Exhibit 3.1(b)
BYLAWS
OF
EVOLVING SYSTEMS HOLDINGS, INC.
(A DELAWARE CORPORATION)
As Adopted by the Board of Directors on October 21,
2005
BYLAWS
OF
EVOLVING SYSTEMS HOLDINGS, INC.
(A DELAWARE CORPORATION)
ARTICLE I
OFFICES
Section 1.
Registered
Office.
The registered office of the
corporation in the State of Delaware shall be in the City of Wilmington, County
of New Castle.
Section 2.
Other
Offices.
The corporation shall also
have and maintain an office or principal place of business in Englewood,
Colorado, at such place as may be fixed by the Board of Directors, and may also
have offices at such other places, both within and without the State of
Delaware as the Board of Directors may from time to time determine or the
business of the corporation may require.
ARTICLE II
CORPORATE SEAL
Section 3
.
Corporate
Seal.
The Board of Directors may
adopt a corporate seal which shall consist of a die bearing the name of the
corporation and the inscription, “Corporate Seal-Delaware.” Said seal may be used by causing it or a
facsimile thereof to be impressed or affixed or reproduced or otherwise.
ARTICLE III
STOCKHOLDERS’ MEETINGS
Section 4.
Place
of Meetings.
Meetings of the
stockholders of the corporation shall be held at such place, either within or
without the State of Delaware, as may be designated from time to time by the
Board of Directors, or, if not so designated, then at the office of the
corporation required to be maintained pursuant to Section 2 hereof.
Section 5.
Annual
Meeting.
(
a
)
The
annual meeting of the stockholders of the corporation, for the purpose of
election of directors and for such other business as may lawfully come before
it, shall be held on such date and at such time as may be designated from time
to time by the Board of Directors.
(
b
)
At
an annual meeting of the stockholders, only such business shall be conducted as
shall have been properly brought before the meeting. To be properly brought before an annual
meeting, business must be: (A) specified
in the notice of meeting (or any supplement thereto) given by or at the
direction of the Board of Directors, (B) otherwise properly brought before
the meeting by or at the direction of the Board of Directors, or (C) otherwise
properly brought before the meeting by a stockholder. For business to be properly brought before an
annual meeting by a stockholder, the stockholder must have given timely notice
thereof in writing to the Secretary of the corporation.
(
c
)
Only
persons who are nominated in accordance with the procedures set forth in this
paragraph (c) shall be eligible for election as directors. Nominations of persons for election to the
Board of Directors of the corporation may be made at a meeting of stockholders
by or at the direction of
the Board of
Directors or by any stockholder of the corporation entitled to vote in the
election of directors at the meeting.
Such nominations, other than those made by or at the direction of the
Board of Directors, shall be made pursuant to timely notice in writing to the
Secretary of the corporation.
Section 6.
Special
Meetings.
(
a
)
Special
meetings of the stockholders of the corporation may be called, for any purpose
or purposes, by (i) the Chairman of the Board of Directors, (ii) the
Chief Executive Officer, (iii) the Board of Directors pursuant to a
resolution adopted by a majority of the total number of authorized directors
(whether or not there exist any vacancies in previously authorized
directorships at the time any such resolution is presented to the Board of
Directors for adoption), or (iv) by the holders of shares entitled to cast
not less than two-thirds (2/3) of the votes at the meeting, and shall be held
at such place, on such date, and at such time as the Board of Directors, shall
fix.
(
b
)
If
a special meeting is called by any person or persons other than the Board of
Directors, the request shall be in writing, specifying the general nature of
the business proposed to be transacted, and shall be delivered personally or
sent by registered mail or by telegraphic or other facsimile transmission to
the Chairman of the Board of Directors, the Chief Executive Officer, or the
Secretary of the corporation. No
business may be transacted at such special meeting otherwise than specified in
such notice. The Board of Directors shall
determine the time and place of such special meeting, which shall be held not
less than thirty-five (35) nor more than one hundred twenty (120) days after
the date of the receipt of the request.
Upon determination of the time and place of the meeting, the officer
receiving the request shall cause notice to be given to the stockholders
entitled to vote, in accordance with the provisions of Section 7 of these
Bylaws. If the notice is not given
within sixty (60) days after the receipt of the request, the person or persons
requesting the meeting may set the time and place of the meeting and give the
notice. Nothing contained in this
paragraph (b) shall be construed as limiting, fixing, or affecting
the time when a meeting of stockholders called by action of the Board of
Directors may be held.
Section 7
.
Notice
of Meetings.
Except as otherwise
provided by law or the Certificate of Incorporation, written notice of each
meeting of stockholders shall be given not less than ten (10) nor more
than sixty (60) days before the date of the meeting to each stockholder
entitled to vote at such meeting, such notice to specify the place, date and
hour and purpose or purposes of the meeting.
Notice of the time, place and purpose of any meeting of stockholders may
be waived in writing, signed by the person entitled to notice thereof, either
before or after such meeting, and will be waived by any stockholder by his
attendance thereat in person or by proxy, except when the stockholder attends a
meeting for the express purpose of objecting, at the beginning of the meeting,
to the transaction of any business because the meeting is not lawfully called
or convened. Any stockholder so waiving
notice of such meeting shall be bound by the proceedings of any such meeting in
all respects as if due notice thereof had been given.
Section 8.
Quorum.
At all meetings of stockholders, except where
otherwise provided by statute or by the Certificate of Incorporation, or by
these Bylaws, the presence, in person or by proxy duly authorized, of the
holders of a majority of the outstanding shares of stock entitled to vote shall
constitute a quorum for the transaction of business. In the absence of a quorum, any meeting of
stockholders may be adjourned, from time to time, either by the chairman of the
meeting or by vote of the holders of a majority of the shares represented
thereat, but no other business shall be transacted at such meeting. The stockholders present at a duly called or
convened meeting, at which a quorum is present, may continue to transact
business until adjournment, notwithstanding the withdrawal of enough
stockholders to leave less than a quorum.
Except as otherwise provided by law, the Certificate of Incorporation or
these Bylaws, all action taken by the holders of a majority of the vote cast,
excluding abstentions, at any meeting at which a quorum is present shall be
valid and binding upon the corporation;
provided, however,
that directors shall be elected by a plurality of the votes of the shares
present in person or represented by proxy at the meeting and entitled to vote
on the election of directors.
2
Section 9
.
Adjournment
and Notice of Adjourned Meetings.
Any meeting of stockholders, whether annual or special, may be adjourned
from time to time either by the chairman of the meeting or by the vote of a
majority of the shares casting votes, excluding abstentions. When a meeting is adjourned to another time
or place, notice need not be given of the adjourned meeting if the time and
place thereof are announced at the meeting at which the adjournment is
taken. At the adjourned meeting, the
corporation may transact any business which might have been transacted at the
original meeting.
Section 10.
Voting
Rights.
For the purpose of
determining those stockholders entitled to vote at any meeting of the
stockholders, except as otherwise provided by law, only persons in whose names
shares stand on the stock records of the corporation on the record date, as
provided in Section 11 of these Bylaws, shall be entitled to vote at any
meeting of stockholders. Every person
entitled to vote shall have the right to do so either in person or by an agent
or agents authorized by a proxy granted in accordance with Delaware law. An agent so appointed need not be a
stockholder. No proxy shall be voted
after three (3) years from its date of creation unless the proxy provides
for a longer period.
Section 11.
List
of Stockholders.
The Secretary shall
prepare and make, at least ten (10) days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at said
meeting, arranged in alphabetical order, showing the address of each
stockholder and the number of shares registered in the name of each
stockholder. Such list shall be open to
the examination of any stockholder, for any purpose germane to the meeting,
during ordinary business hours, for a period of at least ten (10) days
prior to the meeting, either at a place within the city where the meeting is to
be held, which place shall be specified in the notice of the meeting, or, if
not specified, at the place where the meeting is to be held. The list shall be produced and kept at the
time and place of meeting during the whole time thereof and may be inspected by
any stockholder who is present.
Section 12.
Action Without a Meeting.
Unless otherwise provided in the certificate
of incorporation, any action required by this chapter to be taken at any annual
or special meeting of stockholders of the corporation, or any action which may
be taken at any annual or special meeting of such stockholders, may be taken
without a meeting, without prior notice and without a vote, if a consent or
consents in writing, setting forth the action so taken, shall be signed by the
holders of outstanding stock having not less than the minimum number of votes
that would be necessary to authorize or take such action at a meeting at which
all shares entitled to vote thereon were present and voted and shall be
delivered to the corporation by delivery to its registered office in this
State, its principal place of business or an officer or agent of the
corporation having custody of the book in which proceedings of meetings of
stockholders are recorded. Delivery made to a corporation’s registered office
shall be by hand or by certified or registered mail, return receipt requested.
Section 13.
Telephone
Meetings.
Any member of the Board of
Directors, or of any committee thereof, may participate in a meeting by means
of conference telephone or similar communications equipment by means of which
all persons participating in the meeting can hear each other, and participation
in a meeting by such means shall constitute presence in person at such meeting.
3
Section 14.
Organization.
(
a
)
At
every meeting of stockholders, the Chairman of the Board of Directors, or, if a
Chairman has not been appointed or is absent, the Chief Executive Officer or,
if the Chief Executive Officer is absent, the President, or, if the President
is absent, a chairman of the meeting chosen by a majority in interest of the
stockholders entitled to vote, present in person or by proxy, shall act as
chairman. The Secretary, or, in his or
her absence, an Assistant Secretary directed to do so by the President, shall
act as secretary of the meeting.
(
b
)
The
Board of Directors of the corporation shall be entitled to make such rules or
regulations for the conduct of meetings of stockholders as it shall deem
necessary, appropriate or convenient.
Subject to such rules and regulations of the Board of Directors, if
any, the chairman of the meeting shall have the right and authority to
prescribe such rules, regulations and procedures and to do all such acts as, in
the judgment of such chairman, are necessary, appropriate or convenient for the
proper conduct of the meeting, including, without limitation, establishing an
agenda or order of business for the meeting, rules and procedures for
maintaining order at the meeting and the safety of those present, limitations
on participation in such meeting to stockholders of record of the corporation
and their duly authorized and constituted proxies and such other persons as the
chairman shall permit, restrictions on entry to the meeting after the time fixed
for the commencement thereof, limitations on the time allotted to questions or
comments by participants and regulation of the opening and closing of the polls
for balloting on matters which are to be voted on by ballot. Unless and to the extent determined by the
Board of Directors or the chairman of the meeting, meetings of stockholders
shall not be required to be held in accordance with rules of parliamentary
procedure.
ARTICLE IV
DIRECTORS
Section 15.
Number
and Qualifications.
The authorized
number of directors of the corporation shall be fixed by resolution of the
Board of Directors. Directors need not
be stockholders. If for any cause, the
directors shall not have been elected at an annual meeting, they may be elected
as soon thereafter as convenient at a special meeting of the stockholders
called for that purpose in the manner provided in these Bylaws.
Section 16.
Powers.
The powers of the corporation shall be
exercised, its business conducted and its property controlled by the Board of
Directors, except as may be otherwise provided by statute or by the Certificate
of Incorporation.
Section 17.
Vacancies.
Unless otherwise provided in the Certificate
of Incorporation, any vacancies on the Board of Directors resulting from death,
resignation, disqualification, removal or other causes and any newly created
directorships resulting from any increase in the number of directors, shall
unless the Board of Directors determines by resolution that any such vacancies
or newly created directorships shall be filled by stockholders, be filled only
by the affirmative vote of a majority of the directors then in office, even
though less than a quorum of the Board of Directors. Any director elected in accordance with the
preceding sentence shall hold office for the remainder of the full term of the
director for which the vacancy was created or occurred and until such director’s
successor shall have been elected and qualified. A vacancy in the Board of Directors shall be
deemed to exist under this Bylaw in the case of the death, removal or
resignation of any director.
4
Section 18.
Resignation.
Any director may resign at any time by
delivering his written resignation to the Secretary, such resignation to specify
whether it will be effective at a particular time, upon receipt by the
Secretary or at the pleasure of the Board of Directors. If no such specification is made, it shall be
deemed effective at the pleasure of the Board of Directors. When one or more directors shall resign from
the Board of Directors, effective at a future date, a majority of the directors
then in office, including those who have so resigned, shall have power to fill
such vacancy or vacancies, the vote thereon to take effect when such resignation
or resignations shall become effective, and each Director so chosen shall hold
office for the unexpired portion of the term of the Director whose place shall
be vacated and until his successor shall have been duly elected and qualified.
Section 19.
Removal.
The Board of Directors or any individual
director may be removed from office at any time (i) with cause by the
affirmative vote of the holders of a majority of the voting power of all the
then-outstanding shares of voting stock of the corporation, entitled to vote at
an election of directors (the “Voting Stock”) or (ii) without cause by the
affirmative vote of the holders of at least sixty-six and two-thirds percent
(66 2/3%) of the voting power of all the then-outstanding shares of the Voting
Stock.
Section 20.
Meetings.
(
a
)
Annual
Meetings.
The annual meeting of the
Board of Directors shall be held immediately before or after the annual meeting
of stockholders and at the place where such meeting is held. No notice of an annual meeting of the Board
of Directors shall be necessary and such meeting shall be held for the purpose
of electing officers and transacting such other business as may lawfully come
before it.
(
b
)
Regular
Meetings.
Except as hereinafter
otherwise provided, regular meetings of the Board of Directors shall be held in
the office of the corporation required to be maintained pursuant to Section 2
hereof. Unless otherwise restricted by
the Certificate of Incorporation, regular meetings of the Board of Directors
may also be held at any place within or without the State of Delaware which has
been designated by resolution of the Board of Directors or the written consent
of all directors.
(
c
)
Special
Meetings.
Unless otherwise
restricted by the Certificate of Incorporation, special meetings of the Board
of Directors may be held at any time and place within or without the State of
Delaware whenever called by the Chairman of the Board, the Chief Executive
Officer, the President or any two of the directors.
(
d
)
Telephone
Meetings.
Any member of the Board of
Directors, or of any committee thereof, may participate in a meeting by means
of conference telephone or similar communications equipment by means of which
all persons participating in the meeting can hear each other, and participation
in a meeting by such means shall constitute presence in person at such meeting.
(
e
)
Notice
of Meetings.
Notice of the time and
place of all special meetings of the Board of Directors shall given in writing,
by facsimile, telegraph, e-mail, or telex, during normal business hours, at
least twenty-four (24) hours before the date and time of the meeting, or sent
in writing to each director by (i) overnight courier with a nationally
recognized courier service at least two (2) days before the date of the
meeting or (ii) first class mail, charges prepaid, at least three (3) days
before the date of the meeting. Notice
of any meeting may be waived in writing at any time before or after the meeting
and will be waived by any director by attendance thereat, except when the
director attends the meeting for the express purpose of objecting, at the
beginning of the meeting, to the transaction of any business because the
meeting is not lawfully called or convened.
(
f
)
Waiver
of Notice.
The transaction of all business
at any meeting of the Board of Directors, or any committee thereof, however
called or noticed, or wherever held, shall be as valid as though had at a
meeting duly held after regular call and notice, if a quorum be present and if,
either
5
before or after
the meeting, each of the directors not present shall sign a written waiver of
notice. All such waivers shall be filed
with the corporate records or made a part of the minutes of the meeting.
Section 21.
Quorum
and Voting.
(
a
)
Unless
the Certificate of Incorporation requires a greater number and except with
respect to indemnification questions arising under these Bylaws, for which a
quorum shall be one-third of the exact number of directors fixed from time to
time in accordance with the Certificate of Incorporation, a quorum of the Board
of Directors shall consist of a majority of the exact number of directors fixed
from time to time by the Board of Directors in accordance with the Certificate
of Incorporation;
provided, however,
at any meeting
whether a quorum be present or otherwise, a majority of the directors present
may adjourn from time to time until the time fixed for the next regular meeting
of the Board of Directors, without notice other than by announcement at the
meeting.
(
b
)
At
each meeting of the Board of Directors at which a quorum is present, all
questions and business shall be determined by the affirmative vote of a
majority of the directors present, unless a different vote be required by law,
the Certificate of Incorporation or these Bylaws.
Section 22.
Action
Without Meeting.
Unless otherwise
restricted by the Certificate of Incorporation or these Bylaws, any action
required or permitted to be taken at any meeting of the Board of Directors or
of any committee thereof may be taken without a meeting, if all members of the
Board of Directors or committee, as the case may be, consent thereto in
writing, and such writing or writings are filed with the minutes of proceedings
of the Board of Directors or committee.
Section 23.
Fees
and Compensation.
Directors shall be
entitled to such compensation for their services as may be approved by the
Board of Directors, including, if so approved, by resolution of the Board of
Directors, a fixed sum and expenses of attendance, if any, for attendance at
each regular or special meeting of the Board of Directors and at any meeting of
a committee of the Board of Directors.
Nothing herein contained shall be construed to preclude any director
from serving the corporation in any other capacity as an officer, agent,
employee, or otherwise and receiving compensation therefor.
Section 24
.
Committees
and Chairman of the Board.
(
a
)
Executive
Committee.
The Board of Directors
may by resolution passed by a majority of the whole Board of Directors appoint
an Executive Committee to consist of one (1) or more members of the Board
of Directors. The Executive Committee,
to the extent permitted by law and provided in the resolution of the Board of
Directors shall have and may exercise all the powers and authority of the Board
of Directors in the management of the business and affairs of the corporation,
including without limitation the power or authority to declare a dividend, to
authorize the issuance of stock and to adopt a certificate of ownership and
merger, and may authorize the seal of the corporation to be affixed to all
papers which may require it; but no such committee shall have the power or
authority in reference to amending the Certificate of Incorporation (except
that a committee may, to the extent authorized in the resolution or resolutions
providing for the issuance of shares of stock adopted by the Board of Directors
fix the designations and any of the preferences or rights of such shares
relating to dividends, redemption, dissolution, any distribution of assets of
the corporation or the conversion into, or the exchange of such shares for,
shares of any other class or classes or any other series of the same or any
other class or classes of stock of the corporation or fix the number of shares
of any series of stock or authorize the increase or decrease of the shares of
any series), adopting an agreement of merger or consolidation, recommending to
the stockholders the sale, lease or exchange of all or substantially all of the
corporation’s property and assets, recommending to the stockholders a
dissolution of the corporation or a revocation of a dissolution, or amending
the bylaws of the corporation.
(
b
)
Other
Committees.
The Board of Directors
may, by resolution passed by a majority of the whole Board of Directors, from
time to time appoint such other committees as may be
6
permitted by
law. Such other committees appointed by
the Board of Directors shall consist of one (1) or more members of the
Board of Directors and shall have such powers and perform such duties as may be
prescribed by the resolution or resolutions creating such committees, but in no
event shall such committee have the powers denied to the Executive Committee in
these Bylaws.
(c)
Chairman of the Board of Directors.
The Board of Directors shall appoint a
Chairman of the Board. The Chairman of
the Board of Directors, when present, shall preside at all meetings of the
stockholders and the Board of Directors.
The Chairman of the Board of Directors shall perform other duties
commonly incident to his office and shall also perform such other duties and
have such other powers as the Board of Directors shall designate from time to
time.
(d)
Term.
The Chairman of the Board and each member of
a committee of the Board of Directors shall serve a term on the committee
coexistent with such member’s term on the Board of Directors. The Board of Directors, subject to the
provisions of subsections (a) or (b) of this Bylaw may at any
time increase or decrease the number of members of a committee or terminate the
existence of a committee. The membership
of a committee member shall terminate on the date of his death or voluntary
resignation from the committee or from the Board of Directors. The Board of Directors may at any time for
any reason remove the Chairman of the Board and any individual committee member
and the Board of Directors may fill any Chairman position and committee vacancy
created by death, resignation, removal or increase in the number of members of
the committee. The Board of Directors
may designate one or more directors as alternate members of any committee, who
may replace any absent or disqualified member at any meeting of the committee,
and, in addition, in the absence or disqualification of any member of a
committee, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place of any such absent or disqualified member.
(e)
Meetings.
Unless the Board of Directors shall otherwise
provide, regular meetings of the Executive Committee or any other committee
appointed pursuant to this Section 23 shall be held at such times and
places as are determined by the Board of Directors, or by any such committee,
and when notice thereof has been given to each member of such committee, no
further notice of such regular meetings need be given thereafter. Special meetings of any such committee may be
held at any place which has been determined from time to time by such
committee, and may be called by any director who is a member of such committee,
upon written notice to the members of such committee of the time and place of
such special meeting given in the manner provided for the giving of written
notice to members of the Board of Directors of the time and place of special
meetings of the Board of Directors.
Notice of any special meeting of any committee may be waived in writing
at any time before or after the meeting and will be waived by any director by
attendance thereat, except when the director attends such special meeting for
the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened. A majority of the authorized
number of members of any such committee shall constitute a quorum for the
transaction of business, and the act of a majority of those present at any
meeting at which a quorum is present shall be the act of such committee.
Section 25
.
Organization.
At every meeting of the directors, the
Chairman of the Board of Directors, or, if a Chairman has not been appointed or
is absent, the Chief Executive Officer or, if the Chief Executive Officer is
absent, the President, or if the President is absent, the most senior Vice
President, or, in the absence of any such officer, a chairman of the meeting
chosen by a majority of the directors present, shall preside over the
meeting. The Secretary, or in his
absence, an Assistant Secretary directed to do so by the President, shall act
as secretary of the meeting.
7
ARTICLE V
OFFICERS
Section 26
.
Officers
Designated.
The officers of the
corporation shall include, if and when designated by the Board of Directors,
the Chief Executive Officer, the President, one or more Vice Presidents, the
Secretary and the Chief Financial Officer all of whom shall be elected at the
annual organizational meeting of the Board of Directors. The Board of Directors may also appoint one
or more Assistant Secretaries, Assistant Treasurers, Assistant Controllers and
such other officers and agents with such powers and duties as it shall deem
necessary. The Board of Directors may
assign such additional titles to one or more of the officers as it shall deem
appropriate. Any one person may hold any
number of offices of the corporation at any one time unless specifically prohibited
therefrom by law. The salaries and other
compensation of the officers of the corporation shall be fixed by or in the
manner designated by the Board of Directors.
Section 27
.
Tenure
and Duties of Officers.
(a)
General.
All officers shall hold office at the
pleasure of the Board of Directors and until their successors shall have been
duly elected and qualified, unless sooner removed. Any officer elected or appointed by the Board
of Directors may be removed at any time by the Board of Directors. If the office of any officer becomes vacant
for any reason, the vacancy may be filled by the Board of Directors.
(b)
Duties
of Chief Executive Officer.
The
Chief Executive Officer shall preside at all meetings of the stockholders and
at all meetings of the Board of Directors, unless the Chairman of the Board of
Directors has been appointed and is present.
The Chief Executive Officer shall, subject to the control of the Board
of Directors, have general supervision, direction and control of the business
and officers of the corporation. The
Chief Executive Officer shall perform other duties commonly incident to his
office and shall also perform such other duties and have such other powers as
the Board of Directors shall designate from time to time.
(c)
Duties
of President.
The President may assume and
perform the duties of the Chief Executive Officer in the absence or disability
of the Chief Executive Officer or whenever the office of Chief Executive
Officer is vacant. The President,
subject to the control of the Board of Directors and the Chief Exectuvive
Officer, shall have general supervision, direction and control of the business
and officers of the corporation. The
President shall perfom other duties commonly incident to his office and shall
also perform such other duties and have such other powers as the Board of
Directors shall designate from time to time.
(
d
)
Duties
of Vice Presidents.
The Vice
Presidents may assume and perform the duties of the Chief Executive Officer or
the President in the absence or disability of both of the Chief Executive
Officer and the President or whenever the office of Chief Executive Officer and
President is vacant. The Vice Presidents
shall perform other duties commonly incident to their office and shall also
perform such other duties and have such other powers as the Board of Directors
or the Chief Executive Officer or President shall designate from time to time.
(
e
)
Duties
of Secretary.
The Secretary shall
attend all meetings of the stockholders and of the Board of Directors and shall
record all acts and proceedings thereof in the minute book of the
corporation. The Secretary shall give
notice in conformity with these Bylaws of all meetings of the stockholders and
of all meetings of the Board of Directors and any committee thereof requiring
notice. The Secretary shall perform all
other duties given him in these Bylaws and other duties commonly incident to
his office and shall also perform such other duties and have such other powers
as the Board of Directors shall designate from time to time. The President may direct any Assistant
Secretary to assume and perform the duties of the Secretary in the absence or
disability of the Secretary, and each Assistant Secretary shall perform other
duties commonly incident to his office and shall also perform such other
8
duties and have
such other powers as the Board of Directors or the President shall designate
from time to time.
(
f
)
Duties
of Chief Financial Officer.
The Chief
Financial Officer shall keep or cause to be kept the books of account of the
corporation in a thorough and proper manner and shall render statements of the
financial affairs of the corporation in such form and as often as required by
the Board of Directors or the President.
The Chief Financial Officer, subject to the order of the Board of
Directors, shall have the custody of all funds and securities of the
corporation. The Chief Financial Officer
shall perform other duties commonly incident to his office and shall also
perform such other duties and have such other powers as the Board of Directors
or the President shall designate from time to time. The President may direct the Controller or
any Assistant Controller to assume and perform the duties of the Chief
Financial Officer in the absence or disability of the Chief Financial Officer,
and each Controller and Assistant Controller shall perform other duties
commonly incident to his office and shall also perform such other duties and
have such other powers as the Board of Directors or the President shall
designate from time to time.
Section 28
.
Delegation
of Authority.
The Board of Directors
may from time to time delegate the powers or duties of any officer to any other
officer or agent, notwithstanding any provision hereof.
Section 29
.
Resignations.
Any officer may resign at any time by giving
written notice to the Board of Directors or to the President or to the
Secretary. Any such resignation shall be
effective when received by the person or persons to whom such notice is given,
unless a later time is specified therein, in which event the resignation shall
become effective at such later time.
Unless otherwise specified in such notice, the acceptance of any such
resignation shall not be necessary to make it effective. Any resignation shall be without prejudice to
the rights, if any, of the corporation under any contract with the resigning
officer.
Section 30.
Removal.
Any officer may be removed from office at any
time, either with or without cause, by the affirmative vote of a majority of
the directors in office at the time, or by the unanimous written consent of the
directors in office at the time, or by any committee or superior officers upon
whom such power of removal may have been conferred by the Board of Directors.
ARTICLE VI
EXECUTION OF CORPORATE INSTRUMENTS AND VOTING
OF SECURITIES OWNED BY THE CORPORATION
Section 31
.
Execution
of Corporate Instruments.
The Board
of Directors may, in its discretion, determine the method and designate the
signatory officer or officers, or other person or persons, to execute on behalf
of the corporation any corporate instrument or document, or to sign on behalf
of the corporation the corporate name without limitation, or to enter into
contracts on behalf of the corporation, except where otherwise provided by law
or these Bylaws, and such execution or signature shall be binding upon the
corporation.
Unless
otherwise specifically determined by the Board of Directors or otherwise
required by law, promissory notes, deeds of trust, mortgages and other
evidences of indebtedness of the corporation, and other corporate instruments
or documents requiring the corporate seal, and certificates of shares of stock
owned by the corporation, shall be executed, signed or endorsed by the Chief
Executive Officer or the President or any Vice President, and by the Secretary
or Chief Financial Officer. All other
instruments and documents requiring the corporate signature, but not requiring
the corporate seal, may be executed as aforesaid or in such other manner as may
be directed by the Board of Directors.
9
All
checks and drafts drawn on banks or other depositories on funds to the credit
of the corporation or in special accounts of the corporation shall be signed by
such person or persons as the Board of Directors shall authorize so to do.
Unless
authorized or ratified by the Board of Directors or within the agency power of
an officer, no officer, agent or employee shall have any power or authority to
bind the corporation by any contract or engagement or to pledge its credit or
to render it liable for any purpose or for any amount.
Section 32
.
Voting
of Securities Owned by the Corporation.
All stock and other securities of other corporations owned or held by
the corporation for itself, or for other parties in any capacity, shall be
voted, and all proxies with respect thereto shall be executed, by the person
authorized so to do by resolution of the Board of Directors, or, in the absence
of such authorization, by the Chief Executive Officer, the President, or any
Vice President.
ARTICLE VII
SHARES OF STOCK
Section 33
.
Form and
Execution of Certificates.
Certificates for the shares of stock of the corporation shall be in such
form as is consistent with the Certificate of Incorporation and applicable
law. Every holder of stock in the
corporation shall be entitled to have a certificate signed by or in the name of
the corporation by the Chief Executive Officer, or the President or any Vice
President and by the Chief Financial Officer, or the Secretary or Assistant
Secretary, certifying the number of shares owned by him in the
corporation. Any or all of the
signatures on the certificate may be facsimiles. In case any officer, transfer agent, or
registrar who has signed or whose facsimile signature has been placed upon a
certificate shall have ceased to be such officer, transfer agent, or registrar
before such certificate is issued, it may be issued with the same effect as if
he were such officer, transfer agent, or registrar at the date of issue. Each certificate shall state upon the face or
back thereof, in full or in summary, all of the powers, designations,
preferences, and rights, and the limitations or restrictions of the shares
authorized to be issued or shall, except as otherwise required by law, set
forth on the face or back a statement that the corporation will furnish without
charge to each stockholder who so requests the powers, designations,
preferences and relative, participating, optional, or other special rights of
each class of stock or series thereof and the qualifications, limitations or
restrictions of such preferences and/or rights.
Within a reasonable time after the issuance or transfer of
uncertificated stock, the corporation shall send to the registered owner
thereof a written notice containing the information required to be set forth or
stated on certificates pursuant to this section or otherwise required by
law or with respect to this section a statement that the corporation will
furnish without charge to each stockholder who so requests the powers,
designations, preferences and relative participating, optional or other special
rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights. Except as otherwise expressly provided by
law, the rights and obligations of the holders of certificates representing
stock of the same class and series shall be identical.
Section 34
.
Lost
Certificates.
A new certificate or
certificates shall be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been lost, stolen, or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost, stolen, or destroyed. The corporation may require, as a condition
precedent to the issuance of a new certificate or certificates, the owner of
such lost, stolen, or destroyed certificate or certificates, or his legal
representative, to advertise the same in such manner as it shall require or to
give the corporation a surety bond in such form and amount as it may direct as
indemnity against any claim that may be made against the corporation with
respect to the certificate alleged to have been lost, stolen, or destroyed.
10
Section 35.
Transfers.
(
a
)
Transfers
of record of shares of stock of the corporation shall be made only upon its
books by the holders thereof, in person or by attorney duly authorized, and
upon the surrender of a properly endorsed certificate or certificates for a
like number of shares.
(
b
)
The
corporation shall have power to enter into and perform any agreement with any
number of stockholders of any one or more classes of stock of the corporation
to restrict the transfer of shares of stock of the corporation of any one or
more classes owned by such stockholders in any manner not prohibited by the
General Corporation Law of Delaware.
Section 36.
Fixing
Record Dates.
(
a
)
In
order that the corporation may determine the stockholders entitled to notice of
or to vote at any meeting of stockholders or any adjournment thereof, the Board
of Directors may fix, in advance, a record date, which record date shall not
precede the date upon which the resolution fixing the record date is adopted by
the Board of Directors, and which record date shall not be more than sixty (60)
nor less than ten (10) days before the date of such meeting. If no record date is fixed by the Board of
Directors, the record date for determining stockholders entitled to notice of
or to vote at a meeting of stockholders shall be at the close of business on
the day next preceding the day on which notice is given, or if notice is
waived, at the close of business on the day next preceding the day on which the
meeting is held. A determination of
stockholders of record entitled to notice of or to vote at a meeting of
stockholders shall apply to any adjournment of the meeting;
provided, however,
that the Board of Directors may fix a new
record date for the adjourned meeting.
(
b
)
In
order that the corporation may determine the stockholders entitled to receive
payment of any dividend or other distribution or allotment of any rights or the
stockholders entitled to exercise any rights in respect of any change,
conversion or exchange of stock, or for the purpose of any other lawful action,
the Board of Directors may fix, in advance, a record date, which record date
shall not precede the date upon which the resolution fixing the record date is
adopted, and which record date shall be not more than sixty (60) days prior to
such action. If no record date is fixed,
the record date for determining stockholders for any such purpose shall be at
the close of business on the day on which the Board of Directors adopts the
resolution relating thereto.
Section 37
.
Registered
Stockholders.
The corporation shall
be entitled to recognize the exclusive right of a person registered on its
books as the owner of shares to receive dividends, and to vote as such owner,
and shall not be bound to recognize any equitable or other claim to or interest
in such share or shares on the part of any other person whether or not it shall
have express or other notice thereof, except as otherwise provided by the laws
of Delaware.
ARTICLE VIII
OTHER SECURITIES OF THE CORPORATION
Section 38.
Execution
of Other Securities.
All bonds,
debentures and other corporate securities of the corporation, other than stock
certificates, may be signed by the Chief Executive Officer, the President or
any Vice President, or such other person as may be authorized by the Board of
Directors, and the corporate seal impressed thereon or a facsimile of such seal
imprinted thereon and attested by the signature of the Secretary or an
Assistant Secretary, or the Chief Financial Officer or Assistant Financial
Officer;
provided, however,
that where any such
bond, debenture or other corporate security shall be authenticated by the
manual signature, or where permissible facsimile signature, of a trustee under
an indenture pursuant to which such bond, debenture or other corporate security
shall be issued,
11
the signatures of
the persons signing and attesting the corporate seal on such bond, debenture or
other corporate security may be the imprinted facsimile of the signatures of
such persons. Interest coupons
appertaining to any such bond, debenture or other corporate security,
authenticated by a trustee as aforesaid, shall be signed by the Chief Financial
Officer or an Assistant Financial Officer of the corporation or such other
person as may be authorized by the Board of Directors, or bear imprinted
thereon the facsimile signature of such person.
In case any officer who shall have signed or attested any bond,
debenture or other corporate security, or whose facsimile signature shall
appear thereon or on any such interest coupon, shall have ceased to be such
officer before the bond, debenture or other corporate security so signed or
attested shall have been delivered, such bond, debenture or other corporate
security nevertheless may be adopted by the corporation and issued and
delivered as though the person who signed the same or whose facsimile signature
shall have been used thereon had not ceased to be such officer of the
corporation.
ARTICLE IX
DIVIDENDS
Section 39
.
Declaration
of Dividends.
Dividends upon the
capital stock of the corporation, subject to the provisions of the Certificate
of Incorporation, if any, may be declared by the Board of Directors pursuant to
law at any regular or special meeting.
Dividends may be paid in cash, in property, or in shares of the capital
stock, subject to the provisions of the Certificate of Incorporation.
Section 40.
Dividend Reserve.
Before
payment of any dividend, there may be set aside out of any funds of the
corporation available for dividends such sum or sums as the Board of Directors
from time to time, in their absolute discretion, think proper as a reserve or
reserves to meet contingencies, or for equalizing dividends, or for repairing
or maintaining any property of the corporation, or for such other purpose as
the Board of Directors shall think conducive to the interests of the
corporation, and the Board of Directors may modify or abolish any such reserve
in the manner in which it was created.
ARTICLE X
FISCAL YEAR
Section 41.
Fiscal Year.
The
fiscal year of the corporation shall be fixed by resolution of the Board of
Directors.
ARTICLE XI
INDEMNIFICATION
Section 42
.
Indemnification of Directors, Executive Officers, Other Officers,
Employees and Other Agents.
(
a
)
Directors
and Executive Officers.
The
corporation shall indemnify its directors and executive officers (for the
purposes of this Article XI, “executive officers” shall have the meaning
defined in Rule 3b-7 promulgated under the 1934 Act)
to
the fullest extent not prohibited by the Delaware General Corporation Law;
provided, however,
that the corporation may modify the
extent of such indemnification by individual contracts with its directors and
executive officers; and,
provided, further,
that the corporation shall not be required to indemnify any director or
executive officer in connection with any proceeding (or part thereof) initiated
by such person unless (i) such indemnification is expressly required to be
made by law, (ii) the proceeding was authorized by the Board of Directors
of the corporation, (iii) such indemnification is provided by the
corporation, in its sole discretion, pursuant to
12
the powers vested
in the corporation under the Delaware General Corporation Law or (iv) such
indemnification is required to be made under subsection (d).
(
b
)
Other Officers, Employees and Other Agents.
The corporation shall have power to indemnify
its other officers, employees and other agents as set forth in the Delaware
General Corporation Law.
(
c
)
Expenses.
The
corporation shall advance to any person who was or is a party or is threatened
to be made a party to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative, by reason
of the fact that he is or was a director or executive officer, of the
corporation, or is or was serving at the request of the corporation as a
director or officer of another corporation, partnership, joint venture, trust
or other enterprise, prior to the final disposition of the proceeding, promptly
following request therefor, all expenses incurred by any director or executive
officer in connection with such proceeding upon receipt of an undertaking by or
on behalf of such person to repay said amounts if it should be determined
ultimately that such person is not entitled to be indemnified under this Bylaw
or otherwise.
Notwithstanding the
foregoing, unless otherwise determined pursuant to paragraph (e) of
this Bylaw, no advance shall be made by the corporation to an executive officer
of the corporation (except by reason of the fact that such officer is or was a
director of the corporation in which event this paragraph shall not apply) in
any action, suit or proceeding, whether civil, criminal, administrative or
investigative, if a determination is reasonably and promptly made (i) by
the Board of Directors by a majority vote of a quorum consisting of directors
who were not parties to the proceeding, or (ii) if such quorum is not
obtainable, or, even if obtainable, a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, that the facts
known to the decision-making party at the time such determination is made
demonstrate clearly and convincingly that such person acted in bad faith or in
a manner that such person did not believe to be in or not opposed to the best
interests of the corporation.
(
d
)
Enforcement.
Without the necessity of entering into an
express contract, all rights to indemnification and advances to directors and
executive officers under this Bylaw shall be deemed to be contractual rights
and be effective to the same extent and as if provided for in a contract
between the corporation and the director or executive officer. Any right to indemnification or advances
granted by this Bylaw to a director or executive officer shall be enforceable
by or on behalf of the person holding such right in any court of competent
jurisdiction if (i) the claim for indemnification or advances is denied,
in whole or in part, or (ii) no disposition of such claim is made within
ninety (90) days of request therefor.
The claimant in such enforcement action, if successful in whole or in
part, shall be entitled to be paid also the expense of prosecuting his
claim. In connection with any claim for
indemnification, the corporation shall be entitled to raise as a defense to any
such action that the claimant has not met the standards of conduct that make it
permissible under the Delaware General Corporation Law for the corporation to
indemnify the claimant for the amount claimed.
In connection with any claim by an executive officer of the corporation
(except in any action, suit or proceeding, whether civil, criminal,
administrative or investigative, by reason of the fact that such executive
officer is or was a director of the corporation) for advances, the corporation
shall be entitled to raise a defense as to any such action clear and convincing
evidence that such person acted in bad faith or in a manner that such person
did not believe to be in or not opposed to the best interests of the
corporation, or with respect to any criminal action or proceeding that such person
acted without reasonable cause to believe that his conduct was lawful. Neither the failure of the corporation
(including its Board of Directors, independent legal counsel or its
stockholders) to have made a determination prior to the commencement of such
action that indemnification of the claimant is proper in the circumstances
because he has met the applicable standard of conduct set forth in the Delaware
General Corporation Law, nor an actual determination by the corporation
(including its Board of Directors, independent legal counsel or its
stockholders) that the claimant has not met such applicable standard of
conduct, shall be a defense to the action or create a presumption that claimant
has not met the applicable standard of conduct.
In any suit brought by a director or executive officer to enforce a
right to indemnification or to an advancement of expenses
13
hereunder, the
burden of proving that the director or executive officer is not entitled to be
indemnified, or to such advancement of expenses, under this Article XI or
otherwise shall be on the corporation.
(
e
)
Non-Exclusivity
of Rights.
The rights conferred on
any person by this Bylaw shall not be exclusive of any other right which such
person may have or hereafter acquire under any statute, provision of the
Certificate of Incorporation, Bylaws, agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in his official
capacity and as to action in another capacity while holding office. The corporation is specifically authorized to
enter into individual contracts with any or all of its directors, officers,
employees or agents respecting indemnification and advances, to the fullest
extent not prohibited by the Delaware General Corporation Law.
(
f
)
Survival of Rights.
The rights conferred on any person by this Bylaw shall continue as to a
person who has ceased to be a director, officer, employee or other agent and
shall inure to the benefit of the heirs, executors and administrators of such a
person.
(
g
)
Insurance.
To the
fullest extent permitted by the Delaware General Corporation Law, the
corporation, upon approval by the Board of Directors, may purchase insurance on
behalf of any person required or permitted to be indemnified pursuant to this
Bylaw.
(
h
)
Amendments.
Any
repeal or modification of this Bylaw shall only be prospective and shall not
affect the rights under this Bylaw in effect at the time of the alleged
occurrence of any action or omission to act that is the cause of any proceeding
against any agent of the corporation.
(
i
)
Saving
Clause.
If this Bylaw or any portion
hereof shall be invalidated on any ground by any court of competent
jurisdiction, then the corporation shall nevertheless indemnify each director
and executive officer to the full extent not prohibited by any applicable
portion of this Bylaw that shall not have been invalidated, or by any other
applicable law.
(
j
)
Certain
Definitions
.
For the purposes of this Bylaw, the following definitions shall apply:
(
i
)
The
term “proceeding” shall be broadly construed and shall include, without
limitation, the investigation, preparation, prosecution, defense, settlement,
arbitration and appeal of, and the giving of testimony in, any threatened, pending
or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative.
(
ii
)
The
term “expenses” shall be broadly construed and shall include, without
limitation, court costs, attorneys’ fees, witness fees, fines, amounts paid in
settlement or judgment and any other costs and expenses of any nature or kind
incurred in connection with any proceeding.
(
iii
)
The
term the “corporation” shall include, in addition to the resulting corporation,
any constituent corporation (including any constituent of a constituent)
absorbed in a consolidation or merger which, if its separate existence had
continued, would have had power and authority to indemnify its directors,
officers, and employees or agents, so that any person who is or was a director,
officer, employee or agent of such constituent corporation, or is or was
serving at the request of such constituent corporation as a director, officer,
employee or agent of another corporation, partnership, joint venture, trust or
other enterprise, shall stand in the same position under the provisions of this
Bylaw with respect to the resulting or surviving corporation as he would have
with respect to such constituent corporation if its separate existence had
continued.
(
iv
)
References
to a “director,” “executive officer,” “officer,” “employee,” or “agent” of the
corporation shall include, without limitation, situations where such
14
person is serving at the
request of the corporation as, respectively, a director, executive officer,
officer, employee, trustee or agent of another corporation, partnership, joint
venture, trust or other enterprise.
(
v
)
References
to “other enterprises” shall include employee benefit plans; references to “fines”
shall include any excise taxes assessed on a person with respect to an employee
benefit plan; and references to “serving at the request of the corporation”
shall include any service as a director, officer, employee or agent of the
corporation which imposes duties on, or involves services by, such director,
officer, employee, or agent with respect to an employee benefit plan, its
participants, or beneficiaries; and a person who acted in good faith and in a
manner he reasonably believed to be in the interest of the participants and
beneficiaries of an employee benefit plan shall be deemed to have acted in a
manner “not opposed to the best interests of the corporation” as referred to in
this Bylaw.
ARTICLE XII
NOTICES
Section 43.
Notices.
(
a
)
Notice to Stockholders.
Whenever, under any provisions of these Bylaws, notice is required to be
given to any stockholder, it shall be given in writing, timely and duly
deposited in the United States mail, postage prepaid, and addressed to his last
known post office address as shown by the stock record of the corporation or
its transfer agent.
(
b
)
Notice to directors.
Any notice required to be given to any director may be given by the
method stated in subsection (a), or may be delivered electronically or by
overnight courier, facsimile, telex or telegram, except that such notice other
than one which is delivered personally shall be sent to such address as such
director shall have filed in writing with the Secretary, or, in the absence of
such filing, to the last known post office address of such director.
(
c
)
Affidavit of Mailing.
An affidavit of mailing, executed by a duly authorized and competent
employee of the corporation or its transfer agent appointed with respect to the
class of stock affected, specifying the name and address or the names and
addresses of the stockholder or stockholders, or director or directors, to whom
any such notice or notices was or were given, and the time and method of giving
the same, shall in the absence of fraud, be prima facie evidence of the facts
therein contained.
(
d
)
Time Notices Deemed Given.
All notices given by mail or overnight courier, as above provided, shall
be deemed to have been given as at the time of mailing, and all notices given electronically,
by facsimile, telex or telegram shall be deemed to have been given as of the
sending time recorded at time of transmission.
(
e
)
Methods of Notice.
It
shall not be necessary that the same method of giving notice be employed in
respect of all directors, but one permissible method may be employed in respect
of any one or more, and any other permissible method or methods may be employed
in respect of any other or others.
(
f
)
Failure to Receive Notice.
The period or limitation of time within which any stockholder may
exercise any option or right, or enjoy any privilege or benefit, or be required
to act, or within which any director may exercise any power or right, or enjoy
any privilege, pursuant to any notice sent him in the manner above provided,
shall not be affected or extended in any manner by the failure of such
stockholder or such director to receive such notice.
15
(
g
)
Notice to Person with Whom Communication Is Unlawful.
Whenever notice is required to be given,
under any provision of law or of the Certificate of Incorporation or Bylaws of
the corporation, to any person with whom communication is unlawful, the giving
of such notice to such person shall not be required and there shall be no duty
to apply to any governmental authority or agency for a license or permit to
give such notice to such person. Any
action or meeting which shall be taken or held without notice to any such
person with whom communication is unlawful shall have the same force and effect
as if such notice had been duly given.
In the event that the action taken by the corporation is such as to
require the filing of a certificate under any provision of the Delaware General
Corporation Law, the certificate shall state, if such is the fact and if notice
is required, that notice was given to all persons entitled to receive notice
except such persons with whom communication is unlawful.
(
h
)
Notice to Person with Undeliverable Address.
Whenever notice is required to be given,
under any provision of law or the Certificate of Incorporation or Bylaws of the
corporation, to any stockholder to whom (i) notice of two consecutive
annual meetings, and all notices of meetings or of the taking of action by
written consent without a meeting to such person during the period between such
two consecutive annual meetings, or (ii) all, and at least two, payments
(if sent by first class mail) of dividends or interest on securities during a
twelve-month period, have been mailed addressed to such person at his address
as shown on the records of the corporation and have been returned
undeliverable, the giving of such notice to such person shall not be
required. Any action or meeting which
shall be taken or held without notice to such person shall have the same force
and effect as if such notice had been duly given. If any such person shall deliver to the
corporation a written notice setting forth his then current address, the
requirement that notice be given to such person shall be reinstated. In the event that the action taken by the corporation
is such as to require the filing of a certificate under any provision of the
Delaware General Corporation Law, the certificate need not state that notice
was not given to persons to whom notice was not required to be given pursuant
to this paragraph.
ARTICLE XIII
AMENDMENTS
Section 44
.
Amendments.
The
Bylaws may be altered or amended or new Bylaws adopted by the affirmative vote
of at least sixty-six and two-thirds percent (66-2/3%) of the voting power of
all of the then-outstanding shares of the Voting Stock.
ARTICLE XIV
LOANS TO DIRECTORS AND EXECUTIVE OFFICERS
Section 45.
Loans
to Directors and Executive Officers.
The corporation may not,
directly or indirectly, including through any subsidiary, extend or maintain
credit, or arrange for the extension of credit, or renew any extension of
credit, in the form of a personal loan to or for the benefit of any director or
executive officer of the corporation.
For purposes of this provision, the term “director’ shall mean a member
of the corporation’s board of directors and the term “executive officer” shall
mean the chief executive officer, the president, any vice president in charge
of a principal business unit, division or function, any other officer who
performs a policy-making function for the corporation or any other person who
performs a similar policy-making function.
16
Exhibit 10.1(a)
CREDIT AGREEMENT
among
EVOLVING
SYSTEMS, INC.
TELECOM
SOFTWARE ENTERPRISES, LLC
EVOLVING
SYSTEMS HOLDINGS, INC.
and
CAPITALSOURCE
FINANCE LLC,
as Agent
Dated as of
November 14,
2005
CREDIT AGREEMENT
This
CREDIT AGREEMENT
(this “Agreement”),
dated as of November 14, 2005, is entered into by and among, (i) Evolving
Systems, Inc. (“Evolving Systems”), a Delaware corporation and Telecom
Software Enterprises, LLC, a Colorado limited liability company (together with
Evolving Systems each a “Borrower”); (ii) Evolving Systems Holdings, Inc.,
a Delaware corporation (“Intermediate Holdco”), as a Guarantor and additional
Credit Party; (iii) CAPITALSOURCE FINANCE LLC, a Delaware limited
liability company (in its individual capacity, “CapitalSource”), as
administrative and payment agent for the Lenders (CapitalSource, in such
capacity, “Agent”);
and (iv) the
LENDERS from time to time parties hereto.
WHEREAS
, the Credit Parties have requested that Lenders
make available to Borrower a term loan in an aggregate original principal
amount of Eight Million Five Hundred Thousand Dollars ($8,500,000), the
proceeds of which, in each case, shall be used by Borrower for purposes
permitted under, and otherwise in accordance with and subject to the terms of,
this Agreement.
WHEREAS
, Lenders are
willing to make the loan available to Borrower, upon the terms and subject to
the conditions set forth herein.
NOW, THEREFORE
, in consideration of the foregoing, and for
other good and valuable consideration, the receipt, sufficiency and adequacy of
which hereby are acknowledged, the parties hereto hereby agree as follows:
I.
DEFINITIONS
For
purposes of the Loan Documents and all schedules, exhibits, annexes and
attachments thereto, in addition to the definitions elsewhere in this Agreement
and the other Loan Documents, the terms listed in
Appendix A
hereto
shall have the respective meanings assigned to such terms in
Appendix A
hereto, which is incorporated herein and made a part hereof. All capitalized terms used which are not
specifically defined herein shall have the respective meanings assigned to them
in Article 9 of the UCC to the extent the same are used or defined
therein. Unless otherwise specified in
any Loan Document, this Agreement, any other Loan Document and any agreement or
contract referred to herein or in
Appendix A
hereto shall mean such
agreement or contract, as modified, amended, supplemented or restated and in
effect from time to time, subject to any applicable restrictions set forth in
such Loan Document. Unless otherwise
specified, as used in the Loan Documents or in any certificate, report,
instrument or other document made or delivered pursuant to any of the Loan
Documents, all accounting terms not defined in
Appendix A
hereto or
elsewhere in this Agreement or any other Loan Document shall have the meanings
assigned to such terms in and shall be interpreted in accordance with
GAAP. If any change in GAAP results in a
change in the calculation of the financial covenants or interpretation of
related provisions of this Agreement or any other Loan Document, then Borrower,
Agent, Lenders and the other Credit Parties agree to amend such provisions of
this Agreement so as to equitably reflect such changes in GAAP with the desired
result that the criteria for evaluating the Credit Parties’ financial condition
shall be the same after such change in GAAP as if such change had not been
made, provided that, notwithstanding any other provision of this Agreement, the
Requisite Lenders’ agreement to any amendment of such
provisions shall be sufficient to bind all Lenders; and, provided
further, until such time as the financial covenants and the related provisions
of this Agreement have been amended in accordance with the terms of this
paragraph, the calculations of financial covenants and the interpretation of
any related provisions shall be calculated and interpreted in accordance with
GAAP as in effect immediately prior to such change in GAAP. The term “Borrower” used in the singular
shall mean each of Evolving Systems and Telecom Software Enterprises, LLC.
II.
CREDITS
2.1
Loan
Subject
to the terms and conditions set forth in this Agreement, each Lender agrees to
loan to Borrower on the Closing Date such Lender’s Pro Rata Share of the Loan,
which, in the aggregate for all Lenders, shall be in the original principal
amount of Eight Million Five Hundred Thousand Dollars ($8,500,000). The Loan is not a revolving credit facility
and may not be drawn, repaid and redrawn and any repayments or prepayments of
principal on the Loan shall permanently reduce the Loan. The obligations of Lenders hereunder are
several and not joint or joint and several.
Borrower irrevocably authorizes Agent and Lenders to disburse the
proceeds of the Loan on the Closing Date.
2.2
Evidence of Loan
(a)
Each
Lender shall maintain, in accordance with its usual practice, electronic or
written records evidencing the indebtedness and obligations to such Lender
resulting from the Loan made by such Lender, including, without limitation, the
amounts of principal and interest payable and paid to such Lender from time to
time under this Agreement.
(b)
Agent
shall maintain electronic or written records in which it will record (i) the
amount of each Loan made hereunder, the class and type of each Loan made and
any applicable interest rate periods, (ii) the amount of any principal
and/or interest due and payable and/or to become due and payable from Borrower
to each Lender hereunder and (iii) all amounts received by Agent hereunder
from Borrower and each Lender’s share thereof.
(c)
The
entries in the electronic or written records maintained pursuant to Section 2.2(b) (the
“Register”), which shall include the promissory notes, if any, issued pursuant
to Section 2.2(d) hereof, shall, in the absence of manifest error, be
prima facie evidence of the existence and amounts of the obligations and
indebtedness therein recorded; provided, however, that the failure of Agent to maintain
such records or any error therein shall not in any manner affect the
obligations of Borrower to repay the Loans or Obligations in accordance with
their terms. The Register shall be
subject to the terms of Section 12.2(c).
(d)
Borrower
agrees that:
(i)
upon written notice by Agent to Borrower that
a promissory note or other evidence of indebtedness or replacement of a lost
Note is requested by Agent (for itself or on behalf of any Lender) to evidence
the Loan and other Obligations owing or payable to, or to be made by, such
Lender, Borrower promptly shall (and in any event within five (5) Business
Days of any such request and in the event of a lost Note upon
2
receipt of customary affidavits and
indemnities) execute and deliver to Agent an appropriate promissory note or
notes in form and substance reasonably satisfactory to Agent and Borrower,
payable to the order of such Lender in a principal amount equal to the amount
of the Loan owing or payable to such Lender;
(ii)
all references to “Notes” in the Loan
Documents shall mean Notes, if any, to the extent issued (and not returned to
Borrower for cancellation) hereunder, as the same may be amended, supplemented,
modified, divided and/or restated and in effect from time to time which shall
be included in the Register maintained by the Agent; and
(iii)
upon Agent’s written request (for itself or
on behalf of any Lender), and in any event within five (5) Business Days
of any such request, Borrower shall execute and deliver to Agent new Notes
and/or split or divide the Notes, or any of them, in exchange for the then
existing subject Notes, in such smaller amounts or denominations as Agent or
such Lender shall specify; provided, that the aggregate principal amount of
such new, split or divided Notes shall not exceed the aggregate principal
amount of the Notes outstanding at the time such request is made; and provided,
further, that such Notes that are replaced shall then be deemed no longer
outstanding hereunder and replaced by such new Notes, promptly cancelled and
returned to Borrower within a reasonable period of time after Agent’s receipt
of the replacement Notes.
2.3
Interest
(a)
Subject
to Section 2.3(c), the Loan shall bear interest on the outstanding
principal amount thereof from the date made at a rate per annum equal to (i) the
greater of (A) LIBOR Rate in effect from time to time or (B) 3.75%,
plus
(ii) the Applicable Margin in effect from time to time.
(b)
Interest
on the Loan
shall be due and
payable in cash in arrears on each Interest Payment Date and on the date of any
prepayment (actual or due) of the Loan pursuant to Sections 2.4 and 2.5.
(c)
Upon
the occurrence and during the continuance of any Event of Default, the
Obligations shall bear interest at the Default Rate upon written notice of such
increase given by Agent to Borrower; provided, that, from and after the
occurrence of any Event of Default under Sections VIII (a), (g) or (h),
such increase shall be automatic and without any notice from Agent, Requisite
Lenders, or any other person. In all
such events unless otherwise provided in the applicable notice by Agent to
Borrower, and notwithstanding the date on which application of the Default Rate
is communicated to Borrower, the Default Rate shall accrue from the initial
date of such Event of Default until that Event of Default is waived in writing
in accordance with the terms of this Agreement and shall be payable in cash
upon demand. Neither Agent nor Lenders
shall be required to (i) accelerate the maturity of the Loan, (ii) terminate
any Commitment or (iii) exercise any other rights or remedies under the
Loan Documents or applicable law in order to charge interest hereunder at the
Default Rate.
3
2.4
Voluntary Prepayments
(a)
Subject
to the terms of this Section 2.4 and Section 3.2, Borrower may prepay
to Agent, for the ratable benefit of the applicable Lenders, the outstanding
principal amount of the Loan, in whole or in part, at any time or from time to
time.
(b)
If
Borrower elects to make any prepayment of the Loan pursuant to this Section 2.4,
Borrower Funds Administrator shall give irrevocable notice of such prepayment
to Agent not less than three (3) Business Days prior to the date such
prepayment is to be made, specifying (i) the date on which such prepayment
is to be made, (ii) the amount of such prepayment and (iii) the
amount of the Prepayment Premium, if any, and accrued interest applicable to
such prepayment. Such notice shall be
accompanied by a certificate of a Responsible Officer of Borrower Funds
Administrator on behalf of Borrower Funds Administrator stating that such
payment is being made in compliance with this Section 2.4. Notice of prepayment having been so given,
the aggregate principal amount of the Loan so specified to be prepaid, together
with accrued interest thereon and the applicable Prepayment Premium, shall be
due and payable on the prepayment date set forth in such notice.
(c)
Any
voluntary partial prepayment with respect to the Loan shall be applied in the
following order of priority to the payment of:
(i) first, to all then unpaid fees and expenses of Agent under the
Loan Documents, (ii) second, to all then unpaid fees and expenses of
Lenders under the Loan Documents, including any Prepayment Premium, (iii) third
to any and all Obligations that are due and owing pursuant to the terms of the
Loan Documents, except the principal balance of the Loan and accrued and unpaid
interest thereon; (iv) fourth to accrued and unpaid interest on the
portion of the principal balance of the Loan being prepaid; and (v) fifth
to the principal balance of the Loan, which shall be applied to the scheduled
installments thereof in inverse order of maturities.
(d)
All
prepayments made pursuant to this Section 2.4 shall be designated as a
prepayment pursuant to this Section 2.4 on the applicable wire. The amount of any partial prepayment of the
principal balance of the Loan shall not be less than $100,000 or, if in excess
thereof, in integral multiples of $100,000 in excess thereof.
2.5
Mandatory Payments and Prepayments
(a)
The
principal amount of the Loan shall be paid in installments on the dates and in
the respective amounts set forth below:
|
|
|
Amount of
|
|
|
Payment Date
|
|
Principal Payment
|
|
|
|
|
|
|
|
January 1, 2006
|
|
$
|
250,000
|
|
|
April 1, 2006
|
|
$
|
250,000
|
|
|
July 1, 2006
|
|
$
|
250,000
|
|
|
October 1, 2006
|
|
$
|
250,000
|
|
|
January 1, 2007
|
|
$
|
500,000
|
|
|
April 1, 2007
|
|
$
|
500,000
|
|
|
July 1, 2007
|
|
$
|
500,000
|
|
|
October 1, 2007
|
|
$
|
500,000
|
|
|
January 1, 2008
|
|
$
|
625,000
|
|
|
April 1, 2008
|
|
$
|
625,000
|
|
|
July 1, 2008
|
|
$
|
625,000
|
|
|
October 1, 2008
|
|
$
|
625,000
|
|
|
January 1, 2009
|
|
$
|
500,000
|
|
|
April 1, 2009
|
|
$
|
500,000
|
|
|
July 1, 2009
|
|
$
|
500,000
|
|
|
October 1, 2009
|
|
$
|
500,000
|
|
|
January 1, 2010
|
|
$
|
250,000
|
|
|
April 1, 2010
|
|
$
|
250,000
|
|
|
July 1, 2010
|
|
$
|
250,000
|
|
|
October 1, 2010
|
|
$
|
250,000
|
|
4
(b)
The
then remaining unpaid principal amount of the Loan and all other Obligations
under or in respect of the Loan shall be due and payable in full, if not
earlier in accordance with this Agreement, on the Maturity Date.
(c)
If a
Change of Control occurs that has not been consented to in writing by Agent
prior to consummation thereof, or any Credit Party or any Subsidiary of any
Credit Party (other than the Revolving Borrower and its Subsidiaries), whether
in a single transaction or a series of transactions:
(i)
sells or transfers any Property (other than
any Qualified Asset Sale);
(ii)
sells or issues any Capital Stock (excluding
sales or issuances of Permitted Securities to the extent no Default or Event of
Default has occurred and is continuing or would be caused thereby or result
therefrom, but specifically including any sale or issuance of Capital Stock
pursuant to a Public Offering);
(iii)
receives any property damage insurance award
or any other insurance proceeds of any kind, including, without limitation,
proceeds from any life insurance (including the Life Insurance Policy) or
business interruption insurance in excess of $100,000; or
(iv)
incurs any Indebtedness other than Permitted
Indebtedness.
then Borrower shall prepay the Loan and the other Obligations in an
amount equal to one hundred percent (100%) of the Net Proceeds received by the
Credit Parties and their Subsidiaries in connection therewith (or such lesser
amount as is required to irrevocably pay in cash in full the Obligations)),
which prepayment shall be applied thereto in accordance with Section 2.5(e);
provided, that, the foregoing notwithstanding, if Borrower reasonably expects
the Net Proceeds of any such sale or transfer in respect of the foregoing
clause (i) or any such property damage
5
insurance award under the foregoing clause (iii), or a portion thereof,
to be reinvested in productive assets of a kind then used or usable in the
Business, and, within one hundred eighty (180) days after such occurrence,
enters into a binding commitment to make such reinvestment (which reinvestment
shall be made within two hundred seventy (270) days after such occurrence),
then Borrower shall deliver an amount equal to such Net Proceeds, or applicable
portion thereof, to Agent to be held by Agent in a cash collateral account
pending such reinvestment.
(d)
On
the day of the delivery to Agent of Borrower’s annual audited financial
statements in accordance with the terms of this Agreement, but in any event no
later than the ninetieth (90
th
) day after the end of each fiscal
year of Borrower (commencing with the fiscal year of Borrower ending December 31,
2006), Borrower shall furnish to Agent a written calculation of Excess Cash
Flow for such fiscal year and deliver to Agent, for distribution to Lenders, an
amount equal to fifty percent (50%) of such Excess Cash Flow, for application
to the Loan and the other Obligations in accordance with Section 2.5(e).
(e)
All
prepayments pursuant to Sections 2.5(c), and 2.5(d) shall be applied in
the following order of priority: (i) first, to all then unpaid fees and
expenses of Agent under the Loan Documents, (ii) second, to all then
unpaid fees and expenses of Lenders under the Loan Documents, including any
Prepayment Premium, (iii) third to any and all Obligations that are due
and owing pursuant to the terms of the Loan Documents, except the principal
balance of the Loan and accrued and unpaid interest thereon; (iv) fourth
to accrued and unpaid interest on the portion of the principal balance of the
Loan being prepaid or required to be prepaid; and (v) fifth to the principal
balance of the Loan, which shall be applied to the scheduled installments
thereof in inverse order of maturities.
2.6
Promise to Pay; Manner of Payment.
Borrower
absolutely and unconditionally promises to pay, when due and payable pursuant
hereto, principal, interest and all other amounts and Obligations payable
hereunder and under any other Loan Document, without any right of rescission
and without any deduction whatsoever, including any deduction for set-off,
recoupment or counterclaim, notwithstanding any damage to, defects in or
destruction of the Collateral or any other event, including obsolescence of any
property or improvements. Any payments
made by the Credit Parties shall be made by wire transfer on the date when due,
without offset, deduction or counterclaim, in Dollars, in immediately available
funds to such account as may be indicated in writing by Agent to Borrower from
time to time. Any such payment received
after 2:00 p.m. (New York City time) on any date shall be deemed received
on the next succeeding Business Day, and any applicable interest or fees shall
continue to accrue in respect thereof.
Whenever any payment under any Loan Document shall be stated to be due
or shall become due and payable on a day other than a Business Day, the due
date thereof shall be extended to, and such payment shall be made on, the next
succeeding Business Day, and such extension of time in such case shall be
included in the computation of payment of any interest (at the interest rate in
effect during such extension) and/or fees, as the case may be.
6
2.7
Payments by Agent
Should
any Obligation required to be paid under any Loan Document remain unpaid beyond
any applicable cure period, such Obligation may be paid by Agent, on behalf of
Lenders. Any sums expended or amounts
paid by Agent and/or Lenders as a result of any Credit Party’s failure to pay,
perform or comply with any Loan Document or any of the Obligations may be
charged to Borrower’s account and added to the Obligations.
2.8
Computation of Interest and Fees; Lawful
Limits
All
interest and fees owing from time to time under the Loan Documents shall be
computed on the basis of a year of 360 days and for the actual number of days
elapsed in each calculation period, as applicable. In no contingency or event whatsoever,
whether by reason of acceleration or otherwise, shall the interest and other
charges paid or agreed to be paid to Agent, for the benefit of Lenders, or
Lenders for the use, forbearance or detention of money hereunder exceed the
maximum rate permissible under applicable law which a court of competent
jurisdiction shall, in a final determination, deem applicable hereto. If, due to any circumstance whatsoever,
fulfillment of any provision hereof, at the time performance of such provision
shall be due, shall exceed any such limit, then, the obligation to be so
fulfilled shall be reduced to such lawful limit, and, if Agent or Lenders shall
have received interest or any other charges of any kind which might be deemed
to be interest under applicable law in excess of the maximum lawful rate, then
such excess shall be applied first to any unpaid fees and charges hereunder,
then to the unpaid principal balance owed by Borrower hereunder, and if the
then remaining excess interest is greater than the previously unpaid principal
balance, Agent and Lenders shall promptly refund such excess amount to Borrower
and the provisions hereof shall be deemed amended to provide for such
permissible rate. The terms and
provisions of this Section 2.8 shall control to the extent any other
provision of any Loan Document is inconsistent herewith.
2.9
Reallocation of Commitments
The Credit Parties, Agent and the Lenders
agree and acknowledge that, on terms and conditions satisfactory to each
Borrower, Revolving Borrower, Agent, each of the Lenders, and the Revolving
Lender, any Commitment of any Lender hereunder and the Revolving Lender under
the Revolving Loan Agreement for the benefit of any Borrower or Revolving Borrower
may be reallocated and adjusted from time to time with any other Commitment or
Commitments of such Lender under this Agreement or Revolving Lender for the
benefit of the other Borrower or Revolving Borrower, and the outstanding Loans
thereunder and hereunder reclassified or re-categorized in connection therewith
and herewith to evidence or effectuate any such reallocation and adjustment,
without constituting a novation, for any purpose, including, without
limitation, for purposes of accurately reflecting each Borrower’s or Revolving
Borrower’s relative contribution to, or allocable amount or share of, Evolving
System’s Consolidated EBITDA, earnings, revenue, assets and/or
liabilities. For clarification purposes,
any such reallocation and adjustment shall require the written consent of each
Borrower, Revolving Borrower, Agent, each Lender and Revolving Lender and shall
not, in any event, result in a reduction of the aggregate Commitments contained
herein and in the Revolving Loan Agreement.
7
III.
FEES
3.1
Commitment Fee
On
the Closing Date, Borrower shall pay to Agent, for the ratable benefit of
Lenders, a nonrefundable commitment fee equal to One Hundred Twenty Seven
Thousand Five Hundred Dollars ($127,500), which commitment fee shall be deemed
fully earned and due and payable on the Closing Date and in addition to any
other fee from time to time payable under the Loan Documents.
3.2
Prepayment Premium
.
If
the Obligations are accelerated as a result of either (i) an Event of
Default under Article VIII(a), (g)(ii) – (g)(v) or (h) or (ii) an
Event of Default resulting from violation of any of the financial covenants set
forth in Exhibit B-1 hereto or Borrower otherwise prepays, or is required
to prepay, the Loan in full or in part (other than as a result of any mandatory
prepayment under Sections 2.5(c)(iii) or 2.5(d)), then, on the effective
date of such acceleration or prepayment, Borrower shall pay to Agent, for the
ratable benefit of Lenders (in addition to the then outstanding principal,
accrued interest and other Obligations owing pursuant to the terms of this
Agreement and any other Loan Document), as yield maintenance for the loss of
bargain and not as a penalty, an amount equal to the Prepayment Premium (prior
to giving effect to any payment of Obligations as a result thereof). For purposes of determining the Prepayment
Premium, if any, due upon acceleration of the Obligations, such acceleration
shall be deemed to have occurred on the date the Event of Default giving rise
to such acceleration first occurred.
IV.
CONDITIONS PRECEDENT
4.1
Conditions to Funding of the Loan and the
Closing
The
obligations of Agent and Lenders to consummate the transactions contemplated
herein and to fund the Loan in each case are subject to the delivery of all
documents listed on, the taking of all actions set forth on and the
satisfaction of each of the conditions precedent listed on Exhibit D
hereto, all in a manner, form and substance satisfactory to Agent in its sole
discretion.
V.
REPRESENTATIONS AND
WARRANTIES
Each
Credit Party, jointly and severally, represents and warrants to the Lender
Parties as follows as of the Closing Date and except as set forth in the
disclosure schedule corresponding to such Section:
5.1
Organization and Authority
Each
Credit Party, and each Subsidiary of each Credit Party, is a corporation,
partnership or limited liability company, or other form of entity, as the case
may be, duly organized or formed, validly existing and in good standing (to the
extent such concept applies) under the laws of its jurisdiction of organization
or formation. Each Credit Party, and
each Subsidiary of each Credit Party, (a) has all requisite corporate,
partnership, limited liability company or other type
8
of entity, as the case may be, power and authority to own its
Properties and carry on its business as now being conducted and as contemplated
in the Loan Documents, the Revolving Loan Documents and the Related Documents, (b) is
duly qualified and licensed to do business in and in good standing (to the
extent such concept applies) in each jurisdiction where the failure so to
qualify or be licensed or qualified would reasonably be expected to result in a
Material Adverse Effect, and (c) has all requisite corporate, partnership,
limited liability company or other type of entity, as the case may be, power
and authority (i) to execute, deliver and perform the Loan Documents, the
Revolving Loan Documents and the Related Documents to which it is a party, (ii) with
respect to Borrower, to borrow hereunder, (iii) to consummate the
transactions contemplated by the Loan Documents, the Revolving Loan Documents
and the Related Documents and (iv) to grant the Liens pursuant to the
Security Documents to which it is a party.
5.2
Loan Documents, Revolving Loan Documents and
Related Documents
The
execution, delivery and performance by each Credit Party of the Loan Documents,
the Revolving Loan Documents and the Related Documents to which it is a party,
and the consummation by such Credit Party of the transactions contemplated
thereby, (a) have been duly authorized by all requisite corporate,
partnership, limited liability company or other form of entity, as the case may
be, action of such Credit Party, and such Loan Documents, Revolving Loan
Documents and Related Documents to which it is a party have been duly executed
and delivered by or on behalf of such Credit Party; (b) do not violate any
provisions of (i) any applicable law, statute, rule, regulation, ordinance
or tariff, (ii) any order, injunction, writ or decree of any Governmental
Authority binding on such Credit Party or any of their respective Properties,
or (iii) the Organizational Documents of such Credit Party, or any
agreement between such Credit Party and its shareholders, members, partners or
equity owners or, to the knowledge of the Credit Parties, among any such
shareholders, members, partners or equity owners; (c) are not in conflict
with, and do not result in a breach or default of or constitute an event of
default, or an event, fact, condition or circumstance which, with notice or
passage of time, or both, would constitute or result in a conflict, breach,
default or event of default under, any indenture, agreement or other instrument
to which such Credit Party is a party, or by which the Properties of such
Credit Party are bound, the effect of which would reasonably be expected to
result in, either individually or in the aggregate, a Material Adverse Effect; (d) except
as contemplated or expressly permitted by the Loan Documents and the Revolving
Loan Documents, will not result in the creation or imposition of any Lien of
any nature upon any of the Collateral or other material Properties of any
Credit Party; and (e) except for filings in connection with the perfection
and/or registration of the Liens created by the Security Documents, filings
required to be made by Evolving Systems with the SEC, as defined herein, under
the Securities Exchange Act of 1934, as amended, and rules and regulations
thereunder, and consents, approvals, authorizations, filings, registrations and
qualifications that have been obtained, made or done, do not require the
consent, approval or authorization of, or filing, registration or qualification
with, any Governmental Authority or any other Person. Each of the Loan Documents, the Revolving
Loan Documents and the Related Documents to which each Credit Party, is a party
constitutes the legal, valid and binding obligation of such Credit Party,
enforceable against such Credit Party in accordance with its terms, subject to
the effect of any applicable bankruptcy, moratorium, insolvency, reorganization
or other similar law affecting the enforceability of creditors’ rights
generally and to the effect of general principles of equity which may limit the
availability of equitable remedies (whether in a proceeding at law or in
equity).
9
5.3
Subsidiaries, Capitalization and Ownership
Interests
As
of the Closing Date, no Credit Party has any Subsidiaries other than those
Persons listed as Subsidiaries on
Schedule 5.3
.
Schedule 5.3
states the
authorized and issued capitalization of each Credit Party, the number and class
of equity securities and/or ownership, voting or partnership interests issued
and outstanding of such Credit Party, the number and class of Capital Stock
authorized and issued pursuant to each employee stock option plan and stock
purchase plan and, except as to the holders of the common stock of Evolving
Systems and Capital Stock issued pursuant to employee stock option plans and
stock purchase plans, the beneficial and record owners thereof (including
options, warrants, convertible notes and other rights to acquire, or exchangeable
or exercisable for, any of the foregoing) as of the Closing Date. Except as listed on
Schedule 5.3
,
the outstanding equity securities and/or ownership, voting or partnership
interests of each Credit Party have been duly authorized and validly issued and
are fully paid and nonassessable and each Credit Party listed on
Schedule 5.3
owns beneficially and of record all of the equity securities it is listed as
owning free and clear of any Liens other than Liens created by the Security
Documents and Permitted Liens.
Schedule 5.3
lists the directors and managers of each Credit Party as of the Closing
Date. Except as listed on
Schedule 5.3
,
no Credit Party (a) owns any interest or participates or engages in any
joint venture, partnership or similar arrangements with any Person, (b) is
a party to or has knowledge of any agreements restricting the transfer of its
equity securities, excluding the equity securities of Evolving Systems, (c) has
issued any rights which can be convertible into or exchangeable or exercisable
for any of its equity securities, or any rights to subscribe for or to
purchase, or any options for the purchase of or any rights of pre-emption or
conversion of, or any agreements providing for the issuance (contingent or
otherwise) of, or any calls, or other commitments or claims of any character
relating to, any of its equity securities or any securities convertible into or
exchangeable or exercisable for any of its equity securities and (d) is
subject to any obligation (contingent or otherwise) to repurchase or otherwise
acquire, repay, redeem or retire any of its equity securities or other
convertible rights or options or debt securities. No Credit Party has any stock appreciation
rights, phantom stock plan or similar rights or obligations outstanding.
5.4
Properties
Each
Credit Party is the sole owner and has good, valid and marketable title to, or
a valid leasehold interest in, license of, or right to use, all of its material
Properties, whether personal or real, in each instance, necessary or used in
the Ordinary Course of Business, free and clear of all Liens other than
Permitted Liens. All material tangible
personal Property of each Credit Party is in good repair, working order and
condition (normal wear and tear excepted) and is suitable and adequate for the
uses for which they are being used or are intended.
5.5
Other Agreements
Other
than as listed in
Schedule 5.5
, no Credit Party is (a) a party
to any judgment, order or decree or any agreement, document or instrument, or
subject to any restriction, which adversely affects its ability to grant a
security interest in the Collateral, take actions necessary to perfect the
Lender’s Liens, execute and deliver, or perform its payment, guaranty,
indemnification, release, waiver, and any material obligations under, any Loan
Document, Revolving Loan Document or Related Document to which it is a party or
to pay the Obligations,
10
(b) in default in any material respect in the performance,
observance or fulfillment of any obligation, covenant or condition contained in
any Related Document, nor is there any event, fact, condition or circumstance
which, with notice or passage of time or both, would constitute or result in a
material conflict, breach, default or event of default under, any of the Related
Documents, (c) in default in the performance, observance or fulfillment of
any obligation, covenant or condition contained in any other agreement,
document or instrument to which it is a party or to which any of its Properties
are subject, which default would reasonably be expected to result in a Material
Adverse Effect, nor is there any event, fact, condition or circumstance which,
with notice or passage of time or both, would constitute or result in a conflict,
breach, default or event of default under, any of the foregoing which would
reasonably be expected to result in a Material Adverse Effect, or (d) a
party or subject to any agreement, document or instrument with respect to, or
obligation to pay any, service or management fee to an Affiliate with respect
to, the ownership, operation, leasing or performance of any of its Business
other than the Cross-License Agreements and Transfer Pricing Agreements.
5.6
Litigation
Except
as set forth on
Schedule 5.6
, (i) there are no actions, suits,
or proceedings pending against any Credit Party, (ii) to the knowledge of
the Credit Parties, there are no investigations pending against any Credit
Party and (iii) to the knowledge of the Credit Parties, there are no actions,
suits, investigations or proceedings threatened against any Credit Party that, in
each case, (a) questions or would reasonably be expected to prevent the
validity of any of the Loan Documents, Revolving Loan Documents or Related
Documents or the right of such Credit Party to enter into any Loan Document,
any Revolving Loan Document or any Related Document to which it is a Party or
to consummate the transactions contemplated thereby, or (b) would
reasonably be expected to result in, either individually or in the aggregate, a
Material Adverse Effect. Except as
listed on
Schedule 5.6
, no Credit Party is a party or subject to
any order, writ, injunction, judgment or decree of any Governmental Authority.
5.7
Environmental Matters
Each
Credit Party is, and the operations of each Credit Party are, in compliance
with all applicable Environmental Laws in all material respects. No Credit Party has been notified in writing of
any action, suit, proceeding or investigation (a) relating in any way to
compliance by or liability of such Credit Party under any Environmental Laws, (b) which
otherwise deals with any Hazardous Substance or any Environmental Law, or (c) which
seeks to suspend, revoke or terminate any license, permit or approval necessary
for the generation, handling, storage, treatment or disposal of any Hazardous
Substance.
5.8
Tax Returns; Governmental Reports
Except
as set forth in Schedule 5.8, each Credit Party (a) has filed all
federal and all material state, foreign and local tax returns and other
material reports which are required by law to be filed by such Credit Party,
and (b) has paid all taxes, assessments, fees and other governmental
charges, including, without limitation, payroll and other employment related
taxes, in each case that are due and payable, except for items that such Credit
Party currently is
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contesting in good faith by appropriate proceedings and for which
adequate reserves have been established in accordance with GAAP and no notice
of Lien has been filed or recorded.
5.9
Financial Statements and Reports
All
financial statements relating to any Credit Party that have been and hereafter
may be delivered to Agent or any Lender by any Credit Party (a) are
consistent with the books of account and records of such Credit Party, (b) have
been prepared in accordance with GAAP on a consistent basis throughout the
indicated periods, subject to, in the case of interim unaudited financial
statements, the lack of footnote disclosure and normal year-end adjustments,
and (c) present fairly in all material respects the consolidated financial
position and results of operations of such Credit Party and its consolidated
Subsidiaries at the dates and for the relevant periods indicated in accordance
with GAAP on a basis consistently applied.
Except as (a) listed on
Schedule 5.9
and (b) permitted
under this Agreement and not required to be disclosed on a Credit Party’s
financial statements under GAAP, the Credit Parties have no material obligations
or liabilities of any kind that are not disclosed in such financial statements,
and since the date of the most recent financial statements submitted to Agent
and Lenders, there has not occurred any Material Adverse Effect or, to Credit
Parties’ knowledge, any event or condition that would reasonably be expected to
result in a Material Adverse Effect.
5.10
Compliance with Law; ERISA; Business
(a)
Except
as set forth on
Schedule 5.10(c)
, each Credit Party (a) is in
compliance with all laws, statutes, rules, regulations, ordinances and tariffs
of any Governmental Authority applicable to such Credit Party, the Business
and/or such Credit Party’s Properties or operations, including, without
limitation, ERISA and any other laws or regulations pertaining to the Business,
and (b) is not in violation of any order of any Governmental Authority or
other board or tribunal, except, in the case of both (a) and (b), where
any such noncompliance or violation would not reasonably be expected to result
in, either individually or in the aggregate, a Material Adverse Effect. There is no event, fact, condition or
circumstance which, with notice or passage of time, or both, would constitute
or result in any noncompliance with, or any violation of, any of the foregoing,
in each case except where any such noncompliance or violation would not
reasonably be expected to result in, either individually or in the aggregate, a
Material Adverse Effect.
(b)
Evolving
Systems has filed all material reports, schedules, forms, statements and other
documents (including exhibits and other information incorporated therein) with
the U.S. Securities and Exchange Commission (“SEC”) required to be filed by
Evolving Systems since December 31, 2002 (such documents, the “SEC
Documents”). No Subsidiary of Evolving Systems is required to file, or files,
any form, report or other document with the SEC or similar foreign Governmental
Authority regulating public issuance of securities. As of their respective
dates, the SEC Documents complied in all material respects with the
requirements of the Securities Act, or the Exchange Act, as the case may be,
applicable to such SEC Documents, and none of the SEC Documents contained any
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not materially
misleading as of their respective dates; provided that notwithstanding anything
else contained in this
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Agreement or any Loan
Document, none of the Credit Parties make any representation, warranty or
guaranty as to any projections furnished to Agent or the Lenders (except that
such projections have been prepared by the applicable Credit Party or
Subsidiary of a Credit Party on the basis of assumptions which were believed to
be reasonable as of the date of such projections in light of current and
reasonably foreseeable business conditions).
The financial statements of Evolving Systems included in the SEC
Documents comply as to form in all material respects with applicable accounting
requirements and the published rules and regulations of the SEC with
respect thereto, have been prepared in accordance with GAAP (except, in the
case of unaudited statements, as permitted by Form 10-Q of the SEC)
applied on a consistent basis during the periods involved (except as may be
indicated in the notes thereto) and fairly present in all material respects the
consolidated financial position of Evolving Systems and its consolidated
Subsidiaries as of the dates thereof and the consolidated results of their
operations and cash flows for the periods then ended (subject, in the case of
unaudited statements, to the absence of footnote disclosure and to normal and
recurring year-end audit adjustments).
(c)
Except
as set forth on Schedule 5.10(c), no Credit Party has (i) engaged in
any “Prohibited Transactions,” as defined in Section 406 of ERISA and Section 4975
of the Internal Revenue Code of 1986, as amended, and the rules and
regulations promulgated thereunder, (ii) failed to meet any applicable
minimum funding requirements under Section 302 of ERISA in respect of its
plans and no funding requirements have been postponed or delayed, (iii) knowledge
of any event or occurrence which would cause the Pension Benefit Guaranty
Corporation to institute proceedings under Title IV of ERISA to terminate any
of its employee benefit plans, (iv) any fiduciary responsibility under
ERISA for investments with respect to any plan existing for the benefit of
Persons other than its employees or former employees, or (v) withdrawn,
completely or partially, from any multi-employer pension plans so as to incur
liability under the MultiEmployer Pension Plan Amendments of 1980. With respect to each Credit Party, there
exists no event described in Section 4043 of ERISA, excluding Subsections
4043(b)(2) and 4043(b)(3) thereof, for which the thirty (30) day
notice period contained in 12 C.F.R. § 2615.3 has not been waived. Each Credit Party has maintained all material
records required to be maintained by any applicable Governmental
Authority. Intermediate Holdco has not
engaged, does not presently engage and does not propose to engage in any
business other than the ownership of the equity securities of Evolving Systems
Holdings Limited, a company organized under the laws of England and Wales, and
activities incidental thereto.
5.11
Intellectual Property
(a)
Except
as set forth on
Schedule 5.11
, as of the Closing Date, or as
thereafter otherwise disclosed in writing to Agent from time to time, no Credit
Party or Subsidiary of a Credit Party owns or licenses any material patents,
patent applications, registered trademarks, trademark applications, trade
names, registered service marks, service mark applications, registered
copyrights or copyright applications other than off-the-shelf licenses readily
available in the open market. Each
Credit Party and each Subsidiary of a Credit Party owns directly, or is
entitled to use by license or otherwise, all Intellectual Property necessary
for or material to the conduct of such Credit Party’s business (such
Intellectual Property, the “Necessary Intellectual Property”). The ownership or license interests of all of
the Credit Parties’ and each of their Subsidiaries’ interests in the items
listed on
Schedule 5.11
as of the Closing Date are and, at all
times after the Closing Date (except to the extent no longer deemed
13
necessary for or material to
the conduct of the business of the Credit Parties and their Subsidiaries in the
good faith business judgment of the Credit Parties) will be: (a) subsisting
and have not been adjudged invalid or unenforceable, in whole or part; and (b) valid,
in full force and effect and not in known conflict with the rights of any
Person. Each Credit Party and Subsidiary
of a Credit Party has made all filings and recordations necessary in the
exercise of reasonable business judgment to protect its ownership or license interest
in the Necessary Intellectual Property of such Credit Party or Subsidiary of a
Credit Party in the United States Patent and Trademark Office, and the United
States Copyright Office and in corresponding offices throughout the world, as
appropriate. Each Credit Party and
Subsidiary of a Credit Party has performed all acts and has paid and will
continue to pay all required fees and taxes to maintain each and every item of
its ownership or license interest in Necessary Intellectual Property in full
force and effect, except such items of its Necessary Intellectual Property as
are no longer deemed necessary for or material to the conduct of its businesses
in its reasonable business judgment. As
of the Closing Date, no litigation is pending or, to the knowledge of each
Credit Party, threatened against any Credit Party or Subsidiary thereof, which
contains allegations respecting the validity, enforceability, infringement or
ownership of the interest of any Credit Party or Subsidiary of a Credit Party
in the Necessary Intellectual Property.
No Credit Party or Subsidiary of a Credit Party is in breach of or
default under the provisions of any of the licenses under which it has obtained
rights to license any Necessary Intellectual Property, nor is there any event,
fact, condition or circumstance which, with notice or passage of time or both,
would constitute or result in a conflict, breach, default or event of default
under, any such license agreement which would reasonably be expected to result
in, either individually or in the aggregate, a Material Adverse Effect. All personnel (including employees, agents,
consultants and contractors) of the Credit Parties and each Subsidiary thereof,
who have contributed to or participated in the conception or development of the
Necessary Intellectual Property used in the business of the Credit Parties and
their Subsidiaries either (i) have been a party to a “work-for-hire” or
other arrangements or agreements with the Credit Parties or their Subsidiaries
in accordance with applicable international, national and other applicable laws
that has accorded the Credit Parties and their Subsidiaries full, effective,
exclusive and original ownership of all tangible and intangible property and
intellectual property rights thereby arising or relating thereto, or (ii) have
executed appropriate instruments of assignment in favor of the Credit Parties
or their Subsidiaries as assignee that have conveyed to such Person effective
and exclusive ownership of all intellectual property rights thereby arising and
related thereto.
5.12
Permits; Labor
Each
Credit Party is in compliance with, and has, all Permits necessary or required
by applicable law or Governmental Authorities for the operation of its Business
as presently conducted and as proposed to be conducted, and for the execution,
delivery and performance by, and enforcement against, such Credit Party of each
Loan Document, Revolving Loan Document and Related Document, except where
noncompliance, violation or lack thereof would not reasonably be expected to
result in, either individually or in the aggregate, a Material Adverse
Effect. Except as listed in
Schedule 5.12
,
(a) there is not any event, fact, condition or circumstance which, with
notice or passage of time or both, would constitute or result in a conflict,
breach, default or event of default under, any of the foregoing Permits, in
each case which would reasonably be expected to result in, either individually
or in the aggregate, a
14
Material Adverse Effect, and (b) no Credit Party is nor has been
involved in any group labor dispute, strike, walkout or union organization.
5.13
No Default; Solvency
No
Default or Event of Default exists. Each
Credit Party is and, after giving effect to the transactions and the
Indebtedness contemplated by the Loan Documents and the transactions
contemplated by the Revolving Loan Document and the Related Documents, will be
Solvent.
5.14
Insurance
All
insurance policies of the Credit Parties or otherwise relating to their
Properties as of the Closing Date are listed and described on
Schedule 5.14
.
5.15
Margin Stock; Regulated Entities; Tax
Regulations; OFAC; Patriot Act
(a)
The
Credit Parties are not engaged in the business of extending credit for the
purpose of purchasing or carrying any “margin stock” or “margin security”
(within the meaning of Regulations T, U or X issued by the Board of Governors
of the Federal Reserve System), and no proceeds of the Loan will be used to
purchase or carry any margin stock or margin security or to extend credit to
others for the purpose of purchasing or carrying any margin stock or margin
security within the meaning of such Regulations T, U or X.
(b)
No
Credit Party or any Person controlling any Credit Party is (a) an “investment
company” within the meaning of the Investment Company Act of 1940; or (b) subject
to regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, the Interstate Commerce Act, any state public utilities code, or any
other Federal or state statute or regulation limiting its ability to incur
Indebtedness.
(c)
No
Credit Party intends to treat the Loan, the Commitments and/or any letters of
credit and related transactions as being a “reportable transaction” (within the
meaning of Treasury Regulation Section 1.6011-4).
(d)
No
Credit Party (i) is a Person whose property or interest in property is
blocked or subject to blocking pursuant to Section 1 of Executive Order
13224 of September 23, 2001 Blocking Property and Prohibiting Transactions
With Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg.
49079 (2001)), (ii) engages in any dealings or transactions prohibited by Section 2
of such executive order, or is otherwise associated with any such Person in any
manner violative of such Section 2, or (iii) is a Person on the list
of Specially Designated Nationals and Blocked Persons or subject to the
limitations or prohibitions under any other U.S. Department of Treasury’s
Office of Foreign Assets Control regulation or executive order (“OFAC”).
(e)
Each
Credit Party is in compliance, in all material respects, with the Patriot
Act. No part of the proceeds of the Loan
will be used, directly or indirectly, for any payments to any governmental
official or employee, political party, official of a political party, candidate
for political office, or anyone else acting in an official capacity, in order
to obtain,
15
retain or direct business or
obtain any improper advantage, in violation of the United States Foreign
Corrupt Practices Act of 1977, as amended.
5.16
Broker’s or Finder’s Commissions
Except
as set forth on Schedule 5.16 no broker’s, finder’s or placement fee or
commission is or will be payable to any broker, investment banker or agent
engaged by any Credit Party or any of its officers, directors or agents with
respect to the transactions contemplated by this Agreement, the other Loan
Documents, the Revolving Loan Documents and the Related Documents, except for
fees payable to Agent and Lenders.
5.17
Disclosure
No
Loan Document or any other agreement, document, written report, certificate or
statement furnished to Agent or any Lender by or on behalf of any Credit Party
in connection with the transactions contemplated by or pursuant to the Loan
Documents, nor any representation or warranty made by any Credit Party in any
Loan Document, contains any untrue statement of a material fact or omits to
state any material fact necessary to make the factual statements therein taken
as a whole not materially misleading as of the time made or delivered in light
of the circumstances under which it was made or furnished; provided that
notwithstanding anything else contained in this Agreement or any Loan Document,
none of the Credit Parties make any representation, warranty or guaranty as to
any projections furnished to Agent or the Lenders (except that such projections
have been prepared by the applicable Credit Party or Subsidiary of a Credit
Party on the basis of assumptions which were believed to be reasonable as of
the date of such projections in light of current and reasonably foreseeable
business conditions).
5.18
Incorporation of Certain Representations and
Warranties
As
of the Closing Date and any other date on which representations and warranties
are otherwise remade or deemed remade hereunder, (i) each of the
representations and warranties contained in the Related Documents made by any
Credit Party is true and correct in all material respects (except to the extent
already qualified by materiality, in which case it shall have been true and
correct in all respects and shall not have been false or misleading in any
respect taken as a whole and in light of the circumstances under which it was
made or furnished) and (ii) to the knowledge of each Credit Party, each of
the representations and warranties contained in the Related Documents made by
Persons other than a Credit Party, Agent or any Lender is true and correct in
all material respects.
5.19
Survival
Each
Credit Party agrees that the representations and warranties contained in the
Loan Documents are made with the knowledge and intention that Agent and Lenders
are relying and will rely thereon. All
such representations and warranties will survive the execution and delivery of
this Agreement, the Closing and the funding of the Loan.
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VI.
AFFIRMATIVE COVENANTS
Each
Credit Party, jointly and severally, covenants and agrees that, until the full performance
and satisfaction, and indefeasible payment in full in cash, of all the
Obligations (other than contingent indemnification Obligations to the extent no
claim giving rise thereto has been asserted) and the termination of the
Commitments:
6.1
Reporting, Collateral and Other Information
(a)
Reporting
. The Credit Parties shall maintain, and shall
cause each of their Subsidiaries to maintain a system of accounting established
and administered in accordance with sound business practices to permit the
preparation of financial statements in conformity with GAAP (provided that
interim financial statements shall not be required to have footnote disclosure
and may be subject to normal year-end adjustments).
(b)
The
Credit Parties shall furnish to Agent and each Lender, at the times, for the
periods and otherwise in accordance with the terms of Exhibit C attached
hereto, all statements (financial or otherwise), budgets, projections, reports,
listings, calculations, certificates, notices and other materials described on
such Exhibit C-1.
(c)
Collateral Deliverables; Related Actions
. Each
Credit Party shall, and shall cause each other Credit Party to comply with each
of the agreements, covenants and undertakings set forth in Exhibit C-2,
applicable to such Credit Party in accordance with the terms thereof, and
represents and warrants to the Lender Parties that the representations and
warranties thereon contained are true, correct and complete in all material
respects (except to the extent already qualified by materiality, in which case
it shall have been true and correct in all respects) and shall not have been
false or misleading in any respect taken as a whole and in light of the
circumstances under which it was made or furnished.
6.2
Conduct of Business; Maintenance of Existence
and Assets
Each
Credit Party shall, and shall cause each of its Subsidiaries to:
(a)
engage
solely in the Business in accordance with good business practices customary to
its industry, and use commercially reasonable efforts to preserve the goodwill
and business of the customers, suppliers and others having material business
relations with it;
(b)
use
commercially reasonable efforts to collect its Accounts in the Ordinary Course
of Business;
(c)
maintain
and preserve all of its material Properties used or useful in its Business in
good working order and condition (normal wear and tear excepted and except as
may be disposed of in accordance with the terms of the Loan Documents) and from
time to time make all reasonably necessary repairs, renewals and replacements
thereof;
(d)
except
as permitted under Section 7.4(h), maintain and preserve in full force and
effect its organizational existence under the laws of its state or jurisdiction
of incorporation, organization or formation, as applicable;
17
(e)
maintain
and preserve in full force and effect all Permits and qualifications to do
business and remain in good standing (to the extent such concept applies to
such entity) in each jurisdiction in which the ownership or lease of its
property or the nature of its business makes such Permits or qualification
necessary, in each case except as would not reasonably be expected to result
in, either individually or in the aggregate, a Material Adverse Effect; and
(f)
maintain,
comply with and keep in full force and effect and renew its rights in
Intellectual Property except where the non-preservation, non-compliance or loss
of which or failure to maintain would not reasonably be expected to result,
either individually or in the aggregate, in a Material Adverse Effect.
6.3
Compliance with Legal and Other Obligations
Each
Credit Party shall, and shall cause each of its Subsidiaries to:
(a)
comply
with all laws, statutes, rules, regulations, ordinances and tariffs of all
Governmental Authorities applicable to it or its Business, Properties or
operations, except where the failure to comply would not reasonably be expected
to result in, either individually or in the aggregate, a Material Adverse Effect;
(b)
comply
in all material respects with the Securities Act and Exchange Act and the rules promulgated
under such acts in all material respects and make all material filings required
by such acts within the required filing period;
(c)
pay
all taxes, assessments, governmental fees and charges except taxes,
assessments, governmental fees and charges being contested in good faith by
appropriate proceedings diligently prosecuted and against which adequate
reserves are being maintained in accordance with GAAP and, with respect to such
items, all such items do not exceed $250,000 against Persons organized in the
United States in the aggregate at any time or such items do not exceed
$1,500,000 against Persons organized outside the United States in the aggregate
at any time;
(d)
subject
to any subordination provisions in favor of the Lender Parties and/or other
restrictions herein set forth, perform in accordance with its terms each
contract, agreement or other arrangement to which it is a party or by which it
or any of the Collateral is bound, except where the failure to so perform would
not reasonably be expected to result in, either individually or in the
aggregate, a Material Adverse Effect;
(e)
pay
and perform, before the same shall become delinquent and as the same shall be
required to be performed, all of its obligations, liabilities and Indebtedness,
but subject to any subordination provisions contained herein and/or in any
instrument or agreement evidencing or pertaining to such Indebtedness, except where
the failure to so pay or perform would not reasonably be expected to result in,
either individually or in the aggregate, a Material Adverse Effect;
(f)
pay
and perform, before the same shall become delinquent and as the same shall be
required to be performed, but subject to any subordination provisions contained
herein and in the Subordination Agreement, and preserve and enforce all of its
material rights, duties
18
and obligations under each
of the Related Documents and the TSE Purchase Agreement except as provided in Section 7.5(f);
and
(g)
properly
file all reports required to be filed with any Governmental Authority, except
where the failure to file would not reasonably be expected to result in a Material
Adverse Effect.
6.4
Insurance
Each
Credit Party shall or if applicable Evolving Systems shall cause such Credit
Party to (a) ensure that the Life Insurance Policy is fully paid and in
full force and effect at all times; and (b) keep all of its insurable
Properties adequately insured against losses, damages and hazards as are
customarily insured against by businesses engaging in similar activities or the
Business or owning similar Properties and of such types and in such amounts as
are customarily carried under similar circumstances by such other Persons, and
at least the minimum amount required by applicable law and any other agreement
to which such Credit Party is a party or pursuant to which such Credit Party
provides any services, including, without limitation, liability, property and
business interruption insurance, as applicable; provided the amount of business
interruption insurance shall not be less than projected EBITDA for all Credit
Parties and their Subsidiaries on a consolidated basis without duplication for
a period of not less than six (6) months and, in any event, not less than
$1,500,000; and maintain general liability insurance at all times against
liability on account of damage to Persons and Property having such limits,
deductibles, exclusions and co-insurance and other provisions as are customary
for a business engaged in activities similar to those of such Credit Party
under similar circumstances and (c) maintain directors and officers
liability insurance at all times against risks and liabilities customarily
insured; all of the foregoing insurance policies and coverage levels to (i) be
satisfactory to Agent in its Permitted Discretion, (ii) name Agent, for
the benefit of the Lender Parties, as loss payee/mortgagee in respect of property
damage and casualty insurance, additional insured in respect of liability
insurance (excluding errors and omissions insurance and directors and officers
liability insurance) and sole beneficiary of the Life Insurance Policy, and (iii) expressly
provide that they cannot be altered, amended, modified, canceled or terminated
without at least thirty (30) days (ten (10) days in the event of a
termination for nonpayment of premiums) prior written notice to Agent from the
insurer except to add in the Ordinary Course of Business additional customers
as loss payee/mortgagee or additional insured pursuant to this subsection (iii),
and that they inure to the benefit of Agent, for the benefit of the Lender
Parties, notwithstanding any action or omission or negligence of or by such
Credit Party, or any insured thereunder.
Upon request of Agent or any Lender, Borrower shall furnish to Agent,
with sufficient copies for each Lender, at reasonable intervals (but not more
than once per calendar year) a certificate of a Responsible Officer on behalf
of Borrower (and, if requested by Agent, any insurance broker of Borrower)
setting forth the nature and extent of all insurance maintained by Borrower and
its Subsidiaries in accordance with this Section 6.4. Unless Borrower provides Agent with evidence
of the insurance coverage required by this Agreement, Agent may purchase
insurance at Borrower’s expense to protect Agent’s and Lenders’ interests in
the Credit Parties’ Properties. This
insurance may, but need not, protect the Credit Parties’ interests. The coverage that Agent purchases may not pay
any claim that any Credit Party makes or any claim that is made against any
Credit Party in connection with said Property.
Borrower may later cancel any insurance purchased by Agent, but only
after providing Agent with satisfactory evidence to Agent, and
19
written acknowledgment thereof, that Borrower has obtained insurance as
required by this Agreement. If Agent
purchases insurance, Borrower shall be responsible for the costs of that
insurance, including interest and any other charges Agent may impose in
connection with the placement of insurance, until the effective date of the
cancellation or expiration of the insurance.
The costs of the insurance shall be added to the Obligations and payable
on demand. The costs incurred by Agent
of the insurance may be more than the costs of insurance Borrower may be able
to obtain on its own. Any and all
proceeds of the Life Insurance Policy shall be applied to the payment of the Obligations
as provided in this Agreement.
6.5
Inspection; Management Meetings
(a)
Each
Credit Party shall permit the representatives of Agent from time to time during
normal business hours upon reasonable notice to (i) visit and inspect any
of such Credit Party’s and the Subsidiaries of such Credit Parties’s offices or
properties or any other place where Collateral is located to inspect the
Collateral and/or to examine and/or audit all of such Credit Party’s books of
account, records, reports and other papers, (ii) make copies and extracts
therefrom and (iii) discuss such Credit Party’s Business, operations,
prospects, properties, assets, liabilities, condition and/or Accounts with its
officers and, so long as officers and employees of the Credit Party or such Subsidiary
are entitled to be present, independent public accountants (and by this
provision such officers and accountants are authorized to discuss the
foregoing); provided, however, that (x) the Credit Parties shall not be
obligated to reimburse Agent for more than an aggregate of two (2) visits,
inspections, examinations and/or audits under this Section 6.5(a) and
pursuant to the Revolving Loan Agreement (whether any such visit, inspection,
examination or audit includes or covers some or all of the “Credit Parties” and
their respective “Subsidiaries” under and as defined in this Agreement and the
Revolving Loan Agreement) during any fiscal year in which no Event of Default
exists, of which one (1) visit, inspection, examination and/or audit in
which employees and agents of Agent located within North America travel outside
North America, which visits shall, to the extent practicable and appropriate in
the Permitted Discretion of the Agent, be coordinated to occur at the same time
as the semi-annual meetings provided for in clause (b) below (it being
agreed and understood that the Borrower shall be obligated to reimburse Agent
for all such visits, inspections, examinations and audits conducted while any
Event of Default exists), and (y) no notice shall be required to do any of the
foregoing if any Event of Default has occurred and is continuing.
(b)
The
Credit Parties shall cause their senior management to hold meetings with Agent
in person, on a semi-annual basis or more frequently in the Permitted
Discretion of the Agent, to discuss the financial performance and projections
of Evolving Systems and its Subsidiaries.
The format and content of the meetings shall be substantially similar to
the discussion of such matters in meetings of the board of directors of
Evolving Systems. Credit Parties’ shall
reimburse Agent for all reasonable out-of-pocket expenses incurred in
connection with attendance at such meetings.
(c)
Agent and such representatives shall
maintain the confidentiality of all non-public information (whether written or
verbal and whether specifically identified as “confidential”) obtained during
such visits, inspections, examinations, audits or meetings in accordance with Section 12.10.
20
6.6
Use of Proceeds
Borrower
shall use the proceeds from the Loan solely for the following purposes: (i) to refinance a portion of the
existing indebtedness on the Closing Date that was used to pay costs incurred
in purchasing Tertio Telecoms Limited, a seller of operational support systems and
for payment of other costs and expenses incurred in connection with the
negotiation and consummation of the transactions provided for in this Agreement
and the other Loan Documents; and (ii) in compliance with applicable law
and not in violation of this Agreement.
6.7
Further Assurances; Post Closing Deliveries
(a)
Except
as authorized by Agent in its Permitted Discretion, each Credit Party shall,
and shall cause each Credit Party to, within five (5) Business Days after
demand by Agent or Requisite Lenders, take such further actions, obtain such
consents and approvals and duly execute and deliver such further agreements,
assignments, instructions or documents as may be requested in their Permitted
Discretion in form and substance satisfactory to the Agent in its Permitted
Discretion in order to carry out the purposes, terms and conditions of the Loan
Documents and the transactions contemplated thereby, whether before, at or after
the performance and/or consummation of the transactions contemplated hereby or
the occurrence of any Default or Event of Default.
(b)
Without
limiting any other provision of any Loan Document, each Credit Party shall, and
shall cause each of its Subsidiaries to, execute and deliver, or cause to be
executed and delivered, to Agent all agreements, instruments, documents and
other deliveries, and take or cause to be taken all actions, and otherwise
perform, observe and comply with all obligations and covenants, set forth on
Schedule 6.7
hereto within the applicable time periods set forth thereon.
(c)
Each
Credit Party shall, and, except as provided in subsection (e) shall
cause its Subsidiaries to, (i) execute, deliver and/or record any and all
financing statements, continuation statements, stock powers, instruments and
other documents, or cause the execution, delivery and recording of any and all
of the foregoing, that are necessary or required under law or otherwise
requested by Agent in its Permitted Discretion to create, perfect or preserve
the pledge of the Collateral to Agent and the Lien on the Collateral in favor
of Agent, for the benefit of the Lender Parties under the Loan Documents (and
each Credit Party irrevocably grants Agent the right, at Agent’s option, to
file any or all of the foregoing), and (ii) defend the Collateral and the
Lien in favor of Agent, for the benefit of the Lender Parties under the Loan
Documents, against all claims and demands of all Persons (other than Permitted
Liens). Without limiting the generality
of the foregoing and except as provided in subsection (e) or as
otherwise approved in writing by Requisite Lenders, (i) each Guarantor
shall, and each Credit Party shall cause its Subsidiaries (other than the
Borrower) to, guaranty the Obligations of Borrower and grant to Agent, for the
benefit of the Lender Parties under the Loan Documents, a Lien on all of its
Property to secure such guaranty, and (ii) Evolving Systems and each
Credit Party shall grant a first priority Lien (other than with respect to
Property subject to Priority Permitted Liens) on all of its Property (other
than accounts used exclusively for employee payroll and employee benefit and
any other Property that is not required to constitute Collateral pursuant to
the Security Documents) and, without limiting the foregoing, pledge the stock
and other equity interests and
21
securities of each of its
Subsidiaries, in each case to Agent, for the benefit of the Lender Parties, to
secure the Obligations. In furtherance
thereof, each Domestic Subsidiary of a Credit Party shall execute a Joinder
Agreement and become a party to such of the Loan Documents, including this
Agreement, and in such capacity (Borrower or Guarantor) as Agent shall
elect. Notwithstanding the other
provisions of this subsection (c) and anything else in this Agreement
to the contrary, the Credit Parties shall not be required to grant a leasehold
mortgage in the leases listed on Schedule 6.7(c) as such leases exist
as of the date of this Agreement.
(d)
Concurrently
with (i) the execution by any Credit Party, as lessee, of any lease
pertaining to real property, such Credit Party shall deliver to Agent (a) an
executed copy thereof, (b), a Landlord Waiver and Consent from the Landlord
under such lease in form and substance acceptable to Agent in its Permitted
Discretion and (c) except for extensions of leases listed on Schedule 6.7(c) as
of the Closing Date and for leases of real property requiring no more than
$200,000 in annual rent payments, (I) at the option of Agent, either a
leasehold mortgage upon or a collateral assignment of such lease in favor of
Agent for the benefit of the Lender Parties under the Loan Documents, in either
case in form and substance acceptable to Agent in its Permitted Discretion and
(II) at the option of Agent, a lender’s policy of title insurance for the
benefit of the Lender Parties under the Loan Documents, in such form and amount
and containing such endorsements as shall be satisfactory to Agent in its
Permitted Discretion, insuring the Lien of such leasehold mortgage or
collateral assignment of lease, together with a survey of such real property,
which survey shall be of a recent enough date and in sufficient detail so as to
permit the title company issuing such policy to eliminate any survey exceptions
to such policy and (d) such other documents and assurances with respect to
such real property as Agent may require in its Permitted Discretion, and (ii) the
execution by any Credit Party of any contract relating to the acquisition by
such Credit Party of real property, an executed copy of such contract and,
concurrently with the closing of the purchase of such real property, (a) a
first mortgage or deed of trust in favor of Agent, for the benefit of the
Lender Parties under the Loan Documents, on such real property, in form and
substance acceptable to Agent in its Permitted Discretion, (b) a lender’s
policy of title insurance for the benefit of the Lender Parties under the Loan
Documents, in such form and amount and containing such endorsements as shall be
satisfactory to Agent in its Permitted Discretion, (c) a survey of such
real property, which survey shall be of a recent enough date and in sufficient
detail so as to permit the title company issuing such policy to eliminate any
survey exceptions to such policy, (d) a recent environmental assessment of
such real property by a third party acceptable to Agent, and the results
thereof shall be satisfactory to Agent in its Permitted Discretion, and (e) such
other documents and assurances with respect to such real property as Agent may
require in its Permitted Discretion.
(e)
The
foregoing provisions of this Section 6.7 to the contrary notwithstanding: (a) no
Foreign Subsidiary of Evolving Systems that is a “controlled foreign
corporation,” as defined in Section 957 of the Code, shall be required to
deliver any guaranty or grant a security interest in any of its Property to
secure any such guaranty, and neither Borrower nor any of its other Domestic
Subsidiaries shall be required to pledge securities representing in the
aggregate more than sixty five percent (65%) of the voting power of the
outstanding voting equity securities of any such Foreign Subsidiary of Evolving
Systems, to the extent, in any such case, such guaranty or granting, or a
pledge of additional equity securities, would reasonably be expected to result
in material and adverse tax consequences to any Credit Party under Section 956
of the Code and (b) no Foreign Subsidiary of Evolving Systems incorporated
in the United
22
Kingdom shall be required to
deliver any guaranty or grant a security interest in any of its Property to
secure any such guaranty if such guaranty or security would be in breach of Section 151
of the Companies Act 1985, as determined by Agent in its Permitted Discretion.
6.8
Mandatory Dividends
On
the day of delivery of any quarterly financial statements pursuant to Section 6.1,
Borrower shall furnish to Agent a written calculation of U.K. Excess Cash Flow
for the prior quarter. For each period
for which EBITDA of the Credit Parties and their consolidated Subsidiaries on a
consolidated basis without duplication is less than the aggregate of (a) the
“Minimum EBITDA” set forth in
Exhibit B-1
for such period and (b) $250,000,
the Credit Parties shall cause the Revolving Borrowers and their Subsidiaries,
directly or indirectly, to, within the 45-day period following delivery of such
financial statements, either (a) dividend to Evolving Systems 100% of such
Excess Cash Flow lawfully available for dividends and lawfully transfer any
remainder to Evolving Systems in another manner approved by Agent in its
Permitted Discretion or (b) with the prior consent of Agent, lawfully
transfer 100% of such Excess Cash Flow to Evolving Systems in another a manner
approved by Agent in its Permitted Discretion.
VII.
NEGATIVE COVENANTS
Each
Credit Party, jointly and severally, covenants and agrees that, until the full
performance and satisfaction, and indefeasible payment in full in cash, of all
Obligations (other than contingent indemnification Obligations to the extent no
claim giving rise thereto has been asserted) and the termination of all
Commitments:
7.1
Financial Covenants
No
Credit Party shall, and no Credit Party shall cause or permit any of its
Subsidiaries to, violate any of the financial covenants set forth in Exhibit B-1
hereto, calculated and determined as of the respective dates and for the
respective periods set forth thereon.
7.2
Indebtedness
No
Credit Party shall, and no Credit Party shall permit or cause any of its
Subsidiaries to, create, incur, assume, suffer to exist, or otherwise become or
remain directly or indirectly liable with respect to, any Indebtedness, except
the following (collectively, “Permitted Indebtedness”):
(a)
Indebtedness
of the Credit Parties evidenced by the Loan Documents or the Revolving Loan
Documents;
(b)
any
Indebtedness of Borrower and its Subsidiaries existing on the Closing Date and
set forth on
Schedule 7.2
hereto, including extensions and
replacements thereof provided that the principal amount of such Indebtedness as
of the date of such extension or replacement is not increased and the maturity
and weighted average life thereof are not shortened;
23
(c)
Indebtedness
of Borrower and its Subsidiaries not to exceed $250,000 in the aggregate at any
time outstanding constituting Capital Lease Obligations;
(d)
Indebtedness
of Borrower and its Subsidiaries incurred after the Closing Date secured by
purchase money Liens permitted under Section 7.3(e)(i) provided the
aggregate amount thereof outstanding at any time does not exceed $200,000;
(e)
inter-company
unsecured Indebtedness arising from loans made by Borrower to its domestic
Wholly-Owned Subsidiaries that are Credit Parties to fund working capital
requirements of such Subsidiaries in the Ordinary Course of Business; provided,
that, that upon the request of Agent, such Indebtedness shall be evidenced by
promissory notes having terms (including subordination terms) satisfactory to the
Agent, the sole originally executed counterparts of which shall be pledged and
delivered to the Agent, for the benefit of the Lender Parties, as security for
the Obligations;
(f)
inter-company
unsecured Indebtedness not listed in Schedule 7.2 on the Closing Date arising
from loans made by Borrower to Evolving Systems Networks India PVT LTD, an
India corporation, and Evolving Systems GmbH, a German corporation, so long as
such Persons are Wholly-Owned Subsidiaries of Evolving Systems, to fund working
capital requirements of such Subsidiaries in the Ordinary Course of Business;
provided, that, that upon the request of Agent, such Indebtedness shall be evidenced
by promissory notes having terms (including subordination terms) satisfactory
to Agent, the sole originally executed counterparts of which shall be pledged
and delivered to Agent, for the benefit of the Lender Parties, as security for
the Obligations; provided, however, that the aggregate amount of Investments
permitted pursuant to Section 7.4(i) and outstanding Indebtedness
permitted pursuant to this subsection 7.2(f) does not exceed $100,000
at any time;
(g)
Subordinated
Debt of Borrower evidenced by the Subordinated Notes to the extent such
Indebtedness remains subject to the terms and conditions of the Seller
Subordination Agreement;
(h)
Contingent
Obligations to the extent constituting Indebtedness and permitted under Section 7.8
hereof;
(i)
the
incurrence by any Credit Party or any Subsidiary thereof of Indebtedness in an
amount up to $50,000 arising from the honoring by a bank or other financial
institution of a check, draft or similar instrument drawn against insufficient
funds, so long as such Indebtedness is covered within five Business Days;
(j)
reimbursement obligations under the letters
of credit listed on Schedule 7.2;
(k)
unsecured Indebtedness of a Credit Party or its
Subsidiaries incurred in connection with the financing of insurance premiums in
the Ordinary Course of Business with respect to insurance required or permitted
under
Section 6.4
up to $500,000 in aggregate annual premiums; and
24
(l)
other unsecured Indebtedness of Borrower and
its Subsidiaries not to exceed $50,000 in the aggregate outstanding at any
time.
7.3
Liens
No
Credit Party shall, and no Credit Party shall permit or cause any of its
Subsidiaries to, directly or indirectly, make, create, incur, assume or suffer
to exist any Lien upon, in, against or with respect to any part of, or any
pledge of, any of the Collateral or any of its other Property or Capital Stock
(other than the Capital Stock of Evolving Systems) whether now owned or
hereafter acquired, except the following (collectively, “Permitted Liens”):
(a)
Liens created by the Loan Documents or the
Revolving Loan Documents or otherwise arising in favor of Agent, for the
benefit of the Lender Parties;
(b)
Liens imposed by law for taxes, assessments,
fees or charges of any Governmental Authority (i) that are not yet
delinquent or (ii) which are being contested in good faith by appropriate
proceedings and with respect to which adequate reserves or other appropriate
provisions are being maintained by such Credit Party or Subsidiary in
accordance with GAAP and, with respect to this clause (ii), all such Liens
secure claims not exceeding amounts set forth in Section 6.3(c);
(c)
statutory Liens of landlords, carriers, warehousemen,
mechanics and/or materialmen and other similar Liens imposed by law or that
arise by operation of law in the Ordinary Course of Business that, in any such
case, are only for amounts not yet delinquent or which are being contested in
good faith by appropriate proceedings (which have the effect of preventing or
staying the forfeiture or sale of the Property subject thereto) and with
respect to which adequate reserves or other appropriate provisions are being
maintained by such Person in accordance with GAAP;
(d)
Liens (other than any Lien imposed by ERISA)
incurred or deposits or pledges made in the Ordinary Course of Business
(including, without limitation, surety bonds and appeal bonds) in connection
with workers’ compensation, unemployment insurance and other types of social
security benefits or to secure the performance of tenders, bids, leases, trade
contracts, statutory obligations and other similar obligations (other than for
the repayment of Indebtedness);
(e)
(i) purchase money Liens securing
Indebtedness permitted under Section 7.2(d); provided, that (x) any such
Lien attaches to the subject Property concurrently with or within twenty (20)
days after the acquisition thereof, (y) such Lien attaches only to the subject
Property and (z) the principal amount of such Indebtedness secured thereby does
not exceed 100% of the cost of such Property; and (ii) Liens arising under
Capital Leases permitted under Section 7.2(c) to the extent such
Liens attach only to the Property that is the subject of such Capital Leases;
(f)
any attachment or judgment Lien provided that
the enforcement of such Liens is effectively stayed, satisfied, vacated,
dismissed or discharged within 30 days of issuance or execution and such Liens
secure claims not otherwise constituting an Event of Default;
25
(g)
easements, rights of way, restrictions,
zoning ordinances, reservations, covenants and other similar charges, title
exceptions or encumbrances relating to real Property of the Credit Parties
incurred in the Ordinary Course of Business that, either individually or in the
aggregate, are not substantial in amount, do not interfere in any material
respect with the use of the Property affected or the ordinary conduct of the Business
of the Credit Parties and do not result in material diminution in value of the
Property subject thereto;
(h)
Liens disclosed on Schedule 7.3 as of
the Closing Date;
(i)
Liens arising by virtue of any statutory or
common law provision relating to banker’s liens, rights of set-off, recoupment,
combination of accounts or similar rights as to deposit accounts or other funds
maintained with a creditor depository institution;
(j)
Liens that arise under customary
non-assignment provisions in contracts, leases, subleases, licenses and
sublicenses entered into with unaffiliated third parties in the Ordinary Course
of Business;
(k)
transfer restrictions that arise under any
agreement for a sale, lease, transfer, conveyance, assignment or other
disposition of any Property or any interest therein that is permitted pursuant
to Section 7.7 that imposes restrictions only on the Properties that are
the subject of such agreement pending the consummation of such transaction;
(l)
restrictions under federal, state or foreign
securities laws or the rules or regulations promulgated thereunder;
(m)
Liens
on Capital Stock of Evolving Systems not held by any Credit Party or Subsidiary
of a Credit Party; and
(n)
Liens
of licensors and sublicensors on licenses and sublicenses of Intellectual
Property of a Credit Party or Subsidiary thereof entered into in the Ordinary
Course of Business.
7.4
Consolidations, Mergers and Investments
No
Credit Party shall, and no Credit Party shall permit or cause any of its
Subsidiaries to, directly or indirectly, (i) merge, liquidate, amalgamate
or consolidate with or into, or convey, transfer, lease or otherwise dispose of
(whether in one transaction or in a series of transactions) all or
substantially all of its Property to or in favor of, any other Person, (ii) purchase,
own, hold, invest in or otherwise acquire any obligations or stock or other
securities of, or any other ownership interest in, any other Person (including
the establishment or creation of any Subsidiary) or any joint venture, or
otherwise consummate or commit to make any Acquisition (including by way of
merger, consolidation or other combination), (iii) purchase, own, hold,
invest in or otherwise acquire any “investment property” (as defined in the
UCC) issued by any other Person, or (iv) except as permitted by Section 7.2
or Section 7.8, make, permit to exist or commit to make any loans,
advances or extensions of credit to or for the benefit of any Person, or
assume, guarantee, indemnify, endorse, contingently agree to purchase or
otherwise become liable for or upon or incur any obligation of, any Person (the
items described in the foregoing clauses (ii), (iii) and (iv) sometimes
are referred to as “Investments”), except:
26
(a)
Investments created by the Loan Documents and
the Revolving Loan Documents;
(b)
trade credit extended by Borrower and its
Subsidiaries in the Ordinary Course of Business and Investments received in
satisfaction or partial satisfaction thereof from financially troubled account
debtors to the extent reasonably necessary in order to prevent or limit loss;
(c)
Investments constituting inter-company
Indebtedness to the extent permitted under Sections 7.2(e) and (f);
(d)
loans to employees and advances for business
travel and similar temporary advances made in the Ordinary Course of Business
to officers, directors and employees, not to exceed $25,000 in the aggregate at
any time outstanding;
(e)
the endorsement of negotiable instruments for
deposit or collection or similar transactions in the Ordinary Course of
Business;
(f)
(i) Investments by the Credit Parties in
Cash Equivalents with respect to which Agent, for the benefit of the Lender
Parties, has a first priority and perfected Lien, as security for the
Obligations and (ii) Investments in Cash Equivalents by the Revolving
Borrower, Evolving Systems Networks India PVT LTD and Evolving Systems GmbH;
(g)
Borrower and its Subsidiaries may consummate
transactions otherwise permitted under Sections 7.2, 7.5, 7.7 and 7.8;
(h)
upon not less than ten (10) Business
Days’ prior written notice to Agent, any Subsidiary of Borrower may (A) merge
with, or dissolve or liquidate into, or transfer its Property to, Borrower or a
domestic Wholly-Owned Subsidiary of Borrower that is a Credit Party, provided
that, with respect to any such merger, Borrower or such domestic Wholly-Owned
Subsidiary shall be the continuing or surviving entity and (B) merge with,
or dissolve or liquidate into, or transfer its Property to a Wholly-Owned
Subsidiary of Borrower as permitted by the Revolving Loan Documents;
(i)
Investments in the Capital Stock of Evolving
Systems Networks India PVT LTD and Evolving Systems GmbH not listed in
Schedule 7.4
on the Closing Date; provided that the aggregate amount of such Investments and
the outstanding Indebtedness permitted under Section 7.2(f) shall not
exceed $100,000 at any time;
(j)
Investments in any domestic Wholly-Owned
Subsidiary of Borrower that is or concurrent with such Investment becomes a
Credit Party;
(k)
Investments existing as of the Closing Date
by a Credit Party in its Subsidiaries set forth on Schedule 7.4;
(l)
Investments received in compromise or
resolution of litigation or arbitration proceedings with Persons who are not
Affiliates of a Credit Party up to $50,000 in the aggregate;
27
(m)
Investments
represented by prepaid expenses made in the Ordinary Course of Business; and
(n)
Without
duplication of any quantitative limits, the Revolving Borrower and its
Subsidiaries may make Investments permitted under the Revolving Loan Agreement.
For purposes of covenant compliance, the
amount of any Investment shall be the amount actually invested, without
adjustment for subsequent increases or decreases in the value of such
Investment.
7.5
Restricted Payments
No
Credit Party shall, and no Credit Party shall permit or cause any of its
Subsidiaries to, (i) declare, pay or make any dividend or distribution of
cash, securities or other Property on any shares of its Capital Stock or other
equity or ownership interests or securities, (ii) apply any of its
Property to the acquisition, redemption or other retirement of any of its
Capital Stock or other equity or ownership interests or securities or of any
warrants, options or other rights to purchase or acquire, exchangeable or
exercisable for, or convertible into, any of the foregoing, (iii) make any
payment or prepayment of principal, premium, if any, interest, or fees on any
Subordinated Debt, make any sinking fund or similar payment with respect to any
Subordinated Debt, or redeem, exchange, purchase, retire, defease or setoff
against any Subordinated Debt; (iv) make any payment or prepayment of any
TSE Contingent Obligation, make any sinking fund or similar payment with
respect to any TSE Contingent Obligation, or redeem, exchange, purchase,
retire, defease or setoff against any TSE Contingent Obligation or (v) pay
any management, service, consulting, non-competition or similar fee or any
compensation to any Affiliate of any Credit Party (the items described in
clauses (i), (ii), (iii), (iv) and (v) above sometimes are referred
to herein as “Restricted Payments”).
Notwithstanding the foregoing:
(a)
any Wholly-Owned Subsidiary of Borrower may declare
and pay dividends and other distributions to Borrower or to any other domestic
Wholly-Owned Subsidiary of Borrower that
is a Credit Party and the Wholly-Owned Subsidiaries of Evolving Systems party
to the Revolving Loan Agreement may declare and pay dividends permitted under
the Revolving Loan Agreement;
(b)
Evolving Systems may, upon termination,
resignation or retirement of an officer or employee of Borrower, redeem for
cash any equity securities or warrants or options to acquire any equity securities
of Evolving Systems owned by such officer or employee, provided, that all of
the following conditions are satisfied with respect to each such distribution:
(i)
no Default or Event of Default has occurred
and is continuing or would arise as a result of such distribution;
(ii)
after giving effect to such distribution, the
Credit Parties are in compliance on a pro forma basis with the financial
covenants referenced in Section 7.1(a) (recomputed for the most
recent period for which financial statements have been delivered in accordance
with the terms hereof after giving effect thereto as of the first day of such
period); and
28
(iii)
the aggregate amount of such distributions
shall not exceed $175,000 in any fiscal year of Borrower or $350,000 during the
Term;
(c)
The Revolving Borrower may make distributions
to Intermediate Holdco solely sufficient to permit Intermediate Holdco to pay
as and when due and payable franchise taxes and other similar ordinary course
licensing expenses and other general and customary holding company costs and
expenses incurred in the Ordinary Course of Business and otherwise relating to
activities in which Intermediate Holdco otherwise is permitted to engage under
the Loan Documents to the extent no Default or Event of Default has occurred
and is continuing or would arise as a result of such distributions;
(d)
Borrower may make payments on the
Subordinated Debt evidenced by the Subordinated Notes only to the extent
expressly permitted under the applicable Seller Subordination Agreement;
(e)
the Credit Parties and their Subsidiaries may
pay (i) reasonable compensation (including Permitted Securities issued as
equity compensation) to officers and employees for actual services rendered to
Borrower and its Subsidiaries in the Ordinary Course of Business, including
reasonable severance compensation upon termination of employment, and (ii) reasonable
directors’ fees, meeting fees and reimbursement of actual out-of-pocket
expenses incurred in connection with attending board of director meetings; and
(f)
Evolving Systems may pay the TSE Contingent
Obligation due on November 15, 2005 in an amount up to $300,000 and TSE
Contingent Obligations on or promptly thereafter the day of delivery to Agent
of quarterly financial statements for such fiscal quarter; provided, that all
of the following conditions are satisfied with respect to each such payment:
(i)
no Default or Event of Default has occurred
and is continuing or would arise as a result of such distribution;
(ii)
the Credit Parties are compliance with the
financial covenants referenced in Section 7.1(a) and provide evidence
to Agent to such effect; and
(iii)
the aggregate amount of such distributions
shall not exceed $2,900,000 during the Term;
(g)
Evolving Systems may declare and make
dividend payments or other distributions payable solely in Permitted Securities;
and
(h)
the Credit Parties and their Subsidiaries may
make payments pursuant to and in accordance with the Cross License Agreement
and Transfer Pricing Agreements.
7.6
Transactions with Affiliates
No
Credit Party shall, and no Credit Party shall permit or cause any of its
Subsidiaries to, enter into or consummate any transaction with any Affiliate of
such Person other than:
29
(a)
as expressly permitted by, and subject to the
terms of, this Agreement, the other Loan Documents and the Revolving Loan Documents;
(b)
compensation and employment arrangements (including
Permitted Securities issued as equity compensation) with employee, officers and
directors in the Ordinary Course of Business and to the extent otherwise
permitted under Section 7.5(e);
(c)
other transactions pursuant to written
agreements between a Credit Party or its Subsidiary and any such Affiliates
that are entered into in the Ordinary Course of Business and pursuant to the
reasonable requirements of the business of such Credit Party; provided, that
such transactions and agreements are on fair and reasonable terms not less
favorable to such Person than would be obtained in an arm’s length transaction
between unrelated parties of equal bargaining power;
(d)
(i) transactions between or among any of
the Credit Parties and/or their domestic Wholly-Owned Subsidiaries that are or
concurrent with such transaction becomes a Credit Party and (ii) transactions
between or among the Revolving Borrowers and its Subsidiaries that are
permitted by the Revolving Loan Agreement;
(e)
the Cross License Agreement and the Transfer Pricing
Agreements in form and substance satisfactory to the Agent in its Permitted
Discretion; and
(f)
the
agreements identified on Schedule 7.6.
7.7
Transfer of Assets
No
Credit Party shall, and no Credit Party shall permit or cause any of its
Subsidiaries to, directly or indirectly, sell, lease, transfer, convey, assign
or otherwise dispose of (whether in a single transaction or a series of
transactions) any Property or any interest therein, or agree to do any of the
foregoing, except that:
(a)
Borrower and its Subsidiaries may sell lease,
transfer, convey, assign or otherwise dispose of (whether in a single
transaction or a series of transactions) obsolete,
worn out, replaced, damaged or excess Property that is no longer needed in the
Ordinary Course of Business and has a book value not exceeding $200,000 in the
aggregate in any fiscal year;
(b)
Borrower and its Subsidiaries may sell or
otherwise dispose of inventory and use cash in the Ordinary Course of Business
and liquidate or sell Cash Equivalents in the Ordinary Course of Business;
(c)
Borrower and its Subsidiaries may sell,
lease, transfer, convey, assign or otherwise dispose of other Properties not
specifically permitted otherwise in this Section 7.7 (other than Capital
Stock of a Credit Party to the extent owned by another Credit Party) to the
extent (a) Borrower or such Subsidiary complies with the mandatory
prepayment provisions of Section 2.5(c) in connection therewith (to
the extent the proceeds thereof are not reinvested in accordance with the terms
of such Section 2.5(c)(i)), (b) such sale is for fair market value
and the aggregate fair market value of all assets so sold does not exceed
$250,000 in any fiscal year, (c) no Default or Event of Default exists or
otherwise would result therefrom, (d) after giving effect
30
to such transaction, the
Credit Parties are in compliance on a pro forma basis with the financial
covenants referenced in Section 7.1(a) (recomputed for the most
recent period for which financial statements have been delivered in accordance
with the terms hereof after giving effect thereto as of the first day of such
period), and (e) the sole consideration therefor received by Borrower or
such Subsidiary is cash;
(d)
transactions otherwise permitted under
Sections 7.2, 7.3, 7.4, 7.5, 7.6 and 7.8 to the extent permitted
thereunder;
(e)
Any Credit Party may sell, transfer, convey,
assign or otherwise dispose of Property to any other Credit Party;
(f)
Borrower and its Subsidiaries may license and
sublicense their Intellectual Property in the Ordinary Course of Business on a
non-exclusive basis so long as such license does not restrict the ability of
Agent and Lenders to exercise their rights and remedies under the Loan Documents
and the Revolving Loan Documents
with respect to such Intellectual Property subject to such license. Such license may include a restriction on the
assignability of the license and its continuation after a Change in Control;
(g)
The Revolving Borrower and its Subsidiaries
may dispose of Property to the extent permitted by the Revolving Loan
Documents.
7.8
Contingent Obligations
No
Credit Party shall, and no Credit Party shall permit or cause any of its
Subsidiaries to, enter into, create, assume, suffer to exist or incur any
Contingent Obligations or assume, guarantee, indemnify, endorse, contingently
agree to purchase or otherwise become liable for or upon or incur any
obligation of any Person, except:
(a)
Borrower or any of its Domestic Subsidiaries
may enter into guarantees of Indebtedness of Borrower or any such Domestic
Subsidiary that are Credit Parties otherwise permitted under Section 7.2;
(b)
Borrower and its Subsidiaries may endorse
checks for collection in the Ordinary Course of Business;
(c)
Borrower and the Revolving Borrower may enter
into unsecured Hedging Agreements in the Ordinary Course of Business for bona
fide hedging purposes and not for speculation in an aggregate notional or
contract amount not to exceed $250,000 outstanding at any time;
(d)
Contingent Obligations of Borrower and its
Subsidiaries incurred in the Ordinary Course of Business with respect to
workers’ compensation claims, unemployment insurance and other types of social
security benefits, self-insurance obligations, bankers’ acceptances,
performance bonds, appeal and surety bonds and other similar obligations;
31
(e)
Contingent Obligations of Borrower and its
Subsidiaries arising under indemnity agreements to title insurers to cause such
title insurers to issue to Agent title insurance policies;
(f)
the TSE Contingent Obligations;
(g)
Contingent Obligations of any Credit Party or
Subsidiary thereof arising from indemnification obligations to its directors,
officers and employees in the Ordinary Course of Business;
(h)
a guaranty of the obligations of the
Revolving Borrower under the Revolving Loan Documents;
(i)
indemnities given by any Credit Party or any
Subsidiary thereof to its customers, vendors, independent contractors,
purchasers or sellers of Property, or other third parties in the Ordinary
Course of Business; and
(j)
Contingent Obligations in respect of Evolving
Systems’ guarantee of the expenses incurred by certain employees in connection
with the use of credit cards sponsored by Evolving Systems in an aggregate
amount not to exceed $150,000 at any time outstanding.
7.9
Organizational Documents; Accounting Changes;
Use of Proceeds; Insurance; Business
No
Credit Party shall, and no Credit Party shall permit or cause any of its
Subsidiaries to:
(a)
amend, modify, restate or change any of its
articles of incorporation, bylaws, certificate of formation, operating
agreement, and other charter documents, in any respect adverse to Agent or
Lenders (including changing its name), or make any material change to its
equity capital structure or, without the prior written consent of Agent (but
without limiting the mergers or other transactions involving any Credit Party
otherwise permitted under Section 7.4(h)), reincorporate or reorganize
itself under the laws of any jurisdiction other than the jurisdiction in which
it is incorporated or organized as of the Closing Date;
(b)
make any significant change in accounting
treatment or reporting practices, except as required by GAAP or to accommodate
FAS 123R, or change its fiscal year;
(c)
use any proceeds of the Loan, directly or
indirectly, for “purchasing” or “carrying” “margin stock” as defined in
Regulations T, U or X of the Board of Governors of the Federal Reserve System,
or to repay or refinance Indebtedness incurred to so “purchase” or “carry” “margin
stock,” or otherwise in violation of applicable law or this Agreement;
(d)
amend, modify, restate or change any
insurance policy in any material respect including, without limitation, any
material increase in the amount of any deductibles payable by the Credit
Parties under any such insurance policy or any material change in the scope of
coverage, coverage amount, beneficiaries, loss payees and/or additional insureds
except additional insureds permitted by Section 6.4(c), but excluding
changes in the term of coverage in connection with renewals thereof in the
Ordinary Course of Business;
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(e)
engage, directly or indirectly, in any business
other than the Business; or
(f)
allow Intermediate Holdco to engage in any
business other than the ownership of the equity securities of Evolving Systems
Holdings Limited and activities incidental thereto.
7.10
Related Documents; Subordinated Debt; and TSE
Contingent Obligations
(a)
No Credit Party shall, and no Credit Party
shall permit or cause any of its Subsidiaries to, (i) amend, supplement,
waive or otherwise modify any of the terms or provisions of, and will not fail
to enforce or diligently pursue its remedies under, any Related Document, as in
effect on the Closing Date, in any manner adverse to Agent or any Lender or
which would reasonably be expected to result in a Material Adverse Effect, or (ii) take
or fail to take any other action under any Related Document that would
reasonably be expected to result in a Material Adverse Effect.
(b)
No Credit Party shall, and no Credit Party
shall permit or cause any of its Subsidiaries to, directly or indirectly,
amend, supplement or otherwise modify the terms of any Subordinated Debt except
as expressly permitted under the applicable Subordination Agreement.
(c)
No Credit Party shall, and no Credit Party
shall permit or cause any of its Subsidiaries to, directly or indirectly, amend,
terminate, supplement or otherwise, without the prior written consent of the
Agent in its Permitted Discretion, modify the terms of the TSE Purchase
Agreement, the Cross License Agreement or Transfer Pricing Agreements or any
TSE Contingent Obligations in any material respect or in any manner adverse to
Agent or Lenders; provided, however, that the parties may amend the TSE
Purchase Agreement so long as such amendment is not adverse to the interests of
Agent or Lenders under the Loan Documents or the Revolving Loan Documents and
does not extend the duration of the agreement, increase the aggregate amounts
due thereunder, or accelerate payment dates.
The Credit Parties shall notify and promptly provide Agent with
copies of any amendment, modification, restatement or change to such
agreements.
7.11
Negative Pledges
Except
as a result of the Loan Documents and the Revolving Loan Documents, no Credit
Party shall, and no Credit Party shall permit or cause any of its Subsidiaries
to, directly or indirectly, create or otherwise cause or suffer to exist or
become effective any consensual restriction or encumbrance of any kind on the
ability of any such Subsidiary to pay dividends or make any other distribution
on any of such Subsidiary’s equity securities or to pay fees or make other
payments and distributions to Borrower or any of its Subsidiaries except as
permitted under the Transfer Pricing Agreements. No Credit Party shall, and no Credit Party
shall permit or cause any of its Domestic Subsidiaries to, directly or
indirectly, enter into, assume or become subject to any contract or agreement
that prohibits or otherwise restricts the existence of any Lien upon any of its
Property in favor of Agent, for the benefit of the Lender Parties under the
Loan Documents, whether now owned or hereafter acquired except (a) in
connection with any document or instrument governing Liens related to purchase
money Indebtedness and Capital Leases which, in each case, otherwise constitute
Permitted Liens and (b) leased equipment,
33
Intellectual Property and
General Intangibles of any Credit Party to the extent excluded from Collateral
in Section 2(c) of the Security Agreement.
7.12
Certain Specific Agreements
Neither
any Credit Party nor any Subsidiary of any Credit Party (i) will be or
become a Person whose Property or interests in Property are blocked or subject
to blocking pursuant to Section 1 of Executive Order 13224 of September 23,
2001 Blocking property and Prohibiting Transactions With Persons Who Commit,
Threaten to Commit or Support Terrorism (66 Fed. Reg. 49079(2001), (ii) will
engage in any in any dealings or transactions prohibited by Section 2 of
such executive order, or otherwise be associated with any such Person in any
manner violative of Section 2 of such executive order, or (iii) otherwise
will become a Person on the list of Specially Designated Nationals and Blocked
Persons or subject to the limitations or prohibitions under any other OFAC
regulation or executive order.
7.13
Shareholder Blocking Rights
No Credit Party shall issue any Capital Stock
which grants or provides any direct or indirect owner or equityholder thereof
any Shareholder Blocking Rights.
VIII.
EVENTS OF DEFAULT
The
occurrence of any one or more of the following shall constitute an “
Event of Default
”:
(a)
any Credit Party shall fail to pay when due
and payable (i) any principal or Prepayment Premium provided for or
required under this Agreement and/or the Notes, or (ii) within two (2) Business
Days after the same shall become due and payable, any interest, fees or other
Obligations (other than principal or premium) provided for or required under
this Agreement or the other Loan Documents, in any such case described in the
foregoing clause (i) or (ii), whether on any payment date, at maturity, by
reason of acceleration, by notice of intention to prepay, by required
prepayment or otherwise);
(b)
any representation, statement or warranty
made or deemed made by or on behalf of any Credit Party in any Loan Document or
Revolving Loan Document, or in any other certificate, document, report or
opinion delivered pursuant to any Loan Document or Revolving Loan Document to
which it is a party shall not be true and correct in all material respects or
shall have been false or misleading in any material respect taken as a whole
and in light of the circumstances under which it was made or furnished on the
date when made or deemed to have been made (except to the extent already
qualified by materiality, in which case it shall have been true and correct in
all respects and shall not have been false or misleading in any respect taken
as a whole and in light of the circumstances under which it was made or
furnished on the date when made or deemed to have been made);
(c)
any Credit Party thereto shall be in
violation, breach or default of, or shall fail to perform, observe or comply
with, any covenant, obligation or agreement set forth in, or any event of
default occurs under, any Loan Document and such violation, breach, default,
event of default or failure shall not be cured within the applicable period, if
any, set forth in the
34
applicable Loan Document;
provided that, with respect to the affirmative covenants set forth in Article VI
(other than Sections 6.1, 6.3(c), 6.4, 6.5, 6.7(b) or 6.8, for which no
cure period shall apply), any such violation, breach, default, event of default
or failure shall result in any Event of Default only if it remains uncured for
thirty (30) calendar days after the earlier of (i) Receipt (as defined in Section 12.5)
by such Person of written notice of such violation, breach, default, event of
default or failure and (ii) the time at which any officer of a Credit
Party knew or became aware, or should reasonably have known or been aware, of
such violation, breach, default, event of default or failure;
(d)
(i) any of the Loan Documents ceases for
any reason to be in full force and effect or (ii) any Lien, except Liens
that the Agent chooses not to perfect, created under any Loan Documents ceases (other
than pursuant to the express terms of the applicable Loan Document) to
constitute a valid first priority perfected Lien (other than with respect to
Property subject only to Priority Permitted Liens) on the Collateral in
accordance with the terms thereof;
(e)
one or more judgments or decrees is or are
rendered against the Credit Parties, any Subsidiary of any Credit Party or any
of them in an outstanding amount, at any one time, in excess of $175,000
individually or $350,000 in the aggregate (excluding judgments and decrees to
the extent covered by third party insurance of such Persons where such coverage
has been acknowledged by the insurer), which is/are not satisfied, stayed,
vacated or discharged of record within thirty (30) calendar days of being
rendered;
(f)
any Credit Party or any Subsidiary of any
Credit Party shall, or there shall occur:
(i)
default
in the payment of any principal of or interest when due on any Indebtedness
(other than the Obligations and the “Obligations” as defined in the Revolving
Loan Agreement) in the outstanding principal amount in excess of $250,000 in
the aggregate, which default is not cured or waived within any applicable grace
or cure period;
(ii)
default
or breach the terms of any note, agreement, indenture or other document
evidencing or relating to any Indebtedness (other than the Obligations and the “Obligations”
as defined in the Revolving Loan Agreement) in the outstanding principal amount
in excess of $750,000 in the aggregate, which default or breach is not cured or
waived within any applicable grace or cure period and the effect of which is to
cause, or to permit the holder or holders of any such Indebtedness to cause,
such Indebtedness to become due (whether by acceleration or otherwise) prior to
the stated maturity thereof;
(iii)
default
or breach the terms of any agreement, contract, document or instrument that is
between any Credit Party and Agent or any Lender or any Affiliate of Agent or
any Lender (other than the Loan Documents) beyond all applicable grace or cure
periods;
(iv)
upon
written notice from Agent, any default or
breach in the performance, observance or fulfillment of any provision contained
in any Material
35
Contract and such default or breach continues
beyond all applicable grace or cure period and permits the other party thereto
to terminate such Material Contract or otherwise reduce or limit any material amounts
owed by such other party thereunder;
(v)
an
“Event of Default” (as defined in the Subordinated Notes); or
(vi)
an “Event
of Default” (as defined in the Revolving Loan Agreement).
(g)
any Credit Party or any Subsidiary of any
Credit Party shall (i) be unable to pay its debts generally as they become
due, as determined by Agent in its Permitted Discretion, (ii) file a
voluntary petition under any insolvency statute, (iii) make a general
assignment for the benefit of its creditors, (iv) commence a proceeding
for the appointment of a receiver, trustee, liquidator or conservator of itself
or of the whole or any substantial part of its Property or shall otherwise be
dissolved or liquidated (other than as permitted under Section 7.4(h)), or
(v) file a petition seeking reorganization or liquidation or similar
relief under any Debtor Relief Law or any other applicable law or statute;
(h)
(i) a court of competent jurisdiction
shall (A) enter an order, judgment or decree appointing a custodian,
receiver, trustee, liquidator or conservator of any Credit Party or any
Subsidiary of any Credit Party or the whole or any substantial part of any such
Person’s Properties, which shall continue undismissed and unstayed and in
effect for a period of sixty (60) calendar days, (B) approve a petition
filed against any Credit Party or any Subsidiary of any Credit Party seeking
reorganization, liquidation or similar relief under the any Debtor Relief Law
or any other applicable law or statute, which is not dismissed or stayed within
sixty (60) calendar days, or (C) under the provisions of any Debtor Relief
Law or other applicable law or statute, assume custody or control of any Credit
Party or any Subsidiary of any Credit Party or of the whole or any substantial
part of any such Person’s Properties, which is not irrevocably relinquished
within sixty (60) calendar days, (ii) there is commenced against any
Credit Party or any Subsidiary of any Credit Party any proceeding or petition
seeking reorganization, liquidation or similar relief under any Debtor Relief
Law or any other applicable law or statute (A) which is not
unconditionally dismissed or stayed within sixty (60) calendar days after the
date of commencement, or (B) in respect of which such Credit Party or any
Subsidiary of any Credit Party takes any action to indicate its approval of or
consent to any such proceeding or petition; or (iii) any stayed order,
judgment, decree, proceeding, petition or other item is reinstated.
(i)
any Change of Control or any Material Adverse
Effect occurs;
(j)
Agent or any Lender receives any evidence
that any Credit Party has directly or indirectly been engaged in any type of
activity which, in Agent’s Permitted Discretion, would reasonably be expected
to result in forfeiture of any material portion of Collateral to any
Governmental Authority, which shall have continued unremedied for a period of
twenty (20) calendar days after written notice from Agent;
36
(k)
uninsured damage to, or uninsured loss, theft
or destruction of, any portion of the Collateral occurs that exceeds $250,000
in the aggregate;
(l)
(i) any Credit Party is criminally
indicted or convicted (A) of a felony or (B) under any law that would
reasonably be expected to lead to forfeiture of any material portion of
Collateral, or (ii) any director or senior officer of any Credit Party is
convicted (A) of a felony for fraud or dishonesty in connection with the
Business or (B) under any law that would reasonably be expected to lead to
forfeiture of any material portion of Collateral;
(m)
the issuance of any process for levy,
attachment or garnishment or execution upon or any judgment against any Credit
Party or any of its material Property or against any of the Collateral, which
has an aggregate fair market value in excess of $175,000 individually or
$350,000 in the aggregate in any case which is not satisfied, stayed, vacated,
dismissed or discharged within thirty (30) calendar days of being issued or
executed;
(n)
(i) the subordination provisions of the
Seller Subordination Agreement and/or the subordination provisions contained in
or otherwise pertaining to any agreement or instrument governing any
Subordinated Debt shall for any reason be revoked or invalidated, or cease to
be in full force and effect, or (ii) any Person shall raise a
non-frivolous claim in court contesting in any manner the validity or
enforceability thereof, (iii) any Person shall take any action in
violation thereof or fail to take any action required by the terms thereof that
would reasonably be expected to have an adverse effect on the rights and
remedies of Agent or Lenders, or (iv) the Obligations, for any reason
shall not have the priority contemplated by this Agreement, the Seller
Subordination Agreement or such subordination provisions;
(o)
an “Event of Default” under any other Loan
Document occurs (to the extent, with respect to any such other Loan Document,
not otherwise constituting an Event of Default hereunder);
(p)
any Credit Party is enjoined, restrained or
in any way prevented by the order of any court or other Governmental Authority
from conducting all or any material part of its business for more than fifteen
(15) calendar days which is reasonably likely to be, have or result in a
Material Adverse Effect;
(q)
If the “Shelf Registration Statement” (as
defined in the Certificate of Designation of Evolving System’s Series B
Convertible Preferred Stock (“Certificate of Designation”)) to be prepared and
filed by the Corporation (as defined in the Certificate of Designation) in
accordance with the terms and conditions of Section 2.3 of the Investor
Rights Agreement (as defined in the Certificate of Designation) by and among
the Corporation and the holders of the Series B Preferred Stock dated as
of the Series B Original Issue Date (as defined in the Certificate of
Designation) (i) is not declared effective by the SEC as contemplated by Section 2.3
or (ii) if declared effective, is not kept continuously effective as
contemplated by Section 2.4 of the Investor Rights Agreement, or any other
event occurs which with the passage of time and/or giving of notice would grant
a holder of Evolving System’s preferred stock the rights described in section 5
of the Certificate of Designation; or
37
(r)
The occurrence of a “Liquidation” as defined
in the Certificate of Designation or any other event which with the passage of
time and/or giving of notice would give rise to a “Liquidation” to which Agent
has not previously expressly consented in writing;
If an Event of Default occurs and is continuing, notwithstanding any
other provision of any Loan Document, (I) Agent may (and at the request of
Requisite Lenders, shall), by notice to Borrower (i) terminate Lenders’
Commitments and obligations hereunder, whereupon the same shall immediately
terminate, and (ii) declare all or any of the Loan and/or any Notes, all
interest thereon and all other Obligations (including, without limitation, the
Prepayment Premium, if any) to be due and payable immediately including any
Prepayment Premium calculated as if such Obligations were prepaid on the date
of the Event of Default (provided, that in the case of any Event of Default
under
Article VIII(g), (h), (q),
or
(r)
all of the foregoing
automatically and without any act by Agent or any Lender shall be due and
payable immediately and Lenders’ Commitments and obligations hereunder shall
immediately terminate; in each case without presentment, demand, protest or
notice of any kind, all of which hereby are expressly waived by the Credit
Parties), and (II) without limiting any of the other rights and/or remedies of
Agent and Lenders, no action permitted to be taken under
Article VII
hereof may be taken to the extent such action is expressly prohibited during
the existence of an Event of Default.
IX.
RIGHTS AND REMEDIES AFTER DEFAULT
9.1
Rights and Remedies
(a)
In addition to the acceleration and other
provisions set forth in
Article VIII
, upon the occurrence and
during the continuation of an Event of Default, Agent shall have the right to
(and at the request of Requisite Lenders, shall) exercise any and all rights
and remedies provided for in any Loan Document or any Revolving Loan Document,
under the UCC or at law or in equity, including, without limitation, the right
to the extent permitted by applicable law, to (i) apply any Property of
any Credit Party held by Agent, for the benefit of the Lender Parties, or any
Lender to reduce the Obligations, (ii) foreclose the Liens created under
the Loan Documents or the Revolving Loan Documents, (iii) enforce, realize
upon, take possession of and/or sell or otherwise transfer any Collateral or
securities pledged, with or without judicial process, (iv) exercise all
rights and powers with respect to the Collateral as any Credit Party might
exercise, (v) collect and send notices regarding the Collateral, with or
without judicial process, (vi) by its own means or with judicial
assistance, enter any premises at which Collateral and/or pledged securities
are located, or render any of the foregoing unusable or dispose of the
Collateral and/or pledged securities on such premises without any liability for
rent, storage, utilities, or other sums, and no Credit Party shall resist or
interfere with such action, (vii) at Credit Parties’ expense, require that
all or any part of the Collateral be assembled and made available to Agent at
any place where the Credit Parties regularly maintain inventory or Property
designated by Agent in its Permitted Discretion, and/or (viii) relinquish
or abandon any Collateral or securities pledged or any Lien thereon. Notwithstanding any provision of any Loan
Document, Agent, in its Permitted Discretion, shall have the right, at any time
that any Credit Party fails to do so, and from time to time, without prior
notice, to: (i) obtain insurance covering any of the Collateral to the
extent required hereunder; (ii) pay for the performance of any of the
Obligations; (iii) discharge taxes, levies and/or Liens on any of the
Collateral that are in violation of any Loan Document; and (iv) pay for
the maintenance, repair and/or preservation of the
38
Collateral. Such expenses and advances shall be added to
the Obligations until reimbursed to Agent and shall be secured by the
Collateral and payable on demand, and such payments by Agent shall not be
construed as a waiver by Agent or Lenders of any Event of Default or any other
rights or remedies of Agent and Lenders.
(b)
The Credit Parties jointly and severally
agree that notice received by any of them at least ten (10) calendar days
before the time of any intended public sale, or the time after which any
private sale or other disposition of Collateral is to be made, shall be deemed
to be reasonable notice of such sale or other disposition. If permitted by applicable law, any
perishable Collateral which threatens to speedily decline in value or which is
sold on a recognized market may be sold immediately by Agent without prior notice
to any Credit Party. At any sale or disposition
of Collateral or securities pledged, Agent may (to the extent permitted by
applicable law) purchase all or any part thereof free from any right of
redemption by the Credit Parties, which right hereby is waived and released. The Credit Parties jointly and severally
covenant and agree not to, and not to permit or cause any of their Subsidiaries
to, interfere with or impose any obstacle to Agent’s exercise of its rights and
remedies with respect to the Collateral.
In dealing with or disposing of the Collateral or any part thereof,
Agent and Lenders shall not be required to give priority or preference to any
item of Collateral or otherwise to marshal assets or to take possession or sell
any Collateral with judicial process.
(c)
Each Credit Party hereby grants to Agent, for
the benefit of the Lender Parties, after the occurrence and during the
continuance of an Event of Default, an irrevocable, nonexclusive license
(exercisable without payment of royalty or other compensation to such Credit
Party) to use, assign, license or sublicense any Intellectual Property, (unless
such use, assignment, license or sublicense is expressly prohibited under a
license agreement and would result in a breach under such agreement for which
such agreement would reasonably be expected to be terminated by such licensor)
and now owned or hereafter acquired by such Credit Party, and wherever the same
may be located, including in such license reasonable access as to all media in
which any of the licensed items may be recorded or stored and to all computer
programs and used for the compilation or printout thereof. All proceeds received by Agent or Lenders in
connection with such license shall be used by Agent or Lenders to satisfy the
Obligations.
(d)
In addition to the acceleration and other
provisions set forth in
Article VIII
, upon the occurrence and
during the continuation of an Event of Default, each Credit Party shall take
any action that Agent, for the benefit of itself and the Lenders, may request
in order to enable Agent to obtain and enjoy the full rights and benefits
granted to Agent hereunder.
9.2
Application of Proceeds
In
addition to any other rights and remedies Agent and Lenders have under the Loan
Documents or the Revolving Loan Documents, the UCC, at law or in equity, all
payments received after the occurrence and during the continuation of any Event
of Default, and all proceeds collected or received from collecting, holding,
managing, renting, selling or otherwise disposing of all or any part of the
Collateral or any proceeds thereof upon exercise of remedies hereunder upon the
occurrence and during the continuation of an Event of Default, shall be applied
in the following order of priority:
39
(i)
first
, to the payment of all costs and expenses of such collection, holding,
managing, renting, selling or disposition, and of conducting the Credit Parties’
Businesses and of maintenance, repairs, replacements, alterations, additions
and improvements of or to the Collateral, and to the payment of all sums which
Agent or Lenders may be required or may elect to pay, if any, for taxes,
assessments, insurance and other charges upon the Collateral or any part
thereof, and all other payments that Agent or Lenders may be required or
authorized to make under any provision of the Loan Documents (including,
without limitation, in each such case, in-house documentation and diligence
fees and legal expenses, search, audit, recording, professional and filing fees
and expenses and reasonable attorneys’ fees and all expenses, liabilities and
advances made or incurred in connection therewith);
(ii)
second
, to payment of all accrued unpaid interest on the Obligations and fees
owed to the Agent and Lenders;
(iii)
third
, to payment of principal of the Obligations;
(iv)
fourth
, to payment of any other amounts owing constituting Obligations; and
(v)
fifth
, any surplus then remaining to the Credit Parties, unless otherwise
provided by law or directed by a court of competent jurisdiction;
provided that the Credit Parties shall be liable for any deficiency if
such proceeds are insufficient to satisfy all of the Obligations or any of the
other items referred to in this Section.
In carrying out the foregoing, (x) amounts received shall be applied in
the numerical order provided until exhausted prior to the application to the
next succeeding category; and (y) each of the Lenders shall receive an amount
equal to its pro rata share of amounts available to be applied pursuant to
clauses (i), (ii), (iii) and (iv) above.
9.3
Rights to Appoint Receiver
Without
limiting any other rights, options and remedies Agent and Lenders have under
the Loan Documents or the Revolving Loan Documents, the UCC, at law or in
equity, upon the occurrence and during the continuation of an Event of Default,
Agent shall have the right to apply for and have a receiver appointed by a
court of competent jurisdiction in any action taken by Agent to enforce its and
Lenders’ rights and remedies in order to manage, protect and preserve the
Collateral, to sell or dispose of the Collateral and continue the operation of
the Businesses of the Credit Parties and to collect all revenues and profits
thereof and apply the same to the payment of all expenses and other charges of
such receivership including the compensation of the receiver and to the
payments as aforesaid until a sale or other disposition of such Collateral
shall be finally made and consummated.
To the extent not prohibited by applicable law, each Credit Party hereby
irrevocably consents to, and waives any right to object to or otherwise
contest, the appointment of, a receiver as provided above.
40
9.4
Attorney in Fact
Each
Credit Party hereby irrevocably appoints Agent, for the benefit of the Lender
Parties, as its attorney in fact to take any action Agent or Requisite Lenders
deem necessary or desirable upon the occurrence and during the continuation of
an Event of Default to protect and realize upon the Liens in the Collateral,
including the execution and delivery of any and all documents or instruments
related to the Collateral in such Credit Party’s name, and said appointment
shall create in Agent, for the benefit of the Lender Parties, a power coupled
with an interest.
9.5
Rights and Remedies not Exclusive
As
among the Lender Parties on one hand and the Credit Parties on the other hand,
Agent and Lenders shall have the right in their sole discretion to determine
which rights, Liens and/or remedies Agent and/or Lenders may at any time
pursue, relinquish, subordinate or modify, and such determination shall not in
any way modify or affect any of Agent’s or Lenders’ rights, Liens or remedies
under any Loan Document, any Revolving Loan Documents, applicable law or
equity. The enumeration of any rights
and remedies in any Loan Document or any Revolving Loan Document is not
intended to be exhaustive, and all rights and remedies of Agent and the Lenders
described in any Loan Document and the Revolving Loan Documents are cumulative
and are not alternative to or exclusive of any other rights or remedies which
Agent and Lenders otherwise may have.
The partial or complete exercise of any right or remedy shall not
preclude any other further exercise of such or any other right or remedy.
X.
WAIVERS AND JUDICIAL
PROCEEDINGS
10.1
Certain Waivers
Except
as expressly provided for herein or in any other Loan Document, each Credit
Party hereby waives set-off, counterclaim, demand, presentment, protest, all
defenses with respect to any and all instruments and all notices and demands of
any description, and the pleading of any statute of limitations as a defense to
any demand under any Loan Document. Each
Credit Party hereby waives any and all defenses and counterclaims it may have
or could interpose in any action or procedure brought by Agent or any Lender to
obtain an order of court recognizing the assignment of, or Lien of Agent, for
the benefit the Lender Parties, in and to, any Collateral.
10.2
Delay; No Waiver of Defaults
No
course of action or dealing, renewal, release or extension of any provision of
any Loan Document, or single or partial exercise of any such provision, or
delay, failure or omission on Agent’s or any Lender’s part in enforcing any
such provision shall affect the liability of any Credit Party or operate as a
waiver of such provision or affect the liability of any Credit Party or
preclude any other or further exercise of such provision. No waiver by any party to any Loan Document
of any one or more defaults by any other party in the performance of any of the
provisions of any Loan Document shall operate or be construed as a waiver of
any future default, whether of a like or different nature, and each such waiver
shall be limited solely to the express
41
terms and provisions of such waiver.
Notwithstanding any other provision of any Loan Document or any
Revolving Loan Documents, by completing the Closing under this Agreement and funding
the Loan, neither Agent nor any Lender waives any breach of any representation
or warranty of any Credit Party under any Loan Document or any Revolving Loan
Documents, and all of Agent’s and Lenders’ claims and rights resulting from any
such breach or misrepresentation hereby specifically are reserved.
10.3
Jury Waiver
EACH
PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF
ANY CLAIM OR CAUSE OF ACTION ARISING UNDER THE LOAN DOCUMENTS OR IN ANY WAY
CONNECTED WITH OR INCIDENTAL TO THE DEALINGS OF THE PARTIES WITH RESPECT TO THE
LOAN DOCUMENTS, ANY REVOLVING LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED
THEREBY, WHETHER NOW EXISTING OR HEREAFTER ARISING, AND WHETHER SOUNDING IN
CONTRACT, TORT OR OTHERWISE. EACH PARTY
HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE
DECIDED BY COURT TRIAL WITHOUT A JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE
AN ORIGINAL COUNTERPART OR A COPY OF THIS SECTION WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENTS OF THE PARTIES TO THE WAIVER OF THEIR
RESPECTIVE RIGHTS TO TRIAL BY JURY.
10.4
Amendment and Waivers
Except
as otherwise provided herein, no amendment, modification, termination or waiver
of any provision of this Agreement or any other Loan Document, or consent to
any departure by the Credit Parties or any of them therefrom, shall be
effective unless the same shall be in writing and signed by Requisite Lenders
(or Agent at the direction of the Requisite Lenders) and each Credit Party;
provided, that no amendment, modification, termination or waiver shall, unless
in writing and signed by each Credit Party and each Lender directly affected
thereby, do any of the following: (i) increase the Commitment of any
individual Lender (which action shall be deemed to directly affect all
Lenders); (ii) reduce the principal of, rate (or cash rate) of interest on
or fees payable with respect to any Loan or other Obligation; (iii) extend
the scheduled due date, or reduce the amount due on any scheduled due date, of
any installment of principal, interest or fees payable under any Loan Document,
or waive, forgive, extend, defer or postpone the payment thereof; (iv) change
the percentage of the Commitments, of the aggregate unpaid principal amount of
the Loan, or of Lenders which shall be required for Lenders, Agent or any of
them to take any action hereunder (which action shall be deemed to directly
affect all Lenders) or alter as between or among the Lenders, the amount
payable to each hereunder; (v) except as otherwise permitted herein or in
the other Loan Documents, release any Guaranty or release any material portion
of the Collateral (which action shall be deemed to directly affect all Lenders)
(provided, that consent to such release shall not be required if such release
is made after the occurrence and during the continuation of an Event of Default
in connection with the sale or disposition of the Collateral by Agent otherwise
permitted hereunder); (vi) amend, modify or waive this Section 10.4
or the definitions of the terms used in this Section 10.4 insofar as the
definitions affect the substance of this Section 10.4 (which action shall
be deemed to directly affect all Lenders); and/or (vii) consent to the
assignment or other transfer by any Credit Party or any other party to
42
any Loan Documents (other than Agent or any Lender) of any of their
rights and obligations under any Loan Document; and provided, further, that no
amendment, modification, termination or waiver affecting the rights or duties
of Agent under any Loan Document shall be effective unless in writing and
signed by Agent, in addition to Lenders required hereinabove to take such
action. Any amendment, modification,
termination, waiver or consent effected in accordance with this Section 10.4
shall be binding upon Agent, each Lender and the Credit Parties.
10.5
Survival and Termination
(a)
All obligations, covenants, agreements,
representations, warranties, waivers and indemnities made by each Credit Party
in the Loan Documents shall survive the execution and delivery of the Loan
Documents, the Closing, the making and funding of the Loan and any termination
of this Agreement until all Obligations (other than contingent indemnification
Obligations to the extent no claim giving rise thereto has been asserted) are
fully performed and indefeasibly paid in full in cash and all Commitments have
been terminated; provided, that, the obligations and provisions of Sections
10.1, 10.3, 10.5, 12.3, 12.4, 12.7, 12.9, 12.10 and 12.11,
Article XI
and
Article XIII
shall survive the termination of the Loan
Documents and any payment, in full or in part, of the Obligations.
(b)
The Loan and other Obligations shall be due
and payable in full in cash, if not earlier in accordance with this Agreement,
on the Maturity Date. All of Agent’s and
Lenders’ rights and remedies and the Liens in the Collateral shall continue in
full force and effect until, and this Agreement shall terminate when all
Obligations have been fully performed and indefeasibly paid in full in cash and
Credit Parties shall have executed and delivered releases in favor of Agent and
Lenders in form and substance satisfactory to Agent, in its Permitted
Discretion (provided, however, that the release may exclude claims filed by a
Credit Party against Agent or a Lender prior to the payoff contemplated in this
Section 10.5(b), arising out of the gross negligence, willful misconduct
or fraud of Agent or such Lender).
Accordingly, each Credit Party waives any right it may have under the
UCC to demand the filing of termination statements with respect to the
Collateral other than such right in connection with the release of Liens
pursuant to sales or other dispositions of assets expressly permitted under
this terms of this Agreement, and Agent shall not be required to provide such
termination statements or to file them with any filing office unless and until
all conditions to the termination of this Agreement and the payment and
performance of the Obligations are satisfied in a manner acceptable to Agent,
in its Permitted Discretion.
XI.
AGENT PROVISIONS; SETTLEMENT
11.1
Agent
(a)
Appointment
. Each
Lender hereby designates and appoints CapitalSource as the administrative
agent, payment agent and collateral agent under this Agreement and the other
Loan Documents and each Lender hereby irrevocably authorizes CapitalSource, as
Agent for such Lender, to take such action or to refrain from taking such
action on its behalf under the provisions of this Agreement and the other Loan
Documents and to exercise such powers and perform such duties as are delegated
to Agent by the terms of this Agreement and the other Loan Documents, together
with such other powers as are reasonably
43
incidental thereto. Agent agrees to act as such on the conditions
contained in this
Article XI
.
The provisions of this
Article XI
are solely for the benefit
of Agent and Lenders, and the Credit Parties shall have no rights as
third-party beneficiaries of any of the provisions of this
Article XI
other than Section 11.1(h)(iii).
Agent may perform any of its duties hereunder, or under the Loan
Documents, by or through its agents, employees or sub-agents.
(b)
Nature of Duties
. In
performing its functions and duties under this Agreement, Agent is acting
solely on behalf of Lenders, and its duties are administrative in nature, and
does not assume and shall not be deemed to have assumed, any obligation toward
or relationship of agency or trust with or for Lenders, other than as expressly
set forth herein and in the other Loan Documents, or the Credit Parties. Agent shall have no duties, obligations or
responsibilities except those expressly set forth in this Agreement or in the
other Loan Documents. Agent shall not
have by reason of this Agreement or any other Loan Document a fiduciary
relationship in respect of any Lender.
Each Lender shall make its own independent investigation of the
financial condition and affairs of the Credit Parties in connection with the extension
of credit hereunder and shall make its own appraisal of the creditworthiness of
the Credit Parties. Except for
information, notices, reports and other documents expressly required to be
furnished to Lenders by Agent hereunder or given to Agent for the account of or
with copies for Lenders, 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 Closing Date or at any time or times thereafter. If Agent seeks the consent or approval of any
Lenders to the taking or refraining from taking any action hereunder, then
Agent shall send prior written notice thereof to each Lender. Agent shall promptly notify each Lender in
writing any time that the applicable percentage of Lenders have instructed
Agent to act or refrain from acting pursuant hereto.
(c)
Rights, Exculpation, Etc
.
Neither Agent nor any of its officers, directors, managers, members,
equity owners, employees, attorneys or agents shall be liable to any Lender for
any action lawfully taken or omitted by them hereunder or under any of the
other Loan Documents, or in connection herewith or therewith; provided that the
foregoing shall not prevent Agent from being be liable to the extent of its own
gross negligence or willful misconduct as determined by a court of competent
jurisdiction on a final and nonappealable basis. Notwithstanding the foregoing, Agent shall be
obligated on the terms set forth herein for performance of its express duties
and obligations hereunder. Agent shall
not be liable for any apportionment or distribution of payments made by it 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 the other Lenders any
payment in excess of the amount to which they are determined to be entitled
(and such other Lenders hereby agree promptly to return to such Lender any such
erroneous payments received by them). In
performing its functions and duties hereunder, Agent shall exercise the same
care which it would in dealing with loans for its own account. Agent shall not be responsible to any Lender
for any recitals, statements, representations or warranties made by the Credit
Parties herein or for the execution, effectiveness, genuineness, validity,
enforceability, collectibility or sufficiency of this Agreement or any of the
other Loan Documents or the transactions contemplated thereby, or for the
financial condition of the Credit Parties.
Agent shall not be required to make any inquiry concerning either the
performance or observance of any of the terms, provisions, or conditions of this
Agreement or any of the Loan Documents, or
44
the financial condition of
the Credit Parties, or the existence or possible existence of any Default or
Event of Default. Agent may at any time
request instructions from Lenders with respect to any actions or approvals
which by the terms of this Agreement or of any of the other Loan Documents
Agent is permitted or required to take or to grant, and Agent shall be
absolutely entitled to refrain from taking any action or to withhold any
approval and shall not be under any liability whatsoever to any Person for
refraining from taking any action or withholding any approval under any of the
Loan Documents until it shall have received such instructions from the
applicable percentage of Lenders.
Without limiting the foregoing, no Lender shall have any right of action
whatsoever against Agent as a result of Agent acting or refraining from acting
under this Agreement or any of the other Loan Documents in accordance with the
instructions of the applicable percentage of Lenders and, notwithstanding the
instructions of Lenders, Agent shall have no obligation to take any action if
it, in good faith, believes that such action exposes Agent or any of its
officers, directors, managers, members, equity owners, employees, attorneys or
agents to any personal liability unless Agent receives an indemnification
satisfactory to it from Lenders with respect to such action.
(d)
Reliance
.
Agent shall be entitled to rely upon any written notices, statements,
certificates, orders or other documents or any telephone message or other
communication (including any writing, telex, telecopy or telegram) 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, any of the other Loan Documents or the Revolving Loan Documents and
its duties hereunder or thereunder, upon advice of legal counsel, independent
accountants and other experts selected by Agent in its sole discretion.
(e)
Indemnification
. Each
Lender, severally and not (i) jointly or (ii) jointly and severally,
agrees to reimburse and indemnify and hold harmless Agent and its officers,
directors, managers, members, equity owners, employees, attorneys and agents
(to the extent not reimbursed by the Credit Parties), ratably according to
their respective Pro Rata Share in effect on the date on which indemnification
is sought under this subsection of the total outstanding Obligations (or,
if indemnification is sought after the date upon which the Commitments shall
have terminated and the Loan shall have been paid in full, ratably in
accordance with their Pro Rata Share immediately prior to such date of the
total outstanding Obligations), 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 Agent or any of its officers,
directors, managers, members, equity owners, employees, attorneys or agents in
any way relating to or arising out of this Agreement, any of the other Loan
Documents or any of the Revolving Loan Documents or any action taken or omitted
by Agent under this Agreement, any of the other Loan Documents or any of the
Revolving Loan Documents; provided, however, that no Lender shall be liable for
the payment of any portion of such liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses, advances or
disbursements to the extent resulting from Agent’s gross negligence or willful
misconduct as determined by a court of competent jurisdiction on a final and
nonappealable basis. The obligations of
Lenders under this
Article XI
shall survive the payment in full of
the Obligations and the termination of this Agreement.
(f)
CapitalSource Individually
. With
respect to the Loan made by it and the Notes, if any, issued to it,
CapitalSource shall have, and may exercise, the same rights and
45
powers hereunder and under
the other Loan Documents, and is subject to the same obligations and
liabilities, as and to the extent set forth herein and the other Loan Documents
as any other Lender. The terms “Lenders”
or “Requisite Lenders” or any similar terms shall, unless the context clearly
otherwise indicates, include CapitalSource in its individual capacity as a
Lender or one of the Requisite Lenders.
CapitalSource may lend money to, and generally engage in any kind of
banking, trust or other business with, any Credit Party or any Subsidiary or
Affiliate of any Credit Party as if it were not acting as Agent pursuant
hereto.
(g)
Successor Agent
.
(i)
Resignation
.
Agent may resign from the performance of all or part of its functions
and duties hereunder at any time by giving at least thirty (30) calendar days’
prior written notice to Borrower and Lenders.
Such resignation shall take effect upon the acceptance by a successor
Agent of appointment pursuant to clause (ii) below or as otherwise
provided below.
(ii)
Appointment of Successor
. Upon
any such notice of resignation pursuant to clause (g)(i) of this Section 11.1,
Requisite Lenders shall appoint a successor Agent with the consent of Borrower,
which consent shall not be unreasonably withheld, delayed or conditioned (or
required if any Default or Event of Default exists). If a successor Agent shall not have been so
appointed within said thirty (30) calendar day period referenced in clause (g)(i) above,
the retiring Agent, upon notice to Borrower, may, on behalf of Lenders, appoint
a successor Agent with the consent of Borrower, which consent shall not be
unreasonably withheld, delayed or conditioned (or required if any Default or
Event of Default exists), who shall serve as Agent until such time as Requisite
Lenders appoint a successor Agent as provided above. If no successor Agent has been appointed
pursuant to the foregoing within said thirty (30) calendar day period, the
resignation shall become effective and Requisite Lenders thereafter shall
perform all the duties of Agent hereunder, until such time, if any, as
Requisite Lenders appoint a successor Agent as provided above.
(iii)
Successor Agent
. Upon
the acceptance of any appointment as Agent under the Loan Documents by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent
and, upon the earlier of such acceptance or the effective date of the retiring
Agent’s resignation, the retiring Agent shall be discharged from its duties and
obligations under the Loan Documents, provided that any indemnity rights or
other rights in favor of such retiring Agent shall continue after and survive
such resignation and succession. After
any retiring Agent’s resignation as Agent under the Loan Documents, the
provisions of this
Article XI
shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under the Loan
Documents.
(h)
Collateral Matters
.
(i)
Collateral
. Each
Lender agrees that any action taken by Agent or the Requisite Lenders (or,
where required by the express terms of this Agreement, a greater proportion of
Lenders) in accordance with the provisions of this Agreement or of
46
the other Loan Documents relating to the
Collateral, and the exercise by Agent or the Requisite Lenders (or, where so
required, such greater proportion of Lenders) of the powers set forth herein or
therein, together with such other powers as are reasonably incidental thereto,
shall be authorized and binding upon all of the Lenders and Agent. Without limiting the generality of the
foregoing, Agent shall have the sole and exclusive right and authority to (i) act
as the disbursing and collecting agent for Lenders with respect to all payments
and collections arising in connection herewith and with the Loan Documents in
connection with the Collateral; (ii) execute and deliver each Loan
Document relating to the Collateral and any Subordination Agreement and accept
delivery of each such agreement delivered by the Credit Parties or any of their
Subsidiaries; (iii) act as collateral agent for Lenders for purposes of
the perfection of all security interests and Liens created by such agreements
and all other purposes stated therein; (iv) manage, supervise and
otherwise deal with the Collateral; (v) take such action as is necessary
or desirable to maintain the perfection and priority of the security interests
and Liens created or purported to be created by the Loan Documents relating to
the Collateral; and (vi) except as may be otherwise specifically
restricted by the terms hereof or of any other Loan Document, exercise all
right and remedies given to such Agent and Lenders with respect to the
Collateral under the Loan Documents relating thereto, applicable law or
otherwise.
(ii)
Release of Collateral
.
Lenders hereby irrevocably authorize Agent, at its option and in its sole
discretion, to release any Lien granted to or held by Agent, for the benefit
the of Lender Parties, upon any Property covered by the Loan Documents (A) upon
termination of this Agreement and payment and satisfaction in full of all
Obligations (other than contingent indemnification Obligations to the extent no
claim giving rise thereto has been asserted); (B) constituting Property
being sold or disposed of if Borrower certifies to Agent that the sale or
disposition is made in compliance with the provisions of the Loan Documents
(and Agent may rely in good faith conclusively on any such certificate to such
effect, without further inquiry); or (C) constituting Property leased to
any Credit Party under a lease which has expired or been terminated in a
transaction permitted under this Agreement or is about to expire and which has
not been, and is not intended by such Credit Party to be, renewed or extended.
(iii)
Confirmation of Authority;
Execution of Releases
. Without in any manner limiting Agent’s
authority to act without any specific or further authorization or consent by
Lenders (as set forth in Section 11.1(h)(i) and
(ii)
), each
Lender agrees to confirm in writing, upon request by Borrower, the authority to
release any property covered by this Agreement or the Loan Documents conferred
upon Agent under Section 11.1(h)(ii).
So long as no Event of Default exists, upon receipt by Agent of
confirmation from the requisite percentage of Lenders of its authority to
release any particular item or types of Property covered by this Agreement or
the other Loan Documents, and upon at least five (5) Business Days’ prior
written request by Borrower, Agent shall (and hereby is irrevocably authorized
by Lenders to) execute such documents as may be necessary to evidence the
release of the Liens granted to Agent, for the benefit of the Lender Parties,
herein or pursuant hereto upon such Collateral; provided, however, that (A) Agent
shall not be required to execute any such document
47
on terms which, in Agent’s opinion, would
expose Agent to liability or create any obligation or entail any consequence
other than the release of such Liens without recourse or warranty (other than
that such Collateral is free and clear, on the date of such delivery, of any
and all Liens arising under the Loan Documents from such Person’s own acts),
and (B) such release shall not in any manner discharge, affect or impair
the Obligations or any Liens upon or obligations of the Credit Parties or any
Subsidiary of any Credit Party in respect of all interests retained by the
Credit Parties or any Subsidiary of a Credit Party, including, without
limitation, the proceeds of any sale, all of which shall continue to constitute
part of the Property covered by this Agreement, the Loan Documents or the
Revolving Loan Documents.
(iv)
Absence of Duty
.
Agent shall have no obligation whatsoever to any Lender or any other
Person to assure that the Property covered by this Agreement or the other Loan
Documents exists or is owned by any Credit Party or is cared for, protected or
insured or has been encumbered or that the Liens granted to Agent, on behalf of
the Lender Parties, herein or pursuant hereto have been properly or
sufficiently or lawfully created, perfected, protected, enforced or maintained
or are entitled to any particular priority, or to exercise at all or in any
particular manner or under any duty of care, disclosure, or fidelity, or to
continue exercising, any of the rights, authorities and powers granted or
available to Agent in this Section 11.1(h) or in any of the other Loan
Documents; it being understood and agreed that in respect of the Property
covered by this Agreement or the other Loan Documents, or any act, omission or
event related thereto, Agent may act in any manner it may deem appropriate, in
its discretion, given Agent’s own interest in Property covered by this
Agreement or the other Loan Documents as one of Lenders and Agent shall have no
duty or liability whatsoever to any of the other Lenders; provided, that Agent
shall exercise the same care which it would in dealing with loans for its own
account.
(i)
Agency for Perfection
. Each
Lender hereby appoints Agent as agent for the purpose of perfecting Lenders’
security interest in Collateral which, in accordance with Article 9 of the
UCC in any applicable jurisdiction, can be perfected only by possession or
control. Should any Lender (other than
Agent) obtain possession of any such Collateral, such Lender shall hold such
Collateral for purposes of perfecting a security interest therein for the
benefit of the Lender Parties, notify Agent thereof and, promptly upon Agent’s
request therefor, deliver such Collateral to Agent or otherwise act in respect
thereof in accordance with Agent’s instructions.
(j)
Exercise of Remedies
.
Except as set forth in Section 11.2, each Lender agrees that it
will not have any right individually to enforce or seek to enforce this
Agreement or any other Loan Document or to realize upon any Collateral security
for the Loan or other Obligations; it being understood and agreed that such
rights and remedies may be exercised only by Agent in accordance with the terms
of the Loan Documents.
(k)
Consents.
(i)
In the event Agent requests the waiver or
consent of a Lender and does not receive a written denial thereof within five (5) Business
Days after such
48
Lender’s receipt of such request, then such
Lender will be deemed to have given such waiver or consent so long as such
request contained a notice stating that such failure to respond within five (5) Business
Days would be deemed to be a waiver or consent by such Lender.
(ii)
In
the event Agent requests the waiver or consent of a Lender in a situation where
such Lender’s waiver or consent would be required and such waiver or consent is
denied, then Agent or any of its Eligible Assignees may, at its option, require
such Lender to assign its interest in the Loan to Agent for a price equal to
the then outstanding principal amount thereof due such Lender
plus
accrued and unpaid interest and fees (but not any Prepayment Premium) due such
Lender, which interest in the Loan will be assigned by such Lender when such
principal, interest and fees are paid to such Lender. In the event that Agent or such Eligible
Assignee elects to require any Lender to assign its interest to Agent pursuant
to this Section 11.1(k)(ii), Agent will so notify such Lender in writing
within forty-five (45) days following such Lender’s denial, and such Lender
will assign its interest to Agent or such Eligible Assignee no later than five (5) calendar
days following receipt of such notice.
11.2
Set-off and Sharing of Payments
In
addition to any rights and remedies now or hereafter granted under applicable
law and not by way of limitation of any such rights, upon the occurrence and
during the continuation of any Event of Default, each Lender is hereby
authorized by the Credit Parties at any time or from time to time, to the
fullest extent permitted by law, with notice to Agent and without prior notice
to Borrower or any other Person other than Agent (such notice being hereby
expressly waived) to set off and to appropriate and to apply any and all (a) balances
(general or special, time or demand, provisional or final) held by such Lender
at any of its offices for the account of any Credit Party (regardless of
whether such balances are then due to any Credit Party), and (b) other
Property at any time held or owing by such Lender to or for the credit or for
the account of any Credit Party, against and on account of any of the
Obligations which are not paid when due; provided, that no Lender or any such
holder shall exercise any such right without prior written notice to
Agent. Any Lender that has exercised its
right to set-off or otherwise has received any payment on account of the
Obligations shall, to the extent the amount of any such set off or payment
exceeds its Pro Rata Share of payments obtained by all of the Lenders on
account of such Obligations, purchase for cash (and the other Lenders or holders
of the Loan shall sell) participations in each such other Lender’s or holder’s
Pro Rata Share of Obligations as would be necessary to cause such Lender to
share such excess with each other Lenders or holders in accordance with their
respective Pro Rata Shares; provided, however, that if all or any portion of
such excess payment or benefits is thereafter recovered from such purchasing
Lender, such purchase shall be rescinded, and the purchase price and benefits
returned, to the extent of such recovery.
Each Credit Party agrees, to the fullest extent permitted by law, that (a) any
Lender or holder may exercise its right to set-off with respect to amounts in
excess of its Pro Rata Share of the Obligations and may sell participations in
such excess to other Lenders and holders, and (b) any Lender so purchasing
a participation in the Loan made or other Obligations held by other Lenders may
exercise all rights of set-off, bankers’ lien, counterclaim or similar rights
with respect to such participation as fully as if such Lender were a direct
holder of Loan and other Obligations in the amount of such participation.
49
11.3
Settlements; Payments; and Information
(a)
Payments; Interest and Fee Payments.
(i)
Payments of principal on the Loan will be
settled, in accordance with each Lender’s Pro Rata Share, on the first Business
Day after such payments are received.
All such payments will be made by such Lender without set-off,
counterclaim or deduction of any kind.
(ii)
On the first Business Day of each month (“Interest
Settlement Date”), Agent will advise each Lender by telephone or facsimile of
the amount of interest and fees charged to and collected from Borrower for the
preceding month in respect of the Loan.
Provided that such Lender has made all payments required to be made by
it under this Agreement, Agent will pay to such Lender, by wire transfer to
such Lender’s account (as specified by such Lender on
Schedule A
of
this Agreement as amended by such Lender from time to time after the date
hereof pursuant to the notice provisions contained herein or in the applicable
Lender Addition Agreement) not later than 2:00 p.m. (New York City time)
on the next Business Day following the Interest Settlement Date, such Lender’s
share of such interest and fees.
(b)
Return of Payments
.
(i)
If Agent pays an amount to a Lender under
this Agreement in the belief or expectation that a related payment has been or
will be received by Agent from any Credit Party and such related payment is not
received by Agent, then Agent will be entitled to recover such amount from such
Lender without set-off, counterclaim or deduction of any kind.
(ii)
If Agent determines at any time that any
amount received by Agent under this Agreement must be returned to any Credit
Party or paid to any other Person pursuant to any Debtor Relief Law or
otherwise, then, notwithstanding any other term or condition of this Agreement,
Agent will not be required to distribute any portion thereof to any Lender. In addition, each Lender will repay to Agent
on demand any portion of such amount that Agent has distributed to such Lender,
together with interest at such rate, if any, as Agent is required to pay to
Borrower or such other Person, without set-off, counterclaim or deduction of
any kind.
11.4
Dissemination of Information
Upon
request by a Lender, Agent will distribute promptly to such Lender, unless
previously provided by any Credit Party to such Lender, copies of all notices,
schedules, reports, projections, financial statements, agreements and other
material and information, including, without limitation, financial and
reporting information received from the Credit Parties or generated by a third
party (and excluding only internal information generated by CapitalSource for
its own use as a Lender or as Agent), as provided for in this Agreement and the
other Loan Documents as received by Agent.
Agent shall not be liable to any of the Lenders for any failure to
comply with its obligations under this Section 11.4, except to the extent
that such failure is
50
attributed to Agent’s gross negligence or willful misconduct and
results in demonstrable damages to such Lender as determined, in each case, by
a court of competent jurisdiction on a final and non-appealable basis.
XII.
MISCELLANEOUS
12.1
Governing Law; Jurisdiction; Service of
Process; Venue
The
Loan Documents shall be governed by and construed in accordance with the
internal laws of the State of New York without giving effect to its choice of
law provisions that would result in the application of the laws of a different
jurisdiction. Any judicial proceeding
against any Credit Party with respect to the Obligations, any Loan Document or
any related agreement may be brought in any federal or state court of competent
jurisdiction located in Montgomery County in the State of Maryland or the
Borough of Manhattan in the State of New York.
By execution and delivery of each Loan Document to which it is a party,
each Credit Party (i) accepts the non-exclusive jurisdiction of the
aforesaid courts, (ii) waives personal service of process, (iii) agrees
that service of process upon it may be made by certified or registered mail,
return receipt requested, pursuant to Section 12.5, and (iv) waives
any objection to jurisdiction and venue of any action instituted hereunder and
agrees not to assert any defense based on lack of jurisdiction, venue,
convenience or forum nonconveniens.
Nothing shall affect the right of Agent or any Lender to serve process
in any manner permitted by law or shall limit the right of Agent or any Lender
to bring proceedings against any Credit Party in the courts of any other
jurisdiction having jurisdiction. Any
judicial proceedings against Agent or any Lender involving, directly or
indirectly, the Obligations, any Loan Document or any related agreement shall
be brought only in a federal or state court located in Montgomery County in the
State of Maryland or in the Borough of Manhattan in the State of New York.
12.2
Successors and Assigns; Assignments and
Participations
(a)
Subject to Section 12.2(h), each Lender
may, at any time and from time to time, assign all or any portion of its rights
and delegate all or a portion of its obligations under this Agreement and the
other Loan Documents in a minimum amount of $1,000,000 (or 100% of any
remaining Commitment less than $1,000,000) (including all of its rights and
obligations with respect to the Loan) to one or more Eligible Assignees (each,
a “Transferee”) with the prior written consent of Agent and, to the extent no
Default or Event of Default shall have occurred and be continuing, with the
prior written consent of Borrower (which consent of Borrower shall not be
unreasonably withheld, delayed or conditions, or required if any Default or
Event of Default exists); provided, that such Transferee and such assigning
Lender shall execute and deliver to Agent for acceptance and recording in the
Register, a Lender Addition Agreement, which shall be in form and substance
acceptable to Agent in its Permitted Discretion. Upon such execution, delivery, acceptance and
recording, from and after the effective date determined pursuant to such Lender
Addition Agreement, (i) the Transferee thereunder shall be a party hereto
and, to the extent provided in such Lender Addition Agreement, have the same
rights, benefits and obligations of a Lender hereunder, (ii) the assigning
Lender shall be relieved of its obligations hereunder with respect to its
Commitment or assigned portion thereof, as the case may be, to the extent that
such obligations shall have been expressly assumed by the Transferee pursuant
to such Lender Addition Agreement (and, in the case of a Lender Addition
Agreement
51
covering all or the
remaining portion of an assigning Lender’s rights and obligations under this
Agreement, such assigning Lender shall cease to be a party hereto but shall
nevertheless continue to be entitled to the benefits of Sections 12.4 and
12.7). Borrower hereby acknowledges and
agrees that any assignment will give rise to a direct obligation of Borrower to
the Transferee and that the Transferee shall be a “Lender” hereunder and under
the other Loan Documents. Except as
provided in Section 12.2(h), no Lender will assign all or any portion of
its Loans and/or Commitments unless such Lender also assigns its proportionate
share of its “Loans” and/or “Commitments” under (and as defined in) the
Revolving Loan Agreement. Notwithstanding anything to the contrary contained in
this Section 12.2, no Transferee shall be entitled to the benefits of Section 13.1
unless such Transferee is a “United States Person” (as defined in Section 13.1(f)).
(b)
Each Lender at any time may sell
participations in all or any part of its rights and obligations under this
Agreement and the other Loan Documents (including all of its rights and
obligations with respect to the Loan) to one or more Persons (each, a “Participant”). In the event of any such sale by a Lender of
a participation to a Participant, such Lender’s obligations under this
Agreement to the other parties to this Agreement shall remain unchanged, such
Lender shall remain solely responsible for the performance thereof, such Lender
shall remain the holder of any such Loan (and any Note evidencing such Loan)
for all purposes under this Agreement and the other Loan Documents and Borrower
and Agent shall continue to deal solely and directly with such Lender in
connection with such Lender’s rights and obligations under this Agreement and
the other Loan Documents. Any agreement
pursuant to which any Lender shall sell any such participation shall provide
that such Lender shall retain the sole right and responsibility to exercise
such Lender’s rights and enforce each Credit Party’s obligations hereunder,
including the right to consent to any amendment, supplement, modification or
waiver of any provision of this Agreement or any of the other Loan Documents;
provided, that such participation agreement may provide that such Lender will
not agree, without the consent of the Participant, to any amendment,
supplement, modification or waiver to the extent resulting in: (i) any
reduction in the principal amount, interest rate or fees payable with respect
to any Loan in which such Participant participates; (ii) any extension of
the date fixed for any payment of principal, interest or fees payable with
respect to any Loan in which such Participant participates; and (iii) any
release of all or substantially all of the Collateral (other than in accordance
with the terms of this Agreement or the other Loan Documents). The Credit Parties hereby acknowledge and
agree that the Participant under each participation shall, solely for the
purposes of Sections 10.5, 12.4 and 12.7 of this Agreement, be considered to be
a “Lender” hereunder. Notwithstanding
anything to the contrary contained in this Section 12.2, no Participant
shall be entitled to the benefits of Section 13.1 unless such Participant
is a “United States Person” (as defined in Section 13.1(f)).
(c)
Agent, on behalf of Borrower, shall maintain
at its address referred to in Section 12.5 a copy of each Lender Addition
Agreement delivered to it and the Register for the recordation of the names and
addresses of the Lenders and the Commitment of, and the principal amount of the
Loan owing to, and the Notes, if any, evidencing such Loan owned by, each
Lender from time to time. Anything
contained in this Agreement to the contrary notwithstanding, each of the Credit
Parties, Agent and the Lenders shall treat each Person whose name is recorded
in such Register as the owner of the Loan, the Notes and the Commitments
recorded therein for all purposes of this Agreement. The Register shall be available for
52
inspection by Borrower or
any Lender at any reasonable time and from time to time upon reasonable prior
notice.
(d)
Notwithstanding anything in this Agreement to
the contrary, no assignment under Section 12.2(a) of any rights or
obligations under or in respect of the Loan or the Notes evidencing such Loan
shall be effective unless and until (i) Agent shall have recorded the
assignment pursuant to Section 12.2(c) and (ii) the assignor
Lender or the Transferee has paid to Agent a processing fee (not at the expense
of any Credit Party) in the amount of $3,500 (provided no such processing fee
shall be required to be paid in connection with an assignment by a Lender to
another Lender, an Eligible Assignee that is an Affiliate of such Lender or a
Related Fund of such Lender). Upon its
receipt of a Lender Addition Agreement executed by an assigning Lender and an
Transferee, Agent shall (i) promptly accept such Lender Addition Agreement
and (ii) on the effective date determined pursuant thereto record the
information contained therein in the Register and give prompt notice of such
acceptance and recordation to the Lenders and Borrower. On or prior to such effective date, the
assigning Lender shall surrender any outstanding Notes held by it all or a
portion of which are being assigned, and Borrower, at its own expense, shall,
upon the request of Agent, the assigning Lender or the Transferee, as
applicable, execute and deliver to Agent, within five (5) Business Days of
any request, new Notes to reflect the interest held by the assigning Lender and
its Transferee.
(e)
Except as otherwise provided in this Section 12.2,
no Lender shall, as between Borrower and that Lender, be relieved of any of its
obligations hereunder as a result of any sale, assignment, transfer or negotiation
of, or granting of participations in, all or any part of the Loan or other
Obligations owed to such Lender. Each
Lender may furnish any information concerning the Credit Parties in the
possession of that Lender from time to time to assignees and participants
(including prospective assignees and participants), subject to confidentiality
requirements, if any, hereunder.
(f)
Notwithstanding any other provision set forth
in this Agreement, any Lender may at any time create a security interest in all
or any portion of its rights under this Agreement, including, without
limitation, the Loan owing to it and the Notes held by it and the other Loan
Documents and its rights in the Collateral.
(g)
Each Credit Party agrees to provide
commercially reasonable efforts to assist any Lender in assigning or selling
participations in all or any part of any Loan made by such Lender to a
potential Transferee or Participant identified by such Lender.
(h)
Notwithstanding anything in the Loan
Documents to the contrary, (i) CapitalSource and its Affiliates shall not
be required to execute or deliver a Lender Addition Agreement in connection
with any transaction involving CapitalSource and any of its Affiliates, or the
lenders or funding or financing sources of CapitalSource or any of its
Affiliates, (ii) subject to the provisions at the end of this paragraph,
no lender to or Affiliate, funding or financing source of CapitalSource or any
of its Affiliates shall be considered a Transferee, and (iii) there shall
be no limitation or restriction on (A) the ability of CapitalSource or any
of its Affiliates to assign or otherwise transfer any Loan Document, Commitment
or Obligation to any such Affiliate or lender or financing or funding source or
(B) any such lender’s or funding or financing source’s ability to assign
or otherwise transfer any Loan Document, Commitment or
53
Obligation; provided,
however, CapitalSource shall continue to be liable as a “Lender” under the Loan
Documents unless such Affiliate, lender or funding or financing source executes
and delivers a Lender Addition Agreement and thereby becomes a “Lender.”
(i)
The Loan Documents shall be binding upon and
inure to the benefit of each Lender, Agent, each Transferee, each Participant
(to the extent expressly provided herein only) and all future holders of the
Loan, the Notes, the Obligations and/or any of the Collateral, and each of
their respective successors and assigns.
Each Loan Document shall be binding upon the Persons other than Lenders
and Agent that are parties thereto and their respective successors and assigns;
provided that, no such Person shall assign, delegate or transfer any Loan
Document or any of its rights or obligations thereunder without the prior
written consent of Agent and each Lender.
No rights are intended to be created under any Loan Document for the
benefit of any third party donee, creditor or incidental beneficiary of any
Credit Party. Nothing contained in any
Loan Document shall be construed as a delegation to Agent or any Lender of any
other Person’s duty of performance.
12.3
Reinstatement; Application of Payments
To
the extent that any payment made or received with respect to the Obligations is
subsequently invalidated, determined to be fraudulent or preferential, set
aside, defeased or required to be repaid to a trustee, debtor in possession,
receiver, administrator custodian or any other similar Person under any Debtor
Relief Law, common law or equitable cause or any other law, then the
Obligations intended to be satisfied by such payment shall be revived and shall
continue as if such payment had not been received by Agent or any Lender and
the Liens created by the Security Documents shall be revived automatically
without any action on the part of any party hereto and shall continue as if
such payment had not been received by Agent or such Lender. Except as specifically provided in this
Agreement, any payments with respect to the Obligations received shall be
credited and applied in such manner and order as Agent shall decide in its sole
discretion.
12.4
Indemnity
The
Credit Parties, jointly and severally, hereby indemnify Agent and each Lender,
and their respective Affiliates, managers, members, officers, employees,
agents, representatives, successors, assigns, accountants and attorneys
(collectively, the “Indemnified Persons”) from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses and disbursements of any kind or nature whatsoever
(including, without limitation, reasonable fees and disbursements of counsel
and in-house documentation and diligence fees and legal expenses) which may be
imposed on, incurred by or asserted against any Indemnified Person with respect
to or arising out of, or in any litigation, proceeding or investigation
instituted or conducted by any Person with respect to any aspect of, or any
transaction contemplated by, or any matter related to, any Loan Document, any
Revolving Loan Document, any Related Document or any agreement, document or
transaction contemplated thereby, whether or not such Indemnified Person is a
party thereto, except to the extent a final and nonappealable order of judgment
binding on such Indemnified Person of a court of competent jurisdiction
determines the same arose out of the gross negligence or willful misconduct of
such Indemnified Person. If any
Indemnified Person uses in-house counsel for
54
any purpose for which the Credit Parties are responsible to pay or
indemnify, the Credit Parties expressly agree that their indemnification
obligations include reasonable charges for such work commensurate with the reasonable
fees that would otherwise be charged by outside legal counsel selected by such
Indemnified Person in its sole discretion for the work performed. Agent agrees to give Borrower reasonable
notice of any event of which Agent becomes aware for which indemnification may
be required under this Section 12.4, and Agent may elect (but is not
obligated) to direct the defense thereof.
Any Indemnified Person may take such actions as it deems necessary and
appropriate to investigate, defend or settle any event or take other remedial
or corrective actions with respect thereto as may be necessary for the
protection of such Indemnified Person or the Collateral; provided, however,
that the Indemnified Person shall not settle, compromise or admit any liability
or wrongdoing without the prior written consent of the Borrower (which consent
shall not be unreasonably withheld or delayed).
Notwithstanding the foregoing, if any insurer agrees to undertake the
defense of an event (an “Insured Event”), Agent agrees not to exercise its
right to select counsel to defend the event if that would cause Borrower’s
insurer to deny coverage; provided, however, that each Indemnified Person
reserves the right to retain counsel to represent such Indemnified Person with
respect to an Insured Event at its sole cost and expense. To the extent that Agent or any Lender
obtains recovery from a third party other than an Indemnified Person of any of
the amounts that the Credit Parties have paid to Agent or any Lender pursuant
to the indemnity set forth in this Section 12.4, then Agent and/or any
such Lender shall promptly pay to Borrower the amount of such recovery. Without limiting any of the foregoing, the
Credit Parties, jointly and severally, indemnify the Indemnified Parties for
all claims for brokerage fees or commissions by any person claiming by, through
or under any Credit Party or Affiliate thereof which may be made in connection
with respect to any aspect of, or any transaction contemplated by or referred
to in, or any matter related to, any Loan Document, any of the Revolving Loan
Documents, any Related Document or any other agreement, document or transaction
contemplated thereby.
12.5
Notice
Any
notice or request under any Loan Document shall be given to any party to this
Agreement at such party’s address set forth beneath its signature on the
signature page to this Agreement, or at such other address as such party
hereafter may specify in a notice given in the manner required under this Section 12.5. Any notice or request hereunder shall be
given only by, and shall be deemed to have been received upon (each, a “Receipt”): (i) registered or certified mail, return
receipt requested, on the date on which such notice or request is received as
indicated in such return receipt, (ii) delivery by a nationally recognized
overnight courier, one (1) Business Day after deposit with such courier,
or (iii) facsimile or electronic transmission, in each case upon telephone
or further electronic communication from the recipient acknowledging receipt
(whether automatic or manual from recipient), as applicable.
12.6
Severability; Captions; Counterparts
If
any provision of any Loan Document is adjudicated to be invalid under
applicable laws or regulations, such provision shall be inapplicable to the
extent of such invalidity without affecting the validity or enforceability of
the remainder of the Loan Documents which shall be given effect so far as
possible. The captions in the Loan
Documents are intended for convenience and reference only and shall not affect
the meaning or interpretation of the Loan
55
Documents. The Loan Documents
may be executed in one or more counterparts (which taken together, as
applicable, shall constitute one and the same instrument) and by facsimile
transmission, which facsimile signatures shall be considered original executed
counterparts. Each party to this
Agreement agrees that it will be bound by its own facsimile signature and that
it accepts the facsimile signature of each other party.
12.7
Expenses
The
Credit Parties hereby jointly and severally agree to pay on demand, whether or
not the Closing occurs, all reasonable costs and expenses incurred by Agent,
Lenders and/or their Affiliates, including, without limitation, documentation
and diligence fees and expenses, all search, audit, appraisal, recording,
professional and filing fees and expenses and all other out-of-pocket charges
and expenses (including, without limitation, UCC and judgment and tax lien
searches and UCC filings and fees for post-Closing UCC and judgment and tax
lien searches and wire transfer fees and audit expenses), and reasonable
attorneys’ fees and expenses, (i) in any effort to enforce, protect or
collect payment of any Obligation or to enforce any Loan Document, any Related
Document or any related agreement, document or instrument, (ii) in
connection with entering into, negotiating, preparing, reviewing and executing
the Loan Documents, the Revolving Loan Documents, the Related Documents and/or
any related agreements, documents or instruments, (iii) arising in any way
out of the administration of the Obligations or the taking or refraining from
taking by Agent or any Lender of any action requested by any Credit Party, (iv) in
connection with instituting, maintaining, preserving, enforcing and/or
foreclosing on the Liens in any of the Collateral or securities pledged under
the Loan Documents, whether through judicial proceedings or otherwise, (v) in
defending or prosecuting any actions, claims or proceedings arising out of or
relating to Agent’s and/or Lenders’ transactions with the Credit Parties, (vi) in
seeking, obtaining or receiving any advice with respect to its rights and
obligations under any Loan Document, any Revolving Loan Document, any Related
Document and any related agreement, document or instrument, (vii) arising
out of or relating to any Default or Event of Default or as a result thereof, (viii) in
connection with all actions, visits, audits and inspections undertaken by Agent
or Lenders or their Affiliates pursuant to the Loan Documents, the Revolving
Loan Documents, any Related Document, and/or (ix) in connection with any
modification, restatement, supplement, amendment, waiver or extension of any
Loan Document, any Revolving Loan Document, any Related Document and/or any
related agreement, document or instrument.
All of the foregoing shall be charged to Borrower’s account and shall be
part of the Obligations. If Agent, any
Lender or any of their Affiliates uses in-house counsel for any purpose under
any Loan Document for which the Credit Parties are responsible to pay or
indemnify, the Credit Parties expressly agree that their Obligations include
reasonable charges for such work commensurate with the reasonable fees that
would otherwise be charged by outside legal counsel selected by Agent, such
Lender or such Affiliate in its sole discretion for the work performed. Without limiting the foregoing, Borrower
shall pay all taxes (other than taxes based upon or measured by a Lender’s
income or revenues or any personal property tax), if any, in connection with
the issuance of any Note and the filing and/or recording of any documents
and/or financing statements.
Notwithstanding anything to the contrary contained herein or in any
other Loan Document, in no event shall the Credit Parties be liable for any
costs or expenses relating to or arising out of the syndication or
participation of the Loan, unless such syndication or participation is at the
request of any Credit Party.
56
12.8
Entire Agreement
This
Agreement and the other Loan Documents to which the Credit Parties are parties
constitute the entire agreement between and among the Credit Parties, Agent and
Lenders with respect to the subject matter hereof and thereof, and supersede
all prior agreements and understandings (including, without limitation, the
letter dated on or about September 8, 2005) relating to the subject matter
hereof or thereof. Execution of this
Agreement by the Credit Parties constitutes a full, complete and irrevocable
release of any and all claims which any Credit Party may have at law or in
equity in respect of all prior discussions and understandings, oral or written,
relating to the subject matter of this Agreement and the other Loan Documents. Each party hereto acknowledges that it has
been advised by counsel in connection with the negotiation and execution of
this Agreement and is not relying upon oral representations or statements
inconsistent with the terms and provisions hereof.
12.9
Approvals and Duties
Unless
expressly provided herein to the contrary, any approval, consent, waiver or
satisfaction of Agent or Lenders with respect to any matter that is the subject
of any Loan Document may be granted or withheld by Agent or Lenders, as
applicable, in their sole and absolute discretion. Other than Agent’s duty of reasonable care
with respect to Collateral delivered pursuant to the Loan Documents in
accordance with applicable law (to the extent not waivable), Agent and Lenders
shall have no responsibility for or obligation or duty with respect to any of
the Collateral or any matter or proceeding arising out of or relating thereto,
including, without limitation, any obligation or duty to collect any sums due
in respect thereof or to protect or preserve any rights pertaining thereto.
12.10
Confidentiality and Publicity
(a)
Each Credit Parties agrees, and agrees to
cause each of its Subsidiaries, (i) except to the extent required by
applicable law or regulations (in which case, except in connection with the
Securities Act and the Securities Exchange Act, as amended, and the rules thereunder,
each Credit Party shall, and shall cause its Subsidiaries to, use its best
efforts to obtain confidential treatment of such information), not to transmit
or disclose any provision of any Loan Document to any Person (other than to
such Credit Party’s directors, advisors, counsel, accountants, officers and
employees on a need-to-know basis), in any such case without Agent’s prior
written consent, and (ii) to inform all Persons receiving information
related to the Loan Documents, except through disclosure pursuant to the
Securities Act and the Securities Exchange Act, as amended, and the rules thereunder,
of the confidential nature of the Loan Documents and to direct them not to
disclose the same to any other Person and to require each of them to be bound
by these provisions. Except for filings
submitted pursuant to the Securities Act and the Securities Exchange Act, and
the rules thereunder, the Credit Parties shall provide in writing any
materials that the Credit Parties or any of their Subsidiaries prepare that
contain Agent’s or any Lender’s name or describe or refer to any Loan Document,
any of the terms thereof or any of the transactions contemplated thereby prior
to its use, disclosure or distribution, and Agent and each Lender reserves the
right to review and approve in advance (which approval shall not be
unreasonably withheld or delayed) all such materials. The Credit Parties shall not, and shall not
permit any of their Subsidiaries to, use either Agent’s or any Lender’s name
(or the name of any
57
of Agent’s or any Lender’s
Affiliates) in connection with any of its Business; provided, that Borrower may
disclose the Lenders’ names, the aggregate principal amount of the Loan
outstanding and other principal terms of such Loan to (x) its shareholders and
other equity owners and prospective purchasers of debt or equity securities of
Borrower and (y) Governmental Authorities regulating the Business in accordance
with applicable legal requirements.
Nothing contained in any Loan Document is intended to permit or
authorize any Credit Party or any of its Subsidiaries to contract on behalf of
Agent or any Lender. Notwithstanding
the foregoing, copies of the Loan Documents and information concerning the
applicable provisions of such Loan Documents may be delivered to each holder of
the Subordinated Notes in connection with matters relating to the Seller
Subordination Agreement.
(b)
Agent and each Lender agree to exercise their
best efforts to maintain in confidence, in accordance with its customary
procedures for handling confidential information, all non-public information
that any Credit Party or Subsidiary thereof furnishes to Agent or such Lender
on a confidential basis clearly identified as such (“Confidential Information”),
other than any such Confidential Information that becomes generally available
to the public other than as a result of a breach by Agent or any Lender of its
obligations hereunder or that is or becomes available to Agent or any Lender
from a source other than a Credit Party and that is not, to the actual
knowledge of the recipient thereof, subject to obligations of confidentiality
with respect thereto; provided, however, that Agent and each Lender shall, in
any event, have the right to deliver copies of any such information, and to
disclose any such information, to:
(i)
its affiliates, lenders, funding or financing
sources (or its affiliates’ or lenders’ funding or financing sources),
portfolio management services and partners that are obligated to maintain the
confidentiality of such Confidential Information;
(ii)
directors, officers, trustees, employees,
agents, attorneys, professional consultants, and rating agencies;
(iii)
any other Lender and any successor Agent;
(iv)
(A) subject to provisions substantially
similar to those contained in this Section 12.10, any potential Transferee
or Participant, or (B) any Person if the disclosure consists of general
portfolio information and does not identify any Credit Party specifically by
name;
(v)
any regulatory authority or examiner, or any
insurance industry association, regulating or having jurisdiction over Agent or
any Lender and requiring or requesting such disclosure; and
(vi)
any other Person to which such delivery or
disclosure may be necessary (A) in compliance with any applicable law,
rule, regulation or order, (B) in response to any subpoena or other legal
process or informal investigative demand, (C) in connection with any
litigation to which Agent or such Lender is a party, or (D) in connection
with the exercise or enforcement, or potential exercise or enforcement, of any
of the rights and/or remedies of Agent and/or the Lenders under this Agreement
and the other Loan Documents at any time during the existence of an Event of
Default.
58
Should Agent or any Lender be required to disclose any such information
by virtue of a subpoena or similar process by any court, tribunal, or agency
pursuant to items (v) or (vi) above, then Agent or such Lender shall
promptly notify the applicable Credit Party thereof so as to allow such Credit
Party, at its sole cost and expense, to seek a protective order or to take any
other appropriate action to protect its rights.
Further, the foregoing notwithstanding, the Credit Parties agree that
Agent, any Lender or any Affiliate of Agent or any Lender may (i) disclose
a general description of transactions arising under the Loan Documents, the
Revolving Loan Documents and the Related Documents for advertising, marketing
or other similar purposes, and (ii) use any Credit Party’s name, logo or
other indicia germane to such party in connection with such advertising,
marketing or other similar purposes.
(c)
The
obligations of Agent and Lenders under this Section 12.10 shall supersede
and replace the obligations of Agent and Lenders under any confidentiality
agreement in respect of the financing evidenced hereby executed and delivered
by Agent or any Lender prior to the date hereof.
12.11
No Consequential Damages
No
party to this Agreement or any other Loan Document, nor any agent or attorney
of such party or any Lender, shall be liable to any other party to this
Agreement or any other Person on any theory of liability for any special,
indirect, consequential or punitive damages.
12.12
Borrower Funds Administrator
(a)
Borrowers maintain an integrated cash
management system reflecting their interdependence on one another and the
mutual benefits shared among them as a result of their respective
operations. In order to efficiently fund
and operate their respective businesses and minimize the number of borrowings
which they will make under this Agreement and thereby reduce the administrative
costs and record keeping required in connection therewith, including the
necessity to enter into and maintain separately identified and monitored
borrowing facilities, Borrowers have requested, and Agent and Lenders have
agreed that the Loan will be advanced to and for the account of Borrowers on a
joint and several basis in accordance with the other provisions hereof. Each Borrower hereby acknowledges that it
will be receiving direct and indirect benefits from each Loan made pursuant to
this Agreement.
(b)
Each Borrower hereby designates, appoints,
authorizes and empowers Borrower Funds Administrator as its agent to act as
specified in this Agreement and each of the other Loan Documents and Borrower
Funds Administrator hereby acknowledges such designation, authorization and
empowerment, and accepts such appointment.
Each Borrower hereby irrevocably authorizes and directs Borrower Funds
Administrator to take such action on its behalf under the provisions of this
Agreement and the other Loan Documents, and any other instruments, documents
and agreements referred to herein or therein, and to exercise such powers and
to perform such duties hereunder and thereunder as are specifically delegated
to or required of Borrower Funds Administrator by the respective terms and
provisions hereof and
59
thereof, and such other
powers as are reasonably incidental thereto, including, without limitation, to
take the following actions for and on such Borrower’s behalf:
(i)
to submit on behalf of each Borrower other
notices to Agent in accordance with the provisions of this Agreement;
(ii)
to receive on behalf of each Borrower the
proceeds of the Loan in accordance with the provisions of this Agreement, such
proceeds to be disbursed to or for the account of the applicable Borrower as
soon as practicable after its receipt thereof; and
(iii)
to submit on behalf of each Borrower,
Compliance Certificates and all other certificates, notices and other
communications given or required to be given hereunder.
Borrower
Funds Administrator hereby further is authorized and directed by each Borrower
to take all such actions on behalf of such Borrower necessary to exercise the
specific power granted in clauses (i) through (iii) above and to
perform such other duties hereunder and under the other Loan Documents, and
deliver such agreements, documents, certificates and instruments as delegated
to or required of Borrower Funds Administrator by the terms hereof or thereof.
(c)
The administration by Agent and Lenders of
the credit facility under this Agreement as a co-borrowing facility with a
funds administrator in the manner set forth herein is solely as an
accommodation to Borrowers and at their request and neither Agent nor any
Lender shall incur any liability to any Credit Party as a result thereof.
12.13
Joint and Several Liability
(a)
Each Borrower acknowledges that it is jointly
and severally liable for all of the Obligations under the Loan Documents. Each Borrower expressly understands, agrees
and acknowledges that (i) Borrowers are all Affiliated entities by common
ownership, (ii) each Borrower desires to have the availability of one
common credit facility instead of separate credit facilities, (iii) each
Borrower has requested that Lenders extend such a common credit facility on the
terms herein provided, (iv) Lenders will be lending against, and relying
on a Lien upon, all of Borrowers’ assets even though the proceeds of any
particular Loan made hereunder may not be advanced directly to a particular
Borrower, (v) each Borrower will nonetheless benefit by the making of the
Loan by each Lender and the availability of a single credit facility of a size
greater than each could independently warrant, (vi) all of the
representations, warranties, covenants, obligations, conditions, agreements and
other terms contained in the Loan Documents shall be applicable to and shall be
binding upon each Borrower and (vii) Borrowers have each executed or will
execute the Notes as co-makers of the Notes and that it would not be able to
obtain the credit provided by Lenders hereunder without the financial support
provided by the other Borrowers.
(b)
Each Borrower hereby guarantees the prompt
payment and performance in full of all Obligations. Such guarantee constitutes a guarantee of
payment and not of collection.
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Each Borrower’s obligations
under this Agreement shall, to the fullest extent permitted by law, be
unconditional irrespective of (i) the validity or enforceability,
avoidance or subordination of the Obligations of any other Credit Party or of
any promissory note or other document evidencing all or any part of the
Obligations of any other Credit Party, (ii) the absence of any attempt to
collect the Obligations from any other Credit Party, or any other security
therefor, or the absence of any other action to enforce the same, (iii) the
waiver, consent, extension, forbearance or granting of any indulgence by Agent
and/or any Lender with respect to any provision of any instrument evidencing
the Obligations of any other Credit Party or any part thereof, or any other
agreement now or hereafter executed by any other Credit Party and delivered to
Agent and/or any Lender, (iv) the failure by Agent and/or any Lender to
take any steps to perfect and maintain its security interest in, or to preserve
its rights to, any security or collateral for the Obligations of any other
Credit Party, (v) Agent’s and/or any Lender’s election, in any proceeding
instituted under the Bankruptcy Code, of the application of Section 1111(b)(2) of
the Bankruptcy Code, (vi) any borrowing or grant of a security interest by
any other Credit Party, as debtor-in-possession under Section 364 of the
Bankruptcy Code, (vii) the disallowance of all or any portion of Agent’s
and/or any Lender’s claim(s) for the repayment of the Obligations of any other
Credit Party under Section 502 of the Bankruptcy Code or (viii) any
other circumstances which might constitute a legal or equitable discharge or
defense of a guarantor or of any other Credit Party (other than actual
indefeasible payment in full in cash).
With respect to any Borrower’s Obligations arising as a result of the
joint and several liability of Borrowers hereunder with respect to the Loan or
other extensions of credit made to any of the other Borrowers hereunder, such
Borrower hereby forever waives any right to enforce any right of subrogation or
any remedy which Agent and/or any Lender now has or may hereafter have against
any other Credit Party, or any endorser of all or any part of the Obligations,
and any benefit of, and any right to participate in, any security or collateral
given to Agent and/or any Lender to secure payment of the Obligations or any
other liability of any Borrower to Agent and/or any Lender. During the existence of any Event of Default,
Agent may proceed directly and at once, without notice, against any Borrower to
collect and recover the full amount, or any portion of the Obligations, without
first proceeding against any other Credit Party or any other Person, or against
any security or collateral for the Obligations.
Each Borrower consents and agrees that Agent shall be under no
obligation to marshal any assets in favor of any Credit Party or against or in
payment of any or all of the Obligations.
(c)
Each Borrower is obligated to repay the
Obligations as a joint and several obligor under this Agreement and the other
Loan Documents. To the extent that any
Borrower shall, under this Agreement as a joint and several obligor, repay any
of the Obligations constituting the Loan made to another Borrower hereunder or
other Obligations incurred directly and primarily by any other Borrower (an “Accommodation
Payment”), then 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 and the denominator of which 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 maximum amount of liability for Accommodation Payments
which could be asserted against such Borrower hereunder without (i) rendering
such Borrower “insolvent” within the meaning of Section 101 (31) of the
Bankruptcy
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Code, Section 2 of the
Uniform Fraudulent Transfer Act (“UFTA”) or Section 2 of the Uniform
Fraudulent Conveyance Act (“UFCA”), (ii) 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 5 of the UFCA,
or (iii) 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 Section 12.13 shall be subordinate in right of payment to the
prior indefeasible payment in full in cash of the Obligations. The provisions of this Section 12.13
shall, to the extent inconsistent with any provision in any Loan Document, supersede
such inconsistent provision.
(d)
If (i) any court holds that Borrowers
are guarantors and not jointly and severally liable as principal obligors or (ii) bankruptcy
or reorganization proceedings at any time are instituted by or against any
Borrower under any Debtor Relief Law, then each Borrower hereby: (A) expressly
and irrevocably waives, to the fullest extent possible, except as otherwise
provided in Section 12.13(c), on behalf of such Borrower, any and all
rights at law or in equity to subrogation, reimbursement, exoneration,
contribution, indemnification, set off or any other rights that could accrue to
a surety against a principal, to a guarantor against a maker or obligor, to an
accommodation party against the party accommodated, to a holder or transferee
against a maker, or to the holder of a claim against any Person, and which such
Borrower may have or hereafter acquire against any Person in connection with or
as a result of such Borrower’s execution, delivery and/or performance of this
Agreement, or any other documents to which such Borrower is a party or
otherwise; (B) expressly and irrevocably waives any “claim” (as such term
is defined in the Bankruptcy Code) of any kind against any other Borrower, and
further agrees that it shall not have or assert any such rights against any
Person (including any surety), either directly or as an attempted set off to
any action commenced against such Borrower by Agent or a Lender or any other
Person; and (C) acknowledges and agrees (I) that this waiver is intended
to benefit Agent and Lenders and shall not limit or otherwise affect such
Borrower’s liability hereunder or the enforceability of this Agreement, and
(II) that Agent and Lenders and their successors and assigns are intended
beneficiaries of this waiver, and the agreements set forth in this Section 12.13
and their rights under this Section 12.13 shall survive payment in full of
the Obligations.
(e)
EACH CREDIT PARTY WAIVES THE FILING OF A
CLAIM WITH A COURT IN THE EVENT OF RECEIVERSHIP OR BANKRUPTCY OF ANY CREDIT
PARTY, AND WAIVES EVERY DEFENSE, CAUSE OF ACTION, COUNTERCLAIM OR SETOFF WHICH
ANY CREDIT PARTY MAY NOW HAVE OR HEREAFTER MAY HAVE TO ANY ACTION BY
AGENT OR ANY LENDER IN ENFORCING THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION,
EVERY DEFENSE, COUNTERCLAIM OR SETOFF WHICH SUCH CREDIT PARTY MAY NOW
HAVE, OR HEREAFTER MAY HAVE, AGAINST ANOTHER CREDIT PARTY OR ANY OTHER
PARTY LIABLE TO AGENT OR ANY LENDER IN ANY MANNER. AS FURTHER SECURITY, ANY AND ALL DEBTS AND
LIABILITIES NOW OR HEREAFTER ARISING AND OWING TO ANY CREDIT PARTY BY ANY OTHER
CREDIT PARTY, OR TO ANY OTHER PARTY LIABLE TO AGENT OR ANY LENDER, ARE HEREBY
SUBORDINATED TO AGENT’S AND ANY SUCH LENDER’S CLAIMS AND UPON THE OCCURRENCE OF
AN EVENT OF DEFAULT ARE ASSIGNED TO AGENT FOR THE BENEFIT OF LENDERS. EACH
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CREDIT PARTY RATIFIES AND
CONFIRMS WHATEVER AGENT OR A LENDER MAY DO PURSUANT TO THE TERMS HEREOF,
AND AGREES THAT NEITHER AGENT NOR ANY LENDER SHALL BE LIABLE FOR ANY ERROR IN
JUDGMENT OR MISTAKES OF FACT OR LAW OTHER THAN WITH RESPECT TO ITS GROSS
NEGLIGENCE, FRAUD OR WILLFUL MISCONDUCT.
EACH CREDIT PARTY HEREBY AGREES THAT IT MAY BE JOINED AS A PARTY
DEFENDANT IN ANY LEGAL PROCEEDING (INCLUDING, BUT NOT LIMITED TO, A FORECLOSURE
PROCEEDING) INSTITUTED BY AGENT OR ANY LENDER AGAINST ANY OTHER CREDIT PARTY.
(f)
Should a claim be made upon Agent or any
Lender at any time for repayment of any amount received by Agent or any Lender
in payment of the Obligations, or any part thereof, whether received from any
Credit Party or received by Agent or any Lender as the proceeds of Collateral,
by reason of: (1) any judgment,
decree or order of any court or administrative body having jurisdiction over
Agent or any Lender or any of their property, or (2) any settlement or
compromise of any such claim effected by Agent or any Lender, in its sole
discretion, with the claimant (including a Credit Party), each Credit Party
shall remain liable to Agent or any such Lender for the amount so repaid to the
same extent as if such amount had never originally been received by Agent or
any such Lender, notwithstanding any termination hereof or the cancellation of
any note or other instrument evidencing any of the Obligations.
To
the extent that any payment to, or realization by, any Lender or Agent on the
Obligations exceeds the limitations of this Section 12.13 and is otherwise
subject to avoidance and recovery in any such proceeding, the amount subject to
avoidance shall in all events be limited to the amount by which such actual
payment or realization exceeds such limitation, and this Agreement as limited
shall in all events remain in full force and effect and be fully enforceable
against such Credit Party. This Section 12.13
is intended solely to reserve the rights of Lenders and Agent hereunder against
each Credit Party, in such proceeding to the maximum extent permitted by
applicable Debtor Relief Laws and no Credit Party, guarantor of the Obligations
or other Person shall have any right, claim or defense under this Section 12.13
that would not otherwise be available under applicable Debtor Relief Laws in
such proceeding.
XIII.
TAXES
13.1
Taxes
(a)
Subject to this Section 13.1(g), any and
all payments by Borrower or any other Credit Party to each Lender or Agent
under this Agreement or any other Loan Document shall be made free and clear
of, and without deduction or withholding for, any and all present or future
taxes, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, excluding, in the case of each Lender and
Agent, such taxes (including income taxes or franchise taxes) as are imposed on
or measured by the net income of such Lender or Agent, respectively, by the
jurisdiction under the laws of which such Lender or Agent, as the case may be,
is organized or maintains a Lending Office or other taxable presence, or any
political subdivision thereof (all such non-excluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities being hereinafter referred to
as “Taxes”).
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(b)
In addition, Borrower and the other Credit
Parties shall pay any present or future stamp or documentary taxes or any other
excise or property taxes, charges or similar levies which arise from any
payment made hereunder or from the execution, delivery or registration of, or
otherwise with respect to, this Agreement or any other Loan Document
(hereinafter referred to as “Other Taxes”).
(c)
Subject to this Section 13.1(g), the
Credit Parties shall indemnify and hold harmless each Lender and Agent for the
full amount of Taxes or Other Taxes (including any Taxes or Other Taxes imposed
by any jurisdiction on amounts payable under this Section 13.1) paid by
such Lender or Agent and any liability (including penalties, interest,
additions to tax and expenses) arising therefrom or with respect thereto,
whether or not such Taxes or Other Taxes were correctly or legally asserted,
except in the case of Taxes or Other Taxes incurred due to the gross negligence
or willful misconduct of such Lender or Agent.
Payment under this indemnification shall be made within ten (10) days
from the date any Lender or Agent makes written demand therefor.
(d)
If any Credit Party shall be required by law
to deduct or withhold any Taxes or Other Taxes from or in respect of any sum
payable hereunder to any Lender or Agent, then, subject to Section 13.1(g):
(i)
the sum payable shall be increased as
necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section 13.1), such
Lender or Agent, as the case may be, receives an amount equal to the sum it
would have received had no such deductions been made;
(ii)
such Credit Party shall make such deductions;
and
(iii)
such Credit Party shall pay the full amount
deducted to the relevant taxation authority or other authority in accordance
with applicable law.
(e)
Within ten (10) days after the date of
any payment by any Credit Party of Taxes or Other Taxes, Borrower shall furnish
to Agent (and the applicable Lender) the original or a certified copy of a
receipt evidencing payment thereof, or other evidence of payment satisfactory
to Agent (and the applicable Lender).
(f)
Each Lender that is not a “United States
Person” within the meaning of Section 7701(a)(30) of the Code (a “Non-U.S.
Lender”) shall deliver to Borrower and Agent two (2) copies of each U.S.
Internal Revenue Service Form W-8BEN or Form W-8ECI, or any
subsequent versions thereof or successors thereto, 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 a certificate
representing that such Non-U.S. Lender is not a “bank” for purposes of Section 881(c) of
the Code, is not a ten (10%) percent shareholder (within the meaning of Section 871(h)(3)(B) of
the Code) of Borrower and is not a controlled foreign corporation related to
Borrower (within the meaning of Section 864(d)(4) of the Code)),
properly completed and duly executed by such Non-U.S. Lender claiming complete
exemption from, or a reduced rate of, U.S. federal withholding tax on all
payments by Borrower under this Agreement
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and the other Loan
Documents. Such forms shall be delivered
by each Non-U.S. Lender on or before the date it becomes a party to this
Agreement. In addition, each Non-U.S.
Lender shall deliver such forms (or other forms or documents to the extent
required) promptly upon the obsolescence or invalidity of any form previously
delivered by such Non-U.S. Lender or upon any changes in the forms or documents
required hereunder for establishing that payments to the Non-U.S. Lender are
exempt from withholding. Each Non-U.S.
Lender shall promptly notify Borrower at any time it determines that it is no
longer in a position to provide any previously delivered certificate to
Borrower (or any other form of certification adopted by the U.S. taxing
authorities for such purpose).
Notwithstanding any other provision of this section, a Non-U.S. Lender
shall not be required to deliver any form pursuant to this subsection that
such Non-U.S. Lender is not legally able to deliver.
(g)
Borrower shall not be required to pay any
additional amounts in respect of United States Federal income tax pursuant to
Sections 13.1(c) or (d) to any Lender for the account of any Lending
Office of such Lender:
(i)
if the obligation to pay such additional
amounts would not have arisen but for a failure by such Lender to deliver the
forms or other documents under Section 13.1(f) in respect of such
Lending Office; or
(ii)
if such Lender shall have delivered to
Borrower a Form W-8BEN and/or Form W-8ECI (or any subsequent versions
thereof or successors thereto) in respect of such Lending Office pursuant to Section 13.1(f),
and such Lender shall not at any time be entitled to exemption from deduction
or withholding of United States Federal income tax in respect of payments by
Borrower hereunder for the account of such Lending Office for any reason other
than a change in United States law, treaty or regulations or in the official
interpretation of such law or regulations by any Governmental Authority charged
with the interpretation or administration thereof (whether or not having the
force of law) after the date of delivery of such Form W-8BEN and/or Form W-8ECI
(or any subsequent versions thereof or successors thereto).
(h)
If, at any time, Borrower requests any Lender
to deliver any forms or other documentation in addition to those forms required
to be delivered by such Lender pursuant to Section 13.1(f), then Borrower
shall, on demand of such Lender through Agent, reimburse such Lender for any
costs and expenses (including attorneys’ fees and expenses) reasonably incurred
by such Lender in the preparation or delivery of such forms or other
documentation.
(i)
If Borrower is required to pay additional
amounts to any Lender or Agent pursuant to Sections 13.1 (c) or (d), then
such Lender shall use its reasonable efforts (consistent with legal and
regulatory restrictions) to change the jurisdiction of its Lending Office so as
to eliminate any such additional payment by Borrower which may thereafter
accrue if such change in the judgment of such Lender is not otherwise
disadvantageous to such Lender. In
addition to the foregoing and if such Lender deems it commercially reasonable
in its sole discretion, such Lender agrees to obtain a refund or credit for any
additional amounts paid by Borrower to such Lender or Agent pursuant to
Sections 13.1 (c) or (d), and, to the extent any such refund or credit is
obtained, apply such amounts to the outstanding Obligations owing by any Credit
Party under this Agreement (without any Prepayment Premium under Section 3.2).
65
13.2
Certificates of Lenders.
Any
Lender claiming reimbursement or compensation pursuant to this Article XIII
shall deliver to Borrower (with a copy to Agent) a certificate setting forth in
reasonable detail the amount payable to such Lender hereunder and such
certificate shall be conclusive and binding on the Credit Parties in the
absence of manifest error.
13.3
Survival.
The
agreements and obligations of the Credit Parties in this Article XIII
shall survive the payment of all other Obligations.
XIV.
GUARANTY
14.1
Guaranty
Each
Guarantor jointly and severally hereby unconditionally and irrevocably guarantees
the punctual payment when due, whether at stated maturity, by acceleration or
otherwise, of all Obligations of each other Credit Party, including, without
limitation, Borrower, now or hereafter existing under any Loan Document,
whether for principal, interest (including, without limitation, all interest
that accrues after the commencement of any proceeding of Borrower or any other
Credit Party under any Debtor Relief Laws), fees, commissions, expense
reimbursements, indemnifications or otherwise (such obligations, to the extent
not paid by Borrower, the “Guaranteed Obligations”), and agrees to pay any and
all costs, fees and expenses (including reasonable counsel fees and expenses)
incurred by Agent and Lenders in enforcing any rights under the guaranty set
forth in this
Article XIV
.
Without limiting the generality of the foregoing, each Guarantor’s
liability shall extend to all amounts that constitute part of the Guaranteed
Obligations and would be owed by Borrower or any other Credit Party to Agent and
Lenders under any Loan Document, but for the fact that they are unenforceable
or not allowable due to the existence of any proceeding under any Debtor Relief
Laws involving Borrower or any other Credit Party. This guaranty is a guaranty of payment and not
of collection.
14.2
Guaranty Absolute
The
obligations of each Guarantor under this
Article XIV
are
independent of the Guaranteed Obligations, and a separate action or actions may
be brought and prosecuted against each Guarantor to enforce such obligations,
irrespective of whether any action is brought against any Credit Party or
whether any Credit Party is joined in any such action or actions. The liability of each Guarantor under this
Article XIV
shall be irrevocable, absolute and unconditional irrespective of, and each
Guarantor hereby irrevocably waives any defenses it may now or hereafter have
in any way relating to, any or all of the following:
(a)
any lack of validity or enforceability of any
Loan Document or any agreement or instrument relating thereto;
(b)
any change in the time, manner or place of
payment of, or in any other term of, all or any of the Guaranteed Obligations,
or any other amendment or waiver of or any consent to departure from any Loan
Document, including, without limitation, any increase in the
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Guaranteed Obligations
resulting from the extension of additional credit to any Credit Party or
otherwise;
(c)
any taking, exchange or release of, or
non-perfection of a Lien on, any Collateral, or any taking, release or
amendment or waiver of or consent to departure from any other guaranty, for all
or any of the Guaranteed Obligations;
(d)
any change, restructuring or termination of
the corporate, limited liability company or partnership structure or existence
of any Credit Party; or
(e)
any other circumstance (including, without
limitation, any statute of limitations) or any existence of or reliance on any
representation by Agent or Lenders that might otherwise constitute a defense
available to, or a discharge of, any Credit Party or any other guarantor or
surety.
This
Article XIV
shall continue to be effective or be reinstated, as the
case may be, if at any time any payment of any of the Guaranteed Obligations is
rescinded or must otherwise be returned to Agent or Lenders or any other Person
upon the insolvency, bankruptcy or reorganization of Borrower or any other
Credit Party or otherwise, all as though such payment had not been made.
14.3
Waiver
Each
Guarantor hereby waives promptness, diligence, notice of acceptance and any
other notice with respect to any of the Guaranteed Obligations and this
Article XIV
and any requirement that Agent or Lenders exhaust any right or take any action
against any other Credit Party, any other Person or any Collateral. Each Guarantor acknowledges that it will
receive direct and indirect benefits from the financing arrangements
contemplated herein and that the waiver set forth in this Section 14.3 is
knowingly made in contemplation of such benefits. Each Guarantor hereby waives any right to
revoke this
Article XIV
, and acknowledges that this
Article XIV
is continuing in nature and applies to all Guaranteed Obligations, whether
existing now or in the future.
14.4
Continuing Guaranty; Assignments
This
Article XIV
is a continuing guaranty and shall (a) remain in
full force and effect until the indefeasible payment in full in cash of the
Guaranteed Obligations and all other amounts payable under this
Article XIV
and the termination of this Agreement, (b) be binding upon each Guarantor,
its successors and assigns and (c) inure to the benefit of, and be
enforceable by, Agent and Lenders and their respective successors, pledgees,
Transferees and Participants. Without
limiting the generality of the foregoing clause (c), any Lender may pledge,
assign or otherwise transfer all or any portion of its rights and obligations
under this Agreement (including, without limitation, all or any portion of its
Commitments and the portion of the Loan owing to it) to any Transferee, and
such Transferee shall thereupon become vested with all the benefits in respect
thereof granted such Lender herein or otherwise, in each case as provided in
this Agreement.
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14.5
Maximum Liability
The
provisions of this Guaranty are severable, and in any action or proceeding
involving any state corporate law, or any Debtor Relief Law, if the obligations
of any Guarantor under this Guaranty would otherwise be held or determined to
be avoidable, invalid or unenforceable on account of the amount of such
Guarantor’s liability under this Guaranty, then, notwithstanding any other
provision of this Guaranty to the contrary, the amount of such liability shall,
without any further action by the Guarantors or the Lenders, be automatically
limited and reduced to the highest amount that is valid and enforceable as
determined in such action or proceeding (such highest amount determined
hereunder being the relevant Guarantor’s “Maximum Liability”). This Section with respect to the Maximum
Liability of each Guarantor is intended solely to preserve the rights of the
Lenders to the maximum extent not subject to avoidance under applicable law,
and no Guarantor nor any other person or entity shall have any right or claim
under this Section with respect to such Maximum Liability, except to the
extent necessary so that the obligations of any Guarantor hereunder shall not
be rendered voidable under applicable law.
Each Guarantor agrees that the Guaranteed Obligations may at any time
and from time to time exceed the Maximum Liability of each Guarantor without
impairing this Guaranty or affecting the rights and remedies of the Lender
Parties hereunder, provided that, nothing in this sentence shall be construed
to increase any Guarantor’s obligations hereunder beyond its Maximum Liability.
14.6
Subordination
Each
of the Persons composing Guarantors hereby agrees that, after the occurrence
and during the continuance of any Default or Event of Default, the payment of
any amounts due with respect to the indebtedness owing by Borrower to a
Guarantor or by amounts due with respect to the indebtedness owing by Borrower
to a Guarantor or by any Guarantor to any other Guarantor is hereby
subordinated to the prior payment in full in cash of the Obligations. Each Guarantor hereby agrees that, after the
occurrence and during the continuance of any Default or Event of Default, such
Guarantor shall not demand, sue for or otherwise attempt to collect any
indebtedness of Borrower or any other Guarantor owing to such Guarantor until
the Obligations shall have been paid in full in cash. If, notwithstanding the foregoing sentence,
such Guarantor shall collect, enforce or receive any amounts in respect of such
indebtedness, such amounts shall be collected, enforced and received by such
Guarantor as trustee for the Lender Parties, and such Guarantor shall deliver
any such amounts to Agent for application to the Obligations.
14.7
Subrogation
No
Guarantor shall exercise any rights that it may now have or hereafter acquire
against any other Credit Party or any other guarantor or that arise from the
existence, payment, performance or enforcement of such Guarantor’s obligations
under this
Article XIV
, including, without limitation, any right of
subrogation, reimbursement, exoneration, contribution or indemnification and
any right to participate in any claim or remedy of Agent and Lenders against
any other Credit Party or any other guarantor or any Collateral, whether or not
such claim, remedy or right arises in equity or under contract, statute or
common law, including, without limitation, the right to take or receive from
any other Credit party or any other guarantor, directly or indirectly, in cash
or other property or by set-off or in any other manner, payment or security
68
solely on account of such claim, remedy or right, unless and until all
of the Guaranteed Obligations and all other amounts payable under this
Article XIV
shall have been indefeasibly paid in full in cash and all Commitments to lend
hereunder shall have terminated; provided, however, no Guarantor shall have any
rights hereunder against a Credit Party or any of its Subsidiaries if all or
any portion of the Guaranteed Obligations shall have been satisfied with
proceeds from the exercise of remedies in respect of the equity securities of
such Credit Party pursuant to a Pledge Agreement. If any amount shall be paid to any Guarantor
in violation of the immediately preceding sentence, such amount shall be held
in trust for the benefit of Agent and Lenders and shall forthwith be paid to
Agent to be credited and applied to the Guaranteed Obligations and all other
amounts payable under this
Article XIV
, whether matured or
unmatured, in accordance with the terms of this Agreement, or to be held as
Collateral for any Guaranteed Obligations or other amounts payable under this
Article XIV
thereafter arising. If (i) any
Guarantor shall make payment to Agent and Lenders of all or any part of the
Guaranteed Obligations, (ii) all of the Guaranteed Obligations and all
other amounts payable under this
Article XIV
shall be paid in full
in cash and (iii) all Commitments to lend hereunder shall have been
terminated, Agent and Lenders will, at such Guarantor’s request and expense,
execute and deliver to such Guarantor or appropriate documents, without
recourse and without representation or warranty, reasonably necessary to
evidence the transfer by subrogation to such Guarantor of an interest in the
Guaranteed Obligations resulting from such payment by such Guarantor.
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69
IN
WITNESS WHEREOF, each of the parties has duly executed this Credit Agreement as
of the date first written above.
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BORROWER:
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EVOLVING SYSTEMS, INC.
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By:
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/s/Brian R. Ervine
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Name:
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Brian R. Ervine
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Title:
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Executive Vice President and Chief
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Financial and Administrative Officer
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9777 Pyramid Court, Suite 100
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Englewood, CO 80112
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Attention:
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Anita T. Moseley, General Counsel
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Telephone:
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303 802-2599
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FAX:
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303 802-1138
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E-MAIL:
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atm@evolving.com
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BORROWER:
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TELECOM SOFTWARE ENTERPRISES, LLC
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By:
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/s/Brian R. Ervine
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Name:
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Brian R. Ervine
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Title:
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Executive Vice President and Chief
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Financial and Administrative Officer
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9777 Pyramid Court, Suite 100
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Englewood, CO 80112
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Attention:
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Anita T. Moseley, General Counsel
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Telephone:
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303 802-2599
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FAX:
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303 802-1138
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E-MAIL:
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atm@evolving.com
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GUARANTOR:
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EVOLVING SYSTEMS HOLDINGS, INC.
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By:
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/s/Brian R. Ervine
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Name:
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Brian R. Ervine
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Title:
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Executive Vice President and Chief
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Financial and Administrative Officer
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9777 Pyramid Court, Suite 100
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Englewood, CO 80112
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Attention:
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Anita T. Moseley, General Counsel
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Telephone:
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303 802-2599
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FAX:
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303 802-1138
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E-MAIL:
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atm@evolving.com
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AGENT AND A LENDER:
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CAPITALSOURCE FINANCE LLC
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By:
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/s/ Steven A. Museles
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Name:
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Steven A. Museles
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Title:
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Senior Vice President
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CapitalSource Finance LLC
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4445 Willard Avenue, 12th Floor
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Chevy Chase, Maryland 20815
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Attention:
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Corporate Finance Group, Portfolio Manager
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Telephone:
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(301) 841-2700
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FAX:
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(301) 841-2313
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E-MAIL:
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sladd@capitalsource.com
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Schedule 6.7
Post Closing
Deliverables
In
accordance with Section 6.7 of the Agreement, the following actions, items
and deliverables, which were not completed on or before the Closing Date as
otherwise required by the Agreement, shall be completed, taken and/or delivered
to Required Lenders’ satisfaction on or before the respective dates specified
below. The Credit Parties acknowledge
that the Lenders are accommodating them by permitting the Credit Parties to
complete the following actions, items and deliverables on a post-Closing
basis. As such, the failure to take,
comply with or provide any of the actions or items referred to below on or
before the respective due date set forth below shall constitute an immediate
Event of Default under the Agreement, without further notice or action by or on
behalf of Agent, any Lender or any other Person. Nothing in this
Schedule 6.7
shall limit the effect of any provision of the Agreement or the Credit Parties’
obligations thereunder. Capitalized
terms used but not otherwise defined in this
Schedule 6.7
shall
have the meanings assigned to it in the Agreement.
1.
On or before January 31,
2006, Evolving Systems and its Subsidiaries shall execute the Transfer Pricing
Agreements in form and substance approved by Agent in its Permitted Discretion
and deliver copies thereof to Agent.
2.
On or before December 31,
2005, the Credit Parties shall procure the Life Insurance Policy.
3. The
Credit Parties shall cooperate with Agent to cause Lenders to provide a
back-to-back letter of credit in support of Letter of Guarantee No. 040/700115-0
mentioned on
Schedule 7.2
and shall then cause the issuer to
release any charge over the Property of the Credit Parties.
4.
On or before the
fifteenth Business Day after the Closing Date Evolving Systems shall amend the
Certificate of Designations of the Series B Convertible Preferred Stock in
form and substance acceptable to Agent.
Exhibit B-1
Financial
Covenants
1.
Leverage
Ratio
. No Credit Party shall permit
the Leverage Ratio for the twelve (12) month period ending on any date set
forth in the table below to exceed the maximum ratio set forth in the table
below opposite such date:
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Date
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Maximum Ratio
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December 31,
2005, March 31, 2006, June 30, 2006 and September 30, 2006
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2.50:1
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December 31,
2006, March 31, 2007, June 30, 2007, and September 30, 2007
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2.25:1
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December 31,
2007, March 31, 2008, June 30, 2008 and September 30, 2008
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2:00 to 1
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December 31,
2008, March 31, 2009 and the end of each quarter thereafter
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1.75:1
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2.
Minimum
EBITDA
. No Credit Party shall permit
EBITDA of the Credit Parties and their consolidated Subsidiaries on a
consolidated basis, without duplication, for the twelve (12) month period
ending on any date set forth in the table below to be less than the minimum
amount set forth in the table below opposite such date:
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Date
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Minimum EBITDA
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December 31, 2005, March 31, 2006 and June 30, 2006
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$
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5,500,000
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September 30, 2006 and December 31, 2006
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$
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6,000,000
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March 31, 2007 and June 30, 2007
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$
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6,500,000
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September 30, 2007 and December 31, 2007
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$
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7,000,000
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March 31, 2008 and the end of each quarter thereafter
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$
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7,250,000
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3.
Fixed
Charge Coverage Ratio
. No
Credit Party shall permit the Fixed Charge Coverage Ratio for the twelve (12)
month period ending on any date set forth in the table below to be less than
the minimum ratio set forth in the table below opposite such date:
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Date
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Minimum Ratio
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December 31, 2005, March 31, 2006 and June 30, 2006
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1.15:1
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September 30, 2006 and the end of each quarter thereafter
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1.20:1
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4.
Capital
Expenditures
. No Credit
Party shall make or commit to make Capital Expenditures for any fiscal year (or
shorter period) set forth in the table below in an aggregate amount for all
Credit Parties and their consolidated Subsidiaries, without duplication,
exceeding the dollar limitation set forth in the table below (the “Capital Expenditure Limitation”)
with respect to such fiscal year
(or shorter period):
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Fiscal Year/Period:
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Limitation
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Fiscal year
ending December 31, 2005;
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$
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1,400,000
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Fiscal year
ending December 31, 2006 and each fiscal year thereafter until the
Maturity Date
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$
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1,400,000
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provided,
however, in the event the Credit Parties do not expend the entire respective
Capital Expenditure Limitation in any fiscal year, the Credit Parties may carry
forward to the immediately succeeding fiscal year (but not to subsequent fiscal
years) fifty percent (50%) of such unutilized portion. All Capital Expenditures during any fiscal year
shall be applied first to reduce the applicable Capital Expenditure Limitation
of such fiscal year and then to reduce the carry-forward from the previous
fiscal year (or shorter period), if any.
5.
Definitions. As used in this Agreement, the following
terms shall have the following meanings:
“
Capital Expenditures
” shall mean for any
period, the sum (without duplication) of all expenditures (whether paid in cash
or accrued as liabilities) made by the Credit Parties and their consolidated
Subsidiaries during such period that are or are required to be treated as
capital expenditures under GAAP.
“
EBITDA
” shall mean, with respect to Credit
Parties and their consolidated Subsidiaries on a consolidated basis and without
duplication for any period, the sum of the following for such period, all
determined in accordance with GAAP:
(a)
Net
Income;
(b)
plus
the sum of the following, to the extent deducted in determining such Net Income
and without duplication:
(i)
Interest
Expense;
(ii)
franchise
and income taxes;
(iii)
depreciation,
amortization and impairment expense;
(iv)
all
other non-cash and/or non-recurring charges (including non-cash charges related
to accounting for employee stock option plans as required by FAS 123R) and
expenses approved by Agent in its Permitted Discretion, excluding (A) accruals
for cash expenses made in the Ordinary Course of Business and (B) write-offs
of accounts receivable;
(v)
loss
from any sale of assets, other than sales in the Ordinary Course of Business;
(vi)
extraordinary
losses from the sale of securities or the extinguishment of debt; and
(c)
minus
the sum of the following, to the extent included in determining such Net Income
and without duplication:
(i)
gain
from any sale of assets, other than sales in the Ordinary Course of Business;
(ii)
extraordinary
gains
from
the sale of securities or the extinguishment of debt;
(iii)
all
other non-cash and/or non-recurring income that is in each case not operating
income;
(v)
proceeds
of insurance (other than business interruption insurance); and
(vi)
the
amounts that would be accrued in connection with TSE Contingent Obligations if
the Credit Parties accrued for such amounts.
For purposes of computing EBITDA, the EBITDA of any
person accrued prior to the date it becomes a Credit Party or is merged into or
consolidated with a Credit Party or a Subsidiary thereof that Person’s assets
and acquired by a Credit Party or a Subsidiary thereof shall be excluded.
“
Fixed Charge Coverage Ratio
” shall mean, for
the Credit Parties and their consolidated Subsidiaries on a consolidated basis
and without duplication, on any date of determination, the ratio of (a) EBITDA
minus
Unfinanced Capital Expenditures
minus
income and franchise
taxes paid in cash, to (b) Fixed Charges, in each case for the twelve (12)
months then ending.
“
Fixed Charges
” shall mean, for any period,
the sum of the following for the Credit Parties and their consolidated
Subsidiaries, on a consolidated basis and without duplication: (a) Total Debt Service and (b) dividends,
repurchases or redemptions of equity and/or distributions paid in cash.
“
Interest Expense
” shall mean total interest
expense generated during the period in question (including attributable to
conditional sales contracts, Capital Leases and other title retention
agreements in accordance with GAAP and all unused line and commitment fees and
administrative and similar fees) of the Credit Parties and their consolidated
Subsidiaries on a consolidated basis and without duplication with respect to all
outstanding Indebtedness, including accrued interest and interest paid in kind
and capitalized interest, but excluding commissions, discounts and other fees
owed with respect to letters of credit and bankers’ acceptance financing, net
costs under Hedging Agreements and fees payable to Agent or Lenders on the
Closing Date under
Section 3.1
.
“
Leverage Ratio
” shall mean, on any date of
determination, the ratio of (a) Senior Debt calculated on such date, to (b)
EBITDA for the twelve (12) months then ending.
“
Net Income
” shall mean, for any period, the
net income (or loss) of the Credit Parties and their consolidated Subsidiaries
on a consolidated basis for such period taken as a single accounting period
determined in conformity with GAAP; provided, that there shall be excluded (a) the
income (or loss) of any Person in which any other Person (other than a Credit
Party or a “Credit Party” under and as defined in the Revolving Loan Agreement)
has a joint ownership interest, except to the extent of the amount of dividends
or other distributions actually paid to any Credit Party by such Person during
such period, (b) the income (or loss) of any Person accrued prior to the
date it becomes a or is merged into or consolidated with a Credit Party or a “Credit
Party” under and as defined in the Revolving Loan Agreement or that Person’s
assets are acquired by a Credit Party or a “Credit Party” under and as defined
in the Revolving Loan Agreement, (c) the income of any Subsidiary of such
Person to the extent that the declaration or payment of dividends or similar
distributions of that income by that Subsidiary is not at the time permitted by
operation of the terms of the charter or any agreement, instrument, judgment,
decree, order, statute, rule or governmental regulation applicable to that
Subsidiary and (d) the income (loss) associated with any Hedging
Agreements.
“
Senior Debt
” shall mean, on any date of
determination, the Obligations hereunder and all Indebtedness under the
Revolving Loan Agreement (provided that, for purposes of determining the
Indebtedness outstanding under the Revolving Loan Agreement as of the end of
each fiscal quarter, “Senior Debt” shall mean the average daily amount of
outstanding principal and accrued interest on the Revolving Facility for such
fiscal quarter), on a consolidated basis and without duplication. For all purposes of this Agreement, the term “Senior
Debt” shall be calculated to include (i.e., not net of) discounts, deductions
or allocations relating or applicable to or arising from any equity or equity
participation or fees, whether under GAAP or otherwise.
“
Total Debt
” shall mean, on any date of
determination, the total Indebtedness of
the Credit Parties and their
consolidated Subsidiaries on a consolidated basis and without duplication,
including, without limitation, all Indebtedness under the Loan Documents,
Revolving Loan Documents and all accrued interest on the foregoing (including,
without limitation, all interest paid in kind) and all Capital Lease
Obligations and including, without duplication, Contingent Obligations
consisting of guarantees of Indebtedness that otherwise would constitute Total
Debt of other Persons (provided that, for purposes of determining the
Indebtedness outstanding under any other revolving credit facility (including
the Revolving Loan Agreement) as of the end of each fiscal quarter, “Total Debt”
shall mean the average daily
70
amount
of outstanding principal and accrued interest on such revolving credit facility
for such fiscal quarter). For all
purposes of this Agreement, the term “Total Debt” shall be calculated to
include (i.e., not net of) discounts, deductions or allocations relating or
applicable to or arising from any equity or equity participation or fees,
whether under GAAP or otherwise.
“
Total Debt Service
” shall mean, for any
period, the sum for Credit Parties and their consolidated Subsidiaries on a
consolidated basis amounts of (a) scheduled payments of principal on any
and all Total Debt during such period, (b) other required payments of
principal on Total Debt other than the Obligations, (c) any other cash
amounts due or payable with respect to, in connection with or on Total Debt
during such period (excluding any mandatory prepayments of the Obligations),
and (d) Interest Expense paid in cash or required to be paid in cash
during such period.
“
Unfinanced Capital Expenditures
”
shall mean, for any period, all Capital Expenditures made during such period
other than any Capital Expenditures financed within 30 days of such expenditure
with the proceeds of Permitted Indebtedness (Permitted Indebtedness, for this
purpose, does not include advances under a revolving line of credit, including,
without limitation, Advances under the Revolving Facility).
Exhibit B-2
Form of
Compliance Certificate
COMPLIANCE
CERTIFICATE
EVOLVING SYSTEMS, INC.
TELECOM SOFTWARE ENTERPRISES,
LLC
Date: ,
20 .
This Compliance Certificate (this “Certificate”)
is given by Evolving Systems, Inc. (“ESI”) and Telecom Software
Enterprises, LLC (“TSE,” and together with ESI, collectively, the “Borrower”), pursuant to Section 6.1(a) of
that certain Credit Agreement dated as of
, 2005
among Borrower, the other Credit Parties named therein, CapitalSource Finance
LLC, a Delaware limited liability company, in its capacity as agent for the
Lenders (in such capacity, “Agent”), and the Lenders thereunder (as amended,
modified, supplemented or restated from time to time, the “Credit Agreement”). Capitalized terms used herein without
definition shall have the meanings set forth in the Credit Agreement.
The officer executing this Certificate is the
of ESI and the
of TSE, and as such is duly authorized to execute and deliver this Certificate
on behalf of Borrower. By so executing
this Certificate, the Borrower hereby certifies to the Lender Parties that:
(a)
the
financial statements delivered with this Certificate in accordance with subsection 6.1(a) of
the Credit Agreement fairly present in all material respects the consolidated
results of operations and financial position of the Credit Parties and their
consolidated Subsidiaries as of, and for the respective periods ending on, the
dates of such financial statements;
(b)
Borrower
has reviewed the relevant terms of the Loan Documents and the financial
condition of Borrower and the other Credit Parties;
(c)
no
Default or Event of Default has occurred and is continuing, except as set forth
in
Schedule 1
hereto, which includes a description of the nature
and status and period of existence of such Default or Event of Default, if any,
and what action Borrower has taken, and is undertaking and proposes to take
with respect thereto; and
(d)
Borrower
and the other Credit Parties are in compliance with all financial covenants set
forth on Exhibit B-1 to the Credit Agreement, as demonstrated by the
calculations of such covenants below, except as set forth in
Schedule 1
hereto.
IN WITNESS WHEREOF, Borrower has caused this
Certificate to be executed by the
of ESI and the of
TSE as of this day of ,
20 .
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[EVOLVING SYSTEMS, INC.]
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[TELECOM SOFTWARE ENTERPRISES, LLC]
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By:
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Name:
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Its:
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LEVERAGE
RATIO
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a.
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Senior Debt
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$
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b.
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EBITDA for the twelve (12) months then
ending
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$
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c.
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Ratio of Line (a) to (b)
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MINIMUM
EBITDA
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a.
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EBITDA for the twelve (12) months then
ending
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$
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FIXED
CHARGE COVERAGE RATIO
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a.
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EBITDA for the twelve (12) months then
ending
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$
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b.
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Less the aggregate amount of all Unfinanced
Capital Expenditures during the twelve (12) months then ending
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$
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c.
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Less income and franchise taxes paid in
cash for the twelve (12) months then ending
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$
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d.
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Total ((a) less (b) less (c))
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$
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e.
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Fixed Charges during the twelve (12) months
then ending
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$
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f.
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Ratio of Line (d) to (e)
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CAPITAL
EXPENDITURES
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Maximum Permitted Capital Expenditures
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$
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In Compliance
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Yes / No
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SCHEDULE 1 TO EXHIBIT B-2
CONDITIONS
OR EVENTS WHICH CONSTITUTE A DEFAULT OR
EVENT OF
DEFAULT
If any condition or event exists that
constitutes a Default or Event of Default, specify nature and period of
existence and what action Borrower or one or more other Credit Parties has
taken, is taking or proposes to take with respect thereto; if no such condition
or event exists, state “None.”
Exhibit C-1
Reporting
Requirements
(a)
Financial Reports
. The
Credit Parties shall furnish to Agent and each Lender:
(i)
as soon as available and in any event within
ninety (90) calendar days after the end of each fiscal year of Evolving
Systems, (A) audited consolidated financial statements of Evolving Systems
and its consolidated Subsidiaries, including the notes thereto, consisting of a
consolidated balance sheet at the end of such fiscal year and the related
consolidated statements of income, retained earnings and cash flows and owners’
equity for such fiscal year, which financial statements shall be prepared by
and accompanied by an opinion of any “Big Four” or any other nationally
recognized independent certified public accounting firm satisfactory to Agent
in its Permitted Discretion (which opinion shall be without (1) a “going
concern” qualification, (2) any qualification or exception as to the scope
of such audit and (3) any qualification which relates to the treatment or
classification of any item and which, as a condition to the removal of such
qualification, would require an adjustment to such item, the effect of which
would be to cause any noncompliance with the provisions of Section 7.1(a)),
and which opinion shall state that such financial statements present fairly in
all material respects the financial position for the periods indicated in conformity
with GAAP applied on a basis consistent with prior years and (B) consolidating
balance sheets and income statements for (1) Evolving Systems and its
consolidated Domestic Subsidiaries, (2) the Revolving Borrower and its
consolidated Subsidiaries (excluding Evolving Systems GmbH) and (3) Evolving
Systems Networks India PVT LTD;
(ii)
as soon as available and in any event within
forty-five (45) calendar days after the end of each fiscal quarter of Evolving
Systems, unaudited financial statements of Evolving Systems and its
consolidated Subsidiaries consisting of (A) a consolidated balance sheet
and related consolidated statements of income, retained earnings and cash flows
and owners’ equity as of the end of such fiscal quarter, all certified on behalf
of Borrower by a Responsible Officer as fairly presenting in all material
respects the financial position and the results of operations of Borrower in
accordance with GAAP, subject to normal year-end adjustments and the absence of
footnote disclosure and (B) consolidating balance sheets and income
statements for (1) Evolving Systems and its consolidated Domestic
Subsidiaries, (2) the Revolving Borrower and its consolidated
Subsidiaries, excluding Evolving Systems GmbH and (3) Evolving Systems
Networks India PVT LTD; and
(iii)
as soon as available and in any event within
thirty (30) calendar days after the end of each calendar month, unaudited
financial statements of Evolving Systems and its consolidated Subsidiaries
consisting of (A) a consolidated balance sheet and the related
consolidated statements of income, retained earnings and cash flows and owners’
equity as of the end of such calendar month, all certified on behalf of
Borrower by a Responsible Officer as fairly presenting in all material respects
the financial position and the results of operations of Borrower in accordance
with GAAP, subject to normal
year-end adjustments and the absence of
footnote disclosure and (B) consolidating balance sheets and income
statements for (1) Evolving Systems and its consolidated Domestic
Subsidiaries, (2) the Revolving Borrower and its consolidated Subsidiaries
(excluding Evolving Systems GmbH) and (3) Evolving Systems Networks India
PVT LTD.
All such financial statements shall be prepared in accordance with GAAP
consistently applied with prior periods (subject, as to interim statements, to
normal year-end adjustments and the absence of footnote disclosure). With each delivery of monthly and annual
financial statements, Borrower also shall deliver to Agent and each Lender a
completed Compliance Certificate certified on behalf of Borrower by a
Responsible Officer.
(b)
Other Materials
. The
Credit Parties shall furnish to Agent and Lenders:
(i)
concurrently with the delivery of annual and
quarterly financial statements pursuant to clauses (a)(i) and (a)(ii) above:
(1) a report listing
any and all new contracts entered into by any Credit Party during the preceding
fiscal year or quarter that are material to its business. If the board of directors of Evolving Systems
receives such a report then the report delivered under this subsection may
take the same form and substance;
(2) an operating report
for Evolving Systems and its consolidated Subsidiaries, which includes a
detailed comparison of the actual year-to-date operating results against (A) the
projected operating budget delivered hereunder for the current or prior fiscal
year and (B) the actual operating results for the same period during the
prior fiscal year, in each case inclusive of profit and loss statements;
(3) a report specifying
all unpaid amounts, fees, payables and balances owing to any Governmental
Authority (other than for taxes) as of the last day of such ended fiscal year
or quarter, if any, and
(4) a management
report, in reasonable detail, signed by a Responsible Officer of Borrower,
describing the operations and financial condition of the Credit Parties for the
quarter and portion of the fiscal year then ended (or for the fiscal year then
ended in the case of annual financial statements), which may be satisfied by
delivery of quarterly and annual reports filed with the SEC; and
(ii)
as soon as available and in any event within
ten (10) calendar days after the preparation, receipt or issuance thereof
or request by Agent or any Lender therefor, as applicable:
(1) copies of any final
reports submitted to the Credit Parties by their independent accountants in
connection with any interim audit of the books of
the Credit Parties or their Subsidiaries and
copies of each management control letter provided by such independent
accountants; and
(2) such additional
information, documents, statements, reports and other materials as Agent or any
Lender may request from time to time in its Permitted Discretion.
(c)
Notices
. The
Credit Parties shall promptly, and in any event within five (5) Business
Days after any officer of any Credit Party obtains knowledge thereof, notify
Agent and each Lender in writing of:
(i)
any pending or threatened litigation, suit,
investigation, arbitration, enforcement action, dispute resolution proceeding
or administrative or regulatory proceeding brought or initiated by or against
any Credit Party or Subsidiary of a Credit Party or otherwise affecting or
involving or relating to any Credit Party or Subsidiary of a Credit Party or
any Credit Party’s or a Subsidiary of a Credit Party’s Property to the extent (A) the
amount in controversy exceeds $100,000
individually
or $150,000 in the aggregate for all such events or (B) to the extent any
of the foregoing seeks injunctive relief against a Credit Party;
(ii)
the occurrence or existence of any Default or
Event of Default, which notice shall specify the nature, status and period of
existence thereof and the actions proposed to be taken with respect thereto;
(iii)
any other development, event, fact,
circumstance or condition that would reasonably be expected to result in a
Material Adverse Effect, in each case describing the nature and status thereof
and the actions proposed to be taken with respect thereto;
(iv)
any matter(s) in the amount of $250,000
individually or $500,000 in the aggregate, in existence at any time adversely
affecting the value, enforceability or collectibility of any of the Collateral;
(v)
to the extent not duplicative of deliveries
made hereunder, any material written notice (including any notice of default or
acceleration) and any material written information or other material written delivery
given or made by or delivered to or received by any Credit Party to or from any
lender of any such Credit Party (as a lender and not in any other capacity),
together with copies thereof, as applicable including in connection with the
Subordinated Loan Document.
(vi)
(A) the receipt of any notice or request
from any Governmental Authority regarding any liability or claim of liability
in the amount equal to or exceeding $100,000 individually or $150,000 in the
aggregate or (B) any action taken or threatened to be taken by any
Governmental Authority (or any notice of any of the foregoing) with respect to
any Credit Party which would reasonably be expected to result in a Material
Adverse Effect;
(vii)
receipt or giving of any notice by any Credit
Party regarding termination of any lease of real property (other than by
expiration of the term) or any senior officer or executive, or the loss,
termination or notice of non-renewal (other than by expiration of the term) of
any Material Contract to which any Credit Party is a party or by which its
properties or assets are subject or bound;
(viii)
the filing, recording or assessment of any
federal, state, local or foreign tax Lien against any Collateral or any Credit
Party;
(ix)
the creation, establishment or acquisition of
any Subsidiary or the issuance by Borrower of any Capital Stock or other equity
security or warrant, option or similar agreement in respect thereof other than
Permitted Securities of Evolving Systems; or
(x)
any
default or breach in the
performance, observance or fulfillment of any provision contained in any
Material Contract that with the giving of notice and passage of time permits
the other party thereto to terminate such Material Contract or otherwise reduce
or limit any material amounts owed by such other party thereunder.
Each notice in accordance with the foregoing shall be accompanied by a
written statement by a Responsible Officer on behalf of Borrower setting forth
details of the occurrence referred to therein, and describing with
particularity any and all clauses or provisions of this Agreement and the other
Loan Documents that have been breached or violated.
(d)
Operating Budget and
Projections
. Borrower shall furnish to Agent and each
Lender on or prior to the Closing Date and for each fiscal year of Borrower
thereafter prior to the commencement of such fiscal year, consolidated month by
month projected operating budgets, projections, profit and loss statements,
income statements, balance sheets and cash flow reports of and for the Credit
Parties for such upcoming fiscal year (including an income statement for and a
balance sheet as at the end of each such month), and annual projections for the
fiscal years then remaining in the Term, in each case prepared in accordance
with GAAP consistently applied with prior periods (subject to normal year-end
adjustments and the absence of footnote disclosure).
(e)
Shareholder/Equity Holder
Reports and Government Filings
. The Credit Parties shall furnish to Agent,
within five (5) Business Days after the sending or filing thereof, copies,
which may be in electronic form, of all proxy statements, financial statements
and reports which any Credit Party has made available to its shareholders or
other equity owners as a class or any class or series of shareholders or other
equity owners as a class or series, and copies of all regular, periodic and
special reports, financial statements or registration statements which any
Credit Party files with the Securities and Exchange Commission, any stock
exchange or any Governmental Authority.
(f)
Government Filings Referencing Agent or Lenders.
A reasonable time prior to its use, disclosure or distribution thereof, the Credit
Parties shall and shall cause their Subsidiaries to provide in writing every document to be filed pursuant to state or
federal
securities laws that contain Agent’s or any Lender’s name or describe
or refer to any Loan Document, any of the terms thereof or any of the
transactions contemplated thereby.
Exhibit C-2
Collateral
Reporting and Other Requirements
(a)
Collateral Reporting
. Each Credit Party shall:
(i)
provide Agent with not less than thirty (30)
days’ prior written notice of any change in such Credit Party’s legal name,
organizational identification number, if any, federal employer identification
number, mailing address, corporate or organizational form or jurisdiction of
organization, or of any new location for any of its Property valued at more
than $100,000;
(ii)
notify Agent promptly in writing (A) prior
to any change in the proposed use by such Credit Party or Subsidiary of any
trade name or fictitious business name and (B) upon obtaining knowledge
that any application or registration relating to any Necessary Intellectual
Property (whether now or hereafter existing) may become abandoned, or of any
adverse determination or development (including the institution of, or any such
determination or material development in, any proceeding in the United States
Patent and Trademark Office, the United States Copyright Office or any court)
regarding such Credit Party’s or Subsidiary’s ownership of any Necessary Intellectual
Property, its right to register the same, or to keep and maintain the same;
(iii)
promptly notify Agent of any Commercial Tort Claim
in excess of $50,000 and any claims in excess of $100,000 in the aggregate,
acquired by it and, unless otherwise consented to by Agent, and promptly enter
into a supplement to the Security Agreement to which it is a party granting to
Agent, for the benefit of the Lender Parties, a Lien on and security interest
in such Commercial Tort Claim;
(iv)
upon acquiring or receiving any of the same,
deliver and pledge to Agent any and all Instruments (excluding checks, drafts
and similar instruments that are customarily endorsed or presented for
collection or deposit in the Ordinary Course of Business), negotiable
Documents, Chattel Paper and, subject to the limitations in Section 6.7(e) of
this Agreement, certificated Securities (or Capital Stock) (accompanied by
stock powers executed in blank) duly endorsed and/or accompanied by such
instruments of assignment and transfer executed by such Person in such form and
substance as Agent may request in its Permitted Discretion; provided, that so
long as no Event of Default shall have occurred and be continuing, each Credit
Party or Subsidiary may retain for collection in the Ordinary Course of Business
any Instruments, negotiable Documents and Chattel Paper received by such Person
in the Ordinary Course of Business; provided, further, that if any such Credit
Party or Subsidiary retains possession of any Instruments (excluding checks,
drafts and similar instruments that are customarily endorsed or presented for
collection or deposit in the Ordinary Course of Business), negotiable Documents
or Chattel Paper pursuant to the terms hereof, each such Instrument, negotiable
Documents and Chattel Paper shall be marked with the following legend: “This
writing and the obligations evidenced or secured hereby are subject to the
security interest of CapitalSource Finance LLC, as Agent, as secured
party, for the benefit of certain Lender
Parties” in each case in accordance with the terms of any applicable Security
Agreement;
(v)
deliver to Agent an updated Schedule I
(Filing Jurisdictions), Schedule II (Capital Stock, Instruments,
Documents, Letter of Credit Rights and Chattel Paper), and/or Schedule III
(Legal Names, Prior Names, Type of Entity, Organizational Identification
Number, State of Organization, Chief Executive Office, Principal Place of
Business, Offices, Warehouses, Consignees, Processors, Books and Records) of
the Security Agreement to which it is a party within five (5) Business
Days of any change thereto;
(vi)
prior to any Credit Party opening any new
deposit or securities accounts (except accounts used exclusively for payroll
and employee benefits), such Credit Party shall give Agent not less than ten (10) Business
Days’ prior written notice of its intention to do so and shall deliver to Agent
a revised version of Schedule V (Deposit Accounts) of the Security
Agreement to which it is a party showing any changes thereto within five (5) Business
Days of any such change (and shall otherwise obtain and deliver to Agent an
Account Control Agreement in respect thereof in accordance with the terms of
such Security Agreement);
(vii)
advise Agent promptly, in reasonable detail, (A) of
any Lien (other than a Permitted Lien) or material claim made or asserted
against any of the Collateral, and (B) of the occurrence of any other
event which would reasonably be expected to have a Material Adverse Effect on
the value of the Collateral or on the Liens created hereunder or under any
other Loan Document;
(viii)
promptly, and in any event within five (5) Business
Days after becoming a beneficiary, notify Agent of the issuance of any letter
of credit of which such Credit Party or Subsidiary is a beneficiary;
(ix)
promptly notify Agent of any Collateral which
constitutes a claim against the United States government or any instrumentality
or agent thereof, in an amount equal to or greater than $50,000 individually or
$100,000 in the aggregate, the assignment of which claim is restricted by
federal law and, upon the request of Agent, such Credit Party or Subsidiary
shall take such steps as may be necessary to comply with any applicable federal
assignment of claims laws or other comparable laws; and
(x)
promptly comply with all of the terms and
conditions of each Security Agreement to which such Credit Party or Subsidiary
is a party as is necessary or desirable to ensure the attachment, granting,
creation, perfection, continuation and/or enforceability of a Lien, in favor of
Agent, for the benefit of the Lender Parties, as a result of any of the events
or circumstances described in the other clauses of this paragraph (b) in
each case subject to any grace or cure periods set forth therein.
Exhibit D
Closing
Conditions
(a)
Agent
shall have received (i) the Loan Documents executed by each Credit Party
and the other parties thereto and (ii) executed copies of the Revolving
Loan Documents;
(b)
Agent shall have received (i) a report
of Uniform Commercial Code financing statement, tax, pending suit and judgment
lien searches as requested by Agent, and such report shall show no Liens on the
Collateral (other than Permitted Liens and Liens to be terminated at Closing), (ii) each
document (including, without limitation, any Uniform Commercial Code financing
statements) required by any Loan Document or under law or requested by Agent in
its Permitted Discretion to be filed, registered or recorded to create and
perfect, in favor of Agent, for the benefit of the Lenders Parties, a first
priority Lien upon the Collateral, subject only to Priority Permitted Liens,
and (iii) evidence of each such filing, registration and recordation and
of the payment by Borrower of any necessary fee, tax or expense relating
thereto;
(c)
Agent shall have received: (i) a payoff
letter and lien termination agreement from the holders of the Subordinated
Notes in form and substance satisfactory to Agent in its Permitted Discretion
providing for (A) partial repayment of the liabilities and obligations of
the Credit Parties to the holders of the Subordinated Notes and (B) termination
of all security agreements and related documents with respect to all Liens and
Uniform Commercial Code financing statements relating thereto, (ii) release
and termination of, or Agent’s authority to release and terminate, any and all
other Liens and/or Uniform Commercial Code financing statements in, on, against
or with respect to any of the Collateral, other than Permitted Liens, and (iii) evidence
that all prior lockbox and blocked account arrangements, if any, are
terminated;
(d)
[Reserved];
(e)
Agent shall have received (i) the
Charter and Good Standing Documents, (ii) a certificate of the secretary
or assistant secretary of each Credit Party, dated the Closing Date, as to the
incumbency and signature of the Persons executing the Loan Documents and the
Related Documents on behalf of such Credit Party, (iii) the written legal
opinions of counsel and/or special counsel for the Credit Parties with respect
to the Loan Documents and the Revolving Loan Documents, and (iv) a
certificate executed by an Responsible Officer of Borrower Funds Administrator,
which contains a representation and warranty by Borrower as of the Closing Date
that the conditions contained in this Agreement have been satisfied;
(f)
Agent shall be satisfied with all corporate
and other proceedings, documents, instruments and other legal matters in
connection with the transactions contemplated by the Loan Documents, the
Revolving Loan Documents and the Related Documents (including, but not limited
to, those relating to corporate and capital structures of each Credit Party);
(g)
the Related Transactions (other than the
Transfer Pricing Agreement) shall have closed in the manner contemplated by the
Related Documents, and Agent shall have received certified copies of such
Related Documents;
(h)
Agent shall have received original
certificates of all such required insurance policies, and confirmation that
such certificates are in effect and that the premiums then due and owing with
respect thereto have been paid in full, which certificates shall name the
Agent, for the benefit of the Lender Parties, as sole beneficiary, loss payee
or additional insureds (except in the case of additional insureds as permitted
by Section 6.4(c)), as applicable;
(i)
Agent
shall have received (or shall receive simultaneously with the funding of the
Loan) all fees, charges and expenses due and payable to Agent and Lenders on or
prior to the Closing Date pursuant to the Loan Documents;
(j)
All in form and substance satisfactory to
Agent in its Permitted Discretion, Agent shall have received such consents,
approvals and agreements from such third parties as Agent and its counsel shall
determine in their Permitted Discretion are necessary or desirable with respect
to (i) the Loan Documents and/or the transactions contemplated thereby, (ii) claims
against any Credit Party or any of the Collateral, and/or (iii) agreements,
documents or instruments to which any Credit Party is a party or by which any
of its properties or assets are bound or subject, including without limitation
Landlord Waivers and Consents for each property lease;
(k)
Agent shall have completed its due diligence
examinations of each Credit Party and their Subsidiaries, including, without
limitation, (i) examination of the Collateral and its financial due
diligence, (ii) an examination of the terms and conditions of all
obligations owed by such Person deemed material by Agent, the results of which
shall be satisfactory to Agent, and (iii) customer reference checks and
calls, credit checks and background checks with respect to the relevant key
management and principals of each Credit Party and their Subsidiaries;
(l)
There shall be no event of default under a
Material Contract as of the Closing Date;
(m)
no Material Adverse Effect shall have
occurred since June 30, 2005 and Agent shall have received the audited
financial statements of the Credit Parties for the fiscal year ended December 31,
2004 and the unaudited financial statements of the Credit Parties on a
consolidated, consolidating and pro-forma basis for the eight (8) month
period ending and as of August 31, 2005;
(n)
Agent shall have received evidence that
consolidated EBITDA of Borrower (calculated, for purposes of this subsection (n)
without regard for the amounts that would be accrued in connection with TSE
Contingent Obligations if the Credit Parties accrued for such amounts) for the
six (6)-month period ended on June 30, 2005 was at least Two Million Seven
Hundred Fifty Thousand Dollars ($2,750,000);
(o)
Agent shall have received such other
approvals, opinions, documents, agreements, instruments, certificates and
materials as Agent or any Lender may request in their Permitted Discretion;
(p)
The Credit Parties and their Consolidated
Subsidiaries, on a consolidated basis without duplication shall have an
aggregate of at least $4,000,000 of
unrestricted cash,
marketable
securities and Availability under the Revolving Facility, as defined in the
Revolving Loan Agreement; and
(q)
No Default or Event of
Default shall have occurred and be continuing or will occur after giving effect
to the transactions contemplated by the Loan Documents.
APPENDIX A
DEFINITIONS
The
following terms are defined in the Sections or subsections referenced opposite
such terms:
|
“Accommodation Payment”
|
12.13(c)
|
|
“Affected Lender”
|
13.4
|
|
“Agent”
|
Preamble
|
|
“Agreement”
|
Preamble
|
|
“Borrower”
|
Preamble
|
|
“Capital Expenditures”
|
Exhibit D
|
|
“CapitalSource”
|
Preamble
|
|
“Confidential Information”
|
13.10
|
|
“EBITDA”
|
Exhibit D
|
|
“Event of Default”
|
VIII
|
|
“Fixed Charge Coverage Ratio”
|
Exhibit D
|
|
“Guaranteed Obligations”
|
14.1
|
|
“Indemnified Persons”
|
12.4
|
|
“Insured Event”
|
12.4
|
|
“Interest Coverage Ratio”
|
Exhibit D
|
|
“Interest Settlement Date”
|
11.5(a)(iii)
|
|
“Investments”
|
7.4
|
|
“Leverage Ratio”
|
Exhibit D
|
|
“Maximum Liability”
|
14.5
|
|
“Necessary Intellectual Property”
|
5.11
|
|
“Non-U.S. Lender”
|
13.1(f)
|
|
“Other Taxes”
|
13.1(b)
|
|
“Participant”
|
12.2(b)
|
|
“Permitted Indebtedness”
|
7.2
|
|
“Permitted Liens”
|
7.3
|
|
“Premium Financing Agreement”
|
7.8(k)
|
|
“Receipt”
|
12.5
|
|
“Register”
|
2.4
|
|
“Replacement Lender”
|
13.4
|
|
“Restricted Payments”
|
7.5
|
|
“SEC”
|
5.10
|
|
SEC Documents
|
5.10
|
|
“Taxes”
|
13.1(a)
|
|
“Transferee”
|
12.2(a)
|
|
“UK Subsidiaries”
|
Annex A
|
|
“UFCA”
|
12.13(c)
|
|
“UFTA”
|
12.13(c)
|
In
addition to the terms defined elsewhere in the Agreement, the following terms
have the following meanings:
“
Account
Control Agreement
” shall mean, with respect to each deposit account,
securities account or other account of any Credit Party, excluding each
exclusively payroll account opened in the Ordinary Course of Business, an
agreement, in form and substance satisfactory to Agent in its Permitted
Discretion, among Agent, such Credit Party and the financial institution at
which such account is maintained, pursuant to which, among other things, Agent,
for the benefit of the Lender Parties, has “control” under the UCC over, and
otherwise has a first priority and perfected Lien on, such account and all
Property from time to time on deposit or otherwise credited to such account.
“
Acquisition
”
shall mean any transaction or series of related transactions for the purpose of
or resulting, directly or indirectly, in (a) the acquisition of all or
substantially all of the assets of a Person, or of any business or division of
a Person, (b) the acquisition of more than fifty percent (50%) of the
Capital Stock of any Person or otherwise causing any Person to become a
Subsidiary of a Credit Party, or (c) a merger, amalgamation, consolidation
or other combination with another Person.
“
Affiliate
”
or “
affiliate
” shall mean, as to any initial Person, any other Person (a) that,
directly or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such initial Person, (b) who
is or within the preceding ten years was a director or officer (i) of such
initial Person, (ii) of any Subsidiary of such initial Person, or (iii) of
any other Person described in clause (a) above with respect to such
initial Person, or (c) which, directly or indirectly through one or more
intermediaries, is the beneficial or record owner (as defined in Rule 13d-3
of the Securities Exchange Act of 1934, as amended) of twenty percent (20%) or
more of any class of the outstanding voting Capital Stock of such initial
Person. For purposes of this definition,
the term “control” (and the correlative terms, “controlled by” and “under
common control with”) shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management and/or policies of a Person,
whether through ownership of securities or other interests, by contract or
otherwise.
“
Applicable
Default Margin
” shall mean four percent (4.0%).
“
Applicable
Margin
” shall mean six and one quarter percent (6.25%); provided, however,
that the Applicable Margin shall, from time to time, be five and one quarter
percent (5.25%) for the quarter following each fiscal quarter in which
quarterly financial statements are delivered pursuant to this Agreement in
which the Leverage Ratio calculated as of the last day of such prior quarter
was less than 1.50 to 1.
“
Bankruptcy
Code
” shall mean the Federal Bankruptcy Reform Act of 1978 (11 U.S.C. §101,
et seq.), as amended and in effect from time to time and the regulations issued
from time to time thereunder.
“
Borrower
Funds Administrator
” shall mean Evolving Systems, Inc. or such
successor Person approved by Agent.
“
Business
”
shall mean the development, distribution and implementation of software
primarily for the communications industry and the provision of related
services, and other activities that are reasonably incidental or ancillary
thereto.
“
Business
Day
” shall mean any day other than a Saturday, Sunday or other day on which
the Federal Reserve or Agent is authorized or required by law to be closed.
“
Capital
Lease
” shall mean, as to any Person, any lease of any interest in any kind
of Property by that Person as lessee that is, should be or should have been
recorded as a “capital lease” in accordance with GAAP.
“
Capital
Lease Obligations
” shall mean all obligations of any Person under Capital
Leases, in each case taken at the amount thereof accounted for as a liability
in accordance with GAAP.
“
Capital
Stock
” shall mean, as to any Person that is a corporation, the authorized
shares of such Person’s capital stock or shares, including all classes of
common, preferred, voting and nonvoting capital stock or shares, and, as to any
Person that is not a corporation or an individual, the partnership, membership
or other ownership interests in such Person, including, without limitation, the
right to share in profits and losses, the right to receive distributions of
cash and other Property, and the right to receive allocations of items of
income, gain, loss, deduction and credit and similar items from such Person,
whether or not such interests include voting or similar rights entitling the
holder thereof to exercise control over such Person, collectively with, in any
such case, all warrants, options and other rights to purchase or otherwise
acquire, and all other instruments convertible into or exchangeable for, any of
the foregoing.
“
Cash
Equivalents
” shall mean (a) securities issued, or directly and fully
guaranteed or insured, by the United States or any agency or instrumentality
thereof (provided that the full faith and credit of the United States is
pledged in support thereof) having maturities of not more than six (6) months
from the date of acquisition, (b) time deposits, certificates of deposit
and bankers’ acceptances of items denominated in the currency of the holder’s
jurisdiction of formation (i) any domestic commercial bank of recognized
standing having capital and surplus in excess of $500,000,000, or (ii) any
bank (or the parent company of such bank) whose short-term commercial paper
rating from Standard & Poor’s Ratings Services (“S&P”) is at least
A-2 or the equivalent thereof or from Moody’s Investors Service, Inc. (“Moody’s”)
is at least P-2 or the equivalent thereof in each case with maturities of not
more than six (6) months from the date of acquisition (any bank meeting
the qualifications specified in clauses (b)(i) or (ii), an “Approved Bank”),
(c) repurchase obligations with a term of not more than seven (7) days
for underlying securities of the types described in clause (a) above
entered into with any Approved Bank, (d) commercial paper issued by any
Approved Bank or by the parent company of any Approved Bank and commercial
paper issued by, or guaranteed by, any industrial or financial company with a
short-term commercial paper rating of at least A-2 or the equivalent thereof by
S&P or at least P-2 or the equivalent thereof by Moody’s, or guaranteed by
any industrial company with a long term unsecured debt rating of at least A or
A2, or the equivalent of each thereof, from S&P or Moody’s, as the case may
be, and in each case maturing within six (6) months after the date of
acquisition, and (e) investments in money market funds substantially all
of whose assets are comprised of securities of the type described in clauses (a) through
(d) above.
“
Change
of Control
” shall mean the occurrence of any of the following:
(i)
any “change in/of control” or “sale” or “disposition”
or similar event as defined in any Organizational Document of any Credit Party or
the Subordinated Notes;
(ii)
the consummation of any initial Public
Offering by any Credit Party after the Closing Date;
(iii)
Any Person and its Affiliates, individually
or as part of a group (as that term is described in Rule 13d-5(b)(1) under
the Exchange Act), either (A) owning or controlling in the aggregate in
excess of 20% of the then outstanding voting Capital Stock of Evolving Systems
or (B) being able to elect a majority of the board of directors of
Evolving Systems;
(iv)
Any Credit Party ceases to own and control,
beneficially and of record, one hundred percent (100%) of the issued and
outstanding Capital Stock (other than directors’ qualifying shares required by
law), free and clear of all Liens, rights, options, warrants or other similar
agreements or understandings, other than Liens in favor of Agent, for the
benefit of the Lender Parties of any Subsidiary of which it own, or controls
such Capital Stock as of the Closing Date;
(v)
Stephen K. Gartside, Jr. ceases to be
employed as Chief Executive Officer of Borrower or otherwise dies or becomes
disabled and, in any case, shall not have been replaced within forty-five (45)
calendar days by an interim Chief Executive Officer, and within two hundred
seventy (270) days by a permanent Chief Executive Officer with such permanent
replacement having similar experience and qualifications as the Chief Executive
Officer being replaced; or
(vi)
Any Credit Party is subject to Shareholder
Blocking Rights which have not been waived pursuant to an agreement in form and
substance satisfactory to Agent in its Permitted Discretion; provided that any
voting rights of the holders of Evolving System’s Series B Convertible
Preferred Stock under Section 3(c) of the Certificate of Designation
have only been waived, if at all, with respect to the rights of the Agent and
Lenders under the Loan Documents.
“
Charter
and Good Standing Documents
” shall mean, for each Credit Party, (i) a
copy of the certificate of incorporation or formation (or other applicable
charter document) certified as of a date not more than twenty one (21) Business
Days prior to the Closing Date by the applicable Governmental Authority of the
jurisdiction of incorporation or organization of such Credit Party, (ii) a
copy of the bylaws or similar Organizational Documents of such Credit Party certified
as of a date not more than twenty one (21) Business Days prior to the Closing
Date by the corporate secretary or assistant secretary of such Credit Party (or
its general partner or managing member, as the case may be), (iii) an
original certificate of good standing as of a date acceptable to Agent issued
by the applicable Governmental Authority of the jurisdiction of incorporation
or organization of such Credit Party and of every other jurisdiction in which
such Credit Party has an office or conducts business or is otherwise required
to be in good standing, and (iv) copies of
the resolutions of the Board of Directors or Managers (or other
applicable governing body of such Credit Party) of such Credit Party and, if
required, stockholders, members, partners or other equity owners, authorizing
the execution, delivery and performance of the Loan Documents and the Related
Documents to which such Credit Party is a party, certified by the corporate
secretary or assistant secretary of such Credit Party (or its general partner
or managing member, as the case may be) as of the Closing Date.
“
Closing
”
shall mean the satisfaction, or written waiver by Agent and Requisite Lenders,
of all of the conditions precedent set forth in this Agreement required to be
satisfied prior to the disbursement of the Loan and consummation of the other
transactions contemplated hereby.
“
Closing
Date
” shall mean the date of this Agreement.
“
Code
”
shall mean the Internal Revenue Code of 1986, and regulations promulgated
thereunder.
“
Collateral
”
shall mean, collectively, all Property, interests in Property, collateral
and/or security granted and/or securities pledged to Agent, for the benefit of
the Lender Parties, or any Lender by the Credit Parties and any other Person to
secure the Obligations or any part thereof pursuant to the Loan Documents,
including, without limitation, all Property in which a Lien is granted pursuant
to the Security Documents to secure the Obligations or any part thereof.
“
Commitment
”
or “
Commitments
” shall mean as to all Lenders, the aggregate commitments
of all Lenders to fund the Loan as the same may be reduced, modified or
terminated from time to time pursuant to this Agreement.
“
Compliance
Certificate
” shall mean a compliance certificate executed by a Responsible
Officer of Borrower in the form of
Exhibit B-2
hereto.
“
Contingent
Obligations
” shall mean, as to any Person, any agreement, undertaking or
arrangement by which such Person assures, guarantees, endorses, contingently
agrees to purchase or provide funds for the payment of, or otherwise becomes or
is contingently liable upon, any Indebtedness, leases, dividends or other
obligations (“primary obligations”) of any other Person (the “primary obligor”)
in any manner, whether directly or indirectly, including, without limitation,
any obligation of such Person, whether or not contingent, (a) to purchase
any such primary obligation or any property constituting direct or indirect
security therefor, (b) to advance or supply funds (i) for the
purchase or payment of any such primary obligation or (ii) to maintain
working capital or equity capital of the primary obligor or otherwise to
maintain the net worth or solvency of the primary obligor, including, without
limitation, any so-called “keepwell” or “makewell” agreement, (c) to
purchase property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation, (d) otherwise to assure or to hold
harmless the owner of such primary obligation against loss in respect thereof, (e) with
respect to any letter of credit of such Person or as to which that Person is
otherwise liable for reimbursement of drawings, or (f) with respect to any
Hedging Agreement; provided, however, that the term “Contingent Obligation”
shall not include endorsements of instruments for deposit or collection in the
Ordinary Course of Business. The amount
of any Contingent Obligation shall be deemed
to be an amount equal to the stated or determinable amount of the
primary obligation in respect of which such Contingent Obligation is made or,
if not stated or determinable, the maximum reasonably anticipated liability in
respect thereof (assuming such Person is required to perform thereunder) as
determined by such Person in good faith.
“
Credit
Party
” shall mean each of Evolving Systems, Inc., Telecom Software
Enterprises, LLC, Intermediate Holdco, and all Domestic Subsidiaries of such
persons.
“
Credit
Parties
” shall mean Evolving Systems, Telecom Software Enterprises, LLC,
Intermediate Holdco, and all Domestic Subsidiaries of such persons.
“
Cross License Agreement
” shall mean,
collectively, (i) the Intercompany License Agreement, dated as of October 17,
2005, between Evolving Systems, as licensor, and Revolving Borrower, as
licensee, and (ii) the Intercompany License Agreement, dated as of October 17,
2005 between Revolving Borrower, as licensor, and Evolving Systems, as
licensee.
“
Debtor Relief Law
” shall mean,
collectively, the Bankruptcy Code and all other applicable liquidation,
conservatorship, bankruptcy, moratorium, rearrangement, receivership,
insolvency, reorganization or similar debtor relief laws from time to time in
effect affecting the rights of creditors generally, in each case as amended
from time to time.
“
Default
”
shall mean any event, fact, circumstance or condition that, with the giving of
applicable notice or passage of time or both, would constitute, be or result in
an Event of Default.
“
Default
Rate
” shall mean a per annum rate equal to the Libor Rate in effect from
time to time,
plus
six and one quarter percent (6.25%),
plus
the
Applicable Default Margin; provided, that if any Obligation otherwise does not
bear interest, the Default Rate with respect thereto shall equal the Libor Rate
in effect from time to time,
plus
six and one quarter percent (6.25%),
plus
the Applicable Default Margin.
“
Dollars
”
and “
$
” shall mean lawful money of the United States of America.
“
Domestic Subsidiary
” shall mean any
Subsidiary of a Person incorporated or otherwise organized under the laws of
the United States of America or a state of the United States of America or the
District of Columbia.
“
Eligible
Assignee
” shall mean any of the following:
(a) a commercial bank organized under the laws of the United
States, or any state thereof; (b) a commercial bank organized under the
laws of any other country; (c) a finance company, insurance company or
other financial institution or fund which is engaged in making, purchasing or
otherwise investing in commercial loans or other debt obligations for its own
account in its ordinary course of business; or (d) a Related Fund.
“
Environmental
Laws
” shall mean, collectively, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, the Superfund Amendment and
Reauthorization Act of 1986, the Resource Conservation and Recovery Act, the
Toxic Substances Control Act, the Clean Air Act, the Clean Water Act, any other
“Superfund” or
“Superlien” law and all other federal, state and local and foreign
environmental, land use, zoning, health, chemical use, safety and sanitation
laws, statutes, ordinances and codes relating to the protection of the
environment and/or governing the use, storage, treatment, generation, transportation,
processing, handling, production or disposal of Hazardous Substances, in each
case, as amended, and the legally-binding rules, regulations, policies,
guidelines, interpretations, decisions, orders and directives of Governmental
Authorities with respect thereto.
“
ERISA
”
shall mean the Employee
Retirement Income Security Act of 1974, as amended, and the regulations
thereunder.
“
Eurocurrency
Reserve Requirement
” for any day shall mean the aggregate (without
duplication) of the rates (expressed as a decimal rounded upward to the nearest
1/100
th
of 1%) as determined by Agent of reserve requirements in
effect on such day (including, without limitation, basis, supplemental,
marginal and emergency reserves under any regulations of the Board of Governors
of the Federal Reserve System of the United Stated or other Governmental
Authority, or any successor thereto, having jurisdiction with respect thereto)
prescribed for Eurocurrency funding (currently referred to as “Eurocurrency
Liabilities” in Regulation D of such Board) maintained by a member bank of the
Federal Reserve System.
“
Excess
Cash Flow
” shall mean, for Evolving Systems and its consolidated
Subsidiaries, for each fiscal year commencing with the year ending December 31,
2006, on a consolidated basis without duplication, an amount equal to the sum
of (i) EBITDA (as defined in
Annex I
hereof) for such fiscal year,
minus
(ii) actual cash franchise and income tax paid in cash during such fiscal
year,
minus
(iii) cash Interest Expense on the Loan and the
Revolving Facility and the Subordinated Notes actually paid during such fiscal
year, if any,
minus
(iv) Unfinanced Capital Expenditures (as
defined in
Exhibit B-1
hereto) of the Credit Parties and their
Subsidiaries for such fiscal year
minus
(v) an amount equal to the
aggregate amount of all scheduled repayments of principal and all prepayments
of the Loan for such fiscal year, if any,
minus
(vi) an amount
equal to the sum of payments of principal on the Subordinated Notes and
Revolving Facility, if any, (to the extent such payments on the Revolving
Facility resulting in permanent reductions of the Revolving Facility) actually
made during such period to the extent permitted hereunder.
“
Exchange Act
” shall mean the
Securities Exchange Act of 1934, as amended.
“
Fair
Valuation
” shall mean the determination of the value of the consolidated
assets of a Person on the basis of the amount which may be realized by a
willing seller within a reasonable time through collection or sale of such
assets at market value on a going concern basis to an interested buyer who is
willing to purchase under ordinary selling conditions in an arm’s length
transaction.
“
Foreign Subsidiary
” shall mean any
Subsidiary of a Person that is not a Domestic Subsidiary.
“
GAAP
”
shall mean generally accepted accounting principles in the United States of
America in effect from time to time as applied by nationally recognized
accounting firms.
“
Governmental
Authority
” shall mean any federal, state, foreign, municipal, national,
provincial, local or other governmental department, court, commission, board,
bureau, agency or instrumentality or political subdivision thereof, or any
entity or officer exercising executive, legislative or judicial, regulatory or
administrative functions of or pertaining to any government or any court, in
each case, whether of the United States or a state, territory or possession
thereof, a foreign sovereign entity or country or jurisdiction or the District
of Columbia.
“
Guarantor
”
shall mean any Credit Party other than Borrower, and “
Guarantors
” shall
mean all such other Credit Parties.
“
Guaranty
”
shall mean any guaranty executed by a Guarantor, including, without limitation,
the guaranty effectuated by
Article XIV
of this Agreement or any
guaranty set forth in a Pledge Agreement executed by a Person relating to the
Capital Stock of Borrower or any of its Subsidiaries.
“
Hazardous
Substances
” shall mean any flammable explosives, radon, radioactive
materials, asbestos, urea formaldehyde foam insulation, polychlorinated
biphenyls, petroleum and petroleum products, methane, hazardous materials,
hazardous wastes, hazardous or toxic substances or related materials as defined
in or other substances or materials regulated by or subject to, or which may
form the basis of liability under, any applicable Environmental Law.
“
Hedging
Agreement
” shall mean any swap agreements (as defined in Section 101
of the Bankruptcy Code) and any other agreements or arrangements designed to
provide protection against fluctuations in interest or currency exchange rates
and entered into for bona fide hedging purposes and not for speculation.
“
Indebtedness
”
of any Person shall mean, without duplication: (a) all indebtedness for
borrowed money; (b) all obligations issued, undertaken or assumed as the
deferred purchase price of property or services (other than trade payables
incurred and payable in the Ordinary Course of Business of such Person); (c) the
face amount of all letters of credit issued for the account of such Person and,
without duplication, all drafts drawn thereunder and all reimbursement or
payment obligations with respect to letters of credit, surety bonds and other
similar instruments issued by such Person; (d) all obligations evidenced
by notes, bonds, debentures or similar instruments, including obligations so
evidenced incurred in connection with the acquisition of property, assets or
businesses; (e) all indebtedness created or arising under any conditional
sale or other title retention agreement, or incurred as financing, in either
case with respect to Property acquired by such Person (even though the rights
and remedies of the seller or bank under such agreement in the event of default
are limited to repossession or sale of such property); (f) all Capital
Lease Obligations; (g) the principal balance outstanding under any
synthetic lease, off-balance sheet loan or similar off balance sheet financing
products; (h) all indebtedness referred to in clauses (a) through (g) above
secured by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien upon or in Property
(including accounts and contracts rights) owned by such Person, even though
such Person has not assumed or become liable for the payment of such
indebtedness; and (i) all Contingent Obligations in respect of
indebtedness or obligations of others of the kinds referred to in clauses (a) through
(h) above.
“
Intellectual
Property
” shall mean all present and future: trade secrets, know-how and other proprietary
information; trademarks, trademark applications, internet domain names, service
marks, trade dress, trade names, business names, designs, logos, slogans (and
all translations, adaptations, derivations and combinations of the foregoing)
indicia and other source and/or business identifiers, and the goodwill of the
business relating thereto and all registrations or applications for
registrations which have heretofore been or may hereafter be issued thereon
throughout the world; copyrights and copyright applications; (including
copyrights for computer programs) and all tangible and intangible property
embodying the copyrights, unpatented inventions (whether or not patentable);
patents and patent applications; industrial design applications and registered
industrial designs; license agreements related to any of the foregoing and
income therefrom; books, records, writings, computer tapes or disks, flow
diagrams, specification sheets, computer software, source codes, object codes,
executable code, data, databases and other physical manifestations, embodiments
or incorporations of any of the foregoing; the right to sue for all past,
present and future infringements of any of the foregoing; all other
intellectual property; and all common law and other rights throughout the world
in and to all of the foregoing.
“
Intellectual
Property Security Agreement
” shall mean an Acknowledgment of Intellectual
Property Collateral Lien executed by a Credit Party in favor of Agent, for the
benefit of the Lender Parties, as the same may be modified, amended, restated
or supplemented from time to time.
“
Interest
Payment Date
” shall mean the first day of each calendar month.
“
Joinder Agreement
” shall mean an
agreement, in form and substance satisfactory to Agent in its Permitted Discretion,
pursuant to which, among other things, a Person becomes a party to, and bound
by the terms of, this Agreement and/or the other Loan Documents in the same
capacity and to the same extent as either Borrower or a Guarantor, as Agent may
determine.
“
Landlord
Waiver and Consent
” shall mean a waiver or consent, in form and substance
satisfactory to Agent in its Permitted Discretion, pursuant to which a
mortgagee, owner or lessor of real property on which any Collateral is stored
or otherwise located, or a warehouseman, processor or other bailee of any
Property of any Credit Party, (i) acknowledges and consents to the Liens
of Agent, for the benefit of the Lender Parties under the Loan Documents, (ii) waives
any Liens held by such Person on such Property, and (iii) in the case of
any such agreement with a mortgagee or lessor, permits Agent access to and use
of such real Property for a reasonable amount of time following the occurrence
and during the continuance of an Event of Default to assemble, complete and
sell any Collateral stored or otherwise located thereon.
“
Lender
”
shall mean any of the Persons from time to time named on
Schedule A
under the headings “Lenders,” and their respective successors and permitted
assigns (but not, except as expressly set forth herein, any Participant that
otherwise is not a party to this Agreement), and “Lenders” shall mean all of
them collectively.
“
Lender
Addition Agreement
” shall mean an agreement among Agent, a Lender and such
Lender’s assignee regarding their respective rights and obligations with
respect to assignments of
the Commitments, the Loan and other interests under this Agreement and
the other Loan Documents, in form and substance acceptable to Agent in its
Permitted Discretion; it being agreed and understood that the consent or
approval of Borrower shall be required thereto only in accordance with the
terms of Section 13.1.
“
Lender
Parties
” shall mean, collectively, Agent and Lenders, and “
Lender Party
”
shall mean any of them.
“
Lending
Office
” shall mean, with respect to any Lender, the office or offices of
such Lender specified as its “Lending Office” opposite its name on the
applicable signature page hereto, or such other office or offices of such
Lender as it may from time to time notify Borrower and Agent.
“
Libor
Rate
” shall mean a fluctuating per annum rate of interest equal to (i) the
rate per annum (rounded upwards to the nearest 1/100
th
of 1%) equal
to the offered rate for deposits of Dollars for a 30-day period which appears
on Telerate page 3750 as of 11:00 A.M. (London time) Rate divided by (ii) 1.00
minus the Eurocurrency Reserve Requirements in effect. “Telerate page 3750” means the display
designated as “page 3750” on the Telerate Service (or such other page as
may replace Page 3750 on that service or such other service as may be
nominated by the British Bankers’ Association as the information vendor for the
purpose of displaying British Bankers’ Association Interest Settlement Rates
for deposits in Dollars).
“
Lien
”
shall mean any mortgage, pledge, security interest, encumbrance, transfer,
charge or other restriction, lien or charge of any kind or any other priority
arrangement (including any agreement to give any of the foregoing, any
conditional sale or other title retention agreement or any lease in the nature
thereof), or any other arrangement pursuant to which title to the Property is
retained by or vested in some other Person for security purposes.
“
Life
Insurance Policy
” shall mean a current, valid and fully paid key man life
insurance policy insuring the life of Stephen K. Gartside, Jr. in the
amount of $1,000,000 that (i) lists Agent, for the benefit of the Lender
Parties, as the sole beneficiary thereunder, (ii) is issued by a carrier
and otherwise is in form and substance acceptable to Agent in its Permitted
Discretion, (iii) cannot be altered, amended or modified in any respect
(including, without limitation, with respect to amounts of coverage and
beneficiaries without the consent of Agent), and (iv) cannot be canceled
without at least thirty (30) Business Days’ prior written notice to Agent.
“
Loan
”
shall mean the term loan in aggregate principal balance of $8,500,000 made by
the Lenders to the Borrowers pursuant to this Agreement.
“
Loan
Documents
” shall mean, collectively, this Agreement, the Notes, if any, the
Security Documents, all Compliance Certificates, the Subordination Agreements and
all other agreements, documents, instruments and certificates heretofore or
hereafter executed and/or delivered to Agent or any Lender by or on behalf of
any Credit Party in connection with any of the foregoing or the Loan, in each
case as the same may be amended, modified or supplemented from time to time.
“
Material
Adverse Effect
” shall mean any event, condition, obligation, liability or circumstance
or set of events, conditions, obligations, liabilities or circumstances or any
change(s) which:
(i)
has,
had or would reasonably be expected to have a material adverse effect upon or
change in (a) the legality, validity or enforceability of any Loan
Document to which a Credit Party is a party or (b) the aggregate rights
and remedies of the Agent under the Loan Documents taken as a whole;
(ii)
has been or would reasonably be expected to
be material and adverse to the value of any of the Collateral, taken as a
whole, or to the business, operations, liabilities or condition (financial or
otherwise) of Evolving Systems or Revolving Borrower, individually, or of the
Credit Parties taken as a whole; or
(iii)
has materially impaired or would reasonably
be expected to materially impair the ability of Evolving Systems or Revolving
Borrower, individually, or of the Credit Parties taken as a whole to perform
any of its or their Obligations, or to consummate the transactions, under the
Loan Documents.
“
Material Contracts
” means (i) the
Related Documents and (ii) any other one or series of related contracts,
agreements or arrangements to which Credit Parties or any of their Subsidiaries
are a party that involve aggregate
consideration payable to or by such Credit Party or such Subsidiary of
more than $1,000,000 annually.
“
Maturity Date
” shall mean the earliest to occur of (i) the
acceleration (whether automatic or by written notice) of any Obligations in
accordance with the terms of this Agreement and (ii) the last day of the
Term.
“
Mortgage
”
shall mean a mortgage, deed of trust, deed to secure debt, leasehold mortgage,
leasehold deed of trust, leasehold deed to secure debt or similar instrument
creating a Lien on real Property or on any interest in real Property to secure
any of the Obligations.
“
Net
Proceeds
” shall mean:
(i)
in
respect of any issuance of debt or equity, cash proceeds and non-cash proceeds
received or receivable in connection therewith, net of underwriting discounts
and reasonable out-of-pocket costs and expenses paid or incurred in connection
therewith in favor of any Person that is not an Affiliate of any Credit Party;
and
(ii)
in respect of any disposition, casualty,
condemnation, taking or other event of loss, proceeds in cash, checks or other
cash equivalent financial instruments (including Cash Equivalents) as and when
received by the Person making such disposition or all insurance proceeds
received on account of such casualty, condemnation, taking or other event of
loss, in any such case net of: (i) in the event of a disposition, (x) the
direct costs and expenses relating to such disposition excluding amounts
payable to Borrower or any Affiliate of any Credit Party, (y) sale, use or
other transaction taxes paid or payable as a result thereof, and (z) amounts
required to be
applied to repay principal, interest and
prepayment premiums and penalties on Indebtedness (other than the Obligations)
secured by a Lien on the asset that is the subject of such disposition; and (ii) in
the event of a casualty, condemnation, taking or other event of loss, (x) all
money actually applied to repair or reconstruct the damaged property or
property affected by the condemnation or taking in accordance with the terms
hereof, (y) all of the costs and expenses reasonably incurred in connection
with the collection of such proceeds, award or other payments, and (z) any
amounts retained by or paid to parties having superior rights to such proceeds,
awards or other payments.
“
Notes
”
shall mean, collectively, if any, any notes issued pursuant to this Agreement,
together with any promissory notes or other instruments issued in substitution
therefor or replacement thereof, in each case as the same may be amended,
modified, divided, split, supplemented and/or restated from time to time.
“
Obligations
”
shall mean, without duplication, all present and future obligations,
Indebtedness and liabilities of Borrower and/or any other Credit Party to Agent
and/or the other Lender Parties at any time and from time to time of every
kind, nature and description arising under any Loan Document, whether direct or
indirect, secured or unsecured, joint and/or several, absolute or contingent,
due or to become due, matured or unmatured, now existing or hereafter arising,
contractual or tortious or liquidated or unliquidated, including, without
limitation, all interest, fees, charges, expenses and/or amounts paid or
advanced by Agent or any other Lender Party to, on behalf of or for the benefit
of any such Person for any reason under any Loan Document at any time,
obligations of performance as well as obligations of payment, and all interest,
fees and other amounts that accrue after the commencement of any proceeding
under any Debtor Relief Law by or against any such Person or its Properties
related to any of the Obligations.
“
Ordinary
Course of Business
” shall mean, in respect of any transaction involving any
Credit Party, the ordinary course of such Credit Party’s business, as conducted
by such Credit Party in accordance with past practices and undertaken by such
Credit Party in good faith and not for purposes of evading any covenant or
restriction in any Loan Document.
“
Organizational
Documents
” shall mean (a) for any corporation, the memorandum and/or certificate
or articles of incorporation, the bylaws, any certificate of designation, or
other instrument relating to the rights of preferred shareholders or
stockholders of such corporation and any shareholder rights agreement, (b) for
any partnership, the partnership agreement and, if applicable, the certificate
of limited partnership, and (c) for any limited liability company, the
operating agreement and articles or certificate of formation or organization.
“
Patriot
Act
” shall mean the Uniting and Strengthening America by Providing Appropriate
Tools Required to Intercept and Obstruct Terrorism Act of 2001, P.L. 107-56, as
amended.
“
Permit
”
shall mean any license, lease, power, permit, franchise, certificate,
authorization or approval issued by a Governmental Authority.
“
Permitted
Discretion
” shall mean, with respect to any Person, a determination or
judgment made by such Person in good faith in the exercise of reasonable (from
the perspective of a secured lender) credit or business judgment.
“
Permitted
Securities
” shall mean any Capital Stock of Evolving Systems that by their
terms (or by the terms of any security into which they are convertible or for
which they are exchangeable) or upon the happening of any event or otherwise (A) are
not convertible or exchangeable for Indebtedness or any securities that are not
Permitted Securities, (B) (i) do not mature and (ii) are not
putable or redeemable at the option of the holder thereof, in each case under
clause (i) or (ii) in whole or in part on or prior to the date that
is six (6) months after the earlier of the scheduled end of the Term or
the actual payment in full in cash of the Obligations, (C) do not require
or mandate payments of dividends or distributions in cash on or prior to the
date that is six (6) months after the earlier of the scheduled end of the
Term or the actual payment in full in cash of the Obligations, (D) are
unsecured and by operation of law or by legally binding agreement are
subordinated in right of repayment, liens, security and remedies to all of the
Obligations and to all of Agent’s and the other Lender Parties’ rights, Liens
and remedies, (E) are not sold, issued or otherwise transferred in
connection with or as a part of a Public Offering; and (F) to the extent
the same are subject to or provide for any Shareholder Blocking Rights, all
such Shareholder Blocking Rights have been waived in form and substance
satisfactory to Agent in its Permitted Discretion.
“
Person
”
shall mean an individual, a partnership, a corporation, a limited liability
company, a business trust, a joint stock company, a trust, an unincorporated
association, a joint venture, a Governmental Authority or any other entity of
whatever nature.
“
Pledge
Agreement
” shall mean any pledge agreement between Agent and any Credit
Party, as the same be amended, modified, supplemented or restated from time to
time.
“
Prepayment
Premium
” shall mean: (a) for the period from the Closing Date through
and including November 14, 2006, an amount equal to two and one half
percent (2.5%) of the Loan so prepaid or required to be prepaid; (b) for
the period after November 14, 2006 through and including November 14,
2007, an amount equal to one and one half percent (1.5%) of the Loan so prepaid
or required to be prepaid.
“
Priority
Permitted Liens
” shall mean Permitted Liens contemplated by and permitted
under Sections 7.3(b), (c), (d), (e) and/or (i).
“
Property
”
shall mean all types of real, personal or mixed property and all types of
tangible or intangible property.
“
Pro
Rata Share
” shall mean:
(a)
with respect to any Lender
as to all Lenders, the percentage obtained by dividing (i) the aggregate
amount of such Lender’s share of the Loan outstanding and such Lender’s
Commitments by (ii) the aggregate amount of all Lenders’ share of the Loan
outstanding and all Lenders’ Commitments; in any case as such percentage may be
adjusted by assignments permitted pursuant to Section 12.2 and 2.9.
“
Public
Offering
” shall mean any offer or sale of its Capital Stock by Evolving
Systems or any of its Subsidiaries pursuant to any registration statement filed
and effective with the Securities and Exchange Commission or any other
applicable Governmental Authority except offers and sales pursuant to (a) any
Special Registration Statement or (b) any registration statements on Form S-3
that are effective as of the Closing Date.
“
Qualified
Asset Sale
” shall mean any sale, transfer or other disposition by Borrower
or any of its Subsidiaries permitted under Section 7.7(a), (b), (d), (e), (f) and
(g).
“
Real
Estate
” shall mean each parcel of real Property owned by any Credit Party.
“
Related
Documents
” shall mean, collectively, the Subordinated Loan Documents, the
Transfer Pricing Agreements to be prepared pursuant to Section 6.7, and the
Cross License Agreement
.
“
Related
Fund
” shall mean (a) any fund, trust or similar entity that invests in
commercial loans in the ordinary course of its business and is advised or
managed by (i) a Lender, (ii) an Affiliate of a Lender, (iii) the
same investment advisor that manages a Lender or (iv) an Affiliate of an
investment advisor that manages a Lender or (b) any finance company,
insurance company or other financial institution which temporarily warehouses
the Loan for any Lender or any Person described in clause (a) above.
“
Related
Transactions
” shall mean the transactions anticipated by the Related
Documents.
“
Requisite
Lenders
” shall mean at any time Lenders then holding more than fifty
percent (50%) of the sum of the aggregate unpaid principal amount of the Loan
then outstanding. For purposes of this
definition, all Lenders that are Affiliates and each Lender and its Related
Funds shall be deemed to constitute one, single Lender.
“
Responsible
Officer
” shall mean the chief executive officer or the president of
Borrower Funds Administrator, or any other officer having substantially the
same authority and responsibility; or, with respect to compliance with
financial covenants or delivery of financial information, the chief financial
officer or the treasurer of Borrower Funds Administrator, or any other officer
having substantially the same authority and responsibility.
“
Revolving
Borrower
” shall mean Evolving Systems Ltd., a company incorporated under
the laws of England and Wales, as the “Borrower” under the Revolving Loan
Agreement
“
Revolving
Facility
” shall mean the revolving loan facility established pursuant to
the Revolving Loan Documents.
“
Revolving
Lender
” shall mean the “Lender” under the Revolving Loan Agreement.
“
Revolving
Loan Agreement
” shall mean the Revolving Loan Agreement dated the date
hereof by and among Revolving Borrower, Evolving Systems Ltd, Agent and CSE
Finance, Inc., as the same be amended, modified, supplemented or restated
from time to time.
“
Revolving
Loan Documents
” shall mean the Revolving Loan Agreement and all other
agreements, documents, instruments and certificates heretofore or hereafter
executed in connection with the Revolving Loan Agreement.
“
Revolving Obligations
” shall mean the
“Obligations” as defined in the Revolving Loan Agreement.
“
Securities
Act
” shall mean the Securities Act of 1933, as amended.
“
Securities Exchange Act
” shall mean
the Securities Exchange Act of 1934, as amended.
“
Security
Agreements
” shall mean any security or pledge agreement executed by a
Person in favor of Agent, for the benefit of the Lender Parties, to secure the
Obligations.
“
Security
Documents
” shall mean, collectively, the Security Agreements, the
Guarantees, any Mortgages, the Intellectual Property Security Agreements, all
Account Control Agreements, all Landlord Waivers and Consents, all UCC
financing statements and all other agreements, documents and instruments that
create or perfect the Liens in the Collateral, as the same may be modified,
amended or supplemented from time to time.
“
Seller
Subordination Agreement
” shall mean the Subordination Agreement dated the
date hereof by and among Agent, the Credit Parties named therein, the holders
of the Subordinated Notes and any other parties thereto as the same may be
modified, amended, restated or supplemented from time to time and in form and
substance satisfactory to Agent.
“
Shareholder
Blocking Rights
” shall mean any rights of any owner (direct or indirect) of
any Capital Stock of any Credit Party which, pursuant to the terms of any
agreement or Organizational Document, has the right to consent, or the effect
of requiring such consent, to any foreclosure by the Agent under any Pledge
Agreement or otherwise to the exercise of any of Agent’s rights and remedies
thereunder or otherwise has the right to restrain, delay, impair or otherwise
interfere with the Agent in the event of Agent’s exercise of its rights under a
Pledge Agreement or other Security Documents.
“
Solvent
”
shall mean, as to any Person at any time, that (a) the fair value of the
Property of such Person is greater than the amount of such Person’s liabilities
(including disputed, contingent and unliquidated liabilities) as such value is
established and liabilities evaluated for purposes of Section 101(32)(A) of
the Bankruptcy Code and, in the alternative, for purposes of the Uniform
Fraudulent Transfer Act; (b) the present fair saleable value of the
Property of such Person is not less than the amount that will be required to
pay the probable liability of such Person on its debts as they become absolute
and matured; and (c) such Person is able to realize upon its Property and
pay its debts and other liabilities (including disputed, contingent and
unliquidated liabilities) as they mature in the normal course of business.
“
Special Registration Statement
” shall
mean (i) a registration statement relating to any employee benefit plan, (ii) any
registration statement with respect to any corporate reorganization or
transaction under Rule 145 of the Securities Act, including any
registration statements related to the issuance or resale of securities issued
in such a transaction or (iii) any
registration statement for the purpose of effecting a business
combination; provided that, in the case of any registration statement described
in clauses (ii) and (iii), the underlying transaction is permitted under
the Loan Documents or is otherwise consented to in writing by Agent prior to
the consummation thereof.
“
Subordinated
Debt
” shall mean any Indebtedness, contingent equity, earnout or other
obligations of Borrower or any of its Subsidiaries that is unsecured and
subordinated by written contract in right of payment, liens, security and
remedies to all of the Obligations and all of the Lender Parties’ rights, Liens
and remedies in form and substance satisfactory to Requisite Lenders,
including, without limitation, the unsecured Indebtedness of Borrower evidenced
by the Subordinated Loan Documents.
“
Subordinated
Loan Documents
” shall mean, collectively, the Subordinated Notes and all
other agreements, documents and instruments executed and delivered in
connection therewith.
“
Subordinated
Notes
” shall mean the Subordinated Notes of Evolving Systems dated November 14,
2005 in the aggregate principal amount of $4,869,700.47.
“
Subordination
Agreement
” shall mean, collectively, any of (i) the Seller
Subordination Agreement and (ii) any other agreement between Agent and the
holders of Subordinated Debt to which Evolving Systems is either a party or
executes an acknowledgment to such agreement, in each case as the same may be
modified, amended, restated or supplemented from time to time and in form and
substance satisfactory to Requisite Lenders.
“
Subsidiary
”
shall mean, as to any initial Person, any other Person in which more than fifty
percent (50%) of all equity, membership, partnership or other ownership
interests is owned directly or indirectly by such initial Person or one or more
of its Subsidiaries. For purposes of the
Loan Documents, any reference to “Subsidiary” shall be deemed to refer to a
Subsidiary of Borrower unless the context provides otherwise.
“
Term
”
shall mean the period commencing on the Closing Date and ending on November 14,
2010.
“
Transfer Pricing Agreements
” shall
mean agreements on transfer pricing in form and substance satisfactory to Agent
in its Permitted Discretion.
“
TSE Contingent Obligations
” shall
mean the Deferred Payment obligations to the Sellers (as defined in the TSE
Purchase Agreement).
“
TSE Purchase Agreement
” shall mean
the Acquisition Agreement of Telecom Software Enterprises, LLC, dated as of October 15,
2004 among Evolving Systems, as Buyer, and Lisa Marie Maxson and Peter McGuire,
as Sellers.
“
UCC
”
shall mean the Uniform Commercial Code as in effect in the State of New York
from time to time; provided, that to the extent the UCC is used to define any
term herein or in any other Loan Document 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.
“
UK Excess Cash Flow
” shall mean, for
Revolving Borrower and its consolidated Subsidiaries (the “UK Subsidiaries”),
for each fiscal quarter commencing with the fiscal quarter ending December 31,
2006, on a consolidated basis without duplication, an amount equal to the sum
of (i) EBITDA (as defined in Annex I hereof) of the UK Subsidiaries for
such fiscal quarter, minus (ii) actual cash franchise and income tax paid
in cash by the UK Subsidiaries during such fiscal quarter, minus (iii) cash
Interest Expense on the Revolving Facility actually paid during such fiscal
quarter, if any, minus (iv) Unfinanced Capital Expenditures (as defined in
Exhibit B-1 hereto) of the UK Subsidiaries for such fiscal quarter minus (v) an
amount equal to the sum of payments of principal on the Revolving Facility, if
any, (to the extent such payments on the Revolving Facility resulting in
permanent reductions of the Revolving Facility) actually made during such
period to the extent permitted hereunder, minus (vi) the amount of any
dividends made by Revolving Borrower under Section 7.5(c) during such
period for Intermediate Holdco to pay taxes, costs and expenses.
“
Wholly-Owned
Subsidiary
” shall mean any Subsidiary in which (other than directors’
qualifying shares required by law) one hundred percent (100%) of the equity, at
the time as of which any determination is being made, is owned, beneficially
and of record, by Borrower or by one or more of the other Wholly-Owned
Subsidiaries of Borrower, or both.
SCHEDULE A
Lenders/Commitments
|
Lenders
|
|
Commitment
|
|
|
|
|
|
|
|
CapitalSource Finance LLC
|
|
$
|
8,500,000
|
|
|
4445 Willard Avenue, 12
th
Floor
|
|
|
|
|
Chevy Chase, Maryland 20815
|
|
|
|
|
Attention: Corporate Finance Group,
Portfolio Manager
|
|
|
|
|
Telephone: (301) 841-2700
|
|
|
|
|
FAX: (301) 841-2360
|
|
|
|
|
E-Mail: sladd@capitalsource.com
|
|
|
|
|
|
|
|
|
|
Wire Instructions:
|
|
|
|
|
|
Bank:
|
Bank of America, Baltimore, MD
|
|
|
|
|
Account:
|
003939396662
|
|
|
|
|
ABA:
|
026009593
|
|
|
|
|
Account Name:
|
CapitalSource Funding LLC - CFG
|
|
|
|
|
Reference:
|
Evolving Systems
|
|
|
|
|
|
|
|
|
|
Total:
|
|
$
|
8,500,000
|
|
Exhibit 10.1(c)
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT
(the “
Agreement
”)
is entered into as of this 14th day of November, 2005, by and between
CAPITALSOURCE FINANCE LLC
, a Delaware limited liability
company, as administrative agent and collateral agent for the Lenders defined
below (in such capacities, “
Agent
” or “
Secured Party
”) under the Loan Agreement (as defined below),
and
EVOLVING SYSTEMS, INC.
,
a Delaware corporation (“
Pledgor
”).
RECITALS
A.
Reference is made to (i) that certain
Credit Agreement (as the same now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced, from time to time, the “
US Loan Agreement
”), dated as of the date hereof, among
Pledgor, the other Credit Parties named therein, Secured Party and the Lenders from
time to time a party thereto (the “
US Lenders
”), and
to the other Loan Documents referred to therein, and (ii) that certain Revolving
Facility Agreement (the “
UK Loan Agreement
,”
and together with the US Loan Agreement, collectively, the “
Loan Agreement
”), dated as of the date hereof, among the
Credit Parties named therein, Secured Party, as agent, CSE Finance, Inc.
and the other Lenders from time to time a party thereto (the “
UK Lenders
,” and together with the US Lenders, collectively,
the “
Lenders
”),
and
to the other Loan Documents referred to therein.
B.
Pledgor is a Borrower under the US Loan Agreement
and a Guarantor under that certain Guaranty, dated as of the date hereof, among
Pledgor and the other Guarantors named therein in favor of Agent for the
benefit of the UK Lenders (the “
Guaranty
”), and
is the record and beneficial owner of certain securities of each of the
entities listed on
Schedule 1.1
attached hereto and as described
herein and the holder of the notes listed on
Schedule 1.2
attached
hereto and as described herein. The
obligations of Secured Party and Lenders to execute and deliver the Loan
Documents under each Loan Agreement and to make the loans provided for
thereunder are conditioned on, among other things, the execution of this
Agreement and the pledge by Pledgor to Secured Party, for its benefit and the
benefit of the Lenders, of the Collateral (as defined herein) as security for,
among other things, Pledgor’s obligations under the Loan Documents to which it is
a party and the Guaranty, and Pledgor has agreed to enter into this Agreement
in order to induce Secured Party and Lenders to enter into the Loan Documents
and to make the Loan.
Accordingly,
for good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, and as an inducement for Secured Party and Lenders to
enter into the Loan Documents, the parties hereto, intending to be legally
bound, do hereby agree as follows:
SECTION 1
DEFINITIONS
1.1.
Defined Terms
.
Capital terms used herein and not otherwise defined shall have the
meanings assigned to such terms in the Loan Agreement or, to the extent the
same are used or defined therein, the meanings provided in Article 9 of
the UCC in effect on the date hereof.
Whenever the context so requires, each reference to gender includes the
masculine and feminine, the singular number includes the plural and vice
versa. This Agreement shall mean such
agreement as the same now exists or may hereafter be amended, modified,
supplemented, extended, renewed, restated or replaced, from time
to time.
Unless otherwise specified, all accounting terms not defined in the US Loan
Agreement shall have the meanings given to such terms in and shall be
interpreted in accordance with GAAP.
References in this Agreement to any Person shall include such Person and
its successors and permitted assigns. In
this Agreement, the following terms shall mean as follows:
“
Collateral
” shall mean, collectively and each individually, (i) (a) 100%
of the issued and outstanding capital stock, equity securities, limited
liability company interests, membership interests and ownership interests of
Telecom Software Enterprises, LLC, a Colorado limited liability company and Evolving
Systems Holdings, Inc., a Delaware corporation, and (b) securities
representing 65% of the aggregate voting power of the issued and outstanding
capital stock and ownership interests of Evolving Systems Networks India PVT
Ltd., an India corporation, in each case under the foregoing (a) or (b) owned
or held of record or beneficially by Pledgor on the date hereof as listed on
Schedule 1.1
hereto (and the certificates, copies of which are attached hereto, representing
such shares, securities and/or interests, if any); (ii) all other capital
stock, equity securities, limited liability company interests, membership
interests and ownership interests of Telecom Software Enterprises, LLC, Evolving
Systems Holdings, Inc. or any current or future direct Subsidiary of Pledgor
organized under the laws of the United States or any state thereof, in each
case owned or held of record or beneficially by Pledgor at any time (and the
certificates representing such shares, securities and/or interests, if any); (iii) securities
representing 65% of the aggregate voting power of the capital stock, equity
securities, limited liability company interests, membership interests and
ownership interests of Evolving Systems Networks India PVT Ltd. or any current
or future direct Subsidiary of Pledgor organized outside of the laws of the
United States, in each case owned or held of record or beneficially by Pledgor
at any time (and the certificates representing such shares, securities and/or
interests, if any); (iv) all other Investment Property of Pledgor; (v) the
Pledged Notes; (vi) any and all replacements, products and proceeds of,
and dividends, distributions in property, securities, returns of capital or
other distributions made on or with respect to, any of the foregoing; and (vii) all
rights and privileges of Pledgor with respect to the foregoing. Notwithstanding the foregoing, the term “Collateral”
shall not include securities representing at any time more than 65% of the
aggregate voting power of the Capital Stock of a “controlled foreign
corporation,” as defined in Section 957 of the Code.
“
Default
” shall mean any event, fact, circumstance or
condition that, with the giving of applicable notice or passage of time or
both, would constitute, be or result in an Event of Default.
“
Event of Default
” shall mean the occurrence of any
event set forth in
Section 4
.
“
Initial Pledged Notes
”
means the notes set forth on
Schedule 1.2
attached hereto.
“
Investment Property
” shall have the meaning given that term
in the UCC.
“
Loan Documents
” shall mean, collectively, the Loan Documents
as defined in each Loan Agreement.
“
Obligations
” shall mean, collectively, all “Obligations” as
defined in each Loan Agreement and all “Guaranteed Obligations” as defined in
the Guaranty.
“
Pledged Notes
” means all Initial Pledged Notes and all notes,
instruments or chattel paper pledged pursuant to this Agreement.
2
SECTION 2
COLLATERAL
2.1.
Pledge of Collateral
.
(a)
As security for the due and punctual payment and
performance of (i) the Obligations and (ii) Pledgor obligations under
this Agreement (collectively, the “
Secured Obligations
”),
Pledgor pledges and assigns to Secured Party, for its benefit and the ratable
benefit of the Lenders, and grants to Secured Party, for its benefit and the ratable
benefit of the Lenders, a continuing first priority security interest in and
Lien on, all of Pledgor’s right, title and interest in the Collateral and all
proceeds thereof.
(b)
As of the Closing Date, Pledgor has delivered to
Secured Party, for its benefit and the benefit of the Lenders, the Initial
Pledged Notes and all certificates, if any, representing that portion of the
Collateral described in clause (i) of the definition of Collateral. Pledgor will deliver to Secured Party, for
its benefit and the benefit of the Lenders, within ten (10) Business Days
after Pledgor’s acquisition of such Collateral, all certificates, if any,
representing that portion of the Collateral described in clauses (ii), (iii) and
(iv) of the definition of Collateral (and agrees that to the extent any
such Collateral is uncertificated, Pledgor will not certificate such Collateral
without delivering such certificates to Secured Party), in each case registered
in the name of Pledgor and accompanied by a stock power duly executed by
Pledgor in blank in form and substance satisfactory to Secured Party, with any
and all documentary tax stamps and other documents necessary to cause Secured
Party, for its benefit and the benefit of the Lenders, to have a good, valid
and perfected continuing first priority pledge of and Lien on such Collateral
(free and clear of any other Liens other than Permitted Liens (as defined in
each Loan Agreement)). Any Pledged Notes
acquired by Pledgor (excluding checks, drafts and similar instruments that are
customarily endorsed or presented for collection or deposit in the Ordinary
Course of Business), shall be accompanied by proper instruments of assignment
or endorsement for security purposes, duly executed by Pledgor, and such other
instruments or documents as the Secured Party may request in writing in its
Permitted Discretion, in form and substance satisfactory to Secured Party, to
cause Secured Party, for its benefit and the benefit of the Lenders, to have a
good, valid and perfected continuing first priority pledge of and Lien on such
Collateral (free and clear of any Liens other than Permitted Liens (as defined
in each Loan Agreement));
provided
,
that
so long as no Event of
Default shall have occurred and be continuing, Pledgor may retain for collection
in the Ordinary Course of Business any such Pledged Notes but shall mark all
Pledged Notes (excluding checks, drafts and similar instruments that are
customarily endorsed or presented for collection or deposit in the ordinary
course of business) with the following legend: “This Writing and the
obligations evidenced or secured hereby are subject to the security interest of
CapitalSource Finance LLC, as Agent, as secured party, for the benefit of
certain Lender Parties.” With respect to all other Collateral consisting of
Investment Property in which a security interest may be perfected by control
under the UCC, Pledgor shall, within ten (10) Business Days after Pledgor’s
acquisition of such Collateral, take such action as may be required to perfect
Secured Party’s security interest in such Collateral by control under the UCC
as a first priority security interest in such Collateral (free and clear of any
other Liens other than Permitted Liens (as defined in each Loan
Agreement). At any time following the
occurrence and continuation of an Event of Default, at the option of Secured
Party, the Collateral or any part thereof may be registered in the name of
Secured Party, for its benefit and the benefit of the Lenders, or of its or
their nominees, and Pledgor covenants that, upon written demand by Secured
Party, Pledgor shall, and shall cause the Person in which such Collateral
evidences an ownership stake to, effect such registration.
(c)
Pledgor irrevocably and unconditionally
authorizes Agent (or its agent) to file at any time and from time to time such
financing statements with respect to the Collateral naming the Agent or its
designee as the secured party and Pledgor as the debtor as Agent may require
and including any other information with respect to Pledgor or otherwise as may
be required by the UCC of such jurisdiction as Agent may determine together
with amendments and continuations with respect thereto.
3
(d)
In the event that Pledgor fails to do so, Secured
Party shall have the right, but not the obligation, to pay any taxes or levies
on or relating to the Collateral and any costs to preserve the Collateral,
which payments shall be part of the Obligations. No injury to, or loss or destruction of any of,
the Collateral or any Material Adverse Effect or Material Adverse Change shall
relieve Pledgor of any of the Secured Obligations.
(e)
Secured Party acknowledges that notwithstanding
Pledgor’s delivery of a stock certificate representing 72.99% of the outstanding
capital stock of Evolving Systems Networks India PVT, Ltd., and notwithstanding
anything to the contrary contained in this Agreement or any Loan Document,
Secured Party’s security interest and Lien extends only to securities
representing 65% of the aggregate voting power of the outstanding capital stock
of Evolving Systems Networks India PVT, Ltd., and Secured Party has no security
interest in or Lien on the remaining securities representing 35% of the aggregate
voting power of the shares of capital stock of Evolving Systems Networks India
PVT, Ltd. (a portion of which unencumbered shares are evidenced by the
certificate delivered to Secured Party).
The Secured Party agrees to return to Pledgor the stock certificate(s)
representing the ownership interests in Evolving Systems Networks India PVT,
Ltd. as reasonably requested by Pledgor so long as Pledgor has delivered the
new stock certificate(s) of Evolving Systems Networks India PVT, Ltd.
representing 65% of Pledgor’s aggregate voting power of the ownership interests
in therein.
2.2.
Voting Rights, Dividends and Distributions
.
(a)
So long as no Event of Default has occurred and
is continuing, subject to the terms of this Agreement (i) Pledgor shall be
entitled to exercise all voting and/or consensual rights and powers relating to
the Collateral;
provided
,
however
, that Pledgor will not be
entitled to exercise any such right if the result thereof could materially and
adversely affect the rights inuring to a holder of the Collateral or the rights
and remedies of the Agent or any of the Lenders under this Agreement, the Loan
Agreement or any other Loan Document or the ability of the Agent or any of the
Lenders to exercise the same and (ii) Pledgor shall be entitled to receive
and retain and to utilize in accordance with the Loan Agreement cash dividends
payable on the Collateral to the extent, and only to the extent, that such cash
dividends are permitted by, and otherwise paid in accordance with, the terms
and conditions of this Agreement, the Loan Agreement, the other Loan Documents
and applicable law. All noncash
dividends, and all dividends paid or payable in cash or otherwise in connection
with a partial or total liquidation or dissolution, return of capital, capital
surplus or paid-in surplus, and all other distributions (other than dividends
and distributions referred to in the preceding sentence) made on or in respect
of the Collateral, whether paid or payable in cash or otherwise, whether
resulting from a subdivision, combination or reclassification of the
outstanding capital stock or partnership interests of the issuer of any
Collateral or received in exchange for the Collateral or any part thereof, or
in redemption thereof, or as a result of any merger, amalgamation, arrangement,
consolidation, acquisition or other exchange of assets to which such issuer may
be a party or otherwise, shall be and become part of the Pledged Collateral,
and, if received by Pledgor, to the extent required to be paid to the Agent
pursuant to the terms of the Loan Agreement or the other Loan Documents, shall
not be commingled by Pledgor with any of its other funds or property but shall
be held separate and apart therefrom, shall be held in trust for the benefit of
the Agent and shall be forthwith delivered to the Agent in the same form as so
received (with any necessary endorsement).
(b)
Each party hereto shall execute and deliver (or
cause to be executed and delivered) to the other party such proxies, powers of
attorney, dividend orders and other instruments as such other party may request
in writing for the purpose of enabling it to exercise the voting and/or
consensual rights and powers that it is entitled to exercise pursuant to this
Agreement and/or to receive the dividends that it is authorized to receive and
retain pursuant to this Agreement.
4
(c)
Upon the occurrence and continuation of an Event
of Default, all rights of Pledgor to exercise voting and/or consensual rights
and powers and/or to receive dividends that Pledgor is entitled to exercise
and/or receive pursuant to this
Section 2.2
shall cease immediately
upon notice by or on behalf of Secured Party to Pledgor, and all such rights
thereupon shall become vested solely and exclusively in Secured Party, for its
benefit and the benefit of the Lenders, automatically without any action by any
Person. Pledgor hereby appoints Secured
Party, for its benefit and the benefit of the Lenders, its attorney-in-fact,
with full power of substitution, which appointment as attorney-in-fact is
irrevocable and coupled with an interest, to take all such actions upon or
after the occurrence and continuation of an Event of Default, whether in the
name of Secured Party, any Lender or Pledgor, as Secured Party may consider
necessary or desirable for the purpose of exercising such rights and receiving
such dividends. Any dividends,
distributions in property, returns of capital and other distributions made on
or in respect of the Collateral, and any and all cash and other property received
in exchange therefor and/or redemption of any Collateral delivered to Pledgor
in violation of this Agreement shall be held in trust for the benefit of the
Secured Party, for its benefit and the benefit of the Lenders, and forthwith
shall be delivered to Secured Party, for its benefit and the benefit of the
Lenders. Any and all money and other
property received by Secured Party pursuant to the provisions of this
Section 2.2(c)
shall
be retained by Secured Party, for its benefit and the benefit of the Lenders,
as part of the Collateral.
SECTION 3
REPRESENTATIONS, WARRANTIES AND COVENANTS
3.1
Collateral
. Pledgor hereby represents and
warrants to Secured Party and Lenders as of the date hereof and as of the date
of each Advance under the UK Loan Agreement (which representations and
warranties shall survive the execution and delivery of this Agreement and the
making of the Loans under each Loan Agreement) as follows: (a) Pledgor is, or, with respect to the
Collateral described in clauses (ii), (iii) and (iv) of the
definition of Collateral, will be, the direct record and beneficial owner of
each share, security and other interest that comprises the Collateral, and
Pledgor has and will have good, valid and marketable title thereto, free and
clear of all Liens other than those created by this Agreement or except as
permitted under the Loan Documents; (b) all of the Collateral under clause
(i) of the definition of Collateral has been, or, with respect to the
Collateral described in clauses (ii) and (iii) of the definition of
Collateral, will be, duly and validly issued, fully paid and nonassessable; (c) the
Collateral constitutes that percentage of the issued and outstanding capital
stock, equity securities and ownership interests of each Person in which such
Collateral represents an ownership interest (calculated on a fully diluted, as
converted basis) as set forth on
Schedule 1.1
; (d) the
Collateral is and will be duly and validly pledged to Secured Party, for its
benefit and the benefit of the Lenders, in accordance with applicable law, and
Secured Party, for its benefit and the benefit of the Lenders, has and will
have a good, valid and perfected first priority Lien on and security interest
in the Collateral and the proceeds thereof subject to no other Liens (except as
permitted under the Loan Documents), and no filing or other action will be
necessary to perfect or protect such Lien in any Collateral constituting
certificated securities other than delivery to Secured Party of certificates
representing such Collateral accompanied by a stock power duly executed by
Pledgor in blank; (e) except to the extent required by applicable law, the
obligations of Pledgor hereunder are not subordinated in any way to any other
obligation of Pledgor or to the rights of any other Person; and (f) except
as expressly permitted under the Loan Agreement, Pledgor will not consent to or
approve the issuance of (i) any additional shares of any class of capital
stock or other equity securities of any issuer of the Collateral described in
clauses (i), (ii) or (iii) of the definition of Collateral, (ii) any
securities convertible voluntarily by the holder thereof or automatically upon
the occurrence or nonoccurrence of any event or condition into, or exchangeable
for, any such shares or interests, or (iii) any warrants, options, rights,
or other commitments entitling any person to purchase or otherwise acquire any
such shares or interests. Pledgor has
full legal authority and power to own the Collateral and to execute, deliver
and perform this Agreement and to consummate the transactions contemplated
hereunder, and
5
Pledgor is under no legal
restriction, limitation or disability that would prevent any of the
foregoing. No effective financing
statement relating to any of the Collateral is on file in any public office
except those on behalf of Secured Party for the benefit of itself and the
Lenders.
3.2.
Authorization
. The
execution, delivery and performance by Pledgor of this Agreement and the
consummation of the transactions contemplated hereby have been duly and validly
authorized by all necessary corporate actions on the part of Pledgor and
pursuant to all necessary consents required thereof. This Agreement has been duly executed and
delivered by Pledgor and constitutes the legal, valid and binding obligation of
Pledgor, enforceable against Pledgor in accordance with its terms, subject to
the effect of any applicable bankruptcy, moratorium, insolvency, reorganization
or other similar law affecting the enforceability of creditors’ rights
generally and to the effect of general principles of equity which may limit the
availability of equitable remedies (whether in a proceeding at law or in
equity). No approval, consent,
authorization of, filing registration or qualification with, or other action
by, Pledgor or any other Person (including, without limitation, any Person
whose securities constitute part of the Collateral) or Governmental Authority
that has not been obtained is or will be necessary to permit the valid
execution, delivery and performance of this Agreement by Pledgor or the
consummation of the transactions or creation of the Liens and security
interests contemplated hereby other than delivery of certificates representing
the Collateral (if any) to Secured Party and the filing of appropriate UCC
financing statements.
3.3.
No Conflicts
. The
execution, delivery and performance by Pledgor of this Agreement and the
consummation of the transactions contemplated hereby and the creation and
granting of the security interests and Liens contemplated hereby do not and
will not (1) conflict with or violate any provision of any applicable law,
statute, rule, regulation, ordinance or tariff or any order, injunction, writ
or decree of any Governmental Authority binding on or applicable to Pledgor or
any of its properties or assets; (2) conflict with, result in a breach of,
constitute a default of or an event of default under, or an event, fact,
condition or circumstance which, with notice or passage of time, or both, would
constitute or result in a conflict, breach, default or event of default under,
require any consent not obtained under, or result in or require the
acceleration of any indebtedness pursuant to, any indenture, agreement or other
instrument to which Pledgor is a party or by which it, or any of its properties
or assets are bound or subject in each case the effect of which would be or
have a Material Adverse Effect; (3) if applicable, conflict with or
violate any provision of the certificate of incorporation or formation or
by-laws or operating agreement of Pledgor or any Person whose securities
constitute part of the Collateral under clause (i), (ii) or (iii) of
the definition of Collateral or any agreement by and between Pledgor or any such
Person and its shareholders or equity owners or among any such shareholders or
equity owners (other than any such agreements among the equity owners or
shareholders of Pledgor with respect to the Capital Stock of Pledgor); or (4) result
in the creation or imposition of any Lien of any nature whatsoever upon any of
the properties or assets of Pledgor (except as contemplated herein).
3.4.
Non-Subordination
.
Except to the extent required by applicable law, the obligations of
Pledgor under this Agreement are not subordinated in any way to any other
obligation of Pledgor or to the rights of any other Person, and Pledgor is not
a party to or bound by any other agreement, document or instrument that
otherwise relates to the Secured Obligations or any of the Collateral (other
than the Loan Documents or as permitted by the Loan Documents).
3.5.
Litigation and Compliance; Other Agreements
.
(a)
There is no action, suit, proceeding or
investigation pending or, to Pledgor’s knowledge, threatened (1) against the
Collateral that would reasonably be expected to have a Material Adverse Effect,
or (2) that questions or could reasonably be expected to prevent the
validity of this Agreement or the right or ability of Pledgor to enter into
this Agreement or to consummate the
6
transactions contemplated hereby.
3.6
[Intentionally Omitted]
.
3.7
Covenants
.
(a)
Pledgor shall take all necessary and
appropriate actions to ensure that this Agreement and the Liens and pledges
created hereby are and remain enforceable against Pledgor in accordance with
their terms and that Pledgor complies with each of its obligations
hereunder. Pledgor shall not (i) cause
or permit to be done, or enter into or make or become a party to any agreement,
arrangement or commitment to do or cause to be done, any of the things
prohibited by this Agreement or that would breach this Agreement, or (ii) enter
into or make or become a party to any agreement, document or instrument or
arrangement that would prevent Pledgor from complying herewith and/or
performing hereunder.
(b)
Pledgor hereby agrees to take or cause to be
taken promptly such further actions, obtain such consents and approvals and
duly execute and deliver or cause to be executed and delivered such further
agreements, assignments, instructions or documents Secured Party may request in
its Permitted Discretion with respect to or in order to fully effectuate the
purposes, terms and conditions of this Agreement and the consummation of the transactions
contemplated hereby, whether before, at or after the performance and/or
consummation of such transactions or the occurrence of a Default or Event of
Default, including, without limitation, any of the foregoing necessary or
required or requested by Secured Party in its Permitted Discretion to create,
perfect, maintain, preserve, continue, validate or otherwise protect, and from
time to time renew, Secured Party’s, for its benefit and the benefit of the
Lenders, perfected first priority Lien on and pledge of the Collateral. Without limiting the foregoing, upon the
exercise by Secured Party or any Lender or any of its or their Affiliates or
agents of any right or remedy hereunder which requires any consent, approval or
registration with, consent, qualification or authorization by, any Person,
Pledgor shall execute and deliver, or cause (to the extent that it has the
legal right, power or authority to cause) the execution and delivery of, all
applications, certificates, instruments and other documents that Secured Party
or any Lender or its or their Affiliate or agents may be required to obtain for
such consent, approval, registration, qualification or authorization. Pledgor hereby appoints Secured Party, for its
benefit and the benefit of the Lenders, its attorney-in-fact (without requiring
Secured Part to act as such), with full power of substitution, which
appointment as attorney-in-fact is irrevocable and coupled with an interest, to
take all such actions, whether in the name of Secured Party, for its benefit
and the benefit of the Lenders, or Pledgor, as Secured Party in its Permitted
Discretion may consider necessary with respect to the foregoing (but only to
the extent Pledgor fails to so execute and/or file any of the foregoing within
two (2) Business Days of Secured Party’s request or the time when Pledgor
is otherwise obligated to do so).
Pledgor will pay all reasonable costs associated with respect to the
foregoing, including without limitation, the cost of filing any of the
foregoing in all public offices or other locations wherever Secured Party in
its Permitted Discretion deems filing to be necessary or desirable.
(c)
Pledgor (i) shall (A) maintain at all
times the pledge of the Collateral to Secured Party, for its benefit and the
benefit of the Lenders, and Secured Party’s, for its benefit and the benefit of
the Lenders, perfected first priority Lien on the Collateral; and (B) defend
the Collateral and Secured Party’s, for its benefit and the benefit of the
Lenders, perfected first priority Lien thereon and pledge thereof against all
claims and demands of all Persons at any time (except for Liens permitted under
the Loan Documents) and pay all reasonable costs and expenses (including,
without limitation, in-house
7
documentation
and diligence fees and legal expenses and reasonable attorneys’ fees and
expenses) in connection with such defense, which, at Secured Party’s
discretion, may be added to the Obligations, and (ii) shall not sell, lease,
transfer, pledge, encumber, restrict, assign or otherwise dispose of any of the
Collateral or any interest therein or create, incur, assume or suffer to exist
any Lien on the Collateral or any interest therein (except pursuant hereto or allowed
pursuant to the Loan Documents).
(d)
Pledgor shall, and shall cause each Person whose
securities constitute the Collateral to, (i) keep true, complete and
accurate records with respect to the Collateral, (ii) except as permitted
by the Loan Documents, not take or permit to be taken any action in connection
with the Collateral or otherwise which would impair in any material respect (as
determined by Secured Party in its Permitted Discretion) the value of the
Collateral, taken as a whole, or any material portion thereof or the value of
the interests or rights of Pledgor or Secured Party, for its benefit and the
benefit of the Lenders, therein, including, without limitation, any amendment
to or modification of the certificate of incorporation (or similar charter documents)
or bylaws (or similar documents) of Pledgor or such Person that is not
permitted by the Loan Documents.
(e)
Pledgor shall notify Agent at least thirty (30)
Days before any change of its state of incorporation, corporate name, federal
tax identification number or address.
3.8
No Third Party Beneficiary
. No
rights are intended to be created under this Agreement for the benefit of any
third party donee, creditor or incidental beneficiary of Pledgor.
SECTION 4
EVENTS OF DEFAULT
The occurrence of any one or
more of the following shall constitute an “Event of Default” under this
Agreement: (a) Pledgor shall be in violation, breach or default of, or
shall fail to perform, observe or comply with any covenant, obligation or
agreement set forth in, this Agreement and such failure shall not be cured
within the applicable period, if any;
provided
that, with respect to the
covenants set forth herein (other than
Sections 3.7(c)(i)(A) and 3.7(c)(ii)
for
which there shall be no cure periods), there shall be a 30 calendar day cure
period commencing from the earlier of (i) Receipt (as defined herein) by
Pledgor of written notice of such breach, default, violation or failure, and (ii) the
time at which any authorized officer of Pledgor knew or became aware of such failure,
violation, breach or default; (b) any representation, statement or
warranty made or deemed made by Pledgor in this Agreement shall not be true and
correct in all material respects or shall have been false or misleading in any
material respect on the date when made or deemed to have been made (except to
the extent already qualified by materiality, in which case it shall be true and
correct in all respects and shall not be false or misleading in any respect)
except those made as of a specific date; (c) any Event of Default (as
defined in the Loan Agreement) shall occur and be continuing past any cure
period and shall not have been waived in writing or cured within the applicable
cure period; or (d) if prior to termination of this Agreement pursuant to
Section 6.11
hereof, this Agreement shall cease to be in full force and effect or any Lien
created hereunder shall cease to constitute a valid perfected first priority
Lien on the Collateral or Secured Party, for its benefit and the benefit of the
Lenders, otherwise ceases to have a valid perfected first priority Lien on and
security interest in any of the Collateral, except as otherwise permitted by
the terms of this Agreement or the other Loan Documents.
8
SECTION 5
RIGHTS AND REMEDIES
5.1
Rights and Remedies in Loan Documents
.
(a)
In addition to the provisions set forth in this
Agreement, upon the occurrence and continuation of an Event of Default, Secured
Party, for its benefit and the benefit of the Lenders, shall have the right to
exercise any and all rights, powers, options and remedies provided for in any
Loan Document and/or herein, under the UCC or at law or in equity, including,
without limitation, to the fullest extent permitted by applicable law, the
right (in its sole and absolute discretion) to, which Pledgor agrees to be
commercially reasonable, (i) apply the Collateral to reduce the Secured
Obligations, (ii) foreclose the Liens created hereunder and under the Loan
Documents, (iii) realize upon, take possession of and/or sell any
Collateral, with or without judicial process, at public or private sales or at
any broker’s board or on any securities exchange or otherwise, (iv) exercise
all rights and powers with respect to the Collateral as Pledgor might exercise
in its absolute discretion, including, without limitation, to (1) relinquish
or abandon any Collateral or any Lien thereon, (2) to vote all or any part
of the Collateral and otherwise act with respect thereto as though it were the
outright owner thereof, (3) to settle, adjust, compromise and arrange all
claims and demands whatsoever in relation to all or any part of the Collateral,
(4) to execute all such contracts, agreements, deeds, documents and
instruments, to bring, defend and abandon all such actions, suits and
proceedings, and to take all actions in relation to all or any party of the
Collateral, and/or (5) to appoint managers, sub-agents, and officers for
any of the purposes mentioned in the foregoing provisions of this Section and
to dismiss the same, (v) collect and send notices regarding the
Collateral, with or without judicial process, (vi) by its own means or
with judicial assistance, enter any premises at which Collateral is located, or
render any of the foregoing unusable or dispose of the Collateral on such
premises without any liability for rent, storage, utilities, or other sums, and
Pledgor shall not resist or interfere with such action, (vii) at any
Credit Party’s or Pledgor’s expense, require that all or any part of the Collateral
be assembled and made available to Secured Party at any place designated by
Secured Party in its Permitted Discretion, and/or (viii) relinquish or
abandon any Collateral or any Lien thereon.
Agent shall have the right in its sole discretion to determine which
rights and/or remedies Agent or any other Lender may at any time pursue,
relinquish, subordinate or modify, and such determination will not in any way
modify or affect any of Agent’s or any Lender’s rights and remedies under this
Agreement, at law or in equity.
(b)
Secured Party, in its sole discretion, shall
have the right, but not the obligation, at any time that any Credit Party or
Pledgor fails to do so, and from time to time, without prior notice, as
applicable, to discharge taxes, levies or Liens on any of the Collateral that
are in violation of any Loan Document unless Credit Party or Pledgor, as
applicable, is in good faith with due diligence by appropriate proceedings
contesting those items. Such expenses
and advances shall be added to the Obligations until reimbursed to Secured
Party and shall be secured by the Collateral, and such payments by Secured
Party shall not be construed as a waiver by Secured Party or Lenders of any
Event of Default or any other rights or remedies of Secured Party and Lenders.
(c)
Pledgor agrees that notice received by it at
least ten (10) calendar days before the time of any intended public sale,
or the time after which any private sale or other disposition of Collateral is
to be made, shall be deemed to be reasonable notice of such sale or other
disposition. If permitted by applicable
law, any perishable Collateral which threatens to speedily decline in value or
which is sold on a recognized market may be sold immediately by Secured Party
without prior notice to Pledgor. At any
sale or disposition of Collateral, Secured Party may (to the extent permitted
by applicable law) (i) purchase all or any part thereof free from any
right of redemption by Pledgor or any Credit Party or other Person guaranteeing
the Obligations, which right is hereby waived and released, (ii) restrict
the number of prospective bidders or purchasers and/or further restrict such
prospective bidders or purchasers to Persons who will represent and agree that
they are purchasing for their own account, for investment and not with a view
to the distribution or resale of the Collateral, and (iii) otherwise
require that such sale be conducted subject to restrictions as to such other
matters as Secured Party may deem necessary in order that such sale may be
effected in such manner as to comply with all applicable state and federal
securities and other laws. The Agent
shall not be obligated to make any sale or other disposition of any Collateral
if it shall
9
determine not to do so, regardless of the fact that
notice of sale or other disposition of such Collateral shall have been given.
The Agent may, without notice or publication, adjourn any public or private
sale or cause the same to be adjourned from time to time by announcement at the
time and place fixed for sale, and such sale may, without further notice, be
made at the time and place to which the same was so adjourned. For purposes hereof, a written agreement to
purchase the Collateral or any portion thereof shall be treated as a sale
thereof. The Agent shall be free to
carry out such sale pursuant to such agreement and Pledgor shall not be
entitled to the return of the Collateral or any portion thereof subject
thereto, notwithstanding the fact that after the Agent shall have entered into
such an agreement all Events of Default shall have been remedied and the
Obligations paid in full.
(d)
Pledgor hereby acknowledges that (i) notwithstanding
that a higher price might be obtained for the Collateral at a public sale than
at a private sale or sales, the making of a public sale of the Collateral may
be subject to registration requirements under applicable securities laws and
other legal restrictions, compliance with which would require such actions on
the part of Pledgor, would entail such expenses and would subject Secured
Party, any Lender, any underwriter through whom the Collateral may be sold or
any controlling person of any of the foregoing to such liabilities, as would
make a public sale of the Collateral impractical, and accordingly, Pledgor
hereby agrees that private sales made by Secured Party or any Lender in good
faith in accordance with the provisions of this Agreement may be at prices and
on other terms less favorable to the seller than if the Collateral were sold at
a public sale, and that Secured Party and Lenders shall not have any obligation
to take any steps in order to permit the Collateral to be sold at a public
sale, such a private sale being considered or deemed to be a sale in a
commercially reasonable manner; (ii) any private sale of the Collateral
may be subject to compliance with federal and state securities and/or other
laws, and (iii) Secured Party is hereby authorized to comply with any
limitation or restriction in connection with such sale that may be necessary in
order to avoid any violation of applicable law or in order to obtain any
required approval of the purchaser(s) by any Governmental Authority or officer
or court.
5.2
Application of Proceeds
.
In addition to any other rights, options and remedies Secured Party and
Lenders have under the Loan Documents, the UCC, at law or in equity, the
proceeds of any collection, recovery, receipt, appropriation, realization,
transfer, exchange, disposition or sale of the Collateral as aforesaid shall be
applied in accordance with the terms of each Loan Agreement.
5.3
Rights of Lender to Appoint Receiver
.
Without limiting and in addition to any other rights, options and
remedies Secured Party and Lenders have hereunder or under the Loan Documents,
the UCC, at law or in equity, upon the occurrence and continuation of an Event
of Default, Secured Party shall have the right to apply for and have a receiver
appointed by a court of competent jurisdiction in any action taken by Secured
Party to enforce its rights and remedies in order to manage, protect and
preserve the Collateral and continue the operation of the business of Borrower
and/or Pledgor and to collect all revenues and profits thereof and apply the
same to the payment of all expenses and other charges of such receivership
including the compensation of the receiver and to the payments as aforesaid
until a sale or other disposition of such Collateral shall be finally made and
consummated.
5.4
Attorney in Fact
. Pledgor
hereby irrevocably appoints Secured Party, for its benefit and the benefit of
the Lenders, as its attorney in fact to take any action Lender deems necessary
upon the occurrence and continuation of an Event of Default to perfect, protect
and realize upon its Lien and first priority security interest in the
Collateral, for its benefit and the benefit of the Lenders, including the
execution and delivery of any and all documents or instruments related to the
Collateral in Pledgor’s name, or otherwise to effect fully the purpose, terms
and conditions of this Agreement and the other Loan Documents, and said
appointment shall create in Secured Party, for its benefit and the benefit of
the Lenders, a power coupled with an interest.
10
SECTION 6
MISCELLANEOUS
6.1
No Waiver of Defaults; Waiver
. No
course of action or dealing, renewal, waiver, release or extension of any
provision of any Loan Document or this Agreement, or single or partial exercise
of any such provision, or delay, failure or omission on Secured Party’s or
Lenders’ part in enforcing any such provision shall affect the liability of
Pledgor or operate as a waiver of such provision or preclude any other or
further exercise of such provision. No
waiver by Secured Party or any Lender of any one or more defaults by any other
party in the performance of any of the provisions of any Loan Document or this
Agreement shall operate or be construed as a waiver of any future default,
whether of a like or different nature, and each such waiver shall be limited
solely to the express terms and provisions of such waiver. Notwithstanding any other provision of any
Loan Document or this Agreement, by completing the Closing and/or by making
Advances and/or funding the Loan, neither Secured Party nor any Lender waives
any breach of any representation or warranty under any Loan Document or this
Agreement, and all of Secured Party’s and Lenders’ claims and rights resulting
therefrom are specifically reserved.
Except as expressly provided for herein, Pledgor hereby waives setoff,
counterclaim, demand, presentment, protest, all defenses with respect to any
and all instruments and all notices and demands of any description (including,
without limitation, notice of acceptance hereof, notice of any Loan made,
credit extended, collateral received or delivered) and the pleading of any
statute of limitations as a defense to any demand under any Loan Document, it
being the intention that Pledgor shall remain liable under this Agreement and the
Loan Documents until the full amount of all Secured Obligations shall have been
indefeasibly paid in cash (other than indemnity obligations under the Loan
Documents not then due and payable for any events of claims that would give
rise thereto that are not then pending) and performed and satisfied in full and
any commitments to extend credit under the Loan Agreement are terminated,
notwithstanding any act, omission or anything else which might otherwise
operate as a legal or equitable discharge of Pledgor. Pledgor hereby waives any and all defenses
and counterclaims it may have or could interpose in any action or procedure
brought by Secured Party or any Lender to obtain an order of court recognizing
the assignment of, or Lien of Secured Party, for its benefit and the benefit of
the Lenders, in and to, any Collateral.
6.2
Entire Agreement
. This
Agreement and the other Loan Documents to which Pledgor is a party constitute
the entire agreement between Pledgor and Secured Party and Lenders with respect
to the subject matter hereof and thereof, and supersede all prior agreements
and understandings, if any, relating to the subject matter hereof or
thereof. Any promises, representations,
warranties or guarantees not herein contained and hereinafter made shall have
no force and effect unless in writing signed by the parties hereto. Each party hereto acknowledges that it has
been advised by counsel in connection with the negotiation and execution of
this Agreement and is not relying upon oral representations or statements
inconsistent with the terms and provisions hereof.
6.3
Amendment
. No provision of this Agreement
may be changed, modified, amended, restated, waived, supplemented, discharged,
canceled or terminated orally or by any course of dealing or in any other
manner other than by a written agreement signed by Secured Party and
Pledgor. Pledgor acknowledges that it
has been advised by counsel in connection with the negotiation and execution of
this Agreement and is not relying upon oral representations or statements
inconsistent with the terms and provisions hereof.
6.4
Notices
. Any notice or request under
this Agreement shall be given to any party hereto at
11
such party’s address set forth beneath its signature
on the signature page hereto, or at such other address as such party may
hereafter specify in a notice given in the manner required under this
Section 6.4
. Any such notice or request shall be given
only by, and shall be deemed to have been received upon (each, a
“Receipt”
): (a) registered
or certified mail, return receipt requested, on the date on which such received
as indicated in such return receipt, (b) delivery by a nationally
recognized overnight courier, one (1) Business Day after deposit with such
courier, or (c) facsimile or electronic transmission, in each case upon
telephone or further electronic communication from the recipient acknowledging
receipt (whether automatic or manual from recipient), as applicable.
6.5
Governing Law; Jurisdiction; Construction
. This
Agreement shall be governed by and construed in accordance with the internal
laws of the State of New York without giving effect to its choice of law
provisions. Any judicial proceeding
against Pledgor with respect to any of the Secured Obligations, any of the
Collateral or this Agreement may be brought in any federal or state court of
competent jurisdiction located in Montgomery County in the State of Maryland or
the Borough of Manhattan in the State of New York. By execution and delivery of this Agreement,
Pledgor (a) accepts the non-exclusive jurisdiction of the aforesaid courts
and irrevocably agrees to be bound by any judgment rendered thereby, (b) waives
personal service of process, (c) agrees that service of process upon it
may be made by certified or registered mail, return receipt requested, pursuant
to
Section 6.4
hereof, and (d) waives any objection to
jurisdiction and venue of any action instituted hereunder and agrees not to
assert any defense based on lack of jurisdiction, venue, convenience or
forum non conveniens
.
Nothing shall affect the right of Secured Party or any Lender to serve
process in any manner permitted by law or shall limit the right of Secured
Party or any Lender to bring proceedings against Pledgor in the courts of any
other jurisdiction having jurisdiction.
Any judicial proceedings against Secured Party or any Lender, involving,
directly or indirectly, the Secured Obligations, Collateral or this Agreement shall
be brought only in a federal or state court located in Montgomery County in the
State of Maryland or the Borough of Manhattan in the State of New York. Pledgor acknowledges that it participated in
the negotiation and drafting of this Agreement and that, accordingly, it shall
not move or petition a court construing this Agreement to construe it more
stringently against one party than against any other.
6.6
Severability; Captions; Counterparts;
Facsimile Signature
. If any provision of this Agreement is
adjudicated to be invalid under applicable laws or regulations, such provision
shall be inapplicable to the extent of such invalidity without affecting the
validity or enforceability of the remainder of this Agreement which shall be
given effect so far as possible. The
captions in this Agreement are intended for convenience and reference only and
shall not affect the meaning or interpretation of this Agreement. This Agreement may be executed in one or more
counterparts (which taken together, as applicable, shall constitute one and the
same instrument) and by facsimile transmission, which facsimile signatures
shall be considered original executed counterparts. Each party to this Agreement agrees that it
will be bound by its own facsimile signature and that it accepts the facsimile
signature of each other party.
6.7
Successors and Assigns
. This
Agreement (a) shall inure to the benefit of, and, except as provided in
the Loan Agreement, may be enforced by, Secured Party and Lenders, Transferees,
Participants (to the extent expressly provided in the Loan Agreement) and all
future holders of the Notes, if any, any of the Secured Obligations or any of the
Collateral and each of their respective successors and permitted assigns, and (b) shall
be binding upon and enforceable against Pledgor and Pledgor’s permitted assigns
and successors. Pledgor shall not
assign, delegate or transfer this Agreement or any of its rights or obligations
thereunder without the prior written consent of Secured Party. This Agreement shall be
12
binding upon Pledgor and its respective heirs,
administrators, executors, successors and assigns. Nothing contained in this Agreement or any
other Loan Document shall be construed as a delegation to Secured Party or any
Lender of Pledgor’s duty of performance.
PLEDGOR ACKNOWLEDGES AND AGREES THAT SECURED PARTY AND LENDERS AT ANY
TIME AND FROM TIME TO TIME MAY (I) DIVIDE AND REISSUE (WITHOUT ANY
SUBSTANTIVE CHANGES OTHER THAN THOSE RESULTING FROM SUCH DIVISION) THE NOTES,
AND/OR (II) SELL, ASSIGN OR GRANT PARTICIPATING INTERESTS IN OR TRANSFER ALL OR
ANY PART OF ITS RIGHTS OR OBLIGATIONS UNDER THIS AGREEMENT, ANY NOTE, THE
OBLIGATIONS, THE COLLATERAL AND/OR THE LOAN DOCUMENTS TO ONE OR MORE
TRANSFEREES IN EACH CASE ON THE TERMS AND CONDITIONS PROVIDED IN THE LOAN
AGREEMENT. The terms “Secured Party” and
“Lenders” in this Agreement includes Transferees and Participants and Secured
Party’s successors and assigns, each of which shall, except as provided in the
Loan Agreement, have all rights and benefits of Secured Party or Lender
hereunder. Except as provided in the
Loan Agreement, each Transferee and Participant shall have all of the rights
and benefits with respect to the Secured Obligations, Notes, Collateral, this
Agreement and/or Loan Documents held by it as fully as if the original holder
thereof. Notwithstanding any other
provision of this Agreement or any Loan Document, Secured Party and Lenders may
disclose to any Transferee or Participant all information, reports, financial
statements, certificates and documents obtained under any provision of this
Agreement,
provided
, that Transferees and Participants shall be subject
to the confidentiality provisions contained in each Loan Agreement that are
applicable to Secured Party and Lenders.
6.8
Waiver of Jury Trial
. EACH
PARTY TO THIS AGREEMENT HEREBY EXPRESSLY WAIVES ANY RIGHT TO TRIAL BY JURY OF
ANY CLAIM OR CAUSE OF ACTION ARISING HEREUNDER OR IN ANY WAY CONNECTED WITH OR
INCIDENTAL TO THE DEALINGS OF THE PARTIES WITH RESPECT HERETO OR THE
TRANSACTIONS CONTEMPLATED HEREBY, WHETHER NOW EXISTING OR HEREAFTER ARISING,
AND WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE. EACH PARTY HEREBY AGREES AND CONSENTS THAT
ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A
JURY, AND THAT ANY PARTY TO THIS AGREEMENT MAY FILE AN ORIGINAL COUNTERPART OR
A COPY OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENTS
OF THE PARTIES TO THE WAIVER OF THEIR RESPECTIVE RIGHTS TO TRIAL BY JURY.
6.9
Expenses
. Pledgor shall pay to Secured
Party and Lenders all reasonable costs and expenses incurred by Secured Party,
Lenders and/or their Affiliates and reasonable attorneys’ fees and expenses (a) in
any effort to enforce this Agreement against Pledgor, (b) in defending or
prosecuting any actions, claims or proceedings by or against Pledgor arising
out of or relating to this Agreement and/or the Collateral (except to the
extent such action, claim or proceeding is determined in a final, nonappealable
judgment by a court of competent jurisdiction binding on such Secured Party,
Lender or Affiliate to have arisen as a result of the gross negligence or
willful misconduct of such party), (c) arising in any way out of the
taking or refraining from taking by Secured Party or any Lender of any action
requested by Pledgor, and/or (d) in connection with any modification,
restatement, supplement, amendment, waiver or extension of this Agreement
and/or any related agreement, document or instrument requested by Pledgor. If Secured Party or any Lender or any of its
Affiliates uses in-house counsel for any of the foregoing, Pledgor expressly
agrees that its obligations hereunder include reasonable cost of time spent by
such in-house counsel.
13
6.10
Rights and Remedies
.
Secured Party, for its benefit and the benefit of the Lenders, shall
have the right in its sole discretion to determine which rights and/or remedies
Secured Party or Lenders may at any time pursue, relinquish, subordinate or modify,
and such determination will not in any way modify or affect any of Secured
Party’s or Lenders’ rights, Liens or remedies under any Loan Document or this
Agreement, applicable law or equity. The
enumeration of any rights and remedies in this Agreement or any Loan Document
is not intended to be exhaustive, and all rights and remedies of Secured Party
described in this Agreement and the Loan Documents are cumulative and are not
alternative to or exclusive of any other rights or remedies which Secured Party
otherwise may have. The partial or
complete exercise of any right or remedy shall not preclude any other further
exercise of such or any other right or remedy.
6.11
Termination; Release of Collateral
. This
Agreement shall continue in full force and effect until full performance and
indefeasible payment in full in cash of all Secured Obligations (other than
indemnity obligations under the Loan Documents not then due and payable for any
events of claims that would give rise thereto that are not then pending) and
termination of any commitments to extend credit under any of the Loan
Documents. Notwithstanding any other
provision of this Agreement or any Loan Document, no termination of this
Agreement shall affect Secured Party’s or Lenders’ rights or any of the Secured
Obligations existing as of the effective date of such termination until the
Secured Obligations have been fully performed and indefeasibly paid in cash in
full (other than indemnity obligations under the Loan Documents not then due
and payable for any events of claims that would give rise thereto that are not
then pending) and Pledgor shall have executed and delivered releases in favor
of Agent and Lenders in form and substance satisfactory to Agent, in its
Permitted Discretion (provided, however, that such release may exclude claims
filed by Pledgor against Secured Party or any Lender prior to the payoff
contemplated in this
Section 6.11
to the extent arising out of the
gross negligence, willful misconduct or fraud of Secured Party or any Lender). The Liens granted to Secured Party, for its
benefit and the benefit of the Lenders, hereunder and any financing statements
filed pursuant hereto and the rights and powers of Secured Party and Lenders
hereunder shall continue in full force and effect until all of the Secured
Obligations have been fully performed and indefeasibly paid in full in cash
(other than indemnity obligations under the Loan Documents not then due and
payable for any events of claims that would give rise thereto that are not then
pending) and Pledgor shall have executed and delivered releases in favor of
Agent and Lenders in form and substance satisfactory to Agent, in its Permitted
Discretion. Subject to
Section 12.3
of the Loan Agreement, promptly following full performance and satisfaction and
indefeasible payment in full in cash of all Secured Obligations (other than
indemnity obligations under the Loan Documents not then due and payable for any
events of claims that would give rise thereto that are not then pending) and the
termination of any commitments to extend credit under any Loan Documents, the
Liens created hereby shall terminate and Secured Party and Lenders shall
execute and deliver such documents, at Pledgor’s expense, as are necessary to
release their Liens in the Collateral and shall return the Collateral to
Pledgor;
provided
,
however
, that the parties agree that,
notwithstanding any such termination or release or the execution, delivery or
filing of any such documents or the return of any Collateral, if and to the
extent that any such payment made or received with respect to the Obligations
is subsequently invalidated, determined to be fraudulent or preferential, set
aside or required to be repaid to a trustee, debtor in possession, receiver,
custodian or any other Person under any Debtor Relief Law, common law or
equitable cause or any other law, then the Obligations intended to be satisfied
by such payment shall be revived and shall continue as if such payment had not
been received by Agent or any Lender and the Liens created hereby shall be
revived automatically without any action on the part of any party hereto and
shall continue as if such payment had not been received by Agent or any
Lender. Secured Party and each Lender
shall not be deemed to have made any representation or warranty with
14
respect to any Collateral so delivered except that
such Collateral is free and clear, on the date of such delivery, of any and all
Liens arising from its own acts.
6.12
Approvals and Duties
.
Secured Party and Lenders shall have no responsibility for or obligation
or duty with respect to any of the Collateral (other than the duty of
reasonable care with respect to the safekeeping of such Collateral in their
custody) or any matter or proceeding arising out of or relating thereto,
including, without limitation, any obligation or duty to collect any sums due
in respect thereof or to protect or preserve any rights pertaining thereto.
6.13
Survival
. It is the express intention and
agreement of the parties hereto that all covenants, representations, warranties
and waivers and indemnities made by Pledgor herein shall survive the execution,
delivery and termination of this Agreement until all Obligations are performed
in full and indefeasibly paid in full in cash and any commitments to extend
credit under any of the Loan Documents are terminated.
[SIGNATURES
APPEAR ON THE FOLLOWING PAGE]
15
IN
WITNESS WHEREOF, each of the parties hereto has duly executed this Pledge
Agreement as of the date first written above.
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CAPITALSOURCE FINANCE
LLC
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By:
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/s/ Steven A. Museles
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Name:
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Steven A. Museles
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Its: Senior Vice President
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4445 Willard Avenue, 12
th
Floor
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Chevy Chase, MD 20815
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Attention: Corporate
Finance Group, Portfolio Manager
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Telephone:
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(301) 841-2700
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FAX:
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(301) 841-2313
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E-Mail:
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sladd@capitalsource.com
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EVOLVING SYSTEMS, INC.
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By:
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/s/Brian R. Ervine
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Name:
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Brian R. Ervine
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Its: Executive Vice President,
Chief Financial &
Administrative Officer
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9777 Pyramid Court, Suite 100
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Englewood, Colorado 80112
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Attention:
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Anita T. Moseley, General
Counsel
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Telephone:
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(303) 802-2599
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FAX:
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(303) 802-1138
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E-Mail:
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atm@evolving.com
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Pledge Agreement
Schedule 1.1
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Name of Entity
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Class or Series
of Units
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Number of
Units
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Percentage of
Ownership
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Certificate
Representing
Such Units
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Telecom Software
Enterprises, LLC
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Membership Interests
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The Membership Interest is
uncertificated
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100%
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The Membership Interest is
uncertificated
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Evolving Systems Holdings, Inc.
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Common Stock
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100 shares
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100%
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1
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Evolving Systems Networks
India PVT Ltd.
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Equity Shares
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370,184 shares
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100%
(only 65% pledged pursuant to this Agreement)
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001 (9,998 shares),
002 (1 share)*,
003 (1 share)*,
004 (90,000
shares) and 006
(270,184 shares)**
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* Certificates Numbers 002
and 003 are held by N. Madhusudan Reddy, a director of Evolving Systems
Networks India PVT Ltd, as the nominee of Evolving Systems, Inc.
** Only 65% of the
outstanding shares of Evolving Systems Networks India PVT, Ltd. are pledged to
Secured Party pursuant to this Agreement.
Notwithstanding the fact that certificate no. 006 represents more than
65% of the outstanding shares of Evolving Systems Networks India PVT, Ltd.,
Secured Party’s security interest and Lien shall extend only to 65% of such
outstanding shares.
Pledge Agreement
Schedule 1.2
Initial Pledged Notes
None.
Exhibit 10.1(e)
REVOLVING
FACILITY AGREEMENT
among
EVOLVING SYSTEMS, LTD.
as Borrower and a Credit
Party
EVOLVING SYSTEMS
HOLDINGS, LTD.
EVOLVING SYSTEMS, INC.
TELECOM SOFTWARE
ENTERPRISES, LLC
EVOLVING SYSTEMS
HOLDINGS, INC
as a Credit Party
and
CSE FINANCE, INC
as Lender
CAPITALSOURCE
FINANCE LLC,
as Agent
Dated as of
November 14,
2005
REVOLVING FACILITY AGREEMENT
This
REVOLVING FACILITY AGREEMENT
(this “Agreement”), dated as of November 14, 2005, is entered into by and
among EVOLVING SYSTEMS LTD., a company incorporated under the laws of England &
Wales with registration number 2325854 (“Borrower”); EVOLVING SYSTEMS HOLDINGS
LTD., a company incorporated under the laws of England & Wales with
registration number 5272751 (a “UK Guarantor”), EVOLVING SYSTEMS, INC., a
Delaware Corporation, TELECOM SOFTWARE ENTERPRISES, LLC, a Colorado limited
liability company and EVOLVING SYSTEMS HOLDINGS, Inc., a Delaware Corporation
as Credit Parties; CAPITALSOURCE FINANCE LLC, a Delaware limited liability
company (in its individual capacity, “CapitalSource”), as administrative,
payment and collateral agent for the Lenders (CapitalSource, in such
capacities, “Agent”); CSE FINANCE INC as a Lender, a Delaware corporation (“CSE
Finance”); and the Lenders from time to time parties hereto.
WHEREAS
, the Credit
Parties have requested that Lenders make available to Borrower (i) a
revolving credit facility (including a letter of credit sub-facility ) (the “Revolving
Facility”) in a maximum aggregate amount not to exceed the Facility Cap in
effect from time to time (the amount of which, initially, shall be $4,500,000),
shall be used by Borrower for purposes permitted under, and otherwise in
accordance with and subject to the terms of, this Agreement.
WHEREAS
, Lenders are
willing to make the Revolving Facility available to Borrower, upon the terms
and subject to the conditions set forth herein.
NOW, THEREFORE
, in
consideration of the foregoing, and for other good and valuable consideration,
the receipt, sufficiency and adequacy of which hereby are acknowledged, the
parties hereto hereby agree as follows:
I.
DEFINITIONS
(a)
For purposes of the Loan Documents and all
schedules, exhibits, annexes and attachments thereto, in addition to the
definitions elsewhere in this Agreement and the other Loan Documents, the terms
listed in
Appendix A
hereto shall have the respective meanings assigned
to such terms in
Appendix A
hereto, which is incorporated herein and
made a part hereof. All capitalized
terms used which are not specifically defined herein shall have the respective
meanings assigned to them in Article 9 of the UCC to the extent the same
are used or defined therein. Unless
otherwise specified in any Loan Document, this Agreement, any other Loan
Document and any agreement or contract referred to herein or in
Appendix A
hereto shall mean such agreement or contract, as modified, amended,
supplemented or restated and in effect from time to time, subject to any
applicable restrictions set forth in such Loan Document. Unless otherwise specified, as used in the
Loan Documents or in any certificate, report, instrument or other document made
or delivered pursuant to any of the Loan Documents, all accounting terms not
defined in
Appendix A
hereto or elsewhere in this Agreement or any other
Loan Document shall have the meanings assigned to such terms in and shall be
interpreted in accordance with GAAP. If
any change in GAAP results in a change in the calculation of the financial
covenants or interpretation of related provisions of this Agreement or any
other Loan Document, then
1
Borrower,
Agent, Lenders and the other Credit Parties agree to amend such provisions of
this Agreement so as to equitably reflect such changes in GAAP with the desired
result that the criteria for evaluating the Credit Parties’ financial condition
shall be the same after such change in GAAP as if such change had not been made,
provided that, notwithstanding any other provision of this Agreement, the
Requisite Lenders’ agreement to any amendment of such provisions shall be
sufficient to bind all Lenders; and, provided further, until such time as the
financial covenants and the related provisions of this Agreement have been
amended in accordance with the terms of this paragraph, the calculations of
financial covenants and the interpretation of any related provisions shall be
calculated and interpreted in accordance with GAAP as in effect immediately
prior to such change in GAAP.
II.
CREDITS
2.1
Revolving
Facility
(a)
Subject to the terms and conditions set
forth in this Agreement, each Lender agrees to make available to Borrower its
Pro Rata Share of Advances under the Revolving Facility from time to time
during the Term; provided, that (i) the Pro Rata Share of Advances of any
Lender shall not at any time exceed such Lender’s Commitment under the
Revolving Facility and (ii) the aggregate amount of all Advances at any
time outstanding under the Revolving Facility shall not exceed the lesser of (x) the Facility Cap
in effect at such time less the Letter of Credit Usage then in effect and (y) the Aggregate Borrowing
Availability then in effect. The
obligations of the Lenders under the Revolving Facility shall be several, and
not joint or joint and several. The
Revolving Facility is a revolving credit facility that may be drawn, repaid and
redrawn from time to time as permitted under this Agreement. Borrower may not at any time increase, reduce
or otherwise adjust the Facility Cap.
Agent shall have the right to establish and readjust from time to time,
in its Permitted Discretion, reserves under the Revolving Facility, which
reserves shall have the effect of reducing the amounts otherwise available to
be disbursed to Borrower under the Revolving Facility.
(b)
Subject to Section 2.1(a) Borrower
shall maintain a minimum outstanding balance at all times of Advances in the
amount of at least $2,000,000 from the Closing Date until delivery of the
Compliance Certificate for the quarter ending December 31, 2005 and at a
variable amount, to be adjusted thereafter following delivery of the Compliance
Certificate after the end of each fiscal quarter, as follows:
Leverage Ratio calculated pursuant to Exhibit B-1 as
reported on the Compliance Certificate for the 12-month
period ending at the end of any fiscal quarter
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Minimum Balance of Advances
Until the Next Reported
Measurement of the Leverage Ratio
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Equal to or greater than 1.00 to 1
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$
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2,000,000
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Less than 1.00 to 1 and equal to or greater than .75 to 1
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$
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1,500,000
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Less than .75 to 1 and equal to or greater than .50 to 1
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$
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1,100,000
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Less than .50 to 1 and equal to or greater than .25 to 1
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$
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700,000
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Less than .25 to 1
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$
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300,000
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2
2.2
Evidence
of Loans
(a)
Each Lender shall maintain, in accordance
with its usual practice, electronic or written records evidencing the
indebtedness and obligations to such Lender resulting from each Loan made by
such Lender from time to time, including, without limitation, the amounts of
principal and interest payable and paid to such Lender from time to time under
this Agreement.
(b)
Agent shall maintain electronic or written
records in which it will record (i) the amount of each Loan made
hereunder, the class and type of each Loan made and any applicable interest
rate periods, (ii) the amount of any principal and/or interest due and
payable and/or to become due and payable from Borrower to each Lender hereunder
and (iii) all amounts received by Agent hereunder from Borrower and each
Lender’s share thereof.
(c)
The entries in the electronic or written
records maintained pursuant to Section 2.2(b) (the “Register”), which
shall include the promissory notes, if any, issued pursuant to Section 2.2(e) hereof,
shall in the absence of manifest error be prima facie evidence of the existence
and amounts of the obligations and indebtedness therein recorded; provided,
however, that the failure of Agent to maintain such records or any error
therein shall not in any manner affect the obligations of Borrower to repay the
Loans or Obligations in accordance with their terms. The Register shall be subject to the terms of
Section 12.4(c).
(d)
Agent will account to Borrower monthly with
a statement of Advances under the Revolving Facility and any charges and
payments made pursuant to this Agreement, and in the absence of demonstrable
error, such accounting rendered by Agent shall be deemed final, binding and
conclusive unless Agent is notified by Borrower in writing to the contrary
within fifteen (15) calendar days of Receipt of such accounting, which notice
shall be deemed an objection only to items specifically objected to therein.
(e)
Borrower agrees that:
(i)
upon
written notice by Agent to Borrower that a promissory note or other evidence of
indebtedness or replacement of a lost Note is requested by Agent (for itself or
on behalf of any Lender) to evidence the Loans and other Obligations owing or
payable to, or to be made by, such Lender, Borrower promptly shall (and in any
event within five (5) Business Days of any such request and in the event
of a lost Note upon receipt of customary affidavits and indemnities) execute
and deliver to Agent an appropriate promissory note or notes in form and
substance reasonably satisfactory to Agent and Borrower, payable to the order
of such Lender in a principal amount equal to the amount of the Loans owing or
payable to such Lender;
3
(ii)
all
references to “Notes” in the Loan Documents shall mean Notes, if any, to the
extent issued (and not returned to Borrower for cancellation) hereunder, as the
same may be amended, supplemented, modified, divided and/or restated and in
effect from time to time which shall be included in the Register maintained by
the Agent; and
(iii)
upon
Agent’s written request (for itself or on behalf of any Lender), and in any
event within five (5) Business Days of any such request, Borrower shall
execute and deliver to Agent new Notes and/or split or divide the Notes, or any
of them, in exchange for the then existing subject Notes, in such smaller
amounts or denominations as Agent or such Lender shall specify; provided, that
the aggregate principal amount of such new, split or divided Notes shall not
exceed the aggregate principal amount of the Notes outstanding at the time such
request is made; and provided, further, that such Notes that are replaced shall
then be deemed no longer outstanding hereunder and replaced by such new Notes,
promptly cancelled and returned to Borrower within a reasonable period of time
after Agent’s receipt of the replacement Notes.
2.3
Interest
(a)
Subject to Section 2.3(c), each Loan
shall bear interest on a daily basis on the outstanding principal amount
thereof from the date made (each a “Borrowing Date”) at a rate per annum equal
to (i) the greater of (A) the daily LIBOR Rate in effect from time to
time or (B) 3.75%,
plus
(ii) the Applicable Margin in effect
from time to time.
(b)
Interest on each Loan shall be due and
payable in cash in arrears on each Interest Payment Date and on the date of any
prepayment (actual or due) of Loans pursuant to Sections 2.5 and 2.6.
(c)
Upon the occurrence and during the
continuance of any Event of Default, the Obligations shall bear interest at the
Default Rate upon written notice of such increase given by the Agent to the
Borrower; provided, that from and after the occurrence of any Event of Default
under Sections VIII(a), (g) or (h), such increase shall be automatic and
without notice from the Agent, Requisite Lenders or any other Person. In all such events, unless otherwise provided
in the applicable notice by Agent to Borrower, and notwithstanding the date on
which application of the Default Rate is communicated to Borrower, the Default
Rate shall accrue from the initial date of such Event of Default until that
Event of Default is waived in writing in accordance with the terms of this
Agreement and shall be payable in cash upon demand. Neither Agent nor Lenders shall be required
to (i) accelerate the maturity of the Loans, (ii) terminate any
Commitment or (iii) exercise any other rights or remedies under the Loan
Documents or applicable law in order to charge interest hereunder at the
Default Rate.
2.4
Procedures
for Advances under the Revolving Facility
Each Advance under the Revolving Facility shall be made upon Borrower’s
irrevocable written notice to Agent requesting an Advance under the Revolving
Facility in the form of a completed Borrowing Certificate, which Borrowing
Certificate shall be delivered to Agent not later than 12:00p.m. (New York City
time) at least one (1) but not more than four (4) Business
4
Days prior to the proposed Business Day on
the Borrowing Date. Each such completed
Borrowing Certificate requesting an Advance under the Revolving Facility shall:
(a)
specify the proposed Borrowing Date of the
requested Advance, which shall be a Business Day;
(b)
specify the principal amount of the
requested Advance (which shall be in an aggregate minimum principal amount of
$50,000 and integral multiples of $25,000 in excess thereof); and
(c)
certify the matters contained in Section 4.2.
On each Borrowing Date, Borrower irrevocably authorizes Agent and the
Lenders to disburse the proceeds of the requested Advance to the Borrower’s
account at:
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Bank:
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Royal Bank of Scotland
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Account Name:
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Evolving Systems Ltd
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IBAN:
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GB55 RBOS 1663 0000 3666 61
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Swift:
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RBOSGB2L
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Branch:
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151000
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Account No:
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00366661
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or such other account to which Agent agrees (and which shall be subject
to the Security Documents) (or to such other account, if approved by Agent, as
to which Borrower shall instruct Agent in writing), for credit to Borrower via
Federal funds wire transfer no later than 3:00p.m. (New York City time). Anything herein contained to the contrary
notwithstanding, Agent and Lenders shall be entitled to rely upon the authority
of any officer of Borrower for communications with and instructions from
Borrower, including, without limitation, for purposes of this Section 2.4,
until Agent has received written notice from Borrower that such officer no
longer has such authority.
2.5
Mandatory
Payments and Prepayments
(a)
The principal amount of the Advances under
the Revolving Facility, and all other Obligations under or in respect of the
Revolving Facility shall be due and payable in full, if not earlier in
accordance with this Agreement, on the Maturity Date.
(b)
If it becomes unlawful in any applicable
jurisdiction for a Lender to perform any of its obligations as contemplated by
this Agreement or to fund, issue or maintain its participation in any Advance
or other Obligation:
5
(i)
that
Lender shall promptly notify the Agent upon becoming aware of that event;
(ii)
upon
the Agent notifying the Borrower, the Commitment of that Lender will be
cancelled on the earlier of immediately or on the date (if applicable) required
by law; and
(iii)
the
Borrower shall repay that Lender’s participation in any Advances or Obligations
to that Borrower promptly after the Agent has notified the Borrower or, if
earlier, the date specified by the Lender in the notice delivered to the Agent
(being no earlier than the last day of any applicable grace period permitted by
law).
(c)
If a Change of Control occurs that has not
been consented to in writing by the Agent prior to consummation thereof, or any
Credit Party or any Subsidiary of any Credit Party (other than to the extent
any Credit Party is obliged to apply such proceeds in accordance with the terms
of the Term Loan Agreement), whether in a single transaction or a series of
transactions:
(i)
sells
or transfers any Property (other than any Qualified Asset Sale);
(ii)
sells
or issues any Capital Stock (excluding sales or issuances of Permitted
Securities to the extent no Default or Event of Default has occurred and is
continuing or would be caused thereby or result therefrom, but specifically
including any sale or issuance of Capital Stock pursuant to a Public Offering)
;
(iii)
receives
any property damage insurance award or any other insurance proceeds of any
kind, including, without limitation, proceeds from any life insurance
(including the Life Insurance Policy) or business interruption insurance in
excess of an amount equal to $100,000; or
(iv)
incurs
any Indebtedness other than Permitted Indebtedness,
then Borrower shall prepay the Loans and the other Obligations in an amount
equal to one hundred percent (100%) of the Net Proceeds received by the Credit
Parties and their Subsidiaries in connection therewith (or such lesser amount
as is required to irrevocably pay in cash in full the Obligations), which
prepayment shall be applied thereto in accordance with this Section 2.5(c);
provided, that, the foregoing notwithstanding, if Borrower reasonably expects
the Net Proceeds of any such sale or transfer in respect of the foregoing
clause (i) or any such property damage insurance award under the foregoing
clause (iii), or a portion thereof, to be reinvested in productive assets of a
kind then used or usable in the Business, and, within one hundred eighty (180)
days after such occurrence, enters into a binding commitment to make such
reinvestment (which reinvestment shall be made within two hundred seventy (270)
days after such occurrence), then Borrower shall deliver an amount equal to
such Net Proceeds, or applicable portion thereof, to Agent to be, at Agent’s
election, (x) applied to the Revolving Loans (without resulting in a permanent
reduction in the Revolving Loan Commitment) or (y) held by Agent in a cash
collateral account pending such reinvestment.
6
(d)
All
prepayments pursuant to this Section 2.5(b) and 2.5(c) shall be
applied in the following order of priority:
first
, to all then unpaid fees and expenses of Agent under the
Loan Documents, second, to all then unpaid fees and expenses of Lenders under the Loan Documents, third, to any and
all Obligations that are due and owing pursuant to the terms of the Loan
Documents, except the principal balance of the Loan and accrued and unpaid
interest thereon; fourth, to all accrued and unpaid interest on the Revolving
Loan; fifth, to the principal amount of Revolving Loans (with a corresponding
permanent reduction in the Facility Cap).
(e)
Any balance of Advances under the Revolving
Facility outstanding at any time in excess of the lesser of (a) the
Facility Cap in effect at such time less the Letter of Credit Usage then in
effect and (b) the Aggregate Borrowing Availability in effect at such time
(determined by reference to the Borrowing Base Certificate then most recently
delivered to Agent in accordance with the terms hereof), shall be immediately
due and payable by Borrower without the necessity of any notice or demand
unless remedied within three (3) Business Days of the date of
determination by the Borrower or notification by the Agent to the Borrower.
2.6
Promise
to Pay; Manner of Payment
Borrower absolutely and unconditionally promises to pay, when due and
payable pursuant hereto, principal, interest and all other amounts and
Obligations payable hereunder and under any other Loan Document, without any
right of rescission and without any deduction whatsoever, including any
deduction for set-off, recoupment or counterclaim, notwithstanding any damage
to, defects in or destruction of the Collateral or any other event, including
obsolescence of any property or improvements.
Any payments made by the Credit Parties (other than payments
automatically paid through Advances under the Revolving Facility as provided
herein) shall be made by wire transfer on the date when due, without offset,
deduction or counterclaim in immediately available funds to such account as may
be indicated in writing by Agent to Borrower from time to time. Any such payment received after 2:00p.m. (New
York City time) on any date shall be deemed received on the next succeeding
Business Day, and any applicable interest or fees shall continue to accrue in
respect thereof. Whenever any payment
under any Loan Document shall be stated to be due or shall become due and
payable on a day other than a Business Day, the due date thereof shall be
extended to, and such payment shall be made on, the next succeeding Business
Day, and such extension of time in such case shall be included in the
computation of payment of any interest (at the interest rate in effect during
such extension) and/or fees, as the case may be. All payments of principal, interest, fees,
expenses and all other amounts hereunder shall be payable in Dollars.
2.7
Payments
by Agent
Should any Obligation required to be paid under any Loan Document
remain unpaid beyond any applicable cure period, such Obligation may be paid by
Agent, on behalf of Lenders, which non-payment shall be deemed an automatic
request for an Advance under the Revolving Facility as of the date such payment
is or was due, and Borrower hereby irrevocably authorizes disbursement of any such
funds to Agent, for the benefit of Lenders, by way of direct payment of the
relevant amount, interest or other Obligation without necessity of any
demand. Any sums expended or amounts
paid by Agent and/or Lenders as a result of any Credit Party’s failure to
7
pay, perform or comply with any Loan Document
or any of the Obligations may be charged to Borrower’s account as an Advance
under the Revolving Facility and added to the Obligations.
2.8
Computation
of Interest and Fees; Lawful Limits
All interest and fees owing from time to time under the Loan Documents
shall be computed on the basis of a year of 360 days and for the actual number
of days elapsed in each calculation period, as applicable. In no contingency or event whatsoever,
whether by reason of acceleration or otherwise, shall the interest and other
charges paid or agreed to be paid to Agent, for the benefit of Lenders, or
Lenders for the use, forbearance or detention of money hereunder exceed the
maximum rate permissible under applicable law which a court of competent
jurisdiction shall, in a final determination, deem applicable hereto. If, due to any circumstance whatsoever,
fulfilment of any provision hereof, at the time performance of such provision
shall be due, shall exceed any such limit, then, the obligation to be so
fulfilled shall be reduced to such lawful limit, and, if Agent or Lenders shall
have received interest or any other charges of any kind which might be deemed
to be interest under applicable law in excess of the maximum lawful rate, then
such excess shall be applied first to any unpaid fees and charges hereunder,
then to the unpaid principal balance owed by Borrower hereunder, and if the
then remaining excess interest is greater than the previously unpaid principal
balance, Agent and Lenders shall promptly refund such excess amount to Borrower
and the provisions hereof shall be deemed amended to provide for such
permissible rate. The terms and
provisions of this Section 2.8 shall control to the extent any other
provision of any Loan Document is inconsistent herewith.
2.9
Collections
In accordance with the Debenture, the Borrower and the UK Guarantor
shall cause all cash payments received by them for their benefit to be promptly
deposited into a Security Account for which a first priority perfected Lien has
been created thereon in favour of the Lender Parties.
2.10
Reallocation
of Commitments
The Credit Parties, Agent and the Lenders agree and acknowledge that,
on terms and conditions satisfactory to the Borrower, each Term Borrower,
Agent, each of the Lenders, and the Term Lender, any Commitment of any Lender
hereunder and the Term Lender under the Term Loan Agreement for the benefit of
the Borrower or Term Borrower may be reallocated and adjusted from time to time
with any other Commitment or Commitments of such Lender under this Agreement or
Lender for the benefit of the other Borrower or Term Borrowers, and the
outstanding Loans thereunder and hereunder reclassified or re-categorized in
connection therewith and herewith to evidence or effectuate any such
reallocation and adjustment, without constituting a novation, for any purpose,
including, without limitation, for purposes of accurately reflecting each
Borrower’s or Term Borrower’s relative contribution to, or allocable amount or
share of, Evolving System’s Consolidated EBITDA, earnings, revenue, assets
and/or liabilities. For clarification
purposes, any such reallocation and adjustment shall require the written
consent of the Borrower, each Term Borrower, Agent, each Lender and Term Lender
and shall not, in any event, result in (a) a reduction of the aggregate
Commitments contained herein and in the Term Loan Agreement or (b) any
breach of Sections 151 to 158 of the Act.
8
2.11
Market
disruption
(a)
If a Market Disruption Event occurs in
relation to a Loan, then the rate of interest on each Lender’s share of that
Loan shall be the rate per annum which is the sum of:
(i)
the
Applicable Margin;
(ii)
the
greater of (A) rate notified to the Agent by that Lender as soon as
practicable and in any event before interest is due to be paid in respect of
that Loan, to be that which expresses as a percentage rate per annum the cost to
that Lender of funding its participation in that Loan from whatever source it
may reasonably select or (B) 3.75%; and
(iii)
any
Eurocurrency Reserve Requirement of the Lenders if applicable.
(b)
In this Agreement “Market Disruption Event”
means:
(i)
at
or about noon on the Borrowing Date the Screen Rate is not available to
determine the LIBOR Rate; or
(ii)
before
close of business in London on the Borrowing Date, the Agent receives
notifications from a Lender or Lenders (whose participations in a Loan exceed
25 per cent of that Loan) that the cost to it of obtaining matching deposits in
the Relevant Interbank Market would be in excess of LIBOR.
(c)
Alternative basis of interest or funding
(i)
If
a Market Disruption Event occurs and the Agent or the Borrower so requires, the
Agent and the Borrower shall enter into negotiations (for a period of not more
than 30 days) with a view to agreeing a substitute basis for determining the
rate of interest.
(ii)
Any
alternative basis agreed pursuant to clause 2.11(c) shall, with the
prior consent of all the Lenders and the Borrower, be binding on all Parties.
2.12
Increased
Costs
(a)
(i)
Subject
to clause 2.11(c) and 2.12(d) the Borrower shall, within three
Business Days of a demand by the Agent, pay for the account of a Lender the
amount of any Increased Costs incurred by that Lender as a result of (i) the
introduction of or any change in (or in the interpretation, administration or
application of) any law or regulation or (ii) compliance with any law or
regulation made after the date of this Agreement.
(ii)
In
this Agreement “Increased Costs” means:
9
(1)
a reduction
in the rate of return from the Revolving Facility or on a Lender Party’s (or
its Affiliate’s) overall capital;
(2)
an
additional or increased cost; or
(3)
a reduction
of any amount due and payable under any Loan Document,
which is
incurred or suffered by a Lender to the extent that it is attributable to that
Lender having entered into its Commitment or funding or performing its
obligations under the Loan Document or Letter of Credit provided, however that
any amounts that such Lender is already receiving by adjusting the Eurocurrency
Reserve Requirements pursuant to the definition of Libor Rate shall not be
included in the Increased Costs.
(b)
(i)
A
Lender intending to make a claim pursuant to clause 2.12(a) shall
notify the Agent of the event giving rise to the claim, following which the
Agent shall promptly notify the Borrower.
(ii)
Each
Lender shall, as soon as practicable after a demand by the Agent, provide a
certificate confirming the amount of its Increased Costs.
(c)
(i)
Clause 2.12(a) does
not apply to the extent any Increased Cost is:
(1)
attributable
to a Tax deduction required by law to be made by a Credit Party;
(2)
compensated
for by clause 13.1 but was not so compensated solely because any of the
exclusions in clause 13.1 applied or is attributable to Taxes for which no
compensation is required in clause 13.1; and
(3)
attributable
to the wilful breach by the relevant Lender Party or its Affiliates of any law
or regulation.
(d)
Each Lender agrees to designate a different
lending office if such designation will avoid the need for, or reduce the
amount of, any compensation pursuant to this Section and will not, in the
reasonable judgment of such Lender, be otherwise disadvantageous to such
Lender.
2.13
Letter
of Credit.
Subject to the terms and conditions set forth
in this Agreement and on Appendix B hereto, Borrower shall have the right to
request, and the Lenders agree to incur, or purchase participations in, Letters
of Credit in respect of Borrower and the other Credit Parties so long as
10
none of the Letters of Credit are used directly or indirectly to
benefit the Subordinated Note Holders or otherwise violate Sections 151 to 158
of the Act.
III.
FEES
3.1
Commitment
Fee
On the Closing Date, Borrower shall pay to Agent, for the rateable
benefit of Lenders, a nonrefundable commitment fee equal to Sixty Seven
Thousand Five Hundred Dollars ($67,500.00), which commitment fee shall be
deemed fully earned and due and payable on the Closing Date and in addition to
any other fee from time to time payable under the Loan Documents.
3.2
Management
Fee
Borrower shall pay to Agent a management fee (the “Management Fee”) in an amount equal to one-half of one percent (0.5%) per
annum of the daily average of the aggregate of (i) the Facility Cap for
each day of each month and (ii) any additional amounts advanced under the
Revolving Facility in excess of the Facility Cap for each day outstanding. The Management Fee shall be payable monthly
in arrears on the first day of each calendar month, commencing with the month
immediately succeeding the month in which the Closing Date occurs, provided
that the amount payable for the first and last month shall be proportional to
the number of days in such month in which the Commitment is outstanding.
3.3
Letter
of Credit Fees
Borrower shall pay to Agent, for the rateable
benefit of Lenders, a Letter of Credit fee equal to (i) two or three
quarters percent (2.75%) per annum of the aggregate undrawn face amount of all
outstanding Standby Letters of Credit issued for the account of Borrower (the “Standby
Letter of Credit Fee”), which fee shall be payable in arrears on each Interest
Payment Date and (ii) one quarter of one percent (.25%) of the aggregate
undrawn face amount of any such Documentary Letter of Credit issued for the
account of Borrower and payable upon issuance (together with the Standby Letter
of Credit Fees plus normal and customary issuance, presentation, amendment,
processing and other administrative costs and expenses incurred by L/C Issuer,
the “Letter of Credit Fees”). Upon the
occurrence and during the continuance of any Event of Default, all Letter of
Credit Fees shall be payable on demand at a rate equal to the Letter of Credit
Fee,
plus
four percent (4.00%) per annum, in each case on the aggregate
undrawn face amount of all outstanding Letters of Credit issued for the account
of Borrower. Borrower shall also pay on
demand the normal and customary administrative charges for issuance, amendment,
negotiation, renewal or extension of any Standby Letter of Credit or
Documentary Letter of Credit imposed by the L/C Issuer.
On demand by Agent at any time after the
occurrence and during the continuance of any Event of Default, Borrower will
cause cash to be deposited and maintained in an account with Agent, as cash
collateral, in an amount equal to one hundred and five percent (105%) of the
Letter of Credit Usage, and Borrower hereby irrevocably authorizes Agent, in
its discretion, on Borrower’s behalf and in Borrower’s name, to open such an
account and to make and maintain
11
deposits therein, or in an account opened by Borrower, in the amounts
required to be made by Borrower, out of the proceeds of Accounts or other
Collateral or out of any other funds of any Credit Party coming into any Lender’s
possession at any time. Agent will
invest such cash collateral (less applicable reserves) in such short-term
money-market items as to which Agent in its Permitted Discretion may determine
and the net return on such investments shall be credited to such account and
constitute additional cash collateral.
Borrower may not withdraw amounts credited to any such account except
upon the earlier of (i) payment and performance in full of all Obligations
(other than contingent indemnification obligations under the Loan Documents for
which no claim giving rise thereto has been asserted) and termination of this
Agreement and (ii) at such time as such Event of Default no longer exists
unless Agent determines in its Permitted Discretion not to release such amounts
but in any event, Agent shall apply any amounts in such account to the
repayment of any Letter of Credit disbursements.
IV.
CONDITIONS PRECEDENT
4.1
Conditions
to Initial Advance and the Closing
The obligations of Agent and Lenders to consummate the transactions
contemplated herein, to make the initial Advance under the Revolving Facility
(the “Initial Advance”) are, in addition to the conditions precedent specified
in Section 4.2, subject to the
delivery of all documents listed on, the taking of all actions set forth on and
the satisfaction of each of the conditions precedent listed on Exhibit D
hereto, all in a manner, form and substance satisfactory to Agent in its sole
discretion.
4.2
Conditions
to each Advance
The obligations of Lenders to make any Advance under the Revolving
Facility (including, without limitation, the Initial Advance) are subject, in
each case, to the satisfaction of each of the following:
(a)
the Borrower shall have delivered to Agent a
Borrowing Certificate for such Advance
and a Borrowing Base Certificate setting forth the Borrowing Base and the
Aggregate Borrowing Availability as of the most recent month;
(b)
each of the representations and warranties
made by each Credit Party in the Loan Documents, except sections 5.4, 5.5(d), 5.7,
5.8, 5.10(c) and (d), 5.11(a), 5.14, 5.16 and 5.20 of the this Agreement,
shall be true and correct in all respects before and after giving effect the
making of such Advance (except to the extent such representations and
warranties expressly relate to an earlier date, in which case they shall have
been true and correct in all respects as of such earlier date);
(c)
no Default or Event of Default is continuing
or would result from the requested Advance on the relevant Borrowing Date; and
(d)
immediately after giving effect to the
requested Advance, the aggregate outstanding principal amount of Advances under
the Revolving Facility shall not exceed the
12
lesser of (i) the
Facility Cap then in effect less the Letter of Credit Usage then in effect; and
(ii) the Aggregate Borrowing Availability then in effect
Each Borrowing Certificate submitted shall constitute a representation
and warranty by each Credit Party, as of the date of each such notice and as of
the relevant Borrowing Date, that the conditions in this Section 4.2 are
satisfied.
V.
REPRESENTATIONS AND WARRANTIES
Each Credit Party, jointly and severally, represents and warrants to
the Lender Parties as follows except as set forth in the disclosure schedule corresponding
to such Section as of the Closing Date, and each time such representation
is to be made pursuant to Section 4.2(b):
5.1
Organization
and Authority
As of the Closing Date each Credit Party, and each Subsidiary of each
Credit Party, is duly incorporated, organized or formed, validly existing and
in good standing (to the extent such concept applies) under the laws of its
jurisdiction of incorporation, organization or formation. Each Credit Party, and each Subsidiary of
each Credit Party, (a) has all requisite corporate, partnership, limited
liability company or other company, as the case may be, power and authority to
own its Properties and carry on its business as now being conducted and as
contemplated in the Loan Documents, the Term Loan Documents and the Related
Documents to the extent a party thereto, (b) is duly qualified and
licensed to do business in and in good standing (to the extent such concept
applies) in each jurisdiction where the failure so to qualify or be licensed or
qualified would reasonably be expected to result in a Material Adverse Effect,
and (c) has all requisite corporate, partnership, limited liability
company or other company, as the case may be, power and authority (i) to
execute, deliver and perform the Loan Documents, the Term Loan Documents and
the Related Documents to which it is a party, (ii) with respect to
Borrower, to borrow hereunder, (iii) to consummate the transactions
contemplated by the Loan Documents, the Term Loan Documents and the Related Documents
to which it is a party and (iv) to grant the Liens pursuant to the
Security Documents to which it is a party.
5.2
Loan
Documents and Related Documents
The execution, delivery and performance by each Credit Party of the
Loan Documents, the Term Loan Documents and the Related Documents to which it
is a party, and the consummation by such Credit Party of the transactions
contemplated thereby, (a) have been duly authorized by all requisite
corporate, partnership, limited liability company or other company, as the case
may be, action of such Credit Party, and such Loan Documents, Term Loan
Documents and Related Documents to which it is a party have been duly executed
and delivered by or on behalf of such Credit Party; (b) do not violate any
provisions of (i) any applicable law, statute, rule, regulation, ordinance
or tariff, (ii) any order, injunction, writ or decree of any Governmental
Authority binding on such Credit Party or any of their respective Properties,
or (iii) the Organizational Documents of such Credit Party, or any
agreement between such Credit Party and its shareholders, members, partners or
equity owners or, to the knowledge of the Credit Parties, among any such
shareholders, members, partners or equity owners; (c) are not in conflict
13
with, and do not result in a breach or
default of or constitute an event of default, or an event, fact, condition or
circumstance which, with notice or passage of time, or both, would constitute
or result in a conflict, breach, default or event of default under, any
indenture, agreement or other instrument to which such Credit Party is a party,
or by which the Properties of such Credit Party are bound, the effect of which
would reasonably be expected to result in, either individually or in the
aggregate, a Material Adverse Effect; (d) except as contemplated or
expressly permitted by the Loan Documents and the Term Loan Documents, will not
result in the creation or imposition of any Lien of any nature upon any of the
Collateral or other material Properties of any Credit Party; and (e) except
for filings in connection with the perfection and/or registration of the Liens
created by the Security Documents, filings required to be made by Evolving
Systems with the SEC under the Securities Exchange Act of 1934, as amended, and
rules and regulations thereunder, and consents, approvals authorizations,
filings, registrations and qualifications that have been obtained, made or
done, do not require the consent, approval or authorization of, or filing,
registration or qualification with, any Governmental Authority or any other
Person. Each of the Loan Documents, the
Term Loan Documents and the Related Documents to which each Credit Party, is a
party constitutes the legal, valid and binding obligation of such Credit Party,
enforceable against such Credit Party in accordance with its terms, subject to
the effect of any applicable bankruptcy, moratorium, insolvency, reorganization
or other similar law affecting the enforceability of creditors’ rights
generally and to the effect of general principles of equity which may limit the
availability of equitable remedies (whether in a proceeding at law or in
equity).
5.3
Subsidiaries,
Capitalization and Ownership Interests
As of the Closing Date, no Credit Party has any Subsidiaries other than
those Persons listed as Subsidiaries on
Schedule 5.3
.
Schedule 5.3
states, as of the
Closing Date, the authorized and issued capitalization of each Credit Party,
the number and class of equity securities and/or ownership, voting or
partnership interests issued and outstanding of such Credit Party the number
and class of Capital Stock authorized and issued pursuant to each employee
stock option plan and stock purchase plan and, except as to the holders of the
common stock of Evolving Systems and Capital Stock issued pursuant to employee
stock option plans and stock purchase plans, the beneficial and record owners
thereof (including options, warrants, convertible notes and other rights to
acquire, or exchangeable or exercisable for, any of the foregoing). Except as listed on
Schedule 5.3
,
the outstanding equity securities and/or ownership, voting or partnership
interests of each Credit Party have been duly authorized and validly issued and
are fully paid and non-assessable (as applicable) and each Credit Party listed
on
Schedule 5.3
as of the Closing Date owns beneficially and of
record all of the equity securities it is listed as owning free and clear of
any Liens other than Liens created by the Security Documents and the Permitted
Liens.
Schedule 5.3
lists
the directors and secretaries of each Credit Party as of the Closing Date. Except as listed on
Schedule 5.3
,
no Credit Party (a) owns any interest or participates or engages in any
joint venture, partnership or similar arrangements with any Person, (b) is
a party to or has knowledge of any agreements restricting the transfer of its
equity securities excluding the equity securities of Evolving Systems, (c) has
issued any rights which can be convertible into or exchangeable or exercisable
for any of its equity securities, or any rights to subscribe for or to
purchase, or any options for the purchase of, or any rights of pre-emption or
conversion of, or any agreements providing for the issuance (contingent or
otherwise) of, or any calls, or other commitments or claims of any character
relating to, any of its equity securities or any securities convertible into or
exchangeable or exercisable for any of its equity
14
securities and (d) is subject to any
obligation (contingent or otherwise) to repurchase or otherwise acquire, repay,
redeem or retire any of its equity securities or other convertible rights or
options or debt securities. No Credit Party
has any stock appreciation rights, phantom stock plan or similar rights or
obligations outstanding.
5.4
Properties
Each Credit Party is the sole owner and has good, valid and marketable
title to, or a valid leasehold interest in, license of, or right to use, all of
its material Properties, whether personal or real, in each instance, necessary
or used in the Ordinary Course of Business, free and clear of all Liens other
than Permitted Liens. All material
tangible personal Property of each Credit Party is in good repair, working
order and condition (normal wear and tear excepted) and is suitable and
adequate for the uses for which they are being used or are intended.
5.5
Other
Agreements
Other than as listed in
Schedule 5.5
, no Credit Party is (a) a
party to any judgment, order or decree or any agreement, document or
instrument, or subject to any restriction, which adversely affects its ability
to grant a security interest in the Collateral, take actions necessary to
perfect the Lenders Liens, execute and deliver, or perform its payment,
guarantee, indemnification, release, waiver, and any material obligations
under, any Loan Document, Term Loan Documents or Related Document
to which it is a party or to pay the
Obligations, (b) in default in any material respect in the performance,
observance or fulfilment of any obligation, covenant or condition contained in
any Related Document, nor is there any event, fact, condition or circumstance
which, with notice or passage of time or both, would constitute or result in a
material conflict, breach, default or event of default under, any of the
Related Documents, (c) in default in the performance, observance or
fulfilment of any obligation, covenant or condition contained in any other
agreement, document or instrument to which it is a party or to which any of its
Properties are subject, which default would reasonably be expected to result in
a Material Adverse Effect, nor is there any event, fact, condition or
circumstance which, with notice or passage of time or both, would constitute or
result in a conflict, breach, default or event of default under, any of the
foregoing which would reasonably be expected to result in a Material Adverse
Effect, or (d) a party or subject to any agreement, document or instrument
with respect to, or obligation to pay any, service or management fee to an
Affiliate with respect to, the ownership, operation, leasing or performance of
any of its Business other than the Cross License Agreements and Transfer
Pricing Agreements.
5.6
Litigation
Except as set forth on
Schedule 5.6
, (i) there are no
actions, suits, or proceedings pending against any Credit Party, (ii) to
the knowledge of the Credit Parties, there are no investigations pending
against any Credit Party and (iii) to the knowledge of the Credit Parties,
there are no actions, suits, investigations or proceedings threatened against
any Credit Party that, in each case, (a) questions or would reasonably be
expected to prevent the validity of any of the Loan Documents, Term Loan
Documents or Related Documents or the right of such Credit Party to enter into
any Loan Document, Term Loan Documents or any Related Document to which it is a
party or to consummate the transactions contemplated thereby, or (b) would
reasonably be
15
expected to result in, either individually or
in the aggregate, a Material Adverse Effect.
Except as listed on
Schedule 5.6
, no Credit Party is a party
or subject to any order, writ, injunction, judgment or decree of any Governmental
Authority as of the Closing Date, and after the Closing Date that, in the case
of any order, writ, injuction, judgment or decree to which any Credit Party
becomes a party would reasonably be expected to have a Material Adverse Effect.
5.7
Environmental
Matters
Each Credit Party is, and the operations of each Credit Party are, in
compliance with all applicable Environmental Laws in all material
respects. No Credit Party has been
notified in writing of any action, suit, proceeding or investigation (a) relating
in any way to compliance by or liability of such Credit Party under any
Environmental Laws, (b) which otherwise deals with any Hazardous Substance
or any Environmental Law, or (c) which seeks to suspend, revoke or
terminate any license, permit or approval necessary for the generation,
handling, storage, treatment or disposal of any Hazardous Substance.
5.8
Tax
Returns; Governmental Reports
Except as set forth on
Schedule 5.8
, each Credit Party (a) has
filed all federal (if applicable) and all other material tax returns and other
material reports which are required by law to be filed by such Credit Party,
and (b) has paid all taxes, assessments, fees and other governmental
charges, including, without limitation, payroll and other employment related
taxes, in each case that are due and payable, except for items that such Credit
Party currently is contesting in good faith by appropriate proceedings and for
which adequate reserves have been established in accordance with GAAP and no
notice of Lien has been filed or recorded.
5.9
Financial
Statements and Reports
All financial statements relating to any Credit Party that have been
and hereafter may be delivered to Agent or any Lender by any Credit Party (a) are
consistent with the books of account and records of such Credit Party, (b) have
been prepared in accordance with GAAP on a consistent basis throughout the
indicated periods, subject to, in the case of interim unaudited financial
statements, the lack of footnote disclosure and normal year-end adjustments,
and (c) present fairly in all material respects the consolidated financial
position and results of operations of such Credit Party and its consolidated
Subsidiaries at the dates and for the relevant periods indicated in accordance
with GAAP on a basis consistently applied.
Except as (a) listed on
Schedule 5.9
and for items
arising after the Closing Date, disclosed to Agent in accordance with Section 6.1
and (b) permitted under this Agreement and not required to be disclosed on
a Credit Party’s financial statements under GAAP, the Credit Parties have no
material obligations or liabilities of any kind that are not disclosed in such
financial statements, and since the date of the most recent financial
statements submitted to Agent and Lenders, there has not occurred any Material
Adverse Effect or, to Credit Parties’ knowledge, any event or condition that
would reasonably be expected to result in a Material Adverse Effect.
5.10
Compliance
with Law; ERISA, Pensions; Business
(a)
Except as set forth on
Schedule 5.10(c)
,
each Credit Party (a) is in compliance with all laws, statutes, rules,
regulations, ordinances and tariffs of any Governmental
16
Authority
applicable to such Credit Party, the Business and/or such Credit Party’s
Properties or operations, including, without limitation and where applicable,
ERISA and any other laws or regulations pertaining to the Business, and (b) is
not in violation of any order of any Governmental Authority or other board or
tribunal, except, in the case of both (a) and (b), where any such
noncompliance or violation would not reasonably be expected to result in,
either individually or in the aggregate, a Material Adverse Effect. There is no event, fact, condition or circumstance
known to a Credit Party which, with notice or passage of time, or both, would
constitute or result in any noncompliance with, or any violation of, any of the
foregoing, in each case except where any such noncompliance or violation would
not reasonably be expected to result in, either individually or in the
aggregate, a Material Adverse Effect.
(b)
No Subsidiary of Evolving Systems is
required to file, or files, any form, report or other document with the SEC or
similar foreign Governmental Authority regulating public issuance of
securities.
(c)
No Credit Party or any of its Subsidiaries
has at any time operated or had maintained for the benefit of it and/or any of
its employees a defined benefit occupation pension scheme other than as listed
in
Schedule 5.10
.
(d)
Except as set forth on
Schedule 5.10(c)
,
no Credit Party subject to ERISA has (i) engaged in any “Prohibited
Transactions,” as defined in Section 406 of ERISA and Section 4975 of
the Internal Revenue Code of 1986, as amended, and the rules and
regulations promulgated thereunder, (ii) failed to meet any applicable
minimum funding requirements under Section 302 of ERISA in respect of its
plans and no funding requirements have been postponed or delayed, (iii) knowledge
of any event or occurrence which would cause the Pension Benefit Guaranty
Corporation to institute proceedings under Title IV of ERISA to terminate any
of its employee benefit plans, (iv) any fiduciary responsibility under
ERISA for investments with respect to any plan existing for the benefit of
Persons other than its employees or former employees, or (v) withdrawn,
completely or partially, from any multi-employer pension plans so as to incur
liability under the MultiEmployer Pension Plan Amendments of 1980, except in
each case under clauses (i) through (v) with respect to any matters
arising after the Closing Date, as would not reasonably be expected to have a
Material Adverse Effect. With respect to
each Credit Party, there exists no event described in Section 4043 of
ERISA, excluding Subsections 4043(b)(2) and 4043(b)(3) thereof, for
which the thirty (30) day notice period contained in 12 C.F.R. § 2615.3
has not been waived except, with respect to events occurring after the Closing
Date, for events that would not reasonably be expected to have a Material
Adverse Effect. Each Credit Party has
maintained all material records required to be maintained by any applicable Governmental
Authority except, after the Closing Date, where the failure to do so would not
reasonably be expected to have a Material Adverse Effect. UK Guarantor has not engaged, does not
presently engage and does not propose to engage in any business other than the
ownership of the equity securities of Borrower and activities incidental
thereto.
5.11
Intellectual
Property
(a)
Except as set forth on
Schedule 5.11
,
no Credit Party or Subsidiary of a Credit Party owns or licenses any material
patents, patent applications, registered trademarks, trademark applications,
trade names, trade name applications, registered service marks, service
17
mark
applications, registered copyrights or copyright applications other than
off-the-shelf licenses readily available in the open market.
(b)
Each Credit Party and each Subsidiary of a
Credit Party owns directly, or is entitled to use by license or otherwise, all
Intellectual Property necessary for or material to the conduct of such Credit
Party’s business (such Intellectual Property, the “Necessary Intellectual
Property”). The ownership or license
interests of all of the Credit Parties” and each of their Subsidiaries’ in the
items listed on
Schedule 5.11
as of the Closing Date are and, at
all times after the Closing Date (except to the extent no longer deemed
necessary for or material to the conduct of the business of the Credit Parties
and their Subsidiaries in the good faith business judgment of the Credit
Parties) will be: (a) subsisting and have not been adjudged invalid or
unenforceable, in whole or part; and (b) valid, in full force and effect
and not in known conflict with the rights of any Person. Each Credit Party and Subsidiary of a Credit
Party has made all filings and recordations necessary in the exercise of
reasonable business judgment to protect its ownership or license interest in
the Necessary Intellectual Property of such Credit Party or Subsidiary of a
Credit Party in the United States Patent and Trademark Office, and United
States Copyright Office and in corresponding offices throughout the world, as
appropriate. Each Credit Party and
Subsidiary of a Credit Party has performed all acts and has paid and will
continue to pay all required fees and taxes to maintain each and every item of
its ownership or license interest in Necessary Intellectual Property in full
force and effect, except such items of its Necessary Intellectual Property as
are no longer deemed necessary for or material to the conduct of its businesses
in its reasonable business judgment. As
of the Closing Date, no litigation is pending or, to the knowledge of each
Credit Party, threatened against any Credit Party or Subsidiary thereof, which
contains allegations respecting the validity, enforceability, infringement or
ownership of the interest of any Credit Party or Subsidiary of a Credit Party in
the Necessary Intellectual Property. No
Credit Party or Subsidiary of a Credit Party is in breach of or default under
the provisions of any of the licenses under which it has obtained rights to
license any Necessary Intellectual Property, nor is there any event, fact,
condition or circumstance which, with notice or passage of time or both, would
constitute or result in a conflict, breach, default or event of default under,
any such license agreement which would reasonably be expected to result in,
either individually or in the aggregate, a Material Adverse Effect. All personnel (including employees, agents,
consultants and contractors) of the Credit Parties and each Subsidiary thereof,
who have contributed to or participated in the conception or development of the
Necessary Intellectual Property used in the business of the Credit Parties and
their Subsidiaries either (i) have been a party to a “work-for-hire” or
other arrangements or agreements with the Credit Parties or their Subsidiaries
in accordance with applicable international, national and other applicable laws
that has accorded the Credit Parties and their Subsidiaries full, effective,
exclusive and original ownership of all tangible and intangible property and
intellectual property rights thereby arising or relating thereto, or (ii) have
executed appropriate instruments of assignment in favor of the Credit Parties
or their Subsidiaries as assignee that have conveyed to such Person effective
and exclusive ownership of all intellectual property rights thereby arising and
related thereto.
5.12
Permits;
Labour
Each Credit Party is in compliance with, and has, all Permits necessary
or required by applicable law or Governmental Authorities for the operation of
its Business as presently
18
conducted and as proposed to be conducted,
and for the execution, delivery and performance by, and enforcement against,
such Credit Party of each Loan Document, Term Loan Document and Related
Document, except where noncompliance, violation or lack thereof would not
reasonably be expected to result in, either individually or in the aggregate, a
Material Adverse Effect. Except as
listed in
Schedule 5.12
, (a) there is not any event, fact,
condition or circumstance which, with notice or passage of time or both, would
constitute or result in a conflict, breach, default or event of default under,
any of the foregoing Permits, in each case which would reasonably be expected
to result in, either individually or in the aggregate, a Material Adverse
Effect, and (b) no Credit Party is nor has been involved in any group
labor dispute, strike, walkout or union organization.
5.13
No
Default; Solvency
(a)
No Default or Event of Default exists.
(b)
Evolving Systems and each U.S. Subsidiary is
and, after giving effect to the transactions and the Indebtedness contemplated
by the Loan Documents and the transactions contemplated by the Term Loan
Document and the Related Documents, will be Solvent.
(c)
Borrower and UK Guarantor are not and, after
giving effect to the transactions and the Indebtedness contemplated by the Loan
Documents and the transactions contemplated by the Term Loan Documents and the
Related Documents (to the extent a party thereto), will not be unable to pay
their respective debts within the meaning of the Insolvency Act 1986.
(d)
No corporate action, legal proceeding, or
other procedure or step described in Article VIII(g) or process
described in Article VIII(h) has been taken or threatened, to such
Credit Party’s knowledge, in relation to any Credit Party.
5.14
Insurance
All insurance policies of the Credit Parties or otherwise relating to
their Properties as of the Closing Date are listed and described on
Schedule 5.14
.
5.15
Margin
Stock; Regulated Entities; Tax Regulations; OFAC; Patriot Act
(a)
The Credit Parties are
not engaged in the business of extending credit for the purpose of purchasing
or carrying any “margin stock” or “margin security” (within the meaning of
Regulations T, U or X issued by the Board of Governors of the Federal Reserve
System), and no proceeds of the Loans will be used to purchase or carry any
margin stock or margin security or to extend credit to others for the purpose
of purchasing or carrying any margin stock or margin security within the
meaning of such Regulations T, U or X.
(b)
No Credit Party or any
Person controlling any Credit Party is (a) an “investment company” within
the meaning of the Investment Company Act of 1940; or (b) subject to
regulation under the Public Utility Holding Company Act of 1935, the Federal
Power Act, the Interstate Commerce Act, any state public utilities code, or any
other Federal or state statute or regulation limiting its ability to incur
Indebtedness.
19
(c)
No Credit Party intends
to treat the Loans, the Commitments and/or any letters of credit and related
transactions as being a “reportable transaction” (within the meaning of
Treasury Regulation Section 1.6011-4).
(d)
No Credit Party (i) is
a Person whose property or interest in property is blocked or subject to
blocking pursuant to Section 1 of Executive Order 13224 of September 23,
2001 Blocking Property and Prohibiting Transactions With Persons Who Commit,
Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)), (ii) engages
in any dealings or transactions prohibited by Section 2 of such executive
order, or is otherwise associated with any such Person in any manner violative
of such Section 2, or (iii) is a Person on the list of Specially Designated
Nationals and Blocked Persons or subject to the limitations or prohibitions
under any other U.S. Department of Treasury’s Office of Foreign Assets Control
regulation or executive order (“OFAC”).
(e)
Each Credit Party is in
compliance, in all material respects, with the Patriot Act. No part of the proceeds of the Loans will be
used, directly or indirectly, for any payments to any governmental official or
employee, political party, official of a political party, candidate for
political office, or anyone else acting in an official capacity, in order to
obtain, retain or direct business or obtain any improper advantage, in
violation of the United States Foreign Corrupt Practices Act of 1977, as
amended.
5.16
Broker’s
or Finder’s Commissions
Except as set forth on
Schedule 5.16
no broker’s, finder’s
or placement fee or commission is or will be payable to any broker, investment
banker or agent engaged by any Credit Party or any of its officers, directors
or agents with respect to the transactions contemplated by this Agreement, the
other Loan Documents, Term Loan Documents and the Related Documents, except for
fees payable to Agent and Lenders.
5.17
Disclosure
No Loan Document or any other agreement, document, written report,
certificate or statement (including without limitation the Security Agreement
Questionnaire submitted by letter dated October 3, 2005 (as supplemented
prior to the date hereof as described in such letter) to the security
questionnaire for the Borrower and the UK Guarantor) furnished to Agent or any
Lender by or on behalf of any Credit Party in connection with the transactions
contemplated by or pursuant to the Loan Documents, nor any representation or
warranty made by any Credit Party in any Loan Document, contains any untrue statement
of a material fact or omits to state any material fact necessary to make the
factual statements therein taken as a whole not materially misleading as of the
time made or delivered in light of the circumstances under which it was made or
furnished; provided that notwithstanding anything else contained in this
Agreement or any Loan Document, none of the Credit Parties make any
representation, warranty or guaranty as to any projections furnished to Agent
or the Lenders (except that such projections have been prepared by the
applicable Credit Party or Subsidiary of a Credit Party on the basis of
assumptions which were believed to be reasonable as of the date of such
projections in light of current and reasonably foreseeable business
conditions).
20
5.18
Governing
Law and Enforcement
(a)
The choice of English Law as the governing
law of this Agreement and the Security Documents governed by English law will
be recognized and enforced in the Relevant Jurisdictions.
(b)
Any final judgement obtained in England in
relation to this Agreement and the Security Documents governed by English law
will be recognized and enforced in the Relevant Jurisdictions.
5.19
Centre
of main interests and establishments
For the purposes of The Council of the European Union Regulation No. 1346/2000
on Insolvency Proceedings (the
“Regulation”
),
the centre of main interest (as that term is used in Article 3(1) of
the Regulation) for the Borrower and UK Guarantor is situated in England and
Wales and other than in relation to Evolving Systems Ltd’s branch office in
Malaysia, has no
“establishment”
(as that term is used in Article 2(h) of the Regulations) in any
other jurisdiction.
5.20
Incorporation
of Certain Representations and Warranties
Each of the representations and warranties contained in the Related
Documents and, at the Closing Date, the Term Loan Documents made by any Credit
Party is true and correct in all material respects (except to the extent
already qualified by materiality, in which case it shall have been true and
correct in all respects and shall not have been false or, misleading in any
respect taken as a whole and in light of the circumstances under which it was
made or furnished) and to the knowledge of each Credit Party as of the Closing
Date, each of the representations and warranties contained in the Related
Documents made by Persons other than a Credit Party Agent or any Lender is true
and correct in all material respects.
5.21
Survival
Each Credit Party agrees that the representations and warranties
contained in the Loan Documents are made with the knowledge and intention that
Agent and Lenders are relying and will rely thereon. All such representations and warranties will
survive the execution and delivery of this Agreement, the Closing and the
making of any and all Advances and/or the funding of the Term Loan.
VI.
AFFIRMATIVE COVENANTS
Each Credit Party, jointly and severally, covenants and agrees that,
until the full performance and satisfaction, and indefeasible payment in full
in cash, of all the Obligations (other than contingent indemnification
Obligations to the extent no claim giving rise thereto has been asserted) and
the termination of the Commitments:
21
6.1
Reporting,
Collateral and Other Information
(a)
Reporting
. The Credit Parties shall maintain and shall
cause each of their Subsidiaries to maintain a system of accounting established
and administered in accordance with sound business practices to permit the
preparation of financial statements in conformity with GAAP (provided that
interim financial statements shall not be required to have footnote disclosure
and may be subject to normal year-end adjustments).
(b)
The Credit Parties shall furnish to Agent
and each Lender, at the times, for the periods and otherwise in accordance with
the terms of Exhibit C attached hereto, all statements (financial or
otherwise), budgets, projections, reports, listings, calculations,
certificates, notices and other materials described on such Exhibit C-1.
(c)
Collateral Deliverables;
Related Actions
. Each Credit
Party shall, and shall cause each other Credit Party to comply with each of the
agreements, covenants and undertakings set forth in Exhibit C-2, applicable
to such Credit Party in accordance with the terms thereof, and represents and
warrants to the Lender Parties that the representations and warranties thereon
contained are true, correct and complete in all material respects (except to
the extent already qualified by materiality, in which case it shall have been
true and correct in all respects) and shall not have been false or misleading
in any respect taken as a whole and in light of the circumstances under which
it was made or furnished.
6.2
Conduct
of Business; Maintenance of Existence and Assets
Each Credit Party shall, and shall cause each of its Subsidiaries to:
(a)
engage solely in the Business in accordance
with good business practices customary to its industry, and use commercially
reasonable efforts to preserve the goodwill and business of the customers,
suppliers and others having material business relations with it;
(b)
use commercially reasonable efforts to
collect its Accounts in the Ordinary Course of Business;
(c)
maintain and preserve all of its material
Properties used or useful in its Business in good working order and condition
(normal wear and tear excepted and except as may be disposed of in accordance
with the terms of the Loan Documents) and from time to time make all reasonably
necessary repairs, renewals and replacements thereof;
(d)
except as permitted under Section 7.4(h),
maintain and preserve in full force and effect its organizational existence
under the laws of its state or jurisdiction of incorporation, organization or
formation, as applicable;
(e)
maintain and preserve in full force and
effect all Permits and qualifications to do business and remain in good
standing (to the extent such concept applies to such entity) in each
jurisdiction in which the ownership or lease of its property or the nature of
its business makes such Permits or qualification necessary, in each case except
as would not reasonably be expected to result in, either individually or in the
aggregate, a Material Adverse Effect; and
22
(f)
maintain, comply with and keep in full
force and effect and renew its rights in Intellectual Property except where the
non-preservation, non-compliance or loss of which or failure to maintain would
not reasonably be expected to result, either individually or in the aggregate,
in a Material Adverse Effect.
6.3
Compliance
with Legal and Other Obligations
Each Credit Party shall, and shall cause each of its Subsidiaries to:
(a)
comply with
all
laws, statutes, rules, regulations, ordinances and tariffs of all Governmental
Authorities applicable to it or its Business, Properties or operations, except
where the failure to comply would not reasonably be expected to result in,
either individually or in the aggregate, a Material Adverse Effect;
(b)
comply in all material respects with the
Securities Act and Exchange Act and the rules promulgated under such acts
in all material respects and make all material filings required by such acts
within the required filing period;
(c)
pay all taxes, assessments, governmental
fees and charges except taxes, assessments, governmental fees and charges being
contested in good faith by appropriate proceedings diligently prosecuted and
against which adequate reserves are being maintained in accordance with GAAP and, with respect to such items,
all such items do not exceed an amount equal to $250,000 against Persons
organized in the United States in the aggregate at any time or such items do
not exceed an amount equal to $1,500,000 against Persons organized outside the
United States in the aggregate at any time;
(d)
subject to any subordination provisions in
favor of the Lender Parties and/or other restrictions herein set forth, perform
in accordance with its terms each contract, agreement or other arrangement to
which it is a party or by which it or any of the Collateral is bound, except
where the failure to so perform would not reasonably be expected to result in,
either individually or in the aggregate, a Material Adverse Effect;
(e)
pay and perform, before the same shall
become delinquent and as the same shall be required to be performed, all of its
obligations, liabilities and Indebtedness, but subject to any subordination
provisions contained herein and/or in any instrument or agreement evidencing or
pertaining to such Indebtedness, except where the failure to so pay or perform
would not reasonably be expected to result in, either individually or in the
aggregate, a Material Adverse Effect;
(f)
with respect to the Credit Parties other
than Borrower and any of its Subsidiaries, pay and perform, before the same
shall become delinquent and as the same shall be required to be performed, but
subject to any subordination provisions contained herein and in the
Subordination Agreement, and preserve and enforce all of its material rights,
duties and obligations under each of the Related Documents and the TSE Purchase
Agreement except as provided in Section 7.5(f); and
23
(g)
properly file all reports required to be
filed with any Governmental Authority, except where the failure to file would
not reasonably be expected to result in a Material Adverse Effect.
6.4
Insurance
Each Credit Party shall or if applicable Evolving Systems shall cause
such Credit Party to (a) ensure
that the Life Insurance Policy is fully paid and in full force and effect at
all times; and (b) keep all of its insurable Properties adequately
insured against losses, damages and hazards as are customarily insured against
by businesses engaging in similar activities or the Business or owning similar
Properties and of such types and in such amounts as are customarily carried
under similar circumstances by such other Persons, and at least the minimum
amount required by applicable law and any other agreement to which such Credit
Party is a party or pursuant to which such Credit Party provides any services,
including, without limitation, liability, property and business interruption
insurance, as applicable; provided the
amount of business interruption insurance shall not be less than projected
EBITDA for all Credit Parties and their Subsidiaries on a consolidated basis
without duplication for a period of not less than six (6) months and, in
any event, not less than an amount equal to $1,500,000; and maintain
general liability insurance at all times against liability on account of damage
to Persons and Property having such limits, deductibles, exclusions and
co-insurance and other provisions as are customary for a business engaged in
activities similar to those of such Credit Party under such circumstances and (c) maintain
directors and officers liability insurance at all times against risks and
liabilities customarily insured; all of the foregoing insurance policies and
coverage levels to (i) be satisfactory to Agent in its Permitted
Discretion, (ii) name Agent, for the benefit of the Lender Parties, as
loss payee/mortgagee in respect of property damage and casualty insurance,
additional insured in respect of liability insurance (excluding errors and
omissions insurance and directors and officers liability insurance) and prior to the repayment in full of the
Obligations as defined in and under the Term Loan Agreement sole beneficiary of
the Life Insurance Policy (after indefeasible repayment of such Obligations,
the Agent need not be the sole beneficiary of the Life Insurance Policy),
and (iii) expressly provide that they cannot be altered, amended,
modified, cancelled or terminated without at least thirty (30) days
(10 days in the event of a termination for non-payment of premiums) prior
written notice to Agent from the insurer except to add in the Ordinary Course
of Business additional customers as loss payee/mortgagee or additional insured
pursuant to this subsection (iii), and that they inure to the benefit of
Agent, for the benefit of the Lender Parties, notwithstanding any action or
omission or negligence of or by such Credit Party, or any insured
thereunder. Upon request of Agent or any
Lender, Evolving Systems shall furnish to Agent, with sufficient copies for
each Lender, at reasonable intervals (but not more than once per calendar year)
a certificate of a Responsible Officer on behalf of Evolving Systems (and, if
requested by Agent, any insurance broker of Evolving Systems) setting forth the
nature and extent of all insurance maintained by Evolving Systems and its
Subsidiaries in accordance with this Section 6.4. Unless Evolving Systems provides Agent with
evidence of the insurance coverage required by this Agreement, Agent may
purchase insurance at Borrower’s expense to protect Agent’s and Lenders’
interests in the Credit Parties’ Properties.
This insurance may, but need not, protect the Credit Parties’
interests. The coverage that Agent
purchases may not pay any claim that any Credit Party makes or any claim that
is made against any Credit Party in connection with said Property. Evolving Systems may later cancel any
insurance purchased by Agent, but only after providing Agent with satisfactory
evidence to
24
Agent, and written acknowledgment thereof,
that Evolving Systems has obtained insurance as required by this
Agreement. If Agent purchases insurance,
Borrower shall be responsible for the costs of that insurance, including
interest and any other charges Agent may impose in connection with the
placement of insurance, until the effective date of the cancellation or
expiration of the insurance. The costs of the insurance shall be added to the
Obligations and payable on demand. The
costs incurred by Agent of the insurance may be more than the costs of
insurance Evolving Systems may be able to obtain on its own.
6.5
Inspection
Management Meetings
(a)
Each Credit Party shall permit the
representatives of Agent from time to time during normal business hours upon
reasonable notice to (i) visit and inspect any of such Credit Party’s and
the Subsidiaries of such Credit Parties’ offices or properties or any other
place where Collateral is located to inspect the Collateral and/or to examine
and/or audit all of such Credit Party’s books of account, records, reports and
other papers, (ii) make copies and extracts therefrom and (iii) discuss
such Credit Party’s Business, operations, prospects, properties, assets,
liabilities, condition and/or Accounts with its officers and, so long as
officers and employees of the Credit Party or such Subsidiary are entitled to
be present, independent public accountants (and by this provision such officers
and accountants are authorized to discuss the foregoing); provided, however,
that (x) the Credit Parties shall not be obligated to reimburse Agent for more
than an aggregate of two (2) visits, inspections, examinations and/or
audits under this Section 6.5(a) and pursuant to the Term Loan
Agreement (whether any such visit, inspection, examination or audit includes or
covers some or all of the “Credit Parties” and their respective “Subsidiaries”
under and as defined in this Agreement and the Term Loan Agreement) during any
fiscal year in which no Event of
Default exists, of which one (1) visit, inspection, examination and/or
audit in which employees and agents of Agent located within North America
travel outside North America which visits shall, to the extent practicable and
appropriate in the Permitted Discretion of the Agent, be coordinated to occur
at the same time as the semi-annual meetings provided for in clause (b) below
(it being agreed and understood that the Borrower shall be obligated to
reimburse Agent for all such visits, inspections, examinations and audits conducted
while any Event of Default exists), and (y) no notice shall be required
to do any of the foregoing if any Event of Default has occurred and is
continuing.
(b)
The Credit Parties shall cause their senior
management to hold meetings with Agent in person, on a semi-annual basis or
more frequently in the Permitted Discretion of the Agent, to discuss the
financial performance and projections of Evolving Systems and its
Subsidiaries. The format and content of
the meetings shall be substantially similar to discussion of such matters in
meetings of the board of directors of Evolving Systems. Credit Parties’ shall reimburse Agent for all
reasonable out-of-pocket expenses incurred in connection with attendance at
such meetings.
(c)
Agent and such representatives shall
maintain the confidentiality of all non-public information (whether written or
verbal and whether specifically identified as “confidential”) obtained during
such visits, inspections, examinations, audits or meetings in accordance with Section 12.12.
25
6.6
Use
of Proceeds
The Borrower shall use the proceeds from the Advances under the
Revolving Facility solely for the following purposes at the election of
Borrower: (i) for the purchase or generation from time to time of
receivables and inventory and for payments of amounts owing from time to time
to Agent and Lenders under the Loan Documents, and (ii) for permitted
corporate purposes in compliance with applicable law and not in violation of
this Agreement . The Borrower shall not
use the proceeds from the Advances under the Revolving Facility for the
acquisitions of companies, businesses or undertakings or for repayment or
prepayment of the Term Loan or the obligations under the Subordinated Loan
Documents or to make any loans or payments to any Credit Party organized in the
United States other than (x) any dividend payment as permitted by section 7.5
or for the avoidance of doubt not for any purpose which would result in a
breach of Sections 151 to 158 of the Act.
6.7
Further
Assurances; Post Closing Deliveries
(a)
Except as authorized by Agent in its
Permitted Discretion, each Credit Party shall, and shall cause each Credit
Party to, within five (5) Business Days after demand by Agent or Requisite
Lenders, take such further actions, obtain such consents and approvals and duly
execute and deliver such further agreements, assignments, instructions or
documents as may be requested in their Permitted Discretion in form and
substance satisfactory to the Agent in its Permitted Discretion in order to
carry out the purposes, terms and conditions of the Loan Documents and the
transactions contemplated thereby, whether before, at or after the performance
and/or consummation of the transactions contemplated hereby or the occurrence
of any Default or Event of Default.
(b)
Without limiting any other provision of any
Loan Document, each Credit Party shall, and shall cause each of its
Subsidiaries to, execute and deliver, or cause to be executed and delivered, to
Agent all agreements, instruments, documents and other deliveries, and take or
cause to be taken all actions, and otherwise perform, observe and comply with
all obligations and covenants, set forth on
Schedule 6.7
hereto
within the applicable time periods set forth thereon.
(c)
Each Credit Party shall, and shall cause its
Subsidiaries to, (i) execute, deliver and/or record any and all financing
statements, continuation statements, stock powers, transfers, instruments and
other documents, or cause the execution, delivery and/or recording of any and
all of the foregoing, that are necessary or required under law or otherwise
requested by Agent in its Permitted Discretion to create, perfect or preserve
the pledge of the Collateral to Agent and the Lien on the Collateral in favor
of Agent, for the benefit of the Lender Parties under the Loan Documents (and
each Credit Party irrevocably grants Agent the right, at Agent’s option, to
file any or all of the foregoing), and (ii) defend the Collateral and the
Lien in favor of Agent, for the benefit of the Lender Parties under the Loan
Documents, against all claims and demands of all Persons (other than Permitted
Liens). Without limiting the generality
of the foregoing and except as otherwise approved in writing by Requisite
Lenders, (i) each Guarantor shall, and each Credit Party shall cause its
Subsidiaries (other than Borrower) to, guaranty the Obligations of Borrower,
and grant to Agent, for the benefit of the Lender Parties under the Loan
Documents, a Lien on all of its Property to secure such guaranty, (ii) each
Credit Party shall
26
pledge the
equity interests in their Subsidiaries to Agent, for the benefit of the Lender
Parties, to secure the Obligations, and (iii) each Credit Party shall
grant a first priority Lien (other than with respect to Property subject to
Priority Permitted Liens) on all of its Property (other than accounts used
exclusively for employee payroll and employee benefits and any other Property
that is not required to constitute Collateral pursuant to the Security
Documents) and, without limiting the foregoing, pledge the stock and other
equity interests and securities of each of its Subsidiaries, in each case to
Agent, for the benefit of the Lender Parties, to secure the Obligations. In furtherance thereof, each Subsidiary of a
Credit Party other than Borrower shall execute a Joinder Agreement and become a
Guarantor. Nothing in this
Section 6.7(c)
shall
require a Credit Party to grant any Lien in favor of the Agent, for the benefit
of the Lender Parties under the Loan Documents, in relation to the Capital
Stock of Evolving Systems GmbH, nor shall Evolving Systems GmbH and Evolving
Systems Networks India PVT Ltd be required to execute a Joinder Agreement or
grant any Lien in favor of the Agent, for the benefit of the Lender Parties
under the Loan Documents unless such Subsidiary has EBITDA representing five (5) per
cent or more, or net turnover representing five (5) per cent or more, of
the EBITDA or net turnover respectively of the Credit Parties and their
consolidated Subsidiaries as a whole without duplication.
(d)
Concurrently with (i) the execution by
any Credit Party, as lessee, of any lease pertaining to real property, such
Credit Party shall deliver to Agent (a) an executed copy thereof, (b) a
Landlord Waiver and Consent from the Landlord under such lease in form and
substance acceptable to Agent in its Permitted Discretion and (c), except for
extensions of leases listed on
Schedule 6.7(c)
as of the
Closing Date and for leases of real property, requiring no more than an amount
equal to $200,000 in annual rent payments, (I) at the option of Agent, either a
leasehold mortgage upon or a collateral assignment of such lease in favor of
Agent, for the benefit of the Lender Parties under the Loan Documents, in
either case in form and substance acceptable to Agent in its Permitted
Discretion, and (II) at the option of Agent, a lender’s policy of title
insurance for the benefit of the Lender Parties under the Loan Documents, in
such form and amount and containing such endorsements as shall be satisfactory
to Agent in its Permitted Discretion, insuring the Lien of such leasehold
mortgage or collateral assignment of lease, together with a survey of such real
property, which survey shall be of a recent enough date and in sufficient
detail so as to permit the title company issuing such policy to eliminate any
survey exceptions to such policy and (d) such other documents and
assurances with respect to such real property as Agent may require in its
Permitted Discretion, and (ii) the execution by any Credit Party of any
contract relating to the acquisition by such Credit Party of real property, an
executed copy of such contract and, concurrently with the closing of the
purchase of such real property, (a) a first mortgage or deed of trust in
favor of Agent, for the benefit of the Lender Parties under the Loan Documents,
on such real property, in form and substance acceptable to Agent in its
Permitted Discretion, (b) a lender’s policy of title insurance for the
benefit of the Lender Parties under the Loan Documents, in such form and amount
and containing such endorsements as shall be satisfactory to Agent in its
Permitted Discretion, (c) a survey of such real property, which survey
shall be of a recent enough date and in sufficient detail so as to permit the
title company issuing such policy to eliminate any survey exceptions to such
policy, (d) a recent environmental assessment of such real property by a
third party acceptable to Agent, and the results thereof shall be satisfactory
to Agent in its Permitted Discretion, and (e) such other documents and
assurances with respect to such real property as Agent may require in its
Permitted Discretion.
27
VII.
NEGATIVE COVENANTS
Each Credit Party, jointly and severally, covenants and agrees that,
until the full performance and satisfaction, and indefeasible payment in full
in cash, of all Obligations (other than contingent indemnification Obligations
to the extent no claim giving rise thereto has been asserted) and the
termination of all Commitments:
7.1
Financial
Covenants
No Credit Party shall, and no Credit Party shall cause or permit any of
its Subsidiaries to, violate any of the financial covenants set forth in Exhibit B-1
hereto, calculated and determined as of the respective dates and for the
respective periods set forth thereon.
7.2
Indebtedness
No Credit Party shall, and no Credit Party shall permit or cause any of
its Subsidiaries to, create, incur, assume, suffer to exist, or otherwise
become or remain directly or indirectly liable with respect to, any
Indebtedness, except the following (collectively, “Permitted Indebtedness”):
(a)
Indebtedness of the Credit Parties evidenced
by the Loan Documents or the Term Loan Documents;
(b)
any Indebtedness of Evolving Systems and its
Subsidiaries existing on the Closing Date and set forth on
Schedule 7.2
hereto, including extensions and replacements thereof provided that the
principal amount of such Indebtedness as of the date of such extension or
replacement is not increased and the maturity and weighted average life thereof
are not shortened;
(c)
Indebtedness of Evolving Systems and its
Subsidiaries not to exceed an amount equal to $250,000 in the aggregate at any time outstanding constituting
Capital Lease Obligations;
(d)
Indebtedness of Evolving Systems and its
Subsidiaries incurred after the Closing Date secured by Liens permitted under Section 7.3(e)(i) provided
the aggregate amount thereof outstanding at any time does not exceed an amount
equal to $200,000;
(e)
inter-company unsecured Indebtedness arising
from loans made by Evolving Systems to its Wholly-Owned Subsidiaries that are
Credit Parties to and as defined in the Term Loan Agreement to fund working
capital requirements of such Subsidiaries in the Ordinary Course of Business;
provided, that, that upon the request of Agent, such Indebtedness shall be
evidenced by promissory notes having terms (including subordination terms)
satisfactory to the Agent, the sole originally executed counterparts of which
shall be pledged and delivered to the Agent, for the benefit of the Lender
Parties, as security for the Obligations;
(f)
inter-company unsecured Indebtedness not
listed in
Schedule 7.2
on the Closing Date arising from loans made
by Evolving Systems to Evolving Systems Networks India PVT LTD, an India
corporation, and Evolving Systems GmbH, a German corporation, so long as such
Persons are Wholly-Owned Subsidiaries of Evolving Systems, to fund working
capital
28
requirements
of such Subsidiaries in the Ordinary Course of Business; provided that, that
upon the request of Agent, such Indebtedness shall be evidenced by promissory
notes having terms (including subordination terms) satisfactory to Agent, the
sole originally executed counterparts of which shall be pledged and delivered
to Agent, for the benefit of the Lender Parties, as security for the
Obligations; provided, however, that the aggregate amount of Investments
permitted pursuant to Section 7.4(i) and outstanding Indebtedness
permitted pursuant to this subsection 7.2(f) does not exceed an
amount equal to $100,000 at any time.
(g)
Subordinated
Debt of Evolving Systems evidenced by the Subordinated Notes to the extent such
Indebtedness remains subject to the terms and conditions of the Seller
Subordination Agreement;
(h)
Contingent
Obligations to the extent constituting Indebtedness and permitted under Section 7.8
hereof;
(i)
the
incurrence by any Credit Party or any Subsidiary thereof of Indebtedness in an
amount up to an amount equal to $50,000 arising from the honouring by a bank or
other financial institution of a check, draft or similar instrument drawn
against insufficient funds, so long as such Indebtedness is covered within five
Business Days;
(j)
reimbursement
obligations under the letters of credit listed on
Schedule 7.2
;
(k)
unsecured
Indebtedness of a Credit Party or its Subsidiaries incurred in connection with
the financing of insurance premiums in the Ordinary Course of Business with
respect to insurance required or permitted under Section 6.4 up to an
amount equal to $500,000 in aggregate annual premiums; and;
(l)
other
unsecured Indebtedness of Evolving Systems and its Subsidiaries not to exceed
an amount equal to $50,000 in the aggregate outstanding at any time.
7.3
Liens
No Credit Party shall, and no Credit Party shall permit or cause any of
its Subsidiaries to, directly or indirectly, make, create, incur, assume or
suffer to exist any Lien upon, in, against or with respect to any part of, or
any pledge of, any of the Collateral or any of its other Property or Capital
Stock (other than the Capital Stock of Evolving Systems) whether now owned or
hereafter acquired, except the following (collectively, “Permitted Liens”):
(a)
Liens created by the Loan Documents or the
Term Loan Documents or otherwise arising in favor of Agent, for the benefit of
the Lender Parties;
(b)
Liens imposed by law for taxes, assessments,
fees or charges of any Governmental Authority (i) that are not yet
delinquent or (ii) which are being contested in good faith by appropriate
proceedings and with respect to which adequate reserves or other appropriate
provisions are being maintained by such Credit Party or Subsidiary in
accordance with GAAP and, with respect to this clause (ii), all such Liens
secure claims not exceeding amounts set forth in Section 6.3(c);
29
(c)
statutory Liens of landlords, carriers,
warehousemen, mechanics and/or materialmen and other similar Liens imposed by
law or that arise by operation of law in the Ordinary Course of Business that,
in any such case, are only for amounts not yet delinquent or which are being
contested in good faith by appropriate proceedings (which have the effect of
preventing or staying the forfeiture or sale of the Property subject thereto)
and with respect to which adequate reserves or other appropriate provisions are
being maintained by such Person in accordance with GAAP;
(d)
Liens (other than any Lien imposed by ERISA)
incurred or deposits or pledges made in the Ordinary Course of Business
(including, without limitation, surety bonds and appeal bonds) in connection
with workers’ compensation, unemployment insurance and other types of social
security benefits or to secure the performance of tenders, bids, leases, trade
contracts, statutory obligations and other similar obligations (other than for
the repayment of Indebtedness);
(e)
(i) purchase money Liens securing
Indebtedness permitted under Section 7.2(d); provided, that (x) any such
Lien attaches to the subject Property concurrently with or within twenty (20)
days after the acquisition thereof, (y) such Lien attaches only to the subject
Property and (z) the principal amount of such Indebtedness secured thereby does
not exceed 100% of the cost of such Property; and (ii) Liens arising under
Capital Leases permitted under Section 7.2(c) to the extent such
Liens attach only to the Property that is the subject of such Capital Leases;
(f)
any attachment or judgment Lien provided
that the enforcement of such Liens is effectively stayed, satisfied, vacated,
dismissed or discharged within 30 days of issuance or execution and such
Liens secure claims not otherwise constituting an Event of Default;
(g)
easements, rights of way, restrictions,
zoning ordinances, reservations, covenants and other similar charges, title
exceptions or encumbrances relating to real Property of the Credit Parties
incurred in the Ordinary Course of Business that, either individually or in the
aggregate, are not substantial in amount, do not interfere in any material
respect with the use of the Property affected or the ordinary conduct of the
Business of the Credit Parties and do not result in material diminution in
value of the Property subject thereto;
(h)
Liens
disclosed on
Schedule 7.3
as of the Closing Date;
(i)
Liens
arising by virtue of any statutory or common law provision relating to banker’s
liens, rights of set-off, recoupment, combination of accounts or similar rights
as to deposit accounts or other funds maintained with a creditor depository
institution;
(j)
Liens
that arise under customary non-assignment provisions in contracts, leases,
subleases, licenses and sublicenses entered into with unaffiliated third
parties in the Ordinary Course of Business;
(k)
transfer
restrictions that arise under any agreement for a sale, lease, transfer,
conveyance, assignment or other disposition of any Property or any interest
therein that is permitted pursuant to Section 7.7 that imposes
restrictions only on the Properties that are the subject of such agreement
pending the consummation of such transaction;
30
(l)
restrictions
under federal, state or foreign securities laws or the rules or
regulations promulgated thereunder;
(m)
Liens on Capital Stock of Evolving Systems not held by any Credit Party or Subsidiary of a Credit Party;
and
(n)
Liens of licensors and sublicensors on
licenses and sublicenses of Intellectual Property of a Credit Party or
Subsidiary thereof entered into in the Ordinary Course of Business.
7.4
Consolidations,
Mergers and Investments
No Credit Party shall, and no Credit Party shall permit or cause any of
its Subsidiaries to, directly or indirectly, (i) merge, liquidate,
amalgamate or consolidate with or into, or convey, transfer, lease or otherwise
dispose of (whether in one transaction or in a series of transactions) all or
substantially all its Property to or in favor of, any other Person, (ii) purchase,
own, hold, invest in or otherwise acquire any obligations or stock or other
securities of, or any other ownership interest in, any other Person (including
the establishment or creation of any Subsidiary) or any joint venture, or
otherwise consummate or commit to make any Acquisition (including by way of
merger, consolidation or other combination), (iii) purchase, own, hold,
invest in or otherwise acquire any “investment property” (as defined in the
UCC) issued by any other Person, or (iv) except as permitted by Section 7.2
or Section 7.8 make, permit to exist or commit to make any loans, advances
or extensions of credit to or for the benefit of any Person, or assume,
guarantee, indemnify, endorse, contingently agree to purchase or otherwise
become liable for or upon or incur any obligation of, any Person (the items
described in the foregoing clauses (ii), (iii) and (iv) sometimes are
referred to as “Investments”), except:
(a)
Investments created by the Loan Documents
and the Term Loan Documents;
(b)
trade credit extended by Evolving Systems
and its Subsidiaries in the Ordinary Course of Business and Investments
received in satisfaction or partial satisfaction thereof from financially
troubled account debtors to the extent reasonably necessary in order to prevent
or limit loss;
(c)
Investments constituting inter-company
Indebtedness to the extent permitted under Sections 7.2(e) and 7.2(f);
(d)
loans to employees and advances for business
travel and similar temporary advances made in the Ordinary Course of Business
to officers, directors and employees, not to exceed an amount equal to $25,000
in the aggregate at any time outstanding;
(e)
the endorsement of negotiable instruments
for deposit or collection or similar transactions in the Ordinary Course of
Business;
(f)
(i) Investments by the Credit Parties
in Cash Equivalents with respect to which Agent, for the benefit of the Lender
Parties, has a first priority and perfected Lien, as
31
security for
the Obligations and (ii) Investments in Cash Equivalents by Evolving
Systems Networks India PVT LTD and Evolving Systems GmbH;
(g)
Evolving Systems and its Subsidiaries may
consummate transactions otherwise permitted under Sections 7.2, 7.5, 7.7 and
7.8;
(h)
upon not less than ten (10) Business
Days’ prior written notice to Agent, (i) any Subsidiary of Borrower may
merge with, or dissolve or liquidate into, or transfer its Property to,
Borrower or a Wholly-Owned
Subsidiary of Borrower that is a Credit Party, provided that, with respect to
any such merger, Borrower or
such Wholly-Owned Subsidiary shall be the continuing or surviving entity and (ii) a
Subsidiary of Evolving Systems may merge with or dissolve or liquidate into or
transfer its Property to a Wholly-Owned Subsidiary of Evolving Systems as
permitted by the Term Loan Documents;
(i)
Investments in the Capital Stock of
Evolving Systems Networks India PVT LTD and Evolving Systems GmbH not listed in
Schedule 7.4
on the Closing Date; provided that the aggregate
amount of such Investments and the outstanding Indebtedness permitted under Section 7.2(f) shall
not exceed an amount equal to $100,000 at any time;
(j)
Investments
by any Credit Party other than Borrower or its Subsidiaries in any Wholly-Owned
Subsidiary of Evolving Systems that is a U.S. Subsidiary and that is or
concurrent with such Investment becomes a Credit Party and Investments by Evolving
Systems and its Subsidiaries in a Subsidiary of Evolving Systems that is or
concurrent with such Investment becomes a Credit Party as defined in and under
the Term Loan Agreement;
(k)
Investments existing
as of the Closing Date by a Credit Party in its Subsidiaries set forth on
Schedule
7.4
;
(l)
Investments received in compromise or
resolution of litigation or arbitration proceedings with Persons who are not
Affiliates of a Credit Party up to an amount equal to $50,000 in the aggregate;
(m)
Investments
represented by prepaid expenses made in the Ordinary Course of Business; and
(n)
without duplication of
any quantitative limits, Evolving Systems and its US Subsidiaries which are
Credit Parties may make Investments permitted under the Term Loan Agreement.
For purposes of covenant
compliance, the amount of any Investment shall be the amount actually invested,
without adjustment for subsequent increases or decreases in the value of such
Investment.
7.5
Restricted
Payments
No Credit Party shall, and no Credit Party shall permit or cause any of
its Subsidiaries to, (i) declare, pay or make any dividend or distribution
of cash, securities or other Property on any shares of its Capital Stock or
other equity or ownership interests or securities, (ii) apply any of its
32
Property to the acquisition, redemption or
other retirement of any of its Capital Stock or other equity or ownership
interests or securities or of any warrants, options or other rights to purchase
or acquire, exchangeable or exercisable for, or convertible into, any of the
foregoing, (iii) make any payment or prepayment of principal, premium, if
any, interest, or fees on any Subordinated Debt, make any sinking fund or
similar payment with respect to, any Subordinated Debt, or redeem, exchange,
purchase, retire, defease or setoff against any Subordinated Debt; (iv) make
any payment or prepayment of any TSE Contingent Obligation, make any sinking
fund or similar payment with respect to any TSE Contingent Obligation, or
redeem, exchange, purchase, retire, defease or setoff against any TSE
Contingent Obligation or (v) pay any management, service, consulting,
non-competition or similar fee or any compensation to any Affiliate of any
Credit Party (the items described in clauses (i), (ii), (iii), (iv) and (v) above
sometimes are referred to herein as “Restricted Payments”). Notwithstanding the foregoing:
(a)
any Wholly-Owned Subsidiary of Evolving
Systems may declare and pay dividends and other distributions to Evolving
Systems or to any other Wholly-Owned Subsidiary of Evolving Systems that is a
Credit Party and the Wholly-Owned Subsidiaries of Evolving Systems party to the
Term Loan Agreement may declare and pay dividends permitted under the Term Loan
Agreement;
(b)
Evolving Systems may, upon termination,
resignation or retirement of an officer or employee of a Credit Party, redeem
for cash any equity securities or warrants or options to acquire any equity
securities of Evolving Systems owned by such officer or employee so long as the
restrictions and limitations in the Term Loan Agreement are complied with;
(c)
Borrower may pay dividends to Intermediate
Holdco solely sufficient to permit Intermediate Holdco to pay as and when due
and payable franchise taxes and other similar ordinary course licensing
expenses and other general and customary holding company costs and expenses
incurred in the Ordinary Course of Business and otherwise relating to
activities in which Intermediate Holdco otherwise is permitted to engage under
the Loan Documents to the extent no Default or Event of Default has occurred
and is continuing or would arise as a result of such distributions;
(d)
Evolving
Systems may make payments on the Subordinated Debt evidenced by the
Subordinated Notes only to the extent expressly permitted under the applicable
Seller Subordination Agreement;
(e)
the Credit Parties and their Subsidiaries
may pay (i) reasonable compensation (including Permitted Securities issued
as equity compensation) to officers and employees for actual services rendered
to Evolving Systems and its Subsidiaries in the Ordinary Course of Business,
including reasonable severance compensation upon termination of employment, and
(ii) reasonable directors’ fees, meeting fees and reimbursement of actual
out-of-pocket expenses incurred in connection with attending board of director
meetings;
(f)
Evolving
Systems may pay the TSE Contingent Obligation due on November 15, 2005 in
an amount up to $300,000 and TSE Contingent Obligations on or promptly
thereafter the day of delivery to Agent of quarterly financial statements for
such fiscal
33
quarter; provided, that all
of the following conditions are satisfied with respect to each such payment:
(i)
no Default or Event of Default has occurred
and is continuing or would arise as a result of such distribution;
(ii)
the Credit Parties are compliance with the
financial covenants referenced in Section 7.1(a) and provide evidence
to Agent to such effect; and
(iii)
the
aggregate amount of such distributions shall not exceed $2,900,000 during the
Term;
(g)
Evolving Systems may declare and make
dividend payments or other distributions payable solely in Permitted
Securities; and
(h)
the Credit Parties and their Subsidiaries
may make payments pursuant to and in accordance with the Cross License
Agreement and Transfer Pricing Agreements.
7.6
Transactions
with Affiliates
No Credit Party shall, and no Credit Party shall permit or cause any of
its Subsidiaries to, enter into or consummate any transaction with any
Affiliate of such Person other than:
(a)
as expressly permitted by, and subject to
the terms of, this Agreement, the other Loan Documents and the Term Loan
Documents;
(b)
compensation and employment arrangements
(including Permitted Securities issued as equity compensation) with employee,
officers and directors in the Ordinary Course of Business and to the extent
otherwise permitted under Section 7.5(e);
(c)
other transactions pursuant to written
agreements between a Credit Party or its Subsidiary and any such Affiliates
that are entered into in the Ordinary Course of Business and pursuant to the
reasonable requirements of the business of such Credit Party; provided, that
such transactions and agreements are on fair and reasonable terms not less
favorable to such Person than would be obtained in an arm’s length transaction
between unrelated parties of equal bargaining power;
(d)
transactions between or among (i) Evolving
Systems and any of its Wholly Owned Subsidiaries that are U.S. Subsidiaries and
Credit Parties under and as defined in the Term Loan Agreement and (ii) between
or among UK Guarantor and its Wholly Owned Subsidiaries that are, or concurrent
with such transaction becomes, a Credit Party;
(e)
the Cross License Agreement and the Transfer
Pricing Agreements in form and substance satisfactory to the Agent in its
Permitted Discretion; and
(f)
the agreements identified on
Schedule 7.6
.
34
7.7
Transfer
of Assets
No Credit Party shall, and no Credit Party shall permit or cause any of
its Subsidiaries to, directly or indirectly, sell, lease, transfer, convey,
assign or otherwise dispose of (whether in a single transaction or a series of
transactions) any Property or any interest therein, or agree to do any of the
foregoing, except that:
(a)
Evolving Systems and its Subsidiaries may
sell, lease, transfer, convey, assign or otherwise dispose of (whether in a
single transaction or a series of transactions) obsolete, worn out, replaced,
damaged or excess Property that is no longer needed in the Ordinary Course of
Business and has a book value not exceeding an amount equal to $200,000 in the
aggregate in any fiscal year;
(b)
Evolving Systems and its Subsidiaries may
sell or otherwise dispose of inventory and use cash in the Ordinary Course of
Business and liquidate or sell Cash Equivalents in the Ordinary Course of
Business;
(c)
Evolving Systems and its Subsidiaries may
sell, lease, transfer, convey, assign or otherwise dispose of other Properties
not specifically permitted otherwise in this Section 7.7 (other than
Capital Stock of a Credit Party to the extent owned by another Credit Party) to
the extent (a) Evolving Systems or such Subsidiary complies with the
mandatory prepayment provisions of Section 2.5(c) in connection
therewith (to the extent the proceeds thereof are not reinvested in accordance
with the terms of such Section 2.5(c)(i)), (b) such sale is for fair
market value and the aggregate fair market value of all assets so sold does not
exceed an amount equal to $250,000 in any fiscal year, (c) no Default or
Event of Default exists or otherwise would result therefrom (d) after
giving effect to such transaction, the Credit Parties are in compliance on a
pro forma basis with the financial covenants referenced in Section 7.1(a) (recomputed
for the most recent period for which financial statements have been delivered
in accordance with the terms hereof after giving effect thereto as of the first
day of such period), and (e) the sole consideration therefor received by
Evolving Systems or such Subsidiary is cash;
(d)
transactions otherwise permitted under
Sections 7.2, 7.3, 7.4, 7.5, 7.6 and 7.8 to the extent permitted thereunder;
(e)
Any
Credit Party may sell, transfer, convey, assign or otherwise dispose of
Property to any other Credit Party;
(f)
Evolving
Systems and its Subsidiaries may license and sublicense their Intellectual
Property in the Ordinary Course of Business on a non-exclusive basis so long as
such license does not restrict the ability of Agent and Lenders to exercise
their rights and remedies under the Loan Documents and the Term Loan Documents
with respect to such Intellectual Property subject to such license. Such licence may include a restriction on the
assignability of the license and its continuation after a Change of Control;
(g)
Evolving
Systems and its Subsidiaries (other than Borrower and its Subsidiaries) may
dispose of Property to the extent permitted by the Term Loan Documents.
35
7.8
Contingent
Obligations
No Credit Party shall, and no Credit Party shall permit or cause any of
its Subsidiaries to, enter into, create, assume, suffer to exist or incur any
Contingent Obligations or assume, guarantee, indemnify, endorse, contingently
agree to purchase or otherwise become liable for or upon or incur any obligation
of any Person, except:
(a)
Evolving Systems or any of its Subsidiaries
which are Credit Parties may enter into guarantees of Indebtedness of any other
Credit Party permitted under Section 7.2;
(b)
Evolving Systems and its Subsidiaries may
endorse cheques for collection in the Ordinary Course of Business;
(c)
Evolving Systems and Borrower may enter into unsecured Hedging Agreements in the Ordinary
Course of Business for bona
fide hedging purposes and not for speculation in an aggregate notional or
contract amount not to exceed an amount equal to $250,000 outstanding at any
time;
(d)
Contingent Obligations of Evolving Systems
and its Subsidiaries incurred in the Ordinary Course of Business with respect
to workers’ compensation claims, unemployment insurance and other types of
social security benefits, self-insurance obligations, bankers’ acceptances,
performance bonds, appeal and surety bonds and other similar obligations;
(e)
Contingent Obligations of Evolving Systems
and its Subsidiaries arising under indemnity agreements to title insurers to
cause such title insurers to issue to Agent title insurance policies;
(f)
the TSE Contingent Obligations;
(g)
Contingent Obligations of any Credit Party
or Subsidiary thereof arising from indemnification obligations to its
directors, officers and employees in the Ordinary Course of Business;
(h)
indemnities given by any Credit Party or any
Subsidiary thereof to its customers, vendors, independent contractors,
purchasers or sellers of Property or other third parties in the Ordinary Course
of Business; and
(i)
Contingent Obligations in respect of
Evolving Systems’ guarantee of the expenses incurred by certain employees in
connection with the use of credit cards sponsored by Evolving Systems in an
aggregate amount not to exceed an amount equal to $150,000 at any time
outstanding.
36
7.9
Organizational
Documents; Accounting Changes; Use of Proceeds; Insurance; Business
No Credit Party shall, and no Credit Party shall permit or cause any of
its Subsidiaries to:
(a)
amend, modify, restate or change any of its
articles or memorandum of incorporation, bylaws, certificate of formation,
operating agreement and other charter documents in any respect adverse to Agent
or Lenders (including changing its name), or make any material change to its
equity capital structure or, without the prior written consent of Agent (but
without limiting the mergers or other transactions involving any Credit Party
otherwise permitted under Section 7.4(h)), reincorporate or reorganize
itself under the laws of any jurisdiction other than the jurisdiction in which
it is incorporated or organized as of the Closing Date;
(b)
make any significant change in accounting
treatment or reporting practices, except as required by GAAP or to accommodate
FAS 123R, or change its fiscal year;
(c)
use any proceeds of any Loans, directly or
indirectly, for “purchasing” or “carrying” “margin stock” as defined in
Regulations T, U or X of the Board of Governors of the Federal Reserve System,
or to repay or refinance Indebtedness incurred to so “purchase” or “carry” “margin
stock,” or otherwise in violation of applicable law or this Agreement;
(d)
amend, modify, restate or change any
insurance policy in any material respect including, without limitation, any
material increase in the amount of any deductibles payable by the Credit
Parties under any such insurance policy or any material change in the scope of
coverage, coverage amount, beneficiaries, loss payees and/or additional
insureds except additional insureds permitted by Section 6.4(c), but
excluding changes in the term of coverage in connection with renewals thereof
in the Ordinary Course of Business;
(e)
engage, directly or indirectly, in any
business other than the Business; or
(f)
allow Intermediate Holdco to engage in any
business other than the ownership of the equity securities of UK Guarantor and
activities incidental thereto.
7.10
Related
Documents, Subordinated Debt and TSE Contingent Obligations
(a)
No Credit Party shall, and no Credit Party
shall permit or cause any of its Subsidiaries to, (i) amend, supplement,
waive or otherwise modify any of the terms or provisions of, and will not fail
to enforce or diligently pursue its remedies under, any Related Document, as in
effect on the Closing Date, in any manner adverse to Agent or any Lender or
which would reasonably be expected to result in a Material Adverse Effect, or (ii) take
or fail to take any other action under any Related Document that would
reasonably be expected to result in a Material Adverse Effect.
(b)
No Credit Party shall, and no Credit Party
shall permit or cause any of its Subsidiaries to, directly or indirectly,
amend, supplement or otherwise modify the terms of any Subordinated Debt except
as expressly permitted under the applicable Subordination Agreement.
37
(c)
No Credit Party shall, and no Credit Party
shall permit or cause any of its Subsidiaries to, directly or indirectly, amend,
terminate, supplement or otherwise, without the prior written consent of the
Agent in its Permitted Discretion, modify the terms of the TSE Purchase
Agreement, the Cross License Agreement or Transfer Pricing Agreements or any
TSE Contingent Obligations in any material respect or in any manner adverse to
Agent or Lenders; provided, however, that the parties may amend the TSE
Purchase Agreement so long as such amendment is not adverse to the interests of
Agent or Lenders under the Loan Documents or the Term Loan Documents and does
not extend the duration of the agreement, increase the aggregate amounts due
thereunder, or accelerate payment dates.
The Credit Parties shall notify and promptly provide Agent with copies
of any amendment, modification, restatement or change to such agreements.
7.11
Negative
Pledges
Except as a result of the Loan Documents and the Term Loan Documents,
no Credit Party shall, and no Credit Party shall permit or cause any of its
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer to
exist or become effective any consensual restriction or encumbrance of any kind
on the ability of any such Subsidiary to pay dividends or make any other
distribution on any of such Subsidiary’s equity securities or to pay fees or
make other payments and distributions to Borrower or any of its Subsidiaries
except as permitted under the Transfer Pricing Agreements. No Credit Party shall, and no Credit Party
shall permit or cause any of its Subsidiaries to, directly or indirectly, enter
into, assume or become subject to any contract or agreement that prohibits or
otherwise restricts the existence of any Lien upon any of its Property in favor
of Agent, for the benefit of the Lender Parties under the Loan Documents,
whether now owned or hereafter acquired except (a) in connection with any
document or instrument governing Liens related to purchase money Indebtedness
and Capital Leases which, in each case, otherwise constitute Permitted Liens
and (b) leased equipment, Intellectual Property and General Intangibles of
any Credit Party to the extent excluded from Collateral in the Security
Documents.
7.12
Certain
Specific Agreements
Neither any Credit Party nor any Subsidiary of any Credit Party (i) will
be or become a Person whose Property or interests in Property are blocked or
subject to blocking pursuant to Section 1 of Executive Order 13224 of September 23,
2001 Blocking property and Prohibiting Transactions With Persons Who Commit,
Threaten to Commit or Support Terrorism (66 Fed. Reg. 49079(2001), (ii) will
engage in any in any dealings or transactions prohibited by Section 2 of
such executive order, or otherwise be associated with any such Person in any
manner violative of Section 2 of such executive order, or (iii) otherwise
will become a Person on the list of Specially Designated Nationals and Blocked
Persons or subject to the limitations or prohibitions under any other OFAC
regulation or executive order.
7.13
Shareholder
Blocking Rights
No Credit Party shall issue any Capital Stock
which grants or provides any direct or indirect owner or equityholder thereof
any Shareholder Blocking Rights.
38
VIII.
EVENTS OF DEFAULT
The occurrence of any one or more of the following shall constitute an “
Event of Default
”:
(a)
any Credit Party shall fail to pay when due
and payable (i) any principal provided for or required under this
Agreement and/or the Notes, or (ii) within two (2) Business Days
after the same shall become due and payable, any interest, fees or other
Obligations (other than principal
or premium)
provided for or required under this Agreement or the other Loan Documents, in
any such case described in the foregoing clause (i) or (ii), whether on
any payment date, at maturity, by reason of acceleration, by notice of
intention to prepay, by required prepayment or otherwise);
(b)
any representation, statement or warranty
made or deemed made by or on behalf of any Credit Party in any Loan Document or
Term Loan Document or in any other certificate, document, report or opinion
delivered pursuant to any Loan Document or Term Loan Document to which it is a
party shall not be true and correct in all material respects or shall have been
false or misleading in any material respect taken as a whole and in light of
the circumstances under which it was made or furnished on the date when made or
deemed to have been made (except to the extent already qualified by
materiality, in which case it shall have been true and correct in all respects
and shall not have been false or misleading in any respect taken as a whole and
in light of the circumstances under which it was made or furnished on the date
when made or deemed to have been made);
(c)
any Credit Party thereto shall be in
violation, breach or default of, or shall fail to perform, observe or comply
with, any covenant, obligation or agreement set forth in, or any event of
default occurs under, any Loan Document and such violation, breach, default,
event of default or failure shall not be cured within the applicable period, if
any, set forth in the applicable Loan Document; provided that, with respect to
the affirmative covenants set forth in Article VI (other than Sections
6.1, 6.3(c), 6.4, 6.5 or 6.7(b), for which no cure period shall apply), any such
violation, breach, default, event of default or failure shall result in any
Event of Default only if it remains uncured for thirty (30) calendar days after
the earlier of (i) Receipt (as defined in Section 12.7) by such
Person of written notice of such violation, breach, default, event of default
or failure and (ii) the time at which any officer of a Credit Party knew
or became aware, or should reasonably have known or been aware, of such
violation, breach, default, event of default or failure;
(d)
(i) any of the Loan Documents ceases
for any reason to be in full force and effect or (ii) any Lien, except any
Liens the Agent chooses not to perfect created under any Loan Documents ceases
(other than pursuant to the express terms of the applicable Loan Document) to
constitute a valid first priority perfected Lien (other than with respect to
Property subject only to Priority Permitted Liens) on the Collateral in
accordance with the terms thereof;
(e)
one or more judgments or decrees is or are
rendered against the Credit Parties, any Subsidiary of any Credit Party or any
of them in an outstanding amount, at any time in excess of an amount equal to
$175,000 individually or an amount equal to $350,000 in the aggregate
(excluding judgments and decrees to the extent covered by third party insurance
of
39
such Persons
where such coverage has been acknowledged by the insurer), which is/are not
satisfied, stayed, vacated or discharged of record within thirty (30) calendar
days of being rendered;
(f)
any Credit Party or any Subsidiary of any
Credit Party shall, or there shall occur:
(i)
default
in the payment of any principal of or interest when due on any Indebtedness
(other than the Obligations and the “Obligations” as defined in the Term Loan
Agreement) in the outstanding principal amount in excess of an amount equal to
$250,000 in the aggregate, which default is not cured or waived within any
applicable grace or cure period;
(ii)
default
or breach the terms of any note, agreement, indenture or other document
evidencing or relating to any Indebtedness (other than the Obligations and the “Obligations”
as defined in the Term Loan Agreement) in the outstanding principal amount in
excess of an amount equal to $750,000 in the aggregate, which default or breach
is not cured or waived within any applicable grace or cure period and the
effect of which is to cause, or to permit the holder or holders of any such
Indebtedness to cause, such Indebtedness to become due (whether by acceleration
or otherwise) prior to the stated maturity thereof;
(iii)
default
or breach the terms of any agreement, contract, document or instrument that is
between any Credit Party and Agent or any Lender or any Affiliate of Agent or
any Lender (other than the Loan Documents) beyond all applicable grace or cure
periods;
(iv)
upon
written notice from Agent, any default or breach in the performance, observance
or fulfilment of any provision contained in any Material Contract and such
default or breach continues beyond all applicable grace or cure period and
permits the other party thereto to terminate such Material Contract or
otherwise reduce or limit any material amounts owed by such other party
thereunder;
(v)
an
Event of Default (as defined in the Subordinated Notes); or
(vi)
an
“Event of Default” (as defined in the Term Loan Agreement).
(g)
any of the following shall occur:
(i)
A
Credit Party or any Subsidiary of a Credit Party is unable to or admits
inability to pay its debts as they fall due or is deemed to or declared to be
unable to pay its debts under applicable law, suspends or threatens to suspend
making payments on any of its debts other than as a result of a bona fide
dispute being contested in good faith or, by reason of actual or anticipated
financial difficulties, commences negotiations with one or more of its
creditors with a view to rescheduling any of its indebtedness.
40
(ii)
The
value of the assets of any Credit Party or any Subsidiary of a Credit Party is
less than its liabilities (taking into account contingent and prospective
liabilities).
(iii)
A
moratorium is declared in respect of any indebtedness of any Credit Party or
any Subsidiary of a Credit Party. If a
moratorium occurs, the ending of the moratorium will not remedy any Event of
Default caused by that moratorium.
(h)
Any corporate action, legal proceedings or
other procedure or step is taken in relation to:
(i)
the
suspension of payments, a moratorium of any indebtedness, winding-up,
dissolution, administration or reorganization (by way of voluntary arrangement,
scheme of arrangement or otherwise) of any Credit Party or Subsidiary of a
Credit Party other than a solvent liquidation or reorganization of any
Subsidiary of a Credit Party which is not a Credit Party;
(ii)
a
composition, compromise, assignment or arrangement with any creditor of any
Credit Party or any Subsidiary of a Credit Party;
(iii)
the
appointment of a liquidator (other than in respect of a solvent liquidation of
a Subsidiary of a Credit Party which is not a Credit Party), receiver,
administrator, administrative receiver, compulsory manager or other similar
officer in respect of any Credit Party or any Subsidiary of a Credit Party or
any of its assets,
or any analogous procedure or step is taken
in any jurisdiction.
This clause shall not apply to any winding-up
petition which is frivolous or vexatious and is discharged, stayed or dismissed
within 14 days of commencement or, if earlier, the date on which it is
advertised;
(i)
any Change of Control or any Material
Adverse Effect occurs;
(j)
Agent or any Lender receives any evidence
that any Credit Party has directly or indirectly been engaged in any type of
activity which, in Agent’s Permitted Discretion, would reasonably be expected
to result in forfeiture of any material portion of Collateral to any
Governmental Authority, which shall have continued unremedied for a period of
twenty (20) calendar days after written notice from Agent;
(k)
uninsured damage to, or uninsured loss,
theft or destruction of, any portion of the Collateral occurs that exceeds an
amount equal to $250,000 in the aggregate;
(l)
(i) any Credit Party is criminally
indicted or convicted (A) of a felony or (B) under any law that would
reasonably be expected to lead to forfeiture of any material portion of
Collateral, or (ii) any director or senior officer of any Credit Party is
convicted (A) of a felony for fraud or dishonesty in connection with the
Business or (B) under any law that would reasonably be expected to lead to
forfeiture of any material portion of Collateral;
41
(m)
the issuance of any process for levy,
attachment or garnishment or execution upon or any judgment against any Credit
Party or any of its material Property or against any of the Collateral which
has an aggregate fair market value in excess of an amount equal to $175,000
individually or $350,000 in the aggregate, in any case which is not satisfied,
stayed, vacated, dismissed or discharged within thirty (30) calendar days of
being issued or executed;
(n)
(i) the subordination provisions of the
Seller Subordination Agreement and/or the subordination provisions contained in
or otherwise pertaining to any agreement or instrument governing any
Subordinated Debt shall for any reason be revoked or invalidated, or otherwise
cease to be in full force and effect, or (ii) any Person shall raise a
non-frivolous claim in court contesting in any manner the validity or
enforceability thereof, (iii) any Person shall take any action in
violation thereof or fail to take any action required by the terms thereof that
would reasonably be expected to have an adverse effect on the rights and
remedies of Agent or Lenders, or (iv) the Obligations, for any reason
shall not have the priority contemplated by this Agreement, the Seller
Subordination Agreement or such subordination provisions;
(o)
an “Event of Default” under any other Loan
Document occurs (to the extent, with respect to any such other Loan Document,
not otherwise constituting an Event of Default hereunder);
(p)
any Credit Party is enjoined, restrained or
in any way prevented by the order of any court or other Governmental Authority
from conducting all or any material part of its business for more than fifteen
(15) calendar days which is reasonably likely to be, have or result in a
Material Adverse Effect;
(q)
if the “Shelf Registration Statement” (as
defined in the Certificate of Designation of Evolving System’s Series B
Convertible Preferred Stock (“Certificate of Designation”)) to be prepared and
filed by the Corporation (as defined in the Certificate of Designation) in
accordance with the terms and conditions of Section 2.3 of the Investor
Rights Agreement (as defined in the Certificate of Designation) by and among
the Corporation and the holders of the Series B Preferred Stock dated as
of the Series B Original Issue Date (as defined in the Certificate of
Designation) (i) is not declared effective by the SEC as contemplated by Section 2.3
or (ii) if declared effective, is not kept continuously effective as
contemplated by Section 2.4 of the Investor Rights Agreement, or any other
event occurs which with the passage of time and/or giving of notice would grant
a holder of Evolving System’s preferred stock the rights described in section 5
of the Certificate of Designation;
(r)
The occurrence of a “Liquidation” as
defined in the Certificate of Designation or any other event which with the
passage of time and/or giving of notice would give rise to a “Liquidation” to
which Agent has not previously expressly consented in writing;
If an Event of Default occurs and is continuing, notwithstanding any
other provision of any Loan Document, (I) Agent may (and at the request of
Requisite Lenders, shall), by notice to Borrower (i) terminate Lenders’
Commitments and obligations hereunder, whereupon the same shall immediately
terminate, and (ii) declare all or any of the Loans and/or any Notes, all
interest thereon and all other Obligations to be due and payable immediately
(provided, that in the case
42
of any Event of Default under
Article VIII(g)
,
(h)
,
(q),
or
(r)
all of the foregoing automatically and without any act by Agent
or any Lender shall be due and payable immediately and Lenders’ Commitments and
obligations hereunder shall immediately terminate; in each case without
presentment, demand, protest or notice of any kind, all of which hereby are
expressly waived by the Credit Parties), and (II) without limiting any of the
other rights and/or remedies of Agent and Lenders, no action permitted to be
taken under
Article VII
hereof may be taken to the extent such
action is expressly prohibited during the existence of an Event of Default.
IX.
RIGHTS AND REMEDIES AFTER DEFAULT
9.1
Rights
and Remedies
(a)
In addition to the acceleration and other
provisions set forth in
Article VIII
, upon the occurrence and
during the continuation of an Event of Default, Agent shall have the right to
(and at the request of Requisite Lenders, shall) exercise any and all rights
and remedies provided for in any Loan Document or any Term Loan Document, at
law or in equity, including, without limitation, the right to the extent
permitted by applicable law, to (i) apply any Property of any Credit Party
held by Agent, for the benefit of the Lender Parties, or any Lender to reduce
the Obligations, (ii) foreclose the Liens created under the Loan Documents
or the Term Loan Documents, (iii) enforce, realize upon, take possession
of and/or sell or otherwise transfer any Collateral or securities pledged, with
or without judicial process, (iv) exercise all rights and powers with
respect to the Collateral as any Credit Party might exercise, (v) collect
and send notices regarding the Collateral, with or without judicial process, (vi) by
its own means or with judicial assistance, enter any premises at which
Collateral and/or pledged securities are located, or render any of the
foregoing unusable or dispose of the Collateral and/or pledged securities on
such premises without any liability for rent, storage, utilities, or other
sums, and no Credit Party shall resist or interfere with such action, (vii) at
Credit Parties’ expense, require that all or any part of the Collateral be
assembled and made available to Agent at any place where the Credit Parties
regularly maintain inventory or Property designated by Agent in its Permitted
Discretion, (viii) reduce or otherwise change the Facility Cap,
Availability, Aggregate Borrowing Availability and/or any component of the
foregoing and/or (ix) relinquish or abandon any Collateral or securities
pledged or any Lien thereon.
Notwithstanding any provision of any Loan Document, Agent, in its
Permitted Discretion, shall have the right, at any time that any Credit Party
fails to do so, and from time to time, without prior notice, to: (i) obtain
insurance covering any of the Collateral to the extent required hereunder; (ii) pay
for the performance of any of the Obligations; (iii) discharge taxes,
levies and/or Liens on any of the Collateral that are in violation of any Loan
Document; and (iv) pay for the maintenance, repair and/or preservation of
the Collateral. Such expenses and
advances shall be added to the Obligations until reimbursed to Agent and shall
be secured by the Collateral and payable on demand, and such payments by Agent
shall not be construed as a waiver by Agent or Lenders of any Event of Default
or any other rights or remedies of Agent and Lenders. Notwithstanding anything to the contrary in
this Agreement, neither the Agent nor any Lender shall have any right or
authority to take possession of and/or sell or otherwise transfer any
Collateral pledged by the Borrower and UK Guarantor under the Revolving Loan
Documents for the benefit of any Lender under the Term Loan Documents or the
payment of any amounts under the Subordinated Notes, or in repayment or
43
satisfaction
of any amount owing by any of the Credit Parties under and as defined in the
Term Loan Documents.
(b)
The Credit Parties jointly and severally
agree that notice received by any of them at least ten (10) calendar days
before the time of any intended public sale, or the time after which any
private sale or other disposition of Collateral is to be made, shall be deemed
to be reasonable notice of such sale or other disposition. If permitted by applicable law, any
perishable Collateral which threatens to speedily decline in value or which is
sold on a recognized market may be sold immediately by Agent without prior
notice to any Credit Party. At any sale
or disposition of Collateral or securities pledged, Agent may (to the extent
permitted by applicable law) purchase all or any part thereof free from any
right of redemption by the Credit Parties, which right hereby is waived and
released. The Credit Parties jointly and
severally covenant and agree not to, and not to permit or cause any of their
Subsidiaries to, interfere with or impose any obstacle to Agent’s exercise of
its rights and remedies with respect to the Collateral. In dealing with or disposing of the
Collateral or any part thereof, Agent and Lenders shall not be required to give
priority or preference to any item of Collateral or otherwise to marshal assets
or to take possession or sell any Collateral with judicial process.
(c)
Each Credit Party hereby grants to Agent,
for the benefit of the Lender Parties, after the occurrence and during the
continuance of an Event of Default, an irrevocable, nonexclusive license (exercisable
without payment of royalty or other compensation to such Credit Party) to use,
assign, license or sublicense any Intellectual Property, (unless such use,
assignment, license or sublicense is expressly prohibited under a license
agreement and would result in a breach under such agreement for which such
agreement would reasonably be expected to be terminated by such licensor) and
now owned or hereafter acquired by such Credit Party, and wherever the same may
be located, including in such license reasonable access as to all media in
which any of the licensed items may be recorded or stored and to all computer
programs and used for the compilation or printout thereof. All proceeds received by Agent or Lenders in connection
with such license shall be used by Agent or Lenders to satisfy the Obligations.
(d)
In addition to the acceleration and other
provisions set forth in
Article VIII
, upon the occurrence and
during the continuation of an Event of Default, each Credit Party shall take
any action that Agent, for the benefit of itself and the Lenders, may request
in order to enable Agent to obtain and enjoy the full rights and benefits
granted to Agent hereunder.
9.2
Application
of Proceeds
In addition to any other rights and remedies Agent and Lenders have
under the Loan Documents or the Term Loan Documents, the UCC, at law or in
equity, all payments received after the occurrence and during the continuation
of any Event of Default, and all proceeds collected or received from
collecting, holding, managing, renting, selling or otherwise disposing of all
or any part of the Collateral or any proceeds thereof upon exercise of remedies
hereunder upon the occurrence and during the continuation of an Event of
Default, shall be applied in the following order of priority:
44
(i)
first
,
to the payment of all costs and expenses of such collection, holding, managing,
renting, selling or disposition, and of conducting the Credit Parties’
Businesses and of maintenance, repairs, replacements, alterations, additions
and improvements of or to the Collateral, and to the payment of all sums which
Agent or Lenders may be required or may elect to pay, if any, for taxes,
assessments, insurance and other charges upon the Collateral or any part
thereof, and all other payments that Agent or Lenders may be required or
authorized to make under any provision of the Loan Documents (including,
without limitation, in each such case, in-house documentation and diligence
fees and legal expenses, search, audit, recording, professional and filing fees
and expenses and reasonable attorneys’ fees and all expenses, liabilities and
advances made or incurred in connection therewith);
(ii)
second
,
to payment of all accrued unpaid interest on the Obligations and fees owed to
the Agent and Lenders;
(iii)
third
,
to payment of principal of the Obligations;
(iv)
fourth
,
to payment of any other amounts owing constituting Obligations; and
(v)
fifth
,
any surplus then remaining to the Credit Parties, unless otherwise provided by
law or directed by a court of competent jurisdiction;
provided that
the Credit Parties shall be liable for any deficiency if such proceeds are
insufficient to satisfy all of the Obligations or any of the other items
referred to in this Section. In carrying
out the foregoing, (x) amounts received shall be applied in the numerical order
provided until exhausted prior to the application to the next succeeding
category; and (y) each of the Lenders shall receive an amount equal to its pro
rata share of amounts available to be applied pursuant to clauses (i), (ii), (iii) and
(iv) above.
9.3
Rights
to Appoint Receiver
Without limiting any other rights, options and remedies Agent and
Lenders have under the Loan Documents or the Term Loan Documents, the UCC, at
law or in equity, upon the occurrence and during the continuation of an Event
of Default, Agent shall have the right to apply for and have a receiver
appointed by a court of competent jurisdiction in any action taken by Agent to
enforce its and Lenders’ rights and remedies in order to manage, protect and
preserve the Collateral, to sell or dispose of the Collateral and continue the
operation of the Businesses of the Credit Parties and to collect all revenues
and profits thereof and apply the same to the payment of all expenses and other
charges of such receivership including the compensation of the receiver and to
the payments as aforesaid until a sale or other disposition of such Collateral
shall be finally made and consummated.
To the extent not prohibited by applicable law, each Credit Party hereby
irrevocably consents to, and waives any right to object to or otherwise
contest, the appointment of, a receiver as provided above.
45
9.4
Rights
and Remedies not Exclusive
As among the Lender Parties on one hand and the Credit Parties on the
other hand, Agent and Lenders shall have the right in their sole discretion to
determine which rights, Liens and/or remedies Agent and/or Lenders may at any
time pursue, relinquish, subordinate or modify, and such determination shall
not in any way modify or affect any of Agent’s or Lenders’ rights, Liens or
remedies under any Loan Document, Term Loan Documents applicable law or
equity. The enumeration of any rights
and remedies in any Loan Document, or any Term Loan Document, is not intended
to be exhaustive, and all rights and remedies of Agent and the Lenders
described in any Loan Document and the Term Loan Documents are cumulative and
are not alternative to or exclusive of any other rights or remedies which Agent
and Lenders otherwise may have, subject to the limitation contained in the last
sentence of
Section 9.1(a)
.
The partial or complete exercise of any right or remedy shall not
preclude any other further exercise of such or any other right or remedy.
X.
WAIVERS
10.1
Certain
Waivers
Except as expressly provided for herein or in any other Loan Document,
each Credit Party hereby waives set-off, counterclaim, demand, presentment,
protest, all defenses with respect to any and all instruments and all notices
and demands of any description, and the pleading of any statute of limitations
as a defense to any demand under any Loan Document. Each Credit Party hereby waives any and all
defenses and counterclaims it may have or could interpose in any action or
procedure brought by Agent or any Lender to obtain an order of court
recognizing the assignment of, or Lien of Agent, for the benefit the Lender
Parties, in and to, any Collateral.
10.2
Delay;
No Waiver of Defaults
No course of action or dealing, renewal, release or extension of any
provision of any Loan Document, or single or partial exercise of any such
provision, or delay, failure or omission on Agent’s or any Lender’s part in
enforcing any such provision shall affect the liability of any Credit Party or
operate as a waiver of such provision or affect the liability of any Credit
Party or preclude any other or further exercise of such provision. No waiver by any party to any Loan Document
of any one or more defaults by any other party in the performance of any of the
provisions of any Loan Document shall operate or be construed as a waiver of
any future default, whether of a like or different nature, and each such waiver
shall be limited solely to the express terms and provisions of such
waiver. Notwithstanding any other
provision of any Loan Document or any Term Loan Document, by completing the
Closing under this Agreement and/or by making Advances, neither Agent nor any
Lender waives any breach of any representation or warranty of any Credit Party
under any Loan Document or any Term Loan Documents, and all of Agent’s and
Lenders’ claims and rights resulting from any such breach or misrepresentation
hereby specifically are reserved.
46
10.3
Amendment
and Waivers
Except as otherwise provided herein, no amendment, modification,
termination or waiver of any provision of this Agreement or any other Loan
Document, or consent to any departure by the Credit Parties or any of them
therefrom, shall be effective unless the same shall be in writing and signed by
Requisite Lenders (or Agent at the direction of the Requisite Lenders) and each
Credit Party; provided, that no amendment, modification, termination or waiver
shall, unless in writing and signed by each Credit Party and each Lender
directly affected thereby, do any of the following: (i) increase the
Commitment of any individual Lender (which action shall be deemed to directly
affect all Lenders); (ii) reduce the principal of, rate of interest on or
fees payable with respect to any Loan or other Obligation; (iii) extend
the scheduled due date, or reduce the amount due on any scheduled due date, of
any installment of principal, interest or fees payable under any Loan Document,
or waive, forgive, extend, defer or postpone the payment thereof; (iv) change
the percentage of the Commitments, of the aggregate unpaid principal amount of
the Loans, or of Lenders which shall be required for Lenders, Agent or any of them
to take any action hereunder (which action shall be deemed to directly affect
all Lenders) or alter, as between or among the Lenders, the amount payable to
each hereunder; (v) except as otherwise permitted herein or in the other
Loan Documents, release any Guaranty or release any material portion of the
Collateral (which action shall be deemed to directly affect all Lenders)
(provided, that consent to such release shall not be required if such release
is made after the occurrence and during the continuation of an Event of Default
in connection with the sale or disposition of the Collateral by Agent otherwise
permitted hereunder); (vi) amend, modify or waive this Section 10.3
or the definitions of the terms used in this Section 10.3 insofar as the
definitions affect the substance of this Section 10.3 (which action shall
be deemed to directly affect all Lenders); and/or (vii) consent to the
assignment or other transfer by any Credit Party or any other party to any Loan
Documents (other than Agent or any Lender) of any of their rights and
obligations under any Loan Document; and provided, further, that no amendment,
modification, termination or waiver affecting the rights or duties of Agent
under any Loan Document shall be effective unless in writing and signed by
Agent, in addition to Lenders required hereinabove to take such action. Notwithstanding anything contained in this
Agreement to the contrary, no waiver or consent with respect to any Default (if
in connection therewith Lenders have exercised their right to suspend the
making or incurrence of Advances) or any Event of Default shall be effective
for purposes of the conditions precedent to the making of Advances unless the
same shall be in writing and signed by Lenders holding at least a majority of
the Commitments in respect of the Revolving Facility. Any amendment, modification, termination,
waiver or consent effected in accordance with this Section 10.3 shall be
binding upon Agent, each Lender and the Credit Parties.
10.4
Survival
and Termination
(a)
All obligations, covenants, agreements,
representations, warranties, waivers and indemnities made by each Credit Party
in the Loan Documents shall survive the execution and delivery of the Loan
Documents, the Closing, the making and funding of the Loans and any termination
of this Agreement until all Obligations (other than contingent indemnification
Obligations to the extent no claim giving rise thereto has been asserted) are
fully performed and indefeasibly paid in full in cash and all Commitments have
been terminated; provided, that, the obligations and provisions of Sections
10.1, 10.3, 10.4, 12.5, 12.6, 12.9,
47
12.11, 12.12
and 12.13,
Article XI
and
Article XIII
shall survive
the termination of the Loan Documents and any payment, in full or in part, of
the Obligations.
(b)
All
Loans and other Obligations shall be due and payable in full in cash, if not
earlier in accordance with this Agreement, on the Maturity Date. All of Agent’s and Lenders’ rights and
remedies and the Liens in the Collateral shall continue in full force and
effect until, and this Agreement shall terminate when all Obligations have been
fully performed and indefeasibly paid in full in cash and Credit Parties shall
have executed and delivered releases in favor of Agent and Lenders in form and
substance satisfactory to Agent, in its Permitted Discretion (provided,
however, that the release may exclude claims filed by a Credit Party against
Agent or a Lender prior to the payoff contemplated in this Section 10.4(b),
arising out of the gross negligence, wilful misconduct or fraud of Agent or
such Lender). Accordingly, each Credit
Party waives any right it may have under the UCC (to the extent the UCC
applies) to demand the filing of termination statements with respect to the
Collateral other than such right in connection with the release of Liens
pursuant to sales or other dispositions of assets expressly permitted under the
terms of this Agreement, and Agent shall not be required to provide such
termination statements or to file them with any filing office unless and until
all conditions to the termination of this Agreement and the payment and
performance of the Obligations are satisfied in a manner acceptable to Agent,
in its Permitted Discretion.
XI.
AGENT PROVISIONS; SETTLEMENT
11.1
Agent
(a)
Appointment
. In addition to any appointments in the Term
Loan Documents, each Lender hereby designates and appoints CapitalSource (i) as
the administrative agent, payment agent and collateral agent
under this Agreement and the other Loan
Documents and (ii) to hold all of the rights and interests created by the
Security Documents on trust and as agent for the Lenders in respect of the
Obligations and each Lender hereby irrevocably authorizes CapitalSource, as
Agent for such Lender, to take such action or to refrain from taking such
action on its behalf under the provisions of this Agreement and the other Loan
Documents and to exercise such powers and perform such duties as are delegated
to Agent by the terms of this Agreement and the other Loan Documents, together
with such other powers as are reasonably incidental thereto. Agent agrees to act as such on the conditions
contained in this
Article XI
.
The provisions of this
Article XI
are solely for the benefit
of Agent and Lenders, and the Credit Parties shall have no rights as
third-party beneficiaries of any of the provisions of this
Article XI
other than Section 11.1(h)(iii)Agent may perform any of its duties
hereunder, or under the Loan Documents, by or through its agents, employees or
sub-agents.
(b)
Nature of Duties
. In performing its functions and duties under
this Agreement, Agent is acting solely on behalf of Lenders, and its duties are
administrative in nature, and does not assume and shall not be deemed to have
assumed, any obligation toward or relationship of agency or trust with or for
Lenders, other than as expressly set forth herein and in the other Loan
Documents, or the Credit Parties. Agent shall
have no duties, obligations or responsibilities except those expressly set
forth in this Agreement or in the other Loan Documents. Agent shall not have by reason of this
Agreement or any other Loan Document a
48
fiduciary
relationship in respect of any Lender.
Each Lender shall make its own independent investigation of the
financial condition and affairs of the Credit Parties in connection with the
extension of credit hereunder and shall make its own appraisal of the
creditworthiness of the Credit Parties.
Except for information, notices, reports and other documents expressly
required to be furnished to Lenders by Agent hereunder or given to Agent for
the account of or with copies for Lenders, 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 Closing Date or at any time or times
thereafter. If Agent seeks the consent
or approval of any Lenders to the taking or refraining from taking any action
hereunder, then Agent shall send prior written notice thereof to each
Lender. Agent shall promptly notify each
Lender in writing any time that the applicable percentage of Lenders have instructed
Agent to act or refrain from acting pursuant hereto.
(c)
Rights, Exculpation, Etc.
Neither Agent nor any of its officers,
directors, managers, members, equity owners, employees, attorneys or agents
shall be liable to any Lender for any action lawfully taken or omitted by them
hereunder or under any of the other Loan Documents, or in connection herewith
or therewith; provided that the foregoing shall not prevent Agent from being be
liable to the extent of its own gross negligence or willful misconduct as
determined by a court of competent jurisdiction on a final and nonappealable
basis. Notwithstanding the foregoing,
Agent shall be obligated on the terms set forth herein for performance of its
express duties and obligations hereunder.
Agent shall not be liable for any apportionment or distribution of
payments made by it 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 the other Lenders any payment in excess of the amount to which they are
determined to be entitled (and such other Lenders hereby agree promptly to
return to such Lender any such erroneous payments received by them). In performing its functions and duties
hereunder, Agent shall exercise the same care which it would in dealing with
loans for its own account. Agent shall
not be responsible to any Lender for any recitals, statements, representations
or warranties made by the Credit Parties herein or for the execution,
effectiveness, genuineness, validity, enforceability, collectibility or
sufficiency of this Agreement or any of the other Loan Documents or the
transactions contemplated thereby, or for the financial condition of the Credit
Parties. Agent shall not be required to
make any inquiry concerning either the performance or observance of any of the
terms, provisions, or conditions of this Agreement or any of the Loan Documents
or the financial condition of the Credit Parties, or the existence or possible
existence of any Default or Event of Default.
Agent may at any time request instructions from Lenders with respect to
any actions or approvals which by the terms of this Agreement or of any of the
other Loan Documents Agent is permitted or required to take or to grant, and
Agent shall be absolutely entitled to refrain from taking any action or to
withhold any approval and shall not be under any liability whatsoever to any
Person for refraining from taking any action or withholding any approval under
any of the Loan Documents until it shall have received such instructions from
the applicable percentage of Lenders.
Without limiting the foregoing, no Lender shall have any right of action
whatsoever against Agent as a result of Agent acting or refraining from acting
under this Agreement or any of the other Loan Documents in accordance with the
instructions of the applicable percentage of Lenders and, notwithstanding the
instructions of Lenders, Agent shall have no obligation to take any action if
it, in good faith, believes that such action exposes Agent or any of its
officers, directors, managers, members, equity owners, employees, attorneys or
49
agents to any
personal liability unless Agent receives an indemnification satisfactory to it
from Lenders with respect to such action.
(d)
Reliance
. Agent shall be entitled to rely upon any
written notices, statements, certificates, orders or other documents or any
telephone message or other communication (including any writing, telex,
telecopy or telegram) 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, any of the other Loan Documents or
the Term Loan Documents and its duties hereunder or thereunder, upon advice of
legal counsel, independent accountants and other experts selected by Agent in
its sole discretion.
(e)
Indemnification
. Each Lender, severally and not (i) jointly
or (ii) jointly and severally, agrees to reimburse and indemnify and hold
harmless Agent and its officers, directors, managers, members, equity owners,
employees, attorneys and agents (to the extent not reimbursed by the Credit
Parties), ratably according to their respective Pro Rata Share in effect on the
date on which indemnification is sought under this subsection of the total
outstanding Obligations (or, if indemnification is sought after the date upon
which the Commitments shall have terminated and the Loans shall have been paid
in full, ratably in accordance with their Pro Rata Share immediately prior to
such date of the total outstanding Obligations), 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 Agent or
any of its officers, directors, managers, members, equity owners, employees,
attorneys or agents in any way relating to or arising out of this Agreement,
any of the other Loan Documents or any of the Term Loan Documents or any action
taken or omitted by Agent under this Agreement, any of the other Loan Documents
or any of the Term Loan Documents; provided, however, that no Lender shall be
liable for the payment of any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses, advances or
disbursements to the extent resulting from Agent’s gross negligence or wilful
misconduct as determined by a court of competent jurisdiction on a final and
nonappealable basis. The obligations of
Lenders under this
Article XI
shall survive the payment in full of
the Obligations and the termination of this Agreement.
(f)
CapitalSource Individually
. With respect to the Loans made by it or CSE
Finance and the Notes, if any, issued to it or CSE Finance, CapitalSource and
CSE Finance shall have, and may exercise, the same rights and powers hereunder
and under the other Loan Documents, and is subject to the same obligations and
liabilities, as and to the extent set forth herein and the other Loan Documents
as any other Lender. The terms “Lenders”
or “Requisite Lenders” or any similar terms shall, unless the context clearly
otherwise indicates, include CSE Finance in its individual capacity as a Lender
or one of the Requisite Lenders.
CapitalSource (and its Affiliates) may lend money to, and generally
engage in any kind of banking, trust or other business with, any Credit Party
or any Subsidiary or Affiliate of any Credit Party as if it were not acting as
Agent pursuant hereto.
(g)
Successor Agent
.
(i)
Resignation
. Agent
may resign from the performance of all or part of its functions and duties
hereunder at any time by giving at least thirty (30)
50
calendar days’ prior written
notice to Borrower and Lenders. Such
resignation shall take effect upon the acceptance by a successor Agent of
appointment pursuant to clause (ii) below or as otherwise provided below.
(ii)
Appointment of Successor
.
Upon any such notice of resignation pursuant to clause (g)(i) of
this Section 11.1, Requisite Lenders shall appoint a successor Agent with
the consent of Borrower, which consent shall not be unreasonably withheld,
delayed or conditioned (or required if any Default or Event of Default
exists). If a successor Agent shall not
have been so appointed within said thirty (30) calendar day period referenced
in clause (g)(i) above, the retiring Agent, upon notice to Borrower, may,
on behalf of Lenders, appoint a successor Agent with the consent of Borrower,
which consent shall not be unreasonably withheld, delayed or conditioned (or
required if any Default or Event of Default exists), who shall serve as Agent
until such time as Requisite Lenders appoint a successor Agent as provided
above. If no successor Agent has been
appointed pursuant to the foregoing within said thirty (30) calendar day period,
the resignation shall become effective and Requisite Lenders thereafter shall
perform all the duties of Agent hereunder, until such time, if any, as
Requisite Lenders appoint a successor Agent as provided above.
(iii)
Successor Agent
. Upon
the acceptance of any appointment as Agent under the Loan Documents by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent
and, upon the earlier of such acceptance or the effective date of the retiring
Agent’s resignation, the retiring Agent shall be discharged from its duties and
obligations under the Loan Documents, provided that any indemnity rights or
other rights in favor of such retiring Agent shall continue after and survive
such resignation and succession. After
any retiring Agent’s resignation as Agent under the Loan Documents, the
provisions of this
Article XI
shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was Agent under the Loan
Documents.
(h)
Collateral Matters
.
(i)
Collateral
.
Each Lender agrees that any action taken by Agent or the Requisite
Lenders (or, where required by the express terms of this Agreement, a greater
proportion of Lenders) in accordance with the provisions of this Agreement or
of the other Loan Documents relating to the Collateral, and the exercise by
Agent or the Requisite Lenders (or, where so required, such greater proportion
of Lenders) of the powers set forth herein or therein, together with such other
powers as are reasonably incidental thereto, shall be authorized and binding
upon all of the Lenders and Agent.
Without limiting the generality of the foregoing, Agent shall have the
sole and exclusive right and authority to (i) act as the disbursing and
collecting agent for Lenders with respect to all payments and collections
arising in connection herewith and with the Loan Documents in connection with
the Collateral; (ii) execute and deliver each Loan Document relating to
the Collateral and any Subordination Agreement and accept delivery of each such
agreement delivered by the Credit Parties or any of their Subsidiaries; (iii) act
as collateral agent for Lenders for purposes of the perfection of all security
interests and Liens created by such agreements and all other purposes stated
51
therein; (iv) manage,
supervise and otherwise deal with the Collateral; (v) take such action as
is necessary or desirable to maintain the perfection and priority of the
security interests and Liens created or purported to be created by the Loan
Documents relating to the Collateral; and (vi) except as may be otherwise
specifically restricted by the terms hereof or of any other Loan Document,
exercise all remedies given to such Agent and Lenders with respect to the
Collateral under the Loan Documents relating thereto, applicable law or
otherwise.
(ii)
Release of Collateral
. Lenders hereby irrevocably authorize Agent,
at its option and in its sole discretion, to release any Lien granted to or
held by Agent for the benefit of Lender Parties upon any Property covered by
the Loan Documents (A) upon termination of this Agreement and payment and
satisfaction in full of all Obligations; (other than contingent indemnification
Obligations to the extent no claim giving rise thereto has been asserted), (B) constituting
Property being sold or disposed of if Borrower certifies to Agent that the sale
or disposition is made in compliance with the provisions of the Loan Documents
(and Agent may rely in good faith conclusively on any certificate of the
Borrower to such effect, without further inquiry); or (C) constituting
Property leased to any Credit Party under a lease which has expired or been
terminated in a transaction permitted under this Agreement or is about to
expire and which has not been, and is not intended by such Credit Party to be,
renewed or extended.
(iii)
Confirmation of Authority; Execution of Releases
. Without in any manner limiting Agent’s
authority to act without any specific or further authorization or consent by
Lenders (as set forth in Section 11.1(h)(i) and (ii)), each Lender
agrees to confirm in writing, upon request by Borrower, the authority to
release any property covered by this Agreement or the Loan Documents conferred
upon Agent under Section 11.1(h)(ii).
So long as no Event of Default exists, upon receipt by Agent of
confirmation from the requisite percentage of Lenders of its authority to
release any particular item or types of Property covered, by this Agreement or
the other Loan Documents, and upon at least five (5) Business Days’ prior
written request by Borrower, Agent shall (and is hereby irrevocably authorized
by Lenders to) execute such documents as may be necessary to evidence the
release of the Liens granted to Agent for the benefit of the Lender Parties
herein or pursuant hereto upon such Collateral; provided, however, that (A) Agent
shall not be required to execute any such document on terms which, in Agent’s
opinion, would expose Agent to liability or create any obligation or entail any
consequence other than the release of such Liens without recourse or warranty
(other than that such Collateral is free and clear, on the date of such
delivery, of any and all Liens arising under the Loan Documents or from such
Person’s own acts), and (B) such release shall not in any manner
discharge, affect or impair the Obligations or any Liens upon (or obligations
of the Credit Parties or any Subsidiary of any Credit Party in respect of) all
interests retained by the Credit Parties or any Subsidiary of a Credit Party
including, without limitation, the proceeds of any sale, all of which shall
continue to constitute part of the Property covered by this Agreement, the Loan
Documents or subject to the last sentence of Section 9.1(a),the Term Loan
Documents.
52
(iv)
Absence of Duty
.
Agent shall have no obligation whatsoever to any Lender or any other
Person to assure that the Property covered by this Agreement or the other Loan
Documents exists or is owned by any Credit Party or is cared for, protected or
insured or has been encumbered or that the Liens granted to Agent on behalf of
the Lender Parties herein or pursuant hereto have been properly or sufficiently
or lawfully created, perfected, protected, enforced or maintained or are
entitled to any particular priority, or to exercise at all or in any particular
manner or under any duty of care, disclosure, or fidelity, or to continue
exercising, any of the rights, authorities and powers granted or available to
Agent in this Section 11.1(h) or in any of the other Loan Documents,
it being understood and agreed that in respect of the Property covered by this
Agreement or the other Loan Documents or any act, omission, or event related
thereto, Agent may act in any manner it may deem appropriate, in its
discretion, given Agent’s own interest in Property covered by this Agreement or
the other Loan Documents as one of Lenders and Agent shall have no duty or
liability whatsoever to any of the other Lenders; provided, that Agent shall
exercise the same care which it would in dealing with loans for its own
account. Notwithstanding the foregoing,
Agent shall be liable with respect to its own gross negligence or wilful misconduct.
(i)
Agency for Perfection
. Each Lender hereby appoints Agent as agent
for the purpose of perfecting Lenders’ security interest in Collateral which in
any applicable jurisdiction, can be perfected only by possession or
control. Should any Lender (other than
Agent) obtain possession of any such Collateral, such Lender shall hold such
Collateral for purposes of perfecting a security interest therein for the
benefit of the Lender Parties, notify Agent thereof and, promptly upon Agent’s
request therefor, deliver such Collateral to Agent or otherwise act in respect
thereof in accordance with Agent’s instructions.
(j)
Exercise of Remedies
. Except as set forth in Section 11.2,
each Lender agrees that it will not have any right individually to enforce or
seek to enforce this Agreement or any other Loan Document or to realize upon
any Collateral security for the Loans or other Obligations; it being understood
and agreed that such rights and remedies may be exercised only by Agent in
accordance with the terms of the Loan Documents.
(k)
Consents
.
(i)
In
the event Agent requests the waiver or consent of a Lender and does not receive
a written denial thereof within five (5) Business Days after such Lender’s
receipt of such request, then such Lender will be deemed to have given such
waiver of consent so long as such request contained a notice stating that such
failure to respond within five (5) Business Days would be deemed to be a
waiver or consent by such Lender.
(ii)
In
the event Agent requests the waiver or consent of a Lender in a situation where
such Lender’s waiver or consent would be required and such waiver or consent is
denied, then Agent or any of its Eligible Assignees may, at its option, require
such Lender to assign its interest in the Loans to Agent for a price equal to
the then outstanding principal amount thereof due such Lender
plus
accrued and unpaid interest and fees due such Lender, which interest in the
Loans will be assigned by such Lender when such principal, interest and fees
are paid to such Lender. In the event
that Agent or such Eligible Assignee elects to require
53
any Lender to assign its interest to Agent pursuant to this Section 11.1(k)(ii),
Agent will so notify such Lender in writing within forty-five (45) days following
such Lender’s denial, and such Lender will assign its interest to Agent or such
Eligible Assignee no later than five (5) calendar days following receipt
of such notice.
11.2
Set-off
and Sharing of Payments
In addition to any rights and remedies now or hereafter granted under
applicable law and not by way of limitation of any such rights, upon the
occurrence and during the continuation of any Event of Default, each Lender is
hereby authorized by the Credit Parties at any time or from time to time, to the
fullest extent permitted by law, with notice to Agent and without prior notice
to Borrower or any other Person other than Agent (such notice being hereby
expressly waived) to set off and to appropriate and to apply any and all (a) balances
(general or special, time or demand, provisional or final) held by such Lender
at any of its offices for the account of any Credit Party (regardless of
whether such balances are then due to any Credit Party), and (b) other
Property at any time held or owing by such Lender to or for the credit or for
the account of any Credit Party, against and on account of any of the
Obligations which are not paid when due; provided, that no Lender or any such
holder shall exercise any such right without prior written notice to Agent. Any Lender that has exercised its right to
set-off or otherwise has received any payment on account of the Obligations
shall, to the extent the amount of any such set off or payment exceeds its Pro
Rata Share of payments obtained by all of the Lenders on account of such
Obligations, purchase for cash (and the other Lenders or holders of the Loans
shall sell) participations in each such other Lender’s or holder’s Pro Rata
Share of Obligations as would be necessary to cause such Lender to share such
excess with each other Lenders or holders in accordance with their respective
Pro Rata Shares; provided, however, that if all or any portion of such excess
payment or benefits is thereafter recovered from such purchasing Lender, such
purchase shall be rescinded, and the purchase price and benefits returned, to
the extent of such recovery. Each Credit
Party agrees, to the fullest extent permitted by law, that (a) any Lender
or holder may exercise its right to set-off with respect to amounts in excess
of its Pro Rata Share of the Obligations and may sell participations in such
excess to other Lenders and holders, and (b) any Lender so purchasing a
participation in the Loans made or other Obligations held by other Lenders may
exercise all rights of set-off, bankers’ lien, counterclaim or similar rights
with respect to such participation as fully as if such Lender were a direct
holder of Loans and other Obligations in the amount of such participation.
11.3
Disbursement
of Funds under Revolving Facility
Agent may, on behalf of Lenders, disburse funds to Borrower for
Advances requested. Each Lender shall
reimburse Agent on demand for its Pro Rata Share of all funds disbursed on its
behalf by Agent, or if Agent so requests, each Lender shall remit to Agent its
Pro Rata Share of any Advance before Agent disburses such Advance to
Borrower. If Agent so elects to require
that funds be made available prior to disbursement to Borrower, Agent shall
advise each Lender by telephone, telex or telecopy of the amount of such Lender’s
Pro Rata Share of such requested Advance no later than one (1) Business
Day prior to the funding date applicable thereto, and each such Lender shall
pay Agent such Lender’s Pro Rata Share of such requested Loan, in same day
funds, by wire transfer to Agent’s account not later than 2:00p.m. (New York
City time). If Agent shall have
disbursed funds to Borrower on behalf of any such Lender fails to pay the
54
amount of its Pro Rata Share forthwith upon
Agent’s demand, Agent shall promptly notify Borrower, and Borrower shall
immediately repay such amount to Agent.
Any repayment by Borrower required pursuant to this Section 11.3
shall be without premium or penalty.
Nothing in this Section 11.3 or elsewhere in this Agreement or the
other Loan Documents, including, without limitation, the provisions of Section 11.4,
shall be deemed to require Agent to advance funds on behalf of any Lender or to
relieve any Lender from its obligation to fulfill its commitments hereunder or
to prejudice any rights that Agent or Borrower may have against any Lender as a
result of any default by such Lender hereunder.
11.4
Settlements;
Payments; and Information
(a)
Advances; Payments; Interest and Fee
Payments.
(i)
The
amount of outstanding Loans pursuant to Advances may fluctuate from day to day
through Agent’s disbursement of funds to, and receipt of funds from,
Borrower. In order to minimize the
frequency of transfers of funds between Agent and each Lender, notwithstanding
terms to the contrary set forth in Section 11.3, Advances and repayments
thereof may be settled according to the procedures described in Sections
11.4(a)(ii) and 11.4(a)(iii).
Notwithstanding these procedures, each Lender’s obligation to fund its
Pro Rata Share of any Advances made by Agent to Borrower will commence on the
date such Advances are made by Agent.
Nothing contained in this Agreement shall obligate a Lender to make an
Advance at any time any Default or Event of Default exists. All such payments will be made by such Lender
without set-off, counterclaim or deduction of any kind.
(ii)
Once
each week, or more frequently (including daily), if Agent so elects (each such
day being a “Settlement Date”), Agent will advise each Lender by 1:00p.m. (New
York City time) on a Business Day by telephone, telex or telecopy of the amount
of each such Lender’s Pro Rata Share of the outstanding Advances. In the event payments are necessary to adjust
the amount of such Lender’s share of the Advances to such Lender’s Pro Rata
Share of the Advances, the party from which such payment is due will pay the
other party, in same day funds, by wire transfer to the other’s account not
later than 2:00p.m. (New York City time) on the Business Day following the
Settlement Date.
(iii)
On
the first Business Day of each month (“Interest Settlement Date”), Agent will
advise each Lender by telephone or facsimile of the amount of interest and fees
charged to and collected from Borrower for the preceding month in respect of
the applicable Loans. Provided that such
Lender has made all payments required to be made by it under this Agreement,
Agent will pay to such Lender, by wire transfer to such Lender’s account (as
specified by such Lender on
Schedule A
of this Agreement as amended
by such Lender from time to time after the date hereof pursuant to the notice
provisions contained herein or in the applicable Lender Addition Agreement) not
later than 2:00p.m. (New York City time) on the next Business Day following the
Interest Settlement Date, such Lender’s share of such interest and fees.
55
(b)
Availability of Lenders’
Pro Rata Share
.
(i)
Unless
Agent has been notified by a Lender prior to any proposed funding date of such
Lender’s intention not to fund its Pro Rata Share of an Advance requested by
Borrower, Agent may assume that such Lender will make such amount available to
Agent on the proposed funding date or the Business Day following the next
Settlement Date, as applicable; provided, however, nothing contained in this
Agreement shall obligate a Lender to make an Advance at any time any Default or
Event of Default exists. If such amount
is not, in fact, made available to Agent by such Lender when due, Agent will be
entitled to recover such amount on demand from such Lender without set-off,
counterclaim or deduction of any kind.
(ii)
Nothing
contained in this Section 11.4(b) will be deemed to relieve a Lender
of its obligation to fulfil its commitments or to prejudice any rights Agent or
Borrower may have against such Lender as a result of any default by such Lender
under this Agreement.
(c)
Return of Payments
.
(i)
If
Agent pays an amount to a Lender under this Agreement in the belief or
expectation that a related payment has been or will be received by Agent from
any Credit Party and such related payment is not received by Agent, then Agent
will be entitled to recover such amount from such Lender without set-off,
counterclaim or deduction of any kind.
(ii)
If
Agent determines at any time that any amount received by Agent under this
Agreement must be returned to any Credit Party or paid to any other Person
pursuant to any Debtor Relief Law or otherwise, then, notwithstanding any other
term or condition of this Agreement, Agent will not be required to distribute
any portion thereof to any Lender. In
addition, each Lender will repay to Agent on demand any portion of such amount
that Agent has distributed to such Lender, together with interest at such rate,
if any, as Agent is required to pay to Borrower or such other Person, without
set-off, counterclaim or deduction of any kind.
11.5
Dissemination
of Information
Upon request by a Lender, Agent will distribute promptly to such
Lender, unless previously provided by any Credit Party to such Lender, copies
of all notices, schedules, reports, projections, financial statements,
agreements and other material and information, including, without limitation,
financial and reporting information received from the Credit Parties or
generated by a third party (and excluding only internal information generated
by CapitalSource for its own use as a Lender or as Agent), as provided for in
this Agreement and the other Loan Documents as received by Agent. Agent shall not be liable to any of the
Lenders for any failure to comply with its obligations under this Section 11.5,
except to the extent that such failure is attributed to Agent’s gross
negligence or wilful misconduct and results in demonstrable damages to such
Lender as determined, in each case, by a court of competent jurisdiction on a
final and non-appealable basis.
56
XII.
MISCELLANEOUS
12.1
Governing
Law and Enforcement
This Agreement
is governed by English law.
12.2
Jurisdiction
of English courts
(a)
The courts of England have
exclusive jurisdiction to settle any dispute arising out of or in connection
with this Agreement (including a dispute regarding the existence, validity or
termination of this Agreement) (a “
Dispute
”).
(b)
The Parties agree that the
courts of England are the most appropriate and convenient courts to settle
Disputes and accordingly no Party will argue to the contrary.
(c)
This Section 12.2 is for
the benefit of the Lender Parties only.
As a result, no Lender Party shall be prevented from taking proceedings
relating to a Dispute in any other courts with jurisdiction. To the extent allowed by law, the Lender
Parties may take concurrent proceedings in any number of jurisdictions.
12.3
Service
of process
Without
prejudice to any other mode of service allowed under any relevant law, each
Credit Party (other than a Credit Party incorporated in England and Wales):
(a)
irrevocably appoints Borrower
at its registered office, FAO Legal Department as its agent for service of
process in relation to any proceedings before the English courts in connection
with any Loan Document and the Borrower by its execution of this Agreement,
accepts that appointment); and
(b)
agrees that failure by a
process agent to notify the relevant Credit Party of the process will not
invalidate the proceedings concerned.
(c)
If any person appointed as
process agent is unable for any reason to act as agent for service of process,
the Borrower (on behalf of all the Credit Parties) must immediately (and in any
event within 5 days of such event taking place) appoint another agent on terms
acceptable to the Agent. Failing this,
the Agent may appoint another agent for this purpose.
Evolving
Systems, Inc., Telecom Software Enterprises, LLC and Evolving Systems Holdings, Inc.
each expressly agrees and consents to the provisions of Section 12.2 and
12.3.
12.4
Successors
and Assigns; Assignments and Participations
(a)
Subject to Section 12.4(h), each Lender
may, at any time and from time to time, assign all or any portion of its rights
and delegate all or a portion of its obligations under
57
this Agreement
and the other Loan Documents in a minimum amount of $1,000,000 (or 100% of any
remaining commitment less than $1,000,000) (including all of its rights and
obligations with respect to the Loans) to one or more Eligible Assignees (each,
a “Transferee”) with the prior written consent of Agent and, to the extent no
Default or Event of Default shall have occurred and be continuing, with the
prior written consent of Borrower (which consent of Borrower shall not be
unreasonably withheld, delayed or conditions, or required if any Default or
Event of Default exists); provided, that such Transferee
and such assigning Lender shall execute and deliver to
Agent for acceptance and recording in the Register, a Lender Addition
Agreement, which shall be in form and substance acceptable to Agent in its
Permitted Discretion. Upon such
execution, delivery, acceptance and recording, from and after the effective
date determined pursuant to such Lender Addition Agreement, (i) the
Transferee thereunder shall be a party hereto and, to the extent provided in
such Lender Addition Agreement, have the same rights, benefits and obligations
of a Lender hereunder, (ii) the assigning Lender shall be relieved of its
obligations hereunder with respect to its Commitment or assigned portion
thereof, as the case may be, to the extent that such obligations shall have
been expressly assumed by the Transferee pursuant to such Lender Addition
Agreement (and, in the case of a Lender Addition Agreement covering all or the
remaining portion of an assigning Lender’s rights and obligations under this
Agreement, such assigning Lender shall cease to be a party hereto but shall
nevertheless continue to be entitled to the benefits of Sections 12.6 and
12.9). Borrower hereby acknowledges and
agrees that any assignment will give rise to a direct obligation of Borrower to
the Transferee and that the Transferee shall be a “Lender” hereunder and under
the other Loan Documents. Except as
provided in Section 12.4(h), no Lender will assign all or any portion of
its Loans and/or Commitments unless such Lender also assigns its proportionate
share of its “Loans” and/or “Commitments” under (and as defined in) the Term
Loan Agreement. Notwithstanding anything
to the contrary contained in this Section 12.4, no Transferee shall be
entitled to the benefits of Section 13.1 unless such Transferee is a “United
States Person” (as defined in Section 13.1(f)) or is a resident of the
United Kingdom for UK Tax purposes.
(b)
Each Lender at any time may sell
participations in all or any part of its rights and obligations under this
Agreement and the other Loan Documents (including all of its rights and
obligations with respect to the Loans) to one or more Persons (each, a “Participant”). In the event of any such sale by a Lender of
a participation to a Participant, such Lender’s obligations under this
Agreement to the other parties to this Agreement shall remain unchanged, such
Lender shall remain solely responsible for the performance thereof, such Lender
shall remain the holder of any such Loan (and any Note evidencing such Loan)
for all purposes under this Agreement and the other Loan Documents and Borrower
and Agent shall continue to deal solely and directly with such Lender in
connection with such Lender’s rights and obligations under this Agreement and
the other Loan Documents. Any agreement
pursuant to which any Lender shall sell any such participation shall provide
that such Lender shall retain the sole right and responsibility to exercise
such Lender’s rights and enforce each Credit Party’s obligations hereunder,
including the right to consent to any amendment, supplement, modification or
waiver of any provision of this Agreement or any of the other Loan Documents;
provided, that such participation agreement may provide that such Lender will
not agree, without the consent of the Participant, to any amendment,
supplement, modification or waiver to the extent resulting in: (i) any
reduction in the principal amount, interest rate or fees payable with respect
to any Loan in which such Participant participates; (ii) any extension of
the date fixed for any payment of principal, interest or fees payable with
respect to any Loan in which such Participant participates;
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and (iii) any
release of all or substantially all of the Collateral (other than in accordance
with the terms of this Agreement or the other Loan Documents). The Credit Parties hereby acknowledge and
agree that the Participant under each participation shall, solely for the
purposes of Sections 10.5, 12.6 and 12.9 of this Agreement, be considered to be
a “Lender” hereunder. Notwithstanding
anything to the contrary contained in this Section 12.4, no Participant
shall be entitled to the benefits of Section 13.1 unless such Participant
is a “United States Person” (as defined in Section 13.1(f)) or is a
resident of the United Kingdom for UK Tax purposes.
(c)
Agent, on behalf of Borrower, shall maintain
at its address referred to in Section 12.7 a copy of each Lender Addition
Agreement delivered to it and the Register for the recordation of the names and
addresses of the Lenders and the Commitment of, and the principal amount of the
Loans owing to, and the Notes, if any, evidencing such Loans owned by, each
Lender from time to time. Anything
contained in this Agreement to the contrary notwithstanding, each of the Credit
Parties, Agent and the Lenders shall treat each Person whose name is recorded
in such Register as the owner of the Loans, the Notes and the Commitments
recorded therein for all purposes of this Agreement. The Register shall be available for
inspection by Borrower or any Lender at any reasonable time and from time to
time upon reasonable prior notice.
(d)
Notwithstanding anything in this Agreement
to the contrary, no assignment under Section 12.4(a) of any rights or
obligations under or in respect of the Loans or the Notes evidencing such Loans
shall be effective unless and until (i) Agent shall have recorded the
assignment pursuant to Section 12.4(c) and (ii) the assignor Lender or the Transferee has paid to Agent a
processing fee (not at the expense of any Credit Party) in the amount of $3,500
(provided no such processing fee shall be required to be paid in connection
with an assignment by a Lender to another Lender, an Eligible Assignee that is
an Affiliate of such Lender or a Related Fund of such Lender). Upon its receipt of a Lender Addition
Agreement executed by an assigning Lender and an Transferee, Agent shall (i) promptly
accept such Lender Addition Agreement and (ii) on the effective date
determined pursuant thereto record the information contained therein in the Register
and give prompt notice of such acceptance and recordation to the Lenders and
Borrower. On or prior to such effective
date, the assigning Lender shall surrender any outstanding Notes held by it all
or a portion of which are being assigned, and Borrower, at its own expense,
shall, upon the request of Agent, the assigning Lender or the Transferee, as
applicable, execute and deliver to Agent, within five (5) Business Days of
any request, new Notes to reflect the interest held by the assigning Lender and
its Transferee.
(e)
Except as otherwise provided in this Section 12.4,
no Lender shall, as between Borrower and that Lender, be relieved of any of its
obligations hereunder as a result of any sale, assignment, transfer or
negotiation of, or granting of participations in, all or any part of the Loans
or other Obligations owed to such Lender.
Each Lender may furnish any information concerning the Credit Parties in
the possession of that Lender from time to time to assignees and participants
(including prospective assignees and participants), subject to confidentiality
requirements, if any, hereunder.
(f)
Notwithstanding any other provision set
forth in this Agreement, any Lender may at any time create a security interest
in all or any portion of its rights under this
59
Agreement,
including, without limitation, the Loans owing to it and the Notes held by it
and the other Loan Documents and its rights in the Collateral.
(g)
Each Credit Party agrees to provide
commercially reasonable efforts to assist any Lender in assigning or selling
participations in all or any part of any Loans made by such Lender to a
potential Transferee or Participant identified by such Lender.
(h)
Notwithstanding anything in the Loan Documents
to the contrary, (i) CapitalSource and its Affiliates shall not be
required to execute or deliver a Lender Addition Agreement in connection with
any transaction involving CapitalSource and any of its Affiliates, or the
lenders or funding or financing sources of CapitalSource or any of its
Affiliates, (ii) subject to the provisions at the end of this paragraph,
no lender to or Affiliate, funding or financing source of CapitalSource or any
of its Affiliates shall be considered a Transferee, and (iii) there shall
be no limitation or restriction on (A) the ability of CapitalSource or any
of its Affiliates to assign or otherwise transfer any Loan Document, Commitment
or Obligation to any such Affiliate or lender or financing or funding source or
(B) any such lender’s or funding or financing source’s ability to assign
or otherwise transfer any Loan Document, Commitment or Obligation; provided,
however, CapitalSource shall continue to be liable as a “Lender” under the Loan
Documents unless such Affiliate, lender or funding or financing source executes
and delivers a Lender Addition Agreement and thereby becomes a “Lender.”
(i)
The Loan Documents shall be binding upon
and inure to the benefit of each Lender, Agent, each Transferee, each
Participant (to the extent expressly provided herein only) and all future
holders of the Loans, the Notes, the Obligations and/or any of the Collateral,
and each of their respective successors and assigns. Each Loan Document shall be binding upon the
Persons other than Lenders and Agent that are parties thereto and their
respective successors and assigns; provided that, no such Person shall assign,
delegate or transfer any Loan Document or any of its rights or obligations
thereunder without the prior written consent of Agent and each Lender. No rights are intended to be created under
any Loan Document for the benefit of any third party donee, creditor or
incidental beneficiary of any Credit Party.
Nothing contained in any Loan Document shall be construed as a
delegation to Agent or any Lender of any other Person’s duty of performance.
12.5
Reinstatement;
Application of Payments
To the extent that any payment made or received with respect to the
Obligations is subsequently invalidated, determined to be fraudulent or
preferential, set aside, defeased or required to be repaid to a trustee, debtor
in possession, receiver, administrator, custodian or any other similar Person
under any Debtor Relief Law, common law or equitable cause or any other law,
then the Obligations intended to be satisfied by such payment shall be revived
and shall continue as if such payment had not been received by Agent or any
Lender and the Liens created by the Security Documents shall be revived
automatically without any action on the part of any party hereto and shall
continue as if such payment had not been received by Agent or such Lender. Except as specifically provided in this
Agreement, any payments with respect to the Obligations received shall be
credited and applied in such manner and order as Agent shall decide in its sole
discretion.
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12.6
Indemnity
The Credit Parties, jointly and severally, hereby indemnify Agent and
each Lender, and their respective Affiliates, managers, members, officers, employees,
agents, representatives, successors, assigns, accountants and attorneys
(collectively, the “Indemnified Persons”) from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses and disbursements of any kind or nature whatsoever
(including, without limitation, reasonable fees and disbursements of counsel
and in-house documentation and diligence fees and legal expenses) which may be
imposed on, incurred by or asserted against any Indemnified Person with respect
to or arising out of, or in any litigation, proceeding or investigation
instituted or conducted by any Person with respect to any aspect of, or any
transaction contemplated by, or any matter related to, any Loan Document, any
Term Loan Document, any Related Document or any agreement, document or
transaction contemplated thereby, whether or not such Indemnified Person is a
party thereto, except to the extent a final and nonappealable order of judgment
binding on such Indemnified Person of a court of competent jurisdiction
determines the same arose out of the gross negligence or wilful misconduct of
such Indemnified Person. If any
Indemnified Person uses in-house counsel for any purpose for which the Credit
Parties are responsible to pay or indemnify, the Credit Parties expressly agree
that their indemnification obligations include reasonable charges for such work
commensurate with the reasonable fees that would otherwise be charged by
outside legal counsel selected by such Indemnified Person in its sole
discretion for the work performed. Agent
agrees to give Borrower reasonable notice of any event of which Agent becomes
aware for which indemnification may be required under this Section 12.6,
and Agent may elect (but is not obligated) to direct the defense thereof. Any Indemnified Person may take such actions
as it deems necessary and appropriate to investigate, defend or settle any
event or take other remedial or corrective actions with respect thereto as may
be necessary for the protection of such Indemnified Person or the Collateral;
provided, however, that the Indemnified Person shall not settle, compromise or
admit any liability or wrongdoing without the prior written consent of the
Borrower (which consent shall not be unreasonably withheld or delayed). Notwithstanding the foregoing, if any insurer
agrees to undertake the defense of an event (an “Insured Event”), Agent agrees
not to exercise its right to select counsel to defend the event if that would
cause Borrower’s insurer to deny coverage; provided, however, that each
Indemnified Person reserves the right to retain counsel to represent such
Indemnified Person with respect to an Insured Event at its sole cost and
expense. To the extent that Agent or any
Lender obtains recovery from a third party other than an Indemnified Person of
any of the amounts that the Credit Parties have paid to Agent or any Lender
pursuant to the indemnity set forth in this Section 12.4, then Agent
and/or any such Lender shall promptly pay to Borrower the amount of such
recovery. Without limiting any of the
foregoing, the Credit Parties, jointly and severally, indemnify the Indemnified
Parties for all claims for brokerage fees or commissions by any person claiming
by, through or under any Credit Party or Affiliate thereof which may be made in
connection with respect to any aspect of, or any transaction contemplated by or
referred to in, or any matter related to, any Loan Document, any of the Term
Loan Documents, any Related Document or any other agreement, document or
transaction contemplated thereby.
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12.7
Notice
Subject to
Section 12.3
, any notice or request under any
Loan Document shall be given to any party to this Agreement at such party’s
address set forth beneath its signature on the signature page to this
Agreement, or at such other address as such party hereafter may specify in a
notice given in the manner required under this Section 12.7. Any notice or request hereunder shall be
given only by, and shall be deemed to have been received upon (each, a “Receipt”): (i) registered or certified mail, return
receipt requested, on the date on which such notice or request is received as
indicated in such return receipt, (ii) delivery by a nationally recognized
overnight courier, one (1) Business Day after deposit with such courier,
or (iii) facsimile or electronic transmission, in each case upon telephone
or further electronic communication from the recipient acknowledging receipt
(whether automatic or manual from recipient), as applicable.
12.8
Severability;
Headings; Counterparts
If any provision of any Loan Document is adjudicated to be invalid
under applicable laws or regulations, such provision shall be inapplicable to
the extent of such invalidity without affecting the validity or enforceability
of the remainder of the Loan Documents which shall be given effect so far as
possible. The headings in the Loan
Documents are intended for convenience and reference only and shall not affect
the meaning or interpretation of the Loan Documents. The Loan Documents may be executed in one or
more counterparts (which taken together, as applicable, shall constitute one
and the same instrument) and by facsimile transmission, which facsimile
signatures shall be considered original executed counterparts. Each party to this Agreement agrees that it
will be bound by its own facsimile signature and that it accepts the facsimile
signature of each other party.
12.9
Expenses
The Credit Parties hereby jointly and severally agree to pay on demand,
whether or not the Closing occurs, all reasonable costs and expenses incurred
by Agent, Lenders and/or their Affiliates, including, without limitation,
documentation and diligence fees and expenses, all search, audit, appraisal,
recording, professional and filing fees and expenses and all other
out-of-pocket charges and expenses, and reasonable attorneys’ fees and
expenses, (i) in any effort to enforce, protect or collect payment of any
Obligation or to enforce any Loan Document, any Related Document or any related
agreement, document or instrument, (ii) in connection with entering into,
negotiating, preparing, reviewing and executing the Loan Documents, the Term
Loan Documents, the Related Documents and/or any related agreements, documents
or instruments, (iii) arising in any way out of the administration of the
Obligations or the taking or refraining from taking by Agent or any Lender of
any action requested by any Credit Party, (iv) in connection with
instituting, maintaining, preserving, enforcing and/or foreclosing on the Liens
in any of the Collateral or securities pledged under the Loan Documents,
whether through judicial proceedings or otherwise, (v) in defending or
prosecuting any actions, claims or proceedings arising out of or relating to
Agent’s and/or Lenders’ transactions with the Credit Parties, (vi) in
seeking, obtaining or receiving any advice with respect to its rights and
obligations under any Loan Document, any Term Loan Document, any Related
Document and any related agreement, document or instrument, (vii) arising
out of or relating to any Default or Event of Default or as a result thereof, (viii) in
connection with all actions, visits, audits and
62
inspections undertaken by Agent or Lenders or
their Affiliates pursuant to the Loan Documents, the Term Loan Documents, any
Related Document, and/or (ix) in connection with any modification,
restatement, supplement, amendment, waiver or extension of any Loan Document,
any Term Loan Document, any Related Document and/or any related agreement,
document or instrument. All of the
foregoing shall be charged to Borrower’s account and shall be part of the
Obligations. If Agent, any Lender or any
of their Affiliates uses in-house counsel for any purpose under any Loan
Document for which the Credit Parties are responsible to pay or indemnify, the
Credit Parties expressly agree that their Obligations include reasonable
charges for such work commensurate with the reasonable fees that would
otherwise be charged by outside legal counsel selected by Agent, such Lender or
such Affiliate in its sole discretion for the work performed. Without limiting the foregoing, Borrower
shall pay all taxes (other than taxes based upon or measured by a Lender’s
income or revenues or any personal property tax), if any, in connection with
the issuance of any Note and the filing and/or recording of any documents
and/or financing statements.
Notwithstanding anything to the contrary contained herein or in any
other Loan Document, in no event shall the Credit Parties be liable for any
costs or expenses relating to or arising out of the syndication or
participation of the Loan, unless such syndication or participation is at the
request of any Credit Party.
12.10
Entire
Agreement
This Agreement and the other Loan Documents to which the Credit Parties
are parties constitute the entire agreement between and among the Credit
Parties, Agent and Lenders with respect to the subject matter hereof and
thereof, and supersede all prior agreements and understandings (including,
without limitation, the letter dated on or about September 8, 2005)
relating to the subject matter hereof or thereof. Execution of this Agreement by the Credit
Parties constitutes a full, complete and irrevocable release of any and all
claims which any Credit Party may have at law or in equity in respect of all
prior discussions and understandings, oral or written, relating to the subject
matter of this Agreement and the other Loan Documents. Each party hereto acknowledges that it has
been advised by counsel in connection with the negotiation and execution of
this Agreement and is not relying upon oral representations or statements
inconsistent with the terms and provisions hereof. The obligations of the Credit Parties and the
rights of the Lenders and the Agent under this Agreement and the Loan Documents
shall be in addition to any obligation and rights under the Term Loan
Documents.
12.11
Approvals
and Duties
Unless expressly provided herein to the contrary, any approval,
consent, waiver or satisfaction of Agent or Lenders with respect to any matter
that is the subject of any Loan Document may be granted or withheld by Agent or
Lenders, as applicable, in their sole and absolute discretion. Other than Agent’s duty of reasonable care
with respect to Collateral delivered pursuant to the Loan Documents in
accordance with applicable law (to the extent not waivable), Agent and Lenders
shall have no responsibility for or obligation or duty with respect to any of
the Collateral or any matter or proceeding arising out of or relating thereto,
including, without limitation, any obligation or duty to collect any sums due
in respect thereof or to protect or preserve any rights pertaining thereto.
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12.12
Confidentiality
and Publicity
(a)
Each Credit Parties
agrees, and agrees to cause each of its Subsidiaries, (i) except to the
extent required by applicable law or regulations (in which case, except in
connection with the Securities Act and the Securities Exchange Act, as amended
and the rules thereunder, each Credit Party shall, and shall cause its
Subsidiaries to, use its best efforts to obtain confidential treatment of such
information), not to transmit or disclose any provision of any Loan Document to
any Person (other than to such Credit Party’s directors, advisors, counsel,
accountants, officers and employees on a need-to-know basis), in any such case
without Agent’s prior written consent, and (ii) to inform all Persons
receiving information related to the Loan Documents, except through disclosure pursuant
to the Securities Act and the Securities Exchange Act, as amended, and the rules thereunder,
of the confidential nature of the Loan Documents and to direct them not to
disclose the same to any other Person, and to require each of them to be bound by
these provisions. Except for filings
submitted pursuant to the Securities Act and the Securities Exchange Act, and
the rules thereunder, the Credit Parties shall provide in writing any
materials that the Credit Parties or any of their Subsidiaries prepare that
contain Agent’s or any Lender’s name or describe or refer to any Loan Document,
any of the terms thereof or any of the transactions contemplated thereby prior
to its use, disclosure or distribution, and Agent and each Lender reserves the
right to review and approve in advance (which approval shall not be
unreasonably withheld or delayed) all such materials. The Credit Parties shall not, and shall not
permit any of their Subsidiaries to, use either Agent’s or any Lender’s name
(or the name of any of Agent’s or any Lender’s Affiliates) in connection with
any of its Business; provided, that Borrower may disclose the Lenders’ names,
the aggregate principal amount of the Loans outstanding and other principal
terms of such Loans to (x) its shareholders and other equity owners and
prospective purchasers of debt or equity securities of Borrower and (y)
Governmental Authorities regulating the Business in accordance with applicable
legal requirements. Nothing contained in
any Loan Document is intended to permit or authorize any Credit Party or any of
its Subsidiaries to contract on behalf of Agent or any Lender. Notwithstanding the foregoing, copies of the
Loan Documents and information concerning the applicable provisions of such
Loan Documents may be delivered to each holder of the Subordinated Notes in
connection with matters relating to the Seller Subordination Agreement.
(b)
Agent and each Lender
agree to exercise their best efforts to maintain in confidence, in accordance
with its customary procedures for handling confidential information, all
non-public information that any Credit Party or Subsidiary thereof furnishes to
Agent or such Lender on a confidential basis clearly identified as such (“Confidential
Information”), other than any such Confidential Information that becomes
generally available to the public other than as a result of a breach by Agent
or any Lender of its obligations hereunder or that is or becomes available to
Agent or any Lender from a source other than a Credit Party and that is not, to
the actual knowledge of the recipient thereof, subject to obligations of
confidentiality with respect thereto; provided, however, that Agent and each
Lender shall, in any event, have the right to deliver copies of any such
information, and to disclose any such information, to:
(i)
its
affiliates, lenders, funding or financing sources (or its affiliates’ or
lenders’ funding or financing sources), portfolio management services and
partners that are obligated to maintain the confidentiality of such Confidential
Information;
64
(ii)
directors,
officers, trustees, employees, agents, attorneys, professional consultants and
rating agencies;
(iii)
any
other Lender and any successor Agent;
(iv)
(A) subject
to provisions substantially similar to those contained in this Section 12.10
any potential Transferee or Participant or (B) any Person if the
disclosure consists of general portfolio information and does not identify any
Credit Party specifically by name;
(v)
any
regulatory authority or examiner, or any insurance industry association,
regulating or having jurisdiction over Agent or any Lender and requiring or
requesting such disclosure; and
(vi)
any
other Person to which such delivery or disclosure may be necessary (A) in
compliance with any applicable law, rule, regulation or order, (B) in
response to any subpoena or other legal process or informal investigative
demand, (C) in connection with any litigation to which Agent or such
Lender is a party, or (D) in connection with the exercise or enforcement,
or potential exercise or enforcement, of any of the rights and/or remedies of
Agent and/or the Lenders under this Agreement and the other Loan Documents at
any time during the existence of an Event of Default.
Should Agent or any Lender be required to disclose any such information
by virtue of a subpoena or similar process by any court or any tribunal, or
agency pursuant to items (v) or (vi) above, then Agent or such Lender
shall promptly notify the applicable Credit Party thereof so as to allow such
Credit Party, at its sole cost and expense, to seek a protective order or to
take any other appropriate action to protect its rights. Further, the foregoing notwithstanding, the
Credit Parties agree that Agent, any Lender or any Affiliate of Agent or any
Lender may (i) disclose a general description of transactions arising
under the Loan Documents, the Term Loan Documents, and the Related Documents
for advertising, marketing or other similar purposes, and (ii) use any
Credit Party’s name, logo or other indicia germane to such party in connection
with such advertising, marketing or other similar purposes.
(c)
The obligations of
Agent and Lenders under this Section 12.10 shall supersede and replace the
obligations of Agent and Lenders under any confidentiality agreement in respect
of the financing evidenced hereby executed and delivered by Agent or any Lender
prior to the date hereof.
12.13
No
Consequential Damages
No party to this Agreement or any other Loan Document, nor any agent or
attorney of such party or any Lender, shall be liable to any other party to
this Agreement or any other Person on any theory of liability for any special,
indirect, consequential or punitive damages.
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XIII.
TAXES
13.1
Taxes
(a)
Subject to this Section 13.1, any and
all payments by Borrower or any other Credit Party to each Lender or Agent
under this Agreement or any other Loan Document shall be made free and clear
of, and without deduction or withholding for, any and all present or future
taxes, levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, excluding, in the case of each Lender and
Agent, such taxes (including income taxes or franchise taxes) as are imposed on
or measured by the net income of such Lender or Agent, respectively, by the
jurisdiction under the laws of which such Lender or Agent, as the case may be,
is organized or maintains a Lending Office or other taxable presence or any
political subdivision thereof (all such non-excluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities being hereinafter referred to
as “Taxes”).
(b)
In addition, Borrower and the other Credit
Parties shall pay any present or future stamp or documentary taxes or any other
excise or property taxes, charges or similar levies which arise from any
payment made hereunder or from the execution, delivery or registration of, or
otherwise with respect to, this Agreement or any other Loan Document
(hereinafter referred to as “Other Taxes”).
(c)
Subject to this Section 13.1, the
Credit Parties shall indemnify and hold harmless each Lender and Agent for the
full amount of Taxes or Other Taxes (including any Taxes or Other Taxes imposed
by any jurisdiction on amounts payable under this Section 13.1) paid by
such Lender or Agent and any liability (including penalties, interest,
additions to tax and expenses) arising therefrom or with respect thereto,
whether or not such Taxes or Other Taxes were correctly or legally asserted
except in the case of Taxes or Other Taxes incurred due to the gross negligence
or wilful misconduct of such Lender or Agent.
Payment under this indemnification shall be made within ten (10) days
from the date any Lender or Agent makes written demand therefor.
(d)
If any Credit Party shall be required by law
to deduct or withhold any Taxes or Other Taxes from or in respect of any sum
payable hereunder to any Lender or Agent, then, subject to this Section 13.1:
(i)
the
sum payable shall be increased as necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 13.1), such Lender or Agent, as the case may be, receives an
amount equal to the sum it would have received had no such deductions been
made;
(ii)
such
Credit Party shall make such deductions; and
(iii)
such
Credit Party shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law.
(e)
Within ten (10) days after the date of
any payment by any Credit Party of Taxes or Other Taxes, Borrower shall furnish
to Agent (and the applicable Lender) the original
66
or a certified
copy of a receipt evidencing payment thereof, or other evidence of payment
satisfactory to Agent (and the applicable Lender).
(f)
No Lender shall be entitled to any
additional amounts solely in respect of a deduction or withhold for or on
account of United Kingdom Taxes (a “UK Withholding Tax Deduction”) in respect
of interest payable by the Borrower hereunder, if on the date on which the
payment falls due, the payment could have been made to such Lender without a UK
Withholding Tax Deduction if such Lender was entitled under a Treaty to a full
exemption from UK Withholding Tax Deductions in respect of interest payable
hereunder, but on such date such Lender is not or has ceased to be entitled to
a full exemption from UK Withholding Tax Deductions other than as a result of
any change after the Closing Date (or, if later, the date it became a Lender
hereunder) in any existing law, regulation, treaty or directive or in the
interpretation or application thereof.
(g)
Notwithstanding any other provision of any
Loan Document but subject to the next following sentence, if at any time after
the Closing or the making of any Advance or funding of the Term Loan
(x) any change in any existing law, regulation, treaty or directive or in
the interpretation or application thereof, (y) any new law, regulation,
treaty or directive enacted or any interpretation or application thereof, or
(z) compliance by Agent or any Lender with new request or directive
(whether or not having the force of law) from any Governmental Authority: (i) subjects
Agent or such Lender to any tax, levy, impost, deduction, assessment, charge or
withholding imposed by any taxing authority with respect to any Loan Document,
or changes the basis of taxation of payments to Agent, for its own account
and/or for the benefit of Lenders, of any amount payable thereunder (except in
each case, for net income taxes imposed generally by any taxing authority under
the law of the jurisdiction where a Lender or the Agent is organized or where
it has a Lending Office or its principal place of business (or, if different,
in which, other than by reason of its execution and performance of the Loan
Documents, it is treated as resident for tax purposes) or, in the case of any
Lender, in which its applicable lending office is located, with respect to
interest or commitment fees or other fees payable hereunder or changes in the
rate of tax on the overall net income of Agent and/or such Lender), or (ii) imposes
on Agent or Lenders any other condition or increased cost (not related to
taxation) in connection with the transactions contemplated thereby or
participations therein; and the result of any of the foregoing is to increase
the cost to Agent or Lenders of making or continuing or maintaining any Loan
hereunder or to reduce any amount receivable hereunder, then, in any such case,
the Credit Parties shall promptly pay to the Agent, for its own account and/or
for the benefit of Lenders, any additional amounts necessary to compensate
Agent and each Lender, on an after-tax basis, for such additional cost or
reduced amount as determined by Agent and/or such Lender (acting reasonably and
in good faith). The Credit Parties shall
not be required to pay any amounts as provided in the preceding sentence, (i) to
the extent Agent or such Lender shall have already been compensated for such
increased cost or reduced amount under
Section 2.11 or 2.12
of this
Agreement, (ii) to the extent such increased cost or reduced amount is
attributable to the wilful breach by Agent or such Lender (or an Affiliate of
Agent or such Lender), as applicable, of any law or regulation, (iii) to
the extent such increased cost or reduced amount is attributable to a
withholding for or on account of Tax or (iv) to the extent Agent or such
Lender shall have already been compensated, or is not entitled to compensation,
for such increased cost or reduced amount under Section 13.1(c). If Agent or any Lender becomes entitled to
claim any additional amounts pursuant to this
Section 13.1
it shall
reasonably promptly after obtaining knowledge
67
thereof notify
Borrower of the event by reason of which Agent or such Lender has become so
entitled, and each such notice of additional amounts payable pursuant to this
Section 13.1
submitted by Agent or such Lender to the Credit Parties shall, absent manifest
error, be final, conclusive and binding for all purposes.
(h)
If at any time the Borrower or any other
Credit Party is required by law to make any deduction or withholding from any
sum payable by it under this Agreement or any other Loan Document (or if
subsequently there is any change in the rates at which or the manner in which
such deductions or withholdings are calculated), it shall promptly notify Agent
upon becoming aware of the same. In addition,
each Lender shall promptly notify Agent upon becoming aware of any
circumstances as a result of which Borrower or any other Credit Party is or
would be required to make any deduction or withholding from any sum payable by
it under this Agreement or under any other Loan Document (or if subsequently
there is or would be any change in the rates at which or the manner in which
such deductions or withholdings are calculated), whether as a result of such
Lender ceasing to beneficially own interest payable hereunder or
otherwise. If Agent receives such a
notification from a Lender it shall promptly notify the Borrower. Any Lender which ceases to be a Treaty Lender
by reason of an action taken by such Lender or by reason of a failure by such
Lender to take any action as required by this Agreement shall, upon becoming
aware of such action or failure, also promptly notify Agent and the Borrower of
its change in status, the date of such change and the reason for its change in
status. The Borrower or any Credit Party,
as appropriate, shall pay the full amount deducted to the relevant taxing or
other authority in accordance with the applicable law and promptly provide an
original tax certificate of withholding to the Agent or relevant Lender (which,
in the case of a withholding under United Kingdom tax legislation, is in the
form of a duly completed Form R185), as appropriate (or other evidence
reasonably satisfactory to such Person).
(i)
Upon written request by Borrower, each
Lender that is not a “United States Person” within the meaning of Section 7701(a)(30)
of the Code (a “Non-U.S. Lender”) shall deliver to Borrower and Agent two (2) copies
of each U.S. Internal Revenue Service Form W-8BEN or Form W-8ECI, or
any subsequent versions thereof or successors thereto, 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 a certificate
representing that such Non-U.S. Lender is not a “bank” for purposes of Section 881(c) of
the Code, is not a ten (10%) percent shareholder (within the meaning of Section 871(h)(3)(B) of
the Code) of Borrower and is not a controlled foreign corporation related to
Borrower (within the meaning of Section 864(d)(4) of the Code)),
properly completed and duly executed by such Non-U.S. Lender claiming complete
exemption from, or a reduced rate of, U.S. federal withholding tax on all
payments by Borrower under this Agreement and the other Loan Documents. Such forms shall be delivered by each
Non-U.S. Lender on or before the date it becomes a party to this
Agreement. In addition, each Non-U.S.
Lender shall deliver such forms (or other forms or documents to the extent
required) promptly upon the obsolescence or invalidity of any form previously
delivered by such Non-U.S. Lender or upon any changes in the forms or documents
required hereunder for establishing that payments to the Non-US Lender are exempt
from withholding. Each Non-U.S. Lender
shall promptly notify Borrower at any time it determines that it is no longer
in a position to provide any previously delivered certificate to Borrower (or
any other form of certification adopted by the U.S. taxing authorities for such
purpose).
68
Notwithstanding
any other provision of this section, a Non-U.S. Lender shall not be required to
deliver any form pursuant to this subsection that such Non-U.S. Lender is
not legally able to deliver.
(j)
No Credit Party shall be required to pay
any additional amounts in respect of United States Federal income tax pursuant
to this Section 13.1 to Agent or to any Lender for the account of any
Lending Office of such Lender if the obligation to pay such additional amounts
would not have arisen but for a failure by such Lender to deliver the forms or
other documents under Section 13.1(i) in respect of such Lending
Office.
(k)
To the extent that the Borrower or another
Credit Party reasonably determines that (i) Agent and/or any Lender may
recover Taxes deduction from payments made by Borrower or such Credit Party
under any Loan Document to the extent Borrower or such Credit Party shall have
paid additional amounts in respect of such Taxes under
Section 13.1(d)
or
(ii) a withholding or deduction for or on account of taxes may be avoided
or reduced if, in either case, Agent or a Lender completes certain procedural
formalities and/or provides properly completed and executed documentation
prescribed by applicable law, Agent or such Lender shall within a reasonable
timeframe cooperate with Borrower to complete such procedural formalities
and/or provide such documentation to the Borrower (in each case, upon the
Borrower’s reasonable request and at the Borrower’s sole cost and expense);
provided
that Agent or such Lender, as the case may be, determines in its sole, good
faith reasonable judgment that completing such procedural formalities and/or
providing such documentation will not disadvantage or prejudice such Agent or
Lender in any manner.
(l)
If the United Stated Internal Revenue
Service or any other Governmental Authority of the United States or any other
country or any political subdivision thereof asserts a claim that Agent did not
properly withhold tax from amounts paid to or for the account of any Lender
(because the appropriate form was not delivered or properly completed or for
any other reason other than the gross negligence or wilful misconduct of
Agent), such Lender shall indemnify Agent fully for all amounts paid, directly
or indirectly, by Agent as tax, withholding therefore, or otherwise, including
penalties, interest and additions to tax, and including taxes imposed by any
jurisdiction on amounts payable to Agent under this paragraph, together with
all costs and expenses related thereto (including attorneys fees and time
charges of attorneys for Agent, which attorneys may be employees of
Agent). The obligations of the Lenders
under this paragraph shall survive the payment of the Obligations and
termination of this Agreement.
(m)
If Agent or any Lender determines in its
sole, good faith reasonable judgment that it has received a remission for, or a
refund or direct credit in respect of and specifically associated with any
Taxes or Other Taxes as to which it has been indemnified by any Credit Party,
or with respect to which such Credit Party has paid additional amounts, it
shall promptly notify the Credit Party of such remission, refund or direct
credit and shall within 30 days from the date of receipt of such refund or
benefit of such remission or direct credit pay over the amount of such refund
or benefit of such remission or direct credit (including any interest paid or
credited by the relevant Governmental Authority attributable to such remission,
refund or direct credit) to the Credit Party but only to the extent of
indemnity payments made, or additional amounts paid, by such Credit Party with
respect to the Taxes or Other Taxes giving rise to such remission, refund or
direct credit, net of all out-of-pocket expenses of such Person.
69
Notwithstanding
any other provision of this Agreement, if Agent or any Lender has made a
payment to any Credit Party in respect of a remission, refund or direct credit
of Taxes or Other Taxes pursuant to the preceding sentence, to the extent any
remission is withdrawn or any refund or direct credit is required to be repaid
to the relevant taxing authority, such amount shall be treated as a Tax subject
to indemnification under this
Section 13.1
.
(n)
If, at any time, Borrower requests any
Lender to deliver any forms or other documentation in addition to those forms
required to be delivered by such Lender pursuant to Section 13.1, then
Borrower shall, on demand of such Lender through Agent, reimburse such Lender
for any costs and expenses (including attorneys’ fees and expenses) reasonably
incurred by such Lender in the preparation or delivery of such forms or other
documentation.
(o)
If Borrower is required to pay additional
amounts to any Lender or Agent pursuant to Section 13.1, then such Lender
shall use its reasonable efforts (consistent with legal and regulatory
restrictions) to change the jurisdiction of its Lending Office so as to eliminate
any such additional payment by Borrower which may thereafter accrue if such
change in the judgment of such Lender is not otherwise disadvantageous to such
Lender. In addition to the foregoing and
if such Lender deems it commercially reasonable in its sole discretion, such
Lender agrees to obtain a refund or credit for any additional amounts paid by
Borrower to such Lender or Agent pursuant to Sections 13.1, and, to the extent
any such refund or credit is obtained, apply such amounts to the outstanding
Obligations owing by such Credit Party under this Agreement.
13.2
Certificates of Lenders
Any Lender claiming reimbursement or compensation pursuant to this Article XIII
shall deliver to Borrower (with a copy to Agent) a certificate setting forth in
reasonable detail the amount payable to such Lender hereunder and such
certificate shall be conclusive and binding on the Credit Parties in the
absence of manifest error.
13.3
Survival
The agreements and obligations of the Credit Parties in this Article XIII
shall survive the payment of all other Obligations.
XIV.
GUARANTEE AND INDEMNITY
14.1
Guarantee
and indemnity
Each UK Guarantor irrevocably and unconditionally jointly and
severally:
(a)
guarantees to each Lender Party punctual
performance by each Borrower of all that Borrower’s obligations under the Loan
Documents;
(b)
undertakes with each Lender Party that
whenever a Borrower does not pay any amount when due under or in connection
with any Loan Document, that UK Guarantor shall immediately on demand pay that
amount as if it was the principal obligor; and
70
(c)
indemnifies each Lender Party immediately on
demand against any cost, loss or liability suffered by that Lender Party if any
obligation guaranteed by it is or becomes unenforceable, invalid or
illegal. The amount of the cost, loss or
liability shall be equal to the amount which that Lender Party would otherwise
have been entitled to recover.
14.2
Continuing
guarantee
This guarantee is a continuing guarantee and will extend to the
ultimate balance of sums payable by any Credit Party under the Loan Documents,
regardless of any intermediate payment or discharge in whole or in part.
14.3
Reinstatement
If any payment by a Credit Party or any discharge given by a Lender
Party (whether in respect of the obligations of any Credit Party or any
security for those obligations or otherwise) is avoided or reduced as a result
of insolvency or any similar event:
(a)
the liability of each Credit Party shall
continue as if the payment, discharge, avoidance or reduction had not occurred;
and
(b)
each Lender Party shall be entitled to
recover the value or amount of that security or payment from each Credit Party,
as if the payment, discharge, avoidance or reduction had not occurred.
14.4
Waiver
of defenses
The obligations of each UK Guarantor under this clause 14 will not
be affected by an act, omission, matter or thing which, but for this
clause 14, would reduce, release or prejudice any of its obligations under
this clause 14 (without limitation and whether or not known to it or any
Lender Party) including:
(a)
any time, waiver or consent granted to, or
composition with, any Credit Party or other person;
(b)
the release of any other Credit Party or any
other person under the terms of any composition or arrangement with any
creditor of any Credit Party;
(c)
the taking, variation, compromise, exchange,
renewal or release of, or refusal or neglect to perfect, take up or enforce,
any rights against, or security over assets of, any Credit Party or other
person or any non-presentation or non-observance of any formality or other
requirement in respect of any instrument or any failure to realize the full
value of any security;
(d)
any incapacity or lack of power, authority
or legal personality of or dissolution or change in the members or status of an
Credit Party or any other person;
(e)
any amendment (however fundamental) or
replacement of a Loan Document or any other document or security;
71
(f)
any unenforceability, illegality or
invalidity of any obligation of any person under any Loan Document or any other
document or security; or
(g)
any insolvency or similar proceedings.
14.5
Immediate recourse
Each UK Guarantor waives any right it may have of first requiring any
Lender Party (or any trustee or agent on its behalf) to proceed against or
enforce any other rights or security or claim payment from any person before
claiming from that UK Guarantor under this Article 14. This waiver applies irrespective of any law
or any provision of a Loan Document to the contrary.
14.6
Appropriations
Until all amounts which may be or become payable by the Credit Parties
under or in connection with the Loan Documents have been irrevocably paid in
full, each Lender Party (or any trustee or agent on its behalf) may:
(a)
refrain from applying or enforcing any other
monies, security or rights held or received by that Lender Party (or any
trustee or agent on its behalf) in respect of those amounts, or apply and
enforce the same in such manner and order as it sees fit (whether against those
amounts or otherwise) and no Guarantor shall be entitled to the benefit of the
same; and
(b)
hold in an interest-bearing suspense account
any monies received from any Guarantor or on account of any Guarantor’s
liability under this clause 14.
14.7
Deferral
of Guarantors’ rights
Until all amounts which may be or become payable by the Obligors under
or in connection with the Loan Documents have been irrevocably paid in full and
unless the Agent otherwise directs, no UK Guarantor will exercise any rights
which it may have by reason of performance by it of its obligations under the
Loan Documents:
(a)
to be indemnified by an Credit Party;
(b)
to claim any contribution from any other
guarantor of any Credit Party’s obligations under the Loan Documents; and/or
(c)
to take the benefit (in whole or in part and
whether by way of subrogation or otherwise) of any rights of the Lender Parties
under the Loan Documents or of any other guarantee or security taken pursuant
to, or in connection with, the Loan Documents by any Lender Party.
14.8
Release
of UK Guarantors’ right of contribution
If any UK Guarantor (a
“Retiring
Guarantor”
) ceases to be a UK Guarantor in accordance with the terms
of the Loan Documents for the purpose of any sale or other disposal
72
of that Retiring UK Guarantor then on the
date such Retiring UK Guarantor ceases to be a UK Guarantor:
(a)
that Retiring UK Guarantor is released by
each other UK Guarantor from any liability (whether past, present or future and
whether actual or contingent) to make a contribution to any other UK Guarantor
arising by reason of the performance by any other UK Guarantor of its
obligations under the Loan Documents; and
(b)
each other UK Guarantor waives any rights it
may have by reason of the performance of its obligations under the Loan
Documents to take the benefit (in whole or in part and whether by way of
subrogation or otherwise) of any rights of the Lender Parties under any Loan
Document or of any other security taken pursuant to, or in connection with, any
Loan Document where such rights or security are granted by or in relation to
the assets of the Retiring UK Guarantor.
14.9
Additional
security
This guarantee is in addition to and is not in any way prejudiced by
any other guarantee or security now or subsequently held by any Lender Party.
14.10
Guarantee
limitations
This guarantee does not apply to any liability to the extent that it
would result in this guarantee constituting unlawful financial assistance
within the meaning of sections 151 and 152 of the Act or any equivalent and
applicable provisions under the laws of the jurisdiction of incorporation of
the relevant Guarantor.
73
IN WITNESS WHEREOF, each of the parties has duly executed this
Revolving Facility Agreement as of the date first written above.
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BORROWER:
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EVOLVING SYSTEMS LTD
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By:
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Name:
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Brian R. Ervine
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Title:
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Director
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9777 Pyramid Court, Suite 100
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Englewood, CO 80112
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Attention:
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Anita T. Moseley, Company
Secretary
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Telephone:
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303 802-2599
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FAX:
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303 802-1138
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E-MAIL:
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atm@evolving.com
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UK GUARANTOR:
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Executed and delivered as a Deed by:
EVOLVING SYSTEMS HOLDINGS LTD
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By:
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/s/Brian R. Ervine
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Name:
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Brian R. Ervine
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Title:
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Director
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By:
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/s/ Anita T. Moseley
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Name:
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Anita T. Moseley
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Title:
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Company Secretary
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9777 Pyramid Court, Suite 100
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Englewood, CO 80112
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Attention:
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Anita T. Moseley, Company
Secretary
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Telephone:
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303 802-2599
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FAX:
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303 802-1138
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E-MAIL:
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atm@evolving.com
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[SIGNATURE PAGE TO REVOLVING FACILITY
AGREEMENT]
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CREDIT PARTY:
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Executed and delivered as a Deed by:
EVOLVING SYSTEMS, INC.
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By:
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/s/Brian R. Ervine
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Name:
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Brian R. Ervine
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Title:
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Executive Vice President and Chief
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Financial and Administrative Officer
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9777 Pyramid Court, Suite 100
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Englewood, CO 80112
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Attention:
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Anita T. Moseley, General Counsel
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Telephone:
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303 802-2599
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FAX:
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303 802-1138
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E-MAIL:
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atm@evolving.com
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CREDIT PARTY:
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Executed and delivered as a Deed by:
TELECOM SOFTWARE ENTERPRISES, LLC
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By:
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/s/Brian R. Ervine
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Name:
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Brian R. Ervine
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Title:
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Executive Vice President and Chief
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Financial and Administrative Officer
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9777 Pyramid Court, Suite 100
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Englewood, CO 80112
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Attention:
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Anita T. Moseley, General Counsel
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Telephone:
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303 802-2599
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FAX:
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303 802-1138
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E-MAIL:
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atm@evolving.com
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[SIGNATURE PAGE TO REVOLVING FACILITY
AGREEMENT]
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CREDIT PARTY:
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Executed and delivered as a Deed by:
EVOLVING SYSTEMS HOLDINGS, INC.
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By:
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/s/ Brian R. Ervine
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Name:
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Brian R. Ervine
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Title:
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Executive Vice President and Chief
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Financial and Administrative Officer
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9777 Pyramid Court, Suite 100
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Englewood, CO 80112
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Attention:
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Anita T. Moseley, General Counsel
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Telephone:
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303 802-2599
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FAX:
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303 802-1138
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E-MAIL:
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atm@evolving.com
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[SIGNATURE PAGE TO REVOLVING FACILITY
AGREEMENT]
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AGENT:
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CAPITALSOURCE FINANCE LLC
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By:
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/s/Steven A. Museles
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Name:
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Steve A. Museles
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Title:
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Senior Vice President
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LENDER:
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CSE FINANCE, INC
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By:
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/s/Steven A. Museles
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Name:
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Steven A. Museles
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Title:
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Senior Vice President
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CSE Finance, Inc
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4445 Willard Avenue, 12th Floor
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Chevy Chase, Maryland 20815
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Attention:
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Corporate Finance Group, Portfolio
Manager
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Telephone:
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(301) 841-2700
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FAX:
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(301) 841-2313
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E-MAIL:
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sladd@capitalsource.com
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[SIGNATURE PAGE TO REVOLVING FACILITY
AGREEMENT]
Schedule 6.7
Post Closing Deliverables
In accordance with Section 6.7 of the Agreement, the following
actions, items and deliverables, which were not completed on or before the
Closing Date as otherwise required by the Agreement, shall be completed, taken
and/or delivered to Required Lenders’ satisfaction on or before the respective
dates specified below. The Credit
Parties acknowledge that the Lenders are accommodating them by permitting the
Credit Parties to complete the following actions, items and deliverables on a
post-Closing basis. As such, the failure
to take, comply with or provide any of the actions or items referred to below
on or before the respective due date set forth below shall constitute an
immediate Event of Default under the Agreement, without further notice or
action by or on behalf of Agent, any Lender or any other Person. Nothing in this
Schedule 6.7
shall limit the effect of any provision of the Agreement or the Credit Parties’
obligations thereunder. Capitalized
terms used but not otherwise defined in this
Schedule 6.7
shall
have the meanings assigned to it in the Agreement.
1.
On
or before 31 January 2006, the Credit Parties and their Subsidiaries shall
execute the Transfer Pricing Agreements in form and substance approved by Agent
in its Permitted Discretion and deliver copies thereof to Agent.
2.
On
or before 31 December 2005, the Credit Parties shall procure the Life
Insurance Policy.
3.
The
Credit Parties shall cooperate with Agent to cause Lenders to provide a
back-to-back letter of credit in support of Letter of Guarantee No. 040/700115-0
mentioned on
Schedule 7.2
and shall then cause the issuer to
release any charge over the Property of the Credit Parties.
4. On or before the fifteenth
Business Day after the Closing Date Evolving Systems shall amend the
Certificate of Designations of the Series B Convertible Preferred Stock in
form and substance acceptable to Agent.
Exhibit A
Form of Borrowing
Certificate
BORROWING CERTIFICATE
DATED AS OF ,
20
EVOLVING SYSTEMS LTD., (“Borrower”), by the undersigned
duly authorized officer(s) of Borrower, hereby certifies to Agent and Lenders,
in accordance with the Revolving Facility Agreement dated as of [ ]
2005, among Borrower the other Credit Parties named therein, CapitalSource
Finance LLC, as Agent, and certain other Lenders party thereto from time to
time (as amended, supplemented or modified from time to time, the “Credit
Agreement;” all capitalized terms not defined herein have the meanings given
them in the Credit Agreement), and the other Loan Documents, that:
1.
In accordance with
Sections 2.1 and 4.2(a) of the Credit Agreement, Borrowers hereby
irrevocably request from Lenders an Advance under the Revolving Facility
pursuant to the Credit Agreement in the aggregate principal amount of $
(“Requested Advance”) to be made on ,
20 (the “Borrowing
Date”), which day is a Business Day.
2.
Immediately after giving
effect to the Requested Advance, the aggregate outstanding principal amount of
Advances under the Revolving Facility will not exceed the lesser of (i) the
Facility Cap less any Letter of Credit Usage outstanding and (ii) the
Aggregate Borrowing Availability in existence on the Borrowing Date.
3.
Attached hereto are all
consents, approvals and agreements from third parties necessary with respect to
the Requested Advance.
4.
The certifications,
representations, calculations and statements herein will be true and correct as
of the date hereof and on the Borrowing Date.
5.
All conditions and
provisions of Section 4.2 and, if applicable, Section 4.1, of the
Credit Agreement are as of the date hereof, and will be as of the Borrowing Date
(if applicable), fully satisfied or waived
6.
To the best of Borrowers’
knowledge, no recoupments and/or recoupments of any third-party payor are being
sought, requested or claimed, or, to Borrowers’ knowledge, threatened against
any Credit Party or any Credit Party’s Affiliates except the following amounts: .
IN WITNESS WHEREOF, the undersigned has caused this
certificate to be executed as of the day first written above.
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EVOLVING SYSTEMS, LTD.
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By:
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Name:
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Title:
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[SIGNATURE PAGE TO BORROWING CERTIFICATE]
2
Exhibit B-1
Financial Covenants
1.
Leverage Ratio
. No Credit Party shall permit the Leverage
Ratio for the twelve (12) month period ending on any date set forth in the
table below to exceed the maximum ratio set forth in the table below opposite
such date:
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Date
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Maximum Ratio
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December 31 2005, March 31 2006, June 30 2006
and September 30 2006
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2.50:1
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|
|
|
|
|
December 31 2006, March 31 2007, June 30 2007
and September 30 2007
|
|
2.25:1
|
|
|
|
|
|
|
|
December 31 2007, March 31 2008, June 30 2008
and September 30 2008
|
|
2.00:1
|
|
|
|
|
|
|
|
December 31 2008, March 31 2009
and the end of each calendar quarter thereafter
|
|
1.75:1
|
|
2.
Minimum EBITDA
. No Credit Party shall permit EBITDA of the
Credit Parties and their consolidated Subsidiaries on a consolidated basis,
without duplication, for the twelve (12) month period ending on any date set
forth in the table below to be less than the minimum amount set forth in the table
below opposite such date:
|
Date
|
|
Minimum EBITDA
|
|
|
|
|
|
|
|
December 31 2005, March 31 2006
and June 30 2006
|
|
$
|
5,500,000
|
|
|
|
|
|
|
|
September 30 2006 and December 31 2006
|
|
$
|
6,000,000
|
|
|
|
|
|
|
|
March 31 2007 and June 30 2007
|
|
$
|
6,500,000
|
|
|
|
|
|
|
|
September 30 2007 and December 31
2007
|
|
$
|
7,000,000
|
|
|
|
|
|
|
|
March 31 2008 and the end of each
quarter thereafter
|
|
$
|
7,250,000
|
|
3.
Fixed Charge Coverage Ratio
. No Credit Party shall permit the Fixed Charge
Coverage Ratio for the twelve (12) month period ending on any date set forth in
the table below to be less than the minimum ratio set forth in the table below
opposite such date:
|
Date
|
|
Minimum Ratio
|
|
|
|
|
|
|
|
December 31 2005, March 31 2006
and June 30 2006
|
|
1.15:1
|
|
|
|
|
|
|
|
September 30 2006 and the end of each
quarter thereafter
|
|
1.20:1
|
|
4.
Capital Expenditures
. No Credit Party shall make or commit to make
Capital Expenditures for any fiscal year (or shorter period) set forth in the
table below in an aggregate amount for all Credit Parties and their
consolidated Subsidiaries, without duplication, exceeding the dollar limitation
set forth in the table below
(the “Capital
Expenditure Limitation”)
with
respect to such fiscal year (or shorter period):
|
Fiscal Year/Period:
|
|
Limitation
|
|
|
|
|
|
|
|
Fiscal year ending December 31, 2005
|
|
$
|
1,400,000
|
|
|
|
|
|
|
|
Fiscal year ending December 31, 2006
and each fiscal year thereafter until the Maturity Date
|
|
$
|
1,400,000
|
|
provided, however, in the event the Credit
Parties do not expend the entire respective Capital Expenditure Limitation in
any fiscal year, the Credit Parties may carry forward to the immediately
succeeding fiscal year (but not to subsequent fiscal years) fifty percent (50%)
of such unutilized portion. All Capital
Expenditures during any fiscal year shall be applied first to reduce the
applicable Capital Expenditure Limitation of such fiscal year and then to
reduce the carry-forward from the previous fiscal year (or shorter period), if
any.
5.
Definitions
. As used in this Agreement, the following
terms shall have the following meanings:
“
Capital Expenditures
” shall mean for any period, the sum
(without duplication) of all expenditures (whether paid in cash or accrued as
liabilities) made by the Credit Parties and their consolidated Subsidiaries
during such period that are or are required to be treated as capital
expenditures under GAAP.
“
EBITDA
” shall mean, with respect to Credit Parties and their
consolidated Subsidiaries on a consolidated basis and without duplication for
any period, the sum of the following for such period, all determined in
accordance with GAAP:
(a)
Net Income;
(b)
plus the sum of the
following, to the extent deducted in determining such Net Income and without
duplication:
(i)
Interest
Expense;
(ii)
franchise
and income taxes;
(iii)
depreciation,
amortization and impairment expense;
(iv)
all other non-cash and/or
non-recurring charges (including non-cash charges related to accounting for
employee stock option plans as required by FAS 123R) and expenses approved by
Agent in its Permitted Discretion excluding (A) accruals for cash expenses
made in the Ordinary Course of Business and (B) write-offs of accounts
receivable;
(v)
loss from any sale of
assets, other than sales in the Ordinary Course of Business;
(vi)
extraordinary losses from
the sale of securities or the extinguishment of debt; and
(c)
minus the sum of the
following, to the extent included in determining such Net Income and without
duplication:
(i)
gain
from any sale of assets, other than sales in the Ordinary Course of Business;
(ii)
extraordinary gains
from the sale of securities or
the extinguishment of debt;
(iii)
all other non-cash and/or
non-recurring income that is in each case not operating income;
(v)
proceeds of insurance
(other than business interruption insurance); and
(vi)
the amounts that would be
accrued in connection with TSE Contingent Obligations if the Credit Parties
accrued for such amounts.
For purposes of computing EBITDA, the EBITDA of any
person accrued prior to the date it becomes a Credit Party or is merged into or
consolidated with a Credit Party or a Subsidiary thereof that Person’s assets
and acquired by a Credit Party or a Subsidiary thereof shall be excluded.
“
Fixed Charge Coverage Ratio
” shall mean, for
the Credit Parties and their consolidated Subsidiaries on a consolidated basis
and without duplication, on any date of determination, the ratio of (a) EBITDA
minus
Unfinanced Capital Expenditures
minus
income and franchise
taxes paid in cash, to (b) Fixed Charges, in each case for the twelve (12)
months then ending.
“
Fixed Charges
” shall mean, for any period,
the sum of the following for the Credit Parties and their consolidated
Subsidiaries, on a consolidated basis and without duplication:
(a) Total
Debt Service and (b) dividends, repurchases or redemptions of equity
and/or distributions paid in cash.
“
Interest Expense
” shall mean total interest
expense generated during the period in question (including attributable to
conditional sales contracts, Capital Leases and other title retention agreements
in accordance with GAAP and all unused line and commitment fees and
administrative and similar fees) of the Credit Parties and their consolidated
Subsidiaries on a consolidated basis and without duplication with respect to
all outstanding Indebtedness, including accrued interest and interest paid in
kind and capitalized interest, but excluding commissions, discounts and other
fees owed with respect to letters of credit and bankers’ acceptance financing,
net costs under Hedging Agreements and fees payable to Agent or Lenders on the
Closing Date under Section 3.1.
“
Leverage Ratio
” shall mean, on any date of
determination, the ratio of (a) Senior Debt calculated on such date, to (b)
EBITDA for the twelve (12) months then ending.
“
Net Income
” shall mean, for any period, the
net income (or loss) of the Credit Parties and their consolidated Subsidiaries
on a consolidated basis for such period taken as a single accounting period
determined in conformity with GAAP; provided, that there shall be excluded (a) the
income (or loss) of any Person in which any other Person (other than a Credit
Party or a “Credit Party” under and as defined in the Term Loan Agreement) has
a joint ownership interest, except to the extent of the amount of dividends or
other distributions actually paid to any Credit Party by such Person during
such period, (b) the income (or loss) of any Person accrued prior to the
date it becomes or is merged into or consolidated with a Credit Party or a “Credit
Party” under and as defined in the Term Loan Agreement or that Person’s assets
are acquired by a Credit Party or a “Credit Party” under and as defined in the
Term Loan Agreement, (c) the income of any Subsidiary of such Person to
the extent that the declaration or payment of dividends or similar distributions
of that income by that Subsidiary is not at the time permitted by operation of
the terms of the charter or any agreement, instrument, judgment, decree, order,
statute, rule or governmental regulation applicable to that Subsidiary and
(d) the income (loss) associated with any Hedging Agreements.
“
Senior Debt
” shall mean, on any date of
determination, the Obligations hereunder and all Indebtedness under the Term
Loan Agreement (provided that, for purposes of determining the Indebtedness
outstanding under the Loan Agreement as of the end of each fiscal quarter, “Senior
Debt” shall mean the average daily amount of outstanding principal and accrued
interest on the Revolving Facility for such fiscal quarter), on a consolidated
basis and without duplication. For all
purposes of this Agreement, the term “Senior Debt” shall be calculated to
include (i.e., not net of) discounts, deductions or allocations relating or
applicable to or arising from any equity or equity participation or fees,
whether under GAAP or otherwise.
“
Total Debt
” shall mean, on any date of
determination, the total Indebtedness of
the
Credit Parties and their
consolidated Subsidiaries on a consolidated basis and without duplication,
including, without limitation, all Indebtedness under the Loan Documents, Term
Loan Documents and all accrued interest on the foregoing (including, without
limitation, all interest paid in kind) and all Capital Lease Obligations and
including, without duplication, Contingent Obligations consisting of guarantees
of Indebtedness that otherwise would constitute
Total
Debt of other Persons (provided that, for purposes of determining the
Indebtedness outstanding under any other revolving credit facility (including
the Revolving Loan Agreement) as of the end of each fiscal quarter, “Total Debt”
shall mean the average daily amount of outstanding principal and accrued
interest on such revolving credit facility for such fiscal quarter).
For all purposes of this Agreement, the term “Total
Debt” shall be calculated to include (i.e., not net of) discounts, deductions
or allocations relating or applicable to or arising from any equity or equity
participation or fees, whether under GAAP or otherwise
.
“
Total Debt Service
” shall mean, for any
period, the sum for Credit Parties and their consolidated Subsidiaries, on a
consolidated basis amounts of (a) scheduled payments of principal on any
and all Total Debt during such period, (b) other required payments of
principal on Total Debt other than the Obligations, (c) any other cash
amounts due or payable with respect to, in connection with or on Total Debt
during such period (excluding any mandatory prepayments of the Obligations),
and (d) Interest Expense paid in cash or required to be paid in cash
during such period.
“
Unfinanced Capital Expenditures
” shall mean, for any period,
all Capital Expenditures made during such period other than any Capital
Expenditures financed within 30 days of such expenditure with the proceeds of
Permitted Indebtedness (Permitted Indebtedness, for this purpose, does not
include advances under a revolving line of credit, including, without
limitation, Advances under the Revolving Facility).
Exhibit B-2
Form of Compliance Certificate
COMPLIANCE CERTIFICATE
[EVOLVING SYSTEMS HOLDINGS LIMITED
AND EVOLVING SYSTEMS LIMITED]
This Compliance Certificate (this “Certificate”)
is given by EVOLVING SYSTEMS LIMITED (the “Borrower”), pursuant to Section 6.1(a) of
that certain Credit Agreement dated as of ,
2005 among Borrower, the other Credit Parties named therein, CapitalSource
Finance LLC, a Delaware limited liability company, in its capacity as agent for
the Lenders (in such capacity, “Agent”), and the Lenders thereunder (as
amended, modified, supplemented or restated from time to time, the “Credit
Agreement”). Capitalized terms used
herein without definition shall have the meanings set forth in the Credit
Agreement.
The officer executing this Certificate is the
of Borrower, and as such is duly authorized to execute and deliver this
Certificate on behalf of Borrower. By so
executing this Certificate, the Borrower hereby certifies to the Lender Parties
that:
(a)
the
financial statements delivered with this Certificate in accordance with subsection 6.1(a) of
the Credit Agreement fairly present in all material respects the consolidated
results of operations and financial position of the Credit Parties and their
consolidated Subsidiaries as of, and for the respective periods ending on, the
dates of such financial statements;
(b)
Borrower
has reviewed the relevant terms of the Loan Documents and the financial
condition of Borrower and the other Credit Parties;
(c)
no
Default or Event of Default has occurred and is continuing, except as set forth
in
Schedule 1
hereto, which includes a description of the nature
and status and period of existence of such Default or Event of Default, if any,
and what action Borrower has taken, and is undertaking and proposes to take
with respect thereto; and
(d)
Borrower
and the other Credit Parties are in compliance with all financial covenants set
forth on Exhibit B-1 to the Credit Agreement, as demonstrated by the
calculations of such covenants below, except as set forth in
Schedule 1
hereto.
IN WITNESS WHEREOF, Borrower has caused this
Certificate to be executed by the
of
Borrower this
day
of ,
20 .
|
|
EVOLVING SYSTEMS LIMITED
|
|
|
|
|
|
|
|
|
By:
|
|
|
|
|
Name:
|
|
|
|
|
Its:
|
|
|
COMPLIANCE
CERTIFICATE
Date: ,
20
LEVERAGE
RATIO
|
a.
|
Senior Debt
|
|
$
|
|
|
|
|
|
|
|
|
b.
|
EBITDA for the twelve (12) months then
ending
|
|
$
|
|
|
|
|
|
|
|
|
c.
|
Ratio of Line (a) to (b)
|
|
|
|
MINIMUM
EBITDA
|
a.
|
EBITDA for the twelve (12) months then
ending
|
|
$
|
|
FIXED
CHARGE COVERAGE RATIO
|
a.
|
EBITDA for the twelve (12) months then
ending
|
|
$
|
|
|
|
|
|
|
|
|
b.
|
Less the aggregate amount of all Unfinanced
Capital Expenditures during the twelve (12) months then ending
|
|
$
|
|
|
|
|
|
|
|
|
c.
|
Less income and franchise taxes paid in cash
for the twelve (12) months then ending
|
|
$
|
|
|
|
|
|
|
|
|
d.
|
Total ((a) less (b) less (c))
|
|
$
|
|
|
|
|
|
|
|
|
e.
|
Fixed Charges during the twelve (12) months
then ending
|
|
$
|
|
|
|
|
|
|
|
|
f.
|
Ratio of Line (d) to (e)
|
|
|
|
CAPITAL
EXPENDITURES
|
Maximum Permitted Capital Expenditures
|
|
$
|
|
|
|
|
|
|
|
In Compliance
|
|
Yes / No
|
|
SCHEDULE 1 TO EXHIBIT B-2
CONDITIONS
OR EVENTS WHICH CONSTITUTE A DEFAULT OR
EVENT
OF DEFAULT
If any condition or event exists that constitutes a Default or Event of
Default, specify nature and period of existence and what action Borrower or one
or more other Credit Parties has taken, is taking or proposes to take with
respect thereto; if no such condition or event exists, state “None.”
Exhibit C-1
Reporting Requirements
(a)
Financial Reports
. The Credit Parties shall furnish to Agent and
each Lender:
(i)
as
soon as available and in any event within ninety (90) calendar days after the
end of each fiscal year of Evolving
Systems, (A) audited consolidated financial statements of Evolving
Systems and its consolidated Subsidiaries, including the notes thereto,
consisting of a consolidated balance sheet at the end of such fiscal year and
the related consolidated statements of income, retained earnings and cash flows
and owners’ equity for such fiscal year, which financial statements shall be
prepared by and accompanied by an opinion of any “Big Four” or any other
nationally recognized independent certified public accounting firm satisfactory
to Agent in its Permitted Discretion (which opinion shall be without (1) a
“going concern” qualification, (2) any qualification or exception as to
the scope of such audit and (3) any qualification which relates to the
treatment or classification of any item and which, as a condition to the
removal of such qualification, would require an adjustment to such item, the
effect of which would be to cause any noncompliance with the provisions of Section 7.1(a)),
and which opinion shall state that such financial statements present fairly in
all material respects the financial position for the periods indicated in
conformity with GAAP applied on a basis consistent with prior years and (B) consolidating
balance sheets and income statements for (1) Evolving Systems and its
consolidated U.S. Subsidiaries, (2) Borrower and its consolidated
Subsidiaries (excluding Evolving Systems GmbH) and (3) Evolving Systems
Networks India PVT LTD;
(ii)
as
soon as available and in any event within forty-five (45) calendar days after
the end of each fiscal quarter of Evolving
Systems, unaudited financial statements of Evolving Systems and its consolidated Subsidiaries consisting of
(A) a consolidated balance sheet and related consolidated statements of
income, retained earnings and cash flows and owners’ equity as of the end of
such fiscal quarter, all certified on behalf of Borrower by a Responsible
Officer as fairly presenting in all material respects the financial position
and the results of operations of Borrower, in accordance with GAAP, subject to
normal year-end adjustments and the absence of footnote disclosure and (B) consolidating
balance sheets and income statements for (1) Evolving Systems and its
consolidated U.S. Subsidiaries, (2) Borrower and its consolidated
Subsidiaries (excluding Evolving Systems GmbH) and (3) Evolving Systems
Networks India PVT LTD; and
(iii)
as
soon as available and in any event within thirty (30) calendar days after the
end of each calendar month, unaudited financial statements of Evolving Systems and its consolidated
Subsidiaries consisting of (A) a consolidated balance sheet and the
related consolidated statements of income, retained earnings and cash flows and
owners’ equity as of the end of such calendar month, all certified on behalf of
Borrower by a Responsible Officer as fairly presenting in all material respects
the financial position and the results of operations of Borrower, in accordance
with GAAP, subject to normal
year-end adjustments and the
absence of footnote disclosure and (B) consolidating balance sheets and
income statements for (1) Evolving Systems and its consolidated U.S.
Subsidiaries, (2) Borrower and its consolidated Subsidiaries (excluding
Evolving Systems GmbH) and (3) Evolving Systems Networks India PVT LTD.
All such
financial statements shall be prepared in accordance with GAAP consistently
applied with prior periods (subject, as to interim statements, to normal
year-end adjustments and the absence of footnote disclosure). With each delivery of
monthly and annual financial
statements, Borrower also shall deliver to Agent and each Lender a completed
Compliance Certificate certified on behalf of Borrower by a Responsible
Officer.
Each month (or
more frequently upon the request of Agent)
and each time a request for an Advance is
made, Borrower shall deliver to Agent and each Lender a Borrowing Base
Certificate accompanied by a separate detailed aging and categorization of
Borrower’s accounts receivable and accounts payable and such other supporting
documentation with respect to the figures and information in the Borrowing Base
Certificate as Agent shall request in its Permitted Discretion.
(b)
Other Materials
. The Credit Parties shall furnish to Agent and
Lenders:
(i)
concurrently
with the delivery of annual and quarterly financial statements pursuant to
clauses (a)(i) and (a)(ii) above:
(1)
a report
listing any and all new contracts entered into by any Credit Party during the
preceding fiscal year or quarter that are material to its business. If the board of directors of Evolving Systems
receives such a report then the report delivered under this subsection may
take the same form and substance;
(2)
an operating
report for Evolving Systems and its consolidated Subsidiaries which includes a
detailed comparison of the actual year-to-date operating results against (A) the
projected operating budget delivered hereunder for the current or prior fiscal
year and (B) the actual operating results for the same period during the
prior fiscal year, in each case inclusive of profit and loss statements;
(3)
a report
specifying all unpaid amounts, fees, payables and balances owing to any
Governmental Authority (other than for taxes) as of the last day of such ended
fiscal year or quarter, if any; and
(4)
a management
report, in reasonable detail, signed by a Responsible Officer of Borrower,
describing the operations and financial condition of the Credit Parties for the
quarter and portion of the fiscal year then ended (or for the fiscal year then
ended in the case of annual financial statements), which may be satisfied by
delivery of quarterly and annual reports filed with SEC; and
(ii)
as
soon as available and in any event within ten (10) calendar days after the
preparation, receipt or issuance thereof or request by Agent or any Lender
therefor, as applicable:
(1)
copies of
any final reports submitted to the Credit Parties by their independent
accountants in connection with any interim audit of the books of the Credit
Parties or their Subsidiaries and copies of each management control letter
provided by such independent accountants; and
(2)
such additional
information, documents, statements, reports and other materials as Agent or any
Lender may request from time to time in its Permitted Discretion.
(c)
Notices
. The Credit Parties shall promptly, and in any
event within five (5) Business Days after any officer of any Credit Party
obtains knowledge thereof, notify Agent and each Lender in writing of:
(i)
any
pending or threatened litigation, suit, investigation, arbitration, enforcement
action, dispute resolution proceeding or administrative or regulatory
proceeding brought or initiated by or against any Credit Party or Subsidiary of
a Credit Party or otherwise affecting or involving or relating to any Credit
Party or Subsidiary of a Credit Party or any Credit Party’s or Subsidiary of a
Credit Party’s Property to the extent (A) the amount in controversy
exceeds an amount equal to $100,000 individually or an amount equal to $150,000
in the aggregate for all such events or (B) to the extent any of the
foregoing seeks injunctive relief against a Credit Party;
(ii)
the
occurrence or existence of any Default or Event of Default, which notice shall
specify the nature, status and period of existence thereof and the actions
proposed to be taken with respect thereto;
(iii)
any
other development, event, fact, circumstance or condition that would reasonably
be expected to result in a Material Adverse Effect, in each case describing the
nature and status thereof and the actions proposed to be taken with respect
thereto;
(iv)
any
matter(s) in an amount equal to $250,000 individually or an amount equal to
$500,000 in the aggregate, in existence at any time adversely affecting the
value, enforceability or collectibility of any of the Collateral;
(v)
to
the extent not duplicative of deliveries made hereunder, any material written
notice (including any notice of default or acceleration) and any material
written information or other material written delivery given or made by or
delivered to or received by any Credit Party to or from any lender of any such
Credit Party (as a lender and not in any other capacity), together with copies
thereof, as applicable including in
connection with the Subordinated Loan Document;
(vi)
(A) the
receipt of any notice or request from any Governmental Authority regarding any
liability or claim of liability in the amount equal to or exceeding $100,000
individually or $150,000 in the aggregate or (B) any action taken or
threatened to be taken by any Governmental Authority (or any notice of any of
the foregoing) with respect to any Credit Party which would reasonably be
expected to result in a Material Adverse Effect;
(vii)
receipt
or giving of any notice by any Credit Party regarding termination of any lease
of real property (other than by expiration of the term) or any senior officer
or executive, or the loss, termination or notice of non-renewal (other than by
expiration of the term) of any Material Contract to which any Credit Party is a
party or by which its properties or assets are subject or bound;
(viii)
the
filing, recording or assessment of any federal, state, local or foreign tax
Lien against any Collateral or any Credit Party;
(ix)
the
creation, establishment or acquisition of any Subsidiary or the issuance by
Borrower of any Capital Stock or other equity security or warrant, option or
similar agreement in respect thereof other than Permitted Securities of
Evolving Systems;
(x)
any
default or breach in the performance, observance or fulfilment of any provision
contained in any Material Contract that with the giving of notice and passage
of time permits the other party thereto to terminate such Material Contract or
otherwise reduce or limit any material amounts owed by such other party
thereunder;
(xi)
any
representation or warranty contained in any Related Document made by Persons
other than a Credit Party, Agent or any Lender is not true and correct in all
material respects to the knowledge of each Credit Party.
Each notice in accordance with the foregoing shall be accompanied by a
written statement by a Responsible Officer on behalf of Borrower setting forth
details of the occurrence referred to therein, and describing with
particularity any and all clauses or provisions of this Agreement and the other
Loan Documents that have been breached or violated.
(d)
Operating Budget and Projections
. Borrower shall furnish to Agent and each
Lender on or prior to the Closing Date and for each fiscal year of Borrower
thereafter prior to the commencement of such fiscal year, consolidated month by
month projected operating budgets, projections, profit and loss statements,
income statements, balance sheets and cash flow reports of and for the Credit
Parties for such upcoming fiscal year (including an income statement for and a
balance sheet as at the end of each such month), and annual projections for the
fiscal years then remaining in the Term, in each case prepared in accordance
with GAAP consistently applied with prior periods (subject to normal year-end
adjustments and the absence of footnote disclosure).
(e)
Shareholder/Equity Holder
Reports and Government Filings
.
The Credit Parties shall furnish to Agent, within five (5) Business
Days after the sending or filing thereof, copies, which may be in electronic
form, of all proxy statements, financial statements
and reports
which any Credit Party has made available to its shareholders or other equity
owners as a class or any class or series of shareholders or other equity owners
as a class or series, and copies of all regular, periodic and special reports,
financial statements or registration statements which any Credit Party files
with the Securities and Exchange Commission, any stock exchange or any
Governmental Authority.
(f)
Government Filings
Referencing Agent or Lenders.
A reasonable time prior to its use, disclosure or distribution thereof,
the Credit Parties shall and shall cause their Subsidiaries to provide in
writing every document to be filed pursuant to state or federal securities laws
that contain Agent’s or any Lender’s name or describe or refer to any Loan
Document, any of the terms thereof or any of the transactions contemplated
thereby.
Exhibit C-2
Collateral
Reporting and Other Requirements
(a)
Collateral
Reporting
. Each Credit Party
shall:
(i)
provide
Agent with not less than thirty (30) days’ prior written notice of any change
in such Credit Party’s legal name, organizational identification number, if
any, federal employer identification number, mailing address, corporate or
organizational form or jurisdiction of organization, or of any new location for
any of its Property valued at an amount greater than an amount equal to
$100,000;
(ii)
notify
Agent promptly in writing (A) prior to any change in the proposed use by
such Credit Party or Subsidiary of any trade name or fictitious business name
and (B) upon obtaining knowledge that any application or registration
relating to any Necessary Intellectual Property (whether now or hereafter
existing) may become abandoned, or of any adverse determination or development
(including the institution of, or any such determination or material
development in, any proceeding in the United States Patent and Trademark
Office, the United States Copyright Office or any Court) regarding such Credit
Party’s or Subsidiary’s ownership of any Necessary Intellectual Property, its
right to register the same, or to keep and maintain the same;
(iii)
promptly
notify Agent of any Commercial Tort Claim in excess of an amount equal to
$50,000 and any claims in excess of an amount equal to $100,000 in the
aggregate, acquired by it and, unless otherwise consented to by Agent, and
promptly enter into a supplement to the Security Agreement to which it is a
party granting to Agent, for the benefit of the Lender Parties, a Lien on and
security interest in such Commercial Tort Claim;
(iv)
upon
acquiring or receiving any of the same, deliver and pledge to Agent any and all
Instruments (excluding checks, drafts and similar instruments that are
customarily endorsed or presented for collection or deposit in the Ordinary
Course of Business), negotiable Documents, Chattel Paper and, subject to the
limitations contained in
Section 6.7(c)
of this Agreement,
certificated Securities (or Capital Stock) (accompanied by transfer certificate
executed in blank) duly endorsed and/or accompanied by such instruments of
assignment and transfer executed by such Person in such form and substance as
Agent may request in its Permitted Discretion; provided, that so long as no
Event of Default shall have occurred and be continuing, each Credit Party or Subsidiary
may retain for collection in the Ordinary Course of Business any Instruments,
negotiable Documents and Chattel Paper received by such Person in the Ordinary
Course of Business; provided, further, that if any such Credit Party or
Subsidiary retains possession of any Instruments, negotiable Documents or
Chattel Paper pursuant to the terms hereof, each such Instrument (excluding
checks, drafts and similar instruments that are customarily endorsed or
presented for collection or deposit in the Ordinary Course of Business),
negotiable Documents and Chattel Paper shall be marked with the following
legend: “This writing and the obligations evidenced or secured hereby are
subject to the security interest of CapitalSource Finance LLC, as Agent, as
secured party, for the benefit of certain Lender Parties” in each case in
accordance with the terms of any applicable Security Document;
(v)
deliver
to Agent an updated
Schedule I
(Filing Jurisdictions),
Schedule II
(Capital Stock, Instruments, Documents, Letter of Credit Rights and Chattel
Paper),
Schedule III
(Legal Names, Prior Names, Type of Entity,
Organizational Identification Number, State of Organization, Chief Executive
Office, Principal Place of Business, Offices, Warehouses, Consignees,
Processors, Books and Records) of the Security Agreement to which it is a party
within five (5) Business Days of any change thereto;
(vi)
prior
to any Credit Party opening any new deposit or securities accounts (except
accounts used exclusively for payroll and employee benefits), such Credit Party
shall give Agent not less than ten (10) Business Days’ prior written
notice of its intention to do so and shall deliver to Agent a revised version
of
Schedule V
(Deposit Accounts) of the Security Agreement to which
it is a party showing any changes thereto within five (5) Business Days of
any such change (and shall otherwise obtain and deliver to Agent an Account
Control Agreement in respect thereof in accordance with the terms of such
Security Agreement);
(vii)
advise
Agent promptly, in reasonable detail, (A) of any Lien (other than a
Permitted Lien) or material claim made or asserted against any of the
Collateral, and (B) of the occurrence of any other event which would
reasonably be expected to have a Material Adverse Effect on the value of the
Collateral or on the Liens created hereunder or under any other Loan Document;
(viii)
promptly,
and in any event within five (5) Business Days after becoming a
beneficiary, notify Agent of the issuance of any letter of credit of which such
Credit Party or Subsidiary is a beneficiary;
(ix)
promptly
notify Agent of any Collateral which constitutes a claim against the United
States government or any instrumentality or agent thereof in an amount equal to
or greater than $50,000 individually or $100,000 in the aggregate, the
assignment of which claim is restricted by federal law and, upon the request of
Agent, such Credit Party or Subsidiary shall take such steps as may be
necessary to comply with any applicable federal assignment of claims laws or
other comparable laws; and
(x)
promptly
comply with all of the terms and conditions of each Security Agreement to which
such Credit Party or Subsidiary is a party as is necessary or desirable to
ensure the attachment, granting, creation, perfection, continuation and/or
enforceability of a Lien, in favor of Agent, for the benefit of the Lender
Parties, as a result of any of the events or circumstances described in the
other clauses of this paragraph (b) in each case subject to any grace or
cure periods set forth therein.
Exhibit D
Closing Conditions
(a)
(i)
A
copy of the Organizational Documents and of the constitutional documents of
each Credit Party.
(ii)
A
copy of a resolution of the board of directors of each Credit Party:
(1)
approving the
terms of, and the transactions contemplated by, the Loan Documents to which it
is a party and resolving that it execute, deliver and perform the Loan
Documents to which it is a party;
(2)
authorizing
a specified person or persons to execute the Loan Documents to which it is a
party on its behalf; and
(3)
authorizing
a specified person or persons, on its behalf, to sign and/or deliver all
documents and notices to be signed and/or delivered by it under or in
connection with the Loan Documents to which it is a party;
(iii)
A
specimen of the signature of each person authorized by the resolution referred
to in paragraph (ii) above in relation to the Loan Documents and any
related documents referred to in paragraph (ii)(3) above.
(iv)
A
copy of a resolution signed by all the holder of the issued shares in Evolving
Systems Holdings Limited, approving the terms of, and the transactions
contemplated by, the Loan Documents to which Evolving Systems Holdings Limited
is a party.
(v)
A
certificate of the Borrower (signed by a director) confirming that borrowing or
guaranteeing or securing, as appropriate, the Facility Cap would not cause any
borrowing, guarantee, security or similar limit binding on any Credit Party to
be exceeded.
(vi)
A
certificate of an authorized signatory of each of the Borrower and the UK
Guarantor certifying that each copy document relating to it and delivered
pursuant to clauses (a) (i) to (v) above to which it is a party
is correct, complete and in full force and effect and has not been amended or
superseded as at a date no earlier than the date of this Agreement.
(b)
Agent shall have received (i) the Loan
Documents executed by each Credit Party and the other parties thereto, (ii) executed
copies of the Term Loan Documents and (iii) a completed Borrowing
Certificate for the Initial Advance executed by Borrower;
(c)
Agent shall have received evidence (i) of
repayment in full and termination of all liabilities and obligations of the
Credit Parties to The Royal Bank of Scotland plc and all related documents,
agreements and instruments and of all Liens, (ii) of release and
termination of, or Agent’s authority to release and terminate, any and all
Liens in, on, against or with respect to any of the Collateral, other than
Permitted Liens, and (iii) that all prior lockbox and blocked account
arrangements are terminated;
(d)
Agent shall be satisfied with all corporate
and other proceedings, documents, instruments and other legal matters in
connection with the transactions contemplated by the Loan Documents, the Term
Loan Documents and the Related Documents (including, but not limited to, those
relating to corporate and capital structures of each Credit Party);
(e)
Agent shall have received (i) the
written legal opinion of counsel to the Agent with respect to the Loan
Documents, and (ii) a certificate executed by an Responsible Officer of
Borrower, which contains a representation and warranty by Borrower as of the
Closing Date that the conditions contained in this Agreement have been
satisfied;
(f)
the Related Transactions (other than the
Transfer Pricing Agreement) shall have closed in the manner contemplated by the
Related Documents and Agent shall have received certified copies of such
Related Documents;
(g)
Agent shall have received original
certificates of all such required insurance policies, and confirmation that
such certificates are in effect and that the premiums then due and owing with
respect thereto have been paid in full, which certificates shall name the
Agent, for the benefit of the Lender Parties, as sole beneficiary, loss payee
or additional insureds, (except in the case of additional insureds as permitted
by Section 6.4(c)) as applicable;
(h)
Agent shall have received (or shall receive
simultaneously with the funding of the Initial Advance, as applicable) all
fees, charges and expenses due and payable to Agent and Lenders on or prior to
the Closing Date pursuant to the Loan Documents;
(i)
All in form and substance satisfactory to
Agent in its Permitted Discretion, Agent shall have received such consents,
approvals and agreements from such third parties as Agent and its counsel shall
determine in their Permitted Discretion are necessary or desirable with respect
to (i) the Loan Documents and/or the transactions contemplated thereby, (ii) claims
against any Credit Party or any of the Collateral, and/or (iii) agreements,
documents or instruments to which any Credit Party is a party or by which any
of its properties or assets are bound or subject, including without limitation
Landlord Waivers and Consents for each property lease;
(j)
Agent shall have completed its due
diligence examinations of each Credit Party, and their Subsidiaries including,
without limitation, (i) examination of the Collateral and its financial
due diligence, (ii) an examination of the terms and conditions of all
obligations owed by such Person deemed material by Agent, the results of which
shall be satisfactory to Agent, and (iii) customer reference checks and
calls, credit checks and background checks with respect to the relevant key
management and principals of each Credit Party and their Subsidiaries;
(k)
There shall be no event of default under a
Material Contract as of the Closing Date;
(l)
no Material Adverse Effect shall have
occurred since June 30, 2005 and Agent shall have received the audited
financial statements of Evolving Systems and its Consolidated Subsidiaries for
the fiscal year ended December 31, 2004 and the unaudited financial
statements Evolving Systems and its Consolidated Subsidiaries on a
consolidated, consolidating and pro-forma basis for the eight (8)-month period
ending and as of August 31, 2005;
(m)
Agent shall have received evidence that (i) consolidated
EBITDA of Evolving Systems (calculated, for purposes of this subsection without
regard for the amounts that would be accrued in connection with TSE Contingent
Obligations if the Credit Parties accrued for such amounts) for the six
(6)-month period ended on June 30, 2005 was at least Two Million Seven
Hundred Fifty Thousand Dollars ($2,750,000);
(n)
Agent shall have received a completed
Borrowing Base Certificate setting forth the Borrowing Base as of a date not
more than thirty (30) days prior to the Closing Date, and not more than
$2,000,000 in Revolving Loans shall be advanced on the Closing Date, and, after
the funding of the any Loans on the Closing Date;
(o)
Agent shall have received evidence that all
Shareholder Blocking Rights, if any, have been waived pursuant to an agreement,
in form and substance satisfactory to Agent in its Permitted Discretion, by
such applicable shareholders;
(p)
Agent shall have received such other
approvals, opinions, documents, agreements, instruments, certificates and
materials as Agent or any Lender may request in their Permitted Discretion;
(q)
The Credit Parties and their consolidated
Subsidiaries, on a consolidated basis without duplication shall have an
aggregate of at least $4,000,000 of unrestricted cash, marketable securities
and Availability under the Revolving Facility;
(r)
The Term Loan shall be drawn down in full
simultaneously with or prior to any Loans under this Agreement; and
(s)
No Default or Event of Default shall have
occurred and be continuing or will occur after giving effect to the
transactions contemplated by the Loan Documents.
Exhibit E
Form of Borrowing Base Certificate
BORROWING
CERTIFICATE
DATED AS OF ,
2005
Evolving Systems Limited (
“Borrower”)
, by the undersigned duly authorized officer(s),
hereby certify to Agent and Lenders, in accordance with the Revolving Facility
Agreement dated as of October , 2005, between
Borrower, certain of its Affiliates, CapitalSource Finance LLC, as a Lender and
as Agent, and certain other Lenders party thereto from time to time (as
amended, supplemented or modified from time to time, the
“Loan
Agreement;”
all capitalized terms not defined herein have the
meanings given them in the Loan Agreement), and other Loan Documents that the
following information is true and accurate in all respects and determined in
accordance with the Loan Agreement and GAAP:
Evolving
Systems
Borrowing
Base Certificate
[Date]
Availability
|
Aggregate Borrowing Availability
|
|
|
|
|
Senior
Leverage Ratio
|
|
|
|
|
Senior Debt
|
|
|
|
|
UK Revolving
Loan
|
|
|
|
|
Letter of
Credit
|
|
|
|
|
US Term Loan
|
|
|
|
|
Total Senior
Debt
|
|
|
|
|
|
|
|
|
|
Most Recent
EBITDA
|
|
|
|
|
|
|
|
|
|
Borrowing
Base Multiple
|
|
|
|
|
|
|
|
|
|
Maximum
Senior Leverage
|
|
|
|
|
|
|
|
|
|
Leverage
Based Availability
|
|
|
|
|
UK Revolving
Loan Cap
|
|
4,500,000
|
|
|
|
|
|
|
|
Total
Availability Cap
|
|
4,500,000
|
|
|
|
|
|
|
|
UK
Revolving Loan
|
|
—
|
|
|
LC’s
|
|
—
|
|
|
Reserves
|
|
—
|
|
|
|
|
|
|
|
Remaining
Availability
|
|
4,500,000
|
|
Revolving Loan
|
Beginning Balance
|
|
|
|
|
- Cash (Checks/ACH)
|
|
—
|
|
|
- Cash (Wire)
|
|
—
|
|
|
(+/-) Adjustments
|
|
—
|
|
|
+ Advance Request
|
|
—
|
|
|
Adjusted Balance
|
|
—
|
|
|
Prepared By
|
|
|
Title
|
Date
|
|
|
|
|
Approved By
|
|
|
Title
|
Date
|
IN WITNESS WHEREOF, the undersigned has
caused this certificate to be executed as of the day first written above.
|
|
Evolving
Systems Ltd
|
|
|
|
|
|
By:
|
|
|
|
|
Name:
|
|
|
|
|
Title:
|
|
|
|
|
|
|
|
|
[SIGNATURE PAGE TO BORROWING BASE
CERTIFICATE]
APPENDIX A
DEFINITIONS
The following terms are defined in the
Sections or subsections referenced opposite such terms:
|
“Agent”
|
|
Preamble
|
|
“Agreement”
|
|
Preamble
|
|
“Borrower”
|
|
Preamble
|
|
“Borrowing Date”
|
|
2.3
|
|
“Capital Expenditure Limitation”
|
|
Exhibit B-1
|
|
“Capital Expenditures
|
|
Exhibit B-1
|
|
“CapitalSource”
|
|
Preamble
|
|
“Confidential Information”
|
|
12.12
|
|
“EBITDA”
|
|
Exhibit B-1
|
|
“Documentary Letter of Credit”
|
|
Appendix B
|
|
“Dispute”
|
|
12.2
|
|
“Event of Default”
|
|
VIII
|
|
“Fixed Charge Coverage Ratio”
|
|
Exhibit B-1
|
|
“Indemnified Persons”
|
|
12.6
|
|
“Initial Advance”
|
|
4.1
|
|
“Insured Event”
|
|
12.7
|
|
“Interest Settlement Date”
|
|
11.4(a)(iii)
|
|
“Investments”
|
|
7.4
|
|
“L/C Undertaking”
|
|
Appendix B
|
|
“Letter of Credit”
|
|
Appendix B
|
|
“Letter of Credit Fees”
|
|
3.3
|
|
“Leverage Ratio”
|
|
Exhibit D
|
|
“Management Fee”
|
|
3.2
|
|
“Necessary Intellectual Property”
|
|
5.11
|
|
“Non-U.S. Lender
|
|
13.1(i)
|
|
“Other Taxes”
|
|
13.1(b)
|
|
“Participant”
|
|
12.4(b)
|
|
“Permitted Indebtedness”
|
|
7.2
|
|
“Permitted Liens”
|
|
7.3
|
|
“Receipt”
|
|
12.8
|
|
“Register”
|
|
2.2
|
|
“Restricted Payments”
|
|
7.5
|
|
“Settlement Date”
|
|
11.5(a)(ii)
|
|
“Standby Letter of Credit”
|
|
Appendix B
|
|
“Standby Letter of Credit Application”
|
|
Appendix B
|
|
“Standby Letter of Credit Fee”
|
|
3.3
|
|
“Taxes”
|
|
13.1(a)
|
|
“Transferee”
|
|
12.4(a)
|
|
“UK Witholding Tax Deduction”
|
|
13.1(f)
|
|
“UK Guarantor”
|
|
Preamble
|
1
In
addition to the terms defined elsewhere in the Agreement, the following terms
have the following meanings:
“
Acquisition
” shall mean any transaction or series of related
transactions for the purpose of or resulting, directly or indirectly, in (a) the
acquisition of all or substantially all of the assets of a Person, or of any
business or division of a Person, (b) the acquisition of more than fifty
percent (50%) of the Capital Stock of any Person or otherwise causing any
Person to become a Subsidiary of a Credit Party, or (c) a merger,
amalgamation, consolidation or other combination with another Person.
“
Act
” means the Companies Act 1985.
“
Advance
” shall mean any borrowing under the Revolving Facility.
“
Affiliate
” or “
affiliate
” shall mean, as to any initial
Person, any other Person (a) that, directly or indirectly through one or
more intermediaries, controls, is controlled by, or is under common control
with, such initial Person, (b) who is or within the preceding
10 years was a director or officer (i) of such initial Person, (ii) of
any Subsidiary of such initial Person, or (iii) of any other Person
described in clause (a) above with respect to such initial Person, or (c) which,
directly or indirectly through one or more intermediaries, is the beneficial or
record owner (as defined in Rule 13d-3 of the Securities Exchange Act of
1934, as amended) of twenty percent (20%) or more of any class of the
outstanding voting Capital Stock of such initial Person. For purposes of this definition, the term “control”
(and the correlative terms, “controlled by” and “under common control with”)
shall mean the possession, directly or indirectly, of the power to direct or
cause the direction of the management and/or policies of a Person, whether
through ownership of securities or other interests, by contract or otherwise.
“
Aggregate Borrowing Availability
”
shall mean, at any time, the Borrowing Base then in effect less any Letter of
Credit Usage then in effect.
“
an amount equal to
” shall mean, where a provision of this
agreement requires that an amount in any other currency must be converted into
an equivalent amount in Dollars, such amount converted into Dollars at the rate
of exchange of the Agent for that currency on the day the provision requires
the amount to be converted. For purposes
of covenant compliance, such amount shall be determined only once, and only as
of the date of the transaction resulting in the need to determine such amount
(or, in the case of any sale, lease, transfer, conveyance, assignment or
disposal of Property or any interest therein, if earlier, the date a binding
commitment to make such sale, lease, transfer, conveyance, assignment or
disposal is entered into).
“
Applicable Default Margin
” shall mean four percent (4.0%).
“
Applicable Margin
” shall mean four percent (4.0%)
“
Availability
” shall mean, at any time
of determination, the amount by which the lesser of (A) the Facility Cap
in effect at such time
2
less any letter of Credit Usage
in effect at such time and (B) the Aggregate Borrowing Availability in
effect at such time, exceeds the outstanding principal amount of all Advances
under the Revolving Facility then outstanding.
“
Bankruptcy Code
” shall mean the
Federal Bankruptcy Reform Act of 1978 (11 U.S.C. §101 et seq,) as amended and
in effect from time to time and the regulations issued from time to time
thereunder.
“
Borrowing Base
” shall
mean the value equal to (A) for any period ending prior to delivery of the
financial statements for the quarter ended December 31, 2005 pursuant to Section 6.1(b),
annualized EBITDA of the Credit Parties and their Subsidiaries on a
consolidated basis, without duplication, for the three-fiscal-quarter-period
ended September
30, 2005 or (B) for any period ending
after December 31, 2005, annualized EBITDA for the most recently concluded
two-fiscal-quarter-period for which financial statements have been delivered
pursuant to Section 6.1(b); multiplied by (B) the Borrowing Base
Multiple, minus (C) Senior Debt calculated as of the close of the most
recently concluded fiscal quarter for which financial statements have been
delivered pursuant to Section 6.1(b).
“
Borrowing Base Certificate
”
shall mean a Borrowing Base Certificate substantially in the form of
Exhibit E
hereto.
“
Borrowing Certificate
” shall mean a Borrowing Certificate
substantially in the form of
Exhibit A
hereto.
“
Borrowing Base Multiple
” shall mean:
|
For the period from November 14, 2005
through and including November 14, 2006
|
|
2.50
|
|
|
For the period after November 14, 2006
through and including November 14, 2007
|
|
2.25
|
|
|
For the period after November 14, 2007
through and including November 14, 2008
|
|
2.00
|
|
|
For the period after November 14, 2008
and thereafter
|
|
1.75
|
|
“
Business
” shall mean the development, distribution and implementation of software primarily for
the communications industry and the provision of related services, and other
activities that are reasonably incidental or ancillary thereto.
“
Business Day
” shall mean any day other than a Saturday, Sunday
or other day on which the Federal Reserve or Agent is authorized or required by
law to be closed.
“
Capital Lease
” shall
mean, as to any Person, any lease of any interest in any kind of Property by
that Person as lessee that is, should be or should have been recorded as a “capital
lease” in accordance with GAAP.
3
“
Capital Lease Obligations
” shall mean all obligations of any
Person under Capital Leases, in each case taken at the amount thereof accounted
for as a liability in accordance with GAAP.
“
Capital Stock
” shall mean, as to any Person that is a
corporation, the authorized shares of such Person’s capital stock or shares,
including all classes of common, preferred, voting and nonvoting capital stock
or shares, and, as to any Person that is not a corporation or an individual,
the partnership, membership or other ownership interests in such Person,
including, without limitation, the right to share in profits and losses, the
right to receive distributions of cash and other Property, and the right to
receive allocations of items of income, gain, loss, deduction and credit and
similar items from such Person, whether or not such interests include voting or
similar rights entitling the holder thereof to exercise control over such
Person, collectively with, in any such case, all warrants, options and other
rights to purchase or otherwise acquire, and all other instruments convertible
into or exchangeable for, any of the foregoing.
“
Cash Equivalents
” shall mean (a) securities issued, or
directly and fully guaranteed or insured, by the United States or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States is pledged in support thereof) having maturities of not more than six (6) months
from the date of acquisition, (b) time deposits, certificates of deposit
and bankers’ acceptances of items denominated in the currency of the holder’s
jurisdiction of formation (i) any domestic commercial bank of recognized
standing having capital and surplus in excess of $500,000,000, or (ii) any
bank (or the parent company of such bank) whose short-term commercial paper
rating from Standard & Poor’s Ratings Services (“S&P”) is at least
A-2 or the equivalent thereof or from Moody’s Investors Service, Inc. (“Moody’s”)
is at least P-2 or the equivalent thereof in each case with maturities of not
more than six (6) months from the date of acquisition (any bank meeting
the qualifications specified in clauses (b)(i) or (ii), an “Approved Bank”),
(c) repurchase obligations with a term of not more than seven (7) days
for underlying securities of the types described in clause (a) above
entered into with any Approved Bank, (d) commercial paper issued by any
Approved Bank or by the parent company of any Approved Bank and commercial
paper issued by, or guaranteed by, any industrial or financial company with a
short-term commercial paper rating of at least A-2 or the equivalent thereof by
S&P or at least P-2 or the equivalent thereof by Moody’s, or guaranteed by
any industrial company with a long term unsecured debt rating of at least A or
A2, or the equivalent of each thereof, from S&P or Moody’s, as the case may
be, and in each case maturing within six (6) months after the date of
acquisition, and (e) investments in money market funds substantially all
of whose assets are comprised of securities of the type described in clauses (a) through
(d) above.
“
Change of Control
” shall mean the occurrence of any of the
following:
(i)
any
“change in/of control” or “sale” or “disposition” or similar event as defined
in any Organizational Document of any Credit Party or the Subordinated Notes;
(ii)
the
consummation of any initial Public Offering by any Credit Party after the
Closing Date;
(iii)
Any
Person and its Affiliates, individually or as part of a group (as that term is
described in Rule 13d-5(b)(1) under the Exchange Act), either (A) owning
or
4
controlling in the aggregate in excess of 20% of the then outstanding
voting Capital Stock of Evolving Systems or (B) being able to elect a
majority of the board of directors of Evolving Systems;
(iv)
Any
Credit Party ceases to own and control, beneficially and of record, one hundred
percent (100%) of the issued and outstanding Capital Stock (other than
directors’ qualifying shares required by law), free and clear of all Liens,
rights, options, warrants or other similar agreements or understandings, other
than Liens in favor of Agent, for the benefit of the Lender Parties of any
Subsidiary of which it owns or controls such Capital Stock as of the Closing
Date;
(v)
Stephen
K. Gartside, Jr. ceases to be employed as Chief Executive Officer of Evolving Systems or otherwise dies or
becomes disabled and, in any case, shall not have been replaced within forty
five (45) calendar days by an interim Chief
Executive Officer, and within two hundred and seventy (270) days by a
permanent Chief Executive Officer,
with such permanent replacement having similar experience and qualifications as
the Chief Executive Officer
being replaced; or
(vi)
any
Credit Party is subject to Shareholder Blocking Rights which have not been
waived pursuant to an agreement in form and substance satisfactory to Agent in
its Permitted Discretion; provided that any voting rights of the holders of
Evolving System’s Series B Convertible Preferred Stock under Section 3(c) of
the Certificate of Designation have only been waived, if at all, with respect
to the rights of the Agent and Lenders under the Loan Documents.
“
Closing
” shall mean the satisfaction, or written waiver by
Agent and Requisite Lenders, of all of the conditions precedent set forth in
this Agreement required to be satisfied prior to the disbursement of the
Initial Advance and consummation of the other transactions contemplated hereby.
“
Closing Date
” shall mean the date of this Agreement.
“
Code
” shall mean the Internal Revenue Code of 1986, and
regulations promulgated thereunder.
“
Collateral
” shall mean, collectively, all Property, interests
in Property, collateral and/or security granted and/or securities pledged to
Agent, for the benefit of the Lender Parties, or any Lender by the Credit
Parties and any other Person to secure the Obligations, or any part thereof,
pursuant to the Loan Documents, including, without limitation, all Property in
which a Lien is granted pursuant to the Security Documents to secure the
Obligations, or any part thereof.
“
Commitment
” or “
Commitments
” shall mean the amount in
Dollars of the Commitment to fund the Loans for each Lender set out in
Schedule A
hereto or in the most recent Lender Addition Agreement relating to such Lender,
as the same may be reduced, modified or terminated from time to time pursuant
to this Agreement.
“
Compliance Certificate
” shall mean a compliance certificate
executed by a Responsible Officer of Borrower in the form of
Exhibit B-2
hereto.
5
“
Contingent Obligations
” shall mean, as to any Person, any
agreement, undertaking or arrangement by which such Person assures, guarantees,
endorses, contingently agrees to purchase or provide funds for the payment of,
or otherwise becomes or is contingently liable upon, any Indebtedness, leases,
dividends or other obligations (“primary obligations”) of any other Person (the
“primary obligor”) in any manner, whether directly or indirectly, including,
without limitation, any obligation of such Person, whether or not contingent, (a) to
purchase any such primary obligation or any property constituting direct or
indirect security therefor, (b) to advance or supply funds (i) for
the purchase or payment of any such primary obligation or (ii) to maintain
working capital or equity capital of the primary obligor or otherwise to
maintain the net worth or solvency of the primary obligor, including, without
limitation, any so-called “keepwell” or “makewell” agreement, (c) to
purchase property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation, (d) otherwise to assure or to
hold harmless the owner of such primary obligation against loss in respect
thereof, (e) with respect to any letter of credit of such Person or as to
which that Person is otherwise liable for reimbursement of drawings, or (f) with
respect to any Hedging Agreement; provided, however, that the term “Contingent
Obligation” shall not include endorsements of instruments for deposit or
collection in the Ordinary Course of Business.
The amount of any Contingent Obligation shall be deemed to be an amount
equal to the stated or determinable amount of the primary obligation in respect
of which such Contingent Obligation is made or, if not stated or determinable,
the maximum reasonably anticipated liability in respect thereof (assuming such
Person is required to perform thereunder) as determined by such Person in good
faith.
“
Credit Party
” shall mean each of the Borrower, the UK Guarantor, the Guarantors pursuant to the US
Guarantee and each Subsidiary of Evolving Systems (other than Borrower) that
becomes a Credit Party pursuant to Section 6.7(c).
“
Credit Parties
” shall mean the Borrower, the UK Guarantor, the Guarantors pursuant to the US
Guarantee and each Subsidiary of Evolving Systems (other than Borrower) that
becomes a Credit Party pursuant to Section 6.7(c).
“
Cross License Agreement
” shall mean,
collectively, (i) the Intercompany License Agreement, dated as of October 17,
2005 between Evolving Systems, as licensor, and Borrower, as licensee, and (iii) the
Intercompany License Agreement dated as of October 17, 2005 between
Borrower, as licensor, and Evolving Systems, as licensee.
“
Debenture
” means the debenture dated on or about the date
hereof between certain of the Credit Parties and the Agent.
“
Debtor Relief Law
” shall mean, collectively, as to Evolving
Systems and all of its U.S. Subsidiaries, the Bankruptcy code and all other
applicable liquidation, conservatorship, bankruptcy, moratorium, rearrangement,
receivership, insolvency, reorganization or similar debtor relief laws from
time to time in effect affecting the rights of creditors generally, in each
case as amended from time to time and, with respect to Borrower and U.K.
Guarantor the Insolvency Act 1986.
6
“
Default
” shall mean any event, fact, circumstance or condition
that, with the giving of applicable notice or passage of time or both, would constitute,
be or result in an Event of Default.
“
Default Rate
” shall mean a per annum rate equal to the Libor
Rate in effect from time to time,
plus
the Applicable Margin in effect
from time to time,
plus
the Applicable Default Margin; provided, that if
any Obligation otherwise does not bear interest, the Default Rate with respect
thereto shall equal the Libor Rate in effect from time to time,
plus
the
Applicable Margin in effect from time to time with respect to Revolving
Advances,
plus
the Applicable Default Margin.
“
Dollars
” and “
$
” shall mean lawful money of the United
States of America.
“
Eligible Assignee
” shall mean any of the following: (a) a commercial bank organized under
the laws of the United States, or any state thereof; (b) a commercial bank
organized under the laws of any other country; (c) a finance company,
insurance company or other financial institution or fund which is engaged in
making, purchasing or otherwise investing in commercial loans or other debt
obligations for its own account in its ordinary course of business; or (d) a
Related Fund.
“
Environmental Laws
” shall mean (a) with respect to each
Credit Party other than Borrower and UK Guarantor, collectively, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
the Superfund Amendment and Reauthorization Act of 1986, the Resource
Conservation and Recovery Act, the Toxic Substance Control Act, the Clean Air
Act, the Clean Water Act, any other “Superfund” or “Superlien” law and all
other federal, state and local and foreign environmental, land use, zoning,
health, chemical use, safety and sanitation laws, statutes, ordinances and
codes relating to the protection of the environment and/or governing the use,
storage, treatment, generation, transportation, processing handling, production
or disposal of Hazardous Substances, in each case, as amended, and the legally
binding rules, regulations, policies, guidelines, interpretations, decisions,
orders and directives of Governmental Authorities with respect thereto.
(b)
with
respect to the Borrower and UK Guarantor, collectively, any applicable law or
regulation which relates to:
(c) the pollution or protection of the
environment;
(d) harm to or the protection of human health;
(e) the conditions of the workplace; or
(f) any emission or substance capable of
causing harm to any living organism or the environment.
“
ERISA
” shall mean the Employee Retirement Income Security Act
of 1974, as amended, and the regulations thereunder.
“
Eurocurrency Reserve Requirement
” for
any day shall mean the aggregate (without duplication of the rates (expressed
as a decimal rounded upward to the nearest 1/100
th
of 1%) as
7
determined by Agent of reserve
requirements in effect on such day (including, without limitation, basis,
supplemental, marginal and emergency reserves under any regulations of the
Board of Governors of the Federal Reserve System of the United States or other
Governmental Authority, or any successor thereto, having jurisdiction with
respect thereto) prescribed for Eurocurrency funding (currently referred to as “Eurocurrency
Liabilities” in Regulation D of such Board) maintained by a member bank of the
Federal Reserve System.
“
Evolving Systems
” means Evolving Systems, Inc, a Delaware
Corporation.
“
Exchange Act
” shall mean the Securities Exchange Act of 1934,
as amended.
“
Facility Cap
” shall mean, initially, $4,500,000, as reduced from time to time in accordance with the terms of
this Agreement.
“
Fair Valuation
” shall mean the determination of the value of
the consolidated assets of a Person on the basis of the amount which may be
realized by a willing seller within a reasonable time through collection or
sale of such assets at market value on a going concern basis to an interested
buyer who is willing to purchase under ordinary selling conditions in an arm’s
length transaction.
“
Foreign Subsidiary
” shall mean any Subsidiary of a Person that
is not a U.S. Subsidiary.
“
GAAP
” shall mean generally accepted accounting principles in
the United States of America in effect from time to time as applied by
nationally recognized accounting firms.
“
Governmental Authority
” shall mean any federal, state, foreign,
municipal, national, provincial, local or other governmental department, court,
commission, board, bureau, agency or instrumentality or political subdivision
thereof, or any entity or officer exercising executive, legislative or
judicial, regulatory or administrative functions of or pertaining to any
government or any court.
“
Guarantee
” shall mean any guaranty executed by a Guarantor to
secure any of the Obligations, including, without limitation, the guarantee
effectuated by
Article XIV
of this Agreement and the US Guarantee.
“
Guarantor
” shall mean any Credit Party other than Borrower, and
“
Guarantors
” shall mean all such other Credit Parties.
“
Hazardous Substances
” shall mean any flammable explosives,
radon, radioactive materials, asbestos, urea formaldehyde foam insulation,
polychlorinated biphenyls, petroleum and petroleum products, methane, hazardous
materials, hazardous wastes, hazardous or toxic substances or related materials
as defined in or other substances or materials regulated by or subject to, or
which may form the basis of liability under, any applicable Environmental Law.
“
Hedging Agreement
” shall mean any swap agreements (as defined
in Section 101 of the Bankruptcy Code) and any other agreements or
arrangements designed to provide protection against fluctuations in interest or
currency exchange rates and entered into for bona fide hedging purposes and not
for speculation.
8
“
Indebtedness
” of any Person shall mean, without duplication: (a) all
indebtedness for borrowed money; (b) all obligations issued, undertaken or
assumed as the deferred purchase price of property or services (other than
trade payables incurred and payable in the Ordinary Course of Business of such
Person); (c) the face amount of
all letters of credit issued for the account of such Person and, without
duplication, all drafts drawn thereunder and all reimbursement or
payment obligations with respect to letters
of credit, surety bonds and other similar instruments issued by such
Person; (d) all obligations evidenced by notes, bonds, debentures or
similar instruments, including obligations so evidenced incurred in connection
with the acquisition of property, assets or businesses; (e) all
indebtedness created or arising under any conditional sale or other title
retention agreement, or incurred as financing, in either case with respect to
Property acquired by such Person (even though the rights and remedies of the
seller or bank under such agreement in the event of default are limited to
repossession or sale of such property); (f) all Capital Lease Obligations;
(g) the principal balance outstanding under any synthetic lease,
off-balance sheet loan or similar off balance sheet financing products; (h) all
indebtedness referred to in clauses (a) through (g) above secured by
(or for which the holder of such Indebtedness has an existing right, contingent
or otherwise, to be secured by) any Lien upon or in Property (including
accounts and contracts rights) owned by such Person, even though such Person
has not assumed or become liable for the payment of such indebtedness; and (i) all
Contingent Obligations in respect of indebtedness or obligations of others of
the kinds referred to in clauses (a) through (h) above.
“
Intellectual Property
” shall mean all present and future: trade secrets, know-how and other proprietary
information; trademarks, trademark applications, internet domain names, service
marks, trade dress, trade names, business names, designs, logos, slogans (and
all translations, adaptations, derivations and combinations of the foregoing)
indicia and other source and/or business identifiers, and the goodwill of the
business relating thereto and all registrations or applications for
registrations which have heretofore been or may hereafter be issued thereon
throughout the world; copyrights and copyright applications; (including
copyrights for computer programs) and all tangible and intangible property
embodying the copyrights, unpatented inventions (whether or not patentable);
patents and patent applications; industrial design applications and registered
industrial designs; license agreements related to any of the foregoing and
income therefrom; books, records, writings, computer tapes or disks, flow
diagrams, specification sheets, computer software, source codes, object codes,
executable code, data, databases and other physical manifestations, embodiments
or incorporations of any of the foregoing; the right to sue for all past,
present and future infringements of any of the foregoing; all other
intellectual property; and all common law and other rights throughout the world
in and to all of the foregoing.
“
Intellectual Property Security Agreement
” shall mean an
Acknowledgment of Intellectual Property Collateral Lien executed by a Credit
Party in favor of Agent, for the benefit of the Lender Parties, as the same may
be modified, amended, restated or supplemented from time to time.
“
Interest Payment Date
” shall mean the
first day of each calendar month.
“
Intermediate Holdco
” shall mean Evolving Systems Holdings, Inc.
9
“
Inventory
”
shall mean all “inventory” of the Borrower (or, if referring to another Person,
of such other Person), now owned or hereafter acquired, and all documents of
title or other documents representing any of the foregoing, and all collateral
security and guaranties of any kind, now or hereafter in existence, given by
any Person with respect to any of the foregoing.
“
Joinder Agreement
” shall mean an agreement, in form and
substance satisfactory to Agent in its Permitted Discretion, pursuant to which,
among other things, a Person becomes a party to, and bound by the terms of,
this Agreement and/or the other Loan Documents in the same capacity and to the
same extent as either Borrower or a Guarantor, as Agent may determine.
“
Landlord Waiver and Consent
” shall mean a waiver or consent, in
form and substance satisfactory to Agent in its Permitted Discretion, pursuant
to which a mortgagee, owner or lessor of real property on which any Collateral
is stored or otherwise located, or a warehouseman, processor or other bailee of
any Property of any Credit Party, (i) acknowledges and consents to the
Liens of Agent, for the benefit of the Lender Parties under the Loan Documents,
(ii) waives any Liens held by such Person on such Property, and (iii) in
the case of any such agreement with a mortgagee or lessor, permits Agent access
to and use of such real Property for a reasonable amount of time following the
occurrence and during the continuance of an Event of Default to assemble,
complete and sell any Collateral stored or otherwise located thereon.
“
Lender
” shall mean any of the Persons from time to time named
on
Schedule A
under the headings “Lenders” and their respective
successors and permitted assigns (but not, except as expressly set forth herein,
any Participant that otherwise is not a party to this Agreement), and “Lenders”
shall mean all of them collectively, provided that references to Lenders herein
shall only apply to Lenders in their capacity as a Lender under this Agreement
and the Loan Documents and not in their capacity as a lender under the Term
Loan Documents.
“
Lender Addition Agreement
” shall mean an agreement among Agent,
a Lender and such Lender’s assignee regarding their respective rights and
obligations with respect to assignments of the Commitments, Loans and other
interests under this Agreement and the other Loan Documents, in form and
substance acceptable to Agent in its Permitted Discretion; it being agreed and
understood that the consent or approval of Borrower shall be required thereto
only in accordance with the terms of Section 13.1.
“
Lender Parties
” shall mean, collectively, Agent and Lenders,
and “
Lender Party
” shall mean any of them.
“
Lending Office
” shall mean, with respect to any Lender, the
office or offices of such Lender specified as its “Lending Office” opposite its
name on the applicable signature page hereto, or such other office or
offices of such Lender as it may from time to time notify Borrower and Agent.
“
Letter of Credit Usage
” shall mean, as of any date of
determination, the sum, without duplication, of (i) the aggregate undrawn
amount of all outstanding Letters of Credit, plus (ii) 100% of the amount
of outstanding time drafts accepted by an Underlying Issuer as a result of
10
drawings under Underlying Letters of Credit,
plus (iii) the aggregate unreimbursed amount of all drawn Letters of
Credit, in each case as of such date of determination.
L/C Disbursement
” shall mean any payment by the L/C Issuer
pursuant to a Letter of Credit.
“
L/C Issuer
” shall mean a national banking association, or any
Lender that, at the request of Agent, agrees, in such Lender’s sole discretion,
to become an L/C Issuer for purposes of issuing Letters of Credit or L/C
Undertakings pursuant to Section 2.3.
“
Libor Rate
” shall mean a fluctuating per annum rate of interest
equal to (i) the rate per annum (rounded upwards to the nearest 1/100
th
of 1%) equal to the offered rate for deposits of Dollars for a 30-day period
which appears on Telerate page 3750 as of 11:00a.m. (London time) divided
by (ii) 1.00 minus the Eurocurrency Reserve Requirements in effect. “Telerate
page 3750” means the display designated as “page 3750” on the
Telerate Service (or such other page as may replace Page 3750 on that
service or such other service as may be nominated by the British Bankers’
Association as the information vendor for the purpose of displaying British
Bankers’ Association Interest Settlement Rates for deposits in Dollars).
“
Lien
” shall mean any mortgage, pledge, security interest,
encumbrance, transfer, charge or other restriction, lien or charge of any kind
or any other priority arrangement (including any agreement to give any of the
foregoing, any conditional sale or other title retention agreement or any lease
in the nature thereof), or any other arrangement pursuant to which title to the
Property is retained by or vested in some other Person for security purposes.
“
Life Insurance Policy
” shall mean a
current, valid and fully paid key man life insurance policy insuring the life
of Stephen K. Gartside, Jr. in the amount of $1,000,000 that (i) prior
to indefeasible payment in full of the Obligations as defined in and under the
Term Loan Agreement lists Agent, for the benefit of the Lender Parties, as the
sole beneficiary thereunder, (ii) is issued by a carrier and otherwise is
in form and substance acceptable to Agent in its Permitted Discretion, (iii) cannot
be altered, amended or modified in any respect (including, without limitation,
with respect to amounts of coverage and beneficiaries without the consent of
Agent), and (iv) cannot be cancelled without at least thirty (30) Business
Days’ prior written notice to Agent.
“
Loan
” or “
Loans
” shall mean, individually or
collectively, respectively, the Advances under the Revolving Facility.
“
Loan Documents
” shall mean, collectively, this Agreement, the
Notes, if any, the Security Documents, all Borrowing Certificates, all
Compliance Certificates, the Subordination Agreements and all other agreements,
documents, instruments and certificates heretofore or hereafter executed and/or
delivered to Agent or any Lender by or on behalf of a Credit Party in
connection with any of the foregoing or the Loans, in each case as the same may
be amended, modified or supplemented from time to time.
“
Material Adverse Effect
” shall mean any event, condition,
obligation, liability or circumstance or set of events, conditions,
obligations, liabilities or circumstances or any change(s) which:
11
(i)
has,
had or would reasonably be expected to have a material adverse effect upon or
change in (a) the legality, validity or enforceability of any Loan
Document to which a Credit Party is a party or (b) the aggregate rights
and remedies of the Agent under the Loan Documents taken as a whole;
(ii)
has
been or would reasonably be expected to be material and adverse to the value of
any of the Collateral, taken as a whole, or to the business, operations,
liabilities or condition (financial or otherwise) of Evolving Systems or
Borrower, individually, or of the Credit Parties, taken as a whole; or
(iii)
has
materially impaired or would reasonably be expected to materially impair the
ability of Evolving Systems or Borrower, individually, or of the Credit Parties
taken as a whole to perform any of its or their Obligations, or to consummate
the transactions, under the Loan Documents.
“
Material Contracts
” means (i) the Related Documents, and (ii) any
other one or series of related contracts, agreements or arrangements to which
Credit Parties or any of their Subsidiaries are a party that involve aggregate
consideration payable to or by such Credit Party or such Subsidiary of more
than an amount equal to $1,000,000 annually.
“
Maturity Date
” shall mean the earliest to occur of (i) the
acceleration (whether automatic or by written notice) of any Obligations in
accordance with the terms of this Agreement and (ii) the last day of the
Term.
“
Mortgage
” shall mean a mortgage, deed of trust, deed to secure
debt, leasehold mortgage, leasehold deed of trust, leasehold deed to secure
debt or similar instrument creating a Lien on real Property or on any interest
in real Property to secure any of the Obligations.
“
Net Proceeds
” shall mean:
(a)
in
respect of any issuance of debt or equity, cash proceeds and non-cash proceeds
received or receivable in connection therewith, net of underwriting discounts
and reasonable out-of-pocket costs and expenses paid or incurred in connection
therewith in favor of any Person that is not an Affiliate of any Credit Party;
and
(b)
in
respect of any disposition, casualty, condemnation, taking or other event of
loss, proceeds in cash, checks or other cash equivalent financial instruments
(including Cash Equivalents) as and when received by the Person making such
disposition or all insurance proceeds received on account of such casualty,
condemnation, taking or other event of loss, in any such case net of: (i) in
the event of a disposition, (x) the direct costs and expenses relating to such
disposition excluding amounts payable to Borrower or any Affiliate of any
Credit Party, (y) sale, use or other transaction taxes paid or payable as a
result thereof, and (z) amounts required to be applied to repay principal,
interest and prepayment premiums and penalties on Indebtedness (other than the
Obligations) secured by a Lien on the asset that is the subject of such
disposition; and (ii) in the event of a casualty, condemnation, taking or
other event of loss, (x) all money actually applied to repair or reconstruct
the damaged property or property affected by the condemnation or taking in
accordance with the terms hereof, (y) all of the costs and
12
expenses reasonably incurred in connection with the collection of such
proceeds, award or other payments, and (z) any amounts retained by or paid
to parties having superior rights to such proceeds, awards or other payments.
“
Notes
” shall mean, collectively, if any, any notes issued
pursuant to this Agreement, together with any promissory notes or other
instruments issued in substitution therefor or replacement thereof, in each
case as the same may be amended, modified, divided, split, supplemented and/or
restated from time to time.
“
Obligations
” shall mean, without duplication, all present and
future obligations, Indebtedness and liabilities of Borrower and/or any other
Credit Party to Agent and/or the other Lender Parties at any time and from time
to time of every kind, nature and description arising under any Loan Document,
whether direct or indirect, secured or unsecured, joint and/or several,
absolute or contingent, due or to become due, matured or unmatured, now
existing or hereafter arising, contractual or tortious or liquidated or unliquidated,
including, without limitation, all interest, fees, charges, expenses and/or
amounts paid or advanced by Agent or any other Lender Party to, on behalf of or
for the benefit of any such Person for any reason under any Loan Documents at
any time, obligations of performance as well as obligations of payment, and all
interest, fees and other amounts that accrue after the commencement of any
proceeding under any Debtor Relief Law by or against any such Person or its
Properties related to any of the Obligations.
“
Ordinary Course of Business
” shall mean, in respect of any
transaction involving any Credit Party, the ordinary course of such Credit
Party’s business, as conducted by such Credit Party in accordance with past
practices and undertaken by such Credit Party in good faith and not for
purposes of evading any covenant or restriction in any Loan Document.
“
Organizational Documents
” shall mean (a) for any
corporation, the memorandum and/or certificate and/or articles of
incorporation, the bylaws, any certificate of designation or other instrument
relating to the rights of preferred shareholders or stockholders of such
corporation and any shareholder rights agreement, (b) for any partnership,
the partnership agreement and, if applicable, the certificate of limited
partnership and (c) for any limited liability company, the operating
agreement and articles or certificate of formation or organization.
“
Patriot Act
” shall mean the Uniting and Strengthening America
by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act
of 2001, P.L. 107-56, as amended.
“
Permit
” shall mean any license, lease, power, permit,
franchise, certificate, authorization or approval issued by a Governmental
Authority.
“
Permitted Discretion
” shall mean, with respect to any Person, a
determination or judgment made by such Person in good faith in the exercise of
reasonable (from the perspective of a secured lender) credit or business
judgment.
“
Permitted Securities
” shall mean any Capital Stock of Evolving Systems that by their terms
(or by the terms of any security into which they are convertible or for which
they are exchangeable) or upon the happening of any event or otherwise (A) are
not convertible or
13
exchangeable for Indebtedness or any
securities that are not Permitted Securities, (B) (i) do not mature
and (ii) are not putable or redeemable at the option of the holder
thereof, in each case under clause (i) or (ii) in whole or in part on
or prior to the date that is six (6) months after the earlier of the
scheduled end of the Term or the actual payment in full in cash of the
Obligations, (C) do not require or mandate payments of dividends or
distributions in cash on or prior to the date that is six (6) months after
the earlier of the scheduled end of the Term or the actual payment in full in
cash of the Obligations, (D) are unsecured and by operation of law or by
legally binding agreement are subordinated in right of repayment, liens,
security and remedies to all of the Obligations and to all of Agent’s and the
other Lender Parties’ rights, Liens and remedies, (E) are not sold, issued
or otherwise transferred in connection with or as a part of a Public Offering,
and (F) to the extent the same are subject to or provide for any
Shareholder Blocking Rights, all such Shareholder Blocking Rights have been
waived in form and satisfactory to Agent in its Permitted Discretion.
“
Person
” shall mean an individual, a partnership, a corporation,
a limited liability company, a business trust, a joint stock company, a trust,
an unincorporated association, a joint venture, a Governmental Authority or any
other entity of whatever nature.
“
Pledge Agreement
” shall mean any pledge agreement between Agent
and any Credit Party, as the same be amended, modified, supplemented or
restated from time to time.
“
Priority Permitted Liens
” shall mean Permitted Liens
contemplated by and permitted under Sections 7.3(b), (c) (d), (e) and/or
(i).
“
Property
” shall mean all types of real, personal or mixed
property and all types of tangible or intangible property.
“
Pro Rata Share
” shall mean with respect to any Lender as to all
Lenders, the percentage obtained by dividing (i) the aggregate amount of
such Lender’s share of the Loans outstanding and such Lender’s Commitments by (ii) the
aggregate amount of all Lenders’ share of the Loans outstanding and all Lenders’
Commitments; in any case above, as such percentage may be adjusted by
assignments permitted pursuant to Section 12.2 and 2.9.
“
Public Offering
” shall mean any offer or sale of its Capital
Stock by Evolving Systems or any of its Subsidiaries pursuant to any
registration statement filed and effective with the Securities and Exchange
Commission or any other applicable Governmental Authority except offers and
sales pursuant to (a) any Special Registration Statement or (b) any
registration statements on Form S-3 that are effective as of the Closing
Date or, for Borrower or UK Guarantor, a successful application being made for
the listing of any part of its Capital Stock on a recognized stock exchange or
the sale or issue by way of floatation or public offering.
“
Qualified Asset Sale
” shall mean any sale, transfer or other
disposition by Borrower or any of its Subsidiaries permitted under Section 7.7(a),
(b), (d), (e), (f) and (g).
“
Real Estate
” shall mean each parcel of real Property owned by
any Credit Party.
14
“
Related Documents
” shall mean, collectively, the Subordinated
Loan Documents, the Transfer Pricing Agreements to be prepared pursuant to Section 6.7
and the Cross License Agreement.
“
Related Fund
” shall mean (a) any fund, trust or similar
entity that invests in commercial loans in the ordinary course of its business
and is advised or managed by (i) a Lender, (ii) an Affiliate of a
Lender, (iii) the same investment advisor that manages a Lender or (iv) an
Affiliate of an investment advisor that manages a Lender or (b) any
finance company, insurance company or other financial institution which
temporarily warehouses Loans for any Lender or any Person described in clause (a) above.
“
Related Transactions
” shall mean the transactions anticipated
by the Related Documents.
“
Relevant Jurisdiction
” means, in relation to a Credit Party:
(i)
its jurisdiction of
incorporation;
(ii)
any jurisdiction where
any asset subject to or intended to be subject to the Security Documents
governed by English law to be created by it is situated; and
(iii)
the jurisdiction whose
laws govern the perfection of any of the Security Documents governed by English
law entered into by it.
“
Requisite Lenders
” shall mean at any time Lenders then holding
more than
fifty percent (50%) of the sum of the Commitments then in
effect. For purposes of this definition,
all Lenders that are Affiliates and each Lender and its Related Funds shall be
deemed to constitute one, single Lender.
“
Responsible Officer
” shall mean the chief executive officer or
the president of Borrower, or any other officer having substantially the same
authority and responsibility; or, with respect to compliance with financial
covenants or delivery of financial information, the chief financial officer or
the treasurer of Borrower, or any other officer having substantially the same
authority and responsibility.
“
Revolving Facility
” shall have the meaning assigned to such
term in the recitals of this Agreement.
“
Revolving Note
” shall mean a Revolving Note and any additional
promissory note payable to the order of a Lender executed by Borrower
evidencing the Revolving Facility and Advances hereunder, together with any
promissory note issued in substitution thereof or replacement therefor, in each
case as the same may be amended, modified, divided, split, supplemented and/or
restated from time to time.
“
Security Account
” has the meaning given to it in the Debenture
for any accounts maintained in England or Wales.
“
Securities Act
” shall mean the Securities Act of 1933, as
amended.
15
“
Securities Exchange Act
” shall mean the Securities Exchange Act
of 1934, as amended.
“
Security Agreements
” shall mean any security or pledge
agreement executed by a Person in favor of Agent, for the benefit of the Lender
Parties, to secure the Obligations.
“
Security Documents
” shall mean, collectively, the Security
Agreements, the Debenture, the Guarantees, any Mortgages, the Intellectual
Property Security Agreements, all Account Control Agreements, all Landlord
Waivers and Consents and all other agreements, documents and instruments that
create or perfect the Liens in the Collateral, as the same may be modified,
amended or supplemented from time to time.
“
Seller Subordination Agreement
” shall mean the Subordination
Agreement dated the date hereof by and among Agent, some Credit Parties, the
holders of the Subordinated Notes and any other parties thereto as the same may
be modified, amended, restated or supplemented from time to time and in form
and substance satisfactory to Agent.
“
Shareholder Blocking Rights
” shall mean any rights of any owner
(direct or indirect) of any Capital Stock of any Credit Party which, pursuant
to the terms of any agreement or Organizational Document, has the right to
consent, or the effect of requiring such consent, to any foreclosure by the
Agent under any Pledge Agreement or otherwise to the exercise of any of Agent’s
rights and remedies thereunder or otherwise has the right to restrain, delay,
impair or otherwise interfere with the Agent in the event of Agent’s exercise
of its rights under a Pledge Agreement or other Security Documents.
“
Solvent
” shall mean, as to any Person at any time, that (a) the
fair value of the Property of such Person is greater than the amount of such
Person’s liabilities (including disputed, contingent and unliquidated liabilities)
as such value is established and liabilities evaluated for purposes of Section 101(32)(A) of
the Bankruptcy Code and, in the alternative, for purposes of the Uniform
Fraudulent Transfer Act; (b) the present fair saleable value of the
Property of such Person is not less than the amount that will be required to
pay the probable liability of such Person on its debts as they become absolute
and matured; and (c) such Person is able to realize upon its Property and
pay its debts and other liabilities (including disputed, contingent and
unliquidated liabilities) as they mature in the normal course of business.
“
Special Registration Statement
” shall mean (i) a
registration statement relating to any employee benefit plan, (ii) any
registration statement with respect to any corporate reorganization or
transaction under Rule 145 of the Securities Act, including any
registration statements related to the issuance or resale of securities issued
in such a transaction or (iii) any registration statement for the purpose
of effecting a business combination; provided that, in the case of any
registration statement described in clauses (ii) and (iii), the underlying
transaction is permitted under the Loan Documents or is otherwise consented to
in writing by Agent prior to the consummation thereof.
“
Subordinated Debt
” shall mean any Indebtedness, contingent
equity, earnout or other obligations of Evolving Systems or any of its
Subsidiaries that is unsecured and subordinated by written contract in right of
payment, liens, security and remedies to all of the Obligations and all of the
Lender Parties’ rights, Liens and remedies in form and substance satisfactory
to Requisite
16
Lenders, including, without limitation, the
unsecured Indebtedness of Evolving System evidenced by the Subordinated Loan
Documents.
“
Subordinated Loan Documents
” shall mean, collectively, the
Subordinated Notes and all other agreements, documents and instruments executed
and delivered in connection therewith.
“
Subordinated Notes
” shall mean the Subordinated Notes of
Evolving Systems dated November 14, 2005 in the aggregate principal amount
of $4,869,700.47.
“
Subordination Agreement
” shall mean, collectively, any of (i) the
Seller Subordination Agreement and (ii) any other agreement between Agent
and the holders of Subordinated Debt to which Evolving Systems is either a
party or executes an acknowledgement to such agreement, in each case as the
same may be modified, amended, restated or supplemented from time to time and
in form and substance satisfactory to Requisite Lenders.
“
Subsidiary
” shall mean, as to any initial Person, any other
Person in which more than fifty percent (50%) of all equity, membership,
partnership or other ownership interests is owned directly or indirectly by
such initial Person or one or more of its Subsidiaries. For purposes of the Loan Documents, any
reference to “Subsidiary” shall be deemed to refer to a Subsidiary of Borrower
unless the context provides otherwise.
“
Taxes Act
” means the Income and Corporate Taxes Act 1988.
“
Term
” shall mean the period commencing on the Closing Date and
ending on November 14, 2010.
“
Term Borrower
” shall mean Evolving Systems, Inc., a
Delaware corporation and Telecom Software Enterprises, LLC, a Colorado limited
liability company, each as a “Borrower” under the Term Loan Agreement.
“
Term Lenders
” shall mean Lenders as defined in the Term Loan
Agreement.
“
Term Loan
” shall mean the term loan made by Term Lenders to
Borrower on the Closing Date pursuant to the Term Loan Agreement, and all
Obligations related thereto.
“
Term Loan Agreement
” shall mean the Credit Agreement, dated the
date hereof by and among Evolving Systems, Telecom Software Enterprises, LLC,
Evolving Systems Holdings, Inc. and CapitalSource Finance LLC.
“
Term Loan Documents
” shall mean, collectively, the Term Loan
Agreement and all other agreements, documents, instruments and certificates
heretofore or hereafter executed or delivered to Agent by or on behalf of any
Credit Party in connection with any of the foregoing or the Term Loan, in each
case as the same may be amended, modified or supplemented from time to time.
“
Transfer Pricing Agreements
” shall mean agreements on transfer
pricing in form and substance satisfactory to Agent in its Permitted
Discretion.
17
“
Treaty Lender
” means a Lender which is beneficially entitled to
interest payable to such Lender under the Revolving Facility and (i) is
treated as a resident of a Treaty State for the purposes of a Treaty, (ii) does
not carry on a trade or business in the United Kingdom through a permanent
establishment with which such Lender’s participation in this Agreement is
effectively connected or to which payments under this Agreement are
attributable; and (iii) is, pursuant to the terms of the relevant Treaty,
entitled to full exemption from or repayment of United Kingdom tax in respect
of interest payable by Borrower under the Revolving Facility.
“
Treaty State
” means a jurisdiction having a double taxation
agreement (a “
Treaty
”) with the United Kingdom that makes provision for
exemption from tax imposed by the United Kingdom on interest.
“
TSE Contingent Obligations
” shall mean the Deferred Payment
obligations to the Sellers (as defined in Section 1.4 of the TSE Purchase
Agreement).
“
TSE Purchase Agreement
” shall mean the Acquisition Agreement of
Telecom Software Enterprises, LLC, dated as of October 15, 2004 among
Evolving Systems, as Buyer, and Lisa Marie Maxson and Peter McGuire, as
Sellers.
“UCC” shall mean the Uniform Commercial Code as in effect in the state
of New York from time to time; provided, that to the extent the UCC is used to
define any term herein or in any other Loan Document 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.
“
UK Guarantor
” shall mean Evolving Systems Holdings Ltd and each
subsidiary of such company incorporated under the laws of England and Wales
that subsequently becomes a Credit Party under this Agreement.
“
Underlying
Issuer
” shall mean a third Person that is the beneficiary of an L/C
Undertaking and has issued a letter of credit at the request of the L/C Issuer
for the benefit of Borrower.
“
Underlying
Letter of Credit
” shall mean a letter of credit that has been issued by an
Underlying Issuer.
“
US Guarantee
” shall mean the guarantee in favor of the Lender
Parties with respect to the Obligations dated on or about the date hereof and
given by Evolving Systems Inc, Telecom Software Enterprises LLC and
Intermediate Holdco.
“
U.S. Subsidiaries
” shall mean any Subsidiary of a Person
incorporated or otherwise organized under the laws of the United States of
America or a state of the United States of America or the District of Columbia.
“
Wholly-Owned Subsidiary
” shall mean any Subsidiary in which
(other than directors’ qualifying shares required by law) one hundred percent
(100%) of the equity, at the time as of which any determination is being made,
is owned, beneficially and of record, by Borrower or by one or more of the
other Wholly-Owned Subsidiaries of Borrower, or both.
18
Appendix B
Letters of Credit
(a)
Subject to the terms and conditions of this
Agreement, Agent agrees to cause the L/C Issuer from time to time during the
Term to issue standby letters of credit or documentary letters of credit for
the account of Borrower (each standby letter of credit or documentary letter of
credit, as applicable, a “Letter of Credit”) or to purchase participations or
execute indemnities or reimbursement obligations (each such undertaking, an “L/C
Undertaking”) with respect to documentary letters of credit which comply with
the provisions of this
Appendix B
issued by an Underlying Issuer for the
account of Borrower (each Letter of Credit or L/C Undertaking, as the context
requires, constituting or relating to a documentary letter of credit is
referred to in this Agreement as a “Documentary Letter of Credit” and each
Letter of Credit or L/C Undertaking, as the context requires, constituting or
relating to a standby letter of credit is referred to in this Agreement as a “Standby
Letter of Credit”);
provided
,
however
, that the L/C Issuer will
not be required to issue, purchase or execute a requested Documentary Letter of
Credit or a requested Standby Letter of Credit if any of the following would
result after giving effect thereto: (i) the
Letter of Credit Usage would exceed the Facility Cap
minus
the amount of
Advances then outstanding or (ii) the aggregate face amount of all Standby
Letters of Credit and Documentary Letters of Credit then outstanding would
exceed $500,000. If L/C Issuer is
obligated to advance funds under a Documentary Letter of Credit or Standby
Letter of Credit, Borrower immediately shall reimburse such L/C Disbursement to
L/C Issuer by paying to Agent an amount equal to such L/C Disbursement not
later than 1:00 p.m. (New York City time) on the date that such L/C
Disbursement is made, if Borrower shall have received written or telephonic
notice of such L/C Disbursement prior to 12:00 p.m. (New York City time)
on such date, or, if such notice has not been received by Borrower prior to
such time on such date, then not later than 1:00 p.m. (New York City
time), on the first Business Day that Borrower has such notice prior to 12:00 p.m.
(New York City time), and, in the absence of such reimbursement, the L/C
Disbursement immediately and automatically shall be deemed to be an Advance
hereunder and, thereafter, shall bear interest at the Applicable Rate for
Advances. To the extent an L/C
Disbursement is deemed to be an Advance hereunder, Borrower’s obligation to
reimburse such L/C Disbursement shall be discharged and replaced by the
resulting Advance. The portion of the
face amount of the Documentary Letters of Credit and Standby Letters of Credit
that has not been drawn upon shall not bear interest.
(b)
Borrower may from time to time upon notice
not later than (i) 12:00 noon (New York City time), at least one (1) Business
Day in advance, request Agent and L/C Issuer to assist Borrower in establishing
or opening a Standby Letter of Credit by delivering to L/C Issuer with a copy
to Agent, at the Payment Office, the L/C Issuer’s standard form of standby
letter of credit application (with such changes thereto as Borrower, Agent and
L/C Issuer may agree) (the “Standby Letter of Credit Application”) completed to
the satisfaction of Agent and the L/C Issuer (each in the exercise of its
Permitted Discretion), and such other certificates, documents and other papers
and information as Agent or L/C Issuer may reasonably request, and (ii) 12:00
noon (New York City time) at least one (1) Business Day in advance,
request Agent and L/C Issuer to assist Borrower in establishing a Documentary
Letter of Credit by delivering to L/C Issuer, with a copy to Agent, at the
Payment Office, the L/C Issuer’s standard form of documentary letter of credit
application (each “Documentary Letter of Credit Application”)
1
completed to
the satisfaction of the Agent and L/C Issuer (in the exercise of its Permitted
Discretion), and such other certificates, documents and other papers and
information as Agent or L/C Issuer may reasonably request. If requested by Agent or L/C Issuer, Borrower
also shall be an applicant under the application with respect to any Underlying
Letter of Credit that is to be the subject of an L/C Undertaking. Borrower acknowledges that, unless L/C Issuer
otherwise agree, the issuance of any Letter of Credit shall occur no sooner
than three (3) Business Days following the submission of a Standby Letter
of Credit Application or Documentary Letter of Credit Application, as the case
may be, to, and to the satisfaction of Agent and the L/C Issuer (each in the
exercise of its Permitted Discretion).
(c)
Each Documentary Letter of Credit and each
Standby Letter of Credit (and, in each case, each corresponding Underlying
Letter of Credit) shall, among other things, (i) be in form and substance
acceptable to the L/C Issuer (in the exercise of its Permitted Discretion),
including the requirement that the amounts payable thereunder must be payable
in Dollars, (ii) provide for the payment of sight or time drafts when
presented for honour thereunder in accordance with the terms thereof and when
accompanied by the documents described therein, (iii) in the case of a
Documentary Letter of Credit, have an expiry date not later than one hundred
and eighty (180) days after such Documentary Letter of Credit’s date of
issuance and in no event later than 30 days prior to the last day of the Term,
and (iv) in the case of a Standby Letter of Credit, have an expiry date
not later than twelve (12) months after such Standby Letter of Credit’s date of
issuance and in no event later than 30 days prior to the last day of the
Term. Each Standby Letter of Credit
Application and each Standby Letter of Credit shall be subject to the
International Standby Practices (ISP98) issued by the Institute for
International Banking Law and Practice, Inc., and any amendments or
revision thereof.
(d)
In connection with the issuance of any
Letter of Credit, Borrower shall indemnify, save and hold Agent, each Lender
and each L/C Issuer harmless from any loss, cost, expense or liability,
including, without limitation, payments made by Agent, any Lender or any L/C
Issuer, and reasonable out-of-pocket expenses and reasonable attorneys’ fees
incurred by Agent, any Lender or any L/C Issuer arising out of, or in connection
with, any Letter of Credit to be issued for the account of Borrower, except for
any such losses, costs, expenses or liabilities arising out of Agent’s, such
Lender’s or such L/C Issuer’s gross negligence or willful misconduct. Borrower shall be bound by the L/C Issuer’s
regulations and reasonable good faith interpretations of any Letter of Credit
issued or created for Borrower’s account, although this interpretation may be
different from Borrower’s own. Neither
Agent nor any Lender, any L/C Issuer, nor any of its correspondents shall be
liable for any error, negligence, or mistakes, whether of omission or commission,
in following Borrower’s instructions or those contained in any Letter of Credit
or of any modifications, amendments or supplements thereto or in issuing or
paying any Letter of Credit, except for, and solely to the extent of, Agent’s,
any Lender’s, such L/C Issuer’s or such correspondents’ gross negligence or
wilful misconduct.
(e)
Borrower shall authorize and direct each
Underlying Issuer to name Borrower as the “Account Party” therein and to accept
and rely upon the L/C Issuer’s instructions and agreements with respect to all
matters arising in connection with the documentary letters of credit issued by
it and the applications therefor.
2
(f)
In connection with all Documentary Letters
of Credit issued or caused to be issued by the L/C Issuer under this Agreement,
Borrower hereby appoints Agent, L/C Issuer and each Underlying Issuer, or the
respective designee(s) of any of them, as its attorney, with full power and
authority, after the occurrence and during the continuance of an Event of
Default, and in each case with respect to the Property shipped under such
Documentary Letter of Credit, and any documents, instruments or agreements
under or in connection with such Documentary Letter of Credit for such Property
(i) to sign and/or endorse Borrower’s name upon any warehouse or other
receipts or any letter of credit applications; (ii) to sign Borrower’s
name on bills of lading; (iii) to clear Inventory through the United
States of America Customs Department (“
Customs
”) in the name of
Borrower, L/C Issuer, Underlying Issuer, Agent or Agent’s, L/C Issuer’s or
Underlying Issuer’s designee, and to sign and deliver to Customs officials
powers of attorney in the name of Borrower for such purpose; (iv) to
complete in the name of Agent, L/C Issuer, Underlying Issuer or Agent’s, L/C
Issuer’s or Underlying Issuer’s designee, any order, sale or transaction,
obtain the necessary documents in connection therewith, and collect the
proceeds thereof; (v) to clear and resolve any questions of non-compliance
of documents; (vi) to give any instructions as to acceptance or rejection
of any documents or goods; (vii) to execute any and all applications for
steamship or airways guarantees, indemnities or delivery orders; (viii) to
grant any extensions of the maturity of, time of payment for, or time of
presentation of, any drafts, acceptances, or documents; and (ix) to agree
to any amendments, renewals, extensions, modifications, changes or cancellation
of any of the terms or conditions of any of the applications, Documentary
Letters of Credit, drafts or acceptances; all in Agent’s, L/C Issuer’s or
Underlying Issuer’s sole name, and the L/C Issuer shall be entitled to comply
with and honour any and all such documents or instruments executed by or
received solely from Agent, all without notice to or consent from
Borrower. Agent, L/C Issuer, Underlying
Issuer and their agents or attorneys will not be liable for any acts or
omissions or for any error of judgment or mistakes of fact or law, except gross
negligence or wilful misconduct. This
power, being coupled with an interest, may only be exercised by Agent or L/C
Issuer if an Event of Default has occurred and is continuing and is irrevocable
as long as any Documentary Letters of Credit remain outstanding. Borrower hereby authorizes and directs any
Underlying Issuer to deliver to the L/C Issuer all instruments, documents, and
such other writings and property received by such Underlying Issuer pursuant to
such Underlying Letters of Credit and to accept and rely upon the L/C Issuer’s
instructions with respect to all matters arising in connection with such
Underlying Letter of Credit and the related application.
(g)
Except as expressly provided for herein,
neither Agent, L/C Issuer, any Lender nor any Underlying Issuer shall be
responsible for: the existence, character, quality, quantity, condition,
packing, value or delivery of the goods purporting to be represented by any
documents; any differences or variation in the character, quality, quantity,
condition, packing, value or delivery of the goods from that expressed in the
documents; the validity, sufficiency or genuineness of any documents or of any
endorsements thereon, even if such documents should in fact prove to be in any
or all respects invalid, insufficient, fraudulent, or forged; the time, place,
manner or order in which shipment is made; partial or incomplete shipment, or
failure or omission to ship any or all of the goods referred to in the
Documentary Letters of Credit or documents; any deviation from instructions,
delay, default, or fraud by the shipper and/or any one else in connection with
the Collateral or the shipping thereof; or any breach of contract between the
shipper or vendors and Borrower.
3
(h)
Borrower must ensure that any necessary
import, export or other licenses or certificates for the import or handling of
the Collateral shipped under a Documentary Letter of Credit will have been
promptly procured; all foreign and domestic governmental laws and regulations
in regard to the shipment and importation of such Collateral or the financing
thereof will have been promptly and fully complied with in all material
respects; and any certificates in that regard that Agent and/or L/C Issuer may
at any time request will be promptly furnished.
Borrower warrants and represents that all shipments made under any such
Documentary Letters of Credit are in accordance in all material respects with
the governmental laws and regulations of the countries in which the shipments
originate and terminate, and are not prohibited by any such law and
regulations. Borrower assumes all risk,
liability and responsibility for, and agrees to pay and discharge all present
and future local, state, federal or foreign taxes, duties, or levies in respect
of such Collateral and/or the applicable Documentary Letter of Credit. Any embargo, restriction, laws, customs or
regulations of any country, state, city or other political subdivision where
such Collateral is or may be located or wherein payments are to be made or
wherein drafts may be drawn, negotiated, accepted, or paid shall be solely at Borrower’s
risk, liability and responsibility.
(i)
Each Lender shall, to the extent of its Pro
Rata Share of the aggregate amount of all disbursements made with respect to
the Letters of Credit, be deemed to have irrevocably purchased an undivided
participation in each L/C Disbursement and each Advance made as a consequence
of such disbursement. If at the time a
L/C Disbursement is made the unpaid balance of Advances exceeds or would
exceed, with the making of such L/C Disbursement, the Facility Cap and if such
L/C Disbursement is not reimbursed by Borrower within one (1) Business
Day, then Agent shall promptly notify each Lender, and upon Agent’s demand each
Lender shall pay to Agent such Lender’s Pro Rata Share of such unreimbursed
disbursement together with such Lender’s Pro Rata Share of Agent’s unreimbursed
costs and expenses relating to such unreimbursed disbursement. Upon receipt by Agent of a repayment from
Borrower of any amount disbursed by Agent for which Agent had already been
reimbursed by the Lenders, Agent shall deliver to each of the Lenders that
Lender’s Pro Rata Share of such repayment.
Each Lender’s participation commitment shall continue until the last to
occur of any of the following events: (i) L/C Issuer ceases to be
obligated to issue or to cause the issuance of Letters of Credit hereunder; (ii) no
Letter of Credit remains outstanding and uncancelled; or (iii) all Persons
(other than Borrower) have been fully reimbursed for all payments made under or
relating to all Letters of Credit.
(j)
The obligations of a Lender to make
payments to Agent for the account of Agent or the L/C Issuer with respect to a
Letter of Credit shall be irrevocable, without any qualification or exception
whatsoever and shall be made in accordance with the terms and conditions of
this Agreement under all circumstances, including, without limitation, any of
the following circumstances:
(i)
any
lack of validity or enforceability of this Agreement or any of the Loan
Documents;
(ii)
the
existence of any claim, setoff, defense or other right that Borrower may have
at any time against a beneficiary named in such Letter of Credit or any
transferee of such Letter of Credit (or any Person for which any such
transferee may
4
be acting), Agent, L/C Issuer,
any Lender, or any other person, whether in connection with this Agreement,
such Letter of Credit, the transactions contemplated herein or any related
transactions (including any underlying transactions between Borrower or any
other party and the beneficiary named in such Letter of Credit);
(iii)
any
draft, certificate or any other document presented under such Letter of Credit
proving to be forged, fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect;
(iv)
the
surrender or impairment of any security for the performance or observance of
any of the terms of this Agreement or any of the Loan Documents;
(v)
any
failure by Agent or the L/C Issuer to provide any notices required pursuant to
this Agreement relating to such Letter of Credit;
(vi)
any
payment by the L/C Issuer under any of the Letters of Credit against
presentation of a draft or certificate which does not comply with the terms of
such Letter of Credit (if, in the good faith opinion of the L/C Issuer, such
prepayment is deemed to be appropriate); or
(vii)
the
occurrence and continuation of any Default or Event of Default;
provided
,
however
, that after paying in
full its reimbursement obligation hereunder, nothing herein shall adversely
affect the right of Borrower or any Lender, as the case may be, to commence any
proceeding against such L/C Issuer for any wrongful disbursement made by such
L/C Issuer under a Letter of Credit as a result or solely to the extent of acts
or omissions constituting gross negligence or wilful misconduct on the part of
such L/C Issuer;
(k)
If by reason of (i) any change in any
applicable law, treaty, rule, or regulation or any change in the interpretation
or application thereof by any Governmental Authority, or (ii) compliance
by any Underlying Issuer or Lender with any direction, request, or requirement
(irrespective of whether having the force of law) of any Governmental Authority
or monetary authority including, Regulation D of the Federal Reserve Board as
from time to time in effect (and any successor thereto):
(1)
any reserve,
deposit, or similar requirement is or shall be imposed or modified in respect
of any Letter of Credit issued hereunder, or
(2)
there shall
be imposed on any Underlying Issuer, Lender or Agent any other condition
regarding any Letter of Credit issued pursuant hereto;
and the result of the foregoing is to increase, directly or indirectly,
the cost to any Underlying Issuer, Lender or Agent of issuing, making,
guaranteeing, or maintaining any Letter of Credit or to reduce the amount
receivable in respect thereof by any Underlying Issuer, Lender or Agent, then,
and in any such case, Agent may, at any time within a reasonable period after
the additional cost is incurred or the amount received is reduced, notify
Borrower, and Borrower shall pay on demand such amounts as necessary to
compensate Agent and Lenders for such additional cost or
5
reduced receipt, together with interest on such amount from the date of
such demand until payment in full thereof at the Applicable Rate for
Advances. The determination by Agent of
any amount due pursuant to this Section (k), as set forth in a certificate
setting forth the calculation thereof in reasonable detail, shall, in the
absence of manifest or demonstrable error, be final and conclusive and binding
on all of the parties hereto.
(l)
Borrower acknowledges and agrees that
certain of the Documentary Letters of Credit may provide for the presentation
of time drafts to the Underlying Issuer.
If an Underlying Issuer accepts such a time draft that is presented
under and in accordance with an Underlying Letter of Credit, it is acknowledged
and agreed that (i) the Documentary Letter of Credit will require the L/C
Issuer to reimburse the Underlying Issuer for amounts paid on account of such
time draft on or after the maturity date thereof, (ii) the pricing
provisions hereof (including Section 3.3) shall continue to apply, until
payment of such time draft on or after the maturity date thereof, as if the
Underlying Letter of Credit were still outstanding, and (iii) on the date
on which L/C Issuer makes payment to the Underlying Issuer of the amounts paid
on account of such time draft, Borrower promptly shall reimburse such amount to
L/C Issuer as provided in Section (a) above and such amount shall
constitute an L/C Disbursement hereunder.
If any
portion of the Letter of Credit Usage, whether or not then due and payable,
remains unpaid or outstanding on the Revolving Loan Maturity Date or such
earlier date as this Agreement may be terminated, Borrower shall: (A) provide cash collateral therefor in
the manner described in Section 3.3; or (B) cause all such Letters of
Credit and guaranties thereof, if any, to be cancelled and returned; or (C) deliver
a stand-by letter (or letters) of credit in guarantee of such portion of the
Letter of Credit Usage, which stand-by letter (or letters) of credit shall be
of like tenor and duration (plus thirty (30) additional days) as, and in an
amount equal to at least 105% of the aggregate maximum amount then available to
be drawn under, such Letters of Credit to which such outstanding Letter of
Credit Usage relate and shall be issued by a Person, and shall be subject to
such terms and conditions, as are satisfactory to Agent in its Permitted
Discretion.
6
SCHEDULE A
Lenders/Commitments
|
Lenders
|
|
Revolving
Commitment
|
|
|
|
|
|
|
|
CSE
Finance, Inc.
4445 Willard Avenue, 12
th
Floor
Chevy Chase, Maryland 20815
Attention: Corporate Finance Group, Portfolio Manager
Telephone: (301) 841-2700
FAX: (301) 841-2360
E-Mail: rladd@capitalsource.com
|
|
$
|
4,500,000
|
|
|
|
|
|
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Wire
Instructions:
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Bank:
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Bank of America,
Baltimore, MD
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Account:
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003939396662
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ABA:
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026009593
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|
|
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Account Name:
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CapitalSource
Funding LLC - CFG
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|
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Reference:
|
Evolving Systems
|
|
|
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|
|
|
|
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Total:
|
|
$
|
4,500,000
|
|
7
Exhibit 10.1(h)
(1) THE COMPANIES NAMED IN THIS DEED AS
CHARGING COMPANIES
- and -
(2) CAPITALSOURCE FINANCE LLC
(as Collateral Agent)
DEBENTURE
|
THIS
DEBENTURE
is made on
|
|
2005
|
BETWEEN
(1)
THE COMPANIES NAMED IN THIS DEED AS
CHARGING COMPANIES
(the
“Initial Charging Companies”
); and
(2)
CAPITALSOURCE FINANCE LLC
(as collateral agent for the Lender Parties (as defined below)) (in
such capacity, the
“Collateral Agent”
).
IT IS AGREED
:
1.
DEFINITIONS AND INTERPRETATION
1.1
Definitions
In this
Deed:
(a)
terms defined in, or construed for the purposes of, the Revolving
Facility Agreement (as defined below) have the same meanings when used in this
Deed (unless the same are otherwise defined in this Deed); and
(b)
the following terms have
the following meanings:
“Accession Deed”
means an accession deed
substantially in the form set out in schedule 8 (
Form of Accession Deed
);
“Account Bank”
means The Royal Bank of Scotland plc, Corporate Office, Thames
Valley Corporate, 4 Abbey Gardens, Abbey Street, Reading RG1 3BA or such other
bank with which any Security Account is maintained from time to time;
“Act”
means the Law of Property Act 1925;
“Assigned Assets”
means the Security Assets
expressed to be assigned pursuant to clause 4.2 (
Security assignments
);
“Charged Investments”
means the Charged Securities and
all present and future Related Rights accruing to all or any of the Charged
Securities;
“Charged Securities”
means:
(a)
the securities specified in part 2 of schedule 2 (
Details of Security Assets
); and
(b)
all other stocks, shares, debentures, bonds, warrants, coupons,
negotiable instruments, certificates of deposit or other securities or
“investments”
(as defined in part II of schedule II
to the Financial Services and Markets Act 2000 as in force at the date of this
Deed) now or in future owned (legally or beneficially) by a Charging Company, held
by a nominee on its behalf or in which such Charging Company has an interest at
any time;
1
but,
for the avoidance of doubt excluding any shareholding in Evolving Systems GmbH,
unless and until required to be pledged pursuant to clause 6.7(c) of the
Revolving Facility Agreement;
“Charging
Companies”
means the
Initial Charging Companies and any other company which accedes to this Deed pursuant to an
Accession Deed;
“Company”
means Evolving Systems Holdings Ltd, a company
incorporated and registered under the laws of England and Wales with number
5272751 with its registered office at One Angel Square, Torrens Street, London
EC1V 1PL;
“Default”
has the meaning given to that term in the
Revolving Facility Agreement;
“Default Rate”
has the meaning given to that
term in the Revolving Facility Agreement;
“Delegate”
means any delegate, sub-delegate, agent,
attorney or co-trustee appointed by the Collateral Agent or by a Receiver;
“Event of Default”
has the meaning given to that
term in the Revolving Facility Agreement;
“Insurances”
means all policies of insurance (and all cover notes) which are at
any time held by, or written in favour of, a Charging Company or in which a
Charging Company from time to time has an interest (including, without limitation, the policies of insurance (if any)
specified in part 5 of schedule 2 (
Details
of Security Assets
));
“Intellectual Property”
means all
present and future legal and/or equitable interests (including, without limitation,
the benefit of all licences in any part of the world) of each Charging Company
in, or relating to, registered and unregistered trade marks and service marks,
patents, registered designs, utility models, applications for any of the
foregoing, trade names, copyrights, design rights, unregistered designs,
inventions, confidential information, know-how, registrable business names,
database rights, domain names and any other rights of every kind deriving from
or through the exploitation of any of the foregoing (including, without
limitation, the intellectual property rights (if any) specified in part 3 of schedule 2
(
Details of Security Assets
));
“Party”
means a party to this Deed;
“Permitted Disposal”
means a disposal permitted
pursuant to clause 7.7 (
Transfer of
Assets
) of the Revolving Facility Agreement;
“Permitted Indebtedness”
has the meaning given to that
term in the Revolving Facility Agreement;
“Permitted Lien”
has the meaning given to that
term in the Revolving Facility Agreement;
“Planning Acts”
means (a) the Town and Country Planning Act 1990, (b) the
Planning (Listed Buildings and Conservation Areas) Act 1990, (c) the
Planning (Hazardous Substances) Act 1990, (d) the Planning (Consequential
Provisions) Act 1990, (e) the Planning and Compensation Act 1991, (f) any
regulations made pursuant to any of the foregoing and (g) any other
legislation of a similar nature;
2
“Property”
means all estates and interests in freehold,
leasehold and other immovable property (wherever situated) now or in future
belonging to any Charging Company, or in which any Charging Company has an
interest at any time (including the registered and unregistered land (if any) in England and
Wales specified in part 1 of schedule 2 (
Details of Security Assets
)), together with:
(a)
all buildings and fixtures (including trade fixtures) and fixed
plant and machinery at any time thereon;
(b)
all easements, rights and agreements in respect thereof;
(c)
all proceeds of sale of that property; and
(d)
the benefit of all covenants given in respect thereof;
“Receivables”
means all present and future book debts and other debts, rentals,
royalties, fees, VAT and monetary claims and all other amounts at any time
recoverable or receivable by, or due or owing to, any Charging Company (whether
actual or contingent and whether arising under contract or in any other manner
whatsoever) together with:
(a)
the benefit of all rights, guarantees, Security Interests and
remedies relating to any of the foregoing (including, without limitation,
negotiable instruments, indemnities, reservations of property rights, rights of
tracing and unpaid vendor’s liens and similar associated rights); and
(b)
all proceeds of any of the foregoing;
“Receiver”
means any receiver, receiver and manager or administrative receiver appointed
by the Collateral Agent under this Deed;
“Related Rights”
means, in relation to any Charged Security:
(a)
all dividends, distributions and other income paid or payable on the
relevant Charged Security or on any asset referred to in paragraph (b) of
this definition;
(b)
all rights, monies or property accruing or offered at any time in
relation to such Charged Security whether by way of redemption, substitution,
exchange, bonus or preference, under option rights or otherwise;
“Relevant Contract”
means each agreement, if any, specified in part 4 of schedule 2
(
Details of Security Assets
)
together with each other agreement supplementing or amending or novating or
replacing the same;
“Revolving Facility Agreement”
means the revolving
credit facility agreement dated the
same date as this Deed and made between (1) Evolving Systems Holdings Ltd
and Evolving Systems Ltd and (2) CapitalSource Finance LLC in its
capacities as Agent (including Collateral Agent), Lender and L/C Issuer;
“Secured Obligations”
means all present and future obligations and liabilities (whether
actual or contingent and whether owed jointly or severally or alone or in any
other capacity whatsoever) of any Credit Party to CapitalSource Finance LLC (in
its various capacities) and/or the other Lender Parties (or any of them) under
or pursuant to the Loan Documents (including all monies covenanted to be paid
under this Deed),
3
provided
that no obligation or liability shall be included in the definition
of
“Secured Obligations”
to the extent
that, if it were so included, this Deed (or any part of it) would constitute
unlawful financial assistance within the meaning of sections 151 and 152 of the
Companies Act 1985 and provided further that the Secured Obligations shall not
include any Obligations (as defined in the Term Loan Agreement) or arising
under any of the Loan Documents (as defined in the Term Loan Agreement);
“Security”
means the Security Interests created by or pursuant to this Deed;
“Security Account”
has the
meaning given to that term in clause 11.6(a)(ii);
“Security Assets”
means all property and assets from time to time mortgaged, charged
or assigned (or expressed to be mortgaged, charged or assigned) by or pursuant
to this Deed;
“Security Interest”
means any mortgage, pledge, lien, charge, assignment by way of
security, hypothecation, security interest, title retention, preferential right
or trust arrangement or any other security agreement or arrangement having the
effect of security;
“Security Period”
means the period beginning on the
date of this Deed and ending on the date on which:
(a)
all the Secured Obligations have been unconditionally and irrevocably
paid and discharged in full; and
(b)
no Lender Party has any further commitment, obligation or liability
under or pursuant to the Loan Documents.
“Term Loan Agreement”
means the term loan facility agreement dated the same date as this
Deed and made between (1) Evolving Systems, Inc., Telecom Software
Enterprises, LLC and Evolving Systems Holdings, Inc. (2) CapitalSource
Finance LLc, in its capacities as Agent (including Collateral Agent) and (3) the
Lenders from time to time a party thereto;
1.2
Interpretation
(a)
Unless a contrary indication appears, any reference in this Deed to:
(i)
a
“Charging Company”
,
the
“Collateral Agent”
or any
other
“Lender Party”
shall be
construed so as to include its successors in title, permitted assigns and
permitted transferees;
(ii)
“this Deed”
,
the
“Revolving Facility Agreement”
,
any other
“Loan Document”
or any
other agreement or instrument shall be construed as a reference to this Deed,
the Revolving Facility Agreement, such other Loan Document or such other agreement
or instrument as amended, supplemented, novated and/or replaced in any manner
from time to time (even if any of the same increases the obligations of
any Group Company or provides for further advances);
(iii)
“assets”
includes
any present and future properties, revenues and rights of every description and
includes uncalled capital;
4
(iv)
an Event of Default that is
“continuing”
shall be construed as meaning an Event of Default that has not been waived in
writing by the Agent nor remedied to the satisfaction of the Agent;
(v)
“including”
or
“includes”
means including or includes
without limitation;
(vi)
“Secured Obligations”
includes obligations and liabilities which would be treated as such
but for the liquidation or dissolution of or similar event affecting any Group
Company;
(vii)
a provision of law is a reference to that provision as amended or
re-enacted; and
(viii)
the singular includes the plural and vice versa.
(b)
References to clauses, paragraphs and schedules are to be construed,
unless otherwise stated, as references to clauses, paragraphs and schedules of
this Deed and references to this Deed include its schedules.
(c)
Clause and schedule headings are for convenience only and shall
not affect the construction of this Deed.
(d)
Each undertaking of any Charging Company (other than a payment
obligation) contained in this Deed must be complied with at all times during
the Security Period and is given by such Charging Company for the benefit of
the Collateral Agent and each other Lender Party.
(e)
The terms of the other Loan Documents and of any side letters
between any of the parties thereto in relation to any Loan Document are
incorporated in this Deed to the extent required to ensure that any disposition
of the Property contained in this Deed is a valid disposition in accordance
with section 2(1) of the Law of Property (Miscellaneous Provisions)
Act 1989.
(f)
If the Collateral Agent or the Agent reasonably considers that an
amount paid by any Charging Company to a Lender Party under a Loan Document is
capable of being avoided or otherwise set aside on the liquidation or
administration of such Charging Company, then that amount shall not be
considered to have been irrevocably paid for the purposes of this Deed.
(g)
The liabilities and obligations of each Charging Company under this
Deed shall be joint and several. Each Charging Company
agrees to be bound by this Deed notwithstanding that any other Charging Company
which was intended to sign or be bound by this Deed did not so sign or is not
bound by this Deed.
(h)
The Parties intend that this document shall take effect as a deed
notwithstanding the fact that a Party may only execute this document under
hand.
(i)
If there is any conflict or inconsistency between any provision of
this Deed and any provision of the Revolving Facility Agreement, then the
Revolving Facility Agreement shall prevail.
1.3
Trust
All
Security Interests and dispositions made or created and all obligations and undertakings
contained in this Deed to, in favour of or for the benefit of the Collateral
Agent are made,
5
created
and entered into in favour of the Collateral Agent as trustee for the Lender
Parties from time to time pursuant to the terms of the Revolving Facility
Agreement.
1.4
Third party rights
A
person who is not a Party shall have no right under the Contracts (Rights of
Third Parties) Act 1999 to enforce or enjoy the benefit of any term of this
Deed.
2.
COVENANT
TO PAY
2.1
Covenant to pay
(a)
Each Charging Company, as principal obligor and not merely as
surety, covenants in favour of the Collateral Agent that it will pay and
discharge the Secured Obligations from time to time when they fall due and are
payable.
(b)
Every payment by a Charging Company of a Secured Obligation which is
made to or for the benefit of a Lender Party to which that Secured Obligation
is due and payable in accordance with the Loan Document under which such sum is
payable to that Lender Party shall operate in satisfaction to the same extent
of the covenant contained in clause 2.1(a).
2.2
Default interest
(a)
Any amount which is not paid under this Deed when due shall bear
interest (both before and after judgment and payable on demand) from the due
date until the date on which such amount is unconditionally and irrevocably
paid and discharged in full on a daily basis at the rate and in the manner
agreed in the Loan Document under which such amount is payable and, in the absence
of such agreement, at the Default Rate from time to time.
(b)
Default interest will accrue in accordance with the Revolving
Facility Agreement.
3.
GRANT
OF SECURITY
3.1
Nature of security
All
Security Interests and dispositions created or made by or pursuant to this Deed
are created or made:
(a)
in favour of the Collateral Agent;
(b)
with full title guarantee in accordance with the Law of Property
(Miscellaneous Provisions) Act 1994; and
(c)
as continuing security for payment of the Secured Obligations.
3.2
Qualifying floating charge
Paragraph
14 of schedule B1 to the Insolvency Act 1986 applies to any floating
charge created by or pursuant to this Deed (and each such floating charge is a
qualifying floating charge for the purposes of the Insolvency Act 1986).
6
4.
FIXED
SECURITY
4.1
Fixed charges
Each
Charging Company charges and agrees to charge all of its present and future
right, title and interest in and to the following assets which are at any time
owned by it, or in which it from time to time has an interest:
(a)
by way of first legal mortgage:
(i)
the Property (if any) specified in part 1 of schedule 2 (
Details of Security Assets
); and
(ii)
all other Property (if any) at the date of this Deed vested in, or
charged to, such Charging Company (not charged by clause 4.1(a)(i));
(b)
by way of first fixed charge:
(i)
all other Property and all interests in Property (not charged by
clause 4.1(a)); and
(ii)
all licences to enter upon or use land and the benefit of all other
agreements relating to land;
(c)
by way of first fixed charge all plant and machinery (not charged by
clauses 4.1(a) or 4.1(b)) and the benefit of all contracts, licences and
warranties relating to the same;
(d)
by way of first fixed charge:
(i)
all computers, vehicles, office equipment and other equipment (not
charged by clause 4.1(c)); and
(ii)
the benefit of all contracts, licences and warranties relating to
the same,
other
than any which are for the time being part of any Charging Company’s
stock-in-trade or work-in-progress) but, without prejudice to clause 7.7(a) or
(c) of the Revolving Facility Agreement;
(e)
by way of:
(i)
first fixed charge the Charged Securities referred to in part 2 of schedule 2
(
Details of Security Assets
);
(ii)
first fixed charge all other Charged Securities (not charged by
clause 4.1(e)(i)),
in each
case, together with (A) all Related Rights from time to time accruing to
those Charged Securities and (B) all rights which such Charging Company
may have at any time against any clearance or settlement system or any
custodian in respect of any Charged Investments;
(f)
by way of first fixed charge:
(i)
the Security Accounts and all monies at any time standing to the
credit of the Security Accounts; and
7
(ii)
all accounts of such Charging Company with any bank, financial
institution or other person not charged by clause 4.1(f)(i) and all monies
at any time standing to the credit of such accounts, (but excluding any account
subject to a Permitted Lien),
in each
case, together with all interest from time to time accrued or accruing on such
monies, any investment made out of such monies or account and all rights to
repayment of any of the foregoing;
(g)
by way of first fixed charge:
(i)
the Intellectual Property (if any) specified in part 3 of schedule 2
(
Details of Security Assets
); and
(ii)
all other Intellectual Property (if any) (not charged by clause
4.1(g)(i));
(h)
to the extent that any Assigned Asset is not effectively assigned
under clause 4.2 (
Security assignments
),
by way of first fixed charge, such Assigned Asset;
(i)
by way of first fixed charge (to the extent not otherwise charged or
assigned in this Deed):
(i)
the benefit of all licences, consents, agreements and authorisations
held or used in connection with the business of such Charging Company or the
use of any of its assets; and
(ii)
any letter of credit issued in favour of such Charging Company and
all bills of exchange and other negotiable instruments held by it,
without prejudice to clauses 7.4(e), 7.7(b) and
7.7(f) of the Revolving Facility Agreement;
(j)
by way of first fixed charge all of the goodwill and uncalled
capital of such Charging Company.
4.2
Security assignments
Each
Charging Company assigns and agrees to assign absolutely (to the extent the
same are assignable and subject to a proviso for reassignment on redemption)
all its present and future right, title and interest in and to:
(a)
the Relevant Contracts, all rights and remedies in connection with
the Relevant Contracts and all proceeds and claims arising therefrom;
(b)
the Insurances, all claims under the Insurances and all proceeds of
the Insurances; and
(c)
the Security Accounts and all monies at any time standing to the
credit of the Security Accounts, together with all interest from time to time
accrued or accruing on such monies, any investment made out of such monies or
account and all rights to repayment of any of the foregoing; and
(d)
all other Receivables (not assigned under clauses 4.2(a) or 4.2(b) or
4.2(c)).
To the
extent that any Assigned Asset described in clause 4.2(b) is not
assignable, the assignment which that clause purports to effect shall operate
as an assignment of all present and future rights and claims of such Charging
Company to any proceeds of the Insurances.
8
4.3
Notice of assignment
Upon an
Event of Default, which has occurred and is continuing each Charging Company
shall, immediately:
(a)
in respect of each Relevant Contract to which it is a party, deliver
a duly completed notice of assignment to each other party to that Relevant
Contract, and shall use its reasonable endeavours to procure that each such
party executes and delivers to the Collateral Agent an acknowledgement, in each
case in the respective forms set out in schedule 6 (
Form of notice to and acknowledgement by party
to Relevant Contract
) (or in such other form as the Collateral Agent
shall agree); and
(b)
in respect of each of its Insurances, deliver a duly completed
notice of assignment to each other party to that Insurance, and shall use its
reasonable endeavours to procure that each such party executes and delivers to
the Collateral Agent an acknowledgement, in each case in the respective forms
set out in schedule 7 (
Form of
notice to and acknowledgement by insurers
) (or in such other form as
the Collateral Agent shall agree); and
(c)
deliver a duly completed notice to the Account Bank and shall use
its best endeavours to procure that the Account Bank executes and delivers to
the Collateral Agent an acknowledgement, in each case in the respective forms
set out in schedule 5 (
Form of
notice to and acknowledgement from bank operating Security Accounts
)
(or in such other form as the Collateral Agent shall agree).
4.4
Assigned Assets
The
Collateral Agent is not obliged to take any steps necessary to preserve any
Assigned Asset, to enforce any term of a Relevant Contract against any person
or to make any enquiries as to the nature or sufficiency of any payment
received by it pursuant to this Deed.
5.
FLOATING
CHARGE
Each
Charging Company charges and agrees to charge by way of first floating charge
all of its present and future:
(a)
assets and undertaking (wherever located) which are not effectively
charged by way of first fixed mortgage or charge or assigned pursuant to
clause 4.1 (
Fixed charges
),
clause 4.2 (
Security assignments
)
or any other provision of this Deed; and
(b)
(whether or not effectively so charged or assigned) heritable
property and all other property and assets in Scotland.
6.
CONVERSION
OF FLOATING CHARGE
6.1
Conversion of notice
The
Collateral Agent may, by written notice to a Charging Company, convert the
floating charge created under this Deed into a fixed charge as regards all or
any of the assets of such Charging Company specified in the notice if:
(a)
an Event of Default has occurred and is continuing; or
(b)
the Collateral Agent (acting reasonably) considers any Security
Assets (whether or not those specified in the notice) to be in danger of being
seized or sold under any
9
form of
distress, attachment, execution or other legal process or to be otherwise in
jeopardy.
6.2
Small companies
The
floating charge created under this Deed by any Charging Company shall not
convert into a fixed charge solely by reason of a moratorium being obtained
under the Insolvency Act 2000 (or anything done with a view to obtaining such a
moratorium) in respect of such Charging Company.
6.3
Automatic conversion
The
floating charge created under this Deed shall (in addition to the circumstances
in which the same will occur under general law) automatically convert into a
fixed charge:
(a)
in relation to any Security Asset which is subject to a floating
charge if:
(i)
such Charging Company creates (or attempts or purports to create)
any Security Interest (other
than a Permitted Lien) on or over the relevant Security Asset without the prior
written consent of the Collateral Agent; or
(ii)
any third party levies or attempts to levy any distress, execution,
attachment or other legal process against any such Security Asset; and
(b)
over all Security Assets of a Charging Company which are subject to
a floating charge if an administrator is appointed in respect of such Charging
Company or the Collateral Agent receives notice of intention to appoint such an
administrator.
6.4
Partial conversion
The
giving of a notice by the Collateral Agent pursuant to clause 6.1 (
Conversion by notice
) in relation to any
class of assets of any Charging Company shall not be construed as a waiver or
abandonment of the rights of the Collateral Agent to serve similar notices in
respect of any other class of assets or of any other right of the Collateral
Agent and/or the other Lender Parties.
7.
CONTINUING
SECURITY
7.1
Continuing security
The
Security is continuing and will extend to the ultimate balance of the Secured
Obligations regardless of any intermediate payment or discharge in whole or in
part. This Deed shall remain in full
force and effect as a continuing security for the duration of the Security
Period.
7.2
Additional and separate security
This
Deed is in addition to, without prejudice to, and shall not merge with, any
other right, remedy, guarantee or Security Interest which the Collateral Agent
and/or any other Lender Party may at any time hold for any Secured Obligation.
7.3
Right to enforce
This
Deed may be enforced against each or any Charging Company without the
Collateral Agent and/or any other Lender Party first having recourse to any
other right, remedy, guarantee or Security Interest held by or available to it
or any of them.
10
8.
LIABILITY
OF CHARGING COMPANIES RELATING TO SECURITY ASSETS
Notwithstanding
anything contained in this Deed or implied to the contrary, each Charging
Company remains liable to observe and perform all conditions and obligations
assumed by it in relation to the Security Assets. The Collateral Agent is under no obligation to
perform or fulfil any such condition or obligation or to make any payment in
respect of any such condition or obligation.
9.
ACCOUNTS
No
monies at any time standing to the credit of any account (of any type and
however designated) of any Charging Company with the Collateral Agent and/or
the Lender Parties (or any of them) or in which any Charging Company has an
interest (and no rights and benefits relating thereto) shall be capable of
being assigned to any third party, other than any monies subject to a Permitted
Lien.
10.
REPRESENTATIONS
10.1
General
Each
Charging Company makes the representations and warranties set out in this
clause 10 to the Collateral Agent and to
each other Lender Party.
10.2
No Security Interests
Its Security Assets are, or when acquired
will be, beneficially owned by such Charging Company free from any Security
Interest other than:
(a)
as created by this Deed; and
(b)
as permitted by the Revolving Facility Agreement.
10.3
Charged Securities
The Charged Securities are fully paid and
the Charged Securities listed in part 2 of schedule 2 (
Details of Security Assets
) constitute the
entire share capital owned by each Charging Company in the relevant company.
10.4
Property
In relation to the Property, save as disclosed in
accordance with clause 6.7(c ) in schedule 6.7(c) of the Revolving
Facility Agreement:
(a)
part 1 of schedule 3 (
Details
of Security Assets
) identifies all freehold and leasehold Properties
which are beneficially owned by each Charging Company at the date of this Deed;
(b)
except as disclosed in writing, to the Lender Parties, (where
relevant):
(i)
there is no breach of the Planning Acts or any other law or
regulation which may materially affect the value or marketability of the
Property;
(ii)
there is no covenant, agreement, stipulation, reservation,
condition, interest, right or other matter affecting a Charging Company’s
ownership or ability to occupy (in a material respect) any Property;
11
(iii)
there is no unregistered interest which overrides (A) first
registration or (B) registered dispositions affecting the Property, and
there is no person in adverse possession of the Property;
(iv)
no person has a right to terminate the use of a facility necessary
for the enjoyment and use of the Property;
(v)
no Charging Company is aware of any adverse claim in respect of the
ownership of, or any interest in, the Property;
(vi)
the Property is free from any other tenancies or licences; and
(vii)
the Property is in good and substantial repair.
10.5
Time when representations made
(a)
All the representations and warranties in this clause 10 are made by
each Charging Company on the date of this Deed and (except for those in clause
10.4(a)) are also deemed to be made by each Charging Company:
(i)
on the date of each Borrowing Certificate and on each Advance under
the Revolving Facility Agreement; and
(ii)
(in the case of a company that accedes to the terms of this Deed
pursuant to an Accession Deed) on the day on which it becomes a Charging
Company.
(b)
Each representation or warranty deemed to be made after the date of
this Deed shall be deemed to be made by reference to the facts and
circumstances existing at the date the representation or warranty is deemed to
be made.
11.
UNDERTAKINGS
BY THE CHARGING COMPANIES
11.1
Restrictions on dealing
No
Charging Company shall do or agree to do any of the following without the prior
written consent of the Collateral Agent:
(a)
create or permit to subsist any Security Interest on any Security
Asset except
a Permitted Lien;
(b)
sell, transfer, lease, lend or otherwise dispose of (whether by a
single transaction or a number of transactions and whether related or not) the
whole or any part of its interest in any Security Asset except for a Permitted
Disposal or as in accordance with the Loan Documents.
11.2
Security Assets generally
Each
Charging Company shall:
(a)
permit the Collateral Agent (or its designated representatives), on
reasonable written notice:
(i)
(and upon reasonable request), access during normal office hours to
the accounting records of such Charging Company and to any documents and
records relating to the Security Assets; and
12
(ii)
to inspect, take extracts from, and make photocopies of, the same,
and to
provide (at the expense of such Charging Company), such clerical and other
assistance which the Collateral Agent may reasonably require to do this;
(b)
notify the Collateral Agent within 14 days of receipt of every
material notice, order, application, requirement or proposal given or made in
relation to the Security Assets by any competent authority, and (if required by
the Collateral Agent) immediately provide it with a copy of the same and either
(A) comply with such notice, order, application, requirement or proposal
or (B) make such objections to the same as the Collateral Agent may
require or approve in its Permitted Discretion;
(c)
comply in all material respects with all obligations in relation to
the Security Assets under any present or future law, regulation, order or
instrument or under any bye-laws, regulations or requirements of any competent
authority or other approvals, licences or consents, except where failure to
comply would not reasonably be expected to result in, either individually or in
aggregate, a Material Adverse Effect;
(d)
comply with all material covenants and obligations affecting the
Security Assets (or their manner of use), except where failure to comply would
not reasonably be expected to result in, either individually or in aggregate, a
Material Adverse Effect;
(e)
not, except with the prior written consent of the Collateral Agent
(such consent not to be unreasonably withheld or delayed), enter into any
onerous or restrictive obligation affecting any Security Asset save as
permitted in the Revolving Facility Agreement;
(f)
unless the Collateral Agent otherwise confirms in writing and
without prejudice to clause 11.7(a), deposit with the Collateral Agent all
title deeds and documents of title relating to the Security Assets (each of
which the Collateral Agent may hold throughout the Security Period);
(g)
provide the Collateral Agent with all information which it may
reasonably request in relation to the Security Assets;
(h)
not do, cause or permit to be done anything which may in any way
depreciate, jeopardise or otherwise prejudice any material portion of the
Security Assets (or make any omission which has such an effect).
11.3
Property matters
(a)
Each Charging Company shall:
(i)
maintain all buildings and erections forming part of the Security
Assets in a good state of repair;
(ii)
maintain all plant, machinery, fixtures, fittings and other effects
for the time being owned by it in a good state of repair and good working order
and condition and shall, immediately on request by the Collateral Agent, affix
to any such item (in a prominent position) a durable notice of this Deed (in
any form required by the Collateral Agent); and
(iii)
not sever, unfix or remove any of such plant, machinery, fixtures,
fittings or other effects except for the purposes of effecting any necessary
repairs or of replacing the same with new or improved models.
13
(b)
No Charging Company shall, except with the prior written consent of
the Collateral Agent or as expressly permitted under the Revolving Facility
Agreement, confer on any person:
(i)
any lease or tenancy of any of the Property or accept a surrender of
any lease or tenancy (whether independently or under any statutory power);
(ii)
any right or licence to occupy any land or buildings forming part of
the Property; or
(iii)
any licence to assign or sublet any part of the Property.
(c)
No Charging Company shall carry out any development within the
meaning of the Planning Acts in or upon any part of the Property without first
obtaining such permissions as may be required under or by virtue of the
Planning Acts and, in the case of development involving a substantial change in
the structure of, or a change of use of, any part of the Property, without
first obtaining the written consent of the Collateral Agent.
(d)
No Charging Company shall do, or permit to be done, anything as a
result of which any lease may be liable to forfeiture or otherwise be
determined other than in accordance with clause 7.7(c) of the Revolving
Facility Agreement.
(e)
Each Charging Company shall permit the Collateral Agent and any
person nominated by it at all reasonable times with reasonable notice to enter
any part of the Property and view the state of it.
(f)
Each Charging Company shall grant the Collateral Agent on request
all reasonable facilities within the power of such Charging Company to enable
the Collateral Agent (or its lawyers) to carry out investigations of title to
the Property and to make all enquiries in relation to any part of the Property
which a prudent mortgagee might carry out.
Those investigations shall be carried out at the expense of such Charging
Company.
(g)
Each Charging Company shall, in respect of any freehold or leasehold
Property which is acquired by it after the date of this Deed, the title of
which is registered at the Land Registry or the title to which is required to
be so registered, give the Land Registry written notice of this Deed and
procure that notice of this Deed is clearly noted in the Register to each such
title.
11.4
Insurance
Each
Charging Company shall at all times comply with its obligations as to insurance
contained in the Revolving Facility Agreement (and, in particular, clause 6.4
of the Revolving Facility Agreement).
11.5
Intellectual Property
Each
Charging Company will at all times comply with its obligations as to
Intellectual Property contained in the Revolving Facility Agreement (and in
particular, clause 5.11 and 6.2(f) of the Revolving Facility Agreement).
14
11.6
Dealings with and realisation of Receivables and operation of
Security Accounts
(a)
Each Charging Company shall:
(i)
without prejudice to clause 11.1 (
Restrictions
on dealing
) (but in addition to the restrictions in that clause),
not, without the prior written consent of the Collateral Agent, sell, assign,
charge, factor or discount or in any other manner deal with any Receivable
(save as permitted in the Loan Documents);
(ii)
collect all Receivables promptly in the ordinary course of trading
as agent for the Collateral Agent (save as permitted in the Loan Documents) and
immediately upon receipt pay all monies which it receives in respect of the
Receivables into:
(A)
such specially designated account(s) with the Account Bank as the
Collateral Agent may from time to time direct; or
(B)
such other account(s) with such other bank as the Collateral Agent
may from time to time direct,
(each
such account together with all additions to or renewals or replacements thereof
(in whatever currency) being a
“Security
Account”
) and pending such payment, hold all monies so received upon
trust for the Collateral Agent; and
(iii)
where any Security Account is not maintained with the Collateral
Agent, deliver to the relevant Account Bank a duly completed notice and procure
that such Account Bank executes and delivers to the Collateral Agent an
acknowledgement, in each case in the respective forms set out in schedule 5
(
Form of notice to and acknowledgement
from bank operating Security Accounts
).
(b)
The initial Account Bank is The Royal Bank of Scotland plc unless
the Collateral Agent specifies otherwise.
(c)
Provided that unless and until the Collateral Agent has taken
enforcement action in accordance with the first sentence of clause 9.1(a) of
the Revolving Facility Agreement (
“Enforcement
Action”
), each Charging Company shall be entitled to withdraw (or
direct any transfer of) all or any part of the monies in any Security Account
without the prior written consent of the Collateral Agent, but following the
occurrence of an Enforcement Action, the Collateral Agent shall be entitled (in
its absolute discretion) to refuse to permit any such withdrawal or transfer.
(d)
Following the occurrence of an Enforcement Action, each Charging
Company shall deal with the Receivables (both collected and uncollected) and
the Security Accounts in accordance with any directions given in writing from
time to time by the Collateral Agent and, in default of and subject to such
directions, in accordance with this Deed.
(e)
Each
Charging Company shall deliver to the Collateral Agent such information as to
the amount and nature of its Receivables as the Collateral Agent may from time
to time reasonably require (taking into account the requirements of the Loan
Documents).
15
11.7
Charged Investments
(a)
Each Charging Company shall following the occurrence of an Event of
Default, which is continuing:
(i)
promptly give notice to any custodian of any agreement with such
Charging Company in respect of any Charged Investment in a form the Collateral
Agent may require; and
(ii)
use its reasonable endeavours to ensure that the custodian
acknowledges that notice in a form the Collateral Agent may require.
(b)
Each Charging Company shall promptly pay all calls or other payments
which may become due in respect of its
Charged Investments.
11.8
Rights in respect of Charged Investments
(a)
Until an Event of Default occurs and is continuing, each Charging
Company shall be entitled to:
(i)
receive and retain all dividends, distributions and other monies
paid on or derived from its Charged Securities; and
(ii)
exercise all voting and other rights and powers attaching to its
Charged Securities, provided that
it must not do so in a manner which (A) has the effect of changing the
terms of such Charged Securities (or any class of them) or of any Related Rights
or (B) which is prejudicial to the interests of the Collateral Agent
and/or the other Lender Parties.
(b)
At any time following the occurrence of an Event of Default which is
continuing and which has led to an acceleration of the Revolving Facility, the
Collateral Agent may complete the instrument(s) of transfer for all or any
Charged Securities on behalf of any Charging Company in favour of itself or
such other person as it may select.
(c)
At any time when any Charged Security is registered in the name of
the Collateral Agent or its nominee, the Collateral Agent shall be under no
duty to:
(i)
ensure that any dividends, distributions or other monies payable in
respect of such Charged Security are duly and promptly paid or received by it
or its nominee; or
(ii)
verify that the correct amounts are paid or received; or
(iii)
take any action in connection with the taking up of any (or any
offer of any) Related Rights in respect of or in substitution for any such
Charged Security.
11.9
Relevant Contracts
(a)
No Charging Company shall, except with the prior written consent of
the Collateral Agent, in its Permitted Discretion, amend, supplement or waive
or otherwise modify any term of any Relevant Contract, terminate any Relevant
Contract or release any other party from its material obligations under any
Relevant Contract.
(b)
Each Charging Company shall duly perform its material obligations
under each Relevant Contract, shall notify the Collateral Agent of any material
default by it or
16
any
other party under any Relevant Contract and shall not take any action which
will reduce or impede recoveries in respect of any Assigned Asset save as
permitted in the Revolving Facility Agreement.
(c)
Each Charging Company shall provide to the Collateral Agent as soon
as practicable upon receipt copies of all notices and material written
information received by it from any other party to any Relevant Contract.
12.
POWER
TO REMEDY
12.1
Power to remedy
If at
any time a Charging Company does not comply with any of its obligations under
this Deed, the Collateral Agent (without prejudice to any other rights arising
as a consequence of such non-compliance) shall be entitled (but not bound) to
rectify that default. The relevant
Charging Company irrevocably authorises the Collateral Agent and its employees
and agents by way of security to do all things (including entering the property
of such Charging Company) which are necessary or desirable to rectify that
default.
12.2
Mortgagee in possession
The
exercise of the powers of the Collateral Agent under this clause 12 shall not
render it or any other Lender Party liable as a mortgagee in possession.
12.3
Monies expended
The
relevant Charging Company shall pay to the Collateral Agent on demand any
monies which are expended by the Collateral Agent in exercising its powers
under this clause 12, together with interest at the Default Rate from the date
on which those monies were expended by the Collateral Agent (both before and
after judgment) and otherwise in accordance with clause 2.2 (
Default interest
).
13.
WHEN
SECURITY BECOMES ENFORCEABLE
13.1
When enforceable
This
Security shall become immediately enforceable upon the occurrence of an Event
of Default and shall remain so for so long as such Event of Default is
continuing.
13.2
Statutory powers
The
power of sale and other powers conferred by section 101 of the Act (as
amended or extended by this Deed) shall be immediately exercisable upon and at
any time after the occurrence of any Event of Default and for so long as such
Event of Default is continuing.
13.3
Enforcement
After
this Security has become enforceable, the Collateral Agent may in its absolute
discretion enforce all or any part of the Security in such manner as it sees
fit.
14.
ENFORCEMENT
OF SECURITY
14.1
General
For the
purposes of all powers implied by statute, the Secured Obligations are deemed
to have become due and payable on the date of this Deed. Sections 93 and 103 of
the Act shall not
17
apply
to the Security. The statutory powers of
leasing conferred on the Collateral Agent are extended so as to authorise the
Collateral Agent to lease, make agreements for leases, accept surrenders of
leases and grant options as the Collateral Agent may think fit and without the
need to comply with section 99 or 100 of the Act.
14.2
Powers of Collateral Agent
(a)
At any time after the Security becomes enforceable, the Collateral
Agent may without further notice (unless required by law):
(i)
(or if so requested by any Charging Company by written notice at any
time may) appoint any person or persons to be a receiver, receiver and manager
or administrative receiver of all or any part of the Security Assets and/or of
the income of the Security Assets; and/or
(ii)
appoint or apply for the appointment of any person who is
appropriately qualified as administrator of a Charging Company; and/or
(iii)
exercise all or any of the powers conferred on mortgagees by the Act
(as amended or extended by this Deed) and/or all or any of the powers which are
conferred by this Deed on a Receiver, in each case without first appointing a
Receiver or notwithstanding the appointment of any Receiver; and/or
(iv)
exercise (in the name of any Charging Company and without any
further consent or authority of such Charging Company) any voting rights and
any powers or rights which may be exercised by the person(s) in whose name the
Charged Investments are registered, or who is the holder of any of them.
(b)
The Collateral Agent is not entitled to appoint a Receiver in
respect of any Security Assets of any Charging Company which are subject to a
charge which (as created) was a floating charge solely by reason of a
moratorium being obtained under the Insolvency Act 2000 (or anything done with
a view to obtaining such a moratorium) in respect of such Charging Company.
14.3
Redemption of prior mortgages
At any
time after the Security has become enforceable, the Collateral Agent may:
(a)
redeem any prior Security Interest against any Security Asset;
and/or
(b)
procure the transfer of that Security Interest to itself; and/or
(c)
settle and pass the accounts of the holder of any prior Security
Interest and any accounts so settled and passed shall be conclusive and binding
on each Charging Company.
All
principal, interest, costs, charges and expenses of and incidental to any such
redemption and/or transfer shall be paid by the relevant Charging Company to
the Collateral Agent on demand.
14.4
Privileges
Each
Receiver and the Collateral Agent is entitled to all the rights, powers,
privileges and immunities conferred by the Act on mortgagees and receivers when
such receivers have been duly appointed under the Act, except that section 103
of the Act does not apply.
18
14.5
No liability
(a)
Neither the Collateral Agent, any other Lender Party nor any
Receiver shall be liable (A) in respect of all or any part of the Security
Assets or (B) for any loss or damage which arises out of the exercise or
the attempted or purported exercise of, or the failure to exercise any of, its
or his respective powers (unless such loss or damage is caused by its or his
gross negligence or wilful misconduct).
(b)
Without prejudice to the generality of clause 14.5(a), neither the
Collateral Agent, any other Lender Party nor any Receiver shall be liable, by
reason of entering into possession of a Security Asset, to account as mortgagee
in possession or for any loss on realisation or for any default or omission for
which a mortgagee in possession might be liable.
14.6
Protection of third parties
No
person (including a purchaser) dealing with the Collateral Agent or any
Receiver or Delegate will be concerned to enquire:
(a)
whether the Secured Obligations have become payable; or
(b)
whether any power which the Collateral Agent or the Receiver is
purporting to exercise has become exercisable; or
(c)
whether any money remains due under any Loan Document; or
(d)
how any money paid to the Collateral Agent or to the Receiver is to
be applied.
15.
RECEIVER
15.1
Removal and replacement
The
Collateral Agent may from time to time remove any Receiver appointed by it
(subject, in the case of an administrative receivership, to section 45 of
the Insolvency Act 1986) and, whenever it may deem appropriate, may appoint a
new Receiver in the place of any Receiver whose appointment has terminated.
15.2
Multiple Receivers
If at
any time there is more than one Receiver of all or any part of the Security
Assets and/or the income of the Security Assets, each Receiver shall have power
to act individually (unless otherwise stated in the appointment document).
15.3
Remuneration
Any
Receiver shall be entitled to remuneration for his services at a rate to be
fixed by agreement between him and the Collateral Agent (or, failing such
agreement, to be fixed by the Collateral Agent).
15.4
Payment by Receiver
Only
monies actually paid by a Receiver to the Collateral Agent in relation to the
Secured Obligations shall be capable of being applied by the Collateral Agent
in discharge of the Secured Obligations.
19
15.5
Agent of Charging Companies
Any
Receiver shall be the agent of the Charging Company in respect of which it is
appointed. Such Charging Company shall
(subject to the Companies Act 1985 and the Insolvency Act 1986) be solely
responsible for his acts and defaults and for the payment of his remuneration. No Lender Party shall incur any liability (either
to such Charging Company or to any other person) by reason of the appointment
of a Receiver or for any other reason.
16.
POWERS
OF RECEIVER
16.1
General powers
Any
Receiver shall have:
(a)
all the powers which are conferred by the Act on mortgagees in
possession and receivers appointed under the Act;
(b)
(whether or not he is an administrative receiver) all the powers
which are listed in schedule 1 of the Insolvency Act 1986; and
(c)
all powers which are conferred by any other law conferring power on
receivers.
16.2
Additional powers
In
addition to the powers referred to in clause 16.2 (
General powers
), a Receiver shall have the following powers:
(a)
to take possession of, collect and get in all or any part of the
Security Assets and/or income in respect of which he was appointed;
(b)
to manage the Security Assets and the business of any Charging
Company as he thinks fit;
(c)
to redeem any security and to borrow or raise any money and secure
the payment of any money in priority to the Secured Obligations for the purpose
of the exercise of his powers and/or defraying any costs or liabilities
incurred by him in such exercise;
(d)
to sell or concur in selling, leasing or otherwise disposing of all
or any part of the Security Assets in respect of which he was appointed without
the need to observe the restrictions imposed by section 103 of the
Act. Fixtures may be severed and sold
separately from the Property containing them, without the consent of any
Charging Company. The consideration for any such transaction may consist of
cash, debentures or other obligations, shares, stock or other valuable
consideration (and the amount of such consideration may be dependent upon
profit or turnover or be determined by a third party). Any such consideration may be payable in a
lump sum or by instalments spread over such period as he thinks fit;
(e)
to alter, improve, develop, complete, construct, modify, refurbish
or repair any building or land and to complete or undertake or concur in the
completion or undertaking (with or without modification) of any project in
which any Charging Company was concerned or interested before his appointment
(being a project for the alteration, improvement, development, completion,
construction, modification, refurbishment or repair of any building or land);
20
(f)
to carry out any sale, lease or other disposal of all or any part of
the Security Assets by conveying, transferring, assigning or leasing the same
in the name of the relevant Charging Company and, for that purpose, to enter
into covenants and other contractual obligations in the name of, and so as to
bind, such Charging Company;
(g)
to take any such proceedings (in the name of any of the relevant
Charging Companies or otherwise) as he shall think fit in respect of the
Security Assets and/or income in respect of which he was appointed (including
proceedings for recovery of rent or other monies in arrears at the date of his
appointment);
(h)
to enter into or make any such agreement, arrangement or compromise
as he shall think fit;
(i)
to insure, and to renew any insurances in respect of, the Security
Assets as he shall think fit (or as the Collateral Agent shall direct);
(j)
to appoint and employ such managers, officers and workmen and engage
such professional advisers as he shall think fit (including, without prejudice
to the generality of the foregoing power, to employ his partners and firm);
(k)
to form one or more Subsidiaries of any Charging Company, and to
transfer to any such Subsidiary all or any part of the Security Assets;
(l)
to operate any rent review clause in respect of any Property in
respect of which he was appointed (or any part thereof) and to apply for any
new or extended lease; and
(m)
to:
(i)
give valid receipts for all monies and to do all such other things
as may seem to him to be incidental or conducive to any other power vested in
him or necessary or desirable for the realisation of any Security Asset;
(ii)
exercise in relation to each Security Asset all such powers and
rights as he would be capable of exercising if he were the absolute beneficial
owner of the Security Assets; and
(iii)
use the name of any Charging Company for any of the above purposes.
17.
APPLICATION
OF PROCEEDS
17.1
Application
All
monies received by the Collateral Agent or any Receiver after the Security has
become enforceable shall (subject to the rights and claims of any person having
a security ranking in priority to the Security) be applied in the following
order:
(a)
first
, in satisfaction of, or provision for, all costs, charges and
expenses incurred, and payments made by the Collateral Agent, any other Lender
Party or any Receiver and of all remuneration due to the Receiver in connection
with this Deed or the Security Assets;
(b)
secondly
,
in
or towards the satisfaction of the remaining Secured Obligations; and
(c)
thirdly
,
in
payment of any surplus to any Charging Company or other person entitled to it.
21
17.2
Contingencies
If the Security is enforced at a time when no amounts are due under the
Loan Documents (but at a time when amounts may become so due), the Collateral
Agent or a Receiver may pay the proceeds of any recoveries effected by it into
a blocked suspense account.
18.
SET-OFF
18.1
Set-off
(a)
The Collateral Agent and each other Lender Party may (but shall not
be obliged to) set off any obligation which is due and payable by any Charging
Company and unpaid (whether under the Loan Documents or which has been assigned
to the Collateral Agent or such other Lender Party by any other Charging
Company) against any obligation (whether or not matured) owed by the Collateral
Agent or such other Lender Party to such Charging Company, regardless of the
place of payment, booking branch or currency of either obligation.
(b)
If the obligations are in different currencies, the Collateral Agent
or such other Lender Party may convert either obligation at a market rate of
exchange in its usual course of business for the purpose of the set-off.
(c)
If either obligation is unliquidated or unascertained, the
Collateral Agent or such other Lender Party may set off in an amount estimated
by it in good faith to be the amount of that obligation.
18.2
Time deposits
Without
prejudice to clause 18.1 (
Set-off
),
if any time deposit matures on any account which any Charging Company has with
the Collateral Agent or any other Lender Party at a time within the Security
Period when:
(a)
this Security has become enforceable; and
(b)
no Secured Obligation is due and payable (but amounts may become so
due),
such
time deposit shall automatically be renewed for such further maturity as the
Collateral Agent or such other Lender Party in its absolute discretion
considers appropriate unless the Collateral Agent or such other Lender Party
otherwise agrees in writing.
19.
DELEGATION
Each of
the Collateral Agent and any Receiver may delegate, by power of attorney (or in
any other manner) to any person, any right, power or discretion exercisable by
it under this Deed upon any terms (including power to sub-delegate) which it
may think fit. Neither the Collateral
Agent nor any Receiver shall be in any way liable or responsible to any
Charging Company for any loss or liability arising from any act, default,
omission or misconduct on the part of any Delegate.
20.
FURTHER
ASSURANCES
20.1
Further action
Each
Charging Company shall, at its own expense, promptly take whatever action the
Collateral Agent or a Receiver may require for:
22
(a)
creating, perfecting or protecting the Security Interests intended
to be created by this Deed; and
(b)
facilitating the realisation of any Security Asset or the exercise
of any right, power or discretion exercisable by the Collateral Agent or any
Receiver or Delegate in respect of any Security Asset,
including
the execution of any transfer, conveyance, assignment or assurance of any
property whether to the Collateral Agent or to its nominees, the giving of any
notice, order or direction and the making of any registration which in any such
case the Collateral Agent may think expedient.
20.2
Specific security
Without
prejudice to the generality of clause 20.1 (
Further
action
), each Charging Company shall forthwith at the request of the
Collateral Agent execute a legal mortgage, charge, assignment, assignation or
other security over any Security Asset which is subject to or intended to be
subject to any fixed security created by this Deed in favour of the Collateral
Agent (including any arising or intended to arise pursuant to clause 6 (
Conversion of floating charge
)) in such
form as the Collateral Agent may reasonably require.
21.
POWER
OF ATTORNEY
21.1
Each Charging
Company, by way of security, irrevocably and severally appoints the Collateral
Agent, each Receiver and any Delegates to be its attorney to take any action
which such Charging Company is obliged to take under this Deed, including under
clause 20 (
Further assurances
). Each Charging Company ratifies and confirms
whatever any attorney does or purports to do pursuant to its appointment under
this clause.
21.2
Each of the
Collateral Agent, Receiver and any Delegate agrees that the power of attorney
provided under this clause 21 (
Power of
Attorney
) shall only be relied upon and exercised by such Party upon
the occurrence of an Event of Default which is continuing.
22.
PAYMENTS
22.1
Payments
Subject
to clause 22.2 (
Gross-up
), all
payments to be made by a Charging Company in respect of this Deed shall be
made:
(a)
in immediately available funds to the credit of such account as the
Collateral Agent may designate; and
(b)
without (and free and clear of, and without any deduction for or on
account of):
(i)
any set-off or counterclaim; or
(ii)
except to the extent compelled by law, any deduction or withholding
for or on account of Tax.
22.2
Gross-up
If any
Charging Company is compelled by law to make any deduction or withholding from
any sum payable under this Deed to the Collateral Agent or to any other Lender
Party, the sum so payable by such Charging Company shall be increased so as to
result in the receipt by
23
the
Collateral Agent or such other Lender Party of a net amount equal to the full
amount expressed to be payable under this Deed.
23.
STAMP
DUTY
Each
Charging Company shall:
(a)
pay all present and future stamp, registration and similar Taxes or
charges which may be payable, or determined to be payable, in connection with
the execution, delivery, performance or enforcement of this Deed or any
judgment given in connection therewith; and
(b)
indemnify the Collateral Agent, each other Lender Party and any
Receiver on demand against any and all costs, losses or liabilities (including,
without limitation, penalties) with respect to, or resulting from, its delay or
omission to pay any such stamp, registration and similar Taxes or charges.
24.
COSTS
AND EXPENSES
24.1
Transaction and amendment expenses
Each
Charging Company shall promptly on demand pay to the Collateral Agent and each
other Lender Party the amount of all reasonable costs, charges and expenses
(including, without limitation, reasonable legal fees, valuation, accountancy
and consultancy fees (and any VAT or similar Tax thereon)) incurred by the
Collateral Agent or any other Lender Party in connection with:
(a)
the negotiation, preparation, printing, execution, registration,
perfection and completion of this Deed, the Security or any document referred
to in this Deed; or
(b)
any actual or proposed amendment or extension of, or any waiver or
consent under, this Deed.
24.2
Enforcement and preservation costs
Each
Charging Company shall promptly on demand pay to the Collateral Agent, each
other Lender Party and any Receiver the amount of all costs, charges and
expenses (including (without limitation) legal fees (and any VAT or similar Tax
thereon)) incurred by any of them in connection with the enforcement, exercise
or preservation (or the attempted enforcement, exercise or preservation) of any
of their respective rights under this Deed or any document referred to in this
Deed or the Security (including all remuneration of the Receiver).
24.3
Default interest
Any
amount demanded under clauses 24.1 (
Transaction
and amendment expenses
) or 24.2 (
Enforcement
and preservation costs
) shall bear interest at the Default Rate
(both before and after judgment) from the day on which those costs, charges or
expenses were paid, incurred or charged by the relevant person and otherwise in
accordance with clause 2.2 (
Default interest
).
25.
CURRENCIES
25.1
Conversion
All
monies received or held by the Collateral Agent or any Receiver under this Deed
may be converted from their existing currency into such other currency as the
Collateral Agent or the
24
Receiver
considers necessary or desirable to cover the obligations and liabilities
comprised in the Secured Obligations in that other currency at a market rate of
exchange in its usual course of business for the purpose of the conversion. Each Charging Company shall indemnify the
Collateral Agent against all costs, charges and expenses incurred in relation
to such conversion. Neither the Collateral Agent nor any Receiver shall have
any liability to any Charging Company in respect of any loss resulting from any
fluctuation in exchange rates after any such conversion.
25.2
Currency indemnity
No
payment to the Collateral Agent (whether under any judgment or court order or
in the liquidation, administration or dissolution of any Charging Company or
otherwise) shall discharge the obligation or liability of any Charging Company
in respect of which it was made, unless and until the Collateral Agent shall
have received payment in full in the currency in which the obligation or
liability was incurred and, to the extent that the amount of any such payment
shall on actual conversion into such currency fall short of such obligation or
liability expressed in that currency, the Collateral Agent shall have a further
separate cause of action against any Charging Company and shall be entitled to
enforce the Security to recover the amount of the shortfall.
26.
INDEMNITY
Each
Charging Company shall indemnify the Collateral Agent, each other Lender Party,
any Receiver and any Delegate and the Collateral Agent’s officers and employees
(each an
“Indemnified Party”
) on
demand against any cost, loss, liability or expense (however arising) incurred
by any Indemnified Party as a result of or in connection with:
(a)
anything done or omitted in the exercise or purported exercise of
the powers contained in this Deed;
(b)
the Security Assets or the use or occupation of them by any person;
or
(c)
any breach by any Charging Company of any of its obligations under
this Deed,
save
where such cost, loss, liability or expense arises as a result of the gross
negligence or wilful default of the Collateral Agent, Lender Party or Receiver
or Delegate.
27.
MISCELLANEOUS
27.1
Appropriation and suspense account
(a)
The Collateral Agent may apply all payments received in respect of
the Secured Obligations in reduction of any part of the Secured Obligations in
accordance with the Revolving Facility Agreement. Any such appropriation shall override any
appropriation by any Charging Company.
(b)
All monies received, recovered or realised by the Collateral Agent
under, or in connection with, this Deed may at the discretion of the Collateral
Agent be credited to a separate interest bearing suspense account for so long
as the Collateral Agent determines (with interest accruing thereon at such
rate, if any, as the Collateral Agent may determine for the account of the
relevant Charging Company) without the Collateral Agent having any obligation
to apply such monies and interest or any part thereof in or towards the
discharge of any of the Secured Obligations.
25
27.2
New accounts
If the
Collateral Agent or any other Lender Party receives, or is deemed to be
affected by, notice, whether actual or constructive, of any subsequent Security
Interest (other than a Permitted Lien) affecting any Security Asset and/or the
proceeds of sale of any Security Asset or the Guarantee ceases to continue in
force, it may open a new account or accounts for any Charging Company. If it does not open a new account, it shall
nevertheless be treated as if it had done so at the time when it received or
was deemed to have received such notice.
As from that time all payments made to the Collateral Agent or such
other Lender Party will be credited or be treated as having been credited to
the new account and will not operate to reduce any amount of the Secured
Obligations.
27.3
Changes to the Parties
(a)
No Charging Company may assign any of its rights under this Deed.
(b)
The Collateral Agent may assign or transfer all or any part of its
rights under this Deed pursuant to the resignation or removal of the Collateral
Agent in accordance with the Revolving Facility Agreement. Each Charging Company shall, immediately upon
being requested to do so by the Collateral Agent, enter into such documents as
may be necessary or desirable to effect such assignment or transfer.
27.4
Memorandum and articles
Each
Charging Company certifies that the Security does not contravene any of the
provisions of the memorandum or articles of association of that Charging
Company.
27.5
Tacking
(a)
Each Finance Party shall perform its obligations under the Revolving
Facility Agreement (including any obligation to make available further
advances).
(b)
This Deed secures advances already made and further advances to be
made.
27.6
The Land Registry
(a)
Each Charging Company shall apply to the Chief Land Registrar for a
restriction in the following terms to be entered on the Register of Title
relating to any property registered at the Land Registry (or any unregistered
land subject to first registration) and against which this Deed may be noted:
“No disposition of the registered estate by the proprietor
of the registered estate is to be registered without a written consent signed
by the proprietor for the time being of the charge dated
•
2005 (the
“Charge”
)
in favour of CapitalSource Finance LLC (as Collateral Agent) referred to in the
charges register.”
(b)
Each Charging Company:
(i)
authorises the Collateral Agent to make any application which the
Collateral Agent deems appropriate for the designation of this Deed, the
Revolving Facility Agreement or any other Loan Document as an exempt
information document under rule 136 of the Land Registration Rules 2003;
(ii)
shall use its best endeavours to assist with any such application
made by or on behalf of the Collateral Agent; and
26
(iii)
shall notify the Collateral Agent in writing as soon as it receives
notice of any person’s application under rule 137 of the Land Registration
Rules 2003 for the disclosure of this Deed, the Revolving Facility
Agreement or any other Loan Document following its designation as an exempt
information document.
(c)
No Charging Company shall make any application under rule 138
of the Land Registration Rules 2003 for the removal of the designation of
any such document as an exempt information document.
(d)
Each Charging Company shall promptly make all applications to and
filings with the Land Registry which are necessary or desirable under the Land
Registration Rules to protect the Security.
(e)
No Charging Company shall, without the prior written consent of the
Collateral Agent, permit any person to be or become registered under the Land
Registration Act 2002 as the proprietor of a Security Asset who is not so
registered under the Land Registration Act 2002 at the date of this Deed or, in
the case of Property acquired after the date of this Deed, at the date of such
acquisition.
27.7
Amendments and waivers
Any
provision of this Deed may be amended only if the Collateral Agent and the
Charging Companies so agree in writing and any breach of this Deed may be
waived before or after it occurs only if the Collateral Agent so agrees in
writing. A waiver given or consent granted by the Collateral Agent under
this Deed will be effective only if given in writing and then only in the
instance and for the purpose for which it is given.
27.8
Calculations and certificates
A
certificate of the Collateral Agent specifying the amount of any Secured
Obligation due from a Charging Company (including details of any relevant
calculation thereof) shall be prima facie evidence of such amount against each
Charging Company in the absence of manifest error.
27.9
Waiver, rights and remedies
No
failure to exercise, nor any delay in exercising, on the part of the Collateral
Agent or any other Lender Party, any right or remedy under this Deed shall
operate as a waiver, nor shall any single or partial exercise of any right or
remedy prevent any further or other exercise or the exercise of any other right
or remedy. The rights and remedies
provided are cumulative and not exclusive of any rights or remedies provided by
law.
28.
NOTICES
28.1
Communications in writing
Any
communication to be made under, or in connection with, this Deed shall be made
in writing and, unless otherwise stated, may be made by fax or letter (but not
by email).
28.2
Addresses
The
address and fax number (and the department or officer, if any, for whose
attention the communication is to be made) of each Party for any communication
or document to be made or delivered under or in connection with this Deed is:
27
(a)
in the case of each Charging Company, that identified with its name
below; and
(b)
in the case of the Collateral Agent, that identified with its name
below,
or any
substitute address, fax number or department or officer as any Charging Company
may notify to the Collateral Agent (or the Collateral Agent may notify to the
Charging Companies, if a change is made by the Collateral Agent) by not less
than five Business Days’ notice.
28.3
Delivery
Clause
12.5 (Notice) of the Revolving Facility Agreement shall apply
mutatis mutandis
as if set out in this
Deed.
28.4
Notification of address and fax
number
Promptly upon receipt of notification of an address and fax number or
change of address or fax number pursuant to clause 28.2 (
Addresses
) or changing its own address or
fax number, the Collateral Agent shall notify the Agent.
28.5
English language
(a)
Any notice given under, or in connection with, this Deed must be in
English.
(b)
All other documents provided under or in connection with this Deed
must be:
(i)
in English; or
(ii)
if not in English, and if so required by the Collateral Agent,
accompanied by a certified English translation and, in this case, the English
translation will prevail unless the document is a constitutional, statutory or
other official document.
29.
ACCESSION
Each
Charging Company irrevocably authorises the Company to agree to, and execute as
a deed, any duly completed Accession Deed as agent for and on behalf of such
Charging Company.
30.
PARTIAL
INVALIDITY
All the
provisions of this Deed are severable and distinct from one another and if at
any time any provision is or becomes illegal, invalid or unenforceable in any
respect under any law of any jurisdiction, neither the legality, validity or
enforceability of any of the remaining provisions nor the legality, validity or
enforceability of such provision under the law of any other jurisdiction will
in any way be affected or impaired.
31.
RELEASE
Upon
the expiry of the Security Period (but not otherwise) the Collateral Agent and
each other Lender Party shall, at the request and cost of the Charging
Companies, take whatever action is necessary to release or re-assign (without
recourse or warranty) the Security Assets from the Security.
28
32.
COUNTERPARTS
This
Deed may be executed in any number of counterparts, and this has the same
effect as if the signatures (and seals, if any) on the counterparts were on a
single copy of this Deed.
33.
GOVERNING
LAW
This
Deed is governed by English law.
IN
WITNESS
of
which this Deed has been duly executed by each of the
Initial Charging Companies as a deed and duly executed by the Collateral Agent
and has been delivered on the date written at the beginning of this Deed.
29
SCHEDULE 1
Initial Charging Companies
|
Company name
|
|
Company number
|
|
|
Evolving Systems Holdings Limited
|
|
5272751
|
|
|
Evolving Systems Limited
|
|
2325854
|
|
30
SCHEDULE 2
Details of Security Assets
Part 1 - Property
|
Registered land
|
|
Charging
Company
|
|
Address
|
|
County/District/London Borough
|
|
Title number
|
|
|
|
|
|
|
|
|
|
|
|
|
|
None
|
|
|
|
Unregistered land
|
|
|
Charging
Company
|
|
Address
|
|
Document describing the Property
|
|
|
|
|
|
|
Date
|
|
Document
|
|
Parties
|
|
|
|
|
|
|
None
|
|
|
|
|
|
|
|
|
|
|
|
|
Part 2 - Charged Securities
|
Charging
Company
|
|
Name of company in
which shares are held
|
|
Class of
shares held
|
|
Number of
shares held
|
|
Issued share
capital
|
|
|
Evolving Systems Holdings Limited
|
|
Evolving Systems Limited
|
|
Ordinary
|
|
1,488,205
|
|
74,410.25
|
|
|
|
|
Evolving Systems Limited
|
|
New Ordinary
|
|
180,703
|
|
9,035.15
|
|
|
|
|
Evolving Systems Limited
|
|
Deferred Ordinary
|
|
1,475,104
|
|
73,755.20
|
|
31
Part 3 - Intellectual Property
Trade Marks
|
BWT Ref
|
|
Country
|
|
Applicant
|
|
Mark
|
|
Registration
Number
|
|
Classes
|
|
Date
of
Registration
|
|
Status
|
|
|
T31910/001
|
|
Community
|
|
Tertio Limited
|
|
Evident
|
|
1620657
|
|
09, 16, 38, 42
|
|
10/02/2003
|
|
Registered/Granted
|
|
|
T29846/000
|
|
Community
|
|
Tertio Limited
|
|
Tertio
|
|
1023795
|
|
09, 16, 38, 42
|
|
05/10/2000
|
|
Registered/Granted
|
|
|
T29845/000
|
|
Community
|
|
Tertio Limited
|
|
Provident
|
|
1022870
|
|
09, 16, 38, 42
|
|
06/08/2000
|
|
Registered/Granted
|
|
|
T30021/001
|
|
United Kingdom
|
|
Tertio Limited
|
|
Evident
|
|
2175390
|
|
09, 16, 38, 42
|
|
20/08/1998
|
|
Registered/Granted
|
|
|
T30021/000
|
|
United Kingdom
|
|
Tertio Limited
|
|
Evident
|
|
2103764
|
|
09, 38
|
|
27/06/1996
|
|
Registered/Granted
|
|
|
T29846/003
|
|
United Kingdom
|
|
Tertio Limited
|
|
Tertio
|
|
2175389
|
|
09, 16, 38, 42
|
|
20/08/1998
|
|
Registered/Granted
|
|
|
T29846/002
|
|
United Kingdom
|
|
Tertio Limited
|
|
Tertio
|
|
1578744
|
|
42
|
|
20/07/1994
|
|
Registered/Granted
|
|
|
T29846/001
|
|
United Kingdom
|
|
Tertio Limited
|
|
Tertio
|
|
2010862
|
|
38
|
|
10/02/1995
|
|
Registered/Granted
|
|
|
T29845/001
|
|
United Kingdom
|
|
Tertio Limited
|
|
Provident
|
|
2184361
|
|
09, 16, 38, 42
|
|
14/12/1998
|
|
Registered/Granted
|
|
|
|
|
United Kingdom
|
|
Tertio Limited
|
|
Tertio Technology with Business Sense
|
|
2175453
|
|
9, 16, 38, 42
|
|
28/01/2000
|
|
Registered/Granted
|
|
|
|
|
United Kingdom
|
|
Tertio Limited
|
|
Stylized Keyboard Design
|
|
2201294
|
|
9, 16, 38, 42
|
|
25/06/1999
|
|
Registered/Granted
|
|
32
|
BWT Ref
|
|
Country
|
|
Applicant
|
|
Mark
|
|
Registration
Number
|
|
Classes
|
|
Date
of
Registration
|
|
Status
|
|
|
|
|
United Kingdom
|
|
Tertio Limited
|
|
Observant
|
|
2175386
|
|
9, 16, 38, 42
|
|
20/08/1998
|
|
Registered/Granted
|
|
|
|
|
United Kingdom
|
|
Tertio Limited
|
|
Observant
|
|
2142970
|
|
9, 16, 38, 42
|
|
22/08/1997
|
|
Registered/Granted
|
|
|
|
|
European Community
|
|
Tertio Limited
|
|
Stylized Keyboard Design
|
|
1225598
|
|
9, 16, 42
|
|
21/06/2000
|
|
Registered/Granted
|
|
|
|
|
European Community
|
|
Tertio Limited
|
|
Observant
|
|
681585
|
|
9, 16, 38, 42
|
|
26/12/1999
|
|
Registered/Granted
|
|
33
Part 4 - Relevant Contracts
|
Charging
Company
|
|
Date of Relevant Contract
|
|
Parties
|
|
Details of Relevant
Contract
|
|
|
|
|
|
|
|
|
|
|
None
Part 5 - Insurances
|
Charging
Company
|
|
Insurer
|
|
Insured risks
|
|
Policy number
|
|
|
|
|
|
|
|
|
|
|
None
34
SCHEDULE 3
Form of notice to and acknowledgement from bank operating Security
Accounts
|
To:
The Royal Bank of Scotland plc
|
|
|
|
|
Thames
Valley Corporate
|
|
|
4
Abbey Gardens
|
|
|
Abbey
Street
|
|
|
Reading
|
|
|
RG1
3BA
|
|
|
|
|
|
Dated:
•
2005
Dear Sirs
|
Re:
|
|
Account Holder
:
Evolving Systems Holdings
Ltd and Evolving Systems Ltd
(
the
“Charging Companies”)
|
|
|
|
Security Account Nos: 00366661
(the
“Security Account[•
s]”
)
|
|
|
|
Account Branch: Thames Valley Corporate, 4 Abbey Gardens, Abbey
Street, Reading RG1 3BA
|
1.
We give notice that, by a debenture dated November 2005 (the
“Debenture”
),
we have charged to
CAPITALSOURCE
FINANCE LLC
(the
“Collateral Agent”
)
as Collateral Agent for certain banks and others (as specified in the
Debenture) all our present and future right, title and interest in and to:
(a)
the
Security Accounts, all monies from time to time standing to the credit of the
Security Accounts and all additions to or renewals or replacements thereof (in
whatever currency); and
(b)
any
other account from time to time maintained with you by each Charging Company and all monies at any
time standing to the credit of such accounts,
(together
the
“
Charged
Accounts
”
) and to all
interest from time to time accrued or accruing on the Charged Accounts, any
investment made out of any such monies or account and all rights to repayment of
any of the foregoing by you.
2.
We advise you that until you receive a notice from the Collateral
Agent to the contrary, under the terms of the Debenture, we are entitled to
withdraw any monies from the Security Accounts from time to time subject to no
Enforcement Event having occurred and continuing. Following an Enforcement Event, and where the
Collateral Agent has given notice to you, we shall only be entitled to withdraw
monies from the Security Account in accordance with directions from the Collateral
Agent.
3.
We agree that you are not bound to enquire whether the right of the
Collateral Agent to withdraw any monies from any Charged Account has arisen or
be concerned with (a) the propriety or regularity of the exercise of that
right or (b) notice to the contrary or (c) or to be responsible for
the application of any monies received by the Collateral Agent.
4.
This notice may only be revoked or amended with the prior written
consent of the Collateral Agent.
5.
Please confirm by completing the enclosed copy of this notice and
returning it to the Collateral Agent (with a copy to each Charging Company)
that:
35
(a)
you
agree to comply with this notice;
(b)
you
have not, at the date this notice is returned to the Collateral Agent, received
notice of any assignment or charge of or claim to the monies standing to the
credit of any Charged Account or the grant of any security or other interest
over those monies or any Charged Account in favour of any third party and you
will notify the Collateral Agent promptly if you should do so in the future;
and
(c)
you
do not at the date of this notice and will not in the future exercise any right
to combine accounts or any rights of set-off or lien or any similar rights in
relation to the monies standing to the credit of the Charged Accounts.
6.
This notice (and any acknowledgement) is governed by English law.
Yours
faithfully
|
|
|
|
for
and on behalf of
|
|
EVOLVING SYSTEMS HOLDING LTD
|
|
|
|
|
for
and on behalf of
|
|
EVOLVING SYSTEMS LTD
|
Countersigned
by
|
|
|
|
for
and on behalf of
|
|
CAPITALSOURCE FINANCE LLC
|
[
On
copy]
|
To:
|
CapitalSource
Finance LLC
|
|
|
as Collateral Agent
|
|
|
|
4445
Willard Avenue
|
|
|
|
12th
Floor
|
|
|
|
Chevy
Chase
|
|
|
|
Maryland
|
|
|
|
20815
|
|
36
|
Copy
to:
|
|
Evolving Systems
Holding Ltd
|
|
|
|
Evolving Systems Ltd
|
We acknowledge
receipt of the above notice. We confirm and agree:
(a)
that the matters referred to in it do not conflict with the terms
which apply to any Charged Account; and
(b)
the matters set out in
paragraphs 5(a) to 5(c) in the above notice.
|
|
|
|
for
and on behalf of
|
|
The
Royal Bank of Scotland plc
|
Dated:
•
200
•
37
SCHEDULE 4
Form of notice to and acknowledgement
by party to Relevant Contract
To:
[
•
Insert name and address of relevant
party
]
Dated:
•
200
•
Dear
Sirs
Re: [
•
describe
Relevant Contract
] dated [
•
DATE] 200
•
between
(1) you and [
•
specify parties
] and (2) [
•
Name of Charging Company
]
(the “Charging Company”) (the ”Agreement[
•
s]”)
1.
We give notice that, by a debenture dated [
•
DATE
] 2005 (the
”Debenture”
), we have assigned to
CAPITALSOURCE FINANCE LLC
(the
”Collateral Agent”
) as Collateral Agent for
certain banks and others (as specified in the Debenture) all our present and
future right, title and interest in and to [
•
insert details of Relevant Contract
] (together with any other agreement supplementing or amending the
same, the
”Agreement”
)
including all rights and remedies in connection with the Agreement and all
proceeds and claims arising from the Agreement.
2.
We irrevocably authorise and instruct you from time to time:
(a)
to
disclose to the Collateral Agent without any reference to or further authority
from us (and without any enquiry by you as to the justification for such
disclosure), such information relating to the Agreement as the Collateral Agent
may at any time and from time to time request;
(b)
to
pay from time to time due and payable by you to us under the Agreement at the
direction of the Collateral Agent;
(c)
to
pay or release all or any part of the sums from time to time due and payable by
you to us under the Agreement only in accordance with the written instructions
given to you by the Collateral Agent from time to time;
(d)
to
comply with any written notice or instructions in any way relating to, or
purporting to relate to, the Debenture, the sums payable to us from time to
time under the Agreement or the debts represented thereby which you receive at
any time from the Collateral Agent without any reference to or further
authority from us and without any enquiry by you as to the justification for or
validity of such notice or instruction; and
(e)
to
send copies of all notices and other information given or received under the
Agreement to the Collateral Agent.
3.
We are not permitted to receive from you, otherwise than through the
Collateral Agent, any amount in respect of or on account of the sums payable to
us from time to time under the Agreement or to agree any amendment or
supplement to, or waive any obligation under, the Agreement without the prior
written consent of the Collateral Agent.
4.
This notice may only be revoked or amended with the prior written
consent of the Collateral Agent.
38
5.
Please confirm your agreement to the above by completing the
enclosed copy of this notice and returning it to the Collateral Agent (with a
copy to us) that:
(a)
you
accept the instructions and authorisations contained in this notice and you
undertake to comply with this notice;
(b)
you
have not, at the date this notice is returned to the Collateral Agent, received
notice of the assignment or charge, the grant of any security or the existence
of any other interest of any third party in or to the Agreement or any proceeds
thereof and you will notify the Collateral Agent promptly if you should do so
in future;
(c)
you
will not permit any sums to be paid to us or any other person under or pursuant
to the Agreement without the prior written consent of the Collateral Agent;
(d)
you
will not exercise any right to terminate the Agreement without the prior
written consent of the Collateral Agent.
6.
This notice (and any acknowledgement) is governed by English law.
Yours
faithfully,
|
|
|
|
For
itself and on behalf of
|
|
EVOLVING SYSTEMS HOLDINGS LIMITED
|
|
EVOLVING SYSTEMS LIMITED
|
[
On
copy
]
|
To:
|
|
CapitalSource
Finance LLC
|
|
|
|
as Collateral Agent
|
|
|
|
|
|
Copy
to:
|
|
Evolving
Systems Holdings Limited
|
|
|
|
Evolving
Systems Limited
|
We
acknowledge receipt of the above notice and consent and agree to its
terms. We confirm and agree to the
matters set out in paragraphs 5(a) to 5(d) in the above notice.
|
|
|
|
For
on behalf of
|
|
[
•
Name of relevant party
]
|
|
|
|
Dated:
•
200
•
|
39
SCHEDULE 5
Form of notice to and acknowledgement
by insurers
To:
[
•
Insert name and address of insurer
]
Dated:
•
200
•
Dear
Sirs
[
•
Describe insurance policies
] dated [
•
DATE]
200
•
between (1) you and (2) [
•
NAME OF CHARGING COMPANY] (
the
“Charging Company”) (
the
“Polic[
•
y][
•
ies]”)
1.
We give notice that, by a debenture dated [
•
DATE
]200
•
(the
“Debenture”
), we
have [
•
assigned] to
CAPITALSOURCE FINANCE
LLC
(the
“Collateral Agent”
)
as Collateral Agent for certain banks and others (as specified in the
Debenture) all our present and future right, title and interest in and to the
Policies (together with any other agreement supplementing or amending the same,
the
“Policies”
) including all
rights and remedies in connection with the Policies and all proceeds and claims
arising from the Policies.
2.
We irrevocably authorise and instruct you from time to time:
(a)
to
disclose to the Collateral Agent without any reference to or further authority
from us (and without any enquiry by you as to the justification for such
disclosure), such information relating to the Policies as the Collateral Agent
may at any time and from time to time request;
(b)
to
pay sums from time to time due and payable by you to us under the Policies at
the direction of the Collateral Agent;
(c)
to
pay or release all or any part of the sums from time to time due and payable by
you to us under the Policies only in accordance with the written instructions
given to you by the Collateral Agent from time to time;
(d)
to
comply with any written notice or instructions in any way relating to, or
purporting to relate to, the Debenture, the sums payable to us from time to
time under the Policies or the debts represented thereby which you receive at
any time from the Collateral Agent without any reference to or further
authority from us and without any enquiry by you as to the justification for or
validity of such notice or instruction; and
(e)
to
send copies of all notices and other information given or received under the
Policies to the Collateral Agent.
3.
We are not permitted to receive from you, otherwise than through the
Collateral Agent, any amount in respect of or on account of the sums payable to
us from time to time under the Policies or to agree any amendment or supplement
to, or waive any obligation under, the Policies without the prior written
consent of the Collateral Agent.
4.
This notice may only be revoked or amended with the prior written
consent of the Collateral Agent.
5.
Please confirm by completing the enclosed copy of this notice and
returning it to the Collateral Agent (with a copy to us) that:
40
(a)
you
accept the instructions and authorisations contained in this notice and you
undertake to comply with this notice;
(b)
you
have not, at the date this notice is returned to the Collateral Agent, received
notice of the assignment or charge, the grant of any security or the existence
of any other interest of any third party in or to the Policies or any proceeds
of them and you will notify the Collateral Agent promptly if you should do so
in future;
(c)
you
will not permit any sums to be paid to us or any other person under or pursuant
to the Policies without the prior written consent of the Collateral Agent;
(d)
you will
not exercise any right to terminate, cancel, vary or waive the Policies or take
any action to amend or supplement the Policies without the prior written
consent of the Collateral Agent.
6.
This notice (and any acknowledgement) is governed by English law.
Yours
faithfully
|
|
|
|
For
itself and on behalf of
|
|
[EVOLVING SYSTEMS HOLDINGS LIMITED]
|
|
[EVOLVING SYSTEMS LIMITED]
|
[
On
copy
]
|
To:
|
|
CapitalSource
Finance LLC
|
|
|
|
as Collateral Agent
|
|
|
|
|
|
|
|
|
|
Copy
to:
|
|
[Evolving
Systems Limited]
|
|
|
|
[Evolving
Systems Holdings Limited]
|
We
acknowledge receipt of the above notice and consent and agree to its
terms. We confirm and agree to the
matters set out in paragraphs 5(a) to 5(d) in the above notice.
|
|
|
|
For
and on behalf of
|
|
[
•
Name of insurer
]
|
|
|
|
Dated:
•
200
•
|
41
SCHEDULE 8
Form of Accession Deed
|
THIS ACCESSION DEED
is made on
|
200
•
|
BETWEEN
(1)
THE
COMPANY SPECIFIED IN SCHEDULE 1
(the
“Acceding Company”
);
(2)
[
•
Name of Company acting as agent for all
Charging Companies
]
(the
“Company”
);
and
(3)
[
•
Name of Collateral Agent
]
(the
“Collateral Agent”
).
BACKGROUND
This
Accession Deed is supplemental to debenture dated
•
200
•
and made between (1) the Charging Companies and (2) the
Collateral Agent (the
“Debenture
”
).
IT
IS AGREED
:
1.
DEFINITIONS AND INTERPRETATION
(a)
Terms
defined in, or construed for the purposes of, the Debenture have the same
meanings when used in this Accession Deed including the recital to this
Accession Deed (unless otherwise defined in this Accession Deed).
(b)
Clause
1.2 (
Interpretation
) of the
Debenture shall apply with any necessary changes to this Accession Deed as if
it were set out in full in this Accession Deed.
2.
ACCESSION OF THE ACCEDING COMPANY
(a)
By
its execution of this Accession Deed, the Acceding Company unconditionally and
irrevocably undertakes to and agrees with the Collateral Agent to observe and
be bound by the Debenture and grants and creates the charges, mortgages,
assignments and other security which are stated to be granted or created by the
Debenture as if it had been an original party to the Debenture as one of the
Charging Companies.
(b)
Without
prejudice to the generality of clause 2(a), the Acceding Company:
(i)
(jointly
and severally with the other Charging Companies) covenants in the terms set out
in clause 3 (
Covenant to pay)
to
the Debenture; and
(ii)
with
full title guarantee, charges and assigns (and agrees to charge and assign) to
the Collateral Agent for the payment and discharge of the Secured Obligations,
all its property, assets and undertaking on the terms set out in clauses 4 (
Grant of security
), 5 (
Fixed security
) and 6 (
Floating charge
) of the Debenture,
including (without limiting the generality of the foregoing):
(A)
by way
of first legal mortgage all the freehold and leasehold Property (if any) vested
in or charged to the Acceding Company (including without limitation, the
property specified in part 1 of schedule 2 (
Details of Security Assets
), together with all buildings and
fixtures (including trade fixtures) at any time thereon;
42
(B)
by way
of first fixed charge all the Charged Securities (including, without
limitation, those specified in part 2 of schedule 2 (
Details of Security Assets
)) together with
all Related Rights from time to time accruing thereto;
(C)
by way
of first fixed charge all Intellectual Property (including, without limitation,
the Intellectual Property specified in part 3 of schedule 2 (
Details of Security Assets
));
(D)
by way
of assignment the Relevant Contracts (including, without limitation, those
specified in part 4 of schedule 2 (
Details
of Security Assets
)), all rights and remedies in connection with the
Relevant Contracts and all proceeds and claims arising therefrom; and
(E)
by
way of assignment the Insurances (including, without limitation those specified
in part 5 of schedule 2 (
Details of
Security Assets
)), all claims under the Insurances and all proceeds
of the Insurances.
(c)
Pursuant
to clause 30 of the Debenture (
Accession
),
the Company, as agent for itself and the existing Charging Companies, consents
to the accession of the Acceding Company to the Debenture on the terms of
clauses 2(a) and 2(b) and agrees that the Debenture shall after the
date of this Accession Deed be read and construed as if the Acceding Company
had been named in the Debenture as a Charging Company.
3.
INTERPRETATION
This Accession Deed shall be read as one with the
Debenture, so that all references in the Debenture to “
this Deed
”,
and similar expressions shall include references to this Accession Deed.
4.
COUNTERPARTS
This Accession Deed may be executed in any number of
counterparts, and this has the same effect as if the signatures (and seals, if
any) on the counterparts were on a single copy of this Accession Deed.
5.
THIRD PARTY RIGHTS
A person who is not a party to this Accession Deed
shall have no right under the Contracts (Rights of Third Parties) Act 1999 to
enforce or enjoy the benefit of any term of this Accession Deed.
6.
GOVERNING LAW
This Accession Deed is
governed by English law.
IN WITNESS
of which this
Accession Deed has been duly executed by the Acceding Company and the Company
as a deed and duly executed by the Collateral Agent and has been delivered on
the date written at the beginning of this Accession Deed.
43
SCHEDULE 1
The Acceding Company
|
Company name
|
|
Company number
|
|
•
|
|
•
|
44
SCHEDULE 2
Details of Security Assets
Part 1
-
Property
|
Registered land
|
|
Address
|
|
County/District/London Borough
|
|
Title number
|
|
|
|
|
|
|
|
•
|
|
•
|
|
•
|
|
Unregistered land
|
|
|
|
|
Document describing the Property
|
|
|
Address
|
|
Date
|
|
Document
|
|
Parties
|
|
|
•
|
|
•
|
|
•
|
|
•
|
|
Part 2
-
Charged Securities
|
Name of company in
which shares are held
|
|
Class of shares held
|
|
Number of shares
held
|
|
Issued share capital
|
|
|
•
|
|
•
|
|
•
|
|
•
|
|
|
•
|
|
•
|
|
•
|
|
•
|
|
|
•
|
|
•
|
|
•
|
|
•
|
|
Part 3
-
Intellectual Property
[
•
INSERT DETAILS
]
Part 4
-
Relevant Contracts
|
Date
of Relevant Contract
|
|
Parties
|
|
Details of Relevant Contract
|
|
[•DATE] 200•
|
|
•
|
|
•
|
Part 5
-
Insurances
|
Insurer
|
|
Insured risks
|
|
Policy number
|
|
•
|
|
•
|
|
•
|
|
•
|
|
•
|
|
•
|
45
EXECUTION PAGE
(Accession Deed)
46
EXECUTION PAGES
|
THE INITIAL CHARGING COMPANIES
|
|
|
|
EXECUTED
as a deed (but
not delivered
|
)
|
|
|
until
the date of this Deed) by
|
)
|
|
|
EVOLVING SYSTEMS HOLDINGS, LTD.
|
)
|
|
|
acting
by:
|
)
|
|
|
|
|
|
|
|
Director
|
/s/Brian
R. Ervine
|
|
|
|
|
|
|
|
Secretary
|
/s/Anita T. Moseley
|
|
|
|
|
|
|
|
|
|
Address:
|
9777
Pyramid Court
|
|
|
Suite 100
|
|
|
Englewood
Co 80112
|
|
|
|
|
Facsimile No:
|
(303)
802-1138
|
|
|
|
|
Attention:
|
Anita
Moseley
|
|
|
Senior
Vice President)
|
|
EXECUTED
as a deed (but
not delivered
|
)
|
|
|
until
the date of this Deed) by
|
)
|
|
|
EVOLVING SYSTEMS, LTD.
|
)
|
|
|
acting
by:
|
)
|
|
|
|
|
|
|
|
Director
|
/s/Brian
R. Ervine
|
|
|
|
|
|
|
|
Secretary
|
/s/Anita T. Moseley
|
|
|
|
|
|
|
|
|
|
Address:
|
9777
Pyramid Court
|
|
|
Suite 100
|
|
|
Englewood
Co 80112
|
|
|
|
|
Facsimile No:
|
(303)
802-1138
|
|
|
|
|
Attention:
|
Anita
Moseley
|
|
|
Senior
Vice President)
|
47
|
THE COLLATERAL AGENT
|
|
|
|
|
|
|
|
SIGNED
by
|
)
|
|
|
|
)
|
|
|
for and on behalf of
|
)
|
|
|
CAPITALSOURCE FINANCE LLC
|
)
|
/s/ Steven A. Museles
|
|
|
|
|
Signature
|
|
|
|
|
|
Address:
|
|
4445 Willard Avenue
|
|
|
|
12th Floor
|
|
|
|
Chevy Chase
|
|
|
|
Maryland 20815
|
|
|
|
|
|
Facsimile No:
|
|
(301) 841 2313
|
|
|
|
|
|
Attention:
|
|
Corporate Finance Group
|
|
|
|
Portfolio Manager
|
|
|
|
|
|
|
|
48
Exhibit 10.1(j)
SUBORDINATION
AGREEMENT
THIS SUBORDINATION AGREEMENT
(this “
Agreement
”) is made as of November 14,
2005 by and among (i) each of the parties a signatory hereto as junior
creditors
(each individually and all
collectively, together with their successors and assigns and all other holders
of Junior Debt, the “
Junior Creditors
”);
(ii)
EVOLVING SYSTEMS, INC.
, a Delaware corporation, (“
ESI
”), and the other US Obligors on the signature page hereto; and (iii)
CAPITALSOURCE FINANCE LLC
,
a Delaware limited liability company, as agent for the lenders from time to
time parties to the Credit Agreements described below (the Agent and such
lenders, together with their successors and assigns and all other holders of
Senior Debt, collectively being referred to as the “
Senior
Creditors
”).
INTRODUCTION
A.
ESI and Telecom Software Enterprises, LLC, as borrowers, Evolving Systems
Holdings, Inc., as a guarantor, the Agent and the other Senior Creditors thereunder have
entered into a Credit Agreement dated the date hereof (as the same may be
amended, supplemented, replaced, substituted, refinanced or otherwise modified
from time to time, as permitted hereunder, the “
Term
Loan
Credit Agreement
”), pursuant
to which, among other things, the Senior Creditors thereunder have agreed,
subject to the terms and conditions set forth therein, to make certain term
loans and financial accommodations to ESI and Telecom Software Enterprises,
LLC, as borrowers thereunder.
B.
Evolving Systems Ltd.,
certain other Obligors, CSE Finance
Inc. and the other Senior Creditors thereunder have entered into a
Revolving Facility Agreement dated the date hereof (as the same may be amended,
supplemented, replaced, substituted, refinanced or otherwise modified from time
to time, as permitted hereunder, the “
Revolving
Loan
Credit
Agreement
” and together with the Term Loan Credit Agreement, the
“
Credit Agreements
”), pursuant to
which, among other things, the Senior Creditors thereunder have agreed, subject
to the terms and conditions set forth therein, to make certain revolving loans
and financial accommodations to certain of the Obligors.
C.
ESI and the Junior
Creditors have entered into certain unsecured subordinated notes each dated November ,
2005 evidencing indebtedness in the aggregate original principal amount of $ ,
issued by ESI in exchange for those certain Secured Notes referred to as “A
Notes” in the original aggregate principal amount of $11,950,000 (as the same
may be amended, supplemented or otherwise modified from time to time as
permitted hereunder, together with all notes and other instruments issued in
replacement thereof or substitution therefor, the “
Junior
Notes
”).
D.
As an inducement to and
as one of the conditions precedent to the agreement of the Agent and the other
Senior Creditors under the Credit Agreements to consummate the transactions
contemplated thereby, the Agent and the other Senior Creditors have required
the execution and delivery of this Agreement by the Junior Creditors, ESI and
the US Obligors on the signature page hereto.
NOW THEREFORE
, in order to induce
the Senior Creditors to consummate the transactions contemplated by the Credit
Agreements, and for other good and valuable consideration, the receipt and
sufficiency of which hereby are acknowledged, the parties hereto hereby agree
as follows:
1.
Definitions
. Capitalized terms
used but not otherwise defined in this Agreement shall have the meanings
assigned to such terms in the applicable Credit Agreement. As used in this Agreement, the following
terms have the following meanings:
Agent
shall mean
CapitalSource Finance LLC, a Delaware limited liability company, as agent for
the Senior Creditors, or any other Person appointed by the holders of any
Senior Debt as agent for purposes of any Senior Debt Documents and this
Agreement; provided that, after the consummation of any refinancing of any
Senior Debt, the term “Agent” shall refer to any Person appointed by the
holders of the applicable Senior Debt at such time as agent for themselves for
purposes of, among other things, this Agreement.
Available
Cash for Payment
shall have the meaning set forth in the Junior Notes as
in effect on the date of this Agreement, except that, solely for purposes of
this Agreement, clause (iv) of such definition of “Available Cash for
Payment” shall refer to $4.0 million (instead of $4.5 million).
Bankruptcy
Code
shall mean, collectively, (i) with
respect to ESI and any other US Obligor, Chapter 11 of Title 11 of the United
States Code, as amended from time to time and any successor statutes and all rules and
regulations promulgated thereunder and (ii) with respect to any other
Obligor organized or otherwise formed under the laws of England, the Insolvency
Act of 1986, as amended from time to time and any successor acts and all rules and
regulations promulgated thereunder.
Collection
Action
shall mean, with respect to the Junior Debt, any action (a) to sue
for, take or receive from or on behalf of any US Obligor, by set-off or in any
other manner, the whole or any
part of any moneys which may now or hereafter be owing by any US Obligor with
respect to the Junior Debt, (b) to initiate or participate with others in
any suit, action or Proceeding against any US Obligor or its property to (i) enforce
payment of or to collect the whole or any part of the Junior Debt or (ii) commence
judicial enforcement of any of the rights and remedies under the Junior Debt
Documents or applicable law with respect to the Junior Debt, (c) to
accelerate any Junior Debt, (d) to cause any US Obligor to honor any
redemption, put or mandatory payment obligation with respect to the Junior Debt
or any other equity interests of any US Obligor or (e) to take any action
under the provisions of any state, local, federal or foreign law, including,
without limitation, the UCC, or under any contract or agreement, to enforce
against, foreclose upon, take possession of or sell any property or assets of
any US Obligor.
Debtor
Relief Law
shall
mean, collectively, the Bankruptcy Code and all other applicable liquidation,
conservatorship, bankruptcy, moratorium, rearrangement, receivership,
insolvency, reorganization or similar debtor relief laws from time to time in
effect affecting the rights of creditors generally, in each case as amended
from time to time.
Junior Debt
shall mean,
collectively, all of the obligations, liabilities and indebtedness of ESI (and,
if applicable, any other US Obligors) to the Junior Creditors evidenced by the Junior Notes and all
other amounts now or hereafter owed by ESI or such other US Obligor to the
Junior Creditors under or in respect of any of the Junior Debt Documents.
Junior Debt
Documents
shall mean, collectively, the Junior Notes, any
guaranty with respect to the Junior Debt and all other documents, agreements
and instruments evidencing the foregoing and/or executed and delivered in
connection therewith.
Junior
Default
shall mean (i) a default in the payment of the Junior Debt or in
the performance of any term, covenant or condition contained in any of the Junior Debt Documents, or (ii) any
other occurrence permitting the Junior Creditors to accelerate the payment of,
or put or cause the redemption of, all or any portion of the Junior Debt or any
of the Junior Debt Documents.
2
Missed
Secondary Default Payments
shall have the meaning set forth in
Section 2.3(b)
.
Obligor
or
Obligors
shall mean, each
individually and all collectively, each US Obligor, Evolving Systems Ltd.,
Evolving Systems Holdings, Ltd. and all guarantors of the Senior Debt or, if
applicable, the Junior Debt (it being understood that there is no requirement
under the Junior Debt Documents that any Person guarantee the Junior Debt).
Paid in
Full
or
Payment in Full
shall mean the irrevocable and indefeasible
payment in full in cash of all of the Senior Debt and the termination of the
lending commitments under the Senior Debt Documents.
Permitted Junior Debt Payments
shall mean payments of principal and
interest on the Junior Debt as and when due and payable on a non-accelerated
basis in accordance with the terms of the Junior Debt Documents as in effect on
the date hereof or as modified in accordance with the terms of this Agreement.
Person
shall mean any natural
person, corporation, general or limited partnership, limited liability company,
firm, trust, association, government, governmental agency or other entity,
whether acting in an individual, fiduciary or other capacity.
Proceeding
shall mean any
voluntary or involuntary insolvency, bankruptcy, receivership, custodianship,
liquidation, dissolution,
reorganization, assignment for the benefit of creditors, appointment of a
custodian, receiver, trustee or other officer with similar powers or any other
proceeding for the liquidation, dissolution or other winding up of a Person,
including, without limitation, any of the foregoing under Debtor Relief Laws.
Reorganization
Subordinated Securities
shall mean any debt or equity securities issued
in a Proceeding in substitution of all or any portion of the Junior Debt, in
each case that (a) are subordinated in right of payment, performance and
otherwise to the Senior Debt (or any debt and/or equity securities issued in substitution of all or any portion of
the Senior Debt) to at least the same extent that the Junior Debt is
subordinated to the Senior Debt pursuant to the terms of this Agreement, (b) do
not have the benefit of any obligation of any Person (whether as issuer,
guarantor or otherwise) unless the Senior Debt has at least the same benefit of
the obligation of such Person, and (c) do not have any terms, and are not
subject to or entitled to the benefit of any agreement or instrument that has
terms, that are more burdensome to the issuer of or other obligor on such debt
or equity securities than are the terms of (x) any such debt or equity
securities issued to the Senior Creditors in connection with such Proceeding or
(y) the Junior Debt immediately prior to such issuance; provided in each case
that the Junior Creditors shall have entered into such supplements to or
modifications of this Agreement as the Agent reasonably may request to reflect
the continued subordination of the Reorganization Subordinated Securities to
the Senior Debt (or debt and equity securities issued in substitution of all or
a portion thereof).
Senior
Covenant Default
shall mean
any
“Event of Default”
(or other term of similar import or
meaning) under the Senior Debt Documents (other than a Senior Payment Default).
Senior Debt
shall mean the “Obligations,”
as such term is defined in each Credit Agreement, including, without
limitation, the principal amount of all debts, claims and indebtedness, accrued
and unpaid interest and all fees, costs and expenses, whether primary,
secondary, direct, contingent, fixed or otherwise, heretofore, now and from
time to time hereafter owing, due or payable, whether before or after the
filing of a Proceeding, together with (a) any amendments, modifications,
refinancings, replacements,
3
renewals or extensions thereof and (b) any interest
accruing thereon after the commencement of a Proceeding, without regard to
whether or not such interest is an allowed claim; provided, however, that in no
event shall the aggregate outstanding principal amount of the Senior Debt
exceed the sum of (i) the principal amount of the loans and any unfunded
loan commitments under the Credit Agreements as in effect on the date hereof,
reduced by the sum (without duplication of amounts) of (x) the aggregate amount
of all scheduled principal payments made thereon under the Term Loan Credit
Agreement from time to time (other than any principal payment which by express
terms may be reborrowed thereunder) and (y) the aggregate amount of any
permanent reductions in the amount of the revolving commitments under the
Revolving Loan Credit Agreement (specifically excluding, however, any such
payments or commitment reductions resulting from any refinancing of Senior Debt
to the extent the terms thereof otherwise are not prohibited by the terms of
this Agreement), plus (ii) $1,625,000.
Senior Debt shall be considered to be outstanding whenever any loan
commitment under any Senior Debt Document is outstanding.
Senior Debt
Documents
shall mean, collectively, the Credit Agreements, the
other Loan Documents and all other documents, agreements and instruments
evidencing, securing or otherwise pertaining to all or any portion of the
Senior Debt.
Senior
Default
shall mean any Senior Payment Default or Senior Covenant Default.
Senior
Payment Default
shall mean any failure by any Obligor to make any
required payment of interest or principal, or any fee (including, without
limitation, any letter of credit fees) or other monetary payment, under the
Senior Debt Documents, including, without limitation, any default in payment of
Senior Debt after acceleration thereof and/or the filing of a Proceeding, or any failure to pay the
amounts described in this definition regardless of any requirement of notice or
lapse of time or both before such failure to pay becomes an Event of Default
under the Senior Debt Documents.
Senior Secondary Default
shall mean the following Senior Covenant
Defaults under the Credit Agreements which, in the Agent’s Permitted
Discretion, are capable of being remedied or cured: (i) failure to timely
provide the financial reports or compliance certificate required under items
(a), (b), (d) or (e) of Exhibit C-1 to Section 6.1; (ii) failure
to provide evidence of the insurance required to be maintained pursuant to Section 6.4(b) (other
than any directors and officers liability insurance) within 10 days of Agent’s
request for such evidence of insurance; (iii) failure to obtain the
landlord waiver and consent or failure to obtain the leasehold mortgage under Section 6.7(d)(i)(b) or
the title insurance policy required under Section 6.7(d)(i)(c) within
10 days of when due; or (iv) failure to comply with the provisions of
Sections 6.7(a), (b) or (c) of
the Credit Agreements, provided that, in this case of this subsection (iv),
the Agent has not notified the Junior Creditors in writing within 120 days of
the occurrence of any such failure that, in the Agent’s Permitted Discretion,
such failure is not a Senior Secondary Default.
US Obligor
or
US Obligors
shall mean, each
individually and all collectively, ESI, Telecom Software Enterprises, LLC,
Evolving Systems Holdings, Inc. and all US Persons who are guarantors of
the Senior Debt or, if applicable, the Junior Debt (it being understood that
there is no requirement under the Junior Debt Documents that any Person
guarantee the Junior Debt).
US Persons
shall mean a Person
incorporated or otherwise organized under the laws of the United States of
America or a state of the United States of America or the District of Columbia.
4
2.
Subordination
.
2.1
Subordination of Junior Debt to
Senior Debt
. Each of the US Obligors covenants
and agrees, and each of the Junior Creditors by its acceptance of the Junior
Notes (whether upon original issue or transfer or assignment) covenants and
agrees, that (a) the payment of any and all of the Junior Debt is
subordinate and subject in right of payment, to the extent and in the manner
hereinafter set forth, to the prior Payment in Full of the Senior Debt and (b) the
existing and hereafter acquired liens and security interests of the Agent or
any Senior Creditor in any Collateral is senior, regardless of the time, order,
lack or method of perfection, to all existing and hereafter acquired liens and
security interests, if any, of the Junior Creditors (or any agent therefor) in
the Collateral, if any, securing all or any portion of the Junior Debt. Each Senior Creditor, whether now outstanding
or hereafter created, incurred, assumed or guaranteed, shall be deemed to have
acquired Senior Debt in reliance upon the provisions contained in this
Agreement. The parties hereto intend
this Agreement to be deemed enforceable by any applicable court under any Bankruptcy
Code and other Debtor Relief Laws.
2.2
Proceedings
.
(a)
Payments and Distributions
. In the event of any Proceeding involving any
Obligor or any Property of any Obligor, (i) all Senior Debt first shall be
Paid in Full before any payment of, or payment or distribution with respect to,
the Junior Debt shall be made (other than a distribution of Reorganization
Subordinated Securities); (ii) any payment or distribution, whether in
cash, property or securities which, but for the terms hereof, otherwise would
be payable or deliverable in respect of the Junior Debt (other than a
distribution of Reorganization Subordinated Securities), shall be paid or
delivered directly to the Agent (to be held and/or applied by the Agent in
accordance with the terms of the applicable Credit Agreement) until all Senior
Debt is Paid in Full, and each of the Junior Creditors irrevocably authorizes,
empowers and directs all receivers, trustees, liquidators, custodians,
conservators and others having authority in the premises to effect all such
payments and distributions, and each of the Junior Creditors also irrevocably
authorizes, empowers and directs the Agent to demand, sue for, collect and
receive every such payment or distribution; and (iii) each of the Junior
Creditors agrees to execute and deliver to the Agent or its representative all
such further instruments confirming the authorization referred to in the
foregoing clause (ii).
(b)
Proofs of Claim; Claims; Voting;
and Other Matters
.
The
Junior Creditors shall not initiate, prosecute or participate in any claim or
action in any Proceeding or otherwise challenging the enforceability, validity,
perfection or priority of the Senior Debt, this Agreement, or any liens and
security interests securing the Senior Debt.
In the event the Junior Creditors (i) fail to execute, verify,
deliver and file any proofs of claim in respect of the Junior Debt in
connection with any Proceeding prior to the date that is 30 days before the
expiration of the time to file any such proof or (ii) fail to vote any
such claim in any Proceeding prior to the date that is 15 days before the
expiration of the time to vote any such claim, the Junior Creditors hereby
irrevocably authorize, empower and appoint the Agent as its agent and
attorney-in-fact to execute, verify, deliver and file such proofs of claim and
to vote such claim (including the right to vote to accept or reject any plan of
partial or complete liquidation, reorganization, arrangement, composition, or
extension); provided the Agent shall have
5
no obligation to exercise any
such authority with respect to the Junior Creditors’ claim. In the event that the Agent votes any claim
in accordance with the authority granted hereby, the Junior Creditors shall not
be entitled to change or withdraw such vote.
(c)
Reinstatement
. The Senior Debt shall continue to be treated
as Senior Debt and the provisions of this Agreement shall continue to govern
the relative rights and priorities of the Senior Creditors and the Junior
Creditors even if all or part of the Senior Debt or the security interests
securing the Senior Debt are subordinated, set aside, avoided or disallowed in
connection with any such Proceeding. This Agreement shall be reinstated if at
any time any payment of any of the Senior Debt is rescinded or must otherwise
be returned by any Senior Creditor or any representative of such Senior
Creditor.
(d)
Collateral
. To the extent that the Junior Creditors have
or acquire any liens or other rights with respect to any Collateral, the Junior
Creditors shall not assert such rights in any Proceeding without the prior
written consent of the Agent unless
requested to do so by the Agent, in which case the Junior Creditors shall seek
to exercise such rights in the manner requested by the Agent.
2.3
Junior
Debt Payments
.
(a)
Restrictions
on Payments;
Commencement of Payment Blockage
. The
terms of the Junior Debt Documents to the contrary notwithstanding, ESI and the
other US Obligors each hereby agrees that it may not make, and each Junior
Creditor hereby agrees that it will not accept, any payment or distribution on
account of, or any redemption, purchase or acquisition of, the Junior Debt (by
set off or otherwise) until the Senior Debt is Paid in Full; provided that
Permitted Junior Debt Payments may be made by ESI (and, if applicable, the
other US Obligors) and accepted by the Junior Creditors quarterly on the tenth
Business Day following the earlier of (i) delivery to Agent of the
financial statements and compliance certificates of the Obligors for the
applicable fiscal quarter as required by the Credit Agreements and (ii) the
due date for delivery under the Credit Agreements of the financial statements
and compliance certificates of the Obligors for the applicable fiscal quarter
as required by the Credit Agreements (commencing with the tenth Business Day
following the earlier of (x) the delivery to the Agent of the audited financial
statements and compliance certificates for the fiscal year ending December 31,
2005 as required by the Credit Agreements and (y) the due date for delivery
under the Credit Agreements of the audited financial statements and compliance
certificates for the fiscal year ending December 31, 2005 as required by
the Credit Agreements) so long as, at the time of such payment or immediately
after giving effect thereto:
(i)
no Senior Default exists or would be created by the making of such
payment;
(ii)
there shall be Available Cash for Payment;
(iii)
such Permitted Junior Debt Payment is not made from proceeds of the
Senior Debt under the Revolving Loan Credit Agreement; and
6
(iv)
the Obligors have delivered compliance certificates pursuant to the
Credit Agreements certifying that the Obligors would have been in compliance on
a pro forma basis (
recomputed for the most recent period for which
financial statements have been delivered to the Senior Creditors after giving
effect thereto as of the first day of such period) with the financial covenants set forth in the Credit Agreements assuming
the financial covenant levels for the then current period shall apply, and the
Obligors shall have provided to the Agent such other evidence thereof as
requested by the Agent to the satisfaction of the Agent.
With each payment on the
Junior Debt, ESI shall certify in writing to the Junior Creditors that such
payment is a Permitted Junior Debt Payment and that no Senior Default exists. ESI
shall provide a copy of such written certification to the Agent. If a Senior Default has occurred at the time
such payment is made by ESI (or, if applicable, any other US Obligor), the
Agent shall have 120 days from the date the Agent receives such written
certification to notify the Junior Creditors that a Senior Default did exist at
the time such payment was made and that such payment was received by the Junior
Creditors in violation of this Agreement.
In the event that the Junior Creditors are notified by the Agent within
such 120 day period that the Junior Creditors received such payment in
violation of this Agreement, the Junior Creditors shall promptly return such
payment to the Agent. If the Agent fails
to notify the Junior Creditors within such 120 day period, the Junior Creditors
shall have no further obligation or liability to return such payment.
No Senior Default shall be
deemed to have been cured or waived for purposes of this
Section 2.3(a)
unless
and until ESI and the Junior Creditors shall have received a written waiver or
notice of cure of any such Senior Default from the Agent. To the extent such Senior Default is cured or
waived, the Agent agrees to provide the Junior Creditors with notice thereof
within a reasonable period of time.
(b)
Limited Exception to Payment
Blockage
. In the event that the Junior
Creditors would be permitted to received a Permitted Junior Debt Payment under
Section 2.3(a)
above
in respect of the Junior Debt solely but for the occurrence of a Senior
Secondary Default (a “
Missed Secondary Default
Payment
”), and provided no other Senior Default that is not a
Senior Secondary Default exists and the Junior Creditors are otherwise
permitted to receive such Permitted Junior Debt Payments pursuant to
Sections
2.3(a)(ii), (iii) and (iv)
above, the Junior Creditors shall be
permitted to receive any such Missed Secondary Default Payment upon the earlier
to occur of (i) the cure or waiver of such Senior Secondary Default as
provided in
Section 2.3(a)
or (ii) 180 days from the date written notice is provided by any
Junior Creditor to the Agent notifying the Agent of such Missed Secondary
Default Payment.
(c)
Non-Applicability
to Proceeding
. The provisions
of this
Section 2.3
shall not apply to any payment with respect to
which
Section 2.2
would be applicable.
2.4
Restriction on Action by the
Junior Creditors
.
(a)
Notwithstanding any of the Junior Creditors’
rights under applicable law or any provision of the Junior Debt Documents to
the contrary and except as otherwise expressly permitted under clauses (b) and
(c) below, the Junior Creditors hereby
7
acknowledge and agree that the Junior Creditors
shall not take any Collection Action, until the Senior Debt is Paid in Full.
(b)
In the event that ESI (or, if applicable, any
other US Obligor) is permitted under this Agreement to make a Permitted Junior
Debt Payment in respect of the Junior Debt and is required to make such payment
pursuant to the Junior Debt Documents but fails to make such payment, the
Junior Creditors may, after one (1) year from the date written notice is
provided by any Junior Creditor to the Agent notifying the Agent of such
failure to pay, sue for such missed payment;
provided
,
however
, that (i) such action to sue shall not
include any right on the part of Junior Creditors to take any other Collection
Action, including accelerating any Junior Debt or foreclosing upon or otherwise
exercising any rights to any property or assets of ESI or any other US Obligors,
and (ii) any moneys obtained by the Junior Creditors with respect to any
such Collection Action permitted under this
Section 2.4(b)
during
any Senior Default shall in any event be held in trust for the benefit of the
Agent and the Senior Creditors and promptly paid or delivered to the Agent for
the benefit of Senior Creditors in the form received until all Senior Debt is
Paid in Full.
(c)
In the event that the Senior Creditor
accelerates all of the Senior Debt, a Junior Creditor may, upon ten days prior written notice to the Agent,
accelerate its Junior Debt and obtain a judgment;
provided
,
however
,
that if following such acceleration of all of the Senior Debt, such
acceleration is rescinded, then each such Junior Creditor shall likewise
rescind such acceleration of the Junior Debt and shall not be permitted to take
any further action with respect to such judgment, and
provided
,
further
,
that (i) such acceleration right shall not include any right on the part
of Junior Creditors to take any other Collection Action or to enforce such
judgment, including foreclosing upon or otherwise exercising any rights to any
property or assets of ESI or any other US Obligors until all Senior Debt is
Paid in Full, (ii) any moneys obtained by the Junior Creditors with
respect to any such Collection Action permitted under this
Section 2.4(c)
shall
in any event be held in trust for the benefit of the Agent and the Senior
Creditors and promptly paid or delivered to the Agent for the benefit of Senior
Creditors in the form received until all Senior Debt is Paid in Full and (iii) in
the case of acceleration by all Junior Creditors in accordance with this
Section 2.4(c)
,
any one Junior Creditor may provide such notice on behalf of all Junior
Creditors in a notice specifying it is being given on behalf of all Junior
Creditors.
(d)
Notwithstanding anything to the contrary
contained in this Agreement, in the event of a Change of Control (as such term
is defined in the Junior Notes as in effect on the date of this Agreement), the
Junior Creditors may take the following action:
(i)
With respect to an event under (i) or (ii) of
such Change of Control definition, a
Junior Creditor may, from the
earlier to occur of (A) receipt by Senior Creditors of Payment in Full of
the Senior Debt as a result of any of the transactions completed under (i) or
(ii) of such Change of Control definition, or (B) if there has not been an acceleration of the
Senior Debt (if there has been an acceleration of the Senior Debt, the
provisions of
Section 2.4(c)
shall apply), within 180
days from the date such transactions under (i) or (ii) of such Change
of Control definition are consummated, accelerate
its Junior Debt and accept and receive payment in satisfaction of its Junior
Debt in
8
accordance with the terms of
the Junior Debt Documents;
provided
in the case of acceleration by all Junior
Creditors in accordance with this
Section 2.4(d)(i)
, any one Junior
Creditor may provide such notice on behalf of all Junior Creditors in a notice
specifying it is being given on behalf of all Junior Creditors; or
(ii)
With respect to an event under (iii) or (iv) of
such Change of Control
definition, upon ten days prior written
notice from a Junior Creditor to the Agent, such Junior Creditor may accelerate
its Junior Debt and accept and receive payment in satisfaction of its Junior
Debt;
provided
, in the case of acceleration by all Junior
Creditors in accordance with this
Section 2.4(d)(ii)
, any one
Junior Creditor may provide such notice on behalf of all Junior Creditors in a
notice specifying it is being given on behalf of all Junior Creditors.
(e)
The Junior Creditors hereby waive any right
they may have to require that the Agent or the Senior Creditors to marshal any
assets of the Obligors in favor of the Junior Creditors, and the Junior
Creditors agree that they shall not acquire, by subrogation or otherwise, any
lien, estate, right or other interest in any collateral of the Obligors or the
proceeds therefrom. Until the Senior Debt is Paid in Full,
the Junior Creditors shall not (i) institute any judicial or
administrative proceeding against any Obligor, the Agent or any Senior
Creditor, (ii) take any other action, including without limitation, any
Collection Action (except as expressly permitted under
Sections 2.4(b), (c) or
(d)
above), or (iii) fail to take any actions or give or fail to
give any consent, in each case which directly or indirectly would interfere
with or delay the exercise by the Agent or the Senior Creditors of their rights
and remedies under the Senior Debt Documents.
(f)
The US Obligors agree that any applicable
statute of limitations shall be tolled during any standstill period and waive
any right to assert any defense based upon any such statute of limitations
without giving effect to such tolling.
2.5
No Liens
.
(a)
The Junior Creditors shall not
seek to obtain, and shall not take, accept, obtain or have, any lien or
security interest in any Collateral as security for all or any part of the Junior Debt
other than judgment liens obtained
in connection with a Collection Action permitted hereby and, in the event
that the Junior Creditors obtain any liens or security interests in any Collateral not otherwise permitted hereby,
the Junior Creditors shall (or shall cause its agent to) promptly execute and
deliver to the Agent such documents, agreements and instruments, and take such
other actions, as the Agent shall request to release such liens and security
interests in such Collateral.
(b)
The Agent and Senior Creditors shall have the exclusive right as to the
exercise and enforcement of all privileges and rights with respect to the
Collateral in their sole discretion, including, without limitation, the exclusive right
to take or retake control or possession of such Collateral and to hold, prepare
for sale, process, sell, lease, dispose of, or liquidate such Collateral or
settle or adjust insurance claims with respect thereto. Without in anyway limiting the foregoing, if
in connection with any sale or other disposition of Collateral the Agent or the
Senior Creditors request that the Junior
9
Creditors release their liens upon such Collateral,
then the Junior Creditors shall execute and deliver such documents, agreements
and instruments, and take such other actions as are necessary to release the
Junior Creditors’ liens in such Collateral, subject to the Junior Creditors’
right to retain a lien subordinated hereunder on any proceeds from the
disposition of such Collateral in excess of the amount of the Senior Debt
outstanding.
(c)
In furtherance of this
Section 2.5
,
each of the Junior Creditors hereby irrevocably appoints the Agent its
attorney-in-fact, with full authority in the place and stead of such Junior
Creditor and in the name of such Junior Creditor or otherwise, to execute and
deliver any document, agreement or instrument which the Junior Creditors may be
required to deliver pursuant to this
Section 2.5
. The Agent and the Senior Creditors shall have
no responsibility for or obligation or duty with respect to any of the
Collateral or any matter or proceeding arising out of or relating thereto,
including, without limitation, any obligation or duty to collect any sums due
in respect thereof or to protect or preserve any rights pertaining thereto.
2.6
Amendment of Junior Debt
Documents
. Until the Senior Debt is Paid in
Full, and anything contained in the Junior Debt Documents or any of the Senior
Debt Documents to the contrary notwithstanding, the Junior Creditors shall not,
without the prior written consent of the Agent, agree to any amendment or
supplement to, or other modification of, the Junior Debt Documents or the
Junior Debt the effect of which is to (a) increase the maximum principal
amount of the Junior Debt, (b) increase the rate of interest (cash or
otherwise) on any of the Junior Debt (except for regularly scheduled interest
at the non-default rate of interest to the extent expressly provided in the
Junior Debt Documents as in effect on the date of this Agreement), (c) change
the date upon which regularly scheduled payments of principal or interest on
the Junior Debt are due, (d) add or make more restrictive any event of
default or any covenant with respect to the Junior Debt or make any change to
any event of default or any covenant which would have the effect of making such
event of default or covenant more restrictive than those in effect in the
Credit Agreements on the date of this Agreement, (e) change the final
maturity date of any Junior Debt to a date that is earlier than the date which
is 180 days after the scheduled maturity date of the Senior Debt, (f) take
any liens or security interests in assets of the Obligors or any other property
or assets securing the Senior Debt, (g) change any redemption, put or
prepayment provisions of the Junior Debt, (h) alter the subordination
provisions with respect to the Junior Debt, including, without limitation,
subordinating the Junior Debt to any other indebtedness, or (i) change or
amend any other term of the Junior Debt Documents if such change or amendment
would result in a Senior Default, increase the obligations of any Obligor or
confer additional material rights on the Junior Creditors or any holder of the
Junior Debt in a manner adverse to any Obligor or the Senior Creditors.
2.7
Incorrect Payments
. If any payment or distribution on account of
the Junior Debt not permitted to be made by the Obligors or received by the
Junior Creditors under this Agreement is received by the Junior Creditors in
violation of this Agreement before all Senior Debt is Paid in Full, such
payment or distribution shall not be commingled with any asset of the Junior
Creditor, shall be held in trust by the Junior Creditors for the benefit of the
Senior Creditors and shall be promptly paid over to the Agent, or its
designated representative, for application (in accordance with the Credit
Agreements) to the payment of the Senior Debt then remaining unpaid, until all
of the Senior Debt is Paid in Full.
10
2.8
Transfer
. No Junior Creditor shall sell, assign,
pledge, dispose of or otherwise transfer all or any portion of the Junior Debt
or any Junior Debt Document (a) without giving written notice within
fifteen (15) days of such action to the Agent, (b) unless prior to the
consummation of any such action, the transferee thereof shall execute and
deliver to the Agent a joinder to this Agreement providing for the continued
subordination of the Junior Debt to the Senior Debt as provided herein and for
the continued effectiveness of all of the rights of the Agent and the Senior
Creditors arising under this Agreement, and (c) unless, following the
consummation of any such action, there shall be either (i) no more than
five (5) holders of the Junior Debt, or (ii) one Person acting as
agent for all of the Junior Creditors pursuant to documentation reasonably
satisfactory to the Agent and the Junior Creditors such that any notice of a
Senior Default and other notices and communications to be delivered to or by
the Junior Creditors hereunder shall be made to or obtained from such agent and
shall be binding on the Junior Creditors as if directly received by or obtained
from the Junior Creditors.
Notwithstanding the failure to execute or deliver any joinder to this
Agreement in form and substance satisfactory to the Agent, the subordination
effected hereby shall survive any sale, assignment, pledge, disposition or
other transfer of all or any portion of the Junior Debt, and the terms of this
Agreement shall be binding upon the successors and assigns of the Junior
Creditors.
2.9
Legends
. Until the Senior Debt is Paid in Full, the
Junior Notes and all other Junior Debt Documents at all times shall contain in
a conspicuous manner the following legend:
“This
instrument and the rights and obligations evidenced hereby are subordinate in
the manner and to the extent set forth in that certain Subordination Agreement
(as amended, the “
Subordination Agreement
”)
dated as of November 14, 2005 among Evolving Systems, Inc., a
Delaware corporation,
the other US Obligors (as defined therein), the Junior
Creditors (as defined therein) and CapitalSource Finance LLC, as Agent for the Lenders
from time to time a party to the Credit Agreements (as defined therein), all as
more particularly described in the Subordination Agreement, and each holder of
this instrument, by its acceptance hereof, shall be bound by the provisions of
the Subordination Agreement.”
3.
Modifications to
Senior Debt
. The Senior Creditors may at any
time without the consent of or notice to the Junior Creditors, without
incurring liability to the Junior Creditors and without impairing or releasing
the obligations of the Junior Creditors under this Agreement, change the manner
or place of payment or extend the time of payment of, increase the interest
rates and fees applicable to or renew or alter any of the other terms of the
Senior Debt (including increases to the principal amount of outstanding Senior
Debt subject to the proviso under the definition of Senior Debt in this
Agreement) or the Senior Debt Documents, or amend, modify, supplement, restate,
substitute, replace or refinance in any manner any Senior Debt Document or any
other any agreement, note, guaranty or other instrument evidencing or securing
or otherwise relating to the Senior Debt.
4.
Continued
Effectiveness of this Agreement
. The terms
of this Agreement, the subordination effected hereby, and the rights and the
obligations of the Junior Creditors, the US Obligors, the Agent and the Senior
Creditors arising hereunder shall not be affected, modified or impaired in any
manner or to any extent by the validity or enforceability of any of the Senior
Debt Documents or the Junior Debt Documents, or any exercise or non-exercise of
any right, power or remedy under or in respect of the Senior Debt, the Senior
Debt Documents, the Junior Debt or the Junior Debt Documents. The Junior Creditors hereby acknowledge that
the provisions of this Agreement are intended to be
11
enforceable at all times, whether before the
commencement of, after the commencement of, in connection with or premised on
the occurrence of a Proceeding.
5.
No Contest
. Each of the Junior
Creditors agrees that it will not at any time contest the validity, perfection,
priority or enforceability of the Senior Debt, the Senior Debt Documents, or
the liens and security interests of the Agent and any of the Senior Creditors
in any Collateral.
6.
Representations
and Warranties
. The Junior Creditors hereby
represent and warrant as follows:
6.1
Existence and Power
. Each of the Junior Creditors is duly
organized, validly existing and in good standing under the laws of the
jurisdiction in which it is organized.
6.2
Authority
. Each of the Junior Creditors has the power
and authority to enter into, execute, deliver and carry out the terms of this
Agreement, all of which have been duly authorized by all proper and necessary
action and are not prohibited by such party’s organizational documents.
6.3
Binding Agreements
. This Agreement, when executed and delivered,
will constitute the valid and legally binding obligation of the Junior
Creditors, enforceable in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of creditors’
rights generally and by equitable principles.
6.4
Conflicting Agreements;
Litigation
. No provisions of any mortgage,
indenture, contract, agreement, statute, rule, regulation, judgment, decree or
order binding on the Junior Creditors conflicts with, or requires any consent
which has not already been obtained under, or would in any way prevent the
execution, delivery or performance of the terms of this Agreement by the Junior
Creditors or the Junior Debt Documents by the parties thereto. No pending or,
to the best of the Junior Creditors’ knowledge, threatened, litigation,
arbitration or other proceedings if adversely determined would prevent the
performance of the terms of this Agreement by such party or the Junior Debt
Documents by the parties thereto.
6.5
Ownership
. Each of the Junior Creditors is the sole
owner, beneficially and of record, of the Junior Notes, the other Junior Debt
Documents and the Junior Debt.
6.6
Defaults
. No Junior Default exists under or with
respect to the Junior Notes or any of the other Junior Debt Documents.
6.7
Junior Debt
Documents
. There are no material Junior
Debt Documents other than those attached hereto as
Exhibit A
.
6.8
Senior Debt
Documents
. The material Senior Debt
Documents are listed on
Exhibit B
attached hereto.
7.
Agent
. The Agent hereby represents and warrants to
the Junior Creditors as follows:
7.1
Existence
and Power
. The Agent is a limited liability
company duly organized, validly existing and in good standing under the laws of
the jurisdiction in which it is organized.
12
7.2
Authority
. The Agent has the power and authority to
enter into, execute, deliver and carry out the terms of this Agreement, all of
which have been duly authorized by all proper and necessary action and are not
prohibited by its organizational documents.
7.3
Binding
Agreements
. This Agreement, when executed
and delivered, will constitute the valid and legally binding obligation of the
Agent enforceable in accordance with its terms, except as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting the enforcement of creditors’ rights generally and by
equitable principles.
7.4
Conflicting
Agreements; Litigation
. No provisions
of any mortgage, indenture, contract, agreement, statute, rule, regulation,
judgment, decree or order binding on the Agent conflicts with, or requires any
consent which has not already been obtained under, or would in any way prevent
the execution, delivery or performance of the terms of this Agreement by the
Agent. No pending or, to the best of the Agent’s knowledge, threatened,
litigation, arbitration or other proceedings if adversely determined would
prevent the performance of the terms of this Agreement by the Agent.
8.
Notice of
Junior Default
. Each of the Junior Creditors shall
provide the Agent with written notice of the occurrence of a Junior Default
under its Junior Note and ESI shall provide the Agent with a written notice of
the occurrence of each Junior Default, and each Junior Creditor who has
provided such notice and ESI shall notify the Agent in writing in the event
such Junior Default is waived; provided that (i) any failure to deliver
any such notices shall not otherwise affect the subordination provisions or
other obligations of the Junior Creditors or the US Obligors hereunder, (ii) no
such notice shall be effective for purposes of
Section 2.4(b)
unless
specifically stating so therein and (iii) any one Junior Creditor may
provide such notices on behalf of all Junior Creditors in a notice specifying
it is being given on behalf of all Junior Creditors.
9.
Cumulative
Rights, No Waivers
. Each and every
right, remedy and power granted to the Agent, the Senior Creditors or the
Junior Creditors hereunder shall be cumulative and in addition to any other
rights, remedy or power specifically granted herein or in the Senior Debt
Documents or the Junior Debt Documents, as applicable, or now or hereafter
existing in equity, at law, by virtue of statute or otherwise, and may be
exercised by the Agent, Senior Creditors or any Junior Creditor, as applicable,
from time to time, concurrently or independently and as often and in such order
as the Agent, the Senior Creditors or the Junior Creditors, as applicable, may
deem expedient. Any failure or delay on
the part of the Agent, Senior Creditors or any of the Junior Creditors, as
applicable, in exercising any such right, remedy or power, or abandonment or
discontinuance of steps to enforce the same, shall not operate as a waiver
thereof or affect the rights of the Agent, the Senior Creditors or Junior
Creditors, as applicable, thereafter to exercise the same, and any single or
partial exercise of any such right, remedy or power shall not preclude any
other or further exercise thereof or the exercise of any other right, remedy or
power, and no such failure, delay, abandonment or single or partial exercise of
the rights of the Agent, the Senior Creditors or the Junior Creditors, as applicable,
hereunder shall be deemed to establish a custom or course of dealing or
performance among the parties hereto.
10.
Modification
. This Agreement may be amended or modified
only by a writing signed by the US Obligors, the Agent and the holders of at least
50.1% of the then outstanding principal balance of the Junior Notes. The Junior
Creditors may waive any right under this Agreement or grant a consent by action
of the holders of at least 50.1% of the then outstanding principal balance of
the Junior Notes. Any notice or demand
given to the Junior Creditor by the Agent or the Senior Creditors in any
13
circumstances not specifically required by the Agent or
the Senior Creditors shall not entitle the Junior Creditors to any other or
further notice or demand in the same, similar or other circumstances unless
specifically required hereunder. Any
notice or demand given to the Agent or the Senior Creditors by any Junior
Creditor in any circumstances not specifically required by the Junior Creditors
shall not entitle the Agent or the Senior Creditors to any other or further
notice or demand in the same, similar or other circumstances unless
specifically required hereunder.
11.
Additional
Documents and Actions
. The Junior
Creditors at any time, and from time to time, after the execution and delivery
of this Agreement, promptly will execute and deliver such further documents and
do such further acts and things as the Agent reasonably may request in order to
effect fully the purposes of this Agreement.
12.
Notices
. Unless otherwise specifically provided
herein, any notice or other communication required or permitted to be given
shall be in writing addressed to the respective party as set forth below and
shall be given only by, and
shall be deemed to have been received upon:
(a) registered or certified mail, return receipt requested, on the
date on which such notice was received as indicated in such return receipt; (b) delivery
by a nationally recognized overnight courier, one Business Day after deposit
with such courier; or (c) facsimile or electronic transmission, in each
case upon telephone or further electronic communication from the recipient
acknowledging receipt (whether automatic or manual from recipient), as
applicable.
Notices shall be addressed as
follows:
(a)
If to the Junior
Creditors:
Advent Crown Fund II C.V.
Advent Euro-Italian Direct
Investment Program Limited Partnership
Advent European
Co-Investment Program Limited Partnership
Advent PGGM Global Limited
Partnership
Digital Media &
Communications II Limited Partnership
Global Private Equity III
Limited Partnership
Global Private Equity III-A
Limited Partnership
Global Private Equity III-B
Limited Partnership
Global Private Equity III-C
Limited Partnership
Advent Partners Limited
Partnership
Advent Partners (NA) GPE III
Limited Partnership
Advent Partners GPE III
Limited Partnership
Advent Global GECC III
Limited Partnership
c/o
Advent International Company
75
State Street
Boston,
MA 02109
Attention:
Janet L. Hennessey,
Vice President
Facsimile:
(617) 951-0566
with
copies to:
Advent
International plc
123
Buckingham Palace Road
14
London
SW1W 9SL
United
Kingdom
Attention:
James Brocklebank
Facsimile:
(44) 20-7333-0801
and
Pepper
Hamilton LLP
3000
Two Logan Square
Eighteenth
and Arch Streets
Philadelphia,
PA 19103-2799
Attention:
Cary S. Levinson
Facsimile:
(215) 981-4750
Apax
WW Nominees Ltd a/c AE4
c/o
Apax Partners Ltd.
15
Portland Place
London
W1B 1PT
United
Kingdom
Attention:
Peter Skinner
Facsimile:
(44) 20-7843-4001
with a
copy to:
Pepper
Hamilton LLP
3000
Two Logan Square
Eighteenth
and Arch Streets
Philadelphia,
PA 19103-2799
Attention:
Cary S. Levinson
Facsimile:
(215) 981-4750
Four Seasons
Venture II A.S.
c/o
Four Seasons Venture
Postboks
1216 Vika
0110
Oslo
Norway
Attention:
Gunnar Rydning
Facsimile:
(47) 2283-8518
Nigel
Clifford
Croftland
Moor
Lane
Speen
Newbury
Berks
RG14 1RT
United
Kingdom
15
David
Gibbon
14
Beaumont Road
Windsor
Berks
SL4 1HY
United
Kingdom
(b)
If to the US Obligors:
Evolving
Systems, Inc.
9777
Pyramid Court
Suite 100
Englewood,
Colorado 80112
Attention:
Anita T. Moseley,
General Counsel
Facsimile:
(303) 802-1138
(c)
If to the Agent:
CapitalSource
Finance LLC
4445
Willard Avenue
12
th
Floor
Chevy
Chase, MD 20815
Attention:
Corporate Finance
Group, Portfolio Manager
Facsimile:
(301) 841-2313
or in any case, to such other address as the party
addressed shall have previously designated by written notice to the serving
party, given in accordance with this
Section 11
. A notice not given as provided above shall,
if it is in writing, be deemed given if and when actually received by the party
to whom given.
13.
Severability
.
In the event that any provision of this
Agreement is deemed to be invalid, illegal or unenforceable by reason of the
operation of any law or by reason of the interpretation placed thereon by any
court or governmental authority, the validity, legality and enforceability of
the remaining provisions of this Agreement shall not in any way be affected or
impaired thereby, and the affected provision shall be modified to the minimum
extent permitted by law so as most fully to achieve the intention of this
Agreement.
14.
Successors
and Assigns
. This Agreement shall inure to
the benefit of the successors and assigns of the Agent, the Senior Creditors
and the Junior Creditors and shall be binding upon their respective successors
and assigns and the US Obligors. The
Agent and Senior Creditors, without notice to or consent of the Junior
Creditors, may assign or transfer any or all of the Senior Debt or any interest
therein to any Person and, notwithstanding any such assignment or transfer, or
any subsequent assignment or transfer, the Senior Debt shall, subject to the
terms hereof, be and remain Senior Debt for purposes of this Agreement, and
every permitted assignee or transferee of any of the Senior Debt or of any
interest therein shall, to the extent of the interest of such permitted
assignee or transferee in the Senior Debt, be entitled to rely upon and be the
third party beneficiary of the subordination provided under this Agreement and
shall be entitled to enforce the terms and provisions hereof to the same extent
as if such assignee or transferee were initially a party hereto. EACH OF THE JUNIOR CREDITORS AND THE US OBLIGORS
ACKNOWLEDGES AND AGREES THAT THE AGENT AND THE OTHER SENIOR CREDITORS AT ANY
TIME AND FROM TIME TO TIME MAY DIVIDE AND REISSUE (WITHOUT SUBSTANTIVE
CHANGES OTHER THAN THOSE RESULTING FROM SUCH DIVISION) THE NOTES EVIDENCING THE
SENIOR DEBT, THE OBLIGATIONS UNDER
16
THE CREDIT AGREEMENTS, THE COLLATERAL AND THE SENIOR
DEBT DOCUMENTS TO ONE OR MORE OTHER PERSONS, IN EACH CASE ON THE TERMS AND
CONDITIONS IN THE SENIOR DEBT DOCUMENTS.
The terms “Agent” and “Senior Creditors” in this Agreement include
transferees and participants of the Senior Debt and successors and assigns,
each of which shall have all rights and benefits of the Agent or Senior
Creditors hereunder. Each transferee and
participant of the Senior Debt (to the extent provided in the applicable Credit
Agreement) shall have all of the rights and benefits with respect to the Obligations
under the applicable Credit Agreement, the notes evidencing Senior Debt, the
Collateral, this Agreement and the Senior Debt Documents held by it as fully as
the original holder thereof.
15.
Counterparts
. This Agreement may be executed in one or more
counterpart originals, which, taken together, shall constitute one
fully-executed instrument. Any signature
delivered by facsimile shall be deemed to be a counterpart original hereto.
16.
Defines
Rights of Creditors; Obligors’ Obligations Unconditional
. The provisions of this Agreement are solely
for the purpose of defining the relative rights of the Junior Creditors, the
Agent and the Senior Creditors and shall not be deemed to create any rights or
priorities in favor of any other Person, including, without limitation, any
Obligor. As between the Obligors and the
Senior Creditors, nothing contained herein shall impair the unconditional and
absolute obligation of the Obligors to the Senior Creditors to pay the Senior
Debt as such Senior Debt shall become due and payable in accordance with the
Senior Debt Documents. As between ESI
and the other US Obligors and the Junior Creditors, nothing contained herein
shall impair the unconditional and absolute obligation of ESI or, if
applicable, the other US Obligors to the Junior Creditors to pay the Junior
Debt as such Junior Debt shall become due and payable in accordance with the
Junior Debt Documents, subject to the terms of this Agreement.
17.
Subrogation
. After and subject to the indefeasible Payment
in Full of the Senior Debt, and prior to the irrevocable and indefeasible
repayment in full in cash of the Junior Debt, the Junior Creditors shall be
subrogated to the rights of the Senior Creditors to the extent that payments
and distributions otherwise payable to the Junior Creditors have been applied
to the Senior Debt in accordance with the provisions of this Agreement. For purposes of such subrogation, no payments
or distributions to the Senior Creditors of any cash, property or securities to
which the Junior Creditors would be entitled except for the provisions of this
Agreement, and no payments pursuant to the provisions of this Agreement to the
Senior Creditors by the Junior Creditors, shall, as among the Obligors, their
creditors (other than the Senior Creditors) and the Junior Creditors be deemed
to be a payment or distribution by such Obligor to or on account of the Senior
Debt; it being understood that
the provisions of this Agreement are and are intended solely for the purpose of
defining the relative rights of the Junior Creditors, on the one hand, and the
Agent and the Senior Creditors, on the other hand. The Agent and the Senior
Creditors shall have no obligation or duty to protect the Junior Creditors’
rights of subrogation arising pursuant to this Agreement or under any
applicable law, nor shall the Agent or the Senior Creditors be liable for any
loss to, or impairment of, any subrogation rights held by the Junior Creditors.
18.
Conflict
.
In the event of any conflict between any
term, covenant or condition of this Agreement and any term, covenant or
condition of any of the Junior Debt Documents or the Senior Debt Documents, the
provisions of this Agreement shall control and govern.
19.
Headings
. The paragraph headings used in this Agreement
are for convenience only and shall not affect the interpretation of any of the
provisions hereof.
17
20.
Termination
. This Agreement shall terminate upon the
indefeasible Payment in Full of the Senior Debt.
21.
Applicable
Law
. This Agreement shall be governed by and shall
be construed and enforced in accordance with the internal laws of the State of
New York, without regard to conflicts of law principles.
22.
CONSENT TO
JURISDICTION
. EACH OF
THE AGENT, THE JUNIOR CREDITORS AND THE OBLIGORS HEREBY CONSENTS TO THE
JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN THE STATE OF NEW YORK
IN THE BOROUGH OF MANHATTAN AND IRREVOCABLY AGREES THAT ALL ACTIONS OR
PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT SHALL BE LITIGATED IN
SUCH COURTS. EACH OF THE AGENT, THE
JUNIOR CREDITORS AND THE OBLIGORS EXPRESSLY SUBMITS AND CONSENTS TO THE
JURISDICTION OF THE AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON
CONVENIENS. EACH OF THE AGENT, THE
JUNIOR CREDITORS AND THE OBLIGORS HEREBY WAIVES PERSONAL SERVICE OF ANY AND ALL
PROCESS AND AGREES THAT ALL SUCH SERVICE OF PROCESS MAY BE MADE UPON IT BY
CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT REQUESTED, ADDRESSED TO THE AGENT,
JUNIOR CREDITORS AND THE OBLIGORS AT THEIR RESPECTIVE ADDRESSES SET FORTH IN
THIS AGREEMENT AND SERVICE SO MADE SHALL BE COMPLETE 10 DAYS AFTER THE SAME HAS
BEEN POSTED.
23.
WAIVER OF
JURY TRIAL
. THE
JUNIOR CREDITORS, THE OBLIGORS AND THE AGENT HEREBY WAIVE THEIR RESPECTIVE
RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING
OUT OF THIS AGREEMENT. EACH OF THE
JUNIOR CREDITORS, THE OBLIGORS AND THE AGENT ACKNOWLEDGES THAT THIS WAIVER IS A
MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT EACH HAS RELIED
ON THE WAIVER IN ENTERING INTO THIS AGREEMENT AND THAT EACH WILL CONTINUE TO
RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS. EACH OF THE JUNIOR CREDITORS, THE OBLIGORS
AND THE AGENT WARRANTS AND REPRESENTS THAT EACH HAS HAD THE OPPORTUNITY OF
REVIEWING THIS JURY WAIVER WITH LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND
VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS.
24.
Waiver of Consolidation
. Each
of the Junior Creditors acknowledges and agrees that (i) the Obligors are
each separate and distinct entities; and (ii) it will not at any time
insist upon, plead or seek advantage of any substantive consolidation, piercing
of the corporate veil or any other order or judgment that causes an effective
combination of the assets and liabilities of the Obligors in any Proceeding
under Debtor Relief Laws or other similar proceeding.
25.
Defense to Enforcement Provision
.
If
any of the Junior Creditors, in contravention of the terms of this Agreement,
shall commence, prosecute or participate in any Proceeding or Collection Action
with respect to the Junior Debt against any Obligor, then Agent or any Senior
Creditor may (i) intervene and interpose such defense or pleas in its
name, and/or (ii) by virtue of this Agreement, restrain the enforcement
thereof in the name of Agent or any Senior Creditor. If any of the Junior Creditors, in
contravention of the terms of this Agreement, obtains any cash or other assets
of any Obligor as a result of any Proceeding or Collection Action with respect
to the Junior Debt, such Junior Creditor agrees forthwith to pay, deliver and
assign to the Agent, with appropriate endorsements, any such cash or other
18
assets
for application to the Senior Debt owing to Agent and Senior Creditors until
the Senior Debt has been Paid in Full.
{
Signatures
appear on the following page
.}
19
IN WITNESS WHEREOF,
the Junior Creditor,
the US Obligors and the Agent have caused this Subordination Agreement to be
executed as of the date first above written.
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JUNIOR CREDITORS:
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APAX WW NOMINEES LTD A/C AE4
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By:
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Name:
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Title:
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ADVENT CROWN FUND II C.V.
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ADVENT EURO-ITALIAN DIRECT
INVESTMENT PROGRAM LIMITED
PARTNERSHIP
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ADVENT EUROPEAN CO-INVESTMENT
PROGRAM LIMITED PARTNERSHIP
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ADVENT PGGM GLOBAL LIMITED
PARTNERSHIP
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DIGITAL MEDIA & COMMUNICATIONS II
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LIMITED PARTNERSHIP
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GLOBAL PRIVATE EQUITY III LIMITED
PARTNERSHIP
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GLOBAL PRIVATE EQUITY III-A LIMITED
PARTNERSHIP
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GLOBAL PRIVATE EQUITY III-B LIMITED
PARTNERSHIP
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GLOBAL PRIVATE EQUITY III-C LIMITED
PARTNERSHIP
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By:
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Advent International Limited Partnership,
General Partner
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By:
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Advent International Corporation, General
Partner
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By:
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Name:
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Title:
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ADVENT PARTNERS LIMITED PARTNERSHIP
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20
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ADVENT PARTNERS (NA) GPE III LIMITED
PARTNERSHIP
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ADVENT PARTNERS GPE III LIMITED
PARTNERSHIP
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By:
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Advent International Corporation, General
Partner
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By:
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Name:
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Title:
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ADVENT GLOBAL GECC III LIMITED
PARTNERSHIP
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By:
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Advent Global Management Limited Partnership,
General Partner
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By:
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Advent International Limited Partnership,
General Partner
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By:
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Advent International Corporation, General
Partner
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By:
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Name:
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Title:
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FOUR SEASONS VENTURE II A.S.
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By:
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Name:
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Title:
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NIGEL CLIFFORD
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DAVID GIBBON
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21
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OBLIGORS:
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EVOLVING SYSTEMS, INC.
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By:
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Name:
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Brian R. Ervine
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Title:
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Executive Vice President and Chief Financial
Officer
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TELECOM SOFTWARE ENTERPRISES, LLC
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By:
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Name:
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Brian R. Ervine
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Title:
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Executive Vice President and Chief Financial
Officer
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EVOLVING SYSTEMS HOLDINGS, INC.
|
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By:
|
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Name:
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Brian R. Ervine
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Title:
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Executive Vice President and Chief Financial
Officer
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22
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AGENT AND LENDER:
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CAPITALSOURCE FINANCE LLC
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By:
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Name:
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Title:
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23
EXHIBIT A
Junior Debt Documents
See Attached.
24
EXHIBIT B
Senior Debt Documents
|
1.
|
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Credit Agreement
|
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2.
|
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Security Agreement
|
|
3.
|
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Acknowledgment of Intellectual Property Collateral Lien
|
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4.
|
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Pledge Agreement
|
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5.
|
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Revolving Facility Agreement
|
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6.
|
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Debenture
|
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7.
|
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Charge Over Shares (US Obligations)
|
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8.
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Charge Over Shares (UK Obligations)
|
25
