Document:

exv10w69

 

EXHIBIT 10.69

EXECUTION COPY

AMENDMENT NO. 1 TO

ASSET PURCHASE AGREEMENT

     This AMENDMENT NO. 1 TO ASSET PURCHASE AGREEMENT (this “Amendment”) dated as of March
11, 2005 amends that certain Asset Purchase Agreement dated as of December 17, 2004 (the
“Agreement”) by and between U.S. TelePacific Corp., a California corporation
(“Buyer”) and Pac-West Telecomm, Inc., a California corporation (“Seller”).

     WHEREAS, the parties desire to amend the Agreement.

     WHEREAS, Section 9.4 of the Agreement permits Seller and Buyer to amend the Agreement
only by a written instrument executed and delivered by Seller and Buyer.

     NOW, THEREFORE, for good and valuable consideration and in consideration of the respective
representations, warranties, covenants and agreements set forth in the Agreement, the parties
hereby agree as follows:

ARTICLE I

AMENDMENT

     Closing Date. Section 2.1 of the Agreement is hereby amended by replacing
“8:00 a.m. PST” in the last line thereof with “11:59 p.m. PST.”

ARTICLE II

MISCELLANEOUS

     Section 2.1 Definitions. Capitalized terms used but not otherwise defined herein will have
the meanings ascribed to them in the Agreement.

     Section 2.2 No Further Amendments. Except as expressly amended hereby, the provisions of the
Agreement are and will remain unmodified and in full force and effect. Each reference to “hereof,”
“herein,” “hereunder,” “hereby” and “this Agreement” will hereafter refer to the Agreement as
amended by this Amendment. Notwithstanding the foregoing, unless the context requires otherwise,
references in the Agreement to “the date hereof,” “the date of this Agreement” or similar
references will continue to refer to December 17, 2004.

     Section 2.3 Incorporation by Reference. This Amendment is subject to all of the terms,
conditions and limitations set forth in this Agreement including, without limitation, Sections
9.2, 9.7 and 9.8 thereof, which sections are hereby incorporated into this
Amendment, mutatis mutandis, as if they were set forth in their entirety herein.

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

 

     IN WITNESS WHEREOF, the parties have duly executed and adopted this Amendment as of the date
first written above.

	 	 	 	 	 
	 	 	U.S. TELEPACIFIC CORP.
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	 
	

	 	 	 	Title:
	 
	 	 	 	 
	 	 	PAC-WEST TELECOMM, INC.
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	 
	

	 	 	 	Title:exv10w70

 

EXHIBIT 10.70

PAYOFF LETTER AND RELEASE

	 	 	 
	

	 	December 17, 2004

Pac-West Telecomm, Inc.

1776 W. March Lane, Suite 250

Stockton, California 95207

	 	 	 	 	 
	

	 	Re:
	 	Certain transactions
contemplated by the Note and Warrant Purchase Agreement dated October
17, 2003 (as amended, restated, supplemented or otherwise modified
from time to time, the “Note and Warrant Purchase
Agreement”) between
Pac-West Telecomm, Inc., a California corporation (the
“Borrower”),
and  Deutsche Bank AG - London, acting through DB Advisors, LLC (the
“Purchaser”)  

Ladies and Gentlemen:

     This Payoff Letter and
Release (this “Letter Agreement”) refers to the financing
arrangements among the Borrower and the Purchaser contemplated by the
Note and Warrant Purchase Agreement, pursuant to which (i) the
Purchaser purchased from the Borrower that certain Senior Secured
Promissory Note dated as of December 19, 2003 (as amended, restated,
supplemented or otherwise modified from time to time, the
“Senior Note”) in the original principal amount of $40,000,000 made by
the Borrower in favor of the Purchaser, (ii) the Borrower entered into that certain Guaranty
and Security Agreement dated as of December 19, 2003 (as amended, restated, supplemented or
otherwise modified from time to time, the “Guaranty and Security
Agreement”) in favor of Deutsche
Bank Trust Company Americas, as “Collateral Agent” for the Purchaser, pursuant
to which the
Borrower granted the Collateral Agent a security interest in substantially all of its personal
property as security for the repayment of the Senior Note, (iii) the Borrower issued the
Purchaser that certain Warrant to Purchase Shares of Common Stock dated as of December 19, 2003
(as amended, restated, supplemented or otherwise modified from time
to time, the “Warrant”)
entitling the Purchaser to purchase up to 26,666,667 shares of the common stock of the Borrower
on the terms set forth therein, and (iv) the Borrower and the Purchaser entered into that certain
Registration Rights Agreement dated as of December 19, 2003 (as amended, restated, supplemented
or otherwise modified from time to time, the “Registration
Rights Agreement”) and all such other
agreements, instruments, certificates and documents executed and/or delivered by or on behalf of
the Borrower to or for the benefit of the Purchaser, the Collateral Agent or any affiliate or
representative of the either of the foregoing, in each case, pursuant to the Note and Warrant
Purchase Agreement, the Senior Note, the Guaranty and Security Agreement, the Warrant and/or the
Registration Rights Agreement (collectively with the Note and Warrant Purchase Agreement, the
Senior Note, the Guaranty and Security Agreement, the Warrant and the Registration Rights
Agreement, the “Transaction Documents”).

 

 

Pac-West Telecomm, Inc.

December 17, 2004

Page 2

     This Letter Agreement is being executed in connection with the execution of that certain Asset
Purchase Agreement, dated December                     , 2004, by and between U.S. TelePacific Corp. and the Borrower
relating to the sale of the Borrower’s small and medium-sized enterprises business on the terms set
forth therein (the “SME Asset Purchase Agreement”). An executed copy of the SME Asset
Purchase Agreement is attached hereto as Exhibit A. The parties hereto understand and
acknowledge that the proceeds of the transactions contemplated by the SME Asset Purchase Agreement
will be used to provide the Payoff Amount (as defined below) hereunder and that the payment of the
Payoff Amount to the Purchaser hereunder is expressly conditioned on the closing of the
transactions contemplated by the SME Asset Purchase Agreement.

     In consideration of the foregoing and for other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, each of the undersigned hereby agrees as follows:

     1. Payoff and Termination. Except as provided in Paragraph 8 below, the
Borrower, the Purchaser and the Collateral Agent hereby agree, that upon the Purchaser’s receipt of
payment of $40,750,000 plus all fees and expenses of the Collateral Agent then due and owing as of
the date of such payment under the Guaranty and Security Agreement (the “Payoff Amount”) in
immediately available funds of the United States of America at the Purchaser’s bank account at
Bank of New York, ABA No. 021 000 018, F/A/O Deutsche Bank Securities Inc., Account No. 8900327634,
Reference Account No. 902 09201 (the date such payment is so made, being the “Effective
Date”):

          (a) such Payoff Amount shall be deemed payment in full of all interest and principal
then accrued, due or owing under any and all of the Transaction Documents;

          (b) all outstanding Warrants to purchase the shares of the common stock of the
Borrower issued pursuant to Note and Warrant Purchase Agreement, the Warrant or any of the
other Transactions Documents shall be deemed immediately terminated, expired and
extinguished and of no further force or effect; and

          (c) all of the Transaction Documents shall be deemed immediately terminated and of no
further force or effect (other than with respect to (i) those indemnification obligations
set forth in Section 7.02 of the Note and Warrant Purchase Agreement and Section 22 of the
Guaranty and Security Agreement (the “Surviving Indemnity Rights”) and (ii) the
confidentiality obligations set forth in Section 9.02 of the Note and Warrant Purchase
Agreement and Section 25 of the Guaranty and Security Agreement); all liens, security
interests, bank account control agreements, claims or other encumbrances granted by the
Borrower to the Purchaser or the Collateral Agent on any of the assets, rights, title or
interests of the Borrower (or any other Grantor or Guarantor under the
Guaranty and Security Agreement) pursuant to the Transaction Documents shall be and are
hereby immediately released and forever discharged, and shall be of no further force or
effect; and the original copy of the Senior Note, the Warrant, the Registration Rights
Agreement, each account control agreement and any such other Transaction Documents as the
Borrower may request, shall be immediately returned by the Purchaser and/or the

 

 

Pac-West Telecomm, Inc.

December 17, 2004

Page 3

Collateral
Agent, as applicable, to the Borrower marked “Terminated” and signed by the Purchaser.

          The Borrower shall notify the Purchaser and the Collateral Agent in writing of the Borrower’s
intention to make the payment of the Payoff Amount to the Purchaser no less than two Business Days
(as defined in the Note and Warrant Purchase Agreement) prior to such payment.

          The Purchaser, as sole Lender (as defined in the Guaranty and Security Agreement), hereby
notifies the Collateral Agent that Purchaser’s receipt of the Payoff Amount (as defined below)
constitutes the payment in full of the Secured Obligations (as defined in the Guaranty and Security
Agreement) as contemplated under Section 27 of the Guaranty and Security Agreement and directs the
Collateral Agent to sign this Letter Agreement.

     2. Releases. Upon the Effective Date, (a) the Borrower hereby releases, discharges
and acquits the Purchaser and the Collateral Agent, and each of their respective officers,
directors, agents and employees and their respective successors and assigns (the “Purchaser
Released Parties”), from all obligations to the Borrower (and its respective successors and
assigns) and from any and all claims, demands, debts, accounts, contracts, liabilities, actions and
causes of actions, whether in law or in equity, whether known or unknown, that the Borrower at any
time had or has, or that its successors and assigns hereafter can or may have against the Purchaser
Released Parties arising under or in connection with the Transaction Documents or the transactions
contemplated thereby on or prior to the Effective Date; provided, that nothing herein shall
be deemed to release the Purchaser Released Parties from their obligation to perform, or the
Borrower’s right to enforce, this Letter Agreement in accordance with its terms or any Surviving
Indemnity Right under any Transaction Document with respect to any matter arising after the
Effective Date, and (b) the Purchaser and the Collateral Agent each hereby releases, discharges and
acquits the Borrower (and each other Grantor and Guarantor under the Guaranty and Security
Agreement), and each of their respective officers, directors, agents and employees and their
respective successors and assigns (the “Borrower Released Parties”), from all obligations
to the Purchaser and the Collateral Agent (and their respective successors and assigns) and from
any and all claims, demands, debts, accounts, contracts, liabilities, actions and causes of
actions, whether in law or in equity, whether known or unknown, that the Purchaser and/or the
Collateral Agent at any time had or has, or that their respective successors and assigns hereafter
can or may have against the Borrower Released Parties arising under or in connection with the
Transaction Documents or the transactions contemplated thereby on or prior to the Effective Date;
provided, that nothing herein shall be deemed to release the Borrower Released Parties
from their obligation to perform, or the Purchaser’s and/or the Collateral Agent’s right to
enforce, this Letter Agreement in accordance with its terms or any Surviving Indemnity Right under
any Transaction Document with respect to any matter arising after the Effective Date.

     3. Release Documents; Authorization to File. Upon and after the Effective Date and at
the Borrower’s expense, the Purchaser and the Collateral Agent each hereby authorizes the Borrower
to prepare, file and record any Uniform Commercial Code termination statements to release, as of
record, all financing statements filed by the Purchaser and/or the Collateral Agent

 

 

Pac-West Telecomm, Inc.

December 17, 2004

Page 4

naming the
Borrower, as debtor, that are currently filed of record and to terminate all other notices of
security interests, mortgages, liens, claims or other encumbrances previously filed, recorded or
registered by the Purchaser and/or the Collateral Agent with respect to the financing arrangements
under the Transaction Documents (collectively, the “Releases”), and the Purchaser and the
Collateral Agent each hereby agree to execute and/or deliver any such Releases reasonably requested
by the Borrower to effect the termination thereof.

     4. Representations of the Purchaser. The Purchaser hereby acknowledges, represents,
warrants, covenants and agrees that on the date hereof and on the Effective Date:

          (a) The Purchaser has full corporate power and authority to enter into this Letter
Agreement and to carry out the transactions contemplated hereby. The execution, delivery
and performance by the Purchaser of this Letter Agreement have been or prior to the
Effective Date will be duly authorized by all necessary corporate action on the part of the
Purchaser. This Letter Agreement has been duly executed and delivered by the Purchaser and
constitutes the legal, valid and binding obligation of the Purchaser enforceable in
accordance with its terms, except as enforcement may be limited by applicable bankruptcy,
insolvency, reorganization or similar laws from time to time in effect affecting creditor’s
rights generally and by legal and equitable limitations on the availability of specific
remedies.

          (b) The Purchaser is the sole beneficial owner of the Warrant and the Senior Note, free
and clear of any liens, security interests, claims, encumbrances or restrictions on its
ability to, and with full power and authority to, consummate the transactions contemplated
by this Letter Agreement. The Purchaser has not transferred or assigned to any other Person
any portion of or interest in the Warrant or the Senior Note, and has not exercised, in
whole or in part, the Warrant.

          (c) The Purchaser acknowledges that the Borrower may have material, non-public,
confidential information concerning the Borrower (the “Information”), which has not
been, and may not be, disclosed to the Purchaser or the Collateral Agent. Notwithstanding
the foregoing, the Borrower acknowledges that it has disclosed to the Purchaser all material
Information relating to any offers to purchase a controlling interest in the Borrower or all
or a substantial portion of the Borrower’s assets, in each case, received within the prior
twelve (12) months.

          (d) The Purchaser is engaged in the business of investing in securities such as the
Warrant and the Senior Note, and as such, is a sophisticated, experienced and well-informed
investor, capable of evaluating the merits and economic risks which may be associated with a
sale or purchase of the Warrant and the Senior Note.

          (e) The Borrower is relying on this Letter Agreement and the payment and effectiveness
of the Payoff Amount to extinguish the Warrant, satisfy the Senior Note and
release the security interests granted to the Collateral Agent pursuant to the
Transaction Documents (the “Payoff”), and would not enter into the transaction
contemplated by this Letter Agreement in the absence of this Letter Agreement.

 

 

Pac-West Telecomm, Inc.

December 17, 2004

Page 5

     5. Representations of the Borrower. The Borrower hereby acknowledges, represents,
warrants, covenants and agrees that on the date hereof and on the Effective Date that it has full
corporate power and authority to enter into this Letter Agreement and to carry out the transactions
contemplated hereby. The execution, delivery and performance by the Borrower of this Letter
Agreement have been or prior to the Effective Date will be duly authorized by all necessary
corporate action on the part of the Borrower. This Letter Agreement has been duly executed and
delivered by the Borrower and constitutes the legal, valid and binding obligation of the Borrower
enforceable in accordance with its terms, except as enforcement may be limited by applicable
bankruptcy, insolvency, reorganization or similar laws from time to time in effect affecting
creditor’s rights generally and by legal and equitable limitations on the availability of specific
remedies.

     6. Additional Covenants.

          (a) The Purchaser covenants and agrees that, notwithstanding anything else to the contrary in
the Transaction Documents, it will not transfer or assign all or any portion of the Warrant or the
Senior Note, or any of its rights and obligations thereunder or under the other Transaction
Documents during the term of this Letter Agreement.

          (b) The Borrower agrees to use commercially reasonable efforts to inform the Purchaser of any
material developments that, in the reasonable judgment of the Borrower, would cause the
transactions contemplated by the SME Asset Purchase Agreement not to close.

     7. Further Assurances. At the request of the Borrower, at the Borrowers’ expense, the
Purchaser and the Collateral Agent each agree to execute and deliver such other and further
documents and instruments and take such actions as may be reasonably requested in order to effect
or evidence more fully the matters covered hereby, including, without limitation, notifying any
depositary or securities institutions in respect of which the Borrower maintains any accounts
subject to account control agreements in favor of the Collateral Agent of the termination of such
agreements and the Collateral Agent’s rights in respect thereof.

     8. Termination.

          (a) The rights and obligations of the parties hereto shall terminate upon termination
of the SME Asset Purchase Agreement in accordance with its terms; provided, that the
Borrower shall provide the Purchaser and the Collateral Agent written notice that the SME
Asset Purchase Agreement has been terminated and evidence of such termination reasonably
satisfactory to the Purchaser.

          (b) The Purchaser may terminate this Letter Agreement, and the rights and obligations
of the parties hereto shall terminate, by written notice to the Borrower and the Collateral
Agent if the transactions contemplated by the SME Asset Purchase Agreement shall not have
been consummated on or prior to April 15, 2005 (the “Termination Date”); provided
that, in the event that the transactions contemplated by the SME Asset Purchase Agreement do
not close as a result of the failure of either or both of the parties thereto to
obtain all consents, authorizations, assignments, registrations or waivers required
from any governmental authority (“Government Approvals”), the Termination Date shall
be extended to the earlier to occur of (i) the date that is five (5) business days following
receipt of all Government Approvals and (ii) June 30, 2005.

 

 

Pac-West Telecomm, Inc.

December 17, 2004

Page 6

          The Collateral Agent shall have the same rights and protections hereunder as it does under the
Guaranty and Security Agreement.

     9. Purchaser’s Legal Fees. The Borrower hereby agrees to reimburse Purchaser for all
of Purchaser’s legal expenses (reasonable and documented attorneys fees and out-of-pocket expenses)
incurred in connection with the negotiation of this letter agreement up to a maximum of $15,000.

     10. Governing Law. The validity, construction and effect of this Letter Agreement
shall be governed by the internal laws of the State of New York but excluding any principles of
conflicts of law or other rule of law that would cause the application of the law of any
jurisdiction other than the laws of the State of New York.

     11. Counterparts. This Letter Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original hereof and admissible into evidence
and all of which together shall be deemed to be a single instrument. Delivery of an executed
counterpart of this Letter Agreement by telecopier shall have the same force and effect as delivery
of an original executed counterpart of this Letter Agreement.

     12. Successors and Assigns. This Letter Agreement shall be binding upon, and shall
inure to the benefit of each of the parties hereto and their respective successors and assigns.

[Signature Pages to Follow]

 

 

	 	 	 	 	 
	 	 	Very truly yours,
	 
	 	 	 	 
	 	 	DEUTSCHE BANK AG - LONDON, acting
	 	 	through DB ALTERNATIVE TRADING INC.
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	 
	

	 	Title:	 	 
	

	 	 	 	 
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	 
	

	 	Title:	 	 
	

	 	 	 	 
	 
	 	 	 	 
	 	 	DEUTSCHE BANK TRUST COMPANY
	 	 	AMERICAS, as Collateral Agent
	 
	 	 	 	 
	

	 	By:	 	 
	

	 	 	 	 
	

	 	Title:	 	 
	

	 	 	 	 

ACKNOWLEDGED AND AGREED:

PAC-WEST TELECOMM, INC.

	 	 	 	 	 
	By:
	 	 	 	 
	

	 	 	 
	Title:
	 	 	 	 
	

	 	 	 

 

 

EXHIBIT A

EXECUTED SME ASSET PURCHASE AGREEMENT

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