EXHIBIT 10.39
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TERM LOAN AGREEMENT
Dated as of November 6, 2003
between
NORTHLAND CABLE PROPERTIES SEVEN LIMITED PARTNERSHIP,
as Borrower,
NORTHLAND COMMUNICATIONS CORPORATION,
as Guarantor
and
CIT LENDING SERVICES CORPORATION,
as Agent and Lender
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TABLE OF CONTENTS
Page
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1. TERM LOAN................................................................................... 1
1.1 Term Loan.......................................................................... 1
1.2 Prepayments........................................................................ 2
1.3 Use of Proceeds.................................................................... 3
1.4 Interest and Applicable Margins.................................................... 4
1.5 Cash Management Systems............................................................ 6
1.6 Fees............................................................................... 6
1.7 Receipt of Payments................................................................ 6
1.8 Allocation of Payments............................................................. 7
1.9 Loan Account and Accounting........................................................ 7
1.10 Indemnity.......................................................................... 7
1.11 Access............................................................................. 8
1.12 Taxes.............................................................................. 9
1.13 Capital Adequacy; Increased Costs; Illegality...................................... 9
2. CONDITIONS PRECEDENT........................................................................ 11
2.1 Conditions to the Term Loan........................................................ 11
3. REPRESENTATIONS AND WARRANTIES.............................................................. 13
3.1 Authorization, Validity, and Enforceability of this Agreement and the Loan
Documents; Locations............................................................. 13
3.2 Financial Statements and Projections............................................... 14
3.3 Material Adverse Effect............................................................ 15
3.4 Ownership of Property; Liens....................................................... 15
3.5 Labor Matters...................................................................... 16
3.6 Ventures, Subsidiaries and Affiliates; Outstanding Stock and Indebtedness.......... 16
3.7 Government Regulation.............................................................. 16
3.8 Margin Regulations................................................................. 17
3.9 Taxes.............................................................................. 17
3.10 ERISA.............................................................................. 17
3.11 No Litigation...................................................................... 18
3.12 Brokers............................................................................ 18
3.13 Intellectual Property.............................................................. 18
3.14 Full Disclosure.................................................................... 19
3.15 Environmental Matters.............................................................. 19
3.16 Insurance.......................................................................... 20
3.17 Deposit and Disbursement Accounts.................................................. 20
3.18 Government Contracts............................................................... 20
3.19 Customer and Trade Relations....................................................... 20
3.20 Solvency........................................................................... 21
3.21 Partnership Tax Status............................................................. 21
3.22 [Intentionally Omitted]............................................................ 21
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3.23 Licenses; Governmental Approvals and Access Rights................................. 21
4. FINANCIAL STATEMENTS AND INFORMATION........................................................ 23
4.1 Reports and Notices................................................................ 23
4.2 Communication with Accountants..................................................... 26
5. AFFIRMATIVE COVENANTS....................................................................... 26
5.1 Maintenance of Existence and Conduct of Business................................... 26
5.2 Payment of Charges................................................................. 27
5.3 Books and Records.................................................................. 27
5.4 Insurance; Damage to or Destruction of Collateral.................................. 27
5.5 Compliance with Laws............................................................... 29
5.6 Supplemental Disclosure............................................................ 29
5.7 Intellectual Property.............................................................. 30
5.8 Environmental Matters.............................................................. 30
5.9 Acquisitions of Interests in Real Estate; Bailee Letters........................... 31
5.10 Further Assurances................................................................. 33
5.11 Legal Requirements................................................................. 33
5.12 Filings and Consents............................................................... 33
6. NEGATIVE COVENANTS.......................................................................... 34
6.1 Mergers, Subsidiaries, Etc......................................................... 34
6.2 Investments; Loans and Advances.................................................... 34
6.3 Indebtedness....................................................................... 34
6.4 Employee Loans and Affiliate Transactions.......................................... 35
6.5 Capital Structure and Business..................................................... 35
6.6 Guaranteed Indebtedness............................................................ 35
6.7 Liens.............................................................................. 36
6.8 Sale of Stock and Assets........................................................... 36
6.9 ERISA.............................................................................. 37
6.10 Financial Covenants................................................................ 37
6.11 Hazardous Materials................................................................ 38
6.12 Sale-Leasebacks.................................................................... 38
6.13 Restricted Payments................................................................ 38
6.14 Change of Name or Location; Existence; Change of Fiscal Year....................... 38
6.15 Real Estate Purchases.............................................................. 38
6.16 Changes Relating to Material Contracts............................................. 39
7. TERM........................................................................................ 39
7.1 Termination........................................................................ 39
7.2 Survival of Obligations Upon Termination of Financing Arrangements................. 39
8. EVENTS OF DEFAULT; RIGHTS AND REMEDIES...................................................... 39
8.1 Events of Default.................................................................. 39
8.2 Remedies........................................................................... 41
8.3 Waivers by Credit Parties.......................................................... 42
8.4 Consent to Receiver................................................................ 42
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9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT......................................... 43
9.1 Assignment and Participations...................................................... 43
9.2 Appointment of Agent............................................................... 44
9.3 Agent's Reliance, Etc.............................................................. 45
9.4 CIT and Affiliates................................................................. 46
9.5 Indemnification.................................................................... 46
9.6 Successor Agent.................................................................... 46
9.7 Setoff and Sharing of Payments..................................................... 47
9.8 Payments; Information; Actions in Concert......................................... 48
10. SUCCESSORS AND ASSIGNS...................................................................... 48
10.1 Successors and Assigns............................................................. 48
11. MISCELLANEOUS............................................................................... 49
11.1 Complete Agreement; Modification of Agreement...................................... 49
11.2 Amendments and Waivers............................................................. 49
11.3 Fees and Expenses.................................................................. 50
11.4 No Waiver.......................................................................... 52
11.5 Remedies........................................................................... 52
11.6 Severability....................................................................... 52
11.7 Conflict of Terms.................................................................. 52
11.8 Confidentiality.................................................................... 52
11.9 GOVERNING LAW...................................................................... 53
11.10 Notices............................................................................ 54
11.11 Section Titles..................................................................... 54
11.12 Counterparts....................................................................... 55
11.13 WAIVER OF JURY TRIAL............................................................... 55
11.14 Press Releases and Related Matters................................................. 55
11.15 Reinstatement...................................................................... 55
11.16 Advice of Counsel.................................................................. 56
11.17 No Strict Construction............................................................. 56
12. GUARANTEE................................................................................... 56
12.1 Guarantee.......................................................................... 56
12.2 Certain Waivers.................................................................... 56
12.3 Guaranty of Payment................................................................ 56
12.4 No Setoffs......................................................................... 56
12.5 Reinstatement...................................................................... 57
12.6 Indemnification.................................................................... 57
12.7 Subordination...................................................................... 57
12.8 Excess Payments Among Guarantors................................................... 57
13. DEFINITIONS................................................................................. 58
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INDEX OF APPENDICES
Annex A (Section 1.5) - Cash Management System
Annex B (Section 9.9(a)) - Lenders' Wire Transfer Information
Exhibit 1.1(a) - Form of Term Note
Exhibit 1.4(e) - Form of Notice of Conversion/Continuation
Exhibit 2.1(a) - Closing Document Index
Exhibit 3.1(n)(1) - Form of Borrower Opinion
Exhibit 3.1(n)(2) - Form of Regulatory Opinion
Exhibit 9.1(a) - Form of Assignment Agreement
Schedule 1.3 - Sources and Uses; Funds Flow Memorandum
Schedule 2.1(c) - Approvals
Schedule 2.1(f) - Mortgages, Leasehold Mortgages and Bailee Letters
Schedule 3.1(b) - Collateral Locations; Type of Entity; State of
Organization
Schedule 3.2 - Financial Statements
Schedule 3.4 - Real Estate and Leases
Schedule 3.5 - Labor Matters
Schedule 3.6 - Ventures, Subsidiaries and Affiliates; Outstanding
Stock
Schedule 3.9 - Tax Matters
Schedule 3.10 - ERISA Plans
Schedule 3.11 - Litigation
Schedule 3.13 - Intellectual Property
Schedule 3.15 - Environmental Matters
Schedule 3.16 - Insurance
Schedule 3.17 - Deposit and Disbursement Accounts
Schedule 3.18 - Government Contracts
Schedule 3.23(a)(i) - Systems
Schedule 3.23(a)(ii) - FCC Licenses and Franchises
Schedule 3.23(e) - Compliance with Cable Act
Schedule 3.23(f) - Compliance with Other Communications Laws
Schedule 3.23(g) - Access Rights Agreements
Schedule 5.1 - Trade Names
Schedule 6.3 - Indebtedness
Schedule 6.4(a) - Transactions with Affiliates
Schedule 6.7(a) - Existing Liens
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This TERM LOAN AGREEMENT (this "Agreement"), dated as of November __,
2003 among NORTHLAND CABLE PROPERTIES SEVEN LIMITED PARTNERSHIP, a Washington
limited partnership ("Borrower"); NORTHLAND COMMUNICATIONS CORPORATION, a
Washington corporation, as Guarantor ("NCC"); the other Credit Parties signatory
hereto; CIT LENDING SERVICES CORPORATION, a Delaware corporation (in its
individual capacity, "CIT"), for itself, as Lender, and as Agent for Lenders,
and the other Lenders signatory hereto from time to time.
RECITALS
WHEREAS, Borrower has requested that Lenders extend a term loan to
Borrower of TWENTY-ONE MILLION FIVE HUNDRED THOUSAND DOLLARS ($21,500,000) in
the aggregate for the purpose of refinancing certain indebtedness of Borrower
and to provide (a) working capital financing for Borrower and (b) funds for
other general corporate purposes of Borrower; and for these purposes, Lenders
are willing to make such loan upon the terms and conditions set forth herein;
and
WHEREAS, Borrower has agreed to secure all of its obligations under the
Loan Documents by granting to Agent, for the benefit of Agent and Lenders, a
security interest in and lien upon all of its existing and after-acquired
personal and real property, including, without limitation, all Franchises; and
WHEREAS, NCC, as managing general partner of Borrower, is willing to
guarantee all of the obligations of Borrower to Agent and Lenders under the Loan
Documents and to pledge to Agent, for the benefit of Agent and Lenders, all
rights of NCC to receive distributions from Borrower payable on account of NCC's
equity interest in Borrower to secure such guaranty; and
WHEREAS, capitalized terms used in this Agreement shall have the
meanings ascribed to them in Section 13 and, for purposes of this Agreement and
the other Loan Documents, the rules of construction set forth in Section 13
shall govern. All Annexes, Schedules, Exhibits and other attachments
(collectively, "Appendices") hereto, or expressly identified to this Agreement,
are incorporated herein by reference, and taken together with this Agreement,
shall constitute but a single agreement. These Recitals shall be construed as
part of the Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual
covenants hereinafter contained, and for other good and valuable consideration,
the parties hereto agree as follows:
1. TERM LOAN
1.1 Term Loan.
(a) Term Loan .
(i) Subject to the terms and conditions hereof,
each Lender agrees to make a term loan (collectively, the "Term Loan")
on the Closing Date to Borrower in the original principal amount of its
Pro Rata Share of the Maximum Term Loan Amount. The Term Loan shall be
evidenced by promissory notes substantially in the form of
Exhibit 1.1(a) (each a "Term Note" and collectively the "Term Notes"),
and, except as provided in Section 1.9, Borrower shall execute and
deliver a Term Note to each applicable Lender. Each Term Note shall
represent the obligation of Borrower to pay the amount of the
applicable Lender's Pro Rata Share, together with interest thereon as
prescribed in Section 1.4.
(ii) Borrower shall, without setoff, deduction or
counterclaim, repay the principal amount of the Term Loan in twenty-one
(21) consecutive quarterly installments on the last day of March, June,
September and December of each Fiscal Year, commencing March 31, 2004,
followed by a final installment on the Maturity Date, when all
remaining outstanding principal and accrued interest thereon shall be
due and payable in full without setoff, deduction or counterclaim.
Quarterly payments of principal in respect of the Term Loan shall be in
the amounts set forth below:
AMOUNT OF QUARTERLY
QUARTERLY DUE DATES PRINCIPAL PAYMENT
------------------- -------------------
March 31, 2004 through December 31, 2004 $ 806,250
March 31, 2005 through December 31, 2005 $ 860,000
March 31, 2006 through December 31, 2006 $ 913,750
March 31, 2007 through December 31, 2007 $1,128,750
March 31, 2008 through December 31, 2008 $1,343,750
Maturity Date The then remaining outstanding and unpaid
principal balance of the Term Loan.
(iii) Notwithstanding Section 1.1(a)(ii), the
aggregate outstanding principal balance of the Term Loan shall be due
and payable in full in immediately available funds on the Maturity
Date, if not sooner paid in full. No payment with respect to the Term
Loan may be reborrowed.
(iv) Each payment of principal with respect to
the Term Loan shall be paid to Agent, for the ratable benefit of each
Lender, ratably in proportion to each such Lender's respective Pro Rata
Share.
(b) Reliance on Notices. Agent shall be entitled to rely
upon, and shall be fully protected in relying upon, any Notice of
Conversion/Continuation or similar notice believed by Agent to be genuine. Agent
may assume that each Person executing and delivering any notice in accordance
herewith was duly authorized, unless the responsible individual acting thereon
for Agent has actual knowledge to the contrary.
1.2 Prepayments.
(a) Voluntary Prepayments. Borrower may at any time on at
least five (5) days' prior written notice to Agent, voluntarily prepay all or
part of the Term Loan; provided that any such prepayments shall be an integral
multiple of Five Hundred Thousand Dollars ($500,000) or such lesser amount as
equals the then outstanding principal amount of the Term Loan. Any voluntary
prepayment of the Term Loan must be accompanied by payment of the Fee required
by Section 1.6(b), if any, plus the payment of any LIBOR funding breakage costs
in
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accordance with Section 1.10(b). Any voluntary partial prepayments of the Term
Loan shall be applied to prepay the scheduled installments of the Term Loan in
inverse order of maturity.
(b) Mandatory Prepayments.
(i) Immediately upon receipt by Borrower of
proceeds of any disposition of assets of any kind (including, without
limitation, any amounts from (x) System Dispositions or (y) insurance
or condemnation proceeds required to be prepaid in accordance with
Section 5.4(e) or the Mortgages, respectively), Borrower shall prepay
the Term Loan in an amount equal to all such proceeds, net of (A)
commissions and other reasonable and customary transaction costs, fees
and expenses properly attributable to such transaction and payable by
Borrower in connection therewith (in each case, paid to
non-Affiliates), (B) sales, use and transfer taxes, (C) amounts payable
to holders of senior Liens (to the extent such Liens constitute
Permitted Encumbrances hereunder), if any, and (D) an appropriate
reserve for income taxes in an amount reasonably estimated by Borrower
and reasonably acceptable to Agent equal to the income taxes payable as
a result of any such disposition. Any such prepayment shall be applied
in accordance with Section 1.2(c) and must be accompanied by payment of
the Fee required by Section 1.6(b), if any. Notwithstanding the
foregoing, the following amounts shall not be subject to mandatory
prepayment under this clause (b)(i): (A) the proceeds of any sale of
assets to the extent permitted by Section 6.8(a), and (B) the Permitted
Wave Transaction Proceeds.
(ii) If Borrower issues Stock or any Indebtedness
(other than Indebtedness issued pursuant to Section 6.7(a)(iii)), no
later than the Business Day following the date of receipt of the
proceeds thereof, Borrower shall prepay the Term Loan in an amount
equal to all such proceeds, net of underwriting discounts and
commissions and other reasonable costs paid to non-Affiliates in
connection therewith. Any such prepayment shall be applied in
accordance with Section 1.2(c) and must be accompanied by payment of
the Fee required by Section 1.6(b), if any.
(c) Application of Certain Mandatory Prepayments. Any
prepayments made by Borrower pursuant to Section 1.2(b) above shall be applied
as follows: first, to Fees and reimbursable expenses of Agent then due and
payable pursuant to any of the Loan Documents; second, to interest then due and
payable on the Term Loan; third, to prepay the scheduled principal installments
of the Term Loan (accompanied by payment of the Fee required by Section 1.6(b),
if any, plus the payment of any LIBOR funding breakage costs in accordance with
Section 1.10(b), such principal prepayment to be applied in pro rata to the then
remaining scheduled payments on the Term Loan, until such Term Loan shall have
been prepaid in full.
(d) No Implied Consent. Nothing in this Section 1.2 shall
be construed to constitute Agent's or any Lender's consent to any transaction
that is not permitted by other provisions of this Agreement or the other Loan
Documents.
1.3 Use of Proceeds. Borrower shall utilize the proceeds of the
Term Loan solely for the Refinancing (and to pay any related transaction
expenses), and for the financing of Borrower's ordinary working capital and
general corporate needs. Schedule 1.3 contains a
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description of Borrower's sources and uses of funds as of the Closing Date,
including the Term Loan, and a funds flow memorandum detailing how funds from
each source are to be transferred to particular uses.
1.4 Interest and Applicable Margins.
(a) Borrower shall pay interest to Agent, for the ratable
benefit of Lenders, in arrears on each applicable Interest Payment Date, at (i)
the Base Rate plus the Applicable Base Rate Margin per annum or, (ii) at the
election of Borrower and subject to the other provisions of this Agreement
respecting the availability of LIBOR Rate, the applicable LIBOR Rate plus the
Applicable LIBOR Margin per annum.
As of the Closing Date and until adjusted as described below, the
Applicable Margins are as follows:
Applicable Base Rate Margin 3.50%
Applicable LIBOR Margin 4.50%
The Applicable Margins shall, commencing on the first day of the month
following the first anniversary of the Closing Date, be adjusted prospectively
on a quarterly basis as determined by Borrower's financial performance,
commencing on the fifth (5th) Business Day after delivery of Borrower's
quarterly Financial Statements. Adjustments in Applicable Margins shall be
determined by reference to the following grid:
APPLICABLE BASE APPLICABLE
IF TOTAL LEVERAGE RATIO IS: RATE MARGIN LIBOR MARGIN
--------------------------- --------------- ------------
> or = 4.0: 1.0 3.50% 4.50%
< 4.0: 1.0, but > or = 3.5: 1.0 3.25% 4.25%
< 3.5: 1.0, but > or = 3.0: 1.0 3.00% 4.00%
< 3.0: 1.0 2.75% 3.75%
Failure to timely deliver such Financial Statements shall at the
election of Agent, in addition to any other remedy provided for in this
Agreement, result in an increase in the Applicable Margins to the highest level
set forth in the foregoing grid, until the first day of the first calendar month
following the delivery of those Financial Statements demonstrating that such an
increase is not required. If an Event of Default has occurred and is continuing
at the time any reduction in the Applicable Margins is to be implemented, that
reduction shall be deferred until the first day of the first calendar month
following the date on which such Event of Default is waived or cured.
(b) If any payment becomes due and payable on a day other
than a Business Day, the maturity thereof will be extended to the next
succeeding Business Day (except as set forth in the definition of LIBOR Period
and except for purpose of calculating financial covenant compliance) payable at
the then applicable rate during such extension.
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(c) All computations of Fees calculated on a per annum
basis and interest with respect to the Base Rate shall be made by Agent on the
basis of a 365/366-day year and all computations of interest with respect to the
LIBOR Rate shall be made by Agent on the basis of a 360-day year, in each case
for the actual number of days occurring in the period for which such interest
and Fees are payable. The Base Rate is a floating rate determined for each day.
Each determination by Agent of an interest rate and Fees hereunder shall be
presumptive evidence of the correctness of such rates and Fees, absent manifest
error.
(d) So long as an Event of Default has occurred and is
continuing and at the election of Agent (or upon the written request of
Requisite Lenders) confirmed by written notice from Agent to Borrower, the
interest rates applicable to Term Loan shall be increased by two percentage
points (2%) per annum above the rates of interest otherwise applicable hereunder
unless Agent or Requisite Lenders elect to impose a smaller increase (the
"Default Rate"), and all outstanding Obligations shall bear interest at the
Default Rate applicable to such Obligations during the continuance of such
Default or Event of Default until such Default or Event of Default is cured or
waived in writing.
(e) So long as no Default of Event of Default has
occurred and is continuing, Borrower shall have the option to (i) convert at any
time all or any part of the Term Loan from a Base Rate Loan to a LIBOR Loan;
(ii) convert any LIBOR Loan to a Base Rate Loan, subject to payment of LIBOR
breakage costs in accordance with Section 1.10(b) if such conversion is made
prior to the expiration of the LIBOR Period applicable thereto; or (iii)
continue all or any portion of the Term Loan as a LIBOR Loan upon the expiration
of the applicable LIBOR Period and the succeeding LIBOR Period of that continued
LIBOR Loan shall commence on the first day after the last day of the LIBOR
Period of the LIBOR Loan to be continued. Any portion of the Term Loan to be
made or continued as, or converted into, a LIBOR Loan must be in a minimum
amount of $500,000 and integral multiples of $100,000 in excess of such amount.
Any such election must be made by 11:00 a.m. (New York time) on the Third
Business Day prior to (1) the end of each LIBOR Period with respect to any LIBOR
Loans to be continued as such, or (2) the date on which Borrower wishes to
convert any Base Rate Loan to a LIBOR Loan for a LIBOR Period designated by
Borrower in such election. If no such timely election is received (or if Default
or an Event of Default has occurred and is continuing), that LIBOR Loan shall be
converted to an Base Rate Loan at the end of its LIBOR Period. Borrower must
make such election by notice to Agent in writing, by telecopy or overnight
courier. In the case of any conversion to or continuation of a LIBOR Loan, such
election must be made pursuant to a written notice (a "Notice of
Conversion/Continuation") in the form of Exhibit 1.4(e).
(f) Notwithstanding anything to the contrary set forth in
this Section 1.4, if a court of competent jurisdiction determines in a final
order that the rate of interest payable hereunder exceeds the highest rate of
interest permissible under law (the "Maximum Lawful Rate"), then so long as the
Maximum Lawful Rate would be so exceeded, the rate of interest payable hereunder
shall be equal to the Maximum Lawful Rate; provided, however, that if at any
time thereafter the rate of interest payable hereunder is less than the Maximum
Lawful Rate, Borrower shall continue to pay interest hereunder at the Maximum
Lawful Rate until such time as the total interest received by Agent, on behalf
of Lenders, is equal to the total interest that would have been received had the
interest rate payable hereunder been (but for the operation of this paragraph)
the interest rate payable since the Closing Date as otherwise provided in this
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Agreement. In no event shall the total interest received by any Lender pursuant
to the terms hereof exceed the amount that such Lender could lawfully have
received had the interest due hereunder been calculated for the full term hereof
at the Maximum Lawful Rate.
1.5 Cash Management Systems. On or prior to the Closing Date,
Borrower will establish and will maintain until the Termination Date, the cash
management systems described in Annex A (the "Cash Management Systems").
1.6 Fees.
(a) Borrower shall pay to CIT, individually, the Fees
specified in the CIT Fee Letter.
(b) If Borrower, from time to time, prepays all or any
portion of the Term Loan, whether voluntarily or involuntarily and whether
before or after acceleration of the Obligations (other than any such amounts
received by the Borrower pursuant to Section 5.4) (the "Subject Amounts"),
Borrower shall pay to Agent, for the benefit of Lenders as liquidated damages
and compensation for the costs of having made funds available hereunder, an
amount equal to the Applicable Percentage (as defined below) multiplied by the
principal amount of the Subject Amounts (the "Prepayment Fee"). The Prepayment
Fee shall only apply to the extent that on or before the third anniversary of
the Closing Date the aggregate Subject Amounts (regardless of the number of
events or transactions causing such prepayments) exceed $5,375,000. Upon payment
by the Borrower of aggregate Subject Amounts exceeding $5,375,000 (a "Triggering
Payment"), Borrower shall be obligated to pay the Prepayment Fee with respect to
the aggregate of all Subject Amounts resulting from (i) the Triggering Payment,
plus (ii) all prior payments of Subject Amounts during the six (6) months
preceding the Triggering Payment; such Prepayment Fee to be determined based
upon the Applicable Percentage in effect as of the date of the Triggering
Payment. Following a Triggering Payment, Borrower shall be obligated to pay the
Prepayment Fee with respect to each transaction generating additional Subject
Amounts determined based upon the Applicable Percentage in effect as of the date
of each such subsequent transaction. As used herein, the term "Applicable
Percentage" shall mean (x) two percent (2%), in the case of a prepayment on or
prior to the first anniversary of the Closing Date; (y) one and one-half percent
(1-1/2%), in the case of a prepayment after the first anniversary of the Closing
Date but on or prior to the second anniversary thereof; and (z) one percent
(1%), in the case of a prepayment after the second anniversary of the Closing
Date but on or prior to the third anniversary thereof. The Credit Parties agree
that the Applicable Percentages are a reasonable calculation of Lenders' lost
profits in view of the difficulties and impracticality of determining actual
damages resulting from an early termination of the Term Loan.
1.7 Receipt of Payments. Borrower shall make each payment under
this Agreement not later than 2:00 p.m. (New York time) on the day when due in
immediately available funds in Dollars to the Collection Account. For purposes
of computing interest and Fees all payments shall be deemed received on the
Business Day on which immediately available funds therefor are received in the
Collection Account prior to 2:00 p.m. New York time. Payments received after
2:00 p.m. New York time on any Business Day or on a day that is not a Business
Day shall be deemed to have been received on the following Business Day.
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1.8 Allocation of Payments.
(a) All payments and prepayments shall be applied ratably
to the portion thereof held by each Lender as determined by its Pro Rata Share.
As to all payments made when an Event of Default has occurred and is continuing
or following the Maturity Date, Borrower hereby irrevocably waives the right to
direct the application of any and all payments received from or on behalf of
Borrower, and Borrower hereby irrevocably agrees that Agent shall have the
continuing exclusive right to apply any and all such payments against the
Obligations as Agent may deem advisable notwithstanding any previous entry by
Agent in the Loan Account or any other books and records.
1.9 Loan Account and Accounting. Agent shall maintain a loan
account (the "Loan Account") on its books to record reflecting the Term Loan,
all payments made by Borrower and all other debits and credits as provided in
this Agreement with respect to the Term Loan or any other Obligations. All
entries in the Loan Account shall be made in accordance with Agent's customary
accounting practices as in effect from time to time. The balance in the Loan
Account, as recorded on Agent's most recent printout or other written statement,
shall, absent manifest error, be presumptive evidence of the amounts due and
owing to Agent and Lenders by Borrower; provided, that any failure to so record
or any error in so recording shall not limit or otherwise affect Borrower's duty
to pay the Obligations. Notwithstanding any provision herein contained to the
contrary, any Lender may elect (which election may be revoked) to dispense with
the issuance of Term Notes to that Lender and may rely on the Loan Account as
evidence of the amount of Obligations from time to time owing to it.
1.10 Indemnity.
(a) Each Credit Party that is a signatory hereto shall
jointly and severally indemnify and hold harmless each of Agent, Lenders and
their respective Affiliates, and each such Person's respective officers,
directors, employees, attorneys, agents and representatives (each, an
"Indemnified Person"), from and against any and all suits, actions, proceedings,
claims, damages, losses, liabilities and expenses (including reasonable
attorneys' fees and disbursements and other costs of investigation or defense,
including those incurred upon any appeal) that may be instituted or asserted
against or incurred by any such Indemnified Person as the result of or in
connection with or arising out of (i) credit having been extended, suspended or
terminated under this Agreement and the other Loan Documents, (ii) the
administration of such credit, (iii) the transactions contemplated hereunder and
thereunder and/or (iv) any actions or failures to act in connection with any of
the foregoing, including, without limitation, any and all legal costs and
expenses arising out of or incurred in connection with disputes between or among
any parties to any of the Loan Documents (collectively, "Indemnified
Liabilities"); provided, that no such Credit Party shall be liable for any
indemnification to an Indemnified Person to the extent that any such suit,
action, proceeding, claim, damage, loss, liability or expense results from (i)
that Indemnified Person's gross negligence or willful misconduct, as determined
by a final non-appealable order of a court of competent jurisdiction, or (ii)
from claims between or among Lenders to the extent not attributable to actions
or inactions of any Credit Party. NO INDEMNIFIED PERSON SHALL BE RESPONSIBLE OR
LIABLE TO ANY OTHER PARTY TO ANY LOAN DOCUMENT, ANY SUCCESSOR, ASSIGNEE OR THIRD
PARTY BENEFICIARY OF SUCH PERSON OR ANY OTHER PERSON ASSERTING CLAIMS
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DERIVATIVELY THROUGH SUCH PARTY, FOR INDIRECT, PUNITIVE, EXEMPLARY OR
CONSEQUENTIAL DAMAGES WHICH MAY BE ALLEGED AS A RESULT OF CREDIT HAVING BEEN
EXTENDED, SUSPENDED OR TERMINATED UNDER ANY LOAN DOCUMENT OR AS A RESULT OF ANY
OTHER TRANSACTION CONTEMPLATED HEREUNDER OR THEREUNDER.
(b) To induce Lenders to provide the LIBOR Rate option on
the terms provided herein, if (i) any LIBOR Loans are repaid in whole or in part
prior to the last day of any applicable LIBOR Period (whether that repayment is
made pursuant to any provision of this Agreement or any other Loan Document or
occurs as a result of acceleration, by operation of law or otherwise); (ii)
Borrower shall default in payment when due of the principal amount of or
interest on any LIBOR Loan; (iii) Borrower shall request a termination of any
conversion into or continuation of LIBOR Loans after Borrower has given notice
requesting the same in accordance herewith; or (iv) Borrower shall fail to make
any prepayment of a LIBOR Loan after Borrower has given a notice thereof in
accordance herewith, then Borrower shall indemnify and hold harmless each Lender
from and against all losses, costs and expenses resulting from or arising from
any of the foregoing. Such indemnification shall include any loss or expense
arising from the reemployment of funds obtained by it or from fees payable to
terminate deposits from which such funds were obtained. For the purpose of
calculating amounts payable to a Lender under this subsection, each Lender shall
be deemed to have actually funded its relevant LIBOR Loan through the purchase
of a deposit bearing interest at the LIBOR Rate in an amount equal to the amount
of that LIBOR Loan and having a maturity comparable to the relevant LIBOR
Period; provided, that each Lender may fund each of its LIBOR Loans in any
manner it sees fit, and the foregoing assumption shall be utilized only for the
calculation of amounts payable under this subsection. This covenant shall
survive the termination of this Agreement and the payment of the Term Notes and
all other amounts payable hereunder. As promptly as practicable under the
circumstances, each Lender shall provide Borrower with its written calculation
of all amounts payable pursuant to this Section 1.10(b), and such calculation
shall be binding on the parties hereto unless Borrower shall object in writing
within ten (10) Business Days of receipt thereof, specifying the basis for such
objection in detail.
1.11 Access. Each Credit Party that is a party hereto shall, from
time to time not more than once during each Fiscal Year (unless an Event of
Default has occurred and is continuing, whereupon no such limit shall apply)
during normal business hours, from time to time upon two (2) Business Days'
prior notice: (a) provide Agent and any of its officers, employees and agents
access to its properties, facilities, advisors, officers and employees of each
Credit Party, the Systems and the Collateral, (b) permit Agent, and any of its
officers, employees and agents, to inspect, audit and make extracts from any
Credit Party's books and records relating to the Borrower, the Systems or the
Collateral, and (c) permit Agent, and its officers, employees and agents, to
inspect, review, evaluate and make test verifications and counts of the Accounts
and other Collateral of any Credit Party relating to Borrower or the Systems. If
an Event of Default has occurred and is continuing, each such Credit Party shall
provide such access to Agent and to each Lender at all times and without advance
notice. Furthermore, so long as any Event of Default has occurred and is
continuing, Borrower shall provide Agent and each Lender with access to its
suppliers. Each Credit Party shall make available to Agent and its counsel
reasonably promptly originals or copies of all books and records that Agent may
reasonably request. Each Credit Party shall deliver any document or instrument
necessary for Agent, as it
8
may from time to time request, to obtain records from any service bureau or
other Person that maintains records for such Credit Party relating to Borrower
or the Systems, and shall maintain duplicate records or supporting documentation
on media, including computer tapes and discs owned by such Credit Party relating
to Borrower or the Systems. Agent will give Lenders at least five (5) days'
prior written notice of regularly scheduled audits. Representatives of other
Lenders may accompany Agent's representatives on regularly scheduled audits at
no charge to Borrower.
1.12 Taxes.
(a) Any and all payments by Borrower hereunder or under
the Term Notes shall be made, in accordance with this Section 1.12, free and
clear of and without deduction for any and all present or future Taxes. If
Borrower shall be required by law to deduct any Taxes from or in respect of any
sum payable hereunder or under the Term Notes, (i) the sum payable shall be
increased as much as shall be necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section 1.12) Agent or Lenders, as applicable, receive an amount equal to
the sum they would have received had no such deductions been made, (ii) Borrower
shall make such deductions, and (iii) Borrower shall pay the full amount
deducted to the relevant taxing or other authority in accordance with applicable
law. Within thirty (30) days after the date of any payment of Taxes, Borrower
shall furnish to Agent the original or a certified copy of a receipt evidencing
payment thereof.
(b) Each Credit Party that is a signatory hereto shall
indemnify and, within ten (10) days of demand therefor, pay Agent and each
Lender for the full amount of Taxes (including any Taxes imposed by any
jurisdiction on amounts payable under this Section 1.12) paid by Agent or such
Lender, as appropriate, and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto, whether or not such Taxes
were correctly or legally asserted.
(c) Each Lender organized under the laws of a
jurisdiction outside the United States (a "Foreign Lender") as to which payments
to be made under this Agreement or under the Term Notes are exempt from United
States withholding tax under an applicable statute or tax treaty shall provide
to Borrower and Agent a properly completed and executed IRS Form W-8ECI or Form
W-8BEN or other applicable form, certificate or document prescribed by the IRS
or the United States certifying as to such Foreign Lender's entitlement to such
exemption (a "Certificate of Exemption"). Any foreign Person that seeks to
become a Lender under this Agreement shall provide a Certificate of Exemption to
Borrower and Agent prior to becoming a Lender hereunder. No foreign Person may
become a Lender hereunder if such Person fails to deliver a Certificate of
Exemption in advance of becoming a Lender.
1.13 Capital Adequacy; Increased Costs; Illegality.
(a) If any law, treaty, governmental (or
quasi-governmental) rule, regulation, guideline or order regarding capital
adequacy, reserve requirements or similar requirements or compliance by any
Lender with any request or directive regarding capital adequacy, reserve
requirements or similar requirements (whether or not having the force of law),
in each case, adopted after the Closing Date, from any central bank or other
Governmental Authority increases
9
or would have the effect of increasing the amount of capital, reserves or other
funds required to be maintained by such Lender and thereby reducing the rate of
return on such Lender's capital as a consequence of its obligations hereunder,
then Borrower shall from time to time upon demand by such Lender (with a copy of
such demand to Agent) pay to Agent, for the account of such Lender, additional
amounts sufficient to compensate such Lender for such reduction. A certificate
as to the amount of that reduction and showing the basis of the computation
thereof submitted by such Lender to Borrower and to Agent shall be presumptive
evidence of the matters set forth therein. Each Lender agrees that, as promptly
as practicable after it becomes aware of any circumstances referred to above
which would result in any such increased cost, the affected Lender shall, to the
extent not inconsistent with such Lender's internal policies of general
application or applicable law or regulation, use reasonable commercial efforts
to minimize costs and expenses incurred by it and payable to it by Borrower
pursuant to this Section 1.13(a).
(b) If, due to either (i) the introduction of or any
change in any law or regulation (or any change in the interpretation thereof) or
(ii) the compliance with any guideline or request from any central bank or other
Governmental Authority (whether or not having the force of law), in each case
adopted after the Closing Date, there shall be any increase in the cost to any
Lender of agreeing to make or maintain the Term Loan, then Borrower shall from
time to time, upon demand by such Lender (with a copy of such demand to Agent),
pay to Agent for the account of such Lender additional amounts sufficient to
compensate such Lender for such increased cost. A certificate as to the amount
of such increased cost, submitted to Borrower and to Agent by such Lender, shall
be presumptive evidence of the matters set forth therein. Each Lender agrees
that, as promptly as practicable after it becomes aware of any circumstances
referred to above which would result in any such increased cost, the affected
Lender shall, to the extent not inconsistent with such Lender's internal
policies of general application or applicable law or regulation, use reasonable
commercial efforts to minimize costs and expenses incurred by it and payable to
it by Borrower pursuant to this Section 1.13(b).
(c) Notwithstanding anything to the contrary contained
herein, if the introduction of or any change in any law or regulation (or any
change in the interpretation thereof) shall make it unlawful, or any central
bank or other Governmental Authority shall assert that it is unlawful, for any
Lender to agree to make or to make or to continue to fund or maintain any LIBOR
Loan, then, unless that Lender is able to make or to continue to fund or to
maintain such LIBOR Loan at another branch or office of that Lender without, in
that Lender's reasonable opinion, materially adversely affecting it or its Loans
or the income obtained therefrom, on notice thereof and demand therefor by such
Lender to Borrower through Agent, (i) the obligation of such Lender to agree to
make or to make or to continue to fund or maintain LIBOR Loans shall terminate
and (ii) Borrower shall forthwith prepay in full all outstanding LIBOR Loans
owing to such Lender, together with interest accrued thereon, unless Borrower,
within five (5) Business Days after the delivery of such notice and demand,
converts all LIBOR Loans into Base Rate Loans.
(d) Within thirty (30) days after receipt by Borrower of
written notice and demand from any Lender (an "Affected Lender") for payment of
additional amounts or increased costs as provided in Sections 1.12(a), 1.13(a)
or 1.13(b), Borrower may, at its option, notify Agent and such Affected Lender
of its intention to replace the Affected Lender. So long as no Default or Event
of Default has occurred and is continuing, Borrower, with the consent of Agent
10
(which consent shall not be unreasonably withheld or delayed), may obtain, at
Borrower's expense, a replacement Lender ("Replacement Lender") for the Affected
Lender, which Replacement Lender must be reasonably satisfactory to Agent. If
Borrower obtains a Replacement Lender within ninety (90) days following notice
of its intention to do so, the Affected Lender must sell and assign its Term
Loan to such Replacement Lender for an amount equal to the principal balance of
its Term Loan held by the Affected Lender, all accrued interest and Fees with
respect thereto and all other amounts due to such Affected Lender through the
date of such sale and such assignment shall not require the payment of an
assignment fee to Agent; provided, that Borrower shall have reimbursed such
Affected Lender for the additional amounts or increased costs that it is
entitled to receive under this Agreement through the date of such sale and
assignment. Notwithstanding the foregoing, Borrower shall not have the right to
obtain a Replacement Lender if the Affected Lender rescinds its demand for
increased costs or additional amounts within 15 days following its receipt of
Borrower's notice of intention to replace such Affected Lender. Furthermore, if
Borrower gives a notice of intention to replace and does not so replace such
Affected Lender within ninety (90) days thereafter, Borrower's rights under this
Section 1.13(d) shall terminate with respect to such Affected Lender and
Borrower shall promptly pay all increased costs or additional amounts demanded
by such Affected Lender pursuant to Sections 1.12(a), 1.13(a) and 1.13(b).
2. CONDITIONS PRECEDENT
2.1 Conditions to the Term Loan. No Lender shall be obligated to
make the Term Loan on the Closing Date, until the following conditions have been
satisfied or provided for in a manner satisfactory to Agent, or waived in
writing by Agent and Lenders in their sole discretion:
(a) Credit Agreement; Loan Documents. This Agreement or
counterparts hereof shall have been duly executed by, and delivered to,
Borrower, each other Credit Party, Agent and Lenders; and Agent shall have
received such documents, instruments, agreements and legal opinions as Agent
shall reasonably request in connection with the transactions contemplated by
this Agreement and the other Loan Documents, including, without limitation, all
those documents and agreements listed on the Closing Document Index attached as
Exhibit 2.1(a), each in form and substance reasonably satisfactory to Agent.
(b) Repayment of Existing Lenders' Obligations. Agent
shall have received a fully executed original of a pay-off letter reasonably
satisfactory to Agent confirming that all of the Existing Lenders' Obligations
will be repaid in full from the proceeds of the Term Loan and all Liens upon any
of the property of Borrower or NCC in favor of the Existing Lenders shall be
terminated by the Existing Lenders immediately upon such payment.
(c) Approvals. Agent shall have received (i) satisfactory
evidence that the Credit Parties have obtained all required consents and
approvals of all Persons including, without limitation, all requisite
Governmental Authorities (including any Franchise Authority or other franchise
authority or, to the extent required, the FCC), and counterparties to any
material contracts relating to Borrower or any System to the execution, delivery
and performance of this Agreement and the other Loan Documents (excluding any
Access Right Agreements other than those listed on Schedule 2.1(c)) or (ii) an
officer's certificate in form and substance reasonably satisfactory to Agent
affirming that no such consents or approvals are required.
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(d) Payment of Fees. Borrower shall have paid the Fees
required to be paid on the Closing Date in the respective amounts specified in
Section 1.6 (including the Fees specified in the CIT Fee Letter), and shall have
reimbursed Agent for all out-of-pocket fees, costs and expenses of closing
presented as of the Closing Date.
(e) Capital Structure; Other Indebtedness. The Borrower
shall have made no material change to its capital structure.
(f) Mortgages; Leasehold Mortgages and Bailee Letters.
Agent shall have received evidence of satisfaction of each of the requirements
of Section 5.9 with respect to all of the Real Estate owned or leased by
Borrower and listed on Schedule 2.1(f).
(g) Waivers. Agent, on behalf of Lenders, shall have
received landlord waivers and consents, bailee letters and mortgagee agreements
in form and substance satisfactory to Agent, in each case as required pursuant
to Section 5.9.
(h) Insurance. Agent shall have received satisfactory
evidence that the insurance policies required by Section 5.4 are in full force
and effect, together with appropriate evidence showing loss payable and/or
additional insured clauses or endorsements, as reasonably requested by Agent, in
favor of Agent, on behalf of Lenders.
(i) [Intentionally Omitted.]
(j) Subordination Agreement. Agent and Lenders shall have
received any and all subordination agreements, all in form and substance
reasonably satisfactory to Agent, in its sole discretion, as Agent shall have
deemed necessary or appropriate with respect to (i) any Indebtedness of Borrower
and (ii) the Management Agreement and any other management or similar fees
payable by Borrower to NCC.
(k) System Engineering Reports. Agent shall have received
system engineering reports with respect to each System, each of which shall be
in form and substance reasonably satisfactory to Agent.
(l) Audited Financials; Financial Condition. Agent shall
have received the Financial Statements, Pro Forma, Projections and other
materials set forth in Section 3.2, certified by an executive officer of NCC, in
each case in form and substance satisfactory to Agent, and Agent shall be
satisfied, in its sole discretion, with all of the foregoing. Agent shall have
further received a certificate of an executive officer of NCC to the effect that
(a) Borrower will be Solvent upon the consummation of the transactions
contemplated herein; (b) the Pro Forma fairly presents the financial condition
of Borrower as of the date thereof after giving effect to the transactions
contemplated by the Loan Documents; (c) the Projections are based upon estimates
and assumptions stated therein, all of which Borrower believes to be reasonable
and fair in light of current conditions and current facts known to Borrower and,
as of the Closing Date, reflect Borrower's good faith and reasonable estimates
of its future financial performance and of the other information projected
therein for the period set forth therein; and (d) containing such other
statements with respect to the Solvency of Borrower and matters related thereto
as Agent shall request.
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(m) Financial Covenants. Borrower shall have provided to
Agent evidence, satisfactory to Agent in its sole discretion, of its compliance
on the Closing Date (on a pro-forma basis) with the Financial Covenants.
(n) No Material Change. There shall not have occurred a
material adverse change since December 31, 2002 in the business, assets,
liabilities (actual or contingent), operations, condition (financial or
otherwise) of Borrower.
(o) Due Diligence. Agent shall have completed its
business and legal due diligence.
(p) Legal Opinions. The Agent shall have received, with a
counterpart for each Lender, the executed legal opinions required by Agent,
including without limitation: (i) of Cairncross & Hempelmann, P.S., special
counsel to the Credit Parties, Cole Raywid & Xxxxxxxxx, L.L.P., special
regulatory counsel to the Credit Parties and Xxxxx Xxxxx LLP, special Texas
counsel to the Credit Parties, each substantially in the form of Exhibits
3.1(n)(1), 3.1(n)(2) and 3.1(n)(3), respectively, covering such matters relating
to the Credit Parties and the Loan Documents as Agent shall reasonably request.
The Borrower hereby requests such counsel to deliver such opinions.
(q) Additional Matters. All corporate and other
proceedings, and all documents, instruments and other legal matters in
connection with the transactions contemplated by this Agreement and the other
Loan Documents shall be satisfactory in form and substance to the Agent, and the
Agent shall have received such other documents in respect of any aspect or
consequence of the transactions contemplated hereby or thereby as it shall
reasonably request.
3. REPRESENTATIONS AND WARRANTIES
To induce Lenders to make the Term Loan, the Credit Parties executing
this Agreement, jointly and severally, make the following representations and
warranties to Agent and each Lender with respect to all Credit Parties, each and
all of which shall survive the execution and delivery of this Agreement.
3.1 Authorization, Validity, and Enforceability of this Agreement
and the Loan Documents; Locations.
(a) Each Credit Party has the power and authority to
execute, deliver and perform this Agreement and the other Loan Documents to
which it is a party, to incur the Obligations, and to grant to the Agent Liens
upon and security interests in the Collateral in which it has an interest. Such
Credit Party has taken all necessary action (including obtaining approval of its
partners, stockholders or other equity holders, if necessary) to authorize its
execution, delivery and performance of this Agreement and the other Loan
Documents to which it is a party. This Agreement and the other Loan Documents to
which it is a party have been duly executed and delivered by such Credit Party,
and constitute the legal, valid and binding obligations of such Credit Party,
enforceable against it in accordance with their respective terms except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
13
Such Credit Party's execution, delivery and performance of this Agreement and
the other Loan Documents to which it is a party do not and will not conflict
with, or constitute a violation or breach of, or result in the imposition of any
Lien upon the property of such Credit Party, by reason of, the terms of (a) any
contract, mortgage, lease, agreement, indenture or instrument to which such
Credit Party is a party or which is binding upon it; (b) any law or regulation,
or any order or decree of any court or Governmental Authority; (c) consent or
approval of any Governmental Authority or any other Person, except those
referred to in Section 2.1(c), all of which will have been duly obtained, made
or complied with prior to the Closing Date, or (d) the certificate or articles
of incorporation or by-laws or the limited liability company or limited
partnership agreement or other organizational documents of such Credit Party.
(b) As of the Closing Date, the current location of
Borrower's chief executive office and the warehouses and premises at which any
Collateral is located (except for (i) installed cable plant (other than head-end
equipment) and other assets that are deployed or otherwise installed at
residential locations, and (ii) assets that have a value less than $100,000 in
the aggregate for any one such location) are set forth in Schedule 3.1(b), and
none of such locations has changed within the 12 months preceding the Closing
Date. In addition, Schedule 3.1(b) lists the federal employer identification
number and organizational identification number, if any, of Borrower.
3.2 Financial Statements and Projections. Except for the
Projections, all Financial Statements concerning Borrower that are referred to
below have been prepared in accordance with GAAP consistently applied throughout
the periods covered (except as disclosed therein and except, with respect to
unaudited Financial Statements, for the absence of footnotes and normal year-end
audit adjustments) and present fairly in all material respects the financial
position of Borrower as at the dates thereof and the results of its operations
and cash flows for the periods then ended.
(a) Financial Statements. The Borrower has heretofore
furnished to the Agent on or before the date hereof (and the same are attached
hereto as Schedule 3.2):
(i) The audited balance sheets of Borrower as at
each of December 31, 2002 and December 31, 2001, and the statements of
operations, changes in partners' equity and changes in financial
position of Borrower for such Fiscal Years, certified, without
qualification, by KPMG or Xxxxxx Xxxxxxxx, as the case may be.
(ii) The unaudited balance sheet at June 30, 2003
and the related statement of income and cash flows of Borrower for the
two Fiscal Quarters then ended.
(b) Pro Forma. The Pro Forma heretofore furnished to the
Agent on or before the date hereof was prepared by Borrower giving pro forma
effect to the Refinancing, was based on the unaudited balance sheet of Borrower
referred to in Section 3.2(a)(ii), and was prepared in accordance with GAAP,
with only such adjustments thereto as would be required in accordance with GAAP.
(c) Projections. The Projections heretofore furnished to
the Agent on or before the date hereof have been prepared by Borrower in light
of the past operations of its
14
businesses, but including future payments of known contingent liabilities, and
reflect projections for the six (6) year period beginning on August 1, 2003 on a
month-by-month basis for the first year and on a year-by-year basis thereafter.
The Projections are based upon the same accounting principles as those used in
the preparation of the Financial Statements and the estimates and assumptions
stated therein, all of which Borrower believes to be reasonable and fair in
light of current conditions and current facts known to Borrower and, as of the
Closing Date, reflect Borrower's good faith and reasonable estimates of the
future financial performance of Borrower for the period set forth therein. The
Projections are not a guaranty of future performance, and actual results may
differ from the Projections.
3.3 Material Adverse Effect. Between December 31, 2002 and the
Closing Date, (a) Borrower has not incurred any obligations, contingent or
noncontingent liabilities, liabilities for Charges, long-term Leases or unusual
forward or long-term commitments that are not reflected in the Pro Forma and
that, alone or in the aggregate, could reasonably be expected to have a Material
Adverse Effect, (b) no contract, Lease or other agreement or instrument has been
entered into by Borrower or has become binding upon Borrower's assets and, to
the knowledge of each Credit Party, no law or regulation applicable to Borrower
has been adopted that has had or could reasonably be expected to have a Material
Adverse Effect, and (c) Borrower is not in default and to the best knowledge of
each Credit Party, no third party is in default under any material contract,
Lease or other agreement or instrument, that alone or in the aggregate could
reasonably be expected to have a Material Adverse Effect. Since December 31,
2002, no event has occurred, that alone or together with other events, could
reasonably be expected to have a Material Adverse Effect.
3.4 Ownership of Property; Liens. As of the Closing Date, all
interests in real property owned or leased by, or for the benefit of Borrower or
any System (excluding Access Rights) are listed in Schedule 3.4 (collectively,
and together with any additional real estate acquired after the Closing Date,
the "Real Estate") and such interests constitutes all of the interests in real
property owned, Leased or otherwise used by, or for the benefit of Borrower or
any System (excluding ordinary course easements, rights of access, use ingress
or egress incidental to the operations of Borrower or any System which are
unrecorded). Borrower owns good and marketable fee simple title to all of its
owned Real Estate, and valid leasehold interests in all of its Leased Real
Estate, all as described on Schedule 3.4, and copies of all such Leases or a
summary of terms thereof reasonably satisfactory to Agent have heretofore been
furnished to Agent. Schedule 3.4 further describes any Real Estate with respect
to which Borrower is a lessor, sublessor or assignor as of the Closing Date.
Borrower also has valid title to, or valid leasehold interests in, all of its
personal property and assets. As of the Closing Date, none of the properties and
assets of Borrower are subject to any Liens other than Permitted Encumbrances,
and there are no facts, circumstances or conditions known to any Credit Party
that may result in any Liens (including Liens arising under Environmental Laws)
other than Permitted Encumbrances. Borrower has received all deeds, assignments,
waivers, consents, nondisturbance and attornment or similar agreements, bills of
sale and other documents, and has duly effected all recordings, filings and
other actions necessary to establish, protect and perfect Borrower's right,
title and interest in and to all such Real Estate and other properties and
assets, except where failure to receive such documents would not, individually
or in the aggregate, have a material adverse effect on Borrower's right, title
and interest in and to any parcel of Real Estate. Schedule 3.4 also describes
any purchase options, rights of first refusal or other similar
15
contractual rights pertaining to any Real Estate. As of the Closing Date, no
portion of Borrower's Real Estate has suffered any material damage by fire or
other casualty loss that has not heretofore been repaired and restored in all
material respects to its original condition or otherwise remedied. As of the
Closing Date, all material permits required to have been issued or appropriate
to enable the Real Estate to be lawfully occupied and used for all of the
purposes for which it is currently occupied and used have been lawfully issued
and are in full force and effect.
3.5 Labor Matters. Except as set forth on Schedule 3.5, as of the
Closing Date: (a) Borrower is not party to or bound by any collective bargaining
agreement, management agreement, consulting agreement, employment agreement,
bonus, restricted stock, stock option, or stock appreciation plan or agreement
or any similar plan, agreement or arrangement (and true and complete copies of
any agreements described on Schedule 3.5 have heretofore been furnished to
Agent); (b) no strikes or other material labor disputes against any Borrower are
pending or, to any Credit Party's knowledge, threatened; (c) hours worked by and
payment made to employees of Borrower comply with the Fair Labor Standards Act
and each other federal, state, local or foreign law applicable to such matters,
except where failure to comply with such laws could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect; (d) all
payments due from Borrower for employee health and welfare insurance have been
paid or accrued as a liability on Borrower's books, except where failure to do
so could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect; (e) there is no organizing activity involving Borrower
pending or, to any Credit Party's knowledge, threatened by any labor union or
group of employees; and (f) there are no material complaints or charges against
Borrower pending or, to the knowledge of any Credit Party, threatened to be
filed with any Governmental Authority or arbitrator based on, arising out of, in
connection with, or otherwise relating to the employment or termination of
employment by Borrower of any individual.
3.6 Ventures, Subsidiaries and Affiliates; Outstanding Stock and
Indebtedness. As of the Closing Date, Borrower does not have any Subsidiaries,
is not is engaged in any joint venture or partnership with any other Person, and
does not own Stock of or otherwise "control" (as such term is defined in the
definition of Affiliate in Section 13) any other Person. Schedule 3.6 sets forth
the identity of each General Partner of Borrower, and except as set forth
therein no other Person has the right under the Partnership Agreement or
applicable law to exercise general management of the Borrower. Except as set
forth in Schedule 3.6, there are no outstanding rights to purchase, options,
warrants or similar rights or agreements pursuant to which Borrower may be
required to issue, sell, repurchase or redeem any of its Stock or other equity
securities. All outstanding Indebtedness and Guaranteed Indebtedness of Borrower
as of the Closing Date (except for the Obligations) is described in Section 6.3
(including Schedule 6.3).
3.7 Government Regulation. No Credit Party is an "investment
company" or an "affiliated person" of, or "promoter" or "principal underwriter"
for, an "investment company," as such terms are defined in the Investment
Company Act of 1940. No Credit Party is subject to regulation under the Public
Utility Holding Company Act of 1935, the Federal Power Act, or any other federal
or state statute that restricts or limits its ability to incur Indebtedness or
to perform its obligations hereunder. The making of the Term Loan by Lenders to
Borrower, the application of the proceeds thereof and repayment thereof and the
consummation of the Refinancing will not
16
violate any provision of any such statute or any rule, regulation or order
issued by the Securities and Exchange Commission or any other Governmental
Authority.
3.8 Margin Regulations. No part of the proceeds of the Term Loan
will be used for "buying" or "carrying" any "margin stock" within the respective
meanings of each of the quoted terms under Regulation U of the Federal Reserve
Board as now and from time to time hereafter in effect or for any purpose that
violates the provisions of any regulations of the Federal Reserve Board. If
requested by any Lender or the Agent, Borrower will furnish to Agent and each
Lender a statement to the foregoing effect in conformity with the requirements
of FR Form G-3 or FR Form U-1, as applicable, referred to in Regulation U.
3.9 Taxes. All Federal and other material tax returns, reports and
statements, including information returns, required by any Governmental
Authority to be filed by Borrower have been filed with the appropriate
Governmental Authority on or prior to the applicable due date therefor (subject
to any extensions thereof), and all Charges have been paid prior to the date on
which any fine, penalty, interest or late charge may be added thereto for
nonpayment thereof, excluding Charges or other amounts being contested in
accordance with Section 5.2(b) and unless the failure to so file or pay would
not reasonably be expected to result in fines, penalties or interest in excess
of $50,000 in the aggregate. Proper and accurate amounts have been withheld by
Borrower from its respective employees for all periods in compliance in all
material respects with all applicable federal, state, local and foreign laws and
such withholdings have been timely paid to the respective Governmental
Authorities. Schedule 3.9 sets forth as of the Closing Date those taxable years
for which Borrower's tax returns are currently being audited by the IRS or any
other applicable Governmental Authority and any assessments or threatened
assessments in connection with such audit, or otherwise currently outstanding.
Except as described in Schedule 3.9, as of the Closing Date, Borrower has not
executed or filed with the IRS or any other Governmental Authority any agreement
or other document extending, or having the effect of extending, the period for
assessment or collection of any Charges. Borrower is not liable for any Charges:
(a) under any agreement (including any tax sharing agreements) or (b) to each
Credit Party's knowledge, as a transferee. As of the Closing Date, Borrower has
not agreed or been requested to make any adjustment under IRC Section 481(a), by
reason of a change in accounting method or otherwise, which would reasonably be
expected to have a Material Adverse Effect.
3.10 ERISA.
(a) Schedule 3.10 lists as of the Closing Date, all Plans
and separately identifies all Pension Plans, including Title IV Plans,
Multiemployer Plans, ESOPs and Welfare Plans, including all Retiree Welfare
Plans. Copies of all such listed Plans, together with a copy of the latest form
IRS/DOL 5500-series for each such Plan have heretofore been furnished to Agent.
Except with respect to Multiemployer Plans, each Qualified Plan has been
determined by the IRS to qualify under Section 401 of the IRC, the trusts
created thereunder have been determined to be exempt from tax under the
provisions of Section 501 of the IRC, and, nothing has occurred that would cause
the loss of such qualification or tax-exempt status. Each Plan is in compliance
in all material respects with the applicable provisions of ERISA and the IRC,
including the timely filing of all reports required under the IRC or ERISA,
including the statement required by 29 CFR Section 2520.104-23. Neither Borrower
nor ERISA Affiliate has
17
failed to make any material contribution or pay any material amount due as
required by either Section 412 of the IRC or Section 302 of ERISA or the terms
of any such Plan. Neither Borrower nor ERISA Affiliate has engaged in a
"prohibited transaction," as defined in Section 406 of ERISA and Section 4975 of
the IRC, in connection with any Plan, that would subject any Credit Party to a
material tax on prohibited transactions imposed by Section 502(i) of ERISA or
Section 4975 of the IRC.
(b) Except as set forth in Schedule 3.10: (i) no Title IV
Plan has any material Unfunded Pension Liability; (ii) no ERISA Event or event
described in Section 4062(e) of ERISA with respect to any Title IV Plan has
occurred or is reasonably expected to occur; (iii) there are no pending, or to
the knowledge of any Credit Party, threatened material claims (other than claims
for benefits in the normal course), sanctions, actions or lawsuits, asserted or
instituted against any Plan or any Person as fiduciary or sponsor of any Plan;
(iv) no Credit Party or ERISA Affiliate has incurred or reasonably expects to
incur any material liability as a result of a complete or partial withdrawal
from a Multiemployer Plan; (v) within the last five years no Title IV Plan of
any Credit Party or ERISA Affiliate has been terminated, whether or not in a
"standard termination" as that term is used in Section 4041 of ERISA, nor has
any Title IV Plan of any Credit Party or ERISA Affiliate (determined at any time
within the past five years) with material Unfunded Pension Liabilities been
transferred outside of the "controlled group" (within the meaning of Section
4001(a)(14) of ERISA) of any Credit Party or ERISA Affiliate; (vi) except in the
case of any ESOP, Stock of all Credit Parties and their ERISA Affiliates makes
up, in the aggregate, no more than 10% of fair market value of the assets of any
Plan measured on the basis of fair market value as of the latest valuation date
of any Plan; and (vii) no liability under any Title IV Plan has been satisfied
with the purchase of a contract from an insurance company that is not rated AAA
by the Standard & Poor's Corporation or an equivalent rating by another
nationally recognized rating agency.
3.11 No Litigation. No action, claim, lawsuit, dispute, demand,
investigation or proceeding of any kind is now pending or, to the knowledge of
any Credit Party, threatened against any Credit Party, before any Governmental
Authority or before any arbitrator or panel of arbitrators (collectively,
"Litigation"), (a) that directly or indirectly challenges any Credit Party's
right or power to enter into or perform any of its obligations under the Loan
Documents to which it is a party, or the validity or enforceability of any Loan
Document or any action taken thereunder, or (b) that has a reasonable risk of
being determined adversely to any Credit Party and that, if so determined, could
reasonably be expected to result in a Material Adverse Effect. Except as set
forth on Schedule 3.11, as of the Closing Date there is no Litigation pending
or, to the knowledge of any Credit Party, threatened against or otherwise
involving any Credit Party which seeks (i) damages in excess of $100,000 or (ii)
injunctive relief against any Credit Party which would materially effect the
operations of such Credit Party's business.
3.12 Brokers. No broker or finder acting on behalf of any Credit
Party or Affiliate thereof brought about the obtaining, making or closing of the
Term Loan and no Credit Party or Affiliate thereof has any obligation to any
Person in respect of any finder's or brokerage fees in connection therewith.
3.13 Intellectual Property. As of the Closing Date, Borrower owns
or has rights to use all Intellectual Property necessary to continue to conduct,
in all material respects, its business as
18
now conducted by it or presently proposed to be conducted by it. Each Patent,
Trademark, Copyright and License to which Borrower is a party or which is
otherwise material to the business of Borrower is listed, together with
application or registration numbers, as applicable, in Schedule 3.13. Borrower
conducts its business and affairs without infringement of or interference with
any Intellectual Property of any other Person in any material respect, except
for matters which, if adversely determined, would not reasonably be expected to
result in (i) damages to any Credit Party in excess $50,000 or (ii) injunctive
relief against any Credit Party which would materially effect the operations of
such Credit Party's business. Except as set forth in Schedule 3.13, no Credit
Party is aware of any material infringement claim against any Credit Party by
any other Person with respect to any Intellectual Property used by Borrower.
3.14 Full Disclosure. No information contained in this Agreement,
any of the other Loan Documents, any Projections, Financial Statements or other
written reports from time to time prepared by any Credit Party and delivered
hereunder or any written statement prepared by any Credit Party and furnished by
or on behalf of any Credit Party to Agent or any Lender pursuant to the terms of
this Agreement contains or will contain any untrue statement of a material fact
or omits or will omit to state a material fact necessary to make the statements
contained herein or therein not misleading in light of the circumstances under
which they were made. Projections from time to time delivered hereunder are or
will be based upon the estimates and assumptions stated therein, all of which
Borrower believed at the time of delivery to be reasonable and fair in light of
current conditions and current facts known to Borrower as of such delivery date,
and reflect Borrower's good faith and reasonable estimates of the future
financial performance of Borrower and of the other information projected therein
for the period set forth therein. Such Projections are not a guaranty of future
performance and actual results may differ from those set forth in such
Projections. To the extent that Agent and Lenders have taken the steps set forth
in the legal opinions delivered pursuant to Section 3.1(n) as necessary to
perfect and maintain the perfection of the Liens granted to Agent under the
Collateral Documents, the Liens granted to Agent, on behalf of itself and
Lenders, pursuant to the Collateral Documents will at all times be fully
perfected first priority Liens in and to the Collateral described therein,
subject, as to priority, only to Permitted Encumbrances.
3.15 Environmental Matters.
(a) Except as set forth in Schedule 3.15, as of the
Closing Date: (i) the Real Estate is free of contamination from any Hazardous
Material except for such contamination that would not adversely impact the value
or marketability of such Real Estate and that would not result in Environmental
Liabilities that could reasonably be expected to exceed, individually or in the
aggregate, $100,000; (ii) no Credit Party has caused or suffered to occur any
material Release of Hazardous Materials on, at, in, under, above, to, from or
about any of its Real Estate; (iii) Borrower has been in compliance with all
Environmental Laws, except for such noncompliance that would not result in
Environmental Liabilities which could reasonably be expected to exceed,
individually or in the aggregate, $100,000; (iv) Borrower has obtained, and is
in compliance with, all Environmental Permits required by Environmental Laws for
the operations of its business as presently conducted or as proposed to be
conducted, except where the failure to so obtain or comply with such
Environmental Permits would not result in Environmental Liabilities that could
reasonably be expected to exceed, individually or in the aggregate, $100,000,
and all such Environmental Permits are valid, in good standing, and, to the
19
knowledge of each Credit Party, uncontested; (v) Borrower is not involved in
operations or knows of any facts, circumstances or conditions, including any
Releases of Hazardous Materials, that are likely to result in any Environmental
Liabilities of Borrower which could reasonably be expected to exceed,
individually or in the aggregate, $100,000; (vi) there is no Litigation arising
under or related to any Environmental Laws, Environmental Permits or Hazardous
Material that seeks damages, penalties, fines, costs or expenses in excess,
individually or in the aggregate, of $100,000 or injunctive relief against, or
that alleges criminal misconduct by, any Credit Party; (vii) no notice has been
received by any Credit Party identifying it as a "potentially responsible party"
or requesting information under CERCLA or analogous state statutes, and to the
knowledge of the Credit Parties, there are no facts, circumstances or conditions
that may result in any Credit Party being identified as a "potentially
responsible party" under CERCLA or analogous state statutes; and (viii) Borrower
has provided to Agent copies of all existing environmental reports, reviews and
audits of which Borrower has knowledge and all written information pertaining to
actual or potential Environmental Liabilities, in each case relating to any
Credit Party.
(b) Each Credit Party hereby acknowledges and agrees that
Agent (i) is not now, and has not ever been, in control of any of the Real
Estate or any Credit Party's affairs, and (ii) does not, prior to the exercise
of any remedies granted to Agent pursuant to this Agreement or the other Loan
Documents, have the capacity through the provisions of the Loan Documents or
otherwise to influence any Credit Party's conduct with respect to the ownership,
operation or management of any of its Real Estate or compliance with
Environmental Laws or Environmental Permits.
3.16 Insurance. Schedule 3.16 lists all insurance policies of any
nature maintained, as of the Closing Date, for current occurrences by Borrower,
as well as a summary of the terms of each such policy.
3.17 Deposit and Disbursement Accounts. Schedule 3.17 lists all
banks and other financial institutions at which any Credit Party maintains
deposit or other accounts as of the Closing Date relating to Borrower or the
Systems, including any Disbursement Accounts, and such Schedule correctly
identifies the name, address and telephone number of each depository, the name
in which the account is held, a description of the purpose of the account, and
the complete account number therefor.
3.18 Government Contracts. Except as set forth on Schedule 3.18 and
except for the Franchises, Borrower is not party to any contract or agreement
with any Governmental Authority. None of Borrower's Accounts are subject to the
Federal Assignment of Claims Act (31 U.S.C. Section 3727) or any similar state
or local law.
3.19 Customer and Trade Relations. As of the Closing Date, there
exists no actual or, to the knowledge of any Credit Party, threatened
termination or cancellation of, or any material adverse modification or change
in: the business relationship of Borrower with any customer or group of
customers whose purchases during the preceding 12 months caused them to be
ranked among the ten largest customers of Borrower; or the business relationship
of Borrower with any supplier essential to the operation of any System.
20
3.20 Solvency. Both before and after giving effect to (a) the Term
Loan, (b) the disbursement of the proceeds of the Term Loan pursuant to the
instructions of Borrower, (c) the Refinancing and (d) the payment and accrual of
all transaction costs in connection with the foregoing, Borrower and all other
Credit Parties are and will be Solvent.
3.21 Partnership Tax Status. Borrower, since its organization, has
been treated as a partnership within the meaning of Section 761(a) of the IRC
for Federal income tax purposes and has not been and is not an entity subject to
Federal or state income tax. No Credit Party has any knowledge of any inquiry or
investigation by any Person (including, without limitation, the IRS) as to
whether or not Borrower is, or any claim or assertion by any Person (including,
without limitation, the IRS) that Borrower is not, a partnership for Federal or
state income tax purposes or an entity subject to Federal or state income taxes.
3.22 [Intentionally Omitted.]
3.23 Licenses; Governmental Approvals and Access Rights.
(a) Borrower has duly secured all necessary licenses and
Franchises from, and has filed all required registrations, applications, reports
and other documents with and paid all required royalty and other fees to, the
FCC, the U.S. Copyright Office, each Franchise Authority and other entities
exercising jurisdiction over the provision of cable television or the
construction of the systems therefor, in respect of its business as currently
conducted, in each case other than where the failure to do any of the foregoing
could not reasonably be expected to have a material adverse effect upon
Borrower's ability to operate each System identified on Schedule 3.23(a)(i) in
substantially the same manner as operated immediately prior to the Closing Date;
provided, however, in the case of the payment of royalty and other fees in
respect of each Franchise, Borrower has paid all such fees other than fees, the
validity or amount is which are being contested in good faith by appropriate
proceedings and for which adequate reserves are being held in accordance with
GAAP. No Lender, solely by reason of the execution, delivery and performance of
any of the Loan Documents, will be subject to the regulation or control of any
Governmental Authority, except in connection with the enforcement of remedies.
Without limiting the generality of the foregoing, Borrower holds the FCC
Licenses and Franchises specified on Schedule 3.23(a)(ii); all such FCC Licenses
and Franchises are valid and in full force and effect; and to the knowledge of
each Credit Party, no event has occurred or is occurring that could reasonably
be expected to (i) result in the revocation or termination, modification in any
material respect, or forfeiture of any such FCC License or Franchise, or (ii)
materially and adversely affect any rights of Borrower under any FCC License or
any Franchise; and no Credit Party has reason to believe or any knowledge that
the FCC Licenses and Franchises specified on Schedule 3.23(a)(ii) will not be
renewed in the ordinary course. Such FCC Licenses and Franchises are sufficient
for Borrower to conduct its business as presently conducted or as it proposes to
conduct it and to operate each System in substantially the same manner as
operated immediately prior to the Closing Date. Schedule 3.23(a)(ii) correctly
lists (1) such FCC Licenses and Franchises, (2) the geographical area to which
each such FCC License or Franchise relates, (3) the expiration date, if any, of
each such FCC License or Franchise, and (4) if not issued in the name of
Borrower, the name of the Person in whose name such FCC License or Franchise is
nominally issued and any restrictions on transfer.
21
(b) Borrower has duly and timely filed all cable
television registration statements and other filings which are required to be
filed by Borrower under the Communications Laws, the Cable Act and other
relevant communications law, other than where the failure to make such filing on
a timely basis would not (i) constitute a material violation thereof or (ii)
result in the incurrence of a material penalty, and is in material compliance
with such law, including, without limitation, the rules and regulations of the
FCC and such Franchise Authority having jurisdiction over Borrower or any
System.
(c) Borrower has paid all franchise, license, regulatory
or other fees and charges which have become due pursuant to any FCC License,
Franchise or permit in respect of its business and has made appropriate
provisions as is required by GAAP for any such fees and charges which have
accrued, except where the failure to make such payments or provisions could not,
individually or in the aggregate, reasonably be expected to (i) have a Material
Adverse Effect or (ii) otherwise have a material adverse effect upon Borrower's
ability to operate each System in substantially the same manner as operated
immediately prior to the Closing Date.
(d) Borrower has deposited with the U.S. Copyright Office
all statements of account and other documents and instruments, and has paid all
royalties, supplemental royalties, fees, interest assessments and other sums to
the U.S. Copyright Office under the Copyright Act with respect to its business
and the operation of the Systems as are required to obtain, hold and maintain
the compulsory license for cable television systems prescribed in Section 111 of
the Copyright Act, except where the failure to make such payments or deposits
could not, individually or in the aggregate, reasonably be expected to (i) have
a Material Adverse Effect or (ii) otherwise have a material adverse effect upon
Borrower's ability to operate each System in substantially the same manner as
operated immediately prior to the Closing Date. There is no inquiry, claim,
action or demand pending, or to the knowledge of any Credit Party, threatened
against any Credit Party, before the U.S. Copyright Office or from any other
Person which questions the copyright filings or payments made by any Credit
Party with respect to its business or the Systems. Complete and correct copies
of all current reports and filings for the two reporting periods prior to the
Closing Date, made or filed pursuant to the Copyright Act and the rules and
regulations of the U.S. Copyright Office with respect to the conduct of the
business of Borrower or the operation of the Systems, have been provided to
Agent.
(e) Except as set forth on Schedule 3.23(e), each System
is in compliance with the provisions of the Cable Act as such provisions relate
to the rates and other charges of the Systems, except where the failure to so
comply could not, individually or in the aggregate, reasonably be expected to
(i) have a Material Adverse Effect or (ii) otherwise have a material adverse
effect upon Borrower's ability to operate each System in substantially the same
manner as operated immediately prior to the Closing Date. Borrower has used
reasonable good faith efforts to establish rates and charges to customers that
are allowable under the Cable Act, and any authoritative interpretation thereof
now in effect, for each System, to the extent such rates (on any tier) are
presently subject to regulation by any Governmental Authority. Borrower has
delivered to Agent complete and correct copies of all material FCC and other
governmental forms filed by Borrower since January 1, 2002 and all material
correspondence with any Governmental Authority delivered since such date,
including any pending material complaints filed with the FCC or any other
Governmental Authority with respect to any rates charged to Subscribers of the
Systems and any other documentation supporting an exemption from the rate
22
regulation provisions of the Cable Act claimed by Borrower with respect to any
of the Systems. Except as set forth on Schedule 3.23(e), Borrower is not subject
to rate regulation by any Governmental Authority and has not received any
correspondence indicating that this may change in the future. Borrower has not
made and is not bound by any election with respect to any cost of service
proceeding conducted in accordance with Part 76.922 of Title 47 of the Code of
Federal Regulations or any similar proceeding with respect to any of the
Systems.
(f) Except as set forth on Schedule 3.23(f), since
January 1, 2002 (i) no written notices or demands have been received from the
FCC, from any television station, or from any other Person or Governmental
Authority (x) challenging the right of the Systems to carry any television
broadcast station or deliver the same, or (y) claiming that any System has
failed to carry a television broadcast station required to be carried pursuant
to the Communications Laws, has failed to carry a television broadcast station
on a channel designated by such station consistent with the requirements of the
Communications Laws; (ii) all necessary FAA, FCC and other governmental
approvals have been obtained with respect to the height and location of towers
used in connection with the operation of the Systems, and such towers are being
operated in material compliance with the applicable FCC, FAA and other
governmental rules, except where the failure to obtain such approvals or
maintain such compliance could not, individually or in the aggregate, reasonably
be expected to (x) have a Material Adverse Effect or (y) otherwise have a
material adverse effect upon Borrower's ability to operate each System in
substantially the same manner as operated immediately prior to the Closing Date;
and (iii) Borrower has not received, nor is Borrower bound by, any notice from
any Governmental Authority with respect to an intention to enforce customer
service standards pursuant to the Cable Act.
(g) Borrower has duly secured all necessary Access Rights
in respect of its business as currently conducted, in each case other than where
the failure to do any of the foregoing could not reasonably be expected to have
a material effect upon Borrower's ability to operate each System in
substantially the same manner as operated immediately prior to the Closing Date.
Borrower is party to each of the Access Rights Agreement described on Schedule
3.23(g); all such Access Rights Agreements are valid and in full force and
effect; and to the knowledge of each Credit Party, no event has occurred or is
occurring that could reasonably be expected to (i) result in the termination,
modification in any material respect, any such Access Rights Agreement, or (ii)
materially and adversely affect any rights of Borrower under any such Access
Rights Agreement. Except for to the Access Rights Agreements identified on
Schedule 3.23(g), Borrower is not the beneficiary of any other Access Rights
which are material to Borrower's ability to operate each System in substantially
the same manner as operated immediately prior to the Closing Date.
4. FINANCIAL STATEMENTS AND INFORMATION
4.1 Reports and Notices. Borrower hereby agrees that from and
after the Closing Date and until the Termination Date, it shall deliver to Agent
or to Agent and Lenders, as indicated, the following:
(a) Quarterly Financials. To Agent and Lenders, within
forty-five (45) days after the end of each of the first three Fiscal Quarters of
each Fiscal Year, financial information
23
regarding Borrower, certified by an executive officer of NCC, including (i)
unaudited balance sheets as of the close of such Fiscal Quarter and the related
statements of income and cash flow for that portion of the Fiscal Year ending as
of the close of such Fiscal Quarter and (ii) unaudited statements of income and
cash flows for such Fiscal Quarter, in each case setting forth in comparative
form the figures for the corresponding period in the prior year and the figures
contained in the Projections for such Fiscal Year, all prepared in accordance
with GAAP (subject to normal year-end adjustments and the absence of footnotes).
Such financial information shall be accompanied by (A) a statement in reasonable
detail (each, a "Compliance Certificate") showing the calculations used in
determining compliance with each of the Financial Covenants that is tested on a
quarterly basis and (B) the certification of an executive officer of NCC that
(x) such financial information have been prepared in accordance with GAAP
(subject to normal year-end adjustments and the absence of footnotes) and fairly
present in all material respects, the financial position, results of operations
and statements of cash flows of Borrower, as at the end of such Fiscal Quarter
and for that portion of the Fiscal Year then ended, (y) any other information
presented is true, correct and complete in all material respects and that each
representation, warranty and covenant of each Credit Party is true and correct
as of such date (except to the extent that any representation or warranty
expressly relates to an earlier date) and there was no Default or Event of
Default in existence as of such time or, if a Default or Event of Default has
occurred and is continuing, describing the nature thereof and all efforts
undertaken to cure such Default or Event of Default. In addition, Borrower shall
deliver to Agent and Lenders, within forty-five (45) days after the end of each
Fiscal Quarter, a management discussion and analysis that includes a comparison
to budget for that Fiscal Quarter and a comparison of performance for that
Fiscal Quarter to the corresponding period in the prior year.
(b) Operating Plan. To Agent and Lenders, as soon as
available, but not later than thirty (30) days after the end of each Fiscal
Year, an annual operating plan for Borrower, approved by the managing general
partner of Borrower, for the following Fiscal Year, which (i) includes a
statement of all of the material assumptions on which such plan is based, (ii)
includes an annual budget (by month) for the following year and (iii) integrates
sales, gross profits, operating expenses, operating profit, cash flow
projections, all prepared on the same basis and in similar detail as that on
which operating results are reported (and in the case of cash flow projections,
representing management's good faith estimates of future financial performance
based on historical performance), and including plans for personnel, Capital
Expenditures and facilities.
(c) Annual Audited Financials. To Agent and Lenders,
within ninety (90) days after the end of each Fiscal Year, audited Financial
Statements for Borrower, consisting of balance sheets and statements of income
and retained earnings and cash flows, setting forth in comparative form in each
case the figures for the previous Fiscal Year, which Financial Statements shall
be prepared in accordance with GAAP and certified without qualification, by KPMG
or another an independent certified public accounting firm of national standing
or otherwise acceptable to Agent. Such Financial Statements shall be accompanied
by (i) a statement prepared by NCC in reasonable detail showing the calculations
used in determining compliance with each of the Financial Covenants, (ii) a
report from such accounting firm to the effect that, in connection with their
audit examination, nothing has come to their attention to cause them to believe
that a Default or Event of Default has occurred with respect to the Financial
Covenants (or specifying those Defaults and Events of Default that they became
aware
24
of), it being understood that such audit examination extended only to accounting
matters and that no special investigation was made with respect to the existence
of Defaults or Events of Default, (iii) the annual letters to such accountants
in connection with their audit examination detailing contingent liabilities and
material litigation matters, (iv) a Compliance Certificate relating to the last
Fiscal Quarter of such Fiscal Year, and (v) the certification of the principal
financial and accounting officer of NCC that all such Financial Statements
present fairly in accordance with GAAP the financial position, results of
operations and statements of cash flows of Borrower, as at the end of such
Fiscal Year and for the period then ended, and that there was no Default or
Event of Default in existence as of such time or, if a Default or Event of
Default has occurred and is continuing, describing the nature thereof and all
efforts undertaken to cure such Default or Event of Default.
(d) Management Letters. To Agent and Lenders, within five
(5) Business Days after receipt thereof by any Credit Party, copies of all
management letters, exception reports or similar letters or reports received by
such Credit Party from its independent certified public accountants relating to
Borrower.
(e) Default Notices. To Agent and Lenders, as soon as
practicable, and in any event within five (5) Business Days after an executive
officer of Borrower has actual knowledge of the existence of any Default, Event
of Default or other event that has had a Material Adverse Effect, telephonic or
telecopied notice specifying the nature of such Default or Event of Default or
other event, including the anticipated effect thereof, which notice, if given
telephonically, shall be promptly confirmed in writing on the next Business Day.
(f) SEC Filings and Press Releases. To Agent and Lenders,
promptly upon their becoming available, copies of: (i) all Financial Statements,
reports, notices and proxy statements made publicly available by any Credit
Party to its security holders relating to Borrower; (ii) all regular and
periodic reports and all registration statements and prospectuses, if any, filed
by any Credit Party with any securities exchange or with the Securities and
Exchange Commission; and (iii) all press releases and other statements made
available by any Credit Party to the public concerning material changes or
developments in the business of any such Person (other than press releases in
the nature of corporate promotion or advertising).
(g) Supplemental Schedules. To Agent, supplemental
disclosures, if any, required by Section 5.6.
(h) Litigation. To Agent in writing, promptly upon
learning thereof, notice of any Litigation commenced or threatened against any
Credit Party, any System or any other Collateral that seeks (i) damages in
excess of $100,000 or (ii) injunctive relief against any Credit Party which
would materially effect the operations of such Credit Party's business.
(i) Insurance Notices. To Agent, disclosure of losses or
casualties required by Section 5.4 that could reasonably be expected to exceed
$100,000.
(j) Lease Default Notices. To Agent, within two (2)
Business Days after receipt thereof, copies of (i) any and all default notices
received under or with respect to any Leased location or public warehouse where
Collateral is located (other than notices related to
25
rent where payment thereof is possible and has in fact been made within a stated
grace period in the case of any head-end location and, in the case of any other
location, within 10 Business Days thereafter), and (ii) such other notices or
documents as Agent may reasonably request.
(k) Other Documents. To Agent and Lenders, such other
financial and other information respecting any Credit Party's business or
financial condition as Agent or any Lender shall, from time to time, reasonably
request.
(l) FCC and Other Governmental Documents. To Agent, at
the time of delivery of each of the annual Financial Statements delivered
pursuant to Section 4.1(c), (i) a listing of government contracts of Borrower
subject to the Federal Assignment of Claims Act of 1940; (ii) a list of any
applications for the registration of any Patent, Trademark or Copyright filed by
any Credit Party with the United States Patent and Trademark Office, the United
States Copyright Office or any similar office or agency in the prior Fiscal
Quarter; and (iii) a report identifying any action or omission by Borrower with
respect to the matters set forth in Section 3.23 (except where any such action
or inaction could not, individually or in the aggregate, reasonably be expected
to (i) have a Material Adverse Effect or (ii) otherwise have a material adverse
effect upon Borrower's ability to operate each System in substantially the same
manner as operated immediately prior to the Closing Date), including copies of
any such notice accompanied by a report describing the measures undertaken by
the Credit Parties to remedy any such action or omission.
4.2 Communication with Accountants. Each Credit Party executing
this Agreement authorizes (a) Agent and (b) so long as an Event of Default has
occurred and is continuing, each Lender, to communicate directly with its
independent certified public accountants, including KPMG, and authorizes and, at
Agent's request, shall instruct those accountants and advisors to communicate to
Agent and each Lender information relating to any Credit Party with respect to
the business, results of operations and financial condition of any Credit Party.
5. AFFIRMATIVE COVENANTS
Borrower agrees that (and each other Credit Party executing this
Agreement agrees to cause Borrower to comply with Borrower's agreement to) from
and after the date hereof and until the Termination Date:
5.1 Maintenance of Existence and Conduct of Business. Borrower
shall: do or cause to be done all things necessary to preserve and keep in full
force and effect Borrower's corporate existence and its material rights and
franchises (including all FCC Licenses, Franchises; continue to conduct its
business substantially as now conducted or as otherwise permitted hereunder; at
all times maintain, preserve and protect all of its assets and properties used
or useful in the conduct of its business, and keep the same in good repair,
working order and condition in all material respects (taking into consideration
ordinary wear and tear and obsolescence) and from time to time make, or cause to
be made, all necessary or appropriate repairs, replacements and improvements
thereto consistent with industry practices; maintain in full force and effect
all Access Rights necessary to continue to conduct its business substantially as
now conducted or as otherwise permitted hereunder, and transact business only in
such corporate and trade names as are set forth in Schedule 5.1. In addition to
the foregoing, in the case of NCC, NCC in its
26
capacity as managing general partner of Borrower shall not take any action to
dissolve, whether pursuant to the terms of the Partnership Agreement or
otherwise, and shall not withdraw, retire or otherwise cease to serve as the
sole managing general partner of Borrower or to otherwise permit any other
Person to exercise the management rights exercised by NCC as the managing
general partner on the Closing Date.
5.2 Payment of Charges.
(a) Subject to Section 5.2(b), Borrower shall pay and
discharge or cause to be paid and discharged promptly all Charges payable by it,
including (i) Charges imposed upon it, its income and profits, or any of its
property (real, personal or mixed) and all Charges with respect to tax, social
security and unemployment withholding with respect to its employees, (ii) lawful
claims for labor, materials, supplies and services or otherwise, and (iii) all
fees, royalties, charges or similar items relating to the Franchises, in each
case, before any thereof shall become past due, except in the case of clauses
(ii) and (iii) where the failure to pay or discharge such Charges would not
result in aggregate liabilities in excess of $100,000 or result in a default
under any Franchise which could reasonably be expected to result in termination
of, a material impairment of rights under, or the imposition of material costs
or penalties in connection with, any such Franchise.
(b) Borrower may in good faith contest, by appropriate
proceedings, the validity or amount of any Charges, Taxes or claims described in
Section 5.2(a); provided, that (i) adequate reserves with respect to such
contest are maintained on the books of such Credit Party, to the extent required
in accordance with GAAP; (ii) no Lien (other than Permitted Encumbrances) shall
be imposed to secure payment of such Charges (other than payments to
warehousemen and/or bailees) that is superior to any of the Liens securing
payment of the Obligations and such contest is maintained and prosecuted
continuously and with diligence and operates to suspend collection or
enforcement of such Charges, (iii) none of the Collateral (including, without
limitation, any FCC License or Franchise) becomes subject to forfeiture or loss
as a result of such contest, and (iv) such Credit Party shall promptly pay or
discharge such contested Charges, Taxes or claims and all additional charges,
interest, penalties and expenses, if any, and shall, if so requested by Agent,
deliver to Agent evidence reasonably acceptable to Agent of such compliance,
payment or discharge, if such contest is terminated or discontinued adversely to
such Credit Party or the conditions set forth in this Section 5.2(b) are no
longer met.
5.3 Books and Records. Borrower shall keep adequate books and
records with respect to its business activities in which proper entries,
reflecting all financial transactions, are made in accordance with GAAP and on a
basis consistent with the Financial Statements attached as Schedule 3.2.
5.4 Insurance; Damage to or Destruction of Collateral.
(a) Borrower shall maintain at its own expense, with
insurers acceptable to Agent and Lenders and shall comply with all terms and
conditions of the following insurance coverages: (i) "All Risk Property and
Boiler and Machinery Insurance;" specifically, Borrower shall maintain `all
risk' or `special form' property insurance (applicable to all assets of Borrower
other than overhead and underground lines) against direct physical loss or
damage on an all risks
27
basis, including flood and earthquake (which may be subject to a sublimit
acceptable to the Agent and Lenders) and comprehensive boiler and machinery
coverage, subject to a maximum deductible of $5,000 ($50,000 in the case of
damage from flood or earthquake) and the property shall be insured for the full
replacement cost and such policy shall contain an agreed amount endorsement
waiving any coinsurance penalty; (ii) "Business Income;" specifically, as an
extension of the coverage required under subparagraph (i) above, Borrower shall
maintain business income insurance including extra expense in an agreed amount
equal to at least $5,000,000, subject to a sublimit of $1,000,000 per location,
and subject to a maximum deductible of five (5) days of interruption at any
location, which shall contain an agreed amount endorsement waiving any
coinsurance penalty; (iii) "Commercial General Liability Insurance;"
specifically, Borrower shall maintain commercial general liability insurance
written on an occurrence basis with a limit of not less than $1,000,000 each
occurrence and $2,000,000 in the aggregate per location and such coverage shall
include, but not be limited to, premises/operations, blanket contractual
liability, independent contractors, broad form products and completed
operations, personal injury, fire legal liability and employee benefits
liability and such insurance shall not exclude coverage for punitive or
exemplary damages where insurable by law; (iv) "Workers' Compensation/Employers
Liability;" specifically, Borrower shall maintain workers' compensation
insurance in accordance with statutory provisions covering accidental injury,
illness or death of an employee of Borrower while at work or in the scope of his
or her employment with Borrower and employer's liability insurance in an amount
not less than $500,000 and such coverage shall not contain any occupational
disease exclusions; (v) "Automobile Liability;" specifically, Borrower shall
maintain automobile liability insurance covering owned, non-owned, leased, hired
or borrowed vehicles against bodily injury or property damage and such coverage
shall have a limit of not less than $1,000,000; (vi) "Excess/Umbrella
Liability;" specifically, Borrower shall maintain excess or umbrella liability
insurance in an amount not less than $4,000,000, written on an occurrence basis
providing coverage limits in excess of the insurance limits required under
subparagraphs (iii), and (iv) (employers liability only), and (v) above and such
insurance shall follow form the primary insurances and drop down in case of
exhaustion of underlying limits and/or aggregates and such insurance shall not
exclude coverage for punitive or exemplary damages where insurable by law.
(b) In addition to the foregoing, Borrower shall maintain
at its own expense, with insurers acceptable to the Agent and Lenders such other
insurance to such extent and against such risks, as are reasonably satisfactory
to the Agent.
(c) Borrower shall cause each insurance policy (other
than any policy referred to in clause (a)(iv) above related to workers'
compensation) pertaining to the insurable properties to (i) name the Agent and
each Lender as an "additional insured" if such policy is a liability policy;
(ii) name the Agent, for itself and on behalf of the Lenders, as "loss payee" if
such policy is a property and/or boiler & machinery policy; (iii) provide that,
the Agent and each Lender shall be notified in writing of any proposed
cancellation or material change in risk, of such policy, initiated by Borrower's
insurer at least thirty (30) days in advance prior to any proposed cancellation
or material change in risk; (iv) contain a waiver of subrogation in favor of
Agent, for itself and on behalf of the Lenders; (v) contain a breach of warranty
in favor of the Loss Payee; (vi) contain a cross liability clause; (vii) provide
that the insurance shall be primary and without right of contribution from any
other insurance which may be available to Agent and Lenders; (viii) provide that
Agent and Lenders have no responsibility for premiums.
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(d) On the Closing Date and at least thirty (30) days
prior to expiry of the policies, Borrower shall deliver or cause to be delivered
to Agent a certificate of insurance evidencing that (i) all the coverages listed
in this Section 5.4 have been renewed and continue to be in full force and
effect for such period as shall be then stipulated; (ii) specifying the insurers
with whom the insurances are carried; and (iii) containing such other
certifications and undertakings as are customarily provided to Lenders, as
reasonably requested by Agent.
(e) In the event that Borrower shall default in the
performance of its obligations under this Section 5.4, Agent may, at its option,
effect such insurance coverage with an insurer acceptable to the Agent and add
the premium(s) paid therefor to the principal amount of the Obligations incurred
pursuant hereto, and the amount of such premium shall be payable by Borrower on
demand with interest thereon at the highest rate payable hereunder. In the event
of a property or casualty loss, and so long as no Event of Default exists at
such time, Borrower shall be paid directly by the insurer the proceeds of any
insurance for such loss not exceeding $250,000 per occurrence, provided that
Borrower shall use such proceeds for the restoration or replacement of the
property or asset which was the subject of such casualty loss; provided,
further, that if such proceeds are not used for such restoration or replacement
prior to the earlier to occur of (x) the ninetieth (90th) day following the
receipt thereof, and (y) the date on which a Default or Event of Default occurs,
such proceeds shall be promptly prepaid in accordance with Section 1.2(c). In
all other instances, the insurance proceeds involving property or casualty
losses shall be paid to Agent, and Agent shall, for so long as no Default or
Event of Default then exists, promptly deliver to Borrower the proceeds of any
insurance thereon; provided that (i) Borrower shall use such proceeds for the
restoration or replacement of the property or asset which was the subject of
such loss, (ii) Borrower shall have demonstrated to the reasonable satisfaction
of Agent that such property or asset will be restored to substantially its
previous condition or will be replaced by comparable property or assets, and
(iii) if Agent and the Lenders had a security interest in and Lien upon the
property or asset which was the subject of such loss, Agent shall have received
if requested by it, satisfactory evidence as to the priority of Agent's and
Lenders' security interest in and Lien upon such restored or replaced property
or asset; provided, all such amounts (including all interest and other earnings
on such cash collateral account) shall be held in an interest bearing cash
collateral account controlled by Agent, and provided further, that until
disbursed in accordance with this Section, that if such proceeds are not used
for such restoration or replacement prior to the earlier to occur of (x) the
ninetieth (90th) day following the receipt thereof, and (y) the date on which a
Default or Event of Default occurs, such proceeds shall be promptly prepaid in
accordance with Section 1.2(c). Notwithstanding the foregoing, in lieu of
delivering such proceeds to Borrower, Agent shall have the right to retain such
proceeds if in excess of $250,000 for the purpose of making periodic
disbursement thereof to any contractors, subcontractors and materialmen to whom
payment is owed in connection with such restoration.
5.5 Compliance with Laws. Borrower shall comply with all federal,
state, local and foreign laws and regulations applicable to it, including ERISA,
labor laws, and Environmental Laws and Environmental Permits, except to the
extent that the failure to comply, individually or in the aggregate, could not
reasonably be expected to have a Material Adverse Effect.
5.6 Supplemental Disclosure. On each date on which Borrower
delivers Financial Statements required to be delivered pursuant to Sections
4.1(a) or (b), and at such other times as
29
may be reasonably requested by Agent or at Borrower' election, Borrower shall
supplement each Schedule hereto, or any representation herein or in any other
Loan Document, with respect to any matter hereafter arising that, if existing or
occurring at the date of this Agreement, would have been required to be set
forth or described in such Schedule or as an exception to such representation or
that is necessary to correct any information in such Schedule or representation
which has been rendered inaccurate thereby (and, in the case of any supplements
to any Schedule, such Schedule shall be appropriately marked to show the changes
made therein); provided, that (a) no such supplement to any such Schedule or
representation shall amend, supplement or otherwise modify any Schedule or
representation, or be or be deemed a waiver of any Default or Event of Default
resulting from the matters disclosed therein, except as consented to by Agent
and Requisite Lenders in writing, and (b) no supplement shall be required or
permitted as to representations and warranties that relate solely to the Closing
Date.
5.7 Intellectual Property. Borrower will conduct its business and
affairs without infringement of or interference with any Intellectual Property
of any other Person in any material respect and shall comply in all material
respects with the terms of its Licenses, except where the failure to so comply
could not, individually or in the aggregate, reasonably be expected to (i) have
a Material Adverse Effect or (ii) otherwise have a material adverse effect upon
Borrower's ability to operate each System in substantially the same manner as
operated immediately prior to the Closing Date.
5.8 Environmental Matters. Borrower shall and shall cause each
Person within its control to: (a) conduct its operations and keep and maintain
its Real Estate in compliance with all Environmental Laws and Environmental
Permits other than noncompliance that could not reasonably be expected to have a
Material Adverse Effect; (b) implement any and all investigation, remediation,
removal and response actions that are reasonably appropriate or necessary to
maintain the value and marketability of the Real Estate or to otherwise comply
with Environmental Laws and Environmental Permits pertaining to the presence,
generation, treatment, storage, use, disposal, transportation or Release of any
Hazardous Material on, at, in, under, above, to, from or about any of its Real
Estate in all material respects; (c) notify Agent promptly after such Credit
Party becomes aware of any violation of Environmental Laws or Environmental
Permits or any Release on, at, in, under, above, to, from or about any Real
Estate that is reasonably likely to result in Environmental Liabilities in
excess of $100,000; and (d) promptly forward to Agent a copy of any order,
notice, request for information or any communication or report received by such
Credit Party in connection with any such violation or Release or any other
matter relating to any Environmental Laws or Environmental Permits that could
reasonably be expected to result in Environmental Liabilities in excess of
$100,000 in each case whether or not the Environmental Protection Agency or any
Governmental Authority has taken or threatened any action in connection with any
such violation, Release or other matter. If Agent at any time has a reasonable
basis to believe that there may be a violation of any Environmental Laws or
Environmental Permits by any Borrower or any Environmental Liability arising
thereunder, or a Release of Hazardous Materials on, at, in, under, above, to,
from or about any of its Real Estate, that, in each case, could reasonably be
expected to have a Material Adverse Effect, then Borrower shall, upon Agent's
written request (i) cause the performance of such environmental audits including
subsurface sampling of soil and groundwater, and preparation of such
environmental reports, at Borrower's expense, as Agent may from time to time
reasonably request, which shall be conducted by reputable environmental
consulting firms
30
reasonably acceptable to Agent and shall be in form and substance reasonably
acceptable to Agent, and (ii) permit Agent or its representatives to have access
to all Real Estate for the purpose of conducting such environmental audits and
testing as Agent deems appropriate, including subsurface sampling of soil and
groundwater. Borrower shall reimburse Agent for the costs of such audits and
tests and the same will constitute a part of the Obligations secured hereunder.
5.9 Acquisitions of Interests in Real Estate; Bailee Letters.
(a) Borrower shall promptly (but in any event at least
seven (7) Business Days prior to consummation) notify the Agent in the event
that any Borrower elects to enter into (i) a binding purchase and sale agreement
or lease of any Real Estate (1) with a fair market value equal to or greater
than $25,000 in the case of a purchase or an annual rent in excess of $36,000 in
the case of a lease, or (2) upon which headend equipment will be located or
stored (without regard to the purchase price or lease cost thereof), or (ii) a
bailment arrangement with respect to any warehouse, processor or converter
facility or other location where Collateral (x) with an aggregate value of
$50,000 or more, or (y) which is (i) headend equipment or (ii) otherwise
necessary to the business of Borrower, is stored or located (each a "Bailment
Arrangement"), will deliver to Agent a copy of the related purchase agreement or
lease respecting such Real Estate or documents evidencing the Bailment
Arrangement.
(b) On or before the date Borrower (i) purchases any Real
Estate or enters into any Lease for Real Estate, which is the subject of Section
5.9(a), or (ii) enters into a Bailment Arrangement, Borrower shall if requested
by Agent, execute and deliver, or cause to be executed and delivered, to the
Agent, the following:
(i) with respect to any such Real Estate in
which a Borrower has a fee interest (the "Subject Property"), the Agent
shall, unless waived in writing in the sole discretion of Agent, have
received: (A) an executed Mortgage in recordable form, (B) a title
insurance policy in favor of the Agent showing that the Subject
Property is free of any encumbrances other than Permitted Encumbrances
and insuring the respective Mortgage as a first mortgage lien, subject
only to Permitted Encumbrances, (C) a Phase I showing that the Subject
Property is free of material environmental concerns as determined by
the Agent, (D) a survey showing the boundaries of the Subject Property
and that any facilities located thereon are within such boundaries
except for any minor encroachments or imperfections that do not impede
in any material respect a Credit Parties' intended use thereof, (E) a
flood search certificate showing that the Subject Property is not in a
flood zone (or Borrower shall provide evidence of adequate flood
insurance coverage, if applicable and available on commercially
reasonable terms), and (F) tenant consents to the extent deemed
necessary by Agent;
(ii) with respect to any such Real Estate in
which a Borrower has a leasehold interest (other than a leasehold
interest in property which is solely used as office space) (the
"Subject Leasehold Property"), the Agent shall, unless waived in
writing in the sole discretion of Agent, have received: (A) an executed
Mortgage in recordable form, (B) a title commitment or policy (dated as
of a date recent to the date of acquisition) showing that the Subject
Leasehold Property is free of any encumbrances
31
other than Permitted Encumbrances, (C) a copy of any and all Leases,
licenses, easements, assignments of Lease and any other instruments
which establish Borrower's chain of title, interests and rights in or
with respect to such Subject Leasehold Property, all as properly
recorded, or a recorded memorandum thereof (or, if not recorded, in
recordable form), which is satisfactory to evidence that the Borrower's
title, interests and rights in or to such Subject Leasehold Property
are of record, (D) with respect to any Leasehold Mortgage or other
security interest in favor of the Agent and the Lenders, consents and
waivers from landlords, tenants and mortgages and any other consents
and/or waivers which in the reasonable judgment of the Agent are
required by the terms of applicable Leases, mortgages, or tenant Leases
or as are otherwise required by applicable law, (E) a flood search
certificate showing that the Subject Leasehold Property is not in a
flood zone (or Borrower shall provide evidence of adequate flood
insurance coverage, if applicable and available on commercially
reasonable terms), (F) a Phase I report showing that the Subject
Leasehold Property is free of material environmental concerns as
determined by the Agent; and (vii) any other agreements or documents as
the Agent may reasonably request which can be obtained using
commercially reasonable efforts;
(iii) with respect to any Bailment Arrangement or
any leasehold interest in property which is solely used as office
space, the Agent shall have received an agreement or letter containing
a waiver or subordination of all Liens or claims that the bailee may
assert against the Collateral at the location which is the subject of
the Bailment Arrangement, and shall otherwise be reasonably
satisfactory in form and substance to Agent;
(iv) with respect to all Subject Property and
Subject Leasehold Property, Agent shall also have received such other
agreements, instruments or documents as the Agent determines are
reasonably necessary to (A) grant to the Agent, for itself and on
behalf of the Lenders, a valid and perfected first priority Lien in
such Subject Property or Subject Leasehold Property, as the case may
be, and the related facilities and other personal property interests
thereon, and (B) to protect such Liens and the rights and remedies of
the Agent and Lenders therein, including, without limitation, delivery
of legal opinions reasonably satisfactory to the Agent from counsel
qualified to practice in the jurisdictions in which the Subject
Property or Subject Leasehold Property is located;
(v) For all purposes of this and any other
provisions of this Agreement and the other Loan Documents, (x) any
references to a "fee interest" or "owned" Site or similar terms shall
also include, without limitation, easements and other property
interests not limited in duration which constitute an ownership
interest in less than all of the rights related to a particular site
but shall not include ordinary course easements, rights of access, use
ingress or egress incidental to and, not otherwise, individually or in
the aggregate, necessary or material to the operations of Borrower or
any System, in each case other than Access Rights (which shall be the
subject of Sections 3.23(g) and 5.1) and (y) any references to a
"leasehold interest" or "leased" Site or similar terms shall also
include, without limitation, sites for which a Credit Party has the
right to use or operate (whether as a result of a sublease, license or
otherwise) and other property interests
32
limited in duration and other ordinary rights or access, use, ingress
or egress incidental to and, not otherwise, individually or in the
aggregate, necessary or material to the operations of Borrower or any
System, in each case other than Access Rights (which shall be the
subject of Section 3.23(g) and 5.1).
5.10 Further Assurances. Each Credit Party executing this Agreement
agrees that it shall and cause Borrower to, at Borrower's expense and upon the
reasonable request of Agent, duly execute and deliver, or cause to be duly
executed and delivered, to Agent such further instruments and do and cause to be
done such further acts as may be necessary or proper in the reasonable opinion
of Agent to carry out more effectively the provisions and purposes of this
Agreement and each Loan Document.
5.11 Legal Requirements. Borrower shall cause (i) all Franchises in
which it has or shall have an interest to be issued and maintained solely in the
name of Borrower, and (ii) all contracts and other rights in which it has or
shall have an interest to be issued and maintained in the name of Borrower, NCC
or an Affiliate of NCC (other that programming and similar agreements furnishing
content for distribution over one or more Systems), and such contracts and other
rights shall be the subject of a valid collateral assignment in favor of Agent
for the benefit of Lenders, in form and substance reasonably acceptable to
Agent. Borrower shall materially comply with all laws, ordinances or
governmental rules, regulations and orders to which it is subject, and obtain or
maintain all Franchises (including, without limitation, FCC Licenses and
Franchises), permits, franchises or other governmental authorizations or
approvals necessary for the ownership, of its properties and the conduct of its
businesses, comply in all material respects with FCC and Franchise Authority
construction, operating and reporting requirements and comply in all material
respects with all applicable legal requirements in effect including, without
limitation, (i) the Copyright Act and applicable rules and regulations of the
U.S. pertaining to the U.S. Copyright Office; (ii) the Communications Laws
including provisions thereof pertaining to signal leakage; (iii) the must-carry
provisions and retransmission consent provisions of the Cable Act as they relate
to the Systems; and (iv) all other applicable legal requirements relating to the
construction, maintenance, ownership and operation of its assets and the
Systems, including the legal requirements pertaining to utility pole make ready
and to grounding and bonding of cable television systems. Borrower will maintain
or cause to be maintained its properties in good repair, working order and
condition (ordinary wear and tear excepted) and make or cause to be made all
appropriate and proper repairs, renewals, replacements, additions and
improvements thereto, and keep all systems and equipment which may now or in the
future be subject to compliance with any material standards or rules (including,
without limitation, the FCC, any Franchise Authority or other state or local
governments or instrumentalities) in compliance in all material respects with
such standards or rules. Borrower shall maintain, preserve and protect, and,
when necessary, renew, all Franchises and all services marks, copyrights,
trademarks, trade names and other rights held by it and all agreements to which
it is a party which are necessary or useful to conduct its businesses, except
where the failure to do any of the foregoing could not have a Material Adverse
Effect.
5.12 Filings and Consents. Borrower will file with the FCC, each
Franchise Authority and other regulatory or administrative bodies in a timely
fashion copies of the Loan Documents, to the extent required under applicable
law, and any and all other documents required to be filed by applicable law,
rules or regulations and shall take such other action as is necessary under
33
applicable law and the rules and regulations of the applicable Franchise
Authorities and the FCC to effect the purposes of the Loan Documents. Without
limiting the generality of the foregoing, Borrower shall obtain such consents as
may be required by any Franchise Authority or, to the extent permitted under
applicable law, the FCC to permit the grant of a security interest in the
Franchises in favor of the Agent and to otherwise effect the purposes of the
Loan Documents.
6. NEGATIVE COVENANTS
Borrower agrees that (and each other Credit Party executing this
Agreement agrees to cause Borrower to comply with Borrower's agreement to) from
and after the date hereof and until the Termination Date:
6.1 Mergers, Subsidiaries, Etc. Borrower shall not directly or
indirectly, by operation of law or otherwise (a) form or acquire any Subsidiary,
or (b) merge with, consolidate with, acquire all or substantially all of the
assets or Stock of, or otherwise combine with or acquire, any Person.
6.2 Investments; Loans and Advances. Except as otherwise expressly
permitted by this Section 6, Borrower shall not make or permit to exist any
investment in, or make, accrue or permit to exist loans or advances of money to,
any Person, through the direct or indirect lending of money, holding of
securities or otherwise, except that: (a) Borrower may hold investments
comprised of notes payable, or stock or other securities issued by Account
Debtors to Borrower pursuant to negotiated agreements with respect to settlement
of such Account Debtor's Accounts in the ordinary course of business, consistent
with past practices; and (b) so long as Agent has not delivered an Activation
Notice, Borrower may make investments, subject to Control Letters in favor of
Agent for the benefit of Lenders or otherwise subject to a perfected security
interest in favor of Agent for the benefit of Lenders, in amounts not to exceed
$1,000,000, in (i) marketable direct obligations issued or unconditionally
guaranteed by the United States of America or any agency thereof maturing within
one year from the date of acquisition thereof, (ii) commercial paper maturing no
more than one year from the date of creation thereof and currently having the
highest rating obtainable from either Standard & Poor's Ratings Group or Xxxxx'x
Investors Service, Inc., (iii) certificates of deposit maturing no more than one
year from the date of creation thereof issued by commercial banks incorporated
under the laws of the United States of America, each having combined capital,
surplus and undivided profits of not less than $300,000,000 and having a senior
unsecured rating of "A" or better by a nationally recognized rating agency (an
"A Rated Bank"), (iv) time deposits maturing no more than thirty (30) days from
the date of creation thereof with A Rated Bank, and (v) mutual funds that invest
solely in one or more of the investments described in clauses (i) through (iv)
above, so long as (x) any instruments and agreements evidencing the same are
pledged to Agent in accordance with the terms hereof and the Collateral
Documents, and (ii) any Deposit Accounts, securities accounts or brokerage or
similar accounts in which such investments are held are pledged to, and under
the control of, Agent in accordance with the terms hereof and of the Collateral
Documents.
6.3 Indebtedness.
(a) Borrower shall not create, incur, assume or permit to
exist any Indebtedness, except (without duplication) (i) Indebtedness secured by
purchase money security
34
interests and Capital Leases permitted in Section 6.7(a)(iii), (ii) the Term
Loan and the other Obligations, (iii) unfunded pension fund and other employee
benefit plan obligations and liabilities to the extent they are permitted to
remain unfunded under applicable law, and (iv) existing Indebtedness described
in Schedule 6.3 and refinancings thereof or amendments or modifications thereof
that do not have the effect of increasing the principal amount thereof or
changing the amortization thereof (other than to extend the same) and that are
otherwise on terms and conditions no less favorable to Borrower, Agent or any
Lender, as determined by Agent, than the terms of the Indebtedness being
refinanced, amended or modified.
(b) Borrower shall not, directly or indirectly,
voluntarily purchase, redeem, defease or prepay any principal of, premium, if
any, interest or other amount payable in respect of any Indebtedness prior to
its scheduled maturity, other than (i) the Obligations; (ii) Indebtedness
secured by a Permitted Encumbrance if the asset securing such Indebtedness has
been sold or otherwise disposed of in accordance with Sections 6.8(b) or (c);
and (iii) Indebtedness permitted by Section 6.3(a)(iv) upon any refinancing
thereof in accordance with Section 6.3(a)(iv).
6.4 Employee Loans and Affiliate Transactions.
(a) Except as otherwise expressly permitted in this
Section 6 with respect to Affiliates, Borrower shall not after the date hereof
enter into or be a party to any transaction with any Credit Party or any
Affiliate thereof except in the ordinary course of and pursuant to the
reasonable requirements of Borrower's business and upon fair and reasonable
terms that are no less favorable to Borrower than would be obtained in a
comparable arm's length transaction with a Person not an Affiliate of Borrower.
In addition, if any such transaction or series of related transactions after the
date hereof involves payments in excess of $50,000 in the aggregate, the terms
of these transactions must be disclosed in advance to Agent and Lenders. All
such transactions existing as of the date hereof are described in Schedule
6.4(a).
(b) Borrower shall not enter into any lending or
borrowing transaction with any employees of any Credit Party, except loans to
its employees on an arm's-length basis in the ordinary course of business
consistent with past practices for travel and entertainment expenses, relocation
costs, employee issued equipment and similar purposes up to a maximum of $15,000
to any employee and up to a maximum of $50,000 in the aggregate at any one time
outstanding.
6.5 Capital Structure and Business. Borrower shall not issue
additional Stock. Borrower shall not amend its Partnership Agreement. Borrower
shall not engage in any business other than the businesses currently engaged in
by Borrower on the Closing Date. NCC shall remain the sole Managing General
Partner of the Borrower and FNEJV shall remain the sole Administrative General
Partner of the Borrower.
6.6 Guaranteed Indebtedness. Borrower shall not create, incur,
assume or permit to exist any Guaranteed Indebtedness except by endorsement of
instruments or items of payment for deposit to the general account.
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6.7 Liens.
(a) Borrower shall not create, incur, assume or permit to
exist any Lien on or with respect to its Accounts or any of its other properties
or assets including, without limitation, any Franchise (whether now owned or
hereafter acquired) except for (i) Permitted Encumbrances; (ii) Liens in
existence on the date hereof and summarized on Schedule 6.7(a) securing
Indebtedness described on Schedule 6.3 and permitted refinancings, extensions
and renewals thereof, including extensions or renewals of any such Liens;
provided, that the principal amount so secured is not increased and the Lien
does not attach to any other property; and (iii) Liens created after the date
hereof by conditional sale or other title retention agreements (including
Capital Leases) or in connection with purchase money Indebtedness with respect
to Equipment and Fixtures acquired by any Credit Party in the ordinary course of
business, involving the incurrence of an aggregate amount of purchase money
Indebtedness and Capital Lease Obligations of not more than $250,000 outstanding
at any one time for all such Liens (provided, that such Liens attach only to the
assets subject to such purchase money debt and such Indebtedness is incurred
within twenty (20) days following such purchase and does not exceed 100% of the
purchase price of the subject assets). In addition, Borrower shall not become a
party to any agreement, note, indenture or instrument, or take any other action,
that would prohibit the creation of a Lien on any of its properties or other
assets in favor of Agent, on behalf of itself and Lenders, as additional
collateral for the Obligations, except operating leases, Capital Leases or
Licenses which prohibit Liens upon the assets that are subject thereto.
(b) No Credit Party shall create, incur, assume or permit
to exist any Lien on any Stock or other interest of such Credit Party in
Borrower, including without limitation, any Credit Party's right to direct,
manage or control Borrower.
6.8 Sale of Stock and Assets.
(a) Except for (i) System Dispositions and (ii) the
Permitted Matagorda Disposition, Borrower shall not sell, transfer, convey,
assign or otherwise dispose of any of its properties or other assets, including
its Stock or any of its Accounts (in each case, whether in a public or a private
offering or otherwise), other than (a) the sale of Inventory in the ordinary
course of business, and (b) the sale, transfer, conveyance or other disposition
by Borrower of Equipment and/or Fixtures and/or other property having a value
not exceeding $250,000 in any Fiscal Year. With respect to any disposition of
assets or other properties permitted pursuant to clause (b), Agent agrees on
reasonable prior written notice to release the Lien on such assets or other
properties in order to permit Borrower to effect such disposition and shall, at
Borrower's expense, file or cause to be filed appropriate UCC-3 partial
termination statements or other instruments evidencing such released Lien.
(b) Notwithstanding the foregoing, so as long as no
Default or Event of Default is continuing or would result therefrom, Borrower
may consummate a System Disposition (i) where the proceeds thereof are
sufficient to prepay the Term Loan and all other Obligations in full in cash
upon consummation of such System Disposition or (ii) for Fair Market Value,
payable in cash at Closing (subject to customary holdback provisions not to
exceed 10% of the purchase price); provided, however, that with respect to any
such System Disposition, all
36
proceeds of such System Disposition are applied to the prepayment of the
Obligations to the extent required by Section 1.2(b).
6.9 ERISA. Borrower shall not, or shall not cause or permit any
ERISA Affiliate to, cause or permit to occur (i) an event that could result in
the imposition of a Lien under Section 412 of the IRC or Section 302 or 4068 of
ERISA or (ii) an ERISA Event to the extent such ERISA Event would reasonably be
expected to result in taxes, penalties and other liability in excess of $250,000
in the aggregate.
6.10 Financial Covenants. Borrower shall not breach or fail to
comply with any of the following financial covenants, each of which shall be
calculated in accordance with GAAP consistently applied:
(a) Maximum Capital Expenditures. Borrower shall not make
Capital Expenditures during the period beginning on the Closing Date and ending
on December 31, 2003 (the "Stub Year") in excess of $850,000 or in any
subsequent Fiscal Year in excess of $2,500,000; provided, however, that the
lesser of (a) an amount equal to the difference obtained by taking the permitted
Capital Expenditures threshold for the immediately prior Fiscal Year (or Stub
Year, as the case may be), minus the actual amount of any Capital Expenditures
expended during such Fiscal Year (or Stub Year, as the case may be) or (b)
$2,500,000, may be carried forward to and increase the amount of permitted
Capital Expenditures in the immediately succeeding Fiscal Year.
(b) Minimum Total Debt Service Coverage Ratio. Borrower
shall have, at the end of each Fiscal Quarter set forth below, a Total Debt
Service Coverage Ratio of not less than the following:
1.00 to 1.00 for the Fiscal Quarters ending September 30,
2003, December 31, 2003, March 31, 2004,
June 30, 2004, September 30, 2004 and
December 31, 2004; and
1.10 to 1.00 for each Fiscal Quarter ending thereafter.
(c) Maximum Total Leverage Ratio. Borrower shall have, at
the end of each Fiscal Quarter set forth below, a Total Leverage Ratio as of the
last day of such Fiscal Quarter of not more than the following;
4.75 to 1.00 for the Fiscal Quarters ending September 30,
2003, December 31, 2003 and March 31, 2004;
4.25 to 1.00 for the Fiscal Quarters ending June 30,
2004, September 30, 2004, and December 31,
2004;
4.00 to 1.00 for the Fiscal Quarters ending March 31,
2005 and June 30, 2005; and
3.50 to 1.00 for each Fiscal Quarter ending thereafter.
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(d) Minimum Interest Coverage Ratio. Borrower shall have,
at the end of each Fiscal Quarter set forth below, a Minimum Interest Coverage
Ratio as of the last day of such Fiscal Quarter of not less than the following;
2.50 to 1.00 for the Fiscal Quarters ending September 30,
2003, December 31, 2003, March 31, 2004,
June 30, 2004, September 30, 2004 and
December 31, 2004;
3.00 to 1.00 for the Fiscal Quarters ending March 31,
2005, June 30, 2005, September 30, 2005 and
December 31, 2005; and
3.50 to 1.00 for each Fiscal Quarter ending thereafter.
6.11 Hazardous Materials. No Credit Party shall cause or permit a
Release of any Hazardous Material on, at, in, under, above, to, from or about
any of the Real Estate (other than with respect to an interest in Real Estate
consisting solely as the result of Access Rights) of where such Release would
(a) violate in any respect, or form the basis for any Environmental Liabilities
under, any Environmental Laws or Environmental Permits or (b) otherwise
adversely impact the value or marketability of any of the Real Estate or any of
the Collateral, other than such violations or Environmental Liabilities that
could not reasonably be expected to have a Material Adverse Effect.
6.12 Sale-Leasebacks. Borrower shall not engage in any
sale-leaseback, synthetic lease or similar transaction involving any of its
assets.
6.13 Restricted Payments. Borrower shall not make any Restricted
Payment, except (a) payments and transactions to the extent permitted under
Section 6.4(b), and (b) subject to the Subordination Agreement, payment of the
fees under the Management Agreement or Partnership Agreement under circumstances
where no Default or Event of Default then exists hereunder or would result from
the payment of such fees.
6.14 Change of Name or Location; Existence; Change of Fiscal Year.
Borrower shall not (a) change its name as it appears in official filings in the
state of its incorporation or other organization, (b) change its chief executive
office, principal place of business, corporate offices or warehouses or
locations at which Collateral is held or stored, or the location of its records
concerning the Collateral, (c) change the type of entity that it is, (d) change
its organization identification number, if any, issued by its state of
incorporation or other organization, or (e) change its state of incorporation or
organization, in each case without at least thirty (30) days prior written
notice to Agent and after Agent's written acknowledgment that any reasonable
action requested by Agent in connection therewith, including to continue the
perfection of any Liens in favor of Agent, on behalf of Lenders, in any
Collateral, has been completed or taken, and provided, that any such new
location shall be in the continental United States. Borrower shall not change
its Fiscal Year. In any event, Borrower shall not dissolve, wind up its business
or terminate the partnership or otherwise all the partnership to expire.
6.15 Real Estate Purchases. Borrower shall not purchase a fee
simple ownership interest Real Estate (other than Access Rights) with an
aggregate purchase price in excess of $50,000.
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6.16 Changes Relating to Material Contracts. No Credit Party shall
change or amend the terms of any of the Material Agreements.
7. TERM
7.1 Termination. The financing arrangements contemplated hereby
shall be in effect until the Maturity Date, and the Term Loan and all other
Obligations shall be automatically due and payable in full on such date.
7.2 Survival of Obligations Upon Termination of Financing
Arrangements. Except as otherwise expressly provided for in the Loan Documents,
no termination or cancellation (regardless of cause or procedure) of any
financing arrangement under this Agreement shall in any way affect or impair the
obligations, duties and liabilities of the Credit Parties or the rights of Agent
and Lenders relating to any unpaid portion of the Term Loan or any other
Obligations, due or not due, liquidated, contingent or unliquidated or any
transaction or event occurring prior to such termination, or any transaction or
event, the performance of which is required after the Maturity Date. Except as
otherwise expressly provided herein or in any other Loan Document, all
undertakings, agreements, covenants, warranties and representations of or
binding upon the Credit Parties, and all rights of Agent and each Lender, all as
contained in the Loan Documents, shall not terminate or expire, but rather shall
survive any such termination or cancellation and shall continue in full force
and effect until the Termination Date; provided, that the provisions of Section
11, the payment obligations under Sections 1.12 and 1.13, and the indemnities
contained in the Loan Documents shall survive the Termination Date.
8. EVENTS OF DEFAULT; RIGHTS AND REMEDIES
8.1 Events of Default. The occurrence of any one or more of the
following events (regardless of the reason therefor) shall constitute an "Event
of Default" hereunder:
(a) Borrower (i) fails to make any payment of principal
of, or interest on, or Fees owing in respect of, the Term Loan or any of the
other Obligations when due and payable, or (ii) fails to pay or reimburse Agent
or Lenders for any expense reimbursable hereunder or under any other Loan
Document within thirty (30) days following Agent's demand for such reimbursement
or payment of expenses.
(b) Any Credit Party fails or neglects to perform, keep
or observe any of the provisions of Sections 1.3, 1.5, 5.4, 6.1, 6.5, 6.10, or
6.13 or any of the provisions set forth in Annex A.
(c) Borrower fails or neglects to perform, keep or
observe any of the provisions of Section 4 or Section 6 (other than Sections
6.1, 6.5, 6.10, or 6.13) and the same shall remain unremedied for three (3)
Business Days or more.
(d) Any Credit Party fails or neglects to perform, keep
or observe any other provision of this Agreement or of any of the other Loan
Documents (other than any provision embodied in or covered by any other clause
of this Section 8.1) and the same shall remain unremedied for thirty (30) days
or more.
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(e) A default or breach occurs under any other agreement,
document or instrument to which Borrower is a party that is not cured within any
applicable grace period therefor, and such default or breach (i) involves the
failure to make any payment when due in respect of any Indebtedness or
Guaranteed Indebtedness (other than the Obligations) of Borrower in excess of
$75,000 in the aggregate (including (x) undrawn committed or available amounts
and (y) amounts owing to all creditors under any combined or syndicated credit
arrangements), or (ii) causes, or permits any holder of such Indebtedness or
Guaranteed Indebtedness or a trustee to cause, Indebtedness or Guaranteed
Indebtedness or a portion thereof in excess of $75,000 in the aggregate to
become due prior to its stated maturity or prior to its regularly scheduled
dates of payment, or cash collateral to be demanded in respect thereof, in each
case, regardless of whether such right is exercised, by such holder or trustee.
(f) Assets of any Credit Party with a fair market value
of $75,000 or more are attached, seized, levied upon or subjected to a writ or
distress warrant, or come within the possession of any receiver, trustee,
custodian or assignee for the benefit of creditors of any Credit Party and such
condition continues for thirty (30) days or more.
(g) A case or proceeding is commenced against any Credit
Party seeking a decree or order in respect of such Credit Party (i) under the
Bankruptcy Code or any other applicable federal, state or foreign bankruptcy or
other similar law, (ii) appointing a custodian, receiver, liquidator, assignee,
trustee or sequestrator (or similar official) for such Credit Party or for any
substantial part of any such Credit Party's assets, or (iii) ordering the
winding-up or liquidation of the affairs of such Credit Party, and such case or
proceeding shall remain undismissed or unstayed for sixty (60) days or more or a
decree or order granting the relief sought in such case or proceeding is granted
by a court of competent jurisdiction.
(h) Any Credit Party (i) files a petition seeking relief
under the Bankruptcy Code or any other applicable federal, state or foreign
bankruptcy or other similar law, (ii) consents to or fails to contest in a
timely and appropriate manner to the institution of proceedings thereunder or to
the filing of any such petition or to the appointment of or taking possession by
a custodian, receiver, liquidator, assignee, trustee or sequestrator (or similar
official) for such Credit Party or for any substantial part of any such Credit
Party's assets, (iii) makes an assignment for the benefit of creditors, or (iv)
takes any action in furtherance of any of the foregoing, or (v) admits in
writing its inability to, or is generally unable to, pay its debts as such debts
become due.
(i) A final judgment or judgments for the payment of
money in excess of $100,000 in the aggregate at any time are outstanding against
one or more of the Credit Parties (which judgments are not covered by insurance
policies as to which liability has been accepted by the insurance carrier), and
the same are not, within ten (10) days after the entry thereof, discharged or
execution thereof stayed or bonded pending appeal, or such judgments are not
discharged prior to the expiration of any such stay.
(j) Any material provision of any Loan Document for any
reason ceases to be valid, binding and enforceable in accordance with its terms
(or any Credit Party shall challenge the enforceability of any Loan Document or
shall assert in writing, or engage in any action or inaction based on any such
assertion, that any provision of any of the Loan Documents has
40
ceased to be or otherwise is not valid, binding and enforceable in accordance
with its terms), or any Lien created under any Loan Document ceases to be a
valid and perfected first priority Lien (except as otherwise permitted herein or
therein) in any Franchise or any other Collateral purported to be covered
thereby with a fair market value in excess of $50,000 in the aggregate.
(k) Any Change of Control or event resulting in a
Material Adverse Effect occurs.
(l) During any twelve-month period, any event or events
occurs (other than System Dispositions or the Permitted Matagorda Disposition),
whether or not insured or insurable, as a result of which revenue-producing
activities cease or are substantially curtailed at any facility of Borrower
generating more than 10% of Borrower's revenues for the Fiscal Year preceding
such event or events and such cessation or curtailment continues for more than
thirty (30) days.
(m) Any default or breach by Borrower occurs and is
continuing under any of the Material Contracts, which default or breach could
reasonably be expected to, if uncured within any express grace period therein
provided, result in the termination of such Material Contract or any of the
Material Contracts is terminated for any reason, other than (i) any such
termination by the Borrower in the ordinary course of its business for
reasonable business purposes, and (ii) any expiration of the Material Contract
(a) for which a renewal thereof is being negotiated, and (b) for which, during
the period of such negotiations, Borrower is not prevented from continuing
business under the terms of the Material Contract so expired.
(n) One or more Franchises relating to the Systems
covering in the aggregate more than 10% of Borrower's Subscribers shall be
terminated or revoked such that Borrower is no longer able to operate such
Franchises and retain the revenue received therefrom or Borrower or the grantors
of such Franchises shall fail to renew such Franchises at the stated expiration
thereof such that Borrower is no longer able to operate such Franchises and
retain the revenue received therefrom, and such termination, revocation, or
failure to renew shall not be cured through renewal or reinstatement within
thirty (30) days.
8.2 Remedies.
(a) If any Event of Default has occurred and is
continuing, Agent may (and at the written request of the Requisite Lenders
shall), without notice, suspend the ability of any portion of the Term Loan or
other Obligations to bear interest at the LIBOR Rate so long as such Default or
Event of Default is continuing (excluding LIBOR Loans outstanding on the date of
the Event of Default for the then current LIBOR Period). If any Event of Default
has occurred and is continuing, Agent may (and at the written request of
Requisite Lenders shall), without notice except as otherwise expressly provided
herein, increase the rate of interest applicable to the Loans and the Letter of
Credit Fees to the Default Rate.
(b) If any Event of Default has occurred and is
continuing, Agent may (and at the written request of the Requisite Lenders
shall), without notice (i) declare all or any portion of the Obligations,
including all or any portion of the Term Loan to be forthwith due and payable,
all without presentment, demand, protest or further notice of any kind, all of
which are expressly
41
waived by Borrower and each other Credit Party; or (ii) exercise any rights and
remedies provided to Agent under the Loan Documents or at law or equity,
including all remedies provided under the Code; provided, that upon the
occurrence of an Event of Default specified in Sections 8.1(g) or (h), all of
the Obligations, including the Term Loan, shall become immediately due and
payable without declaration, notice or demand by any Person.
8.3 Waivers by Credit Parties. Except as otherwise provided for in
this Agreement or by applicable law, each Credit Party waives: (a) presentment,
demand and protest and notice of presentment, dishonor, notice of intent to
accelerate, notice of acceleration, protest, default, nonpayment, maturity,
release, compromise, settlement, extension or renewal of any or all commercial
paper, accounts, contract rights, documents, instruments, chattel paper and
guaranties at any time held by Agent on which any Credit Party may in any way be
liable, and hereby ratifies and confirms whatever Agent may do in this regard,
(b) all rights to notice and a hearing prior to Agent's taking possession or
control of, or to Agent's replevy, attachment or levy upon, the Collateral or
any bond or security that might be required by any court prior to allowing Agent
to exercise any of its remedies, and (c) the benefit of all valuation,
appraisal, marshaling and exemption laws.
8.4 Consent to Receiver. Without limiting the generality of the
foregoing or limiting in any way the rights of Lenders and Agent under the
Collateral Documents or otherwise under applicable law, at any time after the
occurrence and during the continuance of an Event of Default and acceleration of
the Notes and Obligations, the Agent, at the direction of Requisite Lenders,
shall be entitled to apply for and have a receiver or receiver and manager
appointed under state or federal law by a court of competent jurisdiction in any
action taken by the Agent or Lenders to enforce their rights and remedies
hereunder and under the Collateral Documents in order to manage, protect,
preserve, sell and otherwise dispose of all or any portion of the Collateral and
continue the operation of the business of the Credit Parties, or any of them,
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 the payment of the other Obligations until a
sale or other disposition of such Collateral shall be finally made and
consummated. EACH CREDIT PARTY HEREBY IRREVOCABLY CONSENTS TO AND WAIVES ANY
RIGHT TO OBJECT TO OR OTHERWISE CONTEST THE APPOINTMENT OF A RECEIVER AFTER THE
OCCURRENCE OF AN EVENT OF DEFAULT AND ACCELERATION OF THE NOTES AND OBLIGATIONS,
AS PROVIDED ABOVE. EACH CREDIT PARTY GRANTS SUCH WAIVER AND CONSENT KNOWINGLY
AFTER HAVING DISCUSSED THE IMPLICATIONS THEREOF WITH COUNSEL, ACKNOWLEDGES THAT
THE UNCONTESTED RIGHT TO HAVE A RECEIVER APPOINTED FOR THE FOREGOING PURPOSES IS
CONSIDERED ESSENTIAL BY THE LENDERS IN CONNECTION WITH THE ENFORCEMENT OF THEIR
RIGHTS AND REMEDIES HEREUNDER AND UNDER THE COLLATERAL DOCUMENTS AND OTHER LOAN
DOCUMENTS, AND THE AVAILABILITY OF SUCH APPOINTMENT AS A REMEDY UNDER THE
FOREGOING CIRCUMSTANCES WAS A MATERIAL FACTOR IN INDUCING THE LENDERS TO MAKE
(AND COMMIT TO MAKE) THE LOANS TO BORROWER, AND AGREED TO ENTER INTO ANY AND ALL
STIPULATIONS IN ANY LEGAL ACTIONS, OR AGREEMENTS OR OTHER INSTRUMENTS IN
CONNECTION WITH THE FOREGOING AND TO COOPERATE FULLY WITH THE AGENT AND THE
LENDERS IN CONNECTION WITH THE
42
ASSUMPTION AND EXERCISE OF CONTROL BY THE RECEIVER OVER ALL OR ANY PORTION OF
THE COLLATERAL AND PROPERTY OF THE CREDIT PARTIES AND THEIR SUBSIDIARIES. NO
RIGHT CONFERRED UPON THE LENDERS OR THE AGENT HEREBY OR BY ANY COLLATERAL
DOCUMENT OR THE NOTES SHALL BE EXCLUSIVE OF ANY OTHER RIGHT REFERRED TO HEREIN
OR THEREIN OR NOW OR HEREAFTER AVAILABLE AT LAW, IN EQUITY, BY STATUTE OR
OTHERWISE.
9. ASSIGNMENT AND PARTICIPATIONS; APPOINTMENT OF AGENT
9.1 Assignment and Participations.
(a) Subject to the terms of this Section 9.1, any Lender
may make an assignment to a Qualified Assignee of, or sale of participations in,
at any time or times, the Loan Documents, Term Loan or any portion thereof or
interest therein, including any Lender's rights, title, interests, remedies,
powers or duties thereunder. Any assignment by a Lender shall: (i) require the
consent of Agent (which consent shall not be unreasonably withheld or delayed
with respect to a Lender or an Affiliate of a Lender) and the execution of an
assignment agreement (an "Assignment Agreement" substantially in the form
attached hereto as Exhibit 9.1(a) and otherwise in form and substance reasonably
satisfactory to, and acknowledged by, Agent; (ii) be conditioned on such
assignee Lender representing to the assigning Lender and Agent that it is
purchasing the applicable Term Loans to be assigned to it for its own account,
for investment purposes and not with a view to the distribution thereof; (iii)
include a payment to Agent of an assignment fee of $3,500 and (iv) so long as no
Event of Default has occurred and is continuing, (A) not require Borrower to pay
any additional fees or expenses (other than those generally payable to Lenders
hereunder) and (B) require the consent of Borrower, which shall not be
unreasonably withheld or delayed; provided, that no such consent shall be
required for an assignment by a Lender to any other Lender, any Affiliate of any
Lender or any investment fund that invests in commercial loans and that is
managed by a Lender or an Affiliate of a Lender. In the case of an assignment by
a Lender under this Section 9.1, the assignee shall have, to the extent of such
assignment, the same rights, benefits and obligations as all other Lenders
hereunder. Borrower hereby acknowledges and agrees that any assignment shall
give rise to a direct obligation of Borrower to the assignee and that the
assignee shall be considered to be a "Lender". In the event Agent or any Lender
assigns or otherwise transfers all or any part of the Obligations, Agent or any
such Lender shall so notify Borrower and Borrower shall, upon the request of
Agent or such Lender, execute new Term Notes in exchange for the Term Notes, if
any, being assigned. Notwithstanding the foregoing provisions of this Section
9.1(a), any Lender may at any time pledge the Obligations held by it and such
Lender's rights under this Agreement and the other Loan Documents to a Federal
Reserve Bank, and any lender that is an investment fund may assign the
Obligations held by it and such Lender's rights under this Agreement and the
other Loan Documents to another investment fund managed by the same investment
advisor; provided, that no such pledge to a Federal Reserve Bank shall release
such Lender from such Lender's obligations hereunder or under any other Loan
Document.
(b) Any participation by a Lender of all or any part of
its Term Loan shall be made with the understanding that all amounts payable by
Borrower hereunder shall be determined as if that Lender had not sold such
participation, and that the holder of any such participation shall not be
entitled to require such Lender to take or omit to take any action
43
hereunder except actions directly affecting (i) any reduction in the principal
amount of, or interest rate or Fees payable with respect to, the Term Loan in
which such holder participates, (ii) any extension of the scheduled amortization
of the principal amount of the Term Loan in which such holder participates or
the final maturity date thereof, and (iii) any release of all or substantially
all of the Collateral (other than in accordance with the terms of this
Agreement, the Collateral Documents or the other Loan Documents). Solely for
purposes of Sections 1.10, 1.12, 1.13 and 9.7, Borrower acknowledges and agrees
that a participation shall give rise to a direct obligation of Borrower to the
participant and the participant shall be considered to be a "Lender". Except as
set forth in the preceding sentence neither Borrower nor any other Credit Party
shall have any obligation or duty to any participant. Neither Agent nor any
Lender (other than the Lender selling a participation) shall have any duty to
any participant and may continue to deal solely with the Lender selling a
participation as if no such sale had occurred.
(c) Except as expressly provided in this Section 9.1, no
Lender shall, as between Borrower and that Lender, or Agent 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 participation in, all or
any part of the Term Loan, the Term Notes or other Obligations owed to such
Lender.
(d) Each Credit Party executing this Agreement shall
assist any Lender permitted to sell assignments or participations under this
Section 9.1 as reasonably required to enable the assigning or selling Lender to
effect any such assignment or participation, including the execution and
delivery of any and all agreements, notes and other documents and instruments as
shall be requested (provided, that no such agreement, note, document or
instrument imposes any obligations on any Credit Party in addition to those set
forth for the benefit of Lenders under this Agreement or the other Loan
Documents) and the preparation of informational materials for, and the
participation of management in meetings with, potential assignees or
participants. Each Credit Party executing this Agreement shall certify the
correctness, completeness and accuracy of all descriptions of the Credit Parties
and their respective affairs contained in any selling materials provided by it
and all other information provided by it and included in such materials, except
that any Projections delivered by Borrower shall only be certified by Borrower
as having been prepared by Borrower in compliance with the representations
contained in Section 3.2(c).
(e) A Lender may furnish any information concerning
Credit Parties in the possession of such Lender from time to time to assignees
and participants (including prospective assignees and participants); provided,
that such Lender shall obtain from assignees or participants confidentiality
covenants substantially equivalent to those contained in Section 11.8.
(f) So long as no Event of Default has occurred and is
continuing, no Lender shall assign or sell participations in any portion of its
Term Loan to a potential Lender or participant, if, as of the date of the
proposed assignment or sale, the assignee Lender or participant would be subject
to capital adequacy or similar requirements under Section 1.13(a), increased
costs under Section 1.13(b), an inability to fund LIBOR Loans under Section
1.13(c), or withholding taxes in accordance with Section 1.12(a).
9.2 Appointment of Agent. CIT is hereby appointed to act on behalf
of all Lenders as Agent under this Agreement and the other Loan Documents. The
provisions of this Section 9.2
44
are solely for the benefit of Agent and Lenders and no Credit Party nor any
other Person shall have any rights as a third party beneficiary of any of the
provisions hereof. In performing its functions and duties under this Agreement
and the other Loan Documents, Agent shall act solely as an agent of Lenders and
does not assume and shall not be deemed to have assumed any obligation toward or
relationship of agency or trust with or for any Credit Party or any other
Person. Agent shall have no duties or responsibilities except for those
expressly set forth in this Agreement and the other Loan Documents. The duties
of Agent shall be mechanical and administrative in nature and Agent shall not
have, or be deemed to have, by reason of this Agreement, any other Loan Document
or otherwise a fiduciary relationship in respect of any Lender. Except as
expressly set forth in this Agreement and the other Loan Documents, Agent shall
not have any duty to disclose, and shall not be liable for failure to disclose,
any information relating to any Credit Party or any of their respective
Subsidiaries or any Account Debtor that is communicated to or obtained by CIT or
any of its Affiliates in any capacity. Neither Agent nor any of its Affiliates
nor any of their respective officers, directors, employees, agents or
representatives shall be liable to any Lender for any action taken or omitted to
be taken by it hereunder or under any other Loan Document, or in connection
herewith or therewith, except for damages caused by its or their own gross
negligence or willful misconduct.
If Agent shall request instructions from Requisite Lenders or all
affected Lenders with respect to any act or action (including failure to act) in
connection with this Agreement or any other Loan Document, then Agent shall be
entitled to refrain from such act or taking such action unless and until Agent
shall have received instructions from Requisite Lenders or all affected Lenders,
as the case may be, and Agent shall not incur liability to any Person by reason
of so refraining. Agent shall be fully justified in failing or refusing to take
any action hereunder or under any other Loan Document (a) if such action would,
in the opinion of Agent, be contrary to law or the terms of this Agreement or
any other Loan Document, (b) if such action would, in the opinion of Agent,
expose Agent to Environmental Liabilities or (c) if Agent shall not first be
indemnified to its satisfaction against any and all liability and expense which
may be incurred by it by reason of taking or continuing to take any such action.
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
hereunder or under any other Loan Document in accordance with the instructions
of Requisite Lenders or all affected Lenders, as applicable.
9.3 Agent's Reliance, Etc. Neither Agent nor any of its Affiliates
nor any of their respective directors, officers, agents or employees shall be
liable for any action taken or omitted to be taken by it or them under or in
connection with this Agreement or the other Loan Documents, except for damages
caused by its or their own gross negligence or willful misconduct. Without
limiting the generality of the foregoing, Agent: (a) may treat the payee of any
Term Note as the holder thereof until Agent receives written notice of the
assignment or transfer thereof signed by such payee and in form reasonably
satisfactory to Agent; (b) may consult with legal counsel, independent public
accountants and other experts selected by it and shall not be liable for any
action taken or omitted to be taken by it in good faith in accordance with the
advice of such counsel, accountants or experts; (c) makes no warranty or
representation to any Lender and shall not be responsible to any Lender for any
statements, warranties or representations made in or in connection with this
Agreement or the other Loan Documents; (d) shall not have any duty to ascertain
or to inquire as to the performance or observance of any of the terms, covenants
or conditions of this Agreement or the other Loan Documents on the part of
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any Credit Party or to inspect the Collateral (including the books and records)
of any Credit Party; (e) shall not be responsible to any Lender for the due
execution, legality, validity, enforceability, genuineness, sufficiency or value
of this Agreement or the other Loan Documents or any other instrument or
document furnished pursuant hereto or thereto; and (f) shall incur no liability
under or in respect of this Agreement or the other Loan Documents by acting upon
any notice, consent, certificate or other instrument or writing (which may be by
telecopy, telegram, cable or telex) believed by it to be genuine and signed or
sent by the proper party or parties.
9.4 CIT and Affiliates. CIT shall have the same rights and powers
under this Agreement and the other Loan Documents as any other Lender and may
exercise the same as though it were not Agent; and the term "Lender" or
"Lenders" shall, unless otherwise expressly indicated, include CIT in its
individual capacity. CIT and its Affiliates may lend money to, invest in, and
generally engage in any kind of business with, any Credit Party, any of their
Affiliates and any Person who may do business with or own securities of any
Credit Party or any such Affiliate, all as if CIT were not Agent and without any
duty to account therefor to Lenders. CIT and its Affiliates may accept fees and
other consideration from any Credit Party for services in connection with this
Agreement or otherwise without having to account for the same to Lenders.
9.5 Indemnification. Lenders agree to indemnify Agent (to the
extent not reimbursed by Credit Parties and without limiting the obligations of
Credit Parties hereunder), ratably according to their respective Pro Rata
Shares, from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever that may be imposed on, incurred by, or asserted
against Agent in any way relating to or arising out of this Agreement or any
other Loan Document or any action taken or omitted to be taken by Agent in
connection therewith; provided, that no Lender shall be liable for any portion
of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from Agent's gross
negligence or willful misconduct. Without limiting the foregoing, each Lender
agrees to reimburse Agent promptly upon demand for its ratable share of any
out-of-pocket expenses (including reasonable counsel fees) incurred by Agent in
connection with the preparation, execution, delivery, administration,
modification, amendment or enforcement (whether through negotiations, legal
proceedings or otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement and each other Loan Document, to the
extent that Agent is not reimbursed for such expenses by Credit Parties.
9.6 Successor Agent. Agent may resign at any time by giving not
less than thirty (30) days' prior written notice thereof to Lenders and
Borrower. Upon any such resignation, the Requisite Lenders shall have the right
to appoint a successor Agent. If no successor Agent shall have been so appointed
by the Requisite Lenders and shall have accepted such appointment within thirty
(30) days after the resigning Agent's giving notice of resignation, then the
resigning Agent may, on behalf of Lenders, appoint a successor Agent, which
shall be a Lender, if a Lender is willing to accept such appointment, or
otherwise shall be a commercial bank or financial institution or a subsidiary of
a commercial bank or financial institution if such commercial bank or financial
institution is organized under the laws of the United States of America or of
any State thereof and has a combined capital and surplus of at least
$300,000,000. If no successor Agent has been appointed pursuant to the
foregoing, within thirty (30) days after
46
the date such notice of resignation was given by the resigning Agent, such
resignation shall become effective and the Requisite Lenders shall thereafter
perform all the duties of Agent hereunder until such time, if any, as the
Requisite Lenders appoint a successor Agent as provided above. Any successor
Agent appointed by Requisite Lenders hereunder shall be subject to the approval
of Borrower, such approval not to be unreasonably withheld or delayed; provided
that such approval shall not be required if a Default or an Event of Default has
occurred and is continuing. Upon the acceptance of any appointment as Agent
hereunder by a successor Agent, such successor Agent shall succeed to and become
vested with all the rights, powers, privileges and duties of the resigning
Agent. Upon the earlier of the acceptance of any appointment as Agent hereunder
by a successor Agent or the effective date of the resigning Agent's resignation,
the resigning Agent shall be discharged from its duties and obligations under
this Agreement and the other Loan Documents, except that any indemnity rights or
other rights in favor of such resigning Agent shall continue. After any
resigning Agent's resignation hereunder, the provisions of this Section 9 shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was acting as Agent under this Agreement and the other Loan Documents.
9.7 Setoff and Sharing of Payments. In addition to any rights now
or hereafter granted under applicable law and not by way of limitation of any
such rights, upon the occurrence and during the continuance of any Event of
Default and subject to Section 9.8(c), each Lender is hereby authorized at any
time or from time to time, without prior notice to any Credit Party or to any
Person other than Agent, any such notice being hereby expressly waived, to
offset and to appropriate and to apply any and all balances held by it at any of
its offices for the account of Borrower or any Guarantor (regardless of whether
such balances are then due to Borrower or any Guarantor) and any other
properties or assets at any time held or owing by that Lender or that holder to
or for the credit or for the account of Borrower or any Guarantor against and on
account of any of the Obligations that are not paid when due; provided that the
Lender exercising such offset rights shall give notice thereof to the affected
Credit Party promptly after exercising such rights. Any Lender exercising a
right of setoff or otherwise receiving any payment on account of the Obligations
in excess of its Pro Rata Share thereof shall purchase for cash (and the other
Lenders or holders shall sell) such participations in each such other Lender's
or holder's Pro Rata Share of the Obligations as would be necessary to cause
such Lender to share the amount so offset or otherwise received with each other
Lender or holder in accordance with their respective Pro Rata Shares, (other
than offset rights exercised by any Lender with respect to Sections 1.12, 1.13
or 1.15). Borrower and each Guarantor agrees, to the fullest extent permitted by
law, that upon the occurrence and during the continuation of an Event of Default
(a) any Lender may exercise its right to offset with respect to amounts in
excess of its Pro Rata Share of the Obligations and may sell participations in
such amounts so offset to other Lenders and holders and (b) any Lender so
purchasing a participation in the Loans made or other Obligations held by other
Lenders or holders may exercise all rights of offset, bankers' lien,
counterclaim or similar rights with respect to such participation as fully as if
such Lender or holder were a direct holder of the Loans and the other
Obligations in the amount of such participation. Notwithstanding the foregoing,
if all or any portion of the offset amount or payment otherwise received is
thereafter recovered from the Lender that has exercised the right of offset, the
purchase of participations by that Lender shall be rescinded and the purchase
price restored without interest.
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9.8 Payments; Information; Actions in Concert.
(a) Payments.
(i) Agent shall pay to each Lender such Lender's
Pro Rata Share of principal, interest and Fees paid by Borrower by wire
transfer to such Lender's account (as specified by such Lender in Annex
B or the applicable Assignment Agreement) not later than 2:00 p.m. (New
York time) on the Business Day.
(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 Borrower and such related
payment is not received by Agent, then Agent will be entitled to
recover such amount from such Lender on demand without setoff,
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
Borrower or paid to any other Person pursuant to any insolvency law or
otherwise, then, notwithstanding any other term or condition of this
Agreement or any other Loan Document, 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 setoff, counterclaim or deduction of any kind.
(c) Dissemination of Information. Agent shall use
reasonable efforts to provide Lenders with any notice of Default or Event of
Default received by Agent from, or delivered by Agent to, any Credit Party, with
notice of any Event of Default of which Agent has actually become aware and with
notice of any action taken by Agent following any Event of Default; provided,
that Agent shall not be liable to any Lender for any failure to do so, except to
the extent that such failure is attributable to Agent's gross negligence or
willful misconduct.
(d) Actions in Concert. Anything in this Agreement to the
contrary notwithstanding, each Lender hereby agrees with each other Lender that
no Lender shall take any action to protect or enforce its rights arising out of
this Agreement or the Term Notes (including exercising any rights of setoff)
without first obtaining the prior written consent of Agent and Requisite
Lenders, it being the intent of Lenders that any such action to protect or
enforce rights under this Agreement and the Term Notes shall be taken in concert
and at the direction or with the consent of Agent or Requisite Lenders.
10. SUCCESSORS AND ASSIGNS
10.1 Successors and Assigns. This Agreement and the other Loan
Documents shall be binding on and shall inure to the benefit of each Credit
Party, Agent, Lenders and their respective successors and assigns (including, in
the case of any Credit Party, a debtor-in-possession on behalf of such Credit
Party), except as otherwise provided herein or therein. No Credit Party may
assign, transfer, hypothecate or otherwise convey its rights, benefits,
obligations or duties
48
hereunder or under any of the other Loan Documents without the prior express
written consent of Agent and Lenders. Any such purported assignment, transfer,
hypothecation or other conveyance by any Credit Party without the prior express
written consent of Agent and Lenders shall be void. The terms and provisions of
this Agreement are for the purpose of defining the relative rights and
obligations of each Credit Party, Agent and Lenders with respect to the
transactions contemplated hereby and no Person shall be a third party
beneficiary of any of the terms and provisions of this Agreement or any of the
other Loan Documents.
11. MISCELLANEOUS
11.1 Complete Agreement; Modification of Agreement. The Loan
Documents constitute the complete agreement between the parties with respect to
the subject matter thereof and may not be modified, altered or amended except as
set forth in Section 11.2. Any letter of interest, commitment letter, fee letter
or confidentiality agreement, if any, between any Credit Party and Agent or any
Lender or any of their respective Affiliates, predating this Agreement and
relating to a financing of substantially similar form, purpose or effect shall
be superseded by this Agreement. Notwithstanding the foregoing, the CIT Fee
Letter shall continue to be binding obligations of the parties.
11.2 Amendments and Waivers.
(a) Except for actions expressly permitted to be taken by
Agent, no amendment, modification, termination or waiver of any provision of
this Agreement or any other Loan Document, or any consent to any departure by
any Credit Party therefrom, shall in any event be effective unless the same
shall be in writing and signed by Agent and Borrower, and by Requisite Lenders
or all affected Lenders, as applicable. Except as set forth in clauses (b) and
(c) below, all such amendments, modifications, terminations or waivers requiring
the consent of any Lenders shall require the written consent of Requisite
Lenders.
(b) No amendment, modification, termination or waiver
shall, unless in writing and signed by Agent and each Lender directly affected
thereby: (i) increase the principal amount of the Term Loan (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 the Term Loan of any affected
Lender; (iii) extend any scheduled payment date or final maturity date of the
principal amount of any Term Loan of any affected Lender; (iv) waive, forgive,
defer, extend or postpone any payment of interest or Fees as to any affected
Lender; (v) release any Guaranty or, except as otherwise permitted herein or in
the other Loan Documents, release, or permit any Credit Party to sell or
otherwise dispose of, any Collateral with a value exceeding $500,000 in the
aggregate (which action shall be deemed to directly affect all Lenders); (vi)
change the aggregate unpaid principal amount of the Term Loan that shall be
required for Lenders or any of them to take any action hereunder; and (vii)
amend or waive this Section 11.2 or the definitions of "Requisite Lenders"
insofar as such definitions affect the substance of this Section 11.2.
Furthermore, no amendment, modification, termination or waiver affecting the
rights or duties of Agent under this Agreement or any other Loan Document shall
be effective unless in writing and signed by Agent, in addition to Lenders
required hereinabove to take such action. Each amendment, modification,
termination or waiver shall be effective only in the specific instance and for
the specific purpose for which it was given. No amendment, modification,
termination or waiver shall be required for
49
Agent to take additional Collateral pursuant to any Loan Document. No amendment,
modification, termination or waiver of any provision of any Term Note shall be
effective without the written concurrence of the holder of that Note. No notice
to or demand on any Credit Party in any case shall entitle such Credit Party or
any other Credit Party to any other or further notice or demand in similar or
other circumstances. Any amendment, modification, termination, waiver or consent
effected in accordance with this Section 11.2 shall be binding upon each holder
of the Term Notes at the time outstanding and each future holder of the Term
Notes.
(c) If, in connection with any proposed amendment,
modification, waiver or termination (a "Proposed Change"):
(i) requiring the consent of all affected
Lenders, the consent of Requisite Lenders is obtained, but the consent
of other Lenders whose consent is required is not obtained (any such
Lender whose consent is not obtained as described in this clause (i)
and in clause (ii) below being referred to as "Non Consenting Lender");
(ii) requiring the consent of Requisite Lenders,
the consent of Lenders holding 51% or more of the aggregate Commitments
is obtained, but the consent of Requisite Lenders is not obtained;
then, so long as Agent is not a Non Consenting Lender, at Borrower's request
Agent, or a Person reasonably acceptable to Agent, shall have the right with
Agent's consent and in Agent's sole discretion (but shall have no obligation) to
purchase from such Non Consenting Lenders, and such Non Consenting Lenders agree
that they shall, upon Agent's request, sell and assign to Agent or such Person,
all of the Commitments of such Non Consenting Lenders for an amount equal to the
principal balance of all Loans held by the Non Consenting Lenders and all
accrued interest and Fees with respect thereto through the date of sale, such
purchase and sale to be consummated pursuant to an executed Assignment
Agreement.
(d) Upon payment in full in cash and performance of all
of the Obligations (other than indemnification Obligations) and a release of all
claims against Agent and Lenders, and so long as no suits, actions proceedings,
or claims are pending or threatened against any Indemnified Person asserting any
damages, losses or liabilities that are Indemnified Liabilities, Agent shall
deliver to Borrower termination statements, mortgage releases and other
documents necessary or appropriate to evidence the termination of the Liens
securing payment of the Obligations.
11.3 Fees and Expenses. Borrower shall reimburse (i) Agent for all
reasonable out of pocket fees, costs and expenses (including the reasonable fees
and expenses of all of its counsel, advisors, consultants and auditors) and (ii)
Agent (and, with respect to clauses (c) and (d) below, all Lenders) for all
reasonable fees, costs and expenses, including the reasonable fees, costs and
expenses of counsel or other advisors (including environmental and management
consultants and appraisers) incurred in connection with the negotiation,
preparation and filing and/or recordation of the Loan Documents and incurred in
connection with:
(a) any amendment, modification or waiver of, or consent
with respect to, or termination of, any of the Loan Documents or advice with
respect thereto;
50
(b) any litigation, contest, dispute, suit, proceeding or
action (whether instituted by Agent, any Lender, any Credit Party or any other
Person and whether as a party, witness or otherwise) in any way relating to the
Collateral, any of the Loan Documents or any other agreement to be executed or
delivered in connection herewith or therewith, including any litigation,
contest, dispute, suit, case, proceeding or action, and any appeal or review
thereof, in connection with a case commenced by or against any or all of the
Credit Parties or any other Person that may be obligated to Agent by virtue of
the Loan Documents, including any such litigation, contest, dispute, suit,
proceeding or action arising in connection with any work-out or restructuring of
the Loans during the pendency of one or more Events of Default; provided, that
in the case of reimbursement of counsel for Lenders other than Agent, such
reimbursement shall be limited to one counsel for all such Lenders; provided,
further, that no Person shall be entitled to reimbursement under this clause (c)
in respect of any litigation, contest, dispute, suit, proceeding or action to
the extent any of the foregoing results from such Person's gross negligence or
willful misconduct, as determined by a court of competent jurisdiction in a
final non-appealable decision;
(c) any attempt to enforce any remedies of Agent or any
Lender against any or all of the Credit Parties or any other Person that may be
obligated to Agent or any Lender by virtue of any of the Loan Documents,
including any such attempt to enforce any such remedies in the course of any
work-out or restructuring of the Loans during the continuation of one or more
Events of Default;
(d) any workout or restructuring of the Loans during the
continuation of one or more Events of Default; and
(e) from and after the occurrence of an Event of Default,
efforts to (i) monitor the Term Loan or any of the other Obligations, (ii)
evaluate, observe or assess any of the Credit Parties or their respective
affairs, and (iii) verify, evaluate, assess, appraise, collect, sell, liquidate
or otherwise dispose of any of the Collateral; provided, notwithstanding the
foregoing, all costs and expense in connection with the protection of Collateral
shall be reimbursed whether before or following the occurrence of any Event of
Default;
(f) including, as to each of clauses (a) through (e)
above, all reasonable attorneys' and other professional and service providers'
fees arising from such services and other advice, assistance or other
representation, including those in connection with any appellate proceedings,
and all reasonable expenses, costs, charges and other fees incurred by such
counsel and others in connection with or relating to any of the events or
actions described in this Section 11.3, all of which shall be payable, on
demand, by Borrower to Agent. Without limiting the generality of the foregoing,
such expenses, costs, charges and fees may include: the reasonable fees, costs
and expenses of accountants, environmental advisors, appraisers, investment
bankers, management and other consultants and paralegals; court costs and
expenses; photocopying and duplication expenses; court reporter fees, costs and
expenses; long distance telephone charges; air express charges; telegram or
telecopy charges; secretarial overtime charges; and expenses for travel, lodging
and food paid or incurred in connection with the performance of such legal or
other advisory services.
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11.4 No Waiver. Agent's or any Lender's failure, at any time or
times, to require strict performance by the Credit Parties of any provision of
this Agreement or any other Loan Document shall not waive, affect or diminish
any right of Agent or such Lender thereafter to demand strict compliance and
performance herewith or therewith. Any suspension or waiver of an Event of
Default shall not suspend, waive or affect any other Event of Default whether
the same is prior or subsequent thereto and whether the same or of a different
type. Subject to the provisions of Section 11.2, none of the undertakings,
agreements, warranties, covenants and representations of any Credit Party
contained in this Agreement or any of the other Loan Documents and no Default or
Event of Default by any Credit Party shall be deemed to have been suspended or
waived by Agent or any Lender, unless such waiver or suspension is by an
instrument in writing signed by an officer of or other authorized employee of
Agent and the applicable required Lenders and directed to Borrower specifying
such suspension or waiver.
11.5 Remedies. Agent's and Lenders' rights and remedies under this
Agreement shall be cumulative and nonexclusive of any other rights and remedies
that Agent or any Lender may have under any other agreement, including the other
Loan Documents, by operation of law or otherwise. Recourse to the Collateral
shall not be required.
11.6 Severability. Wherever possible, each provision of this
Agreement and the other Loan Documents shall be interpreted in such a manner as
to be effective and valid under applicable law, but if any provision of this
Agreement or any other Loan Document shall be prohibited by or invalid under
applicable law, such provision shall be ineffective only to the extent of such
prohibition or invalidity, without invalidating the remainder of such provision
or the remaining provisions of this Agreement or such other Loan Document.
11.7 Conflict of Terms. Except as otherwise provided in this
Agreement or any of the other Loan Documents by specific reference to the
applicable provisions of this Agreement, if any provision contained in this
Agreement conflicts with any provision in any of the other Loan Documents, the
provision contained in this Agreement shall govern and control.
11.8 Confidentiality. Agent and each Lender agree to use
commercially reasonable efforts (equivalent to the efforts Agent or such Lender
applies to maintain the confidentiality of its own confidential information, but
in no event less than reasonable care) to maintain as confidential all
confidential information provided to them by the Credit Parties and designated
in writing as confidential for a period of three (3) years following receipt
thereof, except that Agent and each Lender may disclose such information (a) to
Persons employed or engaged by Agent or such Lender or their respective
Affiliates; (b) to any assignee or participant or potential assignee or
participant that has agreed to comply with the covenant contained in this
Section 11.8 (and any assignee or participant or potential assignee or
participant may disclose such information to Persons employed or engaged by them
as described in clause (a) above and to their potential assignees and
participants); (c) as required or requested by any Governmental Authority or
reasonably believed by Agent or such Lender to be compelled by any court decree,
subpoena or legal or administrative order or process; (d) as, on the advice of
Agent's or such Lender's counsel, is required by law; (e) in connection with the
exercise of any right or remedy under the Loan Documents or in connection with
any Litigation to which Agent or such Lender is a party; or (f) that ceases to
be confidential through no fault of Agent or any Lender. Notwithstanding
anything to the contrary set forth herein or in any other Loan Document or any
other express or
52
implied agreement, arrangement or understanding, if any, the obligations of
confidentiality contained herein and therein, Agent, Lenders and each Credit
Party (and any of their respective employees, officers, directors,
representatives or other agents) may disclose to any and all Persons, without
limitation of any kind, the tax treatment and tax structure of the transactions
contemplated herein and all materials of any kind (including opinions or other
tax analyses) that are provided to either party relating to such tax treatment
and tax structure. This authorization of tax disclosure is retroactively
effective to the commencement of the first discussions between the parties
regarding the transactions contemplated herein. The preceding sentence is
intended to cause any structure or transaction not to be treated as having been
offered under conditions of confidentiality for purposes of Section
1.6011-4(b)(3) (or any successor provision) of the Treasury Regulations
promulgated under Section 6011 of the IRC and shall be construed in a manner
consistent with such purpose. In addition, each party hereto acknowledges that
it has no proprietary or exclusive rights to any structure or transaction.
11.9 GOVERNING LAW.
EXCEPT AS OTHERWISE EXPRESSLY PROVIDED IN ANY OF THE LOAN DOCUMENTS, IN
ALL RESPECTS, INCLUDING ALL MATTERS OF CONSTRUCTION, VALIDITY AND PERFORMANCE,
THE LOAN DOCUMENTS AND THE OBLIGATIONS SHALL BE GOVERNED BY, AND CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW JERSEY
APPLICABLE TO CONTRACTS MADE AND PERFORMED IN THAT STATE AND ANY APPLICABLE LAWS
OF THE UNITED STATES OF AMERICA. EACH CREDIT PARTY HEREBY CONSENTS AND AGREES
THAT THE STATE OR FEDERAL COURTS LOCATED IN ESSEX COUNTY, NEW JERSEY SHALL HAVE
EXCLUSIVE JURISDICTION TO HEAR AND DETERMINE ANY CLAIMS OR DISPUTES BETWEEN THE
CREDIT PARTIES, AGENT AND LENDERS PERTAINING TO THIS AGREEMENT OR ANY OF THE
OTHER LOAN DOCUMENTS OR TO ANY MATTER ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS; PROVIDED, THAT AGENT, LENDERS AND
THE CREDIT PARTIES ACKNOWLEDGE THAT ANY APPEALS FROM THOSE COURTS MAY HAVE TO BE
HEARD BY A COURT LOCATED OUTSIDE OF ESSEX COUNTY AND; PROVIDED, FURTHER THAT
NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO PRECLUDE AGENT FROM
BRINGING SUIT OR TAKING OTHER LEGAL ACTION IN ANY OTHER JURISDICTION TO REALIZE
ON THE COLLATERAL OR ANY OTHER SECURITY FOR THE OBLIGATIONS, OR TO ENFORCE A
JUDGMENT OR OTHER COURT ORDER IN FAVOR OF AGENT. EACH CREDIT PARTY EXPRESSLY
SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY ACTION OR SUIT
COMMENCED IN ANY SUCH COURT, AND EACH CREDIT PARTY HEREBY WAIVES ANY OBJECTION
THAT SUCH CREDIT PARTY MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION,
IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF
SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. BORROWER
HEREBY IRREVOCABLY DESIGNATES AND APPOINTS, AS ITS AUTHORIZED AGENT FOR SERVICE
OF PROCESS IN THE STATE OF NEW JERSEY, CORPORATION SERVICE COMPANY (CSC), WHOSE
ADDRESS IS 000 XXXX XXXXXX XXXX, XXXX XXXXXXX, XXX XXXXXX 00000, OR SUCH OTHER
PERSON AS BORROWER SHALL DESIGNATE
53
HEREAFTER BY WRITTEN NOTICE GIVEN TO AGENT. THE AGENT AND EACH LENDER SHALL FOR
ALL PURPOSES AUTOMATICALLY, AND WITHOUT ANY ACT ON THEIR PART, BE ENTITLED TO
TREAT SUCH DESIGNEE OF BORROWER AS THE AUTHORIZED AGENT TO RECEIVE FOR AND ON
BEHALF OF BORROWER SERVICE OF WRITS, OR SUMMONS OR OTHER LEGAL PROCESS IN THE
STATE OF NEW JERSEY, WHICH SERVICE SHALL BE DEEMED EFFECTIVE PERSONAL SERVICE ON
BORROWER WHEN DELIVERED, WHETHER OR NOT SUCH AGENT GIVES NOTICE TO SUCH
BORROWER. BORROWER FURTHER IRREVOCABLY CONSENTS TO SERVICE OF PROCESS AT THE
ADDRESS AND IN THE MANNER SET FORTH IN SECTION 11.10, IN THE EVENT THAT, FOR ANY
REASON, SUCH AGENT OR HIS OR HER SUCCESSORS SHALL NO LONGER SERVE AS AGENT OF
BORROWER TO RECEIVE SERVICE OF PROCESS IN THE STATE OF NEW JERSEY. BORROWER
SHALL SERVE AND ADVISE THE AGENT THEREOF SO THAT AT ALL TIMES BORROWER WILL
MAINTAIN AN AGENT TO RECEIVE SERVICE OF PROCESS IN THE STATE OF NEW JERSEY ON
BEHALF OF BORROWER WITH RESPECT TO THIS AGREEMENT AND ALL OTHER LOAN DOCUMENTS.
IN THE EVENT THAT, FOR ANY REASON, SERVICE OF LEGAL PROCESS CANNOT BE MADE IN
THE MANNER DESCRIBED ABOVE, SUCH SERVICE MAY BE MADE IN SUCH MANNER AS PERMITTED
BY LAW.
11.10 Notices. Except as otherwise provided herein, whenever it is
provided herein that any notice, demand, request, consent, approval, declaration
or other communication shall or may be given to or served upon any of the
parties by any other parties, or whenever any of the parties desires to give or
serve upon any other parties any communication with respect to this Agreement,
each such notice, demand, request, consent, approval, declaration or other
communication shall be in writing and shall be deemed to have been validly
served, given or delivered (a) upon the earlier of actual receipt and five (5)
Business Days after deposit in the United States Mail, registered or certified
mail, return receipt requested, with proper postage prepaid, (b) upon
transmission, when sent by telecopy or other similar facsimile transmission
(with such telecopy or facsimile promptly confirmed by delivery of a copy by
personal delivery or United States Mail as otherwise provided in this Section
11.10); (c) one (1) Business Day after deposit with a reputable overnight
courier with all charges prepaid or (d) when delivered, if hand-delivered by
messenger, all of which shall be addressed to the party to be notified and sent
to the address or facsimile number indicated on the signature pages of this
Agreement or to such other address (or facsimile number) as may be substituted
by notice given as herein provided. The giving of any notice required hereunder
may be waived in writing by the party entitled to receive such notice. Failure
or delay in delivering copies of any notice, demand, request, consent, approval,
declaration or other communication to any Person (other than Borrower or Agent)
designated in on the signature pages of this Agreement to receive copies shall
in no way adversely affect the effectiveness of such notice, demand, request,
consent, approval, declaration or other communication.
11.11 Section Titles. The Section titles and Table of Contents
contained in this Agreement are and shall be without substantive meaning or
content of any kind whatsoever and are not a part of the agreement between the
parties hereto.
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11.12 Counterparts. This Agreement may be executed in any number of
separate counterparts, each of which shall collectively and separately
constitute one agreement.
11.13 WAIVER OF JURY TRIAL. BECAUSE DISPUTES ARISING IN CONNECTION
WITH COMPLEX FINANCIAL TRANSACTIONS ARE MOST QUICKLY AND ECONOMICALLY RESOLVED
BY AN EXPERIENCED AND EXPERT PERSON AND THE PARTIES WISH APPLICABLE STATE AND
FEDERAL LAWS TO APPLY (RATHER THAN ARBITRATION RULES), THE PARTIES DESIRE THAT
THEIR DISPUTES BE RESOLVED BY A JUDGE APPLYING SUCH APPLICABLE LAWS. THEREFORE,
TO ACHIEVE THE BEST COMBINATION OF THE BENEFITS OF THE JUDICIAL SYSTEM AND OF
ARBITRATION, THE PARTIES HERETO WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION,
SUIT, OR PROCEEDING BROUGHT TO RESOLVE ANY DISPUTE, WHETHER SOUNDING IN
CONTRACT, TORT OR OTHERWISE, AMONG AGENT, LENDERS AND ANY CREDIT PARTY ARISING
OUT OF, CONNECTED WITH, RELATED TO, OR INCIDENTAL TO THE RELATIONSHIP
ESTABLISHED AMONG THEM IN CONNECTION WITH, THIS AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS OR THE TRANSACTIONS RELATED THERETO.
11.14 Press Releases and Related Matters. Each Credit Party
executing this Agreement agrees that neither it nor its Affiliates will in the
future issue any press releases or other public disclosure using the name of CIT
or its affiliates or referring to this Agreement, the other Loan Documents or
the Related Transactions Documents without at least two (2) Business Days' prior
notice to CIT and without the prior written consent of CIT unless (and only to
the extent that) such Credit Party or Affiliate is required to do so under law
and then, in any event, such Credit Party or Affiliate will consult with CIT
before issuing such press release or other public disclosure. Each Credit Party
consents to the publication by Agent or any Lender of advertising material
relating to the financing transactions contemplated by this Agreement using
Borrower's name, product photographs, logo or trademark. Agent or such Lender
shall provide a draft of any advertising material to each Credit Party for
review and comment prior to the publication thereof. Agent reserves the right to
provide to industry trade organizations information necessary and customary for
inclusion in league table measurements.
11.15 Reinstatement. This Agreement shall remain in full force and
effect and continue to be effective should any petition be filed by or against
any Credit Party for liquidation or reorganization, should any Credit Party
become insolvent or make an assignment for the benefit of any creditor or
creditors or should a receiver or trustee be appointed for all or any
significant part of any Credit Party's assets, and shall continue to be
effective or to be reinstated, as the case may be, if at any time payment and
performance of the Obligations, or any part thereof, is, pursuant to applicable
law, rescinded or reduced in amount, or must otherwise be restored or returned
by any obligee of the Obligations, whether as a "voidable preference,"
"fraudulent conveyance," or otherwise, all as though such payment or performance
had not been made. In the event that any payment, or any part thereof, is
rescinded, reduced, restored or returned, the Obligations shall be reinstated
and deemed reduced only by such amount paid and not so rescinded, reduced,
restored or returned.
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11.16 Advice of Counsel. Each of the parties represents to each
other party hereto that it has discussed this Agreement and, specifically, the
provisions of Sections 11.9 and 11.13, with its counsel.
11.17 No Strict Construction. The parties hereto have participated
jointly in the negotiation and drafting of this Agreement. In the event an
ambiguity or question of intent or interpretation arises, this Agreement shall
be construed as if drafted jointly by the parties hereto and no presumption or
burden of proof shall arise favoring or disfavoring any party by virtue of the
authorship of any provisions of this Agreement.
12. GUARANTEE
12.1 Guarantee. Each Guarantor party hereto unconditionally
guarantees, as a primary obligor and not merely as a surety, jointly and
severally with each other Guarantor party hereto, the due and punctual payment
of the principal of and interest on the Term Loan and of all other Obligations,
when and as due, whether at maturity, by acceleration, by notice or prepayment
or otherwise. Each Guarantor party hereto further agrees that the Obligations
may be extended and renewed, in whole or in part, without notice to or further
assent from it, and that it will remain bound upon its guarantee notwithstanding
any extension or renewal of any Obligations.
12.2 Certain Waivers. To the fullest extent permitted by law, each
Guarantor party hereto, from time to time, waives presentment to, demand of
payment from and protest to any of Borrower or any other Person of any of the
Obligations, and also waives notice of acceptance of its guarantee and notice of
protest for nonpayment. To the fullest extent permitted by law, the obligations
of a Guarantor party hereto hereunder shall not be affected by (a) the failure
of the Agent or any Lender to assert any claim or demand or to enforce any right
or remedy against Borrower or any other Guarantor under the provisions of this
Agreement or any of the other Loan Documents or otherwise; (b) any rescission,
waiver, amendment or modification of any of the terms or provisions of this
Agreement, any of the other Loan Documents, any guarantee or any other
agreement; (c) the release of any security held by the Agent or any Lender for
any of the Obligations; or (d) the failure of the Administrative Agent or any
Lender to exercise any right or remedy against any other Guarantor of the
Obligations.
12.3 Guaranty of Payment. Each Guarantor party hereto further
agrees that its guarantee constitutes a guarantee of payment when due and not of
collection, and waives any right to require that any resort be had by the Agent
or any Lender to any security (if any) held for payment of the Obligations or to
any balance of any deposit account or credit on the books of the Agent or any
Lender in favor of any Borrower or any other Person, each Guarantor hereby
waiving the benefits of division and discussion.
12.4 No Setoffs. To the fullest extent permitted by law, the
obligations of each Guarantor party hereto, from time to time, shall not be
subject to any reduction, limitation, impairment or termination for any reason,
including, without limitation, any claim of waiver, release, surrender,
alteration or compromise, and shall not be subject to any defense or setoff,
compensation, counterclaim, recoupment or termination whatsoever by reason of
the invalidity, illegality or unenforceability of any of the Obligations or
otherwise. Without limiting the generality of the foregoing, to the fullest
extent permitted by law, the obligations of each
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Guarantor party hereto hereunder shall not be discharged or impaired or
otherwise affected by the failure of the Agent or any Lender to assert any claim
or demand or to enforce any remedy under this Agreement or under any other Loan
Document, any guarantee or any other agreement, by any waiver or modification of
any provision thereof, by any default, failure or delay, willful or otherwise,
in the performance of any of the Obligations, or by any other act or omission
which may or might in any manner or to any extent vary the risk of such
Guarantor or otherwise operate as a discharge of such Guarantor as a matter of
law or equity.
12.5 Reinstatement. Each Guarantor party hereto, from time to time,
further agrees that its guarantee shall continue to be effective or be
reinstated, as the case may be, if at any time payment, or any part thereof, of
principal or of interest on any Obligation or any other Obligations is rescinded
or must otherwise be returned by the Agent or any Lender upon the bankruptcy or
reorganization of any Borrower or otherwise.
12.6 Indemnification. Each Guarantor hereby, from time to time,
acknowledges that the Obligations include, without limitation, any cost or
expense which is of the nature of extrajudicial professional fees payable by the
Agent or any Lender in accordance with any of the Loan Documents for services
required by the Agent or any Lender in order to recover the capital and interest
secured by any security interest entered into by any Loan Party or to conserve
the property charged thereunder even if such cost or expense cannot be secured
by such security interest. Each Guarantor undertakes to indemnify the Agent and
each Lender with respect to all such reasonable costs and expenses.
12.7 Subordination. Each Guarantor party hereto, from time to time,
hereby subordinates to the Obligations all rights of subrogation against each
Borrower and its property and all rights of indemnification, contribution and
reimbursement from each Borrower and its property, in each case in connection
with this guarantee and any payments made hereunder, and regardless of whether
such rights arise by operation of law, pursuant to contract or otherwise and
shall not exercise any such rights until such time as the Obligations have been
indefeasibly paid in full in cash.
12.8 Excess Payments Among Guarantors. If at any time more than one
Guarantor exists, the Guarantors hereby agree as among themselves that, if any
Guarantor shall make an Excess Payment (as defined below), such Guarantor shall
have a right of contribution from each other Guarantor in an amount equal to
such other Guarantor's Contribution Share (as defined below) of such Excess
Payment. The payment obligations of any Guarantor under this paragraph shall be
subordinate and subject in right of payment to the Obligations until such time
as the Obligations (other than Contingent Obligations at Termination) have been
indefeasibly paid in full in cash, and none of the Guarantors shall exercise any
right or remedy under this paragraph against any other Guarantor until the
Obligations have been indefeasibly paid in full in cash. For purposes of this
paragraph, (a) "Excess Payment" shall mean the amount paid by any Guarantor in
excess of its Pro Rata Share of any Obligations; (b) "Pro Rata Share" shall
mean, for any Guarantor in respect of any payment of Obligations by such
Guarantor, the ratio (expressed as a percentage) as of the date of such payment
of Obligations of (i) the amount by which the aggregate present fair salable
value of all of its assets and properties exceeds the amount of all debts and
liabilities of such Guarantor (including contingent, subordinated, unmatured and
unliquidated liabilities, but excluding the obligations of such Guarantor
hereunder) to (ii) the
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amount by which the aggregate present fair salable value of all assets and other
properties of all of the Guarantors exceeds the amount of all of the debts and
liabilities (including contingent, subordinated, unmatured and unliquidated
liabilities, but excluding the obligations of the Guarantors hereunder) of the
Guarantors; provided, however, that, for purpose of calculating the Pro Rata
Shares of the Guarantors in respect of any payment of Obligations, any Guarantor
that became a Guarantor subsequent to the date of any such payment shall be
deemed to have been a Guarantor on the date of such payment and the financial
information for such Guarantor as of the date such Guarantor became a Guarantor
shall be utilized for such Guarantor in connection with such payment; and (c)
"Contribution Share" shall mean, for any Guarantor in respect of any Excess
Payment made by any other Guarantor, the ratio (expressed as a percentage) as of
the date of such Excess Payment of (i) the amount by which the aggregate present
fair salable value of all of its assets and properties exceeds the amount of all
debts and liabilities of such Guarantor (including contingent, subordinated,
unmatured and unliquidated liabilities, but excluding the obligations of such
Guarantor hereunder) to (ii) the amount by which the aggregate present fair
salable value of all assets and other properties of the Guarantors other than
the maker of such Excess Payment exceeds the amount of all of the debts and
liabilities (including contingent, subordinated, unmatured and unliquidated
liabilities, but excluding the obligations of the Guarantors hereunder) of the
Guarantors other than the maker of such Excess Payment; provided, however, that,
for purposes of calculating the Contribution Shares of the Guarantors in respect
of any Excess Payment, any Guarantor that became a Guarantor subsequent to the
date of any such Excess Payment shall be deemed to have been a Guarantor on the
date of such Excess Payment and the financial information for such Guarantor as
of the date such Guarantor became a Guarantor shall be utilized for such
Guarantor in connection with such Excess Payment.
13. DEFINITIONS
Capitalized terms used in the Loan Documents shall have (unless
otherwise provided elsewhere in the Loan Documents) the following respective
meanings and all references to Sections, Exhibits, Schedules or Annexes in the
following definitions shall refer to Sections, Exhibits, Schedules or Annexes of
or to the Agreement:
"Access Rights" means the various rights of Borrower to construct,
operate and maintain the System or parts thereof in, over, under, and across the
real property of others (whether such rights are contractual or statutory,
recorded or unrecorded), including, without limitation, right of ways,
easements, servitudes, permits, licenses, or other instruments in favor of
Borrower (or their predecessors in title) and Borrower's successors and assigns.
"Access Right Agreements" means any agreement or instrument evidencing
Access Rights which are not recorded in the real property records of a pertinent
jurisdiction, including, without limitation, Pole Attachment Agreements,
Railroad Crossing Agreements and Multi-Tenant Unit Access Agreements.
"Account Debtor" means any Person who may become obligated to any
Credit Party under, with respect to, or on account of, an Account, Chattel Paper
or General Intangibles (including a payment intangible).
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"Accounts" means all "accounts," as such term is defined in the Code,
now owned or hereafter acquired by any Credit Party, including (a) all accounts
receivable, other receivables, book debts and other forms of obligations (other
than forms of obligations evidenced by Chattel Paper or Instruments), (including
any such obligations that may be characterized as an account or contract right
under the Code), (b) all of each Credit Party's rights in, to and under all
purchase orders or receipts for goods or services, (c) all of each Credit
Party's rights to any goods represented by any of the foregoing (including
unpaid sellers' rights of rescission, replevin, reclamation and stoppage in
transit and rights to returned, reclaimed or repossessed goods), (d) all rights
to payment due to any Credit Party for property sold, leased, licensed, assigned
or otherwise disposed of, for a policy of insurance issued or to be issued, for
a secondary obligation incurred or to be incurred, for energy provided or to be
provided, for the use or hire of a vessel under a charter or other contract,
arising out of the use of a credit card or charge card, or for services rendered
or to be rendered by such Credit Party or in connection with any other
transaction (whether or not yet earned by performance on the part of such Credit
Party), (e) all healthcare insurance receivables, and (f) all collateral
security of any kind, now or hereafter in existence, given by any Account Debtor
or other Borrower agrees that (and each other Credit Party executing this
Agreement agrees to cause Borrower to comply with Borrower's agreement to) from
and after the date hereof and until the Termination Date Person with respect to
any of the foregoing.
"Activation Event" and "Activation Notice" have the meanings ascribed
thereto in Annex A.
"Affiliate" means, with respect to any Person, (a) each Person that,
directly or indirectly, owns or controls, whether beneficially, or as a trustee,
guardian or other fiduciary, 5% or more of the Stock having ordinary voting
power in the election of directors of such Person, (b) each Person that
controls, is controlled by or is under common control with such Person, (c) each
of such Person's officers, directors, joint venturers and partners and (d) in
the case of Borrower, the immediate family members, spouses and lineal
descendants of individuals who are Affiliates of Borrower. For the purposes of
this definition, "control" of a Person shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of its management or
policies, whether through the ownership of voting securities, by contract or
otherwise; provided, however, that the term "Affiliate" shall specifically
exclude, with respect to the Credit Parties, the Agent and each Lender.
"Agent" means CIT in its capacity as Agent for Lenders or its successor
appointed pursuant to Section 9.6.
"Agreement" means the Term Loan Agreement by and among Borrower, the
other Credit Parties party thereto, CIT, as Agent and Lender and the other
Lenders from time to time party thereto, as the same may be amended,
supplemented, restated or otherwise modified from time to time.
"Annualized EBITDA" means, with respect to any Fiscal Quarter, the
product of (i) Borrower's EBITDA for then most recently completed Fiscal
Quarter, multiplied by (ii) four.
"Appendices" has the meaning ascribed to it in the recitals to the
Agreement.
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"Applicable Margins" means collectively the Applicable Base Rate Margin
and the Applicable LIBOR Margin.
"Applicable Base Rate Margin" means the per annum interest rate margin
from time to time in effect and payable in addition to the Base Rate applicable
to the Term Loan, as determined by reference to Section 1.4(a).
"Applicable LIBOR Margin" means the per annum interest rate from time
to time in effect and payable in addition to the LIBOR Rate applicable to the
Term Loan, as determined by reference to Section 1.4(a).
"Assignment Agreement" has the meaning ascribed to it in Section
9.1(a).
"Bankruptcy Code" means the provisions of Title 11 of the United States
Code, 11 U.S.C. Sections 101 et seq.
"Base Rate" means, for any day, a floating rate equal to the higher of
(i) the rate publicly quoted from time to time by The Wall Street Journal as the
"prime rate" (or, if The Wall Street Journal ceases quoting a prime rate, the
highest per annum rate of interest published by the Federal Reserve Board in
Federal Reserve statistical release H.15 (519) entitled "Selected Interest
Rates" as the Bank prime loan rate or its equivalent), and (ii) the Federal
Funds Rate plus 50 basis points per annum. Each change in any interest rate
provided for in the Agreement based upon the Base Rate shall take effect at the
time of such change in the Base Rate.
"Base Rate Loan" means a Loan or portion thereof bearing interest by
reference to the Base Rate.
"Blocked Accounts" has the meaning ascribed to it in Annex B.
"Borrower" has the meaning ascribed thereto in the preamble to the
Agreement.
"Business Day" means any day that is not a Saturday, a Sunday or a day
on which banks are required or permitted to be closed in the State of New Jersey
and in reference to LIBOR Loans shall mean any such day that is also a LIBOR
Business Day.
"CIT" means CIT Lending Services Corporation, a Delaware corporation.
"CIT Fee Letter" means that certain letter, dated as of the date
hereof, between CIT and Borrower with respect to certain Fees to be paid from
time to time by Borrower to CIT.
"Cable Act" means Title VI of the Communications Laws of 1934, as
amended, 47 U.S.C. Section 151 et seq., and all other provisions of the Cable
Communications Policy Act of 1984, Pub. L. No. 98-549, and the Cable Television
Consumer Protection and Competition Act of 1992, Pub., L. No. 102-385, and the
Telecommunications Act of 1996, Pub. L. No. 104-104, as such statutes may be
amended from time to time, and the rules and regulations thereunder, as in
effect from time to time.
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"CATV System" means any cable distribution system owned or acquired by
Borrower which receives audio, video, digital, other broadcast signals or
information or telecommunications by cable, optical, antennae, microwave or
satellite transmission and which amplifies and transmits such signals to Persons
who receive such signals.
"Capital Expenditures" means, with respect to any Person, all
expenditures (by the expenditure of cash or the incurrence of Indebtedness) by
such Person during any measuring period for the acquisition or construction of
fixed assets or improvements or for replacements, substitutions or additions
thereto, that have a useful life of more than one year and that are required to
be capitalized under GAAP.
"Capital Lease" means, with respect to any Person, any lease of any
property (whether real, personal or mixed) by such Person as lessee that, in
accordance with GAAP, would be required to be classified and accounted for as a
capital lease on a balance sheet of such Person.
"Capital Lease Obligation" means, with respect to any Capital Lease of
any Person, the amount of the obligation of the lessee thereunder that, in
accordance with GAAP, would appear on a balance sheet of such lessee in respect
of such Capital Lease.
"Cash Collateral Account" has the meaning ascribed to it Annex B.
"Cash Equivalents" has the meaning ascribed to it in Annex B.
"Cash Management Systems" has the meaning ascribed to it in Section
1.8.
"Change of Control" means any event, transaction or occurrence as a
result of which (i) NCC shall cease to constitute the sole Managing General
Partner of Borrower or shall otherwise fail or be prohibited from exclusively
exercising the rights and powers set forth in Sections 11(a) and (b) of the
Partnership Agreement (other than to the extent of the duties of the
Administrative General Partner expressly enumerated in Section 12(c) of the
Partnership Agreement)as provided or (ii) Northland Telecommunications
Corporation ceases to own and control all of the economic and voting rights
associated with all of the outstanding capital Stock of NCC.
"Charges" means all federal, state, county, city, municipal, local,
foreign or other governmental taxes (including taxes owed to the PBGC at the
time due and payable), levies, assessments, charges, liens, claims or
encumbrances upon or relating to (a) the Collateral, (b) the Obligations, (c)
the employees, payroll, income or gross receipts of any Credit Party, (d) any
Credit Party's ownership or use of any properties or other assets, or (e) any
other aspect of any Credit Party's business.
"Chattel Paper" means any "chattel paper," as such term is defined in
the Code, including electronic chattel paper, now owned or hereafter acquired by
any Credit Party, wherever located.
"Closing Date" means November __, 2003.
"Code" means the Uniform Commercial Code as the same may, from time to
time, be enacted and in effect in the State of New Jersey; provided, that to the
extent that the Code is used to define any term herein or in any Loan Document
and such term is defined differently in
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different Articles or Divisions of the Code, the definition of such term
contained in Article or Division 9 shall govern; provided further, that in the
event that, by reason of mandatory provisions of law, any or all of the
attachment, perfection or priority of, or remedies with respect to, Agent's or
any Lender's Lien on any Collateral is governed by the Uniform Commercial Code
as enacted and in effect in a jurisdiction other than the State of New Jersey,
the term "Code" shall mean the Uniform Commercial Code as enacted and in effect
in such other jurisdiction solely for purposes of the provisions thereof
relating to such attachment, perfection, priority or remedies and for purposes
of definitions related to such provisions.
"Collateral" means the property covered by the Security Agreement, the
Mortgages and the other Collateral Documents and any other property, real or
personal, tangible or intangible, now existing or hereafter acquired, that may
at any time be or become subject to a security interest or Lien in favor of
Agent, on behalf of itself and Lenders, to secure the Obligations.
"Collateral Documents" means the Security Agreement, the Guarantor
Pledge Agreement, the Mortgages, the Patent Security Agreement, the Trademark
Security Agreement, the Copyright Security Agreement and all similar agreements
entered into guaranteeing payment of, or granting a Lien upon property as
security for payment of, the Obligations.
"Collection Account" means the account described in Annex B or such
other account as may be designated by Agent from time to time in accordance with
this Agreement.
"Commercial Tort Claims" means, as to any Person, "commercial tort
claims" as such term is defined in the Code.
"Communications Laws" means the Communications Laws of 1934, as
amended, inter alia, by the Cable Television Consumer Protection and Competition
Act of 1992 and the Telecommunications Act of 1996, and the FCC's rules,
regulations, orders and policies, all as may be amended from time to time.
"Compliance Certificate" has the meaning ascribed to it in Section
4.1(a).
"Concentration Account" has the meaning ascribed to it in Annex A.
"Contracts" means all "contracts," as such term is defined in the Code,
now owned or hereafter acquired by any Credit Party, in any event, including all
contracts, undertakings, or agreements (other than rights evidenced by Chattel
Paper, Documents or Instruments) in or under which any Credit Party may now or
hereafter have any right, title or interest, including any agreement relating to
the terms of payment or the terms of performance of any Account.
"Control Letter" means a letter agreement between Agent and (i) the
issuer of uncertificated securities with respect to uncertificated securities in
the name of any Credit Party, (ii) a securities intermediary with respect to
securities, whether certificated or uncertificated, securities entitlements and
other financial assets held in a securities account in the name of any Credit
Party, (iii) a futures commission merchant or clearing house, as applicable,
with respect to commodity accounts and commodity contracts held by any Credit
Party, whereby, among other things, the issuer, securities intermediary or
futures commission merchant limits any security interest in the applicable
financial assets in a manner reasonably satisfactory to Agent,
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acknowledges the Lien of Agent, on behalf of itself and Lenders, on such
financial assets, and agrees to follow the instructions or entitlement orders of
Agent without further consent by the affected Credit Party.
"Copyright Act" means Title 17 of the United States Code, as amended,
and rules and regulations, orders, and policies of the U.S. Copyright Office, in
each case as amended and in effect from time to time.
"Copyright License" means any and all rights now owned or hereafter
acquired by any Credit Party under any written agreement granting any right to
use any Copyright or Copyright registration.
"Copyright Security Agreements" means the Copyright Security Agreements
made in favor of Agent, on behalf of itself and Lenders, by each applicable
Credit Party.
"Copyrights" means all of the following now owned or hereafter adopted
or acquired by any Credit Party: (a) all copyrights and General Intangibles of
like nature (whether registered or unregistered), all registrations and
recordings thereof, and all applications in connection therewith, including all
registrations, recordings and applications in the United States Copyright Office
or in any similar office or agency of the United States, any state or territory
thereof, or any other country or any political subdivision thereof, and (b) all
reissues, extensions or renewals thereof.
"Credit Parties" means Borrower and NCC, as Guarantor.
"Default" means any event that, with the passage of time or notice or
both, would, unless cured or waived, become an Event of Default.
"Default Rate" has the meaning ascribed to it in Section 1.5(d).
"Deposit Accounts" means all "deposit accounts" as such term in defined
in the Code, now or hereafter held in the name of any Credit Party.
"Disbursement Accounts" has the meaning ascribed to it in Annex C.
"Documents" means any "documents," as such term is defined in the Code,
now owned or hereafter acquired by any Credit Party, wherever located.
"Dollars" or "$" means lawful currency of the United States of America.
"EBITDA" means, with respect any Fiscal Quarter, without duplication,
an amount equal to (a) Borrower's net income for such period, determined in
accordance with GAAP, minus (b) the sum of (i) income tax credits, (ii) interest
income, (iii) gain from extraordinary items for such period, (iv) any aggregate
net gain during such period arising from the sale, exchange or other disposition
of capital assets by Borrower (including any fixed assets, whether tangible or
intangible, all inventory sold in conjunction with the disposition of fixed
assets and all securities), and (v) any other non-cash gains that have been
added in determining net income, in each case to the extent included in the
calculation of net income of Borrower for such period in
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accordance with GAAP, but without duplication, plus (c) the sum of (i) any
provision for income taxes, (ii) Interest Expense, (iii) loss from extraordinary
items for such period, (iv) depreciation and amortization for such period, (v)
amortized debt discount for such period, (vi) the amount of any deduction to net
income as the result of any grant to any members of the management of Borrower
of any Stock, (vii) amounts actually paid by Borrower to reimburse Agent or
Lenders pursuant to Section 11.3 with respect to actions taken pursuant to
Sections 1.11 or 4.2, and (viii) other non-cash charges included in the
determination of net income or loss, in each case to the extent included in the
calculation of net income of Borrower for such period in accordance with GAAP,
but without duplication. For purposes of this definition, the following items
shall be excluded in determining Borrower's net income: (1) any restoration to
income of any contingency reserve, except to the extent that provision for such
reserve was made out of income accrued during such period; (2) any write-up of
any asset; (3) any net gain from the collection of the proceeds of life
insurance policies; and (4) any net gain arising from the acquisition of any
securities, or the extinguishment, under GAAP, of any Indebtedness, of Borrower.
"Environmental Laws" means all applicable federal, state, local and
foreign laws, statutes, ordinances, codes, rules, standards and regulations, now
or hereafter in effect, and any applicable judicial or administrative
interpretation thereof, including any applicable judicial or administrative
order, consent decree, order or judgment, imposing liability or standards of
conduct for or relating to the regulation and protection of human health,
safety, the environment and natural resources (including ambient air, surface
water, groundwater, wetlands, land surface or subsurface strata, wildlife,
aquatic species and vegetation). Environmental Laws include the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980 (42
U.S.C. Sections 9601 et seq.) ("CERCLA"); the Hazardous Materials Transportation
Authorization Act of 1994 (49 U.S.C. Sections 5101 et seq.); the Federal
Insecticide, Fungicide, and Rodenticide Act (7 U.S.C. Sections 136 et seq.); the
Solid Waste Disposal Act (42 U.S.C. Sections 6901 et seq.); the Toxic Substance
Control Act (15 U.S.C. Sections 2601 et seq.); the Clean Air Act (42
U.S.C. Sections 7401 et seq.); the Federal Water Pollution Control Act (33
U.S.C. Sections 1251 et seq.); the Occupational Safety and Health Act (29
U.S.C. Sections 651 et seq.); and the Safe Drinking Water Act (42 U.S.C.
Sections 300(f) et seq.), and any and all regulations promulgated thereunder,
and all analogous state, local and foreign counterparts or equivalents and any
transfer of ownership notification or approval statutes.
"Environmental Liabilities" means, with respect to any Person, all
liabilities, obligations, responsibilities, response, remedial and removal
costs, investigation and feasibility study costs, capital costs, operation and
maintenance costs, losses, damages, punitive damages, property damages, natural
resource damages, consequential damages, treble damages, costs and expenses
(including all reasonable fees, disbursements and expenses of counsel, experts
and consultants), fines, penalties, sanctions and interest incurred as a result
of or related to any claim, suit, action, investigation, proceeding or demand by
any Person, whether based in contract, tort, implied or express warranty, strict
liability, criminal or civil statute or common law, including any arising under
or related to any Environmental Laws, Environmental Permits, or in connection
with any Release or threatened Release or presence of a Hazardous Material
whether on, at, in, under, from or about or in the vicinity of any real or
personal property.
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"Environmental Permits" means all permits, licenses, authorizations,
certificates, approvals or registrations required by any Governmental Authority
under any Environmental Laws.
"Equipment" means all "equipment," as such term is defined in the Code,
now owned or hereafter acquired by Borrower, wherever located and, in any event,
including all Borrower's machinery and equipment, including processing
equipment, conveyors, machine tools, data processing and computer equipment,
including embedded software and peripheral equipment and all engineering,
processing and manufacturing equipment, office machinery, furniture, materials
handling equipment, tools, attachments, accessories, automotive equipment,
trailers, trucks, forklifts, molds, dies, stamps, motor vehicles, rolling stock
and other equipment of every kind and nature, trade fixtures and fixtures not
forming a part of real property, together with all additions and accessions
thereto, replacements therefor, all parts therefor, all substitutes for any of
the foregoing, fuel therefor, and all manuals, drawings, instructions,
warranties and rights with respect thereto, and all products and proceeds
thereof and condemnation awards and insurance proceeds with respect thereto.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any regulations promulgated thereunder.
"ERISA Affiliate" means, with respect to any Credit Party, any trade or
business (whether or not incorporated) that, together with such Credit Party,
are treated as a single employer within the meaning of Sections 414(b), (c), (m)
or (o) of the IRC.
"ERISA Event" means, with respect to any Credit Party or any ERISA
Affiliate, (a) any event described in Section 4043(c) of ERISA with respect to a
Title IV Plan; (b) the withdrawal of any Credit Party or ERISA Affiliate from a
Title IV Plan subject to Section 4063 of ERISA during a plan year in which it
was a substantial employer, as defined in Section 4001(a)(2) of ERISA; (c) the
complete or partial withdrawal of any Credit Party or any ERISA Affiliate from
any Multiemployer Plan; (d) the filing of a notice of intent to terminate a
Title IV Plan or the treatment of a plan amendment as a termination under
Section 4041 of ERISA; (e) the institution of proceedings to terminate a Title
IV Plan or Multiemployer Plan by the PBGC; (f) the failure by any Credit Party
or ERISA Affiliate to make when due required contributions to a Multiemployer
Plan or Title IV Plan unless such failure is cured within thirty (30) days; (g)
any other event or condition that would reasonably be expected to constitute
grounds under Section 4042 of ERISA for the termination of, or the appointment
of a trustee to administer, any Title IV Plan or Multiemployer Plan or for the
imposition of liability under Section 4069 or 4212(c) of ERISA; (h) the
termination of a Multiemployer Plan under Section 4041A of ERISA or the
reorganization or insolvency of a Multiemployer Plan under Section 4241 or 4245
of ERISA; or (i) the loss of a Qualified Plan's qualification or tax exempt
status; or (j) the termination of a Plan described in Section 4064 of ERISA.
"ESOP" means a Plan that is intended to satisfy the requirements of
Section 4975(e)(7) of the IRC.
"Event of Default" has the meaning ascribed to it in Section 8.1.
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"Existing Lenders" means Bank of America, N.A., as successor to
SeaFirst Bank, Bank of Montreal, Bank One, N.A., Xxxxx Bank and Trust Company
and Bank of Toccoa.
"Existing Lenders' Obligations" means all obligations arising under (i)
that certain Commercial Loan Agreement, dated as of December 1, 1997, between
Northland Cable Properties Seven Limited Partnership and the Existing Lenders,
as amended, (ii) that certain Business Loan Agreement, dated as of February 19,
2003, by and between Borrower and Xxxxx Bank and Trust Company, and (iii) that
certain Promissory Note, dated April 24, 1998, in favor of Bank of Toccoa, in
the original principal amount of $190,000.00.
"FAA" means the Federal Aviation Administration, or its successor
agency.
"FNEJV" means FN Equities Joint Venture, a California joint venture.
"Fair Labor Standards Act" means the Fair Labor Standards Act, 29
U.S.C. Section 201 et seq.
"Fair Market Value" means with respect to any asset or group of assets
at any date, the value of the consideration obtainable in a sale or other
disposition of such asset (or assets) at such date assuming a sale by a willing
seller to a willing purchaser dealing at arm's length and arranged in an orderly
manner over a reasonable period of time having regard to the nature and
characteristics of such asset (or assets), as reasonably determined by the
Managing General Partner in accordance with the provision of the Partnership
Agreement.
"FCC" means the Federal Communications Commission of the United States
or any governmental body succeeding to the functions of such commission in whole
or in part.
"FCC License" means any radio, microwave, or other communications
license, permit, certificate of compliance, franchise, approval or authorization
granted or issued by the FCC for control, ownership, acquisition, construction
or operation of Borrower's business.
"Federal Funds Rate" means, for any day, a floating rate equal to the
weighted average of the rates on overnight federal funds transactions among
members of the Federal Reserve System, as determined by Agent in its sole
discretion, which determination shall be final, binding and conclusive (absent
manifest error).
"Federal Reserve Board" means the Board of Governors of the Federal
Reserve System.
"Fees" means any and all fees payable to Agent or any Lender pursuant
to the Agreement or any of the other Loan Documents.
"Financial Covenants" means the financial covenants set forth in
Section 6.10.
"Financial Statements" means the consolidated and consolidating income
statements, statements of cash flows and balance sheets of Borrower delivered in
accordance with Section 3.4.
"Fiscal Month" means any of the monthly accounting periods of Borrower.
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"Fiscal Quarter" means any of the quarterly accounting periods of
Borrower, ending on March, June, September and December of each year.
"Fiscal Year" means any of the annual accounting periods of Borrower
ending on December 31 of each year.
"Fixtures" means all "fixtures" as such term is defined in the Code,
now owned or hereafter acquired by Borrower.
"Franchise" means a franchise, permit or license (including, without
limitation, an FCC License), designation or certificate granted by any
Governmental Authority pursuant to which Borrower has the right to own,
construct or operate a CATV System.
"Franchise Authority" means any state or local regulatory agency or
body or other Governmental Authority (including, without limitation, any party
having authority to grant or oversee operation of any Franchise) that exercises
jurisdiction over, or otherwise grants a Franchise to Borrower with respect to,
the ownership, construction or operation of any CATV System in which all or any
portion of a System is located.
"Funded Debt" means, with respect to any Person, without duplication,
all Indebtedness for borrowed money evidenced by notes, bonds, debentures, or
similar evidences of Indebtedness and that by its terms matures more than one
year from, or is directly or indirectly renewable or extendible at such Person's
option under a revolving credit or similar agreement obligating the lender or
lenders to extend credit over a period of more than one year from the date of
creation thereof, and specifically including Capital Lease Obligations, current
maturities of long-term debt, revolving credit and short-term debt extendible
beyond one year at the option of the debtor, and also including, in the case of
Borrower, the Obligations and, without duplication, Guaranteed Indebtedness
consisting of guaranties of Funded Debt of other Persons.
"GAAP" means generally accepted accounting principles in the United
States of America, consistently applied.
"General Intangibles" means "general intangibles," as such term is
defined in the Code, now owned or hereafter acquired by Borrower, including all
right, title and interest that such Credit Party may now or hereafter have in or
under any Contract, all payment intangibles, customer lists, Licenses,
Copyrights, Trademarks, Patents, and all applications therefor and reissues,
extensions or renewals thereof, rights in Intellectual Property, interests in
partnerships, joint ventures and other business associations, licenses, permits,
copyrights, trade secrets, proprietary or confidential information, inventions
(whether or not patented or patentable), technical information, procedures,
designs, knowledge, know-how, software, data bases, data, skill, expertise,
experience, processes, models, drawings, materials and records, goodwill
(including the goodwill associated with any Trademark or Trademark License), all
rights and claims in or under insurance policies (including insurance for fire,
damage, loss and casualty, whether covering personal property, real property,
tangible rights or intangible rights, all liability, life, key man and business
interruption insurance, and all unearned premiums), uncertificated securities,
choses in action, deposit, checking and other bank accounts, rights to receive
tax refunds and other payments, rights to receive dividends, distributions,
cash,
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Instruments and other property in respect of or in exchange for pledged Stock
and Investment Property, rights of indemnification, all books and records,
correspondence, credit files, invoices and other papers, including without
limitation all tapes, cards, computer runs and other papers and documents in the
possession or under the control of such Credit Party or any computer bureau or
service company from time to time acting for such Credit Party.
"Goods" means any "goods" as defined in the Code, now owned or
hereafter acquired by any Credit Party, wherever located, including embedded
software to the extent included in "goods" as defined in the Code, manufactured
homes, standing timber that is cut and removed for sale and unborn young of
animals.
"Governmental Authority" means any nation or government, any state or
other political subdivision thereof, local or municipal governmental or quasi
governmental entity or jurisdiction, and any agency, department, instrumentality
or other entity exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Guaranteed Indebtedness" means, as to any Person, any obligation of
such Person guaranteeing, providing comfort or otherwise supporting any
Indebtedness, lease, dividend, or other obligation ("primary obligation") of any
other Person (the "primary obligor") in any manner, including any obligation or
arrangement of such Person to (a) purchase or repurchase any such primary
obligation, (b) 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 or any
balance sheet condition of the primary obligor, (c) 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) protect the beneficiary of such arrangement from
loss (other than product warranties given in the ordinary course of business) or
(e) indemnify the owner of such primary obligation against loss in respect
thereof. The amount of any Guaranteed Indebtedness at any time shall be deemed
to be an amount equal to the lesser at such time of (x) the stated or
determinable amount of the primary obligation in respect of which such
Guaranteed Indebtedness is incurred and (y) the maximum amount for which such
Person may be liable pursuant to the terms of the instrument embodying such
Guaranteed Indebtedness, or, if not stated or determinable, the maximum
reasonably anticipated liability (assuming full performance) in respect thereof.
"Guaranties" means, collectively, the NCC Guaranty and any other
guaranty executed by any Guarantor in favor of Agent and Lenders in respect of
the Obligations.
"Guarantors" means NCC and each other Person, if any, that executes a
guaranty or other similar agreement in favor of Agent, for itself and the
ratable benefit of Lenders, in connection with the transactions contemplated by
the Agreement and the other Loan Documents.
"Hazardous Material" means any substance, material or waste that is
regulated by, or forms the basis of liability now or hereafter under, any
Environmental Laws, including any material or substance that is (a) defined as a
"solid waste," "hazardous waste," "hazardous material," "hazardous substance,"
"extremely hazardous waste," "restricted hazardous waste," "pollutant,"
"contaminant," "hazardous constituent," "special waste," "toxic substance" or
other
68
similar term or phrase under any Environmental Laws, or (b) petroleum or any
fraction or by-product thereof, asbestos, polychlorinated biphenyls (PCB's), or
any radioactive substance.
"Indebtedness" means, with respect to any Person, without duplication
(a) all indebtedness of such Person for borrowed money or for the deferred
purchase price of property payment for which is deferred 6 months or more, but
excluding obligations to trade creditors incurred in the ordinary course of
business that are unsecured and not overdue by more than 6 months unless being
contested in good faith, (b) all reimbursement and other obligations with
respect to letters of credit, bankers' acceptances and surety bonds, whether or
not matured, (c) all obligations evidenced by notes, bonds, debentures or
similar instruments, (d) all indebtedness created or arising under any
conditional sale or other title retention agreement with respect to property
acquired by such Person (even though the rights and remedies of the seller or
lender under such agreement in the event of default are limited to repossession
or sale of such property), (e) all Capital Lease Obligations and the present
value (discounted at the Base Rate as in effect on the Closing Date) of future
rental payments under all synthetic leases, (f) all obligations of such Person
under commodity purchase or option agreements or other commodity price hedging
arrangements, in each case whether contingent or matured, (g) all obligations of
such Person under any foreign exchange contract, currency swap agreement,
interest rate swap, cap or collar agreement or other similar agreement or
arrangement designed to alter the risks of that Person arising from fluctuations
in currency values or interest rates, in each case whether contingent or
matured, (h) all Indebtedness referred to 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 or other assets (including accounts
and contract rights) owned by such Person, even though such Person has not
assumed or become liable for the payment of such Indebtedness, and (i) the
Obligations.
"Indemnified Liabilities" has the meaning ascribed to it in Section
1.10.
"Indemnified Person" has the meaning ascribed to it in Section 1.10.
"Instruments" means all "instruments," as such term is defined in the
Code, now owned or hereafter acquired by any Credit Party, wherever located,
and, in any event, including all certificated securities, all certificates of
deposit, and all promissory notes and other evidences of indebtedness, other
than instruments that constitute, or are a part of a group of writings that
constitute, Chattel Paper.
"Intellectual Property" means any and all Licenses, Patents,
Copyrights, Trademarks, and the goodwill associated with such Trademarks.
"Interest Expense" means, with respect to any Person for any fiscal
period, interest expense (whether cash or non-cash) of such Person determined in
accordance with GAAP for the relevant period ended on such date, including
interest expense with respect to any Funded Debt of such Person and interest
expense for the relevant period that has been capitalized on the balance sheet
of such Person.
69
"Interest Coverage Ratio" means, with respect to any Fiscal Quarter,
the ratio of Annualized EBITDA for such period to aggregate Interest Expense for
the immediately preceding four (4) consecutive Fiscal Quarters.
"Interest Payment Date" means (a) as to any Base Rate Loan, the first
Business Day of each quarter to occur while such Loan is outstanding, and (b) as
to any LIBOR Loan, the last day of the applicable LIBOR Period; provided, that
in the case of any LIBOR Period greater than three months in duration, interest
shall be payable at three month intervals and on the last day of such LIBOR
Period; and provided further that, in addition to the foregoing, the Maturity
Date shall be deemed to be an "Interest Payment Date" with respect to any
interest that has then accrued under the Agreement.
"Inventory" means any "inventory," as such term is defined in the Code,
now owned or hereafter acquired by Borrower, wherever located, and in any event
including inventory, merchandise, goods and other personal property that are
held by or on behalf of Borrower for sale or lease or are furnished or are to be
furnished under a contract of service, or that constitute raw materials, work in
process, finished goods, returned goods, supplies or materials of any kind,
nature or description used or consumed or to be used or consumed in Borrower's
business or in the processing, production, packaging, promotion, delivery or
shipping of the same, including all supplies and embedded software.
"Investment Property" means all "investment property" as such term is
defined in the Code now owned or hereafter acquired by Borrower, wherever
located, including (i) all securities, whether certificated or uncertificated,
including stocks, bonds, interests in limited liability companies, partnership
interests, treasuries, certificates of deposit, and mutual fund shares; (ii) all
securities entitlements of Borrower, including the rights of Borrower to any
securities account and the financial assets held by a securities intermediary in
such securities account and any free credit balance or other money owing by any
securities intermediary with respect to that account; (iii) all securities
accounts of Borrower; (iv) all commodity contracts of Borrower; and (v) all
commodity accounts held by Borrower.
"IRC" means the Internal Revenue Code of 1986, as amended, and all
regulations promulgated thereunder.
"IRS" means the Internal Revenue Service.
"Lease" means any lease, sublease, or other periodic payment
arrangement (including, without limitation, licenses for use or collocation
arrangements) for the use or possession of Real Estate.
"Lenders" means those Lenders having Term Loan Commitments.
"Lenders" means CIT, the other Lenders named on the signature pages of
the Agreement, and, if any such Lender shall decide to assign all or any portion
of the Obligations, such term shall include any assignee of such Lender.
"Letter-of-Credit Rights" means, as to any Person, "letter-of-credit
rights" as such term is defined in the Code, now owned or hereafter acquired by
such Person, including rights to
70
payment or performance under a letter of credit, whether or not such Person, as
beneficiary, has demanded or is entitled to demand payment or performance.
"LIBOR Business Day" means a Business Day on which banks in the City of
London are generally open for interbank or foreign exchange transactions.
"LIBOR Loan" means a Loan or any portion thereof bearing interest by
reference to the LIBOR Rate.
"LIBOR Period" means, with respect to any LIBOR Loan, each period
commencing on a LIBOR Business Day selected by Borrower pursuant to the
Agreement and ending one, two, three or six months thereafter, as selected by
Borrower's irrevocable notice to Agent as set forth in Section 1.5(e); provided,
that the foregoing provision relating to LIBOR Periods is subject to the
following:
(a) if any LIBOR Period would otherwise end on a day that
is not a LIBOR Business Day, such LIBOR Period shall be extended to the
next succeeding LIBOR Business Day unless the result of such extension
would be to carry such LIBOR Period into another calendar month in
which event such LIBOR Period shall end on the immediately preceding
LIBOR Business Day;
(b) any LIBOR Period that would otherwise extend beyond
the Maturity Date shall end two (2) LIBOR Business Days prior to such
date;
(c) any LIBOR Period that begins on the last LIBOR
Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the calendar month at the end of such
LIBOR Period) shall end on the last LIBOR Business Day of a calendar
month;
(d) Borrower shall select LIBOR Periods so as not to
require a payment or prepayment of any LIBOR Loan during a LIBOR Period
for such Loan; and
(e) Borrower shall select LIBOR Periods so that there
shall be no more than eight (8) separate LIBOR Loans in existence at
any one time.
"LIBOR Rate" means for each LIBOR Period, a rate of interest determined
by Agent equal to:
(a) the offered rate for deposits in United States
Dollars for the applicable LIBOR Period that appears on Telerate Page
3750 as of 11:00 a.m. (London time), on the second full LIBOR Business
Day next preceding the first day of such LIBOR Period (unless such date
is not a Business Day, in which event the next succeeding Business Day
will be used); divided by
(b) a number equal to 1.0 minus the aggregate (but
without duplication) of the rates (expressed as a decimal fraction) of
reserve requirements in effect on the day that is two (2) LIBOR
Business Days prior to the beginning of such LIBOR Period (including
basic, supplemental, marginal and emergency reserves under any
regulations of the
71
Federal Reserve Board or other Governmental Authority having
jurisdiction with respect thereto, as now and from time to time in
effect) for Eurocurrency funding (currently referred to as
"Eurocurrency Liabilities" in Regulation D of the Federal Reserve Board
that are required to be maintained by a member bank of the Federal
Reserve System.
If such interest rates shall cease to be available from
Telerate News Service, the LIBOR Rate shall be determined from such
financial reporting service or other information as shall be mutually
acceptable to Agent and Borrower.
"License" means any Copyright License, Patent License, Trademark
License or other license of rights or interests now held or hereafter acquired
by any Credit Party (other than the Master Programming Agreement).
"Lien" means any mortgage or deed of trust, pledge, hypothecation,
assignment, deposit arrangement, lien, charge, claim, security interest,
easement or encumbrance, or preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including any lease
or title retention agreement, any financing lease having substantially the same
economic effect as any of the foregoing, and the filing of, or agreement to
give, any financing statement perfecting a security interest under the Code or
comparable law of any jurisdiction).
"Litigation" has the meaning ascribed to it in Section 3.11.
"Loan Account" has the meaning ascribed to it in Section 1.9.
"Loan Documents" means the Agreement, the Term Notes, the Collateral
Documents, and all other agreements, instruments, documents and certificates
executed and delivered to, or in favor of, Agent or any Lenders and including
all other pledges, powers of attorney, consents, assignments, contracts,
notices, letter of credit agreements and all other written matter whether
heretofore, now or hereafter executed by or on behalf of any Credit Party, or
any employee of any Credit Party, and delivered to Agent or any Lender in
connection with the Agreement or the transactions contemplated thereby. Any
reference in the Agreement or any other Loan Document to a Loan Document shall
include all appendices, exhibits or schedules thereto, and all amendments,
restatements, supplements or other modifications thereto, and shall refer to the
Agreement or such Loan Document as the same may be in effect at any and all
times such reference becomes operative.
"Management Agreement" means that certain Amended and Restated
Management Agreement, dated as of January 3, 1990, between Borrower and NCC.
"Margin Stock" has the meaning ascribed to it in Section 3.10.
"Master Programming Agreement" means that certain Programming
Agreement, dated as of August 1, 1993, by and between NCC and Borrower, as the
same exists on the date hereof.
"Material Adverse Effect" means a material adverse effect on (a) the
business, assets, operations, prospects or financial or other condition of
Borrower or any Credit Party, (b) Borrower's ability to pay any of the Term Loan
or any of the other Obligations in accordance
72
with the terms of the Agreement, (c) the Collateral or Agent's Liens, on behalf
of itself and Lenders, on the Collateral or the priority of such Liens, or (d)
Agent's or any Lender's rights and remedies under the Agreement and the other
Loan Documents.
"Material Agreements" means (a) any of the agreements relating to a
Franchises identified on Schedule 3.23(a), (b) the Master Programming Agreement,
(c) the Management Agreement, (d) that certain Communications Use Lease, dated
December 8, 1997, between the United States Xxxxxxx Service and Borrower
relating to the Off-Air Tower & Headend Site located on Currahee Mtn./Hwy 123
West, Toccoa, Georgia, (e) that certain Tower Site Lease Agreement, dated April
1, 1996 and agreed to on March 19, 1993 between Xxxxx X. Xxxxxx, Xx. and
Borrower as assignee of TCI Cablevision of Georgia, Inc. relating to the Headend
Site located on Oconee Road, Tennille, Georgia, (f) that certain Letter
Agreement, dated September 30, 1991 and agreed to on March 19, 1993, between
Xxxxxxxxx Family Farm, Inc. and Borrower as assignee of TCI Cablevision of
Georgia, Inc. relating to the Headend and Tower Site located in the 00 X.X.
Xxxxxxxx, Xxxxxxx, Xxxxxxx, and (g) any other material agreement entered into by
Borrower after the Closing Date which is reasonably designated as a Material
Agreement by the Agent.
"Maturity Date" means, means the earliest of (a) Xxxxx 00, 0000, (x)
the date of termination of Lenders obligation to permit the Term Loan to remain
outstanding pursuant to Section 8.2(b), and (c) the date of indefeasible
prepayment in full by Borrower of the Term Loan.
"Maximum Term Loan Amount" means the aggregate commitment of all
Lenders to make the Term Loan on the Closing Date, which aggregate commitment
shall be Twenty One Million Five Hundred Thousand Dollars ($21,500,000).
"Mortgages" means each of the mortgages, deeds of trust, leasehold
mortgages, leasehold deeds of trust, collateral assignments of leases or other
real estate security documents delivered by any Credit Party to Agent on behalf
of itself and Lenders with respect to the Real Estate to the extent required by
Sections 2.1(f) and 5.9, all in form and substance reasonably satisfactory to
Agent.
"Multiemployer Plan" means a "multiemployer plan" as defined in Section
4001(a)(3) of ERISA, and to which any Credit Party or ERISA Affiliate is making,
is obligated to make or has made or been obligated to make, contributions on
behalf of participants who are or were employed by any of them.
"Multi-Tenant Unit Access Agreement" means an agreement granting to
Borrower the right to offer cable television services to the tenants of
multi-tenant buildings located within a System.
"NCC" has the meaning ascribed thereto in the recitals to the
Agreement.
"NCC Guaranty" means the guaranty of even date herewith executed by NCC
in favor of Agent and Lenders.
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"NCC Pledge Agreement" means the Pledge Agreement of even date herewith
executed by NCC in favor of Agent, on behalf of itself and Lenders, pledging
NCC's right to receive distributions from Borrower.
"Notice of Conversion/Continuation" has the meaning ascribed to it in
Section 1.5(e).
"Obligations" means all loans, advances, debts, liabilities and
obligations, for the performance of covenants, tasks or duties or for payment of
monetary amounts (whether or not such performance is then required or
contingent, or such amounts are liquidated or determinable) owing by any Credit
Party to Agent or any Lender, and all covenants and duties regarding such
amounts, of any kind or nature, present or future, whether or not evidenced by
any note, agreement, letter of credit agreement or other instrument, arising
under the Agreement or any of the other Loan Documents. This term includes all
principal, interest (including all interest that accrues after the commencement
of any case or proceeding by or against any Credit Party in bankruptcy, whether
or not allowed in such case or proceeding), Fees, hedging obligations under
swaps, caps and collar arrangements provided by any Lender, expenses, attorneys'
fees and any other sum chargeable to any Credit Party under the Agreement or any
of the other Loan Documents.
"Partnership Agreement" means that certain Amended and Restated
Agreement of Limited Partnership of Borrower, dated as of September 30, 1987, as
the same has been amended prior to the date of this Agreement.
"Patent License" means rights under any written agreement now owned or
hereafter acquired by any Credit Party granting any right with respect to any
invention on which a Patent is in existence.
"Patent Security Agreements" means the Patent Security Agreements made
in favor of Agent, on behalf of itself and Lenders, by each applicable Credit
Party.
"Patents" means all of the following in which any Credit Party now
holds or hereafter acquires any interest: (a) all letters patent of the United
States or any other country, all registrations and recordings thereof, and all
applications for letters patent of the United States or of any other country,
including registrations, recordings and applications in the United States Patent
and Trademark Office or in any similar office or agency of the United States,
any State or any other country, and (b) all reissues, continuations,
continuations-in-part or extensions thereof.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Pension Plan" means a Plan described in Section 3(2) of ERISA.
"Permitted Matagorda Disposition" means the sale, transfer, wind-down
or teardown or abandonment of the Subscriber base and/or other assets comprising
the System serving approximately 100 Subscribers in Matagorda, Texas.
"Permitted Encumbrances" means the following encumbrances: (a) Liens
for taxes or assessments or other governmental Charges not yet due and payable
or which are being contested in accordance with Section 5.2(b), provided, that
they remain inchoate and unperfected and
74
subordinate to the Agent's Liens under the Loan Documents; (b) pledges or
deposits of money securing statutory obligations under workmen's compensation,
unemployment insurance, social security or public liability laws or similar
legislation (excluding Liens under ERISA) in an outstanding aggregate amount not
in excess of $250,000 at any time; (c) pledges or deposits of money securing
bids, tenders, contracts (other than contracts for the payment of money) or
leases to which any Credit Party is a party as lessee made in the ordinary
course of business in an outstanding aggregate amount not in excess of $250,000
at any time; (d) inchoate and unperfected workers', mechanics' or similar liens
arising in the ordinary course of business, so long as such Liens attach only to
Equipment, Fixtures and/or Real Estate and provided that they remain subordinate
to the Agent's Liens under the Loan Documents; (e) carriers', warehousemen's,
suppliers' or other similar possessory liens arising in the ordinary course of
business and securing liabilities in an outstanding aggregate amount not in
excess of $250,000 at any time, so long as such Liens attach only to Inventory;
(f) deposits securing, or in lieu of, surety, appeal or customs bonds in
proceedings to which any Credit Party is a party in an outstanding aggregate
deposit amount not in excess of $250,000 at any time; (g) any attachment or
judgment lien not constituting an Event of Default under Section 8.1(f); (h)
whether or not disclosed on a title policy delivered zoning restrictions, rights
of way, easements, licenses, or other restrictions on the use of any Real Estate
or other minor defects, encroachments or other minor irregularities in title
(including leasehold title) thereto, so long as the same do not materially
impair the use, value, or marketability of such Real Estate; (i) presently
existing or hereafter created Liens in favor of Agent, on behalf of Lenders; and
(j) Liens expressly permitted under clauses (b) and (c) of Section 6.7 of the
Agreement .
"Permitted Wave Transaction Proceeds" means all amounts which are the
subject of that certain Holdback Agreement, dated as of March 11, 2003 by and
between Borrower and WaveDivision Holdings, LLC relating to the holdback of
$1,060,054 from the purchase price payable to Borrower pursuant to that certain
Asset Purchase Agreement, dated October 28, 2002, as amended.
"Person" means any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation, limited
liability company, institution, public benefit corporation, other entity or
government (whether federal, state, county, city, municipal, local, foreign, or
otherwise, including any instrumentality, division, agency, body or department
thereof).
"Plan" means, at any time, an "employee benefit plan," as defined in
Section 3(3) of ERISA, that any Credit Party or ERISA Affiliate maintains,
contributes to or has an obligation to contribute to on behalf of participants
who are or were employed by any Credit Party.
"Pledge Agreements" means the NCC Pledge Agreement, and any other
pledge agreement entered into after the Closing Date by any Credit Party (as
required by the Agreement or any other Loan Document).
"Pole Attachment Agreement" means any pole attachment agreement or
underground conduit use agreement entered into by or on behalf of Borrower with
respect to the operation of any System.
75
"Proceeds" means "proceeds," as such term is defined in the Code,
including (a) any and all proceeds of any insurance, indemnity, warranty or
guaranty payable to any Credit Party from time to time with respect to any of
the Collateral, (b) any and all payments (in any form whatsoever) made or due
and payable to any Credit Party from time to time in connection with any
requisition, confiscation, condemnation, seizure or forfeiture of all or any
part of the Collateral by any Governmental Authority (or any Person acting under
color of governmental authority), (c) any claim of any Credit Party against
third parties (i) for past, present or future infringement of any Patent or
Patent License, or (ii) for past, present or future infringement or dilution of
any Copyright, Copyright License, Trademark or Trademark License, or for injury
to the goodwill associated with any Trademark or Trademark License, (d) any
recoveries by any Credit Party against third parties with respect to any
litigation or dispute concerning any of the Collateral including claims arising
out of the loss or nonconformity of, interference with the use of, defects in,
or infringement of rights in, or damage to, Collateral, (e) all amounts
collected on, or distributed on account of, other Collateral, including
dividends, interest, distributions and Instruments with respect to Investment
Property and pledged Stock, and (f) any and all other amounts, rights to payment
or other property acquired upon the sale, lease, license, exchange or other
disposition of Collateral and all rights arising out of Collateral.
"Pro Forma" means the unaudited balance sheet of Borrower dated as of
September 30, 2003 after giving pro forma effect to the Refinancing.
"Projections" means Borrower's forecasted consolidated and
consolidating: (a) balance sheets; (b) profit and loss statements; (c) cash flow
statements; and (d) capitalization statements, all prepared on a System by
System or basis and otherwise consistent with the historical Financial
Statements of Borrower, together with appropriate supporting details and a
statement of underlying assumptions.
"Pro Rata Share" means with respect to all matters relating to any
Lender the percentage obtained by dividing (i) the aggregate outstanding
principal balance of the Term Loans held by that Lender, by (ii) the outstanding
principal balance of the Term Loans held by all Lenders.
"Qualified Plan" means a Pension Plan that is intended to be
tax-qualified under Section 401(a) of the IRC.
"Qualified Assignee" means (a) any Lender, any Affiliate of any Lender
and, with respect to any Lender that is an investment fund that invests in
commercial loans, any other investment fund that invests in commercial loans and
that is managed or advised by the same investment advisor as such Lender or by
an Affiliate of such investment advisor, and (b) any commercial bank, savings
and loan association or savings bank or any other entity which is an "accredited
investor" (as defined in Regulation D under the Securities Act) which extends
credit or buys loans as one of its businesses, including insurance companies,
mutual funds, lease financing companies and commercial finance companies, in
each case, which through its applicable lending office, is capable of lending to
Borrower without the imposition of any withholding or similar taxes or otherwise
breaching applicable law; provided that (i) no Person proposed to become a
Lender after the Closing Date and determined by Agent to be acting in the
capacity of a vulture fund or distressed debt purchaser shall be a Qualified
Assignee, and (ii) no Person or Affiliate of such Person proposed to become a
Lender after the Closing Date and that
76
holds Subordinated Debt or Stock issued by any Credit Party, shall be a
Qualified Assignee, without (in either case) the prior written consent of the
Agent.
"Real Estate" has the meaning ascribed to it in Section 3.4.
"Refinancing" means the repayment in full by Borrower of the Existing
Lenders Obligations on the Closing Date.
"Release" means any release, threatened release, spill, emission,
leaking, pumping, pouring, emitting, emptying, escape, injection, deposit,
disposal, discharge, dispersal, dumping, leaching or migration of Hazardous
Material in the indoor or outdoor environment, including the movement of
Hazardous Material through or in the air, soil, surface water, ground water or
property.
"Requisite Lenders" means Lenders having more than 66 2/3% of the
aggregate outstanding amount of the Term Loans.
"Restricted Payment" means, with respect to Borrower (a) the
declaration or payment of any dividend or the incurrence of any liability to
make any other payment or distribution of cash or other property or assets in
respect of Stock; (b) any payment on account of the purchase, redemption,
defeasance, sinking fund or other retirement of such Credit Party's Stock or any
other payment or distribution made in respect thereof, either directly or
indirectly; (c) any payment or prepayment of principal of, premium, if any, or
interest, fees or other charges on or with respect to, and any redemption,
purchase, retirement, defeasance, sinking fund or similar payment and any claim
for rescission with respect to, any Subordinated Debt; (d) any payment made to
redeem, purchase, repurchase or retire, or to obtain the surrender of, any
outstanding warrants, options or other rights to acquire Stock of such Credit
Party now or hereafter outstanding; (e) any payment of a claim for the
rescission of the purchase or sale of, or for material damages arising from the
purchase or sale of, any shares of such Credit Party's Stock or of a claim for
reimbursement, indemnification or contribution arising out of or related to any
such claim for damages or rescission; (f) any payment, loan, contribution, or
other transfer of funds or other property to any Stockholder of such Credit
Party other than payment of compensation in the ordinary course of business to
Stockholders who are employees of such Credit Party; and (g) any payment of
management fees (or other fees of a similar nature) by such Credit Party to any
Stockholder of such Credit Party or its Affiliates.
"Retiree Welfare Plan" means, at any time, a Welfare Plan that provides
for continuing coverage or benefits for any participant or any beneficiary of a
participant after such participant's termination of employment, other than
continuation coverage provided pursuant to Section 4980B of the IRC and at the
sole expense of the participant or the beneficiary of the participant.
"Schedules" means the Schedules prepared by Borrower and denominated as
Schedules 1.1 through 6.7(a) in the Index to the Agreement.
"Security Agreement" means the Security Agreement of even date herewith
entered into by and among Agent, on behalf of itself and Lenders, and each
Credit Party that is a signatory thereto.
77
"Software" means all "software" as such term is defined in the Code,
now owned or hereafter acquired by any Credit Party, other than software
embedded in any category of Goods, including all computer programs and all
supporting information provided in connection with a transaction related to any
program.
"Solvent" means, with respect to any Person on a particular date, that
on such date (a) the fair value of the property of such Person is greater than
the total amount of liabilities, including contingent liabilities, of such
Person; (b) the present fair salable value of the assets 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; (c) such Person does
not intend to, and does not believe that it will, incur debts or liabilities
beyond such Person's ability to pay as such debts and liabilities mature; and
(d) such Person is not engaged in a business or transaction, and is not about to
engage in a business or transaction, for which such Person's property would
constitute an unreasonably small capital. The amount of contingent liabilities
(such as litigation, guaranties and pension plan liabilities) at any time shall
be computed as the amount that, in light of all the facts and circumstances
existing at the time, represents the amount that can be reasonably be expected
to become an actual or matured liability.
"Stock" means all shares, options, warrants, general or limited
partnership interests, membership interests or other equivalents (regardless of
how designated) of or in a corporation, partnership, limited liability company
or equivalent entity whether voting or nonvoting, including common stock,
preferred stock or any other "equity security" (as such term is defined in Rule
3a11-1 of the General Rules and Regulations promulgated by the Securities and
Exchange Commission under the Securities Exchange Act of 1934).
"Stockholder" means, with respect to any Person, each holder of Stock
of such Person.
"Subordination Agreement" means that certain Subordination Agreement,
dated as of the Closing Date, between NCC and Agent.
"Subordinated Debt" means any Indebtedness of any Credit Party
subordinated to the Obligations in a manner and form satisfactory to Agent and
Lenders in their sole discretion, as to right and time of payment and as to any
other rights and remedies thereunder.
"Subscriber" means, as of any date of determination thereof, the sum of
(i) the total number of households (exclusive of "additional outlets," as such
term is commonly understood in the cable television industry and also exclusive
of customers billed on a bulk billing or commercial account basis) subscribing
on the most recent billing cut-off date prior to the last day of the Fiscal
Quarter of the Borrower ending on, or most recently ended prior to, such date to
receive basic or expanded basic service (as such terms are commonly understood
in the cable television industry) in the cable television systems of the
Borrower and its Subsidiaries and paying the standard monthly service fees and
charges imposed by the Borrower and such Subsidiaries, provided that such term
shall not include any household whose account is more than ninety (90) days past
due for amounts in excess of $10.00 on the most recent billing cut-off date
prior to the last day of the Fiscal Quarter of the Borrower ending on (or most
recently ended prior to) such date and (ii) the total number of equivalent
households served on a bulk billing or commercial account basis, which shall be
deemed to be equal to the sum obtained by adding (A)
78
the quotient of (a) the total fees and charges received from customers receiving
basic only service during the Fiscal Quarter of the Borrower and such
Subsidiaries ending on, or most recently ended prior to, such date on a bulk
billing or commercial account basis by (b) the weighted average standard monthly
service fees and charges for basic service, and (B) the quotient of (a) the
total fees and charges received from customers receiving basic and expanded
basic service during the Fiscal Quarter of the Borrower and such Subsidiaries
ending on, or most recently ended prior to, such date on a bulk billing or
commercial account basis by (b) the weighted average standard monthly service
fees and charges for basic and expanded basic service (as such terms are
commonly understood in the cable television industry) that "Basic Subscribers"
of the type described in clause (i) above were billed during such Fiscal
Quarter.
"Subsidiary" means, with respect to any Person, (a) any corporation of
which an aggregate of more than 50% of the outstanding Stock having ordinary
voting power to elect a majority of the board of directors of such corporation
(irrespective of whether, at the time, Stock of any other class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time, directly or indirectly, owned
legally or beneficially by such Person or one or more Subsidiaries of such
Person, or with respect to which any such Person has the right to vote or
designate the vote of 50% or more of such Stock whether by proxy, agreement,
operation of law or otherwise, and (b) any partnership or limited liability
company in which such Person and/or one or more Subsidiaries of such Person
shall have an interest (whether in the form of voting or participation in
profits or capital contribution) of more than 50% or of which any such Person is
a general partner or may exercise the powers of a general partner. Unless the
context otherwise requires, each reference to a Subsidiary shall be a reference
to a Subsidiary of the Borrower.
"Supporting Obligations" means all "supporting obligations" as such
term is defined in the Code, including letters of credit and guaranties issued
in support of Accounts, Chattel Paper, Documents, General Intangibles,
Instruments, or Investment Property.
"System Disposition" means the sale of all or any portion of a System
in accordance with the provisions of the Partnership Agreement, the effect of
which is to reduce the number of Subscribers serviced by the Borrower and where
the net proceeds of which are repaid in accordance with Section 1.2(b)(i);
provided, however, the Permitted Matagorda Disposition shall not constitute a
System Disposition to the extent the proceeds of any sale or other disposition
thereof do not exceed $50,000.
"Systems" means the CATV Systems, including those for the
municipalities listed on Schedule 3.23(a)(i) attached hereto, in respect of
which Borrower is franchised or otherwise holds legal and valid authority to
operate.
"Taxes" means taxes, levies, imposts, deductions, Charges or with NCC,
and all liabilities with respect thereto, excluding taxes imposed on or measured
by the net income of Agent or a Lender by the jurisdictions under the laws of
which Agent and Lenders are organized or conduct business or any political
subdivision thereof.
"Termination Date" means the date on which (a) the Loans have been
indefeasibly repaid in full, (b) all other Obligations under the Agreement and
the other Loan Documents have been
79
completely discharged, (c) all Letter of Credit Obligations have been cash
collateralized, cancelled or backed by standby letters of credit in accordance
with Annex B, and (d) Borrower shall not have any further right to borrow any
monies under the Agreement.
"Term Loan" has the meaning assigned to it in Section 1.1(a)(i).
"Term Note" has the meaning assigned to it in Section 1.1(a)(i).
"Title IV Plan" means a Pension Plan (other than a Multiemployer Plan),
that is covered by Title IV of ERISA, and that any Credit Party or ERISA
Affiliate maintains, contributes to or has an obligation to contribute to on
behalf of participants who are or were employed by any of them.
"Total Debt Service" means, with respect to any Fiscal Quarter, the sum
(without duplication) of (a) estimated Interest Expense of Borrower for the
immediately succeeding four (4) consecutive Fiscal Quarters (assuming no change
in interest rates applicable to variable rate Indebtedness and after giving
effect to any scheduled repayments during such four (4) Fiscal Quarters), plus
(b) scheduled payments to be made during the immediately succeeding four (4)
consecutive Fiscal Quarters on account of principal of Indebtedness of Borrower
(including, (i) scheduled principal payments in respect of the Term Loan and
(ii) Capital lease Obligations, in each case, required to be paid by Borrower
during such period ).
"Total Debt Service Coverage Ratio" means, with respect to any Person
for any period, the ratio of Annualized EBITDA to Total Debt Service.
"Total Leverage Ratio" means, with respect to Borrower, on a
consolidated basis, the ratio of (a) Funded Debt as of any date of determination
to (b) the sum of Annualized EBITDA as of any date of determination.
"Trademark Security Agreements" means the Trademark Security Agreements
made in favor of Agent, on behalf of Lenders, by each applicable Credit Party.
"Trademark License" means rights under any written agreement now owned
or hereafter acquired by any Credit Party granting any right to use any
Trademark.
"Trademarks" means all of the following now owned or hereafter adopted
or acquired by any Credit Party: (a) all trademarks, trade names, corporate
names, business names, trade styles, service marks, logos, other source or
business identifiers, prints and labels on which any of the foregoing have
appeared or appear, designs and general intangibles of like nature (whether
registered or unregistered), all registrations and recordings thereof, and all
applications in connection therewith, including registrations, recordings and
applications in the United States Patent and Trademark Office or in any similar
office or agency of the United States, any state or territory thereof, or any
other country or any political subdivision thereof; (b) all reissues, extensions
or renewals thereof; and (c) all goodwill associated with or symbolized by any
of the foregoing.
"Unfunded Pension Liability" means, at any time, the aggregate amount,
if any, of the sum of (a) the amount by which the present value of all accrued
benefits under each Title IV Plan
80
exceeds the fair market value of all assets of such Title IV Plan allocable to
such benefits in accordance with Title IV of ERISA, all determined as of the
most recent valuation date for each such Title IV Plan using the actuarial
assumptions for funding purposes in effect under such Title IV Plan, and (b) for
a period of five (5) years following a transaction which might reasonably be
expected to be covered by Section 4069 of ERISA, the liabilities (whether or not
accrued) that could be avoided by any Credit Party or any ERISA Affiliate as a
result of such transaction.
"Welfare Plan" means a Plan described in Section 3(i) of ERISA.
"Working Capital" means the average of Borrower's Current Assets less
Current Liabilities for the first three months of each Fiscal Year compared to
the average of Borrower's Current Assets less Current Liabilities for the last
three months of such Fiscal Year.
All other undefined terms contained in any of the Loan Documents shall,
unless the context indicates otherwise, have the meanings provided for by the
Code to the extent the same are used or defined therein; in the event that any
term is defined differently in different Articles or Divisions of the Code, the
definition contained in Article or Division 9 shall control. Unless otherwise
specified, references in the Agreement or any of the Appendices to a Section,
subsection or clause refer to such Section, subsection or clause as contained in
the Agreement. The words "herein," "hereof" and "hereunder" and other words of
similar import refer to the Agreement as a whole, including all Annexes,
Exhibits and Schedules, as the same may from time to time be amended, restated,
modified or supplemented, and not to any particular section, subsection or
clause contained in the Agreement or any such Annex, Exhibit or Schedule.
Wherever from the context it appears appropriate, each term stated in
either the singular or plural shall include the singular and the plural, and
pronouns stated in the masculine, feminine or neuter gender shall include the
masculine, feminine and neuter genders. The words "including", "includes" and
"include" shall be deemed to be followed by the words "without limitation"; the
word "or" is not exclusive; references to Persons include their respective
successors and assigns (to the extent and only to the extent permitted by the
Loan Documents) or, in the case of governmental Persons, Persons succeeding to
the relevant functions of such Persons; and all references to statutes and
related regulations shall include any amendments of the same and any successor
statutes and regulations. Whenever any provision in any Loan Document refers to
the knowledge (or an analogous phrase) of any Credit Party, such words are
intended to signify that such Credit Party has actual knowledge or awareness of
a particular fact or circumstance or that such Credit Party, if it had exercised
reasonable diligence, would have known or been aware of such fact or
circumstance.
[Signatures Follow on Next Page]
81
IN WITNESS WHEREOF, this Agreement has been duly executed as of the
date first written above.
BORROWER:
NORTHLAND CABLE PROPERTIES
SEVEN LIMITED PARTNERSHIP
By: Northland Communications Corporation,
its Managing General Partner
By: /s/ Xxxx X. Xxxxx
-------------------
Name: Xxxx X. Xxxxx
Title: President
Address for Notices:
Northland Cable Properties Seven Limited
Partnership c/o Northland Communications
Corporation (Managing General Partner)
000 Xxxxxxx Xxxxxx - Xxxxx 000
Xxxxxxx, Xxxxxxxxxx 00000
Attention: President and Senior Counsel
Telecopy: (000) 000-0000
with a copy (which shall not constitute notice) to:
Cairncross & Hempelmann
A Professional Service Corporation
000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Xxxx X. Xxxxxx, Esq.
Telecopy: (000) 000-0000
[Signatures Continue on Next Page]
Signature Page to Term Loan Agreement
LENDER:
CIT LENDING SERVICES CORPORATION,
as Agent and Lender
By: /s/ Xxxx Xxxxxxxx
------------------------------
Name: Xxxx Xxxxxxxx
Title: Vice President
Address for Notices:
CIT Lending Services Corporation
0 XXX Xxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attention: Vice President, Credit Structured
Finance - Communications and Media
Finance Group
Telecopy: 000-000-0000
with a copy (which shall not constitute notice) to:
CIT Xxxxx Xxxxxxxxxx
0 XXX Xxxxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attention: Vice President and Assistant Chief
Counsel Structured Finance-Communications
and Media Finance Group
Telecopy: 000-000-0000
with a further copy (which shall not constitute
notice) to:
Hunton & Xxxxxxxx LLP
000 Xxxxxxxxx Xxxxxx, XX
Xxxxx 0000, Bank of America Plaza
Atlanta, Georgia 30308
Attention: Xxxx X. Xxxxxxxxx, Esq.
Telecopier: 000-000-0000
Signature Page to Term Loan Agreement
The following Persons are signatories to this Agreement in their
capacity as Credit Parties and not as Borrower.
NORTHLAND COMMUNICATIONS
CORPORATION
By: /s/ Xxxx X. Xxxxx
---------------------------------
Name: Xxxx X. Xxxxx
Title: President
Signature Page to Term Loan Agreement
ANNEX A
CASH MANAGEMENT SYSTEM
Borrower shall establish and maintain the Cash Management Systems
described below:
(a) (i) On or before the Closing Date and until the Termination
Date, Borrower shall establish blocked accounts in such Borrower's name and
otherwise complying with clause (c) below ("Blocked Accounts") at the banks set
forth in Schedule 3.17(a) (each, a "Relationship Bank"), and (ii) as of the
Closing Date Borrower also may maintain one or more depositary accounts with the
banks set forth in Schedule 3.17(b), and may establish from time to time one or
more additional or replacement depository accounts with on or more additional
banks on or after the date on which Borrower supplements Schedule 3.17(b) to
disclose such new account (collectively, the "Permitted Depositary Accounts").
At all times prior to the Termination Date, Borrower shall (i) deposit and cause
its local offices to deposit promptly, and in any event no later than the second
Business Day after the date of receipt thereof, all cash, checks, drafts or
other similar items of payment relating to or constituting payments made in
respect of any and all Collateral into one or more Permitted Depositary
Accounts, and (ii) maintain and use its best efforts to require all of
Borrower's local managers to abide by Borrower's existing cash management
policies which require that all amounts in excess of $5,000 maintained in any
Permitted Depositary Account to be promptly deposited into one or more Blocked
Accounts.
(b) Borrower may maintain, in its name, an account (each a
"Disbursement Account" and collectively, the "Disbursement Accounts") at a bank
reasonably acceptable to Agent for use by such Borrower solely in accordance
with the provisions of Section 1.3.
(c) On or before the Closing Date, U.S. Bank, N.A. shall have
entered into tri-party blocked account agreement with Agent, for the benefit of
itself and Lenders, and Borrower, in form and substance reasonably acceptable to
Agent, which shall (x) relate to all Deposit Accounts of Borrower at such banks,
and (y) become operative on or prior to the Closing Date. Each such blocked
account agreement shall provide, among other things, that (i) all items of
payment deposited in such account and proceeds thereof deposited in the
applicable Blocked Account are held by such bank as agent or
bailee-in-possession for Agent, on behalf of itself and Lenders, (ii) the bank
executing such agreement has no rights of setoff or recoupment or any other
claim against such account (and no right of indemnity from Agent or Lenders), as
the case may be, other than for payment of its service fees and other charges
directly related to the administration of such account and for returned checks
or other items of payment, and (iii) from and after the Closing Date (A) with
respect to banks at which a Blocked Account is maintained, such bank agrees,
from and after the receipt of a notice (an "Activation Notice") from Agent
(which Activation Notice may be given by Agent at any time at which an Event of
Default has occurred and is continuing (any of the foregoing being referred to
herein as an "Activation Event")), to forward immediately all amounts in each
Blocked Account to the Collection Account through daily sweeps from such Blocked
Account into the Collection Account. From and after the date Agent has delivered
an Activation Notice to any bank with respect to any Blocked Account(s), no
Borrower shall, or shall cause or permit any Subsidiary thereof to, accumulate
or maintain cash in Disbursement Accounts or payroll accounts as of any date of
determination in excess of checks outstanding against such accounts as of that
date and amounts necessary to meet minimum balance requirements and no Borrower
nor any Subsidiary shall
A-1
have any right to direct the management of the Blocked Accounts or the
disposition of the amounts therein. Borrower agrees that no Permitted Depositary
Account or other account of any type or nature whatsoever shall be maintained by
or on behalf of Borrower, other than those specifically listed on Schedule
3.17(b) as amended from time to time as provided in subsection (a) above.
Furthermore, Borrower agrees that at any time following the occurrence and
during the continuance of an Event of Default, Borrower shall deliver to Agent,
for the benefit of Lenders, a blocked account agreement, in form and substance
satisfactory to Agent and Requisite Lenders related to all accounts of Borrower
for which a blocked account agreement has not been previously delivered under
the terms hereof. In the event any such blocked account agreements are not
received, Borrower shall, at the request of Agent, close such account and
transfer all amounts in such account to an account which is the subject of a
blocked account agreement.
(d) So long as no Default or Event of Default has occurred and is
continuing, Borrower may amend Schedule 3.17(a) to add or replace a Relationship
Bank or Blocked Account or to replace any Disbursement Account; provided, that
(i) Agent shall have consented in writing (which consent shall not be
unreasonably withheld or delayed) in advance to the opening of such account with
the relevant bank and (ii) prior to the time of the opening of such account,
Borrower and such bank shall have executed and delivered to Agent a tri-party
blocked account agreement, in form and substance reasonably satisfactory to
Agent and Requisite Lenders. Borrower shall close any of their accounts (and
establish replacement accounts in accordance with the foregoing sentence)
promptly and in any event within thirty (30) days following notice from Agent
that the creditworthiness of any bank holding an account is no longer acceptable
in Agent's reasonable judgment, or as promptly as practicable and in any event
within sixty (60) days following notice from Agent that the operating
performance, funds transfer or availability procedures or performance with
respect to accounts of the bank holding such accounts or Agent's liability under
any tri-party blocked account agreement with such bank is no longer acceptable
in Agent's reasonable judgment.
(e) The Blocked Accounts and the Disbursement Accounts shall be
cash collateral accounts, with all cash, checks and other similar items of
payment in such accounts securing payment of the Loans and all other
Obligations, and in which each Borrower and each Subsidiary thereof shall have
granted a Lien to Agent, on behalf of itself and Lenders, pursuant to the
Security Agreement.
(f) All amounts deposited in the Collection Account shall be
deemed received by Agent in accordance with Section 1.7 and shall be applied
(and allocated) by Agent in accordance with Section 1.8. In no event shall any
amount be so applied unless and until such amount shall have been credited in
immediately available funds to the Collection Account.
(g) Borrower shall and shall cause its Affiliates, officers,
employees, agents, directors or other Persons acting for or in concert with such
Borrower (each a "Related Person") to (i) hold in trust for Agent, for the
benefit of itself and Lenders, all checks, cash and other items of payment
received by Borrower or any such Related Person, and (ii) within two (2)
Business Days after receipt by Borrower or any such Related Person of any
checks, cash or other items of payment, deposit the same into a Blocked Account
or a Permitted Depositary Account. Borrower on behalf of itself and each Related
Person thereof acknowledges and agrees that all cash, checks or other items of
payment constituting proceeds of Collateral are part of the
A-2
Collateral. Other than as expressly permitted by this Annex A, all proceeds of
the sale or other disposition of any Collateral, shall be deposited directly
into the applicable Blocked Accounts.
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