LOAN AGREEMENT
LOAN AGREEMENT ("Agreement") made as of December 30, 1997, between ATLANTIC
TELE-NETWORK CO., a United States Virgin Islands corporation ("Borrower"), and
RURAL TELEPHONE FINANCE COOPERATIVE, a South Dakota cooperative association
("Lender").
RECITALS
WHEREAS, Borrower has requested Lender to make the Loan(s) to Borrower
described in Schedule 1 hereto; and
WHEREAS, Lender is willing to make the Loan(s) upon the terms and
conditions set forth in this Agreement,
NOW, THEREFORE, for and in consideration of the mutual covenants contained
herein, Borrower and Lender do hereby agree as follows:
1. CONSTRUCTION AND DEFINITION OF TERMS
All accounting terms not specifically defined herein shall have the
meanings assigned to them as determined by generally accepted accounting
principles. In addition to the terms defined elsewhere in this Agreement, unless
the context otherwise requires, when used herein, the following terms shall have
the following meanings:
"Adjustment Date" shall mean a date or dates, determined by the Lender
based on the term (or rate period) of the applicable Fixed Rate, after the date
of the initial Advance to the Maturity Date.
"Advance" shall mean an Advance as defined in Section 2.02.
"Business Day" shall mean any day that Lender is open for business.
"Cash Margins" for any year shall mean net income plus depreciation,
amortization and any other non-cash charges, less any non-cash credits and
principal on long-term debt payable in such year, as calculated on a
consolidated basis for Borrower and all its Subsidiaries.
"Certified" shall mean that the information, statement, schedule, report or
other document required to be "Certified" shall contain a representation of a
duly authorized officer of Borrower that such information, statement, schedule,
report or other document is true and correct and complete.
"Closing" shall mean the first date on which funds are advanced to Borrower
hereunder.
"Collateral" shall mean the Mortgaged Property, as such term is defined in
the Mortgage, and all proceeds, cash and non-cash, including insurance proceeds,
of the foregoing, whether in the possession of Borrower or any other person, and
certain stock and related proceeds and dividends described in, and pledged to
Lender pursuant to, a Pledge and Security Agreement dated as of even date
herewith (the "Pledge Agreement').
"Commitment" shall have the meaning set forth in Schedule 1 hereto.
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"Debt Service Coverage Ratio" or "DSC" for any year shall mean (a) total
net income or margins plus depreciation and amortization expense, and interest
on long-term debt for such year, divided by (b) principal and interest on
long-term debt payable in such year, as measured on a consolidated basis for the
Borrower and all its Subsidiaries.
"Event of Default" shall mean any of the events described in Section 8
hereof.
"Fixed Rate" shall mean the interest rate per annum provided for in Section
2.03 of this Agreement.
"Leases" shall mean any lease of property by which Borrower or any
Subsidiary shall be obligated for rental or other payments which in the
aggregate are in excess of $100,000 other than such equipment leases which are
in form and substance substantially in conformity with lease agreements in
general use in Borrower's industry by companies of size and character similar to
Borrower.
"Lien" shall mean any statutory or common law consensual or non-consensual
mortgage, pledge, security interest, encumbrance, lien, right of set-off, claim
or charge of any kind, including, without limitation, any conditional sale or
other title retention transaction, any lease transaction in the nature thereof
and any secured transaction under the Uniform Commercial Code of any
jurisdiction.
"Loan" shall mean the loan or loans by the Lender to Borrower, pursuant to
this Agreement and the Note, in an aggregate principal amount not to exceed the
Commitment.
"Make-Whole Premium" shall mean the excess, if any, of (i) the present
value of the amount of interest that would have accrued during the applicable
Fixed Rate period on that portion of the Loan to be prepaid or converted over
(ii) the present value of the amount of interest Lender would earn if that
portion of the Loan to be prepaid or converted was reinvested for the remainder
of the applicable Fixed Rate period in U.S. Treasury obligations with a maturity
comparable to the remaining term of the applicable Fixed Rate period. For
purposes of calculating the present value in (i) and (ii) above, the discount
rate will be the rate of interest accruing on the U.S. Treasury obligations in
(ii) above.
"Maturity Date" shall mean the maturity date defined in the Note.
"Minimum Net Worth Test" shall be calculated on a consolidated basis for
the Borrower and all its Subsidiaries, and shall mean an equity to total asset
ratio of at least forty percent (40%). Equity shall be determined by subtracting
total liabilities from total assets.
"Mortgage" shall mean the mortgage and security agreement described in
Schedule 1.
"Net Worth" shall be calculated on a consolidated basis for the Borrower
and all its Subsidiaries taken as a whole and arrived at by subtracting total
liabilities from total assets.
"Note" shall mean the Note or Notes executed and delivered by Borrower at
or prior to Closing pursuant to Subsection 5.02(a) hereof, and all renewals,
replacements and extensions thereof.
"Obligations" shall include the full and punctual performance of all
present and future duties, covenants and responsibilities due to the Lender by
Borrower under this Agreement, the Note, the Other Agreements, all present and
future obligations of Borrower to the Lender for the payment of money under this
Agree-
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ment, the Note, the Other Agreements, extending to all principal amounts,
interest, late charges and all other charges and sums, as well as all costs and
expenses payable by Borrower under this Agreement, the Note, the Other
Agreements, and any and all other present and future monetary liabilities of
Borrower to the Lender, whether direct or indirect, contingent or noncontingent,
matured or unmatured, accrued or not accrued, related or unrelated to this
Agreement, whether or not of the same character or class as Borrower's
obligations under this Agreement and the Note, whether or not secured under any
other document, instrument or statutory or common law provision, as well as all
renewals, refinancings, consolidations, recastings and extensions of any of the
foregoing.
"Other Agreements" shall mean any and all promissory notes, security
agreements, assignments, subordination agreements, pledge or hypothecation
agreements, mortgages, deeds of trust, leases, contracts, guaranties,
instruments and documents now and hereafter existing between the Lender and
Borrower, executed and/or delivered pursuant to this Agreement or guaranteeing,
securing or in any other manner relating to any of the Obligations, including
the instruments and documents referred to in Subsection 5.02 hereof.
"Payment Date" shall mean the last day of each of the months referred to in
Schedule 1 hereto.
"Payment Notice" shall mean the notice furnished to the Borrower at least
quarterly indicating the precise amount of principal and/or interest due on the
next ensuing Payment Date, such notice to be sent to the Borrower at least ten
(10) days before such Payment Date.
"Person" shall include natural persons, corporations, associations,
partnerships, joint ventures, trusts, governments and agencies and departments
thereof, and every other entity of every kind.
"Pledge Agreement" shall mean the Pledge and Security Agreement executed by
and between Borrower and Lender as of even date herewith.
"Subordinated Capital Certificate" or "SCC" shall mean a subordinated
certificate representing an investment in the Lender purchased by the Borrower
in connection with the Loan.
"Subsidiary" at any time means any entity which is at the time beneficially
owned or controlled directly or indirectly by the Borrower, by one or more such
entities or by the Borrower and one or more such entities.
"Termination Date" shall mean that date which is two (2) years from the
date hereof.
"Times Interest Earned Ratio" or "TIER" for any year shall mean (a) total
net income or margins plus income taxes plus interest payable on long-term debt
for such year, divided by (b) interest on long-term debt payable in such year,
as measured on a consolidated basis for the Borrower and all its Subsidiaries.
"Total Plant" shall be calculated on a consolidated basis for the Borrower
and all its Subsidiaries and shall mean the total of all assets included in
property, plant and equipment pursuant to generally accepted accounting
principles and shall exclude any goodwill or plant acquisition adjustments.
"Variable Rate" shall mean the variable rate established by the Lender from
time to time for loans similarly classified pursuant to Lender's policies and
procedures then in effect.
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2. LOAN
2.01. Loan. The Lender agrees to make the Loan to Borrower subject to all
of the terms and conditions of this Agreement and the Other Agreements.
2.02. Advances. The Lender agrees to make, and the Borrower agrees to
request, on the terms and conditions of this Agreement, Advances from time to
time at the office of the Lender in Herndon, Virginia, or at such other place as
the Lender may designate, not to exceed the Commitment. The Borrower shall give
the Lender at least one Business Day prior written notice of the date on which
each Advance is to be made. On the Termination Date the Lender may stop
advancing funds and reduce the Commitment to the aggregate amount theretofore
advanced. The obligation of the Borrower to repay the Advances shall be
evidenced by the Note.
2.03. Payment, Amortization and Interest Rate.
(a) Payment. The Borrower shall pay on each Payment Date quarterly
installments, in an amount as determined by the Lender, of principal
and/or interest as shown in the Payment Notice, except that, if not
sooner paid, any balance of the principal amount and interest accrued
thereon and all other amounts due hereunder shall be due and, payable
on the Maturity Date. Payment of principal hereunder shall commence
after the first full quarter following the initial Advance of funds as
set forth in Schedule 1 and on each subsequent Payment Date until the
Maturity Date or such earlier date as all amounts due hereunder and on
account of the Note shall have been paid in full. Payment of interest
hereunder is due on each Payment Date in which a principal balance is
outstanding. Principal will be amortized in accordance with the method
stated in Schedule 1 hereto.
The Lender will use, for purposes of calculating the amortization of
principal, one of the following interest rates, as applicable:
(i) If the Borrower elects the Fixed Rate, the Fixed Rate in effect on the
Adjustment Date; or
(ii) If the Borrower elects the Variable Rate, the Variable Rate in effect
when amortization begins; or
(iii)If the Borrower elects to convert from one interest rate program to
another, pursuant to the provisions hereunder, the interest rate then
in effect for the elected program.
At the Lender's option, all payments shall be applied to late payment
charges due, as hereinafter provided, then to interest accrued to the date of
such payment, and then to the reduction of principal balance outstanding.
No provision of this Agreement or the Note shall require the
payment, or permit the collection, of interest in excess of the highest rate
permitted by applicable law.
(b) Interest Rate. Each Advance shall be initially made at the Variable
Rate. Interest shall be computed from the actual number of days
elapsed on the basis of a year of 365 days until the first Payment
Date following the initial Advance. Thereafter, interest shall
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continue to be computed for the actual number of days elapsed on the
basis of a year of 365 days unless a Fixed Rate is applicable to the
Loan, in which case interest shall be computed on the basis of a
30-day month and 360-day year.
(i) Variable Rate. If Advances are made at the Variable Rate, it shall
apply until the Maturity Date, except as provided hereinbelow.
(ii) Fixed Rate. If the Borrower elects a Fixed Rate, such Fixed Rate as is
available and in effect for loans similarly classified pursuant to
Lender's policies and procedures then in effect at the time of the
election shall apply to such Advance until the Adjustment Date. Upon
notice given by the Borrower five Business Days prior to such
Adjustment Date, Borrower may elect to reset the interest rate to such
Fixed Rate as is available and in effect at the time of such
Adjustment Date. Such reset Fixed Rate shall apply to that portion of
the outstanding principal balance of the Loan elected to have a Fixed
Rate from the Adjustment Date until a new Adjustment Date or the
Maturity Date. If Borrower does not elect to reset the Fixed Rate, the
Variable Rate shall apply to the outstanding principal balance of the
Loan that had been bearing interest at the Fixed Rate prior to such
Adjustment Date, from such Adjustment Date to the Maturity Date.
(iii) Conversion to Different Interest Program.
(A) Variable Rate to Fixed Rate. Subject to the conditions set forth
herein, the Borrower may convert from the Variable Rate to the
Fixed Rate for any portion or all of the principal amount of the
Commitment then outstanding at any time provided the Lender
offers a Fixed Rate at such time.
(B) Fixed Rate to Variable Rate. The Borrower may convert from a
Fixed Rate to the Variable Rate: (1) on an Adjustment Date or (2)
at any other time, provided that Borrower shall pay Lender any
applicable Make-Whole Premium.
2.04. Prepayment. In the event the Borrower prepays all or part of the
Loan, the Borrower shall pay any payment fee as the Lender may prescribe
pursuant to the terms of this Section 2.04. All prepayments shall be accompanied
by payment of accrued and unpaid interest on the amount of and to the date of
the prepayment. All prepayments shall be applied first to fees, second to the
payment of accrued and unpaid interest, and then to the unpaid balance of the
principal amount of the Loan. If the Loan bears interest at the Variable Rate
the Borrower may prepay the Loan or any portion thereof, as the case may be, at
any time subject to the terms hereof and said prepayment fee shall be in an
amount equal to fifty (50) basis points times the amount being prepaid. If the
Loan bears interest at the Fixed Rate, the Borrower may prepay the Loan only on
an Adjustment Date or any such other date provided that the Borrower shall pay a
prepayment fee in an amount equal to fifty (50) basis points times the amount
being prepaid plus any applicable Make-Whole Premium.
2.05. 5% Subordinated Capital Certificates. The Borrower shall purchase
SCCs which in the aggregate shall not exceed the amount specified in Schedule 1
hereto. Unless otherwise requested in writing by the Borrower prior to the
initial Advance and approved by the Lender, the Borrower agrees to purchase SCCs
either (1) with each Advance in the amount of five percent of each such Advance,
and each such SCC shall be paid for with proceeds of such Advance, or (2) by
making payments with Borrower's own funds in twenty equal quarterly
installments, commencing with the first full quarter following the initial
Advance. If the Borrower
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elects to pay for SCCs other than from Loan funds, the amount of the Commitment
will be correspondingly reduced by said amount when the SCCs are fully paid. If
the Borrower obtains Advances hereunder other than for the purpose of purchasing
SCCs and fails to pay for the SCCs, then the Lender may make Advances for the
account of the Borrower to purchase the SCCs. The Lender agrees to deliver the
SSCs on or about the date on which the SCCs have been paid for in full. The SCCs
shall bear no interest and shall mature in accordance with the terms thereof.
3. SECURITY
As security for the payment and performance of all of the Obligations,
Borrower has (i) entered into the Mortgage pledging and granting to the Lender a
prior and continuing security interest in the Collateral that may be secured by
the Mortgage that shall continually exist until all Obligations have been paid
in full and (ii) executed the Pledge Agreement with Lender pursuant to which
Borrower has pledged certain equity interests as described therein. If
reasonably required by the Lender at any time, Borrower shall make notations,
satisfactory to the Lender, on its books and records disclosing the existence of
the Lender's security interest in the Collateral. Borrower agrees that, with
respect to the Collateral which is subject to Article 9 of the Uniform
Commercial Code, the Lender shall have, but not be limited to, all the rights
and remedies of a secured party under the Uniform Commercial Code. The Lender
shall have no liability or duty, either before or after the occurrence of an
Event of Default hereunder, on account of loss of or damage to, or to collect or
enforce any of its rights against, the Collateral, or to preserve any rights
against account debtors or other parties with prior interests in the Collateral.
4. REPRESENTATIONS AND WARRANTIES
To induce the Lender to enter into this Agreement, Borrower represents and
warrants to the Lender as of the date of this Agreement that:
4.01. Good Standing. Borrower is a corporation duly incorporated, validly
existing and in good standing under the laws of the territory of its
organization; has the power to own its property and to carry on its business; is
duly qualified to do business; and is in good standing in each jurisdiction in
which the transaction of its business makes such qualification necessary.
4.02. Authority. Borrower has full power and authority to enter into this
Agreement, the Note, the Mortgage and the Pledge Agreement; to make the
borrowing hereunder; to execute and deliver all documents and instruments
required hereunder and to incur and perform the obligations provided for herein,
in the Mortgage, in the Pledge Agreement and in the Note, all of which have been
duly authorized by all necessary and proper corporate and other action; and no
consent or approval of any person, including, without limitation, stockholders
and members of Borrower and any public authority or regulatory body, which has
not been obtained is required as a condition to the validity or enforceability
hereof or thereof.
4.03. Binding Agreement. This Agreement has been duly and property executed
by Borrower, constitutes the valid and legally binding obligation of Borrower
and is fully enforceable against Borrower in accordance with its terms, subject
only to laws affecting the rights of creditors generally, the exercise of
judicial discretion in accordance with general principles of equity or because
waivers of statutory or common law rights or remedies may be limited.
4.04. No Conflicting Agreements. The execution, delivery of and performance
by Borrower of this Agreement, the Mortgage, the Pledge Agreement and the Note,
and the transactions contemplated hereby
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or thereby, will not: (a) violate any provision of law, any order, rule or
regulation of any court or other agency of government, any award of any
arbitrator, the articles of incorporation or by-laws of Borrower, or any
indenture, contract, agreement, mortgage, deed of trust or other instrument to
which Borrower is a party or by which it or any of its property is bound; or (b)
be in conflict with, result in a breach of or constitute (with due notice and/or
lapse of time) a default under, any such award, indenture, contract agreement,
mortgage, deed of trust or other instrument, or result in the creation or
imposition of any Lien (other than contemplated hereby) upon any of the property
or assets of Borrower.
4.05. Litigation. There are no judgments, claims, actions, suits or
proceedings pending or, to the knowledge of Borrower, threatened against or
affecting Borrower or its properties, at law or in equity or before or by any
federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, which may result in any material adverse
change in the business, operations, prospects, properties or assets or in the
condition, financial or otherwise, of Borrower, and Borrower is not, to its
knowledge, in default with respect to any judgment, order, writ, injunction,
decree, rule or regulation of any court or federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, which would have a material adverse effect on Borrower.
4.06. Financial Condition. The financial statements of Borrower as at the
date set forth in Schedule 1 hereto, heretofore delivered to the Lender, are
complete and correct, fairly present the financial condition of Borrower and
have been prepared in accordance with generally accepted accounting principles
applied on a consistent basis. There are no liabilities of Borrower, direct or
indirect, fixed or contingent, as of the date of such statements which are not
reflected therein. There has been no material adverse change in the financial
condition or operations of the Borrower from that set forth in said financial
statements except changes previously disclosed in writing to the Lender prior to
the date hereof.
4.07. Taxes. Borrower has paid or caused to be paid all federal, state and
local taxes to the extent that such taxes have become due, unless the Borrower
is contesting in good faith any such tax. Borrower has filed or caused to be
filed all federal, state and local tax returns which are required to be filed by
Borrower.
4.08. Title to Properties. Borrower has good and marketable title to all of
its real properties and owns all of its other properties and assets free and
clear of any liens, except (i) the lien of this Mortgage and taxes or
assessments not yet due; (ii) deposits or pledges to secure payment of workmen's
compensation, unemployment insurance, old age pensions or other social security;
and (iii) deposits or pledges to secure performance of bids, tenders, contracts
(other than contracts for the payment of borrowed money), leases, public or
statutory obligations, surety or appeal bonds, or other deposits or pledges for
purposes of like general nature in the ordinary course of business.
4.09. Licenses and Permits. Borrower has duly obtained and now holds all
licenses, permits, certifications, approvals and the like necessary to own and
operate its property and business that are required by federal, state and local
laws of the jurisdictions in which Borrower conducts its business and each
remains valid and in full force and effect.
4.10. Subsidiaries. Borrower has no Subsidiaries other than Subsidiaries
heretofore disclosed to the Lender, or hereafter formed or acquired with the
prior written consent of the Lender.
4.11. Certain Indebtedness. There is no indebtedness of Borrower owing to
any employee, officer, stockholder or director of the board of Borrower, other
than accrued salaries, commissions and the like and any indebtedness
subordinated to the Obligations pursuant hereto.
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4.12. Location of Office. The chief place of business of the Borrower and
the office where its records concerning accounts and contract rights are kept is
identified in Schedule 1 hereto.
4.13. Required Approvals. No license, consent, permit or approval of any
governmental agency or authority is required to enable the Borrower to enter
into this Agreement or to perform any of its obligations provided for herein
except as disclosed on Schedule 1 hereto and except with respect to regulatory
approvals which may be required in connection with the Lender's enforcement of
certain remedies hereunder.
4.14. ERISA. Each pension plan of Borrower and its Subsidiaries providing
benefits for employees of Borrower or such Subsidiary covered by Title IV of the
Employee Retirement Income Security Act of 1974, as amended, and the regulations
thereto ("ERISA"), is in compliance with ERISA in all material respects, and no
material liability to the Pension Benefit Guaranty Corporation ("PBGC") or to a
multiemployer plan has been, or is expected by Borrower or its Subsidiaries to
be, incurred by Borrower or such Subsidiaries.
5. CONDITIONS OF LENDING
The Lender shall have no obligation to make the initial Advance to Borrower
hereunder unless, as of the date of Closing, each of the following conditions
precedent shall be satisfied as provided below:
5.01. Legal Matters. All legal matters incident to the consummation of the
transactions hereby contemplated shall be satisfactory to counsel for the Lender
and to such local counsel as counsel for the Lender may retain.
5.02. Documents. There shall have been delivered to the Lender, fully
completed and duly executed (when applicable), the following, satisfactory to
the Lender and its counsel:
(a) This Agreement and the Note.
(b) Certified copies, satisfactory to the Lender, of all such
corporate documents and proceedings of the Borrower authorizing
the transactions herein contemplated.
(c) A written opinion from Borrower's counsel addressing such legal
matters as the Lender or its counsel shall reasonably require.
(d) The Borrower shall have (i) executed the Mortgage; (ii) if any
real property is owned by Borrower, recorded a valid and binding
Mortgage granting Lender a first lien in all real property owned
by Borrower; (iii) filed financing statements in all
jurisdictions necessary to provide Lender a first priority,
perfected security interest in all Collateral which may be
perfected by the filing of financing statements; and (iv)
delivered such other documents as are necessary to create or
continue a perfected security interest in favor of the Lender in
the Collateral.
(e) The Pledge Agreement dated as of even date herewith and related
stock powers.
5.03. Government Approvals. The Borrower shall have furnished to the Lender
true and correct copies of all certificates, authorizations and consents,
including without limitation the consents referred to in Section 4.13 hereof,
necessary for the execution, delivery or performance by the Borrower of this
Agreement, the Note, the Pledge and the Mortgage.
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5.04. Representations, Warranties and Material Change. At Closing and at
the date of every subsequent Advance hereunder, all covenants, representations
and warranties set forth in this Agreement shall be true and correct on and as
of such time with the same effect as though such covenants, representations and
warranties had been made on and as of such date; no Event of Default specified
in Section 8 and no event which, with the lapse of time or the notice and lapse
of time specified in Section 8 would become such an Event of Default, shall have
occurred and be continuing or will have occurred after giving effect to the
Advance on the books of the Borrower, there shall have occurred no material
adverse change in the business or condition, financial or otherwise, of the
Borrower, and nothing shall have occurred which in the opinion of the Lender
materially and adversely affects the Borrower's ability to meet its obligations
hereunder.
5.05. Special Conditions. At Closing and at the time of every subsequent
Advance hereunder, the Lender and its counsel shall be fully satisfied that the
Borrower has complied and will continue to comply with any special conditions
identified in Schedule 1 hereto.
5.06. Requisitions. The Borrower will request Advances in form and
substance satisfactory to the Lender. Pursuant to the terms and conditions
hereof, the Lender will wire the proceeds of the requested Advance to an account
as directed by the Borrower.
6. AFFIRMATIVE COVENANTS
Borrower covenants and agrees with the Lender that, until all of the
Obligations have been paid in full, Borrower will:
6.01. Membership. Remain, or an affiliate thereof will remain, a member in
good standing of the Lender.
6.02. Financial Statements and Other Information. Furnish to the Lender:
(a) financial statements as required by the Mortgage; (b) such other
information, reports or statements concerning the operations, business affairs
and/or financial condition of Borrower as the Lender may reasonably request from
time to time; and (c) promptly upon their becoming available information, in
form and substance satisfactory to Lender, evidence of any and all changes or
modification of licenses, permits, certifications, approvals and the like
necessary for Borrower to own or operate its business or a substantial part of
its business.
6.03. Financial Ratios. Subject to applicable laws and rules and orders of
regulatory bodies, and to events which in the judgment of the Lender are beyond
the control of the Borrower, so operate and manage its business as to achieve a
DSC of not less than 1.25 and a TIER of not less than 1.50, said ratios being
determined by averaging each of the two highest annual ratios during the three
most recent fiscal years.
6.04. Annual Certificate. Within one hundred twenty (120) days after the
close of each calendar year, commencing with the year in which the initial
Advance hereunder shall have been made, deliver to the Lender a written
statement signed by the general manager or such other similar presiding officer
stating that to the best of said person's knowledge, the Borrower has fulfilled
all of its Obligations under this Agreement, the Note, the Pledge and the
Mortgage throughout such year or, if there has been a default in the fulfillment
of any such Obligations, specifying each such default known to said person and
the nature and status thereof.
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6.05. Use of Proceeds. Use Advances made hereunder and under the Note only
for the purpose identified in Schedule 1 hereto and for the payment of the
costs, expenses and fees incident to this Agreement and for no other purpose
whatsoever without the prior written consent of the Lender.
6.06. Special Affirmative Covenants. During the term hereof, Lender and its
counsel shall be fully satisfied that the Borrower has complied and will
continue to comply with any special affirmative covenants identified in Schedule
1 hereto.
6.07. Mortgage Filing. Within 10 days of acquiring any real property, the
Borrower shall cause the Mortgage to be duly recorded as a first mortgage on all
real property and the Mortgage or other appropriate documentation shall have
been duly filed, recorded or indexed as a security interest in personal property
wherever the Lender shall have reasonably requested, all in accordance with
applicable law, and the Borrower shall have caused satisfactory evidence thereof
to be furnished to the Lender.
7. NEGATIVE COVENANTS
7.01. Notice. Borrower covenants and agrees with the Lender that Borrower
will not, directly or indirectly, without giving written notice to the Lender
thirty days prior to the effective date of any change:
(a) Change Location of Chief Place of Business. Change the location
of the Borrower's chief place of business.
(b) Change of Name. Change the name of Borrower.
7.02. Consent. Borrower covenants and agrees with the Lender that Borrower
will not, directly or indirectly, without the prior written consent of the
Lender:
(a) Control. Alter or permit alteration of control of the Borrower.
Control shall be as defined by regulations for telephone
companies issued by the Federal Communications Commission
("FCC").
(b) Subsidiaries. Form or acquire any Subsidiaries.
(c) Additional Indebtedness. Borrow money on a secured or unsecured
basis from any other lender or incur any additional secured or
unsecured indebtedness; or enter into or allow any of its
Subsidiaries to enter into any Leases, unless at that time
Borrower meets the Minimum Net Worth Test; provided, however,
Borrower and its Subsidiaries may grant purchase money secured
indebtedness or incur unsecured trade debt or pay other current
operating liabilities that arise in the ordinary course of
business so long as the aggregate total of such debt does not
exceed five percent (5%) of Borrower's consolidated total assets.
If Borrower meets the Minimum Net Worth Test, then Borrower and
its Subsidiaries may incur additional indebtedness or enter into
Leases without prior written approval of Lender provided the
Borrower meets the Minimum Net Worth Test after incurring such
additional indebtedness or entering into such Leases; provided,
further, however, Borrower must give at least thirty (30) days
written notice to Lender prior to incurring any additional
indebtedness or entering into such Leases.
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7.03. Dividends and Other Cash Distributions. The Borrower will not, in any
one calendar year, without the prior approval in writing of the Lender (i)
declare or pay any dividends or make any other distribution to its stockholders
with respect to its capital stock; (ii) purchase or redeem or retire any of its
capital stock; or (iii) pay any management fees or if already paying a
management fee, pay an increase in management fees, unless with respect to any
of the foregoing (after giving effect to such transaction): (a) Borrower shall
have a minimum equity (determined by subtracting total liabilities from total
assets) to total assets ratio of twenty percent (20%); (b) Borrower shall be in
compliance with the financial ratios in Section 6.03 herein; and (c) the payment
of such dividend, the making of such distribution, or the purchase, redemption
or retirement of such stock, individually or in the aggregate, does not exceed
fifty percent (50%) of the prior fiscal year-end's net income. In no event may
the Borrower make such a distribution or payment when there is unpaid any due
installment of principal and/or interest on the Note or if the Borrower is
otherwise in material default of any provision of this Agreement or would be in
material default hereunder as a result of such distribution or payment.
7.04. Special Negative Covenants. During the term hereof, Lender and its
counsel shall be fully satisfied that the Borrower has complied and will
continue to comply with any special negative covenants identified in Schedule 1
hereto.
7.05. Limitations on Loans, Investments and Other Obligations.
(a) The Borrower shall not, without first obtaining the written
approval of Lender, (i) purchase or make any commitment to
purchase any stock, bonds, notes, debentures or other securities
or obligations of or beneficial interest in, (ii) make any other
investment in, (iii) make any loan to, or (iv) guarantee, assume,
or otherwise become liable for any obligation of, any
corporation, association, partnership, joint venture, trust,
government or any agency or department thereof, or any other
entity of any kind if the aggregate amount of all such purchases,
investments, loans and guarantees exceeds the greater of ten
percent (10%) of Total Plant or thirty percent (30%) of Net
Worth.
(b) The following shall not be included in the limitation on
purchases investments, loans and guarantees in (a) above: (i)
bonds, notes, debentures, stock, or other securities or
obligations issued by or guaranteed by the United States
government or any agency or instrumentality thereof; (ii) bonds,
notes, debentures, stock, commercial paper, subordinated capital
certificates, or other security or obligation of institutions
whose senior unsecured debt obligations are rated by at least two
nationally recognized rating organizations in either or its two
highest categories; (iii) investments incidental to loans made by
RTFC; (iv) bonds, notes, debentures, commercial paper or any
other security of the National Rural Utilities Cooperative
Finance Corporation; and (v) any deposit that is fully insured by
the Federal Government.
8. EVENTS OF DEFAULT
The occurrence of any one or more of the following events shall constitute
an "Event of Default":
(a) Representations and Warranties. Any representation or warranty
made herein, in any of the Other Agreements or in any statement,
report, certificate, opinion, financial
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statement or other document furnished or to be furnished in
connection with this Agreement or the Other Agreements shall be
false or misleading in any material respect.
(b) Payment. Failure of Borrower to make any of the payment
Obligations, including, without limitation, any sum due the
Lender under this Agreement or any of the Other Agreements, when
and as the same shall become due, whether at the due date
thereof, by demand, by acceleration or otherwise.
(c) Other Covenants. Failure of Borrower to observe or perform any
warranty, covenant or condition to be observed or performed by
Borrower under this Agreement or any of the Other Agreements.
(d) Existence. The Borrower shall forfeit or otherwise be deprived of
its charter, franchises, permits, easements, consents or licenses
required to carry on any material portion of its business.
(e) Other Obligations. Default by the Borrower in the payment when
due of any money owed by the Borrower, whether principal,
interest, premium or otherwise, under any other agreement for
borrowing money in an amount in excess of five percent (5%) of
total assets, whether or not such borrowing is secured.
(f) Bankruptcy. A court shall enter a decree or order for relief with
respect to the Borrower or any Subsidiary or guarantor (if any)
in an involuntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or
appointing a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official, or ordering the winding up or
liquidation of its affairs, and such decree or order shall remain
unstayed and in effect for a period of sixty (60) consecutive
days or the Borrower or any Subsidiary or guarantor (if any)
shall commence a voluntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or
under any such law, or consent to the appointment or taking of
possession by a receiver, liquidator, assignee, custodian or
trustee, of a substantial part of its property, or make any
general assignment for the benefit of creditors.
(g) Dissolution or Liquidation. Other than as provided in subsection
(e) above, the dissolution or liquidation of the Borrower or any
Subsidiary or guarantor (if any), or failure by the Borrower or
any Subsidiary promptly to forestall or remove any execution,
garnishment or attachment of such consequence as will impair its
ability to continue its business or fulfill its obligations and
such execution, garnishment or attachment shall not be vacated
within sixty (60) days.
(h) Final Judgment. A final non-appealable judgment in excess of
$100,000 shall be entered against the Borrower and shall remain
unsatisfied or without a stay for a period of sixty (60) days.
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9. RIGHTS AND REMEDIES
9.01. Rights and Remedies of the Lender. Upon the occurrence of an Event of
Default, the Lender may, subject to:
(i) thirty (30) days prior written notice during which time
Borrower shall have the opportunity to cure said Event of
Default except with respect to Obligations pursuant to 8(b),
8(f) and 8(g) above which shall require no notice or demand
and shall have no period to cure; and
(ii) compliance, if required, with the rules and regulations of
the FCC and any state public service or utilities commission
having jurisdiction;
exercise in any jurisdiction in which enforcement hereof is sought, the
following rights and remedies, in addition to all rights and remedies available
to the Lender under applicable law, all such rights and remedies being
cumulative and enforceable alternatively, successively or concurrently:
(a) Declare all unpaid principal outstanding on the Note, all
accrued and unpaid interest thereon, and all other
Obligations to be immediately due and payable and the same
shall thereupon become immediately due and payable without
presentment, demand, protest or notice of any kind, all of
which are hereby expressly waived.
(b) Institute any proceeding or proceedings to enforce the
Obligations owed to, or any Liens in favor of the Lender.
(c) Pursue all rights and remedies available to the Lender that
are contemplated by the Mortgage in the manner, upon the
conditions, and with the effect provided in the Mortgage,
including but not limited to a suit for specific
performance, injunctive relief or damages.
(d) Pursue any other rights and remedies available to the Lender
at law or in equity.
9.02. Cumulative Nature of Remedies. Nothing herein shall limit the right
of the Lender, subject to notice and right to cure provisions contained herein,
to pursue all rights and remedies available to a creditor following the
occurrence of an Event of Default subject to compliance, if required, with the
rules and regulations of the FCC and any state public service or utilities
commission having jurisdiction. Each right, power and remedy of the Lender in
this Agreement and/or the Other Agreements shall be cumulative and concurrent,
and recourse to one or more rights or remedies shall not constitute a waiver or
any other right, power or remedy.
9.03. Costs and Expenses. Borrower agrees to pay and to be liable for any
and all reasonable expenses, including attorneys' fees and court costs, incurred
by the Lender in exercising or enforcing any of its rights hereunder or under
the Other Agreements, together with interest thereon at the rate and determined
in the manner provided in the Mortgage. Subject to the Mortgage and applicable
law, the Lender may apply all Collateral and proceeds of all Collateral to the
Obligations in any manner which the Lender, in its sole discretion, deems
appropriate, and Borrower will continue to be liable for any deficiency.
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9.04. Late Payment Charges. If payment of any principal and/or interest due
under the terms of the Note is not received at the office of the Lender in
Herndon, Virginia, or as the Lender may otherwise designate to the Borrower,
within such time period as the Lender may prescribe from time to time in its
policies in connection with any late payment charges (such unpaid amount of
principal and/or interest being herein called the "delinquent amount" and the
period beginning after such due date until payment of the delinquent amount
being herein called the "late-payment period"), the Borrower will pay to the
Lender, in addition to all other amounts due under the terms of the Note, the
Mortgage, the Pledge and this Agreement, any late-payment charge as may be fixed
by the Lender from time to time, on the delinquent amount for the late-payment
period.
9.05. Lender's Setoff. The Lender shall have the right, in addition to all
other rights and remedies available to it, to set off and to recover against any
or all of the Obligations due to Lender, any monies now and hereafter owing to
Borrower by the Lender. Borrower waives all rights of setoff, deduction,
recoupment or counterclaim.
10. MISCELLANEOUS
10.01. Performance for Borrower. Borrower agrees and hereby authorizes that
the Lender may, in its sole discretion, but the Lender shall not be obligated
to, advance funds on behalf of Borrower without prior notice to Borrower, in
order to insure Borrower's compliance with any material covenant, warranty,
representation or agreement of Borrower made in or pursuant to this Agreement or
any of the Other Agreements, to preserve or protect any right or interest of the
Lender in the Collateral or under or pursuant to this Agreement or any of the
Other Agreements, including without limitation, the payment of any insurance
premiums or taxes and the satisfaction or discharge of any judgment or any Lien
upon the Collateral or other property or assets of Borrower, provided, however,
that the making of any such advance by the Lender shall not constitute a waiver
by the Lender of any Event of Default with respect to which such advance is made
nor relieve Borrower of any such Event or Default. Borrower shall pay to the
Lender upon demand all such advances made by the Lender with interest thereon at
the rate and determined in the manner provided in the Note. All such advances
shall be deemed to be included in the Obligations and secured by the security
interest granted the Lender hereunder to the extent permitted by law.
10.02. Expenses and Filing Fees. Whether or not any of the transactions
contemplated hereby shall be consummated, Borrower agrees to pay to the Lender
at Closing or thirty (30) days after the execution and delivery hereof,
whichever is earlier, all expenses of the Lender in connection with the filing
or recordation of all financing statements and instruments as may be required by
the Lender at the time of, or subsequent to, the execution of this Agreement,
including, without limitation, all documentary stamps, recordation and transfer
taxes and other costs and taxes incident to recordation of any document or
instrument in connection herewith. Borrower agrees to save harmless and
indemnify the Lender from and against any liability resulting from the failure
to pay any required documentary stamps, recordation and transfer taxes,
recording costs, or any other expenses incurred by the Lender in connection with
this Agreement. The provisions of this Subsection 10.02 shall survive the
execution and delivery of this Agreement and the payment of all other
Obligations.
10.03. Waivers by Borrower. Borrower hereby waives, to the extent the same
may be waived under applicable law: (a) in the event the Lender seeks to
repossess any or all of the Collateral by judicial proceedings, any bond(s) or
demand(s) for possession which otherwise may be necessary or required; (b)
presentment, demand for payment, protest and notice of non-payment and all
exemptions; and (c) substitution, impairment, exchange or release of any
collateral security for any of the Obligations. Borrower agrees that the Lender
may exercise any or all of its rights and/or remedies hereunder and under the
Other Agreements without resorting to and without regard to security or sources
of liability with respect to any of the Obligations.
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10.04. Waivers by the Lender. Neither any failure nor any delay on the part
of the Lender in exercising any right, power or remedy hereunder or under any of
the Other Agreements shall operate as a waiver thereof, nor shall a single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or remedy.
10.05. Lender's Records. Every statement of account or reconciliation
rendered by the Lender to Borrower with respect to any of the Obligations shall
be presumed conclusively to be correct and shall constitute an account stated
between the Lender and Borrower unless, within ten (10) Business Days after such
statement or reconciliation shall have been mailed, postage prepaid, to
Borrower, the Lender shall receive written notice of specific objection thereto.
10.06. Modifications. No modification or waiver of any provision of this
Agreement, the Note or any of the Other Agreements, and no consent to any
departure by Borrower therefrom shall in any event be effective unless the same
shall be in writing, and then such waiver or consent shall be effective only in
the specific instance and for the purpose for which given. No notice to or
demand upon Borrower in any case shall entitle Borrower to any other or further
notice or demand in the same, similar or other circumstances.
10.07. Notices. All notices, requests and other communications provided for
herein including, without limitation, any modifications of, or waivers, requests
or consents under, this Agreement shall be given or made in writing (including,
without limitation, by telecopy) and delivered to the intended recipient at the
"Address for Notices" specified below, or, as to any party, at such other
address as shall be designated by such party in a notice to each other party.
Except as otherwise provided in this Agreement, all such communications shall be
deemed to have been duly given when personally delivered or, in the case of a
telecopied or mailed notice, upon receipt, in each case given or addressed as
provided for herein. The Address for Notices of the respective parties are as
follows:
Rural Telephone Finance Cooperative
Woodland Park
0000 Xxxxxxxxxxx Xxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Chief Executive Officer
Fax: 000-000-0000
The Borrower:
The address set forth in
Schedule 1 hereto
10.08. Governing Law; Submission To Jurisdiction; Waiver of Jury Trial.
(a) THE PERFORMANCE AND CONSTRUCTION OF THIS AGREEMENT AND THE NOTE SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH
OF VIRGINIA.
(b) BORROWER HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED
STATES COURTS LOCATED IN VIRGINIA AND OF ANY STATE COURT SO LOCATED FOR PURPOSES
OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY. BORROWER
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IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY
OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE ESTABLISHING OF THE VENUE OF
ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH
PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
(c) EACH OF THE BORROWER AND THE LENDER HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY
IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
10.09. Holiday Payments. If any payment to be made by the Borrower
hereunder shall become due on a day which is not a Business Day, such payment
shall be made on the next succeeding Business Day and such extension of time
shall be included in computing any interest in respect of such payment.
10.10. Consent to Patronage Capital Distributions. The Borrower hereby
consents that the amount of any distributions with respect to Borrower's
patronage which are made in written notices of allocation (as defined in Section
1388 of the Internal Revenue Code of 1986, as amended ("Code") including any
other comparable successor provision) and which are received from Lender will be
taken into account by Borrower at their stated dollar amounts in the manner
provided in Section 1385(a) of the Code in the taxable year in which such
written notices of allocation are received.
10.11. Right to Inspect. The Borrower shall permit representatives of the
Lender at any time during normal business hours to inspect and make abstracts
from the books and records pertaining to the Collateral, and permit
representatives of the Lender to be present at Borrower's place of business to
receive copies of all communications and remittances relating to the Collateral,
all in such manner as the Lender may reasonably require.
10.12. Survival; Successors and Assigns. All covenants, agreements,
representations and warranties made herein and in the Other Agreements shall
survive Closing and the execution and delivery to the Lender of the Note, and
shall continue in full force and effect until all of the Obligations have been
paid in full. Whenever in this Agreement any of the parties hereto is referred
to, such reference shall be deemed to include the successors and assigns of such
party. All covenants, agreements, representations and warranties by or on behalf
of Borrower which are contained in this Agreement and the Other Agreements shall
inure to the benefit of the successors and assigns of the Lender.
10.13. Assignment. The Lender may assign its rights and obligations under
this Agreement and the Other Agreements without the consent of the Borrower;
provided, however, that no such assignment shall result in terms or conditions
less favorable to Borrower. The Borrower may not assign any of its rights of
obligations under this Agreement or the Other Agreements without the prior
written consent of the Lender.
10.14. Severability. If any term, provision or condition, or any part
thereof, of this Agreement or any of the Other Agreements shall for any reason
be found or held invalid or unenforceable by any court or governmental agency of
competent jurisdiction, such invalidity or unenforceability shall not affect the
remainder of such term, provision or condition nor any other term, provision or
condition, and this Agreement, the Note, and the Other Agreements shall survive
and be construed as if such invalid or unenforceable term, provision or
condition had not been contained therein.
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10.15. Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto on separate counterparts, each of
which, when so executed and delivered, shall be an original, but all such
counter-parts shall together constitute one and the same instrument.
10.16. Headings/Use of Terms. The headings and sub-headings contained in
this Agreement are intended to be used for convenience only and do not
constitute part of this Agreement. The use of any gender or the neuter herein
shall also refer to the other gender or the neuter and the use of the plural
shall also refer to the singular, and vice versa.
10.17. Further Assurances. The Borrower will, upon demand of the Lender,
make, execute, acknowledge and deliver all such further and supplemental
indentures of mortgage, deeds of trust, mortgages, financing statements,
continuation statements, security agreements and/or any other instruments and
conveyances as may be reasonably requested by the Lender to effectuate the
intention of this Agreement and to provide for the securing and payment of the
principal of and interest on the Note according to the terms thereof. 10.18.
Lender's Approval. Wherever prior written approval of Lender is required under
the terms and conditions of this Agreement, Lender hereby agrees to not
unreasonably withhold said approval.
10.19. Merger and Integration. This Agreement and the attached exhibits and
matters incorporated by reference contain the entire agreement of the parties
hereto with respect to the matters covered and the transactions contemplated
hereby, and no other agreement, statement or promise made by any party hereto,
or by any employee, officer, agent or attorney of any party hereto, which is not
contained herein, shall be valid or binding.
10.20. Schedule 1. Schedule 1 attached hereto is an integral part of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have executed or caused to be
executed this Agreement under seal as of the date first above written.
ATLANTIC TELE-NETWORK CO.
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Chief Executive Officer
(SEAL)
Attest: /s/ Xxxxx Xxxxxx
--------------------------
Assistant Secretary
RURAL TELEPHONE FINANCE COOPERATIVE
By:/s/ Xxxxxxxx Xxxxxxxx
--------------------------------------
Title: Assistant Secretary-Treasurer
(SEAL)
Attest: /s/ Xxx Xxxxx
----------------------------------
Assistant Secretary-Treasurer
SCHEDULE 1
1. The "Commitment" shall mean $18,315,789.
2. The Mortgage defined in Section 1 is the Mortgage and Security Agreement by
and between Borrower and Lender dated as of even date herewith.
3. The months relating to the Payment Date are September, December, March and
June.
4. The method of amortization referred to in Section 2.03 shall be based upon
the method indicated below.
____level principal
__X_level debt service (no principal deferral)
5. The amount referred to in Section 2.05 is $915,789 (A-02 loan).
6. The date of Borrower's financial statement referred to in Section 4.06 is
December 31, 1996.
7. The chief place of business referred to in Section 4.12 and address of
Borrower referred to in Section 10.07 is Chase Financial Center, X.X. Xxx
0000, Xx. Xxxxx, X.X. Xxxxxx Xxxxxxx 00000-0000.
8. The government authorities referred to in Section 4.13 are the Virgin
Islands Public Service Commission ("VI PSC") and the Securities and
Exchange Commission ("SEC").
9. The special conditions referred to in Section 5.05 are as follows:
Prior to the initial Advance of funds from this loan, Lender shall receive,
in form and content satisfactory to Lender, copies of the following:
a) Borrower's Articles of Incorporation and Bylaws;
b) All definitive agreements relative to the reorganization of Borrower's
parent corporation, Atlantic Tele-Network, Inc. ("ATN-Inc"), into two
separate public companies ("the Split-Off");
c) The SEC's and all other necessary regulatory, government, lender and
shareholder approvals of the Split-Off;
d) An Internal Revenue Service ("IRS") opinion letter confirming the
tax-free treatment of the Split-Off;
e) A fairness opinion letter issued by an investment banking firm,
reasonably satisfactory to Lender, related to the Split-Off; and
f) Evidence of final approval by the United States Virgin Island's
Industrial Development Commission of Borrower's wholly-owned
Subsidiary, Virgin Islands Telephone Corporation, application for tax
relief.
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10. The purpose referred to in Section 6.05 is to: (i) fund the valuation
adjustment payments for the Split-Off and reorganization of Borrower and
ATN, Inc.; and (ii) purchase SCCs.
11. The special affirmative covenants referred to in Section 6.06 are as
follows: None
12. The special negative covenants referred to in Section 7.04 are as follows:
None
