EXHIBIT 10.39
LOAN AND SECURITY AGREEMENT
This LOAN AND SECURITY AGREEMENT ("Agreement"), is dated as of December 31,
1998 (the "Closing Date"), by and between the following parties:
LENDER/SECURED PARTY: NTFC CAPITAL CORPORATION, a Delaware corporation with
offices at 000 Xxxxxxxxx Xxxxxx Xxxxx, Xxxxxxxx, Xxxxxxxxx
00000 ("Lender")
BORROWER/DEBTOR: STARTEC GLOBAL COMMUNICATIONS CORPORATION, a Maryland
corporation with its principal place of business at 00000
Xxxxx Xxxx Xxxxx, Xxxxxxxx, Xxxxxxxx ("Borrower")
This Agreement includes the general terms and conditions contained herein and
all the exhibits and schedules attached hereto, all of which are incorporated
herein. In the event of an express conflict between the general terms and
conditions and any exhibit or schedule, the additional terms and conditions
stated in the schedule shall control.
By executing this Agreement, Lender agrees to make loans to Borrower, and
Borrower agrees to borrow from Lender and to provide collateral to secure such
loans, all on the terms and conditions set forth herein.
IN WITNESS WHEREOF, the parties have executed this Agreement by their duly
authorized representatives:
LENDER: BORROWER:
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NTFC CAPITAL CORPORATION STARTEC GLOBAL COMMUNICATIONS CORPORATION
BY: BY:
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TITLE: TITLE:
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DATE: DATE:
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TABLE OF CONTENTS
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Page
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ARTICLE 1: DEFINITIONS
1.01. Certain Definitions...................................... 1
1.02. Accounting Principles; Subsidiaries...................... 8
1.03. UCC Terms................................................ 8
1.04. General Construction; Captions........................... 8
1.05. References to Documents and Laws......................... 8
ARTICLE 2: LOANS
2.01. Commitment............................................... 9
2.02. Note and Payment Terms................................... 9
2.03. Procedures for Borrowing..................................10
2.04. Prepayments.............................................. 11
2.05. Computation of Interest.................................. 12
2.06. Payments................................................. 12
2.07. Indemnity................................................ 12
2.08. Use of Proceeds.......................................... 12
2.09. Fees..................................................... 12
2.10. Lender's Expenses........................................ 13
ARTICLE 3: COLLATERAL AND SECURITY AGREEMENT
3.01. Grant of Security Interest............................... 13
3.02. Priority of Security Interests........................... 14
3.03. Further Documentation; Pledge of Instruments............. 14
3.04. Further Identification of Collateral..................... 14
3.05. Remedies................................................. 14
3.06. Standard of Care......................................... 14
3.07. Advances to Protect Collateral........................... 15
3.08. License to Use........................................... 15
3.09. Subsidiary Guarantees.................................... 15
ARTICLE 4: REPRESENTATIONS AND WARRANTIES
4.01. Organization and Qualification........................... 15
4.02. Authority and Authorization.............................. 15
4.03. Execution and Binding Effect............................. 15
4.04. Governmental Authorizations.............................. 16
4.05. Regulatory Authorizations................................ 16
4.06. Material Agreement; Absence of Conflicts................. 16
4.07. No Restrictions.......................................... 16
4.08. Financial Statements..................................... 16
4.09. Financial Accounting Practices........................... 17
4.10. Accurate and Complete Disclosure......................... 17
4.11. No Event of Default; Compliance with Material
Agreements............................................... 17
4.12. Litigation............................................... 17
4.13. Rights to Property....................................... 17
4.14. Financial Condition...................................... 17
4.15. Taxes.................................................... 17
4.16. No Material Adverse Change............................... 18
4.17. No Regulatory Event...................................... 18
4.18. Trade Relations.......................................... 18
4.19. No Brokerage Fees........................................ 18
4.20. Margin Stocks; Regulations U and X .......................18
4.21. Intentionally Deleted.................................... 18
4.22. Intentionally Deleted.................................... 18
4.23. Security Interests....................................... 18
4.24. Place of Business........................................ 18
4.25. Location of Collateral................................... 19
4.26. Clear Title To Collateral................................ 19
4.27. Assumed Names............................................ 19
4.28. Intentionally Deleted.................................... 19
4.29. Nortel Purchase Agreement................................ 19
4.30. Subsidiaries of Borrower................................. 19
ARTICLE 5: CONDITIONS OF CLOSING
5.01. Closing Certificates..................................... 19
5.02 Opinions of Counsel...................................... 19
5.03. Closing Documents........................................ 19
ARTICLE 6: CONDITIONS OF LENDING
6.01. Conditions for Initial Advance........................... 20
6.02. Conditions for All Advances.............................. 20
6.03. Affirmation of Representations and Warranties............ 22
6.04. Deadline for Funding Conditions.......................... 22
ARTICLE 7: AFFIRMATIVE COVENANTS
7.01. Reporting and Information Requirements................... 22
7.02 Other Notices............................................ 23
7.03. Inspection Rights........................................ 23
7.04. Preservation of Corporate Existence and Qualification.... 24
7.05. Continuation of Business................................. 24
7.06. Insurance................................................ 24
7.07. Payment of Taxes, Charges, Claims and Current
Liabilities.............................................. 25
7.08. Financial Accounting Practices........................... 26
7.09. Compliance with Laws..................................... 26
7.10. Use of Proceeds.......................................... 26
7.11. Government Authorizations; Regulatory Authorizations,
Etc...................................................... 26
7.12. Contracts and Franchises................................. 27
7.13. Consents................................................. 27
7.14. Financial Covenants...................................... 27
7.15. Construction and Storage................................. 27
7.16. Upgrade Equipment........................................ 27
ARTICLE 8: NEGATIVE COVENANTS
8.01. Additional Indebtedness.................................. 28
8.02. Restrictions on Liens and Sale of Collateral............. 28
8.03. Intentionally Deleted.................................... 28
8.04. Prohibition of Mergers, Acquisitions, Name, Office or
Business Changes......................................... 28
8.05. Limitation on Equity Payments............................ 28
8.06. Limitation on Investments, Advances and Loans............ 28
8.07. Intentionally Deleted.................................... 29
8.08. Intentionally Deleted.................................... 29
8.09. Removal of Collateral.................................... 29
8.10. Assumed Names............................................ 29
ARTICLE 9: EVENTS OF DEFAULT
9.01. Events of Default........................................ 29
9.02. Consequences of an Event of Default...................... 31
9.03. Exercise of Rights....................................... 31
9.04. Rights of Secured Party.................................. 31
9.05. Notices, Etc. Waived..................................... 32
9.06. Additional Remedies...................................... 32
9.07. Application of Proceeds.................................. 33
9.08. Discontinuance of Proceedings............................ 33
9.09. Power of Attorney........................................ 33
9.10. Regulatory Matters....................................... 34
ARTICLE 10: GENERAL CONDITIONS/MISCELLANEOUS
10.01. Modifications and Waivers................................ 34
10.02. Advances Not Implied Waivers............................. 34
10.03. Deviation from Covenants................................. 35
10.04. Holidays................................................. 35
10.05. Records.................................................. 35
10.06. Notices.................................................. 35
10.07. FCC and PUC Approval..................................... 36
10.08. Lender Sole Beneficiary.................................. 36
10.09. Lender's Review of Information........................... 36
10.10. No Joint Venture......................................... 36
10.11. Severability............................................. 36
10.12. Rights Cumulative........................................ 37
10.13. Duration; Survival....................................... 37
10.14. Governing Law............................................ 37
10.15. Counterparts............................................. 37
10.16. Successors and Assigns................................... 37
10.17. Participation............................................ 38
10.18. Time of Essence.......................................... 38
10.19. Disclosures and Confidentiality.......................... 38
10.20. Jurisdiction and Venue................................... 39
10.21. Jury Waiver.............................................. 39
10.22. Limitation on Liability.................................. 40
10.23. Borrower Waivers......................................... 40
10.24. Schedules................................................ 40
10.25. Agreement to Govern...................................... 40
10.26. Entire Agreement......................................... 40
10.27. Construction............................................. 41
LOAN AND SECURITY AGREEMENT
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THIS LOAN AND SECURITY AGREEMENT ("Agreement") is dated as of the
"Closing Date" set forth on Schedule 1 hereto, by and between the entity or
entities described on Schedule 1 hereto (collectively, "Borrower") and NTFC
CAPITAL CORPORATION, a Delaware corporation ("Lender"), with offices at 000
Xxxxxxxxx Xxxxxx Xxxxx, Xxxxxxxx, Xxxxxxxxx 00000.
B A C K G R O U N D:
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A. Borrower has entered into a certain purchase agreement with Northern
Telecom Inc., as described on Schedule 1 hereto, providing for Borrower's
purchase of certain telecommunications equipment and the license of associated
software, all as described therein, and has requested Lender to extend credit to
Borrower to finance such purchase and license, as described on Schedule 1
hereto, and to make credit available for the purchase of additional
telecommunications equipment, in each case as described herein.
B. Lender is willing to extend such credit to Borrower upon the terms
and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained and intending to be legally bound hereby, the parties
hereto agree as follows:
ARTICLE 1: DEFINITIONS
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1.01. Certain Definitions. Certain terms are defined on Schedule 1
hereto. In addition to other words and terms defined in the preamble hereof or
elsewhere in this Agreement, or on the Schedules hereto, the following words and
terms shall have the following meanings unless the context otherwise clearly
requires:
"Advance(s)": any advance or loan of funds made by Lender to Borrower
pursuant to this Agreement.
"Affiliate": as applied to any Person, any other Person directly or
indirectly controlling, controlled by, or under common control with such Person.
For purposes of this definition and the definition of "Subsidiary", a Person
shall be deemed to control another Person if such first Person possesses,
directly or indirectly, the power to direct, or to cause the direction of, the
management and policies of such other Person, whether through ownership of
voting securities, by contract or otherwise. The "Affiliates" of Borrower shall
also include any Person that owns of record or beneficially at least 10% of the
outstanding capital stock of Borrower (excluding capital stock issuable upon the
exercise of stock options).
"Borrowing Certificate": a certificate substantially in the form of
Exhibit B hereto.
"Borrowing Date": any Business Day on which an Advance is made to
Borrower hereunder.
"Business Day": a day other than a Saturday, Sunday or other day on
which commercial banks in Nashville, Tennessee are authorized or required by law
to close.
"Calendar Quarter": each three-month period starting on each January
1, April 1, July 1, and
October 1, during the term of this Agreement, as appropriately adjusted if
Borrower changes its fiscal year in accordance with this Agreement.
"Carrier": any interexchange carrier or other provider of
telecommunications long distance service, or local exchange company or other
provider of local telecommunications service.
"Cash": at any time, the cash, cash equivalents or marketable
investment grade securities held by Borrower free of any claims or encumbrances.
"Cash Flow": during any fiscal period of Borrower, EBITDA, less any
Equity Payments pursuant to Section 8.05 hereof or payments on Subordinated
Indebtedness made during such period.
"Certificate of Financial Condition": a certificate in the form of
Exhibit F hereto, executed by Borrower.
"Change in Control": any change in the control of, or the actual and
then current ability or right to control, a majority of the outstanding shares
of voting capital stock of Borrower or in the ability or right to control the
election of at least a majority of the board of directors of Borrower.
"Closing Date": as defined on Schedule 1 hereto.
"Code": the Internal Revenue Code of 1986 and the U. S. Treasury
Regulations promulgated thereunder, all as amended from time to time.
"Collateral": as defined in Section 3.01 hereof.
"Commitment": as defined in Section 2.01 hereof.
"Communications Law": any and all of (i) the Communications Act of
1934, as amended and any similar or successor federal statute, and the rules and
regulations of the FCC thereunder, (ii) any applicable state law governing the
provision of telecommunications services, and the rules and regulations of the
PUC, all as the same may be in effect from time to time.
"Consent": a consent to a collateral assignment of the Nortel Purchase
Agreement, a consent to a collateral assignment of the Vendor Purchase
Agreement, a Landlord Consent, and/or a Mortgagee's Consent.
"Contingent Obligation": as to any Person, any obligation of such
Person guaranteeing, directly or indirectly, any Indebtedness, leases, dividends
or other obligations ("primary obligations") of any other Person (the "primary
obligor") in any manner, whether directly or indirectly, including, without
limitation, any obligation of such Person, whether or not contingent, (a) to
purchase any such primary obligation or any property constituting direct or
indirect security therefor, (b) to advance or supply funds (i) for the purchase
or payment of any such primary obligation or (ii) to maintain working capital or
equity capital of the primary obligor or otherwise to maintain the solvency of
the primary obligor, (c) to purchase property, securities or services primarily
for the purpose of assuring the owner of any such primary obligation of the
ability of the primary obligor to make payment of such primary obligation or (d)
otherwise to assure or hold harmless the owner of such primary obligation
against loss in respect thereof.
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"Debt Service": for any fiscal period of Borrower, the sum of all
principal and interest payments that Borrower is required to make during such
period on account of all of its Indebtedness including, without limitation, (a)
amounts due during such period on account of capitalized leases, (b) the then
current portion of any long-term Indebtedness, including any Subordinated
Indebtedness, (c) amounts due on short-term Indebtedness, and (d) amounts due
under this Agreement and the Note.
"Default": any of the conditions or occurrences specified in Section
9.01, whether or not any requirement for the giving of notice, the lapse of
time, or both, or any other condition has been satisfied.
"Default Rate": a rate of interest equal to the lesser of (i) three
percentage points in excess of the Interest Rate, or (ii) the maximum
permissible rate under applicable law in effect at any time.
"EBITDA": for any fiscal period, Borrower's actual operating earnings
from ongoing operations and before interest, taxes, depreciation and
amortization for such fiscal period.
"Equipment": as defined in Section 3.01 hereof.
"Equity Payment": other than as required in connection with the Units
Offering, or as required by the terms of the Units, any distribution of earnings
or capital to any stockholders of Borrower, or any redemption of stock or other
ownership interests, either directly or indirectly, whether in cash or property
or in obligations of Borrower.
"Event of Default": any of the events specified in Section 9.01
hereof, provided that any requirement for the giving of notice, the lapse of
time, or both, or any other condition, under Section 9.01 or otherwise, has been
satisfied.
"Exchange Act": means the Securities Exchange Act of 1934, as amended.
"FCC": the Federal Communications Commission of the United States of
America, and any successor, in whole or in part, to its jurisdiction.
"Financing Termination Date": as defined on Schedule 2.02 hereto.
"First Borrowing Date": the date of the first Advance by Borrower
hereunder.
"Fixed Charges": with respect to any fiscal period of Borrower, its
Debt Service, plus non-financed capital expenditures.
"GAAP": subject to Section 1.02 hereof, generally accepted accounting
principles in the United States of America (as such principles may change from
time to time) applied on a consistent basis (except for changes in application
in which Borrower's independent certified public accountants concur), applied
both to classification of items and amounts.
"General Intangibles": as defined in Section 3.01 hereof.
"Governmental Actions": duly-authorized actions taken by any
Governmental Authority.
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"Governmental Authority": the United States federal government, any
state or political subdivision thereof, any city or municipal entity, and any
entity exercising executive, legislative, judicial, regulatory, administrative
or other quasi-governmental functions.
"Indebtedness": as to any Person, at a particular time, (a)
indebtedness for borrowed money or for the deferred purchase price of property
or services in respect of which such Person is liable, contingently or
otherwise, as obligor, guarantor or otherwise, or in respect of which such
Person otherwise assures a creditor against loss, (b) obligations under leases
which shall have been or should be, in accordance with GAAP, recorded as capital
leases in respect of which obligations such Person is liable, contingently or
otherwise, as obligor, guarantor or otherwise, or in respect of which
obligations such Person assures a creditor against loss (c) obligations of such
Person to purchase or repurchase accounts receivable, chattel paper or other
payment rights sold or assigned by such Person, and (d) indebtedness or
obligations of such Person under or with respect to letters of credit, notes,
bonds or other debt instruments; provided, however, that none of the
above-described Indebtedness shall include or be deemed to include the Senior
Notes or any securities issued in connection with any refinancing thereof except
for the purpose of calculating the ratios specified in Schedule 7.14 hereto.
"Initial Payment Date": as defined on Schedule 2.02 hereto.
"Interest Rate": as defined on Schedule 2.02 hereto.
"Landlord Consent": a consent substantially in the form of Exhibit E
hereto or in other form acceptable to Lender, to be executed by the
owner/landlord, sublessor and/or licensor (including carriers) of any real
property where any of the Equipment is to be located.
"Law": any law, constitution, statute, regulation, rule, ordinance,
order, injunction, writ, decree or award of any Governmental Authority or court
of competent jurisdiction or of any arbitrator (including but not limited to the
Code, the UCC, any applicable tax law, product safety law, occupational safety
or health law or Communications Law).
"Lender's Expenses": as defined in Section 2.10 hereof.
"Lien": any mortgage, pledge, hypothecation, lien (statutory or
other), judgment lien, security interest, security agreement, charge or other
encumbrance, or other security arrangement of any nature whatsoever, including,
without limitation, any installment contract, conditional sale or other title
retention arrangement, any sale of accounts receivable or chattel paper, and any
assignment, deposit arrangement or lease intended as, or having the effect of,
security and the filing of any financing statement under the UCC or comparable
law of any jurisdiction.
"Loan": each of the loans and loan facilities described in Section
2.01 hereof and all Advances pursuant hereto.
"Loan Documents": a collective reference to this Agreement, the Note,
the Security Documents, and all other documents, instruments, agreements and
certificates evidencing or securing any advance hereunder or any obligation for
the payment or performance thereof and/or executed and delivered in connection
with any of the foregoing.
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"Mandatory Prepayments": as defined in Section 2.04(b) hereof.
"Material Adverse Effect": or "Material Adverse Change": any fact,
circumstance or condition that would reasonably be expected to have a material
adverse effect on, or material adverse change in, (i) the business, operations
or financial condition of Borrower and its Subsidiaries, taken together as a
whole, (ii) the ability of Borrower to perform its obligations under this
Agreement, the Note, or the other Loan Documents, or (iii) Lender's ability to
enforce the rights and remedies granted under this Agreement or the other Loan
Documents, in all cases whether attributable to a single circumstance or event
or an aggregation of circumstances or events.
"Mortgagee's Consent": a consent substantially in the form of Exhibit
E-1 hereto, to be executed by any Person holding a lien on real property leased
or otherwise provided to Borrower, on which any of the Equipment is located.
"Maturity Date": the date defined on Schedule 2.02 hereto, on which
all principal due under the Note shall be finally due and payable.
"Nortel": Northern Telecom Inc., a Delaware corporation.
"Nortel Equipment": the equipment and licensed or sub-licensed
software manufactured or supplied by Nortel to Borrower with respect to which
Advances hereunder are used directly or indirectly to finance the acquisition
cost thereof at any time pursuant to the Nortel Purchase Agreement or any
purchase order issued by Borrower to Nortel or otherwise, including installation
and construction services provided by Nortel pursuant thereto.
"Nortel Purchase Agreement": the Nortel Purchase Agreement identified
on Schedule 4.29 hereto, together with any amendments or supplements thereto,
and any other purchase agreement between Nortel and Borrower and all purchase
orders and invoices issued pursuant thereto, all subject to the approval of
Lender.
"Note": collectively, one or more promissory notes issued by Borrower
to Lender pursuant to this Agreement, and all extensions, renewals,
modifications, replacements, amendments, restatements and refinancings thereof.
"Obligations": all indebtedness, liabilities and obligations of
Borrower to Lender of any class or nature, whether arising under or in
connection with this Agreement and/or the other Loan Documents, whether now
existing or hereafter incurred, direct or indirect, absolute or contingent,
secured or unsecured, matured or unmatured, joint or several, whether for
principal, interest, fees, expenses, lease obligations, indemnities or
otherwise, including, without limitation, future advances of any sort, all
future advances made by Lender for taxes, levies, insurance and/or repairs to or
maintenance of the Collateral, the unpaid principal amount of, and accrued
interest on, the Note, and any expenses of collection or protection of Lender's
rights, including reasonable attorneys' fees.
"Organizational Documents": with respect to a corporation, the
articles of incorporation and by-laws of such corporation; with respect to a
partnership, the certificate of partnership (or limited partnership, as
applicable) and partnership agreement, together with the analogous documents for
any corporate or
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partnership general partner; with respect to a limited liability company, the
articles of organization and operating agreement of such limited liability
company; and in any case, any other document governing the formation and conduct
of business by such entity.
"Payment Date": as defined on Schedule 2.02 hereto.
"Payment Schedule": as defined on Schedule 2.02 hereto.
"Permits": all consents, licenses, notices, approvals, authorizations,
filings, orders, registrations, and permits required by any Governmental
Authority for the construction and operation of the Equipment (excluding
Regulatory Authorizations), issued or obtained as and when required in
accordance with all Requirements of Law.
"Permitted Encumbrances": the Liens permitted under Section 8.02
hereof.
"Person": an individual, corporation, limited liability company,
partnership, business or other trust, unincorporated association, joint venture,
joint-stock company, Governmental Authority or any other entity.
"Proceeds": as defined in Section 3.01 hereof.
"PUC": the public utilities commission for the state or any other
jurisdiction in which Borrower operates its telecommunications business or any
portion of the Equipment is located, or any successor agency, and any successor,
in whole or in part, to its functions or jurisdictions, and any other Persons
specified as such on Schedule 1 hereto.
"Purchase Agreement": individually and collectively, the Nortel
Purchase Agreement and the Vendor Purchase Agreement.
"Regulatory Authorizations": all approvals, authorizations, licenses,
filings, notices, registrations, consents, permits, exemptions, registrations,
qualifications, designations, declarations, or other actions or undertakings now
or hereafter made by, to or in respect of any telecommunications Governmental
Authority, including, without limitation, any certificates of public convenience
and all grants, approvals, licenses, filings and registrations from or to the
FCC or PUC or under any Communications Law necessary in order to enable Borrower
to own, construct, maintain and operate the Equipment, and any authorizations
specified on Schedule 1 hereto.
"Regulatory Event": any of the following events: (i) Lender becomes
subject to regulation as a "carrier," a "telephone company," a "common carrier,"
a "public utility" or otherwise under any applicable law or governmental
regulation, federal, state or local, solely as a result of the transactions
contemplated by this Agreement and the other Loan Documents, or (ii) Borrower
becomes subject to regulation by any Governmental Authority in any way that is
materially different from the regulation existing at the Closing Date and that
could materially adversely affect Borrower's ability to perform its material
obligations under the Loan Documents or Lender's rights thereunder, or (iii) the
FCC or PUC issues an order revoking, denying or refusing to renew, or
recommending the revocation, denial or non-renewal of, any material Regulatory
Authorization.
"Required Consents": the Governmental Authority approvals or consents
of other Persons required
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with respect to Borrower's execution, delivery and performance of this Agreement
and the other Loan Documents, as described in Section 4.04 hereto.
"Requirement of Law": as to any Person, the Organizational Documents
of such Person, and any law, treaty, rule or regulation, or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its properties or transactions or to
which such Person or any of its property or transactions is subject, including
all provisions of all applicable state and federal constitutions, statutes,
rules, regulations and orders of Governmental Authorities, all Permits or
Regulatory Authorizations issued to Borrower, and all Communications Laws.
"Responsible Officer": with respect to a corporation, its President or
any Vice President or Treasurer; with respect to a partnership, its general
partner (or the President, any Vice President or Treasurer of any corporate
general partner, as applicable); with respect to a limited liability company, a
member or manager (or the President, any Vice President or Treasurer of any
corporate member or manager), or the President or any Vice President of any
other Person.
"SEC": the United States Securities and Exchange Commission.
"Security Documents": this Agreement, the Consents, all financing
statements, and any other documents granting, evidencing, or perfecting any
security interest or Lien with respect to or securing any of the Obligations.
"Senior Notes": means the Borrower's 12% Series A Senior Notes due
2008, issued pursuant to an Indenture (the "Indenture"), dated as of May 21,
1998, between the Borrower and First Union National Bank.
"Site(s)": any of the sites where Equipment is or is to be located.
"Software" and "Software Licenses": any software now or hereafter
owned by, or licensed to, Borrower that is contained in the Equipment supplied
by Nortel or any Vendor.
"Subsidiary": as to any Person, any corporation or other entity that
is an Affiliate of such Person and of which shares of stock or equity interests
having ordinary voting power with respect to the election of one or more
directors or other managers of such corporation are at the time directly or
indirectly owned or controlled by such Person (regardless of any contingency
which does or may suspend or dilute the voting rights of such class).
"Subordinated Indebtedness": Indebtedness of Borrower for money
borrowed for the use of Borrower, payment of which is fully subordinated to the
payment of all Obligations of Borrower to Lender upon terms and provisions
reasonably acceptable to Lender.
"Total Debt": at any time, the total outstanding liabilities of
Borrower, including, without limitation, current liabilities, long term
Indebtedness, all lease obligations under finance leases, capital leases, all
Contingent Obligations, and all the Obligations.
"UCC": the Uniform Commercial Code as the same may from time to time
be in effect in the State of New York, or the Uniform Commercial Code of another
jurisdiction, to the extent it may be required to
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apply to any item or items of Collateral.
"Units": means 160,000 Units, consisting of $160 million in aggregate
principal amount of 12% Series A Senior Notes due 2008 and Warrants to Purchase
200,226 shares of common stock of the Borrower offered and sold on or about May
21, 1998.
"Units Offering": means the offering of the Units on or about May 21,
1998 by the Borrower.
"Vendor" means any manufacturer or supplier of Vendor Equipment or
licensor or supplier of Software, in each case other than Nortel.
"Vendor Equipment" means any equipment, upgrades, switches and
licensed or sub-licensed Software manufactured, or supplied to Borrower, by a
Vendor.
"Vendor Purchase Agreement": any purchase agreement, together with any
amendments or supplements thereto, between a Vendor and Borrower or an assignor
of Borrower and all purchase orders and invoices issued pursuant thereto for the
sale of Vendor Equipment, all subject to the approval of Lender, not to be
unreasonably withheld or delayed.
1.02. Accounting Principles; Subsidiaries. Except as otherwise
provided in this Agreement, all computations and determinations as to accounting
or financial matters and all financial statements to be delivered pursuant to
this Agreement shall be made and prepared in accordance with GAAP (including
principles of consolidation where appropriate), consistently applied, and all
accounting or financial terms shall have the meanings ascribed to such terms by
GAAP. If, at any time, Borrower has any Subsidiaries, all accounting and
financial terms herein shall be deemed to include references to consolidated and
consolidating principles, and covenants, representations and agreements with
respect to Borrower and its properties and activities shall be deemed to refer
to Borrower and its consolidated Subsidiaries collectively.
1.03. UCC Terms. Except as otherwise provided or amplified (but not
limited) herein, terms used in this Agreement that are defined in the UCC shall
have the same meanings herein.
1.04. General Construction; Captions. All definitions and other terms
used in this Agreement shall be equally applicable to the singular and plural
forms thereof, and all references to any gender shall include all other genders.
The words "hereof", "herein" and "hereunder" and words of similar import when
used in this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement, and Section, subsection, schedule and
exhibit references are to this Agreement unless otherwise specified. The
captions and table of contents in this Agreement and the other Loan Documents
are for convenience only, and in no way limit or amplify the provisions hereof.
1.05. References to Documents and Laws. All defined terms and
references in this Agreement or the other Loan Documents with respect to any
agreements, notes, instruments, certificates or other documents shall be deemed
to refer to such documents and to any amendments, modifications, renewals,
extensions, replacements, restatements, substitutions and supplements of and to
such documents. All references to statutes and related regulations shall include
any amendments thereof and any successor statutes and regulations.
ARTICLE 2: LOANS
----------------
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2.01. Commitment. Subject to the terms and conditions herein provided,
and so long as no Default has occurred and is continuing hereunder, Lender
agrees to lend to Borrower from time to time before the Financing Termination
Date, an aggregate principal amount not to exceed the amount set forth on
Schedule 2.01 hereto as the maximum principal amount (the "Commitment"). All
Advances hereunder shall be used solely for the purchase of Nortel Equipment and
Vendor Equipment and related services (exclusive of sales tax), and amounts not
exceeding the amount (if any) specified on Schedule 2.01 hereto may be used for
legal fees, charges, expenses and closing costs and other expenses incurred by
Borrower or incurred by Lender and payable by Borrower under Section 2.10
hereof, provided, however, that the Borrower may not use more than thirty
percent (30%) of the aggregate principal amount of all Advances made hereunder
for purchases of Vendor Equipment and related services, provided, further, that
in each case such amount has been approved by Nortel prior to the date of the
Advance therefor.
2.02. Note and Payment Terms.
(a) Promissory Note. The Loan shall be evidenced by the Note
substantially in the form of Exhibit A hereto, with appropriate
insertions. The Note shall be executed by Borrower, payable to the
order of Lender, and shall evidence the obligation of Borrower to repay
all principal amounts advanced under or pursuant to this Agreement,
together with interest and all other amounts due thereunder. The Note
shall be dated the Closing Date, have a stated maturity that is the
Maturity Date, and bear interest at the Interest Rate from the First
Borrowing Date until the principal amount and any other amount due
under the Note is paid in full (whether on the Maturity Date, by
acceleration or otherwise). All schedules attached to the Note shall be
deemed a part thereof. Any such schedule may be amended by Lender from
time to time to reflect changes in the amounts includable thereon, but
the failure to attach any schedule shall not diminish the obligation of
Borrower to repay all amounts due hereunder or on the Note.
(b) Interest Payments. Interest shall continue to accrue on
the principal amount outstanding on the Note at the Interest Rate and
shall be payable, in arrears, on each Payment Date, with the principal
payments described below.
(c) Principal Payments. All principal amounts due with respect
to the Note shall be payable in installments in accordance with the
Payment Schedule set forth on Schedule 2.02 hereto, commencing on the
Initial Payment Date and on each Payment Date thereafter until the
Maturity Date. The principal payment amounts shall be recalculated by
Lender if any Advances are made hereunder after the Initial Payment
Date, based on the aggregate amount of all Advances made at any time.
Borrower and Lender understand that this payment schedule is intended
to amortize fully the principal amount of the Note and any other
principal and interest amounts outstanding will be added to the final
payment on the Maturity Date. In any event, the entire outstanding
principal amount of the Note and all accrued but unpaid interest and
all other outstanding amounts due thereunder shall be paid on the
Maturity Date.
(d) Late Payments and Default Rate. Notwithstanding the
foregoing, if Borrower shall fail to pay, within ten (10) days after
the due date thereof, any principal amount or interest or other amount
payable under this Agreement or under the Note, Borrower shall pay to
Lender, to defray the administrative costs of handling such late
payments, an amount equal to interest on the amount unpaid, to the
extent permitted under applicable Law, at the Default Rate (instead of
the Interest
9
Rate), from the due date until such overdue principal amount or
interest is paid in full (both before and after judgment) whether or
not any notice of default in the payment thereof has been delivered
under Section 9.01 hereof. In addition, but without duplication, upon
the occurrence and during the continuance of an Event of Default, all
outstanding principal and interest hereunder shall bear interest at
the Default Rate (instead of the Interest Rate) until such amounts are
paid in full or such Event of Default is waived in writing by Lender.
(e) Excess Interest. Notwithstanding any provision of the
Note, this Agreement or any other Loan Document to the contrary, it is
the intent of Lender and Borrower that Lender or any subsequent holder
of the Note shall never be entitled to receive, collect, reserve or
apply, as interest, any amount in excess of the maximum rate of
interest permitted to be charged by applicable Law, as amended or
enacted from time to time. In the event Lender, or any subsequent
holder of the Note, ever receives, collects, reserves or applies, as
interest, any such excess, such amount which would be excessive
interest shall be deemed a partial prepayment of principal due under
the Note and treated as such, or, if the principal indebtedness and all
other amounts due are paid in full, any remaining excess funds shall
immediately be applied to any other outstanding Obligations of Borrower
due to Lender, and if none is outstanding, shall be paid to Borrower.
In determining whether or not the interest paid or payable, under any
specific contingency, exceeds the highest lawful rate, Borrower and
Lender shall, to the maximum extent permitted under applicable Law, (a)
exclude voluntary prepayments and the effects thereof as it may relate
to any fees charged by Lender, and (b) amortize, prorate, allocate, and
spread, in equal parts, the total amount of interest throughout the
entire term of the Note; provided that if the indebtedness is paid and
performed in full prior to the end of the full contemplated term
hereof, and if the interest received for the actual period of existence
hereof exceeds the maximum lawful rate, Lender or any subsequent holder
of the Note shall refund to Borrower the amount of such excess or
credit the amount of such excess against the principal portion of the
indebtedness, as of the date it was received, and, in such event,
Lender shall not be subject to any penalties provided by any laws for
contracting for, charging, reserving or receiving interest in excess of
the maximum lawful rate.
2.03. Procedures for Borrowing.
(a) Timing of Advances. Advances shall not be made more than
once per calendar month, and all Advances in any calendar month shall
be made on the same Borrowing Date. Each Advance (other than the last
Advance) shall be in an aggregate principal amount of not less than
$25,000. No amounts may be borrowed hereunder on or after the Financing
Termination Date. Lender is hereby authorized to retain from each
Advance all amounts of Lender's Expenses accrued and unpaid by
Borrower, for which invoices have been sent to Borrower at least five
(5) Business Days before such Advance. In any event, all outstanding
legal fees, charges and expenses not paid by Borrower prior to any
Borrowing Date shall be paid before any Advance is made or concurrently
with such Advance.
(b) Borrowing Certificates. To request an Advance hereunder,
Borrower shall send to Lender, at least five (5) Business Days prior to
the requested Borrowing Date, a completed Borrowing Certificate, along
with invoices and such other supporting documentation as Lender may
reasonably request. Lender is hereby authorized to add to any Borrowing
Certificate all amounts payable by Borrower to Lender in respect of
legal fees, charges and expenses arising or incurred by Lender, to the
extent such fees, charges and expenses have then been incurred or
charged and may
10
be paid from proceeds of the Loan.
(c) Transmission of Advances. Advances shall be made by wire
transfer to the account(s) specified in the applicable Borrowing
Certificate, except that (i) proceeds of the Loan may be transmitted,
at Lender's option, directly to an Nortel or Vendor account for payment
of any unpaid Nortel or Vendor invoices, and (ii) Advances shall be
made to Borrower only to the extent that Borrower provides Lender with
satisfactory evidence that the amount of such Advance has been paid to
Nortel or the Vendor. No further authorization shall be necessary for
any such direct disbursements, and each such Advance shall satisfy pro
tanto the obligations of Lender under this Agreement.
(d) Borrowing Dates. Advances shall be made by Lender on the
Borrowing Date specified in the applicable Borrowing Certificate if all
conditions for such Advance have been satisfied, or on such later
Business Day as all conditions for such Advance shall have been
satisfied, as determined by Lender.
(e) Advances After Default. At its option, during the
continuance of a Default, Lender may, but shall not be obligated to,
make Advances to any Person (including without limitation Nortel and
any Vendor, suppliers, sub-contractors and materialmen) to whom Lender
in good faith determines payment is due with respect to the Equipment,
and any Advances so made shall be deemed made as of the Business Day on
which the Person to whom payment is made receives the same. No further
authorization from Borrower shall be necessary to warrant such direct
Advances, and the execution of this Loan Agreement by Borrower shall,
and hereby does, constitute an irrevocable authorization and power of
attorney to advance proceeds hereunder. All such Advances shall satisfy
pro tanto the obligations of Lender hereunder and shall be secured by
the Security Documents as fully as if made directly to Borrower.
2.04. Prepayments.
(a) Voluntary Prepayments. Borrower may, at its option, at any
time and from time to time, prepay the Loan in whole or in part, upon
at least ten (10) Business Days prior written notice to Lender
specifying the date and amount of prepayment, in a minimum amount of
$25,000, plus the premium described below, and all accrued but unpaid
interest thereon. Such notice shall be irrevocable and the principal
amount specified in such notice shall be due and payable on the date
specified together with accrued interest on the amount prepaid. Any
such prepayment shall be subject to a prepayment premium equal to a
percentage of the amount prepaid as follows: three percent (3%) if the
prepayment is made prior to the first anniversary of the Closing Date,
two percent (2%) if the prepayment is made more than one (1), but not
more two (2) years after the Closing Date, one percent (1%) if the
prepayment is made more than two (2) but not more than three (3) years
after the Closing Date, and without a premium if the prepayment is made
more than three (3) years after the Closing Date. Amounts prepaid may
not be reborrowed and shall be applied as provided in Section 2.04(c).
Mandatory Prepayments, excess interest payments under Section 2.02(g)
or prepayments made from insurance proceeds pursuant to Section 6.03 or
with any condemnation proceeds shall not be subject to a prepayment
premium.
(b) Mandatory Prepayment. Upon Lender's demand, all
Obligations arising from Advances for Equipment financed for purchase
under the Nortel Purchase Agreement will become
11
due and payable pursuant to the terms of the Note if such Nortel
Agreement is terminated prior to the completion and acceptance of such
Equipment. Any such Mandatory Prepayments shall not require the
payment of any premium or penalty.
(c) Application of Prepayments. Any prepayments shall be
applied first to interest, then to premium, then to expenses, and then
to the installments of principal in reverse chronological order from
the Maturity Date.
2.05. Computation of Interest. Interest shall be calculated daily on
the basis of a 365-day year for the actual days elapsed in the period during
which it accrues.
2.06. Payments. All payments and prepayments (if any) to be made in
respect of principal, interest, prepayment premiums or other amounts due from
Borrower hereunder or under the Note shall be payable on or before 1:00 p.m.,
Nashville time, on the Business Day when due, without presentment, demand,
protest or notice of any kind, all of which are hereby expressly waived, and an
action therefor shall immediately accrue. Such payments shall be made to Lender
at Lender's office at 000 Xxxxxxxxx Xxxxxx Xxxxx, Xxxxxxxx, Xxxxxxxxx 00000, or
such other location specified in writing by Lender, in immediately available
funds, without setoff, recoupment, counterclaims or any other deduction of any
nature.
2.07. Indemnity. Borrower hereby indemnifies Lender against any losses,
claims, penalties, expenses, actions, suits, obligations, liabilities and Liens
(and all costs and expenses, including reasonable attorneys' fees incurred in
connection therewith), that Lender has sustained or incurred or may sustain or
incur in connection with any of the Collateral, or the enforcement, performance
or administration of the Loan Documents, or as a consequence of any Default by
Borrower in the performance or observance of any covenant or condition contained
in this Agreement or the Loan Documents, including without limitation, the
breach of any representation or warranty, any failure of Borrower to pay when
due (by acceleration or otherwise) any principal, interest, fee or any other
amount due hereunder or under the Note, and any failure of Borrower to comply
with all applicable Requirements of Law (collectively, "Claims") except to the
extent of any Claims caused solely by Lender's gross negligence or willful
misconduct. Borrower's obligations under this Section 2.07 shall be part of the
Obligations and shall be secured by the Collateral. Borrower agrees that upon
written notice by Lender of the assertion of any Claims, Borrower shall, at
Lender's option, either assume full responsibility for, or reimburse Lender for
the reasonable costs and expenses of, the defense thereof. Lender shall have no
liability for consequential or incidental damages of any nature unless such
damages arise as a result of Lender's gross negligence or willful misconduct.
The provisions of this Section 2.07 shall survive the termination of this
Agreement and payment of the Obligations for a period of two years.
2.08. Use of Proceeds. The proceeds of the Advances hereunder shall be
used by Borrower only for the purposes and in the amounts described in Section
2.01 hereof, and no amounts repaid may be reborrowed (except for any voluntary
prepayments as permitted pursuant to Section 2.04(a).
2.09. Fees. Borrower shall pay Lender the fees described on Schedule
2.09 hereto in connection with this Agreement.
2.10. Lender's Expenses. Borrower agrees (a) to pay or reimburse Lender
for all its reasonable costs, fees, charges and expenses incurred or arising in
connection with the negotiation, review, preparation and execution of this
Agreement, the Loan Documents, any commitment or proposal letter, or any
12
amendment, supplement, waiver, modification to, or restructuring of this
Agreement, the Obligations or the other Loan Documents, including, without
limitation, reasonable legal fees and disbursements, expenses, document charges
and other charges and expenses of Lender in connection with this Agreement, (b)
to pay or reimburse Lender for all its reasonable costs, fees, charges and
expenses incurred in connection with the administration of the Loan or the
enforcement, protection or preservation of any rights under or in connection
with this Agreement or any other Loan Documents, including, without limitation,
reasonable legal fees and disbursements, audit fees and charges, and all
out-of-pocket expenses, (c) to pay, indemnify, and to hold Lender harmless from,
any and all recording and filing fees and taxes and any and all liabilities with
respect to, or resulting from any delay in paying, stamp, excise and other taxes
(excluding income and franchise taxes and taxes of similar nature), if any,
which may be payable or determined to be payable in connection with the
execution and delivery or recordation or filing of, or consummation of any of
the transactions contemplated by, or any amendment, supplement or modification
of, or any waiver or consent under or in respect of, this Agreement and the
other Loan Documents. All of the amounts described in this Section are referred
to collectively as the "Lender's Expenses", shall be payable upon Lender's
demand, and shall accrue interest at the Interest Rate in effect when such
demand is made from five (5) days after the date of demand until paid in full.
All Lender's Expenses, and interest thereon, shall be part of the Obligations
and shall be secured by the Collateral. The agreements in this Section 2.10
shall survive repayment of the Obligations. All Lender's Expenses that are
outstanding on any Borrowing Date shall be paid before or with any Advance
relating thereto. If Borrower has not paid to Lender the amount of all Lender's
Expenses billed to Borrower at least five (5) Business Days before such
Borrowing Date, Lender shall be authorized to retain from any Advance on such
Borrowing Date the amount of such Lender's Expenses that remain unpaid.
Borrower's obligation to pay Lender's Expenses shall not be limited by any
limitation on the amount of the Commitment that may be designated as available
for such purposes, and any amounts so designated shall be used to pay Lender's
Expenses accrued at the time of any Advance before any of Borrower's legal fees
or similar expenses.
ARTICLE 3: COLLATERAL AND SECURITY AGREEMENT
--------------------------------------------
3.01. Grant of Security Interest. Borrower (as debtor) hereby assigns
to Lender as collateral, and grants to Lender (as secured party) a continuing
security interest in and to, all of Borrower's right, title and interest in and
to the following kinds and types of property, whether now owned or hereafter
acquired or arising, wherever located, together with all substitutions therefor
and all accessions, replacements and renewals thereof, and in all proceeds
thereof (collectively, the "Collateral"):
(a) All Nortel Equipment financed or refinanced with
proceeds of an Advance and all Vendor Equipment financed or
refinanced with proceeds of an Advance, and in each case any
and all additions, substitutions, and replacements to or of
any of the foregoing, together with all attachments,
components, parts, improvements, upgrades, and accessions
installed thereon or affixed thereto (collectively,
"Equipment") and Borrower's rights under each Nortel Purchase
Agreement and each Vendor Purchase Agreement relating to such
Equipment;
(b) All general intangibles and intangible property
(including all contracts and contract rights) constituting
part of, or provided by or through Nortel or any Vendor in
connection with, the Equipment which are necessary for the
proper operation of the Equipment, including (without
limitation) amounts due under licenses, license rights, rights
in intellectual property, Software, Software Licenses,
computer programming (including
13
source codes, object codes and all other embodiments of
computer programming or information), refunds, warranties and
indemnification rights directly used in the Equipment, and all
amounts owed at any time to Borrower by Lender or Nortel or by
a Vendor in connection with a Vendor Purchase Agreement
relating to Equipment (collectively, "General Intangibles");
and
(c) All proceeds and products of any of the
foregoing, including without limitation (i) any and all
proceeds of any indemnity, warranty or guaranty payable to
Borrower from time to time with respect to any of the
Collateral, and (ii) any and all payments (in any form
whatsoever) made or due and payable to Borrower 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) (collectively,
"Proceeds").
3.02. Priority of Security Interests. The security interests granted by
Borrower to Lender are and shall be continuing and indefeasible first-priority
security interests in the Collateral, subject to no Liens except for Permitted
Encumbrances as defined and permitted under Section 8.02 hereof.
3.03. Further Documentation; Pledge of Instruments. At any time and
from time to time, upon the written request of Lender, and at the sole expense
of Borrower, Borrower shall promptly execute, deliver and record any documents,
instruments, agreements and amendments, and take all such further action, as
Lender may reasonably deem necessary or appropriate in obtaining the full
benefits of this Agreement and of the rights and powers herein granted,
including, without limitation, the filing of any financing statements or
amendments under the UCC. Borrower also hereby authorizes Lender to file any
such financing statement or amendment thereto, or with a copy or telecopy of
Borrower's signature, to the extent permitted by applicable Law, or to execute
any financing statement or amendment thereof on behalf of Borrower as Borrower's
attorney-in-fact. If any amount payable under or in connection with any of the
Collateral shall be or become evidenced by any promissory note or other
instrument or any certificated securities, such note, instrument or certificate
shall be immediately pledged and delivered to Lender hereunder, duly endorsed in
a manner satisfactory to Lender.
3.04. Further Identification of Collateral. Borrower shall furnish to
Lender from time to time statements and schedules further identifying and
describing the Collateral and such other reports in connection with the
Collateral as Lender may reasonably request, all in reasonable detail.
3.05. Remedies. Lender shall have all the rights and remedies of a
secured party under the UCC, and shall be entitled to exercise any and all
remedies available under Article 9 hereof or otherwise available at law or in
equity upon the occurrence of an Event of Default.
3.06. Standard of Care. Lender shall be deemed to have exercised
reasonable care in the custody and preservation of any of the Collateral in its
possession if it treats the Collateral in the manner in which it would treat its
own property or otherwise takes such action for that purpose as Borrower
requests in writing, but Lender's failure to comply with any such request shall
not of itself be deemed a failure to exercise reasonable care, and no failure of
Lender to preserve or protect any rights with respect to such Collateral against
prior parties, or to do any act with respect to the preservation of such
Collateral not so requested by Borrower, shall be deemed a failure to exercise
reasonable care in the custody or preservation of such Collateral.
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3.07. Advances to Protect Collateral. All expenses of protecting,
storing, warehousing, insuring, handling, maintaining and shipping the
Collateral (including, without limitation, all rent payable by Borrower to any
landlord of any Site), and, any and all taxes shall be borne and paid by
Borrower. Lender may (but shall not be obligated to) make advances to preserve,
protect or obtain any of the Collateral, including advances to cure, with the
prior consent of Borrower, defaults under any lease agreements for Sites or
advances to pay taxes, insurance and the like, and all such advances shall
become part of the Obligations owing to Lender hereunder and shall be payable to
Lender on demand, with interest thereon from the date of such advance until paid
at the Default Rate in effect on the date of such advance.
3.08. License to Use. So long as an Event of Default is continuing,
Lender is hereby granted a license or other right to use , in connection with
the Equipment and without charge, the Software and the Software Licenses
pertaining to the Equipment.
3.09. Subsidiary Guarantees. Payment of the Borrower's Obligations
shall also be unconditionally guaranteed by any existing Subsidiary of the
Borrower, as well as all future Subsidiaries of the Borrower, pursuant to the
form of Guaranty Agreement attached as Exhibit G to this Agreement, during such
time as, with regard to any single Subsidiary, any such single Subsidiary's
assets or revenues (whichever applies first) meet or exceed 10% of the
Borrower's consolidated assets or revenues (as applicable) as of the Closing
Date, as of the end of each of the Borrower's fiscal years thereafter, or as of
the end of the Borrower's fiscal quarter immediately preceding any Borrowing
Date, or, with regard to any group of Subsidiaries, the combined combined assets
or revenues of any such group of Subsidiaries (whichever applies first) meet or
exceed 15% of the Borrower's consolidated assets or revenues (as applicable) as
of the Closing Date, as of the end of each of the Borrower's fiscal years
thereafter, or as of the end of the Borrower's fiscal quarter immediately
preceding any Borrowing Date.
ARTICLE 4: REPRESENTATIONS AND WARRANTIES
-----------------------------------------
Borrower hereby represents and warrants to Lender as follows:
4.01. Organization and Qualification. Borrower is duly organized,
validly existing and in good standing as a corporation under the laws of
Maryland. Borrower is duly qualified to do business and in good standing in each
jurisdiction in which the failure to receive or retain such qualification would
have a Material Adverse Effect.
4.02. Authority and Authorization. Borrower has all requisite corporate
right, power and authority to execute and deliver and perform its obligations
under this Agreement, to make the borrowings provided for herein, and to execute
and deliver and to perform its obligations under the Note. Borrower's execution,
delivery and performance of the Loan Documents have been duly and validly
authorized by all necessary corporate action on the part of Borrower.
4.03. Execution and Binding Effect. This Agreement, the Note and all
other Loan Documents have been or will be duly and validly executed and
delivered by Borrower, and constitute or, when executed and delivered will
constitute, the legal, valid and binding obligations of Borrower enforceable in
accordance with their respective terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, fraudulent conveyance,
receivership, moratorium or other Laws affecting creditors' rights generally.
15
4.04. Governmental Authorizations. Except for the consents identified
on Schedule 4.04 hereto (the "Required Consents"), no authorization, consent,
approval, license, exemption or other action by, and no registration,
qualification, designation, declaration or filing with, any Governmental
Authority (other than the filing of UCC financing statements and continuation
statements) is or will be necessary in connection with execution and delivery of
this Agreement, the Note or any other Loan Documents by Borrower, consummation
of the transactions herein or therein contemplated, performance of or compliance
by Borrower with the terms and conditions hereof or thereof.
4.05. Regulatory Authorizations. The Borrower holds all material
authorizations, permits and licenses required by the FCC or the PUC or any
Communications Law for the operation of the Equipment, and all such Regulatory
Authorizations are in full force and effect, are subject to no further
administrative or judicial review and are therefore final. Lender will not, by
reason of the execution, delivery and performance (other than the enforcement of
remedies) of any of the Loan Documents, be subject to the regulation or control
of either the FCC or the PUC. The Regulatory Authorizations will be described on
Schedule 4.05 within 30 days after the Closing Date.
4.06. Material Agreements; Absence of Conflicts. The execution and
delivery of this Agreement, the Note and the other Loan Documents, the
consummation of the transactions herein or therein contemplated and the
performance of or compliance with the terms and conditions hereof or thereof by
Borrower will not (a) materially violate any applicable Law; (b) conflict with
or result in a material breach of or a default under the Organizational
Documents of Borrower or any material agreement or instrument to which Borrower
is a party or by which Borrower or its properties is bound; or (c) result in the
creation or imposition of any Lien upon any property (now owned or hereafter
acquired) of Borrower except as otherwise contemplated by this Agreement, except
with respect to Permitted Encumbrances or as contemplated by this Agreement and
the Security Documents or which would not have a Material Adverse Effect.
4.07. No Restrictions. Borrower is not a party or subject to any
contract or agreement which restricts its right or ability to incur
Indebtedness, other than as set forth on Schedule 4.07, none of which prohibit
Borrower's execution of or compliance with this Agreement. Borrower has not
agreed or consented to cause or permit in the future (upon the happening of a
contingency or otherwise) any of the Collateral, whether now owned or hereafter
acquired, to be subject to a Lien that is not a Permitted Encumbrance.
4.08. Financial Statements. Borrower has furnished to Lender the most
recent annual or quarterly financial statements of Borrower, certified by a
Responsible Officer of Borrower, including balance sheets and related statements
of income and retained earnings and changes in financial position, as described
on Schedule 4.08 hereof. Such financial statements (including the notes thereto)
present fairly the financial condition of Borrower on a consolidated basis as of
the end of each such fiscal period and the results of its operations and the
changes in its financial position for the fiscal period then ended, all in
conformity with GAAP applied on a basis consistent with that of the preceding
fiscal period. Any pro forma financial statements delivered by Borrower to
Lender were prepared in good faith.
4.09. Financial Accounting Practices. Borrower has made and kept books,
records and accounts which, in reasonable detail, accurately and fairly reflect
its respective transactions and dispositions of its assets, and Borrower shall
maintain a system of internal accounting controls sufficient to provide
reasonable assurances that (a) transactions are executed in accordance with
management's general or specific authorization, (b) transactions are recorded as
necessary (i) to permit preparation of financial statements in conformity with
GAAP and (ii) to maintain accountability for assets, (c) access to assets is
permitted only in accordance with management's general or specific authorization
and (d) the recorded accountability for assets is compared with the existing
assets at reasonable intervals and appropriate action is taken with respect to
any differences.
16
4.10. Accurate and Complete Disclosure. No representation or warranty
made by Borrower under this Agreement and no statement made by Borrower in any
financial statement, certificate, report, exhibit or document furnished by
Borrower to Lender pursuant to or in connection with this Agreement (including,
without limitation, any filings with the SEC, the FCC or the PUC) is or was
false or misleading as of the date made in any material respect (including by
omission of material information necessary to make such representation, warranty
or statement not misleading). To the best of the knowledge of Borrower, there
are no existing facts that would reasonably be expected to result in a Material
Adverse Effect which has not been set forth in the financial statements referred
to in Section 4.08 hereof or otherwise disclosed in writing to Lender prior to
the First Borrowing Date.
4.11. No Event of Default; Compliance with Material Agreements. No
event has occurred and is continuing and no condition exists which constitutes a
Default or an Event of Default after giving effect to the Advance to be made on
the First Borrowing Date. As of the date hereof, Borrower is not in violation of
any term of its material agreements or instruments to which it is a party or by
which it or its properties is bound which would reasonably be expected to result
in a Material Adverse Effect.
4.12. Litigation. Except as set forth in Schedule 4.12 or as otherwise
disclosed by the Borrower pursuant to the Exchange Act, there is no pending
action, suit or (to the best of Borrower's knowledge) threatened proceeding by
or before any Governmental Authority against or affecting Borrower or any of its
properties, rights or licenses which, if adversely decided, would reasonably be
expected to result in a Material Adverse Effect.
4.13. Rights to Property; Intellectual Property. Borrower has good and
marketable title, subject only to the Permitted Encumbrances, to the Collateral
and to all personal and real property purported to be owned by it as reflected
in the most recent balance sheet referred to in Section 4.08 hereof (except as
sold or otherwise disposed of in the ordinary course of business as no longer
used or useful in the conduct of the business). Borrower owns or possesses the
right to use all material patents, trademarks, service marks, trade names,
copyrights, know-how, franchises, software and software licenses necessary for
the operation of its business.
4.14. Financial Condition. Borrower's financial condition is accurately
described in the Certificate of Financial Condition executed by Borrower
pursuant hereto.
4.15. Taxes. Borrower's federal tax identification number is set forth
on Schedule 1 hereto. All tax returns required to be filed by Borrower have been
properly prepared, executed and filed, and all taxes, assessments, fees and
other governmental charges upon Borrower or upon any of its respective
properties, incomes, sales or franchises which are shown to be due and payable
thereon have been paid, other than taxes or assessments the validity or amount
of which Borrower is contesting in good faith. The reserves and provisions for
taxes on the books of Borrower are adequate for all open years and for its
current fiscal period.
17
4.16. No Material Adverse Change. Since the date of the financial
statements referenced in Section 4.08, there has been no Material Adverse
Change.
4.17. No Regulatory Event. No Regulatory Event has occurred and is
continuing.
4.18. Trade Relations. There exists no actual or, to the best of
Borrower's knowledge, threatened termination, cancellation or limitation of the
business relationship between Borrower and any Carrier, any labor organizations,
any material customer or any group thereof whose agreements with Borrower are
material to the business of Borrower, or with any material Supplier, and there
exists no present condition or state of facts or circumstances which would have
a Material Adverse Effect or prevent Borrower from conducting its business after
the consummation of the transaction contemplated by this Agreement.
4.19. No Brokerage Fees. Other than as described in this Agreement, no
brokerage or other fee, commission or compensation is to be paid by Borrower to
any Person in connection with the loans to be made hereunder. Borrower hereby
indemnifies Lender against any claims brought against Lender for brokerage fees
or commissions of any Person based on a written agreement with Borrower and
agrees to pay all reasonable expenses actually incurred by Lender in connection
with the defense of any action or proceeding brought to collect any such
brokerage fees or commissions.
4.20. Margin Stock; Regulations U and X. Borrower is not engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying margin stock. The making of the
Advances and the use of the proceeds thereof will not violate Regulations U or X
of the Board of Governors of the Federal Reserve System.
4.21. Intentionally Deleted.
4.22. Intentionally Deleted.
4.23. Security Interests. The provisions of Article 3 hereof are
effective to create in favor of Lender a legal, valid and enforceable Lien on or
security interest in all of the Collateral, and, when the recordings and filings
described on Schedule 4.23 hereto have been effected in the public offices
listed on said Schedule 4.23, this Agreement and the Security Documents will
create a perfected first-priority security interest in all right, title, estate
and interest of Borrower in the Collateral, and subject to no other Liens except
for Permitted Encumbrances. All action necessary or desirable to protect and
perfect such security interest in each item of the Collateral will have been
duly taken prior to or on the First Borrowing Date. The recordings and filings
shown on said Schedule 4.23 are all the actions necessary or advisable in order
to establish, protect and perfect the interest of Lender in the Collateral.
4.24. Place of Business. The chief executive offices of Borrower are
identified on Schedule 4.24 hereto. Borrower's principal place of business in
the state(s) where the Equipment is located is identified on Schedule 4.24
hereto. Borrower's records concerning the Collateral are kept at one or both of
these addresses.
4.25. Location of Collateral. The Collateral is and will be kept at the
locations identified on Schedule 4.24 hereto or such other locations as may be
permitted under Section 8.12.
18
4.26. Clear Title To Equipment. Borrower is the sole owner of each item
of the Equipment, having good and marketable title thereto, free and clear of
any and all Liens, claims, or rights of others, except for the security interest
granted herein to Lender and the other Permitted Encumbrances.
4.27. Assumed Names. Except as set forth on Schedule 4.27 hereto,
Borrower does not conduct business under any assumed names or trade names, and
has not, during the five (5) years preceding the date of this Agreement,
conducted business under any other names, or any assumed names or trade names.
4.28. Intentionally Deleted.
4.29. Nortel Purchase Agreement. The Nortel Purchase Agreement for
Nortel Equipment already acquired has been duly executed and delivered by
Borrower, is in full force and effect, and a true, correct and complete copy
thereof (including all annexes, attachments and amendments thereto) has been
delivered to Lender, and there are no other side letters, waivers or other
agreements known to Borrower affecting the terms thereof.
4.30. Subsidiaries of Borrower. A true and correct list of all direct
and indirect Subsidiaries of the Borrower, together with the jurisdiction of
incorporation of each Subsidiary, appears on Schedule 4.30 to this Agreement.
ARTICLE 5: CONDITIONS OF CLOSING
--------------------------------
On or before the Closing Date, the following conditions shall have been
satisfied:
5.01 Borrower's Certificate. A certificate of Borrower signed by a duly
authorized Responsible Officer, certifying as to (i) true copies of
Organizational Documents of Borrower in effect on such date; (ii) evidence of
all corporate action taken by Borrower relative to this Agreement, the Note and
the other Loan Documents; (iii) the names, true signatures and incumbency of the
Responsible Officers of Borrower authorized to execute and deliver this
Agreement, the Note and the other Loan Documents; (iv) a Certificate of Good
Standing (or equivalent certificate) for Borrower duly issued by the Secretary
of State of Maryland and each state in which Borrower intends to locate the
Equipment; and (v) such other matters as Lender shall request.
5.02 Opinion of Counsel. Lender shall have received dated as of the
Closing Date and in form and substance satisfactory to Lender a written opinion
of counsel to Borrower, substantially in the Form of Exhibit C hereto.
5.03. Closing Documents. Lender shall have received the following
documents, all in form and substance satisfactory to Lender:
(a) Agreement. This Agreement, duly executed by Borrower;
(b) Note. The Note, duly executed by Borrower;
(c) Financing Statements. All UCC-1 financing statements
necessary to perfect the Liens granted hereby, each duly executed by
Borrower, and duly recorded in all the jurisdictions identified on
Schedule 4.24 hereto;
19
(d) Guaranty Agreements. A Guaranty Agreement, duly executed
by all of the existing Subsidiaries of the Borrower, in the form
attached as Exhibit G to this Agreement.
(e) Insurance. Policies and certificates of insurance required
by Section 7.06, accompanied by evidence of the payment of the premiums
therefor;
(f) Financial Statements. The financial statements described
in Section 4.08 hereof;
(g) Certificate of Financial Condition. A Certificate of
Financial Condition, duly executed by a Responsible Officer of
Borrower.
(h) Pre-Closing Lien Searches. Lien searches from all
jurisdictions reasonably determined by Lender to be appropriate,
effective as of a date reasonably close to the Closing Date, reflecting
no other Liens (other than Permitted Encumbrances) on any of the
Collateral.
ARTICLE 6: CONDITIONS OF LENDING
--------------------------------
6.01. Conditions for Initial Advance. On or before the First Borrowing
Date, the following conditions shall have been met to Lender's satisfaction:
(a) Post-Closing Lien Searches. Lender shall have received
satisfactory results of Lien searches in all jurisdictions reasonably
determined by Lender to be appropriate, reflecting the filing of
financing statements in favor of Lender pursuant hereto and no other
Liens other than Permitted Encumbrances.
(b) Required Consents. Lender shall have received satisfactory
evidence of Borrower's obtaining the Required Consents.
6.02. Conditions for All Advances. The obligation of Lender to make any
Advance hereunder is subject to Borrower's performance of its obligations
hereunder on or before the Borrowing Date of such Advance, and to the
satisfaction of the following further conditions on or before the Borrowing Date
for any Advance, including the first Advance:
(a) Filings, Registrations and Recordings. Any financing
statements or other recordings required hereunder shall have been
properly filed, registered or recorded in each office in each
jurisdiction required in order to create in favor of Lender a perfected
first-priority Lien on the Collateral, subject to no other Lien except
Permitted Encumbrances; Lender shall have received acknowledgment
copies of all such filings, registrations and recordations stamped by
the appropriate filing officer; and Lender shall have received results
of searches of such filing offices, and satisfactory evidence that any
other Liens (other than Permitted Encumbrances) on the Collateral have
been duly released, that all necessary filing fees, recording fees,
taxes and other expenses related to such filings, registrations and
recordings have been paid in full.
(b) Borrowing Certificate. Lender shall have received a duly
executed Borrowing Certificate in the form of Exhibit B, including a
detailed itemization of all costs of goods and services to be paid with
the proceeds of the Advance and accompanied by supporting documentation
satisfactory to Lender.
20
(c) Reporting Requirements. Borrower shall have provided
Lender with all relevant reports and information required under Article
7 hereof.
(d) No Regulatory Event. No Regulatory Event (in either
Borrower's or Lender's reasonable determination) shall have occurred
and be continuing or would exist upon the consummation of transactions
to occur on such Borrowing Date.
(e) No Default or Event of Default. No Default or Event of
Default shall have occurred and be continuing or would exist upon the
consummation of transactions to occur on such Borrowing Date.
(f) No Material Adverse Change. No Material Adverse Change
shall have occurred, or would occur after giving effect to such
Advance, since the date of the last financial statements delivered to
Lender pursuant to Section 4.08 or 7.01 hereof.
(g) Representations and Warranties. The representations and
warranties contained in Article 4 hereof shall be true on and as of the
date of each such Advance hereunder.
(h) Lender's Expenses. All closing costs, and other Lender's
Expenses shall have been paid in full (or shall be paid first from such
Advance as provided in Section 2.03 hereof).
(i) Opinion. Lender shall have received from Borrower such
opinion of counsel for Borrower as may be reasonably acceptable to
Lender in form and substance with respect to the perfection and
priority of the Liens created by the Security Documents in each such
jurisdictional location.
(j) Details, Proceedings and Documents. All legal details and
proceedings in connection with the transactions contemplated by this
Agreement shall be reasonably satisfactory to Lender and Lender shall
have received all such counterpart originals or certified or other
copies of such documents and proceedings in connection with such
transactions, in form and substance reasonably satisfactory to Lender,
as Lender may from time to time request.
(k) Consents. Lender shall have received Consents duly
executed by all parties and in form satisfactory to Lender.
(l) Fees. Lender shall have received the fee(s) described in
Section 2.09 hereof.
(m) Purchase Agreement. Lender shall have received a copy of
the executed Nortel Purchase Agreement or any Vendor Purchase Agreement
with respect to which proceeds of an Advance shall be used to acquire
Nortel Equipment or other Vendor Equipment, and Lender shall have
reviewed and approved the Equipment to be acquired with proceeds of an
Advance.
6.03. Affirmation of Representations and Warranties. Any Borrowing
Certificate or other request for any Advance hereunder shall constitute a
representation and warranty that (a) the representations and warranties
contained in Article 4 hereof are true and correct on and as of the date of such
request with the same effect as though made on and as of the date of such
request and (b) on the date of such request, no Default or Event of Default has
occurred and is continuing or exists or will occur or exist after giving effect
to such Advance (for this purpose such Advance being deemed to have been made on
the date of such request). Failure of Lender to receive notice from Borrower to
the contrary before such Advance is made shall constitute a further
representation and warranty by Borrower that (x) the representations and
warranties of Borrower contained in the first sentence of this Section 6.03 are
true and correct on and as of the date of such Advance with the same effect as
though made on and as of the date of such Advance and (y) on the date of the
Advance no Default or Event of Default has occurred and is continuing or exists
or will occur or exist after giving effect to such Advance.
21
6.04. Deadline for Funding Conditions. Lender shall have no obligation
to make any Advances hereunder if all of the conditions set forth in Article 5
and in Sections 6.01 and 6.02 hereof have not been fully satisfied or waived,
and the first Advance made hereunder, within the period of twelve (12) calendar
months following the Closing Date.
ARTICLE 7: AFFIRMATIVE COVENANTS
--------------------------------
Borrower hereby agrees that as long as the Commitment remains in
effect, the Note remains outstanding or unpaid or any other amount is owing to
Lender hereunder or under any of the Loan Documents, Borrower shall keep and
perform fully each and all of the following covenants:
7.01. Reporting and Information Requirements.
(a) Annual Audit Reports. As soon as practicable within ninety
(90) days after the close of each fiscal year of Borrower, but in no
event earlier than the date on which the appropriate filing is made
with the SEC, Borrower shall furnish or cause to be furnished to Lender
audited statements of income, statements of cash flow and retained
earnings for such fiscal year and Borrower's balance sheet as of the
close of such fiscal year, and notes to each, all in reasonable detail,
and beginning with Borrower's second full fiscal year setting forth in
comparative form the corresponding figures for the preceding fiscal
year, with such statements and balance sheet to be certified by
independent certified public accountants selected by Borrower and
reasonably satisfactory to Lender.
(b) Quarterly Reports. Within forty-five (45) days after the
end of each fiscal quarter, Borrower shall furnish to Lender (i)
unaudited consolidated statements of income, statements of cash flow
and retained earnings for Borrower for such quarter and for the period
from the beginning of Borrower's then current fiscal year to the end of
such quarter, and an unaudited consolidated balance sheet of Borrower
as of the end of the quarter, all in reasonable detail and certified by
a Responsible Officer of Borrower as presenting fairly the financial
position of Borrower as of the end of such quarter and the results of
its operations and the changes in its financial position for such
quarter, in conformity with GAAP (except for accompanying notes
thereto), subject to year-end audit adjustments; provided, however,
that such information shall be furnished only on or after the date on
which the appropriate filing is made with the SEC, and (ii) upon
Lender's request, an aging of accounts payable and accounts receivable.
22
(c) Compliance Certificates. Within thirty (30) days after the
end of each Calendar Quarter, Borrower shall deliver to Lender a
certificate dated as of the end of such Calendar Quarter, signed on
behalf of Borrower by a Responsible Officer of Borrower (i) stating
that, as of the date thereof, no Event of Default has occurred and is
continuing or exists, or if an Event of Default has occurred and is
continuing or exists, specifying in detail the nature and period of
existence thereof and any action with respect thereto taken or
contemplated to be taken by Borrower; (ii) stating that such
Responsible Officer has reviewed this Agreement and that such
certificate is based on an examination made by or under the supervision
of the Responsible Officer sufficient to assure that such certificate
is accurate; and (iii) calculating and certifying Borrower's compliance
with the financial covenants set forth in Section 7.15 hereof.
(d) Other Reports and Information. Promptly upon their
becoming available to Borrower and otherwise in accordance with
applicable Law (including the Exchange Act and the rules and
regulations of the SEC), Borrower shall deliver to Lender copies of (i)
all regular or special reports or effective registration statements
which Borrower shall file with the SEC and (ii) all press releases
issued by or concerning Borrower.
(e) Further Information. Borrower will promptly furnish to
Lender, in accordance with applicable Law, such other information
(including any report by independent auditors) in such form as Lender
may reasonably request.
7.02 Other Notices. Promptly upon a Responsible Officer of Borrower
becoming aware of any of the following, Borrower shall give Lender notice
thereof, together with a written statement of a Responsible Officer of Borrower
setting forth the details thereof and any action with respect thereto taken or
contemplated to be taken by Borrower:
(a) a Default or Event of Default;
(b) any Material Adverse Change;
(c) a material default or breach by Borrower under any other
material contractual obligation to which it is a party or by which it
or its material properties is bound, if the consequences of such breach
or default are material to the business, operations or financial
condition of Borrower;
(d) any event that Borrower reasonably determines would
constitute a Regulatory Event;
(e) the commencement, existence or threat of any proceeding by
or before any Governmental Authority against Borrower which, if
adversely decided, would have a Material Adverse Effect; or
(f) any Change in Control or any material change in the
management of Borrower.
7.03. Inspection Rights. Borrower shall, upon reasonable notice, permit
such Persons as Lender may designate, at Lender's sole expense (unless there is
continuing an Event of Default) to visit and inspect the Collateral or any other
properties of Borrower, to examine its books and records and discuss its affairs
with its officers, employees and independent engineers at such times and as
often as Lender may reasonably request. Borrower hereby authorizes such
officers, employees, and independent engineers to discuss with Lender the
affairs of Borrower in a manner consistent with applicable Law.
23
7.04. Preservation of Corporate Existence and Qualification. Other than
as contemplated in connection with the Borrower's pending corporate
reorganization (as further described in the Borrower's filings with the SEC
pursuant to the Exchange Act), the Borrower shall maintain its existence, good
standing and rights in full force and effect in its jurisdiction of
organization. Borrower shall qualify to do business and remain qualified and in
good standing and shall obtain all necessary authorizations to do business in
each jurisdiction in which failure to receive or retain such would have a
Material Adverse Effect.
7.05. Continuation of Business. Borrower shall continue to engage
solely in the business described on Schedule 1 hereto, and shall acquire and
maintain in full force and effect all rights, privileges, franchises and
licenses necessary for the operation and maintenance of its business (including,
without limitation any license or authorization required by the FCC or any PUC).
7.06. Insurance.
(a) With respect to the Equipment, Borrower shall provide and
maintain or cause to be maintained at all times insurance in such forms
and covering such risks and hazards and in such amounts and with an
insurance carrier with a Best rating of "A" or above, licensed to do
business in the states where Borrower and the Equipment are located, as
may be satisfactory to Lender, as shown on Schedule 7.06 hereto, and
otherwise as may be required by the Security Documents.
(b) Borrower shall cause (i) all liability insurance policies
referred to in Section 7.06(a), above, to name Lender as an additional
insured, (ii) all physical damage insurance policies referred to in
Section 7.06(a), above, to contain a lender's or mortgagee's loss
payable provision reasonably acceptable to Lender with respect to the
Collateral, (iii) all insurance policies to provide that no assignment,
cancellation, modification, reduction in amount or adverse change in
coverage thereof shall be effective until at least thirty (30) days
after receipt by Lender of written notice thereof, (iv) all insurance
policies to insure the interests of Lender with respect to the
Collateral regardless of any breach of or violation by Borrower of any
warranties, declarations or conditions contained therein and (v) such
action to ensure that Lender shall have no obligation or liability for
premiums, commissions, assessments or calls in connection with such
insurance. Lender shall be under no obligation to verify the adequacy
or existence of any insurance coverage. Borrower shall furnish Lender
copies of, or acceptable certificates with respect to, all such
policies prior to the Closing Date, and shall provide to Lender, at
least thirty days prior to each policy expiration date, evidence of the
insurance being maintained by Borrower in compliance with this Section
7.06(b). Certificates for insurance required under subsection (i) above
shall be in XXXXX Form 27 (attached hereto at Schedule 7.06), and all
certificates shall be satisfactory in form and substance to Lender.
24
(c) If the Collateral is partially or totally damaged or
destroyed, Borrower shall give prompt notice to Lender, and all
insurance proceeds, less the costs of collection thereof, shall be paid
to or retained by Lender. Settlements, adjustments or compromises of
any claims for loss, damage or destruction to the Collateral shall be
made by Borrower and Lender as long as no Event of Default has occurred
and is continuing, and otherwise shall be made solely by Lender.
Borrower hereby authorizes and directs any affected insurance company
to pay such proceeds directly to Lender, and to rely on Lender's
statement as to whether an Event of Default has occurred. Borrower
shall pay all costs of collection of insurance proceeds payable on
account of such damage or destruction. If no Default or Event of
Default has occurred and is continuing on the date the Collateral is
partially or totally damaged or destroyed, Lender shall make available
to Borrower the proceeds of any physical damage insurance actually paid
to Lender in respect of such damage or destruction of the Collateral to
pay the cost of restoration, and Borrower shall proceed promptly with
the work of restoration of the Collateral and shall pursue the work of
restoration diligently to completion. If any Default or Event of
Default has occurred and is continuing either on the date of such
damage or destruction or on the date such insurance proceeds are paid,
or if any Default or Event of Default shall occur prior to completion
of such work of restoration, then Lender, at its option, may apply such
insurance proceeds in payment of any of the Obligations, in such order
as Lender may elect in its sole discretion. Any insurance proceeds
remaining after completion of work or restoration shall, at Lender's
election, be applied in accordance with Section 2.04(c) hereof (but
without prepayment premium), or paid over to Borrower. Upon completion
of any restoration, Borrower shall deliver to Lender a certificate
stating that the restoration has been duly completed and accounting for
the use of any insurance proceeds in such restoration.
7.07. Payment of Taxes, Charges, Claims and Current Liabilities.
Borrower shall pay or discharge:
(a) on or prior to the date on which penalties thereto accrue,
all taxes, assessments and other government charges or levies imposed
upon it or any of its properties or income;
(b) on or prior to the date when due, all lawful and
uncontested claims of materialmen, mechanics, carriers, warehousemen,
and other like persons which could result in creation of a Lien upon
any such property;
(c) on or prior to the date when due, all other lawful and
uncontested claims which, if unpaid, might result in the creation of a
Lien upon any such property (other than Permitted Encumbrances) or
which, if unpaid, would give rise to a claim entitled to priority over
general creditors of Borrower in a case under Title 11 (Bankruptcy) of
the United States Code, as amended, or in any insolvency proceeding or
dissolution or winding-up involving Borrower; and
(d) all other current liabilities so that none is overdue more
than ninety (90) days.
Notwithstanding the foregoing, Borrower shall be entitled to contest or
appeal the requirements of any Law or Governmental Authority or the payment of
any tax, assessment, charge, levy or claim, or any judgment entered against
Borrower (collectively, in this Section 7.07, the "requirements"), as long as
(i) such requirements are being contested in good faith by appropriate
proceedings diligently conducted; (ii) Borrower has given Lender written notice
of such requirements and its intent to contest them, with supporting reasons for
such contest, before the addition of any interest or penalties that may accrue
on such requirements; (iii) Borrower maintains adequate cash reserves and makes
other appropriate provisions as may be required by GAAP to provide for any
liability arising from such requirements; (iv) the contesting of, or failure to
comply with, such requirements does not in any way impair Borrower's ability or
authority to operate all or any part of the Collateral or the continuing
priority of Lender's security interests in the Collateral; (vi) the contesting
of, or failure to comply with, such requirements does not have a Material
Adverse Effect; and (vii) any foreclosure, attachment, execution, sale or
similar proceeding against Borrower or any of its properties in connection with
any such requirements is duly stayed by posting of a bond or security deposit or
by other action sufficient under applicable law to stay such foreclosure,
attachment, execution, sale or other proceedings.
25
7.08. Financial Accounting Practices. Borrower shall make and keep
books, records and accounts which, in reasonable detail, accurately and fairly
reflect its transactions and dispositions of its assets and maintain a system of
internal accounting controls sufficient to provide reasonable assurances that
(a) transactions are executed in accordance with management's general or
specific authorization, (b) transactions are recorded as necessary (i) to permit
preparation of financial statements in conformity with GAAP and (ii) to maintain
accountability for assets, (c) access to assets is permitted only in accordance
with management's general or specific authorization and (d) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
7.09. Compliance with Laws. Borrower shall comply in all material
respects with all Laws applicable to Borrower, provided that Borrower shall not
be deemed to be in violation of this Section 7.09 as a result of any failure to
comply which would not result in any liability or exposure to Lender or any
fines, penalties, injunctive relief or other civil or criminal liabilities
which, in the aggregate, would have a Material Adverse Effect.
7.10. Use of Proceeds. Borrower shall use the proceeds of Advances
hereunder only as set forth in Section 2.01 hereof.
7.11. Government Authorizations; Regulatory Authorizations, Etc.
Borrower shall at all times obtain and maintain in force all Regulatory
Authorizations and all other authorizations, permits, consents, approvals,
licenses, exemptions and other actions by, and all registrations,
qualifications, designations, declarations and other filings with, any
Governmental Authority necessary in connection with the execution and delivery
of this Agreement or the Note, consummation of the transactions herein or
therein contemplated, performance of or compliance with the terms and conditions
hereof or thereof or to ensure the legality, validity and enforceability hereof
or thereof.
7.12. Contracts and Franchises. Borrower shall comply in all material
respects with all material agreements or instruments to which it is a party or
by which it or any of its material properties (now owned or hereafter acquired)
may be subject or bound and shall maintain any and all franchises it may have or
hereafter acquire, provided that Borrower shall not be deemed to be in violation
of this Section 7.12 as a result of any failure to comply with any agreement if
one reasonably would expect such failure not to have a Material Adverse Effect.
7.13. Consents. Borrower shall obtain such Landlord's Consents,
Mortgagee's Consents and other third party consents as Lender shall reasonably
request after the Closing to protect its Liens and its access to the Collateral.
7.14. Financial Covenants. Borrower shall comply with the financial
covenants set forth on Schedule 7.14 hereto.
26
7.15. Construction and Storage. The Collateral shall be installed in
material compliance with the Requirements of Law affecting the Collateral except
to the extent a failure to so comply would not have a Material Adverse Effect on
the construction or operation of the Collateral. All Equipment financed with the
proceeds of the Loan shall be safeguarded and stored until installed in
appropriate storage facilities owned or leased by Borrower. In the event of any
cessation of construction for more than fifteen (15) successive calendar days,
Borrower shall make adequate provision, reasonably acceptable to Lender, for the
protection of all materials stored on site against deterioration, loss or
damage.
7.16. Upgrade Equipment. Borrower shall update the Software used in the
Equipment within two releases of the most current batch change supplement
release. Borrower shall maintain the Equipment in good working order in
accordance with established maintenance procedures such that the Equipment
performs to published specifications and shall upgrade its functionality to
include batch change supplements releases generally available to customers of
Nortel or the applicable Vendor, as the case may be, and batch change
supplements upgrades included in the original purchase price of the Purchase
Agreement in the form in effect on the date of the Closing Date.
ARTICLE 8: NEGATIVE COVENANTS
-----------------------------
Borrower hereby agrees that so long as the Commitment hereunder remains
in effect or the Note remains outstanding and unpaid or any other amount is
owing to Lender hereunder or under any of the Loan Documents, Borrower shall
not, directly or indirectly, without the prior written consent of Lender, do or
permit to exist any of the following:
8.01. Additional Indebtedness. Create, incur, assume or suffer to exist
at any one time any Indebtedness that would cause Borrower not to comply with
the ratios set forth in Schedule 7.14 hereto; provided, however, that the
Borrower may create, incur, assume or suffer to exist any Indebtedness (or
portion thereof) secured by the Borrower's accounts receivable without
application of the ratios set forth in Schedule 7.14 hereto and without the
Lender's written consent. As long as the Borrower would continue to comply with
the ratios set forth in Schedule 7.14 hereto, the Borrower shall have the right
to incur (a) Subordinated Indebtedness; (b) unsecured, unsubordinated
Indebtedness with the Lender's prior written consent, which consent the Lender
shall not withhold unreasonably; or (c) without the Lender's consent, unsecured,
unsubordinated Indebtedness with interest only payable prior to the Maturity
Date and with covenants, terms and conditions no less favorable from the
Lender's perspective as the covenants, terms and conditions contained in the
Senior Notes and the Indenture, including (without limitation) conditions
prohibiting or restricting Subsidiaries from loaning or distributing cash
dividends to Borrower or limiting redemptions prior to maturity.
8.02. Restrictions on Liens and Sale of Collateral. Create or suffer to
exist any Lien on the Collateral, or any part thereof, whether superior or
subordinate to the Lien of the Security Documents, or assign, convey, sell or
otherwise dispose of or encumber its interest in the Collateral, or any part
thereof (including, without limitation, execution of any lease), nor permit any
such action to be taken, except for the following permitted dispositions and
encumbrances (the "Permitted Encumbrances"): (i) the Lien created hereby; (ii)
Liens for taxes not yet due, or which are being contested in good faith and by
appropriate proceedings in accordance with Section 7.07 hereof; (iii) carriers',
warehousemen's, mechanics', materialmen's, repairmen's or other like Liens
arising in the ordinary course of business which are overdue for a period not
longer than thirty (30) days or which are being contested in good faith and by
appropriate proceedings in accordance with Section 7.07 hereof; (iv) pledges or
liens in connection with workers' compensation, unemployment insurance and other
social security legislation; (v) deposits to secure the performance of bids,
trade contracts (other than for borrowed money), leases, statutory obligations,
surety and appeal bonds, performance bonds and other obligations of a like
nature incurred in the ordinary course of business; (vi) easements,
rights-of-way, restrictions and other similar encumbrances that are not
substantial in amount, and which do not in any case materially detract from the
value of the property subject thereto or interfere with the ordinary conduct of
the business of Borrower; (vii) judgment liens with respect to which execution
has been stayed within ten (10) days by appropriate judicial proceedings and the
posting of adequate security which may not be any of the Collateral; and (viii)
specific liens, if any, identified on Schedule 8.02 hereto. Any of the foregoing
Liens shall remain "Permitted Encumbrances" as long as they are being contested
by Borrower in compliance with Section 7.07 hereof.
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8.03. Intentionally Deleted.
8.04. Prohibition of Mergers, Acquisitions, Name, Office or Business
Changes, Etc.
(a) Enter into or become the subject of any merger,
acquisition or consolidation which would result in a Change in Control;
liquidate, wind up or dissolve itself (or suffer any liquidation or
dissolution); or convey, sell, lease, transfer or otherwise dispose of,
in one transaction or a series of transactions, all or substantially
all of Borrower's assets, whether now owned or hereafter acquired.
(b) Change its name or corporate structure without giving
Lender at least thirty (30) days advance written notice of such change,
and ensuring that any steps that Lender may reasonably deem necessary
to continue the perfection and priority of Lender's security interests
in the Collateral shall have been taken.
(c) Change the fiscal year end of Borrower from December 31,
except with the prior written consent of Lender, which consent shall
not be unreasonably withheld.
(d) Amend, restate or otherwise modify, or violate any terms
of, its Organizational Documents without the prior written consent of
Lender, which consent shall not be unreasonably withheld.
(e) Enter into any new business other than the
telecommunications business or other similar businesses or make any
material change in any of Borrower's business objectives, purposes and
operations from those currently undertaken which would have a Material
Adverse Effect.
8.05. Limitation on Equity Payments. Make any Equity Payment, except
that, as long as no Default or Event of Default is continuing, or would be
caused thereby, and if no other provision contained herein will be violated by
the disbursement of such Equity Payment, Borrower may make Equity Payments
described on Schedule 8.05 hereto. Before making any Equity Payment in
accordance with this Section 8.05, Borrower shall deliver to Lender a
certificate of a Responsible Officer of Borrower, setting forth in detail the
calculation supporting Borrower's compliance with the financial covenants,
stating that no Material Adverse Change has occurred since the date of the
latest financial statement delivered pursuant to Section 7.01(a), and stating
that no Default or Event of Default has occurred and is continuing or will be
caused by such Equity Payment.
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8.06. Limitation on Investments, Advances and Loans. Except in
connection with the Borrower's pending corporate organization, without the
Lender's prior written consent, organize, create, acquire, capitalize or own any
Subsidiaries engaged in any business other than the telecommunications business
or similar businesses, or make or commit to make any advance, loan, guarantee of
any Indebtedness, extension of credit or capital contribution to, or hold or
invest in or purchase or otherwise acquire any stock, bonds, notes, debentures
or other securities of, or make any other investment in, any Person not engaged
in the telecommunications business or similar businesses.
8.07. Intentionally Deleted.
8.08. Intentionally Deleted.
8.09. Removal of Collateral. Remove or permit the removal of any
material part of the Equipment from the locations identified on Schedule 4.24,
without giving Lender thirty (30) days prior written notice of such removal and
ensuring that any steps Lender may deem necessary to continue the perfection and
priority of Lender's security interest in the Collateral shall have been taken.
8.10. Assumed Names. Transact or engage in business under any assumed
name, fictitious name, tradestyle or "d/b/a" except those identified on Schedule
4.27.
ARTICLE 9: EVENTS OF DEFAULT AND REMEDIES
-----------------------------------------
9.01. Events of Default. An Event of Default shall mean the occurrence
or existence of one or more of the following events or conditions (whatever the
reason for such Event of Default and whether voluntary, involuntary or effected
by operation of Law):
(a) Payment Default. If Borrower fails to pay any sum, whether
of principal or interest on the Note or any prepayment premiums, or any
other amount due hereunder or under the Note within 10 calendar days
after such amount becomes due; or
(b) False Statement. If any statement, representation or
warranty made by Borrower in any Loan Document or made in any financial
statement, certificate, report, exhibit or document furnished to Lender
pursuant to any Loan Document, proves to have been untrue, incomplete,
false or misleading in any material respect as of the time when made
(including by omission of material information necessary to make such
representation, warranty or statement not misleading) and such untruth,
falsity, misleading statement or omission shall not have been corrected
or remedied to the satisfaction of Lender within thirty (30) calendar
days after the earlier of Borrower's knowledge thereof or receipt of
written notice thereof from Lender; or
(c) Covenant Defaults. If Borrower defaults in the performance
or observance of any covenant or agreement in this Agreement, and such
default continues for a period of 30 calendar days after the earlier of
Borrower's knowledge thereof or receipt of written notice from Lender
thereof, except for violations of Section 7.14, which shall become an
Event of Default at the end of 10 days; except for violations of
Section 7.07(d), which shall become an Event of Default at the end of
the sixty (60) day period stated therein; and except for specific
Defaults listed elsewhere in this Section 9.01, as to which no notice
or cure period shall apply unless specified; or
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(d) Failure of Conditions. If Borrower fails to meet any
condition of lending under Article 6 hereof, and such condition is not
waived by Lender;
(e) Undischarged Judgments. If one or more judgments for the
payment of money has been entered against Borrower in an amount in
excess of $500,000, and such judgment or judgments have remained
undischarged and unstayed for a period of thirty (30) calendar days,
unless the validity thereof is contested in compliance with Section
7.07 hereof; or
(f) Attachments, etc. If a writ or warrant of attachment,
garnishment, execution, distraint or similar process has been issued
against Borrower or any of its properties which has remained
undischarged and unstayed for a period of thirty (30) consecutive days
and is not being contested in compliance with Section 7.07 hereof; or
(g) Default Under Third Party Agreements. If a default, or
event or condition which with notice or lapse of time or both would
become a default, occurs that gives the creditor the right to
accelerate in respect of any other obligation of Borrower for borrowed
money (including lease obligations) in the amount of $500,000 in the
aggregate, or under any two or more such other obligations of any
amount; or
(h) Dissolution; Etc. If Borrower dissolves, has its
Organizational Document revoked, winds up or liquidates itself or its
business; or
(i) Involuntary Bankruptcy or Receivership Proceedings. If a
receiver, custodian, liquidator, or trustee of Borrower, or of any of
its property is appointed by the order or decree of any court or agency
or supervisory authority having jurisdiction; or an order is entered
adjudicating Borrower as bankrupt or insolvent; or any of the property
of Borrower is sequestered by court order; or a petition is filed
against Borrower under any state or federal bankruptcy, reorganization,
arrangement, insolvency, readjustment of debt, dissolution,
liquidation, or receivership law of any jurisdiction, whether now or
hereafter in effect; or
(j) Voluntary Bankruptcy. If Borrower takes affirmative steps
to prepare to file, or files, a petition in voluntary bankruptcy or to
seek relief under any provision of any bankruptcy, reorganization,
arrangement, insolvency, readjustment of debt, dissolution, or
liquidation Law of any jurisdiction, whether now or hereafter in
effect, or consents to the filing of any petition against it under any
such Law; or
(k) Assignments for Benefit of Creditors, Etc. If Borrower
makes an assignment for the benefit of creditors, or admits in writing
its inability to pay its debts generally as they become due, or
consents to the appointment of a receiver, trustee, or liquidator of
itself or of all or any part of its properties; or
(l) Non-compliance with Governmental Requirements. If Borrower
fails to comply with any requirement of any Governmental Authority
within thirty (30) calendar days after notice in writing of such
requirement shall have been given to Borrower by such Governmental
Authority, or such longer period of time permitted Borrower by such
Governmental Authority; or
(m) Regulatory Authorizations. If any Regulatory Authorization
in connection with this Agreement or any other Loan Document or any
such Regulatory Authorization now or hereafter necessary or advisable
to make this Agreement or the other Loan Documents legal, valid,
enforceable and admissible in evidence or to permit Borrower to conduct
its business is not obtained or has ceased to be in full force and
effect or has been modified or amended or has been held to be illegal
or invalid or is revoked or terminated, and is not being contested by
Borrower in compliance with Section 7.07 hereof and Lender has
reasonably determined in good faith (which determination shall be
conclusive) that such event or occurrence may have a Material Adverse
Effect or a material adverse effect on Lender's rights under this
Agreement or any other Loan Documents; or
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(n) Damage or Destruction. If the proceeds of any physical
damage insurance actually paid in respect of the partial or total
damage or destruction of the Collateral are insufficient to cover the
cost of the restoration thereof or if Lender determines that such
damage or destruction is so extensive that repair or restoration cannot
be expected within a time period short enough to prevent a Material
Adverse Effect;
(o) Consents. If Borrower fails to provide any Consent
required hereunder and Lender determines in its reasonable discretion
that such failure results in a material impairment of Lender's security
for the Loan; or
(p) Defaults Under Other Loan Documents. If any default,
misrepresentation or breach should occur under any Security Document or
other Loan Document and is not cured or waived within the time
permitted therein, or any such Loan Documents should cease to be in
full force and effect, or any party thereto should assert any
unenforceability of, or deny liability on, or admit inability to
perform under, any such Loan Document.
9.02. Consequences of an Event of Default. If any Event of Default
shall occur and be continuing or shall exist, Lender shall be under no further
obligation to make Advances hereunder, any remaining commitment hereunder shall
immediately terminate, with no further notice, and Lender may, by notice to
Borrower, declare the unpaid principal amount of the Note, interest accrued
thereon and all other amounts owing by Borrower hereunder or under the Note to
be immediately due and payable without presentment, demand, protest or further
notice of any kind, all of which are hereby expressly waived, and an action
therefor shall immediately accrue. Such consequences shall occur automatically
upon the occurrence of an Event of Default under Section 9.01 (h), (i), (j) or
(k), without any notice or demand. Upon the occurrence of an Event of Default,
Lender may, in its sole discretion, exercise any and all remedies available to
it under this Article 9 or under any of the Loan Documents or under applicable
Law without further notice or period of grace or opportunity to cure.
9.03. Exercise of Rights. Subject to any requirements for FCC or other
Governmental Authority upon the occurrence of any Event of Default, the rights,
powers and privileges provided in this Section and all other remedies available
to Lender under this Agreement or by statute or by rule of law may be exercised
by Lender at any time from time to time whether or not the Obligations shall be
due and payable, and whether or not Lender shall have instituted any foreclosure
or other action for the enforcement of this Agreement or the Note. No failure to
exercise nor any delay in exercising on the part of Lender, any right, remedy,
power or privilege hereunder or under any of the other Loan Documents shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, power or privilege hereunder or thereunder preclude any other or future
exercise thereof or the exercise of any other right, remedy, power or privilege.
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9.04. Rights of Secured Party; Possession or Sale of Collateral.
Without limiting the generality of the foregoing, Lender shall have all the
rights and remedies of a secured party under the UCC, and Lender may, without
demand and without advertisement or notice, all of which Borrower waives, at any
time or times, sell and deliver any or all Collateral held by or for it at
public or private sale, for cash, upon credit or otherwise, at such prices and
upon such terms as Lender deems advisable, in its sole discretion, and/or
collect, or enforce the collection of, the Collateral. Lender may be the
purchaser at any such sale. Upon the occurrence of an Event of Default and upon
Lender's request, Borrower shall assemble, at its own expense, any or all
Equipment and other Collateral at a convenient place acceptable to Lender and
shall pay to Lender or reimburse Lender for, on demand, all costs of collection
of all amounts due, and enforcement of all rights hereunder, including
reasonable attorneys' fees and legal expenses, and expenses of any repairs to
any realty or other property to which any of such Collateral may be affixed.
Upon an Event of Default Lender may, to the full extent permitted by applicable
law, without notice, advertisement, hearing or process of law of any kind, enter
upon any premises where any of the Collateral may be located and take possession
of and remove such Collateral.
9.05. Notices, Etc. Waived. Except as expressly provided in this
Article 9, Borrower hereby expressly waives, to the full extent permitted by
applicable law, presentment, demand, protest, any and all notices of any kind,
advertisements, hearing or process of law in connection with the exercise by
Lender of any of its rights and remedies upon the occurrence of an Event of
Default. If any notification of intended disposition of any of the Collateral is
required by law, such notification shall be deemed reasonably and properly given
if given in accordance with Section 10.06 hereto at least ten (10) days before
such disposition.
9.06. Additional Remedies. Lender's remedies upon the occurrence and
during the continuance of an Event of Default shall include, in addition to, and
not in lieu of, such remedies as are available at law or in equity or provided
for in any of the Loan Documents, the following:
(a) Foreclosure; Receivership. Lender shall be entitled to
file one or more suits at law or in equity to collect the Obligations
and/or to foreclose on Lender's Liens on and security interests created
by this Agreement or the Security Documents. Lender may apply or
require Borrower to apply for any necessary transfers, assignments,
orders, consents or licenses in connection with the operation or
abandonment of the Collateral or any part thereof, and Lender shall
also be entitled as a matter of right and without notice and without
requiring bond (notice and bond being hereby waived), without regard to
the solvency or insolvency of Borrower at the time of application and
without regard to the value of the Collateral at that time, to have a
receiver appointed by a court of competent jurisdiction in order to
manage, protect, and preserve the Collateral and to continue the
operation of the business of Borrower, and to collect all revenues and
profits thereof and apply the same to the payment of all expenses and
other charges of such receivership until the sale or other final
disposition of the Collateral. Borrower hereby consents to the
appointment of such receiver.
(b) Right to Cure. If Borrower fails in any material respect
to perform or comply with any of its agreements contained herein or in
any of the other Loan Documents, Lender may take whatever actions it
may deem appropriate to perform or comply or otherwise cause
performance or compliance with such agreement, all at the risk, cost
and expense of Borrower.
(c) Setoff. If the unpaid principal amount of the Note,
interest accrued thereon or any other amount owing by Borrower
hereunder or under the Note shall have become due and payable (by
acceleration or otherwise), Lender shall have the right, in addition to
all other rights and remedies available to it, without notice to
Borrower, to setoff against and to appropriate and apply to such due
and payable amounts any debt owing to, and any other funds held in any
manner for the account of, Borrower by Lender. Such right shall exist
whether or not Lender shall have given notice or made any demand
hereunder or under the Note, whether or not such debt owing to or funds
held for the account of Borrower is or are matured or unmatured, and
regardless of the existence or adequacy of any Collateral, guaranty or
any other security, right or remedy available to Lender. Borrower
hereby consents to and confirms the foregoing arrangements and confirms
Lender's rights of setoff.
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9.07. Application of Proceeds. Any proceeds of any of the Collateral
received by Lender through sale or disposition of the Collateral or otherwise,
may be applied by Lender toward the payment of the Obligations, including
expenses in connection with the Collateral (including reasonable fees and legal
expenses) in such order of application as Lender may from time to time elect.
9.08. Discontinuance of Proceedings. If Lender should proceed to
enforce any right or remedy under this Agreement or any other Loan Document, and
then discontinue or abandon such proceeding for any reason, all rights, powers
and remedies of Lender hereunder shall continue as if no such proceeding had
been taken.
9.09. Power of Attorney. For the purpose of carrying out the provisions
and exercising the rights, powers and privileges granted by the Loan Documents,
including, without limitation, this Article 9, Borrower hereby irrevocably
constitutes and appoints Lender its true and lawful attorney-in-fact to execute,
acknowledge and deliver any instruments and do and perform any acts such as are
referred to in the Loan Documents during the continuance of any Event of
Default, including, without limitation, this Article 9, in the name and on
behalf of Borrower, from time to time in Lender's reasonable discretion after
the occurrence and during the continuance of an Event of Default, in accordance
with the Loan Documents and any statute or rule of law. This power of attorney
is a power coupled with an interest and cannot be revoked. Borrower hereby
ratifies all that said attorney-in-fact shall lawfully do or cause to be done by
virtue and in accordance with the terms hereof.
Without limiting the generality of the foregoing, Lender may, during the
continuance of an Event of Default, do the following without notice to or assent
by Borrower to accomplish the purposes of this Agreement:
(a) upon failure of Borrower to timely pay or discharge taxes or Liens
levied or placed on or threatened against the Collateral, effect any
repairs or any insurance called for by the terms of this Loan Agreement
or any other Loan Document, and pay all or any part of the premiums
therefor and the costs thereof;
(b) (i) direct any party liable for any payment on any Collateral to
make payment of any and all monies due and to become due thereunder
directly to Lender or as Lender shall direct; (ii) in the name of
Borrower or its own name or otherwise, take possession of and endorse
and collect any checks, drafts, notes, acceptances, or other
instruments for the payment of monies due under, or otherwise receive
payment of and receipt for any and all monies, claims and other amounts
due and to become due at any time in respect of or arising out of any
Collateral; (iii) sign and endorse any invoices, freight or express
bills, bills of lading, storage or warehouse receipts, drafts against
debtors, assignments, verifications and notices in connection with the
Collateral; (iv) commence and prosecute any suits, actions or
proceedings at law or in equity in any court of competent jurisdiction
to collect all or any of the Collateral and to enforce any other right
in respect of any Collateral; (v) defend any suit, action or proceeding
brought against Borrower with respect to any Collateral; (vi) settle,
compromise or adjust any suit, action or proceeding described above
upon commercially reasonable terms under the circumstances and, in
connection therewith, give such discharges or releases as Lender may
reasonably deem appropriate; and (vii) generally sell, use, operate,
transfer, pledge, make any agreement with respect to or otherwise deal
with any of the Collateral as fully and completely as though Lender
were the absolute owner thereof for all purposes, and, at Lender's
option and Borrower's expense, at any time or from time to time after
the occurrence and during the continuance of an Event of Default, all
other acts and things that Lender reasonably deems necessary to
protect, preserve or realize upon the Collateral and Lender's security
interest therein, in order to effect the intent of this Agreement and
the other Loan Documents all as fully and effectively as Borrower might
do.
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9.10. Regulatory Matters. Notwithstanding any provision to the contrary
contained herein, Lender will not exercise any right or remedy under this
Agreement that requires prior FCC or PUC approval without first obtaining such
approval. If counsel to Lender reasonably determines that the consent of the FCC
or PUC is required in connection with any of the actions that may be taken by
Lender in the exercise of its rights hereunder or under any of the other Loan
Documents, then Borrower, at its sole cost and expense, agrees to use its best
efforts to secure such consent and to cooperate with Lender in any action
commenced by Lender to secure such consent. Upon the occurrence and during the
continuation of an Event of Default, Borrower shall promptly execute and/or
cause the execution of all applications, certificates, instruments and other
documents and papers that may be required in order to obtain any necessary
governmental consent, approval or authorization, and if Borrower fails or
refuses to execute such documents, the clerk of the court with jurisdiction may
execute such documents on behalf of Borrower.
ARTICLE 10: GENERAL CONDITIONS/MISCELLANEOUS
--------------------------------------------
The following conditions shall be applicable throughout the term of
this Agreement:
10.01. Modifications and Waivers. This Agreement, the other Loan
Documents, or any provision thereof may not be changed, waived or terminated
orally, but only by an instrument in writing signed by the party against whom
enforcement of the change, waiver or termination is sought. No action or course
of dealing on the part of Lender, its officers, employees, consultants, or
agents, nor any failure or delay by Lender with respect to exercising any right,
power, or privilege of Lender under the Note, this Agreement, or any other Loan
Document shall operate as a waiver thereof, except as otherwise provided in this
Agreement. Any waiver shall be effective only to the extent and for the instance
specifically identified in such writing, and shall not be deemed to imply any
future waivers or other waivers. No amendment to the Loan Documents shall be
effective without written agreement signed by both Borrower and Lender.
10.02. Advances Not Implied Waivers. No waiver of the requirements
contained in any Loan Document shall be effective unless in writing duly signed
by Lender. No Advance hereunder shall constitute a waiver of any of the
conditions of Lender's obligation to make further Advances nor, in the event
Borrower is unable to satisfy any such condition, shall any waiver of such
condition have the effect of precluding Lender from thereafter declaring such
inability to be an Event of Default as herein provided. Any Advance made by
Lender and any sums expended by Lender pursuant to the Loan Documents shall be
deemed to have been made pursuant to this Agreement, notwithstanding the
existence of an uncured Default or Event of Default. No Advance at a time when
an Event of Default exists shall constitute a waiver of any right or remedy of
Lender existing by reason of such Event of Default, including, without
limitation, the right to accelerate the maturity of the Indebtedness evidenced
by the Note or to foreclose the Lien on the Collateral or to refuse to make
further advances hereunder.
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10.03. Deviation from Covenants. The procedure to be followed by
Borrower to obtain the consent of Lender to any deviation from the covenants
contained in this Agreement or any other Loan Document shall be as follows:
(a) Borrower shall send a written notice to Lender setting
forth (i) the covenant(s) relevant to the matter, (ii) the requested
deviation from the covenant(s) involved, and (iii) the reason for the
requested deviation from the covenant(s); and
(b) Lender, within a reasonable time, will send a written
notice to Borrower, permitting or refusing the request, but in no event
will any deviation from the covenants of this Agreement or any other
Loan Document be effective without the express prior written consent of
Lender. Lender's failure to provide such written notice shall be deemed
a refusal of such request.
10.04. Holidays. Except as otherwise provided herein, whenever any
payment or action to be made or taken hereunder or under the Note shall be
stated to be due on a day which is not a Business Day, such payment or action
shall be made or taken on the next following Business Day and such extension of
time shall be included in computing interest or fees, if any, in connection with
such payment or action.
10.05. Records. From time to time, Lender may send Borrower statements
of the unpaid principal amount of the Note, the unpaid interest accrued thereon,
the Interest Rate or rates applicable to such unpaid principal amount, the
duration of such applicability, and the amount remaining available on any Loan,
and each statement shall be deemed correct and conclusively binding on Borrower
(absent manifest error) unless Borrower notifies Lender of an error in the
statement in writing within thirty (30) days of the date of any such statement
is provided to Borrower.
10.06. Notices. All notices, requests, demands, directions and other
communications (collectively, "notices") required under the provisions of this
Agreement or any other Loan Document shall be in writing (including
communication by facsimile transmission) unless otherwise expressly permitted
hereunder and shall be sent by hand, by registered or certified mail return
receipt requested, by overnight courier service maintaining records of receipt,
or by facsimile transmission with confirmation in writing mailed first-class, in
all cases with charges prepaid, and any such properly given notice shall be
effective upon the earlier of receipt or (i) when delivered by hand, or (ii) the
third Business Day after being mailed, or (iii) the following Business Day if
sent by overnight courier service, or (iv) when sent by facsimile, answer back
received. All notices shall be addressed as follows:
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If to Borrower, to the Notice Address set forth on Schedule 1,
with copies, if any, as set forth on Schedule 1.
If to Lender: NTFC Capital Corporation
000 Xxxxxxxxx Xxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxx 00000
Attention: Manager, Credit
Telecopy: (000) 000-0000
With a copy to: NTFC Capital Corporation
000 Xxxxxxxxx Xxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxx 00000
Attention: Legal Department
Telecopy: (000) 000-0000
All notices shall be sent to the applicable party at the address stated
above or in accordance with the last unrevoked written direction from such party
to the other party hereto, given in accordance with the terms hereof.
10.07. FCC and PUC Approval. The exercise of any rights or remedies
hereunder or under any other Loan Document by Lender that may require FCC or PUC
approval shall be subject to obtaining such approval. Pending the receipt of any
PUC or FCC approval, Borrower shall not do anything to delay, hinder, interfere
with or obstruct the exercise of Lender's rights or remedies hereunder or the
obtaining of such approvals.
10.08. Lender Sole Beneficiary. All conditions of the obligation of
Lender to make any Advances hereunder are imposed solely and exclusively for the
benefit of Lender and its assigns and no other Person shall have standing to
require satisfaction of such conditions in accordance with their terms or be
entitled to assume that Lender will refuse to make any Advances in the absence
of strict compliance with any or all such conditions, and no Person shall under
any circumstances be deemed to be a beneficiary of such conditions, any or all
of which may be freely waived in whole or in part by Lender at any time if in
its sole discretion it deems it advisable to do so. Lender's sole obligation
hereunder is to make the Advances if and to the extent required by this
Agreement or the Note.
10.09. Lender's Review of Information. Borrower acknowledges and agrees
that any review or analysis by Lender of financial information, operating
information, marketing data or other information provided to Lender by or on
behalf of Borrower at any time is and shall be conducted solely for Lender's
benefit and internal use and that Lender is under no duty or obligation to make
the results of such review or analysis available to Borrower. Borrower is not
relying, and will not rely, on Lender for financial or business advice.
10.10. No Joint Venture. Nothing in any of the Loan Documents or in
this Agreement shall be deemed to constitute any kind of partnership, joint
venture or fiduciary relationship between Lender and Borrower.
10.11. Severability. The provisions of this Agreement are intended to
be severable. If any provision of this Agreement or the other Loan Documents
shall be held invalid or unenforceable in whole or in part in any jurisdiction
such provision shall, as to such jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without in any manner affecting the validity
or enforceability thereof in any other jurisdiction or the remaining provisions
hereof or thereof in any jurisdiction.
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10.12. Rights Cumulative. All rights, powers and remedies herein given
to Lender are cumulative and not alternative, and are in addition to all
statutes or rules of law.
10.13. Duration; Survival. All representations and warranties of
Borrower contained herein or made in connection herewith shall survive the
making of and shall not be waived by the execution and delivery of this
Agreement and the other Loan Documents, any investigation by Lender, or the
making of any Advances hereunder. All covenants and agreements of Borrower
contained herein shall continue in full force and effect from and after the date
hereof so long as it may borrow hereunder and until payment in full of the Note,
interest thereon, all fees and all other Obligations of Borrower. Without
limitation, it is understood that all obligations of Borrower to make payments
to or indemnify Lender shall survive the payment in full of the Notes and of all
other Obligations.
10.14. Governing Law. This Agreement, the Note and each of the other
Loan Documents shall be governed by and construed and enforced in accordance
with the internal laws of the State of New York (i.e., notwithstanding any
conflict of law principles), except to the extent, if any, set forth on Schedule
2.02 hereto, and except to the extent that the laws of jurisdictions where the
Collateral is located may be required to apply to the Collateral.
10.15. Counterparts. This Agreement may be executed in any number of
counterparts (by facsimile transmission or otherwise) and by the different
parties hereto on separate counterparts, each of which, when so executed, shall
be deemed an original, but all such counterparts shall constitute but one and
the same instrument.
10.16. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of Lender and Borrower and their respective successors and
assigns; provided, however, that Borrower may not assign or transfer any of its
rights or obligations hereunder or under the other Loan Documents (in whole or
in part) without the prior written consent of Lender. Lender may assign,
transfer or pledge any of its respective rights or obligations hereunder or
under the other Loan Documents without notice to or the prior written consent of
Borrower. Upon receipt of written notice from Lender of such assignment,
Borrower shall promptly acknowledge receipt thereof in writing. If Borrower is
given written notice of any assignment, it shall perform its obligations with
respect to this Agreement for the ratable benefit of the applicable assignee(s),
and, if so directed, shall pay all amounts due or to become due hereunder
directly to the applicable assignee(s) or to any other party designated by such
assignee(s). Borrower shall not assert against any such assignee any set-off,
defense or counterclaim that Borrower may have against Lender or any person
other than such assignee. Borrower shall also execute and deliver to Lender such
documentation as any such assignee may reasonably require, including but not
limited to amended promissory notes and acknowledgment of or consent to the
assignment which may require Borrower to make certain representations or
reaffirmations as to some of the basic terms and covenants contained herein.
Lender shall not be relieved of its obligations hereunder as a result of any
such sale, assignment, transfer, grant or pledge, unless such assignee
specifically assumes all or part of Lender's future obligations hereunder in a
writing, a copy of which shall be delivered to Borrower, in which event after
the date of such assignment, Borrower's obligations to any such assignee shall
be proportionately as set forth herein with respect to Lender, and Borrower
shall not look to Lender to perform any of such assignee's obligations hereunder
which arise after the date thereof. Any assignee shall be entitled to rely on
Borrower's agreements as stated herein, as applicable, and shall be considered a
third party beneficiary thereof. Except to the extent otherwise required by the
context of this Agreement, the word "Lender" where used in this Agreement shall
mean and include any holder of any Note originally issued to Lender hereunder,
and any such holder of the Note shall be bound by and have the benefits of this
Agreement the same as if such holder had been a signatory hereto.
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10.17. Participation. Lender shall have the right to enter into one or
more participation agreements, syndication agreements or similar agreements with
one or more participating lenders or other parties approved by Lender on such
terms and conditions as Lender shall deem advisable. Borrower shall furnish a
sufficient number of copies of reports and certificates to Lender so that Lender
and each participating lender shall receive a copy of each such document.
10.18. Time of Essence. Time is of the essence of this Agreement and
the Note and the other Loan Documents.
10.19. Disclosures and Confidentiality.
(a) Except as required by applicable Law, the Exchange Act, or
the rules and regulations of the SEC, Borrower agrees that it will
obtain Lender's written consent before using or generating any press
release, advertisement, publicity materials or other publication in
which the name or logo of Lender or any of its Affiliates is used or
may be reasonably inferred, and will not distribute any such materials
in the absence of such prior written approval.
(b) Except as required by applicable Law, the Exchange Act, or
the rules and regulations of the SEC, Borrower agrees that it will not,
directly or indirectly, disclose to any third party the terms of this
Agreement or the other Loan Documents or prior or future correspondence
relating thereto, or the transactions contemplated hereby, or any other
information regarding Lender or its Affiliates learned by Borrower
during the course of negotiation thereof. The term "third party" shall
exclude only Borrower, its Affiliates and their respective attorney(s)
and certified public accountant(s). This Section 10.19(b) shall not
restrict the disclosure of information if such disclosure is required
by law, by order of any court or by the order, rule or regulation of
any Governmental Authority, including without limitation any
requirements of the SEC, FCC, any PUC, or any state or federal
securities commissions (the "Commissions"); provided, however, that,
except for disclosures required by the SEC, FCC, PUC or Commissions,
Borrower shall provide Lender with advance notice of any such required
disclosure of information so that Lender may seek an appropriate
protective order and/or waive compliance with this Section. Borrower
shall not oppose any action taken by Lender to obtain an appropriate
protective order or other reliable assurance that the information will
be accorded confidential treatment. The obligations set forth in this
Section 10.19(b) shall survive the termination of this Agreement.
(c) The disclosure of information by either Lender or Borrower
will not be restricted under this Agreement if such information (i) has
been or becomes published or is now, or in the future, in the public
domain through (A) no fault of the parties, (B) disclosure other than
unauthorized disclosure by the party to whom the information is
disclosed, or (C) disclosure to third parties by the disclosing party
without similar restriction; (ii) is properly (other than proposal
letters, commitment letters or other correspondence between Lender and
Borrower) within the legitimate possession of the receiving party prior
to disclosure hereunder; (iii) subsequent to disclosure hereunder, is
lawfully received from a third party having rights therein without
restriction of the third party's or receiving party's rights to
disseminate the information and without notice of any restriction
against its further disclosure; (iv) is disclosed with the written
approval of the other party; (v) is or becomes publicly available free
of any obligation to keep it confidential.
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(d) Borrower authorizes Lender to discuss with and furnish to
any Affiliate of Lender, to any Governmental Authority with
jurisdiction over Lender, to any other Governmental Authority or to any
assignee, successor, participant, successor, or prospective assignee,
successor or participant, all publicly-disclosed financial statements,
audit reports and other information pertaining to Borrower and/or its
Subsidiaries whether such information was provided by Borrower or
prepared or obtained by Lender or third parties. Neither Lender nor any
of its employees, officers, directors or agents make any representation
or warranty to any existing or prospective assignee, successor or
participant regarding any audit reports or other analyses of Borrower
that Lender may distribute, whether such information was provided by
Borrower or prepared or obtained by Lender or third parties, nor shall
Lender or any of its employees, officers, directors or agents be liable
to any Person receiving a copy of such reports or analyses for any
inaccuracy or omission contained in such reports or analyses or
relating thereto.
(e) Every reference in this Agreement to disclosures of
Borrower to Lender (except the financial statements), to the extent
that such references refer or are intended to refer to disclosures at
or prior to the execution of this Agreement, shall be deemed strictly
to refer only to written disclosures delivered to Lender concurrently
with the execution of this Agreement and referred to specifically in
the Loan Documents. The parties intend that such disclosures are to be
limited to those presented in an orderly manner at the time of
executing this Agreement and are not to be deemed to include expressly
or impliedly any disclosures that previously may have been delivered
from time to time to Lender, except to the extent that such previous
disclosures are again presented to Lender in writing concurrently with
the execution of this Agreement.
10.20. Jurisdiction and Venue. BORROWER HEREBY IRREVOCABLY CONSENTS TO
THE JURISDICTION OF THE COURTS LOCATED IN DAVIDSON COUNTY, TENNESSEE, INCLUDING
WITHOUT LIMITATION FEDERAL COURTS SITTING IN THE MIDDLE DISTRICT OF TENNESSEE
AND THE CHANCERY COURT FOR DAVIDSON COUNTY, TENNESSEE, FOR ANY SUIT BROUGHT OR
ACTION COMMENCED IN CONNECTION WITH THIS AGREEMENT, THE OTHER LOAN DOCUMENTS, OR
THE OBLIGATIONS, AND AGREES NOT TO CONTEST VENUE OR JURISDICTION IN ANY SUCH
COURTS. In any such litigation, Borrower waives personal service of any summons,
complaint or other process, and agrees that the service thereof may be made by
certified or registered mail direct to Borrower at its address set forth in
Section 10.06 hereof. Within thirty (30) days after such mailing, Borrower shall
appear and answer to such summons, complaint or other process. Should Borrower
fail to appear or answer within the said 30-day period, then such party shall be
deemed in default and judgment may be entered against Borrower for the amount or
other relief as demanded in any summons, complaint or other process so served.
In the alternative, in its sole discretion, Lender may effect service upon
Borrower in any other form or manner permitted by law. The choice of forum set
forth herein shall not be deemed to preclude the enforcement of any judgment
obtained in such forum or the taking of any action under this Agreement to
enforce the same in any appropriate jurisdiction.
10.21. Jury Waiver. BORROWER AND LENDER HEREBY KNOWINGLY AND WILLINGLY
WAIVE THEIR RIGHTS TO DEMAND A JURY TRIAL IN ANY ACTION OR PROCEEDING INVOLVING
THIS AGREEMENT, ANY OTHER LOAN DOCUMENT, THE OBLIGATIONS, OR ANY RELATIONSHIP
BETWEEN LENDER AND BORROWER. BORROWER WARRANTS AND REPRESENTS THAT IT HAS
REVIEWED THE FOREGOING WAIVERS WITH ITS LEGAL COUNSEL AND HAS KNOWINGLY AND
VOLUNTARILY WAIVED ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN
CONSENT TO A TRIAL BY THE COURT.
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10.22. Limitation on Liability. LENDER SHALL HAVE NO LIABILITY UNDER OR
IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS FOR
SPECIAL, EXEMPLARY, PUNITIVE, INCIDENTAL, INDIRECT OR CONSEQUENTIAL DAMAGES OF
ANY SORT IN ANY SUIT BROUGHT OR ACTION COMMENCED IN CONNECTION WITH THIS
AGREEMENT, THE OTHER LOAN DOCUMENTS, OR THE OBLIGATIONS, AND, EXCEPT TO THE
EXTENT PROHIBITED BY LAW, EACH PARTY WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR
RECOVER IN ANY SUCH ACTION ANY SPECIAL, EXEMPLARY, PUNITIVE, INCIDENTAL,
INDIRECT OR CONSEQUENTIAL DAMAGES OF ANY SORT OTHER THAN ACTUAL DAMAGES.
10.23. Borrower Waivers. To the full extent permitted by law, Borrower
hereby waives (i) presentment, demand and protest and notice of presentment,
protest, default, non payment, 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 Lender
on which Borrower may in any way be liable and hereby ratifies and confirms
whatever Lender may do in this regard; (ii) notice prior to taking possession or
control of the Collateral or any bond or security which might be required by any
court prior to allowing Lender to exercise any of Lender's remedies, including
the issuance of an immediate writ of possession, except as expressly required in
any of the Loan Documents; (iii) any marshalling of assets, or any right to
compel Lender to resort first to any Collateral or other Persons before pursuing
Borrower for payment of the Obligations and any defenses based on suretyship or
impairment of Collateral; (iv) the benefit of all valuation, appraisement and
exemption laws; (v) any right to require Lender to terminate its security
interest in the Collateral or in any other property of Borrower until
termination of this Agreement and the execution by Borrower and by any person
whose loans to Borrower are used in whole or in part to satisfy the Obligations,
of an agreement indemnifying Lender from any loss or damage Lender may incur as
the result of dishonored or unsatisfied items of any account debtor applied to
the Obligations; and (vi) notice of acceptance hereof. Borrower acknowledges
that the foregoing waivers are a material inducement to Lender's entering into
this Agreement and that Lender is relying upon the foregoing waivers in its
future dealings with Borrower.
10.24. Schedules. The Schedules and Exhibits attached to this Agreement
are an integral part hereof, and are hereby made a part of this Agreement.
10.25. Agreement to Govern. In case of any conflict between the terms
of this Agreement and any of the other Loan Documents, the terms of this
Agreement (including all exhibits and schedules hereto) shall govern.
10.26. Entire Agreement. This Agreement, the other Loan Documents and
other documents, agreements and certificates executed by the parties
contemporaneously herewith or subsequent hereto constitute the entire agreement
of the parties and supersede all prior understandings and agreements, written or
oral, between the parties hereto relating to the subject matter hereof. Borrower
is not entering into this Agreement in reliance on statements or representations
made by any Person other than as set forth herein.
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10.27. Construction. The parties acknowledge that each party and/or its
legal counsel have reviewed and made revisions to this Agreement. The rule of
construction requiring the resolution of any ambiguities in this Agreement
against the drafting party shall not apply to the construction of this Agreement
or any schedules or exhibits to this Agreement.
[END OF GENERAL TERMS AND CONDITIONS. NEXT PAGE IS SCHEDULE 1.]
[SIGNATURES ARE ON COVER PAGE. ]
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