EXHIBIT 10.26
LOAN AND SECURITY AGREEMENT
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This LOAN AND SECURITY AGREEMENT ("Agreement") is dated as of October 22,
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1999 (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").
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BORROWERS/DEBTORS: BROADVIEW NETWORKS HOLDINGS, INC., a Delaware
corporation, Broadview Networks, Inc., a New York
corporation, and Broadview Networks of Massachusetts,
Inc., a Delaware corporation, each with its principal
place of business at 00-00 Xxxxx Xxxxxx, Xxx. 000, Xxxx
Xxxxxx Xxxx, XX 00000 ("BNH"), and the Subsidiaries of
BNH which subsequently become a party to this Agreement
pursuant to Section 2.11 of this Agreement (the
"Borrowers").
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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 a conflict between the general terms and
conditions and any schedule, the additional terms and conditions stated in the
schedule shall control.
By executing this Agreement, Lender agrees to make loans to Borrowers, and
Borrowers agree 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: BORROWERS:
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NTFC CAPITAL CORPORATION BROADVIEW NETWORKS HOLDINGS, INC.
BY:_______________________________ BY:____________________________________
TITLE:____________________________ TITLE:_________________________________
DATE:_____________________________ DATE:__________________________________
BROADVIEW NETWORKS
BY:____________________________________
TITLE:_________________________________
DATE:__________________________________
BROADVIEW NETWORKS OF
MASSACHUSETTS, INC.
BY:____________________________________
TITLE:_________________________________
DATE:__________________________________
TABLE OF CONTENTS
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Page
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ARTICLE 1: DEFINITIONS.................................................... 1
1.01. Certain Definitions............................................ 1
1.02. Accounting Principles; Subsidiaries............................ 12
1.03. UCC Terms...................................................... 12
1.04. General Construction; Captions................................. 12
1.05. References to Documents and Laws............................... 12
ARTICLE 2: LOANS.......................................................... 12
2.01. Commitment..................................................... 12
2.02. Notes and Payment Terms........................................ 13
2.03. Procedures for Borrowing....................................... 15
2.04. Prepayments.................................................... 16
2.05. Computation of Interest........................................ 17
2.06. Payments....................................................... 17
2.07. Indemnity...................................................... 17
2.08. Use of Proceeds................................................ 18
2.09. Fees........................................................... 18
2.10. Lender's Expense............................................... 18
2.11. Joint and Several Liability; Additional Subsidiaries........... 19
2.12. Taxes.......................................................... 19
ARTICLE 3: COLLATERAL AND SECURITY AGREEMENT.............................. 20
3.01. Grant of Security Interest..................................... 20
3.02. Priority of Security Interests................................. 21
3.03. Further Documentation; Pledge of Instruments................... 21
3.04. Further Identification of Collateral........................... 22
3.05. Remedies....................................................... 22
3.06. Standard of Care............................................... 22
3.07. Advances to Protect Collateral................................. 22
3.08. License to Use................................................. 22
3.09. Collateral Assignment of NTI Purchase Agreement................ 23
3.10. Priority of Security Interests and Liens on Equipment Outside
United States.................................................. 23
ARTICLE 4: REPRESENTATIONS AND WARRANTIES................................. 24
4.01. Organization and Qualification................................. 24
4.02. Authority and Authorization.................................... 24
4.03. Execution and Binding Effect................................... 24
4.04. Governmental Authorizations.................................... 24
4.05. Regulatory Authorizations...................................... 24
4.06. Material Agreement; Absence of Conflicts....................... 25
4.07. No Restrictions................................................ 25
4.08. Financial Statements........................................... 25
4.09. Financial Accounting Practices................................. 25
4.10. Accurate and Complete Disclosure............................... 26
4.11. No Event of Default; Compliance with Material Agreements....... 26
4.12. Litigation..................................................... 26
4.13. Rights to Property; Intellectual Property...................... 26
4.14. Financial Condition............................................ 26
4.15. Taxes.......................................................... 26
4.16. No Material Adverse Change..................................... 27
4.17. No Regulatory Event............................................ 27
4.18. Trade Relations................................................ 27
4.19. No Brokerage Fees.............................................. 27
4.20. Margin Stock; Regulation U..................................... 27
4.21. Investment Company; Public Utility Holding Company............. 27
4.22. Personal Holding Company; Subchapter S......................... 27
4.23. ERISA.......................................................... 28
4.24. Environmental Warranties....................................... 28
4.25. Security Interests............................................. 28
4.26. Place of Business.............................................. 28
4.27. Location of Collateral......................................... 28
4.28. Clear Title To Collateral...................................... 28
4.29. Assumed Names.................................................. 29
4.30. Transactions with Affiliates................................... 29
4.31. NTI Purchase Agreement......................................... 29
ARTICLE 5: CONDITIONS OF CLOSING.......................................... 29
5.01. Closing Certificates........................................... 29
5.02. Opinions of Counsel............................................ 29
5.03. Closing Documents.............................................. 30
ARTICLE 6: CONDITIONS OF LENDING.......................................... 30
6.01. Conditions for Initial Advance................................. 30
6.02. Conditions for All Advances.................................... 31
6.03. Affirmation of Representations and Warranties.................. 32
6.04. Deadline for Funding Conditions................................ 33
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ARTICLE 7: AFFIRMATIVE COVENANTS.......................................... 33
7.01. Reporting and Information Requirements......................... 33
7.02 Other Notices.................................................. 35
7.03. Notice of Pension-Related Events............................... 35
7.04. Inspection Rights.............................................. 35
7.05. Preservation of Corporate Existence and Qualification.......... 36
7.06. Continuation of Business....................................... 36
7.07. Insurance...................................................... 36
7.08. Payment of Taxes, Charges, Claims and Current Liabilities...... 37
7.09. Financial Accounting Practices................................. 38
7.10. Compliance with Laws........................................... 38
7.11. Use of Proceeds................................................ 38
7.12. Government Authorizations; Regulatory Authorizations, Etc...... 39
7.13. Contracts and Franchises....................................... 39
7.14. Consents....................................................... 39
7.15. Financial Covenants............................................ 39
7.16. Construction and Storage....................................... 39
7.17. Upgrade Equipment.............................................. 39
7.18. Additional Subsidiaries........................................ 40
ARTICLE 8: NEGATIVE COVENANTS.............................................. 40
8.01. Restrictions on Additional Indebtedness........................ 40
8.02. Restrictions on Liens and Sale of Collateral................... 40
8.03. Limitation on Contingent Obligations........................... 41
8.04. Fees and Commissions........................................... 41
8.05. Prohibition of Mergers, Acquisitions, Name, Office
or Business Changes, Etc............................... 41
8.07. Limitation on Investments, Advances and Loans.................. 42
8.08. Capital Expenditures........................................... 42
8.09. Limitation on Leases........................................... 42
8.10. Transactions with Affiliates................................... 42
8.11. Termination of Purchase Agreement.............................. 43
8.12. Removal of Collateral.......................................... 43
8.13. Assumed Names.................................................. 43
ARTICLE 9: EVENTS OF DEFAULT.............................................. 43
9.01. Events of Default.............................................. 43
9.02. Consequences of an Event of Default............................ 46
9.03. Exercise of Rights............................................. 46
9.04. Rights of Secured Party: Possession or Sale of Collateral...... 46
9.05. Notices, Etc., Waived.......................................... 47
9.06. Additional Remedies............................................ 47
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9.07. Application of Proceeds..................................... 48
9.08. Discontinuance of Proceeding................................ 48
9.09. Power of Attorney........................................... 48
9.10. Regulatory Matters.......................................... 49
ARTICLE 10: GENERAL CONDITIONS/MISCELLANEOUS............................. 49
10.01. Modifications and Waivers................................... 49
10.02. Advances Not Implied Waivers................................ 50
10.03. Deviation from Covenants.................................... 50
10.04. Holidays.................................................... 50
10.05. Records..................................................... 51
10.06. Notices..................................................... 51
10.07. FCC and PUC Approval........................................ 51
10.08. Lender Sole Beneficiary..................................... 52
10.09. Lender's Review of Information.............................. 52
10.10. No Joint Venture............................................ 52
10.11. Severability................................................ 52
10.12. Rights Cumulative........................................... 52
10.13. Duration: Survival.......................................... 52
10.14. Governing Law............................................... 53
10.15. Counterparts................................................ 53
10.16. Successors and Assigns...................................... 53
10.17. Participation............................................... 54
10.18. Time of Essence............................................. 54
10.19. Disclosures and Confidentiality............................. 54
10.20. Jurisdiction and Venue...................................... 55
10.21. Jury Waiver................................................. 56
10.22. Limitation on Liability..................................... 56
10.23. Borrowers' Waivers.......................................... 56
10.24. Schedules................................................... 57
10.25. Agreement to Govern......................................... 57
10.26. Entire Agreement............................................ 57
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SCHEDULES TO LOAN AND SECURITY AGREEMENT
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Schedule 1 Borrowers Information and Defined Terms
Schedule 2.01 Maximum Loan Amounts
Schedule 2.02 Payment Terms and Governing Law
Schedule 2.09 Fees
Schedule 2.11 Annex A to Loan and Security Agreement
Schedule 2.11(b) Additional Subsidiary Information
Schedule 4.04 Required Consents
Schedule 4.05 Regulatory Authorizations
Schedule 4.07 Restrictions on Loans
Schedule 4.08 Financial Statements
Schedule 4.12 Pending Litigation
Schedule 4.25 UCC Filing Offices
Schedule 4.26 Principal Offices and Location of Collateral
Schedule 4.29 Assumed Names
Schedule 4.30 Transactions with Affiliates
Schedule 4.31 NTI Purchase Agreement
Schedule 6.02 Post-Closing Items
Schedule 7.07 Insurance
Schedule 7.15 Financial Covenants
Schedule 8.01 Permitted Specific Encumbrances
Schedule 8.06 Permitted Equity Payments
EXHIBITS TO LOAN AND SECURITY AGREEMENT
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Exhibit A Form of Notes
Exhibit B Form of Borrowing Certificate
Exhibit C Form of Opinion of Counsel for Borrowers
Exhibit D Form of Opinion of Regulatory Counsel for Borrowers
Exhibit E Form of Landlord's Consent
Exhibit F Form of Mortgagee's Consent
Exhibit G Form of Certificate of Financial Condition
Exhibit H Form of Subordination Agreement
Exhibit I Form of Collateral Assignment of Purchase Agreement
Exhibit J Form of Consent to Collateral Assignment of Purchase
Agreement
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LOAN AND SECURITY AGREEMENT
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THIS LOAN AND SECURITY AGREEMENT ("Agreement") is dated as of the "Closing
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Date" set forth on Schedule 1 hereto, by and between BROADVIEW NETWORKS
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HOLDINGS, INC. (collectively, "BNH"), the other Borrowers (as defined below),
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and NTFC CAPITAL CORPORATION, a Delaware corporation ("Lender"), with offices at
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000 Xxxxxxxxx Xxxxxx Xxxxx, Xxxxx 000, Xxxxxxxx, Xxxxxxxxx 00000.
BACKGROUND:
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A. Broadview Networks, Inc., f/k/a Community Networks, Inc., a Domestic
Subsidiary of BNH, has entered into a certain purchase agreement with Northern
Telecom Inc., as described on Schedule 4.31 hereto, providing for the purchase
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by it or its Subsidiaries of certain telecommunications equipment and the
license of associated software, all as described therein, and has requested
Lender to extend credit to Borrowers to finance such purchase and license, as
described on Schedule 1 hereto, and to make credit available for the purchase of
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additional telecommunications equipment, in each case as described herein.
B. Lender is willing to extend such credit to Borrowers 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 2.01
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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 (including Capitalized Interest)
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made by Lender to Borrower pursuant to this Agreement.
"Affiliate": as applied to any Person, any second Person directly or
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indirectly controlling, controlled by, or under common control with that Person,
or related to such Person by blood, marriage or adoption. 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.
"Basic Agreements": a collective reference to this Agreement, each Note,
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and the Security Documents.
"Borrowing Certificate": a certificate substantially in the form of Exhibit
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B hereto, designating the applicable Borrower(s) under this Agreement, and
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executed by BNH and the applicable Borrower(s), if other than BNH.
"Borrower": BNH; each Domestic Subsidiary and Foreign Subsidiary which has
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signed this Agreement and which subsequently becomes a party to this Agreement
pursuant to Section 2.11 of this Agreement; and each of their respective
successors.
"Borrowing Date": any Business Day on which an Advance is made to a
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Borrower hereunder.
"Business Day": a day other than a Saturday, Sunday or other day on which
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commercial banks in New York, New York, are authorized or required by law to
close.
"Business Plan": the business plan of BNH, a copy of which is attached to
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Schedule 1 to this Agreement.
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"Calendar Quarter": each three month period starting on each January 1,
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April 1, July 1, and October 1, during the term of this Agreement.
"Capitalized Interest": the accrued but unpaid interest on any Advance that
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accrues during the Capitalized Interest Period, if any Capitalized Interest
Period is defined on Schedule 2.02 hereto, and is added to and deemed to be
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principal due under any Note, in accordance with Section 2.02(b) hereof.
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"Capitalized Interest Period": as defined on Schedule 2.02 hereto.
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"Carrier": any interexchange carrier or other provider of
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telecommunications long distance service or any local exchange company or other
provider of local telecommunications service.
"Certificate of Financial Condition": a certificate in the form of Exhibit
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G hereto, executed by BNH.
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"Change in Control": any change in the direct or indirect control of, or
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the ability or right to control, a majority of the voting shares of any class of
securities or ownership rights in a Borrower or in the right and/or the power to
control the election of the board of directors of a Borrower.
"Closing Date": as defined on Schedule 1 hereto.
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2
"Code": the Internal Revenue Code of 1986, as amended from time to time.
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"Collateral": as defined in Section 3.01 hereof.
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"Co-Location Site": a space located in an ILEC central office for the
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exclusive use of the Borrower in which a Borrower's equipment is located.
"Commitment": as defined in Section 2.01 hereof.
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"Communications Law": any and all of (i) the Communications Act of 1934, as
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amended and any similar or successor federal statute, and the rules and
regulations of the FCC thereunder, (ii) any 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 NTI Purchase
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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
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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 net worth or
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.
"Contributed Equity": the cumulative amount of cash equity received by BNH.
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"Conversion Date": as defined on Schedule 2.02 hereto.
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"Debt Service": for the most recent four full fiscal quarters of BNH being
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measured, the sum of (i) all amortized principal and interest payments that BNH
is required to make during such period on account of all of its Total Debt
including, without limitation, (a) amounts due during such period on account of
capitalized leases, (b) the then current portion of any long-term Total Debt of
BNH calculated in accordance with GAAP, (c) amounts due on short-term Total Debt
of BNH and (d) amounts due under this Loan Agreement and the Note, plus (ii)
capitalized expenditures not paid with proceeds of any Indebtedness.
3
"Default": any of the conditions or occurrences specified in Section 9.01,
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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
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percentage points in excess of the Interest Rate or (ii) the maximum permissible
rate under applicable law in effect at any time.
"Domestic Borrower": each Borrower formed under the laws of the United
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States; any state of the United States, the District of Columbia; or any
territory, possession or protectorate of the United States.
"Domestic Borrower Obligations": all Obligations of all Borrowers.
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"Domestic Subsidiary": each Subsidiary of BNH formed under the laws of the
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United State; any state of the United States, the District of Columbia; or any
territory, possession or protectorate of the United States.
"EBITDA": for any fiscal period, BNH's actual operating earnings on a
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consolidated basis from ongoing operations before interest, taxes, depreciation
and amortization for such fiscal period.
"Environmental Law": any current or future federal, state and local law
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(including common law), statute, regulation, ordinance, rulings, codes, judicial
order, administrative order or terms of licenses or permits applicable to
environmental conditions (including without limitation conditions relating to
ambient air, surface water, groundwater, land surface or subsurface strata),
including without limitation all such laws governing employment, the generation,
use, storage, disposal or transportation of toxic or hazardous substances or
wastes (including, without limitation, asbestos and petroleum products), the
Comprehensive Environmental Response, Compensation and Liability Act, the
Resource Conservation and Recovery Act, the Superfund Amendment and
Reauthorization Act of 1986, the Toxic Substances Control Act, the Clean Air
Act, the Water Pollution Control Act, the Hazardous Waste Management Act, the
Mineral Lands and Leasing Act, the Surface Mining Control and Reclamation Act,
U.S. Department of Transportation Regulations, and all similar state and local
laws, regulations, all as now or hereafter amended.
"Equipment": the equipment defined in Section 3.01 hereof.
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"Equity Payment": any distribution of earnings or capital to any Owner
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that is not a Borrower hereunder, any management fee or other fee paid to any
Affiliate that is not a Borrower hereunder not reasonably related to services
actually performed, or any redemption of equity ownership interests, either
directly or indirectly, whether in cash or property or in obligations of a
Borrower held by an Owner that is not a Borrower hereunder.
4
"ERISA": the Employee Retirement Income Security Act of 1974, as amended
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from time to time, and any successor statute.
"Event of Default": any of the events specified in Section 9.01 hereof,
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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
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satisfied.
"Excluded Indebtedness": (i) Subordinated Indebtedness, (ii) Indebtedness
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which by its terms is unsecured, has a stated maturity date at least twelve
months after the Maturity Date hereof, requires no principal repayments until at
least twelve months after the Maturity Date hereof, provides for no right of
prepayment, redemption or put rights (whether exercisable at the option of the
borrower or lender) prior to its stated maturity date, is issued on market terms
prevailing at the time, and which in any event provides for a cash payment of
interest at a rate not greater than the prime rate of interest most recently
announced by Citibank, N.A., plus 1000 basis points, and (iii) Indebtedness
under one or more receivables financing facility in an aggregate principal
amount not exceeding 85% of the net book value of the accounts receivables of
the Borrowers liable thereunder which are pledged as collateral for the
repayment of such Indebtedness.
"FCC": the Federal Communications Commission of the United States of
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America, and any successor, in whole or in part, to its jurisdiction.
"Financing Termination Date": as defined on Schedule 2.02 hereto.
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"First Borrowing Date": the date of the first borrowing by a Borrower
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hereunder.
"Fixed Charge Coverage Ratio" means the ratio of EBITDA during the four
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full fiscal quarters then ended ("the Four Quarter Period") to Debt Service for
the Four Quarter Period.
"Foreign Borrower": each Borrower formed under the laws of any
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jurisdiction other than the United States; the District of Columbia; or any
territory, possession or protectorate of the United States.
"Foreign Borrower Obligations": all Obligations of all Foreign Borrowers.
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"Foreign Subsidiary": each Subsidiary of BNH formed under the laws of any
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jurisdiction other than the United States; the District of Columbia; or any
territory, possession or protectorate of the United States.
"GAAP": subject to Section 1.02 hereof, generally accepted accounting
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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 BNH's independent certified public accountants concur), applied both to
classification of items and amounts.
5
"General Intangibles": as defined in Section 3.01 hereof.
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"Governmental Actions": actions by any Governmental Authority.
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"Governmental Authority": the federal government, any state or political
----------------------
subdivision thereof, any city or municipal entity, and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Indebtedness": as to any Person, at a particular time, (a) indebtedness for
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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.
"Initial Payment Date": as defined on Schedule 2.02 hereto.
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"Interest Payment Date": as defined on Schedule 2.02 hereto.
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"Interest Rate": as defined on Schedule 2.02 hereto.
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"Landlord Consent": a consent substantially in the form of Exhibit E hereto or
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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 Collateral is to be located.
"Law": any law (including common law), constitution, statute, regulation,
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rule, ordinance, order, injunction, writ, decree or award of any governmental
body or court of competent jurisdiction or of any arbitrator (including but not
limited to ERISA, the Code, the UCC, any applicable tax law, product safety law,
occupational safety or health law, Communications Law, Environmental Law and/or
securities laws).
"Lender's Expenses": as defined in Section 2.10 hereof.
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"Leverage Ratio": The ratio of Total Debt (other than Excluded Indebtedness
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and current trade payables incurred in the ordinary course of business payable
in accordance with customary practices and not more than 90 days past due) to
Contributed Equity.
6
"Lien": any mortgage, pledge, hypothecation, lien (statutory or other),
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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.
"Loans": the loans and loan facilities described in Section 2.01 hereof and
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all Advances pursuant hereto.
"Loan Documents": a collective reference to this Agreement, each Note, the
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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.
"Mandatory Prepayments": as defined in Section 2.04(b) hereof.
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"Material Adverse Effect": or "Material Adverse Change": a material adverse
----------------------- -----------------------
effect on, or material adverse change in, (i) the business, operations or
financial condition of BNH and its Subsidiaries taken as a whole, (ii) the
ability of a Borrower to perform its obligations under this Loan Agreement, a
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 F
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hereto, to be executed by any Person holding a lien on real property leased or
otherwise provided to a Borrower, on which any of the Equipment is located.
"Maturity Date": the date defined on Schedule 2.02 hereto, on which all
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principal, interest, premium, expenses, fees, penalties and other amounts due
under a Note shall be finally due and payable.
"Note": collectively, one or more promissory notes issued by a Borrower to
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Lender pursuant to this Agreement, and all extensions, renewals, modifications,
replacements, amendments, restatements and refinancings thereof.
"NTI": Northern Telecom Inc., a Delaware corporation.
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"NTI Equipment": the equipment and licensed or sub-licensed Software
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manufactured or supplied by NTI to a Borrower with respect to which Advances
hereunder are used directly or indirectly to finance the acquisition cost
thereof at any time pursuant to the NTI Purchase Agreement
7
or any purchase order issued by a Borrower to NTI or otherwise, including
installation and construction services provided by NTI pursuant thereto.
"NTI Purchase Agreement": the NTI Purchase Agreement identified on Schedule
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4.31 hereto, together with any amendments or supplements thereto, and any other
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purchase agreement between NTI and a Borrower and all purchase orders and
invoices issued pursuant thereto, all subject to the approval of Lender.
"Obligations": all indebtedness, liabilities and obligations of a Borrower to
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Lender of any class or nature, whether arising under or in connection with this
Agreement and/or the other Loan Documents or otherwise, 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, a 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
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incorporation and bylaws 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 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.
"Owner(s)": the owner or owners, as the context requires, of any equity
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securities of BNH or any Subsidiary of BNH, now or in the future.
"Payment Date": as defined on Schedule 2.02 hereto.
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"PBGC": the Pension Benefit Guaranty Corporation established under Title IV of
----
ERISA or any other governmental agency, department or instrumentality succeeding
to its functions.
"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.
8
"Plan": any employee pension benefit plan to which Section 4021 of ERISA
----
applies and (i) which is maintained for employees of BNH and/or its Subsidiaries
or (ii) to which a Borrower made, or was required to make, contributions at any
time within the preceding five (5) years.
"Proceeds": as defined in Section 3.01 hereof.
-------- ------------
"PUC": the public utilities commission for the state or any other jurisdiction
---
in which a 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 NTI Purchase
------------------
Agreement and the Vendor Purchase Agreement.
"Regulatory Authorizations": all material 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 or
other regulatory 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 BNH or any of its Subsidiaries 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) BNH or any of its
Subsidiaries 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 BNH's ability to perform its
material obligations under the Loan Documents or Lender's rights thereunder or
the Collateral, 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
Regulatory Authorization.
"Reportable Event": (i) a reportable event described in Section 4043 of ERISA
----------------
and regulations thereunder, (ii) a withdrawal by a substantial employer from a
Plan to which more than one employer contributes, as referred to in Section
4063(b) of ERISA, or (iii) a cessation of operations at a facility causing more
than twenty percent (20%) of Plan participants to be separated from employment,
as referred to in Section 4062(f) of ERISA.
9
"Required Consents": the Governmental Authority approvals or consents of other
-----------------
Persons required with respect to a 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
without limitation, all applicable common law and equitable principles, all
provisions of all applicable state and federal constitutions, statutes, rules,
regulations and orders of governmental bodies, all Permits or Regulatory
Authorizations issued to BNH and each of its Subsidiaries, all Communications
Laws, and all Environmental Laws.
"Responsible Officer": with respect to a corporation, its President, Chief
-------------------
Executive Officer(s), any Vice President or Treasurer; with respect to a
partnership, its general partner (or the President, Chief Executive Officer(s),
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, Chief Executive Officer(s), any Vice President or Treasurer
of any corporate member or manager), or the President, Chief Executive
Officer(s) or any Vice President of any other Person.
"Security Documents": this Agreement, the Consents, all financing statements,
------------------
all documents and instruments executed and/or delivered by or on behalf of any
Borrower in favor of Lender granting and perfecting liens and security interests
on and in any Collateral located outside the United States as Lender may
approve, and any other documents granting, evidencing, or perfecting any
security interest or Lien with respect to or securing any of the Obligations.
"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, a Borrower or any of its Subsidiaries or with respect to which BNH
or any of its Subsidiaries has or may have license or use rights.
"Subsidiary": as to any Person, a corporation, partnership, limited liability
----------
company, or other entity in which equity interests having ordinary voting power
to elect a majority of the board of directors, managers or similar persons of
the entity 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).
"Subordination Agreement": one or more Subordination Agreements substantially
-----------------------
in the form of Exhibit H hereto or otherwise as accepted by Lender.
---------
10
"Subordinated Indebtedness": Indebtedness that (i) does not require any
-------------------------
payment of principal until twelve (12) months after the Maturity Date, and
requires no principal repayments until at least twelve months after the Maturity
Date hereof, and provides for no right of prepayment, redemption or put rights
(whether exercisable at the option of the borrower or lender) prior to its
stated maturity date, (ii) is issued on market terms prevailing at the time, and
which in any event provides for a cash payment of interest at a rate not greater
than the prime rate of interest most recently announced by Citibank, N.A., plus
1000 basis points and (iii) is subordinated on terms reasonably acceptable to
Lender in a Subordination Agreement to the payment of Indebtedness created
hereunder and pursuant to any other Loan Document.
"System": BNH's complete telecommunications network or system constructed
------
and/or operated by BNH and its Subsidiaries (including any future development
and expansions thereof), of which the Equipment forms a part, as described on
Schedule 1 hereto.
----------
"Total Debt": of any person means, without duplication, (a) all items of
----------
indebtedness or liability which in accordance with generally accepted accounting
principles, consistently applied, would be included in determining total
liabilities as shown on the liability side of a balance sheet as of the date as
of which indebtedness is to be determined, (b) indebtedness or other liabilities
secured by any mortgage, security agreement, pledge, or lien existing on or
encumbering property owned by such person, whether or not the indebtedness or
other liabilities secured thereby shall have been assumed by such person, (c)
all indebtedness of such person (i) which such person has directly or indirectly
guaranteed, endorsed (otherwise than for collection or deposit in the ordinary
course of business), discounted with recourse, agreed (contingently or
otherwise) to purchase or repurchase or otherwise acquire, (ii) in respect of
which such person has agreed to supply or advance funds (whether by way of loan,
purchase of securities or capital contribution, through a commitment to pay for
property or services regardless of the nondelivery of such property or the
nonfurnishing of such services or otherwise), or (iii) in respect of which such
person has otherwise become directly or indirectly liable, and (d) all
obligations of such person under any now or hereafter existing interest swap or
hedge agreements (net of any amounts owed to that person under any such swap or
hedge agreements).
"UCC": the Uniform Commercial Code as the same may from time to time be in
---
effect in the State of Tennessee, or the Uniform Commercial Code of another
jurisdiction, to the extent it may be required to apply to any item or items of
Collateral.
"Unrestricted Subsidiary": (i) Open Support Systems, LLC, a Connecticut
-----------------------
limited liability company and a Subsidiary of BNH ("OSS"), and (ii) wholly-owned
Subsidiaries of OSS formed after the date hereof, provided that they only engage
in businesses substantially similar to that of OSS.
"Vendor" means any manufacturer or supplier of Vendor Equipment or licensor or
------
supplier of Software, in each case other than NTI.
11
"Vendor Equipment" means any equipment, upgrades, switches and licensed or
----------------
sub-licensed Software manufactured, or supplied to a Borrower, by a Vendor.
"Vendor Purchase Agreement": any purchase agreement, together with any
-------------------------
amendments or supplements thereto, between a Vendor and a Borrower or an
assignor of a 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. 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 the Borrowers and their
properties and activities shall be deemed to refer to BNH 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
----------------
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 the Borrowers from
12
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, plus Capitalized Interest, if any, set forth on Schedule 2.01
-------------
hereto (the "Commitment"). If BNH or NTI should terminate the NTI Purchase
----------
Agreement at any time prior to the Initial Payment Date, then the Commitment
shall automatically terminate, subject to Lender's right to make further
Advances hereunder, including, but not limited to, Advances under Section 2.03
------------
hereof. All amounts advanced hereunder shall be used solely for the purchase of
NTI Equipment and related services (exclusive of sales tax) associated with the
installation and operation of the NTI Equipment from NTI, 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 a
Borrower or incurred by Lender and payable by a Borrower under Section 2.10
------------
hereof; provided, however, that not exceeding (i) forty percent (40%) of the
-------- -------
aggregate of the principal amount of all Advances made hereunder may be used for
purchases of Vendor Equipment and related services associated with the
installation and operation of the Vendor Equipment, and (ii) eighteen and ten
one hundredths percent (18.10%) of the aggregate of the principal amount of all
Advances made hereunder may be used to finance the buildout, construction and
equipping of Co-Location Sites and related line conversion costs.
2.02. Notes and Payment Terms.
-----------------------
(a) Promissory Notes. The Loans shall be a Note substantially in
----------------
the form of Exhibit A hereto, with appropriate insertions, shall be
---------
executed by the applicable Borrowers, payable to the order of Lender, and
shall evidence the joint and several obligation of such Borrowers to repay
all principal amounts advanced under or pursuant to the terms of the Note,
together with interest and all other amounts due thereunder. Each Note
shall be dated as of the Closing Date, have a stated maturity that is the
Maturity Date, and bear interest at the Interest Rate from the Borrowing
Date until the Note or any amount thereunder is paid in full (whether on
the Maturity Date, by acceleration or otherwise). All schedules attached to
a Note shall be deemed a part thereof. Any such schedule may be amended by
Lender from time to time to reflect Advances made thereunder upon notice to
and consent from the applicable Borrowers which consent will not be
unreasonably withheld or delayed.
(b) Capitalized Interest Period. During the Capitalized Interest
---------------------------
Period applicable to each Advance, interest shall accrue on principal
amounts of such Advance under the Note at the Interest Rate, and up to an
aggregate of the maximum amount of Capitalized Interest set forth on
Schedule 2.02 hereto of such interest shall be capitalized, in arrears, and
-------------
added to the principal amount of the Note by Lender, on behalf of the
Borrowers, on the first day of each calendar month, thereby increasing the
principal amount of the Note. The Lender may also evidence such increase by
noting the date and amount of each such addition on a schedule to the Note.
Interest accruing during the Capitalized Interest Period in excess of the
maximum aggregate amount of Capitalized Interest set forth on Schedule 2.02
-------------
hereto shall be paid by the Borrowers monthly in arrears, on the first day
of each calendar month, commencing on the first day of the month after the
month in which such limit is exceeded.
13
(c) Interest Payments. After the expiration of the Capitalized
-----------------
Interest Period for an Advance, interest shall continue to accrue on the
principal amount of such Advance under a Note (together with Capitalized
Interest) at the Interest Rate and shall be payable, in arrears, on each
Interest Payment Date.
(d) Principal Payments. On the Conversion Date for each Advance, the
------------------
principal amount of such Advance (including Capitalized Interest) shall be
payable in installments in accordance with the Payment Schedule set forth
on Schedule 2.02 hereto, plus accrued interest, commencing on the Initial
-------------
Payment Date and on each Payment Date there after until the Maturity Date.
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.
(e) Late Payments and Default Rate. Notwithstanding the foregoing, if
------------------------------
the applicable Borrowers shall fail to pay within ten (10) days after the
due date any principal amount or interest or other amount payable under
this Agreement or under a Note, the applicable Borrowers 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 Rate),
from the due date until such overdue principal amount, interest or other
unpaid amount 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 amounts 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.
(f) Excess Interest. Notwithstanding any provision of a Note, this
---------------
Agreement or any other Loan Document to the contrary, it is the intent of
Lender and the Borrowers that Lender or any subsequent holder of either of
the Notes 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 a 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 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 indebtedness of the
applicable Borrowers due to Lender, and if none is outstanding, shall be
paid to the applicable Borrowers. In determining whether or not the
interest paid or payable, under any specific contingency, exceeds the
highest lawful rate, the Borrowers 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
14
by Lender, and (b) amortize, prorate, allocate, and spread, in equal parts,
the total amount of interest throughout the entire term of the
indebtedness; 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 any Note shall
refund to the applicable Borrowers 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 $250,000. 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 Borrowers, for which invoices have been sent
to Borrowers at least two (2) Business Days before such Advance. In any
event, all outstanding legal fees, charges and expenses not paid by
Borrowers 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, BNH, and
----------------------
if the proceeds of an Advance are to be used to finance or refinance
Collateral or the construction, buildout and equipping of a Co-Location
Site to be owned or used by a Borrower other than BNH, such other Borrower,
shall send to Lender, at least ten (10) 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 upon notice to the BNH to add to any
Borrowing Certificate all amounts payable by Borrowers 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 be paid from proceeds of the Loans.
(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 Loans may be transmitted, at Lender's option,
directly to an NTI or Vendor account for payment of any unpaid NTI or
Vendor invoices, and (ii) Advances shall be made to a Borrower only to the
extent the Borrower provides Lender with satisfactory evidence that the
amount of such Advance has been paid to NTI 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
Date as all conditions for such Advance shall have been satisfied, as
determined by Lender.
(e) Advances After Default. At its option, after the occurrence and
----------------------
continuance of a Default, Lender may but shall not be obligated to make
advances of portions of the Loans to any Person (including without
limitation NTI 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 proceeds so disbursed by Lender shall be deemed
disbursed as of the date on which the Person to whom payment is made
receives the same. No further authorization from a Borrower shall be
necessary to warrant such direct advances, and the execution of this Loan
Agreement by a Borrower shall, and hereby does, constitute an irrevocable
authorization and power of attorney so to advance
15
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 the Borrower.
2.04. Prepayments.
-----------
(a) Voluntary Prepayments. Borrowers may, at their option, at any
---------------------
time after the first (1/st/) anniversary of the date of the applicable
Advance) and from time to time thereafter, prepay such Advance in whole or
in part, upon at least thirty (30) days prior written notice to Lender
specifying the date and amount of prepayment, in a minimum amount of
$50,000, 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 after the first (1/st/) but before the second (2/nd/) anniversary of
the date of the applicable Advance (or portion thereof) being prepaid; two
percent (2%) if the prepayment is made after the second (2/nd/) but before
the third (3/rd/) anniversary of the date of the applicable Advance (or
portion thereof) being prepaid; one percent (1%) if the prepayment is made
after the third (3/rd/) but before the fourth (4/th/) anniversary of the
date of the applicable Advance (or portion thereof) being prepaid; and
without a premium if the prepayment is made after the third (3/rd/) but
before the fourth (4/th/) anniversary of the date of the applicable Advance
(or portion thereof) being prepaid. 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. No voluntary
prepayments shall be permitted prior to the Initial Payment Date.
(b) Mandatory Prepayment. Upon Lender's demand, Borrowers shall
--------------------
immediately prepay the Loans in full, including all principal, accrued
interest, and expenses ("Mandatory Prepayments") , all of which shall be
---------------------
made upon Lender's demand and shall not be subject to any prepayment
premium:
(i) If, prior to the completion of the installation of the
subject Equipment for which an Advance has been made, the Borrowers
fail to satisfy its purchase obligations under the related Purchase
Agreement or terminate the related Purchase Agreement, at Lender's
option Borrower shall prepay the Loans in full, including all
principal, accrued interest, and expenses, within five (5) Business
Days of Lender's demand.
(ii) If (i) the percentage of the aggregate amount of all
Advances made hereunder to finance the purchase of NTI Equipment and
services under the NTI Purchase Agreement, as of the Financing
Termination Date, is less than sixty percent
16
(60%) of the total amount of Advances made hereunder (excluding
Capitalized Interest) of (ii) the percentage of the aggregate amount
of all Advances made hereunder to finance the buildout, construction
and equipping of Co-Location Sites ever exceeds eighteen and ten one
hundredths percent (18.10%) of the aggregate of the principal amount
of all Advances made hereunder (excluding Capitalized Interest),
then Borrower shall pay to Lender sufficient amounts to reduce the
outstanding principal amount of the Note to a principal amount
(excluding Capitalized Interest) necessary so as to comply with
Section 2.01. Any such Mandatory Prepayments under this Section
------------ -------
2.04(b)(ii) shall be deemed to be applied first to pay the amounts
-----------
of Advances made for purposes other than the purchase of NTI
Equipment, and shall otherwise be applied as set forth in Section
-------
2.04(c) hereof.
-------
(c) Application of Prepayments. Any prepayments shall be applied
--------------------------
first to Capitalized Interest, if any, then to interest, then to premium,
then to expenses, and then to the installments of principal in reverse
chronological order.
2.05. Computation of Interest. Interest shall be calculated daily on the
-----------------------
basis of a 360-day year for the actual days elapsed in the period during which
it accrues.
2.06. Payments. All payments and prepayments to be made in respect of
--------
principal, interest, prepayment premiums or other amounts due from a Borrower
hereunder or under a Note shall be payable on or before 1:00 p.m., Nashville
time, on the 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. Borrowers hereby, jointly and severally, indemnify
---------
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 a 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 a Borrower to pay when due (by acceleration or
otherwise) any principal, interest, fee or any other amount due hereunder or
under a Note, and any failure of a 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. Borrowers'
obligations under this Section 2.07 shall be part of the Obligations and shall
------------
be secured by the Collateral. Borrowers agree that upon written notice by
Lender of the assertion of any Claims, Borrowers shall, at Lender's option,
either assume full responsibility for, or reimburse Lender for
17
the reasonable costs and expenses of, the defense thereof. Lender shall have no
liability for consequential or incidental damages of any nature. The provisions
of this Section 2.07 shall survive the termination of this Agreement and payment
------------
of the Obligations.
2.08. Use of Proceeds. The proceeds of the Advances hereunder shall be
---------------
used by a Borrower only for the purposes and in the amounts described in Section
-------
2.01 hereof, and no amounts repaid may be reborrowed.
----
2.09. Fees. Borrowers shall pay Lender the fees described on Schedule
---- --------
2.09 hereto in connection with this Agreement.
----
2.10. Lender's Expenses. Borrowers agree, jointly and severally, (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 amendment, supplement, waiver, modification to, or restructuring
of this Agreement, the Obligations or the other Loan Documents, including,
without limitation, reasonable and customary legal fees and disbursements,
expenses, document charges and other charges and expenses of Lender, (b) to pay
or reimburse Lender for all its reasonable costs, fees, charges and expenses
incurred in connection with the administration of the Loans 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, and (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 subject to Schedule 2.09. All of the amounts described as
-------------
payable 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 fifteen (15) 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
such advance. If Borrowers have not paid to Lender the amount of all Lender's
Expenses billed to Borrowers 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 or delay
funding such requested Advance until the payment of such amounts. Borrowers'
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 Borrowers' legal fees or
similar expenses.
18
2.11 Joint and Several Liability; Additional Subsidiaries. All Borrowers
----------------------------------------------------
shall be jointly and severally liable with all other Borrowers for all other
Obligations hereunder. The undersigned Borrowers acknowledge and agree that:
(i) future Subsidiaries of BNH are required to become additional Borrowers under
the Agreement without the consent of any other Borrower by execution by such
Subsidiary of a copy of Annex A attached as Schedule 2.11 to this Agreement;
-------------
(ii) Lender is willing to extend certain credit to the undersigned Borrowers,
subject to the terms and conditions set forth in the Agreement, including the
condition that the undersigned Borrowers will be jointly and severally liable
for the payment of all Indebtedness owed by BNH and any other Borrower to Lender
under the Agreement; (iii) without this condition of joint and several
liability, Lender would not be willing to extend credit to any Borrower; and
(iv) the undersigned Borrowers and other Subsidiaries of BNH which may become
additional Borrowers under the Agreement are (or will be) related entities, and
the undersigned Borrowers expect to increase their respective businesses, and to
benefit directly and indirectly, through the use of the equipment to be acquired
by it and the other Borrowers with the proceeds of the loans to be made pursuant
to the Agreement. BNH shall cause each Person that becomes a Subsidiary of BNH
after the date of this Agreement to become a Borrower hereunder by executing a
copy of Annex A attached as Schedule 2.11 to this Agreement and provide the
-------------
information required to be set forth in Schedule 2.11(b) hereto, and if required
----------------
by Lender cause the delivery of an opinion of legal counsel to BNH and such
additional Subsidiary dated the date of the execution of the Annex A in form and
substance satisfactory to Lender and such other documents as the Lender may
request, including but not limited to a certificate of a responsible officer of
such additional Subsidiary as to the authority of such additional Subsidiary to
execute, deliver and perform this Agreement and the applicable Note and as to
the incumbency and signature of the officer or officers signing the Borrowing
Certificate and the applicable Note.
2.12 Taxes. (a) Any and all payments by any Borrower hereunder or under a
-----
Note executed by such Borrower shall be made, in accordance with Section 2.12,
------------
free and clear of and without deduction for any and all present or future taxes,
levies, imposts, deductions, charges or withholdings, and all liabilities with
respect thereto, excluding, in the case of Lender, taxes that are imposed on its
---------
net income by the United States or any state thereof and taxes that are imposed
on its net income (and franchise taxes imposed in lieu thereof) by the state or
foreign jurisdiction under the laws of which Lender is organized or any
political subdivision thereof (all such non-excluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities in respect of payments
hereunder or under the Notes being hereinafter referred to as "Taxes"). If any
-----
Borrower shall be required by law to deduct any Taxes from or in respect of any
sum payable hereunder or under any Note executed by such Borrower to Lender, (i)
the sum payable by such Borrower shall be increased as may be necessary so that,
after such Borrower and Lender have made all required deductions (including
deductions applicable to additional sums payable under this Section 2.12),
------------
Lender receives an amount equal to the sum it would have received had no such
deductions been made, (ii) such Borrower shall make all such deductions, and
(iii) such Borrower shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law.
19
(b) In addition, each Borrower shall pay any present or future stamp,
documentary, excise, property or similar taxes, charges or levies that arise
from any payment made hereunder or under the Note executed by such Borrower or
from the execution, delivery or registration of, performance under, or otherwise
with respect to, this Agreement or the Note executed by such Borrower
(hereinafter referred to as "Other Taxes").
-----------
(c) Each Borrower shall jointly and severally indemnify Lender for and
hold it harmless against the full amount of Taxes and Other Taxes, and for the
full amount of taxes of any kind imposed by any jurisdiction on amounts payable
under this section imposed on or paid by Lender and any liability (including
penalties, additions to tax, interest and expenses) arising therefrom or with
respect thereto. This indemnification shall be made within 30 days from the date
Lender makes written demand therefor.
(d) Within 30 days after the date of any payment of Taxes, the Borrower
shall furnish to Lender, at its address referred to above, the original or a
certified copy of a receipt evidencing such payment.
(e) In the event that Lender determines in its reasonable discretion,
that it has actually and finally realized a refund of or credit for taxes
withheld or paid pursuant to this section, which credit or refund is
identifiable by Lender as being a result of taxes withheld in connection with
sums payable hereunder or under any other Loan Document, Lender shall promptly
notify such Borrower and shall remit to such Borrower, the amount of such refund
or credit allocable to payments made hereunder or under the other Loan
Documents; provided, however, that in the event of any subsequent disallowance
-------- -------
of any such refund or credit on account of which Lender has made a payment
pursuant to this paragraph, the amount so disallowed shall be deemed to be a Tax
(notwithstanding any exclusions in the definition of "Taxes") for which Lender
-----
shall be entitled to indemnification under of this section, but only to the
extent of any payment by such Lender pursuant to this paragraph.
ARTICLE 3: COLLATERAL AND SECURITY AGREEMENT
--------------------------------------------
3.01. Grant of Security Interest. As security for the Obligations, in the
--------------------------
case of the Domestic Borrowers, and for the Foreign Borrower Obligations in the
case of the Foreign Borrowers, each 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 and
products thereof (collectively, the "Collateral"):
----------
(a) All NTI 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
20
any and all additions, substitutions, and replacements to or of any of the
foregoing, together with all attachments thereto (other than attachments
(i) not financed or refinanced with proceeds of an Advance or which are not
required to be attached thereto by the terms of this Loan Agreement, and
(ii) which are not an integral part of the Collateral, and are severable
from the Collateral without damaging the functionality or value of the
remaining Collateral), and all components, parts, improvements, upgrades,
and accessions installed thereon or affixed thereto, including installation
services provided by NTI or any other Vendor in connection therewith
(collectively, "Equipment") and each Borrower's rights under each NTI
---------
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 NTI or any Vendor in connection with, the Equipment that are
necessary for the proper operation of the Equipment, including without
limitation licenses, license rights, rights in intellectual property,
Software, Software Licenses, computer programming (including source codes,
object codes and all other embodiments of computer programming or
information), insurance proceeds and amounts due under insurance policies,
refunds, warranties and indemnification rights, and all amounts owed at any
time to each Borrower by Lender or NTI 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 insurance, indemnity,
warranty or guaranty payable to each Borrower from time to time with
respect to any of the Collateral, (ii) any and all payments (in any form
whatsoever) made or due and payable to each 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), and
(iii) any and all cash proceeds and non-cash proceeds in the form of
equipment, inventory, contracts, accounts, general intangibles, chattel
paper, documents, instruments, securities, or other proceeds (collectively,
"Proceeds").
--------
3.02. Priority of Security Interests. The security interests granted by
------------------------------
each Borrower to Lender are and shall be continuing and indefeasible first-
priority security interests in the Collateral, subject to no Liens except for
Liens permitted under Section 8.01 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 the
applicable Borrowers, each Borrower shall promptly execute, deliver and record
any documents, instruments, agreements and amendments, and take all such further
action, as Lender may reasonably deem desirable 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. Each Borrower
21
also hereby authorizes Lender to file any such financing statement or amendment
thereto, without the signature of Borrower, or with a copy or telecopy of the
Borrower's signature, to the extent permitted by applicable law, or to execute
any financing statement or amendment thereof on behalf of the Borrower as the
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. Each 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 takes such action for that purpose as any 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 a Borrower, shall be deemed a failure to exercise reasonable
care in the custody or preservation of such Collateral.
3.07. Advances to Protect Collateral. All insurance expense and all
------------------------------
expenses of protecting, storing, warehousing, insuring, handling, maintaining
and shipping the Collateral (including, without limitation, all rent payable by
the Borrowers to any landlord of any premises where any of the Collateral may be
located), and, any and all taxes shall be borne and paid by the Borrowers.
Lender may (but shall not be obligated to) make advances to preserve, protect or
obtain any of the Collateral, including advances to cure 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. Lender is hereby granted a license or other right
--------------
to use, after the occurrence of an Event of Default, without charge, in
advertising for the sole purpose of the sale and selling any Collateral, each
Borrower's labels, patents, copyrights, rights of use of any name, trade
secrets, tradenames, trademarks and advertising matter, or any tangible or
intangible property or rights of a similar nature, as it pertains to the
Collateral, and each Borrower's rights under all licenses and franchise
agreements with respect to the Collateral shall inure to Lender's benefit.
22
3.09. Collateral Assignment of NTI Purchase Agreement. (a) On the Closing
-----------------------------------------------
Date, the Borrowers shall assign to the Lender, as additional collateral
security, all of the Borrowers' right, title and interest in and to the NTI
Purchase Agreement pursuant to the form of Collateral Assignment of Purchase
Agreement attached as Exhibit I to this Agreement and shall obtain the consent
---------
of NTI to that assignment pursuant to the form of Consent to Collateral
Assignment of Purchase Agreement attached as Exhibit J to this Agreement. The
---------
Borrowers shall make future collateral assignments to the Lender of any
additional purchase agreements subsequently entered into with NTI and shall
deliver consents to the Lender from NTI for those subsequent assignments within
10 business days after the effective date of each subsequent purchase agreement
using substantially the same forms as attached as exhibits to this Agreement.
(b) The Borrowers shall make collateral assignments to the Lender of
each "co-locate" agreement, arrangement or other understanding or right relating
to or providing for the use by a Borrower of a Co-Location Site at which
Collateral is located or with respect to which Advances hereunder have financed
or refinanced the construction, buildout or equipping thereof; provided,
--------
however, such collateral assignments shall expressly provide that such
-------
agreements shall be enforceable only to the extent that such co-location
agreements do not prohibit such assignment to be effected except upon the
consent of the counter-party to such agreement and the execution of such
collateral assignment would not constitute a breach (or an event that, upon
notice or the passage of time, or both, would constitute a breach) of such co-
location agreement.
3.10 Priority of Security Interests and Liens on Equipment Outside United
--------------------------------------------------------------------
States. As a condition to any Advance by Lender to a Borrower to finance the
------
acquisition of NTI Equipment to be located outside the United States, such
Borrower shall (i) deliver a list identifying all NTI Equipment and specifying
where in such country such NTI Equipment will be located, (ii) at the sole
expense of such Borrower, execute, deliver and record any documents,
instruments, agreements and amendments, and take all such further action as
Lender may reasonably deem desirable, to grant and perfect a security interest
and/or lien on the Collateral in favor of Lender under the laws of such country
where such NTI Equipment will be located, which security interest and/or lien
will be enforceable against the Borrower and third parties in accordance with
its terms, and subject to no other liens or security interest other than
Permitted Encumbrances, and (iii) deliver an opinion of counsel in favor of
Lender, in form and substance to the reasonable satisfaction of the Lender,
confirming that (x) all steps have been taken to grant and perfect the security
interest and/or lien in such Collateral in favor of Lender which is enforceable
against the Borrower and third parties in accordance with its terms, subject to
no other liens or security interests, and (y) compliance with all regulatory
requirements in such jurisdiction for the installation and operation of the
Collateral in such jurisdiction and the right of Lender to exercise foreclosure
or repossession remedies without the necessity of regulatory approval or
licensing.
23
ARTICLE 4: REPRESENTATIONS AND WARRANTIES
-----------------------------------------
Each Borrower hereby represents and warrants to Lender as follows:
4.01. Organization and Qualification. BNH and each of its Subsidiaries is
------------------------------
duly organized, validly existing and in good standing as a corporation under the
laws of its state of organization. BNH and each of its Subsidiaries 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. BNH and each of its Subsidiaries has
---------------------------
all requisite corporate right, power, authority and legal right 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 each Note. BNH's and each Subsidiary's execution, delivery and
performance of the Basic Agreements have been duly and validly authorized by all
necessary corporate proceedings on the part of BNH and each Subsidiary.
4.03. Execution and Binding Effect. This Agreement, each Note, and all
----------------------------
other Basic Agreements have been or will be duly and validly executed and
delivered by BNH and each of its Subsidiaries, and constitute or, when executed
and delivered will constitute, the legal, valid and binding obligations of BNH
and each of its Subsidiaries enforceable in accordance with their respective
terms, except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, receivership, moratorium or other laws affecting creditors'
rights generally.
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 (i) the filing of financing statements and continuation
statements and (ii) those that have otherwise been obtained or made on or prior
to the Initial Borrowing Date and which remain in full force and effect on the
Initial Borrowing Date) is or will be necessary in connection with execution and
delivery of this Agreement either, of the Notes, or any other Loan Documents by
BNH and each of its Subsidiaries, consummation of the transactions herein or
therein contemplated, performance of or compliance by BNH and each of its
Subsidiaries with the terms and conditions hereof or thereof or the legality,
validity and enforceability hereof or thereof.
4.05. Regulatory Authorizations. BNH and each of its Subsidiaries holds
-------------------------
all authorizations, permits and licenses required by the FCC or the PUC or any
Communications Law for the construction and operation of the System, and all
such Regulatory Authorizations are in full force and effect, are subject to no
further administrative or judicial review and are therefore final, except to the
extent described in Schedule 4.05. With respect to the Regulatory
-------------
Authorizations listed in Schedule 6.02, the Borrower will use its best efforts
-------------
to obtain those regulatory consents in the most expedient manner possible, but
in any event prior to the first anniversary of the Initial Borrowing
24
Date. 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 are described on Schedule 4.05.
-------------
4.06. Material Agreement; Absence of Conflicts. The execution and
----------------------------------------
delivery of this Agreement, each 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
BNH and each of its Subsidiaries 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 BNH and each of its Subsidiaries or any agreement or
instrument to which BNH or any of its Subsidiaries is a party or by which BNH,
any of its Subsidiaries, or their properties are bound; or (c) result in the
creation or imposition of any Lien upon any property (now owned or hereafter
acquired) of BNH or any of its Subsidiaries except as otherwise contemplated by
this Agreement.
4.07. No Restrictions. BNH and each of its Subsidiaries is not a party or
---------------
subject to any contract, agreement, or restriction in its Organizational
Documents that materially and adversely affects its business or the use or
ownership of any of its properties or operation of its business. BNH and each
of its Subsidiaries 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 BNH's or any of its Subsidiaries'
-------------
execution of or compliance with this Agreement. BNH and each of its Subsidiaries
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. BNH has furnished to Lender the most recent
--------------------
annual or quarterly financial statements of BNH, certified by a Responsible
Officer of BNH, 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 BNH on a consolidated basis as of the end of
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
projections and pro forma financial statements delivered by BNH to Lender were
prepared in good faith, based on reasonable assumptions, including without
limitation, the cost of capital.
4.09. Financial Accounting Practices. BNH and each of its Subsidiaries
------------------------------
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 BNH and each of its Subsidiaries 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
25
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.
4.10. Accurate and Complete Disclosure. No representation or warranty
--------------------------------
made by any Borrower under this Agreement and no statement made by any Borrower
in any financial statement, certificate, report, exhibit or document furnished
by the Borrower to Lender pursuant to or in connection with this Agreement
(including without limitation any filings with the Securities Exchange
Commission, 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).
There are no facts that evidence or create a Material Adverse Effect, or, so far
as any Borrower can now foresee, will evidence or create 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, BNH and each of its
Subsidiaries 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.
4.12. Litigation. Except as set forth in Schedule 4.12, there is no
---------- -------------
pending action, suit or threatened proceeding by or before any Governmental
Authority against or affecting BNH, any of its Subsidiaries, or any of their
properties, rights or licenses which if adversely decided would have a Material
Adverse Effect.
4.13. Rights to Property; Intellectual Property. BNH and each of its
-----------------------------------------
Subsidiaries, as applicable, 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). BNH and each of its Subsidiaries, as applicable, owns or
possesses the right to use all patents, trademarks, service marks, trade names,
copyrights, know-how, franchises, software and software licenses necessary for
the operation of its business, free from burdensome restrictions.
4.14. Financial Condition. BNH's financial condition is accurately
-------------------
described in the Certificate of Financial Condition executed by BNH pursuant
hereto.
4.15. Taxes. BNH's federal tax identification number is set forth on
-----
Schedule 1 hereto. All tax returns required to be filed by BNH have been
----------
properly prepared, executed and filed, and all material taxes, assessments, fees
and other governmental charges upon BNH, each of its Subsidiaries, or upon any
of their 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
26
of which BNH or any of its Subsidiaries is contesting in good faith. The
reserves and provisions for taxes on the books of BNH and each of its
Subsidiaries are adequate for all open years and for its current fiscal period.
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 threatened termination,
---------------
cancellation or limitation of, or any modification or change in, the business
relationship between BNH or any of its Subsidiaries and any Carrier, any labor
organizations, any customer or any group thereof whose agreements with BNH or
any of its Subsidiaries or use of the System individually or in the aggregate
are material to the business of BNH and its Subsidiaries, 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 BNH and each
of the Subsidiaries from conducting its business after the consummation of the
transaction contemplated by this Agreement.
4.19. No Brokerage Fees. No brokerage or other fee, commission or
-----------------
compensation is to be paid by BNH or any of its Subsidiaries to any Person in
connection with the Loans to be made hereunder. Each Borrower hereby indemnifies
Lender against any claims brought against Lender for brokerage fees or
commissions of any Person based on an agreement with BNH or any of its
Subsidiaries and agrees to pay all expenses 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; Regulation U. BNH or any of its Subsidiaries 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 G, U or X of the Board of Governors of the Federal Reserve System.
4.21. Investment Company; Public Utility Holding Company. BNH or any of
--------------------------------------------------
its Subsidiaries is not an "investment company" or a "company controlled by an
investment company" within the meaning of the Investment Company Act of 1940, as
amended, or a "holding company," or a "subsidiary company" of a "holding
company," or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company," within the meaning of the Public Utility Holding Company
Act of 1935, as amended.
4.22. Personal Holding Company; Subchapter S. BNH is not a "personal
--------------------------------------
holding company" as defined in Section 542 of the Code, and BNH is not a
"Subchapter S" corporation within the meaning of the Code.
27
4.23. ERISA. (i) With respect to any Plan, there is no Reportable Event
-----
currently under consideration by the PBGC which may reasonably result in any
material liability to the PBGC with respect to any Plan, (ii) no Plan has been
terminated, (iii) no trustee has been appointed by any United States District
Court to administer any Plan, (iv) the PBGC has not instituted proceedings to
terminate any Plan or to appoint a trustee to administer any such Plan, (v)
neither BNH nor any Affiliate has withdrawn, completely or partially, from any
Plan and (vi) neither BNH nor any Affiliate has incurred secondary liability for
withdrawal liability payments under any Plan.
4.24. Environmental Warranties. BNH and each of its Subsidiaries is in
------------------------
compliance with all Environmental Laws applicable to BNH, each of its
Subsidiaries, or its business or to the real or personal property owned, leased
or operated by BNH and each of its Subsidiaries. BNH and each of its
Subsidiaries has not received notice of, and is not aware of, any violations or
alleged violations, or any liability or asserted liability, under any such
Environmental Laws, with respect to BNH, any of its Subsidiaries, or their
business or properties.
4.25. 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 4.25 hereto have been effected in the public offices
-------------
listed on said Schedule 4.25, this Agreement will create a perfected first-
-------------
priority security interest in all right, title, estate and interest of BNH and
each of its Subsidiaries 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 the First Borrowing Date. The recordings and filings shown
on said Schedule 4.25 are all the actions necessary or advisable in order to
-------------
establish, protect and perfect the interest of Lender in the Collateral.
4.26. Place of Business. The chief executive offices of BNH and each of
-----------------
its Subsidiaries which are Borrowers are identified on Schedule 4.26 hereto.
-------------
BNH and each of its Subsidiaries' principal place of business in the state(s)
where the Equipment is located is identified on Schedule 4.26 hereto. BNH's and
-------------
each of its Subsidiaries' records concerning the Collateral are kept at one or
both of these addresses.
4.27. Location of Collateral. The Collateral is and will be kept at the
----------------------
locations identified on Schedule 4.26 hereto, or for subsequently acquired
-------------
Equipment, on the Borrowing Certificate pursuant to which Advances financing
such Equipment are made, or such other locations as may be permitted under
Section 8.12.
------------
4.28. Clear Title To Collateral. Subject to Article 5 of the NTI Purchase
-------------------------
Agreement, BNH or each of its Subsidiaries, as applicable, is the sole owner of
each item of the Collateral, 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.
28
4.29. Assumed Names. Except as set forth on Schedule 4.29 hereto, BNH or
------------- -------------
any of its Subsidiaries does not conduct business under any assumed names or
trade names, and has not conducted business under any other names, or any
assumed names or trade names, at any time during the six months immediately
prior to the date hereof.
4.30. Transactions with Affiliates. No Affiliate and no officer or
----------------------------
director of BNH or any of its Subsidiaries or any individual related by blood,
marriage, adoption or otherwise to any such officer or director, or any Person
in which any such officer, director or individual related thereto owns any
beneficial interest, is a party to any agreement, contract, commitment or
transaction with BNH or any of its Subsidiaries or has any material interest in
any material property used by BNH or any of its Subsidiaries, except as set
forth on Schedule 4.30 hereto.
-------------
4.31. NTI Purchase Agreement. The NTI Purchase Agreement for NTI
----------------------
Equipment already acquired has been duly executed and delivered by Community
Networks, Inc., and NTI, 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 affecting the terms thereof.
ARTICLE 5: CONDITIONS OF CLOSING
--------------------------------
On or before the Closing Date, the following conditions shall have been
satisfied:
5.01. Closing Certificates. A certificate of the applicable Borrowers
--------------------
signed by a duly authorized Responsible Officer, certifying as to (i) true
copies of Organizational Documents of each Borrower in effect on such date; (ii)
true copies of all corporate action taken by each Borrower relative to this
Agreement, each Note, and the other Loan Documents; (iii) the names, true
signatures and incumbency of the Responsible Officers of each Borrower
authorized to execute and deliver this Agreement, each Note, and the other Loan
Documents; (iv) a Certificate of Good Standing (or equivalent certificate) for
each Borrower duly issued by the Secretary of State of each state in which such
Borrower currently does business; and (v) such other matters as Lender shall
reasonably request.
5.02. Opinions of Counsel. Lender shall have received the following
-------------------
opinions, all dated as of the Closing Date and in form and substance
satisfactory to Lender:
(a) A written opinion of counsel to each Borrower, substantially in
the form of Exhibit C hereto;
---------
(b) A written opinion of regulatory counsel for each Borrower,
substantially in the form of Exhibit D hereto; and
---------
29
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 each Borrower;
---------
(b) Notes. Each Note, duly executed by the applicable Borrowers;
-----
(c) Financing Statements. All UCC-1 financing statements
--------------------
necessary to perfect the Liens granted hereby, each duly executed by the
applicable Borrowers, and duly recorded in all the offices identified on
Schedule 4.25 hereto;
-------------
(d) Collateral Assignment of Purchase Agreement. The Collateral
-------------------------------------------
Assignment of Purchase Agreement, duly executed by the applicable
Borrowers, and the Consent to Collateral Assignment of Purchase Agreement,
duly executed by NTI;
(e) Insurance. Policies and certificates of insurance required by
---------
Section 7.07, accompanied by evidence of the payment of the premiums
------------
therefor;
(f) Financial Statements. The financial statements described in
--------------------
Section 4.08 hereof;
------------
(g) Balance Sheet. A balance sheet of BNH, dated as of the end of
-------------
month preceding the Closing Date, certified by a Responsible Officer as
fairly presenting the financial condition of BNH.
(h) Certificate of Financial Condition. A Certificate of Financial
----------------------------------
Condition, duly executed by a Responsible Officer of BNH.
(i) 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.
30
(b) Required Consents. Lender shall have received satisfactory
-----------------
evidence of Borrowers' obtaining the Required Consents.
6.02. Conditions for All Advances. The obligation of Lender to make any
---------------------------
Advance hereunder is subject to each Borrower's performance of its obligations
hereunder on or before the 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; 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.
(c) Reporting Requirements. Borrowers shall have provided Lender
----------------------
with all relevant reports and information required under Article 7 hereof.
---------
(d) No Regulatory Event. No Regulatory Event (in either Borrowers'
-------------------
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.
31
(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) Opinions. Lender shall have received from each Borrower such
--------
opinions of counsel for the 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 Agreements. Lender shall have received a copy of each
-------------------
executed NTI Purchase Agreement and/or Vendor Purchase Agreement with
respect to which proceeds of an Advance shall be used to acquire NTI
Equipment or other Equipment, and Lender's shall have reviewed and approved
the Equipment to be acquired with proceeds of an Advance, together with the
collateral assignment and consent specified in Section 3.10 of this
------------
Agreement.
(n) Post-Closing Items. The post-closing items described on
------------------
Schedule 6.02 hereto, if any, shall have been completed in the time
-------------
permitted, and each Borrower shall have provided Lender with satisfactory
evidence thereof.
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 a Borrower
to the contrary before such Advance is made shall constitute a further
representation and warranty by the Borrower that (x) the representations and
warranties of the 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
32
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.
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, and the first
------------- ----
Advance made hereunder, within the period of twelve (12) calendar months
following the Closing Date.
ARTICLE 7: AFFIRMATIVE COVENANTS
--------------------------------
Each Borrower hereby agrees that as long as the commitment hereunder
remains in effect, either Note remains outstanding or unpaid, or any other
amount is owing to Lender hereunder or under any of the Loan Documents, each
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, and in any event
--------------------
within one hundred twenty (120) days after the close of each fiscal year of
BNH, BNH 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 BNH's balance sheet as of the close of such fiscal
year, and notes to each, all in reasonable detail, and beginning with BNH'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 without qualification by independent certified public
accountants of recognized regional or national standing selected by BNH and
reasonably satisfactory to Lender.
(b) Quarterly Reports. Within forty-five (45) days after the end of
-----------------
each fiscal quarter, BNH shall furnish to Lender (i) unaudited consolidated
statements of income, statements of cash flow and retained earnings for BNH
for such quarter and for the period from the beginning of BNH's then
current fiscal year to the end of such quarter, and an unaudited
consolidated balance sheet of BNH as of the end of such quarter, all in
reasonable detail and certified by a Responsible Officer of BNH as
presenting fairly the financial position of BNH 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, and (ii) upon
Lender's request, an aging of accounts payable and accounts receivable.
(c) Compliance Certificates. Within thirty (30) days after the end
-----------------------
of each fiscal quarter, BNH shall deliver to Lender a certificate dated as
of the end of such fiscal quarter,
33
signed on behalf of BNH by a Responsible Officer of BNH (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 BNH and/or
any of its Subsidiaries; (ii) stating that the signer has personally
reviewed this Agreement and that such certificate is based on an
examination made by or under the supervision of the signer sufficient to
assure that such certificate is accurate; and (iii) calculating and
certifying BNH's compliance with the financial covenants set forth in
Section 7.15 hereof.
------------
(d) Accountants' Certificate. Each set of year-end audited
------------------------
consolidated statements and balance sheet delivered pursuant to Section
-------
7.01(a) hereof shall be accompanied by, or shall contain within, a
-------
certificate or report dated the date of such statement and balance sheet by
the accountants who certified such statements and balance sheet stating in
substance that they have reviewed this Agreement and that in making the
examination necessary for their certification of such statements and
balance sheet they did not become aware of any Default, or if they did
become so aware, such certificate or report shall state the nature and
period of existence thereof.
(e) Projections. If requested by Lender, BNH shall deliver to Lender
-----------
within thirty (30) days prior to the beginning of each calendar year
projections of its anticipated income, expenses, cash flow, assets and
liabilities for each month of such calendar year, prepared in good faith
and in a manner and format consistent with other financial statements
provided by BNH to Lender. Such projections shall present fairly the
anticipated financial condition of BNH and shall be certified by a
Responsible Officer of BNH. Upon Lender's request, or following any
material change in BNH's financial condition or business, such reports
shall be provided to Lender quarterly, within thirty (30) days prior to the
beginning of each Calendar Quarter.
(f) Other Reports and Information. Promptly upon their becoming
-----------------------------
available to BNH, BNH shall deliver to Lender copies of (i) all regular or
special reports or effective registration statements which BNH or any of
its Subsidiaries shall file with Governmental Authorities, the FCC or the
PUC (or any successor thereto) or any securities exchange, (ii) financial
statements, material reports, and other information distributed by BNH or
any of its Subsidiaries to its creditors or the financial community in
general, and (iii) all press releases issued by or concerning BNH or the
System.
(g) Further Information. Each Borrower will promptly furnish to
-------------------
Lender such other information (including any report by independent
auditors) in such form as Lender may reasonably request.
34
7.02. Other Notices. Promptly upon a Responsible Officer of a Borrower
-------------
becoming aware of any of the following, the Borrower shall give Lender notice
thereof, together with a written statement of a Responsible Officer of the
Borrower setting forth the details thereof and any action with respect thereto
taken or contemplated to be taken by the Borrower:
(a) a Default or Event of Default;
(b) any Material Adverse Change;
(c) a material default or breach by the Borrower under any other
contractual obligation to which it is a party or by which it or its
properties is bound, if the consequences of such breach of default are
material to the business, operations or financial condition of the
Borrower;
(d) any event that the Borrower reasonably determines would constitute
a Regulatory Event;
(e) the commencement, existence or threat of any proceeding by or
before any Governmental Authority against the Borrower which, if adversely
decided, would have a Material Adverse Effect;
(f) the Borrower's receipt of any notice of violation of, or liability
under, any Environmental Laws affecting the Borrower or any of its
properties; or
(g) any Change in Control or any material change in the management of
the Borrower.
7.03. Notice of Pension-Related Events. Each Borrower shall promptly
--------------------------------
furnish Lender with written notice upon the receipt by the Borrower or the
administrator of any Plan of any notice, correspondence or other communication
from the PBGC, the IRS, the Secretary of Treasury, the Department of Labor, or
any other Person, as the case may be, relating to (i) any Reportable Event, (ii)
any funding deficiency with respect to any Plan, (iii) any liability, either
primary or secondary, with respect to complete or partial withdrawal from any
Plan, (iv) proceedings to terminate any Plan or (v) the appointment of a trustee
for any Plan. Such notice shall be accompanied by any pertinent documents
including, but not limited to, the relevant notice, correspondence or other
communication and a statement of a Responsible Officer of the Borrower
describing the event or the action taken and the reasons therefor.
7.04. Inspection Rights. Each Borrower shall upon reasonable notice
-----------------
permit such persons as Lender may designate to visit and inspect the Collateral
or any other properties of the Borrower, to examine its books and records and
take copies and extracts therefrom and discuss its respective affairs with its
officers, employees and independent engineers, in each case during normal
business
35
hours and as often as Lender may reasonably request. Each Borrower hereby
authorizes such officers, employees, and independent engineers to discuss with
Lender the affairs of the Borrower.
7.05. Preservation of Corporate Existence and Qualification. Each
-----------------------------------------------------
Borrower shall maintain its existence, good standing and rights in full force
and effect in its jurisdiction of organization. Each Borrower shall qualify to
do business and remain qualified and in good standing and obtain all necessary
authorizations to do business in each jurisdiction in which failure to receive
or retain such would have a Material Adverse Effect.
7.06. Continuation of Business. Each 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 the System (including,
without limitation any license or authorization required by the FCC or any PUC).
7.07. Insurance.
---------
(a) Each 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 corporation with a Best rating of
"A" or above, licensed to do business in the states where the System and
the Borrower are located, as may be satisfactory to Lender, as shown on
Schedule 7.07 hereto, and otherwise as may be required by the Security
-------------
Documents.
(b) As soon as practicable following the Closing Date, each Borrower
shall cause (i) all liability insurance policies to name Lender as an
additional insured, (ii) all physical damage insurance policies to contain
a lender's or mortgagee's loss payable provision 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 any Borrower of any warranties,
declarations or conditions contained therein and (v) all insurance policies
to provide 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. Each 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
the Borrower in compliance with this Section 7.07(b). Certificates for
---------------
insurance required under subsection (i) above shall be in XXXXX Form 27
(attached hereto at Schedule 7.07(), and all certificates shall be
---------------
satisfactory in form and substance to Lender.
36
(c) If the Collateral is partially or totally damaged or destroyed,
the applicable 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
the Borrower and Lender as long as no Event of Default has occurred and is
continuing, and otherwise shall be made solely by Lender. Each 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. Each 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 the applicable Borrower the
proceeds of any physical damage insurance actually paid to Lender in
respect of such damage or destruction of the Collateral (after deducting
therefrom any sums retained by Lender in reimbursement for costs of
collection) to pay the cost of restoration, and the 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 the applicable Borrower. Upon completion of any restoration, the
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.
7.08. Payment of Taxes, Charges, Claims and Current Liabilities. Each
---------------------------------------------------------
Borrower shall pay or discharge:
(a) on or prior to the date on which penalties thereto accrue, all
material taxes, assessments and other government charges or levies imposed
upon it or any of its properties or income (including such as may arise
under Section 4062, Section 4063 or Section 4064 of ERISA, or any similar
provision of law);
(b) on or prior to the date when due, all lawful 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 claims which,
if unpaid, might result in the creation of a Lien upon any such property
(other than Permitted Encumbrances) or which, if unpaid, might give rise to
a claim entitled to priority over
37
general creditors of the 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 the Borrower; and
(d) all other current liabilities so that none is overdue more than
sixty (60) days.
Notwithstanding the foregoing, each 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
the Borrower (collectively, in this Section 7.08, the "requirements"), as long
------------ ------------
as (i) such requirements are being contested in good faith by appropriate
proceedings diligently conducted; (ii) the Borrower has given Lender written
notice of such requirements and the 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) the 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 jeopardize
the 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 the 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.
7.09. Financial Accounting Practices. Each 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.
7.10. Compliance with Laws. Each Borrower shall comply in all respects
--------------------
with all Laws applicable to the Borrower, provided that the Borrower shall not
be deemed to be in violation of this Section 7.10 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 materially affect the business, operations or
financial condition of the Borrower or the ability of the Borrower to perform
its obligations under this Agreement or the applicable Note.
7.11. Use of Proceeds. Each Borrower shall use the proceeds of Advances
---------------
hereunder only as set forth in Section 2.01 hereof.
------------
38
7.12. Government Authorizations; Regulatory Authorizations, Etc. Each
---------------------------------------------------------
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 execution and delivery of
this Agreement, the applicable Note, the consummation of the transactions herein
or therein contemplated, the performance of or compliance with the terms and
conditions hereof or thereof, or to ensure the legality, validity and
enforceability hereof or thereof.
7.13. Contracts and Franchises. Each Borrower shall comply with all
------------------------
agreements or instruments to which it is a party or by which it or any of its
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
the Borrower shall not be deemed to be in violation of this Section 7.13 as a
------------
result of any failure to comply with any agreement if such failure would not
have Material Adverse Effect.
7.14. Consents. Each Borrower shall use all reasonable efforts to obtain
--------
such Landlord's Consents, Mortgagee's Consents and other third party consents as
Lender shall reasonably request to protect its Liens and its access to the
Collateral.
7.15. Financial Covenants. BNH shall comply with the financial covenants
-------------------
set forth on Schedule 7.15 hereto.
-------------
7.16. Construction and Storage. The Collateral shall be installed and
------------------------
equipped in full 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 Loans shall be safeguarded and
stored until installed in appropriate storage facilities owned or leased by the
applicable Borrower. In the event of any cessation of construction for more
than fifteen (15) successive calendar days, the applicable Borrower shall make
adequate provision, reasonably acceptable to Lender, for the protection of all
materials stored on site against deterioration, loss or damage.
7.17. Upgrade Equipment. Each Borrower shall update the software
-----------------
customarily used in equipment of the same type as the Equipment within two
releases of the most current batch change supplement release. Each Borrower
shall maintain its Equipment in good working order in accordance with
established maintenance procedures such that the Equipment performs to published
specifications and upgrade its functionality to include batch change supplements
releases generally available to customers of NTI 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.
39
7.18. Additional Subsidiaries. BNH shall cause each direct and indirect
-----------------------
Subsidiary formed or acquired after the date of this Agreement to become a
Borrower under this Agreement in conformity with the terms and conditions of
Section 2.11 of this Agreement.
ARTICLE 8: NEGATIVE COVENANTS
-----------------------------
Each Borrower hereby agrees that, so long as the Commitment hereunder
remains in effect, either of the Notes remains outstanding and unpaid, or any
other amount is owing to Lender hereunder or under any of the Loan Documents,
each Borrower shall not directly or indirectly without prior written consent of
Lender, do or permit to exist any of the following:
8.01. Restrictions on Additional Indebtedness. Create, incur, assume or
---------------------------------------
suffer to exist at any one time any Indebtedness in excess of $50,000 in the
aggregate except for (a) trade payables incurred in the ordinary course of
business, and (b) any Indebtedness described on Schedule 8.01 hereto.
-------------
8.02. Restrictions on Liens and Sale of Collateral. Create or suffer to
--------------------------------------------
exist any Lien on the Collateral or on any other property of a Borrower, 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 7.08 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 7.08 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 a
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 7.08 hereof.
------------
40
8.03. Limitation on Contingent Obligations. Other than for Indebtedness of
------------------------------------
a Borrower, agree to, or assume, guarantee, endorse or otherwise in any way be
or become responsible or liable for, directly or indirectly, any Contingent
Obligation except for those created or contemplated by the Loan Documents.
8.04. Fees and Commissions.
--------------------
[INTENTIONALLY DELETED]
8.05. Prohibition of Mergers, Acquisitions, Name, Office or Business
--------------------------------------------------------------
Changes, Etc.
------------
(a) Enter into or become the subject of, any transaction of merger,
acquisition or consolidation or 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 any substantial part of a Borrower's business or assets, whether now
owned or hereafter acquired, provided, however, that any Borrower may enter
into a transaction of merger, acquisition or consolidation with a
telecommunications company if such transaction is consistent with the
Business Plan, immediately before, and after giving effect to, the
consummation of such transaction, there is no Default or Event of Default
under any Loan Document, and such Borrower is the surviving entity of such
transaction.
(b) Change its name or corporate structure without giving Lender at
least ten (10) days advance written notice of such change, and previously
ensuring that any steps that Lender may 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 the 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 in a manner adverse to Lenders without the prior
written consent of Lender.
(e) Become or agree to become a general or limited partner in any
general or limited partnership, or a member in a limited liability company
or a joint venturer in any joint venture, except that a Borrower may become
so involved in the aforementioned types of entities if such entity is, or
thereupon becomes, a Subsidiary of BNH and becomes a Borrower hereunder.
(f) Acquire or purchase substantially all of the stock, partnership,
membership or other ownership interests in, or substantially all of the
business, assets, customers or operations of, any other entity unless such
transaction is an acquisition consistent with the Business Plan.
41
(g) Enter into any new business or make any material change in any of
Borrower's business objectives, purposes and operations from those
contemplated in the Business Plan.
8.06. Limitation on Equity Payments. Make any Equity Payment to any
-----------------------------
Person, except that, as long as no Default or Event of Default has occurred and
is continuing, or would be caused thereby, and if no other provision contained
herein will be violated by the disbursement of such Equity Payment, Borrowers
may make Equity Payments described on Schedule 8.06 hereto. Before making any
-------------
Equity Payment in accordance with this Section 8.06, a Borrower shall deliver to
------------
Lender a certificate of a Responsible Officer of such Borrower, setting forth in
detail the calculation supporting BNH'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.
8.07. Limitation on Investments, Advances and Loans. Other than in the
---------------------------------------------
ordinary course of business or as set forth on Schedule 8.07 and in either case
-------------
only for a purpose consistent with the Business Plan, organize, create, acquire,
capitalize or own any Subsidiaries without Lender's prior written consent, 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 including, without limitation, any
officers of any Borrower, any Affiliate of any Borrower or any Owner, or any
officers of any Affiliate of any Borrower except in the ordinary course of
business.
8.08. Capital Expenditures. Directly or indirectly make or commit to make
--------------------
any expenditure in respect of the purchase or other acquisition (including
installment purchases or capital leases) of fixed or capital assets, except for
expenditures in accordance with the Business Plan and normal replacements and
maintenance which are properly charged to current operations.
8.09. Limitation on Leases. Enter into any agreement, or be or become
--------------------
liable under any agreement, not in existence as of the date hereof and reflected
on BNH's financial statements, for the lease, hire or use of any real or
personal property in excess of $100,000 in the aggregate, including, without
limitation, capital or operating leases, except that a Borrower may, in the
ordinary course of business and on term standard in the industry, enter into
such leases or agreements if immediately before, and after giving effect to the
incurrence thereof BNH is in compliance with its financial covenants required by
Schedule 7.15.
-------------
8.10. Transactions with Affiliates. Except as described in Schedule 4.30
---------------------------- -------------
and Schedule 8.07 hereto, enter into any transactions, including, without
-------------
limitation, any loans or advances, any repayment of loans or advances, or the
purchase, sale or exchange of property or the rendering of any services, with
any Affiliate, or enter into, assume or suffer to exist any employment or
42
consulting contract with any Affiliate, or otherwise pay any fees or expenses
to, or reimburse or assume any obligation for the reimbursement of any expenses
incurred by, any Affiliate.
8.11. Termination of Purchase Agreement. Prior to the completion of the
---------------------------------
installation of the subject Equipment (i) fail to satisfy its purchase
obligations under the related Purchase Agreement or (ii) terminate the related
Purchase Agreement.
8.12. Removal of Collateral. Remove or permit the removal of any material
---------------------
part of the Collateral from the locations identified on Schedule 4.25, without
-------------
giving Lender thirty (30) days prior written notice of such move and ensuring
that any steps the Lender may deem necessary to continue the perfection and
priority of Lender's security interest in the Collateral shall have been taken.
8.13. Assumed Names. Transact or engage in business under any assumed
-------------
name, fictitious name, tradestyle or "d/b/a" except those identified on
Schedule 4.29.
-------------
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 a Borrower fails to pay any sum, whether of
---------------
principal or interest on a Note or any prepayment premiums, or any other
amount due hereunder or under a Note within five (5) Business Days after
such amount becomes due; or
(b) False Statement. If any statement, representation or warranty made
---------------
by a 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 ten (10) Business Days after the earlier of a
Borrower's (or Owner's) knowledge thereof or receipt of written notice
thereof from Lender; or
(c) Covenant Defaults. If a Borrower defaults in the performance or
-----------------
observance of any material covenant or agreement in this Agreement, and
such default continues for a period of ten (10) Business Days after the
earlier of the Borrower's knowledge thereof or receipt of written notice
from Lender thereof, except for violations of Section 7.08(d), which shall
---------------
become an Event of Default at the end of the sixty (60) day period stated
therein and
43
except for specific Defaults listed elsewhere in this Section 9.01, as to
which no notice or cure period shall apply unless specified; or
(d) Failure of Conditions. If a 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 a Borrower in an amount in excess of
$100,000, 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 7.08 hereof; or
----
(f) Attachments, etc. If a writ or warrant of attachment,
----------------
garnishment, execution, distraint or similar process has been issued
against a 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 7.08 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 a Borrower for borrowed money (including lease
obligations) in the amount of $100,000 in the aggregate, or under any two
or more such other obligations of any amount; or
(h) Dissolution: Etc. If a 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 a 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 a Borrower as bankrupt or insolvent; or any of the property of
a Borrower is sequestered by court order; or a petition is filed against a
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 a 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 a Borrower makes an
-----------------------------------------
assignment for the benefit of creditors, or admits in writing its inability
to pay its debts generally as they
44
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 a Borrower
---------------------------------------------
fails to comply with any material requirement of any Governmental Authority
within ten (10) Business Days after notice in writing of such requirement
shall have been given to the Borrower by such Governmental Authority, or
such longer period of time permitted the 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 a 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 the Borrower in compliance
with Section 7.08 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
(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 a Borrower fails to provide any Consent required
--------
hereunder and Lender determines in its sole discretion that such failure
results in a material impairment of Lender's security for the Loans; or
(p) Change in Control. If any Change in Control should occur without
-----------------
Lender's prior written consent, which consent may be withheld in Lender's
sole and absolute discretion; or
(q) ERISA Defaults. If, with respect to any Plan, (i) there has
--------------
occurred a Reportable Event being considered by the PBGC which may
reasonably result in any material liability to the PBGC with respect to any
Plan, (ii) a Plan has been terminated, (iii) a trustee has been appointed
by a United States District Court to administer a Plan, (iv) a PBGC or any
other person has instituted proceedings to terminate a Plan or to appoint a
trustee to administer any such Plan, (v) either a Borrower or any Affiliate
has withdrawn, completely or partially, from any Plan (vi) either a
Borrower or any Affiliate has incurred
45
secondary liability for withdrawal liability payments under any Plan or
(vii) a Plan has failed to meet the minimum funding standards established
under the Code or ERISA; or
(r) 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 the
Borrowers, declare the unpaid principal amount of each Note, interest accrued
thereon and all other amounts owing by Borrowers hereunder or under each 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 and continuance 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 approval 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.
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 each 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, the applicable 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
46
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, each 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 each
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
a 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 a 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. Each Borrower hereby
consents to the appointment of such receiver.
(b) Right to Cure. If a 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 the
Borrower.
(c) Setoff. If the unpaid principal amount of a Note, interest
------
accrued thereon or any other amount owing by a Borrower hereunder or under
the Note shall have become due
47
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 the 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, the 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 the 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. Each Borrower hereby
consents to and confirms the foregoing arrangements and confirms Lender's
rights of setoff.
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, each 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, including, without limitation, this Article
-------
9, in the name and on behalf of the 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. Each 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 after the
occurrence and during the continuance of an Event of Default do the following
without notice to or assent by the Borrower to accomplish the purposes of this
Agreement:
(a) upon failure of a 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
48
direct; (ii) in the name of the applicable 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 the 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 the 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 the Borrower might do.
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 the applicable 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, the applicable 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 the
Borrower fails or refuses to execute such documents, the clerk of the court with
jurisdiction may execute such documents on behalf of the 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
49
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 the Borrowers 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 a
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.
10.03. Deviation from Covenants. The procedure to be followed by a
------------------------
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) The 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
the 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 a 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.
50
10.05. Records. From time to time Lender may send BNH statements of the
-------
unpaid principal amount of a 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 the Borrowers
(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 BNH.
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:
If to any 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, a Borrower shall not do
51
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. Inspections and approvals
of the System, and the workmanship and materials used therein impose no
responsibility or liability of any nature whatsoever on Lender, and no Person
shall, under any circumstances, be entitled to rely upon such inspections and
approvals by Lender for any reason. Lender's sole obligation hereunder is to
make the Advances if and to the extent required by this Agreement or the Notes.
10.09. Lender's Review of Information. Each 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 any 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 any Borrower. Each 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 any Borrower or between Lender and
any Owners.
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.
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 each
------------------
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 each Borrower
contained herein shall continue in full force and effect from and after the date
hereof so long as it
52
may borrow hereunder and until payment in full of the Notes, interest thereon,
all fees and all other Obligations of each Borrower. Without limitation, it is
understood that all obligations of each 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 and the Notes 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, 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 or the enforcement of Lender's rights therein.
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 each Borrower and their respective successors
and assigns; provided, however, that a 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 any Borrower. Upon receipt of written notice from Lender of such assignment,
each Borrower shall promptly acknowledge receipt thereof in writing. If a
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). Each Borrower shall not assert against
any such assignee any set-off, defense or counterclaim that the Borrower may
have against Lender or any person other than such assignee. Each 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 the 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 of Lender's future obligations
hereunder in a writing, a copy of which shall be delivered to the applicable
Borrower, in which event after the date of such assignment, the Borrower's
obligations to any such assignee shall be proportionately as set forth herein
with respect to Lender, and the 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 each 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,
53
and any such holder of any Note shall be bound by and have the benefits of this
Agreement the same as if such holder had been a signatory hereto.
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. Each 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, each
---------------
Note, and the other Loan Documents.
10.19. Disclosures and Confidentiality.
-------------------------------
(a) Each 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) Each 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 the Borrower during the course of negotiation
thereof. The term "third party" shall exclude only the Borrowers, 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, to the extent required
to fulfill a duty of disclosure of a Borrower to a prospective lender, by
order of any court or by the order, rule or regulation of any
administrative agency, including without limitation any requirements of the
FCC, any PUC, or any state or federal securities commissions (the
"Commissions"); provided, however, that, except for disclosures required by
----------- -------- -------
the FCC, PUC or Commissions, each 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. Each 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 a 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 property
54
(other than proposal letters, commitment letters or other correspondence
between Lender and a 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.
(d) Each Borrower authorizes Lender to discuss with and furnish to
any Affiliate of Lender, to any government or self-regulatory agency with
jurisdiction over Lender, to any other Governmental Authority or to any
assignee, successor, participant, successor, or prospective assignee,
successor or participant, all financial statements, audit reports and other
information pertaining to the Borrower whether such information was
provided by the Borrower or prepared or obtained by Lender or third
parties. Neither Lender nor any of its employees, officers, directors or
agents makes any representation or warranty to any existing or prospective
assignee, successor or participant regarding any audit reports or other
analyses of a Borrower that Lender may distribute, whether such information
was provided by a 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 a 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. EACH BORROWER HEREBY IRREVOCABLY CONSENTS
----------------------
TO THE JURISDICTION OF THE COURTS LOCATED IN DAVIDSON OR XXXXXXXXXX COUNTY,
TENNESSEE, INCLUDING WITHOUT LIMITATION FEDERAL COURTS SITTING IN THE MIDDLE
DISTRICT OF TENNESSEE AND THE CHANCERY COURT FOR DAVIDSON OR XXXXXXXXXX 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, each
Borrower waives personal service of any summons, complaint or other process, and
agrees that the service
55
thereof may be made by certified or registered mail direct to the Borrower at
its address set forth in Section 10.06 hereof. Within thirty (30) days after
-------------
such mailing, the Borrower shall appear and answer to such summons, complaint or
other process. Should the 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 the 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 the 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. EACH 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 THE BORROWER. EACH 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.
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. Borrowers Waivers. To the full extent permitted by law, each
-----------------
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 the 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 a 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
56
interest in the Collateral or in any other property of the Borrower until
termination of this Agreement and the execution by the Borrower and by any
person whose Loans to the 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. Each 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 all of the Borrowers.
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
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. Each
Borrower is not entering into this Agreement in reliance on statements or
representations made by any Person other than as set forth herein.
[END OF GENERAL TERMS AND CONDITIONS. NEXT PAGE IS SCHEDULE 1.]
[SIGNATURES APPEAR ON THE COVER PAGE. ]
57
[EXHIBIT A]
[Floor Plan]
month following the date of such Advance, interest on such Advance shall accrue
at the Interest Rate applicable to such Advance and shall be capitalized and
added to the principal amount of such Advance outstanding hereunder
("Capitalized Interest"). Following the end of the Capitalized Interest Period
--------------------
for such Advance, interest shall accrue at the Interest Rate for such Advance on
the principal amount of such Advance (including Capitalized Interest) and shall
be payable in arrears (together with principal payable in accordance with the
amortization schedule described in the following paragraph), commencing on the
first day of the first calendar month following the Conversion Date (the
"Initial Payment Date"), and on the first day of each consecutive calendar month
thereafter (together with the Initial Payment Date, a "Payment Date").
Principal (and Capitalized Interest thereon) of each Advance made by Lender
pursuant to the request of a Borrower under a Borrowing Certificate shall be
repaid pursuant to the following amortization schedule. At the Conversion Date
applicable to an Advance, all principal amounts of such Advance (including
Capitalized Interest thereon) shall be amortized and repaid monthly in arrears
over forty-eight (48) consecutive months in payments of principal calculated as
follows: (i) the first twelve (12) payments of principal shall each be equal to
0.833% of the principal amount (including Capitalized Interest thereon) of such
Advance as of the Conversion Date; (ii) the next twelve (12) payments of
principal shall each be equal to 1.6667% of the principal amount (including
Capitalized Interest thereon) of such Advance as of the Conversion Date; (iii)
the next twelve (12) payments shall each be equal to 2.50% of the principal
amount (including Capitalized Interest thereon) of such Advance as of the
Conversion Date; and (iv) the next twelve (12) payments shall each be equal to
3.33% of the principal amount (including Capitalized Interest thereon) of such
Advance as of the Conversion Date. The first payment shall be due on the first
day of the first month following the Conversion Date.
The principal payment amounts shall be recalculated by Lender if any
Advances are made hereunder after the Financing Termination Date, based on the
aggregate amount of all Advances (including Capitalized Interest) made at any
time. It is intended that the above amortization schedule will fully amortize
the principal amounts advanced under this Note. If any principal, interest, or
other charge or expense remains outstanding on November 1, 2007 or such earlier
date as all principal amounts of Advances hereunder are required to be repaid
pursuant to the amortization schedule described in the preceding paragraph (the
"Maturity Date"), such amount shall be added to the payment due on the Maturity
Date.
Notwithstanding the foregoing, if Makers shall fail to pay within five (5)
days after the due date any principal amount or interest or other amount payable
under this Note, Makers shall pay, jointly and severally, 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
a rate equal to the lesser of three percent (3%) higher than the then applicable
interest rate or the maximum permissible interest rate under applicable law (the
"Default Rate") (instead of the Interest Rate), from the due date until such
------------
overdue principal amount, interest or other unpaid amount is paid in full (both
before and after judgment) whether or not any notice of default in the payment
thereof has been delivered under the Loan Agreement. In addition, but without
duplication, upon the occurrence and during the continuance of an Event of
Default, all outstanding amounts 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.
Notwithstanding any provision of this Note or the Loan Agreement to the
contrary, it is the intent of the Lender and the Makers that the Lender or any
subsequent holder of this 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 this 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 and treated as such (except that no prepayment premium will be payable
thereon), or, if the principal indebtedness and all other amounts due are paid
in full, any remaining excess funds shall immediately be paid to the Makers. In
determining whether or not the interest paid or payable, under any specific
contingency, exceeds the highest lawful rate, the Makers and the 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 the
Lender, and (b) amortize, prorate, allocate, and spread, in equal parts, the
total amount of interest throughout the entire term of the indebtedness;
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, the Lender or
any subsequent holder of the Note shall refund to the Makers 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, the 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.
All amounts received for payment under this Note shall at the option of
Lender be applied first to any unpaid expenses due Lender under this Note or
under any other documents evidencing or securing the obligations of any Maker to
Lender, then to any unpaid late charges, then to any unpaid interest accrued at
the Default Rate, then to all other accrued but unpaid interest due under this
Note and finally to the reduction of outstanding principal due under this Note.
Upon the occurrence of any one or more of the Events of Default specified
in the Loan Agreement (each, an "Event of Default"), all amounts then remaining
----------------
unpaid on this Note shall be, or may be declared to be, immediately due and
payable as provided in the Loan Agreement, without further notice, at the option
of the Lender. Lender may waive any Event of Default before or after the same
has been declared and restore this Note to full force and effect without
impairing any rights hereunder, such right of waiver being a continuing one, but
one waiver shall not imply any additional or subsequent waiver. Time is of the
essence of this Note.
Each Maker hereby expressly waives demand, presentment, notice and protest.
Each Maker and any and all endorsers, guarantors and other parties liable on
this Note, and any and all general partners of any Maker or of any endorsers,
guarantors or other parties liable on this Note (collectively, the "Obligors")
--------
jointly and severally waive presentment for payment, protest, notice of protest,
notice of nonpayment of this Note, demand and all legal
diligence in enforcing collection, and all other claims and defenses based on
suretyship principles, and hereby expressly consent to (i) any and all delays,
extensions, renewals or other modifications of this Note or any waivers of any
term hereof, (ii) any release or discharge by Lender of any of the Obligors,
(iii) any release, substitution or exchange of any security for the payment
hereof, (iv) any failure to act on the part of Lender, and (vi) any indulgence
shown by Lender from time to time (without notice or further assent from any of
the Obligors) and hereby agree that no such action, failure to act or failure to
exercise any right or remedy by Lender shall in any way affect or impair the
obligations of any of the Obligors.
EACH MAKER HEREBY IRREVOCABLY CONSENTS TO THE JURISDICTION OF THE COURTS
LOCATED IN DAVIDSON COUNTY, TENNESSEE, AND XXXXXXXXXX COUNTY, TENNESSEE,
INCLUDING WITHOUT LIMITATION FEDERAL COURTS SITTING IN THE MIDDLE DISTRICT OF
TENNESSEE AND THE CHANCERY COURT FOR DAVIDSON COUNTY, TENNESSEE, AND THE
CHANCERY COURT FOR XXXXXXXXXX COUNTY, TENNESSEE, FOR ANY SUIT BROUGHT OR ACTION
COMMENCED IN CONNECTION WITH THIS NOTE, ANY DOCUMENTS EXECUTED OR DELIVERED IN
CONNECTION HEREWITH, INCLUDING WITHOUT LIMITATION THE LOAN AGREEMENT, OR ANY
RELATIONSHIP BETWEEN LENDER AND ANY MAKER, AND AGREES NOT TO CONTEST OR
CHALLENGE VENUE IN ANY SUCH COURTS.
Each Maker irrevocably consents to the service of process of any such
courts in any such action or proceeding by the mailing of copies thereof by
registered or certified mail, postage prepaid, return receipt requested, to such
Maker at the address set forth in the Loan Agreement or to such other address as
such Maker may have furnished to Lender in writing, and agrees that such service
shall become effective thirty (30) days after such mailing. However, nothing
herein shall affect the right of Lender or any Maker to serve process in any
other manner permitted by law or to commence legal proceedings or otherwise
proceed against Lender or any Maker in any other jurisdiction.
EACH MAKER HEREBY KNOWINGLY, WILLINGLY AND IRREVOCABLY WAIVES ITS RIGHTS
TO DEMAND A JURY TRIAL IN ANY ACTION OR PROCEEDING INVOLVING THIS NOTE, ANY
DOCUMENTS EXECUTED OR DELIVERED IN CONNECTION HEREWITH INCLUDING WITHOUT
LIMITATION THE LOAN AGREEMENT OR ANY RELATIONSHIP BETWEEN SUCH MAKER AND LENDER.
EACH MAKER AGREES THAT LENDER MAY FILE AN ORIGINAL COUNTERPART OR COPY OF THIS
PARAGRAPH WITH ANY COURT AS WRITTEN EVIDENCE OF SUCH MAKER'S EXPRESS WAIVER OF
ITS RIGHT TO TRIAL BY JURY.
IN ANY ACTION TO ENFORCE THIS NOTE, EACH MAKER HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL
RIGHTS UNDER THE LAWS OF ANY STATE OR OTHER JURISDICTION CLAIM OR RECOVER ANY
SPECIAL, EXEMPLARY, PUNITIVE, CONSEQUENTIAL OR OTHER DAMAGES OTHER THAN ACTUAL
DIRECT DAMAGES.
In the event this Note is placed in the hands of one or more attorneys
for collection or
enforcement or protection of the holder's rights described herein or in the Loan
Agreement or the other Loan Documents, the Makers agrees to pay, jointly and
severally, all reasonable attorneys' fees and all court and other out-of-pocket
costs incurred by the holder hereof (as of which shall be due on demand and
shall bear interest at the rate then payable hereunder from five (5) days after
such demand is made until paid).
This Note is governed by and shall be construed in accordance with the
internal laws of the State of New York. If any provision of this Note should for
any reason be invalid or unenforceable, the remaining provisions hereof shall
remain in full force and effect.
This Note may not be changed, extended or terminated except in writing. No
waiver of any term or provision hereof shall be valid unless in writing signed
by Lender.
Executed as of the date first written above.
BROADVIEW NETWORKS HOLDINGS, INC.
By: /s/
---------------------------------
Title: President
------------------------------
BROADVIEW NETWORKS, INC.
By: /s/
---------------------------------
Title: President
------------------------------
BROADVIEW NETWORKS OF MASSACHUSETTS, INC.
By: /s/
--------------------------------
Title: President
-----------------------------
SCHEDULE A TO NOTE
------------------
ADVANCES AND PAYMENTS
---------------------
Initial Payment Date:
Maturity Date:
Amount Advanced Date of Advance Payment Amount Payment Date Balance
--------------- --------------- -------------- ------------ -------
____________ ____________ ____________ ____________ _______
____________ ____________ ____________ ____________ _______
____________ ____________ ____________ ____________ _______
____________ ____________ ____________ ____________ _______
____________ ____________ ____________ ____________ _______
____________ ____________ ____________ ____________ _______
____________ ____________ ____________ ____________ _______
____________ ____________ ____________ ____________ _______
____________ ____________ ____________ ____________ _______
____________ ____________ ____________ ____________ _______
____________ ____________ ____________ ____________ _______
____________ ____________ ____________ ____________ _______
____________ ____________ ____________ ____________ _______
____________ ____________ ____________ ____________ _______
____________ ____________ ____________ ____________ _______
____________ ____________ ____________ ____________ _______
____________ ____________ ____________ ____________ _______
____________ ____________ ____________ ____________ _______
____________ ____________ ____________ ____________ _______
____________ ____________ ____________ ____________ _______
____________ ____________ ____________ ____________ _______
____________ ____________ ____________ ____________ _______
____________ ____________ ____________ ____________ _______
____________ ____________ ____________ ____________ _______
____________ ____________ ____________ ____________ _______
____________ ____________ ____________ ____________ _______
____________ ____________ ____________ ____________ _______
____________ ____________ ____________ ____________ _______
____________ ____________ ____________ ____________ _______
____________ ____________ ____________ ____________ _______
SCHEDULE B TO NOTE
------------------
CAPITALIZED INTEREST
--------------------
Original Capitalized Principal
Principal Interest Date Balance
--------- ----------- ---- ---------
____________ _____________ __________
____________ _____________ __________
____________ _____________ __________
____________ _____________ __________
____________ _____________ __________
____________ _____________ __________
____________ _____________ __________
____________ _____________ __________
____________ _____________ __________
____________ _____________ __________
____________ _____________ __________
____________ _____________ __________
____________ _____________ __________
____________ _____________ __________
____________ _____________ __________
____________ _____________ __________
____________ _____________ __________
____________ _____________ __________
____________ _____________ __________
____________ _____________ __________
____________ _____________ __________
____________ _____________ __________
____________ _____________ __________
____________ _____________ __________
____________ _____________ __________
____________ _____________ __________
____________ _____________ __________
____________ _____________ __________
____________ _____________ __________
____________ _____________ __________
____________ _____________ __________
____________ _____________ __________
____________ _____________ __________
SCHEDULE 1 TO
-------------
LOAN AND SECURITY AGREEMENT
---------------------------
BORROWERS INFORMATION AND DEFINED TERMS
---------------------------------------
Closing Date: October 22, 1999
Borrowers: Broadview Networks Holdings, Inc., a Delaware
corporation Tax Identification Number: 11-
3310798
Broadview Networks, Inc., a New York
corporation Tax Identification Number: 16-
1401082
Broadview Networks of Massachusetts, Inc., a
Delaware corporation
Tax Identification Number: 00-0000000
Chief Executive Offices: 00-00 Xxxxx Xxxxxx, Xxx 000
Xxxx Xxxxxx Xxxx, Xxx Xxxx 00000
Notice Address: 00-00 Xxxxx Xxxxxx, Xxx 000
Xxxx Xxxxxx Xxxx, Xxx Xxxx 00000
PUC: The New York Public Service Commission and
the Massachusetts Department of
Transportation and Energy
Regulatory Authorizations: The term "Regulatory Authorizations" shall
include, without limitation, the approval of
the transactions contemplated by this
Agreement by the New York Public Service
Commission.
Business Plan: Broadview Networks Holdings, Inc. (Broadview)
is an Integrated Communications Provider.
Broadview's business plan is to build a
sizable customer base offering voice and data
communications products as both a carrier and
a provider of both horizontal and vertical,
value-added communications related products
and services. Broadview intends to build its
customer base through a combination of its
own sales and marketing activities, as well
as strategic alliances and acquisitions of
customer bases and acquisitions of corporate
entities with customer bases. Broadview
intends to provide such products and services
utilizing a combination of its own
facilities, leased facilities of other
carriers and resale of other carrier services
and products. Broadview intends to
incorporate into its network architecture a
variety of traditional Class V circuit based
switching capabilities, data transport and
routing capabilities, and evolving internet
protocol and other switching/transmission
technologies. Broadview intends
to offer communications services in multiple
geographic markets, initially targeting the
Northeast United States, with anticipated
significant expansions of geographic focus.
Broadview intends to differentiate itself by
making significant ongoing investments in its
proprietary operating software systems and
other software based operational systems to
develop cost efficiencies and service quality
improvements.
SCHEDULE 2.01 TO
----------------
LOAN AND SECURITY AGREEMENT
---------------------------
MAXIMUM LOAN AMOUNTS
--------------------
Maximum Principal Amount of All Loans: Thirty-six Million (US) Dollars
($36,000,000) (plus Capitalized
Interest thereon) available for
drawing on or before September 30,
2001.
SCHEDULE 2.02 TO
----------------
LOAN AND SECURITY AGREEMENT
---------------------------
PAYMENT TERMS AND GOVERNING LAW
-------------------------------
Amortization of Term Loan or Payment Schedule: Principal (and Capitalized
Interest thereon) of each Advance made by Lender pursuant to the request of a
Borrower under a Borrowing Certificate shall be repaid pursuant to the following
amortization schedule. At the Conversion Date applicable to an Advance, all
principal amounts of such Advance (including Capitalized Interest thereon) shall
be amortized and repaid monthly in arrears over forty-eight (48) consecutive
months in payments of principal calculated as follows: (i) the first twelve (12)
payments of principal shall each be equal to 0.833% of the principal amount
(including Capitalized Interest thereon) of such Advance as of the Conversion
Date; (ii) the next twelve (12) payments of principal shall each be equal to
1.6667% of the principal amount (including Capitalized Interest thereon) of such
Advance as of the Conversion Date; (iii) the next twelve (12) payments shall
each be equal to 2.50% of the principal amount (including Capitalized Interest
thereon) such of Advance as of the Conversion Date; and (iv) the next twelve
(12) payments shall each be equal to 3.33% of the principal amount (including
Capitalized Interest thereon) such Advance as of the Conversion Date. The first
payment shall be due on the first day of the first month following the
Conversion Date.
Capitalized Interest Period: for each Advance made by Lender pursuant to
the request of a Borrower under a Borrowing Certificate, the period from the
date of such Advance through the last day of the twelfth (12th) calendar month
following the date of such Advance
Closing Date: October 22, 1999
Conversion Date: For each Advance made by Lender pursuant to the request of
a Borrower under a Borrowing Certificate, the expiration of the Capitalized
Interest Period applicable to such Advance.
Financing Termination Date: September 30, 2001.
Governing Law: Determined pursuant to Section 10.14 of the Agreement.
=============
Initial Borrowing Date: The date of the first Advance hereunder.
Initial Payment Date: The first day of the first calendar month next
following the Conversion Date.
Interest Payment Date: Monthly in arrears commencing on the first day of
the calendar month next following the Conversion Date and monthly thereafter
through the Maturity Date.
Interest Rate: For each Advance, the Five Year Swap Rate, as reported on
page 19901 of the Dow Xxxxx & Company Telerate screen (or any successor page) on
the date such Advance is made, plus 475 basis points. If Dow Xxxxx & Company
Telerate screen should cease service or cease publishing such rate, the Lender
shall designate a comparable reference rate for use in determining the Interest
Rate hereunder.
Maturity Date: November 1, 2007, or such earlier date as all principal
amounts of Advances hereunder are required to be repaid pursuant to the
Amortization of Term Loan (provided that the Maturity
Date shall automatically be shortened to the Initial Borrowing Date plus 364
days in the event that the Borrowers have not obtained all of the Regulatory
Authorizations and delivered, if required by Lender, evidence of same to the
Lender by such date, unless the Borrowers have delivered an opinion of FCC
regulatory counsel, in form and substance acceptable to the Lender, to the
effect that one or more of such Required Approvals are no longer necessary), on
which date all then-outstanding Obligations under a Note shall be finally due
and payable.
Payment Date: The Initial Payment Date and the first day of each calendar
month thereafter.
SCHEDULE 2.09 TO
----------------
LOAN AND SECURITY AGREEMENT
---------------------------
FEES
----
(a) Commitment Fee. Borrower shall pay Lender at the Closing Date a
--------------
commitment fee equal to one and one-half percent (1 1/2%) of the Commitment
Amount.
SCHEDULE 2.11 TO
----------------
LOAN AND SECURITY AGREEMENT
---------------------------
ANNEX A TO LOAN AND SECURITY AGREEMENT
--------------------------------------
By executing this Annex to and forming a part of the Loan and Security
Agreement dated as of October 22, 1999 (the "Agreement"), by and among NTFC
Capital Corporation; Broadview Networks Holdings, Inc. ("BNH"); each direct or
indirect Subsidiary of BNH which signed the Agreement; and each Subsidiary which
subsequently becomes a party thereto pursuant to Section 2.11 of the Agreement
============
by executing this Annex, the undersigned represents and warrants that it is a
[FOREIGN or DOMESTIC] Subsidiary of BNH, joins as a party to the Agreement,
---------------------
assumes the obligations of a [FOREIGN/DOMESTIC] Borrower under the Agreement,
------------------
and confirms that it is bound by the terms and conditions of the Agreement,
including but not limited to the grant by the undersigned to Lender of a
security interest in all of its right, title and interest in and to the
Collateral as provided in the Agreement. (The execution of this instrument
constitutes a grant by the undersigned of a security interest in the
Collateral). The undersigned further acknowledges and agrees that (i) one or
more other Subsidiaries of BNH may become additional Borrowers under the
Agreement without the consent of any other Borrower by execution of a copy of
this Annex; (ii) the Lender is willing to extend certain credit to the
Borrowers, subject to the terms and conditions set forth in the Agreement,
including the condition that all Domestic Borrowers will be jointly and
severally liable for the payment of all Indebtedness owed by BNH or any Borrower
to Lender under the Agreement and the condition that all Foreign Borrowers will
be jointly and severally liable for the payment of all Indebtedness owed by any
Foreign Borrower to Lender under the Agreement; (iii) without this condition of
joint and several liability, Lender would not be willing to extend credit to any
Borrower; and (iv) the undersigned, the existing Borrowers, and the Subsidiaries
of BNH which may become additional Borrowers under the Agreement are (or will
be) related entities, and the undersigned expects to increase its business and
to benefit directly and indirectly through the use of the equipment to be
acquired by it and the other Borrowers with the proceeds of the loans to be made
pursuant to the Agreement.
The undersigned authorizes the Lender to attach this Annex to the Agreement
and, thereby, form a part of the Agreement. This Annex shall be construed in
accordance with and governed by the laws of the jurisdiction stated in Schedule
--------
2.02 to the Agreement under the caption "Governing Law," except to the extent
----
the internal laws of another jurisdiction are required to be applied in
connection with the exercise of rights pertaining to Collateral in that
jurisdiction. Capitalized terms used in this Annex without definition shall have
the meanings set forth in the Agreement to which this Annex is attached and form
a part.
This Annex 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 of such counterparts shall constitute but one and the same document.
IN WITNESS WHEREOF, the undersigned has executed this Annex to Loan and
Security Agreement by its duly authorized officer or representative this ____
day of __________, ____.
Borrower: _________________________________
--------
By: ____________________________
Its: ____________________________
SCHEDULE 2.11(b) TO
-------------------
LOAN AND SECURITY AGREEMENT
---------------------------
ADDITIONAL SUBSIDIARY INFORMATION
---------------------------------
Name
----
Jurisdiction of Formation
-------------------------
Taxpayer Identification Number
------------------------------
Principal Place of Business
---------------------------
Location of Collateral Owned Directly
-------------------------------------
SCHEDULE 4.04 TO
----------------
LOAN AND SECURITY AGREEMENT
---------------------------
REQUIRED CONSENTS
-----------------
The transactions contemplated by this Agreement must be approved by the New York
Public Service Commission. The following applications for such Approval were
filed on September 27, 1999 and are pending:
1. Joint Petition of Coaxicom, Inc., and Community Networks, Inc. for
Approval Nunc Pro Tunc of Transfer of Assets (filed 9/27/99); and
2. Joint Petition of Coaxicom, Inc., and Community Networks, Inc. for
Authority to Enter Inter Secured Financing Agreement (filed 9/27/99)
SCHEDULE 4.05 TO
----------------
LOAN AND SECURITY AGREEMENT
---------------------------
REGULATORY AUTHORIZATIONS
-------------------------
The transactions contemplated by this Agreement must be approved by the New York
Public Service Commission. The following applications for such Approval were
filed on September 27, 1999 and are pending:
1. Joint Petition of Coaxicom, Inc., and Community Networks, Inc. for
Approval Nunc Pro Tunc of Transfer of Assets (filed 9/27/99); and
2. Joint Petition of Coaxicom, Inc., and Community Networks, Inc. for
Authority to Enter Inter Secured Financing Agreement (filed 9/27/99)
SCHEDULE 4.07 TO
----------------
LOAN AND SECURITY AGREEMENT
---------------------------
RESTRICTIONS ON LOANS
---------------------
1. Under the Stockholders Agreement among BNH (formerly known as Coaxicom,
Inc.) Xxxxx Communications Fund, L.P., Xxxx X. Xxxxxxx, Xxxxxxxx X.
Xxxxxxxx, Xxxxxx X. Xxxxx, Xxxxxx X. Xxxxxx, and those parties listed on
Schedule I to the (i) Series A Preferred Stock Purchase Agreement (the
"Series A Holders") dated as of January 29, 1998, by and among BNH and the
Series A Holders and (ii) Series B Preferred Stock Purchase Agreement (the
"Series B Holders") dated as of September 9, 1998, by and among BNH and the
Series B Holders, BNH may not incur any debt or enter into any commitments
to incur debt without the prior written approval of at least a majority of
the then outstanding shares held by All Preferred Holders (as defined in
such Shareholders Agreement). BNH has obtained the written approval of at
least a majority of the outstanding shares held by All Preferred Holders to
BNH's execution of this Agreement and the incurrence of the Obligations
thereunder.
2. Under the Certificate of Incorporation of BNH, BNH may not, without the
affirmative vote or consent of the holders of a majority of the shares of
(i) Series A Preferred Stock and Series B Preferred Stock then outstanding
(voting or consenting, as the case may be, together as one class ) and (ii)
Series C Preferred Stock and Series D Stock then outstanding (voting or
consenting, as the case may be, together as one class), encumber, in one
transaction or a series of related transactions, all or substantially all
of the assets of BNH and its subsidiaries on a consolidated basis.
SCHEDULE 4.08 TO LOAN AND SECURITY AGREEMENT
---------------- ---------------------------
FINANCIAL STATEMENTS
--------------------
[Separately provided]
SCHEDULE 4.12 TO
----------------
LOAN AND SECURITY AGREEMENT
---------------------------
PENDING LITIGATION
------------------
None
SCHEDULE 4.25 TO
----------------
LOAN AND SECURITY AGREEMENT
---------------------------
UCC FILING OFFICES
------------------
[To be provided by Lender's counsel]
SCHEDULE 4.26 TO
----------------
LOAN AND SECURITY AGREEMENT
---------------------------
PRINCIPAL OFFICES AND LOCATION OF COLLATERAL
--------------------------------------------
Broadview Networks Holdings's Chief Executive Office and that of each of its
Subsidiaries, which are Borrowers, is listed on Schedule 1:
Locations of Collateral:
See attached list
SCHEDULE 4.29 TO
----------------
LOAN AND SECURITY AGREEMENT
---------------------------
ASSUMED NAMES
-------------
1. BNH changed its name from "Coaxicom, Inc." to "Broadview Networks Holdings,
Inc." on October 5, 1999. Coaxicom was also authorized to do business in
New York under the Name "Coaxicom - DE."
2. BNI changed its name from "Community Networks, Inc." to "Broadview
Networks, Inc." on October 6, 1999.
3. BNI of Massachusetts changed its name from "Community Networks of
Massachusetts, Inc." to "Broadview Networks of Massachusetts, Inc. on
October 5, 1999.
SCHEDULE 4.30 TO
----------------
LOAN AND SECURITY AGREEMENT
---------------------------
TRANSACTIONS WITH AFFILIATES
----------------------------
1. Employment agreements with employees entered into in the ordinary course of
business of such Borrower that do provide for (i) annual base compensation,
together with any other annual base compensation under any other employment
agreements with other Borrowers, not in excess of $250,000 and (ii)
additional compensation subject to the consent of Lender, such consent not
to be unreasonably withheld
SCHEDULE 4.31 TO
-----------------
LOAN AND SECURITY AGREEMENT
---------------------------
NTI PURCHASE AGREEMENT
----------------------
Agreement dated as of March 30, 1999, as amended, between Broadview Networks,
Inc. (f/k/a Community Networks, Inc.) and Northern Telecom Inc.
SCHEDULE 6.02 TO
----------------
LOAN AND SECURITY AGREEMENT
---------------------------
POST-CLOSING ITEMS
------------------
1. Regulatory Authorizations: the approval of the transactions contemplated
by this Agreement by the New York Public Service Commission.
SCHEDULE 7.07 TO
----------------
LOAN AND SECURITY AGREEMENT
---------------------------
INSURANCE
---------
[See attached certificate(s)]
SCHEDULE 7.15 TO
----------------
LOAN AND SECURITY AGREEMENT
---------------------------
FINANCIAL COVENANTS
-------------------
BROADVIEW NETWORK HOLDINGS, Inc.
Financial Covenants
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 the Borrowers and their
properties and activities shall be deemed to refer to BNH and its
consolidated Subsidiaries collectively, provided, however, the results of
operations and activities of the Unrestricted Subsidiary shall be excluded
for purposes of determining BNH's compliance with the covenants set forth in
Schedule 7.15.
-------------
. Minimum Revenues: BNH shall have revenues (calculated at the end of each
fiscal quarter as the sum of the revenue of the last four consecutive
fiscal quarters then ending) equal to or greater than the level projected
for the sum of such fiscal quarters in the Projected Revenue Table below
(amounts in table expressed as $millions).
Projected Revenue Table
------------------------------------------------------------------------------------------------------
Date 1999 2000 2001 2002 2003 2004
------------------------------------------------------------------------------------------------------
March 31 N/A 43.5 62.5 72.5 83.8 93.9
------------------------------------------------------------------------------------------------------
June 30 N/A 51.2 65.0 75.2 86.5 96.3
------------------------------------------------------------------------------------------------------
September 30 N/A 56.7 67.4 78.8 88.4 98.7
------------------------------------------------------------------------------------------------------
December 31 33.6 60.1 69.9 80.9 91.6 101.2
------------------------------------------------------------------------------------------------------
. Minimum Gross Margins: BNH shall maintain Minimum Gross Margins
(calculated at the end of each fiscal quarter) equal to or greater than
those set forth below (amounts expressed as a percentage of actual
revenues for the fiscal quarter).
------------------------------------------------------------------------------------------------------
Date 1999 2000 2001 2002 2003 2004
------------------------------------------------------------------------------------------------------
March 31 N/A 14.0 36.0 36.5 37.0 38.0
------------------------------------------------------------------------------------------------------
June 30 N/A 21.0 36.0 36.5 37.0 38.0
------------------------------------------------------------------------------------------------------
September 30 N/A 31.0 36.5 36.5 37.0 38.0
------------------------------------------------------------------------------------------------------
December 31 10.0 35.5 36.5 36.5 37.0 38.0
------------------------------------------------------------------------------------------------------
. Fixed Charge Coverage Ratio: Borrower shall maintain a Fixed Charge
Coverage Ratio of not less than 1.25:1. For purposes of calculating BNH's
Fixed Charge Coverage Ratio for such four fiscal quarter periods ending on
or before September 30, 2001, (i) EBITDA shall include all unrestricted
cash on BNH's balance sheet at the beginning of such four fiscal quarter
period, plus net proceeds received on amounts borrowed during such four
fiscal quarter period plus any cash equity received during such four
fiscal quarter period, and (ii) Debt Service shall include capital
expenditures paid with proceeds of Indebtedness.
. Leverage: BNH shall at all times maintain a Leverage Ratio not greater
than 1.05:1. This ratio shall be calculated as a condition to each funding
of an Advance.
SCHEDULE 8.01 TO
----------------
LOAN AND SECURITY AGREEMENT
---------------------------
PERMITTED INDEBTEDNESS
----------------------
1. Borrowers may incur Indebtedness consisting of (i) Excluded Indebtedness,
and (ii) other Indebtedness if immediately before, and after giving effect
to the incurrence, of such Indebtedness BNH is in compliance with its
financial covenants required by Schedule 7.15.
--------------
SCHEDULE 8.02 TO
----------------
LOAN AND SECURITY AGREEMENT
---------------------------
PERMITTED SPECIFIC ENCUMBRANCES
-------------------------------
1. Liens on property of a Borrower not constituting Collateral which are
granted to secure Indebtedness other than Indebtedness defined in clauses
(i) and (ii) of the definition of Excluded Indebtedness.
2. Liens evidenced by any of the following UCC searches attached hereto.
