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EXHIBIT 10.8.1
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CREDIT AGREEMENT
dated as of February 26, 1999
by and among
TELERGY, INC.
as Borrower,
TELERGY NETWORK SERVICES, INC.
as Guarantor
and
NORTHERN TELECOM INC.
as Administrative Agent
and
THE LENDERS NAMED HEREIN
$30,000,000 ADVANCING TERM LOAN FACILITY
and
$15,000,000 ADVANCING TERM LOAN FACILITY
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TABLE OF CONTENTS
Page
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ARTICLE 1 Definitions........................................................1
Section 1.1 Definitions, etc...........................................1
Section 1.2 Other Definitional Provisions.............................19
Section 1.3 Accounting Terms and Determinations.......................20
Section 1.4 Financial Covenants and Reporting.........................20
ARTICLE 2 Loans.............................................................21
Section 2.1 Commitments...............................................21
Section 2.2 Notes.....................................................21
Section 2.3 Repayment of Loans........................................22
Section 2.4 Interest..................................................23
Section 2.5 Borrowing Procedure.......................................24
Section 2.6 Optional Prepayments, Conversions and
Continuations of Loans ...................................24
Section 2.7 Mandatory Prepayments.....................................25
Section 2.8 Minimum Amounts...........................................26
Section 2.9 Certain Notices...........................................26
Section 2.10 Use of Proceeds .........................................27
Section 2.11 Fees ....................................................27
Section 2.12 Computations ............................................27
Section 2.13 Termination or Reduction of Commitments .................28
ARTICLE 3 Payments..........................................................28
Section 3.1 Method of Payment.........................................28
Section 3.2 Pro Rata Treatment........................................29
Section 3.3 Sharing of Payments, Etc..................................29
Section 3.4 Non-Receipt of Funds by the Administrative Agent..........29
Section 3.5 Taxes.....................................................30
Section 3.6 Withholding Tax Exemption.................................31
Section 3.7 Reinstatement of Obligations..............................31
Section 3.8 No Force Majeure, Disputes................................31
ARTICLE 4 Yield Protection and Illegality...................................32
Section 4.1 Additional Costs..........................................32
Section 4.2 Limitation on Types of Loans..............................33
Section 4.3 Illegality................................................34
Section 4.4 Treatment of Affected Loans...............................34
Section 4.5 Compensation..............................................35
Section 4.6 Capital Adequacy..........................................35
Section 4.7 Additional Interest on Eurodollar Loans...................36
ARTICLE 5 Security..........................................................36
Section 5.1 Collateral................................................36
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Section 5.2 Guaranty..................................................36
Section 5.3 Landlord Waivers..........................................36
Section 5.4 Setoff....................................................37
ARTICLE 6 Conditions Precedent..............................................37
Section 6.1 Initial Extension of Credit...............................37
Section 6.2 All Extensions of Credit................................. 39
Section 6.3 Closing Certificates......................................40
ARTICLE 7 Representations and Warranties....................................41
Section 7.1 Existence.................................................41
Section 7.2 Financial Statements......................................41
Section 7.3 Corporate Action; No Breach...............................41
Section 7.4 Operation of Business; Licenses...........................42
Section 7.5 Intellectual Property.....................................42
Section 7.6 Litigation and Judgments..................................42
Section 7.7 Rights in Properties; Liens...............................43
Section 7.8 Enforceability............................................43
Section 7.9 Approvals.................................................43
Section 7.10 Debt.....................................................43
Section 7.11 Taxes....................................................43
Section 7.12 Margin Securities........................................44
Section 7.13 ERISA....................................................44
Section 7.14 Disclosure...............................................45
Section 7.15 Loan Parties.............................................45
Section 7.16 Compliance with Laws.....................................45
Section 7.17 Investment Company Act...................................45
Section 7.18 Public Utility Holding Company Act.......................45
Section 7.19 Environmental Matters....................................45
Section 7.20 Year 2000 Compliance.....................................46
Section 7.21 Labor Disputes and Acts of God...........................47
Section 7.22 Material Contracts.......................................47
Section 7.23 Outstanding Securities...................................47
Section 7.24 Solvency.................................................47
Section 7.25 Employee Matters.........................................47
Section 7.27 Insurance................................................47
Section 7.28 Common Enterprise........................................47
ARTICLE 8 Affirmative Covenants.............................................48
Section 8.1 Reporting Requirements....................................48
Section 8.2 Maintenance of Existence; Conduct of Business.............51
Section 8.3 Maintenance of Properties and Permits.....................51
Section 8.4 Taxes and Claims..........................................51
Section 8.5 Insurance.................................................51
Section 8.6 Inspection Rights.........................................53
Section 8.7 Keeping Books and Records.................................53
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Section 8.8 Compliance with Laws......................................53
Section 8.9 Compliance with Agreements................................53
Section 8.10 Further Assurances.......................................54
Section 8.11 ERISA....................................................54
Section 8.12 Non-Consolidation........................................54
Section 8.13 Year 2000 Compliance.....................................54
Section 8.14 Trade Accounts Payable...................................54
Section 8.15 Delivery of Certain Amendments...........................54
Section 8.16 Board Observation........................................55
ARTICLE 9 Negative Covenants................................................55
Section 9.1 Limitation on Liens.......................................55
Section 9.2 Mergers; Liquidation......................................55
Section 9.3 Restricted Payments.......................................56
Section 9.4 Disposition of Collateral.................................56
Section 9.5 Lines of Business.........................................56
Section 9.6 Environmental Protection..................................56
Section 9.7 Intercompany Transactions.................................56
Section 9.8 Supply Agreement..........................................56
Section 9.9 Modification of Certain Agreements........................57
Section 9.10 ERISA....................................................57
Section 9.10 No Prepayment of Debt, Etc...............................57
ARTICLE 10 Financial Covenants..............................................57
Section 10.1 Credit Facility Debt to Contributed Capital..............57
Section 10.2 Quarterly Minimum EBITDA.................................57
ARTICLE 11 Default..........................................................58
Section 11.1 Events of Default........................................58
Section 11.2 Remedies.................................................60
Section 11.3 Performance by the Administrative Agent, etc.............61
ARTICLE 12 The Administrative Agent.........................................61
Section 12.1 Appointment, Powers and Immunities.......................61
Section 12.2 Rights of Administrative Agent as a Lender...............62
Section 12.3 Defaults.................................................62
Section 12.4 INDEMNIFICATION..........................................63
Section 12.5 Independent Credit Decisions.............................64
Section 12.6 Several Commitments......................................64
Section 12.7 Successor Administrative Agent...........................64
ARTICLE 13 Miscellaneous....................................................65
Section 13.1 Expenses ................................................65
Section 13.2 INDEMNIFICATION..........................................65
Section 13.3 Limitation of Liability..................................66
Section 13.4 No Duty..................................................66
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Section 13.5 No Fiduciary Relationship................................67
Section 13.6 Equitable Relief.........................................67
Section 13.7 No Waiver; Cumulative Remedies...........................67
Section 13.8 Successors and Assigns...................................67
Section 13.9 Survival.................................................71
Section 13.10 ENTIRE AGREEMENT........................................71
Section 13.11 Amendments..............................................71
Section 13.12 Maximum Interest Rate...................................72
Section 13.13 Notices.................................................73
Section 13.14 GOVERNING LAW; SUBMISSION TO JURISDICTION;
SERVICE OF PROCESS .....................................73
Section 13.15 Counterparts............................................73
Section 13.16 Severability............................................74
Section 13.17 Headings................................................74
Section 13.18 Construction............................................74
Section 13.19 Independence of Covenants...............................74
Section 13.20 Confidentiality.........................................74
Section 13.21 WAIVER OF JURY TRIAL....................................74
Section 13.22 Approvals and Consent...................................75
Section 13.23 Service of Process......................................75
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INDEX TO EXHIBITS
Exhibit A - Form of Assignment and Acceptance
Exhibit B-1 - Form of Tranche A Note
Exhibit B-2 - Form of Tranche B Note
Exhibit C - Form of Notice of Borrowings, Conversions, Continuations and
Prepayments
Exhibit D - Form of Compliance Certificate
INDEX TO SCHEDULES
Schedule 10 - Financial Covenants
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of February 26, 1999, is by and among
TELERGY, INC., a New York corporation (the "Borrower"), TELERGY NETWORK
SERVICES, INC., a New York corporation (the "Guarantor"), each of the lending
entities which is a party hereto (as evidenced by the signature pages of this
Agreement) or which may from time to time become a party hereto as a lender or
any successor or assignee thereof (individually, a "Lender" and, collectively,
the "Lenders"), and NORTHERN TELECOM INC., a Delaware corporation, as
administrative agent for itself and the other Lenders (in such capacity,
together with its successors in such capacity, the "Administrative Agent").
RECITALS:
A. The Borrower intends to construct and operate the Network.
B. The Borrower desires to obtain a $30,000,000 advancing term loan
facility to finance a portion of Guarantor's costs to purchase Nortel Networks
Goods and Services and a $15,000,000 advancing term loan facility for general
corporate purposes, including but not limited to providing working capital for
the Borrower.
C. The Lender(s) identified on the signature pages of this Agreement
desire to provide such credit facilities with the assistance of the
Administrative Agent upon and subject to the terms and provisions contained in
this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereto hereby agree as follows:
ARTICLE 1
Definitions
Section 1.1 Definitions, etc. As used in this Agreement, the following
terms shall have the following meanings:
"Additional Costs" means as specified in Section 4.1(a).
"Adjusted Eurodollar Rate" means, for any Eurodollar Loan for any Interest
Period therefor, the rate per annum (rounded upwards, if necessary, to the
nearest 1/16 of one percent) determined by the Administrative Agent to be equal
to (a) the Eurodollar Rate for such Eurodollar Loan for such Interest Period
divided by (b) one minus the Reserve Requirement for such Eurodollar Loan for
such Interest Period.
"Adjusted Net Income" means for any period, Consolidated Net Income less
the following (without duplication) to the extent that any of the following
shall have been included in Consolidated Net Income for such period: (a) any net
gain or loss arising from the sale of capital assets, (b) any net gain or loss
arising from any write-up or write-down of assets, (c) earnings or losses of any
other
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Person, substantially all of the assets of which have been acquired by the
Borrower or a Consolidated Subsidiary of the Borrower in any manner, to the
extent that such earnings or losses were realized by such other Person prior to
the date of such acquisition, (d) earnings or losses of any Person (other than a
Consolidated Subsidiary of the Borrower) in which the Borrower or a Consolidated
Subsidiary has an ownership interest, unless such earnings have actually been
received by the Borrower or such Consolidated Subsidiary in the form of cash
distributions, and (e) any net gain or loss arising from the acquisition of any
securities of the Borrower or a Consolidated Subsidiary of the Borrower.
"Administrative Agent" means as specified in the introductory paragraph of
this Agreement.
"Administrative Agent's Letter" means the letter agreement dated as of
February 26, 1999 between the Administrative Agent and the Borrower.
"Advances" means the Loans made under this Agreement.
"Affiliate" means, as to any Person, any other Person (a) that directly or
indirectly through one or more intermediaries controls or is controlled by, or
is under direct or indirect common control with, such first Person, (b) that
directly or indirectly beneficially owns or holds ten percent or more of any
class of voting Capital Stock of such first Person, or (c) ten percent or more
of the voting Capital Stock of which is directly or indirectly beneficially
owned or held by such first Person. For the purposes of this definition,
"control" when used with respect to any Person means the power to direct the
management and policies of such Person, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing. For
purposes of the Loan Documents, neither the Administrative Agent nor any Lender
shall be deemed to be an Affiliate of the Borrower or any Loan Party.
"Agreement" means this Agreement and any and all amendments,
modifications, supplements, renewals, extensions or restatements hereof.
"Applicable Lending Office" means for each Lender and each Type of Loan,
the lending office of such Lender (or an Affiliate of such Lender) designated
for such Type of Loan below its name on the signature pages hereof (or, with
respect to a Lender that becomes a party to this Agreement pursuant to an
assignment made in accordance with Section 13.8, in the Assignment and
Acceptance executed by it) or such other office of such Lender (or an Affiliate
of such Lender) as such Lender may from time to time specify to the Borrower and
the Administrative Agent as the office by which its Loans of such Type are to be
made and maintained.
"Applicable Margin" means the rate per annum equal to (a) with respect to
each Base Rate Loan, three and one-half of one percent (3.50%) and (b) with
respect to each Eurodollar Loan, four and one-half of one percent (4.50%).
"Assignee" means as specified in Section 13.8(b).
"Assigning Lender" means as specified in Section 13.8(b).
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"Assignment and Acceptance" means an assignment and acceptance entered
into by a Lender and its Assignee and accepted by the Administrative Agent
pursuant to Section 13.8(e), in substantially the form of Exhibit A hereto.
"Bankruptcy Code" means as specified in Section 11.1(e).
"Base Rate" means, at any time, the greater of (a) the rate of interest
per annum then most recently announced or established by the Reference Bank at
its principal office in New York City as its highest commercial prime or base
rate then in effect, or (b) the Federal Funds Rate then in effect plus one-half
of one percent (0.50%). The Base Rate may not necessarily be the lowest rate of
interest charged by the Reference Bank to its commercial borrowers. Each change
in any interest rate provided for herein based upon the prime or base rate or
the Federal Funds Rate resulting from a change in the prime or base rate or the
Federal Funds Rate, respectively, shall take effect without notice to the
Borrower at the time of such change in the prime or base rate or the Federal
Funds Rate, respectively.
"Base Rate Loans" means Loans that bear interest at rates based upon the
Base Rate.
"Basle Accord" means the proposals for risk-based capital framework
described by the Basle Committee on Banking Regulations and Supervisory
Practices in its paper entitled "International Convergence of Capital
Measurement and Capital Standards" dated July 1988, as amended, supplemented and
otherwise modified and in effect from time to time, or any replacement thereof.
"▇▇▇▇ Canada Fiber Agreement" means that certain Fiber Agreement dated as
of October 28, 1998, by and among the Borrower, Telergy Network Services, Inc.,
Telergy Central, LLC, Telergy Metro LLC, Telergy Canada, Inc., BCE Inc., ▇▇▇▇
Canada, 3474461 Canada Inc. and Fiberco Telecommunications Corporation.
"Board of Directors" means the board of directors of the Borrower.
"Board Resolution" means a copy of a resolution certified by the Secretary
or an Assistant Secretary of the Borrower to have been duly adopted by the Board
of Directors and to be in full force and effect on the date of such
certification.
"Borrower" means as specified in the initial paragraph of this Agreement.
"Business Day" means (a) any day other than a Saturday, Sunday or other
day on which commercial banks are authorized or required by law to close in New
York, New York or Dallas, Texas, and (b) with respect to all borrowings,
payments, Conversions, Continuations, Interest Periods and notices in connection
with Eurodollar Loans, any day which is a Business Day described in clause (a)
above and which is also a day on which dealings in Dollar deposits are carried
out in the London interbank market.
"Business Plan" means the Borrower's marketing and construction plans for
the Network, budget and schedule as submitted to the Administrative Agent on or
prior to the Closing Date, including financial projections of the Borrower and
certain of its Subsidiaries, such projections
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giving effect to the Debt to be incurred under this Agreement as well as the
other Debt to be incurred by the Borrower and certain of its Consolidated
Subsidiaries during such period, as the same may be updated and delivered to the
Administrative Agent in accordance with this Agreement.
"Capital Lease Obligations" means, as to the Borrower or any Consolidated
Subsidiary, the obligations of such Person to pay rent or other amounts under a
lease of (or other agreement conveying the right to use) real and/or personal
Property, which obligations are classified as a capital lease on a balance sheet
of such Person under GAAP. For purposes of this Agreement, the amount of such
Capital Lease Obligations shall be the capitalized amount thereof, determined in
accordance with GAAP.
"Capital Stock" means corporate stock and any and all securities, shares,
partnership interests, limited partnership interests, limited liability company
interests, membership interests, equity interests, participations, rights or
other equivalents (however designated) of corporate stock or any of the
foregoing issued by any entity (whether a corporation, a partnership or another
entity) and includes, without limitation, securities convertible into Capital
Stock and rights or options to acquire Capital Stock.
"Change in Control" means that the ▇▇▇▇▇ Holders shall have ceased to own
at least fifty percent (50%) of the Voting Stock of the Borrower or that the
Borrower shall have ceased to own one hundred percent (100%) of the Voting Stock
of the Guarantor.
"Closing Date" means February 26, 1999, the date of this Agreement.
"Code" means the Internal Revenue Code of 1986, as amended, and the
regulations promulgated and rulings issued thereunder.
"Collateral" means all Property of any Loan Party upon which a Lien is
created by any Loan Document as security for the Obligations or any portion
thereof.
"Collateral Disposition" means the disposition of any of the Collateral,
whether by sale, lease, transfer, assignment, condemnation or otherwise.
"Commitment Percentage" means, as to any Lender and as to the Tranche A
Commitments or the Tranche B Commitments (as applicable based upon the context
in which such term is used), the percentage equivalent of a fraction, the
numerator of which is the amount of the outstanding Tranche A Commitments or
Tranche B Commitments (as applicable) of such Lender (or, if such applicable
commitment has terminated or expired, the outstanding principal amount of
Tranche A Loans or Tranche B Loans, respectively, of such Lender) and the
denominator of which is the aggregate amount of the outstanding Tranche A
Commitments or Tranche B Commitments (as applicable) of all Lenders (or, if such
applicable commitments have terminated or expired, the aggregate outstanding
principal amount of Tranche A Loans or Tranche B Loans, respectively, of all
Lenders), as adjusted from time to time in accordance with Section 13.8.
"Commitments" means, as to any Lender, such Lender's Tranche A Commitment
and Tranche B Commitment.
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"Communications Act" means the Communications Act of 1934, and any similar
or successor federal statute, and the rules and regulations of the FCC
thereunder, all as amended and as the same may be in effect from time to time.
"Consolidated Interest Expense" means, for any period, all interest on
Debt of the Borrower and its Consolidated Subsidiaries paid in cash during such
period, including the interest portion of payments under capital lease
obligations.
"Consolidated Net Income" means, for any period, the net income (or loss)
of the Borrower and its Consolidated Subsidiaries for such period, determined on
a consolidated basis in accordance with GAAP.
"Consolidated Subsidiary" means any Subsidiary the financial attributes of
which is or would be consolidated with those of the Borrower in the consolidated
financial statements of the Borrower in accordance with GAAP.
"Continue", "Continuation" and "Continued" shall refer to the continuation
pursuant to Section 2.6 of a Eurodollar Loan as a Eurodollar Loan of the same
Type from one Interest Period to the next Interest Period.
"Contract Rate" means as specified in Section 13.12(a).
"Contributed Capital" means, as of any date of determination, the sum of
(a) all equity contributions then made in cash or previously made in cash to the
Borrower (including equity contributed on or before the Closing Date), minus (b)
all Restricted Payments (in any form) then made or previously made by the
Borrower to or for the benefit of any Person.
"Convert", "Conversion" and "Converted" shall refer to a conversion
pursuant to Section 2.6 or Article 4 of one Type of Loan into the other Type of
Loan.
"Current Date" means (a) a date occurring no more than 30 days prior to
the Closing Date or other relevant date as may be specified herein (as
applicable) or (b) such earlier date which is acceptable to the Administrative
Agent.
"Debt" means as to any Person at any time (without duplication): (a) all
indebtedness, liabilities and obligations of such Person for borrowed money, (b)
all indebtedness, liabilities and obligations of such Person evidenced by bonds,
notes, debentures or other similar instruments, (c) all indebtedness,
liabilities and obligations of such Person to pay the deferred purchase price of
property or services, except trade accounts payable of such Person arising in
the ordinary course of business that are not past due by more than 90 days, (d)
all Capital Lease Obligations of such Person, (e) all Debt of others Guaranteed
by such Person, (f) all indebtedness, liabilities and obligations secured by a
Lien existing on Property owned by such Person, whether or not the indebtedness,
liabilities or obligations secured thereby have been assumed by such Person or
are non-recourse to such Person, (g) all reimbursement obligations of such
Person (whether contingent or otherwise) in respect of letters of credit,
bankers' acceptances, surety or other bonds and similar instruments, (h)
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all indebtedness, liabilities and obligations of such Person to redeem or retire
shares of Capital Stock of such Person, (i) all indebtedness, liabilities and
obligations of such Person under Interest Rate Protection Agreements, and (j)
all indebtedness, liabilities and obligations of such Person in respect of
unfunded vested benefits under any pension plans.
"Default" means an Event of Default or the occurrence of an event or
condition which with notice or lapse of time or both would become an Event of
Default.
"Default Rate" means, in respect of any principal of any Loan at all times
during which any Default has occurred and is continuing or in respect of any
other amount payable by the Borrower under this Agreement or any other Loan
Document which is not paid when due (whether at stated maturity, by acceleration
or otherwise), a rate per annum during the period of such Default or during the
period commencing on the due date of such other amount until such other amount
is paid in full, respectively, equal to the lesser of (a) the sum of three
percent (3.00%) plus the Base Rate as in effect from time to time plus the
Applicable Margin for Base Rate Loans or (b) the Maximum Rate; provided,
however, that (i) if such amount in default is principal of a Eurodollar Loan
and the due date is a day other than the last day of an Interest Period
therefor, the "Default Rate" for such principal shall be, for the period from
and including the due date and to but excluding the last day of the Interest
Period therefor, the lesser of the rate per annum equal to (A) the sum of three
percent (3.00%) plus the interest rate for such Eurodollar Loan for such
Interest Period as provided in clause (ii) of Section 2.4(a) hereof or (B) the
Maximum Rate and, thereafter, the rate provided for above in this definition.
"Dollars" and "$" mean lawful money of the U.S.
"EBITDA" means, for any period, without duplication, the sum of the
following for the Borrower and its Consolidated Subsidiaries for such period
determined on a consolidated basis in accordance with GAAP: (a) Adjusted Net
Income, plus (b) Consolidated Interest Expense, plus (c) income and franchise
taxes to the extent deducted in determining Adjusted Net Income, plus (d)
depreciation and amortization expense and other non-cash, non-tax items to the
extent deducted in determining Adjusted Net Income, minus (e) non-cash income
(or losses) to the extent included in determining Adjusted Net Income.
"Eligible Assignee" means (a) any Affiliate of a Lender, (b) any
commercial bank, savings and loan association, savings bank, finance company,
insurance company, pension fund, mutual fund or other financial institution
(whether a corporation, partnership or other entity) which has been approved by
the Administrative Agent as a Lender under this Agreement or (c) any other
entity approved by the Administrative Agent which is (or which is managed by a
manager which manages funds which are) primarily engaged in making, purchasing
or otherwise investing in commercial loans or extending, or investing in
extensions of, credit for its own account in the ordinary course of its
business; provided, however, that (i) Eligible Assignee shall not include any
Affiliate of the Borrower and (ii) Eligible Assignee shall not include any
business competitor of the Borrower except after the occurrence and during the
continuance of an Event of Default.
"Environmental Law" means any federal, state, provincial, local or foreign
law, statute, code or ordinance, principle of common law, rule or regulation, as
well as any Permit, order, decree,
CREDIT AGREEMENT - Page 6
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judgment or injunction issued, promulgated, approved or entered thereunder,
relating to pollution or the protection, cleanup or restoration of the
environment or natural resources, or to the public health or safety, or
otherwise governing the generation, use, handling, collection, treatment,
storage, transportation, recovery, recycling, discharge or disposal of Hazardous
Materials, including, without limitation as to U.S. laws, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42 ▇.▇.▇.▇▇.
9601 et seq., the Superfund Amendment and Reauthorization Act of 1986, 99-499,
100 Stat. 1613, the Resource Conservation and Recovery Act of 1976, 42 U. S.
C.ss.6901 et seq., the Occupational Safety and Health Act, 29 U S.C.ss.651 et
seq., the Clean Air Act, 42 ▇.▇.▇.▇▇. 7401 et seq., the Clean Water Act, 33 U.
S. C.ss.1251 et seq., the Emergency Planning and Community Right to Know Act, 42
U. S. C.ss.11001 et seq., the Federal Insecticide, Fungicide and Rodenticide
Act, 7 U.S.C.ss.136 et seq., and the Toxic Substances Control Act, 15
U.S.C.ss.2601 et seq., and any state or local counterparts.
"Environmental Liabilities" means, as to any Person, all liabilities,
obligations, responsibilities, Remedial Actions, losses, damages, punitive
damages, consequential damages, treble damages, costs and expenses (including,
without limitation, all reasonable fees, disbursements and expenses of counsel,
expert and consulting fees and costs of investigation and feasibility studies),
fines, penalties, sanctions and interest incurred as a result of any claim or
demand, by any Person, whether based in contract, tort, implied or express
warranty, strict liability or criminal, penal or civil statute, including,
without limitation, any Environmental Law, Permit, order or agreement with any
Governmental Authority or other Person, arising from environmental, health or
safety conditions or the Release or threatened Release of a Hazardous Material
into the environment.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations and published interpretations
thereunder.
"ERISA Affiliate" means any corporation or trade or business which is a
member of a group of entities, organizations or employers of which a Loan Party
is also a member and which is treated as a single employer within the meaning of
Sections 414(b), (c), (m) or (o) of the Code.
"Eurodollar Loans" means Loans that bear interest at rates based upon the
Eurodollar Rate or the Adjusted Eurodollar Rate.
"Eurodollar Rate" means, for any Eurodollar Loan for any Interest Period
therefor, the rate per annum (rounded upwards, if necessary, to the nearest 1/16
of 1%) appearing on Telerate Page 3750 (or any successor page) as the London
interbank offered rate for deposits in Dollars in the approximate amount of the
proposed Eurodollar Loan at approximately 11:00 a.m. (London time) two Business
Days prior to the first day of such Interest Period for a term comparable to
such Interest Period. If such rate ceases to be available from Telerate News
Service, the Eurodollar Rate shall be determined by the Administrative Agent in
good faith from another financial reporting service, which service shall be
reasonably acceptable to the Borrower.
"Event of Default" has the meaning specified in Section 11.1.
"Excess Cash Flow" means, for any fiscal year and without duplication,
EBITDA for such fiscal year minus (a) taxes payable in cash for such fiscal
year, (b) all principal and cash interest
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payments on Debt made during such fiscal year whether optional, mandatory or
scheduled payments, and (c) Capital Expenditures (but only to the extent paid in
cash and not financed) made during such fiscal year.
"Excess Proceeds Amount" means as specified in Section 2.7(a).
"Exchange Act" means the Securities Exchange Act of 1934, as amended (or
any successor act), and the rules and regulations thereunder (or respective
successors thereto).
"FCC" means the Federal Communications Commission and any successor
agency.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest one-sixteenth of one percent (1/16 of 1%))
equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published by the Federal Reserve Bank of New York
on the Business Day next succeeding such day, provided that (a) if the day for
which such rate is to be determined is not a Business Day, the Federal Funds
Rate for such day shall be such rate on such transactions on the next preceding
Business Day as so published on the next succeeding Business Day and (b) if such
rate is not so published on such next succeeding Business Day, the Federal Funds
Rate for any day shall be the average rate which would be charged to the
Reference Bank on such day on such transactions as determined by the
Administrative Agent.
"GAAP" means generally accepted accounting principles, applied on a
consistent basis, as set forth in Opinions of the Accounting Principles Board of
the American Institute of Certified Public Accountants and/or in statements of
the Financial Accounting Standards Board and/or their respective successors and
which are applicable in the circumstances as of the date in question. Accounting
principles are applied on a "consistent basis" when the accounting principles
applied in a current period are comparable in all material respects to those
accounting principles applied in a preceding period.
"Governmental Authority" means any nation or government, any state,
provincial or political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Governmental Requirement" means any law, statute, code, ordinance, order,
rule, regulation, judgment, decree, injunction, franchise, Permit, certificate,
license, authorization or other directive or requirement of any federal, state,
county, municipal, parish, provincial or other Governmental Authority or any
department, commission, board, court, agency or any other instrumentality of any
of them.
"Guarantee" by any Person means any obligation, contingent or otherwise,
of such Person directly or indirectly guaranteeing any Debt or other obligation
of any other Person and, without limiting the generality of the foregoing, any
indebtedness, liability or obligation, direct or indirect, contingent or
otherwise, of such Person (a) to purchase or pay (or advance or supply funds for
the purchase or payment of) such Debt or other obligation (whether arising by
virtue of partnership arrangements, by agreement to keep-well, to purchase
assets, goods, securities or services, to
CREDIT AGREEMENT - Page 8
15
take-or-pay or to maintain financial statement conditions or otherwise) or (b)
entered into for the purpose of assuring in any other manner the obligee of such
Debt or other indebtedness, liability or obligation as to the payment thereof or
to protect the obligee against loss in respect thereof (in whole or in part),
provided that the term Guarantee shall not include endorsements for collection
or deposit in the ordinary course of business. The term "Guarantee" used as a
verb has a corresponding meaning. The amount of any Guarantee shall be deemed to
be an amount equal to the stated or determinable amount of the primary
obligation in respect of which such Guarantee is made or, if not stated or
determinable, the maximum anticipated liability in respect thereof (assuming
such Person is required to perform thereunder).
"Guarantor" means as specified in the initial paragraph of this Agreement.
"Guaranty" means a guaranty agreement guaranteeing payment and performance
of the Obligations in form and substance satisfactory to the Administrative
Agent executed by a Guarantor in favor of the Administrative Agent and the
Lenders, and any and all amendments, modifications, supplements, renewals,
extensions or restatements thereof.
"Hazardous Material" means any substance, product, liquid, waste,
pollutant, chemical, contaminant, insecticide, pesticide, gaseous or solid
matter, organic or inorganic matter, fuel, micro-organisms, ray, odor,
radiation, energy, vector, plasma, constituent or material which (a) is or
becomes listed, regulated or addressed under any Environmental Law or (b) is, or
is deemed to be, alone or in any combination, hazardous, hazardous waste, toxic,
a pollutant, a deleterious substance, a contaminant or a source of pollution or
contamination under any Environmental Law, including, without limitation,
asbestos, petroleum, underground storage tanks (whether empty or containing any
substance) and polychlorinated biphenyls.
"Insurance Recovery" means, with respect to any Collateral and any single
occurrence or related occurrences with respect thereto, the receipt or
constructive receipt by either Loan Party, or the payment by an insurance
company to the Administrative Agent, of proceeds of any such Collateral or
casualty insurance.
"Intellectual Property" means any U.S. or foreign patents, patent
applications, trademarks, trade names, service marks, brand names, logos and
other trade designations (including unregistered names and marks), trademark and
service ▇▇▇▇ registrations and applications, copyrights and copyright
registrations and applications, inventions, invention disclosures, protected
formulae, formulations, processes, methods, trade secrets, computer software,
computer programs and source codes, manufacturing research and similar technical
information, engineering know-how, customer and supplier information, assembly
and test data drawings or royalty rights.
"Inter-Company Note" has the meaning set forth in Section 2.10.
"Interest Period" means, with respect to any Eurodollar Loan, each period
commencing on the date such Loan is made or Converted from a Base Rate Loan or
(if Continued) the last day of the next preceding Interest Period with respect
to such Loan, and ending on the numerically corresponding day in the first,
second, third or sixth calendar month thereafter, as the Borrower may select as
provided in Section 2.9 hereof, except that each such Interest Period which
commences on
CREDIT AGREEMENT - Page 9
16
the last Business Day of a calendar month (or on any day for which there is no
numerically corresponding day in the appropriate subsequent calendar month)
shall end on the last Business Day of the appropriate subsequent calendar month.
Notwithstanding the foregoing: (a) each Interest Period which would otherwise
end on a day which is not a Business Day shall end on the next succeeding
Business Day (or, if such succeeding Business Day falls in the next succeeding
calendar month, on the next preceding Business Day); (b) any Interest Period
which would otherwise extend beyond the Maturity Date shall end on the Maturity
Date; (c) no more than ten Interest Periods for Eurodollar Loans shall be in
effect at the same time; (d) no Interest Period shall have a duration of less
than one month and, if the Interest Period for any Eurodollar Loans would
otherwise be a shorter period, such Loans shall not be available hereunder; and
(e) no Interest Period for a Term Loan may commence before, and end after, any
principal payment date unless, after giving effect thereto, the aggregate
principal amount of the Eurodollar Loans having Interest Periods that end after
such principal payment date shall be equal to or less than the amount of the
applicable Loans scheduled to be outstanding hereunder after such principal
payment date.
"Interest Rate Protection Agreements" means, with respect to the Borrower,
an interest rate swap, cap or collar agreement or similar arrangement between
the Borrower and one or more Lenders providing for the transfer or mitigation of
interest rate risks either generally or under specified contingencies.
"▇▇▇▇▇ Holders" means (a) ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇▇▇▇▇ and
(b) any spouse, parent, sibling, child or grandchild of any of the aforesaid
individuals (in each case, whether such relationship arises from birth, adoption
or through marriage) or any trust established for the benefit of any such
individuals or any spouse, parent, sibling, child or grandchild of any such
individuals (in each case whether such relationship arises from birth, adoption
or through marriage).
"Lender" and "Lenders" means as specified in the initial paragraph of this
Agreement.
"Lien" means, with respect to any Property, any mortgage or deed of trust,
pledge, hypothecation, assignment, deposit arrangement, security interest, tax
lien, financing statement, pledge, charge, hypothecation or other lien, charge,
easement (other than any easement not materially impairing usefulness),
encumbrance, preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever on or with respect to such Property
(including, without limitation, any conditional sale or other title retention
agreement having substantially the same economic effect as any of the
foregoing).
"Loan Documents" means this Agreement, the Notes, the Security Documents,
the Inter-Company Note, the Administrative Agent's Letter and all other
agreements, documents, instruments and certificates now or hereafter executed
and/or delivered pursuant to or in connection with any of the foregoing, and any
and all amendments, modifications, supplements, renewals, extensions or
restatements thereof.
"Loan Party" means the Borrower or the Guarantor and "Loan Parties" means
both of such Persons.
"Loans" means the Tranche A Loans and the Tranche B Loans, and "Loan"
means any of such loans.
CREDIT AGREEMENT - Page 10
17
"Material Adverse Effect" means any event, development or circumstance
that has had or could reasonably be expected to have a material adverse effect
on (a) the business, assets, financial condition, results of operations or
prospects of either Loan Party individually or of the Borrower and its
Subsidiaries taken as a whole, (b) the validity or enforceability of any of the
Loan Documents or the rights and remedies of the Administrative Agent and the
Lenders thereunder, (c) the ability of either Loan Party to pay and perform its
indebtedness, liabilities and/or obligations under any of the Loan Documents, or
(d) the value of Collateral available to the Administrative Agent and the
Lenders after giving effect to Liens in favor of other Persons.
"Material Contracts" means, as to either Loan Party, any supply, purchase,
service, employment, tax, indemnity, shareholder or other agreement or contract
for which the aggregate amount or value of services performed or to be performed
for or by, or funds or other Property transferred or to be transferred to or by,
either Loan Party to such agreement or contract, or by which either Loan Party
or any of its Properties is otherwise bound, during any fiscal year of the
Borrower exceeds $1,000,000 (or the equivalent amount in any currency) and any
and all amendments, modifications, supplements, renewals or restatements
thereof.
"Maturity Date" means the Tranche A Maturity Date or the Tranche B
Maturity Date (as applicable, based upon the context in which such term
appears).
"Maximum Rate" means, with respect to any Lender, the maximum non-usurious
interest rate or an amount computed in reference to such rate (as applicable),
if any, that any time or from time to time may be contracted for, taken,
reserved, charged or received with respect to the particular Obligations as to
which such rate is to be determined, payable to such Lender pursuant to this
Agreement or any other Loan Document, under laws applicable to such Lender which
are presently in effect or, to the extent allowed by law, under such applicable
laws which may hereafter be in effect and which allow a higher maximum
non-usurious interest rate than applicable laws now allow. The Maximum Rate
shall be calculated in a manner that takes into account any and all fees,
payments and other charges in respect of the Loan Documents that constitute
interest under applicable law. Each change in any interest rate provided for
herein based upon the Maximum Rate resulting from a change in the Maximum Rate
shall take effect without notice to the Borrower at the time of such change in
the Maximum Rate.
"Monthly Date" means the last day of each month of each year the first of
which shall be March 31, 1999.
"Multiemployer Plan" means a multiemployer plan defined as such in Section
3(37) of ERISA to which contributions have been made by or are required from the
Borrower or any ERISA Affiliate since 1974 and which is covered by Title IV of
ERISA.
"Net Proceeds" means, with respect to any Collateral Disposition, (a) the
gross amount of cash received by either Loan Party from such Collateral
Disposition, minus (b) the amount, if any, of all taxes paid or payable by such
Loan Party directly resulting from such Collateral Disposition (including the
amount, if any, estimated by the Borrower in good faith at the time of such
Collateral Disposition for taxes payable by either Loan Party on or measured by
net income or gain resulting
CREDIT AGREEMENT - Page 11
18
from such Collateral Disposition), minus (c) the reasonable out-of-pocket costs
and expenses incurred by either Loan Party in connection with such Collateral
Disposition (including reasonable brokerage fees paid to a Person other than an
Affiliate of the Borrower) excluding any fees or expenses paid to an Affiliate
of the Borrower, minus (d) amounts applied to the repayment of indebtedness
(other than the Obligations) secured by any Permitted Lien (if any) on the
Collateral subject to the Collateral Disposition. "Net Proceeds" with respect to
any Collateral Disposition shall also include proceeds (after deducting any
amounts specified in clauses (b), (c) and (d) of the preceding sentence) of
insurance with respect to any actual or constructive loss of Collateral, an
agreed or compromised loss of Collateral or the taking of any Collateral under
the power of eminent domain and condemnation awards and awards in lieu of
condemnation for the taking of Collateral under the power of eminent domain.
"Network" means the fiber-optic network constructed by or on behalf of the
Borrower and owned and operated by the Borrower and its Subsidiaries and located
in the state of New York, the other areas of northeastern United States and the
southeast region of Canada.
"Nortel Networks Equipment" means all equipment sold to the Borrower
pursuant to the Supply Agreement, including, without limitation, the optical
equipment, switches, access nodes and related software.
"Nortel Networks Goods and Services" means sales, installation and
commissioning of Nortel Networks equipment and related software, and project
management, system design and services performed by Nortel Networks personnel
pursuant to the Supply Agreement.
"Nortel Networks" means Northern Telecom Inc., a Delaware corporation.
"Notes" means the Tranche A Notes and the Tranche B Notes, in the form of
Exhibit B-1 and Exhibit B-2, respectively, hereto, made by the Borrower
evidencing the Loans and any and all amendments, modifications, supplements,
renewals, extensions or restatements thereof and all substitutions therefor
(including promissory notes issued by the Borrower pursuant to Section 13.8),
and "Note" means any such promissory note.
"Notice of Borrowing" means as specified in Section 2.9.
"Obligations" means any and all (a) indebtedness, liabilities and
obligations of the Borrower or the Guarantor to the Administrative Agent and the
Lenders, or any of them, evidenced by and/or arising pursuant to any of the Loan
Documents (including, without limitation, this Agreement and the Notes), now
existing or hereafter arising, whether direct, indirect, related, unrelated,
fixed, contingent, liquidated, unliquidated, joint, several or joint and
several, including, without limitation, (i) the obligations of the Borrower to
repay the Loans, to pay interest on the Loans (including, without limitation,
interest accruing after any, if any, bankruptcy, insolvency, reorganization or
other similar filing) and to pay all fees, indemnities, costs and expenses
(including attorneys' fees) provided for in the Loan Documents, (ii) the
obligations of the Guarantor under its Guarantee, and (iii) the indebtedness
constituting the Loans and such interest, fees, indemnities, costs and expenses,
and (b) indebtedness, liabilities and obligations of the Borrower or the
Guarantor under any and all Interest Rate Protection Agreements that it may
enter into with any Lender with the prior written consent of the Administrative
Agent and the Required Lenders.
CREDIT AGREEMENT - Page 12
19
"Payor" means as specified in Section 3.4.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to all or any of its functions under ERISA.
"Pension Plan" means an employee pension benefit plan as defined in
Section 3(2) of ERISA (including a Multiemployer Plan) which is subject to the
funding requirements under Section 302 of ERISA or Section 412 of the Code, in
whole or in part, and which is maintained or contributed to currently or at any
time within the six years immediately preceding the Closing Date or, in the case
of a Multiemployer Plan, at any time since September 2, 1974, by any Borrower or
any ERISA Affiliate for employees of any Borrower or any ERISA Affiliate.
"Permit" means any permit, certificate, approval, order, license,
right-of-way (whether an easement, contract or agreement in any form) or other
authorization.
"Permitted Liens" mean:
(a) Liens on Property other than the Collateral;
(b) Liens securing the Obligations in favor of the Administrative
Agent (for the benefit of the Administrative Agent and the Lenders)
pursuant to the Loan Documents;
(c) Encumbrances consisting of easements, rights-of-way, zoning
restrictions or other restrictions on the use of real Property or
imperfections to title that do not (individually or in the aggregate)
materially affect the value of the Property encumbered thereby or
materially impair the ability of the Borrower or any of its Subsidiaries
to use such Property in its businesses, and none of which is violated in
any material respect by existing or proposed structures or land use;
(d) Liens for taxes, assessments or other governmental charges that
are not delinquent or which are being contested in good faith by
appropriate proceedings, which proceedings have the effect of preventing
the forfeiture or sale of the Collateral subject to such Liens, and for
which adequate reserves have been established;
(e) Liens of mechanics, materialmen, warehousemen, carriers,
landlords or other similar statutory Liens securing obligations that are
not yet due and are incurred in the ordinary course of business or which
are being contested in good faith by appropriate proceedings, which
proceedings have the effect of preventing the forfeiture or sale of the
Collateral subject to such Liens, and for which adequate reserves have
been established;
(f) Liens resulting from good faith deposits to secure payment of
worker's compensation or other social security programs or to secure the
performance of tenders, statutory obligations, surety and appeal bonds,
bids, contracts (other than for payment of Debt) or leases, all in the
ordinary course of business; and
CREDIT AGREEMENT - Page 13
20
(g) Any extension, renewal or replacement of any of the foregoing.
"Person" means any individual, corporation, trust, association, company,
partnership, joint venture, limited liability company, joint stock company,
Governmental Authority or other entity.
"Plan" means any employee benefit plan as defined in Section 3(3) of ERISA
established or maintained or contributed to by either Loan Party or any ERISA
Affiliate, including any Pension Plan.
"Principal Office" means the principal office of the Administrative Agent
in Richardson, Texas, presently located at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇.
"Prohibited Transaction" means any transaction set forth in Section 406 of
ERISA or Section 4975 of the Code.
"Property" means property of all kinds, real, personal or mixed, tangible
or intangible (including, without limitation, all rights relating thereto),
whether owned or acquired on or after the Closing Date.
"Quarterly Date" means the last day of each March, June, September and
December of each year, the first of which shall be June 30, 1999.
"Reference Bank" means Citibank, N.A.
"Register" means as specified in Section 13.8(d).
"Registered Note" means as specified in Section 2.2(b).
"Registered Note Register" means as specified in Section 13.8(h).
"Regulation D" means Regulation D of the Board of Governors of the Federal
Reserve System as the same may be amended or supplemented from time to time.
"Regulatory Change" means, with respect to any Lender, any change after
the Closing Date in any U.S. federal or state or foreign laws or regulations
(including Regulation D) or the adoption or making after such date of any
interpretations, directives or requests applying to a class of lenders including
such Lender of or under any U.S. federal or state or foreign laws or regulations
(whether or not having the force of law) by any Governmental Authority charged
with the interpretation or administration thereof.
"Release" means, as to any Person, any release, spill, emission, leaking,
pumping, injection, deposit, discharge, disposal, dispersement, leaching or
migration of Hazardous Materials into the indoor or outdoor environment or into
or out of Property owned by such Person, including, without limitation, the
movement of Hazardous Materials through or in the air, soil, surface water or
ground water.
CREDIT AGREEMENT - Page 14
21
"Remedial Action" means all actions required to (a) cleanup, remove,
respond to, treat or otherwise address Hazardous Materials in the indoor or
outdoor environment, (b) prevent the Release or threat of Release or minimize
the further Release of Hazardous Materials so that they do not migrate or
endanger or threaten to endanger public health or welfare or the indoor or
outdoor environment, (c) perform studies and investigations on the extent and
nature of any actual or suspected contamination, the remedy or remedies to be
used or health effects or risks of such contamination, or (d) perform
post-remedial monitoring, care or remedy of a contaminated site.
"Reportable Event" means any of the events set forth in Section 4043(b) of
ERISA other than any such event for which the 30-day notice requirement has been
waived in regulations issued by the PBGC.
"Required Lenders" means, at any date of determination, Lenders holding at
least two-thirds (in Dollar amount) of the sum of (a) the outstanding principal
amount of the Loans, plus (b) the principal amount of the outstanding
Commitments.
"Required Payment" means as specified in Section 3.4.
"Reserve Requirement" means, for any Eurodollar Loan of any Lender for any
Interest Period therefor, the maximum rate at which reserves (including any
marginal, supplemental or emergency reserves) are required to be maintained
during such Interest Period under any regulations of the Board of Governors of
the Federal Reserve System (or any successor) by such Lender for deposits
exceeding $1,000,000 against "Eurocurrency Liabilities" as such term is used in
Regulation D. Without limiting the effect of the foregoing, the Reserve
Requirement shall reflect any other reserves required to be maintained by such
Lenders by reason of any Regulatory Change against (a) any category of
liabilities which includes deposits by reference to which the Eurodollar Rate or
the Adjusted Eurodollar Rate is to be determined or (b) any category of
extensions of credit or other assets which include Eurodollar Loans.
"Responsible Officer" means, as to the Borrower, the chief executive
officer, the president, any vice president, the chief financial officer, the
chief operating officer or the treasurer of such Person.
"Restricted Payment" means (a) any dividend or other distribution (whether
in cash, Property or obligations), direct or indirect, on account of (or the
setting apart of money for a sinking or other analogous fund for) any shares of
any class of Capital Stock of the Borrower or any of its Subsidiaries now or
hereafter outstanding, except a dividend payable solely in shares of that class
of stock to the holders of that class; (b) any redemption, conversion, exchange,
retirement, sinking fund or similar payment, purchase or other acquisition for
value, direct or indirect, of any shares of any class of Capital Stock of the
Borrower or any of its Subsidiaries now or hereafter outstanding; (c) any loan,
advance or payment to any officer, director or shareholder of the Borrower or
any of its Subsidiaries (other than a shareholder consisting of the Borrower or
a Consolidated Subsidiary of the Borrower), exclusive of reasonable compensation
paid to officers or directors paid in the ordinary course of business; and (d)
any payment made to retire, or to obtain the surrender of, any outstanding
warrants, options or other rights to acquire shares of any class of Capital
Stock of the Borrower or any of its Subsidiaries now or hereafter outstanding.
CREDIT AGREEMENT - Page 15
22
"Security Agreements" means security agreements, pledge agreements,
securities pledge agreements and other agreements, documents or instruments
evidencing or creating a Lien as security for the Obligations or any portion
thereof in form and substance satisfactory to the Administrative Agent executed
by either Loan Party, in favor of the Administrative Agent for the benefit of
the Administrative Agent and the Lenders, and any such agreement, document or
instrument subsequently executed in accordance or connection with this Agreement
or any other Loan Document, and any and all amendments, modifications,
supplements, renewals, extensions or restatements thereof.
"Security Documents" means the Security Agreements, as they may be
amended, modified, supplemented, renewed, extended or restated from time to
time, and any and all other agreements, deeds of trust, mortgages, chattel
mortgages, security agreements, pledges, guaranties, assignments of proceeds,
assignments of income, assignments of contract rights, assignments of
partnership interests, assignments of royalty interests, assignments of
performance or other collateral assignments, subordination agreements,
undertakings and other agreements, documents, instruments and financing
statements now or hereafter executed and/or delivered by any Person in
connection with or as security or assurance for the payment or performance of
the Obligations or any part thereof.
"Solvent" means, with respect to any Person as of the date of any
determination, that on such date (a) the fair value of the Property of such
Person (both at fair valuation and at present fair saleable value) is greater
than the total liabilities, including, without limitation, contingent
liabilities, of such Person, (b) the present fair saleable value of the assets
of such Person is not less than the amount that will be required to pay the
probable liability of such Person on its debts as they become absolute and
matured, (c) such Person is able to realize upon its assets and pay its debts
and other liabilities, contingent obligations and other commitments as they
mature in the normal course of business, (d) such Person does not intend to, and
does not believe that it will, incur debts or liabilities beyond such Person's
ability to pay as such debts and liabilities mature, and (e) such Person is not
engaged in business or a transaction, and is not about to engage in business or
a transaction, for which such Person's Property would constitute unreasonably
small capital after giving due consideration to current and anticipated future
capital requirements and current and anticipated future business conduct and the
prevailing practice in the industry in which such Person is engaged. In
computing the amount of contingent liabilities at any time, such liabilities
shall be computed at the amount which, in light of the facts and circumstances
existing at such time, represents the amount that can reasonably be expected to
become an actual or matured liability.
"Subsidiary" means, with respect to any Person, any corporation or other
entity of which at least a majority of the outstanding shares of stock or other
ownership interests having by the terms thereof ordinary voting power to elect a
majority of the board of directors (or Persons performing similar functions) of
such corporation or entity (irrespective of whether or not at the time, in the
case of a corporation, stock of any other class or classes of such corporation
shall have or might have voting power by reason of the happening of any
contingency) is at the time directly or indirectly owned or controlled by such
Person or one or more of its Subsidiaries or by such Person and one or more of
its Subsidiaries.
CREDIT AGREEMENT - Page 16
23
"Supply Agreement" means the that certain Agreement for Purchases and
License of Nortel Networks Products and Services dated as of February 26, 1999,
by and between the Guarantor and Nortel Networks, as amended, supplemented or
restated from time to time.
"Telergy/▇▇▇▇ Canada Account" means that certain account to be established
by the Borrower into which the Borrower will direct the ▇▇▇▇ Canada parties to
the ▇▇▇▇ Canada Fiber Agreement to remit payments due under the ▇▇▇▇ Canada
Fiber Agreement, except for payments due to Telergy Canada, Inc., which shall be
remitted to Telergy Canada, Inc. and will be deposited in the Telergy/▇▇▇▇
Canada Account by Telergy Canada, Inc. within three Business Days.
"Total Debt" means, as of any date, the aggregate principal amount of all
Debt of the Borrower and its Consolidated Subsidiaries outstanding, determined
on a consolidated basis.
"Tranche A Commitment" means, as to any Tranche A Lender, the obligation
of such Tranche A Lender to make or continue Tranche A Loans hereunder in an
aggregate principal amount up to but not exceeding the amount set forth opposite
the name of such Tranche A Lender on the signature pages hereto under the
heading "Tranche A Commitment" or, if such Tranche A Lender is a party to an
Assignment and Acceptance, the amount of the "Tranche A Commitment" set forth in
the most recent Assignment and Acceptance of such Tranche A Lender, as the same
may be reduced or terminated pursuant to Section 2.13 or 11.2, and "Tranche A
Commitments" means such obligations of all Tranche A Lenders. As of the Closing
Date, the aggregate principal amount of the Tranche A Commitments is
$30,000,000.
"Tranche A Commitment Termination Date" means the earlier to occur of (a)
the third anniversary of the Closing Date or (b) the initial date upon which the
Tranche A Loans have become fully funded in an aggregate amount equal to the
Tranche A Commitments (as such Commitments may be reduced or terminated pursuant
to Section 2.13 or 11.2).
"Tranche A Lenders" means the Lenders who hold Tranche A Loans or who have
Tranche A Commitments.
"Tranche A Loans" means as specified in Section 2.1(a).
"Tranche A Maturity Date" means the sixth anniversary of the Tranche A
Commitment Termination Date.
"Tranche A Notes" means the promissory notes evidencing the Tranche A
Loans executed in accordance with Section 2.2.
"Tranche B Commitment" means, as to any Tranche B Lender, the obligation
of such Tranche B Lender to make or continue Tranche B Loans hereunder in an
aggregate principal amount up to but not exceeding the amount set forth opposite
the name of such Tranche B Lender on the signature pages hereto under the
heading "Tranche B Commitment" or, if such Tranche B Lender is a party to an
Assignment and Acceptance, the amount of the "Tranche B Commitment" set forth in
the most recent Assignment and Acceptance of such Tranche B Lender, as the same
may be reduced or terminated pursuant to Section 2.13 or 11.2, and "Tranche B
Commitments" means such
CREDIT AGREEMENT - Page 17
24
obligations of all Tranche B Lenders. As of the Closing Date, the aggregate
principal amount of the Tranche B Commitments is $15,000,000.
"Tranche B Commitment Termination Date" means the earlier to occur of (a)
January 31, 2000, or (b) the initial date upon which the Tranche B Loans have
become fully funded in an aggregate amount equal to the Tranche B Commitments
(as such Commitments may be reduced or terminated pursuant to Section 2.13 or
11.2).
"Tranche B Lenders" means the Lenders who hold Tranche B Loans or who have
Tranche B Commitments.
"Tranche B Loans" means as specified in Section 2.1(b).
"Tranche B Maturity Date" means January 31, 2000.
"Tranche B Notes" means the promissory notes evidencing the Tranche B
Loans executed in accordance with Section 2.2.
"Type" means any type of Loan (i.e., a Base Rate Loan or Eurodollar Loan).
"UCC" means the Uniform Commercial Code as in effect in the State of New
York and/or any other jurisdiction, the laws of which may be applicable to or in
connection with the creation, perfection or priority of any Lien on any
Collateral created pursuant to any Security Document.
"U.S." means the United States of America.
"U.S. Person" means a citizen or resident of the U.S., a corporation,
partnership or other entity created or organized in or under any laws of the
U.S. or any estate or trust that is subject to U.S. Federal income taxation
regardless of the source of its income.
"U.S. Taxes" means any present or future tax, assessment or other charge
or levy imposed by or on behalf of the U.S. or any taxing authority thereof.
"Vendor" means Nortel Networks in its capacity as vendor under the Supply
Agreement.
"Voting Stock" of any Person means Capital Stock of such Person which
ordinarily has voting power for the election of directors, managers or general
partners (or persons performing similar functions) of such Person, whether at
all times or only for so long as no senior class of securities has such voting
power by reason of any contingency.
"Year 2000 Compliant" means that (a) the services, products or other
item(s) at issue accurately process, provide and/or receive all date/time data
(including calculating, comparing, sequencing, processing and outputting)
within, from, into and between centuries (including the twentieth and
twenty-first centuries and the years 1999 and 2000), including leap year
calculations, and (b) neither the performance nor the functionality nor the
business' provision of the services, products and other item(s) at issue will be
affected by any dates/times prior to, on, after or spanning January 1, 2000. The
design of the services, products and other item(s) at issue to ensure compliance
CREDIT AGREEMENT - Page 18
25
with the "year 2000" representations and warranties and covenants contained in
this Agreement includes proper date/time data century recognition and
recognition of 1999 and 2000, calculations that accommodate single century and
multi-century formulae and date/time values before, on, after and spanning
January 1, 2000, and date/time data interface values that reflect the century,
1999 and 2000. In particular, but without limitation, such design means that (i)
no value for current date/time will cause any error, interruption or decreased
performance in or for such services, products and other item(s), (ii) all
manipulations of date and time related data (including calculating, comparing,
sequencing processing and outputting) will produce correct results for all valid
dates and times when used independently or in combination with other services,
products and/or items, (iii) date/time elements in interfaces and data storage
will specify the century to eliminate date ambiguity without human intervention,
including leap year calculations, (iv) where any date/time element is
represented without a century, the correct century will be unambiguous for all
manipulations involving that element, (v) authorization codes, passwords and
zaps (purge functions) will function normally and in the same manner during,
prior to, on and after January 1, 2000, including the manner in which they
function with respect to expiration dates and CPU serial numbers, and (vi) the
business' supply of the services, products and other item(s) will not be
materially interrupted, delayed, decreased or otherwise affected by the advent
of the year 2000.
Section 1.2 Other Definitional Provisions. All definitions contained in
this Agreement are equally applicable to the singular and plural forms of the
terms defined. The words "hereof", "herein" and "hereunder" and words of similar
import referring to this Agreement refer to this Agreement as a whole and not to
any particular provision of this Agreement. The term "continuing",
"continuation" or "continuance" means, in reference to any Default or Event of
Default that has occurred, that such Default or Event of Default has not been
either cured to the reasonable satisfaction of the Administrative Agent within
the applicable grace period (if any) specified in this Agreement or the other
Loan Documents (as applicable) or waived in writing by the requisite Lenders in
accordance with Section 13.11. Unless otherwise specified, all Article and
Section references pertain to this Agreement. Terms used herein that are defined
in the UCC, unless otherwise defined herein, shall have the meanings specified
in the UCC. All references in this Agreement to any agreement shall be deemed to
mean and refer to such agreement as it may be amended, modified or supplemented
from time to time if (but only if) such amendment, modification or supplement
has been approved by the Administrative Agent and the Required Lenders, is
expressly referred to in such reference or is otherwise expressly permitted by
the terms of this Agreement.
Section 1.3 Accounting Terms and Determinations.
(a) All accounting terms not specifically defined herein shall be
construed in accordance with GAAP (subject to year end adjustments, if
applicable) consistent with such accounting principles applied in the
preparation of the audited financial statements referred to in Section 7.2(a).
All financial information delivered to the Administrative Agent pursuant to
Section 8.1 shall be prepared in accordance with GAAP (subject to year end
adjustments, if applicable) applied on a basis consistent with such accounting
principles applied in the preparation of the audited financial statements of
such Person referred to in Section 7.2 or in accordance with Section 8.7.
CREDIT AGREEMENT - Page 19
26
(b) The Borrower shall deliver to the Administrative Agent and the
Lenders, at the same time as the delivery of any annual or quarterly financial
statement under Section 8.1, (i) a description, in reasonable detail, of any
material variation between the application of GAAP employed in the preparation
of the next preceding annual or quarterly financial statements as to which no
objection has been made in accordance with the last sentence of subsection (a)
preceding and (ii) reasonable estimates of the difference between such
statements arising as a consequence thereof.
(c) To enable the ready and consistent determination of compliance with
the covenants set forth in this Agreement, the Borrower will not change the last
day of its fiscal year from December 31 or the last days of the first three
fiscal quarters of the Borrower in each of its fiscal years from March 31, June
30 and September 30, respectively.
(d) Unless otherwise expressly provided herein to the contrary, all
references herein to the Closing Date shall be deemed to mean and refer to the
Closing Date after giving effect to all transactions which occur on or before
such date.
Section 1.4 Financial Covenants and Reporting. All financial statements
and reports required to be delivered pursuant to this Agreement and the other
Loan Documents, and all financial covenants (if any) contained in this
Agreement, shall be prepared or determined (as applicable) in accordance with
GAAP (except as may be expressly provided to the contrary herein) and, if and to
the extent that such statements, reports or covenants are to be prepared or
determined on a consolidated basis, shall be prepared or determined on a
consolidated basis for the Borrower and its Subsidiaries (except as may be
expressly provided to the contrary herein).
ARTICLE 2
Loans
Section 2.1 Commitments.
(a) Tranche A Loans. Subject to the terms and conditions of this Agreement
(including, without limitation, Section 2.13(a)), each Tranche A Lender
severally agrees to make one or more loans to the Borrower from time to time
from and including the Closing Date to but excluding the Tranche A Commitment
Termination Date up to but not exceeding the amount of such Tranche A Lender's
Tranche A Commitment as then in effect. (Such loans referred to in this Section
2.1(a) now or hereafter made by the Tranche A Lenders to the Borrower,
including, without limitation, such loans which remain outstanding after the
Tranche A Commitment Termination Date, are hereinafter collectively called the
"Tranche A Loans".) The Borrower may not reborrow the Tranche A Loans which have
been repaid.
(b) Tranche B Loans. Subject to the terms and conditions of this Agreement
(including, without limitation, Section 2.13(a)), each Tranche B Lender
severally agrees to make one or more loans to the Borrower from time to time
from and including the Closing Date to but excluding the Tranche B Commitment
Termination Date up to but not exceeding the amount of such Tranche B Lender's
Tranche B Commitment as then in effect. (Such loans referred to in this Section
2.1(b) now
CREDIT AGREEMENT - Page 20
27
or hereafter made by the Tranche B Lenders to the Borrower, including, without
limitation, such loans which remain outstanding after the Tranche B Commitment
Termination Date, are hereinafter collectively called the "Tranche B Loans".)
The Borrower may not reborrow the Tranche B Loans which have been repaid.
(c) Continuation and Conversion of Certain Loans. Subject to the terms and
conditions of this Agreement, the Borrower may borrow the Loans as Base Rate
Loans or Eurodollar Loans and, until the Maturity Date of such Loan, the
Borrower may Continue Eurodollar Loans or Convert Loans of one Type into Loans
of the other Type.
(d) Lending Offices. Loans of each Type made by each Lender shall be made
and maintained at such Lender's Applicable Lending Office for Loans of such
Type.
Section 2.2 Notes.
(a) Notes. Each of the Tranche A Loans and Tranche B Loans made by each
Lender shall be evidenced by a single promissory note of the Borrower in
substantially the form of Exhibit B-1 and Exhibit B-2, respectively, hereto
dated the Closing Date (or such later date on which such Lender becomes a party
to this Agreement), payable to the order of such Lender in a principal amount
equal to the sum of (i) the aggregate principal amount of such Loans of such
Lender plus (ii) the aggregate principal amount of the unfunded Commitment of
such Lender relating to such Loans as originally in effect. Each Lender is
hereby authorized by the Borrower to endorse on the schedule (or a continuation
thereof) attached to the Notes of such Lender, to the extent applicable, the
date, amount and Type of and the Interest Period for each applicable Loan made
by such Lender to the Borrower and the amount of each payment or prepayment of
principal of such Loan received by such Lender, provided that any failure by
such Lender to make any such endorsement shall not affect the obligations of the
Borrower under any such Note or this Agreement in respect of any such Loan.
(b) Registered Notes. Any Lender that is not a U.S. Person and that could
become completely exempt from withholding of U.S. Taxes in respect of payment of
any Obligations due to such Lender hereunder relating to any of its Loans if
such Loans were in registered form for U.S. Federal income tax purposes may
request the Borrower (through the Administrative Agent), and the Borrower agrees
thereupon, to exchange such Lender's Note evidencing its Loans for a promissory
note registered as provided in Section 13.8(h) hereof (a "Registered Note").
Registered Notes may not be exchanged for Notes that are not in registered form.
CREDIT AGREEMENT - Page 21
28
Section 2.3 Repayment of Loans.
(a) Tranche A Loans. The Borrower shall pay to the Administrative Agent
for the account of each Lender:
(i) the principal of the Tranche A Loans outstanding as of February
26, 2000 and borrowed between the Closing Date and such date in 12
quarterly installments, commencing on the March 31, 2000, and continuing
on each Quarterly Date thereafter through and including December 31, 2002;
(ii) the principal of the Tranche A Loans outstanding as of February
26, 2001 and borrowed between February 26, 2000 and such date in 12
quarterly installments, commencing on the March 31, 2001, and continuing
on each Quarterly Date thereafter through and including December 31, 2003;
and
(iii) the principal of the Tranche A Loans outstanding as of
February 26, 2002 and borrowed between February 26, 2001 and such date in
12 quarterly installments, commencing on the March 31, 2002, and
continuing on each Quarterly Date thereafter through and including
December 31, 2004;
each of which installments shall be in an amount equal to the percentage of the
principal amount set forth above as of such applicable date specified opposite
such installment in the following table:
-------------------------------------------------------------------
Percentage of the Principal Amount of
Principal Installment Applicable Loans Due and Payable
-------------------------------------------------------------------
1 8.33%
-------------------------------------------------------------------
2 8.33%
-------------------------------------------------------------------
3 8.34%
-------------------------------------------------------------------
4 8.33%
-------------------------------------------------------------------
5 8.33%
-------------------------------------------------------------------
6 8.34%
-------------------------------------------------------------------
7 8.33%
-------------------------------------------------------------------
8 8.33%
-------------------------------------------------------------------
9 8.34%
-------------------------------------------------------------------
10 8.33%
-------------------------------------------------------------------
11 8.33%
-------------------------------------------------------------------
12 8.34%
-------------------------------------------------------------------
In addition, the Borrower shall pay to the Administrative Agent for the account
of each Lender all outstanding principal of the Tranche A Loans (and all
outstanding principal of the Tranche A Loans shall be due and payable) on the
Tranche A Maturity Date.
CREDIT AGREEMENT - Page 22
29
(b) Tranche B Loans. The Borrower shall pay to the Administrative Agent
for the account of each Tranche B Lender the principal of the Tranche B Loans
outstanding as of the Tranche B Commitment Termination Date (and the principal
of such Loans outstanding as of such date shall be due and payable) in full on
the Tranche B Maturity Date.
Section 2.4 Interest.
(a) Interest Rate. The Borrower shall pay to the Administrative Agent for
the account of each Lender interest on the unpaid principal amount of each Loan
made by such Lender (or deemed made by such Lender with respect to a Loan
assigned to such Lender after the making of such Loan) to the Borrower for the
period commencing on the date of such Loan to, but excluding, the date such Loan
shall be paid in full, at the following rates per annum:
(i) during the periods such Loan is a Base Rate Loan, the lesser of
(A) the Base Rate plus the Applicable Margin or (B) the Maximum Rate; and
(ii) during the periods such Loan is a Eurodollar Loan, the lesser
of (A) the Adjusted Eurodollar Rate plus the Applicable Margin or (B) the
Maximum Rate.
(b) Payment Dates.
(i) in the case of Base Rate Loans, on each Monthly Date;
(ii) in the case of each Eurodollar Loan, on the last day of the
Interest Period with respect thereto and, in the case of an Interest
Period greater than three months, at three-month intervals after the
first day of such Interest Period;
(iii) upon the payment or prepayment (whether mandatory or optional)
of any such Loan or the Conversion of any such Loan to a Loan of the
other Type (but only on the principal amount so paid, prepaid or
Converted); and
(iv) with respect to all Loans, on the Maturity Date.
(c) Default Interest. Notwithstanding the foregoing, the Borrower shall
pay to the Administrative Agent for the account of each Lender interest at the
applicable Default Rate (i) at all times during which any Default has occurred
and is continuing, on any principal of any Loan outstanding, and (ii) to the
fullest extent permitted by law, any other amount payable by the Borrower under
this Agreement or any other Loan Document to or for the account of such Lender
which is not paid in full when due (whether at stated maturity, by acceleration
or otherwise) for the period from and including the due date thereof to but
excluding the date the same is paid in full. Interest payable at the Default
Rate shall be payable from time to time on demand by the Administrative Agent.
Section 2.5 Borrowing Procedure. The Borrower shall give the
Administrative Agent notice of each borrowing hereunder in accordance with
Section 2.9. Not later than 12:00 noon (New
CREDIT AGREEMENT - Page 23
30
York, New York time) on the date specified for each borrowing hereunder, each
Lender will make available the amount of the Loan to be made by it on such date
to the Administrative Agent, at the Principal Office, in immediately available
funds, for the account of the Borrower. The amount of each borrowing hereunder
so received by the Administrative Agent shall, subject to the terms and
conditions of this Agreement, be made available, for and on behalf of the
Borrower, in immediately available funds by no later than 2:00 p.m. (New York,
New York time); provided, however, that the Administrative Agent may, in its
discretion, cause such amount to be made available directly to or for the
benefit of the Person who is to receive the proceeds of such Loan in accordance
with Section 2.10. Notwithstanding anything to the contrary contained in this
Agreement, if and to the extent that Nortel Networks is a Tranche A Lender under
this Agreement, the Borrower further hereby irrevocably agrees that each Tranche
A Loan to be advanced by Nortel Networks to the Borrower in accordance with this
Agreement (and only in accordance with this Agreement and after the
Administrative Agent's receipt of a Notice of Borrowing executed by the
Borrower) may (in the discretion of Nortel Networks and if and to the extent
that the proceeds of such Loan are to be paid to Nortel Networks) be effectively
disbursed on the date set forth in the Notice of Borrowing for such disbursement
to the Borrower by virtue of a credit in the amount of such Loan given to the
Guarantor under the Supply Agreement.
Section 2.6 Optional Prepayments, Conversions and Continuations of Loans.
Subject to Section 2.7, the Borrower shall have the right from time to time to
prepay the Loans in whole or in part, to Convert all or part of a Loan of one
Type into a Loan of another Type or to Continue Eurodollar Loans; provided that:
(a) the Borrower shall give the Administrative Agent notice of each such
prepayment, Conversion or Continuation as provided in Section 2.9, (b)
Eurodollar Loans may only be Converted on the last day of the Interest Period
and any prepayment of Eurodollar Loans on any day other than the last day of the
Interest Period shall be subject to payment of the additional compensation
specified in Section 4.5, (c) except for Conversions of Eurodollar Loans into
Base Rate Loans, no Conversions or Continuations shall be made while a Default
has occurred and is continuing, and (d) optional prepayments of the Loans shall
be applied pro rata to the principal of the Loans in the inverse order of the
maturities of the then remaining installments of such Loans. No amounts prepaid
pursuant to this Section 2.6 may be reborrowed.
Section 2.7 Mandatory Prepayments.
(a) Collateral Dispositions, etc. Each Loan Party shall, within three
Business Days after it receives any Net Proceeds of any Collateral Disposition,
proceeds of any Insurance Recovery or proceeds of condemnation awards
aggregating in excess of $100,000 during any period of 12 consecutive months or
less (the amount of such proceeds exceeding $100,000 received during any such
period are herein called the "Excess Proceeds Amount"), pay to the
Administrative Agent, as a prepayment of the Tranche A Loans, an aggregate
amount equal to the Excess Proceeds Amount; provided, that no such prepayment
will be required if and to the extent that the Excess Proceeds Amount is fully
re-invested in productive assets used in the ordinary course of such Loan
Party's business within 60 days of the receipt of such Excess Proceeds Amount;
provided, further, however, that the Excess Proceeds Amount (or portion thereof)
not so re-invested within 60 days of the receipt thereof shall be deposited into
a cash collateral account held by the Administrative Agent pursuant to an
agreement in form and substance satisfactory to the Administrative Agent until
such time as
CREDIT AGREEMENT - Page 24
31
such amount is either re-invested within 120 days of the receipt thereof or
applied to the Tranche A Loans or other Obligations related to the Tranche A
Loans as provided in this Section 2.7.
(b) Excess Cash Flow. The Borrower shall, commencing on the February 26,
2000 and on each anniversary thereof thereafter, pay (or cause to be paid) to
the Administrative Agent, as a prepayment of the Loans and other Obligations
then outstanding, an aggregate amount equal to [***].
(c) Proceeds of Sale or Placement of Debt or Capital Stock. The Borrower
shall, within three Business Days after it receives aggregate net proceeds (i.e.
gross proceeds less reasonable out-of-pocket transactions costs) in excess of
$175,000,000 from sales or placements of Debt or Capital Stock of the Borrower
closed subsequent to the date of this Agreement, prepay the outstanding Tranche
B Loans.
(d) Payments Received Under ▇▇▇▇ Canada Fiber Agreement. The Borrower
shall, within three Business Days after it receives payment in available funds
under the ▇▇▇▇ Atlantic Fiber Agreement, pay to the Administrative Agent the
amount received as a prepayment of the Tranche B Loans.
(e) Application of Mandatory Prepayments. All prepayments pursuant to
Section 2.7(a) and Section 2.7(b) shall be applied pro rata to the principal of
the Tranche A Loans in the inverse order of the maturities of the then remaining
installments of such Loans, then to the principal of the Tranche B Loans and
then to the remaining outstanding Obligations in such order as the
Administrative Agent may determine. All prepayments pursuant to Section 2.7(a)
shall be applied to the outstanding Tranche A Loans. All prepayments pursuant to
Section 2.7(c) and Section 2.7(d) shall be applied to the outstanding Tranche B
Loans.
(f) No Reborrowing. No amounts of the Loans prepaid pursuant to this
Section 2.7 may be reborrowed.
Section 2.8 Minimum Amounts. Except for Conversions and prepayments
pursuant to Section 2.7 and Article 4, each Conversion and each optional
prepayment of principal of the Loans shall be in an amount at least equal to
$100,000 or an integral multiple of $100,000 in excess thereof (borrowings,
prepayments or Conversions of or into Loans of different Types or, in the case
of Eurodollar Loans, having different Interest Periods at the same time
hereunder shall be deemed separate borrowings, prepayments and Conversions for
purposes of the foregoing, one for each Type or Interest Period).
Section 2.9 Certain Notices. Notices by the Borrower to the Administrative
Agent of terminations or reductions of Commitments, of borrowings, Conversions,
Continuations and prepayments of Loans and of the duration of Interest Periods
shall be irrevocable and shall be effective only if received by the
Administrative Agent not later than 11:00 a.m. (New York, New York, time) on the
Business Day prior to the date of the relevant termination, reduction,
borrowing, Conversion, Continuation or prepayment or the first day of such
Interest Period specified below:
CONFIDENTIAL
[***] Confidential treatment has been requested with respect to material omitted
on this page. The omitted portions have been filed separately with the
Securities and Exchange Commission.
CREDIT AGREEMENT - Page 25
32
----------------------------------------------------------------------
Number of
Notice Business Days Prior
----------------------------------------------------------------------
Terminations or Reductions of Commitments 1
----------------------------------------------------------------------
Borrowings of Loans which are Base Rate Loans 2
----------------------------------------------------------------------
Borrowings of Loans which are Eurodollar Loans 3
----------------------------------------------------------------------
Prepayments of Loans 3
----------------------------------------------------------------------
Each such notice of termination or reduction shall specify the amount of the
Commitments to be terminated or reduced. Each such notice of borrowing,
Conversion, Continuation or prepayment shall specify the Loans to be borrowed,
Converted, Continued or prepaid and the amount (subject to Section 2.8 hereof)
and Type of the Loans to be borrowed, Converted, Continued or prepaid (and, in
the case of a Conversion, the Type of Loans to result from such Conversion) and
the date of borrowing, Conversion, Continuation or prepayment (which shall be a
Business Day). Each such notice of termination, reduction, borrowing,
Conversion, Continuation or prepayment shall be in the form of Exhibit C hereto,
appropriately completed as applicable. Each notice of borrowing (a "Notice of
Borrowing") (a) shall certify that all proceeds of the requested Loans are,
concurrently with the making of such Loans, being used by the Borrower for the
purpose specified in Section 2.10 and (b) shall be accompanied by such other
evidence as to use of the proceeds of such borrowing, as the Administrative
Agent may reasonably request from time to time. Each notice which includes
reference to the duration of an Interest Period shall specify the Loans to which
such Interest Period is to relate. The Administrative Agent shall promptly
notify the Lenders of the contents of each such notice. In the event the
Borrower fails to select the Type of Loan, or the duration of any Interest
Period for any Eurodollar Loan, within the time period and otherwise as provided
in this Section 2.9, such Loan (if outstanding as Eurodollar Loan) will be
automatically Converted into a Base Rate Loan on the last day of preceding
Interest Period for such Loan or (if outstanding as a Base Rate Loan) will
remain as, or (if not then outstanding) will be made as, a Base Rate Loan. The
Borrower may not borrow any Eurodollar Loans, Convert any Loans into Eurodollar
Loans or Continue any Loans as Eurodollar Loans if the interest rate for such
Eurodollar Loans would exceed the Maximum Rate.
Section 2.10 Use of Proceeds.
(a) Tranche A Loans. The Borrower agrees that all proceeds of the Tranche
A Loans shall be contributed to or loaned to the Guarantor and used to pay the
purchase price for Nortel Networks Goods and Services provided by Nortel
Networks under the Supply Agreement. In the event the Borrower determines to
loan all or a portion of such funds to the Guarantor, the loan shall be
evidenced by one or more promissory notes in the principal amount of such
loan(s) (the "Inter-Company Note"). The Inter-Company Note(s) shall have
repayment and prepayment terms consistent with the Tranche A Notes and shall be
collaterally assigned to the Administrative Agent to secure the Obligations.
(b) Tranche B Loans. The Borrower agrees that all proceeds of the Tranche
B Loans shall be used by the Borrower for working capital and general corporate
purposes of the Borrower
CREDIT AGREEMENT - Page 26
33
and its Subsidiaries, subject to compliance with all requirements of law and the
terms and provisions of this Agreement.
(c) Margin Stock. None of the proceeds of any Loan have been or will be
used to acquire any security in any transaction that is subject to Section 13 or
14 of the Exchange Act or to purchase or carry any margin stock (within the
meaning of Regulations T, U or X of the Board of Governors of the Federal
Reserve System).
Section 2.11 Fees.
(a) Subject to Section 13.12, the Borrower shall pay to the Administrative
Agent for the account of each applicable Lender a commitment fee on the daily
average unused or unfunded amount of each of such Lender's Commitments, for the
period from and including the date on which such Lender (or its predecessor in
interest with respect to Commitments assigned to such Lender as to which a
commitment fee has not previously been paid during the applicable period) became
a party hereto but excluding the Tranche A Commitment Termination Date or
Tranche B Commitment Termination Date, as the case may be, [***] per annum based
on a 360 day year and the actual number of days elapsed, which accrued
commitment fees shall be payable in arrears on each Quarterly Date and on the
Tranche A Commitment Termination Date and the Tranche B Commitment Termination
Date, as the case may be.
(b) Subject to Section 13.12, the Borrower agrees to pay to the
Administrative Agent and Nortel Networks such additional fees as are specified
in the Administrative Agent's Letter, which fees shall be payable in such
amounts and on such dates as are specified therein.
Section 2.12 Computations. Interest and fees payable by the Borrower
hereunder and under the other Loan Documents on all Loans shall be computed on
the basis of a year of 360 days and the actual number of days elapsed (including
the first day but excluding the last day) occurring in the period for which
payable unless, in the case of interest, such calculation would result in a
usurious rate, in which case interest shall be calculated on the basis of a year
of 365 or 366 days, as the case may be.
Section 2.13 Termination or Reduction of Commitments.
(a) Notwithstanding anything to the contrary contained in this Agreement,
each of the Commitments shall automatically terminate upon the occurrence of any
Change in Control.
(b) The Borrower shall have the right to terminate or reduce in part the
unused portion of the Tranche A Commitments and the Tranche B Commitments at any
time and from time to time prior to the Tranche A Commitment Termination Date
and the Tranche B Commitment Termination Date, respectively; provided, however,
that no such termination or reduction shall be effective unless the Borrower
shall have given notice of each such termination or reduction as provided in
Section 2.9, and each partial reduction of the Commitments shall be in an
aggregate amount at least equal to $1,000,000 or an integral multiple of
$100,000 in excess thereof.
CREDIT AGREEMENT - Page 27
CONFIDENTIAL
[***] Confidential treatment has been requested with respect to material omitted
on this page. The omitted portions have been filed separately with the
Securities and Exchange Commission.
34
(c) The Commitments may not be reinstated after they have been terminated
or increased after they have been reduced.
ARTICLE 3
Payments
Section 3.1 Method of Payment. All payments of principal, interest, fees
and other amounts to be made by the Borrower under this Agreement and the other
Loan Documents shall be made to the Administrative Agent at the Principal Office
for the account of each Lender's Applicable Lending Office in Dollars and in
immediately available funds, without setoff, deduction or counterclaim, not
later than 1:00 p.m. (New York, New York time) on the date on which such payment
shall become due (each such payment made after such time on such due date to be
deemed to have been made on the next succeeding Business Day). The Borrower
shall, at the time of making each such payment, specify to the Administrative
Agent the sums payable by the Borrower under this Agreement and the other Loan
Documents to which such payment is to be applied (and in the event that the
Borrower fails to so specify, or if an Event of Default has occurred and is
continuing, the Administrative Agent may apply such payment to the Obligations
in such order and manner as the Administrative Agent may elect, subject to
Section 3.2). Upon the occurrence and during the continuation of an Event of
Default, all proceeds of any Collateral and all other funds of the Borrower in
the possession of the Administrative Agent or any Lender, may be applied by the
Administrative Agent to the Obligations in such order and manner as the
Administrative Agent may elect, subject to Section 3.2. Each payment received by
the Administrative Agent under this Agreement or any other Loan Document for the
account of a Lender shall be paid promptly to such Lender, in immediately
available funds, for the account of such Lender's Applicable Lending Office.
Whenever any payment under this Agreement or any other Loan Document shall be
stated to be due on a day that is not a Business Day, such payment may be made
on the next succeeding Business Day, and such extension of time shall in such
case be included in the computation of the payment of interest and commitment
fee, as the case may be.
Section 3.2 Pro Rata Treatment. Except to the extent otherwise provided in
this Agreement: (a) each Loan shall be made by the Lenders under Section 2.1,
each payment of commitment fees under Section 2.11(a) shall be made for the
account of the Lenders, and each termination or reduction of the Commitments
under Section 2.13 shall be applied to the Commitments of the Lenders, pro rata
according to the respective unused Commitments; (b) the making, Conversion and
Continuation of Loans of a particular Type (other than Conversions provided for
by Section 4.4) shall be made pro rata among the Lenders holding Loans of such
Type according to the amounts of their respective Commitments; (c) each payment
and prepayment by the Borrower of principal of or interest on Loans of a
particular Type shall be made to the Administrative Agent for the account of the
Lenders holding Loans of such Type pro rata in accordance with the respective
unpaid principal amounts of such Loans held by such Lenders; and (d) Interest
Periods for Loans of a particular Type shall be allocated among the Lenders
holding Loans of such Type pro rata according to the respective principal
amounts held by such Lenders.
Section 3.3 Sharing of Payments, Etc. If a Lender shall obtain payment of
any principal of or interest on any of the Obligations due to such Lender
hereunder through the exercise of any
CREDIT AGREEMENT - Page 28
35
right of setoff, banker's lien, counterclaim or similar right, or otherwise, it
shall promptly purchase from the other Lenders participations in the Obligations
held by the other Lenders in such amounts, and make such adjustments from time
to time, as shall be equitable to the end that all the Lenders shall share pro
rata in accordance with the unpaid principal and interest on the Obligations
then due to each of them. To such end, all of the Lenders shall make appropriate
adjustments among themselves (by the resale of participations sold or otherwise)
if all or any portion of such excess payment is thereafter rescinded or must
otherwise be restored. The Borrower agrees, to the fullest extent it may
effectively do so under applicable law, that any Lender so purchasing a
participation in the Obligations by the other Lenders may exercise all rights of
setoff, banker's lien, counterclaim or similar rights with respect to such
participation as fully as if such Lender were a direct holder of Obligations in
the amount of such participation. Nothing contained herein shall require any
Lender to exercise any such right or shall affect the right of any Lender to
exercise, and retain the benefits of exercising, any such right with respect to
any other indebtedness, liability or obligation of the Borrower.
Section 3.4 Non-Receipt of Funds by the Administrative Agent. Unless the
Administrative Agent shall have been notified by a Lender or the Borrower (the
"Payor") prior to the date on which such Lender is to make payment to the
Administrative Agent of the proceeds of a Loan to be made by it hereunder or the
Borrower is to make a payment to the Administrative Agent for the account of one
or more of the Lenders, as the case may be (such payment being herein called the
"Required Payment"), which notice shall be effective upon receipt, that the
Payor does not intend to make the Required Payment to the Administrative Agent,
the Administrative Agent may assume that the Required Payment has been made and
may, in reliance upon such assumption (but shall not be required to), make the
amount thereof available to the intended recipient on such date and, if the
Payor has not in fact made the Required Payment to the Administrative Agent, the
recipient of such payment shall, on demand, pay to the Administrative Agent the
amount made available to it together with interest thereon in respect of the
period commencing on the date such amount was so made available by the
Administrative Agent until the date the Administrative Agent recovers such
amount at a rate per annum equal to the Federal Funds Rate for such period.
CREDIT AGREEMENT - Page 29
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Section 3.5 Taxes.
(a) All payments by the Borrower of principal of and interest on the Loans
and of all fees and other amounts payable under the Loan Documents shall be made
free and clear of, and without withholding or deduction by reason of, any
present or future taxes, levies, duties, imposts, assessments or other charges
levied or imposed by any Governmental Authority (other than franchise taxes and
taxes on the overall net income of any Lender). If any such taxes, levies,
duties, imposts, assessments or other charges are so levied or imposed, the
Borrower will (i) make additional payments in such amounts so that every net
payment of principal of and interest on the Loans and of all other amounts
payable by it under the Loan Documents, after withholding or deduction for or on
account of any such present or future taxes, levies, duties, imposts,
assessments or other charges (including any tax imposed on or measured by net
income of a Lender attributable to payments made to or on behalf of a Lender
pursuant to this Section 3.5 and any penalties or interest attributable to such
payments), will not be less than the amount provided for herein or therein
absent such withholding or deduction (provided that the Borrower shall not have
any obligation to pay such additional amounts to any Lender to the extent that
such taxes, levies, duties, imposts, assessments or other charges are levied or
imposed by reason of the failure of such Lender to comply with the provisions of
Section 3.6), (ii) make such withholding or deduction and (iii) remit the full
amount deducted or withheld to the relevant Governmental Authority in accordance
with applicable law. Without limiting the generality of the foregoing, the
Borrower will, upon written request of any Lender, reimburse each such Lender
for the amount of (A) such taxes, levies, duties, imports, assessments or other
charges so levied or imposed by any Governmental Authority and paid by such
Lender as a result of payments made by the Borrower under or with respect to the
Loans other than such taxes, levies, duties, imports, assessments and other
charges previously withheld or deducted by the Borrower which have previously
resulted in the payment of the required additional amount to such Lender, and
(B) such taxes, levies, duties, assessments and other charges so levied or
imposed with respect to any Lender reimbursement under the foregoing clause (A),
so that the net amount received by such Lender (net of payments made under or
with respect to the Loans) after such reimbursement will not be less than the
net amount such Lender would have received if such taxes, levies, duties,
assessments and other charges on such reimbursement had not been levied or
imposed. The Borrower shall furnish promptly to the Administrative Agent for
distribution to each affected Lender, as the case may be, upon request of such
Lender, official receipts evidencing any such payment, withholding or reduction.
(b) The Borrower will indemnify the Administrative Agent and each Lender
(without duplication) against, and reimburse the Administrative Agent and each
Lender for, all present and future taxes, levies, duties, imposts, assessments
or other charges (including interest and penalties) levied or collected (whether
or not legally or correctly imposed, assessed, levied or collected), excluding,
however, any taxes imposed on the overall net income of the Administrative Agent
or such Lender or any lending office of the Administrative Agent or such Lender
by any jurisdiction in which the Administrative Agent or such Lender or any such
lending office is located, on or in respect of this Agreement, any of the Loan
Documents or the Obligations or any portion thereof (the "reimbursable taxes").
Any such indemnification shall be on an after-tax basis, taking into account any
such reimbursable taxes imposed on the amounts paid as indemnity.
CREDIT AGREEMENT - Page 30
37
(c) Without prejudice to the survival of any other term or provision of
this Agreement, the obligations of the Borrower under this Section 3.5 shall
survive the payment of the Loans and the other Obligations and termination of
the Commitments.
Section 3.6 Withholding Tax Exemption. Each Lender that is not
incorporated or otherwise formed under the laws of the U.S. or a state thereof
agrees that it will, prior to or on or about the Closing Date or the date upon
which it initially becomes a party to this Agreement and if it is legally able
to do so, deliver to the Borrower and the Administrative Agent two duly
completed copies of U.S. Internal Revenue Service Form 1001, 4224 or W-8, as
appropriate, certifying in any case that such Lender is entitled to receive
payments from the Borrower under any Loan Document without deduction or
withholding of any U.S. federal income taxes. Each Lender which so delivers a
Form 1001, 4224 or W-8 further undertakes to deliver to the Borrower and the
Administrative Agent two additional copies of such form (or a successor form) on
or before the date such form expires or becomes obsolete or after the occurrence
of any event requiring a change in the most recent form so delivered by it, and
such amendments thereto or extensions or renewals thereof as may be reasonably
requested by the Borrower or the Administrative Agent, in each case certifying
that such Lender is entitled to receive payments from the Borrower under any
Loan Document without deduction or withholding of any U.S. federal income taxes,
unless an event (including without limitation any change in treaty, law or
regulation) has occurred prior to the date on which any such delivery would
otherwise be required which renders all such forms inapplicable or which would
prevent such Lender from duly completing and delivering any such form with
respect to it and such Lender advises the Borrower and the Administrative Agent
that it is not capable of receiving such payments without any deduction or
withholding of U.S. federal income tax.
Section 3.7 Reinstatement of Obligations. Notwithstanding anything to the
contrary contained in this Agreement or any other Loan Document, if the payment
of any amount of principal of or interest with respect to the Loans or any other
amount of the Obligations, or any portion thereof, is rescinded, voided or must
otherwise be refunded by the Administrative Agent or any Lender upon the
insolvency, bankruptcy or reorganization of the Borrower or otherwise for any
reason whatsoever, then each of (a) the Obligations, (b) the Loan Documents
(including, without limitation, this Agreement, the Notes and the Security
Documents), (c) the indebtedness, liabilities and obligations of the Borrower
and any other Loan Parties and (d) all Liens for the benefit of the
Administrative Agent and the Lenders created under or evidenced by the Loan
Documents, will be automatically reinstated and become automatically effective
and in full force and effect, all to the extent that and as though such payment
so rescinded, voided or otherwise refunded had never been made.
Section 3.8 No Force Majeure, Disputes. The Borrower's obligation to pay
all amounts due under the Loans and the other Obligations shall not be affected
by (a) any set-off, counterclaim, recoupment, deduction, abatement, suspension,
diminution, reduction, defense or other right which the Borrower or the
Guarantor may have against the Vendor for any reason whatsoever arising under or
pursuant to the Supply Agreement or otherwise relating to the purchase of goods
or services from the Vendor, (b) any defect in the condition, design, operation
or fitness for use of, or any damage to or loss or destruction of, any equipment
or material or service provided by the Vendor, (c) any insolvency, bankruptcy,
reorganization or similar proceedings by or against the Borrower or affecting
any of its Properties, (d) any action of any Governmental Authority or any
damage to or
CREDIT AGREEMENT - Page 31
38
destruction of or any taking of the Borrower's Property or any part thereof, (e)
any change, waiver, extension, indulgence or failure to perform or comply with,
or other action or omission herein or in the other Loan Documents (except for
express written modifications to this Agreement or other Loan Documents as and
in the manner permitted under this Agreement or the other Loan Documents), (f)
any dissolution of the Borrower, (g) any inability or illegality with respect to
the use or ownership of the Borrower's Property, (h) any failure to obtain, or
expiration, suspension or other termination of, or interruption to, any required
licenses, permits, consents, authorizations, approvals or other legal
requirements, (i) the invalidity or unenforceability of any of the Loan
Documents or any other infirmity therein or any lack of power or authority of
the Administrative Agent or any Lender or the Borrower, or (j) any other event
or circumstance whatsoever, whether or not similar to any of the foregoing and
whether or not the Borrower shall have notice or knowledge of any of the
foregoing, it being the intention of the Administrative Agent and the Lenders
and the Borrower that the Obligations of the Borrower shall be absolute and
unconditional and shall be separate and independent covenants and agreements and
shall continue unaffected unless the requirements to pay or perform the same
shall have been terminated pursuant to an express provision thereof or of any of
the other Loan Documents.
ARTICLE 4
Yield Protection and Illegality
Section 4.1 Additional Costs.
(a) The Borrower shall pay directly to each Lender from time to time,
promptly upon the request of such Lender, the costs incurred by such Lender
which such Lender reasonably determines are attributable to its making or
maintaining of any Eurodollar Loans or its obligation to make any of such Loans,
or any reduction in any amount receivable by such Lender hereunder in respect of
any such Loans or obligations (such increases in costs and reductions in amounts
receivable being herein called "Additional Costs"), resulting from any
Regulatory Change which:
(i) changes the basis of taxation of any amounts payable to such
Lender under this Agreement or its Notes in respect of any of such Loans
(other than taxes imposed on the overall net income of such Lender or its
Applicable Lending Office for any of such Loans by the jurisdiction in
which such Lender has its principal office or such Applicable Lending
Office);
(ii) imposes or modifies any reserve, special deposit, minimum
capital, capital ratio or similar requirement relating to any extensions
of credit or other assets of, or any deposits with or other liabilities or
commitments of, such Lender (including any of such Loans or any deposits
referred to in the definition of "Eurodollar Rate" in Section 1.1 hereof,
but excluding the Reserve Requirement to the extent it is included in the
calculation of the Adjusted Eurodollar Rate); or
(iii) imposes any other condition affecting this Agreement or the
Notes or any extensions of credit or liabilities or commitments
contemplated hereunder or thereunder.
CREDIT AGREEMENT - Page 32
39
Each Lender will notify the Borrower (with a copy to the Administrative Agent)
of any event occurring after the Closing Date which will entitle such Lender to
compensation pursuant to this Section 4.1(a) as promptly as practicable after it
obtains knowledge thereof and determines to request such compensation, and (if
so requested by the Borrower) will designate a different Applicable Lending
Office for the Eurodollar Loans of such Lender if such designation will avoid
the need for, or reduce the amount of, such compensation and will not, in the
sole opinion of such Lender, violate any law, rule or regulation or be in any
way disadvantageous to such Lender, provided that such Lender shall have no
obligation to so designate an Applicable Lending Office located in the U.S. Each
Lender will furnish the Borrower with a certificate setting forth the basis and
the amount of each request of such Lender for compensation under this Section
4.1(a). If any Lender requests compensation from the Borrower under this Section
4.1(a), the Borrower may, by notice to such Lender (with a copy to the
Administrative Agent), suspend the obligation of such Lender to make or Continue
making, or Convert Base Rate Loans into, Eurodollar Loans until the Regulatory
Change giving rise to such request ceases to be in effect (in which case the
provisions of Section 4.4 hereof shall be applicable).
(b) Without limiting the effect of the foregoing provisions of this
Section 4.1, in the event that, by reason of any Regulatory Change, any Lender
either (i) incurs Additional Costs based on or measured by the excess above a
specified level of the amount of a category of deposits or other liabilities of
such Lender which includes deposits by reference to which the interest rate on
Eurodollar Loans is determined as provided in this Agreement or a category of
extensions of credit or other assets of such Lender which includes Eurodollar
Loans or (ii) becomes subject to restrictions on the amount of such a category
of liabilities or assets which it may hold, then, if such Lender so elects by
notice to the Borrower (with a copy to the Administrative Agent), the obligation
of such Lender to make or Continue making, or Convert Base Rate Loans into,
Eurodollar Loans hereunder shall be suspended until such Regulatory Change
ceases to be in effect (in which case the provisions of Section 4.4 hereof shall
be applicable).
(c) Determinations and allocations by any Lender for purposes of this
Section 4.1 of the effect of any Regulatory Change on its costs of maintaining
its obligation to make Loans or of making or maintaining Loans or on amounts
receivable by it in respect of Loans and of the additional amounts required to
compensate such Lender in respect of any Additional Costs, shall be conclusive
in the absence of manifest error, provided that such determinations and
allocations are made on a reasonable basis.
Section 4.2 Limitation on Types of Loans. Anything herein to the contrary
notwithstanding, if with respect to any Eurodollar Loans for any Interest Period
therefor:
(a) the Administrative Agent determines (which determination shall be
conclusive absent manifest error) that quotations of interest rates for the
relevant deposits referred to in the definition of "Eurodollar Rate" in Section
1.1 hereof are not being provided in the relative amounts or for the relative
maturities for purposes of determining the rate of interest for such Loans as
provided in this Agreement; or
(b) the Required Lenders determine (which determination shall be
conclusive absent manifest error) and notify the Administrative Agent that the
relevant rates of interest referred to in
CREDIT AGREEMENT - Page 33
40
the definition of "Eurodollar Rate" or "Adjusted Eurodollar Rate" in Section 1.1
hereof on the basis of which the rate of interest for such Loans for such
Interest Period is to be determined do not accurately reflect the cost to the
Lenders of making or maintaining such Loans for such Interest Period;
then the Administrative Agent shall give the Borrower prompt notice thereof and,
so long as such condition remains in effect, the Lenders shall be under no
obligation to make Eurodollar Loans or to Convert Base Rate Loans into
Eurodollar Loans and the Borrower shall, on the last day(s) of the then current
Interest Period(s) for the outstanding Eurodollar Loans, either prepay such
Loans or Convert such Loans into Base Rate Loans in accordance with the terms of
this Agreement.
Section 4.3 Illegality. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Lender or its
Applicable Lending Office to (a) honor its obligation to make Eurodollar Loans
or (b) maintain Eurodollar Loans, then such Lender shall promptly notify the
Borrower (with a copy to the Administrative Agent) thereof and such Lender's
obligation to make or maintain Eurodollar Loans and to Convert Base Rate Loans
into Eurodollar Loans hereunder shall be suspended until such time as such
Lender may again make and maintain Eurodollar Loans (in which case the
provisions of Section 4.4 hereof shall be applicable).
Section 4.4 Treatment of Affected Loans. If the obligation of any Lender
to make or Continue, or to Convert Base Rate Loans into, Eurodollar Loans is
suspended pursuant to Section 4.1 or 4.3 hereof, such Lender's Eurodollar Loans
shall be automatically Converted into Base Rate Loans on the last day(s) of the
then current Interest Period(s) for the Eurodollar Loans (or, in the case of a
Conversion required by Section 4.1(b) or 4.3 hereof, on such earlier date as
such Lender may specify to the Borrower with a copy to the Administrative Agent)
and, unless and until such Lender gives notice as provided below that the
circumstances specified in Section 4.1 or 4.3 hereof which gave rise to such
Conversion no longer exist:
(a) to the extent that such Lender's Eurodollar Loans have been so
Converted, all payments and prepayments of principal which would otherwise be
applied to such Lender's Eurodollar Loans shall be applied instead to its Base
Rate Loans; and
(b) all Loans which would otherwise be made or Continued by such Lender as
Eurodollar Loans shall be made as or Converted into Base Rate Loans and all
Loans of such Lender which would otherwise be Converted into Eurodollar Loans
shall be Converted instead into (or shall remain as) Base Rate Loans.
If such Lender gives notice to the Borrower that the circumstances specified in
Section 4.1 or 4.3 hereof which gave rise to the Conversion of such Lender's
Eurodollar Loans pursuant to this Section 4.4 no longer exist (which such Lender
agrees to do promptly upon such circumstances ceasing to exist) at a time when
Eurodollar Loans are outstanding, such Lender's Base Rate Loans shall be
automatically Converted, on the first day(s) of the next succeeding Interest
Period(s) for such outstanding Eurodollar Loans, to the extent necessary so
that, after giving effect thereto, all Loans held by the Lenders holding
Eurodollar Loans and by such Lender are held pro rata (as to principal amounts,
Types and Interest Periods) in accordance with their respective Commitments.
CREDIT AGREEMENT - Page 34
41
Section 4.5 Compensation. The Borrower shall pay to the Administrative
Agent for the account of each Lender, promptly upon the request of such Lender
through the Administrative Agent, such amount or amounts as shall be sufficient
(in the reasonable opinion of such Lender) to compensate it for any loss, cost
or expense incurred by it as a result of:
(a) Any payment, prepayment or Conversion of a Eurodollar Loan for any
reason (including, without limitation, the acceleration of the outstanding Loans
pursuant to Section 11.2) on a date other than the last day of an Interest
Period for such Loan; or
(b) Any failure by the Borrower for any reason (including, without
limitation, the failure of any conditions precedent specified in Article 6 to be
satisfied) to borrow, Convert or prepay a Eurodollar Loan on the date for such
borrowing, Conversion or prepayment specified in the relevant notice of
borrowing, prepayment or Conversion under this Agreement.
Section 4.6 Capital Adequacy. If, after the Closing Date, any Lender shall
have determined that the adoption or implementation of any applicable law, rule
or regulation regarding capital adequacy (including, without limitation, any
law, rule or regulation implementing the Basle Accord), or any change therein,
or any change in the interpretation or administration thereof by any central
bank or other Governmental Authority charged with the interpretation or
administration thereof, or compliance by such Lender (or its parent) with any
guideline, request or directive regarding capital adequacy (whether or not
having the force of law) of any central bank or other Governmental Authority
(including, without limitation, any guideline or other requirement implementing
the Basle Accord), has or would have the effect of reducing the rate of return
on such Lender's (or its parent's) capital as a consequence of its obligations
hereunder or the transactions contemplated hereby to a level below that which
such Lender (or its parent) could have achieved but for such adoption,
implementation, change or compliance (taking into consideration such Lender's
policies with respect to capital adequacy) by an amount reasonably deemed by
such Lender to be material, then from time to time, within ten Business Days
after demand by such Lender (with a copy to the Administrative Agent), the
Borrower shall pay to such Lender such additional amount or amounts as will
compensate such Lender (or its parent) for such reduction. A certificate of such
Lender claiming compensation under this Section 4.6 and setting forth the
additional amount or amounts to be paid to it hereunder shall be conclusive
absent manifest error, provided that the determination thereof is made on a
reasonable basis. In determining such amount or amounts, such Lender may use any
reasonable averaging and attribution methods.
Section 4.7 Additional Interest on Eurodollar Loans. Without duplication
of Section 2.4 or amounts directly included in the definition of the term
"Adjusted Eurodollar Rate", the Borrower shall pay, directly to each Lender from
time to time, additional interest on the unpaid principal amount of each
Eurodollar Loan held by such Lender, from the date of the making of such
Eurodollar Loan until such principal amount is paid in full, at an interest rate
per annum determined by such Lender in good faith equal to the positive
remainder (if any) of (a) the Adjusted Eurodollar Rate applicable to such
Eurodollar Loan minus (b) the Eurodollar Rate applicable to such Eurodollar
Loan. Each payment of additional interest pursuant to this Section 4.7 shall be
payable by the Borrower on each date upon which interest is payable on such
Eurodollar Loan pursuant to Section 2.4(b); provided, however, that the Borrower
shall not be obligated to make any such payment of additional interest until the
first Business Day after the date when the Borrower has been
CREDIT AGREEMENT - Page 35
42
informed (i) that such Lender is subject to a Reserve Requirement and (ii) of
the amount of such Reserve Requirement (after which time the Borrower shall be
obligated to make all such payments of additional interest, including, without
limitation, such payment of additional interest that otherwise would have been
payable by the Borrower on or prior to such time had the Borrower been earlier
informed).
ARTICLE 5
Security
Section 5.1 Collateral. Each Loan Party will grant to the Administrative
Agent for the benefit of the Administrative Agent and the Lenders a perfected,
first priority Lien on all of its right, title and interest in and to the
following Collateral, whether now owned or hereafter acquired, pursuant to the
Security Documents, including, without limitation, the following:
(a) the Guarantor shall ▇▇▇▇▇ ▇ ▇▇▇▇ all Nortel Networks Equipment
purchased under the Supply Agreement and owned by the Guarantor and any and all
additions, substitutions and replacements of any of the foregoing, wherever
located, together with all attachments, components, parts, equipment and
accessories installed thereon or affixed thereto;
(b) the Borrower shall ▇▇▇▇▇ ▇ ▇▇▇▇ the Telergy/▇▇▇▇ Canada Account; and
(c) all cash and non-cash proceeds and products of any of the foregoing.
Section 5.2 Guaranty. The Guarantor shall Guarantee the payment and
performance of the Tranche A Loans pursuant to the Guaranty.
Section 5.3 Landlord Waivers. With respect to each lease of real Property
executed by either Loan Party at which Collateral will be located, such Loan
Party will, prior to delivery or installation of such Collateral, obtain waivers
of landlord's Liens from each lessor and other agreements from such lessor and
its lenders necessary or appropriate to ensure Administrative Agent's perfected,
first priority Lien on the Collateral affected thereby, the Administrative
Agent's access to such Collateral and the right of the Administrative Agent, the
Lenders or their designee to succeed to the rights of the Loan Party that is the
lessee under the lease, in each case in form and substance reasonably
satisfactory to the Administrative Agent.
Section 5.4 Setoff. If an Event of Default shall have occurred and be
continuing, each Lender is hereby authorized at any time and from time to time,
without notice to the Borrower (any such notice being hereby expressly waived by
the Borrower), to set off and apply any and all deposits (general or special,
time or demand, provisional or final excluding any trust accounts) at any time
held and other indebtedness at any time owing by such Lender to or for the
credit or the account of the Borrower against any and all of the Obligations of
the Borrower now or hereafter existing under this Agreement, such Lender's Note
or any other Loan Document, irrespective of whether or not the Administrative
Agent or such Lender shall have made any demand under this Agreement, such
Lender's Note or any such other Loan Document and although such Obligations may
be unmatured. Each Lender agrees promptly to notify the Borrower (with a copy to
the Administrative Agent) after any such setoff and application, provided that
the failure to give such
CREDIT AGREEMENT - Page 36
43
notice shall not affect the validity of such setoff and application. The rights
and remedies of each Lender hereunder are in addition to other rights and
remedies (including, without limitation, other rights of setoff) which such
Lender may have.
ARTICLE 6
Conditions Precedent
Section 6.1 Initial Extension of Credit. The obligation of each Lender to
make its initial Loan under this Agreement is subject to the receipt by the
Administrative Agent, on or before the Closing Date, of all of the following in
form and substance satisfactory to the Administrative Agent and, in the case of
actions to be taken, the taking of the following required actions and evidence
that such actions have been taken to the satisfaction of the Administrative
Agent:
(a) Resolutions. Resolutions of the board of directors or equivalent
governing body (as applicable) certified by the Secretary or an Assistant
Secretary or equivalent officer or representative of each Loan Party which
authorize the execution, delivery and performance by such Loan Party of the Loan
Documents to which it is or is to be a party;
(b) Incumbency Certificate. A certificate of incumbency certified by the
Secretary or an Assistant Secretary (or other analogous officer) of each Loan
Party certifying as to the name of each officer or other representative of such
Loan Party (i) who is authorized to sign the Loan Documents to which it is or is
to be a party (including any certificates contemplated therein), together with
specimen signatures of each such officer or other representative, and (ii) who
will, until replaced by other officers or representatives duly authorized for
that purpose, act as its representative for the purposes of signing documents
and giving notices and other communications in connection with the Loan
Documents and the transactions contemplated thereby;
(c) Articles of Incorporation. The articles of incorporation, articles of
organization or other analogous constitutional documents of each Loan Party
certified by the Secretary of State or other applicable Governmental Authority
of the state of incorporation or organization of such entity and dated as of a
Current Date;
(d) Bylaws. The bylaws, regulations or other analogous constitutional
documents of each Loan Party certified by its Secretary or an Assistant
Secretary (or other analogous officer or representative);
(e) Governmental Certificates. Certificates of appropriate officials as to
the existence and good standing of each of the Loan Parties in its jurisdiction
of incorporation or organization and in all jurisdictions in which such Loan
Party is qualified or is required to qualify to do business as a foreign entity,
each such certificate to be dated as of a Current Date;
(f) Notes. The Notes duly completed and executed by the Borrower (one
payable to the order of each Lender with respect to each of its Commitments);
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44
(g) Security Agreements and Other Security Documents. Security Agreements
and other Security Documents executed by the Loan Parties pertaining to the
Collateral owned by such Loan Party or in which such Loan Party has rights
sufficient to create a Lien (one such Security Agreement executed by each such
Loan Party) together with all related financing statements and other filings.
(h) Insurance Certificates and Policies. Certificates evidencing all
insurance policies relating to the Collateral required by this Agreement and the
other Loan Documents and, if requested by the Administrative Agent, copies of
all such insurance policies;
(i) Lien Searches. Lien searches in the name of each of the Loan Parties
(and in all names under which any of them has done business within the last five
years) in each jurisdiction where such Loan Party maintains an office or has or
will have Collateral, showing no financing statements or other Lien instruments
of record affecting the Collateral except for Permitted Liens;
(j) Supply Agreement. The Supply Agreement shall have been executed and
delivered by all parties thereto, and the Administrative Agent shall have
received a photocopy of the Supply Agreement as so executed and delivered,
certified by a Responsible Officer of the Borrower as being a true and correct
copy of such document as of the Closing Date;
(k) Payment of Fees and Expenses. The Borrower shall have paid all fees
due on or before the Closing Date as specified in this Agreement or in the
Administrative Agent's Letter;
(l) Compliance with Laws. As of the Closing Date, the Borrower and the
other Loan Parties shall have complied in all material respects with all
Governmental Requirements necessary to consummate the transactions contemplated
by this Agreement and the other Loan Documents;
(m) No Prohibitions. No Governmental Requirement shall prohibit the
consummation of the transactions contemplated by this Agreement or any other
Loan Document, and no order, judgment or decree of any Governmental Authority or
arbitrator shall, and no litigation or other proceeding shall be pending or to
the Borrower's knowledge, threatened which would, enjoin, prohibit, restrain or
otherwise adversely affect in any material manner the consummation of the
transactions contemplated by this Agreement and the other Loan Documents or
otherwise have a Material Adverse Effect;
(n) Financial Statements. Copies of each of the financial statements
referred to in Section 7.2;
(o) Opinions of Counsel. Favorable legal opinions of counsel for the Loan
Parties, in form and substance satisfactory to the Administrative Agent, with
respect to the Loan Parties and with respect to the Loan Documents and a
favorable legal opinion of regulatory counsel to the Loan Parties in form and
substance satisfactory to the Administrative Agent;
(p) Legal Matters and Loan Documents. All matters of a legal nature
relating to the Borrower and the Loan Documents shall be reasonably satisfactory
to the Administrative Agent and its counsel, and the Administrative Agent shall
have received all such other agreements, documents
CREDIT AGREEMENT - Page 38
45
and instruments, each in form and substance and executed and delivered by all
parties, as the Administrative Agent may have reasonably requested to receive;
(q) Business Plan. A copy of the Business Plan;
(r) Waivers and Consents. Copies of all material waivers and consents, if
any, necessary for the execution, delivery and performance by the Loan Parties
of the Loan Documents to which it is a party, including, without limitation, any
waivers and consents in connection with the Supply Agreement as the
Administrative Agent may require, which waivers and consents shall be certified
by a Responsible Officer of the Borrower as true and correct copies of such
consents as of the Closing Date;
(s) Regulatory Approvals. Evidence satisfactory to the Administrative
Agent that all filings, consents or approvals with or of Governmental
Authorities necessary to consummate the transactions contemplated by the Loan
Documents have been made and obtained, as applicable; and
(t) No Material Adverse Change. As of the Closing Date, (i) no material
adverse change shall have occurred with respect to the financial condition,
results of operations, businesses, operations, capitalization, indebtedness,
liabilities, obligations, profitability or prospects or Properties or of the
general affairs or management of the Borrower and its Consolidated Subsidiaries,
taken as a whole, or of the Borrower, in each case since December 31, 1998 and
(ii) the Administrative Agent shall be satisfied that the financial performance
of the Borrower and its Subsidiaries and of the Borrower to the Closing Date is
not materially different from the financial projections for such Person(s)
through the Closing Date that were previously submitted to the Administrative
Agent.
The Borrower shall deliver, or cause to be delivered, to the Administrative
Agent sufficient counterparts of each agreement, document or instrument to be
received by the Administrative Agent under this Section 6. 1 to permit the
Administrative Agent to distribute a copy of the same to each of the Lenders.
After the request of the Borrower, the Administrative Agent shall inform the
Borrower in writing as to the status of satisfaction of the conditions precedent
set forth in this Section 6.1.
Section 6.2 All Extensions of Credit. The obligation of each Lender to
make any Loan (including the initial Loan) under this Agreement is subject to
the continued satisfaction of each of the conditions precedent set forth in
Section 6.1 and each of the following additional conditions precedent:
(a) No Default or Material Adverse Effect. No Default or Material Adverse
Effect shall have occurred and be continuing, or would result from such Loan;
(b) Representations and Warranties. All of the representations and
warranties of the Borrower contained in this Agreement and in the other Loan
Documents shall be true and correct on and as of the date of such Loan with the
same force and effect as if such representations and warranties had been made on
and as of such date unless they relate solely to an earlier date;
CREDIT AGREEMENT - Page 39
46
(c) Use of Proceeds. The Borrower shall have certified to the
Administrative Agent that all proceeds of the Loans then being made by the
Lenders are, concurrently with the making of such Loans, being used by the
Borrower for the purposes specified in Section 2.10, and the Borrower shall have
delivered to the Administrative Agent such further evidence thereof (if any) as
the Administrative Agent may reasonably request;
(d) Supply Agreement. The Supply Agreement shall not have been terminated
by the Guarantor;
(e) Full Disclosure. Neither the Borrower nor the Guarantor has failed to
disclose to the Administrative Agent or any Lender any material fact with
respect to the Network or their respective financial conditions (including any
contingent liabilities), or has failed to disclose any information the absence
of which makes any information previously disclosed to the Administrative Agent
or any Lender materially misleading; and
(f) Additional Documentation. The Administrative Agent shall have received
such additional approvals, documents and instruments as the Administrative Agent
may reasonably request.
Each notice of borrowing by the Borrower hereunder shall constitute a
representation and warranty by the Borrower that the conditions precedent set
forth in this Section 6.2 have been satisfied (both as of the date of such
notice and, unless the Borrower otherwise notifies the Administrative Agent
prior to the date of such borrowing, as of the date of such borrowing).
Section 6.3 Closing Certificates. The Borrower shall, concurrently with
the Closing Date (with respect to the conditions precedent set forth in Section
6.1), and concurrently with the date of the making of each other Loan, execute
and deliver to the Administrative Agent a certificate in form and substance
satisfactory to the Administrative Agent certifying as to the satisfaction of
each of the conditions precedent set forth in this Article 6 which are required
to be satisfied on or before such date (without regard to whether such matters
are, in fact, satisfactory to the Administrative Agent to the extent that such
satisfaction is required hereunder).
ARTICLE 7
Representations and Warranties
The Borrower represents and warrants to the Administrative Agent and the
Lenders that the following statements are and, after giving effect to the
funding of the initial Loans on the Closing Date, will be true, correct and
complete:
Section 7.1 Existence. Each Loan Party (a) is a corporation (or other
entity) duly organized, validly existing and in good standing under the laws of
the jurisdiction of its incorporation (or organization), (b) has all requisite
power and authority to own its Properties and carry on its business as now
conducted, and (c) is qualified to do business in all jurisdictions in which the
nature of its business makes such qualification necessary and where failure to
so qualify
CREDIT AGREEMENT - Page 40
47
would have a Material Adverse Effect. Each of the Loan Parties has the power and
authority and legal right to execute, deliver and perform its obligations under
the Loan Documents to which it is or may become a party.
Section 7.2 Financial Statements.
(a) The Borrower has delivered to the Administrative Agent and the Lenders
(i) the unaudited consolidated and consolidating financial statements (including
balance sheet and statements of income or operations, shareholders' equity and
cash flows) of the Borrower and its Subsidiaries as of and for the fiscal year
ended December 31, 1998 and (ii) an unaudited pro forma balance sheet of the
Borrower and its Subsidiaries dated as of the Closing Date which gives effect to
the initial Loans made on the Closing Date and the other transactions to occur
on such date. Such financial statements are true and correct, have been prepared
in accordance with GAAP and fairly and accurately present, on a consolidated and
consolidating (where applicable) basis, the financial condition of the Borrower
and its Subsidiaries as of such dates and the results of operations for the
respective periods indicated therein. There has not been, as of the Closing
Date, any material adverse change in the financial condition, results of
operations, businesses, operations, Properties, capitalization, assets or
liabilities of the Borrower and its Subsidiaries, taken as a whole, or of the
Borrower on an individual basis, since December 31, 1998.
(b) The Business Plan (including, without limitation, the financial
projections contained therein) represents, as of the Closing Date, the good
faith estimate of the Borrower and its senior management concerning the probable
financial condition and performance of the Borrower and certain of its
Subsidiaries for the time period covered thereunder based upon the assumptions
believed to be reasonable at the time made.
Section 7.3 Corporate Action; No Breach. The execution, delivery and
performance by each of the Loan Parties of the Loan Documents to which it is or
may become a party and compliance with the terms and provisions hereof and
thereof have been duly authorized by all requisite entity action and do not and
will not (a) violate or conflict with, or result in a breach of, or require any
consent under (i) the articles of incorporation, articles of organization,
bylaws, regulations or other constitutional documents of such Loan Party, (ii)
any Governmental Requirement (including, without limitation, the Communications
Act, any rule or regulation of the FCC or any rule or regulation of any federal
or state public utility commission or other Governmental Authority) or any
order, writ, injunction or decree of any Governmental Authority or arbitrator,
or (iii) any Material Contract to which either Loan Party is a party or by which
either Loan Party or any of its Property is bound or subject, or (b) constitute
a default under any such Material Contract, or result in the creation or
imposition of any Lien (except a Lien in favor of the Administrative Agent for
and on behalf of the Lenders under the Security Documents as provided in Article
5) upon any of the revenues or Property of either Loan Party.
Section 7.4 Operation of Business; Licenses. Each of the Borrower and each
of its Subsidiaries (a) possesses all material Permits, franchises, licenses and
authorizations necessary or appropriate to construct and operate the Network and
to conduct its businesses substantially as now conducted and as to be conducted
as contemplated by the Business Plan, and (b) has complied with all initial and
on-going conditions to the issuance and use of all such Permits, franchises,
licenses
CREDIT AGREEMENT - Page 41
48
and authorizations, except where failure to comply could not reasonably be
expected to have a Material Adverse Effect. None of such Persons is in violation
of any such material Permits, franchises, licenses or authorizations which could
be expected to result in any termination or cessation thereof. Such licenses and
Permits have been duly issued by the FCC and the appropriate federal or state
public utility commission or other Governmental Authority (as applicable) and
are in full force and effect, and all provisions of such licenses and Permits
have been complied with in all material respects. No such license or Permit is
subject to any pending or, to the knowledge of the Borrower, threatened
revocation or termination proceeding or action.
Section 7.5 Intellectual Property. Each of the Borrower and its
Subsidiaries owns or possesses (or will be licensed or have the full right to
use) all Intellectual Property which is necessary or appropriate for the
operation of its businesses as presently conducted and as proposed to be
conducted, without any known conflict with the rights of others. The
consummation of the transactions contemplated by this Agreement and the other
Loan Documents will not materially alter or impair, individually or in the
aggregate, any of such rights of such Persons. No product or service of any of
the Borrower or any of its Subsidiaries infringes upon any Intellectual Property
of any other Person, and no claim or litigation is pending or, to the knowledge
of the Borrower, threatened against any such Person contesting its right to sell
or otherwise use any product or material or service which could reasonably be
expected to have a Material Adverse Effect. There is no violation by the
Borrower or any of its Subsidiaries of any right of such Person with respect to
any material Intellectual Property owned or used by such Person.
Section 7.6 Litigation and Judgments. There is no material action, suit,
investigation or proceeding before or by any Governmental Authority or
arbitrator pending or, to the knowledge of the Borrower, threatened against or
affecting either Loan Party, or that relates to any of the Loan Documents as of
the Closing Date. None of such actions, suits, investigations or proceedings
could, if adversely determined, reasonably be expected to have a Material
Adverse Effect. There are no material outstanding judgments against either Loan
Party. No Loan Party has received any opinion or memorandum or legal advice from
legal counsel to the effect that it is exposed to any liability or disadvantage
that could reasonably be expected to have a Material Adverse Effect.
Section 7.7 Rights in Properties; Liens. Each Loan Party has good and
marketable title to or, with respect to leasehold interests, valid leasehold
interests in all of its material Properties and assets, real and personal,
including the material Properties, assets and leasehold interests reflected in
the financial statements described in Section 7.2(a), except where failure to
have good and marketable title or valid leasehold interests could not reasonably
be expected to have a Material Adverse Effect, and none of the Properties or
leasehold interests of any of the Loan Parties is subject to any Lien, except
Permitted Liens. No Loan Party has granted or voluntarily allowed or permitted
to exist any Lien to or in favor of any Person (other than the Administrative
Agent for and on behalf of the Lenders as security for the Obligations) which
attaches or relates to any of the Collateral and the Liens on the Collateral in
favor of the Administrative Agent are perfected, first priority Liens.
Section 7.8 Enforceability. The Loan Documents have been duly and validly
executed and delivered by each of the Loan Parties that is a party thereto, and
such Loan Documents constitute the legal, valid and binding obligations of such
Persons, enforceable against each such Person in
CREDIT AGREEMENT - Page 42
49
accordance with their respective terms, except as limited by bankruptcy,
insolvency or other laws of general application relating to the enforcement of
creditors' rights and general principles of equity.
Section 7.9 Approvals. No authorization, approval or consent of, and no
filing or registration with or notice to, any Governmental Authority (including
the FCC) or third party is or will be necessary for the execution, delivery or
performance by either Loan Party of any of the Loan Documents or any of the
Material Contracts to which it is or will be a party or for the validity or
enforceability thereof, except for such consents, approvals and filings as have
been validly obtained or made and are in full force and effect. The consummation
of the transactions contemplated by the Loan Documents and the Material
Contracts does not require the consent or approval of any other Person, except
such consents and approvals (a) as have been validly obtained and are in full
force and effect or (b) as to which the failure to obtain is not, individually
or in the aggregate, material. No Loan Party has failed to obtain any material
consent, approval, Permit, franchise, license or other authorization of any
Governmental Authority (including the FCC) necessary for the ownership or use of
any of its Properties, conduct of its business and performance of the Business
Plan.
Section 7.10 Debt. As of the Closing Date, the Borrower and its
Subsidiaries are not in default of any Debt.
Section 7.11 Taxes. Each of the Loan Parties has filed (a) all tax returns
(federal, state and local) and reports required to be filed including all
income, franchise, employment, Property and sales tax returns, and (b) all other
material tax returns and reports required to be filed except where failure to
file could not reasonably be expected to have a Material Adverse Effect, and has
paid all federal and other material taxes (shown on such returns or reports to
be due and payable), assessments, fees and other governmental charges levied or
imposed upon it or its Properties, income or assets otherwise due and payable
before they become delinquent, except those which are being contested in good
faith by appropriate proceedings and for which adequate reserves have been
provided in accordance with GAAP and no notice of Lien has been filed or
recorded or, as to such Loan Parties only, except where failure to pay could not
reasonably be expected to have a Material Adverse Effect. There is no proposed
tax assessment against either Loan Party which could, if the assessment were
made, reasonably be expected to have a Material Adverse Effect.
Section 7.12 Margin Securities. Neither of the Loan Parties is engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying margin stock (within the
meaning of Regulations T, U or X of the Board of Governors of the Federal
Reserve System), and no part of the proceeds of any Loan will be used to
purchase or carry any margin stock or to extend credit to others for the purpose
of purchasing or carrying margin stock.
Section 7.13 ERISA. Neither of the Loan Parties or any ERISA Affiliate
maintains or contributes to, or has any obligation under, any Pension Plan as of
the Closing Date. To the extent either Loan Party adopts a Plan, the following
shall at all times be true and correct:
Each Plan of the Loan Parties is in compliance in all material respects
with all applicable provisions of ERISA and the Code. Neither a Reportable
Event nor a Prohibited Transaction has occurred within the last 60 months
with respect to any
CREDIT AGREEMENT - Page 43
50
Plan that could reasonably be expected have a Material Adverse Effect. No
notice of intent to terminate a Pension Plan has been filed, nor has any
Pension Plan been terminated. No circumstances exist which constitute
grounds entitling the PBGC to institute proceedings to terminate, or
appoint a trustee to administer, a Pension Plan, nor has the PBGC
instituted any such proceedings. None of the Borrower, its Subsidiaries
nor any ERISA Affiliate has completely or partially withdrawn from a
Multiemployer Plan. Each of the Borrower and its Subsidiaries and each
ERISA Affiliate have met their minimum funding requirements under ERISA
and the Code or with respect to all of their Pension Plans subject to such
requirements, and the present value of all vested benefits under each
funded Plan (exclusive of any Multiemployer Plan) does not and will not
exceed the fair market value of all such Plan assets allocable to such
benefits, as determined on the most recent valuation date of such Plan and
in accordance with ERISA. Neither the Borrower nor any of its Subsidiaries
nor any ERISA Affiliate has incurred any liability to the PBGC under
ERISA. No litigation is pending or, to the Borrower's knowledge,
threatened concerning or involving any Plan that could reasonably be
expected to have a Material Adverse Effect. There are no unfunded or
unreserved liabilities (on either a going-concern basis or a wind-up
basis) relating to any Plan that could, individually or in the aggregate,
have a Material Adverse Effect if the Borrower were required to fund or
reserve such liability in full. As of the Closing Date, no funding waivers
have been or will have been requested or granted under Section 412 of the
Code with respect to any Plan. No unfunded or unreserved liability for
benefits under any Plan or Plans (exclusive of any Multiemployer Plans)
exceeds $100,000, with respect to any such Plan, or $200,000 with respect
to all such Plans, in the aggregate as of the Closing Date, on either a
going-concern basis or a wind-up basis.
Section 7.14 Disclosure. No written statement, information, report,
representation or warranty made by either Loan Party in any Loan Document or
furnished to the Administrative Agent or any Lender by or on behalf of either
Loan Party in connection with the Loan Documents or any transaction contemplated
hereby or thereby contains any untrue statement of a material fact or omits to
state any material fact necessary to make the statements herein or therein, in
light of the circumstances in which made, not misleading. There is no fact known
to the Borrower which has had a Material Adverse Effect, and there is no fact
known to the Borrower which might in the future have a Material Adverse Effect
except as may have been disclosed in writing to the Administrative Agent.
Section 7.15 Loan Parties. Each Loan Party is incorporated in the State of
New York.
Section 7.16 Compliance with Laws. Neither the Borrower nor any Subsidiary
of the Borrower is in violation of any Governmental Requirement (including,
without limitation, the Communications Act, any rule or regulation of the FCC or
any rule or regulation of any federal or state public utility commission or
other Governmental Authority), except for instances of non-compliance that could
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
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51
Section 7.17 Investment Company Act. No Loan Party is an "investment
company" within the meaning of the Investment Company Act of 1940, as amended.
Section 7.18 Public Utility Holding Company Act. No Loan Party is a
"holding company" or a "subsidiary company" of a "holding company" or an
"affiliate" of a "holding company" or a "public utility" within the meaning of
the Public Utility Holding Company Act of 1935, as amended.
Section 7.19 Environmental Matters.
(a) Except for instances of noncompliance with or exceptions to any of the
following representations and warranties that could not have, individually or in
the aggregate, a Material Adverse Effect:
(i) The Borrower and each of its Subsidiaries and all of their
respective Properties and operations are in full compliance with all
Environmental Laws. The Borrower is not aware of, and neither the Borrower
nor any of its Subsidiaries has received written notice of, any past,
present or future conditions, events, activities, practices or incidents
which may interfere with or prevent the compliance or continued compliance
by the Borrower and its Subsidiaries with all Environmental Laws;
(ii) The Borrower and each of its Subsidiaries have obtained all
Permits that are required under applicable Environmental Laws, and all
such Permits are in good standing and all such Persons are in compliance
with all of the terms and conditions thereof;
(iii) No Hazardous Materials exist on, about or within or have been
(to the knowledge of the Borrower) or are being used, generated, stored,
transported, disposed of on or Released from any of the Properties of the
Borrower or any of its Subsidiaries except in compliance with applicable
Environmental Laws. The use which the Borrower and its Subsidiaries make
and intend to make of their respective Properties will not result in the
use, generation, storage, transportation, accumulation, disposal or
Release of any Hazardous Material on, in or from any of their currently
owned Properties except in compliance with applicable Environmental Laws;
(iv) There are no conditions or circumstances associated with the
currently owned or leased Properties or operations of the Borrower or any
of its Subsidiaries that could reasonably be expected to give rise to any
Environmental Liabilities or claims resulting in any Environmental
Liabilities;
(v) None of the Borrower or any of its Subsidiaries and none of
their respective currently or previously owned or leased Properties or
operations are subject to any outstanding or, to the knowledge of the
Borrower, threatened order from or agreement with any Governmental
Authority or other Person or subject to any judicial or administrative
proceeding with respect to (A) any failure to comply with Environmental
Laws, (B) any Remedial Action, or (C) any Environmental Liabilities;
CREDIT AGREEMENT - Page 45
52
(vi) None of the Borrower or any of its Subsidiaries is subject to,
or has received written notice of any claim from any Person alleging that
it is or will be subject to, any Environmental Liabilities;
(vii) None of the Properties of any of the Loan Parties is a
treatment facility (except for the recycling of Hazardous Materials
generated on-site and the treatment of liquid wastes subject to the Clean
Water Act or other applicable Environmental Law for temporary storage of
Hazardous Materials generated on-site prior to their disposal off-site) or
disposal facility requiring a permit under the Resource Conservation and
Recovery Act, 42 U.S.C. ss. 6901 et seq., regulations thereunder or any
comparable provision of state law. The Loan Parties are in compliance with
all applicable financial responsibility requirements of all Environmental
Laws; and
(viii) None of the Borrower or any of its Subsidiaries has failed to
file any notice required under applicable Environmental Law reporting a
Release.
(b) No Lien arising under any Environmental Law that could have,
individually or in the aggregate, a Material Adverse Effect has attached to any
Property or revenues of the Borrower or any of its Subsidiaries.
Section 7.20 Year 2000 Compliance. The Borrower has (a) initiated a review
and assessment of all areas within its and each of its Subsidiaries' business
and operations (including those affected by suppliers and vendors) that could
reasonably be expected to be relevant to whether the Borrower and its
Subsidiaries are Year 2000 Compliant, (b) developed a plan and timeline for
ensuring that the Borrower and its Subsidiaries are Year 2000 Compliant on a
timely basis, and (c) to date, implemented that plan in accordance with that
timetable. Based upon the foregoing, the Borrower believes that it and its
Subsidiaries are Year 2000 Compliant as of the Closing Date.
Section 7.21 Labor Disputes and Acts of God. Neither the business nor the
Properties of any of the Loan Parties are affected by any fire, explosion,
accident, strike, lockout or other labor dispute, drought, storm, hail,
earthquake, embargo, act of God or of the public enemy or other casualty
(whether or not covered by insurance) that is having or could reasonably be
expected to have a Material Adverse Effect.
Section 7.22 Material Contracts. All of the Material Contracts are in full
force and effect and no Loan Party is in default under any Material Contract
and, to the knowledge of the Borrower after due inquiry, no other Person that is
a party thereto is in default under any of the Material Contracts. None of the
Material Contracts prohibits the transactions contemplated under the Loan
Documents.
Section 7.23 Outstanding Securities. As of the Closing Date, all
outstanding securities (as defined in the Securities Act of 1933, as amended, or
any successor thereto, and the rules and regulations of the Securities and
Exchange Commission thereunder) of the Loan Parties have been offered, issued,
sold and delivered in compliance with all applicable Governmental Requirements.
Section 7.24 Solvency. Each of the Loan Parties, as a separate entity, is
Solvent, both before and after giving effect to the Loans.
CREDIT AGREEMENT - Page 46
53
Section 7.25 Employee Matters. As of the Closing Date (a) no Loan Party
nor any of their employees is subject to any collective bargaining agreement,
and (b) no petition for certification or union election is pending with respect
to the employees of either Loan Party, and no union or collective bargaining
unit has sought such certification or recognition with respect to the employees
of any such Person. There are no strikes, slowdowns, work stoppages or
controversies pending or, to the best knowledge of the Borrower after due
inquiry, threatened against, either Loan Party or its respective employees which
could have, either individually or in the aggregate, a Material Adverse Effect.
Section 7.27 Insurance. The insurance certificate delivered to the Agent
on or prior to the Closing Date sets forth a complete and accurate description
of all policies of insurance that relate to the Collateral. To the extent such
policies have not been replaced, no notice of cancellation has been received for
such policies and the Borrower and the owner and holder of each such policy are
in compliance with all of the terms and conditions of such policies.
Section 7.28 Common Enterprise. The Borrower is the parent corporation of
the Guarantor. Each of the Borrower and the Guarantor will derive substantial
benefit (and may reasonably be expected to derive substantial benefit), directly
and indirectly, from the Loans contemplated by this Agreement.
ARTICLE 8
Affirmative Covenants
The Borrower covenants and agrees that, as long as the Obligations or any
part thereof are outstanding or any Lender has any Commitment hereunder, it will
perform and observe, or cause to be performed and observed, the following
covenants:
Section 8.1 Reporting Requirements. The Borrower will furnish (or will
cause to be furnished) to the Administrative Agent and each Lender:
(a) Annual Financial Statements. As soon as available or upon filing with
the Securities and Exchange Commission, and in any event within 120 days after
the end of each fiscal year of the Borrower, beginning with the fiscal year
ending December 31, 1998, either a copy of the form 10-K (including all
financial statements contained therein) filed by the Borrower as of the end of
and for such fiscal year then ended, together with consolidating schedules for
each of the Borrower and its Subsidiaries with respect to the financial
statements contained therein, or a copy of the annual audit report of the
Borrower and its Subsidiaries as of the end of and for such year and the related
consolidated balance sheet and statements of income or operations, shareholders'
equity and cash flows as of the end of and for such fiscal year, together with
unaudited consolidating schedules for the Borrower and its Subsidiaries with
respect to each of such financial statements, in each case setting forth in
comparative form the figures for the previous fiscal year, and accompanied by
the opinion of independent certified public accountants of recognized standing
reasonably acceptable to the Administrative Agent, which opinion shall state
that such consolidated financial statements
CREDIT AGREEMENT - Page 47
54
present fairly the financial position and results of operations for the periods
indicated in conformity with GAAP applied on a basis consistent with prior years
and which opinion shall not be qualified or limited because of a restricted or
limited examination by such accountant of any material portion of such Person's
records;
(b) Quarterly Financial Statements. As soon as available or upon filing
with the Securities and Exchange Commission, and in any event within 60 days
after the end of each of the quarters of each fiscal year of the Borrower,
beginning with the fiscal quarter ending March 31, 1999, either a copy of the
form 10-Q (including all financial statements contained therein) filed by the
Borrower as of the end of and for such fiscal quarter then ended, together with
consolidating schedules for each of the Borrower and the Guarantor with respect
to each of the financial statements contained therein, or a copy of the
unaudited consolidated balance sheet of the Borrower and its Subsidiaries as of
the end of such quarter and the related consolidated statements of income or
operations, shareholders' equity and cash flows and quarterly operating budgets
for the period commencing on the first day and ending on the last day of such
quarter, together with unaudited consolidating schedules for the Borrower and
the Guarantor with respect to each of such financial statements, in each case
setting forth in comparative form the information or figures for the
corresponding period of the preceding fiscal year, and certified by an
appropriate Responsible Officer of the Borrower as fairly presenting, in
accordance with GAAP, the financial position and the results of operations of
the Borrower and its Subsidiaries (except for year-end adjustments and financial
statement footnotes required by GAAP);
(c) Compliance Certificate. Concurrently with the delivery of each of the
financial statements referred to in Sections 8.1(a) and 8.1(b), a Compliance
Certificate of a Responsible Officer of the Borrower substantially in the form
of Exhibit D hereto, appropriately completed, stating that, to the best of such
officer's knowledge, no Default has occurred and is continuing or, if a Default
has occurred and is continuing, stating the nature thereof and the action that
has been taken and is proposed to be taken with respect thereto;
(d) Notice of Actions, Suits or Proceedings. Promptly after the
commencement thereof, notice of all actions, suits and proceedings before any
Governmental Authority (including the FCC) or arbitrator affecting either Loan
Party or any license or Permit, which, if determined adversely to the Borrower
or any Subsidiary of the Borrower, could reasonably be expected to have a
Material Adverse Effect;
(e) Notice of Default, etc.. As soon as possible and in any event
immediately upon the Borrower's knowledge of the occurrence of any Default under
this Agreement, a written notice setting forth the details of such Default and
the action that the Borrower has taken and, if and to the extent known, proposes
to take with respect thereto;
(f) ERISA Plan Reports. Promptly after the filing or receipt thereof,
copies of all reports, including annual reports, and notices which the Borrower
or any of its ERISA Affiliates files with or receives from the PBGC or the U.S.
Department of Labor under ERISA with respect to a Pension Plan or for which the
Borrower has any potential liability; and as soon as possible and in any event
within five days after the Borrower knows or has reason to know that any Pension
Plan is insolvent, or that any Reportable Event or Prohibited Transaction has
occurred with respect to any Plan or Multiemployer Plan, or that the PBGC, or
the Borrower or any ERISA Affiliate has
CREDIT AGREEMENT - Page 48
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instituted or will institute proceedings under ERISA to terminate or withdraw
from or reorganize any Pension Plan, a certificate of a Responsible Officer of
the Borrower setting forth the details as to such insolvency, withdrawal,
Reportable Event, Prohibited Transaction or termination and the action that the
Borrower has taken and proposes to take with respect thereto;
(g) Proxy Statements, Etc. As soon as available, one copy of each (if any)
financial statement, report, notice or proxy statement sent by the Borrower to
its stockholders or other security holders generally and one copy of each (if
any) regular, periodic or special report (including, without limitation, reports
on forms 10-K, 10-Q and 8-K), registration statement or prospectus filed by the
Borrower with any securities exchange or the Securities and Exchange Commission
or any successor agency;
(h) Insurance. Within 60 days prior to the end of each fiscal year of the
Borrower, a report in form and substance reasonably satisfactory to the
Administrative Agent summarizing all material insurance coverage related to the
Collateral maintained by either Loan Party;
(i) Plan Information. From time to time, as reasonably requested by the
Administrative Agent or any Lender, such books, records and other documents
relating to any Pension Plan as the Administrative Agent or any Lender shall
specify; prior to any termination, partial termination or merger of a Pension
Plan covering employees of the Borrower or any ERISA Affiliate, or a transfer of
assets of a Pension Plan covering employees of the Borrower or any ERISA
Affiliate, written notification thereof; promptly upon the Borrower's receipt
thereof, a copy of any determination letter or advisory opinion regarding any
Pension Plan received from any Governmental Authority and any amendment or
modification thereto as may be necessary as a condition to obtaining a favorable
determination letter or advisory opinion; and promptly upon the occurrence
thereof, written notification of any action requested by any Governmental
Authority to be taken as a condition to any such determination letter or
advisory opinion;
(j) Business Plan, etc. Within 15 after adoption by the Board of
Directors, any update of the Business Plan in reasonable detail generally
consistent with the form and substance of the Business Plan provided to the
Administrative Agent on or before the Closing Date;
(k) Management Letters. Promptly upon each receipt thereof by the Borrower
or any of its Subsidiaries, a copy of any management letter or other written
report submitted to such Loan Party by independent certified public accountants
with respect to the business, condition (financial or otherwise), operations,
prospects or Properties of any such Person;
(l) Reports to Other Creditors. Promptly after the furnishing thereof, a
copy of any financial or other material statement or report furnished by either
Loan Party to any other party pursuant to the terms of any indenture, loan,
stock purchase or credit or similar agreement and not otherwise required to be
furnished to the Administrative Agent and the Lenders pursuant to any other
subsection of this Section 8.1;
(m) Notice of Material Adverse Effect. Within three Business Days after
the Borrower becomes aware thereof, written notice of any matter that could
reasonably be expected to have a Material Adverse Effect;
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(n) Environmental Assessments and Notices. Promptly after the receipt
thereof, a copy of each environmental assessment (including any analysis
relating thereto) prepared with respect to any Property of the Borrower or any
of its Subsidiaries and each notice sent by any Governmental Authority relating
to any failure or alleged failure to comply with any Environmental Law or any
liability with respect thereto;
(o) Notices Under Material Contracts. Promptly after the receipt by the
Borrower or the Guarantor and promptly after the delivery by the Borrower or the
Guarantor, a copy of each written notice delivered under any Material Contract
which notice (i) relates to any alleged default under or noncompliance with or
proposed termination of such Material Contract or (ii) otherwise relates to any
matter under any Material Contract which could give rise to Material Adverse
Effect;
(p) Accountant's Letter. A letter from the Borrower authorizing the
independent public accountants of the Borrower and its Consolidated Subsidiaries
to communicate with the Administrative Agent and the Lenders and acknowledging
reliance with the Administrative Agent and the Lenders on past, present and
future financial statements; and
(q) General Information. Promptly, such other business, financial,
corporate affairs and other similar information concerning the Borrower, the
Guarantor and/or the Collateral as the Administrative Agent or any Lender may
from time to time reasonably request.
Section 8.2 Maintenance of Existence; Conduct of Business. Each Loan Party
will preserve and maintain its entity existence and all of its leases,
privileges, licenses, Permits, franchises, qualifications, Intellectual
Property, intangible Property and rights that are necessary in the ordinary
conduct of its business except to the extent that failure to so preserve and
maintain such could not reasonably be expected to have a Material Adverse
Effect. Each Loan Party will conduct its business in an orderly and efficient
manner in accordance with good business practices and the Business Plan.
Section 8.3 Maintenance of Properties and Permits. Each Loan Party will
maintain, keep and preserve all of its Properties and Permits necessary in the
proper conduct of its businesses in good repair, working order and condition
(ordinary wear and tear excepted) and make all necessary repairs, renewals and
replacements and improvements thereof.
Section 8.4 Taxes and Claims. Each Loan Party will pay or discharge before
becoming delinquent (a) all taxes, levies, assessments and governmental charges
imposed on it or its income or profits or any of its Property and (b) all lawful
claims for labor, material and supplies, which, if unpaid, might become a Lien
upon any of its Property; provided, however, that no Loan Party shall be
required to pay or discharge any tax, levy, assessment or governmental charge,
or claim for labor, material or supplies, whose amount, applicability or
validity is being contested in good faith by appropriate proceedings being
diligently pursued and for which adequate reserves have been established under
GAAP.
Section 8.5 Insurance.
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(a) Each Loan Party will keep insured by financially sound and reputable
insurers all Property of a character usually insured by responsible corporations
engaged in the same or a similar business similarly situated against loss or
damage of the kinds and in the amounts customarily insured against by such
corporations or entities and carry such other insurance as is usually carried by
such corporations or entities, provided that in any event the Borrower and the
other Loan Parties will maintain:
(i) Property Insurance. Insurance against loss or damage covering
substantially all of the tangible real and personal Property (including,
without limitation, the Network and related equipment) and improvements of
such Person by reason of any Peril (as defined below) in such amounts
(subject to any deductibles as shall be satisfactory to the Administrative
Agent) as shall be reasonable and customary and sufficient to avoid the
insured named therein from becoming a co-insurer of any loss under such
policy, but in any event in such amounts as are reasonably available as
determined by the Borrower's independent insurance broker reasonably
acceptable to the Administrative Agent.
(ii) Automobile Liability Insurance for Bodily Injury and Property
Damage. Insurance in respect of all vehicles (whether owned, hired or
rented by such Person) at any time located at, or used in connection with,
its Properties or operations against liabilities for bodily injury and
Property damage in such amounts as are then customary for vehicles used in
connection with similar Properties and businesses, but in any event to the
extent required by applicable law.
(iii) Comprehensive General Liability Insurance. Insurance against
claims for bodily injury, death or Property damage occurring on, in or
about the Property (and adjoining streets, sidewalks and waterways) of
such Person, in such amounts as are then customary for Property similar in
use in the jurisdictions where such Properties are located.
(iv) Worker's Compensation Insurance. Worker's compensation
insurance (including employers' liability insurance) to the extent
required by applicable law, which may be self-insurance to the extent
permitted by applicable law.
Without limiting the generality of the foregoing, the Borrower shall purchase
and maintain in effect all-risk, property and casualty insurance (including
casualty insurance covering earthquake and flood damage) reasonably acceptable
to the Administrative Agent covering all equipment purchased by the Borrower or
the Guarantor from Nortel Networks and liability insurance covering the
operations of the Borrower and the Loan Parties in a commercially reasonable
amount. Such insurance shall be written by financially responsible companies
selected by the Borrower and having an A.M. Best Rating of "A-" or better and
being in a financial size category of "VI" or larger, or by other companies
reasonably acceptable to the Administrative Agent. Each policy referred to in
this Section 8.5 shall name the Administrative Agent (for the benefit of itself
and the other Lenders) as loss payee (with respect to casualty insurance
policies) and additional insured (with respect to liability insurance policies)
and shall provide that it will not be canceled, amended or reduced except after
not less than 30 days' prior written notice to the Administrative Agent and
shall also provide that the interests of the Administrative Agent and the
Lenders shall not be invalidated by any act or negligence of either Loan Party.
The Borrower will advise the Administrative Agent promptly of
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any policy cancellation, reduction or amendment. For purposes hereof, the term
"Peril" shall mean, collectively, fire, lightning, flood, windstorm, hail,
explosion, riot and civil commotion, vandalism and malicious mischief, damage
from aircraft, vehicles and smoke and other perils covered by the "all-risk"
endorsement then in use in the jurisdictions where the Properties of the Loan
Parties are located.
(b) The Borrower will cause each Insurance Recovery related to the
Collateral payable by any insurance company to be deposited promptly with the
Administrative Agent as security for the Tranche A Loans if a Default has then
occurred and is continuing, and will pay all Insurance Recoveries to the
Administrative Agent for application against the Tranche A Loans if and to the
extent required in accordance with Section 2.7(a).
(c) If a Default shall have occurred and be continuing, the Borrower will
cause all proceeds of insurance paid on account of the loss of or damage to any
Collateral and all awards of compensation for any Collateral taken by
condemnation or eminent domain to be paid directly to the Administrative Agent
to be applied against or held as security for the Tranche A Loans, at the
election of the Administrative Agent and the Required Lenders.
Section 8.6 Inspection Rights. The Borrower will, and will cause each of
the Loan Parties to, permit representatives and agents of the Administrative
Agent and each Lender, during normal business hours, upon not less than 10 days
prior notice to the Borrower and without disrupting the Borrower's operations,
to examine, copy and make extracts from its books and records as may be relevant
to the Loans, to visit and inspect its Properties and to discuss its business,
operations and financial condition with its officers and independent certified
public accountants. The Borrower will authorize, and will cause each of the Loan
Parties to authorize, its accountants in writing (with a copy to the
Administrative Agent) to comply with this Section 8.6. The Administrative Agent
or its representatives may, at any time and from time to time at the Borrower's
expense, conduct field exams for such purposes as the Administrative Agent may
reasonably request; provided, so long as no Default shall have occurred and be
continuing, field exams conducted at the expense of the Borrower shall not
exceed $4,000 per calendar year.
.
Section 8.7 Keeping Books and Records. The Borrower will, and will cause
each of the Loan Parties to, maintain appropriate books of record and account in
accordance with GAAP consistently applied in which true, full and correct
entries will be made of all their respective dealings and business affairs. If
any changes in accounting principles from those used in the preparation of the
financial statements referenced in Section 8.1 are hereafter required or
permitted by GAAP and are adopted by the Borrower with the concurrence of its
independent certified public accountants and such changes in GAAP result in a
change in the method of calculation or the interpretation of any of the
covenants, standards or terms contained in this Agreement, the Borrower and the
Required Lenders agree to amend any such affected terms and provisions so as to
reflect such changes in GAAP with the result that the criteria for evaluating
the financial condition or performance of the Loan Parties shall be the same
after such changes in GAAP as if such changes in GAAP had not been made.
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Section 8.8 Compliance with Laws. The Borrower will, and will cause each
of the Loan Parties to, comply with all Governmental Requirements applicable to
the operation of its business (including, without limitation, the Communications
Act, any rule or regulation of the FCC or any rule or regulation of any federal
or state public utility commission or other Governmental Authority), except for
instances of noncompliance that could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
Section 8.9 Compliance with Agreements. The Borrower will, and will cause
each of the Loan Parties to, comply with all agreements, documents and
instruments binding on it or affecting its Properties or business, including,
without limitation, all Material Contracts, except for instances of
noncompliance that could not reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect, including, without limitation, any
instances of default under a Material Contract in which, if the nature of the
default is such that it is not reasonably susceptible of being promptly cured,
the Borrower promptly commences a cure, prosecutes the same with reasonable
diligence and keeps the Administrative Agent informed as to such default and
such cure, in which case the Borrower shall have such cure period as reasonable
under the circumstances at the time, including, among other factors, the
Administrative Agent's Lien in the Collateral.
Section 8.10 Further Assurances. The Borrower will execute and deliver and
will cause each of the Loan Parties to execute and deliver such further
agreements, documents and instruments (including, without limitation, financing
statements and amendments to financing statements specifying each item of the
Collateral and the serial number therefor) and take such further action as may
be reasonably requested by the Administrative Agent to carry out the provisions
and purposes of this Agreement and the other Loan Documents, to evidence the
Obligations and to create, preserve, maintain and perfect the Liens of the
Administrative Agent for the benefit of itself and the Lenders in and to the
Collateral and the required priority of such Liens. In the event the Borrower
determines to loan all or a portion of the proceeds of the Tranche A Loans to
the Guarantor, the loan shall be evidenced by one or more Inter-Company Note(s),
which shall have repayment and prepayment terms consistent with the Tranche A
Notes, shall be collaterally assigned to the Administrative Agent to secure the
Obligations and shall be delivered to the Administrative Agent.
Section 8.11 ERISA. The Borrower will, and will cause each of its ERISA
Affiliates to, comply with all minimum funding requirements and all other
material requirements of ERISA so as not to give rise to any material liability
thereunder.
Section 8.12 Non-Consolidation. The Borrower will, and will cause each
other Loan Party to: (a) maintain entity records and books of account separate
from those of any other entity which is an Affiliate of such Loan Party; (b) not
commingle its funds or assets with those of any other entity which is an
Affiliate of such Loan Party; and (c) provide that its board of directors or
other analogous governing body will hold all appropriate meetings to authorize
and approve such Person's entity actions, which meetings will be separate from
those of other Loan Parties.
Section 8.13 Year 2000 Compliance. All of the material computer software,
computer hardware (whether general or special purpose), and other similar or
related items of automated, computerized or software systems that are used or
relied upon by the Borrower or any of its Subsidiaries in the conduct of its
business are and will continue to be Year 2000 Compliant and,
CREDIT AGREEMENT - Page 53
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without limiting the generality of the foregoing, will not malfunction, will not
cease to function, will not generate incorrect data and will not produce
incorrect results when processing, providing or receiving (a) date-related data
into and between the twentieth and twenty-first centuries and (b) date-related
data in connection with any valid date in the twentieth and twenty-first
centuries. The Borrower will promptly notify the Administrative Agent in the
event the Borrower discovers or determines that any computer application
(including those of its suppliers and vendors) that is material to its or any of
its Subsidiaries' business and operations will not be Year 2000 Compliant on a
timely basis.
Section 8.14 Trade Accounts Payable. The Borrower will, and will cause the
other Loan Parties to, pay all trade accounts payable before the same become
more than 90 days past due, except (a) trade accounts payable contested in good
faith or (b) trade accounts payable in an aggregate amount not to exceed
$100,000 at any time outstanding and with respect to which no proceeding to
enforce collection has been commenced or, to the knowledge of the Borrower,
threatened.
Section 8.15 Delivery of Certain Amendments. The Borrower will, and will
cause the other Loan Parties to, promptly deliver to the Administrative Agent
any amendment, modification or supplement to the articles of incorporation,
articles of organization, bylaws, regulations or other constitutional documents
of the Borrower or the Guarantor; provided, however, that any such amendment,
modification, or supplement to be subject to the provisions of Section 9.9
hereof.
Section 8.16 Board Observation. The Borrower will give the Administrative
Agent notice of each meeting of the Board of Directors and each committee of the
Board of Directors and a Person designated by the Administrative Agent to attend
such meetings as an observer. Such observer shall not be entitled to vote on any
matter submitted to, or to participate in the discussion of any matter
considered by, the Board of Directors (or any committee of the Board of
Directors) and shall have no rights, duties, liabilities or obligations of a
director. The observer may share any information gained from presence at such
meetings with the Administrative Agent and the Lenders, provided, that any
confidential or proprietary information shall be subject to the provisions of
Section 13.20 of this Agreement. The Borrower may request that the observer be
excused for such portions of a meeting that relate to a highly confidential or
internal matter that is not material to the Lenders. The observer may share any
information gained from presence at such meetings with the Administrative Agent
and the Lenders, provided, that any confidential or proprietary information
shall be subject to the provisions of Section 13.20 of this Agreement. Notice of
meetings of the Board of Directors and each committee of the Board of Directors
shall be given to the Administrative Agent not less than 10 Business Days prior
to each regularly scheduled meeting and not less than 2 Business Days prior to
any special meeting (unless members of the Board of Directors or such committee
are given less notice of any such meeting, in which case notice to the
Administrative Agent shall be given contemporaneous to the notice to such
members). Nothing in this Section 8.17 is intended to limit the ability of the
Board of Directors' to take action by written consent, which may be done without
prior notice to the Administrative Agent, provided, that the Borrower shall send
the Administrative Agent copies of any such written consents. The rights
afforded under this Section 8.16 shall terminate upon the repayment in full of
the Tranche B Loans.
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ARTICLE 9
Negative Covenants
The Borrower covenants and agrees that, as long as the Obligations or any
part thereof are outstanding or any Lender has any Commitment hereunder, it will
perform and observe, or cause to be performed and observed, the following
covenants:
Section 9.1 Limitation on Liens. Neither the Borrower nor the Guarantor
will incur, create, assume or permit to exist any Lien upon any of the
Collateral except Permitted Liens.
Section 9.2 Mergers; Liquidation. Neither the Borrower nor the Guarantor
will (a) become a party to a merger or consolidation unless such Person is the
surviving entity or (b) wind-up, dissolve or liquidate itself; provided,
however, that the Guarantor may merge with and into the Borrower if the Borrower
is the surviving entity, provided that no consideration is given by the
surviving entity in such merger other than the issuance of any Capital Stock of
the surviving entity. The surviving entity in any such merger shall ratify the
Security Documents and other obligations of the non-surviving entity under the
Loan Documents.
Section 9.3 Restricted Payments. At any time prior to the termination of
the Tranche B Commitments and the repayment in full of the Tranche B Loans, none
of the Borrower or the Guarantor will make any Restricted Payments, except (a)
the Guarantor may repay the Inter-Company Note and may make Restricted Payments
to the Borrower and (b) the Borrower and its Subsidiaries may make temporary
loans or advances to employees, officers and directors of the Loan Parties in
the ordinary course of business that do not exceed $[1,000,000] in aggregate
amount at any time outstanding. At any time after the termination of the Tranche
B Commitments and the repayment in full of the Tranche B Loans, the Borrower and
the Guarantor may make Restricted Payments, unless a Default exists at the time
of such Restricted Payment or would result therefrom.
Section 9.4 Disposition of Collateral. Neither the Borrower nor the
Guarantor will sell, lease, assign, transfer or otherwise dispose of any of the
Collateral without the prior written consent of the Administrative Agent.
Section 9.5 Lines of Business. The Borrower will at all times operate the
Network and conduct of related telecommunications businesses substantially as
described in and contemplated by the Business Plan and may engage in such
additional businesses as the Borrower may determine.
Section 9.6 Environmental Protection. The Borrower will not, and will not
permit any Subsidiary of the Borrower to, (a) use (or permit any tenant to use)
any of its Properties for the handling, processing, storage, transportation or
disposal of any Hazardous Material except in compliance with applicable
Environmental Laws, (b) generate any Hazardous Material except in compliance
with applicable Environmental Laws, (c) conduct any activity that is likely to
cause a Release or threatened Release of any Hazardous Material in violation of
any Environmental Law, or (d) otherwise conduct any activity or use any of its
Properties in any manner, that violates or is likely to violate any
Environmental Law or create any Environmental Liabilities for which the Borrower
or any of its Subsidiaries would be responsible, except for circumstances or
events
CREDIT AGREEMENT - Page 55
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described in clauses (a) through (d) preceding that could not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect.
Section 9.7 Intercompany Transactions. Except as may be expressly
permitted or required by the Loan Documents, the Borrower will not, and will not
permit any Subsidiary of the Borrower to, create or otherwise cause or permit to
exist or become effective any consensual encumbrance or restriction of any kind
on the ability of any Subsidiary to (a) pay dividends or make any other
distribution to the Borrower or any Loan Party in respect of such Subsidiary's
Capital Stock or with respect to any other interest or participation in, or
measured by, its profits or (b) pay any indebtedness owed to the Borrower or any
Loan Party, including, without limitation, any Inter-Company Note that may
hereafter exist.
Section 9.8 Supply Agreement. The Borrower will ensure that the Guarantor
does not terminate the Supply Agreement prior to the later to occur of the
Amortization Commencement Date or the satisfaction in full of the Guarantor's
purchase commitments under the Supply Agreement.
Section 9.9 Modification of Certain Agreements. Neither the Borrower nor
the Guarantor will consent to or implement any termination, amendment,
modification, supplement or waiver of (a) the articles of incorporation,
articles of organization, bylaws, regulations or other constitutional documents
of the Borrower or the Guarantor or (b) prior to the termination of the Tranche
B Commitments and the repayment in full of the Tranche B Loans, the terms of
payment under the ▇▇▇▇ Canada Fiber Agreement; provided, however, that the Loan
Parties may amend or modify (i) the documents referred to in clause (a)
preceding if and to the extent that such amendment or modification could not
reasonably be expected to be materially adverse to the Loan Party or the
Administrative Agent or any of the Lenders.
Section 9.10 ERISA. The Borrower will not, and will not permit any
Subsidiary of the Borrower to:
(a) allow, or take (or permit any ERISA Affiliate to take) any action
which would cause, any unfunded or unreserved liability for benefits under any
Plan (exclusive of any Multiemployer Plan) to exist or to be created that
exceeds $100,000 with respect to any such Plan or $200,000 with respect to all
such Plans in the aggregate on either a going concern or a wind-up basis; or
(b) with respect to any Multiemployer Plan, allow, or take (or permit any
ERISA Affiliate to take) any action which would cause, any unfunded or
unreserved liability for benefits under any Multiemployer Plan to exist or to be
created, either individually as to any such Plan or in the aggregate as to all
such Plans, that could, upon any partial or complete withdrawal from or
termination of any such Multiemployer Plan or Plans, have a Material Adverse
Effect.
Section 9.10 No Prepayment of Debt, Etc. Neither the Borrower nor the
Guarantor will, directly or indirectly, make any optional prepayment or
distribution on account of, or voluntarily purchase, acquire, redeem or retire,
any Debt, prior to 30 days before its originally stated maturity (or its stated
maturity as of the Closing Date in the case of Debt outstanding on the Closing
Date), or in the case of interest, its stated due date, or directly or
indirectly become obligated to do any of the foregoing by amending the terms
thereof or otherwise, if a Default then exists or would result from such action.
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ARTICLE 10
Financial Covenants
Section 10.1 Credit Facility Debt to Contributed Capital. The Borrower
will not permit the ratio of (a) Total Debt outstanding under this Agreement at
the end of any of the calendar quarters set forth on Part 1 of Schedule 10 to
(b) Contributed Capital on such date, to exceed the ratio set forth opposite
such date on such Schedule.
Section 10.2 Quarterly Minimum EBITDA. The Borrower will not permit EBITDA
for any of the calendar quarter set forth on Part 2 of Schedule 10 to be less
than the amount set forth opposite such date on such Schedule.
ARTICLE 11
Default
Section 11.1 Events of Default. Each of the following shall be deemed an
"Event of Default":
(a) (i) The Borrower shall fail to pay, repay or prepay when due, any
amount of principal or interest owing to the Administrative Agent or any Lender
pursuant to this Agreement, (ii) the Borrower shall fail to pay, within two
Business Days after the due date thereof, any fee, expense or other amount or
other Obligation owing to the Administrative Agent or any Lender pursuant to
this Agreement, or (iii) any Loan Party shall fail to pay any amount owing to
the Administrative Agent or any Lender pursuant to other Loan Document within
five Business Days after the Borrower's receipt of written notice from the
Administrative Agent of such amount owing.
(b) Any representation or warranty made or deemed made by or on behalf of
either Loan Party in any Loan Document or in any certificate, report, notice or
financial statement furnished at any time in connection with this Agreement or
any other Loan Document shall be false, misleading or erroneous in any material
respect when made or deemed to have been made.
(c) Any Loan Party shall fail to perform, observe or comply with any
covenant, agreement or term contained in 8.1(f), Article 9 or Article 10; any
Loan Party shall fail to perform, observe or comply with any covenant, agreement
or term contained in Article 5, or Section 8.1, 8.2, 8.5, 8.8, 8.9, and 8.10,
and such failure is not remedied or waived within ten days after written notice
thereof from the Administrative Agent; or any Loan Party shall fail to perform,
observe or comply with any other covenant, agreement or term contained in this
Agreement or any other Loan Document (other than covenants to pay the
Obligations) and such failure is not remedied or waived within the earlier to
occur of 30 days after written notice thereof from the Administrative Agent or,
if a different grace period is expressly made applicable in such other Loan
Documents, such applicable grace period.
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(d) Any Loan Party ceases to be Solvent or shall admit in writing its
inability to, or be generally unable to, pay its debts as such debts become due.
(e) Any Loan Party shall (i) apply for or consent to the appointment of,
or the taking of possession by, a receiver, custodian, trustee, liquidator or
administrator of itself or of all or a substantial part of its Property, (ii)
admit in writing its inability to, or be generally unable to, pay its debts as
such debts become due, subject to any applicable grace periods, (iii) make a
general assignment for the benefit of its creditors, (iv) commence a voluntary
case under the United States Bankruptcy Code (as now or hereafter in effect, the
"Bankruptcy Code"), (v) file a petition seeking to take advantage of any other
law providing for the relief of debtors or relating to bankruptcy, insolvency,
reorganization, liquidation, dissolution, arrangement or winding up, or
composition or readjustment of debts, (vi) fail to controvert in a timely or
appropriate manner, or acquiesce in writing to, any petition filed against it in
an involuntary case under the Bankruptcy Code or other applicable Governmental
Requirement, (vii) dissolve, or (viii) take any entity action for the purpose of
effecting any of the foregoing.
(f) A proceeding or case shall be commenced, without the application or
consent of either Loan Party in any court of competent jurisdiction, seeking (i)
the liquidation, reorganization, dissolution, arrangement, winding up, or
composition or readjustment of its debts, (ii) the appointment of a trustee,
receiver, custodian, examiner, liquidator, administrator or the like of it or of
all or any substantial part of its Property, or (iii) similar relief in respect
of it, under any law providing for the relief of debtors or relating to
bankruptcy, insolvency, reorganization, liquidation, dissolution, arrangement or
winding up, or composition or readjustment of debts, and such proceeding or case
shall continue undismissed, or an order, judgment or decree approving or
ordering any of the foregoing shall be entered and continue unstayed and in
effect, for a period of 60 or more days; or an order for relief shall be entered
in an involuntary case under the Bankruptcy Code against either Loan Party and
shall continue unstayed and in effect for any period of 60 consecutive days.
(g) Any Loan Party shall fail to discharge within a period of 30 days
after the commencement thereof any attachment, sequestration, forfeiture or
similar proceeding or proceedings involving an aggregate amount in excess of
$250,000 against any of its Properties.
(h) A final judgment or judgments for the payment of money in excess of
$250,000 in the aggregate shall be rendered by a court or courts against either
Loan Party on claims not covered by insurance and the same shall not be
discharged, bonded or a stay of execution thereof shall not be procured, within
30 days from the date of entry thereof and either Loan Party shall not, within
said period of 30 days, or such longer period during which execution of the same
shall have been stayed, appeal therefrom and cause the execution thereof to be
stayed during such appeal.
(i) Any Loan Party shall fail to pay when due any principal of or interest
on any Debt of such Loan Party (other than the Obligations) having (either
individually or in the aggregate) a principal amount of at least $100,000 or the
maturity of any such Debt shall have been accelerated, or any such Debt shall
have been required to be prepaid prior to the stated maturity thereof, or any
event shall have occurred (and shall not have been waived or otherwise cured)
that permits (or, with the giving of notice or lapse of time or both, would
permit) any holder or holders of such Debt or
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any Person acting on behalf of such holder or holders to accelerate the maturity
thereof or require any such prepayment.
(j) This Agreement or any other Loan Document shall cease to be in full
force and effect or shall be declared null and void or the validity or
enforceability thereof shall be contested or challenged by either Loan Party or
either Loan Party shall deny that it has further liability or obligation under
any of the Loan Documents; or any Lien created or purported to be created by the
Loan Documents shall for any reason cease to be or fail to be a valid, first
priority perfected Lien upon any of material item of the Collateral purported to
be covered thereby.
(k) Any of the following events shall occur or exist with respect to
either Loan Party or any ERISA Affiliate: (i) any Prohibited Transaction
involving any Plan; (ii) any Reportable Event with respect to any Pension Plan;
(iii) the filing under Section 4041 of ERISA of a notice of intent to terminate
any Pension Plan or the termination of any Pension Plan; (iv) any event or
circumstance that could reasonably be expected to constitute grounds entitling
the PBGC to institute proceedings under Section 4042 of ERISA for the
termination of, or for the appointment of a trustee to administer, any Pension
Plan, or the institution by the PBGC of any such proceedings; (v) any
"accumulated funding deficiency" (as defined in Section 302 of ERISA or Section
412 of the Code), whether or not waived, shall exist with respect to any Pension
Plan; or (vi) complete or partial withdrawal under Section 4201 or 4204 of ERISA
from a Multiemployer Plan or the reorganization, insolvency or termination of
any Pension Plan; and in each case above, such event or condition, together with
all other events or conditions, if any, have subjected or could in the
reasonable opinion of Required Lenders subject either Loan Party or any ERISA
Affiliate to any tax, penalty or other liability to a Plan, a Multiemployer
Plan, the PBGC or otherwise (or any combination thereof) which in the aggregate
exceed or could reasonably be expected to exceed $100,000.
(l) The occurrence of any breach or default by the Guarantor under the
Supply Agreement (after giving effect to any grace or cure period specified
therein) which breach or default entitles Nortel Networks to exercise a right or
remedy under or in connection with the Supply Agreement.
(m) Any termination, revocation or non-renewal by the FCC or any federal
or state public utility commission or other Governmental Authority of any
material license or Permit of the Borrower or any of its Subsidiaries.
(n) The occurrence of any Material Adverse Effect.
(o) The occurrence of any Change in Control.
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Section 11.2 Remedies. If any Event of Default shall occur and be
continuing, the Administrative Agent may and, if directed by the Required
Lenders, the Administrative Agent shall do any one or more of the following:
(a) Acceleration. Declare all outstanding principal of and accrued and
unpaid interest on the Loans and all other amounts payable by the Borrower under
the Loan Documents immediately due and payable, and the same shall thereupon
become immediately due and payable, without notice, demand, presentment, notice
of dishonor, notice of acceleration, notice of intent to accelerate, protest or
other formalities of any kind, all of which are hereby expressly waived by the
Borrower;
(b) Termination of Commitments. Terminate each of the Commitments without
notice to the Borrower;
(c) Judgment. Reduce any claim to judgment;
(d) Foreclosure. Foreclose or otherwise enforce any Lien granted to the
Administrative Agent for the benefit of the Administrative Agent and the Lenders
to secure payment and performance of the Obligations in accordance with the
terms of the Loan Documents; or
(e) Rights. Exercise any and all rights and remedies afforded by the laws
of the State of New York or any other jurisdiction, by any of the Loan
Documents, by equity or otherwise;
provided, however, that upon the occurrence of an Event of Default under Section
11.1(e) or Section 11.1(f), the Commitments of all of the Lenders shall
immediately and automatically terminate, and the outstanding principal of and
accrued and unpaid interest on the Loans and all other amounts payable by the
Borrower under the Loan Documents shall thereupon become immediately and
automatically due and payable.
Section 11.3 Performance by the Administrative Agent, etc.. If the
Borrower shall fail to perform any covenant or agreement in accordance with the
terms of the Loan Documents, the Administrative Agent may perform or attempt to
perform, or may cause any Lender (with the consent of such Lender) to perform or
attempt to perform, such covenant or agreement on behalf of the Borrower. In
such event, the Borrower shall, at the request of the Administrative Agent,
promptly pay any amount expended by the Administrative Agent or the Lenders in
connection with such performance or attempted performance to the Administrative
Agent at its Principal Office, together with interest thereon at the applicable
Default Rate from and including the date of such expenditure to but excluding
the date such expenditure is paid in full. Notwithstanding the foregoing, it is
expressly agreed that neither the Administrative Agent nor any Lender shall have
any liability or responsibility for the performance of any obligation of the
Borrower or any other Person under this Agreement or any of the other Loan
Documents.
ARTICLE 12
The Administrative Agent
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Section 12.1 Appointment, Powers and Immunities. Each Lender hereby
irrevocably appoints and authorizes the Administrative Agent to act as its agent
hereunder and under the other Loan Documents with such powers as are
specifically delegated to the Administrative Agent by the terms of this
Agreement and the other Loan Documents, together with such other powers as are
reasonably incidental thereto. Neither the Administrative Agent nor any of its
Affiliates, officers, directors, employees, attorneys or agents shall be liable
for any action taken or omitted to be taken by any of them hereunder or
otherwise in connection with this Agreement or any of the other Loan Documents
except for its or their own gross negligence or willful misconduct. Without
limiting the generality of the preceding sentence, the Administrative Agent (a)
may treat the payee of any Note as the holder thereof until the Administrative
Agent receives written notice of the assignment or transfer thereof signed by
such payee and in form satisfactory to the Administrative Agent, (b) shall have
no duties or responsibilities except those expressly set forth in this Agreement
and the other Loan Documents, and shall not by reason of this Agreement or any
other Loan Document be a trustee or fiduciary for any Lender, (c) shall not be
required to initiate any litigation or collection proceedings hereunder or under
any other Loan Document except to the extent requested by the Required Lenders,
(d) shall not be responsible to the Lenders for any recitals, statements,
representations or warranties contained in this Agreement or any other Loan
Document, or any certificate or other document referred to or provided for in,
or received by any of them under, this Agreement or any other Loan Document, or
for the value, validity, effectiveness, enforceability or sufficiency of this
Agreement or any other Loan Document or any other document referred to or
provided for herein or therein or for any failure by any Person to perform any
of its obligations hereunder or thereunder, (e) may consult with legal counsel
(including counsel for the Borrower), independent public accountants and other
experts selected by it and shall not be liable for any action taken or omitted
to be taken in good faith by it in accordance with the advice of such counsel,
accountants or experts, and (f) shall incur no liability under or in respect of
any Loan Document by acting upon any notice, consent, certificate or other
instrument or writing reasonably believed by it to be genuine and signed or sent
by the proper party or parties. As to any matters not expressly provided for by
this Agreement, the Administrative Agent shall in all cases be fully protected
in acting, or in refraining from acting, hereunder in accordance with
instructions signed by the Required Lenders, and such instructions of the
Required Lenders and any action taken or failure to act pursuant thereto shall
be binding on all of the Lenders; provided, however, that the Administrative
Agent shall not be required to take any action which exposes the Administrative
Agent to liability or which is contrary to this Agreement or any other Loan
Document or applicable law. The Administrative Agent shall not be deemed to have
any fiduciary relationship with any Lender or either Loan Party, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into this Agreement or otherwise exist against the Administrative Agent.
Without limiting the generality of the foregoing, the use of the term "agent" in
this Agreement with respect to the Administrative Agent is not intended to
connote any fiduciary or other express or implied obligation arising under
agency doctrine of any applicable law; instead, such term is used merely as a
matter of market custom and is intended to create or reflect only an
administrative relationship among independent contracting parties.
Section 12.2 Rights of Administrative Agent as a Lender. With respect to
its Commitments, the Loans made by it and the Note(s) issued to it, Nortel
Networks (and any successor acting as Administrative Agent) in its capacity as a
Lender hereunder shall have the same rights and powers hereunder as any other
Lender and may exercise the same as though it were not
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acting as the Administrative Agent, and the term "Lender" or "Lenders" shall,
unless the context otherwise indicates, include the Administrative Agent in its
individual capacity. The Administrative Agent and its Affiliates may (without
having to account therefor to any Lender) accept deposits from, lend money to,
act as trustee under indentures of, provide merchant banking services to, own
securities of, and generally engage in any kind of banking, trust or other
business with, the Borrower or any of its Affiliates and any other Person who
may do business with or own securities of the Borrower or any of its Affiliates,
all as if it were not acting as the Administrative Agent and without any duty to
account therefor to the Lenders.
Section 12.3 Defaults. The Administrative Agent shall not be deemed to
have knowledge or notice of the occurrence of a Default (other than the
non-payment of principal of or interest on the Loans or of commitment fees)
unless the Administrative Agent has received notice from a Lender or the
Borrower specifying such Default and stating that such notice is a "notice of
default". In the event that the Administrative Agent receives such a notice of
the occurrence of a Default, the Administrative Agent shall give prompt notice
thereof to the Lenders (and shall give each Lender prompt notice of each such
non-payment). The Administrative Agent shall (subject to Section 12.1) take such
action with respect to such Default as shall be directed by the Required
Lenders, provided that unless and until the Administrative Agent shall have
received such directions, the Administrative Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default as it shall seem advisable and in the best interest of the
Lenders.
Section 12.4 INDEMNIFICATION. EACH LENDER HEREBY AGREES TO INDEMNIFY THE
ADMINISTRATIVE AGENT FROM AND HOLD THE ADMINISTRATIVE AGENT HARMLESS AGAINST (TO
THE EXTENT NOT REIMBURSED UNDER SECTIONS 13.1 AND 13.2, BUT WITHOUT LIMITING THE
OBLIGATIONS OF THE BORROWER UNDER SECTIONS 13.1 AND 13.2), RATABLY IN ACCORDANCE
WITH ITS PRO RATA SHARE (CALCULATED ON THE BASIS OF ITS COMMITMENT PERCENTAGE OF
THE COMMITMENTS), ANY AND ALL LIABILITIES (INCLUDING, WITHOUT LIMITATION,
ENVIRONMENTAL LIABILITIES), OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS,
JUDGMENTS, DEFICIENCIES, SUITS, COSTS, EXPENSES (INCLUDING ATTORNEYS' FEES) AND
DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER WHICH MAY BE IMPOSED ON, INCURRED
BY OR ASSERTED AGAINST THE ADMINISTRATIVE AGENT IN ANY WAY RELATING TO OR
ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY ACTION TAKEN OR OMITTED TO BE
TAKEN BY THE ADMINISTRATIVE AGENT UNDER OR IN RESPECT OF ANY OF THE LOAN
DOCUMENTS; PROVIDED, FURTHER, THAT NO LENDER SHALL BE LIABLE FOR ANY PORTION OF
THE FOREGOING TO THE EXTENT CAUSED BY THE ADMINISTRATIVE AGENT'S GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT. WITHOUT LIMITATION OF THE FOREGOING, IT IS THE
EXPRESS INTENTION OF THE LENDERS THAT THE ADMINISTRATIVE AGENT SHALL BE
INDEMNIFIED HEREUNDER FROM AND HELD HARMLESS AGAINST ALL OF SUCH LIABILITIES
(INCLUDING, WITHOUT LIMITATION, ENVIRONMENTAL LIABILITIES), OBLIGATIONS, LOSSES,
DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, DEFICIENCIES, SUITS, COSTS, EXPENSES
(INCLUDING ATTORNEYS' FEES) AND
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DISBURSEMENTS OF ANY KIND OR NATURE DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RESULTING FROM THE SOLE OR CONTRIBUTORY NEGLIGENCE OF THE ADMINISTRATIVE AGENT
(EXCEPT TO THE EXTENT THE SAME ARE CAUSED BY THE ADMINISTRATIVE AGENT'S GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT). WITHOUT LIMITING ANY OTHER PROVISION OF THIS
SECTION 12.4, EACH LENDER AGREES TO REIMBURSE THE ADMINISTRATIVE AGENT PROMPTLY
UPON DEMAND FOR ITS PRO RATA SHARE (CALCULATED ON THE BASIS OF ITS COMMITMENT
PERCENTAGE OF THE COMMITMENTS) OF ANY AND ALL OUT-OF-POCKET EXPENSES (INCLUDING
ATTORNEYS' FEES) INCURRED BY THE ADMINISTRATIVE AGENT IN CONNECTION WITH THE
PREPARATION, EXECUTION, DELIVERY, ADMINISTRATION, MODIFICATION, AMENDMENT OR
ENFORCEMENT (WHETHER THROUGH NEGOTIATIONS, LEGAL PROCEEDINGS OR OTHERWISE) OF,
OR LEGAL ADVICE IN RESPECT OF RIGHTS OR RESPONSIBILITIES UNDER, THE LOAN
DOCUMENTS, TO THE EXTENT THAT THE ADMINISTRATIVE AGENT IS NOT PROMPTLY
REIMBURSED FOR SUCH EXPENSES BY THE BORROWER.
Section 12.5 Independent Credit Decisions. Each Lender agrees that it has
independently and without reliance on the Administrative Agent or any other
Lender, and based on such documents and information as it has deemed
appropriate, made its own credit analysis of the Borrower and the Loan Parties
and its own decision to enter into this Agreement and that it will,
independently and without reliance upon the Administrative Agent or any other
Lender, and based upon such documents and information as it shall deem
appropriate at the time, continue to make its own analysis and decisions in
taking or not taking action under this Agreement or any of the other Loan
Documents. The Administrative Agent shall not be required to keep itself
informed as to the performance or observance by the Borrower (or any other
Person) of this Agreement or any other Loan Document or to inspect the
Properties or books of the Borrower (or any other Person). Except for notices,
reports and other documents and information expressly required to be furnished
to the Lenders by the Administrative Agent hereunder or under the other Loan
Documents, the Administrative Agent shall not have any duty or responsibility to
provide any Lender with any credit or other financial information concerning the
affairs, financial condition or business of the Borrower (or any of its
Affiliates) which may come into the possession of the Administrative Agent or
any of its Affiliates.
Section 12.6 Several Commitments. The Commitments and other obligations of
the Lenders under this Agreement are several. The default by any Lender in
making a Loan in accordance with any of its Commitments shall not relieve the
other Lenders of their obligations under this Agreement. In the event of any
default by any Lender in making any Loan, each nondefaulting Lender shall be
obligated to make its Loan but shall not be obligated to advance the amount
which the defaulting Lender was required to advance hereunder. In no event shall
any Lender be required to advance an amount or amounts with respect to any of
the Loans which would in the aggregate exceed such Lender's Commitment with
respect to such Loans. No Lender shall be responsible for any act or omission of
any other Lender.
Section 12.7 Successor Administrative Agent. Subject to the appointment
and acceptance of a successor Administrative Agent as provided below, the
Administrative Agent may resign at any
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time by giving notice thereof to the Lenders and the Borrower. Upon any such
resignation, the Required Lenders will have the right to appoint another Lender
as a successor Administrative Agent. If no successor Administrative Agent shall
have been so appointed by the Required Lenders and shall have accepted such
appointment within 30 days after the retiring Administrative Agent's giving of
notice of resignation, then the retiring Administrative Agent may, on behalf of
the Lenders, appoint a successor Administrative Agent, which shall be a
commercial bank organized under the laws of the U.S. or any state thereof or of
a foreign country if acting through its U.S. branch and having combined capital
and surplus of at least $100,000,000. Upon the acceptance of its appointment as
successor Administrative Agent, such successor Administrative Agent shall
thereupon succeed to and become vested with all rights, powers, privileges,
immunities and duties of the resigning Administrative Agent, and the resigning
Administrative Agent shall be discharged from its duties and obligations under
this Agreement and the other Loan Documents. After any Administrative Agent's
resignation as Administrative Agent, the provisions of this Article 12 shall
continue in effect for its benefit in respect of any actions taken or omitted to
be taken by it while it was the Administrative Agent. Each Administrative Agent
(including each successor Administrative Agent) agrees that, so long as it is
acting as Administrative Agent under this Agreement, it shall be a Lender under
this Agreement. Nortel Networks shall not resign as the Administrative Agent
during such time as the Tranche B Loan is outstanding without the prior written
consent of the Borrower which shall not be unreasonably withheld; provided, that
upon the occurrence of an Event of Default, Nortel Networks may resign without
the consent of the Borrower.
ARTICLE 13
Miscellaneous
Section 13.1 Expenses. Each of the Borrower and the Administrative Agent
shall pay its own costs and expenses (including attorneys' fees and expenses)
associated with the preparation, negotiation, execution and delivery of this
Agreement. The Borrower hereby agrees, on demand, to pay or reimburse the
Administrative Agent and each of the Lenders for paying: (a) all reasonable
out-of-pocket costs and expenses of the Administrative Agent accrued in
connection with any and all waivers, amendments, modifications, renewals,
extensions and supplements of or to the Loan Documents, and the syndication of
the Commitments and the Loans, including, without limitation, the reasonable
fees and expenses of legal counsel (including all local counsel) for the
Administrative Agent, (b) all out-of-pocket costs and expenses of the
Administrative Agent and the Lenders in connection with any Default, the
exercise of any right or remedy and the enforcement of this Agreement or any
other Loan Document or any term or provision hereof or thereof, including,
without limitation, the fees and expenses of all legal counsel for the
Administrative Agent and/or any Lender, (c) all transfer, stamp, documentary or
other similar taxes, assessments or charges levied by any Governmental Authority
in respect of this Agreement or any of the other Loan Documents, (d) all costs,
expenses, assessments and other charges incurred in connection with any filing,
registration, recording or perfection of any Lien contemplated by this Agreement
or any other Loan Document, and (e) all reasonable out-of-pocket costs and
expenses incurred by the Administrative Agent in connection with due diligence,
computer services, copying, appraisals, environmental audits, collateral audits,
field exams, insurance, consultants and search reports.
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Section 13.2 INDEMNIFICATION. THE BORROWER HEREBY AGREES TO INDEMNIFY THE
ADMINISTRATIVE AGENT AND EACH LENDER AND EACH AFFILIATE THEREOF AND THEIR
RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, ATTORNEYS AND AGENTS FROM, AND HOLD
EACH OF THEM HARMLESS AGAINST, ANY AND ALL LOSSES, LIABILITIES (INCLUDING,
WITHOUT LIMITATION, ENVIRONMENTAL LIABILITIES), CLAIMS, DAMAGES, PENALTIES,
JUDGMENTS, DISBURSEMENTS, COSTS AND EXPENSES (INCLUDING REASONABLE ATTORNEYS'
AND CONSULTANTS' FEES) TO WHICH ANY OF THEM MAY BECOME SUBJECT WHICH DIRECTLY OR
INDIRECTLY ARISE FROM OR RELATE TO (A) THE NEGOTIATION, EXECUTION, DELIVERY,
PERFORMANCE, ADMINISTRATION OR ENFORCEMENT OF ANY OF THE LOAN DOCUMENTS,
INCLUDING, WITHOUT LIMITATION, THE EXERCISE OF ANY FORECLOSURE RIGHT OR OTHER
RIGHT OR REMEDY WHETHER OR NOT SUCH EXERCISE IS IN COMPLIANCE WITH LAWS
AFFECTING OTHER PERSONS OR RESULTS IN DAMAGES PAYABLE TO OTHER PERSONS, (B) ANY
OF THE TRANSACTIONS CONTEMPLATED BY THE LOAN DOCUMENTS, (C) ANY BREACH BY THE
BORROWER OF ANY MATERIAL REPRESENTATION, WARRANTY, COVENANT OR OTHER AGREEMENT
CONTAINED IN ANY OF THE LOAN DOCUMENTS, (D) THE USE OR PROPOSED USE OF ANY LOAN,
(E) THE PRESENCE, RELEASE, THREATENED RELEASE, DISPOSAL, REMOVAL OR CLEANUP OF
ANY HAZARDOUS MATERIAL LOCATED ON, ABOUT, WITHIN OR AFFECTING ANY OF THE
PROPERTIES OF EITHER LOAN PARTY, EXCEPT TO THE EXTENT THAT THE LOSSES,
LIABILITIES, CLAIMS, DAMAGES, PENALTIES, JUDGMENTS, DISBURSEMENTS, COSTS OR
EXPENSES ARE THE DIRECT RESULT OF GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE
PERSON TO BE INDEMNIFIED, OR (F) ANY INVESTIGATION, LITIGATION OR OTHER
PROCEEDING, INCLUDING, WITHOUT LIMITATION, ANY THREATENED INVESTIGATION,
LITIGATION OR OTHER PROCEEDING RELATING TO ANY OF THE FOREGOING; BUT EXCLUDING
ANY OF THE FOREGOING TO THE EXTENT CAUSED BY THE GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OF THE PERSON TO BE INDEMNIFIED. WITHOUT LIMITING ANY PROVISION OF
THIS AGREEMENT OR OF ANY OTHER LOAN DOCUMENT, IT IS THE EXPRESS INTENTION OF THE
PARTIES HERETO THAT EACH PERSON TO BE INDEMNIFIED UNDER THIS SECTION 13.2 SHALL
BE INDEMNIFIED FROM AND HELD HARMLESS AGAINST ANY AND ALL LOSSES, LIABILITIES
(INCLUDING, WITHOUT LIMITATION, ENVIRONMENTAL LIABILITIES), CLAIMS, DAMAGES,
PENALTIES, JUDGMENTS, DISBURSEMENTS, COSTS AND EXPENSES (INCLUDING REASONABLE
ATTORNEYS' FEES) ARISING OUT OF OR RESULTING FROM THE SOLE OR CONTRIBUTORY
NEGLIGENCE OF SUCH PERSON. WITHOUT PREJUDICE TO THE SURVIVAL OF ANY OTHER TERM
OR PROVISION OF THIS AGREEMENT, THE OBLIGATIONS OF THE BORROWER UNDER THIS
SECTION 13.2 SHALL SURVIVE THE REPAYMENT OF THE LOANS AND OTHER OBLIGATIONS AND
TERMINATION OF THE COMMITMENTS.
Section 13.3 Limitation of Liability. None of the Administrative Agent,
any Lender or any Affiliate, officer, director, employee, attorney or agent
thereof shall be liable for any error of judgment or act done in good faith, or
be otherwise liable or responsible under any circumstances
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whatsoever (including such Person's negligence), except for such Person's gross
negligence or willful misconduct. None of the Administrative Agent, any Lender
or any Affiliate, officer, director, employee, attorney or agent thereof shall
have any liability with respect to, and the Borrower hereby waives, releases and
agrees not to ▇▇▇ any of them upon, any claim for any special, indirect,
incidental or consequential damages suffered or incurred by the Borrower or any
Affiliate of the Borrower in connection with, arising out of or in any way
related to this Agreement or any of the other Loan Documents, or any of the
transactions contemplated by this Agreement or any of the other Loan Documents.
The Borrower hereby waives, releases and agrees not to ▇▇▇ the Administrative
Agent or any Lender or any of their respective Affiliates, officers, directors,
employees, attorneys or agents for exemplary or punitive damages in respect of
any claim in connection with, arising out of or in any way related to this
Agreement or any of the other Loan Documents, or any of the transactions
contemplated by this Agreement or any of the other Loan Documents.
Section 13.4 No Duty. All attorneys, accountants, appraisers and other
professional Persons and consultants retained by the Administrative Agent and
the Lenders shall have the right to act exclusively in the interest of the
Administrative Agent and the Lenders and shall have no duty of disclosure, duty
of loyalty, duty of care or other duty or obligation of any type or nature
whatsoever to the Borrower or any of its Affiliates or any other Person.
Section 13.5 No Fiduciary Relationship. The relationship between the
Borrower and each Lender is solely that of debtor and creditor, and neither the
Administrative Agent nor any Lender has any fiduciary or other special
relationship with the Borrower or any of its Affiliates, and no term or
condition of any of the Loan Documents shall be construed so as to deem the
relationship between the Borrower and any Lender, or such Affiliate and any
Lender, to be other than that of debtor and creditor. No joint venture or
partnership is created by this Agreement among the Lenders or among the Borrower
or any of its Affiliates and the Lenders.
Section 13.6 Equitable Relief. The Borrower recognizes that, in the event
it fails to pay, perform, observe or discharge any or all of the Obligations,
any remedy at law may prove to be inadequate relief to the Administrative Agent
and the Lenders. The Borrower therefore agrees that the Administrative Agent and
the Lenders, if the Administrative Agent or the Lenders so request, shall be
entitled to temporary and permanent injunctive relief in any such case without
the necessity of proving actual damages.
Section 13.7 No Waiver; Cumulative Remedies. No failure on the part of the
Administrative Agent or any Lender to exercise and no delay in exercising, and
no course of dealing with respect to, any right, power or privilege under this
Agreement or any other Loan Document shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, power or privilege under this
Agreement or any other Loan Document preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies provided for in this Agreement and the other Loan Documents are
cumulative and not exclusive of any rights and remedies provided by law.
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Section 13.8 Successors and Assigns.
(a) This Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective successors and assigns. The Borrower may not
assign or transfer any of its rights or obligations under this Agreement or any
other Loan Document without the prior written consent of the Administrative
Agent and the Lenders. Any Lender may sell participations in all or a portion of
its rights and obligations under this Agreement and the other Loan Documents
(including, without limitation, all or a portion of its Commitments and the
Loans owing to it); provided, however, that (i) such Lender's obligations under
this Agreement and the other Loan Documents (including, without limitation, its
Commitments) shall remain unchanged, (ii) such Lender shall remain solely
responsible to the Borrower for the performance of such obligations, (iii) such
Lender shall remain the holder of its Notes for all purposes of this Agreement,
(iv) the Borrower shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement and
the other Loan Documents, and (v) the Lenders shall not grant any participation
under which the participant shall have the right to approve (or under which the
consent of the participant must be obtained prior to the Lenders' being able to
approve) any amendment or waiver of this Agreement or the other Loan Documents,
except to the extent that such amendment or waiver (A) increases any Commitment,
(B) reduces the interest rate or the amount of principal or fees applicable to
the Loans or Commitments in which such participant is participating, (C) extends
any Maturity Date, (D) releases any of the Collateral (except as provided for
herein or in any other Loan Document) or any guaranty of the Obligations, or (E)
releases either Loan Party from its monetary Obligations under any of the Loan
Documents.
(b) The Borrower and each of the Lenders agree that any Lender (the
"Assigning Lender") may at any time assign to one or more Eligible Assignees all
or any part of its rights and/or obligations under this Agreement and the other
Loan Documents (including, without limitation, its Commitments and/or Loans)
(each an "Assignee"); provided, however, that (i) each such assignment may be of
a varying percentage of the Assigning Lender's rights and/or obligations under
this Agreement and the other Loan Documents and may relate to some but not all
of such rights and/or obligations, (ii) except in the case of an assignment of
all of a Lender's rights and obligations under this Agreement and the other Loan
Documents, the amount of the Commitment(s) and/or Loans of the Assigning Lender
being assigned pursuant to each assignment (determined as of the date of the
Assignment and Acceptance with respect to such assignment) shall in no event be
less than $5,000,000 calculated based upon the aggregate amount of the
Commitment(s) and/or Loans assigned and (iii) the parties to each such
assignment shall execute and deliver to the Administrative Agent for its
acceptance and recording in the Register (as defined below), an Assignment and
Acceptance, together with the Note subject to such assignment, and a processing
and recordation fee of $3,500. Upon such execution, delivery, acceptance and
recording, from and after the effective date specified in each Assignment and
Acceptance, which effective date shall be at least five Business Days after the
execution thereof or such other date as may be approved by the Administrative
Agent, (1) the Assignee thereunder shall be a party hereto as a "Lender" and, to
the extent that rights and obligations hereunder have been assigned to it
pursuant to such Assignment and Acceptance, have the rights and obligations of a
Lender hereunder and under the Loan Documents, and (2) the Assigning Lender
thereunder shall, to the extent that rights and obligations hereunder have been
assigned by it pursuant to such Assignment and Acceptance, relinquish its rights
and be released from its obligations under this Agreement and the other Loan
Documents (and,
CREDIT AGREEMENT - Page 67
74
in the case of an Assignment and Acceptance covering all or the remaining
portion of a Lender's rights and obligations under the Loan Documents, such
Lender shall cease to be a party thereto, provided that such Lender's rights
under Article 4, Section 13.1 and Section 13.2 accrued through the date of
assignment shall continue). The Borrower will provide full and prompt assistance
to each Lender as it may reasonably request from time to time in connection with
such Lender's efforts to assign its Commitments and/or Loans or sell any
participation interest therein. Such assistance shall include, without
limitation, making senior officers of the Borrower available for meetings with
prospective Lenders and participants and providing (in a timely manner) such
assistance as may be reasonably requested by such Lender and/or its advisors,
including, without limitation, providing information to and responding to
inquiries from such prospective Lenders and participants with respect to the
businesses, operations, business plan, financial condition and results of
operations of the Borrower and its Subsidiaries.
(c) By executing and delivering an Assignment and Acceptance, the
Assigning Lender thereunder and the Assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (i) other than as
provided in such Assignment and Acceptance, such Assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the Loan
Documents or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Loan Documents or any other instrument or document
furnished pursuant thereto; (ii) such Assigning Lender makes no representation
or warranty and assumes no responsibility with respect to the financial
condition or results of operations of the Borrower or any of its Affiliates or
the performance or observance by the Borrower or any of its Affiliates of its
obligations under the Loan Documents; (iii) such Assignee confirms that it has
received a copy of the Loan Documents, together with copies of the financial
statements referred to in Section 7.2 and such other documents and information
as it has deemed appropriate to make its own credit analysis and decision to
enter into such Assignment and Acceptance; (iv) such Assignee will,
independently and without reliance upon the Administrative Agent or such
Assigning Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement and the other Loan Documents; (v) such
Assignee confirms that it is an Eligible Assignee; (vi) such Assignee appoints
and authorizes the Administrative Agent to take such action as agent on its
behalf and exercise such powers under the Loan Documents as are delegated to the
Administrative Agent by the terms thereof, together with such powers as are
reasonably incidental thereto; and (vii) such Assignee agrees that it will
perform in accordance with their terms all of the obligations which by the terms
of the Loan Documents are required to be performed by it as a Lender.
(d) The Administrative Agent shall maintain at its Principal Office a copy
of each Assignment and Acceptance delivered to and accepted by it and a register
for the recordation of the names and addresses of the Lenders and the
Commitments of, and principal amount of the Loans owing to, each Lender from
time to time (the "Register"). The entries in the Register shall be conclusive
and binding for all purposes, absent manifest error, and the Borrower, the
Administrative Agent and the Lenders may treat each Person whose name is
recorded in the Register as a Lender hereunder for all purposes under the Loan
Documents. The Register shall be available for inspection by the Borrower or any
Lender at any reasonable time and from time to time upon reasonable prior
notice.
CREDIT AGREEMENT - Page 68
75
(e) Upon its receipt of an Assignment and Acceptance executed by an
Assigning Lender and Assignee representing that it is an Eligible Assignee,
together with the Note(s) subject to such assignment, the Administrative Agent
shall, if such Assignment and Acceptance has been completed and is in
substantially the form of Exhibit A hereto, (i) accept such Assignment and
Acceptance, (ii) record the information contained therein in the Register, and
(iii) give prompt written notice thereof to the Borrower. Within five Business
Days after its receipt of such notice, the Borrower, at its expense, shall
execute and deliver to the Administrative Agent in exchange for each surrendered
Note evidencing the Loans assigned, a new Note evidencing such Loans payable to
the order of such Eligible Assignee in an amount equal to such Loans assigned to
it and, if the Assigning Lender has retained any Loans, a new Note evidencing
each such Loans payable to the order of the Assigning Lender in the amount of
such Loans retained by it (each such promissory note shall constitute a "Note"
for purposes of the Loan Documents). Such new Notes shall be dated the effective
date of such Assignment and Acceptance and shall otherwise be in substantially
the form of Exhibit B hereto.
(f) Any Lender may, in connection with any assignment or participation or
proposed assignment or participation pursuant to this Section 13.8, disclose to
the Assignee or participant or proposed Assignee or participant any information
relating to the Borrower or any of its Affiliates furnished to such Lender by or
on behalf of the Borrower or any of its Affiliates; provided that each such
actual or proposed Assignee or participant shall agree to be bound by the
provisions of Section 13.20.
(g) Any Lender may assign and pledge any Note held by it to any Federal
Reserve Bank or the U.S. Treasury as collateral security pursuant to Regulation
A of the Board of Governors of the Federal Reserve System and any operating
circular issued by such Federal Reserve System and/or Federal Reserve Bank;
provided, however, that any payment made by the Borrower for the benefit of such
assigning and/or pledging Lender in accordance with the terms of the Loan
Documents shall satisfy the Borrower's obligations under the Loan Documents in
respect thereof to the extent of such payment. No such assignment and/or pledge
shall release the assigning and/or pledging Lender from its obligations
hereunder.
(h) The Borrower shall maintain, or cause to be maintained, a register
(the "Registered Note Register") (which, at the request of the Borrower (which
request the Borrower makes by the execution of this Agreement) shall be kept by
the Administrative Agent on behalf of the Borrower at no extra charge to the
Borrower at the address to which notices to the Administrative Agent are to be
sent hereunder) on which it shall enter the name of the registered owner of each
of the Loans which is evidenced by a Registered Note. Notwithstanding anything
to the contrary contained in this Section 13.8, a Registered Note and the Loans
evidenced thereby may be assigned or otherwise transferred in whole or in part
only by registration of such assignment or transfer of such Registered Note and
the Loans evidenced thereby on the Registered Note Register (and each Registered
Note shall expressly so provide). Any assignment or transfer of all or part of
such Loans and the Registered Note evidencing the same shall be registered on
the Registered Note Register only upon surrender for registration of assignment
or transfer of the Registered Note evidencing such Loans, duly endorsed by (or
accompanied by a written instrument of assignment or transfer duly executed by)
the registered noteholder thereof, and thereupon one or more new Registered
Notes in the same
CREDIT AGREEMENT - Page 69
76
aggregate principal amount shall be issued to the designated assignee(s) or
transferee(s). Prior to the due presentment for registration of transfer of any
Registered Note, the Borrower and the Administrative Agent shall treat the
Person in whose name such Loans and the Registered Note(s) evidencing the same
are registered as the owner thereof for the purpose of receiving all payments
thereon and for all other purposes, notwithstanding any notice to the contrary.
The Registered Note Register shall be available for inspection by the Borrower
and any Lender at any reasonable time upon reasonable prior notice.
(i) The Borrower will not become a party to any loan agreement, credit
agreement or similar agreement which restricts or prohibits the right or ability
of any lender which is a party thereto to become a Lender under this Agreement.
(j) The Borrower shall provide prompt assistance to the Administrative
Agent and the Lenders in connection with their efforts in syndicating the Loans
and Commitments. Such assistance shall include making senior officers and other
representatives of the Borrower and its Affiliates available for meetings with
prospective Lenders and providing, in a timely manner, such assistance as may be
reasonably requested by the Administrative Agent or its advisors, including,
without limitation, providing information to and responding to inquiries from
prospective Lenders with respect to the business, operations, Business Plan,
results and other matters relating to the business of the Borrower and the other
Loan Parties.
Section 13.9 Survival. All representations and warranties made or deemed
made in this Agreement or any other Loan Document or in any document, statement
or certificate furnished in connection with this Agreement shall survive the
execution and delivery of this Agreement and the other Loan Documents and the
making of the Loans, and no investigation by the Administrative Agent or any
Lender or any closing shall affect the representations and warranties or the
right of the Administrative Agent or any Lender to rely upon them. Without
prejudice to the survival of any other obligation of the Borrower hereunder, the
obligations of the Borrower under Article 4 and Sections 13.1 and 13.2 shall
survive repayment of the Loans and the Reimbursement Obligations and the other
Obligations.
Section 13.10 ENTIRE AGREEMENT. THIS AGREEMENT, THE NOTES AND THE OTHER
LOAN DOCUMENTS REFERRED TO HEREIN EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE
PARTIES HERETO AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, TERM SHEETS,
AGREEMENTS, REPRESENTATIONS AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL,
RELATING TO THE SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS
OF THE PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES
HERETO.
Section 13.11 Amendments. No amendment or waiver of any provision of this
Agreement, the Notes or any other Loan Document to which the Borrower is a
party, nor any consent to any departure by the Borrower therefrom, shall in any
event be effective unless the same shall be agreed or consented to by the
Required Lenders and the Borrower in writing, and each such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given;
CREDIT AGREEMENT - Page 70
77
provided, however, that no amendment, waiver or consent shall, unless in writing
and signed by all of the Lenders and the Borrower, do any of the following: (a)
increase the Commitments of the Lenders (or any Lender) or subject the Lenders
to any additional obligations; (b) reduce the principal of, or interest on, the
Loans or any fees or other amounts payable hereunder; (c) postpone any date
fixed for any payment (including, without limitation, any mandatory prepayment)
of principal of, or interest on, the Loans or any fees or other amounts payable
hereunder; (d) change the Commitment Percentages or the aggregate unpaid
principal amount of the Loans or the number or interests of the Lenders which
shall be required for the Lenders or any of them to take any action under this
Agreement; (e) change any provision contained in Section 3.2, 3.3 or 5.1 or this
Section 13.11 or modify the definition of "Required Lenders" contained in
Section 1.1; or (f) except as expressly authorized by this Agreement, release
any material item of the Collateral from any of the Liens created by the
Security Documents; and provided further, however, that no amendment, waiver or
consent relating to Sections 12.1, 12.2, 12.3, 12.4 or 12.5 shall require the
agreement of the Borrower. Notwithstanding anything to the contrary contained in
this Section 13.11, no amendment, waiver or consent shall be made with respect
to (i) Article 12 hereof without the prior written consent of the Administrative
Agent, (ii) the definition of "Nortel Networks Goods and Services" or "Supply
Agreement" or Section 2.5, 2.9 or 2.10 hereof without the prior written consent
of Nortel Networks (whether or not Nortel Networks is then a Lender hereunder),
or (iii) any condition precedent set forth in Article 6 with respect to the
making of any Tranche A Loans or the Tranche B Loans without the prior written
consent of the Lenders that hold, at the time of such amendment, waiver or
consent, at least a majority (in Dollar amount) of the Tranche A Commitments or
the Tranche B Commitments, respectively.
Section 13.12 Maximum Interest Rate.
(a) No interest rate specified in this Agreement or any other Loan
Document shall at any time exceed the Maximum Rate. If at any time the interest
rate (the "Contract Rate") for any Obligation shall exceed the Maximum Rate,
thereby causing the interest accruing on such Obligation to be limited to the
Maximum Rate, then any subsequent reduction in the Contract Rate for such
Obligation shall not reduce the rate of interest on such Obligation below the
Maximum Rate until the aggregate amount of interest accrued on such Obligation
equals the aggregate amount of interest which would have accrued on such
Obligation if the Contract Rate for such Obligation had at all times been in
effect.
(b) Notwithstanding anything to the contrary contained in this Agreement
or the other Loan Documents, none of the terms and provisions of this Agreement
or the other Loan Documents shall ever be construed to create a contract or
obligation to pay interest at a rate in excess of the Maximum Rate; and neither
the Administrative Agent nor any Lender shall ever charge, receive, take,
collect, reserve or apply, as interest on the Obligations, any amount in excess
of the Maximum Rate. The parties hereto agree that any interest, charge, fee,
expense or other obligation provided for in this Agreement or in the other Loan
Documents which constitutes interest under applicable law shall be, ipso facto
and under any and all circumstances, limited or reduced to an amount equal to
the lesser of (i) the amount of such interest, charge, fee, expense or other
obligation that would be payable in the absence of this Section 13.12(b) or (ii)
an amount, which when added to all other interest payable under this Agreement
and the other Loan Documents, equals the Maximum Rate. If, notwithstanding the
foregoing, the Administrative Agent or any Lender ever contracts for,
CREDIT AGREEMENT - Page 71
78
charges, receives, takes, collects, reserves or applies as interest any amount
in excess of the Maximum Rate, such amount which would be deemed excessive
interest shall be deemed a partial payment or prepayment of principal of the
Obligations and treated hereunder as such; and if the Obligations, or applicable
portions thereof, are paid in full, any remaining excess shall promptly be paid
to the Borrower. In determining whether the interest paid or payable, under any
specific contingency, exceeds the Maximum Rate, the Borrower, the Administrative
Agent and the Lenders shall, to the maximum extent permitted by applicable law,
(i) characterize any nonprincipal payment as an expense, fee or premium rather
than as interest, (ii) exclude voluntary prepayments and the effects thereof,
and (iii) amortize, prorate, allocate and spread in equal or unequal parts the
total amount of interest throughout the entire contemplated term of the
Obligations, or applicable portions thereof, so that the interest rate does not
exceed the Maximum Rate at any time during the term of the Obligations; provided
that, if the unpaid principal balance is paid and performed in full prior to the
end of the full contemplated term thereof, and if the interest received for the
actual period of existence thereof exceeds the Maximum Rate, the Administrative
Agent and/or the Lenders, as appropriate, shall refund to the Borrower the
amount of such excess and, in such event, the Administrative Agent and the
Lenders shall not be subject to any penalties provided by any laws for
contracting for, charging, receiving, taking, collecting, reserving or applying
interest in excess of the Maximum Rate.
Section 13.13 Notices. All notices and other communications provided for
in this Agreement and the other Loan Documents to which either Loan Party is a
party shall be given or made by telecopy or in writing and telecopied, mailed by
certified mail return receipt requested or delivered to the intended recipient
at the "Address for Notices" specified below its name on the signature pages
hereof (or, with respect to a Lender that becomes a party to this Agreement
pursuant to an assignment made in accordance with Section 13.8, in the
Assignment and Acceptance executed by it); or, as to any party, at such other
address as shall be designated by such party in a notice to each other party
given in accordance with this Section 13.13. Except as otherwise provided in
this Agreement, all such communications shall be deemed to have been duly given
when transmitted by telecopy or personally delivered or, in the case of a mailed
notice, upon receipt, in each case given or addressed as aforesaid; provided,
however, that notices to the Administrative Agent shall be deemed given when
received by the Administrative Agent.
Section 13.14 GOVERNING LAW; SUBMISSION TO JURISDICTION; SERVICE OF
PROCESS. EXCEPT AS MAY BE EXPRESSLY STATED TO THE CONTRARY IN CERTAIN LOAN
DOCUMENTS, THIS AGREEMENT, THE NOTES AND THE OTHER LOAN DOCUMENTS SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
(WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES) AND EACH OF THE PARTIES HERETO
CHOOSE THE LAWS OF THE STATE OF NEW YORK TO GOVERN THIS AGREEMENT PURSUANT TO
N.Y. GEN. OBLIG. LAW SECTION 5-1401 (CONSOL. 1995) AND APPLICABLE LAWS OF THE
U.S. THE BORROWER HEREBY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF EACH OF
(1) THE U.S. DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, (2) ANY NEW
YORK STATE COURT SITTING IN NEW YORK, NEW YORK, (3) THE U.S. DISTRICT COURT FOR
THE NORTHERN DISTRICT OF TEXAS, AND (4) ANY TEXAS STATE COURT SITTING IN DALLAS
COUNTY, TEXAS, FOR THE PURPOSES OF ALL LEGAL PROCEEDINGS
CREDIT AGREEMENT - Page 72
79
ARISING OUT OF OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY. THE BORROWER HEREBY IRREVOCABLY
CONSENTS TO THE SERVICE OF ANY AND ALL PROCESS IN ANY SUCH ACTION OR PROCEEDING
BY THE MAILING OF COPIES OF SUCH PROCESS TO SUCH PERSON AT ITS ADDRESS SET FORTH
UNDERNEATH ITS SIGNATURE HERETO. THE BORROWER HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT
AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT
IN AN INCONVENIENT FORM.
Section 13.15 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 13.16 Severability. Any provision of this Agreement held by a
court of competent jurisdiction to be invalid or unenforceable shall not impair
or invalidate the remainder of this Agreement and the effect thereof shall be
confined to the provision held to be invalid or illegal.
Section 13.17 Headings. The headings, captions and arrangements used in
this Agreement are for convenience only and shall not affect the interpretation
of this Agreement.
Section 13.18 Construction. The Borrower, the Administrative Agent and
each Lender acknowledges that it has had the benefit of legal counsel of its own
choice and has been afforded an opportunity to review this Agreement and the
other Loan Documents with its legal counsel and that this Agreement and the
other Loan Documents shall be construed as if jointly drafted by the parties
hereto.
Section 13.19 Independence of Covenants. All covenants hereunder shall be
given independent effect so that if a particular action or condition is not
permitted by any of such covenants, the fact that it would be permitted by an
exception to, or be otherwise within the limitations of, another covenant shall
not avoid the occurrence of a Default if such action is taken or such condition
exists.
Section 13.20 Confidentiality. Each Lender agrees to keep any confidential
or proprietary information, including, without limitation, financial
information, delivered or made available by the Borrower to it which is clearly
indicated to be confidential information, confidential from anyone other than
Persons employed or retained by such Lender who are or are expected to become
engaged in evaluating, approving, structuring or administering the Loans;
provided that nothing herein shall prevent any Lender from disclosing such
information (a) to any other Lender, (b) to any Person if reasonably necessary
to the administration of the Loans, (c) upon the order of any court or
administrative agency, (d) upon the request or demand of any regulatory agency
or authority having jurisdiction over such Lender, (e) which has been publicly
disclosed, (f) in connection with any litigation to which the Administrative
Agent, any Lender or their respective Affiliates may be a party, (g) to the
extent reasonably required in connection with the exercise of any right or
remedy under the Loan Documents, (h) to such Lender's legal counsel, independent
auditors and affiliates,
CREDIT AGREEMENT - Page 73
80
and (i) to any actual or proposed participant or Assignee of all or part of its
rights hereunder, so long as such actual or proposed participant or Assignee
agrees to be bound by the provisions of this Section 13.20; provided, that in
the event of the occurrence of an event set forth in clauses (c), (d) or (f)
above, such Lender shall give the Borrower written notice of such order, request
or demand for such disclosure or such litigation and, to the extent not adverse
to the interests of such Lender, shall not oppose any lawful effort by the
Borrower, made at the expense of the Borrower, to limit or prevent such
disclosure in such court, agency or other forum.
Section 13.21 WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND EXPRESSLY
WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
(WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO
ANY OF THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY OR THE
ACTIONS OF THE BORROWER, THE ADMINISTRATIVE AGENT OR ANY LENDER IN THE
NEGOTIATION, ADMINISTRATION OR ENFORCEMENT THEREOF.
Section 13.22 Approvals and Consent. Except as may be expressly provided
to the contrary in this Agreement or in the other Loan Documents (as
applicable), in any instance under this Agreement of the other Loan Documents
where the approval, consent or exercise of judgment of the Administrative Agent
or any Lender is requested or required, (a) the granting or denial of such
approval or consent and the exercise of such judgment shall be within the sole
discretion of the Administrative Agent or such Lender, respectively, and the
Administrative Agent and such Lender shall not, for any reason or to any extent,
be required to grant such approval or consent or to exercise such judgment in
any particular manner, regardless of the reasonableness of the request or the
action or judgment of the Administrative Agent or such Lender, and (b) no
approval or consent of the Administrative Agent or any Lender shall in any event
be effective unless the same shall be in writing and the same shall be effective
only in the specific instance and for the specific purpose for which given.
Section 13.23 Service of Process. The Borrower irrevocably consents to the
service of process by the mailing thereof by the Administrative Agent or the
Required Lenders by registered or certified mail, postage prepaid, to the
Borrower at its address listed on the signature pages hereof. Nothing in this
Section 13.23 shall affect the right of the Administrative Agent or the Lenders
to serve legal process in any other manner permitted by law or affect the right
of the Administrative Agent or any Lender to bring any action or proceeding
against the Borrower or its Property in the court of any jurisdiction.
CREDIT AGREEMENT - Page 74
81
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year first above written.
TELERGY, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
______________________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Executive Vice President
Address for Notices:
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Executive Vice President
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
Telergy, Inc.
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
CREDIT AGREEMENT - Page 75
82
ADMINISTRATIVE AGENT:
NORTHERN TELECOM INC.,
as Administrative Agent
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
By: _______________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Name: _____________________________________
Director, Customer Finance
Title: ____________________________________
Address for Notices:
Northern Telecom Inc.
▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇
Vice President, Finance
Carrier Packet Solutions
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
Northern Telecom Inc.
GMS 991 04 B30
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Vice President,
Customer Finance North America
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
Northern Telecom Inc.
▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Mail Stop 04D/02/A40
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇, Loan Administration
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
CREDIT AGREEMENT - Page 76
83
LENDERS:
-------
Tranche A Commitment: $ 30,000,000 NORTHERN TELECOM INC.
Tranche B Commitment: $ 15,000,000
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
By: _______________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Name: _____________________________________
Director, Customer Finance
Title: ____________________________________
Address for Notices:
Northern Telecom Inc.
and
Northern Telecom Inc.
GMS 991 04 B30
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Vice President,
Customer Finance North America
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
Northern Telecom Inc.
▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Mail Stop 04D/02/A40
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇, Loan Administration
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Lending Office for Base Rate Loans:
Northern Telecom Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Lending Office for Eurodollar Loans:
Northern Telecom Inc.
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CREDIT AGREEMENT - Page 77