$8,000,000
CREDIT AGREEMENT
Dated as of May 24, 1996
GST NEW MEXICO LIGHTWAVE, INC.
(Borrower)
and
TM COMMUNICATIONS LLC
(Lender)
TABLE OF CONTENTS
Page
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ARTICLE 1 - DEFINITIONS................................................. 1
1.1. Definitions.............................................. 1
1.2. Rules of Interpretation.................................. 2
ARTICLE 2 - THE CREDIT FACILITIES....................................... 2
2.1. Loan Facilities.......................................... 2
2.2. Total Commitments........................................ 5
2.3. Fees..................................................... 6
2.4. Other Payment Terms...................................... 7
2.5. Change of Circumstances.................................. 8
2.6. Funding Loss Indemnification............................. 8
2.7. Security................................................. 9
ARTICLE 3 - CONDITIONS PRECEDENT........................................ 10
3.1. Conditions Precedent to Closing.......................... 10
3.2. Conditions Precedent to Each Construction Loan........... 16
3.3. No Approval of Work; Adjustments to Project Budget....... 18
3.4. Waiver of Funding; Adjustment of Drawdown Requests....... 18
3.5. Expenses in Excess of Project Budget..................... 19
3.6. Conditions Precedent to Term Loan Conversion............. 19
ARTICLE 4 - REPRESENTATIONS AND WARRANTIES.............................. 19
4.1. Organization............................................. 20
4.2. Authorization; No Conflict............................... 20
4.3. Enforceability........................................... 20
4.4. ERISA.................................................... 20
4.5. Taxes.................................................... 20
4.6. Business, Debt, Contracts, Etc........................... 21
4.7. Filings.................................................. 21
4.8. Governmental Regulation.................................. 21
4.9. Financial Statements..................................... 21
4.10. Partnerships and Joint Ventures.......................... 22
4.11. No Default............................................... 22
4.12. Possession of Franchises, Licenses, Etc.................. 22
4.13. Permits.................................................. 22
4.14. Offices, Location of Collateral.......................... 22
4.15. Adverse Change........................................... 23
4.16. Project Documents........................................ 23
4.17. Hazardous Substances..................................... 23
4.18. Transfer of Contracts and Other Rights................... 23
4.19. Litigation............................................... 24
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Page
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4.20. Title, Liens and Easements............................... 24
4.21. Utilities................................................ 25
4.22. Sufficiency of Project Documents......................... 25
4.23. Securities............................................... 25
4.24. Disclosure............................................... 25
4.25. Construction Budget; Projections......................... 26
4.26. Intellectual Property.................................... 26
ARTICLE 5 - COVENANTS OF THE BORROWER................................... 26
5.1. Notices.................................................. 26
5.2. Financial Statements, Reports, Etc....................... 27
5.3. Existence, Conduct of Business, Properties, Etc.......... 28
5.4. Obligations.............................................. 28
5.5. Damage and Cancellation Payments......................... 28
5.6. Books, Records, Access................................... 29
5.7. Operation of Project and Annual Budget................... 29
5.8. Completion............................................... 30
5.9. Preservation of Rights; Further Assurances............... 30
5.10. Construction of Project.................................. 30
5.11. Taxes, Other Government Charges and Utility Charges...... 31
5.12. Compliance with Laws, Instruments, Etc................... 31
5.13. Warranty of Title........................................ 31
5.14. Maintenance of Insurance................................. 32
5.15. Event of Eminent Domain.................................. 32
5.16. Indemnification.......................................... 33
5.17. Development Company Net Cash Flow Agreements............. 34
5.18. Consents to Assignment................................... 34
ARTICLE 6 - NEGATIVE COVENANTS.......................................... 35
6.1. Contingent Liabilities................................... 35
6.2. Limitations on Liens..................................... 35
6.3. Indebtedness............................................. 35
6.4. Sale or Lease of Assets.................................. 35
6.5. Changes.................................................. 35
6.6. Dividends, Redemptions, Etc.............................. 35
6.7. Investments.............................................. 36
6.8. Transactions With Affiliates............................. 36
6.9. Loan Proceeds; Project Revenues.......................... 36
6.10. Partnerships............................................. 36
6.11. Dissolution.............................................. 36
6.12. Amendments; Change Orders; Completion.................... 36
6.13. Name and Location; Fiscal Year........................... 36
6.14. Assignment............................................... 36
6.15. Transfer of Ownership Interests.......................... 37
6.16. Abandonment of Project................................... 37
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Page
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6.17. Hazardous Substance...................................... 37
6.18. ERISA.................................................... 37
ARTICLE 7 - APPLICATION OF FUNDS........................................ 37
7.1. Receipts Account and Operating Account................... 37
7.2. Application Of Insurance Proceeds........................ 39
7.3. Application of Eminent Domain Proceeds................... 41
7.4. Security Interest in Proceeds and Accounts............... 43
7.5. Permitted Investments.................................... 44
ARTICLE 8 - EVENTS OF DEFAULT; REMEDIES................................. 44
8.1. Events of Default........................................ 44
8.2. Remedies................................................. 48
ARTICLE 9 - ASSIGNMENTS, ETC............................................ 49
9.1. Assignments.............................................. 49
9.2. Confidentiality. ....................................... 50
9.3. Securities Laws.......................................... 50
ARTICLE 10 - MISCELLANEOUS.............................................. 50
10.1. Notices................................................. 50
10.2. Additional Security; Right to Set-Off................... 51
10.3. Delay and Waiver........................................ 51
10.4. Costs, Expenses and Attorneys' Fees..................... 52
10.5. Attorney-In-Fact........................................ 52
10.6. Entire Agreement; Amendments and Modifications.......... 53
10.7. Governing Law........................................... 53
10.8. Severability............................................ 53
10.9. Headings................................................ 53
10.10. Accounting Terms........................................ 53
10.11. No Partnership; Etc..................................... 53
10.12. Limitation on Liability................................. 54
10.13. Waiver of Jury Trial.................................... 54
10.14. Consent to Jurisdiction................................. 54
10.15. Usury................................................... 55
10.16. Successors and Assigns.................................. 55
10.17. Counterparts............................................ 55
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EXHIBITS
Exhibit A --- Definitions
Exhibit B --- Form of Note
Exhibit C-1 --- Form of Notice of Borrowing
Exhibit C-2 --- Form of Drawdown Certificate
Exhibit D --- Form of Notice of Term Loan Conversion
Exhibit E --- Form of Notice of Interest Rate Conversion
Exhibit F --- Form of Refinancing Notice
Exhibit G-1 --- Form of Security Agreement
Exhibit G-2 --- Form of Account Security Agreement
Exhibit H --- Form of GST Security Agreement
Exhibit I --- Form of Construction Deed of Trust
Exhibit J --- Form of Pledge Agreement
Exhibit K-1 --- Form of Net Cash Flow Agreement
Exhibit K-2 --- Form of Net Cash Flow Account Security Agreement
Exhibit L --- Form of Lessor's Estoppel and Consent
Exhibit M-1 --- Form of Consent to Assignment of Agreement - Non-Utility
Exhibit M-2 --- Form of Consent to Assignment of Agreement - Utilities
Exhibit M-3 --- Form of Consent to Assignment of Agreement - GST Services
Agreement
Exhibit N-1 --- Form of Opinion of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Frome & ▇▇▇▇▇▇▇▇▇▇, LLP
Exhibit N-2 --- Form of Opinion of Borrower's New Mexico Counsel
Exhibit N-3 --- Form of Opinion of Borrower's FCC Counsel
Exhibit O --- Form of Borrower's Closing Certificate
Exhibit P --- Form of Monthly Report
Exhibit Q --- Form of Assignment Agreement
SCHEDULES
Schedule 1 --- Description of Project
Schedule 2 --- Applicable Easements
Schedule 3 --- Applicable Permits
Schedule 4 --- Security Filings
Schedule 5 --- Adverse Changes
Schedule 6 --- Required Insurance
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CREDIT AGREEMENT
----------------
This CREDIT AGREEMENT (this "Agreement") dated as of May 24,
1996 is entered into by and between:
(1) GST New Mexico Lightwave, Inc., a New Mexico corporation
("Borrower"); and
(2) TM Communications LLC, a Delaware limited liability
company ("Lender").
RECITALS
--------
A. Borrower was formed to develop and operate an alternative access
network telecommunications project in the Albuquerque, New Mexico area as
further described in Schedule 1 (the "Project"). Pursuant to a Master Agreement
dated October 24, 1994 among Pacific Lightwave, Inc., a Washington corporation
(now known as "GST Pacific Lightwave, Inc."), Greenstar Telecommunications Inc.,
a Canadian corporation (now known as "GST Telecommunications, Inc.") ("GSI"),
GST Telecom Inc., a Delaware corporation ("GST"), Pacwest Network L.L.C., an
Oregon limited liability company ("Pacwest"), and Tomen America, Inc. ("Tomen
America"), as amended as of the date hereof by Amendment No. 1 to the Master
Agreement (the "Master Agreement"), Tomen America agreed to provide, or to cause
its affiliates to provide, certain credit facilities to Borrower to finance
certain construction costs of Borrower.
B. Borrower wishes to develop and operate the Project.
C. Lender, an affiliate of Tomen America, is willing to provide credit
facilities for the Project upon the terms and subject to the conditions set
forth herein.
In consideration of the agreements herein and in the other
Credit Documents and in reliance upon the representations and warranties set
forth herein and therein, the parties agree as follows:
ARTICLE 1 - DEFINITIONS
-----------------------
1.1. Definitions. Except as otherwise expressly provided in this
Agreement or any other Credit Document, capitalized terms used in this Agreement
and its Exhibits shall have the meanings given in Exhibit A or in the provision
of this Agreement or other Credit Document referenced in Exhibit A.
1.2. Rules of Interpretation. Except as otherwise expressly provided,
the rules of interpretation set forth in Exhibit A shall apply to this Agreement
and the other Credit Documents.
ARTICLE 2 - THE CREDIT FACILITIES
---------------------------------
2.1. Loan Facilities.
(a) Construction Loan Facility.
(i) Availability. Subject to the terms and conditions
set forth in this Agreement, Lender agrees to advance to Borrower from time to
time during the Construction Loan Availability Period such loans as Borrower may
request under this Section 2.1(a) (individually, a "Construction Loan" and
collectively the "Construction Loans"), in an aggregate principal amount not to
exceed the Total Construction Loan Commitment.
(ii) Notice of Borrowing. Borrower shall request
Construction Loans by delivering to Lender an irrevocable written notice in the
form of Exhibit C-1, appropriately completed (a "Notice of Borrowing"), which
specifies, among other things:
(A) The amount of the requested Construction
Loan, which shall be in the minimum amount of Two Hundred Fifty Thousand Dollars
($250,000); and
(B) The date of the requested Construction
Loan, which shall be a Business Day and which shall comply with Section
3.2(a)(i).
Borrower shall give each Notice of Borrowing, accompanied with an appropriately
completed Drawdown Certificate in the form of Exhibit C-2, to Lender at least
three (3) Business Days before the date of any Construction Loan, in the manner
set forth in Section 10.01.
(iii) Use of Proceeds. Borrower shall use the
proceeds of each Construction Loan solely to pay Project Costs.
(b) Term Loan Facility.
(i) Conversion. Subject to the terms and conditions
set forth in this Agreement, Lender agrees to convert the outstanding
Construction Loans, at the request of Borrower, to term loans under this Section
2.1(b) (each, a "Term Loan") in an aggregate principal amount not to exceed the
Total Term Loan Commitment.
(ii) Notice of Term Conversion. Borrower shall
request a Term Conversion by delivering to Lender an irrevocable written notice
in the form of Exhibit D, appropriately completed (the "Notice of Term
Conversion"), which specifies, among other things, the requested date of the
Term Conversion, which shall be the Construction Loan Maturity Date and a
Business Day.
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Borrower shall give the Notice of Term Conversion to Lender at least three (3)
Business Days before the date of the requested conversion. The Notice of Term
Conversion shall be delivered by first-class mail or telecopy to Lender at the
office or to the telecopy number and during the hours specified in Section 10.1;
provided, however, that Borrower shall promptly deliver to Lender the original
of any Notice of Term Conversion initially delivered by telecopy.
(c) Interest. Borrower shall pay interest on the unpaid
principal amount of the Loan Facility with respect to the Project on the dates
and at the times specified herein from and including the Closing Date to but
excluding the Maturity Date, at a rate per annum equal to the LIBOR Rate plus
3.00% at all times until such time after the Term Conversion as the Term Loan
interest rate may be converted to a fixed interest rate pursuant to Section
2.1(d) and thereafter at a rate per annum equal to the Fixed Rate; provided
however, to the extent that Borrower has not obtained Consents to the assignment
of the Project Documents listed in Section 3.1(b) (with the exception of the
Competitive Access Provider Agreement between GST and Sprint dated October 12,
1995) to Lender in the forms set forth as Exhibit M on or before 60 days from
May 24, 1996, Lender has the right, at its sole option, to increase the interest
rate on the portion of the Loan Facility then in effect by one percent (1%)
until such time as all such consents to assignment shall have been received by
Lender.
All computations of interest shall be based on a year of 360 days for actual
days elapsed.
(d) Conversion to Fixed Rate. Borrower may convert the
interest rate on the Term Loan from the LIBOR Rate to the Fixed Rate; provided,
however that any such conversion shall be made on, and only on, the last day of
an Interest Period. Borrower shall request such a conversion by an irrevocable
written notice to Lender in the form of Exhibit E, appropriately completed (a
"Notice of Interest Rate Conversion"), which specifies, among other things, the
date of the requested conversion, which shall be a Business Day.
Borrower shall give a Notice of Interest Rate Conversion to Lender at least
three (3) Business Days before the date of the requested conversion. The Notice
of Interest Rate Conversion shall be delivered by first-class mail or telecopy
to Lender at the office or to the telecopy number and during the hours specified
in Paragraph 10.1; provided, however, that Borrower shall promptly deliver to
Lender the original of any Notice of Interest Rate Conversion initially
delivered by telecopy.
If Borrower is in compliance with the provisions of this Agreement, no later
than 2:00 p.m. on the date specified in the Notice of Interest Rate Conversion
Lender shall notify Borrower of the effectiveness of the conversion, the amount
of the Fixed Rate and the Liquidation Costs incurred by Lender in effecting such
conversion.
(e) Scheduled Payments. (i) Borrower shall repay to Lender (A)
the principal amount of the Construction Loans, accrued interest on the unpaid
principal amount of the Construction Loans and all outstanding fees and costs
payable to Lender with respect to the Construction Loans on the earlier of the
Construction Loan Maturity Date and the Term Conversion Date, and (B), the
principal amount of the Term Loan in twenty-four (24)
3
equal quarterly installments payable on the 1st day of each third month,
commencing on the earlier of the 1st day of the month which is (y) two years
after the Term Conversion Date or (z) three years after the Closing Date, and
ending six years thereafter; provided, however, that the principal payment due
to Lender on each Maturity Date shall be in the amount necessary to pay all
remaining unpaid principal on the relevant portion of the Loan Facility.
(ii) Borrower shall pay accrued interest on the
unpaid principal amount of the Loan Facility (A) on the last day of each
Interest Period, provided that, in lieu of payments on the last day of each
Interest Period, Borrower shall pay accrued interest from amounts borrowed
pursuant to Construction Loans until the earlier of: (1) the Term Conversion
Date and (2) the date which is one year after the Closing Date; provided
further, that to the extent that net revenues from operations are generated
prior to the dates set forth in the preceding clauses (1) and (2), Borrower
shall forthwith pay such net revenues to Lender towards payment of accrued
interest; (B) upon prepayment (to the extent thereof) and (C) at maturity
(whether by acceleration or otherwise).
(f) Promissory Note. The obligation of Borrower to repay the
Loan Facility and to pay interest thereon at the rates provided herein shall be
evidenced by a promissory note of Borrower in substantially the form of Exhibit
B (the "Note").
(g) Funding.
(i) Notice. Each Notice of Borrowing shall be
delivered to Lender in accordance with Section 2.1(a)(ii).
(ii) Disbursement of Funds. No later than 2:00 p.m.
on the Business Day specified in each Notice of Borrowing, if the applicable
conditions precedent listed in Article 3 have been satisfied, Lender will make
available the Construction Loan requested in such Notice of Borrowing (or so
much thereof as Lender shall have approved pursuant to this Agreement) in
Dollars and in immediately available funds, in accordance with the next
succeeding sentence. At Lender's option and upon notice to Borrower, the amount
of any Construction Loan may, in whole or in part, be (x) disbursed by Lender to
Borrower by wire transfer to the Receipts Account established pursuant to
Section 7.1(a) at Bank of America, Sacramento RBCO, ABA No. ▇▇▇▇▇▇▇▇▇, Account
Number 14899-02380, in lawful money of the United States and in immediately
available funds for application in accordance with the applicable Notice of
Borrowing and the Drawdown Certificate or (y) disbursed by Lender directly to
the Person(s) entitled thereto as specified in the applicable Drawdown
Certificate. Upon the application of funds in accordance with clause (y) of the
preceding sentence, Lender shall as promptly as practicable following the
disbursement of such funds provide an accounting of such payments to Borrower.
Such payment shall discharge pro tanto the obligations of Lender with respect to
such amounts and Borrower hereby authorizes Lender to pay such amounts on its
behalf.
4
(h) Prepayments.
(i) Optional Prepayments. At its option, Borrower
may, upon ten (10) Business Days notice to Lender, prepay the Loan Facility in
part in aggregate principal amounts of not less than Five Hundred Thousand
Dollars ($500,000) or an integral multiple of One Hundred Thousand Dollars
($100,000) in excess thereof, or in whole, subject to this Section 2.1(h).
(ii) Mandatory Prepayments. Borrower shall prepay the
Loan Facility upon a Change of Control.
(iii) Terms of Prepayments.
(A) Upon the prepayment of any Loan Facility
(whether such prepayment is an optional prepayment under Section 2.1(h)(i) or a
mandatory prepayment required by the terms of this Agreement or the other Credit
Documents, including a prepayment upon acceleration), Borrower shall pay (1) all
accrued interest to the date of such prepayment on the amount prepaid, and (2)
all Liquidation Costs incurred by Lender as a result of such prepayment. All
prepayments of a Loan Facility shall reduce the remaining payments required
under Section 2.1(e) in the inverse order of maturity. Borrower may not reborrow
the principal amount of any Construction Loan or Term Loan which is prepaid.
(B) If Borrower proposes to refinance the
Project, Borrower shall deliver a written notice of the proposed refinancing in
the form of Exhibit F (a "Refinancing Notice") stating Borrower's bona fide
intention to refinance the Project, together with a copy of the offer to
finance, including without limitation, the name and address of the proposed
refinancer, the amount of the Loan Facility to be refinanced and the interest
rate and other terms of the proposed refinancing. Within thirty (30) days of
receipt of such Notice, Lender shall have the first right to provide the
proposed refinancing to Borrower upon such interest rate, terms and conditions
proposed by such refinancer as set forth in the Refinancing Notice. If the
Lender elects not to provide such refinancing, Borrower may prepay the Loan
Facility; provided that, Borrower refinances the Project at the interest rate
and on the other terms and conditions offered by the proposed refinancer as set
forth in the Refinancing Notice provided to Lender. At the time of any such
prepayment, in addition to any fees, costs or expenses otherwise payable by
Borrower hereunder, Borrower shall have paid to Lender an additional amount
equal to one-third of the net present value of the interest rate savings, if
any, of the refinancing loan compared to the Loan Facility. Net present value of
the interest payable hereunder and under the proposed refinanced loan shall be
calculated for the purposes of this Section by applying a discount rate equal to
the interest rate set forth in the Refinancing Notice.
2.2. Total Commitments.
(a) Construction Loans. The aggregate principal amount of all
Construction Loans made by the Lender shall not exceed Eight Million Dollars
($8,000,000) (the "Total Construction Loan Commitment").
5
(b) Term Loan. The aggregate principal amount of the Term Loan
outstanding at any time shall not exceed Eight Million Dollars ($8,000,000) (the
"Total Term Loan Commitment").
2.3. Fees.
(a) Upfront Fee. Borrower shall pay $120,000.00 to Lender on
the Closing Date as an upfront fee (the "Upfront Fee"). The Upfront Fee shall be
paid to reimburse Lender for preliminary work done by Lender in consideration of
whether to make, and in preparing its analysis for, the loan to Borrower made by
Lender hereunder.
(b) Commitment Fees. The Borrower shall pay to Lender a
commitment fee on the daily average unused amount of the applicable Committed
Amount at a rate per annum equal to 0.5% for the period from the date of this
Agreement, to but not including the Term Conversion Date. Accrued commitment
fees shall be payable on the last day of each Interest Period and on the Term
Conversion Date.
(c) Net of Taxes, Etc.
(i) Taxes. All payments to Lender by Borrower
hereunder or under any other Credit Document shall be made free and clear of,
and without deduction or withholding for or on account of, any present or future
taxes, levies, imposts, deductions, charges or withholdings now or hereafter
imposed as a result of a Change of Law and all liabilities with respect thereto,
excluding taxes imposed on or measured by the income or capital of Lender (all
such non-excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Taxes"). If, as a result of a
Change of Law Borrower shall be required by law to withhold or deduct any Taxes
imposed by the United States or any political subdivision thereof from or in
respect of any sum payable hereunder or under any other Credit Document to
Lender, (A) the sum payable shall be increased as may be necessary so that after
making all required deductions (including deductions applicable to additional
sums payable under this Section 2.3(c)), Lender receives an amount equal to the
sum it would have received had no such deductions been made, (B) Borrower shall
make such deductions, and (C) Borrower shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance with applicable
law. In addition, Borrower agrees to pay any present or future stamp, recording
or documentary taxes and, if as a result of a Change of Law, any other excise or
property taxes, charges or similar levies that arise under the laws of the
United States of America, the State of New Mexico, the State of California, or
the State of New York from any payment made hereunder or under any other Credit
Document or from the execution or delivery or otherwise with respect to this
Agreement or any other Credit Document (hereinafter referred to as "Other
Taxes").
(ii) Indemnity. Borrower shall indemnify Lender for
the full amount of Taxes and Other Taxes (including any Taxes or Other Taxes
imposed by any jurisdiction on amounts payable under this Section 2.3(c)) paid
by Lender or any liability (including penalties, interest and expenses) arising
therefrom or with respect thereto, whether or not
6
such Taxes or Other Taxes were correctly or legally asserted; provided that,
Borrower shall not be obligated to indemnify Lender for any penalties, interest
or expenses relating to Taxes or Other Taxes arising from Lender's gross
negligence or willful misconduct. Lender agrees to give notice to Borrower of
the assertion of any claim against Lender relating to such Taxes or Other Taxes
as promptly as is practicable after being notified of such assertion; provided
that, Lender's failure to notify Borrower promptly of such assertion shall not
relieve Borrower of its obligation under this Section 2.3(c). Payments by
Borrower pursuant to this indemnification shall be made within thirty (30) days
from the date Lender makes written demand therefor, which demand shall be
accompanied by a certificate describing in reasonable detail the basis thereof.
Lender agrees to repay to Borrower any refund (including that portion of any
interest that was included as part of such refund with respect to Taxes or Other
Taxes paid by Borrower pursuant to this Section 2.3(c)) received by Lender for
Taxes or Other Taxes that were paid by Borrower pursuant to this Section 2.3(c)
and to contest, with the cooperation and at the expense of Borrower, any such
Taxes or Other Taxes which Lender or Borrower reasonably believes not to have
been properly assessed.
(iii) Notice. Within 30 days after the date of any
payment of Taxes by the Borrower, Borrower shall furnish to Lender, at its
address referred to in Section 10.1 hereof, the original or a certified copy of
a receipt evidencing payment thereof. Borrower shall compensate Lender for all
reasonable losses and expenses sustained by Lender as a result of any failure by
Borrower to so furnish such copy of such receipt.
(iv) Survival of Obligations. The obligations of
Borrower under this Section 2.3(c) shall survive the termination of this
Agreement and the repayment of Borrower's Obligations.
2.4. Other Payment Terms.
(a) Place and Manner. Borrower shall make all payments due to
Lender hereunder by wire transfer to Tomen America's Account at Citibank, N.A.,
ABA No. ▇▇▇▇▇▇▇▇▇, Account No. ▇▇▇▇▇▇▇▇, or as the Lender shall otherwise
direct, in lawful money of the United States and in immediately available funds
not later than 12:00 noon New York time on the due date.
(b) Late Payments. If any amounts required to be paid by
Borrower under this Agreement or the other Credit Documents (including principal
or interest payable on the Loan Facility, and any fees or other amounts
otherwise payable to Lender) remain unpaid after such amounts are due, Borrower
shall pay interest on the aggregate outstanding balance of such amounts from the
date due until those amounts are paid in full at a per annum rate equal to the
Default Rate.
(c) Application of Payments. Payments made under this
Agreement or the other Credit Documents shall first be applied to any fees,
costs, charges or expenses payable to Lender hereunder or under the other Credit
Documents, next to any accrued but unpaid interest, and then to outstanding
principal in inverse order of maturity.
7
2.5. Change of Circumstances.
(a) Inability to Determine Rates. If, on or before the first
day of any Interest Period Lender shall have determined (which determination
shall be conclusive and binding on all parties hereto) that the LIBOR Rate for
such Interest Period cannot be adequately and reasonably determined due to the
unavailability of funds in or other circumstances affecting the London interbank
market, Lender shall immediately give notice of such condition to Borrower.
After the giving of any such notice and until Lender shall otherwise notify
Borrower that the circumstances giving rise to such condition no longer exist,
Borrower's right to request the making of, and Lender's obligations to make
Loans at the LIBOR Rate shall be suspended. Borrower may, in compliance with the
other terms and conditions hereof, request Alternate Interest Rate Construction
Loans during any periods in which the LIBOR Rate is suspended. Any LIBOR Rate
Loan Facility outstanding at the commencement of any such suspension shall be
converted at the end of the then current Interest Period into an Alternate
Interest Rate Loan unless such suspension has then ended.
(b) Illegality. If, after the date of this Agreement, the
adoption of any Governmental Rule, any change in any Governmental Rule or the
application or requirements thereof (whether such change occurs in accordance
with the terms of such Governmental Rule as enacted, as a result of amendment or
otherwise), any change in the interpretation or administration of any
Governmental Rule by any Governmental Authority, or compliance by Lender or
Borrower with any request or directive (whether or not having the force of law)
of any Governmental Authority (a "Change of Law") shall make it unlawful or
impossible for Lender to make or maintain any Construction Loan or the Term
Loan, Lender shall promptly notify Borrower of such Change of Law. Upon receipt
of such notice, (i) Borrower's right to request the making of Construction Loans
shall be terminated, and (ii) Borrower shall, at the request of Lender,
immediately repay the Loan Facility together with all accrued and unpaid
interest.
2.6. Funding Loss Indemnification. If Borrower shall (a) repay or
prepay the Loan Facility or any portion thereof on any day other than the last
day of an Interest Period (whether a payment upon acceleration or otherwise),
(b) fail to borrow in accordance with a Notice of Borrowing delivered to Lender
(whether as a result of the failure to satisfy any applicable conditions or
otherwise), or (c) prepay the Term Loan or any portion thereof after the
interest rate has been converted to a Fixed Rate, Borrower shall, upon demand by
Lender, reimburse Lender for and hold Lender harmless from all costs and losses,
expenses and liabilities incurred by Lender as a result of such repayment,
prepayment or failure (including without limitation by reason of the liquidation
of deposits or other funds by Lender) ("Liquidation Costs"). Borrower
understands that such Liquidation Costs may include direct losses incurred by
Lender as a result of funding and other contracts entered into by Lender.
8
2.7. Security.
(a) Security Agreement, Pledge, etc. The Obligations of
Borrower to Lender shall be secured by the following:
(i) The Security Agreement, between Borrower, as
grantor, and Lender, in the form of Exhibit G-1, duly executed by Borrower (the
"Security Agreement");
(ii) The Deposit Account Security Agreement, between
Borrower, as grantor, and Lender, in the form of Exhibit G-2 duly executed by
Borrower (the "Account Security Agreement");
(iii) The GST Security Agreement, between GST, as
grantor, and Lender, in the form of Exhibit H, duly executed by GST (the "GST
Security Agreement");
(iv) Construction Deeds of Trust in the form of
Exhibit I, duly executed;
(v) The Pledge Agreement, of GST as the sole
shareholder of Borrower, in the form of Exhibit J, duly executed by GST (the
"Pledge Agreement");
(vi) The Net Cash Flow Agreements of GST Pacific
Lightwave, Inc., GST Tucson Lightwave, Inc., Borrower and the development
companies of all other Network Projects to which Lender or any of its Affiliates
has provided debt funding in the form of Exhibit K-1, duly executed by such
Development Companies (the "Net Cash Flow Agreements");
(vii) The Net Cash Flow Deposit Account Security
Agreements of GST Pacific Lightwave, Inc., GST Tucson Lightwave, Inc. and
Borrower in the form of Exhibit K-1, duly executed by such Development Companies
(the "Net Cash Flow Account Security Agreements"); and
(viii) Such other documents, instruments and
agreements as Lender may request in order to grant to Lender Liens in all assets
of Borrower (including, without limitation, all Permits), the shares of
Borrower's capital securities (other than shares held by the Lender) and all
other assets reasonably necessary for the operation and maintenance of the
Project.
(b) Further Assurances. Borrower shall deliver to Lender each
of the foregoing and such other instruments, agreements, certificates, opinions
and documents (including Uniform Commercial Code financing statements and
fixture filings and landlord waivers) as Lender may reasonably request to
perfect and maintain the Liens granted to Lender by the foregoing prior to the
Liens or other interests of any Person other than Lender. Borrower shall fully
cooperate with Lender and perform all additional acts reasonably requested by
Lender to effect the purposes of the foregoing.
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ARTICLE 3 - CONDITIONS PRECEDENT
--------------------------------
3.1. Conditions Precedent to Closing. The obligation of Lender to make
any Construction Loans is subject to the satisfaction of the following
conditions on or prior to the Closing Date (unless waived by Lender):
(a) Principal Credit Documents. Lender shall have received the
following Credit Documents, each of which (i) shall be in form and substance
satisfactory to Lender, and (ii) shall have been duly authorized, executed and
delivered by the parties thereto:
(A) This Agreement;
(B) The Note;
(C) The Security Agreement;
(D) The Account Security Agreement;
(E) The GST Security Agreement;
(F) The Pledge Agreement;
(G) The Net Cash Flow Agreements;
(H) The Net Cash Flow Account Security Agreements;
(I) An agreement duly executed by Greenstar agreeing
to subordinate all payments due to Greenstar pursuant to any management
agreement between Borrower and Greenstar to the obligations of Borrower to
Lender under this Agreement, the other Credit Agreements and any net cash flow
pledge agreement entered into by Borrower pursuant to Section 5.17;
(J) The Construction Deeds of Trust in the form of
Exhibit I for Bernalillo County; and
(K) The UCC-1 Financing Statements set forth on
Schedule 7.
(b) Project Documents. Lender shall have received (i) true,
complete and correct copies of the following Project Documents, and any
supplements or amendments thereto, each of which (A) shall be in form and
substance satisfactory to Lender, (B) shall have been duly authorized, executed
and delivered by the parties thereto, and (C) shall have been certified by an
authorized officer of Borrower as being true, complete and correct and in full
force and effect, and (ii) evidence satisfactory to Lender that each Project
Document is in full force and effect and that no party to any Project Document
is or, but for the passage of time or giving of notice or both will be, in
breach of any obligation thereunder which is reasonably expected to have a
Material Adverse Effect:
10
(A) The Construction Contracts;
(B) The Pole and Conduit Use Agreements;
(C) The City of Albuquerque License and the City of
Rio Rancho License;
(D) The CPCN;
(E) The Collocation Agreements;
(F) The Interconnection Agreements;
(G) The Leases; and
(H) Each other applicable Project Document not
listed in this Section 3.1(b), including
without limitation, each equipment purchase
agreement referenced in Section 3(b) of the
Master
Agreement.
(c) Borrower Documents. Lender shall have received the
following items, each in form and substance satisfactory to Lender:
(i) A copy of one or more resolutions or other
authorizations of Borrower, certified by Borrower's Secretary as being in full
force and effect on the Closing Date, authorizing the borrowings herein provided
for, the development of the Project and the execution, delivery and performance
of this Agreement and the other Operative Documents and any instruments or
agreements required hereunder or thereunder to which Borrower is a party and the
consummation of the transactions contemplated thereby;
(ii) A certificate of Borrower signed by the
appropriate authorized officer of Borrower and dated as of the Closing Date, as
to the incumbency of the Person or Persons authorized to execute and deliver
this Agreement and the other Operative Documents and any instruments or
agreements required hereunder or thereunder to be executed on the Closing Date
to which Borrower is a party;
(iii) Copies of the Articles of Incorporation and any
Amendments to the Articles of Incorporation of Borrower (including the Articles
of Merger merging GST New Mexico Inc., a Delaware corporation, with and into
Borrower), certified by the New Mexico Secretary of State, and of copies of the
Bylaws of Borrower, certified by the Secretary of Borrower; and
(iv) Certificates issued by the New Mexico Secretary
of State and state tax authority as to the good standing of Borrower, and the
tax status of Borrower, respectively.
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(d) Security Filings. Lender shall have received the following
items, each in form and substance satisfactory to Lender:
(i) A UCC-3 (or similar) report of a date not less
recent than one (1) week before the Closing Date for each of the jurisdictions
in which the UCC-1 financing statements and the fixture filings are intended to
be filed in respect of the Collateral, showing that upon due filing or
recordation (assuming such filing or recordation occurred on such date), the
security interests created under such Collateral Documents will be prior to all
other financing statements, fixture filings, deeds of trust, mortgages or other
security documents in respect of the Collateral;
(ii) Evidence that all appropriate financing
statements and fixture filings were filed and/or recorded as required hereunder
or by law; and
(iii) Stock certificate(s) representing all of the
outstanding capital stock of Borrower together with stock powers duly endorsed
by Borrower's stockholder attached thereto.
(e) Easements. Lender shall have received the following items,
each in form and substance satisfactory to Lender:
(i) A schedule of Applicable Easements required to
construct and operate the Project, which schedule shall be included in and made
a part of this Agreement as Schedule 3, together with evidence of each
Applicable Easement listed on Part I of such schedule and a certificate of an
authorized officer of Borrower certifying that neither Borrower nor such
authorized officer has any reason to believe that all Applicable Easements that
have not been obtained prior to the Closing Date will not be obtained by the
dates by which they are required; and
(ii) Other evidence requested by Lender that (A)
Borrower has duly obtained the Applicable Easements set forth on Schedule 3,
other than those set forth in Part II of such schedule which are not, in light
of the status of the acquisition, development, construction and operation of the
Project as of the Closing Date, required to have been obtained as of such
Closing Date and which, in the reasonable opinion of Lender, can be obtained not
later than required without substantial difficulty, expense or delay, and (B)
such Applicable Easements are in full force and effect and not subject to any
condition, limitation or other provision that in the reasonable judgment of
Lender or its counsel could have a Material Adverse Effect.
(f) Consents and Estoppels. Lender shall have received the
following items, each in form and substance satisfactory to Lender:
(i) An Estoppel and Consent Certificate in the form
of Exhibit L from each lessor of real property to Borrower duly executed by each
such Lessor and Borrower;
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(ii) Consents to assignment of all material licenses,
permits and agreements in the form attached hereto as Exhibit M-1, M-2 and M-3.
(g) Permit, Regulatory and Environmental Matters. Lender shall
have received the following items, each in form and substance satisfactory to
Lender:
(i) A schedule of Applicable Permits required to
construct and operate the Project, which schedules shall be included in and made
a part of this Agreement as Schedule 4, together with copies of each Applicable
Permit listed on Part I of such schedule, and a certificate of an authorized
officer of Borrower certifying that neither Borrower nor such authorized officer
has any reason to believe that all Applicable Permits that have not been
obtained prior to the applicable Closing Date will not be obtained by the dates
by which they are required; and
(ii) Other evidence requested by Lender that (A)
Borrower has duly obtained or been assigned the Applicable Permits for the
Project, other than those set forth in Part II of such schedule which are not,
in light of the status of the acquisition, development, construction and
operation of the Project as of the Closing Date, required to have been obtained
or made as of the Closing Date and which, in the reasonable opinion of Lender,
can be obtained not later than required without substantial difficulty, expense
or delay, and (B) such Applicable Permits are in full force and effect and not
subject to any appeal, restriction, condition, limitation or other provision
that in the reasonable judgment of Lender or its counsel could have a Material
Adverse Effect.
(iii) A certificate of Borrower, that all Permits,
Easements, Licenses, Leases and other property rights necessary have been
obtained and that such Permits, Easements, Licenses, Leases and other property
rights form a contiguous and uninterrupted line necessary to construct and
operate the Project.
(iv) Evidence that Borrower and the network to be
constructed by the Project will not be subject to regulation by the New Mexico
Corporation Commission to an extent unacceptable to Lender in its discretion.
(h) Capital Contribution. Lender shall have received evidence
that GST Telecom Inc. has made a capital contribution to Borrower of Two Million
Six Hundred Sixty Six Thousand Six Hundred Sixty-Six Dollars ($2,666,666).
(i) Third Party Reports. Lender shall have received
satisfactory third- party appraisal, feasibility, engineering, environmental and
accounting reviews relating to the Project.
(j) Opinions. Lender shall have received the opinions, each in
form and substance satisfactory to Lender, of:
(i) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Frome & ▇▇▇▇▇▇▇▇▇▇, LLP, counsel
for Borrower, in substantially the form of Exhibit N-1;
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(ii) Jones, Snead, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇,
P.A., special New Mexico counsel for Borrower, in substantially the form of
Exhibit N-2; and
(iii) ▇▇▇▇▇▇▇ & Berlin, FCC Counsel for Borrower, in
substantially the form of Exhibit N-3.
(k) Certificate. Lender shall have received evidence that
Borrower has obtained and is maintaining in full force and effect insurance
complying with Section 5.14 hereof and Schedule 6 hereto, including (A) a
certificate from Borrower's insurance broker(s), dated as of the Closing Date
and identifying underwriters, type of insurance, insurance limits and policy
terms, listing the special provisions required as set forth in Section 5.14
hereof and Schedule 6 hereto, describing the insurance obtained and stating that
such insurance is in full force and effect and that all premiums then due
thereon have been paid, and (B) certified copies of all policies evidencing such
insurance (or a binder, commitment or certificates signed by the insurer or a
broker authorized to bind the insurer).
(l) Financial Statements, Expenditures to Closing Date,
Projections, Etc. Lender shall have received and approved the following items,
each in form and substance satisfactory to Lender:
(i) The most recent annual financial statements
(audited if available), most recent quarterly financial statements from
Borrower, together with a certificate from the appropriate officer of such
Person, stating that no material adverse change in the consolidated assets,
liabilities, operations or financial condition of such Person has occurred since
the date of the financial statements provided to Lender, and pro forma financial
statements for Borrower giving effect to the Capital Contributions;
(ii) A budget for the Project (the "Project Budget")
for all anticipated costs to be incurred in connection with the construction and
start-up of the Project, including in such budget all construction and
non-construction costs, and including all interest, taxes and other carrying
costs, and such other information as Lender may require, together with a
balanced statement of sources and uses of proceeds (and any other funds
necessary to complete the Project), broken down as to separate construction
phases in a manner satisfactory to Lender.
(iii) An accurate and complete accounting of
expenditures of the Project as of the date five (5) Business Days before the
Closing Date, certified by the Chief Financial Officer of Borrower.
(iv) Borrower shall have furnished Lender the Base
Case Project Projections of operating expenses and cash flow for the Project and
the Project Schedule for the Project and the Milestone Disbursement Schedule for
the Project; and
(v) Evidence that there has not occurred any material
adverse change in the Project Budget, Project Schedule or Base Case Project
Projections, in the economics or feasibility of constructing and/or operating
the Project, or in the financial
14
condition, business or property of any Major Project Participant, which will
have a Material Adverse Effect.
(m) Consents. Lender shall have received executed copies of
the Consents, each in form and substance satisfactory to Lender, including
without limitation, consents to assignment of each of the Project Documents in
the forms of Exhibit M-1, M-2 and M-3 hereto.
(n) Due Diligence. Lender shall have approved the results of
its due diligence review in connection with the transactions contemplated
hereby.
(o) Other Matters. Lender shall have received the following
items, each in form and substance satisfactory to Lender:
(i) Such other evidence as Lender may have requested
that all corporate and legal proceedings and all instruments in connection with
the transactions contemplated by this Agreement are satisfactory in form and
substance to Lender;
(ii) All approvals of Lender and Tomen Corporation
(Lender's parent corporation);
(iii) All information and copies of all documents,
including records of corporate proceedings and copies of any approval by any
Governmental Authority required in connection with any transaction herein
contemplated, which Lender may reasonably have requested in connection herewith,
such documents where appropriate to be certified by proper corporate officers or
Governmental Authorities;
(iv) Evidence that no action, suit, proceeding or
investigation has been instituted or threatened by any Person, nor has any
order, judgment or decree have been issued or proposed to be issued by any
Governmental Authority that could have a Material Adverse Effect;
(v) Evidence that all taxes, fees and other costs
payable in connection with the execution, delivery, recordation and filing of
the documents and instruments referred to in this Section 3.1 have been paid in
full;
(vi) Evidence that Tomen or an Affiliate of Tomen has
been appointed and is serving as Procurement Agent for the Project;
(vii) Evidence that ▇▇▇ is the sole stockholder of
GST as of the Closing Date; and
(viii) A certificate in substantially the form of
Exhibit O hereto (the "Borrower's Closing Certificate"), dated as of the Closing
Date, signed by an authorized officer of Borrower.
15
3.2. Conditions Precedent to Each Construction Loan. The obligation of
Lender to make each Construction Loan (including the initial Construction Loan)
is subject to the prior satisfaction of each of the following conditions (unless
waived by Lender).
(a) The Requested Construction Loans. Lender shall be
satisfied that the following are true and correct as of the date on which
Borrower has requested that such Construction Loan be made:
(i) No other Construction Loan has been made for the
Project during the two-week period preceding the date on which Borrower requests
that such Construction Loan be made;
(ii) The sum of the undrawn Total Construction Loan
Commitment, plus the unexpended portion of any Borrower Equity, is not less than
the aggregate unpaid amount required to attain Completion, in accordance with
all Legal Requirements, the Construction Contracts and the Plans and
Specifications, prior to the Expected Completion Date and to pay or provide for
all anticipated non-construction costs, all as set forth in the Project Budget
(including any revisions thereto) approved by Lender; and
(iii) The amounts to be applied in connection with
such Construction Loan will not cause the amount for any line item with respect
to such month in the applicable Project Budget to exceed the amount set forth in
such Project Budget, as such line items may be adjusted in accordance with
Section 3.3(b).
(b) Drawdown Procedures. Lender shall have received the
following, each in form and substance satisfactory to Lender:
(i) The Notice of Borrowing and the Drawdown
Certificate within the time periods specified therein;
(ii) Evidence that Borrower has established and is
maintaining the Receipts Account and the Operating Account at a bank in
California reasonably acceptable to Lender; and
(iii) Evidence that all work that has been done on
the Project shall have been done in a good and workmanlike manner and in
accordance with the Construction Contracts and Prudent Practices, including, but
not limited to, if requested by Lender, copies of all invoices for services
rendered and materials delivered for the Project, and there shall not have been
filed with or served upon Borrower with respect to the Project or any part
thereof notice of any Lien, claim of Lien or attachment upon or claim affecting
the right to receive payment of any of the moneys payable to any of the Persons
named on such request which has not been released or which will not be released
with the payment of such obligation out of such Construction Loan, other than
Permitted Liens.
(c) Liens. Lender shall have received in form and substance
satisfactory to Lender, if requested by Lender, and subject to Borrower's right
to contest liens as described
16
in the definition of "Permitted Liens," duly executed acknowledgments of
payments and releases of mechanics' and materialmen's liens, in form
satisfactory to Lender, from the Contractors and all other contractors,
subcontractors and materialmen, for all work, services and materials, including
equipment and fixtures of all kinds, done, previously performed, or furnished
for the construction of the Project, except for such work, services and
materials to be paid for with the proceeds of the requested Construction Loan.
(d) Easements. Lender shall have received evidence, in form
and substance acceptable to Lender, that, except for Applicable Easements listed
in Part II of Schedule 3 which are not then required in connection with the
construction or operation of the Project, all Applicable Easements with respect
to the construction and operation of the Project required to have been obtained
by the date of such Construction Loans shall be in full force and effect, and,
with respect to any of the Applicable Easements not yet required, there shall be
no reason to believe that any such Applicable Easements will not be obtained,
all of which shall be satisfactory in all respects to Lender. Borrower shall
inform Lender as to the status of Borrower's efforts to obtain the Applicable
Easements not yet obtained.
(e) Permits. Lender shall have received evidence, in form and
substance acceptable to Lender, that, except for Applicable Permits listed in
Part II of Schedule 4 which are not then required in connection with the
construction or operation of the Project, all Applicable Permits with respect to
the construction and operation of the Project required to have been obtained by
the date of such Construction Loans from any Governmental Authority shall have
been issued and shall be in full force and effect, and, with respect to any of
the Applicable Permits not yet required, there shall be no reason to believe
that any such Applicable Permits will not be obtained, all of which shall be
satisfactory in all respects to Lender.
(f) Other Documents. If requested by Lender, Lender shall have
received evidence, in form and substance satisfactory to Lender, that:
(i) All of the Operative Documents to be executed and
delivered with respect to the Project on or prior to the date of such
Construction Loan shall be in full force and effect without change or amendment
since the respective dates of their execution and delivery in a form which was
approved by Lender, except as consented to in writing by Lender or as otherwise
permitted pursuant to Section 6.12; and
(ii) With respect to Additional Project Documents and
Applicable Permits entered into or obtained, transferred or required (whether
because of the status of the construction or operation of the Project or
otherwise) since the date of the most recent Construction Loan, there shall have
been a delivery or a redelivery, as the case may be, to Lender of such matters
as are described in Sections 3.1(b), 3.1(e), 3.1(f) and 3.1(g) and, if requested
by Lender, any of the other sections of Section 3.1.
(g) Status of Borrower. Lender shall be satisfied that the
following are true and correct as of the date on which Borrower has requested
that such Construction Loan be made:
17
(i) Each representation and warranty set forth in
Article 4 is true and correct as if made on such date;
(ii) No Event of Default or Default has occurred and
is continuing or will result from such Credit Event;
(iii) No event of default under and as defined in or
applicable to any Project Document has occurred and is continuing; and
(iv) Each Credit Document and Project Document
remains in full force and effect.
3.3. No Approval of Work; Adjustments to Project Budget.
(a) The making of any Construction Loan hereunder shall not be
deemed an approval or acceptance by Lender of any work, labor, supplies,
materials or equipment furnished or supplied with respect to the Project.
(b) If requested by Borrower, Lender may, in its reasonable
discretion, adjust the amounts of any individual categories or line items of
Project Costs as set forth in the Project Budget by increasing or decreasing the
amounts shown on the Project Budget for each such individual category or line
item; provided that, Borrower shall have the right to adjust line items without
Lender's consent up to an aggregate maximum change of twenty percent (20%) per
line item from the original Project Budget; provided further, that Borrower
shall immediately provide Lender with notice of any such adjustments. With
respect to adjustments in excess of twenty percent (20%), Borrower shall have
the right to request such adjustments from the Lender Representative no more
frequently than once each thirty (30) days. The Lender Representative shall
approve or disapprove such requests within four (4) Business Days.
Notwithstanding anything to the contrary herein, however, no such adjustment
made pursuant to this Section 3.3 shall change the aggregate amount of all of
the Project Costs as shown on the Project Budget.
3.4. Waiver of Funding; Adjustment of Drawdown Requests.
Notwithstanding the foregoing, Lender, without waiving any of its rights
hereunder, shall have the right to make a Construction Loan or Construction
Loans hereunder without full compliance by Borrower with the conditions
described in this Article 3. If Lender determines that a material item or items
listed in a Drawdown Certificate as a Project Cost is not properly included in
such Drawdown Certificate, Lender may in its reasonable discretion cause to be
made a Construction Loan or Construction Loans in the amount requested in such
Drawdown Certificate less the amount of such item or items. In the event that
Borrower prevails in any dispute as to whether such Project Costs were properly
included in such Drawdown Certificate, Construction Loans in the amount
requested but not initially made shall forthwith be made.
18
3.5. Expenses in Excess of Project Budget. If the amount of Project
Costs with respect to the Project exceeds the applicable amount available
pursuant to the Loan Facility and the Capital Contribution, GST may make a loan
to Borrower in a maximum amount of the unbudgeted Project Costs equal to the
difference between the amount, if any, contributed by Borrower's shareholder and
twenty percent (20%) of the Project Budget; provided that such loan be unsecured
and deeply subordinated to Borrower's obligations to Lender under this
Agreement.
3.6. Conditions Precedent to Term Loan Conversion. The obligation of
Lender to convert the Construction Loans to a Term Loan is subject to the
satisfaction of the following conditions on or prior to the Term Loan Conversion
Date (unless waived by Lender):
(a) Completion. Completion of the Project shall have occurred.
(b) Status of Borrower. Lender shall be satisfied that the
following are true and correct as of the date on which Borrower has requested
that the Term Loan Conversion be made:
(i) Each representation and warranty set forth in
Article 4 of this Agreement and in paragraph 3 of the Pledge Agreement is true
and correct in all material respects as if made on such date (except for
representations and warranties expressly made as of a specified date, which are
true as of such date);
(ii) No Event of Default or Default has occurred and
is continuing or will result from such Term Loan Conversion;
(iii) No material event of default under and as
defined in or applicable to any Project Document has occurred and is continuing;
and
(iv) Each Credit Document and Project Document
remains in full force and effect.
(c) Conversion Procedure. Lender shall have received the
Notice of Term Loan Conversion, in form and substance satisfactory to Lender,
within the time periods specified in Section 2.1(b).
ARTICLE 4 - REPRESENTATIONS AND WARRANTIES
------------------------------------------
Borrower makes the following representations and warranties to and in
favor of Lender as of the date hereof and as of the Closing Date. All of these
representations and warranties shall survive the Closing Date and the making of
the Construction Loans and Term Loans:
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4.1. Organization.
(a) Borrower (i) is a corporation duly constituted, validly
existing and in good standing under the laws of the State of New Mexico, (ii) is
duly qualified, authorized to do business and in good standing in each
jurisdiction where the character of its properties or the nature of its
activities makes such qualification necessary, (iii) has all requisite corporate
power and authority (A) to carry on its business as now being conducted and as
proposed to be conducted by it, (B) to own or hold under lease and operate the
property it purports to own or hold under lease, (C) to execute, deliver and
perform each Operative Document to which it is a party, (D) to take all action
as may be necessary to consummate the transactions contemplated thereunder and
(E) to grant the liens and security interest provided for in the Collateral
Documents to which it is a party, and (iv) has the power and authority to
execute and deliver each Operative Document to which it is a party.
4.2. Authorization; No Conflict. Borrower has duly authorized, executed
and delivered each Operative Document to which Borrower is a party (or such
Operative Documents have been duly and validly assigned to Borrower and Borrower
has duly and validly assumed the obligations thereunder), and neither Borrower's
execution and delivery thereof nor its consummation of the transactions
contemplated thereby nor its compliance with the terms thereof (i) does or will
contravene the Charter Documents of Borrower or any other Legal Requirement
applicable to or binding on Borrower or any of its properties, (ii) does or will
contravene or result in any breach of or constitute any default under, or result
in or require the creation of any Lien (other than Permitted Liens) upon any of
its property under, any agreement or instrument to which it is a party or by
which it or any of its properties may be bound or affected, or (iii) does or
will require the consent or approval of any Person which has not already been
obtained.
4.3. Enforceability. Each Operative Document to which Borrower is a
party or which it has assumed is a legal, valid and binding obligation of
Borrower, enforceable against Borrower in accordance with its terms, except to
the extent that enforceability may be limited by applicable bankruptcy,
insolvency, moratorium, reorganization or other similar laws affecting the
enforcement of creditors' rights and subject to general equitable principles.
None of the Operative Documents to which Borrower is a party or which it has
assumed have been amended or modified except in accordance with this Agreement.
4.4. ERISA. There is no ERISA Plan with respect to Borrower or any
ERISA Affiliate, and neither Borrower nor any ERISA Affiliate has maintained,
contributed to or been obligated to contribute to any ERISA Plan at any time
within the preceding five (5) years.
4.5. Taxes. Borrower has filed all federal, state and local tax returns
that it is required to file, has paid all taxes it is required to pay to the
extent due (other than those taxes that it is contesting in good faith and by
appropriate proceedings, with adequate, segregated reserves established for such
taxes) and, to the extent such taxes are not yet due, has established reserves
that are adequate for the payment thereof and are required by GAAP.
20
4.6. Business, Debt, Contracts, Etc. Borrower has not conducted any
business other than the development of the Project and activities incidental
thereto, it has no outstanding Debt or other material liabilities other than
pursuant to or allowed by the Credit Documents, and it is not a party to or
bound by any material contract other than the Operative Documents to which it is
a party.
4.7. Filings. No filing, recording, refiling or rerecording other than
those listed on Schedule 4 is necessary to perfect and maintain the perfection
of the interest, title or Liens referred to in Section 4.20, and on the Closing
Date all such filings or recordings (other than those that are required to be
made only at a later date, which are so indicated on Schedule 7) will have been
made.
4.8. Governmental Regulation. Except as described in the following
sentence, neither Borrower, nor any Affiliate of Borrower will, solely as a
result of the construction, ownership, leasing or operation of the Project, or
the entering into any Operative Document or any transaction contemplated hereby
or thereby be subject to, or not exempt from, regulation under the
Communications Act, or under state laws and regulations respecting the rates or
the financial or organizational regulation of fiber optic data transmission
companies. Borrower is a "telecommunications common carrier," as that term is
defined in the Communications Act, and is classified as a non-dominant carrier
by the FCC with respect to any domestic, interstate telecommunications service
it offers. Borrower is authorized to provide domestic, interstate
telecommunications service as a non-dominant carrier under the FCC regulatory
framework, and it has filed an appropriate tariff with the FCC. Borrower is a
"telecommunications company" under the New Mexico Telecommunications Act and a
"public telecommunications service" provider under the Docket No. 1099 Rules and
Regulations of the New Mexico State Corporation Commission ("NMSCC"). Pursuant
to a grant of authority in a Certificate of Public Convenience and Necessity by
Order dated October 23, 1995 of the NMSCC in Docket No. 94-371-TC ("NMSCC
October 23 Order"), Borrower has authority to provide specified intrastate
interexchange telecommunications services limited to nonswitched, dedicated
private line services at speeds of 1.544 Mbps or higher, within the territory of
New Mexico presently served by U.S. West. The initial New Mexico state tariff of
Borrower was approved by the NMSCC October 23, 1995 Order. Borrower is not
subject to regulation under any Governmental Rule as to securities, rates or
financial or organizational matters that would preclude any Construction Loan,
or the incurrence by Borrower of any of the Obligations or the execution,
delivery and performance by Borrower of the Operative Documents.
4.9. Financial Statements. The financial statements of Borrower, as of
March 31, 1996, certified by an appropriate authorized officer or other
authorized representative of Borrower, copies of which have been delivered to
Lender, are true, complete and correct and fairly present the financial
condition of Borrower as of the date thereof. The financial statements have been
prepared in accordance with GAAP on a consistent basis throughout the periods
indicated and with each other, except that any interim financial statements do
not contain all footnotes required by GAAP and are subject to normal year-end
adjustments. Borrower does not have and will not have any material liabilities,
direct or contingent, except as will be disclosed in such financial statements.
21
4.10. Partnerships and Joint Ventures. Borrower is not a general
partner or a limited partner in any general or limited partnership or a joint
venturer in any joint venture.
4.11. No Default.
(a) No Event of Default or Default has occurred or is
existing.
(b) Borrower is not in default under any term of any Operative
Document, or any agreement relating to any obligation of Borrower for or with
respect to borrowed money, and to the best of Borrower's knowledge, no other
party to any Project Document is in default with respect to any term thereof.
4.12. Possession of Franchises, Licenses, Etc. Except as disclosed on
Schedule 3 and those the failure of which to obtain does not and will not have a
Material Adverse Effect, Borrower possesses all franchises, certificates,
licenses, Permits, and other authorizations from any Governmental Authorities
(including the City of Albuquerque and the City of Rio Rancho), free from unduly
burdensome restrictions, that are necessary or advisable for the leasing,
ownership, maintenance and operation of its properties and assets, and Borrower
is not in violation of any thereof in any respect. Borrower possesses all
patents, copyrights, trademarks and trade names, or rights thereto necessary to
perform its duties under the Operative Documents and Borrower is not in
violation thereof in any respect or of any valid rights of others with respect
to any of the foregoing.
4.13. Permits. There are no Permits under existing law that are or will
become Applicable Permits other than the Permits described in Schedule 3 and
those the failure of which to obtain does not and will not have a Material
Adverse Effect. Each Applicable Permit (including the City of Albuquerque and
the City of Rio Rancho) is either (y) in full force and effect and is not
subject to any appeals or further proceedings or to any unsatisfied condition
that may allow material modification or revocation, in the case of those Permits
listed in Part I of Schedule 3, or (z), of a type that is routinely granted on
application and that would not normally be obtained before the commencement of a
construction or reconstruction as contemplated by the Operative Documents in the
case of those Applicable Permits listed in Part II of Schedule 3. Borrower has
no reason to believe that any Permit so indicated on Schedule 3 will not be
obtained before it becomes an Applicable Permit.
4.14. Offices, Location of Collateral.
(a) The chief executive office or chief place of business (as
such term is used in Division 9 of the Uniform Commercial Code as in effect in
the State of New Mexico from time to time) of Borrower is located at ▇▇▇▇ ▇▇
▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇.
(b) All of the Collateral (other than the Accounts, the shares
of Borrower's Common Stock pledged pursuant to the Pledge Agreement, and general
intangibles) is, or when installed pursuant to the Project Documents will be,
located on the Leased Property or the Applicable Easements.
22
(c) Borrower's books of accounts and records are located at
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇.
4.15. Adverse Change. To the best of Borrower's knowledge, there are no
facts or conditions, with respect to the Project or Borrower which have or in
the future will have (so far as Borrower can now reasonably foresee) a Material
Adverse Effect which are not listed on Schedule 5.
4.16. Project Documents. Borrower makes, as of the time made, each of
the representations and warranties contained in the Project Documents or any
Additional Project Document to which Borrower is or will be a party to and for
the benefit of Lender as if the same were set forth at length herein.
4.17. Hazardous Substances.
(a) (i) Borrower, is not and has not in the past been in
violation of any Hazardous Substance Laws, which violation could result in a
material liability to Borrower or its respective properties and assets or in an
inability of Borrower to perform its obligations under the Operative Documents;
(ii) neither the Borrower nor, to the best knowledge of Borrower, any third
party has used, released, discharged, generated, manufactured, produced, stored,
or disposed of in, on, under, or about the Leased Property or any part of the
Project, or transported thereto or therefrom, any Hazardous Substances in any
manner or in quantities that could reasonably be expected to subject Lender or
Borrower to liability under any Hazardous Substance Law; (iii) there are no
underground tanks, whether operative or temporarily or permanently closed,
located on the Leased Property or any part of the Project; (iv) there are no
polychlorinated biphenyls ("PCBs") or items containing PCBs used, stored or
present at, on or near the Leased Property or any part of the Project, and (v)
to the best knowledge of Borrower, there is or has been no condition,
circumstance, action, activity or event that could form the basis of any
violation of, or liability to Lender or its Affiliates under, any Hazardous
Substance Law.
(b) There is no proceeding, investigation or inquiry by any
Governmental Authority (including Governmental Authorities in the State of New
Mexico and the U.S. Environmental Protection Agency) or any non-governmental
third party with respect to the presence or release of such Hazardous Substances
in, on, from or to the Leased Property or any part of the Project, and to the
best knowledge of Borrower, no such proceedings have been requested, suggested
or threatened by any such Governmental Authorities or non-governmental third
parties.
(c) Borrower has no knowledge of any past or existing
violations of any Hazardous Substances Laws by any Person relating in any way to
the Leased Property or any part of the Project.
4.18. Transfer of Contracts and Other Rights. All Project Documents and
Applicable Permits have been entered into by or duly and validly assigned to
Borrower free
23
and clear of all Liens except Permitted Liens, and all necessary Persons have
duly consented to such assignment.
4.19. Litigation. There are no pending or, to the best of Borrower's
knowledge, threatened actions or proceedings of any kind, including actions or
proceedings of or before any Governmental Authority, to which Borrower or the
Project is a party or is subject, or by which any of them or any of their
properties or the Project are bound that, if adversely determined to or against
Borrower or the Project, would have a Material Adverse Effect, nor, to the best
of Borrower's knowledge, is there any basis for any such action or proceeding.
4.20. Title, Liens and Easements.
(a) On and after the Closing Date, Borrower will have a good,
insurable and indefeasible title to the Project, and all of the Collateral
relating to the Project, and a good, insurable and indefeasible interest in the
Leased Property and a valid estate in the Applicable Easements other than the
Easements described in Part II of Schedule 2, in each case free and clear of all
Liens, encumbrances or other exceptions to title except Liens in favor of or
created by Lender and Liens that do not interfere with the intended use for the
Project by Borrower of the Leased Properties or Applicable Easements. The Lien
of the Collateral Documents constitutes a valid and subsisting first priority
perfected security interest in all the personal property described in the other
Collateral Documents, subject to no Liens except the Permitted Liens.
(b) The security interests granted to Lender pursuant to the
Collateral Documents in the Collateral (i) as to personal property included in
the Collateral, constitute and, with respect to subsequently acquired personal
property included in the Collateral, will constitute, perfected security
interests under the UCC (to the extent such personal property is subject to the
UCC) and (ii) are, and, with respect to such subsequently acquired property,
will be, as to Collateral perfected under the UCC (to the extent such personal
property is subject to the UCC), superior and prior to the rights of all third
Persons now existing or hereafter arising whether by way of mortgage, lien,
security interests, encumbrance, assignment or otherwise, except for Permitted
Liens. Except to the extent possession of portions of the Collateral is required
for perfection, all such action as is necessary has been taken to establish and
perfect Lender's rights in and to the Collateral, including any recording,
filing, registration, giving of notice or other similar action. The Collateral
Documents relating to the Collateral and the financing statements relating
thereto have been duly filed or recorded in each office and in each jurisdiction
where required in order to create and perfect the first lien and security
interest described above. Borrower has properly delivered or caused to be
delivered to Lender all Collateral that requires perfection of the Lien and
security interest described above by possession.
(c) There are no Easements that are or will become Applicable
Easements other than the Easements described in Schedule 2. Each Applicable
Easement is either (y) in full force and effect and is not subject to any
unsatisfied condition that may allow material modification or revocation, in the
case of those Easements listed in Part I of Schedule 2, or
24
(z) of a type that would not normally be obtained at the stage of the
construction on the Closing Date, as contemplated by the Operative Documents, in
the case of those Applicable Easements listed in Part II of Schedule 2. Borrower
has no reason to believe that any Easement so indicated on Schedule 2 will not
be obtained before it becomes an Applicable Easement.
4.21. Utilities. All utility services necessary for the construction
and the operation of the Project for its intended purposes are available or will
be so available as and when required.
4.22. Sufficiency of Project Documents.
(a) Other than those that can be reasonably expected to be
commercially available when and as required, the services to be performed, the
materials to be supplied and the real property interests, the Applicable
Easements, the Applicable Permits, and other rights granted pursuant to the
Project Documents:
(i) comprise all of the property interests necessary
to secure any right material to the acquisition, leasing, development,
construction, installation, completion, operation and maintenance of the Project
in accordance with all Legal Requirements and in accordance with the Project
Schedules, all without reference to any proprietary information not owned by
Borrower;
(ii) are sufficient to enable the Project to be
located, constructed and operated; and
(iii) provide adequate ingress and egress for any
reasonable purpose in connection with the construction and operation of the
Project.
(b) There are no services, materials or rights required for
the construction or operation of the Project in accordance with the Construction
Contracts, the Plans and Specifications and the Base Case Project Projections
other than those that can reasonably be expected to be commercially available
within the line items contained in the applicable Project Budget.
4.23. Securities. No registration of the Note under the Securities Act
of 1933, as amended, or under the securities laws of any state is required in
connection with the offering, issuance, sale or transfer of the Note hereunder.
4.24. Disclosure. Neither this Agreement nor any certificate furnished
to Lender, or to any consultant submitting a report to Lender, by or, to the
knowledge of Borrower, on behalf of Borrower in connection with the transactions
contemplated by this Agreement, the other Project Documents or the design,
construction, testing or operation of the Project, contains any untrue statement
of a material fact or omits to state a material fact necessary in order to make
the statements contained herein or therein not misleading under the
circumstances in which they were made at the time such statements are made.
There is no
25
fact known to Borrower which Borrower has not disclosed in writing to Lender
which does or reasonably could have a Material Adverse Effect.
4.25. Construction Budget; Projections. Borrower has prepared the
Project Budget and the Base Case Project Projections and is responsible for
developing the assumptions on which the Project Budget and the Base Case Project
Projections are based. The Project Budget and the Base Case Project Projections
(i) are, to the best of Borrower's knowledge as of the Closing Date, based on
reasonable assumptions as to all legal and factual matters material to the
estimates set forth therein, and (ii) as of the Closing Date are consistent with
the provisions of the Project Documents. In the reasonable opinion of Borrower,
as of the Closing Date the textual material accompanying the Base Case Project
Projections discloses all information reasonably necessary for an understanding
of the Base Case Project Projections, and does not contain any material
misstatements or omit any information which, in conjunction with other
information given, would be necessary to make such information not materially
misleading.
4.26. Intellectual Property. Borrower owns or has the right to use all
patents, trademarks, service marks, trade names, copyrights, licenses and other
rights, which are necessary for the operation of its business as presently
conducted. To the best of Borrower's knowledge, (a) no product, process, method,
substance, part or other material presently contemplated to be sold by or
employed by Borrower in connection with its business will infringe upon any
patent, trademark, service ▇▇▇▇, trade name, copyright, license or other
intellectual property right of any other Person, (b) there are no pending or
threatened claims or litigation against or affecting Borrower contesting or
calling into question its right to sell or use any such product, process,
method, substance, part or other material or (c) there is no existing pending or
proposed, patent, invention, device, application or principle or any
Governmental Rule or standard or code which would prevent or inhibit or
substantially reduce the projected revenues of Borrower, or otherwise have a
Material Adverse Effect.
ARTICLE 5 - COVENANTS OF THE BORROWER
-------------------------------------
Borrower covenants and agrees that so long as this Agreement
is in effect, it will, unless Lender waives compliance in writing:
5.1. Notices. Promptly, upon acquiring notice or giving notice, as the
case may be, or obtaining knowledge, give written notice to Lender of:
(a) Any litigation pending or, to the knowledge of Borrower,
threatened against Borrower involving claims against Borrower or the Project in
excess of $100,000 in the aggregate or involving any injunctive or declaratory
relief, such notice to include copies of all papers filed in such litigation and
to be given monthly if any such papers have been filed since the last notice
given;
(b) Any dispute or disputes which may exist between Borrower
and any Governmental Authority and which involve (i) claims against Borrower
which individually
26
exceed $100,000 or in the aggregate exceed $200,000, (ii) injunctive or
declaratory relief, (iii) revocation, expiration or modification or the like of
any Applicable Permit or Applicable Easement, or (iv) any Liens for taxes due
but not paid;
(c) Any Event of Default or Default;
(d) Any casualty, damage or loss, whether or not insured,
through fire, theft, other hazard or casualty, or any act or omission of
Borrower, its employees, agents, contractors, consultants or representatives, or
of any other Person if such casualty, damage or loss affects Borrower or the
Project, in excess of $50,000 for any one casualty or loss, or an aggregate of
$100,000; or
(e) Any matter which has resulted or is likely, in light of
other circumstances affecting Borrower, to have a Material Adverse Effect.
5.2. Financial Statements, Reports, Etc.
(a) Deliver to Lender (or cause to be delivered to Lender), in
form and detail reasonably satisfactory to Lender, unless delivery and/or the
timing of delivery is waived by Lender:
(i) As soon as available but no later than sixty (60)
days after the close of the first, second and third quarterly periods of its
fiscal year, quarterly (and year-to-date) financial statements of and prepared
by Borrower to include a balance sheet and an income and expense statement;
(ii) As soon as available but no later than one
hundred twenty (120) days after the close of each applicable fiscal year,
audited financial statements of Borrower including a statement of equity, a
balance sheet as of the close of such year, an income and expense statement,
reconciliation of capital accounts and a statement of cash flows, all prepared
in accordance with GAAP and certified by an independent certified public
accountant selected by the Person whose financial statements are being prepared
and satisfactory to Lender. Such certificate shall not be qualified or limited
because of restricted or limited examination by such accountant of any material
portion of the records of the applicable Person;
(iii) On the tenth day of each month, with respect to
the preceding month, a report with respect to the Project substantially in the
form of Exhibit P hereto.
(iv) Within thirty (30) days after Completion of the
Project, "as built" maps indicating the locations related to each Easement,
Permit, Collation Agreement, Inter-Connection Agreement, and Pole and Conduit
Use Agreement.
(v) Such other statement or statements, list of
property and accounts, budgets, forecasts or reports relating to the Project, as
Lender may reasonably
27
request from time to time and that can be provided without unreasonable cost to
or effort on the part of Borrower.
(b) Each time the financial statements are delivered under
subsections (i) or (ii) of Section 5.2(a), a certificate signed by the natural
person who is a senior financial officer of Borrower shall be delivered along
with such financial statements, certifying that such officer has made or caused
to be made a review of the transactions and financial condition of the Borrower
during the relevant fiscal period and that such review has not, to the best of
such officer's knowledge, disclosed the existence of any event or condition
which constitutes an Event of Default or a Default hereunder or under any Credit
Document applicable to Borrower, or if any such event or condition existed or
exists, the nature thereof and the corrective actions that Borrower has taken or
proposes to take with respect thereto, and also certifying that the Borrower is
in compliance with all applicable provisions of this Agreement or any other
Credit Document applicable to Borrower or, if such is not the case, stating the
nature of such non-compliance and the corrective actions which Borrower has
taken or proposes to take with respect thereto.
5.3. Existence, Conduct of Business, Properties, Etc. Except as
otherwise expressly permitted under this Agreement, (a) maintain and preserve
its existence as a New Mexico corporation and all rights, privileges and
franchises necessary or desirable in the normal conduct of its business, (b)
perform all of its contractual obligations under the Project Documents and all
other agreements and contracts by which it is bound, maintain all necessary
Permits, including all Applicable Permits, with respect to its business and the
Project, except such as may be contested in good faith or as to which a bona
fide dispute may exist, provided that the non-payment of same would not
reasonably be anticipated to result in a Material Adverse Effect or that
provision is made to the satisfaction of Lender in its reasonable discretion for
the posting of security (other than the Collateral) for or the bonding of such
obligations or the prompt payment thereof in the event that such obligation is
payable, (c) at or before the time that any Permit becomes an Applicable Permit,
obtain such Permit, and (d) engage only in the business contemplated by the
Operative Documents.
5.4. Obligations. Pay all Obligations, howsoever arising, as and when
due and payable, including taxes and tax claims, except (a) such as may be
contested in good faith or as to which a bona fide dispute may exist, provided
that the non-payment of same would not reasonably be anticipated to result in a
Material Adverse Effect or that provision is made to the satisfaction of Lender
in its reasonable discretion for the posting of security (other than the
Collateral) for or the bonding of such obligations or the prompt payment thereof
in the event that such obligation is payable and (b) Borrower's trade payables
which shall be paid in the ordinary course of business.
5.5. Damage and Cancellation Payments. Except as otherwise expressly
permitted under this Agreement apply the proceeds of any surety, performance or
similar bonds and any liquidated or other damages paid in respect of damage
payments or performance payments by any contractors or subcontractors or other
Persons involved in the construction and operation of the Project, to prepay the
Loan Facility.
28
5.6. Books, Records, Access. Maintain adequate books, accounts and
records with respect to Borrower and the Project and prepare all financial
statements required hereunder in accordance with GAAP and in compliance with the
regulations of any Governmental Authority having jurisdiction thereof, and
permit employees or agents of Lender, at any reasonable times and upon
reasonable prior notice to inspect all of Borrower's properties, including the
Leased Property, to examine or audit all of Borrower's books, accounts and
records and make copies and memoranda thereof and to observe the operation,
maintenance and repair of the Project.
5.7. Operation of Project and Annual Budget.
(a) (i) Keep the Project, or cause the same to be kept, in
good operating condition consistent with Prudent Practices, all Applicable
Permits and applicable Legal Requirements and all applicable requirements of the
Operative Documents, and make or cause to be made all repairs (structural and
non-structural, extraordinary or ordinary) necessary to keep the Project in such
condition; and (ii) operate and maintain the Project in a manner consistent with
Prudent Practices and in compliance with the terms of the Project Documents so
as to assure, to the extent reasonably possible, the maximum generation of net
revenue for the Project consistent with the Project Documents.
(b) On or before the date forty-five (45) days prior to the
Expected Completion Date, deliver to Lender an update of the Project Budget for
the period from the date it is delivered until the anticipated commencement of
commercial operation of the Project and the Annual Operating Budget for the
period from the anticipated commencement of commercial operation through the end
of the first full fiscal year thereafter (collectively, the "First Annual
Operating Budget"), in form and substance reasonably acceptable to Lender,
setting forth all anticipated start-up costs, Project Revenues, Debt Service,
proposed distributions, maintenance, repair and operation expenses (including
reasonable allowance for contingencies), and all other anticipated Operation and
Maintenance Costs for the Project for such period. Such First Annual Operating
Budget shall be delivered by Borrower to Lender no later than August 16, 1997.
No less than forty-five (45) days in advance of the beginning of each fiscal
year thereafter, Borrower will similarly adopt an Annual Operating Budget for
the ensuing fiscal year covering the matters (other than start-up costs)
specified above in this Section 5.7(b) and such other matters as may be
reasonably required by Lender. Copies of the draft Annual Operating Budget for
each year of operation shall be promptly furnished to Lender for review and
approval. If Lender does not approve the draft Annual Operating Budget submitted
by Borrower, Lender shall give written notice to Borrower within fifteen (15)
days of Lender's receipt of such draft Annual Operating Budget in compliance
with Section 10.1 hereof. If Lender and Borrower do not agree on a final Annual
Operating Budget by the date the new fiscal year commences, the previous fiscal
year Annual Operating Budget increased by ten percent (10%) shall be used until
Lender and Borrower agree on the new final Annual Operating Budget; provided
however, that if a dispute in the previous fiscal year resulted in such a ten
percent (10%) increase in the Annual Operating Budget, the parties shall use the
previous fiscal year Annual Operating Budget without increase. The Operation and
Maintenance Costs in each such Annual Operating Budget which are subject to
escalation limitations in the Project Documents shall not, absent extraordinary
circumstances,
29
be increased from year to year by more than the amounts provided in such Project
Documents. Borrower will operate and maintain the Project, or cause the Project
to be operated and maintained, within each Annual Operating Budget as approved
by Lender.
5.8. Completion. Achieve Completion in a timely and diligent manner in
accordance with the Project Schedule, the Construction Contracts and the Plans
and Specifications, the Project Budget as the same may be extended, and in no
event later than May 15, 1997.
5.9. Preservation of Rights; Further Assurances.
(a) Preserve, protect and defend the rights of Borrower under
each and every Project Document, including prosecution of suits to enforce any
right of Borrower thereunder and enforcement of any claims with respect thereto,
and, at the request of Lender, permit Lender to participate in such capacity as
it may choose in any such suit, any defense thereof or in the preparation
therefor; provided, however, that upon the occurrence and during the continuance
of any Event of Default, if Lender requests that certain actions be taken and
Borrower fails to take the requested action within five (5) Business Days,
Lender may enforce, in its own name, in the name of Lender or Borrower's name,
such rights of Borrower.
(b) Use its best efforts to extend or renew the City of
Albuquerque Franchise to a period at least as long as the period during which
the Loan Facility is outstanding, including giving timely written notice under
Section 4 of the City of Albuquerque Franchise of Borrower's intention to seek
renewal of such franchise.
(c) From time to time, execute, acknowledge, record, register,
deliver and/or file all such notices, statements, instruments and other
documents, including any memorandum of lease or other agreement, financing
statement, continuation statement, certificate of title or estoppel certificate
relating to the Loan Facility stating the interest and charges then due and any
known defaults, and take such other steps as may be necessary or advisable to
render fully valid and enforceable under all applicable laws the rights, liens
and priorities of Lender with respect to all Collateral and other security from
time to time furnished under this Agreement or intended to be so furnished, in
each case in such form and at such times as shall be satisfactory to Lender, and
pay all fees and expenses (including attorneys' fees and expenses) incident to
compliance with this Section 5.9(b).
(d) If Borrower shall at any time acquire any real property or
leasehold or other interest in real property, promptly upon such acquisition (or
on the Closing Date if such acquisition occurred prior thereto) execute, deliver
and record a mortgage, satisfactory in form and substance to Lender, subjecting
such real property or leasehold or other interests to a lien and security
interest of Lender created by such mortgage.
5.10. Construction of Project. Make or cause to be made all contracts
and do or cause to be done all things reasonably necessary for the acquisition,
construction, expansion, improvement and equipping of the Project, with or
without advertising for bids, and cause
30
the Project to be constructed, expanded, improved and equipped substantially in
accordance with the Plans and Specifications, the Construction Contracts, the
Project Budget and Project Schedule (insofar as necessary to comply with Section
5.7) and not exceeding the disbursements as contemplated by the Construction
Contracts, except as compliance therewith may be waived pursuant to Section 6.12
hereof. Without limiting the generality of the foregoing, Borrower shall
diligently pursue and enforce all of its rights and remedies under the
Construction Contracts, and any other contracts or agreements related to the
construction of the Project and shall ensure that the Project is constructed
substantially in accordance with all such contracts and agreements, to the
extent applicable.
5.11. Taxes, Other Government Charges and Utility Charges. Pay, or
cause to be paid, as and when due and prior to delinquency, all taxes,
assessments and governmental charges of any kind that may at any time be
lawfully assessed or levied against or with respect to Borrower or the Project,
all utility and other charges incurred in the operation, maintenance, use,
occupancy and upkeep of the Project, and all assessments and charges lawfully
made by any Governmental Authority for public improvements that may be secured
by a lien on the Project. However, Borrower may contest in good faith any such
taxes, assessments and other charges and, in such event, may permit the taxes,
assessments or other charges so contested to remain unpaid during any period,
including appeals, when Borrower is in good faith contesting the same, so long
as (a) reserves reasonably satisfactory to Lender have been established in an
amount sufficient to pay any such taxes, assessments or other charges, accrued
interest thereon and potential penalties or other costs relating thereto, or
other adequate provision for the payment thereof shall have been made, (b)
enforcement of the contested tax, assessment or other charge is effectively
stayed for the entire duration of such contest, and (c) any tax, assessment or
other charge determined to be due, together with any interest or penalties
thereon, is immediately paid after resolution of such contest.
5.12. Compliance with Laws, Instruments, Etc. At its expense, promptly
(a) comply, or cause compliance, in all material respects, with all laws, rules,
regulations and Legal Requirements, including laws, rules, regulations and Legal
Requirements, relating to pollution control, environmental protection, equal
employment opportunity or employee benefit plans and employee safety, with
respect to Borrower or the Project, whether or not compliance therewith shall
require structural changes in the Project or any part thereof or require major
changes in operational practices or interfere with the use and enjoyment of the
Project or any part thereof, and (b) procure, maintain and comply, or cause to
be procured, maintained and complied with, in all material respects, all Permits
required for any use of the Project or any part thereof, then being made or
contemplated by the Operative Documents, except that Borrower may, at its
expense, contest by appropriate proceedings conducted in good faith the validity
or application of any such law, rule or regulation; provided that, (i) neither
Lender nor Borrower would be subject to any criminal liability for failure to
comply therewith and (ii) all proceedings to enforce such law, rule or
regulation against Lender, Borrower, or the Project or any part of any of them,
shall have been duly and effectively stayed during the entire pendency of such
contest.
5.13. Warranty of Title. Maintain (a) good, marketable and insurable
leasehold estate to the Leased Property, and good, marketable and insurable
title to the Applicable
31
Easements and (b) good, marketable, insurable and indefeasible title to all of
its other respective properties and assets (other than properties and assets
disposed of in the ordinary course of business) to the extent that failure to do
so would have a Material Adverse Effect.
5.14. Maintenance of Insurance.
(a) Required Insurance. Borrower shall, without cost to
Lender, maintain or cause to be maintained on its behalf in effect at all times
the types of insurance set forth in Schedule 6, together with any other types of
insurance required under this Agreement.
(b) Rights of Lender. If at any time the insurance as herein
provided shall be reduced or cease to be maintained, then (without limiting the
rights of Lender hereunder in respect of the Event of Default which arises as a
result of such failure) Lender may at its option obtain and maintain the
insurance required hereby and, in such event, Borrower shall reimburse Lender
upon demand for the cost thereof together with interest thereon at a rate per
annum equal to the Default Rate. If Borrower fails to respond in a timely and
appropriate manner (as reasonably determined by Lender) to take any steps
necessary or reasonably requested by Lender to collect from any insurers for any
loss covered by any insurance required to be maintained by this Section 5.14,
Lender shall have the right to make all proofs of loss, adjust all claims and/or
receive all or any part of the proceeds of the foregoing insurance policies,
either in its own name or the name of Borrower; provided, however, that Borrower
shall, upon Lender's request and at Borrower's own cost and expense, make all
proofs of loss and take all other steps necessary or reasonably requested by
Lender to collect from insurers for any loss covered by any insurance required
to be obtained by this Section 5.14.
(c) Insurance Compliance. On or before the Closing Date and
annually at each policy renewal Borrower shall furnish to Lender, (i) a
certificate signed by a duly authorized representative of Borrower, listing the
insurance then maintained by or on behalf of Borrower and stating that such
insurance complies in all respects with the terms hereof, together with evidence
of payment of the premiums thereon, and (ii) the report of Borrower's insurance
broker, and prior to Completion, the report of Contractors' insurance broker, to
the effect that Borrower's insurance complies in all respects with the terms of
this Section 5.14 and Schedule 6.
(d) Borrower shall and shall cause (i) all of Borrower's
contractors to, name Lender a loss payee or an additional insured on each
insurance policy with respect to any aspect of the Project and (ii) all such
insurance policies to provide Lender with written notice ten (10) days prior to
cancellation of any such insurance policy for non-payment of premiums and thirty
(30) days prior to cancellation of any such insurance policy for any other
reason.
5.15. Event of Eminent Domain. If an Event of Eminent Domain shall be
threatened or occur with respect to any Collateral, (a) promptly upon discovery
or receipt of notice of any such threat or occurrence provide written notice
thereof to Lender, (b) diligently pursue all its rights to compensation against
the relevant Governmental
32
Authority in respect of such Event of Eminent Domain, (c) not, without the
written consent of Lender, which consent shall not be unreasonably withheld,
compromise or settle any claim against such Governmental Authority, (d) hold all
amounts and proceeds (including instruments) received in respect of any Event of
Eminent Domain ("Eminent Domain Proceeds") in trust for the benefit of Lender,
segregated from other funds of Borrower, for application in accordance with
Section 7.3, and (e) forthwith pay over to Lender all such amounts and proceeds
in the same form as received (with any necessary endorsement) to be held and
applied in accordance with the provisions of Section 7.3. Borrower consents to
the participation of Lender in any eminent domain proceedings, and Borrower
shall from time to time deliver to Lender all instruments requested by it to
permit such participation.
5.16. Indemnification.
(a) Indemnify, defend and hold harmless Lender and, in their
capacities as such, Lender's respective officers, directors, shareholders,
controlling persons, employees, agents and servants (collectively, the
"Indemnitees") from and against and reimburse the Indemnitees for any and all
losses, claims, obligations, liabilities, damages, injuries (to person, property
or natural resources), penalties, stamp or other similar taxes, actions, causes
of action, suits, judgments, costs and expenses (including attorneys' and
consultants' fees and expenses) of whatever kind or nature, whether or not well
founded, meritorious or unmeritorious, demanded, asserted or claimed against any
such Indemnitee in any way relating to, or arising out of or in connection with
(i) this Agreement, the other Operative Documents or the Project; (ii) any Legal
Requirement or Permit relating to the Project or Borrower, the release or
presence of any Hazardous Substance at the Project or released or disposed of by
the Project or by or on behalf of Borrower, whether foreseeable or
unforeseeable, including all costs of removal and disposal of such Hazardous
Substances, all costs required to be incurred in determining whether the Project
is and causing the Project to be in compliance with all applicable Legal
Requirements and Permits; and (iii) any claims, suits or liabilities against or
of Borrower or its Affiliates.
(b) The foregoing indemnities shall not apply with respect to
an Indemnitee, to the extent the claims, damages, liabilities or losses arise as
the direct and sole result of the gross negligence or willful misconduct of such
Indemnitee, but shall continue to apply to other Indemnitees.
(c) The provisions of this Section 5.16 shall survive
foreclosure of the Collateral Documents and satisfaction or discharge of
Borrower's obligations hereunder and shall be in addition to any other rights
and remedies of Lender.
(d) In case any action, suit or proceeding shall be brought
against any Indemnitee, such Indemnitee shall notify in writing Lender and
Borrower of the commencement thereof, and Borrower shall be entitled, at its
expense, acting through counsel reasonably acceptable to such Indemnitee, to
participate in, and, to the extent that Borrower desires, to assume and control
the defense thereof. Such Indemnitee shall thereafter be entitled, at its
expense, to participate in any action, suit or proceeding the defense of which
has been assumed by Borrower. Notwithstanding the foregoing, Borrower
33
shall not be entitled to assume and control the defenses of any such action,
suit or proceedings if and to the extent that, in the opinion of such Indemnitee
and its counsel, such action, suit or proceeding involves the potential
imposition of criminal liability on such Indemnitee or a conflict of interest
between such Indemnitee and Borrower or between such Indemnitee and another
Indemnitee, and in such event (other than with respect to disputes between such
Indemnitee and other Indemnitees) Borrower shall pay the reasonable expenses of
such Indemnitee in such defense, but not more than the expense of one additional
counsel.
(e) Borrower shall report to such Indemnitee on the status of
such action, suit or proceeding as developments shall occur. Borrower shall
deliver to such Indemnitee a copy of each document filed or served on any party
in such action, suit or proceeding, and each document which Borrower possesses
relating to such action, suit or proceeding.
(f) Upon payment of any claim by Borrower pursuant to this
Section 5.16 or other similar indemnity provisions contained herein to or on
behalf of an Indemnitee, Borrower, without any further action, shall be
subrogated to any and all claims that such Indemnitee may have relating thereto,
and such Indemnitee shall cooperate with Borrower and give such further
assurances as are necessary or advisable to enable Borrower vigorously to pursue
such claims. Payment thereof by any Indemnitee or the payment by such Indemnitee
of any judgment or claim successfully perfected against such Indemnitee shall be
payable upon demand of such Indemnitee.
(g) Any amounts payable by Borrower pursuant to this Section
5.16 shall be regularly payable within thirty (30) days after Borrower receives
an invoice for such amounts from any applicable Indemnitee.
5.17. Development Company Net Cash Flow Agreements. At the time of the
closing of the debt financing of subsequent Network Projects funded by Lender or
one of its Affiliates, enter into agreements pledging the Net Cash Flow of
Borrower to support the Obligations of each other Development Company to Lender
and its Affiliates upon a default or event of a default of any other Development
Company; provided however, that a default or event of default on the part of
another Development Company with respect to its Network Project Credit Agreement
by itself, shall not constitute a default or event of default with respect to
this Agreement by Borrower, but rather the Net Cash Flow of Borrower shall be
available to cure the default or event of default of such other Development
Company or Companies. Lender's and its Affiliates' interest in Borrower's Net
Cash Flow pursuant to such pledge agreements shall be senior to all other Debt
of Borrower (except Borrower's other Obligations to Lender under this Agreement)
and any obligations of Borrower to Greenstar for management fees.
5.18. Consents to Assignment. Borrower shall obtain consents to
assignment from third parties to Project Documents not entered into as of the
Closing at the time such Project Documents are entered into in the forms of
Exhibit ▇-▇, ▇-▇ ▇▇▇ ▇-▇, as applicable. Borrower shall provide Lender with a
status report with respect to Project Documents entered into and consents to
assignment to be obtained no less frequently than every month in the monthly
reports required pursuant to Section 5.2, commencing on the tenth day of the
34
month which first occurs after the Closing Date. Borrower shall provide Lender
with each new consent to assignment received within three (3) days of receipt by
Borrower of such consent to assignment.
ARTICLE 6 - NEGATIVE COVENANTS
------------------------------
Borrower covenants and agrees that until the entire principal balance
of the Loan Facility, together with all interest, fees, charges and costs due to
Lender under this Agreement are paid in full, it will not, without the prior
written consent of Lender:
6.1. Contingent Liabilities. Except as provided in this Agreement,
become liable as a surety, guarantor, accommodation endorser or otherwise, for
or upon the obligation of any other Person; provided, however, that this Section
6.1 shall not be deemed to prohibit:
(a) The acquisition of goods, supplies or merchandise in the
normal course of business or normal trade credit; or
(b) The endorsement of negotiable instruments received in the
normal course of its business.
6.2. Limitations on Liens. Create, incur, assume or permit to exist any
Lien, securing a charge or obligation on the Project or on any of the
Collateral, real or personal, whether now owned or hereafter acquired, except
Permitted Liens.
6.3. Indebtedness. Incur, create, assume or permit to exist any Debt
except (a) the Loan Facility, (b) up to Two Hundred Fifty Thousand Dollars
($250,000) of Debt incurred in the ordinary course of business and (c)
obligations of Borrower for money borrowed to finance Project cost overruns
pursuant to Section 3.5 which is unsecured and deeply subordinated to Borrower's
Obligations to Lender hereunder, or cancel, modify, renew or otherwise rearrange
any Debt or make execute or deliver any assignment for the benefit of creditors,
bond, confession of judgment, mortgage or deed.
6.4. Sale or Lease of Assets. Sell, lease, assign, transfer or
otherwise dispose of assets or property, whether now owned or hereafter
acquired, (a) except in the ordinary course of its business as contemplated by
the Operative Documents and (b) except for obsolete, worn out or replaced
property not used or useful in its business, in each case, at fair market value.
The ordinary course of Borrower's business shall include sale or lease of
irrevocable rights to use dark fiber and conduits.
6.5. Changes. Change the nature of its business or expand its business
other than (i) developing and operating a fiber optic and digital
telecommunications network and (ii) provision of telecommunications services and
capacity.
6.6. Dividends, Redemptions, Etc. (i) Pay any dividends or make any
distributions on its Equity Securities; (ii) purchase, redeem, retire, defease
or otherwise acquire for value
35
any of its Equity Securities; (iii) return any capital to any holder of its
Equity Securities as such; (iv) make any distribution of assets, Equity
Securities, obligations or securities to any holder of its Equity Securities as
such; or (v) set apart any sum for any such purpose.
6.7. Investments. Make or permit to remain outstanding any advances,
loans or extensions of credit to, or purchase or own any stock, bonds, notes,
debentures or other securities of any Person, except Permitted Investments.
6.8. Transactions With Affiliates. Directly or indirectly, enter into
any transaction or series of transactions with or for the benefit of an
Affiliate or utilize the collateral in any way for the furtherance of its or any
of its Affiliates' personal business activities without the prior written
approval of Lender, except for (i) the Services Agreement entered into between
Borrower and GST as of October 1, 1995, an executed copy of which has been
delivered to Lender, as the same may be amended from time to time with Lender's
prior written consent, and (ii) any other agreement for the provision of goods
or services by an Affiliate of Borrower to Borrower or by Borrower to an
Affiliate of Borrower; provided that all direct and indirect fees and charges
thereunder are reasonable and comparable to those available from other providers
of such goods or services or to other customers of Borrower, as the case may be.
6.9. Loan Proceeds; Project Revenues. Use, pay, transfer, distribute or
dispose of any Loan Facility proceeds in any manner or for any purposes except
as provided in Section 2.1(a)(iii) or of any Project Revenues in any manner or
for any purposes except as provided in Section 7.1.
6.10. Partnerships. Become a general or limited partner in any
partnership or a joint venturer in any joint venture.
6.11. Dissolution. Liquidate or dissolve, or sell or lease or otherwise
transfer or dispose of all or any substantial part of its property, assets or
business, or combine, merge or consolidate with or into any other entity.
6.12. Amendments; Change Orders; Completion. Cause, consent to or
permit any amendment, modification, variance or waiver of timely compliance with
any terms or conditions of any Project Document if it would have a Material
Adverse Effect, or cancel or terminate any Operative Document to which Borrower
is a party.
6.13. Name and Location; Fiscal Year. Change its name or the location
of its principal place of business without notice to Lender at least thirty (30)
days prior to such change, or change its fiscal year without Lender's consent.
6.14. Assignment. Assign its rights hereunder or under any of the
Operative Documents to any Person.
36
6.15. Transfer of Ownership Interests. Cause, make, suffer, permit or
consent to any sale, assignment or transfer of any ownership or other interest
in Borrower or any right thereto, except that GSI or any direct or indirect
subsidiary of GSI that is a direct or indirect parent of Borrower (a "Specified
GSI Subsidiary") may sell securities of a specified GSI Subsidiary in a
transaction which does not result in the loss of control of such Specified GSI
Subsidiary by GSI or a Specified GSI Subsidiary, as the case may be ("loss of
control" includes the sale or other transfer of more than 49% of the Equity
Securities of such Specified GSI Subsidiary or the rights thereto, and the loss
of the voting power on the board of directors required to control such Specified
GSI Subsidiary). As used herein, the transfer of an ownership interest in
Borrower shall include direct and indirect transfers, including sale of stock or
ownership interests or rights thereto in any entity which has a direct ownership
interest in Borrower; provided that the provisions of this sentence shall not be
applicable to the transfer of stock or ownership interests or rights thereto in
GSI or any corporation the securities of which are publicly held.
6.16. Abandonment of Project. Voluntarily abandon the development,
construction, operation, maintenance or repair of the Project.
6.17. Hazardous Substance. Release, emit or discharge into the
environment any Hazardous Substances in excess of permitted levels or reportable
quantities or in violation of other permitted concentrations, standards or
limitations under any Hazardous Substance Laws, Legal Requirements or Applicable
Permits.
6.18. ERISA. Neither Borrower nor any ERISA Affiliate shall (i) adopt
or institute any ERISA Plan, (ii) take any action which will result in the
partial or complete withdrawal, within the meanings of sections 4203 and 4205 of
ERISA, from a Multiemployer Plan, (iii) engage or permit any Person to engage in
any transaction prohibited by section 406 of ERISA or section 4975 of the Code
involving any Employee Benefit Plan or Multiemployer Plan which would subject
either Borrower or any ERISA Affiliate to any tax, penalty or other liability
including a liability to indemnify, (iv) incur or allow to exist any accumulated
funding deficiency (within the meaning of section 412 of the Code or section 302
of ERISA), (v) fail to make full payment when due of all amounts due as
contributions to any Employee Benefit Plan or Multiemployer Plan, (vi) fail to
comply with the requirements of section 4980B of the Code or Part 6 of Title
I(B) of ERISA, or (vii) adopt any amendment to any Employee Benefit Plan which
would require the posting of security pursuant to section 401(a)(29) of the
Code, where singly or cumulatively, the above would have a Material Adverse
Effect.
ARTICLE 7 - APPLICATION OF FUNDS
--------------------------------
7.1. Receipts Account and Operating Account.
(a) On or prior to the date of the initial Construction Loan
hereunder, Borrower and Lender shall establish at Bank of America, Sacramento
RBCO or another bank which shall be reasonably acceptable to Lender, accounts
entitled "New Mexico Lightwave
37
Project -- Receipts Account" (the "Receipts Account) and "New Mexico Lightwave
Project -- Operating Account" (the "Operating Account"), respectively. Borrower
shall deposit all Project Revenues (excluding Construction Loan proceeds
disbursed by Lender directly to the Person(s) entitled thereto) in the Receipts
Accounts and the Operating Account shall be used to pay all Project Costs. On
the first Business Day of each month until the Loan Facility has been repaid in
full, provided no Default or Event of Default has occurred and is continuing,
Lender will, to the extent funds are available in the Receipts Account and are
not otherwise restricted or designated for a different use or purpose, transfer
funds from the Receipts Account at the following times and in the following
order of priority:
(i) Monthly, to the Operating Account the amount
shown for such month on the applicable Annual Operating Budget, for the payment
of Operation and Maintenance Costs currently payable and with respect to which
funds have not already been withdrawn from the Operating Account;
(ii) from time to time, to the payment of all fees,
costs, charges and any other amounts due and payable to Lender in connection
with this Agreement and the other Credit Documents;
(iii) at the times set forth in Section 2.1(e), to
the payment of interest and principal on the Loan Facility;
(iv) on or within thirty (30) days after the dates
set forth in Section 2.1(e) and to the extent permitted under Section 6.6 and
after the establishment of prudent reserves for any reasonably anticipated
expenses or other items (which shall be retained in the Operating Account), to
Borrower, any part of which may be used by Borrower to pay dividends to its
shareholder in an aggregate amount up to the amount described in Section 6.6 and
in compliance with applicable law.
Upon repayment in full of all amounts due under this Agreement and satisfaction
of all Obligations under the Credit Documents, Lender shall disburse any amounts
on deposit in the Receipts Account and the Operating Account to Borrower.
(b) Notwithstanding anything in Section 7.1(a) to the
contrary, in lieu of transferring some or all of the amount shown on the
applicable Annual Operating Budget into the Operating Account for the payment of
Operation and Maintenance Costs, Lender may, and Borrower hereby authorizes
Lender to, pay some or all of the Operation and Maintenance Costs directly to
the Person(s) entitled thereto, and such payment shall discharge pro tanto the
obligations of Lender hereunder with respect to such amounts.
(c) Any of the payments, disbursements or transfers of funds
provided for in this Section 7.1 may be made notwithstanding the existence of a
Default or Event of Default if the requirement that there be no existing Default
or Event of Default is waived by Lender in its sole discretion. Such waiver may
apply to any or all such payments, disbursements or transfers of funds and may
apply to payments of a lesser priority without applying to payments of a greater
priority. (For example, such a waiver may apply to
38
payments of Debt Service without necessarily applying to payment of Operation
and Maintenance Costs.)
(d) Operation and Maintenance Costs payable pursuant to
Section 7.1(a)(i) shall not in any event exceed the amounts shown on the
approved Annual Operating Budget (as it may be revised from time to time as
provided in Section 5.7(b)). Borrower shall promptly pay all Operation and
Maintenance Costs in excess of the foregoing limit from funds which are
otherwise distributable to Borrower hereunder, other unrestricted funds of
Borrower or equity funds provided to Borrower. To the extent the Annual
Operating Budget is revised pursuant to Section 5.7(b), additional amounts may
be transferred to the Operating Account as set forth in Section 7.1(a).
(e) Notwithstanding the preceding provisions of this Section
7.1, so long as no Default or Event of Default has occurred and at such time as
is ninety (90) days after any Default or Event of Default has been cured,
provided that no other Default or Event of Default shall have occurred in such
ninety (90) day period, Borrower shall have the right to operate the Receipts
Account and the Operating Account consistent with the provisions of this Section
7.1 without the direct control of Lender; provided however, that Borrower will
provide Lender with monthly reports on the balances, status and activity of such
accounts, and provided further, that in no event shall any of the funds in such
accounts be used for any purpose in violation of the terms and conditions of
this Agreement, including without limitation, Section 6.6.
7.2. Application Of Insurance Proceeds.
(a) Each of the parties hereto agrees that all amounts and
proceeds (including instruments) in respect of the proceeds of any insurance
policy required to be maintained by Borrower hereunder ("Insurance Proceeds")
shall, except as otherwise provided in clause (c) below, be paid by the active
insurers directly to Lender (as loss payee or additional insured as provided in
Section 5.14 and Schedule 6), and if paid to Borrower, such Insurance Proceeds
shall be received only in trust for Lender, shall be segregated from other funds
of Borrower, and shall be forthwith paid over to Lender in the same form as
received (with any necessary endorsements). Each of the parties hereto agrees,
to the fullest extent that it effectively may do so under applicable law, that
Lender shall apply all such Insurance Proceeds in accordance with the provisions
of Sections 7.2(b) and 7.2(c).
(b) Unless an Event of Default shall have occurred and be
continuing, any business interruption Insurance Proceeds received by Lender or
Borrower shall be deposited into the Receipts Account.
(c) (i) If there shall occur any damage or destruction of the
Project with respect to which Insurance Proceeds for any single loss not in
excess of $500,000 are payable, such Insurance Proceeds shall be paid to
Borrower and applied to the prompt payment of the cost of the repair or
restoration of such damage or destruction.
39
(ii) If there shall occur any damage or destruction
of the Project with respect to which Insurance Proceeds for any single loss in
excess of $500,000 are payable, Borrower shall promptly notify Lender. Such
Insurance Proceeds shall be applied to the prompt repair or restoration of the
Project in accordance with Section 7.2(c)(iii) to the extent determined by
Borrower and, if Lender determines that such Insurance Proceeds should be
applied to such repair or restoration to a greater extent in order for Borrower
to be able to satisfy its obligations under the Operative Documents as well as
before such damage or destruction, to such greater extent.
(iii) If there shall occur any damage to or
destruction of the Project with respect to which Section 7.2(c)(i) or (ii)
requires repair or restoration and
(A) if (1) such damage or destruction does
not constitute the destruction of all or substantially all of the Project, (2)
Borrower and an independent engineer selected by Borrower and subject to
Lender's approval, certify, and Lender determines in its reasonable judgment,
that repair or restoration of the Project is technically and economically
feasible within a six (6) month period and that a sufficient amount of funds is
or will be available to Borrower to make such repairs and restorations, (3) the
Lender determines that after repair and restoration the Project will be able to
repay the Loan Facility and other amounts due the Lender as and when due, (4)
after giving effect to any proposed repair and restoration, but only at the time
that the same are expected to be made, such damage or destruction will not
result in an Event of Default or a Default, (5) Lender shall receive an opinion
of counsel acceptable to Lender to the effect that no material federal, state or
local governmental license, registration, recording, filing, consent, Permit,
order, authorization, certificate, approval, exemption or declaration is
necessary to proceed with the repair and restoration and that no material
amendment to this Agreement or any of the Credit Documents is necessary (or, if
any such is necessary, Borrower is reasonably likely to be able to obtain such
as and when required) for the purpose of subjecting the repairs or restorations
to the Liens of the Collateral Documents, except such, if any, as may be
delivered to Lender and that such amendments and other instruments (if any) have
been duly executed and delivered by and are valid and binding agreements of
Borrower and any other party thereto and subject such repairs or restoration to
the Liens of the Collateral Documents, and (6) Lender shall receive such
additional title insurance, title insurance endorsements, mechanic's lien
waivers, certificates, opinions or other matters as it may reasonably request as
necessary or appropriate in connection with such repairs or restoration or to
preserve or protect the Lender's interest hereunder or in the Collateral, or
(B) Lender shall direct Borrower to
undertake any repair or restoration, then Borrower shall cause any repairs or
restoration to be commenced and completed promptly and diligently at the cost
and expense of Borrower. From time to time after the Lender shall have duly
approved the making of such repairs or restoration, and upon Borrower's written
request and the presentation to Lender of all documents, certificates and
information with respect to such Insurance Proceeds as Lender may reasonably
request, including a certificate from Borrower (A) describing in reasonable
detail the nature of the repairs or restoration, (B) stating the cost of such
repairs or restoration and the specific amount requested to be paid over to or
upon the order of Borrower and that such amount is
40
requested to pay the cost thereof, (C) stating that the aggregate amount
requested by Borrower in respect of such repairs or restoration (when added to
any other Insurance Proceeds received by Borrower in respect of such damage of
destruction) does not exceed the cost of such repairs or restoration and that a
sufficient amount of funds is or will be available to Borrower to complete the
Project,and (D) stating that no Event of Default has occurred and is continuing
other than an Event of Default resulting solely from such damage or destruction,
then any Insurance Proceeds (other than Insurance Proceeds with respect to
business interruption) held by Lender arising out of such damage or destruction
shall, be paid over to or at the direction of Borrower to pay for the cost of
the repairs or restoration in respect of which such Insurance Proceeds were
received to the extent of costs actually incurred.
(iv) If, after Insurance Proceeds have been applied
to the repair or restoration of the Project as provided in Sections 7.2(c)(i) or
7.2(c)(ii), Lender determines that the Project will be able to operate at a
level enabling Borrower to satisfy its obligations hereunder as well as before
the damage or destruction, any excess Insurance Proceeds shall be paid into the
Receipts Account; provided that such excess Insurance Proceeds shall, in lieu of
being paid into the Receipts Account, if and to the extent necessary to enable
Borrower to satisfy its obligations hereunder (after accounting for the
prepayment described in this sentence) as well as before such damage or
destruction, be applied to the repayment of the Loan Facility in accordance with
Section 2.1(e).
(v) If an Event of Default or Default shall have
occurred and be continuing, then any provisions of Sections 7.2(c)(i) through
7.2(c)(iv) to the contrary notwithstanding, the Insurance Proceeds (including
any Permitted Investments made with such proceeds, which shall be liquidated in
such manner as Lender shall deem reasonable and prudent under the circumstances)
may be applied by Lender to curing such Event of Default or Default. Any
Insurance Proceeds remaining thereafter shall be applied as provided in this
Section 7.2.
7.3. Application of Eminent Domain Proceeds.
(a) All Eminent Domain Proceeds shall be paid by the
condemning authority directly to Lender, and, if paid to Borrower, such Eminent
Domain Proceeds shall be received only in trust for Lender, shall be segregated
from other funds of Borrower and shall forthwith be paid over to Lender in the
same form as received (with any necessary endorsement).
(b) (i) If the Eminent Domain Proceeds with respect to a
single Event of Eminent Domain not in excess of $500,000 are payable, Borrower
shall comply with Section 5.16, and such Eminent Domain Proceeds shall be paid
to Borrower and applied to the prompt payment of the cost of the replacement or
restoration of the Collateral if such replacement and restoration is
practicable;
(ii) If the Eminent Domain Proceeds with respect to a
single Event of Eminent Domain in excess of $500,000 are payable, Borrower shall
comply with
41
Section 5.15, and such Eminent Domain Proceeds shall be applied to the prompt
replacement or restoration of the Collateral in accordance with Section
7.3(b)(iii) to the extent determined by Borrower and, if Lender determines that
such Eminent Domain Proceeds should be applied to such replacement or
restoration to a greater extent in order for Borrower to be able to satisfy its
obligations under the Operative Documents as well as before such damage or
destruction, to such greater extent.
(iii) If there shall occur any Event of Eminent
Domain with respect to which Section 7.3(c)(i) or (ii) requires restoration or
replacement and
(A) if (1) such Event of Eminent Domain does
not constitute the loss of all or substantially all of the Project, (2) Borrower
and an independent engineer selected by Borrower and subject to Lender's
approval, certify, and Lender determines in its reasonable judgment, that
replacement or restoration of the Project is technically and economically
feasible within a six (6) month period and that a sufficient amount of funds is
or will be available to Borrower to make such replacements and restorations, (3)
the Lender determines that after replacement and restoration the Project will be
able to repay the Loan Facility and other amounts due the Lender as and when
due, (4) after giving effect to any proposed restoration or replacement, but
only at the time that the same are expected to be made, such Event of Eminent
Domain will not result in an Event of Default or a Default, (5) Lender shall
receive an opinion of counsel acceptable to Lender to the effect that no
material federal, state or local governmental license, registration, recording,
filing, consent, Permit, Easement, order, authorization, certificate, approval,
exemption or declaration is necessary to proceed with the restoration or
replacement and that no material amendment to this Agreement or any of the
Credit Documents is necessary (or, if any such is necessary, Borrower is
reasonably likely to be able to obtain such as and when required) for the
purpose of subjecting the restored or replacement Collateral to the Liens of the
Collateral Documents, except such, if any, as may be delivered to Lender and
that such amendments and other instruments (if any) have been duly executed and
delivered by and are valid and binding agreements of Borrower and any other
party thereto and subject such replacement or restoration to the Liens of the
Collateral Documents, and (6) Lender shall receive such additional title
insurance, title insurance endorsements, mechanic's lien waivers, certificates,
opinions or other matters as it may reasonably request as necessary or
appropriate in connection with such restoration or replacement or to preserve or
protect the Lender's interest hereunder or in the Collateral, or
(B) Lender shall direct Borrower to
undertake any replacement or restoration, then Borrower shall cause any
replacement or restoration to be commenced and completed promptly and diligently
at the cost and expense of Borrower. From time to time after the Lender shall
have duly approved the making of such restoration or replacement, and upon
Borrower's written request and the presentation to Lender of all documents,
certificates and information with respect to such Insurance Proceeds as Lender
may reasonably request, including a certificate from Borrower (A) describing in
reasonable detail the nature of the replacement or restoration, (B) stating the
cost of such restoration or replacement and the specific amount requested to be
paid over to or upon the order of Borrower and that such amount is requested to
pay the cost thereof, (C) stating that the
42
aggregate amount requested by Borrower in respect of such restoration or
replacement (when added to any other Eminent Domain Proceeds received by
Borrower in respect of such damage of destruction) does not exceed the cost of
such repairs or restoration and that a sufficient amount of funds is or will be
available to Borrower to complete the Project,and (D) stating that no Event of
Default has occurred and is continuing other than an Event of Default resulting
solely from such Event of Eminent Domain, then any Eminent Domain Proceeds held
by Lender arising out of such Event of Eminent Domain shall, be paid over to or
at the direction of Borrower to pay for the cost of the restoration or
replacement of the Collateral in respect of which such Eminent Domain Proceeds
were received to the extent of costs actually incurred.
(iv) If, after Eminent Domain Proceeds have been
applied to the restoration or replacement of the Collateral as provided in
Sections 7.3(c)(i) or 7.3(c)(ii), Lender determines that the Project will be
able to operate at a level enabling Borrower to satisfy its obligations
hereunder as well as before the Event of Eminent Domain, any excess Eminent
Domain Proceeds shall be paid into the Receipts Account; provided that such
excess Eminent Domain Proceeds shall, in lieu of being paid into the Receipts
Account, if and to the extent necessary to enable Borrower to satisfy its
obligations hereunder (after accounting for the prepayment described in this
sentence) as well as before such Event of Eminent Domain, be applied to the
repayment of the Loan Facility in accordance with Section 2.1(e).
If Lender so determines that the Project should be restored,
but no or insufficient replacement property is available for such restoration,
then such Eminent Domain Proceeds shall be applied, after acquisition of
whatever necessary replacement property is available, to the prepayment of the
Loan Facility. After Eminent Domain Proceeds have been applied to the
restoration of the Project as provided in the second previous sentence or if
Lender has determined that the Project need not or can not be restored, any
remaining Eminent Domain Proceeds or the entire fund of Eminent Domain Proceeds,
as the case may be, shall be applied to the prepayment of the Loan Facility.
(v) Notwithstanding the foregoing provisions of this
Section 7.3, if an Event of Default shall have occurred and be continuing, any
amount to be applied pursuant to this Section 7.3, shall be paid to Lender as
security for the obligations of Borrower under the Credit Documents, and may be
held, applied or realized upon by Lender as provided herein or in the other
Credit Documents with respect to holding, applying or realizing upon Collateral
after the occurrence of an Event of Default. To the extent any Eminent Domain
Proceeds then remain, at such time thereafter as no Event of Default shall be
continuing, such amount shall be applied as provided in this Section 7.3.
7.4. Security Interest in Proceeds and Accounts. Borrower hereby
pledges, assigns and transfers to Lender on behalf of Lender and grants Lender
on behalf of Lender a security interest in and to all Insurance Proceeds and
Eminent Domain Proceeds (collectively, "Proceeds") and Accounts as security for
the Loan Facility and the full and faithful performance of all of Borrower's
obligations hereunder and under the other Credit Documents. Borrower shall not
have any rights or powers with respect to any Account except to have funds on
deposit therein applied in accordance with this Agreement. Lender
43
is hereby authorized to reduce to cash any Permitted Investment (without regard
to maturity) in order to make any application required by any Section of this
Article 7 or otherwise pursuant to the Credit Documents. Upon the occurrence of
an Event of Default, Lender shall have all rights and powers with respect to
Proceeds as it has with respect to any other Collateral and may apply Proceeds
to the payment of interest, principal, fees, costs, charges or other amounts due
or payable to Lender with respect to the Loan Facility in such order as Lender
may elect in its sole discretion. Borrower shall not have any rights or powers
with respect to Proceeds except as expressly provided in Section 7.5.
7.5. Permitted Investments. All amounts held by Borrower and/or Lender
in the Accounts or as Insurance Proceeds or Eminent Domain Proceeds shall only
be invested in Permitted Investments as directed by and at the expense and risk
of Borrower.
ARTICLE 8 - EVENTS OF DEFAULT; REMEDIES
---------------------------------------
8.1. Events of Default.
The occurrence of any of the following events shall constitute an event
of default ("Event of Default") hereunder:
(a) Failure to Make Payments. Borrower shall fail to pay, in
accordance with the terms of this Agreement, (i) any principal on any of the
Loan Facility on the date that such sum is due, (ii) any interest on any of the
Loan Facility within five (5) days after the date that such sum is due, or (iii)
any other fee, cost, charge or other sum due under the Credit Documents within
ten (10) days after the date on which written notice is given to Borrower
pursuant to the provisions of Section 10.1 that such sum is due.
(b) Judgments. A judgment or judgments shall be entered
against Borrower (i) in the aggregate amount of $250,000 or more (other than (A)
a judgment which is fully covered by insurance or discharged within sixty (60)
days after its entry, or (B) a judgment, the execution of which is effectively
stayed within sixty (60) days after its entry but only for thirty (30) days
after the date on which such stay is terminated or expires) or (ii) which would
reasonably be expected to materially impair or inhibit the construction of or
Borrower's use or operation of the Project for the purpose for which the Project
was intended or materially impair the value of the Collateral or the interests
of the Lender under this Agreement and the other Credit Documents;
(c) Misstatements; Omissions. Any financial statement,
representation, report, warranty or certificate made or prepared by, under the
control of or on behalf of Borrower and furnished to the Lender pursuant to this
Agreement or any other Credit Document, or in any separate statement or document
to be delivered to the Lender hereunder or under any other Credit Document,
shall contain an untrue or misleading statement of a material fact or shall fail
to state a material fact necessary to make the statements therein not misleading
as of the date made and as a result thereof, there is or is likely to be a
Material Adverse Effect as determined by the Lender, provided that no Event of
Default shall occur
44
pursuant hereto if, within thirty (30) days of the date on which Borrower
receives notice (from any source) that such untrue or misleading statement or
failure to state a material fact has occurred, Borrower shall eliminate or
otherwise address to the satisfaction of the Lender any such Material Adverse
Effect relating to such misleading statement or failure to state a material
fact.
(d) Bankruptcy; Insolvency. Borrower or Borrower's shareholder
shall institute a voluntary case seeking liquidation or reorganization under the
Bankruptcy Law (or any successor statute), or shall consent to the institution
of an involuntary case thereunder against it; or Borrower or Borrower's
shareholder shall file a petition, answer or consent or shall otherwise
institute any similar proceeding under any other applicable federal or state
law, or shall consent thereto; or Borrower or Borrower's shareholder shall apply
for, or by consent or acquiescence there shall be an appointment of, a receiver,
liquidator, sequestrator, trustee or other officer with similar powers, or
Borrower or Borrower's shareholder shall make an assignment for the benefit of
creditors; or Borrower or Borrower's shareholder shall admit in writing its
inability to pay its debts generally as they become due; or if an involuntary
case shall be commenced seeking the liquidation or reorganization of Borrower or
Borrower's shareholder under the Bankruptcy Law (or any successor statute) or
any similar proceeding shall be commenced against Borrower or Borrower's
shareholder under any other applicable federal or state law and (i) the petition
commencing the involuntary case is not timely controverted, (ii) the petition
commencing the involuntary case is not dismissed within sixty (60) days of its
filing, (iii) an interim trustee is appointed to take possession of all or a
portion of the property, and/or to operate all or any part of the business of
Borrower or Borrower's shareholder and such appointment is not vacated within
sixty (60) days, or (iv) an order for relief shall have been issued or entered
therein; or a decree or order of a court having jurisdiction in the premises for
the appointment of a receiver, liquidator, sequestrator, trustee or other
officer having similar powers of Borrower or Borrower's shareholder or of all or
a part of their property, shall have been entered; or any other similar relief
shall be granted against Borrower or Borrower's shareholder under any applicable
federal or state law.
(e) Cross Default. Borrower shall default for a period beyond
any applicable grace period (i) in the payment of any principal, interest or
other amount due under any agreement involving the borrowing of money or the
advance of credit and the outstanding amount or amounts payable under all such
agreements equals or exceeds $250,000 in the aggregate, or (ii) in the payment
of any amount or performance of any obligation due under any guarantee or other
agreement if in either case, pursuant to such default, the holder of the
obligation concerned exercises its right to accelerate the maturity of an
indebtedness evidenced thereby which equals or exceeds $250,000.
(f) ERISA. If Borrower or any ERISA Affiliate should
establish, maintain, contribute to or become obligated to contribute to any
ERISA Plan and (i) a reportable event (as defined in Section 4043(b) of ERISA)
shall have occurred with respect to any ERISA Plan and, within thirty (30) days
after the reporting of such reportable event to Lender by Borrower (or Lender
otherwise obtaining knowledge of such event) and the furnishing of such
information as Lender may reasonably request with respect thereto,
45
Lender shall have notified Borrower in writing that Lender has made a
determination that, on the basis of such reportable event, there are reasonable
grounds for the termination of such ERISA Plan by the PBGC or for the
appointment by the appropriate United States District Court of a trustee to
administer such ERISA Plan; or (ii) a trustee shall be appointed by a United
States District Court to administer any ERISA Plan; or (iii) the PBGC shall
institute proceedings to terminate any ERISA Plan; or (iv) a complete or partial
withdrawal by Borrower or any ERISA Affiliate from any Multiemployer Plan shall
have occurred, or any Multiemployer Plan shall enter reorganization status,
become insolvent, or terminate (or notify Borrower or any ERISA Affiliate of its
intent to terminate) under Section 4041A of ERISA; provided that any of the
events described in this Section 8.1(f) shall involve (A) one or more ERISA
Plans that are single-employer plans (as defined in Section 4001(a)(15) of
ERISA) and under which the aggregate gross amount of unfunded benefit
liabilities (as defined in Section 4001(a)(16) of ERISA), including vested
unfunded liabilities which arise or might arise as the result of the termination
of such ERISA Plan or Plans, and/or (B) one or more Multiemployer Plans to which
the aggregate liabilities of Borrower and all ERISA Affiliates, shall exceed
Five Hundred Thousand Dollars ($500,000).
(g) Breach of Operative Documents. Borrower or any other party
thereto shall breach or default under any term, condition, provision, covenant,
representation or warranty contained in any Credit Document, Material Project
Document or other agreement to which Borrower is a party and Lender shall have
determined that such breach or default will have a Material Adverse Effect and
such breach or default shall continue unremedied for thirty (30) days after
notice from Lender to Borrower; provided, however, that if the breach or default
cannot be remedied within such thirty (30) days despite Borrower's and/or such
other party's, as the case may be, best efforts to do so and the breach or
default is capable of being remedied within a period of ninety (90) days, Lender
will not unreasonably withhold its consent to an extension for such additional
period (not to exceed ninety (90) days) as is reasonably necessary beyond such
initial thirty (30) day period to cure such breach of default if remedial action
is promptly instituted within such thirty (30) day period and is thereafter
diligently pursued until the breach or default is corrected. Notwithstanding the
foregoing, Borrower's stockholder shall default in the performance of any of its
respective obligations under its Pledge Agreement and such default is not cured
within five (5) days after notice thereof to such stockholder from Lender.
(h) Breach of Terms of Agreement.
(i) Borrower shall fail to perform or observe any of
the covenants set forth in Sections 5.1, 5.2, 5.4, 5.7, 5.9, 5.11, 5.13, 5.14,
5.15, or 5.16, Sections 6.1 through 6.18 or Article 7; or
(ii) Borrower shall fail to perform or observe any
other covenant to be observed or performed by it hereunder or under any Credit
Document and not otherwise specifically provided for in Section 8.1(h)(i) or
elsewhere in Section 8.1, and such failure shall continue unremedied for a
period of thirty (30) days after Borrower becomes aware thereof or receives
written notice thereof from Lender, provided, however, that if such default is
of a nature such that it cannot reasonably be cured within such thirty (30) day
46
period but is susceptible to cure within a longer period, an Event of Default
shall not result therefrom so long as (A) Borrower has, promptly upon discovery
thereof, given written notice to Lender of such default (provided, that if any
Event of Default is cured within any applicable time period specified herein, or
waived or temporarily waived by the Lender, the failure alone to give notice of
such Event of Default as provided in this sentence shall not be deemed an Event
of Default); (B) Borrower as promptly as practicable commences action reasonably
designed to cure such default and continues diligently to pursue such action and
(C) the Lender in its sole discretion shall have determined that such default
does and will not have a Material Adverse Effect.
(i) Completion. Completion shall not have occurred by the
Construction Loan Maturity Date.
(j) Loss of Status.
(i) The CPCN, the City of Albuquerque License or the
City of Rio Rancho License shall be revoked or suspended, or
(ii) Borrower shall lose its status as a nondominant
interexchange carrier under the Communications Act and the regulations
thereunder and Lender determines in its discretion, that such loss could
reasonably be anticipated to have a Material Adverse Effect, or
(iii) Administrative or judicial proceedings are
commenced by the City of Albuquerque, Bernalillo County, the NMSCC or the FCC
that could result in the occurrence of either of subclauses (i) or (ii).
(k) Default in Construction. At any time prior to Completion,
the Project shall be abandoned or work thereon shall cease for a period of more
than thirty (30) days (which period shall be measured from the first occurrence
of a work stoppage and continuing until work of a substantial nature is resumed
and thereafter diligently continued, but which period shall not include delays
caused by Force Majeure and strikes not extending for any one work stoppage or
abandonment beyond 30 days so long as an independent engineer, selected by
Borrower and subject to Lender's approval, has certified that Completion is not
likely to be achieved beyond the applicable Construction Loan Maturity Date,
provided that Borrower gives Lender immediate written notice of all such events)
for any reason, or the Project shall not be constructed substantially in
accordance with the Plans and Specifications (except as to changes therein
approved by the Lender or permitted by Section 6.12), or changes shall be made
in the Plans and Specifications without the prior written approval of the Lender
(except as to changes permitted by Section 6.12).
(l) Security. Any of the Collateral Documents, once executed
and delivered, shall, except as the result of the acts or omissions of the
Lender, in any material respect fail to provide the Lender the Liens, security
interest, rights, titles, interest, remedies, powers or privileges intended to
be created thereby or cease to be in full force and effect, or the validity
thereof or the applicability thereof to this Agreement, the Loan
47
Facility, the Note or any other obligations purported to be secured or
guaranteed thereby or any part thereof shall be disaffirmed or questioned by or
on behalf of Borrower or any other party thereto or there shall occur a default
or event of default (however defined) under any of the Collateral Documents,
such default or event of default shall not have been cured within thirty (30)
days after its occurrence and the Lender shall determine in its sole discretion
that such default or event of default could have a Material Adverse Effect.
(m) Loss of Applicable Permit. Any Applicable Permit necessary
for operation of the Project shall be revoked or cancelled by the issuing agency
or other Governmental Authority having jurisdiction and within ninety (90) days
thereafter Borrower is not able to replace or reinstate such Permit or
demonstrate to the Lender that loss of such Permit will not have a Material
Adverse Effect.
(n) Loss of Collateral. Any substantial portion of Borrower's
property is seized or appropriated without fair value being paid therefor such
as to allow replacement of such property and/or prepayment of the Loan Facility
as provided in Section 7.3 and to allow Borrower in the Lender's reasonable
judgment to continue satisfying its obligations hereunder and under the other
Operative Documents.
8.2. Remedies.
Upon the occurrence and during the continuation of an Event of Default,
Lender may, without further notice of default, presentment or demand for
payment, protest or notice of non-payment or dishonor, or other notices or
demands of any kind, all such notices and demands being waived, exercise any or
all of the following rights and remedies, in any combination or order that the
Lender may elect, in addition to such other rights or remedies as the Lender may
have hereunder, under the Collateral Documents or at law or in equity:
(a) No Further Loans. Refuse, and Lender shall not be
obligated, to make any additional Construction Loans or make any payments from
any Account or any Proceeds or other funds held or controlled by Lender under
the Credit Documents or on behalf of Borrower.
(b) Cure. Without any obligation to do so, make disbursements
or Construction Loans to or on behalf of Borrower to cure any Event of Default
or Default hereunder and to cure any default and render any performance under
any Project Documents as the Lender in its sole discretion may consider
necessary or appropriate, whether to preserve and protect the Collateral or the
Lender's interests therein or for any other reason, and all sums so expended,
together with interest on such total amount at the Default Rate, shall be repaid
by Borrower on demand to Lender, and shall be secured by the Credit Documents,
notwithstanding that such expenditures may, together with amounts advanced under
this Agreement, exceed the amount of the Committed Amount.
(c) Acceleration. Declare and make all sums of accrued and
outstanding principal and accrued but unpaid interest remaining under this
Agreement together with all
48
unpaid fees, costs (including Liquidation Costs) and charges due hereunder or
under any other Credit Document, immediately due and payable.
(d) Cash Collateral. Subject to Section 10.2, apply or execute
upon any amounts on deposit in any Account or any Proceeds or Borrower Equity or
any other moneys of Borrower on deposit with Lender in the manner provided in
the Uniform Commercial Code and other relevant statutes and decisions and
interpretations thereunder with respect to cash collateral.
(e) Possession of Project. Enter into possession of the
Project and perform any and all work and labor necessary to complete the Project
substantially according to the Construction Contract and the Plans and
Specifications or to operate, maintain and repair the Project, and all sums
expended by Lender in so doing, together with interest on such total amount at
the Default Rate, shall be repaid by Borrower to Lender upon demand and shall be
secured by the Credit Documents, notwithstanding that such expenditures may,
together with amounts advanced under this Agreement, exceed the amount of the
Total Construction Loan Commitment.
(f) Remedies Under Credit Documents. Exercise any and all
rights and remedies available to it under any of the Credit Documents, including
making demand for payment under any judicial or non-judicial foreclosure or
public or private sale of any of the Collateral pursuant to the Collateral
Documents.
ARTICLE 9 - ASSIGNMENTS, ETC.
-----------------------------
9.1. Assignments.
Lender may in accordance with applicable law, after giving reasonable
notice to Borrower, sell and assign to one or more parties (individually, an
"Assignee") all or a portion of its rights and obligations under this Agreement
and the other Credit Documents (such a sale and assignment to be referred to
herein as an "Assignment") pursuant to an assignment agreement in the form of
Exhibit Q (an "Assignment Agreement"), executed by each Assignee and Lender (as
"Assignor") provided, however, that Lender shall not assign more than forty-nine
percent (49%) of its rights or obligations hereunder or assign any of its rights
or obligations hereunder to a competitor of Borrower or a Person who is or has
been engaged in a dispute with Borrower; provided further, that upon notice that
Lender intends to assign any part of its interest hereunder, Borrower shall
promptly provide Lender with a list of its competitors and those Persons with
which it has, or has had, disputes. Upon the execution, delivery, acceptance and
recording of each Assignment Agreement, from and after the Assignment Effective
Date determined pursuant to such Assignment Agreement, (A) each Assignee
thereunder shall be a Lender hereunder with a Proportionate Share as set forth
on Attachment 1 to such Assignment Agreement and shall have the rights, duties
and obligations of Lender under this Agreement and the other Credit Documents,
and (B) the Assignor thereunder shall be a Lender with a Proportionate Share as
set forth on Attachment 1 to such Assignment Agreement, or, if the Proportionate
Share of the Assignor has been reduced to
49
0%, the Assignor shall cease to be a Lender. On or prior to the Assignment
Effective Date determined pursuant to each Assignment Agreement, Borrower, at
its expense, shall execute and deliver to Lender in exchange for the respective
surrendered Note of the Assignor thereunder, a new Note to the order of each
Assignee thereunder (with each new Note to be in an amount equal to the
Committed Amount assumed by such Assignee) and, if the Assignor has retained a
Committed Amount hereunder, a new Note to the order of the Assignor (with the
new Note to be in an amount equal to the Committed Amount retained by it). Each
such new Note shall be dated the Closing Date and each such new Note shall
otherwise be in the form of the Note replaced thereby. The Note surrendered by
the Assignor shall be returned by Lender to Borrower marked "cancelled".
9.2. Confidentiality. Lender may disclose the Credit Documents and any
financial or other information relating to Borrower to any potential Assignee.
9.3. Securities Laws. Notwithstanding the foregoing provisions of this
Article 9, no sale, assignment, transfer, negotiation or other disposition of
the interests of Lender hereunder or under the other Credit Documents shall be
allowed if it would violate the Securities Act of 1933, as amended (the "Act"),
or would require registration under the Act, any other federal securities laws
or regulations or the securities laws or regulations of any applicable
jurisdiction. Borrower shall, from time to time at the request and expense of
Lender, execute and deliver to Lender, or to such party or parties as Lender may
designate, any and all further instruments as may in the opinion of Lender be
necessary or advisable to give full force and effect to such disposition.
ARTICLE 10 - MISCELLANEOUS
--------------------------
10.1. Notices. All notices, notifications and other communications
required or permitted by this Agreement shall be in writing and shall be
delivered by hand, telegraphically transmitted, sent by facsimile (with a copy
sent by overnight mail), or mailed by overnight courier to the parties at the
following addresses (or such other address for a party as shall be specified by
notice given pursuant hereto):
If to Lender: c/o Tomen America Inc.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
50
If to Borrower: GST New Mexico Lightwave, Inc.
▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇, Chief Executive Officer
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Frome & ▇▇▇▇▇▇▇▇▇▇, LLP
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
Notices delivered by hand, telegraphically transmitted, or sent by
facsimile shall be deemed given the day so delivered, transmitted or sent.
Notices delivered or mailed as provided herein shall be deemed given on the date
of actual receipt. Failure to deliver a copy of a notice to counsel for a party
as provided above shall not constitute failure to give notice hereunder. Notice
so given shall be effective upon receipt by the addressee, except that
communication or notice so transmitted by telecopy or other direct written
electronic means shall be deemed to have been validly and effectively given on
the day (if a Business Day and, if not, on the next following Business Day) on
which it is transmitted if transmitted before 4 p.m., recipient's time, and if
transmitted after that time, on the next following Business Day; provided,
however, that if any notice is tendered to an addressee and the delivery thereof
is refused by such addressee, such notice shall be effective upon such tender.
Any party shall have the right to change its address for notice hereunder to any
other location within the continental United States by giving of thirty (30)
days' notice to the other parties in the manner set forth hereinabove.
10.2. Additional Security; Right to Set-Off. Any deposits or other sums
at any time credited or due from Lender and any Project Revenues, securities or
other property of Borrower in the possession of Lender may at all times be
treated as collateral security for the payment of amounts due with respect to
the Loan Facility and the Note and all other obligations of Borrower to Lender
under this Agreement and the other Credit Documents, and Borrower hereby pledges
to Lender for the benefit of the Lender and grants Lender a security interest in
and to all such deposits, sums, securities or other property. Regardless of the
adequacy of any other collateral, Lender and only Lender, may execute or realize
on the Lender's security interest in any such deposits or other sums credited by
or due from Lender to Borrower, may apply any such deposits or other sums to or
set them off against Borrower's obligations to Lender under the Note and this
Agreement at any time after the occurrence and during the continuance of any
Event of Default.
10.3. Delay and Waiver. No delay or omission to exercise any right,
power or remedy accruing to the Lender upon the occurrence of any Event of
Default or Default or any breach or default of Borrower under this Agreement or
any other Credit Document shall impair any such right, power or remedy of the
Lender, nor shall it be construed to be a waiver of any such breach or default,
or an acquiescence therein, or of or in any similar breach or default thereafter
occurring, nor shall any waiver of any single Event of Default,
51
Default or other breach or default be deemed a waiver of any other Event of
Default, Default or other breach or default theretofore or thereafter occurring.
Any waiver, permit, consent or approval of any kind or character on the part of
Lender of any Event of Default, Default or other breach or default under this
Agreement or any other Credit Document, or any waiver on the part of Lender of
any provision or condition of this Agreement or any other Credit Document, must
be in writing and shall be effective only to the extent in such writing
specifically set forth. All remedies, either under this Agreement or any other
Credit Document or by law or otherwise afforded to Lender, shall be cumulative
and not alternative.
10.4. Costs, Expenses and Attorneys' Fees. Borrower will pay to Lender
on demand (a) all reasonable out-of-pocket costs, fees and expenses, including
reasonable attorneys' fees and expenses, incurred by Lender in connection with
the enforcement or protection (or attempted enforcement or protection) of any
rights or remedies of Lender under this Agreement or any other Credit Document
and (b) the reasonable fees, expenses and disbursements of any engineering,
environmental, insurance, construction or other consultants to Lender incurred
in connection with any of the foregoing.
10.5. Attorney-In-Fact.
(a) For the purpose of allowing Lender to exercise the rights
and remedies provided in Article 8, following the occurrence and during the
continuation of an Event of Default, Borrower hereby constitutes and appoints
Lender its true and lawful attorney-in-fact, with full power of substitution, to
complete any or all of the Project in the name of Borrower, and hereby empowers
such attorney or attorneys as follows:
(i) To use any unadvanced proceeds of the
Construction Loans and any Borrower Equity for the purpose of completing,
operating, maintaining and repairing any or all of the Project and to perform
any and all of Borrower's obligations under the Project Documents;
(ii) To make such changes and corrections in the
Plans and Specifications or the operating and maintenance practices and
procedures of the Project as they consider reasonably necessary or desirable to
complete the work on any or all of the Project in substantially the manner
contemplated by the Construction Contracts;
(iii) To employ such contractors, subcontractors,
agents, architects, inspectors and other Persons as reasonably shall be required
for such purposes;
(iv) To pay, settle or compromise all bills and
claims which may be or become liens or security interests against any or all of
the Project or the Collateral, or any part thereof, unless a bond or other
security satisfactory to Lender has been provided;
(v) To execute applications and certificates in the
name of Borrower which reasonably may be required by the Credit Documents or any
other agreement or instrument executed by Borrower in connection with the
Project;
52
(vi) To prosecute and defend all actions or
proceedings in connection with the Project or the Collateral or any part thereof
and to take such action and require such performance as Lender reasonably deems
necessary under any performance and payment bond or the Credit Documents;
(vii) To do any and every act which Borrower might do
on its behalf with respect to the Collateral or any part thereof or any or all
of the Project and to exercise any or all of Borrower's rights and remedies
under any or all of the Project Documents; and
(viii) To use any funds in any Account to pay
interest or principal with respect to the Loan Facility or fees and other
amounts due to Lender, as they may be due from time to time or, to pay Project
Costs.
(b) The powers of attorney set forth in this Section 10.5
shall be deemed to be powers coupled with interests and shall be irrevocable.
10.6. Entire Agreement; Amendments and Modifications. This Agreement
and any agreement, document or instrument attached hereto as exhibits or
schedules or otherwise or referred to herein integrate all the terms and
conditions mentioned herein or incidental hereto and supersede all oral
negotiations and prior writings, in respect to the subject matter hereof. In the
event of any conflict between the terms, conditions and provisions of this
Agreement and any such agreement, document or instrument, the terms, conditions
and provisions of this Agreement shall prevail. This Agreement and the other
Credit Documents may only be amended or modified by an instrument in writing
signed by Borrower, Lender and any other parties to be charged or as set forth
in Section 9.1.
10.7. Governing Law. This Agreement, and any instrument or agreement
required hereunder (to the extent not expressly provided for therein), shall be
governed by, and construed under, the laws of the State of New York without
reference to conflicts of law rules.
10.8. Severability. In case any one or more of the provisions contained
in this Agreement should be invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions shall not
in any way be affected or impaired thereby.
10.9. Headings. Paragraph headings have been inserted in this Agreement
as a matter of convenience for reference only and are not a part of this
Agreement and shall not be used in the interpretation of any provision of this
Agreement.
10.10. Accounting Terms. All accounting terms used in this Agreement or
in any other Credit Document shall be construed, and all accounting and
financial computations, hereunder or thereunder, shall be computed, in
accordance with GAAP.
10.11. No Partnership; Etc. The Lender and Borrower intend that the
relationship between them shall be solely that of creditor and debtor. Nothing
contained in this
53
Agreement, the Note or in any of the other Credit Documents shall be deemed or
construed to create a partnership, tenancy-in-common, joint tenancy, joint
venture or co-ownership by or between the Lender and Borrower or any other
Person. The Lender shall not be in any way responsible or liable for the debts,
losses, obligations or duties of Borrower or any other Person with respect to
the Project or otherwise. All obligations to pay real property or other taxes,
assessments, insurance premiums, and all other fees and charges arising from the
ownership, operation or occupancy of the Project and to perform all obligations
and other agreements and contracts relating to the Project shall be the sole
responsibility of Borrower.
10.12. Limitation on Liability. No claim shall be made by Borrower, any
shareholder of Borrower or sponsor or any of their Affiliates against the Lender
or any of their Affiliates, directors, employees, attorneys or agents for any
special, indirect, consequential or punitive damages in respect of any breach or
wrongful conduct (whether or not the claim therefor is based on contract, tort
or duty imposed by law), in connection with, arising out of or in any way
related to the transactions contemplated by this Agreement or the other
Operative Documents or any act or omission or event occurring in connection
therewith; and Borrower hereby waives, releases and agrees not to ▇▇▇ upon any
such claim for any such damages, whether or not accrued and whether or not known
or suspected to exist in its favor.
10.13. Waiver of Jury Trial. THE LENDER AND BORROWER HEREBY KNOWINGLY,
VOLUNTARILY, AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH, THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT, OR ANY COURSE OR
CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), OR ACTIONS
OF THE LENDER OR BORROWER. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE
LENDER TO ENTER INTO THIS AGREEMENT.
10.14. Consent to Jurisdiction. The Lender and Borrower agree that,
except as may otherwise be required by law, any legal action or proceeding by or
against Borrower or with respect to or arising out of this Agreement, the Note,
or any other Credit Document may be brought in or removed to the courts of the
State of New York sitting in New York City, or of the United States of America
for the Southern District of New York, as Lender may elect. By execution and
delivery of this Agreement, Lender and Borrower accept, for themselves and in
respect of their property, generally and unconditionally, the jurisdiction of
the aforesaid courts. Lender and Borrower irrevocably consent to the service of
process out of any of the aforementioned courts in any such action or proceeding
by the mailing of copies thereof by registered or certified airmail, postage
prepaid, to Lender or Borrower, as the case may be, at their respective
addresses for notices as specified herein and that such service shall be
effective five (5) Business Days after such mailing. Nothing herein shall affect
the right to serve process in any other manner permitted by law or the right of
Lender to bring legal action or proceedings in any other competent jurisdiction,
including judicial or non-judicial foreclosure of a mortgage. Notwithstanding
the foregoing, service of process shall not be deemed mailed (i) to Lender until
a copy of all matters to be served have been
54
mailed to ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq. or such other Person as
Lender may hereafter designate by notice given pursuant to Section 10.1 or (ii)
to Borrower until a copy of all matters to be served have been mailed to Olshan,
Grundman, Frome & ▇▇▇▇▇▇▇▇▇▇, LLP, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇, Esq. or such other Person as Borrower may hereafter
designate by notice given pursuant to Section 10.1. Lender and Borrower further
agree that the aforesaid courts of the State of New York and of the United
States of America shall have exclusive jurisdiction with respect to any claim or
counterclaim of Borrower based upon the assertion that the rate of interest
charged by Lender on or under this Agreement, the Loan Facility and/or the other
Credit Documents is usurious. Lender and Borrower hereby waive any right to stay
or dismiss any action or proceeding under or in connection with any or all of
the Project, this Agreement or any other Credit Document brought before the
foregoing courts on the basis of forum non-conveniens.
10.15. Usury. Nothing contained in this Agreement or the Note shall be
deemed to require the payment of interest or other charges by Borrower or any
other Person in excess of the amount which Lender or other holders of the Note
("Note Holders") may lawfully charge under any applicable usury laws. In the
event that Lender or other Note Holders shall collect moneys under this
Agreement, the Note or any other Credit Document which are deemed to constitute
interest which would increase the effective interest rate to a rate in excess of
that permitted to be charged by applicable law, all such sums deemed to
constitute interest in excess of the legal rate shall, upon such determination,
at the option of Lender or other Note Holders, be returned to Borrower or
credited against the principal balance of the Note then outstanding.
10.16. Successors and Assigns. The provisions of this Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns. Borrower may not assign or otherwise transfer
any of its rights under this Agreement without the prior written consent of
Lender.
10.17. Counterparts. This Agreement may be executed in one or more
duplicate counterparts and when signed by each of the parties listed below shall
constitute a single binding agreement.
* * * *
55
IN WITNESS WHEREOF, the parties have caused this Agreement to
be duly executed by their officers thereunto duly authorized as of the day and
year first above written.
GST NEW MEXICO LIGHTWAVE, INC.,
a New Mexico corporation,
as Borrower
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Assistant Secretary and Vice President
TM COMMUNICATIONS LLC,
a Delaware limited liability company,
as Lender
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President
56
EXHIBIT A
---------
DEFINITIONS
-----------
"Account Debtor" has the meaning given in Section 5(c) of the
Security Agreement.
"Account Security Agreement" has the meaning given in Section
2.7(a) of the NML Credit Agreement.
"Accounts" means the Receipts Account and the Operating
Account.
"Act" means the U.S. federal Securities Act of 1933, as
amended.
"Additional Information" has the meaning given in Section
2.1(a) of the Master Agreement.
"Additional Project Documents" means any other contracts or
agreements related to the construction, testing, maintenance, repair, operation
or use of the Project entered into by Borrower and any other Person subsequent
to the Closing Date.
"Affiliate" has the meaning set forth in Rule 12b-2 of the
regulations under the Securities Exchange Act of 1934, as amended provided,
however, that in no case shall Lender or any of its Affiliates be deemed to be
Affiliates of Greenstar.
"Alternate Interest Rate" means a fluctuating per annum rate
of interest as shall be in effect from time to time which rate shall at all
times be equal to the Federal Funds Rate plus three percent (3%). Any change in
the Alternate Interest Rate due to a change in the Federal Funds Rate shall be
effective as of the effective date of such change in such Federal Funds Rate.
"Alternate Interest Rate Loan" means any portion of the Loan
Facility converted pursuant to Section 2.5(a) of the NML Credit Agreement into a
loan at the Alternate Interest Rate.
"AMEX" means the American Stock Exchange.
"Annual Operating Budget" means, with respect to any fiscal
year of Borrower, an annual operating budget setting forth all reasonably
anticipated Project Revenues, Debt Service, Operation and Maintenance Costs,
allowances for reserves, and information described in Section 5.7(b) of the NML
Credit Agreement. "Annual Operating Budget" includes the First Annual Operating
Budget.
"Applicable Easement" means any Easement that is necessary at
any given time in light of the stage of development, construction or operation
of the Project to
A-1
construct, test, operate, maintain, repair, own or use the Project as
contemplated by the Operative Documents, to enter into any Operative Document or
to consummate any transaction contemplated thereby.
"Applicable Permit" means any Permit, including any zoning,
environmental protection, pollution, sanitation, FCC, NMSCC, safety, sitting,
building or other Permit, (a) that is necessary at any given time in light of
the stage of development, construction or operation of the Project to construct,
test, operate, maintain, repair, own or use the Project as contemplated by the
Operative Documents, to enter into any Operative Document or to consummate any
transaction contemplated thereby, or (b) that is necessary so that neither
Borrower nor any Affiliate may be deemed by any Governmental Authority to be
subject to regulation under the Communications Act or under any state laws or
regulations as a result of the construction and operation of the Project.
"Assigned Agreement" has the meaning given in Section 2(d)(i)
of the Security Agreement.
"Assignee" has the meaning given in Section 9.1 of the NML
Credit Agreement.
"Assignment" has the meaning given in Section 9.1 of the NML
Credit Agreement.
"Assignment Agreement" has the meaning given in Section 9.1 of
the NML Credit Agreement.
"Assignor" has the meaning given in Section 9.1 of the NML
Credit Agreement.
"Bankruptcy Law" means Title 11 of the United States Code, and
any other state or federal insolvency, reorganization, moratorium or similar law
for the relief of debtors.
"Base Case Project Projection" means a projection of operating
results for the Project over a period ending no sooner than five (5) years
beyond the Expected Completion Date, showing at a minimum Borrower's reasonable
good faith estimates, as of the applicable Closing Date, of revenue, operating
expenses, debt service coverage ratios and sources and uses of revenues over the
forecast period, which projection shall be delivered at the applicable Closing
Date.
"Borrower" means GST New Mexico Lightwave, Inc., a New Mexico
corporation.
"Borrower Equity" means any non-borrowed funds contributed by
Borrower, or any shareholder of Borrower on behalf of Borrower, toward Project
Costs.
A-2
"Business Day" means any day other than a Saturday, Sunday or
other day on which banks are authorized to be closed in Albuquerque, New Mexico
or New York, New York and, with respect to the determination of the LIBOR Rate,
which is also a day on which dealings in Dollar deposits are carried out in the
London interbank market.
"Capital Contribution" means the contribution to capital to be
made prior to the Closing as set forth in Section 3.1(h) of the NML Credit
Agreement.
"Change of Control" means any of the following: (i) the sale,
lease, conveyance or other disposition of assets of the Borrower valued in
excess of $5,000,000; (ii) the liquidation or dissolution of the Borrower; and
(iii) any transaction or series of transactions that results in GSI ceasing to
hold and control, directly or indirectly, fifty percent (50%) or more of the
Equity Securities of Borrower.
"Change of Law" has the meaning given in Section 2.5(b) of the
NML Credit Agreement.
"Charter Documents" means, as to any Person other than a
natural person, the charter, certificate or articles of incorporation, bylaws or
other organizational or governing documents of such Person, including, with
respect to a partnership, a partnership agreement and any certificate of limited
partnership or similar document.
"City of Albuquerque License" means the nonexclusive
franchise, right and privilege to erect, construct, maintain and operate within
the corporate limits of the City of Albuquerque, New Mexico, a telecommunication
system to supply city residents and others with telecommunication service
granted to Borrower by the City of Albuquerque on July 17, 1995.
"City of Rio Rancho License" means the non-exclusive right and
privilege to construct, erect, operate and maintain, in, upon, along, across,
above, over and under the streets, alleys, public way and public places now in
use or dedicated, and all extensions thereof, and additions thereto, in the City
of Rio Rancho, poles, wires, cables, underground conduits, manholes and other
telecommunications facilities necessary or proper for the maintenance and
operation in said City of Rio Rancho, the Company's telecommunications business
as that term is defined in ss.63-9A-3.L, ▇▇▇▇ ▇▇▇▇, and set forth in its CPCN as
amended from time to time, granted to Borrower by the City of Rio Rancho on
January 24, 1996.
"Closing Date" means the date when each of the conditions
precedent listed in Section 3.1 of the NML Credit Agreement has been satisfied
(or waived in writing by Lender).
"Code" means the Internal Revenue Code of 1986, as amended.
Reference to a specific section of the Code shall include any valid regulation
promulgated thereunder, and any comparable provision of any future legislation
amending, supplementing or superseding such section.
A-3
"Collateral" means all real and personal property which is
subject or is or is intended to become subject to the security interests or lien
granted by any of the Collateral Documents.
"Collateral Documents" means the Pledge Agreement, the
Security Agreement, the Account Security Agreement, the GST Security Agreement,
the Consents, the Net Cash Flow Agreements, the Net Cash Flow Account Security
Agreements, and the other agreements to be entered into pursuant to Section 5.17
of the NML Credit Agreement, the Construction Deeds of Trust and any financing
statements and the like filed or recorded in connection with the foregoing.
"Collocation Agreements" means the agreements entered into or
to be entered into between NML and local exchange carriers with respect to
physical or virtual collocation with respect to the Project.
"Committed Amount" means Eight Million Dollars ($8,000,000).
"Communications Act" means the Communication Act of 1934, as
amended.
"Completion" means, with respect to the Project, that the
Project shall have been substantially completed in all material respects and
that all work under the Construction Contracts shall have occurred and that
completion of all such work shall have been in accordance with the Plans and
Specifications and the requirements of all Applicable Permits for the Project.
"Completion Date" means, with respect to the Project, the
earlier of: (i) the date of Completion of the Project, and (ii) May 15, 1997.
"Consents" shall mean a consent executed by each party to the
Project Documents (other than Lender) in substantially the form of Exhibit ▇-▇,
▇-▇ ▇▇ ▇-▇ hereto, as applicable.
"Construction Contracts" means the Construction Contract
between NML and US Communications, Inc. dated September 26, 1995 and the other
Construction Agreements to be entered into with respect to the construction of
the Project, subject to the terms and conditions of the NML Credit Agreement.
"Construction Deeds of Trust" shall mean the construction
deeds of trust filed in connection with the Closing, in substantially the form
of Exhibit I.
"Construction Loan" has the meaning given in Section 2.1(a)(i)
of the NML Credit Agreement.
"Construction Loan Availability Period" means with respect to
the Project the period from the Closing Date to the earlier of Completion or the
Construction Loan Maturity Date.
A-4
"Construction Loan Borrowing" means a borrowing by Borrower
consisting of a Construction Loan made by the Lender.
"Construction Loan Maturity Date" shall mean, with respect to
the Project, the date which is one year after the Closing Date.
"Contractors" means U. S. Communications, Inc. and such other
contractors as may be selected by Borrower and approved by Lender.
"CPCN" means the Certificate of Public Convenience and
Necessity Granted to Borrower by the NMSCC on October 23, 1995.
"Credit Documents" means the NML Credit Agreement, the Note,
the Collateral Documents and the Consents.
"Credit Event" means the making of any Construction Loan and
any other extension of credit hereunder.
"Debt" of any Person at any date means, without duplication,
(a) all obligations of such Person for borrowed money, (b) all obligations of
such Person evidenced by bonds, debentures, notes or other similar instruments,
(c) all obligations of such Person to pay the deferred purchase price of
property or services, except trade accounts payable arising in the ordinary
course of business, (d) all obligations of such Person under leases which are or
should be, in accordance with GAAP, recorded as capital leases in respect of
which such Person is liable, (e) all obligations of such Person to purchase
securities (or other property) which arise out of or in connection with the sale
of the same or substantially similar securities (or property), (f) all deferred
obligations of such Person to reimburse any bank or other Person in respect of
amounts paid or advanced under a letter of credit or other instrument, (g) all
Debt of others secured by a Lien on any asset of such Person, whether or not
such Debt is assumed by such Person and (h) all Debt of others guaranteed
directly or indirectly by such person or as to which such Person has an
obligation substantially the economic equivalent of a guarantee.
"Debt Service" means for any Person and any period all
Obligations for principal and interest payments on Debt of such Persons due in
such period.
"Default" means any occurrence, circumstance or event, or any
combination thereof, which, with the lapse of time and/or the giving of notice,
would constitute an Event of Default.
"Default Rate" means an interest rate per annum equal to the
interest rate then in effect on the Loan Facility plus three percent (3%). All
computations of interest with respect to the Default Rate shall be based on a
year of 360 days and actual days elapsed.
"Depositary Bank" has the meaning given in Section 8(b) of the
Security Agreement.
A-5
"Development Companies" means corporations which are direct or
indirect subsidiaries of GSI and/or GST which will develop the Network Projects.
"Dollars" and "$" means United States dollars or such coin or
currency of the United States of America as at the time of payment shall be
legal tender for the payment of public and private debts in the United States of
America.
"Drawdown Certificate" means a certificate delivered to Lender
pursuant to Section 3.2(b) of the NML Credit Agreement substantially in the form
of Exhibit C-2 thereto.
"Easement Property" means the property subject to all
Easements and similar agreements described on Schedule 2 attached hereto.
"Easements" means any easement, other right of way or license
provided or agreed to by any Person other than a Governmental Authority.
"Eminent Domain Proceeds" has the meaning given in Section
5.15 of the NML Credit Agreement.
"Employee Benefit Plan" means any employee benefit plan within
the meaning of section 3(3) of ERISA maintained or contributed to by Borrower or
any ERISA Affiliate, other than a Multiemployer Plan.
"Equipment" has the meaning given in Section 2(c) of the
Security Agreement.
"Equity Securities" of any Person shall mean (a) all common
stock, preferred stock, participations, shares, partnership interests or other
equity interests in and of such Person (regardless of how designated and whether
or not voting or non-voting) and (b) all warrants, options and other rights to
acquire any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, including (unless the context otherwise
requires) any rules or regulations promulgated thereunder.
"ERISA Affiliate" means any Person which is treated as a
single employer with Borrower under Section 414 of the Code.
"ERISA Plan" means any employee benefit plan (a) maintained by
Borrower or any ERISA Affiliate, or to which any of them contributes or is
obligated to contribute, for its employees and (b) covered by Title IV of ERISA
or to which Section 412 of the Code applies.
"Estoppel and Consent Certificate" shall mean an estoppel and
consent certificate in substantially the same form of Exhibit L.
A-6
"Event of Default" means any event specified in Article 8 of
the NML Credit Agreement.
"Event of Eminent Domain" means any compulsory transfer or
taking by condemnation, eminent domain or exercise of a similar power, or
transfer under threat of such compulsory transfer or taking, of any part of the
Collateral or any of the mortgaged property described in a mortgage by any
agency, department, authority, commission, board, instrumentality or political
subdivision of the State of New Mexico, the United States or another
Governmental Authority having jurisdiction.
"Exercise Price" has the meaning given in Section 2 of the
Warrant.
"Expected Completion Date" means March 31, 1997.
"FCC" means the Federal Communications Commission and its
successors.
"Federal Funds Rate" means the per annum rate of interest at
which Federal funds in the amount of the Loan Facility scheduled to be
outstanding as of the commencement of the relevant Interest Period are offered
to the Lender for such Interest Period by Federal funds brokers in New York at
approximately 11:00 a.m. New York time on the date two Business Days prior to
the first day of such Interest Period.
"Federal Reserve Board" means the Board of Governors of the
Federal Reserve System.
"First Annual Operating Budget" has the meaning given in
Section 5.7(b) of the NML Credit Agreement.
"Fixed Rate" means a rate per annum equal to the annual yield
which a United States government securities dealer of recognizes standing,
selected by the Lender in its sole discretion, offers to the Lender at
approximately 11:00 a.m. New York time on the day preceding the date of
conversion for the purchase of United States Treasury notes or bonds in an
aggregate principal amount of $1,000,000 or more maturing approximately on the
Maturity Date plus 3.00% plus swap costs.
"Force Majeure" means a delay in or failure of performance by
a Person attributable to unforeseeable occurrences beyond the control of such
Person, including acts of God or the public enemy; expropriation or confiscation
of facilities; compliance with any order or request of any Governmental
Authority; unforeseen changes in laws, regulations or orders, acts of declared
or undeclared war; use of any weapon of war employing atomic fission or
radioactive force, whether in time of peace or war; shipwreck; public disorder,
rebellion or sabotage, revolution, epidemics, landslides, hurricanes,
earthquakes, floods, riots, partial or entire failure of utilities, quarantine,
or similar causes; strikes, lockouts or other labor disputes (excluding a strike
at the Site or by employees of a Contractor unless such strike or disturbance is
in violation of a "no strike" provision of a Project labor
A-7
agreement). Financial difficulties of any kind are explicitly excluded from
this definition of Force Majeure.
"GAAP" means generally accepted accounting principles and
practices as in effect in the United States of America from time to time,
consistently applied.
"Governmental Authority" means any national, state or local
government (whether domestic or foreign), any political subdivision thereof or
any other governmental, quasi-governmental, judicial, public or statutory
instrumentality, authority, body, agency, bureau or entity, (including any
zoning authority, the FCC, the NMSCC, or any arbitrator with authority to bind a
party at law).
"Governmental Charges" has the meaning given in Section 1 of
the Security Agreement.
"Governmental Rule" means any law, rule, regulation,
ordinance, order, code interpretation, judgment, decree, directive, guidelines,
policy or similar form of decision of any Governmental Authority.
"Greenstar" means GSI, ▇▇▇, GST, PLI, NML, GST Tucson
Lightwave, Inc., GST Pacwest Telecom Hawaii, Inc., and their Affiliates.
"GSI" means GST Telecommunications Inc. (formerly known as
"Greenstar Telecommunications Inc."), a corporation organized under the laws of
Canada.
"GST" means GST Telecom Inc., a Delaware corporation.
"GST Security Agreement" has the meaning given in Section
2.7(a) of the NML Credit Agreement.
"GST Services Agreement" means the Services Agreement between
NML and GST, dated as of October 1, 1995.
"▇▇▇" means GST USA, Inc. (formerly known as "Greenstar USA,
Inc."), a Delaware corporation.
"Hazardous Substances" means substances defined as "hazardous
substances," in Section 101 of the CERCLA (42 U.S.C. Section 9601); those
substances defined as "hazardous waste" by the RCRA; those substances designated
as a "hazardous substance" pursuant to Section 311 of the Clean Water Act (33
U.S.C. Section 1321); those substances defined as "hazardous materials" in
Section 103 of the Hazardous Materials Transportation Act (49 U.S.C. Section
1801 et seq. at Section 1802); those substances regulated as a hazardous
chemical substance or mixture or as an imminently hazardous chemical substance
or mixture pursuant to Sections 6 or 7 of the TSCA (15 U.S.C. Sections 2605,
2606); those substances defined as "contaminants" by Section 1401 of the SDWA
(42 U.S.C. Section 300f), if present in any surface or ground water in excess of
maximum contaminant
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levels; those substances regulated by the Oil Pollution Act; those substances
defined as a pesticide pursuant to Section 2(u) of the FIFRA (7 U.S.C. Section
136(u)); those substances defined as a source, special nuclear or by-product
material by Section 11 of the AEA (42 U.S.C. Section 2014); those substances
defined as "residual radioactive material" by Section 101 of the UMTRCA (42
U.S.C. Section 7911); those substances defined as "toxic materials" or "harmful
physical agents" pursuant to Section 6 of the Occupational Safety and Health Act
(29 U.S.C. Section 651 et seq. at Section 655); those substances defined as
hazardous wastes in 40 C.F.R. Part 261.3; those substances defined as hazardous
waste constituents in 40 C.F.R. Part 260.10, specifically including Appendix VII
and VIII of Subpart D of 40 C.F.R. Part 261; those substances designated as
hazardous substances in 40 C.F.R. Parts 116.4 and 302.4; those substances
defined as hazardous substances or hazardous materials in 49 C.F.R. Part 171.8;
those substances regulated as hazardous materials, hazardous substances, or
toxic substances in 40 C.F.R. Part 1910; and in the regulations adopted and
publications promulgated pursuant to any Hazardous Substance Laws, whether or
not such regulations or publications are specifically referenced herein.
"Hazardous Substance Laws" means: (a) the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended (42
U.S.C. Section 9601 et seq.)("CERCLA"); (b) the Federal Water Pollution Control
Act (33 U.S.C. Section 1251 et seq.)("Clean Water Act" or "CWA"); (c) the
Resource Conversation and Recovery Act (42 U.S.C. Section 6901 et seq.)("RCRA");
(d) the Atomic Energy Act of 1954 (42 U.S.C. Section 2011 et seq.)("AEA"); (e)
the Clean Air Act (42 U.S.C. Section 7401 et seq.)("CAA"); (f) the Emergency
Planning and Community Right to Know Act (42 U.S.C. Section 11001 et
seq.)("EPCRA"); (g) the Federal Insecticide, Fungicide, and Rodenticide Act (7
U.S.C. Section 136 et seq.)("FIFRA"); (h) the Oil Pollution Act of 1990 (P.L.
101-380, 104 Stat. 486); (i) the Safe Drinking Water Act (42 U.S.C. Sections
300f et seq.)("SDWA"); (j) the Surface Mining Control and Reclamation Act of
1974 (30 U.S.C. Sections 1201 et seq.)("SMCRA"); (k) the Toxic Substances
Control Act (15 U.S.C. Section 2601 et seq.)("TSCA"); (l) the Uranium Mill
Tailings Radiation Control Act of 1978 (42 U.S.C. Section 7901 et
seq.)("UMTRCA"); and (m) all other Federal, state and local Governmental Rules
which govern Hazardous Substances, and the regulations adopted and publications
promulgated pursuant to all such foregoing laws.
"Insurance Proceeds" has the meaning given in Section 7.2(a)
of the NML Credit Agreement.
"Interconnection Agreements" means the Communications Services
Agreement between NML and AT&T dated December 15, 1995, Competitive Access
Provider Service Agreement between GST and Sprint Communications Company L.P.
dated October 12, 1995, Building Space License Agreement for Shared Customer
Provided Access between NML and AT&T, Synchronization Interconnection Agreement
between NML and AT&T dated January 17, 1996, the Master Capacity Agreement
between GST and MCI dated October 12, 1995 (with respect to Borrower), and any
other interconnection agreement entered into or to be entered into with respect
to the Project.
A-9
"Interest Period" means (a) the period commencing on May 24,
1996 and ending on August 24, 1996 and (b) thereafter, each period commencing on
the last day of the next preceding Interest Period and ending on the numerically
corresponding day in the third succeeding calendar month; provided, however,
that (1) the initial Interest Period with respect to each Construction Loan
other than the initial Construction Loan shall commence on the date on which
such subsequent Construction Loan is advanced and end on the last day of the
then current Interest Period as established above; (2) any Interest Period which
would otherwise end on a day which is not a Business Day shall be extended to
the next succeeding Business Day unless such next Business Day falls in another
calendar month, in which case such Interest Period shall end on the immediately
preceding Business Day; (3) any Interest Period which begins on the last
Business Day of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest Period)
shall end on the last Business Day of a calendar month; and (4) no Interest
Period shall end after the Maturity Date.
"Inventory" has the meaning given in Section 2(e) of the
Security Agreement.
"Leased Property" means the real property subject to or
covered by the Leases.
"Leases" means any lease of property necessary or entered into
in connection with respect to the Project.
"Lease Sites" means: (i) ▇▇▇▇▇ ▇▇▇▇ located at ▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇.▇., ▇▇▇▇▇▇▇▇▇▇▇, N.M. (approximately 1,095 sq. ft.), (ii) Suite 1000 located
at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇., ▇.▇., ▇▇▇▇▇▇▇▇▇▇▇, N.M. (approximately 20,000 sq. ft.);
(iii) building and parking space at ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇▇▇▇▇,
N.M. (approximately 5,700 sq. ft.) and the sites which are the subject of the
other Leases to be entered into with respect to the Project, and all rights,
rights of way and appurtenances thereto, covering certain real property in
Bernalillo County, New Mexico with respect to the Project.
"Legal Requirement" means, as to any Person, any requirement
set forth in the Charter Documents, of such Person, any Governmental Rule, any
requirement under a Permit, and any determination of any arbitrator, court, or
government Governmental Authority, in each case applicable to or binding upon
such Person or any of its properties or to which such Person or any of its
properties is subject.
"Lender" means TM Communications LLC and its successors and
assigns.
"Lender Representative" means an individual designated by
Lender from time to time to act as liaison with Borrower.
"LIBOR Rate" means a rate per annum determined by Lender
(which determination shall, absent manifest error, be conclusive) to be equal to
the rate at which deposits in Dollars are offered to Lender in the London
interbank eurodollar currency market at approximately 11:00 a.m. (London time),
two Business Days prior to the first day of the
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relevant Interest Period (for delivery on the first day of such Interest Period)
and for a term equal to such Interest Period.
"Lien" on any asset means any mortgage, deed of trust, lien,
pledge, charge, judgment, security interest, restrictive covenant or easement or
encumbrance of any kind in respect of such asset, whether or not filed, recorded
or otherwise perfected or effective under applicable law, as well as the
interest of a vendor or lessor under any conditional sale agreement, capital
lease or other title retention agreement relating to such asset.
"Liquidation Costs" has the meaning given in Section 2.6 of
the NML Credit Agreement.
"Loan Facility" means, collectively, the Construction Loans
and the Term Loans made under the NML Credit Agreement.
"Major Project Participants" means U. S. Communications, Inc.
and the other entities to be awarded contracts with respect to the construction
of the Project.
"Major Subcontracts" means any contract between Contractor and
any Major Subcontractor.
"Major Subcontractor" means any Person, at any tier, who
performs any work, including the supply of any equipment or materials for any
Contractor, involving amounts in excess in the aggregate of Two Hundred Fifty
Thousand Dollars ($250,000).
"Master Agreement" means the Master Agreement among GSI, GST,
Pacwest, PLI and Tomen America dated October 24, 1994, as amended.
"Material Adverse Effect" means a material adverse effect on
(a) construction or operation of the Project, or the business, assets,
operations or financial or other condition of Borrower at any time or on the
financial or other condition of any other Major Project Participant during the
Construction Loan Availability Period, (b) the ability of Borrower or any Major
Project Participant to perform its obligations under the Credit Documents or
other Operative Documents, (c) the validity or enforceability of the NML Credit
Agreement or any other Credit Document or any related document, instrument or
agreement, or the rights and remedies of Lender hereunder or thereunder, or (d)
the Lender's interest in a Project, the value of the Collateral, or Lender's
security interests in the Collateral or the perfection or priority of such
security interests.
"Material Project Documents" means the documents specified in
Section 3.1(b)(A) through 3.1(b)(G) of the NML Credit Agreement.
"Maturity" or "maturity" means, with respect to the amount due
with respect to the Loan Facility, interest, fees or other amounts payable by
Borrower under the NML Credit Agreement or the other Credit Documents, the date
such amounts becomes due, whether upon the stated maturity or due date, upon
acceleration or otherwise.
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"Maturity Date" means the earlier of the date which is nine
(9) years from the Closing Date or eight (8) years from the Term Conversion Date
or such earlier date on which the entire outstanding principal balance of the
Loan Facility, together with all unpaid interest, fees, charges and costs,
become due and payable under the NML Credit Agreement.
"Maximum Legal Rate" has the meaning given in the Note.
"Milestone Disbursement Schedule" means the milestone
disbursement schedule for the Project delivered by Borrower at the Closing Date.
"Multiemployer Plan" means any multiemployer plan within the
meaning of section 3(37) of ERISA maintained or contributed to by Borrower or
any ERISA Affiliate.
"Net Cash Flow" means with respect to a Development Company
and the applicable period:
(a) the sum of:
(i) the gross receipts of the Development Company
from all sources (other than capital contributions, proceeds from the Credit
Agreement with Tomen America or a Tomen Affiliate or other loans), including but
not limited to receipts from (1) the sale of products and services, (2) interest
and other investment income on investments and reserves, and (3) insurance
proceeds;
(ii) any amounts released from reserves, the
distribution of which is permissible and in accordance with the provisions of
the Credit Agreement; and
(iii) any Net Cash Flow from a prior period not
distributed but the distribution of which is permissible;
less (b) the sum of:
(i) all costs and expenses which the Development
Company paid during such period in connection with the construction, ownership,
management (except as provided herein), operation and maintenance of the Network
Project, including, but not limited to, (1) utility costs, (2) business taxes
and real and personal property tax and assessments, and fees and expenses in
connection with the preparation of the Development Company's tax returns, (3)
insurance premiums, (4) the actual documented costs of Network Project
management, not to include management fees paid to Greenstar or any Affiliate in
excess of such actual costs, (5) expenditures for capital improvements and the
repair, maintenance and restoration of the improvements (including any portion
of the same to the extent not covered by insurance proceeds), (6) expenditures
required or deemed advisable to be made under or in connection with any contract
of the Development Company, and (7) all other costs and expenses, including
capital expenditures and the purchase of spare parts and other inventory and
replacement items, required to be made by the Development Company (but excluding
any such amounts to the extent paid out of reserves); and
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(ii) all principal and interest and other sums and
amounts payable by the Development Company to repay any Loan from Tomen or any
of its Affiliates payable for the applicable or pertinent period.
"Net Cash Flow Account Security Agreements" has the meaning
given in Section 2.7(a).
"Net Cash Flow Agreements" means the agreements in the form of
Exhibit K entered into pursuant to Section 3.1(a) and Section 5.17 of the NML
Credit Agreement.
"Network Project Credit Agreement" means a credit agreement
between Lender or one of its Affiliates, as lender and a Development Company, as
borrower, to finance an alternative access network telecommunications project.
"Network Projects" means alternative access network
telecommunications projects to be developed or existing alternative access
projects to be expanded by GSI and/or GST in the Territory.
"1934 Act" means the Securities Exchange Act of 1934, as
amended.
"NML" means GST New Mexico Lightwave, Inc., a New Mexico
corporation.
"NML Credit Agreement" means the Credit Agreement between TM
Communications LLC (as lender) and NML (as borrower) dated May 24, 1996.
"NML Project" means the Project.
"NMSCC" means the New Mexico State Corporation Commission.
"Note Holder" means the registered owner of any Note.
"Note" has the meaning given in Section 2.1(f) of the NML
Credit Agreement.
"Notice of Borrowing" has the meaning given in Section
2.1(a)(ii) of the NML Credit Agreement.
"Notice of Interest Rate Conversion" has the meaning given in
Section 2.1(d) of the NML Credit Agreement.
"Notice of Term Conversion" has the meaning given in Section
2.1(b)(ii) of the NML Credit Agreement.
"Obligations" means and includes, with respect to any Person,
all loans, advances, debts, liabilities, and obligations, howsoever arising,
owed by such Person to a lender of every kind and description (whether or not
evidenced by any note or instrument,
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and whether or not for the payment of money), direct or indirect, absolute or
contingent, due or to become due, now existing or hereafter arising, pursuant to
the terms of a credit agreement or any other credit document, including all
interest, fees, charges, expenses, attorneys' fees and accountants fees
chargeable to such Person in connection with its dealings with such lender and
payable by such Person hereunder or thereunder. The term "Obligations" shall
also mean and include any amounts owing to Lender which arise because payments
as to past transactions are rescinded or otherwise required to be surrendered by
Lender after receipt.
"Operating Account" has the meaning given in Section 7.1 of
the NML Credit Agreement.
"Operation and Maintenance Costs" means all actual cash
maintenance and operation costs incurred and paid, or if appropriate, to be
incurred and paid, for the Project in any particular calendar or fiscal year or
period to which said term is applicable, including payments for fuel, additives
or chemicals and transportation costs related thereto, local taxes, insurance,
consumables, payments under any Lease, payments pursuant to the agreements for
the management, operation and maintenance of the Project, reasonable legal fees
and expenses paid by Borrower in connection with the management, maintenance or
operation of the Project (but excluding legal fees and expenses related to
litigation), fees paid in connection with obtaining, transferring, maintaining
or amending any Applicable Permits and reasonable general and administrative
expenses, but exclusive in all cases of non-cash charges, including depreciation
or obsolescence charges or reserves therefor, amortization of intangibles or
other bookkeeping entries of a similar nature, and also exclusive of all
interest charges and charges for the payment or amortization of principal of
indebtedness of Borrower (other than those relating to Debt permitted pursuant
to Section 6.3 of the NML Credit Agreement).
"Operative Documents" means the Credit Documents, the Project
Documents and any Additional Project Documents.
"Other Taxes" has the meaning given in Section 2.3(c)(i) of
the NML Credit Agreement.
"Pacwest" means Pacwest Network L.L.C., an Oregon limited
liability company and its Affiliates.
"Parts" means any part, appliance, instrument, appurtenance,
accessory or other property of any nature necessary or useful to the operation,
maintenance, service or repair of the project.
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under Title IV of ERISA.
"Permit" means any action, approval, consent, waiver,
exemption, variance, franchise, order, permit, authorization, right or license
of or from a Governmental Authority.
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"Permitted Investments" means (a) direct obligations of the
United States of America (including obligations issued or held in book-entry
form on the books of the Department of the Treasury of the United States of
America) or obligations the timely payment of the principal of and interest on
which are fully guaranteed by the United States of America; (b) obligations,
debentures, notes or other evidence of indebtedness issued or guaranteed by any
of the following: Export-Import Lender of the United States, Federal Housing
Administration or other agency or instrumentality of the United States; (c)
interest-bearing demand or time deposits (including certificates of deposit)
which are either (i) insured by the Federal Deposit Insurance Corporation, or
(ii) held in banks and savings and loan associations, having general obligations
rated at least "AA" or equivalent by Standard & Poor's Corporation ("S&P") or
▇▇▇▇▇'▇ Investors Service, Inc. ("Moody's), or if not so rated, secured at all
times, in the manner and to the extent provided by law, by collateral security
described in clauses (a) or (b) of this definition, of a market value of no less
than the amount of moneys so invested; (d) commercial paper rated (on the date
of acquisition thereof) at least A-1 or P-1 or equivalent by S&P or Moody's,
respectively (or an equivalent rating by another nationally recognized credit
rating agency of similar standing if neither of such corporations is then in the
business of rating commercial paper), maturing not more than 270 days from the
date of creation thereof; (e) any corporate evidence of indebtedness rated at
least "A-" or equivalent by S&P or Moody's; or (f) any advances, loans or
extensions of credit or any stock, bonds, notes, debentures or other securities
as Lender may from time to time approve in its sole and absolute discretion.
"Permitted Liens" means (a) the rights and interests of Lender
as provided in the Operative Documents, (b) Liens for any tax, assessment or
other governmental charge, either secured by a bond reasonably acceptable to
Lender or not yet due or being contested in good faith and by appropriate
proceedings, so long as (i) such proceedings shall not involve any substantial
danger of the sale, forfeiture or loss of the Project or any Applicable
Easements, as the case may be, title thereto or any interest therein and shall
not interfere in any material respect with the use or disposition of the Project
or any Applicable Easements, or (ii) a bond or other security acceptable to
Lender in its sole discretion has been posted or provided in such manner and
amount as to assure Lender that any taxes, assessments or other charges
determined to be due will be promptly paid in full when such contest is
determined, (c) materialmen's, mechanics', workers', repairmen's, employees' or
other like Liens arising in the ordinary course of business or in connection
with the construction of the Project, either for amounts not yet due or for
amounts being contested in good faith and by appropriate proceedings, so long as
(i) such proceedings shall not involve any substantial danger of the sale,
forfeiture or loss of any part of the Project or any Applicable Easements, as
the case may be, title thereto or any interest therein and shall not interfere
with the use or disposition of the Project or any Applicable Easements, or (ii)
a bond or other security acceptable to Lender in its sole discretion has been
posted or provided in such manner and amount as to assure Lender that any
amounts determined to be due will be promptly paid in full when such contest is
determined, (d) Liens arising out of judgments or awards, but only so long as an
appeal or proceeding for review is being prosecuted in good faith with a
reasonable likelihood of success and for the payment of which adequate reserves,
bonds or other security acceptable to Lender in its sole discretion have been
provided or are fully covered by insurance, (e) mineral rights the use and
enjoyment of which do not materially
A-15
interfere with the use and enjoyment of the Project or any Applicable Easements,
(f) Liens, deposits or pledges to secure statutory obligations or performance of
bids, tenders, contracts (other than for the repayment of borrowed money) or
leases, or for purposes of like general nature in the ordinary course of its
business, (g) Liens incident to the ordinary course of business that are not
incurred in connection with the obtaining of any loan, advance or credit and
that do not in the aggregate materially impair the use of the property or assets
of Borrower or the value of such property or assets for the purposes of such
business, (h) Liens of trade vendors created in connection with Debt allowed
under Section 6.3 of the NML Credit Agreement, and (i) Liens created in
connection with a Net Cash Flow Agreement.
"Person" means and includes an individual, a partnership, a
firm, an association, a corporation (including a business trust), a joint stock
company, an unincorporated association, a joint venture, a Governmental
Authority or any other entity whether acting in an individual, fiduciary or
other capacity.
"Plans and Specifications" means the plans and specifications
for the construction and design of the Project, including any document
describing the scope of work performed by the Contractors under the Construction
Contracts or any other contract or subcontract for the construction of the
Project, including, without limitation, the Collocation Agreements, the
Interconnection Agreements and the Pole and Conduit Agreements, all work
drawings, engineering and construction schedules, project schedules, project
monitoring systems, specifications status lists, material and procurement
ledgers, drawings and drawing lists, manpower allocation documents, management
and project procedures documents, project design criteria, and any other
document referred to in the Construction Contracts or any of the documents
referred to in this definition.
"Pledge Agreement" has the meaning given in Section 2.6 of the
NML Credit Agreement.
"Pole and Conduit Use Agreements" means the Fiber Optic
Construction and Use Agreement between NML and Public Service Company of New
Mexico dated July 18, 1995 and any other agreements entered into or to be
entered into with respect to the use of poles, conduits, the lease of fiber
optic cables, or rights of way for the Project's fiber optic cable and other
equipment.
"Proceeds" has the meaning given in Section 7.4 of the NML
Credit Agreement.
"Procurement Agent" means construction equipment and materials
procurement agent for the development and construction of the Network Projects.
"Project" means the development, construction and operation of
fiber optic transmission equipment and optical fiber cable for the Service
District all as more particularly described in Schedule 1 to the NML Credit
Agreement, together with all Easements, all alterations thereto or replacements
thereof, all fixtures, attachments, appliances, equipment, machinery and other
articles attached thereto or used in connection
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therewith and all Parts which may from time to time be incorporated or installed
in or attached thereto, all contracts and agreements for the purchase or sale of
commodities or other personal property related thereto, all leases of real or
personal property related thereto, and all other real and tangible and
intangible personal property owned by Borrower and placed upon or used in
connection therewith.
"Project Budget" has the meaning given in Section 3.1(l)(ii)
of the NML Credit Agreement.
"Project Costs" means (a) the cost of designing, equipping,
procuring, constructing, starting up and testing the Project, (b) the cost of
acquiring any lease, the Applicable Easements and any other necessary interest
in the Project, (c) local property taxes and insurance premiums payable with
respect to the Project during the Construction Loan Availability Period, (d)
interest payable on any Note for the Project during the Construction Loan
Availability Period, (e) reasonable initial working capital requirements of the
Project as approved by Lender, (f) the costs of acquiring Permits for the
Project during the Construction Loan Availability Period, (g) other fees and
expenses relating to the Project, including financial, legal (excluding
litigation) and consulting fees and expenses, all as described in the Project
Budget.
"Project Documents" means the documents listed in Section
3.1(b) of the NML Credit Agreement, and any other material agreement or document
relating to the development, construction, operation, maintenance and repair of
the Project.
"Project Loan" means a loan in the amount of 75% of the
Project Costs of a Network Project provided by Lender or one of its affiliates
to a Development Company pursuant to a Network Project Credit Agreement.
"Project Revenues" means all income and receipts derived from
the ownership or operation of the Project, including payments due Borrower under
the Construction Contracts, proceeds of any business interruption or other
insurance, income derived from the Project, together with any receipts derived
from the sale of any property pertaining to the Project or incidental to the
operation of the Project, all as determined in conformity with cash accounting
principles, the investment income on amounts in the Accounts, the proceeds of
any drawing under a letter of credit of which Borrower is the beneficiary,
proceeds of any insurance, condemnation or litigation or arbitration awards
relating to the Project and proceeds from the Collateral Documents, but not
including sums paid to Borrower in satisfaction of a contractual obligation to
indemnify Borrower for third party liability to the extent such sums do not
exceed the actual damage, loss or cost suffered by Borrower in connection
therewith.
"Project Schedule" means the Project Schedule/Milestone
Disbursement Schedule for the Project delivered by Borrower at the Closing.
"Proportionate Share" has the meaning given to it in Section
9.1 of the NML Credit Agreement, and as set forth in Attachment 1 of the
Assignment Agreement.
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"Prudent Practices" means those practices, methods, equipment,
specifications and standards of safety and performance, as the same may change
from time to time, as are commonly used by facilities similar to the Project of
a type and size similar to the Project as good, safe and prudent engineering
practices in connection with the design, construction, operation, maintenance,
repair and use thereof with commensurate standards of safety, performance,
dependability, efficiency and economy.
"Receipts Account" has the meaning given in Section 7.1(a) of
NML Credit Agreement.
"Receivables" has the meaning given in Section 2(a) of the
Security Agreement.
"Refinancing Notice" shall mean a written notice of proposed
financing by Borrower in substantially the same form of Exhibit F to the NML
Credit Agreement.
"Rules" shall mean the Commercial Arbitration Rules of The
American Arbitration Association.
"SEC" means the U.S. Securities and Exchange Commission.
"Security Agreement" has the meaning given in Section
2.7(a)(i) of the NML Credit Agreement.
"Service District" means the geographic district to be served
by the Project in Albuquerque, New Mexico as further described in Schedule 1.
"Site" means the Lease Sites and the Easement Properties.
"Substantial Completion" means substantial completion of the
Project in accordance with the Plans and Specifications and the requirements of
all Applicable Permits and as certified by an independent engineer to the
satisfaction of the Lender in its sole discretion.
"Taxes" has the meaning given in Section 2.3(c) of the NML
Credit Agreement.
"Term Conversion" means the accomplishment of the conversion
of Construction Loans to a Term Loan pursuant to Section 2.1(b)(i) of the NML
Credit Agreement.
"Term Conversion Date" means the date on which Term Conversion
occurs.
"Term Loan" has the meaning given in Section 2.1(b) of the NML
Credit Agreement.
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"Territory" means North America, Central America and South
America.
"Tomen" means Tomen Corporation, a corporation organized under
the laws of Japan.
"Tomen America" means Tomen America Inc., a New York
Corporation.
"Total Construction Loan Commitment" has the meaning given in
Section 2.2(a) of the NML Credit Agreement.
"Total Term Loan Commitment" has the meaning given in Section
2.2(b) of the NML Credit Agreement.
"UCC" means the Uniform Commercial Code of the jurisdiction
the law of which governs the document in which such term is used.
"U.S." means the United States of America.
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RULES OF INTERPRETATION
1. All terms defined in the NML Credit Agreement or any other
Credit Document in the singular form shall have comparable meanings in the
plural form and vice versa.
2. The word "or" is not exclusive.
3. A reference to a Governmental Rule includes any amendment
or modification to such Governmental Rule.
4. A reference to a Person includes such Person's permitted
successors and permitted assigns.
5. The words "include", "includes" and "including" and words
of similar import are not limiting or exclusive.
6. A reference in a Credit Document to an Article, Section,
Exhibit, Schedule, Annex, Attachment or Appendix is to the Article, Section,
Exhibit, Schedule, Annex, Attachment or Appendix of such Credit Document unless
otherwise indicated. Exhibits, Schedules, Annexes, Attachments or Appendices to
any document shall be deemed incorporated by reference in such document.
7. References to any document, instrument or agreement (a)
shall include all exhibits, schedules and other attachments thereto, (b) shall
include all documents, instruments or agreements issued or executed in
replacement thereof, and (c) shall mean such document, instrument or agreement,
or replacement or predecessor thereto, as amended, modified and supplemented
from time to time and in effect at any given time.
8. The words "hereof," "herein" and "hereunder" and words of
similar import when used in any Credit Document shall refer to such Credit
Document as a whole and not to any particular provision of such document.
9. References to "days" shall mean calendar days, unless the
term "Business Days" is used. References to a time of day shall mean such time
in New York, New York unless otherwise specified.
10. The Credit Documents are the result of negotiations
between, and have been reviewed by Borrower, Lender and their respective
counsel. Accordingly, the Credit Documents shall be deemed to be the product of
all parties thereto, and no ambiguity shall be construed in favor of or against
Borrower or Lender.