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EXHIBIT 99.1
CREDIT AGREEMENT
DATED AS OF DECEMBER 29, 2000
BETWEEN
PRODIGY COMMUNICATIONS CORPORATION
AS BORROWER,
SBC COMMUNICATIONS INC.,
AS LENDER
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CREDIT AGREEMENT dated as of December 29, 2000 between Prodigy Communications
Corporation (" Borrower") and SBC Communications Inc.("Lender").
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. DEFINED TERMS. As used in this Agreement, the following
terms have the meanings specified below:
"Affiliate" means, with respect to a specified person, another person that
directly, or indirectly through one or more intermediaries, has the power to
direct the management of such person or otherwise controls or is under common
control with the person specified.
"Applicable Base Rate" or "ABR" means, for any day, a rate per annum equal
to the one month LIBOR, as it appears on the Telerate Page 3750, in effect on
such day plus 400 basis points. Any change in the ABR due to a change in the
LIBOR rate shall be effective from and including the effective date of such
change.
"Availability Period" means the period from and including the Effective
Date to, but excluding the earlier of the Termination Date and the date of
termination of the Commitments.
"Borrower Existing Credit Agreement" means the credit agreement between
Borrower and Banco Inbursa, S.A.
"Business Day" means any day that is not a Saturday, Sunday or other day
on which commercial banks in San Antonio are authorized or required by law to
remain closed.
"Change in Control" means (i) the acquisition of ownership, directly or
indirectly, beneficially or of record, by any person or group (within the
meaning of the Securities Exchange Act of 1934 and the rules of the Securities
and Exchange Commission thereunder as in effect on the date hereof), other than
the Existing Controlling Interests, of shares representing more than 25% of the
aggregate ordinary voting power represented by the issued and outstanding
capital stock of Borrower; and (ii) occupation of a majority of the seats (other
than vacant seats) on the board of directors by persons who were neither (A)
nominated by the board of directors of Borrower nor (B) appointed by directors
so nominated.
"Commitment(s)" means the maximum aggregate amount of Loans available
hereunder. The initial aggregate amount of the Lender's Commitments is up to
$110,000, 000.
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"EBITDA" means, with respect to any period, the consolidated net income of
a person and its consolidated subsidiaries for such period, determined on a
consolidated basis, plus, to the extent deducted in computing such consolidated
net income for such period, the sum (without duplication) of (a) income tax
expense, (b) interest expense, (c) depreciation and amortization expense, (d)
extraordinary losses, and (e) non-recurring, non-cash charges; provided that if
any such non-recurring, non-cash charges result in cash payments in the future,
such cash payments shall be deducted from EBITDA in the period when paid.
"ERISA Event" means (a) any "reportable event", as defined in Section 4043
of ERISA or the regulations issued thereunder with respect to a plan subject to
ERISA (" Plan") (other than an event for which the 30-day notice period is
waived); (b) the existence with respect to any Plan of an "accumulated funding
deficiency" (as defined in Section 412 of the Internal Revenue Code ("Code") or
Section 302 of ERISA), whether or not waived; (c) the filing pursuant to Section
412(d) of the Code or Section 303(d) of ERISA of an application for a waiver of
the minimum funding standard with respect to any Plan; (d) the incurrence by the
Borrower, or any of its affiliates treated with Borrower as a single employer
("ERISA Affiliates") of any liability under ERISA with respect to the
termination of any Plan; (e) the receipt by the Borrower, or any of its ERISA
Affiliates from the PBGC, as defined in ERISA, or a plan administrator of any
notice relating to an intention to terminate any Plan or Plans or to appoint a
trustee to administer any Plan; (f) the incurrence by the Borrower, or any of
its ERISA Affiliates, of any liability with respect to the withdrawal or partial
withdrawal from any Plan or multi-employer Plan; or (g) the receipt by the
Borrower, or any of its ERISA Affiliates, of any notice, or the receipt by any
multi-employer Plan from the Borrower, or any of its ERISA Affiliates, of any
notice, concerning the imposition of withdrawal liability or a determination
that a multi-employer Plan is, or is expected to be, insolvent or in
reorganization, within the meaning of ERISA.
"Existing Controlling Interests" means each person set forth in Borrower's
SEC filings as having beneficial ownership as of [day before Effective Date],
2000 of more than 10% of the outstanding shares of common stock of Borrower and
includes any combination of such persons.
"Financial Officer" means the chief financial officer, principal
accounting officer, treasurer, or controller of the Borrower.
"GAAP" means generally accepted accounting principles in the United
States.
"Indebtedness" means all obligations of such person for borrowed money,
including (a) all obligations of such person under conditional sale or other
title retention agreements relating to property acquired by such person, (b) all
guarantees by such person of Indebtedness of others, (c) all capital lease
obligations of such person and (d) all obligations, contingent or otherwise, of
such person in respect of bankers' acceptances.
"Interest Payment Date" means the first business day of each month.
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"Lien" means, with respect to any asset of a person, (a) any mortgage,
deed of trust, lien, pledge, hypothecation, encumbrance, charge or security
interest in, on or of such asset and (b) the interest of a vendor or a lessor
under any conditional sale agreement, capital lease or title retention agreement
(or any financing lease having substantially the same economic effect as any of
the foregoing) relating to such asset.
"Material Adverse Effect" means a material adverse effect on (a) the
business, operations or condition (financial or otherwise), of Borrower and its
Subsidiaries, taken as a whole, (b) the ability of the Borrower to perform any
of its obligations under this Agreement or (c) the rights of or benefits
available to the Lender under this Agreement.
"Material Subsidiary" means, at any time, any Subsidiary (a) the
consolidated total assets of which exceed 5% of the consolidated total assets of
Borrower and its consolidated Subsidiaries as of the end of the most recent
fiscal quarter of Borrower ended at or prior to such time or (b) the operating
income of which exceeds 5% of the operating income of Borrower and its
consolidated Subsidiaries for the most recent period of four consecutive fiscal
quarters of Borrower at or prior to such time.
"Permitted Encumbrances" means:
(a) Liens imposed by law for taxes that are not yet due or are
being contested in compliance with Section 5.04;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's and other like Liens imposed by law, arising in the ordinary course
of business and securing obligations that are not overdue by more than 30 days
or are being contested in compliance with Section 5.04;
(c) pledges and deposits made in the ordinary course of business in
compliance with workers' compensation, unemployment insurance and other social
security laws or regulations;
(d) deposits to secure the performance of bids, trade contracts,
leases, statutory obligations, surety and appeal bonds, performance bonds and
other obligations of a like nature, in each case in the ordinary course of
business;
(e) judgment liens in respect of judgments that do not constitute
an Event of Default under clause (k) of Article VII; and
(f) easements, zoning restriction, servitudes, rights-of-way and
similar encumbrances on real or immoveable property imposed by law or arising in
the ordinary course of business that do not secure any monetary obligations and
do not materially detract from the value of the affected property or interfere
with the ordinary conduct of business of the Borrower or any Subsidiary;
provided that the term "Permitted Encumbrances" shall not include any Lien
securing Indebtedness.
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"Related Parties" means a person's Affiliates and the respective
directors, officers, employees, agents and advisors of such person and such
person's Affiliates.
"Subsidiary" means, with respect to Borrower or any other person (the
"parent") at any date, any corporation, limited liability company, partnership,
association or other entity of which securities or other ownership interests
representing more than 50% of the equity or more than 50% of the ordinary voting
power or, in the case of a partnership, more than 50% of the general partnership
interests are, as of such date, owned, controlled or held by the parent or one
or more subsidiaries of the parent.
"Termination Date" means December 31, 2003.
"Transactions" means the execution, delivery and performance by the
Borrower of this Agreement, the Loans and the use of the proceeds thereof.
SECTION 1.02. TERMS GENERALLY. The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined. The words
"include", "includes" and "including" shall be deemed to be followed by the
phrase "without limitation. The word "will" shall be construed to have the same
meaning and effect as the word "shall". Unless the context requires otherwise
(a) any reference to any agreement, instrument or other document herein shall
include any amendments, or other modifications thereto (subject to any
restrictions on such amendments, supplements or modifications set forth herein),
(b) any reference herein to any person shall include such person's successors
and assigns, and (c) the words "herein", "hereof" and "hereunder", and words of
similar import, shall be construed to refer to this Agreement in its entirety
and not to any particular provision hereof.
SECTION 1.03. ACCOUNTING TERMS - GAAP. Except as otherwise expressly
provided herein, all terms of an accounting or financial nature shall be
construed in accordance with GAAP, as in effect from time to time.
ARTICLE II
THE CREDITS
SECTION 2.01. COMMITMENTS. Subject to the terms and conditions set forth
herein, the Lender agrees to make revolving loans to the Borrower from time to
time during the Availability Period in an aggregate principal amount that will
not exceed the total Commitments.
SECTION 2.02. LOANS AND BORROWINGS. (a) Each loan ("Loan" or
"Borrowing") shall be made in accordance with the procedures set forth in
Section 2.03.
(b) Notwithstanding any other provision of this Agreement, the Borrower
shall not be entitled to request or continue any Borrowing if the Interest
Period requested with respect thereto would end after the Maturity Date.
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SECTION 2.03. REQUESTS FOR REVOLVING BORROWINGS. To request a Loan, the
Chief Financial Officer of the Borrower shall notify the Lender of such request
by telephone not later than 12:00 noon, San Antonio, Texas time, at least three
Business Days before the date of the proposed Borrowing. Each such telephonic
Borrowing Request shall be irrevocable and shall be confirmed promptly by hand
delivery or telecopy to the Lender of a written Borrowing Request in a form
approved by the Lender and signed by the Borrower. Each such telephonic and
written Borrowing Request shall specify the amount of the requested Borrowing
and the date of such Borrowing, which shall be a Business Day. Borrower agrees
to designate a single account for deposit of all Loans hereunder and to obtain
Lender's consent prior to changing such account. Notwithstanding the above,
Borrower shall make only one request for a Loan per month.
SECTION 2.04. FUNDING OF BORROWINGS. No later than 3 business days after
receiving a request for a Loan, The Lender shall wire transfer each Loan in
immediately available funds by 5:00 p.m., San Antonio time, to the designated
account of the Borrower.
SECTION 2.05. TERMINATION OF COMMITMENTS. Unless previously terminated,
the Commitments shall terminate on the Termination Date.
SECTION 2.06. REPAYMENT OF LOANS; EVIDENCE OF DEBT. (a) The Borrower
hereby unconditionally promises to pay to the Lender the then unpaid principal
amount of each Loan made by such Lender on the Termination Date.
(b) The Lender shall maintain in accordance with its usual practice,
account(s) evidencing each Loan made by such Lender, including the amounts of
principal and interest payable and paid to such Lender from time to time
hereunder.
(c) The entries made in the account(s) maintained pursuant to paragraph
(b) of this Section shall be prima facie evidence of the existence and amounts
of the obligations recorded therein; provided that the failure of the Lender to
maintain such accounts or any error therein shall not in any manner affect the
obligation of the Borrower to repay the Loans in accordance with the terms of
this Agreement.
(d) The Lender may request that Loans made by it be evidenced by a
promissory note. In such event, the Borrower shall prepare, execute and deliver
to such Lender a promissory note payable to the order of such Lender and in a
form approved by the Lender.
SECTION 2.07. PREPAYMENT OF LOANS. (a) The Borrower shall have the right
at any time to prepay any Borrowing in whole or in part, subject to prior notice
in accordance with paragraph (b) of this Section.
(b) The Borrower shall notify the Lender by telephone (confirmed by
telecopy) of any prepayment hereunder not later than 12:00 noon, San Antonio
time, one Business Day before the date of prepayment. Each such notice shall be
irrevocable and shall specify the prepayment date and the principal amount of
each Borrowing or portion thereof to be prepaid.
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Each prepayment of a Borrowing shall be applied ratably to the Loans included in
the prepaid Borrowing. Prepayments shall be accompanied by accrued interest to
the extent required.
SECTION 2.08. INTEREST. (a) Loans shall bear interest at the Applicable
Base Rate.
(b) Notwithstanding the foregoing, if any principal of or interest on any
Loan hereunder is not paid when due, whether at stated maturity, upon
acceleration or otherwise, such overdue amount shall bear interest, after as
well as before judgment, at a rate per annum equal to 300 basis points plus the
ABR otherwise applicable to such Loan.
(c) Accrued interest on each Loan shall be payable in arrears on each
Interest Payment Date for such Loan.
(d) All interest hereunder shall be computed on the basis of a year of 365
days (or 366 days in a leap year), and in each case shall be payable for the
actual number of days elapsed (including the first day but excluding the last
day). The applicable ABR shall be determined by the Lender and such
determination shall be conclusive absent manifest error.
SECTION 2.09. TAXES. (a) Any and all payments by or on account of any
obligation of the Borrower hereunder shall be made without deduction for any
taxes; provided that if the Borrower shall be required to deduct any taxes from
such payments, then (i) the sum payable shall be increased as necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section) the Lender receives an amount equal
to the sum it would have received had no such deductions been made, (ii) the
Borrower shall make such deductions and (iii) the Borrower shall pay the full
amount deducted to the relevant governmental authority in accordance with
applicable law.
SECTION 2.10. PAYMENTS GENERALLY; PRO RATA TREATMENT; SHARING OF SETOFFS.
(a) The Borrower shall make each required payment hereunder prior to 12:00 noon,
San Antonio time, on the date when due, in immediately available funds, without
setoff or counterclaim. Any amounts received after such time on any date may, in
the discretion of the Lender, be deemed to have been received on the next
succeeding Business Day for purposes of calculating interest thereon. All such
payments shall be made to the Lender at its offices at 175 E. Houston Street,
San Antonio, Texas 78205 except that payments pursuant to Section 2.09 shall be
made directly to the persons entitled thereto. If any payment hereunder shall be
due on a day that is not a Business Day, the date for payment shall be extended
to the next succeeding Business Day, and, in the case of any payment accruing
interest, interest thereon shall be payable for the period of such extension.
All payments hereunder shall be made in U.S. dollars.
(b) If at any time insufficient funds are received by and available to the
Lender to pay fully all amounts of principal, interest and fees then due
hereunder, such funds shall be applied (i) first, towards payment of interest
and fees then due hereunder, and (ii) second, towards payment of principal then
due hereunder.
ARTICLE III
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REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lenders that:
SECTION 3.01. ORGANIZATION, POWERS. The Borrower and each Material
Subsidiary is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, has all requisite power and
authority to carry on its business as now conducted and, except where the
failure to do so, individually or in the aggregate, would not reasonably be
expected to result in a Material Adverse Effect, is qualified to do business in,
and is in good standing in, every jurisdiction where such qualification is
required.
SECTION 3.02. AUTHORIZATION, ENFORCEABILITY. The Transactions are within
the Borrower's corporate powers and have been duly authorized by all necessary
corporate and, if required, stockholder action. This Agreement has been duly
executed and delivered by the Borrower and constitutes a legal, valid and
binding obligation of the Borrower, enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium or
other laws affecting creditors' rights generally, subject to general principles
of equity regardless of whether considered in a proceeding in equity or at law.
SECTION 3.03. GOVERNMENTAL APPROVALS, NO CONFLICTS. The Transactions (a)
do not require any consent or approval of, registration or filing with, or any
other action by, any governmental authority, except such as have been obtained
or made and are in full force and effect, (b) will not violate any applicable
law or regulation or the charter, by-laws or other organizational documents of
the Borrower or any Material Subsidiary or any order of any governmental
authority, and (c) will not violate or result in a default under any indenture,
agreement or other instrument binding upon the Borrower or any Material
Subsidiary or their assets, or give rise to a right thereunder to require any
payment to be made by the Borrower or any Material Subsidiary, except where such
violation or default, individually or in the aggregate, would not reasonably be
expected to result in a Material Adverse Effect.
SECTION 3.04. FINANCIAL CONDITION, NO MATERIAL ADVERSE CHANGE. (a) The
Borrower has heretofore furnished to the Lenders the consolidated balance sheet
and consolidated statements of income and retained earnings and of cash flows
for Borrower as of and for the fiscal year ended 1999, reported on by
PricewaterhouseCoopers L.L.P., independent public accountants. Such financial
statements present fairly, in all material respects, the financial position and
results of operations and cash flows of Borrower and its consolidated
Subsidiaries as of such date and for such periods in accordance with GAAP.
(b) Since December 31, 1999, there has been no Material Adverse Change in
the business, operations or condition (financial or otherwise) of Borrower and
its Subsidiaries, taken as a whole, except as disclosed in interim filings with
the SEC.
SECTION 3.05. PROPERTIES. (a) The Borrower and each Material Subsidiary
has good title to, or valid leasehold interests in, all its real and personal
property, except where any
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such failure, individually or in the aggregate, would not reasonably be expected
to result in a Material Adverse Effect.
(b) The Borrower and each Material Subsidiary owns, or is licensed to use,
all trademarks, tradenames, copyrights, patents and other intellectual property
material to the business of Borrower and its Subsidiaries, taken as a whole, and
the use thereof by the Borrower and each Material Subsidiary does not infringe
upon the rights of any other person, except for any such infringements that,
individually or in the aggregate, would not reasonably be expected to result in
a Material Adverse Effect.
SECTION 3.06. LITIGATION. There are no actions, suits or proceedings by or
before any arbitrator or governmental authority pending against or, to the
knowledge of the Borrower, threatened against or affecting the Borrower or any
Material Subsidiary (a) as to which there is a reasonable possibility of an
adverse determination and that, if adversely determined, would reasonably be
expected, individually or in the aggregate, to result in a Material Adverse
Effect (other than those matters disclosed in filings with the SEC) or (b) that
involve the validity or enforceability of this Agreement or the Transactions.
SECTION 3.07. COMPLIANCE WITH LAWS. The Borrower and each Material
Subsidiary is in compliance with all laws, regulations and orders of any
governmental authority applicable to it or its property and, except where the
failure to do so, individually or in the aggregate, would not reasonably be
expected to result in a Material Adverse Effect.
SECTION 3.08. INVESTMENT AND HOLDING COMPANY STATUS. The Borrower is not
(a) an "investment company" as defined in, or subject to regulation under, the
Investment Company Act of 1940 nor (b) a "holding company" as defined in, or
subject to regulation under, the Public Utility Holding Company Act of 1935.
SECTION 3.09. ERISA. No ERISA Event has occurred or is reasonably expected
to occur that, when taken together with all other such ERISA Events for which
liability is reasonably expected to occur, would reasonably be expected to
result in a Material Adverse Effect.
SECTION 3.10. DISCLOSURE. Neither the Borrower's filings with the SEC
on the date filed nor any of the other reports, financial statements,
certificates or other information delivered hereunder (as modified or
supplemented by other information so furnished) contains any material
misstatement of fact or omits to state any material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided that, with respect to projected financial
information, the Borrower represents only that such information was prepared in
good faith based upon assumptions believed to be reasonable at the time.
SECTION 3.11. PARI PASSU RANKING. The obligations of the Borrower under
this Agreement rank at least pari passu in priority of payment with all other
unsecured Indebtedness of the Borrower.
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ARTICLE IV
CONDITIONS
SECTION 4.01. EFFECTIVE DATE. The obligations of the Lender to make Loans
hereunder shall not become effective until the date ("Effective Date") on which
each of the following conditions is satisfied (or waived in accordance with
Section 8.02):
(a) The Lender shall have received from the Borrower a counterpart of this
Agreement signed on behalf of such party.
(b) The Lender shall have received a favorable written opinion (dated the
Effective Date) of counsel for the Borrower.
(c) The Lender shall have received such documents and certificates as the
Lender may reasonably request relating to the organization, existence and good
standing of the Borrower, the authorization of the Transactions and any other
legal matters relating to the Borrower, this Agreement or the Transactions, all
in form and substance satisfactory to the Lender.
(d) The Lender shall have received a balance sheet of Borrower as of
November 30, 2000, and a consolidated income statement of Borrower for the
period and such balance sheet and income statement shall not be inconsistent
with the information and projections previously provided to the Lender.
(e) The Lender shall have received all fees and other amounts due and
payable on or prior to the Effective Date, including, to the extent invoiced,
reimbursement or payment of all out-of-pocket expenses required to be reimbursed
or paid by the Borrower hereunder.
(f) Borrower and Lender shall have executed an amended Strategic and
Marketing Agreement and all conditions to the effectiveness of such agreement,
including unconditional approval by Borrower's Board of Directors, shall have
been satisfied or waived by the Lender.
Notwithstanding the foregoing, the obligations of the Lender to make Loans
hereunder shall not become effective unless each of the foregoing conditions is
satisfied (or waived pursuant to Section 8.02) at or prior to 3:00 p.m., San
Antonio, Texas time, on January 19, 2001 (and, in the event such conditions are
not so satisfied or waived, the Commitments shall terminate at such time).
SECTION 4.02. EACH CREDIT EVENT. The obligation of the Lender to make
each individual Loan is subject to the satisfaction of the following
conditions:
(a) The representations and warranties of the Borrower set forth in this
Agreement shall be true and correct in all material respects on and as of the
date of such Borrowing.
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(b) At the time of and immediately after giving effect to such Borrowing,
no Event of Default shall have occurred and be continuing.
Each Borrowing shall be deemed to constitute a representation and warranty by
the Borrower on the date thereof as to the matters specified in paragraphs (a)
and (b) of this Section.
ARTICLE V
AFFIRMATIVE COVENANTS
Until the Commitments have expired or been terminated and the principal of
and interest on each Loan shall have been paid in full, the Borrower covenants
and agrees with the Lender that:
SECTION 5.01. FINANCIAL STATEMENTS AND OTHER INFORMATION. The Borrower
will furnish to the Lender:
(a) within 120 days after the end of each fiscal year of the Borrower
either (i) the reports of the Borrower to the SEC on Form 10-K for such year, or
(ii) if such report of the Borrower shall not be prepared for such year,
Borrower's audited consolidated balance sheet and related statements of
operations and retained earnings and of cash flows as of the end of and for such
year, setting forth in each case in comparative form the figures for the
previous fiscal year, all reported on by PricewaterhouseCoopers L.L.P. or other
independent public accountants of recognized national standing to the effect
that such consolidated financial statements present fairly in all material
respects the financial condition and results of operations of Borrower and its
consolidated Subsidiaries on a consolidated basis in accordance with GAAP
consistently applied;
(b) within 60 days after the end of each of the first three fiscal
quarters of each fiscal year of the Borrower either (i) the reports of the
Borrower to the SEC on Form 10-Q for such quarter, or (ii) if such report of the
Borrower shall not be prepared for such quarter, Borrower's consolidated balance
sheet and related statements of operations and retained earnings and of cash
flows as of the end of and for such fiscal quarter and the then elapsed portion
of the fiscal year, setting forth in each case in comparative form the figures
for the corresponding period or periods of (or, in the case of the balance
sheet, as of the end of) the previous fiscal year, all certified by one of its
Financial Officers as presenting fairly in all material respects the financial
condition and results of operations of Borrower and its consolidated
Subsidiaries on a consolidated basis in accordance with GAAP consistently
applied, subject to normal year-end audit adjustments and the absence of
footnotes;
(c) concurrently with any delivery of financial statements under clause
(a) or (b) above, a certificate of a Financial Officer of the Borrower (i)
certifying as to whether an Event of Default has occurred and, if such event has
occurred, specifying the details thereof and any action taken or proposed to be
taken with respect thereto, (ii) setting forth reasonably detailed calculations
demonstrating compliance with Sections 6.05 and 6.06 and (iii) stating
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whether any change in GAAP or in the application thereof has occurred since the
date of the audited financial statements referred to in Section 3.04 which has
had a material effect on the financial reporting of Borrower and its
Subsidiaries and, if any such change has occurred, specifying the effect of such
change on the financial statements accompanying such certificate;
(d) concurrently with any delivery of financial statements under clause
(a) above, a certificate of the accounting firm that reported on such financial
statements stating whether they obtained knowledge during the course of their
examination of such financial statements of any Event of Default (which
certificate may be limited to the extent required by accounting rules or
guidelines);
(e) promptly after the same become publicly available, copies of all
periodic reports and proxy statements filed by the Borrower or any Material
Subsidiary with the SEC, or with any national securities exchange, or
distributed by Borrower to its shareholders generally, as the case may be; and
(f) promptly following any request therefor, such other information
regarding the operations, business affairs and financial condition of the
Borrower or any of its Subsidiaries, or compliance with the terms of this
Agreement, as the Lender may reasonably request.
SECTION 5.02. NOTICES OF MATERIAL EVENTS. Upon obtaining knowledge
thereof, the Borrower will furnish to the Lender prompt written notice of the
following:
(a) the occurrence of any Event of Default;
(b) the filing or commencement of any action, suit or proceeding by
or before any arbitrator or governmental authority against or affecting the
Borrower or any Affiliate thereof that would reasonably be expected to result in
a Material Adverse Effect;
(c) the occurrence of any ERISA Event that, alone or together with
any other ERISA Events that have occurred, would reasonably be expected to
result in a Material Adverse Effect; and
(d) any other development that results in, or would reasonably be
expected to result in, a Material Adverse Effect.
Each such notice shall be accompanied by a statement of a Financial Officer or
other executive officer of the Borrower setting forth the details of the event
or development requiring such notice and any action taken or proposed to be
taken with respect thereto.
SECTION 5.03. EXISTENCE, CONDUCT OF BUSINESS. The Borrower will, and will
cause each Material Subsidiary to, do or cause to be done all things necessary
to preserve, renew and keep in full force and effect its legal existence and the
rights, licenses, permits, privileges and franchises material to the conduct of
its business; provided that the foregoing shall not prohibit any merger,
consolidation, liquidation or dissolution permitted under Section 6.02.
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SECTION 5.04. PAYMENT OF TAXES. The Borrower will, and will cause each of
its Subsidiaries to, pay its Tax liabilities, that, if not paid, would
reasonably be expected to result in a Material Adverse Effect before the same
shall become delinquent or in default, except where (a) the validity or amount
thereof is being contested in good faith by appropriate proceedings, (b) the
Borrower or such Subsidiary has set aside on its books adequate reserves with
respect thereto in accordance with GAAP and (c) the failure to make payment
pending such contest would not reasonably be expected to result in a Material
Adverse Effect.
SECTION 5.05. MAINTENANCE OF INSURANCE. The Borrower will, and will cause
each Material Subsidiary to maintain, with financially sound insurance
companies, insurance against loss or damage to its property in accordance with
good business practice, or at the option of Borrower in lieu of all or any part
of such insurance, maintain, or cause each Material Subsidiary to maintain, by
means of adequate insurance reserves currently set aside or maintained out of
earnings, a system of self-insurance with respect to such properties.
SECTION 5.06. BOOKS AND RECORDS, INSPECTION RIGHTS. The Borrower will, and
will cause each of its Subsidiaries to, keep proper books of record and account
in which full, true and correct entries are made of all dealings and
transactions in relation to its business and activities. The Borrower will, and
will cause each of its Subsidiaries to, permit any representatives designated by
the Lender, upon reasonable prior notice, to visit and inspect its properties
during normal business hours, to examine and make extracts from its books and
records, and to discuss its affairs, finances and condition with its officers
and, during the continuance of an Event of Default, independent accountants, all
at such reasonable times and as often as reasonably requested.
SECTION 5.07. COMPLIANCE WITH LAWS. The Borrower will, and will cause each
Material Subsidiary to, comply with all laws, rules, regulations and orders of
any governmental authority applicable to it or its property, except where the
failure to do so, individually or in the aggregate, would not reasonably be
expected to result in a Material Adverse Effect.
SECTION 5.08. USE OF PROCEEDS. The proceeds of the Loans will be used
only for general corporate purposes of Borrower and its Subsidiaries.
ARTICLE VI
NEGATIVE COVENANTS
Until the Commitments have expired or terminated and the principal of and
interest on each Loan and all fees payable hereunder have been paid in full, the
Borrower covenants and agrees with the Lender that:
SECTION 6.01. LIENS. The Borrower will not, and will not permit any
Subsidiary to, create, incur, assume or permit to exist any Lien on any property
or asset now owned or
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hereafter acquired by it, or assign or sell any income or revenues or rights in
respect of any thereof, except:
(a) Permitted Encumbrances;
(b) any Lien on any property or asset of the Borrower or any
Subsidiary existing on the date hereof; provided that (i) such Lien shall not
apply to any other property or asset of the Borrower or any Subsidiary and (ii)
such Lien shall secure only those obligations which it secures on the date
hereof and extensions, renewals and replacements thereof that do not increase
the outstanding principal amount thereof;
(c) Liens on fixed or capital assets acquired, constructed or
improved by the Borrower or any Subsidiary (including, without limitation,
capital leases); provided that (i) such security interests secure only
Indebtedness incurred to acquire, construct or improve such assets and the
Indebtedness secured thereby is incurred prior to or within 180 days after such
acquisition or the completion of such construction or improvement and (ii) such
security interests shall not apply to any other property or assets of the
Borrower or any Subsidiary.
SECTION 6.02. FUNDAMENTAL CHANGES. The Borrower will not merge into or
consolidate with any other person, or permit any other person to merge into or
consolidate with it, or liquidate or dissolve, except that, if at the time
thereof and immediately after giving effect thereto no Event of Default shall
have occurred and be continuing, any person may merge into the Borrower in a
transaction in which the Borrower is the surviving corporation. Borrower will
not, and will not permit any Subsidiary to, sell, transfer, lease or otherwise
dispose of (in one transaction or a series of transactions) all or substantially
all of the assets of Borrower or such Subsidiary.
SECTION 6.03. TRANSACTIONS WITH AFFILIATES. The Borrower will not, and
will not permit any of its Material Subsidiaries to, sell, lease or otherwise
transfer any property or assets to, or purchase, lease or otherwise acquire any
property or assets from, or otherwise engage in any other transactions with, any
Affiliate of Borrower, except in the ordinary course of business, at prices and
on terms and conditions not less favorable to the Borrower or such Subsidiary
than could be obtained on an arm's-length basis from unrelated third parties.
For purposes of this Section 6.03, a Subsidiary shall be deemed not to be an
Affiliate of Borrower.
SECTION 6.04. RESTRICTIVE AGREEMENTS. The Borrower will not, and will not
permit any of its Material Subsidiaries to, directly or indirectly, enter into,
incur or permit to exist any agreement or other arrangement that prohibits,
restricts or imposes any condition upon (a) the ability of the Borrower or any
Subsidiary to create, incur or permit to exist any Lien upon any of its property
or assets, or (b) the ability of any Subsidiary to pay dividends or other
distributions with respect to any shares of its capital stock or to make or
repay loans or advances to the Borrower or any other Subsidiary or to guarantee
Indebtedness of the Borrower or any other Subsidiary, except to the extent that
such prohibition, restriction or condition, individually or in the aggregate,
would not reasonably be expected to result in a Material Adverse Effect;
provided that (i) the foregoing shall not apply to prohibitions,
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restrictions and conditions imposed by applicable law or regulation or by this
Agreement or the Borrower Existing Credit Agreement, (ii) the foregoing shall
not apply to prohibitions, restrictions and conditions existing on the date
hereof (but shall apply to any amendment or modification expanding the scope of
any such prohibition, restriction or condition), (iii) the foregoing shall not
apply to customary prohibitions, restrictions and conditions contained in
agreements relating to the sale of property, assets or a Subsidiary pending such
sale, provided such prohibitions, restrictions and conditions apply only to the
property, assets or Subsidiary, as the case may be, that is to be sold and such
sale is not prohibited hereunder, (iv) clause (a) of the foregoing shall not
apply to prohibitions, restrictions and conditions arising pursuant to
contractual arrangements (other than arrangements with respect to Indebtedness)
relating to specific items of property entered into in the ordinary course of
business; provided that (x) such prohibitions, restrictions and conditions apply
only to such specific items of property which are subject to such contractual
arrangements and (y) the aggregate amount of property subject to such
prohibitions, restrictions or conditions shall not exceed 5% of the consolidated
total assets of Borrower at any time.
ARTICLE VII
EVENTS OF DEFAULT
If any of the following events ("Events of Default") shall occur:
(a) the Borrower shall fail to pay any principal of any Loan when
and as the same shall become due and payable, whether at the due date thereof or
at a date fixed for prepayment thereof or otherwise;
(b) the Borrower shall fail to pay any interest on any Loan or any
fee or any other amount (other than an amount referred to in clause (a) of this
Article) payable under this Agreement, when and as the same shall become due and
payable, and such failure shall continue unremedied for a period of five days;
(c) any representation or warranty made or deemed made by or on
behalf of the Borrower or any Subsidiary in this Agreement or any amendment or
modification hereof or waiver hereunder, or in any report, certificate,
financial statement or other document furnished pursuant to this Agreement or
any amendment or modification hereof or waiver hereunder, shall prove to have
been incorrect in any material respect when made or deemed made;
(d) the Borrower shall fail to observe or perform any covenant,
condition or agreement contained in Section 5.02 (a) or 5.03 (with respect to
the Borrower's existence) or in Article VI;
(e) the Borrower shall fail to observe or perform any covenant,
condition or agreement contained in this Agreement (other than those specified
in clause (a), (b) or (d) of this Article), and such failure shall continue
unremedied for a period of 30 days after notice thereof from the Lender to the
Borrower;
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(f) the Borrower or any Subsidiary shall fail to make any payment
(after giving effect to any applicable grace period) in respect of the principal
or interest due under Borrower Existing Credit Agreement, when and as the same
shall become due and payable;
(g) any event or condition occurs that enables or permits (with or
without the giving of notice, the lapse of time or both) the holder under the
Borrower Existing Credit Agreement or any trustee or agent on its or their
behalf to cause such agreement to become due, or to require the prepayment,
repurchase, redemption or defeasance thereof, prior to its scheduled maturity;
(h) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) liquidation, reorganization or other relief
in respect of the Borrower or any Material Subsidiary or its debts, or of a
substantial part of its assets, under any Federal, state or foreign bankruptcy,
insolvency, receivership or similar law now or hereafter in effect or (ii) the
appointment of a receiver, trustee, custodian, sequestrator, conservator or
similar official for the Borrower or any Material Subsidiary or for a
substantial part of its assets, and, in any such case, such proceeding or
petition shall continue undismissed for 60 days or an order or decree approving
or ordering any of the foregoing shall be entered;
(i) the Borrower or any Material Subsidiary shall (i) voluntarily
commence any proceeding or file any petition seeking liquidation, reorganization
or other relief under any Federal, state or foreign bankruptcy, insolvency,
receivership or similar law now or hereafter in effect, (ii) consent to the
institution of, or fail to contest in a timely and appropriate manner, any
proceeding or petition described in clause (h) of this Article, (iii) apply for
or consent to the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for the Borrower or any Material Subsidiary or
for a substantial part of its assets, (iv) file an answer admitting the material
allegations of a petition filed against it in any such proceeding, (v) make a
general assignment for the benefit of creditors or (vi) take any action for the
purpose of effecting any of the foregoing;
(j) the Borrower or any Material Subsidiary shall become unable,
admit in writing its inability or fail generally to pay its debts as they become
due; or
(k) a Change in Control shall occur;
then, and in every such event (other than an event with respect to the Borrower
described in clause (h) or (i) of this Article), and at any time thereafter
during the continuance of such event, the Lender may, by notice to the Borrower,
take either or both of the following actions, at the same or different times:(i)
terminate the Commitments, and thereupon the Commitments shall terminate
immediately, and (ii) declare the Loans then outstanding to be due and payable
in whole (or in part, in which case any principal not so declared to be due and
payable may thereafter be declared to be due and payable), and thereupon the
principal of the Loans so declared to be due and payable, together with accrued
interest thereon, shall become due and payable immediately, without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by
the Borrower; and in case of any event with
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respect to the Borrower described in clause (h) or (i) of this Article, the
Commitments shall automatically terminate and the principal of the Loans then
outstanding, together with accrued interest thereon, shall automatically become
due and payable, without presentment, demand, protest or other notice of any
kind, all of which are hereby waived by the Borrower.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.01. NOTICES. Except in the case of notices and other
communications expressly permitted to be given by telephone, all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
(a) if to the Borrower, to it at ____________, _______________,
attention of Chief Financial Officer ( Fax No. (____)_________________);
(b) if to Lender, to it at 175 East Houston, San Antonio, TX 78205
attention of Vice President and Treasurer (Fax No. (210) 351-___________)
All notices and other communications given to any party hereto in accordance
with the provisions of this Agreement shall be deemed to have been given on the
date of receipt.
SECTION 8.02. WAIVERS; AMENDMENTS. (a) No failure or delay by the Lender
in exercising any right or power hereunder shall operate as a waiver thereof,
nor shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Lender hereunder are cumulative
and are not exclusive of any rights or remedies that they would otherwise have.
No waiver of any provision of this Agreement or consent to any departure by the
Borrower therefrom shall in any event be effective unless the same shall be
permitted by paragraph (b) of this Section, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. Without limiting the generality of the foregoing, the making of a Loan
shall not be construed as a waiver of any Event of Default, regardless of
whether the Lender may have had notice or knowledge of such Event of Default at
the time.
(b) Neither this Agreement nor any provision hereof may be waived, amended
or modified except pursuant to a written agreement between the Borrower and the
Lender.
SECTION 8.03. EXPENSES; INDEMNITY; DAMAGE WAIVER. (a) The Borrower shall
promptly pay (i) all reasonable out-of-pocket expenses incurred by the Lender,
including the reasonable fees, charges and disbursements of counsel for the
Lender, in connection with the preparation and administration of this Agreement
or any amendments, modifications or waivers of the provisions hereof (whether or
not the transactions contemplated hereby shall be consummated) and (ii) all
reasonable out-of-pocket expenses incurred by the Lender, including the
reasonable fees, charges and disbursements of any counsel for the Lender, in
connection with the enforcement or protection of its rights in connection with
this
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Agreement, including its rights under this Section, or in connection with the
Loans made hereunder, including all such out-of-pocket expenses incurred during
any workout or restructuring in respect of such Loans.
(b) The Borrower shall indemnify the Lender, and each Related Party of the
Lender (each an "Indemnitee") against, and hold each Indemnitee harmless from,
any and all losses, claims, damages, liabilities and related expenses, including
the reasonable fees, charges and disbursements of any counsel for any
Indemnitee, incurred by or asserted against Indemnitee arising out of, in
connection with, or as a result of (i) the execution or delivery of this
Agreement or any agreement or instrument contemplated hereby, the performance by
the parties hereto of their respective obligations hereunder or the consummation
of the Transactions or any other transactions contemplated hereby, (ii) any Loan
or the use of the proceeds therefrom, or (iii) any actual or prospective claim,
litigation, investigation or proceeding relating to any of the foregoing,
whether based on contract, tort or any other theory and regardless of whether
any Indemnitee is a party thereto; provided that such indemnity shall not, as to
any Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses result from the gross negligence or willful
misconduct of such Indemnitee.
To the extent permitted by applicable law, the Borrower shall not assert, and
hereby waives, any claim against any Indemnitee, on any theory of liability, for
special, indirect, consequential or punitive damages (as opposed to direct or
actual damages) arising out of, in connection with, or as a result of, this
Agreement or any agreement or instrument contemplated hereby, the Transactions,
any Loan or the use of the proceeds thereof.
SECTION 8.04. SUCCESSORS AND ASSIGNS. (a) The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby, except that the Borrower
shall not assign or otherwise transfer any of its rights or obligations
hereunder without the prior written consent of the Lender (and any attempted
assignment or transfer by the Borrower without such consent shall be null and
void). Nothing in this Agreement, expressed or implied, shall be construed to
confer upon any person (other than the parties hereto, their respective
successors and assigns permitted hereby and, to the extent expressly
contemplated hereby, the Related Parties of the Lender) any legal or equitable
right, remedy or claim under or by reason of this Agreement.
(b) The Lender may assign to one or more assignees all or a portion
of its right and obligations under this Agreement (including all or a portion of
its Commitment and the Loans at the time owing to it) from and after the
effective date specified in each assignment and the assignee thereunder shall be
a party hereto and, to the extent of the interest assigned by such assignment,
have the rights and obligations of a Lender under this Agreement, and the
assigning Lender thereunder shall, to the extent of the interest assigned by
such assignment, be released from its obligations under this Agreement (and, in
the case of an assignment, covering all of the assigning Lender's rights and
obligations under this Agreement, such Lender shall cease to be a party hereto
but shall continue to be entitled to the benefits of this Agreement). Any
assignment or transfer by a Lender of rights or obligations under this Agreement
that does not comply with this paragraph shall be treated
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for purposes of this Agreement as a sale by such Lender of a participation in
such rights and obligations in accordance with paragraph (e) of this Section.
The Lender may at any time pledge or assign a security interest in all or
any portion of its rights under this Agreement to secure obligations of such
Lender and this Section shall not apply to any such pledge or assignment..
SECTION 8.05. SURVIVAL. All covenants, agreements, representations and
warranties made by the Borrower herein and in other instruments delivered in
connection with to this Agreement shall be considered to have been relied upon
by the other parties hereto and shall survive the execution and delivery of this
Agreement and the making of any Loans, regardless of any investigation made by
any such other party or on its behalf and notwithstanding that the Lender may
have had notice or knowledge of any Event of Default or incorrect representation
or warranty at the time any credit is extended hereunder, and shall continue in
full force and effect as long as the principal of or any accrued interest on any
Loan or any fee or any other amount payable under this Agreement is outstanding
and unpaid and so long as the Commitments have not expired or terminated. The
provisions of Sections 2.08, 2.09, 2.10 and 8.03 shall survive and remain in
full force and effect regardless of the consummation of the transactions
contemplated hereby, the repayment of the Loans, the expiration or termination
of the Commitments or the termination of this Agreement or any provision hereof.
SECTION 8.06. COUNTERPARTS; INTEGRATION; EFFECTIVENESS. This Agreement may
be executed in counterparts (and by different parties hereto on different
counterparts), each of which shall constitute an original, but all of which when
taken together shall constitute a single contract. This Agreement constitutes
the entire contract among the parties relating to the subject matter hereof and
supersede any and all previous agreements and understandings, oral or written,
relating to the subject matter hereof. Except as provided in Section 4.01, this
Agreement shall become effective when it shall have been executed by the parties
hereto and the Lender shall have received counterparts hereof which, when taken
together, bear the signatures of the other party hereto, and thereafter shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns.
SECTION 8.07. SEVERABILITY. Any provision of this Agreement held to be
invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.
SECTION 8.08. RIGHT OF SETOFF. If an Event of Default shall have occurred
and be continuing and the Loans are due and payable, the Lender and each of its
Affiliates is hereby authorized at any time and from time to time, to the
fullest extent permitted by law, to set off any and all credits of the Borrower
against any of and all the obligations of the Borrower now or hereafter existing
under this Agreement held by such Lender. The rights of the
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Lender under this Section are in addition to other rights and remedies
(including other rights of setoff) which such Lender may have.
SECTION 8.09. GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF PROCESS.
(a) This Agreement shall be construed in accordance with and governed by the law
of the State of Delaware.
(b) Each party hereto agrees that all claims in respect of any such action
or proceeding may be heard and determined in Texas or, to the extent permitted
by law, in such Federal court. Each of the parties hereto agrees that a final
judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions. Nothing in this Agreement shall affect any
right that any party hereto may otherwise have to bring any action or proceeding
relating to this Agreement.
(c) The Borrower hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement in any court referred to in
paragraph (b) of this Section. Each of the parties hereto hereby irrevocably
waives, to the fullest extent permitted by law, the defense of an inconvenient
forum to the maintenance of such action or proceeding in any such court.
(d) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 8.01. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
SECTION 8.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY (WHETHER
BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A) CERTIFIES
THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY,
AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
SECTION 8.11. HEADINGS. Article and Section headings and the Table of
Contents used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
SECTION 8.12. CONFIDENTIALITY. The Lender agrees to maintain the
confidentiality of the Information (as defined below), except that Information
may be disclosed (a) to its and its Affiliates' directors, officers, employees
and agents, including accountants, legal counsel and
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other advisors (it being understood that the Persons to whom such disclosure is
made will be informed of the confidential nature of such Information and
instructed to keep such Information confidential), (b) to the extent requested
by any regulatory authority, (c) to the extent required by applicable laws or
regulations or by any subpoena or similar legal process, (d) to any other party
to this Agreement, (e) to the extent that such confidential Information is
directly relevant to the subject matter thereof, in connection with the exercise
of any remedies hereunder or any suit, action or proceeding relating to this
Agreement or the enforcement of rights hereunder, (f) subject to an agreement
containing provisions substantially the same as those of this Section, to any
assignee of or any prospective assignee of , the Lender, , (g) with the consent
of the Borrower, or (h) to the extent such Information (i) becomes publicly
available other than as a result of a breach of this Section or (ii) becomes
available to the Lender on a nonconfidential basis from a source other than the
Borrower. For the purposes of this Section, "Information" means all information
received from or on behalf of Borrower or any of its Subsidiaries relating to
Borrower, any of its Subsidiaries or any of their respective businesses or
assets, other than any such information that is available to the Lender on a
nonconfidential basis prior to disclosure by Borrower or any of its
Subsidiaries; provided that, in the case of information received from (or on
behalf of) Borrower or any of its Subsidiaries after the date hereof, such
information is clearly identified at the time of delivery as confidential. Any
Person required to maintain the confidentiality of Information as provided in
this Section shall be considered to have complied with its obligation to do so
if such Person has exercised the same degree of care to maintain the
confidentiality of such Information as such Person would accord to its own
confidential information.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
PRODIGY COMMUNICATIONS CORP.
/s/ Allen Craft
------------------------------------
Name: Allen Craft
Title: Chief Financial Officer
SBC COMMUNICATIONS INC.
/s/ Michael Viola
------------------------------------
Name: Michael Viola
Title: Vice President and Treasurer
