<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): January 20, 1999
CommNet Cellular Inc.
(Exact name of registrant as specified in its charter)
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<S> <C> <C>
Colorado 000-15056 84-0924904
(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
</TABLE>
CommNet Cellular Inc.
8350 E. Crescent Parkway, Suite 400
Englewood, Colorado 80111
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (303)-694-3234
<PAGE>
Item 5. Other Events
On January 20, 1999 Glenn H. Hutchins resigned as a director of CommNet
Cellular Inc. (the "Company"). Mr. Hutchins stated no reason for his
resignation. Therefore, he will not be available to serve as a director of the
Company and shares voted for him in accordance with the Proxy Statement mailed
to stockholders on January 14, 1999 will not be effective to elect Mr. Hutchins
as a director of the Company at the Annual Meeting of Stockholders to be held on
Thursday, February 25, 1999, at 9:00 A.M., local time, at the Hyatt Regency Tech
Center, Englewood, Colorado, 80111.
The Board of Directors of the Company intends to fill the vacancy created
by Mr. Hutchins' resignation in accordance with the by-laws of the Company as
soon as a suitable candidate is found. If the vacancy is filled by the Board of
Directors on or prior to the date of the Annual Meeting of Stockholders, then
shares for which a proxy has been given to Arnold C. Pohs and Daniel P. Dwyer
will be voted for the person who fills the vacancy. If the vacancy is filled
after the date of the Annual Meeting, the person filling the vacancy will serve
until the next annual meeting of shareholders in accordance with the by-laws of
the Company.
Item 7. Financial Statements and Exhibits.
The following exhibit is filed with this report which was referred to
in the Form 8-K dated September 18, 1997:
99.1 Credit Agreement dated as of September 18, 1997 by and among
CommNet Cellular Inc., Cellular, Inc. Financial Corporation,
The Chase Manhattan Bank as administrative agent and collateral
agent, Chase Manhattan Bank Delaware as fronting bank, and the
other lenders named therein.
2
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the registrant has duly caused this report to be signed on its behalf
by the undersigned hereunto duly authorized.
CommNet Cellular Inc.
Date: February 16, 1999 By: \s\ Daniel P. Dwyer
-------------------
Daniel P. Dwyer
President and
Chief Operating Officer
3
<PAGE>
EXECUTION COPY
- --------------------------------------------------------------------------------
CREDIT AGREEMENT
among
COMMNET CELLULAR INC. and
CELLULAR, INC. FINANCIAL CORPORATION
and
The Lenders Party Hereto
and
THE CHASE MANHATTAN BANK,
as Administrative Agent,
and
CHASE MANHATTAN BANK DELAWARE,
as Fronting Bank
------------------------------
Dated as of September 18, 1997
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[blank page]
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<CAPTION>
TABLE OF CONTENTS
Page
----
<S> <C> <C>
ARTICLE I. DEFINITIONS....................................................... 2
SECTION 1.01. Defined Terms............................................. 2
SECTION 1.02. Terms Generally...........................................26
ARTICLE II. THE CREDITS......................................................27
SECTION 2.01. Commitments...............................................27
SECTION 2.02. Loans.....................................................30
SECTION 2.03. Borrowing Procedure.......................................31
SECTION 2.04. Evidence of Debt; Repayment of Loans......................32
SECTION 2.05. Fees......................................................33
SECTION 2.06. Interest on Loans.........................................33
SECTION 2.07. Default Interest..........................................34
SECTION 2.08. Alternate Rate of Interest................................34
SECTION 2.09. Termination and Reduction of Commitments..................35
SECTION 2.10. Conversion and Continuation of Term Borrowings............35
SECTION 2.11. Repayment of Term Borrowings..............................37
SECTION 2.12. Prepayment................................................39
SECTION 2.13. Reserve Requirements; Change in Circumstances.............41
SECTION 2.14. Change in Legality........................................43
SECTION 2.15. Indemnity.................................................44
SECTION 2.16. Pro Rata Treatment........................................44
SECTION 2.17. Sharing of Setoffs........................................45
SECTION 2.18. Payments..................................................45
SECTION 2.19. Taxes.....................................................46
SECTION 2.20. Letters of Credit.........................................49
ARTICLE III. REPRESENTATIONS AND WARRANTIES..................................54
SECTION 3.01. Organization; Powers......................................54
SECTION 3.02. Authorization.............................................54
SECTION 3.03. Enforceability............................................55
SECTION 3.04. Governmental Approvals....................................55
SECTION 3.05. Financial Statements......................................55
SECTION 3.06. No Material Adverse Change................................55
SECTION 3.07. Title to Properties; Possession Under Leases..............56
</TABLE>
<PAGE>
<TABLE>
<S> <C> <C>
SECTION 3.08. Downstream Affiliates...........................................56
SECTION 3.09. Litigation; Compliance with Laws................................57
SECTION 3.10. Agreements......................................................57
SECTION 3.11. Federal Reserve Regulations.....................................58
SECTION 3.12. Investment Company Act; Public Utility Holding
Company Act...................................................58
SECTION 3.13. Use of Proceeds.................................................58
SECTION 3.14. Tax Returns.....................................................58
SECTION 3.15. No Material Misstatements.......................................58
SECTION 3.16. Employee Benefit Plans..........................................59
SECTION 3.17. Environmental Matters...........................................59
SECTION 3.18. Capitalization of CommNet and the Borrower......................60
SECTION 3.19. Security Documents..............................................61
SECTION 3.20. Labor Matters...................................................62
SECTION 3.21. Insurance.......................................................62
SECTION 3.22. Solvency........................................................62
SECTION 3.23. FCC Compliance; Licenses........................................63
ARTICLE IV. CONDITIONS OF LENDING..................................................63
SECTION 4.01. All Credit Events...............................................63
SECTION 4.02. First Credit Event..............................................64
ARTICLE V. AFFIRMATIVE COVENANTS...................................................68
SECTION 5.01. Existence; Businesses and Properties............................68
SECTION 5.02. Insurance.......................................................68
SECTION 5.03. Taxes...........................................................69
SECTION 5.04. Financial Statements, Reports, etc..............................69
SECTION 5.05. Litigation and Other Notices....................................71
SECTION 5.06. Employee Benefits...............................................71
SECTION 5.07. Maintaining Records; Access to Properties and
Inspections...................................................72
SECTION 5.08. Use of Proceeds.................................................72
SECTION 5.09. Compliance with Environmental Laws..............................72
SECTION 5.10. Preparation of Environmental Reports............................72
SECTION 5.11. Further Assurances..............................................72
SECTION 5.12. Fiscal Year; Accounting.........................................73
SECTION 5.13. Dividends.......................................................74
SECTION 5.14. Interest Rate Protection Agreements.............................74
SECTION 5.15 CoBank Patronage................................................74
ARTICLE VI. NEGATIVE COVENANTS.....................................................74
SECTION 6.01. Indebtedness....................................................74
SECTION 6.02. Liens...........................................................77
SECTION 6.03. Sale and Lease-Back Transactions................................80
SECTION 6.04. Investments, Loans and Advances.................................80
SECTION 6.05. Mergers, Consolidations, Sales of Assets and Acquisitions.......84
</TABLE>
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<TABLE>
<S> <C> <C>
SECTION 6.06. Dividends and Distributions.............................. 85
SECTION 6.07. Transactions with Affiliates............................. 85
SECTION 6.08. Business of CommNet and the Downstream Affiliates........ 86
SECTION 6.09. Material Agreements...................................... 86
SECTION 6.10. Interest Coverage Ratio.................................. 86
SECTION 6.11. Leverage Ratio........................................... 88
SECTION 6.12. Fixed Charge Coverage Ratio.............................. 90
SECTION 6.13. Capital Expenditures..................................... 91
SECTION 6.14. Capital Stock of the Subsidiaries........................ 91
SECTION 6.15. Borrowing Affiliates..................................... 91
ARTICLE VII. EVENTS OF DEFAULT.............................................. 93
ARTICLE VIII. THE ADMINISTRATIVE AGENT AND THE
COLLATERAL AGENT............................................ 96
ARTICLE IX. MISCELLANEOUS................................................... 99
SECTION 9.01. Notices.................................................. 99
SECTION 9.02. Survival of Agreement.................................... 99
SECTION 9.03. Binding Effect...........................................100
SECTION 9.04. Successors and Assigns...................................100
SECTION 9.05. Expenses; Indemnity......................................103
SECTION 9.06. Right of Setoff..........................................105
SECTION 9.07. Applicable Law...........................................105
SECTION 9.08. Waivers; Amendment.......................................106
SECTION 9.09. Interest Rate Limitation.................................107
SECTION 9.10. Entire Agreement.........................................107
SECTION 9.11. Waiver of Jury Trial.....................................107
SECTION 9.12. Severability.............................................108
SECTION 9.13. Counterparts.............................................108
SECTION 9.14. Headings.................................................108
SECTION 9.15. Jurisdiction; Consent to Service of Process..............108
SECTION 9.16. Confidentiality..........................................109
SECTION 9.17. Release of Liens and Guarantees..........................109
</TABLE>
SCHEDULES:
Schedule 2.01 -- Commitments of Lenders
Schedule 3.02 -- Authorizations
Schedule 3.08 -- Downstream Affiliates
Schedule 3.09 -- Material Litigation
Schedule 3.14 -- Taxes
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Page
----
Schedule 3.17 -- Environmental Matters
Schedule 3.18(a) -- Capitalization of CommNet and Borrower
Schedule 3.18(b) -- Outstanding options, warrants, etc.
Schedule 3.20 -- Labor Matters
Schedule 3.21 -- Insurance
Schedule 6.01 -- Indebtedness
Schedule 6.02 -- Liens
Schedule 6.04 -- Investments
Schedule 6.07 -- Transactions with Affiliates
EXHIBITS:
Exhibit A -- Form of Administrative Questionnaire
Exhibit B -- Form of Assignment and Acceptance
Exhibit C -- Form of Borrowing Request
Exhibit D -- Form of Collateral Account Agreement
Exhibit E -- Form of Indemnity, Subrogation and Contribution Agreement
Exhibit F -- Form of Intellectual Property Security Agreement
Exhibit G -- Form of Parent Guarantee Agreement
Exhibit H -- Form of Pledge Agreement
Exhibit I -- Form of Security Agreement
Exhibit J -- Form of Subsidiary Guarantee Agreement
Exhibit K-1 -- Form of Opinion of Simpson Thacher & Bartlett
Exhibit K-2 -- Form of Opinion of Ireland, Stapleton, Pryor & Pascoe, P.C.
Exhibit K-3 -- Form of Opinion of Communications Act Counsel
<PAGE>
CREDIT AGREEMENT dated as of September 18, 1997, among
COMMNET CELLULAR INC., a Colorado corporation ("CommNet"), and
CELLULAR, INC. FINANCIAL CORPORATION, a Colorado corporation and
a wholly owned subsidiary of CommNet (the "Borrower"); the
financial institutions from time to time party hereto, initially
consisting of those financial institutions listed on Schedule
2.01 (the "Lenders"); THE CHASE MANHATTAN BANK, a New York
banking corporation ("Chase"), as agent (in such capacity, the
"Administrative Agent") and as collateral agent (in such
capacity, the "Collateral Agent") for the Lenders; and CHASE
MANHATTAN BANK DELAWARE, as fronting bank (the "Fronting Bank").
CommNet and AV Acquisition Corp. (the "Investor") have entered into
the Recapitalization Agreement (such term and each other capitalized term used
but not defined in this preamble having the meaning assigned to such term in
Article I) pursuant to which (a) the Investor will be merged with and into
CommNet in a transaction (the "Merger") in which (i) CommNet will be the
surviving corporation, (ii) the Fund and the Participants will receive
approximately 87% of the common stock of CommNet (after giving effect to the
transactions referred to in this paragraph) and (iii) the pre-Merger
shareholders of CommNet will receive cash in an aggregate amount of
approximately $498 million and retain approximately 13% of the common stock of
CommNet (after giving effect to the transactions referred to in this paragraph),
(b) the Borrower will terminate, and repay in full the indebtedness outstanding
under, the Existing Credit Facility, and (c) CommNet will consummate debt tender
offers and consent solicitations in respect of its 11-3/4% Senior Subordinated
Notes Due 2003 and its 11-1/4% Subordinated Notes Due 2005 (collectively, the
"Pre-Closing Debt Securities") pursuant to which it will repurchase Pre-Closing
Debt Securities and as a result of which all significant negative covenants
applicable to the Pre-Closing Debt Securities shall be eliminated. The foregoing
transactions are collectively referred to as the "Recapitalization".
The Borrower has requested the Lenders to extend credit in the form of
(a) Tranche A Term Loans on the Closing Date, in an aggregate principal amount
not in excess of $200,000,000, (b) Tranche B Term Loans on the Closing Date, in
an aggregate principal amount not in excess of $100,000,000, (c) Tranche C Term
Loans on the Closing Date, in an aggregate principal amount not in excess of
$100,000,000, (d) Tranche D Term Loans on the Closing Date, in an aggregate
principal amount not in excess of $280,000,000, (e) Revolving Loans at any time
and from time to time prior to the Revolving Credit Maturity Date, in an
aggregate principal amount at any time outstanding not in excess of $80,000,000,
of which up to $10,000,000 will be available as Swingline Loans and (f) Letters
of Credit at any time and from time to time prior to the
<PAGE>
Revolving Credit Maturity Date, in an aggregate stated amount at any time
outstanding not in excess of $10,000,000.
The proceeds of the Term Loans will be used, together with the
proceeds of the Equity Contributions and up to $10,000,000 of Revolving Loans,
to provide funds for the Recapitalization and to pay related fees, expenses and
other transaction costs (including prepayment and tender costs).
The proceeds of Borrowings and Letters of Credit under the Revolving
Loans will be used to provide funds in an amount not in excess of $10,000,000
for the Recapitalization and otherwise for working capital and general corporate
purposes.
The Lenders are willing to extend such credit to the Borrower and the
Fronting Bank is willing to issue Letters of Credit for the account of the
Borrower, in each case on the terms and subject to the conditions set forth
herein. Accordingly, the parties hereto agree as follows:
ARTICLE I. DEFINITIONS
SECTION 1.01. Defined Terms. As used in this Agreement, the following
terms shall have the meanings specified below:
"ABR Borrowing" shall mean a Borrowing comprised of ABR Loans.
"ABR Loan" shall mean any ABR Term Loan, ABR Revolving Loan or
Swingline Loan.
"ABR Revolving Loan" shall mean any Revolving Loan bearing interest at
a rate determined by reference to the Alternate Base Rate in accordance with the
provisions of Article II.
"ABR Term Borrowing" shall mean a Borrowing comprised of ABR Term
Loans.
"ABR Term Loan" shall mean any Term Loan bearing interest at a rate
determined by reference to the Alternate Base Rate in accordance with the
provisions of Article II.
"Adjusted LIBO Rate" shall mean, with respect to any Eurodollar
Borrowing for any Interest Period, an interest rate per annum (rounded upwards,
if necessary, to the next 1/16 of 1%) equal to the product of (a) the LIBO Rate
in effect for such Interest Period and (b) Statutory Reserves.
"Administrative Agent Fees" shall have the meaning given such term in
Section 2.05(c).
<PAGE>
3
"Administrative Questionnaire" shall mean an Administrative
Questionnaire in the form of Exhibit A.
"Affiliate" shall mean, when used with respect to a specified person,
another person that directly, or indirectly through one or more intermediaries,
Controls or is Controlled by or is under common Control with the person
specified.
"Affiliate Advance" shall have the meaning given such term in Section
3.08.
"Affiliate Advance Facility" shall have the meaning given such term in
Section 3.08.
"Alternate Base Rate" shall mean, for any day, a rate per annum
(rounded upwards, if necessary, to the next 1/16 of 1%) equal to the greater of
(a) the Prime Rate in effect on such day and (b) the Federal Funds Effective
Rate in effect on such day plus 1/2 of 1%. If for any reason the Administrative
Agent shall have determined (which determination shall be conclusive absent
manifest error) that it is unable to ascertain the Federal Funds Effective Rate,
including the failure of the Federal Reserve Bank of New York to publish rates
or the inability of the Administrative Agent to obtain quotations in accordance
with the terms thereof, the Alternate Base Rate shall be determined without
regard to clause (b) of the preceding sentence until the circumstances giving
rise to such inability no longer exist. Any change in the Alternate Base Rate
due to a change in the Prime Rate or the Federal Funds Effective Rate shall be
effective on the effective date of such change in the Prime Rate or the Federal
Funds Effective Rate, respectively.
"Applicable Margin" shall mean, with respect to any ABR Loan,
Eurodollar Loan, Commitment Fee or L/C Participation Fee, as the case may be,
the percentage set forth below under the caption "ABR Margin" "LIBOR Margin",
"Commitment Fee", or "L/C Participation Fee", as the case may be, based on the
ratio of Total Debt as of the last day of the most recent fiscal quarter for
which financial statements shall have been delivered pursuant to Section 5.04(a)
or (b) and (c) to Financed Proportionate EBITDA for the four consecutive fiscal
quarter period ended on such day (or if such most recent fiscal quarter for
which such financial statements shall have been delivered is the (x) second full
fiscal quarter following the Closing Date, Financed Proportionate EBITDA for the
two consecutive fiscal quarter period ending on the last day of such fiscal
quarter multiplied by two and (y) third full fiscal quarter following the
Closing Date, Financed Proportionate EBITDA for the three consecutive fiscal
quarter period ending on the last day of such fiscal quarter multiplied by 1-
1/3):
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4
<TABLE>
<CAPTION>
ABR Margin LIBOR Margin Fee Participation Fee
Ratio (per annum) (per annum) (per annum) (per annum)
----- ----------- ------------ ----------- -----------------
<S> <C> <C> <C> <C>
Category 1
- ----------
Greater than or equal to 9.0 1.250% 2.250% 0.500% 2.250%
to 1.0
Category 2
- ----------
Less than 9.0 to 1.0 but 1.000% 2.000% 0.500% 2.000%
greater than or equal to 8.0
to 1.0
Category 3
- ----------
Less than 8.0 to 1.0 but 0.875% 1.875% 0.375% 1.875%
greater than or equal to 7.0
to 1.0
Category 4
- ----------
Less than 7.0 to 1.0 but 0.750% 1.750% 0.375% 1.750%
greater than or equal to 6.0
to 1.0
Category 5
- ----------
Less than 6.0 to 1.0 0.500% 1.500% 0.250% 1.500%
</TABLE>
provided, however, that for any day (i) prior to the first date after the six
month anniversary of the Closing Date on which the Borrower delivers financial
statements pursuant to Section 5.04(a) or (b) and (c), (ii) as of which the
Borrower shall have been required to have delivered such financial statements
and computation but shall not yet have done so or (iii) on which an Event of
Default shall have occurred and be continuing, Category 1 shall be deemed to be
effective; and provided further that for any day prior to the Closing Date the
Applicable Margin with respect to Commitment Fees shall be 0.250%.
"Applicable Percentage" of any Revolving Credit Lender at any time
shall mean the percentage of the Total Revolving Credit Commitment represented
by such Lender's Revolving Credit Commitment. In the event the Revolving Credit
Commitments shall have expired or been terminated, the Applicable Percentages
shall be determined on the basis of the Revolving Credit Commitments most
recently in effect, but giving effect to any assignments pursuant to Section
9.04.
<PAGE>
5
"Approved Fund" shall mean, with respect to any Lender that is a fund
that invests in bank loans, any other fund with assets in excess $100,000,000
that invests in bank loans and is managed by the same investment advisor as such
Lender or by an Affiliate of such investment advisor.
"Assignment and Acceptance" shall mean an assignment and acceptance
entered into by a Lender and an assignee, and accepted by the Administrative
Agent and the Borrower, in the form of Exhibit B or such other form as shall be
approved by the Administrative Agent.
"Board" shall mean the Board of Governors of the Federal Reserve
System of the United States.
"Borrower" shall have the meaning given such term in the introductory
statement hereto.
"Borrowing" shall mean a group of Loans of a single Type under a
single Tranche or consisting solely of Revolving Loans or Swingline Loans and
made on a single date and, in the case of Eurodollar Loans, as to which a single
Interest Period is in effect.
"Borrowing Affiliate" shall have the meaning given such term in
Section 3.08.
"Borrowing Request" shall mean a request by the Borrower in accordance
with the terms of Section 2.03 and substantially in the form of Exhibit C.
"Business Day" shall mean any day other than a Saturday, Sunday or day
on which banks in New York City are authorized or required by law to close;
provided, however, that when used in connection with a Eurodollar Loan, the term
"Business Day" shall also exclude any day on which banks are not open for
dealings in dollar deposits in the London interbank market.
"Capital Expenditures" shall mean, for any person in respect of any
period, the aggregate of all expenditures incurred by such person during such
period that, in accordance with GAAP, are or should be included in "purchase of
plant, property or equipment"or similar items reflected in the statement of cash
flows of such person; provided, however, that Capital Expenditures for CommNet
and the Downstream Affiliates shall not include (i) expenditures of proceeds of
insurance settlements, condemnation awards and other settlements in respect of
lost, destroyed, damaged or condemned assets, equipment or other property to the
extent such expenditures are made to replace or repair such lost, destroyed,
damaged or condemned assets, equipment or other property or otherwise to acquire
assets or properties useful in the business of
<PAGE>
6
CommNet and the Downstream Affiliates within 12 months of receipt of such
proceeds, (ii) expenditures that are accounted for as capital expenditures of
such person and that actually are paid for by a third party (excluding CommNet
or any Downstream Affiliate) and for which neither CommNet nor any Downstream
Affiliate has provided or is required to provide or incur, directly or
indirectly, any consideration or obligation to such third party or any other
person (whether before, during or after such period), (iii) the book value of
any asset owned by such person prior to or during such period to the extent that
such book value is included as a capital expenditure during such period as a
result of such person reusing or beginning to reuse such asset during such
period without a corresponding expenditure actually having been made in such
period; provided that any expenditure necessary in order to permit such asset to
be reused shall be included as a Capital Expenditure during the period that such
expenditure actually is made and such book value shall have been included in
Capital Expenditures when such asset was originally acquired or (iv)
expenditures to the extent financed with the proceeds of equity issued by
CommNet.
"Capital Lease Obligations" of any person shall mean the obligations
of such person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are required to be classified and
accounted for as capital leases on a balance sheet of such person under GAAP
and, for purposes hereof, the amount of such obligations at any time shall be
the capitalized amount thereof at such time determined in accordance with GAAP.
"Capital Stock" of any person shall mean any and all shares,
interests, rights to purchase, warrants, options, participation or other
equivalents of or interests in (however designated) equity of such person,
including any preferred stock, any limited or general partnership interest and
any limited liability company membership interest, but excluding any debt
securities convertible into such equity.
"CERCLA" shall have the meaning given such term in the definition of
"Environmental Law".
A "Change in Control" shall be deemed to have occurred if (a) CommNet
should fail to own directly, beneficially and of record, free and clear of any
and all Liens (other than Liens in favor of the Collateral Agent pursuant to the
Pledge Agreement), 100% of the issued and outstanding Capital Stock of the
Borrower; (b) the Fund, Fund Affiliates and Management Investors (collectively,
the "Designated Persons") or any combination of Designated Persons shall cease
to own beneficially, directly or indirectly, in the aggregate shares
representing at least 51% of the aggregate ordinary voting power represented by
the issued and outstanding Capital Stock of the Investor prior to the
<PAGE>
7
Closing Date or CommNet on or after the Closing Date; (c) a majority of the
seats (excluding vacant seats) on the board of directors of the Investor prior
to the Closing Date or CommNet on or after the Closing Date shall be occupied by
persons who were neither (i) nominated by any one or more Designated Persons or
by a majority of the board of directors of the Investor prior to the Closing
Date or CommNet on or after the Closing Date, nor (ii) appointed by directors so
nominated; or (d) a change in control with respect to the Investor, CommNet or
the Borrower (or similar event, however denominated) shall occur under and as
defined in any indenture or agreement in respect of Indebtedness in an aggregate
outstanding principal amount in excess of $10,000,000 to which the Investor,
CommNet, the Borrower or any Subsidiary is party (other than pursuant to Pre-
Closing Debt Securities). For purposes of clause (b) of this definition, the
term "Designated Person" shall be deemed to include any other holder or holders
of shares of the Investor or CommNet having ordinary voting power if the
Investor, a Fund or any Fund Affiliate shall have the power to vote (or cause to
be voted at its discretion), pursuant to contract, irrevocable proxy or
otherwise, the shares held by such holder.
"Chase" shall have the meaning given such term in the introductory
statement hereto.
"Closing Date" shall mean a single date on which the first Credit
Event occurs pursuant to Section 4.02, which shall in no event be later than
December 31, 1997 (or such later date to which the term of the Recapitalization
Agreement may be extended as a result of the failure to obtain required consents
of Governmental Authorities for the Recapitalization, but in no event later than
May 27, 1998).
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time.
"Collateral" shall mean all the "Collateral" as defined in any
Security Document.
"Collateral Account" shall have the meaning given such term in the
Collateral Account Agreement.
"Collateral Account Agreement" shall mean the Collateral Account
Agreement, substantially in the form of Exhibit D, between the Loan Parties and
the Collateral Agent for the benefit of the Secured Parties.
"Commitment Fee" shall have the meaning given such term in Section
2.05(a).
<PAGE>
8
"Commitments" shall mean, with respect to any Lender, such Lender's
Revolving Credit Commitment, Term Commitments and Swingline Loan Commitment and,
with respect to the Fronting Bank, its Letter of Credit Commitment.
"Committed Capital Expenditure Deposit" shall mean any amount
deposited by CommNet or any Subsidiary party to the Collateral Account Agreement
in the Collateral Account for the sole purpose of funding Capital Expenditures
that CommNet or such Subsidiary intends to make within 12 months of the deposit
of such amount and in respect of which the Administrative Agent shall have
received a certificate of a Responsible Officer to such effect.
"CommNet" shall have the meaning given such term in the introductory
statement hereto.
"Communications Act" shall mean the Communications Act of 1934, and
any successor Federal statute, and the rules and regulations and published
policies of the FCC thereunder, all as amended and as the same may be in effect
from time to time.
"Control" shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
person, whether through the ownership of voting securities, by contract or
otherwise, and "Controlling" and "Controlled" shall have meanings correlative
thereto. Control shall not be deemed to exist solely by virtue of CommNet
directly or indirectly having (i) Affiliate Advances outstanding to any
Downstream Affiliate or (ii) a right to manage a System of any person.
"Controlled Downstream Affiliate" shall mean a Downstream Affiliate
that is directly or indirectly Controlled by CommNet.
"Credit Event" shall have the meaning given such term in Article IV.
"Current Assets" shall mean, with respect to any person at any date of
determination, all assets (other than cash and Permitted Investments or other
cash equivalents) that would, in accordance with GAAP, be classified on a
balance sheet of such person as current assets at such date of determination.
"Current Liabilities" shall mean, with respect to any person at any
date of determination, all liabilities that would, in accordance with GAAP, be
classified on a balance sheet of such person as current liabilities at such date
of determination, other than (a) the current portion of long term debt, (b)
accruals of Interest Expense (excluding Interest Expense that is due and
unpaid), (c) in the case of the Borrower, Revolving Loans or Swingline Loans
classified as current, (d) accruals of transaction costs resulting from
<PAGE>
9
the Recapitalization and (e) accruals of any costs or expenses related to
severance or termination of employees prior to the date hereof.
"Debt Service" shall mean, with respect to any person for any period,
Interest Expense of such person for such period plus scheduled principal
amortization of Total Debt for such period (whether or not such payments are
made).
"Default" shall mean any event or condition which upon notice, lapse
of time or both would constitute an Event of Default.
"Dollars" or "$" shall mean lawful money of the United States of
America.
"Downstream Affiliate" shall mean any person with respect to which
CommNet directly or indirectly owns 5% or more of its Capital Stock; provided
that TVX shall be deemed not to constitute a Downstream Affiliate for all
purposes under the Loan Documents.
"EBITDA" shall mean, with respect to any person for any period, the
net income of such person for such period plus, to the extent deducted in
computing such net income, without duplication, the sum of (a) interest expense,
(b) income tax expense and withholding tax expense incurred in connection with
cross border transactions involving nondomestic Subsidiaries, (c) depreciation
and amortization expense, (d) any special charges (including, without
limitation, any noncash fees or expenses incurred in connection with the
Transactions) and any extraordinary or nonrecurring losses, (e) monitoring and
management fees paid to the Fund and/or any Fund Affiliates and (f) other
noncash items reducing net income, minus, to the extent added in computing such
net income, without duplication, (i) interest income, (ii) extraordinary or
nonrecurring gains and (iii) other noncash items increasing net income, in each
case determined, where applicable, in accordance with GAAP.
"Election" shall have the meaning given such term in Section 2.12(e).
"environment" shall mean ambient air, surface water and groundwater
(including potable water, navigable water and wetlands), the land surface or
subsurface strata, the workplace or as otherwise defined in any Environmental
Law.
"Environmental Claim" shall mean any written accusation, allegation,
notice of violation, claim, demand, order, directive, cost recovery action or
other cause of action by, or on behalf of, any Governmental Authority or any
person for damages, injunctive or equitable relief, personal injury (including
sickness, disease or death), Remedial Action costs, tangible or intangible
property damage, natural resource damages, nuisance, pollution, any adverse
effect on the environment caused by any Hazardous
<PAGE>
10
Material, or for fines, penalties or restrictions, resulting from or based upon:
(a) the threat, the existence, or the continuation of the existence of a Release
(including sudden or non-sudden, accidental or non-accidental Releases); (b)
exposure to any Hazardous Material; (c) the presence, use, handling,
transportation, storage, treatment or disposal of any Hazardous Material; or (d)
the violation or alleged violation of any Environmental Law or Environmental
Permit.
"Environmental Law" shall mean any and all applicable present and
future treaties, laws, rules, regulations, codes, ordinances, orders, decrees,
judgments, injunctions, notices or binding agreements issued, promulgated or
entered into by any Governmental Authority, relating in any way to the
environment, preservation or reclamation of natural resources, the treatment,
storage, disposal, Release or threatened Release of any Hazardous Material or to
human health or safety, including the Hazardous Materials Transportation Act, 49
U.S.C. (S)(S) 1801 et seq., the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended by the Superfund Amendments
and Reauthorization Act of 1986, 42 U.S.C. (S)(S) 9601 et seq. ("CERCLA"), the
Solid Waste Disposal Act, as amended by the Resource Conservation and Recovery
Act of 1976 and the Hazardous and Solid Waste Amendments of 1984, 42 U.S.C.
(S)(S) 6901 et seq., the Federal Water Pollution Control Act, as amended, 33
U.S.C. (S)(S) 1251 et seq., the Clean Air Act of 1970, as amended, 42 U.S.C.
(S)(S) 7401 et seq., the Toxic Substances Control Act of 1976, 15 U.S.C. (S)(S)
2601 et seq., the Emergency Planning and Community Right-to-Know Act of 1986, 42
U.S.C. (S)(S) 11001 et seq., the National Environmental Policy Act of 1975, 42
U.S.C. (S)(S) 4321 et seq., the Safe Drinking Water Act of 1974, as amended, 42
U.S.C. (S)(S) 300(f) et seq., and any similar or implementing state or foreign
law, and all amendments or regulations promulgated thereunder.
"Environmental Permit" shall mean any permit, approval, authorization,
certificate, license, variance, filing or permission required by or from any
Governmental Authority pursuant to any Environmental Law.
"Equity Contributions" shall mean contributions made on or prior to
the Closing Date, directly or indirectly, by the Fund and the Participants in
cash to the Investor as common equity in an aggregate amount of not less than
$141,800,000.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as the same may be amended from time to time.
"ERISA Affiliate" shall mean any trade or business (whether or not
incorporated) that, together with CommNet or the Borrower, is treated as a
single employer under Section 414(b) or (c) of the Code, or, solely for purposes
of Section 302
<PAGE>
11
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.
"Eurodollar Borrowing" shall mean a Borrowing comprised of Eurodollar
Loans.
"Eurodollar Loan" shall mean any Eurodollar Term Loan or Eurodollar
Revolving Loan.
"Eurodollar Revolving Loan" shall mean any Revolving Loan bearing
interest at a rate determined by reference to the Adjusted LIBO Rate in
accordance with the provisions of Article II.
"Eurodollar Term Loan" shall mean any Term Loan bearing interest at a
rate determined by reference to the Adjusted LIBO Rate in accordance with the
provisions of Article II.
"Event of Default" shall have the meaning given such term in Article
VII.
"Excess Amount" shall have the meaning given such term in Section
2.12(f).
"Excess Cash Flow" shall mean, with respect to CommNet and the
Downstream Affiliates on a combined basis for any fiscal year, the greater of
(x) Financed Proportionate EBITDA on a combined basis for such fiscal year,
minus, without duplication, (a) Debt Service of CommNet and the Downstream
Affiliates on a combined basis for such fiscal year to the extent paid in cash,
(b) Capital Expenditures by CommNet and the Downstream Affiliates on a combined
basis during such fiscal year which are paid in cash, the aggregate amount of
Committed Capital Expenditure Deposits made during such fiscal year and, to the
extent not included in Capital Expenditures, the aggregate consideration paid in
cash during such fiscal year in respect of Permitted Business Acquisitions, (c)
taxes paid in cash by CommNet and the Downstream Affiliates on a combined basis
during such fiscal year, including income tax expense and withholding tax
expense incurred in connection with cross border transactions involving non-
domestic Downstream Affiliates, (d) an amount equal to any increase in Working
Capital of CommNet and the Downstream Affiliates on a combined basis for such
fiscal year, (e) monitoring and management fees paid to the Fund and/or any Fund
Affiliates during such fiscal year, (f) cash expenditures made in respect of
Interest Rate Protection Agreements during such fiscal year, to the extent not
reflected in the computation of Financed Proportionate EBITDA, (g) permitted
dividends or repurchases of its Capital Stock paid in cash by CommNet during
such fiscal year and permitted dividends or repurchases of its Capital Stock
paid in cash by any Downstream Affiliate to any person
<PAGE>
12
other than CommNet or any of its other Downstream Affiliates during such fiscal
year, in the case of CommNet or any Controlled Downstream Affiliate in
accordance with Section 6.06, (h) amounts paid in cash during such fiscal year
on account of items that were accounted for as noncash reductions of combined
net income of CommNet and the Downstream Affiliates in the current or a prior
period, (i) special charges or any extraordinary or nonrecurring loss paid in
cash during such fiscal year, (j) to the extent not deducted in the computation
of Net Proceeds in respect of any asset disposition or condemnation giving rise
thereto, mandatory prepayments of Indebtedness (other than Indebtedness created
hereunder or under any other Loan Document) of CommNet and the Downstream
Affiliates on a combined basis for such fiscal year, (k) any voluntary
prepayments of Term Loans during the period beginning on the first day of the
second fiscal quarter of such fiscal year and ending on the last day of the
first fiscal quarter of the immediately succeeding fiscal year, (l) to the
extent included in determining Financed Proportionate EBITDA, all items that did
not result from a cash payment to CommNet and the Downstream Affiliates on a
combined basis during such fiscal year, (m) voluntary prepayments of
Indebtedness of Non-Controlled Downstream Affiliates during such fiscal year
(and in an aggregate amount not to exceed $7,000,000) and (n) to the extent
included in determining Financed Proportionate EBITDA, amounts attributable to
Non-Controlled Downstream Affiliates that, as a result of dividend restrictions
with respect to such Non-Controlled Downstream Affiliates that could not be
unilaterally waived by CommNet or a Controlled Downstream Affiliate, were not
the subject of a cash dividend to CommNet or a Controlled Downstream Affiliate
(in the case of each of clauses (a) through (n) (other than (g)) above,
excluding the effect of minority interests in the case of Downstream Affiliates
(other than those that are Borrowing Affiliates or guarantors of Affiliate
Advances) in which CommNet owns (directly or indirectly) a majority of, but not
all of, the Capital Stock and excluding the effect of majority interests in the
case of Downstream Affiliates (other than those that are Borrowing Affiliates or
guarantors of Affiliate Advances) in which CommNet owns (directly or indirectly)
less than a majority of the Capital Stock) plus, without duplication, (i) an
amount equal to any decrease in Working Capital of CommNet and the Downstream
Affiliates on a combined basis for such fiscal year, (ii) all proceeds received
during such fiscal year of Capital Lease Obligations, purchase money
Indebtedness, Sale and Lease-Back Transactions pursuant to Section 6.03(a) and
any other Indebtedness to the extent used to finance any Capital Expenditure
(other than Indebtedness under this Agreement to the extent there is no
corresponding deduction to Excess Cash Flow above in respect of the use of such
Borrowings) and all proceeds received during such fiscal year of Sale and Lease-
Back Transactions pursuant to Section 6.03(b), (iii) all amounts referred to in
(b) above to the extent funded with the issuance of Capital Stock of CommNet
after the Closing Date (to the extent not previously used to prepay Indebtedness
(other than Revolving Loans or Swingline Loans), make any investment or capital
expenditure or otherwise for any purpose resulting in a deduction to Excess Cash
Flow in any fiscal year) or any amount that would have constituted Net Proceeds
under clause (a) of the definition of Net
<PAGE>
13
Proceeds if not so spent, in each case to the extent there is a corresponding
deduction to Excess Cash Flow above, (iv) cash payments received in respect of
Interest Rate Protection Agreements during such fiscal year to the extent not
included in the computation of Financed Proportionate EBITDA, (v) any
extraordinary or nonrecurring gain realized in cash during such fiscal year
(except to the extent such gain is subject to Section 2.12(c)), (vi) to the
extent deducted in the computation of Financed Proportionate EBITDA, interest
income, (vii) the amount of the Excess Cash Flow Reserve as of the date on which
Excess Cash Flow is determined for such year pursuant to Section 2.12(d), (viii)
the aggregate amount released from the Collateral Account during such fiscal
year and (ix) to the extent subtracted in determining Financed Proportionate
EBITDA, all items which did not result from a cash payment by CommNet and the
Downstream Affiliates on a consolidated basis during such fiscal year (in the
case of each of clauses (i) through (ix) above, excluding the effect (to the
extent such effect affected the calculation of the amounts referred to in such
clauses) of minority interests in the case of Downstream Affiliates (other than
those that are Borrowing Affiliates or guarantors of Affiliate Advances) in
which CommNet owns (directly or indirectly) a majority of, but not all of, the
Capital Stock and excluding the effect (to the extent such effect affected the
calculation of the amounts referred to in such clauses) of majority interests in
the case of Downstream Affiliates (other than those that are Borrowing
Affiliates or guarantors of Affiliate Advances) in which CommNet owns (directly
or indirectly) less than a majority of the Capital Stock) and (y) the Excess
Cash Flow Reserve as of the date on which Excess Cash Flow is determined for
such year pursuant to Section 2.12(d).
"Excess Cash Flow Payment Date" shall have the meaning given such term
in Section 2.12(d).
"Excess Cash Flow Percentage" shall mean, with respect to any fiscal
year, (x) if the ratio of Total Debt as of the last day of such fiscal year as
determined pursuant to the financial statements delivered pursuant to Section
5.04(a) to Financed Proportionate EBITDA for the four consecutive fiscal quarter
period ended on such day is less than or equal to 6.00 to 1.00, 50% and (y)
otherwise, 75%.
"Excess Cash Flow Reserve" shall mean at any time the aggregate amount
contained in the Collateral Account at such time representing Committed Capital
Expenditure Deposits made pursuant to the Collateral Account Agreement for the
purpose described in the definition of Committed Capital Expenditure Deposit but
not used to fund Capital Expenditures within 12 months of deposit.
"Excluded Downstream Affiliate" shall have the meaning given such term
in Section 6.15(c).
<PAGE>
14
"Existing Credit Facility" shall mean the Consolidated Loan Agreement
dated as of September 6, 1995, among CoBank, ACB and the Borrower, and the
loans, credits and commitments thereunder, as amended.
"FCC" shall mean the Federal Communications Commission, or any other
successor agency of the Federal government administering the Communications Act.
"Federal Funds Effective Rate" shall mean, for any day, the weighted
average of the rates on overnight Federal funds transactions with members of the
Federal Reserve System arranged by Federal funds brokers, as published on the
next succeeding Business Day by the Federal Reserve Bank of New York, or, if
such rate is not so published for any day which is a Business Day, the average
of the quotations for the day of such transactions received by the
Administrative Agent from three Federal funds brokers of recognized standing
selected by it.
"Fees" shall mean the Commitment Fees, the L/C Participation Fees, the
Fronting Bank Fees and the Administrative Agent Fees.
"Financed Proportionate EBITDA" shall mean, with respect to CommNet
and the Downstream Affiliates (other than Excluded Downstream Affiliates) on a
combined basis for any period, the sum of, without duplication, (a) the EBITDA
for such period of CommNet and its Wholly Owned Subsidiaries, (b) the EBITDA for
such period of all Borrowing Affiliates and other Downstream Affiliates
guaranteeing payment in full of the Affiliate Advances of any Borrowing
Affiliate, to the extent not included pursuant to (a) above, and (c) the product
of (i) the EBITDA for such period of each Downstream Affiliate (other than those
referred to in clauses (a) or (b) of this definition) and (ii) the percentage of
Capital Stock of such Downstream Affiliate owned, directly or indirectly, by
CommNet; provided, however, that solely for purposes of clause (b) of this
definition, a Downstream Affiliate will not be considered a Borrowing Affiliate
or a guarantor thereof to the extent that the EBITDA of such Borrowing Affiliate
and the Downstream Affiliates guaranteeing the Affiliate Advances thereof on a
consolidated basis for the relevant period exceeds the Affiliate Advances of
such Borrowing Affiliate as of the last day of such period; and provided,
further that the EBITDA of (i) any Borrowing Affiliate and any Downstream
Affiliate guaranteeing payment in full of the Affiliate Advances of such
Borrowing Affiliate shall not be included in the calculation of Financed
Proportionate EBITDA if a payment default shall have occurred and be continuing
under the Affiliate Advance Facility with respect to such Borrowing Affiliate
and (ii) any Excluded Downstream Affiliate shall not be included in the
calculation of Financed Proportionate EBITDA.
<PAGE>
15
"Financial Officer" of any corporation shall mean the chief financial
officer, principal accounting officer, Treasurer, Assistant Treasurer or
Controller of such corporation.
"Fixed Charge Coverage Ratio" shall mean, for any four consecutive
fiscal quarter period ending on the last day of any fiscal quarter, the ratio of
(a) Financed Proportionate EBITDA for such period to (b) the sum of (i) Interest
Expense of CommNet and the Subsidiaries on a consolidated basis for such period,
(ii) the aggregate amount of income taxes paid in cash by CommNet and the
Subsidiaries on a consolidated basis during such period, (iii) Capital
Expenditures paid in cash during such period by CommNet and the Subsidiaries and
(iv) principal amounts that became payable (whether or not paid and whether at
the stated maturity, by acceleration or by reason of prepayment or redemption or
otherwise) by the Borrower or any Subsidiary in respect of Indebtedness during
such period.
"Fronting Bank" shall have the meaning given such term in the
introductory statement hereto.
"Fronting Bank Fees" shall have the meaning given to such term in
Section 2.05(b).
"Fund" shall mean Blackstone Capital Partners II Merchant Banking Fund
L.P., a Delaware limited partnership.
"Fund Affiliates" shall mean each Affiliate of the Fund that is not an
operating company or Controlled by an operating company and each general partner
of the Fund or any Affiliate of the Fund who is a partner or employee of The
Blackstone Group L.P.
"GAAP" shall mean generally accepted accounting principles in effect
from time to time in the United States or, when reference is made to another
jurisdiction, generally accepted accounting principles in such jurisdiction
applied on a consistent basis.
"Governmental Authority" shall mean any Federal, state, local or
foreign court or governmental agency, authority, instrumentality or regulatory
body or, in the case of references to "Governmental Authority" in Article II and
Section 9.16, the National Association of Insurance Commissioners.
"Guarantee" of or by any person shall mean (a) any obligation,
contingent or otherwise, of such person guaranteeing or having the economic
effect of guaranteeing any Indebtedness of any other person (the "primary
obligor") in any manner, whether directly or indirectly, and including any
obligation of such person, direct or indirect, (i) to
<PAGE>
16
purchase or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness (whether arising by virtue of partnership arrangements, by
agreement to keep well, to purchase assets, goods, securities or services, to
take-or-pay or otherwise) or to purchase (or to advance or supply funds for the
purchase of) any security for the payment of such Indebtedness, (ii) to purchase
or lease property, securities or services for the purpose of assuring the owner
of such Indebtedness of the payment of such Indebtedness, (iii) to maintain
working capital, equity capital or any other financial statement condition or
liquidity of the primary obligor so as to enable the primary obligor to pay such
Indebtedness or (iv) entered into for the purpose of assuring in any other
manner the holders of such Indebtedness of the payment thereof or to protect
such holders against loss in respect thereof (in whole or in part), or (b) any
Lien on any assets of such person securing any Indebtedness of any other person,
whether or not such Indebtedness is assumed by such person; provided, however,
that the term "Guarantee" shall not include endorsements for collection or
deposit, in either case in the ordinary course of business, or customary and
reasonable indemnity obligations in effect on the Closing Date or entered into
in connection with any acquisition or disposition of assets permitted under this
Agreement.
"Guarantee Agreements" shall mean the Parent Guarantee Agreement and
the Subsidiary Guarantee Agreement.
"Guarantors" shall mean CommNet and the Subsidiary Guarantors.
"Hazardous Materials" shall mean any material meeting the definition
of a "hazardous substance" in CERCLA 42 U.S.C. (S)9601(14) and all explosive or
radioactive substances or wastes, toxic substances or wastes, pollutants, solid,
liquid or gaseous wastes, including petroleum, petroleum distillates or
fractions or residues, asbestos or asbestos-containing materials,
polychlorinated biphenyls ("PCBs") or materials or equipment containing PCBs,
radon gas, infectious or medical wastes and all other substances or wastes of
any nature regulated pursuant to any Environmental Law, or that reasonably could
form the basis of an Environmental Claim.
"Indebtedness" of any person shall mean, without duplication, (a) all
obligations of such person for borrowed money or with respect to deposits or
advances of any kind, (b) all obligations of such person evidenced by bonds,
debentures, notes or similar instruments, (c) all obligations of such person
upon which interest charges are customarily paid (other than trade payables
incurred in the ordinary course of business), (d) all obligations of such person
under conditional sale or other title retention agreements relating to property
or assets purchased by such person, (e) all obligations of such person issued or
assumed as the deferred purchase price of property or services (other than
current trade liabilities incurred in the ordinary course of business), (f) all
Indebtedness of others secured by (or for which the holder of such Indebtedness
has an existing right,
<PAGE>
17
contingent or otherwise, to be secured by) any Lien on property owned or
acquired by such person, whether or not the obligations secured thereby have
been assumed, (g) all Guarantees by such person of Indebtedness of others, (h)
all Capital Lease Obligations of such person, (i) all payments that such person
would have to make in the event of an early termination, on the date
Indebtedness of such person is being determined, in respect of outstanding
interest rate protection agreements, foreign currency exchange agreements or
other interest or exchange rate hedging arrangements and (j) all obligations of
such person as an account party in respect of letters of credit and bankers'
acceptances. The Indebtedness of any person shall include the Indebtedness of
any partnership in which such person is a general partner, other than to the
extent that the instrument or agreement evidencing such Indebtedness expressly
limits the liability of such person in respect thereof; provided that, if the
sole asset of such person is its general partnership interest in such
partnership, the amount of such Indebtedness shall be deemed equal to the value
of such general partnership interest and the amount of any Indebtedness in
respect of any Guarantee of such partnership Indebtedness shall be limited to
the same extent as such Guarantee may be limited.
"Indemnity, Subrogation and Contribution Agreement" shall mean the
Indemnity, Subrogation and Contribution Agreement, substantially in the form of
Exhibit E, among the Borrower, the Subsidiary Guarantors and the Collateral
Agent.
"Information Memorandum" shall have the meaning given such term in
Section 3.15.
"Initial Payment" shall have the meaning given such term in Section
2.11(b).
"Installment Date" shall have the meaning given such term in Section
2.11.
"Intellectual Property Security Agreement" shall mean the Intellectual
Property Security Agreement, substantially in the form of Exhibit F, among
CommNet, the Borrower and certain other Subsidiaries and the Collateral Agent
for the benefit of the Secured Parties.
"Interest Coverage Ratio" shall have the meaning given such term in
Section 6.11.
"Interest Expense" shall mean, with respect to any person for any
period, the sum of (a) gross interest expense of such person for such period,
including (i) the amortization of debt discounts, (ii) the amortization of all
fees (including fees with respect to interest rate protection agreements)
payable in connection with the incurrence of Indebtedness to the extent included
in interest expense and (iii) the portion of any
<PAGE>
18
payments or accruals with respect to Capital Lease Obligations allocable to
interest expense and (b) capitalized interest of such person for such period
minus (c) gross interest income of such person for such period. For purposes of
the foregoing, gross interest expense shall be determined after giving effect to
any net payments made or received by such person with respect to interest rate
protection agreements.
"Interest Payment Date" shall mean, (a) with respect to any Eurodollar
Loan, the last day of the Interest Period applicable to the Borrowing of which
such Loan is a part and, in the case of a Eurodollar Borrowing with an Interest
Period of more than three months' duration, each day that would have been an
Interest Payment Date had successive Interest Periods of three months' duration
been applicable to such Borrowing, and, in addition, the date of any refinancing
or conversion of such Borrowing with or to a Borrowing of a different Type and
(b) with respect to any ABR Loan, the last day of each calendar quarter.
"Interest Period" shall mean as to any Eurodollar Borrowing, the
period commencing on the date of such Borrowing or on the last day of the
immediately preceding Interest Period applicable to such Borrowing, as the case
may be, and ending on the numerically corresponding day (or, if there is no
numerically corresponding day, on the last day) in the calendar month that is 1,
2, 3 or 6 months thereafter (or 9 or 12 months, if at the time of the relevant
Borrowing, all Lenders make interest periods of such length available), as the
Borrower may elect, and the date any Eurodollar Borrowing is converted to an ABR
Borrowing in accordance with Section 2.10 or repaid or prepaid in accordance
with Section 2.11 or 2.12; provided, however, that if any Interest Period would
end on a day other than a Business Day, such Interest Period shall be extended
to the next succeeding Business Day unless such next succeeding Business Day
would fall in the next calendar month, in which case such Interest Period shall
end on the next preceding Business Day. Interest shall accrue from and
including the first day of an Interest Period to but excluding the last day of
such Interest Period.
"Interest Rate Protection Agreement" shall mean any interest rate
agreement or arrangement approved by the Administrative Agent (such approval not
to be unreasonably withheld) entered into by CommNet or a Downstream Affiliate
and designed to protect against fluctuations in interest rates.
"Interim Advances" shall have the meaning given such term in Section
6.01(g).
"Investor" shall have the meaning given such term in the introductory
statement hereto.
<PAGE>
19
"L/C Participation Fee" shall have the meaning given such term in
Section 2.05(b).
"Lenders" shall have the meaning given such term in the introductory
statement hereto.
"Letter of Credit" shall mean any letter of credit issued pursuant to
Section 2.20.
"Letter of Credit Commitment" shall mean the commitment of the
Fronting Bank to issue Letters of Credit pursuant to Section 2.20(a).
"Letter of Credit Disbursement" shall mean a payment or disbursement
made by the Fronting Bank pursuant to a Letter of Credit.
"Letter of Credit Exposure" shall mean at any time the sum of (a) the
aggregate undrawn amount of all outstanding Letters of Credit at such time plus
(b) the aggregate principal amount of all Letter of Credit Disbursements that
have not yet been reimbursed at such time. The Letter of Credit Exposure of any
Revolving Credit Lender at any time shall mean its Applicable Percentage of the
aggregate Letter of Credit Exposure at such time.
"LIBO Rate" shall mean, with respect to any Eurodollar Borrowing, the
rate (rounded upwards, if necessary, to the next 1/16 of 1%) at which dollar
deposits approximately equal in principal amount to the Administrative Agent's
portion of such Eurodollar Borrowing (or, if the Administrative Agent shall not
have any portion of such Borrowing, the average amount of the portions of each
Lender having any portion of such Borrowing) and for a maturity comparable to
the Interest Period of such Eurodollar Borrowing are offered to the principal
London office of the Administrative Agent in immediately available funds in the
London interbank market at approximately 11:00 a.m., London time, two Business
Days prior to the commencement of such Interest Period.
"License" shall mean any license, authorization or permit issued by
the FCC or any other Governmental Authority in connection with the operation of
a System.
"License Drop-Down Date" shall have the meaning given such term in
Section 5.11(b).
"License Subsidiary" shall have the meaning given such term in Section
5.11(b).
<PAGE>
20
"Lien" shall mean, with respect to any asset, (a) any mortgage, deed
of trust, lien, pledge, encumbrance, charge or security interest in or on such
asset, (b) the interest of a vendor or a lessor under any conditional sale
agreement, capital lease or title retention agreement relating to such asset and
(c) in the case of securities, any purchase option, call or similar right of a
third party with respect to such securities.
"Loan Documents" shall mean this Agreement, the Letters of Credit, the
Guarantee Agreements, the Security Documents and the Indemnity, Subrogation and
Contribution Agreement.
"Loan Parties" shall mean the Borrower and the Guarantors.
"Loans" shall mean the Revolving Loans, the Term Loans and the
Swingline Loans.
"Management Investors" shall mean members of management of CommNet
holding, directly or indirectly, voting stock of CommNet or options to acquire
such stock; provided that the term Management Investors shall not include any
such member of management appointed after the Closing Date who has directly or
indirectly made an equity investment in CommNet which, when taken together with
such equity investments of other such members appointed after the Closing Date,
is in excess of $5,000,000.
"Mandatory Prepayment" shall mean a prepayment of Borrowings as
required pursuant to Section 2.12(c) and/or Section 2.12(d).
"Margin Stock" shall have the meaning given such term in Regulation U.
"Material Adverse Effect" shall mean (a) a materially adverse effect
on the assets, business, properties, financial condition or results of
operations of CommNet and the Downstream Affiliates, taken as a whole, (b) a
material impairment of the ability of the Investor, CommNet or any Subsidiary
to perform any of its material obligations under any Loan Document to which it
is or will be a party or to consummate the Recapitalization or the other
Transactions or to make the Equity Contributions or (c) an impairment of the
validity or enforceability of, or a material impairment of the material rights,
remedies or benefits available to the Lenders, the Fronting Bank, the
Administrative Agent or the Collateral Agent under, any Loan Document.
"Material Affiliate Advance Facility Covenants" shall have the meaning
given such term in Section 6.15 (c).
"Measurement Date" shall have the meaning given such term in Section
3.08.
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21
"Merger" shall have the meaning given such term in the introductory
statement hereto.
"Moody's" shall mean Moody's Investors Service, Inc.
"Multiemployer Plan" shall mean a multiemployer plan as defined in
Section 4001(a)(3) of ERISA to which the Borrower or any ERISA Affiliate (other
than one considered an ERISA Affiliate only pursuant to subsection (m) or (o) of
Code Section 414) is making or accruing an obligation to make contributions, or
has within any of the preceding five plan years made or accrued an obligation to
make contributions.
"Nature of the Prepayment" shall have the meaning given such term in
Section 2.12(e).
"Net Proceeds" shall mean (a) 100% of CommNet's direct or indirect
proportionate share of cash proceeds actually received by CommNet or any
Subsidiary (taking into account minority interests in the case of Subsidiaries
that are not Wholly Owned Subsidiaries and including any cash payments received
by way of deferred payment of principal pursuant to a note or installment
receivable or purchase price adjustment receivable or otherwise and including
casualty insurance settlements and condemnation awards, but only as and when
received), net of (i) attorneys' fees, accountants' fees, investment banking
fees, survey costs, title insurance premiums, and related search and recording
charges, transfer taxes, deed or mortgage recording taxes, required debt
payments (other than pursuant hereto), other customary expenses and brokerage,
consultant and other customary fees actually incurred in connection therewith
and (ii) taxes paid or payable as a result thereof (including withholding taxes
incurred in connection with cross-border transactions, if applicable, and
including taxes estimated by CommNet to be payable as a result thereof or as a
result of such transactions or taxes that would be payable but for the
availability of net operating losses), from any loss, damage, destruction or
condemnation of, or any sale, transfer or other disposition (including any sale
and leaseback of assets and any mortgage or lease of real property) to any
person of any asset or assets of CommNet or any Subsidiary or from any sale,
transfer or other disposition of equity interests in Subsidiaries or other
persons by CommNet or any Subsidiary (other than those pursuant to Sections
6.03, 6.05(a), 6.05(b) and 6.05(e) or any other financing subject to clause (ii)
of the definition of "Excess Cash Flow"); provided that if the Borrower shall
deliver a certificate of a Responsible Officer to the Administrative Agent
promptly following receipt of any such proceeds setting forth the Borrower's
intention to use any portion of such proceeds to purchase assets useful in the
business of CommNet and the Subsidiaries (including by way of a purchase of
Capital Stock of any person holding such assets) within 12 months of such
receipt, such portion of such proceeds shall not constitute Net Proceeds except
to the extent not so used within such 12-month period and provided further that
(x) no proceeds realized in a single
<PAGE>
22
transaction or series of related transactions shall constitute Net Proceeds
unless such proceeds shall exceed $1,000,000 and (y) no such proceeds shall
constitute Net Proceeds in any fiscal year until the aggregate amount of all
such proceeds in such fiscal year shall exceed $1,000,000 or the aggregate of
all such proceeds received after the Closing Date shall exceed $5,000,000, and
(b) 100% of CommNet's direct or indirect proportionate share of cash proceeds
actually received by CommNet or any Subsidiary (taking into account minority
interests in the case of Subsidiaries that are not Wholly Owned Subsidiaries)
from the incurrence, issuance or sale by CommNet or any Subsidiary of any
Indebtedness (other than Indebtedness permitted pursuant to Section 6.01), net
of all taxes (including withholding taxes incurred in connection with cross-
border transactions, if applicable, and including taxes estimated by the
Borrower to be payable as a result thereof or as a result of such transactions)
and fees (including investment banking fees), commissions, costs and other
expenses incurred in connection with such issuance or sale. For purposes of
calculating Net Proceeds, fees, commissions and other costs and expenses payable
to the Investor, CommNet or any Affiliate thereof shall be disregarded, except
for financial advisory fees customary in type and amount paid to Affiliates of
The Blackstone Group L.P.
"Non-Controlled Downstream Affiliate" shall mean a Downstream
Affiliate that is not, directly or indirectly, Controlled by CommNet.
"Non-Subsidiary Downstream Affiliates" shall mean Downstream
Affiliates that are not Subsidiaries.
"Notes" shall mean any promissory note of the Borrower issued pursuant
to this Agreement.
"Obligations" shall mean all obligations defined as "Obligations" in
the Guarantee Agreements and the Security Documents.
"Optional Prepayment" shall have the meaning given such term in
Section 2.12(a).
"Parent Guarantee Agreement" shall mean the Parent Guarantee
Agreement, substantially in the form of Exhibit G, made by CommNet in favor of
the Collateral Agent for the benefit of the Secured Parties.
"Participants" shall mean certain investors designated by (and
consisting principally of Affiliates of) the Fund who, together with the Fund,
own the Investor.
"PBGC" shall mean the Pension Benefit Guaranty Corporation referred to
and defined in ERISA.
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23
"Permitted Business Acquisition" shall mean any acquisition of all or
substantially all the assets of, or shares or other equity interests in, a
person or division or line of business of a person (or any subsequent investment
made in a previously acquired Permitted Business Acquisition) if immediately
after giving effect thereto: (a) no Default or Event of Default shall have
occurred and be continuing or would result therefrom, (b) all transactions
related thereto shall be consummated in accordance with applicable laws, (c) the
Borrower or CommNet shall have the absolute right to receive dividends from such
acquired person on an annual basis in an amount equal to a percentage of the
Excess Cash Flow of the acquired person, which percentage will be no less than
the percentage of the Capital Stock of such acquired or newly formed
corporation, partnership, association or other business entity owned by CommNet
or a domestic Subsidiary, (d) all actions required to be taken, if any, with
respect to such acquired or newly formed subsidiary under Section 5.11 shall
have been taken, (e) at least 51% of the Capital Stock of any acquired or newly
formed corporation, partnership, association or other business entity is owned
directly by the Borrower or CommNet or a Wholly Owned Subsidiary, and (f)(i)
CommNet and the Borrower shall be in compliance, on a pro forma basis after
giving effect to such acquisition or formation, with the covenants contained in
Sections 6.10, 6.11 and 6.12 recomputed as at the last day of the most recently
ended fiscal quarter of CommNet as if such acquisition had occurred on the first
day of each relevant period for testing such compliance, and the Borrower shall
have delivered to the Administrative Agent an officers' certificate to such
effect, together with all relevant financial information for such subsidiary or
assets, and (ii) any acquired or newly formed subsidiary shall not be liable for
any Indebtedness (except for Indebtedness permitted by Section 6.01).
"Permitted Investments" shall mean: (a) direct obligations of the
United States of America or any agency thereof or obligations guaranteed by the
United States of America or any agency thereof; (b) time deposit accounts,
certificates of deposit and money market deposits maturing within 180 days of
the date of acquisition thereof issued by a bank or trust company which is
organized under the laws of the United States of America, any state thereof or
any foreign country recognized by the United States of America having capital,
surplus and undivided profits aggregating in excess of $250,000,000 (or the
foreign currency equivalent thereof) and whose long-term debt, or whose parent
holding company's long-term debt, is rated A (or such similar equivalent rating
or higher by at least one nationally recognized statistical rating organization
(as defined in Rule 436 under the Securities Act of 1933, as amended)); (c)
repurchase obligations with a term of not more than 30 days for underlying
securities of the types described in clause (a) above entered into with a bank
meeting the qualifications described in clause (b) above; (d) commercial paper,
maturing not more than 180 days after the date of acquisition, issued by a
corporation (other than an Affiliate of the Borrower) organized and in existence
under the laws of the United States of America or any foreign country
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24
recognized by the United States of America with a rating at the time as of which
any investment therein is made of P-1 (or higher) according to Moody's, or A-1
(or higher) according to S&P; (e) securities with maturities of six months or
less from the date of acquisition issued or fully guaranteed by any state,
commonwealth or territory of the United States of America, or by any political
subdivision or taxing authority thereof, and rated at least A by S&P or A by
Moody's; (f) mutual funds whose investment guidelines restrict such funds'
investments to those satisfying the provisions of clauses (a) through (e) above;
and (g) time deposit accounts, certificates of deposit and money market deposits
in an aggregate face amount not in excess of 1/2 of 1% of total assets of the
Borrower and the Subsidiaries, on a consolidated basis, as of the end of the
Borrower's most recently completed fiscal year.
"person" shall mean any natural person, corporation, business trust,
joint venture, association, limited liability company, company, partnership,
other business entity or government, or any agency or political subdivision
thereof.
"Plan" shall mean any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code and in respect of which the Borrower or any ERISA Affiliate is
(or, if such plan were terminated, would under Section 4069 of ERISA be deemed
to be) an "employer" as defined in Section 3(5) of ERISA.
"Pledge Agreement" shall mean the Pledge Agreement, substantially in
the form of Exhibit H, among CommNet, the Borrower, the Subsidiary Guarantors
and the Collateral Agent for the benefit of the Secured Parties.
"Pledged Stock" shall have the meaning given such term in the Pledge
Agreement.
"Pre-Closing Debt Securities" shall have the meaning given such term
in the introductory statement hereto.
"Prime Rate" shall mean the rate of interest per annum publicly
announced from time to time by the Administrative Agent as its prime rate in
effect at its principal office in New York City; each change in the Prime Rate
shall be effective on the date such change is publicly announced as being
effective.
"Properties" shall have the meaning given such term in Section 3.17.
"Recapitalization" shall have the meaning given such term in the
introductory statement hereto.
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25
"Recapitalization Agreement" shall mean the Agreement and Plan of
Merger dated as of May 27, 1997, between CommNet and the Investor.
"Refunded Swingline Loans" shall have the meaning given such term in
Section 2.01(c)(iii).
"Register" shall have the meaning given such term in Section 9.04(d).
"Regulation G" shall mean Regulation G of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"Regulation U" shall mean Regulation U of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"Regulation X" shall mean Regulation X of the Board as from time to
time in effect and all official rulings and interpretations thereunder or
thereof.
"Release" shall have the meaning given such term in CERCLA, 42 U.S.C.
(S) 9601(22).
"Remedial Action" shall mean (a) "remedial action" as such term is
defined in CERCLA, 42 U.S.C. Section 9601(24), and (b) all other actions,
including studies and investigations, required by any Governmental Authority or
voluntarily undertaken to: (i) clean up, remove, treat, abate or in any other
way respond to any Hazardous Material in the environment; or (ii) prevent the
Release or threat of Release, or minimize the further Release of any Hazardous
Material.
"Reportable Event" shall mean any reportable event as defined in
Section 4043 of ERISA or the regulations issued thereunder with respect to a
Plan (other than a Plan maintained by an ERISA Affiliate that is considered an
ERISA Affiliate only pursuant to subsection (m) or (o) of Code Section 414).
"Required Lenders" shall mean, at any time, Lenders having Loans
(other than Swingline Loans), Letter of Credit Exposures, Swingline Exposures
and unused Commitments (excluding commitments to issue Letters of Credit or make
Swingline Loans) representing at least 51% of the sum of all Loans (other than
Swingline Loans) outstanding, Letter of Credit Exposures, Swingline Exposures
and unused Commitments (excluding commitments to issue Letters of Credit or make
Swingline Loans) at such time.
"Responsible Officer" of any corporation shall mean any executive
officer or Financial Officer of such corporation and any other officer or
similar official thereof
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26
responsible for the administration of the obligations of such corporation in
respect of this Agreement.
"Revolving Credit Borrowing" shall mean a Borrowing comprised of
Revolving Loans.
"Revolving Credit Commitment" shall mean, with respect to each Lender,
the commitment, if any, of such Lender to make Revolving Loans hereunder as set
forth in Section 2.01(b) or in the Assignment and Acceptance pursuant to which
such Lender assumed its Revolving Credit Commitment, as applicable, as the same
may be reduced from time to time pursuant to Section 2.09 and pursuant to
assignments by such Lender pursuant to Section 9.04.
"Revolving Credit Exposure" shall mean, with respect to any Lender at
any time, the aggregate principal amount at such time of all outstanding
Revolving Loans of such Lender plus the amount at such time of such Lender's
Applicable Percentage of the Letter of Credit Exposure plus the amount at such
time of such Lender's Swingline Exposure.
"Revolving Credit Lender" shall mean a Lender with a Revolving Credit
Commitment.
"Revolving Credit Maturity Date" shall mean the eighth anniversary of
the Closing Date.
"Revolving Loans" shall mean the revolving loans made by the Revolving
Credit Lenders to the Borrower pursuant to Section 2.01(b). Each Revolving Loan
shall be a Eurodollar Revolving Loan or an ABR Revolving Loan.
"S&P" shall mean Standard & Poor's Ratings Services, a division of The
McGraw-Hill Companies, Inc.
"Sale and Lease-Back Transaction" shall have the meaning given such
term in Section 6.03.
"Secured Parties" shall have the meaning given such term in the
Security Agreement.
"Security Agreement" shall mean the Security Agreement, substantially
in the form of Exhibit I, among CommNet, the Borrower, the Subsidiary Guarantors
and the Collateral Agent for the benefit of the Secured Parties.
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27
"Security Documents" shall mean the Security Agreement, the
Intellectual Property Security Agreement, the Pledge Agreement, and each of the
security agreements and other instruments and documents executed and delivered
pursuant to any of the foregoing or pursuant to Section 5.11.
"Standard Prepayment Schedule" shall have the meaning given such term
in Section 2.11(b).
"Statutory Reserves" shall mean a fraction (expressed as a decimal),
the numerator of which is the number one and the denominator of which is the
number one minus the aggregate of the maximum reserve percentages (including any
marginal, special, emergency or supplemental reserves) expressed as a decimal
established by the Board and any other banking authority, domestic or foreign,
to which the Administrative Agent is subject with respect to Eurocurrency
Liabilities (as defined in Regulation D of the Board) or other categories of
liabilities or deposits by reference to which the LIBO Rate is determined. Such
reserve percentages shall include those imposed pursuant to such Regulation D.
Eurodollar Loans shall be deemed to constitute Eurocurrency Liabilities and to
be subject to such reserve requirements without benefit of or credit for
proration, exemptions or offsets which may be available from time to time to any
Lender under such Regulation D. Statutory Reserves shall be adjusted
automatically on and as of the effective date of any change in any reserve
percentage.
"subsidiary" shall mean, with respect to any person (herein referred
to as the "parent"), any corporation, partnership, association or other business
entity (a) of which securities or other ownership interests representing more
than 50% of the equity or more than 50% of the ordinary voting power or more
than 50% of the general partnership interests are, at the time any determination
is being made, directly or indirectly, owned, controlled or held, or (b) which
is, at the time any determination is made, otherwise Controlled, by the parent
or one or more subsidiaries of the parent or by the parent and one or more
subsidiaries of the parent.
"Subsidiary" shall mean each subsidiary of CommNet, including the
Borrower; provided that TVX shall be deemed not to constitute a Subsidiary for
all purposes under the Loan Documents.
"Subsidiary Guarantee Agreement" shall mean the Subsidiary Guarantee
Agreement, substantially in the form of Exhibit J, made by the Subsidiary
Guarantors in favor of the Collateral Agent for the benefit of the Secured
Parties.
"Subsidiary Guarantor" shall mean each direct or indirect domestic
Subsidiary (other than any person that is a Subsidiary but not a Wholly Owned
Subsidiary unless and until such person becomes a Wholly Owned Subsidiary).
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28
"Swingline Exposure" shall mean at any time the aggregate principal
amount of all outstanding Swingline Loans at such time. The Swingline Exposure
of any Revolving Credit Lender at any time shall mean its Applicable Percentage
of the aggregate Swingline Exposure at such time.
"Swingline Lender" shall mean Chase in its capacity as Swingline
Lender hereunder.
"Swingline Loan Commitment" shall mean the commitment of the Swingline
Lender to make Swingline Loans as set forth in Section 2.01(c).
"Swingline Loans" shall mean the swingline loans made by the Swingline
Lender to the Borrower pursuant to Section 2.01(c).
"System" shall mean, as to any person, assets constituting a radio
communications system authorized under the rules for cellular or wireless
communications services (including any license and the network, marketing,
distribution, sales, customer interface and operations functions related
thereto) owned or operated by such person.
"Term Borrowing" shall mean a Borrowing comprised of Term Loans.
"Term Commitments" shall mean the Tranche A Term Loan Commitments, the
Tranche B Term Loan Commitments, the Tranche C Term Loan Commitments and the
Tranche D Term Loan Commitments.
"Term Loans" shall mean the term loans made by the Lenders to the
Borrower pursuant to Section 2.01(a). Each Term Loan shall be a Eurodollar Term
Loan or an ABR Term Loan.
"Total Debt" shall mean, with respect to any person at any time, all
Capital Lease Obligations, Indebtedness for borrowed money and Indebtedness in
respect of the deferred purchase price of property or services of such person at
such time less, in the case of Total Debt of CommNet and the Subsidiaries on a
consolidated basis, the amount on deposit in the Collateral Account at such
time.
"Total Revolving Credit Commitment" shall mean, at any time, the
aggregate amount of the Revolving Credit Commitments, as in effect at such time.
"Total Revolving Credit Exposure" shall mean, at any time, the
aggregate amount of the Lenders' Revolving Credit Exposures at such time.
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29
"Tranche A Maturity Date" shall mean the eighth anniversary of the
Closing Date.
"Tranche A Term Borrowing" shall mean a Borrowing comprised of Tranche
A Term Loans.
"Tranche A Term Loan Commitment" shall mean with respect to each
Lender, the commitment, if any, of such Lender to make Tranche A Term Loans
hereunder as set forth in Section 2.01(a)(i), as the same may be reduced from
time to time pursuant to Section 2.09.
"Tranche A Term Loans" shall mean the term loans made by certain of
the Lenders to the Borrower pursuant to Section 2.01(a)(i).
"Tranche B Maturity Date" shall mean the ninth anniversary of the
Closing Date.
"Tranche B Term Borrowing" shall mean a Borrowing comprised of Tranche
B Term Loans.
"Tranche B Term Loan Commitment" shall mean with respect to each
Lender, the commitment, if any, of such Lender to make Tranche B Term Loans
hereunder as set forth in Section 2.01(a)(ii), as the same may be reduced from
time to time pursuant to Section 2.09.
"Tranche B Term Loans" shall mean the term loans made by certain of
the Lenders to the Borrower pursuant to Section 2.01(a)(ii).
"Tranche C Maturity Date" shall mean the date that is nine and one-
half years after the Closing Date.
"Tranche C Term Borrowing" shall mean a Borrowing comprised of Tranche
C Term Loans.
"Tranche C Term Loan Commitment" shall mean with respect to each
Lender, the commitment, if any, of such Lender to make Tranche C Term Loans
hereunder as set forth in Section 2.01(a)(iii), as the same may be reduced from
time to time pursuant to Section 2.09.
"Tranche C Term Loans" shall mean the term loans made by certain of
the Lenders to the Borrower pursuant to Section 2.01(a)(iii).
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30
"Tranche D Maturity Date" shall mean the tenth anniversary of the
Closing Date.
"Tranche D Term Borrowing" shall mean a Borrowing comprised of Tranche
D Term Loans.
"Tranche D Term Loan Commitment" shall mean with respect to each
Lender, the commitment, if any, of such Lender to make Tranche D Term Loans
hereunder as set forth in Section 2.01(a)(iv), as the same may be reduced from
time to time pursuant to Section 2.09.
"Tranche D Term Loans" shall mean the term loans made by certain of
the Lenders to the Borrower pursuant to Section 2.01(a)(iv).
"Transactions" shall have the meaning given such term in Section 3.02.
"TVX" shall mean TVX, Inc.
"Type", when used in respect of any Loan or Borrowing, shall refer to
the Rate by reference to which interest on such Loan or on the Loans comprising
such Borrowing is determined. For purposes hereof, the term "Rate" shall include
the Adjusted LIBO Rate and the Alternate Base Rate.
"Wholly Owned Subsidiary" means a Subsidiary of CommNet, all of the
Capital Stock of which (other than directors' qualifying shares) is owned by
CommNet or one or more other Wholly Owned Subsidiaries.
"Withdrawal Liability" shall mean liability to a Multiemployer Plan as
a result of a complete or partial withdrawal from such Multiemployer Plan, as
such terms are defined in Part I of Subtitle E of Title IV of ERISA.
"Working Capital" shall mean, with respect to any person at any date
of determination, the Current Assets of such person at such date of
determination minus the Current Liabilities of such person at such date of
determination.
SECTION 1.02. Terms Generally. The definitions in Section 1.01 shall
apply equally to both the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words "include", "includes" and
"including" shall be deemed to be followed by the phrase "without limitation".
All references herein to Articles, Sections, Exhibits and Schedules shall be
deemed references to Articles and Sections of, and Exhibits and Schedules to,
this Agreement unless the context shall otherwise require.
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31
Except as otherwise expressly provided herein, (a) any reference in this
Agreement to any Loan Document shall mean such document as amended, restated,
supplemented or otherwise modified from time to time and (b) all terms of an
accounting or financial nature shall be construed in accordance with GAAP, as in
effect from time to time; provided, however, that for purposes of determining
compliance with the covenants contained in Section 2.12(d) and Article VI all
accounting terms herein shall be interpreted and all accounting determinations
hereunder (in each case, unless otherwise provided for or defined herein) shall
be made in accordance with GAAP as in effect on the date of this Agreement and
applied on a basis consistent with the application used in the financial
statements referred to in Section 3.05; and provided further that if the
Borrower notifies the Administrative Agent that the Borrower wishes to amend any
covenant in Section 2.12(d) or Article VI or any related definition to eliminate
the effect of any change in GAAP occurring after the date of this Agreement on
the operation of such covenant (or if the Administrative Agent notifies the
Borrower that the Required Lenders wish to amend Section 2.12(d) or Article VI
or any related definition for such purpose), then (i) the Borrower and the
Administrative Agent shall negotiate in good faith to agree upon an appropriate
amendment to such covenant and (ii) the Borrower's compliance with such covenant
shall be determined on the basis of GAAP in effect immediately before the
relevant change in GAAP became effective until such covenant is amended in a
manner satisfactory to the Borrower and the Required Lenders.
ARTICLE II. THE CREDITS
SECTION 2.01. Commitments. (a) Subject to the terms and conditions and
relying upon the representations and warranties of CommNet and the Borrower
herein set forth, each Lender agrees, severally and not jointly:
(i) to make a Tranche A Term Loan to the Borrower on the Closing Date
in a principal amount not to exceed the Tranche A Term Loan Commitment, if
any, set forth opposite its name on Schedule 2.01, as the same may be
reduced from time to time pursuant to Section 2.09; and
(ii) to make a Tranche B Term Loan to the Borrower on the Closing Date
in a principal amount not to exceed the Tranche B Term Loan Commitment, if
any, set forth opposite its name on Schedule 2.01, as the same may be
reduced from time to time pursuant to Section 2.09;
(iii) to make a Tranche C Term Loan to the Borrower on the Closing
Date in a principal amount not to exceed the Tranche C Term Loan
Commitment, if any, set forth opposite its name on Schedule 2.01, as the
same may be reduced from time to time pursuant to Section 2.09; and
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32
(iv) to make a Tranche D Term Loan to the Borrower on the Closing Date
in a principal amount not to exceed the Tranche D Term Loan Commitment, if
any, set forth opposite its name on Schedule 2.01, as the same may be
reduced from time to time pursuant to Section 2.09;
provided, however, that the Term Commitments shall be reduced on a pro rata
basis by the amount, if any, by which $239,000,000 exceeds the principal amount
of the Pre-Closing Debt Securities required on the Closing Date to be
repurchased or redeemed.
(b) Subject to the terms and conditions and relying upon the
representations and warranties of CommNet and the Borrower herein set forth,
each Revolving Credit Lender agrees, severally and not jointly, to make
Revolving Loans to the Borrower, at any time and from time to time on or after
the date on which the Term Borrowings are made, and until the earlier of the
Revolving Credit Maturity Date and the termination of the Revolving Credit
Commitment of such Lender in accordance with the terms hereof, in an aggregate
principal amount at any time outstanding that will not result in (A) such
Lender's Revolving Credit Exposure at such time exceeding such Lender's
Applicable Percentage of the Total Revolving Credit Exposure or (B) such
Lender's Revolving Credit Exposure exceeding its Revolving Credit Commitment.
(c) (i) The Swingline Lender hereby agrees, subject to the terms and
conditions and relying upon the representations and warranties of CommNet and
the Borrower herein set forth, and subject to the limitations set forth below
with respect to the maximum amount of Swingline Loans permitted to be
outstanding from time to time, to make Swingline Loans to the Borrower at any
time and from time to time on or after the date on which the Term Borrowings are
made and until the earlier of the Revolving Credit Maturity Date and the
termination of the Revolving Credit Commitments in accordance with the terms
hereof in an aggregate principal amount at any time outstanding that will not
result in (A) the aggregate principal amount of Swingline Loans exceeding the
Swingline Loan Commitment and (B) the Total Revolving Credit Exposure exceeding
the Total Revolving Credit Commitment. Swingline Loans may be made
notwithstanding the fact that such Swingline Loans, when aggregated with the
Swingline Lender's outstanding Revolving Loans and Letter of Credit Exposure,
may exceed the Swingline Lender's Revolving Credit Commitment. The original
amount of the Swingline Loan Commitment is $10,000,000. The Swingline Loan
Commitment shall expire on the date the Revolving Credit Commitments are
terminated and all Swingline Loans and all other amounts owed hereunder with
respect to Swingline Loans shall be paid in full no later than that date. The
Borrower shall give the Swingline Lender telephonic, written or telecopy notice
(in the case of telephonic notice, such notice shall be promptly confirmed in
writing or by telecopy) not later than 12:00 (noon), New York City time, on the
day of a proposed Swingline Loan. Such notice shall be delivered on a Business
Day, shall be irrevocable,
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33
shall refer to this Agreement and shall specify the requested date (which shall
be a Business Day) and amount of such Swingline Loan. The Swingline Lender shall
give the Administrative Agent, which shall in turn give to each Lender, prompt
written or telecopy advice of any notice received from the Borrower pursuant to
this paragraph.
(ii) In no event shall the aggregate principal amount of Swingline
Loans outstanding at any time exceed the Swingline Loan Commitment in effect at
such time. Swingline Loans may only be made as ABR Loans.
(iii) With respect to any Swingline Loans that have not been
voluntarily prepaid by the Borrower, the Swingline Lender (by request to the
Administrative Agent) or Administrative Agent at any time may, and shall at any
time Swingline Loans in an amount not less than $1,000,000 shall have been
outstanding for more than 10 days, on one Business Day's notice, require each
Revolving Credit Lender, including the Swingline Lender, and each Revolving
Credit Lender hereby agrees, subject to the provisions of this Section 2.01(c),
to make a Revolving Loan (which shall be funded as an ABR loan) in an amount
equal to such Lender's Applicable Percentage of the amount of the Swingline
Loans ("Refunded Swingline Loans") outstanding on the date such notice is given
that the Swingline Lender requests the Lenders to make such Revolving Loans
pursuant to this Section 2.01(c)(iii).
(iv) In the case of Revolving Loans made by Lenders other than the
Swingline Lender under the immediately preceding paragraph (iii), each such
Lender shall make the amount of its Revolving Loan available to the
Administrative Agent, in same day funds, at the office of the Administrative
Agent located at 270 Park Avenue, New York, New York, not later than 1:00 p.m.,
New York City time, on the Business Day next succeeding the date such notice is
given. The proceeds of such Revolving Loans shall be immediately delivered to
the Swingline Lender (and not to the Borrower) and applied to repay the Refunded
Swingline Loans. On the day such Revolving Loans are made, the Swingline
Lender's Applicable Percentage of the Refunded Swingline Loans shall be deemed
to be paid with the proceeds of a Revolving Loan made by the Swingline Lender
and such portion of the Swingline Loans deemed to be so paid shall no longer be
outstanding as Swingline Loans and shall be outstanding as Revolving Loans of
Lenders. The Borrower irrevocably authorizes the Administrative Agent and the
Swingline Lender to charge the Borrower's account with the Administrative Agent
(up to the amount available in such account) in order to pay immediately to the
Swingline Lender the amount of such Refunded Swingline Loans to the extent
amounts received from Lenders, including amounts deemed to be received from the
Swingline Lender, are not sufficient to repay in full such Refunded Swingline
Loans. If any portion of any such amount paid (or deemed to be paid) to the
Swingline Lender should be recovered by or on behalf of the Borrower from the
Swingline Lender in bankruptcy, by assignment for the benefit of creditors or
otherwise, the loss of the amount so recovered shall be ratably shared among all
Lenders
<PAGE>
34
in the manner contemplated by Section 2.17. Subject to compliance by the
Swingline Lender with the provisions of subparagraph (vii) below, each Lender's
obligation to make the Revolving Loans referred to in this paragraph shall be
absolute and unconditional and shall not be affected by any circumstance,
including (A) any setoff, counterclaim, recoupment, defense or other right which
such Lender may have against the Swingline Lender, the Borrower or any other
person for any reason whatsoever; (B) the occurrence or continuance of an Event
of Default or a Default; (C) any adverse change in the condition (financial or
otherwise) of CommNet or any of the Subsidiaries; (D) any breach of this
Agreement by any party hereto; or (E) any other circumstance, happening or event
whatsoever, whether or not similar to any of the foregoing. Nothing in this
Section 2.01(c) shall be deemed to relieve any Lender from its obligation to
fulfill its Commitments hereunder or to prejudice any rights that the Borrower
or the Swingline Lender may have against any Lender as a result of any default
by such Lender hereunder.
(v) A copy of each notice given by the Swingline Lender or the
Administrative Agent pursuant to this Section 2.01(c) shall be promptly
delivered by the Swingline Lender to the Administrative Agent and the Borrower.
Upon the making of a Revolving Loan by a Lender pursuant to this Section
2.01(c), the amount so funded shall no longer be owed in respect of Swingline
Loans.
(vi) If as a result of any bankruptcy or similar proceeding Revolving
Loans are not made pursuant to this Section 2.01(c) sufficient to repay any
amounts owed to the Swingline Lender as a result of a nonpayment of outstanding
Swingline Loans, each Lender agrees to purchase, and shall be deemed to have
purchased, a participation in such outstanding Swingline Loans in an amount
equal to its Applicable Percentage of the unpaid amount together with accrued
interest thereon. Upon one Business Day's notice from the Swingline Lender, each
Lender shall deliver to the Swingline Lender an amount equal to its respective
participation in same day funds at the office of the Swingline Lender in New
York, New York. In order to evidence such participation each Lender agrees to
enter into a participation agreement at the request of the Swingline Lender in
form and substance reasonably satisfactory to all parties. In the event any
Lender fails to make available to the Swingline Lender the amount of such
Lender's participation as provided in this Section 2.01(c), the Swingline Lender
shall be entitled to recover such amount on demand from such Lender together
with interest at the customary rate set by the Swingline Lender for correction
of errors among banks in New York City for one Business Day and thereafter at
the Alternate Base Rate plus 1.25%.
(vii) Notwithstanding anything herein to the contrary, the Swingline
Lender shall not make any Swingline Loans at any time the Swingline Lender has
received written notice from the Borrower that the conditions to the making of
such Swingline Loan set forth in Section 4.01 have not been satisfied unless
such conditions shall have been waived in accordance with this Agreement.
<PAGE>
35
(d) Within the limits set forth in paragraphs (b) and (c) above, the
Borrower may borrow, pay or prepay and reborrow Revolving Loans and Swingline
Loans on or after the Closing Date and prior to the Revolving Credit Maturity
Date, subject to the terms, conditions and limitations set forth herein.
Amounts paid or prepaid in respect of Term Loans may not be reborrowed.
SECTION 2.02. Loans. (a) Each Loan shall be made as part of a
Borrowing consisting of Loans made by the Lenders ratably in accordance with
their applicable Commitments; provided, however, that the failure of any Lender
to make any Loan shall not relieve any other Lender of its obligation to lend
hereunder (it being understood, however, that no Lender shall be responsible for
the failure of any other Lender to make any Loan required to be made by such
other Lender). The Loans comprising any Borrowing shall be in an aggregate
principal amount which is (i) at least $1,000,000 (or, in the case of Swingline
Loans, $250,000) or (ii) equal to the remaining available balance of the
applicable Commitments; provided that Revolving Loans used to pay Refunded
Swingline Loans or to reimburse L/C Disbursements may be in the amount of such
Refunded Swingline Loans or L/C Disbursements.
(b) Subject to Sections 2.08 and 2.14, each Borrowing shall be
comprised entirely of ABR Loans or (except in the case of Swingline Loans)
Eurodollar Loans as the Borrower may request pursuant to Section 2.03. Each
Lender may at its option make any Eurodollar Loan by causing any domestic or
foreign branch or Affiliate of such Lender to make such Loan; provided that any
exercise of such option shall not affect the obligation of the Borrower to repay
such Loan in accordance with the terms of this Agreement and such Lender shall
not be entitled to any amounts payable under Section 2.13 or Section 2.19 in
respect of increased costs arising as a result of such exercise. Borrowings of
more than one Type may be outstanding at the same time; provided, however, that
the Borrower shall not be entitled to request any Borrowing that, if made, would
result in more than 20 Eurodollar Borrowings outstanding hereunder at any time.
For purposes of the foregoing, (i) Borrowings having different Interest Periods,
regardless of whether they commence on the same date, shall be considered
separate Borrowings and (ii) Borrowings of different Types, regardless of
whether they commence on the same date and/or have the same interest periods,
shall be considered separate Borrowings.
(c) Subject to paragraph (f) below, each Lender shall make each Loan
to be made by it hereunder on the proposed date thereof by wire transfer to such
account as the Administrative Agent may designate in federal funds not later
than 11:00 a.m., New York City time, and the Administrative Agent shall by 12:00
(noon), New York City time, (a) in the case of any Loan made to reimburse any
L/C Disbursement or to refund any Swingline Loan, apply the amounts so received
to effect such reimbursement or refund as contemplated by Section 2.20 or
Section 2.01(c) and (b) in the case of each Loan the
<PAGE>
36
proceeds of which are to be received by the Borrower, credit the amounts so
received to an account designated by the Borrower in the applicable Borrowing
Request; provided, however, that if a Borrowing shall not occur on such date
because any condition precedent herein specified shall not have been met, the
Administrative Agent shall return the amounts so received to the respective
Lenders.
(d) Unless the Administrative Agent shall have received notice from a
Lender prior to the date of any Borrowing that such Lender will not make
available to the Administrative Agent such Lender's portion of such Borrowing,
the Administrative Agent may assume that such Lender has made such portion
available to the Administrative Agent on the date of such Borrowing in
accordance with paragraph (c) above and may, in reliance upon such assumption,
make available to the Borrower on such date a corresponding amount. If the
Administrative Agent shall have so made funds available then, to the extent that
such Lender shall not have made such portion available to the Administrative
Agent, such Lender and the Borrower severally agree to repay to the
Administrative Agent forthwith on demand such corresponding amount together with
interest thereon, for each day from the date such amount is made available to
the Borrower until the date such amount is repaid to the Administrative Agent,
at (i) in the case of the Borrower, the interest rate applicable at the time to
the Loans comprising such Borrowing and (ii) in the case of such Lender, a rate
determined by the Administrative Agent to represent its cost of overnight or
short-term funds (which determination shall be conclusive absent manifest
error). If such Lender shall repay to the Administrative Agent such
corresponding amount, such amount shall constitute such Lender's Loan as part of
such Borrowing for purposes of this Agreement.
(e) Notwithstanding any other provision of this Agreement, the
Borrower shall not be entitled to request any Revolving Credit Borrowing if the
Interest Period requested with respect thereto would end after the Revolving
Credit Maturity Date.
(f) The Borrower may refinance all or any part of a Revolving Credit
Borrowing with another Revolving Credit Borrowing. Any Revolving Credit
Borrowing or part thereof so refinanced shall be deemed to be repaid or prepaid
in accordance with the applicable provisions of this Agreement with the proceeds
of the new Revolving Credit Borrowing and the proceeds of such new Borrowing, to
the extent they do not exceed the principal amount of the Borrowing being
refinanced, shall not be paid by the Lenders to the Administrative Agent or by
the Administrative Agent to the Borrower pursuant to paragraph (c) above.
SECTION 2.03. Borrowing Procedure. In order to request a Borrowing,
the Borrower shall hand deliver or telecopy to the Administrative Agent a duly
completed Borrowing Request substantially in the form of Exhibit C (a) in the
case of a Eurodollar Borrowing, not later than 12:00 (noon), New York City time,
three Business Days before a proposed Borrowing, and (b) in the case of an ABR
Borrowing, not later than
<PAGE>
37
12:00 noon, New York City time, one Business Day before a proposed Borrowing;
provided, however, that Borrowing Requests with respect to Borrowings to be made
on the Closing Date may, at the discretion of the Administrative Agent, be
delivered later than the times specified above. Each Borrowing Request shall be
irrevocable, shall be signed by or on behalf of the Borrower and shall specify
the following information: (i) whether the Borrowing then being requested is to
be a Term Borrowing or a Revolving Credit Borrowing (and, in the case of a Term
Borrowing, the Commitments pursuant to which the Loans comprising such Borrowing
are to be made), and whether such Borrowing is to be a Eurodollar Borrowing or
an ABR Borrowing; (ii) the date of such Borrowing (which shall be a Business
Day), (iii) the amount of such Borrowing; and (iv) if such Borrowing is to be a
Eurodollar Borrowing, the Interest Period with respect thereto; provided,
however, that, notwithstanding any contrary specification in any Borrowing
Request, each requested Borrowing shall comply with the requirements set forth
in Section 2.02. If no election as to the Type of Borrowing is specified in any
such notice, then the requested Borrowing shall be an ABR Borrowing. If no
Interest Period with respect to any Eurodollar Borrowing is specified in any
such notice, then the Borrower shall be deemed to have selected an Interest
Period of one month's duration. The Administrative Agent shall promptly (and in
any event on the same day that the Administrative Agent receives such notice, if
received by 1:00 p.m., New York City time, on such day) advise the applicable
Lenders of any notice given pursuant to this Section 2.03 and of each Lender's
portion of the requested Borrowing.
If the Borrower shall not have delivered a Borrowing Request in
accordance with this Section 2.03 prior to the end of the Interest Period then
in effect for any Revolving Credit Borrowing requesting that such Borrowing be
refinanced, then the Borrower shall (unless the Borrower has notified the
Administrative Agent, not less than three Business Days prior to the end of such
Interest Period, that such Borrowing is to be repaid at the end of such Interest
Period) be deemed to have delivered a Borrowing Request requesting that such
Borrowing be refinanced with a new Borrowing of equivalent amount, and such new
Borrowing shall be an ABR Borrowing.
SECTION 2.04. Evidence of Debt; Repayment of Loans. (a) The
outstanding principal balance of each Loan shall be payable (i) in the case of a
Revolving Loan or a Swingline Loan, on the Revolving Credit Maturity Date and
(ii) in the case of a Term Loan, as provided in Section 2.11. Each Loan shall
bear interest from the date of the first Borrowing hereunder on the outstanding
principal balance thereof as set forth in Section 2.06.
(b) Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing the indebtedness to such Lender resulting from
each Loan made by such Lender from time to time, including the amounts of
principal and interest payable and paid to such Lender from time to time under
this Agreement.
<PAGE>
38
(c) The Administrative Agent shall maintain accounts in which it will
record (i) the amount of each Loan made hereunder, the Type of each Loan made
and the Interest Period applicable thereto, (ii) the amount of any principal or
interest due and payable or to become due and payable from the Borrower to each
Lender hereunder and (iii) the amount of any sum received by the Administrative
Agent hereunder from the Borrower and each Lender's share thereof.
(d) The entries made in the accounts maintained pursuant to paragraph
(b) and (c) of this Section 2.04 shall be prima facie evidence of the existence
and amounts of the obligations therein recorded; provided, however, that the
failure of any Lender or the Administrative Agent to maintain such accounts or
any error therein shall not in any manner affect the obligations of the Borrower
to repay the Loans in accordance with their terms.
(e) Notwithstanding any other provision of this Agreement, in the
event any Lender shall request and receive a Note as provided in Section 9.04(h)
or otherwise, the interests represented by that Note shall at all times
(including after any assignment of all or part of such interests pursuant to
Section 9.04) be represented by one or more Notes payable to the payee named
therein or its registered assigns.
SECTION 2.05. Fees. (a) The Borrower agrees to pay to each Lender,
through the Administrative Agent, on the Closing Date, on the last day of March,
June, September and December in each year (other than any such day occurring
prior to the date of the Merger), and on the date on which the Revolving Credit
Commitments of all the Lenders shall be terminated as provided herein (but in no
event prior to the date of the Merger), a commitment fee (a "Commitment Fee") on
the average daily unused amount of the aggregate Commitments of such Lender
during the preceding quarter (or other period commencing with the date hereof or
ending with the date on which all of the Commitments of such Lender shall have
terminated) at a rate per annum equal to the Applicable Margin for Commitment
Fees in effect from time to time. All Commitment Fees shall be computed on the
basis of the actual number of days elapsed in a year of 365 days. For the
purpose of calculating any Lender's Commitment Fee, the outstanding Swingline
Loans during the period for which such Lender's Commitment Fee is calculated
shall be deemed to be zero. The Commitment Fee due to each Lender shall
commence to accrue on the date hereof and shall cease to accrue on the date on
which all of the Commitments of such Lender shall have terminated as provided
herein.
(b) The Borrower agrees to pay from time to time (i) to each
Revolving Credit Lender, through the Administrative Agent, on the last day of
March, June, September and December of each year, and on the date on which the
Revolving Credit Commitments of all the Lenders shall be terminated as provided
herein, a fee (an "L/C
<PAGE>
39
Participation Fee") on such Lender's Applicable Percentage of the average daily
aggregate Letter of Credit Exposure (excluding in each case the portion thereof
attributable to unreimbursed Letter of Credit Disbursements), during the
preceding quarter (or shorter period commencing with the date hereof or ending
with the Revolving Credit Maturity Date or the date on which the Revolving
Credit Commitments shall be terminated) at a rate per annum equal to the
Applicable Margin for L/C Participation Fees in effect from time to time and
(ii) to the Fronting Bank, a per annum percentage separately agreed upon by the
Borrower and the Fronting Bank on the aggregate stated amount of outstanding
Letters of Credit, payable in arrears on the last day of March, June, September,
and December in each year and on the date on which the Revolving Credit
Commitments of all the Lenders shall be terminated as provided herein, plus, in
connection with the issuance, amendment or transfer of any such Letter of Credit
or any Letter of Credit Disbursement thereunder, the Fronting Bank's customary
documentary and processing charges (collectively, the "Fronting Bank Fees"). All
L/C Participation Fees and Fronting Bank Fees that are payable on a per annum
basis shall be computed on the basis of the actual number of days elapsed in a
year of 360 days.
(c) The Borrower agrees to pay to the Administrative Agent, for its
own account, the fees set forth in the Fee Letter dated May 23, 1997, between
the Investor and the Administrative Agent at the times and in the amounts set
forth therein (the "Administrative Agent Fees").
(d) All Fees shall be paid on the dates due, in immediately available
funds, to the Administrative Agent for distribution, if and as appropriate,
among the Lenders, except that the Fronting Bank Fees shall be paid directly to
the Fronting Bank. Once paid, none of the Fees shall be refundable under any
circumstances.
SECTION 2.06. Interest on Loans. (a) Subject to the provisions of
Section 2.07, the Loans comprising each ABR Borrowing shall bear interest
(computed on the basis of the actual number of days elapsed over a year of 365
or 366 days, as the case may be, when determined by reference to the Prime Rate
and over a year of 360 days at all other times) at a rate per annum equal to the
Alternate Base Rate plus, in the case of (i) Tranche A Term Loans, Revolving
Loans or Swingline Loans, the Applicable Margin for ABR Loans in effect from
time to time, (ii) Tranche B Term Loans, 1.75%, (iii) Tranche C Term Loans,
2.00%, or (iv) Tranche D Term Loans, 2.50%.
(b) Subject to the provisions of Section 2.07, the Loans comprising
each Eurodollar Borrowing shall bear interest (computed on the basis of the
actual number of days elapsed over a year of 360 days) at a rate per annum equal
to the Adjusted LIBO Rate for the Interest Period in effect for such Borrowing
plus, in the case of (i) Tranche A Term Loans and Revolving Loans, the
Applicable Margin for Eurodollar Loans in effect
<PAGE>
40
from time to time, (ii) Tranche B Term Loans, 2.75%, (iii) Tranche C Term Loans,
3.00% or (iv) Tranche D Term Loans, 3.50%.
(c) Interest on each Loan shall be payable on the Interest Payment
Dates applicable to such Loan except as otherwise provided in this Agreement.
The applicable Alternate Base Rate or Adjusted LIBO Rate for each Interest
Period or day within an Interest Period, as the case may be, shall be determined
by the Administrative Agent, and such determination shall be conclusive absent
manifest error. The Administrative Agent shall give the Borrower prompt notice
of each such determination.
SECTION 2.07. Default Interest. If the Borrower shall default in the
payment of the principal of or interest on any Loan or any other amount becoming
due hereunder, by acceleration or otherwise, the Borrower shall on demand from
time to time pay interest, to the extent permitted by law, on such defaulted
amount for the period beginning on the date of such default up to (but not
including) the date of actual payment (after as well as before judgment) at a
rate per annum (the "Default Rate") (computed on the basis of the actual number
of days elapsed over a year of 360 days) equal to (a) in the case of (i) overdue
Loans, overdue interest thereon, overdue Commitment Fees, overdue L/C
Participation Fees or other overdue amounts owing in respect of Loans or other
obligations (or the related Commitments) under a particular Tranche or in
respect of the Revolving Credit Commitments or (ii) other overdue amounts owing
to a Lender participating in no more than one of the Tranches or the Revolving
Credit Commitments, the rate that would otherwise be applicable to ABR Loans
under such Tranche or to ABR Revolving Loans, as applicable, pursuant to Section
2.06 plus 2.00% or (b) in the case of any other overdue amount, the Alternate
Base Rate plus the Applicable Margin for ABR Revolving Loans plus 2.00%.
SECTION 2.08. Alternate Rate of Interest. In the event, and on each
occasion, that on the day two Business Days prior to the commencement of any
Interest Period for a Eurodollar Borrowing the Administrative Agent shall have
determined that dollar deposits in the principal amounts of the Loans comprising
such Borrowing are not generally available in the London interbank market, or
that the rates at which such dollar deposits are being offered will not
adequately and fairly reflect the cost to any Lender of making or maintaining
its Eurodollar Loan during such Interest Period, or that reasonable means do not
exist for ascertaining the Adjusted LIBO Rate, the Administrative Agent shall,
as soon as practicable thereafter, give written or telecopy notice of such
determination to the Borrower and the Lenders. In the event of any such
determination, until the Administrative Agent shall have advised the Borrower
and the Lenders that the circumstances giving rise to such notice no longer
exist, any request by the Borrower for a Eurodollar Borrowing pursuant to
Section 2.03 or 2.10 shall be deemed to be a request for an ABR Borrowing. Each
determination by the Administrative Agent hereunder shall be conclusive absent
manifest error.
<PAGE>
41
SECTION 2.09. Termination and Reduction of Commitments. (a) The
Term Loan Commitments shall be automatically and permanently terminated at 5:00
p.m., New York City time, on the Closing Date. The Revolving Credit Commitments
shall be automatically and permanently terminated at 5:00 p.m., New York City
time, on the Revolving Credit Maturity Date. The Commitments will be
automatically and permanently terminated at 5:00 p.m., New York City time, on
December 31, 1997 (or such later date to which the term of the Recapitalization
Agreement may be extended as a result of the failure to obtain requisite
regulatory consents for the Recapitalization, but in no event later than May 27,
1998), if the Closing Date has not occurred by that time.
(b) Upon at least three Business Days prior irrevocable written or
telecopy notice to the Administrative Agent, the Borrower may at any time in
whole permanently terminate, or from time to time in part permanently reduce,
any of the Term Commitments or the Revolving Credit Commitments; provided,
however, that (i) each partial reduction of any Commitments shall be in a
minimum amount of $1,000,000 (or, if less, the remaining amount of the
applicable Commitments) and (ii) in the case of any reduction of Revolving
Credit Commitments, after giving effect to such reduction, the Total Revolving
Credit Commitment shall not be reduced to an amount that is less than the Total
Revolving Credit Exposure at the time.
(c) The Revolving Credit Commitments shall be automatically and
permanently reduced by an amount equal to any amount applied under paragraph (c)
or (d) of Section 2.12 to prepay Revolving Credit Borrowings (or that would have
been required to be so applied if Revolving Credit Borrowings equal to such
amount had been outstanding).
(d) Each reduction in the Commitments hereunder shall be made ratably
among the Lenders in accordance with their respective applicable Commitments.
The Borrower shall pay to the Administrative Agent for the account of the
Lenders, on the date of each termination or reduction, the Commitment Fees and,
to the extent applicable, L/C Participation Fees on the amount of the
Commitments so terminated or reduced accrued to but excluding the date of such
termination or reduction.
<PAGE>
42
SECTION 2.10. Conversion and Continuation of Term Borrowings. The
Borrower shall have the right at any time upon prior irrevocable notice to the
Administrative Agent (a) not later than 12:00 (noon), New York City time, one
Business Day prior to conversion, to convert any Eurodollar Term Borrowing into
an ABR Term Borrowing, (b) not later than 10:00 a.m., New York City time, three
Business Days prior to conversion or continuation, to convert any ABR Term
Borrowing into a Eurodollar Term Borrowing or to continue any Eurodollar Term
Borrowing as a Eurodollar Term Borrowing for an additional Interest Period, and
(c) not later than 10:00 a.m., New York City time, three Business Days prior to
conversion, to convert the Interest Period with respect to any Eurodollar Term
Borrowing to another permissible Interest Period, subject in each case to the
following:
(i) each conversion or continuation shall be made pro rata among the
relevant Lenders in accordance with the respective principal amounts of the
Loans comprising the converted or continued Term Borrowing;
(ii) if less than all the outstanding principal amount of any Term
Borrowing shall be converted or continued, then each resulting Term
Borrowing shall satisfy the limitations specified in Sections 2.02(a) and
(b) regarding the principal amount and maximum number of Borrowings of the
relevant Type;
(iii) each conversion shall be effected by each Lender by recording
for the account of such Lender the new Term Loan of such Lender resulting
from such conversion and reducing the Term Loan (or portion thereof) of
such Lender being converted by an equivalent principal amount; accrued
interest on a Term Loan (or portion thereof) being converted shall be paid
by the Borrower at the time of conversion;
(iv) if any Eurodollar Term Borrowing is converted at a time other
than the end of the Interest Period applicable thereto, the Borrower shall
pay, upon demand, any amounts due to the Lenders pursuant to Section 2.15;
(v) any portion of a Term Borrowing maturing or required to be repaid
in less than one month may not be converted into or continued as a
Eurodollar Term Borrowing;
(vi) any portion of a Eurodollar Term Borrowing that cannot be
converted into or continued as a Eurodollar Term Borrowing by reason of the
immediately preceding clause shall be automatically converted at the end of
the Interest Period in effect for such Borrowing into an ABR Term
Borrowing; and
<PAGE>
43
(vii) no Interest Period may be selected for any Eurodollar Term
Borrowing that would end later than an Installment Date occurring on or
after the first day of such Interest Period if, after giving effect to such
selection, the aggregate outstanding amount of (A) the Eurodollar Term
Borrowings made pursuant to the same Commitments with Interest Periods
ending on or prior to such Installment Date and (B) the ABR Term Borrowings
made pursuant to the same Commitments would not be at least equal to the
principal amount of Term Borrowings to be paid on such Installment Date.
Each notice pursuant to this Section 2.10 shall be irrevocable and
shall refer to this Agreement and specify (i) the identity and amount of the
Term Borrowing that the Borrower requests be converted or continued, (ii)
whether such Term Borrowing is to be converted to or continued as a Eurodollar
Borrowing or an ABR Borrowing, (iii) if such notice requests a conversion, the
date of such conversion (which shall be a Business Day) and (iv) if such Term
Borrowing is to be converted to or continued as a Eurodollar Borrowing, the
Interest Period with respect thereto. If no Interest Period is specified in any
such notice with respect to any conversion to or continuation as a Eurodollar
Borrowing, the Borrower shall be deemed to have selected an Interest Period of
one month's duration. The Administrative Agent shall advise the other Lenders
of any notice given pursuant to this Section 2.10 and of each Lender's portion
of any converted or continued Term Borrowing. If the Borrower shall not have
given notice in accordance with this Section 2.10 to continue any Term Borrowing
into a subsequent Interest Period (and shall not otherwise have given notice in
accordance with this Section 2.10 to convert such Term Borrowing), such Term
Borrowing shall, at the end of the Interest Period applicable thereto (unless
repaid pursuant to the terms hereof), automatically be converted into an ABR
Borrowing.
SECTION 2.11. Repayment of Term Borrowings. (a) The Term
Borrowings shall be payable as to principal in the amounts and on the dates set
forth below (each such date being called an "Installment Date"):
<TABLE>
<CAPTION>
Tranche A Tranche B Tranche C Tranche D
Term Loan Term Loan Term Loan Term Loan
Date Amount Amount Amount Amount
<S> <C> <C> <C> <C>
December 31, 1999 $1,250,000 $25,000 $25,000 $25,000
March 31, 2000 $1,250,000 $25,000 $25,000 $25,000
June 30, 2000 $1,250,000 $25,000 $25,000 $25,000
September 30, 2000 $1,250,000 $25,000 $25,000 $25,000
December 31, 2000 $5,000,000 $25,000 $25,000 $25,000
March 31, 2001 $5,000,000 $25,000 $25,000 $25,000
June 30, 2001 $5,000,000 $25,000 $25,000 $25,000
</TABLE>
<PAGE>
44
<TABLE>
<S> <C> <C> <C> <C>
September 30, 2001 $5,000,000 $25,000 $25,000 $25,000
December 31, 2001 $8,750,000 $25,000 $25,000 $25,000
March 31, 2002 $8,750,000 $25,000 $25,000 $25,000
June 30, 2002 $8,750,000 $25,000 $25,000 $25,000
September 30, 2002 $8,750,000 $25,000 $25,000 $25,000
December 31, 2002 $10,000,000 $25,000 $25,000 $25,000
March 31, 2003 $10,000,000 $25,000 $25,000 $25,000
June 30, 2003 $10,000,000 $25,000 $25,000 $25,000
September 30, 2003 $10,000,000 $25,000 $25,000 $25,000
December 31, 2003 $12,500,000 $325,000 $25,000 $25,000
March 31, 2004 $12,500,000 $325,000 $25,000 $25,000
June 30, 2004 $12,500,000 $325,000 $25,000 $25,000
September 30, 2004 $12,500,000 $325,000 $25,000 $25,000
December 31, 2004 $12,500,000 $325,000 $375,000 $375,000
March 31, 2005 $12,500,000 $325,000 $375,000 $375,000
June 30, 2005 $12,500,000 $325,000 $375,000 $375,000
September 30, 2005 $12,500,000 $325,000 $375,000 $375,000
December 31, 2005 $0 $325,000 $375,000 $375,000
March 31, 2006 $0 $325,000 $375,000 $375,000
June 30, 2006 $0 $325,000 $375,000 $375,000
September 30, 2006 $0 $96,025,000 $375,000 $375,000
December 31, 2006 $0 $0 $375,000 $375,000
March 31, 2007 $0 $0 $96,125,000 $375,000
June 30, 2007 $0 $0 $0 $375,000
September 30, 2007 $0 $0 $0 $275,375,000
</TABLE>
(b) (i) Each prepayment of principal of the Term Borrowings pursuant
to Section 2.12 shall be applied to (w) the Tranche A Term Borrowings, (x) the
Tranche B Term Borrowings, (y) the Tranche C Term Borrowings and (z) the Tranche
D Term Borrowings ratably in accordance with the respective amounts thereof and
shall reduce scheduled payments and reductions required under paragraph (a)
above after the date of such prepayment or reduction in the scheduled order of
maturity (the entire preceding content of this subsection 2.11(b) being referred
to as the "Standard Prepayment Schedule"); provided that (A) the first
$50,000,000 (hereinafter referred to as the "Initial Payment") in the aggregate
of (1) Mandatory Prepayments on account of Excess Cash Flow and (2) Optional
Prepayments (other than Optional Prepayments which are designated by the
Borrower as subject to application under the Standard Prepayment Schedule) shall
be applied, first to prepay Tranche A Borrowings in full in scheduled order of
maturity and, second, after the Tranche A Borrowings have been paid in full, in
<PAGE>
45
accordance with the Standard Prepayment Schedule; (B) Lenders of Tranche B Term
Borrowings, Tranche C Term Borrowings and Tranche D Borrowings may (1) decline
any Mandatory Prepayment described in Section 2.12(c) or (d) or (2) if the
Borrower shall in the applicable notice of prepayment give the Lenders of
Tranche B Loans, Tranche C Loans and Tranche D Loans the right to decline an
Optional Prepayment, to decline such Optional Prepayment, and in such event, the
amount of any prepayment which is so declined shall be applied to prepay Tranche
A Term Borrowings and such Tranche B Term Borrowings, Tranche C Term Borrowings
and Tranche D Term Borrowings as are held by Lenders who did not decline such
prepayment, ratably in accordance with the respective amounts thereof (and,
after the Tranche A Term Borrowings and such Tranche B Term Borrowings, Tranche
C Term Borrowings and Tranche D Term Borrowings shall have been paid in full,
the Tranche B Term Borrowings, Tranche C Term Borrowings and Tranche D Term
Borrowings of such declining Lenders, ratably in accordance with the respective
amounts thereof), and shall reduce scheduled prepayments and reductions required
under paragraph (a) above after the date of such prepayment or reduction in the
scheduled order of maturity; and (C) the Borrower shall be entitled, at its
election, to require that any Optional Prepayment be used solely to prepay
Tranche D Term Borrowings, and in such event, such Optional Prepayment shall be
used to reduce scheduled prepayments of the Tranche D Borrowings required under
paragraph (a) above after the date of such prepayment in the scheduled order of
maturity; provided further that, in order to so prepay, the Borrower shall
notify the Administrative Agent as provided in Sections 2.12(a), (c) and (d),
which notice shall comply with the provisions of Section 2.12(e). In the case
of an Optional Prepayment, if the notice delivered by the Borrower shall fail to
specify an Election, then such Optional Prepayment shall be applied to Term
Borrowings according to the Standard Prepayment Schedule.
(ii) If a prepayment is a Mandatory Prepayment and is either (x) both
(A) on account of Excess Cash Flow and (B) not part of the Initial Payment or
(y) on account of Net Proceeds, then (1) the Administrative Agent shall within
two Business Days after receiving the notice from the Borrower specified in
Sections 2.12(a), (c) and (d) and complying with Section 2.12(e), notify by
written or telecopy notice (or telephone notice promptly confirmed by written or
telecopy notice) the Lenders of Tranche B Term Borrowings, Tranche C Term
Borrowings and Tranche D Term Borrowings of the Nature of the Prepayment and the
date and amount of the prepayment and (2) each such Lender of Tranche B Term
Borrowings, Tranche C Term Borrowings and Tranche D Term Borrowings shall, if it
wishes to decline such prepayment, so notify the Administrative Agent prior to
the date two Business Days before the date of such prepayment by written or
telecopy notice (or telephone notice promptly confirmed by written or telecopy
notice) (if a Lender shall fail to so timely notify the Administrative Agent,
such Lender shall be deemed to have affirmatively elected to accept such
prepayment).
<PAGE>
46
(iii) If a prepayment is an Optional Prepayment that does not
constitute part of the Initial Payment and the Borrower has granted Lenders of
Tranche B Term Borrowings, Tranche C Term Borrowings and Tranche D Term
Borrowings the option to decline such prepayment, then (1) the Administrative
Agent shall within two Business Days after receiving the notice from the
Borrower specified in Sections 2.12 (a), (c), and (d) and complying with Section
2.12(e), notify by written or telecopy notice (or telephone notice promptly
confirmed by written or telecopy notice) the Lenders of Tranche B Term
Borrowings, Tranche C Term Borrowings and Tranche D Term Borrowings of the
Nature of the Prepayment and the amount of the prepayment and (2) each such
Lender of Tranche B Term Borrowings, Tranche C Term Borrowings and Tranche D
Term Borrowings shall, if it wishes to decline such prepayment, so notify the
Administrative Agent prior to the date two Business Days before the date of such
prepayment by written or telecopy notice (or telephone notice promptly confirmed
by written or telecopy notice) (if a Lender shall fail to so timely notify the
Administrative Agent, such Lender shall be deemed to have affirmatively elected
to accept such prepayment).
(c) To the extent not previously paid or reduced, (i) all Tranche A
Term Borrowings shall be due and payable on the Tranche A Maturity Date, (ii)
all Tranche B Term Borrowings shall be due and payable on the Tranche B Maturity
Date, (iii) all Tranche C Term Borrowings shall be due and payable on the
Tranche C Maturity Date, and (iv) all Tranche D Term Borrowings shall be due and
payable on the Tranche D Maturity Date. Each repayment of Term Borrowings
pursuant to this Section 2.11 shall be subject to Section 2.15 but shall
otherwise be without premium or penalty. Each payment of Borrowings pursuant to
this Section 2.11 shall be accompanied by accrued interest on the principal
amount paid to but excluding the date of payment.
SECTION 2.12. Prepayment. (a) The Borrower shall have the right at
any time and from time to time to prepay any Borrowing, in whole or in part,
upon at least three (or, in the case of prepayments of Term Borrowings which are
the subject of Section 2.11(b)(iii), seven) Business Days prior written or
telecopy notice (or telephone notice promptly confirmed by written or telecopy
notice) to the Administrative Agent (each such prepayment, an "Optional
Prepayment"); provided, however, that (i) each partial prepayment (other than of
a Swingline Loan) shall be in an amount which is at least $1,000,000 (or, if
less, the aggregate outstanding amount under the applicable Tranche or, in the
case of Swingline Loans, at least $100,000) and (ii) each prepayment of Term
Borrowings shall be applied as set forth in paragraph (b) of Section 2.11.
(b) In the event of any termination of the Revolving Credit
Commitments, the Borrower shall on the date of such termination repay or prepay
all its outstanding Swingline Loans and Revolving Credit Borrowings, reduce the
Letter of Credit Exposure to zero and cause all Letters of Credit to be canceled
and returned to the Fronting Bank. In the event of any partial reduction of the
Revolving Credit Commitments, then (i) at or
<PAGE>
47
prior to the effective date of such reduction, the Administrative Agent shall
notify the Borrower, the Swingline Lender, the Fronting Bank and the Revolving
Credit Lenders of the Total Revolving Credit Exposure and (ii) if after giving
effect to such reduction the Total Revolving Credit Exposure would exceed the
Total Revolving Credit Commitment, then the Borrower shall, on the date of such
reduction, as applicable, repay or prepay Swingline Loans and other Revolving
Credit Borrowings or reduce the Letter of Credit Exposure, in an aggregate
amount sufficient to eliminate any such excess. Notwithstanding the foregoing,
on the date of any termination or reduction of the Revolving Credit Commitments
pursuant to Section 2.09, the Borrower shall pay or prepay so much of the
Revolving Credit Borrowings and Swingline Loans as shall be necessary in order
that the Total Revolving Credit Exposure shall not exceed the Total Revolving
Credit Commitment after giving effect to such termination or reduction.
(c) The Borrower shall apply an amount equal to all Net Proceeds
within five Business Days following receipt thereof by CommNet or any Subsidiary
to prepay Term Borrowings (and, after the Term Borrowings have been paid in
full, to reduce permanently, repay or prepay, as the case may be, Swingline
Loans and other Revolving Borrowings, the Letter of Credit Exposure, the Letter
of Credit Commitment and the Revolving Credit Commitments).
(d) Not later than 90 days after the end of each fiscal year of
CommNet, commencing with the fiscal year ending September 30, 1999, the Borrower
shall calculate Excess Cash Flow for such fiscal year and shall apply a
percentage of such Excess Cash Flow equal to the Excess Cash Flow Percentage for
such fiscal year to prepay Term Borrowings and, after the Term Borrowings have
been paid in full, to reduce permanently the Revolving Credit Commitments and to
reduce, repay or prepay, as the case may be, Swingline Loans and other
Revolving Borrowings and the Letter of Credit Exposure. Not later than the date
on which the Borrower is required to deliver financial statements with respect
to the end of each fiscal year under Section 5.04(a), the Borrower will deliver
to the Administrative Agent a certificate signed by a Financial Officer of the
Borrower setting forth the amount, if any, of Excess Cash Flow for such fiscal
year and the calculation thereof in reasonable detail.
(e) Each notice of prepayment or reduction pursuant to this Section
2.12 shall specify (i) whether the prepayment shall be a Mandatory Prepayment or
an Optional Prepayment, (ii) in the case of a Mandatory Prepayment, whether such
prepayment is on account of Excess Cash Flow or Net Proceeds (the information
required by the immediately preceding clauses (i) and (ii) shall be defined as
the "Nature of the Prepayment") and if such prepayment is part of the Initial
Payment, (iii) in the case of an Optional Prepayment, (x) where such Optional
Prepayment is part of the Initial Payment, whether the Borrower has elected to
apply such prepayment solely to Tranche A Term Loans or to apply such prepayment
to Tranche A Term Loans, Tranche B Term Loans,
<PAGE>
48
Tranche C Term Loans and Tranche D Term Loans, or (y) where such Optional
Prepayment is not part of the Initial Payment, whether the Borrower has elected
to apply such Optional Prepayment solely to Tranche D Term Loans (in each case
of (x) and (y), such election required by this clause (iii) shall be referred to
as an "Election"), (iv) the prepayment date and (v) the principal amount of each
Borrowing (or portion thereof) to be prepaid, shall be irrevocable and shall
commit the Borrower to prepay such Borrowing by the amount stated therein on the
date stated therein. All prepayments and reductions under this Section 2.12
shall be subject to Section 2.15 but otherwise without premium or penalty. All
prepayments under this Section 2.12 shall be accompanied by accrued interest on
the principal amount being prepaid to but excluding the date of payment.
(f) In the event the amount of any prepayment required to be made
above shall exceed the aggregate principal amount of the ABR Loans outstanding
under the Tranches required to be prepaid (the amount of any such excess being
called the "Excess Amount"), the Borrower shall have the right, in lieu of
making such prepayment in full, to prepay all the outstanding applicable ABR
Loans and to deposit an amount equal to the Excess Amount with the Collateral
Agent in a cash collateral account maintained (pursuant to documentation
reasonably satisfactory to the Administrative Agent) by and in the sole dominion
and control of the Collateral Agent. Any amounts so deposited shall be held by
the Collateral Agent as collateral for the Obligations and applied to the
prepayment of the applicable Eurodollar Loans at the ends of the current
Interest Periods applicable thereto. On any Business Day on which (i) collected
amounts remain on deposit in or to the credit of such cash collateral account
after giving effect to the payments made on such day pursuant to this Section
2.12(f) and (ii) the Borrower shall have delivered to the Collateral Agent a
written request or a telephonic request (which shall be promptly confirmed in
writing) that such remaining collected amounts be invested in the Permitted
Investments specified in such request, the Collateral Agent shall use its
reasonable efforts to invest such remaining collected amounts in such Permitted
Investments; provided, however, that the Collateral Agent shall have continuous
dominion and full control over any such investments (and over any interest that
accrues thereon) to the same extent that it has dominion and control over such
cash collateral account and no Permitted Investment shall mature after the end
of the Interest Period for which it is to be applied. The Borrower shall not
have the right to withdraw any amount from such cash collateral account until
the applicable Eurodollar Loans and accrued interest thereon are paid in full or
if a Default or Event of Default then exists or would result.
SECTION 2.13. Reserve Requirements; Change in Circumstances. (a)
Notwithstanding any other provision herein, if after the date of this Agreement
any change in applicable law or regulation or in the interpretation or
administration thereof by any Governmental Authority charged with the
interpretation or administration thereof (whether or not having the force of
law) shall change the basis of taxation of payments to any Lender or the
Fronting Bank in respect of any Letter of Credit or of the principal of or
<PAGE>
49
interest on any Eurodollar Loan made by such Lender or any Fees or other amounts
payable hereunder (other than changes in respect of (i) taxes imposed on the
overall net income of such Lender or the Fronting Bank by the jurisdiction in
which such Lender or the Fronting Bank has its principal office or by any
political subdivision or taxing authority therein and (ii) any Taxes described
in Section 2.19), or shall impose, modify or deem applicable any reserve,
special deposit or similar requirement against assets or deposits with or for
the account of or credit extended by or, in the case of the Letters of Credit,
participated in by such Lender (except any such reserve requirement which is
reflected in the Adjusted LIBO Rate) or the Fronting Bank or shall impose on
such Lender or the Fronting Bank or the interbank eurodollar market any other
condition affecting this Agreement, any Letter of Credit (or any participation
with respect thereto), the Letter of Credit Exposure, the Letter of Credit
Commitment or any Eurodollar Loans of such Lender or the Fronting Bank, and the
result of any of the foregoing shall be to increase the cost to such Lender or
the Fronting Bank of making or maintaining its Letter of Credit Exposure, its
Letter of Credit Commitment or any Eurodollar Loan (or, in the case of the
Fronting Bank, of making any payment under any Letter of Credit) or to reduce
the amount of any sum received or receivable by such Lender or the Fronting Bank
hereunder (whether of principal, interest or otherwise) by an amount deemed by
such Lender or the Fronting Bank to be material, then from time to time the
Borrower will pay to such Lender or the Fronting Bank upon demand such
additional amount or amounts as will compensate such Lender or the Fronting Bank
for such additional costs incurred or reduction suffered.
(b) If any Lender or the Fronting Bank shall have determined that the
adoption after the date hereof of any law, rule, regulation or guideline
regarding capital adequacy, or any change after the date hereof in any of the
foregoing or in the interpretation or administration of any of the foregoing by
any Governmental Authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by any Lender (or any
lending office of such Lender) or the Fronting Bank or any Lender's or the
Fronting Bank's holding company with any request or directive regarding capital
adequacy (whether or not having the force of law) made or issued after the date
hereof by any such authority, central bank or comparable agency, has or would
have the effect of reducing the rate of return on such Lender's or the Fronting
Bank's capital or on the capital of such Lender's or the Fronting Bank's holding
company, if any, as a consequence of this Agreement or its obligations pursuant
hereto to a level below that which such Lender or the Fronting Bank or such
Lender's or the Fronting Bank's holding company would have achieved but for such
adoption, change or compliance (taking into consideration such Lender's or the
Fronting Bank's policies and the policies of such Lender's or the Fronting
Bank's holding company with respect to capital adequacy) by an amount deemed by
such Lender or the Fronting Bank to be material, then from time to time the
Borrower shall pay to such Lender or the Fronting Bank upon demand such
additional amount or amounts as will compensate such Lender or
<PAGE>
50
the Fronting Bank or such Lender's or the Fronting Bank's holding company for
any such reduction suffered.
(c) A certificate of each Lender or the Fronting Bank setting forth
such amount or amounts as shall be necessary to compensate such Lender or the
Fronting Bank or its holding company as specified in paragraph (a) or (b) above,
as the case may be, shall be delivered to the Borrower through the
Administrative Agent and shall be conclusive absent manifest error. The
Borrower shall pay each Lender or the Fronting Bank the amount shown as due on
any such certificate delivered by it within 10 days after its receipt of the
same.
(d) In the event any Lender or the Fronting Bank delivers a notice
pursuant to paragraph (e) below, the Borrower may require, at the Borrower's
expense and subject to Section 2.15, such Lender or the Fronting Bank to assign,
at par plus accrued interest and fees, without recourse (in accordance with
Section 9.04) all its interests, rights and obligations hereunder (including, in
the case of a Lender, all of its Commitments and the Loans at the time owing to
it and participations in Letters of Credit held by it and its obligations to
acquire such participations) to a financial institution specified by the
Borrower; provided that (i) such assignment shall not conflict with or violate
any law, rule or regulation or order of any court or other Governmental
Authority, (ii) the Borrower shall have received the written consent of the
Administrative Agent (which consent shall not be unreasonably withheld) and the
Fronting Bank to such assignment, (iii) the Borrower shall have paid to the
assigning Lender or the Fronting Bank all monies accrued and owing hereunder to
it (including pursuant to this Section 2.13) and (iv) in the case of a required
assignment by the Fronting Bank, all outstanding Letters of Credit issued by the
Fronting Bank shall be canceled and returned to the Fronting Bank.
(e) Promptly after any Lender or the Fronting Bank has determined, in
its sole judgment, that it will make a request for increased compensation
pursuant to this Section 2.13, such Lender or the Fronting Bank will notify the
Borrower thereof. Failure on the part of any Lender or the Fronting Bank so to
notify the Borrower or to demand compensation for any increased costs or
reduction in amounts received or receivable or reduction in return on capital
with respect to any period shall not constitute a waiver of such Lender's or the
Fronting Bank's right to demand compensation with respect to such period or any
other period; provided that the Borrower shall not be under any obligation to
compensate any Lender or the Fronting Bank under paragraph (b) above with
respect to increased costs or reductions with respect to any period prior to the
date that is six months prior to such request if such Lender or the Fronting
Bank knew or could reasonably have been expected to be aware of the
circumstances giving rise to such increased costs or reductions and of the fact
that such circumstances would in fact result in a claim for increased
compensation by reason of such increased costs or reductions;
<PAGE>
51
provided further that the foregoing limitation shall not apply to any increased
costs or reductions arising out of the retroactive application of any law,
regulation, rule, guideline or directive as aforesaid within such six month
period. The protection of this Section 2.13 shall be available to each Lender
and the Fronting Bank regardless of any possible contention as to the invalidity
or inapplicability of the law, rule, regulation, guideline or other change or
condition which shall have occurred or been imposed.
SECTION 2.14. Change in Legality. (a) Notwithstanding any other
provision herein, if the adoption of or any change in any law or regulation or
in the interpretation thereof by any Governmental Authority charged with the
administration or interpretation thereof shall make it unlawful for any Lender
to make or maintain any Eurodollar Loan or to give effect to its obligations as
contemplated hereby with respect to any Eurodollar Loan, then, by written notice
to the Borrower and to the Administrative Agent, such Lender may:
(i) declare that Eurodollar Loans will not thereafter be made by such
Lender hereunder, whereupon any request by the Borrower for a Eurodollar
Borrowing shall, as to such Lender only, be deemed a request for an ABR
Loan unless such declaration shall be subsequently withdrawn; and
(ii) require that all outstanding Eurodollar Loans made by it be
converted to ABR Loans, in which event all such Eurodollar Loans shall be
automatically converted to ABR Loans as of the effective date of such
notice as provided in paragraph (b) below.
In the event any Lender shall exercise its rights under subparagraphs (i) and
(ii) above, all payments and prepayments of principal which would otherwise have
been applied to repay the Eurodollar Loans that would have been made by such
Lender or the converted Eurodollar Loans of such Lender shall instead be applied
to repay the ABR Loans made by such Lender in lieu of, or resulting from the
conversion of, such Eurodollar Loans.
(b) For purposes of this Section 2.14, a notice to the Borrower by
any Lender shall be effective as to each Eurodollar Loan, if lawful, on the last
day of the Interest Period currently applicable to such Eurodollar Loan; in all
other cases such notice shall be effective on the date of receipt by the
Borrower.
SECTION 2.15. Indemnity. The Borrower shall indemnify each Lender
against any loss or expense (other than taxes) that such Lender may sustain or
incur as a consequence of (a) any failure by the Borrower to fulfill on the date
of any Borrowing or proposed Borrowing hereunder the applicable conditions set
forth in Article IV, (b) any failure by the Borrower to borrow or to refinance,
convert or continue any Loan hereunder after irrevocable notice of such
Borrowing, refinancing, conversion or
<PAGE>
52
continuation has been given pursuant to Section 2.03 or 2.10, (c) any payment,
prepayment or conversion of a Eurodollar Loan required by any other provision of
this Agreement or otherwise made or deemed made on a date other than the last
day of the Interest Period applicable thereto, (d) any default in payment or
prepayment of the principal amount of any Loan or any part thereof or interest
accrued thereon, as and when due and payable (at the due date thereof, whether
by scheduled maturity, acceleration, irrevocable notice of prepayment or
otherwise) or (e) the occurrence of any Event of Default, including, in each
such case, any loss or reasonable expense sustained or incurred or to be
sustained or incurred in liquidating or employing deposits from third parties
acquired to effect or maintain such Loan or any part thereof as a Eurodollar
Loan. Such loss or reasonable expense shall exclude loss of margin hereunder but
shall include an amount equal to the excess, if any, as reasonably determined by
such Lender, of (i) its cost of obtaining the funds for the Loan being paid,
prepaid, converted or not borrowed, converted or continued (assumed to be the
Adjusted LIBO Rate applicable thereto) for the period from the date of such
payment, prepayment, conversion or failure to borrow, convert or continue to the
last day of the Interest Period for such Loan (or, in the case of a failure to
borrow, convert or continue, the Interest Period for such Loan which would have
commenced on the date of such failure) over (ii) the amount of interest (as
reasonably determined by such Lender) that would be realized by such Lender in
reemploying the funds so paid, prepaid, converted or not borrowed, converted or
continued for such period or Interest Period, as the case may be. A certificate
of any Lender setting forth any amount or amounts which such Lender is entitled
to receive pursuant to this Section 2.15 (and the reasons therefor) shall be
delivered to the Borrower through the Administrative Agent and shall be
conclusive absent manifest error.
SECTION 2.16. Pro Rata Treatment. Except as required under Section
2.14 and subject to Section 2.11, each Borrowing, each payment or prepayment of
principal of any Borrowing, each payment of interest on the Loans, each
reimbursement of Letter of Credit Disbursements, each payment of the Commitment
Fees or L/C Participation Fees, each reduction of the Term Commitments or the
Revolving Credit Commitments and each refinancing of any Borrowing with,
conversion of any Borrowing to or continuation of any Borrowing as a Borrowing
of any Type shall be allocated (except in the case of Swingline Loans) pro rata
among the Lenders in accordance with their respective applicable Commitments
(or, if such Commitments shall have expired or been terminated, in accordance
with the respective principal amounts of their applicable outstanding Loans or
participations in Letter of Credit Disbursements, as applicable). Each Lender
agrees that in computing such Lender's portion of any Borrowing or Letter of
Credit Disbursement, the Administrative Agent may, in its discretion, round each
Lender's percentage of such Borrowing or Letter of Credit Disbursement, computed
in accordance with Section 2.01, to the next higher or lower whole dollar
amount.
<PAGE>
53
SECTION 2.17. Sharing of Setoffs. Each Lender agrees that if it
shall, through the exercise of a right of banker's lien, setoff or counterclaim
against the Borrower, or pursuant to a secured claim under Section 506 of Title
11 of the United States Code or other security or interest arising from, or in
lieu of, such secured claim, received by such Lender under any applicable
bankruptcy, insolvency or other similar law or otherwise, or by any other means,
obtain payment (voluntary or involuntary) in respect of any Loan or Letter of
Credit Disbursement as a result of which the unpaid principal portion of its
Loans or Letter of Credit Disbursements shall be proportionately less than the
unpaid principal portion of the Loans or Letter of Credit Disbursements of any
other Lender, it shall be deemed simultaneously to have purchased from such
other Lender at face value, and shall promptly pay to such other Lender the
purchase price for, an interest in the Loans or Letter of Credit Disbursements
of such other Lender, so that the aggregate unpaid principal amount of the Loans
or Letter of Credit Disbursements and interests in Loans or Letter of Credit
Disbursements held by each such Lender shall be in the same proportion to the
aggregate unpaid principal amount of all Loans or Letter of Credit Disbursements
then outstanding as the principal amount of its Loans or Letter of Credit
Disbursements prior to such exercise of banker's lien, setoff or counterclaim or
other event was to the principal amount of all such Loans or Letter of Credit
Disbursements outstanding prior to such exercise of banker's lien, setoff or
counterclaim or other event; provided, however, that, if any such purchase or
purchases or adjustments shall be made pursuant to this Section 2.17 and the
payment giving rise thereto shall thereafter be recovered, such purchase or
purchases or adjustments shall be rescinded to the extent of such recovery and
the purchase price or prices or adjustment restored without interest. The
Borrower expressly consents to the foregoing arrangements and agrees that any
Lender holding an interest in a Loan or Letter of Credit Disbursement deemed to
have been so purchased may exercise any and all rights of banker's lien, setoff
or counterclaim with respect to any and all moneys owing by the Borrower to such
Lender by reason thereof as fully as if such Lender had made a Loan directly to,
or Letter of Credit Disbursement directly for the benefit of, the Borrower in
the amount of such interest.
SECTION 2.18. Payments. (a) The Borrower shall make each payment
without setoff or counterclaim (including principal of or interest on any
Borrowing or Letter of Credit Disbursement or any Fees or other amounts)
required to be made by it hereunder and under any other Loan Document not later
than 12:00 noon, New York City time, on the date when due in Dollars to the
Administrative Agent at its offices at 270 Park Avenue, New York, New York,
Attention of Loan and Agency Services Group, in immediately available funds, for
credit to The Chase Manhattan Bank, ABA Number 021000021, Account Number
323514685. The Administrative Agent shall distribute such payments to the
Lenders and the Fronting Bank promptly upon receipt in like funds as received.
<PAGE>
54
(b) Whenever any payment (including principal of or interest on any
Borrowing or Letter of Credit Disbursement or any Fees or other amounts)
hereunder or under any other Loan Document shall become due, or otherwise would
occur, on a day that is not a Business Day, such payment may be made on the next
succeeding Business Day (except in the case of payment of principal of a
Eurodollar Borrowing if the effect of such extension would be to extend such
payment into the next succeeding month, in which event such payment shall be due
on the immediately preceding Business Day), and such extension of time shall in
such case be included in the computation of interest or Fees, if applicable.
SECTION 2.19. Taxes. (a) Any and all payments by the Borrower to
the Administrative Agent, the Fronting Bank or the Lenders hereunder or under
the other Loan Documents shall be made, in accordance with Section 2.18, free
and clear of and without deduction for any and all present or future taxes,
levies, imposts, deductions, charges or withholdings, and all liabilities with
respect thereto, excluding (i) in the case of each Lender, the Fronting Bank and
the Administrative Agent, taxes that would not be imposed but for a connection
between such Lender, the Fronting Bank or the Administrative Agent (as the case
may be) and the jurisdiction imposing such tax, other than a connection arising
solely by virtue of the activities of such Lender, the Fronting Bank or the
Administrative Agent (as the case may be) pursuant to or in respect of this
Agreement or under any other Loan Document, including entering into, lending
money or extending credit pursuant to, receiving payments under, or enforcing,
this Agreement or any other Loan Document, and (ii) in the case of each Lender,
the Fronting Bank and the Administrative Agent, any United States withholding
taxes payable with respect to any payments made hereunder or under the other
Loan Documents under laws (including any statute, treaty, ruling, determination
or regulation) in effect on the Initial Date (as hereinafter defined) applicable
to such Lender, the Fronting Bank or the Administrative Agent, as the case may
be, but not excluding any United States withholding taxes payable solely as a
result of any change in such laws occurring after the Initial Date (all such
non-excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "Taxes"). For purposes of this
Section 2.19, the term "Initial Date" shall mean (i) in the case of the
Administrative Agent, the Fronting Bank or any Lender, the date on which such
person became a party to this Agreement and (ii) in the case of any assignment,
including any assignment by a Lender or the Fronting Bank to a new lending
office, the date of such assignment. If any Taxes shall be required by law to
be deducted from or in respect of any sum payable hereunder or under any other
Loan Document to any Lender, the Fronting Bank or the Administrative Agent, (i)
the sum payable by the Borrower shall be increased as may be necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section 2.19) such Lender, the Fronting Bank
or the Administrative Agent, as the case may be, 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
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Borrower shall pay the full amount deducted to the relevant taxation authority
or other authority in accordance with applicable law. The Borrower shall not,
however, be required to pay any amounts pursuant to clause (i) of the preceding
sentence to any Lender, the Fronting Bank or the Administrative Agent not
organized under the laws of the United States of America or a state thereof if
such Lender, the Fronting Bank or the Administrative Agent fails to comply with
the requirements of paragraph (f) and paragraph (g) of this Section 2.19.
(b) In addition, the Borrower agrees to pay any present or future
stamp or documentary taxes or any other excise or property taxes, charges or
similar levies which arise from the execution, delivery or registration of, or
otherwise with respect to, this Agreement or any other Loan Document
(hereinafter referred to as "Other Taxes").
(c) The Borrower will indemnify each Lender, the Fronting Bank and
the Administrative Agent 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 2.19) paid by such Lender, the Fronting Bank or the Administrative
Agent, as the case may be, and any liability (including penalties, interest and
expenses including reasonable attorney's fees and expenses) arising therefrom or
with respect thereto whether or not such Taxes or Other Taxes were correctly or
legally asserted. A certificate as to the amount of such payment or liability
prepared by a Lender (or Transferee), the Fronting Bank or the Administrative
Agent, absent manifest error, shall be final, conclusive and binding for all
purposes; provided that if the Borrower reasonably believes that such Taxes were
not correctly or legally asserted, such Lender, the Fronting Bank or the
Administrative Agent, as the case may be shall use reasonable efforts to
cooperate with the Borrower to obtain a refund of such Taxes or Other Taxes.
Such indemnification shall be made within 10 days after the date any Lender, the
Fronting Bank or the Administrative Agent, as the case may be, makes written
demand therefor. If a Lender, the Fronting Bank or the Administrative Agent
shall become aware that it is entitled to receive a refund in respect of Taxes
or Other Taxes, it shall promptly notify the Borrower of the availability of
such refund and shall, within 30 days after receipt of a request by the
Borrower, pursue or timely claim such refund at the Borrower's expense. If any
Lender, the Fronting Bank or the Administrative Agent receives a refund in
respect of any Taxes or Other Taxes for which such Lender, the Fronting Bank or
the Administrative Agent has received payment from the Borrower hereunder, it
shall promptly repay such refund (plus any interest received) to the Borrower
(but only to the extent of indemnity payments made, or additional amounts paid,
by the Borrower under this Section 2.19 with respect to the Taxes or Other Taxes
giving rise to such refund); provided that the Borrower, upon the request of
such Lender, the Fronting Bank or the Administrative Agent, agrees to return
such refund (plus any penalties, interest or other charges required to be paid)
to such Lender, the Fronting Bank or the Administrative Agent in the event such
Lender, the Fronting Bank or the Administrative Agent is required to repay such
refund to the relevant taxing authority.
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56
(d) Within 30 days after the date of any payment of Taxes or Other
Taxes withheld by the Borrower in respect of any payment to any Lender, the
Fronting Bank or the Administrative Agent, the Borrower will furnish to the
Administrative Agent, at its address referred to in Section 9.01, the original
or a certified copy of a receipt evidencing payment thereof.
(e) Without prejudice to the survival of any other agreement
contained herein, the agreements and obligations contained in this Section 2.19
shall survive the payment in full of principal and interest hereunder, the
expiration of the Letters of Credit and the termination of the Commitments.
(f) Each Lender, the Fronting Bank and the Administrative Agent that
is not organized under the laws of the United States of America or a state
thereof agrees that at least 10 days prior to the first Interest Payment Date
following the Initial Date in respect of the Fronting Bank or such Lender, it
will (i) deliver to the Borrower and the Administrative Agent (if appropriate)
two duly completed copies of either United States Internal Revenue Service Form
1001 or 4224 or successor applicable form, as the case may be, certifying in
each case that the Fronting Bank, such Lender or the Administrative Agent, as
the case may be, is entitled to receive payments under this Agreement and the
other Loan Documents payable to it without deduction or withholding of any
United States Federal income taxes and backup withholding taxes or is entitled
to receive such payments at a reduced rate pursuant to a treaty provision or
(ii) in the case of a Lender that is not a "bank" within the meaning of Section
881(c)(3) of the Code, (A) deliver to the Borrower and the Administrative Agent
(I) a statement under penalties of perjury that such Lender (w) is not a "bank"
under Section 881(c)(3)(A) of the Code, is not subject to regulatory or other
legal requirements as a bank in any jurisdiction, and has not been treated as a
bank for purposes of any tax, securities law or other filing or submission made
to any Governmental Authority, any application made to a rating agency or
qualification for any exemption from tax, securities law or other legal
requirements, (x) is not a 10-percent shareholder within the meaning of Section
881(c)(3)(B) of the Code, (y) is not a controlled foreign corporation receiving
interest from a related person within the meaning of Section 881(c)(3)(c) of the
Code and (z) is not a "conduit entity" within the meaning of U.S. Treasury
Regulations Section 1.881-3 and (II) an Internal Revenue Service Form W-8; (B)
deliver to the Borrower and the Administrative Agent a further copy of said Form
W-8, or any successor applicable form or other manner of certification on or
before the date that any such Form W-8 expires or becomes obsolete or after the
occurrence of any event requiring a change in the most recent form previously
delivered by such Lender; and (C) obtain such extensions of time for filing and
complete such forms or certifications as may be reasonably requested by the
Borrower or the Administrative Agent; unless in any such case an event
(including any change in treaty, law or regulation) has occurred prior to the
date on which any such delivery would otherwise be required
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57
which renders any such forms inapplicable or which would prevent such Lender
from duly completing and delivering any such form with respect to it and such
Lender so advises the Borrower and the Administrative Agent. In the case of a
Lender providing a Form 1001 or 4224, such Lender also agrees to provide a Form
W-8 or W-9, certifying that it is entitled to an exemption from United States
backup withholding tax. Each Person that shall become a participant pursuant to
Section 9.04 shall, upon the effectiveness of the related transfer, be required
to provide all the forms and statements required pursuant to this paragraph (f)
to the Lender from which the related participation shall have been purchased.
Unless the Borrower and the Administrative Agent have received forms,
certificates and other documents required by this Section 2.19(f) indicating
that payments hereunder or under this Agreement, any other Loan Document or the
Letters of Credit to or for the Fronting Bank or Lender not incorporated under
the laws of the United States or a state thereof are not subject to United
States withholding tax or are subject to such tax at a rate reduced by an
applicable tax treaty, the Borrower or the Administrative Agent shall withhold
such taxes from such payments at the applicable statutory rate.
(g) The Fronting Bank and any Lender claiming any additional amounts
payable pursuant to this Section 2.19 shall use reasonable efforts (consistent
with legal and regulatory restrictions) to file any certificate or document
requested in writing by the Borrower or to change the jurisdiction of its
applicable lending office, if the making of such a filing or change would avoid
the need for or reduce the amount of any such additional amounts which would be
payable or may thereafter accrue and would not, in the sole determination of the
Fronting Bank or such Lender, be otherwise disadvantageous to the Fronting Bank
or such Lender.
(h) Nothing contained in this Section 2.19 shall require any Lender
or the Fronting Bank or the Administrative Agent to make available any of its
tax returns (or any other information that it deems to be confidential or
proprietary).
SECTION 2.20. Letters of Credit. (a) General. The Borrower may
request the issuance of a Letter of Credit, in a form reasonably acceptable to
the Administrative Agent and the Fronting Bank, appropriately completed, for the
account of the Borrower at any time and from time to time while the Revolving
Credit Commitments remain in effect. This Section 2.20(a) shall not be
construed to impose an obligation upon the Fronting Bank to issue any Letter of
Credit that is inconsistent with the terms and conditions of this Agreement or
that would result in the aggregate stated amount of the outstanding Letters of
Credit at any time exceeding $10,000,000.
(b) Notice of Issuance, Amendment, Renewal, Extension; Certain
Conditions. In order to request the issuance of a Letter of Credit (or to
request that the Fronting Bank amend, renew or extend an existing Letter of
Credit), the Borrower shall hand deliver or telecopy to the Fronting Bank and
the Administrative Agent (reasonably in advance of the requested date of
issuance, amendment, renewal or extension) a notice
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requesting the issuance of such Letter of Credit, or identifying any Letter of
Credit to be amended, renewed or extended, and specifying the date of issuance,
amendment, renewal or extension, the date on which such Letter of Credit is to
expire (which shall comply with paragraph (c) below), the amount of such Letter
of Credit to be issued, amended, renewed or extended, the name and address of
the beneficiary thereof and such other information as shall be necessary to
prepare such Letter of Credit or accomplish such issuance, amendment, renewal or
extension. Following receipt of such notice and prior to the issuance,
amendment, renewal or extension of any Letter of Credit, the Administrative
Agent shall notify the Borrower and the Fronting Bank of the amount of the Total
Revolving Credit Exposure after giving effect to (i) the issuance, amendment,
renewal or extension of such Letter of Credit, (ii) the issuance or expiration
of any other Letter of Credit that is to be issued or will expire prior to the
requested date of issuance of such Letter of Credit and (iii) the borrowing or
repayment of any Revolving Loans and Swingline Loans that (based upon notices
delivered to the Administrative Agent by the Borrower) are to be borrowed or
repaid prior to the requested date of issuance, amendment, renewal or extension
of such Letter of Credit. Each Letter of Credit shall be issued, amended,
renewed or extended subject to the terms and conditions and relying on the
representations and warranties of CommNet and the Borrower set forth herein, and
in any case only if, and upon issuance, amendment, renewal or extension of each
Letter of Credit the Borrower shall be deemed to represent and warrant that,
after giving effect to such issuance, amendment, renewal or extension, the Total
Revolving Credit Exposure shall not exceed the Total Revolving Credit Commitment
in effect at such time. Any Letter of Credit may be issued by the Fronting Bank
through its affiliate, Chase, and in the event of any such issuance, all
references herein and in the other Loan Documents to the term "Fronting Bank"
shall, with respect to such Letter of Credit, be deemed to refer to Chase, in
such capacity, as the context shall require.
(c) Expiration Date. Each Letter of Credit shall expire at the close
of business on the earlier of the date one year after the date of the issuance
of such Letter of Credit and the date that is five Business Days prior to the
Revolving Credit Maturity Date, unless such Letter of Credit expires by its
terms on an earlier date; provided that a Letter of Credit shall not be issued
(nor shall a Letter of Credit be amended, renewed or extended) that would result
in the Total Revolving Credit Exposure exceeding the Total Revolving Credit
Commitment in effect at such time. Compliance with the foregoing proviso shall
be determined based upon the assumption that (i) each Letter of Credit remains
outstanding and undrawn in accordance with its terms until its expiration date
(taking into account any rights of renewal or extension that do not require
written notice by or consent of the Fronting Bank, in its sole discretion, in
order to effect such renewal or extension) and (ii) the Revolving Credit
Commitments will not be reduced pursuant to Section 2.09.
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(d) Participations. By the issuance of a Letter of Credit and
without any further action on the part of the Fronting Bank or the Revolving
Credit Lenders, the Fronting Bank will grant to each Revolving Credit Lender,
and each such Lender will acquire from the Fronting Bank, a participation in
such Letter of Credit equal to such Revolving Credit Lender's Applicable
Percentage from time to time of the aggregate amount available to be drawn under
such Letter of Credit, effective upon the issuance of such Letter of Credit. In
consideration and in furtherance of the foregoing, each Revolving Credit Lender
hereby absolutely and unconditionally agrees to pay to the Administrative Agent,
for the account of the Fronting Bank, such Revolving Credit Lender's Applicable
Percentage of each Letter of Credit Disbursement made by the Fronting Bank under
such Letter of Credit and not reimbursed by the Borrower (or, if applicable,
another party pursuant to its obligations under any other Loan Document) on or
before the next Business Day as provided in paragraph (e) below. Each Revolving
Credit Lender acknowledges and agrees that its obligation to acquire
participations pursuant to this paragraph in respect of Letters of Credit is
absolute and unconditional and shall not be affected by any circumstance
whatsoever, including the occurrence and continuance of a Default or an Event of
Default, and that each such payment shall be made without any offset, abatement,
withholding or reduction whatsoever.
(e) Reimbursement. If the Fronting Bank shall make any Letter of
Credit Disbursement in respect of a Letter of Credit, the Borrower shall pay to
the Administrative Agent, on or before the Business Day immediately following
the date of such Letter of Credit Disbursement, an amount equal to such Letter
of Credit Disbursement. If the Borrower shall fail to pay any amount required
to be paid under this paragraph on or before such Business Day (or to cause
payment thereof when due pursuant to a Revolving Credit Borrowing), then (i)
such unpaid amount shall bear interest, for each day from and including such
Business Day to but excluding the date of payment, at a rate per annum equal to
the interest rate applicable to overdue ABR Loans that are Revolving Loans
pursuant to Section 2.07(b) (provided that the 2.00% per annum margin referred
to therein shall not be applicable until the first Business Day after the
Borrower receives notice from the Administrative Agent that such Letter of
Credit Disbursement has been or will be made), (ii) the Administrative Agent
shall notify the Fronting Bank and the Revolving Credit Lenders thereof, (iii)
each Revolving Credit Lender shall comply with its obligation under paragraph
(d) above by wire transfer of immediately available funds, in the same manner as
provided in Section 2.02(c) with respect to Loans made by such Revolving Credit
Lender (and Section 2.02(d) shall apply, mutatis mutandis, to the payment
obligations of the Revolving Credit Lenders) and (iv) the Administrative Agent
shall promptly pay to the Fronting Bank amounts so received by it from the
Revolving Credit Lenders. The Administrative Agent shall promptly pay to the
Fronting Bank on a pro rata basis with respect to outstanding Letter of Credit
Disbursements any amounts received by it from the Borrower pursuant to this
paragraph prior to the time that any Revolving Credit Lender makes any payment
pursuant
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to paragraph (d) above; any such amounts received by the Administrative Agent
thereafter shall be promptly remitted by the Administrative Agent to the
Revolving Credit Lenders that shall have made such payments and to the Fronting
Bank, as their interests may appear.
(f) Obligations Absolute. The Borrower's obligations to reimburse
Letter of Credit Disbursements as provided in paragraph (e) above shall be
absolute, unconditional and irrevocable, and shall be performed strictly in
accordance with the terms of this Agreement, under any and all circumstances
whatsoever, and irrespective of:
(i) any lack of validity or enforceability of any Letter of Credit
or any Loan Document, or any term or provision therein;
(ii) any amendment or waiver of or any consent to departure from all
or any of the provisions of any Letter of Credit or any Loan Document;
(iii) the existence of any claim, setoff, defense or other right that
the Borrower, any other party guaranteeing, or otherwise obligated with,
the Borrower, any Subsidiary or other Affiliate thereof or any other person
may at any time have against the beneficiary under any Letter of Credit,
the Fronting Bank, the Administrative Agent or any Lender (other than the
defense of payment in accordance with the terms of this Agreement or a
defense based on the gross negligence or wilful misconduct of the Fronting
Bank) or any other person, whether in connection with this Agreement, any
other Loan Document or any other related or unrelated agreement or
transaction;
(iv) any draft or other document presented under a Letter of Credit
proving to be forged, fraudulent, invalid or insufficient in any respect or
any statement therein being untrue or inaccurate in any respect; provided
that payment by the Fronting Bank shall not have constituted gross
negligence or wilful misconduct of the Fronting Bank;
(v) payment by the Fronting Bank under a Letter of Credit against
presentation of a draft or other document that does not comply with the
terms of such Letter of Credit; provided that payment by the Fronting Bank
shall not have constituted gross negligence or wilful misconduct of the
Fronting Bank; and
(vi) any other act or omission to act or delay of any kind of the
Fronting Bank, the Lenders, the Administrative Agent or any other person or
any other event or circumstance whatsoever, whether or not similar to any
of the foregoing, that might, but for the provisions of this Section
2.20(c), constitute a legal or equitable discharge of the Borrower's
obligations hereunder; provided that such act
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or omission shall not have constituted gross negligence or wilful
misconduct of the Fronting Bank.
(g) Disbursement Procedures. The Fronting Bank shall, promptly
following its receipt thereof, examine all documents purporting to represent a
demand for payment under a Letter of Credit. The Fronting Bank shall as
promptly as possible give telephonic notification, confirmed by telecopy, to the
Administrative Agent and the Borrower of such demand for payment and whether the
Fronting Bank has made or will make a Letter of Credit Disbursement thereunder;
provided that any failure to give or delay in giving such notice shall not
relieve the Borrower of its obligation to reimburse the Fronting Bank and the
Lenders with respect to any such Letter of Credit Disbursement. The
Administrative Agent shall promptly give each Revolving Credit Lender notice
thereof.
(h) Interim Interest. If the Fronting Bank shall make any Letter of
Credit Disbursement in respect of a Letter of Credit, then, unless the Borrower
shall reimburse such Letter of Credit Disbursement in full on such date, the
unpaid amount shall bear interest for the account of the Fronting Bank, for each
day from and including the date of such Letter of Credit Disbursement, to but
excluding the earlier of the date of payment or the date on which interest shall
commence to accrue thereon as provided in subparagraph (e) above, at the rate
per annum that would apply to such amount if such amount were an ABR Loan.
(i) Liability of the Fronting Bank. Without limiting the generality
of paragraph (f) above, it is expressly understood and agreed that the absolute
and unconditional obligation of the Borrower hereunder to reimburse Letter of
Credit Disbursements will not be excused by the gross negligence or wilful
misconduct of the Fronting Bank, except as otherwise expressly provided in said
paragraph (f). However, nothing in this Agreement shall be construed to excuse
the Fronting Bank from liability to the Borrower to the extent of any direct
damages (as opposed to consequential damages, claims in respect of which are
hereby waived by the Borrower to the extent permitted by applicable law)
suffered by the Borrower that are caused by the Fronting Bank's gross negligence
or wilful misconduct in determining whether drafts and other documents presented
under a Letter of Credit comply with the terms thereof. It is understood that
the Fronting Bank may accept documents that appear on their face to be in order,
without responsibility for further investigation in making any payment under any
Letter of Credit and, except as otherwise expressly provided in said paragraph
(f), (i) the Fronting Bank's exclusive reliance on the documents presented to it
under such Letter of Credit as to any and all matters set forth therein,
including reliance on the amount of any draft presented under such Letter of
Credit, whether or not the amount due to the beneficiary thereunder equals the
amount of such draft and whether or not any document presented pursuant to such
Letter of Credit proves to be insufficient in any respect, if such document on
its face
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appears to be in order, and whether or not any other statement or any other
document presented pursuant to such Letter of Credit proves to be forged or
invalid or any statement therein proves to be inaccurate or untrue in any
respect whatsoever and (ii) any noncompliance in any immaterial respect of the
documents presented under such Letter of Credit with the terms thereof shall, in
each case, be deemed not to constitute wilful misconduct or gross negligence of
the Fronting Bank.
(j) Resignation or Removal of the Fronting Bank. The Fronting Bank
may resign at any time by giving 180 days prior written notice to the
Administrative Agent, the Lenders and the Borrower, and may be removed at any
time by the Borrower by notice to the Fronting Bank, the Administrative Agent
and the Lenders, subject in each case to the appointment by the Borrower of a
replacement Fronting Bank reasonably satisfactory to the Administrative Agent;
provided that the Fronting Bank may not resign as to any Letter of Credit
previously issued by it. Subject to the next succeeding sentences of this
paragraph (j), upon the acceptance of any appointment as the Fronting Bank
hereunder by a successor Fronting Bank (which shall be a Lender), such successor
shall succeed to and become vested with all the interests, rights and
obligations of the retiring Fronting Bank and the retiring Fronting Bank shall
be discharged from its obligations to issue additional Letters of Credit
hereunder. At the time such removal or resignation shall become effective, the
Borrower shall pay all accrued and unpaid fees of the Fronting Bank pursuant to
Section 2.05(b)(ii). The acceptance of any appointment as the Fronting Bank
hereunder by a successor Fronting Bank shall be evidenced by an agreement
entered into by such successor, in a form satisfactory to the Borrower and the
Administrative Agent, and, from and after the effective date of such agreement,
(i) such successor Fronting Bank shall have all the rights and obligations of
the previous Fronting Bank under this Agreement and the other Loan Documents and
(ii) references herein and in the other Loan Documents to the term "Fronting
Bank" shall be deemed to refer to such successor or to any previous Fronting
Bank, or to such successor and all previous Fronting Banks, as the context shall
require. After the resignation or removal of the Fronting Bank hereunder, the
retiring Fronting Bank shall remain a party hereto and shall continue to have
all the rights and obligations of a Fronting Bank under this Agreement and the
other Loan Documents with respect to Letters of Credit issued by it prior to
such resignation or removal (including the right to receive accrued and unpaid
fees pursuant to Section 2.05(b)(ii)), but shall not be required to issue
additional Letters of Credit.
(k) Cash Collateralization. If any Event of Default shall occur and
be continuing, the Borrower shall, on the Business Day it receives notice from
the Administrative Agent or the Required Lenders (or, if the maturity of the
Loans has been accelerated, Revolving Credit Lenders holding participations in
outstanding Letters of Credit representing greater than 50% of the aggregate
undrawn amount of all outstanding Letters of Credit) of such Event of Default
and the amount to be deposited, deposit in an account with the Collateral Agent,
for the benefit of the Lenders, an amount in cash equal
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to the Letter of Credit Exposure as of such date. Such deposit shall be held by
the Collateral Agent as collateral for the payment and performance of the
Obligations. The Collateral Agent shall have exclusive dominion and control,
including the exclusive right of withdrawal, over such account. Other than any
interest earned on the investment of such deposits in Permitted Investments,
which investments shall be made at the option and sole discretion of the
Collateral Agent (provided that the Collateral Agent shall use reasonable
efforts to make such investments), such deposits shall not bear interest.
Interest or profits, if any, on such investments shall accumulate in such
account. Moneys in such account shall (i) automatically be applied by the
Administrative Agent to reimburse the Fronting Bank for Letter of Credit
Disbursements for which it has not been reimbursed, (ii) be held for the
satisfaction of the reimbursement obligations of the Borrower for the Letter of
Credit Exposure at such time and (iii) if the maturity of the Loans has been
accelerated (but subject to the consent of Revolving Credit Lenders holding
participations in outstanding Letters of Credit representing greater than 50% of
the aggregate undrawn amount of all outstanding Letters of Credit), be applied
to satisfy the Obligations. If the Borrower is required to provide an amount of
cash collateral hereunder as a result of the occurrence of an Event of Default,
such amount (to the extent not applied as aforesaid) shall be returned to the
Borrower within three Business Days after all Events of Default have been cured
or waived.
ARTICLE III. REPRESENTATIONS AND WARRANTIES
Each of CommNet and the Borrower represents and warrants to each of
the Lenders that effective as of the Closing Date and each Borrowing Date
(provided that all representations and warranties in this Article III with
respect to Non-Controlled Downstream Affiliates are made to the best knowledge
of CommNet and the Borrower; and provided, further, that CommNet and the
Borrower will use diligent efforts to ensure that the information in Section
3.08 is accurate) that:
SECTION 3.01. Organization; Powers. Each of CommNet and the
Downstream Affiliates (a) is a corporation, partnership or company duly
organized, validly existing and in good standing (or, if applicable in a foreign
jurisdiction, enjoys the equivalent status under the laws of any jurisdiction of
organization outside the United States) under the laws of the jurisdiction of
its organization, except in the case of a person other than CommNet, the
Borrower or, other than with respect to good standing, any Subsidiary Guarantor,
where the failure to be so could not reasonably be expected to result in a
Material Adverse Effect, (b) has all requisite power and authority to own its
property and assets and to carry on its business as now conducted and as
proposed to be conducted, except in the case of a person other than CommNet, the
Borrower or any Subsidiary Guarantor, where the failure to have such power or
authority could not reasonably be expected to result in a Material Adverse
Effect, (c) is qualified to do
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business in every jurisdiction where such qualification is required, except
where the failure so to qualify could not reasonably be expected to result in a
Material Adverse Effect, and (d) has the corporate, partnership or company power
and authority to execute, deliver and perform its obligations under each of the
Loan Documents and each other agreement or instrument contemplated thereby to
which it is or will be a party and, in the case of the Borrower, to borrow and
otherwise obtain credit hereunder.
SECTION 3.02. Authorization. Except as set forth in Schedule 3.02,
the execution, delivery and performance by CommNet and the other Loan Parties of
each of the Loan Documents to which they are a party, and, in the case of the
Investor and CommNet, the Recapitalization Agreement, and the borrowings
hereunder, the Recapitalization and the other transactions contemplated hereby
and thereby (collectively, the "Transactions") (a) have been duly authorized by
all corporate and stockholder or other action required to be obtained by the
Investor, CommNet and the other Loan Parties and, except to the extent failure
to obtain such action could not reasonably be expected to result in a Material
Adverse Effect, by any corporate or stockholder or other action required of any
other party to the Recapitalization and (b) will not (i) violate (A) any
provision of law, statute, rule, regulation, license, permit or authorization,
or of the certificate or articles of incorporation or other constitutive
documents or by-laws of the Investor, CommNet or any Downstream Affiliate, (B)
any applicable order of any court or any rule, regulation or order of any
Governmental Authority or (C) any provision of any indenture, certificate of
designation for preferred stock, agreement or other instrument to which CommNet
or any Downstream Affiliate is a party or by which any of them or any of their
property is or may be bound, (ii) be in conflict with, result in a breach of or
constitute (alone or with notice or lapse of time or both) a default under any
such indenture, certificate of designation for preferred stock, agreement or
other instrument, where any such conflict, violation, breach or default referred
to in clause (b)(i) or (ii) of this Section 3.02, individually or in the
aggregate could reasonably be expected to have a Material Adverse Effect, or
(iii) result in the cancelation or termination of any License now held or
hereafter obtained by CommNet or any Downstream Affiliate which cancelation or
termination could reasonably be expected to, individually or in the aggregate
with other such cancellations and terminations, result in a Material Adverse
Effect or in the creation or imposition of any Lien upon or with respect to any
property or assets now owned or hereafter acquired by CommNet or any Downstream
Affiliate, other than the Liens created by the Loan Documents.
SECTION 3.03. Enforceability. This Agreement has been duly executed
and delivered by CommNet and the Borrower and constitutes, and each other Loan
Document when executed and delivered by CommNet, the Borrower and each other
Loan Party which is party thereto will constitute, a legal, valid and binding
obligation of CommNet, the Borrower and such Loan Party enforceable against
CommNet, the Borrower and such Loan Party in accordance with its terms, except
as enforceability may
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be limited by bankruptcy, insolvency, moratorium, reorganization or other
similar laws affecting creditors' rights generally and except as enforceability
may be limited by general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
SECTION 3.04. Governmental Approvals. No action, consent or approval
of, registration or filing with or any other action by any Governmental
Authority is or will be required in connection with the Transactions, except for
(a) the filing of Uniform Commercial Code financing statements and filings with
the United States Patent and Trademark Office and the United States Copyright
Office, (b) such as have been made or obtained and are in full force and effect,
(c) filings with, and the consent of, the FCC with respect to the
Recapitalization, (d) notice filings not requiring consents to be made in the
ordinary course, (e) such filings or approvals as may be necessary to realize
upon any Collateral or to exercise any remedy with respect to any Collateral,
and (f) such actions, consents and approvals the failure to obtain or make which
could not reasonably be expected to result in a Material Adverse Effect.
SECTION 3.05. Financial Statements. CommNet has heretofore furnished
to the Lenders (a) its consolidated balance sheet and consolidated income
statement as of and for the fiscal year ended September 30, 1996, audited by and
accompanied by the opinion of Ernst & Young LLP, independent public accountants
and (b) its consolidated balance sheet and consolidated income statement as of
and for the fiscal period ended June 30, 1997. Such financial statements
present fairly the financial condition and results of operations of CommNet and
its consolidated subsidiaries as of such dates and for such periods. None of
the Investor, CommNet and the Subsidiaries has or shall have as of the Closing
Date any material Guarantee, contingent liability or liability for taxes, or any
long-term lease or unusual forward or long-term commitment that is not reflected
in the foregoing statements or the notes thereto. Such financial statements
were prepared in accordance with GAAP applied on a consistent basis.
SECTION 3.06. No Material Adverse Change. There has been no material
adverse change in the assets, business, properties, financial condition or
results of operations of CommNet and the Subsidiaries and Borrowing Affiliates,
taken as a whole, since March 31, 1997.
SECTION 3.07. Title to Properties; Possession Under Leases. (a)
Each of CommNet and the Subsidiaries has good and marketable title to, or valid
leasehold interests in, or easements or other limited property interests in, all
its material properties and assets, except for minor defects in title that do
not interfere with its ability to conduct its business as currently conducted or
to utilize such properties and assets for their intended purposes. All such
material properties and assets are free and clear of Liens, other than Liens not
prohibited by Section 6.02.
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(b) Each of CommNet and the Subsidiaries has complied with all
obligations under all material leases to which it is a party, except where the
failure to comply would not have a Material Adverse Effect, and all such leases
are in full force and effect, except leases in respect of which the failure to
be in full force and effect could not reasonably be expected to have a Material
Adverse Effect. Each of CommNet and the Downstream Affiliates enjoys peaceful
and undisturbed possession under all such material leases, other than leases
which, individually or in the aggregate, are not material to the Borrower and
the Downstream Affiliates, taken as a whole, and in respect of which the failure
to enjoy peaceful and undisturbed possession could not reasonably be expected
to, individually or in the aggregate, result in a Material Adverse Effect.
(c) After giving effect to the Recapitalization, each of CommNet and
the Downstream Affiliates owns or possesses, or could obtain ownership or
possession of, on terms not materially adverse to it, all patents, trademarks,
service marks, trade names, copyrights, licenses and rights with respect
thereto, including each of the Licenses, necessary for the present conduct of
its business, without any known conflict with the rights of others, and free
from any burdensome restrictions, except where such conflicts and restrictions
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
SECTION 3.08. Downstream Affiliates. Schedule 3.08 sets forth as of
the date hereof the name and jurisdiction of organization of each Downstream
Affiliate and, as to each such Downstream Affiliate, (a) the percentage of each
class of Capital Stock thereof owned directly or indirectly by CommNet; (b) in
the case of any Downstream Affiliate that is (i) a Borrowing Affiliate, (ii) a
guarantor of an Affiliate Advance or (iii) in a market in which there is a
management agreement with CommNet, the Borrower or a Wholly Owned Subsidiary for
the operation of a System, any Licenses issued by the FCC and relating to the
operation of a System which are held thereby; (c) any credit facility (each an
"Affiliate Advance Facility") providing for loans or advances ("Affiliate
Advances") to any such Downstream Affiliate other than those that are Wholly
Owned Subsidiaries (each, a "Borrowing Affiliate"), and the amount of
outstanding Affiliate Advances to such Borrowing Affiliate as of June 30, 1997
(the "Measurement Date"), in each case from the Borrower, CommNet or any Wholly
Owned Subsidiary, and in each case indicating (i) the final maturity date and
final commitment termination date with respect thereto, (ii) whether any
material provision of such Affiliate Advance Facility has been amended or waived
since the Measurement Date, (iii) whether any additional commitments to make
Affiliate Advances have been made since the Measurement Date, (iv) whether the
collateral securing such Affiliate Advance Facility or any guarantee of the
Affiliate Advances thereunder includes (A) an equity interest in a person or (B)
a direct interest in a System and other tangible assets (including interests in
Licenses, to the extent permitted by law), (v) whether the interest in such
collateral described in the immediately preceding clause (iv) purports to
constitute a first priority lien, and, in the case of interests
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which are not of first priority, the name of the persons, if any, holding
consensual security interests which are senior to such interests held by the
Borrower, CommNet or such Wholly Owned Subsidiary, as the case may be, and (vi)
the amount of any unfunded commitments under such Affiliate Advance Facility as
of the Measurement Date; (d) the amount outstanding as of March 31, 1997 of
Indebtedness (other than Affiliate Advances) of each Borrowing Affiliate and
each Downstream Affiliate (in the case of Non-Controlled Downstream Affiliates,
to the best knowledge of CommNet and the Borrower) in which any Borrowing
Affiliate directly or indirectly owns Capital Stock; (e) the maximum amount as
of the date hereof of Indebtedness (other than Affiliate Advances) of each
Borrowing Affiliate and each Downstream Affiliate in which any Borrowing
Affiliate owns Capital Stock which is permitted to be outstanding at any time
under the relevant Affiliate Advance Facility; (f) any restrictions on dividends
and distributions which can be made by any Downstream Affiliate that is a
Subsidiary, a Borrowing Affiliate or a Downstream Affiliate in which a Borrowing
Affiliate directly or indirectly owns Capital Stock; (g) any obligation (and the
amount thereof) of CommNet, any Subsidiary or any Borrowing Affiliate to make
capital contributions to any Downstream Affiliate; and (h) whether CommNet has
entered into a management agreement with any Downstream Affiliate.
SECTION 3.09. Litigation; Compliance with Laws. (a) Except as set
forth in Schedule 3.09, there are not any material actions, suits or proceedings
at law or in equity or by or before any Governmental Authority now pending or,
to the knowledge of CommNet, threatened against or affecting CommNet or any
Downstream Affiliate or any business, property or rights of any such person (i)
that involve any Loan Document or, as of the Closing Date, the Transactions or
(ii) as to which there is a reasonable possibility of an adverse determination
and that, if adversely determined, could, individually or in the aggregate,
reasonably be expected to result in a Material Adverse Effect or materially
adversely affect the Recapitalization.
(b) None of CommNet and the Downstream Affiliates or their respective
material properties or assets is in violation of (nor will the continued
operation of their material properties and assets as currently conducted
violate) any law, rule or regulation (including any Environmental Law), or is in
default with respect to any judgment, writ, injunction or decree of any
Governmental Authority, where such violation or default could reasonably be
expected to result in a Material Adverse Effect.
SECTION 3.10. Agreements. (a) None of the Investor, CommNet and the
Downstream Affiliates is a party to any agreement or instrument or subject to
any corporate restriction that has resulted or could reasonably be expected to
result in a Material Adverse Effect.
(b) None of CommNet and the Downstream Affiliates is in default in
any manner under any provision of any indenture or other agreement or instrument
evidencing
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Indebtedness, or any other material agreement or instrument to which it is a
party or by which it or any of its properties or assets are or may be bound, in
either case where such default could reasonably be expected to result in a
Material Adverse Effect. Immediately after giving effect to the Transactions, no
Default or Event of Default shall have occurred and be continuing.
SECTION 3.11. Federal Reserve Regulations. (a) None of CommNet and
the Downstream Affiliates is engaged principally, or as one of its important
activities, in the business of extending credit for the purpose of purchasing or
carrying Margin Stock.
(b) No part of the proceeds of any Loan will be used, whether
directly or indirectly, and whether immediately, incidentally or ultimately, (i)
to purchase or carry Margin Stock or to extend credit to others for the purpose
of purchasing or carrying Margin Stock or to refund indebtedness originally
incurred for such purpose, or (ii) for any purpose which entails a violation of,
or which is inconsistent with, the provisions of the Regulations of the Board,
including Regulation G, U or X.
SECTION 3.12. Investment Company Act; Public Utility Holding Company
Act. None of CommNet and the Downstream Affiliates is (a) an "investment
company" as defined in, or subject to regulation under, the Investment Company
Act of 1940 or (b) a "holding company" as defined in, or subject to regulation
under, the Public Utility Holding Company Act of 1935.
SECTION 3.13. Use of Proceeds. The Borrower will use the proceeds of
the Loans and will request the issuance of Letters of Credit only for the
purposes specified in the preamble to this Agreement.
SECTION 3.14. Tax Returns. Each of CommNet and the Subsidiaries has
timely filed or caused to be timely filed all Federal, and all material state
and local tax returns required to have been filed by it and has paid or caused
to be paid all taxes shown thereon to be due and payable by it and all
assessments received by it, except taxes or assessments that are being contested
in good faith by appropriate proceedings in accordance with Section 5.03 and for
which CommNet or such Subsidiary has set aside on its books adequate reserves in
accordance with GAAP. Each of CommNet and the Subsidiaries has paid in full or
made adequate provision (in accordance with GAAP) for the payment of all taxes
due with respect to all periods ending on or before the Closing Date, which
taxes, if not paid or adequately provided for, could reasonably be expected to
have a Material Adverse Effect. Except as set forth on Schedule 3.14, as of the
Closing Date, with respect to each of CommNet and the Subsidiaries (a) no
material claims are being asserted in writing with respect to any taxes, (b) no
presently effective waivers or extensions of statutes of limitation with respect
to taxes have been given or requested,
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(c) no tax returns are being examined by, and no written notification of
intention to examine has been received from, the Internal Revenue Service or,
with respect to any material potential tax liability, any other taxing authority
and (d) no currently pending issues have been raised in writing by the Internal
Revenue Service or, with respect to any material potential tax liability, any
other taxing authority. For purposes hereof, "taxes" shall mean any present or
future tax, levy, impost, duty, charge, assessment or fee of any nature
(including interest, penalties and additions thereto) that is imposed by any
Governmental Authority.
SECTION 3.15. No Material Misstatements. (a) The written
information, reports, financial statements, exhibits and schedules furnished by
or on behalf of the Investor, CommNet or any Subsidiary to the Administrative
Agent or any Lender in connection with the negotiation of any Loan Document or
included therein or delivered pursuant thereto (including the Confidential
Information Memorandum (the "Information Memorandum") dated July 1997, relating
to CommNet and the Borrower), when taken as a whole, did not contain, and as
they may be amended, supplemented or modified from time to time, will not
contain, as of the Closing Date any material misstatement of fact and did not
omit, and as they may be amended, supplemented or modified from time to time,
will not omit, to state as of the Closing Date any material fact necessary to
make the statements therein, in the light of the circumstances under which they
were, are or will be made, not materially misleading in their presentation of
the Recapitalization or of CommNet and the Downstream Affiliates taken as a
whole.
(b) All financial projections concerning CommNet and the Downstream
Affiliates that are or have been made available to the Administrative Agent or
any Lender by the Investor, CommNet, the Borrower or any Subsidiary have been or
will be prepared in good faith based upon assumptions believed by CommNet and
the Borrower to be reasonable.
SECTION 3.16. Employee Benefit Plans. Each of CommNet, the Borrower
and the ERISA Affiliates is in compliance with the applicable provisions of
ERISA and the provisions of the Code relating to ERISA and the regulations and
published interpretations thereunder except for such noncompliance which could
not reasonably be expected to result in a Material Adverse Effect. No
Reportable Event has occurred as to which CommNet, the Borrower or any ERISA
Affiliate was required to file a report with the PBGC, other than reports for
which the 30-day notice requirement is waived, reports that have been filed and
reports the failure of which to file could not reasonably be expected to result
in a Material Adverse Effect. As of the Closing Date, the present value of all
benefit liabilities under each Plan (on a termination basis and based on those
assumptions used to fund such Plan) did not, as of the last annual valuation
date applicable thereto for which a valuation is available, exceed by more than
$1,000,000 the value of the assets of such Plan, and the present value of all
benefit liabilities of all
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underfunded Plans (based on those assumptions used to fund each such Plan) did
not, as of the last annual valuation dates applicable thereto for which
valuations are available, exceed by more than $1,000,000 the value of the assets
of all such underfunded Plans. None of CommNet, the Borrower and the ERISA
Affiliates has incurred or could reasonably be expected to incur any Withdrawal
Liability that could reasonably be expected to result in a Material Adverse
Effect. None of CommNet, the Borrower and the ERISA Affiliates have received any
written notification that any Multiemployer Plan is in reorganization or has
been terminated, within the meaning of Title IV of ERISA, and no Multiemployer
Plan is reasonably expected to be in reorganization or to be terminated, where
such reorganization or termination has resulted or could reasonably be expected
to result, through increases in the contributions required to be made to such
Plan or otherwise, in a Material Adverse Effect.
SECTION 3.17. Environmental Matters. Except as set forth in Schedule
3.17:
(a) There has not been a Release or threatened Release of Hazardous
Materials at, on, under or around the properties currently owned or
currently or formerly operated by CommNet, the Borrower and the Downstream
Affiliates (the "Properties") in amounts or concentrations which (i)
constitute or constituted a violation of Environmental Laws, except as
could not reasonably be expected to have a Material Adverse Effect; (ii)
would reasonably be expected to give rise to an Environmental Claim which,
in any such case or in the aggregate, is reasonably likely to result in a
Material Adverse Effect; or (iii) could reasonably be expected to impair
materially the fair saleable value of any Property material to CommNet and
the Downstream Affiliates taken as a whole;
(b) The Properties and all operations of CommNet and the Downstream
Affiliates are in compliance, and in the last five years have been in
compliance, with all Environmental Laws, and all necessary Environmental
Permits have been obtained and are in effect, except to the extent that
such non-compliance or failure to obtain any necessary permits, in the
aggregate, are not reasonably likely to result in a Material Adverse
Effect;
(c) None of CommNet and the Downstream Affiliates has received any
written notice of an Environmental Claim in connection with the Properties
or the operations of CommNet or any of the Downstream Affiliates or with
regard to any person whose liabilities for environmental matters CommNet or
any of the Downstream Affiliates has retained or assumed, in whole or in
part, contractually, by operation of law or otherwise, which, in either
such case or in the aggregate, is reasonably likely to result in a Material
Adverse Effect;
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(d) Hazardous Materials have not been transported from the
Properties, nor have Hazardous Materials been generated, treated, stored or
disposed of at, on, under or around any of the Properties in a manner that
could reasonably give rise to liability to CommNet or any Downstream
Affiliate under any Environmental Law, nor have any of CommNet and the
Downstream Affiliates retained or assumed any liability, contractually, by
operation of law or otherwise, with respect to the generation, treatment,
storage or disposal of Hazardous Materials, which, in each case,
individually or in the aggregate, is reasonably likely to result in a
Material Adverse Effect; and
(e) No Lien in favor of any Governmental Authority for (i) any
liability under any Environmental Law or (ii) damages arising from or costs
incurred by such Governmental Authority in response to a Release or
threatened Release of Hazardous Materials into the environment has been
recorded with respect to the Properties except for Liens not prohibited by
Section 6.02.
SECTION 3.18. Capitalization of CommNet and the Borrower. (a) The
authorized Capital Stock, the par value thereof and the amount of such
authorized Capital Stock issued and outstanding for each of CommNet and the
Borrower is set forth on Schedule 3.18(a) as of the Closing Date. All
outstanding shares of Capital Stock of CommNet and the Borrower are fully paid
and nonassessable and, in the case of the Borrower, are free and clear of all
Liens and encumbrances whatsoever other than the Liens created by the Loan
Documents. After giving effect to the Recapitalization, CommNet shall own all
outstanding shares of Capital Stock of the Borrower and the Fund and the
Participants shall own approximately 87% of the outstanding shares of Capital
Stock of CommNet.
(b) As of the Closing Date, except as set forth on Schedule 3.18(b),
there are no outstanding subscriptions, options, warrants, calls, rights
(including preemptive rights) or other agreements or commitments (including
pursuant to management or employee stock plans or similar plans) of any nature
relating to any Capital Stock of CommNet or any Wholly Owned Subsidiary.
SECTION 3.19. Security Documents. (a) The Pledge Agreement is
effective to create in favor of the Collateral Agent, for the ratable benefit of
the Secured Parties, a legal, valid and enforceable security interest in the
Collateral (as defined in the Pledge Agreement) and, when the Pledged Stock,
together with duly executed stock transfer powers and the required consents of
other equity owners of Downstream Affiliates, are delivered to the Collateral
Agent (or, as applicable in the case of uncertificated Capital Stock or Capital
Stock of foreign Downstream Affiliates, the requisite filings or registrations
are made), the Pledge Agreement will constitute a fully perfected first priority
Lien on, and security interest in, all right, title and interest of the
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pledgors thereunder in such Pledged Stock, in each case prior and superior in
right to any other person; provided that such Pledged Stock will be subject to
rights of first refusal and buy-sell provisions contained in agreements with
other equity owners of Downstream Affiliates.
(b) Each of the Security Agreement and the Collateral Account
Agreement is effective to create in favor of the Collateral Agent, for the
ratable benefit of the Secured Parties, a legal, valid and enforceable security
interest in the Collateral subject thereto (as defined, respectively, in the
Security Agreement and the Collateral Account Agreement) and, when financing
statements in appropriate form are filed in the offices specified on the
schedules to the Security Agreement and, in the case of equity interests in
Downstream Affiliates and related contract rights under the related partnership
or comparable agreement, when the required consents of other equity owners of
Downstream Affiliates are received and, in the case of cash included in the
Collateral under the Collateral Account Agreement, when such cash is deposited
in the Collateral Account, each of the Security Agreement and the Collateral
Account Agreement will constitute a fully perfected Lien on, and security
interest in, all right, title and interest of the grantors thereunder in such
Collateral, to the extent contemplated therein and subject to Section 9-306 of
the Uniform Commercial Code, and the proceeds thereof, in each case prior and
superior in right to any other person, other than with respect to Liens not
prohibited by Section 6.02.
(c) The Intellectual Property Security Agreement is effective to
create in favor of the Collateral Agent, for the ratable benefit of the Secured
Parties, a legal, valid and enforceable security interest in the Collateral (as
defined in the Intellectual Property Security Agreement), and when financing
statements in appropriate form are filed in the offices specified on the
schedules to the Security Agreement and the Intellectual Property Security
Agreement is filed in the United States Patent and Trademark Office and the
United States Copyright Office, the Intellectual Property Security Agreement
will constitute a fully perfected Lien on, and security interest in, all right,
title and interest of the Loan Parties in such Collateral and, to the extent
contemplated therein and subject to Section 9-306 of the Uniform Commercial
Code, the proceeds thereof, in each case prior and superior in right to any
other person (it being understood that subsequent recordings in the United
States Patent and Trademark Office and the United States Copyright Office may be
necessary to perfect a lien on registered trademarks, trademark applications and
copyrights acquired by the Loan Parties after the date hereof), other than with
respect to the rights of persons pursuant to Liens expressly permitted by
Section 6.02.
SECTION 3.20. Labor Matters. Except as set forth in Schedule 3.20,
there are no strikes, lockouts or slowdowns pending or threatened against
CommNet or any Downstream Affiliate which, individually or in the aggregate,
could reasonably be expected to result in a Material Adverse Effect. The hours
worked by and payments made to employees of CommNet and the Subsidiaries have
not been in violation in any material
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respect of the Fair Labor Standards Act or any other applicable law dealing with
such matters. All material payments due from CommNet or any Downstream Affiliate
or for which any claim may be made against CommNet or any Subsidiary, on account
of wages and employee health and welfare insurance and other benefits have been
paid or accrued as a liability on the books of CommNet or such Subsidiary to the
extent required by GAAP. The consummation of the Transactions will not give rise
to a right of termination or right of renegotiation on the part of any union
under any collective bargaining agreement to which CommNet or any Subsidiary (or
any predecessor) is a party or by which CommNet or any Subsidiary (or any
predecessor) is bound, other than collective bargaining agreements which,
individually or in the aggregate, are not material to CommNet and the Downstream
Affiliates taken as a whole.
SECTION 3.21. Insurance. Schedule 3.21 sets forth a true, complete
and correct description of all insurance maintained by CommNet or the Borrower
or by CommNet or the Borrower for its Subsidiaries as of the Closing Date. As
of such date, such insurance is in full force and effect and all premiums have
been duly paid. CommNet or the Borrower and its Subsidiaries have insurance in
such amounts and covering such risks and liabilities (and with such deductibles
and exclusions) as are in accordance with normal industry practice.
SECTION 3.22. Solvency. (a) Immediately after the consummation of
the Transactions and the other transactions to occur on the Closing Date and
immediately following the making of each Loan made on the Closing Date and after
giving effect to the application of the proceeds of such Loans, (i) the fair
value of the assets of CommNet and the Subsidiaries on a consolidated basis, at
a fair valuation, will exceed the debts and liabilities, subordinated,
contingent or otherwise, of CommNet and the Subsidiaries on a consolidated
basis; (ii) the present fair saleable value of the property of CommNet and the
Subsidiaries on a consolidated basis will be greater than the amount that will
be required to pay the probable liability of CommNet and the Subsidiaries on a
consolidated basis on their debts and other liabilities, subordinated,
contingent or otherwise, as such debts and other liabilities become absolute and
matured; (iii) CommNet and the Subsidiaries on a consolidated basis will be able
to pay their debts and liabilities, subordinated, contingent or otherwise, as
such debts and liabilities become absolute and matured; and (iv) CommNet and the
Subsidiaries on a consolidated basis will not have unreasonably small capital
with which to conduct the businesses in which they are engaged as such
businesses are conducted and are proposed to be conducted following the Closing
Date.
(b) Neither CommNet nor the Borrower intends to, neither will permit
any Subsidiary Controlled by it to, and neither believes that it or any
Subsidiary will, incur debts beyond its ability to pay such debts as they
mature, taking into account the timing of and amounts of cash to be received by
it or any such Subsidiary and the timing of the
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amounts of cash to be payable on or in respect of its Indebtedness or the
Indebtedness of any such Subsidiary.
SECTION 3.23. FCC Compliance; Licenses. (a) Each of CommNet and
the Downstream Affiliates is in compliance with the Communications Act, except
where non-compliance therewith could not reasonably be expected to result in a
Material Adverse Effect.
(b) Each of CommNet and the Subsidiaries has no knowledge of any
investigation, notice of apparent liability, violation, forfeiture or other
order or complaint issued by or before the FCC, or of any other proceedings
(other than proceedings relating to the wireless communications industries
generally) of or before the FCC, which could reasonably be expected to have a
Material Adverse Effect.
(c) No event has occurred which (i) results in, or after notice or
lapse of time or both would result in, revocation, suspension, adverse
modifications, non-renewal, impairment, restriction or termination of, or order
of forfeiture with respect to, any License in any respect which could reasonably
be expected to result in a Material Adverse Effect or (ii) affects or could
reasonably be expected in the future to affect any of the rights of CommNet or
any Downstream Affiliate under any License held by CommNet or any Downstream
Affiliate in any respect which could reasonably be expected to result in a
Material Adverse Effect.
(d) CommNet and the Subsidiaries have duly filed in a timely manner
all material filings, reports, applications, documents, instruments and
information required to be filed by it under the Communications Act, and all
such filings were when made true, correct and complete in all material respects.
(e) The Borrower and CommNet have no reason to believe that each
License of CommNet and its Downstream Affiliates will not be renewed in the
ordinary course, except where the failure of any such Licenses to be so renewed,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect.
ARTICLE IV. CONDITIONS OF LENDING
The obligations of the Lenders to make Loans and of the Fronting Bank
to issue Letters of Credit hereunder (each, a "Credit Event") are subject to the
satisfaction of the following conditions:
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SECTION 4.01. All Credit Events. On the date of each Borrowing and
on the date of each issuance or renewal of a Letter of Credit (other than a
Borrowing in which Revolving Loans are refinanced with new Revolving Loans as
contemplated by Section 2.02(f) without any increase in the aggregate principal
amount of Revolving Loans outstanding and any extension or renewal of any Letter
of Credit without any increase in the stated amount of such Letter of Credit):
(a) The Administrative Agent shall have received a notice of such
Borrowing as required by Section 2.03 (or such notice shall have been
deemed given in accordance with the last paragraph of Section 2.03) or, in
the case of the issuance of a Letter of Credit, the Fronting Bank and the
Administrative Agent shall have received a notice requesting the issuance
of such Letter of Credit as required by Section 2.20(b).
(b) The representations and warranties set forth in each Loan
Document shall be true and correct in all material respects on and as of
the date of such Borrowing with the same effect as though made on and as of
such date, except to the extent such representations and warranties
expressly relate to an earlier date.
(c) At the time of and immediately after such Borrowing or issuance
of such Letter of Credit, as the case may be, no Event of Default or
Default shall have occurred and be continuing.
Each Borrowing and each issuance of a Letter of Credit (except those specified
in the parenthetical contained in the introductory paragraph of this Section
4.01) shall be deemed to constitute a representation and warranty by the
Borrower on the date of such Borrowing or issuance, as the case may be, as to
the matters specified in paragraphs (b) and (c) of this Section 4.01.
SECTION 4.02. First Credit Event. On the Closing Date:
(a) The Administrative Agent shall have received, on behalf of
itself, the Lenders and the Fronting Bank, a favorable written opinion of
(i) (A) Simpson Thacher & Bartlett and (B) Ireland, Stapleton, Pryor &
Pascoe, P.C. and/or other counsel reasonably acceptable to the
Administrative Agent, each counsel for CommNet and the Borrower,
substantially to the effect set forth in Exhibit K-1 and Exhibit K-2,
respectively, and (ii) Communications Act counsel for CommNet and the
Borrower, substantially to the effect set forth in Exhibit K-3, in each
case (A) dated the Closing Date, (B) addressed to the Fronting Bank, the
Administrative Agent and the Lenders, and (C) covering such other matters
relating to the Loan Documents and the Transactions as the Administrative
Agent shall reasonably request. Each of the Investor, CommNet and the
Borrower hereby instructs its counsel to deliver such opinions.
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(b) All legal matters incident to this Agreement, the borrowings and
extensions of credit hereunder and the other Loan Documents shall be
reasonably satisfactory to the Lenders, to the Fronting Bank and to
Cravath, Swaine & Moore, counsel for the Administrative Agent.
(c) The Administrative Agent shall have received (i) a copy of the
certificate or articles of incorporation, including all amendments thereto,
of each Loan Party, certified as of a recent date by the Secretary of State
(or, in the case of CommNet, following the Merger, the Secretary of
CommNet) of the state of its organization, and a certificate as to the good
standing of each Loan Party as of a recent date from such Secretary of
State; (ii) a certificate of the Secretary or Assistant Secretary of each
Loan Party dated the Closing Date and certifying (A) that attached thereto
is a true and complete copy of the by-laws of such Loan Party as in effect
on the Closing Date and at all times since a date prior to the date of the
resolutions described in clause (B) below, (B) that attached thereto is a
true and complete copy of resolutions duly adopted by the Board of
Directors of such Loan Party authorizing the execution, delivery and
performance of the Loan Documents to which such person is a party and, in
the case of the Borrower, the borrowings hereunder, and that such
resolutions have not been modified, rescinded or amended and are in full
force and effect, (C) that the certificate or articles of incorporation of
such Loan Party have not been amended since the date of the last amendment
thereto shown on the certificate of good standing furnished pursuant to
clause (i) above, and (D) as to the incumbency and specimen signature of
each officer executing any Loan Document or any other document delivered in
connection herewith on behalf of such Loan Party; (iii) a certificate of
another officer as to the incumbency and specimen signature of the
Secretary or Assistant Secretary executing the certificate pursuant to (ii)
above; and (iv) such other documents as the Lenders, the Fronting Bank or
Cravath, Swaine & Moore, counsel for the Administrative Agent, may
reasonably request.
(d) The Administrative Agent shall have received a certificate of the
Borrower, dated the Closing Date and signed by a Financial Officer of and
on behalf of the Borrower, confirming compliance with the conditions
precedent set forth in paragraphs (b) and (c) of Section 4.01.
(e) The Administrative Agent shall have received all Fees and other
amounts due and payable on or prior to the Closing Date, including, to the
extent invoiced, reimbursement or other payment of all out-of-pocket
expenses required to be reimbursed or paid by the Borrower hereunder or
under any other Loan Document.
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(f) Each of the Guarantee Agreements and the Indemnity, Subrogation
and Contribution Agreement shall have been duly executed by the parties
thereto and delivered to the Collateral Agent and shall be in full force
and effect.
(g) The Pledge Agreement shall have been duly executed by the parties
thereto and delivered to the Collateral Agent and shall be in full force
and effect, and (i) all outstanding Capital Stock of the Borrower shall
have been duly and validly pledged thereunder to the Collateral Agent for
the ratable benefit of the Secured Parties and (ii) CommNet and the
Borrower shall have used their reasonable best efforts to duly and validly
pledge under the Pledge Agreement Capital Stock in Downstream Affiliates
such that the aggregate combined EBITDA of CommNet and the Downstream
Affiliates with respect to which (A) all of the Capital Stock held by
CommNet or a Wholly Owned Subsidiary has been so pledged or (B) to the
extent not included in (A) above, Affiliate Advances have been pledged
under the Loan Documents (but excluding in the case of clause (B) EBITDA of
such Downstream Affiliates to the extent in excess of such Affiliate
Advances to such Downstream Affiliates on the Closing Date), in each case
to the extent included in Financed Proportionate EBITDA, represents at
least 80% of the Financed Proportionate EBITDA for fiscal year 1997
projected by CommNet, based on the projections previously delivered by
CommNet to the Administrative Agent (CommNet represents that such
projections were made in good faith as of the date of delivery to the
Administrative Agent and are consistent with the projections and
assumptions set forth in the Information Memorandum) to the Collateral
Agent for the ratable benefit of the Secured Parties and, in the case of
certificated shares, certificates representing such shares, accompanied by
instruments of transfer and stock powers endorsed in blank, shall be in the
actual possession of the Collateral Agent.
(h) The Security Agreement, the Intellectual Property Security
Agreement and the Collateral Account Agreement shall have been duly
executed by the Loan Parties thereto and shall have been delivered to the
Collateral Agent and shall be in full force and effect on such date and
each document (including each Uniform Commercial Code financing statement)
required by law or reasonably requested by the Administrative Agent to be
filed, registered or recorded in order to create in favor of the Collateral
Agent for the benefit of the Secured Parties a valid, legal and perfected
first-priority security interest in and lien on the Collateral described in
each such agreement (subject to any Lien expressly permitted by Section
6.02) shall have been delivered to the Collateral Agent.
(i) The Collateral Agent shall have received the results of a search
of the Uniform Commercial Code filings made with respect to CommNet, the
Borrower and each other Loan Party in the states in which the chief
executive office of each
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such person is located and the other jurisdictions in which Uniform
Commercial Code filings are to be made pursuant to the preceding paragraph,
together with copies of the financing statements disclosed by such search,
accompanied by evidence satisfactory to the Administrative Agent that the
Liens indicated in any such financing statement would be permitted under
Section 6.02 or have been, or on or prior to the Closing Date will be,
released. The Administrative Agent shall have received duly executed
documentation evidencing the termination of (i) all the security interests
granted in the Pledged Stock and in any other Collateral in connection with
the Existing Credit Facility or otherwise and (ii) each obligation of
CommNet or any Wholly Owned Subsidiary in respect of each letter of credit
or portion thereof being replaced with the Letters of Credit to be issued
simultaneously with the initial Credit Event hereunder.
(j) The Administrative Agent shall have received copies of, or an
insurance broker's or agent's certificate as to coverage under, the
insurance policies required by Section 5.02 and the applicable provisions
of the Security Documents, each of which shall be endorsed or otherwise
amended to include a "standard" or "New York" lender's loss payable
endorsement and to name the Collateral Agent as additional insured, in form
and substance reasonably satisfactory to the Administrative Agent.
(k) The Recapitalization shall have been consummated (i)
simultaneously with the initial Credit Event hereunder in accordance with
applicable law and the Recapitalization Agreement and all related
documentation and (ii) other than as set forth in (i) above, on terms
reasonably satisfactory to Chase; and the conditions to the Investor's
obligations set forth in the Recapitalization Agreement shall have been
satisfied without giving effect to any waiver or amendment in any manner
materially adverse to the Lenders that was not approved by the Required
Lenders. Chase shall be satisfied that the aggregate level of fees and
expenses paid in connection with the Recapitalization, the financing
therefor and the other Transactions shall not exceed by a material amount
the amount previously disclosed to Chase.
(l) The Equity Contributions shall have been made, or shall be made
simultaneously with the initial Credit Event hereunder, on terms
satisfactory to the Lenders; and the Investor shall have received net
proceeds of not less than $141,800,000 therefrom.
(m) The Pre-Closing Debt Securities shall have been repurchased or
redeemed or amended, or shall be repurchased or redeemed or amended
simultaneously with the initial Credit Event hereunder, in amounts, at
prices and on terms satisfactory in all respects to Chase and all
significant negative and, if any,
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financial covenants benefitting holders of the Pre-Closing Debt Securities
and all change in control or similar provisions contained therein shall
have been effectively eliminated.
(n) The Borrower shall have terminated and repaid, or shall terminate
and repay simultaneously with the initial Credit Event hereunder, in full
all Indebtedness outstanding under, the Existing Credit Facility, and all
Liens in respect thereof shall have been, or will contemporaneously with
the initial Credit Event hereunder be, released.
(o) After giving effect to the Recapitalization and the other
Transactions, (i) CommNet and the Subsidiaries shall have outstanding no
preferred stock and no Indebtedness other than the Loans hereunder and
Indebtedness otherwise permitted under Section 6.01 and (ii) the Borrower
shall have outstanding no equity interest that is not directly owned by
CommNet and pledged to the Collateral Agent under the Pledge Agreement.
(p) There shall have been no material adverse change in the assets,
business, properties, financial condition or results of operations of
CommNet and the Downstream Affiliates on a combined basis since March 31,
1997.
(q) The Lenders shall have received a reasonably satisfactory pro
forma consolidated balance sheet of CommNet as of March 31, 1997, together
with a certificate of CommNet, dated the Closing Date and signed by a
Financial Officer of CommNet, to the effect that such statement fairly
presents the pro forma financial position of CommNet and the Subsidiaries
in accordance with GAAP (except to the extent otherwise noted) after giving
effect to the Credit Events to occur on the Closing Date and the
Recapitalization (and assuming the initial Credit Events and the
Recapitalization occurred on March 31, 1997), and the Lenders shall be
reasonably satisfied that such balance sheet and the transactions in
connection with the Recapitalization and the financing arrangements
contemplated hereby are consistent with the schedule of sources and uses of
funds delivered to the Lenders prior to the date hereof and are not
materially inconsistent with the Information Memorandum and the
information, the projections or the financial model contained therein.
CommNet shall also have provided such other financial information as the
Lenders shall reasonably have requested in connection with the
Recapitalization.
(r) All requisite material Governmental Authorities and all material
third parties shall have approved or consented to the Transactions to the
extent required, all applicable antitrust appeal periods, if any, shall
have expired and there shall be no governmental or judicial action, actual
or threatened, that has or could
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have a reasonable likelihood of restraining, preventing or imposing
burdensome conditions on the Recapitalization or the consummation of the
other Transactions.
(s) The Lenders shall have received a solvency letter in form and
substance satisfactory to Chase from Murray Devine & Co. or another
valuation firm acceptable to the Administrative Agent, together with other
evidence reasonably requested by the Lenders as to the solvency of CommNet
and the Subsidiaries on a consolidated basis, after giving effect to the
Recapitalization and the consummation of the other Transactions.
ARTICLE V. AFFIRMATIVE COVENANTS
Each of CommNet and the Borrower covenants and agrees with each Lender
that from and after the Closing Date and so long as this Agreement shall remain
in effect and until the Commitments have been terminated and the principal of
and interest on each Loan, all Fees and all other expenses or amounts payable
under any Loan Document shall have been paid in full and all Letters of Credit
have been canceled or have expired and all amounts drawn thereunder have been
reimbursed in full, unless the Required Lenders shall otherwise consent in
writing, each of CommNet and the Borrower will, and will cause each of the
Controlled Downstream Affiliates to:
SECTION 5.01. Existence; Businesses and Properties. (a) Do or cause to
be done all things necessary to preserve, renew and keep in full force and
effect its legal existence, except as otherwise expressly permitted under
Section 6.05, and except for the liquidation or dissolution of Subsidiaries
(other than the Borrower) if the assets thereof to the extent they exceed
estimated liabilities are acquired by the Borrower or a Subsidiary in proportion
to such ownership interest in such liquidation or dissolution; provided that
Subsidiaries that are Guarantors may not be liquidated into Subsidiaries that
are not Guarantors.
(b) Do or cause to be done all things necessary to obtain, preserve,
renew, extend and keep in full force and effect the rights, licenses (including
Licenses), permits, franchises, authorizations, patents, copyrights, trademarks
and trade names material to the conduct of its business; comply in all material
respects with all applicable laws, rules, regulations (including any
Environmental Law) and orders of any Governmental Authority, whether now in
effect or hereafter enacted; and at all times maintain and preserve all property
material to the conduct of such business and keep such property in good repair,
working order and condition and from time to time make, or cause to be made, all
needful and proper repairs, renewals, additions, improvements and replacements
thereto necessary in order that the business carried on in connection therewith,
if any, may
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be properly conducted at all times (in each case except as expressly permitted
by this Agreement).
SECTION 5.02. Insurance. Keep its insurable properties insured at all
times by financially sound and reputable insurers in such amounts as shall be
customary for similar businesses; maintain such other insurance (including, to
the extent consistent with past practices, self-insurance), of such types, to
such extent and against such risks, as is customary with companies in the same
or similar businesses, including general liability insurance against claims for
personal injury or death or property damage occurring upon, in, about or in
connection with the use of any properties owned, occupied or controlled by it;
and maintain such other insurance as may be required by law or any other Loan
Document.
SECTION 5.03. Taxes. Pay and discharge promptly when due all taxes,
assessments and governmental charges or levies imposed upon it or upon its
income or profits or in respect of its property, before the same shall become
delinquent or in default, as well as all lawful claims for labor, materials and
supplies or otherwise which, if unpaid, might give rise to a Lien upon such
properties or any part thereof; provided, however, that such payment and
discharge shall not be required with respect to any such tax, assessment,
charge, levy or claim so long as (a) the validity or amount thereof shall be
contested in good faith by appropriate proceedings and CommNet or the affected
Subsidiary, as applicable, shall have set aside on its books adequate reserves
with respect thereto, (b) such tax, assessment, charge, levy or claim is in
respect of property taxes for property that CommNet or one of the Subsidiaries
has determined to abandon and the sole recourse for such tax, assessment,
charge, levy or claim is to such property or (c) the amount of such taxes,
assessments, charges, levies and claims and interest and penalties thereon does
not exceed $5,000,000 in the aggregate.
SECTION 5.04. Financial Statements, Reports, etc. In the case of the
Borrower, furnish to the Administrative Agent and each Lender:
(a) within 90 days after the end of each fiscal year, a consolidated
balance sheet and related statements of operations, cash flows and
stockholders' equity showing the financial condition of CommNet and the
Subsidiaries as of the close of such fiscal year and the consolidated
results of their operations during such year, all audited by independent
public accountants of recognized national standing reasonably acceptable to
the Administrative Agent and accompanied by an opinion of such accountants
(which shall not be qualified in any material respect) to the effect that
such consolidated financial statements fairly present the financial
condition and results of operations of CommNet and the Subsidiaries on a
consolidated basis in accordance with GAAP, together with a written
discussion by management of annual results compared to prior year results;
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(b) within 45 days after the end of each of the first three fiscal
quarters of each fiscal year, a consolidated balance sheet and related
statements of operations, cash flows and stockholders' equity showing the
financial condition of CommNet and the Subsidiaries as of the close of such
fiscal quarter and the consolidated results of their operations during such
fiscal quarter and the then-elapsed portion of the fiscal year, all
certified by a Financial Officer of CommNet, on behalf of the Borrower, or
the Borrower as fairly presenting the financial condition and results of
operations of CommNet and the Subsidiaries on a consolidated basis in
accordance with GAAP (except for the absence of footnotes), subject to
normal year-end audit adjustments, together with a written discussion by
management of quarterly results and year-to-date results compared to prior
year results;
(c) concurrently with any delivery of financial statements under (a)
or (b) above, a certificate of the accounting firm or Financial Officer of
CommNet, on behalf of the Borrower, or the Borrower opining on or
certifying such statements (which certificate, when furnished by an
accounting firm, may be limited to accounting matters and disclaim
responsibility for legal interpretations) (i) certifying that no Event of
Default or Default has occurred or, if such an Event of Default or Default
has occurred, specifying the nature and extent thereof and any corrective
action taken or proposed to be taken with respect thereto and (ii) setting
forth computations in reasonable detail satisfactory to the Administrative
Agent demonstrating compliance with the covenants contained in Sections
6.10, 6.11, 6.12 and 6.13 (it being understood that the information
required by this clause (ii) may be provided in a certificate of a
Financial Officer on behalf of the Borrower instead of from such accounting
firm);
(d) promptly after the same become publicly available, copies of all
periodic and other publicly available reports, proxy statements and, to the
extent requested by the Administrative Agent, other materials filed by
CommNet or any Subsidiary with the Securities and Exchange Commission, or
any governmental authority succeeding to any of or all the functions of
said Commission, or with any national securities exchange, or distributed
to its shareholders generally, as the case may be;
(e) if, as a result of any change in accounting principles and
policies from those as in effect on the date of this Agreement, the
consolidated financial statements of CommNet and the Subsidiaries delivered
pursuant to paragraph (a) or (b) above will differ in any material respect
from the consolidated financial statements that would have been delivered
pursuant to such clauses had no such change in accounting principles and
policies been made, then, together with the first delivery of financial
statements pursuant to paragraph (a) and (b) above
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following such change, a schedule prepared by a Financial Officer of
CommNet, on behalf of the Borrower, or the Borrower reconciling such
changes to what the financial statements would have been without such
changes;
(f) within 90 days after the beginning of each fiscal year, a copy of
an operating and capital expenditure budget for such fiscal year;
(g) promptly following the creation of or acquisition of Capital Stock
in any Downstream Affiliate, a certificate from a Responsible Officer
identifying such new Downstream Affiliate and the ownership interest
(direct or indirect) of CommNet therein;
(h) promptly, a copy of all reports submitted in connection with any
material interim or special audit made by independent accountants of the
books of CommNet or any Subsidiary;
(i) simultaneously with the date of delivery of any financial
statements pursuant to paragraph (a) above (or by such other date as the
Administrative Agent shall reasonably request), a schedule substantially in
the form of Schedule 3.08 containing such information as shall be necessary
to update such Schedule 3.08 such that Section 3.08, by reference to such
updated schedule so furnished, will be true in all material respects as of
the last day of the fiscal year to which such financial statements relate
(or, in the case of such request of the Administrative Agent, as of the day
60 days (100 days in the case of information required to be disclosed by
Section 3.08(d)) prior to the date such updated schedule is so furnished);
and
(j) promptly, from time to time, such other information regarding the
operations, business affairs and financial condition of CommNet, the
Borrower or any other Non-Controlled Downstream Affiliate (if the Borrower
possesses or has the ability to obtain such information), or Controlled
Downstream Affiliate, or compliance with the terms of any Loan Document, or
such consolidating financial statements, as in each case the Administrative
Agent or any Lender, acting through the Administrative Agent, may
reasonably request.
SECTION 5.05. Litigation and Other Notices. Furnish to the
Administrative Agent and each Lender written notice of the following promptly
after any Responsible Officer of CommNet or the Borrower obtains actual
knowledge thereof:
(a) any Event of Default or Default, specifying the nature and extent
thereof and the corrective action (if any) proposed to be taken with
respect thereto;
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(b) the filing or commencement of, or any written threat or notice of
intention of any person to file or commence, any action, suit or
proceeding, whether at law or in equity or by or before any Governmental
Authority, against CommNet or any Downstream Affiliate in respect of which
there is a reasonable possibility of an adverse determination and which, if
adversely determined, could reasonably be expected to result in a Material
Adverse Effect and a notice of any material adverse development in such
action, suit or proceeding; and
(c) any other development specific to CommNet or any Downstream
Affiliate that is not a matter of general public knowledge and that has
resulted in, or could reasonably be expected to result in, a Material
Adverse Effect.
SECTION 5.06. Employee Benefits. (a) Comply in all material
respects with the applicable provisions of ERISA and the provisions of the Code
relating to ERISA and any applicable similar non-U.S. law and (b) furnish to the
Administrative Agent (i) as soon as possible after, and in any event within 30
days after any Responsible Officer of CommNet, the Borrower or any ERISA
Affiliate knows or has reason to know that, any Reportable Event has occurred, a
statement of a Financial Officer setting forth details as to such Reportable
Event and the action proposed to be taken with respect thereto, together with a
copy of the notice, if any, of such Reportable Event given to the PBGC, (ii)
promptly after any Responsible Officer learns of receipt thereof, a copy of any
notice that CommNet, the Borrower or any ERISA Affiliate may receive from the
PBGC relating to the intention of the PBGC to terminate any Plan or Plans (other
than a Plan maintained by an ERISA Affiliate that is considered an ERISA
Affiliate only pursuant to subsection (m) or (o) of Code Section 414) or to
appoint a trustee to administer any such Plan, (iii) within 30 days after the
due date for filing with the PBGC pursuant to Section 412(n) of the Code a
notice of failure to make a required installment or other payment with respect
to a Plan, a statement of a Financial Officer setting forth details as to such
failure and the action proposed to be taken with respect thereto, together with
a copy of any such notice given to the PBGC and (iv) promptly after any
Responsible Officer learns thereof and in any event within 30 days after receipt
thereof by CommNet, the Borrower or any ERISA Affiliate from the sponsor of a
Multiemployer Plan, a copy of each notice received by CommNet, the Borrower or
any ERISA Affiliate concerning (A) the imposition of Withdrawal Liability or (B)
a determination that a Multiemployer Plan is, or is expected to be, terminated
or in reorganization, in each case within the meaning of Title IV of ERISA;
provided that in the case of each of clauses (i) through (iv) above, notice to
the Administrative Agent shall only be required if such event or condition,
together with all other events or conditions referred to in clauses (i) through
(iv) above, could reasonably be expected to result in liability of CommNet or
any Subsidiary in an aggregate amount exceeding $10,000,000.
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SECTION 5.07. Maintaining Records; Access to Properties and
Inspections. Maintain all financial records in accordance with GAAP and permit
any persons designated by the Administrative Agent or any Lender to visit and
inspect the financial records and the properties of CommNet or any Subsidiary at
reasonable times, upon reasonable prior notice to CommNet or to the Borrower,
and as often as reasonably requested and to make extracts from and copies of
such financial records, and permit any persons designated by the Administrative
Agent or any Lender upon reasonable prior notice to CommNet or the Borrower to
discuss the affairs, finances and condition of, CommNet or any Subsidiary with
the officers thereof and independent accountants therefor (subject to reasonable
requirements of confidentiality, including requirements imposed by law or by
contract).
SECTION 5.08. Use of Proceeds. Use the proceeds of the Loans and
request the issuance of Letters of Credit only for the purposes set forth in the
preamble to this Agreement.
SECTION 5.09. Compliance with Environmental Laws. Comply, and cause
all lessees and other persons occupying its Properties to comply, with all
Environmental Laws and Environmental Permits applicable to its operations and
Properties, except in the case of such noncompliance as could not reasonably be
expected to result in a material liability; obtain and renew all material
Environmental Permits necessary for its operations and Properties; and conduct
any material Remedial Action in accordance with Environmental Laws.
SECTION 5.10. Preparation of Environmental Reports. If a default
caused by reason of a breach of Section 3.17 or 5.09 shall have occurred and be
continuing, at the request of the Required Lenders through the Administrative
Agent, provide to Lenders within 90 days after such request, at the expense of
the Borrower, an environmental site assessment report for the Properties that
are the subject of such default prepared by an environmental consulting firm
acceptable to the Administrative Agent, indicating the presence or absence of
Hazardous Materials and the estimated cost of any Remedial Action required under
any applicable Environmental Law in connection with such Properties.
SECTION 5.11. Further Assurances. (a) Execute any and all further
documents, financing statements, agreements and instruments, and take all
further action (including filing Uniform Commercial Code and other financing
statements) that may be required under applicable law, or that the Collateral
Agent may reasonably request, in order to effectuate the transactions
contemplated by the Loan Documents and in order to grant, preserve, protect and
perfect the validity and first priority (subject to Liens permitted by Section
6.02) of the security interests created or intended to be created by the
Security Documents. In addition, from time to time, CommNet, the Borrower and
the
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Subsidiaries will, at their cost and expense, on or promptly (but in any event
within 10 Business Days) following the date of creation or acquisition by
CommNet or any Wholly Owned Subsidiary of any new Wholly Owned Subsidiary
(subject to the receipt of any required consents from Governmental Authorities),
promptly secure the Obligations by causing the following to occur: (i) promptly
upon creating or acquiring any additional Wholly Owned Subsidiary, the Capital
Stock of such Wholly Owned Subsidiary (unless such Wholly Owned Subsidiary is a
subsidiary of a foreign Subsidiary) will be pledged pursuant to the Pledge
Agreement; provided that no more than 65% of the Capital Stock of any foreign
subsidiary shall be required to be pledged pursuant to this Section 5.11, and
(ii) such Wholly Owned Subsidiary (unless such subsidiary is a foreign
Subsidiary) will become a party to the Security Agreement, the Intellectual
Property Security Agreement, the Pledge Agreement (if such subsidiary owns
Capital Stock), the Subsidiary Guarantee Agreement, the Collateral Account
Agreement and the Indemnity, Subrogation and Contribution Agreement as
contemplated under each such agreement and will, if such subsidiary owns any
real property with a book or fair market value greater than $5,000,000 located
in the United States, enter into and deliver to the Collateral Agent a mortgage
or deed of trust, as applicable, in respect of such property in such form as may
reasonably be specified by the Collateral Agent and constituting the highest
priority Lien then obtainable thereon. All such security interests and Liens
will be created under the Security Documents and other instruments and documents
in form and substance reasonably satisfactory to the Collateral Agent, and
CommNet and the Wholly Owned Subsidiaries shall deliver or cause to be delivered
to the Administrative Agent all such instruments and documents (including legal
opinions and lien searches) as the Required Lenders shall reasonably request to
evidence compliance with this Section 5.11. CommNet and the Borrower agree to
provide, and to cause each Wholly Owned Subsidiary to provide, such evidence as
the Collateral Agent shall reasonably request as to the perfection and priority
status of each such security interest and Lien.
(b) On or prior to the date which is 90 days after the Closing Date
(the "License Drop-Down Date"), transfer each License issued by the FCC held by
CommNet and the Wholly Owned Subsidiaries as of the License Drop-Down Date to a
Wholly Owned Subsidiary (the "License Subsidiary") all of the Capital Stock of
which is directly held by the Borrower.
(c) Within 90 days after any License issued by the FCC (other than
those referred to in Section 5.11(b) above) becomes held by CommNet or a Wholly
Owned Subsidiary (through the acquisition of either a License or equity
interests in a person), transfer any such License to the License Subsidiary.
(d) Use diligent efforts to obtain the consents necessary to pledge,
and to pledge, under the Loan Documents any Capital Stock held by CommNet or any
Wholly Owned Subsidiary which is not so pledged.
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SECTION 5.12. Fiscal Year; Accounting. In the case of each of
CommNet, the Borrower and the other Subsidiaries, cause its respective fiscal
year to end on September 30 of such fiscal year and its respective first, second
and third fiscal quarters to end on December 31, March 31 and June 30,
respectively, of such fiscal year.
SECTION 5.13. Dividends. In the case of CommNet and the Borrower,
cause the Controlled Downstream Affiliates to pay dividends and cause such
dividends to be paid to the extent required to pay the monetary Obligations,
subject to prohibitions imposed by applicable requirements of law, any
applicable organizational documents of the Downstream Affiliates and by this
Agreement.
SECTION 5.14. Interest Rate Protection Agreements. As promptly as
practicable and in any event within 60 days after the Closing Date, enter into,
and thereafter maintain in effect, one or more Interest Rate Protection
Agreements with any of the Lenders or other financial institutions reasonably
satisfactory to the Administrative Agent, the effect of which for each three-
year period (or shorter period ending on the Tranche D Maturity Date) shall be
to limit at all times during such period the interest payable in connection with
Term Borrowings having an aggregate outstanding principal amount not less than
50% of the aggregate principal amount of Term Borrowings projected to be
outstanding at any such time to a maximum rate and on terms and conditions
otherwise reasonably acceptable, taking into account current market conditions,
to the Administrative Agent, and deliver evidence of the execution and delivery
thereof to the Administrative Agent.
SECTION 5.15. CoBank Patronage. In the case of the Borrower and at
all times during which CoBank, ACB ("CoBank") is a Lender hereunder, acquire and
maintain non-voting patronage certificates in CoBank (the "Patronage
Certificates") in such amounts and at such times as CoBank may from time to time
require in accordance with its bylaws and capital plan (as each may be amended
from time to time); provided, that the maximum amount of Patronage Certificates
that the Borrower may be required to purchase may not exceed the maximum amount
permitted by CoBank's bylaws as in effect on the date hereof. The rights and
obligations of the parties with respect to the Patronage Certificates and any
other patronage or other distributions made by CoBank shall be governed by
CoBank's bylaws.
<PAGE>
88
ARTICLE VI. NEGATIVE COVENANTS
Each of CommNet and the Borrower covenants and agrees with each Lender
that from and after the Closing Date and so long as this Agreement shall remain
in effect and until the Commitments have been terminated and the principal of
and interest on each Loan, all Fees and all other expenses or amounts payable
under any Loan Document have been paid in full and all Letters of Credit have
been canceled or have expired and all amounts drawn thereunder have been
reimbursed in full, unless the Required Lenders shall otherwise consent in
writing, none of CommNet or the Borrower will, and none of them will cause or
permit any of the Subsidiaries (other than Subsidiaries not Controlled by
CommNet) to:
SECTION 6.01. Indebtedness. Incur, create, assume or permit to exist
any Indebtedness, except:
(a) Indebtedness existing on the date hereof and set forth in Schedule
3.08 or 6.01, but not any extensions, renewals or replacements of such
Indebtedness except (i) renewals and extensions expressly provided for in
the agreements evidencing any such Indebtedness as the same are in effect
on the date of this Agreement and (ii) refinancings and extensions of any
such Indebtedness if the interest rate with respect thereto and other terms
thereof (in the aggregate with respect to such other terms) are no less
favorable to the obligor thereon or to the Lenders than the Indebtedness
being refinanced or extended and the average life to maturity thereof is
greater than or equal to that of the Indebtedness being refinanced or
extended; provided that such Indebtedness permitted under clause (i) or
clause (ii) above shall not be (A) Indebtedness of an obligor that was not
an obligor with respect to the Indebtedness being extended, renewed or
refinanced, (B) in a principal amount which exceeds the Indebtedness being
renewed, extended or refinanced or (C) incurred, created or assumed if any
Default or Event of Default has occurred and is continuing or would result
therefrom;
(b) Indebtedness created hereunder and under the other Loan Documents;
(c) in the case of the Guarantors, the Guarantees under the Guarantee
Agreements;
(d) Indebtedness of the Borrower pursuant to Interest Rate Protection
Agreements entered into in order to fix the effective rate of interest on
the Loans and other Indebtedness; provided that such transactions shall be
entered into to hedge actual interest rate exposures and not for the
purpose of speculation;
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89
(e) Indebtedness of CommNet and the Subsidiaries owed to (including
obligations in respect of letters of credit for the benefit of) any person
providing worker's compensation, health, disability or other employee
benefits or property, casualty or liability insurance to CommNet or any
Subsidiary, pursuant to reimbursement or indemnification obligations to
such person;
(f) in the case of the Borrower, Indebtedness in respect of Letters of
Credit issued hereunder;
(g) (i) Indebtedness of CommNet, the Borrower or any Wholly Owned
Subsidiary that is a Guarantor to any Downstream Affiliate, (ii)
Indebtedness of the Borrower or any Wholly Owned Subsidiary that is a
Guarantor to CommNet or the Borrower, (iii) Indebtedness consisting of
Affiliate Advances permitted under Section 6.04 and (iv) Indebtedness
extended to Borrowing Affiliates and other Downstream Affiliates by CommNet
which by their terms are required to be repaid with the proceeds of
Affiliate Advances or capital contributions within 60 days after the last
day of the fiscal quarter in which they are made ("Interim Advances");
provided that the aggregate principal amount of Interim Advances
outstanding at any one time may not exceed $25,000,000;
(h) Indebtedness of CommNet or a Subsidiary that represents the
assumption by CommNet or such Subsidiary of Indebtedness of a Subsidiary in
connection with the permitted merger of such Subsidiary with or into the
assuming person or the permitted purchase of all or substantially all the
assets of such Subsidiary by CommNet or a Subsidiary;
(i) Indebtedness of CommNet or the Subsidiaries in respect of
performance bonds, bid bonds, appeal bonds, surety bonds and similar
obligations and trade related letters of credit, in each case provided in
the ordinary course of business, including those incurred to secure health,
safety and environmental obligations in the ordinary course of business,
and any extension, renewal or refinancing thereof to the extent not
provided to secure the repayment of other Indebtedness and to the extent
that the amount of refinancing Indebtedness is not greater than the amount
of Indebtedness being refinanced;
(j) Indebtedness arising from the honoring by a bank or other
financial institution of a check, draft or similar instrument drawn against
insufficient funds in the ordinary course of business; provided that such
Indebtedness is extinguished within two Business Days of its incurrence;
(k) Indebtedness of a Subsidiary acquired after the date hereof and
Indebtedness of a corporation merged or consolidated with or into CommNet
or a
<PAGE>
90
Subsidiary after the date hereof, which Indebtedness in each case exists at
the time of such acquisition, merger, consolidation or conversion into a
Subsidiary and is not created in contemplation of such event and where such
acquisition, merger or consolidation is permitted by this Agreement;
provided that the aggregate principal amount of Indebtedness under this
paragraph (k) shall not at any time exceed $10,000,000 for all
Subsidiaries;
(l) Capital Lease Obligations, mortgage financings and purchase money
Indebtedness in an aggregate principal amount outstanding at any time not
in excess of $5,000,000 incurred by CommNet or any Subsidiary prior to or
within 270 days after a Capital Expenditure in order to finance such
Capital Expenditure, and extensions, renewals and refinancings thereof if
the interest rate with respect thereto and other terms thereof (in the
aggregate with respect to such other terms) are no less favorable to
CommNet or such Subsidiary than the Indebtedness being refinanced and the
average life to maturity thereof is greater than or equal to that of the
Indebtedness being refinanced; provided that such refinancing Indebtedness
shall not be (i) Indebtedness of an obligor that was not an obligor with
respect to the Indebtedness being extended, renewed or refinanced, (ii) in
a principal amount that exceeds the Indebtedness being renewed, extended or
refinanced or (iii) incurred, created or assumed if any Default or Event of
Default has occurred and is continuing or would result therefrom;
(m) Capital Lease Obligations incurred by CommNet or any Subsidiary in
respect of any Sale and Leaseback Transaction that is permitted under
Section 6.03;
(n) Indebtedness of CommNet or any Subsidiary supported by a Letter of
Credit, in a principal amount not in excess of the stated amount of such
Letter of Credit;
(o) Capital Lease Obligations arising out of leases of automobiles to
be used by employees and directors of CommNet and the Subsidiaries entered
into in the ordinary course of business; and
(p) other Indebtedness of the Borrower and the Subsidiaries in an
aggregate principal amount at any time outstanding that when taken together
with all Indebtedness outstanding at such time under paragraphs (h), (k)
and (l) above is not in excess of $25,000,000.
<PAGE>
91
SECTION 6.02. Liens. Create, incur, assume or permit to exist any
Lien on any property or assets (including stock or other securities of any
person, including any Subsidiary) now owned or hereafter acquired by it or on
any income or revenues or rights in respect of any thereof, or sell or transfer
any account receivable or any right in respect thereof, except:
(a) Liens existing on the date hereof and set forth in Schedule 6.02;
provided that such Liens shall secure only those obligations that they
secure on the date hereof (and extensions, renewals and refinancings of
such obligations permitted by Section 6.01(a)) and shall not subsequently
apply to any other property or assets of CommNet or any Subsidiary (other
than pursuant to after acquired property clauses included in such Liens and
set forth in Schedule 6.02);
(b) any Lien created under the Loan Documents;
(c) any Lien existing on any property or asset of CommNet or any
Subsidiary prior to the acquisition thereof by CommNet or any Subsidiary
that does not secure Indebtedness; provided that (i) such Lien is not
created in contemplation of or in connection with such acquisition and (ii)
such Lien does not apply to any other property or asset of CommNet or any
Subsidiary;
(d) any Lien on any property or asset of a Subsidiary securing
Indebtedness permitted by Section 6.01(h) or (k) ("Acquired Indebtedness");
provided that such Lien does not apply to any other property or assets of
CommNet or any Subsidiary Guarantor not securing such Indebtedness at the
date of acquisition of such property or asset (other than after acquired
property subject to a Lien securing Indebtedness existing prior to such
date and permitted hereunder which contains a requirement for the pledging
of after acquired property except for such after acquired property that is
not related to the business of which such Acquired Indebtedness was a part
(as compared to the other businesses of CommNet and its Subsidiaries)
before such business was acquired by a Loan Party);
(e) Liens for taxes, assessments or other governmental charges or
levies not yet delinquent, or that are for less than $10,000,000 in the
aggregate, or that are being contested in compliance with Section 5.03 or
for property taxes on property that CommNet or one of the Subsidiaries has
determined to abandon if the sole recourse for such tax, assessment,
charge, levy or claim is to such property;
(f) carriers', warehousemen's, mechanic's, materialmen's, repairmen's
or other like Liens arising in the ordinary course of business and securing
obligations that are not due and payable or that are being contested in
good faith by
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92
appropriate proceedings and in respect of which, if applicable, CommNet or
the relevant Subsidiary shall have set aside on its books reserves in
accordance with GAAP;
(g) pledges and deposits made in the ordinary course of business in
compliance with the Federal Employers Liability Act or any other workmen's
compensation, unemployment insurance and other social security laws or
regulations and deposits securing liability to insurance carriers under
insurance or self-insurance arrangements in respect of such obligations;
(h) deposits to secure the performance of bids, trade contracts (other
than for Indebtedness), leases (other than Capital Lease Obligations),
statutory obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature incurred in the ordinary course of business,
including those incurred to secure health, safety and environmental
obligations in the ordinary course of business;
(i) zoning restrictions, easements, trackage rights, leases (other
than Capital Lease Obligations), licenses, special assessments, rights-of-
way, restrictions on use of real property and other similar encumbrances
incurred in the ordinary course of business which, in the aggregate, are
not substantial in amount and do not materially detract from the value of
the property subject thereto or interfere with the ordinary conduct of the
business of CommNet or any Subsidiary;
(j) purchase money security interests in real property, improvements
thereto or equipment hereafter acquired (or, in the case of improvements,
constructed) by CommNet or any Subsidiary (including the interests of
vendors and lessors under conditional sale and title retention agreements);
provided that (i) such security interests secure Indebtedness or Sale and
Lease-Back Transactions permitted by Section 6.01, (ii) such security
interests are incurred, and the Indebtedness secured thereby is created,
within 270 days after such acquisition (or construction), (iii) the
Indebtedness secured thereby does not exceed 100% of the cost of such real
property, improvements or equipment at the time of such acquisition (or
construction), (iv) such expenditures are permitted by this Agreement and
(v) such security interests do not apply to any other property or assets of
CommNet or any Subsidiary (other than to accessions to such real property,
improvements or equipment and provided that individual financings of
equipment provided by a single lender may be cross-collateralized to other
financings of equipment provided solely by such lender);
(k) (i) the sale of accounts receivable in connection with collection
in the ordinary course of business and (ii) Liens securing reimbursement
obligations in
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93
respect of trade related letters of credit permitted under Section 6.01 and
covering the goods (or the documents of title in respect of such goods)
financed by such letters of credit;
(l) Liens arising out of capitalized or operating lease transactions
permitted under Section 6.03, so long as such Liens (i) attach only to the
property sold in such transaction and any accessions thereto and (ii) do
not interfere with the business of CommNet or any of the Subsidiaries in
any material respect;
(m) Liens consisting of interests of lessors under capital leases
permitted by Section 6.01;
(n) Liens securing judgments for the payment of money in an aggregate
amount not in excess of $10,000,000 (except to the extent covered by
insurance), unless such judgments shall remain undischarged for a period of
more than 30 consecutive days during which execution shall not be
effectively stayed;
(o) any Lien arising by operation of law pursuant to Section 107(1) of
the Comprehensive Environmental Response, Compensation and Liability Act,
42 U.S.C. (S) 9607(1), or pursuant to analogous state law, for costs or
damages which are not yet due (by virtue of a written demand for payment by
a Governmental Authority) or which are being contested in compliance with
the standard set forth in Section 5.03(a), or on property that the Borrower
or a Subsidiary has determined to abandon if the sole recourse for such
costs or damages is to such property; provided that the liability of the
Borrower and the Guarantors with respect to the matters giving rise to all
such Liens shall not, in the reasonable estimate of the Borrower (in light
of all attendant circumstances, including the likelihood of contribution by
third parties), exceed $10,000,000;
(p) any leases or subleases to other persons of properties or assets
owned or leased by the Borrower or a Subsidiary;
(q) Liens that are contractual rights of setoff (i) relating to the
establishment of depository relations with banks not given in connection
with the issuance of Indebtedness or (ii) pertaining to pooled deposit
and/or sweep accounts of CommNet and/or any Subsidiary to permit
satisfaction of overdraft or similar obligations incurred in the ordinary
course of business of the Borrower and its Subsidiaries;
(r) the replacement, extension or renewal of any Lien permitted by
clause (c), (d) or (j) above; provided that such replacement, extension or
renewal Lien shall not cover any property other than the property that was
subject to such Lien prior to such replacement, extension or renewal; and
provided further that the
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94
Indebtedness and other obligations secured by such replacement, extension
or renewal Lien are permitted by this Agreement;
(s) any Lien arising as a result of a transaction permitted under
Section 6.14;
(t) any Lien on assets of a Subsidiary securing Indebtedness of such
Subsidiary permitted pursuant to Section 6.01(g) (iii) or (iv);
(u) rights of first refusal and buy-sell provisions relating to
Capital Stock of Downstream Affiliates;
(v) statutory Liens on all equity evidenced by the Patronage
Certificates which the Borrower may now own or hereafter acquire or be
allocated in CoBank; and
(w) other Liens with respect to property or assets with an aggregate
fair market value, which shall be no greater than the fair market value at
the time of the creation of any such Lien, of not more than $5,000,000 at
any time.
SECTION 6.03. Sale and Lease-Back Transactions. Enter into any
arrangement, directly or indirectly, with any person whereby it shall sell or
transfer any property, real or personal, used or useful in its business, whether
now owned or hereafter acquired, and thereafter rent or lease such property or
other property which it intends to use for substantially the same purpose or
purposes as the property being sold or transferred (a "Sale and Lease-Back
Transaction"), other than any Sale and Lease-Back Transaction that involves a
sale by CommNet or a Subsidiary solely for cash consideration on terms not less
favorable than would prevail in an arm's-length transaction and that (a) results
in a Capital Lease Obligation permitted under Section 6.01 entered into to
finance the initial acquisition by CommNet or such Subsidiary of the property
sold or transferred in such Sale and Lease-Back Transaction; provided that such
Sale and Lease-Back Transaction occurs within 270 days after such acquisition,
(b) results in an operating lease not involving CommNet or a Subsidiary, or (c)
results in a Capital Lease Obligation or an operating lease entered into for any
purpose; provided that the proceeds of any such Sale and Lease-Back Transaction
in reliance upon this clause (c) shall be deemed subject to Section 2.12(c).
<PAGE>
95
SECTION 6.04. Investments, Loans and Advances. Purchase, hold or
acquire any Capital Stock, evidences of indebtedness or other securities of or
equity interests in, make or permit to exist any loans or advances or capital
contributions to, or make or permit to exist any investment or any other
interest in, any other person, directly or indirectly except:
(a) investments (i) existing on the date hereof in Capital Stock or
(ii) by CommNet or any Wholly Owned Subsidiary in the Borrower or any other
Subsidiary Guarantor;
(b) Permitted Investments and investments that were Permitted
Investments when made;
(c) investments arising out of the receipt by CommNet or any
Subsidiary, of noncash consideration for the sale of assets permitted under
Section 6.05 provided that in the case of the Borrower and the Guarantors
such consideration (if the stated amount or value thereof is in excess of
$1,000,000) is pledged upon receipt pursuant to the Pledge Agreement;
(d) intercompany loans permitted to be incurred as Indebtedness under
Section 6.01;
(e) (i) loans and advances to employees of CommNet or a Subsidiary not
exceeding $1,000,000 in the aggregate at any time and (ii) advances of
payroll payments and expenses to employees in the ordinary course of
business;
(f) (i) accounts receivable arising and trade credit granted in the
ordinary course of business and any securities received in satisfaction or
partial satisfaction thereof from financially troubled account debtors to
the extent reasonably necessary in order to prevent or limit loss and (ii)
prepayments and other credits to suppliers made in the ordinary course of
business;
(g) Interest Rate Protection Agreements permitted pursuant to Section
6.01(d);
(h) investments, other than investments listed in paragraphs (a)
through (g) of this Section 6.04, existing on the Closing Date and set
forth on Schedule 6.04;
(i) investments resulting from pledges and deposits referred to in
Section 6.02(g) or (h);
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96
(j) investments constituting Permitted Business Acquisitions and
subsequent investments in previously acquired Permitted Business
Acquisitions not exceeding $35,000,000 (net of any return representing
return of capital in respect of any such investments) in the aggregate at
any time;
(k) investments or loans not existing on the date hereof in any
person that directly or indirectly owns and operates a System; provided
that the sum of the aggregate amount of the consideration (whether cash,
property or the existence of Indebtedness of such person (less third party
interests in such Indebtedness)) for all investments made pursuant to this
clause (k) shall not exceed (net of any return of capital of (but not
return on) any such investment) $20,000,000 (which amount shall be
increased by the amount of such investments directly funded through the
sale of Capital Stock of CommNet);
(l) investments in or Indebtedness extended to TVX subsequent to the
date hereof not exceeding $3,000,000 in the aggregate;
(m) Affiliate Advances by the Borrower to any Borrowing Affiliate (i)
outstanding as of the date hereof and set forth in Schedule 3.08, (ii) made
pursuant to binding commitments of the Borrower under Affiliate Advance
Facilities existing on the date hereof and set forth in Schedule 3.08 in
accordance with the terms (including maximum amounts) and subject to all
condition precedent relating to such commitments as of the date hereof,
(iii) made pursuant to new commitments under existing Affiliate Advance
Facilities; provided that, in the case of Affiliate Advances made pursuant
to this clause (iii), the Borrower shall ensure that the condition set
forth in clause (iv)(C) below is satisfied or (iv) made pursuant to other
Affiliate Advance Facilities; provided that, in the case of Affiliate
Advances made pursuant to this clause (iv), the Borrower shall ensure that
all the following conditions are satisfied:
(A) each such Borrowing Affiliate shall have entered into a
management agreement whereby such Borrowing Affiliate and its
subsidiaries will be managed by CommNet or a Wholly Owned Subsidiary
on terms consistent with those described in the Information Memorandum
for such management agreements existing on the date hereof;
(B) there will be no material restriction on the right of CommNet
to receive its proportionate share of the cash flow of each Borrowing
Affiliate and the Downstream Affiliates in which such Borrowing
Affiliate owns (directly or indirectly) Capital Stock which is not
necessary for the continued operation thereof to be distributed
thereby;
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97
(C) on the closing date for the proposed Affiliate Advance
Facility, the ratio, on a pro forma basis, after giving effect to the
proposed Affiliate Advance Facility (including unfunded commitments
and Affiliate Advances thereunder on such date) and treating the
proposed Borrowing Affiliate as a Borrowing Affiliate for purposes of
(I) and (II) below, recomputed as of the last day of the most recently
ended four consecutive fiscal quarter period of CommNet as if such
Affiliate Advance Facility had existed on the first day of such four
fiscal quarter period, of (I) Indebtedness of all Borrowing
Affiliates and other Downstream Affiliates guaranteeing payment in
full of the Affiliate Advances of any Borrowing Affiliate as of the
last day of any fiscal quarter set forth below to (II) Financed
Proportionate EBITDA (excluding the contribution of persons who are
not either Borrowing Affiliates or Downstream Affiliates guaranteeing
payment in full of the Affiliate Advances of any Borrowing Affiliate)
for the four consecutive fiscal quarter period ending on such day
shall not exceed the ratio set forth below:
<TABLE>
<CAPTION>
Fiscal Quarter Ratio
-------------- ----------
<S> <C>
December 31, 1997 8.0 to 1.0
March 31, 1998 8.0 to 1.0
June 30, 1998 8.0 to 1.0
September 30, 1998 8.0 to 1.0
December 31, 1998 7.0 to 1.0
March 31, 1999 7.0 to 1.0
June 30, 1999 7.0 to 1.0
September 30, 1999 7.0 to 1.0
December 31, 1999 6.0 to 1.0
March 31, 1999 6.0 to 1.0
June 30, 1999 6.0 to 1.0
September 30, 2000 6.0 to 1.0
Thereafter 5.0 to 1.0
</TABLE>
; provided that up to $10,000,000 in aggregate commitments under
Affiliate Advance Facilities (including increases in commitments under
existing Affiliate Advance Facilities contemplated in clause (iii)
above) that would be prohibited hereunder due to the failure to meet
the above condition shall nonetheless be permitted (subject, in the
case of new Affiliate Advance Facilities, to satisfaction of the other
conditions set forth in this clause (iv));
(D) each such Borrowing Affiliate or one of the Downstream
Affiliates in which such Borrowing Affiliate owns (directly or
indirectly)
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98
Capital Stock shall hold one or more Licenses issued by the FCC and
shall use the proceeds of such Affiliate Advances solely to fund (i)
the construction or operation of the System or Systems related to such
License or Licenses and (ii) the payment of interest on Affiliate
Advances and related transaction costs and expenses;
(E) substantially all of the assets of each such Borrowing
Affiliate and the Downstream Affiliates in which such Borrowing
Affiliate owns (directly or indirectly) Capital Stock and which holds
material assets relating to the System or Systems referred to in
clause (D) above shall be pledged to secure such Affiliate Advances
(except that any License referred to in clause (D) above held by any
such person will be transferred to a subsidiary thereof, all of the
Capital Stock of such subsidiary will be pledged to secure such
Affiliate Advances, such subsidiary shall guarantee the payment in
full of such Affiliate Advances and such subsidiary shall not have or
incur any liability or have or assume or undertake any obligations
other than such guarantee, in each case unless such action cannot
reasonably be taken other than in a manner that results in tax
consequences that are material and adverse to the licensee) and each
of such Downstream Affiliates in which such Borrowing Affiliate owns
(directly or indirectly) Capital Stock and which holds material assets
related to the Systems referred to the clause (D) above shall have
guaranteed the payment in full of such Affiliate Advances, and all
such pledges will purport to be perfected security interests subject
to no prior consensual liens; in each case pursuant to documentation
substantially similar to the security documentation for a substantial
number of the Affiliate Advance Facilities in existence on the date
hereof;
(F) each Borrowing Affiliate and other Downstream Affiliates in
which such Borrowing Affiliate owns (directly or indirectly) Capital
Stock and which holds material assets related to the Systems referred
to in clause (D) above shall not be permitted under the Affiliate
Advance Facilities to incur any material Indebtedness other than such
Affiliate Advances and, in the case of such other Downstream
Affiliates, to such Borrowing Affiliate and under guarantees of
Affiliate Advances;
(G) such Affiliate Advances and all related rights therein and
documentation with respect thereto (including one or more notes
representing such Affiliate Advances) and rights of the Borrower in
collateral, guarantees and other credit support therefor will
constitute Collateral under the Security Documents subject to a
perfected security interest of the Collateral Agent for the benefit of
the Lenders that is prior to all consensual Liens thereon; and
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99
(H) such Affiliate Advance will be made on other terms (including
with respect to interest rates and fees) and conditions which are
consistent in all material respects with those of a substantial number
of the Affiliate Advance Facilities in existence on the date hereof;
(n) investments pursuant to capital calls in Downstream Affiliates
existing on the Closing Date;
(o) investments in Downstream Affiliates not to exceed $250,000 in the
aggregate per year; and
(p) Interim Advances to Downstream Affiliates; provided that at no
time will the aggregate principal amount of Interim Advances exceed
$25,000,000.
SECTION 6.05. Mergers, Consolidations, Sales of Assets and
Acquisitions. Merge into or consolidate with any other person, or permit any
other person to merge into or consolidate with it, or sell, transfer, lease or
otherwise dispose of (in one transaction or in a series of transactions) all or
any substantial part of its assets (whether now owned or hereafter acquired), or
purchase, lease or otherwise acquire (in one transaction or a series of
transactions) all or any substantial part of the assets of any other person,
except that this Section 6.05 shall not prohibit:
(a) the purchase and sale of inventory in the ordinary course of
business by the Borrower or any Subsidiary or the acquisition of any asset
of any person in the ordinary course of business;
(b) if at the time thereof and immediately after giving effect thereto
no Event of Default or Default shall have occurred and be continuing (i)
the merger of any Wholly Owned Subsidiary into CommNet in a transaction in
which CommNet is the surviving corporation and (ii) the merger or
consolidation of any Wholly Owned Subsidiary (other than the Borrower) into
or with any other Wholly Owned Subsidiary (other than the Borrower) and, in
the case of each clauses (i) and (ii), no person other than the CommNet or
a Wholly Owned Subsidiary receives any consideration; provided, however,
that in no event shall the License Subsidiary be a party to any such
merger or consolidation or any Capital Stock of the License Subsidiary be
held by any person other than the Borrower or a Wholly Owned Subsidiary;
(c) Sale and Lease-Back Transactions permitted by Section 6.03;
(d) investments permitted by Section 6.04;
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100
(e) subject to Section 6.07, sales, leases or transfers from CommNet
or any Subsidiary to CommNet or any domestic Wholly Owned Subsidiary;
(f) sales, leases or other dispositions of equipment or real property
or inventory of CommNet and the Subsidiaries determined by the Board of
Directors or senior management of CommNet or any such Subsidiary to be no
longer useful or necessary in the operation of the business of CommNet and
the Subsidiaries; provided that the Net Proceeds thereof shall be applied
in accordance with Section 2.12(c); and
(g) sales, leases or other dispositions of property of CommNet and the
Subsidiaries having a net book value not in excess of $10,000,000 in any
fiscal year; provided that the Net Proceeds thereof are applied in
accordance with Section 2.12(c) or are used within one year of the date of
receipt thereof to purchase assets useful in the business of CommNet and
the Subsidiaries; and provided further that no sale may be made of the
Capital Stock of any Downstream Affiliate except in connection with the
sale of all its outstanding Capital Stock that is held by CommNet and any
other Subsidiary.
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101
SECTION 6.06. Dividends and Distributions. Declare or pay, directly
or indirectly, any dividend or make any other distribution (by reduction of
capital or otherwise), whether in cash, property, securities or a combination
thereof, with respect to any shares of its Capital Stock (other than dividends
and distributions on the common stock of CommNet payable solely by the issuance
of additional shares of common stock of CommNet) or directly or indirectly
redeem, purchase, retire or otherwise acquire for value (or permit any
Controlled Downstream Affiliate to purchase or acquire) any shares of any class
of its Capital Stock or set aside any amount for any such purpose; provided,
however, that: (a) subject to clause (c) below, any Controlled Downstream
Affiliate (including the Borrower) may declare and pay dividends to, repurchase
its Capital Stock from or make other distributions to CommNet or to any
Controlled Downstream Affiliate on a pro rata basis (or more favorable basis
from the perspective of the Borrower) based on relative ownership interests,
(b) CommNet may purchase or redeem its Capital Stock, declare and pay dividends
or make other distributions (x) following any Excess Cash Flow Payment Date
occurring in any fiscal year after the fiscal year ending September 30, 1999 if
(i) the Borrower shall have made all payments and prepayments of Term Loans and
reductions of Revolving Credit Commitments required to have been made by the
Borrower in respect of such immediately preceding fiscal year, including
pursuant to Section 2.12(d), (ii) the aggregate amount of such dividends and
other distributions made in such fiscal year does not exceed the amount of
Excess Cash Flow for the previous fiscal year which was not required to be
applied pursuant to Section 2.12(d) and (iii) no Default or Event of Default
shall have occurred and be continuing or (y) in respect of payments permitted
under Section 6.07(b) and (c) no Controlled Downstream Affiliate shall be
permitted by CommNet, the Borrower or any other Wholly Owned Subsidiary to take
any action prohibited by this Section 6.06.
SECTION 6.07. Transactions with Affiliates. (a) Sell or transfer
any property or assets to, or purchase or acquire any property or assets from,
or otherwise engage in any other transaction with, any of its Affiliates or any
known direct or indirect holder of 10% or more of any class of capital stock of
CommNet, unless such transaction is (i) otherwise permitted under this Agreement
and (ii) upon terms no less favorable to CommNet or such Subsidiary, as the case
may be, than it would obtain in a comparable arm's-length transaction with a
person that was not an Affiliate; provided that the foregoing restriction shall
not apply to (A) the payment to the Fund and/or any Fund Affiliates of the
monitoring and management fees referred to in paragraph (c) below or fees
payable on the Closing Date, (B) the indemnification of directors of CommNet
and the Subsidiaries in accordance with customary practice or (C) the management
and other operating agreements between CommNet and the Downstream Affiliates
entered into on customary terms and conditions.
(b) The foregoing paragraph (a) shall not prohibit, to the extent
otherwise permitted under this Agreement, (i) loans or advances to employees of
CommNet, the
<PAGE>
102
Borrower or any Controlled Downstream Affiliate in accordance with Section
6.04(e), (ii) transactions among CommNet and any Downstream Affiliate otherwise
permitted by this Agreement, (iii) the payment of fees and indemnities to
directors, officers and employees of CommNet and any Controlled Downstream
Affiliate in the ordinary course of business, (iv) transactions pursuant to
permitted agreements in existence on the Closing Date and set forth on Schedule
6.07, (v) any employment agreements entered into by CommNet or any Controlled
Downstream Affiliate in the ordinary course of business, (vi) dividends and
repurchases permitted under Section 6.06, (vii) any purchase by the Participants
of Capital Stock of CommNet, or any contribution by the Participants to the
equity capital of CommNet, (viii) the payment of investment banking fees to The
Blackstone Group and its affiliates to the extent such fees are no greater than
the investment banking fees that a third party could have obtained for the same
services after negotiation at arm's-length, and (ix) any reasonable issuance of
securities, or other reasonable payments, awards or grants in cash, securities
or otherwise pursuant to, or the funding of, employment arrangements, employee
or director stock options and employee or director stock ownership plans
approved by the Board of Directors of CommNet.
(c) Make any payment of or on account of monitoring or management fees
payable to the Fund and/or any Fund Affiliates if a Default or Event of Default
shall have occurred and be continuing or would result therefrom; provided that
the aggregate amount of monitoring and management fees paid or payable to the
Fund and Fund Affiliates in any fiscal year shall not exceed $500,000 for 1997,
$525,000 for 1998 and for any year subsequent to 1998 an amount equal to 105% of
the maximum allowable aggregate monitoring and management fee for the
immediately preceding year; provided that in the event that the maximum amount
allowable for such monitoring and management fee (without giving effect to this
proviso) is not paid in any such year (the "Fee Shortfall") the maximum amount
allowable for such monitoring and management fee for the following year shall be
an amount equal to 105% of the maximum allowable aggregate monitoring and
management fee for such preceding year plus the Fee Shortfall.
SECTION 6.08. Business of CommNet and the Subsidiaries. Engage at
any time in any business or business activity other than (i) the business
currently conducted by it; (ii) any business activities reasonably incidental or
related to the business activities specified in clause (i) immediately preceding
this clause; and (iii) any other business or business activity acquired as part
of a Permitted Business Acquisition if such other business or business activity
constitutes less than 25% of the business acquired in such Permitted Business
Acquisition at the time of acquisition; provided that in no event shall the
Borrower permit the License Subsidiary to have or incur any non-de minimis
liabilities or obligations (other than under the Subsidiary Guarantee Agreement
and the Communications Act) or to engage in any business or activities other
than the holding of Licenses held by it.
<PAGE>
103
SECTION 6.09. Material Agreements. (a) (i) Directly or indirectly,
make any payment, retirement, repurchase or redemption on account of the
principal of or directly or indirectly prepay or defease any Indebtedness prior
to the stated maturity date of such Indebtedness (other than Indebtedness under
the Loan Documents and Affiliate Advances and Interim Advances), (ii) make any
payment or prepayment of any such Indebtedness that would violate the terms of
this Agreement or of such Indebtedness, any agreement or document evidencing,
related to or securing the payment or performance of such Indebtedness or any
subordination agreement or provision applicable to such Indebtedness or (iii)
pay in cash any amount in respect of such Indebtedness that may at the
Borrower's option be paid in kind thereunder.
(b) Amend or modify in any manner adverse in any material respect to
the Lenders, or grant any waiver or release under or terminate in any manner
adverse in any material respect to the Lenders, or take any action having any of
the foregoing effects with respect to, the certificate of incorporation, any
partnership agreement or bylaws of CommNet, the Borrower or any Controlled
Downstream Affiliate or the Recapitalization Agreement (it being agreed that any
such action that is adverse to the Lenders with respect to any provision thereof
relating to limitations on Indebtedness shall be deemed material for purposes of
this Section 6.09(b)).
(c) Permit any Controlled Downstream Affiliate to enter into any
agreement or instrument (other than this Agreement) that by its terms restricts
the payment of dividends or the making of cash advances by such Controlled
Downstream Affiliate to CommNet or any Controlled Downstream Affiliate that is a
direct or indirect parent of such Controlled Downstream Affiliate other than
those set forth in the Loan Documents, those in effect on the Closing Date and
those set forth on Schedule 3.08 or in any new Affiliate Advance Facility to the
extent substantially similar to the restrictions set forth in Affiliate Advance
Facilities existing on the date hereof (or replacements of such agreements on
terms no less favorable to the Lenders).
<PAGE>
104
SECTION 6.10. Interest Coverage Ratio. Permit the ratio of (a)
Financed Proportionate EBITDA for the four consecutive fiscal quarter period
ending on the last day of any fiscal quarter set forth below to (b) Interest
Expense of CommNet and the Subsidiaries on a consolidated basis for such period
to be less than the ratio set forth below; provided that (i) for purposes of
calculating Financed Proportionate EBITDA for the first, second and third fiscal
quarters of 1998, the amount determined pursuant to clause (a) above shall be
calculated by dividing (I) in the case of the first quarter of 1998, Financed
Proportionate EBITDA for the two consecutive fiscal quarter period ending on
December 31, 1997, by 0.50, (II) in the case of the second quarter, Financed
Proportionate EBITDA for the two consecutive fiscal quarter period ending on
March 31, 1998, by 0.35 and (III) in the case of the third quarter, Financed
Proportionate EBITDA for the three consecutive fiscal quarter period ending on
June 30, 1998, by 0.60, and (ii) for purposes of calculating Interest Expense of
CommNet and the Subsidiaries on a consolidated basis for the first, second and
third fiscal quarters of 1998, the amount determined pursuant to clause (b)
above shall be determined by multiplying Interest Expense of CommNet and the
Subsidiaries on a consolidated basis for (I) in the case of the first fiscal
quarter of 1998, the fiscal quarter ending on December 31, 1997, by 4, (II) in
the case of the second fiscal quarter of 1998, the two consecutive fiscal
quarter period ending on March 31, 1998, by 2 and (III) in the case of the
third fiscal quarter of 1998, the three consecutive fiscal quarter period ending
on June 30, 1998, by 1-1/3:
<PAGE>
105
<TABLE>
<CAPTION>
Fiscal Quarter: Ratio:
<S> <C>
December 31, 1997 1.00
March 31, 1998 1.00
June 30, 1998 1.00
September 30, 1998 1.00
December 31, 1998 1.10
March 31, 1999 1.15
June 30, 1999 1.20
September 30, 1999 1.25
December 31, 1999 1.25
March 31, 2000 1.25
June 30, 2000 1.25
September 30, 2000 1.35
December 31, 2000 1.35
March 31, 2001 1.35
June 30, 2001 1.35
September 30, 2001 1.45
December 31, 2001 1.45
March 31, 2002 1.45
June 30, 20002 1.45
September 30, 2002 1.60
December 31, 2002 1.60
March 31, 2003 1.60
June 30, 2003 1.60
September 30, 2003 1.75
December 31, 2003 1.75
March 31, 2004 1.75
June 30, 2004 1.75
September 30, 2004 2.00
December 31, 2004 2.00
March 31, 2005 2.00
June 30, 2005 2.00
September 30, 2005 2.25
December 31, 2005 2.25
March 31, 2006 2.25
June 30, 2006 2.25
September 30, 2006 2.50
December 31, 2006 2.50
</TABLE>
<PAGE>
106
<TABLE>
<S> <C>
March 31, 2007 2.50
June 30, 2007 2.50
September 30, 2007 2.75
</TABLE>
SECTION 6.11. Leverage Ratio. Permit the ratio of (a) Total Debt of
CommNet and the Subsidiaries on a consolidated basis as of the last day of any
fiscal quarter set forth below to (b) Financed Proportionate EBITDA for the four
consecutive fiscal quarter period ending on such day to be in excess of the
ratio set forth below ; provided that for purposes of calculating Financed
Proportionate EBITDA for the first, second and third fiscal quarters of 1998,
the amount determined pursuant to clause (b) above shall be calculated by
dividing (i) in the case of the first quarter of 1998, Financed Proportionate
EBITDA for the two consecutive fiscal quarter period ending on December 31,
1997, by 0.50, (ii) in the case of the second quarter, Financed Proportionate
EBITDA for two consecutive fiscal quarter period ending on March 31, 1998, by
0.35, and (iii) in the case of the third quarter, Financed Proportionate EBITDA
for the three consecutive fiscal quarter period ending on June 30, 1998, by
0.60:
<TABLE>
<CAPTION>
Fiscal Quarter: Ratio:
<S> <C>
December 31, 1997 10.90
March 31, 1998 10.90
June 30, 1998 10.50
September 30, 1998 9.75
December 31, 1998 9.50
March 31, 1999 9.00
June 30, 1999 8.50
September 30, 1999 8.25
December 31, 1999 8.00
March 31, 2000 8.00
June 30, 2000 8.00
September 30, 2000 7.00
December 31, 2000 7.00
March 31, 2001 7.00
June 30, 2001 7.00
September 30, 2001 6.50
December 31, 2001 6.50
March 31, 2002 6.50
June 30, 20002 6.50
September 30, 2002 6.25
December 31, 2002 6.25
March 31, 2003 6.25
</TABLE>
<PAGE>
107
<TABLE>
<S> <C>
June 30, 2003 6.25
September 30, 2003 5.75
December 31, 2003 5.75
March 31, 2004 5.75
June 30, 2004 5.75
September 30, 2004 5.25
December 31, 2004 5.25
March 31, 2005 5.25
June 30, 2005 5.25
September 30, 2005 4.75
December 31, 2005 4.75
March 31, 2006 4.75
June 30, 2006 4.75
September 30, 2006 4.25
December 31, 2006 4.25
March 31, 2007 4.25
June 30, 2007 4.25
September 30, 2007 4.00
</TABLE>
SECTION 6.12. Fixed Charge Coverage Ratio. Permit the Fixed Charge
Coverage Ratio for the four consecutive fiscal quarter period ending on the last
day of any fiscal quarter set forth below to be less than the ratio set forth
below.
<TABLE>
<CAPTION>
Fiscal Quarter: Ratio:
<S> <C>
September 30, 2001 1.0
December 31, 2001 1.0
March 31, 2002 1.0
June 30, 20002 1.0
September 30, 2002 1.0
December 31, 2002 1.0
March 31, 2003 1.0
June 30, 2003 1.0
September 30, 2003 1.0
December 31, 2003 1.0
March 31, 2004 1.0
June 30, 2004 1.0
September 30, 2004 1.0
December 31, 2004 1.0
March 31, 2005 1.0
</TABLE>
<PAGE>
108
<TABLE>
<S> <C>
June 30, 2005 1.0
September 30, 2005 1.0
December 31, 2005 1.0
March 31, 2006 1.0
June 30, 2006 1.0
September 30, 2006 1.0
December 31, 2006 1.0
March 31, 2007 1.0
June 30, 2007 1.0
September 30, 2007 1.0
</TABLE>
SECTION 6.13. Capital Expenditures. Permit the aggregate amount of
Capital Expenditures made by CommNet and the Downstream Affiliates (adjusted to
eliminate a portion of Capital Expenditures of Downstream Affiliates ratably to
the extent of equity interests therein not owned directly or indirectly by
CommNet at the end of CommNet's applicable fiscal year) in any fiscal year to
exceed the amount set forth below:
<TABLE>
<CAPTION>
Year Amount
<S> <C>
1998 $35,000,000
1999 $35,000,000
2000 $35,000,000
2001 $35,000,000
2002 $35,000,000
2003 $30,000,000
2004 $30,000,000
2005 $30,000,000
2006 $30,000,000
2007 $30,000,000
</TABLE>
; provided that, to the extent Capital Expenditures made in any fiscal year are
less than the amount set forth above for such fiscal year, such unused amount
may be carried forward to succeeding fiscal years.
SECTION 6.14. Capital Stock of the Subsidiaries. Sell, transfer, lease
or otherwise dispose of, or make subject to any subscription, option, warrant,
call, right or other agreement or commitment of any nature, the Capital Stock of
any Subsidiary, other than, in the case of Subsidiaries other than the Borrower
and the License Subsidiary, (a) pursuant to the Loan Documents, (b) pursuant to
a transaction permitted pursuant to Section 6.05, (c) directors' qualifying
shares and (d) pursuant to buy-sell provisions in the organizational documents
thereof.
<PAGE>
109
SECTION 6.15. Borrowing Affiliates. (a) Permit any amendment,
modification or waiver of any provisions of any Affiliate Advance Facility
(except as set forth in clause (iv) below, other than amendments, modifications
or waivers which are not material) of any covenants in any Affiliate Advance
Facility (other than Affiliate Advance Facilities with respect to which an
Excluded Downstream Affiliate is the Borrowing Affiliate) relating to (i) the
incurrence of Indebtedness (including increasing the amount of other
Indebtedness permitted by the terms thereof between the date hereof and the
Closing Date), (ii) the incurrence of Liens, (iii) the making of investments and
loans, (iv) the payment of dividends or distributions or redemption
consideration or other amounts in respect of equity while any Interim Advances
or Affiliate Advances are outstanding to the applicable Borrowing Affiliate, (v)
acquisitions and asset sales, (vi) mergers and consolidations, (vii) the conduct
of business activities, (viii) entering into obligations restricting the payment
of dividends, (ix) maintenance of existence, (x) payment of material
liabilities, (xi) termination or non-renewal of management agreements, if any,
(xii) Downstream Affiliates in which the relevant Borrowing Affiliate directly
or indirectly owns Capital Stock and (xiii) Licenses issued by the FCC and other
material governmental authorizations. Notwithstanding the foregoing, CommNet
and the Borrower shall not be prohibited from permitting such amendments,
modifications or waivers with respect to (A) the incurrence of immaterial
Indebtedness, (B) the incurrence of immaterial Liens, (C) the making of
immaterial investments and loans, (D) engaging in immaterial acquisitions or
asset sales or (E) permitting the borrowing and the payment of Interim Advances
by the obligor thereof.
(b) Except as permitted under documentation relating to an Affiliate
Advance Facility existing on the date hereof, permit any documentation governing
any Affiliate Advance Facility (other than those providing for Affiliate
Advances to Excluded Downstream Affiliates) to permit any Borrowing Affiliate to
apply any of its annual "excess cash flow" (or any similar term defined in the
relevant Affiliate Advance Facility; provided that such term or a similar term
will be contained in all Affiliate Advance Facilities entered into after the
date hereof and such term will be defined in a manner consistent with a majority
of the Affiliate Advance Facilities existing on the date hereof) for any purpose
other than to permanently repay (and reduce commitments with respect to)
Affiliate Advances if Affiliate Advances or commitments to make Affiliate
Advances to such Borrowing Affiliate are outstanding.
(c) Permit any Borrowing Affiliate or any Downstream Affiliate of
such Borrowing Affiliate to be in breach of any of the covenants in Affiliate
Advance Facilities referred to in Section 6.15(a), any of the covenants in
Affiliate Advance Facilities relating to the matters referred to in Section
6.15(b) and the covenants to make payments under Affiliate Advance Facilities
(collectively, the "Material Affiliate Advance Facility Covenants") for any
consecutive 75 day period unless (i) the commitments under such
<PAGE>
110
Borrowing Affiliate's Affiliate Advance Facility shall have been terminated and
the Affiliate Advances thereunder shall have been declared immediately due and
payable, (ii) any such breach shall have been cured or (iii) CommNet and the
Borrower shall have notified the Administrative Agent that the EBITDA of such
Borrowing Affiliate and any Downstream Affiliates thereof shall no longer be
included in the calculation of Financed Proportionate EBITDA (any such Borrowing
Affiliate and other Downstream Affiliates referred to herein as "Excluded
Downstream Affiliates"); provided that an entity may only be designated an
Excluded Downstream Affiliate if immediately after giving effect to such
designation: (i) no Default or Event of Default shall have occurred and be
continuing or would result therefrom and (ii) CommNet and the Borrower shall be
in compliance, on a pro forma basis, after giving effect to such exclusion, with
the covenants contained in Sections 6.10, 6.11 and 6.12 recomputed as of the
last day of the most recently ended fiscal quarter of CommNet as if such
exclusion had occurred on the first day of each relevant period for testing
compliance, and the Borrower shall have delivered to the Administrative Agent an
officer's certificate to such effect, together with all relevant financial
information for each such Excluded Downstream Affiliate; and provided, however,
that this sentence shall be inapplicable (and any such consecutive 75 day period
shall end on) any day on which the aggregate amount of outstanding Affiliate
Advances and commitments to make additional Affiliate Advances under Affiliate
Advance Facilities with respect to which any Borrowing Affiliate is in breach of
a Material Affiliate Advance Facility Covenant is less than $10,000,000.
Notwithstanding the foregoing, CommNet and the Borrower shall have the right by
providing notice to the Administrative Agent to designate (a "Redesignation") an
Excluded Downstream Affiliate as no longer being an Excluded Downstream
Affiliate as of the date of such notice, in which case such Downstream Affiliate
shall not constitute an Excluded Downstream Affiliate, in each case so long as
at the time of such notice (i) such Downstream Affiliate shall not be the
subject of more than three Redesignations, (ii) such Downstream Affiliate shall
not be the subject of a Redesignation which occurs within 18 months after any
prior Redesignation of such Downstream Affiliate, and (iii) no more than six
such Redesignations may be effected in any 18 month period (each such notice
shall be deemed a representation and warranty by CommNet and the Borrower that
each of the conditions set forth in clauses (i), (ii) and (iii) of this sentence
shall have been satisfied). In addition, no new Affiliate Advances shall be made
to any Borrowing Affiliate that is in breach of a Material Affiliate Advance
Facility Covenant unless the Borrower is nevertheless obligated under such
Affiliate Advance Facility to extend additional Affiliate Advances thereunder.
<PAGE>
111
ARTICLE VII. EVENTS OF DEFAULT
In case of the happening of any of the following events ("Events of
Default"):
(a) any representation or warranty made or deemed made by CommNet, the
Borrower or any Loan Party in any Loan Document, or any representation,
warranty, statement or information contained in any report, certificate,
financial statement or other instrument furnished in connection with or
pursuant to any Loan Document, shall prove to have been false or misleading
in any material respect when so made, deemed made or furnished by CommNet,
the Borrower or any other Loan Party;
(b) default shall be made in the payment of any principal of any Loan
or the reimbursement with respect to any Letter of Credit Disbursement 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 by acceleration
thereof or otherwise;
(c) default shall be made in the payment of any interest on any Loan
or on any Letter of Credit Disbursement or in the payment of any Fee or any
other amount (other than an amount referred to in (b) above) due under any
Loan Document, when and as the same shall become due and payable, and such
default shall continue unremedied for a period of five Business Days;
(d) default shall be made in the due observance or performance by
CommNet, the Borrower or any Controlled Downstream Affiliate of any
covenant, condition or agreement contained in Section 5.01(a) (with respect
to the Borrower), 5.05(a), 5.08 or 5.11(b) or in Article VI;
(e) default shall be made in the due observance or performance by
CommNet, the Borrower or any Controlled Downstream Affiliate of any
covenant, condition or agreement contained in any Loan Document (other than
those specified in (b), (c) or (d) above) and such default shall continue
unremedied for a period of 30 days after notice thereof from the
Administrative Agent or the Required Lenders to the Borrower;
(f) CommNet or any Subsidiary shall fail to observe or perform any
term, covenant, condition or agreement contained in any agreement or
instrument evidencing or governing any Indebtedness (other than any
Indebtedness under any Loan Document) having an aggregate principal or
notional amount in excess of $10,000,000 or any other event shall occur, if
the effect of any such failure or event is to cause, or to permit the
holder or holders of such Indebtedness or a
<PAGE>
112
trustee on its or their behalf (with or without the giving of notice, the
lapse of time or both) to cause, such Indebtedness to become due prior to
its stated maturity, or CommNet or any Subsidiary shall fail to pay any
principal in respect of any such Indebtedness at the stated maturity
thereof;
(g) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed in a court of competent jurisdiction seeking (i)
relief in respect of CommNet or any Subsidiary, or of a substantial part of
the property or assets of CommNet or a Subsidiary, under Title 11 of the
United States Code, as now constituted or hereafter amended, or any other
Federal, state or foreign bankruptcy, insolvency, receivership or similar
law, (ii) the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for CommNet or any Subsidiary or for a
substantial part of the property or assets of CommNet or a Subsidiary or
(iii) the winding-up or liquidation of CommNet or any Subsidiary; and 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;
(h) CommNet or any Subsidiary shall (i) voluntarily commence any
proceeding or file any petition seeking relief under Title 11 of the United
States Code, as now constituted or hereafter amended, or any other Federal,
state or foreign bankruptcy, insolvency, receivership or similar law, (ii)
consent to the institution of, or fail to contest in a timely and
appropriate manner, any proceeding or the filing of any petition described
in (g) above, (iii) apply for or consent to the appointment of a receiver,
trustee, custodian, sequestrator, conservator or similar official for
CommNet or any Subsidiary or for a substantial part of the property or
assets of CommNet or any Subsidiary, (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, (vi) become
unable, admit in writing its inability or fail generally to pay its debts
as they become due or (vii) take any formal corporate, partnership or other
entity action for the purpose of effecting any of the foregoing;
(i) one or more judgments for the payment of money in an aggregate
amount in excess of $10,000,000 (except to the extent covered by insurance
as to which the insurer has acknowledged in writing its obligation to
cover) shall be rendered against CommNet, any Subsidiary or any combination
thereof and the same shall remain undischarged for a period of 30
consecutive days during which execution shall not be effectively stayed, or
any action shall be legally taken by a judgment creditor to levy upon
assets or properties of the Investor, CommNet or any Subsidiary to enforce
any such judgment;
<PAGE>
113
(j) (i) a Reportable Event or Reportable Events, or a failure to make
a required installment or other payment (within the meaning of Section
412(n)(1) of the Code), shall have occurred with respect to any Plan or
Plans, (ii) a trustee shall be appointed by a United States district court
to administer any Plan or Plans, (iii) the PBGC shall institute proceedings
(including giving notice of intent thereof) to terminate any Plan or Plans,
(iv) CommNet or any ERISA Affiliate shall have been notified by the sponsor
of a Multiemployer Plan that it has incurred Withdrawal Liability to such
Multiemployer Plan and CommNet or such ERISA Affiliate does not have
reasonable grounds for contesting such Withdrawal Liability or is not
contesting such Withdrawal Liability in a timely and appropriate manner,
(v) CommNet or any ERISA Affiliate shall have been notified by the sponsor
of a Multiemployer Plan that such Multiemployer Plan is in reorganization
or is being terminated, within the meaning of Title IV of ERISA, (vi)
CommNet or any ERISA Affiliate shall engage in any "prohibited transaction"
(as defined in Section 406 of ERISA or Section 4975 of the Code) involving
any Plan, (vii) any other similar event or condition shall occur or exist
with respect to a Plan; and in each case in clauses (i) through (vii)
above, such event or condition, together with all other such events or
conditions, if any, could reasonably be expected to have a Material Adverse
Effect;
(k) (i) any Loan Document shall for any reason be asserted by CommNet
or any Subsidiary not to be a legal, valid and binding obligation of any
party thereto, (ii) any security interest purported to be created by any
Security Document and to extend to assets that are not immaterial to
CommNet and the Subsidiaries on a consolidated basis shall cease to be, or
shall be asserted by the Borrower or any other Loan Party not to be, a
valid, perfected, first priority (except as otherwise expressly provided in
this Agreement or such Security Document) security interest in the
securities, assets or properties covered thereby, except to the extent that
any such loss of perfection or priority results from the failure of the
Collateral Agent to maintain possession of certificates representing
securities pledged under the Pledge Agreement or to file UCC continuation
statements or (iii) the Obligations of CommNet and the Borrower or the
guarantees thereof pursuant to the Guarantee Agreements, shall cease to
constitute senior indebtedness under the subordination provisions of any
document or instrument evidencing any permitted subordinated Indebtedness
or such subordination provisions shall be invalidated or otherwise cease to
be legal, valid and binding obligations of the parties thereto, enforceable
in accordance with their terms;
(l) there shall have occurred a Change in Control; or
<PAGE>
114
(m) one or more payment defaults shall exist and have been continuing
for at least 180 days under one or more Affiliate Advance Facilities (other than
to Excluded Downstream Affiliates) with respect to Affiliate Advances in an
aggregate principal amount in excess of $20,000,000;
then, and in every such event (other than an event with respect to the Borrower
described in paragraph (g) or (h) above), and at any time thereafter during the
continuance of such event, the Administrative Agent, at the request of the
Required Lenders, shall, by notice to the Borrower, take any or all of the
following actions, at the same or different times: (i) terminate forthwith the
Commitments, (ii) declare the Loans then outstanding to be forthwith due and
payable in whole or in part and (iii) demand cash collateral pursuant to Section
2.20(k), whereupon the principal of the Loans so declared to be due and payable,
together with accrued interest thereon and any unpaid accrued Fees and all other
liabilities of the Borrower accrued hereunder and under any other Loan Document,
shall become forthwith due and payable, without presentment, demand, protest or
any other notice of any kind, all of which are hereby expressly waived by the
Borrower, anything contained herein or in any other Loan Document to the
contrary notwithstanding; and in any event with respect to the Borrower
described in paragraph (g) or (h) above, the Commitments shall automatically
terminate, the principal of the Loans then outstanding, together with accrued
interest thereon and any unpaid accrued Fees and all other liabilities of the
Borrower accrued hereunder and under any other Loan Document, shall
automatically become due and payable and the Administrative Agent shall be
deemed to have made a demand for cash collateral to the full extent permitted
under Section 2.20(k), without presentment, demand, protest or any other notice
of any kind, all of which are hereby expressly waived by the Borrower, anything
contained herein or in any other Loan Document to the contrary notwithstanding.
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ARTICLE VIII. THE ADMINISTRATIVE AGENT AND THE COLLATERAL AGENT
In order to expedite the transactions contemplated by this Agreement,
Chase is hereby appointed to act as Administrative Agent and Collateral Agent on
behalf of the Lenders and the Fronting Bank (for purposes of this Article VIII,
the Administrative Agent and the Collateral Agent are referred to collectively
as the "Agents"). Each of the Lenders and each assignee of any such Lender
hereby irrevocably authorizes the Agents to take such actions on behalf of such
Lender or assignee or the Fronting Bank and to exercise such powers as are
specifically delegated to the Agents by the terms and provisions hereof and of
the other Loan Documents, together with such actions and powers as are
reasonably incidental thereto. The Administrative Agent is hereby expressly
authorized by the Lenders and the Fronting Bank, without hereby limiting any
implied authority, (a) to receive on behalf of the Lenders and the Fronting Bank
all payments of principal of and interest on the Loans, all payments in respect
of Letter of Credit Disbursements and all other amounts due to the Lenders and
the Fronting Bank hereunder, and promptly to distribute to each Lender or the
Fronting Bank its proper share of each payment so received; (b) to give notice
on behalf of each of the Lenders to the Borrower of any Event of Default
specified in this Agreement of which the Administrative Agent has actual
knowledge acquired in connection with its agency hereunder; and (c) to
distribute to each Lender copies of all notices, financial statements and other
materials delivered by the Borrower pursuant to this Agreement as received by
the Administrative Agent. Without limiting the generality of the foregoing, the
Agents are hereby expressly authorized to execute any and all documents
(including releases) with respect to the Collateral and the rights of the
Secured Parties with respect thereto, as contemplated by and in accordance with
the provisions of this Agreement and the Security Documents. In the event that
any party other than the Lenders and the Agents shall participate in all or any
portion of the Collateral pursuant to the Security Documents, all rights and
remedies in respect of such Collateral shall be controlled by the Collateral
Agent.
Neither the Agents nor any of their respective directors, officers,
employees or agents shall be liable as such for any action taken or omitted by
any of them except for its or his own gross negligence or wilful misconduct, or
be responsible for any statement, warranty or representation herein or the
contents of any document delivered in connection herewith, or be required to
ascertain or to make any inquiry concerning the performance or observance by the
Borrower or any other Loan Party of any of the terms, conditions, covenants or
agreements contained in any Loan Document. The Agents shall not be responsible
to the Lenders for the due execution, genuineness, validity, enforceability or
effectiveness of this Agreement or any other Loan Documents or other instruments
or agreements. The Agents shall in all cases be fully protected in acting, or
refraining from acting, in accordance with written instructions signed by the
Required Lenders and, except as otherwise specifically provided herein, such
instructions and any
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action or inaction pursuant thereto shall be binding on all the Lenders. Each
Agent shall, in the absence of knowledge to the contrary, be entitled to rely on
any instrument or document believed by it in good faith to be genuine and
correct and to have been signed or sent by the proper person or persons. Neither
the Agents nor any of their respective directors, officers, employees or agents
shall have any responsibility to the Borrower or any other Loan Party on account
of the failure of or delay in performance or breach by any Lender or the
Fronting Bank of any of its obligations hereunder or to any Lender or the
Fronting Bank on account of the failure of or delay in performance or breach by
any other Lender or the Fronting Bank or the Borrower or any other Loan Party of
any of their respective obligations hereunder or under any other Loan Document
or in connection herewith or therewith. Each of the Agents may execute any and
all duties hereunder by or through agents or employees and shall be entitled to
rely upon the advice of legal counsel selected by it with respect to all matters
arising hereunder and shall not be liable for any action taken or suffered in
good faith by it in accordance with the advice of such counsel.
The Lenders hereby acknowledge that neither Agent shall be under any
duty to take any discretionary action permitted to be taken by it pursuant to
the provisions of this Agreement unless it shall be requested in writing to do
so by the Required Lenders. The Lenders further acknowledge and agree that so
long as an Agent shall make any determination to be made by it hereunder or
under any other Loan Document in good faith, such Agent shall have no liability
in respect of such determination to any person.
Subject to the appointment and acceptance of a successor Agent as
provided below, either Agent may resign at any time by notifying the Lenders and
the Borrower. Upon any such resignation, the Required Lenders shall have the
right to appoint a successor with the consent of the Borrower (not to be
unreasonably withheld). If no successor shall have been so appointed by the
Required Lenders and approved by the Borrower and shall have accepted such
appointment within 30 days after the retiring Agent gives notice of its
resignation, then the retiring Agent may, on behalf of the Lenders with the
consent of the Borrower (not to be unreasonably withheld), appoint a successor
Agent which shall be a bank with an office in New York, New York, having a
combined capital and surplus of at least $500,000,000 or an Affiliate of any
such bank. Upon the acceptance of any appointment as Agent hereunder by a
successor bank, such successor shall succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Agent and the retiring
Agent shall be discharged from its duties and obligations hereunder. After the
Agent's resignation hereunder, the provisions of this Article and Section 9.05
shall continue in effect for its benefit in respect of any actions taken or
omitted to be taken by it while it was acting as Agent.
With respect to the Loans made by it hereunder, each Agent in its
individual capacity and not as Agent shall have the same rights and powers as
any other Lender and may exercise the same as though it were not an Agent, and
the Agents and
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their Affiliates may accept deposits from, lend money to and generally engage in
any kind of business with the Borrower or any Subsidiary or other Affiliate
thereof as if it were not an Agent.
Each Lender agrees (a) to reimburse the Agents, on demand, in the
amount of its pro rata share (based on its Commitments hereunder (or if such
Commitments shall have expired or been terminated, in accordance with the
respective principal amounts of its applicable outstanding Loans or
participations in Letter of Credit Disbursements, as applicable)) of any
reasonable expenses incurred for the benefit of the Lenders by the Agents,
including counsel fees and compensation of agents and employees paid for
services rendered on behalf of the Lenders, which shall not have been reimbursed
by the Borrower and (b) to indemnify and hold harmless each Agent and any of its
directors, officers, employees or agents, on demand, in the amount of such pro
rata share, from and against any and all liabilities, taxes, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever which may be imposed on, incurred
by or asserted against it in its capacity as Agent or any of them in any way
relating to or arising out of this Agreement or any other Loan Document or any
action taken or omitted by it or any of them under this Agreement or any other
Loan Document, to the extent the same shall not have been reimbursed by the
Borrower; provided that no Lender shall be liable to an Agent for any portion of
such liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements resulting from the gross negligence or
wilful misconduct of such Agent or any of its directors, officers, employees or
agents.
Each Lender acknowledges that it has, independently and without
reliance upon the Agents or any other Lender and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon the Agents or any other Lender and
based on such documents and information as it shall from time to time deem
appropriate, continue to make its own decisions in taking or not taking action
under or based upon this Agreement or any other Loan Document, any related
agreement or any document furnished hereunder or thereunder.
No Agent shall have any liability hereunder by virtue of its execution
of this Agreement as an Agent.
As soon as practicable after it becomes aware of an Event of Default
that has occurred and is continuing, the Administrative Agent shall notify each
Lender thereof.
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ARTICLE IX. MISCELLANEOUS
SECTION 9.01. Notices. 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 8350 East Crescent Parkway, Suite
400, Englewood, CO 80111, Attention of President (Telecopy No. (303) 694-
5590), and if to CommNet or any Subsidiary, to it in care of the Borrower,
with a copy to Mark Gallogly, Senior Managing Director, The Blackstone
Group L.P., 345 Park Avenue, 31st Floor, New York, NY 10154 (Telecopy No.
(212) 754-8712);
(b) if to the Administrative Agent or the Collateral Agent, to The
Chase Manhattan Bank, in care of Loan and Agency Services Group, One Chase
Manhattan Plaza, 8th Floor, New York, NY 10018, Attention of Robert
Berdecio (Telecopy No. (212) 552-5700), with a copy to The Chase Manhattan
Bank, at 270 Park Avenue, 37th Floor, New York, NY 10017 Attention of John
Huber III (Telecopy No. (212) 270-4584);
(c) if to the Fronting Bank, to Chase Manhattan Bank Delaware at 1201
Market Street, 9th Floor, Wilmington, DE 19801, Attention of Michael P.
Handago (Telecopy No. (302) 428-3390); and
(d) if to a Lender, to it at its address (or telecopy number) set
forth in the Administrative Questionnaire delivered to the Administrative
Agent by such Lender in connection with the execution of this Agreement or
in the Assignment and Acceptance pursuant to which such Lender shall have
become a party hereto.
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 if delivered by hand or overnight courier service or sent by
telecopy or on the date five Business Days after dispatch by certified or
registered mail if mailed, in each case delivered, sent or mailed (properly
addressed) to such party as provided in this Section 9.01 or in accordance with
the latest unrevoked direction from such party given in accordance with this
Section 9.01.
SECTION 9.02. Survival of Agreement. All covenants, agreements,
representations and warranties made by CommNet, the Borrower and the Guarantors
herein, in the other Loan Documents and in the certificates or other instruments
prepared or delivered in connection with or pursuant to this Agreement or any
other Loan Document shall be considered to have been relied upon by the Lenders
and the Fronting
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Bank and shall survive the making by the Lenders of the Loans, the execution and
delivery to the Lenders of the Loan Documents and the issuance of the Letters of
Credit, regardless of any investigation made by the Lenders or on their behalf,
and shall continue in full force and effect as long as the principal of or any
accrued interest on any Loan or Letter of Credit Disbursement or any Fee or any
other amount payable under this Agreement or any other Loan Document is
outstanding and unpaid or any Letter of Credit is outstanding and so long as the
Commitments have not been terminated. Without prejudice to the survival of any
other agreements contained herein, indemnification and reimbursement obligations
contained herein (including pursuant to Sections 2.13, 2.15, 2.19 and 9.05)
shall survive the payment in full of the principal and interest hereunder, the
expiration of the Letters of Credit and the termination of the Commitments or
this Agreement.
SECTION 9.03. Binding Effect. This Agreement shall become effective
when it shall have been executed by CommNet, the Borrower and the Administrative
Agent and when the Administrative Agent shall have received copies hereof which,
when taken together, bear the signatures of each of the other parties hereto,
and thereafter shall be binding upon and inure to the benefit of CommNet, the
Borrower, the Fronting Bank, the Administrative Agent and each Lender and their
respective permitted successors and assigns.
SECTION 9.04. Successors and Assigns. (a) Whenever in this
Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the permitted successors and assigns of such party; and all
covenants, promises and agreements by or on behalf of CommNet, the Borrower, the
Administrative Agent, the Fronting Bank or the Lenders that are contained in
this Agreement shall bind and inure to the benefit of their respective
successors and assigns.
(b) Each Lender may assign to one or more assignees all or a portion
of its interests, rights and obligations as a Lender under this Agreement
(including all or a portion of its Commitments, the Loans at the time owing to
it and participations in Letters of Credit held by it (it being understood the
Revolving Credit Commitments, Revolving Loans, Letter of Credit Disbursements
and participations in Letters of Credit and Swingline Loans may only be assigned
in pro rata amounts)); provided, however, that (i) except in the case of an
assignment to another Lender or an Affiliate or Approved Fund of such Lender, in
each case, (A) the Borrower must give its prior written consent to such
assignment (which consent shall not be unreasonably withheld or delayed) and (B)
in the case of participations in Letters of Credit, Letter of Credit
Disbursements or Revolving Credit Commitments, the Fronting Bank must give its
prior written consent to such assignment (which consent shall not be
unreasonably withheld or delayed), (ii) except in the case of an assignment to
another Lender or an Affiliate of such Lender, the amount of the Loans or
Commitments of the assigning Lender subject to such assignment
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(determined as of the date the Assignment and Acceptance with respect to such
assignment is delivered to the Administrative Agent) shall be an amount not less
than $5,000,000 or shall be the entire remaining amount of such Loans or
Commitments of such assigning Lender unless the Borrower provides its prior
written consent to a lesser amount, (iii) unless the assignor ceases to be a
Lender, the aggregate amount of the Loans owing to and unused Commitments of
such Lender after giving effect to such assignment shall be not less than
$5,000,000 unless the Borrower provides its prior written consent to a lesser
amount, (iv) the parties to each such assignment shall execute and deliver to
the Administrative Agent an Assignment and Acceptance, together with a
processing and recordation fee of $3,500 and (v) the assignee, if it shall not
be a Lender, shall deliver to the Administrative Agent an Administrative
Questionnaire. Upon acceptance and recording pursuant to paragraph (e) of this
Section 9.04, from and after the effective date specified in each Assignment and
Acceptance, which effective date shall be at least five Business Days after the
execution thereof unless agreed otherwise by the Administrative Agent, (i) the
assignee thereunder shall be a party hereto and, to the extent of the interest
assigned by such Assignment and Acceptance, have the rights and obligations of a
Lender under this Agreement and (ii) the assigning Lender thereunder shall, to
the extent of the interest assigned by such Assignment and Acceptance, be
released from its obligations under this Agreement (and, in the case of an
Assignment and Acceptance covering all or the remaining portion of an 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 Sections
2.13, 2.15, 2.19 and 9.05, as well as to any Fees accrued for its account and
not yet paid).
(c) By executing and delivering an Assignment and Acceptance, the
assigning Lender thereunder and the assignee thereunder shall be deemed to
confirm to and agree with each other and the other parties hereto as follows:
(i) such assigning Lender warrants that it is the legal and beneficial owner of
the interest being assigned thereby free and clear of any adverse claim and that
its Term Commitments and Revolving Credit Commitment, and the outstanding
balances of its Loans and Letter of Credit Disbursements and its participations
in Letters of Credit, in each case without giving effect to assignments thereof
that have not become effective, are as set forth in such Assignment and
Acceptance; (ii) except as set forth in clause (i) above, such assigning Lender
makes no representation or warranty and assumes no responsibility with respect
to any statements, warranties or representations made in or in connection with
this Agreement, or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of this Agreement, any other Loan Document or
any other instrument or document furnished pursuant hereto or thereto, or the
financial condition of the Borrower or any Guarantor or the performance or
observance by the Borrower or any Guarantor of any of its obligations under this
Agreement, any other Loan Document or any other instrument or document furnished
pursuant hereto or thereto; (iii) such assignee represents and warrants that it
is legally authorized to enter into such Assignment and Acceptance; (iv) such
assignee
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confirms that it has received copies of this Agreement and the other Loan
Documents, together with copies of the most recent financial statements
delivered pursuant to this Agreement and such other documents and information as
it has deemed appropriate to make its own credit analysis and decision to enter
into such Assignment and Acceptance; (v) such assignee will independently and
without reliance upon the Administrative Agent, the Fronting Bank, such
assigning Lender or any other Lender and based on such documents and information
as it shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under this Agreement; (vi) such
assignee appoints and authorizes the Administrative Agent and the Collateral
Agent to take such action as agent on its behalf and to exercise such powers
under this Agreement and the other Loan Documents as are delegated to the
Administrative Agent by the terms hereof or thereof, together with such powers
as are reasonably incidental thereto; and (vii) such assignee agrees that it
will perform in accordance with their terms all the obligations which by the
terms of this Agreement are required to be performed by it as a Lender.
(d) The Administrative Agent, acting for this purpose as an agent of
the Borrower, shall maintain at its address referred to in subsection 9.01 a
copy of each Assignment and Acceptance delivered to it and a register (the
"Register") for the recordation of the names and addresses of the Lenders and
the Commitments of, and principal amount of the Loans and Letter of Credit
Disbursements owing to, each Lender from time to time. The Administrative Agent
shall also record the Letter of Credit Exposure of each Lender in the Register.
The entries in the Register shall be conclusive, in the absence of manifest
error, and the Borrower, the Administrative Agent, the Fronting Bank and the
Lenders shall treat each person whose name is recorded in the Register as the
owner of Commitments and the Loans and Letter of Credit Exposures recorded
therein for all purposes of this Agreement. The Register shall be available for
inspection by the Borrower, the Fronting Bank, any Lender and their
representatives (including counsel and accountants), at any reasonable time and
from time to time upon reasonable prior notice.
(e) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an assignee, an Administrative Questionnaire
completed in respect of the assignee (unless the assignee shall already be a
Lender hereunder), the processing and recordation fee referred to in paragraph
(b) above and, if required, the written consent of the Borrower, the Fronting
Bank and the Administrative Agent to such assignment, the Administrative Agent
shall (i) accept such Assignment and Acceptance, (ii) record the information
contained therein in the Register and (iii) give prompt notice thereof to the
Lenders. Notwithstanding anything to the contrary contained herein, no
assignment under Section 9.04(b) of any rights or obligations shall be effective
unless and until the Administrative Agent shall have recorded such assignment in
the Register. The Administrative Agent shall record the name of the transferor,
the name of
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the transferee, and the amount of the transfer in the Register after receipt of
all documents required pursuant to this Section 9.04 and such other documents as
the Administrative Agent may reasonably request.
(f) Each Lender may without the consent of the Borrower, the Fronting
Bank or the Administrative Agent sell participations to one or more banks or
other entities in all or a portion of its rights and obligations under this
Agreement (including all or a portion of its Commitments, the Loans owing to it,
its Letter of Credit Exposure and the participations in Letters of Credit held
by it); provided, however, that (i) such Lender's obligations under this
Agreement shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations,
(iii) the participating banks or other entities shall be entitled to the benefit
of the cost protection provisions contained in Sections 2.13, 2.15, 2.19 and
9.06 to the same extent as if they were Lenders; provided that no such
participating bank or entity shall be entitled to receive any greater amount
pursuant to such Sections than a Lender would have been entitled to receive in
respect of the amount of the participation sold by such Lender to such
participating bank or entity had no sale occurred, and (iv) the Borrower, the
Administrative Agent, the Fronting Bank and the other Lenders shall continue to
deal solely and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement, and such Lender shall retain the
sole right to enforce the obligations of the Borrower or any other Loan Party,
as the case may be, relating to its Loans, Letter of Credit Exposure and
participations in Letters of Credit and Fees and to approve any amendment,
modification or waiver of any provision of this Agreement or any other Loan
Document (other than amendments, modifications or waivers decreasing any Fee
payable hereunder or the amount of principal of or the rate at which interest is
payable on the Loans or Letter of Credit Disbursements, extending any final
maturity date or increasing any Commitment, in each case in respect of an
Obligation in which the relevant participating bank or entity is participating,
or releasing all or substantially all of the Collateral or any Guarantor from
its Guarantee Agreement unless all or substantially all the Capital Stock of
such Guarantor is sold in a transaction permitted by this Agreement or as
provided in Section 9.17). Each Lender will disclose the identity of its
participants to the Borrower and Administrative Agent if requested by the
Borrower or the Administrative Agent.
(g) Any Lender or participant may, in connection with any assignment
or participation or proposed assignment or participation pursuant to this
Section 9.04, disclose to the assignee or participant or proposed assignee or
participant any information relating to the Borrower or any Guarantor furnished
to such Lender by or on behalf of the Borrower or any Guarantor; provided that,
prior to any such disclosure, each such assignee or participant or proposed
assignee or participant shall execute an agreement whereby such assignee or
participant shall agree to be bound by Section 9.16.
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(h) (i) Any Lender may at any time assign or pledge all or any portion
of its rights under this Agreement to a Federal Reserve Bank and (ii) any Lender
that is a fund may at any time assign or pledge all or any portion of its rights
under this Agreement to secure such Lender's indebtedness; provided that no such
assignment shall release a Lender from any of its obligations hereunder and the
foreclosure upon or other exercise of remedies with respect to any such
assignment or pledge shall be subject to the requirements of this Section 9.04.
In order to facilitate such an assignment, the Borrower shall, at the request of
the assigning Lender, duly execute and deliver to the assigning Lender a
promissory note or notes evidencing the Loans made to the Borrower by the
assigning Lender hereunder.
(i) In the event that S&P or Moody's shall, after the date that any
Lender becomes a Lender, downgrade the long-term certificate deposit ratings or
long-term senior unsecured debt ratings of such Lender (or the parent company
thereof), and the resulting ratings shall be BBB+ or Baa1 or lower, then the
Fronting Bank shall have the right, but not the obligation, at its own expense,
upon notice to such Lender and the Administrative Agent, to replace (or to
request the Borrower, at the sole expense of the Fronting Bank, to use its
reasonable efforts to replace) such Lender with respect to such Lender's
Revolving Credit Commitment with an assignee (in accordance with and subject to
the restrictions contained in paragraph (b) above), and such Lender hereby
agrees to transfer and assign without recourse (in accordance with and subject
to the restrictions contained in paragraph (b) above) all its interests, rights
and obligations in respect of its Revolving Credit Commitment to such assignee;
provided, however, that (i) no such assignment shall conflict with any law, rule
and regulation or order of any Governmental Authority and (ii) such assignee
shall pay to such Lender in immediately available funds on the date of such
assignment the principal of and interest accrued to the date of payment on the
Loans and Letter of Credit Disbursements of such Lender hereunder and all other
amounts accrued for such Lender's account or owed to it hereunder.
(j) Neither CommNet nor the Borrower shall assign or delegate any of
its rights or duties hereunder and any attempted assignment shall be null and
void.
(k) Except as provided in Section 2.13(d), the Fronting Bank shall
not assign or delegate any of its interests, rights or obligations as a Fronting
Bank under this Agreement without the prior written consent of the Borrower and
the Administrative Agent.
SECTION 9.05. Expenses; Indemnity. (a) The Borrower agrees to pay
all reasonable out-of-pocket expenses incurred by the Administrative Agent and
the Collateral Agent in connection with the preparation of this Agreement and
the other Loan Documents, or by the Administrative Agent or the Collateral Agent
in connection with the syndication of the Commitments or the administration of
this Agreement or in connection
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with any amendments, modifications or waivers of the provisions hereof or
thereof (whether or not the transactions hereby contemplated shall be
consummated) or incurred by the Administrative Agent, the Collateral Agent or
any Lender in connection with the enforcement or protection of their rights in
connection with this Agreement and the other Loan Documents or in connection
with the Loans made or the Letters of Credit issued hereunder, including the
reasonable fees, charges and disbursements of Cravath, Swaine & Moore, counsel
for the Administrative Agent and the Collateral Agent, and, in connection with
any such enforcement or protection, the reasonable fees, charges and
disbursements of any other counsel (including the reasonable allocated costs of
internal counsel if a Lender elects to use internal counsel in lieu of outside
counsel) for the Administrative Agent, the Fronting Bank or any Lender (but no
more than one such counsel for any Lender).
(b) The Borrower agrees to indemnify the Administrative Agent, the
Collateral Agent, the Fronting Bank, each Lender and each of their respective
directors, trustees, officers, employees and agents (each such person being
called an "Indemnitee") against, and to hold each Indemnitee harmless from, any
and all losses, claims, damages, liabilities and related expenses, including
reasonable counsel fees, charges and disbursements, incurred by or asserted
against any Indemnitee arising out of, in any way connected with, or as a result
of (i) the execution or delivery of this Agreement or any other Loan Document or
any agreement or instrument contemplated hereby or thereby, the performance by
the parties hereto and thereto of their respective obligations thereunder or the
consummation of the Transactions and the other transactions contemplated hereby
and thereby, (ii) the use of the proceeds of the Loans or the use of any Letter
of Credit or (iii) any claim, litigation, investigation or proceeding relating
to any of the foregoing, whether or not 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 wilful misconduct of, or material breach of
any Loan Document by, such Indemnitee (treating, for this purpose only, the
Administrative Agent, the Fronting Bank or any Lender and its directors,
trustees, officers and employees as a single Indemnitee). Subject to and
without limiting the generality of the foregoing sentence, the Borrower agrees
to indemnify each Indemnitee against, and hold each Indemnitee harmless from,
any Environmental Claim, and any and all losses, claims, damages, liabilities
and related expenses, including reasonable counsel or consultant fees, charges
and disbursements, incurred by or asserted against any Indemnitee (and arising
out of, or in any way connected with or as a result of, any of the events
described in clause (i), (ii) or (iii) of the preceding sentence) arising out
of, in any way connected with, or as a result of any actual or alleged presence
or Release of Hazardous Materials on any of the Properties, or any Environmental
Claim related in any way to CommNet, the Borrower or any Downstream Affiliate;
provided that such indemnity shall not, as to any Indemnitee, be available to
the extent that such Environmental Claim is, or such losses, claims, damages,
liabilities or related expenses are,
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determined by a court of competent jurisdiction by final and nonappealable
judgment to have resulted from the gross negligence or wilful misconduct of such
Indemnitee or any of its directors, trustees, officers or employees. The
provisions of this Section 9.05 shall remain operative and in full force and
effect regardless of the expiration of the term of this Agreement, the
consummation of the transactions contemplated hereby, the repayment of any of
the Obligations, the invalidity or unenforceability of any term or provision of
this Agreement or any other Loan Document, or any investigation made by or on
behalf of the Administrative Agent, the Fronting Bank or any Lender. All amounts
due under this Section 9.05 shall be payable on written demand therefor.
(c) Unless an Event of Default shall have occurred and be continuing,
the Borrower shall be entitled to assume the defense of any action for which
indemnification is sought hereunder with counsel of its choice at its expense
(in which case the Borrower shall not thereafter be responsible for the fees and
expenses of any separate counsel retained by an Indemnitee except as set forth
below); provided, however, that such counsel shall be reasonably satisfactory to
each such Indemnitee. Notwithstanding the Borrower's election to assume the
defense of such action, each Indemnitee shall have the right to employ separate
counsel and to participate in the defense of such action, and the Borrower shall
bear the reasonable fees, costs and expenses of such separate counsel, if (i)
the use of counsel chosen by the Borrower to represent such Indemnitee would
present such counsel with a conflict of interest; (ii) the actual or potential
defendants in, or targets of, any such action include both the Borrower and such
Indemnitee and such Indemnitee shall have reasonably concluded that there may be
legal defenses available to it that are different from or additional to those
available to the Borrower (in which case the Borrower shall not have the right
to assume the defense or such action on behalf of such Indemnitee); (iii) the
Borrower shall not have employed counsel reasonably satisfactory to such
Indemnitee to represent it within a reasonable time after notice of the
institution of such action; or (iv) the Borrower shall authorize such Indemnitee
to employ separate counsel at the Borrower's expense. The Borrower will not be
liable under this Agreement for any amount paid by an Indemnitee to settle any
claims or actions if the settlement is entered into without the Borrower's
consent, which consent may not be withheld or delayed unless such settlement is
unreasonable in light of such claims or actions against, and defenses available
to, such Indemnitee.
(d) Notwithstanding anything to the contrary in this Section 9.05,
this Section 9.05 shall not apply to taxes, it being understood that the
Borrower's only obligations with respect to taxes shall arise under Sections
2.13 and 2.19.
SECTION 9.06. Right of Setoff. If an Event of Default shall have
occurred and be continuing, each Lender and the Fronting Bank is hereby
authorized at any time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time
<PAGE>
126
held and other indebtedness at any time owing by such Lender or the Fronting
Bank to or for the credit or the account of the Borrower against any of and all
the obligations of the Borrower now or hereafter existing under this Agreement
or any other Loan Document held by such Lender or Fronting Bank, irrespective of
whether or not such Lender or the Fronting Bank shall have made any demand under
this Agreement or such other Loan Document and although such obligations may be
unmatured. The rights of each Lender and Fronting Bank under this Section 9.06
are in addition to other rights and remedies (including other rights of setoff)
which such Lender or the Fronting Bank may have.
SECTION 9.07. APPLICABLE LAW. THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS (OTHER THAN LETTERS OF CREDIT AND AS EXPRESSLY SET FORTH IN OTHER LOAN
DOCUMENTS) SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK. EACH LETTER OF CREDIT SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED IN ACCORDANCE WITH, THE LAWS OR RULES DESIGNATED IN SUCH LETTER OF
CREDIT, OR IF NO SUCH LAWS OR RULES ARE DESIGNATED, THE UNIFORM CUSTOMS AND
PRACTICE FOR DOCUMENTARY CREDITS (1993 REVISION), INTERNATIONAL CHAMBER OF
COMMERCE, PUBLICATION NO. 500 (THE "UNIFORM CUSTOMS") AND, AS TO MATTERS NOT
GOVERNED BY THE UNIFORM CUSTOMS, THE LAWS OF THE STATE OF NEW YORK.
SECTION 9.08. Waivers; Amendment. (a) No failure or delay of the
Administrative Agent, the Fronting Bank or any Lender in exercising any right or
power hereunder or under any Loan Document 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 Administrative Agent, the
Fronting Bank and the Lenders hereunder and under the other Loan Documents 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 any other Loan
Document or consent to any departure by CommNet, the Borrower or any Guarantor
therefrom shall in any event be effective unless the same shall be permitted by
paragraph (b) below, and then such waiver or consent shall be effective only in
the specific instance and for the purpose for which given. No notice or demand
on CommNet, the Borrower or any Guarantor in any case shall entitle the Borrower
to any other or further notice or demand in similar or other circumstances.
(b) Neither this Agreement nor any other Loan Document nor any
provision hereof or thereof may be waived, amended or modified except, in the
case of this Agreement, pursuant to an agreement or agreements in writing
entered into by CommNet, the Borrower and the Required Lenders or, in the case
of any other Loan
<PAGE>
127
Document, pursuant to an agreement or agreements in writing entered into by each
party thereto and the Collateral Agent and consented to by the Required Lenders;
provided, however, that no such agreement shall (i) decrease the principal
amount of, or extend the final maturity of, or decrease the rate of interest on,
any Loan or any Letter of Credit Disbursement, without the prior written consent
of each Lender directly affected thereby, (ii) extend any Installment Date
(other than any final maturity) or extend any date on which payment of interest
on any Loan or any Letter of Credit Disbursement is due, without the prior
written consent of (A) in the case of Term Loans, the Required Lenders and
Lenders holding Term Loans representing at least 80% of the aggregate principal
amount of each Tranche affected by such action or (B) in the case of Loans under
the Revolving Credit Commitments and Letter of Credit Disbursements, the
Required Lenders and Lenders with Revolving Credit Commitments representing at
least 80% of the aggregate Revolving Credit Commitments then in effect, (iii)
advance any Installment Date, without the prior written consent of the Required
Lenders and Lenders holding Term Loans representing (A) at least 80% of the
aggregate principal amount of the then outstanding Tranche A Term Loans, (B) at
least 80% of the aggregate principal amount of the then outstanding Tranche B
Term Loans, (C) at least 80% of the aggregate principal amount of the then
outstanding Tranche C Term Loans and (D) at least 80% of the aggregate principal
amount of the then outstanding Tranche D Term Loans or (iv) increase or extend
the Commitment of any Lender or decrease the Commitment Fees or L/C
Participation Fees or other fees of any Lender without the prior written consent
of such Lender or (v) without the prior written consent of the Required Lenders
and a majority in interest of the Lenders participating in the adversely
affected Tranche or otherwise adversely affected thereby (A) effect any waiver,
amendment or modification that by its terms adversely affects the rights in
respect of payments or Collateral of Lenders participating in any Tranche
differently from those of Lenders participating in the other Tranche or (B)
change the relative rights in respect of payments or Collateral of the Lenders
participating in different Tranches or (vi) amend or modify the provisions of
Section 2.09(d), Section 2.11(b) or Section 2.16, the provisions of this Section
or the definition of "Required Lenders" or release all or substantially all the
Collateral or release any Guarantor from its Guarantee Agreement unless all or
substantially all the Capital Stock of such Guarantor is sold in a transaction
permitted by this Agreement or as provided in Section 9.17, without the prior
written consent of each Lender adversely affected thereby; provided further that
no such agreement shall amend, modify or otherwise affect the rights or duties
of the Administrative Agent or the Fronting Bank hereunder without the prior
written consent of the Administrative Agent or the Fronting Bank acting as such
at the effective date of such agreement, as the case may be. Each Lender shall
be bound by any waiver, amendment or modification authorized by this Section
9.08 and any consent by any Lender pursuant to this Section 9.08 shall bind any
assignee of such Lender.
<PAGE>
128
SECTION 9.09. Interest Rate Limitation. Notwithstanding anything
herein to the contrary, if at any time the applicable interest rate, together
with all fees and charges which are treated as interest under applicable law
(collectively, the "Charges"), as provided for herein or in any other document
executed in connection herewith, or otherwise contracted for, charged, received,
taken or reserved by any Lender or Fronting Bank, shall exceed the maximum
lawful rate (the "Maximum Rate") that may be contracted for, charged, taken,
received or reserved by such Lender in accordance with applicable law, the rate
of interest payable hereunder, together with all Charges payable to such Lender
or the Fronting Bank, shall be limited to the Maximum Rate; provided that such
excess amount shall be paid to such Lender or the Fronting Bank on subsequent
payment dates to the extent not exceeding the legal limitation.
SECTION 9.10. Entire Agreement. This Agreement, the other Loan
Documents and the agreements regarding certain Fees referred to herein
constitute the entire contract between the parties relative to the subject
matter hereof. Any previous agreement among or representations from the parties
with respect to the subject matter hereof is superseded by this Agreement and
the other Loan Documents. Nothing in this Agreement or in the other Loan
Documents, expressed or implied, is intended to confer upon any party other than
the parties hereto and thereto any rights, remedies, obligations or liabilities
under or by reason of this Agreement or the other Loan Documents.
SECTION 9.11. 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 RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT
OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS. 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 AND THE OTHER LOAN DOCUMENTS, AS
APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN
THIS SECTION 9.11.
SECTION 9.12. Severability. In the event any one or more of the
provisions contained in this Agreement or in any other Loan Document should be
held invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein and therein
shall not in any way be affected or impaired thereby. The parties shall
endeavor in good-faith negotiations to replace the
<PAGE>
129
invalid, illegal or unenforceable provisions with valid provisions the economic
effect of which comes as close as possible to that of the invalid, illegal or
unenforceable provisions.
SECTION 9.13. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall constitute an original but all of which
when taken together shall constitute but one contract, and shall become
effective as provided in Section 9.03.
SECTION 9.14. 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 are not to affect the construction of, or to be taken into
consideration in interpreting, this Agreement.
SECTION 9.15. Jurisdiction; Consent to Service of Process. (a) Each
of CommNet and the Borrower hereby irrevocably and unconditionally submits, for
itself and its property, to the nonexclusive jurisdiction of any New York State
court or Federal court of the United States of America sitting in New York City,
and any appellate court from any thereof, in any action or proceeding arising
out of or relating to this Agreement or the other Loan Documents, or for
recognition or enforcement of any judgment, and each of the parties hereto
hereby irrevocably and unconditionally agrees that all claims in respect of any
such action or proceeding may be heard and determined in such New York State 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 by suit on the judgment or
in any other manner provided by law. Nothing in this Agreement shall affect any
right that any Lender or the Fronting Bank may otherwise have to bring any
action or proceeding relating to this Agreement or the other Loan Documents
against CommNet, the Borrower or any Guarantor or their properties in the courts
of any jurisdiction.
(b) Each of CommNet and 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 or
the other Loan Documents in any New York State or Federal court. 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.
(c) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 9.01. Nothing in this
Agreement will affect the right of any party to this Agreement to serve process
in any other manner permitted by law.
<PAGE>
130
SECTION 9.16. Confidentiality. Each of the Lenders, the Fronting
Bank and the Administrative Agent agrees that it shall maintain in confidence
any information relating to CommNet, the Borrower and the Downstream Affiliates
and the other Loan Parties furnished to it by or on behalf of CommNet, the
Borrower or the other Loan Parties (other than information that (a) has become
generally available to the public other than as a result of a disclosure by such
party, (b) has been independently developed by such Lender, the Fronting Bank or
the Administrative Agent without violating this Section 9.16 or (c) was
available to such Lender, the Fronting Bank or the Administrative Agent from a
third party having, to such person's knowledge, no obligations of
confidentiality to CommNet, the Borrower or any other Loan Party) and shall not
reveal the same other than (i) to its directors, trustees, officers, employees
and advisors with a need to know or to any person who evaluates, approves,
structures or administers the Loans on behalf of a Lender (so long as each such
person shall have been instructed to keep the same confidential in accordance
with this Section 9.16) and (ii) as contemplated by Section 9.04(g), except:
(A) to the extent necessary to comply with law or any legal process or the
requirements of any Governmental Authority or of any securities exchange on
which securities of the disclosing party or any Affiliate of the disclosing
party are listed or traded, (B) as part of normal reporting or review procedures
to Governmental Authorities, (C) to its parent companies, Affiliates or auditors
(so long as each such person shall have been instructed to keep the same
confidential in accordance with this Section 9.16) and (D) in order to enforce
its rights under any Loan Document in a legal proceeding.
<PAGE>
131
SECTION 9.17. Release of Liens and Guarantees. In the event that
CommNet, the Borrower or any Subsidiary conveys, sells, leases, assigns,
transfers or otherwise disposes of all or any portion of any of the Capital
Stock, assets or property of CommNet, the Borrower or any of the Subsidiaries in
a transaction not prohibited by Section 6.05 or Section 6.13, the Administrative
Agent and the Collateral Agent shall promptly (and the Lenders hereby authorize
the Administrative Agent and the Collateral Agent to) take such action and
execute any such documents as may be reasonably requested by the Borrower and at
the Borrower's expense to release any Liens created by any Loan Document in
respect of such Capital Stock, assets or property, and, in the case of a
disposition of all or substantially all the Capital Stock or assets of any
Subsidiary that is a Guarantor, terminate such Guarantor's obligations under the
Subsidiary Guarantee Agreement. In addition, the Administrative Agent and the
Collateral Agent agree to take such actions as are reasonably requested by the
Borrower and at the Borrower's expense to terminate the Liens and security
interests created by the Loan Documents when all the Obligations are paid in
full and all Letters of Credit and Commitments are terminated. Any
representation, warranty or covenant contained in any Loan Document relating to
any such Capital Stock, assets, property or Subsidiary shall no longer be deemed
to be made once such Capital Stock, assets or property is conveyed, sold,
leased, assigned, transferred or disposed of.
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.
COMMNET CELLULAR INC.,
by
/s/ Daniel P. Dwyer
-------------------------------
Name: Daniel P. Dwyer
Title: Executive Vice President
<PAGE>
132
CELLULAR, INC. FINANCIAL CORPORATION,
by
/s/ Daniel P. Dwyer
-------------------
Name: Daniel P. Dwyer
Title: Executive Vice President
THE CHASE MANHATTAN BANK,
individually and as Administrative
Agent and Collateral Agent,
by
/s/ B. Joseph Lillis
--------------------
Name: B. Joseph Lillis
Title: Managing Director
CHASE MANHATTAN BANK DELAWARE,
as Fronting Bank,
by
/s/ Michael L. Handago
----------------------
Name: Michael L. Handago
Title: Vice President
ALLSTATE INSURANCE COMPANY,
by
/s/ Patricia W. Wilson
----------------------
Name: Patricia W. Wilson
Title: Authorized Signatories
by
/s/ Jerry D. Zinkula
----------------------
Name: Jerry D. Zinkula
Title: Authorized Signatories
<PAGE>
BANK OF AMERICA NATIONAL TRUST & SAVINGS ASSOCIATION,
by
/s/ Elizabeth R. Borow
----------------------
Name: Elizabeth R. Borow
Title: Managing Director
CAISSE NATIONALE DE CREDIT AGRICOLE,
by
/s/ John McCloskey
------------------
Name: John McCloskey
Title: Vice President
COBANK, ACB,
by
/s/ Robert F. West
------------------
Name: Robert F. West
Title: Senior Vice President
CORESTATES BANK N.A.,
by
/s/ Philip D. Harrison
----------------------
Name: Philip D. Harrison
Title: Vice President
<PAGE>
CREDIT SUISSE FIRST BOSTON,
by
/s/ Jeffrey C. Howe
-------------------
Name: Jeffrey C. Howe
Title: Director
by
/s/ Todd C. Morgan
------------------
Name: Todd C. Morgan
Title: Vice President
DEBT STRATEGIES FUND, INC.,
by
/s/ Gilles Marchand
------------------------
Name: Gilles Marchand, CFA
Title: Authorized Signatory
DEEPROCK & COMPANY,
By: Boston Management and Research, as investment advisor,
by
/s/ Payson F. Swaffield
-----------------------
Name: Payson F. Swaffield
Title: Vice President
DLJ CAPITAL FUNDING, INC.,
by
/s/ Howard Shams
----------------
Name: Howard Shams
Title: Vice President
FIRSTRUST BANK,
by
<PAGE>
/s/ Richard F. DiLorenzo
------------------------
Name: Richard F. DiLorenzo
Title: Chief Credit Policy Officer
FLOATING RATE PORTFOLIO,
By: Chancellor LGT Senior Secured Ma
by
/s/ Stephen M. Alfieri
----------------------
Name: Stephen M. Alfieri
Title: Managing Director
GOLDMAN SACHS CREDIT PARTNERS L.P.,
by
/s/ Stephen King
----------------
Name: Stephen B. King
Title: Authorized Signatory
KZH SOLEIL CORPORATION,
by
/s/ Virginia Conway
-------------------
Name: Virginia R. Conway
Title: Authorized Agent
KZH HOLDING CORPORATION III,
by
/s/ Virginia Conway
-------------------
Name: Virginia R. Conway
Title: Authorized Agent
<PAGE>
THE LONG TERM CREDIT BANK OF
JAPAN, LTD. NEW YORK BRANCH,
by
/s/ Shuichi Tajima
------------------
Name: Shuichi Tajima
Title: Deputy General Manager
MERRILL LYNCH SENIOR FLOATING RATE FUND, INC.,
by
/s/ Gilles Marchand
--------------------
Name: Gilles Marchand, CFA
Title: Authorized Signatory
OCTAGON CREDIT INVESTORS LOAN PORTFOLIO
(a unit of The Chase Manhattan Bank),
by
/s/ Andrew Gordon
-----------------
Name: Andrew D. Gordon
Title: Managing Director
PNC BANK, NATIONAL ASSOCIATION,
by
/s/ Steven McGehrin
-------------------
Name: Steven J. McGehrin
Title: Vice President
<PAGE>
PRIME INCOME TRUST,
by
/s/ Howard Schloss
------------------
Name: Howard Schloss
Title: Vice President
ROYALTON COMPANY,
By: Pacific Investment Management
by
/s/ Raymond Kennedy
-------------------
Name: Raymond Kennedy
Title: Vice President
SENIOR HIGH INCOME PORTFOLIO INC.,
by
/s/ Gilles Merchand
-------------------
Name: Giles Merchand, CFA
Title: Authorized Signatory
VAN KAMPEN AMERICAN CAPITAL PRIME RATE INCOME TRUST,
by
/s/ Jeffrey Maillet
-------------------
Name: Jeffrey W. Maillet
Title: Senior Vice President
and Director
