CREDIT AGREEMENT
among
TELEREUNION S.A. de C.V.,
TELEREUNION INTERNATIONAL, S.A. de C.V.,
TELSCAPE INTERNATIONAL, INC.,
and
THE OTHER BORROWERS PARTY HERETO
and
THE ADDITIONAL BORROWERS FROM
TIME TO TIME A PARTY HERETO
collectively, as Borrowers
and
THE LENDERS PARTY HERETO,
and
GENERAL ELECTRIC CAPITAL CORPORATION,
as Administrative Agent and Lender
Dated as of September 29, 2000
CREDIT AGREEMENT, dated as of September 29, 2000, among TELEREUNION
S.A. de C.V., a Mexican corporation ("Telereunion"), TELEREUNION INTERNATIONAL,
S.A. de C.V., a Mexican corporation ("Telereunion International"), TELSCAPE
INTERNATIONAL, INC., a Texas corporation ("Holdings") and the other Borrowers
listed on Schedule 1.0 hereto and the Additional Borrowers from time to time
party hereto (jointly and severally with Telereunion, Telereunion International
and Holdings, the "Borrowers and each a "Borrower"), GENERAL ELECTRIC CAPITAL
CORPORATION, a New York corporation, in its capacity as Administrative Agent
(the "Administrative Agent") and Lender, as well as the several lending
institutions that from time to time are party to this Agreement (collectively
the "Lenders" and individually, a "Lender").
WITNESSETH:
WHEREAS, the Borrowers have requested that the Lenders enter into
certain financing arrangements with the Borrowers pursuant to which the Lenders
may make loans and provide other financial accommodations to the Borrowers;
WHEREAS, the Lenders are willing to make such loans and provide such
financial accommodations on the terms and conditions set forth herein;
WHEREAS, the Administrative Agent is willing to administer such loans
on behalf of the Lenders and in accordance with the terms and conditions set
forth herein;
WHEREAS, Pointe Communications Corporation. ("PCom"), a Nevada
corporation, has become a subsidiary of Holdings pursuant to a merger on June 2,
2000; and
WHEREAS, the Borrower presently is party to a financing facility with
Lucent Technologies Inc., which facility it would like to retire entirely with
the proceeds of the facility subject of this Agreement.
NOW THEREFORE, in consideration of the premises and mutual covenants
contained herein, the parties hereto hereby agree as follows:
ARTICLE I
INTERPRETATION OF THIS AGREEMENT; DEFINITIONS
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Section 1.1 Defined Terms. As used in this Agreement, the following
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terms shall have the following meanings:
"ABR": for any day, the greater of:
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the floating commercial loan rate announced from time to time by Bank
of America, N.A., as its prime rate, or equivalent, for United States
dollar loans made in the United States, in effect on such day, with any
change in the ABR resulting from a change in such announced rate to be
effective on the day of the relevant change, plus the relevant Applicable
Margin; and
the sum of (i) the Federal Funds Effective Rate plus (ii) 1/2 of 1%
(0.50%).
"ABR Loans": Loans the rate of interest applicable to which is based
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upon the ABR.
"Accession Agreement": the Accession Agreement substantially in the
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form of Exhibit N.
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"Account Control Agreement": the Account Control Agreement
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substantially in the form of Exhibit T, with such changes therein as the
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Administrative Agent shall approve.
"Accountants": Any internationally recognized firm of independent
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certified public accountants selected by the Borrowers and acceptable to the
Administrative Agent in its reasonable discretion.
"Acknowledgement of Concession Commencement": a letter from the
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Cofetel in form and substance satisfactory to the Administrative Agent, in its
sole discretion, acknowledging that Telereunion has commenced exploitation of
the Concession.
"Acknowledgment of Indebtedness": as defined in Section 4.2(f).
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"Additional Approved Cities": Chicago (Illinois), Dallas (Texas), New
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York City (New York), San Francisco (California) and San Xxxx (Puerto Rico).
"Additional Borrowers": each Borrower party to an Accession
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Agreement.
"Administrative Agent": GE Capital, as the Administrative Agent for
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the Lenders under this Agreement and the other Loan Documents, and any successor
thereto pursuant to Section 10.9.
"Affiliate": as to any Person, any other Person who directly or
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indirectly Controls, is under common Control with, or is Controlled by such
Person; provided that, in any event: (a) any Person who owns directly or
indirectly ten percent (10%) or more of the securities having ordinary voting
power for the election of directors or other governing body of a corporation or
ten percent (10%) or more of the partnership or other ownership interests of any
other such Person (other than as a limited partner of such other Person) will be
deemed an Affiliate of such corporation or other Person; and (b) each director
and officer of a Loan Party shall be deemed to be an Affiliate of the other Loan
Parties.
"Agents": the Administrative Agent and the Collateral Agents.
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"Agreement": this Credit Agreement, as amended, supplemented or
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otherwise modified from time to time.
2
"Approved Build-Out Plan": the original PCom business plan titled
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"Pointecom-Telscape 5 Year -- Combined v4.xls" provided to the Lender in May
2000, with such changes as may be required thereto to reflect, in connection
with infrastructure build-out in all the Additional Approved Cities, a need for
obtaining aggregate additional financing (exclusively for application to such
infrastructure build-out) after the Closing Date in the form of (i) equity
contributions in an aggregate amount of at least $9,000,000 and (ii) additional
financing (in the form of equity contributions or Indebtedness expressly
permitted under this Agreement) in an aggregate amount, including without
duplication of any equity financing required pursuant to clause (i) above, of at
least $21,000,000, in each case as such business plan may from time to time be
modified or superseded subject to the Administrative Agent's written consent.
"Assignee": as defined in Section 11.6(c).
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"Assignment and Acceptance": an assignment and acceptance entered
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into by a Lender and an assignee (with the consent of any party whose consent is
required by Section 11.6(c)), and accepted by the Administrative Agent, in the
form of Exhibit F or any other form approved by the Administrative Agent.
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"Bankruptcy Code": the Ley de Concursos Mercantiles and any successor
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statute thereto with respect to Mexico and otherwise any insolvency,
reorganization, moratorium or similar law for the general relief of debtors in
any relevant jurisdiction and, in each case, the rules and regulations issued
thereunder, as in effect from time to time.
"Benefited Lender": as defined in Section 11.7(a).
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"Blocked Account Agreement": the Blocked Account Agreement
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substantially in the form of Exhibit O, with such changes therein as the
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Administrative Agent shall approve.
"Board of Governors": the Board of Governors of the Federal Reserve
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System and any Governmental Authority which succeeds to the powers and functions
thereof.
"Borrowers": as defined in the Preamble to this Agreement.
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"Borrowing Date": shall mean with respect to any Loan, the date that
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the amount of such Loan is made available to the applicable Borrowers pursuant
to Section 2.2.
3
"Business Day": a day other than a Saturday, Sunday or other day on
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which commercial banks in New York City or Mexico, D.F., Mexico are authorized
or required by law to close.
"California Landlord's Waiver Agreements": the Landlord's Waiver
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Agreement (Mountain View) and the Landlord's Waiver Agreement (Sunnyvale).
"Capital Expenditures": as to any Person for any period, the
---------------------
aggregate amount incurred by such Person and its Subsidiaries for the rental,
lease, purchase (including by way of the acquisition of securities of a Person),
construction or use of any property during such period, the value or cost of
which, in accordance with GAAP, would appear on such Person's consolidated
balance sheet in the category of property, plant or equipment at the end of such
period, excluding: any such expenditure made to restore, replace or rebuild
property to the condition of such property immediately prior to any damage,
loss, destruction or condemnation of such property, to the extent such
expenditure is made with insurance proceeds or condemnation awards relating to
any such damage, loss, destruction or condemnation.
"Capital Stock": any and all shares, interests, participations,
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social parts or other equivalents (however designated) of capital stock of a
corporation, any and all equivalent ownership interests in a Person (other than
a corporation) and any and all warrants or options to purchase any of the
foregoing.
"Cash Equivalents": (a) securities issued or directly and fully
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guaranteed or insured by the United States Government, or any agency or
instrumentality thereof, having maturities of not more than one year from the
date of acquisition; (b) marketable general obligations issued by any state of
the United States of America or any political subdivision of any such state or
any public instrumentality or agency thereof maturing within one year from the
date of acquisition thereof and, at the time of acquisition thereof having a
credit rating of "A" or better from either Standard & Poor's Ratings Group or
Xxxxx'x Investors Service, Inc.; (c) certificates of deposit, time deposits,
eurodollar time deposits, overnight bank deposits or bankers' acceptances having
maturities of not more than one year from the date of acquisition thereof of any
Lender, or of any U.S. domestic commercial bank the long-term debt of which is
rated at the time of acquisition thereof at least A or the equivalent thereof by
Standard & Poor's Ratings Group or A or the equivalent thereof by Xxxxx'x
Investors Service, Inc., and having capital and surplus in excess of
$500,000,000; (d) repurchase obligations with a term of not more than seven days
for underlying securities of the types described in clauses (a), (b) and (c)
above entered into with any bank meeting the qualifications specified in clause
(c) above; (e) commercial paper rated at the time of acquisition thereof at
least A-2 or the equivalent thereof by Standard & Poor's Ratings Group or P-2 or
the equivalent thereof by Xxxxx'x Investors Service, Inc., or carrying an
equivalent rating by a nationally recognized rating agency, if both of the two
named rating agencies cease publishing ratings of investments, and in either
case maturing within 270 days after the date of acquisition thereof; (f)
interests in any investment company which invests solely in instruments of the
type specified in clauses (a) through (e) above; and (g) other investment
installments approved in writing by the Required Lenders and offered by any
Lender or by any financial institution which has a combined capital and surplus
of not less than $500,000,000.
4
"CFE": Comision Federal de Electricidad, a Mexican federal
---
governmental agency.
"CFE Consent": evidence satisfactory to the Administrative Agent in
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its reasonable discretion of the consent by CFE to the grant of a security
interest to the Mexican Collateral Agent pursuant to the Mexican
Telecommunications Mortgage on the rights of Telereunion derived from the lease
agreement executed by and between Telereunion and CFE.
"Change in Control": (a) with respect to any Borrower other than
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Interlink and Holdings, the acquisition by any Person or Persons (other than the
Borrowers) in the aggregate of more than five (5%) percent of the Capital Stock
of such Borrower or of the Capital Stock of such Borrower having the ordinary
voting power to elect the Board of Directors or the governing body of such
Borrower, (b) with respect to Interlink, the acquisition by another Person of
Capital Stock owned beneficially or of record by a Borrower, and (c) with
respect to Holdings, the acquisition by another Person or Persons in the
aggregate of either (i) twenty-five (25%) percent of such Capital Stock or (ii)
such lesser amount of such Capital Stock which would result in a change of
Control or upon the occurrence of specified events would result in a change in
Control and, in any case, the entering into of contractual or other arrangements
which would have the effect of a change of Control in any Borrower, except as
permitted pursuant to Section 6.8.
"Closing Date": the date on which the conditions precedent set forth
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in Section 4.1 and 4.2 shall be satisfied or waived and the Initial Loans shall
be made.
"Code": the Internal Revenue Code of 1986, as amended from time to
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time.
"Cofetel": Comision Federal de Telecomunicaciones, a Mexican federal
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governmental agency.
"Collateral": all assets of the Loan Parties, now owned or
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hereinafter acquired, upon which a Lien is purported to be created by any
Security Document.
"Collateral Assignment of Lease": each Collateral Assignment of Lease
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substantially in the form of Exhibit L.
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"Collateral Agency Agreement": the Collateral Agency Agreement which
----------------------------
appoints the U.S. Collateral Agent and the Mexican Collateral Agent,
substantially in the form of Exhibit H.
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"Collateral Agents": collectively, the U.S. Collateral Agent and the
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Mexican Collateral Agent and any other person designated to act in the capacity
as a collateral agent pursuant to the terms of Section 5.10(a).
"Commitment": with respect to any Lender, that Lender's commitment to
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make Loans to the Borrowers in an amount not to exceed the amount set forth
opposite such Lender's name on Schedule 1.1, as such amount may be reduced from
time to time pursuant to this Agreement; collectively with all Lenders,
"Commitments". The aggregate amount of the Lenders' Commitment is $60,000,000.
5
"Commitment Percentage": as to any Lender at any time, the percentage
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which (a) the sum of (i) such Lender's then unused Commitment plus (ii) the
principal amount of such Lender's Loans then outstanding constitutes of (b) the
sum of (x) the aggregate unused Commitments of all Lenders plus (y) the
aggregate principal amount of all Loans of all Lenders then outstanding.
"Commitment Period": the period from the Closing Date to the
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Commitment Termination Date or such earlier date on which the Commitments shall
terminate as provided herein.
"Commitment Termination Date": the date which is the first
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anniversary of the Closing Date.
"Commonly Controlled Entity": an entity, whether or not incorporated,
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which is under common Control with each of the Borrowers within the meaning of
Section 4001 of ERISA or is part of a group which includes the Borrowers and
which is treated as a single employer under Section 414(b) or (c) of the Code
or, solely for purposes of determining liabilities under Section 412 of the
Code, which is treated as a single employer under Section
414(b), (c), (m) or (o) of the Code.
"Concession": the concession to install, operate and exploit a public
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telecommunications network in the Xxxxxxx Xxxxxxxx xxx xxx Xxxxxx xx Xxxxxxxxxx,
Xxxxxxx, Xxxxxx, Nuevo Leon, Puebla, Tamaulipas and Veracruz, granted to
Telereunion by the Government of Mexico through the SCT, as evidenced by the
Concession Title (Titulo de Concesion), dated June 3, 1998 issued by the SCT.
"Consent and Agreement": each Consent and Agreement substantially in
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the form of Exhibit S, with such changes as the Administrative Agent shall
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approve.
"Consolidated Debt Service Obligations": as of the last day of any
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quarter of Holdings and its Subsidiaries, the sum of (a) Consolidated Interest
Expense for the prior four consecutive quarters of Holdings and its
Subsidiaries, plus (b) scheduled principal payments in respect of Indebtedness
of Holdings and its Subsidiaries for prior four consecutive quarters of
Holdings.
"Consolidated EBITDA": for any period, the Consolidated Net Income
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for such period, plus, to the extent deducted in determining such Consolidated
Net Income (without duplication), (a) Consolidated Interest Expense, (b) all
federal, state, local and foreign income and corporate withholding taxes, (c)
depreciation and amortization (including amortization of debt discount and
deferred financing costs), (d) other non-cash charges, and (e) any extraordinary
and unusual losses, and, minus, to the extent added in determining such
Consolidated Net Income, (i) any non-cash income or non-cash gains and (ii) any
extraordinary and unusual gains, all as determined, to the extent applicable, on
a consolidated basis in accordance with GAAP.
6
"Consolidated Funded Debt": at any date of determination, the sum
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(without duplication) of all Funded Debt of Holdings and its Subsidiaries at
such date of determination that would be included in the liabilities on a
consolidated balance sheet of Holdings and its Subsidiaries as at such date,
prepared in accordance with GAAP.
"Consolidated Interest Expense": for any period, the net interest
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expense of Holdings and its Subsidiaries for such period as determined on a
consolidated basis in accordance with GAAP.
"Consolidated Net Income": for any period, the net income of Holdings
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and its Subsidiaries for such period as determined on a consolidated basis in
accordance with GAAP.
"Consolidated Revenue": for any period, the revenue of Holdings and
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its Subsidiaries for such period as determined on a consolidated basis in
accordance with GAAP.
"Consolidated Total Debt": at any date of determination, the sum
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(without duplication) of all Indebtedness of Holdings and its Subsidiaries at
such date of determination that would be included in the liabilities on a
consolidated balance sheet of Holdings and its Subsidiaries as at such date,
prepared in accordance with GAAP.
"Consolidated Total Equity": as of any date, the sum of the
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consolidated paid-in capital, and including irrevocable capital contributions,
any preferred stock and accumulated retained earnings of Holdings and its
Subsidiaries as of such date, all as determined in accordance with GAAP.
"Contractual Obligation": as to any Person, any provision of any
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security issued by such Person or of any agreement, instrument, or other
material undertaking to which such Person is a party or by which it or any of
its property is bound.
"Control": the possession, directly or indirectly, of power to direct
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(or cause the direction of) management or policies of another Person (whether
through ownership of securities or partnership or other ownership interests, by
contract or otherwise). "Controlled by" and "under common Control with" have
meanings correlative thereto.
"Cooperation and Fee Letter": the letter agreement among the
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Borrowers and GE Capital dated the date hereof.
"Corporate Parts Pledge Agreement": the Corporate Parts Pledge
-----------------------------------
Agreement, dated the date hereof, executed by each of the Corporate Parts
Pledgors, in favor of the Mexican Collateral Agent for the benefit of the
Lenders, substantially in the form of Exhibit T.
"Corporate Parts Pledgors": Telereunion and Holdings.
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7
"Default": any of the events specified in Article IX, whether or not
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any requirement for the giving of notice, the lapse of time, or both, or any
other condition that would be necessary in order to constitute such event as an
Event of Default, has occurred or been satisfied.
"Dollar" or "$": the lawful currency of the United States of America.
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"Drawdown Certificate": a request by the Borrowers for a Borrowing
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and executed by the relevant Borrower(s) using the proceeds of such Borrowing
pursuant to Section 2.6, substantially in the form of Exhibit D.
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"EBITDA": net earnings, plus to the extent deducted in determining
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net earnings, (a) interest expense, (b) all income and withholding taxes, (c)
depreciation and amortization (including amortization of debt discount and
deferred financing costs), (d) other non-cash charges, and (e) any extraordinary
and unusual costs, and minus, to the extent added in determining such net
income, (i) any non-cash income or non-cash gains and (ii) any extraordinary and
unusual gains, all as determined, to the extent applicable, on a consolidated
basis in accordance with GAAP.
"Endorsement": each Endorsement to the U.S. Collateral Agent of the
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loss payable clause under any insurance policy substantially in the form of
Exhibit K.
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"Environmental Laws": any and all Federal, state, local, municipal or
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foreign laws, rules, orders, regulations, statutes, ordinances, codes, decrees,
requirements of any Governmental Authority having the force of law or other
Requirements of Law (including common law) regulating, relating to or imposing
liability or standards of conduct concerning the protection of the environment
or the protection of human health as it relates to the protection of the
environment, as now or at any time hereafter in effect.
"Environmental Permits": all permits, licenses, registrations,
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notifications, exemptions, and other authorizations required by or from any
Governmental Authority under Environmental Laws.
"Equipment": as defined in the Supply Contracts.
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"ERISA": the Employee Retirement Income Security Act of 1974, as
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amended from time to time.
"Eurodollar Loans": Loans the rate of interest applicable to which is
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based upon LIBOR, regardless of how the Loans are actually funded.
"Event of Default": any of the events specified in Article IX,
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provided that all requirements for the giving of notice, the lapse of time, or
both, and any other conditions, have been satisfied.
8
"Excess Cash Flow": for any period, for all Borrowers on a
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consolidated basis, the result (without duplication) of:
(a) Consolidated EBITDA; minus
(b) Capital Expenditures for such period; minus
(c) the aggregate amount of all scheduled and paid repayments and
voluntary and mandatory prepayments of Indebtedness of the Borrowers and
their subsidiaries for borrowed money (excluding (i) payments on revolving
credit facilities if such amounts remain available to be reborrowed, (ii)
mandatory prepayment of the Loans, and (iii) repayments and prepayments of
Indebtedness pursuant to refinancings); minus
(d) income tax payments accrued or paid for such period; minus
(e) equity investments in Telecommunications companies in an amount
not to exceed $10,000,000 per annum.
"Excess Withholding Taxes": any withholding taxes, or any portion
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thereof, which would not have been imposed but for (a) failure by the
Administrative Agent or any Lender (i) to provide to Borrowers upon their
request, and if and when required under applicable law, a letter specifying that
the Lenders are the effective beneficiary of the interest payments hereunder and
under the Promissory Note(s), as set forth in the "Resolution that Establishes
General Rules and Other Provisions of a Tax Nature for 2000" (Resolucion que
Establece Reglas Generales y Otras Disposiciones de Caracter Fiscal para el ano
de 2000) or any equivalent general rules in effect thereafter while this
Agreement shall remain in full force and effect, (ii) following a reasonable
written request of Borrowers, to complete and file with the appropriate
Governmental Authority, or to provide to Borrowers such forms, certificates,
information, applications or declarations prescribed by any such law, rule or
regulation enacted or issued by Mexico or any political subdivision thereof or
authority therein, or a double taxation treaty to which Mexico is a party that
are a precondition for a reduction of or exemption from such Taxes to which any
Lender is entitled (provided, that neither Administrative Agent nor such Lender
shall be under any obligation to provide any information to Borrowers which it
deems, in Administrative Agent's and the Lender's judgment, to be confidential
or legally or commercially prejudicial to Administrative Agent or the Lender),
or (iii) to use its reasonable commercial efforts to maintain its status as a
Registered Entity; provided, that for the purposes of this clause (iii), if such
Administrative Agent or Lender is prohibited by law (or by any other reason)
from maintaining its status as a Registered Entity, it will use its best efforts
to minimize or avoid the effects of such a result by designating a different
lending office or transferring the Loans to any other office or affiliates of
such Lender if such designation or transfer would avoid such a result and would
not, in the sole opinion of such Lender, be otherwise disadvantageous to such
Lender, or (b) the participation or assignment of the Loans or any portion
thereof to an entity which is not a Mexican bank or a Registered Entity at the
time of such participation or assignment or which subsequently fails to comply
with the provisions of clauses (a)(i) through (a)(iii) above as applicable to
any Lender.
9
"Excluded Taxes": (i) net income taxes, franchise taxes and capital
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taxes imposed on the Administrative Agent or any Lender (or Transferee) as a
result of any future, present or former connection between the Administrative
Agent or such Lender (or Transferee) and the jurisdiction of the Governmental
Authority imposing such tax or any political subdivision or taxing authority
thereof or therein (other than any such connection arising solely from the
Administrative Agent or such Lender (or Transferee) having executed, delivered
or performed its obligations or received a payment under, or enforced, this
Agreement or any Note or any other Loan Document); and (ii) in the case of
Administrative Agent and each Lender, taxes imposed on or measured by its net
income by the jurisdiction (or any political subdivision thereof) under the laws
of which Administrative Agent and each Lender is organized or maintains its
lending office with respect to the Loans.
"Federal Funds Effective Rate": for any day, the weighted average of
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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 nationally recognized standing selected by
it.
"Financing Lease": any lease of property, real or personal, the
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obligations of the lessee in respect of which are required in accordance with
GAAP to be capitalized on a balance sheet of the lessee.
"Financing Lease Obligations": as to any Person, the obligations of
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such Person to pay rent or other amounts under any Financing Lease; the amount
of such obligations at any time shall be the capitalized amount thereof at such
time determined in accordance with GAAP.
"Five-year Projections": as defined in 4.1(k).
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"Fixed Charges": with respect to any Person for any fiscal period,
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(a) the aggregate of all Interest Expense paid or accrued during such period,
plus (b) scheduled payments of principal with respect to Indebtedness during
such period, plus (c) Capital Expenditures during such period, plus (d) cash
payments of income taxes.
"Funded Debt": with respect to any Person, all Indebtedness for
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borrowed money evidenced by notes, bonds, debentures, or similar evidences of
Indebtedness and which by its terms matures more than one year from, or is
directly or indirectly renewable or extendible at such Person's option under a
revolving credit or similar agreement obligating the lender or lenders to extend
credit over a period of more than one year from the date of creation thereof,
and specifically including Financing Lease Obligations, current maturities of
long-term debt, revolving credit and short-term debt extendible beyond one year
at the option of the debtor, and also including, in the case of Borrowers, the
Obligations and, without duplication, any Guarantee Obligation.
"GAAP": generally accepted accounting principles in the United States
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of America in effect from time to time.
10
"GE Capital": General Electric Capital Corporation, a New York
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corporation.
"Governmental Authority": any nation or government, any state or
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other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Guarantee Obligation": as to any Person (the "Guaranteeing Person"),
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any obligation of (a) the Guaranteeing Person or (b) another Person (including,
without limitation, any bank under any letter of credit) pursuant to which the
Guaranteeing Person has issued a reimbursement, counter indemnity or similar
obligation, in either case guaranteeing or in effect guaranteeing any
Indebtedness, lease, dividend or other obligation (the "Primary Obligations") of
any other third Person (the "Primary Obligor") in any manner, whether directly
or indirectly, including, without limitation, any obligation of the Guaranteeing
Person, whether or not contingent, (i) to purchase any such Primary Obligation
or any property constituting direct or indirect security therefor, (ii) to
advance or supply funds (A) for the purchase or payment of any such Primary
Obligation or (B) to maintain working capital or equity capital of the Primary
Obligor or otherwise to maintain the net worth or solvency of the Primary
Obligor, (iii) to purchase property, securities or services primarily for the
purpose of assuring the owner of any such Primary Obligation of the ability of
the Primary Obligor to make payment of such Primary Obligation or (iv) otherwise
to assure or hold harmless the owner of any such Primary Obligation against loss
in respect thereof; provided, however, that the term Guarantee Obligation shall
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not include endorsements of instruments for deposit or collection in the
ordinary course of business or normal and customary indemnification pursuant to
any transaction heretofore or hereafter entered into by the Borrowers, or any of
the Borrowers' Subsidiaries in the ordinary course of business permitted
hereunder, or in connection with any purchase or sale of assets permitted
hereunder. The amount of any Guarantee Obligation of any Guaranteeing Person
shall be deemed to be the lower of (x) an amount equal to the stated or
determinable amount of the Primary Obligation in respect of which such Guarantee
Obligation is made and (y) the maximum amount for which such Guaranteeing Person
may be liable pursuant to the terms of the instrument embodying such Guarantee
Obligation, unless such Primary Obligation and the maximum amount for which such
Guaranteeing Person may be liable with respect thereto are not stated or
determinable, in which case the amount of such Guarantee Obligation shall be
such Guaranteeing Person's maximum reasonably anticipated liability in respect
thereof as determined by the Borrowers in good faith.
"Guaranteeing Person": as defined in the definition of "Guarantee
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Obligation" contained in this Section 1.1.
"Hacienda": means the Secretaria de Hacienda y Credito P blico, a
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Mexican federal agency.
"Hazardous Materials": any petroleum (including crude oil or any
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fraction thereof) or petroleum products, polychlorinated biphenyls,
urea-formaldehyde insulation, asbestos and asbestos-containing materials,
pollutants, contaminants, and all other materials and substances including but
not limited to radioactive materials regulated pursuant to any Environmental
Laws or the handling or disposal of which could result in liability under any
Environmental Law.
11
"Holdings": as defined in the Preamble to this Agreement.
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"Indefeasibly Paid": means, with respect to the making of any payment
-----------------
on any Obligation, a payment of such Obligation in full that is not subject to
avoidance under Section 547 of the U.S. Bankruptcy Code or any similar law or
equitable principle.
"Increased Amounts": as defined in Section 2.15(a).
------------------
"Indebtedness": of any Person at any date, without duplication, (a)
------------
all indebtedness of such Person for borrowed money or for the deferred purchase
price of property or services (other than current trade liabilities incurred in
the ordinary course of business payable in accordance with customary practices
and not more than 90 days past due, unless being contested in good faith by
appropriate proceedings, and compensation, pension obligations and other
obligations arising from employee benefits and employee arrangements), (b) any
other indebtedness of such Person which is evidenced by a note, bond, debenture
or similar instrument, (c) all Financing Lease Obligations of such Person, (d)
all obligations of such Person under Interest Rate Protection Agreements, (e)
all obligations of such Person in respect of letters of credit (whether or not
drawn), acceptances and similar obligations issued or created for the account of
such Person, (f) all Guarantee Obligations of such Person and (g) all
liabilities secured by any Lien on any property owned by such Person even though
such Person has not assumed or otherwise become liable for the payment thereof
(the amount of such indebtedness with respect to such Person being deemed to be
the lesser of the fair market value of such property or the amount of
indebtedness of others so secured).
"Indemnified Liabilities": as defined in Section 11.5.
-----------------------
"Initial Loan": the first Loan made under the Commitments pursuant to
------------
the terms of this Agreement.
"Insolvency": with respect to any Multiemployer Plan, the condition
----------
that such Plan is insolvent within the meaning of Section 4245 of ERISA.
"Insolvent": pertaining to a condition of Insolvency.
---------
"Intellectual Property": as defined in Section 3.9.
----------------------
"Interest Expense": shall mean, with respect to any Person for any
-----------------
fiscal period, interest expense (whether cash or non-cash) of such Person
determined in accordance with GAAP for the relevant period ended on such date,
including, in any event, interest expense with respect to any Funded Debt of
such Person and interest expense for the relevant period that has been
capitalized on the balance sheet of such Person.
12
"Interest Payment Date": (a) with respect to any ABR Loan, the last
-----------------------
day of each quarter and (b) with respect to any Eurodollar Loan, the last day of
the Interest Period applicable to such Eurodollar Loan and, in the case of a
Eurodollar Loan with an Interest Period of more than three months' duration,
each day which is three months, or a whole multiple thereof, after the first day
of such Interest Period.
"Interest Period": (a) with respect to an ABR Loan, the period
----------------
commencing with the incurrence of such ABR Loan (or conversion from an
Eurodollar Loan) and ending on the next succeeding Interest Payment Date and,
thereafter, from the last day of the immediately preceding Interest Period
applying to such ABR Loan and ending on the next succeeding Interest Payment
Date and, (b) with respect to an Eurodollar Loan, initially, the period
commencing on the Borrowing Date and ending on the numerically corresponding day
in the calendar month that is six (6) months after such Borrowing Date, and
thereafter, each period commencing on the last day of the immediately preceding
Interest Period and ending six (6) months thereafter, provided that, all of the
foregoing provisions relating to Interest Periods are subject to the following:
(i) if any Interest Period would otherwise end on a day that is not a
Business Day, such Interest Period shall be extended to the next succeeding
Business Day unless the result of such extension would be to carry such
Interest Period into another calendar month in which event such Interest
Period shall end on the immediately preceding Business Day;
(ii) any Interest Period that would otherwise extend beyond the
Maturity Date or beyond the date final payment is otherwise due on the
Loans shall end on the Maturity Date or such date final payment is due;
(iii) any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding
day in the calendar month at the end of such Interest Period) shall end on
the last Business Day of a calendar month; and
(iv) if an Interest Period shall be a period other than one of equal
length to that of the Interest Period which is concluding, the Borrowers
shall issue and deliver to the Administrative Agent a new Note as required
pursuant to the provisions of Section 2.5 and, if such new Note or Notes is
not provided to the Administrative Agent, the Interest Period shall be
deemed to be equal to six months.
"Interest Rate Protection Agreements": as to any Person, all interest
-----------------------------------
rate swaps, caps or collar agreements or similar arrangements entered into
by such Person providing for protection against fluctuations in interest
rates or the exchange of nominal interest obligations, either generally
or under specific contingencies.
"Interlink": Interlink Communications, Inc., a Delaware corporation
---------
and a U.S. Borrower.
"Investment": as defined in Section 6.3.
----------
13
"Landlord Consent": each Landlord Consent substantially in the form
-----------------
of Exhibit M or in such other form as is mutually acceptable to the
----------
Administrative Agent and the Borrowers.
"Landlord's Waiver Agreement (Mountain View)": the Landlord's Waiver
--------------------------------------------
Agreement substantially in the form of Exhibit P.
-----------
"Lenders": as defined in the Preamble to the Agreement.
-------
"LIBOR": with respect to any Interest Period pertaining to a
-----
Eurodollar Loan, the rate per annum (expressed as a decimal) for deposits in
---------
Dollars equal or approximately equal to the principal amount of such Eurodollar
Loan and for a period equal or comparable to such Interest Period which (a)
appears on the Bridge Telerate Page 3750 (or such other page as may replace such
Telerate Page 3750 for the purpose of displaying London interbank offered rates
for Dollar deposits), as of approximately 11:00 A.M. London time on the date two
(2) London business days prior to the first day of such Interest Period or (b)
in the event that the Bridge Telerate Service or Telerate Page 3750 (or any
replacement page therefor) shall be unavailable on any such date, the rate per
annum at which such deposits in Dollars are offered on such date by Bank of
America, N.A. to prime banks in the London interbank market at 11:00 A.M. London
time on the date two (2) London business days prior to the first day of such
Interest Period.
"Lien": any mortgage, pledge, hypothecation, assignment for security,
----
deposit arrangement, encumbrance, lien (statutory or other), charge or other
security interest or any preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including, without
limitation, any conditional sale or other title retention agreement and any
Financing Lease having substantially the same economic effect as any of the
foregoing).
"Loan Documents": collectively, this Agreement, any Note or Notes,
---------------
the Mexican Security Documents, the U.S. Security Documents, the Cooperation and
Fee Letter, the Accession Agreement, and any other material agreement or
material document entered into by any Loan Party in connection herewith.
"Loan Participants": as defined in Section 11.6(b).
------------------
"Loan Parties": each of the Borrowers and each other direct or
-------------
indirect subsidiary of each of the Borrowers which is a party to a Loan
Document.
"Loans": as defined in Section 2.1(a).
-----
"Lucent": Lucent Technologies Inc., a Delaware corporation.
------
"Lucent Collateral": any and all collateral securing indebtedness
------------------
created under the Lucent Credit Agreement.
14
"Lucent Credit Agreement": the Credit Agreement dated August 27, 1999
-----------------------
among certain Borrowers, Lucent and the lenders party thereto.
"Material Adverse Effect": a material adverse effect on (a) the
-------------------------
business, operations, property, assets, prospects, or condition (financial or
otherwise) of Holdings and its Subsidiaries taken as a whole or of Telereunion
or Telereunion International individually, (b) the ability of the Borrowers or
any other Loan Party to perform in a timely manner their respective material
Obligations under any of the Loan Documents, (c) the validity or enforceability
of this Agreement or any of the other Loan Documents, (d) the rights or remedies
of the Collateral Agents (or any other collateral agent under the Mexican
Security Documents and the U.S. Security Documents) or the Lenders under any of
the Loan Documents or (e) the Liens, including the enforceability or validity
thereof, provided to the Collateral Agents (or any other collateral agent under
the Mexican Security Documents and the U.S. Security Documents) or any Lender
under any of the Loan Documents.
"Material Foreign Subsidiary" shall mean, at any time, any Subsidiary
---------------------------
of Holdings which is organized under the laws of any country (or political
subdivision of any country) other than the United States or Mexico and has at
such time either (i) EBITDA for the preceding four fiscal quarter period in
excess of $1,000,000 or (ii) total assets, as of the last day of the preceding
fiscal quarter, having a net book value in excess of $3,000,000, in each case
based upon the most recent annual or quarterly financial statements delivered to
the Administrative Agent pursuant to Section 5.1.
"Maturity Date": the date which is the sixth anniversary of the
--------------
Closing Date.
"Mexican Borrower Obligations": the unpaid principal of and interest
-----------------------------
on the Loans to the Mexican Borrowers, the proceeds of any Loan to any U.S.
Borrower which either (i) are received by a Mexican Borrower either directly or
indirectly in the form of loans or capital contributions from such U.S. Borrower
to pay invoices pursuant to the Supply Contracts or (ii) are used to pay the
principal or interest on any loan under the Lucent Credit Agreement that was an
obligation of a Mexican Borrower and all other obligations and liabilities of
the Mexican Borrowers to the Administrative Agent, the Collateral Agents and the
Lenders (including, without limitation, interest accruing at the then applicable
rate provided in this Agreement after the maturity of the Loans and interest
accruing at the then applicable rate provided in this Agreement after the filing
of any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to the Mexican Borrowers, whether or
not a claim for post-filing or post-petition interest is allowed in such
proceeding), whether direct or indirect, absolute or contingent, due or to
become due, or now existing or hereafter incurred, which may arise under, out
of, or in connection with, this Agreement, the other Loan Documents, any cash
management services agreement entered into by the Mexican Borrowers with any
Lender or any Affiliate of any Lender or any other document made, delivered or
given in connection herewith or therewith, in each case whether on account of
principal, interest, reimbursement obligations, fees, indemnities, costs,
expenses or otherwise (including, without limitation, all reasonable fees and
disbursements of counsel to the Administrative Agent or to the Lenders that are
required to be paid by the Mexican Borrowers pursuant to the terms of this
Agreement, any other Loan Document or any such cash management services
agreement entered into by the Mexican Borrowers with any Lender or any Affiliate
of any Lender).
15
"Mexican Borrowers": each Borrower incorporated under the laws of
------------------
Mexico.
"Mexican Collateral Agent": GE Capital Bank, S.A., Institucion de
--------------------------
Banca M ltiple, , a Mexican banking corporation, in its capacity as collateral
agent for the Lenders under the Mexican Security Documents and any successor
thereto.
"Mexican Industrial Mortgage": each floating mortgage on the assets
-----------------------------
of the Mexican Borrower which is a party thereto, substantially in the form of
Exhibit B-2.
------------
"Mexican Landowner Consents": each Landowner Consent with respect to
---------------------------
the consent to the collateral assignment of certain real property interests in
connection with the Network.
"Mexican Mortgages": the Mexican Telecommunications Mortgage and the
------------------
Mexican Industrial Mortgage.
"Mexican Security Documents": collectively, the Mexican Mortgages,
----------------------------
the Stock Pledge Agreement, the Corporate Parts Pledge Agreement, the CFE
Consent, the SCT Authorizations, the Mexican Landowner Consents and each other
agreement or document granting a security interest in any property in Mexico for
the benefit of the Lenders.
"Mexican Telecommunications Mortgage": the floating mortgage on the
-------------------------------------
Concession, the Network and other tangible and intangible assets of Telereunion
pursuant to Articles 92 and 93 of the Ley de Vias Generales de Comunicacion as
subrogated and amended to be substantially in the form of Exhibit B-1.
-----------
"Mortgages": collectively, each Mexican Mortgage and each U.S.
---------
Mortgage, if any.
"MSN": M.S. Noticias y Telecomunicaciones, S.A. de C.V., a Mexican
---
corporation and a Mexican Borrower.
"Multiemployer Plan": a Plan which is a multiemployer plan as defined
------------------
in Section 4001(a)(3) of ERISA.
"Network": the telecommunications network to be built and operated by
-------
the Borrowers in order to provide telecommunications services pursuant to the
Concession.
"New Equity": Additional funds (over and above those referenced in
-----------
Section 4.1(v)) contributed to Holdings through the sale by Holdings of equity
securities.
"New Lending Office": as defined in Section 2.15(c)(i)(A).
--------------------
16
"New Note Circumstance": as defined in Section 2.5(c).
-----------------------
"Net Proceeds": with respect to any event (a) the cash proceeds
-------------
received in respect of such event including (i) any cash received in respect of
any non-cash proceeds, but only as and when received, (ii) in the case of a
casualty, insurance proceeds, and (iii) in the case of a condemnation or similar
event, condemnation awards and similar payments, net of (b) the sum of (i) all
reasonable fees and out-of-pocket expenses paid by any Borrower to third parties
(other than Affiliates) in connection with such event, (ii) in the case of a
sale or other disposition of an asset (including pursuant to a casualty or
condemnation), the amount of all payments required to be made by any Borrower as
a result of such event to repay Indebtedness (other than Loans) secured by such
asset or otherwise subject to mandatory prepayment as a result of such event,
and (iii) the amount of all taxes paid (or reasonably estimated to be payable)
by any Borrower and the amount of any reserves established by any Borrower to
fund contingent liabilities reasonably estimated to be payable, in each case
during the year that such event occurred or the next succeeding year and that
are directly attributable to such event (as determined reasonably and in good
faith by the chief financial officer of each of the Borrowers).
"Non-Excluded Taxes": as defined in Section 2.15.
-------------------
"Non-U.S. Lender": as defined in Section 2.15.
----------------
"Notes": as defined in Section 2.5(a).
-----
"Obligations": collectively, the Mexican Borrower Obligations and the
-----------
U.S. Borrower Obligations.
"PBGC": the Pension Benefit Guaranty Corporation established pursuant
----
to Subtitle A of Title IV of ERISA and any Governmental Authority which succeeds
to the powers and functions thereof.
"PCom": Pointe Communications Corporation, a Nevada corporation.
-----
"PCom Subsidiaries": PCom, and each direct and indirect Subsidiary of
------------------
PCom which became a Subsidiary of Holdings upon the merger of PCom with and into
a wholly owned Subsidiary of Holdings.
"Permits": the permit No. 42-STVA-946495 dated November 29, 1994 to
-------
render value added services granted to Vextro and the registry No. 05-SVA-95
dated July 25, 1995 to render value added services granted to MSN, each granted
by the Federal Government of Mexico, through the SCT.
"Permitted Liens": as defined in Section 6.1.
----------------
17
"Permitted Preferred Cash Dividends": cash dividends with respect to
-----------------------------------
classes D, E or F of Telscape International Inc. Convertible Senior Preferred
Stock, payable solely out of proceeds of New Equity, at any time after the first
anniversary of the Closing Date so long as (i) Borrowers shall fully comply with
the prepayment obligations set forth in Section 2.8(b) hereof with respect
thereto, and (ii) at the time thereof and after giving effect thereto, no
Default has occurred and is continuing and, with respect to each of the
financial covenants set forth in Article VII, (A) Borrowers were in full
compliance therewith as of the most recent date on which such financial covenant
was (is being) measured, without requiring any waiver thereof or amendment
thereto to enable such compliance, and (B) no Default could reasonably be
expected to exist as of the next date on which such financial covenant is to be
measured.
"Person": any individual, corporation, partnership, joint venture,
------
trust or unincorporated organization, joint stock company, limited liability
company or other similar organization, government or any political subdivision
thereof, a court, or any other legal entity, whether acting in an individual,
fiduciary, or other capacity.
"Plan": at a particular time, any employee benefit plan which is
----
covered by ERISA and in respect of which each of the Borrowers or a Commonly
Controlled Entity is (or, if such plan were terminated at such time, would under
Section 4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5)
of ERISA.
"Pledge Agreement": the Pledge Agreement substantially in the form of
----------------
Exhibit G pursuant to which Holdings and each other applicable Borrower pledges
----------
its shares in a U.S. Borrower.
"Primary Obligor": as defined in the definition of "Guarantee
----------------
Obligation" contained in this Section 1.1.
"Primary Obligations": as defined in the definition of "Guarantee
--------------------
Obligation" contained in this Section 1.1.
"Proceeding": means any:
----------
(f) insolvency, bankruptcy, concurso mercantil, quiebra, receivership,
liquidation, reorganization, readjustment, composition, or other similar
proceeding relating to any Borrower, its property, or its creditors as
such;
(g) proceeding for any liquidation, dissolution, or other winding-up
of any Borrower, voluntary or involuntary, whether or not involving
insolvency or bankruptcy proceedings;
(h) assignment for the benefit of creditors of any Borrower;
(i) other marshalling of the assets of any Borrower under any law
relating to proceedings of the type referred to in the preceding clause (a)
or (b); or
(j) event described in Section (g) of Article IX of this Agreement
with respect to any Borrower.
"Properties": as defined in Section 3.16(a).
------------
18
"Process Agent": as defined in Section 11.12(b).
--------------
"Purchase Money Indebtedness": shall mean (i) any Indebtedness
-----------------------------
incurred for the payment of all or any part of the purchase price of any fixed
asset or equipment, (ii) any Indebtedness incurred for the sole purpose of
financing or refinancing all or any part of the purchase price of any fixed
asset or equipment, and (iii) any renewals, extensions of refinancings thereof
(but not any increases in the principal amounts thereof outstanding at that
time).
"Purchase Money Lien": shall mean any Lien upon any fixed assets or
---------------------
equipment which secures the Purchase Money Indebtedness related thereto but only
if such Lien shall at all times be confined solely to the asset the purchase
price of which was financed or refinanced through the incurrence of the Purchase
Money Indebtedness secured by such Lien and only if such Lien secures only such
Purchase Money Indebtedness.
"Reference Bank": shall mean the London office of the Lender selected
--------------
by the Required Lenders.
"Register": as defined in Section 11.6(d).
--------
"Registered Entity": an entity registered as a financial institution
------------------
with Hacienda for purposes of Article 154 of the Mexican Income Tax Law, for
which the applicable withholding tax rate as of the date hereof is 4.9%.
"Regulation D": Regulation D of the Board of Governors as in effect
-------------
from time to time.
"Regulation G": Regulation G of the Board of Governors as in effect
-------------
from time to time.
"Regulation H": Regulation H of the Board of Governors as in effect
-------------
from time to time.
"Regulation U": Regulation U of the Board of Governors as in effect
-------------
from time to time.
"Regulation X": Regulation X of the Board of Governors as in effect
-------------
from time to time.
"Reorganization": with respect to any Multiemployer Plan, the
--------------
condition that such plan is in reorganization within the meaning of Section 4241
of ERISA.
"Reportable Event": any of the events set forth in Section 4043(c) of
----------------
ERISA, other than those events as to which the thirty day notice period is
waived under the regulations adopted by PBGC.
19
"Required Lenders": Lenders, the Commitment Percentages of which
-----------------
aggregate more than 67%.
"Requirements of Law": as to any Person, (a) the certificate of
---------------------
incorporation and by-laws or other organizational or governing documents of such
Person, and (b) any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Authority, in each case applicable
to or binding upon such Person or any of its property or to which such Person or
any of its property is subject.
"Responsible Officer": as to any Person, the chief financial officer,
-------------------
the chief executive officer or the president of such Person or, with respect to
financial matters, the chief financial officer of such Person or, in either
case, such other executive officers as may be designated from time to time by
such Person in writing to the Administrative Agent.
"Restricted Payment": means (a) any dividend or other distribution
-------------------
(whether in cash, securities or other property other than dividends of preferred
stock of Holdings paid to holders of such preferred stock) with respect to any
shares of any class of Capital Stock of the Borrowers, (b) any payment (whether
in cash, securities or other property) in respect of any Subordinated Claim,
whether on account of principal, interest or otherwise, or (c) any payment
(whether in cash, securities or other property), including any sinking fund or
similar deposit, on account of the purchase, redemption, retirement,
acquisition, cancellation or termination of any Subordinated Claim or any shares
of any class of Capital Stock of any Borrower or any option, warrant or other
right to acquire any such shares of Capital Stock of any Borrower.
"SCT": the Secretaria de Comunicaciones y Transportes (Secretary of
---
Communications and Transportation), a Mexican federal government agency.
"SCT Authorizations": an authorization from the SCT authorizing the
-------------------
mortgage of the Permit of Vextro de Mexico, S.A. de C.V. pursuant to the terms
of the Mexican Industrial Mortgage and the SCT Notice.
"SCT Notice": the notice to the SCT with respect to the amendment to
-----------
the Mexican Telecommunications Mortgage.
"SEC": the Securities and Exchange Commission or any Governmental
---
Authority which succeeds to the powers and functions thereof.
"Secured Party": any Lender, the Administrative Agent, and the
--------------
Collateral Agents or other holder of any Obligation.
"Security Agreement": the Security Agreement, dated the date hereof,
-------------------
executed and delivered by each of the U.S. Borrowers in favor of the U.S.
Collateral Agent, for the benefit of the Lenders, substantially in the form of
Exhibit C.
----------
"Security Documents": the Mexican Security Documents, the U.S.
-------------------
Security Documents and any document by which the Capital Stock of any Material
Foreign Subsidiary is made subject to a Lien for the benefit of the Lenders.
20
"Servicios Corporativos": Servicios Corporativos Vextro S.A. de C.V.,
----------------------
a Mexican corporation and a Mexican Borrower.
"Single Employer Plan": any Plan which is covered by Title IV of
----------------------
ERISA, but which is not a Multiemployer Plan.
"Solvent": when used with respect to any Person, means that, as of
-------
any date of determination, (a) the amount of the "present fair saleable value"
of the assets of such Person will, as of such date, exceed the amount that will
be required to pay all "liabilities of such Person, contingent or otherwise", as
of such date (as such quoted terms are determined in accordance with applicable
Federal and state laws governing determinations of the insolvency of debtors) as
such debts become absolute and matured, (b) such Person will not have, as of
such date, an unreasonably small amount of capital with which to conduct its
business, and (c) such Person will be able to pay its debts as they mature,
taking into account the timing of and amounts of cash to be received by such
Person and the timing of and amounts of cash to be payable on or in respect of
indebtedness of such Person; in each case after giving effect to (A) as of the
Closing Date the making of the Loans to be made on the Closing Date and the
application of the proceeds of such Loans and (B) on any date after the Closing
Date, the making of any Loan to be made on such date and the application of the
proceeds of such Loan. For purposes of this definition, (i) "debt" means
liability on a "claim", and (ii) "claim" means any right to payment, whether or
not such a right is reduced to judgment, liquidated, unliquidated, fixed,
contingent matured, unmatured, disputed, undisputed, legal equitable, secured or
unsecured.
"Stock Pledge Agreement": the Stock Pledge Agreement, dated the date
-----------------------
hereof, executed and delivered by each of the Stock Pledgors in favor of the
Mexican Collateral Agent, for the benefit of the Lenders substantially in the
form of Exhibit I.
----------
"Stock Pledgors": Holdings, Telscape U.S.A., Inc., Enable
---------------
Xxxxxxxx.xxx, Inc., TSCP International, Inc. Telscape de Mexico, S.A. de C.V.,
Vextro, Commercializadora Lufravic, S.A. de C.V., Xxxxxx Xxxxx Xxxxxx, Xxxxxxx
Xxxx Xxxxxx, and Xxxxx Xxxxxx Xxxx.
"Subordinated Agreement": any agreement, document, or instrument
-----------------------
evidencing or governing any Subordinated Claim, or any other agreement or
instrument executed pursuant thereto or in connection therewith, whether direct
or indirect, absolute or contingent, due or to become due, or now existing or
hereafter incurred.
"Subordinated Claims": all amounts owed by any Borrower to any other
--------------------
Borrower, whether direct or indirect, absolute or contingent, due or to become
due, or now existing or hereafter incurred.
"Subordination Provisions": as defined in Article VIII of this
-------------------------
Agreement.
"Subsidiary": as to any Person, a corporation, partnership or other
----------
entity of which shares of stock or other ownership interests having ordinary
voting power (other than stock or such other ownership interests having such
power only by reason of the happening of a contingency) to elect a majority of
the board of directors or other managers of such corporation, partnership or
other entity are at the time owned, or the management of which is otherwise
Controlled, directly or indirectly though one or more intermediaries, or both,
by such Person. Unless otherwise qualified, all references to a "Subsidiary" or
to "Subsidiaries" in this Agreement shall refer to a direct or indirect
Subsidiary of Holdings.
21
"Supply Contracts": the Agreement, dated May 31, 1999, between
-----------------
Telereunion and Lucent Technologies World Service, Inc. and Lucent Technologies
de Mexico, S.A. and each other agreement pursuant to which a Vendor or an
Affiliate of a Vendor sells goods or services to a Borrower.
"Taxes": any and all taxes, levies, imposts, deductions, charges, or
-----
withholdings and liabilities with respect thereto, payable to a Governmental
Authority in any jurisdiction.
"Telecommunications": voice, video, data and internet services.
------------------
"Telereunion": as defined in the Preamble to this Agreement.
-----------
"Telereunion International": as defined in the Preamble to this
--------------------------
Agreement.
"Third Party Consents": each Consent and Agreement of each of the
----------------------
contracting parties listed on Schedule 4.1(x).
----------------
"Total Capitalization": at any date, the sum of (a) Consolidated
---------------------
Total Debt plus (b) Consolidated Total Equity as at such date.
"Trademark Security Agreement": the Trademark Security Agreement
------------------------------
substantially in the form of Exhibit J.
----------
"Transactions": the execution, delivery and performance by each of
------------
the Loan Parties of the Loan Documents to which it is to be a party, the
borrowing of the Loans and the use of the proceeds thereof.
"Transferee": as defined in Section 11.6(f).
----------
"UCC": the Uniform Commercial Code as from time to time in effect in
---
the State of New York.
"U.S. Borrower Obligations": the unpaid principal of and interest on
--------------------------
the Loans and all other obligations and liabilities of the Borrowers to the
Administrative Agent, the Collateral Agents and the Lenders (including, without
limitation, interest accruing at the then applicable rate provided in this
Agreement after the maturity of the Loans and interest accruing at the then
applicable rate provided in this Agreement after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization or like
proceeding, relating to the Borrowers, whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding), whether direct or
indirect, absolute or contingent, due or to become due, or now existing or
hereafter incurred, which may arise under, out of, or in connection with, this
22
Agreement, the other Loan Documents, any cash management services agreement
entered into by the Borrowers with any Lender or any Affiliate of any Lender or
any other document made, delivered or given in connection herewith or therewith,
in each case whether on account of principal, interest, reimbursement
obligations, fees, indemnities, costs, expenses or otherwise (including, without
limitation, all reasonable fees and disbursements of counsel to the
Administrative Agent or to the Lenders that are required to be paid by the
Borrowers pursuant to the terms of this Agreement, any other Loan Document or
any such cash management services agreement entered into by the Borrowers with
any Lender or any Affiliate of any Lender).
"U.S. Borrowers": each Borrower incorporated under the laws of the
---------------
United States of America.
"U.S. Collateral Agent": General Electric Capital Corporation, a New
----------------------
York corporation, in its capacity as collateral agent for the Lenders under the
Collateral Agency Agreement, and any successor thereto.
"U.S. Mortgage": each Mortgage to be executed and delivered by any
--------------
Loan Party, which shall be satisfactory to the Administrative Agent in form and
substance, with respect to each parcel of real property located in the United
States for which a mortgage is granted pursuant to the terms hereof.
"U.S. Security Documents": the Collateral Agency Agreement, the
-------------------------
Security Agreement, the Pledge Agreement, the Collateral Assignment of Lease,
each Landlord Consent, the California Landlord's Waiver Agreement, the Trademark
Security Agreement, each Account Control Agreement, each Endorsement, each
Blocked Account Agreement, each Third Party Consent and each U.S. Mortgage and
each other agreement or document granting a security interest in any property in
the United States for the benefit of the Lenders with respect to the Loans.
"Vendor": Lucent Technologies World Services Inc. and its affiliates,
------
including Lucent Technologies de Mexico, S.A. de C.V., each in its capacity as a
vendor of goods or services to a Borrower.
"Vextro": Vextro de Mexico, S.A. de C.V., a Mexican corporation and a
------
Mexican Borrower.
"Year": any one of the consecutive twelve-month periods following the
----
Closing Date, each of which shall end on an anniversary of the Closing Date.
Section 1.2 Time Periods. In this Agreement and the other Loan
-------------
Documents, in the computation of periods of time from a specified date to a
later specified date, (a) the word "from" means "from and including", (b) the
words "to" and "until" each mean "to, but excluding", and (c) the words
"through", "end of", and "expiration" each mean "through and including". Unless
otherwise specified, all references in this Agreement and the other Loan
Documents to (i) a "month" shall be deemed to refer to a calendar month, (ii) a
"quarter" shall be deemed to refer to a calendar quarter, and (iii) a "year"
shall be deemed to refer to a calendar year.
23
Section 1.3 Accounting Terms and Determinations. All accounting terms
-------------------------------------
not specifically defined herein shall be construed, all accounting
determinations hereunder shall be made, and all financial statements required to
be delivered pursuant hereto shall be prepared, in accordance with GAAP. When
used herein, the term "financial statements" shall include the notes and
schedules thereto.
Section 1.4 Construction. Unless the context of this Agreement clearly
------------
requires otherwise, references to the plural include the singular, and the
singular include the plural. The words "hereof," "herein," "hereby,"
"hereunder," and similar terms in this Agreement refer to this Agreement as a
whole and not to any particular provision of this Agreement. The words
"include," "includes," and "including" mean include, includes and including
"without limitation" and "without limitation by specification." All references
in this Agreement to "Article", "Section", "subsection", "subparagraph",
"clause" or "Exhibit", unless otherwise indicated, shall be deemed to refer to
an Article, Section, subsection, subparagraph, clause or Exhibit, as applicable,
of this Agreement. Unless otherwise expressly provided herein, any reference in
this Agreement to any Loan Document shall mean such document as amended,
restated, supplemented or otherwise modified from time to time.
Section 1.5 Schedules and Exhibits. All of the schedules and exhibits
------------------------
attached to this Agreement shall be deemed incorporated herein by reference.
Section 1.6 UCC Terms. Terms defined in the UCC and not defined herein
----------
shall have the respective meanings given to them in the UCC.
Section 1.7 Administrative Agent's Discretion. Whenever the terms
-----------------------------------
"satisfactory to Administrative Agent", "determined by Administrative Agent",
"acceptable to Administrative Agent", "consent of Administrative Agent",
"Administrative Agent shall elect", "Administrative Agent shall request", or
similar terms are used in the Loan Documents, except as otherwise specifically
provided therein, such terms shall mean satisfactory to, at the election of,
determined by, acceptable to, consented to by, elected by, or requested by, as
applicable, the Administrative Agent in its sole and unlimited discretion.
ARTICLE II
LOANS
-----
Section 2.1 Agreement to Lend.
-------------------
(a) Subject to the terms and conditions hereof and relying upon the
representations and warranties of each of the Borrowers herein, each Lender
severally agrees to make loans (the "Loans") to the Borrowers, jointly and
-----
severally, from time to time during the Commitment Period in the amount of
its pro rata share of such Loans as the Borrowers may request under Section
2.2, in an aggregate principal amount not to exceed such Lender's
Commitment.
(b) All Loans shall be Eurodollar Loans except as provided in Sections
2.11, 2.13 and 2.14.
24
(c) The obligations of each U.S. Borrower hereunder and under each
Note evidencing amounts from time to time advanced hereunder to a U.S.
Borrower shall be joint and several obligations of all U.S. Borrowers. The
obligations of each Mexican Borrower hereunder and under each Note
evidencing amounts from time to time advanced hereunder constituting
Mexican Borrower Obligations shall be joint and several obligations of all
Borrowers.
(d) Subject to Section 2.1(a), the Initial Loan shall be in an amount
not less than the aggregate amount of principal and interest due and owing
under the Lucent Credit Agreement.
Section 2.2 Procedure for Borrowing.
-----------------------
(a) Subject to the terms and conditions hereof, any Borrower or
Borrowers may borrow under the Commitments during the Commitment Period on
any Business Day, provided, except as set forth in Section 2.2(b), that
--------
such Borrower or Borrowers shall give the Administrative Agent irrevocable
notice (which notice must be received by the Administrative Agent prior to
12:00 Noon, New York City time, three Business Days prior to the requested
Borrowing Date, specifying (i) the amount to be borrowed and (ii) the
requested Borrowing Date. If any Drawdown Certificate requests that a
borrowing be made on the Borrowing Date specified therein to finance
amounts then due under invoices submitted to any Borrower by the Vendor
pursuant to the Supply Contracts, such Drawdown Certificate shall identify
such invoices and the amounts being paid thereunder pursuant to such
Borrowing. Upon receipt of any such Drawdown Certificate from the relevant
Borrower(s), the Administrative Agent shall promptly notify each Lender
thereof. Each Lender will make the amount of its pro rata share of each
borrowing available to the Administrative Agent for the account(s) of the
relevant Borrower(s) at the office of the Administrative Agent specified in
Section 11.2 prior to 11:00 A.M., New York City time, on the Borrowing Date
requested by the Borrower(s) in funds immediately available to the
Administrative Agent. Such borrowing will then be made available to the
Borrower(s) by the Administrative Agent (x) with respect to amounts to be
used to pay invoices pursuant to the Supply Contracts, by crediting the
account of the Vendor designated in its borrowing notice prior to 2:00
P.M., New York City time, on such Borrowing Date with the lesser of the (1)
aggregate of the amounts made available to the Administrative Agent by the
Lenders and (2) the aggregate amount of such invoices and (y) with respect
to proceeds to be used for any other permitted use, by crediting the
account(s) of the relevant Borrower(s) designated in the Drawdown
Certificate prior to 1:00 P.M., New York time, on such Borrowing Date. The
Borrowers may borrow no more than once in any month.
(b) Subject to the terms and conditions hereof, on any Interest
Payment Date occurring prior to the first anniversary of the Closing Date,
the Borrowers may borrow under the Commitments the aggregate amount of
interest due and payable on such Interest Payment Date up to an aggregate
maximum of $4,200,000. During such period, unless the Borrowers who are
obligated on outstanding Loans provide a notice to the Administrative Agent
at least four business days prior to such Interest Payment Date that they
intend to pay interest due and payable on such Interest Payment Date,
subject to the terms and conditions hereof, the Lenders shall make Loans to
such Borrowers by increasing the outstanding principal amount of the Loans
in the amount of such interest due on such date and such Borrowers shall
deliver the Notes required to be delivered by Section 4.2(k) on such
Interest Payment Date.
25
Section 2.3 Commitment and Other Fees. The U.S. Borrowers, jointly and
--------------------------
severally, agree to pay to the Administrative Agent for the account of each
Lender a commitment fee for the period from and including the date hereof to the
Commitment Termination Date, computed at the rate of three-quarters of one
percent per annum (0.75%) on the average daily amount of the unutilized and
undrawn Commitment of such Lender during such period, payable quarterly in
arrears on the last day of each quarter and on the Commitment Termination Date
or such earlier date as the Commitment shall terminate as provided herein,
commencing on the first of such dates to occur after the date hereof.
Section 2.4 Termination or Reduction of Commitments. The Borrowers shall
---------------------------------------
have the right, upon not less than one Business Day's prior notice to the
Administrative Agent (who shall notify the Lenders), to terminate the
Commitments or, from time to time, to reduce the amount of the Commitments. Any
such reduction shall be in an amount equal to $1,000,000 or a whole multiple of
$100,000 in excess thereof and shall reduce permanently the Commitments then in
effect. In addition, the Commitments shall be permanently reduced as set forth
in Sections 2.8(b)(iii) and (iv).
Section 2.5 The Notes.
----------
(a) The obligation of the U.S. Borrowers to repay Loans and to pay
interest thereon at the rates provided herein shall be further evidenced by
promissory notes in the form of Exhibit A-1, payable to the order of such
-----------
Lender and in the principal amount of the respective Loan evidenced
thereby, and in each case executed by the U.S. Borrowers representing the
joint and several obligation of the U.S. Borrowers to pay the aggregate
unpaid principal amount of all of the promissory notes (plus any accrued
interest thereon) until paid in full as provided below. The obligation of
the Borrowers to repay Loans and to pay interest thereon at the rates
provided herein shall be further evidenced by bilingual promissory notes in
the forms of Exhibit A-2 (in the case of each Eurodollar Loan for Mexican
-----------
Borrower Obligations), and Exhibit A-3 (in the case of each ABR Loan for
-----------
Mexican Borrower Obligations), each payable to the order of such Lender and
in the principal amount of the respective Loan evidenced thereby, and in
each case executed by all Borrowers representing the joint and several
obligation of all Borrowers to pay the aggregate unpaid principal amount of
all of the promissory notes (plus any accrued interest thereon) until paid
in full as provided below. The promissory notes referenced in this Section
2.5(a) shall be collectively referred to herein as the "Notes". A U.S.
-----
Borrower shall be jointly and severally liable for each Note executed by
all other Borrowers under this Agreement even if the Note is issued prior
to the addition of such particular U.S. Borrower as a Borrower hereunder
and such U.S. Borrower is not a maker of the Note. A Mexican Borrower shall
be jointly and severally liable for each Note executed by all other Mexican
Borrowers under this Agreement even if
26
the Note is issued prior to the addition of such particular Mexican
Borrower as a Borrower hereunder and such Mexican Borrower is not a maker
of a Note. When a new entity is added as a U.S. Borrower, it, together with
the other U.S. Borrowers shall execute new Notes in substitution for the
old Notes which shall be cancelled and returned to Holdings. When a new
entity is added as a Mexican Borrower, such additional Mexican Borrower
shall immediately execute and endorse ("por aval") all the outstanding
--- ----
Notes and all subsequent Notes. Each Borrower acknowledges that an Event of
Default under any Note issued under this Agreement shall constitute an
Event of Default under all Notes issued hereunder.
(b) With respect to the Notes executed by the Mexican Borrowers, such
Notes evidencing any Loan shall specify the applicable Interest Periods
then in effect in accordance with the provisions of this Agreement.
(c) The Borrowers shall issue a new Note to any Lender, in exchange
for the outstanding Note theretofore issued to such Lender to evidence the
corresponding Loan for Mexican Borrowers Obligations, in accordance with
the procedure set forth below in paragraph (d) of this Section 2.5, upon
any of the following circumstances (any such circumstance is a "New Note
--------
Circumstance"): (i) if the length of the Interest Period for such Loan
------------
shall differ from the length of the Interest Period then in effect and
specified in the outstanding Note, in which case the new Note for such Loan
shall specify the length of the applicable Interest Period to be in effect;
(ii) if the Applicable Margin with respect to such Loan shall change from
that specified in the outstanding Note pursuant to the terms of this
Agreement, in which case the new Note for such Loan shall specify such
change in the Applicable Margin and the date of such change; (iii) if the
Maturity Date for such Loan shall change from that specified in the
outstanding Note pursuant to the terms of this Agreement, in which case the
new Note for such Loan shall specify the Maturity Date then in effect under
this Agreement; or (iv) the Loan shall convert from a Eurodollar Loan to an
ABR Loan.
(d) If the Borrowers shall be required pursuant to paragraph (c) above
to issue and deliver a new Note to any Lender, such Borrowers shall execute
and deliver to the Administrative Agent for the account of each such Lender
a new Note evidencing each applicable Loan made by such Lender, dated the
date of the applicable New Note Circumstance, payable to the order of such
Lender and in an amount equal to the outstanding principal amount of such
Loan. Upon receipt by the Administrative Agent (i) from the Borrowers of
any such new Note, and (ii) from the respective Lender of the corresponding
Note to be replaced by such new Note, then the Administrative Agent shall
promptly deliver to such Lender the new Note and deliver to the Borrowers
the corresponding Note thereby replaced, it being understood and agreed
that the Note so delivered to the Borrowers shall then be marked
"cancelled" by the relevant Borrowers.
(e) The new promissory notes so executed and delivered pursuant to
paragraph (d) above, shall constitute "Notes" for all purposes of this
Agreement and of any instruments or documents delivered by the Borrowers
pursuant hereto and shall be deemed issued, in each instance, in partial
substitution for, and to evidence a portion of the same indebtedness
formerly evidenced by, the corresponding Note theretofore issued to, and
held by, the corresponding Lender, except that interest accrued and unpaid
on the indebtedness outstanding under the Note theretofore issued to such
Lender shall, from and after the date of the issuance of the new Note, be
deemed to be payable under such new Note, and interest shall accrue on each
such new Note from and including the date of issuance thereof
27
(f) In the case of any assignment by a Lender of its Loan pursuant to
Section 11.6, the corresponding exchange of Notes shall be governed by the
applicable Assignment and Acceptance and not by paragraphs (c), (d) and (e)
of this Section 2.5.
Section 2.6 Proceeds. The proceeds of the Loans to the Borrowers shall
--------
be used (i) to repay principal and interest owed pursuant to the Lucent Credit
Agreement, (ii) to purchase or license Equipment, software and services pursuant
to the Supply Contracts, (iii) to pay import duties and taxes in connection with
the Supply Contracts, (iv) to pay interest due on Loans hereunder to the extent
permitted by Section 2.2(b), not to exceed $4,200,000 less the accrued interest
and other fees and expenses repaid under the Lucent Credit Agreement, (v) to
finance loans and capital contributions from one Borrower to another Borrower
for the purposes set forth in clauses (i) through (iv) above, (v) to repay
$1,200,000 of amounts owned by Pointe Communications Corporation to Connecticut
Bank of Commerce and (vii) to pay the Arrangement Fee as defined in the
Cooperation and Fee Letter.
Section 2.7 Amortization of Loans. Each of the Borrowers, jointly and
----------------------
severally, hereby unconditionally promises to pay to the Administrative Agent
for the account of each Lender the principal amount of the Loans made by such
Lender, in the case of a U.S. Borrower, to any Borrower, and in the case of a
Mexican Borrower, with respect to any Mexican Borrower Obligations, in nine
equal semi-annual installments with the first such installment due on the second
anniversary of the Closing Date with each succeeding payment due six months
thereafter with the final installment due on the sixth anniversary of the
Closing Date. The Borrowers hereby further, jointly and severally, agree to pay
to the Administrative Agent for the account of each Lender interest on the
unpaid principal amount of the Loans, in the case of a U.S. Borrower, to any
Borrower, and in the case of a Mexican Borrower for any Mexican Borrower
Obligations, from time to time outstanding from the Closing Date until payment
in full thereof at the rates per annum, and on the dates, set forth in Section
2.9(c).
Section 2.8 Optional and Mandatory Prepayments.
-------------------------------------
(a) Optional Prepayments. The Borrowers may at any time and from time
--------------------
to time prepay the Loans, in whole or in part, without premium or penalty,
on any Interest Payment Date, upon three Business Days' irrevocable notice
to the Administrative Agent, prior to such prepayment, specifying the date
and amount of prepayment. Upon receipt of any such notice the
Administrative Agent shall notify each Lender thereof on the date of
receipt of such notice. If any such notice is given, the amount specified
in such notice shall be due and payable on the date specified therein,
together with any amounts payable pursuant to Section 2.16 and, accrued
interest to such date on the amount prepaid. Partial prepayments pursuant
to this subsection shall be in an aggregate principal amount of at least
$1,000,000 and increments of $100,000 in excess thereof.
(b) Mandatory Prepayments.
---------------------
28
(i) The Borrowers shall prepay the outstanding principal amount
of all Loans hereunder upon the closing of any financing which is
intended by the Borrowers to refinance the Loans hereunder.
(ii) Following the end of each fiscal year of Holdings,
commencing with the year ending December 31, 2000, the Borrowers shall
prepay Loans in an aggregate amount equal to 50% of Excess Cash Flow
of such year. Each prepayment pursuant to this subsection shall be
made within 90 days after the year for which Excess Cash Flow is being
calculated and such prepayment shall be in a minimum amount of
$50,000.
(iii) If and on each occasion that any Net Proceeds are received
by or on behalf of the Borrowers in respect of any sale, disposition,
casualty or condemnation of any Collateral, the Borrowers shall, to
the extent such Net Proceeds are not reinvested in Collateral of at
least substantially similar nature and value and, in the case of any
Collateral acquired from the Vendor pursuant to the Supply Contracts,
purchased from the Vendor in each case within a 90 day period, prepay
Loans outstanding (or if no Loans are then outstanding, reduce the
Commitments) in an aggregate amount equal to such Net Proceeds.
(iv) If and to the extent any prepayments are to be made on (A)
any vendor financing, (B) any bank credit facilities (other than
revolving credit facilities) or any other Indebtedness of the
Borrowers, or (C) any Guarantee Obligation of the Borrowers, the
Borrowers shall make a pro rata prepayment in an amount equivalent to
such prepayment of all Loans outstanding (or if no Loans are then
outstanding, a reduction of the Commitments) under this Agreement;
provided, however, that the foregoing shall not apply (W) with respect
-------- -------
to any prepayment of Indebtedness owed by a Borrower to another
Borrower, (X) with respect to repayment of Indebtedness of any
Borrower (1) to Lenox Invest Ltd. in an amount not to exceed
$1,500,000 and (2) to Xxxxx Xxxxx in an amount not to exceed $850,000
so long as the repayment of such Indebtedness comes from the proceeds
of New Equity, or (Y) with respect to any prepayment of an amount that
is equal to or less than $50,000.
(v) If and on each occasion that any Borrower shall make any
Permitted Preferred Cash Dividends, the record date for which shall
occur during the period after the first anniversary of the Closing
Date and before the second anniversary of the Closing Date, then, on
or before the record date for such Permitted Preferred Cash Dividends,
the Borrowers shall make a prepayment on the Loans, out of the
proceeds of the New Equity raised in connection with such Permitted
Preferred Cash Dividends, in an amount equal to the amount of such
Permitted Preferred Cash Dividends.
(c) If any optional or mandatory prepayment would trigger compliance
with reserve requirements imposed by the Mexican Central Bank, the
Borrowers shall make such required deposit.
29
(d) All prepayments of Loans (except payments pursuant to Section 2.7)
shall reduce the remaining scheduled payments of principal of such Loans in
the inverse order of maturity. Amounts prepaid on account of the Loans may
not be reborrowed.
Section 2.10 Computation of Interest and Fees.
------------------------------------
(a) Commitment fees and interest on Loans shall be calculated on the
basis of a 360-day year for the actual days elapsed except that, whenever
interest is calculated on the basis of the ABR, interest shall be
calculated on the basis of a 365 or 366 day year, as the case may be for
the actual days elapsed. The Administrative Agent shall as soon as
practicable notify the Borrowers and the affected Lenders of each
determination of LIBOR.
(b) Each determination of an interest rate by the Administrative Agent
pursuant to any provision of this Agreement shall be conclusive and binding
on the Borrowers and the Lenders in the absence of manifest error. The
Administrative Agent shall, at the request of the Borrowers, deliver to the
Borrowers a statement showing the quotations used by the Administrative
Agent in determining any interest rate pursuant to Section 2.10(a).
30
Section 2.12 Pro Rata Treatment and Payments.
-----------------------------------
(a) All payments (including prepayments) to be made by the Borrowers
hereunder, whether on account of principal, interest, fees or otherwise,
shall be made without set off or counterclaim and shall be made prior to
12:00 Noon, New York City time, on the due date thereof to the
Administrative Agent, for the account of the Lenders at the Administrative
Agent's office specified in Section 11.2, in Dollars and in immediately
available funds. Payments received by the Administrative Agent after such
time shall be deemed to have been received on the next Business Day. The
Administrative Agent shall distribute such payments to the Lenders entitled
to receive the same promptly upon receipt in like funds as received. If any
payment hereunder (other than payments on the Eurodollar Loans) becomes due
and payable on a day other than a Business Day, such payment shall be
extended to the next succeeding Business Day, and, with respect to payments
of principal, interest thereon shall be payable at the then applicable rate
during such extension. If any payment on a Eurodollar Loan becomes due and
payable on a day other than a Business Day, the maturity thereof shall be
extended to the next succeeding Business Day (and, with respect to payments
of principal, interest shall be payable thereon at the then applicable rate
during such extension) unless the result of such extension would be to
extend such payment into another calendar month, in which event such
payment shall be made on the immediately preceding Business Day. If, and to
the extent that, on any Business Day the Administrative Agent receives any
payment hereunder or under the other Loan Documents (including any such
payment representing a realization upon the Collateral), and such payment
is not sufficient to pay in full all principal, interest, fees and other
amounts then due and payable hereunder, the Administrative Agent shall
apply such payment in the following order of priority:
31
(i) First, all amounts due under this Agreement and not otherwise
provided for in this Section 2.12(a);
(ii) Second, interest and fees due hereunder; and
(iii) Third, installments of principal due.
(b) Unless the Administrative Agent shall have been notified in
writing by any Lender prior to a borrowing that such Lender will not make
the amount that would constitute its portion of such borrowing available to
the Administrative Agent, the Administrative Agent may assume that such
Lender is making such amount available to the Administrative Agent, and the
Administrative Agent may, in reliance upon such assumption, make available
to the Borrowers a corresponding amount. If such amount is not made
available to the Administrative Agent by the required time on the Borrowing
Date therefor, such Lender shall pay to the Administrative Agent, on
demand, such amount with interest thereon at a rate equal to the daily
average Federal Funds Effective Rate for the period until such Lender makes
such amount immediately available to the Administrative Agent. A
certificate of the Administrative Agent submitted to any Lender with
respect to any amounts owing under this Section shall be conclusive in the
absence of manifest error.
(c) Each borrowing by the Borrowers of Loans shall be made ratably
from the Lenders, respectively, in accordance with their respective
Commitment Percentages. Any reduction of the Commitments or prepayment of
Loans shall be made ratably among the Lenders, in accordance with their
respective Commitment Percentages.
Section 2.14 Requirements of Law.
---------------------
32
(a) If the adoption of or any change in any Requirements of Law or in
the interpretation or application thereof or compliance by any Lender with
any request or directive (whether or not having the force of law) from any
central bank or other Governmental Authority in each case made subsequent
to the date hereof or, in the case of a Transferee, to the same extent as
that of the transferor prior to the transfer or subsequent to the date of
transfer:
(i) shall subject any Lender to any Non-Excluded Tax of any kind
whatsoever with respect to this Agreement, any Note, any Eurodollar
Loan made by it, or change the basis of taxation of payments to such
Lender in respect thereof (except for Non-Excluded Taxes covered by
Section 2.15 and changes in the basis of tax on the overall net income
of such Lender and taxes imposed as a result of any future, present or
former connection between such Lender and the jurisdiction of the
Governmental Authority imposing such tax or any political subdivision
or taxing authority thereof or therein other than any such connection
arising solely from such Lender having executed, delivered or
performed its obligations or received a payment under, or enforced,
this Agreement or any Note or any other Loan Document);
(ii) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held
by, deposits or other liabilities in or for the account of, advances,
loans or other extensions of credit by, or any other acquisition of
funds by, any office of such Lender which is not otherwise included in
the determination of LIBOR hereunder; or
(iii) shall impose on such Lender any other condition; and the
result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender reasonably deems to be material, of
making, continuing or maintaining Eurodollar Loans or to reduce any
amount receivable hereunder in respect thereof, then, in any such
case, the Borrowers shall, within 20 Business Days after receipt by
the Borrowers of such Lender's written demand (with a copy to the
Administrative Agent), pay such Lender such additional amount or
amounts as will compensate such Lender for such increased cost or
reduced amount receivable. If any Lender has demanded compensation
under this Section 2.14 with respect to any Eurodollar Loan, the
Borrowers shall have the option to convert immediately such Eurodollar
Loan into an ABR Loan until the circumstances giving rise to such
demand for compensation no longer apply; provided, that (x) no such
--------
conversion shall affect the Borrowers' obligation to pay compensation
as provided herein which is due with respect to the period prior to
such conversion and (y) on the date of such conversion the Borrowers
shall pay to the Administrative Agent for the benefit of the relevant
Lender accrued interest on such Eurodollar Loan to the date of
conversion.
(b) If any Lender shall have determined that the adoption of or any
change in any Requirements of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation Controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any
Governmental Authority, in each case made subsequent to the date hereof,
shall have the effect of reducing the rate of return on such Lender's or
such corporation's capital as a consequence of its obligations hereunder to
a level below which
33
that which such Lender or such corporation could have achieved but for such
adoption, change or compliance (taking into consideration such Lender's or
such corporation's policies with respect to capital adequacy) by an amount
material to such Lender, or such corporation, then from time to time,
within 20 Business Days after receipt by the Borrowers of such Lender's
written demand therefor (with a copy to the Administrative Agent) the
Borrowers shall pay to such Lender such additional amount or amounts as
will compensate such Lender or such corporation for such reduction.
(c) If any Lender becomes entitled to claim any additional amounts
pursuant to Section 2.14(a) or (b), it shall promptly give written notice
to the Borrowers (with a copy to the Administrative Agent) specifying in
reasonable detail the event by reason of which it has become so entitled
and the method of calculating the amounts to which it claims to be
entitled. A certificate as to any additional amounts payable pursuant to
this Section 2.14 submitted by such Lender to the Borrowers (with a copy to
the Administrative Agent) shall be conclusive in the absence of manifest
error. The agreements in this Section 2.14 shall survive the termination of
this Agreement and the payment of the Loans and all other amounts payable
hereunder.
Section 2.15 Taxes.
-----
(a) Subject to the provisions (and exceptions) set forth in Section
2.15(b) with respect to Mexican Taxes, all payments made by the Borrowers
under this Agreement and any Notes shall be made free and clear of, and
without deduction or withholding for or on account of, any present or
future Taxes, now or hereafter imposed, levied, collected, withheld or
assessed by any Governmental Authority, excluding Excluded Taxes. If any
such non-excluded Taxes, ("Non-Excluded Taxes") are required to be withheld
------------------
from any amounts payable to the Administrative Agent or any Lender (or
Transferee) hereunder or under any Note, the amounts so payable to the
Administrative Agent or such Lender (or Transferee) shall be increased by
the amounts ("Increased Amounts") necessary so that after making all
------------------
required deductions and withholdings (including, without limitation, the
payment of all Non-Excluded Taxes) the Administrative Agent or such Lender
(or Transferee) receives the amounts equal to the interest or any such
other amounts payable hereunder at the rates or in the amounts specified in
this Agreement; provided, however, that the Borrowers shall not be required
-------- -------
to increase any such amounts payable to any Lender that is not organized
under the laws of the United States of America or a state thereof (a
"Non-U.S. Lender") if such Lender fails to comply with the requirements of
----------------
paragraph (c) or (d) of this subsection. Whenever any Non-Excluded Taxes
are payable by any Borrower, such Borrower shall promptly send to the
Administrative Agent for its own account or for the account of such Lender
(or Transferee), as the case may be, a certified copy of an original
official receipt received by such Borrower showing payment thereof or other
evidence of remittance of Non-Excluded Taxes reasonably acceptable to the
Administrative Agent. If such Borrower fails to pay any Non-Excluded Taxes
when due to the appropriate taxing authority or fails to remit to the
Administrative Agent the required receipts or other reasonably acceptable
evidence, the Borrowers or, in the case of such failure by a U.S. Borrower,
the U.S. Borrowers shall jointly and severally indemnify the Administrative
Agent and the Lenders for any incremental taxes, interest or penalties that
may become payable by the Administrative Agent or any
34
Lender as a result of any such failure. The Borrowers or in the case of
Non-Excluded Taxes paid in connection with Loans to U.S. Borrowers, the
U.S. Borrowers will jointly and severally indemnify each Lender (or
Transferee) and the Administrative Agent for the amount of Non-Excluded
Taxes paid by such Lender (or Transferee) or the Administrative Agent, as
the case may be, and any liability (including penalties, interest and
expenses) arising therefrom or with respect thereto. The agreements in this
Section 2.15 shall survive the termination of this Agreement and the
payment of the Loans and all other amounts payable hereunder; provided,
--------
however, that the Borrowers shall not be required to indemnify any Non-U.S.
-------
Lender that fails to comply with the requirements of paragraph (c) or (d)
of this subsection to the extent amounts would not be payable had such
Lender so complied.
(b) All payments of principal, interest, fees and other amounts made
or in respect to this Agreement or the Loan Documents shall be made without
setoff or counterclaim and free and clear of and without deduction for any
and all present and future Mexican Taxes other than Excess Withholding
Taxes and Excluded Taxes. Borrower agrees to cause all such Taxes to be
paid on behalf of any Lender directly to the appropriate Governmental
Authority. If at any time a Borrower is required by law or is otherwise
compelled to withhold or deduct any such Taxes from any payment to be made
by such Borrower in respect to this Agreement or the Loan Documents, all
such payments, including payments made pursuant to this Section 2.15 shall
be increased so that after provision for Mexican Taxes, including Mexican
Taxes on such increase, the amounts received by any Lender shall equal the
amounts such Lender would have received if no Mexican Taxes were due on
such payments or no deductions (other than for Excess Withholding Taxes or
Excluded Taxes) were made; provided however, that no Borrower shall be
required to increase any such amounts payable to any Lender that is not
organized under the laws of the United States of America or a state thereof
(a "Non-U.S. Lender") if such Lender fails to comply with the requirements
of paragraph (c) or (d) of this section. Such Borrower shall provide
Administrative Agent with original Tax receipts, notarized copies of Tax
receipts or such other documentation as will reasonably prove payment of
Tax before the Internal Revenue Service or a United States Court or other
relevant Governmental Authority, for all Taxes paid by such Borrower
pursuant to this Section 2.15. Such Borrower shall deliver such receipts or
other accountable documentation to Administrative Agent within thirty (30)
days from the due date of the related Tax. No Lender shall be under any
obligation to pass on to any Borrower any benefits that may accrue to it,
pursuant to this Section 2.15.
(c) Each Non-U.S. Lender shall:
(i) in the case of a Lender (or Transferee) that is a "bank"
under Section 881(c)(3)(A) of the Code;
(A) on or before the date on which the first payment becomes payable
to it hereunder or under any Note (or, in the case of a Loan Participant,
on or before the date such Loan Participant becomes a Loan Participant
hereunder) and on or before the date, if any, such Lender (or Transferee)
changes its
35
applicable lending office by designating a different lending office (a "New
---
Lending Office") deliver to the Borrowers and the Administrative Agent (y)
--------------
two properly completed and duly executed copies of United States Internal
Revenue Service Form 1001 or 4224, or successor applicable form, as the
case may be, and (z) an Internal Revenue Service Form W-8 or W-9, or
successor applicable form, as the case may be;
(B) deliver to the Borrowers and the Administrative Agent two further
properly completed and duly executed copies of any such form or
certification on or before the date that any such form or certification
expires or becomes obsolete and after the occurrence of any event requiring
a change in the most recent form previously delivered by it to the
Borrowers or upon the request of the Borrowers or the Administrative Agent;
and
(C) obtain such extensions of time for filing and completing such
forms or certifications as may reasonably be requested by the Borrowers;
(ii) in the case of a Lender or a Transferee that is not a "bank"
under Section 881(c)(3)(A) of the Code:
(A) on or before the date on which the first payment becomes payable
to it under any Note (or, in the case of a Loan Participant, on or before
the date such Loan Participant becomes a Loan Participant hereunder)
deliver to the Borrowers and the Administrative Agent (I) a statement under
penalties of perjury that such Lender (x) 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, (y) is not a 10-percent shareholder of any Borrower within
the meaning of Section 881(c)(3)(B) of the Code and (z) 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 (II) a properly completed
and duly executed Internal Revenue Service Form W-8 or applicable successor
form;
(B) deliver to the Borrowers and the Administrative Agent two further
properly completed and duly executed copies of said Form W-8, or any
successor applicable form 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 it to the
Borrowers or upon the request of the Borrowers; and
36
(C) obtain such extensions of time for filing and completing such
forms or certifications as may be reasonably requested by the Borrowers or
the Administrative Agent; unless in any such case any change in treaty, law
or regulation has occurred subsequent to the date such Lender (or
Transferee) became a party to this Agreement (or in the case of a Loan
Participant, the date such Loan Participant became a Loan Participant
hereunder) which renders all such forms inapplicable or which would prevent
such Lender from properly completing and executing any such form with
respect to it and such Lender so advises the Borrowers and the
Administrative Agent in writing no later than 15 days before any payment
hereunder or under any Note is due. Each such Lender (and each Transferee)
shall certify (i) in the case of a Form 1001 or 4224, that it is entitled
to receive payments under this Agreement without deduction or withholding
of any United States federal income taxes and (ii) in the case of a Form
W-8 or W-9 delivered pursuant to subsection 2.15(c)(i), that it is entitled
to an exemption from United States backup withholding tax. Each Person that
shall become a Lender or a Loan Participant pursuant to Section 11.6 shall,
upon the effectiveness of the related transfer, provide all of the forms
and statements required pursuant to this subsection, provided that, in the
--------
case of a Loan Participant, such Loan Participant shall furnish all such
required forms and statements to the Lender from which the related
participation shall have been purchased.
(d) Each Lender (and the Administrative Agent with respect to payments
to the Administrative Agent for its own account) agrees that it will (i)
take all reasonable actions by all usual means to maintain all exemptions,
if any, available to it from United States withholding taxes (whether
available by treaty, existing administrative waiver, by virtue of the
location of any Lender's applicable lending office or otherwise) and (ii)
otherwise cooperate with the Borrowers to minimize amounts payable by the
Borrowers under this subsection provided such measures or actions would
not, in such Lender's determination, cause such Lender to suffer any
material economic, legal or regulatory disadvantage.
Section 2.16 Indemnity. The U.S. Borrowers agree jointly and severally
---------
to indemnify each Lender and to hold each Lender harmless from any loss or
expense which such Lender may sustain or incur as a direct consequence of (a)
default by any Borrower in making a borrowing of, or continuation of Eurodollar
Loans after such Borrower has given a notice requesting the same in accordance
with the provisions of this Agreement, (b) default by any Borrower in making any
prepayment of Eurodollar Loans after such Borrower has given a notice thereof in
accordance with the provisions of this Agreement or (c) the making of a
prepayment of Eurodollar Loan on a day which is not the last day of any Interest
Period with respect thereto. The Mexican Borrowers agree jointly and severally
to indemnify each Lender and to hold each Lender harmless from any loss or
expense which such Lender may sustain or incur as a direct consequence to (a)
default in making a borrowing of, or continuation of Eurodollar Loans
constituting a Mexican Borrower Obligation after the relevant Borrower has given
a notice requesting the same in accordance with the provisions of this
Agreement, (b) default in making any prepayment of Eurodollar Loans constituting
a Mexican Borrower Obligation after the relevant Borrower has given a notice
thereof in accordance with the provisions of this Agreement or (c) the making of
a prepayment of Eurodollar Loan which constitutes a Mexican Borrower Obligation
on a day which is not the last day of any Interest Period with respect thereto.
In each
37
case, such indemnification may include an amount equal to the excess, if any,
of (i) the amount of interest which would have accrued on the amount so prepaid,
or not so borrowed, for the period from the date of such prepayment or of such
failure to borrow to the last day of such Interest Period (or, in the case of a
failure to borrow, the Interest Period that would have commenced on the date of
such failure) in each case at the applicable rate of interest for such Loans
provided for herein over (ii) the amount of interest (as reasonably determined
by such Lender) which would have accrued to such Lender on such amount by
placing such amount on deposit for a comparable period with leading banks in the
interbank eurodollar market. This covenant shall survive the termination of
this Agreement and the payment of the Loans and all other amounts payable
hereunder.
Section 2.17 Change of Lending Office; Filing of Certificates or
----------------------------------------------------------
Documents. Each Lender agrees that if it makes any demand for payment, or
---------
becomes entitled to any additional amounts or Increased Amounts, under Section
2.13, 2.14 or 2.15 or if any adoption or change of the type described in Section
2.14 shall occur with respect to it, it will use reasonable efforts (consistent
with its internal policy and legal and regulatory restrictions and so long as
such efforts would not be disadvantageous to it, as determined in its sole
discretion) to designate a different lending office or file any certificate or
document reasonably requested in writing by the Borrowers if such action would
reduce or obviate the need for the Borrowers to make payments under Section
2.13, 2.14 or 2.15 or would eliminate or reduce the effect of any adoption or
change described in Section 2.14.
Section 2.18 Replacement Lenders. If (a) the Borrowers become obligated
-------------------
to pay additional amounts or Increased Amounts to, or receive notice from, any
Lender pursuant to Sections 2.13, 2.14 or 2.15, or (b) any Lender has defaulted
in its obligation to make Loans hereunder, then the Borrowers may, on ten
Business Days' prior written notice to the Administrative Agent and such Lender,
cause such Lender to (and such Lender shall) assign pursuant to Section 11.6(c)
all of its rights and obligations under this Agreement to another bank or
financial institution of its selection which is willing to become a Lender and
is acceptable (which acceptance shall not be unreasonably withheld) to the
Administrative Agent, for a purchase price equal to the outstanding principal
amount of the Loans payable to such Lender plus any accrued but unpaid interest
on such Loans, any accrued but unpaid commitment fees in respect of such
Lender's Commitment and any other amounts payable to such Lender under this
Agreement (including, without limitation, amounts payable under Sections 2.13,
2.14 or 2.15).
ARTICLE III
REPRESENTATIONS AND WARRANTIES
------------------------------
To induce the Administrative Agent and the Lenders to enter into this
Agreement and to make the Loans, Holdings with respect to itself and each of its
Subsidiaries and each of the Borrowers with respect to itself (except for
Section 3.1) hereby represent and warrant to the Administrative Agent and each
Lender that:
38
Section 3.1 Financial Condition. The consolidated unaudited balance
--------------------
sheet of Holdings as at June 30, 2000 and the consolidated audited balance
sheets of Holdings and PCom respectively on December 31, 1999 and the related
consolidated statements of income and cash flows for the fiscal year ended on
such date, audited by the BDO Xxxxxxx, LLP with respect to Holdings and Xxxxxx
Xxxxxxxx with respect to PCom, copies of which have heretofore been furnished to
each Lender, present fairly in accordance with GAAP the consolidated financial
condition of Holdings and its Subsidiaries or, with respect to the 1999 audited
financials of PCom, PCom and its Subsidiaries as at such date, and the
consolidated results of operations and cash flows for the fiscal year ended on
such date of Holdings and its Subsidiaries and PCom and it Subsidiaries, as
applicable, for such date then ended. All such financial statements have been
prepared in accordance with GAAP applied consistently throughout the periods
involved. Neither Holdings nor PCom had at the date of the balance sheets
referred to above, any material Guarantee Obligation, contingent liability or
liability for taxes, or any long-term lease or unusual forward or long-term
commitment, including, without limitation, any material interest rate or foreign
currency swap or exchange transaction, which is not reflected in the foregoing
statements or in the notes thereto or expressly permitted to be incurred
hereunder.
Section 3.2 No Change. Except as set forth on Schedule 3.2, since June 30,
--------- ------------
2000, there has been no development, event or circumstance which has, had or
could reasonably be expected to have a Material Adverse Effect.
Section 3.3 Existence; Compliance with Law and Agreements. Such Borrower
---------------------------------------------
(a) is duly organized and validly existing under the laws of the jurisdiction of
its organization, (b) has the power and authority to own and operate its
property, to lease the property it operates as lessee and to conduct the
business in which it is currently engaged, (c) is duly qualified or licensed
under the laws of each jurisdiction where its ownership, lease or operation of
property or the conduct of its business requires such qualification except where
the failure to be so qualified in the aggregate could not reasonably be expected
to have a Material Adverse Effect; and (d) is in compliance with all
Requirements of Law and, except as set forth on Schedule 3.3, all Contractual
------------
Obligations binding upon it or its property (including the Supply Contracts),
except where the failure to be in compliance could not reasonably be expected to
have a Material Adverse Effect.
Section 3.4 Power; Authorization; Enforceable Obligations. Such Borrower
---------------------------------------------
has the power and authority, and the legal right, to make, deliver and perform
the Loan Documents and to borrow and obtain the making of the Loans. Such
Borrower has taken all necessary action to authorize the execution, delivery and
performance by it of the Loan Documents. No consent or authorization of, filing
with, notice to or other act by or in respect of, any Governmental Authority or
any other Person is required to be obtained or made by such Borrower in
connection with, the making of the Loans, or by such Borrower in connection with
the execution, delivery or performance by such Borrower of the Loan Documents or
the validity or enforceability with respect to or against it of the Loan
Documents or in connection with the continuing operations of such Borrower other
than (a) the recordation of the amendment of the Mexican Mortgages and each
Acknowledgement of Indebtedness, (b) registration of the Stock Pledge Agreement
in the stock registry of each Mexican Borrower who issued the corresponding
stock, (c) registration of the Corporate Parts Pledge Agreement in the special
registry book of Servicios de Comunicacion Popular, S. de X.X., (d) registration
of the Trademark Security Agreement (e) cancellation of the Lucent Collateral
other than the Mexican Mortgages and the recordation thereof in the registries
39
where the Lucent collateral is registered, (f) consents, authorizations and
filings in connection with enforcement of the Loan Documents, (g) consents,
permits and authorizations specified on Schedule 3.4 or Schedule 3.21, (h) the
-----------------------------
periodic filings that should be made of the Loan and interest thereon with
Hacienda and the periodic renewal of such registration for purpose of Article
154(I) of the Mexican Income Tax Law and (h) consents the absence of which could
not reasonably be expected to have a Material Adverse Effect. This Agreement
has been, and each other Loan Document will be, duly executed and delivered on
behalf of such Borrower which is a party thereto. This Agreement constitutes,
and each other Loan Document to which such Borrower is a party when executed and
delivered will constitute, a legal, valid and binding obligation of such
Borrower which is enforceable against such Person in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting the enforcement of
creditors' rights generally and by general equitable principles (whether
enforcement is sought by proceedings in equity or at law).
Section 3.5 No Legal Bar. The execution, delivery and performance of the
------------
Loan Documents by such Borrower, the making of the Loans hereunder and the use
of the proceeds thereof by such Borrower will not violate any Requirements of
Law or Contractual Obligation of such Borrower which could reasonably be
expected to have a Material Adverse Effect and will not result in, or require,
the creation or imposition of any Lien on any of its respective properties or
revenues pursuant to any such Requirements of Law or Contractual Obligation
other than as contemplated in or permitted by the Loan Documents.
Section 3.6 No Litigation. Except as set forth in Schedule 3.6, no
-------------- ------------
litigation, investigation or proceeding of or before any arbitrator or
Governmental Authority is pending or, to the knowledge of such Borrower
threatened by or against such Borrower or against any of its or their respective
properties or revenues (a) with respect to any of the Loan Documents or any of
the transactions contemplated hereby or thereby or (b) which has a reasonable
likelihood of an adverse determination, and if adversely determined, could
reasonably be expected to have a Material Adverse Effect, nor is there any basis
for any such litigation, investigation or proceeding.
Section 3.7 No Default. Except as set forth on Schedule 3.3, such
-----------
Borrower is not in default under or with respect to any of its Contractual
Obligations in any respect which could reasonably be expected to have a Material
Adverse Effect. No Default or Event of Default has occurred and is continuing.
Section 3.8 Ownership of Property; Liens. Such Borrower has good,
-------------------------------
marketable and unencumbered title to, and a full ownership interest or a valid
leasehold interest in, (a) all its Collateral and (b) all its other real
property except for such matters as do not materially adversely affect the use
of such property in the conduct of the business as currently conducted, and
owns, or holds a valid leasehold interest in, all its other material property,
and none of such property is subject to any Lien except as permitted by Section
6.1. Schedule 3.8 sets forth a true and complete list of all real property
-------------
owned by such Borrower or in which it has a leasehold interest.
Section 3.9 Intellectual Property. Such Borrower owns or has the right
----------------------
to use all patents, trademarks, permits, service marks, trade names, copyrights,
franchises, formulas, licenses and other rights with respect thereto
("Intellectual Property") which are material in the operation of its business.
----------------------
Schedule 3.9 accurately and completely lists all such Intellectual Property
-------------
owned or possessed by or licensed to any Borrower.
40
Section 3.10 No Burdensome Restrictions. No Requirements of Law or
----------------------------
Contractual Obligation applicable to such Borrower could reasonably be expected
to have a Material Adverse Effect.
Section 3.11 Taxes. Except as set forth on Schedule 3.11, such Borrower
----- -------------
has filed or caused to be filed all tax returns which, to the knowledge of such
Borrower, are required to be filed and has paid all taxes shown to be due and
payable on said returns or on any assessments made against it or any of its
property in respect of such periods and all other material taxes imposed on it
or any of its property by any Governmental Authority (other than any taxes the
amount or validity of which are being contested in good faith by appropriate
proceedings and with respect to which reserves in conformity with GAAP have been
provided on the books of such Borrower), in respect of such periods.
Section 3.12 Federal Regulations. No part of the proceeds of any Loans
--------------------
will be used for "buying" or "carrying" any "margin stock" within the respective
meanings of each of the quoted terms under Regulation G or Regulation U, as now
and from time to time hereafter in effect. If requested by any Lender or the
Administrative Agent, such Borrower will furnish to the Administrative Agent and
each Lender a statement to the foregoing effect in conformity with the
requirements of FR Form G-1 or FR Form U-1 referred to in Regulation G or
Regulation U, as the case may be.
Section 3.13 Availability and Transfer of Foreign Currency. All
--------------------------------------------------
requisite foreign exchange control approvals and other authorizations, if any,
of the Mexican Central Bank and all other Governmental Authorities, where
applicable, have been validly obtained and will be kept current and in full
force and effect, to the extent permitted by Mexican law, in order to allow each
of the Borrowers to purchase Dollars for the servicing through the banking
system of its obligations under the Loan Documents in accordance with their
respective terms.
Section 3.14 Investment Company Act; Other Regulations. Such Borrower is
-----------------------------------------
not an "investment company" within the meaning of the Investment Company Act of
1940, as amended. Such Borrower nor any Subsidiary of such Borrower is a
"holding company" or a "subsidiary company" of a "holding company" within the
meaning of the Public Utility Holding Company Act of 1935, as amended. No Loan
Party is subject to regulation under any Federal or State statute or regulation
(other than Regulation X) which limits its ability to incur Indebtedness as
contemplated herein.
Section 3.15 Purpose of Loans. The proceeds of the Loans shall be used
-----------------
in the manner set forth in Section 2.6.
Section 3.16 Environmental Matters. Except to the extent that the
----------------------
inaccuracy of any of the following (or the circumstances giving rise to such
inaccuracy), individually or in the aggregate, could not reasonably be expected
to have a Material Adverse Effect:
41
(a) The facilities and properties owned, leased or operated by such
Borrower (the "Properties") do not contain any Hazardous Materials in
----------
amounts or concentrations which (i) constitute a violation of, or (ii)
could give rise to any material liability under, any Environmental Law or
could materially interfere with the continued operation of the Properties
or could reasonably be expected to impair the fair saleable value thereof;
(b) Such Borrower and the Properties are in compliance with and to the
knowledge of such Borrower have since the date of incorporation of such
Borrower been in compliance with, all applicable Environmental Laws and
applicable Environmental Permits, and each of the Borrowers reasonably
believes that it will be able to comply with all applicable Environmental
Laws in the future and renew or obtain all Environmental Permits necessary
for its operations in the future;
(c) Such Borrower has not received any written notice of violation,
alleged violation, non-compliance, liability or potential liability
regarding environmental matters or compliance with Environmental Laws with
regard to any of its properties, nor to the knowledge of such Borrower, has
any such notice been threatened;
(d) Hazardous Materials have not been transported, disposed of,
emitted, discharged, or otherwise released or threatened to be released by
such Borrower, nor has their disposal been arranged for by such Borrower,
(i) in violation of, or (ii) in a manner or to a location which could
reasonably be expected to give rise to liability under, any applicable
Environmental Law; nor have any Hazardous Materials been generated,
treated, stored, emitted, discharged or otherwise released or threatened to
be released or disposed of at, on or under any of the Properties in
violation of, or in a manner that could reasonably be expected to give rise
to liability under, any applicable Environmental Law; and
(e) No judicial proceeding or governmental or administrative action is
pending or to the knowledge of such Borrower, threatened under any
Environmental Law to which such Borrower is or to the knowledge of such
Borrower will be named as a party, nor are there any consent decrees or
other decrees, consent orders, administrative orders or other orders, or
other administrative or judicial requirements outstanding under any
Environmental Law with respect to such Borrower or the Properties.
Section 3.17 Mexican Security Documents. The Mexican Mortgages, the
----------------------------
Corporate Parts Pledge Agreement, and the Stock Pledge Agreement when duly
executed, delivered and registered will be effective to create in favor of the
Mexican Collateral Agent, for the ratable benefit of the Lenders, a legal, valid
and enforceable security interest in all of the Collateral described therein and
will, when duly notarized and recorded, grant a legal, valid and enforceable
security interest in all the Collateral described therein and shall constitute
fully perfected, first priority liens, subject to applicable law and Permitted
Liens, on, and security interests in, all right, title and interest of each of
the Borrowers party thereto in the Collateral described therein superior in
right to any other Person.
Section 3.18 True and Complete Disclosure. All factual information
-------------------------------
including all periodic reports filed with the SEC heretofore or
contemporaneously furnished by or on behalf of such Borrower in writing to the
Administrative Agent or any Lender was or is, and all other factual information
(taken as a whole) hereafter furnished by or on behalf of such Borrower will be,
true and accurate in all material respects on the date as of which such
information is dated or certified and shall not omit to state any material fact
necessary to make such statements therein not misleading.
42
Section 3.19 Submission to Law and Jurisdiction. The choice of governing
----------------------------------
law for each of the Loan Documents governed by New York or other state law will
be recognized in the courts of the Republic of Mexico, and those courts will
recognize and give effect to any judgment in respect of any Loan Document
obtained against such Borrower in the courts to which such Borrower has
submitted to the jurisdiction thereof
Section 3.20 Supply Contracts. The Supply Contracts are in full force
-----------------
and effect and no default or event of default has occurred and is existing
thereunder and Holdings and any Borrower to which any such Supply Contract has
been assigned in whole or in part is in compliance with all material obligations
pursuant to such Supply Contract.
Section 3.21 Permits and Approvals. Except as otherwise set forth in
-----------------------
Schedule 3.21, such Borrower has all permits, authorizations, approvals, and
--------------
licenses of any Governmental Authority or other Persons necessary with respect
to the operation and maintenance of the Network. Such Borrower has all material
authorizations, permits, consents or approvals required in the conduct of its
business as currently conducted. Schedule 3.21 also sets forth all material
--------------
permits, authorizations, approvals and licenses to any Governmental Authority
necessary in the conduct of its business as currently conducted. Unless
otherwise specified on Schedule 3.21, each such material permit, authorization,
-------------
approval or license on Schedule 3.21 has been duly obtained by such Borrower and
-------------
is in full force and effect and is not subject to any appeal, restriction,
condition, limitation or other provision that may allow modification or
revocation thereof and that would reasonably be expected to have a Material
Adverse Effect. Such Borrower is in compliance in all material respects with
all conditions of any such material authorization, permit, consent or approval
and has received no notification and has no reason to believe that any such
material authorization, permit, consent or approval will be revoked, terminated,
modified or amended in any material way.
Section 3.22 U.S. Security Documents. Each of the U.S. Security
-------------------------
Documents is effective to create in favor of the U.S. Collateral Agent, for the
ratable benefit of the Lenders, a legal, valid and enforceable security interest
in all the Collateral described therein and Proceeds thereof. Upon completion
of the filings and other actions specified in the U.S. Security Documents, the
U.S. Security Documents shall constitute fully perfected Liens on, and security
interests in, all right, title and interest of the relevant Borrowers in the
Collateral described therein and in Proceeds thereof. Such Liens shall be
second priority Liens on Collateral subject to Permitted Liens listed on
Schedule 6.1(f) or Collateral subject to Liens described in Section 6.1(m) and
shall be first priority security interests with respect to all other Collateral
described in the Security Documents.
Section 3.23 ERISA. Except as set forth in Schedule 3.23, neither a
----- -------------
Reportable Event nor an "accumulated funding deficiency" (within the meaning of
Section 412 of the Code or Section 302 of ERISA) has occurred during the
five-year period prior to the date on which this representation is made or
deemed made with respect to any Plan, and each Plan has complied in all material
respects with the applicable provisions of ERISA and the Code, except where, in
connection with any such event or noncompliance, the liability which would be
likely to result
43
could not be reasonably expected to have a Material Adverse Effect. No
termination of a Single Employer Plan has occurred except where, in connection
with any such termination, the liability which would be likely to result could
not be reasonably expected to have a Material Adverse Effect, and no Lien which
remains unsatisfied in favor of the PBGC or a Plan has arisen, during such
five-year period. The present value of all accrued benefits under each Single
Employer Plan (based on those assumptions used to fund such Plans) did not, as
of the last annual valuation date prior to the date on which this representation
is made or deemed made, exceed the value of the assets of such Plan allocable to
such accrued benefits by an amount in excess of $1,000,000. None of the
Borrowers nor any Commonly Controlled Entity has had a complete or partial
withdrawal from any Multiemployer Plan; none of the Borrowers nor any Commonly
Controlled Entity would become subject to any liability under ERISA if the
Borrowers or any such Commonly Controlled Entity were to withdraw completely
from all Multiemployer Plans as of the valuation date most closely preceding the
date on which this representation is made or deemed made; and no such
Multiemployer Plan is in Reorganization or Insolvent, except where, in any such
case, the liability which would be likely to result could not be reasonably
expected to have a Material Adverse Effect.
Section 3.24 Solvency. As of the Closing Date, after giving effect to
--------
the Initial Loan hereunder and the other transactions contemplated to occur on
the Closing Date such Borrower is Solvent.
Section 3.25 Subsidiaries. Schedule 3.25 sets forth the jurisdiction of
------------ -------------
incorporation and the location of the principal executive office of such
Borrower.
Section 3.26 US Charter de Mexico, S.A. de C.V. US Charter de Mexico,
-----------------------------------
S.A. de C.V. a Mexican corporation, has no assets and no operations.
Section 3.27 Insurance. Schedule 3.27 contains a description of all
--------- --------------
insurance which each of the Borrowers maintains on its behalf as of the date of
this Agreement. All of such insurance is in full force and effect as of the
date of this Agreement.
Section 3.28 Accounts. All of the deposit accounts, investment accounts
--------
or other accounts in the name of or used by any Borrower maintained by any bank
or other financial institution are set forth in Schedule 3.28, subject to the
-------------
right of the Borrowers to establish new accounts in accordance with Section
6.11.
Section 3.29 Servicio Corporativos. Servicio Corporativos represents and
----------------------
warrants that its sole assets are contracts between it and the other Mexican
Borrowers for the provision of services with respect to the management and
administration of employment and human resources matters of the other Mexican
Borrowers.
44
ARTICLE IV
CONDITIONS PRECEDENT
--------------------
Section 4.1 Conditions to Initial Loans. The agreement of each Lender to
---------------------------
make the Initial Loans requested to be made hereunder is subject to the
satisfaction, immediately prior to or concurrently with the making of such
Loans, of the following conditions precedent:
(a) Loan Documents. The Administrative Agent shall have received in
--------------
form and substance satisfactory to it (i) this Agreement, executed and
delivered by a duly authorized officer of each of the Borrowers with a
counterpart for each Lender, (ii) for the account of each Lender, Notes
conforming to the requirements hereof and executed by a duly authorized
officer of each of the Borrowers, as applicable, (iii) the Pledge Agreement
together with the original stock certificates for the U.S. Borrowers other
than Holdings, together with undated stock powers endorsed in blank by a
duly authorized officer of the relevant U.S. Borrower in whose name the
stock certificates are registered, (iv) a Blocked Account Agreement for
each U.S. bank account, (v) the Security Agreement, executed and delivered
by a duly authorized officer of each U.S. Borrower, (vi) the Trademark
Security Agreement, executed and delivered by a duly authorized officer of
each U.S. Borrower, (vii) a Mortgage with respect to each parcel of U.S.
real property owned by the Borrowers, (viii) the Collateral Assignment of
Lease, executed and delivered by a duly authorized officer of MSN
Communications, Inc., (ix) [reserved], (x) the Collateral Agency Agreement,
executed and delivered by a duly authorized officer of each Borrower, (xi)
each of the amendments to the Mexican Mortgages, each executed and
delivered by a duly authorized officer of each Mexican Borrower, (xii) the
Stock Pledge Agreement, together with the original stock certificates for
the Mexican Borrowers and with other required instruments, executed and
delivered by a duly authorized officer of each Mexican Borrower and each
Stock Pledgor, (xiii) the Corporate Parts Pledge Agreement, together with
the original corporate parts certificates duly assigned in guaranty,
executed and delivered by a duly authorized officer of each Corporate Parts
Pledgor, (xiv) [reserved], (xv) each Endorsement with respect to any
insurance of the Borrowers, (xvi) for the account of each Lender, each
other Loan Document executed and delivered by a duly authorized officer of
each of the Borrowers, and (xvii) the appropriate documents evidencing the
termination of the Liens on the Lucent Collateral other than the Mexican
Mortgages;
(b) Drawdown Certificate. The Administrative Agent shall have
----------------------
received, with a copy for each Lender, a certificate of the relevant
Borrowers, dated the date of the Initial Loans, substantially in the form
of Exhibit D, with appropriate insertions and attachments, reasonably
----------
satisfactory in form and substance to the Administrative Agent, executed by
the President or any Vice President or any authorized signatory of each of
the relevant Borrowers;
(c) Corporate Proceedings of the U.S. Borrowers. The Administrative
---------------------------------------------
Agent shall have received, with a copy for each Lender, a copy of the
resolutions, in form and substance reasonably satisfactory to the
Administrative Agent, of the Board of Directors of each of the U.S.
Borrowers authorizing (i) the execution, delivery and performance by
45
each of the U.S. Borrowers of this Agreement and the other Loan Documents,
(ii) the consummation of the transactions contemplated thereby, and (iii)
the granting by it of the Liens created pursuant to the U.S. Security
Documents, certified by the Secretary or an Assistant Secretary of each
U.S. Borrower as of the Closing Date, which certificate shall be in form
and substance reasonably satisfactory to the Administrative Agent and shall
state that the resolutions thereby certified have not been amended,
modified, revoked or rescinded and are in full force and effect;
(d) Each U.S. Borrower's Incumbency Certificate. The Administrative
---------------------------------------------
Agent shall have received, with a copy for each Lender, a certificate of
each of the U.S. Borrowers, dated the Closing Date, as to the incumbency
and signature of the officers of each of the U.S. Borrowers executing any
Loan Document, reasonably satisfactory in form and substance to the
Administrative Agent, executed by the President and the Secretary or any
Assistant Secretary of each of the U.S. Borrowers;
(e) Corporate Proceedings of each of the Mexican Borrowers. The
-----------------------------------------------------------
Administrative Agent shall have received, with a copy for each Lender, a
copy of the resolutions, in form and substance reasonably satisfactory to
the Administrative Agent, of the Board of Directors of each of the Mexican
Borrowers authorizing (i) the execution, delivery and performance by each
of the Mexican Borrowers of this Agreement and the other Loan Documents and
(ii) the granting by it of the Liens created pursuant to the Mexican
Security Documents, which certificate shall be in form and substance
reasonably satisfactory to the Administrative Agent and shall state that
the resolutions thereby certified have not been amended, modified, revoked
or rescinded and are in full force and effect;
(f) Each Mexican Borrower Incumbency Certificate. The Administrative
---------------------------------------------
Agent shall have received, with a copy for each Lender, a certificate of
each of the Mexican Borrowers, dated the Closing Date, as to the incumbency
and signature of the officers of each of the Mexican Borrowers executing
any Loan Document, reasonably satisfactory in form and substance to the
Administrative Agent, executed by the President or any Vice President and
the Secretary or any Assistant Secretary of each of the Mexican Borrowers,
including the appropriate powers of attorney notarized by a Mexican notary
authorizing such officers to sign the Loan Documents on behalf of such
Mexican Borrower;
(g) Organizational Documents. The Administrative Agent shall have
-------------------------
received, with a copy for each Lender, (i) true and complete copies of the
certificate of incorporation and by-laws (as to the Mexican Borrowers,
Estatutos Sociales) of each Borrower, certified as of a recent date as
complete and correct copies thereof by the Secretary of State of the State
of Incorporation for each U.S. Borrower and by a Mexican notary with
respect to each Mexican Borrower and (ii) with respect to each U.S.
Borrower, certificates of good standing, certified as of the Closing Date
by the Secretary of State of the State of Incorporation for such U.S.
Borrower;
(h) Fees. The Administrative Agent shall have received the fees,
----
costs, expenses, and charges then due and payable by the Borrowers under
this Agreement and each Loan Document, including, reimbursement for any
fees and disbursements of counsel then due and payable as set forth in
Section 11.5 and the Arrangement Fee to be received by it pursuant to the
Cooperation and Fee Letter;
46
(i) Legal Opinions. The Administrative Agent shall have received, with
--------------
a counterpart for each Lender, the following executed legal opinions dated
the Closing Date and addressed to the Administrative Agent, the U.S.
Collateral Agent, the Mexican Collateral Agent and each Lender:
(i) the executed legal opinion of Xxxxxx, Xxxxxx & Xxxxxxxxx,
special New York counsel to the Borrowers, in form and substance
satisfactory to the Administrative Agent and covering the matters set
forth on Exhibit E-1 with such changes therein as the Administrative
-----------
Agent shall approve;
(ii) the executed legal opinion of Gallastegui y Xxxxxx, Mexican
counsel for Loan Documents to the Borrowers, in form and substance
satisfactory to the Administrative Agent and covering the matters set
forth on Exhibit E-2 with such changes therein as the Administrative
-----------
Agent shall approve;
(iii) the executed legal opinion of Xxxxxxxx Xxxxxxxx y
Forastieri, S.C., Mexican counsel for corporate legal opinions to the
Borrowers, in form and substance satisfactory to the Administrative
Agent and covering the matters set forth on Exhibit E-3 with such
------------
changes therein as the Administrative Agent shall approve;
(iv) the executed legal opinion of Gardere Xxxx Xxxxxx & Xxxxx,
LLC, Texas counsel to Holdings, Telscape USA, Inc., TSCP
International, Inc., Telereunion, Inc. and Interlink Communications,
Inc., in form and substance satisfactory to the Administrative Agent
and covering the matters set forth in Exhibit E-4 with such changes
-----------
therein as the Administrative Agent shall approve;
(v) the executed legal opinion of Nida & Xxxxxxx, P.C.,
California counsel to MSN Communications, Inc. and Interlink
Communications, Inc., in form and substance satisfactory to the
Administrative Agent and covering the matters set forth in Exhibit E-5
-----------
with such changes therein as the Administrative Agent shall approve;
(vi) the executed legal opinion of Nowalsky, Bronston & Xxxxxxx
LLP, special U.S. telecommunications regulatory counsel to the U.S.
Borrowers, in form and substance satisfactory to the Administrative
Agent and covering the matters set forth in Exhibit E-6 with such
------------
changes therein as the Administrative Agent shall approve;
(vii) the executed legal opinion of Xxxxxxx, Xxxxxx and
Xxxxxxxxxx, LLP, Georgia and Florida counsel to the U.S. Borrowers, in
form and substance satisfactory to the Administrative Agent and
covering the matters set forth in Exhibit E-7 with such changes
------------
therein as the Administrative Agent shall approve;
47
(viii) the executed legal opinion of Xxxxxx & Silver, Nevada
counsel to the U.S. Borrowers, in form and substance satisfactory to
the Administrative Agent and covering the matters set forth in Exhibit
-------
E-8 with such changes therein as the Administrative Agent shall
---
approve;
(ix) the executed legal opinion of Xxxxx & Xxx Xxxxx, PLLC, North
Carolina counsel to the U.S. Borrowers, in form and substance
satisfactory to the Administrative Agent and covering the matters set
forth in Exhibit E-9 with such changes therein as the Administrative
-----------
Agent shall approve;
(j) Lien Searches/Actions to Perfect Liens. (i) The Lenders shall have
--------------------------------------
received the results of a recent lien search in each of the jurisdictions
and offices where assets of the Borrowers are located or recorded, and such
search shall reveal no Liens on any of the assets of the Borrowers except
for Permitted Liens or Liens for which the Administrative Agent has
received a duly executed termination statement and (ii) the Administrative
Agent shall have received evidence in form and substance reasonably
satisfactory to it that all filings, recordings, registrations and other
actions, including, without limitation, the filing of duly executed
financing statements on Form UCC-1, necessary or, in the reasonable opinion
of the Administrative Agent, desirable to perfect the Liens created by the
Security Documents (other than the Third Party Consents) shall have been
completed (or, to the extent that any such filings, recordings,
registrations and other actions shall not have been completed, arrangements
reasonably satisfactory to the Administrative Agent for the completion
thereof shall have been made);
(k) Financial Statements. The Administrative Agent shall have
----------------------
received, with a copy for each Lender (i) the audited consolidated
financial statements for each of Holdings and PCom, respectively, for
December 31, 1999, (ii) the unaudited interim combined and consolidating
financial statements for each of Holdings and PCom (prior to its
acquisition by merger by Telscape) for each quarterly period ended
subsequent to the date of the latest financial statements delivered
pursuant to clause (i) of this subsection and (iii) projections of its
balance sheet, income statement and cash flow projections for each of the
succeeding five years ("Five-year Projections") prepared on a quarterly
basis for the fiscal years 2000 through 2003, and on an annual basis for
fiscal year 2004 and beyond;
(l) Material Adverse Change. There shall have occurred no material
-------------------------
adverse change in the financial and capital markets for international
issues emanating from Mexico which could impair the participation of
financial institutions hereunder;
(m) No Litigation. No action, suit, proceeding or investigation of any
-------------
kind, including arbitration proceedings and actions or proceedings of or
before any Governmental Authority, shall have been instituted or, to the
knowledge of any of the Borrowers, threatened, to which each of the
Borrowers is a party or is subject, or by which any of them or any of their
Properties are bound that, if determined adversely to or against any such
Person could reasonably be expected to have a Material Adverse Effect nor
to any of the Borrowers' knowledge, shall there be any reasonable basis for
any such action, suit, proceeding or investigation except as identified in
Schedule 3.6;
------------
48
(n) Cooperation and Fee Letter. The Administrative Agent shall have
--------------------------
received from the Borrowers the executed, valid and enforceable Cooperation
and Fee Letter;
(o) Mexican Bank Notices. The Mexican Collateral Agent shall have
----------------------
received letters executed by the Mexican Borrowers to each financial
institution in which it has an account in which such financial institution
is notified that such Mexican Borrower has granted a security interest in
such account to the Mexican Collateral Agent;
(p) Purchase Order. Borrowers shall have committed to purchase from
---------------
Vendor or its affiliates not less than $10,000,000 of equipment, software
and services pursuant to the Supply Contracts, in addition to any such
equipment, software or services the purchase of which was financed in whole
or in part pursuant to the Lucent Credit Agreement;
(q) Service of Process. The Administrative Agent shall have received
------------------
evidence that each of the Borrowers has appointed an agent for service of
process in New York, New York, U.S.A.;
(r) Political Risk Insurance. The Administrative Agent shall have
--------------------------
received an Endorsement for political risk insurance, from an insurer
reasonably satisfactory to the Administrative Agent in connection with the
Network in compliance with Section 5.14 in an amount of coverage not less
than one-half the principal amount of the Initial Loans;
(s) Due Diligence. The Administrative Agent shall be satisfied with
-------------
its due diligence;
(t) Documentation. All documentation in connection with any Loan
-------------
Document and the transactions contemplated in any such Loan Document shall
be in form and substance satisfactory to the Administrative Agent;
(u) Other Certificates. The Administrative Agent shall have received
------------------
such other documents, evidence, or opinions as it may reasonably request in
connection with the transactions contemplated hereby;
(v) Additional Investment. Holdings shall have obtained on terms and
----------------------
conditions satisfactory to the Administrative Agent, commitments for an
equity investment or debt subordinated in form and substance satisfactory
to the Administrative Agent in the aggregate amount of $37,000,000 less the
liquidation amount of outstanding Class F Convertible Senior Preferred
Stock of Holdings;
(w) Acknowledgement of Concession Commencement. The Administrative
--------------------------------------------
Agent shall have received the executed, valid and enforceable
Acknowledgement of Concession Commencement;
(x) Third Party Consents. The Administrative Agent shall have received
--------------------
the executed, valid and enforceable Consent and Agreement for each
Contractual Obligation listed on Schedule 4.1(x);
---------------
49
(y) No Material Adverse Change. Since June 30, 2000, and without
-----------------------------
considering for purposes of this condition the items specifically disclosed
in Schedule 3.2, there shall have occurred no material adverse change in
------------
the financial condition, operations, assets, liabilities, or prospects of
Holdings and its Subsidiaries taken as a whole or of Telereunion or
Telereunion International individually; and
(z) Vendor Repayment. The Borrowers shall have repaid to Suppliers
-----------------
$1,500,000 paid by such Suppliers to Mexican taxing authorities in
satisfaction of value added taxes owed by Mexican Borrowers on equipment
sold pursuant to Supply Contracts;
(aa) Mexican Borrower Obligations. The Administrative Agent shall have
----------------------------
received a certificate executed by the Mexican Borrowers as to the amount
of the Initial Loan constituting Mexican Borrower Obligations pursuant to
clause (ii) of the definition thereof;
(bb) SCT Authorizations. The Mexican Collateral Agent shall have
-------------------
received evidence that the SCT Notice has been filed with the SCT.
(cc) CFE Consent. The Mexican Collateral Agent shall have received the
-----------
CFE Consent.
Notwithstanding the foregoing, the obligations of the Lenders to make Loans
hereunder shall not become effective unless each of the foregoing conditions is
satisfied at or prior to 3:00 p.m., New York City time, on September 30, 2000
(and, in the event such conditions are not satisfied, the Commitments shall
terminate at such time).
Section 4.2 Condition to Each Loan. The agreement of each Lender to make
----------------------
any Loan requested to be made by it on any date (including, without limitation,
its Initial Loan), is subject to the satisfaction of the following conditions
precedent:
(a) Representations and Warranties. Each of the representations and
-------------------------------
warranties made by the Borrowers in or pursuant to the Loan Documents shall
be true and correct in all material respects on and as of such date (and,
in the case of the representations and warranties made on the Closing Date,
after giving effect to the transactions contemplated hereby) after giving
effect to any written updates to information provided to the Lenders in
compliance with the terms hereof as if made on and as of such date, except
to the extent such representations and warranties expressly relate to an
earlier date in which case such representations and warranties shall be
true and correct in all material respects as of such earlier date;
(b) No Default. No Default or Event of Default shall have occurred and
----------
be continuing on such date or after giving effect to the Loan requested to
be made on such date;
(c) Drawdown Certificates and Applications. The Administrative Agent
---------------------------------------
shall have received a Drawdown Certificate with respect to such Loan and
Notes duly executed by the Borrowers in accordance with Section 2.5 hereof;
50
(d) Liens. At any time after each of the Borrowers is required to
-----
satisfy the requirement set forth in Section 5.9, the Administrative Agent
shall have a first priority security interest in the Collateral to the
extent permitted by applicable law and subject to Permitted Liens after
obtaining and duly recording the Mexican Mortgages;
(e) Mexican Security Documents. The Mexican Security Documents have
---------------------------
been filed for registration where they are required to be registered to
become effective against third parties;
(f) Acknowledgement of Indebtedness. Each Mexican Borrower shall have
-------------------------------
executed a notarial instrument (or other kind of instrument which would
permit the acknowledgement of indebtedness to be registered at the
corresponding Public Register with jurisdiction over the Mexican Mortgages)
with respect to any Mexican Borrower Obligation acknowledging its liability
for such Mexican Borrower Obligation;
(g) [Reserved]
--------
(h) Supply Contracts. The Supply Contracts shall be in full force and
----------------
effect and no default or event of default shall have occurred and be
continuing thereunder;
(i) Permits and Approvals. Except as otherwise set forth in Section
----------------------
3.21, the Borrowers shall have the Concession and all consents, permits,
approvals and licenses of any Governmental Authority or other Persons
necessary on such date in connection with the Network. The Borrowers shall
also have received no notice from any Governmental Authority or other
Persons that any such consent, permit, approval or license is subject to
revocation, termination or modification which, would have a Material
Adverse Effect on the ability of the Borrowers to operate the Network;
(j) Consents, Licenses and Approvals. The Administrative Agent shall
---------------------------------
have received with a copy for each Lender, a certificate of a Responsible
Officer of the Borrowers (i) attaching copies, if copies have not been
provided on an earlier date pursuant to this Section, of all material
consents and authorizations of and filings with any Governmental Authority
or any other Person that are set forth on Schedule 3.21 (as obtained), and
-------------
each other material consent, license, permit or authorization that is
required to be obtained on or prior to such date or made by the Borrowers
in connection with (A) the Loans hereunder, (B) the execution, delivery or
performance by each of the Borrowers of the Loan Documents or (C) the
validity or enforceability with respect to or against the Borrowers of the
Loan Documents or (D) the continuing material business operations of the
Borrowers as are reasonably requested by the Administrative Agent, and (ii)
stating that such material consents, authorizations and filings, and any
other consent, authorization or filing previously submitted pursuant to
this Section, (A) are in full force and effect and that all applicable
waiting periods under any Requirements of Law shall have expired without
any action being taken or threatened by any competent Governmental
Authority which would restrain, prevent or otherwise impose material
adverse conditions on the transactions contemplated hereby, and (B)
constitute all of the consents, licenses, permits or authorizations then
required to be obtained by the Borrowers in connection with their material
business operations. Each such material consent, authorization and filing
shall be in form and substance reasonably satisfactory to the
Administrative Agent;
51
(k) Notes. The Administrative Agent shall have received for the
-----
account of each Lender a Note in the amount of the Loan it shall make with
respect to any Mexican Borrower Obligation on the Borrowing Date;
(l) Transfer Restriction. There shall be no moratorium or other action
--------------------
by a Governmental Authority which restricts the ability of the Borrowers to
make payments when due under any Loan Document and to transfer Dollars to
the United States, except for administrative requirements which can be
routinely satisfied; and
(m) Political Risk Insurance. The amount of the political risk
--------------------------
insurance coverage shall have been increased to an amount not less than
one-half of the aggregate principal amount of the Loans after giving effect
to the making of any Loan requested to be made by any Lender on such date.
Each borrowing of a Loan by the Borrowers hereunder shall constitute a
representation and warranty by the Borrowers as of the date thereof that the
conditions contained in clauses (a) and (b) of this Section 4.2 have been
satisfied.
ARTICLE V
AFFIRMATIVE COVENANTS
---------------------
Holdings with respect to itself and each of its Subsidiaries and each
of the Borrowers with respect to itself hereby agree that, so long as the
Commitments remain in effect or any amount is owing to any Lender or the
Administrative Agent hereunder or under any other Loan Document, unless the
Required Lenders shall otherwise consent in writing:
Section 5.1 Financial Statements. Furnish to the Administrative Agent
---------------------
and each Lender:
(a) as soon as available, but in any event within 105 days after the
end of each fiscal year of Holdings, (i) a copy of the audited consolidated
balance sheet of Holdings as at the end of such year and the related
audited consolidated statements of income and retained earnings and of cash
flows for such year, setting forth in each case, in comparative form the
figures as of the end of and for the previous year, reported on without a
"going concern" or like qualification or exception, or a qualification
arising out of the scope of the audit, by the Accountants, (ii) a copy of
the consolidating balance sheet of Holdings as at the end of such year and
the related consolidating statements of income and retained earnings and of
cash flows for such year, setting forth in each case, in comparative form
the figures as of the end of and for the previous year, and (iii) a copy of
the then current, updated Five-year Projections;
(b) as soon as available, but in any event not later than 50 days
after the end of each of the first three quarterly periods of each fiscal
year of Holdings, (i) the unaudited consolidated and consolidating balance
sheet of Holdings as at the end of such quarter and (ii) the related
unaudited consolidated and consolidating statements of income and retained
earnings and of cash flows of Holdings for such quarter and the portion of
the
52
fiscal year through the end of such quarter, setting forth in each case, in
comparative form the figures as of the end of and for the corresponding
period in the previous year, certified by a Responsible Officer of Holdings
as being fairly stated in all material respects (subject to normal year-end
audit adjustments).
All such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail, in accordance with GAAP
(subject to the addition, in the case of clause (b) of year end audit
adjustments) applied consistently throughout the periods reflected therein and
with prior periods.
Section 5.2 Certificates; Other Information. Furnish to each Lender:
---------------------------------
(a) concurrently with the delivery of the financial statements
referred to in Section 5.1(a) and (b), a certificate of the Accountants
reporting on such financial statements stating that in making the
examination necessary therefor no knowledge was obtained of any Default or
Event of Default having occurred as of the end of the fiscal year covered
by such financial statements, except as specified in such certificate;
(b) concurrently with the delivery of the financial statements
referred to in Section 5.1, a certificate of a Responsible Officer of each
of the Borrowers stating that each of the Borrowers during such period has
observed or performed in all material respects all of its covenants and
other agreements, and satisfied every condition in all material respects,
contained in this Agreement and the other Loan Documents to be observed,
performed or satisfied by it during such period, and that such Responsible
Officer has obtained no knowledge of any Default or Event of Default except
as specified in such certificate;
(c) promptly upon receipt thereof, copies of all reports submitted to
any of the Borrowers by independent certified public accountants in
connection with each annual, interim or special audit of the books of each
of the Borrowers made by such accountants, including, without limitation,
any management letter commenting on each of the Borrowers' internal
controls submitted by such accountants to management in connection with
their annual audit;
(d) promptly upon filing thereof, copies of any filing that Holdings
or any of its Subsidiaries files with the SEC; and
(e) promptly, such additional financial and other information within
the possession of any of the Borrowers as any Lender may from time to time
reasonably request through the Administrative Agent.
Section 5.3 Payment of Obligations. Pay, discharge or otherwise satisfy
----------------------
at or before maturity or before they became delinquent, as the case may be, all
its material obligations of whatever nature including taxes and fees, except as
contemplated by this Agreement or where the amount or validity thereof is
currently being contested in good faith by appropriate proceedings and reserves
in conformity with GAAP with respect thereto have been provided on the books of
any of the Borrowers or the failure to pay the same could not, in the aggregate,
reasonably be expected to have a Material Adverse Effect, as the case may be.
53
Section 5.4 Conduct of Business; Maintenance of Existence; Compliance
------------------------------------------------------------
with Laws. Continue to engage in business of the same general type as now
----------
conducted by or as contemplated in the Supply Contracts and preserve, renew and
keep in full force and effect its corporate existence and take all reasonable
action to maintain all rights, privileges and franchises necessary or desirable,
in any material respect in the normal conduct of its business except as
otherwise permitted pursuant to Section 6.2; comply in all material respects
with all Contractual Obligations and Requirements of Law (excluding, for
purposes of this Section 5.4, Requirements of Law and Contractual Obligations
specifically addressed elsewhere in this Article V) except where (a) any such
Contractual Obligation is being contested in good faith, a bona fide dispute
exists with respect to any such Contractual Obligation or failure to comply
therewith could not in the aggregate, reasonably be expected to have a Material
Adverse Effect and (b) the failure to comply with any such Requirements of Law
could not, in the aggregate, reasonably be expected to have a Material Adverse
Effect.
Section 5.5 Maintenance of Property; Insurance. (a) Keep all property
------------------------------------
material to the conduct of its business in good working order and condition
(normal wear and tear and obsolescence excepted); (b) maintain insurance with
financially sound and reputable insurance companies with an A.M. Best rating of
A- or better on such of its property and in at least such amounts and against at
least such risks as are usually insured against in the same general area by
companies engaged in the same or a similar business; and (c) furnish to the
Administrative Agent, upon written request, full information as to the insurance
carried. In addition, as soon as reasonably practicable after receipt from the
relevant insurers of any payment of any claim under any insurance policy for
loss or damage to the Collateral, the Borrowers shall deposit all such proceeds
that any Borrower receives into a separate segregated account with the U.S.
Collateral Agent for the benefit of the Lenders in accordance with the
Collateral Agency Agreement. Subject to the Collateral Agency Agreement, the
Borrowers shall be permitted to withdraw any amount on deposit in such account
for the sole purpose of acquiring equipment of at least substantially similar
nature or value to the affected Collateral from the Vendor or otherwise or to
prepay Loans outstanding in accordance with Section 2.8(b). If at any time
following the Closing Date, any insurance company providing insurance pursuant
to clause (b) of this Section falls to a level below the required rating, the
Borrowers shall, as soon as possible and in no event later than 30 days after
such downgrading of the required rating, replace such insurance with insurance
from an insurance company with the required rating acceptable to the
Administrative Agent.
Section 5.6 Inspection of Property; Books and Records; Discussions. Keep
------------------------------------------------------
proper financial records in conformity with GAAP and all Requirements of Law;
and permit (a) representatives of the Administrative Agent or any Lender to
visit and inspect any of its properties and examine and make abstracts from any
of its books and records at any reasonable time during normal business hours,
upon advance written notice, and as often as may reasonably be desired;
provided, that during the continuance of an Event of Default, no advance notice
shall be required, and (b) upon advance written notice during normal business
hours, representatives of the Administrative Agent or any Lender to discuss the
business, operations, properties and financial and other condition of the
Borrowers with officers and employees of the Borrowers and with their
Accountants.
54
Section 5.7 Notices. Promptly give notice to the Administrative Agent
-------
and each Lender of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default by any Borrower under any
Contractual Obligation to which any Borrower is bound and of which it has
knowledge or notice or (ii) litigation, investigation or proceeding which
may exist at any time between any Borrower and any Governmental Authority
of which any of them has knowledge or notice, which in either case, if not
cured or resolved or if adversely determined, as the case may be, could
reasonably be expected to have a Material Adverse Effect;
(c) any pending or threatened claim, litigation or proceeding
affecting any Borrower, of which any Borrower has knowledge or notice, in
which the amount involved is not covered by insurance or in which
injunctive or similar relief is sought and which, in either case, if
adversely determined, could reasonably be expected to have a Material
Adverse Effect;
(d) the following events, as soon as possible and in any event within
30 days after any Borrower knows or has reason to know thereof (i) the
occurrence or expected occurrence of any Reportable Event with respect to
any Plan, a failure to make any required contribution to a Plan, the
creation of any Lien in favor of the PBGC or a Plan or any withdrawal from,
or the termination, Reorganization or insolvency of, any Multiemployer Plan
or (ii) the institution of proceedings or the taking of any other action by
the PBGC or the Borrower or any Commonly Controlled Entity or any
Multiemployer Plan with respect to the withdrawal from, or the termination,
Reorganization or Insolvency of, any Plan, in each of cases (i) and (ii),
where such event could reasonably be expected to have a Material Adverse
Effect; and
(e) any other development or event of which any Borrower has knowledge
or notice which could reasonably be expected to have a Material Adverse
Effect. Each notice pursuant to this Section 5.7 shall be accompanied by a
statement of a Responsible Officer setting forth details of the occurrence
referred to therein and stating what action such Borrower proposes to take
with respect thereto.
Section 5.8 Environmental Laws.
-------------------
(a) Comply with and use reasonable efforts to ensure compliance by all
tenants and subtenants, if any, with, all applicable Environmental Laws and
obtain and comply with and maintain, and use reasonable efforts to ensure
that all tenants and subtenants obtain and comply with and maintain, any
and all Environmental Permits required by applicable Environmental Laws,
except where the failure to so comply with such laws or permits or obtain
and maintain such permits could not reasonably be expected to have a
Material Adverse Effect.
55
(b) Conduct and complete all investigations, studies, sampling and
testing, and all remedial, removal and other actions required by any
Governmental Authority under Environmental Laws and promptly comply with
all lawful orders and directives of all Governmental Authorities regarding
Environmental Laws, except to the extent that the failure to do any of the
foregoing could not reasonably be expected to have a Material Adverse
Effect.
Section 5.9 Maintenance of Liens of the Security Documents.
----------------------------------------------------
(a) File each Acknowledgement of Indebtedness for registration with
the public registry where the Mexican Mortgages are registered within five
(5) Business Days following the execution thereof.
(b) Undertake all actions which are necessary or appropriate in the
reasonable judgment of the Administrative Agent to (i) maintain the
Lenders' security interest in the Collateral (including the priority
thereof) in full force and effect at all times, (ii) preserve and protect
the Collateral, and (iii) protect and enforce each of the Borrower's rights
and title, and the rights of the Lenders, to the Collateral. Subject to the
prior written consent of the Administrative Agent, not to be unreasonably
withheld if the terms of the proposed agreement are reasonable to the
Borrowers, the Borrowers may enter into agreements pursuant to which the
Borrowers sell, lease or assign rights or interests in fiber optic cable
facilities owned or operated by the Borrowers in exchange for rights or
interests in other fiber optic cable facilities provided that a first
priority Lien on the resulting rights or interests of the Borrowers
pursuant to any such agreement is granted to the Administrative Agent
pursuant to Section 5.10.
Section 5.10 Pledge of After Acquired Property; Additional Borrowers.
----------------------------------------------------------
(a) If at any time following the Closing Date, any Borrower shall
acquire any real property or other property of any nature whatsoever which
is intended by the terms of the applicable Security Document to be, but is
not, subject to the Liens created by the Security Documents, such Borrower
shall, as soon as possible and in no event later than 30 days after the
relevant acquisition date and, to the extent permitted by applicable law,
grant to the relevant Collateral Agent for the ratable benefit of the
Lenders a first priority Lien subject to Permitted Liens on such property
as collateral security for, with respect to a Mexican Borrower, the Mexican
Borrower Obligations, and with respect to a U.S. Borrower, the Obligations,
pursuant to documentation reasonably satisfactory in form and substance to
the Administrative Agent. Without limiting the foregoing, with respect to
each Subsidiary of Holdings which becomes a Material Foreign Subsidiary
after the date hereof (whether by acquisition, formation or otherwise),
promptly upon such Subsidiary becoming a Material Foreign Subsidiary,
Holdings shall, or shall cause the Subsidiary of Holdings which holds the
Capital Stock of such Material Foreign Subsidiary to, execute and deliver
an instrument in form and substance reasonably satisfactory to the
Administrative Agent providing for the pledge of one hundred percent (100%)
of the issued and outstanding Capital Stock of such Material Foreign
Subsidiary to the U.S. Collateral Agent (or such other collateral agent or
Person as the Administrative Agent shall designate for such purpose) for
the benefit of the Lenders as security for the
56
Obligations and shall deliver to the U.S. Collateral Agent (or such other
collateral agent or Person) the stock certificates evidencing such Capital
Stock together with undated stock powers for each such certificate, duly
executed in blank. In connection with any of the foregoing, the Borrowers,
at their own expense, shall execute, acknowledge and deliver, or cause the
execution, acknowledgement and delivery of, and thereafter register, file
or record in an appropriate governmental office, any document or instrument
(including legal opinions, title insurance, consents and corporate
documents) and take all such actions reasonably deemed by the
Administrative Agent to be necessary or desirable to ensure the creation,
priority and perfection of such Lien.
(b) (i) Holdings shall cause each new Subsidiary of Holdings created
or acquired after the date hereof, which Subsidiary is organized under the
laws of the United States, Mexico or any political subdivision of the
United States or Mexico, promptly upon such creation or acquisition, to
execute an instrument, substantially in the form of the Accession Agreement
in form and substance reasonably satisfactory to the Administrative Agent
pursuant to which such new Subsidiary shall become a party hereto and the
Lenders agree to permit such Subsidiary to be a Borrower hereunder, and
(ii) Holdings shall, or shall cause the Subsidiary of Holdings which holds
the Capital Stock of such new Subsidiary to, execute and deliver an
instrument in form and substance reasonably satisfactory to the
Administrative Agent providing for the pledge of 100% of the issued and
outstanding Capital Stock of each new Subsidiary of Holdings created or
acquired after the date hereof and owned by Holdings or one of its
Subsidiaries to the U.S. Collateral Agent or the Mexican Collateral Agent
with respect to Subsidiaries incorporated in Mexico for the benefit of the
Lenders, and the Borrowers shall deliver to the U.S. Collateral Agent or
the Mexican Collateral Agent the stock certificates evidencing such Capital
Stock together with undated stock powers for each such certificate, duly
executed in blank.
Section 5.11 Maintenance of Permits and Approvals. Obtain each permit,
-------------------------------------
consent, license or approval of any Governmental Authority or Person required in
connection with the operation of the Network or any part thereof or necessary in
the conduct of its business at or before the time such permit, consent, license
or approval is required and comply in all material respects with the terms and
conditions of, and otherwise maintain in full force and effect without material
adverse modification, any such permit, consent, license or approval or any
permit, consent, license or approval of any Governmental Authority or Person
material in the transaction of its business.
Section 5.12 Supply Contracts. Comply in all material respects with the
----------------
terms and conditions of the Supply Contracts.
Section 5.13 Use of Proceeds. Use the proceeds of the Loans in the
-----------------
manner set forth in Section 2.6.
Section 5.14 Political Risk Insurance. Prior to the Closing Date, obtain
-------------------------
political risk insurance with respect to the Network acceptable to the
Administrative Agent for the benefit of the Lenders; provided, however, that the
-------- -------
Borrowers shall be responsible for payment of the insurance premiums, exposure
fees and any other related charges for a minimum amount of one-half of the
aggregate amount of Loans made by the Lenders hereunder.
57
Section 5.15 Vextro Permit. Within 90 days of the Closing Date, either
---------------
(a) obtain the authorization of the SCT for the mortgage by Vextro of its Permit
or (b) cancel such Permit.
Section 5.16 Conditions Subsequent. Within thirty (30) days of the
----------------------
Closing Date, deliver, or cause the delivery of, each of the following to the
Administrative Agent, each duly executed by all parties thereto (other than the
Administrative Agent) and in form and substance satisfactory to the
Administrative Agent: (a) the California Landlord's Waiver Agreements, (b) the
California Consent, and (c) each Landlord Consent (with respect to leases),
Consent and Agreement (with respect to Contractual Obligations) and (d) each
other document described on Schedule 5.16.
--------------
Section 5.17 US Charter de Mexico, S.A. de C.V. Within 30 days of the
-----------------------------------
Closing Date either (a) cause US Charter de Mexico S.A. de C.V. to execute an
Accession Agreement to become a Mexican Borrower and to execute its endorsement
of the Notes or (b) dissolve such company.
ARTICLE VI
NEGATIVE COVENANTS
------------------
Holdings with respect to itself and each of its Subsidiaries and each
of the Borrowers with respect to itself hereby agree that, so long as the
Commitments remain in effect or any amount is owing to any Lender or the
Administrative Agent hereunder or under any other Loan Document outstanding,
each shall not, directly or indirectly, unless the Required Lenders shall
otherwise agree in writing:
Section 6.1 Limitation on Liens. Create, incur, assume or suffer to
---------------------
exist any Lien upon any of its property, assets or revenues, whether now owned
or hereafter acquired, except for the following ("Permitted Liens"):
----------------
(a) Liens for taxes not yet due or which are being contested in good
faith by appropriate proceedings, provided that adequate reserves with
respect thereto are maintained on the books of Holdings or its
Subsidiaries, as the case may be, in conformity with GAAP;
(b) statutory landlords' liens and carriers', warehousemen's,
mechanics', materialmen's, repairmen's or other like Liens arising in the
ordinary course of business for sums which are not overdue for a period of
more than 90 days or which are being contested in good faith by appropriate
proceedings;
(c) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation and deposits
securing liability to insurance carriers under insurance or self-insurance
arrangements;
58
(d) deposits to secure the performance of bids, trade contracts (other
than for borrowed money) leases, statutory obligations, surety and appeal
bonds, performance bonds and other obligations of a like nature incurred in
the ordinary course of business;
(e) all easements, zoning restrictions, flowage rights, rights-of way,
covenants, conditions, restrictions, reservations, licenses, agreements and
other similar matters, including the unrecorded easements and similar
agreements set forth in Schedule 6.1(e), which, in the aggregate, are not
---------------
substantial in amount and which do not in any case materially detract from
the use of the property subject thereto or materially interfere with the
ordinary conduct of the business of Holdings or such Subsidiaries;
(f) Liens in existence on the date hereof listed on Schedule 6.1(f),
----------------
provided that no such Lien is spread to cover any additional property after
the Closing Date and that the amount of indebtedness secured thereby shall
not subsequently be increased;
(g) all building codes and zoning ordinances and other laws,
ordinances, regulations, rules, orders or determinations of any Federal,
state, county, municipal or other governmental authority now or hereafter
enacted;
(h) Liens created pursuant to the Loan Documents;
(i) restrictions on the transfer of assets imposed by the Concession
as now in effect or by any Requirements of Law;
(j) Liens on any property or asset existing thereon at the time of
acquisition of such property or asset and not created in connection with
such acquisition; and provided that the amount of Indebtedness secured
thereby is not increased in connection with such acquisition and does not
exceed the fair market value of property or asset;
(k) Replacement or renewal of any Lien permitted above, provided that
such new Lien is limited to the property or asset which was subject to the
prior Lien immediately before such renewal or replacement;
(l) Liens on fiber optic cable facilities which are part of the
Network created pursuant to sales, lease or assignments of rights of
interests in such fiber optic cable facilities so long as the condition set
forth in Section 5.9(c) is met with respect to such sale, lease or
assignment; and
(m) With respect to PCom Subsidiaries only, Purchase Money Liens on
assets not a part of or relating to the Network and securing only Purchase
Money Indebtedness permitted under Section 6.13.
Section 6.2 Limitation on Fundamental Changes. Enter into any merger,
-----------------------------------
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or convey, sell, lease, assign, transfer
or otherwise dispose of, all or substantially all of its property, business or
assets, except:
59
(a) any Subsidiary of Holdings may be merged or consolidated with or
into Holdings (provided that Holdings shall be the continuing or surviving
corporation) or with or into any one or more Subsidiaries of Holdings or
with or into another Person (provided that the Subsidiary of Holdings shall
be the continuing or surviving corporation);
(b) any Subsidiary of each of the Borrowers may sell, lease, transfer
or otherwise dispose of any or all of its assets (upon voluntary
liquidation or otherwise) to the Borrowers or any other Subsidiary of the
Borrowers so long as the effect of such sale, lease, transfer or other
disposition will not dilute such assets without proper consideration; and
(c) Holdings or any Subsidiary of Holdings may be merged or
consolidated with or into another Person provided that Holdings or such
Subsidiary shall be the continuing or surviving corporation and that,
following such merger or consolidation, no default or Event of Default
would exist and be continuing hereunder.
Section 6.3 Limitation on Investments, Loans and Advances. Make any
-------------------------------------------------
advance, loan, extension of credit or capital contribution to, or purchase any
stock, bonds, notes, debentures or other securities of or any assets
constituting a business unit of, or make any other investment in any Person (an
"Investment"), except:
----------
(a) extensions of trade credit and endorsements of negotiable
instruments and other documents in the ordinary course of business;
(b) Investments in Cash Equivalents;
(c) Investments by any Borrower in another Borrower;
(d) loans to officers, directors and employees of the Borrowers,
Holdings and their Subsidiaries where cash is paid out to such officers,
directors, and employees shall not exceed in the aggregate $500,000 at any
one time;
(e) Investment in Telecommunications companies in an amount not to
exceed $10,000,000 per annum; and
(f) acquisitions of Telecommunications equipment.
Section 6.4 Limitation on Optional Payments and Modifications of Debt
------------------------------------------------------- ----
Instruments and other Obligations. (a) Make any optional payment or prepayment
----------------------------------
on or redemption, defeasance or purchase of any Indebtedness unless otherwise
permitted under Article II hereof, (b) amend, modify or change, or consent or
agree to any amendment, modification or change to any of the terms of any
Indebtedness (other than any such amendment, modification or change which (i)
would extend the maturity or reduce the amount of any payment of principal
thereof or would reduce the rate or extend the date for payment of interest
thereon, (ii) does not in any way adversely affect the interests of the
Administrative Agent or the Lenders hereunder, thereunder or under the other
Loan Documents, or (iii) is of a technical or clarifying nature), or (c) amend,
modify or change, or consent or agree to any amendment, modification or change
to the articles of incorporation (or such similar charter documents) of the
Borrowers in any material respect.
60
Section 6.5 Limitation on Transactions with Affiliates. Enter into any
-------------------------------------------
transaction, including, without limitation, any purchase, sale, lease or
exchange of property or the rendering of any service, with any Affiliate unless
such transaction is (a) otherwise permitted under this Agreement, or (b) in the
ordinary course of Holdings' or such Subsidiary's business and upon fair and
reasonable terms no less favorable to Holdings or such Subsidiary, as the case
may be, than it would obtain in a comparable arm's-length transaction with a
Person which is not an Affiliate; provided that the foregoing restriction shall
-------- ----
not prohibit (i) transactions among the Borrowers and any Subsidiary thereof and
between Subsidiaries, or (ii) indemnification payments to officers and directors
of any Borrower or any of its respective Subsidiaries.
Section 6.6 Limitation of Restricted Payments. Declare or make, or agree
---------------------------------
to pay or make, directly or indirectly, any Restricted Payment (or incur any
obligation to do so), except (a) each of the Borrowers may declare and pay
dividends with respect to its Capital Stock payable solely in additional shares
of its common stock that are pledged pursuant to the Pledge Agreement as
provided therein, (b) Subsidiaries may declare and pay dividends to their
shareholders with respect to their Capital Stock ratably to each Borrower and
other Person then holding Capital Stock of such Subsidiary (based on the
ownership interest of each such shareholder at such time without regard to
class), (c) Subsidiaries may make payments to their shareholders on account of
the redemption of their Capital Stock ratably to each Borrower and other Person
then holding Capital Stock of such Subsidiary (based on the ownership interest
of each such shareholder at such time without regard to class), (d) each
Borrower may declare and pay dividends to the other Borrowers with respect to
their Capital Stock, (e) each Borrower may make any payment on any Indebtedness
owed to another Borrower but solely to the extent permitted pursuant to Article
VIII, (f) if at the time thereof and after giving effect thereto no Default has
occurred and is continuing, each of the Borrowers may make a payment in cash on
the date that any amount is due and payable with respect to any Indebtedness
listed on Schedule 6.6 in an amount not exceeding the amount due and owing or
-------------
(g) Holdings may declare and pay Permitted Preferred Cash Dividends; provided
--------
that any Restricted Payment otherwise permitted pursuant to this Section shall
not be permitted unless the Borrower shall have delivered to the Administrative
Agent, prior to such Restricted Payment, a certificate signed by a Responsible
Officer setting forth the amount of such Restricted Payment and certifying that
all conditions to such Restricted Payment are satisfied.
Section 6.7 Limitation on Changes in Fiscal Year. Without the consent of
------------------------------------
the Required Lenders, which shall not be unreasonably withheld, permit the
fiscal year of the Borrowers to end on a day other than December 31.
Section 6.8 Limitation on Issuance of Capital Stock. Without the consent
---------------------------------------
of the Required Lenders, sell, assign, transfer or otherwise dispose of any
Capital Stock pledged as Collateral; or, without the consent of the Required
Lenders, which shall not be unreasonably withheld, otherwise issue and sell any
Capital Stock or beneficial interest therein (including, without limitation,
preferred stock) of any Borrower other than Holdings, where such issuance and
sale would result in any Persons (other than the Borrowers) holding in the
aggregate in excess of five percent of such Borrower.
61
Section 6.9 Conduct of Business. Engage in any business other than the
--------------------
business of telecommunications and businesses which are related thereto.
Section 6.10 Amendment of Material Contracts. Without the consent of the
-------------------------------
Required Lenders, amend, modify or supplement a material term of (a) a
Contractual Obligation in connection with the construction, operation, ownership
and maintenance of the Network or the business derived from the Network, or (b)
any other Contractual Obligation, the amendment or modification of which could
reasonably be expected to have a Material Adverse Effect.
Section 6.11 Additional Bank Accounts. Open, establish or maintain any
-------------------------
deposit account, investment account or any other account with any bank or other
financial institution, other than the accounts set forth in Schedule 3.28,
-------------
except with the prior written consent of the Administrative Agent, which shall
not be unreasonably withheld, and subject to such conditions thereto as the
Administrative Agent may establish in accordance with Section 5.10.
Section 6.12 Infrastructure Build Out. Commit to build or construct
--------------------------
telecommunications infrastructure in any city other than Atlanta (Georgia), Los
Angeles (California), Houston (Texas), Miami (Florida), or San Diego
(California); provided however, that Holdings or any Subsidiary of Holdings may
commit to build out or construct telecommunications infrastructure in any of the
Additional Approved Cities, in each case (a) as contemplated in, and consistent
with, the Approved Build-Out Plan and for each such Additional Approved City,
subject to delivery to the Administrative Agent, at least three (3) months prior
to entering into any such commitment or commencing any such build-out, of a
fully funded plan (including evidence showing that Holdings or such Subsidiary
has obtained all financing required or contemplated by the Approved Build-Out
Plan for such city) in connection with such Additional Approved city, all to the
reasonable satisfaction of the Administrative Agent, and (b) only for so long as
and to the extent that, at the time of any such commitment and after giving
effect thereto, no Default has occurred and is continuing, and, with respect to
each of the financial covenants set forth in Article VII, (i) Borrowers were in
full compliance therewith as of the most recent date such financial covenant was
(is being) measured, without requiring any waiver thereof or amendment thereto
to enable such compliance, and (ii) no Default could reasonably be expected to
exist as of the next date on which such financial covenant is to be measured.
Section 6.13 Limitation on Indebtedness. Create, incur, assume or permit
--------------------------
to exist any Indebtedness other than (a) Indebtedness of the Mexican Borrowers
of up to two million seven hundred fifty thousand Dollars ($2,750,000) in
respect of Financing Lease Obligations, (b) Purchase Money Indebtedness of the
PCom Subsidiaries in an aggregate amount of up to fifty million Dollars
($50,000,000) for the purchase of assets not a part of or relating to the
Network, and (c) Indebtedness existing on the Closing Date and described in
Schedule 6.13.
--------------
Section 6.14 Limitation on Sale of Collateral. Without the consent of
----------------------------------
the Required Lenders, sell, assign (by operation of law or otherwise), lease,
transfer or otherwise dispose of, or grant any option with respect to, any of
the Collateral, except that Borrowers and their Subsidiaries may (a) sell
inventory or obsolete or unnecessary equipment, in each case in the ordinary
course of business; and (b) make other sales or dispositions of assets (other
than the Capital Stock of any Subsidiary) if all of the following conditions are
62
met: (i) the market value of assets sold or otherwise disposed of in any single
transaction or series of related transactions does not exceed $250,000 and the
aggregate market value of assets sold or otherwise disposed of in any fiscal
year does not exceed $1,500,000; (ii) the consideration received is at least
equal to the fair market value of such assets; (iii) the Net Proceeds of such
asset sale or other disposition are applied to the Obligations or are used to
acquire replacement property, in each case as set forth in Section 2.8(b)(iii);
and (iv) no Default shall then exist or result from such sale or other
disposition.
ARTICLE VIII
SUBORDINATION; WAIVER
---------------------
Section 8.1 Subordination.
-------------
(a) Generally. The Subordinated Claims shall be and hereby are
---------
expressly made subordinate and junior in right of payment to all Obligations to
the extent and in the manner provided in these Subordination Provisions. These
Subordination Provisions are made for the benefit of the Secured Parties
including the Collateral Agents, and the Collateral Agents are express third
party beneficiaries hereof, with the same effect as if their names were written
as such in this Agreement. Any Secured Party or all of them may proceed to
enforce these Subordination Provisions. Each Borrower waives any and all notice
of the creation or accrual of any Obligation and notice of acceptance and proof
of reliance upon these Subordination Provisions by any Secured Party. Moreover,
each Borrower agrees:
(i) to be bound by these Subordination Provisions;
(ii) that each Obligation shall conclusively be deemed to have
been created, contracted, and incurred in reliance upon these
Subordination Provisions; and
(iii) that all dealings between any Borrower and the Secured
Parties shall be deemed to have been consummated in reliance upon
these Subordination Provisions.
(b) Binding on Transferees, Etc. These Subordination Provisions shall
----------------------------
be binding upon any transferee or assignee of any Subordinated Claim.
(c) Legend. Each note or other instrument evidencing any Subordinated
------
Claim (or, if none, the relevant Subordinated Agreement) shall contain the
following legend, conspicuously noted on the face thereof:
63
THIS [NAME OF INSTRUMENT OR AGREEMENT] IS SUBJECT TO THE SUBORDINATION
PROVISIONS SET FORTH IN ARTICLE VIII TO THE CREDIT AGREEMENT, DATED AS
OF SEPTEMBER 29, 2000, AMONG TELEREUNION S.A. DE C.V., A MEXICAN
CORPORATION, TELEREUNION INTERNATIONAL, S.A. DE C.V., A MEXICAN
CORPORATION, TELSCAPE INTERNATIONAL, INC., A TEXAS CORPORATION, AND
THE OTHER BORROWERS LISTED ON SCHEDULE 1.0 THERETO AND THE ADDITIONAL
BORROWERS FROM TIME TO TIME PARTY THERETO, GENERAL ELECTRIC CAPITAL
CORPORATION, IN ITS CAPACITY AS ADMINISTRATIVE AGENT AND LENDER, AS
WELL AS THE SEVERAL LENDING INSTITUTIONS THAT FROM TIME TO TIME ARE
PARTY THERETO.
Section 8.2 Turnover of Improper Payments. If any payment or
--------------------------------
distribution of any character (whether in cash, securities, or other property)
shall be received by any Borrower in contravention of any of the terms hereof,
such Borrower shall promptly deliver such payment or distribution to the
Administrative Agent. The Administrative Agent and each Secured Party is
irrevocably authorized to supply any required endorsement or assignment that may
have been omitted. Until so delivered, such Borrower shall (a) hold such
improper payment or distribution in trust for the Secured Parties and (b) not
commingle such payment or distribution with other funds or property of any
Borrower. The foregoing obligation shall survive, and shall not be in any way
affected by, the result of any Proceeding.
Section 8.3 Obligations Absolute; Waivers.
-------------------------------
(a) No Prejudice or Impairment. The liabilities of any Borrower with
--------------------------
respect to the Obligations or the Subordination Provisions shall remain in
full force and effect without regard to, and shall not be impaired or
affected by:
(i) any act or failure to act on the part of any Borrower;
(ii) any renewal, extension, accrual, or indulgence in respect of
any payment or prepayment of any Obligation or any part thereof or in
respect of any other amount payable to any Secured Party;
(iii) any amendment, modification, or waiver of, or addition or
supplement to, or deletion from, or compromise, release, consent, or
other action in respect of, any of the terms of any Loan Document or
any other agreement that may be made relating to any Obligation;
(iv) any exercise or non-exercise by any Secured Party of any
right, power, privilege, or remedy under or in respect of any
Obligation or these Subordination Provisions, or any waiver of any
such right, power, privilege, or remedy or of any default in respect
of such Obligation, any Loan Document, or these Subordination
Provisions;
64
(v) any receipt by any Secured Party of any security, or any
failure by such Secured Party to perfect a security interest in, or
any release by such Secured Party of, any security for the payment of
any Obligation;
(vi) any merger or consolidation of any Borrower into or with any
other Person, or any sale, lease, or transfer of any or all of the
assets of any Borrower to any other Person, with or without the
consent of any Secured Party;
(vii) absence of any notice to, or knowledge by, the Borrowers of
the existence or occurrence of any of the matters or events set forth
in the foregoing clauses (i) through (vi); or
(viii) any other circumstance whatsoever.
(b) Waivers. The Borrowers unconditionally waive:
-------
(i) notice of any of the matters referred to in Section 8.5(a);
(ii) to the extent permitted by law, all notices that may be
required, whether by statute, rule of law, or otherwise, to preserve
intact any rights of any Secured Party against any Borrower, including
any:
(A) demand, presentment, protest, or proof of notice of
nonpayment under any Obligation; and
(B) notice of any failure on the part of any Borrower to
perform and comply with any covenant, agreement, term, or
condition of any Loan Document;
(iii) any condition to the enforcement, assertion, or exercise by
any Secured Party of any right, power, privilege, or remedy conferred
in any Loan Document or otherwise;
(iv) any requirement of diligence on the part of any Secured
Party;
(v) any requirement on the part of any Secured Party to mitigate
damages resulting from any default under any Loan Document;
(vi) any notice of any sale, transfer, or other disposition of
any Collateral by any Secured Party;
(vii) any defense based on the adequacy of a remedy at law that
might be asserted as a bar to the remedy of specific performance of
any provision of this Agreement or the Notes;
(viii) the defense that any claim asserted by any Secured Party
pursuant to any provision of this Agreement or the Notes is res
judicata as a result of any decision rendered in any prior proceeding;
and
(ix) any other matter that could result in a defense to the
enforcement of any provision of this Agreement or the Notes.
65
(c) Reinstatement. The obligations of the Borrowers under these
-------------
Subordination Provisions shall continue to be effective, or be reinstated,
as the case may be, if at any time any payment in respect of any
Obligation, or any other payment to any Secured Party in its capacity as
such, is rescinded or must otherwise be restored or returned by such
Secured Party upon the occurrence of any Proceeding, or upon or as a result
of the appointment of a receiver, intervenor or conservator of, or trustee
or similar officer for, any Borrower or any substantial part of its
property, or otherwise, all as though such payment had not been made.
(d) Modifications, Etc., of the Obligations. Each Borrower hereby
-----------------------------------------
irrevocably consents and assents to:
(i) any renewal, extension, or postponement of the time of
payment of any Obligation or any other indulgence with respect
thereto;
(ii) any increase in the amount of any Obligation;
(iii) any substitution, exchange, or release of collateral for
any Obligation;
(iv) the addition or release of any Person primarily or
secondarily liable for any Obligation; and
(v) the provisions of any agreement, instrument, security, or
other writing evidencing, amending, supplementing, or otherwise
modifying any Obligation.
Section 8.4 Subrogation. No Borrower shall have any subrogation or other
-----------
right as the holder of an Obligation, and each Borrower hereby waives all rights
to exercise subrogation rights and all rights of reimbursement or indemnity
whatsoever and all rights of recourse to any security for any Obligation until
the Obligations shall have been Indefeasibly Paid.
Section 8.5 Limitation on Actions. Each Borrower agrees and undertakes
----------------------
that:
(a) Generally. Except as provided in Section 8.2 hereof, no Borrower
---------
shall:
(i) demand, xxx for, or accept from any other Borrower or any
other Person any payment or collateral in respect of any Subordinated
Claim;
(ii) take any action to enforce any of its rights or exercise any
of its remedies in respect of any Subordinated Claim or any collateral
therefor, including any action to foreclose on any asset of any
Borrower; or
(iii) commence, prosecute, or participate in any administrative,
legal, or equitable action against any Borrower to enforce payment of
any Subordinated Claim;
66
(b) Rights of the Secured Parties Upon a Violation. If any Borrower,
-----------------------------------------------
in violation of any provision herein set forth, shall commence, prosecute,
or participate in any suit, action, case, or proceeding against any
Borrower:
(i) any Borrower may interpose as a defense or plea the
provisions set forth herein, and any Secured Party may intervene and
interpose such defense or plea in its own name or in the name of any
Borrower; and (ii) any Secured Party shall, in any event, be entitled
to restrain the enforcement of the payment provisions of any
Subordinated Agreement in its own name or in the name of any Borrower,
as the case may be, in the same suit, action, case, or proceeding or
in any independent suit, action, case, or proceeding.
(c) No Collateral for any Subordinated Claim. No Borrower shall take,
-----------------------------------------
obtain, or hold (or permit anyone acting on its behalf to take, obtain, or
hold) any assets of any Borrower, whether as a result of any
administrative, legal, or equitable action, or otherwise, in violation of
the provisions of these Subordination Provisions.
Section 8.6 Proceedings.
-----------
(a) No Commencement by any Borrower. No Borrower shall commence, or
--------------------------------
join with any other creditor or creditors of any Borrower in commencing,
any Proceeding.
(b) Rights of the Secured Parties in a Proceeding. Each Secured Party
---------------------------------------------
is hereby irrevocably authorized (but not required) in any Proceeding:
(i) to enforce claims comprising Subordinated Claims in the name
of any Borrower by proof of debt, proof of claim, suit, or otherwise;
(ii) to collect any assets of any Borrower distributed, divided,
or applied by way of dividend or payment, and any securities issued,
in each case on account of Subordinated Claims, and apply the same to
Senior Claims; provided that if any Secured Party receives any payment
in excess of its Obligation, it shall either pay such excess to the
Borrowers as directed in the Proceeding or interplead such excess with
a court of competent jurisdiction;
(iii) to vote claims comprising Subordinated Claims to accept or
reject any plan of partial or complete liquidation, reorganization,
arrangement, composition, or extension; and
(iv) to take generally any action in connection with such
Proceeding that any Borrower might otherwise take. Each Borrower shall
cooperate fully with each Secured Party and perform all acts requested
by any Secured Party to enable any Secured Party to enforce any
Subordinated Claim as aforesaid on behalf of such Secured Party,
including filing appropriate proofs of claim and executing and
delivering all necessary powers of attorney, assignments, or other
instruments.
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(c) Inquiry by a Borrower. After the commencement of any Proceeding,
---------------------
any Borrower may inquire in writing to any Secured Party whether such
Secured Party has exercised the rights set forth in Section 8.6(b) hereof
with respect to such Borrower's Subordinated Claim. If, within a reasonable
time after receipt of such inquiry, no Secured Party:
(i) files a proof of claim with respect to such Subordinated
Claim and furnishes a copy thereof to such Borrower; or
(ii) informs such Borrower in writing that such Secured Party
intends to exercise its right to assert such Subordinated Claim on
behalf of such Secured Party in the manner provided in Section 8(b)
hereof, such Borrower may (but shall not be required to) proceed to
file a proof of claim with respect to its Subordinated Claim and take
such further steps with respect thereto, not inconsistent with these
Subordination Provisions, as such Borrower may deem proper.
(d) Effect of a Proceeding. No ruling made or decision reached in any
----------------------
Proceeding shall:
(i) be considered a full and fair determination of the rights and
obligations of any Secured Party or Borrower pursuant to these
Subordination Provisions; or
(ii) in any way prevent any Secured Party from enforcing its
fights under these Subordination Provisions in a court of law,
arbitral tribunal, or otherwise.
Section 8.7 Termination. These Subordination Provisions shall terminate
-----------
on the date that the Obligations are Indefeasibly Paid.
Section 8.8 Understanding of Waivers. Each Borrower warrants and agrees
------------------------
that the waivers set forth in this Article VIII are made with fill knowledge of
their significance and consequences. If any of such waivers are determined to
be contrary to any applicable law or public policy, such waivers shall be
effective only to the maximum extent permitted by law.
Section 8.9 Unlimited Liability. The Obligations of the Borrowers
--------------------
hereunder shall be in addition to any obligations of the Borrowers to the
Lenders heretofore given or hereafter to be given to the Lenders unless such
other obligations are expressly modified or terminated in writing or repaid.
The liability of the Borrowers to the Lenders shall at all times be deemed to be
the aggregate liability of the Borrowers under the terms of this Agreement and
of any other obligations heretofore or hereafter incurred by the Borrowers to
the Lenders and not expressly terminated or modified in writing or repaid.
68
ARTICLE IX
EVENTS OF DEFAULT
-----------------
If any of the following events shall occur and be continuing:
(a) The Borrowers shall fail to pay any principal of any Loan when due
in accordance with the terms hereof; or
(b) the Borrowers shall fail to pay any interest on any Loan, or any
other amount payable hereunder, within five Business Days after any such
interest or other amount becomes due in accordance with the terms hereof;
or
(c) Any representation or warranty made or deemed made by any Borrower
herein or in any other Loan Document or which is contained in any
certificate, document or financial or other statement furnished by it at
any time under or in connection with this Agreement or any such other Loan
Document shall prove to have been incorrect in any material respect on or
as of the date made or deemed made or furnished; or
(d) Any Borrower shall default in the observance or performance of any
covenant or other agreement contained in Sections 5.2(f), 5.4, 5.5, 5.9,
5.10, 5.15 or 5.16, Article VI, or Article VII; or
(e) Any Borrower shall default in the observance or performance of any
covenant or other agreement contained in this Agreement or any other Loan
Document (other than as provided in paragraphs (a) through (d) of this
Section), and such default shall continue unremedied for a period of 30
days; or
(f) Any Borrower shall (i) default in any payment of principal of or
interest on any Indebtedness (other than the Loans) or in the payment of
any Guarantee Obligation, beyond the period of grace (not to exceed 30
days), if any, provided in the instrument or agreement under which such
Indebtedness or Guarantee Obligation was created; or (ii) default in the
observance or performance of any other agreement or condition relating to
any such Indebtedness or Guarantee Obligation or contained in any
instrument or agreement evidencing, securing or relating thereto, or any
other event shall occur or condition exist, the effect of which default or
other event or condition is to cause, or to permit the holder or holders of
such Indebtedness or beneficiary or beneficiaries of such Guarantee
Obligation (or a trustee or agent on behalf of such holder or holders or
beneficiary or beneficiaries) to cause with the giving of notice if
required, such Indebtedness to become due prior to its stated maturity or
such Guarantee Obligation to become payable; provided however, that no
-------- -------
Default or Event of Default shall exist under this paragraph unless the
aggregate amount of Indebtedness or Guarantee Obligations in respect of
which any default or other event or condition referred to in this paragraph
shall have occurred shall be equal to at least $500,000; or
69
(g) (i) Any Borrower shall commence any case, proceeding or other
action (A) under any existing or future law of any jurisdiction, domestic
or foreign, relating to bankruptcy, quiebra, insolvency, concurso
mercantil, reorganization or relief of debtors, seeking to have an order
for relief entered with respect to or seeking to adjudicate it as bankrupt
or insolvent, or seeking reorganization, arrangement, adjustment,
winding-up, liquidation, dissolution, composition or other relief with
respect to it or its debts, or (B) seeking appointment of a receiver,
trustee, custodian, conservator or other similar official for it or for all
or any substantial part of its assets, or any Borrower shall make a general
assignment for the benefit of its creditors; or (ii) there shall be
commenced against any Borrower any case, proceeding or other action of a
nature referred to in clause (i) above which (A) results in the entry of an
order for relief or any such adjudication or appointment and (B) remains
undismissed, unvacated, undischarged or unbonded for a period of 30 days;
or (iii) there shall be entered any order for the issuance of a warrant of
attachment, execution, distraint or similar process against all or any
substantial part of the assets of any Borrower which shall not have been
vacated, discharged, or stayed or bonded pending appeal within 30 days from
the entry thereof or (iv) any Borrower shall take any action in furtherance
of, or indicating its consent to, approval of, or acquiescence in, any of
the acts set forth in clause (i), (ii), or (iii) above; or (v) any Borrower
shall generally not, or shall be unable to, or shall admit in writing its
inability to, pay its debts as they become due; or
(h) (i) Any Borrower shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any
Plan of such Borrower, (ii) any accumulated funding deficiency" (as defined
in Section 302 of ERISA), whether or not waived, shall exist with respect
to any Plan or any Lien in favor of the PBGC or a Plan of such Borrower
shall arise on the assets of the Borrower or any Commonly Controlled
Entity, (iii) a Reportable Event shall occur with respect to, or
proceedings shall commence to have a trustee appointed (or a trustee shall
be appointed) to administer, or to terminate, any Single Employer Plan
which Reportable Event or commencement of proceedings or appointment of a
trustee is, in the reasonable opinion of the Required Lenders, likely to
result in the termination of such Plan for purposes of Title IV of ERISA,
(iv) any Single Employer Plan shall terminate for purposes of Title IV of
ERISA, (v) the Borrowers or any Commonly Controlled Entity shall, or in the
reasonable opinion of the Required Lenders is likely to, incur any material
liability in connection with a withdrawal from, or the Insolvency or
Reorganization of, a Multiemployer Plan, or (vi) any other similar event or
condition shall occur or exist with respect to a Plan that could result in
a liability (other than in the ordinary course), and in each case in
clauses (i) through (vi) 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; or
(i) The provisions contained in Article VIII shall cease to be
enforceable in accordance with their terms; or
(j) One or more judgments or decrees shall be entered against any
Borrower involving individually a liability of $500,000 or more (not paid
or fully covered by insurance or with respect to which coverage has been
denied by the insurers), and all such judgments or decrees shall not have
been vacated, discharged, stayed or bonded pending appeal within 30 days
from the entry thereof; or
70
(k) (i) Any of the Security Documents shall cease, for any reason, to
be in full force and effect or fail to provide the Liens, security
interests, rights, title, interest, remedies, powers or privileges intended
to be created therein, or any of the Borrowers shall so assert in writing,
(ii) there shall be a default or event of default under any Security
Document, or (iii) any Lien created by any of the Security Documents shall
cease to be enforceable and of the same effect and priority, purported to
be created thereby; or
(l) Other than as otherwise described on Schedule 3.21 hereof, the
--------------
Borrowers shall fail to have in full force and effect any consent, permit,
approval or license (or any material portion thereof) (i) material for the
transaction of its business, which failure has a Material Adverse Effect or
(ii) required for the transactions contemplated hereby; or
(m) An event of default on the part of Holdings or any Borrower shall
exist and be continuing under the Supply Contracts, or Holdings or any
Borrower shall terminate or purport to terminate a Supply Contract other
than as a result of a breach by the Vendor of its obligations thereunder;
or
(n) Expropriation, condemnation, confiscation or nationalization by
any Governmental Authority of any Borrower or of all or a material part of
the assets or capital of any Borrower for a period of longer than thirty
(30) days if the result of such expropriation, condemnation, confiscation
or nationalization has a Material Adverse Effect; or
(o) Any Change in Control shall occur; or
(p) Any termination, revocation, impairment in a material manner, or
the failure to renew the Concession or issuance of any final resolution
that concludes that any Borrower is in serious breach of the Concession; or
(q) Vesting of tax liens of $500,000 or more as the result of any
Borrower's failure to pay taxes when due (except in the event of good faith
challenge by appropriate proceedings, provided that adequate reserves with
respect thereto are maintained on the books of the Borrowers, as the case
may be, in conformity with GAAP); or
(r) Adverse event affecting (i) a Contractual Obligation in connection
with the construction, operation, ownership and maintenance of the Network
or the business derived from the Network, if the result of such would be a
Material Adverse Effect, or (ii) any other Contractual Obligation, if the
result of such would be a Material Adverse Effect;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i), (ii) or (iii) of paragraph (g) of this Section with respect to
any Borrower, automatically the Commitments shall immediately terminate and the
Loans hereunder (with accrued interest thereon) and all other amounts owing
under this Agreement shall immediately become due and payable, and (B) if such
event is any other Event of Default, either or both of the following actions may
be taken: (i) with the consent of the Required Lenders, the Administrative
Agent may, or upon the request of the Required Lenders, the Administrative Agent
shall, by notice to
71
the Borrowers declare the Commitments to be terminated forthwith, whereupon the
Commitments shall immediately terminate; and (ii) with the consent of the
Required Lenders, the Administrative Agent may, or upon the request of the
Required Lenders, the Administrative Agent shall by notice to the Borrowers,
declare the Loans hereunder (with accrued interest thereon) and all other
amounts owing under this Agreement to be due and payable forthwith, whereupon
the same shall immediately become due and payable. Except as expressly provided
above in this Section, presentment, demand, protest and all other notices of any
kind are hereby expressly waived.
ARTICLE X
THE ADMINISTRATIVE AGENT
------------------------
Section 10.1 Appointment. Each Lender hereby irrevocably designates and
-----------
appoints the Administrative Agent as the agent of such Lender under this
Agreement and the other Loan Documents and each Lender irrevocably authorizes
the Administrative Agent, in such capacity, to enter into any such Loan Document
on its behalf, to take such action on its behalf under the provisions of this
Agreement and the other Loan Documents and to exercise such powers and perform
such duties as are expressly delegated to the Administrative Agent by the terms
of this Agreement and the other Loan Documents, together with such other powers
as are reasonably incidental thereto. Notwithstanding any provision to the
contrary elsewhere in this Agreement, the Administrative Agent shall not have
any duties or responsibilities, except those expressly set forth herein or any
fiduciary relationship with any Lender, and no implied covenants, functions,
responsibilities, duties, obligations or liabilities shall be read into this
Agreement or any other Loan Document or otherwise exist against the
Administrative Agent.
Section 10.2 Delegation of Duties. The Administrative Agent may execute
--------------------
any of its duties under this Agreement and the other Loan Documents by or
through agents or attorneys-in-fact and shall be entitled to advice of counsel
concerning all matters pertaining to such duties. The Administrative Agent
shall not be responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care.
Section 10.3 Exculpation Provisions. Neither the Administrative Agent
-----------------------
nor any of its officers, directors, employees, agents, attorneys-in-fact or
Affiliates shall be (i) liable for any action lawfully taken or omitted to be
taken by it or such Person under or in connection with this Agreement or any
other Loan Document (except for its or such Person's own gross negligence or
willful misconduct) or (ii) responsible in any manner to any of the Lenders for
any recitals, statements, representations or warranties made by the Borrowers or
any officer thereof contained in this Agreement or any other Loan Document or in
any certificate, report, statement or other document referred to or provided for
in, or received by the Administrative Agent under or in connection with, this
Agreement or any other Loan Document or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other Loan
Document or for any failure of any of the Borrowers to perform its obligations
hereunder or thereunder. The Administrative Agent shall not be under any
obligation to any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement or any other Loan Document, or to inspect the properties, books or
records of the Borrowers.
72
Section 10.4 Reliance by Administrative Agent. The Administrative Agent
--------------------------------
shall be entitled to rely and shall be fully protected in relying, upon any
Note, writing, resolution, notice, consent, certificate, affidavit, letter,
telecopy, telex or teletype message, statement, order or other document or
conversation believed by it to be genuine and correct and to have been signed,
sent or made by the proper Person or Persons and upon advice and statements of
legal counsel (including, without limitation, counsel to the Borrowers),
independent accountants and other experts selected by the Administrative Agent.
The Administrative Agent may deem and treat the payee of any Note as the owner
thereof for all purposes unless a written notice of assignment, negotiation or
transfer thereof shall have been filed with the Administrative Agent. The
Administrative Agent shall be fully justified in failing or refusing to make any
action under this Agreement or any other Loan Document unless it shall first
receive such advice or concurrence of the Required Lenders or all Lenders, as
the case may be, as it deems appropriate or it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense which may
be incurred by it by reason of taking or continuing to take any such action.
The Administrative Agent shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement and the other Loan Document in
accordance with a request of the Required Lenders or all Lenders, as the case
may be, and such request and any action taken or failure to act pursuant thereto
shall be binding upon all the Lenders and all future holders of the Loans.
Section 10.5 Notice of Default. The Administrative Agent shall not be
-------------------
deemed to have knowledge or notice of the occurrence of any Default or Event of
Default unless the Administrative Agent has received notice (in accordance with
Section 11.2) from a Lender or the Borrowers referring to this Agreement,
describing such Default or Event of Default and stating that such notice is a
"notice of default". In the event that the Administrative Agent receives such a
notice, the Administrative Agent shall give notice thereof to the Lenders. The
Administrative Agent shall take such action with respect to such Default or
Event of Default as shall be reasonably directed by the Required Lenders or all
Lenders, as the case may be; provided that unless and until the Administrative
Agent shall have received such directions, the Administrative Agent may (but
shall not be obligated to) take such action, or refrain from taking such action,
with respect to such Default or Event of Default as it shall deem advisable in
the best interests of the Lenders.
Section 10.6 Non-Reliance on Administrative Agent and Other Lenders.
----------------------------------------------------------
Each Lender expressly acknowledges that neither the Administrative Agent nor any
of its officers, directors, employees, agents, attorneys-in-fact or Affiliates
has made any representations or warranties to it and that no act by the
Administrative Agent hereafter taken, including any review of the affairs of the
Borrowers, shall be deemed to constitute any representation or warranty by the
Administrative Agent to any Lender. Each Lender represents to the
Administrative Agent that it has, independently and without reliance upon the
Administrative Agent or any other Lender, and based on such documents and
information as it has deemed appropriate, made its own appraisal of and
investigation into the business, operations, property, financial and other
condition and creditworthiness of the Borrowers and made its own decision to
make its Loans hereunder and enter into this Agreement. Each Lender also
represents that it will, independently and without reliance upon the
Administrative Agent 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 analysis,
73
appraisals and decisions in taking or not taking action under this Agreement and
the other Loan Documents, and to make such investigation as it deems necessary
to inform itself as to the business, operations, property, financial and other
condition and creditworthiness of the Borrowers. Except for notices, reports
and other documents expressly required to be furnished to the Lenders by the
Administrative Agent hereunder or furnished to the Administrative Agent for the
account of or with a copy or counterpart for any of the Lenders, the
Administrative Agent shall not have any duty or responsibility to provide any
Lender with any credit or other information concerning the business, operations,
property, condition (financial or otherwise), prospects or creditworthiness of
the Borrowers which may come into the possession of the Administrative Agent or
any of its officers, directors, employees, agents, attorneys-in-fact or
Affiliates.
Section 10.7 Indemnification. The Lenders agree to indemnify the
---------------
Administrative Agent in its capacity as such (to the extent not reimbursed by
the Borrowers and without limiting the obligation of the Borrowers to do so),
ratably according to their respective Commitment Percentages in effect on the
date on which indemnification is sought (or, if indemnification is sought after
the date upon which the Commitments shall have terminated and the Loans shall
have been paid in full, ratably in accordance with their Commitment Percentages
immediately prior to such date), from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind whatsoever which may at any time
(including, without limitation, at any time following the payment of the Loans)
be imposed on, incurred by or asserted against the Administrative Agent in any
way relating to or arising out of, the Commitments, this Agreement, any of the
other Loan Documents or any documents contemplated by or referred to herein or
therein or the transactions contemplated hereby or thereby or any action taken
or omitted by the Administrative Agent under or in connection with any of the
foregoing; provided that no Lender shall be liable for the payment of any
portion of such liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements resulting from the
Administrative Agent's gross negligence or willful misconduct. The agreements
in this Section shall survive the payment of the Loans and all other amounts
payable hereunder.
Section 10.8 Administrative Agent in Its Individual Capacity. The
----------------------------------------------------
Administrative Agent and its Affiliates may make loans to, accept deposits from
and generally engage in any kind of business with each of the Borrowers and its
respective Affiliates as though it were not the Administrative Agent hereunder
and under the other Loan Documents. With respect to the Loans made by it, it
shall have the same rights and powers under this Agreement and the other Loan
Documents as any Lender and may exercise the same as though it were not the
Administrative Agent, and the terms "Lender" and "Lenders" shall include it in
its individual capacity.
Section 10.9 Successor Administrative Agent. The Administrative Agent
--------------------------------
may resign as Administrative Agent upon 10 days' prior written notice to the
Lenders and the Borrowers. If the Administrative Agent shall resign as
Administrative Agent under this Agreement and the other Loan Documents, then the
Required Lenders shall appoint from among the Lenders a successor agent for the
Lenders, which successor agent shall be subject to the approval of the Borrowers
if no Default or Event of Default shall have occurred and be continuing (which
approval shall not be unreasonably withheld), whereupon such successor agent
shall succeed to
74
the rights, powers and duties of the Administrative Agent, and the term
"Administrative Agent" shall mean such successor agent effective upon such
appointment and approval, and the former Administrative Agent's rights, powers
and duties as Administrative Agent shall be terminated, without any other or
further act or deed on the part of such former Administrative Agent or any of
the parties to this Agreement or any holders of the Loans. After any retiring
Administrative Agent's resignation as Administrative Agent, the provisions of
this Article X shall inure to the benefit of such retiring Person as to any
actions taken or omitted to be taken by it while it was the Administrative Agent
under this Agreement and the other Loan Documents.
ARTICLE XI
MISCELLANEOUS
-------------
Section 11.1 Amendments and Waivers. Neither this Agreement nor any
------------------------
other Loan Document, nor any terms hereof or thereof may be amended,
supplemented or modified except in accordance with the provisions of this
Section. The Required Lenders may, or, with the written consent of the Required
Lenders, the Administrative Agent may, from time to time, (a) enter into with
any Borrower written amendments, supplements or modifications hereto and to the
other Loan Documents for the purpose of adding any provisions to this Agreement
or the other Loan Documents or changing in any manner the rights of the Lenders
or of the Borrowers hereunder or thereunder, (b) release collateral or (c)
waive, on such terms and conditions as the Required Lenders or the
Administrative Agent, as the case may be, may specify in such instrument, any of
the requirements of this Agreement or the other Loan Documents or any Default or
Event of Default and its consequences; provided, however, that no such waiver
--------- -------
and no such amendment, supplement or modification shall (i) reduce the amount or
extend the scheduled date of maturity of any Loan made by any Lender or of any
installment thereof, or reduce the stated rate of any interest thereon or reduce
the fee payable hereunder to any Lender or extend the scheduled date of any
payment thereof or increase the aggregate amount or extend the expiration date
of any Lender's Commitments, in each case without the written consent of each
Lender directly affected thereby, (ii) amend, modify or waive any provision of
this Section 11.1 or reduce the percentages specified in the definition of
Required Lenders or consent to the assignment or transfer by any Borrower of any
of its respective rights and obligations under this Agreement and the other Loan
Documents or release all or substantially all of the Collateral, in each case
without the written consent of all the Lenders, or (iii) amend, modify or waive
any provision of Article X without the written consent of the then
Administrative Agent. Any such waiver and any such amendment, supplement or
modification shall apply equally to each of the Lenders and shall be binding
upon any Borrower, the Lenders, the Administrative Agent and all future holders
of the Loans. In the case of any waiver, the Borrowers, the Lenders and the
Administrative Agent shall be restored to their former positions and rights
hereunder and under the other Loan Documents, and any Default or Event of
Default waived shall be deemed to be cured and not continuing; no such waiver
shall extend to any subsequent or other Default or Event of Default or impair
any right consequent thereon.
Section 11.2 Notices. All notices, requests and demands to or upon the
-------
respective parties hereto to be effective shall be in writing (including by
facsimile transmission followed by other delivery,) and, unless otherwise
expressly provided herein, shall be deemed to have been duly given or made when
delivered, or, in the case of telecopy notice, when received, addressed
75
to the addresses set forth on Schedule 11.2 of the Borrowers and the
--------------
Administrative Agent by messenger or by mail, or to such other address as may be
hereafter notified in writing by the respective parties hereto; provided that
--------
any notice, request or demand to or upon the Administrative Agent or the Lenders
pursuant to subsection 2.2, 2.4, 2.8 or 2.12 shall not be effective until
received.
Section 11.3 No Waiver; Cumulative Remedies. No failure to exercise and
------------------------------
no delay in exercising, on the part of the Administrative Agent or any Lender,
any right, remedy, power or privilege hereunder or under the other Loan
Documents shall operate as a waiver thereof nor shall any single or partial
exercise of any right, remedy, power or privilege hereunder preclude any other
or further exercise thereof or the exercise of any other right, remedy, power or
privilege. The rights, remedies, powers and privileges herein provided are
cumulative and not exclusive of any rights, remedies, powers and privileges
provided by law.
Section 11.4 Survival. All covenants, agreements, representations and
--------
warranties made hereunder, in the other Loan Documents and in any document,
certificate or statement delivered pursuant hereto or in connection herewith
shall be considered to have been relied upon by the other parties hereto and
shall survive the execution and delivery of this Agreement and the making of the
Loans hereunder regardless of any investigation made by any such other party or
on its behalf and notwithstanding that the Administrative Agent or any Lender
may have had notice or knowledge of any Default or incorrect representation or
warranty at the time any credit is extended hereunder, and shall continue in
full force and effect as long as the principal of or any accrued interest on any
Loan or any fee or any other amount payable under this Agreement is outstanding
and unpaid and so long as the Commitments have not expired or terminated. The
provisions of Sections 2.14, 2.15, 2.16 and 11.5 and Article X shall survive and
remain in full force and effect regardless of the consummation of the
transactions contemplated hereby, the repayment of the Loans, the expiration or
termination of the Commitments or the termination of this Agreement or any
provision hereof.
Section 11.5 Payment, Expenses and Taxes. The Borrowers jointly and
------------------------------
severally agree (a) to pay or reimburse the Agents for all of their reasonable
out-of-pocket costs and expenses incurred in connection with the Loans and the
Commitments, legal due diligence in connection therewith, and the development,
preparation and execution of, and any amendment, supplement or modification to,
consent to, or waiver of, the breach of any provision of, this Agreement and the
other Loan Documents and any other documents prepared in connection herewith or
therewith, and the consummation and administration of the transactions
contemplated hereby and thereby, including, without limitation, the reasonable
fees and disbursements of counsel to the Agents, (b) to pay or reimburse each
Lender and each Agent for all its reasonable costs and expenses incurred in
connection with the enforcement or preservation of any rights under this
Agreement, the other Loan Documents and any such other documents prepared in
connection herewith or therewith, including, without limitation, the reasonable
fees and disbursements of counsel to the Lenders and the Agents, (c) to pay, and
indemnify and hold harmless each Lender and each Agent from, any and all
recording and filing fees and any and all liabilities with respect to, or
resulting from any delay in paying, stamp, excise, mortgage recording and other
similar taxes, if any, which are payable or determined to be payable in
connection with the execution and delivery of, or administration of any of the
transactions contemplated by, or any amendment, supplement or modification of,
or any waiver or consent under or in respect of, this Agreement,
76
the other Loan Documents and any such other documents, and (d) to pay and
indemnify and hold harmless each Lender and each Agent from and against, any and
all other liabilities (excluding taxes other than Non-Excluded Taxes and
excluding Excess Withholding Taxes), obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever with respect to the execution, delivery, enforcement,
performance and administration of this Agreement, the other Loan Documents, or
the use of the proceeds of the Loans, and any such other documents, including,
without limitation, any of the foregoing relating to the violation of,
noncompliance with or liability under any Environmental Law applicable to the
operations of the Borrowers or any of the Properties (all the foregoing in this
clause (d), collectively, the "Indemnified Liabilities"), provided, that the
----------------------- --------
Borrowers shall have no obligation hereunder to any Agent or any Lender with
respect to Indemnified Liabilities arising from the gross negligence or willful
misconduct of any such Agent or any such Lender or for special, indirect,
consequential or punitive damages. The agreements in this Section shall survive
repayment of the Loans and all other amounts payable hereunder.
Section 11.6 Successors and Assigns; Participations and Assignments.
----------------------------------------------------------
(a) This Agreement shall be binding upon and inure to the benefit of
the Borrowers, the Lenders, the Administrative Agent and their respective
successors and assigns, except that none of the Borrowers may assign or
transfer any of its rights or obligations under this Agreement without the
prior written consent of each Lender and any assignment or transfer by any
Lender of its rights or obligations under this Agreement or any Loan
Document must be made in compliance with this Section 11.6 (and any
purported assignment in violation of this Section shall be null and void).
(b) Any Lender may, without the consent of the Borrowers or the
Administrative Agent, at any time sell to one or more financial
institutions or other entities ("Loan Participants") participating
-------------------
interests in any Loan owing to such Lender, any Commitment of such Lender
or any other interest of such Lender hereunder and under the other Loan
Documents. In the event of any such sale by a Lender of a participating
interest to a Loan Participant, (i) such Lender's obligation under this
Agreement to the other parties to this Agreement shall remain unchanged,
(ii) such Lender shall remain solely responsible for the performance
thereof, (iii) such Lender shall remain the holder of any such Loan or
other interest for all purposes under this Agreement and the other Loan
Documents, (iv) the Borrowers and the Administrative Agent shall continue
to deal solely and directly with such Lender in connection with such
Lender's rights and obligations under this Agreement and the other Loan
Documents, and (v) no Loan Participant under any participation shall have
any right to approve any amendment or waiver of any provision of any Loan
Document, or any consent to any departure by the Borrowers therefrom,
except with respect to the matters described in clauses (i) and (ii) of the
proviso to the second sentence of Section 11.1. The Borrowers agree that,
while an Event of Default shall have occurred and be continuing if amounts
outstanding under this Agreement are due or unpaid, or shall have been
declared or shall have become due and payable upon the occurrence of an
Event of Default, each Loan Participant shall, to the maximum extent
permitted by applicable law, be deemed to have the right of set off in
respect of its participating interest in amounts owing under this Agreement
to the same extent as if the amount of its participating interest were
owing directly to it as a Lender under this
77
Agreement; provided, that, in purchasing such participating interest, such
--------
Participant shall be deemed to have agreed to share with the Lenders the
proceeds thereof as provided in Section 11.7(a) as fully as if it were a
Lender hereunder. The Borrowers also agree that each Loan Participant shall
be entitled to the benefits of Sections 2.14, 2.15 and 2.16 with respect to
its participation in the Commitments and the Loans outstanding from time to
time as if it were a Lender, provided that, in the case of Section 2.15
such Loan Participant shall have complied with the requirements of said
Section and provided, further, that no Loan Participant shall be entitled
to receive any greater amount pursuant to any such Section than the
transferor Lender would have been entitled to receive in connection with
the same event or circumstance in respect of the amount of the
participation transferred by such transferor Lender to such Loan
Participant had no such transfer occurred.
(c) Any Lender may at any time and from time to time assign, with the
consent of the Administrative Agent in the case of an assignment other than
to another Lender or an Affiliate thereof (which in each case shall not be
unreasonably withheld), to any other Lender or to a Registered Entity (an
"Assignee") all or any part of its rights and obligations under this
--------
Agreement and the other Loan Documents pursuant to an Assignment and
Acceptance, substantially in the form of Exhibit F executed by such
----------
Assignee, such assigning Lender and in the case of an Assignee that is not
then a Lender or an Affiliate thereof, and delivered to the Administrative
Agent for its acceptance and recording in the Register. Upon such
execution, delivery, acceptance and recording, from and after the effective
date determined pursuant to such Assignment and Acceptance, (i) the
Assignee thereunder shall be a party hereto and, to the extent provided in
such Assignment and Acceptance, shall have the rights and obligations of a
Lender hereunder with a Commitment as set forth therein, and (ii) the
assigning Lender thereunder shall, to the extent provided in 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 assigning Lender shall cease to be a party hereto
except as to Sections 2.14, 2.15 and 8.5).
(d) The Administrative Agent, on behalf of the Borrowers, shall
maintain at the address of the Administrative Agent referred to in Section
11.2 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 amounts of the Loans
owing to, each Lender from time to time. The entries in the Register shall
be conclusive, in the absence of manifest error, and the Borrowers, the
Administrative Agent and the Lenders shall treat each Person whose name is
recorded in the Register as the owner of a Loan or other obligation
hereunder as the owner thereof for all purposes of this Agreement and the
other Loan Documents, notwithstanding any notice to the contrary. Any
assignment of any Loan or other obligation hereunder (whether or not
evidenced by a Note) shall be effective only upon appropriate entries with
respect thereto being made in the Register. The Register shall be available
for inspection by the Borrowers or any Lender at any reasonable time and
from time to time upon reasonable prior notice.
78
(e) Upon its receipt of an Assignment and Acceptance executed by an
assigning Lender and an Assignee (and, in the case of an Assignee that is
not then a Lender or an affiliate thereof, the Administrative Agent)
together with, except in the case of an assignment pursuant to Section
2.18, payment to the Administrative Agent of a registration and processing
fee of $3,500, the Administrative Agent shall (i) promptly accept such
Assignment and Acceptance and (ii) on the effective date determined
pursuant thereto record the information contained therein in the Register
and give notice of such acceptance and recordation to the Lenders and the
Borrowers. No assignment shall be effective for purposes of this Agreement
unless it has been recorded in the Register as provided in this clause.
(f) The Borrowers authorize each Lender to disclose to any Loan
Participant or Assignee (each, a "Transferee") and any prospective
----------
Transferee, subject to the provisions of Section 11.15, any and all
financial information in such Lender's possession concerning the Borrowers
and their Affiliates which has been delivered to such Lender by or on
behalf of the Borrowers pursuant to this Agreement or which has been
delivered to such Lender by or on behalf of the Borrowers in connection
with such Lender's credit evaluation of the Borrowers and their Affiliates
prior to becoming a party to this Agreement.
(g) The parties to this Agreement acknowledge that the provisions of
this subsection concerning assignments of Loans and Notes relate only to
absolute assignments and that such provisions do not prohibit assignments
creating security interests, including, without limitation, any pledge or
assignment by a Lender of any Loan or Note to any Federal Reserve Bank in
accordance with applicable law, provided that no such assignment, whether
to a Federal Reserve Bank or other entity, shall release a Lender from any
of its obligations hereunder or substitute any such Federal Reserve Bank or
other entity for such Lender as a party hereto or permit an absolute
assignment to occur other than in accordance with such provisions of this
subsection.
Section 11.7 Adjustments; Set-off.
---------------------
(a) If any Lender (a "Benefited Lender") shall at any time receive any
----------------
payment of all or part of its Loans, or interest thereon, or receive any
collateral in respect thereof (whether voluntary or involuntarily, by
set-off pursuant to events or proceedings of the nature referred to in
Article IX, or otherwise except as to Sections 2.18 and 11.6), in a greater
proportion than any such payment to or collateral received by any other
Lender, if any, in respect of such other Lender's Loans, or interest
thereon, such Benefited Lender shall purchase for cash from the other
Lenders a participating interest in such portion of each such other
Lender's Loan or shall provide such other Lenders with the benefits of any
such collateral, or the proceeds thereof, as shall be necessary to cause
such Benefited Lender to share the excess payment or benefits of such
collateral or proceeds ratably with each of the Lenders; provided, however,
-------- -------
that if all or any portion of such excess payment or benefits is thereafter
recovered from such Benefited Lender, such purchase shall be rescinded, and
the purchase price and benefits returned, to the extent of such recovery,
but without interest.
79
(b) In addition to any rights and remedies of the Lenders provided by
law, each Lender shall have the right, without prior notice to the
Borrowers, any such notice being expressly waived by the Borrowers to the
extent permitted by applicable law, upon any amount becoming due and
payable by the Borrowers hereunder (whether at the stated maturity, by
acceleration or otherwise) to set-off and appropriate and apply against
such amount any and all deposits (general or special, time or demand,
provisional or final), in any currency, and any other credits, indebtedness
or claims, in any currency, in each case whether direct or indirect,
absolute or contingent, matured or unmatured at any time held or owing by
such Lender or any branch or agency thereof to or for the credit or the
account of the Borrowers. Each Lender agrees promptly to notify the
Borrowers and the Administrative Agent after any such set-off and
application made by such Lender, provided that the failure to give such
notice shall not affect the validity of such set-off and application.
Section 11.8 Counterparts. This Agreement may be executed by one or more
------------
of the parties to this Agreement on any number of separate counterparts
(including by facsimile transmission), and all of said counterparts taken
together shall be deemed to constitute one and the same instrument. A set of
the copies of this Agreement signed by all the parties shall be maintained by
the Borrowers and the Administrative Agent.
Section 11.9 Severability. Any provision of this Agreement which is
------------
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without, to
the extent permitted by law, invalidating the remaining provisions hereof and
any such prohibition or unenforceability in any jurisdiction shall not, to the
extent permitted by law, invalidate or render unenforceable such provision in
any other jurisdiction. The parties shall endeavor in good faith negotiations
to replace the invalid, illegal or unenforceable provision with valid provisions
the economic effect of which is as close as possible to that of the invalid,
illegal or unenforceable provision.
Section 11.10 Integration. This Agreement and the other Loan Documents
-----------
represent the entire agreement of the Borrowers, the Administrative Agent and
the Lenders with respect to the subject matter hereof and thereof, and there are
no promises, undertakings, representations or warranties by the Administrative
Agent or any Lender relative to the subject matter hereof or thereof not
expressly set forth or referred to herein or in the other Loan Documents.
Section 11.11 Governing Law. THIS AGREEMENT AND THE RIGHTS AND
--------------
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO ANY CONFLICT OF LAW PROVISION OR RULE THAT WOULD CAUSE THE APPLICATION OF THE
LAWS OF ANY JURISDICTION OTHER THAN THE STATE OF NEW YORK.
Section 11.12 Submission to Jurisdiction; Waivers.
--------------------------------------
(a) Each of the Borrowers, the Administrative Agent and each of
the Lenders hereby irrevocably and unconditionally:
(i) submits for itself and its property in any legal action
or proceeding relating to this Agreement and the other Loan
Documents to which it is a party, or for recognition and
enforcement of any judgment in respect thereof to the
non-exclusive general jurisdiction of the courts of the State of
New York, the courts of the United States of America for the
Southern District of New York, and appellate courts from any
thereof; and
80
(ii) consents that any such action or proceeding may be
brought in such courts and waives any objection that it may now
or hereafter have to the venue of any such action or proceeding
in any such court or that such action or proceeding was brought
in an inconvenient court and agrees not to plead or claim the
same.
(b) Each of the Borrowers hereby irrevocably and unconditionally:
(i) consents to the appointment of CT Corporation System,
0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, as its process agent
(together with any successor process agent, the "Process Agent")
-------------
upon which service of process in New York, New York, may be
served in any legal action or proceeding instituted in such
courts. To the extent permitted by applicable law, each of the
Borrowers agrees that service of process may be made personally
or by mailing or delivering a copy of the summons and complaint
or other legal process in any legal action or proceeding to the
Borrowers, as the case may be, in care of the applicable Process
Agent and such agent is hereby authorized to receive and
acknowledge the same for and on behalf of the Borrowers, as the
case may be, and to admit service with respect thereto. Service
upon the applicable Process Agent shall be deemed in every
respect effective service of process upon the Borrowers, as the
case may be, and shall be legal and binding upon the Borrowers,
as the case may be, for all purposes notwithstanding any failure
to mail copies of such legal process to the Borrowers, or any
failure on the part of the Borrowers, to receive the same. Each
of the Borrowers further agrees that it will not revoke the
appointment of the applicable Process Agent so long as any of the
Notes remain outstanding or until the appointment, which
appointment each of the Borrowers similarly agrees not to revoke,
of a successor Process Agent acceptable to the Administrative
Agent such acceptance not to be unreasonably withheld and such
successor's acceptance of such appointment. Each of the Borrowers
agrees that it will at all times continuously maintain the
applicable Process Agent to receive service of process in the
State of New York on behalf of itself, and, in the event that for
any reason such Process Agent shall cease to be the applicable
Process Agent, each of the Borrowers shall promptly appoint a
successor Process Agent acceptable to the Administrative Agent
(such acceptance not to be unreasonably withheld) for service of
process in the State of New York and shall promptly deliver to
the Administrative Agent a copy of such successor Process Agent's
acceptance or acknowledgment of that appointment. Each of the
Borrowers will take any and all reasonable action, including, the
filing of any and all documents and instruments that may be
necessary to continue the appointment of the applicable Process
Agent in full force and effect;
81
(ii) agrees that nothing herein shall affect the right to
effect service of process in any other manner permitted by law or
shall limit the right to xxx in any other jurisdiction; and
(iii) waives, to the maximum extent not prohibited by law
any right it may have to claim or recover in any legal action or
proceeding referred to in this subsection any special, exemplary,
punitive or consequential damages.
Section 11.13 Acknowledgements. Each of the Borrowers hereby
----------------
acknowledges that:
(a) it has been advised by counsel in connection with the negotiation,
execution and delivery of this Agreement and the other Loan Documents;
(b) neither the Administrative Agent nor any Lender has any fiduciary
relationship with or duty to the Borrowers arising out of or in connection
with this Agreement or any of the other Loan Documents, and the
relationship between the Administrative Agent and Lenders, on one hand, and
the Borrowers, on the other hand, in connection herewith or therewith is
solely that of creditor and debtor; and
(c) no joint venture is created hereby or by the other Loan Documents
or otherwise exists by virtue of the transactions contemplated hereby among
the Lenders or among the Borrowers and the Lenders.
Section 11.14 Waivers of Jury Trial. THE BORROWERS, THE ADMINISTRATIVE
----------------------
AGENT AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE TRIAL BY JURY
IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT AND FOR ANY COUNTERCLAIM WITH RESPECT THERETO TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW.
Section 11.15 Confidentiality. Each of the Administrative Agent and each
---------------
Lender agrees to keep confidential all non-public information provided to it by
or on behalf of the Borrowers or any Subsidiary thereof that is designated by
the Borrowers or any Subsidiary as confidential; provided that nothing herein
-------- ----
shall prevent the Administrative Agent or any Lender from disclosing any such
information (a) to the Administrative Agent or any other Lender, (b) to any
Transferee or prospective Transferee which agrees to comply with the provisions
of this Section 11.15, (c) to the employees, directors, agents, attorneys,
accountants and other professional advisors of such Lender for purposes related
to the transactions contemplated by the Loan Documents, (d) upon the request or
demand of any Governmental Authority having jurisdiction over the Administrative
Agent or such Lender, (e) in response to any order of any court or other
Governmental Authority or as may otherwise be required pursuant to applicable
law or regulation, (f) which has been publicly disclosed other than in breach of
this Section 11.15, or (g) in connection with the exercise of any remedy
hereunder or under any other Loan Document.
82
Section 11.16 Judgment Currency.
------------------
(a) If for the purposes of enforcing the obligations of any Borrower
under this Agreement or the Note or any other Loan Document it is necessary
to convert a sum due from the Borrowers in Dollars into another currency,
the parties hereto agree, to the fullest extent permitted by applicable
law, that the rate of exchange used shall be that at which in accordance
with normal banking procedures the Lenders could purchase Dollars with such
currency at or about 11:00 A.M. (New York City time) on the Business Day
preceding that on which final judgment is given. To the fullest extent
permitted by applicable law, the obligations in respect of any sum due to
the Administrative Agent or any Lender under this Agreement or the Note or
any other Loan Document shall, notwithstanding any adjudication expressed
in a currency other than Dollars, be discharged only to the extent that on
the Business Day following receipt by the Administrative Agent or such
Lender of any sum adjudged to be so due in such other currency the
Administrative Agent or such Lender may in accordance with normal banking
procedures purchase Dollars with such other currency if the amount of
Dollars so purchased is less than the sum originally due to the
Administrative Agent or such Lender in Dollars, the Borrowers, jointly and
severally, agree to the fullest extent permitted by applicable law, as a
separate obligation and notwithstanding any such adjudication, to indemnify
the Administrative Agent or such Lender against such loss, and if the
amount of Dollars so purchased exceeds the sum originally due to the
Administrative Agent or such Lender, the Administrative Agent or such
Lender shall remit such excess to the Borrowers.
(b) All amounts due under this Agreement, the Notes and the other Loan
Documents shall be payable in Dollars.
Section 11.17 Use of English Language. Any translation of this Agreement
-----------------------
into another language shall have no interpretive effect. All documents or
notices to be delivered pursuant to or in connection with this Agreement shall
be in the English language or, if any such document or notice is not in the
English language, accompanied by an English translation thereof, then the
English language version of any such document or notice shall control for
purposes hereof.
Section 11.18 Headings. Article and Section headings and the Table of
--------
Contents used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
83
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the day and year first above written.
ADMINISTRATIVE AGENT:
---------------------
GENERAL ELECTRIC CAPITAL CORPORATION
as Administrative Agent
By:
-----------------------------------
Name: X. Xxxxx Min
Title: Attorney-in-fact
U.S. BORROWERS
---------------
TELSCAPE INTERNATIONAL, INC.
By:
-----------------------------------
Name: Xxxxx Xxxxxxxxx
Title: President
TELEREUNION, INC.
By:
-----------------------------------
Name: Xxxxx Xxxxxxxxx
Title: President
TELSCAPE USA, INC.
By:
-----------------------------------
Name: Xxxxx Xxxxxxxxx
Title: President
MSN COMMUNICATIONS, INC.
By:
-----------------------------------
Name: Xxxxx Xxxxxxxxx
Title: President
INTERLINK COMMUNICATIONS, INC.
By:
-----------------------------------
Name: Xxxxx Xxxxxxxxx
Title: President
TSCP INTERNATIONAL, INC.
By:
-----------------------------------
Name: Xxxxx Xxxxxxxxx
Title: President
DC COMMUNICATIONS, INC.,
By:
-----------------------------------
Name: Xxxxx Xxxxxxxxx
Title: President
XXXXXXXXXXXXXX.XXX,
By:
-----------------------------------
Name: Xxxxx Xxxxxxxxx
Title: President
POINTE COMMUNICATIONS CORPORATION,
By:
-----------------------------------
Name: Xxxxx Xxxxxxxxx
Title: President
POINTE COMMUNICATIONS CORPORATION,
a Delaware subsidiary
By:
-----------------------------------
Name: Xxxxx Xxxxxxxxx
Title: President
POINTECOM INCORPORATED,
By:
-----------------------------------
Name: Xxxxx Xxxxxxxxx
Title: President
GALATEL, INC.,
By:
-----------------------------------
Name: Xxxxx Xxxxxxxxx
Title: President
INTERNATIONAL DIGITAL
TELECOMMUNICATIONS SYSTEMS, INC.,
By:
-----------------------------------
Name: Xxxxx Xxxxxxxxx
Title: President
RENT-A-LINE TELEPHONE COMPANY, LLC,
By:
-----------------------------------
Name: Xxxxx Xxxxxxxxx
Title: President
POINTE LOCAL EXCHANGE COMPANY,
By:
-----------------------------------
Name: Xxxxx Xxxxxxxxx
Title: President
OVERLOOK COMMUNICATIONS
INTERNATIONAL, INC.,
By:
-----------------------------------
Name: Xxxxx Xxxxxxxxx
Title: President
TOPS CORPORATION,
By:
-----------------------------------
Name: Xxxxx Xxxxxxxxx
Title: President
WORLDLINK COMMUNICATIONS, INC.,
By:
-----------------------------------
Name: Xxxxx Xxxxxxxxx
Title: President
PHOENIX DATANET, INC.,
By:
-----------------------------------
Name: Xxxxx Xxxxxxxxx
Title: President
MEXICAN BORROWERS:
------------------
TELEREUNION S.A. DE C.V.,
By:
-----------------------------------
Name:
Title:
TELEREUNION INTERNATIONAL, S.A. DE C.V.
By:
-----------------------------------
Name:
Title:
VEXTRO DE M XICO S.A. DE C.V.
By:
-----------------------------------
Name:
Title:
SERVICIOS CORPORATIVOS TELSCAPE DE
MEXICO, S.A . DE C.V.
By:
-----------------------------------
Name:
Title:
TELSCAPE DE M XICO, S.A. DE C.V.
By:
-----------------------------------
Name:
Title:
N.S.I. S.A. DE C.V.
By:
-----------------------------------
Name:
Title:
LAN AND WAN S.A. DE C.V.
By:
-----------------------------------
Name:
Title:
M.S. NOTICIAS Y TELECOMUNICACIONES,
S.A. DE C.V.
By:
-----------------------------------
Name:
Title:
SERVICIOS DE COMUNICACION POPULAR,
S. DE X.X.
By:
-----------------------------------
Name:
Title:
ENABLE COMMERCE DE M XICO, S.A. DE
C.V.
By:
-----------------------------------
Name:
Title:
Credit Agreement
Exhibit A-1
Form of Note for the U.S. Borrowers
-----------------------------------
Exhibit A-2
Form of Note for Eurodollar Loans for the Mexican Borrowers
-----------------------------------------------------------
Exhibit A-3
Form of Note for ABR Loans for the Mexican Borrowers
----------------------------------------------------
Exhibit B-1
Form of Mexican Telecommunications Mortgage
-------------------------------------------
Exhibit B-2
Form of Mexican Industrial Mortgage
-----------------------------------
Exhibit B-3
Form of SCT Letter
------------------
Exhibit C
Form of Security Agreement
--------------------------
Exhibit D
Form of Drawdown Certificate
----------------------------
Exhibit E-1
Form of Opinion of Xxxxxx, Xxxxxx & Xxxxxxxxx
---------------------------------------------
Exhibit E-2
Form of Opinion of Gallastegui y Xxxxxx
---------------------------------------
Exhibit E-3
Form of Opinion of Xxxxxxxx Xxxxxxxx y Forastieri, S.C.
-------------------------------------------------------
Exhibit E-4
Form of Opinion of Gardere Xxxxx Xxxxxx & Xxxxx, LLC
----------------------------------------------------
Exhibit E-5
Form of Opinion of Nida & Xxxxxxx, P.C.
---------------------------------------
Exhibit E-6
Form of Opinion of Nowalsky, Bronston & Xxxxxxx, LLP
----------------------------------------------------
Exhibit E-7
Form of Opinion of Xxxxxxx, Xxxxxx and Xxxxxxxxxx,
--------------------------------------------------
Florida and Georgia Counsel to the Borrowers
--------------------------------------------
Exhibit E-8
Form of Opinion of Xxxxx & Xxx Xxxxx, PLLC, North Carolina Counsel to the
-------------------------------------------------------------------------
Borrowers
---------
Exhibit E-9
Form of Opinion of Xxxxxx & Silver, Nevada Counsel to the Borrowers
-------------------------------------------------------------------
Exhibit F
Form of Assignment and Acceptance
---------------------------------
Exhibit G
Form of Pledge Agreement
------------------------
Exhibit H
Form of Collateral Agency Agreement
-----------------------------------
Exhibit I
Form of Stock Pledge Agreement
------------------------------
Exhibit J
Form of Trademark Security Agreement
------------------------------------
Exhibit K
Form of Endorsement
-------------------
Exhibit L
Form of Collateral Assignment of Lease
--------------------------------------
Exhibit M
Form of Landlord Consent
------------------------
Exhibit N
Form of Accession Agreement
---------------------------
Exhibit O
Form of Blocked Account Agreement
---------------------------------
Exhibit P
Form of Landlord's Waiver Agreement (Mountain View)
---------------------------------------------------
Exhibit Q
Form of California Consent
--------------------------
------
Exhibit R
Form of Telereunion Cash Pledge Agreement
-----------------------------------------
------
Exhibit S
Form of Consent and Agreement
-----------------------------
Exhibit T
Form of Account Control Agreement
---------------------------------
Exhibit U
Form of Corporate Parts Pledge Agreement
----------------------------------------
CREDIT AGREEMENT
SCHEDULE 1.0
Other Borrowers
---------------
Other U.S. Borrowers
----------------------
1) Telereunion, Inc., a Delaware corporation
2) Telscape USA, Inc., a Texas corporation
3) MSN Communications, Inc., a California corporation
4) Interlink Communications, Inc., a Delaware corporation
5) TSCP International, Inc., a Texas corporation
6) DC Communications, Inc., a Texas corporation
7) XxxxxxXxxxxxxx.xxx, a Delaware corporation
8) Pointe Communications Corporation, a Nevada corporation (formerly Charter
Communications)
9) Pointe Communications Corporation, a Delaware corporation (a subsidiary
of Pointe Communications Corporation, a Nevada corporation)
10) PointeCom Incorporated, a Delaware corporation (a subsidiary of the
subsidiary Pointe Communications Corporation, a Delaware corporation)
11) Galatel, Inc., a Georgia corporation
12) International Digital Telecommunications Systems, Inc., a Florida
corporation
13) Rent-A-Line Telephone Company, LLC, a Georgia corporation
14) Pointe Local Exchange Company, a Georgia corporation
15) Overlook Communications International, Inc., a North Carolina
corporation
16) Tops Corporation, a Nevada corporation
17) Worldlink Communications, Inc., a Georgia corporation
18) Phoenix Datanet, Inc., a Texas corporation
Other Mexican Borrowers
-------------------------
1) Vextro de Mexico S.A. de C.V., a Mexican corporation
2) Servicios Corporativos Telscape de Mexico, S.A. de C.V., a Mexican
corporation
3) Telscape de Mexico, S.A. de C.V. (formerly Integracion de Redes, S.A. de
C.V.), a Mexican corporation
4) N.S.I. S.A. de C.V., a Mexican corporation
5) Lan and Wan S.A. de C.V., a Mexican corporation
6) MS Noticias y Telecomunicaciones, S.A. de C.V., a Mexican corporation
7) Servicios de Comunicacion Popular, S. de X.X., a Mexican corporation
8) Enable Commerce de Mexico, S.A. de C.V., a Mexican corporation
9) US Charter de Mexico, S.A. de C.V., a Mexican corporation
CREDIT AGREEMENT
SCHEDULE 1.1
Commitments
-----------
Commitment
Lender Amount
------ ------
GE Capital Corporation $60,000,000
SCHEDULE 3.2
ADVERSE CHANGES
The financial projections and the financial condition of the Company have been
negatively affected by the following events since June 30, 2000:
(i) The Mexican network was expected to be complete and operational during
the second quarter of 2000. however, due to delays in construction and
interconnection with Telmex, the network became only partially operational
during the third quarter and is not expected to be complete until the
fourth quarter of 2000. This delay has had a significant impact on the
gross margins earned in the prepaid calling card and the wholesale
businesses.
(ii) The completion of the Competitive Local Exchange Carrier network and
marketing of such services was delayed by approximately one quarter due to
delay in the completion of the build out and delay in the implementation of
the Operating Support System necessary to provision customers.
(iii) The non-CLEC one plus business in the United States was closed as a
result of negative operating results.
Borrowers acknowledge that nothing in the disclosures in this Schedule 3.2 shall
be deemed to alter the Borrowers' obligations under the Agreement, including
specifically those of Holdings with respect to the covenants contained in
Article VII, or limit the Lenders' or Administrative Agent's rights and remedies
under the Agreement.
SCHEDULE 5.16
Additional Conditions Subsequent:
Blocked Account Agreement with
Chase Manhattan Bank
Blocked Account Agreement with
Summit (?) Bank
Blocked Account Agreement with
Bank of America, N.A.
Pledge of shares in BCH (?)
EXHIBITS
Exhibit A-1 Form of Note for the U.S. Borrowers
Exhibit A-2 Form of Note for Eurodollar Loans for the Mexican Borrowers
Exhibit A-3 Form of Note for ABR Loans for the Mexican Borrowers
Exhibit B-1 Form of Mexican Telecommunications Mortgage
Exhibit B-2 Form of Mexican Industrial Mortgage
Exhibit B-3 Form of SCT Notice
Exhibit C Form of Security Agreement
Exhibit D Form of Drawdown Certificate
Exhibit E-1 Form of Opinion of Xxxxxx, Xxxxxx & Xxxxxxxxx, special New York
counsel to the Borrowers
Exhibit E-2 Form of Opinion of Gallastegui y Xxxxxx, Mexican counsel for
Loan Documents to the Borrowers
Exhibit E-3 Form of Opinion of Xxxxxxxx Xxxxxxxx y Forastieri, S.C.,
Mexican counsel for Corporate Legal Opinions to the Borrowers
Exhibit E-4 Form of Opinion of Gardere Xxxxx Xxxxxx & Xxxxx, LLC, Texas
counsel to Holdings, Telscape USA, Inc., TSCP International,
Inc., Telereunion, Inc. and Interlink Communications, Inc.
Exhibit E-5 Form of Opinion of Nida & Xxxxxxx, P.C., California counsel to
MSN Communications, Inc. and Interlink Communications, Inc.
Exhibit E-6 Form of Opinion of Nowalsky, Bronston & Xxxxxxx, LLP, special
U.S. telecommunications regulatory counsel to the U.S.
Borrowers
Exhibit E-7 Form of Opinion of Xxxxxxx, Xxxxxx & Xxxxxxxxxx, LLP, Florida
and Georgia Counsel to the U.S. Borrowers
Exhibit E-8 Form of Opinion of Xxxxx & Xxx Xxxxx, PLLC, North Carolina
Counsel to the U.S. Borrowers
Exhibit E-9 Form of Opinion of Xxxxxx & Siver, Nevada Counsel to the U.S.
Borrowers
Exhibit F Form of Assignment and Acceptance
Exhibit G Form of Pledge Agreement
Exhibit H Form of Collateral Agency Agreement
Exhibit I Form of Stock Pledge Agreement
Exhibit J Form of Trademark Security Agreement
Exhibit K Form of Endorsement
Exhibit L Form of Collateral Assignment of Lease
Exhibit M Form of Landlord Consent
Exhibit N Form of Accession Agreement
Exhibit O Form of Blocked Account Agreement
Exhibit P Form of Landlord's Waiver Agreement (Mountain View)
Exhibit Q Reserved
Exhibit R Reserved
Exhibit S Form of Consent and Agreement
Exhibit T Form of Account Control Agreement
Exhibit U Form of Corporate Parts Pledge Agreement
SCHEDULES
Schedule 1.0 Other Borrowers
Schedule 1.1 Commitments
Schedule 3.2 Adverse Changes
Schedule 3.3 Defaults Under Contractual Obligations
Schedule 3.4 Other Consents, Permits and Authorizations
Schedule 3.6 Litigation
Schedule 3.8 Real Property
Schedule 3.9 Intellectual Property
Schedule 3.11 Taxes
Schedule 3.21A Permits, Authorizations, Approvals and Licenses Necessary in
the Conduct of its Business as Currently Conducted
Schedule 3.21 Permits, Authorizations, Approvals and Licenses Necessary to
Construct the Network
Schedule 3.23 ERISA
Schedule 3.25 Jurisdiction of Incorporation and Principal Executive Office
Schedule 3.27 Insurance
Schedule 3.28 Accounts
Schedule 4.1(x) Third Party Consents
Schedule 5.16 Conditions Subsequent
Schedule 6.1(e) Easements, Etc.
Schedule 6.1(f) Permitted Liens
Schedule 6.6 Unrestricted Obligations
Schedule 6.13 Indebtedness
Schedule 11.2 Notice Addresses
TABLE OF CONTENTS
PAGE
ARTICLE I INTERPRETATION OF THIS AGREEMENT; DEFINITIONS . . . . . . . . . . . . 1
Section 1.1 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2 Time Periods . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 1.3 Accounting Terms and Determinations . . . . . . . . . . . . . . . . .24
Section 1.4 Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 1.5 Schedules and Exhibits . . . . . . . . . . . . . . . . . . . . . . . 24
Section 1.6 UCC Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
Section 1.7 Administrative Agent's Discretion . . . . . . . . . . . . . . . . . .24
ARTICLE II LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .24
Section 2.1 Agreement to Lend . . . . . . . . . . . . . . . . . . . . . . . . . .24
Section 2.2 Procedure for Borrowing . . . . . . . . . . . . . . . . . . . . . . .25
Section 2.3 Commitment and Other Fees . . . . . . . . . . . . . . . . . . . . . .26
Section 2.4 Termination or Reduction of Commitments . . . . . . . . . . . . . . .26
Section 2.5 The Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .26
Section 2.6 Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 2.7 Amortization of Loans . . . . . . . . . . . . . . . . . . . . . . . .28
Section 2.8 Optional and Mandatory Prepayments . . . . . . . . . . . . . . . . . 28
Section 2.9 Interest Rates and Payment Dates . . . . . . . . . . . . . . . . . . 30
Section 2.10 Computation of Interest and Fees . . . . . . . . . . . . . . . . . . 30
Section 2.11 Inability to Determine Interest Rate . . . . . . . . . . . . . . . . 31
Section 2.12 Pro Rata Treatment and Payments . . . . . . . . . . . . . . . . . . .31
Section 2.13 Illegality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 2.14 Requirements of Law . . . . . . . . . . . . . . . . . . . . . . . . .33
Section 2.15 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .34
Section 2.16 Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .37
Section 2.17 Change of Lending Office; Filing of Certificates or Documents. . . .38
Section 2.18 Replacement Lenders . . . . . . . . . . . . . . . . . . . . . . . . .38
ARTICLE III REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . 39
Section 3.1 Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . .39
Section 3.2 No Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39
Section 3.3 Existence; Compliance with Law and Agreements . . . . . . . . . . . .39
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Section 3.4 Power; Authorization; Enforceable Obligations . . . . . . . . . . . .39
Section 3.5 No Legal Bar . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 3.6 No Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . .40
Section 3.7 No Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 3.8 Ownership of Property; Liens . . . . . . . . . . . . . . . . . . . . 41
Section 3.9 Intellectual Property . . . . . . . . . . . . . . . . . . . . . . . .41
Section 3.10 No Burdensome Restrictions . . . . . . . . . . . . . . . . . . . . . 41
Section 3.11 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41
Section 3.12 Federal Regulations . . . . . . . . . . . . . . . . . . . . . . . . .41
Section 3.13 Availability and Transfer of Foreign Currency . . . . . . . . . . . .41
Section 3.14 Investment Company Act; Other Regulations . . . . . . . . . . . . . .41
Section 3.15 Purpose of Loans . . . . . . . . . . . . . . . . . . . . . . . . . . 42
Section 3.16 Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . .42
Section 3.17 Mexican Security Documents . . . . . . . . . . . . . . . . . . . . . 42
Section 3.18 True and Complete Disclosure . . . . . . . . . . . . . . . . . . . . 43
Section 3.19 Submission to Law and Jurisdiction . . . . . . . . . . . . . . . . . 43
Section 3.20 Supply Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . 43
Section 3.21 Permits and Approvals . . . . . . . . . . . . . . . . . . . . . . . .43
Section 3.22 U.S. Security Documents . . . . . . . . . . . . . . . . . . . . . . .43
Section 3.23 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44
Section 3.24 Solvency . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 3.25 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 3.26 US Charter de Mexico, S.A. de C.V. . . . . . . . . . . . . . . . . . 44
Section 3.27 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .44
Section 3.28 Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 3.29 Servicio Corporativos . . . . . . . . . . . . . . . . . . . . . . . .45
ARTICLE IV CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 4.1 Conditions to Initial Loans . . . . . . . . . . . . . . . . . . . . .45
Section 4.2 Condition to Each Loan . . . . . . . . . . . . . . . . . . . . . . . 50
ARTICLE V AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . .52
Section 5.1 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . 52
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Section 5.2 Certificates; Other Information . . . . . . . . . . . . . . . . . . .53
Section 5.3 Payment of Obligations . . . . . . . . . . . . . . . . . . . . . . . 54
Section 5.4 Conduct of Business; Maintenance of Existence; Compliance with Laws .54
Section 5.5 Maintenance of Property; Insurance . . . . . . . . . . . . . . . . . 54
Section 5.6 Inspection of Property; Books and Records; Discussions . . . . . . . 54
Section 5.7 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .55
Section 5.8 Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . 55
Section 5.9 Maintenance of Liens of the Security Documents . . . . . . . . . . . 56
Section 5.10 Pledge of After Acquired Property; Additional Borrowers . . . . . . .56
Section 5.11 Maintenance of Permits and Approvals . . . . . . . . . . . . . . . . 57
Section 5.12 Supply Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . 57
Section 5.13 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . .57
Section 5.14 Political Risk Insurance. . . . . . . . . . . . . . . . . . . . . . .58
Section 5.15 Vextro Permit. . . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 5.16 Conditions Subsequent. . . . . . . . . . . . . . . . . . . . . . . . 58
Section 5.17 US Charter de Mexico, S.A. de C.V. . . . . . . . . . . . . . . . . . 58
ARTICLE VI NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 6.1 Limitation on Liens . . . . . . . . . . . . . . . . . . . . . . . . .58
Section 6.2 Limitation on Fundamental Changes . . . . . . . . . . . . . . . . . .59
Section 6.3 Limitation on Investments, Loans and Advances . . . . . . . . . . . .60
Section 6.4 Limitation on Optional Payments and Modifications
of Debt Instruments and other Obligations . . . . . . . . . . . . . .60
Section 6.5 Limitation on Transactions with Affiliates . . . . . . . . . . . . . 61
Section 6.6 Limitation of Restricted Payments . . . . . . . . . . . . . . . . . .61
Section 6.7 Limitation on Changes in Fiscal Year . . . . . . . . . . . . . . . . 61
Section 6.8 Limitation on Issuance of Capital Stock . . . . . . . . . . . . . . .61
Section 6.8 Limitation on Issuance of Capital Stock TC " Section 6.8
Limitation on Issuance of Capital Stock" \l "2". . . . . . . . . . . 61
Section 6.9 Conduct of Business . . . . . . . . . . . . . . . . . . . . . . . . .62
Section 6.10 Amendment of Material Contracts . . . . . . . . . . . . . . . . . . .62
Section 6.11 Additional Bank Accounts . . . . . . . . . . . . . . . . . . . . . . 62
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Section 6.12 Infrastructure Build Out . . . . . . . . . . . . . . . . . . . . . . 62
Section 6.13 Limitation on Indebtedness . . . . . . . . . . . . . . . . . . . . . 62
Section 6.14 Limitation on Sale of Collateral . . . . . . . . . . . . . . . . . . 62
ARTICLE VII FINANCIAL CONDITION COVENANTS . . . . . . . . . . . . . . . . . . . .63
Section 7.1 Ratio of Consolidated Total Debt to Total Capitalization . . . . . . 63
Section 7.2 Maximum Leverage Ratio . . . . . . . . . . . . . . . . . . . . . . . 63
Section 7.3 Capital Expenditures . . . . . . . . . . . . . . . . . . . . . . . . 63
Section 7.4 Ratio of Consolidated EBITDA
to Consolidated Debt Service Obligations . . . . . . . . . . . . . . 64
Section 7.5 Minimum Revenues . . . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 7.6 Minimum Consolidated EBITDA . . . . . . . . . . . . . . . . . . . . .64
Section 7.7 Fixed Charge Coverage Ratio . . . . . . . . . . . . . . . . . . . . .65
ARTICLE VIII SUBORDINATION; WAIVER . . . . . . . . . . . . . . . . . . . . . . . .65
Section 8.1 Subordination . . . . . . . . . . . . . . . . . . . . . . . . . . . .65
Section 8.2 Turnover of Improper Payments . . . . . . . . . . . . . . . . . . . .66
Section 8.3 Obligations Absolute; Waivers. . . . . . . . . . . . . . . . . . . . 66
Section 8.4 Subrogation . . . . . . . . . . . . . . . . . . . . . . . . . . . . .68
Section 8.5 Limitation on Actions . . . . . . . . . . . . . . . . . . . . . . . .68
Section 8.6 Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . .69
Section 8.7 Termination . . . . . . . . . . . . . . . . . . . . . . . . . . . . .70
Section 8.8 Understanding of Waivers . . . . . . . . . . . . . . . . . . . . . . 70
Section 8.9 Unlimited Liability . . . . . . . . . . . . . . . . . . . . . . . . .70
ARTICLE IX EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . .71
ARTICLE X THE ADMINISTRATIVE AGENT . . . . . . . . . . . . . . . . . . . . . . 74
Section 10.1 Appointment . . . . . . . . . . . . . . . . . . . . . . . . . . . . .74
Section 10.2 Delegation of Duties . . . . . . . . . . . . . . . . . . . . . . . . 74
Section 10.3 Exculpation Provisions . . . . . . . . . . . . . . . . . . . . . . . 74
Section 10.4 Reliance by Administrative Agent . . . . . . . . . . . . . . . . . . 75
Section 10.5 Notice of Default . . . . . . . . . . . . . . . . . . . . . . . . . .75
Section 10.6 Non-Reliance on Administrative Agent and Other Lenders . . . . . . . 75
Section 10.7 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . .76
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Section 10.8 Administrative Agent in Its Individual Capacity . . . . . . . . . . .76
Section 10.9 Successor Administrative Agent . . . . . . . . . . . . . . . . . . . 76
ARTICLE XI MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . .77
Section 11.1 Amendments and Waivers . . . . . . . . . . . . . . . . . . . . . . . 77
Section 11.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .77
Section 11.3 No Waiver; Cumulative Remedies . . . . . . . . . . . . . . . . . . . 78
Section 11.4 Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Section 11.5 Payment, Expenses and Taxes . . . . . . . . . . . . . . . . . . . . .78
Section 11.6 Successors and Assigns; Participations and Assignments . . . . . . . 79
Section 11.7 Adjustments; Set-off . . . . . . . . . . . . . . . . . . . . . . . . 81
Section 11.8 Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Section 11.9 Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . 82
Section 11.10 Integration . . . . . . . . . . . . . . . . . . . . . . . . . . . . .82
Section 11.11 Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . .82
Section 11.12 Submission to Jurisdiction; Waivers . . . . . . . . . . . . . . . . .82
Section 11.13 Acknowledgements . . . . . . . . . . . . . . . . . . . . . . . . . . 84
Section 11.14 Waivers of Jury Trial . . . . . . . . . . . . . . . . . . . . . . . .84
Section 11.15 Confidentiality . . . . . . . . . . . . . . . . . . . . . . . . . . .84
Section 11.16 Judgment Currency . . . . . . . . . . . . . . . . . . . . . . . . . .84
Section 11.17 Use of English Language . . . . . . . . . . . . . . . . . . . . . . .85
Section 11.18 Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 85
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