$40,563,000
CREDIT AGREEMENT
DATED AS OF SEPTEMBER 30, 1997
GST TELECOM HAWAII, INC.
(BORROWER)
AND
TM COMMUNICATIONS HAWAII LLC
(LENDER)
THIS IS NOT A CONTRACT, OR AN OFFER FOR A CONTRACT; NOR DOES IT ACCEPT AN OFFER
FOR A CONTRACT OR MEMORIALIZE ANY AGREEMENT BETWEEN THE PARTIES. NO AGREEMENT,
ORAL OR WRITTEN, REGARDING OR RELATING TO ANY OF THE MATTERS COVERED BY THIS
DRAFT HAS BEEN ENTERED INTO BETWEEN THE PARTIES. THIS DOCUMENT, IN ITS PRESENT
FORM OR AS IT MAY BE HEREAFTER REVISED BY ANY PARTY, WILL NOT BECOME THE
AGREEMENT OF THE PARTIES UNTIL, WITH ALL EXHIBITS AND SCHEDULES ATTACHED, IT HAS
BEEN SIGNED BY ALL PARTIES AND THE COMPLETE SIGNED COPIES HAVE BEEN EXCHANGED.
THE EFFECT OF THIS LEGEND MAY NOT BE CHANGED BY ANY ACTION OF THE PARTIES.
TABLE OF CONTENTS
PAGE
ARTICLE 1 - DEFINITIONS................................................. 1
1.1. Definitions............................................... 1
1.2. Rules of Interpretation................................... 1
ARTICLE 2 - THE CREDIT FACILITIES....................................... 2
2.1. Loan Facilities........................................... 2
2.2. Total Commitments......................................... 7
2.3. Upfront Fee. ............................................ 7
2.4. Other Payment Terms....................................... 7
2.5. Change of Circumstances................................... 8
2.6. Funding Loss Indemnification.............................. 8
2.7. Security.................................................. 9
ARTICLE 3 - CONDITIONS PRECEDENT........................................ 9
3.1. Conditions Precedent to Closing........................... 9
3.2. Conditions Precedent to Each Construction Loan............ 16
3.3. No Approval of Work; Adjustments to Project Budget........ 19
3.4. Waiver of Funding; Adjustment of Drawdown Requests........ 19
3.5. Expenses in Excess of Project Budget...................... 19
3.6. Conditions Precedent to Term Loan Conversion.............. 19
ARTICLE 4 - REPRESENTATIONS AND WARRANTIES.............................. 20
4.1. Organization.............................................. 20
4.2. Authorization; No Conflict................................ 20
4.3. Enforceability............................................ 21
4.4. ERISA..................................................... 21
4.5. Taxes..................................................... 21
4.6. Business, Debt, Contracts, Etc............................ 21
4.7. Filings................................................... 21
4.8. Governmental Regulation................................... 21
4.9. Financial Statements...................................... 22
4.10. Partnerships and Joint Ventures........................... 22
4.11. No Default................................................ 22
4.12. Possession of Franchises, Licenses, Etc................... 23
4.13. Permits................................................... 23
4.14. Offices, Location of Collateral........................... 23
4.15. Adverse Change............................................ 24
4.16. Project Documents......................................... 24
4.17. Hazardous Substances...................................... 24
4.18. Transfer of Contracts and Other Rights.................... 24
4.19. Litigation................................................ 25
4.20. Title, Liens and Easements................................ 25
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PAGE
----
4.21. Utilities................................................. 26
4.22. Sufficiency of Project Documents.......................... 26
4.23. Securities................................................ 26
4.24. Disclosure................................................ 26
4.25. Construction Budget; Projections.......................... 27
4.26. Intellectual Property..................................... 27
ARTICLE 5 - COVENANTS OF THE BORROWER................................... 27
5.1. Notices................................................... 27
5.2. Financial Statements, Reports, Etc........................ 28
5.3. Existence, Conduct of Business, Properties, Etc........... 29
5.4. Obligations............................................... 29
5.5. Damage and Cancellation Payments.......................... 29
5.6. Books, Records, Access.................................... 29
5.7. Operation of Project and Annual Budget.................... 30
5.8. Completion................................................ 31
5.9. Preservation of Rights; Further Assurances................ 31
5.10. Construction of Project................................... 31
5.11. Taxes, Other Government Charges and Utility Charges....... 32
5.12. Compliance with Laws, Instruments, Etc.................... 32
5.13. Warranty of Title......................................... 32
5.14. Maintenance of Insurance.................................. 32
5.15. Event of Eminent Domain................................... 33
5.16. Indemnification........................................... 34
5.17. Development Company Net Cash Flow Agreements.............. 35
5.18. Consents to Assignment.................................... 35
ARTICLE 6 - NEGATIVE COVENANTS.......................................... 35
6.1. Contingent Liabilities.................................... 36
6.2. Limitations on Liens...................................... 36
6.3. Indebtedness.............................................. 36
6.4. Sale or Lease of Assets................................... 36
6.5. Changes................................................... 36
6.6. Dividends, Redemptions, Etc............................... 36
6.7. Investments............................................... 36
6.8. Transactions With Affiliates.............................. 37
6.9. Loan Proceeds; Project Revenues........................... 37
6.10. Partnerships.............................................. 37
6.11. Dissolution............................................... 37
6.12. Amendments; Change Orders; Completion..................... 37
6.13. Name and Location; Fiscal Year............................ 37
6.14. Assignment................................................ 37
6.15. Transfer of Ownership Interests........................... 37
6.16. Abandonment of Project.................................... 38
6.17. Hazardous Substance....................................... 38
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PAGE
----
6.18. ERISA..................................................... 38
ARTICLE 7 - APPLICATION OF FUNDS........................................ 38
7.1. Receipts Account and Operating Account.................... 38
7.2. Application Of Insurance Proceeds......................... 40
7.3. Application of Eminent Domain Proceeds.................... 42
7.4. Security Interest in Proceeds and Accounts................ 44
7.5. Permitted Investments..................................... 45
ARTICLE 8 - EVENTS OF DEFAULT; REMEDIES................................. 45
8.1. Events of Default......................................... 45
8.2. Remedies.................................................. 49
ARTICLE 9 - ASSIGNMENTS, ETC............................................ 50
9.1. Assignments............................................... 50
9.2. Confidentiality. ........................................ 51
9.3. Securities Laws........................................... 51
ARTICLE 10 - MISCELLANEOUS.............................................. 51
10.1. Notices.................................................. 51
10.2. Additional Security; Right to Set-Off.................... 52
10.3. Delay and Waiver......................................... 52
10.4. Costs, Expenses and Attorneys' Fees...................... 53
10.5. Attorney-In-Fact......................................... 53
10.6. Entire Agreement; Amendments and Modifications........... 54
10.7. Governing Law............................................ 54
10.8. Severability............................................. 54
10.9. Headings................................................. 54
10.10. Accounting Terms......................................... 54
10.11. No Partnership; Etc...................................... 54
10.12. Limitation on Liability.................................. 55
10.13. Waiver of Jury Trial..................................... 55
10.14. Consent to Jurisdiction.................................. 55
10.15. Usury.................................................... 56
10.16. Successors and Assigns................................... 56
10.17. Counterparts............................................. 56
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EXHIBITS
--------
Exhibit A --- Definitions
Exhibit B --- Form of Note
Exhibit C-1 --- Form of Notice of Borrowing
Exhibit C-2 --- Form of Drawdown Certificate
Exhibit D --- Form of Notice of Term Loan Conversion
Exhibit E --- Form of Notice of Interest Rate Conversion
Exhibit F --- Form of Refinancing Notice
Exhibit G --- Form of Security Agreement
Exhibit H --- Form of GST Security Agreement
Exhibit I --- Form of Construction Deed of Trust
Exhibit J --- Form of Pledge Agreement
Exhibit K-1 --- Form of Guaranty and Net Cash Flow Pledge Agreement
Exhibit K-2 --- Form of Guaranty and Net Cash Flow Deposit Account Pledge
Agreement
Exhibit L --- Form of Lessor's Estoppel and Consent
Exhibit M-1 --- Form of Consent to Assignment of Agreement - Non-Utility
Exhibit M-2 --- Form of Consent to Assignment of Agreement - Utilities
Exhibit M-3 --- Form of Consent to Assignment of Agreement - GST Services
Agreement
Exhibit N-1 --- Form of Opinion of Xxxxxx Xxxxxxxx Frome & Xxxxxxxxxx, LLP
Exhibit N-2 --- Form of Opinion of Borrower's Hawaii Counsel
Exhibit N-3 --- Form of Opinion of Borrower's FCC Counsel
Exhbiit N-4 --- Form of Opinion of Borrower's Hawaii PUC Counsel
Exhibit O --- Form of Borrower's Closing Certificate
Exhibit P --- Form of Monthly Report
Exhibit Q --- Form of Assignment Agreement
SCHEDULES
---------
Schedule 1 --- Description of Project
Schedule 2 --- Applicable Easements
Schedule 3 --- Applicable Permits
Schedule 4 --- Security Filings
Schedule 5 --- Adverse Changes
Schedule 6 --- Required Insurance
iv
CREDIT AGREEMENT
This CREDIT AGREEMENT (this "AGREEMENT") dated as of September
30, 1997 is entered into by and between:
(1) GST Telecom Hawaii, Inc., a Hawaii corporation
("BORROWER"); and
(2) TM Communications LLC, a Delaware limited liability
company. ("LENDER").
RECITALS
A. Borrower was formed to develop and operate an alternative access
network telecommunications project in and among the Hawaiian Islands as further
described in SCHEDULE 1 (the "PROJECT"). Pursuant to a Master Agreement dated
October 24, 1994 among Pacific Lightwave, Inc., a Washington corporation (now
known as "GST Pacific Lightwave, Inc."), Greenstar Telecommunications Inc., a
Canadian corporation (now known as "GST Telecommunications, Inc.") ("GSI"), GST
Telecom Inc., a Delaware corporation ("GST"), Pacwest Network L.L.C., an Oregon
limited liability company ("PACWEST"), and Tomen America, Inc. ("TOMEN
AMERICA"), as amended (the "MASTER AGREEMENT"), Tomen America agreed to provide,
or to cause its affiliates to provide, certain credit facilities to Borrower to
finance certain construction costs of Borrower.
B. Borrower wishes to develop and operate the Project.
C. Lender, an affiliate of Tomen America, is willing to provide credit
facilities for the Project upon the terms and subject to the conditions set
forth herein.
In consideration of the agreements herein and in the other Credit
Documents and in reliance upon the representations and warranties set forth
herein and therein, the parties agree as follows:
ARTICLE 1 - DEFINITIONS
1.1. DEFINITIONS. Except as otherwise expressly provided in this
Agreement or any other Credit Document, capitalized terms used in this Agreement
and its Exhibits shall have the meanings given in EXHIBIT A or in the provision
of this Agreement or other Credit Document referenced in EXHIBIT A.
1.2. RULES OF INTERPRETATION. Except as otherwise expressly provided,
the rules of interpretation set forth in EXHIBIT A shall apply to this Agreement
and the other Credit Documents.
ARTICLE 2 - THE CREDIT FACILITIES
2.1. LOAN FACILITIES.
(a) CONSTRUCTION LOAN FACILITY.
(i) AVAILABILITY. Subject to the terms and conditions set
forth in this Agreement, Lender agrees to advance to Borrower from time to time
during the Construction Loan Availability Period such loans as Borrower may
request under this SECTION 2.1(A) (individually, a "CONSTRUCTION LOAN" and
collectively the "CONSTRUCTION LOANS"), in an aggregate principal amount not to
exceed the Total Construction Loan Commitment.
(ii) NOTICE OF BORROWING. Borrower shall request Construction
Loans by delivering to Lender an irrevocable written notice in the form of
EXHIBIT C-1, appropriately completed (a "NOTICE OF BORROWING"), which specifies,
among other things:
(A) The amount of the requested Construction Loan, which
shall be in the minimum amount of Two Hundred Fifty Thousand Dollars ($250,000);
and
(B) The date of the requested Construction Loan, which
shall be a Business Day and which shall comply with SECTION 3.2(A)(I).
Borrower shall give each Notice of Borrowing, accompanied with an appropriately
completed Drawdown Certificate in the form of EXHIBIT C-2, to Lender at least
three (3) Business Days before the date of any Construction Loan, in the manner
set forth in SECTION 10.01.
(iii) USE OF PROCEEDS. Borrower shall use the proceeds of
each Construction Loan solely to pay Project Costs.
(b) TERM LOAN FACILITY.
(i) CONVERSION. Subject to the terms and conditions set
forth in this Agreement, Lender agrees to convert the outstanding Construction
Loans, at the request of Borrower, to term loans under this SECTION 2.1(B)
(each, a "TERM LOAN") in an aggregate principal amount not to exceed the Total
Term Loan Commitment.
(ii) NOTICE OF TERM CONVERSION. Borrower shall request a
Term Conversion by delivering to Lender an irrevocable written notice in the
form of EXHIBIT D, appropriately completed (the "NOTICE OF TERM CONVERSION"),
which specifies, among other things, the requested date of the Term Conversion,
which shall be the Construction Loan Maturity Date and a Business Day.
Borrower shall give the Notice of Term Conversion to Lender at least three (3)
Business Days before the date of the requested conversion. The Notice of Term
Conversion shall be delivered by first-class mail or telecopy to Lender at the
office or to the telecopy number and during the hours specified in SECTION 10.1;
PROVIDED, HOWEVER, that Borrower shall promptly
2
deliver to Lender the original of any Notice of Term Conversion initially
delivered by telecopy.
(c) INTEREST. Borrower shall pay interest on the unpaid principal
amount of the Loan Facility with respect to the Project on the dates and at the
times specified herein from and including the Closing Date to but excluding the
Maturity Date, at a rate per annum equal to the LIBOR Rate PLUS 3.00% at all
times until such time after the Term Conversion as the Term Loan interest rate
may be converted to a fixed interest rate pursuant to SECTION 2.1(D) and
thereafter at a rate per annum equal to the Fixed Rate; PROVIDED HOWEVER, to the
extent that Borrower has not obtained the below-listed Project Documents and
Consents to the assignment of the Project Documents to Lender in the forms set
forth as EXHIBIT M, on or before ninety (90) days from the date hereof, Lender
has the right, at its sole and absolute option, to increase the interest rate on
the portion of the Loan Facility then in effect by one percent (1%) until such
time as all such consents to assignment shall have been received by Lender:
(i) Agreement by and between the County of Maui and the
Borrower with respect to Kihei Regional Park Easement;
(ii) Easement for the property subject to the Right of
Entry granted by [______________ ] to Borrower, being a portion of Manele Bay
Boat Harbor, Island of Xxxx'i;
(iii) Easement for the property subject to the Right of
Entry granted by the City and County of Honolulu to Borrower, being a portion of
Xxxxx Beach Park;
(iv) Easement for the property subject to the Right of
Entry granted by the City and County of Honolulu to Borrower, being a portion of
Makaha Beach Park;
(v) Consent with respect to the Amendment and Restatement
of License Agreement, dated August 2, 1994, by and between the Trustees under
the will and of the Estate of Xxxxx Xxxxxxxx, Deceased, and Borrower;
(vi) Consent with respect to the Indenture of Lease, dated
November ___________, 1996, by and between Ox Koko Marina, Inc., and Borrower;
(vii) Consent with respect to the Indenture of lease dated
August 15, 1997, by and between Mauna Kea Beach Hotel Corp. and Borrower;
(viii) Consent with respect to the License Agreement dated
as of June 26, 1997 between Pioneer Mill Company, Limited and Borrower;
(ix) Consent with respect to the Sublease, commencing on
2/1/96 between Bank of America, FSB and Borrower;
(x) Easement for the property subject to the Right of
Entry granted by Wailea Resort Company, Ltd. to Borrower, being a portion of the
property covered by
3
Transfer Certificate of Title No. 325,213 issued to Grantor, and certain real
property known as Xxx 00 xxx Xxx X-0;
(xi) Consent with respect to the License Agreement, dated
October 4, 1996, between Lanai Company, Inc. and Borrower; and
(xii) Consent with respect to the Conduit Occupancy
Agreement, dated March 17, 1997, between Lanai Company Inc. and Borrower.
Borrower may deliver to Lender within ninety (90) days from the date hereof a
written explanation with respect to any of the above-listed Project Documents
and Consents to the assignment of the Project Documents that Borrower
anticipates it will not have obtained within such ninety (90) day period, which
may include a description of possible alternatives to the required Project
Documents and/or Consents and any other information Borrower considers relevant.
Lender agrees to consider any such explanation timely provided by Borrower
before exercising the right, in its sole and absolute discretion, to increase
the interest rate on the Loan Facility then in effect in accordance with this
Section.
All computations of interest shall be based on a year of 360 days for actual
days elapsed.
(d) CONVERSION TO FIXED RATE. Borrower may convert the interest
rate on the Term Loan from the LIBOR Rate to the Fixed Rate; PROVIDED, HOWEVER
that any such conversion shall be made on, and only on, the last day of an
Interest Period. Borrower shall request such a conversion by an irrevocable
written notice to Lender in the form of EXHIBIT E, appropriately completed (a
"NOTICE OF INTEREST RATE CONVERSION"), which specifies, among other things, the
date of the requested conversion, which shall be a Business Day.
Borrower shall give a Notice of Interest Rate Conversion to Lender at least
three (3) Business Days before the date of the requested conversion. The Notice
of Interest Rate Conversion shall be delivered by first-class mail or telecopy
to Lender at the office or to the telecopy number and during the hours specified
in PARAGRAPH 10.1; PROVIDED, HOWEVER, that Borrower shall promptly deliver to
Lender the original of any Notice of Interest Rate Conversion initially
delivered by telecopy.
If Borrower is in compliance with the provisions of this Agreement, no later
than 2:00 p.m. on the date specified in the Notice of Interest Rate Conversion
Lender shall notify Borrower of the effectiveness of the conversion, the amount
of the Fixed Rate and the Liquidation Costs incurred by Lender in effecting such
conversion.
(e) SCHEDULED PAYMENTS. (i) Borrower shall repay to Lender (A)
the principal amount of the Construction Loans, accrued interest on the unpaid
principal amount of the Construction Loans and all outstanding fees and costs
payable to Lender with respect to the Construction Loans on the earlier of the
Construction Loan Maturity Date and the Term Conversion Date, and (B), the
principal amount of the Term Loan in twenty-two (22) equal quarterly
installments payable on the 1st day of each third month, commencing on the
earlier of the 1st day of the month which is (y) one year and six months after
the Term Conversion Date or (z) two years and six months after the Closing Date,
and ending five
4
years and six months thereafter; PROVIDED, HOWEVER, that the principal payment
due to Lender on each Maturity Date shall be in the amount necessary to pay all
remaining unpaid principal on the relevant portion of the Loan Facility.
(ii) Borrower shall pay accrued interest on the unpaid
principal amount of the Loan Facility (A) on the last day of each Interest
Period, PROVIDED THAT, in lieu of payments on the last day of each Interest
Period, Borrower shall pay accrued interest from amounts borrowed pursuant to
Construction Loans until the earlier of: (1) the Term Conversion Date and (2)
the date which is one year after the Closing Date; PROVIDED FURTHER, that to the
extent that net revenues from operations are generated prior to the dates set
forth in the preceding clauses (1) and (2), Borrower shall forthwith pay such
net revenues to Lender towards payment of accrued interest; (B) upon prepayment
(to the extent thereof) and (C) at maturity (whether by acceleration or
otherwise).
(f) PROMISSORY NOTE. The obligation of Borrower to repay the Loan
Facility and to pay interest thereon at the rates provided herein shall be
evidenced by a promissory note of Borrower in substantially the form of EXHIBIT
B (the "NOTE").
(g) FUNDING.
(i) NOTICE. Each Notice of Borrowing shall be delivered to
Lender in accordance with SECTION 2.1(A)(II).
(ii) DISBURSEMENT OF FUNDS. No later than 2:00 p.m. on the
Business Day specified in each Notice of Borrowing, if the applicable conditions
precedent listed in ARTICLE 3 have been satisfied, Lender will make available
the Construction Loan requested in such Notice of Borrowing (or so much thereof
as Lender shall have approved pursuant to this Agreement) in Dollars by check or
and in immediately available funds, in accordance with the next succeeding
sentence. At Lender's option and upon notice to Borrower, the amount of any
Construction Loan may, in whole or in part, be (x) disbursed by Lender to
Borrower by check or by wire transfer to the Receipts Account established
pursuant to SECTION 7.1(A) at Bank of Hawaii, Honolulu Branch, ABA No.
000-000-000, Account Number 00-000-000, in lawful money of the United States and
in immediately available funds for application in accordance with the applicable
Notice of Borrowing and the Drawdown Certificate or (y) disbursed by Lender
directly to the Person(s) entitled thereto as specified in the applicable
Drawdown Certificate. Upon the application of funds in accordance with clause
(y) of the preceding sentence, Lender shall as promptly as practicable following
the disbursement of such funds provide an accounting of such payments to
Borrower. Such payment shall discharge PRO TANTO the obligations of Lender with
respect to such amounts and Borrower hereby authorizes Lender to pay such
amounts on its behalf.
(h) PREPAYMENTS.
(i) OPTIONAL PREPAYMENTS. At its option, Borrower may,
upon ten (10) Business Days notice to Lender, prepay the Loan Facility in part
in aggregate principal amounts of not less than Five Hundred Thousand Dollars
($500,000) or an integral multiple
5
of One Hundred Thousand Dollars ($100,000) in excess thereof, or in whole,
subject to this SECTION 2.1(H).
(ii) MANDATORY PREPAYMENTS. Borrower shall prepay the Loan
Facility upon a Change of Control.
(iii) TERMS OF PREPAYMENTS.
(A) Upon the prepayment of any Loan Facility
(whether such prepayment is an optional prepayment under SECTION 2.1(H)(I) or a
mandatory prepayment required by the terms of this Agreement or the other Credit
Documents, including a prepayment upon acceleration), Borrower shall pay (1) all
accrued interest to the date of such prepayment on the amount prepaid, and (2)
all Liquidation Costs incurred by Lender as a result of such prepayment. All
prepayments of a Loan Facility shall reduce the remaining payments required
under SECTION 2.1(E) in the inverse order of maturity. Borrower may not reborrow
the principal amount of any Construction Loan or Term Loan which is prepaid.
(B) If Borrower proposes to refinance the Project,
Borrower shall deliver a written notice of the proposed refinancing in the form
of EXHIBIT F (a "REFINANCING NOTICE") stating Borrower's bona fide intention to
refinance the Project, together with a copy of the offer to finance, including
without limitation, the name and address of the proposed refinancer, the amount
of the Loan Facility to be refinanced and the interest rate and other terms of
the proposed refinancing. Within thirty (30) days of receipt of such Notice,
Lender shall have the first right to provide the proposed refinancing to
Borrower upon such interest rate, terms and conditions proposed by such
refinancer as set forth in the Refinancing Notice. If the Lender elects not to
provide such refinancing, Borrower may prepay the Loan Facility; PROVIDED THAT,
Borrower refinances the Project at the interest rate and on the other terms and
conditions offered by the proposed refinancer as set forth in the Refinancing
Notice provided to Lender. At the time of any such prepayment, in addition to
any fees, costs or expenses otherwise payable by Borrower hereunder, Borrower
shall have paid to Lender an additional amount equal to one-third of the net
present value of the interest rate savings, if any, of the refinancing loan
compared to the Loan Facility. Net present value of the interest payable
hereunder and under the proposed refinanced loan shall be calculated for the
purposes of this Section by applying a discount rate equal to the interest rate
set forth in the Refinancing Notice.
2.2. TOTAL COMMITMENTS.
(a) CONSTRUCTION LOANS. The aggregate principal amount of all
Construction Loans made by the Lender shall not exceed Forty Million Five
Hundred Sixty Three Thousand Dollars ($40,563,000) (the "TOTAL CONSTRUCTION LOAN
COMMITMENT").
(b) TERM LOAN. The aggregate principal amount of the Term Loan
outstanding at any time shall not exceed Forty Million Five Hundred Sixty Three
Thousand Dollars ($40,563,000) (the "TOTAL TERM LOAN COMMITMENT").
6
2.3. UPFRONT FEE. Borrower shall pay $1,863,000 to Lender as an upfront
fee (the "Upfront Fee"); $615,000 of the Upfront Fee shall be paid on or before
the Closing Date, and $1,248,000 of the Upfront Fee shall be paid on or before
the date which is six months after the Closing Date. The Upfront Fee shall be
paid to reimburse the Lender for the preliminary work done by the Lender in
consideration of whether to make, and in preparing its analysis for, the loan to
Borrower made by the Lender hereunder.
2.4. OTHER PAYMENT TERMS.
(a) PLACE AND MANNER. Borrower shall make all payments due to
Lender hereunder by wire transfer to Tomen America's Account at Citibank, N.A.,
ABA No. 000000000, Account No. 00000000, or as the Lender shall otherwise
direct, in lawful money of the United States and in immediately available funds
not later than 12:00 noon New York time on the due date.
(b) LATE PAYMENTS. If any amounts required to be paid by Borrower
under this Agreement or the other Credit Documents (including principal or
interest payable on the Loan Facility, and any fees or other amounts otherwise
payable to Lender) remain unpaid after such amounts are due, Borrower shall pay
interest on the aggregate outstanding balance of such amounts from the date due
until those amounts are paid in full at a per annum rate equal to the Default
Rate.
(c) APPLICATION OF PAYMENTS. Payments made under this Agreement or
the other Credit Documents shall first be applied to any fees, costs, charges or
expenses payable to Lender hereunder or under the other Credit Documents, next
to any accrued but unpaid interest, and then to outstanding principal in inverse
order of maturity.
2.5. CHANGE OF CIRCUMSTANCES.
(a) INABILITY TO DETERMINE RATES. If, on or before the first day
of any Interest Period Lender shall have determined (which determination shall
be conclusive and binding on all parties hereto) that the LIBOR Rate for such
Interest Period cannot be adequately and reasonably determined due to the
unavailability of funds in or other circumstances affecting the London interbank
market, Lender shall immediately give notice of such condition to Borrower.
After the giving of any such notice and until Lender shall otherwise notify
Borrower that the circumstances giving rise to such condition no longer exist,
Borrower's right to request the making of, and Lender's obligations to make
Loans at the LIBOR Rate shall be suspended. Borrower may, in compliance with the
other terms and conditions hereof, request Alternate Interest Rate Construction
Loans during any periods in which the LIBOR Rate is suspended. Any LIBOR Rate
Loan Facility outstanding at the commencement of any such suspension shall be
converted at the end of the then current Interest Period into an Alternate
Interest Rate Loan unless such suspension has then ended.
(b) ILLEGALITY. If, after the date of this Agreement, the adoption
of any Governmental Rule, any change in any Governmental Rule or the application
or requirements thereof (whether such change occurs in accordance with the terms
of such Governmental Rule as enacted, as a result of amendment or otherwise),
any change in the interpretation or
7
administration of any Governmental Rule by any Governmental Authority, or
compliance by Lender or Borrower with any request or directive (whether or not
having the force of law) of any Governmental Authority (a "CHANGE OF LAW") shall
make it unlawful or impossible for Lender to make or maintain any Construction
Loan or the Term Loan, Lender shall promptly notify Borrower of such Change of
Law. Upon receipt of such notice, (i) Borrower's right to request the making of
Construction Loans shall be terminated, and (ii) Borrower shall, at the request
of Lender, immediately repay the Loan Facility together with all accrued and
unpaid interest.
2.6. FUNDING LOSS INDEMNIFICATION. If Borrower shall (a) repay or prepay
the Loan Facility or any portion thereof on any day other than the last day of
an Interest Period (whether a payment upon acceleration or otherwise), (b) fail
to borrow in accordance with a Notice of Borrowing delivered to Lender (whether
as a result of the failure to satisfy any applicable conditions or otherwise),
or (c) prepay the Term Loan or any portion thereof after the interest rate has
been converted to a Fixed Rate, Borrower shall, upon demand by Lender, reimburse
Lender for and hold Lender harmless from all costs and losses, expenses and
liabilities incurred by Lender as a result of such repayment, prepayment or
failure (including without limitation by reason of the liquidation of deposits
or other funds by Lender) ("LIQUIDATION COSTS"). Borrower understands that such
Liquidation Costs may include direct losses incurred by Lender as a result of
funding and other contracts entered into by Lender.
2.7. SECURITY.
(a) SECURITY AGREEMENT, PLEDGE, ETC. The Obligations of Borrower
to Lender shall be secured by the following:
(i) The Security Agreement, between Borrower, as
grantor, and Lender, in the form of EXHIBIT G, duly executed by Borrower (the
"SECURITY AGREEMENT");
(ii) The GST Security Agreement, between GST, as
grantor, and Lender, in the form of EXHIBIT H, duly executed by GST (the "GST
SECURITY AGREEMENT");
(iii) Construction Deeds of Trust in the form of
EXHIBIT I, duly executed;
(iv) The Pledge Agreement, of GST as the sole
shareholder of Borrower, in the form of EXHIBIT J, duly executed by GST (the
"PLEDGE AGREEMENT");
(v) The Guaranty and Net Cash Flow Pledge Agreement
of Borrower in the form of EXHIBIT K-1, duly executed by Borrower (the "NET CASH
FLOW AGREEMENT");
(vi) The Guaranty and Net Cash Flow Deposit Account
Pledge Agreement of Borrower in the form of EXHIBIT K-1, duly executed by
Borrower (the "NET CASH FLOW ACCOUNT PLEDGE AGREEMENT"); and
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(vii) Such other documents, instruments and
agreements as Lender may request in order to grant to Lender Liens in all assets
of Borrower (including, without limitation, all Permits), the shares of
Borrower's capital securities and all other assets reasonably necessary for the
operation and maintenance of the Project.
(b) FURTHER ASSURANCES. Borrower shall deliver to Lender each of
the foregoing and such other instruments, agreements, certificates, opinions and
documents (including Uniform Commercial Code financing statements and fixture
filings and landlord waivers) as Lender may reasonably request to perfect and
maintain the Liens granted to Lender by the foregoing prior to the Liens or
other interests of any Person other than Lender. Borrower shall fully cooperate
with Lender and perform all additional acts reasonably requested by Lender to
effect the purposes of the foregoing.
ARTICLE 3 - CONDITIONS PRECEDENT
3.1. CONDITIONS PRECEDENT TO CLOSING. The obligation of Lender to make
any Construction Loans is subject to the satisfaction of the following
conditions on or prior to the Closing Date (unless waived by Lender):
(a) PRINCIPAL CREDIT DOCUMENTS. Lender shall have received the
following Credit Documents, each of which (i) shall be in form and substance
satisfactory to Lender, and (ii) shall have been duly authorized, executed and
delivered by the parties thereto:
(A) This Agreement;
(B) The Note;
(C) The Security Agreement;
(D) The Account Security Agreement;
(E) The GST Security Agreement;
(F) The Pledge Agreement;
(G) The Net Cash Flow Agreement;
(H) The Net Cash Flow Account Pledge Agreement;
(I) An agreement duly executed by Greenstar agreeing to
subordinate all payments due to Greenstar pursuant to any management agreement
or loan between Borrower and Greenstar to the obligations of Borrower to Lender
under this Agreement, the other Credit Agreements and any net cash flow pledge
agreement entered into by Borrower pursuant to SECTION 5.17;
9
(J) The Construction Deeds of Trust in the form of
EXHIBIT I for Honolulu County, Kauai County and Maui County;
(K) The UCC-1 Financing Statements set forth on
SCHEDULE 4;
(L) Intercreditor and Subordination Agreements between
Lender and each Affiliate of Borrower which is a creditor of Borrower; and
(M) A certificate of each Person which has assigned
Project Documents or other assets to Borrower with respect to such Person's
solvency at the time of and immediately after such assignment.
(b) PROJECT DOCUMENTS. Lender shall have received (i) true,
complete and correct copies of the following Project Documents, and any
supplements or amendments thereto, each of which (A) shall be in form and
substance satisfactory to Lender, (B) shall have been duly authorized, executed
and delivered by the parties thereto, and (C) shall have been certified by an
authorized officer of Borrower as being true, complete and correct and in full
force and effect, and (ii) evidence satisfactory to Lender that each Project
Document is in full force and effect and that no party to any Project Document
is or, but for the passage of time or giving of notice or both will be, in
breach of any obligation thereunder which is reasonably expected to have a
Material Adverse Effect:
(A) The Construction Contracts;
(B) The Pole and Conduit Use Agreements;
(C) The CPCN;
(D) The FCC License Agreements;
(E) The Collocation Agreements;
(F) The Interconnection Agreements;
(G) The Leases;
(H) The Easements;
(I) The Permits; and
(J) Each other applicable Project Document not listed
in this SECTION 3.1(B), including without
limitation, each equipment purchase agreement
referenced in Section 3(b) of the Master Agreement.
(c) BORROWER DOCUMENTS. Lender shall have received the following
items, each in form and substance satisfactory to Lender:
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(i) A copy of one or more resolutions or other
authorizations of Borrower, certified by Borrower's Secretary as being in full
force and effect on the Closing Date, authorizing the borrowings herein provided
for, the development of the Project and the execution, delivery and performance
of this Agreement and the other Operative Documents and any instruments or
agreements required hereunder or thereunder to which Borrower is a party and the
consummation of the transactions contemplated thereby;
(ii) A certificate of Borrower signed by the appropriate
authorized officer of Borrower and dated as of the Closing Date, as to the
incumbency of the Person or Persons authorized to execute and deliver this
Agreement and the other Operative Documents and any instruments or agreements
required hereunder or thereunder to be executed on the Closing Date to which
Borrower is a party;
(iii) Copies of the Articles of Incorporation and any
Amendments to the Articles of Incorporation of Borrower, certified by the Hawaii
Department of Commerce and Consumer Affairs evidencing the merger of GST Pacwest
Telecom Hawaii, Incorporated with and into Borrower, and of copies of the Bylaws
of Borrower, certified by the Secretary of Borrower;
(iv) Certificates issued by the director of the Hawaii
Department of Commerce and Consumer Affairs and state tax authorities as to the
good standing of Borrower, and the tax status of Borrower, respectively; and
(v) The Decision and Order of the PUC waiving the
requirements of Sections 269-17 and 269-19 of the Hawaii Revised Statutes with
respect to the transactions contemplated by this Agreement and the other Credit
Documents.
(d) SECURITY FILINGS. Lender shall have received the following
items, each in form and substance satisfactory to Lender:
(i) A UCC-3 (or similar) report of a date not less
recent than one (1) week before the Closing Date for each of the jurisdictions
in which the UCC-1 financing statements and the fixture filings are intended to
be filed in respect of the Collateral, showing that upon due filing or
recordation (assuming such filing or recordation occurred on such date), the
security interests created under such Collateral Documents will be prior to all
other financing statements, fixture filings, deeds of trust, mortgages or other
security documents in respect of the Collateral;
(ii) Evidence that all appropriate financing statements
and fixture filings were filed and/or recorded as required hereunder or by law;
and
(iii) Stock certificate(s) representing all of the
outstanding capital stock of Borrower together with stock powers duly endorsed
by Borrower's stockholder attached thereto.
(iv) Evidence that the Security Agreement and the Cash
Collateral Agreement between Borrower and AT&T Submarine Systems, Inc. have been
terminated.
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(iv) A duly executed and delivered copy of an
intercreditor and subordination agreement between NTFC and Lender.
(e) EASEMENTS. Lender shall have received the following items,
each in form and substance satisfactory to Lender:
(i) A schedule of Applicable Easements required to
construct and operate the Project, which schedule shall be included in and made
a part of this Agreement as SCHEDULE 2, together with evidence of each
Applicable Easement listed on Part I of such schedule and a certificate of an
authorized officer of Borrower certifying that neither Borrower nor such
authorized officer has any reason to believe that all Applicable Easements that
have not been obtained prior to the Closing Date will not be obtained by the
dates by which they are required; and
(ii) Other evidence requested by Lender that (A)
Borrower has duly obtained the Applicable Easements set forth on SCHEDULE 2,
other than those set forth in Part II of such schedule which are not, in light
of the status of the acquisition, development, construction and operation of the
Project as of the Closing Date, required to have been obtained as of such
Closing Date and which, in the reasonable opinion of Lender, can be obtained not
later than required without substantial difficulty, expense or delay, and (B)
such Applicable Easements are in full force and effect and not subject to any
condition, limitation or other provision that in the reasonable judgment of
Lender or its counsel could have a Material Adverse Effect.
(f) CONSENTS AND ESTOPPELS. Lender shall have received the
following items, each in form and substance satisfactory to Lender:
(i) An Estoppel and Consent Certificate in the form of
EXHIBIT L from each lessor of real property to Borrower duly executed by each
such Lessor and Borrower;
(ii) Consents to assignment of all material licenses,
permits and agreements in the form attached hereto as EXHIBIT M-1, M-2 and M-3.
(g) PERMIT, REGULATORY AND ENVIRONMENTAL MATTERS. Lender shall
have received the following items, each in form and substance satisfactory to
Lender:
(i) A schedule of Applicable Permits required to construct
and operate the Project, which schedules shall be included in and made a part of
this Agreement as SCHEDULE 3, together with copies of each Applicable Permit
listed on Part I of such schedule, and a certificate of an authorized officer of
Borrower certifying that neither Borrower nor such authorized officer has any
reason to believe that all Applicable Permits that have not been obtained prior
to the applicable Closing Date will not be obtained by the dates by which they
are required; and
(ii) Other evidence requested by Lender that (A) Borrower
has duly obtained or been assigned the Applicable Permits for the Project, other
than those set forth in
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Part II of such schedule which are not, in light of the status of the
acquisition, development, construction and operation of the Project as of the
Closing Date, required to have been obtained or made as of the Closing Date and
which, in the reasonable opinion of Lender, can be obtained not later than
required without substantial difficulty, expense or delay, and (B) such
Applicable Permits are in full force and effect and not subject to any appeal,
restriction, condition, limitation or other provision that in the reasonable
judgment of Lender or its counsel could have a Material Adverse Effect.
(iii) A certificate of Borrower, that all Permits,
Easements, Licenses, Leases and other property rights necessary have been
obtained and that such Permits, Easements, Licenses, Leases and other property
rights form a contiguous and uninterrupted line necessary to construct and
operate the Project.
(iv) Evidence that Borrower and the network to be
constructed by the Project will not be subject to regulation by the Hawaii
Public Utility Commission to an extent unacceptable to Lender in its discretion.
(h) CAPITAL CONTRIBUTION. Lender shall have received evidence
that GST Telecom Inc. has made a capital contribution to Borrower of Thirteen
Million Seven Hundred Fifty Thousand Dollars ($13,750,000).
(i) THIRD PARTY REPORTS. Lender shall have received satisfactory
third-party appraisal, feasibility, engineering, environmental and accounting
reviews relating to the Project.
(j) OPINIONS. Lender shall have received the opinions, each in
form and substance satisfactory to Lender, of:
(i) Xxxxxx Xxxxxxxx Frome & Xxxxxxxxxx, LLP, counsel for
Borrower, in substantially the form of EXHIBIT N-1;
(ii) Alston, Hunt, Xxxxx & Ing, special Hawaii counsel for
Borrower, in substantially the form of EXHIBIT N-2; and
(iii) Xxxxxxx & Berlin, FCC Counsel for Borrower, in
substantially the form of EXHIBIT N-3; and
(iv) Hoshida & Bento, Hawaii PUC Counsel for Borrower, in
substantially the form of EXHIBIT N-4.
(k) CERTIFICATE. Lender shall have received evidence that
Borrower has obtained and is maintaining in full force and effect insurance
complying with SECTION 5.14 hereof and SCHEDULE 6 hereto, including (A) a
certificate from Borrower's insurance broker(s), dated as of the Closing Date
and identifying underwriters, type of insurance, insurance limits and policy
terms, listing the special provisions required as set forth in SECTION 5.14
hereof and SCHEDULE 6 hereto, describing the insurance obtained and stating that
such insurance is in full force and effect and that all premiums then due
thereon have been
13
paid, and (B) certified copies of all policies evidencing such insurance (or a
binder, commitment or certificates signed by the insurer or a broker authorized
to bind the insurer).
(l) FINANCIAL STATEMENTS, EXPENDITURES TO CLOSING DATE,
PROJECTIONS, ETC. Lender shall have received and approved the following items,
each in form and substance satisfactory to Lender:
(i) The most recent annual financial statements (audited
if available), most recent quarterly financial statements from Borrower,
together with a certificate from the appropriate officer of such Person, stating
that no material adverse change in the consolidated assets, liabilities,
operations or financial condition of such Person has occurred since the date of
the financial statements provided to Lender, and pro forma financial statements
for Borrower giving effect to the Capital Contributions;
(ii) A budget for the Project (the "PROJECT BUDGET") for
all anticipated costs to be incurred in connection with the construction and
start-up of the Project, including in such budget all construction and
non-construction costs, and including all interest, taxes and other carrying
costs, and such other information as Lender may require, together with a
balanced statement of sources and uses of proceeds (and any other funds
necessary to complete the Project), broken down as to separate construction
phases in a manner satisfactory to Lender.
(iii) An accurate and complete accounting of expenditures
of the Project as of the date five (5) Business Days before the Closing Date,
certified by the Chief Financial Officer of Borrower.
(iv) Borrower shall have furnished Lender the Base Case
Project Projections of operating expenses and cash flow for the Project and the
Project Schedule for the Project and the Milestone Disbursement Schedule for the
Project; and
(v) Evidence that there has not occurred any material
adverse change in the Project Budget, Project Schedule or Base Case Project
Projections, in the economics or feasibility of constructing and/or operating
the Project, or in the financial condition, business or property of any Major
Project Participant, which will have a Material Adverse Effect.
(m) CONSENTS. Lender shall have received executed copies of the
Consents, each in form and substance satisfactory to Lender, including without
limitation, consents to assignment of each of the Project Documents in the forms
of EXHIBIT M-1, M-2 and M-3 hereto.
(n) DUE DILIGENCE. Lender shall have approved the results of its
due diligence review in connection with the transactions contemplated hereby.
(o) OTHER MATTERS. Lender shall have received the following
items, each in form and substance satisfactory to Lender:
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(i) Such other evidence as Lender may have requested that
all corporate and legal proceedings and all instruments in connection with the
transactions contemplated by this Agreement are satisfactory in form and
substance to Lender;
(ii) All approvals of Lender and Tomen Corporation
(Lender's parent corporation);
(iii) All information and copies of all documents,
including records of corporate proceedings and copies of any approval by any
Governmental Authority required in connection with any transaction herein
contemplated, which Lender may reasonably have requested in connection herewith,
such documents where appropriate to be certified by proper corporate officers or
Governmental Authorities;
(iv) Evidence that no action, suit, proceeding or
investigation has been instituted or threatened by any Person, nor has any
order, judgment or decree been issued or proposed to be issued by any
Governmental Authority that could have a Material Adverse Effect;
(v) Evidence that all taxes, fees and other costs payable
in connection with the execution, delivery, recordation and filing of the
documents and instruments referred to in this SECTION 3.1 have been paid in
full;
(vi) Evidence that Tomen or an Affiliate of Tomen has been
appointed and is serving as Procurement Agent for the Project;
(vii) Evidence that XXX is the sole stockholder of GST as
of the Closing Date;
(viii) A certificate in substantially the form of EXHIBIT
O hereto (the "BORROWER'S CLOSING CERTIFICATE"), dated as of the Closing Date,
signed by an authorized officer of Borrower; and
(ix) Evidence that no equipment which is part of the
Project is subject to the terms and conditions of the Indenture dated as of May
13, 1997, by and among GSI, XXX, GST Funding, Inc. and United States Trust
Company of New York, as Trustee.
3.2. CONDITIONS PRECEDENT TO EACH CONSTRUCTION LOAN. The obligation of
Lender to make each Construction Loan (including the initial Construction Loan)
is subject to the prior satisfaction of each of the following conditions (unless
waived by Lender).
(a) THE REQUESTED CONSTRUCTION LOANS. Lender shall be satisfied
that the following are true and correct as of the date on which Borrower has
requested that such Construction Loan be made:
(i) No other Construction Loan has been made for the
Project during the two-week period preceding the date on which Borrower requests
that such Construction Loan be made;
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(ii) The sum of the undrawn Total Construction Loan
Commitment, plus the unexpended portion of any Borrower Equity, is not less than
the aggregate unpaid amount required to attain Completion, in accordance with
all Legal Requirements, the Construction Contracts and the Plans and
Specifications, prior to the Expected Completion Date and to pay or provide for
all anticipated non-construction costs, all as set forth in the Project Budget
(including any revisions thereto) approved by Lender; and
(iii) The amounts to be applied in connection with such
Construction Loan will not cause the amount for any line item with respect to
such month in the applicable Project Budget to exceed the amount set forth in
such Project Budget, as such line items may be adjusted in accordance with
SECTION 3.3(B).
(b) DRAWDOWN PROCEDURES. Lender shall have received the
following, each in form and substance satisfactory to Lender:
(i) The Notice of Borrowing and the Drawdown Certificate
within the time periods specified therein;
(ii) Evidence that Borrower has established and is
maintaining the Receipts Account and the Operating Account at a bank in Hawaii
reasonably acceptable to Lender; and
(iii) Evidence that all work that has been done on the
Project shall have been done in a good and workmanlike manner and in accordance
with the Construction Contracts and Prudent Practices, including, but not
limited to, if requested by Lender, copies of all invoices for services rendered
and materials delivered for the Project, and there shall not have been filed
with or served upon Borrower with respect to the Project or any part thereof
notice of any Lien, claim of Lien or attachment upon or claim affecting the
right to receive payment of any of the moneys payable to any of the Persons
named on such request which has not been released or which will not be released
with the payment of such obligation out of such Construction Loan, other than
Permitted Liens.
(c) LIENS. Lender shall have received in form and substance
satisfactory to Lender, if requested by Lender, and subject to Borrower's right
to contest liens as described in the definition of "Permitted Liens," duly
executed acknowledgments of payments and releases of mechanics' and
materialmen's liens, in form satisfactory to Lender, from the Contractors and
all other contractors, subcontractors and materialmen, for all work, services
and materials, including equipment and fixtures of all kinds, done, previously
performed, or furnished for the construction of the Project, except for such
work, services and materials to be paid for with the proceeds of the requested
Construction Loan.
(d) EASEMENTS. Lender shall have received evidence, in form and
substance acceptable to Lender, that, except for Applicable Easements listed in
Part II of SCHEDULE 2 which are not then required in connection with the
construction or operation of the Project, all Applicable Easements with respect
to the construction and operation of the Project required to have been obtained
by the date of such Construction Loans shall be in full force and effect, and,
with respect to any of the Applicable Easements not yet required, there
16
shall be no reason to believe that any such Applicable Easements will not be
obtained, all of which shall be satisfactory in all respects to Lender. Borrower
shall inform Lender as to the status of Borrower's efforts to obtain the
Applicable Easements not yet obtained.
(e) PERMITS. Lender shall have received evidence, in form and
substance acceptable to Lender, that, except for Applicable Permits listed in
Part II of SCHEDULE 3 which are not then required in connection with the
construction or operation of the Project, all Applicable Permits with respect to
the construction and operation of the Project required to have been obtained by
the date of such Construction Loans from any Governmental Authority shall have
been issued and shall be in full force and effect, and, with respect to any of
the Applicable Permits not yet required, there shall be no reason to believe
that any such Applicable Permits will not be obtained, all of which shall be
satisfactory in all respects to Lender.
(f) OTHER DOCUMENTS. If requested by Lender, Lender shall have
received evidence, in form and substance satisfactory to Lender, that:
(i) All of the Operative Documents to be executed and
delivered with respect to the Project on or prior to the date of such
Construction Loan shall be in full force and effect without change or amendment
since the respective dates of their execution and delivery in a form which was
approved by Lender, except as consented to in writing by Lender or as otherwise
permitted pursuant to SECTION 6.12; and
(ii) With respect to Additional Project Documents and
Applicable Permits entered into or obtained, transferred or required (whether
because of the status of the construction or operation of the Project or
otherwise) since the date of the most recent Construction Loan, there shall have
been a delivery or a redelivery, as the case may be, to Lender of such matters
as are described in SECTIONS 3.1(B), 3.1(E), 3.1(F) and 3.1(G) and, if requested
by Lender, any of the other sections of SECTION 3.1.
(g) STATUS OF BORROWER. Lender shall be satisfied that the
following are true and correct as of the date on which Borrower has requested
that such Construction Loan be made:
(i) Each representation and warranty set forth in ARTICLE
4 is true and correct as if made on such date;
(ii) No Event of Default or Default has occurred and is
continuing or will result from such Credit Event;
(iii) No event of default under and as defined in or
applicable to any Project Document has occurred and is continuing; and
(iv) Each Credit Document and Project Document remains in
full force and effect.
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3.3. NO APPROVAL OF WORK; ADJUSTMENTS TO PROJECT BUDGET.
(a) The making of any Construction Loan hereunder shall not be
deemed an approval or acceptance by Lender of any work, labor, supplies,
materials or equipment furnished or supplied with respect to the Project.
(b) If requested by Borrower, Lender may, in its reasonable
discretion, adjust the amounts of any individual categories or line items of
Project Costs as set forth in the Project Budget by increasing or decreasing the
amounts shown on the Project Budget for each such individual category or line
item; PROVIDED THAT, Borrower shall have the right to adjust line items without
Lender's consent up to an aggregate maximum change of twenty percent (20%) per
line item from the original Project Budget; PROVIDED FURTHER, that Borrower
shall immediately provide Lender with notice of any such adjustments. With
respect to adjustments in excess of twenty percent (20%), Borrower shall have
the right to request such adjustments from the Lender Representative no more
frequently than once each thirty (30) days. The Lender Representative shall
approve or disapprove such requests within four (4) Business Days.
Notwithstanding anything to the contrary herein, however, no such adjustment
made pursuant to this SECTION 3.3 shall change the aggregate amount of all of
the Project Costs as shown on the Project Budget.
3.4. WAIVER OF FUNDING; ADJUSTMENT OF DRAWDOWN REQUESTS. Notwithstanding
the foregoing, Lender, without waiving any of its rights hereunder, shall have
the right to make a Construction Loan or Construction Loans hereunder without
full compliance by Borrower with the conditions described in this ARTICLE 3. If
Lender determines that a material item or items listed in a Drawdown Certificate
as a Project Cost is not properly included in such Drawdown Certificate, Lender
may in its reasonable discretion cause to be made a Construction Loan or
Construction Loans in the amount requested in such Drawdown Certificate less the
amount of such item or items. In the event that Borrower prevails in any dispute
as to whether such Project Costs were properly included in such Drawdown
Certificate, Construction Loans in the amount requested but not initially made
shall forthwith be made.
3.5. EXPENSES IN EXCESS OF PROJECT BUDGET. If the amount of Project
Costs with respect to the Project exceeds the applicable amount available
pursuant to the Loan Facility and the Capital Contribution, GST may make a loan
to Borrower in a maximum amount of the unbudgeted Project Costs equal to the
difference between the amount, if any, contributed by Borrower's shareholder and
twenty percent (20%) of the Project Budget; PROVIDED THAT such loan be unsecured
and deeply subordinated to Borrower's obligations to Lender under this
Agreement.
3.6. CONDITIONS PRECEDENT TO TERM LOAN CONVERSION. The obligation of
Lender to convert the Construction Loans to a Term Loan is subject to the
satisfaction of the following conditions on or prior to the Term Loan Conversion
Date (unless waived by Lender):
(a) COMPLETION. Completion of the Project shall have occurred.
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(b) STATUS OF BORROWER. Lender shall be satisfied that the
following are true and correct as of the date on which Borrower has requested
that the Term Loan Conversion be made:
(i) Each representation and warranty set forth in ARTICLE
4 of this Agreement and in PARAGRAPH 3 of the Pledge Agreement is true and
correct in all material respects as if made on such date (except for
representations and warranties expressly made as of a specified date, which are
true as of such date);
(ii) No Event of Default or Default has occurred and is
continuing or will result from such Term Loan Conversion;
(iii) No material event of default under and as defined in
or applicable to any Project Document has occurred and is continuing; and
(iv) Each Credit Document and Project Document remains in
full force and effect.
(c) CONVERSION PROCEDURE. Lender shall have received the Notice
of Term Loan Conversion, in form and substance satisfactory to Lender, within
the time periods specified in SECTION 2.1(B).
ARTICLE 4 - REPRESENTATIONS AND WARRANTIES
Borrower makes the following representations and warranties to and in
favor of Lender as of the date hereof and as of the Closing Date. All of these
representations and warranties shall survive the Closing Date and the making of
the Construction Loans and Term Loans:
4.1. ORGANIZATION.
(a) Borrower (i) is a corporation duly constituted, validly
existing and in good standing under the laws of the State of Hawaii, (ii) is
duly qualified, authorized to do business and in good standing in each
jurisdiction where the character of its properties or the nature of its
activities makes such qualification necessary, (iii) has all requisite corporate
power and authority (A) to carry on its business as now being conducted and as
proposed to be conducted by it, (B) to own or hold under lease and operate the
property it purports to own or hold under lease, (C) to execute, deliver and
perform each Operative Document to which it is a party, (D) to take all action
as may be necessary to consummate the transactions contemplated thereunder and
(E) to grant the liens and security interest provided for in the Collateral
Documents to which it is a party, and (iv) has the power and authority to
execute and deliver each Operative Document to which it is a party.
4.2. AUTHORIZATION; NO CONFLICT. Borrower has duly authorized, executed
and delivered each Operative Document to which Borrower is a party (or such
Operative Documents have been duly and validly assigned to Borrower and Borrower
has duly and
19
validly assumed the obligations thereunder), and neither Borrower's execution
and delivery thereof nor its consummation of the transactions contemplated
thereby nor its compliance with the terms thereof (i) does or will contravene
the Charter Documents of Borrower or any other Legal Requirement applicable to
or binding on Borrower or any of its properties, (ii) does or will contravene or
result in any breach of or constitute any default under, or result in or require
the creation of any Lien (other than Permitted Liens) upon any of its property
under, any agreement or instrument to which it is a party or by which it or any
of its properties may be bound or affected, or (iii) does or will require the
consent or approval of any Person which has not already been obtained.
4.3. ENFORCEABILITY. Each Operative Document to which Borrower is a
party or which it has assumed is a legal, valid and binding obligation of
Borrower, enforceable against Borrower in accordance with its terms, except to
the extent that enforceability may be limited by applicable bankruptcy,
insolvency, moratorium, reorganization or other similar laws affecting the
enforcement of creditors' rights and subject to general equitable principles.
None of the Operative Documents to which Borrower is a party or which it has
assumed have been amended or modified except in accordance with this Agreement.
4.4. ERISA. There is no ERISA Plan with respect to Borrower or any ERISA
Affiliate, and neither Borrower nor any ERISA Affiliate has maintained,
contributed to or been obligated to contribute to any ERISA Plan at any time
within the preceding five (5) years.
4.5. TAXES. Borrower has filed all federal, state and local tax returns
that it is required to file, has paid all taxes it is required to pay to the
extent due (other than those taxes that it is contesting in good faith and by
appropriate proceedings, with adequate, segregated reserves established for such
taxes) and, to the extent such taxes are not yet due, has established reserves
that are adequate for the payment thereof and are required by GAAP.
4.6. BUSINESS, DEBT, CONTRACTS, ETC. Borrower has not conducted any
business other than the development of the Project and activities incidental
thereto, it has no outstanding Debt or other material liabilities other than
pursuant to or allowed by the Credit Documents, and it is not a party to or
bound by any material contract other than the Operative Documents to which it is
a party.
4.7. FILINGS. No filing, recording, refiling or rerecording other than
those listed on SCHEDULE 4 is necessary to perfect and maintain the perfection
of the interest, title or Liens referred to in SECTION 4.20, and on the Closing
Date all such filings or recordings (other than those that are required to be
made only at a later date, which are so indicated on SCHEDULE 4) will have been
made.
4.8. GOVERNMENTAL REGULATION. Except as described in this SECTION 4.8,
neither Borrower, nor any Affiliate of Borrower will, solely as a result of the
construction, ownership, leasing or operation of the Project, or the entering
into any Operative Document or any transaction contemplated hereby or thereby be
subject to, or not exempt from, regulation under the Communications Act, or
under state laws and regulations respecting the
20
rates or the financial or organizational regulation of fiber optic data
transmission companies. Borrower is a "telecommunications common carrier," as
that term is defined in the Communications Act, and is classified as a
non-dominant carrier by the FCC with respect to any domestic, interstate
telecommunications service it offers. Borrower is authorized to provide
domestic, interstate telecommunications service as a non-dominant carrier under
the FCC regulatory framework, and it has filed an appropriate tariff with the
FCC. Borrower is a "public utility" providing "telecommunications services"
under Chapter 269 of the Hawaii Revised Statutes and the Rules and Regulations
of the Hawaii State Public Utility Commission ("PUC") and possesses all
certificates, authorizations, consents or approvals necessary to conduct its
business as now being conducted. Pursuant to a grant of authority in a
Certificate of Public Convenience and Necessity ("CPCN") by Order dated February
12, 1986 of the PUC, Borrower has authority to provide high-speed digital
microwave data transmission services to the State of Hawaii as a Digital
Microwave Transmission Carrier. Pursuant to a Decision and Order of the PUC
dated March 20, 1995, Borrower's CPCN was amended such that Borrower has
authority to provide both data and voice digital transmission services on a
point-by-point basis in the State of Hawaii. The initial Hawaii state tariff of
Borrower was approved by the PUC on April 1, 1986. By deemed approval of the PUC
effective as of September 4, 1996, Borrower's tariff filed on August 5, 1996
permits Borrower to provide local exchange service in the State of Hawaii.
Except as to matters for which appropriate waivers or exemptions have been
obtained, Borrower is not subject to regulation under any Governmental Rule as
to securities, rates or financial or organizational matters that would preclude
any Construction Loan, or the incurrence by Borrower of any of the Obligations
or the execution, delivery and performance by Borrower of the Operative
Documents.
4.9. FINANCIAL STATEMENTS. The financial statements of Borrower, as of
June 30, 1997, certified by an appropriate authorized officer or other
authorized representative of Borrower, copies of which have been delivered to
Lender, are true, complete and correct and fairly present the financial
condition of Borrower as of the date thereof. The financial statements have been
prepared in accordance with GAAP on a consistent basis throughout the periods
indicated and with each other, except that any interim financial statements do
not contain all footnotes required by GAAP and are subject to normal year-end
adjustments. Borrower does not have and will not have any material liabilities,
direct or contingent, except as will be disclosed in such financial statements.
4.10. PARTNERSHIPS AND JOINT VENTURES. Borrower is not a general partner
or a limited partner in any general or limited partnership or a joint venturer
in any joint venture.
4.11. NO DEFAULT.
(a) No Event of Default or Default has occurred or is existing.
(b) Borrower is not in default under any term of any Operative
Document, or any agreement relating to any obligation of Borrower for or with
respect to borrowed money, and to the best of Borrower's knowledge, no other
party to any Project Document is in default with respect to any term thereof.
21
4.12. POSSESSION OF FRANCHISES, LICENSES, ETC. Except as disclosed on
SCHEDULE 3 and those the failure of which to obtain does not and will not have a
Material Adverse Effect, Borrower possesses all franchises, certificates,
licenses, Permits, and other authorizations from any Governmental Authorities,
free from unduly burdensome restrictions, that are necessary or advisable for
the leasing, ownership, maintenance and operation of its properties and assets,
and Borrower is not in violation of any thereof in any respect. Borrower
possesses all patents, copyrights, trademarks and trade names, or rights thereto
necessary to perform its duties under the Operative Documents and Borrower is
not in violation thereof in any respect or of any valid rights of others with
respect to any of the foregoing.
4.13. PERMITS. There are no Permits under existing law that are or will
become Applicable Permits other than the Permits described in SCHEDULE 3 and
those the failure of which to obtain does not and will not have a Material
Adverse Effect. Each Applicable Permit is either (y) in full force and effect
and is not subject to any appeals or further proceedings or to any unsatisfied
condition that may allow material modification or revocation, in the case of
those Permits listed in Part I of SCHEDULE 3, or (z), of a type that is
routinely granted on application and that would not normally be obtained before
the commencement of a construction or reconstruction as contemplated by the
Operative Documents in the case of those Applicable Permits listed in Part II of
SCHEDULE 3. Borrower has no reason to believe that any Permit so indicated on
SCHEDULE 3 will not be obtained before it becomes an Applicable Permit.
4.14. OFFICES, LOCATION OF COLLATERAL.
(a) The chief executive office or chief place of business (as
such term is used in Division 9 of the Uniform Commercial Code as in effect in
the State of Hawaii from time to time) of Borrower is located at 0000 XX
Xxxxxxxx Xxx, Xxxxxxxxx, Xxxxxxxxxx, 00000.
(b) All of the Collateral (other than the Accounts, the shares of
Borrower's Common Stock pledged pursuant to the Pledge Agreement, and general
intangibles) is, or when installed pursuant to the Project Documents will be,
located on the Leased Property or the Applicable Easements.
(c) Borrower's books of accounts and records are located at 0000
XX Xxxxxxxx Xxx, Xxxxxxxxx, Xxxxxxxxxx, 00000.
4.15. ADVERSE CHANGE. To the best of Borrower's knowledge, there are no
facts or conditions, with respect to the Project or Borrower which have or in
the future will have (so far as Borrower can now reasonably foresee) a Material
Adverse Effect which are not listed on SCHEDULE 5.
4.16. PROJECT DOCUMENTS. Borrower makes, as of the time made, each of
the representations and warranties contained in the Project Documents or any
Additional Project Document to which Borrower is or will be a party to and for
the benefit of Lender as if the same were set forth at length herein.
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4.17. HAZARDOUS SUBSTANCES.
(a) (i) Borrower, is not and has not in the past been in
violation of any Hazardous Substance Laws, which violation could result in a
material liability to Borrower or its respective properties and assets or in an
inability of Borrower to perform its obligations under the Operative Documents;
(ii) neither the Borrower nor, to the best knowledge of Borrower, any third
party has used, released, discharged, generated, manufactured, produced, stored,
or disposed of in, on, under, or about the Leased Property or any part of the
Project, or transported thereto or therefrom, any Hazardous Substances in any
manner or in quantities that could reasonably be expected to subject Lender or
Borrower to liability under any Hazardous Substance Law; (iii) there are no
underground tanks, whether operative or temporarily or permanently closed,
located on the Leased Property or any part of the Project; (iv) there are no
polychlorinated biphenyls ("PCBS") or items containing PCBs used, stored or
present at, on or near the Leased Property or any part of the Project, and (v)
to the best knowledge of Borrower, there is or has been no condition,
circumstance, action, activity or event that could form the basis of any
violation of, or liability to Lender or its Affiliates under, any Hazardous
Substance Law.
(b) There is no proceeding, investigation or inquiry by any
Governmental Authority (including Governmental Authorities in the State of
Hawaii and the U.S. Environmental Protection Agency) or any non-governmental
third party with respect to the presence or release of such Hazardous Substances
in, on, from or to the Leased Property or any part of the Project, and to the
best knowledge of Borrower, no such proceedings have been requested, suggested
or threatened by any such Governmental Authorities or non-governmental third
parties.
(c) Borrower has no knowledge of any past or existing violations
of any Hazardous Substances Laws by any Person relating in any way to the Leased
Property or any part of the Project.
4.18. TRANSFER OF CONTRACTS AND OTHER RIGHTS. All Project Documents and
Applicable Permits have been entered into by or duly and validly assigned to
Borrower free and clear of all Liens except Permitted Liens, and all necessary
Persons have duly consented to such assignment.
4.19. LITIGATION. There are no pending or, to the best of Borrower's
knowledge, threatened actions or proceedings of any kind, including actions or
proceedings of or before any Governmental Authority, to which Borrower or the
Project is a party or is subject, or by which any of them or any of their
properties or the Project are bound that, if adversely determined to or against
Borrower or the Project, would have a Material Adverse Effect, nor, to the best
of Borrower's knowledge, is there any basis for any such action or proceeding.
23
4.20. TITLE, LIENS AND EASEMENTS.
(a) On and after the Closing Date, Borrower will have a good,
insurable and indefeasible title to the Project, and all of the Collateral
relating to the Project, and a good, insurable and indefeasible interest in the
Leased Property and a valid estate in the Applicable Easements other than the
Easements described in Part II of SCHEDULE 2, in each case free and clear of all
Liens, encumbrances or other exceptions to title except Liens in favor of or
created by Lender and Liens that do not interfere with the intended use for the
Project by Borrower of the Leased Properties or Applicable Easements. The Lien
of the Collateral Documents constitutes a valid and subsisting first priority
perfected security interest in all the personal property described in the other
Collateral Documents, subject to no Liens except the Permitted Liens.
(b) The security interests granted to Lender pursuant to the
Collateral Documents in the Collateral (i) as to personal property included in
the Collateral, constitute and, with respect to subsequently acquired personal
property included in the Collateral, will constitute, perfected security
interests under the UCC (to the extent such personal property is subject to the
UCC) and (ii) are, and, with respect to such subsequently acquired property,
will be, as to Collateral perfected under the UCC (to the extent such personal
property is subject to the UCC), superior and prior to the rights of all third
Persons now existing or hereafter arising whether by way of mortgage, lien,
security interests, encumbrance, assignment or otherwise, except for Permitted
Liens. Except to the extent possession of portions of the Collateral is required
for perfection, all such action as is necessary has been taken to establish and
perfect Lender's rights in and to the Collateral, including any recording,
filing, registration, giving of notice or other similar action. The Collateral
Documents relating to the Collateral and the financing statements relating
thereto have been duly filed or recorded in each office and in each jurisdiction
where required in order to create and perfect the first lien and security
interest described above. Borrower has properly delivered or caused to be
delivered to Lender all Collateral that requires perfection of the Lien and
security interest described above by possession.
(c) There are no Easements that are or will become Applicable
Easements other than the Easements described in SCHEDULE 2. Each Applicable
Easement is either (y) in full force and effect and is not subject to any
unsatisfied condition that may allow material modification or revocation, in the
case of those Easements listed in Part I of SCHEDULE 2, or (z) of a type that
would not normally be obtained at the stage of the construction on the Closing
Date, as contemplated by the Operative Documents, in the case of those
Applicable Easements listed in Part II of SCHEDULE 2. Borrower has no reason to
believe that any Easement so indicated on SCHEDULE 2 will not be obtained before
it becomes an Applicable Easement.
4.21. UTILITIES. All utility services necessary for the construction and
the operation of the Project for its intended purposes are available or will be
so available as and when required.
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4.22. SUFFICIENCY OF PROJECT DOCUMENTS.
(a) Other than those that can be reasonably expected to be
commercially available when and as required, the services to be performed, the
materials to be supplied and the real property interests, the Applicable
Easements, the Applicable Permits, and other rights granted pursuant to the
Project Documents:
(i) comprise all of the property interests necessary to
secure any right material to the acquisition, leasing, development,
construction, installation, completion, operation and maintenance of the Project
in accordance with all Legal Requirements and in accordance with the Project
Schedules, all without reference to any proprietary information not owned by
Borrower;
(ii) are sufficient to enable the Project to be located,
constructed and operated; and
(iii) provide adequate ingress and egress for any
reasonable purpose in connection with the construction and operation of the
Project.
(b) There are no services, materials or rights required for the
construction or operation of the Project in accordance with the Construction
Contracts, the Plans and Specifications and the Base Case Project Projections
other than those that can reasonably be expected to be commercially available
within the line items contained in the applicable Project Budget.
4.23. SECURITIES. No registration of the Note under the Securities Act
of 1933, as amended, or under the securities laws of any state is required in
connection with the offering, issuance, sale or transfer of the Note hereunder.
4.24. DISCLOSURE. Neither this Agreement nor any certificate furnished
to Lender, or to any consultant submitting a report to Lender, by or, to the
knowledge of Borrower, on behalf of Borrower in connection with the transactions
contemplated by this Agreement, the other Project Documents or the design,
construction, testing or operation of the Project, contains any untrue statement
of a material fact or omits to state a material fact necessary in order to make
the statements contained herein or therein not misleading under the
circumstances in which they were made at the time such statements are made.
There is no fact known to Borrower which Borrower has not disclosed in writing
to Lender which does or reasonably could have a Material Adverse Effect.
4.25. CONSTRUCTION BUDGET; PROJECTIONS. Borrower has prepared the
Project Budget and the Base Case Project Projections and is responsible for
developing the assumptions on which the Project Budget and the Base Case Project
Projections are based. The Project Budget and the Base Case Project Projections
(i) are, to the best of Borrower's knowledge as of the Closing Date, based on
reasonable assumptions as to all legal and factual matters material to the
estimates set forth therein, and (ii) as of the Closing Date are consistent with
the provisions of the Project Documents. In the reasonable opinion of Borrower,
as of the Closing Date the textual material accompanying the Base Case Project
Projections discloses
25
all information reasonably necessary for an understanding of the Base Case
Project Projections, and does not contain any material misstatements or omit any
information which, in conjunction with other information given, would be
necessary to make such information not materially misleading.
4.26. INTELLECTUAL PROPERTY. Borrower owns or has the right to use all
patents, trademarks, service marks, trade names, copyrights, licenses and other
rights, which are necessary for the operation of its business as presently
conducted. To the best of Borrower's knowledge, (a) no product, process, method,
substance, part or other material presently contemplated to be sold by or
employed by Borrower in connection with its business will infringe upon any
patent, trademark, service xxxx, trade name, copyright, license or other
intellectual property right of any other Person, (b) there are no pending or
threatened claims or litigation against or affecting Borrower contesting or
calling into question its right to sell or use any such product, process,
method, substance, part or other material or (c) there is no existing pending or
proposed, patent, invention, device, application or principle or any
Governmental Rule or standard or code which would prevent or inhibit or
substantially reduce the projected revenues of Borrower, or otherwise have a
Material Adverse Effect.
ARTICLE 5 - COVENANTS OF THE BORROWER
Borrower covenants and agrees that so long as this Agreement is
in effect, it will, unless Lender waives compliance in writing:
5.1. NOTICES. Promptly, upon acquiring notice or giving notice, as the
case may be, or obtaining knowledge, give written notice to Lender of:
(a) Any litigation pending or, to the knowledge of Borrower,
threatened against Borrower involving claims against Borrower or the Project in
excess of $100,000 in the aggregate or involving any injunctive or declaratory
relief, such notice to include copies of all papers filed in such litigation and
to be given monthly if any such papers have been filed since the last notice
given;
(b) Any dispute or disputes which may exist between Borrower and
any Governmental Authority and which involve (i) claims against Borrower which
individually exceed $100,000 or in the aggregate exceed $200,000, (ii)
injunctive or declaratory relief, (iii) revocation, expiration or modification
or the like of any Applicable Permit or Applicable Easement, or (iv) any Liens
for taxes due but not paid;
(c) Any Event of Default or Default;
(d) Any casualty, damage or loss, whether or not insured, through
fire, theft, other hazard or casualty, or any act or omission of Borrower, its
employees, agents, contractors, consultants or representatives, or of any other
Person if such casualty, damage or loss affects Borrower or the Project, in
excess of $50,000 for any one casualty or loss, or an aggregate of $100,000; or
26
(e) Any matter which has resulted or is likely, in light of other
circumstances affecting Borrower, to have a Material Adverse Effect.
5.2. FINANCIAL STATEMENTS, REPORTS, ETC.
(a) Deliver to Lender (or cause to be delivered to Lender), in
form and detail reasonably satisfactory to Lender, unless delivery and/or the
timing of delivery is waived by Lender:
(i) As soon as available but no later than sixty (60) days
after the close of the first, second and third quarterly periods of its fiscal
year, quarterly (and year-to-date) financial statements of and prepared by
Borrower to include a balance sheet and an income and expense statement;
(ii) As soon as available but no later than one hundred
twenty (120) days after the close of each applicable fiscal year, audited
financial statements of Borrower including a statement of equity, a balance
sheet as of the close of such year, an income and expense statement,
reconciliation of capital accounts and a statement of cash flows, all prepared
in accordance with GAAP and certified by an independent certified public
accountant selected by the Person whose financial statements are being prepared
and satisfactory to Lender. Such certificate shall not be qualified or limited
because of restricted or limited examination by such accountant of any material
portion of the records of the applicable Person;
(iii) On the tenth day of each month, with respect to the
preceding month, a report with respect to the Project substantially in the form
of EXHIBIT P hereto.
(iv) Within thirty (30) days after Completion of the
Project, "as built" maps indicating the locations related to each Easement,
Permit, Collation Agreement, Interconnection Agreement, and Pole and Conduit Use
Agreement.
(v) Such other statement or statements, lists of property
and accounts, budgets, forecasts or reports relating to the Project, as Lender
may reasonably request from time to time and that can be provided without
unreasonable cost to or effort on the part of Borrower.
(b) Each time the financial statements are delivered under
subsections (i) or (ii) of SECTION 5.2(A), a certificate signed by the natural
person who is a senior financial officer of Borrower shall be delivered along
with such financial statements, certifying that such officer has made or caused
to be made a review of the transactions and financial condition of the Borrower
during the relevant fiscal period and that such review has not, to the best of
such officer's knowledge, disclosed the existence of any event or condition
which constitutes an Event of Default or a Default hereunder or under any Credit
Document applicable to Borrower, or if any such event or condition existed or
exists, the nature thereof and the corrective actions that Borrower has taken or
proposes to take with respect thereto, and also certifying that the Borrower is
in compliance with all applicable provisions of this Agreement or any other
Credit Document applicable to Borrower or, if such is not the case,
27
stating the nature of such non-compliance and the corrective actions which
Borrower has taken or proposes to take with respect thereto.
5.3. EXISTENCE, CONDUCT OF BUSINESS, PROPERTIES, ETC. Except as
otherwise expressly permitted under this Agreement, (a) maintain and preserve
its existence as a Hawaii corporation and all rights, privileges and franchises
necessary or desirable in the normal conduct of its business, (b) perform all of
its contractual obligations under the Project Documents and all other agreements
and contracts by which it is bound, maintain all necessary Permits, including
all Applicable Permits, with respect to its business and the Project, except
such as may be contested in good faith or as to which a bona fide dispute may
exist, PROVIDED THAT the non-payment of same would not reasonably be anticipated
to result in a Material Adverse Effect or that provision is made to the
satisfaction of Lender in its reasonable discretion for the posting of security
(other than the Collateral) for or the bonding of such obligations or the prompt
payment thereof in the event that such obligation is payable, (c) at or before
the time that any Permit becomes an Applicable Permit, obtain such Permit, and
(d) engage only in the business contemplated by the Operative Documents.
5.4. OBLIGATIONS. Pay all Obligations, howsoever arising, as and when
due and payable, including taxes and tax claims, except (a) such as may be
contested in good faith or as to which a bona fide dispute may exist, PROVIDED
THAT the non-payment of same would not reasonably be anticipated to result in a
Material Adverse Effect or that provision is made to the satisfaction of Lender
in its reasonable discretion for the posting of security (other than the
Collateral) for or the bonding of such obligations or the prompt payment thereof
in the event that such obligation is payable and (b) Borrower's trade payables
which shall be paid in the ordinary course of business.
5.5. DAMAGE AND CANCELLATION PAYMENTS. Except as otherwise expressly
permitted under this Agreement apply the proceeds of any surety, performance or
similar bonds and any liquidated or other damages paid in respect of damage
payments or performance payments by any contractors or subcontractors or other
Persons involved in the construction and operation of the Project, to prepay the
Loan Facility.
5.6. BOOKS, RECORDS, ACCESS. Maintain adequate books, accounts and
records with respect to Borrower and the Project and prepare all financial
statements required hereunder in accordance with GAAP and in compliance with the
regulations of any Governmental Authority having jurisdiction thereof, and
permit employees or agents of Lender, at any reasonable times and upon
reasonable prior notice to inspect all of Borrower's properties, including the
Leased Property, to examine or audit all of Borrower's books, accounts and
records and make copies and memoranda thereof and to observe the operation,
maintenance and repair of the Project.
5.7. OPERATION OF PROJECT AND ANNUAL BUDGET.
(a) (i) Keep the Project, or cause the same to be kept, in good
operating condition consistent with Prudent Practices, all Applicable Permits
and applicable Legal Requirements and all applicable requirements of the
Operative Documents, and make or cause to be made all repairs (structural and
non-structural, extraordinary or ordinary)
28
necessary to keep the Project in such condition; and (ii) operate and maintain
the Project in a manner consistent with Prudent Practices and in compliance with
the terms of the Project Documents so as to assure, to the extent reasonably
possible, the maximum generation of net revenue for the Project consistent with
the Project Documents.
(b) On or before the date forty-five (45) days prior to the
Expected Completion Date, deliver to Lender an update of the Project Budget for
the period from the date it is delivered until the anticipated commencement of
commercial operation of the Project and the Annual Operating Budget for the
period from the anticipated commencement of commercial operation through the end
of the first full fiscal year thereafter (collectively, the "FIRST ANNUAL
OPERATING BUDGET"), in form and substance reasonably acceptable to Lender,
setting forth all anticipated start-up costs, Project Revenues, Debt Service,
proposed distributions, maintenance, repair and operation expenses (including
reasonable allowance for contingencies), and all other anticipated Operation and
Maintenance Costs for the Project for such period. Such First Annual Operating
Budget shall be delivered by Borrower to Lender no later than July 1, 1998. No
less than forty-five (45) days in advance of the beginning of each fiscal year
thereafter, Borrower will similarly adopt an Annual Operating Budget for the
ensuing fiscal year covering the matters (other than start-up costs) specified
above in this SECTION 5.7(B) and such other matters as may be reasonably
required by Lender. Copies of the draft Annual Operating Budget for each year of
operation shall be promptly furnished to Lender for review and approval. If
Lender does not approve the draft Annual Operating Budget submitted by Borrower,
Lender shall give written notice to Borrower within fifteen (15) days of
Lender's receipt of such draft Annual Operating Budget in compliance with
SECTION 10.1 hereof. If Lender and Borrower do not agree on a final Annual
Operating Budget by the date the new fiscal year commences, the previous fiscal
year Annual Operating Budget increased by ten percent (10%) shall be used until
Lender and Borrower agree on the new final Annual Operating Budget; PROVIDED
HOWEVER, that if a dispute in the previous fiscal year resulted in such a ten
percent (10%) increase in the Annual Operating Budget, the parties shall use the
previous fiscal year Annual Operating Budget without increase. The Operation and
Maintenance Costs in each such Annual Operating Budget which are subject to
escalation limitations in the Project Documents shall not, absent extraordinary
circumstances, be increased from year to year by more than the amounts provided
in such Project Documents. Borrower will operate and maintain the Project, or
cause the Project to be operated and maintained, within each Annual Operating
Budget as approved by Lender.
5.8. COMPLETION. Achieve Completion in a timely and diligent manner in
accordance with the Project Schedule, the Construction Contracts and the Plans
and Specifications, the Project Budget as the same may be extended, and in no
event later than August 15, 1998.
5.9. PRESERVATION OF RIGHTS; FURTHER ASSURANCES.
(a) Preserve, protect and defend the rights of Borrower under
each and every Project Document, including prosecution of suits to enforce any
right of Borrower thereunder and enforcement of any claims with respect thereto,
and, at the request of Lender, permit Lender to participate in such capacity as
it may choose in any such suit, any defense thereof or in the preparation
therefor; PROVIDED, HOWEVER, that upon the occurrence and
29
during the continuance of any Event of Default, if Lender requests that certain
actions be taken and Borrower fails to take the requested action within five (5)
Business Days, Lender may enforce, in its own name, in the name of Lender or
Borrower's name, such rights of Borrower.
(b) From time to time, execute, acknowledge, record, register,
deliver and/or file all such notices, statements, instruments and other
documents, including any memorandum of lease or other agreement, financing
statement, continuation statement, certificate of title or estoppel certificate
relating to the Loan Facility stating the interest and charges then due and any
known defaults, and take such other steps as may be necessary or advisable to
render fully valid and enforceable under all applicable laws the rights, liens
and priorities of Lender with respect to all Collateral and other security from
time to time furnished under this Agreement or intended to be so furnished, in
each case in such form and at such times as shall be satisfactory to Lender, and
pay all fees and expenses (including attorneys' fees and expenses) incident to
compliance with this SECTION 5.9(B).
(c) If Borrower shall at any time acquire any real property or
leasehold or other interest in real property, promptly upon such acquisition (or
on the Closing Date if such acquisition occurred prior thereto) execute, deliver
and record a mortgage, satisfactory in form and substance to Lender, subjecting
such real property or leasehold or other interests to a lien and security
interest of Lender created by such mortgage.
5.10. CONSTRUCTION OF PROJECT. Make or cause to be made all contracts
and do or cause to be done all things reasonably necessary for the acquisition,
construction, expansion, improvement and equipping of the Project, with or
without advertising for bids, and cause the Project to be constructed, expanded,
improved and equipped substantially in accordance with the Plans and
Specifications, the Construction Contracts, the Project Budget and Project
Schedule (insofar as necessary to comply with SECTION 5.7) and not exceeding the
disbursements as contemplated by the Construction Contracts, except as
compliance therewith may be waived pursuant to SECTION 6.12 hereof. Without
limiting the generality of the foregoing, Borrower shall diligently pursue and
enforce all of its rights and remedies under the Construction Contracts, and any
other contracts or agreements related to the construction of the Project and
shall ensure that the Project is constructed substantially in accordance with
all such contracts and agreements, to the extent applicable.
5.11. TAXES, OTHER GOVERNMENT CHARGES AND UTILITY CHARGES. Pay, or cause
to be paid, as and when due and prior to delinquency, all taxes, assessments and
governmental charges of any kind that may at any time be lawfully assessed or
levied against or with respect to Borrower or the Project, all utility and other
charges incurred in the operation, maintenance, use, occupancy and upkeep of the
Project, and all assessments and charges lawfully made by any Governmental
Authority for public improvements that may be secured by a lien on the Project.
However, Borrower may contest in good faith any such taxes, assessments and
other charges and, in such event, may permit the taxes, assessments or other
charges so contested to remain unpaid during any period, including appeals, when
Borrower is in good faith contesting the same, so long as (a) reserves
reasonably satisfactory to Lender have been established in an amount sufficient
to pay any such taxes, assessments or other charges, accrued interest thereon
and potential penalties or other costs relating thereto, or
30
other adequate provision for the payment thereof shall have been made, (b)
enforcement of the contested tax, assessment or other charge is effectively
stayed for the entire duration of such contest, and (c) any tax, assessment or
other charge determined to be due, together with any interest or penalties
thereon, is immediately paid after resolution of such contest.
5.12. COMPLIANCE WITH LAWS, INSTRUMENTS, ETC. At its expense, promptly
(a) comply, or cause compliance, in all material respects, with all laws, rules,
regulations and Legal Requirements, including laws, rules, regulations and Legal
Requirements, relating to pollution control, environmental protection, equal
employment opportunity or employee benefit plans and employee safety, with
respect to Borrower or the Project, whether or not compliance therewith shall
require structural changes in the Project or any part thereof or require major
changes in operational practices or interfere with the use and enjoyment of the
Project or any part thereof, and (b) procure, maintain and comply, or cause to
be procured, maintained and complied with, in all material respects, all Permits
required for any use of the Project or any part thereof, then being made or
contemplated by the Operative Documents, except that Borrower may, at its
expense, contest by appropriate proceedings conducted in good faith the validity
or application of any such law, rule or regulation; PROVIDED THAT, (i) neither
Lender nor Borrower would be subject to any criminal liability for failure to
comply therewith and (ii) all proceedings to enforce such law, rule or
regulation against Lender, Borrower, or the Project or any part of any of them,
shall have been duly and effectively stayed during the entire pendency of such
contest.
5.13. WARRANTY OF TITLE. Maintain (a) good, marketable and insurable
leasehold estate to the Leased Property, and good, marketable and insurable
title to the Applicable Easements and (b) good, marketable, insurable and
indefeasible title to all of its other respective properties and assets (other
than properties and assets disposed of in the ordinary course of business) to
the extent that failure to do so would have a Material Adverse Effect.
5.14. MAINTENANCE OF INSURANCE.
(a) REQUIRED INSURANCE. Borrower shall, without cost to Lender,
maintain or cause to be maintained on its behalf in effect at all times the
types of insurance set forth in SCHEDULE 6, together with any other types of
insurance required under this Agreement.
(b) RIGHTS OF LENDER. If at any time the insurance as herein
provided shall be reduced or cease to be maintained, then (without limiting the
rights of Lender hereunder in respect of the Event of Default which arises as a
result of such failure) Lender may at its option obtain and maintain the
insurance required hereby and, in such event, Borrower shall reimburse Lender
upon demand for the cost thereof together with interest thereon at a rate per
annum equal to the Default Rate. If Borrower fails to respond in a timely and
appropriate manner (as reasonably determined by Lender) to take any steps
necessary or reasonably requested by Lender to collect from any insurers for any
loss covered by any insurance required to be maintained by this SECTION 5.14,
Lender shall have the right to make all proofs of loss, adjust all claims and/or
receive all or any part of the proceeds of the foregoing insurance policies,
either in its own name or the name of Borrower; PROVIDED, HOWEVER, that Borrower
shall, upon Lender's request and at Borrower's own cost and expense, make all
proofs of loss and take all other steps necessary or reasonably requested
31
by Lender to collect from insurers for any loss covered by any insurance
required to be obtained by this SECTION 5.14.
(c) INSURANCE COMPLIANCE. On or before the Closing Date and
annually at each policy renewal Borrower shall furnish to Lender, (i) a
certificate signed by a duly authorized representative of Borrower, listing the
insurance then maintained by or on behalf of Borrower and stating that such
insurance complies in all respects with the terms hereof, together with evidence
of payment of the premiums thereon, and (ii) the report of Borrower's insurance
broker, and prior to Completion, the report of Contractors' insurance broker, to
the effect that Borrower's insurance complies in all respects with the terms of
this SECTION 5.14 and SCHEDULE 6.
(d) Borrower shall and shall cause (i) all of Borrower's
contractors to, name Lender a loss payee or an additional insured on each
insurance policy with respect to any aspect of the Project and (ii) all such
insurance policies to provide Lender with written notice ten (10) days prior to
cancellation of any such insurance policy for non-payment of premiums and thirty
(30) days prior to cancellation of any such insurance policy for any other
reason.
5.15. EVENT OF EMINENT DOMAIN. If an Event of Eminent Domain shall be
threatened or occur with respect to any Collateral, (a) promptly upon discovery
or receipt of notice of any such threat or occurrence provide written notice
thereof to Lender, (b) diligently pursue all its rights to compensation against
the relevant Governmental Authority in respect of such Event of Eminent Domain,
(c) not, without the written consent of Lender, which consent shall not be
unreasonably withheld, compromise or settle any claim against such Governmental
Authority, (d) hold all amounts and proceeds (including instruments) received in
respect of any Event of Eminent Domain ("EMINENT DOMAIN PROCEEDS") in trust for
the benefit of Lender, segregated from other funds of Borrower, for application
in accordance with SECTION 7.3, and (e) forthwith pay over to Lender all such
amounts and proceeds in the same form as received (with any necessary
endorsement) to be held and applied in accordance with the provisions of SECTION
7.3. Borrower consents to the participation of Lender in any eminent domain
proceedings, and Borrower shall from time to time deliver to Lender all
instruments requested by it to permit such participation.
5.16. INDEMNIFICATION.
(a) Indemnify, defend and hold harmless Lender and, in their
capacities as such, Lender's respective officers, directors, shareholders,
controlling persons, employees, agents and servants (collectively, the
"INDEMNITEES") from and against and reimburse the Indemnitees for any and all
losses, claims, obligations, liabilities, damages, injuries (to person, property
or natural resources), penalties, stamp or other similar taxes, actions, causes
of action, suits, judgments, costs and expenses (including attorneys' and
consultants' fees and expenses) of whatever kind or nature, whether or not well
founded, meritorious or unmeritorious, demanded, asserted or claimed against any
such Indemnitee in any way relating to, or arising out of or in connection with
(i) this Agreement, the other Operative Documents or the Project; (ii) any Legal
Requirement or Permit relating to the Project or Borrower, the release or
presence of any Hazardous Substance at the Project or released or
32
disposed of by the Project or by or on behalf of Borrower, whether foreseeable
or unforeseeable, including all costs of removal and disposal of such Hazardous
Substances, all costs required to be incurred in determining whether the Project
is and causing the Project to be in compliance with all applicable Legal
Requirements and Permits; and (iii) any claims, suits or liabilities against or
of Borrower or its Affiliates.
(b) The foregoing indemnities shall not apply with respect to an
Indemnitee, to the extent the claims, damages, liabilities or losses arise as
the direct and sole result of the gross negligence or willful misconduct of such
Indemnitee, but shall continue to apply to other Indemnitees.
(c) The provisions of this SECTION 5.16 shall survive foreclosure
of the Collateral Documents and satisfaction or discharge of Borrower's
obligations hereunder and shall be in addition to any other rights and remedies
of Lender.
(d) In case any action, suit or proceeding shall be brought
against any Indemnitee, such Indemnitee shall notify in writing Lender and
Borrower of the commencement thereof, and Borrower shall be entitled, at its
expense, acting through counsel reasonably acceptable to such Indemnitee, to
participate in, and, to the extent that Borrower desires, to assume and control
the defense thereof. Such Indemnitee shall thereafter be entitled, at its
expense, to participate in any action, suit or proceeding the defense of which
has been assumed by Borrower. Notwithstanding the foregoing, Borrower shall not
be entitled to assume and control the defenses of any such action, suit or
proceedings if and to the extent that, in the opinion of such Indemnitee and its
counsel, such action, suit or proceeding involves the potential imposition of
criminal liability on such Indemnitee or a conflict of interest between such
Indemnitee and Borrower or between such Indemnitee and another Indemnitee, and
in such event (other than with respect to disputes between such Indemnitee and
other Indemnitees) Borrower shall pay the reasonable expenses of such Indemnitee
in such defense, but not more than the expense of one additional counsel.
(e) Borrower shall report to such Indemnitee on the status of
such action, suit or proceeding as developments shall occur. Borrower shall
deliver to such Indemnitee a copy of each document filed or served on any party
in such action, suit or proceeding, and each document which Borrower possesses
relating to such action, suit or proceeding.
(f) Upon payment of any claim by Borrower pursuant to this
SECTION 5.16 or other similar indemnity provisions contained herein to or on
behalf of an Indemnitee, Borrower, without any further action, shall be
subrogated to any and all claims that such Indemnitee may have relating thereto,
and such Indemnitee shall cooperate with Borrower and give such further
assurances as are necessary or advisable to enable Borrower vigorously to pursue
such claims. Payment thereof by any Indemnitee or the payment by such Indemnitee
of any judgment or claim successfully perfected against such Indemnitee shall be
payable upon demand of such Indemnitee.
(g) Any amounts payable by Borrower pursuant to this SECTION 5.16
shall be regularly payable within thirty (30) days after Borrower receives an
invoice for such amounts from any applicable Indemnitee.
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5.17. DEVELOPMENT COMPANY NET CASH FLOW AGREEMENTS. To enter into
agreements pledging the Net Cash Flow of Borrower to support the Obligations of
each other Development Company to Lender and its Affiliates upon a default or
event of a default of any other Development Company; PROVIDED HOWEVER, that a
default or event of default on the part of another Development Company with
respect to its Network Project Credit Agreement by itself, shall not constitute
a default or event of default with respect to this Agreement by Borrower, but
rather the Net Cash Flow of Borrower shall be available to cure the default or
event of default of such other Development Company or Companies. Lender's and
its Affiliates' interest in Borrower's Net Cash Flow pursuant to such pledge
agreements shall be senior to all other Debt of Borrower (except Borrower's
other Obligations to Lender under this Agreement) and any obligations of
Borrower to Greenstar for management fees.
5.18. CONSENTS TO ASSIGNMENT. Borrower shall obtain consents to
assignment from third parties to Project Documents not entered into as of the
Closing at the time such Project Documents are entered into in the forms of
EXHIBIT X-0, X-0 xxx X-0, as applicable. Borrower shall use its best efforts to
obtain consents to assignment from third parties to Project Documents entered
into as of the Closing that are not delivered as of the Closing, in the forms of
EXHIBIT X-0, X-0 xxx X-0, as applicable, including without limitation those
consents described in Section 2.1(c). Borrower shall provide Lender with a
status report with respect to Project Documents entered into and consents to
assignment to be obtained no less frequently than every month in the monthly
reports required pursuant to SECTION 5.2, commencing on the tenth day of the
month which first occurs after the Closing Date. Borrower shall provide Lender
with each new consent to assignment received within three (3) days of receipt by
Borrower of such consent to assignment.
ARTICLE 6 - NEGATIVE COVENANTS
Borrower covenants and agrees that until the entire principal balance of
the Loan Facility, together with all interest, fees, charges and costs due to
Lender under this Agreement are paid in full, it will not, without the prior
written consent of Lender:
6.1. CONTINGENT LIABILITIES. Except as provided in this Agreement,
become liable as a surety, guarantor, accommodation endorser or otherwise, for
or upon the obligation of any other Person; PROVIDED, HOWEVER, that this SECTION
6.1 shall not be deemed to prohibit:
(a) The acquisition of goods, supplies or merchandise in the
normal course of business or normal trade credit; or
(b) The endorsement of negotiable instruments received in the
normal course of its business.
6.2. LIMITATIONS ON LIENS. Create, incur, assume or permit to exist any
Lien, securing a charge or obligation on the Project or on any of the
Collateral, real or personal, whether now owned or hereafter acquired, except
Permitted Liens.
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6.3. INDEBTEDNESS. Incur, create, assume or permit to exist any Debt
except (a) the Loan Facility, (b) up to Two Hundred Fifty Thousand Dollars
($250,000) of Debt incurred in the ordinary course of business and (c)
obligations of Borrower for money borrowed to finance Project cost overruns
pursuant to SECTION 3.5 which is unsecured and deeply subordinated to Borrower's
Obligations to Lender hereunder, or cancel, modify, renew or otherwise rearrange
any Debt or make, execute or deliver any assignment for the benefit of
creditors, bond, confession of judgment, mortgage or deed; provided however,
that any such creditor of Borrower has entered into an intercreditor and
subordination agreement with Lender in form and substance acceptable to Lender.
6.4. SALE OR LEASE OF ASSETS. Sell, lease, assign, transfer or otherwise
dispose of assets or property, whether now owned or hereafter acquired, (a)
except in the ordinary course of its business as contemplated by the Operative
Documents and (b) except for obsolete, worn out or replaced property not used or
useful in its business, in each case, at fair market value. The ordinary course
of Borrower's business shall include sale or lease of irrevocable rights to use
dark fiber and conduits.
6.5. CHANGES. Change the nature of its business or expand its business
other than (i) developing and operating a fiber optic and digital
telecommunications network and (ii) provision of telecommunications services and
capacity.
6.6. DIVIDENDS, REDEMPTIONS, ETC. (i) Pay any dividends or make any
distributions on its Equity Securities; (ii) purchase, redeem, retire, defease
or otherwise acquire for value any of its Equity Securities; (iii) return any
capital to any holder of its Equity Securities as such; (iv) make any
distribution of assets, Equity Securities, obligations or securities to any
holder of its Equity Securities as such; or (v) set apart any sum for any such
purpose.
6.7. INVESTMENTS. Make or permit to remain outstanding any advances,
loans or extensions of credit to, or purchase or own any stock, bonds, notes,
debentures or other securities of any Person, except Permitted Investments.
6.8. TRANSACTIONS WITH AFFILIATES. Directly or indirectly, enter into
any transaction or series of transactions with or for the benefit of an
Affiliate or utilize the collateral in any way for the furtherance of its or any
of its Affiliates' personal business activities without the prior written
approval of Lender, except for (i) the Services Agreement entered into between
Borrower and GST as of September 15, 1997, an executed copy of which has been
delivered to Lender, as the same may be amended from time to time with Lender's
prior written consent, and (ii) any other agreement for the provision of goods
or services by an Affiliate of Borrower to Borrower or by Borrower to an
Affiliate of Borrower; PROVIDED THAT all direct and indirect fees and charges
thereunder are reasonable and comparable to those available from other providers
of such goods or services or to other customers of Borrower, as the case may be.
35
6.9. LOAN PROCEEDS; PROJECT REVENUES. Use, pay, transfer, distribute or
dispose of any Loan Facility proceeds in any manner or for any purposes except
as provided in SECTION 2.1(A)(III) or of any Project Revenues in any manner or
for any purposes except as provided in SECTION 7.1.
6.10. PARTNERSHIPS. Become a general or limited partner in any
partnership or a joint venturer in any joint venture.
6.11. DISSOLUTION. Liquidate or dissolve, or sell or lease or otherwise
transfer or dispose of all or any substantial part of its property, assets or
business, or combine, merge or consolidate with or into any other entity.
6.12. AMENDMENTS; CHANGE ORDERS; COMPLETION. Cause, consent to or permit
any amendment, modification, variance or waiver of timely compliance with any
terms or conditions of any Project Document if it would have a Material Adverse
Effect, or cancel or terminate any Operative Document to which Borrower is a
party.
6.13. NAME AND LOCATION; FISCAL YEAR. Change its name or the location of
its principal place of business without notice to Lender at least thirty (30)
days prior to such change, or change its fiscal year without Lender's consent.
6.14. ASSIGNMENT. Assign its rights hereunder or under any of the
Operative Documents to any Person.
6.15. TRANSFER OF OWNERSHIP INTERESTS. Cause, make, suffer, permit or
consent to any sale, assignment or transfer of any ownership or other interest
in Borrower or any right thereto, except that GSI or any direct or indirect
subsidiary of GSI that is a direct or indirect parent of Borrower (a "Specified
GSI Subsidiary") may sell securities of a specified GSI Subsidiary in a
transaction which does not result in the loss of control of such Specified GSI
Subsidiary by GSI or a Specified GSI Subsidiary, as the case may be ("loss of
control" includes the sale or other transfer of more than 49% of the Equity
Securities of such Specified GSI Subsidiary or the rights thereto, and the loss
of the voting power on the board of directors required to control such Specified
GSI Subsidiary). As used herein, the transfer of an ownership interest in
Borrower shall include direct and indirect transfers, including sale of stock or
ownership interests or rights thereto in any entity which has a direct ownership
interest in Borrower; PROVIDED THAT the provisions of this sentence shall not be
applicable to the transfer of stock or ownership interests or rights thereto in
GSI or any corporation the securities of which are publicly held.
6.16. ABANDONMENT OF PROJECT. Voluntarily abandon the development,
construction, operation, maintenance or repair of the Project.
6.17. HAZARDOUS SUBSTANCE. Release, emit or discharge into the
environment any Hazardous Substances in excess of permitted levels or reportable
quantities or in violation of other permitted concentrations, standards or
limitations under any Hazardous Substance Laws, Legal Requirements or Applicable
Permits.
36
6.18. ERISA. Neither Borrower nor any ERISA Affiliate shall (i) adopt or
institute any ERISA Plan, (ii) take any action which will result in the partial
or complete withdrawal, within the meanings of sections 4203 and 4205 of ERISA,
from a Multiemployer Plan, (iii) engage or permit any Person to engage in any
transaction prohibited by section 406 of ERISA or section 4975 of the Code
involving any Employee Benefit Plan or Multiemployer Plan which would subject
either Borrower or any ERISA Affiliate to any tax, penalty or other liability
including a liability to indemnify, (iv) incur or allow to exist any accumulated
funding deficiency (within the meaning of section 412 of the Code or section 302
of ERISA), (v) fail to make full payment when due of all amounts due as
contributions to any Employee Benefit Plan or Multiemployer Plan, (vi) fail to
comply with the requirements of section 4980B of the Code or Part 6 of Title
I(B) of ERISA, or (vii) adopt any amendment to any Employee Benefit Plan which
would require the posting of security pursuant to section 401(a)(29) of the
Code, where singly or cumulatively, the above would have a Material Adverse
Effect.
ARTICLE 7 - APPLICATION OF FUNDS
7.1. RECEIPTS ACCOUNT AND OPERATING ACCOUNT.
(a) Borrower has established at Bank of Hawaii, Honolulu Branch,
ABA No. 000-000-000, accounts entitled "GST Telecom Hawaii Project -- Receipts
Account" Account No. 00-000-000 (the "RECEIPTS ACCOUNT) and "GST Telecom Hawaii
Project -- Operating Account" Account No. 00-000-000 (the "OPERATING ACCOUNT"),
respectively. Borrower shall deposit all Project Revenues (excluding
Construction Loan proceeds disbursed by Lender directly to the Person(s)
entitled thereto) in the Receipts Accounts and the Operating Account shall be
used to pay all Project Costs. On the first Business Day of each month until the
Loan Facility has been repaid in full, PROVIDED no Default or Event of Default
has occurred and is continuing, Lender will, to the extent funds are available
in the Receipts Account and are not otherwise restricted or designated for a
different use or purpose, transfer funds from the Receipts Account at the
following times and in the following order of priority:
(i) Monthly, to the Operating Account the amount shown for
such month on the applicable Annual Operating Budget, for the payment of
Operation and Maintenance Costs currently payable and with respect to which
funds have not already been withdrawn from the Operating Account;
(ii) from time to time, to the payment of all fees, costs,
charges and any other amounts due and payable to Lender in connection with this
Agreement and the other Credit Documents;
(iii) at the times set forth in SECTION 2.1(E), to the
payment of interest and principal on the Loan Facility;
(iv) on or within thirty (30) days after the dates set
forth in SECTION 2.1(E) and to the extent permitted under SECTION 6.6 and after
the establishment of prudent
37
reserves for any reasonably anticipated expenses or other items (which shall be
retained in the Operating Account), to Borrower, any part of which may be used
by Borrower to pay dividends to its shareholder in an aggregate amount up to the
amount described in SECTION 6.6 and in compliance with applicable law.
Upon repayment in full of all amounts due under this Agreement and satisfaction
of all Obligations under the Credit Documents, Lender shall disburse any amounts
on deposit in the Receipts Account and the Operating Account to Borrower.
(b) Notwithstanding anything in SECTION 7.1(A) to the contrary,
in lieu of transferring some or all of the amount shown on the applicable Annual
Operating Budget into the Operating Account for the payment of Operation and
Maintenance Costs, Lender may, and Borrower hereby authorizes Lender to, pay
some or all of the Operation and Maintenance Costs directly to the Person(s)
entitled thereto, and such payment shall discharge PRO TANTO the obligations of
Lender hereunder with respect to such amounts.
(c) Any of the payments, disbursements or transfers of funds
provided for in this SECTION 7.1 may be made notwithstanding the existence of a
Default or Event of Default if the requirement that there be no existing Default
or Event of Default is waived by Lender in its sole discretion. Such waiver may
apply to any or all such payments, disbursements or transfers of funds and may
apply to payments of a lesser priority without applying to payments of a greater
priority. (For example, such a waiver may apply to payments of Debt Service
without necessarily applying to payment of Operation and Maintenance Costs.)
(d) Operation and Maintenance Costs payable pursuant to SECTION
7.1(A)(I) shall not in any event exceed the amounts shown on the approved Annual
Operating Budget (as it may be revised from time to time as provided in SECTION
5.7(B)). Borrower shall promptly pay all Operation and Maintenance Costs in
excess of the foregoing limit from funds which are otherwise distributable to
Borrower hereunder, other unrestricted funds of Borrower or equity funds
provided to Borrower. To the extent the Annual Operating Budget is revised
pursuant to SECTION 5.7(B), additional amounts may be transferred to the
Operating Account as set forth in SECTION 7.1(A).
(e) Notwithstanding the preceding provisions of this SECTION 7.1,
so long as no Default or Event of Default has occurred and at such time as is
ninety (90) days after any Default or Event of Default has been cured, PROVIDED
THAT no other Default or Event of Default shall have occurred in such ninety
(90) day period, Borrower shall have the right to operate the Receipts Account
and the Operating Account consistent with the provisions of this SECTION 7.1
without the direct control of Lender; PROVIDED HOWEVER, that Borrower will
provide Lender with monthly reports on the balances, status and activity of such
accounts, and PROVIDED FURTHER, that in no event shall any of the funds in such
accounts be used for any purpose in violation of the terms and conditions of
this Agreement, including without limitation, SECTION 6.6.
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7.2. APPLICATION OF INSURANCE PROCEEDS.
(a) Each of the parties hereto agrees that all amounts and
proceeds (including instruments) in respect of the proceeds of any insurance
policy required to be maintained by Borrower hereunder ("INSURANCE PROCEEDS")
shall, except as otherwise provided in clause (c) below, be paid by the active
insurers directly to Lender (as loss payee or additional insured as provided in
SECTION 5.14 and SCHEDULE 6), and if paid to Borrower, such Insurance Proceeds
shall be received only in trust for Lender, shall be segregated from other funds
of Borrower, and shall be forthwith paid over to Lender in the same form as
received (with any necessary endorsements). Each of the parties hereto agrees,
to the fullest extent that it effectively may do so under applicable law, that
Lender shall apply all such Insurance Proceeds in accordance with the provisions
of SECTIONS 7.2(B) and 7.2(C).
(b) Unless an Event of Default shall have occurred and be
continuing, any business interruption Insurance Proceeds received by Lender or
Borrower shall be deposited into the Receipts Account.
(c) (i) If there shall occur any damage or destruction of the
Project with respect to which Insurance Proceeds for any single loss not in
excess of $500,000 are payable, such Insurance Proceeds shall be paid to
Borrower and applied to the prompt payment of the cost of the repair or
restoration of such damage or destruction.
(ii) If there shall occur any damage or destruction of the
Project with respect to which Insurance Proceeds for any single loss in excess
of $500,000 are payable, Borrower shall promptly notify Lender. Such Insurance
Proceeds shall be applied to the prompt repair or restoration of the Project in
accordance with SECTION 7.2(C)(III) to the extent determined by Borrower and, if
Lender determines that such Insurance Proceeds should be applied to such repair
or restoration to a greater extent in order for Borrower to be able to satisfy
its obligations under the Operative Documents as well as before such damage or
destruction, to such greater extent.
(iii) If there shall occur any damage to or destruction of
the Project with respect to which SECTION 7.2(C)(I) or (II) requires repair or
restoration and
(A) if (1) such damage or destruction does not
constitute the destruction of all or substantially all of the Project, (2)
Borrower and an independent engineer selected by Borrower and subject to
Lender's approval, certify, and Lender determines in its reasonable judgment,
that repair or restoration of the Project is technically and economically
feasible within a six (6) month period and that a sufficient amount of funds is
or will be available to Borrower to make such repairs and restorations, (3) the
Lender determines that after repair and restoration the Project will be able to
repay the Loan Facility and other amounts due the Lender as and when due, (4)
after giving effect to any proposed repair and restoration, but only at the time
that the same are expected to be made, such damage or destruction will not
result in an Event of Default or a Default, (5) Lender shall receive an opinion
of counsel acceptable to Lender to the effect that no material federal, state or
local governmental license, registration, recording, filing, consent, Permit,
order, authorization, certificate, approval, exemption or declaration is
necessary to proceed with the
39
repair and restoration and that no material amendment to this Agreement or any
of the Credit Documents is necessary (or, if any such is necessary, Borrower is
reasonably likely to be able to obtain such as and when required) for the
purpose of subjecting the repairs or restorations to the Liens of the Collateral
Documents, except such, if any, as may be delivered to Lender and that such
amendments and other instruments (if any) have been duly executed and delivered
by and are valid and binding agreements of Borrower and any other party thereto
and subject such repairs or restoration to the Liens of the Collateral
Documents, and (6) Lender shall receive such additional title insurance, title
insurance endorsements, mechanic's lien waivers, certificates, opinions or other
matters as it may reasonably request as necessary or appropriate in connection
with such repairs or restoration or to preserve or protect the Lender's interest
hereunder or in the Collateral, or
(B) Lender shall direct Borrower to undertake any
repair or restoration, then Borrower shall cause any repairs or restoration to
be commenced and completed promptly and diligently at the cost and expense of
Borrower. From time to time after the Lender shall have duly approved the making
of such repairs or restoration, and upon Borrower's written request and the
presentation to Lender of all documents, certificates and information with
respect to such Insurance Proceeds as Lender may reasonably request, including a
certificate from Borrower (A) describing in reasonable detail the nature of the
repairs or restoration, (B) stating the cost of such repairs or restoration and
the specific amount requested to be paid over to or upon the order of Borrower
and that such amount is requested to pay the cost thereof, (C) stating that the
aggregate amount requested by Borrower in respect of such repairs or restoration
(when added to any other Insurance Proceeds received by Borrower in respect of
such damage of destruction) does not exceed the cost of such repairs or
restoration and that a sufficient amount of funds is or will be available to
Borrower to complete the Project,and (D) stating that no Event of Default has
occurred and is continuing other than an Event of Default resulting solely from
such damage or destruction, then any Insurance Proceeds (other than Insurance
Proceeds with respect to business interruption) held by Lender arising out of
such damage or destruction shall, be paid over to or at the direction of
Borrower to pay for the cost of the repairs or restoration in respect of which
such Insurance Proceeds were received to the extent of costs actually incurred.
(iv) If, after Insurance Proceeds have been applied to the
repair or restoration of the Project as provided in SECTIONS 7.2(C)(I) or
7.2(C)(II), Lender determines that the Project will be able to operate at a
level enabling Borrower to satisfy its obligations hereunder as well as before
the damage or destruction, any excess Insurance Proceeds shall be paid into the
Receipts Account; PROVIDED THAT such excess Insurance Proceeds shall, in lieu of
being paid into the Receipts Account, if and to the extent necessary to enable
Borrower to satisfy its obligations hereunder (after accounting for the
prepayment described in this sentence) as well as before such damage or
destruction, be applied to the repayment of the Loan Facility in accordance with
SECTION 2.1(E).
40
(v) If an Event of Default or Default shall have occurred
and be continuing, then any provisions of SECTIONS 7.2(C)(I) through 7.2(C)(IV)
to the contrary notwithstanding, the Insurance Proceeds (including any Permitted
Investments made with such proceeds, which shall be liquidated in such manner as
Lender shall deem reasonable and prudent under the circumstances) may be applied
by Lender to curing such Event of Default or Default. Any Insurance Proceeds
remaining thereafter shall be applied as provided in this SECTION 7.2.
7.3. APPLICATION OF EMINENT DOMAIN PROCEEDS.
(a) All Eminent Domain Proceeds shall be paid by the condemning
authority directly to Lender, and, if paid to Borrower, such Eminent Domain
Proceeds shall be received only in trust for Lender, shall be segregated from
other funds of Borrower and shall forthwith be paid over to Lender in the same
form as received (with any necessary endorsement).
(b) (i) If the Eminent Domain Proceeds with respect to a single
Event of Eminent Domain not in excess of $500,000 are payable, Borrower shall
comply with SECTION 5.16, and such Eminent Domain Proceeds shall be paid to
Borrower and applied to the prompt payment of the cost of the replacement or
restoration of the Collateral if such replacement and restoration is
practicable;
(ii) If the Eminent Domain Proceeds with respect to a
single Event of Eminent Domain in excess of $500,000 are payable, Borrower shall
comply with SECTION 5.15, and such Eminent Domain Proceeds shall be applied to
the prompt replacement or restoration of the Collateral in accordance with
SECTION 7.3(B)(III) to the extent determined by Borrower and, if Lender
determines that such Eminent Domain Proceeds should be applied to such
replacement or restoration to a greater extent in order for Borrower to be able
to satisfy its obligations under the Operative Documents as well as before such
damage or destruction, to such greater extent.
(iii) If there shall occur any Event of Eminent Domain
with respect to which SECTION 7.3(C)(I) or (II) requires restoration or
replacement and
(A) if (1) such Event of Eminent Domain does not
constitute the loss of all or substantially all of the Project, (2) Borrower and
an independent engineer selected by Borrower and subject to Lender's approval,
certify, and Lender determines in its reasonable judgment, that replacement or
restoration of the Project is technically and economically feasible within a six
(6) month period and that a sufficient amount of funds is or will be available
to Borrower to make such replacements and restorations, (3) the Lender
determines that after replacement and restoration the Project will be able to
repay the Loan Facility and other amounts due the Lender as and when due, (4)
after giving effect to any proposed restoration or replacement, but only at the
time that the same are expected to be made, such Event of Eminent Domain will
not result in an Event of Default or a Default, (5) Lender shall receive an
opinion of counsel acceptable to Lender to the effect that no material federal,
state or local governmental license, registration, recording, filing, consent,
Permit, Easement, order, authorization, certificate, approval, exemption or
declaration is
41
necessary to proceed with the restoration or replacement and that no material
amendment to this Agreement or any of the Credit Documents is necessary (or, if
any such is necessary, Borrower is reasonably likely to be able to obtain such
as and when required) for the purpose of subjecting the restored or replacement
Collateral to the Liens of the Collateral Documents, except such, if any, as may
be delivered to Lender and that such amendments and other instruments (if any)
have been duly executed and delivered by and are valid and binding agreements of
Borrower and any other party thereto and subject such replacement or restoration
to the Liens of the Collateral Documents, and (6) Lender shall receive such
additional title insurance, title insurance endorsements, mechanic's lien
waivers, certificates, opinions or other matters as it may reasonably request as
necessary or appropriate in connection with such restoration or replacement or
to preserve or protect the Lender's interest hereunder or in the Collateral, or
(B) Lender shall direct Borrower to undertake any
replacement or restoration, then Borrower shall cause any replacement or
restoration to be commenced and completed promptly and diligently at the cost
and expense of Borrower. From time to time after the Lender shall have duly
approved the making of such restoration or replacement, and upon Borrower's
written request and the presentation to Lender of all documents, certificates
and information with respect to such Insurance Proceeds as Lender may reasonably
request, including a certificate from Borrower (A) describing in reasonable
detail the nature of the replacement or restoration, (B) stating the cost of
such restoration or replacement and the specific amount requested to be paid
over to or upon the order of Borrower and that such amount is requested to pay
the cost thereof, (C) stating that the aggregate amount requested by Borrower in
respect of such restoration or replacement (when added to any other Eminent
Domain Proceeds received by Borrower in respect of such damage of destruction)
does not exceed the cost of such repairs or restoration and that a sufficient
amount of funds is or will be available to Borrower to complete the Project,and
(D) stating that no Event of Default has occurred and is continuing other than
an Event of Default resulting solely from such Event of Eminent Domain, then any
Eminent Domain Proceeds held by Lender arising out of such Event of Eminent
Domain shall, be paid over to or at the direction of Borrower to pay for the
cost of the restoration or replacement of the Collateral in respect of which
such Eminent Domain Proceeds were received to the extent of costs actually
incurred.
(iv) If, after Eminent Domain Proceeds have been applied
to the restoration or replacement of the Collateral as provided in SECTIONS
7.3(C)(I) or 7.3(C)(II), Lender determines that the Project will be able to
operate at a level enabling Borrower to satisfy its obligations hereunder as
well as before the Event of Eminent Domain, any excess Eminent Domain Proceeds
shall be paid into the Receipts Account; PROVIDED THAT such excess Eminent
Domain Proceeds shall, in lieu of being paid into the Receipts Account, if and
to the extent necessary to enable Borrower to satisfy its obligations hereunder
(after accounting for the prepayment described in this sentence) as well as
before such Event of Eminent Domain, be applied to the repayment of the Loan
Facility in accordance with SECTION 2.1(E).
If Lender so determines that the Project should be restored, but
no or insufficient replacement property is available for such restoration, then
such Eminent Domain Proceeds shall be applied, after acquisition of whatever
necessary replacement property is
42
available, to the prepayment of the Loan Facility. After Eminent Domain Proceeds
have been applied to the restoration of the Project as provided in the second
previous sentence or if Lender has determined that the Project need not or can
not be restored, any remaining Eminent Domain Proceeds or the entire fund of
Eminent Domain Proceeds, as the case may be, shall be applied to the prepayment
of the Loan Facility.
(v) Notwithstanding the foregoing provisions of this
SECTION 7.3, if an Event of Default shall have occurred and be continuing, any
amount to be applied pursuant to this SECTION 7.3, shall be paid to Lender as
security for the obligations of Borrower under the Credit Documents, and may be
held, applied or realized upon by Lender as provided herein or in the other
Credit Documents with respect to holding, applying or realizing upon Collateral
after the occurrence of an Event of Default. To the extent any Eminent Domain
Proceeds then remain, at such time thereafter as no Event of Default shall be
continuing, such amount shall be applied as provided in this SECTION 7.3.
7.4. SECURITY INTEREST IN PROCEEDS AND ACCOUNTS. Borrower hereby
pledges, assigns and transfers to Lender on behalf of Lender and grants Lender
on behalf of Lender a security interest in and to all Insurance Proceeds and
Eminent Domain Proceeds (collectively, "PROCEEDS") and Accounts as security for
the Loan Facility and the full and faithful performance of all of Borrower's
obligations hereunder and under the other Credit Documents. Borrower shall not
have any rights or powers with respect to any Account except to have funds on
deposit therein applied in accordance with this Agreement. Lender is hereby
authorized to reduce to cash any Permitted Investment (without regard to
maturity) in order to make any application required by any Section of this
ARTICLE 7 or otherwise pursuant to the Credit Documents. Upon the occurrence of
an Event of Default, Lender shall have all rights and powers with respect to
Proceeds as it has with respect to any other Collateral and may apply Proceeds
to the payment of interest, principal, fees, costs, charges or other amounts due
or payable to Lender with respect to the Loan Facility in such order as Lender
may elect in its sole discretion. Borrower shall not have any rights or powers
with respect to Proceeds except as expressly provided in SECTION 7.5.
7.5. PERMITTED INVESTMENTS. All amounts held by Borrower and/or Lender
in the Accounts or as Insurance Proceeds or Eminent Domain Proceeds shall only
be invested in Permitted Investments as directed by and at the expense and risk
of Borrower.
ARTICLE 8 - EVENTS OF DEFAULT; REMEDIES
8.1. EVENTS OF DEFAULT.
The occurrence of any of the following events shall constitute an event
of default ("EVENT OF DEFAULT") hereunder:
(a) FAILURE TO MAKE PAYMENTS. Borrower shall fail to pay, in
accordance with the terms of this Agreement, (i) any principal on any of the
Loan Facility on the date that such sum is due, (ii) any interest on any of the
Loan Facility within five (5) days after the date that such sum is due, or (iii)
any other fee, cost, charge or other sum due under the
43
Credit Documents within ten (10) days after the date on which written notice is
given to Borrower pursuant to the provisions of SECTION 10.1 that such sum is
due.
(b) JUDGMENTS. A judgment or judgments shall be entered against
Borrower (i) in the aggregate amount of $250,000 or more (other than (A) a
judgment which is fully covered by insurance or discharged within sixty (60)
days after its entry, or (B) a judgment, the execution of which is effectively
stayed within sixty (60) days after its entry but only for thirty (30) days
after the date on which such stay is terminated or expires) or (ii) which would
reasonably be expected to materially impair or inhibit the construction of or
Borrower's use or operation of the Project for the purpose for which the Project
was intended or materially impair the value of the Collateral or the interests
of the Lender under this Agreement and the other Credit Documents;
(c) MISSTATEMENTS; OMISSIONS. Any financial statement,
representation, report, warranty or certificate made or prepared by, under the
control of or on behalf of Borrower and furnished to the Lender pursuant to this
Agreement or any other Credit Document, or in any separate statement or document
to be delivered to the Lender hereunder or under any other Credit Document,
shall contain an untrue or misleading statement of a material fact or shall fail
to state a material fact necessary to make the statements therein not misleading
as of the date made and as a result thereof, there is or is likely to be a
Material Adverse Effect as determined by the Lender, PROVIDED THAT no Event of
Default shall occur pursuant hereto if, within thirty (30) days of the date on
which Borrower receives notice (from any source) that such untrue or misleading
statement or failure to state a material fact has occurred, Borrower shall
eliminate or otherwise address to the satisfaction of the Lender any such
Material Adverse Effect relating to such misleading statement or failure to
state a material fact.
(d) BANKRUPTCY; INSOLVENCY. Borrower or Borrower's shareholder
shall institute a voluntary case seeking liquidation or reorganization under the
Bankruptcy Law (or any successor statute), or shall consent to the institution
of an involuntary case thereunder against it; or Borrower or Borrower's
shareholder shall file a petition, answer or consent or shall otherwise
institute any similar proceeding under any other applicable federal or state
law, or shall consent thereto; or Borrower or Borrower's shareholder shall apply
for, or by consent or acquiescence there shall be an appointment of, a receiver,
liquidator, sequestrator, trustee or other officer with similar powers, or
Borrower or Borrower's shareholder shall make an assignment for the benefit of
creditors; or Borrower or Borrower's shareholder shall admit in writing its
inability to pay its debts generally as they become due; or if an involuntary
case shall be commenced seeking the liquidation or reorganization of Borrower or
Borrower's shareholder under the Bankruptcy Law (or any successor statute) or
any similar proceeding shall be commenced against Borrower or Borrower's
shareholder under any other applicable federal or state law and (i) the petition
commencing the involuntary case is not timely controverted, (ii) the petition
commencing the involuntary case is not dismissed within sixty (60) days of its
filing, (iii) an interim trustee is appointed to take possession of all or a
portion of the property, and/or to operate all or any part of the business of
Borrower or Borrower's shareholder and such appointment is not vacated within
sixty (60) days, or (iv) an order for relief shall have been issued or entered
therein; or a decree or order of a court having jurisdiction in the premises for
the appointment of a receiver, liquidator,
44
sequestrator, trustee or other officer having similar powers of Borrower or
Borrower's shareholder or of all or a part of their property, shall have been
entered; or any other similar relief shall be granted against Borrower or
Borrower's shareholder under any applicable federal or state law.
(e) CROSS DEFAULT. Borrower shall default for a period beyond any
applicable grace period (i) in the payment of any principal, interest or other
amount due under any agreement involving the borrowing of money or the advance
of credit and the outstanding amount or amounts payable under all such
agreements equals or exceeds $250,000 in the aggregate, or (ii) in the payment
of any amount or performance of any obligation due under any guarantee or other
agreement if in either case, pursuant to such default, the holder of the
obligation concerned exercises its right to accelerate the maturity of an
indebtedness evidenced thereby which equals or exceeds $250,000.
(f) ERISA. If Borrower or any ERISA Affiliate should establish,
maintain, contribute to or become obligated to contribute to any ERISA Plan and
(i) a reportable event (as defined in Section 4043(b) of ERISA) shall have
occurred with respect to any ERISA Plan and, within thirty (30) days after the
reporting of such reportable event to Lender by Borrower (or Lender otherwise
obtaining knowledge of such event) and the furnishing of such information as
Lender may reasonably request with respect thereto, Lender shall have notified
Borrower in writing that Lender has made a determination that, on the basis of
such reportable event, there are reasonable grounds for the termination of such
ERISA Plan by the PBGC or for the appointment by the appropriate United States
District Court of a trustee to administer such ERISA Plan; or (ii) a trustee
shall be appointed by a United States District Court to administer any ERISA
Plan; or (iii) the PBGC shall institute proceedings to terminate any ERISA Plan;
or (iv) a complete or partial withdrawal by Borrower or any ERISA Affiliate from
any Multiemployer Plan shall have occurred, or any Multiemployer Plan shall
enter reorganization status, become insolvent, or terminate (or notify Borrower
or any ERISA Affiliate of its intent to terminate) under Section 4041A of ERISA;
PROVIDED THAT any of the events described in this SECTION 8.1(F) shall involve
(A) one or more ERISA Plans that are single-employer plans (as defined in
Section 4001(a)(15) of ERISA) and under which the aggregate gross amount of
unfunded benefit liabilities (as defined in Section 4001(a)(16) of ERISA),
including vested unfunded liabilities which arise or might arise as the result
of the termination of such ERISA Plan or Plans, and/or (B) one or more
Multiemployer Plans to which the aggregate liabilities of Borrower and all ERISA
Affiliates, shall exceed Five Hundred Thousand Dollars ($500,000).
(g) BREACH OF OPERATIVE DOCUMENTS. Borrower or any other party
thereto shall breach or default under any term, condition, provision, covenant,
representation or warranty contained in any Credit Document, Material Project
Document or other agreement to which Borrower is a party and Lender shall have
determined that such breach or default will have a Material Adverse Effect and
such breach or default shall continue unremedied for thirty (30) days after
notice from Lender to Borrower; PROVIDED, HOWEVER, that if the breach or default
cannot be remedied within such thirty (30) days despite Borrower's and/or such
other party's, as the case may be, best efforts to do so and the breach or
default is capable of being remedied within a period of ninety (90) days, Lender
will not unreasonably withhold its consent to an extension for such additional
period (not to exceed ninety (90) days) as is
45
reasonably necessary beyond such initial thirty (30) day period to cure such
breach or default if remedial action is promptly instituted within such thirty
(30) day period and is thereafter diligently pursued until the breach or default
is corrected. Notwithstanding the foregoing, Borrower's stockholder shall
default in the performance of any of its respective obligations under its Pledge
Agreement and such default is not cured within five (5) days after notice
thereof to such stockholder from Lender.
(h) BREACH OF TERMS OF AGREEMENT.
(i) Borrower shall fail to perform or observe any of the
covenants set forth in SECTIONS 5.1, 5.2, 5.4, 5.7, 5.9, 5.11, 5.13, 5.14, 5.15,
or 5.16, SECTIONS 6.1 through 6.18 or ARTICLE 7; or
(ii) Borrower shall fail to perform or observe any other
covenant to be observed or performed by it hereunder or under any Credit
Document and not otherwise specifically provided for in SECTION 8.1(H)(I) or
elsewhere in SECTION 8.1, and such failure shall continue unremedied for a
period of thirty (30) days after Borrower becomes aware thereof or receives
written notice thereof from Lender, PROVIDED, HOWEVER, that if such default is
of a nature such that it cannot reasonably be cured within such thirty (30) day
period but is susceptible to cure within a longer period, an Event of Default
shall not result therefrom so long as (A) Borrower has, promptly upon discovery
thereof, given written notice to Lender of such default (PROVIDED, that if any
Event of Default is cured within any applicable time period specified herein, or
waived or temporarily waived by the Lender, the failure alone to give notice of
such Event of Default as provided in this sentence shall not be deemed an Event
of Default); (B) Borrower as promptly as practicable commences action reasonably
designed to cure such default and continues diligently to pursue such action and
(C) the Lender in its sole discretion shall have determined that such default
does not and will not have a Material Adverse Effect.
(i) COMPLETION. Completion shall not have occurred by the
Construction Loan Maturity Date.
(j) LOSS OF STATUS.
(i) The CPCN or the FCC License Agreements shall be
revoked or suspended, or
(ii) Borrower shall lose its status as a nondominant
interexchange carrier under the Communications Act and the regulations
thereunder and Lender determines in its discretion, that such loss could
reasonably be anticipated to have a Material Adverse Effect, or
(iii) Administrative or judicial proceedings are commenced
by the PUC or the FCC that could result in the occurrence of either of
subclauses (i) or (ii).
(k) DEFAULT IN CONSTRUCTION. At any time prior to Completion, the
Project shall be abandoned or work thereon shall cease for a period of more than
thirty (30) days
46
(which period shall be measured from the first occurrence of a work stoppage and
continuing until work of a substantial nature is resumed and thereafter
diligently continued, but which period shall not include delays caused by Force
Majeure and strikes not extending for any one work stoppage or abandonment
beyond 30 days so long as an independent engineer, selected by Borrower and
subject to Lender's approval, has certified that Completion is not likely to be
achieved beyond the applicable Construction Loan Maturity Date, PROVIDED THAT
Borrower gives Lender immediate written notice of all such events) for any
reason, or the Project shall not be constructed substantially in accordance with
the Plans and Specifications (except as to changes therein approved by the
Lender or permitted by SECTION 6.12), or changes shall be made in the Plans and
Specifications without the prior written approval of the Lender (except as to
changes permitted by SECTION 6.12).
(l) SECURITY. Any of the Collateral Documents, once executed and
delivered, shall, except as the result of the acts or omissions of the Lender,
in any material respect fail to provide the Lender the Liens, security interest,
rights, titles, interest, remedies, powers or privileges intended to be created
thereby or cease to be in full force and effect, or the validity thereof or the
applicability thereof to this Agreement, the Loan Facility, the Note or any
other obligations purported to be secured or guaranteed thereby or any part
thereof shall be disaffirmed or questioned by or on behalf of Borrower or any
other party thereto or there shall occur a default or event of default (however
defined) under any of the Collateral Documents, such default or event of default
shall not have been cured within thirty (30) days after its occurrence and the
Lender shall determine in its sole discretion that such default or event of
default could have a Material Adverse Effect.
(m) LOSS OF OR FAILURE TO OBTAIN APPLICABLE PERMIT OR APPLICABLE
EASEMENT. Any Applicable Permit or Applicable Easement, including without
limitation, submerged land rights of entry and easements with respect to the
undersea fiber optic cable which is part of the Project, necessary for operation
of the Project shall be revoked or cancelled by, or not obtained from, the
issuing agency or other Governmental Authority having jurisdiction or other
grantor or potential grantor thereof and within ninety (90) days thereafter
Borrower is not able to replace or reinstate such Permit or Easement or
demonstrate to the Lender that loss of or failure to obtain such Permit or
Easement will not have a Material Adverse Effect.
(n) LOSS OF COLLATERAL. Any substantial portion of Borrower's
property is seized or appropriated without fair value being paid therefor such
as to allow replacement of such property and/or prepayment of the Loan Facility
as provided in SECTION 7.3 and to allow Borrower in the Lender's reasonable
judgment to continue satisfying its obligations hereunder and under the other
Operative Documents.
(o) FAILURE TO PAY UPFRONT FEES. Borrower shall fail to pay the
Upfront Fee in accordance with Section 2.3.
(p) CLAIMS OR RIGHTS IN BORROWER'S CAPITAL STOCK. GST fails to
hold all of the issued and outstanding capital stock of Borrower, or any third
party has the right to any of Borrower's capital stock.
47
8.2. REMEDIES.
Upon the occurrence and during the continuation of an Event of Default,
Lender may, without further notice of default, presentment or demand for
payment, protest or notice of non-payment or dishonor, or other notices or
demands of any kind, all such notices and demands being waived, exercise any or
all of the following rights and remedies, in any combination or order that the
Lender may elect, in addition to such other rights or remedies as the Lender may
have hereunder, under the Collateral Documents or at law or in equity:
(a) NO FURTHER LOANS. Refuse, and Lender shall not be obligated,
to make any additional Construction Loans or make any payments from any Account
or any Proceeds or other funds held or controlled by Lender under the Credit
Documents or on behalf of Borrower.
(b) CURE. Without any obligation to do so, make disbursements or
Construction Loans to or on behalf of Borrower to cure any Event of Default or
Default hereunder and to cure any default and render any performance under any
Project Documents as the Lender in its sole discretion may consider necessary or
appropriate, whether to preserve and protect the Collateral or the Lender's
interests therein or for any other reason, and all sums so expended, together
with interest on such total amount at the Default Rate, shall be repaid by
Borrower on demand to Lender, and shall be secured by the Credit Documents,
notwithstanding that such expenditures may, together with amounts advanced under
this Agreement, exceed the amount of the Committed Amount.
(c) ACCELERATION. Declare and make all sums of accrued and
outstanding principal and accrued but unpaid interest remaining under this
Agreement together with all unpaid fees, costs (including Liquidation Costs) and
charges due hereunder or under any other Credit Document, immediately due and
payable.
(d) CASH COLLATERAL. Subject to SECTION 10.2, apply or execute
upon any amounts on deposit in any Account or any Proceeds or Borrower Equity or
any other moneys of Borrower on deposit with Lender in the manner provided in
the Uniform Commercial Code and other relevant statutes and decisions and
interpretations thereunder with respect to cash collateral.
(e) POSSESSION OF PROJECT. Enter into possession of the Project
and perform any and all work and labor necessary to complete the Project
substantially according to the Construction Contract and the Plans and
Specifications or to operate, maintain and repair the Project, and all sums
expended by Lender in so doing, together with interest on such total amount at
the Default Rate, shall be repaid by Borrower to Lender upon demand and shall be
secured by the Credit Documents, notwithstanding that such expenditures may,
together with amounts advanced under this Agreement, exceed the amount of the
Total Construction Loan Commitment.
(f) REMEDIES UNDER CREDIT DOCUMENTS. Exercise any and all rights
and remedies available to it under any of the Credit Documents, including making
demand for
48
payment under any judicial or non-judicial foreclosure or public or private sale
of any of the Collateral pursuant to the Collateral Documents.
ARTICLE 9 - ASSIGNMENTS, ETC.
9.1. ASSIGNMENTS.
Lender may in accordance with applicable law, after giving reasonable
notice to Borrower, sell and assign to one or more parties (individually, an
"ASSIGNEE") all or a portion of its rights and obligations under this Agreement
and the other Credit Documents (such a sale and assignment to be referred to
herein as an "ASSIGNMENT") pursuant to an assignment agreement in the form of
EXHIBIT Q (an "ASSIGNMENT AGREEMENT"), executed by each Assignee and Lender (as
"ASSIGNOR") PROVIDED, HOWEVER, that Lender shall not assign more than forty-nine
percent (49%) of its rights or obligations hereunder or assign any of its rights
or obligations hereunder to a competitor of Borrower or a Person who is or has
been engaged in a dispute with Borrower; PROVIDED FURTHER, that upon notice that
Lender intends to assign any part of its interest hereunder, Borrower shall
promptly provide Lender with a list of its competitors and those Persons with
which it has, or has had, disputes. Upon the execution, delivery, acceptance and
recording of each Assignment Agreement, from and after the Assignment Effective
Date determined pursuant to such Assignment Agreement, (A) each Assignee
thereunder shall be a Lender hereunder with a Proportionate Share as set forth
on ATTACHMENT 1 to such Assignment Agreement and shall have the rights, duties
and obligations of Lender under this Agreement and the other Credit Documents,
and (B) the Assignor thereunder shall be a Lender with a Proportionate Share as
set forth on ATTACHMENT 1 to such Assignment Agreement, or, if the Proportionate
Share of the Assignor has been reduced to 0%, the Assignor shall cease to be a
Lender. On or prior to the Assignment Effective Date determined pursuant to each
Assignment Agreement, Borrower, at its expense, shall execute and deliver to
Lender in exchange for the respective surrendered Note of the Assignor
thereunder, a new Note to the order of each Assignee thereunder (with each new
Note to be in an amount equal to the Committed Amount assumed by such Assignee)
and, if the Assignor has retained a Committed Amount hereunder, a new Note to
the order of the Assignor (with the new Note to be in an amount equal to the
Committed Amount retained by it). Each such new Note shall be dated the Closing
Date and each such new Note shall otherwise be in the form of the Note replaced
thereby. The Note surrendered by the Assignor shall be returned by Lender to
Borrower marked "cancelled".
9.2. CONFIDENTIALITY. Lender may disclose the Credit Documents and any
financial or other information relating to Borrower to any potential Assignee.
9.3. SECURITIES LAWS. Notwithstanding the foregoing provisions of this
ARTICLE 9, no sale, assignment, transfer, negotiation or other disposition of
the interests of Lender hereunder or under the other Credit Documents shall be
allowed if it would violate the Securities Act of 1933, as amended (the "Act"),
or would require registration under the Act, any other federal securities laws
or regulations or the securities laws or regulations of any applicable
jurisdiction. Borrower shall, from time to time at the request and expense of
Lender, execute and deliver to Lender, or to such party or parties as Lender may
designate,
49
any and all further instruments as may in the opinion of Lender be necessary or
advisable to give full force and effect to such disposition.
ARTICLE 10 - MISCELLANEOUS
10.1. NOTICES. All notices, notifications and other communications
required or permitted by this Agreement shall be in writing and shall be
delivered by hand, telegraphically transmitted, sent by facsimile (with a copy
sent by overnight mail), or mailed by overnight courier to the parties at the
following addresses (or such other address for a party as shall be specified by
notice given pursuant hereto):
If to Lender: TM Communications Hawaii LLC
c/o Tomen America Inc.
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx Xxxxxx
Facsimile No. (000) 000-0000
with a copy to: Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxx
Facsimile No. (000) 000-0000
If to Borrower: GST Telecom Hawaii, Inc.
0000 XX Xxxxxxxx Xxx
Xxxxxxxxx, XX 00000
Attn: Xxxx Xxxxx, Chief Executive Officer
Facsimile No. (000) 000-0000
with a copy to: Xxxxxx Xxxxxxxx Frome & Xxxxxxxxxx, LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxx Xxxxx
Facsimile No. (000) 000-0000
Notices delivered by hand, telegraphically transmitted, or sent by
facsimile shall be deemed given the day so delivered, transmitted or sent.
Notices delivered or mailed as provided herein shall be deemed given on the date
of actual receipt. Failure to deliver a copy of a notice to counsel for a party
as provided above shall not constitute failure to give notice hereunder. Notice
so given shall be effective upon receipt by the addressee, except that
communication or notice so transmitted by telecopy or other direct written
electronic means shall be deemed to have been validly and effectively given on
the day (if a Business Day and, if not, on the next following Business Day) on
which it is transmitted if transmitted before 4 p.m., recipient's time, and if
transmitted after that time, on the next following Business Day; PROVIDED,
HOWEVER, that if any notice is tendered to an addressee and the
50
delivery thereof is refused by such addressee, such notice shall be effective
upon such tender. Any party shall have the right to change its address for
notice hereunder to any other location within the continental United States by
giving of thirty (30) days' notice to the other parties in the manner set forth
hereinabove.
10.2. ADDITIONAL SECURITY; RIGHT TO SET-OFF. Any deposits or other sums
at any time credited or due from Lender and any Project Revenues, securities or
other property of Borrower in the possession of Lender may at all times be
treated as collateral security for the payment of amounts due with respect to
the Loan Facility and the Note and all other obligations of Borrower to Lender
under this Agreement and the other Credit Documents, and Borrower hereby pledges
to Lender for the benefit of the Lender and grants Lender a security interest in
and to all such deposits, sums, securities or other property. Regardless of the
adequacy of any other collateral, Lender and ONLY Lender, may execute or realize
on the Lender's security interest in any such deposits or other sums credited by
or due from Lender to Borrower, may apply any such deposits or other sums to or
set them off against Borrower's obligations to Lender under the Note and this
Agreement at any time after the occurrence and during the continuance of any
Event of Default.
10.3. DELAY AND WAIVER. No delay or omission to exercise any right,
power or remedy accruing to the Lender upon the occurrence of any Event of
Default or Default or any breach or default of Borrower under this Agreement or
any other Credit Document shall impair any such right, power or remedy of the
Lender, nor shall it be construed to be a waiver of any such breach or default,
or an acquiescence therein, or of or in any similar breach or default thereafter
occurring, nor shall any waiver of any single Event of Default, Default or other
breach or default be deemed a waiver of any other Event of Default, Default or
other breach or default theretofore or thereafter occurring. Any waiver, permit,
consent or approval of any kind or character on the part of Lender of any Event
of Default, Default or other breach or default under this Agreement or any other
Credit Document, or any waiver on the part of Lender of any provision or
condition of this Agreement or any other Credit Document, must be in writing and
shall be effective only to the extent in such writing specifically set forth.
All remedies, either under this Agreement or any other Credit Document or by law
or otherwise afforded to Lender, shall be cumulative and not alternative.
10.4. COSTS, EXPENSES AND ATTORNEYS' FEES. Borrower will pay to Lender
on demand (a) all reasonable out-of-pocket costs, fees and expenses, including
reasonable attorneys' fees and expenses, incurred by Lender in connection with
the enforcement or protection (or attempted enforcement or protection) of any
rights or remedies of Lender under this Agreement or any other Credit Document
and (b) the reasonable fees, expenses and disbursements of any engineering,
environmental, insurance, construction or other consultants to Lender incurred
in connection with any of the foregoing.
10.5. ATTORNEY-IN-FACT.
(a) For the purpose of allowing Lender to exercise the rights and
remedies provided in ARTICLE 8, following the occurrence and during the
continuation of an Event of Default, Borrower hereby constitutes and appoints
Lender its true and lawful attorney-in-fact,
51
with full power of substitution, to complete any or all of the Project in the
name of Borrower, and hereby empowers such attorney or attorneys as follows:
(i) To use any unadvanced proceeds of the Construction
Loans and any Borrower Equity for the purpose of completing, operating,
maintaining and repairing any or all of the Project and to perform any and all
of Borrower's obligations under the Project Documents;
(ii) To make such changes and corrections in the Plans and
Specifications or the operating and maintenance practices and procedures of the
Project as they consider reasonably necessary or desirable to complete the work
on any or all of the Project in substantially the manner contemplated by the
Construction Contracts;
(iii) To employ such contractors, subcontractors, agents,
architects, inspectors and other Persons as reasonably shall be required for
such purposes;
(iv) To pay, settle or compromise all bills and claims
which may be or become liens or security interests against any or all of the
Project or the Collateral, or any part thereof, unless a bond or other security
satisfactory to Lender has been provided;
(v) To execute applications and certificates in the name
of Borrower which reasonably may be required by the Credit Documents or any
other agreement or instrument executed by Borrower in connection with the
Project;
(vi) To prosecute and defend all actions or proceedings in
connection with the Project or the Collateral or any part thereof and to take
such action and require such performance as Lender reasonably deems necessary
under any performance and payment bond or the Credit Documents;
(vii) To do any and every act which Borrower might do on
its behalf with respect to the Collateral or any part thereof or any or all of
the Project and to exercise any or all of Borrower's rights and remedies under
any or all of the Project Documents; and
(viii) To use any funds in any Account to pay interest or
principal with respect to the Loan Facility or fees and other amounts due to
Lender, as they may be due from time to time or, to pay Project Costs.
(b) The powers of attorney set forth in this SECTION 10.5 shall
be deemed to be powers coupled with interests and shall be irrevocable.
10.6. ENTIRE AGREEMENT; AMENDMENTS AND MODIFICATIONS. This Agreement and
any agreement, document or instrument attached hereto as exhibits or schedules
or otherwise or referred to herein integrate all the terms and conditions
mentioned herein or incidental hereto and supersede all oral negotiations and
prior writings, in respect to the subject matter hereof. In the event of any
conflict between the terms, conditions and provisions of this Agreement and any
such agreement, document or instrument, the terms, conditions and provisions of
this Agreement shall prevail. This Agreement and the other Credit Documents
52
may only be amended or modified by an instrument in writing signed by Borrower,
Lender and any other parties to be charged or as set forth in SECTION 9.1.
10.7. GOVERNING LAW. This Agreement, and any instrument or agreement
required hereunder (to the extent not expressly provided for therein), shall be
governed by, and construed under, the laws of the State of New York without
reference to conflicts of law rules.
10.8. SEVERABILITY. In case any one or more of the provisions contained
in this Agreement should be invalid, illegal or unenforceable in any respect,
the validity, legality and enforceability of the remaining provisions shall not
in any way be affected or impaired thereby.
10.9. HEADINGS. Paragraph headings have been inserted in this Agreement
as a matter of convenience for reference only and are not a part of this
Agreement and shall not be used in the interpretation of any provision of this
Agreement.
10.10. ACCOUNTING TERMS. All accounting terms used in this Agreement or
in any other Credit Document shall be construed, and all accounting and
financial computations, hereunder or thereunder, shall be computed, in
accordance with GAAP.
10.11. NO PARTNERSHIP; ETC. The Lender and Borrower intend that the
relationship between them shall be solely that of creditor and debtor. Nothing
contained in this Agreement, the Note or in any of the other Credit Documents
shall be deemed or construed to create a partnership, tenancy-in-common, joint
tenancy, joint venture or co-ownership by or between the Lender and Borrower or
any other Person. The Lender shall not be in any way responsible or liable for
the debts, losses, obligations or duties of Borrower or any other Person with
respect to the Project or otherwise. All obligations to pay real property or
other taxes, assessments, insurance premiums, and all other fees and charges
arising from the ownership, operation or occupancy of the Project and to perform
all obligations and other agreements and contracts relating to the Project shall
be the sole responsibility of Borrower.
10.12. LIMITATION ON LIABILITY. No claim shall be made by Borrower, any
shareholder of Borrower or sponsor or any of their Affiliates against the Lender
or any of their Affiliates, directors, employees, attorneys or agents for any
special, indirect, consequential or punitive damages in respect of any breach or
wrongful conduct (whether or not the claim therefor is based on contract, tort
or duty imposed by law), in connection with, arising out of or in any way
related to the transactions contemplated by this Agreement or the other
Operative Documents or any act or omission or event occurring in connection
therewith; and Borrower hereby waives, releases and agrees not to xxx upon any
such claim for any such damages, whether or not accrued and whether or not known
or suspected to exist in its favor.
10.13. WAIVER OF JURY TRIAL. THE LENDER AND BORROWER HEREBY KNOWINGLY,
VOLUNTARILY, AND INTENTIONALLY WAIVE ANY RIGHTS THEY MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH,
53
THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT, OR ANY COURSE OR CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN), OR ACTIONS OF THE LENDER OR
BORROWER. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE LENDER TO ENTER INTO
THIS AGREEMENT.
10.14. CONSENT TO JURISDICTION. The Lender and Borrower agree that,
except as may otherwise be required by law, any legal action or proceeding by or
against Borrower or with respect to or arising out of this Agreement, the Note,
or any other Credit Document may be brought in or removed to the courts of the
State of New York sitting in New York City, or of the United States of America
for the Southern District of New York, as Lender may elect. By execution and
delivery of this Agreement, Lender and Borrower accept, for themselves and in
respect of their property, generally and unconditionally, the jurisdiction of
the aforesaid courts. Lender and Borrower irrevocably consent to the service of
process out of any of the aforementioned courts in any such action or proceeding
by the mailing of copies thereof by registered or certified airmail, postage
prepaid, to Lender or Borrower, as the case may be, at their respective
addresses for notices as specified herein and that such service shall be
effective five (5) Business Days after such mailing. Nothing herein shall affect
the right to serve process in any other manner permitted by law or the right of
Lender to bring legal action or proceedings in any other competent jurisdiction,
including judicial or non-judicial foreclosure of a mortgage. Notwithstanding
the foregoing, service of process shall not be deemed mailed (i) to Lender until
a copy of all matters to be served have been mailed to Xxxxxx, Xxxxxxxxxx &
Xxxxxxxxx LLP, 000 Xxxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000, Attention:
Xxxxxxx X. Xxxxxx, Esq. or such other Person as Lender may hereafter designate
by notice given pursuant to SECTION 10.1 or (ii) to Borrower until a copy of all
matters to be served have been mailed to Olshan, Grundman, Frome & Xxxxxxxxxx,
LLP, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxxx Xxxxx, Esq.
or such other Person as Borrower may hereafter designate by notice given
pursuant to SECTION 10.1. Lender and Borrower further agree that the aforesaid
courts of the State of New York and of the United States of America shall have
exclusive jurisdiction with respect to any claim or counterclaim of Borrower
based upon the assertion that the rate of interest charged by Lender on or under
this Agreement, the Loan Facility and/or the other Credit Documents is usurious.
Lender and Borrower hereby waive any right to stay or dismiss any action or
proceeding under or in connection with any or all of the Project, this Agreement
or any other Credit Document brought before the foregoing courts on the basis of
FORUM NON-CONVENIENS.
10.15. USURY. Nothing contained in this Agreement or the Note shall be
deemed to require the payment of interest or other charges by Borrower or any
other Person in excess of the amount which Lender or other holders of the Note
("Note Holders") may lawfully charge under any applicable usury laws. In the
event that Lender or other Note Holders shall collect moneys under this
Agreement, the Note or any other Credit Document which are deemed to constitute
interest which would increase the effective interest rate to a rate in excess of
that permitted to be charged by applicable law, all such sums deemed to
constitute interest in excess of the legal rate shall, upon such determination,
at the option of Lender or other Note Holders, be returned to Borrower or
credited against the principal balance of the Note then outstanding.
54
10.16. SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns. Borrower may not assign or otherwise transfer any of its
rights under this Agreement without the prior written consent of Lender.
10.17. COUNTERPARTS. This Agreement may be executed in one or more
duplicate counterparts and when signed by each of the parties listed below shall
constitute a single binding agreement.
* * * *
55
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed by their officers thereunto duly authorized as of the day and year
first above written.
GST TELECOM HAWAII, INC.,
a Hawaii corporation,
as Borrower
By: /s/ Xxxxxxxx X. Xxxxxx
------------------------------------
Name: Xxxxxxxx X. Xxxxxx
Title: Vice President
TM Communications Hawaii LLC,
a Delaware limited liability company
as Lender
By: /s/ Xxxxx Xxxxxx
------------------------------------
Name: Xxxxx Xxxxxx
Title: Vice President
56
EXHIBIT A
DEFINITIONS
"ACCOUNT DEBTOR" has the meaning given in SECTION 5(C) of the
Security Agreement.
"ACCOUNT SECURITY AGREEMENT" has the meaning given in SECTION
2.7(A) of the Credit Agreement.
"ACCOUNTS" means the Receipts Account and the Operating Account.
"ACT" means the U.S. federal Securities Act of 1933, as amended.
"ADDITIONAL PROJECT DOCUMENTS" means any other contracts or
agreements related to the construction, testing, maintenance, repair, operation
or use of the Project entered into by Borrower and any other Person subsequent
to the Closing Date.
"AFFILIATE" has the meaning set forth in Rule 12b-2 of the
regulations under the Securities Exchange Act of 1934, as amended PROVIDED,
HOWEVER, that in no case shall Lender or any of its Affiliates be deemed to be
Affiliates of Greenstar.
"ALTERNATE INTEREST RATE" means a fluctuating per annum rate of
interest as shall be in effect from time to time which rate shall at all times
be equal to the Federal Funds Rate PLUS three percent (3%). Any change in the
Alternate Interest Rate due to a change in the Federal Funds Rate shall be
effective as of the effective date of such change in such Federal Funds Rate.
"ALTERNATE INTEREST RATE LOAN" means any portion of the Loan
Facility converted pursuant to SECTION 2.5(A) of the Credit Agreement into a
loan at the Alternate Interest Rate.
"AMEX" means the American Stock Exchange.
"ANNUAL OPERATING BUDGET" means, with respect to any fiscal year
of Borrower, an annual operating budget setting forth all reasonably anticipated
Project Revenues, Debt Service, Operation and Maintenance Costs, allowances for
reserves, and information described in SECTION 5.7(B) of the Credit Agreement.
"Annual Operating Budget" includes the First Annual Operating Budget.
"APPLICABLE EASEMENT" means any Easement that is necessary at any
given time in light of the stage of development, construction or operation of
the Project to construct, test, operate, maintain, repair, own or use the
Project as contemplated by the Operative Documents, to enter into any Operative
Document or to consummate any transaction contemplated thereby.
A-1
"APPLICABLE PERMIT" means any Permit, including any zoning,
environmental protection, pollution, sanitation, FCC, PUC, safety, sitting,
building or other Permit, (a) that is necessary at any given time in light of
the stage of development, construction or operation of the Project to construct,
test, operate, maintain, repair, own or use the Project as contemplated by the
Operative Documents, to enter into any Operative Document or to consummate any
transaction contemplated thereby, or (b) that is necessary so that neither
Borrower nor any Affiliate may be deemed by any Governmental Authority to be
subject to regulation under the Communications Act or under any state laws or
regulations as a result of the construction and operation of the Project.
"ASSIGNED AGREEMENT" has the meaning given in SECTION 2(D)(I) of
the Security Agreement.
"ASSIGNEE" has the meaning given in SECTION 9.1 of the Credit
Agreement.
"ASSIGNMENT" has the meaning given in SECTION 9.1 of the Credit
Agreement.
"ASSIGNMENT AGREEMENT" has the meaning given in SECTION 9.1 of
the Credit Agreement.
"ASSIGNOR" has the meaning given in SECTION 9.1 of the Credit
Agreement.
"BANKRUPTCY LAW" means Title 11 of the United States Code, and
any other state or federal insolvency, reorganization, moratorium or similar law
for the relief of debtors.
"BASE CASE PROJECT PROJECTION" means a projection of operating
results for the Project over a period ending no sooner than five (5) years
beyond the Expected Completion Date, showing at a minimum Borrower's reasonable
good faith estimates, as of the applicable Closing Date, of revenue, operating
expenses, debt service coverage ratios and sources and uses of revenues over the
forecast period, which projection shall be delivered at the applicable Closing
Date.
"BORROWER" means GST Telecom Hawaii, Inc., a Hawaii corporation.
"BORROWER EQUITY" means any non-borrowed funds contributed by
Borrower, or any shareholder of Borrower on behalf of Borrower, toward Project
Costs.
"BUSINESS DAY" means any day other than a Saturday, Sunday or
other day on which banks are authorized to be closed in Honolulu, Hawaii or New
York, New York and, with respect to the determination of the LIBOR Rate, which
is also a day on which dealings in Dollar deposits are carried out in the London
interbank market.
"CAPITAL CONTRIBUTION" means the contribution to capital to be
made prior to the Closing as set forth in SECTION 3.1(H) of the Credit
Agreement.
A-2
"CHANGE OF CONTROL" means any of the following: (i) the sale,
lease, conveyance or other disposition of assets of the Borrower valued in
excess of $5,000,000; (ii) the liquidation or dissolution of the Borrower; and
(iii) any transaction or series of transactions that results in GSI ceasing to
hold and control, directly or indirectly, fifty percent (50%) or more of the
Equity Securities of Borrower.
"CHANGE OF LAW" has the meaning given in SECTION 2.5(B) of the
Credit Agreement.
"CHARTER DOCUMENTS" means, as to any Person other than a natural
person, the charter, certificate or articles of incorporation, bylaws or other
organizational or governing documents of such Person, including, with respect to
a partnership, a partnership agreement and any certificate of limited
partnership or similar document.
"CLOSING DATE" means the date when each of the conditions
precedent listed in SECTION 3.1 of the Credit Agreement has been satisfied (or
waived in writing by Lender).
"CODE" means the Internal Revenue Code of 1986, as amended.
Reference to a specific section of the Code shall include any valid regulation
promulgated thereunder, and any comparable provision of any future legislation
amending, supplementing or superseding such section.
"COLLATERAL" means all real and personal property which is
subject or is or is intended to become subject to the security interests or lien
granted by any of the Collateral Documents.
"COLLATERAL DOCUMENTS" means the Pledge Agreement, the Security
Agreement, the GST Security Agreement, the Consents, the Net Cash Flow
Agreement, the Net Cash Flow Account Pledge Agreement, and the other agreements
to be entered into pursuant to SECTION 5.17 of the Credit Agreement, the
Construction Deeds of Trust, the Intercreditor and Subordination Agreements to
be entered into pursuant to SECTION 3.1(A), and any financing statements and the
like filed or recorded in connection with the foregoing.
"COLLOCATION AGREEMENTS" means the agreements entered into or to
be entered into between Borrower and local exchange carriers with respect to
physical or virtual collocation with respect to the Project.
"COMMITTED AMOUNT" means Forty Million Five Hundred Sixty Three
Thousand Dollars ($40,563,000).
"COMMUNICATIONS ACT" means the Communication Act of 1934, as
amended.
"COMPLETION" means, with respect to the Project, that the Project
shall have been substantially completed in all material respects and that all
work under the Construction Contracts shall have occurred and that completion of
all such work shall have been in accordance with the Plans and Specifications
and the requirements of all Applicable Permits for the Project.
A-3
"COMPLETION DATE" means, with respect to the Project, the earlier
of: (i) the date of Completion of the Project, and (ii) August 15, 1998.
"CONSENTS" shall mean a consent executed by each party to the
Project Documents (other than Lender) in substantially the form of EXHIBIT X-0,
X-0 xx X-0 hereto, as applicable.
"CONSTRUCTION CONTRACTS" means the Hawaii Island Fibernet Cable
System Contract between GST International, Inc. (subsequently assigned to
Borrower) and AT&T Submarine Systems, Inc., dated as of May 21, 1996; the
Agreement between GST Telecom, Inc. and Simplicity Communications, Inc., dated
as of September 30, 1996, the Contract between Xxxx Atlantic Professional
Services, Incorporated and Borrower, dated as of October 30, 1996, the
Professional Services Agreement between X.X. Xxxxxx, Inc. and GST Telecom, Inc.,
effective as of November 28, 1995, and the other Construction Agreements to be
entered into with respect to the construction of the Project, subject to the
terms and conditions of the Credit Agreement.
"CONSTRUCTION DEEDS OF TRUST" shall mean the Mortgage and
Financing Statement and Absolute Assignment of Rents and Fixture Filings
(Construction Mortgage) filed in connection with the Closing, in substantially
the form of EXHIBIT I.
"CONSTRUCTION LOAN" has the meaning given in SECTION 2.1(A)(I) of
the Credit Agreement.
"CONSTRUCTION LOAN AVAILABILITY PERIOD" means with respect to the
Project the period from the Closing Date to the earlier of Completion or the
Construction Loan Maturity Date.
"CONSTRUCTION LOAN BORROWING" means a borrowing by Borrower
consisting of a Construction Loan made by the Lender.
"CONSTRUCTION LOAN MATURITY DATE" shall mean, with respect to the
Project, the date which is one year after the Closing Date.
"CONTRACTORS" means AT&T Submarine Systems, Inc., Xxxx Atlantic
Professional Services, Incorporated, Simplicity Communications, Inc., X.X.
Xxxxxx and such other contractors as may be selected by Borrower and approved by
Lender.
"CPCN" means the Certificate of Public Convenience and Necessity
Granted to Borrower by the PUC on February 12, 1986, as amended.
"CREDIT AGREEMENT" means the Credit Agreement between TM
Communications Hawaii LLC (as lender) and GST Telecom Hawaii, Inc. (as borrower)
dated September 30, 1997.
"CREDIT DOCUMENTS" means the Credit Agreement, the Note, the
Collateral Documents and the Consents.
A-4
"CREDIT EVENT" means the making of any Construction Loan and any
other extension of credit hereunder.
"DEBT" of any Person at any date means, without duplication, (a)
all obligations of such Person for borrowed money, (b) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (c)
all obligations of such Person to pay the deferred purchase price of property or
services, except trade accounts payable arising in the ordinary course of
business, (d) all obligations of such Person under leases which are or should
be, in accordance with GAAP, recorded as capital leases in respect of which such
Person is liable, (e) all obligations of such Person to purchase securities (or
other property) which arise out of or in connection with the sale of the same or
substantially similar securities (or property), (f) all deferred obligations of
such Person to reimburse any bank or other Person in respect of amounts paid or
advanced under a letter of credit or other instrument, (g) all Debt of others
secured by a Lien on any asset of such Person, whether or not such Debt is
assumed by such Person and (h) all Debt of others guaranteed directly or
indirectly by such person or as to which such Person has an obligation
substantially the economic equivalent of a guarantee.
"DEBT SERVICE" means for any Person and any period all
Obligations for principal and interest payments on Debt of such Persons due in
such period.
"DEFAULT" means any occurrence, circumstance or event, or any
combination thereof, which, with the lapse of time and/or the giving of notice,
would constitute an Event of Default.
"DEFAULT RATE" means an interest rate per annum equal to the
interest rate then in effect on the Loan Facility PLUS three percent (3%). All
computations of interest with respect to the Default Rate shall be based on a
year of 360 days and actual days elapsed.
"DEPOSITARY BANK" has the meaning given in SECTION 8(B) of the
Security Agreement.
"DEVELOPMENT COMPANIES" means corporations which are direct or
indirect subsidiaries of GSI and/or GST which will develop the Network Projects.
"DOLLARS" and "$" means United States dollars or such coin or
currency of the United States of America as at the time of payment shall be
legal tender for the payment of public and private debts in the United States of
America.
"DRAWDOWN CERTIFICATE" means a certificate delivered to Lender
pursuant to SECTION 3.2(B) of the Credit Agreement substantially in the form of
EXHIBIT C-2 thereto.
"EASEMENT PROPERTY" means the property subject to all Easements
and similar agreements described on SCHEDULE 2 attached hereto.
"EASEMENTS" means any easement, other right of way or license
provided or agreed to by any Person other than a Governmental Authority.
A-5
"EMINENT DOMAIN PROCEEDS" has the meaning given in SECTION 5.15
of the Credit Agreement.
"EMPLOYEE BENEFIT PLAN" means any employee benefit plan within
the meaning of section 3(3) of ERISA maintained or contributed to by Borrower or
any ERISA Affiliate, other than a Multiemployer Plan.
"EQUIPMENT" has the meaning given in SECTION 2(C) of the Security
Agreement.
"EQUITY SECURITIES" of any Person shall mean (a) all common
stock, preferred stock, participations, shares, partnership interests or other
equity interests in and of such Person (regardless of how designated and whether
or not voting or non-voting) and (b) all warrants, options and other rights to
acquire any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, including (unless the context otherwise
requires) any rules or regulations promulgated thereunder.
"ERISA AFFILIATE" means any Person which is treated as a single
employer with Borrower under Section 414 of the Code.
"ERISA PLAN" means any employee benefit plan (a) maintained by
Borrower or any ERISA Affiliate, or to which any of them contributes or is
obligated to contribute, for its employees and (b) covered by Title IV of ERISA
or to which Section 412 of the Code applies.
"ESTOPPEL AND CONSENT CERTIFICATE" shall mean an estoppel and
consent certificate in substantially the same form of EXHIBIT L.
"EVENT OF DEFAULT" means any event specified in ARTICLE 8 of the
Credit Agreement.
"EVENT OF EMINENT DOMAIN" means any compulsory transfer or taking
by condemnation, eminent domain or exercise of a similar power, or transfer
under threat of such compulsory transfer or taking, of any part of the
Collateral or any of the mortgaged property described in a mortgage by any
agency, department, authority, commission, board, instrumentality or political
subdivision of the State of Hawaii, the United States or another Governmental
Authority having jurisdiction.
"EXERCISE PRICE" has the meaning given in SECTION 2 of the
Warrant.
"EXPECTED COMPLETION DATE" means August 15, 1998.
"FCC" means the Federal Communications Commission and its
successors.
"FCC LICENSE AGREEMENTS" means the Service Agreement, dated as of
September 30, 1997, between Pacwest Network, Inc. ("PNI") and Borrower; the
A-6
Management Agreement, dated as of September 30, 1997, between PNI and Borrower;
and the Purchase agreement dated September 30, 1997 among PNI, Borrower and GST.
"FEDERAL FUNDS RATE" means the per annum rate of interest at
which Federal funds in the amount of the Loan Facility scheduled to be
outstanding as of the commencement of the relevant Interest Period are offered
to the Lender for such Interest Period by Federal funds brokers in New York at
approximately 11:00 a.m. New York time on the date two Business Days prior to
the first day of such Interest Period.
"FEDERAL RESERVE BOARD" means the Board of Governors of the
Federal Reserve System.
"FIRST ANNUAL OPERATING BUDGET" has the meaning given in SECTION
5.7(B) of the Credit Agreement.
"FIXED RATE" means a rate per annum equal to the annual yield
which a United States government securities dealer of recognizes standing,
selected by the Lender in its sole discretion, offers to the Lender at
approximately 11:00 a.m. New York time on the day preceding the date of
conversion for the purchase of United States Treasury notes or bonds in an
aggregate principal amount of $1,000,000 or more maturing approximately on the
Maturity Date PLUS 3.00% PLUS swap costs.
"FORCE MAJEURE" means a delay in or failure of performance by a
Person attributable to unforeseeable occurrences beyond the control of such
Person, including acts of God or the public enemy; expropriation or confiscation
of facilities; compliance with any order or request of any Governmental
Authority; unforeseen changes in laws, regulations or orders, acts of declared
or undeclared war; use of any weapon of war employing atomic fission or
radioactive force, whether in time of peace or war; shipwreck; public disorder,
rebellion or sabotage, revolution, epidemics, landslides, hurricanes,
earthquakes, floods, riots, partial or entire failure of utilities, quarantine,
or similar causes; strikes, lockouts or other labor disputes (excluding a strike
at the Site or by employees of a Contractor unless such strike or disturbance is
in violation of a "no strike" provision of a Project labor agreement). Financial
difficulties of any kind are explicitly excluded from this definition of Force
Majeure.
"GAAP" means generally accepted accounting principles and
practices as in effect in the United States of America from time to time,
consistently applied.
"GOVERNMENTAL AUTHORITY" means any national, state or local
government (whether domestic or foreign), any political subdivision thereof or
any other governmental, quasi-governmental, judicial, public or statutory
instrumentality, authority, body, agency, bureau or entity, (including any
zoning authority, the FCC, the PUC, or any arbitrator with authority to bind a
party at law).
"GOVERNMENTAL CHARGES" has the meaning given in SECTION 1 of the
Security Agreement.
A-7
"GOVERNMENTAL RULE" means any law, rule, regulation, ordinance,
order, code interpretation, judgment, decree, directive, guidelines, policy or
similar form of decision of any Governmental Authority.
"GREENSTAR" means GSI, XXX, GST, PLI, GST New Mexico Lightwave,
Inc., GST Tucson Lightwave, Inc., Borrower, and their Affiliates.
"GSI" means GST Telecommunications Inc. (formerly known as
"Greenstar Telecommunications Inc."), a corporation organized under the laws of
Canada.
"GST" means GST Telecom Inc., a Delaware corporation.
"GST SECURITY AGREEMENT" has the meaning given in SECTION 2.7(A)
of the Credit Agreement.
"GST SERVICES AGREEMENT" means the Services Agreement between
Borrower and GST, dated as of September 15, 1997.
"GTE" means GTE Hawaiian Telephone Company Incorporated.
"XXX" means GST USA, Inc. (formerly known as "Greenstar USA,
Inc."), a Delaware corporation.
"HAZARDOUS SUBSTANCES" means substances defined as "hazardous
substances," in Section 101 of the CERCLA (42 U.S.C. Section 9601); those
substances defined as "hazardous waste" by the RCRA; those substances designated
as a "hazardous substance" pursuant to Section 311 of the Clean Water Act (33
U.S.C. Section 1321); those substances defined as "hazardous materials" in
Section 103 of the Hazardous Materials Transportation Act (49 U.S.C. Section
1801 ET SEQ. at Section 1802); those substances regulated as a hazardous
chemical substance or mixture or as an imminently hazardous chemical substance
or mixture pursuant to Sections 6 or 7 of the TSCA (15 U.S.C. Sections 2605,
2606); those substances defined as "contaminants" by Section 1401 of the SDWA
(42 U.S.C. Section 300f), if present in any surface or ground water in excess of
maximum contaminant levels; those substances regulated by the Oil Pollution Act;
those substances defined as a pesticide pursuant to Section 2(u) of the FIFRA (7
U.S.C. Section 136(u)); those substances defined as a source, special nuclear or
by-product material by Section 11 of the AEA (42 U.S.C. Section 2014); those
substances defined as "residual radioactive material" by Section 101 of the
UMTRCA (42 U.S.C. Section 7911); those substances defined as "toxic materials"
or "harmful physical agents" pursuant to Section 6 of the Occupational Safety
and Health Act (29 U.S.C. Section 651 ET SEQ. at Section 655); those substances
defined as hazardous wastes in 40 C.F.R. Part 261.3; those substances defined as
hazardous waste constituents in 40 C.F.R. Part 260.10, specifically including
Appendix VII and VIII of Subpart D of 40 C.F.R. Part 261; those substances
designated as hazardous substances in 40 C.F.R. Parts 116.4 and 302.4; those
substances defined as hazardous substances or hazardous materials in 49 C.F.R.
Part 171.8; those substances regulated as hazardous materials, hazardous
substances, or toxic substances in 40 C.F.R. Part 1910; and in the
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regulations adopted and publications promulgated pursuant to any Hazardous
Substance Laws, whether or not such regulations or publications are specifically
referenced herein.
"HAZARDOUS SUBSTANCE LAWS" means: (a) the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as amended (42
U.S.C. Section 9601 ET SEQ.)("CERCLA"); (b) the Federal Water Pollution Control
Act (33 U.S.C. Section 1251 ET SEQ.)("CLEAN WATER ACT" or "CWA"); (c) the
Resource Conversation and Recovery Act (42 U.S.C. Section 6901 ET SEQ.)("RCRA");
(d) the Atomic Energy Act of 1954 (42 U.S.C. Section 2011 ET SEQ.)("AEA"); (e)
the Clean Air Act (42 U.S.C. Section 7401 ET SEQ.)("CAA"); (f) the Emergency
Planning and Community Right to Know Act (42 U.S.C. Section 11001 ET
SEQ.)("EPCRA"); (g) the Federal Insecticide, Fungicide, and Rodenticide Act (7
U.S.C. Section 136 ET SEQ.)("FIFRA"); (h) the Oil Pollution Act of 1990 (P.L.
101-380, 104 Stat. 486); (i) the Safe Drinking Water Act (42 U.S.C. Sections
300f ET SEQ.)("SDWA"); (j) the Surface Mining Control and Reclamation Act of
1974 (30 U.S.C. Sections 1201 ET SEQ.)("SMCRA"); (k) the Toxic Substances
Control Act (15 U.S.C. Section 2601 ET SEQ.)("TSCA"); (l) the Uranium Mill
Tailings Radiation Control Act of 1978 (42 U.S.C. Section 7901 ET
SEQ.)("UMTRCA"); and (m) all other Federal, state and local Governmental Rules
which govern Hazardous Substances, and the regulations adopted and publications
promulgated pursuant to all such foregoing laws.
"INSURANCE PROCEEDS" has the meaning given in SECTION 7.2(A) of
the Credit Agreement.
"INTERCONNECTION AGREEMENTS" means the Cable Station Resources
Agreement between Borrower and AT&T dated August 6, 1996, the Telecommunication
Facility Agreement between Borrower and GTE (undated), and any other
interconnection agreement entered into or to be entered into with respect to the
Project.
"INTEREST PERIOD" means (a) the period commencing on
_____________ __, 1997 and ending on ______________ __, 1997 and (b) thereafter,
each period commencing on the last day of the next preceding Interest Period and
ending on the numerically corresponding day in the third succeeding calendar
month; PROVIDED, HOWEVER, that (1) the initial Interest Period with respect to
each Construction Loan other than the initial Construction Loan shall commence
on the date on which such subsequent Construction Loan is advanced and end on
the last day of the then current Interest Period as established above; (2) any
Interest Period which would otherwise end on a day which is not a Business Day
shall be extended to the next succeeding Business Day unless such next Business
Day falls in another calendar month, in which case such Interest Period shall
end on the immediately preceding Business Day; (3) any Interest Period which
begins on the last Business Day of a calendar month (or on a day for which there
is no numerically corresponding day in the calendar month at the end of such
Interest Period) shall end on the last Business Day of a calendar month; and (4)
no Interest Period shall end after the Maturity Date.
"INVENTORY" has the meaning given in SECTION 2(E) of the Security
Agreement.
"LEASED PROPERTY" means the real property subject to or covered
by the Leases.
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"LEASES" means any lease of property necessary or entered into in
connection with respect to the Project.
"LEASE SITES" means: the sites which are the subject of the other
Leases to be entered into with respect to the Project, and all rights, rights of
way and appurtenances thereto, covering certain real property in the Hawaiian
Islands with respect to the Project.
"LEGAL REQUIREMENT" means, as to any Person, any requirement set
forth in the Charter Documents, of such Person, any Governmental Rule, any
requirement under a Permit, and any determination of any arbitrator, court, or
government Governmental Authority, in each case applicable to or binding upon
such Person or any of its properties or to which such Person or any of its
properties is subject.
"LENDER" means TM Communications Hawaii LLC and its successors
and assigns.
"LENDER REPRESENTATIVE" means an individual designated by Lender
from time to time to act as liaison with Borrower.
"LIBOR RATE" means a rate per annum determined by Lender (which
determination shall, absent manifest error, be conclusive) to be equal to the
rate at which deposits in Dollars are offered to Lender in the London interbank
eurodollar currency market at approximately 11:00 a.m. (London time), two
Business Days prior to the first day of the relevant Interest Period (for
delivery on the first day of such Interest Period) and for a term equal to such
Interest Period.
"LIEN" on any asset means any mortgage, deed of trust, lien,
pledge, charge, judgment, security interest, restrictive covenant or easement or
encumbrance of any kind in respect of such asset, whether or not filed, recorded
or otherwise perfected or effective under applicable law, as well as the
interest of a vendor or lessor under any conditional sale agreement, capital
lease or other title retention agreement relating to such asset.
"LIQUIDATION COSTS" has the meaning given in SECTION 2.6 of the
Credit Agreement.
"LOAN FACILITY" means, collectively, the Construction Loans and
the Term Loans made under the Credit Agreement.
"MAJOR PROJECT PARTICIPANTS" means AT&T Submarine Systems, Inc.,
Simplicity Communications, Inc., Xxxx Atlantic Professional Services,
Incorporated, X.X. Xxxxxx, Inc., and the other entities to be awarded contracts
with respect to the construction of the Project.
"MAJOR SUBCONTRACTS" means any contract between Contractor and
any Major Subcontractor.
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"MAJOR SUBCONTRACTOR" means any Person, at any tier, who performs
any work, including the supply of any equipment or materials for any Contractor,
involving amounts in excess in the aggregate of Two Hundred Fifty Thousand
Dollars ($250,000).
"MASTER AGREEMENT" means the Master Agreement among GSI, GST,
Pacwest, PLI and Tomen America dated October 24, 1994, as amended.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (a)
construction or operation of the Project, or the business, assets, operations or
financial or other condition of Borrower at any time or on the financial or
other condition of any other Major Project Participant during the Construction
Loan Availability Period, (b) the ability of Borrower or any Major Project
Participant to perform its obligations under the Credit Documents or other
Operative Documents, (c) the validity or enforceability of the Credit Agreement
or any other Credit Document or any related document, instrument or agreement,
or the rights and remedies of Lender hereunder or thereunder, or (d) the
Lender's interest in a Project, the value of the Collateral, or Lender's
security interests in the Collateral or the perfection or priority of such
security interests.
"MATERIAL PROJECT DOCUMENTS" means the documents specified in
SECTION 3.1(B) of the Credit Agreement.
"MATURITY" or "MATURITY" means, with respect to the amount due
with respect to the Loan Facility, interest, fees or other amounts payable by
Borrower under the Credit Agreement or the other Credit Documents, the date such
amounts becomes due, whether upon the stated maturity or due date, upon
acceleration or otherwise.
"MATURITY DATE" means the earlier of the date which is eight (8)
years from the Closing Date or seven (7) years from the Term Conversion Date or
such earlier date on which the entire outstanding principal balance of the Loan
Facility, together with all unpaid interest, fees, charges and costs, become due
and payable under the Credit Agreement.
"MAXIMUM LEGAL RATE" has the meaning given in the Note.
"MILESTONE DISBURSEMENT SCHEDULE" means the milestone
disbursement schedule for the Project delivered by Borrower at the Closing Date.
"MULTIEMPLOYER PLAN" means any multiemployer plan within the
meaning of section 3(37) of ERISA maintained or contributed to by Borrower or
any ERISA Affiliate.
"NET CASH FLOW" means with respect to a Development Company and
the applicable period:
(a) the sum of:
(i) the gross receipts of the Development Company from all
sources (other than capital contributions, proceeds from the Credit Agreement
with Tomen America or a Tomen Affiliate or other loans), including but not
limited to receipts from (1) the sale of
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products and services, (2) interest and other investment income on investments
and reserves, and (3) insurance proceeds;
(ii) any amounts released from reserves, the distribution
of which is permissible and in accordance with the provisions of the Credit
Agreement; and
(iii) any Net Cash Flow from a prior period not
distributed but the distribution of which is permissible; less (b) the sum of:
(i) all costs and expenses which the Development Company
paid during such period in connection with the construction, ownership,
management (except as provided herein), operation and maintenance of the Network
Project, including, but not limited to, (1) utility costs, (2) business taxes
and real and personal property tax and assessments, and fees and expenses in
connection with the preparation of the Development Company's tax returns, (3)
insurance premiums, (4) the actual documented costs of Network Project
management, not to include management fees paid to Greenstar or any Affiliate in
excess of such actual costs, (5) expenditures for capital improvements and the
repair, maintenance and restoration of the improvements (including any portion
of the same to the extent not covered by insurance proceeds), (6) expenditures
required or deemed advisable to be made under or in connection with any contract
of the Development Company, and (7) all other costs and expenses, including
capital expenditures and the purchase of spare parts and other inventory and
replacement items, required to be made by the Development Company (but excluding
any such amounts to the extent paid out of reserves); and
(ii) all principal and interest and other sums and amounts
payable by the Development Company to repay any Loan from Tomen or any of its
Affiliates payable for the applicable or pertinent period.
"NET CASH FLOW ACCOUNT PLEDGE AGREEMENT" means the Guaranty and
Net Cash Flow Deposit Account Pledge Agreement in the form of EXHIBIT K-2
entered into pursuant to SECTION 3.1(A) and SECTION 5.17 of the Credit
Agreement.
"NET CASH FLOW AGREEMENT" means the Guaranty and Net Cash Flow
Pledge Agreement in the form of EXHIBIT K-1 entered into pursuant to SECTION
3.1(A) and SECTION 5.17 of the Credit Agreement.
"NETWORK PROJECT CREDIT AGREEMENT" means a credit agreement
between Lender or one of its Affiliates, as lender and a Development Company, as
borrower, to finance an alternative access network telecommunications project.
"NETWORK PROJECTS" means alternative access network
telecommunications projects to be developed or existing alternative access
projects to be expanded by GSI and/or GST in the Territory.
"1934 ACT" means the Securities Exchange Act of 1934, as amended.
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"NORTEL EQUIPMENT" means the equipment which is the subject of
the Master Lease Agreement between Borrower and GST EquipCo., Inc. dated as of
December 19, 1996.
"NOTE HOLDER" means the registered owner of any Note.
"NOTE" has the meaning given in SECTION 2.1(F) of the Credit
Agreement.
"NOTICE OF BORROWING" has the meaning given in SECTION 2.1(A)(II)
of the Credit Agreement.
"NOTICE OF INTEREST RATE CONVERSION" has the meaning given in
SECTION 2.1(D) of the Credit Agreement.
"NOTICE OF TERM CONVERSION" has the meaning given in SECTION
2.1(B)(II) of the Credit Agreement.
"OBLIGATIONS" means and includes, with respect to any Person, all
loans, advances, debts, liabilities, and obligations, howsoever arising, owed by
such Person to a lender of every kind and description (whether or not evidenced
by any note or instrument, and whether or not for the payment of money), direct
or indirect, absolute or contingent, due or to become due, now existing or
hereafter arising, pursuant to the terms of a credit agreement or any other
credit document, including all interest, fees, charges, expenses, attorneys'
fees and accountants fees chargeable to such Person in connection with its
dealings with such lender and payable by such Person hereunder or thereunder.
The term "Obligations" shall also mean and include any amounts owing to Lender
which arise because payments as to past transactions are rescinded or otherwise
required to be surrendered by Lender after receipt.
"OPERATING ACCOUNT" has the meaning given in SECTION 7.1 of the
Credit Agreement.
"OPERATION AND MAINTENANCE COSTS" means all actual cash
maintenance and operation costs incurred and paid, or if appropriate, to be
incurred and paid, for the Project in any particular calendar or fiscal year or
period to which said term is applicable, including payments for fuel, additives
or chemicals and transportation costs related thereto, local taxes, insurance,
consumables, payments under any Lease, payments pursuant to the agreements for
the management, operation and maintenance of the Project, reasonable legal fees
and expenses paid by Borrower in connection with the management, maintenance or
operation of the Project (but excluding legal fees and expenses related to
litigation), fees paid in connection with obtaining, transferring, maintaining
or amending any Applicable Permits and reasonable general and administrative
expenses, but exclusive in all cases of non-cash charges, including depreciation
or obsolescence charges or reserves therefor, amortization of intangibles or
other bookkeeping entries of a similar nature, and also exclusive of all
interest charges and charges for the payment or amortization of principal of
indebtedness of Borrower (other than those relating to Debt permitted pursuant
to SECTION 6.3 of the Credit Agreement).
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"OPERATIVE DOCUMENTS" means the Credit Documents, the Project
Documents and any Additional Project Documents.
"OTHER TAXES" has the meaning given in SECTION 2.3(C)(I) of the
Credit Agreement.
"PACWEST" means Pacwest Network L.L.C., an Oregon limited
liability company and its Affiliates.
"PARTS" means any part, appliance, instrument, appurtenance,
accessory or other property of any nature necessary or useful to the operation,
maintenance, service or repair of the project.
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under Title IV of ERISA.
"PERMIT" means any action, approval, consent, waiver, exemption,
variance, franchise, order, permit, authorization, right or license of or from a
Governmental Authority.
"PERMITTED INVESTMENTS" means (a) direct obligations of the
United States of America (including obligations issued or held in book-entry
form on the books of the Department of the Treasury of the United States of
America) or obligations the timely payment of the principal of and interest on
which are fully guaranteed by the United States of America; (b) obligations,
debentures, notes or other evidence of indebtedness issued or guaranteed by any
of the following: Export-Import Lender of the United States, Federal Housing
Administration or other agency or instrumentality of the United States; (c)
interest-bearing demand or time deposits (including certificates of deposit)
which are either (i) insured by the Federal Deposit Insurance Corporation, or
(ii) held in banks and savings and loan associations, having general obligations
rated at least "AA" or equivalent by Standard & Poor's Corporation ("S&P") or
Xxxxx'x Investors Service, Inc. ("Moody's), or if not so rated, secured at all
times, in the manner and to the extent provided by law, by collateral security
described in clauses (a) or (b) of this definition, of a market value of no less
than the amount of moneys so invested; (d) commercial paper rated (on the date
of acquisition thereof) at least A-1 or P-1 or equivalent by S&P or Moody's,
respectively (or an equivalent rating by another nationally recognized credit
rating agency of similar standing if neither of such corporations is then in the
business of rating commercial paper), maturing not more than 270 days from the
date of creation thereof; (e) any corporate evidence of indebtedness rated at
least "A-" or equivalent by S&P or Moody's; or (f) any advances, loans or
extensions of credit or any stock, bonds, notes, debentures or other securities
as Lender may from time to time approve in its sole and absolute discretion.
"PERMITTED LIENS" means (a) the rights and interests of Lender as
provided in the Operative Documents, (b) Liens for any tax, assessment or other
governmental charge, either secured by a bond reasonably acceptable to Lender or
not yet due or being contested in good faith and by appropriate proceedings, so
long as (i) such proceedings shall not involve any substantial danger of the
sale, forfeiture or loss of the Project or any Applicable Easements, as the case
may be, title thereto or any interest therein and shall not interfere in
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any material respect with the use or disposition of the Project or any
Applicable Easements, or (ii) a bond or other security acceptable to Lender in
its sole discretion has been posted or provided in such manner and amount as to
assure Lender that any taxes, assessments or other charges determined to be due
will be promptly paid in full when such contest is determined, (c)
materialmen's, mechanics', workers', repairmen's, employees' or other like Liens
arising in the ordinary course of business or in connection with the
construction of the Project, either for amounts not yet due or for amounts being
contested in good faith and by appropriate proceedings, so long as (i) such
proceedings shall not involve any substantial danger of the sale, forfeiture or
loss of any part of the Project or any Applicable Easements, as the case may be,
title thereto or any interest therein and shall not interfere with the use or
disposition of the Project or any Applicable Easements, or (ii) a bond or other
security acceptable to Lender in its sole discretion has been posted or provided
in such manner and amount as to assure Lender that any amounts determined to be
due will be promptly paid in full when such contest is determined, (d) Liens
arising out of judgments or awards, but only so long as an appeal or proceeding
for review is being prosecuted in good faith with a reasonable likelihood of
success and for the payment of which adequate reserves, bonds or other security
acceptable to Lender in its sole discretion have been provided or are fully
covered by insurance, (e) mineral rights the use and enjoyment of which do not
materially interfere with the use and enjoyment of the Project or any Applicable
Easements, (f) Liens, deposits or pledges to secure statutory obligations or
performance of bids, tenders, contracts (other than for the repayment of
borrowed money) or leases, or for purposes of like general nature in the
ordinary course of its business, (g) Liens incident to the ordinary course of
business that are not incurred in connection with the obtaining of any loan,
advance or credit and that do not in the aggregate materially impair the use of
the property or assets of Borrower or the value of such property or assets for
the purposes of such business, (h) Liens of trade vendors created in connection
with Debt allowed under SECTION 6.3 of the Credit Agreement, and (i) Liens
created in connection with a Net Cash Flow Agreement.
"PERSON" means and includes an individual, a partnership, a firm,
an association, a corporation (including a business trust), a joint stock
company, an unincorporated association, a joint venture, a Governmental
Authority or any other entity whether acting in an individual, fiduciary or
other capacity.
"PLANS AND SPECIFICATIONS" means the plans and specifications for
the construction and design of the Project, including any document describing
the scope of work performed by the Contractors under the Construction Contracts
or any other contract or subcontract for the construction of the Project,
including, without limitation, the Collocation Agreements, the Interconnection
Agreements and the Pole and Conduit Agreements, all work drawings, engineering
and construction schedules, project schedules, project monitoring systems,
specifications status lists, material and procurement ledgers, drawings and
drawing lists, manpower allocation documents, management and project procedures
documents, project design criteria, and any other document referred to in the
Construction Contracts or any of the documents referred to in this definition.
"PLEDGE AGREEMENT" has the meaning given in SECTION 2.6 of the
Credit Agreement.
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"POLE AND CONDUIT USE AGREEMENTS" means: the Master License/Lease
Agreement between Hawaiian Electric Company, Inc., Maui Electric Company,
Limited, Hawaii Electric Light Company, Inc. and GST Telecom Inc. subsequently
assigned to Borrower dated March 25, 1996; the Pole Attachment Agreement between
GTE Hawaiian Telephone Company, Incorporated ("GTE") and Borrower dated August
29, 1996; the Conduit Occupancy Agreement between GTE and Borrower; and any
other agreements entered into or to be entered into with respect to the use of
poles, conduits, the lease of fiber optic cables, or rights of way for the
Project's fiber optic cable and other equipment.
"PROCEEDS" has the meaning given in SECTION 7.4 of the Credit
Agreement.
"PROCUREMENT AGENT" means construction equipment and materials
procurement agent for the development and construction of the Network Projects.
"PROJECT" means the development, construction and operation of
fiber optic transmission equipment and optical fiber cable for the Service
District all as more particularly described in SCHEDULE 1 to the Credit
Agreement, together with all Easements, all alterations thereto or replacements
thereof, all fixtures, attachments, appliances, equipment, machinery and other
articles attached thereto or used in connection therewith and all Parts which
may from time to time be incorporated or installed in or attached thereto, all
contracts and agreements for the purchase or sale of commodities or other
personal property related thereto, all leases of real or personal property
related thereto, and all other real and tangible and intangible personal
property owned by Borrower and placed upon or used in connection therewith.
"PROJECT BUDGET" has the meaning given in SECTION 3.1(L)(II) of
the Credit Agreement.
"PROJECT COSTS" means (a) the cost of designing, equipping,
procuring, constructing, starting up and testing the Project, (b) the cost of
acquiring any lease, the Applicable Easements and any other necessary interest
in the Project, (c) local property taxes and insurance premiums payable with
respect to the Project during the Construction Loan Availability Period, (d)
interest payable on any Note for the Project during the Construction Loan
Availability Period, (e) reasonable initial working capital requirements of the
Project as approved by Lender, (f) the costs of acquiring Permits for the
Project during the Construction Loan Availability Period, (g) other fees and
expenses relating to the Project, including financial, legal (excluding
litigation) and consulting fees and expenses, all as described in the Project
Budget.
"PROJECT DOCUMENTS" means the documents listed in SECTION 3.1(B)
of the Credit Agreement, and any other material agreement or document relating
to the development, construction, operation, maintenance and repair of the
Project.
"PROJECT LOAN" means a loan in the amount of 75% of the Project
Costs of a Network Project provided by Lender or one of its affiliates to a
Development Company pursuant to a Network Project Credit Agreement.
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"PROJECT REVENUES" means all income and receipts derived from the
ownership or operation of the Project, including payments due Borrower under the
Construction Contracts, proceeds of any business interruption or other
insurance, income derived from the Project, together with any receipts derived
from the sale of any property pertaining to the Project or incidental to the
operation of the Project, all as determined in conformity with cash accounting
principles, the investment income on amounts in the Accounts, the proceeds of
any drawing under a letter of credit of which Borrower is the beneficiary,
proceeds of any insurance, condemnation or litigation or arbitration awards
relating to the Project and proceeds from the Collateral Documents, but not
including sums paid to Borrower in satisfaction of a contractual obligation to
indemnify Borrower for third party liability to the extent such sums do not
exceed the actual damage, loss or cost suffered by Borrower in connection
therewith.
"PROJECT SCHEDULE" means the Project Schedule/Milestone
Disbursement Schedule for the Project delivered by Borrower at the Closing.
"PROPORTIONATE SHARE" has the meaning given to it in SECTION 9.1
of the Credit Agreement, and as set forth in Attachment 1 of the Assignment
Agreement.
"PRUDENT PRACTICES" means those practices, methods, equipment,
specifications and standards of safety and performance, as the same may change
from time to time, as are commonly used by facilities similar to the Project of
a type and size similar to the Project as good, safe and prudent engineering
practices in connection with the design, construction, operation, maintenance,
repair and use thereof with commensurate standards of safety, performance,
dependability, efficiency and economy.
"PUC" means the State of Hawaii Public Utilities Commission.
"RECEIPTS ACCOUNT" has the meaning given in SECTION 7.1(A) of
Credit Agreement.
"RECEIVABLES" has the meaning given in SECTION 2(A) of the
Security Agreement.
"REFINANCING NOTICE" shall mean a written notice of proposed
financing by Borrower in substantially the same form of EXHIBIT F to the Credit
Agreement.
"RULES" shall mean the Commercial Arbitration Rules of The
American Arbitration Association.
"SEC" means the U.S. Securities and Exchange Commission.
"SECURITY AGREEMENT" has the meaning given in SECTION 2.7(A)(I)
of the Credit Agreement.
"SERVICE DISTRICT" means the geographic district to be served by
the Project in the Hawaiian Islands as further described in SCHEDULE 1.
A-17
"SITE" means the Lease Sites and the Easement Properties.
"SUBSTANTIAL COMPLETION" means substantial completion of the
Project in accordance with the Plans and Specifications and the requirements of
all Applicable Permits and as certified by an independent engineer to the
satisfaction of the Lender in its sole discretion.
"TAXES" has the meaning given in SECTION 2.3(C) of the Credit
Agreement.
"TERM CONVERSION" means the accomplishment of the conversion of
Construction Loans to a Term Loan pursuant to SECTION 2.1(B)(I) of the Credit
Agreement.
"TERM CONVERSION DATE" means the date on which Term Conversion
occurs.
"TERM LOAN" has the meaning given in SECTION 2.1(B) of the Credit
Agreement.
"TERRITORY" means Xxxxx Xxxxxxx, Xxxxxxx Xxxxxxx xxx Xxxxx
Xxxxxxx.
"TOMEN" means Tomen Corporation, a corporation organized under
the laws of Japan.
"TOMEN AMERICA" means Tomen America Inc., a New York Corporation.
"TOTAL CONSTRUCTION LOAN COMMITMENT" has the meaning given in
SECTION 2.2(A) of the Credit Agreement.
"TOTAL TERM LOAN COMMITMENT" has the meaning given in SECTION
2.2(B) of the Credit Agreement.
"UCC" means the Uniform Commercial Code of the jurisdiction the
law of which governs the document in which such term is used.
"U.S." means the United States of America.
RULES OF INTERPRETATION
1. All terms defined in the Credit Agreement or any other Credit
Document in the singular form shall have comparable meanings in the plural form
and VICE VERSA.
2. The word "or" is not exclusive.
3. A reference to a Governmental Rule includes any amendment or
modification to such Governmental Rule.
4. A reference to a Person includes such Person's permitted
successors and permitted assigns.
5. The words "include", "includes" and "including" and words of
similar import are not limiting or exclusive.
6. A reference in a Credit Document to an Article, Section,
Exhibit, Schedule, Annex, Attachment or Appendix is to the Article, Section,
Exhibit, Schedule, Annex, Attachment or Appendix of such Credit Document unless
otherwise indicated. Exhibits, Schedules, Annexes, Attachments or Appendices to
any document shall be deemed incorporated by reference in such document.
7. References to any document, instrument or agreement (a) shall
include all exhibits, schedules and other attachments thereto, (b) shall include
all documents, instruments or agreements issued or executed in replacement
thereof, and (c) shall mean such document, instrument or agreement, or
replacement or predecessor thereto, as amended, modified and supplemented from
time to time and in effect at any given time.
8. The words "hereof," "herein" and "hereunder" and words of
similar import when used in any Credit Document shall refer to such Credit
Document as a whole and not to any particular provision of such document.
9. References to "days" shall mean calendar days, unless the term
"Business Days" is used. References to a time of day shall mean such time in New
York, New York unless otherwise specified.
10. The Credit Documents are the result of negotiations between,
and have been reviewed by Borrower, Lender and their respective counsel.
Accordingly, the Credit Documents shall be deemed to be the product of all
parties thereto, and no ambiguity shall be construed in favor of or against
Borrower or Lender.
