Attached files
Exhibit 10.3
LOAN AGREEMENT
among
AST TELECOM, LLC
as Borrower
ANZ FINANCE AMERICAN SAMOA, INC.
ANZ AMERIKA SAMOA BANK
as Lenders
and
ANZ FINANCE AMERICAN SAMOA, INC.
as Agent
March 31, 2011
LOAN AGREEMENT
THIS LOAN AGREEMENT (the “Agreement”) is made as of the 31st day of March, 2011, by and between AST TELECOM, LLC, a Delaware limited liability company (the “Borrower”), ANZ FINANCE AMERICAN SAMOA, INC., an American Samoa corporation (the “ANZ Finance”), ANZ AMERIKA SAMOA BANK, an American Samoa corporation (“ANZ Bank” and together with ANZ Finance, the “Lenders” and each a “Lender”), and ANZ FINANCE AMERICAN SAMOA, INC., an American Samoa corporation, as agent for the Lenders (in such capacity, the “Agent”).
ARTICLE 1
DEFINITIONS; INTERPRETIVE PROVISIONS
Section 1.1 Certain Defined Terms. As used in this Agreement, the following terms have the following meanings:
“Affiliate” means any Person who, directly or indirectly, controls or is controlled by or is under common control with such Person.
“Affiliate Guarantor” means American Samoa Entertainment Inc., an American Samoa corporation.
“Agent” means ANZ Finance American Samoa, Inc., an American Samoa corporation, and any Successor thereto or successor agent selected pursuant to Section 10.8.
“Amendments to Security Documents” means, collectively, an Amendment to Security Agreement (Borrower) in the Form of Exhibit D-1, an Amendment to Security Agreement (Parent Guarantors) in the form of Exhibit D-2, an Amendment to Security Agreement (Affiliate Guarantor) in the form of Exhibit D-3, and an Amendment to Real Estate Mortgage in the form of Exhibit F.
“Agreement” means this Loan Agreement, as the same may be amended, restated, supplemented or otherwise modified from time to time.
“AICPA” means the American Institute of Certified Public Accountants.
“ANZ Bank” means ANZ Amerika Samoa Bank, an American Samoa corporation, and any Successor.
“ANZ Finance” means ANZ Finance American Samoa, Inc., an American Samoa corporation, and any Successor.
“Applicable Interest Rate” means with respect to the Term Loan, an interest rate per annum rate equal to two and one-half percent (2.50%) above the Prime Rate (changing as such Prime Rate changes).
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“Beneficiary” means Huawei or other vender of Borrower’s choice acceptable to L/C Issuer.
“Borrower” means AST Telecom, LLC, a Delaware limited liability company, and any Successor.
“Borrower Documents” means this Agreement, the Note, the Letter of Credit Application, the Amendments to Security Documents to which the Borrower is a party, as any thereof shall be amended, restated, supplemented or otherwise modified from time to time and all other certificates, instruments and other documents executed by the Borrower in connection with this Agreement or the transactions contemplated hereby.
“Business Day” means any day other than Saturday, Sunday or other day on which banks are authorized or obligated to close in Pago Pago, American Samoa.
“Business Unit” means (i) a corporation, partnership or limited liability company, business, business unit, division or product or service line, or (ii) the assets that constitute all or substantially all of the assets of any of the entities or business units described in the preceding clause (i).
“Capital Leases” means for any Person, all obligations of such Person under leases which shall have been, or in accordance with GAAP, should be recorded as capital leases.
“Capital Stock” means all shares of capital stock of or in a Person which is a corporation, whether voting or non-voting, and including common stock and preferred stock, all membership or other equity interests of or in a Person which is a limited liability company, all partnership and other equity interests of or in a Person which is a partnership, and all similar equity and other interests of or in any other Person.
“Cash Equivalents” means: (i) marketable direct obligations issued or unconditionally guaranteed by the United States government or issued by any agency thereof and backed by the full faith and credit of the United States, in each case maturing within one year from the date of acquisition thereof; (ii) commercial paper maturing no more than one year from the date issued and, at the time of acquisition, having a rate of at least A-1 from Standard & Poor’s Rating Services or at least P-1 from Moody’s Investors Service, Inc.; (iii) certificates of deposit or bankers’ acceptances maturing within one year from the date of issuance thereof issued by, or overnight reverse repurchase agreements from any commercial bank organized under the laws of the United States of America or any state thereof or the District of Columbia having combined capital and surplus of not less than One Hundred Million Dollars ($100,000,000); (iv) time deposits maturing no more than thirty (30) days from the date of creation thereof and demand deposits with commercial banks having membership in the Federal Deposit Insurance Corporation in amounts not exceeding the lesser of One Hundred Thousand Dollars ($100,000) or the maximum amount of insurance applicable to the aggregate amount of the Borrower’s deposits at such institution; and (v) deposits or investments in mutual or similar funds offered or sponsored by brokerage or other companies having membership in the Securities Investor Protector Corporation investing only in obligations described in clauses (i) through (iv) above.
“Code” means the Internal Revenue Code of 1986, as amended from time to time.
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“Collateral” means the property in which any of the Security Documents creates or purports to create a security interest or other lien in favor of the Agent for the ratable benefit of the Lenders and the Agent.
“Commitment” means (i) with respect to ANZ Finance, its obligation to make Term Loans under this Agreement and (ii) with respect to ANZ Bank, its obligation to issue the Letter of Credit under this Agreement.
“Controlled Group” means all members of a controlled group of corporations and all trades or businesses (whether or not incorporated) under common control which, together with the Borrower, are treated as a single employer under Section 414(b) or 414(c) of the Code.
“Default” means any event which but for the passage of time, the giving of notice, or both would be an Event of Default.
“Default Rate” means a per annum rate equal to eight percent (8%) above the then applicable interest rate on the Loan.
“Dollar” and “$” mean lawful money of the United States.
“EBIT” means, for any period, an amount equal to Net Income for such period plus, the following to the extent deducted in calculating such Net Income, (i) Interest Expense for such period and (ii) all Federal, state, local and foreign income tax expense of the Borrower and its Subsidiaries on a consolidated basis for such period.
“Environmental Laws” means all federal, state and local statutes, regulations, ordinances, and requirements, now or hereafter in effect, pertaining to environmental protection, contamination or cleanup, including, without limitation (i) the Federal Resource Conservation and Recovery Act of 1976 (42 U.S.C. § 6901, et seq.), (ii) the Federal Comprehensive Environmental Response, Compensation, and Liability Act (42 U.S.C. § 9601, et seq.), (iii) the Federal Hazardous Materials Transportation Control Act (49 U.S.C. § 1801, et seq.), (iv) the Federal Clean Air Act (42 U.S.C. § 7401, et seq.), (v) the Federal Water Pollution Control Act, Federal Clean Water Act (33 U.S.C. § 1251, et seq.), (vi) the Federal Insecticide, Fungicide, and Rodenticide Act, Federal Pesticide Act (7 U.S.C. § 136, et seq.), (vii) the Federal Toxic Substances Control Act (15 U.S.C. § 2601, et seq.) and (viii) the Federal Safe Drinking Water Act (42 U.S.C. § 300f, et seq.), all as now or hereafter amended.
“ERISA” means the Employee Retirement Income Security Act of 1974, as amended from time to time.
“Event of Default” has the meaning given in Section 8.1.
“Existing Debt” means the Indebtedness set forth on Schedule 1 attached hereto.
“Financial Transaction Contract” means any agreement (including all schedules thereto, confirmations of transactions thereunder, and documents, definitions, and agreements incorporated therein by reference or relating thereto) between the Borrower and the Lender or an Affiliate of the Lender, whether or not in writing, pursuant to which the Lender or an Affiliate of
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the Lender has agreed to (i) permit daylight overdrafts to occur on accounts maintained by the Borrower with the Lender or such Affiliate of the Lender, (ii) provide remote disbursement services for any the Borrower, (iii) process automated clearing house (ACH) transactions for the account of the Borrower or (iv) extend credit to the Borrower, in the form of credit card accounts and merchant card accounts, and, unless the context otherwise clearly requires, any master agreement relating to or governing any or all of the foregoing.
“Fraudulent Transfer Law” means Section 548 of the Bankruptcy Code of the United States, the Uniform Fraudulent Transfer Act, or any applicable provisions of comparable international, foreign, Federal, state or local law.
“GAAP” has the meaning given in Section 1.3.
“Government Approval” means an approval, permit, license, authorization, certificate, or consent of any Governmental Authority.
“Governmental Authority” means the government of the United States or any State or any foreign country or any political subdivision of any thereof or any branch, department, agency, instrumentality, court, tribunal or regulatory authority which constitutes a part or exercises any sovereign power of any of the foregoing.
“Guaranties” means, collectively (i) that certain Continuing Guaranty dated as of March 31, 2011, substantially in the form of Exhibit B-1 attached hereto, executed by the Parent Guarantors in favor of the Lenders and the Agent and (ii) that certain Deed of Continuing Guaranty dated as of the Closing Date, substantially in the form of Exhibit B-2 attached hereto, executed by the Affiliate Guarantor in favor of the Lenders and the Agent, as each may be amended, restated, supplemented or otherwise modified from time to time, and “Guaranty” means either of them.
“Guarantors” means, collectively, the Parent Guarantors and the Affiliate Guarantor, and “Guarantor” means any of them.
“Guarantor Documents” means the Guaranties and Amendments to Security Documents to which the Guarantors are a party, as any thereof shall be amended, restated, supplemented or otherwise modified from time to time and all other certificates, instruments and other documents executed by any Guarantor in connection with this Agreement or the transactions contemplated hereby.
“Indebtedness” means, for any Person, without duplication: (i) all indebtedness for borrowed money; (ii) all obligations issued, undertaken or assumed as the deferred purchase price of property or services (other than indebtedness or liability for borrowed money deferred for a period of more than six months from the date of incurrence or trade payables entered into in the ordinary course of business on ordinary terms); (iii) all reimbursement or payment obligations with respect to letters of credit, bankers acceptances, surety bonds and similar instruments; (iv) all obligations evidenced by notes, bonds, debentures or similar instruments, including obligations so evidenced incurred in connection with the acquisition of property, assets or businesses; (v) the net obligations of such Person under any Swap Contract in an amount equal to (A) if such Swap Contract has been closed out, the termination value thereof, or (B) if
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such Swap Contract has not been closed out, the mark-to-market value thereof determined on the basis of readily available quotations provided by any recognized dealer in such swap agreement; (vi) all indebtedness created or arising under any conditional sale or other title retention agreement (excluding any operating lease), or incurred as financing, in either case with respect to property acquired by such Person (even though the rights and remedies of the seller or bank under such agreement in the event of default are limited to repossession or sale of such property); (vii) all obligations with respect to Capital Leases or Synthetic Leases; (viii) all indebtedness referred to in clauses (i) through (vi) above secured by (or for which the holder of such Indebtedness has an existing right, contingent or otherwise, to be secured by) any Lien upon or in property (including, without limitation, accounts and contracts rights) owned by such Person, even though such Person has not assumed or become liable for the payment of such Indebtedness; and (viii) all liabilities in respect of indebtedness or obligations of others of the kinds referred to in clauses (i) through (vii) above for which such Person is directly or contingently liable as obligor, guarantor, or otherwise, or in respect of which such Person otherwise assures a creditor against loss. For purposes of this Agreement, the Indebtedness of any Person shall include all recourse Indebtedness of any partnership or joint venture formed as a partnership where such Person is a general partner or is otherwise liable for the Indebtedness of such partnership or joint venture, unless such Indebtedness is expressly made non-recourse to such Person and except for customary exceptions acceptable to the Lender.
“Intellectual Property” means, as to any Person, all of the following: (i) all trademarks, service marks, designs, trade names, corporate names, company names, business names, fictitious business names, trade styles, trade dress, logos, other source or business identifiers owned or used by such Person in its business or hereafter adopted or acquired, all registrations and recordings thereof, and all registration and recording applications filed in connection therewith, including registrations and pending applications in the United States Patent and Trademark Office, any State of the United States or any similar offices in any other country or any political subdivision thereof, and all extensions or renewals thereof; (ii) all letters patent of the United States or any other country or any political subdivision thereof, all registrations and recordings thereof, and all applications for letters patent of the United States or the equivalent thereof in any other country owned by such Persons, including registrations, recordings and pending applications in the United States Patent and Trademark Office or the equivalent thereof in any similar offices in any other country, and all reissues, continuations, divisions, continuations-in-part, renewals or extensions thereof, and the inventions disclosed or claimed therein, including the right to make, use and/or sell the inventions disclosed or claimed therein; (iii) all computer programs, computer data bases, other computer software, trade secrets, trade secret rights, ideas, drawings, designs, schematics, algorithms, writings, techniques, processes and formulas owned or used by such Person in its business; and (iv) all copyright rights of such Person in any work subject to the copyright laws of the United States, any state thereof or any other country or any political subdivision thereof, whether registered or unregistered and whether published or unpublished, whether as author, assignee, transferee or otherwise, and all registrations and applications for registration of any such copyright in the United States, any state thereof or any other country or any political subdivision thereof, including registrations, recordings, supplemental registrations and pending applications for registration in the United States Copyright Office or in any similar offices in any other country.
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“Interest Expense” means, for any period, the sum (without duplication) of (i) all interest, premium payments, debt discount, fees, charges and related expenses in connection with borrowed money (including capitalized interest) or in connection with the deferred purchase price of assets, in each case to the extent treated as interest in accordance with GAAP and (ii) the portion of rent expense with respect to such period under Capital Leases that is treated as interest in accordance with GAAP, in each case, of or by the Borrower and its Subsidiaries on a consolidated basis for such period.
“Investments” has the meaning given in Section 7.8.
“L/C Credit Extension” means, with respect to the Letter of Credit, the issuance thereof or extension of the expiry date thereof, or the renewal or increase of the amount thereof.
“L/C Issuer” means ANZ Bank in its capacity as issuer of the Letter of Credit hereunder, or any successor issuer of Letters of Credit hereunder.
“Letter of Credit” or “L/C” means any letter of credit issued hereunder.
“Letter of Credit Application” means an application and agreement for the issuance or amendment of a letter of credit in the form from time to time in use by the L/C Issuer.
“Letter of Credit Expiry Date” means the expiry date of the Letter of Credit issued hereunder, which shall not extend beyond twenty-four (24) months after the date of this Agreement.
“Letter of Credit Facility” means letter of credit issued by L/C Issuer pursuant to Section 2.4, not to exceed the Letter of Credit Limit.
“Letter of Credit Limit” or “L/C Limit” means an amount not to exceed $3,500,000.
“Lenders” means ANZ Finance, ANZ Bank and any Successors thereto or permitted assigns thereof.
“Lien” means, for any Person, any security interest, pledge, mortgage, charge, assignment, hypothecation, encumbrance, attachment, garnishment, execution or other voluntary or involuntary lien upon or affecting the revenues of such Person or any real or personal property in which such Person has or hereafter acquires any interest.
“Loan Documents” means, collectively, the Borrower Documents, the Guarantor Documents and all other documents executed by the Borrower or any Guarantor and delivered to the Agent or any Lender in connection with the transactions contemplated by this Agreement as the same may be amended, restated, supplemented or otherwise modified from time to time.
“Loans” means, collectively, the Term Loan.
“Maturity Date” means (i) in the case of the Letter of Credit, the Letter of Credit Expiry Date, and (ii) in the case of the Term Loan, the Term Loan Maturity Date.
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“Net Income” means, for any period, an amount equal to the net income of the Borrower and its Subsidiaries on a consolidated basis for such period.
“Note” means the Term Note.
“Officer’s Certificate” means a certificate executed and delivered on behalf of the Borrower by a Responsible Officer of the Borrower.
“Parent Guarantors” means, collectively, Elandia International, Inc., a Delaware corporation, and Elandia south Pacific Holdings, Inc., a Delaware corporation, and “Parent Guarantor” means any of them.
“PBGC” means the Pension Benefit Guaranty Corporation or any entity succeeding to any or all of its functions under ERISA.
“Pension Plan” means an “employee pension benefit plan” (as such term is defined in ERISA) from time to time maintained by the Borrower or a member of a Controlled Group.
“Permitted Liens” means: (i) Liens securing Taxes which are not delinquent or which remain payable without penalty (excluding any Liens imposed pursuant to any of the provisions of ERISA) or the validity or amount of which is being contested in good faith by appropriate proceedings, which shall have the effect of staying execution if execution is threatened or possible; (ii) Liens imposed by law (such as mechanics’, processor’s, materialmen’s, carriers’, warehousemen’s and landlord’s liens) incurred in good faith in the ordinary course of business which are not delinquent or which remain payable without penalty or the validity or amount of which is being contested in good faith by appropriate proceedings, which shall have the effect of staying execution if execution is threatened or possible; (iii) Liens arising in connection with worker’s compensation, unemployment insurance and social security benefits which are not delinquent or which remain payable without penalty or the validity or amount of which is being contested in good faith by appropriate proceedings, which shall have the effect of staying execution if execution is threatened or possible; (iv) Liens incurred or deposits made in the ordinary course of business to secure the performance of bids tenders, statutory obligations, fee and expense arrangements with trustees and fiscal agents (exclusive of obligations incurred in connection with the borrowing of money) and customary deposits granted in the ordinary course of business under operating leases; (v) Liens securing surety, indemnity, performance, appeal and release bonds; (vi) customary rights of set off, revocation, refund or chargeback under deposit agreements or under the UCC in favor of banks where the Borrower maintains deposits in the ordinary course of business; and (vii) Liens constituting encumbrances in the nature of zoning restrictions, condemnations, easements, encroachments, covenants, rights of way, minor defects, irregularities and rights or restrictions of record on the title or use of real property, which, in the reasonable judgment of the Lender, do not materially detract from the value of such property or materially impair the use thereof in the business and operations of the Borrower.
“Person” means any natural person, corporation, unincorporated organization, trust, joint stock company, joint venture, association, company, limited liability company, partnership or government, or any agency or political subdivision of any government.
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“Plan” means, at any time, an employee pension benefit plan which is covered by Title IV of ERISA or subject to the minimum funding standards under Section 412 of the Code and is either (i) maintained by the Borrower or any member of a Controlled Group for employees of the Borrower or any member of a Controlled Group or (ii) maintained pursuant to a collective bargaining agreement or any other arrangement under which more than one employer makes contributions and to which the Borrower or any member of a Controlled Group is then making or accruing an obligation to make contributions or has within the preceding five (5) plan years made contributions.
“Pledge Agreement” means that certain Pledge Agreement dated as of March 31, 2011, substantially in the form of Exhibit E attached hereto executed by Borrower, in favor of the Agent for the ratable benefit of the Lenders and the Agent, as the same may be amended, restated, supplemented or otherwise modified from time to time.
“Prime Rate” means the base rate on corporate loans posted by at least 75% of the United States’ 30 largest banks, commonly known as the U.S. Prime Rate of Interest as published from time to time in the Wall Street Journal.
“Real Property Mortgage” means the Real Property Leasehold Mortgage; Security Agreement; Assignment of Rents and Leases; and Financing Statement dated as of October 30, 2006, and executed by Stanford American Samoa Holdings, Limited, an American Samoa corporation, in favor of the Agent for the ratable benefit of the Lenders and the Agent, as the same may be amended, restated, supplemented or otherwise modified from time to time.
“Reporting Parties” means Borrower, American Samoa Hawaii Cable, LLC, Bluesky Samoatel Investments, Ltd. and Samoatel Limited.
“Responsible Officer” means, as to any Loan Party, any of the President, the Director, the Vice President, or the Secretary of such Loan Party.
“Security Agreements” means, collectively (i) that certain Security Agreement dated as of October 30, 2006, executed by the Borrower in favor of the Agent for the ratable benefit of the Lenders and the Agent, (ii) that certain Security Agreement dated as of October 30, 2006, executed by Elandia, Inc. in favor of the Agent for the ratable benefit of the Lenders and the Agent, and (iii) that certain Security Agreement dated as of October 30, 2006, executed by South Pacific Holdings, Inc. in favor of the Lender, as each may be amended, restated, supplemented or otherwise modified from time to time, and “Security Agreement” means any of them.
“Security Documents” means, collectively (i) the Security Agreements as amended by the Amendments to Security Agreements, (ii) the Pledge Agreement, (iii) the Real Property Mortgage as amended by Amendment to Real Property Mortgage, (iv) all financing statements, fixture filings, landlord waivers and notices filed in connection therewith, and (v) all other documents and instruments executed by the Borrower or any Guarantor in connection therewith, as any thereof shall be amended, restated, supplemented or otherwise modified from time to time.
“Seller” means the Government of the Independent State of Samoa.
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“Share Sale Agreement” means that certain Share Sale and Purchase Agreement dated January 21, 2011, between the Government of the Independent State of Samoa, as seller, and Borrower as buyer, with respect to the shares of Samoatel Limited, a Samoan company.
“Solvent” means, as to any Person at a particular time, if, at such time both (a) (i) the then fair saleable value of the property of such Person on a going concern basis is (A) greater than the total amount of liabilities (including contingent liabilities) of such Person as they mature in the ordinary course and (B) not less than the amount that will be required to pay the probable liabilities on such Person’s then existing debts as they become absolute and matured considering all financing alternatives and potential asset sales reasonably available to such Person; (ii) such Person’s capital is not unreasonably small in relation to its business or any contemplated or undertaken transaction; and (iii) such Person does not intend to incur, or believe (nor should it reasonably believe) that it will incur, debts beyond its ability to pay such debts as they become due; and (b) such Person is “solvent” within the meaning given that term and similar terms under applicable laws relating to fraudulent transfers and conveyances. For purposes of this definition, the debts and liabilities of a Person, contingent or otherwise, shall include the amount of all debts and liabilities that are relevant under applicable Fraudulent Transfer Laws, and the assets of a Person shall give effect to the value (as determined under the applicable provisions of the Fraudulent Transfer Laws) of any rights to subrogation, reimbursement, indemnification or contribution of such Person pursuant to applicable Law or pursuant to the terms of any agreement (including the Contribution Agreement).
“Subordinated Debt” means Indebtedness of the Borrower or any Subsidiary with respect to which the Borrower or such Subsidiary and the party to whom the Indebtedness is owed have executed and delivered a subordination agreement in favor of the Lender in form and substance satisfactory to the Lender.
“Subsidiary” means, for any Person, each business entity directly or indirectly controlled by such Person. For the purposes of this definition, “controlled by” shall mean the possession, directly or indirectly of the power to direct or cause the direction of the management or policies of such Subsidiary, whether through the ownership of partnership or limited liability company interest, voting securities, by contract, or otherwise. Unless otherwise specified, all references herein to a “Subsidiary” shall refer to a Subsidiary of the Borrower.
“Successor” means, for any corporation, banking association or other legal entity, any successor by merger or consolidation, or by acquisition of substantially all of the assets of the predecessor, or by conversion to another type of legal entity, or by continuation after and the occurrence of an event that would otherwise result in termination under applicable law but for such continuation.
“Swap Contract” means any agreement (including all schedules thereto, confirmations of transactions thereunder, and documents, definitions, and agreements incorporated therein by reference or relating thereto) relating to any transaction between the Borrower and the Lender or an Affiliate of the Lender that is an interest rate swap agreement or equivalent interest rate risk management agreement, basis swap, forward rate agreement, interest rate option, rate cap, collar or floor agreement or any other, similar agreement, and, unless the context otherwise clearly requires, any master agreement relating to or governing any or all of the foregoing.
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“Synthetic Lease” means (i) a so-called synthetic, off-balance sheet or tax retention lease, or (ii) an agreement for the use or possession of property creating obligations which do not appear on the balance sheet of such Person but which, upon the insolvency or bankruptcy of such Person, would be characterized as the Indebtedness of such Person (without regard to accounting treatment).
“Tax” means, for any Person, any tax, assessment, duty, levy, impost or other charge imposed by any Governmental Authority on such Person or on any property, revenue, income, or franchise of such Person and any interest or penalty with respect to any of the foregoing.
“Term Loan” has the meaning given to it in Section 3.1.
“Term Note” has the meaning given in Section 3.6.
“Term Maturity Date” means March 31, 2016.
“Treasury Management Contract” means any agreement among the Borrower and its Affiliates governing the provision of treasury or cash management services, including, without limitation, deposit accounts, funds transfers, automated clearing house (ACH) transactions, zero balance accounts, concentration accounts, controlled disbursement services and lockbox accounts.
“Unfunded Vested Liabilities” means, with respect to any Plan at any time, the amount (if any) by which (i) the present value of all vested non-forfeitable benefits under such Plan exceeds (ii) the fair market value of all Plan assets allocable to such benefits, all determined as of then most recent valuation date for such Plan, but only to the extent that such excess represents a potential liability of the Borrower or any member of a Controlled Group to the PBGC or the Plan under Title IV of ERISA.
“United States” and “U.S.” each means the United States of America.
Section 1.2 General Principles Applicable to Definitions. Definitions given herein shall be equally applicable to both singular and plural forms of the terms therein defined and references herein to “he” or “it” shall be applicable to Persons whether masculine, feminine or neuter. References herein to any document including, without limitation, this Agreement shall be deemed a reference to such document as it now exists, and as, from time to time hereafter, the same may be amended. The term “including” is not limiting and means “including without limitation.” References herein to any section, subsection, Schedule or Exhibit shall, unless otherwise indicated, be deemed a reference to sections and subsections within and schedules and Exhibits to this Agreement.
Section 1.3 Accounting Terms. Except as otherwise provided herein, accounting terms not specifically defined shall be construed, and all accounting procedures shall be performed, in accordance with generally accepted United States accounting principles consistently applied from and after the date hereof (“GAAP”) and as in effect on the date of application.
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Section 1.4 UCC Terms. Except as otherwise provided herein, terms used herein that are defined in the UCC have the meanings given to them in the Uniform Commercial Code (the “UCC”) as the same may, from time to time, be in effect in the State of Washington.
ARTICLE 2
LETTER OF CREDIT FACILITY
Section 2.1 Letter of Credit Facility. Pursuant to the terms hereof, ANZ Bank agrees to issue the Letter of Credit to the Beneficiary, not to exceed the Letter of Credit Limit, for the account of Borrower.
Section 2.2 Requests for Letter of Credit. Prior to the Letter of Credit Expiry Date, Borrower may request that L/C Issuer issue a letter of credit (“Letter of Credit”) for Borrower’s account or to extend or renew any existing Letters of Credit issued by L/C Issuer, in an aggregate stated amount not to exceed, the lesser of the Letter of Credit Limit and the outstanding amount owed by Borrower on its contract with Beneficiary. Such request will be made in accordance with the instructions provided in the Letter of Credit Application and, if such instructions are not so provided, then each such request shall be made by delivering a written request for the issuance, extension or renewal of such Letter of Credit to L/C Issuer not later than 11:00 a.m. (American Samoa time) three (3) Business Days prior to the date the Letter of Credit is to be issued or an existing Letter of Credit is to be extended or renewed. Any request for a Letter of Credit shall be deemed to constitute a representation and warranty by Borrower that, as of the date of such request, the statements set forth in Article 5 of the Loan Agreement and the statements in the Loan Documents are true and correct and that no Default or Event of Default has occurred and is continuing. Each request for a Letter of Credit shall specify the face amount of the requested Letter of Credit, the proposed date of expiration, and whether such Letter of Credit is an extension or renewal of an existing Letter of Credit. Each letter of credit request shall include terms and conditions for drawing which shall be acceptable to L/C Issuer.
Section 2.3 Administrative Fees. Borrower shall pay from time to time and on demand the usual issuance, presentation and processing fees that are standard fees charged by L/C Issuer for services relating to Letters of Credit as from time to time in effect and as otherwise described in the Reimbursement Agreement executed by Borrower in connection with each such Letter of Credit.
Section 2.4 Amount. Each Letter of Credit issued by L/C Issuer shall be in a face amount such that after the issuance of a Letter of Credit, the total of all outstanding Letters of Credit shall not exceed Three Million Five Hundred Thousand Dollars ($3,500,000.00).
Section 2.5 Letter of Credit Fees. Borrower shall pay L/C Issuer an annual letter of credit fee on the maximum amount of Letter of Credit Limit equal to two percent (2.0%) of the said maximum Letter of Credit Limit, payable quarterly in arrears.
Section 2.6 Letter of Credit Application. Borrower shall execute a Letter of Credit Application in the standard form used by L/C Issuer at the time any Letter of Credit is requested by Borrower hereunder. Subject to Borrower’s compliance the Letter of Credit Application and this Article 2, L/C Issuer shall deliver its Letter of Credit to the designated Beneficiary at such
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address as Borrower may specify. New Letters of Credit and extensions or renewals of any existing Letters of Credit issued hereunder shall contain terms and conditions customarily included in L/C Issuer’s Letters of Credit and shall otherwise be in a form acceptable to L/C Issuer.
Section 2.7 Conflict of Terms. In the event of any conflict between the terms of any Letter of Credit Application or Letter of Credit and the terms of this Agreement, the terms of this Agreement shall control.
Section 2.8 Indemnification. Borrower shall indemnify L/C Issuer on demand for any and all additional costs, expenses or damages incurred by L/C Issuer, directly or indirectly, arising out of the issuance of any Letter of Credit including, without limitation, any costs of maintaining reserves in respect thereof and any premium rates imposed by the Federal Deposit Insurance Corporation in connection therewith. A certificate as to such additional amounts submitted to Borrower by L/C Issuer shall be binding, absent a showing by Borrower of manifest error.
Section 2.9 Change in Laws. If at any time after the date of the Agreement, the introduction of or change in Applicable Law, rule, or regulation or the interpretation or the administration thereof by any Governmental Body charged with the interpretation or administration thereof, or compliance by L/C Issuer with any requests directed by any such Governmental Body (whether or not having the force of law) shall, with respect to any such Letter of Credit subject L/C Issuer to any tax (other than a tax imposed on the net income or gross revenue of L/C Issuer), duty or other charge or impose, modify, or deem applicable any reserve, special deposit, or similar requirements against assets of, deposits with or for the account of, credit extended by L/C Issuer or shall impose on L/C Issuer any other conditions affecting the Letters of Credit and the result of any of the foregoing is to increase the cost to L/C Issuer of issuing a Letter of Credit or to reduce the amount of any sum received or receivable by L/C Issuer hereunder with respect to the Letters of Credit, then, upon demand by L/C Issuer, Borrower shall pay to L/C Issuer such additional amount or amounts as will compensate L/C Issuer for such increased cost or reduction. A certificate submitted to Borrower by L/C Issuer setting forth the basis for the determination of such additional amount or amounts shall be binding absent a showing by Borrower of manifest error.
Section 2.10 L/C Indemnity. Borrower shall indemnify and hold L/C Issuer harmless from and against (i) any and all taxes (other than taxes imposed on the net income or gross revenue of L/C Issuer) and other fees payable in connection with Letters of Credit or the provisions of this Agreement relating thereto, and (ii) any and all actions, claims, damages, losses, liabilities, fines, penalties, costs, and expenses of every nature, including reasonable attorney’s fees, suffered or incurred by L/C Issuer otherwise arising out of or relating to this Agreement or any Letter of Credit; provided, however, said indemnification shall not apply to the extent that any such action, claim, damage, loss, liability, fine, penalty, cost, or expense arises out of or is based upon L/C Issuer’s gross negligence or willful misconduct.
Section 2.11 Payment by Borrower. Any payment made by L/C Issuer under any Letter of Credit and any unpaid fees payable by Borrower with respect to any Letter of Credit not immediately reimbursed by Borrower shall be paid in full upon demand, except as otherwise provided in the Letter of Credit Application.
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Section 2.12 Cash Collateralization. If a Default or Event of Default shall occur and be continuing (i) the unreimbursed amounts drawn under all Letters of Credit shall become immediately due and payable all without protest, presentment, notice or demand, all of which Borrower expressly waives, (ii) Borrower shall immediately deposit with L/C Issuer as cash collateral an amount equal to the aggregate face amount of all undrawn issued and outstanding Letters of Credit, and (iii) L/C Issuer’s obligation to issue Letters of Credit for the account of Borrower shall immediately terminate. The rights and remedies set forth in this subsection (i) shall be in addition to any and all rights and remedies set forth in this Agreement and the other Loan Documents. Any amounts deposited with L/C Issuer under this subsection (i) shall be applied to satisfy and reimburse L/C Issuer for all amounts drawn under the Letters of Credit, and, when all such amounts have been reimbursed and L/C Issuer shall have no further obligation to issue Letters of Credit, then such amounts shall be applied to reimburse Lenders for any and all other amounts owing by Borrower under this Agreement and the Loan Documents. Regardless of whether Borrower’s obligations to pay the unreimbursed amounts drawn on Letters of Credit have been accelerated by L/C Issuer, L/C Issuer may realize on any or all of the Collateral by exercising any remedies provided in the Loan Documents. Amounts paid or received from Borrower in respect of issued and outstanding Letters of Credit which exceed amounts paid by L/C Issuer under such Letters of Credit shall be held (and applied) as additional cash collateral to secure the performance of all obligations of Borrower owing to Lenders under this Agreement and the Loan Documents.
ARTICLE 3
THE TERM LOAN
Section 3.1 Term Loan. Subject to the terms and conditions of this Agreement, ANZ Finance agrees during the period from the date hereof until a date not later than ten (10) days after the satisfaction of the conditions set forth in Article 4 hereof, to make a term loan (the “Term Loan”) to the Borrower in the principal amount of Five Million Five Hundred Thousand Dollars ($5,500,000).
Section 3.2 Manner of Borrowing. To request the Term Loan, the Borrower shall deliver to the Agent a written request made by a Responsible Officer not later than 11:00 a.m. (Pago Pago time) on the date the Borrower wishes the Term Loan to be made. The request shall be deemed to constitute a representation and warranty by the Borrower that (i) as of the date of such request, the representations and warranties set forth in Article 5 hereof are true and correct in all material respects and (ii) no Default or Event of Default has occurred and is continuing or will result from making the Term Loan. Upon fulfillment to ANZ Finance’s satisfaction of the applicable conditions set forth in this Section 3.2 and in Article 4 hereof, ANZ Finance will promptly make the proceeds of the Term Loan available to the Borrower by direct payment to the Seller pursuant to the terms of the Share Sale Agreement.
Section 3.3 Repayment of Term Loan. The Borrower shall repay to ANZ Finance the principal amount of and accrued interest on the Term Loan in consecutive monthly installments commencing on April 30, 2011, and continuing on the last Business Day of each
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month thereafter in the amount of One Hundred Five Thousand Six Hundred Ninety-four Dollars ($105,694), and shall repay the remaining principal amount of the Term Loan and all accrued but unpaid interest on the Term Maturity Date. The Term Loan may be repaid at any time without penalty or premium.
Section 3.4 Interest. The Borrower agrees to pay to ANZ Finance interest on the unpaid principal amount of the Term Loan from the date made until the Term Loan shall be due and payable at a per annum rate equal to the Applicable Interest Rate in effect from time to time; provided, however, that after the occurrence and during the continuation of an Event of Default, interest shall accrue at the Default Rate; provided, further, that interest shall not accrue at a rate in excess of the maximum rate permitted by applicable law. Accrued but unpaid interest on the Term Loan shall be paid in accordance with Section 3.3; provided, however, that accrued interest on the Term Loan shall be payable on demand after the occurrence of an Event of Default. Computations of interest on the Term Loan shall be made on the basis of a year of 365/366 days, for the actual number of days (including the first day but excluding the last day) occurring in the period for which such interest is payable.
Section 3.5 Form and Place of Payment. All payments and prepayments of principal and interest on each Loan shall be made by paying the same in United States Dollars and in immediately available funds to the Agent not later than 3:00 p.m. (Pago Pago time) on the date on which such payment or prepayment shall become due. If such payment is received after 3:00 p.m. (Pago Pago time), then it will be deemed received on the next Business Day. All payments to be made by the Borrower shall be made without setoff, recoupment or counterclaim. The Agent shall promptly remit to ANZ Finance, in immediately available funds, all payments and prepayments of principal and interest on the Term Loan. In the event the Agent is required to refund any such payment or prepayment of principal and interest on the Term Loan, then ANZ Finance, agrees to immediately repay to the Agent such payment or prepayment of principal and interest on the Term Loan. Whenever any payment under this Article 2 shall be stated to be due on a day other than a Business Day, such payment shall be made on the next succeeding Business Day and such extension of time shall in such case be included in the computation and payment of interest or fees, as the case may be.
Section 3.6 Note; Recordation of Loan. The Term Loan shall be evidenced by a promissory note of the Borrower dated as of the date hereof, payable to the order of ANZ Finance substantially in the form attached hereto as Exhibit A in the face amount of Five Million Five Hundred Thousand Dollars ($5,500,000) (the “Term Note”). ANZ Finance is hereby authorized to record the date and amount of the Term Loan, the Applicable Interest Rate, and the date and amount of each payment of principal and interest thereon on a schedule annexed to or kept in respect of the Term Note. Any such recordation by ANZ Finance shall constitute prima facie evidence of the accuracy of the information so recorded; provided, however, that the failure to make any such recordation or any error in any such recordation shall not affect the obligations of the Borrower hereunder or under the Term Note.
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ARTICLE 4
CONDITIONS TO LOANS
Section 4.1 Conditions to Initial Advance. In addition to the conditions set forth in Section 4.2, the obligation of ANZ Bank to issue the Letter of Credit and the obligation of ANZ Finance to make the Term Loan, are subject to fulfillment of the following conditions precedent prior to making such Loan:
(a) Borrower Documents. The Agent shall have received the following, each of which shall be originals, each properly executed by an officer of the Borrower and each in form and substance satisfactory to the Lenders and the Agent and their legal counsel: (i) executed counterparts of this Agreement; (ii) the original Note; and (iii) executed counterparts of each other Borrower Document.
(b) Borrower Authority. The Agent shall have received the following, each in form and substance satisfactory to the Lenders and the Agent and their legal counsel: (i) such certificates of resolutions or other action, incumbency certificates and/or other certificates of officers of the Borrower as the Agent may require to establish the identities of and verify the authority and capacity of each officer thereof authorized to act as an officer in connection with this Agreement, the Notes and the other Borrower Documents; and (ii) such evidence as the Agent may require to verify that the Borrower is duly formed, validly existing, in good standing and qualified to engage in business in each jurisdiction in which it is required to be qualified to engage in business, including certified copies of the Borrower’s certificate of formation and operating agreement and a certificate of good standing.
(c) Guarantor Documents. The Agent shall have received the following, each of which shall be originals, each properly executed by an officer of each Guarantor a party thereto and each in form and substance satisfactory to the Lenders and the Agent and their legal counsel: (i) executed counterparts of the Guaranties; and (ii) executed counterparts of each other Guarantor Document.
(d) Guarantor Authority. The Agent shall have received the following, each in form and substance satisfactory to the Lenders and the Agent and their legal counsel: (i) such certificates of resolutions or other action, incumbency certificates and/or other certificates of officers of each Guarantor as the Agent may require to establish the identities of and verify the authority and capacity of each officer thereof authorized to act as an officer in connection with the Guaranty and the other Guarantor Documents to which such Guarantor is a party; and (ii) such evidence as the Agent may require to verify that each Guarantor is duly formed, validly existing, in good standing and qualified to engage in business in each jurisdiction in which it is required to be qualified to engage in business, including certified copies of each Guarantor’s articles or certificate of incorporation and bylaws and a certificate of good standing.
(e) Collateral. The Agent shall have received the following, each in form and substance satisfactory to the Lenders and the Agent and their legal counsel:
(i) searches of Uniform Commercial Code filings in (A) the jurisdiction in which the Borrower is organized, (B) the jurisdiction in which the chief
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executive office of the Borrower is located, (C) as to each Guarantor, the jurisdiction in which such Guarantor is organized, (D) as to each Guarantor, the jurisdiction in which the chief executive office of such Guarantor is located, and (E) each jurisdiction where any Collateral is located or where a filing would need to be made in order to perfect the Lien created by the Security Documents, copies of the financing statements on file in such jurisdictions and evidence that no Liens exist other than as expressly permitted by this Agreement;
(ii) to the extent not described in Sections 4.1(a) and 4.1(c) above, executed counterparts of each Amendment to Security Documents by the Borrower or any applicable Guarantor; together with allonges or assignments as may be necessary or appropriate to perfect the Lien created by the Security Documents;
(iii) (A) evidence, which may be in the form of a letter from an insurance broker or a municipal engineer, as to whether (1) any real property or improvements covered by a Real Property Mortgage is located in an area designated by the Federal Emergency Management Agency as having special flood or mud slide hazards (a “Flood Hazard Property”) and (2) the community in which any such Flood Hazard Property is located is participating in the National Flood Insurance Program, (B) if there are any such Flood Hazard Properties, the written acknowledgement of the Borrower and Guarantor of receipt of written notification from the Agent (1) as to the existence of each such Flood Hazard Property and (2) as to whether the community in which each such Flood Hazard Property is located is participating in the National Flood Insurance Program, and (C) in the event such Flood Hazard Property is located in a community that participates in the National Flood Insurance Program, evidence that the Borrower has obtained flood insurance in respect of such Flood Hazard Property to the extent required under the applicable regulations of the Board of Governors of the Federal Reserve System;
(iv) in the case of each real property leasehold interest of the Borrower or any Guarantor or any other Collateral consisting of a real property leasehold interest, the Consent of Sublessor and such other estoppel letters, consents and waivers from the landlords of such real property (other than the Consent of Lessors) as may be required by the Agent, which estoppel letters, consents and waivers shall be in form and substance satisfactory to the Agent; and
(v) evidence that all other actions necessary or, in the opinion of the Agent, desirable to perfect and protect the first priority Lien created by the Security Documents, and to enhance the Agent’s and each Lender’s ability to preserve and protect their interests in and access to the Collateral, have been taken.
(f) Evidence of Priority. The Agent shall have received evidence satisfactory to the Lenders and the Agent and their legal counsel that (i) the Agent holds a perfected, first priority Lien on all Collateral (other than as expressly permitted by this Agreement) and (ii) none of the Collateral is subject to any other Liens other than as expressly permitted by this Agreement.
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(g) Evidence of Insurance. The Agent shall have received copies of insurance policies, certificates of insurance or other evidence satisfactory to the Agent that the insurance required by this Agreement or any Security Document is in full force and effect and that the Agent and each Lender has been named as additional insured and/or loss payee to the extent required hereunder or thereunder.
(h) Officer’s Certificate. The Agent shall have received an Officer’s Certificate from the Borrower as to the accuracy of the Borrower’s representations and warranties set forth in Article 5 hereof and as to the absence of any Default or Event of Default.
(i) No Material Adverse Change. No event shall have occurred since the date of the balance sheet referred to in Section 5.6(b) that could reasonably be expected to have a material adverse change in, or a material adverse effect upon, the business, operations, properties or financial condition of the Borrower or the Borrower and the Guarantors taken as a whole.
(j) Payment of Fees and Expenses. The Lender shall have received (i) the upfront fee set forth in Section 4.2, and (ii) reimbursement for all reasonable expenses incurred by the Agent or any Lender in connection with the consummation of the transactions contemplated by this Agreement and the other Loan Documents.
(k) Consents. The Agent shall have received evidence reasonably satisfactory to the Agent that the Borrower and each Guarantor has obtained all consents, permits and Government Approvals from all Persons (including, without limitation, Governmental Authorities) which are parties to or the issuer of any material contract, lease, license or other Government Approval necessary or advisable to permit the Agent and each Lender following any Event of Default, to enjoy the practical realization of the rights and remedies provided in this Agreement and the other Loan Documents.
Section 4.2 Conditions to All Advances. The obligation of ANZ Finance to make the Term Loan, and the obligation of ANZ Bank to issue the Letter of Credit are subject to fulfillment of the following conditions precedent:
(a) Prior Conditions. All of the conditions set forth in Section 4.1 shall have been satisfied.
(b) Up Front Fee. Agent shall have received the Loan Approval Fee in the amount of $82,500.00 for the Term Loan and the Loan Approval Fee for the Letter of Credit Facility in the amount of $52,500.00, as set forth in the Offer Letter dated March 30, 2011.
(c) No Defaults, Etc. At the date of the requested Loan, no Default or Event of Default shall have occurred and be continuing or will result from making the Term Loan or issuance of the Letter of Credit; and the representations and warranties of the Borrower in Article 5 hereof shall be true on and as of such date with the same force and effect as if made on and as of such date.
(d) Revocation of Guaranty. Neither the Agent or any Lender shall have received from the Borrower or any Guarantor any notice terminating or purporting to terminate any Guarantor’s obligations under the Guaranty to which such Guarantor is a party or claiming that either Guaranty is not or will in the future not be fully enforceable against each Guarantor a party thereto in accordance with its terms.
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(e) Other Information. The Agent shall have received such other statements, opinions, certificates, documents and information as it or, in the case of a requested Revolving Loan, ANZ Finance, and, in the case of a request for the Term Loan, ANZ Bank, may reasonably request in order to satisfy itself that the conditions set forth in this Section 4.2 have been fulfilled.
(f) Elandia Datec Acquisitions. Agent shall have received documentary evidence that Elandia Datec Acquisitions has been closed.
(g) Equity Contributions. Agent shall have received documentary evidence that equity contributions from the consortium of investors (totaling USD$4.5 million) has been committed and in place.
(h) Share Purchase. All conditions precedent in the Share Purchase Agreement are in compliance, including evidence of local telecommunication regulator approval regarding the change of ownership of Samoatel Limited and documentation of the dividend policy to be at a maximum of 50% of NPAT of acquired company.
(i) Insurance. Agent shall have received evidence of insurance coverage against all hazards is in place with a coverage amount satisfactory to the ANZ Bank with ANZ Finance who shall be named as a loss payee.
(j) Management Agreement. The management agreement between Borrower and Samoatel Limited shall have been reviewed by the Agent and shall be satisfactory to ANZ Bank and ANZ Finance as to the reasonableness of the overall fee, and that any management fees in excess of Samoa Tala 700,000 per annum (USD $300,000 per annum) are to be accrued and payable only with the prior consent of the Agent.
(k) Preferred Stock. The Agent shall have confirmed that the Non-Voting Redeemable Preferred Shares (NVRPS) Offering Agreement to NVRPS of Blue Sky Samoatel Investments Inc. are not callable for 5-years and that dividends are not payable without Agent consent.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Agent and each Lender as follows:
Section 5.1 Existence and Power. The Borrower is a limited liability company, validly existing and in good standing under the laws of Delaware. The Borrower is duly qualified to do business in each other jurisdiction where the failure to so qualify would be likely to have a material adverse effect on the business, operations, properties or financial condition of the Borrower. The Borrower has full company power, authority and legal right to carry on its business and operations as presently conducted, to own and operate its properties and assets, and to execute, deliver and perform this Agreement and the other Borrower Documents.
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Section 5.2 Authorization. The execution, delivery and performance by the Borrower of this Agreement and the other Borrower Documents and any borrowing hereunder, have been duly authorized by all necessary company action of the Borrower, do not require any member approval or the approval or consent of any trustee or the holders of any Indebtedness of the Borrower, except such as have been obtained (certified copies thereof having been delivered to the Lender), do not contravene any law, regulation, rule or order binding on it or its certificate of formation and limited liability company agreement and do not contravene the provisions of or constitute a default under any material indenture, mortgage, contract or other agreement or instrument to which the Borrower is a party or by which the Borrower or any of its properties may be bound or affected.
Section 5.3 Government Approvals, Etc. No Government Approval or filing or registration with any Governmental Authority is required for the making and performance by the Borrower or any Guarantor of the Loan Documents or in connection with any of the transactions contemplated hereby or thereby, except such as have been heretofore obtained and are in full force and effect (certified copies thereof having been delivered to the Agent).
Section 5.4 Binding Obligations, Etc. This Agreement has been duly executed and delivered by the Borrower and constitutes, and the other Borrower Documents when duly executed and delivered will constitute, the legal, valid and binding obligations of the Borrower enforceable against the Borrower in accordance with their respective terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, similar laws affecting creditors’ rights generally or general principles of equity. The Guarantor Documents when duly executed and delivered will constitute, the legal, valid and binding obligations of each Guarantor a party thereto enforceable against such Guarantor in accordance with their respective terms, except as enforceability may be limited by bankruptcy, insolvency, reorganization, similar laws affecting creditors’ rights generally or general principles of equity.
Section 5.5 Litigation. Except as specifically disclosed in Schedule 2 attached hereto, there are no actions, proceedings, investigations, or claims against or affecting the Borrower or any Guarantor now pending before any court, arbitrator, or Governmental Authority (nor to the Borrower’s knowledge has any thereof been threatened nor does any basis exist therefor) which if determined adversely to the Borrower or such Guarantor would (a) have a material adverse effect on the business, operations, properties or financial condition of the Borrower or the Borrower and the Guarantors taken as a whole, (b) impair or defeat the Lien of the Agent or any Lender on any of the Collateral or any rights of the Borrower or any Guarantor therein, or (c) result in a judgment or order against the Borrower or any Guarantor (in excess of insurance coverage) for more than Fifty Thousand Dollars ($50,000) in any one case or One Hundred Fifty Thousand Dollars ($150,000) in the aggregate.
Section 5.6 Financial Condition.
(a) Pro forma Financial Information. The pro forma financial information, statements and projections furnished to the Lender by or on behalf of the Borrower in connection with this Agreement and the transactions contemplated hereby and thereby, were prepared and furnished to each Lender in good faith and were based on estimates and assumptions that were believed by the management of the Borrower to be reasonable in light of then current and
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foreseeable business conditions of the Borrower and represented the Borrower’s management’s good faith estimate of the projected financial performance of the Borrower based on the information available to the Responsible Officers of the Borrower at the time so furnished.
(b) Financial Statements. The most recent consolidated balance sheet of the Borrower and its Subsidiaries furnished to the Lender pursuant to Section 6.10(a) or (b) and (the “Current Balance Sheet”), and the related statements of income and retained earnings of the Borrower and its Subsidiaries for the fiscal year then ended, copies of which have been furnished to each Lender, fairly present the consolidated financial condition of the Borrower as at such date, all determined in accordance with GAAP. The Borrower did not have on such date any material contingent liabilities for Taxes, unusual forward or long-term commitments or material unrealized or anticipated losses from any unfavorable commitments, except as referred to or reflected or provided for in such balance sheet and in the related notes. Since the date of the Current Balance Sheet there has been no material adverse change in the business, operations, properties or financial condition of the Borrower or the Borrower and its Subsidiaries taken as a whole.
Section 5.7 Solvency. The Borrower and each Guarantor is Solvent and each shall be Solvent immediately after the consummation of the transactions contemplated by this Agreement.
Section 5.8 Title and Liens. The Borrower has good and marketable title to each of the properties and assets reflected in the Current Balance Sheet, except such as have been since sold or otherwise disposed of in the ordinary course of business. No assets or revenues of the Borrower are subject to any Lien except as required or permitted by this Agreement or specifically disclosed in Schedule 3 attached hereto.
Section 5.9 Intellectual Property. The Borrower owns or possesses all Intellectual Property and all licenses, franchises, permits and rights with respect to any Intellectual Property necessary to own and operate its respective properties and to carry on its business as presently conducted and presently planned to be conducted. Except as specifically disclosed in Schedule 4 attached hereto, no claim or litigation regarding any Intellectual Property or any license, franchise, permit or other rights with respect thereto is pending (nor to the best of the Borrower’s knowledge threatened) which if determined adversely to the Borrower would have a material adverse effect on the business, operations, properties or financial condition of the Borrower or the Borrower and its Subsidiaries taken as a whole.
Section 5.10 Matters Concerning Collateral.
(a) The execution and delivery by the Borrower and each Guarantor of the Security Documents to which they are a party, together with the actions taken on or prior to the date hereof pursuant to Section 4.1(e), are effective to create and do create in favor of the Agent for the ratable benefit of the Lenders and the Agent, as security for the Secured Obligations (as defined in the applicable Security Document in respect of any Collateral), a valid, perfected and enforceable Lien on such Collateral, prior and superior in right to any other Person except for Permitted Liens and Liens specifically disclosed in Schedule 3 attached hereto, and all filings and other actions necessary or desirable to perfect and maintain the perfection and first priority
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status of such Liens have been duly made or taken and remain in full force and effect, other than the filing of any UCC financing statements and the periodic filing of UCC continuation statements in respect of UCC financing statements filed by or on behalf of the Agent or any Lender.
(b) No approval, consent, exemption, authorization, or other action by, or notice to, or filing with, any Governmental Authority is necessary or required for either (i) the grant by the Borrower or any Guarantor of the Liens purported to be created in favor of the Agent for the ratable benefit of the Lenders and the Agent pursuant to any of the Security Documents to which it or such Guarantor is a party or (ii) the exercise by the Agent or any Lender of any rights or remedies in respect of the Collateral described in any of such Security Documents (whether specifically granted or created pursuant to any of such Security Documents or created or provided for by applicable law), except for filings or recordings contemplated by subsection (a) above.
(c) Except as such as may have been filed in favor of the Agent or any Lender as contemplated by subsection (a) above and in respect of Liens permitted under Section 7.7, no effective UCC financing statement, fixture filing or other instrument similar in effect covering all or any part of the Collateral described in any of the Security Documents to which the Borrower or any Guarantor is a party is on file in any filing or recording office.
(d) All representations and warranties of the Borrower and each Guarantor contained in the Security Documents to which it or such Guarantor is a party are true and correct, and all information supplied to the Agent or any Lender by or on behalf of the Borrower and each Guarantor with respect to the Collateral is accurate and complete in all material respects.
Section 5.11 Environmental Laws, Etc. Except as specifically disclosed in Schedule 5 attached hereto, all properties of the Borrower and its use thereof comply in all material respects with applicable zoning and use restrictions and with applicable laws and regulations relating to health, safety and the environment in all jurisdictions in which the Borrower is doing business. Without limiting the foregoing, except as specifically disclosed in Schedule 5 attached hereto, no Hazardous Substances have been generated, manufactured, refined, transferred, stored, treated, transported, handled, managed, discharged or disposed of, whether by the Borrower or, to the best of the Borrower’s knowledge after investigation, by any other Person onto, upon, over, beneath or from any real property owned by the Borrower or other premises owned, leased, operated, used or held at any time by the Borrower or any of the ground water beneath any such premises (collectively, the “Premises”) which in any fashion might result in the Borrower, the Agent or any Lender incurring or suffering at any time any loss, liability, damages, or obligations including liability for cleanup and recovery costs and expenses. Except as specifically disclosed in Schedule 5 attached hereto, there are no underground storage tanks, whether in current use or not, at any of the Premises and no such tanks have ever been maintained on the Premises. There are no past or present events, conditions, circumstances, activities, practices, incidents or actions at or in connection with the Premises which could reasonably be expected to interfere with or prevent continued compliance with any laws or regulations pertaining to underground storage tanks or any other laws or regulations relating to the emission, discharge, release or threatened release of Hazardous Substances into the environment or give rise to any legal liability or otherwise form the basis of any claim, action,
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suit, proceedings, hearing or investigation against or affecting the Borrower under the Environmental Laws. There has been no disposal from the Premises by (or to the best of the Borrower’s knowledge after investigation, by any other Person) directly or indirectly of any Hazardous Substances to, on or in any site currently listed or formally proposed to be listed on the National Priorities List under Superfund or any site listed on any priority cleanup list compiled by any state department of ecology or environmental quality. The Borrower has not and will not be involved in any operations at or near the Premises which operations when conducted in accordance with applicable law could lead to: (a) the imposition of liability under Environmental Laws on the Borrower or any subsequent owner of the Premises or (b) the creation of a lien on the Premises under Environmental Laws or under any similar laws or regulations.
Section 5.12 Taxes. The Borrower has filed all tax returns and reports required of it, has paid all Taxes which are due and payable and before they have become delinquent, except for Taxes (a) whose amount is not individually or in the aggregate a Material Amount, or (b) whose amount, applicability or validity is currently being contested in good faith by appropriate proceedings where reserves or other appropriate provisions required by GAAP shall have established therefor. The charges, accruals and reserves on the books of the Borrower and its Subsidiaries in respect of Taxes for all fiscal periods to date are accurate. There are no questions or disputes between the Borrower and any Governmental Authority with respect to any Taxes. As used in this Section 5.12, “Material Amount” shall mean an amount of Fifty Thousand Dollars ($50,000) or more or an amount otherwise material to the business, operations, properties or financial condition of the Borrower or the Borrower and its Subsidiaries taken as a whole.
Section 5.13 Other Agreements. The Borrower is not in breach of or default in any material respect under any material agreement to which it is a party or which is binding on it or any of its assets.
Section 5.14 Labor and Employee Relations Matters. The Borrower is not and does not expect to be the subject of any union organizing activity or material labor dispute, and the Borrower has not violated any applicable federal or state law or regulation relating to labor or labor practices, except such organizing activity, labor disputes and violations, which individually or in aggregate, could not reasonably be expected to have a material adverse effect on the business, operations, properties or financial condition of the Borrower or the Borrower and its Subsidiaries taken as a whole.
Section 5.15 Federal Reserve Regulations. The Borrower is not engaged principally or as one of its important activities in the business of extending credit for the purpose of purchasing or carrying any margin stock (within the meaning of Federal Reserve Regulation U), and no part of the proceeds of any Loan will be used to purchase or carry any such margin stock or to extend credit to others for the purpose of purchasing or carrying any such margin stock or for any other purpose that violates the applicable provisions of any Federal Reserve Regulation. The Borrower will furnish to the Agent or any Lender on request a statement conforming with the requirements of Regulation U.
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Section 5.16 ERISA.
(a) The present value of all benefits vested under all Pension Plans did not, as of the most recent valuation date of such Pension Plans, exceed the value of the assets of the Pension Plans allocable to such vested benefits by an amount which would represent a potential material liability of the Borrower or affect materially the ability of the Borrower to perform the Loan Documents.
(b) No Plan or trust created thereunder, or any trustee or administrator thereof, has engaged in a “prohibited transaction” (as such term is defined in Section 406 of ERISA or Section 4975 of the Code) which could subject such Plan or any other Plan, any trust created thereunder, or any trustee or administrator thereof, or any party dealing with any Plan or any such trust to the tax or penalty on prohibited transactions imposed by Section 502 of ERISA or Section 4975 of the Code.
(c) No Pension Plan or trust has been terminated, except in accordance with the Code, ERISA, and the regulations of the Internal Revenue Service and the PBGC as applicable to solvent plans in which benefits of participants are fully protected. No “reportable event” as defined in Section 4043 of ERISA has occurred for which notice has not been waived or for which alternative notice procedures are permitted.
(d) No Pension Plan or trust created thereunder has incurred any “accumulated funding deficiency” (as such term is defined in Section 302 of ERISA) whether or not waived, since the effective date of ERISA.
(e) The required allocations and contributions to Pension Plans will not violate Section 415 of the Code.
(f) The Borrower has no withdrawal liability to any trust created pursuant to a multi-employer pension or benefit plan nor would it be subject to any such withdrawal liability in excess of Fifty Thousand Dollars ($50,000) if it withdrew from any such plan or if its participation therein were otherwise terminated.
Section 5.17 Subsidiaries. The Borrower owns no Subsidiaries.
Section 5.18 Not Investment Company, Etc. The Borrower is not now, and after the application by the Borrower of the proceeds of any Loan will not be, subject to regulation under the Investment Company Act of 1940, the Public Utility Holding Company Act of 1935, the Federal Power Act, the Interstate Commerce Act, any state public utilities code or any federal or state statute or regulation limiting its ability to incur Indebtedness.
Section 5.19 Representations as a Whole. This Agreement, the other Loan Documents, the financial statements referred to in Section 5.6(b), and all other instruments, documents, certificates and statements furnished to the Agent or any Lender by or on behalf of the Borrower, taken as a whole, do not contain any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements contained herein or therein, in light of the circumstances under which they were made, not misleading. The Borrower has disclosed to the Agent and each Lender in writing any and all facts which could reasonably be
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expected to have a material adverse effect on the business, operations, properties, financial condition or prospects of the Borrower, any Guarantor or the ability of the Borrower or any Guarantor to perform its obligations under the Loan Documents. Without limiting the foregoing, each of the representations and warranties made by the Borrower herein and in the other Loan Documents is true and correct on and as of the date when made, on and as of the date hereof, and on and as of each date this representation is deemed made hereunder with the same force and effect as if made on and as of such dates.
ARTICLE 6
AFFIRMATIVE COVENANTS
So long as any Lender shall have any Commitment hereunder or there shall be any outstanding Loans and until payment in full of each Loan and performance of all other obligations of the Borrower under this Agreement and the other Loan Documents, the Borrower agrees that it will do all of the following unless the Agent and each Lender shall otherwise consent in writing.
Section 6.1 Use of Proceeds. Borrower will (a) use the proceeds of the Term Loan solely for the purchase of shares in Samoatel Limited.
Section 6.2 Payment. The Borrower will pay the principal of and interest on the Term Loan in accordance with the terms of this Agreement and the Note, and will pay when due all other amounts payable by the Borrower hereunder and under any other Loan Document.
Section 6.3 Preservation of Company Existence, Etc. The Borrower will, and will cause each Subsidiary to, preserve and maintain their existence, rights, franchises and privileges in the jurisdictions of their organization and will, and will cause each Subsidiary to, qualify and remain qualified as foreign companies, corporations or entities in each jurisdiction where qualification is necessary or advisable in view of their business and operations or the ownership of their properties.
Section 6.4 Visitation Rights. The Borrower will permit the Agent, each Lender and such Persons as the Agent or any Lender may designate, at any reasonable time, and from time to time, to examine and make copies of and abstracts from the records and books of account of and to visit the properties of the Borrower and any Subsidiary and to discuss the affairs, finances and accounts of the Borrower and any Subsidiary with any of the Borrower’s officers, managers or members. Without limiting the generality of the foregoing, the Borrower agrees to permit Persons retained by the Agent or any Lender at any reasonable time, and from time to time, to conduct field audits of the Collateral, to examine and make copies of and abstracts from the records and books of account of and to visit the properties of the Borrower and any Subsidiary.
Section 6.5 Keeping of Books and Records. The Borrower will, and will cause each Subsidiary to, keep adequate records and books of account in which complete entries will be made, in accordance with GAAP, reflecting all financial transactions of the Borrower and its Subsidiaries.
Section 6.6 Maintenance of Property, Etc. The Borrower will, and will cause each Subsidiary to, maintain and preserve all of its material properties in good working order and
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condition, ordinary wear and tear excepted, and will from time to time make all needed repairs, renewals, or replacements so that the efficiency of such properties shall be fully maintained and preserved. The Borrower will not take or fail to take any action, nor permit any action to be taken by others that are subject to the Borrower’s control which would affect the validity and enforcement of its Intellectual Property, or impair the value of such Intellectual Property.
Section 6.7 Compliance With Laws, Etc. The Borrower will, and will cause each Subsidiary to, comply in all material respects with all laws, regulations, rules, and orders of Governmental Authorities applicable to the Borrower, such Subsidiary or to its or their business, operations or properties, except any thereof whose validity is being contested in good faith by appropriate proceedings upon stay of execution of the enforcement thereof and with provision having been made to the satisfaction of the Lenders for the payment of any fines, charges, penalties or other costs in respect thereof in the event the contest is determined adversely to the Borrower or such Subsidiary.
Section 6.8 Other Obligations. The Borrower will, and will cause each Subsidiary to, pay and discharge before the same shall become delinquent all Indebtedness, Taxes, and other obligations for which the Borrower or such Subsidiary is liable or to which its income or property is subject and all claims for labor and materials or supplies which, if unpaid, might become by law a lien upon assets of the Borrower or such Subsidiary, except any thereof whose validity, applicability or amount is being contested in good faith by the Borrower or such Subsidiary in appropriate proceedings with provision having been made to the satisfaction of the Lenders for the payment thereof in the event the contest is determined adversely to the Borrower or such Subsidiary.
Section 6.9 Insurance. The Borrower will, and will cause each Subsidiary to, keep in force upon all of its and their business, operations and properties, policies of insurance carried with responsible companies in such amounts and covering all such risks as shall be customary in the industry and as shall be reasonably satisfactory to the Lenders. Without limiting the generality of the foregoing, the Borrower will, and will cause each Subsidiary to, maintain or cause to be maintained all insurance required under the terms of any Security Document. Each such policy of insurance shall (a) name the Agent and each Lender as an additional insured thereunder as its interests may appear and (b) in the case of each business interruption and casualty insurance policy, contain a loss payable clause or endorsement, satisfactory in form and substance to the Agent that names the Agent as the loss payee thereunder and provides for at least forty-five (45) days prior written notice to the Agent of the cancellation of such policy. The Borrower will provide the Agent and each Lender with at least forty-five (45) days prior written notice of any modification of any policies of insurance required to be maintained by the Borrower and its Subsidiaries under this Section, and will from time to time, on request, furnish to the Agent and each Lender certificates of insurance or, at the Agent’s or any Lender’s request, duplicate policies evidencing such coverage.
Section 6.10 Financial Information. The Borrower will deliver to each Lender:
(a) Annual Financial Statements. As soon as available and in any event within one hundred twenty (120) days after the end of each fiscal year of the Reporting Parties, the consolidated balance sheet of the Reporting Parties and their Subsidiaries as of the end of
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such fiscal year and the related consolidated statements of revenue and expenses, member’s equity and cash flows for such year, audited by independent certified public accountants selected by the Borrower and approved by the Agent (which approval shall not be unreasonably withheld or delayed) and accompanied by consolidated data shall be prepared in accordance with GAAP and the standards of the AICPA and shall not be qualified by reason of restricted or limited examination of any material portion of the records of the Reporting Parties or their Subsidiaries and (ii) an Officer’s Certificate of the Borrower certifying that as of the close of such year no Event of Default or Default had occurred and was continuing;
(b) Quarterly Financial Statements. As soon as available and in any event within [thirty (30)] days after the end of each fiscal quarter of the Reporting Parties, the consolidated balance sheet of the Reporting Parties and their Subsidiaries as of the end of such fiscal quarter and the related consolidated statements of profits and losses, revenue and expenses, member’s equity and cash flows for such fiscal quarter, prepared by the Reporting Parties, together with consolidated data and accompanied by an Officer’s Certificate certifying that such financial statements have been prepared in conformity with GAAP and the standards of the AICPA (subject to year-end audit adjustments and the absence of footnote disclosures) and, in all material respects, present fairly the financial position and the results of operations of the Borrower and its Subsidiaries as at the end of and for such fiscal quarter;
(c) Annual Budgets. As soon as available and in any event within thirty (30) days after the end of each fiscal year of the Borrower, a budget for the Borrower, American Samoa Hawaii Cable, LLC, Bluesky Samoatel Investments Ltd., and Samoatel Limited prepared on a monthly basis, for the next succeeding fiscal year setting forth the projected revenues, expenses and cash flows and the underlying assumptions therefore, all in reasonable detail and certified by a Responsible Officer of the Borrower as having been prepared and furnished to the Lenders in good faith and based on estimates and assumptions that were believed by the management of the Borrower to be reasonable in light of the then current and foreseeable business conditions of the Borrower and its Subsidiaries; and
(d) Other. All other statements, reports and other information as the Agent or any Lender may reasonably request concerning the Collateral or the financial condition and business affairs of the Borrower or any of its Subsidiaries.
Section 6.11 Financial Covenant. The Borrower will maintain on a consolidated basis, as of the end of its second fiscal quarter and as of its fiscal year end:
(a) Interest Coverage Ratio. An Interest Coverage Ratio equal to or greater than 2.50 to 1 for each fiscal quarter and fiscal year end. As used herein, “Interest Coverage Ratio” shall mean, as of any date of determination, the ratio of (i) EBIT of the Borrower and its Subsidiaries to (ii) Interest Expense of the Borrower and its Subsidiaries, in each case for the four (4) fiscal quarters ended at such date.
(b) Debt Service Coverage Ratio which is equivalent to total debts reported of Borrower and its Subsidiaries divided by EBITDA (earnings before interest, depreciation, amortization and taxes for the period) to be equal to or less than 4.0x (measured annually).
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(c) Adjusted Gearing Ratio which is equivalent to total debts of Borrower and its Subsidiaries (excluding non-current subordinated debts) divided by total equity of borrower (excluding intangibles) plus subordinated debts shall be equal to or less than 4.50 to 1.0 for each fiscal year. Measured annually.
Section 6.12 Notification. Promptly after learning thereof, the Borrower will notify the Agent and each Lender of (a) any action, proceeding, investigation or claim against or affecting the Borrower or any Subsidiary instituted before any court, arbitrator or Governmental Authority or, to the Borrower’s knowledge threatened to be instituted, which if determined adversely to the Borrower or any Subsidiary would be likely to have a material adverse effect on the business, operations, properties, financial condition or prospects of the Borrower, such Subsidiary or the Borrower and the Guarantors taken as a whole, or to impair or defeat the Lien of the Agent or any Lender on any Collateral or the rights of Borrower, any Subsidiary or any Guarantor therein, or to result in a judgment or order against the Borrower, any Subsidiary or any Guarantor (in excess of insurance coverage) for more than One Thousand Dollars ($100,000) or, when combined with all other pending or threatened claims, more than Two Hundred Fifty Thousand Dollars ($250,000); (b) any substantial dispute between the Borrower, any Subsidiary or any Guarantor and any Governmental Authority; (c) any labor controversy which has resulted in or, to the Borrower’s knowledge, threatens to result in a strike which would materially affect the business or operations of the Borrower, any Subsidiary or any Guarantor; (d) if the Borrower or any member of a Controlled Group gives or is required to give notice to the PBGC of any “reportable event” (as defined in subsections (b)(1), (2), (5) or (6) of Section 4043 of ERISA) with respect to any Plan (or the Internal Revenue Service gives notice to the PBGC of any “reportable event” as defined in subsection (c)(2) of Section 4043 of ERISA and the Borrower obtains knowledge thereof) which might constitute grounds for a termination of such Plan under Title IV of ERISA, or knows that the plan administrator of any Plan has given or is required to give notice of any such reportable event, a copy of the notice of such reportable event given or required to be given to the PBGC; (e) the occurrence of any Event of Default or Default; and (f) the occurrence of an event which results in a material adverse change the business, operations, properties, financial condition or prospects of the Borrower or the Borrower and the Guarantors taken as a whole. In the case of the occurrence of an Event of Default or Default or the occurrence of an event which results in a material adverse change in the business, operations, properties or financial condition of the Borrower or the Borrower and the Guarantors taken as a whole, the Borrower will deliver to the Agent and each Lender an Officer’s Certificate specifying the nature thereof, the period of existence thereof, if applicable, and what action the Borrower proposes to take with respect thereto.
Section 6.13 Additional Payments; Additional Acts. From time to time, the Borrower will (a) pay or reimburse the Agent and each Lender on request for all Taxes (other than Taxes imposed on the net income of the Agent or such Lender) imposed on this Agreement and any other Loan Document or payment and for all expenses, including, without limitation, attorneys’ fees (including allocated costs of in-house counsel), incurred by the Lender in connection with the making or administering of the Loans, (b) pay or reimburse the Agent and each Lender on request for all expenses (including allocated costs of in-house collateral examiners) incurred by the Agent or such Lender in connection with conducting field audits or inspections of the Collateral; provided, however, that so long as no Event of Default shall have occurred and be continuing, such collateral examinations shall occur no more often than
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annually; (c) pay or reimburse the Agent and each Lender on request for all costs, expenses and fees, including, without limitation, attorneys’ fees (including allocated costs of in-house counsel), incurred by the Agent or such Lender in connection with the negotiation, preparation and execution of this Agreement and the other Loan Documents and any and all amendments, waivers, consents and similar documents pertaining hereto and thereto; (d) pay or reimburse the Agent and each Lender for all expenses, including, without limitation, attorneys’ fees, incurred by the Agent or such Lender in connection with the enforcement, attempted enforcement, or preservation of any rights or remedies under this Agreement and each other Loan Document (including, without limitation, all such costs and expenses incurred during any “workout” or restructuring in respect of the Loans and during any legal proceeding, including, without limitation, any proceeding under any applicable international, foreign, Federal, state or local bankruptcy, insolvency or other similar debtor relief laws); (e) if requested by the Agent or any Lender, obtain and promptly furnish to the Agent or such Lender evidence of all such Government Approvals as may be required to enable the Borrower to comply with its obligations hereunder and under the other Borrower Documents and to continue its business and operations as conducted on the date hereof without material interruption or interference; and (f) execute and deliver all such instruments and to perform all such other acts as the Agent or any Lender may request to carry out the transactions contemplated by this Agreement and the other Loan Documents and to maintain the continuous perfection and priority of the Agent’s or any Lender’s Lien on all Collateral. All amounts described in this Section shall be repayable by the Borrower on demand, and if the Borrower shall default in its obligations to pay or reimburse the Agent or any Lender, interest shall accrue on the unpaid amount thereof at the Default Rate from the date the Agent or such Lender makes demand therefor until repaid in full by the Borrower; provided, however, that interest shall not accrue at a rate in excess of the maximum rate permitted by applicable law. The amount and nature of any expense by the Agent or any Lender hereunder shall be fully established by the certificate of the Agent or such Lender or any of the Agent’s or such Lender’s officers or agents. The obligations of the Borrower under this Section 6.13 shall survive the payment of the Loans and the termination of this Agreement.
ARTICLE 7
NEGATIVE COVENANTS
So long as any Lender shall have any Commitment hereunder or there shall be any outstanding Loans and until payment in full of each Loan and performance of all other obligations of the Borrower under this Agreement and the other Loan Documents, the Borrower agrees that it will not do any of the following unless the Agent and each Lender shall otherwise consent in writing.
Section 7.1 Distributions, Management Fees, Etc. The Borrower shall not, and shall cause each Subsidiary to not (a) declare or pay any dividend or distribution (except dividends or distributions payable in its Capital Stock) on any shares or units of any class of the Borrower’s or any Subsidiary’s (including Bluesky Samoatel Investments Limited) Capital Stock or Preferred Stock or apply any assets to the purchase, redemption or other retirement of, or set aside any sum for the payment of any dividends on or for the purchase, redemption or other retirement of, or make any other distribution by reduction of capital or otherwise in respect of, any shares of any class of Capital Stock of the Borrower or any Subsidiary, except for (i) dividends and distributions declared and paid by any Subsidiary to the Borrower and (ii) the purchase,
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redemption or other retirement by the Borrower of its of Capital Stock pursuant to employee benefit and incentive plans and agreements with employees; provided that the aggregate amount of all such purchases, redemptions or other retirement of Capital Stock does not exceed the amount of Fifty Thousand Dollars ($50,000) in any fiscal year of the Borrower or (b) make any other distribution or transfer to the Borrower’s or any Subsidiary’s members or stockholders, whether in the form of distributions, salaries, bonuses, management fees or otherwise, except for the payment of salaries, benefits and bonuses to members or stockholders employed by the Borrower or any Subsidiary; provided that the aggregate amount of all such salaries, benefits and bonuses does not exceed the amount reported in Borrower’s financial statements as of December 31, 2010 in any fiscal year of the Borrower, increased annually by the percentage that the United States Department of Labor, Bureau of Labor Statistics, Consumer Price Index for All Urban Consumers (CPI-U) for Honolulu, Hawaii (Index 1982-84=100) has increased between the end of the 2005 calendar year and the end of the calendar year preceding the calendar year in which the salaries, benefits and bonuses are paid to such members or stockholders.
Section 7.2 Transactions With Affiliates. The Borrower shall not, and shall cause each Subsidiary to not, enter into any transaction with any Affiliate of the Borrower, except upon fair and reasonable terms no less favorable to the Borrower or such Subsidiary than it would obtain in a comparable arm’s-length transaction with a Person not an Affiliate of the Borrower or such Subsidiary; provided, however, that the Borrower and any of its Subsidiaries may enter into Treasury Management Contracts with Affiliates of the Borrower under terms that the Borrower deems reasonable under the circumstances.
Section 7.3 Consolidations and Mergers. The Borrower shall not, and shall cause each Subsidiary to not, liquidate, dissolve or enter into any merger or consolidation with or into, or sell, transfer, lease or otherwise dispose of (whether in one transaction or in a series of transactions) all or substantially all of its assets to or in favor of, any Person, except: (a) any Subsidiary may liquidate, dissolve, merge, consolidate with or into the Borrower or any wholly-owned Subsidiary; provided that the Borrower or such wholly-owned Subsidiary shall be the continuing or surviving corporation or company and (b) the Borrower or any Subsidiary may sell, transfer, lease or otherwise dispose of its assets as permitted under Section 7.4.
Section 7.4 Dispositions of Assets. The Borrower shall not, and shall cause each Subsidiary to not, sell, transfer, lease or otherwise dispose of (whether in one or a series of transactions) all or any substantial portion of its businesses or assets or of any Collateral (including accounts and notes receivable, with or without recourse) or enter into any agreement to do any of the foregoing, except: (a) sales of inventory in the ordinary course of business; (b) any Subsidiary may sell, lease or otherwise transfer any of its assets to the Borrower; and (c) the Borrower or any Subsidiary may sell obsolete assets or assets no longer used or useful in the business of the Borrower and its Subsidiaries; provided that the net proceeds from the sale of such assets are paid to the Agent and applied by the Agent first against principal on the Term Loan until the Term Loan is paid in full and second held by the Agent as cash collateral to secure the performance of all obligations of the Borrower owing to the Agent and the Lenders under the Letter of Credit Application, other Loan Documents, the Swap Contracts and the Financial Transaction Contracts.
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Section 7.5 Indebtedness. The Borrower shall not, and shall cause each Subsidiary to not, create, incur or become liable for any Indebtedness except: (a) the Term Loan and Indebtedness hereunder in respect of the Letter of Credit; (b) Indebtedness existing as of the date of this Agreement and reflected on the pro forma balance sheet referred to in Section 5.6(a); (c) current accounts payable or accrued expenses incurred by the Borrower in the ordinary course of business; (d) Indebtedness permitted under Section 7.6; (e) intercompany Indebtedness owing by the Borrower or any Subsidiary to the Borrower or any other Subsidiary permitted under Section 7.8; (f) Indebtedness arising under Swap Contracts between the Borrower and the Lender or any Affiliate of the Lender; and (g) Indebtedness to members and owners permitted hereunder shall not exceed $100,000 on any date of determination.
Section 7.6 Guaranties, Etc. The Borrower shall not, and shall cause each Subsidiary to not, assume, guaranty, endorse or otherwise become directly or contingently liable for, nor obligated to purchase, pay or provide funds for payment of, any obligation or Indebtedness of any other Person, except: (a) guaranties of any Indebtedness permitted under Section 7.5; (b) by endorsement of negotiable instruments for deposit or collection or by similar transactions in the ordinary course of business; (c) with respect to customary indemnification obligations incurred in connection title insurance agreements; (d) with respect to performance, surety, bid, appeal or similar bonds incurred in the ordinary course of business; and (e) obligations existing as of the date of this Agreement, reflected on the pro forma balance sheet referred to in Section 5.6(a) and in amounts not greater than the amounts referred to therein.
Section 7.7 Liens. The Borrower shall not, and shall cause each Subsidiary to not, create, assume or suffer to exist any Lien on any of its assets except: (a) Liens in favor of the Lender arising pursuant to the Security Documents or as otherwise permitted or required under this Agreement; (b) Liens securing Indebtedness permitted under Section 7.5; (c) Permitted Liens; and (d) Liens specifically disclosed in Schedule 3 attached hereto.
Section 7.8 Investments. The Borrower shall not, and shall cause each Subsidiary to not, make any loan or advance to any Person or purchase or otherwise acquire the Capital Stock or obligations of, or any other equity or interest in, any Person, or all or substantially all of the assets of any Business Unit or any Person (collectively, “Investments”) or enter into any agreement to do any of the foregoing, except: (a) Investments held in the form of Cash Equivalents; (b) receivables owing to the Borrower or any Subsidiary arising in the ordinary course of business; (c) Investments existing as of the date of this Agreement, reflected on the pro forma balance sheet referred to in Section 5.6(a) and in amounts not greater than the amounts referred to therein; (d) Investments made by the Borrower to or in any Guarantor; (e) Investments made by any Subsidiary to or in the Borrower or any Guarantor; and (f) Investments made by the Borrower in the form of loans and advances to Affiliates of the Borrower under or in connection with Treasury Management Contracts the ordinary course of business; provided that the aggregate principal amount of all such loans and advances does not exceed One Hundred Thousand Dollars ($100,000) at any one time outstanding.
Section 7.9 Operations. The Borrower shall not, and shall cause each Subsidiary to not, engage in any activity which is substantially different from or unrelated to the present business activities of the Borrower and its Subsidiaries nor discontinue any portion of the Borrower’s and its Subsidiaries’ present business activities taken as a whole which constitutes a substantial portion thereof.
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Section 7.10 Securities. The Borrower shall not, and shall cause each Subsidiary to not, issue, sell, or otherwise distribute any Capital Stock, bond, note, debenture or other security of the Borrower or such Subsidiary, except (a) the Borrower may issue notes (including the Notes) or other debt instruments evidencing Indebtedness permitted by this Agreement; and (b) the Borrower may issue Capital Stock to its employees pursuant to and in accordance with employee benefit and incentive plans and agreements with employees.
Section 7.11 ERISA Compliance. Neither the Borrower nor any member of the Controlled Group nor any Plan of any of them will (a) engage in any “prohibited transaction” (as such term is defined in Section 406 of ERISA or Section 4975 of the Code; (b) incur any “accumulated funding deficiency” (as such term is defined in Section 302 of ERISA) whether or not waived; (c) terminate any Pension Plan in a manner which could result in the imposition of a Lien on any property of the Borrower or any member of the Controlled Group pursuant to Section 4068 of ERISA; or (d) violate state or federal securities laws applicable to any Plan.
Section 7.12 Accounting Change. The Borrower shall not change its fiscal year end from December 31st and shall not make any significant change in accounting policies or reporting practices other than changes required by GAAP or otherwise required by law.
Section 7.13 Bluesky Somoatel. Borrower (as majority shareholder) will not vote or support a change in the share structure of the Bluesky Samoatel Investments Ltd. that will result in its relinquishing majority control, without the Agent’s written consent
ARTICLE 8
EVENTS OF DEFAULT
Section 8.1 Events of Default. The occurrence of any of the following events shall constitute an “Event of Default” hereunder.
(a) Payment Default. The Borrower fails to pay (i) within three (3) Business Days after the same becomes due, any amount of principal of or interest on any Loan, or (ii) within five (5) Business Days after the same becomes due, any other amount payable hereunder or under any other Loan Document; or
(b) Breach of Warranty. Any representation or warranty made or deemed made by the Borrower under or in connection with any Loan Document shall prove to have been incorrect in any material respect when made or deemed made; or
(c) Breach of Certain Covenants. The Borrower shall have failed to comply with Sections 6.1, 6.3, 6.9, 6.11 and 6.12(e) or any provision of Article 7 of this Agreement;
(d) Breach of Other Covenants. The Borrower shall fail to perform or observe any other covenant, obligation or term of this Agreement or any other Loan Document and such failure shall continue unremedied for a period of thirty (30) days after the earlier of (i) the date upon which written notice thereof shall have been given to the Borrower by the Agent or any Lender or (ii) the date upon which a Responsible Officer of the Borrower, any Subsidiary or any Guarantor knew or reasonably should have known of such failure; or
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(e) Material Adverse Change. An event shall occur which results in a material adverse change in, or a material adverse effect upon, the business, operations, properties or financial condition of the Borrower or the Borrower and the Guarantors taken as a whole; or
(f) Cross-default. The Borrower, any of its Subsidiaries or any Guarantor shall fail (i) to pay when due (whether by scheduled maturity, required prepayment, acceleration, demand or otherwise) any Indebtedness or any interest or premium thereon and such failure shall continue without waiver after the applicable grace period, if any, specified in the agreement or instrument relating to such Indebtedness, or (ii) to perform any term or covenant on its part to be performed under any agreement or instrument relating to any such Indebtedness and required to be performed and such failure shall continue without waiver after the applicable grace period, if any, specified in such agreement or instrument, if the effect of such failure to perform is to accelerate or to permit the acceleration of the maturity of such Indebtedness, or (iii) any such Indebtedness shall be declared to be due and payable or required to be prepaid (other than by regularly scheduled required prepayment) prior to the stated maturity thereof; or
(g) Voluntary Bankruptcy, Etc. The Borrower, any of its Subsidiaries or any Guarantor shall: (i) file a petition seeking relief for itself under Title 11 of the United States Code, as now constituted or hereafter amended, or file an answer consenting to, admitting the material allegations of or otherwise not controverting, or fail timely to controvert a petition filed against it seeking relief under Title 11 of the United State Code, as now constituted or hereafter amended; or (ii) file such petition or answer with respect to relief under the provisions of any other now existing or future applicable bankruptcy, insolvency, or other similar law of the United States of America or any State thereof or of any other country or jurisdiction providing for the reorganization, winding-up or liquidation of corporations or an arrangement, composition, extension or adjustment with creditors; or
(h) Involuntary Bankruptcy, Etc. An order for relief shall be entered against the Borrower, any of its Subsidiaries or any Guarantor under Title 11 of the United States Code, as now constituted or hereafter amended, which order is not stayed; or upon the entry of an order, judgment or decree by operation of law or by a court having jurisdiction in the premises which is not stayed adjudging it a bankrupt or insolvent under, or ordering relief against it under, or approving as properly filed a petition seeking relief against it under the provisions of any other now existing or future applicable bankruptcy, insolvency or other similar law of the United States of America or any State thereof or of any other country or jurisdiction providing for the reorganization, winding-up or liquidation of corporations or any arrangement, composition, extension or adjustment with creditors; or appointing a receiver, liquidator, assignee, sequestrator, trustee or custodian of the Borrower, any of its Subsidiaries or any Guarantor or of any substantial part of any of its or their property, or ordering the reorganization, winding-up or liquidation of any of their affairs; or upon the expiration of sixty (60) days after the filing of any involuntary petition against the Borrower, any of its Subsidiaries or any Guarantor seeking any of the relief specified in Section 8.1(g) or this Section 8.1(h) without the petition being dismissed prior to that time; or
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(i) Insolvency, Etc. The Borrower, any of its Subsidiaries or any Guarantor shall (i) make a general assignment for the benefit of its creditors or (ii) consent to the appointment of or taking possession by a receiver, liquidator, assignee, trustee, or custodian of all or a substantial part of the property of the Borrower, any of its Subsidiaries or any Guarantor, as the case may be, or (iii) admit its insolvency or inability to pay its debts generally as they become due, or (iv) fail generally to pay its debts as they become due, or (v) take any action (or suffer any action to be taken by its directors or shareholders) looking to the dissolution or liquidation of the Borrower, any of its Subsidiaries or any Guarantor, as the case may be; or
(j) Judgment. A final judgment or order for the payment of money in excess of Two Hundred Fifty Thousand Dollars ($250,000) not covered by insurance or which defeats the Lien of the Lender on any Collateral valued at Five Hundred Thousand Dollars ($500,000) or more or the Borrower’s or any Guarantor’s rights therein shall be rendered against the Borrower, any of its Subsidiaries or any Guarantor and such judgment or order shall continue without being discharged, vacated, bonded or execution thereon stayed pending appeal for a period of thirty (30) consecutive days; or
(k) Involuntary Liens. Any involuntary Lien in the sum of Fifty Thousand Dollars ($50,000) or more shall attach to any asset or property of the Borrower, any of its Subsidiaries or any Guarantor which is not discharged within sixty (60) days after such attachment or within thirty (30) days after notice from the Agent or any Lender, whichever first occurs; or
(l) ERISA. The Borrower or any member of the Controlled Group shall fail to pay when due an amount or amounts aggregating in excess of Ten Thousand Dollars ($10,000) which it shall have become liable to pay to the PBGC or to a Plan under Section 515 of ERISA or Title IV of ERISA; or notice of intent to terminate a Plan or Plans (other than a multi-employer plan, as defined in Section 4001(3) of ERISA), having aggregate Unfunded Vested Liabilities in excess of Twenty-five Thousand Dollars ($25,000) shall be filed under Title IV of ERISA by the Borrower, any member of the Controlled Group, any plan administrator or any combination of the foregoing; or the PBGC shall institute proceedings under Title IV of ERISA to terminate any such Plan or Plans; or
(m) Change in Control. Any Person or group of Persons (within the meaning of the Securities Exchange Act), other than an existing members of the Borrower, becomes the legal or beneficial owner, directly or indirectly, of more than Twenty percent (20%) of the Capital Stock of the Borrower; or
(n) Condemnation. Such portion of the properties of the Borrower, any of its Subsidiaries or any Guarantor or of the Collateral as in the opinion of the Lenders constitutes a substantial portion thereof shall be condemned, seized or appropriated; or
(o) Prepayment. The Borrower shall make any payment of principal of any Indebtedness (except the Loans) which is not required to be made at the time of such payment by the terms of such Indebtedness, unless such payment is made in connection with the refinancing of such Indebtedness which refinancing shall be new Indebtedness of the Borrower in an amount not substantially less than the amount of the payment made; or
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(p) Governmental Approvals. Any Government Approval or registration or filing with any Governmental Authority now or hereafter required in connection with the performance by the Borrower of its obligations set forth in the Loan Documents shall be revoked, withdrawn or withheld or shall fail to remain in full force and effect unless in the reasonable opinion of the Lenders such revocation, withdrawal or withholding would not be likely to have a material adverse affect on the ability of the Borrower to perform its obligations under the Loan Documents; or
(q) Other Government Action. Any act of any Governmental Authority shall, in the reasonable opinion of the Lenders, deprive the Borrower, any of its Subsidiaries or any Guarantor of any substantial right, privilege, or franchise or substantially restrict the exercise thereof which deprivation would, in the reasonable opinion of the Lenders, be likely to have a material adverse effect on the business, operations, properties, financial condition or prospects of the Borrower, such Subsidiary or the Borrower and the Guarantors taken as a whole, and such act is not revoked or rescinded within sixty (60) days after it becomes effective or within thirty (30) days after notice from the Agent or any Lender, whichever first occurs; or
(r) Guarantor Default; Invalidity of Guaranty. Any Guarantor shall fail to perform or observe any other covenant, obligation or term of the Guaranty or any other Guarantor Document to which it is a party and such failure shall continue unremedied after the applicable grace period, if any, specified in such Guaranty or other Guarantor Document, or any “Event of Default” as defined in either Guaranty or any Guarantor Document shall have occurred and is continuing; or either Guaranty shall for any reason be revoked or invalidated, or otherwise cease to be in full force and effect (except as expressly permitted hereunder), or any Guarantor or any other Person shall contest in any manner the validity or enforceability thereof or deny that it has any further liability or obligation thereunder; or
(s) Failure of Security. Any Security Document ceases to be in full force and effect, or is declared by a court of competent jurisdiction to be null and void, invalid or unenforceable in any respect; or the Agent or any Lender shall not have or shall cease to have a valid and perfected Lien of first priority (other than Liens expressly permitted to be prior to such Lien pursuant to Section 7.7) in the Collateral purported to be covered thereby having a fair market value, individually or in the aggregate, exceeding Two Hundred Fifty Thousand Dollars ($250,000), in each case for any reason other than (i) the payment in full of each Loan and performance of all other obligations of the Borrower under this Agreement and the other Loan Documents or (ii) the failure of the Agent or any Lender to take any action within its exclusive control; or
(t) Invalidity of Loan Documents. Any other Loan Document or any provision thereof, at any time after its execution and delivery and for any reason other than the payment in full of each Loan and performance of all other obligations of the Borrower under this Agreement and the other Loan Documents, ceases to be in full force and effect, or is declared by a court of competent jurisdiction to be null and void, invalid or unenforceable in any respect; or the Borrower or any Guarantor denies that it has any or further liability or obligation under any other Loan Document, or purports to revoke, terminate or rescind any Loan Document.
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Section 8.2 Consequences of Default.
(a) General Remedies. If any of the Events of Default described in Section 8.1(g) or Section 8.1(h) shall occur, each Lender’s Commitment shall immediately terminate and, if any Loans shall have been made, the principal of and interest on the Loans and all other sums payable by the Borrower under the Loan Documents shall become immediately due and payable all without protest, presentment, notice or demand, all of which the Borrower expressly waives. If any other Event of Default shall occur and be continuing, then in any such case and at any time thereafter so long as any such Event of Default shall be continuing, the Agent shall at the request, or may with the consent, of the Lenders immediately terminate each Lender’s Commitment and, if any Loans shall have been made, the Agent shall at the request, or may with the consent, of the Lenders, declare the principal of and interest on the Loans and all other sums payable by the Borrower under this Agreement and the other Loan Documents to be immediately due and payable, whereupon the same shall become immediately due and payable all without protest, presentment, notice, or demand, all of which the Borrower expressly waives. Regardless of whether the Borrower’s obligations to repay the Loans have been accelerated pursuant to the preceding sentences, the Agent shall at the request, or may with the consent, of the Lenders, realize on any or all of the Collateral by exercising any remedies provided to the Agent and the Lenders in the Security Documents. The rights and remedies set forth in this Section 8.2 shall be in addition to any and all rights and remedies set forth in the other Loan Documents.
(b) Cash Collateral. Regardless of whether the Borrower’s obligations to repay the Loans have been accelerated pursuant to subsection (a) above, the Agent shall at the request, or may with the consent, of the Lenders, realize on any or all of the Collateral by exercising any remedies provided in the Security Documents. Amounts paid or received hereunder in respect of any payment or transfer under the Financial Transaction Contracts and/or Swap Contracts not then due shall be held (and applied) as cash collateral to secure the performance of all obligations of the Borrower owing to the Agent and the Lenders (or any of them) and their Affiliates under the Loan Documents or any documents relating to the Financial Transaction Contracts and/or Swap Contracts.
(c) Application of Funds. After the exercise of the rights and remedies provided for in this Section 8.2 (or after the Borrower’s obligations to repay the Term Loan or the Indebtedness hereunder in respect of the Letter of Credit have been accelerated pursuant to subsection (a) above), except as otherwise required by applicable laws, any amounts received on account of the Borrower’s obligations owing hereunder, the other Loan Documents and under the Financial Transaction Contracts and the Swap Contracts shall be applied by the Agent first, against fees, expenses and indemnities due hereunder or under any other Loan Document and payable to the Agent in its capacity as such; second, against fees, expenses and indemnities due hereunder or under any other Loan Document and payable to the Lenders in proportion to the amounts described in this clause payable to them; third, against (i) any interest due on any Loans and (ii) any fees, premiums and scheduled periodic payments due under any Swap Contract permitted by Section 7.5, and any interest accrued thereon, ratably among the Lenders in proportion to the respective amounts described in this clause payable to them; fourth, against (i) principal on the Term Loan and draws under the Letter of Credit, (ii) any breakage, termination or other payments due under any Swap Contract permitted by Section 7.5, and any interest accrued thereon and (iii) amounts owing to any Lender under any Financial Transaction
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Contract and any interest accrued thereon, in each case ratably among Lenders in proportion to the respective amounts described in this clause held by them; and fifth, to the Agent to be held (and applied in the preceding order of priority) as cash collateral to secure the performance of all obligations of the Borrower owing to the Agent and the Lenders under the Loan Documents, the Letter of Credit Application, the Swap Contracts, and the Financial Transaction Contracts.
ARTICLE 9
MATTERS CONCERNING COLLATERAL
Section 9.1 Recourse of Lenders. Each Lender acknowledges and agrees that (a) it shall only have recourse to the Collateral through the Agent and that it shall have no independent recourse to the Collateral and (b) the Agent shall have no obligation to take any action, or refrain from taking any action, except upon instructions from the Lenders in accordance with Sections 8.2 and 10.2 hereof. Nothing contained herein shall restrict the Lenders’ rights to pursue remedies, by proceedings in law and equity, to collect principal of or interest on the Loans or the Indebtedness hereunder in respect of the Letter of Credit or to enforce the performance of and provisions of this Agreement.
Section 9.2 Acts of Lenders. Any request, demand, authorization, direction, notice, consent, waiver or other action permitted or required by this Agreement to be given or taken by the Lenders may be and, at the request of the Agent, shall be embodied in and evidenced by one or more instruments satisfactory in form to the Agent and signed by or on behalf of the Lenders and, except as otherwise expressly provided in any such instrument, any such action shall become effective when such instrument or instruments shall have been delivered to the Agent. The instrument or instruments evidencing any action (and the action embodied therein and evidenced thereby) are sometimes referred to herein as an “Act” of the persons signing such instrument or instruments. The Agent shall be entitled to rely absolutely upon an Act of any Lender if such Act purports to be taken by or on behalf of such Lender.
Section 9.3 Legally Required Releases. Whether or not so instructed by the Lenders, the Agent may release any Collateral and may provide any release, termination statement or instrument of subordination required by order of a court of competent jurisdiction or otherwise required by applicable law.
Section 9.4 Turnover of Collateral. If any Lender acquires custody, control or possession of any Collateral or proceeds therefrom other than pursuant to the terms of this Agreement, such Lender shall promptly cause such Collateral or proceeds to be delivered to or put in the custody, possession or control of the Agent or, if the Agent shall so designate in writing, an agent of the Agent (which agent may be a branch or affiliate of the Agent or any Lender) in the same form of payment received, with appropriate endorsements, in the country in which such Collateral is held. Until such time as the provisions of the immediately preceding sentence have been complied with, such Lender shall be deemed to hold such Collateral and proceeds in trust for the Agent.
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ARTICLE 10
MATTERS CONCERNING THE AGENT
Section 10.1 Appointment of Agent. Each Lender hereby appoints and authorizes the Agent to take such action as agent on its behalf and to exercise such powers under this Agreement and the Security Documents as are delegated to the Agent by the terms hereof, together with such powers as are reasonably incidental thereto.
Section 10.2 Actions under Security Documents. Subject to the provisions of this Article 10, the Agent shall take any action under or with respect to the Security Documents which is requested by the Lenders and which is not inconsistent with or contrary to the provisions of this Agreement or the other Loan Documents. The Agent shall, subject in all cases to the provisions of this Article 10, exercise or refrain from exercising all such rights, powers and remedies as shall be available to it under the Security Documents or any of them in accordance with any written instructions received from the Lenders. The Agent shall have the right to decline to follow any such direction if the Agent, being advised by counsel, determines that the directed action is not permitted by the terms of this Agreement or the Security Documents, may not lawfully be taken or would involve it in personal liability, and the Agent shall not be required to take any such action unless it shall have been provided an indemnity satisfactory to it against the costs, expenses and liabilities which may be incurred by it in compliance with such direction. The Agent may rely on any such direction given to it by the Lenders and shall be fully protected, and shall under no circumstances (absent the gross negligence and willful misconduct of the Agent) be liable to the Borrower, the Guarantor, any holder of any Note or any other Person for taking or refraining from taking action in accordance therewith. Absent written instructions from the Lenders, in the case of an emergency in order to protect any of the Collateral, the Agent may take (but shall have no obligation to take) any and all such actions under the Security Documents or any of them or otherwise as it shall deem to be in the best interests of the Lenders. Except as provided in the preceding sentence, in the absence of written instructions (which may relate to the exercise of specific remedies or to the exercise of remedies in general) from the Lenders, the Agent shall not exercise remedies available to it under any Security Documents with respect to the Collateral or any part thereof.
Section 10.3 Limitation on Responsibilities. The Agent shall have no duties or responsibilities except those expressly set forth in this Agreement and the other Loan Documents. The duties of the Agent shall be mechanical and administrative in nature; the Agent shall not have by reason of this Agreement a fiduciary relationship in respect of any Lender; and nothing in this Agreement or the other Loan Documents, expressed or implied, is intended to or shall be so construed as to impose upon the Agent any obligations in respect of this Agreement or the other Loan Documents except as expressly set forth herein or therein. The Agent shall not be responsible for insuring the Collateral, for the payment of taxes, charges, assessments or liens upon the Collateral or otherwise as to the maintenance of the Collateral, except when the Agent has possession of the Collateral. Collateral Agent shall have no duty to the Borrower, the Guarantor, any holder of any Note or any other Person as to any Collateral in its possession or control or in the possession or control of any agent or nominee of the Agent or any income thereon or as to the preservation of rights against prior parties or any other rights pertaining thereto, except the duty to accord such of the Collateral as may be in its possession substantially the same care as it accords its own assets and the duty to account for monies received by it. As
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to any matters not expressly provided for by this Agreement, including enforcement or collection of the Loans, the Letters of Credit or the Collateral, the Agent shall not be required to exercise any discretion or take any action except upon the instructions of the Lenders, and such instructions shall be binding upon the Lenders and any holders of any Note; provided that the Agent shall not be required to take any action which exposes the Agent to personal liability or which is contrary to the Loan Documents or applicable law; provided, further, that the terms of this Article 10 shall not be amended without the prior written consent of the Agent (acting for its own account). In the absence of instructions from the Lenders, the Agent shall have authority (but no obligation), in its sole discretion, to take or not to take any action, unless this Agreement specifically requires the consent of the Lenders and any such action or failure to act shall be binding on the Lenders and on all holders of the Notes. Each Lender and each holder of any Note shall execute and deliver such additional instruments, including powers of attorney in favor of the Agent, as may be necessary or desirable to enable the Agent to exercise its powers hereunder and under the other Loan Documents.
Section 10.4 Duties and Obligations.
(a) Neither the Agent nor any of its directors, officers, employees, agents, counsel or attorneys-in-fact shall be liable for any action taken or omitted to be taken by it or any of them under or in connection with this Agreement or any other Loan Document and the transactions contemplated hereby and thereby, except for its or their own gross negligence or willful misconduct. Without limiting the generality of the foregoing, the Agent (i) may treat each Lender as the party entitled to receive payments hereunder until the Agent receives written notice of the assignment of such Lender’s interest herein signed by such Lender and made in accordance with the terms hereof and a written agreement of the assignee that it is bound hereby as it would have been had it been an original party hereto, in each case in form satisfactory to the Agent; (ii) may consult with legal counsel (including counsel for the Borrower), independent public accountants and other experts selected by it and shall not be liable for any action taken or omitted to be taken in good faith by it in accordance with the advice of such experts; (iii) makes no warranty or representation to any Lender and shall not be responsible to any Lender for any statements, warranties or representations made in or in connection with this Agreement, the other Loan Documents or in any instrument or document furnished pursuant hereto or thereto; (iv) makes no representation as to the value or condition of the Collateral or any part thereof, as to the title of the Borrower or the Guarantor to the Collateral, as to the security afforded by this Agreement or any Security Document; (v) shall not have any duty to ascertain or to inquire as to the performance of any of the terms, covenants, or conditions of the Loan Documents, or of any instrument or document furnished pursuant thereto, on the part of the Borrower or as to the use of the proceeds of any Loan or the proceeds received in respect of any Letter of Credit or as to the existence or possible existence of any Default or Event of Default; (vi) shall not be responsible to any Lender for the due execution, legality, validity, enforceability, genuineness, effectiveness, or value of this Agreement, of any other Loan Document, or of any instrument or document furnished pursuant hereto; (vii) may execute any of its duties by or through its employees, other independent agents or attorneys-in-fact and shall not be responsible for the negligence or misconduct of any such agent or attorney-in-fact that it selects with reasonable care; and (viii) shall incur no liability under or in respect to this Agreement by acting upon any oral or written notice, consent, certificate or other instrument or writing (which may be by telex, facsimile transmission, e-mail or cable) believed by it to be genuine and signed or sent by the proper party or parties or by acting upon any representation or warranty of the Borrower made or deemed to be made under this Agreement or in any other Loan Document.
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(b) The Agent will account to each Lender for its interest in amounts received by the Agent on account of the Borrower’s obligations owing hereunder, the other Loan Documents and under the Financial Transaction Contracts and the Swap Contracts and will promptly remit to the Lender(s) entitled thereto all such amounts. The Agent will transmit to each Lender copies of all documents received from the Borrower pursuant to the requirements of this Agreement other than documents which by the terms of this Agreement the Borrower is obligated to deliver directly to the Lenders.
Section 10.5 Dealings Between Agent and Borrower. With respect to its Commitment, the Loans made by it, and Letters of Credit issued by it, the Agent shall have the same obligations, rights and powers under this Agreement and the other Loan Documents as any other Lender and may exercise the same as though it were not the Agent hereunder, and the term “Lender” shall unless otherwise expressly indicated include the Agent in its individual capacity. The Agent may accept deposits from, lend money to, act and generally engage in any kind of business with the Borrower and any Person which may do business with the Borrower, all as if the Agent were not the Agent hereunder and without any duty to obtain the consent of or account therefor to any other Lender. Each Lender acknowledges that, pursuant to such activities, the Agent may receive information regarding the Borrower (including information that may be subject to confidentiality obligations in favor of the Borrower) and acknowledges that the Agent shall be under no obligation to provide such information to any Lender.
Section 10.6 Notice of Default. The Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default, unless the Agent shall have received written notice from a Lender or the Borrower referring to this Agreement, describing such Default or Event of Default and stating that such notice is a “notice of default.” The Agent will notify the Lenders of its receipt of any such notice. The Agent shall take such action with respect to such Default or Event of Default as may be directed by the Lenders in accordance with Section 8.2; provided, however, that unless and until the Agent has received any such direction, the Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable or in the best interest of the Lenders.
Section 10.7 Indemnification. Each Lender agrees to indemnify the Agent (to the extent not reimbursed by the Borrower) from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind or nature whatsoever which may be imposed on, incurred by or asserted against the Agent in any way relating to or arising out of this Agreement or any other Loan Document or any action taken or omitted by the Agent under this Agreement or any other Loan Document, except any such as result from the Agent’s gross negligence or willful misconduct. Without limiting the foregoing, each Lender agrees to reimburse Agent promptly on demand for any out-of-pocket expenses, including legal fees, incurred by the Agent in connection with the administration or enforcement of or the preservation of any rights under this Agreement or any other Loan Document (to the extent that the Agent is not reimbursed for such expenses by the Borrower) including without limitation, expenses incurred in connection with the enforcement or collection of the Loans, the Letters of Credit or the Collateral.
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Section 10.8 Successor Agent. The Agent may give written notice of resignation at any time to the Lenders and the Borrower, and may be removed at any time with cause by the Lenders. Upon any such notice of resignation or removal, the Lenders shall have the right to appoint a successor Agent. If no successor Agent shall have been so appointed by the Lenders and shall have accepted such appointment within thirty (30) days after the Agent’s giving of notice of resignation or the Lender’s removal of Agent, then the Agent may, after consulting with the Lenders and the Borrower, appoint a successor Agent from among the Lenders. Upon the acceptance of any appointment as the Agent hereunder by a successor Agent, such successor Agent shall thereupon succeed to and become vested with all the rights, powers, privileges and duties of the retiring Agent, and the retiring Agent shall be discharged from its duties and obligations under this Agreement. If no successor agent has accepted appointment as Agent by the date which is thirty (30) days following a retiring Agent’s notice of resignation, the retiring Agent’s resignation shall nevertheless thereupon become effective and the Lenders shall perform all of the duties of the agent hereunder until such time, if any, as the Lenders appoint a successor agent as provided above. Notwithstanding any retiring Agent’s resignation or removal hereunder as the Agent, the provisions of this Article 10 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was the Agent under this Agreement.
ARTICLE 11
MISCELLANEOUS
Section 11.1 No Waiver; Remedies Cumulative. No failure by the Agent or any Lender to exercise, and no delay in exercising, any right, power or remedy under this Agreement or any other Loan Document shall operate as a waiver thereof, nor shall any single or partial exercise of any right, power or remedy under this Agreement or any other Loan Document preclude any other or further exercise thereof or the exercise of any other right, power, or remedy. The exercise of any right, power, or remedy shall in no event constitute a cure or waiver of any Event of Default or prejudice the rights of the Agent or any Lender in the exercise of any right hereunder or thereunder. The rights and remedies provided herein and therein are cumulative and not exclusive of any right or remedy provided by law.
Section 11.2 Governing Law. This Agreement and the other Loan Documents shall be governed by and construed in accordance with the laws of the Territory of American Samoa (excluding its conflict of laws rules) except in the case of the Security Documents, where the location of Collateral requires that the creation, validity, perfection, or enforcement of the security interests provided for herein be governed by the laws of the jurisdiction where such Collateral is located.
Section 11.3 Consent to Jurisdiction. Each party hereto irrevocably submits to the nonexclusive jurisdiction of the High Court of American Samoa in any action or proceeding brought to enforce or otherwise arising out of or relating to this Agreement or any other Loan Document, hereby waives any objection to venue in any such court and any claim that such forum is an inconvenient forum and agrees that a final judgment in any such action or proceeding shall be conclusive and may be enforced in any other jurisdiction by suit on the judgment or in any other manner provided by law. Nothing in this Section 11.3 shall impair the right of any party to bring any action or proceeding hereunder in the courts of any other jurisdiction.
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Section 11.4 Waiver of Jury Trial. THE PARTIES HERETO WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO ENFORCE OR DEFEND ANY RIGHTS UNDER OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED OR WHICH MAY IN THE FUTURE BE DELIVERED IN CONNECTION HEREWITH OR THEREWITH OR ARISING FROM ANY RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, AND AGREE THAT (A) ANY SUCH ACTION OR PROCEEDING SHALL NOT BE TRIED BEFORE A JURY AND (B) ANY PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OR COPY OF THIS AGREEMENT WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE WAIVER OF THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY.
Section 11.5 Notices. All notices and other communications provided for in the Loan Documents shall be in writing or (unless otherwise specified) and shall be mailed (with first class postage prepaid) or sent or delivered to each party by facsimile or courier service at the address or facsimile number set forth below, or at such other address as shall be designated by such party in a written notice to the other parties.
| If to Borrower: | AST Telecom, LLC | |
| P.O. Box 478 | ||
| Pago Pago, American Samoa 96799 | ||
| Attn: Adolfo Montenegro | ||
| Facsimile: 684-699-2105 | ||
| If to Agent | ANZ Finance American Samoa, Inc. | |
| or Lenders: | P.O. Box 3790 | |
| Pago Pago, American Samoa 96799 | ||
| Attn: David Whitby | ||
| Facsimile: 684-633-5057 | ||
Except as otherwise specified all notices sent by mail, if duly given, shall be effective three (3) Business Days after deposit into the mails, all notices sent by a nationally recognized courier service, if duly given, shall be effective one Business Day after delivery to such courier service, and all other notices and communications if duly given or made shall be effective upon receipt. Neither the Agent or any Lender shall incur any liability to the Borrower for actions taken in reliance on any telephonic notice referred to in this Agreement which the Agent or such Lender believes in good faith to have been given by a duly authorized officer or other Person authorized to borrow or give such telephonic notice hereunder on behalf of the Borrower. Electronic mail may be used only to distribute routine communications, such as financial statements and other information as provided in Section 6.10, and to distribute Loan Documents for execution by the parties thereto, and may not be used for any other purpose.
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Section 11.6 Assignments and Participations. This Agreement shall be binding upon and inure to the benefit of the parties and their respective Successors and assigns; provided that the Borrower may not assign or otherwise transfer all or any part of its rights or obligations under this Agreement or any other Loan Document without the prior written consent of the Agent and each Lender, and any such assignment or transfer purported to be made without such consent shall be ineffective. Any Lender may at any time assign or otherwise transfer all or any part of its interest under this Agreement and other Loan Documents (including assignments for security and sales of participations), and to the extent of any such assignment, the assignee shall have the same rights and benefits against the Borrower and otherwise under this Agreement (including, without limitation, the right of setoff) as if such assignee were such Lender. The Borrower agrees to execute and deliver all such instruments and to perform all such other acts as the Agent or any Lender may request to effect such assignments and participations.
Section 11.7 Confidentiality. The Agent and each Lender shall hold all non-public, proprietary or confidential information (which has been identified as such by the Borrower) obtained pursuant to the requirements of this Agreement in accordance with their customary procedures for handling confidential information of this nature and in accordance with safe and sound lending practices; provided, however, that the Agent or any Lender may make disclosure of any such information to its examiners, Affiliates, outside auditors, counsel, consultants, operators and other professional advisors in connection with this Agreement or as required by any proposed, transferee or participant in connection with the contemplated transfer of all or any part of its interest under this Agreement and other Loan Documents or the contemplating granting of a participation therein, as required or requested by any Governmental Authority or representative thereof or in connection with the enforcement hereof or of any other Loan Document or pursuant to legal process; provided, however, that any such proposed syndicate member or proposed transferee or participant shall have agreed in writing for the Borrower’s benefit to be bound by the terms of this Section 11.7. In no event shall the Agent or any Lender be obligated or required to return any materials furnished to it by the Borrower or any of its Subsidiaries.
Section 11.8 USA Patriot Act Notice. The Agent and each Lender hereby notifies the Borrower that pursuant to the requirements of the USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)) (the “Patriot Act”), it is required to obtain, verify and record information that identifies the Borrower, which information includes the name and address of the Borrower and other information that will allow the Agent and each Lender to identify the Borrower in accordance with the Patriot Act.
Section 11.9 Borrower’s Indemnity. Whether or not the transactions contemplated hereby shall be consummated, the Borrower shall pay, indemnify and hold the Agent and each Lender and their respective officers, directors, employees, counsel, agents and attorneys-in-fact (each, an “Indemnified Person”) harmless from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, charges, expenses or disbursements (including, without limitation, attorneys’ fees, which may include the allocated charges of internal legal counsel) of any kind or nature whatsoever with respect to any investigation, litigation or proceeding (including, without limitation, any insolvency proceeding or appellate proceeding) arising out of or related to this Agreement or any other Loan Document or any actual or proposed use of proceeds of the Loans made hereunder, whether or not any Indemnified
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Person is a party thereto (all of the foregoing, collectively the “Indemnified Liabilities”); provided, that the Borrower shall have no obligation hereunder to any Indemnified Person with respect to Indemnified Liabilities arising from the willful misconduct or gross negligence of such Indemnified Person. All amounts owing under this Section 11.9 shall be paid promptly upon demand. At the election of any Indemnified Person, the Borrower shall defend such Indemnified Person in respect of any Indemnified Liabilities using legal counsel reasonably satisfactory to such Indemnified Person at the sole cost and expense of the Borrower.
Section 11.10 Set-Off. In addition to any rights and remedies of the Agent and each Lender provided by law, if an Event of Default has occurred and is continuing, the Agent and each Lender is authorized at any time and from time to time, without prior notice to the Borrower, any such notice being waived by the Borrower to the fullest extent permitted by law, to set-off and apply any and all deposits (general or special, time or demand, provisional or final) at any time held by, and other indebtedness at any time owing by, the Agent or any Lender to or for the credit or the account of the Borrower against any and all obligations owing to the Agent or such Lender, now or hereafter existing, irrespective of whether or not the Agent or any Lender shall have made demand under this Agreement or any other Loan Document and although such obligations may be contingent or unmatured. The Agent and each Lender agrees promptly to notify the Borrower after any such set-off and application made by the Agent or such Lender; provided, however, that the failure to give such notice shall not affect the validity of such set-off and application.
Section 11.11 Severability. Any provision of this Agreement or any other Loan Document which is prohibited or unenforceable in any jurisdiction shall as to such jurisdiction be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof or affecting the validity or enforceability of such provision in any other jurisdiction. To the extent permitted by applicable law, the parties waive any provision of law which renders any provision hereof prohibited or unenforceable in any respect.
Section 11.12 Survival. The representations, warranties and indemnities of the Borrower in favor of the Agent and each Lender shall survive indefinitely and, without limiting the foregoing, shall survive the execution and delivery of the Loan Documents, the making of any Loans, the expiration of the Commitment and the repayment of all amounts due under the Loan Documents.
Section 11.13 Executed in Counterparts. This Agreement and the other Loan Documents may be executed in any number of counterparts and by different parties in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement.
Section 11.14 Conditions Not Fulfilled. If no Loans are made or issued hereunder owing to nonfulfillment of any condition precedent specified in Article 5 hereof, no party hereto shall be responsible to any other party for any damage or loss by reason thereof, except that the Borrower shall be in any event liable to pay the fees, Taxes, and expenses for which it is obligated hereunder.
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Section 11.15 Entire Agreement; Amendment, Etc. This Agreement and the other Loan Documents comprise the entire agreement of the parties and may not be amended or modified except by written agreement of the Borrower, the Agent and each Lender. No provision of this Agreement may be waived except in writing and then only in the specific instance and for the specific purpose for which given.
Section 11.16 Construction. In the event of any conflict between the terms, conditions and provisions of this Agreement and those of any other Loan Document, the terms, conditions and provisions of this Agreement shall control.
[Signature page follows]
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IN WITNESS WHEREOF, the Borrower, each Lender and the Agent have caused this Agreement to be executed by their respective officers or agents thereunto duly authorized as of the date first above written.
| BORROWER: |
AST TELECOM, LLC, a Delaware limited liability company | |||||
| By | /s/ Adolfo Montenegro | |||||
| Name: | Adolfo Monenegro | |||||
| Title: | CEO | |||||
| LENDERS: |
ANZ FINANCE AMERICAN SAMOA, INC., an American Samoa corporation | |||||
| By | /s/ David Whitby | |||||
| Name: | David Whitby | |||||
| Title: | CEO and President | |||||
| ANZ AMERIKA SAMOA BANK, an American Samoa corporation | ||||||
| By | /s/ David Whitby | |||||
| Name: | David Whitby | |||||
| Title: | CEO and President | |||||
| AGENT: |
ANZ FINANCE AMERICAN SAMOA, INC., an American Samoa corporation | |||||
| By | /s/ David Whitby | |||||
| Name: | David Whitby | |||||
| Title: | CEO and President | |||||
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