Credit Agreement
This Agreement is entered into as of January 4, 1994, effective as of
November 12, 1993, between Roseville Telephone Company ("Borrower") and Bank
of America National Trust and Savings Association ("Bank").
1. Definitions and Financial Requirements.
1.1 Definitions. The following terms have the meanings indicated
for purposes of this Agreement:
"Business Day" means a day other than Saturday or Sunday on
which Bank is open for business in San Francisco, California.
"Cash Flow" means the sum of net income (before income taxes
and interest expense), depreciation and amortization.
"Cash Flow Coverage Ratio" means, for any period, the ratio of
Cash Flow during such period to the sum of (a) the current portion of
long-term debt paid during such period, plus (b) interest expense for
such period.
"Closing Date" means the date of this Agreement.
"Compliance Certificate" means the certificate in the form of
Exhibit A.
"Effective Date" means November 12, 1993.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time.
"Event of Default" means any event listed in Article 9.
"Fixed Rate" means 5.47% per annum.
"Leverage Ratio" means the ratio of total liabilities to
Tangible Net Worth.
"Money Market" means the domestic certificate of deposit
market, the eurodollar deposit market or other appropriate money market
designated by Bank.
"Money Market Rate" means the fixed interest rate per annum
which Bank determines could be obtained by reinvesting a specified
Prepaid Installment in the Money Market from the date of prepayment
through the applicable Original Payment Date.
"Non-Essential Assets" means fixed or capital assets which are
worn or obsolete and are not necessary for business activities and
operations.
"Original Payment Date" (collectively "Original Payment
Dates") means, as of the date of any prepayment by Borrower, each date
subsequent thereto on which principal of the Term Loan is to be paid in
accordance with Paragraph 2.4.
"Person" means any individual, association, joint venture,
partnership, joint stock company, corporation, trust, business trust,
government, governmental authority, regulatory authority or other
entity.
"Prepaid Installment" means, for each prepayment made by
Borrower, the portion of such prepayment allocated to each Original
Payment Date. To calculate the Prepaid Installment, the aggregate
amount of such prepayment is divided by the number of Original Payment
Dates. The resulting quotient is the amount of the Prepaid Installment
for each Original Payment Date.
"Plan" means any employee pension benefit plan maintained or
contributed to by Borrower or by any trade or business (whether or not
incorporated) under common control (as defined in Section 4001(b) of
ERISA) with Borrower and insured by the Pension Benefit Guaranty
Corporation under Title IV of ERISA.
"Reference Rate" means the rate of interest publicly announced
from time to time by Bank in San Francisco, California, as its Reference
Rate. The Reference Rate is a rate set by Bank based upon various
factors including Bank's costs and desired return, general economic
conditions, and other factors, and is used as a reference point for
pricing some loans. Bank may price loans at, above or below the
Reference Rate. Any change in the Reference Rate shall take effect on
the day specified in the public announcement of such change.
"SEC" means the Securities and Exchange Commission.
"Subsidiary" means any association, corporation or other
entity of which Borrower owns, directly or indirectly, more than 50% of
the voting shares thereof or which Borrower otherwise controls.
"Tangible Net Worth" means total assets (exclusive of
goodwill, patents, trademarks, trade names, organization expense,
treasury shares, unamortized debt discount and premium, deferred charges
(other than those recoverable in regulatory proceedings) and other like
intangibles) less all liabilities (including accrued and deferred income
taxes and subordinated liabilities).
"Term Date" means November 12, 1993, the Business Day on which
Bank disbursed to Borrower the Term Loan.
"Term Loan" means the loan provided under Article 2.
"Treasury Rate" means the interest rate yield for U.S.
Government Treasury Securities which Bank determines could be obtained
by reinvesting a specified Prepaid Installment in such securities from
the date of prepayment through the applicable Original Payment Date.
1.2 Financial Requirements. Unless otherwise specified in this
Agreement, all accounting terms used in this Agreement shall be interpreted,
all financial information required under this Agreement shall be prepared and
all financial computations required under this Agreement shall be made in
accordance with generally accepted accounting principles consistently
applied.
2. The Term Loan.
2.1 Commitment for the Term Loan. On the Term Date, Bank loaned
to Borrower in one disbursement the total principal amount of $15,000,000.
Such loan shall be the Term Loan hereunder. The interest rate for the Term
Loan shall be based on the Fixed Rate, and the Term Loan shall be subject to
the terms and conditions of this Agreement.
2.2 Reserved.
2.3 Interest on the Term Loan.
(a) The outstanding principal amount of the Term Loan shall
bear interest from the Term Date until payment in full at the Fixed Rate
plus 0.75% (computed on the basis of a 360 day year and actual days
elapsed).
(b) Borrower shall pay interest on the outstanding principal
amount of the Term Loan on the last day of each calendar quarter,
beginning with the first such date after the disbursement by Bank to
Borrower of the Term Loan, and upon payment in full of the Term Loan.
2.4 Principal on the Term Loan. Borrower shall pay the principal
amount of the Term Loan in 28 substantially equal quarterly installments
commencing on March 31, 1997, on the last day of each successive calendar
quarter thereafter, and on December 1, 2003, on which day the entire balance
of principal and interest then unpaid shall be due and payable.
2.5 Prepayment of the Term Loan.
(a) Borrower may at any time prepay the Term Loan, in whole
or in part, in the minimum amount of $1,000,000 or a multiple thereof.
(b) Each prepayment shall be made upon the irrevocable
written notice of Borrower received by Bank not later than 12:00 p.m.
San Francisco time five Business Days prior to prepayment. The notice
of prepayment shall specify the date and the amount of the prepayment.
If a prepayment is being made in conjunction with a scheduled principal
payment required under Paragraph 2.4, the notice of prepayment should
set forth such information, and the definition of "Original Payment
Date" for such prepayment shall be adjusted to reflect such information.
(c) Each prepayment of the Term Loan, whether voluntary, by
reason of acceleration or otherwise, shall be accompanied by payment of
all accrued interest on the amount of the prepayment and the prepayment
fee described below.
(d) To determine the prepayment fee due from Borrower upon
each prepayment made in accordance with subparagraph (b) ("Total
Prepayment Fee"), a prepayment fee shall be calculated separately for
each Prepaid Installment in accordance with the steps set forth in
(d)(i) through (d)(iii) below. The Total Prepayment Fee will be the
aggregate amount of each separate calculation pertaining to each Prepaid
Installment.
(i) First, determine the amount of interest which
would have accrued each calendar quarter on the Prepaid Installment
had it remained outstanding until the applicable Original Payment
Date, using the rates per annum set forth in Paragraph 2.3(a);
(ii) Second, subtract from each quarterly interest
amount determined in (d)(i) above the amount of interest which
would accrue for that Prepaid Installment if it were reinvested
from the date of prepayment through the applicable Original Payment
Date, using the following rate:
(A) if the applicable Original Payment
Date is more than five years after the date of prepayment:
the Treasury Rate plus 0.25% (computed on the basis of a 360
day year and actual days elapsed); or
(B) if the applicable Original Payment
Date is five years or less after the date of prepayment: the
Money Market Rate (computed on the basis of a 360 day year
and actual days elapsed);
(iii) Third, if (d)(i) minus (d)(ii) for the
Prepaid Installment is greater than zero, discount the quarterly
differences to the date of prepayment by the rate used in (d)(ii)
above. The sum of the discounted quarterly differences is the
prepayment fee for that Prepaid Installment.
(e) Bank may adjust the Treasury Rate and Money Market Rate
to reflect the compounding, accrual basis, or other costs of the Term
Loan. Each of the rates is Bank's estimate only and Bank is under no
obligation to actually reinvest any prepayment. The rates shall be
based on information from either the Telerate or Reuters information
services, The Wall Street Journal, or other information sources Bank
deems appropriate.
(f) Borrower acknowledges that prepayment of the Term Loan
may result in Bank incurring certain additional costs, expenses and
liabilities. Borrower therefore agrees to pay the Total Prepayment Fee
for each prepayment and agrees that said amount represents a reasonable
estimate of the prepayment costs, expenses and liabilities of Bank.
2.6 Arrangement Fee. Borrower shall pay to Bank on the Closing
Date a non-refundable arrangement fee of $75,000.
3. Disbursements and Payments.
3.1 Lending Branch. The disbursement of the Term Loan by Bank and
each payment by Borrower under this Agreement shall be made for the account
of such branch of Bank as it shall designate from time to time.
3.2 Loan Account. Principal, interest and other sums owing to
Bank under this Agreement shall be evidenced by entries in records maintained
by Bank. Each payment on and any other credits with respect to principal,
interest and other sums under this Agreement shall be evidenced by entries in
such records.
3.3 Immediately Available Funds; Disbursements and Payments. The
disbursement of the Term Loan by Bank and each payment by Borrower under this
Agreement shall be made in immediately available funds (or such other funds
as Bank may require) at such branch of Bank or such other place as Bank may
from time to time select. Each payment by Borrower may be made only on a
Business Day. If the day on which a payment would fall due is not a Business
Day, the day on which such payment is due shall be the next succeeding
Business Day. Each payment shall be made without setoff or counterclaim not
later than 12:00 p.m. San Francisco time on the day such payment is due. All
sums received after such time shall be deemed received on the next Business
Day and interest and fees shall accrue on such sums at the applicable rate
for the additional day or days.
3.4 Default Interest. Any principal not paid on the date when
due, or any interest or other sum payable by Borrower hereunder if not paid
on the date which is five days from when due, shall bear interest (payable on
demand) from such date until payment in full (computed daily on the basis of
a 360 day year and actual days elapsed) at a rate per annum equal to the
Reference Rate plus two percentage points.
3.5 Interest Rate Calculations. All interest rate calculations
hereunder shall be made on the basis of a 360 day year and actual days
elapsed, which results in greater interest than if a 365/66 day year were
used.
4. Taxes, Costs and Capital Adequacy.
4.1 Taxes. Borrower agrees to make all payments or reimbursements
under this Agreement free and clear of any deduction for any present or
future taxes and agrees to pay any present or future taxes or charges with
respect to such payments or reimbursements which may be imposed by any
government authority, except net income taxes of Bank imposed by any
jurisdiction. On request of Bank, Borrower will provide Bank with original
tax receipts, notarized copies of tax receipts, or such other documentation
as will prove payment of tax in a court of law applying the United States
Federal Rules of Evidence for all taxes paid by Borrower.
4.2 Costs. Borrower shall reimburse or compensate Bank, upon
demand by Bank from time to time, for all costs incurred, losses suffered and
payments made by Bank which are applied or allocated by Bank to the Term Loan
(all as determined by Bank in its sole and absolute discretion) by reason of:
(a) any and all present and future reserve, deposit or
similar requirements against (or against any class of or change in or in
the amount of) assets or liabilities of, or commitments or extensions of
credit by, Bank;
(b) compliance by Bank with any directive, requirement or
request from any governmental or regulatory authority, whether or not
having the force of law.
4.3 Capital Adequacy. If Bank determines that any law, rule,
regulation or guideline regarding capital adequacy affects or would affect
the amount of capital required to be maintained by Bank or any corporation
controlling Bank and Bank determines (taking into consideration Bank's
policies with respect to capital adequacy and Bank's desired return on
capital) that the amount of required capital is increased as a result of
Bank's obligations under this Agreement, then, upon demand by Bank from time
to time, Borrower shall pay Bank additional amounts sufficient as specified
by Bank to compensate Bank for such increase.
5. Conditions Precedent. This Agreement shall take effect on the Closing
Date, but effective as of the Effective Date, subject to the conditions
precedent that, on or before the Closing Date, there shall have been
delivered to Bank, in form and substance satisfactory to Bank:
5.1 Opinion of Borrower's Counsel. A written opinion, dated the
Closing Date, of counsel for Borrower (which counsel must be satisfactory to
Bank), which opinion may be qualified to the extent approved by Bank and
shall cover such legal matters relating hereto as Bank may reasonably
request;
5.2 Borrower's Corporate Resolution. A copy of a resolution or
resolutions passed by the Board of Directors of Borrower, certified by the
Secretary or an Assistant Secretary of Borrower as being in full force and
effect on the Closing Date, authorizing the borrowing provided for herein and
the execution, delivery and performance of this Agreement and any instrument
or agreement required hereunder;
5.3 Borrower's Incumbency Certificate. A certificate, signed by
the Secretary or an Assistant Secretary of Borrower and dated the Closing
Date, as to the incumbency, and containing the specimen signature or
signatures, of the person or persons authorized to execute and deliver this
Agreement and any instrument or agreement required hereunder on behalf of
Borrower;
5.4 Borrower's Compliance Certificate. A completed Compliance
Certificate, signed on behalf of Borrower by its chief financial officer and
calculated as of December 31, 1992, dated the Closing Date;
5.5 Approvals and Consents. Certified copies of all approvals,
consents, exemptions and other actions by, and notices to and filings with,
any governmental or regulatory authority and any trustee or holder of any
indebtedness or obligation of Borrower which, in Bank's opinion, are required
in connection with any transaction contemplated hereby;
5.6 Evidence of No Material Adverse Change. A certificate signed
on behalf of Borrower by its chief financial officer stating that since
December 31, 1992 there has been no material adverse change in Borrower's
consolidated financial condition or results of operations or ability to
perform its obligations under this Agreement or under any instrument or
agreement required hereunder;
5.7 Fees. The arrangement fee; and
5.8 Other Evidence Bank May Require. Such other evidence as Bank
may reasonably request to establish the consummation of the transactions
contemplated hereby, the taking of all proceedings in connection herewith and
compliance with the conditions set forth in this Agreement.
6. Representations and Warranties.
Borrower represents and warrants that:
6.1 Organization of Borrower. Borrower is a corporation duly
organized and existing under the laws of California, and is properly
licensed, qualified and in good standing in every jurisdiction in which it is
doing business;
6.2 Authorization of Agreement. The execution, delivery and
performance of this Agreement and any instrument or agreement required
hereunder are within Borrower's powers, have been duly authorized, and are
not in conflict with the terms of any charter, bylaw or other organization
papers of Borrower, or any instrument or agreement to which Borrower is a
party or by which Borrower is bound or affected;
6.3 Government Approvals. No approval, consent, exemption or
other action by, or notice to or filing with (other than a Form 8-K Current
Report which Borrower may determine to file with the SEC to disclose the
execution of this Agreement and notification to the PUC (as hereinafter
defined), which notice Borrower shall give promptly after the Closing Date),
any governmental or regulatory authority is necessary in connection with the
execution, delivery, performance or enforcement of this Agreement or any
instrument or agreement required hereunder, except as may have been obtained
and certified copies of which have been delivered to Bank;
6.4 Compliance with Laws. There is no law, rule or regulation,
nor is there any judgment, decree or order of any court or governmental or
regulatory authority binding on Borrower which would be contravened by the
execution, delivery, performance or enforcement of this Agreement or any
instrument or agreement required hereunder;
6.5 Investment Company Act. Borrower is not an "investment
company" or a company "controlled" by an "investment company" within the
meaning of the Investment Company Act of 1940;
6.6 Enforceability of Agreement. This Agreement is a legal, valid
and binding agreement of Borrower, enforceable against Borrower in accordance
with its terms, and any instrument or agreement required hereunder, when
executed and delivered, will be similarly legal, valid, binding and
enforceable;
6.7 Title to Property. Borrower has good and marketable title to
its property free and clear of all security interests, liens, encumbrances
and rights of others, except for:
(a) taxes which have resulted in a lien but are not yet
delinquent; and
(b) security interests, liens and encumbrances permitted
under Paragraph 8.3, none of which secure revolving lines of credit or
term indebtedness extended by banks or other lenders to Borrower;
and the execution, delivery, performance or enforcement of this Agreement or
any instrument or agreement required hereunder will not result in the
creation of any security interest, lien, encumbrance or right of another
except in favor of Bank;
6.8 Hazardous Materials. Borrower is in compliance with all
federal, state and local laws, rules and regulations relating to hazardous or
toxic materials, substances or wastes;
6.9 No Litigation. (a) Excluding for purposes of this
subparagraph (a) only any proceedings, claims or disputes before or
involving the Public Utilities Commission of the State of California
("PUC"), there are no actions, proceedings, claims or disputes pending
or, to the knowledge of Borrower, threatened against or affecting
Borrower or its property, the adverse determination of which might
materially adversely affect Borrower's consolidated financial condition
or results of operations or Borrower's ability to perform its
obligations hereunder or under any instrument or agreement required
hereunder;
(b) There are no actions, proceedings, claims or disputes
before or involving the PUC pending or, to the knowledge of Borrower,
threatened against or affecting Borrower or its property, the adverse
determination of which might materially adversely affect Borrower's
consolidated financial condition or its ability to perform its
obligations hereunder or under any instrument or agreement required
hereunder;
(c) There are no actions, proceedings, claims or disputes
pending or, to the knowledge of Borrower, threatened against or
affecting Borrower or its property, alleging violation of any federal,
state, or local law, rule or regulation relating to hazardous or toxic
materials, substances or wastes;
6.10 Events of Default. No event has occurred or would result from
the incurring of obligations by Borrower under this Agreement which is, or
upon the lapse of time or notice or both would become, an Event of Default;
6.11 Regulation U. The proceeds of the Term Loan will not be used,
directly or indirectly, to purchase or carry any margin stock (as defined in
Regulation U of the Board of Governors of the Federal Reserve System or any
successor regulation) or to extend credit to others for the purpose of
purchasing or carrying any margin stock;
6.12 Taxes. All payments under or in respect of this Agreement and
any instrument or agreement required hereunder are exempt from tax other than
taxes on net income imposed by the country or any subdivision of the country
in which Bank's principal office or actual lending office is located;
6.13 Subsidiaries. Borrower has one Subsidiary, RTC Communications
Corp., which has no contracts and which engages in no business activities;
6.14 Financial Information. All financial statements dated
December 31, 1992, information and data furnished by Borrower to Bank prior
to the Closing Date are complete, and such financial statements have been
prepared in accordance with generally accepted accounting principles
consistently applied and fairly present the consolidated financial condition
and results of operations of Borrower as of such date. Since December 31,
1992 there has been no material adverse change in Borrower's consolidated
financial condition or results of operations or ability to perform its
obligations under this Agreement or under any instrument or agreement
required hereunder. Borrower has no contingent obligations, liabilities for
taxes or other outstanding financial obligations which are material in the
aggregate, except as disclosed in such statements, information and data.
7. Positive Covenants.
Borrower covenants and agrees that so long as the Term Loan shall remain
available, and until the full and final payment of all obligations of
Borrower under this Agreement and any instrument or agreement required
hereunder, it will:
7.1 Payment. Pay interest and principal on the Term Loan and all
other sums outstanding under or in respect of this Agreement and any
instrument or agreement required hereunder in accordance with the terms
hereof and thereof;
7.2 Use of Proceeds. Use the proceeds of the Term Loan for
general corporate purposes;
7.3 Cash Flow Coverage Ratio. Achieve on a consolidated basis on
the last day of each calendar quarter, for the 12-month period ending on such
day, a Cash Flow Coverage Ratio of at least 2.0 to 1.0;
7.4 Tangible Net Worth. Maintain at all times on a consolidated
basis Tangible Net Worth of at least 90% of Tangible Net Worth on June 30,
1993 plus the sum of 40% of net income after income taxes (without
subtracting losses) earned in each calendar quarter commencing after June 30,
1993 and the net proceeds from any equity securities issued after June 30,
1993;
7.5 Notices. Promptly give written notice to Bank of:
(a) all actions, proceedings, claims or disputes affecting
Borrower (other than actions, proceedings, claims or disputes before or
involving the PUC or the Federal Communications Commission ("FCC"))
where the amount claimed is $1,000,000 or more;
(b) any substantial dispute which may exist between Borrower
and any governmental or regulatory authority;
(c) any labor controversy resulting in or threatening to
result in a strike, work stoppage, boycott, shutdown or other labor
disruption against or involving Borrower;
(d) (i) all significant developments in the actions,
proceedings, claims or disputes before or involving the PUC or the FCC
which are disclosed in Borrower's 10-K Annual Report filed with the SEC
for the fiscal year ending December 31, 1992, (ii) all actions,
proceedings, claims or disputes before or involving the PUC or the FCC
which arise subsequent to the Closing Date and which Borrower
anticipates will be disclosed in the next Form 10-K Annual Report which
Borrower is required to file with the SEC, and (iii) all significant
developments pertaining to items in
subparagraph (ii);
(e) any reportable event under Section 4043(b)(5), (6) or (9)
of ERISA with respect to any Plan, any decision to terminate or withdraw
from a Plan, the commencement of any proceeding with respect to a Plan
under Section 4042 of ERISA, or any material increase in the actuarial
present value of unfunded vested benefits under any Plan over the
preceding year;
(f) as required under Paragraph 2.3(c);
(g) any Event of Default or any event which, upon the lapse
of time or notice or both, would become an Event of Default; and
(h) any matter which has resulted or might result in a
material adverse change in Borrower's consolidated financial condition
or results of operations or Borrower's ability to perform its
obligations hereunder or under any instrument or agreement required
hereunder;
(i) copies of the reports pertaining to the execution of this
Agreement which Borrower submits to the PUC or one of its divisions in
accordance with the PUC's order with respect to Application 91-11-045, and
evidence of the PUC's or such division's receipt of same;
7.6 Financial Statements, Reports, Etc. Deliver to Bank in form
and detail satisfactory to Bank, and in such number of copies as Bank may
request:
(a) as soon as available but no later than 60 days after the
end of each of the first three quarters of each of its fiscal years,
Borrower's balance sheet as of the end of such quarter, and Borrower's
statements of income, retained earnings and cash flows for such quarter
and that portion of the fiscal year ending with such quarter, prepared
on a consolidated basis, all as set forth in Borrower's Form 10-Q
Quarterly Report filed with the SEC for such quarter, and a certificate
signed on behalf of Borrower by its chief financial officer stating that
such financial statements fairly present the consolidated financial
condition and results of operations of Borrower during such quarter and
were prepared in accordance with generally accepted accounting
principles consistently applied;
(b) as soon as available but no later than 120 days after the
end of each of its fiscal years, a complete copy of Borrower's audited
financial statements, which shall include at least Borrower's balance
sheet as of the end of such year, and Borrower's statements of income,
retained earnings and cash flows for such year, prepared on a
consolidated basis, and the opinion of an independent certified public
accountant selected by Borrower and satisfactory to Bank stating that
Borrower's financial statements fairly present the consolidated
financial condition and results of operations of Borrower and were
prepared in accordance with generally accepted accounting principles
consistently applied, all as set forth in Borrower's Form 10-K Annual
Report filed with the SEC for such fiscal year. The opinion of such
certified public accountant shall not be qualified or limited because of
a restricted or limited examination by such accountant of any material
portion of Borrower's records;
(c) at the same time as the deliveries made to Bank by
Borrower pursuant to subparagraphs (a) and (b) above, a completed
Compliance Certificate signed on behalf of Borrower by its chief
financial officer and calculated as of the end of such quarter or year;
(d) as soon as distributed to Borrower's shareholders, a copy
of any interim financial statements furnished by Borrower to its
shareholders;
(e) as soon as filed with the Securities and Exchange
Commission, a copy of each Form 8-K Current Report, Form 10-K Annual
Report, Annual Report to Shareholders, Proxy Statement and Registration
Statement;
(f) such other statements, lists of property and accounts,
budgets, forecasts or reports as Bank may reasonably request;
7.7 Cooperation. Perform, on request of Bank and at Borrower's
expense, such acts as may be reasonably necessary or advisable to carry out
the intent of this Agreement;
7.8 Existence, Etc. Maintain and preserve its existence and all
rights, privileges and franchises now enjoyed, and keep all its properties in
good working order and condition; provided, however, that Borrower may
dissolve RTC Communications Corp.;
7.9 Payment of Obligations. Pay all obligations, including tax
claims, when due, except such as may be contested in good faith or as to
which a bona fide dispute may exist;
7.10 Compliance with Laws. Comply with all laws, rules,
regulations, orders and directions of any governmental or regulatory
authority having jurisdiction over it or its business;
7.11 Insurance. Maintain and keep in force in adequate amounts
such insurance as is usual in its business;
7.12 Maintain Books and Records; Inspection Rights. Maintain
adequate books, accounts and records in accordance with generally accepted
accounting principles consistently applied, and permit employees or agents of
Bank at any reasonable time to inspect its properties, and to examine and
audit its books, accounts and records and make copies and memoranda thereof.
8. Negative Covenants.
Borrower covenants and agrees that, so long as the Term Loan shall
remain available, and until full and final payment of all obligations of
Borrower under this Agreement and any instrument or agreement required
hereunder, it will not:
8.1 Leverage Ratio. Permit at any time its Leverage Ratio to
exceed 0.75 to 1.0;
8.2 Reserved.
8.3 Other Security Interests. Create, assume or suffer to exist
any security interest, lien (including the lien of an attachment, judgment or
execution) or encumbrance, securing a charge or obligation, on or of any of
its property, whether now owned or hereafter acquired, except:
(a) any security interests, liens or encumbrances disclosed
to Bank prior to the Closing Date;
(b) liens for current taxes, assessments or other
governmental charges which are not delinquent or remain payable without
any penalty, or the validity of which is being contested in good faith
by appropriate proceedings upon stay of execution of the enforcement
thereof;
(c) deposits or pledges to secure:
(i) statutory obligations;
(ii) surety or appeal bonds;
(iii) bonds for release of attachment, stay of
execution or injunction; or
(iv) performance of bids, tenders, contracts
(other than for the repayment of borrowed money) or leases, or for
purposes of like general nature in the ordinary course of its
business as presently conducted;
(d) purchase money security interests or mortgages in or
against property hereafter acquired if the liability secured does not
exceed 100% of the cost thereof and the security interest does not
extend beyond the property purchased;
(e) security interests, liens or encumbrances on margin stock
(as defined in Regulation U of the Board of Governors of the Federal
Reserve System or any successor regulation);
(f) involuntary liens which do not give rise to an Event of
Default under Paragraph 9.4;
8.4 Liquidation; Merger, Etc. Liquidate or dissolve, or enter
into any merger, consolidation, reorganization, partnership, joint venture or
other combination other than in the ordinary course of business as presently
conducted, or sell, lease, exchange, transfer or otherwise dispose of all or
substantially all of its property; provided, however, that
(a) Borrower may enter into mergers after the Closing Date so
long as (i) Borrower is the surviving party to any such merger, and (ii)
the primary business activity or operation of the entity(ies) merging
into Borrower is substantially related to Borrower's business activities
and operations as of the Closing Date;
(b) Borrower may enter into any partnership or joint venture
if to do so would be in the ordinary course of its business as conducted
as of the Closing Date;
8.5 Sale of Property for Fair Consideration. Sell, lease,
exchange, transfer or otherwise dispose of any of its property except for
full, fair and reasonable consideration, provided, however, that this
Paragraph shall not apply to Non-Essential Assets;
8.6 Sale of Fixed or Capital Assets. Sell, lease, exchange,
transfer or otherwise dispose of all or substantially all of its fixed or
capital assets, or enter into any sale and leaseback agreement covering any
of its fixed or capital assets, provided, however, that this Paragraph shall
not apply to Non-Essential Assets;
8.7 Purchase of Property. Purchase or otherwise acquire the
property or business of, or any shares or other forms of ownership interest
in, make any capital contributions to or loans or extensions of credit, or
otherwise invest in, any Person; provided, however, that this Paragraph shall
not be deemed to prohibit the purchase or acquisition of the property or
business of or any form of ownership interest in any entity if such entity's
primary business activity or operation is substantially related to Borrower's
business activities and operations as of the Closing Date;
8.8 Contracts. Enter into any contracts, leases, indentures, or
other agreements except in the ordinary course of its business as conducted
as of the Closing Date;
8.9 Change in Business. Engage in any business activities or
operations substantially different from or unrelated to its business
activities and operations as of the Closing Date.
9. Events of Default.
The occurrence of any of the following events shall terminate any
obligation on the part of Bank to make or continue the Term Loan and, at the
option of Bank, shall make all interest and principal remaining on the Term
Loan and all other sums outstanding under or in respect of this Agreement
immediately due and payable, without notice of default, presentment or demand
for payment, protest or notice of nonpayment or dishonor, or other notices or
demands of any kind or character:
9.1 Nonpayment-Principal. Borrower fails to pay, when due, any
installment of principal under this Agreement in accordance with the terms
hereof;
9.2 Nonpayment-Interest and Other Sums. Borrower fails to pay,
within five days after the date when due, any installment of interest or any
other sum under this Agreement in accordance with the terms hereof;
9.3 Misrepresentation. Any representation or warranty herein or
in any agreement, instrument or certificate executed pursuant hereto or in
connection with any transaction contemplated hereby proves to have been false
or misleading in any material respect when made or when deemed to have been
made;
9.4 Involuntary Liens. Any involuntary lien or liens in the
aggregate amount of $1,000,000 or more, of any kind or character, attaches to
any property of Borrower and remains unvacated or unbonded for a period of 30
days, except for taxes due but not in default;
9.5 Judgments. A judgment or judgments or arbitration award or
awards is entered against Borrower in the aggregate amount of $1,000,000 or
more on a claim or claims not covered by insurance and remains unpaid,
unvacated, unbonded or unstayed for a period of 60 days;
9.6 Voluntary Bankruptcy. Borrower is generally not paying or
admits in writing its inability to pay its debts as such debts become due, or
files any petition or action for relief under any bankruptcy, reorganization,
arrangement, insolvency, or moratorium law or any other law for the relief
of, or relating to, debtors, or requests the appointment of a custodian,
receiver or trustee (or other similar official) to take possession, custody
or control of any of its property, or enters into any composition with
creditors, or makes any assignment for the benefit of creditors, or takes any
corporate action in furtherance of any of the foregoing;
9.7 Involuntary Bankruptcy. An involuntary petition is filed
against Borrower under any bankruptcy, reorganization, arrangement,
insolvency, or moratorium law or any other law for the relief of, or relating
to, debtors, or a custodian, receiver, trustee, assignee for the benefit of
creditors (or other similar official) is appointed to take possession,
custody or control of any property of Borrower, unless such petition or
appointment is set aside or withdrawn or ceases to be in effect within 60
days from the date of said filing or appointment;
9.8 Condemnation. All, or in the opinion of Bank substantially
all, of the property of Borrower is condemned, seized or appropriated;
9.9 Regulatory Action. Any governmental or regulatory authority
takes or institutes action which, in the opinion of Bank, will materially
adversely affect Borrower's consolidated financial condition or results of
operations or ability to perform its obligations hereunder or under any
instrument or agreement required hereunder;
9.10 Cross Default. Any breach or default occurs under any other
agreement or agreements involving the borrowing of money or the extension of
credit under which Borrower may be obligated as borrower, instalment
purchaser or guarantor, if such breach or default consists of the failure to
pay any indebtedness when due or if such breach or default permits or causes
(or upon the lapse of time or notice or both would permit or cause) the
acceleration of any indebtedness or the termination of any commitment to lend
or to extend credit;
9.11 Breach of Other Obligations. Any breach or default occurs
under any other obligation of Borrower to Bank or any subsidiary or affiliate
of Bank;
9.12 ERISA Termination. Any Plan termination or any full or
partial withdrawal from a Plan or Plans occurs which could result in
liability of Borrower to the Pension Benefit Guaranty Corporation or to the
Plan or Plans in the aggregate amount of $10,000,000 or more, or the
actuarial present value of unfunded vested benefits under all Plans shall
exceed 10% of Borrower's Tangible Net Worth (determined on a consolidated
basis);
9.13 Material Adverse Change. Any material adverse change occurs
in Borrower's consolidated financial condition or results of operations or
ability to perform its obligations hereunder or under any instrument or
agreement required hereunder;
9.14 Other Defaults. Borrower breaches, or defaults under, any
term, condition, provision, representation, warranty or covenant contained in
this Agreement not specifically referred to in this Article.
10. Miscellaneous.
10.1 Notices. Any communications between the parties hereto to be
given in writing shall be given by mailing the same, postage prepaid, or by
telex, cable, facsimile or personal delivery to each party at its address set
forth on the signature pages hereto, or to such other addresses as either
party may in writing hereafter indicate. Any communications between the
parties hereto to be given by telephone shall be confirmed immediately in
writing by the party initiating the telephone call.
10.2 Successors and Assigns. This Agreement shall bind and inure
to the benefit of the parties hereto and their respective successors and
assigns; provided, however, that Borrower shall not assign this Agreement or
any of the rights of Borrower hereunder without the prior written consent of
Bank.
10.3 Participations.
(a) Bank may from time to time sell, assign, grant
participations in, or otherwise transfer to any bank (a "Participant")
all or part of the obligations of Borrower to Bank under this
Agreement.
(b) Borrower agrees that each transfer of its obligations
under this Agreement will give rise to a direct obligation of Borrower
to the Participant and that Participant shall have the same rights and
benefits under this Agreement as it would have if it were party to this
Agreement.
(c) Bank shall remain liable for the performance of all of
its obligations under this Agreement notwithstanding any transfer by
Bank of Borrower's obligations under this Agreement, unless Borrower,
Bank and Participant agree to the contrary in writing.
(d) Borrower authorizes Bank to disclose to any prospective
Participant and any Participant any and all confidential information in
Bank's possession concerning Borrower and this Agreement, subject to
such prospective Participant and Participant executing a confidentiality
agreement substantially in the form of Exhibit B. Bank shall not be
responsible if such prospective Participant or Participant fails to
comply with the confidentiality agreement.
10.4 Novations.
(a) Bank may from time to time assign to any bank (an
"Assignee") all or part of the obligations of Borrower to Bank under
this Agreement and delegate to Assignee all or a proportionate part of
the obligations of Bank to Borrower under this Agreement.
(b) The effectiveness of each such assignment and delegation
is subject to the prior written consent of Borrower (whose consent will
not be unreasonably withheld).
(c) Borrower agrees that each such assignment and delegation
will give rise to a direct obligation of Borrower to Assignee and that
Assignee shall have the same rights and benefits and obligations under
this Agreement as it would have if it were party to this Agreement.
Borrower agrees that each such assignment and delegation will release
and discharge Bank from Bank's obligations to Borrower under this
Agreement with respect to the portion of Bank's obligations delegated to
Assignee.
(d) Borrower authorizes Bank to disclose to any prospective
Assignee and any Assignee any and all confidential information in Bank's
possession concerning Borrower and this Agreement, subject to such
prospective Assignee and Assignee executing a confidentiality agreement
substantially in the form of Exhibit B. Bank shall not be responsible
if such prospective Assignee or Assignee fails to comply with the
confidentiality agreement.
10.5 Setoff. Borrower authorizes Bank and each Participant and
each Assignee, upon the occurrence of an Event of Default, to proceed
directly by right of setoff, banker's lien, or otherwise, against any
property of Borrower which may be in the hands of Bank or such Participant or
such Assignee, respectively.
10.6 Confidentiality. Bank agrees to maintain confidentiality with
respect to all information which is furnished by or on behalf of Borrower to
Bank under this Agreement, except to the extent such information:
(a) was or becomes generally available to the public other
than as a result of a disclosure by Bank;
(b) was or becomes available on a non-confidential basis from
a source other than Borrower, provided that such source is not bound by
a confidentiality agreement with Borrower known to Bank;
(c) is disclosed by Bank:
(i) to any governmental or regulatory authority in
the course of its duties;
(ii) pursuant to subpoena or other legal process;
(iii) to legal counsel and other advisors retained
by Bank;
(iv) to any Person and in any proceeding necessary
in Bank's judgment to protect Bank's interest in connection with
any claim or dispute involving Bank; or
(v) to any prospective Participant or Assignee and
any Participant or Assignee.
10.7 Waivers; Writing Required. No delay or omission by Bank to
exercise any right under this Agreement shall impair any such right, nor
shall it be construed to be a waiver thereof. No waiver of any single breach
or default under this Agreement shall be deemed a waiver of any other breach
or default. Any amendment or waiver of any provision of this Agreement must
be in writing to be effective.
10.8 Remedies. All rights and remedies provided in this Agreement
and any instrument or agreement required hereunder are cumulative and are not
exclusive of any rights or remedies otherwise provided by law. Any single or
partial exercise of any right or remedy shall not preclude the further
exercise thereof or the exercise of any other right or remedy.
10.9 Costs and Expenses. Borrower agrees to pay to Bank on demand
from time to time all costs, expenses and attorneys' fees (including
allocated costs for in-house legal services) incurred by Bank in connection
with (a) the preparation of this Agreement and of any waivers and amendments,
(b) the administration of this Agreement and any waivers and amendments, but
not including any charges for time allocated by Bank personnel (other than in-
house legal staff) to routine ongoing operations with respect to this
Agreement, (c) enforcement of this Agreement and any instrument or agreement
required hereunder, and (d) in connection with any refinancing or
restructuring of the Term Loan in the nature of a "work-out"; provided,
however, that Borrower's reimbursement of Bank for attorneys' fees (including
allocated costs for in-house legal services) incurred by Bank in connection
with the preparation of this Agreement shall not exceed $10,000.
10.10 Indemnification for Hazardous Substances. Borrower shall
indemnify Bank and its directors, officers, agents, employees and counsel
against and hold Bank and each such person harmless from any and all
liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses and disbursements of any kind or nature whatsoever
(including attorneys' fees and allocated costs for in-house legal services)
arising out of or attributable to the use, generation, manufacture,
production, storage, release, threatened release, discharge, disposal or
presence on, under or about Borrower's operations or property or property
leased by Borrower of any material, substance or waste which is or becomes
designated as hazardous or toxic under any federal, state or local law, rule
or regulation.
10.11 Indemnification for Use of Proceeds of Term Loan.
Borrower shall indemnify Bank and its directors, officers, agents, employees
and counsel against and hold Bank and each such person harmless from any and
all liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses and disbursements of any kind or nature whatsoever
(including attorneys' fees and allocated costs for in-house legal services)
arising out of or incurred in connection with Borrower's use or proposed use
of the proceeds of the Term Loan for any purpose, including the purchase or
other acquisition of any shares or other forms of ownership interest in any
Person (or to refinance any indebtedness incurred for such purpose).
10.12 Paragraph Headings. Paragraph headings are for reference
only, and shall not affect the interpretation or meaning of any provision of
this Agreement. Unless otherwise provided, references to Articles,
Paragraphs and Exhibits shall be deemed reference to Articles, Paragraphs and
Exhibits of this Agreement.
10.13 Severability. The illegality or unenforceability of any
provision of this Agreement or any instrument or agreement required hereunder
shall not in any way affect or impair the legality or enforceability of the
remaining provisions of this Agreement or any instrument or agreement
required hereunder.
10.14 Counterparts. This Agreement may be executed in as many
counterparts as may be deemed necessary or convenient, and by the different
parties hereto on separate counterparts each of which, when so executed,
shall be deemed an original but all such counterparts shall constitute but
one and the same agreement.
10.15 Governing Law. This Agreement, and any instrument or
agreement required hereunder, shall be governed by and construed under the
laws of the State of California.
10.16 Entire Agreement. This Agreement and any instrument,
agreement or document attached hereto or referred to herein (a) integrate all
the terms and conditions mentioned herein or incidental hereto, (b) supersede
all oral negotiations and prior writings with respect to the subject matter
hereof, and (c) are intended by the parties as the final expression of the
agreement with respect to the terms and conditions set forth in this
Agreement and any such instrument, agreement or document and as the complete
and exclusive statement of the terms agreed to by the parties. In the event
of any conflict between the terms, conditions and provisions of this
Agreement and any such instrument, agreement or document, the terms,
conditions and provisions of this Agreement shall prevail.
In Witness Whereof, the parties hereto have executed this Agreement by
their duly authorized officers as of the day and year first above written,
effective for all purposes as of November 12, 1993.
BANK OF AMERICA NATIONAL TRUST ROSEVILLE TELEPHONE COMPANY
AND SAVINGS ASSOCIATION
By By
Title Title
By By
Title Title
Address for notices: Address for notices:
555 California St., 41st Floor 211 Lincoln Street
San Francisco, CA 94104 Roseville, CA 95678
Attn: S. DeMarti, #3838
CONTENTS
SECTION PAGE
INTRODUCTION
RECITALS
1. Definitions and Financial Requirements
1.1 Definitions
1.2 Financial Requirements
2. The Term Loan
2.1 Commitment for the Term Loan
2.2 Reserved
2.3 Interest on the Term Loan
2.4 Principal on the Term Loan
2.5 Prepayment of the Term Loan
2.6 Arrangement Fee
3. Disbursements and Payments
3.1 Lending Branch
3.2 Loan Account
3.3 Immediately Available Funds; Disbursements and Payments
3.4 Default Interest
3.5 Interest Rate Calculations
4. Taxes, Costs and Capital Adequacy
4.1 Taxes
4.2 Costs
4.3 Capital Adequacy
5. Conditions Precedent
5.1 Opinion of Borrower's Counsel
5.2 Borrower's Corporate Resolution
5.3 Borrower's Incumbency Certificate
5.4 Borrower's Compliance Certificate
5.5 Approvals and Consents
5.6 Evidence of No Material Adverse Change
5.7 Fees
5.8 Other Evidence Bank May Require
6. Representations and Warranties
6.1 Organization of Borrower
6.2 Authorization of Agreement
6.3 Government Approvals
6.4 Compliance with Laws
6.5 Investment Company Act
6.6 Enforceability of Agreement
6.7 Title to Property
6.8 Hazardous Materials
6.9 No Litigation
6.10 Events of Default
6.11 Regulation U
6.12 Taxes
6.13 Subsidiaries
6.14 Financial Information
7. Positive Covenants
7.1 Payment
7.2 Use of Proceeds
7.3 Cash Flow Coverage Ratio
7.4 Tangible Net Worth
7.5 Notices
7.6 Financial Statements, Reports, Etc.
7.7 Cooperation
7.8 Existence, Etc.
7.9 Payment of Obligations
7.10 Compliance with Laws
7.11 Insurance
7.12 Maintain Books and Records; Inspection Rights
8. Negative Covenants
8.1 Leverage Ratio
8.2 Reserved
8.3 Other Security Interests
8.4 Liquidation; Merger, Etc.
8.5 Sale of Property for Fair Consideration
8.6 Sale of Fixed or Capital Assets
8.7 Purchase of Property
8.8 Contracts
8.9 Change in Business
9. Events of Default
9.1 Nonpayment-Principal
9.2 Nonpayment-Interest and Other Sums
9.3 Misrepresentation
9.4 Involuntary Liens
9.5 Judgments
9.6 Voluntary Bankruptcy
9.7 Involuntary Bankruptcy
9.8 Condemnation
9.9 Regulatory Action
9.10 Cross Default
9.11 Breach of Other Obligations
9.12 ERISA Termination
9.13 Material Adverse Change
9.14 Other Defaults
10. Miscellaneous
10.1 Notices
10.2 Successors and Assigns
10.3 Participations
10.4 Novations
10.5 Setoff
10.6 Confidentiality
10.7 Waivers; Writing Required
10.8 Remedies
10.9 Costs and Expenses
10.10 Indemnification for Hazardous Substances
10.11 Indemnification for Use of Proceeds of Term Loan
10.12 Paragraph Headings
10.13 Severability
10.14 Counterparts
10.15 Governing Law
10.16 Entire Agreement
EXHIBITS
Exhibit A Compliance Certificate
Exhibit B Confidentiality Agreement
=============================================================================
CREDIT AGREEMENT
dated as of January 4, 1994
between
ROSEVILLE TELEPHONE COMPANY
as Borrower
and
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
=============================================================================