\n TABLE OF CONTENTS<\/p>\n PAGE
\n —-
\n
\n
\nARTICLE I DEFINITIONS……………………………………………………….2
\n 1.01. Definitions……………………………………………………….2<\/p>\nARTICLE II THE CREDITS 11
\n 2.01. Advances………………………………………………………….11
\n 2.02. Facility Termination Date…………………………………………..11
\n 2.03. Minimum Amount of Each Advance…………………………………….. 12
\n 2.04. Commitment Increases……………………………………………… 12
\n 2.05. Borrowing Notices for New Advances…………………………………. 12
\n 2.06. Rates Applicable After an Event of Default………………………….. 13
\n 2.07. Method of Payment………………………………………………… 13
\n 2.08. Notes…………………………………………………………… 13
\n 2.09. Interest Rate; Interest Payment Dates; Interest and Fee Basis…………. 13
\n 2.10. Waivers; Special Agreements of Borrowers……………………………. 13<\/p>\n
ARTICLE III CONVERSION AND PREPAYMENT………………………………………… 14
\n 3.01. Conversion………………………………………………………. 14
\n 3.02. No Impairment……………………………………………………. 18
\n 3.03. Stock Transfer Taxes……………………………………………… 18
\n 3.04. No Fractional Shares: Certificate as to Adjustments………………….. 19
\n 3.05. Notices of Record Date……………………………………………. 19
\n 3.06. Reservation of Securities Issuable upon Conversion…………………… 19
\n 3.07. Prepayment………………………………………………………. 20
\n 3.08. Mandatory Prepayments…………………………………………….. 20
\n 3.09. Stockholder Rights Plan…………………………………………… 20
\n 3.10. Tolling of Automatic Conversion and Other Time periods for HSR Compliance 21<\/p>\n
ARTICLE IV ADVANCE CONDITIONS……………………………………………….. 21<\/p>\n
ARTICLE V REPRESENTATIONS AND WARRANTIES…………………………………….. 22
\n 5.01. Organization, Standing and Power…………………………………… 22
\n 5.02. Subsidiaries and Joint Ventures……………………………………. 22
\n 5.03. Authority; Noncontravention……………………………………….. 23
\n 5.04. Taxes…………………………………………………………… 23
\n 5.05. Compliance with Laws……………………………………………… 23
\n 5.06. Environmental Matters…………………………………………….. 24
\n 5.07. Intellectual Property…………………………………………….. 24
\n 5.08. Certain Payments…………………………………………………. 25
\n<\/s><\/c><\/caption>\n<\/table>\n
i<\/p>\n
\n
\nARTICLE VI COVENANTS………………………………………………………….. 25
\n 6.01. Financial Reporting………………………………………………….. 25
\n 6.02. Subsidiaries as Borrowers; Use of Proceeds……………………………… 27
\n 6.03. Notice of Default……………………………………………………. 27
\n 6.04. Conduct of Business; Merger, Sale of Assets, Etc………………………… 27
\n 6.05. Taxes………………………………………………………………. 28
\n 6.06. Insurance…………………………………………………………… 28
\n 6.07. Compliance with Laws…………………………………………………. 28
\n 6.08. Maintenance of Properties…………………………………………….. 28
\n 6.09. Inspection………………………………………………………….. 28
\n 6.10. Investments and Purchases…………………………………………….. 28
\n 6.11. Liens………………………………………………………………. 29
\n 6.12. Affiliates………………………………………………………….. 30
\n 6.13. Environmental Matters………………………………………………… 30
\n 6.14. Change in Corporate Structure; Fiscal Year……………………………… 30
\n 6.15. Inconsistent Agreements………………………………………………. 31
\n 6.16. Indebtedness………………………………………………………… 31
\n 6.17. ERISA Compliance…………………………………………………….. 31<\/p>\n ARTICLE VII EVENTS OF DEFAULT………………………………………………… 32
\n 7.01……………………………………………………………………….. 32
\n 7.02……………………………………………………………………….. 32
\n 7.03……………………………………………………………………….. 32
\n 7.04……………………………………………………………………….. 32
\n 7.05……………………………………………………………………….. 33
\n 7.06……………………………………………………………………….. 33
\n 7.07……………………………………………………………………….. 33
\n 7.08……………………………………………………………………….. 33
\n 7.09……………………………………………………………………….. 33<\/p>\n
ARTICLE VIII ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES………………………. 33<\/p>\n
ARTICLE IX SETOFF……………………………………………………………. 34<\/p>\n
ARTICLE X BENEFIT OF AGREEMENT; ASSIGNMENTS……………………………………… 35
\n 10.01. Successors and Assigns……………………………………………….. 35
\n 10.02. Assignments by Sprint………………………………………………… 35
\n 10.03. Dissemination of Information………………………………………….. 36<\/p>\n
ARTICLE XI MISCELLANEOUS ……………………………………………………… 36
\n 11.01. Notices…………………………………………………………….. 36
\n <\/c><\/s><\/table>\n
ii<\/p>\n
\n\n
\n11.02. Entire Agreement……………………………………………………… 37
\n11.03. Waiver………………………………………………………………. 37
\n11.04. Governing Law………………………………………………………… 38
\n11.05. Severability…………………………………………………………. 38
\n11.06. Counterparts…………………………………………………………. 38
\n11.07. Headings…………………………………………………………….. 38
\n11.08. No Third-Party Beneficiaries…………………………………………… 38
\n11.09. Interpretation……………………………………………………….. 38
\n11.10. Inclusion of Information in Schedules…………………………………… 39
\n11.11. Amendment……………………………………………………………. 39
\n11.12. Joint and Several Obligations of Borrowers………………………………. 39
\n11.13. Effectiveness of Agreement…………………………………………….. 39
\n11.14. Reliance on Investment Agreement……………………………………….. 39
\n11.15. Exclusive Jurisdiction and Consent to Service of Process………………….. 39
\n11.16. WAIVER OF JURY TRIAL………………………………………………….. 41
\n <\/c><\/s><\/caption>\n<\/table>\n iii<\/p>\n
PAGE
\n —-
\nEXHIBITS
\n——–<\/p>\n
Exhibit A (Section 1) Convertible Senior Promissory Note
\nExhibit B (Section 6.1(d)) Compliance Certificate
\nExhibit C ( Section 6.2(a)) Agreement to Add Borrower
\nExhibit D (Section 10.2.1) Assignment Agreement<\/p>\n
SCHEDULES
\n———<\/p>\n
Schedule 6.10 – Investments
\nSchedule 6.11 – Liens
\nSchedule 6.12 – Certain Affiliate Agreements<\/p>\n
iv<\/p>\n
CREDIT AGREEMENT<\/p>\n
THIS CREDIT AGREEMENT, dated as of February 10, 1998, is between Dolphin,
\nInc., a Delaware corporation (“Newco”), and EarthLink Network, Inc., a Delaware
\ncorporation (the “Company”), and Sprint Corporation, a Kansas corporation
\n(“Sprint”), as lender.<\/p>\n
WHEREAS, the respective Boards of Directors of Sprint, the general partner
\nof Sprint Communications L.P., a Delaware limited partnership (“Sprint L.P.”)
\nand the Company have determined to enter into a strategic relationship in the
\narea of Internet access and related services and Sprint and Sprint L.P. will
\nmake investments in Newco and the Company in connection with the Merger (as
\ndefined below) of Newco Sub, Inc., a Delaware corporation and wholly-owned
\nsubsidiary of Newco (“Newco Sub”) and the Company in order to enhance the
\ncapabilities for growth and financial and strategic success;<\/p>\n
WHEREAS, Sprint, Sprint L.P., the Company, Newco and Newco Sub have entered
\ninto an Investment Agreement as of the date hereof (the “Investment Agreement”)
\ncontemplating that strategic alliance and addressing the terms and conditions of
\nsuch investment and related transactions;<\/p>\n
WHEREAS, Sprint proposes to make a tender offer (as it may be amended from
\ntime to time as permitted under the Investment Agreement, with the Company’s
\nconsent if required thereby, the “Offer”) to purchase 1,250,000 shares of common
\nstock, par value $.01 per share, of the Company (the “Company Common Stock”),
\nfor an aggregate cash consideration of $56,250,000 and at a price per share of
\nCompany Common Stock of $45 net to each seller in cash (such price, as may
\nhereafter be changed, the “Offer Price”), upon the terms and subject to the
\nconditions set forth in the Investment Agreement; and the Board of Directors of
\nthe Company has approved the Offer and the other transactions contemplated by
\nthe Investment Agreement and is recommending that the Company’s stockholders who
\nwish to receive cash for their shares of Company Common Stock accept the Offer;<\/p>\n
WHEREAS, immediately following the closing of the Offer, Sprint L.P.
\nproposes to purchase 4,102,941 shares of Series A Convertible Preferred Stock,
\npar value $.01 per share of Newco (the “Convertible Preferred Stock”) in
\nexchange for (i) an aggregate cash consideration of $23,750,000, (ii) the
\nassignment to Newco of 100% of the Sprint Internet Passport Subscribers, and
\n(iii) entering into a network agreement whereby Newco and the Company will
\nutilize Sprint’s long-distance network under specified terms and conditions;<\/p>\n
WHEREAS, Sprint, Sprint L.P., the Company and Newco will enter into a
\nmarketing agreement whereby Newco and the Company will utilize the Sprint brand
\nunder specified terms and conditions and will, inter alia, have the right to use
\n —– —-
\nSprint L.P. distribution channels under specified terms and conditions and agree
\nto sell certain Sprint L.P. products;<\/p>\n
1<\/p>\n
WHEREAS, Sprint shall provide Newco and the Company, as co-borrowers, with
\nup to $25 million of Convertible Senior Debt financing (the “Convertible Debt
\nFinancing”) on or after the Closing, with such amount to increase to up to $100
\nmillion over time, such indebtedness to be evidenced by one or more Notes;<\/p>\n
WHEREAS, the closing of the acquisition of the Convertible Preferred Stock
\nand the other transactions referred to above other than the Offer shall take
\nplace concurrently with the merger of Newco Sub into the Company (the “Merger”)
\nand the conversion of each outstanding share of Company Common Stock into one
\nshare of Newco Common Stock, par value $.01 per share (“Newco Common Stock’)
\npursuant to the Merger, in each case upon the terms and subject to the
\nconditions set forth in the Investment Agreement and\/or the Ancillary
\nAgreements;<\/p>\n
WHEREAS, to induce Sprint and Sprint L.P. to enter into the Investment
\nAgreement and the Ancillary Agreements, and to consummate the transactions
\ncontemplated thereby, (i) certain stockholders of the Company have entered into
\na Stockholders’ Agreement with Sprint and Sprint L.P., and (ii) certain other
\nstockholders have granted to Sprint agreements to vote and\/or tender their
\nshares of Company Common Stock in connection with the transactions contemplated
\nby the Investment Agreement;<\/p>\n
WHEREAS, each Borrower hereunder recognizes and acknowledges that this
\nAgreement, the Investment Agreement and the Ancillary Agreements, and the
\nAdvances made hereunder to such Borrower and to Affiliates of such Borrower,
\nserve to benefit, directly or indirectly, such Borrower; and<\/p>\n
WHEREAS, Newco intends to make the credit facility provided for in this
\nAgreement and Advances thereunder available to its Subsidiaries for working
\ncapital and other purposes permitted hereunder.<\/p>\n
NOW, THEREFORE, in consideration of the representations, warranties,
\ncovenants and agreements contained in this Agreement, the Investment Agreement
\nand in the Ancillary Agreements, and for other good and valuable consideration,
\nthe receipt and sufficiency of which are hereby acknowledged, the parties hereto
\nhereby agree as follows:<\/p>\n
ARTICLE I<\/p>\n
DEFINITIONS<\/p>\n
SECTION 1.01. Definitions. Definitions as used in this Agreement:<\/p>\n
“Action” means any action, suit, arbitration, inquiry, proceeding or
\ninvestigation by or before any Governmental Entity.<\/p>\n
2<\/p>\n
“Advance” means a borrowing hereunder.<\/p>\n
“Affiliate” and “Associate” shall have the respective meanings ascribed to
\nsuch terms in Rule 12b-2 under the Securities Exchange Act of 1934, as amended,
\nas such Rule is in effect on the Closing Date.<\/p>\n
“Aggregate Available Commitment” means, at any time, the Aggregate
\nCommitment at such time, minus the aggregate amount of all Advances.
\n —– <\/p>\n
“Aggregate Commitment” means the total amount which Sprint is obligated to
\nadvance under Section 2.04 below
\n ———— <\/p>\n
“Agreement” means this Credit Agreement, as it may be amended, modified or
\nrestated and in effect from time to time.<\/p>\n
“Ancillary Agreements” is defined in Article VIII of the Investment
\nAgreement.<\/p>\n
“Authorized Officer” means any of the chairman, chief executive officer or
\nchief financial officer of the Borrowers, or any other officer of the Borrowers
\nthey or any of them designate to Sprint.<\/p>\n
“Average Market Price” means the average of the Closing Prices for the 30
\nTrading Days immediately preceding an Advance.<\/p>\n
“Bankruptcy Code” means Title 11, United States Code, sections 101 et seq.,
\n — —
\nas the same may be amended from time to time, and any successor thereto or
\nreplacement therefor which may be hereafter enacted.<\/p>\n
“Borrower” means each of Newco and the Company and any Subsidiary added as
\na “Borrower” under Section 6.02(a).
\n ————— <\/p>\n
“Borrower Filed SEC Documents” is defined in Section 6.01.
\n ———— <\/p>\n
“Borrowing Date” means a date on which an Advance is made hereunder.<\/p>\n
“Borrowing Notice” is defined in Section 2.05.
\n ———— <\/p>\n
“Business Day” means with respect to any borrowing or payment, a day (other
\nthan a Saturday or Sunday) on which banks generally are open in Kansas City,
\nMissouri for the conduct of substantially all of their commercial lending
\nactivities.<\/p>\n
“Business Combination” shall have the same meaning as given such term in
\nthe Governance Agreement.<\/p>\n
3<\/p>\n
“Capitalized Lease” of a Person means any lease of Property by such Person
\nas lessee which would be capitalized on a balance sheet of such Person prepared
\nin accordance with GAAP.<\/p>\n
“Capitalized Lease Obligations” of a Person means the amount of the
\nobligations of such Person under Capitalized Leases which would be shown as a
\nliability on a balance sheet of such Person prepared in accordance with GAAP.<\/p>\n
“Closing” shall have the same meaning as given such term in the Investment
\nAgreement.<\/p>\n
“Closing Price” per share of Common Stock on any date shall be the last
\nsale price, regular way, or, in case no such sale takes place on such day, the
\naverage of the closing bid and asked prices, regular way, in either case as
\nreported in the principal consolidated transaction reporting system with respect
\nto securities listed or admitted to trading on the New York Stock Exchange or,
\nif the Common Stock is not listed or admitted to trading on the New York Stock
\nExchange, as reported in the principal consolidated transaction reporting system
\nwith respect to securities listed on the principal national securities exchange
\non which the Common Stock is listed or admitted to trading or, if the Common
\nStock is not listed or admitted to trading on any national securities exchange,
\nif such shares of Common Stock are not listed or admitted to trading on such
\nexchange, as reported on the NASDAQ National Market, or if not quoted on the
\nNASDAQ National Market, the last quoted sale price or, if not so quoted, the
\naverage of the high bid and low asked prices in the over-the-counter market, as
\nreported by NASDAQ or such other system then in use, or, if on any such date the
\nCommon Stock is not quoted by any such organization, the average of the closing
\nbid and asked prices as furnished by a professional market maker making a market
\nin the Common Stock selected by the Board of Directors. If the Common Stock is
\nnot publicly held or so listed or publicly traded, “Closing Price” shall mean
\nthe Fair Market Value per share as determined in good faith by the Board of
\nDirectors.<\/p>\n
“Code” means the Internal Revenue Code of 1986.<\/p>\n
“Common Stock” shall mean Newco’s authorized Common Stock, $.01 par value,
\nas constituted on the Closing Date, and any stock into which such Common Stock
\nmay thereafter be changed or reclassified, including, without limitation, any
\nSurviving Entity Securities; provided, however, that if Common Stock is changed
\nor reclassified into more than one class or series of equity securities, the
\nterm “Common Stock” shall refer to the class or series of such equity securities
\nhaving the greatest general voting power in the election of directors of Newco
\nas compared to the other classes or series of equity securities.<\/p>\n
“Company” has the meaning set forth in the recitals.<\/p>\n
“Condemnation” is defined in Section 7.08.
\n ———— <\/p>\n
4<\/p>\n
“Consolidated” or “consolidated”, when used in connection with any
\ncalculation, means a calculation to be determined on a consolidated basis (as
\ndetermined in accordance with GAAP) for Newco.<\/p>\n
“Consolidated Person” means, for the taxable year of reference, each Person
\nwhich is a member of the affiliated group of which Newco is a member if
\nconsolidated returns are or shall be filed for such affiliated group for federal
\nincome tax purposes or any combined or unitary group of which Newco is a member
\nfor state income tax purposes.<\/p>\n
“Contingent Obligation” of a Person means any agreement, undertaking or
\narrangement by which such Person assumes, guarantees, endorses, contingently
\nagrees to purchase or provide funds for the payment of, or otherwise becomes or
\nis contingently liable upon, the obligation or liability of any other Person, or
\nagrees to maintain the net worth or working capital or other financial condition
\nof any other Person, or otherwise assures any creditor of such other Person
\nagainst loss, including, without limitation, any operating agreement or take-or-
\npay contract or application for a letter of credit.<\/p>\n
“Controlled Group” means all members of a controlled group of corporations
\nand all trades or businesses (whether or not incorporated) under common control
\nwhich, together with Newco or any of its Subsidiaries and after giving effect
\nto the transactions contemplated by the Investment Agreement and the Ancillary
\nAgreements, are treated as a single employer under Section 414 of the Code.<\/p>\n
“Conversion Rights,” “Conversion Notice,” “Conversion Amount,” and
\n“Conversion Price” are defined in Section 3.01.
\n ———— <\/p>\n
“Current Market Price” per share of Newco Common Stock on any date shall be
\ndeemed to be the Closing Price per share of Newco Common Stock on the Trading
\nDay immediately prior to such date, except that “Current Market Price” for
\npurposes of an adjustment resulting from a Spin-Off under Section 3.01(c)(v)
\n ——————
\nshall mean the average Closing Price for the 20 Trading Days following the 10th
\nTrading Day following the effective date of any Spin-Off, as defined in Section
\n ——-
\n3.01(c)(v).
\n———- <\/p>\n
“Default” means any event or condition the occurrence of which would, with
\nthe passage of time or the giving of notice, or both, constitute an Event of
\nDefault.<\/p>\n
“Encumbrance” means any charge, claim, community property interest,
\nequitable interest lien, tax lien, option, pledge, security interest, right of
\nfirst refusal or restriction of any kind, including any restriction on transfer,
\nreceipt of income or exercise of any other attribute of ownership.<\/p>\n
“Environment” means soil, land surface or subsurface strata, surface waters
\n(including navigable waters, ocean waters, streams, ponds, drainage basins, and
\nwetlands), groundwaters, drinking water supply, stream sediments, ambient air
\n(including indoor air), plant and animal life, and any other environmental
\nmedium or natural resource.<\/p>\n
5<\/p>\n
“Environmental Law” means any Law that requires or relates to protection of
\nhuman health or the Environment.<\/p>\n
“ERISA” means the Employee Retirement Income Security Act of 1974, as
\namended from time to time.<\/p>\n
“Event of Default” is defined in Article VII.<\/p>\n
“Facility Termination Date” is defined in Section 2.02.
\n ———— <\/p>\n
“Fair Market Value” means the amount which a willing buyer would pay a
\nwilling seller in an arm’s-length transaction.<\/p>\n
“Fiscal Quarter” means one of the four consecutive three-month accounting
\nperiods beginning on the first day of each Fiscal Year.<\/p>\n
“Fiscal Year” means the twelve-month accounting period ending on December
\n31 of each year.<\/p>\n
“Foreign Entity” means any Person that is not a resident of the United
\nStates or organized under the laws of the United States or any state thereof or
\nany Person that has property equal to a Substantial Portion located outside the
\nUnited States.<\/p>\n
“GAAP” means generally accepted accounting principles, consistently
\napplied.<\/p>\n
“Governance Agreement” means the Governance Agreement, dated as of the date
\nhereof, among Sprint, Sprint L.P., the Company and Newco.<\/p>\n
“Governmental Entity” means any federal, state, foreign or local
\ngovernment, any of its subdivisions, administrative agencies, authorities,
\ncommissions, boards or bureaus, any federal, state, foreign or local court or
\ntribunal and any arbitrator.<\/p>\n
“Holder” is defined in Section 3.01.
\n ———— <\/p>\n
“HSR Act” means the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
\nas amended.<\/p>\n
“Indebtedness” of a Person means such Person’s (a) obligations for borrowed
\nmoney, (b) obligations representing the deferred purchase price of Property or
\nservices (other than accounts payable arising in the ordinary course of such
\nPerson’s business), (c) obligations, whether or not assumed, secured by Liens or
\npayable out of the proceeds or production from Property now or hereafter owned
\nor acquired by such Person, (d) obligations which are evidenced by notes,
\nacceptances, or other instruments, (e) Capitalized Lease Obligations, (f)
\nContingent Obligations, and <\/p>\n
6<\/p>\n
(g) repurchase obligations or liabilities of such Person with respect to
\naccounts receivable or notes receivable sold by such Person.<\/p>\n
“Investment” of a Person means any loan, advance (other than commission,
\ntravel and similar advances to officers and employees made in the ordinary
\ncourse of business), extension of credit (other than accounts receivable arising
\nin the ordinary course of business), or contribution of capital by such Person
\nto any other Person or any investment in, or purchase or other contribution of,
\nthe stock, partnership interests, notes, debentures or other securities of any
\nother Person made by such Person valued at historical cost.<\/p>\n
“Investment Agreement” is defined in the recitals hereof.<\/p>\n
“Knowledge” means the actual knowledge of any of the executive officers and
\ndirectors of the Parties (except in respect of the Company, John W. Sidgmore)
\nwithout any duty to inquire or attribution of knowledge from any other Person to
\nthe persons in such capacities.<\/p>\n
“Law” means any federal, state, local, municipal, foreign, international,
\nmultinational, or other judicial or administrative order, judgment, decree,
\nconstitution, law, ordinance, common law of California and Delaware, regulation,
\nstatute, or treaty.<\/p>\n
“Lien” means any lien, pledge, claim, security interest or Encumbrance
\nwhatsoever, mortgage, deed of trust, security interest (including any
\nCapitalized Lease or other title retention agreement), charge, pledge, retention
\nof title agreement, easement, encroachment, condition, reservation, covenant,
\nlis pendens lien, claim of lien, adverse claim, restriction on attributes of
\nownership, or other Encumbrance affecting title.<\/p>\n
“Loan” means the aggregate of all Advances.<\/p>\n
“Loan Documents” means this Agreement, the Notes, and the other documents
\nand agreements contemplated by this Agreement and executed by any Borrower in
\nfavor of Sprint in connection with this Agreement.<\/p>\n
“Margin Stock” has the meaning assigned to that term under Regulation G of
\nthe Board of Governors of the Federal Reserve.<\/p>\n
“Marketing Agreement” means the Marketing and Distribution Agreement, dated
\nas of the date hereof, among Sprint L.P., Newco and the Company.<\/p>\n
“Material Adverse Effect” means any change or effect having a material
\nadverse effect (or any development as to which there is a substantial
\nlikelihood, insofar as can be foreseen, would have such an effect) on the
\nbusiness, properties, assets, condition (financial or otherwise), or results of
\noperations of Newco, the Company and their Subsidiaries taken as a whole.<\/p>\n
7<\/p>\n
“Multiemployer Plan” means a Plan coming within Section 4001(a)(3) of
\nERISA.<\/p>\n
“Net Income” means, for any computation period, with respect to Newco on a
\nconsolidated basis with its Subsidiaries (other than any Subsidiary which is
\nrestricted from declaring or paying dividends or otherwise advancing funds to
\nits parent whether by contract or otherwise), cumulative net income earned
\nduring such period in accordance with GAAP.<\/p>\n
“Note” and “Notes” means one or more of the Convertible Senior Promissory
\nNotes substantially in the form attached hereto as Exhibit A each evidencing an
\nAdvance (including any such Convertible Senior Promissory Notes issued in
\nexchange or substitution).<\/p>\n
“Obligations” means all unpaid principal of and accrued and unpaid interest
\non the Notes, all accrued and unpaid fees and all expenses, reimbursements,
\nindemnities and other obligations of a Borrower to Sprint or any indemnified
\nparty hereunder arising under any of the Loan Documents.<\/p>\n
“Ordinary Course of Business” means an action taken by a Person will be
\ndeemed to have been taken in the “Ordinary Course of Business” only if:<\/p>\n
(a) such action is consistent with the past practices of such Person
\n and is taken in the ordinary course of the normal day-to-day operations of
\n such Person; and<\/p>\n
(b) such action is not required to be authorized by the board of
\n directors of such Person (or by any Person or group of Persons exercising
\n similar authority);<\/p>\n
“Party” and “Parties” shall mean individually a party to this Agreement and
\ncollectively all of the parties to this Agreement.<\/p>\n
“Payment Date” means the fifteenth day of each January, April, July and
\nOctober and any other date on which any payment of principal and\/or interest is
\ndue hereunder or under any Note.<\/p>\n
“PBGC” means the Pension Benefit Guaranty Corporation or any successor
\nthereto.<\/p>\n
“Person” means any natural person, corporation, limited liability company,
\nfirm, joint venture, partnership, association, enterprise, trust or other entity
\nor organization, or any government or political subdivision or any agency,
\ndepartment, division or instrumentality of any of the foregoing.<\/p>\n
“Plan” means an employee pension benefit plan, as defined in Section 3(2)
\nof ERISA, as to which Newco or any member of the Controlled Group has any
\nliability.<\/p>\n
“Prime Rate” means the interest rate from time to time on corporate loans
\nat large U.S. money center commercial banks (as published from time to time in
\nThe Wall Street Journal under the caption “Money Rates – Prime Rates”). In the
\nevent that such rate is no longer published in The Wall Street Journal as
\ncontemplated by this definition, then the reference rate of interest or formula,<\/p>\n
8<\/p>\n
identified in a written notice from Sprint to Newco, that is substantially
\nsimilar to the reference rate contemplated by this definition shall be used.<\/p>\n
“Property” of a Person means any and all property, whether real, personal,
\ntangible, intangible, or mixed, of such Person, or other assets owned, leased or
\noperated by such Person.<\/p>\n
“Purchase” means any transaction, or any series of related transactions,
\nconsummated on or after the date of this Agreement, by which Newco or any of its
\nSubsidiaries (a) acquires any going business or all or substantially all of the
\nassets of any other Person, whether through purchase of assets, merger or
\notherwise, or (b) directly or indirectly acquires (in one transaction or as the
\nmost recent transaction in a series of transactions) at least a majority (in
\nnumber of votes) of the securities of a corporation which have ordinary voting
\npower for the election of directors (other than securities having such power
\nonly by reason of the happening of a contingency) or a majority in interest (by
\npercentage or voting power) of the outstanding interests of any other Person.<\/p>\n
“Release” is defined in the Comprehensive Environmental Response,
\nCompensation and Liability Act, as amended, 42 U.S.C. (S) 9601 et seq.
\n — — <\/p>\n
“Reportable Event” means a reportable event as defined in Section 4043 of
\nERISA and the regulations issued under such section, with respect to a Plan,
\nexcluding, however, such events as to which the PBGC has by regulation waived
\nthe requirement of Section 4043(a) of ERISA that it be notified within 30 days
\nof the occurrence of such event; provided, that a failure to meet the minimum
\n ——–
\nfunding standard of Section 412 of the Code and of Section 302 of ERISA shall be
\na Reportable Event regardless of the issuance of any such waiver of the notice
\nrequirement in accordance with Section 4043(a) of ERISA.<\/p>\n
“Returns” means all tax returns that must be filed with any federal, state
\nor local taxing authority.<\/p>\n
“SEC” means the Securities and Exchange Commission of the United States
\nGovernment.<\/p>\n
“Single Employer Plan” means a Plan subject to Title IV of ERISA, other
\nthan a Multiemployer Plan.<\/p>\n
“Sprint” means Sprint Corporation, a Kansas corporation and its successors
\nand assigns.<\/p>\n
“Stockholders’ Equity” means stockholders’ equity of Newco determined in
\naccordance with GAAP.<\/p>\n
“Subsidiary” of any Person means any corporation or other entity of which a
\nmajority of the voting power of the voting equity securities or equity interest
\nis owned, directly or indirectly, by such Person.<\/p>\n
9<\/p>\n
“Substantial Portion” means, with respect to the Property of Newco and its
\nSubsidiaries, Property which (a) represents more than 15% of the consolidated
\nassets of Newco, as would be shown in the consolidated financial statements of
\nNewco as at the end of the Fiscal Quarter next preceding the date on which such
\ndetermination is made, or (b) is responsible for more than 15% of the
\nconsolidated net sales or of the Net Income of Newco for the 12-month period
\nending as of the end of the Fiscal Quarter next preceding the date of
\ndetermination.<\/p>\n
“Surviving Entity” and “Surviving Entity Securities” are defined in Section
\n ——-
\n3.01(c)(iv) hereof.
\n———- <\/p>\n
“Tax” or “Taxes” means all income, profits, franchise, gross receipts,
\ncapital, sales, use, withholding, value added, ad valorem, transfer, employment,
\nsocial security, disability, occupation, property, severance, production, excise
\nand other taxes, duties and similar governmental charges and assessments imposed
\nby or on behalf of any Governmental Entity (including interest and penalties
\nthereon).<\/p>\n
“Termination Event” means, with respect to a Plan which is subject to Title
\nIV of ERISA, (a) a Reportable Event, (b) the withdrawal of Newco or any other
\nmember of the Controlled Group from such Plan during a plan year in which Newco
\nor any other member of the Controlled Group was a “substantial employer” as
\ndefined in Section 4001(a)(2) of ERISA or was deemed such under Section 4066 of
\nERISA, (c) the termination of such Plan or the filing of a notice of intent to
\nterminate such Plan under Section 4041 of ERISA, or (d) the institution by the
\nPBGC of proceedings to terminate such Plan or the occurrence of any event or
\ncondition which constitutes grounds under Section 4042 of ERISA for the
\ntermination of, or appointment of a trustee to administer, such Plan.<\/p>\n
“Threatened” means any demand or statement that has been made in writing
\nthat would lead a prudent person to conclude that a claim, proceeding, dispute,
\nAction, or other matter is likely to be asserted, commenced, taken, or otherwise
\npursued in the future.<\/p>\n
“Total Liabilities” means all liabilities of Newco, on a consolidated
\nbasis, reflected on a balance sheet prepared in accordance with GAAP, including
\nall Indebtedness.<\/p>\n
“Trading Day” means a day on which the principal national securities
\nexchange, NASDAQ or other securities market on which Newco Common Stock is
\nlisted or admitted to trading is open for the transaction of business or, if
\nNewco Common Stock is not listed or admitted to trading on any national
\nsecurities exchange, any day other than a Saturday, Sunday, or a day on which
\nbanking institutions in the State of New York are authorized or obligated by law
\nor executive order to close.<\/p>\n
“Unfunded Liability” means the amount (if any) by which the present value
\nof all vested and unvested accrued benefits under a Single Employer Plan exceeds
\nthe fair market value of assets allocable to such benefits, all determined as of
\nthe then most recent valuation date for such Plan using PBGC actuarial
\nassumptions for single employer plan terminations.<\/p>\n
10<\/p>\n
Any capitalized terms appearing herein and not otherwise defined shall have
\nthe meaning ascribed to them in the Investment Agreement.<\/p>\n
ARTICLE II<\/p>\n
THE CREDITS<\/p>\n
SECTION 2.01. Advances. (a) From and after the Closing, but prior to the
\nFacility Termination Date, Sprint agrees, on the terms and subject to the
\nconditions set forth in this Agreement, to make Advances to the Borrowers from
\ntime to time in amounts not to exceed the Aggregate Available Commitment
\nexisting at such time. Although the Borrowers may obtain multiple Advances
\nhereunder, this is not a revolving line of credit and Advances may not be repaid
\nand re-advanced. Prepayment may only be made in accordance with Sections 3.07
\n ————-
\nand 3.08.
\n——– <\/p>\n
(b) The Borrowers, jointly and severally, agree that if at any time the
\noutstanding balance of the Loan exceeds the Aggregate Commitment, the Borrowers
\nshall repay immediately the then outstanding Loan balance in such amount as is
\nnecessary to eliminate such excess.<\/p>\n
(c) The Borrowers’ obligation to pay the principal of, and interest on,
\neach Advance shall be evidenced by a Note executed by the Borrowers in the
\nprincipal amount equal to such Advance and dated the date of such Advance. Each
\nBorrower’s joint and several obligations as co-maker of each Note shall exist
\nregardless of which Borrower actually receives the applicable Advance.<\/p>\n
Each Advance shall mature, and the principal amount thereof and any unpaid
\naccrued interest thereon shall be due and payable, on the 5\/th\/ anniversary of
\nthe Borrowing Date for such Advance (or as otherwise provided in the related
\nNote or in Section 3.08).
\n ———— <\/p>\n
SECTION 2.02. Facility Termination Date. The Facility Termination Date is
\nthe date after which Sprint is no longer obligated to make Advances hereunder
\nand shall occur upon the first to occur of the following:<\/p>\n
(a) The 5\/th\/ anniversary of the Closing;<\/p>\n
(b) Acceleration by Sprint in accordance with the provisions of Article
\n VIII;<\/p>\n
(c) Consummation of a Business Combination; or<\/p>\n
(d) Termination of the Marketing Agreement other than a termination by
\n Sprint under Section 24(b)(ii) thereof and other than a termination by
\n the Company under Section 24(c), 24(d)(i) and 24(d)(ii) thereof.<\/p>\n
11<\/p>\n
Such termination of the credit facility shall not affect in any way Sprint’s
\nrights, including the Conversion Rights and rights to accelerate the Loans,
\nunder this Agreement and the Notes.<\/p>\n
SECTION 2.03. Minimum Amount of Each Advance. Each Advance shall be in the
\nminimum amount of $5,000,000 (and in multiples of $1,000,000 if in excess
\nthereof); provided, however, that any Advance may be in the amount of the
\n ——– ——-
\nAggregate Available Commitment.<\/p>\n
SECTION 2.04. Commitment Increases. Sprint shall not be obligated to make
\nany Advance prior to the Closing. From and after the Closing the “Aggregate
\nCommitment” shall be $25,000,000 and shall be automatically increased by the
\nfollowing amounts on the following dates:<\/p>\n
\n\n Aggregate
\n Date Increase Commitment
\n —- ——– ———-
\n
\n 1\/st\/ Anniversary of Closing $25,000,000 $ 50,000,000
\n 2\/nd\/ Anniversary of Closing $25,000,000 $ 75,000,000
\n 3\/rd\/ Anniversary of Closing $25,000,000 $100,000,000
\n<\/c><\/c><\/s><\/caption>\n<\/table>\n SECTION 2.05. Borrowing Notices for New Advances. Newco shall give Sprint
\nirrevocable notice containing the following information (a “Borrowing Notice”)
\n —————-
\nnot later than 10:00 a.m. (Kansas City time) at least ten (10) Business Days and
\nnot more than twenty (20) Business Days before the proposed Borrowing Date of
\neach Advance:<\/p>\n
(a) the proposed Borrowing Date, which shall be a Business Day, of
\n such Advance;<\/p>\n
(b) the aggregate amount of such Advance;<\/p>\n
(c) a statement to the effect that all of the representations and
\n warranties of each Borrower contained herein are true and correct (i) as of
\n the date referred to in any representation or warranty that addresses a
\n matter as of a particular date and (ii) as to all other representations and
\n warranties as of the date of such Borrowing Notice, unless in either the
\n case of clause (i) or (ii), the inaccuracies under such representations and
\n warranties would not, individually or in the aggregate, have a Material
\n Adverse Effect; and<\/p>\n
(d) a description of any Default that exists as to which the proviso
\n of clause (g) in Article IV may apply.<\/p>\n
Subject to the terms hereof and subject to the satisfaction of the conditions
\nset forth in Article IV, Sprint shall, not later than noon (Kansas City time) on
\n ———-
\neach Borrowing Date, make available to Newco immediately available funds in the
\namount of the Advance requested to be made on such Borrowing Date.<\/p>\n
12<\/p>\n
SECTION 2.06. Rates Applicable After an Event of Default. During the
\ncontinuance of an Event of Default, Sprint may, at its option, by notice to the
\nBorrowers (which notice may be revoked at the option of Sprint), declare that
\nfor the duration of time during which such Event of Default shall be continuing,
\nthe outstanding balance of the Loan shall bear a floating rate of interest equal
\nto the Prime Rate, as in effect from time to time, plus five percent (5%) per
\nannum calculated for actual days elapsed on the basis of a 360-day year.<\/p>\n
SECTION 2.07. Method of Payment. All payments of the Obligations hereunder
\nshall be made, without setoff, deduction or counterclaim, in immediately
\navailable funds to Sprint pursuant to wire transfer instructions provided to the
\nBorrowers by a duly authorized executive officer of Sprint, or absent such
\ninstructions, at Sprint’s address specified pursuant to Section 11.01, on the
\n ————-
\ndate when due. If the Borrowers shall be required by law to deduct any such
\namounts from or in respect of any sum payable hereunder to Sprint, then the sum
\npayable hereunder shall be increased so that, after making all required
\ndeductions, Sprint receives an amount equal to the sum it would have received
\nhad no such deduction been made, and the Borrowers, jointly and severally, shall
\nindemnify Sprint for taxes, assessments and governmental charges imposed by any
\njurisdiction on account of amounts paid or payable pursuant to this sentence.
\nWithin 30 days after the date of any payment of any such amount withheld by
\neither Borrower in respect of any payment to Sprint, such Borrower shall furnish
\nto Sprint the original or certified copy of a receipt evidencing payment
\nthereof.<\/p>\n
SECTION 2.08. Notes. Upon receipt of a Borrowing Notice, Sprint shall
\ndeliver to the Borrowers a Note for execution by the Borrowers; provided,
\n ——–
\nhowever, that Sprint may refuse to deliver such Note if Sprint is not obligated
\n——-
\nto make an Advance hereunder.<\/p>\n
SECTION 2.09. Interest Rate; Interest Payment Dates; Interest and Fee
\nBasis. Interest on principal shall be payable at a rate equal to six percent
\n(6%) per annum, provided, however, such interest rate may be increased as
\nprovided in this Agreement under certain circumstances to a floating rate equal
\nto five percent (5%) above the Prime Rate. Interest accrued on each Advance
\nshall be payable on each Payment Date, commencing with the first Payment Date to
\noccur after the Borrowing Date, on any date on which principal is prepaid,
\nwhether due to acceleration or otherwise, and at maturity. Interest shall be
\ncalculated for actual days elapsed on the basis of a 360-day year. Interest
\nshall be payable for the day an Advance is made but not for the day of any
\npayment on the amount paid if payment is received prior to noon (Kansas City
\ntime) at the place of payment. If any payment of principal of or interest on an
\nAdvance shall become due on a day which is not a Business Day, such payment
\nshall be made on the next succeeding Business Day and, in the case of a
\nprincipal payment, such extension of time shall be included in computing
\ninterest in connection with such payment.<\/p>\n
SECTION 2.10. Waivers; Special Agreements of Borrowers. Each Borrower
\nwarrants to Sprint that it has adequate means to obtain from the other Borrower,
\non a continuing basis, information concerning the financial condition of such
\nother Borrower, and that it is not relying on Sprint to provide such
\ninformation, now or in the future. Each Borrower hereby waives any act or
\nomission of Sprint (except acts or omissions in bad faith) that materially
\nincreases the scope of such <\/p>\n
13<\/p>\n
Borrower’s risk, including negligent administration of the loan. As a condition
\nof payment or performance by either Borrower, Sprint is not required to seek to
\nenforce any remedies against the other Borrower or any other party liable to
\nSprint on account of the Obligations; nor is Sprint required to seek to enforce
\nor resort to any remedies with respect to any Lien granted to Sprint by the
\nother Borrower or any other party on account of the Obligations. This Agreement
\nand the Notes shall remain fully enforceable against a Borrower irrespective of
\nany defenses which the other Borrower may assert with respect to the
\nObligations, including failure of consideration, breach of warranty, fraud,
\npayment, statute of frauds, bankruptcy, lack of legal capacity, statute of
\nlimitations, lender liability, accord and satisfaction and usury.<\/p>\n
ARTICLE III<\/p>\n
CONVERSION AND PREPAYMENT<\/p>\n
SECTION 3.01. Conversion. Sprint or a permitted assignee (in either case,
\na “Holder”) of a Note shall have conversion rights as follows (the “Conversion
\nRights”):<\/p>\n
(a) Optional Conversion Rights and Automatic Conversion.<\/p>\n
(i) Each Note shall be convertible, in whole or in part, at
\n the option of the Holder thereof, at any time, and from time to time,
\n at the office of Newco into such number of validly issued, fully paid
\n and nonassessable shares of Newco Common Stock, free and clear of all
\n Liens of any kind or nature whatsoever, as is determined by dividing
\n the outstanding principal balance of such Note at the time of such
\n conversion, or the part thereof converted by the Holder, by the
\n Conversion Price per share at the time in effect for such Note;
\n provided, however, any such conversion shall be in the following
\n minimum amounts (“Minimum Conversion Amounts”): (1) If the aggregate
\n principal amount of the Notes outstanding at the time of such
\n conversion is less than $5,000,000 then the Minimum Conversion Amount
\n is such aggregate principal amount; or (2) If the aggregate principal
\n amount of the Notes is more than $5,000,000, then the Minimum
\n Conversion Amount is equal to $5,000,000 plus such multiples of
\n $1,000,000 as the Holder may elect. The Conversion Price per share for
\n each Note shall be an amount equal to 130% times the Average Market
\n Price of the Newco Common Stock, calculated with reference to the
\n related Borrowing Date, which amount shall be inserted in each Note at
\n the time of its original issuance in the appropriate space identifying
\n the Conversion Price of such Note, subject to adjustment as
\n hereinafter provided. It is understood that the Conversion Price for
\n each Note, if there is more than one Note, may be different. The
\n Conversion Price for each Note shall be subject to adjustment, from
\n time to time as set forth in Section 3.01(c).
\n ————— <\/p>\n
14<\/p>\n
(ii) Upon conversion of all or part of the then outstanding
\n principal balance of a Note, payment shall be made for all accrued but
\n unpaid interest on that portion of such Note converted through the
\n date of conversion.<\/p>\n
(b) Mechanics of Conversion. If the Holder of a Note desires to
\n exercise such right of conversion, such Holder shall give written notice to
\n Newco (the “Conversion Notice”) of that Holder’s election to convert a
\n stated amount of the principal balance (the “Conversion Amount”) into
\n shares of Newco Common Stock, and surrender to Newco, at its principal
\n office or at such other office or agency maintained by Newco for such
\n purpose, the originally executed Note evidencing such Conversion Amount.
\n The Conversion Notice shall also contain a statement of the name or names
\n (with addresses) in which the certificate or certificates for Newco Common
\n Stock shall be issued. Notwithstanding the foregoing, Newco shall not be
\n required to issue any certificates to any person other than the Holder of
\n the converted Note unless Newco has obtained reasonable assurance that such
\n transaction is exempt from the registration requirements of, or is covered
\n by an effective registration statement under, the Securities Act of 1933,
\n as amended (the “Act”), and all applicable state securities laws,
\n including, if necessary in the reasonable judgment of Newco or its legal
\n counsel, receipt of an opinion to such effect from counsel reasonably
\n satisfactory to Newco. In no event would such opinion be required if the
\n shares of Newco Common Stock could, upon conversion, be resold pursuant to
\n Rule 144 or Rule 144A under the Act. Promptly as practicable, and in any
\n event within five business days (subject to the last sentence of Section
\n 3.01(c)(v)), after the receipt of the Conversion Notice and the surrender
\n of the Note evidencing at least the Conversion Amount, Newco shall issue
\n and deliver, or cause to be delivered, to the Holder of such Note or his
\n nominee or nominees, (i) a certificate or certificates for the number of
\n shares of Newco Common Stock issuable upon the conversion of such
\n Conversion Amount and (ii) if the Conversion Amount is less than the total
\n outstanding principal balance of the converted Note which is surrendered, a
\n new Note, of like tenor, evidencing the remaining portion of the
\n outstanding principal balance which is not converted. Such conversion
\n shall be deemed to have been effected as of the close of business on the
\n date Newco received the Conversion Notice and the originally executed Note
\n representing at least the Conversion Amount, and the person or persons
\n entitled to receive the shares of Newco Common Stock issuable upon
\n conversion shall be treated for all purposes as the holder or holders of
\n record of such shares of Newco Common Stock as of the close of business on
\n such date.<\/p>\n
(c) Conversion Price Adjustments.<\/p>\n
(i) If Newco should at any time or from time to time after the
\n date of the Advance evidenced by a Note fix a record date for the
\n effectuation of a split or subdivision of the outstanding shares of
\n Newco Common Stock or the determination of holders of Newco Common
\n Stock entitled to receive a dividend or other distribution payable in
\n additional shares of Newco Common Stock, then, as of such record date
\n (or, if no record date is fixed, as of the close of business on the
\n date on <\/p>\n
15<\/p>\n
which the Board of Directors of Newco adopts the resolution relating
\n to such dividend, distribution, split or subdivision), the Conversion
\n Price for such Note shall be decreased to equal the product of the
\n Conversion Price in effect immediately prior to such date for such
\n Note multiplied by a fraction, the numerator of which shall be the
\n number of shares of Newco Common Stock outstanding immediately prior
\n thereto and the denominator of which shall be the number of shares of
\n Newco Common Stock outstanding immediately thereafter.<\/p>\n
(ii) If the number of shares of Newco Common Stock outstanding
\n at any time or from time to time after the date of the Advance
\n evidenced by a Note is decreased by a combination of the outstanding
\n shares of Newco Common Stock, then following such combination, the
\n Conversion Price shall be increased to equal the product of the
\n Conversion Price in effect immediately prior thereto for such Note
\n multiplied by a fraction, the numerator of which shall be the number
\n of shares of Newco Common Stock outstanding immediately prior thereto
\n and the denominator of which shall be the number of shares of Newco
\n Common Stock outstanding immediately thereafter. So long as any of the
\n Notes are outstanding, Newco shall not combine any shares of Newco
\n Common Stock unless it likewise combines all shares of Newco Common
\n Stock.<\/p>\n
(iii) If Newco shall at any time and from time to time after the
\n date of the Advance evidenced by a Note issue rights or warrants to
\n all holders of the Newco Common Stock entitling such holders to
\n subscribe for or purchase Newco Common Stock at a price per share less
\n than the Current Market Price per share of the Newco Common Stock on
\n the record date for the determination of stockholders entitled to
\n receive such rights or warrants, then, and in each such case, the
\n Conversion Price shall be adjusted so that the Holder of such Note
\n shall be entitled to receive, upon the conversion thereof, the number
\n of shares of Newco Common Stock determined by multiplying the number
\n of shares of Newco Common Stock into which such Note was convertible
\n on the day immediately prior to such record date by a fraction, (A)
\n the numerator of which is the sum of (1) the number of shares of Newco
\n Common Stock outstanding on such record date and (2) the number of
\n additional shares of Newco Common Stock which such rights or warrant
\n entitle holders of Common Stock to subscribe for or purchase (“Offered
\n Shares”), and (B) the denominator of which is the sum of (1) the
\n number of shares of Newco Common Stock outstanding on the record date
\n and (2) a fraction, (x) the numerator of which is the product of the
\n number of Offered Shares multiplied by the subscription or purchase
\n price of the Offered Shares and (y) the denominator of which is the
\n Current Market Price per share of Newco Common Stock on such record
\n date. Such adjustment shall become effective immediately after such
\n record date.<\/p>\n
(iv) If Newco shall be a party to any transaction, including
\n any capital reorganization or reclassification of the Newco Common
\n Stock (other than a <\/p>\n
16<\/p>\n
transaction described in clauses (i), (ii) and (v) of this Section
\n ——-
\n 3.01(c)), or consolidation or merger of Newco, or the sale or
\n ——–
\n conveyance of all or substantially all of its assets in which the
\n previously outstanding shares of Newco Common Stock shall be changed
\n into or, pursuant to the operation of law or the terms of the
\n transaction to which Newco is a party, exchanged, or would have been
\n changed or exchanged as required by the Certificate of Incorporation
\n if such Newco Common Stock were outstanding, for different securities
\n of Newco or common stock or other securities of another company or
\n interests in a non-corporate entity (such other company or non-
\n corporate entity is referred to herein as the “Surviving Entity”) or
\n other property (including cash) or any combination of the foregoing,
\n then, as a condition to the consummation of such transaction, lawful
\n and adequate provision shall be made whereby each Holder of a Note
\n shall thereafter have the right to receive, in lieu of the shares of
\n Newco Common Stock immediately theretofore receivable with respect to
\n the conversion of such Holder’s Note, such shares of stock or
\n securities (such stock and securities are referred to herein as the
\n “Surviving Entity Securities”) or assets as are issued or are payable
\n with respect to or in exchange for the shares of Newco Common Stock
\n which such Holder would have held had his Note been converted in full
\n immediately prior to such transaction. In any such case, appropriate
\n provisions shall be made with respect to the rights and interests of
\n each Holder of a Note to the end that such conversion rights
\n (including, without limitation, provisions for adjustment of the
\n Conversion Price) shall thereafter be applicable, as nearly as may be
\n practicable in relation to any shares of Surviving Entity Securities
\n or assets thereafter deliverable upon the exercise thereof.<\/p>\n
(v) If Newco shall at any time or from time to time after the
\n date of an Advance declare, order, pay or make a dividend or other
\n distribution (including, without limitation, any distribution of stock
\n or other securities or property or rights or warrants to subscribe for
\n securities of Newco or any of its Subsidiaries by way of dividend) on
\n Newco Common Stock, other than (x) regular quarterly dividends payable
\n in cash or extraordinary cash dividends in an aggregate amount not to
\n exceed in any Fiscal Quarter an amount equal to 6.25% of the Net
\n Income for the twelve-month period ending on the day immediately
\n preceding the first day of such Fiscal Quarter, (y) shares of Newco
\n Common Stock which are referred to in clause (i) of this Section
\n ——-
\n 3.01(c), or (z) rights or warrants which are referred to in clause
\n ——
\n (iii) of this Section 3.01(c), then, as a condition to the
\n ————–
\n consummation of such dividend or distribution, the Conversion Price of
\n each Note shall be adjusted so that the Holder of each Note shall be
\n entitled to receive, upon the conversion of the Note, the number of
\n shares of Common Stock determined by multiplying (1) the number of
\n shares of Newco Common Stock into which such share was convertible on
\n the day immediately prior to the record date fixed for the
\n determination of stockholders entitled to receive such dividend or
\n distribution by (2) a fraction, the numerator of which shall be the
\n Current Market Price per share of Newco Common Stock as of the third
\n Trading Day prior to such record date, and the denominator of which
\n shall be such Current Market <\/p>\n
17<\/p>\n
Price per share of Newco Common Stock less the Fair Market Value per
\n share of Newco Common Stock (as determined in good faith by the Board
\n of Directors of Newco, a certified resolution with respect to which
\n shall be mailed to each Holder of a Note) of such dividend or
\n distribution; provided, however, that in the event of a distribution
\n ——– ——-
\n of shares of capital stock of a Subsidiary of Newco (a “Spin-Off”)
\n made to holders of shares of Newco Common Stock, the numerator of such
\n fraction shall be the sum of the Current Market Price per share of
\n Newco Common Stock and the Current Market Price of the number of
\n shares (or the fraction of a share) of capital stock of the Subsidiary
\n which is distributed in such Spin-Off in respect of one share of Newco
\n Common Stock and the denominator of which shall be the Current Market
\n Price per share of Newco Common Stock. An adjustment made pursuant to
\n this clause (v) shall be made upon the opening of business on the next
\n Business Day following the date on which any such dividend or
\n distribution is paid and shall be effective retroactively to such time
\n immediately after the close of business on the record date fixed for
\n the determination of stockholders entitled to receive such dividend or
\n distribution; provided, however, if the proviso in the foregoing
\n ——– ——-
\n sentence applies, then such adjustment shall be made and be effective
\n as of the 30th Trading Day after the effective date of such Spin-Off,
\n and in the event all or part of this Note is converted after the
\n record date for such Spin-Off but prior to the 30th Trading Day after
\n the effective date of the Spin-Off, Newco will deliver to the holder
\n of this Note in accordance with Section 3.01(b) that number of shares
\n —————
\n which would be issued prior to the appropriate adjustment, and issue
\n the additional number of shares which would be issuable as a result of
\n the applicable adjustment pursuant to this clause (v) within 35
\n Trading Days after the effective date of such Spin-Off.<\/p>\n
SECTION 3.02. No Impairment. Newco will not, by amendment of its
\nCertificate of Incorporation, Bylaws or other organizational documents or
\nthrough any reorganization, reclassification, recapitalization, transfer of
\nassets, consolidation, merger, dissolution, issue or sale of securities or any
\nother voluntary action, avoid or seek to avoid the observance or performance of
\nany of the terms to be observed or performed hereunder by Newco but will at all
\ntimes in good faith assist in the carrying out of all the provisions of Section
\n ——-
\n3.01 and in the taking of all such action as may be necessary or appropriate in
\n—-
\norder to protect the Conversion Rights of each Holder of the Notes against
\nimpairment. Without limiting the foregoing, Newco will not effect any
\ntransaction described in this Section 3.02, the result of which is to adversely
\n ————
\naffect any of the rights of holders of Newco Common Stock relative to the rights
\nof holders of any other securities of Newco other than the Notes.<\/p>\n
SECTION 3.03. Stock Transfer Taxes. The issuance of stock certificates
\nupon the conversion of a Note shall be made without charge to the Holder thereof
\nfor any tax in respect of such issuance. Newco shall not, however, be required
\nto pay any tax which may be payable in respect of any transfer involved in the
\nissuance and delivery of shares in any name other than that of the Holder of the
\napplicable Note, and Newco shall not be required to issue or deliver any such
\nstock <\/p>\n
18<\/p>\n
certificate unless and until the person or persons requesting the issuance
\nthereof shall have paid to Newco the amount of such tax, if any.<\/p>\n
SECTION 3.04. No Fractional Shares: Certificate as to Adjustments. (a) No
\nfractional shares shall be issued upon conversion of a Note, and the number of
\nshares of Common Stock to be issued shall be rounded to the nearest whole share.<\/p>\n
(b) Upon the occurrence of each adjustment or readjustment of the
\nConversion Price of a Note pursuant to Section 3.01(c), Newco, at its expense,
\n —————
\nshall promptly compute such adjustment or readjustment in accordance with the
\nterms hereof and prepare and furnish to the Holder of each Note a certificate
\nsetting forth such adjustment or readjustment for such Holder’s Note and showing
\nin detail the facts upon which such adjustment or readjustment is based. Newco
\nshall, upon the written request at any time by a Holder of a Note, furnish or
\ncause to be furnished to such Holder a like certificate setting forth (A) such
\nadjustment and readjustment, (B) the Conversion Price at the time in effect for
\nsuch Note, and (C) the number of shares of Newco Common Stock and the amount, if
\nany, of other property which at the time would be received upon the total
\nconversion of such Note.<\/p>\n
SECTION 3.05. Notices of Record Date. In the event of any taking by Newco
\nof a record of the holders of any class of securities for the purpose of
\ndetermining the holders thereof who are entitled to receive any dividend (other
\nthan a cash dividend) or other distribution, any right to subscribe for,
\npurchase or otherwise acquire any shares of stock or any class of any other
\nsecurities or property, or to receive any other right, Newco shall mail to each
\nHolder of the Notes, at least ten (10) Business Days prior to the date specified
\ntherein, a notice specifying the date on which any such record is to be taken
\nfor the purpose of such dividend, distribution or right, and the amount and
\ncharacter of such dividend, distribution or right. Newco shall not issue rights
\nor warrants described in Section 3.01(c)(iii), consummate any reorganization,
\n ——————–
\nreclassification, consolidation, merger or sale described in Section
\n ——-
\n3.01(c)(iv), or dividend or distribution described in Section 3.01(c)(v), unless
\n———– ——————
\nit provides each Holder of the Notes at least ten (10) Business Days advance
\nnotice thereof.<\/p>\n
SECTION 3.06. Reservation of Securities Issuable upon Conversion. Newco
\nshall at all times reserve and keep available out of its authorized but unissued
\nshares of Common Stock, solely for the purpose of effecting the conversion of
\nthe Notes, free from any preemptive right or other obligation, such number of
\nits shares of Newco Common Stock as shall from time to time be sufficient to
\neffect the conversion of all of the outstanding principal balance of the Notes
\nissued under this Agreement; and if at any time the number of authorized but
\nunissued shares of Newco Common Stock shall not be sufficient to effect the
\nconversion of all of the outstanding principal balance of the Notes issued under
\nthis Agreement, in addition to such other remedies as shall be available to the
\nHolders of the Notes, Newco will take such corporate action as may be necessary
\nto increase its authorized but unissued shares of Newco Common Stock to such
\nnumber of shares as shall be sufficient for such purposes. Newco shall prepare
\nand shall use its best efforts to obtain and keep in force such governmental or
\nregulatory permits or other authorizations as may be required by law, and shall
\ncomply with all requirements as to registration, qualification or listing of the
\nNewco Common Stock in order to enable Newco to lawfully issue and deliver to the
\nHolders of the Notes such number <\/p>\n
19<\/p>\n
of shares of its Newco Common Stock as shall from time to time be sufficient to
\neffect the conversion of all of the outstanding principal balance of the Notes
\nissued under this Agreement.<\/p>\n
SECTION 3.07. Prepayment. From and after the date which is 42 months after
\nthe Borrowing Date applicable to a Note, the Borrowers shall have the right to
\nprepay such Note, upon not less than thirty (30) nor more than sixty (60) days’
\nprior notice setting forth the amount (each prepayment shall be made in the
\nminimum amount of $5,000,000 and in $1,000,000 increments over the minimum
\namount) that it wishes to prepay of such Note and the date of such prepayment
\n(“Prepayment Notice”). In the event that the Borrowers prepay a Note in part,
\nthe Borrowers shall execute and deliver to Holder a new Note in a principal
\namount equal to the principal remaining outstanding. Delivery of a Prepayment
\nNotice shall not affect Holder’s right to convert any such Note, in whole or in
\npart, prior to the date set for prepayment.<\/p>\n
SECTION 3.08. Mandatory Prepayments. (a) Newco or the Company shall, as
\nthe case may be, notify Sprint that it intends to enter into a Business
\nCombination or that a Business Combination may occur at least thirty (30) days
\nprior to consummation of such proposed Business Combination, setting forth in
\nsuch notice all the material facts relating to the Business Combination. Prior
\nto the consummation of such Business Combination, the Holders shall continue to
\nhave the right to convert the Notes as herein provided. From and after the
\nconsummation of such Business Combination and for a thirty (30) day period
\nthereafter, the Holders shall have the right to require the Borrowers to prepay
\nall principal and accrued interest on the Notes (calculating accrued interest to
\nthe date of such prepayment), plus an amount equal to 1% of the principal amount
\nof such Notes. Such mandatory prepayment shall be made on or before the tenth
\nday after notice is given by Sprint to the Borrowers demanding such prepayment.<\/p>\n
(b) In the event the Facility Termination Date occurs pursuant to Section
\n2.02(d), then each of the Notes outstanding hereunder shall be required to be
\nprepaid, without the necessity of any notice or demand by Sprint or any Holder,
\non or before the first Business Day following the end of one year after such
\nFacility Termination Date.<\/p>\n
(c) The foregoing provisions of this Section 3.08 shall not affect in any
\n ————
\nway the obligation of the Borrowers to pay any Note on its maturity date if such
\nmaturity date is earlier than the required prepayment date.<\/p>\n
SECTION 3.09. Stockholder Rights Plan. Notwithstanding any other provision
\nof this Agreement to the contrary, if Newco shall adopt a stockholders rights
\nplan (sometimes known as a “poison pill” plan), and shall declare, order, pay or
\nmake a dividend or other distribution of rights thereunder with respect to the
\nNewco Common Stock (whether or not separate from the Newco Common Stock), each
\nHolder of a Note shall be entitled to receive from Newco, upon conversion of
\nsuch Note into Newco Common Stock pursuant to Article III, all of the rights
\ndistributed under such plan (but without any limitation or restriction on the
\nexercise of such rights) fully and to the same extent as if immediately prior to
\nthe earlier of such distribution or any record date therefor such Holder had
\nconverted all of such Holder’s outstanding principal balance on the Notes into
\nshares of <\/p>\n
20<\/p>\n
Newco Common Stock. The preceding sentence shall provide the exclusive
\nprotection under this Agreement to the Holders of the Notes (including
\nadjustments that would otherwise be required by Section 3.01(c)) with respect to
\nthe subject matter of the immediately preceding sentence.<\/p>\n
SECTION 3.10. Tolling of Automatic Conversion and Other Time periods for
\nHSR Compliance. Notwithstanding any other provision of this Agreement to the
\ncontrary, until such time as the filing and waiting period requirements of the
\nHSR Act relating to the conversion of any of the Notes into Common Stock
\npursuant to Article III shall have been complied with, if any, and there shall
\nbe no action taken or instituted by the United States Department of Justice or
\nthe United States Federal Trade Commission to delay, enjoin or impose conditions
\non such conversion, and such waiting period applicable under the HSR Act shall
\nhave expired or received early termination: (i) the date for any prepayments
\npursuant to Section 3.07 or 3.08 shall be automatically extended for a period of
\n ——————–
\nfive (5) Business Days beyond the date of expiration or early termination of the
\nwaiting period of the HSR Act (as so extended, the “Extended Redemption Date”)
\nand each Holder of Notes shall be entitled to convert any or all of the
\noutstanding principal balance of such Notes into Common Stock prior to the
\nExtended Redemption Date; and (ii) each other date or event that would otherwise
\nimpair any right to convert the Notes into Common Stock or otherwise impair the
\nrights of the Notes shall be tolled until the Extended Redemption Date. Any
\nHolder of Notes who is required to comply with the filing and waiting period
\nrequirements of the HSR Act with respect to the conversion of any Notes shall
\nuse commercially reasonable efforts to cause such filing to be made as soon as
\npracticable after such Holder has provided notice of its intention to convert
\nsuch Notes and to diligently and in good faith pursue expiration or termination
\nof the waiting period of the HSR Act, provided no conditions are imposed on
\nSprint.<\/p>\n
ARTICLE IV<\/p>\n
ADVANCE CONDITIONS<\/p>\n
Sprint shall not be required to make a requested Advance, if on the
\nproposed Borrowing Date for such Advance:<\/p>\n
(a) There is then outstanding any “Recommended Third Party Offer,” as
\n such term is defined in the Governance Agreement;<\/p>\n
(b) All representations and warranties of the Borrowers contained
\n herein are not true and correct (i) as of the date referred to in any
\n representation or warranty that addresses a matter as of a particular date
\n and (ii) as to all other representations and warranties as of the date of
\n such proposed Advance, unless, in either the case of clause (i) or (ii),
\n the inaccuracy of such representations and warranties would not,
\n individually or in the aggregate, have a Material Adverse Effect;<\/p>\n
21<\/p>\n
(c) The Average Market Price of the Newco Common Stock is less than
\n $13.00 (adjusted after the date hereof for any stock split, stock dividend
\n or other subdivision or combination of the Newco Common Stock);<\/p>\n
(d) A Borrowing Notice shall not have been properly submitted with
\n respect to such Advance;<\/p>\n
(e) A duly executed Note representing the Advance has not been
\n received by Sprint;<\/p>\n
(f) The Facility Termination Date shall have occurred; or<\/p>\n
(g) A Default or Event of Default has occurred and is continuing or
\n will exist as a result of the requested Advance; provided, however, this
\n clause (g) shall not apply to any Default, the facts of which have been
\n specifically disclosed to Sprint in the Borrowing Notice for such Advance
\n and as to which Sprint has, within five (5) Business Days after Sprint’s
\n receipt of the Borrowing Notice, neither advised the Borrowers of its
\n intent to declare an Event of Default nor, advised the Borrowers that it
\n intends to exercise its rights in this clause (g) and not make the
\n requested Advance (as is Sprint’s right, exercising such right in its sole
\n discretion).<\/p>\n
Each Borrowing Notice with respect to each such Advance shall constitute a
\nrepresentation and warranty by the Borrowers that the conditions contained in
\nthis Article IV have been satisfied. Sprint may require a duly completed
\ncompliance certificate (dated the Borrowing Date) in substantially the form of
\nExhibit B hereto as a condition to making an Advance.
\n——— <\/p>\n
ARTICLE V<\/p>\n
REPRESENTATIONS AND WARRANTIES<\/p>\n
SECTION 5.01. Organization, Standing and Power. Each of the Borrowers is
\na corporation duly organized, validly existing and in good standing under the
\nlaws of the jurisdiction in which it is incorporated and has all requisite power
\nand authority to own, lease and operate its properties and to carry on its
\nbusiness as now being conducted. Each of the Borrowers is duly qualified or
\nlicensed to do business and is in good standing in each jurisdiction in which
\nthe nature of its business or the ownership or leasing of its properties makes
\nsuch qualification or licensing necessary, other than in such jurisdictions
\nwhere the failure to be so qualified or licensed (individually or in the
\naggregate) would not have a Material Adverse Effect.<\/p>\n
SECTION 5.02. Subsidiaries and Joint Ventures. No Borrower has any
\nSubsidiary that is not also a Borrower hereunder or has the right to acquire an
\nequity interest in any corporation, <\/p>\n
22<\/p>\n
partnership, limited liability company, joint venture, business trust or any
\nother entity, except to the extent any such interest may be acquired under
\nSection 6.10 hereof.
\n———— <\/p>\n
SECTION 5.03. Authority; Noncontravention. Each Borrower has the requisite
\ncorporate power and authority to enter into this Agreement and perform its
\nobligations hereunder and under the Loan Documents and the same have been duly
\nauthorized by all necessary corporate action on the part of such Borrower, and
\nassuming this Agreement constitutes the valid and binding agreement of Sprint,
\nconstitute valid and binding obligations of such Borrower enforceable against
\nsuch Borrower, in accordance with its terms, except to the extent that the
\nenforcement thereof may be limited by (i) bankruptcy, insolvency,
\nreorganization, moratorium or other similar laws now or hereafter in effect
\nrelating to creditors’ rights generally, and (ii) general principles of equity
\nregardless of whether enforceability is considered in a proceeding in equity or
\nat law. The execution and delivery of this Agreement by each Borrower did not,
\nand the consummation of the transactions contemplated by this Agreement will
\nnot, conflict with, or result in any violation of, or default (with or without
\nnotice or lapse of time, or both) under, or give rise to a right of termination,
\ncancellation or acceleration of any obligation or to loss by such Borrower of a
\nmaterial benefit under, or result in the creation of any Lien upon any of the
\nproperties or assets of such Borrower under, (i) the certificate of
\nincorporation or bylaws of such Borrower, (ii) any loan or credit agreement,
\nnote, bond, mortgage, indenture, lease or other agreement, instrument, permit or
\nlicense applicable to such Borrower or its properties or assets or (iii) subject
\nto the governmental filings and other matters referred to in the following
\nsentence, any law applicable to such Borrower or its respective properties or
\nassets, other than, in the case of clauses (ii), (iii) and (iv), any such
\nconflicts, violations, defaults, rights or Liens that individually or in the
\naggregate would not (x) have a Material Adverse Effect, (y) materially impair
\nthe ability of such Borrower to perform its obligations under this Agreement or
\n(z) prevent the consummation of any of the transactions contemplated by this
\nAgreement.<\/p>\n
SECTION 5.04. Taxes. Except as set forth on Schedule 5.04, each Borrower
\nhas timely filed all Returns and reports required to be filed by it, except
\nwhere failure to timely file would not have a Material Adverse Effect. All such
\nReturns and reports are complete and accurate except where the failure to be
\ncomplete or accurate would not have a Material Adverse Effect. Each Borrower has
\npaid or has set up an adequate reserve for the payment of all Taxes shown as due
\non such Returns except where the failure to do so would not have a Material
\nAdverse Effect. Except as set forth on Schedule 5.04, no deficiencies for any
\nTaxes have been asserted, proposed or assessed against any Borrower that have
\nnot been paid or otherwise settled or reserved against, except for deficiencies
\nthe assertion, proposing or assessment of which would not have a Material
\nAdverse Effect, and no requests for waivers of the time to assess any such taxes
\nare pending. There are no material Liens for Taxes (other than for current taxes
\nnot yet due and payable) on the assets of any Borrower.<\/p>\n
SECTION 5.05. Compliance with Laws. Each Borrower has in effect all
\npermits from approvals, authorizations, certificates, filings, franchises,
\nlicenses, notices, permits, variances, exemptions, orders and rights (“Permits”)
\nnecessary for it to own, lease or operate its properties and assets and to carry
\non its business as now conducted, and there has not occurred any default under
\nany Permit, except for the absence of Permits and for defaults under Permits
\nthat, individually or in <\/p>\n
23<\/p>\n
the aggregate, have not had a Material Adverse Effect. Except as disclosed in
\nthe Borrower Filed SEC Documents, such Borrower is in compliance with all
\napplicable Law, except where failures to so comply, individually or in the
\naggregate, would not have a Material Adverse Effect.<\/p>\n
SECTION 5.06. Environmental Matters. Each Borrower is and at all times has
\nbeen in full compliance with, and has not been and is not in violation of or
\nliable under, any Environmental Law (which compliance includes the possession by
\nsuch Borrower of all Permits required under applicable Environmental Law and
\ncompliance with the terms and conditions thereof), except for such failure to be
\nin compliance which, individually or in the aggregate, would not have a Material
\nAdverse Effect. There are no pending or, to the Knowledge of any Borrower,
\nThreatened claims, orders, notices, administrative or judicial actions, or
\nEncumbrances, relating to environmental, health, and safety liabilities arising
\nunder or pursuant to any federal, state or local Environmental Laws, with
\nrespect to or affecting any of the properties and assets (whether real,
\npersonal, or mixed) in which such Borrower has an interest, except for any such
\nclaim, order, notice, administrative or judicial action, Encumbrance or other
\nrestriction that would not, individually or in the aggregate, have a Material
\nAdverse Effect.<\/p>\n
SECTION 5.07. Intellectual Property. Each Borrower owns sufficient right,
\ntitle and interest in and to, or has valid licenses of sufficient scope and
\nduration for, all patents, patent rights, copyrights, trademarks, service marks,
\ntrade names, software, trade secrets, confidential information and other
\nintellectual property material to the operation of the business of such Borrower
\nas currently conducted or proposed to be conducted (the “Intellectual Property
\nAssets”) and as proposed to be conducted. The Intellectual Property Assets are
\nfree and clear of all Liens which would materially impair such Borrower’s
\nability to use the Intellectual Property Assets in the business of such Borrower
\nas currently conducted or proposed to be conducted. No Borrower has granted any
\nthird party any rights in and to the Intellectual Property Assets except for
\ndistribution rights, OEM rights, end user licenses and rights to reproduce
\ncertain of the Intellectual Property Assets in the Ordinary Course of Business
\nin connection with the marketing and distribution of such Borrower’s product and
\nservice offerings, and which individually and in the aggregate would not have a
\nMaterial Adverse Effect. Except as set forth on Schedule 5.8, no Intellectual
\nProperty Assets of any Borrower infringes, or conflicts with, or to the
\nKnowledge of any Borrower, is alleged to infringe upon or conflict with the
\nintellectual property rights of any third party. No Borrower has Knowledge that
\nany of its employees performing or managing key functions of such Borrower is
\nobligated under any contract (including licenses, covenants or commitments of
\nany nature) or other agreement, or subject to any judgment, decree or order of
\nany court or administrative agency, that would interfere with the use of such
\nemployee’s best efforts to promote the interests of such Borrower or that would
\nconflict with such Borrower’s business as proposed to be conducted. To the
\nKnowledge of any Borrower, neither the execution nor delivery of this Agreement,
\nnor the carrying on of any Borrower’s business by the employees of such
\nBorrower, nor the conduct of the business of any Borrower as proposed, will
\nconflict with or result in a breach of the terms, conditions or provisions of,
\nor constitute a default under, any contract, covenant or instrument under which
\nany of such employees is now obligated, which conflict or breach would have a
\nMaterial Adverse Effect. No Borrower utilizes or intends to <\/p>\n
24<\/p>\n
utilize any inventions of any of its employees (or people it currently intends
\nto hire) made prior to their employment by such Borrower.<\/p>\n
SECTION 5.08. Certain Payments. No Borrower, or any of the directors,
\nofficers, agents, or employees of any Borrower, or to the Knowledge of any
\nBorrower, any other Person associated with or acting for or on behalf of any
\nBorrower, has directly or indirectly (a) made any contribution, gift, bribe,
\nrebate, payoff, influence payment, kickback, or other payment to any Person,
\nprivate or public, regardless of form, whether in money, property, or services
\n(i) to obtain favorable treatment in securing business, (ii) to pay for
\nfavorable treatment for business secured, (iii) to obtain special concessions or
\nfor special concessions already obtained, for or in respect of a Borrower or any
\nAffiliate of a Borrower, (b) established or maintained any fund or asset that
\nhas not been appropriately recorded in the books and records of the Borrower,
\nwhich in the case of either clause (a) or (b) would be in violation of Law or
\nwould have a Material Adverse Effect.<\/p>\n
ARTICLE VI<\/p>\n
COVENANTS<\/p>\n
So long as any Note remains unpaid, unless Sprint shall otherwise consent
\nin writing:<\/p>\n
SECTION 6.01. Financial Reporting. Newco will maintain, for itself and
\neach Subsidiary, a system of accounting established and administered in
\naccordance with GAAP, and furnish to Sprint:<\/p>\n
(a) Within five (5) days after its filing with the SEC, and in any
\n event within 120 days after the close of each Fiscal Year, an unqualified
\n audit report certified by independent certified public accountants (which
\n shall be a “Big Six” accounting firm, or another nationally recognized
\n accounting firm), prepared in accordance with GAAP on a consolidated and
\n consolidating basis (consolidating statements need not be certified by such
\n accountants), including balance sheets as of the end of such period and
\n related statements of income and cash flows, accompanied by (i) any
\n management letter prepared by said accountants, (ii) a certificate of said
\n accountants that, in the course of the examination necessary for their
\n certification of the foregoing, they have obtained no knowledge of any
\n Default or Event of Default, or if, in the opinion of such accountants, any
\n Default or Event of Default shall exist, stating the nature and status
\n thereof, and (iii) a letter from said accountants addressed to Sprint
\n acknowledging that Sprint is extending credit in primary reliance on such
\n financial statements and authorizing such reliance. Newco hereby
\n authorizes Sprint to communicate directly with such accountants following
\n the occurrence of a Default or Event of Default.<\/p>\n
(b) Within five (5) days after its filing with the SEC, and in any
\n event within 65 days after the close of the first three Fiscal Quarters of
\n each Fiscal Year, consolidated and consolidating unaudited balance sheets
\n as at the close of each such period and consolidated and consolidating
\n statements of income and cash flows for the period from the beginning of<\/p>\n
25<\/p>\n
such Fiscal Year to the end of such Fiscal Quarter, all certified by its
\n chief financial officer to have been prepared in accordance with GAAP
\n (other than the absence of notes to financial statements and subject to
\n normal recurring year-end audit adjustments).<\/p>\n
(c) As soon as available, but in any event not later than 15 days
\n before the end of each Fiscal Year, beginning with Fiscal Year 1998, a copy
\n of the plan and forecast (including a projected consolidated and
\n consolidating balance sheet, income statement and cash flow statement) of
\n Newco and its Subsidiaries for the next Fiscal Year.<\/p>\n
(d) Together with the financial statements required by clauses (a)
\n ———–
\n and (b) above, a compliance certificate in substantially the form of
\n —
\n Exhibit B hereto signed by its chief financial officer showing the
\n ———
\n calculations necessary to determine compliance with this Agreement and
\n stating that no Default or Event of Default exists and no Business
\n Combination has occurred, or if any Default or Event of Default exists,
\n stating the nature and status thereof.<\/p>\n
(e) Within 270 days after the close of each Fiscal Year, a statement
\n of the Unfunded Liabilities of each Single Employer Plan, certified by an
\n actuary enrolled under ERISA.<\/p>\n
(f) As soon as possible and in any event within ten (10) days after
\n Newco knows that any event has occurred which is a Termination Event with
\n respect to any Plan which is subject to Title IV of ERISA, a statement,
\n signed by the chief financial officer of Newco, describing said Termination
\n Event and any action which Newco proposes to take with respect thereto.<\/p>\n
(g) As soon as possible and in any event within ten (10) days after
\n receipt by Newco, a copy of (i) any notice, claim, complaint or order to
\n the effect that Newco or any of its Subsidiaries is or may be liable to any
\n Person as a result of the release by Newco, any of its Subsidiaries, or any
\n other Person of any Hazardous Materials into the environment or requiring
\n that action be taken by Newco to respond to or clean up a Release of
\n Hazardous Materials into the environment, and (ii) any notice, complaint or
\n citation alleging any violation of any environmental law or environmental
\n permit by Newco or any of its Subsidiaries. Within ten (10) days after
\n Newco or any Subsidiary having Knowledge of the proposal, enactment or
\n promulgation of any environmental law which would have a Material Adverse
\n Effect, Newco shall provide Sprint with written notice thereof.<\/p>\n
(h) Promptly upon the furnishing thereof to the stockholders of
\n Newco, copies of all financial statements, reports and proxy statements so
\n furnished.<\/p>\n
(i) Promptly, and in any event within five (5) days after the filing
\n thereof, copies of any reports which Newco or any of its Subsidiaries files
\n with the SEC.<\/p>\n
26<\/p>\n
(j) Promptly, and in any event within ten (10) days after learning
\n thereof, notification of (i) any tax assessment, demand, notice of proposed
\n deficiency or notice of deficiency received by Newco or any other
\n Consolidated Person or (ii) the filing of any tax Lien or commencement of
\n any judicial proceeding by or against any such Consolidated Person, if any
\n such assessment, demand, notice, Lien or judicial proceeding relates to tax
\n liabilities in excess of $1,000,000.<\/p>\n
(k) Such other information (including non-financial information) as
\n Sprint may from time to time reasonably request.<\/p>\n
Each Borrower shall file, on a timely basis, all reports, schedules, forms,
\nstatements and other documents that are required to be filed with the SEC
\n(“Borrower Filed SEC Documents”). As of their respective dates, the Borrower
\nFiled SEC Documents will comply in all material respects with the requirements
\nof the Securities Act of 1933 or the Securities and Exchange Act of 1934, as the
\ncase may be, applicable to such Borrower Filed SEC Documents, and none of the
\nBorrower Filed SEC Documents will contain any untrue statement of a material
\nfact or omit to state a material fact required to be stated therein or necessary
\nin order to make the statements therein, in light of the circumstances under
\nwhich they were made, not misleading.<\/p>\n
SECTION 6.02. Subsidiaries as Borrowers; Use of Proceeds. (a) Prior to or
\nsimultaneously with any Person (other than a Foreign Entity), becoming a
\nSubsidiary of a Borrower the Borrower agrees to cause such Person to enter into
\nan agreement with Sprint pursuant to which such Person shall be added as a party
\nhereto and a “Borrower” hereunder, such agreement to be substantially in the
\nform of Exhibit B hereto.<\/p>\n
(b) The Borrowers will use the proceeds of the Advances to meet the
\nworking capital needs of the Borrowers. No Borrower will use any of the proceeds
\nof the Advances to purchase or carry any Margin Stock.<\/p>\n
SECTION 6.03. Notice of Default. The Borrowers will give prompt notice in
\nwriting to Sprint of the occurrence of any Default or Event of Default and of
\nany other development relating to any Borrower, financial or other, which would
\nhave a Material Adverse Effect.<\/p>\n
SECTION 6.04. Conduct of Business; Merger, Sale of Assets, Etc. (a) Each
\nBorrower will carry on and conduct its business in generally the same manner and
\nin generally the same fields of enterprise as it is presently conducted and to
\ndo all things necessary to remain duly incorporated, validly existing and in
\ngood standing as a domestic corporation in its jurisdiction of incorporation
\nand, except where the failure to do so would not have a Material Adverse Effect,
\nmaintain all requisite authority to conduct its business in each jurisdiction in
\nwhich its business is conducted.<\/p>\n
(b) No Borrower shall sell, transfer, lease or otherwise dispose of any of
\nits Property which, when taken together with all other Property of the Borrowers
\ndisposed of during the twelve <\/p>\n
27<\/p>\n
month period ending with the month in which such disposition occurs, constitutes
\na Substantial Portion.<\/p>\n
SECTION 6.05. Taxes. Each Borrower will timely file complete and correct
\nUnited States federal and applicable foreign, state and local tax returns
\nrequired by applicable law and pay when due all taxes, assessments and
\ngovernmental charges and levies upon it or its income, profits or Property,
\nexcept those which are being diligently contested in good faith by appropriate
\nproceedings and with respect to which adequate reserves have been set aside.<\/p>\n
SECTION 6.06. Insurance. Each Borrower will maintain with financially
\nsound and reputable insurance companies insurance on all its Property in such
\namounts and covering such risks as is consistent with sound business practice,
\nand Newco will furnish to Sprint upon request full information as to the
\ninsurance carried.<\/p>\n
SECTION 6.07. Compliance with Laws. Each Borrower will comply with all
\nlaws, rules, regulations, orders, writs, judgments, injunctions, decrees or
\nawards to which it may be subject, the failure to comply with which would have a
\nMaterial Adverse Effect.<\/p>\n
SECTION 6.08. Maintenance of Properties. Each Borrower will do all things
\nnecessary to maintain, preserve, protect and keep its Property in good repair,
\nworking order and condition, and make all necessary and proper repairs, renewals
\nand replacements so that its business carried on in connection therewith may be
\nproperly conducted at all times.<\/p>\n
SECTION 6.09. Inspection. Each Borrower will permit Sprint, by its
\nrepresentatives and agents, to inspect any of the Property, corporate books and
\nfinancial records of each Borrower, to examine and make copies of the books of
\naccounts and other financial records of each Borrower, and to discuss the
\naffairs, finances and accounts of each Borrower with, and to be advised as to
\nthe same by, their respective officers at such reasonable times and intervals as
\nSprint may designate; provided, that if a Default has occurred and is
\n ——–
\ncontinuing, each Borrower shall permit Sprint or its representatives and agents,
\nto exercise the inspection rights set forth above during normal business hours
\nwithout limitation, whether by reason of a Borrower’s claims of inconvenience,
\ninterruption of business operations or otherwise, so long as no Default has
\noccurred and is continuing, no such action shall unreasonably and in a material
\nfashion interfere with the normal business operations of a Borrower. Each
\nBorrower will keep or cause to be kept, appropriate records and books of account
\nin which complete entries are to be made reflecting its business and financial
\ntransactions, such entries to be made in accordance with GAAP.<\/p>\n
SECTION 6.10. Investments and Purchases. No Borrower will make or suffer
\nto exist any Investments or commitments therefor, or become or remain a partner
\nin any partnership or joint venture, or make any Purchase of any Person, except:<\/p>\n
(a) Obligations that have a term of one year or less or are fully
\n guaranteed by the United States of America;<\/p>\n
28<\/p>\n
(b) Commercial paper rated A-l or better by Standard and Poor’s
\n Rating Group or P-l or better by Moody’s Investors Service, Inc.;<\/p>\n
(c) Demand deposit accounts maintained in the ordinary course of
\n business;<\/p>\n
(d) Certificates of deposit issued by and time deposits with
\n commercial banks (whether domestic or foreign) having capital and surplus
\n in excess of $100,000,000;<\/p>\n
(e) Repurchase agreements issued by any commercial bank or trust
\n company organized under the laws of the United States or any state thereof
\n having capital and surplus in excess of $100,000,000 and whose commercial
\n paper (or that of its parent corporation) is rated A-1 or better by
\n Standard & Poor’s Ratings Group or P-1 or better by Moody’s Investors
\n Service, Inc.;<\/p>\n
(f) Investments in existence on the date hereof and described in
\n Schedule 6.10 hereto; and
\n ————- <\/p>\n
(g) Subject to Section 6.10(h) hereof, Investments in Borrowers; and
\n ————— <\/p>\n
(h) Any other Investment which, when aggregated with all other
\n Investments made under this clause (h), does not exceed $20,000,000,
\n provided that no more than $5,000,000 of such Investments in the aggregate
\n shall be made in one or more Foreign Entities.<\/p>\n
SECTION 6.11. Liens. No Borrower will create, incur, or suffer to exist
\nany Lien in, of or on the Property of such Borrower, except:<\/p>\n
(a) Liens for taxes, assessments or governmental charges or levies on
\n its Property if the same shall not at the time be delinquent or thereafter
\n can be paid without penalty, or are being contested in good faith and by
\n appropriate proceedings and for which adequate reserves in accordance with
\n GAAP shall have been set aside on its books;<\/p>\n
(b) Liens imposed by law, such as landlords’, carriers’,
\n warehousemen’s and mechanics’ liens and other similar liens arising in the
\n ordinary course of business which secure payment of obligations not more
\n than 60 days past due or which are being contested in good faith by
\n appropriate proceedings and for which adequate reserves in accordance with
\n GAAP shall have been set aside on its books;<\/p>\n
(c) Liens arising out of pledges or deposits under worker’s
\n compensation laws, unemployment insurance, old age pensions, or other
\n social security or retirement benefits, or similar legislation;<\/p>\n
29<\/p>\n
(d) Utility easements, building restrictions and such other
\n encumbrances or charges against real property as are of a nature generally
\n existing with respect to properties of a similar character and which do not
\n in any material way adversely affect the marketability of the same or
\n interfere with the use thereof in the business of any Borrower;<\/p>\n
(e) Capitalized Leases, whether currently existing or hereafter
\n created, under which the Capitalized Lease Obligations do not exceed in the
\n aggregate (i) $56,250,000 in 1998, (ii) $90,000,000 in 1999, (iii)
\n $100,000,000 in 2000, and (iv) $150,000,000 thereafter; and<\/p>\n
(f) All other Liens securing Indebtedness (other than Capitalized
\n Lease Obligations) which does not exceed in the aggregate (i) $30,000,000
\n in 1998, (ii) $45,000,000 in 1999, (iii) $60,000,000 in 2000, and (iv)
\n $90,000,000 thereafter.<\/p>\n
SECTION 6.12. Affiliates. No Borrower shall enter into any transaction
\n(including, without limitation, the purchase or sale of any Property or service)
\nwith, or make any payment or transfer to, any other Affiliate (other than
\nanother Borrower) except (a) pursuant to the agreements described in the
\nProspectus included in Newco’s registration statement declared effective by the
\nSEC on January 22, 1997, (b) where expressly permitted, or (c) in the Ordinary
\nCourse of Business and pursuant to the reasonable requirements of such
\nBorrower’s business and upon fair and reasonable terms no less favorable to such
\nBorrower than such Borrower would obtain in a comparable arms-length
\ntransaction.<\/p>\n
SECTION 6.13. Environmental Matters. Each Borrower shall (a) at all times
\nmaterially comply with all applicable Environmental Laws and (b) take any and
\nall remedial actions as are required by Environmental Laws in response to the
\nRelease of any Hazardous Materials on, under or about any real property owned,
\nleased or operated by such Borrower. In the event that a Borrower undertakes any
\nremedial action with respect to any Hazardous Material on, under or about any
\nreal property, such Borrower shall conduct and complete such remedial action in
\ncompliance with all applicable Environmental Laws, except when such Borrower’s
\nliability for such Release of any Hazardous Material is being contested in good
\nfaith by such Borrower and appropriate reserves therefor have been established.
\nIf Sprint at any time has a reasonable basis to believe that there may be a
\nmaterial violation of any Environmental Law by any Borrower, a Release of a
\nmaterial amount of Hazardous Materials on any real property owned, leased or
\noperated by a Borrower or a Release of a material amount of Hazardous Materials
\nfrom such real property onto real property adjacent to such real property, then
\nthe Borrowers shall, upon the request of Sprint, provide Sprint with all such
\nreports, certificates, engineering studies and other written material or data
\nrelating thereto as Sprint may reasonably require which shall be maintained as
\nconfidential by Sprint to the fullest extent authorized by law.<\/p>\n
SECTION 6.14. Change in Corporate Structure; Fiscal Year. No Borrower
\nshall (a) permit any amendment or modification to be made to its certificate of
\nincorporation or bylaws which is adverse to the interests of Sprint or (b)
\nsubject to Sprint’s consent (which consent shall not be <\/p>\n
30<\/p>\n
unreasonably withheld), change its Fiscal Year to end on any date other than
\nDecember 31 of each year.<\/p>\n
SECTION 6.15. Inconsistent Agreements. No Borrower shall enter into any
\nindenture, agreement, instrument or other arrangement which contains any
\nprovision which would be violated or breached by the making of Advances or by
\nthe performance by any Borrower of any of such Borrower’s obligations under any
\nLoan Document, the Investment Agreement or any Ancillary Agreement.<\/p>\n
SECTION 6.16. Indebtedness. Newco shall not permit its consolidated
\nIndebtedness as of any date during a Fiscal Year identified below (including the
\naggregate of Capitalized Lease Obligations and other Indebtedness secured by
\nLiens limited by Section 6.11(e) and (f)) to exceed the greater of (a) the
\namount listed below opposite such Fiscal Year and (b) four and one-half (4 1\/2)
\ntimes EBITDA for the latest period of four (4) fiscal quarters ended prior to
\nthe date of determination:<\/p>\n
\n\n DURING FISCAL YEAR AMOUNT
\n —————— ——
\n
\n 1998 $ 75,000,000
\n 1999 150,000,000
\n 2000 200,000,000
\n 2001 and beyond 300,000,000
\n<\/c><\/s><\/caption>\n<\/table>\nAs used herein, “EBITDA” means Net Income for a specified period, plus the sum
\nof the amounts equal to the interest expense, the provision for taxes based on
\nincome and the depreciation and amortization expense deducted in determining
\nsuch Net Income.<\/p>\n
SECTION 6.17. ERISA Compliance. With respect to any Plan, no Borrower
\nshall:<\/p>\n
(a) engage in any “prohibited transaction” (as such term is defined
\n in Section 406 of ERISA or Section 4975 of the IRC) for which a civil
\n penalty pursuant to Section 502(i) of ERISA or a tax pursuant to Section
\n 4975 of the IRC in excess of $1,000,000 is imposed;<\/p>\n
(b) incur any “accumulated funding deficiency” (as such term is
\n defined in Section 302 of ERISA) in excess of $1,000,000, whether or not
\n waived, or permit any Unfunded Liability in excess of $1,000,000, to exist
\n for more than 30 days after learning thereof;<\/p>\n
(c) permit the occurrence of any Termination Event which results in a
\n liability to a Borrower or any other member of the Controlled Group in
\n excess of $1,000,000;<\/p>\n
31<\/p>\n
(d) fail to make any contribution or payment to any Multiemployer
\n Plan which either Borrower or any other member of the Controlled Group is
\n required to make under any agreement relating to such Multiemployer Plan or
\n Title IV of ERISA which results in a liability in excess of $1,000,000; or<\/p>\n
(e) permit the establishment or amendment of any Plan or fail to
\n comply with the applicable provisions of ERISA and the IRC with respect to
\n any Plan which would result in liability to a Borrower or any other member
\n of the Controlled Group which, individually or in the aggregate, would have
\n a Material Adverse Effect.<\/p>\n
ARTICLE VII<\/p>\n
EVENTS OF DEFAULT<\/p>\n
The occurrence of any one or more of the following events shall constitute
\nan Event of Default:<\/p>\n
SECTION 7.01. Any representations or warranties of the Borrowers made or
\ndeemed made by or on behalf of a Borrower to Sprint under or in connection with
\nthis Agreement, or in any certificate or information delivered in connection
\nwith this Agreement or any other Loan Document are not true and correct (i) as
\nof the date referred to in such representations or warranties that addresses a
\nmatter as of a particular date and (ii) as to all other representations and
\nwarranties as of the date of such representation or warranty, except in either
\nthe case of clause (i) or (ii), if the inaccuracy of such representations and
\nwarranties would not in the aggregate have a Material Adverse Effect.<\/p>\n
SECTION 7.02. Nonpayment of (a) principal of any Note within fourteen (14)
\ndays after the same becomes due, or (b) interest upon a Note or obligations
\nunder any of the Loan Documents within fourteen (14) days after the same becomes
\ndue.<\/p>\n
SECTION 7.03. The breach by a Borrower of any of the terms or provisions
\nof Sections 6.02, 6.14, 6.15 or 6.16.
\n ————- —- —- —- <\/p>\n
SECTION 7.04. The breach by a Borrower (other than a breach which
\nconstitutes a Default under Section 7.01, 7.02 or 7.03) of any of the terms or
\n ———— —- —-
\nprovisions of this Agreement, Sections 5.07 or 5.08 of the Investment Agreement,
\nor Articles II, III or IV of the Governance Agreement, or any material breach by
\na Borrower of any terms or provisions of the Registration Rights Agreement (as
\ndefined in the Investment Agreement), in any such case, which is not remedied
\nwithin forty-five (45) days after written notice to Newco from Sprint; provided,
\nhowever, such forty-five (45) day period shall be reduced to a fifteen (15) day
\nperiod for any breach under Section 6.10 or Section 6.12.
\n ———— ———— <\/p>\n
32<\/p>\n
SECTION 7.05. The default by a Borrower in the performance of any term,
\nprovision or condition contained in any agreement or agreements under which any
\nIndebtedness aggregating in excess of $5,000,000 was created or is governed, or
\nthe occurrence of any other event or existence of any other condition, the
\neffect of any of which is to cause, or to permit the holder or holders of such
\nIndebtedness to cause, such Indebtedness to become due prior to its stated
\nmaturity; or any such Indebtedness of a Borrower shall be declared to be due and
\npayable or required to be prepaid (other than by a regularly scheduled payment)
\nprior to the stated maturity thereof.<\/p>\n
SECTION 7.06. A Borrower shall (a) have an order for relief entered with
\nrespect to it under the Federal bankruptcy laws as now or hereafter in effect,
\n(b) make an assignment for the benefit of creditors, (c) apply for, seek,
\nconsent to, or acquiesce in, the appointment of a receiver, custodian, trustee,
\nexaminer, liquidator or similar official for it or any Substantial Portion of
\nits Property, (d) institute any proceeding seeking an order for relief under the
\nFederal bankruptcy laws as now or hereafter in effect or seeking to adjudicate
\nit a bankrupt or insolvent, or seeking dissolution, winding up, liquidation,
\nreorganization, arrangement, adjustment or composition of it or its debts under
\nany law relating to bankruptcy, insolvency or reorganization or relief of
\ndebtors, (e) take any corporate action to authorize or effect any of the
\nforegoing actions set forth in this Section 7.06, (f) fail to contest in good
\n ————
\nfaith any appointment or proceeding described in Section 7.07 or (g) become
\n ————
\nunable to pay, not pay, or admit in writing its inability to pay, its debts
\ngenerally as they become due.<\/p>\n
SECTION 7.07. Without the application, approval or consent of a Borrower,
\na receiver, trustee, examiner, liquidator or similar official shall be appointed
\nfor a Borrower or any Substantial Portion of its Property, or a proceeding
\ndescribed in Section 7.06(d) shall be instituted against a Borrower, and such
\n —————
\nappointment continues undischarged or such proceeding continues undismissed or
\nunstayed for a period of ninety (90) consecutive days.<\/p>\n
SECTION 7.08. Any court, government or governmental agency shall condemn,
\nseize or otherwise appropriate, or take custody or control of (each a
\n“Condemnation”), all or any portion of the Property of a Borrower which, when
\n ————
\ntaken together with all other Property of the Borrowers so condemned, seized,
\nappropriated, or taken custody or control of, during the twelve-month period
\nending with the month in which any such Condemnation occurs, constitutes a
\nSubstantial Portion.<\/p>\n
SECTION 7.09. A Borrower shall fail within thirty (30) days to pay, bond
\nor otherwise discharge any judgments or orders for the payment of money in an
\naggregate amount in excess of $1,000,000, which are not stayed on appeal or
\notherwise being appropriately contested in good faith.<\/p>\n
ARTICLE VIII<\/p>\n
ACCELERATION, WAIVERS, AMENDMENTS AND REMEDIES<\/p>\n
33<\/p>\n
If any Event of Default described in Section 7.06 or 7.07 occurs with
\n ———— —-
\nrespect to a Borrower, the obligations of Sprint to make Advances hereunder
\nshall automatically terminate and the Obligations shall immediately become due
\nand payable without any election or action on the part of Sprint. If any other
\nEvent of Default occurs, Sprint may terminate or suspend the obligations of
\nSprint to make Advances hereunder, or declare the Obligations to be due and
\npayable, or both, whereupon the Obligations shall become immediately due and
\npayable, without presentment, demand, protest or notice of any kind, all of
\nwhich each of the Borrowers hereby expressly waives.<\/p>\n
Within ten (10) Business Days after acceleration of the maturity of the
\nObligations or termination of the obligations of Sprint to make Advances
\nhereunder as a result of any Event of Default (other than any Event of Default
\nas described in Section 7.06 or 7.07 with respect to a Borrower) and before any
\n ———— —-
\njudgment or decree for the payment of the Obligations due shall have been
\nobtained or entered, Sprint may (in its sole discretion), by notice to the
\nBorrowers, rescind and annul such acceleration and\/or termination.<\/p>\n
ARTICLE IX<\/p>\n
SETOFF<\/p>\n
In addition to, and without limitation of, any rights of Sprint under
\napplicable law, if any Default or Event of Default or Business Combination
\noccurs, any and all deposits (including all account balances, whether
\nprovisional or final and whether or not collected or available) and any other
\nIndebtedness at any time held or owing by Sprint or any Affiliate of Sprint to
\nor for the credit or account of any Borrower may be offset and applied toward
\nthe payment of the Obligations owing to Sprint or such Affiliate of Sprint,
\nwhether or not the Obligations, or any part hereof, shall then be due or have
\nmatured; provided, however, the foregoing shall not apply to any Business
\nCombination unless at least ten days prior to such offset or applications,
\nSprint has given notice to the Borrowers that a prepayment is being required
\nunder Section 3.08(a).<\/p>\n
34<\/p>\n
ARTICLE X<\/p>\n
BENEFIT OF AGREEMENT; ASSIGNMENTS<\/p>\n
SECTION 10.01. Successors and Assigns. The terms and provisions of the
\nLoan Documents shall be binding upon and inure to the benefit of the Borrowers
\nand Sprint and their respective successors and assigns, except that (a) the
\nBorrowers shall not have the right to assign any rights or obligations under the
\nLoan Documents, and (b) any assignment by Sprint must be made in compliance with
\nSection 10.02. Any assignee or transferee of any Note agrees by acceptance
\n————-
\nthereof to be bound by all the terms and provisions of the Loan Documents. Any
\nrequest, authority or consent of any Person, who at the time of making such
\nrequest or giving such authority or consent is the holder of the Note, shall be
\nconclusive and binding on any subsequent holder, transferee or assignee of such
\nNote or of any note or notes issued in exchange therefor.<\/p>\n
SECTION 10.02. Assignments by Sprint.<\/p>\n
10.02.1. Assignments of this Agreement and the Obligations
\n ————————————————-
\nThereunder. An Assignment or transfer of this Agreement may be made without the
\n———-
\nprior consent of the Borrowers (i) by Sprint to any of its Affiliates, provided
\nthat any such assignment or transfer to such Affiliate shall not release Sprint
\nfrom the obligations of Sprint under this Agreement, or (ii) pursuant to any
\nmerger or sale of substantially all of the assets or stock of Sprint or such
\nAffiliates (or any transaction having such effect) that is pursuant to an
\nagreement entered into after the Closing Date and pursuant to which in the case
\nof a purchase of substantially all of the assets or stock of Sprint or such
\nAffiliates, the party purchasing such assets or stock of Sprint or such
\nAffiliates assumes the obligations of Sprint under this Agreement.<\/p>\n
10.02.2. Transfers of the Notes. Sprint may in accordance with
\n ———————-
\napplicable law and without the prior consent of the Borrowers, at any time,
\ntransfer and assign all or part of the Notes to one or more Persons
\n(“Transferees”). In the case of such an assignment or transfer, Sprint shall
\nsurrender the Notes subject to such assignment to the Borrowers prior to the
\ntransfer and assignment being effective and the Borrowers shall, simultaneously
\nwith such surrender, reissue and deliver new Notes in the same aggregate
\noutstanding principal amount as the surrendered Note in the name of such holders
\nas requested by Sprint. On or after the effective date of such transfer and
\nassignment, (a) each such Transferee shall acquire all of the rights of Sprint
\nin the Notes assigned to such Transferee, and (b) Sprint shall remain subject to
\nthe Aggregate Commitment and Loans.<\/p>\n
10.02.3. Administration. As a condition to any transfer or
\n ————–
\nassignment of the Notes pursuant to Section 10.02.2, each Transferee shall
\nappoint Sprint (or any other Person to whom this Agreement has been assigned in
\naccordance with Section 10.02.1 or with the consent of the Borrowers) (the
\n“Agent”) to act as agent of such Transferee, provided that the Agent shall not
\nhave a fiduciary relationship in respect of the Borrowers or any Transferee of
\nthe Notes. The Agent shall exclusively exercise such powers under this
\nAgreement as are specifically delegated to Sprint by the terms hereof, including
\nthe right to receive notices, requests, waivers, instructions, information<\/p>\n
35<\/p>\n
regarding the Borrowers, consents and other documents which the Borrowers may be
\nrequired to deliver pursuant to this Agreement. The Agent shall have no implied
\nduties to the Transferees, or any obligation to the Transferees to take any
\naction thereunder.<\/p>\n
SECTION 10.03. Dissemination of Information. Each Borrower authorizes
\nSprint to disclose to any Person to whom this Agreement is being assigned
\npursuant to Section 10.02.1 or Transferees under Section 10.02.2 any and all
\ninformation in Sprint’s possession concerning the creditworthiness of the
\nBorrowers, subject however, to Sprint obtaining an appropriate confidentiality
\nagreement respecting such information.<\/p>\n
ARTICLE XI<\/p>\n
MISCELLANEOUS<\/p>\n
SECTION 11.01. Notices. Unless otherwise provided herein, any notice,
\nrequest, waiver, instruction, consent or document or other communication
\nrequired or permitted to be given by this Agreement shall be effective only if
\nit is in writing and (a) delivered by hand or sent by certified mail, return
\nreceipt requested, (b) if sent by a nationally-recognized overnight delivery
\nservice with delivery confirmed, or (c) if telexed or telecopied, with receipt
\nconfirmed as follows:<\/p>\n
The Borrowers: 3100 New York Drive
\n Pasadena, California 91107
\n Attn: President and CEO
\n Telecopy No.: (626) 296-4161<\/p>\n
with a copy to: Hunton & Williams
\n NationsBank Plaza, Suite 4100
\n 600 Peachtree Street, N.E.
\n Atlanta, Georgia 30308-2216
\n Attn: Scott M. Hobby, Esq.
\n Telecopy No.: (404) 888-4190<\/p>\n
Sprint: Sprint Corporation
\n 2330 Shawnee Mission Parkway
\n Westwood, Kansas 66205
\n Attn: Chief Financial Officer
\n Telecopy No.: (913) 624-8426<\/p>\n
with a copy to: Sprint Corporation
\n 2330 Shawnee Mission Parkway
\n Westwood, Kansas 66205
\n Attn: Senior Vice President and
\n Treasurer<\/p>\n
36<\/p>\n
Telecopy No.: (913) 624-8426<\/p>\n
with additional copies to: Sprint Corporation
\n 2330 Shawnee Mission Parkway
\n Westwood, Kansas 66205
\n Attn: Vice President and Assistant
\n Treasurer
\n Telecopy No.: (913) 624-8252<\/p>\n
Sprint Corporation
\n 2330 Shawnee Mission Parkway
\n Westwood, Kansas 66205
\n Attn: Corporate Secretary
\n Telecopy No.: (913) 624-8233<\/p>\n
The Parties shall promptly notify each other of any change in their respective
\naddresses or facsimile numbers or of the Person or office to receive notices,
\nrequests or other communications under this Section 11.01. Notice shall be
\n ————-
\ndeemed to have been given as of the date when so personally delivered, when
\nactually delivered by the U.S. Postal Service at the proper address, the next
\nday when delivered during business hours to an overnight delivery service
\nproperly addressed or when receipt of a telex or telecopy is confirmed, as the
\ncase may be, unless the sending party has actual Knowledge that such notice was
\nnot received by the intended recipient.<\/p>\n
SECTION 11.02. Entire Agreement. This Agreement together with all
\nSchedules and Exhibits hereto, embody the entire agreement and understanding of
\nthe Parties in respect to the matters contemplated hereby and supersedes and
\nrenders null and void all other prior agreements and understandings, written and
\noral, with respect to the subject matters hereof, provided that this provision
\n ——–
\nshall not abrogate any other written agreement between the Parties executed
\nsimultaneously with this Agreement. No Party shall be liable or bound to any
\nother Party in any manner by any promises, conditions, representations,
\nwarranties, covenants, agreements and understandings, except as specifically set
\nforth herein or therein.<\/p>\n
SECTION 11.03. Waiver. Except as otherwise permitted in this Agreement,
\nthe terms or conditions of this Agreement may not be waived unless set forth in
\na writing signed by the Party entitled to the benefits thereof. No waiver of
\nany of the provisions of this Agreement shall be deemed or shall constitute a
\nwaiver of such provision at any time in the future or a waiver of any other
\nprovision hereof. The rights and remedies of the Parties are cumulative and not
\nalternative. Except as otherwise provided in this Agreement, neither the
\nfailure nor any delay by any Party in exercising any right, power or privilege
\nunder this Agreement, or the documents referred to in this Agreement or therein
\nwill operate as a waiver of such right, power or privilege, and no single or
\npartial exercise of any such right, power or privilege will preclude any other
\nor further exercise of such right, power or privilege or the exercise of any
\nother right, power or privilege.<\/p>\n
37<\/p>\n
SECTION 11.04. Governing Law. This Agreement shall be governed by and
\nconstrued in accordance with the laws of the State of Delaware, without regard
\nto conflict of laws principles.<\/p>\n
SECTION 11.05. Severability. If any term or provision of this Agreement
\nor the application thereof to either party or set of circumstances shall, in any
\njurisdiction and to any extent, be finally held invalid or unenforceable, such
\nterm or provision shall only be ineffective as to such jurisdiction, and only to
\nthe extent of such invalidity or unenforceability, without invalidating or
\nrendering unenforceable any other terms or provisions of this Agreement or under
\nany other circumstances, and the parties shall negotiate in good faith a
\nsubstitute provision which comes as close as possible to the invalidated or
\nunenforceable term or provision, and which puts each party in a position as
\nnearly comparable as possible to the position it would have been in but for the
\nfinding of invalidity or unenforceability, while remaining valid and
\nenforceable.<\/p>\n
SECTION 11.06. Counterparts. This Agreement may be executed in one or
\nmore counterparts each of which when so executed and delivered shall for all
\npurposes be deemed to be an original but all of which, when taken together,
\nshall constitute one and the same Agreement.<\/p>\n
SECTION 11.07. Headings. The table of contents, captions and headings
\nused in this Agreement are inserted for convenience only and shall not be deemed
\nto constitute part of this Agreement or to affect the construction or
\ninterpretation hereof.<\/p>\n
SECTION 11.08. No Third-Party Beneficiaries. Nothing in this Agreement,
\nexpress or implied, shall create or confer upon any Person (including but not
\nlimited to any employees), other than the Parties or their respective successors
\nand permitted assigns, any legal or equitable rights, remedies, obligations,
\nliabilities or claims under or with respect to this Agreement, except as
\nexpressly provided herein.<\/p>\n
SECTION 11.09. Interpretation. (a) Unless specifically stated otherwise,
\nreferences to Articles, Sections, Exhibits and Schedules refer to Articles,
\nSections, Exhibits and Schedules in this Agreement. References to “includes”
\nand “including” mean “includes without limitation” and “including without
\nlimitation.” Whenever the context may require, any pronoun shall include the
\ncorresponding masculine feminine and neuter forms. Unless the context shall
\notherwise require or provide, any reference to any agreement or other instrument
\nor statute or regulation is to such agreement, instrument statute or regulation
\nas amended and supplemented from time to time (and, in the case of a statute or
\nregulation, to any successor provision).<\/p>\n
(b) Each Party is a sophisticated legal entity that was advised by
\nexperienced counsel and, to the extent it deemed necessary, other advisors in
\nconnection with this Agreement. Accordingly, each Party hereby acknowledges
\nthat no Party has relied or will rely in respect of this Agreement or the
\ntransactions contemplated hereby upon any document or written or oral
\ninformation previously furnished to or discovered by it or its representatives,
\nother than this Agreement or the documents and instruments delivered at the
\nClosing.<\/p>\n
38<\/p>\n
(c) No provision of this Agreement shall be interpreted in favor of, or
\nagainst, any of the Parties by reason of the extent to which any such Party or
\nits counsel participated in the drafting thereof or by reason of the extent to
\nwhich any such provision is inconsistent with any prior draft hereof or thereof.<\/p>\n
SECTION 11.10. Inclusion of Information in Schedules. The inclusion of
\nany information in any Schedule (i) shall not be deemed an admission that any
\nsuch information is material for purposes of the representation and warranty to
\nwhich it relates or any other representation and warranty or for any other
\npurpose related to this Agreement or the transactions contemplated hereby,
\nincluding for purposes of any covenants, closing conditions or any other
\nremedies the Parties may have, and (ii) shall not be used or interpreted in any
\nmanner to create a standard of materiality for any such purpose.<\/p>\n
SECTION 11.11. Amendment. No amendment, modification or alteration of the
\nterms or provisions of this Agreement, including any Schedules and Exhibits
\nhereto or thereto, shall be binding unless the same shall be in writing and duly
\nexecuted by the Party against whom such amendment, modification or alteration is
\nsought to be enforced.<\/p>\n
SECTION 11.12. Joint and Several Obligations of Borrowers. Each and
\nevery agreement and obligation of Newco or any Borrower under this Agreement,
\nany Note or any other Loan Document shall be the joint and several obligation of
\neach Borrower.<\/p>\n
SECTION 11.13. Effectiveness of Agreement. This Agreement shall become
\neffective at the Closing, provided that this Agreement shall terminate upon the
\ntermination of the Investment Agreement pursuant to Section 6.01(a) thereof.
\n ————— <\/p>\n
SECTION 11.14. Reliance on Investment Agreement. The Borrowers recognize
\nand acknowledge that in entering into this Agreement Sprint is relying on each
\nand every representation and warranty made by the Borrowers to Sprint in the
\nInvestment Agreement as of the Closing.<\/p>\n
SECTION 11.15. EXCLUSIVE JURISDICTION AND CONSENT TO SERVICE OF PROCESS.
\nTHE PARTIES AGREE THAT ANY ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT,
\nTHE NOTES, THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY SHALL BE
\nINSTITUTED IN A FEDERAL COURT SITTING IN DELAWARE OR STATE COURT SITTING IN
\nDELAWARE, WHICH SHALL BE THE EXCLUSIVE VENUE OF ANY SUCH ACTION. EACH PARTY
\nWAIVES ANY OBJECTION WHICH SUCH PARTY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF
\nVENUE OF ANY SUCH ACTION, AND IRREVOCABLY CONSENTS AND SUBMITS TO THE
\nJURISDICTION OF ANY SUCH COURT (AND THE APPROPRIATE APPELLATE COURTS) IN ANY
\nSUCH ACTION. ANY AND ALL SERVICE OF PROCESS AND ANY OTHER NOTICE IN ANY SUCH
\nACTION SHALL BE EFFECTIVE AGAINST SUCH PARTY WHEN TRANSMITTED IN ACCORDANCE WITH
\nSECTION 11.01. NOTHING CONTAINED HEREIN SHALL BE DEEMED TO AFFECT
\n————- <\/p>\n
39<\/p>\n
THE RIGHT OF ANY PARTY TO SERVE PROCESS IN ANY MANNER PERMITTED BY LAW.<\/p>\n
[THE BALANCE OF THIS PAGE LEFT BLANK INTENTIONALLY]<\/p>\n
40<\/p>\n
SECTION 11.16. WAIVER OF JURY TRIAL. THE BORROWERS AND SPRINT HEREBY WAIVE
\nTRIAL BY JURY IN ANY JUDICIAL PROCEEDING INVOLVING, DIRECTLY OR INDIRECTLY, ANY
\nMATTER (WHETHER SOUNDING IN TORT, CONTRACT OR OTHERWISE), INCLUDING ANY CLAIM,
\nCOUNTERCLAIM, CROSS-CLAIM, DEFENSE, OR AFFIRMATIVE DEFENSE, IN ANY WAY ARISING
\nOUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN DOCUMENT OR THE RELATIONSHIP
\nESTABLISHED THEREUNDER.<\/p>\n
THIS IS THE FINAL EXPRESSION OF THE CREDIT AGREEMENT BETWEEN THE BORROWERS, AS
\nDEBTORS, AND SPRINT, AS LENDER. THIS CREDIT AGREEMENT MAY NOT BE CONTRADICTED BY
\nEVIDENCE OF ANY PRIOR ORAL CREDIT AGREEMENT OR OF A CONTEMPORANEOUS ORAL CREDIT
\nAGREEMENT BETWEEN THE PARTIES.<\/p>\n
Newco: Sprint: THS
\n ———— ————
\n Initials Initials<\/p>\n
The Company:
\n ———–
\n Initials<\/p>\n
IN WITNESS WHEREOF, Newco, the Company and Sprint have executed this
\nAgreement as of the date first above written.<\/p>\n
DOLPHIN, INC.<\/p>\n
By: \/s\/ Charles G. Betty
\n —————————————
\n Print Name: Charles G. Betty
\n ——————————-
\n Title: President & CEO
\n ————————————<\/p>\n
EARTHLINK NETWORK, INC.<\/p>\n
By: \/s\/ Charles G. Betty
\n —————————————
\n Print Name: Charles G. Betty
\n ——————————-
\n Title: President & CEO
\n ————————————<\/p>\n
SPRINT CORPORATION<\/p>\n
By: \/s\/ Theodore H. Schell
\n —————————————
\n Print Name: Theodore H. Schell
\n ——————————-
\n Title: Vice President – Strategic Planning
\n ————————————
\n and Corporate Development<\/p>\n
SIGNATURE PAGE FOR CREDIT AGREEMENT<\/p>\n
EXHIBIT A
\n ———<\/p>\n
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED
\n(THE “ACT”), AND MAY NOT BE OFFERED OR SOLD UNLESS REGISTERED PURSUANT TO THE
\nPROVISIONS OF SUCH ACT OR AN EXEMPTION FROM REGISTRATION THEREFROM IS AVAILABLE.
\nNEWCO SHALL NOT BE REQUIRED TO ISSUE ANY CERTIFICATES TO ANY PERSON UPON
\nCONVERSION OF THIS NOTE OTHER THAN TO THE HOLDER OF SUCH CONVERTED NOTE UNLESS
\nNEWCO HAS OBTAINED REASONABLE ASSURANCE THAT SUCH TRANSACTION IS EXEMPT FROM THE
\nREGISTRATION REQUIREMENTS OF, OR IS COVERED BY AN EFFECTIVE REGISTRATION
\nSTATEMENT UNDER, THE ACT AND ALL APPLICABLE STATE SECURITIES LAWS, INCLUDING, IF
\nNECESSARY IN THE REASONABLE JUDGMENT OF NEWCO OR ITS LEGAL COUNSEL, RECEIPT OF
\nAN OPINION TO SUCH EFFECT FROM COUNSEL SATISFACTORY TO NEWCO IN ITS REASONABLE
\nJUDGMENT.<\/p>\n
THE UNDERSIGNED BORROWERS ACKNOWLEDGE RECEIPT OF A COPY
\n OF THIS PROMISSORY NOTE<\/p>\n
CONVERTIBLE SENIOR PROMISSORY NOTE
\n ———————————-<\/p>\n
____________________, ______________________
\n (City) (State)<\/p>\n
$_________________ [Borrowing Date]<\/p>\n
FOR VALUE RECEIVED, the undersigned, Dolphin, Inc., a Delaware corporation
\nand EarthLink Network, Inc., a Delaware corporation, jointly and severally as
\nco-makers of this Note, (collectively the “Borrowers”), hereby promise to pay to
\nthe order of Sprint Corporation, a Kansas corporation (“Lender”), its successors
\nand assigns (each a “Holder”), at its office designated below or at such other
\nplace as the Holder hereof may, from time to time, designate in writing, the
\nfollowing designated principal and interest in the manner set forth below:<\/p>\n
PRINCIPAL: The principal sum of $___________________________________. Such
\namount constitutes an Advance under the Credit Agreement (as hereinafter
\ndefined).<\/p>\n
INTEREST on the principal shall be payable from the date hereof to and
\nincluding the date of maturity at a rate equal to SIX PERCENT (6 %) per annum;
\nprovided, however, such interest rate may be increased as provided in the Credit
\nAgreement under certain circumstances to a floating rate equal to five percent
\n(5%) per annum above the Prime Rate.<\/p>\n
Interest shall be computed on the basis of the actual number of elapsed
\ndays and a 360-day year.<\/p>\n
PRINCIPAL AND INTEREST shall be payable as follows:<\/p>\n
PRINCIPAL: Shall be payable five (5) years after the date of this Note.<\/p>\n
INTEREST: Shall be payable quarterly on the fifteenth day of January,
\nApril, July and October of each year commencing on the first such day occurring
\nafter the date of this Note and upon any prepayment or conversion hereunder
\nuntil such time as all amounts of principal under this Note are paid in full.<\/p>\n
If any Payment Date for this Note is not a Business Day (as defined in
\nthe Credit Agreement), payment shall be made on the next successive Business Day
\nand interest shall be payable thereon at the rate herein specified during such
\nextension.<\/p>\n
Nothing in this Note shall be construed as an express or implied
\nagreement by Lender to forbear in the collection of any amount owing hereunder,
\nor be construed as in any way giving Borrowers the right, express or implied, to
\nfail to make timely payment hereunder.<\/p>\n
PLACE OF PAYMENT: All payments of principal and interest shall be made in
\nlawful currency of the United States of America in immediately available funds
\nto Lender to an account designated by instructions from Lender or at such other
\nplace as the Holder hereof may from time to time, designate in writing.<\/p>\n
DEFINITIONS: The following terms shall have the following meanings herein:<\/p>\n
“Credit Agreement” means the Credit Agreement, dated as of ______________,
\n1998, between Lender and Borrowers.<\/p>\n
Capitalized terms not otherwise defined herein shall have the meanings
\nascribed to them in the Credit Agreement.<\/p>\n
CREDIT AGREEMENT: This Note is issued subject to the provisions of the
\nCredit Agreement and each and every provision of the Credit Agreement is hereby
\nincorporated into this<\/p>\n
A-2<\/p>\n
Note by reference notwithstanding the termination of the Credit Agreement. Each
\nHolder of this Note, by accepting the same, agrees to and shall be bound by such
\nprovisions.<\/p>\n
SET-OFF: Lender may exercise its right of set off in accordance with
\nArticle IX of the Credit Agreement.
\n———-<\/p>\n
CONVERSION: The Conversion Price of this Note is $___________. This Note is
\nsubject to the Conversion Rights set forth in the Credit Agreement.<\/p>\n
In the event of conversion of this Note in part only, the unpaid portion of
\ninterest accrued on the part of the Note converted shall be prepaid as of the
\ndate of such conversion and a New Note evidencing the remaining principal
\nbalance of this Note shall be issued in the name of the Holder hereof upon the
\ncancellation hereof.<\/p>\n
PREPAYMENT: This Note is subject to optional and mandatory prepayment, all
\nas provided in the Credit Agreement.<\/p>\n
DEFAULT AND ACCELERATION: Upon the occurrence of an Event of Default,
\nLender may, at its option, declare the entire unpaid balance of principal of and
\ninterest on this Note, as well as the unpaid principal of and interest on any
\nother indebtedness or liability of Borrowers to Lender, immediately due and
\npayable without notice or demand. In addition to Lender’s right of set-off as
\nprovided above, Lender shall have, upon the occurrence of any Event of Default,
\nand at any time thereafter, the remedies provided for in the Credit Agreement
\nand any other document, agreement or instrument evidencing or otherwise relating
\nto this Note.<\/p>\n
PURPOSE OF LOAN: Borrowers hereby warrant and represent that the proceeds
\nof this loan will be used solely for business purposes of Borrowers and as set
\nforth in the Credit Agreement.<\/p>\n
MISCELLANEOUS TERMS: Demand, presentment, protest and notice of nonpayment
\nand dishonor of this Note are hereby waived.<\/p>\n
Unless otherwise agreed, all payments made by Borrowers to Lender in
\nconnection with the indebtedness evidenced by this Note shall be applied first
\ntoward all amounts owed to Lender for payment of attorneys’ fees and costs of
\ncollection, if any, next toward payment of accrued interest and finally toward
\nprincipal. If any Event of Default has occurred and is continuing, any and all
\nsums received from or for the account of Borrowers shall be applied to any
\nIndebtedness of any kind owed by Borrowers to Lender, whether evidenced by this
\nNote or otherwise, in such order as Lender may elect.<\/p>\n
Each Borrower agrees that Lender may, at its option, assign all or a part
\nof, the obligation evidenced hereby to such parties as Lender shall determine in
\nits sole discretion, subject to the provisions of the Credit Agreement.<\/p>\n
A-3<\/p>\n
No delay or omission on the part of Lender in exercising any right or
\nremedy hereunder shall operate as a waiver of such right or remedy. A waiver on
\nany one occasion shall not be construed as a bar to or waiver of any such right
\nand\/or remedy on any future occasion.<\/p>\n
Notwithstanding anything to the contrary herein, the interest rate hereon
\nshall not exceed the maximum rate, if any, permitted by applicable law to be
\ncontracted by Borrowers for the purposes set forth herein.<\/p>\n
This Note shall be governed by and construed and enforced in accordance
\nwith the laws of the State of Delaware.<\/p>\n
Borrowers will pay on demand, to the extent permitted by applicable law,
\nall costs of collection, including attorneys fees actually incurred or paid by
\nLender in enforcing this Note.<\/p>\n
If any provision or clause of this Note shall be held or deemed to be or
\nshall, in fact, be inoperative, invalid or unenforceable as applied in any
\nparticular case or in all cases because it conflicts with any provisions of any
\nconstitution or statute or rule of public policy, or for any other reason, such
\ndetermination shall not affect in any way any other provision or clause herein
\nwhich can be given effect without the inoperative, invalid or unenforceable
\nprovision or clause.<\/p>\n
EXCLUSIVE JURISDICTION AND CONSENT TO SERVICE OF PROCESS. THE PARTIES
\n ——————————————————–
\nAGREE THAT ANY ACTION ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
\nTRANSACTIONS CONTEMPLATED HEREBY SHALL BE INSTITUTED IN A FEDERAL COURT SITTING
\nIN DELAWARE OR STATE COURT SITTING IN DELAWARE, WHICH SHALL BE THE EXCLUSIVE
\nVENUE OF ANY SUCH ACTION. EACH PARTY WAIVES ANY OBJECTION WHICH SUCH PARTY MAY
\nNOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH ACTION, AND IRREVOCABLY
\nCONSENTS AND SUBMITS TO THE JURISDICTION OF ANY SUCH COURT (AND THE APPROPRIATE
\nAPPELLATE COURTS) IN ANY SUCH ACTION. ANY AND ALL SERVICE OF PROCESS AND ANY
\nOTHER NOTICE IN ANY SUCH ACTION SHALL BE EFFECTIVE AGAINST SUCH PARTY WHEN
\nTRANSMITTED IN ACCORDANCE WITH SECTION 11.01. NOTHING CONTAINED HEREIN SHALL BE
\n ————-
\nDEEMED TO AFFECT THE RIGHT OF ANY PARTY TO SERVE PROCESS IN ANY MANNER PERMITTED
\nBY LAW.<\/p>\n
DOLPHIN, INC.<\/p>\n
By_________________________________
\nPrinted Name:______________________
\nTitle______________________________<\/p>\n
EARTHLINK NETWORK, INC.<\/p>\n
By________________________________
\nPrinted Name:_____________________
\nTitle_____________________________<\/p>\n
[Any additional Borrowers at the Borrowing Date shall also sign the Note]<\/p>\n
EXHIBIT B
\n ———<\/p>\n
AGREEMENT TO ADD BORROWER
\n ————————-<\/p>\n
THIS AGREEMENT made and entered into this ______ day of ______, _____ by
\nand between ______________, a ______________ (“Subsidiary”) and Sprint
\nCorporation, a Kansas corporation (“Sprint”).<\/p>\n
WHEREAS, Sprint, as lender, and Dolphin, Inc. and EarthLink Network, Inc.,
\nas borrowers, have entered into a Credit Agreement, dated February __, 1998 (the
\n“Credit Agreement”); and<\/p>\n
WHEREAS, it is anticipated that Subsidiary will become a “Subsidiary” (as
\nthat term is defined in the Credit Agreement) of a Borrower under the Credit
\nAgreement; and<\/p>\n
WHEREAS, Subsidiary recognizes and acknowledges that the Credit Agreement,
\nthe Investment Agreement and the Ancillary Agreements, including Advances
\nheretofore and hereafter made to the Borrowers under the Credit Agreement, serve
\nto benefit, directly or indirectly, Subsidiary; and<\/p>\n
WHEREAS, the Credit Agreement requires that prior to a Person becoming a
\nSubsidiary, such Person shall enter into this Agreement.<\/p>\n
NOW, THEREFORE, the parties hereto hereby agrees as follows:<\/p>\n
1. All capitalized terms appearing herein and not otherwise defined shall
\nhave the meaning attributed to them in the Credit Agreement.<\/p>\n
2. Sprint hereby agrees that upon the Subsidiary becoming a Subsidiary
\n(as defined in the Credit Agreement) of a Borrower, the Subsidiary shall be and
\nbecome a “Borrower” under the Credit Agreement with all of the rights and
\nobligations of a Borrower thereunder.<\/p>\n
3. In consideration of Sprint’s Agreement set forth in paragraph 2 above,
\nSubsidiary hereby agrees to be bound by all of the terms and conditions of the
\nCredit Agreement as a “Borrower” thereunder and hereby joins all other Borrowers
\ntherein in making, jointly and severally with each other Borrower, each and
\nevery agreement, warranty and representation made therein by the Borrowers
\nthereunder, including, without limitation, the joint and several obligation of
\nthe Borrower to pay all Obligations (including those in existence prior to the
\ndate hereof) when the same are due, whether at maturity, by acceleration,
\nmandatory prepayment or otherwise.<\/p>\n
B-1<\/p>\n
4. Subsidiary agrees that at the request of Sprint, it will execute all
\nConvertible Senior Promissory Notes outstanding prior to the date hereof as an
\nadditional Borrower, joint obligor and co-maker of each such Note.<\/p>\n
5. The Credit Agreement is not otherwise amended and shall continue in
\nfull force and effect.<\/p>\n
IN WITNESS WHEREOF, the undersigned have entered into this Agreement as of
\nthe day and year first above written.<\/p>\n
SPRINT CORPORATION ________________________________<\/p>\n
By:________________________________ By:_____________________________<\/p>\n
(“Sprint”) (“Subsidiary”)<\/p>\n
The undersigned being all of the Borrowers under the above-mentioned Credit
\nAgreement hereby consent and agree to the foregoing Agreement to Add Borrowers.<\/p>\n
Dated ___________, ______<\/p>\n
DOLPHIN, INC. EARTHLINK NETWORK, INC.<\/p>\n
By:________________________________ By:_____________________________<\/p>\n
(“Newco”) (“The Company”)<\/p>\n
[The above is to be agreed to by all other Borrowers that exist at the time the
\nabove Agreement is entered into.]<\/p>\n
EXHIBIT C
\n ———<\/p>\n
COMPLIANCE CERTIFICATE
\n ———————-<\/p>\n
This Compliance Certificate is furnished to Sprint Corporation (“Lender”)
\npursuant to that certain Credit Agreement dated as of ____________, 1998, by and
\namong Lender and Dolphin, Inc. (the “Newco”) and EarthLink Network, Inc.
\n(collectively, with those Persons added as a party to the Credit Agreement
\npursuant to Section 6.02 thereof, the “Borrowers”). Unless otherwise defined
\n ————
\nherein, the terms used in this Compliance Certificate have the meanings ascribed
\nto thereto in the Credit Agreement.<\/p>\n
THE UNDERSIGNED HEREBY CERTIFIES THAT:<\/p>\n
1. I am the duly appointed chief financial officer of Newco;<\/p>\n
2. I have reviewed the terms of the Credit Agreement and I have made, or
\nhave caused to be made under my supervision, a detailed review of the
\ntransactions and conditions of each of the Borrowers during the accounting
\nperiod covered by the attached financial statements;<\/p>\n
3. The examinations described in paragraph 2 did not disclose, and I have
\nno knowledge of, the existence of any condition or occurrence of any event which
\nconstitutes a Default or Event of Default during or at the end of the accounting
\nperiod covered by the attached financial statements or as of the date of this
\nCertificate, except as set forth below;<\/p>\n
4. No Business Combination has occurred as of the date of this
\nCertificate;<\/p>\n
5. The financial statements required by Section 6.01 of the Credit
\n ————
\nAgreement and being furnished to you concurrently with this Certificate are
\ntrue, correct and complete as of the date and for the periods covered thereby;
\nand<\/p>\n
6. The Attachment hereto sets forth the financial data and computations
\nevidencing Newco’s compliance with Section 6.11(e) and (f) and Section 6.16 of
\n ———————– ————
\nthe Credit Agreement, which data and computations are, to the best of my
\nknowledge, true, correct and complete and have been made in accordance with
\nSection 6.11(e) and (f) and Section 6.16 of the Credit Agreement.
\n———————– ———— <\/p>\n
Described below are the exceptions, if any, to paragraph 3 by listing, in
\ndetail, the nature of the condition or event, the period during which it has
\nexisted and the action which the relevant Borrower has taken, is taking, or
\nproposes to take with respect to each such condition or event:<\/p>\n
________________________________________________________________________________<\/p>\n
________________________________________________________________________________<\/p>\n
________________________________________________________________________________<\/p>\n
________________________________________________________________________________<\/p>\n
C-1 <\/p>\n
The foregoing certifications, together with the computations set forth in
\nthe Attachment hereto and the financial statements delivered with this
\nCertificate in support hereof, are made and delivered this ____________ day of
\n________________ __________.<\/p>\n
_____________________________________
\nChief Financial Officer for Newco<\/p>\n
ATTACHMENT TO COMPLIANCE CERTIFICATE<\/p>\n
Compliance Calculations for Credit Agreement<\/p>\n
Calculations as of ___________________<\/p>\n
________________________________________________________________________________<\/p>\n
\n\nINDEBTEDNESS (SECTION 6.16)
\n <\/p>\n 1. Indebtedness (as defined) $__________________<\/p>\n
2. EBITDA (as defined) $__________________<\/p>\n
3. 4 1\/2 times Line 2 $__________________<\/p>\n
4. Fiscal Year Amount
\n ———– ——- <\/p>\n
1998 $ 75,000,000
\n 1999 150,000.000
\n 2000 200,000,000
\n 2001 and beyond 300,000,000
\n <\/c><\/c><\/s><\/caption>\n<\/table>\n
5. As listed in Section 6.16 for the Fiscal years indicated,
\n Indebtedness shall not exceed the greater of Line 3 above
\n or the amount indicated in Line 4 above adjacent to the
\n appropriate Fiscal year.<\/p>\n
6. Newco is in compliance?
\n (Circle yes or no) Yes \/ No
\n ——–<\/p>\n
CAPITALIZED LEASE OBLIGATIONS AND OTHER INDEBTEDNESS SECURED BY LIENS (SECTIONS
\n6.11(e) AND (f))<\/p>\n
1. Capitalized Lease Obligations (as defined) $_____________
\n 2. Other Indebtedness (as defined) secured by Liens
\n (as defined) $_____________<\/p>\n
\n\n Capitalized Other
\n Lease Indebtedness
\n 3. Fiscal Year Obligations Secured by Liens
\n ———– —————-
\n
\n 1998 $ 56,250,000 $30,000,000
\n 1999 90,000,000 45,000,000
\n 2000 100,000,000 60,000,000
\n 2001 and beyond 150,000,000 90,000,000
\n<\/c><\/c><\/s><\/caption>\n<\/table>\n 4. As set forth in Section 6.11(e) for the Fiscal years indicated,
\n —————
\n Capitalized Lease Obligations shall not exceed the amount indicated in
\n Line 3 above adjacent to the appropriate Fiscal year.<\/p>\n
Newco is in compliance?
\n (Circle yes or no) Yes \/ No
\n ——–<\/p>\n
5. As set forth in Seciton 6.11(f) for the Fiscal years indicated, other
\n Indebtedness secured by Liens shall not exceed the amount indicated in
\n Line 3 above adjacent to the appropriate Fiscal year.<\/p>\n
Newco is in compliance?
\n (Circle yes or no) Yes \/ No
\n ——–
\n C-4<\/p>\n","protected":false},"template":"","meta":{"_acf_changed":false,"_stopmodifiedupdate":true,"_modified_date":"","_cloudinary_featured_overwrite":false},"corporate_contracts_companies":[7397],"corporate_contracts_industries":[9510],"corporate_contracts_types":[9561,9560],"class_list":["post-40956","corporate_contracts","type-corporate_contracts","status-publish","hentry","corporate_contracts_companies-earthlink-inc","corporate_contracts_industries-technology__programming","corporate_contracts_types-finance__credit","corporate_contracts_types-finance"],"acf":[],"_links":{"self":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts\/40956","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts"}],"about":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/types\/corporate_contracts"}],"wp:attachment":[{"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/media?parent=40956"}],"wp:term":[{"taxonomy":"corporate_contracts_companies","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_companies?post=40956"},{"taxonomy":"corporate_contracts_industries","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_industries?post=40956"},{"taxonomy":"corporate_contracts_types","embeddable":true,"href":"https:\/\/corporate.findlaw.com\/legal-api\/wp-json\/wp\/v2\/corporate_contracts_types?post=40956"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}