SENIOR SECURED CREDIT AGREEMENT
Draft — Subject to Review and Comment
Dated as of [●], 2025
by and among
CASCADIA FIBER NETWORKS, INC., a Delaware corporation, as Borrower,
NORTHGATE TELECOMMUNICATIONS PLC, a public limited company organized under the laws of England and Wales, as Parent Guarantor,
PINNACLE ATLANTIC BANK, N.A., as Administrative Agent, Collateral Agent, Swing Line Lender and an Issuing Bank,
and
THE LENDERS FROM TIME TO TIME PARTY HERETO
________________________________________
$500,000,000 SENIOR SECURED CREDIT FACILITIES
$300,000,000 Term Loan A Facility $200,000,000 Revolving Credit Facility
________________________________________
Prepared by Calderwood & Harkness LLP 600 Lexington Avenue, 30th Floor New York, NY 10022 C&H Matter No. 1022-00006
CONFIDENTIAL DRAFT — FOR DISCUSSION PURPOSES ONLY
TABLE OF CONTENTS
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ARTICLE I — DEFINITIONS AND ACCOUNTING TERMS
Section 1.01 — Defined Terms
As used in this Senior Secured Credit Agreement (this "Agreement"), the following terms shall have the meanings set forth below (such meanings to be applicable equally to both the singular and the plural forms of the terms defined). Terms not otherwise defined in this Section 1.01 have the meanings given to them elsewhere herein.
"Administrative Agent" means Pinnacle Atlantic Bank, N.A., a national banking association, with its principal office at 270 Park Place, Charlotte, NC 28202, in its capacity as administrative agent for the Lenders hereunder, and its successors and permitted assigns in such capacity.
"Administrative Questionnaire" means an administrative questionnaire in a form supplied by the Administrative Agent.
"Affiliate" means, with respect to any Person, another Person that directly, or indirectly through one or more intermediaries, Controls or is Controlled by or is under common Control with the Person specified.
"Aggregate Commitments" means the aggregate of the Term Loan A Commitments and the Revolving Commitments of all Lenders, which as of the Closing Date shall equal $500,000,000.
"Agreement" has the meaning specified in the preamble.
"Applicable Rate" means, initially, SOFR plus 225 basis points for Term Loan A and Revolving Loans that are SOFR Loans (and the Base Rate plus 125 basis points for Base Rate Loans), in each case subject to leverage-based step-downs as set forth in the Pricing Grid in Section 1.01(a).
"Arrangers" means Pinnacle Atlantic Bank, N.A., in its capacity as lead arranger and sole bookrunner, together with such co-arrangers as may be named in the Commitment Letter.
"Base Rate" means, for any day, a fluctuating rate per annum equal to the highest of (i) the Federal Funds Rate in effect on such day plus 0.50%, (ii) the "prime rate" of Pinnacle Atlantic Bank, N.A. publicly announced from time to time as its prime rate at its principal office in Charlotte, North Carolina, and (iii) one-month SOFR plus 1.00%. Any change in the Base Rate shall be effective from and including the effective date of such change without notice to the Borrower.
"Base Rate Loan" means a Loan that bears interest based on the Base Rate.
"Benchmark Transition Event" has the meaning specified in Section 2.17.
"Borrower" means Cascadia Fiber Networks, Inc., a Delaware corporation (EIN: 45-6128937; Delaware Secretary of State File No. 5197843), with its principal office located at 2750 NW Thurman Street, Suite 400, Portland, Oregon 97210, and its permitted successors and assigns (including, from and after the Closing Date, in its capacity as the surviving corporation of the Merger).
"Business Day" means any day other than a Saturday, Sunday, or other day on which commercial banks in New York, New York are authorized or required by law to close; provided that, when used in connection with a SOFR Loan, the term "Business Day" shall also exclude any day that is not a U.S. Government Securities Business Day.
"Capital Lease" means, as applied to any Person, any lease of any property (whether real, personal, or mixed) by such Person as lessee that, in conformity with GAAP, is required to be accounted for as a finance lease on the balance sheet of such Person. As of the date hereof, the aggregate outstanding balance under the Borrower's existing Capital Leases is approximately $12,300,000.
"Change in Law" means (a) the adoption of any law, treaty, order, policy, rule, or regulation after the date hereof, (b) any change in any law, treaty, order, policy, rule, or regulation, or in the interpretation or application thereof, by any Governmental Authority after the date hereof, or (c) compliance by any Lender with any request, guideline, or directive issued or made after the date hereof by any Governmental Authority (including any requirements imposed under the Dodd-Frank Act and Basel III or Basel IV).
"Change of Control" means the occurrence of any of the following: (i) any "person" or "group" (within the meaning of Sections 13(d) and 14(d) of the Securities Exchange Act of 1934) other than the Parent Guarantor or a wholly-owned Subsidiary of the Parent Guarantor becomes the beneficial owner of more than 50% of the equity interests of the Borrower entitled to vote for the election of directors; (ii) the Parent Guarantor ceases to own, directly or indirectly through one or more wholly-owned Subsidiaries, 100% of the issued and outstanding equity interests of the Borrower; or (iii) the occurrence of a "change of control" (or any comparable event or term, however denominated) under the documentation governing any Material Indebtedness.
"Closing Date" means the date on which all of the conditions precedent set forth in Article IV are satisfied or waived in accordance with the terms hereof, which is anticipated to occur in August 2025.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" means all property (whether now owned or hereafter acquired) subject to, or purported to be subject to, any Lien in favor of the Collateral Agent granted pursuant to any Security Document, including substantially all assets of the Borrower and the Pledged Equity.
"Collateral Agent" means Pinnacle Atlantic Bank, N.A., in its capacity as collateral agent for the Secured Parties under the Security Documents, and its successors and permitted assigns in such capacity.
"Commitment Fee Rate" means the rate per annum equal to 37.5 basis points, subject to leverage-based step-downs as set forth in the Pricing Grid.
"Commitment Letter" means that certain Commitment Letter dated as of March 10, 2025 (Reference No. PAB-CL-2025-03102), among Pinnacle Atlantic Bank, N.A., the other Lenders named therein, and the Borrower (or Northgate Telecommunications PLC, as applicable).
"Consolidated EBITDA" means, for any period, Consolidated Net Income for such period plus, without duplication and to the extent deducted in computing Consolidated Net Income, (i) Consolidated Interest Expense, (ii) provisions for taxes based on income, profits, or capital, (iii) depreciation and amortization expense, (iv) any non-cash charges (including impairment of goodwill and intangibles and stock-based compensation), (v) transaction fees, costs, and expenses incurred in connection with the Merger and the Transactions (in an aggregate amount not to exceed $30,000,000), (vi) restructuring charges and integration costs (subject to a cap of 15% of Consolidated EBITDA in the aggregate over the life of this Agreement), and (vii) other customary add-backs reasonably acceptable to the Administrative Agent, minus any non-cash gains, all determined on a consolidated basis in accordance with GAAP.
"Consolidated Interest Expense" means, for any period, the total interest expense (including capitalized interest, commitment fees, letter of credit fees, and amortization of deferred financing costs) of the Borrower and its Subsidiaries on a consolidated basis, net of interest income, all determined in accordance with GAAP.
"Consolidated Net Income" means, for any period, the net income (or loss) of the Borrower and its Subsidiaries on a consolidated basis for such period, determined in accordance with GAAP.
"Consolidated Total Net Debt" means, at any date of determination, the aggregate principal amount of Indebtedness of the Borrower and its Subsidiaries outstanding on such date (excluding undrawn Letters of Credit and hedging obligations not then due and payable), minus the aggregate amount of unrestricted cash and Cash Equivalents of the Borrower and its Subsidiaries on such date, in an aggregate amount not to exceed $50,000,000.
"Control" means the possession, directly or indirectly, of the power to direct or cause the direction of the management or policies of a Person, whether through the ability to exercise voting power, by contract, or otherwise.
"Default" means any event or condition that constitutes an Event of Default or that, with the giving of notice or the lapse of time, or both, would (unless cured or waived) become an Event of Default.
"Dollars" or "$" means lawful money of the United States of America.
"ERISA" means the Employee Retirement Income Security Act of 1974, as amended.
"ERISA Event" means, without limitation, (i) a Reportable Event with respect to a Pension Plan, (ii) a failure by any Loan Party to meet the minimum funding standard, (iii) a withdrawal from a Multiemployer Plan, (iv) a determination that a Pension Plan is in "at risk" status, or (v) the receipt of notice by any Loan Party of any impending liability under Section 4062 or 4063 of ERISA.
"Event of Default" means any of the events specified in Section 8.01.
"Excess Cash Flow" means, for any fiscal year, Consolidated EBITDA for such fiscal year minus the sum of (i) Consolidated Interest Expense paid in cash, (ii) scheduled principal payments made in respect of Indebtedness, (iii) permitted voluntary prepayments of Indebtedness, (iv) capital expenditures made in cash (and permitted capital expenditure commitments), (v) cash income taxes paid, (vi) permitted acquisitions consummated during such fiscal year, (vii) permitted Restricted Payments paid in cash, and (viii) net changes in working capital, in each case as determined in accordance with GAAP.
"Existing Credit Agreement" means that certain Credit Agreement dated as of March 22, 2021 (as amended, restated, supplemented, or otherwise modified), among the Borrower, the lenders party thereto, and Elkhorn Capital Markets, LLC, as administrative agent, under which approximately $82,600,000 of principal is outstanding as of the date hereof, all of which shall be repaid in full on the Closing Date pursuant to the Payoff Letter.
"FATCA" means Sections 1471 through 1474 of the Code, any current or future regulations or official interpretations thereof, and any agreements entered into pursuant to Section 1471(b)(1) of the Code.
"FCC" means the Federal Communications Commission or any successor agency.
"Federal Funds Rate" means, for any day, the rate per annum equal to the weighted average of the rates on overnight federal funds transactions with members of the Federal Reserve System as published by the Federal Reserve Bank of New York on the next succeeding Business Day.
"Financial Covenants" means the covenants set forth in Section 7.11.
"GAAP" means generally accepted accounting principles in the United States as in effect from time to time, applied on a consistent basis.
"Governmental Authority" means any nation, sovereign, or government, any state, province, territory, or other political subdivision thereof, and any entity, agency, authority (including any central bank), regulatory body, or court exercising executive, legislative, judicial, regulatory, or administrative functions of or pertaining to government (including any supra-national bodies such as the European Union).
"Guaranteed Obligations" means all Obligations of the Borrower under the Loan Documents that are guaranteed by the Parent Guarantor and each other Guarantor pursuant to the Guaranty Agreement.
"Guarantors" means, collectively, the Parent Guarantor and its U.S. holding subsidiary that directly owns the Pledged Equity, together with any additional Subsidiary of the Borrower that is required to become a Guarantor pursuant to Section 6.10.
"Guaranty Agreement" means the Guaranty Agreement to be executed and delivered on the Closing Date by each Guarantor in favor of the Administrative Agent for the benefit of the Secured Parties.
"Indebtedness" means, with respect to any Person, without duplication, (a) all obligations for borrowed money, (b) all obligations evidenced by bonds, debentures, notes, or similar instruments, (c) all obligations to pay the deferred purchase price of property or services (other than trade payables incurred in the ordinary course), (d) all Capital Lease obligations, (e) all reimbursement obligations under letters of credit, (f) all guarantees of Indebtedness of others, and (g) net obligations under Swap Agreements.
"Interest Coverage Ratio" means, as of the last day of any fiscal quarter, the ratio of (a) Consolidated EBITDA for the four consecutive fiscal quarters ending on such date to (b) Consolidated Interest Expense paid or payable in cash for such period. The minimum required Interest Coverage Ratio is 2.50 to 1.00.
"Interest Period" means, with respect to any SOFR Loan, the period commencing on the date of borrowing and ending one, three, or six months thereafter (or such other period as may be available and agreed to by the Administrative Agent), as selected by the Borrower.
"Issuing Bank" means Pinnacle Atlantic Bank, N.A., in its capacity as issuer of Letters of Credit hereunder, and any other Revolving Lender that agrees to act as an Issuing Bank.
"Lenders" means, collectively, the financial institutions party hereto from time to time as lenders. On the Closing Date, the Lenders and their respective Commitments shall be as follows:
"Letter of Credit" means any standby or trade letter of credit issued by an Issuing Bank hereunder.
"Lien" means any mortgage, pledge, hypothecation, security interest, encumbrance, lien (statutory or otherwise), charge, or other similar arrangement (including any conditional sale or other title retention agreement and any Capital Lease).
"Loan" means an extension of credit by a Lender to the Borrower under Article II in the form of a Term Loan A, a Revolving Loan, a Swing Line Loan, or a Base Rate Loan or SOFR Loan, as applicable.
"Loan Documents" means this Agreement, the Guaranty Agreement, the Security Agreement, the Pledge Agreement, each promissory note issued pursuant to Section 2.11, each Loan Notice, each Compliance Certificate, and each other agreement, instrument, or document executed and delivered in connection herewith.
"Loan Notice" means a notice of a borrowing, conversion, or continuation of a Loan, substantially in the form of Exhibit A.
"Loan Party" means the Borrower and each Guarantor.
"Material Adverse Effect" means any event, circumstance, condition, development, occurrence, or change that has, or would reasonably be expected to have, a material adverse effect on (a) the business, assets, operations, or financial condition of the Borrower and its Subsidiaries taken as a whole, (b) the ability of any Loan Party to perform its obligations under the Loan Documents, or (c) the rights and remedies of the Administrative Agent, the Collateral Agent, and the Lenders under the Loan Documents (taken as a whole).
"Material Indebtedness" means Indebtedness of any Loan Party in an aggregate outstanding principal amount exceeding $10,000,000.
"Maturity Date" means the date that is five (5) years after the Closing Date; provided that if such date is not a Business Day, the Maturity Date shall be the immediately preceding Business Day.
"Merger" means the merger of NTP Acquisition Sub, Inc., a Delaware corporation and wholly-owned indirect Subsidiary of the Parent Guarantor, with and into Cascadia Fiber Networks, Inc., with Cascadia Fiber Networks, Inc. surviving as a wholly-owned indirect Subsidiary of the Parent Guarantor, in accordance with the terms of the Merger Agreement and Section 251 of the General Corporation Law of the State of Delaware.
"Merger Agreement" means that certain Agreement and Plan of Merger among Northgate Telecommunications PLC, NTP Acquisition Sub, Inc., and Cascadia Fiber Networks, Inc. (targeted for execution on April 7, 2025), as the same may be amended, supplemented, or otherwise modified from time to time in accordance with the terms thereof and hereof.
"Net Working Capital" has the meaning ascribed to such term in the Merger Agreement. The Target Net Working Capital is $14,800,000.
"Obligations" means all advances to, and debts, liabilities, obligations, covenants, and duties of, the Borrower and each other Loan Party arising under any Loan Document or otherwise with respect to any Loan or Letter of Credit.
"Outside Date" means September 30, 2025, subject to a mutual extension right to November 29, 2025 in the event that regulatory approvals are the sole outstanding closing condition, in each case as set forth in the Merger Agreement.
"Parent Guarantor" means Northgate Telecommunications PLC, a public limited company organized under the laws of England and Wales, with its registered office located at 14 Broadwick Place, London W1F 8HN, United Kingdom (LSE: NTP; NYSE ADR: NTPL).
"Payoff Letter" means the payoff letter to be delivered by Elkhorn Capital Markets, LLC, as administrative agent under the Existing Credit Agreement, on or prior to the Closing Date, providing for the repayment in full of the Existing Credit Agreement in an amount equal to $82,600,000 of outstanding principal, a prepayment premium of $826,000 (1.0%), and accrued and unpaid interest, together with authorization to file UCC-3 termination statements and release all Liens securing the Existing Credit Agreement.
"Permitted Indebtedness" has the meaning ascribed thereto in Section 7.02.
"Permitted Investments" has the meaning ascribed thereto in Section 7.03.
"Permitted Liens" has the meaning ascribed thereto in Section 7.01.
"Person" means any natural person, corporation, limited liability company, trust, joint venture, association, company, partnership, Governmental Authority, or other entity.
"Pledge Agreement" means the Pledge Agreement to be executed and delivered on the Closing Date by the Parent Guarantor's U.S. holding subsidiary in favor of the Collateral Agent, pledging the Pledged Equity.
"Pledged Equity" means 100% of the issued and outstanding equity interests of the Borrower, pledged by the Parent Guarantor's U.S. holding subsidiary pursuant to the Pledge Agreement.
"Pricing Grid" means the pricing grid set forth in Section 1.01(a).
"PUC" means, with respect to any state, the public utility commission or public service commission or comparable body of such state.
"Required Lenders" means, at any time, Lenders holding more than 50% of the sum of (a) the aggregate outstanding principal amount of the Loans, (b) the aggregate unfunded Term Loan A Commitments, and (c) the aggregate unfunded Revolving Commitments.
"Restricted Payment" means (a) any dividend or other distribution (whether in cash, securities, or other property) on account of any equity interests of the Borrower, and (b) any purchase, redemption, retirement, acquisition, cancellation, or termination of any such equity interests.
"Revolving Commitment" means, with respect to each Revolving Lender, its commitment to make Revolving Loans hereunder, in the amount set forth opposite such Lender's name on Schedule 1.01. The aggregate Revolving Commitments on the Closing Date equal $200,000,000.
"Revolving Credit Facility" means the revolving credit facility established under Section 2.02.
"Revolving Lender" means, at any time, any Lender that has a Revolving Commitment or holds Revolving Loans.
"Revolving Loan" means any Loan made pursuant to Section 2.02.
"Secured Parties" means, collectively, the Administrative Agent, the Collateral Agent, each Issuing Bank, each Swing Line Lender, each Lender, and each secured cash management or hedging counterparty designated pursuant to Section 9.11.
"Security Agreement" means the Security Agreement and Pledge Agreement to be executed and delivered on the Closing Date by the Borrower in favor of the Collateral Agent, granting a first-priority Lien on substantially all assets of the Borrower and the Pledged Equity.
"Security Documents" means, collectively, the Security Agreement, the Pledge Agreement, each UCC-1 financing statement filed in connection therewith, and each other agreement, instrument, or document granting a Lien on any Collateral in favor of the Collateral Agent for the benefit of the Secured Parties.
"SOFR" means the Secured Overnight Financing Rate published by the Federal Reserve Bank of New York (or a successor administrator) on its website (or any successor source).
"SOFR Loan" means a Loan that bears interest at a rate based on Term SOFR.
"Subsidiary" means, with respect to any Person, any corporation, limited liability company, partnership, or other entity of which more than 50% of the outstanding voting equity is owned, directly or indirectly, by such Person.
"Swap Agreement" means any interest rate, currency, commodity, or other hedging agreement or arrangement.
"Swing Line Lender" means Pinnacle Atlantic Bank, N.A., in its capacity as swing line lender.
"Swing Line Loan" means a swing line loan made pursuant to Section 2.04.
"Term Loan A" means the term loans made by the Term Lenders to the Borrower on the Closing Date pursuant to Section 2.01, in an aggregate principal amount of $300,000,000.
"Term Loan A Commitment" means, with respect to each Term Lender, its commitment to make its portion of the Term Loan A on the Closing Date, in the amount set forth opposite such Lender's name on Schedule 1.01. The aggregate Term Loan A Commitments on the Closing Date equal $300,000,000.
"Term Lender" means any Lender that has a Term Loan A Commitment or holds any portion of the Term Loan A.
"Term SOFR" means the forward-looking term rate based on SOFR published by the CME Group (or any successor administrator) for the applicable Interest Period.
"Total Net Leverage Ratio" means, as of the last day of any fiscal quarter, the ratio of (a) Consolidated Total Net Debt as of such date to (b) Consolidated EBITDA for the four consecutive fiscal quarters ending on such date.
"Transactions" means, collectively, (a) the Merger, (b) the repayment of the Existing Credit Agreement and other Indebtedness of the Borrower on the Closing Date, (c) the entering into of the Loan Documents and the funding of the Term Loan A on the Closing Date, and (d) the payment of transaction fees, costs, and expenses in connection with the foregoing.
"U.S. Government Securities Business Day" means any day other than a Saturday, Sunday, or day on which the Securities Industry and Financial Markets Association recommends that the fixed income departments of its members be closed.
Section 1.01(a) — Pricing Grid
The Applicable Rate and the Commitment Fee Rate shall be determined by reference to the Total Net Leverage Ratio, as follows:
Any adjustment to the Applicable Rate or the Commitment Fee Rate shall be effective as of the third Business Day following the Administrative Agent's receipt of the applicable Compliance Certificate. From the Closing Date until the delivery of the first Compliance Certificate required under Section 6.01, the Applicable Rate and the Commitment Fee Rate shall be at Level I.
Section 1.02 — Other Interpretive Provisions
With reference to this Agreement and each other Loan Document, unless otherwise specified herein or in such Loan Document:
(a) The words "hereof," "herein," "hereunder," and words of similar import when used in any Loan Document refer to such Loan Document as a whole and not to any particular provision thereof.
(b) The word "including" is not limiting and means "including without limitation."
(c) References to Articles, Sections, Schedules, and Exhibits are references to Articles and Sections of, and Schedules and Exhibits to, this Agreement unless otherwise expressly stated.
(d) All references to any agreement, instrument, or other document are to such agreement, instrument, or document as amended, restated, supplemented, or otherwise modified from time to time.
(e) All references to any statute, rule, regulation, or law are to such statute, rule, regulation, or law as amended and in effect from time to time.
(f) All references to time of day mean New York City time unless otherwise indicated.
(g) Section headings are for convenience of reference only and shall not affect the interpretation of any Loan Document.
Section 1.03 — Accounting Terms
All accounting terms not specifically or completely defined herein shall be construed in conformity with, and all financial data (including financial ratios and other financial calculations) required to be submitted pursuant hereto shall be prepared in conformity with, GAAP as in effect from time to time, applied on a consistent basis. Notwithstanding the foregoing, if at any time any change in GAAP would affect the computation of any financial ratio or requirement set forth in any Loan Document, the Borrower and the Administrative Agent shall negotiate in good faith to amend such ratio or requirement to preserve the original intent thereof in light of such change; until so amended, such ratio or requirement shall continue to be computed in accordance with GAAP prior to such change.
Section 1.04 — Rounding
Any financial ratios required to be maintained or calculated pursuant to this Agreement shall be calculated by dividing the appropriate component by the other component, carrying the result to one place more than the number of places by which such ratio is expressed herein and rounding the result up or down to the nearest number (with a rounding-up if there is no nearest number). All dollar amounts shall be rounded to two decimal places, except as otherwise expressly provided.
Section 1.05 — Times of Day
Unless otherwise specified, all references herein to times of day shall be references to New York City time (daylight or standard, as applicable).
Section 1.06 — Division
For all purposes under the Loan Documents, in connection with any division or plan of division under Delaware law (or any comparable event under a different jurisdiction's law): (a) if any asset, right, obligation, or liability of any Person becomes the asset, right, obligation, or liability of a different Person, then it shall be deemed to have been transferred from the original Person to the subsequent Person, and (b) if any new Person comes into existence, such new Person shall be deemed to have been organized on the first date of its existence by the holders of its equity interests at such time.
ARTICLE II — THE COMMITMENTS AND CREDIT EXTENSIONS
Section 2.01 — Term Loan A Commitments
Subject to the terms and conditions set forth herein, each Term Lender severally agrees to make a single term loan to the Borrower on the Closing Date in Dollars in an amount equal to such Term Lender's Term Loan A Commitment. The aggregate principal amount of the Term Loan A on the Closing Date shall be $300,000,000, allocated among the Term Lenders as follows:
(a) Pinnacle Atlantic Bank, N.A.: $120,000,000;
(b) Commonwealth Trust Bank: $75,000,000;
(c) Dralvecen National Bank: $60,000,000; and
(d) Elkhorn Capital Markets, LLC: $45,000,000.
Amounts borrowed under this Section 2.01 that are repaid or prepaid may not be reborrowed. The Term Loan A Commitments shall automatically terminate upon the funding of the Term Loan A on the Closing Date (or, if the Closing Date has not occurred, upon the earlier of the Outside Date or the termination of the Merger Agreement in accordance with its terms).
Section 2.02 — Revolving Credit Commitments
Subject to the terms and conditions set forth herein, each Revolving Lender severally agrees to make Revolving Loans in Dollars to the Borrower from time to time from the Closing Date through, but excluding, the Maturity Date, in an aggregate principal amount not to exceed at any time outstanding the amount of such Revolving Lender's Revolving Commitment. The aggregate Revolving Commitments on the Closing Date shall equal $200,000,000, allocated among the Revolving Lenders as follows:
(a) Pinnacle Atlantic Bank, N.A.: $80,000,000;
(b) Commonwealth Trust Bank: $50,000,000;
(c) Dralvecen National Bank: $40,000,000; and
(d) Elkhorn Capital Markets, LLC: $30,000,000.
Within the foregoing limits and subject to the other terms and conditions of this Agreement, the Borrower may borrow Revolving Loans, prepay them under Section 2.07, and reborrow them until the Maturity Date. At no time shall the aggregate principal amount of Revolving Loans outstanding (together with the aggregate outstanding amount of Swing Line Loans and Letter of Credit exposures) exceed the aggregate Revolving Commitments then in effect.
Section 2.03 — Borrowing Procedure
Each borrowing of Loans shall be made upon the Borrower's irrevocable written notice to the Administrative Agent, which shall be substantially in the form of Exhibit A (each, a "Loan Notice"). Each such Loan Notice must be received by the Administrative Agent not later than 12:00 noon (a) three (3) U.S. Government Securities Business Days prior to the requested date of any borrowing of SOFR Loans, and (b) one (1) Business Day prior to the requested date of any borrowing of Base Rate Loans. Each Loan Notice shall specify (i) whether the Borrower is requesting a borrowing of SOFR Loans or Base Rate Loans, (ii) the requested date of such borrowing (which shall be a Business Day), (iii) the principal amount of such borrowing, and (iv) if applicable, the Interest Period therefor.
Each borrowing of SOFR Loans shall be in a minimum principal amount of $5,000,000, or a whole multiple of $1,000,000 in excess thereof. Each borrowing of Base Rate Loans shall be in a minimum principal amount of $1,000,000, or a whole multiple of $500,000 in excess thereof.
Promptly following its receipt of a Loan Notice, the Administrative Agent shall notify each Lender of the amount of its pro rata share of the requested borrowing. Each Lender shall make its portion of each borrowing available to the Administrative Agent by wire transfer of immediately available funds to the account designated by the Administrative Agent by not later than 1:00 p.m. on the requested borrowing date.
Section 2.04 — Swing Line Loans
Subject to the terms and conditions set forth herein, the Swing Line Lender may, in its discretion, make Swing Line Loans in Dollars to the Borrower from time to time from the Closing Date until the Maturity Date, in an aggregate principal amount at any one time outstanding not to exceed $15,000,000 (the "Swing Line Sublimit"); provided that no Swing Line Loan shall be made if, after giving effect thereto, the aggregate Revolving Credit exposures would exceed the aggregate Revolving Commitments.
Each Revolving Lender shall, upon notice from the Administrative Agent, purchase from the Swing Line Lender a participation in each Swing Line Loan in an amount equal to such Revolving Lender's pro rata share. Settlement among the Revolving Lenders shall occur on the earlier of (i) the third Business Day after the making of such Swing Line Loan and (ii) any Business Day on which the Swing Line Lender so requests.
Section 2.05 — Letters of Credit
Subject to the terms and conditions set forth herein, each Issuing Bank agrees to issue Letters of Credit for the account of the Borrower from time to time from the Closing Date until the Maturity Date, in an aggregate face amount at any one time outstanding not to exceed $25,000,000 (the "L/C Sublimit"); provided that no Letter of Credit shall be issued if, after giving effect thereto, the aggregate Revolving Credit exposures would exceed the aggregate Revolving Commitments.
Requests for issuance, amendment, renewal, or extension of Letters of Credit shall be delivered to the applicable Issuing Bank (with a copy to the Administrative Agent) not less than three (3) Business Days prior to the requested date thereof. Each Letter of Credit shall have an expiry date not later than the earlier of (a) twelve months after issuance (subject to renewal on customary terms) and (b) five (5) Business Days prior to the Maturity Date.
Upon any drawing under a Letter of Credit, the Borrower shall reimburse the applicable Issuing Bank in Dollars in the amount of such drawing not later than 1:00 p.m. on the Business Day immediately following the Business Day on which such drawing is honored. Any unreimbursed drawing shall be automatically converted into a Revolving Loan bearing interest at the Base Rate. Each Revolving Lender hereby irrevocably agrees to purchase from each Issuing Bank a participation in each Letter of Credit issued by such Issuing Bank in an amount equal to such Revolving Lender's pro rata share of the face amount thereof.
Section 2.06 — Repayment of Term Loan A
The Borrower shall repay the outstanding principal amount of the Term Loan A in consecutive quarterly installments payable on the last Business Day of each fiscal quarter, commencing with the last Business Day of the first full fiscal quarter ending after the Closing Date, as follows (based on the original principal amount of $300,000,000):
The remaining outstanding principal balance of the Term Loan A, together with all accrued and unpaid interest thereon, shall be due and payable on the Maturity Date. See Schedule 2.06 for the detailed amortization schedule.
Section 2.07 — Prepayments
Section 2.07(a) — Voluntary Prepayments
The Borrower may, upon irrevocable notice to the Administrative Agent given no later than 12:00 noon (i) three (3) U.S. Government Securities Business Days prior to any voluntary prepayment of SOFR Loans, and (ii) one (1) Business Day prior to any voluntary prepayment of Base Rate Loans, prepay Term Loan A or Revolving Loans, in whole or in part, without premium or penalty (other than compensation for any breakage costs pursuant to Section 2.14). Each such voluntary prepayment shall be in a minimum aggregate principal amount of $5,000,000 or, if less, the entire outstanding amount, and in integral multiples of $1,000,000 in excess thereof.
Voluntary prepayments of the Term Loan A shall be applied to reduce the remaining scheduled amortization installments thereof in direct order of maturity, or in such other order as the Borrower may direct.
Section 2.07(b) — Mandatory Prepayments
The Borrower shall make mandatory prepayments in accordance with the following:
(i) Asset Sales. Within five (5) Business Days after receipt by the Borrower or any of its Subsidiaries of net cash proceeds from any sale, transfer, or other disposition of assets (other than dispositions permitted by Section 7.05) that (A) individually exceed $5,000,000 or (B) in the aggregate exceed $15,000,000 in any fiscal year, the Borrower shall prepay the Loans in an amount equal to 100% of such net cash proceeds; provided that the Borrower may reinvest such proceeds in productive assets used or useful in the business of the Borrower within 365 days of receipt (or, if committed to reinvest within such 365-day period, within 545 days of receipt), in which case such proceeds shall not be subject to mandatory prepayment.
(ii) Debt Incurrence. Within three (3) Business Days after receipt by the Borrower or any of its Subsidiaries of net cash proceeds from the incurrence of any Indebtedness not permitted hereunder, the Borrower shall prepay the Loans in an amount equal to 100% of such net cash proceeds.
(iii) Insurance and Condemnation Proceeds. Within five (5) Business Days after receipt by the Borrower or any of its Subsidiaries of net cash proceeds from any insurance recovery or condemnation event exceeding $5,000,000, the Borrower shall prepay the Loans in an amount equal to 100% of such net cash proceeds; provided that the Borrower may reinvest such proceeds in the repair, restoration, or replacement of the affected property, or in other productive assets, within 180 days of receipt, in which case such proceeds shall not be subject to mandatory prepayment.
(iv) Excess Cash Flow. Within ten (10) Business Days after the delivery of the annual audited financial statements pursuant to Section 6.01(a) for each fiscal year of the Borrower (commencing with the first full fiscal year ending after the Closing Date), the Borrower shall prepay the Loans in an amount equal to:
(A) 50% of Excess Cash Flow for such fiscal year, if the Total Net Leverage Ratio as of the last day of such fiscal year was greater than 3.50x;
(B) 25% of Excess Cash Flow for such fiscal year, if the Total Net Leverage Ratio as of the last day of such fiscal year was less than or equal to 3.50x but greater than 3.00x; and
(C) 0% of Excess Cash Flow for such fiscal year, if the Total Net Leverage Ratio as of the last day of such fiscal year was less than or equal to 3.00x.
Mandatory prepayments made pursuant to this Section 2.07(b) shall be applied first to the remaining scheduled amortization installments of the Term Loan A in direct order of maturity, and second, after the Term Loan A has been repaid in full, to the outstanding Revolving Loans (without a corresponding permanent reduction of the Revolving Commitments).
Section 2.08 — Interest
Section 2.08(a) — Interest Rates
Subject to the provisions of Section 2.08(b), (i) each SOFR Loan shall bear interest during each Interest Period applicable thereto at a rate per annum equal to Term SOFR for such Interest Period plus the Applicable Rate for SOFR Loans in effect from time to time, and (ii) each Base Rate Loan shall bear interest at a rate per annum equal to the Base Rate plus the Applicable Rate for Base Rate Loans in effect from time to time. The Applicable Rate for Base Rate Loans is 100 basis points less than the Applicable Rate for SOFR Loans at each level of the Pricing Grid. Notwithstanding anything to the contrary herein, at no time shall SOFR (or the SOFR component of the Base Rate) be less than 0.00%.
Section 2.08(b) — Default Interest
Upon the occurrence and during the continuance of any Event of Default, and automatically upon the occurrence of any Event of Default under Section 8.01(a) or 8.01(f), the outstanding principal amount of each Loan (and, to the extent permitted by applicable law, past due interest, fees, and other amounts) shall bear interest at a rate per annum equal to 2.00% plus the interest rate otherwise applicable thereto.
Section 2.08(c) — Interest Payment Dates
Interest on each Loan shall be payable in arrears on each Interest Payment Date applicable thereto and at such other times as may be specified herein. "Interest Payment Date" means (i) with respect to any SOFR Loan, the last day of each Interest Period applicable to such Loan and, for any Interest Period longer than three months, on the date that is every three months after the first day of such Interest Period, (ii) with respect to any Base Rate Loan, the last Business Day of each calendar quarter, and (iii) with respect to all Loans, the Maturity Date.
Section 2.09 — Fees
Section 2.09(a) — Commitment Fee
The Borrower shall pay to the Administrative Agent for the account of each Revolving Lender, in accordance with its pro rata share, a commitment fee equal to the Commitment Fee Rate times the actual daily amount by which the aggregate Revolving Commitments exceeds the sum of the outstanding principal amount of Revolving Loans and the L/C exposure. The commitment fee shall accrue at all times from the Closing Date and shall be due and payable quarterly in arrears on the last Business Day of each March, June, September, and December, commencing with the first such date to occur after the Closing Date, and on the Maturity Date.
Section 2.09(b) — Administrative Agent Fees
The Borrower shall pay to the Administrative Agent, for its own account, fees payable in the amounts and at the times specified in that certain Administrative Agent Fee Letter between the Borrower and Pinnacle Atlantic Bank, N.A.
Section 2.09(c) — Letter of Credit Fees
The Borrower shall pay (i) to the applicable Issuing Bank, for its own account, a fronting fee of 12.5 basis points per annum on the average daily face amount of Letters of Credit issued by such Issuing Bank, and (ii) to the Administrative Agent, for the account of the Revolving Lenders on a pro rata basis, a participation fee equal to the Applicable Rate then in effect for SOFR Loans on the average daily face amount of outstanding Letters of Credit. Such fees shall be payable quarterly in arrears.
Section 2.10 — Computation of Interest and Fees
All computations of interest for Base Rate Loans (including Base Rate Loans determined by reference to the Federal Funds Rate) shall be made on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed. All other computations of interest and fees hereunder shall be made on the basis of a 360-day year and actual days elapsed (which results in more interest being paid than if computed on the basis of a 365-day year).
Section 2.11 — Evidence of Debt
The Loans made by each Lender shall be evidenced by one or more accounts or records maintained by such Lender and by the Administrative Agent in the ordinary course of business. The accounts or records maintained by the Administrative Agent and each Lender shall be conclusive absent manifest error of the amount of the Loans made by the Lenders to the Borrower and the interest and payments thereon. Upon the request of any Lender made through the Administrative Agent, the Borrower shall execute and deliver to such Lender (through the Administrative Agent) a promissory note substantially in the form of Exhibit D, payable to such Lender.
Section 2.12 — Payments Generally; Pro Rata Treatment
All payments to be made by the Borrower shall be made without condition or deduction for any counterclaim, defense, recoupment, or setoff. Except as otherwise expressly provided herein, all payments by the Borrower hereunder shall be made to the Administrative Agent, for the account of the respective Lenders, at the Administrative Agent's office in Charlotte, North Carolina, in immediately available Dollars, not later than 2:00 p.m. New York City time on the date specified herein. All payments received by the Administrative Agent after 2:00 p.m. shall be deemed received on the next succeeding Business Day and any applicable interest or fees shall continue to accrue.
Section 2.13 — Sharing of Payments
If any Lender shall, by exercising any right of setoff or counterclaim, obtain payment in respect of any Obligation resulting in such Lender receiving payment of a greater proportion of the aggregate amount of its Loans and accrued interest thereon than the proportion received by any other Lender, then such Lender receiving such greater proportion shall (a) notify the Administrative Agent of such fact, and (b) purchase (for cash at face value) participations in the Loans of the other Lenders, to the extent necessary so that the benefit of all such payments shall be shared by the Lenders ratably in accordance with the aggregate amount of their Loans.
Section 2.14 — Increased Costs; Capital Adequacy
If any Change in Law shall (i) impose, modify, or deem applicable any reserve, special deposit, compulsory loan, insurance charge, or similar requirement against assets of, deposits with, or credit extended by any Lender, (ii) subject any Lender to any Tax on its loans or commitments (other than Indemnified Taxes), or (iii) impose on any Lender any other condition or expense affecting this Agreement or the Loans made by such Lender, and the result of any of the foregoing shall be to increase the cost to such Lender of making or maintaining any Loan (or of maintaining its obligation to make any such Loan) or to reduce the amount of any sum received or receivable by such Lender hereunder, then the Borrower shall pay to such Lender such additional amount as will compensate such Lender for such increased cost or reduction.