AT&T Wireless 2010 Annual Report Download - page 77

AT&T Inc. 75
 •Wefailtopaywhendueotherdebtof$400ormorethat
results in acceleration of that debt (commonly referred
to as “cross-acceleration”) or a creditor commences
enforcement proceedings within a specified period after
a money judgment of $400 or more has become final,
 •Apersonacquiresbeneficialownershipofmorethan
50% of AT&T common shares or more than a majority of
AT&T’s directors changes in any 24-month period other
than as elected by the remaining directors (commonly
referred to as a “change in control”),
 •Materialbreachesofrepresentationsorwarrantiesinthe
agreement,
 •Wefailtocomplywiththenegativepledgeordebt-to-
EBITDA ratio covenants described above,
 •Wefailtocomplywithothercovenantsunderthe
Agreement for a specified period after notice,
 •Wefailtomakecertainminimumfundingpayments
under Employee Retirement Income Security Act of 1974,
as amended (ERISA), and
 •Ourbankruptcyorinsolvency.
364-day Agreement
The obligations of the lenders to provide advances will
terminate on December 19, 2011, unless prior to that date
either: (i) we reduce to $0 the commitments of the lenders,
or (ii) certain events of default occur. We and lenders
representing more than 50% of the facility amount may agree
to extend their commitments for an additional 364-day period
beyond the December 19, 2011 termination date, under
certain circumstances. We also can convert all or part of
outstanding advances under the 364-day Agreement into
term loan(s) maturing no later than the first anniversary
of the termination date, under certain circumstances.
Advances would bear interest, at our option, either:
 •atavariableannualrateequalto(1)thehighestof
(a) the base (or prime) rate of a designated bank,
(b) 0.50% per annum above the Federal funds rate, and
(c) the British Bankers Association Interest Settlement
Rate applicable to Dollars for a period of one month
plus 1.00%, plus (2) a rate based on AT&T’s credit default
swap mid-rate spread and subject to a floor or cap
as set forth in such Agreement (Applicable Margin)
minus 1.00% provided such total exceeds zero; or
 •atarateequalto:(i)LIBOR(adjustedupwardstoreflect
any bank reserve costs) for a period of one, two, three or
six months, as applicable, plus (ii) the Applicable Margin.
The 364-day Agreement contains a negative pledge covenant
that is identical to the negative pledge described above.
In the event we elect to convert any outstanding advances
to term loan(s), the debt-to-EBITDA financial ratio covenant
described above also would apply while such term loan(s)
were outstanding. The events of default described above
also apply to the 364-day Agreement.
Credit Facilities In December 2010, we replaced our
five-year, $9,465 revolving credit facility with two new
revolving credit facilities with a syndicate of banks – a four-
year, $5,000 agreement and a $3,000, 364-day agreement.
In the event advances are made under either agreement, those
advances would be used for general corporate purposes,
which could include repayment of maturing commercial paper.
Advances are not conditioned on the absence of a material
adverse change. All advances must be repaid no later than
the date on which lenders are no longer obligated to make
any advances under each agreement. Under each agreement,
we can terminate, in whole or in part, amounts committed by
the lenders in excess of any outstanding advances; however,
we cannot reinstate any such terminated commitments.
At December 31, 2010, we had no advances outstanding
under either agreement and were in compliance with all
covenants under each agreement.
The Four-Year Agreement
We can request the lenders to further increase their
commitments (i.e., raise the available credit) up to an
additional $2,000 provided no event of default has occurred.
The obligations of the lenders to provide advances will
terminate on December 20, 2014, unless prior to that date
either: (i) we reduce to $0 the commitments of the lenders, or
(ii) certain events of default occur. We and lenders representing
more than 50% of the facility amount may agree to extend
their commitments for an additional one year beyond the
December 20, 2014 termination date (with a potential one-
year further renewal), under certain circumstances.
Advances would bear interest, at our option, either:
 •atanannualrateequalto(1)thehighestof(a)thebase
(or prime) rate of a designated bank, (b) 0.50% per
annum above the Federal funds rate, and (c) the British
Bankers Association Interest Settlement Rate applicable
to Dollars for a period of one month plus 1.00%, plus
(2) a rate based on AT&T’s credit default swap mid-rate
spread and subject to a floor or cap as set forth in the
Agreement (Applicable Margin) minus 1.00% provided
such total exceeds zero; or
 •atarateequalto:(i)theLondonInterBankOfferedRate
(LIBOR) (adjusted upwards to reflect any bank reserve
costs) for a period of one, two, three or six months, as
applicable, plus (ii) the Applicable Margin.
If we pledge assets or otherwise have liens on our properties,
then advances will be ratably secured, subject to specified
exceptions. We also must maintain a debt-to-EBITDA (earnings
before interest, income taxes, depreciation and amortization,
and other modifications described in the agreement) ratio of
not more than three-to-one, as of the last day of each fiscal
quarter, for the four quarters then ended.
Defaults under the agreement, which would permit the
lenders to accelerate required repayment and which would
increase the Applicable Margin by 2.00% per annum, include:
 •Wefailtopayprincipalorinterest,orotheramounts
under the agreement beyond any grace period,