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EXHIBIT 10.14
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AMENDED AND RESTATED CREDIT AGREEMENT
dated as of July 30, 1999
by and among
NET2000 COMMUNICATIONS GROUP, INC.
as Borrower
and
NORTEL NETWORKS INC.
as Administrative Agent
and
THE LENDERS NAMED HEREIN
$75,000,000 ADVANCING TERM LOAN FACILITY
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TABLE OF CONTENTS
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ARTICLE 1 - Definitions..............................................................................1
Section 1.1 Definitions, etc..................................................................1
Section 1.2 Other Definitional Provisions....................................................25
Section 1.3 Accounting Terms and Determinations..............................................25
Section 1.4 Financial Covenants and Reporting................................................26
ARTICLE 2 - Loans...................................................................................27
Section 2.1 Commitments......................................................................27
Section 2.2 Notes............................................................................27
Section 2.3 Repayment of Loans...............................................................28
Section 2.4 Interest.........................................................................29
Section 2.5 Borrowing Procedure..............................................................30
Section 2.6 Optional Prepayments, Conversions and Continuations of Loans.....................30
Section 2.7 Mandatory Prepayments............................................................30
Section 2.8 Minimum Amounts..................................................................31
Section 2.9 Certain Notices..................................................................31
Section 2.10 Use of Proceeds..................................................................32
Section 2.11 Fees.............................................................................33
Section 2.12 Computations.....................................................................33
Section 2.13 Termination or Reduction of Commitments..........................................33
ARTICLE 3 - Payments................................................................................34
Section 3.1 Method of Payment................................................................34
Section 3.2 Pro Rata Treatment...............................................................34
Section 3.3 Sharing of Payments, Etc.........................................................34
Section 3.4 Non-Receipt of Funds by the Administrative Agent.................................35
Section 3.5 Taxes............................................................................35
Section 3.6 Withholding Tax Exemption........................................................36
Section 3.7 Reinstatement of Obligations.....................................................37
Section 3.8 No Force Majeure, Disputes.......................................................37
ARTICLE 4 - Yield Protection and Illegality.........................................................38
Section 4.1 Additional Costs.................................................................38
Section 4.2 Limitation on Types of Loans.....................................................39
Section 4.3 Illegality.......................................................................40
Section 4.4 Treatment of Affected Loans......................................................40
Section 4.5 Compensation.....................................................................40
Section 4.6 Capital Adequacy.................................................................41
Section 4.7 Additional Interest on Eurodollar Loans..........................................41
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ARTICLE 5 - Security................................................................................43
Section 5.1 Collateral.......................................................................43
Section 5.2 Guaranties.......................................................................43
Section 5.3 New Subsidiaries; Additional Capital Stock.......................................43
Section 5.4 New Mortgaged Properties; Landlord Waivers.......................................44
Section 5.5 Setoff...........................................................................45
ARTICLE 6 - Conditions Precedent....................................................................45
Section 6.1 Initial Extension of Credit......................................................45
Section 6.2 All Extensions of Credit.........................................................49
Section 6.3 Closing Certificates.............................................................50
ARTICLE 7 - Representations and Warranties..........................................................51
Section 7.1 Existence........................................................................51
Section 7.2 Financial Statements.............................................................51
Section 7.3 Corporate Action; No Breach......................................................51
Section 7.4 Operation of Business............................................................52
Section 7.5 Intellectual Property............................................................52
Section 7.6 Litigation and Judgments.........................................................52
Section 7.7 Rights in Properties; Liens......................................................53
Section 7.8 Enforceability...................................................................53
Section 7.9 Approvals........................................................................53
Section 7.10 Debt.............................................................................53
Section 7.11 Taxes............................................................................53
Section 7.12 Margin Securities................................................................54
Section 7.13 ERISA............................................................................54
Section 7.14 Disclosure.......................................................................55
Section 7.15 Subsidiaries.....................................................................55
Section 7.16 Compliance with Laws.............................................................55
Section 7.17 Investment Company Act...........................................................55
Section 7.18 Public Utility Holding Company Act...............................................55
Section 7.19 Environmental Matters............................................................55
Section 7.20 Year 2000 Compliance.............................................................57
Section 7.21 Labor Disputes and Acts of God...................................................57
Section 7.22 Material Contracts...............................................................57
Section 7.23 Bank Accounts....................................................................57
Section 7.24 Outstanding Securities...........................................................57
Section 7.25 Solvency.........................................................................57
Section 7.26 Employee Matters.................................................................58
Section 7.27 Insurance........................................................................58
Section 7.28 Common Enterprise................................................................58
ARTICLE 8 - Affirmative Covenants...................................................................58
Section 8.1 Reporting Requirements...........................................................58
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Section 8.2 Maintenance of Existence; Conduct of Business....................................61
Section 8.3 Maintenance of Properties and ...................................................62
Section 8.4 Taxes and Claims.................................................................62
Section 8.5 Insurance........................................................................62
Section 8.6 Inspection Rights................................................................64
Section 8.7 Keeping Books and Records........................................................64
Section 8.8 Compliance with Laws.............................................................64
Section 8.9 Compliance with Agreements.......................................................64
Section 8.10 Further Assurances...............................................................64
Section 8.11 ERISA............................................................................65
Section 8.12 Interest Rate Protection.........................................................65
Section 8.13 Miscellaneous Business Covenants.................................................65
Section 8.14 Year 2000 Compliance.............................................................66
Section 8.15 Trade Accounts Payable...........................................................66
Section 8.16 Delivery of Certain Amendments and Material Contracts............................66
Section 8.17 Contribution to Equity Capital of NCH and the Borrower...........................66
ARTICLE 9 - Negative Covenants......................................................................67
Section 9.1 Debt.............................................................................67
Section 9.2 Limitation on Liens..............................................................68
Section 9.3 Mergers, Etc.....................................................................68
Section 9.4 Restricted Payments..............................................................68
Section 9.5 Investments......................................................................69
Section 9.6 Limitation on Issuance of Capital Stock of the Borrower..........................70
Section 9.7 Transactions with Affiliates.....................................................70
Section 9.8 Disposition of Property..........................................................70
Section 9.9 Sale and Leaseback...............................................................71
Section 9.10 Lines of Business................................................................71
Section 9.11 Environmental Protection.........................................................71
Section 9.12 Intercompany Transactions........................................................72
Section 9.13 Management Fees..................................................................72
Section 9.14 Modification of Other Agreements.................................................72
Section 9.15 ERISA............................................................................72
Section 9.16 Financial Covenants..............................................................73
Section 9.17 No Prepayment of Debt............................................................74
ARTICLE 10 - Default................................................................................75
Section 10.1 Events of Default................................................................75
Section 10.2 Remedies.........................................................................77
Section 10.3 Performance by the Administrative Agent, etc.....................................78
ARTICLE 11 - The Administrative Agent...............................................................79
Section 11.1 Appointment, Powers and Immunities...............................................79
Section 11.2 Rights of Administrative Agent as a Lender.......................................80
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Section 11.3 Defaults.........................................................................80
Section 11.4 INDEMNIFICATION..................................................................80
Section 11.5 Independent Credit Decisions.....................................................81
Section 11.6 Several Commitments..............................................................81
Section 11.7 Successor Administrative Agent...................................................82
ARTICLE 12 - Miscellaneous..........................................................................82
Section 12.1 Expenses.........................................................................82
Section 12.2 INDEMNIFICATION..................................................................83
Section 12.3 Limitation of Liability..........................................................84
Section 12.4 No Duty..........................................................................84
Section 12.5 No Fiduciary Relationship........................................................84
Section 12.6 Equitable Relief.................................................................84
Section 12.7 No Waiver; Cumulative Remedies...................................................84
Section 12.8 Successors and Assigns...........................................................85
Section 12.9 Survival.........................................................................88
Section 12.10 ENTIRE AGREEMENT.................................................................89
Section 12.11 Amendments.......................................................................89
Section 12.12 Maximum Interest Rate............................................................89
Section 12.13 Notices..........................................................................90
Section 12.14 GOVERNING LAW; SUBMISSION TO JURISDICTION; SERVICE OF PROCESS....................91
Section 12.15 Counterparts.....................................................................91
Section 12.16 Severability.....................................................................91
Section 12.17 Headings.........................................................................91
Section 12.18 Construction.....................................................................92
Section 12.19 Independence of Covenants........................................................92
Section 12.20 Confidentiality..................................................................92
Section 12.21 WAIVER OF JURY TRIAL.............................................................92
Section 12.22 Approvals and Consent............................................................92
Section 12.23 Service of Process...............................................................93
Section 12.24 Amendment and Restatement........................................................93
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INDEX TO EXHIBITS
Exhibit Description
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A - Form of Assignment and Acceptance
B - Form of Note
C - Form of Notice of Borrowings, Conversions, Continuations
and Prepayments
D - Form of Compliance Certificate
INDEX TO SCHEDULES
Schedule Description
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Schedule 1.1(a) - Certain Permitted Holders
Schedule 1.1(b) - Certain Permitted Liens
Schedule 7.4 - Permits, Franchises, Licenses and Authorizations required by
Governmental Requirements or issued by Governmental
Authorities
Schedule 7.5 - Intellectual Property
Schedule 7.6 - Litigation, Etc.
Schedule 7.7 - Real Property
Schedule 7.10 - Existing Debt
Schedule 7.13 - Plans
Schedule 7.15 - Subsidiaries and Capitalization
Schedule 7.22 - Material Contracts
Schedule 7.23 - Bank Accounts
Schedule 7.26 - Employee Matters
Schedule 7.27 - Insurance
Schedule 9.5 - Certain Investments
Schedule 9.16 - Financial Covenants
(a) - Total Debt to Total Capitalization
(b) - Secured Debt to Total Capitalization
(c) - Fixed Charge Coverage
(d) - Capital Expenditures
(e) - Quarterly Minimum Revenue Levels
(f) - Total Debt to Annualized EBITDA
(g) - Secured Debt to Annualized EBITDA
(h) - EBITDA
(i) - Gross Margin Percentage
(j) - Access Lines
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AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT, dated as of July 30,
1999, is by and among NET2000 COMMUNICATIONS GROUP, INC. (the "Borrower"), a
Delaware corporation, each of the lending entities which is a party hereto (as
evidenced by the signature pages of this Agreement) or which may from time to
time become a party hereto as a lender or any successor or assignee thereof
(individually, a "Lender" and, collectively, the "Lenders"), and NORTEL NETWORKS
INC., a Delaware corporation, as agent for itself and the other Lenders (in such
capacity, together with its successors in such capacity, the "Administrative
Agent").
RECITALS:
A. The Borrower, the Administrative Agent and the Lenders are parties
to that certain Credit Agreement dated as of November 2, 1998 (the "Original
Credit Agreement") relating to a $120,000,000 advancing term loan facility and a
$20,000,000 revolving credit/term loan facility provided to finance a portion of
the Borrower's costs to purchase Nortel Networks Goods and Services (as defined
herein), to finance certain Eligible Third-Party Expenses (as defined herein)
and to provide working capital for the Borrower and its Subsidiaries.
B. The Borrower, the Administrative Agent and the Lenders desire to
amend and restate the Original Credit Agreement (i) to provide for a $75,000,000
advancing term loan facility and (ii) to amend the Original Credit Agreement in
certain other respects.
C. The Lender(s) identified on the signature pages of this Agreement
and the Administrative Agent desire to provide such credit facility upon and
subject to the terms and provisions contained in this Agreement.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the parties hereto hereby agree as follows:
ARTICLE 1
Definitions
Section 1.1 Definitions, etc. As used in this Agreement, the following
terms shall have the following meanings:
"Access Lines" means, at any time, the total number of telephone lines of
business end-users connected to the Network and for which the Borrower and its
Consolidated Subsidiaries are providing local access at such time.
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"Additional Costs" means as specified in Section 4.1(a).
"Adjusted Eurodollar Rate" means, for any Eurodollar Loan for any
Interest Period therefor, the rate per annum (rounded upwards, if necessary, to
the nearest 1/16 of one percent) determined by the Administrative Agent to be
equal to (a) the Eurodollar Rate for such Eurodollar Loan for such Interest
Period divided by (b) one minus the Reserve Requirement for such Eurodollar Loan
for such Interest Period.
"Adjusted Net Income" means, as to any Person (the "subject Person") and
its Consolidated Subsidiaries and for any period, Consolidated Net Income less
the following (without duplication) to the extent that any of the following
shall have been included in Consolidated Net Income for such period: (a) any net
gain or loss arising from the sale of capital assets, (b) any net gain or loss
arising from any write-up or write-down of assets, (c) earnings or losses of any
other Person, substantially all of the assets of which have been acquired by the
subject Person or a Consolidated Subsidiary of the subject Person in any manner,
to the extent that such earnings or losses were realized by such other Person
prior to the date of such acquisition, (d) earnings or losses of any Person
(other than a Consolidated Subsidiary of the subject Person) in which the
subject Person or a Consolidated Subsidiary of the subject Person has an
ownership interest, unless such earnings have actually been received by the
subject Person or such Consolidated Subsidiary in the form of cash
distributions, and (e) any net gain or loss arising from the acquisition of any
securities of the subject Person or a Consolidated Subsidiary of the subject
Person.
"Administrative Agent" means as specified in the introductory paragraph
of this Agreement.
"Administrative Agent's Letter" means that certain letter agreement dated
as of November 2, 1998, between the Administrative Agent and the Borrower.
"Advance Period" means the period commencing on the Effective Date and
ending on the day immediately preceding the Commitment Termination Date.
"Advances" means the Loans made under this Agreement.
"Affiliate" of any Person means any other Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
such Person. For the purposes of this definition, "control" when used with
respect to any Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing. For purposes of the
Loan Documents, Nortel Networks shall not be deemed to be an Affiliate of the
Borrower.
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"Agreement" means this Agreement and any and all amendments,
modifications, supplements, renewals, extensions or restatements hereof.
"Annualized EBITDA" means, as to any Person and its Consolidated
Subsidiaries and for the applicable period, the product of (a) EBITDA for the
two most recently completed fiscal quarters, multiplied by (b) two.
"Applicable Commitment Fee Rate" means (a) from the Effective Date until
the date of the Initial Assignment of Commitments and Loans, the rate per annum
equal to one-half of one percent (0.50%) per annum and (b) from and after the
date of the Initial Assignment of Commitments and Loans and thereafter, the rate
per annum equal to (i)(A) one and three-quarters percent (1.75%) per annum at
any time when the aggregate outstanding principal amount of the Loans is equal
to or less than 30% of the aggregate amount of the Commitments, (B) one and
one-half percent (1.50%) per annum at any time when the aggregate outstanding
principal amount of the Loans is greater than 30% of the aggregate amount of the
Commitments but is equal to or less than 66% of the aggregate amount of the
Commitments, and (C) three-quarters of one percent (0.75%) per annum at any time
when the aggregate outstanding principal amount of the Loans is greater than 66%
of the aggregate amount of the Commitments or (ii) such lesser rate as Nortel
Networks determines to be the "Market Clearing Rate" under the procedures and at
the time set forth in Section 12.8(j) hereof; provided, however, that in no
event shall the Applicable Commitment Fee Rate be reduced below the rate
effective under clause (a) above.
"Applicable Lending Office" means for each Lender and each Type of Loan,
the lending office of such Lender (or an Affiliate of such Lender) designated
for such Type of Loan below its name on the signature pages hereof (or, with
respect to a Lender that becomes a party to this Agreement pursuant to an
assignment made in accordance with Section 12.8, in the Assignment and
Acceptance executed by it) or such other office of such Lender (or an Affiliate
of such Lender) as such Lender may from time to time specify to the Borrower and
the Administrative Agent as the office by which its Loans of such Type are to be
made and maintained.
"Applicable Margin" means (a) from the Effective Date until the date of
the Initial Assignment of Commitments and Loans, the rate per annum equal to (i)
with respect to each Prime Rate Loan, two and one-half percent (2.50%) and (ii)
with respect to each Eurodollar Loan, three and one-half of one percent (3.50%)
and (b) from and after the date of the Initial Assignment of Commitments and
Loans and thereafter, the rate per annum equal to (i)(A) with respect to each
Prime Rate Loan, three and one-half percent (3.50%) and (B) with respect to each
Eurodollar Loan, four and one-half of one percent (4.50%) or (ii) such lesser
rates as Nortel Networks determines to be the "Market Clearing Rate" under the
procedures and at the time set forth in Section 12.8(j)
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hereof; provided, however, that in no event shall the Applicable Margin be
reduced below the rates set forth in clause (a) preceding.
"Asset Disposition" means the disposition of any or all of the Property
of the Borrower or any of its Subsidiaries or NCH, whether by sale, lease,
transfer, assignment, condemnation or otherwise, but excluding (a) sales of
inventory in the ordinary course of business, (b) the grant of a Lien as
security, (c) any involuntary disposition resulting from casualty damage to
Property, and (d) dispositions of equipment if and to the extent that the
equipment disposed of is, concurrently therewith, exchanged or replaced by
equipment of equal or greater value.
"Assignee" means as specified in Section 12.8(b).
"Assigning Lender" means as specified in Section 12.8(b).
"Assignment and Acceptance" means an assignment and acceptance entered
into by a Lender and its Assignee and accepted by the Administrative Agent
pursuant to Section 12.8(e), in substantially the form of Exhibit A hereto.
"Bankruptcy Code" means as specified in Section 10.1(e).
"Basle Accord" means the proposals for risk-based capital framework
described by the Basle Committee on Banking Regulations and Supervisory
Practices in its paper entitled "International Convergence of Capital
Measurement and Capital Standards" dated July 1988, as amended, supplemented and
otherwise modified and in effect from time to time, or any replacement thereof.
"Board of Directors" means the board of directors of the Borrower.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Borrower to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification.
"Borrower" means as specified in the initial paragraph of this Agreement.
"Business Day" means (a) any day other than a Saturday, Sunday or other
day on which commercial banks are authorized or required by law to close in New
York, New York or Dallas, Texas, and (b) with respect to all borrowings,
payments, Conversions, Continuations, Interest Periods and notices in connection
with Eurodollar Loans, any day which is a Business Day described in clause (a)
above and which is also a day on which dealings in Dollar deposits are carried
out in the London interbank market.
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"Business Plan" means the Borrower's marketing and Network build-out
plans, budget and schedule, including financial projections of NCH and the
Borrower and their respective Consolidated Subsidiaries for the eight and
one-half year period beginning on the Original Closing Date, certified as being
prepared generally in accordance with GAAP (except for the absence of
footnotes), such projections giving effect to the Debt to be incurred under this
Agreement as well as the other Debt to be incurred by NCH, the Borrower and
their respective Consolidated Subsidiaries during such period.
"Capital Expenditures" means as to any Person and its Consolidated
Subsidiaries, amounts paid or Debt incurred by such Persons in connection with
the purchase or lease by any such Persons of Property that would be required to
be capitalized and shown on the balance sheet of such Persons in accordance with
GAAP.
"Capital Lease Obligations" means, as to any Person and its Consolidated
Subsidiaries, the obligations of such Persons to pay rent or other amounts under
a lease of (or other agreement conveying the right to use) real and/or personal
Property, which obligations are classified as a capital lease on a balance sheet
of such Persons under GAAP. For purposes of this Agreement, the amount of such
Capital Lease Obligations shall be the capitalized amount thereof, determined in
accordance with GAAP.
"Capital Stock" means corporate stock and any and all securities, shares,
partnership interests, limited partnership interests, limited liability company
interests, membership interests, equity interests, participations, rights or
other equivalents (however designated) of corporate stock or any of the
foregoing issued by any entity (whether a corporation, a partnership or another
entity) and includes, without limitation, securities convertible into Capital
Stock and rights or options to acquire Capital Stock.
"Change in Control" means the existence or occurrence of any of the
following: (a) any of the Capital Stock of the Borrower is owned by any Person
other than NCH or any of the Capital Stock of NCH is owned by any Person other
than NCI; (b) any Capital Stock of any Subsidiary of the Borrower is owned by
any Person other than the Borrower or any Wholly-Owned Subsidiary of the
Borrower, (c) any Person or two or more Persons (other than the Permitted
Holders) acting as a group (as defined in Section 13d-3 of the Exchange Act)
shall have acquired beneficial ownership (within the meaning of Rule 13d-3 of
the Securities and Exchange Commission under the Exchange Act) of 35% or more of
the outstanding shares of Voting Stock of NCI; (d) individuals who, as of the
Original Closing Date, constitute the Board of Directors of NCI (the "NCI
Incumbent Board") cease for any reason to constitute at least a majority of the
Board of Directors of NCI; provided, however, that any individual becoming a
director of NCI subsequent to the Original Closing Date whose election, or
nomination for election by NCI's shareholders was approved by a vote of at least
a majority of the directors then comprising the NCI Incumbent Board shall be
considered as though
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such individual were a member of the NCI Incumbent Board, but excluding, for
this purpose, any such individual whose initial assumption of office occurs as a
result of either an actual or threatened election contest (as such terms are
used in Rule 14a-11 of Regulation 14A promulgated under the Exchange Act) or
other actual or threatened solicitation of proxies or contest by or on behalf of
a Person other than the Board of Directors of NCI; or (e) the consummation of
any transaction the result of which is that any Person or group beneficially
owns more of the Voting Stock of NCI than is beneficially owned, in the
aggregate, by the Permitted Holders.
"Closing Date" means July 30, 1999.
"Code" means the Internal Revenue Code of 1986, as amended, and the
regulations promulgated and rulings issued thereunder.
"Collateral" means all Property of any Person of any nature whatsoever
upon which a Lien is created or purported to be created by any Loan Document as
security for the Obligations or any portion thereof.
"Commitment" means, as to any Lender, the obligation of such Lender to
make or continue Loans hereunder in an aggregate principal amount up to but not
exceeding the amount set forth opposite the name of such Lender on the signature
pages hereto under the heading "Commitment" or, if such Lender is a party to an
Assignment and Acceptance, the amount of the "Commitment" set forth in the most
recent Assignment and Acceptance of such Lender, as the same may be reduced or
terminated pursuant to Section 2.13 or 10.2, and "Commitments" means such
obligations of all Lenders. As of the Effective Date, the aggregate principal
amount of the Commitments is $75,000,000.
"Commitment Percentage" means, as to any Lender and its Commitment, the
percentage equivalent of a fraction, the numerator of which is the amount of the
outstanding Commitment of such Lender (or, if such Commitment has terminated or
expired, the outstanding principal amount of the Loans of such Lender) and the
denominator of which is the aggregate amount of the outstanding Commitments of
all Lenders (or, if such Commitments have terminated or expired, the aggregate
outstanding principal amount of the Loans of all Lenders), as adjusted from time
to time in accordance with Section 12.8.
"Commitment Termination Date" means November 2, 2001.
"Communications Act" means the Communications Act of 1934, and any
successor federal statute, and the rules and regulations of the FCC thereunder,
all as amended and as the same may be in effect from time to time.
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"Consolidated Fixed Charges" means, as to any Person and its Consolidated
Subsidiaries and for any period, the sum of (a) Consolidated Interest Expense of
such Person and its Consolidated Subsidiaries paid or payable in cash during
such period, plus (b) all scheduled payments (as such scheduled payments are
reduced by application of any prepayments) of principal with respect to the
Loans and other outstanding Debt during such period, plus (c) taxes of such
Person and its Consolidated Subsidiaries paid or payable in cash during such
period, plus (d) the scheduled amount paid or payable by such Person and its
Consolidated Subsidiaries in cash during such period on account of Capital
Expenditures.
"Consolidated Interest Expense" means, as to any Person and its
Consolidated Subsidiaries and for any period, all interest on Debt of such
Person and its Consolidated Subsidiaries paid in cash during such period,
including the interest portion of payments under capital lease obligations.
"Consolidated Net Income" means, as to any Person and its Consolidated
Subsidiaries and for any period, the net income (or loss) of such Person and its
Consolidated Subsidiaries for such period, determined on a consolidated basis in
accordance with GAAP.
"Consolidated Subsidiary" means, with respect to any Person, any
Subsidiary the financial attributes of which are or would be consolidated with
those of such Person in the consolidated financial statements of such Person in
accordance with GAAP.
"Continue", "Continuation" and "Continued" shall refer to the
continuation pursuant to Section 2.6 of a Eurodollar Loan as a Eurodollar Loan
of the same Type from one Interest Period to the next Interest Period.
"Contract Rate" means as specified in Section 12.12(a).
"Contributed Capital" means, as to any Person and its Consolidated
Subsidiaries and as of any date of determination, the sum of (without
duplication) (a) equity contributions made to such Persons as of such date
(including equity contributed on or before the Effective Date), plus (b) the
amount of cash proceeds of Subordinated Debt received by such Persons as of such
date, minus (c) the aggregate amount of any dividends or distributions paid or
made by such Persons as of such date minus (d) the aggregate amount of cash
interest paid on Subordinated Debt of such Persons as of such date.
"Convert", "Conversion" and "Converted" shall refer to a conversion
pursuant to Section 2.6 or Article 4 of one Type of Loan into the other Type of
Loan.
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"Current Date" means (a) a date occurring no more than 30 days prior to
the Closing Date or other relevant date as may be specified herein (as
applicable) or (b) such earlier date which is acceptable to the Administrative
Agent.
"Debt" means as to any Person at any time (without duplication): (a) all
indebtedness, liabilities and obligations of such Person for borrowed money, (b)
all indebtedness, liabilities and obligations of such Person evidenced by bonds,
notes, debentures or other similar instruments, (c) all indebtedness,
liabilities and obligations of such Person to pay the deferred purchase price of
property or services, except trade accounts payable of such Person arising in
the ordinary course of business that are not past due by more than 90 days, (d)
all Capital Lease Obligations of such Person, (e) all Debt of others Guaranteed
by such Person, (f) all indebtedness, liabilities and obligations secured by a
Lien existing on Property owned by such Person, whether or not the indebtedness,
liabilities or obligations secured thereby have been assumed by such Person or
are non-recourse to such Person, (g) all reimbursement obligations of such
Person (whether contingent or otherwise) in respect of letters of credit,
bankers' acceptances, surety or other bonds and similar instruments, (h) all
indebtedness, liabilities and obligations of such Person to redeem or retire
shares of Capital Stock of such Person, (i) all indebtedness, liabilities and
obligations of such Person under Interest Rate Protection Agreements, and (j)
all indebtedness, liabilities and obligations of such Person in respect of
unfunded vested benefits under any pension plans.
"Default" means an Event of Default or the occurrence of an event or
condition which with notice or lapse of time or both would become an Event of
Default.
"Default Rate" means, in respect of any principal of any Loan at all
times during which any Default has occurred and is continuing or in respect of
any other amount payable by the Borrower under this Agreement or any other Loan
Document which is not paid when due (whether at stated maturity, by acceleration
or otherwise), a rate per annum during the period of such Default or during the
period commencing on the due date of such other amount until such other amount
is paid in full, respectively, equal to the lesser of (a) the sum of two percent
(2.00%) plus the Prime Rate as in effect from time to time plus the Applicable
Margin for Prime Rate Loans or (b) the Maximum Rate; provided, however, that if
such amount in default is principal of a Eurodollar Loan and the due date is a
day other than the last day of an Interest Period therefor, the "Default Rate"
for such principal shall be, for the period from and including the due date and
to but excluding the last day of the Interest Period therefor, the lesser of the
rate per annum equal to (i) the sum of two percent (2.00%) plus the interest
rate for such Eurodollar Loan for such Interest Period as provided in clause
(ii) of Section 2.4(a) hereof or (ii) the Maximum Rate and, thereafter, the rate
provided for above in this definition.
"Dollars" and "$" mean lawful money of the U.S.
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"D.L. Lines" means, at any time, the total number of Access Lines
providing digital subscriber line services.
"EBITDA" means, as to any Person and its Consolidated Subsidiaries and
for any period, without duplication, the sum of the following for such Person
and its Consolidated Subsidiaries for such period determined on a consolidated
basis in accordance with GAAP: (a) Adjusted Net Income, plus (b) Consolidated
Interest Expense, plus (c) income and franchise taxes to the extent deducted in
determining Adjusted Net Income, plus (d) depreciation and amortization expense
and other non-cash, non-tax items to the extent deducted in determining Adjusted
Net Income, minus (e) non-cash income (or losses) to the extent included in
determining Adjusted Net Income.
"Effective Date" means the initial date, on or after the Closing Date,
upon which all conditions precedent to the effectiveness of this Agreement
specified in Section 6.1 have been satisfied (or waived by the Required
Lenders).
"Eligible Assignee" means (a) any Affiliate of a Lender, (b) any
commercial bank, savings and loan association, savings bank, finance company,
insurance company, pension fund, mutual fund or other financial institution
(whether a corporation, partnership or other entity) which has been approved by
the Administrative Agent as a Lender under this Agreement or (c) any other
entity approved by the Administrative Agent which is (or which is managed by a
manager which manages funds which are) primarily engaged in making, purchasing
or otherwise investing in commercial loans or extending, or investing in
extensions of, credit for its own account in the ordinary course of its
business; provided, however, that (i) Eligible Assignee shall not include any
Affiliate of the Borrower, (ii) Eligible Assignee shall not include any business
competitor of the Borrower except after the occurrence and during the
continuance of an Event of Default, and (iii) during any time when any
Commitment remains in effect, each entity referred to in clauses (b) or (c)
preceding must, in order to constitute an Eligible Assignee of a portion of such
outstanding Commitment, have capital surplus and undivided profits aggregating
at least $500,000,000 in amount.
"Eligible Third-Party Expenses" means (a) amounts paid to vendors of
equipment, including Nortel Networks, for the construction of the Network, (b)
Network site acquisition costs excluding any lease costs, and (c) working
capital expenses.
"Environmental Law" means any federal, state, provincial, local or
foreign law, statute, code or ordinance, principle of common law, rule or
regulation, as well as any Permit, order, decree, judgment or injunction issued,
promulgated, approved or entered thereunder, relating to pollution or the
protection, cleanup or restoration of the environment or natural resources, or
to the public health or safety, or otherwise governing the generation, use,
handling, collection, treatment, storage, transportation, recovery, recycling,
discharge or disposal of Hazardous Materials, including, without limitation as
to U.S. laws, the Comprehensive Environmental Response, Compensation and
Liability
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Act of 1980, 42 U.S.C. section 9601 et seq., the Superfund Amendment and
Reauthorization Act of 1986, 99-499, 100 Stat. 1613, the Resource Conservation
and Recovery Act of 1976, 42 U.S.C. section 6901 et seq., the Occupational
Safety and Health Act, 29 U.S.C. section 651 et seq., the Clean Air Act, 42
U.S.C. section 7401 et seq., the Clean Water Act, 33 U.S.C. section 1251 et
seq., the Emergency Planning and Community Right to Know Act, 42 U.S.C.
section 11001 et seq., the Federal Insecticide, Fungicide and Rodenticide Act, 7
U.S.C. section 136 et seq., and the Toxic Substances Control Act, 15 U.S.C.
section 2601 et seq., and any state or local counterparts.
"Environmental Liabilities" means, as to any Person, all liabilities,
obligations, responsibilities, Remedial Actions, losses, damages, punitive
damages, consequential damages, treble damages, costs and expenses (including,
without limitation, all reasonable fees, disbursements and expenses of counsel,
expert and consulting fees and costs of investigation and feasibility studies),
fines, penalties, sanctions and interest incurred as a result of any claim or
demand, by any Person, whether based in contract, tort, implied or express
warranty, strict liability or criminal, penal or civil statute, including,
without limitation, any Environmental Law, Permit, order or agreement with any
Governmental Authority or other Person, arising from environmental, health or
safety conditions or the Release or threatened Release of a Hazardous Material
into the environment.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations and published interpretations
thereunder.
"ERISA Affiliate" means any corporation or trade or business which is a
member of a group of entities, organizations or employers of which a Loan Party
is also a member and which is treated as a single employer within the meaning of
Sections 414(b), (c), (m) or (o) of the Code.
"Eurodollar Loans" means Loans that bear interest at rates based upon the
Eurodollar Rate or the Adjusted Eurodollar Rate.
"Eurodollar Rate" means, for any Eurodollar Loan for any Interest Period
therefor, the rate per annum (rounded upwards, if necessary, to the nearest 1/16
of 1%) appearing on Telerate Page 3750 (or any successor page) as the London
interbank offered rate for deposits in Dollars in the approximate amount of the
proposed Eurodollar Loan at approximately 11:00 a.m. (London time) two Business
Days prior to the first day of such Interest Period for a term comparable to
such Interest Period. If such rate ceases to be available from Telerate News
Service, the Eurodollar Rate shall be determined by the Administrative Agent in
good faith from another financial reporting service, which service shall be
reasonably acceptable to the Borrower.
"Event of Default" has the meaning specified in Section 10.1.
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"Excess Cash Flow" means, as to any Person and its Consolidated
Subsidiaries and for any fiscal year, and without duplication, the remainder of
(a) EBITDA for such fiscal year minus (b) the sum of (i) taxes payable in cash
for such fiscal year, plus (ii) all principal and cash interest payments on Debt
made during such fiscal year whether optional, mandatory or scheduled payments,
plus (iii) Capital Expenditures (but only to the extent paid in cash and not
financed) made during such fiscal year.
"Exchange Act" means the Securities Exchange Act of 1934, as amended (or
any successor act), and the rules and regulations thereunder (or respective
successors thereto).
"FCC" means the Federal Communications Commission and any successor
agency.
"FCC Licenses" means all Licenses issued by the FCC.
"Federal Funds Rate" means, for any day, the rate per annum (rounded
upwards, if necessary, to the nearest one-sixteenth of one percent (1/16 of 1%))
equal to the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by Federal
funds brokers on such day, as published by the Federal Reserve Bank of New York
on the Business Day next succeeding such day, provided that (a) if the day for
which such rate is to be determined is not a Business Day, the Federal Funds
Rate for such day shall be such rate on such transactions on the next preceding
Business Day as so published on the next succeeding Business Day and (b) if such
rate is not so published on such next succeeding Business Day, the Federal Funds
Rate for any day shall be the average rate which would be charged to the
Reference Bank on such day on such transactions as determined by the
Administrative Agent.
"GAAP" means generally accepted accounting principles, applied on a
consistent basis, as set forth in Opinions of the Accounting Principles Board of
the American Institute of Certified Public Accountants and/or in statements of
the Financial Accounting Standards Board and/or their respective successors and
which are applicable in the circumstances as of the date in question. Accounting
principles are applied on a "consistent basis" when the accounting principles
applied in a current period are comparable in all material respects to those
accounting principles applied in a preceding period.
"Governmental Authority" means any nation or government, any state,
provincial or political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"Governmental Requirement" means any law, statute, code, ordinance,
order, rule, regulation, judgment, decree, injunction, franchise, Permit,
certificate, license, authorization or other directive or requirement of any
federal, state, county, municipal, parish, provincial or other
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Governmental Authority or any department, commission, board, court, agency or
any other instrumentality of any of them.
"Gross Margin Percentage" means, as to any Person and its Consolidated
Subsidiaries and for any period, the quotient of (a) the remainder of (i) Gross
Revenue for such period minus Network Costs, divided by (ii) Gross Revenue for
such period, expressed as a percentage.
"Gross Revenues" means, as to any Person and its Consolidated
Subsidiaries and for any period, gross revenues of such Person and its
Consolidated Subsidiaries determined on a consolidated basis in accordance with
GAAP for such period.
"Gross Up Lender" means as specified in Section 4.8.
"Guarantee" by any Person means any obligation, contingent or otherwise,
of such Person directly or indirectly guaranteeing any Debt or other obligation
of any other Person and, without limiting the generality of the foregoing, any
indebtedness, liability or obligation, direct or indirect, contingent or
otherwise, of such Person (a) to purchase or pay (or advance or supply funds for
the purchase or payment of) such Debt or other obligation (whether arising by
virtue of partnership arrangements, by agreement to keep-well, to purchase
assets, goods, securities or services, to take-or-pay or to maintain financial
statement conditions or otherwise) or (b) entered into for the purpose of
assuring in any other manner the obligee of such Debt or other indebtedness,
liability or obligation as to the payment thereof or to protect the obligee
against loss in respect thereof (in whole or in part), provided that the term
Guarantee shall not include endorsements for collection or deposit in the
ordinary course of business. The term "Guarantee" used as a verb has a
corresponding meaning. The amount of any Guarantee shall be deemed to be an
amount equal to the stated or determinable amount of the primary obligation in
respect of which such Guarantee is made or, if not stated or determinable, the
maximum anticipated liability in respect thereof (assuming such Person is
required to perform thereunder).
"Guarantors" means each of NCH, NCC, NCS, NCRE, NCV, each other
Subsidiary of the Borrower at any time existing and each other Person which has
executed a Guaranty, and "Guarantor" means any of such Persons.
"Guaranty" means a guaranty agreement guaranteeing payment and
performance of the Obligations in form and substance satisfactory to the
Administrative Agent executed by a Guarantor in favor of the Administrative
Agent and the Lenders, and any and all amendments, modifications, supplements,
renewals, extensions or restatements thereof.
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"Hazardous Material" means any substance, product, liquid, waste,
pollutant, chemical, contaminant, insecticide, pesticide, gaseous or solid
matter, organic or inorganic matter, fuel, micro-organisms, ray, odor,
radiation, energy, vector, plasma, constituent or material which (a) is or
becomes listed, regulated or addressed under any Environmental Law or (b) is, or
is deemed to be, alone or in any combination, hazardous, hazardous waste, toxic,
a pollutant, a deleterious substance, a contaminant or a source of pollution or
contamination under any Environmental Law, including, without limitation,
asbestos, petroleum, underground storage tanks (whether empty or containing any
substance) and polychlorinated biphenyls.
"ILEC" means an incumbent local exchange carrier.
"Initial Assignment of Commitments and Loans" means as specified in
Section 12.8(j).
"Insurance Recovery" means, with respect to any Property of any Loan
Party and any single occurrence or related occurrences with respect thereto, the
receipt or constructive receipt by such Loan Party, or the payment by an
insurance company to the Administrative Agent, of proceeds of any such Property
or casualty insurance.
"Intellectual Property" means any U.S. or foreign patents, patent
applications, trademarks, trade names, service marks, brand names, logos and
other trade designations (including unregistered names and marks), trademark and
service ▇▇▇▇ registrations and applications, copyrights and copyright
registrations and applications, inventions, invention disclosures, protected
formulae, formulations, processes, methods, trade secrets, computer software,
computer programs and source codes, manufacturing research and similar technical
information, engineering know-how, customer and supplier information, assembly
and test data drawings or royalty rights.
"Interest Period" means, with respect to any Eurodollar Loan, each period
commencing on the date such Loan is made or Converted from a Prime Rate Loan or
(if Continued) the last day of the next preceding Interest Period with respect
to such Loan, and ending on the numerically corresponding day in the first,
second, third or sixth calendar month thereafter, as the Borrower may select as
provided in Section 2.9 hereof, except that each such Interest Period which
commences on the last Business Day of a calendar month (or on any day for which
there is no numerically corresponding day in the appropriate subsequent calendar
month) shall end on the last Business Day of the appropriate subsequent calendar
month. Notwithstanding the foregoing: (a) each Interest Period which would
otherwise end on a day which is not a Business Day shall end on the next
succeeding Business Day (or, if such succeeding Business Day falls in the next
succeeding calendar month, on the next preceding Business Day); (b) any Interest
Period which would otherwise extend beyond the Maturity Date shall end on the
Maturity Date; (c) no more than five Interest Periods for Eurodollar Loans shall
be in effect at the same time; (d) no Interest Period shall have a duration of
less than one month and, if the Interest Period for any Eurodollar Loans would
otherwise be a shorter
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period, such Loans shall not be available hereunder; and (e) no Interest Period
for a Loan may commence before, and end after, any principal payment date
unless, after giving effect thereto, the aggregate principal amount of the
Eurodollar Loans having Interest Periods that end after such principal payment
date shall be equal to or less than the amount of the applicable Loans scheduled
to be outstanding hereunder after such principal payment date.
"Interest Rate Protection Agreements" means, with respect to the
Borrower, an interest rate swap, cap or collar agreement or similar arrangement
between the Borrower and one or more Lenders providing for the transfer or
mitigation of interest rate risks either generally or under specified
contingencies.
"Investments" means as specified in Section 9.5.
"Lender" and "Lenders" means as specified in the initial paragraph of
this Agreement.
"License" means any permit, certificate, approval, order, license or
other authorization, including, without limitation, any FCC License.
"Lien" means, with respect to any Property, any mortgage or deed of
trust, pledge, hypothecation, assignment, deposit arrangement, security
interest, tax lien, financing statement, pledge, charge, hypothecation or other
lien, charge, easement (other than any easement not materially impairing
usefulness), encumbrance, preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever on or with respect to
such Property (including, without limitation, any conditional sale or other
title retention agreement having substantially the same economic effect as any
of the foregoing).
"Loan Documents" means this Agreement, the Notes, the Security Documents,
the Administrative Agent's Letter, the Supplemental Agreement, the "Loan
Documents" as such term is defined in the Original Credit Agreement (unless such
Loan Documents have been amended and restated pursuant hereto or pursuant to
other Loan Documents) and all other agreements, documents, instruments and
certificates now or hereafter executed and/or delivered pursuant to or in
connection with any of the foregoing, and any and all amendments, modifications,
supplements, renewals, extensions or restatements thereof.
"Loan Party" means the Borrower, any Guarantor or any Person who grants a
Lien on any Property to secure the payment or performance of the Obligations or
any portion thereof, and "Loan Parties" means all of such Persons.
"Loans" means as specified in Section 2.1(a).
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21
"Master Purchase Agreement" means that certain Master Purchase Agreement,
dated as of November 2, 1998, by and among the Borrower and Nortel Networks, as
amended, supplemented or restated from time to time.
"Material Adverse Effect" means any event, development or circumstance
that has had or could reasonably be expected to have a material adverse effect
on (a) the business, assets, financial condition, results of operations or
prospects of NCH and its Subsidiaries taken as a whole, (b) the business,
assets, financial condition, results of operations or prospects of the Borrower
individually or of the Borrower and its Subsidiaries taken as a whole, (c) the
validity or enforceability of any of the Loan Documents or the rights and
remedies of the Administrative Agent and/or the Lenders thereunder, (d) the
ability of any Loan Party to pay and perform its indebtedness, liabilities
and/or obligations under any of the Loan Documents, or (e) the value of
Collateral available to the Administrative Agent and the Lenders after giving
effect to Liens in favor of other Persons.
"Material Contracts" means, as to any Loan Party, any supply, purchase,
service, employment, tax, indemnity, shareholder or other agreement or contract
for which the aggregate amount or value of services performed or to be performed
for or by, or funds or other Property transferred or to be transferred to or by,
any Loan Party to such agreement or contract, or by which any Loan Party or any
of its Properties is otherwise bound, during any fiscal year of the Borrower
exceeds $2,000,000 (or the equivalent amount in any currency) and any and all
amendments, modifications, supplements, renewals or restatements thereof.
"Maturity Date" means the earlier to occur of (a) November 2, 2006 or (b)
the fifth anniversary of the Commitment Termination Date.
"Maximum Financed Amount of Eligible Third-Party Expenses" means, as of
any date of determination, the lesser of (a) an amount equal to the aggregate
amount of Eligible Third-Party Expenses or (b) 50% of the sum of (i) the
aggregate amount paid by the Borrower to Nortel Networks to purchase Nortel
Networks Goods and Services for the Network plus (ii) the dollar amount of
irrevocable purchase orders for Nortel Networks Goods and Services for the
Network for delivery on or before the earlier to occur of 120 days after the
date of such purchase order or the Commitment Termination Date.
"Maximum Rate" means, with respect to any Lender, the maximum
non-usurious interest rate or an amount computed in reference to such rate (as
applicable), if any, that any time or from time to time may be contracted for,
taken, reserved, charged or received with respect to the particular Obligations
as to which such rate is to be determined, payable to such Lender pursuant to
this Agreement or any other Loan Document, under laws applicable to such Lender
which are presently in effect or, to the extent allowed by law, under such
applicable laws which may hereafter be in effect and which allow a higher
maximum non-usurious interest rate than applicable laws now allow.
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The Maximum Rate shall be calculated in a manner that takes into account any and
all fees, payments and other charges in respect of the Loan Documents that
constitute interest under applicable law. Each change in any interest rate
provided for herein based upon the Maximum Rate resulting from a change in the
Maximum Rate shall take effect without notice to the Borrower at the time of
such change in the Maximum Rate.
"Mortgage" means a mortgage, deed of trust or other appropriate
agreement, document or instrument evidencing or creating a Lien on real Property
(and any related personal Property) as security for the Obligations or any
portion thereof in form and substance satisfactory to the Administrative Agent
executed by any Loan Party in favor of the Administrative Agent for the benefit
of the Administrative Agent and the Lenders, and any and all amendments,
modifications, supplements, renewals, extensions or restatements thereof.
"Mortgaged Properties" means Properties in which a Lien has been granted
or purported to be granted pursuant to a Mortgage.
"Multiemployer Plan" means a multiemployer plan defined as such in
Section 3(37) of ERISA to which contributions have been made by or are required
from the Borrower or any ERISA Affiliate since 1974 and which is covered by
Title IV of ERISA.
"NCC" means Net2000 Communications Capital Equipment, Inc., a Delaware
corporation.
"NCH" means Net2000 Communications Holdings, Inc., a Delaware
corporation.
"NCI" means Net2000 Communications, Inc., a Delaware corporation.
"NCRE" means Net2000 Communications Real Estate, Inc., a Delaware
corporation and successor by merger to Net2000 Communications Real Estate, LLC.
"NCS" means Net2000 Communications Services, Inc., a Delaware
corporation.
"NCV" means Net2000 Communications of Virginia, LLC, a Virginia limited
liability company.
"Net Proceeds" means, with respect to any Asset Disposition, (a) the
gross amount of cash received by the Borrower or any of its Subsidiaries from
such Asset Disposition, minus (b) the amount, if any, of all taxes paid or
payable by the Borrower or any of its Subsidiaries directly resulting from such
Asset Disposition (including the amount, if any, estimated by the Borrower in
good faith at the time of such Asset Disposition for taxes payable by the
Borrower or any of its Subsidiaries on or measured by net income or gain
resulting from such Asset Disposition), minus
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(c) the reasonable out-of-pocket costs and expenses incurred by the Borrower or
such Subsidiary in connection with such Asset Disposition (including reasonable
brokerage fees paid to a Person other than an Affiliate of the Borrower)
excluding any fees or expenses paid to an Affiliate of the Borrower, minus (d)
amounts applied to the repayment of indebtedness (other than the Obligations)
secured by any Permitted Lien (if any) on the Property subject to the Asset
Disposition. "Net Proceeds" with respect to any Asset Disposition shall also
include proceeds (after deducting any amounts specified in clauses (b), (c) and
(d) of the preceding sentence) of insurance with respect to any actual or
constructive loss of Property, an agreed or compromised loss of Property or the
taking of any Property under the power of eminent domain and condemnation awards
and awards in lieu of condemnation for the taking of Property under the power of
eminent domain.
"Network" means the Borrower's network for the provision of integrated
communications services, including long distance telephone service, local
telephone service, internet service and other data or voice services to be
constructed and operated in the U.S. as described in the Business Plan as
updated as referred to in Section 8.1(j).
"Network Costs" means, for any period, all direct costs, other than
depreciation and amortization, associated with the provision of
telecommunications services (including resold services, switching, transport,
peripheral equipment components and all facilities costs) to customers of the
Borrower and its Subsidiaries.
"Nortel Networks" means Nortel Networks Inc., a Delaware corporation.
"Nortel Networks Equipment" means all equipment manufactured, sold or
otherwise provided to the Borrower or any other Loan Party by Nortel Networks or
Nortel Networks Corporation, including, without limitation, all equipment sold
to the Borrower pursuant to the Master Purchase Agreement.
"Nortel Networks Goods and Services" means sales, installation and
commissioning of Nortel Networks Equipment and related software, and project
management, network design and services performed by Nortel Networks personnel.
"Nortel Networks Software" means any and all software sold or licensed by
Nortel Networks or Nortel Networks Corporation to the Borrower or any other Loan
Party, including, without limitation, all source code and object code and all
manuals and other documentation relating thereto and each copy thereof
regardless of the media in which they are stored.
"Notes" means the promissory notes, in the form of Exhibit B hereto, made
by the Borrower evidencing the Loans and any and all amendments, modifications,
supplements, renewals, extensions or restatements thereof and all substitutions
therefor (including promissory notes issued by the Borrower pursuant to Section
12.8), and "Note" means any of such promissory note.
"Notice of Borrowing" means as specified in Section 2.9.
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"Obligations" means any and all (a) indebtedness, liabilities and
obligations of the Borrower or any other Loan Party to the Administrative Agent
and the Lenders, or any of them, evidenced by and/or arising pursuant to any of
the Loan Documents (including, without limitation, this Agreement and the
Notes), now existing or hereafter arising, whether direct, indirect, related,
unrelated, fixed, contingent, liquidated, unliquidated, joint, several or joint
and several, including, without limitation, (i) the obligations of the Borrower
or any other Loan Party to repay the Loans, to pay interest on the Loans
(including, without limitation, interest accruing after any, if any, bankruptcy,
insolvency, reorganization or other similar filing) and to pay all fees,
indemnities, costs and expenses (including attorneys' fees) provided for in the
Loan Documents and (ii) the indebtedness constituting the Loans and such
interest, fees, indemnities, costs and expenses, and (b) indebtedness,
liabilities and obligations of the Borrower or any other Loan Party under any
and all Interest Rate Protection Agreements that it may enter into with any
Lender with the prior written consent of the Administrative Agent and the
Required Lenders.
"Original Closing Date" means the "Closing Date" as such term is defined
in the Original Credit Agreement.
"Original Credit Agreement" means as specified in Recital A.
"Original Revolving Loans" means the "Revolving Loans" as such term is
defined in the Original Credit Agreement.
"Original Term Loans" means the "Term Loans" as such term is defined in
the Original Credit Agreement.
"Payor" means as specified in Section 3.4.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to all or any of its functions under ERISA.
"Pension Plan" means an employee pension benefit plan as defined in
Section 3(2) of ERISA (including a Multiemployer Plan) which is subject to the
funding requirements under Section 302 of ERISA or Section 412 of the Code, in
whole or in part, and which is maintained or contributed to currently or at any
time within the six years immediately preceding the Closing Date or, in the case
of a Multiemployer Plan, at any time since September 2, 1974, by any Borrower or
any ERISA Affiliate for employees of any Borrower or any ERISA Affiliate.
"Permit" means any permit, certificate, approval, order, License,
right-of-way (whether an easement, contract or agreement in any form) or other
authorization.
"Permitted Holders" means (a) the Persons who are shareholders of NCI as
of the Original Closing Date, which shareholders are identified on Schedule
1.1(a) hereto and (b) any spouse, parent, sibling, child or grandchild of any of
the aforesaid individuals (in each case, whether such
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25
relationship arises from birth or adoption or through marriage) or any trust
established for the benefit of any such individuals or any spouse, parent,
sibling, child or grandchild of any such individuals (in each case whether such
relationship arises from birth, adoption or through marriage).
"Permitted Liens" mean:
(a) Liens disclosed on Schedule 1.1(b) hereto;
(b) Liens securing the Obligations in favor of the
Administrative Agent (for the benefit of the Administrative Agent and the
Lenders) pursuant to the Loan Documents;
(c) Encumbrances consisting of easements, rights-of-way, zoning
restrictions or other restrictions on the use of real Property or
imperfections to title that do not (individually or in the aggregate)
materially affect the value of the Property encumbered thereby or
materially impair the ability of the Borrower or any of its Subsidiaries
to use such Property in its businesses, and none of which is violated in
any material respect by existing or proposed structures or land use;
(d) Liens for taxes, assessments or other governmental charges
that are not delinquent or which are being contested in good faith by
appropriate proceedings, which proceedings have the effect of preventing
the forfeiture or sale of the Property subject to such Liens, and for
which adequate reserves have been established;
(e) Liens of mechanics, materialmen, warehousemen, carriers,
landlords or other similar statutory Liens securing obligations that are
not yet due and are incurred in the ordinary course of business or which
are being contested in good faith by appropriate proceedings, which
proceedings have the effect of preventing the forfeiture or sale of the
Property subject to such Liens, and for which adequate reserves have been
established;
(f) Liens resulting from good faith deposits to secure payment
of worker's compensation or other social security programs or to secure
the performance of tenders, statutory obligations, surety and appeal
bonds, bids, contracts (other than for payment of Debt) or leases, all in
the ordinary course of business;
(g) Purchase-money Liens on any Property acquired after the
Original Closing Date or the assumption after the Original Closing Date
of any Lien on Property existing at the time of such acquisition (and not
created in contemplation of such acquisition), or a Lien incurred after
the Original Closing Date in connection with any conditional sale or
other title retention agreement or Capital Lease Obligation; provided
that:
(i) any Property subject to the foregoing is acquired by
the Borrower or any of its Subsidiaries in the ordinary course of
its respective business and the Lien on the Property attaches
concurrently or within 90 days after the acquisition thereof;
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26
(ii) the Debt secured by any Lien so created, assumed or
existing shall not exceed the lesser of the cost or fair market
value at the time of acquisition of the Property covered thereby
(inclusive of the cost of engineering, furnishing and installation
services directly relating to such Property) and shall not be less
than 75% of the amortized value of the Property acquired with the
proceeds of such Debt;
(iii) each such Lien shall attach only to the Property so
acquired and the proceeds thereof; and
(iv) the Debt secured by all such Liens, when aggregated
with the Debt secured by all purchase-money Liens and all Liens in
connection with any conditional sale or other title retention
agreement or Capital Lease Obligation existing as of the Original
Closing Date or at any other time, shall not exceed $20,000,000 at
any time outstanding in the aggregate;
(h) Any extension, renewal or replacement of any of the
foregoing, provided that Liens permitted hereunder shall not be extended
or spread to cover any additional indebtedness or Property; and
(i) Liens affecting the accounts of the Borrower and its
Subsidiaries securing only Debt permitted in accordance with clause (g)
of Section 9.1 (which Lien may have priority over the Lien securing the
Obligations in favor of the Administrative Agent);
provided, however, that (A) none of the Permitted Liens (except those in favor
of the Administrative Agent) may attach or relate to the Capital Stock of or any
other ownership interest in the Borrower or any of its Subsidiaries and (B)
except for the Liens disclosed on Schedule 1.1(b) which are expressly identified
as constituting purchase money Liens, none of the Permitted Liens referred to in
clause (a) preceding may have a priority equal or prior to the Liens in favor of
the Administrative Agent as security for the Obligations.
"Person" means any individual, corporation, trust, association, company,
partnership, joint venture, limited liability company, joint stock company,
Governmental Authority or other entity.
"Plan" means any employee benefit plan as defined in Section 3(3) of
ERISA established or maintained or contributed to by any Loan Party or any ERISA
Affiliate, including any Pension Plan.
"Prime Rate" means, at any time, the greater of (a) the rate of interest
per annum then most recently announced or established by the Reference Bank at
its principal office in New York City as its highest commercial prime or base
rate then in effect, or (b) the Federal Funds Rate then in effect plus one-half
of one percent (1/2%). The Prime Rate may not necessarily be the lowest rate of
interest charged by the Reference Bank to its commercial borrowers. Each change
in any interest rate provided for herein based upon the Prime Rate or the
Federal Funds Rate resulting from a
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27
change in the Prime Rate or the Federal Funds Rate, respectively, shall take
effect without notice to the Borrower at the time of such change in the Prime
Rate or the Federal Funds Rate, respectively.
"Prime Rate Loans" means Loans that bear interest at rates based upon the
Prime Rate.
"Principal Office" means the principal office of the Administrative Agent
in Richardson, Texas, presently located at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇.
"Prohibited Transaction" means any transaction set forth in Section 406
of ERISA or Section 4975 of the Code.
"Property" means property of all kinds, real, personal or mixed, tangible
or intangible (including, without limitation, all rights relating thereto),
whether owned or acquired on or after the Closing Date.
"Qualified Telecommunications Investment" means investments in, or
acquisitions of, Telecommunications Assets or Telecommunications Businesses by
the Borrower or its Subsidiary which are either (a) made using Capital Stock of
NCI in lieu of cash paid or Debt assumed or incurred, or (b) to the extent made
with cash paid or Debt assumed or incurred, are made only in an amount equal to
the positive difference, if any, between the amount of net cash proceeds of
equity and Subordinated Debt offerings received by NCI and contributed to the
Borrower as equity or Subordinated Debt since the Original Closing Date and
$130,000,000. No acquisition or investment will qualify as a Qualified
Telecommunications Investment unless the Loan Parties would have been in
compliance with the covenants contained in Section 9.16 of this Agreement as of
the end of the last two fiscal quarters, giving pro forma effect to the EBITDA
gains and losses and other financial attributes of the acquired company (or
portion thereof) or associated with the acquired assets, and the projections for
the Loan Parties, giving effect to the acquisition, would be in compliance with
the covenants contained in Section 9.16 of this Agreement as of the end of the
next two fiscal quarters.
"Quarterly Date" means the last day of each March, June, September and
December of each year, the first of which shall be December 31, 1998.
"Receivables" means, as at any date of determination thereof, each and
every "account" as such term is defined in the UCC and includes, without
limitation, the unpaid portion of the obligation, as stated on the respective
invoice, or, if there is no invoice, other writing, of a customer of the
Borrower or any of its Subsidiaries in respect of services rendered by the
Borrower or any of its Subsidiaries.
"Reference Bank" means Citibank, N.A.
"Register" means as specified in Section 12.8(d).
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"Registered Note" means as specified in Section 2.2(b).
"Registered Note Register" means as specified in Section 12.8(h).
"Registration Rights Agreement" means that certain Exchange and
Registration Rights Agreement dated as of July 30, 1999, among NCI and Nortel
Networks.
"Regulation D" means Regulation D of the Board of Governors of the
Federal Reserve System as the same may be amended or supplemented from time to
time.
"Regulatory Change" means, with respect to any Lender, any change after
the Closing Date in any U.S. federal or state or foreign laws or regulations
(including Regulation D) or the adoption or making after such date of any
interpretations, directives or requests applying to a class of lenders including
such Lender of or under any U.S. federal or state or foreign laws or regulations
(whether or not having the force of law) by any Governmental Authority charged
with the interpretation or administration thereof.
"Release" means, as to any Person, any release, spill, emission, leaking,
pumping, injection, deposit, discharge, disposal, dispersement, leaching or
migration of Hazardous Materials into the indoor or outdoor environment or into
or out of Property owned by such Person, including, without limitation, the
movement of Hazardous Materials through or in the air, soil, surface water or
ground water.
"Remedial Action" means all actions required to (a) cleanup, remove,
respond to, treat or otherwise address Hazardous Materials in the indoor or
outdoor environment, (b) prevent the Release or threat of Release or minimize
the further Release of Hazardous Materials so that they do not migrate or
endanger or threaten to endanger public health or welfare or the indoor or
outdoor environment, (c) perform studies and investigations on the extent and
nature of any actual or suspected contamination, the remedy or remedies to be
used or health effects or risks of such contamination, or (d) perform
post-remedial monitoring, care or remedy of a contaminated site.
"Reportable Event" means any of the events set forth in Section 4043(b)
of ERISA other than any such event for which the 30-day notice requirement has
been waived in regulations issued by the PBGC.
"Required Lenders" means, at any date of determination, Lenders holding
at least two-thirds (in Dollar amount) of the sum of (a) the aggregate
outstanding principal amount of the Loans, plus (b) the aggregate amount of the
outstanding Commitments.
"Required Payment" means as specified in Section 3.4.
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"Reserve Requirement" means, for any Eurodollar Loan of any Lender for
any Interest Period therefor, the maximum rate at which reserves (including any
marginal, supplemental or emergency reserves) are required to be maintained
during such Interest Period under any regulations of the Board of Governors of
the Federal Reserve System (or any successor) by such Lender for deposits
exceeding $1,000,000 against "Eurocurrency Liabilities" as such term is used in
Regulation D. Without limiting the effect of the foregoing, the Reserve
Requirement shall reflect any other reserves required to be maintained by such
Lenders by reason of any Regulatory Change against (a) any category of
liabilities which includes deposits by reference to which the Eurodollar Rate or
the Adjusted Eurodollar Rate is to be determined or (b) any category of
extensions of credit or other assets which include Eurodollar Loans.
"Responsible Officer" means, as to any Loan Party, the chief executive
officer, the president, any vice president, the chief financial officer, the
chief operating officer or the treasurer of such Person.
"Restricted Payment" means (a) any dividend or other distribution
(whether in cash, Property or obligations), direct or indirect, on account of
(or the setting apart of money for a sinking or other analogous fund for) any
shares of any class of Capital Stock of NCH or the Borrower or any of their
Subsidiaries now or hereafter outstanding, except a dividend payable solely in
shares of that class of stock to the holders of that class; (b) any redemption,
conversion, exchange, retirement, sinking fund or similar payment, purchase or
other acquisition for value, direct or indirect, of any shares of any class of
Capital Stock of NCH or the Borrower or any of their Subsidiaries now or
hereafter outstanding; (c) any payment or prepayment of principal of, premium,
if any, or interest on, or any redemption, conversion, exchange, purchase,
retirement or defeasance of, or payment with respect to, any Subordinated Debt;
(d) any loan, advance or payment to any officer, director or shareholder of NCH
or the Borrower or any of their Subsidiaries (other than a shareholder
consisting of NCH or the Borrower or a Wholly-Owned Subsidiary of NCH or the
Borrower), exclusive of reasonable compensation paid to officers or directors
paid in the ordinary course of business; and (e) any payment made to retire, or
to obtain the surrender of, any outstanding warrants, options or other rights to
acquire shares of any class of Capital Stock of NCH or the Borrower or any of
their Subsidiaries now or hereafter outstanding.
"Secured Debt" means, at any particular time, that portion of Total Debt
the payment of which is secured or assured by any Lien or negative pledge or
other similar preferential treatment.
"Securities Purchase Agreement" means that certain Note Purchase
Agreement dated as of July 30, 1999, between NCI and Nortel Networks.
"Security Agreements" means security agreements, pledge agreements,
securities pledge agreements and other agreements, documents or instruments
evidencing or creating a Lien as security for the Obligations or any portion
thereof in form and substance satisfactory to the Administrative Agent executed
by any Loan Party, in favor of the Administrative Agent for the benefit of the
Administrative Agent and the Lenders, and any such agreement, document or
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30
instrument subsequently executed in accordance or connection with this Agreement
or any other Loan Document, and any and all amendments, modifications,
supplements, renewals, extensions or restatements thereof.
"Security Documents" means the Security Agreements and the Mortgages, as
they may be amended, modified, supplemented, renewed, extended or restated from
time to time, and any and all other agreements, deeds of trust, mortgages,
chattel mortgages, security agreements, pledges, guaranties, assignments of
proceeds, assignments of income, assignments of contract rights, assignments of
partnership interests, assignments of royalty interests, assignments of
performance or other collateral assignments, subordination agreements,
undertakings and other agreements, documents, instruments and financing
statements now or hereafter executed and/or delivered by any Person in
connection with or as security or assurance for the payment or performance of
the Obligations or any part thereof.
"Senior Notes" means the $75,000,000 (face amount) Senior Discount Notes
issued by NCI pursuant to the Securities Purchase Agreement.
"Senior Notes Documents" means the Securities Purchase Agreement, the
Senior Notes and the Senior Notes Indenture.
"Senior Notes Indenture" means that certain Indenture dated as of July
30, 1999, between NCI and Allfirst Trust Company, National Association, as
trustee.
"Solvent" means, with respect to any Person as of the date of any
determination, that on such date (a) the fair value of the Property of such
Person (both at fair valuation and at present fair saleable value) is greater
than the total liabilities, including, without limitation, contingent
liabilities, of such Person, (b) the present fair saleable value of the assets
of such Person is not less than the amount that will be required to pay the
probable liability of such Person on its debts as they become absolute and
matured, (c) such Person is able to realize upon its assets and pay its debts
and other liabilities, contingent obligations and other commitments as they
mature in the normal course of business, (d) such Person does not intend to, and
does not believe that it will, incur debts or liabilities beyond such Person's
ability to pay as such debts and liabilities mature, and (e) such Person is not
engaged in business or a transaction, and is not about to engage in business or
a transaction, for which such Person's Property would constitute unreasonably
small capital after giving due consideration to current and anticipated future
capital requirements and current and anticipated future business conduct and the
prevailing practice in the industry in which such Person is engaged. In
computing the amount of contingent liabilities at any time, such liabilities
shall be computed at the amount which, in light of the facts and circumstances
existing at such time, represents the amount that can reasonably be expected to
become an actual or matured liability.
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31
"Subordinated Debt" means unsecured Debt of NCH the payment of which is
structurally or contractually subordinated to the payment of the Loans on terms
satisfactory to the Administrative Agent and the Required Lenders and as to
which the payment of principal of (and premium, if any) and interest and other
payment obligations in respect of such Debt shall be subordinate to the prior
payment in full of the Obligations to at least the following extent: (a) no
payments of principal of (or premium, if any) or interest on or otherwise due in
respect of such Debt may be permitted for so long as any Default in the payment
of principal (or premium, if any) or interest on the Obligations exists; and (b)
such Debt may not (i) provide for payments of principal of such Debt at the
stated maturity thereof or by way of a sinking fund applicable thereto or by way
of any mandatory redemption, defeasance, retirement or repurchase thereof
(including any redemption, retirement or repurchase which is contingent upon
events of circumstances but excluding any retirement required by virtue of
acceleration of such Debt upon any event of default thereunder), in each case
prior to 6 months after the final stated maturity of the Loans or (ii) permit
redemption or other retirement (including pursuant to an offer to purchase made
by the obligor thereon) of such other Debt at the option of the holder thereof
prior to the final stated maturity of the Loans, other than a redemption or
other retirement at the option of the holder of such Debt (including pursuant to
an offer to purchase made by NCH or any of its Subsidiaries) which is
conditioned upon a change of control of NCH pursuant to provisions set forth in
the instruments evidencing such Debt.
"Subordinated Debt Documents" means any and all agreements, documents and
instruments now or hereafter evidencing or governing any Subordinated Debt.
"Subsidiary" means, with respect to any Person, any corporation or other
entity of which at least a majority of the outstanding shares of stock or other
ownership interests having by the terms thereof ordinary voting power to elect a
majority of the board of directors (or Persons performing similar functions) of
such corporation or entity (irrespective of whether or not at the time, in the
case of a corporation, stock of any other class or classes of such corporation
shall have or might have voting power by reason of the happening of any
contingency) is at the time directly or indirectly owned or controlled by such
Person or one or more of its Subsidiaries or by such Person and one or more of
its Subsidiaries.
"Supplemental Agreement" means the Supplemental Agreement dated as of
November 2, 1998, among NCI, the Loan Parties and the Administrative Agent.
"Telecommunications Assets" means all assets, rights (contractual or
otherwise) and properties, whether tangible or intangible, used or intended for
use in connection with a Telecommunications Business.
"Telecommunications Business" means the business of (a) transmitting, or
providing services relating to the transmission of, voice, data or video through
owned or leased transmission facilities, (b) constructing, creating, developing
or marketing communications related network equipment, software and other
devices for use in a telecommunications business or (c) evaluating,
participating or pursuing any other activity or opportunity that is primarily
related to those identified in clause (a)
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or (b) above, provided that the determination of what constitutes a
Telecommunications Business shall be made in good faith by the Board of
Directors.
"Total Capitalization" means, as to any Person and its Consolidated
Subsidiaries and as of any date, the sum of (without duplication) (a) the Total
Debt of such Person and its Consolidated Subsidiaries as of such date plus (b)
the Contributed Capital of such Person and its Consolidated Subsidiaries as of
such date, determined on a consolidated basis in accordance with GAAP.
"Total Debt" means, as to any Person and its Consolidated Subsidiaries
and as of any date, the aggregate principal amount of all Debt of such Person
and its Consolidated Subsidiaries outstanding.
"Type" means any type of Loan (i.e., a Prime Rate Loan or Eurodollar
Loan).
"UCC" means the Uniform Commercial Code as in effect in the State of New
York and/or any other jurisdiction, the laws of which may be applicable to or in
connection with the creation, perfection or priority of any Lien on any Property
created pursuant to any Security Document.
"U.S." means the United States of America.
"U.S. Person" means a citizen or resident of the U.S., a corporation,
partnership or other entity created or organized in or under any laws of the
U.S. or any estate or trust that is subject to U.S. Federal income taxation
regardless of the source of its income.
"U.S. Taxes" means any present or future tax, assessment or other charge
or levy imposed by or on behalf of the U.S. or any taxing authority thereof.
"Vendor" means Nortel Networks in its capacity as vendor under the Master
Purchase Agreement.
"Virtual Co-location" means as defined in 47 C.F.R. section 64.1401(e).
"Voting Stock" of any Person means Capital Stock of such Person which
ordinarily has voting power for the election of directors (or persons performing
similar functions) of such Person, whether at all times or only for so long as
no senior class of securities has such voting power by reason of any
contingency.
"Warrant Agreement" means that certain Warrant Agreement dated as of July
30, 1999, between NCI and Nortel Networks.
"Warrant Documents" means the Warrant Agreement and the Warrants.
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"Warrants" means the warrants issued by NCI to Nortel Networks pursuant
to the Warrant Agreement.
"Wholly-Owned Subsidiary" means, with respect to any Person, a Subsidiary
of such Person all of whose outstanding Capital Stock (other than directors'
qualifying shares, if any) shall at the time be owned by such Person and/or one
or more of its Wholly-Owned Subsidiaries.
Section 1.2 Other Definitional Provisions. All definitions contained in
this Agreement are equally applicable to the singular and plural forms of the
terms defined. The words "hereof", "herein" and "hereunder" and words of similar
import referring to this Agreement refer to this Agreement as a whole and not to
any particular provision of this Agreement. The term "continuing",
"continuation" or "continuance" means, in reference to any Default or Event of
Default that has occurred, that such Default or Event of Default has not been
either cured to the reasonable satisfaction of the Administrative Agent within
the applicable grace period (if any) specified in this Agreement or the other
Loan Documents (as applicable) or waived in writing by the requisite Lenders in
accordance with Section 12.11. Unless otherwise specified, all Article and
Section references pertain to this Agreement. Terms used herein that are defined
in the UCC, unless otherwise defined herein, shall have the meanings specified
in the UCC. All references in this Agreement to any agreement shall be deemed to
mean and refer to such agreement as it may be amended, modified or supplemented
from time to time if (but only if) such amendment, modification or supplement
has been approved by the Administrative Agent and the Required Lenders, is
expressly referred to in such reference or is otherwise expressly permitted by
the terms of this Agreement.
Section 1.3 Accounting Terms and Determinations.
(a) Except as may be expressly provided herein to the contrary, (i)
all accounting terms (whether or not specifically defined herein) shall be
construed in accordance with GAAP (subject to year end adjustments, if
applicable) consistent with such accounting principles applied in the
preparation of the audited financial statements referred to in Section 7.2(a),
(ii) all financial information delivered to the Administrative Agent pursuant to
Section 8.1 shall be prepared in accordance with GAAP (subject to year end
adjustments, if applicable) applied on a basis consistent with such accounting
principles applied in the preparation of the audited financial statements of the
applicable Person referred to in Section 7.2 or in accordance with Section 8.7,
and (iii) with respect to accounting terms or financial information defined or
described in reference to a Person and its Consolidated Subsidiaries, all such
terms and information shall be construed as applying to such Person and its
Consolidated Subsidiaries on a consolidated basis in accordance with GAAP.
(b) The Borrower shall deliver to the Administrative Agent and the
Lenders, at the same time as the delivery of any annual or quarterly financial
statement under Section 8.1, (i) a description, in reasonable detail, of any
material variation between the application of GAAP employed in the preparation
of the next preceding annual or quarterly financial statements prepared in
accordance with the last sentence of Section 1.3(a) preceding as to which no
objection has been
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made by the Administrative Agent and (ii) reasonable estimates of the difference
between such statements arising as a consequence thereof.
(c) To enable the ready and consistent determination of compliance
with the covenants set forth in this Agreement, the Borrower will not change the
last day of its fiscal year from December 31 or the last days of the first three
fiscal quarters of the Borrower in each of its fiscal years from March 31, June
30 and September 30, respectively.
(d) Unless otherwise expressly provided herein to the contrary, all
references herein to the Closing Date and the Effective Date shall be deemed to
mean and refer to the Closing Date and the Effective Date, respectively, after
giving effect to all transactions which occur on or before such date.
Section 1.4 Financial Covenants and Reporting. All financial statements
and reports required to be delivered pursuant to this Agreement and the other
Loan Documents, and all financial covenants (if any) contained in this
Agreement, shall be prepared or determined (as applicable) in accordance with
GAAP (except as to the absence of footnotes in unaudited financial statements
and except as may be expressly provided to the contrary herein). If and to the
extent that such financial statements, reports or covenants are to be prepared
or determined on a consolidated basis, they shall be prepared or determined on a
consolidated basis for NCH and its Subsidiaries (including, without limitation,
the Borrower) and the Borrower and its Subsidiaries, as the case may be (except
as may be expressly provided to the contrary herein).
ARTICLE 2
Loans
Section 2.1 Commitments.
(a) Loans. Subject to the terms and conditions of this Agreement
(including, without limitation, Section 2.13(a)), each Lender severally agrees
to make one or more loans to the Borrower from time to time from and including
the Effective Date to but excluding the Commitment Termination Date up to but
not exceeding the amount of such Lender's Commitment as then in effect. (Such
loans referred to in this Section 2.1(a) now or hereafter made by the Lenders to
the Borrower, including, without limitation, such loans which remain outstanding
after the Commitment Termination Date, are hereinafter collectively called the
"Loans".) The Borrower may not reborrow the Loans which have been repaid.
(b) Prior Loans. Certain of the Lenders made Original Revolving Loans
and Original Term Loans to the Borrower pursuant to Section 2.1(a) of the
Original Credit Agreement. As of the Effective Date, the aggregate unpaid
principal amount of such loans is $19,502,663.33, which amount shall be deemed
outstanding as Loans made under this Agreement.
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(c) Continuation and Conversion of Loans. Subject to the terms and
conditions of this Agreement, the Borrower may borrow the Loans as Prime Rate
Loans or Eurodollar Loans and, until the Maturity Date, the Borrower may
Continue Eurodollar Loans or Convert Loans of one Type into Loans of the other
Type.
(d) Lending Offices. Loans of each Type made by each Lender shall be
made and maintained at such Lender's Applicable Lending Office for Loans of such
Type.
Section 2.2 Notes.
(a) Notes. The Loans made (and deemed made) by each Lender shall be
evidenced by a single promissory note of the Borrower in substantially the form
of Exhibit B hereto dated the Closing Date (or such later date on which such
Lender becomes a party to this Agreement), payable to the order of such Lender
in a principal amount equal to the sum of (i) the aggregate principal amount of
Loans of such Lender plus (ii) the aggregate principal amount of the unfunded
Commitment of such Lender as originally in effect and otherwise duly completed.
Each Lender is hereby authorized by the Borrower to endorse on the schedule (or
a continuation thereof) attached to the Note of such Lender, to the extent
applicable, the date, amount and Type of and the Interest Period for each
applicable Loan made by such Lender to the Borrower and the amount of each
payment or prepayment of principal of such Loan received by such Lender,
provided that any failure by such Lender to make any such endorsement shall not
affect the obligations of the Borrower under any such Note or this Agreement in
respect of any such Loan.
(b) Registered Notes. Any Lender that is not a U.S. Person and that
could become completely exempt from withholding of U.S. Taxes in respect of
payment of any Obligations due to such Lender hereunder relating to any of its
Loans if such Loans were in registered form for U.S. Federal income tax purposes
may request the Borrower (through the Administrative Agent), and the Borrower
agrees thereupon, to exchange such Lender's Note evidencing its Loans for a
promissory note registered as provided in Section 12.8(h) hereof (a "Registered
Note"). Registered Notes may not be exchanged for Notes that are not in
registered form.
Section 2.3 Repayment of Loans.
(a) Repayment of Loans. The Borrower shall pay to the Administrative
Agent for the account of each Lender the principal of each of the Loans
outstanding as of the Commitment Termination Date (and the principal of each of
the Loans outstanding as of the Commitment Termination Date shall be due and
payable) in 20 quarterly installments, commencing on the first Quarterly Date
after the Commitment Termination Date, and continuing on each Quarterly Date
thereafter through and including the Maturity Date, each of which installments
shall be in an amount equal to the percentage of the principal amount of the
Loans outstanding as of the Commitment Termination Date specified opposite such
installment in the following table:
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----------------------------------------------------------------------------------------------------
Percentage of the Aggregate Principal Amount of
Principal Installment each of the Loans Due and Payable
----------------------------------------------------------------------------------------------------
1 3.75%
----------------------------------------------------------------------------------------------------
2 3.75%
----------------------------------------------------------------------------------------------------
3 3.75%
----------------------------------------------------------------------------------------------------
4 3.75%
----------------------------------------------------------------------------------------------------
5 3.75%
----------------------------------------------------------------------------------------------------
6 3.75%
----------------------------------------------------------------------------------------------------
7 3.75%
----------------------------------------------------------------------------------------------------
8 3.75%
----------------------------------------------------------------------------------------------------
9 5.00%
----------------------------------------------------------------------------------------------------
10 5.00%
----------------------------------------------------------------------------------------------------
11 5.00%
----------------------------------------------------------------------------------------------------
12 5.00%
----------------------------------------------------------------------------------------------------
13 6.25%
----------------------------------------------------------------------------------------------------
14 6.25%
----------------------------------------------------------------------------------------------------
15 6.25%
----------------------------------------------------------------------------------------------------
16 6.25%
----------------------------------------------------------------------------------------------------
17 6.25%
----------------------------------------------------------------------------------------------------
18 6.25%
----------------------------------------------------------------------------------------------------
19 6.25%
----------------------------------------------------------------------------------------------------
20 6.25%
----------------------------------------------------------------------------------------------------
In addition, the Borrower shall pay to the Administrative Agent for the account
of each Lender all outstanding principal of the Loans (and all outstanding
principal of the Loans shall be due and payable) on the Maturity Date.
Section 2.4 Interest.
(a) Interest Rate. The Borrower shall pay to the Administrative Agent
for the account of each Lender interest on the unpaid principal amount of each
Loan made by such Lender (or deemed made by such Lender with respect to a Loan
assigned to such Lender after the making of such Loan) to the Borrower for the
period commencing on the date of such Loan to but excluding the date such Loan
shall be paid in full, at the following rates per annum:
(i) during the periods such Loan is a Prime Rate Loan, the
lesser of (A) the Prime Rate plus the Applicable Margin or (B) the
Maximum Rate; and
(ii) during the periods such Loan is a Eurodollar Loan, the
lesser of (A) the Adjusted Eurodollar Rate plus the Applicable Margin or
(B) the Maximum Rate.
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(b) Payment Dates. Accrued interest on the Loans shall be due and
payable as follows:
(i) in the case of Prime Rate Loans, on each Quarterly Date;
(ii) in the case of each Eurodollar Loan, on the last day of the
Interest Period with respect thereto and, in the case of an Interest
Period greater than three months, at three-month intervals after the
first day of such Interest Period;
(iii) upon the payment or prepayment (whether mandatory or
optional) of any Loan or the Conversion of any Loan to a Loan of the
other Type (but only on the principal amount so paid, prepaid or
Converted); and
(iv) with respect to all Loans, on the Maturity Date.
In addition, accrued interest on the Original Revolving Loans and the Original
Term Loans which was not paid in full on or before the Effective Date shall be
due and payable on the last day of the "Interest Period" (as such term is
defined in the Original Credit Agreement) with respect thereto.
(c) Default Interest. Notwithstanding the foregoing, the Borrower
shall pay to the Administrative Agent for the account of each Lender interest at
the applicable Default Rate (i) at all times during which any Default has
occurred and is continuing, on any principal of any Loan outstanding, and (ii)
to the fullest extent permitted by law, any other amount payable by the Borrower
under this Agreement or any other Loan Document to or for the account of such
Lender which is not paid in full when due (whether at stated maturity, by
acceleration or otherwise) for the period from and including the due date
thereof to but excluding the date the same is paid in full. Interest payable at
the Default Rate shall be payable from time to time on demand by the
Administrative Agent.
Section 2.5 Borrowing Procedure. The Borrower shall give the
Administrative Agent notice of each borrowing hereunder in accordance with
Section 2.9. Not later than 1:00 p.m. (New York, New York time) on the date
specified for each borrowing hereunder, each Lender will make available the
amount of the Loan to be made by it on such date to the Administrative Agent, at
the Principal Office, in immediately available funds, for the account of the
Borrower. The amount of each borrowing hereunder so received by the
Administrative Agent shall, subject to the terms and conditions of this
Agreement, be made available, for and on behalf of the Borrower, in immediately
available funds by no later than 1:00 p.m. (New York, New York time); provided,
however, that the Administrative Agent may, in its discretion, cause such
amounts to be made available directly to or for the benefit of the Person who is
to receive the proceeds of such Loan in accordance with Section 2.10 (e.g. the
Vendor) if and to the extent that proceeds of such borrowing are used to pay for
Nortel Networks Goods and Services. Notwithstanding anything to the contrary
contained in this Agreement, if and to the extent that Nortel Networks is a
Lender under this Agreement, the Borrower further hereby irrevocably agrees that
each Loan to be advanced by Nortel Networks to the Borrower
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in accordance with this Agreement (and only in accordance with this Agreement
and after the Administrative Agent's receipt of a Notice of Borrowing executed
by the Borrower) may (in the discretion of Nortel Networks and if and to the
extent that the proceeds of such Loan are to be paid to Nortel Networks) be
effectively disbursed on the date set forth in the Notice of Borrowing for such
disbursement to the Borrower by virtue of a credit in the amount of such Loan
given to the Borrower under the Master Purchase Agreement.
Section 2.6 Optional Prepayments, Conversions and Continuations of
Loans. Subject to Section 2.8, the Borrower shall have the right from time to
time to prepay the Loans in whole or in part, to Convert all or part of a Loan
of one Type into a Loan of another Type or to Continue Eurodollar Loans;
provided that: (a) the Borrower shall give the Administrative Agent notice of
each such prepayment, Conversion or Continuation as provided in Section 2.9, (b)
Eurodollar Loans may only be Converted on the last day of the Interest Period
and any prepayment of Eurodollar Loans on any day other than the last day of the
Interest Period shall be subject to payment of the additional compensation
specified in Section 4.5, (c) except for Conversions of Eurodollar Loans into
Base Rate Loans, no Conversions or Continuations shall be made while a Default
has occurred and is continuing, and (d) optional prepayments of the Loans shall
be applied to the principal of the Loans pro rata to the then remaining
installments of such principal. No amounts prepaid pursuant to this Section 2.6
may be reborrowed.
Section 2.7 Mandatory Prepayments.
(a) Asset Dispositions, etc. The Borrower shall, within two Business
Days after it receives any Net Proceeds of any Asset Disposition, proceeds of
any Insurance Recovery or proceeds of condemnation awards aggregating in excess
of $1,000,000 during any period of 12 consecutive months or less (the amount of
such Net Proceeds or proceeds exceeding $1,000,000 received during any such
period are herein called the "Excess Proceeds Amount"), pay to the
Administrative Agent, as a prepayment of the Loans, an aggregate amount equal to
all of the Excess Proceeds Amount; provided, that no such prepayment will be
required if and to the extent that the Excess Proceeds Amount is fully
re-invested in productive assets used in the ordinary course of Borrower's or
its Subsidiary's (as applicable) business within 365 days of the receipt of such
proceeds; provided, further, however, that the Excess Proceeds Amount not so
re-invested within 60 days after the receipt thereof shall be deposited into a
cash collateral account held by the Administrative Agent pursuant to an
agreement in form and substance satisfactory to the Administrative Agent until
such time as such amount (exclusive of any interest accrued thereon) is either
re-invested within such 365 day period or applied to the Loans or other
Obligations as provided in this Section 2.7.
(b) Excess Cash Flow. The Borrower shall, commencing on March 31, 2002
and on each March 31st thereafter, pay (or cause to be paid) to the
Administrative Agent, as a prepayment of the Loans and other Obligations then
outstanding, an aggregate amount equal to 50% of Excess Cash Flow for the fiscal
year then most recently ended.
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(c) Application of Mandatory Prepayments. All prepayments pursuant to
Section 2.7(a) and Section 2.7(b) shall be applied to the principal of the Loans
pro rata to the then remaining installments of such principal and then to the
remaining outstanding Obligations in such order as the Administrative Agent may
determine. No prepayment shall be required to be made by the Borrower pursuant
to Section 2.7 until such date as the Borrower may make such prepayment without
incurring an additional cost or expense under Section 4.5(a) as a result of such
prepayment.
(d) No Reborrowing. No amounts of the Loans prepaid pursuant to this
Section 2.7 may be reborrowed.
Section 2.8 Minimum Amounts. Except for Conversions and prepayments
pursuant to Section 2.7 and Article 4, each borrowing, each Conversion and each
optional prepayment of principal of the Loans shall be in an amount at least
equal to $2,000,000 or an integral multiple of $100,000 in excess thereof
(borrowings, prepayments or Conversions of or into Loans of different Types or,
in the case of Eurodollar Loans, having different Interest Periods at the same
time hereunder shall be deemed separate borrowings, prepayments and Conversions
for purposes of the foregoing, one for each Type or Interest Period).
Section 2.9 Certain Notices. Notices by the Borrower to the
Administrative Agent of terminations or reductions of Commitments, of
borrowings, Conversions, Continuations and prepayments of Loans and of the
duration of Interest Periods shall be irrevocable and shall be effective only if
received by the Administrative Agent not later than 1:00 p.m. (New York, New
York, time) on the applicable Business Day prior to the date of the relevant
termination, reduction, borrowing, Conversion, Continuation or prepayment or the
first day of such Interest Period specified below:
---------------------------------------------------------------------------------------
Notice Number of Business Days Prior
---------------------------------------------------------------------------------------
Terminations or Reductions of Commitments 1
---------------------------------------------------------------------------------------
Borrowings of Loans which are Prime Rate Loans 2
---------------------------------------------------------------------------------------
Borrowings of Loans which are Eurodollar Loans 3
---------------------------------------------------------------------------------------
Prepayments of Loans 3
---------------------------------------------------------------------------------------
Each such notice of termination or reduction shall specify the amount of the
Commitments to be terminated or reduced. Each such notice of borrowing,
Conversion, Continuation or prepayment shall specify the Loans to be borrowed,
Converted, Continued or prepaid and the amount (subject to Section 2.8 hereof)
and Type of the Loans to be borrowed, Converted, Continued or prepaid (and, in
the case of a Conversion, the Type of Loans to result from such Conversion) and
the date of borrowing, Conversion, Continuation or prepayment (which shall be a
Business Day). Each such notice of termination, reduction, borrowing,
Conversion, Continuation or prepayment shall be in the form of Exhibit C hereto,
appropriately completed as applicable. Each notice of borrowing (a "Notice of
Borrowing") (a) shall certify that all proceeds of the requested Loans are,
concurrently
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with the making of such Loans, being used by the Borrower for the purpose
specified in Section 2.10 and (b) shall be accompanied by such other evidence as
to use of the proceeds of such borrowing, as the Administrative Agent may
reasonably request from time to time. Each notice which includes reference to
the duration of an Interest Period shall specify the Loans to which such
Interest Period is to relate. The Administrative Agent shall promptly notify the
Lenders of the contents of each such notice. In the event the Borrower fails to
select the Type of Loan, or the duration of any Interest Period for any
Eurodollar Loan, within the time period and otherwise as provided in this
Section 2.9, such Loan (if outstanding as Eurodollar Loan) will be automatically
Converted into a Prime Rate Loan on the last day of preceding Interest Period
for such Loan or (if outstanding as a Prime Rate Loan) will remain as, or (if
not then outstanding) will be made as, a Prime Rate Loan. The Borrower may not
borrow any Eurodollar Loans, Convert any Loans into Eurodollar Loans or Continue
any Loans as Eurodollar Loans if the interest rate for such Eurodollar Loans
would exceed the Maximum Rate.
Section 2.10 Use of Proceeds.
(a) Loans. The Borrower agrees that all proceeds of the Loans shall be
used (i) to finance the purchase price for Nortel Networks Goods and Services
provided by Nortel Networks under the Master Purchase Agreement, excluding sales
and use taxes and freight charges, which Nortel Networks Goods and Services
shall be used in the construction and operation of the Network and (ii) to pay
(or reimburse the Borrower for its prior payment of) Eligible Third-Party
Expenses up to an amount not to exceed the Maximum Financed Amount of Eligible
Third-Party Expenses ,provided, however, that proceeds of Loans may not be used
to pay (or to reimburse the prior payment of) any Eligible Third-Party Expenses
initially incurred more than 90 days prior to the date of the making of such
Loans.
(b) Maximum Financed Amount of Eligible Third-Party Expenses. The
Maximum Financed Amount of Eligible Third-Party Expenses shall be determined by
the Administrative Agent in good faith as of the Closing Date and will be
redetermined in good faith by the Administrative Agent thereafter immediately
prior to the proposed borrowing date of any Loan, the proceeds of which (in
whole or in part) are proposed to be used to pay Eligible Third Party Expenses.
(c) Margin Stock. None of the proceeds of any Loan may be used to
acquire any security in any transaction that is subject to Section 13 or 14 of
the Exchange Act or to purchase or carry any margin stock (within the meaning of
Regulations T, U or X of the Board of Governors of the Federal Reserve System).
Section 2.11 Fees.
(a) Subject to Section 12.12, the Borrower shall, commencing on the
Effective Date and for all periods thereafter, pay to the Administrative Agent
for the account of each applicable Lender a commitment fee on the daily average
unused or unfunded amount of such Lender's Commitment, for the period from and
including the date on which such Lender (or its predecessor in interest with
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respect to a Commitment assigned to such Lender as to which a commitment fee has
not previously been paid during the applicable period) became a party hereto but
excluding the Commitment Termination Date, at the rate equal to the Applicable
Commitment Fee Rate based on a 360 day year and the actual number of days
elapsed, which accrued commitment fees shall be payable in arrears on each
Quarterly Date and on the Commitment Termination Date.
(b) Subject to Section 12.12, the Borrower agrees to pay to the
Administrative Agent and Nortel Networks such additional fees as are specified
in the Administrative Agent's Letter, which fees shall be payable in such
amounts and on such dates as are specified therein (provided, however, that all
references to the term "Closing Date" in the Administrative Agent's Letter shall
mean and refer to the Original Closing Date).
Section 2.12 Computations. Interest and fees payable by the Borrower
hereunder and under the other Loan Documents on all Loans shall be computed on
the basis of a year of 360 days and the actual number of days elapsed (including
the first day but excluding the last day) occurring in the period for which
payable unless, in the case of interest, such calculation would result in a
usurious rate, in which case interest shall be calculated on the basis of a year
of 365 or 366 days, as the case may be.
Section 2.13 Termination or Reduction of Commitments.
(a) Notwithstanding anything to the contrary contained in this
Agreement, the Commitments shall automatically terminate upon the earlier to
occur of the occurrence of any Change in Control.
(b) The Borrower shall have the right to terminate or reduce in part
the unused portion of the Commitments at any time and from time to time prior to
the Commitment Termination Date; provided, however, that no such termination or
reduction shall be effective unless the Borrower shall have given notice of each
such termination or reduction as provided in Section 2.9 and each partial
reduction of the Commitments shall be in an aggregate amount at least equal to
$2,000,000 or an integral multiple of $100,000 in excess thereof.
(c) The Commitments may not be reinstated after they have been
terminated or increased after they have been reduced.
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ARTICLE 3
Payments
Section 3.1 Method of Payment. All payments of principal, interest,
fees and other amounts to be made by the Borrower under this Agreement and the
other Loan Documents shall be made to the Administrative Agent at the Principal
Office for the account of each Lender's Applicable Lending Office in Dollars and
in immediately available funds, without setoff, deduction or counterclaim, not
later than 1:00 p.m. (New York, New York time) on the date on which such payment
shall become due (each such payment made after such time on such due date to be
deemed to have been made on the next succeeding Business Day). The Borrower
shall, at the time of making each such payment, specify to the Administrative
Agent the sums payable by the Borrower under this Agreement and the other Loan
Documents to which such payment is to be applied (and in the event that the
Borrower fails to so specify, or if an Event of Default has occurred and is
continuing, the Administrative Agent may apply such payment to the Obligations
in such order and manner as the Administrative Agent may elect, subject to
Section 3.2). Upon the occurrence and during the continuation of an Event of
Default, all proceeds of any Collateral, and all other funds of the Borrower in
the possession of the Administrative Agent or any Lender, may be applied by the
Administrative Agent to the Obligations in such order and manner as the
Administrative Agent may elect, subject to Section 3.2. Each payment received by
the Administrative Agent under this Agreement or any other Loan Document for the
account of a Lender shall be paid promptly to such Lender, in immediately
available funds, for the account of such Lender's Applicable Lending Office.
Whenever any payment under this Agreement or any other Loan Document shall be
stated to be due on a day that is not a Business Day, such payment may be made
on the next succeeding Business Day, and such extension of time shall in such
case be included in the computation of the payment of interest and commitment
fee, as the case may be.
Section 3.2 Pro Rata Treatment. Except to the extent otherwise provided
in this Agreement: (a) each Loan shall be made by the Lenders under Section 2.1,
each payment of commitment fees under Section 2.11(a) shall be made for the
account of the Lenders, and each termination or reduction of the Commitments
under Section 2.13 shall be applied to the Commitments of the Lenders, pro rata
according to the respective unused Commitments; (b) the making, Conversion and
Continuation of Loans of a particular Type (other than Conversions provided for
by Section 4.4) shall be made pro rata among the Lenders holding Loans of such
Type according to the amounts of their respective Commitments; (c) each payment
and prepayment by the Borrower of principal of or interest on Loans of a
particular Type shall be made to the Administrative Agent for the account of the
Lenders holding Loans of such Type pro rata in accordance with the respective
unpaid principal amounts of such Loans held by such Lenders; and (d) Interest
Periods for Loans of a particular Type shall be allocated among the Lenders
holding Loans of such Type pro rata according to the respective principal
amounts held by such Lenders.
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Section 3.3 Sharing of Payments, Etc. If a Lender shall obtain payment
of any principal of or interest on any of the Obligations due to such Lender
hereunder through the exercise of any right of setoff, banker's lien,
counterclaim or similar right, or otherwise, it shall promptly purchase from the
other Lenders participations in the Obligations held by the other Lenders in
such amounts, and make such adjustments from time to time, as shall be equitable
to the end that all the Lenders shall share pro rata in accordance with the
unpaid principal and interest on the Obligations then due to each of them. To
such end, all of the Lenders shall make appropriate adjustments among themselves
(by the resale of participations sold or otherwise) if all or any portion of
such excess payment is thereafter rescinded or must otherwise be restored. The
Borrower agrees, to the fullest extent it may effectively do so under applicable
law, that any Lender so purchasing a participation in the Obligations by the
other Lenders may exercise all rights of setoff, banker's lien, counterclaim or
similar rights with respect to such participation as fully as if such Lender
were a direct holder of Obligations in the amount of such participation. Nothing
contained herein shall require any Lender to exercise any such right or shall
affect the right of any Lender to exercise, and retain the benefits of
exercising, any such right with respect to any other indebtedness, liability or
obligation of the Borrower.
Section 3.4 Non-Receipt of Funds by the Administrative Agent. Unless
the Administrative Agent shall have been notified by a Lender or the Borrower
(the "Payor") prior to the date on which such Lender is to make payment to the
Administrative Agent of the proceeds of a Loan to be made by it hereunder or the
Borrower is to make a payment to the Administrative Agent for the account of one
or more of the Lenders, as the case may be (such payment being herein called the
"Required Payment"), which notice shall be effective upon receipt, that the
Payor does not intend to make the Required Payment to the Administrative Agent,
the Administrative Agent may assume that the Required Payment has been made and
may, in reliance upon such assumption (but shall not be required to), make the
amount thereof available to the intended recipient on such date and, if the
Payor has not in fact made the Required Payment to the Administrative Agent, the
recipient of such payment shall, on demand, pay to the Administrative Agent the
amount made available to it together with interest thereon in respect of the
period commencing on the date such amount was so made available by the
Administrative Agent until the date the Administrative Agent recovers such
amount at a rate per annum equal to the Federal Funds Rate for such period.
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Section 3.5 Taxes.
(a) All payments by the Borrower of principal of and interest on the
Loans and of all fees and other amounts payable under the Loan Documents shall
be made free and clear of, and without withholding or deduction by reason of,
any present or future taxes, levies, duties, imposts, assessments or other
charges levied or imposed by any Governmental Authority (other than franchise
taxes and taxes on the overall net income of any Lender). If any such taxes,
levies, duties, imposts, assessments or other charges are so levied or imposed,
the Borrower will (i) make additional payments in such amounts so that every net
payment of principal of and interest on the Loans and of all other amounts
payable by it under the Loan Documents, after withholding or deduction for or on
account of any such present or future taxes, levies, duties, imposts,
assessments or other charges (including any tax imposed on or measured by net
income of a Lender attributable to payments made to or on behalf of a Lender
pursuant to this Section 3.5 and any penalties or interest attributable to such
payments), will not be less than the amount provided for herein or therein
absent such withholding or deduction (provided that the Borrower shall not have
any obligation to pay such additional amounts to any Lender to the extent that
such taxes, levies, duties, imposts, assessments or other charges are levied or
imposed by reason of the failure of such Lender to comply with the provisions of
Section 3.6), (ii) make such withholding or deduction and (iii) remit the full
amount deducted or withheld to the relevant Governmental Authority in accordance
with applicable law. Without limiting the generality of the foregoing, the
Borrower will, upon written request of any Lender, reimburse each such Lender
for the amount of (A) such taxes, levies, duties, imports, assessments or other
charges so levied or imposed by any Governmental Authority and paid by such
Lender as a result of payments made by the Borrower under or with respect to the
Loans other than such taxes, levies, duties, imports, assessments and other
charges previously withheld or deducted by the Borrower which have previously
resulted in the payment of the required additional amount to such Lender, and
(B) such taxes, levies, duties, assessments and other charges so levied or
imposed with respect to any Lender reimbursement under the foregoing clause (A),
so that the net amount received by such Lender (net of payments made under or
with respect to the Loans) after such reimbursement will not be less than the
net amount such Lender would have received if such taxes, levies, duties,
assessments and other charges on such reimbursement had not been levied or
imposed. The Borrower shall furnish promptly to the Administrative Agent for
distribution to each affected Lender, as the case may be, upon request of such
Lender, official receipts evidencing any such payment, withholding or reduction.
(b) The Borrower will indemnify the Administrative Agent and each
Lender (without duplication) against, and reimburse the Administrative Agent and
each Lender for, all present and future taxes, levies, duties, imposts,
assessments or other charges (including interest and penalties) levied or
collected (whether or not legally or correctly imposed, assessed, levied or
collected), excluding, however, any taxes imposed on the overall net income of
the Administrative Agent or such Lender or any lending office of the
Administrative Agent or such Lender by any jurisdiction in which the
Administrative Agent or such Lender or any such lending office is located, on or
in respect of this Agreement, any of the Loan Documents or the Obligations or
any portion thereof (the
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"reimbursable taxes"). Any such indemnification shall be on an after-tax basis,
taking into account any such reimbursable taxes imposed on the amounts paid as
indemnity.
(c) Without prejudice to the survival of any other term or provision
of this Agreement, the obligations of the Borrower under this Section 3.5 shall
survive the payment of the Loans and the other Obligations and termination of
the Commitments.
Section 3.6 Withholding Tax Exemption. Each Lender that is not
incorporated or otherwise formed under the laws of the U.S. or a state thereof
agrees that it will, prior to or on or about the Effective Date or the date upon
which it initially becomes a party to this Agreement and if it is legally able
to do so, deliver to the Borrower and the Administrative Agent two duly
completed copies of U.S. Internal Revenue Service Form 1001, 4224 or W-8 or
other equivalent documents, as appropriate, certifying in any case that such
Lender is entitled to receive payments from the Borrower under any Loan Document
without deduction or withholding of any U.S. federal income taxes. Each Lender
which so delivers a Form 1001, 4224 or W-8 or other equivalent documents, as
appropriate, further undertakes to deliver to the Borrower and the
Administrative Agent two additional copies of such form (or a successor form) on
or before the date such form expires or becomes obsolete or after the occurrence
of any event requiring a change in the most recent form so delivered by it, and
such amendments thereto or extensions or renewals thereof as may be reasonably
requested by the Borrower or the Administrative Agent, in each case certifying
that such Lender is entitled to receive payments from the Borrower under any
Loan Document without deduction or withholding of any U.S. federal income taxes,
unless an event (including without limitation any change in treaty, law or
regulation) has occurred prior to the date on which any such delivery would
otherwise be required which renders all such forms inapplicable or which would
prevent such Lender from duly completing and delivering any such form with
respect to it and such Lender advises the Borrower and the Administrative Agent
that it is not capable of receiving such payments without any deduction or
withholding of U.S. federal income tax.
Section 3.7 Reinstatement of Obligations. Notwithstanding anything to
the contrary contained in this Agreement or any other Loan Document, if the
payment of any amount of principal of or interest with respect to the Loans or
any other amount of the Obligations, or any portion thereof, is rescinded,
voided or must otherwise be refunded by the Administrative Agent or any Lender
upon the insolvency, bankruptcy or reorganization of the Borrower or otherwise
for any reason whatsoever, then each of (a) the Obligations, (b) the Loan
Documents (including, without limitation, this Agreement, the Notes and the
Security Documents), (c) the indebtedness, liabilities and obligations of the
Borrower and any other Loan Parties and (d) all Liens for the benefit of the
Administrative Agent and the Lenders created under or evidenced by the Loan
Documents, will be automatically reinstated and become automatically effective
and in full force and effect, all to the extent that and as though such payment
so rescinded, voided or otherwise refunded had never been made.
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Section 3.8 No Force Majeure, Disputes. The Borrower's obligation to
pay all amounts due under the Loans and the other Obligations shall not be
affected by (a) any set-off, counterclaim, recoupment, deduction, abatement,
suspension, diminution, reduction, defense or other right which the Borrower may
have against the Vendor for any reason whatsoever arising under or pursuant to
the Master Purchase Agreement or otherwise relating to the purchase of goods or
services from the Vendor, (b) any defect in the condition, design, operation or
fitness for use of, or any damage to or loss or destruction of, any equipment or
material or service provided by the Vendor, (c) any insolvency, bankruptcy,
reorganization or similar proceedings by or against the Borrower or affecting
any of its Properties, (d) any action of any Governmental Authority or any
damage to or destruction of or any taking of the Borrower's Property or any part
thereof, (e) any change, waiver, extension, indulgence or failure to perform or
comply with, or other action or omission herein or in the other Loan Documents
(except for express written modifications to this Agreement or other Loan
Documents as and in the manner permitted under this Agreement or the other Loan
Documents), (f) any dissolution of the Borrower, (g) any inability or illegality
with respect to the use or ownership of the Borrower's Property, (h) any failure
to obtain, or expiration, suspension or other termination of, or interruption
to, any required licenses, permits, consents, authorizations, approvals or other
legal requirements, (i) the invalidity or unenforceability of any of the Loan
Documents or any other infirmity therein or any lack of power or authority of
the Administrative Agent or any Lender or the Borrower, or (j) any other event
or circumstance whatsoever, whether or not similar to any of the foregoing and
whether or not the Borrower shall have notice or knowledge of any of the
foregoing, it being the intention of the Administrative Agent and the Lenders
and the Borrower that the Obligations of the Borrower shall be absolute and
unconditional and shall be separate and independent covenants and agreements and
shall continue unaffected unless the requirements to pay or perform the same
shall have been terminated pursuant to an express provision thereof or of any of
the other Loan Documents.
ARTICLE 4
Yield Protection and Illegality
Section 4.1 Additional Costs.
(a) The Borrower shall pay directly to each Lender from time to time,
promptly upon the request of such Lender, the costs incurred by such Lender
which such Lender determines are attributable to its making or maintaining of
any Eurodollar Loans or its obligation to make any of such Loans, or any
reduction in any amount receivable by such Lender hereunder in respect of any
such Loans or obligations (such increases in costs and reductions in amounts
receivable being herein called "Additional Costs"), resulting from any
Regulatory Change which:
(i) changes the basis of taxation of any amounts payable to
such Lender under this Agreement or its Notes in respect of any of such
Loans (other than taxes imposed on the overall net income of such Lender
or its Applicable Lending Office for any of such Loans
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by the jurisdiction in which such Lender has its principal office or such
Applicable Lending Office);
(ii) imposes or modifies any reserve, special deposit, minimum
capital, capital ratio or similar requirement relating to any extensions
of credit or other assets of, or any deposits with or other liabilities
or commitments of, such Lender (including any of such Loans or any
deposits referred to in the definition of "Eurodollar Rate" in Section
1.1 hereof, but excluding the Reserve Requirement to the extent it is
included in the calculation of the Adjusted Eurodollar Rate); or
(iii) imposes any other condition affecting this Agreement or the
Notes or any extensions of credit or liabilities or commitments
contemplated hereunder or thereunder.
Each Lender will notify the Borrower (with a copy to the Administrative Agent)
of any event occurring after the Closing Date which will entitle such Lender to
compensation pursuant to this Section 4.1(a) as promptly as practicable after it
obtains knowledge thereof and determines to request such compensation, and (if
so requested by the Borrower) will designate a different Applicable Lending
Office for the Eurodollar Loans of such Lender if such designation will avoid
the need for, or reduce the amount of, such compensation and will not, in the
sole opinion of such Lender, violate any law, rule or regulation or be in any
way disadvantageous to such Lender, provided that such Lender shall have no
obligation to so designate an Applicable Lending Office located in the U.S. Each
Lender will furnish the Borrower with a certificate setting forth the basis and
the amount of each request of such Lender for compensation under this Section
4.1(a). If any Lender requests compensation from the Borrower under this Section
4.1(a), the Borrower may, by notice to such Lender (with a copy to the
Administrative Agent), suspend the obligation of such Lender to make or Continue
making, or Convert Prime Rate Loans into, Eurodollar Loans until the Regulatory
Change giving rise to such request ceases to be in effect (in which case the
provisions of Section 4.4 hereof shall be applicable).
(b) Without limiting the effect of the foregoing provisions of this
Section 4.1, in the event that, by reason of any Regulatory Change, any Lender
either (i) incurs Additional Costs based on or measured by the excess above a
specified level of the amount of a category of deposits or other liabilities of
such Lender which includes deposits by reference to which the interest rate on
Eurodollar Loans is determined as provided in this Agreement or a category of
extensions of credit or other assets of such Lender which includes Eurodollar
Loans or (ii) becomes subject to restrictions on the amount of such a category
of liabilities or assets which it may hold, then, if such Lender so elects by
notice to the Borrower (with a copy to the Administrative Agent), the obligation
of such Lender to make or Continue making, or Convert Prime Rate Loans into,
Eurodollar Loans hereunder shall be suspended until such Regulatory Change
ceases to be in effect (in which case the provisions of Section 4.4 hereof shall
be applicable).
(c) Determinations and allocations by any Lender for purposes of this
Section 4.1 of the effect of any Regulatory Change on its costs of maintaining
its obligation to make Loans or of
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making or maintaining Loans or on amounts receivable by it in respect of Loans
and of the additional amounts required to compensate such Lender in respect of
any Additional Costs, shall be conclusive in the absence of manifest error,
provided that such determinations and allocations are made on a reasonable
basis. Notwithstanding anything to the contrary contained herein, the Borrower
shall not be required to make any payment of Additional Costs to any Lender
pursuant to this Section 4.1 with respect to Additional Costs relating to any
period of time which is more than 120 days prior to such Lender's request for
such Additional Costs, provided that the foregoing provisions of this sentence
shall not apply to Additional Costs attributable to any Regulatory Change which
takes effect retroactively.
Section 4.2 Limitation on Types of Loans. Anything herein to the
contrary notwithstanding, if with respect to any Eurodollar Loans for any
Interest Period therefor:
(a) the Administrative Agent determines (which determination shall be
conclusive absent manifest error) that quotations of interest rates for the
relevant deposits referred to in the definition of "Eurodollar Rate" in Section
1.1 hereof are not being provided in the relative amounts or for the relative
maturities for purposes of determining the rate of interest for such Loans as
provided in this Agreement; or
(b) the Required Lenders determine (which determination shall be
conclusive absent manifest error) and notify the Administrative Agent that the
relevant rates of interest referred to in the definition of "Eurodollar Rate" or
"Adjusted Eurodollar Rate" in Section 1.1 hereof on the basis of which the rate
of interest for such Loans for such Interest Period is to be determined do not
accurately reflect the cost to the Lenders of making or maintaining such Loans
for such Interest Period;
then the Administrative Agent shall give the Borrower prompt notice thereof and,
so long as such condition remains in effect, the Lenders shall be under no
obligation to make Eurodollar Loans or to Convert Prime Rate Loans into
Eurodollar Loans and the Borrower shall, on the last day(s) of the then current
Interest Period(s) for the outstanding Eurodollar Loans, either prepay such
Loans or Convert such Loans into Prime Rate Loans in accordance with the terms
of this Agreement.
Section 4.3 Illegality. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Lender or its
Applicable Lending Office to (a) honor its obligation to make Eurodollar Loans
or (b) maintain Eurodollar Loans, then such Lender shall promptly notify the
Borrower (with a copy to the Administrative Agent) thereof and such Lender's
obligation to make or maintain Eurodollar Loans and to Convert Prime Rate Loans
into Eurodollar Loans hereunder shall be suspended until such time as such
Lender may again make and maintain Eurodollar Loans (in which case the
provisions of Section 4.4 hereof shall be applicable).
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Section 4.4 Treatment of Affected Loans. If the obligation of any
Lender to make or Continue, or to Convert Prime Rate Loans into, Eurodollar
Loans is suspended pursuant to Section 4.1 or 4.3 hereof, such Lender's
Eurodollar Loans shall be automatically Converted into Prime Rate Loans on the
last day(s) of the then current Interest Period(s) for the Eurodollar Loans (or,
in the case of a Conversion required by Section 4.1(b) or 4.3 hereof, on such
earlier date as such Lender may specify to the Borrower with a copy to the
Administrative Agent) and, unless and until such Lender gives notice as provided
below that the circumstances specified in Section 4.1 or 4.3 hereof which gave
rise to such Conversion no longer exist:
(a) to the extent that such Lender's Eurodollar Loans have been so
Converted, all payments and prepayments of principal which would otherwise be
applied to such Lender's Eurodollar Loans shall be applied instead to its Prime
Rate Loans; and
(b) all Loans which would otherwise be made or Continued by such
Lender as Eurodollar Loans shall be made as or Converted into Prime Rate Loans
and all Loans of such Lender which would otherwise be Converted into Eurodollar
Loans shall be Converted instead into (or shall remain as) Prime Rate Loans.
If such Lender gives notice to the Borrower that the circumstances specified in
Section 4.1 or 4.3 hereof which gave rise to the Conversion of such Lender's
Eurodollar Loans pursuant to this Section 4.4 no longer exist (which such Lender
agrees to do promptly upon such circumstances ceasing to exist) at a time when
Eurodollar Loans are outstanding, such Lender's Prime Rate Loans shall be
automatically Converted, on the first day(s) of the next succeeding Interest
Period(s) for such outstanding Eurodollar Loans, to the extent necessary so
that, after giving effect thereto, all Loans held by the Lenders holding
Eurodollar Loans and by such Lender are held pro rata (as to principal amounts,
Types and Interest Periods) in accordance with their respective Commitments.
Section 4.5 Compensation. The Borrower shall pay to the Administrative
Agent for the account of each Lender, promptly upon the request of such Lender
through the Administrative Agent, such amount or amounts as shall be sufficient
(in the reasonable opinion of such Lender) to compensate it for any loss, cost
or expense incurred by it as a result of:
(a) Any payment, prepayment or Conversion of a Eurodollar Loan for any
reason (including, without limitation, the acceleration of the outstanding Loans
pursuant to Section 10.2) on a date other than the last day of an Interest
Period for such Loan; or
(b) Any failure by the Borrower for any reason (including, without
limitation, the failure of any conditions precedent specified in Article 6 to be
satisfied) to borrow, Convert or prepay a Eurodollar Loan on the date for such
borrowing, Conversion or prepayment specified in the relevant notice of
borrowing, prepayment or Conversion under this Agreement.
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Section 4.6 Capital Adequacy. If, after the Closing Date, any Lender
shall have determined that the adoption or implementation of any applicable law,
rule or regulation regarding capital adequacy (including, without limitation,
any law, rule or regulation implementing the Basle Accord), or any change
therein, or any change in the interpretation or administration thereof by any
central bank or other Governmental Authority charged with the interpretation or
administration thereof, or compliance by such Lender (or its parent) with any
guideline, request or directive regarding capital adequacy (whether or not
having the force of law) of any central bank or other Governmental Authority
(including, without limitation, any guideline or other requirement implementing
the Basle Accord), has or would have the effect of reducing the rate of return
on such Lender's (or its parent's) capital as a consequence of its obligations
hereunder or the transactions contemplated hereby to a level below that which
such Lender (or its parent) could have achieved but for such adoption,
implementation, change or compliance (taking into consideration such Lender's
policies with respect to capital adequacy) by an amount deemed by such Lender to
be material, then from time to time, within ten Business Days after demand by
such Lender (with a copy to the Administrative Agent), the Borrower shall pay to
such Lender such additional amount or amounts as will compensate such Lender (or
its parent) for such reduction. A certificate of such Lender claiming
compensation under this Section 4.6 and setting forth the additional amount or
amounts to be paid to it hereunder shall be conclusive absent manifest error,
provided that the determination thereof is made on a reasonable basis. In
determining such amount or amounts, such Lender may use any reasonable averaging
and attribution methods. Notwithstanding anything to the contrary contained
herein, the Borrower shall not be required to make any payment of additional
amounts to any Lender pursuant to this Section 4.6 with respect to additional
amounts relating to any period of time which is more than 120 days prior to such
Lender's request for such additional amounts, provided that the foregoing
provisions of this sentence shall not apply to additional amounts attributable
to any Regulatory Change which takes effect retroactively.
Section 4.7 Additional Interest on Eurodollar Loans. Without
duplication of Section 2.4 or amounts directly included in the definition of the
term "Adjusted Eurodollar Rate", the Borrower shall pay, directly to each Lender
from time to time, additional interest on the unpaid principal amount of each
Eurodollar Loan held by such Lender, from the date of the making of such
Eurodollar Loan until such principal amount is paid in full, at an interest rate
per annum determined by such Lender in good faith equal to the positive
remainder (if any) of (a) the Adjusted Eurodollar Rate applicable to such
Eurodollar Loan minus (b) the Eurodollar Rate applicable to such Eurodollar
Loan. Each payment of additional interest pursuant to this Section 4.7 shall be
payable by the Borrower on each date upon which interest is payable on such
Eurodollar Loan pursuant to Section 2.4(b); provided, however, that the Borrower
shall not be obligated to make any such payment of additional interest until the
first Business Day after the date when the Borrower has been informed (i) that
such Lender is subject to a Reserve Requirement and (ii) of the amount of such
Reserve Requirement (after which time the Borrower shall be obligated to make
all such payments of additional interest, including, without limitation, such
payment of additional interest that otherwise would have been payable by the
Borrower on or prior to such time had the Borrower been earlier informed).
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Section 4.8 Replacement of Lenders. If at any time a Lender, other
than Nortel Networks, becomes a Gross Up Lender (as defined in this Section
4.8), the Borrower shall have the right to replace such Lender with another
Person; provided that (a) such other Person shall be an Eligible Assignee and
such other Person shall execute an Assignment and Acceptance, (b) neither the
Administrative Agent nor any Lender shall have any obligation to the Borrower to
find such other Person, (c) in the event of a replacement of a Gross Up Lender,
in order for the Borrower to be entitled to replace such Lender, such
replacement must take place no later than 90 days after the date the Gross Up
Lender shall notify the Borrower and the Administrative Agent of its desire to
be paid any amounts pursuant to Section 3.5, 4.1 or 4.6, and (d) if the Borrower
replaces one Gross Up Lender, it must replace all Gross Up Lenders or replace
all Gross Up Lenders on a pro rata basis. Each Lender, other than Nortel
Networks, agrees to its replacement at the option of the Borrower pursuant to
this Section 4.8 and in accordance with Section 12.8; provided that the
successor Lender shall purchase without recourse such Lender's interest in the
Obligations of the Borrower to such Lender for cash in an aggregate amount equal
to the aggregate unpaid principal thereof, all unpaid interest accrued thereon,
all unpaid commitment fees accrued for the account of such Lender, any breakage
costs incurred by the selling Lender because of the prepayment of any Eurodollar
Loans, all other fees (if any) applicable thereto and all other amounts
(including any amounts under this Article 4) then owing to such Lender hereunder
or under any other Loan Document and the Loan Parties shall execute a release
addressed to such Lender releasing such Lender from all claims arising in
connection with the Loan Documents. Any Lender who requests a payment pursuant
to Section 3.5, 4.1 or 4.6 shall be deemed a "Gross Up Lender".
ARTICLE 5
Security
Section 5.1 Collateral. To secure the full and complete payment and
performance of the Obligations, the Borrower will, and will cause NCH and each
of the Subsidiaries of the Borrower to, grant to the Administrative Agent for
the benefit of the Administrative Agent and the Lenders a perfected, first
priority Lien on all of its right, title and interest in and to the Collateral,
whether now owned or hereafter acquired, pursuant to the Security Documents,
including, without limitation, the following:
(a) all Capital Stock of the Borrower and its Subsidiaries owned by
NCH, the Borrower or any Subsidiary of the Borrower;
(b) all of the Property (as such Property is more specifically
described in the Security Documents) of the Borrower, NCH and each of the
Subsidiaries of the Borrower, including, without limitation, the following:
Investments (including certificates of deposit); accounts; inventory (including,
without limitation, work in process); equipment; deposit accounts (including
cash collateral accounts), contract rights (including, without limitation, all
contracts relating to the construction or operation of the Network, including
rights of way, easements, leases and all related
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contracts); customer deposits in connection with purchase orders; general
intangibles; Mortgaged Properties; instruments; chattel paper; Permits;
Intellectual Property; and intercompany Debt;
(c) all cash and non-cash proceeds and products of any of the
foregoing; and
(d) all real Properties and interests therein (if any) in which the
Administrative Agent is required to have been or to be granted a Lien in
accordance with Section 5.4 of the Original Credit Agreement or Section 5.4
hereof.
Section 5.2 Guaranties. The Borrower shall cause NCH and each of the
Subsidiaries of the Borrower (whether owned as of the Closing Date or thereafter
organized or created) to Guarantee the payment and performance of the
Obligations pursuant to the Guaranties.
Section 5.3 New Subsidiaries; Additional Capital Stock.
Contemporaneously with the creation or acquisition of any Subsidiary of the
Borrower after the Closing Date, the Borrower shall:
(a) grant or cause to be granted to the Administrative Agent, for the
benefit of itself and the Lenders, a perfected, first priority security interest
in all Capital Stock of such Subsidiary owned by the Borrower or any Subsidiary
of the Borrower (to the extent such Capital Stock was not previously pledged to
the Administrative Agent);
(b) cause each such Subsidiary to Guarantee the payment and
performance of the Obligations by executing and delivering to the Administrative
Agent a Guaranty or a joinder therein acceptable to the Administrative Agent;
and
(c) cause each such Subsidiary to execute and deliver to the
Administrative Agent a Security Agreement and such other Security Documents, in
form and substance acceptable to the Administrative Agent, as the Administrative
Agent may request to grant the Administrative Agent, for the benefit of itself
and the Lenders, a perfected, first priority Lien on all Property of such
Subsidiary.
Contemporaneously with the issuance of any additional Capital Stock of the
Borrower or any of the Subsidiaries of the Borrower after the Closing Date, the
Borrower shall, and shall cause NCH and each of the Subsidiaries of the Borrower
to, grant or cause to be granted to the Administrative Agent, for the benefit of
the Administrative Agent and the Lenders, a perfected, first priority security
interest in all Capital Stock or other ownership interests in the Borrower or
such Subsidiary owned by NCH, the Borrower or any Subsidiary of the Borrower (to
the extent such Capital Stock or other ownership interests are already not so
pledged to the Administrative Agent). The Borrower covenants that none of the
Capital Stock to be pledged in accordance with this Section 5.3 shall be subject
to any transfer restriction, shareholders' agreement or other restriction except
for such restrictions under applicable securities laws, such restrictions
existing as of the Closing Date which have been disclosed to the Administrative
Agent in the Security Documents and such restrictions, if any, as may be
reasonably acceptable to the Administrative Agent. In connection with and in
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addition to the foregoing, the Borrower shall, and shall cause NCH and each of
the Subsidiaries of the Borrower and other appropriate Persons (as applicable)
to, execute and/or deliver such further agreements, documents and instruments
(including, without limitation, stock certificates, stock powers and financing
statements) as the Administrative Agent may reasonably request in order for it
to obtain and maintain the perfected, first priority Liens to be granted in
accordance with this Section 5.3.
Section 5.4 New Mortgaged Properties; Landlord Waivers. The Borrower
shall, and shall cause each of the other Loan Parties to, contemporaneously with
the acquisition of any fee real Property, execute, acknowledge and deliver to
the Administrative Agent a Mortgage or an amendment or modification to an
existing Mortgage covering all fee real Property acquired by any such Loan Party
subsequent to the Closing Date, together with evidence satisfactory to the
Administrative Agent and its counsel that the Mortgage creates a valid, first
priority Lien on the fee estate, in favor of the Administrative Agent for the
benefit of the Administrative Agent and the Lenders. Following the date of each
such acquisition of Property, if reasonably requested by the Administrative
Agent, the Borrower shall, and shall cause each of such Loan Parties with an
interest in such Property to, provide the Administrative Agent with a current
environmental assessment of such Property in form and substance reasonably
satisfactory to the Administrative Agent. In addition, with respect to each
lease of real Property executed by any Loan Party relating to a real Property
location where inventory or equipment of a Loan Party having an aggregate fair
market value in excess of $1,000,000 is or will be located, the Borrower will,
and will cause each Loan Party to, obtain waivers of landlord's Liens from each
lessor and other agreements from such lessor and its lenders necessary or
appropriate to ensure Administrative Agent's perfected, first priority Lien on
the Collateral or Property affected thereby, the Administrative Agent's access
to such Collateral or Property and the right of the Administrative Agent, the
Lenders or their designee to succeed to the rights of the Loan Party that is the
lessee under the lease, in each case in form and substance reasonably
satisfactory to the Administrative Agent.
Section 5.5 Setoff. If an Event of Default shall have occurred and be
continuing, each Lender is hereby authorized at any time and from time to time,
without notice to the Borrower (any such notice being hereby expressly waived by
the Borrower), to set off and apply any and all deposits (general or special,
time or demand, provisional or final excluding any trust accounts) at any time
held and other indebtedness at any time owing by such Lender to or for the
credit or the account of the Borrower against any and all of the Obligations of
the Borrower now or hereafter existing under this Agreement, such Lender's Note
or any other Loan Document, irrespective of whether or not the Administrative
Agent or such Lender shall have made any demand under this Agreement, such
Lender's Note or any such other Loan Document and although such Obligations may
be unmatured. Each Lender agrees promptly to notify the Borrower (with a copy to
the Administrative Agent) after any such setoff and application, provided that
the failure to give such notice shall not affect the validity of such setoff and
application. The rights and remedies of each Lender hereunder are in addition to
other rights and remedies (including, without limitation, other rights of
setoff) which such Lender may have.
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ARTICLE 6
Conditions Precedent
Section 6.1 Initial Extension of Credit. The effectiveness of this
Agreement and the obligation of each Lender to make its initial Loan under this
Agreement (other than the loans made pursuant to the Original Credit Agreement
which are deemed outstanding hereunder as provided in Section 2.1(b)) are
subject to the receipt by the Administrative Agent, on or before the Effective
Date, of all of the following in form and substance satisfactory to the
Administrative Agent and, in the case of actions to be taken, the taking of the
following required actions and evidence that such actions have been taken to the
satisfaction of the Administrative Agent:
(a) Resolutions. Resolutions of the Board of Directors certified by
the Secretary or an Assistant Secretary of each Loan Party which authorize the
execution, delivery and performance by the Borrower of the Loan Documents to
which it is or is to be a party;
(b) Incumbency Certificate. A certificate of incumbency certified by
the Secretary or an Assistant Secretary (or other analogous officer) of each
Loan Party certifying as to the name of each officer or other representative of
the Borrower (i) who is authorized to sign the Loan Documents to which it is or
is to be a party (including any certificates contemplated therein), together
with specimen signatures of each such officer or other representative, and (ii)
who will, until replaced by other officers or representatives duly authorized
for that purpose, act as its representative for the purposes of signing
documents and giving notices and other communications in connection with the
Loan Documents and the transactions contemplated thereby;
(c) Articles or Certificates of Incorporation. The articles or
certificate of incorporation or other analogous constitutional documents of each
Loan Party certified by the Secretary of State or other applicable Governmental
Authority of the state of incorporation of such corporation and dated as of a
recent date;
(d) Bylaws. The bylaws or other analogous constitutional documents of
each Loan Party certified by its Secretary or an Assistant Secretary (or other
analogous officer);
(e) Governmental Certificates. Certificates of appropriate officials
as to the existence and good standing of each of the Loan Parties in its
jurisdiction of incorporation or organization and in all jurisdictions in which
such Loan Party is qualified or is required to qualify to do business as a
foreign entity, each such certificate to be dated as of a Current Date;
(f) Notes. The Notes duly completed and executed by the Borrower (one
payable to the order of each Lender with respect to its Commitment);
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(g) Mortgages. If and to the extent required by this Agreement, the
Borrower and its Subsidiaries shall execute Mortgages in favor of the
Administrative Agent for the benefit of the Lenders covering all real property
owned by the Borrower and its Subsidiaries, and with respect to each tract of
real property owned by the Borrower and its Subsidiaries shall provide to the
Administrative Agent a mortgagee policy of title insurance insuring the first
Lien status of each such Mortgage, a current survey certified to the
Administrative Agent and the Lenders, an appraisal complying with all applicable
regulatory requirements, and an environmental survey acceptable to the
Administrative Agent.
(h) Other Security Documents. Security Documents executed by each of
the Loan Parties pertaining to the Collateral (one such Security Agreement
executed by each such Loan Party) together with all related financing statements
and other filings, consents to collateral assignments from all parties to all
Material Contracts included as part of the Collateral in form and substance
acceptable to the Administrative Agent, delivery of all pledged Capital Stock
and instruments together with appropriate stock powers and endorsements and,
with respect to each existing lease of real Property by any Loan Party relating
to a real Property location where inventory or equipment of a Loan Party having
an aggregate fair market value in excess of $1,000,000 is or will be located,
waivers of landlord's Liens from each lessor and other agreements from such
lessor and its lenders necessary or appropriate to ensure Administrative Agent's
perfected, first priority Lien on the Collateral or Property affected thereby,
the Administrative Agent's access to such Collateral or Property and the right
of the Administrative Agent, the Lenders or their designee to succeed to the
rights of the Loan Party that is the lessee under the lease, in each case in
form and substance reasonably satisfactory to the Administrative Agent;
(i) Insurance Certificates and Policies. Certificates evidencing all
insurance policies required by this Agreement and the other Loan Documents and,
if requested by the Administrative Agent, copies of all such insurance policies;
(j) Lien Searches. Lien searches in the name of each of the Loan
Parties (and in all names under which any of them has done business within the
last five years) in each jurisdiction where such Loan Party maintains an office
or has Property, showing no financing statements or other Lien instruments of
record affecting the Collateral except for Permitted Liens;
(k) Master Purchase Agreement. The Master Purchase Agreement shall
have been executed and delivered by all parties thereto, and the Administrative
Agent shall have received a photocopy of the Master Purchase Agreement as so
executed and delivered, certified by a Responsible Officer of the Borrower as
being a true and correct copy of such document as of the Effective Date;
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(l) Preferred Facility. The Agreement of Purchase for the issuance and
sale by NCI of $30,000,000 of convertible preferred stock to Nortel Networks
shall have been executed; and NCI shall have issued the convertible preferred
stock for $30,000,000 pursuant to and in accordance with the terms of the
Agreement of Purchase and NCH (as a capital contribution from and through NCI)
shall have received net proceeds of $30,000,000 in connection with such
issuance;
(m) Capital Contribution. NCI shall have contributed a minimum of
$50,500,000 to the Borrower for constructing the Network and working capital
purposes;
(n) Payment of Fees and Expenses. The Borrower shall have paid all
fees due on or before the Effective Date as specified in this Agreement or in
the Administrative Agent's Letter and all fees, costs and expenses of or
incurred by the Administrative Agent and its counsel to the extent billed on or
before the Effective Date and payable pursuant to this Agreement;
(o) Compliance with Laws. As of the Effective Date, the Borrower and
the other Loan Parties shall have complied in all material respects with all
Governmental Requirements necessary to consummate the transactions contemplated
by this Agreement and the other Loan Documents;
(p) No Prohibitions. No Governmental Requirement shall prohibit the
consummation of the transactions contemplated by this Agreement or any other
Loan Document, and no order, judgment or decree of any Governmental Authority or
arbitrator shall, and no litigation or other proceeding shall be pending or to
the Borrower's knowledge, threatened which would, enjoin, prohibit, restrain or
otherwise adversely affect in any material manner the consummation of the
transactions contemplated by this Agreement and the other Loan Documents or
otherwise have a Material Adverse Effect;
(q) Financial Statements. Copies of each of the financial statements
referred to in Section 7.2;
(r) Opinions of Counsel. A favorable legal opinion of Piper & Marbury,
L.L.P., counsel for the Loan Parties, in form and substance satisfactory to the
Administrative Agent, with respect to the Loan Parties and with respect to the
Loan Documents and a favorable legal opinion of regulatory counsel to the
Borrower and its Subsidiaries in form and substance satisfactory to the
Administrative Agent;
(s) Legal Matters and Loan Documents. All matters of a legal nature
relating to the Borrower and the Loan Documents shall be reasonably satisfactory
to the Administrative Agent and its counsel, and the Administrative Agent shall
have received all such other agreements, documents and instruments, each in form
and substance and executed and delivered by all parties, as the Administrative
Agent may have reasonably requested to receive;
(t) Business Plan. A copy of the Business Plan in form and substance
satisfactory to the Administrative Agent;
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(u) Consents. To the extent not referred to in clause (h) preceding,
copies of all material consents necessary for the execution, delivery and
performance by the Loan Parties of the Loan Documents to which it is a party,
including, without limitation, any consents or waivers in connection with the
Master Purchase Agreement as the Administrative Agent may require and the grant
of a security interest in each Material Contract of each Loan Party (other than
agreements relating to other Debt of the Loan Parties), which consents shall be
certified by a Responsible Officer of the Borrower as true and correct copies of
such consents as of the Effective Date;
(v) Permits. Copies of all material Permits affecting the Borrower or
any of its Subsidiaries in connection with its businesses or any of the
Properties owned or leased by it and in connection with its businesses to be
conducted and Properties to be owned or leased as contemplated by the Business
Plan and evidence satisfactory to the Administrative Agent that the Borrower and
its Subsidiaries are able to conduct their businesses conducted and to be
conducted as contemplated by the Business Plan with the use of such Permits in
full force and effect; and the Administrative Agent shall be satisfied that (i)
the Borrower has the exclusive, unrestricted right to use each of such Permits
pursuant to license agreements or other agreements, documents or instruments in
form and substance reasonably satisfactory to the Administrative Agent and (ii)
the Borrower has complied with all initial and on-going conditions of the
issuance and use of all such Permits;
(w) Regulatory Approvals. Evidence satisfactory to the Administrative
Agent that all filings, consents or approvals with or of Governmental
Authorities necessary to consummate the transactions contemplated by the Loan
Documents have been made and obtained, as applicable;
(x) No Material Adverse Change. As of the Effective Date, (i) no
material adverse change shall have occurred with respect to the financial
condition, results of operations, businesses, operations, capitalization,
indebtedness, liabilities, obligations, profitability or prospects or Properties
or of the general affairs or management of the Borrower and its Subsidiaries,
taken as a whole, or of the Borrower, in each case since December 31, 1998, and
(ii) the Administrative Agent shall be satisfied that the financial performance
of the Borrower and its Subsidiaries and of the Borrower to the Effective Date
is not materially different from the financial projections for such Person(s)
through the Effective Date that were previously submitted to the Administrative
Agent;
(y) Accountant's Letter. A letter from NCI authorizing the independent
public accountants of NCI and its Subsidiaries (including, without limitation,
NCH and the Borrower) to communicate with the Administrative Agent and the
Lenders;
(z) Solvency Certificate. A certificate as to the solvency of each of
NCH, the Borrower and its Subsidiaries, together with contribution agreements
between and among NCH, the Borrower and its Subsidiaries;
(aa) Senior Notes, etc. The Senior Notes Documents (other than the
Senior Notes) shall have been executed and delivered, the Warrants shall have
been issued pursuant to, and shall be
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governed by, the Warrant Documents, and the Registration Rights Agreement shall
have been executed by all parties thereto, all of which Senior Notes Documents,
Warrant Documents and Registration Rights Agreement shall be in form and
substance approved by Nortel Networks;
(bb) Prepayment of Loans, etc. under the Original Credit Agreement. The
Borrower shall have paid in full all interest and fees accrued to the Effective
Date and not previously paid with respect to any loans or commitments under the
Original Credit Agreement, other than accrued interest with respect to the
Original Revolving Loans and the Original Term Loans which constitute
"Eurodollar Loans" as such term is defined in the Original Credit Agreement and
as to which interest is, in accordance with the Original Credit Agreement and
the last sentence of Section 2.4(b), due and payable after the Effective Date;
and
(cc) Supplemental Agreement. The Borrower shall have complied with all
terms and provisions of the Supplemental Agreement.
The Borrower shall deliver, or cause to be delivered, to the Administrative
Agent sufficient counterparts of each agreement, document or instrument to be
received by the Administrative Agent under this Section 6.1 to permit the
Administrative Agent to distribute a copy of the same to each of the Lenders.
After the request of the Borrower, the Administrative Agent shall inform the
Borrower in writing as to the status of satisfaction of the conditions precedent
set forth in this Section 6.1. The Administrative Agent and the Lenders
acknowledge that certain of the conditions precedent referred to in this Section
6.1 were previously satisfied in connection with the Original Credit Agreement
(including the conditions precedent specified in clauses (k), (l), (m), (t) and
(y) preceding).
Section 6.2 All Extensions of Credit. The obligation of each Lender to
make any Loan (including the initial Loan) under this Agreement is subject to
the satisfaction of each of the conditions precedent set forth in Section 6.1
and each of the following additional conditions precedent:
(a) No Default or Material Adverse Effect. No Default or Material
Adverse Effect shall have occurred and be continuing, or would result from such
Loan;
(b) Representations and Warranties. All of the representations and
warranties of the Borrower contained in this Agreement and in the other Loan
Documents shall be true and correct on and as of the date of such Loan with the
same force and effect as if such representations and warranties had been made on
and as of such date unless they relate solely to an earlier date;
(c) Debt Ratio. After giving effect to the requested Advance, the
ratio of Secured Debt to Contributed Capital for NCH and its Consolidated
Subsidiaries does not exceed (i) .62 to .38 for the first $75,750,000 of Secured
Debt; and (ii) .80 to .20 with respect to Secured Debt in excess of $75,750,000,
excluding for purposes of computing compliance with the ratio referred to in
clause (ii), $50,500,000 of Contributed Capital, such that the aggregate ratio
never exceeds .70 to .30;
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(d) Use of Proceeds. The Borrower shall have certified to the
Administrative Agent that all proceeds of the Loans then being made by the
Lenders are, concurrently with the making of such Loans, being used by the
Borrower for the purposes specified in Section 2.10, and the Borrower shall have
delivered to the Administrative Agent a current calculation (in reasonable
detail) of the Maximum Financed Amount of Eligible Third-Party Expenses (if any
of the proceeds of the requested Loans are to used to pay any Eligible
Third-Party Expenses) and such further evidence thereof (if any) as the
Administrative Agent may reasonably request;
(e) Master Purchase Agreement. The Master Purchase Agreement shall not
have been terminated by the Borrower; and
(f) Additional Documentation. The Administrative Agent shall have
received such additional approvals, agreements, documents and instruments as the
Administrative Agent may reasonably request.
Each notice of borrowing by the Borrower hereunder shall constitute a
representation and warranty by the Borrower that the conditions precedent set
forth in this Section 6.2 have been satisfied (both as of the date of such
notice and, unless the Borrower otherwise notifies the Administrative Agent
prior to the date of such borrowing, as of the date of such borrowing).
Section 6.3 Closing Certificates. The Borrower shall, concurrently with
the Effective Date (with respect to the conditions precedent set forth in
Section 6.1), and concurrently with the date of the making of each other Loan,
execute and deliver to the Administrative Agent a certificate in form and
substance satisfactory to the Administrative Agent certifying as to the
satisfaction of each of the conditions precedent set forth in this Article 6
which are required to be satisfied on or before such date (without regard to
whether such matters are, in fact, satisfactory to the Administrative Agent to
the extent that such satisfaction is required hereunder).
ARTICLE 7
Representations and Warranties
The Borrower represents and warrants to the Administrative Agent and the
Lenders that the following statements are and, after giving effect to the
funding of the initial Loans on the Effective Date, will be true, correct and
complete:
Section 7.1 Existence. Each of the Loan Parties (a) is a corporation
(or other entity) duly organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation (or organization), (b) has all
requisite power and authority to own its Properties and carry on its business as
now conducted, and (c) is qualified to do business in all jurisdictions in which
the nature of its business makes such qualification necessary and where failure
to so qualify would have a Material Adverse Effect. Each of the Loan Parties has
the power and authority and
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legal right to execute, deliver and perform its obligations under the Loan
Documents to which it is or may become a party.
Section 7.2 Financial Statements.
(a) The Borrower has delivered to the Administrative Agent and the
Lenders audited financial statements of NCI and its Consolidated Subsidiaries as
of and for the fiscal year ended December 31, 1998 and financial statements of
NCI and its Consolidated Subsidiaries as of and for the fiscal quarter ended
March 31, 1999. All financial statements required to be delivered to the
Administrative Agent in accordance with this Agreement (including, without
limitation, those referred to in the immediately preceding sentence) are or will
be when delivered (as applicable) true and correct, have been or will be (as
applicable) prepared in accordance with GAAP and fairly and accurately present
or will fairly and accurately present (as applicable), on a consolidated and
consolidating (where applicable) basis, the financial condition of NCI and the
Borrower and their respective Consolidated Subsidiaries (as applicable) of the
respective dates indicated therein and the results of operations for the
respective periods indicated therein. There has not been, as of the Effective
Date, any material adverse change in the financial condition, results of
operations, businesses, operations or Properties of the Borrower and its
Subsidiaries, taken as a whole, or of the Borrower on an individual basis, since
December 31, 1998.
(b) The Business Plan represents, as of the Effective Date, the good
faith estimate of the Borrower and its senior management concerning the probable
financial condition and performance of the Borrower and its Subsidiaries for the
time period covered thereunder based upon the assumptions believed to be
reasonable at the time made.
Section 7.3 Corporate Action; No Breach. The execution, delivery and
performance by each of the Loan Parties of the Loan Documents to which it is or
may become a party and compliance with the terms and provisions hereof and
thereof have been duly authorized by all requisite corporate action and do not
and will not (a) violate or conflict with, or result in a breach of, or require
any consent under (i) the articles or certificates of incorporation or bylaws or
other constitutional documents of such Loan Party, (ii) any Governmental
Requirement (including, without limitation, the Communications Act, any rule or
regulation of the FCC or any rule or regulation of any federal or state public
utility commission or other Governmental Authority) or any order, writ,
injunction or decree of any Governmental Authority or arbitrator, or (iii) any
material agreement, document or instrument to which any Loan Party is a party or
by which any Loan Party or any of its Property is bound or subject, or (b)
constitute a default under any such material agreement, document or instrument,
or result in the creation or imposition of any Lien (except a Lien in favor of
the Administrative Agent for and on behalf of the Lenders under the Security
Documents as provided in Article 5) upon any of the revenues or Property of any
Loan Party.
Section 7.4 Operation of Business. Each of the Loan Parties (a)
possesses all material Permits (including, without limitation, rights-of-way),
franchises, and authorizations necessary or appropriate to conduct its
businesses substantially as now conducted and as to be conducted as
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contemplated by the Business Plan, and (b) has complied with all initial and
on-going conditions to the issuance and use of all such Permits, franchises,
licenses and authorizations, except where failure to comply could not reasonably
be expected to have a Material Adverse Effect. None of such Persons is in
violation of any such material Permits, franchises, licenses or authorizations
which could be expected to result in any termination or cessation thereof. All
of such material Permits, franchises, licenses and authorizations required by
any Governmental Requirement (including, without limitation, the Communications
Act, any rule or regulation of the FCC or any state public utility commission)
or issued by any Governmental Authority as of the Effective Date are summarized
by category or type, as relevant to the operation of the Borrower, on Schedule
7.4. As of the Effective Date, there is not pending before the FCC or any other
Governmental Authority any action to cancel, revoke or terminate any License of
any Loan Party relating to any Telecommunications Assets or Telecommunications
Business. The Borrower and its Subsidiaries are entitled to elect to obtain
interconnection rights without negotiation or arbitration with any ILEC by
opting to accept the terms of any interconnection agreement which has been
approved and is on file with the telecommunications regulatory commission in the
jurisdiction in which such Loan Party desires to obtain interconnection rights.
Section 7.5 Intellectual Property. The Intellectual Property owned or
used by each Loan Party in the operation of its business is set forth on
Schedule 7.5. Each of the Loan Parties owns or possesses (or will be licensed or
have the full right to use) all Intellectual Property which is necessary or
appropriate for the operation of its businesses as presently conducted and as
proposed to be conducted, without any known conflict with the rights of others.
The consummation of the transactions contemplated by this Agreement and the
other Loan Documents will not materially alter or impair, individually or in the
aggregate, any of such rights of such Persons. No product or service of any of
the Loan Parties infringes upon any Intellectual Property of any other Person,
and no claim or litigation is pending or, to the knowledge of the Borrower,
threatened against any such Person contesting its right to sell or otherwise use
any product or material or service which could reasonably be expected to have a
Material Adverse Effect. There is no violation by any Loan Party of any right of
such Person with respect to any material Intellectual Property owned or used by
such Person.
Section 7.6 Litigation and Judgments. Each material action, suit,
investigation or proceeding before or by any Governmental Authority or
arbitrator pending or, to the knowledge of the Borrower, threatened against or
affecting any Loan Party, or that relates to any of the Loan Documents as of the
Effective Date, is disclosed on Schedule 7.6. None of such actions, suits,
investigations or proceedings could, if adversely determined, reasonably be
expected to have a Material Adverse Effect. Except as may be disclosed on
Schedule 7.6, as of the Effective Date, there are no outstanding judgments
against any Loan Party. No Loan Party has received any opinion or memorandum or
legal advice from legal counsel to the effect that it is exposed to any
liability or disadvantage that could reasonably be expected to have a Material
Adverse Effect.
Section 7.7 Rights in Properties; Liens. Except as disclosed on
Schedule 7.7, none of the Loan Parties owns any right, title or interest in any
real Property. Each of the Loan Parties has good and marketable title to or,
with respect to leasehold interests, valid leasehold interests in all of
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its material Properties and assets, real and personal, including the material
Properties, assets and leasehold interests reflected in the financial statements
described in Section 7.2(a), except where failure to have good and marketable
title or valid leasehold interests could not reasonably be expected to have a
Material Adverse Effect, and none of the Properties or leasehold interests of
any Loan Party is subject to any Lien, except Permitted Liens. No Loan Party has
granted or voluntarily allowed or permitted to exist any Lien to or in favor of
any Person (other than the Administrative Agent for and on behalf of the Lenders
as security for the Obligations) which attaches or relates to any of the
Collateral and the Liens on the Collateral in favor of the Administrative Agent
are perfected, first priority Liens subject only to Permitted Liens which are
expressly permitted to be equal or prior to the Liens of the Administrative
Agent in the definition of the term "Permitted Liens".
Section 7.8 Enforceability. The Loan Documents have been duly and
validly executed and delivered by each of the Loan Parties that is a party
thereto, and such Loan Documents constitute the legal, valid and binding
obligations of such Persons, enforceable against each such Person in accordance
with their respective terms, except as limited by bankruptcy, insolvency or
other laws of general application relating to the enforcement of creditors'
rights and general principles of equity.
Section 7.9 Approvals. No authorization, approval or consent of, and no
filing or registration with or notice to, any Governmental Authority or third
party is or will be necessary for the execution, delivery or performance by any
Loan Party of any of the Loan Documents or any of the Material Contracts to
which it is or will be a party or for the validity or enforceability thereof,
except for such consents, approvals and filings as have been validly obtained or
made and are in full force and effect. The consummation of the transactions
contemplated by the Loan Documents and the Material Contracts does not require
the consent or approval of any other Person, except such consents and approvals
(a) as have been validly obtained and are in full force and effect or (b) as to
which the failure to obtain is not, individually or in the aggregate, material.
No Loan Party has failed to obtain any material consent, approval, license,
Permit, franchise or other authorization of any Governmental Authority
(including the FCC) necessary for the ownership or use of any of its Properties,
conduct of its business and performance of the Business Plan.
Section 7.10 Debt. As of the Effective Date, the Borrower does not have
any Debt other than (a) the Obligations, and (b) the Debt disclosed on Schedule
7.10 hereto.
Section 7.11 Taxes. Each of the Loan Parties has filed (a) all tax
returns (federal, state and local) and reports required to be filed including
all income, franchise, employment, Property and sales tax returns, and (b) all
other material tax returns and reports required to be filed except where failure
to file could not reasonably be expected to have a Material Adverse Effect, and
has paid all federal and other material taxes (shown on such returns or reports
to be due and payable), assessments, fees and other governmental charges levied
or imposed upon it or its Properties, income or assets otherwise due and payable
before they become delinquent, except those which are being contested in good
faith by appropriate proceedings and for which adequate reserves have been
provided in accordance with GAAP and no notice of Lien has been filed or
recorded or, as to such
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Subsidiaries only, except where failure to pay could not reasonably be expected
to have a Material Adverse Effect. There is no proposed tax assessment against
any Loan Party which could, if the assessment were made, reasonably be expected
to have a Material Adverse Effect.
Section 7.12 Margin Securities. None of the Loan Parties is engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying margin stock (within the
meaning of Regulations T, U or X of the Board of Governors of the Federal
Reserve System), and no part of the proceeds of any Loan will be used to
purchase or carry any margin stock or to extend credit to others for the purpose
of purchasing or carrying margin stock.
Section 7.13 ERISA. None of the Loan Parties or any ERISA Affiliate
maintains or contributes to, or has any obligation under, any Pension Plan other
than the Pension Plans identified on Schedule 7.13. Each Plan of the Loan
Parties is in compliance in all material respects with all applicable provisions
of ERISA and the Code. Neither a Reportable Event nor a Prohibited Transaction
has occurred within the last 60 months with respect to any Plan that could
reasonably be expected have a Material Adverse Effect. No notice of intent to
terminate a Pension Plan has been filed, nor has any Pension Plan been
terminated. No circumstances exist which constitute grounds entitling the PBGC
to institute proceedings to terminate, or appoint a trustee to administer, a
Pension Plan, nor has the PBGC instituted any such proceedings. None of the
Borrower, its Subsidiaries nor any ERISA Affiliate has completely or partially
withdrawn from a Multiemployer Plan. Each of the Borrower, its Subsidiaries and
NCH and each ERISA Affiliate have met their minimum funding requirements under
ERISA and the Code or with respect to all of their Pension Plans subject to such
requirements, and, as of the Effective Date except as specified on Schedule
7.13, the present value of all vested benefits under each funded Plan (exclusive
of any Multiemployer Plan) does not and will not exceed the fair market value of
all such Plan assets allocable to such benefits, as determined on the most
recent valuation date of such Plan and in accordance with ERISA. Neither the
Borrower nor any of its Subsidiaries nor any ERISA Affiliate has incurred any
liability to the PBGC under ERISA. No litigation is pending or, to the
Borrower's knowledge, threatened concerning or involving any Plan that could
reasonably be expected to have a Material Adverse Effect. There are no unfunded
or unreserved liabilities (on either a going-concern basis or a wind-up basis)
relating to any Plan that could, individually or in the aggregate, have a
Material Adverse Effect if the Borrower were required to fund or reserve such
liability in full. As of the Effective Date, no funding waivers have been or
will have been requested or granted under Section 412 of the Code with respect
to any Plan. No unfunded or unreserved liability for benefits under any Plan or
Plans (exclusive of any Multiemployer Plans) exceeds $1,000,000, with respect to
any such Plan, or $2,000,000 with respect to all such Plans, in the aggregate as
of the Effective Date, on either a going-concern basis or a wind-up basis.
Section 7.14 Disclosure. No written statement, information, report,
representation or warranty made by any Loan Party in any Loan Document or
furnished to the Administrative Agent or any Lender by or on behalf of any Loan
Party in connection with the Loan Documents or any transaction contemplated
hereby or thereby contains any untrue statement of a material fact or omits
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to state any material fact necessary to make the statements herein or therein,
in light of the circumstances in which made, taken as a whole, not misleading.
There is no fact known to the Borrower which has had a Material Adverse Effect,
and there is no fact known to the Borrower which might in the future have a
Material Adverse Effect except as may have been disclosed in writing to the
Administrative Agent.
Section 7.15 Subsidiaries. Schedule 7.15 attached hereto contains, as of
the Effective Date, complete and accurate information regarding (a) the
identities of each of the Subsidiaries of NCI, NCH and the Borrower, (b) the
number of issued and outstanding shares (or other units) of each class of
Capital Stock issued by each of such Subsidiaries and the identities of, and
number and percentage of each of such shares (or other units) held by, the
owner(s) (both of record and beneficially) of such Capital Stock, and (c) the
jurisdiction of incorporation or other organization of each such Subsidiary.
Section 7.16 Compliance with Laws. None of the Borrower, its
Subsidiaries or NCH is in violation of any Governmental Requirement, except for
instances of non-compliance that could not, individually or in the aggregate,
reasonably be expected to have a Material Adverse Effect.
Section 7.17 Investment Company Act. None of the Borrower, its
Subsidiaries or NCH is an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
Section 7.18 Public Utility Holding Company Act. None of the Borrower,
its Subsidiaries or NCH is a "holding company" or a "subsidiary company" of a
"holding company" or an "affiliate" of a "holding company" or a "public utility"
within the meaning of the Public Utility Holding Company Act of 1935, as
amended.
Section 7.19 Environmental Matters.
(a) Except for instances of noncompliance with or exceptions to any of
the following representations and warranties that could not have, individually
or in the aggregate, a Material Adverse Effect:
(i) The Borrower, each of its Subsidiaries and NCH and all of
their respective Properties and operations are in full compliance with
all Environmental Laws. The Borrower is not aware of, and neither the
Borrower nor any of its Subsidiaries has received written notice of, any
past, present or future conditions, events, activities, practices or
incidents which may interfere with or prevent the compliance or continued
compliance by the Borrower and its Subsidiaries with all Environmental
Laws;
(ii) The Borrower, each of its Subsidiaries and NCH has obtained
all Permits that are required under applicable Environmental Laws, and
all such Permits are in good standing and all such Persons are in
compliance with all of the terms and conditions thereof;
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(iii) No Hazardous Materials exist on, about or within or have
been (to the knowledge of the Borrower) or are being used, generated,
stored, transported, disposed of on or Released from any of the
Properties of the Borrower, any of its Subsidiaries or NCH except in
compliance with applicable Environmental Laws. The use which the
Borrower, its Subsidiaries or NCH makes and intends to make its
respective Properties will not result in the use, generation, storage,
transportation, accumulation, disposal or Release of any Hazardous
Material on, in or from any of their currently owned Properties except in
compliance with applicable Environmental Laws; and
(iv) There are no conditions or circumstances associated with
the currently owned or leased Properties or operations of the Borrower,
any of its Subsidiaries or NCH that could reasonably be expected to give
rise to any Environmental Liabilities or claims resulting in any
Environmental Liabilities.
(v) None of the Loan Parties nor any of their respective
currently or previously owned or leased Properties or operations are
subject to any outstanding or, to the knowledge of the Borrower,
threatened order from or agreement with any Governmental Authority or
other Person or subject to any judicial or administrative proceeding with
respect to (A) any failure to comply with Environmental Laws, (B) any
Remedial Action, or (C) any Environmental Liabilities;
(vi) None of the Loan Parties is subject to, or has received
written notice of any claim from any Person alleging that it is or will
be subject to, any Environmental Liabilities;
(vii) None of the Properties of any of the Loan Parties is a
treatment facility (except for the recycling of Hazardous Materials
generated on-site and the treatment of liquid wastes subject to the Clean
Water Act or other applicable Environmental Law for temporary storage of
Hazardous Materials generated on-site prior to their disposal off-site)
or disposal facility requiring a permit under the Resource Conservation
and Recovery Act, 42 U.S.C. section 6901 et seq., regulations thereunder
or any comparable provision of state law. The Loan Parties are in
compliance with all applicable financial responsibility requirements of
all Environmental Laws; and
(viii) None of the Loan Parties has failed to file any notice
required under applicable Environmental Law reporting a Release.
(b) No Lien arising under any Environmental Law that could have,
individually or in the aggregate, a Material Adverse Effect has attached to any
Property or revenues of any of the Loan Parties.
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Section 7.20 Year 2000 Compliance. The Borrower has (a) initiated a
review and assessment of all areas within its and each of its Subsidiaries'
business and operations (including those affected by suppliers and vendors) that
could be adversely affected by the "Year 2000 Problem" (that is, the risk that
computer applications used by the Borrower or any of its Subsidiaries (or its
suppliers and vendors) may be unable to recognize and perform properly
date-sensitive functions involving certain dates prior to and any date after
December 31, 1999), (b) developed a plan and timeline for addressing the Year
2000 Problem on a timely basis, and (c) to date, implemented that plan in
accordance with that timetable. The Borrower reasonably believes that all
computer applications that are material to its or any of its Subsidiaries'
business and operations will on a timely basis be able to perform properly
date-sensitive functions for all dates before and after January 1, 2000 (that
is, be "Year 2000 compliant"), except to the extent that a failure to do so
could not reasonably be expected to have a Material Adverse Effect.
Section 7.21 Labor Disputes and Acts of God. Neither the business nor
the Properties of any of the Loan Parties are affected by any fire, explosion,
accident, strike, lockout or other labor dispute, drought, storm, hail,
earthquake, embargo, act of God or of the public enemy or other casualty
(whether or not covered by insurance) that is having or could reasonably be
expected to have a Material Adverse Effect.
Section 7.22 Material Contracts. Attached hereto as Schedule 7.22 is a
complete list, as of the Effective Date, of all Material Contracts of the Loan
Parties, other than the Loan Documents. All of the Material Contracts are in
full force and effect and neither the Borrower nor any of its Subsidiaries is in
default under any Material Contract and, to the knowledge of the Borrower after
due inquiry, no other Person that is a party thereto is in default under any of
the Material Contracts. None of the Material Contracts prohibits the
transactions contemplated under the Loan Documents. Except as may be provided on
Schedule 7.22, (a) each of such Material Contracts has been transferred or
assigned to, or is currently in the name of, a Loan Party and (b) each of such
Material Contracts (other than agreements relating to other Debt of the Loan
Parties) is assignable to the Administrative Agent as collateral and is
assignable by the Administrative Agent to a transferee if an Event of Default
were to occur. The Borrower has delivered to the Administrative Agent a complete
and current copy of each Material Contract (other than purchase orders entered
into in the ordinary course of business) existing on the Effective Date.
Section 7.23 Bank Accounts. As of the Effective Date, Schedule 7.23 sets
forth the account numbers and location of all bank accounts (including lock box
and special deposit accounts) of the Borrower and its Subsidiaries.
Section 7.24 Outstanding Securities. As of the Effective Date, all
outstanding securities (as defined in the Securities Act of 1933, as amended, or
any successor thereto, and the rules and regulations of the Securities and
Exchange Commission thereunder) of the Loan Parties have been offered, issued,
sold and delivered in compliance with all applicable Governmental Requirements.
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Section 7.25 Solvency. Each of the Loan Parties, as a separate entity,
is Solvent, both before and after giving effect to the Loans.
Section 7.26 Employee Matters. Except as set forth on Schedule 7.26, as
of the Effective Date (a) none of the Loan Parties nor any of their employees is
subject to any collective bargaining agreement, and (b) no petition for
certification or union election is pending with respect to the employees of the
Loan Parties, and no union or collective bargaining unit has sought such
certification or recognition with respect to the employees of any such Person.
There are no strikes, slowdowns, work stoppages or controversies pending or, to
the best knowledge of the Borrower after due inquiry, threatened against, any of
the Loan Parties or its respective employees which could have, either
individually or in the aggregate, a Material Adverse Effect. Except as set forth
on Schedule 7.26, as of the Effective Date, none of the Loan Parties is subject
to an employment contract.
Section 7.27 Insurance. Schedule 7.27 sets forth a complete and accurate
description of all policies of insurance that will be in effect as of the
Effective Date for the Loan Parties and their Properties. To the extent such
policies have not been replaced, no notice of cancellation has been received for
such policies and the Borrower and the owner and holder of each such policy are
in compliance with all of the terms and conditions of such policies.
Section 7.28 Common Enterprise. NCH and its Subsidiaries (including,
without limitation, the Borrower) are members of an affiliated group with each
other such Person and are collectively engaged in a common enterprise with one
another. Each of the Loan Parties expects to derive substantial benefit (and may
reasonably be expected to derive substantial benefit), directly and indirectly,
from the Loans contemplated by this Agreement, both in its separate capacity and
as a member of an affiliated and integrated group.
ARTICLE 8
Affirmative Covenants
The Borrower covenants and agrees that, as long as the Obligations or any
part thereof are outstanding or any Lender has any Commitment hereunder, it will
perform and observe, or cause to be performed and observed, the following
covenants:
Section 8.1 Reporting Requirements. The Borrower will furnish to the
Administrative Agent and each Lender:
(a) Annual Financial Statements. As soon as available, and in any
event within 90 days after the end of each fiscal year of the Borrower,
beginning with the fiscal year ending December 31, 1999, (i) either a copy of
the form 10-K (including all financial statements contained therein) filed by
NCI as of the end of and for such fiscal year then ended, together with
consolidating schedules for each of NCI and its Subsidiaries with respect to the
financial statements contained therein, or
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a copy of the annual audit report of NCI and its Subsidiaries (including,
without limitation, the Borrower) as at the end of such year and the related
consolidated statements of income or operations, shareholders' equity and cash
flows for such fiscal year, together with unaudited consolidating schedules for
NCI and its Subsidiaries with respect to each of such financial statements, and
(ii) a copy of the annual audit report of NCH and its Subsidiaries (including,
without limitation, the Borrower) as at the end of such year and the related
consolidated statements of income or operations, shareholders' equity and cash
flows for such fiscal year, together with unaudited consolidating schedules for
NCH and its Subsidiaries with respect to each of such financial statements, in
each case (other than with respect to the consolidating schedules) setting forth
in comparative form the figures for the previous fiscal year, and accompanied by
the opinion of independent certified public accountants of recognized standing
reasonably acceptable to the Administrative Agent, which opinion shall state
that such consolidated financial statements present fairly the financial
position and results of operations for the periods indicated in conformity with
GAAP applied on a basis consistent with prior years and which opinion shall not
be qualified or limited because of a restricted or limited examination by such
accountant of any material portion of such Person's records;
(b) Quarterly Financial Statements. As soon as available, and in any
event within 45 days after the end of each of the quarters of each fiscal year
of the Borrower, beginning with the fiscal quarter ending June 30, 1999, (i)
either a copy of the form 10-Q (including all financial statements contained
therein) filed by NCI as of the end of and for such fiscal quarter then ended,
together with consolidating schedules for each of NCI and its Subsidiaries with
respect to each of the financial statements contained therein, or a copy of the
unaudited consolidated balance sheet of NCI and its Subsidiaries as at the end
of such quarter and the related consolidated statements of income or operations,
shareholders' equity and cash flows for the period commencing on the first day
and ending on the last day of such quarter, together with unaudited
consolidating schedules for NCI and its Subsidiaries with respect to each of
such financial statements, and (ii) a copy of the unaudited consolidated balance
sheet of NCH and its Subsidiaries as at the end of such quarter and the related
consolidated statements of income or operations, shareholders' equity and cash
flows for the period commencing on the first day and ending on the last day of
such quarter, together with unaudited consolidating schedules for NCH and its
Subsidiaries with respect to each of such financial statements, in each case
(other than with respect to the consolidating schedules) setting forth in
comparative form the quarterly operating budget figures for the corresponding
period of the preceding fiscal year, and certified by an appropriate Responsible
Officer of the Borrower as fairly presenting, in accordance with GAAP, the
financial position and the results of operations of the Borrower and its
Subsidiaries (except for year-end adjustments and financial statement footnotes
required by GAAP);
(c) Compliance Certificate. Concurrently with the delivery of each of
the financial statements referred to in Sections 8.1(a) and 8.1(b), a Compliance
Certificate of a Responsible Officer of the Borrower substantially in the form
of Exhibit D hereto, appropriately completed, stating that, to the best of such
officer's knowledge, no Default has occurred and is continuing or, if a Default
has occurred and is continuing, stating the nature thereof and the action that
has been taken and is proposed to be taken with respect thereto;
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(d) Notice of Litigation. Promptly after the commencement thereof,
notice of all actions, suits and proceedings before any Governmental Authority
or arbitrator affecting any Loan Party which, if determined adversely to the
Borrower or any such Subsidiary, could reasonably be expected to have a Material
Adverse Effect;
(e) Notice of Default, etc.. As soon as possible and in any event
immediately upon (i) the Borrower's knowledge of the occurrence of any Default,
a written notice setting forth the details of such Default and the action that
the Borrower has taken and, if and to the extent known, proposes to take with
respect thereto and (ii) the failure of any Loan Party to make any required
payment of principal, premium (if any), interest or other payment of or with
respect to any Subordinated Debt, a written notice setting forth the details
thereof and the action that such Loan Party has taken or proposes to take with
respect thereto;
(f) ERISA Plan Reports. Promptly after the filing or receipt thereof,
copies of all reports, including annual reports, and notices which the Borrower
or any of its ERISA Affiliates files with or receives from the PBGC or the U.S.
Department of Labor under ERISA with respect to a Pension Plan or for which the
Borrower has any potential liability; and as soon as possible and in any event
within five days after the Borrower knows or has reason to know that any Pension
Plan is insolvent, or that any Reportable Event or Prohibited Transaction has
occurred with respect to any Plan or Multiemployer Plan, or that the PBGC, or
the Borrower or any ERISA Affiliate has instituted or will institute proceedings
under ERISA to terminate or withdraw from or reorganize any Pension Plan, a
certificate of a Responsible Officer of the Borrower setting forth the details
as to such insolvency, withdrawal, Reportable Event, Prohibited Transaction or
termination and the action that the Borrower has taken and proposes to take with
respect thereto;
(g) Proxy Statements, Etc. As soon as available, one copy of each (if
any) financial statement, report, notice or proxy statement sent by NCI to its
stockholders or other security holders generally and one copy of each (if any)
regular, periodic or special report (including, without limitation, reports on
forms 10-K, 10-Q and 8-K), registration statement or prospectus filed by NCI
with any securities exchange or the Securities and Exchange Commission or any
successor agency;
(h) Insurance. Within 60 days prior to the end of each fiscal year of
the Borrower, a report in form and substance reasonably satisfactory to the
Administrative Agent summarizing all material insurance coverage maintained by
the Loan Parties as of the date of such report and all material insurance
coverage planned to be maintained by such Persons in the subsequent fiscal year;
(i) Plan Information. From time to time, as reasonably requested by
the Administrative Agent or any Lender, such books, records and other documents
relating to any Pension Plan as the Administrative Agent or any Lender shall
specify; prior to any termination, partial termination or merger of a Pension
Plan covering employees of the Borrower or any ERISA Affiliate, or a transfer of
assets of a Pension Plan covering employees of the Borrower or any ERISA
Affiliate, written notification thereof; promptly upon NCI's or the Borrower's
receipt thereof, a copy of any
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determination letter or advisory opinion regarding any Pension Plan received
from any Governmental Authority and any amendment or modification thereto as may
be necessary as a condition to obtaining a favorable determination letter or
advisory opinion; and promptly upon the occurrence thereof, written notification
of any action requested by any Governmental Authority to be taken as a condition
to any such determination letter or advisory opinion;
(j) Business Plan, etc. Not later than the earlier to occur of (i)
three days after approval of such update by the Board of Directors of the
Borrower or (ii) January 31st of each year, an update of the Business Plan in
reasonable detail generally consistent with the form and substance of the
Business Plan provided to the Administrative Agent on or before the Effective
Date, which update shall reflect the corresponding information for the prior
year, and, promptly upon the Borrower's preparation thereof, any proposed
amendment, modification or supplement to the Business Plan;
(k) Management Letters. Promptly upon each receipt thereof by any Loan
Party, a copy of any management letter or other written report submitted to such
Loan Party by independent certified public accountants with respect to the
business, condition (financial or otherwise), operations, prospects or
Properties of any such Person;
(l) Reports to Other Creditors. Promptly after the furnishing thereof,
a copy of any financial or other material statement or report furnished by any
Loan Party to any other party pursuant to the terms of any indenture, loan,
stock purchase or credit or similar agreement and not otherwise required to be
furnished to the Administrative Agent and the Lenders pursuant to any other
clause of this Section 8.1;
(m) Notice of Material Adverse Effect. Within two Business Days after
the Borrower becomes aware thereof, written notice of any matter that could
reasonably be expected to have a Material Adverse Effect;
(n) Environmental Assessments and Notices. Promptly after the receipt
thereof, a copy of each environmental assessment (including any analysis
relating thereto) prepared with respect to any Property of any Loan Party and
each notice sent by any Governmental Authority relating to any failure or
alleged failure to comply with any Environmental Law or any liability with
respect thereto;
(o) Notices Under Material Contracts. Promptly after the receipt
thereof by the Borrower or any Subsidiary of the Borrower and promptly after the
delivery thereof by the Borrower or any Subsidiary of the Borrower, a copy of
each written notice delivered under any Material Contract, which notice (i)
relates to any alleged default under or noncompliance with or proposed
termination of such Material Contract or (ii) otherwise relates to any matter
under any Material Contract which could reasonably be expected to have a
Material Adverse Effect; and
(p) General Information. Promptly, such other business, financial,
corporate affairs and other similar information concerning the Borrower and/or
the Collateral as the Administrative Agent or any Lender may from time to time
reasonably request.
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Section 8.2 Maintenance of Existence; Conduct of Business. Except as
expressly permitted in connection with mergers undertaken in accordance with
Section 9.3, the Borrower will, and will cause its Subsidiaries to, preserve and
maintain its corporate existence and all of its leases, privileges, licenses,
Permits, franchises, qualifications, Intellectual Property, intangible Property
and rights that are necessary in the ordinary conduct of its business except to
the extent that failure to so preserve and maintain such could not reasonably be
expected to have a Material Adverse Effect. Without limiting the generality of
the foregoing, each of the Loan Parties has entered into, or will timely enter
into, such long-distance carrier and interconnection agreements as are, at any
time of determination, then necessary to the conduct of its business in
accordance with the Business Plan except to the extent that the failure to do so
could not reasonably be expected to cause a Material Adverse Effect. The
Borrower will, and will cause its Subsidiaries to, conduct its business in an
orderly and efficient manner in accordance with good business practices and the
Business Plan.
Section 8.3 Maintenance of Properties and Permits. The Borrower will,
and will cause its Subsidiaries to, maintain, keep and preserve all of its
Properties and Permits (including, without limitation, rights-of-way) necessary
in the proper conduct of its businesses in good repair, working order and
condition (ordinary wear and tear excepted) and make all necessary repairs,
renewals and replacements and improvements thereof; provided, however, that the
failure of NCV to hold certificates of public convenience and necessity required
to provide resale and facilities based local and long distance
telecommunications services in Maryland shall not be deemed to violate this
Section 8.3 if, but only if, all of such Licenses are granted by the appropriate
Governmental Authorities of the State of Maryland on or before October 31, 1999,
and are at all times thereafter maintained, kept and preserved in full force and
effect.
Section 8.4 Taxes and Claims. The Borrower will, and will cause its
Subsidiaries to, pay or discharge before becoming delinquent (a) all taxes,
levies, assessments and governmental charges imposed on it or its income or
profits or any of its Property and (b) all lawful claims for labor, material and
supplies, which, if unpaid, might become a Lien upon any of its Property;
provided, however, that neither the Borrower nor any of its Subsidiaries shall
be required to pay or discharge any tax, levy, assessment or governmental
charge, or claim for labor, material or supplies, whose amount, applicability or
validity is being contested in good faith by appropriate proceedings being
diligently pursued and for which adequate reserves have been established under
GAAP.
Section 8.5 Insurance.
(a) The Borrower will, and will cause each of the other Loan Parties
to, keep insured by financially sound and reputable insurers all Property of a
character usually insured by responsible corporations engaged in the same or a
similar business similarly situated against loss or damage of the kinds and in
the amounts customarily insured against by such corporations or entities and
carry such other insurance as is usually carried by such corporations or
entities, provided that in any event the Borrower and the other Loan Parties
will maintain:
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(i) Property Insurance. Insurance against loss or damage
covering substantially all of the tangible real and personal Property
(including, without limitation, the Network and related equipment) and
improvements of such Person by reason of any Peril (as defined below) in
such amounts (subject to any deductibles as shall be satisfactory to the
Administrative Agent) as shall be reasonable and customary and sufficient
to avoid the insured named therein from becoming a co-insurer of any loss
under such policy, but in any event in such amounts as are reasonably
available as determined by the Borrower's independent insurance broker
reasonably acceptable to the Administrative Agent.
(ii) Automobile Liability Insurance for Bodily Injury and
Property Damage. Insurance in respect of all vehicles (whether owned,
hired or rented by such Person) at any time located at, or used in
connection with, its Properties or operations against liabilities for
bodily injury and Property damage in such amounts as are then customary
for vehicles used in connection with similar Properties and businesses,
but in any event to the extent required by applicable law.
(iii) Comprehensive General Liability Insurance. Insurance
against claims for bodily injury, death or Property damage occurring on,
in or about the Property (and adjoining streets, sidewalks and waterways)
of such Person, in such amounts as are then customary for Property
similar in use in the jurisdictions where such Properties are located.
(iv) Worker's Compensation Insurance. Worker's compensation
insurance (including employers' liability insurance) to the extent
required by applicable law, which may be self-insurance to the extent
permitted by applicable law.
Without limiting the generality of the foregoing, the Borrower shall purchase
and maintain in effect all-risk, property and casualty insurance (including
casualty insurance covering earthquake and flood damage) reasonably acceptable
and in amounts reasonably acceptable to the Administrative Agent covering all
Nortel Networks Equipment and other equipment related to the Network and
liability insurance covering the operations of the Borrower and its
Subsidiaries. Such insurance shall be written by financially responsible
companies selected by the Borrower and having an A.M. Best Rating of "A-" or
better and being in a financial size category of "VI" or larger, or by other
companies reasonably acceptable to the Administrative Agent. Each policy
referred to in this Section 8.5 shall name the Administrative Agent (for the
benefit of itself and the other Lenders) as loss payee (with respect to casualty
insurance policies) and additional insured (with respect to liability insurance
policies) and shall provide that it will not be canceled, amended or reduced
except after not less than 30 days' prior written notice to the Administrative
Agent and shall also provide that the interests of the Administrative Agent and
the Lenders shall not be invalidated or reduced by any act, omission or
negligence of any Loan Party. The Borrower will advise the Administrative Agent
promptly of any policy cancellation, reduction or amendment. For purposes
hereof, the term "Peril" shall mean, collectively, fire, lightning, flood,
windstorm, hail, explosion, riot and civil commotion, vandalism and malicious
mischief, damage from aircraft, vehicles and smoke and other
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perils covered by the "all-risk" endorsement then in use in the jurisdictions
where the Properties of the Loan Parties are located.
(b) The Borrower will cause each Insurance Recovery (other than any
portion of an Insurance Recovery payable to a landlord to repair or replace
Property leased by the Borrower or any of its Subsidiaries) payable by any
insurance company to be deposited promptly with the Administrative Agent as
security for the Obligations if a Default has then occurred and is continuing,
and will promptly pay all Insurance Recoveries to the Administrative Agent for
application against the Obligations if and to the extent required in accordance
with Section 2.7(a).
(c) If a Default shall have occurred and be continuing, the Borrower
will cause all proceeds of insurance paid on account of the loss of or damage to
any Property of any Loan Party and all awards of compensation for any Property
of any Loan Party taken by condemnation or eminent domain to be promptly paid
directly to the Administrative Agent to be applied against or held as security
for the Obligations, at the election of the Administrative Agent and the
Required Lenders.
Section 8.6 Inspection Rights. The Borrower will, and will cause each
of the Loan Parties to, permit representatives and agents of the Administrative
Agent and each Lender, during normal business hours and upon reasonable notice
to the Borrower, to examine, copy and make extracts from its books and records,
to visit and inspect its Properties and to discuss its business, operations and
financial condition with its officers and independent certified public
accountants. The Borrower will authorize, and will cause each of the Loan
Parties to authorize, its accountants in writing (with a copy to the
Administrative Agent) to comply with this Section 8.6. The Administrative Agent
or its representatives may, at any time and from time to time at the Borrower's
expense, conduct field exams for such purposes as the Administrative Agent may
reasonably request, provided, however, that, prior to the occurrence of a
Default, no more than two such field exams during any fiscal year shall be at
the Borrowers expense.
Section 8.7 Keeping Books and Records. The Borrower will, and will
cause each of the Loan Parties to, maintain appropriate books of record and
account in accordance with GAAP consistently applied in which true, full and
correct entries will be made of all their respective dealings and business
affairs. If any changes in accounting principles from those used in the
preparation of the financial statements referenced in Section 8.1 are hereafter
required or permitted by GAAP and are adopted by the Borrower with the
concurrence of its independent certified public accountants and such changes in
GAAP result in a change in the method of calculation or the interpretation of
any of the covenants, standards or terms contained in this Agreement, the
Borrower and the Required Lenders agree to amend any such affected terms and
provisions so as to reflect such changes in GAAP with the result that the
criteria for evaluating the financial condition or performance of the Loan
Parties shall be the same after such changes in GAAP as if such changes in GAAP
had not been made.
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Section 8.8 Compliance with Laws. The Borrower will, and will cause
each of the Loan Parties to, comply with all applicable Governmental
Requirements, except for instances of noncompliance that could not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect.
Section 8.9 Compliance with Agreements. The Borrower will, and will
cause each of the Loan Parties to, comply with all agreements, documents and
instruments binding on it or affecting its Properties or business, except for
instances of noncompliance that could not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
Section 8.10 Further Assurances. The Borrower will execute and deliver
and will cause each of the Loan Parties to execute and deliver such further
agreements, documents and instruments (including, without limitation, financing
statements and amendments to financing statements specifying each item of the
Collateral and the serial number therefor) and take such further action as may
be requested by the Administrative Agent to carry out the terms and provisions
and purposes of this Agreement and the other Loan Documents, to evidence the
Obligations and to create, preserve, maintain and perfect the Liens of the
Administrative Agent for the benefit of itself and the Lenders in and to the
Collateral and the required priority of such Liens.
Section 8.11 ERISA. The Borrower will, and will cause each of its ERISA
Affiliates to, comply with all minimum funding requirements and all other
material requirements of ERISA so as not to give rise to any material liability
thereunder.
Section 8.12 Interest Rate Protection. The Borrower shall, commencing on
or before the earlier to occur of (a) the date upon which the initial Loans are
to be advanced under this Agreement, or (b) September 30, 1999, maintain in full
force and effect through the Maturity Date one or more Interest Rate Protection
Agreements reasonably satisfactory to the Administrative Agent with one or more
counterparties reasonably acceptable to the Administrative Agent rated in one of
the two of the highest rating categories of Standard & Poors Corporation or
▇▇▇▇▇'▇ Investors Services, Inc. and otherwise reasonably acceptable to the
Administrative Agent that enable the Borrower to fix or place a limit upon a
rate of interest with respect to not less than an aggregate notional amount (not
less than zero) equal to fifty percent (50%) of Total Debt minus the amount of
such Total Debt with a fixed interest rate.
Section 8.13 Miscellaneous Business Covenants.
(a) Non-Consolidation. The Borrower will, and will cause each other
Loan Party to: (i) maintain entity records and books of account separate from
those of any other entity which is an Affiliate of such Loan Party; (ii) not
commingle its funds or assets with those of any other entity which is an
Affiliate of such Loan Party, provided, that compliance with Section 8.13(b)
shall not constitute a commingling of funds or assets for purposes of this
clause (ii); and (iii) provide that its board of directors or other analogous
governing body will hold all appropriate meetings to authorize
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and approve such Person's entity actions, which meetings will be separate from
those of other Loan Parties.
(b) Unified Cash Management System. The Borrower will, and will cause
NCH and each of its Subsidiaries to, on and after November 30, 1999, maintain a
unified cash management system and the Borrower will ensure, and will cause NCH
and each of its Subsidiaries to ensure, that all cash proceeds (including,
without limitation, proceeds of all Collateral) are (i) deposited directly, as
received, into a collection account of the Borrower or NCH or such Subsidiary
(as applicable) and (ii) on a daily basis after such deposit, transferred into a
concentration account of the Borrower or NCH or such Subsidiary (as applicable).
In addition, on and after the Effective Date, the Borrower will cause NCH, on a
daily basis, to transfer all cash balances of NCH in excess of $5,000,000 in the
aggregate to a concentration account of the Borrower or any one or more of its
Subsidiaries. The Borrower will, and shall cause NCH and each of its
Subsidiaries to, maintain in effect an agreement governing each of its
collection accounts and concentration accounts in a form approved by the
Administrative Agent with a depository bank satisfactory to the Administrative
Agent.
(c) Ownership of Telecommunications Assets. The Borrower will cause,
and by its execution of a Guaranty NCH agrees to cause, all Telecommunications
Assets of NCH and its Subsidiaries which are contemplated by or material to the
Business Plan to be owned by the Borrower and or its Subsidiaries.
(d) Syndication of Credit Facilities. The Borrower and NCH shall
provide prompt assistance to the Administrative Agent and the Lenders in
connection with their respective efforts in syndicating the Loans. Such
assistance will include making senior officers of the Borrower and NCH available
for meetings with potential Lenders, providing, in a timely manner, such
assistance as may be reasonably requested by the Administrative Agent or its
advisors, including providing information to and responding to inquiries from
prospective Lenders with respect to the business, operations, Business Plan,
results and other matters relating to the business of NCH, the Borrower and the
other Guarantors.
Section 8.14 Year 2000 Compliance. The Borrower will promptly notify the
Agent in the event the Borrower discovers or determines that any computer
application (including those of its suppliers and vendors) that is material to
its or any of its Subsidiaries' business and operations will not be Year 2000
compliant on a timely basis, except to the extent that such failure could not
reasonably be expected to have a Material Adverse Effect.
Section 8.15 Trade Accounts Payable. The Borrower will, and will cause
the other Loan Parties to, pay all trade accounts payable before the same become
more than 90 days past due, except (a) trade accounts payable contested in good
faith or (b) trade accounts payable in an aggregate amount not to exceed
$100,000 at any time outstanding and with respect to which no proceeding to
enforce collection has been commenced or, to the knowledge of the Borrower,
threatened.
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Section 8.16 Delivery of Certain Amendments and Material Contracts. The
Borrower will, and will cause each other Loan Party to, promptly deliver to the
Administrative Agent any amendment, modification or supplement to (a) the
articles of incorporation, articles of organization, bylaws, regulations or
other constitutional documents of the Borrower or any other Loan Party, and (b)
any Material Contract to which it is a party or any License or Permit which it
possesses. The Borrower will, and will cause each of its Subsidiaries to, (i)
deliver to the Administrative Agent, promptly after such Material Contract comes
into existence, a true and correct copy of each Material Contract which is not
identified on Schedule 7.22, and (ii) use its best efforts to ensure that such
Material Contract is assignable to the Administrative Agent as collateral and is
assignable by the Administrative Agent to a transferee if an Event of Default
were to occur.
Section 8.17 Contribution to Equity Capital of NCH and the Borrower. All
net proceeds of the issuance of the Senior Notes shall be contributed by NCI as
equity to the capital of NCH and shall be contributed by NCH as equity to the
capital of the Borrower, in each case promptly upon receipt of such proceeds.
ARTICLE 9
Negative Covenants
The Borrower covenants and agrees that, as long as the Obligations or any
part thereof are outstanding or any Lender has any Commitment hereunder, it will
perform and observe, or cause to be performed and observed, the following
covenants:
Section 9.1 Debt. The Borrower will not, and will not permit NCH or any
Subsidiary of the Borrower to, incur, create, assume or permit to exist any
Debt, except:
(a) Debt to the Lenders pursuant to the Loan Documents;
(b) Subordinated Debt of NCH;
(c) intercompany Debt between or among the Borrower and any of its
Wholly-Owned Subsidiaries incurred in the ordinary course of business
(including, without limitation, Debt owed by the Wholly-Owned Subsidiaries of
the Borrower to the Borrower in connection with loans of proceeds of the Loans
made by the Borrower to such Subsidiaries, the proceeds of which loans are used
for the purposes permitted by Section 2.10), subject to the following
requirements: any and all of the Debt permitted pursuant to this Section 9.1(c)
shall be unsecured, shall be evidenced by instruments satisfactory to the
Administrative Agent which will be pledged to the Administrative Agent for the
benefit of the Administrative Agent and the Lenders and shall be subordinated to
the Obligations pursuant to a subordination agreement in form and substance
satisfactory to the Administrative Agent, provided, however, that temporary
advances made from time to time in the ordinary course of business not to exceed
$100,000 in aggregate principal amount at any time owing
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by any Wholly-Owned Subsidiary of the Borrower to the Borrower shall not be
required to be so evidenced, pledged or subordinated;
(d) unsecured Debt under the Interest Rate Protection Agreements
required to be maintained by Section 8.14, provided, however, that Debt
thereunder may be secured if such Debt constitutes a part of the Obligations;
(e) (i) existing Debt described on Schedule 7.10 hereto and renewals,
extensions or refinancings of such Debt which do not increase the outstanding
principal amount of such Debt and the terms and provisions of which are not
materially more onerous than the terms and conditions of such Debt on the
Closing Date, (ii) purchase money Debt (including Capital Lease Obligations)
secured by purchase money Liens, which Debt and Liens are permitted under and
meet all of the requirements of clause (g) of the definition of Permitted Liens
contained in Section 1.1, and (iii) additional unsecured Debt; provided,
however, that the aggregate principal amount of the Debt referred to in this
Section 9.1(e) shall not exceed $25,000,000 in aggregate amount at any time
outstanding;
(f) liabilities of the Borrower in respect of unfunded vested benefits
under any Plan if and to the extent that the existence of such liabilities will
not constitute, cause or result in a Default; and
(g) Debt of the Borrower in the form of a revolving credit facility
not to exceed $50,000,000 in aggregate principal amount at any time outstanding
which is either unsecured or is secured only by accounts of the Borrower and its
Subsidiaries, books and records related thereto and proceeds thereof and as to
which the advance rate for advances made thereunder does not exceed 75% of
eligible accounts.
Section 9.2 Limitation on Liens. The Borrower will not, and will not
permit NCH or any Subsidiary of the Borrower to, incur, create, assume or permit
to exist any Lien upon any of its Property or revenues, whether now owned or
hereafter acquired, except Permitted Liens and will not enter into any negative
pledge or similar arrangement in favor of other creditors (other than such
negative pledge or similar arrangement under purchase money Debts and Capital
Lease Obligations with respect to the assets financed or secured thereby).
Section 9.3 Mergers, Etc. The Borrower will not, and will not permit
its Subsidiaries to, (a) become a party to a merger or consolidation, (b)
wind-up, dissolve or liquidate itself, or (c) purchase or acquire all or a
material or substantial part of the business or Properties of any Person;
provided however, that (i) Borrower or its Affiliates may make Qualified
Telecommunications Investments and other Investments permitted pursuant to
clause (i) of Section 9.5 and (ii) (A) any Subsidiary of the Borrower other than
NCS, NCRE and NCV may merge with and into the Borrower if the Borrower is the
surviving corporation and (B) NCV may merge with and into NCS or NCS may merge
with and into NCV, provided that in the case of either (A) or (B) above, no
consideration is given by the surviving corporation in such merger other than
the issuance of any Capital Stock of
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the surviving corporation and such Capital Stock is pledged to the
Administrative Agent, on behalf of the Administrative Agent and Lenders, as
security for the Obligations pursuant to Section 9.6. The surviving corporation
in any such merger shall ratify the Security Documents and other obligations of
the non-surviving corporation under the Loan Documents.
Section 9.4 Restricted Payments. The Borrower will not, and will not
permit NCH or any Subsidiary of the Borrower to, make any Restricted Payments,
except:
(a) subject to the subordination provisions relating thereto, NCH may
make regularly scheduled payments of interest accrued on any Subordinated Debt
if and to the extent (but only if and to the extent) permitted by the express
terms of the Subordinated Debt Documents governing such Subordinated Debt, which
terms have been expressly approved in writing by the Administrative Agent;
(b) if and to the extent that NCH has incurred Subordinated Debt, all
or a portion of the proceeds of which are contributed by NCH to the Borrower as
additional equity capital of the Borrower, the Borrower may declare and pay
dividends to NCH in an amount not to exceed the amount necessary to allow NCH to
pay interest accrued on the portion of such Subordinated Debt the proceeds of
which have been contributed to the Borrower, in accordance with its terms;
(c) Subsidiaries of the Borrower may make Restricted Payments to the
Borrower;
(d) the Borrower and its Subsidiaries may make temporary loans or
advances to employees, officers and directors of the Loan Parties in the
ordinary course of business that do not exceed $1,000,000 in aggregate amount at
any time outstanding; and
(e) the Borrower may pay dividends to NCH, and NCH may pay dividends
to NCI, in each case in an amount sufficient to pay the interest accrued on the
Senior Notes which is payable in cash substantially concurrently with the dates
upon which such interest is due;
provided, however, that no Restricted Payments may be made pursuant to clause
(a), (b) or (e) preceding if a Default exists at the time of such Restricted
Payment or would result therefrom.
Section 9.5 Investments. The Borrower will not, and will not permit NCH
or any Subsidiary of the Borrower to, make or permit to remain outstanding any
advance, loan, extension of credit or capital contribution to or investment in
any Person, or purchase or own any stock, bonds, notes, debentures or other
securities of any Person, or be or become a joint venturer with or partner of
any Person (all such transactions being herein called "Investments"), except:
(a) Investments in obligations or securities received in settlement of
debts (created in the ordinary course of business) owing to the Borrower or
another Loan Party;
(b) existing Investments identified on Schedule 9.5 hereto;
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(c) Investments in securities issued or guaranteed by the U.S. or any
agency thereof with maturities of one year or less from the date of acquisition;
(d) Investments in certificates of deposit and Eurodollar time
deposits with maturities of six months or less from the date of acquisition,
bankers' acceptances with maturities not exceeding six months and overnight bank
deposits, in each case with any Lender or with any domestic commercial bank
having capital and surplus in excess of $500,000,000;
(e) Investments in repurchase obligations with a term of not more than
seven days for securities of the types described in clause (c) preceding with
any Lender or with any domestic commercial bank having capital and surplus in
excess of $500,000,000;
(f) Investments in commercial paper of a domestic issuer rated A-1 or
better or P-1 or better by Standard & Poor's Corporation or ▇▇▇▇▇'▇ Investors
Services, Inc., respectively, maturing not more than 270 days from the date of
acquisition;
(g) (i) Investments (other than Intercompany Debt referred to in
clause (h) below) by the Borrower in its Subsidiaries existing on the Closing
Date and by NCH and the Borrower existing as of the Closing Date or required to
occur in accordance with this Agreement, (ii) additional Investments by NCH in
the Borrower, and (iii) additional Investments by a the Borrower in its
Subsidiaries made after the Closing Date in the ordinary course of business;
(h) intercompany Debt permitted pursuant to Section 9.1(c);
(i) (A) Qualified Telecommunications Investments and (B) additional
investments in and acquisitions of, Telecommunications Business or
Telecommunications Assets not to exceed an aggregate of $10,000,000;
(j) Interest Rate Protection Agreements permitted by Section 9.1;
(k) Capital contributions permitted pursuant to Section 9.8(c); and
(l) temporary loans or advances to employees, officers and directors
of the Loan Parties in the ordinary course of business that do not exceed
$1,000,000 at any time outstanding in aggregate amount.
provided, however, that no Investments may be made by the Borrower pursuant to
clauses (g), (h) or (i) preceding if a Default exists at the time of such
Investment or would result therefrom.
Section 9.6 Limitation on Issuance of Capital Stock of the Borrower.
The Borrower will not, and will not permit any of its Subsidiaries to, at any
time issue, sell, assign or otherwise dispose of (a) any of its Capital Stock,
(b) any securities exchangeable for or convertible into or carrying any
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rights to acquire any of its Capital Stock, or (c) any option, warrant or other
right to acquire any of its Capital Stock, in each case to any Person other than
NCH (with respect to Capital Stock of the Borrower) or the Borrower (with
respect to Capital Stock of the Subsidiaries of the Borrower). All such Capital
Stock, securities, options, warrants and other rights issued, sold, assigned or
disposed of shall be, and shall continue to be, subject to a first priority Lien
in favor of the Administrative Agent as security for the payment and performance
of the Obligations.
Section 9.7 Transactions with Affiliates. The Borrower will not, and
will not permit NCH or any Subsidiary of the Borrower to, enter into any
transaction, including, without limitation, the purchase, sale or exchange of
Property or the rendering of any service, with any Affiliate of the Borrower
except in the ordinary course of and pursuant to the reasonable requirements of
the Borrower's business and upon fair and reasonable terms no less favorable to
the Borrower than would be obtained in a comparable arms-length transaction with
a Person not an Affiliate of the Borrower; provided, however, that transactions
between or among the Borrower and its Affiliates may be on terms more favorable
to the Borrower than would be obtained in a comparable arms-length transaction
with a Person not an Affiliate of the Borrower. In addition to the foregoing, no
transactions between or among (a) Affiliates of the Borrower and (b) the
Borrower and its Subsidiaries relating to the purchases of equipment from any
such Affiliate or the provision of services by any such Affiliate for the
Network shall be permitted unless the same are purchased or provided at the cost
to such Affiliate.
Section 9.8 Disposition of Property. The Borrower will not, and will
not permit NCH or any Subsidiary of the Borrower to, sell, lease, assign,
transfer or otherwise dispose of any of its Property (including, without
limitation, the Nortel Networks Equipment and the Nortel Networks Software),
except:
(a) dispositions of Inventory (other than equipment) in the ordinary
course of business;
(b) Asset Dispositions of Property, other than accounts and
Receivables, by the Borrower made in the ordinary course of business if each of
the following conditions have been satisfied: (i)(A) (1) the Net Proceeds from
any single Asset Disposition or series of related Asset Dispositions in any
fiscal year of the Borrower do not exceed $1,000,000 and (2) the Borrower
receives fair consideration for such assets, or (B) with respect to Asset
Dispositions to ILECs made in connection with the execution of any agreement for
Virtual Co-location, the aggregate fair value of all such Asset Dispositions
made at any time during the term of this Agreement shall not exceed $1,000,000,
and (ii) no Default exists at the time of or will result from such Asset
Disposition;
(c) Asset Dispositions of Property, other than equipment, accounts and
Receivables, by the Borrower to any Wholly-Owned Subsidiary of the Borrower if
each of the following conditions have been satisfied: (i) the assets sold,
disposed of or otherwise transferred to a Wholly-Owned Subsidiary of the
Borrower shall continue to be subject to a perfected, first priority Lien
(except for Permitted Liens, if any, which are expressly permitted by the Loan
Documents to have priority over
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the Liens in favor of the Administrative Agent) in favor of the Administrative
Agent and the Lenders, and (ii) no Default exists at the time of or will result
from such Asset Disposition; and
(d) dispositions of Property no longer used or useful in the ordinary
course of business, including, without limitation, dispositions of equipment
being exchanged or replaced with comparable or better equipment.
Section 9.9 Sale and Leaseback. The Borrower will not, and will not
permit NCH or any Subsidiary of the Borrower to, enter into any arrangement with
any Person pursuant to which it leases from such Person real or personal
Property that has been or is to be sold or transferred, directly or indirectly,
by it to such Person.
Section 9.10 Lines of Business. The Borrower will not, and will not
permit any of its Subsidiaries to, (a) engage in any line or lines of business
activity other than the construction, implementation and operation of the
Network and related activities reasonably incidental thereto and the holding of
Permits used in connection therewith and other telecommunications businesses in
the United States as described in and contemplated by the Business Plan or (b)
discontinue any line or lines of business which provide material revenues to the
Borrower or such Subsidiary in which it is engaged on the Closing Date. The
Borrower will not discontinue its engagement in, and will continue to engage in,
the Telecommunications Business. The Borrower will not permit NCI or NCH to
engage in (i) any Telecommunications Business or (ii) in any other business
other than the ownership of the Capital Stock of its Subsidiaries and matters
incidental thereto, including the raising of capital.
Section 9.11 Environmental Protection. The Borrower will not, and will
not permit NCH or any Subsidiary of the Borrower to, (a) use (or permit any
tenant to use) any of its Properties for the handling, processing, storage,
transportation or disposal of any Hazardous Material except in compliance with
applicable Environmental Laws, (b) generate any Hazardous Material except in
compliance with applicable Environmental Laws, (c) conduct any activity that is
likely to cause a Release or threatened Release of any Hazardous Material in
violation of any Environmental Law, or (d) otherwise conduct any activity or use
any of its Properties in any manner, that violates or is likely to violate any
Environmental Law or create any Environmental Liabilities for which the Borrower
or any of its Subsidiaries would be responsible, except for circumstances or
events described in clauses (a) through (d) preceding that could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
Section 9.12 Intercompany Transactions. Except as may be expressly
permitted or required by the Loan Documents, the Borrower will not, and will not
permit any of its Subsidiaries to, create or otherwise cause or permit to exist
or become effective any consensual encumbrance or restriction of any kind on the
ability of (a) any of its Subsidiaries to (i) pay dividends or make any other
distribution to the Borrower or any of its Subsidiaries in respect of such
Subsidiary's Capital Stock or with respect to any other interest or
participation in, or measured by, its profits, (ii) pay any indebtedness owed to
the Borrower or any of its Subsidiaries, (iii) make any loan or advance to the
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Borrower or any of its Subsidiaries, or (iv) except for Property subject to
purchase money Liens permitted in accordance with this Agreement, sell, lease,
transfer any of its Property to the Borrower or any of its Subsidiaries, or (b)
the Borrower or any of its Subsidiaries to (i) comply with the terms and
provisions of Section 8.13(b), or (ii) grant any Lien on any of its Properties
to secure the payment and performance of the Obligations.
Section 9.13 Management Fees. The Borrower and its Subsidiaries shall
not pay any management fees; provided, however, that Subsidiaries of the
Borrower may pay management fees to the Borrower or other Subsidiaries of the
Borrower.
Section 9.14 Modification of Other Agreements. The Borrower will not,
and will not permit NCH or any Subsidiary of the Borrower to, consent to or
implement any termination, amendment, modification, supplement or waiver of (a)
the certificate or articles of incorporation or bylaws or other constitutional
documents of the Borrower or any other Loan Party, (b) the Business Plan or (c)
any other Material Contract to which it is a party or any Permit which it
possesses; provided, however, that the Loan Parties may amend or modify (i) the
documents referred to in clause (a) preceding or the Business Plan if and to the
extent that such amendment or modification is not substantive or material and
could not be adverse to any Loan Party, the Administrative Agent or the Lenders
and (ii) the Material Contracts referred to in clause (b) preceding if and to
the extent that such amendment or modification could not reasonably be expected
to be materially adverse to any Loan Party or any of its Subsidiaries or the
Administrative Agent or any of the Lenders or, in the case of Material Contracts
involving other Debt of the Loan Parties, to the extent that such amendment or
modification does not result in such Loan Party being in breach of any covenant
or agreement contained in any Loan Document.
Section 9.15 ERISA. The Borrower will not, and will not permit NCH or
any Subsidiary of the Borrower to:
(a) allow, or take (or permit any ERISA Affiliate to take) any action
which would cause, any unfunded or unreserved liability for benefits under any
Plan (exclusive of any Multiemployer Plan) to exist or to be created that
exceeds $200,000 with respect to any such Plan or $500,000 with respect to all
such Plans in the aggregate on either a going concern or a wind-up basis; or
(b) with respect to any Multiemployer Plan, allow, or take (or permit
any ERISA Affiliate to take) any action which would cause, any unfunded or
unreserved liability for benefits under any Multiemployer Plan to exist or to be
created, either individually as to any such Plan or in the aggregate as to all
such Plans, that could, upon any partial or complete withdrawal from or
termination of any such Multiemployer Plan or Plans, have a Material Adverse
Effect.
Section 9.16 Financial Covenants.
(a) Total Debt to Total Capitalization. The Borrower and NCH will not
permit the ratio of (i) Total Debt of NCH and its Consolidated Subsidiaries
outstanding at the end of any of the
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calendar quarters set forth on Schedule 9.16(a) to (ii) Total Capitalization of
NCH and its Consolidated Subsidiaries on such date, to exceed the ratio set
forth opposite such date on such Schedule.
(b) Secured Debt to Total Capitalization. The Borrower and NCH will
not permit the ratio of (i) Secured Debt of NCH and its Consolidated
Subsidiaries outstanding at the end of any of the calendar quarters set forth on
Schedule 9.16(b) to (ii) Total Capitalization of NCH and its Consolidated
Subsidiaries on such date, to exceed the ratio set forth opposite such date on
such Schedule.
(c) Fixed Charge Coverage. The Borrower and NCH will not permit the
ratio of (i) EBITDA of NCH and its Consolidated Subsidiaries during any of the
calendar quarters ending on any of the dates set forth on Schedule 9.16(c) plus
cash balances on such date to (ii) Consolidated Fixed Charges of NCH and its
Consolidated Subsidiaries for the next calendar quarter, to be less than the
ratio set forth opposite such date on such Schedule.
(d) Capital Expenditures. The Borrower and NCH will not permit
cumulative Capital Expenditures of NCH and its Consolidated Subsidiaries for the
period beginning on September 30, 1998 and ending on any of the dates set forth
on Schedule 9.16(d) to exceed the amount set forth opposite such date on such
Schedule.
(e) Quarterly Minimum Revenue Levels. The Borrower and NCH will not
permit Gross Revenues of NCH and its Consolidated Subsidiaries for any of the
calendar quarters ending on any of the dates set forth on Schedule 9.16(e) to be
less than the amount set forth opposite such date on such Schedule.
(f) Total Debt to Annualized EBITDA. The Borrower and NCH will not
permit the ratio of (i) Total Debt of NCH and its Consolidated Subsidiaries
outstanding at the end of any of the calendar quarters set forth on Schedule
9.16(f) to (ii) Annualized EBITDA of NCH and its Consolidated Subsidiaries for
the calendar quarter ending on such date, to exceed the ratio set forth opposite
such date on such Schedule.
(g) Secured Debt to Annualized EBITDA. The Borrower and NCH will not
permit the ratio of (i) Secured Debt of NCH and its Consolidated Subsidiaries
outstanding at the end of any of the calendar quarters set forth on Schedule
9.16(g) to (ii) Annualized EBITDA of NCH and its Consolidated Subsidiaries for
the calendar quarter ending on such date, to exceed the ratio set forth opposite
such date on such Schedule.
(h) EBITDA. The Borrower and NCH will not permit EBITDA for any of the
calendar quarters ending on any of the dates set forth on Schedule 9.16(h) to be
less than the amount set forth opposite such date on such Schedule.
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(i) Gross Margin Percentage. The Borrower and NCH will not permit the
Gross Margin Percentage of NCH and its Consolidated Subsidiaries for any of the
calendar quarters ending on any of the dates set forth on Schedule 9.16(i) to be
less than the percentage set forth opposite such date on such Schedule.
(j) Access Lines. The Borrower will not permit the number of the total
Access Lines of the Borrower and its Consolidated Subsidiaries in service at the
end of any of the calendar quarters ending on any of the dates set forth in
Schedule 9.16(j) to be less than the amount set forth on Schedule 9.16(j)
opposite such date on such Schedule.
Section 9.17 No Prepayment of Debt. The Borrower will not, and will not
permit NCH or any of its Subsidiaries to, directly or indirectly, make any
optional prepayment or distribution on account of, or voluntarily purchase,
acquire, redeem or retire, any Debt, prior to 30 days before its originally
stated maturity (or its stated maturity on the Closing Date in the case of Debt
outstanding on the Closing Date), or in the case of interest, its stated due
date, or directly or indirectly become obligated to do any of the foregoing by
amending the terms thereof or otherwise, except for:
(a) prepayments of the Loans or other Obligations pursuant to or as
permitted by the Loan Documents;
(b) prepayments made with the proceeds of new Debt incurred for the
purpose of refinancing the Debt being prepaid, provided that (i) no portion of
such new Debt matures or is required to be prepaid, purchased or otherwise
retired earlier than the corresponding portion of the Debt being prepaid
(including as a result of any prepayment or redemption upon the occurrence of a
condition), (ii) such new Debt (A) is subordinated to the Obligations to at
least the same extent as the Debt being refinanced if such Debt is Subordinated
Debt or (B) is permitted in accordance with this Agreement, and (iii) no Default
or Event of Default then exists or would result from such prepayment or
refinancing; and
(c) prepayments of trade payables incurred in the ordinary course of
the Borrower's or any Subsidiary's business and not overdue by more than 120
days.
In addition, the Borrower will not, and will not permit any Subsidiary of the
Borrower to, prepay any rent or other obligations under any operating lease or
any other Material Contract prior to 90 days before the originally stated due
date therefor (or the due date therefor as of the Closing Date in the case of
operating leases or Material Contracts in existence on the Closing Date).
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ARTICLE 10
Default
Section 10.1 Events of Default. Each of the following shall be deemed an
"Event of Default":
(a) (i) The Borrower shall fail to pay, repay or prepay when due, any
amount of principal owing to the Administrative Agent or any Lender pursuant to
this Agreement or any other Loan Document, or (ii) the Borrower shall fail to
pay, within two Business Days after the due date thereof, any interest, fee,
expense or other amount or other Obligation owing to the Administrative Agent or
any Lender pursuant to this Agreement or any other Loan Document.
(b) Any representation or warranty made or deemed made by or on behalf
of any Loan Party in any Loan Document or in any certificate, report, notice or
financial statement furnished at any time in connection with this Agreement or
any other Loan Document shall be false, misleading or erroneous in any material
respect when made or deemed to have been made.
(c) Any Loan Party shall fail to perform, observe or comply with any
covenant, agreement or term contained in Section 5.1, 8.1(e) or 8.2 or Article
9; any Loan Party shall fail to perform, observe or comply with any covenant,
agreement or term contained in Article 5 or Section 8.1, 8.3, or 8.5, and such
failure is not remedied or waived within ten days after such failure commenced;
or any Loan Party shall fail to perform, observe or comply with any other
covenant, agreement or term contained in this Agreement or any other Loan
Document (other than covenants to pay the Obligations) and such failure is not
remedied or waived within the earlier to occur of 30 days after such failure
commenced or, if a different grace period is expressly made applicable in such
other Loan Documents, such applicable grace period.
(d) Any Loan Party ceases to be Solvent or shall admit in writing its
inability to, or be generally unable to, pay its debts as such debts become due.
(e) Any Loan Party shall (i) apply for or consent to the appointment
of, or the taking of possession by, a receiver, custodian, trustee, liquidator
or administrator of itself or of all or a substantial part of its Property, (ii)
admit in writing its inability to, or be generally unable to, pay its debts as
such debts become due, subject to any applicable grace periods, (iii) make a
general assignment for the benefit of its creditors, (iv) commence a voluntary
case under the United States Bankruptcy Code (as now or hereafter in effect, the
"Bankruptcy Code"), (v) file a petition seeking to take advantage of any other
law providing for the relief of debtors or relating to bankruptcy, insolvency,
reorganization, liquidation, dissolution, arrangement or winding up, or
composition or readjustment of debts, (vi) fail to controvert in a timely or
appropriate manner, or acquiesce in writing to, any petition filed against it in
an involuntary case under the Bankruptcy Code or other applicable Governmental
Requirement, (vii) dissolve, or (viii) take any corporate action for the purpose
of effecting any of the foregoing.
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(f) A proceeding or case shall be commenced, without the application
or consent of any Loan Party, in any court of competent jurisdiction, seeking
(i) the liquidation, reorganization, dissolution, arrangement, winding up, or
composition or readjustment of its debts, (ii) the appointment of a trustee,
receiver, custodian, examiner, liquidator, administrator or the like of it or of
all or any substantial part of its Property, or (iii) similar relief in respect
of it, under any law providing for the relief of debtors or relating to
bankruptcy, insolvency, reorganization, liquidation, dissolution, arrangement or
winding up, or composition or readjustment of debts, and such proceeding or case
shall continue undismissed, or an order, judgment or decree approving or
ordering any of the foregoing shall be entered and continue unstayed and in
effect, for a period of 60 or more days; or an order for relief shall be entered
in an involuntary case under the Bankruptcy Code against any Loan Party and
shall continue unstayed and in effect for any period of 60 consecutive days.
(g) Any Loan Party shall fail to discharge within a period of 30 days
after the commencement thereof any attachment, sequestration, forfeiture or
similar proceeding or proceedings involving an aggregate amount in excess of
$2,000,000 against any of its Properties.
(h) A final judgment or judgments for the payment of money in excess
of $2,000,000 in the aggregate shall be rendered by a court or courts against
any Loan Party on claims not covered by insurance and the same shall not be
discharged, bonded or a stay of execution thereof shall not be procured, within
30 days from the date of entry thereof and any Loan Party shall not, within said
period of 30 days, or such longer period during which execution of the same
shall have been stayed, appeal therefrom and cause the execution thereof to be
stayed during such appeal.
(i) Any Loan Party shall fail to pay when due any principal of or
interest on any Debt of such Loan Party (other than the Obligations) having a
principal amount of at least $2,000,000 individually or at least $5,000,000 in
the aggregate, or the maturity of any such Debt shall have been accelerated, or
any such Debt shall have been required to be prepaid prior to the stated
maturity thereof, or any event shall have occurred (and shall not have been
waived or otherwise cured) that permits (or, with the giving of notice or lapse
of time or both, would permit) any holder or holders of such Debt or any Person
acting on behalf of such holder or holders to accelerate the maturity thereof or
require any such prepayment.
(j) This Agreement or any other Loan Document shall cease to be in
full force and effect or shall be declared null and void or the validity or
enforceability thereof shall be contested or challenged by any Loan Party or any
Loan Party shall deny that it has further liability or obligation under any of
the Loan Documents; or any Lien created or purported to be created by the Loan
Documents shall for any reason cease to be or fail to be a valid, first priority
perfected Lien upon any of the Collateral purported to be covered thereby
(except to the extent that such failure results from the Administrative Agent's
failure to file applicable continuation statements under the UCC).
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(k) Any of the following events shall occur or exist with respect to
any Loan Party or any ERISA Affiliate: (i) any Prohibited Transaction involving
any Plan; (ii) any Reportable Event with respect to any Pension Plan; (iii) the
filing under Section 4041 of ERISA of a notice of intent to terminate any
Pension Plan or the termination of any Pension Plan; (iv) any event or
circumstance that could reasonably be expected to constitute grounds entitling
the PBGC to institute proceedings under Section 4042 of ERISA for the
termination of, or for the appointment of a trustee to administer, any Pension
Plan, or the institution by the PBGC of any such proceedings; (v) any
"accumulated funding deficiency" (as defined in Section 302 of ERISA or Section
412 of the Code), whether or not waived, shall exist with respect to any Pension
Plan; or (vi) complete or partial withdrawal under Section 4201 or 4204 of ERISA
from a Multiemployer Plan or the reorganization, insolvency or termination of
any Pension Plan; and in each case above, such event or condition, together with
all other events or conditions, if any, have subjected or could in the
reasonable opinion of Required Lenders subject any Loan Party or any ERISA
Affiliate to any tax, penalty or other liability to a Plan, a Multiemployer
Plan, the PBGC or otherwise (or any combination thereof) which in the aggregate
exceed or could reasonably be expected to exceed $2,000,000.
(l) If, at any time, the subordination provisions of any of the
Subordinated Debt Documents shall be invalidated or shall otherwise cease to be
in full force and effect.
(m) The occurrence of (i) a default (whether or not such term is used
or defined) under any Subordinated Debt Document, unless (A) such default has
been waived, cured or consented to in accordance with such documents, (B) such
default is not a payment default, (C) the maturity of the Debt affected thereby
has not been accelerated, (D) a blockage under such Subordinated Debt Document
has not been invoked, and (E) such waiver or consent is not made in connection
with any amendment or modification of any of the Subordinated Debt Documents or
in connection with any payment to the holders of any Subordinated Debt, (ii) a
payment default under any Subordinated Debt Document, (iii) an event of default
(whether or not such term is used or defined) under any Subordinated Debt
Document, or (iv) any acceleration of the maturity of any Subordinated Debt.
(n) The occurrence of any breach or default by the Borrower under the
Master Purchase Agreement (after giving effect to any grace or cure period
specified therein) which breach or default entitles Nortel Networks to exercise
a right or remedy under or in connection with the Master Purchase Agreement.
(o) If, at any time, any event or circumstance shall occur which gives
any holder of any Subordinated Debt the right to request or require any Loan
Party to redeem, purchase or prepay any Subordinated Debt.
(p) The occurrence of any Material Adverse Effect.
(q) The occurrence of any Change in Control.
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(r) The occurrence of any "Event of Default" as such term is defined
in the Senior Notes Indenture.
Section 10.2 Remedies. If any Event of Default shall occur and be
continuing, the Administrative Agent may and, if directed by the Required
Lenders, the Administrative Agent shall do any one or more of the following:
(a) Acceleration. Declare all outstanding principal of and accrued and
unpaid interest on the Loans and all other amounts payable by the Borrower under
the Loan Documents immediately due and payable, and the same shall thereupon
become immediately due and payable, without notice, demand, presentment, notice
of dishonor, notice of acceleration, notice of intent to accelerate, protest or
other formalities of any kind, all of which are hereby expressly waived by the
Borrower;
(b) Termination of Commitments. Terminate each of the Commitments
without notice to the Borrower or any other Loan Party;
(c) Judgment. Reduce any claim to judgment;
(d) Foreclosure. Foreclose or otherwise enforce any Lien granted to
the Administrative Agent for the benefit of the Administrative Agent and the
Lenders to secure payment and performance of the Obligations in accordance with
the terms of the Loan Documents; or
(e) Rights. Exercise any and all rights and remedies afforded by the
laws of the State of New York or any other jurisdiction, by any of the Loan
Documents, by equity or otherwise;
provided, however, that (i) upon the occurrence of an Event of Default under
Section 10.1(e) or Section 10.1(f), the Commitments of all of the Lenders shall
immediately and automatically terminate, and the outstanding principal of and
accrued and unpaid interest on the Loans and all other amounts payable by the
Borrower under the Loan Documents shall thereupon become immediately and
automatically due and payable, and (ii) upon the occurrence of an Event of
Default under clause (iv) of Section 10.1(m) or under Section 10.1(o), the
outstanding principal of and accrued and unpaid interest on the Loans and all
other amounts payable by the Borrower under the Loan Documents shall thereupon
become immediately and automatically due and payable, all (with respect to each
of clauses (i) and (ii) preceding) without notice, demand, presentment, notice
of dishonor, notice of acceleration, notice of intent to accelerate, protest or
other formalities of any kind, all of which are hereby expressly waived by the
Borrower.
Section 10.3 Performance by the Administrative Agent, etc.. If the
Borrower shall fail to perform any covenant or agreement in accordance with the
terms of the Loan Documents, the Administrative Agent may perform or attempt to
perform, or may cause any Lender (with the consent of such Lender) to perform or
attempt to perform, such covenant or agreement on behalf of the Borrower. In
such event, the Borrower shall, at the request of the Administrative Agent,
promptly pay any amount expended by the Administrative Agent or the Lenders in
connection with
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such performance or attempted performance to the Administrative Agent at its
Principal Office, together with interest thereon at the applicable Default Rate
from and including the date of such expenditure to but excluding the date such
expenditure is paid in full. Notwithstanding the foregoing, it is expressly
agreed that neither the Administrative Agent nor any Lender shall have any
liability or responsibility for the performance of any obligation of the
Borrower or any other Person under this Agreement or any of the other Loan
Documents.
ARTICLE 11
The Administrative Agent
Section 11.1 Appointment, Powers and Immunities. Each Lender hereby
irrevocably appoints and authorizes the Administrative Agent to act as its agent
hereunder and under the other Loan Documents with such powers as are
specifically delegated to the Administrative Agent by the terms of this
Agreement and the other Loan Documents, together with such other powers as are
reasonably incidental thereto. Neither the Administrative Agent nor any of its
Affiliates, officers, directors, employees, attorneys or agents shall be liable
for any action taken or omitted to be taken by any of them hereunder or
otherwise in connection with this Agreement or any of the other Loan Documents
except for its or their own gross negligence or willful misconduct. Without
limiting the generality of the preceding sentence, the Administrative Agent (a)
may treat the payee of any Note as the holder thereof until the Administrative
Agent receives written notice of the assignment or transfer thereof signed by
such payee and in form satisfactory to the Administrative Agent, (b) shall have
no duties or responsibilities except those expressly set forth in this Agreement
and the other Loan Documents, and shall not by reason of this Agreement or any
other Loan Document be a trustee or fiduciary for any Lender, (c) shall not be
required to initiate any litigation or collection proceedings hereunder or under
any other Loan Document except to the extent requested by the Required Lenders,
(d) shall not be responsible to the Lenders for any recitals, statements,
representations or warranties contained in this Agreement or any other Loan
Document, or any certificate or other document referred to or provided for in,
or received by any of them under, this Agreement or any other Loan Document, or
for the value, validity, effectiveness, enforceability or sufficiency of this
Agreement or any other Loan Document or any other document referred to or
provided for herein or therein or for any failure by any Person to perform any
of its obligations hereunder or thereunder, (e) may consult with legal counsel
(including counsel for the Borrower), independent public accountants and other
experts selected by it and shall not be liable for any action taken or omitted
to be taken in good faith by it in accordance with the advice of such counsel,
accountants or experts, and (f) shall incur no liability under or in respect of
any Loan Document by acting upon any notice, consent, certificate or other
instrument or writing reasonably believed by it to be genuine and signed or sent
by the proper party or parties. As to any matters not expressly provided for by
this Agreement, the Administrative Agent shall in all cases be fully protected
in acting, or in refraining from acting, hereunder in accordance with
instructions signed by the Required Lenders, and such instructions of the
Required Lenders and any action taken or failure to act pursuant thereto shall
be binding on all of the Lenders; provided, however, that the Administrative
Agent shall not be required to take any action which exposes the Administrative
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Agent to liability or which is contrary to this Agreement or any other Loan
Document or applicable law. The Administrative Agent shall not be deemed to have
any fiduciary relationship with any Lender or any Loan Party, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into this Agreement or otherwise exist against the Administrative Agent.
Without limiting the generality of the foregoing, the use of the term "agent" in
this Agreement with respect to the Administrative Agent is not intended to
connote any fiduciary or other express or implied obligation arising under
agency doctrine of any applicable law; instead, such term is used merely as a
matter of market custom and is intended to create or reflect only an
administrative relationship among independent contracting parties.
Section 11.2 Rights of Administrative Agent as a Lender. With respect to
its Commitments, the Loans made by it and the Note(s) issued to it, Nortel
Networks (and any successor acting as Administrative Agent) in its capacity as a
Lender hereunder shall have the same rights and powers hereunder as any other
Lender and may exercise the same as though it were not acting as the
Administrative Agent, and the term "Lender" or "Lenders" shall, unless the
context otherwise indicates, include the Administrative Agent in its individual
capacity. The Administrative Agent and its Affiliates may (without having to
account therefor to any Lender) accept deposits from, lend money to, act as
trustee under indentures of, provide merchant banking services to, own
securities of, and generally engage in any kind of banking, trust or other
business with, the Borrower or any of its Affiliates and any other Person who
may do business with or own securities of the Borrower or any of its Affiliates,
all as if it were not acting as the Administrative Agent and without any duty to
account therefor to the Lenders. Without limiting the generality of the
foregoing, it is contemplated that (a) Nortel Networks and/or an Affiliate of
Nortel Networks may purchase equity securities of NCI, (b) Nortel Networks will
purchase the Senior Notes, and (c) Nortel Networks will be the holder of the
Warrants.
Section 11.3 Defaults. The Administrative Agent shall not be deemed to
have knowledge or notice of the occurrence of a Default (other than the
non-payment of principal of or interest on the Loans or of commitment fees)
unless the Administrative Agent has received notice from a Lender or the
Borrower specifying such Default and stating that such notice is a "notice of
default". In the event that the Administrative Agent receives such a notice of
the occurrence of a Default, the Administrative Agent shall give prompt notice
thereof to the Lenders (and shall give each Lender prompt notice of each such
non-payment). The Administrative Agent shall (subject to Section 11.1) take such
action with respect to such Default as shall be directed by the Required
Lenders, provided that unless and until the Administrative Agent shall have
received such directions, the Administrative Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default as it shall seem advisable and in the best interest of the
Lenders.
SECTION 11.4 INDEMNIFICATION. EACH LENDER HEREBY AGREES TO INDEMNIFY THE
ADMINISTRATIVE AGENT FROM AND HOLD THE ADMINISTRATIVE AGENT HARMLESS AGAINST (TO
THE EXTENT NOT REIMBURSED UNDER SECTIONS 12.1 AND 12.2, BUT WITHOUT LIMITING THE
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OBLIGATIONS OF THE BORROWER UNDER SECTIONS 12.1 AND 12.2), RATABLY IN ACCORDANCE
WITH ITS PRO RATA SHARE (CALCULATED ON THE BASIS OF ITS COMMITMENT PERCENTAGE OF
THE AGGREGATE COMMITMENTS), ANY AND ALL LIABILITIES (INCLUDING, WITHOUT
LIMITATION, ENVIRONMENTAL LIABILITIES), OBLIGATIONS, LOSSES, DAMAGES, PENALTIES,
ACTIONS, JUDGMENTS, DEFICIENCIES, SUITS, COSTS, EXPENSES (INCLUDING ATTORNEYS'
FEES) AND DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER WHICH MAY BE IMPOSED
ON, INCURRED BY OR ASSERTED AGAINST THE ADMINISTRATIVE AGENT IN ANY WAY RELATING
TO OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY ACTION TAKEN OR OMITTED TO
BE TAKEN BY THE ADMINISTRATIVE AGENT UNDER OR IN RESPECT OF ANY OF THE LOAN
DOCUMENTS; PROVIDED, FURTHER, THAT NO LENDER SHALL BE LIABLE FOR ANY PORTION OF
THE FOREGOING TO THE EXTENT CAUSED BY THE ADMINISTRATIVE AGENT'S GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT. WITHOUT LIMITATION OF THE FOREGOING, IT IS THE
EXPRESS INTENTION OF THE LENDERS THAT THE ADMINISTRATIVE AGENT SHALL BE
INDEMNIFIED HEREUNDER FROM AND HELD HARMLESS AGAINST ALL OF SUCH LIABILITIES
(INCLUDING, WITHOUT LIMITATION, ENVIRONMENTAL LIABILITIES), OBLIGATIONS, LOSSES,
DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, DEFICIENCIES, SUITS, COSTS, EXPENSES
(INCLUDING ATTORNEYS' FEES) AND DISBURSEMENTS OF ANY KIND OR NATURE DIRECTLY OR
INDIRECTLY ARISING OUT OF OR RESULTING FROM THE SOLE OR CONTRIBUTORY NEGLIGENCE
OF THE ADMINISTRATIVE AGENT (EXCEPT TO THE EXTENT THE SAME ARE CAUSED BY THE
ADMINISTRATIVE AGENT'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT). WITHOUT LIMITING
ANY OTHER PROVISION OF THIS SECTION 11.4, EACH LENDER AGREES TO REIMBURSE THE
ADMINISTRATIVE AGENT PROMPTLY UPON DEMAND FOR ITS PRO RATA SHARE (CALCULATED ON
THE BASIS OF ITS COMMITMENT PERCENTAGE OF THE COMMITMENTS) OF ANY AND ALL
OUT-OF-POCKET EXPENSES (INCLUDING ATTORNEYS' FEES) INCURRED BY THE
ADMINISTRATIVE AGENT IN CONNECTION WITH THE PREPARATION, EXECUTION, DELIVERY,
ADMINISTRATION, MODIFICATION, AMENDMENT OR ENFORCEMENT (WHETHER THROUGH
NEGOTIATIONS, LEGAL PROCEEDINGS OR OTHERWISE) OF, OR LEGAL ADVICE IN RESPECT OF
RIGHTS OR RESPONSIBILITIES UNDER, THE LOAN DOCUMENTS, TO THE EXTENT THAT THE
ADMINISTRATIVE AGENT IS NOT PROMPTLY REIMBURSED FOR SUCH EXPENSES BY THE
BORROWER.
Section 11.5 Independent Credit Decisions. Each Lender agrees that it
has independently and without reliance on the Administrative Agent or any other
Lender, and based on such documents and information as it has deemed
appropriate, made its own credit analysis of the Borrower and NCH and the
Subsidiaries of the Borrower and its own decision to enter into this Agreement
and that it will, independently and without reliance upon the Administrative
Agent or any other Lender, and based upon such documents and information as it
shall deem appropriate at the time, continue to
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make its own analysis and decisions in taking or not taking action under this
Agreement or any of the other Loan Documents. The Administrative Agent shall not
be required to keep itself informed as to the performance or observance by the
Borrower (or any other Person) of this Agreement or any other Loan Document or
to inspect the Properties or books of the Borrower (or any other Person). Except
for notices, reports and other documents and information expressly required to
be furnished to the Lenders by the Administrative Agent hereunder or under the
other Loan Documents, the Administrative Agent shall not have any duty or
responsibility to provide any Lender with any credit or other financial
information concerning the affairs, financial condition or business of the
Borrower (or any of its Affiliates) which may come into the possession of the
Administrative Agent or any of its Affiliates.
Section 11.6 Several Commitments. The Commitments and other obligations
of the Lenders under this Agreement are several. The default by any Lender in
making a Loan in accordance with any of its Commitments shall not relieve the
other Lenders of their obligations under this Agreement. In the event of any
default by any Lender in making any Loan, each nondefaulting Lender shall be
obligated to make its Loan but shall not be obligated to advance the amount
which the defaulting Lender was required to advance hereunder. In no event shall
any Lender be required to advance an amount or amounts with respect to any of
the Loans which would in the aggregate exceed such Lender's Commitment with
respect to such Loans. No Lender shall be responsible for any act or omission of
any other Lender.
Section 11.7 Successor Administrative Agent. Subject to the appointment
and acceptance of a successor Administrative Agent as provided below, the
Administrative Agent may resign at any time by giving notice thereof to the
Lenders and the Borrower. Upon any such resignation, the Required Lenders will
have the right to appoint another Lender as a successor Administrative Agent. If
no successor Administrative Agent shall have been so appointed by the Required
Lenders and shall have accepted such appointment within 30 days after the
retiring Administrative Agent's giving of notice of resignation, then the
retiring Administrative Agent may, on behalf of the Lenders, appoint a successor
Administrative Agent, which shall be a commercial bank organized under the laws
of the U.S. or any state thereof or of a foreign country if acting through its
U.S. branch and having combined capital and surplus of at least $100,000,000.
Upon the acceptance of its appointment as successor Administrative Agent, such
successor Administrative Agent shall thereupon succeed to and become vested with
all rights, powers, privileges, immunities and duties of the resigning
Administrative Agent, and the resigning Administrative Agent shall be discharged
from its duties and obligations under this Agreement and the other Loan
Documents. After any Administrative Agent's resignation as Administrative Agent,
the provisions of this Article 11 shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was the
Administrative Agent. Each Administrative Agent (including each successor
Administrative Agent) agrees that, so long as it is acting as Administrative
Agent under this Agreement, it shall be a Lender under this Agreement.
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ARTICLE 12
Miscellaneous
Section 12.1 Expenses. The Borrower hereby agrees, on demand, to pay or
reimburse the Administrative Agent and each of the Lenders for paying: (a) all
reasonable out-of-pocket costs and expenses of the Administrative Agent accrued
in connection with the drafting, preparation, negotiation, execution and
delivery of the Loan Documents and in connection with any and all waivers,
amendments, modifications, renewals, extensions and supplements of or to the
Loan Documents, and the syndication of the Commitments and the Loans, including,
without limitation, the reasonable fees and expenses of legal counsel (including
all local counsel) for the Administrative Agent, (b) all out-of-pocket costs and
expenses of the Administrative Agent and the Lenders in connection with any
Default, the exercise of any right or remedy and the enforcement of this
Agreement or any other Loan Document or any term or provision hereof or thereof,
including, without limitation, the fees and expenses of all legal counsel for
the Administrative Agent and/or any Lender, (c) all transfer, stamp, documentary
or other similar taxes, assessments or charges levied by any Governmental
Authority in respect of this Agreement or any of the other Loan Documents, (d)
all costs, expenses, assessments and other charges incurred in connection with
any filing, registration, recording or perfection of any Lien contemplated by
this Agreement or any other Loan Document, and (e) all reasonable out-of-pocket
costs and expenses incurred by the Administrative Agent in connection with due
diligence, computer services, copying, appraisals, environmental audits,
collateral audits, field exams, insurance, consultants and search reports.
Section 12.2 INDEMNIFICATION. THE BORROWER HEREBY AGREES TO INDEMNIFY
THE ADMINISTRATIVE AGENT AND EACH LENDER AND EACH AFFILIATE THEREOF AND THEIR
RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, ATTORNEYS AND AGENTS FROM, AND HOLD
EACH OF THEM HARMLESS AGAINST, ANY AND ALL LOSSES, LIABILITIES (INCLUDING,
WITHOUT LIMITATION, ENVIRONMENTAL LIABILITIES), CLAIMS, DAMAGES, PENALTIES,
JUDGMENTS, DISBURSEMENTS, COSTS AND EXPENSES (INCLUDING REASONABLE ATTORNEYS'
AND CONSULTANTS' FEES) TO WHICH ANY OF THEM MAY BECOME SUBJECT WHICH DIRECTLY OR
INDIRECTLY ARISE FROM OR RELATE TO (A) THE NEGOTIATION, EXECUTION, DELIVERY,
PERFORMANCE, ADMINISTRATION OR ENFORCEMENT OF ANY OF THE LOAN DOCUMENTS,
INCLUDING, WITHOUT LIMITATION, THE EXERCISE OF ANY FORECLOSURE RIGHT OR OTHER
RIGHT OR REMEDY WHETHER OR NOT SUCH EXERCISE IS IN COMPLIANCE WITH LAWS
AFFECTING OTHER PERSONS OR RESULTS IN DAMAGES PAYABLE TO OTHER PERSONS, (B) ANY
OF THE TRANSACTIONS CONTEMPLATED BY THE LOAN DOCUMENTS, (C) ANY BREACH BY THE
BORROWER OF ANY MATERIAL REPRESENTATION, WARRANTY, COVENANT OR OTHER AGREEMENT
CONTAINED IN ANY OF THE LOAN DOCUMENTS, (D) THE USE OR PROPOSED USE OF ANY LOAN,
(E) THE PRESENCE, RELEASE, THREATENED RELEASE, DISPOSAL, REMOVAL OR CLEANUP OF
ANY
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HAZARDOUS MATERIAL LOCATED ON, ABOUT, WITHIN OR AFFECTING ANY OF THE PROPERTIES
OF THE BORROWER OR ANY OF ITS AFFILIATES, EXCEPT TO THE EXTENT THAT THE LOSS,
DAMAGE OR CLAIM IS THE DIRECT RESULT OF GROSS NEGLIGENCE OR WILLFUL MISCONDUCT
OF THE PERSON TO BE INDEMNIFIED, OR (F) ANY INVESTIGATION, LITIGATION OR OTHER
PROCEEDING, INCLUDING, WITHOUT LIMITATION, ANY THREATENED INVESTIGATION,
LITIGATION OR OTHER PROCEEDING RELATING TO ANY OF THE FOREGOING; BUT EXCLUDING
ANY OF THE FOREGOING TO THE EXTENT CAUSED BY THE GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OF THE PERSON TO BE INDEMNIFIED. WITHOUT LIMITING ANY PROVISION OF
THIS AGREEMENT OR OF ANY OTHER LOAN DOCUMENT, IT IS THE EXPRESS INTENTION OF THE
PARTIES HERETO THAT EACH PERSON TO BE INDEMNIFIED UNDER THIS SECTION 12.2 SHALL
BE INDEMNIFIED FROM AND HELD HARMLESS AGAINST ANY AND ALL LOSSES, LIABILITIES
(INCLUDING, WITHOUT LIMITATION, ENVIRONMENTAL LIABILITIES), CLAIMS, DAMAGES,
PENALTIES, JUDGMENTS, DISBURSEMENTS, COSTS AND EXPENSES (INCLUDING REASONABLE
ATTORNEYS' FEES) ARISING OUT OF OR RESULTING FROM THE SOLE OR CONTRIBUTORY
NEGLIGENCE OF SUCH PERSON. WITHOUT PREJUDICE TO THE SURVIVAL OF ANY OTHER TERM
OR PROVISION OF THIS AGREEMENT, THE OBLIGATIONS OF THE BORROWER UNDER THIS
SECTION 12.2 SHALL SURVIVE THE REPAYMENT OF THE LOANS AND OTHER OBLIGATIONS AND
TERMINATION OF THE COMMITMENTS.
Section 12.3 Limitation of Liability. None of the Administrative Agent,
any Lender or any Affiliate, officer, director, employee, attorney or agent
thereof shall be liable for any error of judgment or act done in good faith, or
be otherwise liable or responsible under any circumstances whatsoever (including
such Person's negligence), except for such Person's gross negligence or willful
misconduct. None of the Administrative Agent, any Lender or any Affiliate,
officer, director, employee, attorney or agent thereof shall have any liability
with respect to, and the Borrower hereby waives, releases and agrees not to ▇▇▇
any of them upon, any claim for any special, indirect, incidental or
consequential damages suffered or incurred by the Borrower or any Affiliate of
the Borrower in connection with, arising out of or in any way related to this
Agreement or any of the other Loan Documents, or any of the transactions
contemplated by this Agreement or any of the other Loan Documents. The Borrower
hereby waives, releases and agrees not to ▇▇▇ the Administrative Agent or any
Lender or any of their respective Affiliates, officers, directors, employees,
attorneys or agents for exemplary or punitive damages in respect of any claim in
connection with, arising out of or in any way related to this Agreement or any
of the other Loan Documents, or any of the transactions contemplated by this
Agreement or any of the other Loan Documents.
Section 12.4 No Duty. All attorneys, accountants, appraisers and other
professional Persons and consultants retained by the Administrative Agent and
the Lenders shall have the right to act exclusively in the interest of the
Administrative Agent and the Lenders and shall have no duty
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of disclosure, duty of loyalty, duty of care or other duty or obligation of any
type or nature whatsoever to the Borrower or any of its Affiliates or any other
Person.
Section 12.5 No Fiduciary Relationship. The relationship between the
Borrower and each Lender is solely that of debtor and creditor, and neither the
Administrative Agent nor any Lender has any fiduciary or other special
relationship with the Borrower or any of its Affiliates, and no term or
condition of any of the Loan Documents shall be construed so as to deem the
relationship between the Borrower and any Lender, or such Affiliate and any
Lender, to be other than that of debtor and creditor. No joint venture or
partnership is created by this Agreement among the Lenders or among the Borrower
or any of its Affiliates and the Lenders.
Section 12.6 Equitable Relief. The Borrower recognizes that, in the
event it fails to pay, perform, observe or discharge any or all of the
Obligations, any remedy at law may prove to be inadequate relief to the
Administrative Agent and the Lenders. The Borrower therefore agrees that the
Administrative Agent and the Lenders, if the Administrative Agent or the Lenders
so request, shall be entitled to temporary and permanent injunctive relief in
any such case without the necessity of proving actual damages.
Section 12.7 No Waiver; Cumulative Remedies. No failure on the part of
the Administrative Agent or any Lender to exercise and no delay in exercising,
and no course of dealing with respect to, any right, power or privilege under
this Agreement or any other Loan Document shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, power or privilege under this
Agreement or any other Loan Document preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies provided for in this Agreement and the other Loan Documents are
cumulative and not exclusive of any rights and remedies provided by law.
Section 12.8 Successors and Assigns.
(a) This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns. The Borrower may
not assign or transfer any of its rights or obligations under this Agreement or
any other Loan Document without the prior written consent of the Administrative
Agent and the Lenders. Any Lender may sell participations in all or a portion of
its rights and obligations under this Agreement and the other Loan Documents
(including, without limitation, all or a portion of its Commitments and the
Loans owing to it); provided, however, that (i) such Lender's obligations under
this Agreement and the other Loan Documents (including, without limitation, its
Commitments) shall remain unchanged, (ii) such Lender shall remain solely
responsible to the Borrower for the performance of such obligations, (iii) such
Lender shall remain the holder of its Notes for all purposes of this Agreement,
(iv) the Borrower shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement and
the other Loan Documents, and (v) the Lenders shall not grant any participation
under which the participant shall have the right to approve (or under which the
consent of the participant must be obtained prior to the Lenders being able to
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approve) any amendment or waiver of this Agreement or the other Loan Documents,
except to the extent that such amendment or waiver (A) increases any Commitment,
(B) reduces the interest rate or the amount of principal or fees applicable to
the Loans or Commitments in which such participant is participating, (C) extends
any Maturity Date, (D) releases any of the Collateral (except as provided for
herein or in any other Loan Document) or any guaranty of the Obligations, or (E)
releases any Loan Party from its monetary Obligations under any of the Loan
Documents.
(b) The Borrower and each of the Lenders agree that any Lender (the
"Assigning Lender") may at any time assign to one or more Eligible Assignees all
or any part of its rights and/or obligations under this Agreement and the other
Loan Documents (including, without limitation, its Commitments and/or Loans)
(each an "Assignee"); provided, however, that (i) each such assignment may be of
a varying percentage of the Assigning Lender's rights and/or obligations under
this Agreement and the other Loan Documents and may relate to some but not all
of such rights and/or obligations, (ii) except in the case of an assignment of
all of a Lender's rights and obligations under this Agreement and the other Loan
Documents, the amount of the Commitment(s) and/or Loans of the Assigning Lender
being assigned pursuant to each assignment (determined as of the date of the
Assignment and Acceptance with respect to such assignment) shall in no event be
less than $5,000,000 calculated based upon the aggregate amount of the
Commitment(s) and/or Loans assigned and (iii) the parties to each such
assignment shall execute and deliver to the Administrative Agent for its
acceptance and recording in the Register (as defined below), an Assignment and
Acceptance, together with the Note subject to such assignment, and a processing
and recordation fee of $3,500. Upon such execution, delivery, acceptance and
recording, from and after the effective date specified in each Assignment and
Acceptance, which effective date shall be at least five Business Days after the
execution thereof or such other date as may be approved by the Administrative
Agent, (1) the Assignee thereunder shall be a party hereto as a "Lender" and, to
the extent that rights and obligations hereunder have been assigned to it
pursuant to such Assignment and Acceptance, have the rights and obligations of a
Lender hereunder and under the Loan Documents, and (2) the Assigning Lender
thereunder shall, to the extent that rights and obligations hereunder have been
assigned by it pursuant to such Assignment and Acceptance, relinquish its rights
and be released from its obligations under this Agreement and the other Loan
Documents (and, in the case of an Assignment and Acceptance covering all or the
remaining portion of a Lender's rights and obligations under the Loan Documents,
such Lender shall cease to be a party thereto, provided that such Lender's
rights under Article 4, Section 12.1 and Section 12.2 accrued through the date
of assignment shall continue). The Borrower will provide full and prompt
assistance to each Lender as it may reasonably request from time to time in
connection with such Lender's efforts to assign its Commitments and/or Loans or
sell any participation interest therein. Such assistance shall include, without
limitation, making senior officers of the Borrower available for meetings with
prospective Lenders and participants and providing (in a timely manner) such
assistance as may be reasonably requested by such Lender and/or its advisors,
including, without limitation, providing information to and responding to
inquiries from such prospective Lenders and participants with respect to the
businesses, operations, business plan, financial condition and results of
operations of the Borrower and its Subsidiaries.
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(c) By executing and delivering an Assignment and Acceptance, the
Assigning Lender thereunder and the Assignee thereunder confirm to and agree
with each other and the other parties hereto as follows: (i) other than as
provided in such Assignment and Acceptance, such Assigning Lender makes no
representation or warranty and assumes no responsibility with respect to any
statements, warranties or representations made in or in connection with the Loan
Documents or the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Loan Documents or any other instrument or document
furnished pursuant thereto; (ii) such Assigning Lender makes no representation
or warranty and assumes no responsibility with respect to the financial
condition or results of operations of the Borrower or any of its Affiliates or
the performance or observance by the Borrower or any of its Affiliates of its
obligations under the Loan Documents; (iii) such Assignee confirms that it has
received a copy of the Loan Documents, together with copies of the financial
statements referred to in Section 7.2 and such other documents and information
as it has deemed appropriate to make its own credit analysis and decision to
enter into such Assignment and Acceptance; (iv) such Assignee will,
independently and without reliance upon the Administrative Agent or such
Assigning Lender and based on such documents and information as it shall deem
appropriate at the time, continue to make its own credit decisions in taking or
not taking action under this Agreement and the other Loan Documents; (v) such
Assignee confirms that it is an Eligible Assignee; (vi) such Assignee appoints
and authorizes the Administrative Agent to take such action as agent on its
behalf and exercise such powers under the Loan Documents as are delegated to the
Administrative Agent by the terms thereof, together with such powers as are
reasonably incidental thereto; and (vii) such Assignee agrees that it will
perform in accordance with their terms all of the obligations which by the terms
of the Loan Documents are required to be performed by it as a Lender.
(d) The Administrative Agent shall maintain at its Principal Office a
copy of each Assignment and Acceptance delivered to and accepted by it and a
register for the recordation of the names and addresses of the Lenders and the
Commitments of, and principal amount of the Loans owing to, each Lender from
time to time (the "Register"). The entries in the Register shall be conclusive
and binding for all purposes, absent manifest error, and the Borrower, the
Administrative Agent and the Lenders may treat each Person whose name is
recorded in the Register as a Lender hereunder for all purposes under the Loan
Documents. The Register shall be available for inspection by the Borrower or any
Lender at any reasonable time and from time to time upon reasonable prior
notice.
(e) Upon its receipt of an Assignment and Acceptance executed by an
Assigning Lender and Assignee representing that it is an Eligible Assignee,
together with the Note(s) subject to such assignment, the Administrative Agent
shall, if such Assignment and Acceptance has been completed and is in
substantially the form of Exhibit A hereto, (i) accept such Assignment and
Acceptance, (ii) record the information contained therein in the Register, and
(iii) give prompt written notice thereof to the Borrower. Within five Business
Days after its receipt of such notice, the Borrower, at its expense, shall
execute and deliver to the Administrative Agent in exchange for each surrendered
Note evidencing the Loans assigned, a new Note evidencing such Loans payable to
the order of such Eligible Assignee in an amount equal to such Loans assigned to
it and, if the Assigning Lender has
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retained any Loans, a new Note evidencing each such Loans payable to the order
of the Assigning Lender in the amount of such Loans retained by it (each such
promissory note shall constitute a "Note" for purposes of the Loan Documents).
Such new Notes shall be dated the effective date of such Assignment and
Acceptance and shall otherwise be in substantially the form of Exhibit B hereto.
(f) Any Lender may, in connection with any assignment or participation
or proposed assignment or participation pursuant to this Section 12.8, disclose
to the Assignee or participant or proposed Assignee or participant any
information relating to the Borrower or any of its Affiliates furnished to such
Lender by or on behalf of the Borrower or any of its Affiliates; provided that
each such actual or proposed Assignee or participant shall agree to be bound by
the provisions of Section 12.20.
(g) Any Lender may assign and pledge any Note held by it to any
Federal Reserve Bank or the U.S. Treasury as collateral security pursuant to
Regulation A of the Board of Governors of the Federal Reserve System and any
operating circular issued by such Federal Reserve System and/or Federal Reserve
Bank; provided, however, that any payment made by the Borrower for the benefit
of such assigning and/or pledging Lender in accordance with the terms of the
Loan Documents shall satisfy the Borrower's obligations under the Loan Documents
in respect thereof to the extent of such payment. No such assignment and/or
pledge shall release the assigning and/or pledging Lender from its obligations
hereunder.
(h) The Borrower shall maintain, or cause to be maintained, a register
(the "Registered Note Register") (which, at the request of the Borrower (which
request the Borrower makes by the execution of this Agreement) shall be kept by
the Administrative Agent on behalf of the Borrower at no extra charge to the
Borrower at the address to which notices to the Administrative Agent are to be
sent hereunder) on which it shall enter the name of the registered owner of each
of the Loans which is evidenced by a Registered Note. Notwithstanding anything
to the contrary contained in this Section 12.8, a Registered Note and the Loans
evidenced thereby may be assigned or otherwise transferred in whole or in part
only by registration of such assignment or transfer of such Registered Note and
the Loans evidenced thereby on the Registered Note Register (and each Registered
Note shall expressly so provide). Any assignment or transfer of all or part of
such Loans and the Registered Note evidencing the same shall be registered on
the Registered Note Register only upon surrender for registration of assignment
or transfer of the Registered Note evidencing such Loans, duly endorsed by (or
accompanied by a written instrument of assignment or transfer duly executed by)
the registered noteholder thereof, and thereupon one or more new Registered
Notes in the same aggregate principal amount shall be issued to the designated
assignee(s) or transferee(s). Prior to the due presentment for registration of
transfer of any Registered Note, the Borrower and the Administrative Agent shall
treat the Person in whose name such Loans and the Registered Note(s) evidencing
the same are registered as the owner thereof for the purpose of receiving all
payments thereon and for all other purposes, notwithstanding any notice to the
contrary. The Registered Note Register shall be available for inspection by the
Borrower and any Lender at any reasonable time upon reasonable prior notice.
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(i) The Borrower will not become a party to any loan agreement, credit
agreement or similar agreement which restricts or prohibits the right or ability
of any lender which is a party thereto to become a Lender under this Agreement.
(j) Upon the initial assignment by Nortel Networks as Assigning Lender
of the entirety of its Commitment (if any) and Loans (if any) hereunder to an
Eligible Assignee (the "Initial Assignment of Commitments and Loans"), the
Administrative Agent shall give the Borrower prompt written notice thereof and
notice that the Applicable Margin and the Applicable Commitment Fee Rate shall
be adjusted as provided herein. In connection with the Initial Assignment of
Commitments and Loans, Nortel Networks shall offer not less than the entirety of
its Commitment (if any) and Loans (if any) hereunder to one or more Eligible
Assignees under bidding procedures determined by Nortel Networks in its sole
discretion. Such offer shall provide the opportunity for the offeree to select
an Applicable Margin and an Applicable Commitment Fee Rate of less than the
maximum rates therefor specified herein which are applicable from and after the
date of the Initial Assignment of Commitments and Loans. In the event that any
offeree accepts (which offeree shall be the initial offeree so accepting if more
than one offeree so accepts) an Applicable Margin and an Applicable Commitment
Fee Rate of less than the maximum rates therefor specified herein which are
applicable from and after the date of the Initial Assignment of Commitments and
Loans (each a "Market Clearing Rate"), each of the Applicable Margin and the
Applicable Commitment Fee Rate shall be adjusted to the applicable Market
Clearing Rate with respect to all Loans then or thereafter outstanding;
provided, however, that in no event shall the Applicable Margin or the
Applicable Commitment Fee Rate be reduced below the Applicable Margin and the
Applicable Commitment Fee Rate, respectively, in effect as of the Effective
Date.
Section 12.9 Survival. All representations and warranties made or deemed
made in this Agreement or any other Loan Document or in any document, statement
or certificate furnished in connection with this Agreement shall survive the
execution and delivery of this Agreement and the other Loan Documents and the
making of the Loans, and no investigation by the Administrative Agent or any
Lender or any closing shall affect the representations and warranties or the
right of the Administrative Agent or any Lender to rely upon them. Without
prejudice to the survival of any other obligation of the Borrower hereunder, the
obligations of the Borrower under Article 4 and Sections 12.1 and 12.2 shall
survive repayment of the Loans and the Reimbursement Obligations and the other
Obligations.
Section 12.10 ENTIRE AGREEMENT. THIS AGREEMENT, THE NOTES AND THE OTHER
LOAN DOCUMENTS REFERRED TO HEREIN EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE
PARTIES HERETO AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, TERM SHEETS,
AGREEMENTS, REPRESENTATIONS AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL,
RELATING TO THE SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
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AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS AMONG THE PARTIES HERETO.
Section 12.11 Amendments. No amendment or waiver of any provision of this
Agreement, the Notes or any other Loan Document to which the Borrower is a
party, nor any consent to any departure by the Borrower therefrom, shall in any
event be effective unless the same shall be agreed or consented to by the
Required Lenders and the Borrower in writing, and each such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given; provided, however, that no amendment, waiver or consent shall,
unless in writing and signed by all of the Lenders and the Borrower, do any of
the following: (a) increase the Commitments of the Lenders (or any Lender) or
subject the Lenders to any additional obligations; (b) reduce the principal of,
or interest on, the Loans or any fees or other amounts payable hereunder; (c)
postpone any date fixed for any payment (including, without limitation, any
mandatory prepayment) of principal of, or interest on, the Loans or any fees or
other amounts payable hereunder; (d) change the Commitment Percentages or the
aggregate unpaid principal amount of the Loans or the number or interests of the
Lenders which shall be required for the Lenders or any of them to take any
action under this Agreement; (e) change any provision contained in Section 3.2,
3.3 or 5.1 or this Section 12.11 or modify the definition of "Required Lenders"
contained in Section 1.1; or (f) except as expressly authorized by this
Agreement, release any Collateral from any of the Liens created by the Security
Documents; and provided further, however, that no amendment, waiver or consent
relating to Sections 11.1, 11.2, 11.3, 11.4 or 11.5 shall require the agreement
of the Borrower. Notwithstanding anything to the contrary contained in this
Section 12.11, no amendment, waiver or consent shall be made with respect to (i)
Article 11 hereof without the prior written consent of the Administrative Agent,
(ii) the definition of "Eligible Third-Party Expenses", "Maximum Financed Amount
of Eligible Third-Party Expenses", "Master Purchase Agreement", "Nortel Networks
Equipment", "Nortel Networks Goods and Services" or "Nortel Networks Software"
or Section 2.5, 2.9 or 2.10 hereof without the prior written consent of Nortel
Networks (whether or not Nortel Networks is then a Lender hereunder), or (iii)
any condition precedent set forth in Article 6 with respect to the making of any
Loans without the prior written consent of the Lenders that hold, at the time of
such amendment, waiver or consent, at least a majority (in Dollar amount) of the
Commitments.
Section 12.12 Maximum Interest Rate.
(a) No interest rate specified in this Agreement or any other Loan
Document shall at any time exceed the Maximum Rate. If at any time the interest
rate (the "Contract Rate") for any Obligation shall exceed the Maximum Rate,
thereby causing the interest accruing on such Obligation to be limited to the
Maximum Rate, then any subsequent reduction in the Contract Rate for such
Obligation shall not reduce the rate of interest on such Obligation below the
Maximum Rate until the aggregate amount of interest accrued on such Obligation
equals the aggregate amount of interest which would have accrued on such
Obligation if the Contract Rate for such Obligation had at all times been in
effect.
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(b) Notwithstanding anything to the contrary contained in this
Agreement or the other Loan Documents, none of the terms and provisions of this
Agreement or the other Loan Documents shall ever be construed to create a
contract or obligation to pay interest at a rate in excess of the Maximum Rate;
and neither the Administrative Agent nor any Lender shall ever charge, receive,
take, collect, reserve or apply, as interest on the Obligations, any amount in
excess of the Maximum Rate. The parties hereto agree that any interest, charge,
fee, expense or other obligation provided for in this Agreement or in the other
Loan Documents which constitutes interest under applicable law shall be, ipso
facto and under any and all circumstances, limited or reduced to an amount equal
to the lesser of (i) the amount of such interest, charge, fee, expense or other
obligation that would be payable in the absence of this Section 12.12(b) or (ii)
an amount, which when added to all other interest payable under this Agreement
and the other Loan Documents, equals the Maximum Rate. If, notwithstanding the
foregoing, the Administrative Agent or any Lender ever contracts for, charges,
receives, takes, collects, reserves or applies as interest any amount in excess
of the Maximum Rate, such amount which would be deemed excessive interest shall
be deemed a partial payment or prepayment of principal of the Obligations and
treated hereunder as such; and if the Obligations, or applicable portions
thereof, are paid in full, any remaining excess shall promptly be paid to the
Borrower. In determining whether the interest paid or payable, under any
specific contingency, exceeds the Maximum Rate, the Borrower, the Administrative
Agent and the Lenders shall, to the maximum extent permitted by applicable law,
(i) characterize any nonprincipal payment as an expense, fee or premium rather
than as interest, (ii) exclude voluntary prepayments and the effects thereof,
and (iii) amortize, prorate, allocate and spread in equal or unequal parts the
total amount of interest throughout the entire contemplated term of the
Obligations, or applicable portions thereof, so that the interest rate does not
exceed the Maximum Rate at any time during the term of the Obligations; provided
that, if the unpaid principal balance is paid and performed in full prior to the
end of the full contemplated term thereof, and if the interest received for the
actual period of existence thereof exceeds the Maximum Rate, the Administrative
Agent and/or the Lenders, as appropriate, shall refund to the Borrower the
amount of such excess and, in such event, the Administrative Agent and the
Lenders shall not be subject to any penalties provided by any laws for
contracting for, charging, receiving, taking, collecting, reserving or applying
interest in excess of the Maximum Rate.
(c) Pursuant to Article 15.10(b) of Chapter 15, Subtitle 79, Revised
Civil Statutes of Texas 1925, as amended, the Borrower agrees that such Chapter
15 (which regulates certain revolving credit loan accounts and revolving
tri-party accounts) shall not govern or in any manner apply to the Obligations.
Section 12.13 Notices. All notices and other communications provided for
in this Agreement and the other Loan Documents to which the Borrower is a party
shall be given or made by telecopy or in writing and telecopied, mailed by
certified mail return receipt requested or delivered to the intended recipient
at the "Address for Notices" specified below its name on the signature pages
hereof (or, with respect to a Lender that becomes a party to this Agreement
pursuant to an assignment made in accordance with Section 12.8, in the
Assignment and Acceptance executed by it); or, as to any party, at such other
address as shall be designated by such party in a notice to
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each other party given in accordance with this Section 12.13. Except as
otherwise provided in this Agreement, all such communications shall be deemed to
have been duly given when transmitted by telecopy or personally delivered or, in
the case of a mailed notice, upon receipt, in each case given or addressed as
aforesaid; provided, however, that notices to the Administrative Agent shall be
deemed given when received by the Administrative Agent.
Section 12.14 GOVERNING LAW; SUBMISSION TO JURISDICTION; SERVICE OF
PROCESS. EXCEPT AS MAY BE EXPRESSLY STATED TO THE CONTRARY IN CERTAIN LOAN
DOCUMENTS, THIS AGREEMENT, THE NOTES AND THE OTHER LOAN DOCUMENTS SHALL BE
GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK
(WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES) AND EACH OF THE PARTIES HERETO
CHOOSE THE LAWS OF THE STATE OF NEW YORK TO GOVERN THIS AGREEMENT PURSUANT TO
N.Y. GEN. OBLIG. LAW SECTION 5-1401 (CONSOL. 1995) AND APPLICABLE LAWS OF THE
U.S. THE BORROWER HEREBY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF EACH OF
(1) THE U.S. DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK, (2) ANY NEW
YORK STATE COURT SITTING IN NEW YORK, NEW YORK, (3) THE U.S. DISTRICT COURT FOR
THE NORTHERN DISTRICT OF TEXAS, AND (4) ANY TEXAS STATE COURT SITTING IN DALLAS
COUNTY, TEXAS, FOR THE PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR
RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY. THE BORROWER HEREBY IRREVOCABLY CONSENTS TO THE
SERVICE OF ANY AND ALL PROCESS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING
OF COPIES OF SUCH PROCESS TO SUCH PERSON AT ITS ADDRESS SET FORTH UNDERNEATH ITS
SIGNATURE HERETO. THE BORROWER HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT
PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING
OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT
ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT
FORM.
Section 12.15 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 12.16 Severability. Any provision of this Agreement held by a
court of competent jurisdiction to be invalid or unenforceable shall not impair
or invalidate the remainder of this Agreement and the effect thereof shall be
confined to the provision held to be invalid or illegal.
Section 12.17 Headings. The headings, captions and arrangements used in
this Agreement are for convenience only and shall not affect the interpretation
of this Agreement.
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Section 12.18 Construction. The Borrower, the Administrative Agent and
each Lender acknowledges that it has had the benefit of legal counsel of its own
choice and has been afforded an opportunity to review this Agreement and the
other Loan Documents with its legal counsel and that this Agreement and the
other Loan Documents shall be construed as if jointly drafted by the parties
hereto.
Section 12.19 Independence of Covenants. All covenants hereunder shall be
given independent effect so that if a particular action or condition is not
permitted by any of such covenants, the fact that it would be permitted by an
exception to, or be otherwise within the limitations of, another covenant shall
not avoid the occurrence of a Default if such action is taken or such condition
exists.
Section 12.20 Confidentiality. Each Lender agrees to exercise its best
efforts to keep any information delivered or made available by the Borrower to
it which is clearly indicated to be confidential information, confidential from
anyone other than Persons employed or retained by such Lender who are or are
expected to become engaged in evaluating, approving, structuring or
administering the Loans; provided that nothing herein shall prevent any Lender
from disclosing such information (a) to any other Lender, (b) to any Person if
reasonably incidental to the administration of the Loans, (c) upon the order of
any court or administrative agency, (d) upon the request or demand of any
regulatory agency or authority having jurisdiction over such Lender, (e) which
has been publicly disclosed, (f) in connection with any litigation to which the
Administrative Agent, any Lender or their respective Affiliates may be a party,
(g) to the extent reasonably required in connection with the exercise of any
right or remedy under the Loan Documents, (h) to such Lender's legal counsel,
independent auditors and affiliates, and (i) to any actual or proposed
participant or Assignee of all or part of its rights hereunder, so long as such
actual or proposed participant or Assignee agrees to be bound by the provisions
of this Section 12.20.
Section 12.21 WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT PERMITTED BY
APPLICABLE LAW, EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND EXPRESSLY
WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM
(WHETHER BASED UPON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO
ANY OF THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY OR THE
ACTIONS OF THE BORROWER, THE ADMINISTRATIVE AGENT OR ANY LENDER IN THE
NEGOTIATION, ADMINISTRATION OR ENFORCEMENT THEREOF.
Section 12.22 Approvals and Consent. Except as may be expressly provided
to the contrary in this Agreement or in the other Loan Documents (as
applicable), in any instance under this Agreement of the other Loan Documents
where the approval, consent or exercise of judgment of the Administrative Agent
or any Lender is requested or required, (a) the granting or denial of such
approval or consent and the exercise of such judgment shall be within the sole
discretion of the Administrative Agent or such Lender, respectively, and the
Administrative Agent and such Lender shall not, for any reason or to any extent,
be required to grant such approval or consent or to exercise
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such judgment in any particular manner, regardless of the reasonableness of the
request or the action or judgment of the Administrative Agent or such Lender,
and (b) no approval or consent of the Administrative Agent or any Lender shall
in any event be effective unless the same shall be in writing and the same shall
be effective only in the specific instance and for the specific purpose for
which given.
Section 12.23 Service of Process. The Borrower irrevocably consents to
the service of process by the mailing thereof by the Administrative Agent or the
Required Lenders by registered or certified mail, postage prepaid, to the
Borrower at its address listed on the signature pages hereof. Nothing in this
Section 12.23 shall affect the right of the Administrative Agent or the Lenders
to serve legal process in any other manner permitted by law or affect the right
of the Administrative Agent or any Lender to bring any action or proceeding
against the Borrower or its Property in the court of any jurisdiction.
Section 12.24 Amendment and Restatement. Effective as of the Effective
Date, this Agreement shall constitute an amendment and restatement of all, but
not an extinguishment, discharge, satisfaction or novation of any, indebtedness,
liabilities and/or obligations (including, without limitation, the Obligations)
of the Loan Parties under the Original Credit Agreement.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement
as of the day and year first above written.
NET2000 COMMUNICATIONS GROUP, INC.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Chief Financial Officer
Address for Notices:
--------------------
▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Chief Financial Officer
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ADMINISTRATIVE AGENT:
---------------------
NORTEL NETWORKS INC., as Administrative
Agent
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Director, Customer Finance
Address for Notices:
--------------------
Nortel Networks Inc.
▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Vice President, Finance
Carrier Packet Networks,
Finance
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
Nortel Networks Inc.
GMS 991 15 A40
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Vice President,
Customer Finance North
America
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
Nortel Networks Inc.
▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Mail Stop 04D/02/A40
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇,
Loan Administration
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
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LENDERS:
--------
NORTEL NETWORKS INC.
Commitment: $75,000,000
----------
By: /s/ ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Director, Customer Finance
Address for Notices:
--------------------
Nortel Networks Inc.
▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Vice President, Finance
Carrier Packet Networks
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
Nortel Networks Inc.
GMS 991 15 A40
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Vice President,
Customer Finance North
America
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
Nortel Networks Inc.
▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Mail Stop 04D/02/A40
Attention:
▇▇▇▇▇▇▇▇ ▇▇▇, Loan Administration
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
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Lending Office for Prime Rate Loans:
------------------------------------
Nortel Networks Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Lending Office for Eurodollar Loans:
------------------------------------
Nortel Networks Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇.
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
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