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Exhibit 10.16
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METROMEDIA FIBER NETWORK SERVICES, INC.
$231,036,842.00
14.0% TERM NOTES DUE 2007
NOTE AGREEMENT
dated as of September 19, 2001
NORTEL NETWORKS INC.,
as Administrative Agent
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TABLE OF CONTENTS
This Table of Contents is not part of the Agreement to which it is
attached but is inserted for convenience of reference only.
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PAGE
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ARTICLE I - DEFINITIONS AND ACCOUNTING TERMS.....................................................1
Section 1.01. Certain Defined Terms.................................................1
Section 1.02. Computation of Time Periods..........................................24
Section 1.03. Accounting Terms; Changes in GAAP....................................24
Section 1.04. Extended Meanings....................................................24
Section 1.05. References to Administrative Agent, Purchasers or Holders............24
Section 1.06. Conflict with Security Documents.....................................24
Section 1.07. Non-Business Days....................................................25
Section 1.08. References to Time of Day............................................25
Section 1.09. Severability.........................................................25
Section 1.10. References to Statutes...............................................25
Section 1.11. References to Agreements.............................................25
ARTICLE II - AMOUNTS AND TERMS OF THE NOTES.....................................................25
Section 2.01. The Notes............................................................25
Section 2.02. Repayment............................................................26
Section 2.03. Redemptions; Etc.....................................................26
Section 2.04. Interest.............................................................29
Section 2.05. Payments and Computations............................................29
Section 2.06. Taxes................................................................30
Section 2.07. Sharing of Payments, Etc.............................................32
Section 2.08. No Force Majeure, Disputes...........................................33
ARTICLE III - CONDITIONS OF CLOSING.............................................................33
Section 3.01. Issuance.............................................................33
Section 3.02. Additional Conditions................................................38
Section 3.03. Determinations under Section 3.01 and Section 3.02...................38
Section 3.04. Waiver of Conditions Precedent by the Administrative Agent...........38
ARTICLE IV - REPRESENTATIONS AND WARRANTIES.....................................................38
Section 4.01. Representations and Warranties of the Issuer.........................38
Section 4.02. Representations and Warranties of the Purchasers.....................47
ARTICLE V - AFFIRMATIVE COVENANTS...............................................................47
Section 5.01. Financial Statements, Reports, etc...................................47
Section 5.02. Other Notices........................................................49
Section 5.03. Existence; Businesses and Properties.................................50
Section 5.04. Collateral Security; Further Assurances..............................51
Section 5.05. Maintaining Records; Access to Properties and Inspections............51
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Section 5.06. Compliance with Terms of Private Licenses............................51
Section 5.07. Obligations and Taxes................................................51
Section 5.08. Employee Benefits....................................................52
Section 5.09. Insurance............................................................52
Section 5.10. Franchises...........................................................53
Section 5.11. Licenses.............................................................53
Section 5.12. Use of Proceeds......................................................53
Section 5.13. Terms of Certain Other Debt Agreements...............................53
Section 5.14. Non-Consolidation....................................................54
Section 5.15. Meetings with Senior Executives. ...................................54
ARTICLE VI - NEGATIVE COVENANTS.................................................................54
Section 6.01. Indebtedness.........................................................54
Section 6.02. Unrestricted Subsidiaries............................................60
Section 6.03. Sale and Lease-Back Transactions.....................................61
Section 6.04. Investments and Contingent Investments...............................62
Section 6.05. Mergers, Consolidations, Asset Sales and Acquisitions................64
Section 6.06. Restricted Payments..................................................66
Section 6.07. Restrictive Agreements...............................................67
Section 6.08. Repayment of Indebtedness............................................68
Section 6.09. Transactions with Affiliates.........................................68
Section 6.10. Lines of Business....................................................69
Section 6.11. Modifications to Certain Agreements..................................69
Section 6.12. Financial Covenants..................................................70
ARTICLE VII - EVENTS OF DEFAULT.................................................................73
ARTICLE VIII - THE ADMINISTRATIVE AGENT.........................................................76
Section 8.01. Authorization and Action.............................................76
Section 8.02. Administrative Agent's Reliance, Etc.................................77
Section 8.03. Rights as a Holder...................................................77
Section 8.04. Holder Financial Decision............................................77
Section 8.05. Indemnification......................................................77
Section 8.06. Collateral Duties....................................................78
Section 8.07. Successor Administrative Agent.......................................78
Section 8.08. Administrative Agent's Fee...........................................79
ARTICLE IX - THE INTERCREDITOR AGREEMENT........................................................79
ARTICLE X - MISCELLANEOUS.......................................................................79
Section 10.01. Amendments, Consents, Etc............................................79
Section 10.02. Notices, Etc.........................................................81
Section 10.03. No Waiver; Remedies..................................................82
Section 10.04. Costs, Expenses and Indemnification..................................82
Section 10.05. Right of Setoff......................................................83
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Section 10.06. Governing Law; Submission to Jurisdiction, Etc.......................83
Section 10.07. Waiver of Jury Trial.................................................83
Section 10.08. Successors, Assigns and Transfers....................................84
Section 10.09. Transfer, Registration, Participations and Substitution of Notes.....84
Section 10.10. Execution in Counterparts............................................87
Section 10.11. Confidentiality......................................................87
Section 10.12. Survival and Termination.............................................88
Section 10.13. Captions.............................................................89
Section 10.14. Authorization to File Financing Statements...........................89
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SCHEDULES
Schedule 2.01 - Information Relating to the Purchasers
Schedule 4.01(e) - List of Required Governmental Approvals
Schedule 4.01(i) - Subsidiaries and other Equity Investments
Schedule 4.01(k) - Material Agreements
Schedule 4.01(r) - Insurance
Schedule 4.01(t) - Licenses
Schedule 4.01(u) - Franchises
Schedule 4.01(v) - Real Property and Leases
Schedule 6.05 - Investments
EXHIBITS
EXHIBIT A - Form of Term Note
EXHIBIT B-1 - Form of Security Agreement
EXHIBIT B-2 - Form of Intercreditor Agreement
EXHIBIT C - Form of Opinion of Special Counsel to Holdings and
the Issuer
EXHIBIT D - Form of Transfer and Acceptance
EXHIBIT E - Form of Warrant Agreement
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METROMEDIA FIBER NETWORK SERVICES, INC.
$231,036,842.00 14.0% Term Notes Due 2007
As of September 19, 2001
TO EACH OF THE PURCHASERS
LISTED ON SCHEDULE 2.01:
METROMEDIA FIBER NETWORK SERVICES, INC., a Delaware corporation (the
"ISSUER"), hereby agrees with each of the purchasers whose names appear on
SCHEDULE 2.01 (each a "PURCHASER" and, collectively, the "PURCHASERS") and
Nortel Networks Inc., as administrative agent (in such capacity, together with
its successors in such capacity, the "ADMINISTRATIVE AGENT"), as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1. CERTAIN DEFINED TERMS. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"ACCOUNTANTS" means Ernst & Young LLP or other independent public
accountants selected by the Issuer and satisfactory to the Administrative Agent.
"ACQUIRED INDEBTEDNESS" means, with respect to any specified Person,
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, PROVIDED
that such Indebtedness is not incurred in connection with, or in contemplation
of, such other Person merging with or into or becoming a Subsidiary of, such
specified Person.
"ACQUISITION" means any transaction, or any series of related
transactions, consummated after the date hereof, by which (a) Holdings and/or
any of its Subsidiaries acquires the business of, or all or substantially all of
the assets of, any firm, corporation or division thereof, whether through
purchase of assets, purchase of stock, merger or otherwise or (b) any Person
that was not theretofore a Subsidiary of Holdings becomes a Subsidiary of
Holdings.
"ADJUSTED EBITDA" means, for any period, the sum (for Holdings and its
Restricted Subsidiaries determined on a consolidated basis without duplication
in accordance with GAAP) of the following:
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(a) Net Income for such period, adjusted to exclude any gains
or losses attributable to any Asset Sale or Casualty Event; PLUS ----
(b) the sum of (i) depreciation and amortization, but
excluding amortization of prepaid cash expenses that were paid in a
prior period, for such period, (ii) consolidated interest expense for
such period and (iii) consolidated income tax expense for such period;
PLUS
(c) any non-cash charges, but excluding any non-cash expense
or loss to the extent it represents an accrual of or reserve for cash
expenses in any future period or amortization of a prepaid cash expense
that was paid in a prior period, for such period (or MINUS, any cash or
non-cash gains for such period); PLUS
(d) the net amount, if any, by which the consolidated deferred
revenues increased for such period (or MINUS the amount, if any, by
which the consolidated deferred revenues of decreased for such period);
MINUS
(e) cash payments made during such period which were not
deducted in determining Net Income for such period but that were (or
will be) a non-cash charge deducted in determining Net Income for a
prior (or subsequent) fiscal year; MINUS
(f) the aggregate amount of interest income for such period.
If during any period for which Adjusted EBITDA is being determined Holdings or
any Restricted Subsidiary shall have consummated any Acquisition or Asset Sale
then, for all purposes of this Agreement, Adjusted EBITDA shall be determined on
a pro forma basis (using assumptions that Holdings in good faith believes are
fair, accurate and reasonable at the time, and in which assumptions the Holdings
Notes Agent concurs) as if such Acquisition or Asset Sale had been made or
consummated on the first day of such period.
"ADMINISTRATIVE AGENT" has the meaning specified in the recital of
parties to this Agreement.
"ADMINISTRATIVE AGENT'S ACCOUNT" means the account of the
Administrative Agent maintained by the Administrative Agent at Bank One,
Chicago, Illinois, for the account of Nortel Networks Inc., Account No. 5107520,
ABA #071000013 (or his or her successor), or such other account maintained by
the Administrative Agent as may be designated by the Administrative Agent in a
written notice to the Holders and the Issuer.
"ADMINISTRATIVE QUESTIONNAIRE" means an administrative questionnaire in
a form supplied by the Administrative Agent or, in the case of the
administrative questionnaire relating to Nortel Networks, information in
whatever form supplied by Nortel Networks to the Administrative Agent on or
about the Closing Date.
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"AFFILIATE" means, when used with respect to a specified Person,
another Person that directly, or indirectly through one or more intermediaries,
Controls or is Controlled by or is under common Control with the Person
specified.
"AGREEMENT" means this Note Agreement.
"ASSET SALE" means (a) the sale, lease, transfer, conveyance or other
disposition of any assets or rights (including, without limitation, by way of a
sale and leaseback) other than sales of inventory in the ordinary course of
business and other than any sale, lease, transfer, conveyance or other
disposition in the ordinary course of business of capacity on any fiber optic or
cable system owned, controlled or operated by Holdings or any Restricted
Subsidiary or of telecommunications capacity, transmission rights, conduit or
rights-of-way acquired by Holdings or any Restricted Subsidiary for use in a
Telecommunications Business of Holdings or any Restricted Subsidiary, and (b)
the issue or sale by Holdings or any of its Restricted Subsidiaries of Equity
Interests of any Subsidiary. Notwithstanding the foregoing, the following items
shall not be deemed to be Asset Sales: (i) a transfer of assets by Holdings to a
Restricted Subsidiary or by a Subsidiary to Holdings or to a Restricted
Subsidiary, other than a transfer of assets by the Issuer to Holdings or to a
Restricted Subsidiary (which transfers by the Issuer shall not be excluded from
the definition of the term "Asset Sale"), (ii) an issuance of Equity Interests
by a Subsidiary to Holdings or to a Restricted Subsidiary, (iii) Restricted
Payments permitted under SECTION 6.07, (iv) Investments permitted under SECTION
6.05, (v) a disposition of obsolete or worn out equipment or equipment that is
no longer useful in the conduct of a Telecommunications Business of Holdings and
its Restricted Subsidiaries and that is disposed of in the ordinary course of
business with an aggregate fair market value (as to all such dispositions) not
to exceed $5,000,000, (vi) the surrender or waiver by Holdings or any of its
Restricted Subsidiaries of contract rights or the settlement, release or
surrender of contract, tort or other claims of any kind by Holdings or any of
its Restricted Subsidiaries or the grant by Holdings or any of its Restricted
Subsidiaries of a Lien not prohibited by this Agreement, (vii) the sale of Cash
Equivalents in the ordinary course of business and (viii) sales, transfers,
assignments and other dispositions of assets (or related assets in related
transactions) in the ordinary course of business with an aggregate fair market
value of less than $1,000,000.
"ATTRIBUTABLE DEBT" means, on any date, in respect of any lease of the
Issuer entered into as a part of a sale and leaseback transaction described in
SECTION 6.04, (a) if such lease is a Capital Lease Obligation, the capitalized
amount thereof that would appear on a balance sheet of the Issuer prepared as of
such date in accordance with GAAP, and (b) if such lease is not a Capital Lease
Obligation, the capitalized amount of the remaining lease payments under such
lease that would appear on a balance sheet of the Issuer prepared as of such
date in accordance with GAAP as if such lease were accounted for as a Capital
Lease Obligation.
"BANKRUPTCY CODE" means Title 11 of the United States Code, as from
time to time amended.
"BASIC DOCUMENTS" means, collectively, the Note Documents, the Holdings
Notes Documents, the Vendor Agreements, the Verizon Agreement, the Verizon Debt
Agreement and the Holdings Convertible Debt or Equity Documents.
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"BUSINESS DAY" means any day on which banks are not required or
authorized to close in New York City, New York.
"CAPITAL EXPENDITURES" means, for any period, expenditures of Holdings
and its Restricted Subsidiaries incurred during such period to construct,
install, acquire or improve fixed assets, real property, telecommunications
systems and equipment (including renewals, improvements and replacements, but
excluding repairs unless such repairs are required to be capitalized in
accordance with GAAP) during such period computed in accordance with GAAP, but
excluding any such expenditures in connection with any Acquisition and any
expenditures made with the proceeds of condemnation awards or insurance for
fixed assets, real property or improvements thereon and telecommunications
systems and equipment.
"CAPITAL LEASE OBLIGATIONS" of any Person means, for any period, the
obligations (including the aggregate amount of Capital Lease Obligations
incurred during such period) of such Person to pay rent or other amounts under
any lease of (or other arrangement conveying the right to use) real or personal
property, or a combination thereof, which obligations are required to be
classified and accounted for as capital leases on a balance sheet of such Person
under GAAP, and the amount of such obligations shall be the capitalized amount
thereof determined in accordance with GAAP.
"CAPITAL STOCK" means (a) in the case of a corporation, corporate
stock, (b) in the case of an association or business entity, any and all shares,
interests, participations, rights or other equivalents (however designated) of
corporate stock, (c) in the case of a partnership or limited liability company,
partnership or membership interests (whether general or limited) and (d) any
other interest or participation that confers on a Person the right to receive a
share of the profits and losses of, or distributions of assets of, the issuing
Person.
"CASH EQUIVALENTS" means:
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States
(or by any agency thereof to the extent such obligations are backed by
the full faith and credit of the United States), in each case maturing
within one year from the date of acquisition thereof;
(b) investments in commercial paper maturing within 270 days
from the date of acquisition thereof and having, at such date of
acquisition, one of the two highest credit ratings obtainable from
Standard & Poor's or from Moody's;
(c) investments in certificates of deposit, banker's
acceptances, time deposits and demand deposits maturing within one year
from the date of acquisition thereof issued or guaranteed by or placed
with, and money market deposit accounts issued or offered by, any
domestic or foreign commercial bank that has a combined capital and
surplus and undivided profits of not less than $1,000,000,000;
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(d) repurchase obligations with a term of not more than 90
days for, and secured by, underlying securities of the types described
in CLAUSES (A) through (C) above entered into with a bank meeting the
qualifications described in CLAUSE (C) above; and
(e) mutual funds whose investment guidelines restrict such
funds' investments primarily to those satisfying the provisions of
CLAUSES (A) through (C) above.
"CASH INTEREST EXPENSE" means, for any period, the sum (for Holdings
and its Restricted Subsidiaries determined on a consolidated basis without
duplication in accordance with GAAP), of the excess of (a) the sum of (i) all
interest expense (including imputed interest expense in respect of Capital Lease
Obligations) for such period, PLUS (ii) any interest accrued during such period
in respect of Indebtedness that is required to be capitalized rather than
included in consolidated interest expense for such period, PLUS (iii) any cash
payments made during such period in respect of obligations referred to in CLAUSE
(B) below that were amortized or accrued in a previous period, PLUS (iv) the
aggregate amount of regularly scheduled dividends and distributions in cash made
during such period in respect of Capital Stock MINUS (b) the sum of (i) to the
extent included in such consolidated interest expense for such period, non-cash
amounts attributable to amortization of financing costs paid in a previous
period, PLUS (ii) to the extent included in such consolidated interest expense
for such period, non-cash amounts attributable to amortization of debt discounts
or accrued interest payable in kind for such period. For purposes of the
foregoing, (A) Cash Interest Expense shall be determined taking into account any
net payments made or received by Holdings or any Restricted Subsidiary under
Interest Rate Protection Agreements and (B) to the extent Cash Interest Expense
for any Indebtedness is being determined for a future period, the applicable
interest rate during such future period shall be deemed to be equal to the rate
of interest in effect at the beginning of such period, and the aggregate amount
of such Indebtedness to be outstanding during such period shall be determined
under the assumption that all regularly scheduled payments of principal (but no
prepayments or redemptions of principal) will be made in respect of such
Indebtedness during such period.
If during any period for which Cash Interest Expense is being
determined Holdings or any Restricted Subsidiary shall have consummated any
Acquisition or Asset Sale then, for all purposes of this Agreement, Cash
Interest Expense shall be determined on a pro forma basis (using assumptions
that Holdings in good faith believes are fair, accurate and reasonable at the
time, and in which assumptions the Administrative Agent concurs) as if such
Acquisition or Asset Sale (and any Indebtedness incurred by Holdings or any
Restricted Subsidiary in connection with such Acquisition or repaid as a result
of such Asset Sale) had been made or consummated (and such Indebtedness incurred
or repaid) on the first day of such period.
"CASUALTY EVENT" means, with respect to any property of any Person, any
loss of or damage to, or any condemnation or other taking of, such property for
which such Person or any of its Restricted Subsidiaries receives insurance
proceeds, proceeds of a condemnation award or other compensation.
"CHANGE OF CONTROL" means the occurrence of any one or more of the
following events:
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(a) any "person" or "group" (as such terms are used in SECTION
13(D)(3) of the Exchange Act), other than a Permitted Holder, is or
becomes the beneficial owner, directly or indirectly, of 35% or more of
the Voting Stock (measured by voting power rather than number of
shares) of Holdings and the Permitted Holders own, in the aggregate, a
lesser percentage of the total Voting Stock (measured by voting power
rather than by number of shares) of Holdings than such person and do
not have the right or ability by voting power, contract or otherwise to
elect or designate for election a majority of the Board of Directors of
Holdings (for the purposes of this clause, such other person shall be
deemed to "beneficially own" any Voting Stock of a specified
corporation held by a parent corporation if such other person
beneficially owns, directly or indirectly, more than 35% of the Voting
Stock (measured by voting power rather than by number of shares) of
such parent corporation and the Permitted Holders beneficially own,
directly or indirectly, in the aggregate a lesser percentage of Voting
Stock (measured by voting power rather than by number of shares) of
such parent corporation and do not have the right or ability by voting
power, contract or otherwise to elect or designate for election a
majority of the Board of Directors of such parent corporation);
(b) during any period of two consecutive years, Continuing
Directors cease for any reason to constitute a majority of the Board of
Directors of Holdings;
(c) any change in control (or similar event, however
denominated) with respect to Holdings shall occur under and as defined
in any indenture or agreement in respect of Indebtedness of Holdings or
any of its Restricted Subsidiaries (including a "Change of Control"
applicable to any of the Holdings Senior Notes) and Holdings shall, as
a result thereof, be required to repay, redeem or repurchase all or any
part of such Indebtedness (or offer to do any of the foregoing), or
such change of control shall constitute a default under any such
indenture or agreement; or
(d) the Issuer shall at any time cease to be a Wholly Owned
Subsidiary of Holdings.
"CITICORP USA" means Citicorp USA, Inc., a Delaware corporation.
"CLOSING DATE" means the date upon which the conditions specified in
SECTION 3.01 and SECTION 3.02 are satisfied (or waived by the Administrative
Agent) and the initial Notes are issued hereunder.
"CODE" means the Internal Revenue Code of 1986, as amended from time to
time, and the regulations promulgated and rulings issued thereunder.
"COLLATERAL" means all "Collateral" referred to in the Security
Documents and all other property that is subject to any Lien created by any
Security Document in favor of the Administrative Agent.
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"COMMITMENT" with respect to each Purchaser, the commitment of each
Purchaser to purchase a Note on the Closing Date. The amount of each Purchaser's
Commitment is set forth on SCHEDULE 2.01, or in the Transfer and Acceptance
pursuant to which such Purchaser shall have assumed its Commitment, as
applicable. The aggregate amount of the Purchasers' Commitments is
$231,036,842.00.
"CONFIDENTIAL INFORMATION" means any information that Holdings or any
of its Restricted Subsidiaries furnishes to the Administrative Agent or any
Holder, but does not include any such information once such information has
become generally available to the public or once such information has become
available to the Administrative Agent or any Holder from a source other than
Holdings or any of its Restricted Subsidiaries (unless, in either case, such
information becomes so available as a result of the breach by the Administrative
Agent or a Holder of its duty of confidentiality set forth in SECTION 10.11).
"CONSOLIDATING FINANCIAL STATEMENTS" means, as at the end of and for
any period, separately presented financial statements for the optical
infrastructure business and the internet infrastructure services business of
Holdings and its Subsidiaries, setting out the revenues, gross margins and
property, plant and equipment for each such business as at the end of and for
such period.
"CONTINUING DIRECTORS" means individuals who at the beginning of the
period of determination constituted the Board of Directors of Holdings, together
with any new directors whose election by such Board of Directors or whose
nomination for election by the shareholders of Holdings was approved by a vote
of a majority of the directors of Holdings then still in office who were either
directors at the beginning of such period or whose election or nomination for
election was previously so approved or is the designee of any one of the
Permitted Holders or any combination thereof or was nominated or elected by any
such Permitted Holder(s) or any of their designees.
"CONTRIBUTED CAPITAL" means, as at any date, the sum (determined
without duplication) of (a) $2,820,001,000 PLUS (b) the net cash proceeds
received by Holdings after December 31, 2000 in respect of the issuance and sale
of Capital Stock (other than Disqualified Stock) of Holdings, or from the
conversion of Indebtedness of Holdings into Capital Stock (other than
Disqualified Stock) of Holdings, plus (c) the aggregate amount deemed to have
been received by Holdings at the time of conversion of any Indebtedness of
Holdings into Capital Stock (other than Disqualified Stock) of Holdings
representing the principal amount of such Indebtedness so converted and any
accrued and unpaid interest thereon which is forfeited in connection with such
conversion, MINUS (d) the aggregate amount of Restricted Payments made in
respect of the Capital Stock of Holdings after December 31, 2000.
"CONTROL" means the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of a Person, whether
through the ownership of voting securities, by contract or otherwise, and the
terms "CONTROLLING" and "CONTROLLED" shall have meanings correlative thereto.
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"CONTROLLED GROUP" means all members of a controlled group of
corporations and all members of a controlled group of trades or businesses
(whether or not incorporated) under common control which, together with
Holdings, are treated as a single employer under Section 414(b) or 414(c) of the
Code or Section 4001 of ERISA.
"DATA CENTER" means a co-location facility where entities are able to
transfer electronic data among themselves and with other parties outside such
facility.
"DEBT SERVICE" means, for any period, the sum of, for Holdings and its
Restricted Subsidiaries (determined on a consolidated basis without duplication
in accordance with GAAP), the following: (a) all regularly scheduled payments or
regularly scheduled prepayments or redemptions of principal of Indebtedness
(including, without limitation, the principal component of any payments in
respect of Capital Lease Obligations) made or payable during such period (or, in
the event the relevant period is a future period, scheduled to be made during
such period) PLUS (b) all Cash Interest Expense for such period.
"DEFAULT" means any Event of Default or any event that would constitute
an Event of Default but for the requirement that notice be given or time elapse
or both.
"DISQUALIFIED STOCK" means any Capital Stock or other ownership
interest that, by its terms (or by the terms of any security into which it is
convertible, or for which it is exchangeable, in each case at the option of the
holder thereof), or upon the happening of any event, (a) matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
redeemable at the option of the holder thereof, in whole or in part, on or prior
to the date that is 91 days after the maturity of the Holdings Senior Notes, (b)
is secured by any assets of Holdings or any Restricted Subsidiary or is
Guaranteed by any Restricted Subsidiary or (c) is exchangeable or convertible at
the option of the holder into Indebtedness of Holdings or any Restricted
Subsidiary. Notwithstanding the preceding sentence, any Capital Stock or other
ownership interest that would constitute Disqualified Stock solely because the
holders thereof have the right to require Holdings to repurchase such Capital
Stock or other ownership interest upon the occurrence of a change of control or
an asset sale shall not constitute Disqualified Stock if the terms of such
Capital Stock or other ownership interest provide that Holdings may not
repurchase or redeem any such Capital Stock or other ownership interest pursuant
to such provisions unless such repurchase or redemption complies with the
provisions of SECTION 6.07.
"DOLLARS" and "$" means lawful money of the United States.
"ELIGIBLE INSTITUTION" means (a) any Holder or any Holder Affiliate,
(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, limited liability company or
other entity) which has been approved by the Administrative Agent as a Holder
under this Agreement, such approval not be unreasonably withheld or delayed, or
(c) any fund or other Person which is engaged in making, purchasing or otherwise
investing in commercial loans;
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PROVIDED, HOWEVER, that Eligible Institution shall not include any Affiliate of
the Issuer without the prior written consent of the Administrative Agent.
"ENVIRONMENTAL LAWS" means all laws, rules, regulations, codes,
ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by any Governmental Authority,
relating in any way to the environment, preservation or reclamation of natural
resources, the management, release or threatened release of any Hazardous
Material or to health and safety matters.
"ENVIRONMENTAL LIABILITY" means any liability, contingent or otherwise
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities, and including any Lien filed against any property
covered by any Senior Security Document or Junior Security Document in favor of
any Governmental Authority), of Holdings or any Restricted Subsidiary directly
or indirectly resulting from or based upon (a) violation of any Environmental
Law, (b) the generation, use, handling, transportation, storage, treatment or
disposal of any Hazardous Materials, (c) exposure to any Hazardous Materials,
(d) the release or threatened release of any Hazardous Materials into the
environment or (e) any contract, agreement or other consensual arrangement
pursuant to which liability is assumed or imposed with respect to any of the
foregoing.
"ENVIRONMENTAL PERMIT" means any permit, approval, authorization,
certificate, registration, license, variance, filing, permission or other
approval required by or from any Government Authority pursuant to any
Environmental Law.
"EQUITY INTERESTS" means shares of Capital Stock and all warrants,
options or other rights to acquire Capital Stock (but excluding any debt
security that is convertible into, or exchangeable for, Capital Stock).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
the same may be amended from time to time.
"ERISA AFFILIATE" means any trade or business (whether or not
incorporated) that, together with Holdings, is treated as a single employer
under Section 414(b) or (c) of the Code, or solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.
"ERISA EVENT" means (a) any "reportable event", as defined in Section
4043 of ERISA or the regulations issued thereunder, with respect to a Plan with
respect to which notice is required to be given to the PBGC; (b) the adoption of
any amendment to a Plan that would require the provision of security pursuant to
Section 401(a)(29) of the Code or Section 307 of ERISA; (c) the existence with
respect to any Plan of an "accumulated funding deficiency" (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (d) the
filing pursuant to Section 412(d) of the Code or Section 303 of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (e) the incurrence of any liability under Title IV of ERISA with respect
to the termination of any Plan or the withdrawal or partial withdrawal of
Holdings or any of its ERISA Affiliates from any Plan or Multiemployer Plan; (f)
the receipt by Holdings or any ERISA Affiliate
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from the PBGC or a plan administrator of any notice relating to the intention to
terminate any Plan or Plans or, in the case of the PBGC, to appoint a trustee to
administer any Plan; (g) the receipt by Holdings or any ERISA Affiliate of any
notice concerning the imposition of Withdrawal Liability or a determination that
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA; (h) the occurrence of a "prohibited
transaction" with respect to which Holdings or any of its Subsidiaries is a
"disqualified person" (within the meaning of Section 4975 of the Code) or with
respect to which Holdings or any Restricted Subsidiary could otherwise be
liable; and (i) any other event or condition with respect to a Plan or
Multiemployer Plan that could reasonably be expected to result in liability of
Holdings or any of its Subsidiaries.
"EVENTS OF DEFAULT" has the meaning specified in ARTICLE VII.
"EXCESS CASH FLOW" means, for any fiscal year, the sum (for Holdings
and its Restricted Subsidiaries determined on a consolidated basis without
duplication in accordance with GAAP) of the following:
(a) Net Income for such fiscal year, adjusted to exclude any
gains or losses attributable to any Asset Sale or Casualty Event; PLUS
(b) depreciation, amortization and other non-cash charges or
losses deducted in determining Net Income for such fiscal year; PLUS
(c) the sum of (i) the amount, if any, by which Working
Capital decreased during such fiscal year PLUS (ii) the net amount, if
any, by which the consolidated deferred revenues increased during such
fiscal year; MINUS
(d) the sum of (i) any non-cash gains included in determining
Net Income for such fiscal year PLUS (ii) the amount, if any, by which
Working Capital increased during such fiscal year PLUS (iii) the
amount, if any, by which the consolidated deferred revenues of
decreased during such fiscal year; MINUS
(e) the sum of (i) Capital Expenditures paid in cash during
such fiscal year (except to the extent attributable to the incurrence
of Capital Lease Obligations or otherwise financed by incurring Funded
Indebtedness and except to the extent paid with Net Available Proceeds
in respect of any Asset Sale or Casualty Event or from the issuance of
Capital Stock or other Equity Interests) PLUS (ii) cash consideration
paid during such fiscal year to make acquisitions or other investments
permitted hereunder (other than Cash Equivalents and except to the
extent financed by incurring Funded Indebtedness or issuing Capital
Stock or other Equity Interests); MINUS
(f) cash payments made during such fiscal year which were not
deducted in determining Net Income for such fiscal year that will in a
subsequent fiscal year become a non-cash charge deducted in determining
Net Income for such subsequent fiscal year; MINUS
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(g) the aggregate principal amount of Funded Indebtedness
repaid or prepaid by Holdings and its Restricted Subsidiaries during
such period, excluding (i) Notes redeemed pursuant to SECTION 2.04 and
(ii) repayments, or prepayments or redemptions, of Funded Indebtedness
financed by incurring other Funded Indebtedness.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"FEDERAL" is used as an adjective with respect to the federal
government of the United States.
"FEDERAL FUNDS RATE" means, for any period, a fluctuating interest rate
per annum equal for each day during such period to the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day that is a Business Day, the average of the quotations for such day for such
transactions received by Citicorp USA from three Federal funds brokers of
recognized standing selected by it.
"FINANCIAL OFFICER" of any Person means the chief financial officer,
chief accounting officer, treasurer or controller of such Person.
"FOREIGN SUBSIDIARY" means any Subsidiary organized under the laws of
any country other than the United States, a State thereof or the District of
Columbia.
"FORM 10-K" means Holdings' Annual Report on Form 10-K for the year
ended December31, 2000, as filed with the Securities and Exchange Commission.
"FRANCHISE" means a franchise, license, authorization or right by
contract or otherwise to construct, own, operate, promote and/or extend any
Telecommunications Asset operated or to be operated by Holdings or any of its
Restricted Subsidiaries granted by any state, county, city, town, village or
other local or state government authority. The term "Franchise" shall include
each of the Franchises set forth on SCHEDULE 4.01(U) hereto.
"FUNDED INDEBTEDNESS" means, as of any date, the sum (for Holdings and
its Restricted Subsidiaries determined on a consolidated basis without
duplication in accordance with GAAP), of the sum of (a) all Indebtedness for
borrowed money of Holdings and its Restricted Subsidiaries which by its terms
matures more than one year after such date, and any such Indebtedness for
borrowed money maturing within one year from such date which is renewable or
extendible at the option of the obligor to a date more than one year from such
date PLUS (b) the Imputed Principal Amount of all Preferred Stock outstanding on
such date.
"GAAP" means generally accepted accounting principles in the United
States.
"GOVERNMENTAL AUTHORITY" means any national, Federal, state,
provincial, territorial, municipal, regional, local or foreign judicial,
administrative or governmental agency, board, authority, instrumentality or
other law, regulatory or rule-making body.
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"GUARANTEE" of or by any Person means any obligation, contingent or
otherwise, of such Person guaranteeing any Indebtedness of any other Person (the
"PRIMARY OBLIGOR") in any manner, whether directly or indirectly, and including
any obligation of such Person, direct or indirect, (a) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness or to
purchase (or to advance or supply funds for the purchase of) any security for
the payment of such Indebtedness, (b) to purchase or lease property, securities
or services for the purpose of assuring the owner of such Indebtedness of the
payment of such Indebtedness or (c) to maintain working capital, equity capital
or any other financial statement condition or liquidity of the primary obligor
so as to enable the primary obligor to pay such Indebtedness; PROVIDED that the
term "Guarantee" shall not include endorsements for collection or deposit in the
ordinary course of business.
"GUARANTORS" has the meaning specified in the Holdings Notes Agreement.
"HAZARDOUS MATERIALS" means all explosive or radioactive substances or
wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law.
"HEDGING AGREEMENT" means any Interest Rate Protection Agreement,
foreign currency exchange agreement, commodity price protection agreement or
other interest or currency exchange rate or commodity price hedging arrangement.
"HOLDER AFFILIATE" means (a) with respect to any Holder, (i) an
Affiliate of such Holder or (ii) any entity (whether a corporation, partnership,
trust or otherwise) that is engaged in making, purchasing, holding or otherwise
investing in debt securities, loans and similar extensions of credit in the
ordinary course of its business and is administered or managed by a Holder or an
Affiliate of such Holder and (b) with respect to any Holder that is a fund which
invests in debt securities, loans and similar extensions of credit, any other
fund that invests in debt securities, loans and similar extensions of credit and
is managed by the same investment advisor as such Holder or by an Affiliate of
such investment advisor.
"HOLDERS" means the Purchasers and each Eligible Institution that
becomes a party hereto as a "Holder" pursuant to SECTION 10.09.
"HOLDINGS" means Metromedia Fiber Network, Inc., a Delaware
corporation.
"HOLDINGS CONVERTIBLE DEBT OR EQUITY" has the meaning specified in
CLAUSE (J) of SECTION 3.01.
"HOLDINGS CONVERTIBLE DEBT OR EQUITY DOCUMENTS" means the agreements
and documents evidencing or governing the Convertible Debt or Equity.
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"HOLDINGS NOTES" means the "Notes" as such term is defined in the
Holdings Notes Agreement.
"HOLDINGS NOTES AGENT" means the "Administrative Agent" as such term is
defined in the Holdings Notes Agreement.
"HOLDINGS NOTES AGREEMENT" means that certain Note and Guarantee
Agreement dated as of September 6, 2001 among Holdings, each of the "Guarantors"
party thereto, Citicorp USA, Inc. as administrative agent, and the purchasers
identified therein relating to the issuance by Holdings of notes in the
aggregate principal amount of $150,000,000.
"HOLDINGS NOTES DOCUMENTS" means the "Note Documents" as such term is
defined in each of the Holdings Notes Agreement.
"HOLDINGS NOTES HOLDERS" means the "Holders" as such term is defined in
the Holdings Notes Agreement.
"HOLDINGS NOTES MATURITY DATE" means the "Maturity Date" as such term
is defined in the Holdings Notes Agreement.
"HOLDINGS SENIOR NOTES" means (a) the $650,000,000 10% Senior Notes due
2008 issued by Holdings pursuant to an Indenture dated as of November 25, 1998
and (b) the $750,000,000 10% Senior Notes due 2009 and the _ 250,000,000 10%
Senior Notes due 2009, both issued by Holdings pursuant to an Indenture dated as
of November 17, 1999.
"HOLDINGS SUBORDINATED NOTES" means the$975,281,000 6.15% Convertible
Subordinated Notes due 2010 issued by Holdings pursuant to an Indenture dated as
of March 6, 2000.
"IMPUTED PRINCIPAL AMOUNT" means, with respect to any class of
Preferred Stock, the maximum amount that could be payable upon mandatory
redemption or repurchase of such Preferred Stock or, if no mandatory redemption
or repurchase is applicable, the greater of the issue price or liquidation
preference of such Preferred Stock.
"INDEBTEDNESS" of any Person means, without duplication: (a) all
obligations of such Person for borrowed money; (b) all obligations of such
Person evidenced by bonds, debentures, notes or similar instruments; (c) all
obligations of such Person under conditional sale or other title retention
agreements relating to property or assets purchased by such Person; (d) all
obligations of such Person issued or assumed as the deferred purchase price of
property or services (excluding trade accounts payable and accrued obligations
incurred in the ordinary course of business); (e) all Indebtedness of others
secured by (or for which the holder of such Indebtedness has an existing right,
contingent or otherwise, to be secured by) any Lien on property owned or
acquired by such Person, whether or not the obligations secured thereby have
been assumed; (f) all Guarantees by such Person of Indebtedness of others; (g)
all Capital Lease Obligations of such Person; (h) all net payment obligations of
such Person in respect of Interest Rate Protection Agreements and other Hedging
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Agreements; and (i) all obligations of such Person as an account party in
respect of letters of credit and bankers' acceptances. The Indebtedness of any
Person shall include the Indebtedness of any partnership in which such Person is
a general partner.
"INDEMNIFIED PARTY" means the Administrative Agent, each Holder and
each of their respective Affiliates and their officers, partners, directors,
employees, agents and advisors.
"INSTITUTIONAL INVESTOR" means (a) any original purchaser of a Note,
(b) any Holder of a Note holding more than 5% of the aggregate principal amount
of the Notes then outstanding, and (c) any bank, trust company, savings and loan
association or other financial institution, any pension plan, any investment
company, any insurance company, any broker or dealer, or any other similar
financial institution or entity, regardless of legal form.
"INTERCREDITOR AGREEMENT" means an Intercreditor Agreement
substantially in the form of EXHIBIT B-2 among the Issuer, the Administrative
Agent, Nortel Networks and the Holdings Note Agent.
"INTEREST EXPENSE COVERAGE RATIO" means, as at any date, the ratio of
(a) Adjusted EBITDA for the period of four fiscal quarters ending on or most
recently ended prior to such date to (b) Cash Interest Expense for such period.
"INTEREST PAYMENT DATE" has the meaning specified in SECTION 2.04.
"INTEREST RATE PROTECTION AGREEMENT" means any interest rate swap, cap
or other agreement satisfactory to the Administrative Agent entered into by the
Issuer that is designed to protect Holdings or any of its Subsidiaries against
fluctuations in interest rates and not for speculation.
"INVESTMENT" means, for any Person: (a) the acquisition (whether for
cash, property, services or securities or otherwise) of Capital Stock, bonds,
notes, debentures, partnership or other ownership interests or other securities
of any other Person or any agreement to make any such acquisition (including any
"short sale" or any sale of any securities at a time when such securities are
not owned by the Person entering into such sale); (b) the making of any deposit
with, or advance, loan or other extension of credit to, any other Person
(including the purchase of property from another Person subject to an
understanding or agreement, contingent or otherwise, to resell such property to
such Person); or (c) the entering into of any Guarantee of, or other contingent
obligation with respect to, Indebtedness or other liability of any other Person
and (without duplication) any amount committed to be advanced, lent or extended
to such Person.
"INVESTMENT COMPANY ACT" means the United States Investment Company Act
of 1940, as amended.
"ISSUER" has the meaning specified in the recital of the parties to
this Agreement.
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"JUNIOR INTERCREDITOR AND COLLATERAL AGENCY AGREEMENT" has the meaning
specified in the Holdings Notes Agreement.
"JUNIOR SECURITY DOCUMENTS" has the meaning specified in the Holdings
Notes Agreement and includes, without limitation, the Security Documents.
"LICENSES" means all licenses, writs, permits, approvals,
authorizations, consents, orders, certificates, waivers, franchises and
registrations now existing or hereafter granted to or in favor of Holdings or
any Restricted Subsidiary by any Government Authority including the licenses
described in SCHEDULE 4.01(T).
"LIEN" means any lien, security interest or other charge or encumbrance
of any kind, or any other type of preferential arrangement, including the lien
or retained security title of a conditional vendor and any mortgage, easement,
right of way or other encumbrance on title to real property.
"MARGIN STOCK" has the meaning specified in Regulations T, U and X.
"MASTER PURCHASE AGREEMENT" means, collectively, (a) that certain
Network Products Purchase Agreement between Nortel Networks and the Issuer
executed May 29, 1998 by Nortel Networks and May 26, 1998 by the Issuer, and (b)
that certain Optera Metro Purchase Agreement dated as of May 4, 2000, between
Nortel Networks and the Issuer.
"MATERIAL ADVERSE EFFECT" means (a) a materially adverse effect on the
business, assets, operations, properties, condition (financial or otherwise),
contingent liabilities or Material Agreements of Holdings and its Restricted
Subsidiaries, taken as a whole, or Issuer and its Subsidiaries, taken as a
whole, (b) a material impairment of the ability of the Issuer to perform its
obligations under the Basic Documents, or (c) a material impairment of the
rights of or benefits available to the Administrative Agent or the Holders under
the Note Documents.
"MATERIAL AGREEMENT" means, collectively, (a) the Holdings Senior Notes
and the Holdings Subordinated Notes (and any indenture relating thereto), (b)
the Note Documents, (c) the Vendor Agreements, (d) the Verizon Agreement and the
Verizon Debt Agreement, (e) any agreement with a vendor or contractor pursuant
to which Holdings reasonably anticipates that Holdings and its Subsidiaries will
purchase in the aggregate more than $50,000,000 of equipment or construction
services, (f) any agreement providing for the sale or lease of fiber by Holdings
or any Restricted Subsidiary for aggregate consideration of $50,000,000 or more,
(g) the Holdings Convertible Debt or Equity Documents, (h) the Holdings Notes
Documents, and (i) the other agreements listed in SCHEDULE 4.01(K)
"MATERIAL INDEBTEDNESS" means Indebtedness (excluding any obligations
under the Note Documents but including obligations in respect of Hedging
Agreements), of Holdings or any of its Restricted Subsidiaries in an aggregate
principal amount exceeding $5,000,000. For purposes of determining Material
Indebtedness, the "principal amount" of the obligations of any Person in respect
of any Hedging Agreement at any time shall be the maximum aggregate amount
(giving
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effect to any netting agreements) that such Person would be required to pay if
such Hedging Agreement were terminated at such time.
"MATURITY DATE" means the earlier to occur of (a) March 15, 2007 or (b)
the date that is six months after the "Maturity Date" as such term is defined in
the Holdings Notes Agreement as such agreement is in effect on the Closing Date.
"MAXIMUM RATE" means, with respect to any Purchaser, 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 Purchaser pursuant to
this Agreement or any other Note Document, under laws applicable to such
Purchaser 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. 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 Note 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 Purchaser at the time of such change in
the Maximum Rate.
"MOODY'S" means Moody's Investors Service, Inc. and its successors.
"MULTIEMPLOYER PLAN" means a multiemployer plan as defined in Section
4001(a)(3) of ERISA.
"NET AVAILABLE PROCEEDS" means:
(a) In the case of any Asset Sale, the aggregate amount of all
cash payments as and when received by Holdings and its Restricted
Subsidiaries directly or indirectly in connection with such Asset Sale;
PROVIDED that:
(i) such Net Available Proceeds shall be net of (A)
the amount of any legal, title and recording tax expenses,
commissions and other reasonable fees and expenses (including
reasonable expenses of preparing the relevant property for
sale) paid by Holdings and its Restricted Subsidiaries in
connection with such Asset Sale, (B) any foreign, Federal,
state and local income or other taxes estimated in good faith
to be payable by Holdings and its Restricted Subsidiaries as a
result of such Asset Sale and (C) the aggregate amount of
reserves taken by Holdings and its Restricted Subsidiaries in
accordance with GAAP against indemnification obligations
incurred by them in connection with such Asset Sale; and
(ii) such Net Available Proceeds shall be net of any
repayments of Indebtedness by Holdings and its Restricted
Subsidiaries to the extent that such Indebtedness is secured
by a Lien (other than a Lien under, or subject to the
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provisions of, the Junior Security Documents) on the property
that is the subject of such Asset Sale; and
(b) In the case of any Casualty Event, the aggregate amount of
proceeds of insurance, condemnation or expropriation awards and other
compensation received by Holdings and its Restricted Subsidiaries in
respect of such Casualty Event net of (i) reasonable expenses incurred
by them in connection therewith, (ii) contractually required repayments
of Indebtedness to the extent secured by a Lien on the property
suffering such Casualty Event and any foreign, Federal, state and local
income or other taxes estimated in good faith to be payable by Holdings
and its Restricted Subsidiaries as a result of such Casualty Event and
(iii) amounts promptly (and in any case within 10 days) applied to or
set aside for the repair or replacement of the property suffering such
Casualty Event.
"NET INCOME" means, for any period, the sum (for Holdings and its
Restricted Subsidiaries determined on a consolidated basis without duplication
in accordance with GAAP) of the net income or loss of Holdings and its
Restricted Subsidiaries for such period; PROVIDED that there shall be excluded
(a) the income or loss attributable to any entity not constituting a Subsidiary
in which Holdings owns an Equity Interest, (b) the portion of the income or loss
of any Restricted Subsidiary attributable to the Equity Interest held by any
other Person (other than Holdings and its Restricted Subsidiaries or any
director holding qualifying shares in compliance with applicable law), (c) the
income or loss of any Person accrued prior to the date it becomes a Restricted
Subsidiary or is merged into or consolidated with Holdings or any of its
Restricted Subsidiaries or the date that such Person's assets are acquired by
Holdings or any of its Restricted Subsidiaries, (d) the income or loss
attributable to a Foreign Subsidiary to the extent that the declaration or
payment of dividends or similar distributions by that Subsidiary is not at the
last day of such period permitted without prior governmental approval (that has
not been obtained) or, directly or indirectly by operation of the terms of its
charter or any agreement, instrument, order or decree to which such Subsidiary
or its equity holders are subject and (e) the net income attributable to a
Foreign Subsidiary not subject to the foregoing CLAUSE (D) shall be determined
net of any income or other taxes that would be payable in respect of any
dividend or distribution made by such Foreign Subsidiary.
"NET TANGIBLE ASSETS" means, as at any date, (a) the aggregate assets
as at said dates of Holdings and its Restricted Subsidiaries determined on a
consolidated basis without duplication in accordance with GAAP minus (b) the
aggregate intangible assets as at said date of Holdings and its Restricted
Subsidiaries determined on a consolidated basis in accordance with GAAP.
"NETWORK" means the Issuer's integrated communications network for the
provision of high speed data and voice services.
"NORTEL NETWORKS" means Nortel Networks Inc., a Delaware corporation.
"NOTE" has the meaning specified in SECTION 2.01.
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"NOTE DOCUMENTS" means, collectively, this Agreement, the Security
Documents and the Warrant Documents.
"OBLIGATIONS" means the Indebtedness of the Issuer evidenced by the
Notes, and all other monetary indebtedness, liabilities and/or obligations of
the Issuer under the Note Documents.
"OBLIGORS" has the meaning specified in the Holdings Notes Agreement.
"OTHER DEBT AGREEMENTS" means, collectively, (a) the Holdings Senior
Notes and the Holdings Subordinated Notes (and any indenture relating thereto),
(b) the Holdings Notes Documents, (c) the Vendor Agreements, (d) the Verizon
Agreement and Verizon Debt Agreement, and (e) the Holdings Convertible Debt or
Equity Documents.
"OTHER TAXES" has the meaning specified in SECTION 2.07(B).
"PAYMENT DATE" means any Interest Payment Date and the Maturity Date.
"PAYMENT OFFICE" means, with respect to any Holder, the office of such
Holder specified as its "Payment Office" in the Administrative Questionnaire of
such Holder or in the Transfer and Acceptance pursuant to which it became a
Holder, or such other office of such Holder as such Holder may from time to time
specify to the Administrative Agent.
"PBGC" means the Pension Benefit Guaranty Corporation.
"PERMITTED HOLDER" means Metromedia Company, a Delaware general
partnership, its general partners and their respective Related Persons and
Persons that would constitute a Class B Permitted Holder as defined in Holdings'
Amended and Restated Certificate of Incorporation.
"PERMITTED REFINANCING INDEBTEDNESS" means any Indebtedness of Holdings
or any Restricted Subsidiary issued in exchange for, or the net proceeds of
which are used to extend, refinance, renew, replace, defease or refund other
Indebtedness of Holdings or any Restricted Subsidiary (other than intercompany
Indebtedness), PROVIDED that:
(a) the principal amount (or accreted value, if applicable) of
such Permitted Refinancing Indebtedness does not exceed the principal
amount outstanding of (or accreted value, if applicable), PLUS accrued
interest on, the Indebtedness so extended, refinanced, renewed,
replaced, defeased or refunded (PLUS the amount of reasonable expenses
incurred in connection therewith);
(b) such Permitted Refinancing Indebtedness has a final
maturity date equal to or later than the final maturity date of, and
has a Weighted Average Life to Maturity equal to or longer than the
Weighted Average Life to Maturity of, the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded;
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(c) if the Indebtedness being extended, refinanced, renewed,
replaced, defeased or refunded is subordinated in right of payment to
the Notes, such Permitted Refinancing Indebtedness has a final maturity
date equal to or later than the Maturity Date and is subordinated in
right of payment to the Notes on terms at least as favorable to the
Holders as those contained in the documentation governing the
Indebtedness being extended, refinanced, renewed, replaced, defeased or
refunded; and
(d) such Indebtedness is incurred either by Holdings or by the
Restricted Subsidiary that is the obligor on the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded, and is
not Guaranteed directly or indirectly by any Restricted Subsidiary of
Holdings that has not Guaranteed the Indebtedness being extended,
refinanced, renewed, replaced, defeased or refunded.
"PERSON" means any individual, corporation (including a business
trust), company, voluntary association, partnership, limited liability company,
joint venture, trust, unincorporated organization or Governmental Authority or
other entity of whatever nature.
"PLAN" means any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 307 of ERISA, and in respect of which the Issuer or
any ERISA Affiliate is (or, if such plan were terminated, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
"POST-DEFAULT RATE" means a rate per annum equal to the lesser of (a)
the interest rate otherwise applicable PLUS 3% or (b) the Maximum Rate.
"PREFERRED STOCK" means any preferred stock issued by Holdings after
the date hereof so long as the same does not constitute Disqualified Stock.
"PRIVATE LICENSES" means an license, agreement, lease, authorization or
right by contract entered into with, or granted by, a non-governmental Person in
connection with the construction, ownership or operation by Holdings or any of
its Restricted Subsidiaries of Telecommunications Assets, including, but not
limited to easements, right-of-way agreements, tunnel duct lease agreements,
indefeasible right of use agreements, transmission attachment licenses,
underground license agreements and pole, conduit and/or trench license
agreements.
"PRO FORMA DEBT SERVICE COVERAGE RATIO" means, as at any date, the
ratio of (a) Adjusted EBITDA for the period of four fiscal quarters ending on or
most recently ended prior to such date to (b) Debt Service for the period of
four fiscal quarters immediately following the period referred to in the
foregoing CLAUSE (A).
"PRO RATA SHARE" of any amount means, with respect to any Holder at any
time, the product of (a) a fraction the numerator of which is the amount of such
Holder's Commitment or Notes, as the case may be, and the denominator of which
is the aggregate Commitment or Notes, as the case may be, at such time,
MULTIPLIED BY (b) such amount.
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"PURCHASE PRICE" means with respect to any Acquisition, an amount equal
to the sum of (a) the aggregate consideration, whether cash, property or
securities (including any Indebtedness permitted by CLAUSES (V) or (X) of
SECTION 6.01(A), or CLAUSES (IV) or (VIII) of 6.01(B), issued by the respective
seller and the fair market value of any property being transferred by Holdings
or any Restricted Subsidiary in exchange for the property being acquired in such
Acquisition), paid or delivered by Holdings and its Restricted Subsidiaries in
connection with such Acquisition PLUS (b) the aggregate amount of liabilities of
the acquired business (net of current assets of the acquired business) that
would be reflected on a balance sheet (if such were to be prepared) of Holdings
and its Restricted Subsidiaries after giving effect to such Acquisition.
"PURCHASER" has the meaning specified in the recitals of the parties to
this Agreement.
"QUARTERLY DATES" means March 31, June 30, September 30 and December 31
in each year, the first of which shall be the first such day after the date
hereof, PROVIDED that, if any such day is not a Business Day, the relevant
Quarterly Date shall be the immediately preceding Business Day.
"REGISTER" has the meaning specified in SECTION 10.09(C).
"REGULATION T", "REGULATION U" and "REGULATION X" mean Regulations T, U
and X of the Board of Governors of the Federal Reserve System, respectively, as
in effect from time to time.
"RELATED PERSON" means any Person who controls, is controlled by or is
under common control with a Permitted Holder; PROVIDED, that for purposes of
this definition, "control" means the beneficial ownership of more than 50% of
the total voting power of a Person normally entitled to vote in the election of
directors, managers or trustees, as applicable, of a Person.
"RELEASE" means any release, spill, emission, leaking, pumping,
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the indoor or outdoor environment, including the movement of Hazardous Materials
through ambient air, soil, surface water, ground water, wetlands, land or
subsurface strata
"REQUIRED HOLDERS" means at any time Holders of more than 50% in
principal amount of the Notes at the time outstanding (exclusive of Notes then
owned by any Obligor or any of their respective Affiliates), or if no Notes are
outstanding, Holders holding more than 50% of the Commitments; PROVIDED that,
for purposes hereof, none of the Obligors, nor any of their Affiliates, shall
(unless expressly consented by each other Holder) be deemed to be "Holders" for
purposes of this definition.
"REQUIRED SUPERMAJORITY HOLDERS" means at any time Holders of 80% or
more in principal amount of the Notes at the time outstanding (exclusive of
Notes then owned by any Obligor or any of their respective Affiliates), or if no
Notes are outstanding, Holders holding 80% or more of the Commitments; PROVIDED
that, for purposes hereof, none of the Obligors, nor any of their Affiliates,
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shall (unless expressly consented to by each other Holder) be deemed to be
"Holders" for purposes of this definition.
"RESPONSIBLE OFFICER" means any officer of the Issuer or Holdings
(including any Financial Officer of the Issuer or Holdings).
"RESTRICTED PAYMENT" has the meaning specified in SECTION 6.07.
"RESTRICTED SUBSIDIARY" has the meaning specified in the Holdings Notes
Agreement, and includes, without limitation, the Issuer.
"REVENUES" means, for any period, the revenue for Holdings and its
Restricted Subsidiaries determined on a consolidated basis without duplication
in accordance with GAAP.
"SECURED PARTIES" means, collectively, the parties so designated in the
Security Agreement.
"SECURITIES ACT" means the United States Securities Act of 1933, as
amended.
"SECURITY AGREEMENT" means a Security Agreement substantially in the
form of EXHIBIT B-1 between the Issuer and the Administrative Agent.
"SECURITY DOCUMENTS" means the Intercreditor Agreement, the Security
Agreement and any agreement, instrument or other document now or hereafter
executed by the Issuer or any other Obligor (whether pursuant to SECTION 5.04 or
otherwise) to Guarantee or secure any of the Obligations, including all Uniform
Commercial Code and similar financing statements required by this Agreement or
any of the other Note Documents to be filed with respect to the security
interests in personal property created pursuant thereto.
"SENIOR SECURITY AGREEMENT" has the meaning specified in the Holdings
Notes Agreement.
"SENIOR SECURITY DOCUMENTS" has the meaning specified in the Holdings
Notes Agreement.
"SOLVENT" and "SOLVENCY" mean, with respect to any Person on a
particular date, that on such date (a) the fair value of the property of such
Person is greater than the total amount of liabilities, including contingent
liabilities, of such Person, (b) the present fair salable value of the assets of
such Person on a going concern basis is not less than the amount that will be
required to pay the probable liability of such Person on its Indebtedness as
they become absolute and matured, (c) such Person does not intend to, and does
not believe that it will, incur Indebtedness or liabilities beyond such Person's
ability to pay as such Indebtedness and liabilities mature and (d) 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 an
unreasonably small amount of capital. The portion of contingent liabilities of
any Person at any time that shall be included for purposes of the above
determinations shall be the amount of such contingent liabilities that, in light
of all facts and circumstances existing at such time, could reasonably be
expected to become actual matured liabilities of such Person.
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"STANDARD & POOR'S" means Standard & Poor's, a division of The
McGraw-Hill Companies, and its successors.
"SUBORDINATED INDEBTEDNESS" means Indebtedness (a) for which Holdings
is directly and primarily liable, (b) in respect of which none of its Restricted
Subsidiaries is contingently or otherwise obligated and (c) that is subordinated
to the obligations of Holdings to pay principal of and interest on the Holdings
Notes on terms, and pursuant to documentation containing other terms (including
interest, amortization, covenants and events of default), in form and substance
satisfactory to the "Required Holders" as such term is defined in the Holdings
Notes Agreement.
"SUBSIDIARY" means, with respect to any Person (herein referred to as
the "PARENT"), any corporation, partnership, limited liability company,
association or other business entity of which securities or other ownership
interests representing more than 50% of the equity or more than 50% of the
ordinary voting power or more than 50% of the general partnership interests are,
at the time any determination is being made, owned, controlled or held directly
or indirectly by the parent. Except as the context shall otherwise require, all
references to "Subsidiaries" in this Agreement shall be deemed to be references
to Subsidiaries of the Issuer.
"TAX INDEMNITEE" means each Holder and the Administrative Agent.
"TAXES" has the meaning specified in SECTION 2.06(A).
"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 and all Equity Interests of
a Person engaged entirely or substantially entirely in a Telecommunications
Business.
"TELECOMMUNICATIONS BUSINESS" means the business of (a) transmitting,
or providing services relating to the transmission of voice, video or data
through owned or leased terrestrial or submarine 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 the foregoing CLAUSE (A) or
(B), PROVIDED that the determination of what constitutes a Telecommunications
Business shall be made in good faith by the board of directors of Holdings (or
an authorized committee thereof).
"TOTAL CAPITAL" means, as at any date, the sum of Funded Indebtedness
and Contributed Capital on such date.
"TOTAL INDEBTEDNESS" means, at any date, the sum of all Indebtedness of
Holdings and its Restricted Subsidiaries (determined on a consolidated basis
without duplication in accordance with GAAP) at such time, PROVIDED,
HOWEVER, that there shall be excluded any Indebtedness arising in respect of
any Hedging Agreement.
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"TOTAL LEVERAGE RATIO" means, as at any date, the ratio of (a) Total
Indebtedness as at such date to (b) Adjusted EBITDA for the period of four
fiscal quarters ending on or most recently ended prior to such date.
"TOTAL SENIOR INDEBTEDNESS" means, as at any date, Total Indebtedness
(excluding, however, any Subordinated Indebtedness and any Indebtedness that is
not secured) as at such date.
"TOTAL SENIOR LEVERAGE RATIO" means, as at any date, the ratio of (a)
Total Senior Indebtedness as at such date to (b) Adjusted EBITDA for the period
of four fiscal quarters ending on or most recently ended prior to such date.
"TRANSACTIONS" means the transactions contemplated by this Agreement
and the other Basic Documents (including the execution, delivery and performance
by the Issuer of the Basic Documents, the incurrence of liabilities by the
Issuer under the Basic Documents and the issuance of the Notes hereunder).
"TRANSFER AND ACCEPTANCE" means a transfer and acceptance entered into
by a Holder and an Eligible Institution, and accepted by the Administrative
Agent, in accordance with SECTION 10.09 and in substantially the form of EXHIBIT
D.
"UNITED STATES" or "U.S." means the United States of America.
"UNRESTRICTED SUBSIDIARY" has the meaning specified in the Holdings
Notes Agreement.
"VENDOR" means Nortel Networks and each vendor or contractor party to a
Vendor Agreement.
"VENDOR AGREEMENT" means, in the case of any vendor or contractor, the
agreements and other instruments entered into pursuant to SECTION 3.01(L)
between such vendor or contractor and an Obligor providing for the incurrence of
a deferred payment obligation by such Obligor to such Vendor in whole or partial
satisfaction of Vendor Obligations of such Obligor to such vendor or contractor.
"VENDOR GUARANTEE INDEBTEDNESS" means Indebtedness of Holdings in
respect of a Guarantee by it of Vendor Obligations deferred pursuant to any
Vendor Agreement.
"VENDOR OBLIGATIONS" means indebtedness due from an Obligor to a
Vendor.
"VERIZON AGREEMENT" means the Fiber Optics Private Network Agreement
dated as of October 7, 1999 between Bell Atlantic Global Networks and the
Issuer.
"VERIZON DEBT AGREEMENT" means the agreements or other instruments
entered into pursuant to SECTION 3.01(K) between Verizon, Inc. (or an Affiliate
thereof) and the Issuer.
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"VOTING STOCK" of any Person as of any date means the Capital Stock of
such Person that is at the time entitled to vote in the election of the Board of
Directors of such Person.
"WARRANT AGREEMENT" means a Warrant Agreement substantially in the form
of EXHIBIT E between Holdings and Nortel Networks; PROVIDED, HOWEVER, that both
the number of shares of Capital Stock of Holdings subject to the Warrant
Agreement and the exercise price with respect to the warrants issued pursuant to
the Warrant Agreement shall be satisfactory to Nortel Networks.
"WARRANT DOCUMENTS" means the Warrant Agreement, the warrants issued
thereunder, the voting agreement referred to in SECTION 3.01(M) and the other
agreements, instruments and documents executed and delivered pursuant to the
Warrant Agreement.
"WEIGHTED AVERAGE LIFE TO MATURITY" means, when applied to any
Indebtedness or any Attributable Indebtedness at any date, the number of years
obtained by dividing (a) the sum of the products obtained by multiplying (i) the
amount of each then remaining installment, sinking fund, serial maturity or
other required payments of principal, including payment at final maturity, in
respect thereof, by (ii) the number of years (calculated to the nearest
one-twelfth) that will elapse between such date and the due date for the making
of such payment by (b) the then outstanding principal amount of such
Indebtedness or Attributable Indebtedness.
"WHOLLY OWNED SUBSIDIARY" means, with respect to any Person, any
corporation, partnership or other entity of which all of the equity securities
or other ownership interests (other than, in the case of a corporation,
directors' qualifying shares) are directly or indirectly owned or controlled by
such Person or one or more Wholly Owned Subsidiaries of such Person or by such
Person and one or more Wholly Owned Subsidiaries of such Person. A "WHOLLY OWNED
RESTRICTED SUBSIDIARY" is any Wholly Owned Subsidiary that is a Restricted
Subsidiary.
"WITHDRAWAL LIABILITY" means liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as such
terms are defined in Part I of Subtitle E of Title IV of ERISA.
"WORKING CAPITAL" means, as at such date, for Holdings and its
Restricted Subsidiaries (determined on a consolidated basis without duplication
in accordance with GAAP) (a) current assets (excluding cash and cash
equivalents) MINUS (b) current liabilities (excluding the current portion of
long term debt and of any installments of principal payable hereunder).
SECTION 1.2. COMPUTATION OF TIME PERIODS. In this Agreement in the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including" and the words "to" and "until" mean
"to but excluding".
SECTION 1.3. ACCOUNTING TERMS; CHANGES IN GAAP. Except as otherwise
expressly provided herein, all terms of an accounting or financial nature shall
be construed in accordance with GAAP as in effect from time to time. If the
Issuer notifies the Administrative Agent that the Issuer
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requests an amendment to any provision hereof to eliminate the effect of any
change occurring after the date hereof in GAAP or in the application thereof on
the operation of such provision (or if the Administrative Agent notifies the
Issuer that the Required Holders request an amendment to any provision hereof
for such purpose), regardless of whether any such notice is given before or
after such change in GAAP or in the application thereof, then such provision
shall be interpreted on the basis of GAAP as in effect and applied immediately
before such change shall have become effective until such notice shall have been
withdrawn or such provision amended in accordance herewith.
SECTION 1.4. EXTENDED MEANINGS. Words importing the singular number
only shall include the plural and VICE VERSA, and words importing any gender
shall include all genders. The term "including" means "including without
limitation".
SECTION 1.5. REFERENCES TO ADMINISTRATIVE AGENT, PURCHASERS OR HOLDERS.
Any reference in this Agreement to the Administrative Agent or a Holder shall be
construed so as to include its permitted successors, transfers or assigns
hereunder in accordance with their respective interests.
SECTION 1.6. CONFLICT WITH SECURITY DOCUMENTS. In the event that there
is a conflict or inconsistency between any provision of any of the Security
Documents and this Agreement, the provisions of this Agreement shall prevail.
Section 1.1.
SECTION 1.7. NON-BUSINESS DAYS. Whenever any payment to be made
hereunder shall be stated to be due or any action to be taken hereunder shall be
stated to be required to be taken on a day other than a Business Day, such
payment shall be made or such action shall be taken on the next succeeding
Business Day and, in the case of the payment of any monetary amount, the
extension of time shall be included for the purposes of computation of interest
or fees thereon.
SECTION 1.8. REFERENCES TO TIME OF DAY. Except as otherwise specified
herein, a time of day shall be construed as a reference to New York, New York
time.
SECTION 1.9. SEVERABILITY. In the event that one or more of the
provisions contained in this Agreement shall be invalid, illegal or
unenforceable in any respect under any applicable law, the validity, legality or
enforceability of the remaining provisions hereof shall not be affected or
impaired thereby.
SECTION 1.10. REFERENCES TO STATUTES. Except as otherwise provided
herein, any reference in this Agreement to a statute shall be construed to be a
reference to such statute as the same may have been, or may from time to time
be, amended or re-enacted.
SECTION 1.11. REFERENCES TO AGREEMENTS. Except as otherwise provided
herein, any reference herein to this Agreement, any other Note Document or any
other agreement or document shall be construed to be a reference to this
Agreement, such Note Document or such other agreement or document, as the case
may be, as the same may have been, or may from time to time be, amended, varied,
novated or supplemented.
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ARTICLE II
AMOUNTS AND TERMS OF THE NOTES
SECTION 1.12. THE NOTES.
(a) AUTHORIZATION OF THE NOTES. The Issuer will authorize the issue and
sale of $231,036,842.00 aggregate principal amount of its term notes (the
"NOTES"). As used herein, the term "NOTES" includes all notes originally issued
pursuant to this Agreement and any notes issued in substitution therefor
pursuant to SECTION 10.09.
(b) SALE AND PURCHASE OF NOTES. Subject to the terms and conditions of
this Agreement, on the Closing Date (as provided for in SECTION 2.01(E)), the
Issuer will issue and sell to each Purchaser, and each Purchaser will purchase
from the Issuer, a Note in the principal amount specified opposite such
Purchaser's name in SCHEDULE 2.01 at the purchase price of 100% of the principal
amount thereof.
(c) USE OF PROCEEDS. All of the proceeds of the Notes shall be used to
repay indebtedness or other amounts due and owing by the Issuer to Nortel
Networks under the Master Purchase Agreement in an amount equal to the principal
amount of the Notes. Subject to the terms and conditions of this Agreement, on
the Closing Date, Nortel Networks, as the sole Purchaser as of the Closing Date,
shall be deemed to have fully paid the Issuer for the Note issued to Nortel
Networks for all purposes of SECTION 2.01(B) and for all other purposes of this
Agreement by virtue of Nortel Networks having given a credit to the Issuer in
the aggregate amount of $231,036,842.00 against indebtedness or other amounts
which are due and owing as of the effective date of this Agreement by the Issuer
to Nortel Networks under the Master Purchase Agreement. Such payment and credit
shall be deemed to have been given on the Closing Date concurrently with the
effectiveness of this Agreement. No cash advances shall be made to the Issuer as
consideration for or otherwise in connection with the issuance of the Notes.
(d) NO RESPONSIBILITY TO THIRD PARTIES. Neither the Administrative
Agent nor any Purchaser shall have any responsibility as to the application or
use of any of the proceeds of any Note.
(e) THE CLOSING DATE PROCEEDINGS. The sale and purchase of the Note to
be purchased by each Purchaser shall occur at the offices of Milbank, Tweed,
Hadley & McCloy LLP, One Chase Manhattan Plaza, New York, New York 10005 on the
Closing Date. On the Closing Date, the Issuer will deliver to each Purchaser the
Note to be purchased by such Purchaser in the form of a single Note dated the
Closing Date and registered in such Purchaser's name (or the name of such
Purchaser's nominee). If, on the Closing Date, the Issuer shall fail to tender
any such Note to any Purchaser as provided in this SECTION 2.01(E), or any of
the conditions specified in ARTICLE III shall not have been fulfilled to such
Purchaser's satisfaction, the Purchasers shall be relieved, as a whole, of all
further obligations under this Agreement, without thereby waiving any rights the
Purchasers may have by reason of such failure or such nonfulfillment.
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SECTION 1.13. REPAYMENT.
(a) NOTES. The Issuer hereby promises to pay to the Administrative
Agent for the account of the each Holder the outstanding principal amount of the
Notes on the Maturity Date.
(b) PAYMENTS TO INCLUDE ACCRUED INTEREST. All repayments of principal
under this SECTION 2.02 shall be made together with interest accrued to the date
of such repayment on the principal amount repaid.
SECTION 1.14. REDEMPTIONS; ETC.
(a) OPTIONAL REDEMPTIONS. Subject to the proviso below, the Issuer may,
upon notice given on or before the date of redemption to the Administrative
Agent (which notice shall state the proposed date and aggregate principal amount
of the redemption), and if such notice is given the Issuer shall, redeem the
outstanding principal amount of the Notes issued to it under this Agreement at
the redemption prices (expressed as percentages of the principal amounts of the
Notes) set forth in CLAUSE (IV) below in the aggregate amount and on the date
specified in such notice, together with accrued interest to the date of such
redemption on the principal amount prepaid; PROVIDED that (i) the Issuer may not
redeem the Notes without the prior written consent of the Holders at any time
prior to November 15, 2003, (ii) each partial redemption shall be in an
aggregate principal amount of $10,000,000 or an integral multiple of $1,000,000
in excess thereof, (iii) each such notice shall be made on the relevant day not
later than 12:00 noon, and (iv) the redemption prices required to be paid by the
Issuer (expressed as percentages of the principal amounts of the Notes) to
effectuate any such redemption made during any period shall be as specified in
the table below opposite such period:
<Table>
<Caption>
PERIOD PERCENTAGE
------ ----------
From and including November 15, 2003
to and including November 14, 2004 102.00%
From and including November 15, 2004
and at all times thereafter 100.00%
</Table>
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(b) MANDATORY REDEMPTIONS.
(i) ASSET SALES. Concurrently with the consummation of any
Asset Sale after the date hereof (after obtaining any necessary consent
of the Required Holders, to the extent such Asset Sale is not permitted
under SECTION 6.06), and promptly but in any event not later than the
third Business Day following the receipt by Holdings or any Restricted
Subsidiary of any Net Available Proceeds of such Asset Sale received
after such consummation, the Issuer shall redeem the Notes in an
aggregate amount equal to the Net Available Proceeds of such Asset
Sale; PROVIDED that no redemption of Notes shall be required pursuant
to this CLAUSE (I) with respect to an amount equal to 100% (50% for any
such Asset Sale that occurs prior to the demonstration by Holdings of
compliance with the provisions of SECTION 6.13 as at the end of and for
the fiscal quarter ending March 31, 2003) of the Net Available Proceeds
(such percentage of such Net Available Proceeds being herein called the
"APPLICABLE NET AVAILABLE PROCEEDS") of any Asset Sale to the extent
such Applicable Net Available Proceeds are reinvested in
Telecommunications Assets to be acquired by the Issuer or an Obligor
(but not by any Subsidiary of an Obligor that is not an Obligor) within
360 days of the date of such Asset Sale and, pending such reinvestment,
such Applicable Net Available Proceeds to the extent arising out of an
Asset Sale by an Obligor are either:
(A) deposited with the Administrative Agent and held
as Collateral for the obligations of the Issuer hereunder (it
being understood that any interest or earnings realized upon
such Collateral during the period of such deposit shall not
increase the required amount of the redemption hereunder
required of the Issuer), PROVIDED that nothing herein shall be
deemed to require the Administrative Agent to release any such
proceeds or interest after the occurrence and during the
continuance of an Event of Default, or
(B) applied by the Issuer to the redemption of Notes
(in which event the Issuer agrees to advise the Administrative
Agent in writing at the time of such redemption of Notes that
such redemption is being made from the proceeds of an Asset
Sale);
PROVIDED, FURTHER, that, with respect to any Asset Sale made by the Issuer, the
Issuer shall be the entity required to reinvest the Applicable Net Available
Proceeds for purposes of the initial proviso in CLAUSE (I) above.
(ii) CASUALTY EVENTS. Promptly but in any event not later than
the third Business Day following the receipt by Holdings or any
Restricted Subsidiary of the proceeds of insurance, condemnation award
or other compensation in respect of any Casualty Event affecting any
property of Holdings or any Restricted Subsidiary after the date
hereof, the Issuer shall redeem the Notes in an aggregate amount equal
to the Net Available Proceeds of such Casualty Event; PROVIDED that no
redemption of Notes shall be required pursuant to this CLAUSE (II) to
the extent such Net Available Proceeds are reinvested in the repair,
restoration or replacement of such property or invested in
Telecommunications Assets to be acquired by Holdings or any of its
Restricted Subsidiaries within 360 days of the date of such
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receipt and, pending such reinvestment, such Net Available Proceeds are
either (A) deposited with the Administrative Agent and held as
collateral for the obligations of the Issuer hereunder (PROVIDED that
nothing herein shall be deemed to require the Administrative Agent to
release any such proceeds after the occurrence and during the
continuance of an Event of Default) or (B) applied by the Issuer to the
redemption of Notes hereunder (in which event the Issuer agrees to
advise the Administrative Agent in writing at the time of such
redemption of Notes that such redemption is being made from the
proceeds of a Casualty Event). Nothing in the immediately preceding
sentence shall be deemed to limit any obligation of the Issuer pursuant
to any of the Security Documents to remit to a collateral or similar
account maintained by the Administrative Agent or the Holdings Notes
Agent pursuant to any of the Security Documents the proceeds of
insurance, condemnation award or other compensation received in respect
of any Casualty Event.
(iii) EXCESS CASH FLOW. Not later than 90 days following the
last day of any fiscal year ending on or after December 31, 2004 (but
only if, on the last day of such fiscal year the Total Leverage Ratio
exceeds 3.50 to 1.00), the Issuer shall redeem the Notes, in an
aggregate amount, if any, equal to 50% of Excess Cash Flow for such
fiscal year.
(iv) EXCEPTION REGARDING CERTAIN MANDATORY REDEMPTIONS.
Notwithstanding anything to the contrary contained in this SECTION
2.03(A), the Issuer shall not be obligated to redeem any Notes as
provided in CLAUSE (I), (II) and (III) of this SECTION 2.03(A) above
unless and until the Holdings Notes have been paid in full.
(v) CERTAIN ACTIONS. Notwithstanding anything to the contrary
contained in this Agreement, the Issuer shall redeem the Notes in full
concurrently with (A) the occurrence of any Change of Control, (B) any
sale, transfer or other disposition of the Network or any material
portion thereof, or (C) any noncompliance with SECTION 6.06(A).
(c) TERMS APPLICABLE TO ALL REDEMPTIONS. All redemptions of Notes under
this SECTION 2.03 shall be made together with accrued interest to the date of
such redemption on the principal amount prepaid. Each redemption of Notes under
this SECTION 2.03 shall be made for the account of the relevant Holders
according to their respective Pro Rata Shares of the principal amount of the
Notes then outstanding under this Agreement.
(d) COLLATERAL ACCOUNTS. In the event Net Available Proceeds from more
than one Asset Sale or Casualty Event are deposited with the Administrative
Agent and held as Collateral or applied to the redemption of Notes as provided
in SECTION 2.03(C)(I) or SECTION 2.03(C)(II) above, such Net Available Proceeds
shall be deemed to be released in the same order in which such Asset Sales
occurred or the insurance, condemnation award or other compensation in respect
of such Casualty Events were received and, accordingly, any such Net Available
Proceeds so held for more than 360 days shall be forthwith (and in any event not
later than the third Business Day following the end of such 360-day period)
applied to the redemption of Notes.
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(e) MANDATORY TERMINATION OF COMMITMENTS. To the extent the Closing
Date shall not have occurred on or prior to 3:00 p.m., September 28, 2001, the
Commitments shall be automatically and permanently reduced to zero and this
Agreement shall automatically terminate and be of no further force or effect
(except to the extent provisions hereof are stated to survive such termination).
(f) NO REINSTATEMENTS. Commitments once terminated may not be
reinstated.
SECTION 1.15. INTEREST.
(a) ORDINARY INTEREST. The Issuer shall pay interest on the unpaid
principal amount of each Note held by each Holder on each Quarterly Date (each
date on which interest is due and payable being herein referred to as an
"INTEREST PAYMENT DATE") from the date of such Note until such principal amount
shall be paid in full, at a rate per annum equal to the lesser of (i) fourteen
percent (14.00%) or (ii) the Maximum Rate.
(b) POST-DEFAULT INTEREST. If an Event of Default shall have occurred
and be continuing during any period, the Issuer shall, notwithstanding anything
else in this Agreement to the contrary, pay to the Administrative Agent for the
account of each Holder interest, during such period, at the applicable
Post-Default Rate on any principal of any Note held by such Holder, and on any
other amount whatsoever then due and payable by the Issuer hereunder to or for
the account of such Holder, such interest to be payable from time to time on
demand.
SECTION 1.16. PAYMENTS AND COMPUTATIONS.
(a) MANNER OF PAYMENT. The Issuer shall make each payment hereunder not
later than 12:00 noon on the day when due in Dollars to the Administrative Agent
at the Administrative Agent's Account in same day funds and without deduction,
set-off or counterclaim. The Administrative Agent will promptly thereafter cause
to be distributed like funds relating to the payment of principal or interest
under or in respect this Agreement (other than amounts payable pursuant to
SECTION 2.06 or SECTION 10.04) to the relevant Holders for the account of their
Payment Offices, and like funds relating to the payment of any other amount
payable to any Holder to such Holder for the account of its Payment Office, in
each case to be applied in accordance with the terms of this Agreement. Upon its
acceptance of a Transfer and Acceptance and recording of the information
contained therein in the Register pursuant to SECTION 10.09(C), from and after
the effective date of such Transfer and Acceptance, the Administrative Agent
shall make all payments hereunder in respect of the interest transferred thereby
to the Holder transferee thereunder, and the parties to such Transfer and
Acceptance shall make all appropriate adjustments in such payments for periods
prior to such effective date directly between themselves.
(b) PRESUMPTIONS AS TO APPLICATION OF PAYMENTS. If the Administrative
Agent receives funds for application to the obligations under the Note Documents
under circumstances for which the Note Documents do not specify the Notes to
which, or the manner in which, such funds are to be applied, and the Issuer has
not otherwise directed how such funds are to be applied (which direction is
consistent with the terms of the Note Documents), the Administrative Agent may,
but
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shall not be obligated to, elect to distribute such funds to each Holder ratably
in accordance with such Holder's proportionate share of the principal amount of
all outstanding Notes, in repayment or redemption of such of the outstanding
Notes or other obligations owed to such Holder, as the Administrative Agent
shall direct.
(c) COMPUTATIONS. All computations of interest shall be made by the
Administrative Agent on the basis of a year of 365 or 366 days, as the case may
be, in each case for the actual number of days (including the first day but
excluding the last day) occurring in the period for which such interest is
payable. Each determination by the Administrative Agent of an interest rate
hereunder made in accordance with the provisions of this Agreement shall be
conclusive and binding for all purposes, absent manifest error.
(d) PAYMENT ON NON-BUSINESS DAYS. Whenever any payment hereunder shall
be stated to be due on a day other than a Business Day, such payment shall be
made on the next succeeding Business Day, and such extension of time shall in
such case be included in the computation of payment of interest.
(e) PRESUMPTION BY ADMINISTRATIVE AGENT. Unless the Administrative
Agent shall have received notice from the Issuer prior to the date on which any
payment is due to any Holder hereunder that the Issuer will not make such
payment in full, the Administrative Agent may assume that the Issuer has made
such payment in full to the Administrative Agent on such date and the
Administrative Agent may, in reliance upon such assumption, cause to be
distributed to each such Holder on such due date an amount equal to the amount
then due such Holder. If and to the extent the Issuer shall not have so made
such payment in full to the Administrative Agent, each such Holder shall repay
to the Administrative Agent forthwith on demand such amount distributed to such
Holder together with interest thereon, for each day from the date such amount is
distributed to such Holder until the date such Holder repays such amount to the
Administrative Agent, at the Federal Funds Rate.
SECTION 1.17. TAXES.
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(a) PAYMENTS MADE FREE OF TAXES. Any and all payments by the Issuer
hereunder shall be made, in accordance with SECTION 2.05, free and clear of and
without deduction for any and all present or future taxes, levies, imposts,
deductions, charges or withholdings, and all liabilities with respect thereto,
EXCLUDING, in the case of each Tax Indemnitee, income and franchise taxes
imposed on or measured by net income of such Tax Indemnitee by a jurisdiction in
which such Tax Indemnitee is organized or in which its principal office or
Payment Office is located (all such non-excluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities being hereinafter referred to
as "TAXES"). If the Issuer shall be required by law to deduct any Taxes from or
in respect of any sum payable hereunder to any Tax Indemnitee, (i) the sum
payable shall be increased as may be necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this SECTION 2.06) such Tax Indemnitee receives an amount equal to the sum it
would have received had no such deductions been made, (ii) the Issuer shall make
such deductions and (iii) the Issuer shall pay the full amount deducted to the
relevant taxation authority or other authority in accordance with applicable
law.
(b) OTHER TAXES. In addition, the Issuer agrees to pay any present or
future stamp or documentary taxes or any other excise or property taxes, charges
or similar levies that arise from any payment made by it hereunder or from the
execution, delivery or registration of this Agreement (hereinafter referred to
as "OTHER TAXES").
(c) INDEMNIFICATION. The Issuer will indemnify each Tax Indemnitee for
the full amount of Taxes or Other Taxes (including any Taxes or Other Taxes
imposed by any jurisdiction on amounts payable under this SECTION 2.06) paid by
such Tax Indemnitee and any liability (including penalties, additions to tax,
interest and expenses) arising therefrom or with respect thereto, whether or not
correctly asserted. This indemnification shall be made within 30 days from such
date such Tax Indemnitee makes written demand therefor and such Tax Indemnitee's
determination that it is liable for such taxes shall be conclusive absent
manifest error.
(d) EVIDENCE OF PAYMENTS. Within 30 days after the date of any payment
of Taxes, the Issuer making payment of Taxes will furnish to the Administrative
Agent, at its address referred to in SECTION 10.02, appropriate evidence of
payment thereof.
(e) CERTAIN OBLIGATIONS OF NON-U.S. HOLDERS. Each Holder organized
under the laws of a jurisdiction outside the United States shall, on or prior to
the date of its execution and delivery of this Agreement (in the case of each
Purchaser) and on the date of the Transfer and Acceptance pursuant to which it
became a Holder (in the case of each other Holder), and from time to time
thereafter if requested in writing by the Issuer or the Administrative Agent or
promptly upon the occurrence of any event requiring a change in the last form
delivered by such Holder (but, in each case, only so long as such Holder remains
lawfully able to do so after the date such Holder becomes a Holder hereunder),
provide the Administrative Agent and the Issuer with either (i) Internal Revenue
Service form W8-BEN or W-8ECI, as appropriate, or any successor form prescribed
by the Internal Revenue Service, certifying that such Holder is entitled to
benefits under an income tax treaty to which the United States is a party that
reduces the rate of withholding tax on payments under this Agreement and the
Notes or certifying that the income receivable pursuant to this
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Agreement and the Notes is effectively connected with the conduct of a trade or
business in the United States or (ii) Internal Revenue Service form W-8, upon
which the Issuer is entitled to rely, pursuant to Sections 881(c)(2)(B) or
871(h)(5) of the Code, or any successor form or statement prescribed by the
Internal Revenue Service in order to establish that such Holder is entitled to
treat the interest payments under this Agreement and the Notes as portfolio
interest that is exempt from withholding tax under the Code, together with a
certificate stating that such Holder is not described in Section 881(c)(3) of
the Code.
If the form provided by a Holder at the time such Holder first becomes
a party to this Agreement indicates a United States interest withholding tax
rate on payments of interest hereunder in excess of zero (or if the Holder
cannot provide at such time such form because it is not entitled to reduced
withholding under a treaty, the payments are not effectively connected income
and the payments do not qualify as portfolio interest), withholding tax at such
rate (or at the then existing U.S. statutory rate if the Holder cannot provide
the form) shall be excluded from Taxes unless and until such Holder provides the
appropriate form certifying that a lesser rate applies, whereupon withholding
tax at such lesser rate only shall be excluded from Taxes for periods governed
by such form; PROVIDED that, if at the date of the Transfer and Acceptance
pursuant to which a Holder transferee becomes a party to this Agreement, the
Holder transferor was entitled to payments under SUBSECTION (A) in respect of
United States withholding tax with respect to amounts paid hereunder at such
date, then, to the extent such tax results in liability for such payments, the
term Taxes shall include (in addition to withholding taxes that may be imposed
in the future or other amounts otherwise includable in Taxes) United States
interest withholding tax, if any, applicable with respect to the Holder
transferee on such date.
(f) LIMITATION UPON INDEMNIFICATION OF NON-U.S. HOLDERS. For any period
with respect to which a Holder has failed to provide the Issuer and the
Administrative Agent with the appropriate form described in SECTION 2.06(E)
(other than if such failure is due to a change in law occurring after the date
on which a form originally was required to be provided or if such form otherwise
is not required under CLAUSE (E) above), such Holder shall not be entitled to
indemnification under CLAUSE (A) or CLAUSE (C) above with respect to Taxes
imposed by the United States.
(g) MITIGATION. Any Holder claiming any additional amounts payable
pursuant to this SECTION 2.06 shall use reasonable efforts (consistent with its
internal policy and legal and regulatory restrictions) to change the
jurisdiction of its Payment Office(s) if the making of such a change would avoid
the need for, or reduce the amount of, any such additional amounts that may
thereafter accrue and would not, in the reasonable judgment of such Holder, be
otherwise disadvantageous to such Holder.
(h) SURVIVAL. Without prejudice to the survival of any other agreement
of the Issuer hereunder, the agreements and obligations of the Issuer contained
in this SECTION 2.06 shall survive the payment in full of principal and interest
hereunder.
SECTION 1.18. SHARING OF PAYMENTS, ETC. If any Holder shall obtain any
payment (whether voluntary, involuntary, through the exercise of any right of
set-off, or otherwise) on account of the
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Notes owing to it (including any such payments received through the exercise of
remedies under any of the Security Documents, but excluding any payments
pursuant to SECTION 10.04) in excess of its ratable share of payments on account
of the Notes hereunder obtained by all Holders, such Holder shall forthwith
purchase from the other Holders such participations in the Notes as shall be
necessary to cause such purchasing Holder to share the excess payment ratably
with each of the other Holders; PROVIDED that if all or any portion of such
excess payment is thereafter recovered from such purchasing Holder, such
purchase from each other Holder shall be rescinded and each other Holder shall
repay to the purchasing Holder the purchase price to the extent of such recovery
together with an amount equal to such Holder's ratable share (according to the
proportion of (a) the amount of such Holder's required repayment to (b) the
total amount so recovered from the purchasing Holder) of any interest or other
amount paid or payable by the purchasing Holder in respect of the total amount
so recovered. The Issuer agrees that any Holder so purchasing a participation
from another Holder pursuant to this SECTION 2.07 may, to the fullest extent
permitted by law, exercise all its rights of payment (including the right of
set-off) with respect to such participation as fully as if such Holder were the
direct creditor of the Issuer in the amount of such participation.
SECTION 1.19. NO FORCE MAJEURE, DISPUTES. The Issuer's obligation to
pay all amounts due under the Notes and the other Obligations shall not be
affected by (a) any setoff, counterclaim, recoupment, deduction, abatement,
suspension, diminution, reduction, defense or other right which the Issuer may
have against Nortel Networks or any of its Affiliates for any reason whatsoever
arising under or pursuant to the Master Purchase Agreement or otherwise relating
to the purchase of goods or services from Nortel Networks or any of its
Affiliates, (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 Nortel Networks or any of its Affiliates, (c) any
insolvency, bankruptcy, reorganization or similar proceedings by or against the
Issuer or affecting any of its properties or assets, (d) any action of any
Governmental Authority or any damage to or destruction of or any taking of the
Issuer's properties or assets or any part thereof, (e) any change, waiver,
extension, indulgence or failure to perform or comply with, or other action or
omission with respect to, this Agreement or any other Note Documents (except for
express written modifications to this Agreement or other Note Documents as and
in the manner permitted under this Agreement or the other Note Documents), (f)
any dissolution of the Issuer, (g) any inability or illegality with respect to
the use or ownership of the Issuer's property or assets, (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 Note
Documents or any other infirmity therein or any lack of power or authority of
the Administrative Agent, any Purchaser or the Issuer, or (j) any other event or
circumstance whatsoever, whether or not similar to any of the foregoing and
whether or not the Issuer shall have notice or knowledge of any of the
foregoing, it being the intention of the Administrative Agent and the Purchasers
and the Issuer that the Obligations of the Issuer under the Note Documents 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.
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ARTICLE III
CONDITIONS OF CLOSING
SECTION 1.20. ISSUANCE. The obligation of any Purchaser to purchase and
pay for the Note to be sold to such Purchaser on the Closing Date is subject to
the condition precedent that the Administrative Agent shall have received the
following in form and substance satisfactory to it (except if and to the extent
that the Administrative Agent may have waived compliance with any such condition
precedent at any time):
(a) EXECUTED COUNTERPARTS. This Agreement, the Warrant Agreement, the
Security Agreement, the Intercreditor Agreement and such other Security
Documents as the Administrative Agent shall have requested be executed and
delivered pursuant to SECTION 5.04, in each case duly executed by each of the
intended parties thereto, together with:
(i) such appropriately completed and duly executed copies of
Uniform Commercial Code financing statements and other registrations as
the Administrative Agent or any Purchaser shall have requested in order
to perfect the Liens created by the Security Documents and covering the
Collateral described therein; and
(ii) executed documents for recordation and filing of or with
respect to such Security Documents that the Administrative Agent may
reasonably request, the recordation or filing of which is necessary in
order to perfect the Liens created thereby.
(b) ORGANIZATIONAL DOCUMENTS, ETC. Such documents and certificates as
the Administrative Agent shall have reasonably requested relating to the
organization, existence and good standing of Holdings and the Issuer, the
authorization of the Transactions and any other legal matters relating to
Holdings and the Issuer, this Agreement, the other Note Documents or the
Transactions, all in form and substance reasonably satisfactory to the
Administrative Agent and its counsel.
(c) FINANCIAL OFFICER'S CERTIFICATES. A certificate of a Financial
Officer of the Issuer to the effect that:
(i) the representations and warranties contained in each Note
Document are true and correct on and as of the Closing Date, before and
after giving effect to the transactions contemplated hereby, as though
made on and as of such date (or, if any such representation or warranty
is expressly stated to have been made as of a specific date, as of such
specific date);
(ii) no event has occurred and is continuing that constitutes
a Default or an Event of Default (including, without limitation, any
Default or Event of Default arising out of a default under or in
respect of the Other Debt Agreements); and
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(iii) as of the Closing Date and following the issuances of
the Notes and after giving effect to the application of the proceeds
thereof and consummation of the Transactions and the other transactions
contemplated by the Other Debt Documents, the Issuer is Solvent.
Such certificate shall also state that the financial projections and underlying
assumptions upon which the conclusions set forth in such analysis in CLAUSE
(III) above were based are, on the Closing Date, fair and reasonable in the
opinion of the Issuer and accurately computed and that the portion of contingent
liabilities of the Issuer that have been included for purposes of the above
determinations shall be the amount of such contingent liabilities that, in light
of all facts and circumstances existing at such time, could reasonably be
expected to become actual matured liabilities of the Issuer.
(d) FINANCIAL STATEMENTS. The following financial statements with
respect to Holdings and its Subsidiaries:
(i) the audited consolidated balance sheet of Holdings and its
Subsidiaries (and, separately stated, of Holdings and its Restricted
Subsidiaries), in each case as at December 31, 2000 and the related
audited consolidated statements of income, stockholders' equity and
cash flows of Holdings and its Subsidiaries (and, separately stated, of
Holdings and its Restricted Subsidiaries), for the fiscal year ended on
such date, with the opinion thereon of the Accountants,
(ii) the unaudited consolidated balance sheet of Holdings and
its Subsidiaries (and, separately stated, of Holdings and its
Restricted Subsidiaries), in each case as at March 31, 2001 and June
30, 2001 and the related unaudited consolidated statements of income,
stockholders' equity and cash flows of Holdings and its Subsidiaries
(and, separately stated, of Holdings and its Restricted Subsidiaries),
for the three-month and six-month periods ended on said dates, and
(iii) Consolidating Financial Statements as at and for the
fiscal year ended December 31, 2000,
in each case together with a certificate of a Financial Officer of Holdings to
the effect that the financial statements referred to in CLAUSES (I), (II) and
(III) above accurately present the financial position, income, stockholders'
equity and cash flows of Holdings and its Subsidiaries (or of Holdings and its
Restricted Subsidiaries, as applicable) as of such date and period and, in the
case of the financial statements referred to in CLAUSE (III) above, the
respective revenues, gross margins and property, plant and equipment of the
businesses covered thereby, as applicable.
(e) FINANCIAL PROJECTIONS. Consolidated projected balance sheets and
statements of income, stockholders' equity and cash flows of Holdings and its
Restricted Subsidiaries, covering the period commencing on January 1, 2001
through March 31, 2007 (detailed by fiscal quarter through December 31, 2004).
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(f) INSURANCE. Evidence of the existence of all insurance required to
be maintained by the Issuer hereunder, together with evidence that the
Administrative Agent on behalf of the Secured Parties is an additional insured
or loss payee (to the extent required under SECTION 5.09).
(g) CONSENTS. Evidence of receipt of all governmental and third party
consents and approvals (including each of the consents and approvals listed on
SCHEDULE 4.01(E)) necessary in connection with this Agreement and the other Note
Documents and the Other Debt Agreements and that the same remain in effect,
including, without limitation, all consents and approvals of the holders of the
Holdings Senior Notes and the Holdings Subordinated Notes in form and substance
satisfactory to the Administrative Agent in its sole discretion.
(h) OPINIONS OF COUNSEL TO HOLDINGS AND THE ISSUER. A favorable opinion
of Akin, Gump, Strauss, Hauer & Feld, L.L.P., special counsel for Holdings and
the Issuer, in substantially the form of EXHIBIT C and a favorable opinion of
the General Counsel for Holdings and the Issuer, covering such matters not
covered by the opinion of special counsel for Holdings and the Issuer as is
satisfactory to the Administrative Agent (and for such purpose, the Issuer
hereby authorizes each such counsel to deliver such opinions to the
Administrative Agent and the Purchasers).
(i) FEES. Evidence that the Issuer shall have paid all fees required to
be paid, and all expenses for which invoices have been presented, on or before
the Closing Date (including, without limitation, the reasonable fees and
expenses of Jenkens & Gilchrist, a Professional Corporation, special counsel to
Nortel Networks) and to the extent that statements for such fees and expenses
have been delivered to the Issuer.
(j) ISSUANCE OF HOLDINGS CONVERTIBLE DEBT OR EQUITY. Evidence that
Holdings shall have received net cash proceeds in an amount at least equal to
$230,000,000 from the issuance at par of unsecured Holdings convertible debt or
equity, pursuant to agreements (including all related shareholder, registration
right and other agreements) in form and substance satisfactory to the Purchasers
(the "HOLDINGS CONVERTIBLE DEBT OR EQUITY") and the terms and conditions
applicable to such debt or equity shall be satisfactory in form and substance to
each Purchaser, including the condition that at least $180,000,000 of such net
cash proceeds shall be available for general corporate purposes of Holdings.
(k) VERIZON DEBT AGREEMENT. Evidence that Holdings shall have received
net cash proceeds in an amount at least equal to $50,000,000 from the issuance
at par of secured Indebtedness, pursuant to agreements (including all related
shareholder, registration right and other agreements) in form and substance
satisfactory to the Purchasers, with the terms and conditions applicable to such
Indebtedness being satisfactory in form and substance to each Purchaser, it
being understood that such Indebtedness shall be incurred by Holdings to finance
the acquisition of identified equipment and that such identified
Telecommunications Assets may be pledged as collateral security for such
Indebtedness and that, in connection therewith, Verizon, Inc. (or the respective
affiliate party thereto) shall have entered into intercreditor arrangements
satisfactory to the Holdings Notes Agent with respect to such Telecommunications
Assets. In addition, to the extent that the Verizon Agreement shall be modified
or supplemented in connection with the execution and delivery of the Verizon
Debt Agreement, each Purchaser shall have received a copy
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of such modification or supplement and such modification or supplement shall be
satisfactory in form and substance to each Purchaser.
(l) VENDOR AGREEMENTS. Evidence that Holdings shall have caused one or
more of its Subsidiaries constituting Obligors to enter into Vendor Agreements
with one or more Vendors, other than Nortel Networks, providing for the deferral
of Vendor Obligations, payable to such Vendors in an aggregate amount (as to all
such other Vendors) of not less than $250,000,000, each of which Vendor
Agreements shall be in form and substance, and shall provide for a deferral of
Vendor Obligations upon terms, satisfactory to each Purchaser.
(m) WARRANTS, ETC. Evidence of receipt by Nortel Networks of the
warrants to be issued pursuant to the Warrant Agreement on the Closing Date and,
in that connection, evidence that Metromedia Company shall have executed and
delivered to the Purchasers a voting agreement pursuant to which Metromedia
Company shall have agreed, INTER ALIA, to vote the shares of Holdings held by it
in favor of the issuances of equity contemplated by the Basic Documents.
(n) HOLDINGS NOTES. Evidence that the Holdings Notes in an aggregate
amount equal to $150,000,000 are being concurrently issued pursuant to the
Holdings Notes Agreement.
(o) AMENDMENT TO MASTER PURCHASE AGREEMENT. An amendment to the Master
Purchase Agreement in form and substance satisfactory to Nortel Networks
executed by the Issuer.
(p) ISSUANCE OF NOTES. Evidence that, contemporaneously on the Closing
Date, the Issuer shall have issued to each Purchaser the Note or Notes to be
purchased by such Purchaser on the Closing Date pursuant to SECTION 2.01.
(q) PAYMENT UNDER THE MASTER PURCHASE AGREEMENT. Confirmation that
Nortel Networks shall have received a payment in the aggregate amount of
$15,000,000 under the Master Purchase Agreement, which payment (i) shall be
credited against the indebtedness or other obligations of the Issuer due and
owing by it to Nortel Networks under the Master Purchase Agreement and (ii) be
paid to Nortel Networks for and on behalf of the Issuer by the Holdings Notes
Agent from a portion of the proceeds of the Holdings Notes in partial
consideration for the execution of the Intercreditor Agreement by the
Administrative Agent and Nortel Networks.
(r) MECHANIC'S LIENS, ETC. Evidence satisfactory to the Administrative
Agent that no mechanics' or materialmen's Liens have been filed (which remain
unreleased as of the Closing Date) against Holdings or any Obligor other than
Liens (i) filed by Nortel Networks or the Administrative Agent, (ii) filed by
Vendors who have executed and delivered Vendor Agreements, (iii) constituting
mechanics' or materialmen's Liens permitted under SECTION 6.02(D) or (iv) which
are otherwise acceptable to each Purchaser.
(s) MATURITY DATE. Evidence that the Maturity Date hereunder is at
least six months prior to the maturity date of each of (i) the Holdings Senior
Notes and the Holdings Subordinated Notes and (ii) the Holdings Convertible Debt
or Equity.
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(t) ADMINISTRATIVE AGENT'S FEE. Confirmation that the Issuer shall have
paid to the Administrative Agent the initial Administrative Agent's fee in the
amount of $75,000 due and payable on the Closing Date in accordance with SECTION
8.08.
(u) AVAILABILITY OF NET PROCEEDS OF NEW CAPITAL. Evidence that all net
cash proceeds from the issuance by Holdings of the Holdings Notes and the
Holdings Convertible Debt or Equity shall be available for general corporate
purposes of the Issuer.
(v) OTHER. Such other approvals, opinions and documents relating to
this Agreement and the transactions contemplated hereby as the Administrative
Agent or any Purchaser may reasonably request.
SECTION 1.21. ADDITIONAL CONDITIONS. In addition to the conditions
contained in SECTION 3.01, the obligation of each Purchaser to purchase and pay
for the Notes shall be subject to the further conditions precedent that on the
date of such purchase and payment the following statements shall be true (except
if and to the extent that the Administrative Agent may have waived compliance
with any such conditions at any time):
(a) the representations and warranties contained in each Note Document
are true and correct on and as of the date of such purchase and payment, before
and after giving effect to such purchase and payment and to the application of
the proceeds therefrom, as though made on and as of such date (or, if any such
representation or warranty is expressly stated to have been made as of a
specific date, as of such specific date); and
(b) no event has occurred and is continuing, or would result from such
purchase and payment or from the application of the proceeds therefrom, that
constitutes a Material Adverse Effect, a Default or an Event of Default
(including, without limitation, any Material Adverse Effect, any Default or any
Event of Default arising out of a default under or in respect of the Other Debt
Agreements.
SECTION 1.22. DETERMINATIONS UNDER SECTION 3.01 AND SECTION 3.02. For
purposes of determining compliance with the conditions specified in SECTION 3.01
and SECTION 3.02, each Purchaser shall be deemed to have consented to, approved
or accepted or to be satisfied with each document or other matter required
thereunder to be consented to or approved by or acceptable or satisfactory to
the Purchasers unless an officer of the Administrative Agent responsible for the
transactions contemplated by the Note Documents shall have received notice from
such Purchaser prior to the Closing Date specifying its objection thereto and
such Purchaser shall not have made available to the Administrative Agent such
Purchaser's ratable portion of the Notes.
SECTION 1.23. WAIVER OF CONDITIONS PRECEDENT BY THE ADMINISTRATIVE
AGENT. Notwithstanding anything to the contrary contained in this ARTICLE III or
elsewhere in this Agreement, any one or more of the conditions precedent set
forth in SECTION 3.01 or SECTION 3.02
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may be waived at any time or from time to time by the Administrative Agent by
the giving of written notice of such waiver to the Issuer.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
SECTION 1.24. REPRESENTATIONS AND WARRANTIES OF THE ISSUER. The Issuer
represents and warrants to the Administrative Agent and each of the Purchasers
that:
(a) ORGANIZATION; POWERS. Holdings and each of its Subsidiaries (i) is
a corporation (or, as the case may be, a limited liability company or
partnership) duly organized, validly existing and in good standing under the
laws of the jurisdiction of its organization, (ii) is duly qualified and in good
standing as a foreign corporation (or limited liability company or partnership,
as the case may be) in each other jurisdiction in which it owns or leases
property or in which the conduct of its business requires it to so qualify or be
licensed and where, in each case, failure so to qualify and be in good standing
has had or could reasonably be expected (individually or in the aggregate) to
have a Material Adverse Effect and (iii) has all requisite power (corporate or
other) and authority to own or lease and operate its properties and to carry on
its business as now conducted and as proposed to be conducted.
(b) AUTHORIZATION. The execution, delivery and performance by the
Issuer of this Agreement and each other Basic Document to which it is or is
intended to be a party, and the consummation of the transactions contemplated
hereby, are within the Issuer's corporate powers, have been duly authorized by
all necessary corporate action, and do not (i) contravene the articles or
certificate of incorporation, charter, by-laws, or operating or partnership
agreement or other constitutive documents, or any directors' or shareholders'
resolution of Holdings or any of its Subsidiaries, (ii) violate any applicable
law, rule, regulation (including Regulation U and Regulation X), order, writ,
judgment, injunction, decree, determination or award of any Governmental
Authority, (iii) conflict with or result in the breach of, or constitute a
default or event of default under, or permit an acceleration of any rights or
benefits under, any Material Agreement, contract, loan agreement, indenture,
mortgage, deed of trust, lease or other instrument binding on or affecting
Holdings or any of its Restricted Subsidiaries or any of their properties or
(iv) except for the Liens created by the Security Documents, result in or
require the creation or imposition of any Lien upon or with respect to any of
the properties of Holdings or any of its Restricted Subsidiaries. Neither any
Obligor nor any of its Restricted Subsidiaries is in violation of any such law,
rule, regulation, order, writ, judgment, injunction, decree, determination or
award of any Governmental Authority or in breach of any such Material Agreement,
contract, loan agreement, indenture, mortgage, deed of trust, lease or other
instrument, the violation or breach of which has had or could be reasonably
expected (individually or in the aggregate) to have a Material Adverse Effect.
(c) ENFORCEABILITY This Agreement has been duly executed and delivered
by the Issuer and constitutes, and each other Basic Document when executed and
delivered by the Issuer will
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constitute, a legal, valid and binding obligation of the Issuer enforceable
against the Issuer in accordance with its terms, except as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization, moratorium
or other laws affecting the enforcement of creditors' rights generally and by
equitable principles regardless of whether considered in a proceeding in equity
or at law.
(d) PERFECTION AND PRIORITY OF LIENS. At all times after the execution
of the Security Documents, the Security Documents create, in favor of the
Administrative Agent for the benefit of the Secured Parties, as security for the
Indebtedness evidenced by the Notes and the other obligations purported to be
secured thereby, a legal, valid and enforceable perfected security interest or
Lien in all of the Collateral, superior to and prior to the rights of all third
persons and subject to no Liens except Liens expressly permitted by SECTION
6.02. The Issuer has (or on and after the time it executes the respective
Security Document, will have) good and marketable title to all items of
Collateral (or, as the case may be, collateral) covered by such Security
Document free and clear of all Liens, except Liens expressly permitted by
SECTION 6.02.
(e) GOVERNMENTAL APPROVALS. No action, consent or approval of,
registration or filing with or any other action by any Governmental Authority is
required on the date hereof or will (absent any change in any applicable law,
rule or regulation) be required after the date hereof in connection with the
Transactions or the transactions contemplated by the Other Debt Agreements,
except for (a) the filing of Uniform Commercial Code financing statements and
other similar filings to perfect the interests of the Secured Parties in the
Collateral, (b) such as are listed on SCHEDULE 4.01(E), each of which will have
been made or obtained and will be in full force and effect on the Closing Date,
and (c) such as may be required in the ordinary course of business in connection
with the performance of the obligations of the Issuer hereunder.
(f) FINANCIAL STATEMENTS.
(i) FINANCIAL STATEMENTS. The consolidated financial
statements delivered pursuant to SECTION 3.01(D) present fairly, in all
material respects, the financial position, income, stockholders' equity
and cash flows of Holdings and its Subsidiaries (and of Holdings and
its Restricted Subsidiaries, as applicable) as of such date and for the
fiscal year ended December 31, 2000, in accordance with GAAP, and the
Consolidating Financial Statements delivered pursuant to SECTION
3.01(D) present fairly, in all material respects, the respective
revenues, gross margins and property, plant and equipment of the
businesses covered thereby. As of the date hereof, there are no
material contingent liabilities, material liabilities for taxes,
material unusual forward or long-term commitments or material
unrealized or anticipated losses from any unfavorable commitments of
Holdings or any of its Restricted Subsidiaries, except as referred to
or reflected or provided for in the audited financial statements as at
December 31, 2000.
(ii) PROJECTED FINANCIAL STATEMENTS. The projected financial
statements delivered pursuant to SECTION 3.01(E) have been prepared in
good faith, based on estimates and
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assumptions that the Issuer believes are fair and reasonable at the
time such projections have been furnished to the Holders.
(g) NO MATERIAL ADVERSE CHANGE. Since December 31, 2000, except as set
forth in the Form 10-Q for Holdings as at June 30, 2001, there has been no
material adverse change in the business, assets, results of operations,
financial condition, liabilities or material agreements of Holdings and its
Restricted Subsidiaries, taken as a whole, or of the Issuer, individually.
(h) PROPERTIES, ETC.
(i) TITLE TO PROPERTY. Each of Holdings and its Restricted
Subsidiaries has good title to, or valid leasehold interests in, all of
its properties and assets which are material to Holdings and its
Restricted Subsidiaries, taken as a whole, and, as to Issuer, which are
material to Issuer, in each case except for minor defects in title that
do not materially interfere with its ability to conduct its business as
currently conducted or to utilize such properties and assets for their
intended purposes. All such material properties and assets are free and
clear of Liens, other than Liens expressly permitted by SECTION 6.02.
The Issuer has good title to all of the Collateral.
(ii) POSSESSION UNDER LEASES. Each of Holdings and its
Restricted Subsidiaries has complied with all obligations under all
leases which are material to Holdings and its Restricted Subsidiaries,
taken as a whole, and, as to Issuer, which are material to Issuer, in
each case to which it is a party and all such leases are in full force
and effect, except where failure to do so or failure of such leases to
be in full force and effect has not had and could not reasonably be
expected (individually or in the aggregate) to have a Material Adverse
Effect. Each of Holdings and its Restricted Subsidiaries enjoys
peaceful and undisturbed possession under all such leases, except where
failure to do so has not had and could not reasonably be expected
(individually or in the aggregate) to have a Material Adverse Effect.
(iii) INTELLECTUAL PROPERTY. Each of Holdings and its
Restricted Subsidiaries owns, or is licensed to use, all trademarks,
tradenames, copyrights, patents and other intellectual property
material to its business, and the use thereof by Holdings and its
Restricted Subsidiaries does not infringe upon the rights of any other
Person, except for any such infringements that, individually or in the
aggregate, could not reasonably be expected (individually or in the
aggregate) to result in a Material Adverse Effect.
(iv) PRIVATE LICENSES. The Private Licenses of Holdings and
its Restricted Subsidiaries are adequate and sufficient for the
construction, ownership and operation of the Telecommunications Assets
of Holdings and its Restricted Subsidiaries and neither Holdings nor
any Restricted Subsidiary is in default in any manner under any
provision of any Private License to which it is a party or by which it
or any of its assets may be bound, where such default has had or could
reasonably be expected (individually or in the aggregate) to have a
Material Adverse Effect.
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(i) SUBSIDIARIES; OTHER EQUITY INVESTMENTS. Set forth on SCHEDULE
4.01(I) is a complete and accurate list of all Subsidiaries of Holdings as of
the date hereof, showing as of such date (as to each such Subsidiary) the
jurisdiction of its organization, whether or not such Subsidiary is a Restricted
Subsidiary or Unrestricted Subsidiary, the number of shares of each class of
Capital Stock authorized, and the number outstanding and the percentage of the
outstanding shares or interests of each such class owned (directly or
indirectly) by Holdings or its Subsidiary (as applicable) and the number of
shares covered by all outstanding options, warrants, rights of conversion or
purchase and similar rights. All of the outstanding Capital Stock of all of such
Subsidiaries have been validly issued, are fully paid and non-assessable and are
owned by Holdings or one or more of its Subsidiaries (as applicable) free and
clear of all Liens, except those created by the Senior Security Documents and
those listed in SCHEDULE 4.01(I).
(j) LITIGATION; COMPLIANCE WITH LAWS.
(i) LITIGATION. Other than as set forth on a Schedule to be
prepared after the date hereof and on or before the Closing Date, the
contents of which Schedule shall be in form and substance satisfactory
to each Purchaser, there are no actions, suits or proceedings at law or
in equity or by or before any Governmental Authority now pending or, to
the knowledge of any Obligor, threatened against or affecting Holdings
or any Restricted Subsidiary or any business, property or rights of
Holdings or any Restricted Subsidiary (A) that involve any Basic
Document or the Transactions or (B) as to which there is a reasonable
likelihood of an adverse determination and that, if adversely
determined, individually or in the aggregate, has had or could
reasonably be expected (individually or in the aggregate) to have a
Material Adverse Effect.
(ii) COMPLIANCE WITH LAWS. Neither Holdings nor any Restricted
Subsidiary nor any of their respective properties or assets is in
violation of, nor will the continued operation of their properties and
assets as currently conducted violate, any law, rule or regulation
(including any zoning, building, ordinance, code or approval or any
building permits), or is in default with respect to any judgment, writ,
injunction, decree or order of any Governmental Authority, where such
violation or default has had or could reasonably be expected
(individually or in the aggregate) to have a Material Adverse Effect.
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(k) AGREEMENTS.
(i) NO DEFAULT UNDER AGREEMENTS, ETC. Neither Holdings nor any
Restricted Subsidiary is in default in any manner under any provision
of any agreement or instrument evidencing Indebtedness, or any other
agreement or instrument to which it is a party or by which it or any of
its properties or assets are or may be bound, where such default has
had or could reasonably be expected (individually or in the aggregate)
to have a Material Adverse Effect. Neither the consummation by the
Issuer of the Transactions contemplated hereby nor the consummation by
Holdings of the transactions contemplated by the Other Debt Agreements
will trigger any redemption events or result in the creation of any
Liens under any provision of any agreement or instrument evidencing
Indebtedness, or any other agreement or instrument to which it is a
party or by which it or any of its properties or assets are or may be
bound.
(ii) MATERIAL AGREEMENTS. Set forth on SCHEDULE 4.01(K) is a
list of agreements (other than those referred to in CLAUSES (A) through
(H) of the definition of the term "Material Agreement" in SECTION 1.01)
to which Holdings or any of its Restricted Subsidiaries is a party that
are material to the business, assets, operations, financial condition
or liabilities of Holdings and its Restricted Subsidiaries, taken as a
whole. The Issuer has heretofore delivered to the Administrative Agent
true and complete copies of each of the Material Agreements (including
the Verizon Agreement and the Management Agreement referred to in
SECTION 6.10). Each of the Material Agreements is in full force and
effect and neither Holdings nor any of its Subsidiaries nor any of the
counterparties under any of such Material Agreements, (A) is in default
of any of its respective obligations thereunder where such default has
had or could reasonably be expected (individually or in the aggregate)
to have a Material Adverse Effect or (B) has delivered or received
notification of any default or material deficiency under any such
Material Agreement.
(iii) RESTRICTIVE OR BURDENSOME AGREEMENTS. As of the date
hereof, other than as set forth in SCHEDULE 4.01(K) and expressly
identified in such schedule as involving restrictive or burdensome
agreements or on the Schedule to be delivered on or before the Closing
Date pursuant to SECTION 6.08, neither Holdings nor any Restricted
Subsidiary is subject to any indenture, agreement, instrument or other
arrangement of the type described in SECTION 6.08, nor does there exist
any agreement that imposes burdensome requirements upon Holdings or any
Restricted Subsidiary that, singly or in the aggregate, would be
reasonably likely (individually or in the aggregate) to result in a
Material Adverse Effect.
(l) FEDERAL RESERVE REGULATIONS. Neither Holdings nor any Restricted
Subsidiary is engaged principally, or as one of its important activities, in the
business of extending credit for the purpose of buying or carrying Margin Stock.
No part of the proceeds of any Note will be used by the Issuer, whether directly
or indirectly, and whether immediately, incidentally or ultimately, for any
purpose that violates Regulation T, U or X.
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(m) INVESTMENT COMPANY ACT; PUBLIC UTILITY HOLDING COMPANY ACT. Neither
Holdings nor any of its Subsidiaries is an "investment company," or an
"affiliated person" of, or "promoter" or "principal underwriter" for, an
"investment company," as such terms are defined in the Investment Company Act of
1940. Neither Holdings nor any of its Subsidiaries is a "holding company", or an
"affiliate" of a "holding company" or a "subsidiary company" of a "holding
company", within the meaning of the Public Utility Holding Company Act of 1935,
as amended.
(n) TAX RETURNS. Each of Holdings and its Restricted Subsidiaries has
filed or caused to be filed all material foreign, Federal, state and other tax
returns, extensions or materials required to have been filed by it and has paid
or caused to be paid all taxes shown on such returns to be due and payable by it
and all assessments received by it, except (i) taxes and assessments that are
being contested in good faith by appropriate proceedings and for which it shall
have set aside on its books adequate reserves in accordance with GAAP and (ii)
taxes and assessments the failure to pay which has not had and could not
reasonably be expected (individually or in the aggregate) to result in a
Material Adverse Effect.
(o) NO MATERIAL MISSTATEMENTS. Neither the information, reports,
financial statements, exhibits and schedules furnished in writing by or on
behalf of Holdings or the Issuer to the Administrative Agent or any Holder in
connection with the negotiation, preparation or delivery of this Agreement and
the other Basic Documents or included herein or therein or delivered pursuant
hereto or thereto, nor the information, reports, financial statements, exhibits
and schedules furnished in writing by or on behalf of Holdings to the
Administrative Agent or any Holder in connection with the negotiation,
preparation or delivery of the Other Debt Agreements or included therein or
delivered pursuant thereto, when taken as a whole, contain any untrue statement
of material fact or omit to state any material fact necessary to make the
statements herein or therein, in light of the circumstances under which they
were made, not misleading, other than a material fact the effect of which is
favorable to the Issuer or Holdings, respectively; PROVIDED that, to the extent
any such information, report, financial statement, exhibit or schedule was based
upon or constitutes a forecast, projection or expression of opinion, the Issuer
represents only that it or Holdings (as applicable) acted in good faith and
utilized reasonable assumptions and due care in the preparation of such
information, report, financial statement, exhibit or schedule. All written
information furnished after the date hereof by Holdings or any of its
Subsidiaries to the Administrative Agent and the Holders in connection with this
Agreement and the other Basic Documents and the transactions contemplated hereby
and thereby, and all written information furnished after the date hereof by
Holdings or any of its Subsidiaries in connection with any Other Debt Agreement
and the transactions contemplated thereby, will be true, complete and accurate
in every material respect, or (in the case of projections) based on reasonable
estimates, on the date as of which such information is stated or certified.
There is no fact known to the Issuer that has had or could reasonably be
expected (individually or in the aggregate) to have a Material Adverse Effect
that has not been disclosed herein, in the other Basic Documents or in a report,
financial statement, exhibit, schedule, disclosure letter or other writing
furnished to the Administrative Agent or the Holders for use in connection with
the transactions contemplated hereby or thereby.
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(p) PENSION PLANS. Each of Holdings and its ERISA Affiliates is in
compliance in all material respects with the applicable provisions of ERISA and
the Code and the regulations and published interpretations thereunder, except
where non-compliance has not had and could not reasonably be expected
(individually or in the aggregate) to have a Material Adverse Effect. No ERISA
Event has occurred or is reasonably expected to occur that, when taken together
with all other such ERISA Events, could reasonably be expected to result in
material liability of Holdings or any of its ERISA Affiliates, except where such
liability has not had and could not reasonably be expected (individually or in
the aggregate) to have a Material Adverse Effect.
(q) ENVIRONMENTAL MATTERS. The operations and properties of Holdings
and each of its Restricted Subsidiaries are in compliance in all material
respects with all Environmental Laws, all necessary Environmental Permits have
been obtained and are in effect or have been applied for in order for Holdings
and its Restricted Subsidiaries to conduct their respective operations and to
own their respective properties, Holdings and its Restricted Subsidiaries are in
compliance in all material respects with all such issued Environmental Permits,
no circumstances exist that could (i) form the basis of an Environmental Claim
that could reasonably be expected (individually or in the aggregate) to have a
Material Adverse Effect or (ii) cause any such property to be subject to any
restrictions on ownership, occupancy, use or transferability under any
Environmental Law that has had or could reasonably be expected (individually or
in the aggregate) to have a Material Adverse Effect, and, to the best knowledge
of Holdings and its Restricted Subsidiaries, no investigation (other than
routine investigations) of any such operation or property has been or is being
conducted by any Governmental Authority with respect to the enforcement of any
Environmental Law other than investigations which have not had and could not
reasonably be expected (individually or in the aggregate) to have a Material
Adverse Effect.
(r) INSURANCE. SCHEDULE 4.01(R) sets forth a true, complete and correct
description of all material insurance maintained by the Issuer as of the date
hereof. As of the date hereof, such insurance is in full force and effect and
all premiums which have become due and payable have been duly paid. Each of
Holdings and its Restricted Subsidiaries maintains insurance in such amounts and
covering such risks and liabilities as are in accordance with normal industry
practice.
(s) SOLVENCY. Immediately after the consummation of the Transactions to
occur on the Closing Date and immediately following the issuance of each Note
and after giving effect to the application of the proceeds thereof and
immediately after the consummation of the transactions contemplated by the Other
Debt Documents to occur on the Closing Date and immediately following the
incurrence of the Indebtedness thereunder and after giving effect to the
application of the proceeds thereof, each of Holdings, the Issuer and each
Obligor is Solvent.
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(t) LICENSES.
(i) REQUIRED LICENSES. As of the date hereof, except for the
Licenses described in SCHEDULE 4.01(T), there are no Licenses which are
required for the operation of the business of Holdings or any
Restricted Subsidiary, including Licenses issuable under the United
States Federal Communications Act of 1934, as amended. The Licenses
described in SCHEDULE 4.01(T) are adequate and sufficient for the
construction, ownership and operation of the Telecommunications Assets
of Holdings and its Restricted Subsidiaries and neither Holdings nor
any Restricted Subsidiary is in default in any manner under any
provision of any such License, where such default has had or could
reasonably be expected (individually or in the aggregate) to have a
Material Adverse Effect.
(ii) COMPLIANCE. Except as disclosed in SCHEDULE 4.01(T),
Holdings and each of its Restricted Subsidiaries is in compliance with
the terms of each of the Licenses under which it enjoys rights or
privileges and has timely filed or caused to be filed all renewal
applications with respect to the Licenses, no protests or competing
applications have been filed with respect to such renewal applications
and nothing has come to the attention of Holdings or any of its
Restricted Subsidiaries (after due inquiry) that would lead them to
conclude that such renewal applications would not be granted in the
ordinary course, in each case other than any thereof that has not had
and could not reasonably be expected (individually or in the aggregate)
to have a Material Adverse Effect. Holdings and each of its Restricted
Subsidiaries is authorized under applicable law and the rules and
regulations promulgated thereunder to continue to provide the services
which are the subject of such renewal applications during the pendency
thereof.
(iii) NO RATE REGULATION. Except as disclosed in SCHEDULE
4.01(T), the business and operations conducted and proposed to be
conducted by each Obligor in relation to its business are not regulated
by any Federal, state or provincial utility or rate-regulating
commission.
(u) FRANCHISES. Each Franchise of Holdings and each of its Restricted
Subsidiaries is in full force and effect pursuant to each statute, regulation,
agreement or instrument of each jurisdiction set forth on SCHEDULE 4.01(U), was
lawfully issued pursuant to the rules and regulations of such jurisdiction and
authorizes Holdings and each such Restricted Subsidiary to operate such
Franchise, and no other or further approval, filing or other action of any
Governmental Authority is or will be necessary or advisable in order to permit
the operation by Holdings or any Restricted Subsidiary of its Telecommunications
Business in accordance with the terms thereof. Holdings and its Restricted
Subsidiaries are in compliance with all material terms and conditions of each of
their respective Franchises and no event has occurred or exists which permits
or, after the giving of notice or the lapse of time or both, would permit the
revocation or termination of any such Franchise, other than where any such
non-compliance or revocation or termination (i) has not had and could not
reasonably be expected (individually or in the aggregate) to have a Material
Adverse Effect or (ii) has not resulted in a notification of non-compliance or
revocation or termination by or to any parties to such Franchises. No
Unrestricted Subsidiary owns or has rights to any Franchise necessary
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for the ongoing operations of Holdings and its Restricted Subsidiaries or their
respective Telecommunications Business.
(v) LOCATION OF EQUIPMENT, ETC. As of the date hereof, the equipment of
the Issuer is located in the jurisdictions set forth in the Security Agreement
(including the schedules thereto) and in no other place or places. As of the
date hereof, neither Holdings nor any Obligor owns or leases any real property
other than the lands described in SCHEDULE 4.01(V).
(w) NO DEFAULT. No event has occurred and is continuing, or would
result from the issuance of the Notes or from the application of the proceeds
therefrom, that constitutes a Default or an Event of Default.
(x) PRIVATE OFFERING BY THE ISSUER. Neither the Issuer nor anyone
acting on its behalf has offered the Notes or any similar securities for sale
to, or solicited any offer to buy any of the same from, or otherwise approached
or negotiated in respect thereof with, any Person other than the Purchasers.
Neither the Issuer nor anyone acting on its behalf has taken, or will take, any
action that would subject the issuance or sale of the Notes to the registration
requirements of Section 5 of the Securities Act.
(y) TERMS OF CERTAIN OTHER DEBT AGREEMENTS. No financing, restructuring
or other arrangement relating to any of the Other Debt Agreements, other than
the Holdings Notes Documents and, if applicable, the Verizon Debt Agreement in
form and substance satisfactory to the Purchasers, in each case as the same are
in effect as of the Closing Date, contains or provides for collateral,
Guarantees, other security or other terms or conditions which, when taken as a
whole and excluding consideration of payment terms and maturity dates, are more
favorable than the terms and provisions contained in this Agreement and the
other Note Documents.
(z) AMOUNTS OWED UNDER THE MASTER PURCHASE AGREEMENT. Immediately prior
to the Closing Date, the aggregate amount of indebtedness or other obligations
of the Issuer due and owing to Nortel Networks under the Master Purchase
Agreement is not less than $250,000,000, which amount is not subject to any
setoff, counterclaim, recoupment, deduction, abatement, suspension, diminution,
reduction, defense or other right which the Issuer may have against Nortel
Networks or any of its Affiliates for any reason whatsoever arising under or
pursuant to the Master Purchase Agreement or otherwise relating to the purchase
of goods or services from Nortel Networks or any of its Affiliates.
(aa) PURCHASE MONEY INDEBTEDNESS. The Obligations constitute "Purchase
Money Indebtedness" as such term is defined in each of the Indentures referred
to in the definition of the term "Holdings Senior Notes".
SECTION 1.25. REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS.
(a) PURCHASE FOR INVESTMENT. Each Purchaser represents that such
Purchaser is purchasing the Note for its own account or for one or more separate
accounts maintained by it or for
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the account of one or more pension or trust funds and not with a view to the
distribution thereof in violation of the Securities Act, provided that the
disposition of such Purchaser's or their property and assets shall at all times
be within such Purchaser's or their control. Each Purchaser understands that the
Notes have not been registered under the Securities Act and may be resold only
if registered pursuant to the provisions of the Securities Act or if an
exemption from registration is available, except under circumstances where
neither such registration nor such an exemption is required by law.
(b) ACCREDITED INVESTOR. Each Purchaser represents that it is an
"accredited investor" as such term is defined in Rule 501(a)(3) of Regulation D
under the Securities Act.
ARTICLE V
AFFIRMATIVE COVENANTS
The Issuer covenants and agrees with each Holder that so long as this
Agreement shall remain in effect, until the principal of and interest on each
Note, all fees and all other expenses or amounts (other than contingent
indemnity obligations) payable under the Note Documents shall have been paid in
full, unless the Required Holders shall otherwise consent in writing in
accordance with the provisions of SECTION 10.01:
SECTION 1.26. FINANCIAL STATEMENTS, REPORTS, ETC. The Issuer shall
furnish to the Administrative Agent (in electronic form or with sufficient
copies thereof for each Holder):
(a) as soon as available and in any event within 90 days after the end
of each fiscal year of Holdings commencing with the fiscal year ending December
31, 2001, the audited consolidated balance sheet and related audited
consolidated statements of income, stockholders' equity and cash flows of
Holdings and its Subsidiaries (and, separately stated, the corresponding audited
consolidated balance sheet and statements of Holdings and its Restricted
Subsidiaries), showing the financial condition of Holdings and its Subsidiaries
(and, of Holdings and its Restricted Subsidiaries, as applicable) as of the
close of such fiscal year and the results of operations of Holdings and its
Subsidiaries (and of Holdings and its Restricted Subsidiaries) during such year,
and accompanied
(i) by an opinion of the Accountants to the effect that such
consolidated financial statements fairly present, in all material
respects, the financial condition and results of operations of Holdings
and its Restricted Subsidiaries in accordance with GAAP,
(ii) by Consolidating Financial Statements for such fiscal
year together with a certificate of one of the Financial Officers of
Holdings to the effect that such Consolidating Financial Statements
fairly present in all material respects the respective revenues, gross
margins and property, plant and equipment of the businesses covered
thereby, and
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(iii) at the time of delivery of the financial statements set
forth above for the fiscal years ending December 31, 2001 or December
31, 2002, by (A) management's discussion of the financial performance
of Holdings and its Restricted Subsidiaries for such fiscal year and
the fiscal quarter then ending as compared against the financial
projections delivered pursuant to SECTION 3.01(E) and (B) a comparison
of the financial performance of Holdings and its Restricted
Subsidiaries for such fiscal year and fiscal quarter showing all
variances from such financial projections, in the case of each of
CLAUSE (A) and CLAUSE (B) above in form reasonably satisfactory to the
Administrative Agent;
(b) as soon as available and in any event within 45 days after the end
of each of the first three fiscal quarters of Holdings in each fiscal year, the
unaudited consolidated balance sheet and related unaudited consolidated
statements of income, stockholders' equity and cash flows of Holdings and its
Subsidiaries (and, separately stated, of the corresponding unaudited
consolidated balance sheet and statements of income, stockholders' equity and
cash flows of Holdings and its Restricted Subsidiaries), showing the financial
condition of Holdings and its Subsidiaries (and of Holdings and its Restricted
Subsidiaries) as of the close of such fiscal quarter and the results of
operations of Holdings and its Subsidiaries (and of Holdings and its Restricted
Subsidiaries) during such fiscal quarter and the then elapsed portion of the
fiscal year, and accompanied
(i) by a certificate of one of Financial Officers of Holdings
to the effect that such consolidated balance sheet and statements
fairly present, in all material respects, the consolidated financial
position and results of operations of Holdings and its Subsidiaries
(and of Holdings and its Restricted Subsidiaries) in accordance with
GAAP, subject to normal year-end audit adjustments and lack of footnote
disclosures,
(ii) by Consolidating Financial Statements for such fiscal
quarter and the then elapsed portion of the fiscal year together with a
certificate of one of the Financial Officers of Holdings to the effect
that such Consolidating Financial Statements fairly present in all
material respects the respective revenues, gross margins and property,
plant and equipment of the businesses covered thereby, and
(iii) at the time of delivery of the financial statements set
forth above for the fiscal quarter ending June 30, 2001, and each
fiscal quarter thereafter ending on or before March 31, 2003, by (A)
management's discussion of the financial performance of Holdings and
its Restricted Subsidiaries for such fiscal quarter then ending as
compared against the financial projections delivered pursuant to
SECTION 3.01(E) and (B) a comparison of the financial performance of
Holdings and its Restricted Subsidiaries for such fiscal quarter
showing all variances from such financial projections, in the case of
each of CLAUSE (A) and CLAUSE (B) above in form reasonably satisfactory
to the Administrative Agent;
(c) concurrently with any delivery of any audited consolidated
financial statements under CLAUSE (A) above, a certificate of the Accountants
(which certificate may be limited to accounting matters relating to the
provisions of SECTION 6.13, and may disclaim responsibility for legal matters)
and concurrently with any delivery of financial statements under CLAUSE (a) or
CLAUSE (b) above, a
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certificate of a Financial Officer of Holdings, in each case (i) certifying that
in making its examination in connection with rendering such opinion or
certificate with respect to such statements, such Person has not obtained
knowledge that an Event of Default or Default has occurred or, if such Financial
Officer has obtained knowledge that an Event of Default or Default has occurred,
specifying the nature and extent thereof and any corrective action taken or
proposed to be taken with respect thereto and (ii) setting forth computations in
a manner reasonably satisfactory to the Administrative Agent demonstrating
compliance with the covenants contained in SECTIONS 6.01, 6.02, 6.04, 6.05,
6.06, 6.07 and 6.13;
(d) promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials filed by
Holdings or any Restricted Subsidiary with the U.S. Securities and Exchange
Commission or any Governmental Authorities succeeding to any or all of the
functions of said Commission, or with any securities exchange, or distributed by
Holdings to its shareholders, as the case may be;
(e) as soon as practicable and in any event no later than 30 days after
the beginning of each fiscal year, a copy of the annual business plan of
Holdings and forecasts, prepared by management of Holdings, in each case in form
and detail reasonably satisfactory to the Administrative Agent, of consolidated
balance sheets and related statements of operations and cash flows of Holdings
and its Restricted Subsidiaries, in each case on a quarterly basis for such
fiscal year and on an annual basis for each of the following fiscal years
remaining during the term of this Agreement; and
(f) promptly, from time to time, such other information regarding the
operations, business affairs and financial condition of Holdings and its
Restricted Subsidiaries, or compliance with the terms of any Basic Document or
any Other Debt Agreement, as the Administrative Agent or any Holder may
reasonably request.
SECTION 1.27. OTHER NOTICES. The Issuer will furnish to the
Administrative Agent (in electronic form or with sufficient copies thereof for
each Holder):
(a) as soon as possible and in any event within five Business Days
after any Responsible Officer knows or has reason to believe that a Default or
Event of Default has occurred or a default or an event of default has occurred
under any Material Agreement, written notice specifying the nature and extent
thereof and the corrective action (if any) taken or proposed to be taken with
respect thereto;
(b) as soon as possible and in any event within five Business Days
after any Responsible Officer has knowledge thereof, written notice of the
filing or commencement of, or of any threat or notice of intention of any Person
to file or commence, any action, suit or proceeding, whether at law or in equity
or by or before any Governmental Authority, against Holdings or any Restricted
Subsidiary that, if adversely determined, could reasonably be expected
(individually or in the aggregate) to have a Material Adverse Effect;
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(c) prompt written notice of the assertion of any Environmental Claim
by any Person against, or with respect to the operations and properties of,
Holdings or any of its Subsidiaries, other than any Environmental Claim that, if
adversely determined, either individually or in the aggregate, could not
reasonably be expected (individually or in the aggregate) to have a Material
Adverse Effect;
(d) prompt written notice of any development known to any Responsible
Officer that has had or could reasonably be expected (individually or in the
aggregate) to have a Material Adverse Effect;
(e) as soon as possible and in any event within five Business Days
after any Responsible Officer knows or has reason to believe that a Change in
Control has occurred or is reasonably likely to occur, written notice of such
Change in Control;
(f) as soon as possible and in any event within five Business Days
after any Responsible Officer has knowledge thereof, written notice of the
condemnation or casualty of any property of Holdings or any Restricted
Subsidiary that has or could reasonably be expected to result in loss to
Holdings or any Restricted Subsidiary in an amount exceeding $5,000,000 at any
one time; and
(g) as soon as possible and in any event within five Business Days
after any Responsible Officer has knowledge thereof, written notice of the
filing of, or of any threat or notice of intention of any Person to file, any
Lien on any of the assets of Holdings or any Obligor for obligations in excess
of $1,000,000.
SECTION 1.28. EXISTENCE; BUSINESSES AND PROPERTIES. The Issuer will,
and will cause Holdings and each of its Restricted Subsidiaries to:
(a) do or cause to be done all things necessary to preserve, renew and
keep in full force and effect its legal existence, except, as to Restricted
Subsidiaries other than the Issuer, as otherwise expressly permitted under
SECTION 6.06; and
(b) do or cause to be done all things necessary to obtain, preserve,
renew, extend and keep in full force and effect the rights, Licenses,
Franchises, Private Licenses, patents, copyrights, trademarks and trade names
material to the conduct of its business; comply with all applicable laws, rules,
regulations and decrees and orders of any Governmental Authority (including
health and welfare laws and Environmental Laws), whether now in effect or
hereafter enacted, except for failures to comply which, individually or in the
aggregate, have not had and could not reasonably be expected (individually or in
the aggregate) to have a Material Adverse Effect; and at all times maintain and
preserve all property material to the conduct of such business and keep such
property in good repair, working order and condition (excepting ordinary wear
and tear and damage due to casualty, PROVIDED that such damage due to casualty
is repaired within a reasonable period of time) and from time to time make, or
cause to be made, all needful and proper repairs, renewals, additions,
improvements and replacements thereto necessary in order that the business
carried on in connection therewith may be properly conducted at all times,
except for failures to maintain and preserve
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property that have not had and could not reasonably be expected (individually or
in the aggregate) to have a Material Adverse Effect.
SECTION 1.29. COLLATERAL SECURITY; FURTHER ASSURANCES.
(a) COLLATERAL SECURITY. It is the intent of the parties hereto that
the indebtedness, liabilities and obligations of the Issuer hereunder be secured
by first Liens and prior perfected security interests, subject only to the prior
security interests created by the Senior Security Agreement, in all of the
equipment which was, on or before the Closing Date, sold or delivered to or on
behalf of the Issuer under the Master Purchase Agreement.
(b) FURTHER ASSURANCES. The Issuer shall execute and deliver any and
all documents and financing statements and take all actions (including filing
Uniform Commercial Code and other financing statements) as the Required Holders
or the Administrative Agent may from time to time reasonably request in order to
grant, preserve, protect and perfect, in favor of the Administrative Agent for
the benefit of the Secured Parties, the Liens and security interests described
in CLAUSE (A) above and in this CLAUSE (B) (subject, in each case, to Liens
permitted under SECTION 6.02).
SECTION 1.30. MAINTAINING RECORDS; ACCESS TO PROPERTIES AND
INSPECTIONS. The Issuer will, and will cause Holdings and each of its Restricted
Subsidiaries to, keep proper books of record and account in conformity with
GAAP. The Issuer will, and will cause Holdings and each of its Restricted
Subsidiaries to, permit any representatives designated by the Administrative
Agent or any Holder to visit and inspect the financial records and the
properties of Holdings and its Restricted Subsidiaries at reasonable times, on
reasonable notice and as often as reasonably requested and to make extracts from
and copies of such financial records, and permit any representatives designated
by the Administrative Agent or any Holder to discuss the affairs, finances and
condition of Holdings and its Restricted Subsidiaries with any Responsible
Officer and the Accountants.
SECTION 1.31. COMPLIANCE WITH TERMS OF PRIVATE LICENSES. The Issuer
will, and will cause Holdings and each of its Restricted Subsidiaries to, make
all payments and otherwise perform all obligations in respect of all Private
Licenses to which Holdings or any such Restricted Subsidiary is a party, keep
such Private Licenses in full force and effect and not allow such Private
Licenses to lapse or be terminated or any rights to renew such Private Licenses
to be forfeited or canceled, notify the Administrative Agent of any default by
any party with respect to such Private Licenses and cooperate with the
Administrative Agent in all respects to cure any such default and cause Holdings
and each such Restricted Subsidiary to do so, except, in any case, where the
failure to do any of the foregoing, either individually or in the aggregate, has
not had and could not be reasonably expected (individually or in the aggregate)
to have a Material Adverse Effect.
SECTION 1.32. OBLIGATIONS AND TAXES. The Issuer will, and will cause
Holdings and each of its Restricted Subsidiaries to, pay its Indebtedness and
other obligations promptly and in accordance with their terms and pay and
discharge promptly when due all material taxes, assessments and governmental
charges or levies imposed upon it or upon its income or profits or in respect of
its property, before the same shall become delinquent or in default, as well as
all lawful claims for
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labor, materials and supplies or otherwise that, if unpaid, might give rise to a
Lien upon such properties or any part thereof; PROVIDED that such payment and
discharge shall not be required with respect to any such tax, assessment,
charge, levy or claim so long as the validity or amount thereof shall be
contested in good faith by appropriate proceedings and Holdings or such
Restricted Subsidiaries (as applicable) shall have set aside on its books
adequate reserves with respect thereto in accordance with GAAP and such contest
operates to suspend collection of the contested obligation, tax, assessment or
charge and enforcement of a Lien.
SECTION 1.33. EMPLOYEE BENEFITS. The Issuer will, and will cause
Holdings and each of its Restricted Subsidiaries to:
(a) comply in all material respects with the applicable provisions of
ERISA and the Code, except where non-compliance has not had and could not
reasonably be expected (individually or in the aggregate) to have a Material
Adverse Effect; and
(b) furnish to the Administrative Agent as soon as possible after, and
in any event within 10 days after any Responsible Officer knows or has reason to
know that, any ERISA Event has occurred that, alone or together with any other
ERISA Event could reasonably be expected (individually or in the aggregate) to
result in a Material Adverse Effect, a statement of a Financial Officer of
Holdings setting forth details as to such ERISA Event and the action, if any,
that Holdings proposes to take with respect thereto.
SECTION 1.34. INSURANCE. The Issuer will, and will cause Holdings and
each of its Restricted Subsidiaries to:
(a) keep its insurable properties (including, without limitation, the
Collateral) adequately insured at all times by financially sound and reputable
insurers, and keep the Collateral fully insured 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 from becoming a
co-insurer of any loss under any policy of insurance; maintain such other
insurance, to such extent and against such risks, including fire and other risks
insured against by extended coverage, as is customary with companies in the same
or similar businesses operating in the same or similar locations, including
public liability insurance against claims for personal injury or death or
property damage occurring upon, in, about or in connection with the use of any
properties owned, occupied or controlled by it; and maintain such other
insurance as may be required by law;
(b) cause all such property damage policies relating to any of the
Collateral to be endorsed or otherwise amended to include a "standard" lender's
loss payable endorsement, in form and substance satisfactory to the
Administrative Agent, which endorsement shall provide that, from and after the
Closing Date, if the insurance carrier shall have received written notice from
the Administrative Agent of the occurrence of an Event of Default, the insurance
carrier shall pay all proceeds otherwise payable to Holdings or any Restricted
Subsidiary under such policies directly to the Administrative Agent, and deliver
original or certified copies of all such policies to the Administrative Agent;
PROVIDED, HOWEVER, that, so long as the Holdings Notes are outstanding, all
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such proceeds may be payable to the Holdings Notes Agent and distributed to it
in accordance with the Intercreditor Agreement; and
(c) if any separate or additional property, casualty or "umbrella"
insurance policy is known by a Responsible Officer to have been obtained by the
Issuer, notify the Administrative Agent thereof promptly, and promptly deliver
to the Administrative Agent a duplicate original copy of such policy.
SECTION 1.35. FRANCHISES. The Issuer shall, and shall cause Holdings
and each of the Restricted Subsidiaries to, continue to comply with the terms of
all Franchises to which it is subject, and shall do, and cause Holdings and each
of the Restricted Subsidiaries to do, everything necessary or desirable to
maintain the Franchises in good standing, to prevent the termination or
forfeiture of the Franchises and to ensure that the Franchises are renewed upon
their respective times of expiry on at least as favorable terms as the terms on
which they were or are originally granted, except to the extent that any such
failure to comply with the terms of such Franchises, to maintain such Franchises
or to prevent the termination or forfeiture of such Franchises could not
reasonably be expected (individually or in the aggregate) to have a Material
Adverse Effect. Notwithstanding the foregoing, the obligations of Holdings and
the Restricted Subsidiaries with respect to their compliance with the terms of
the Franchises disclosed in SCHEDULE 4.01(U) shall be satisfied if Holdings and
its Restricted Subsidiaries make commercially reasonable efforts to achieve
compliance in all material respects with such terms as soon as possible and
continue such compliance thereafter.
SECTION 1.36. LICENSES. The Issuer shall, and shall cause Holdings and
each Restricted Subsidiary to, continue to comply with the terms of all Licenses
to which it is subject, and shall do, and cause Holdings and each Restricted
Subsidiary to do, everything necessary or desirable to maintain the Licenses in
good standing, to prevent the termination or forfeiture of the Licenses and to
ensure that the Licenses are renewed upon their respective times of expiry on at
least as favorable terms as the terms on which they were or are originally
granted, except to the extent that any such failure to comply with the terms of
such Licenses, to maintain such Licenses or to prevent the termination or
forfeiture of such Licenses could not reasonably be expected (individually or in
the aggregate) to have a Material Adverse Effect. Notwithstanding the foregoing,
the obligations of Holdings and its Restricted Subsidiaries with respect to
their compliance with the terms of the Licenses disclosed in SCHEDULE 4.01(T)
shall be satisfied if Holdings and its Restricted Subsidiaries make commercially
reasonable efforts to achieve compliance in all material respects with such
terms as soon as possible and continue such compliance thereafter.
SECTION 1.37. USE OF PROCEEDS. The Issuer will use the proceeds of the
Notes hereunder solely as permitted by SECTION 2.01(C) (in compliance with all
applicable legal and regulatory requirements, including Regulations T, U and X
and the Securities Act of 1933 and the Securities Exchange Act of 1934 and the
regulations thereunder); PROVIDED that neither the Administrative Agent nor any
Holder shall have any responsibility as to the use of any of such proceeds.
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SECTION 1.38. TERMS OF CERTAIN OTHER DEBT AGREEMENTS. In the event that
any financing, restructuring or other arrangement relating to any of the Other
Debt Agreements, other than the Holdings Notes Documents as the same are in
effect on the Closing Date, contains or provides for collateral, Guarantees,
other security or other terms or conditions which, when taken as a whole and
excluding consideration of payment terms and maturity dates, are more favorable
than the terms and provisions contained in this Agreement and the other Note
Documents, then the Issuer shall (a) promptly give written notice of such fact
and a detailed explanation thereof to the Administrative Agent and (b) promptly
upon the request of the Administrative Agent or the Required Holders, amend the
terms and provisions of this Agreement and/or the other Note Documents in a
manner reasonably satisfactory to the Administrative Agent and the Required
Holders such that the terms and provisions of this Agreement and/or the other
Note Documents are, when taken as a whole, no less favorable than the terms and
provisions (including, without limitation, terms and provisions regarding
collateral, Guarantees or other security) contained in any such Other Debt
Agreement.
SECTION 1.39. NON-CONSOLIDATION. Each of Holdings and the Issuer will,
and will cause each of the other Obligors to: (a) maintain entity records and
books of account separate from those of any other entity which is an Affiliate
of such Person; (b) not commingle its funds or properties or assets with those
of any other entity which is an Affiliate of such Person; and (c) provide that
its board of directors or other analogous governing body will hold all
appropriate meetings to authorize and approve such Person's entity actions,
which meetings will be separate from those of other such Persons (i.e.,
Holdings, the Issuer or the other Obligors, as the case may be).
SECTION 1.40. MEETINGS WITH SENIOR EXECUTIVES. The Issuer will ensure
that representatives of the Administrative Agent and Nortel Networks have the
right and opportunity to meet with senior executives of Holdings and the Issuer
selected by the Administrative Agent during each fiscal quarter (as the
Administrative Agent or Nortel Networks may request) to discuss the general
affairs, the financial condition and other matters related to the business of
Holdings and its Subsidiaries (including, without limitation, the Issuer). Such
representatives of the Administrative Agent and Nortel Networks may share any
information gained from such meetings with the Administrative Agent and Nortel
Networks and their employees, officers, directors, attorneys and advisers,
subject to SECTION 10.11(A).
ARTICLE VI
NEGATIVE COVENANTS
The Issuer covenants and agrees with each Holder that so long as this
Agreement shall remain in effect, until the principal of and interest on each
Note, all fees and all other expenses or amounts (other than contingent
indemnity obligations) payable under the Note Documents shall have been paid in
full, unless the Holders shall otherwise consent in writing in accordance with
the provisions of Section 10.01:
SECTION 1.41. INDEBTEDNESS.
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(a) HOLDINGS. Holdings will not create, incur or suffer to exist any
Indebtedness or any Attributable Debt except:
(i) Indebtedness to the Holdings Notes Holders under the
Holdings Notes Agreement;
(ii) existing Indebtedness of Holdings as listed on a Schedule
to be prepared after the Closing Date, the contents of which Schedule
shall be in form and substance satisfactory to each Purchaser;
(iii) Indebtedness of Holdings to any Restricted Subsidiary,
so long as the obligations of Holdings to such Restricted Subsidiary in
respect of such Indebtedness are subordinated to the obligations of
Holdings under the Holdings Notes Agreement upon terms in form and
substance, and pursuant to documentation, satisfactory to the Holdings
Notes Agent;
(iv) Indebtedness in respect of Hedging Agreements entered
into in the ordinary course of Holdings' financial planning to hedge or
mitigate risks to which Holdings or any Restricted Subsidiary is
exposed in the conduct of its business or the management of its
liabilities;
(v) Indebtedness of Holdings (including Acquired Indebtedness
and Capital Lease Obligations, mortgage financings and purchase money
obligations) incurred for the purpose of financing all or any part of
the cost of construction, engineering, acquisition, installation,
development or improvement by Holdings or any Restricted Subsidiary of
any Telecommunications Assets of Holdings or any Restricted Subsidiary
and including any related notes, Guarantees, collateral documents,
instruments and agreements executed in connection therewith, and any
Attributable Debt of Holdings arising out of a sale and leaseback
transaction with respect to one or more Data Centers permitted under
SECTION 6.04, PROVIDED that
(A) the aggregate principal amount of such
Indebtedness and Attributable Debt shall not exceed
$50,000,000 at any one time outstanding,
(B) except if such Indebtedness constitutes Vendor
Guarantee Indebtedness, the final maturity date of any such
Indebtedness or Attributable Debt shall not be earlier than
six months after the latest maturity of any of the Holdings
Notes outstanding at the time such Indebtedness or
Attributable Debt is incurred,
(C) except if such Indebtedness constitutes Vendor
Guarantee Indebtedness, the Weighted Average Life to Maturity
of such Indebtedness or Attributable Debt shall not be earlier
than the Weighted Average Life to Maturity of the Holdings
Notes (the determination of such Weighted Average Lives to
Maturity to be made by the Administrative Agent), and
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(D) the agreements and other instruments relating to
such Indebtedness or Attributable Debt shall not in any way
restrict the payment or redemption of principal or interest on
the Holdings Notes, or other amounts owing thereunder, the
granting of Liens on property of Holdings or any of its
Subsidiaries to secure the obligations of Holdings under the
Holdings Notes Agreement, the Guarantee by any of the
Subsidiaries of Holdings of any of the obligations of Holdings
thereunder, or the execution or delivery of any modification,
waiver or consent entered into in connection with any of the
Holdings Notes Documents;
(vi) Indebtedness of Holdings incurred in the ordinary course
of business in accordance with customary industry practices in respect
of letters of credit and performance bonds in amounts and for the
purposes customary in Holdings' industry (so long as no such
performance bonds or letters of credit support Indebtedness);
(vii) Indebtedness arising in connection with the pledge by
Holdings of its Equity Interest in any Unrestricted Subsidiary to
secure Indebtedness of such Unrestricted Subsidiary, so long as the
obligations of Holdings in respect of such Indebtedness is limited in
recourse to such Equity Interest;
(viii) Permitted Refinancing Indebtedness in exchange for, or
the net proceeds of which are used to refund, refinance or replace,
Indebtedness (other than intercompany Indebtedness) that is permitted
under CLAUSES (II) or (V) of this SECTION 6.01(A), PROVIDED that any
refinancing, renewal, replacement, defeasance or refunding of the
Holdings Senior Notes shall contain covenants, defaults, mandatory
redemption provisions and other terms (including maturity) no less
favorable in any respect (from the standpoint of the Issuer) than
Holdings' 10% Senior Notes due 2009;
(ix) Indebtedness of Holdings under the Verizon Debt Agreement
in an aggregate principal amount up to but not exceeding $50,000,000;
and
(x) additional unsecured Indebtedness so long as (A) after
giving effect to the incurrence of such Indebtedness, Holdings shall be
in compliance with SECTION 6.13 (the determination of such compliance
to be calculated on a pro forma basis (1) as at the end of and for the
period of four fiscal quarters most recently ended prior to the date of
such incurrence for which financial statements of Holdings and its
Restricted Subsidiaries are available and (2) on a projected basis
until the date six months after the Holdings Notes Maturity Date (using
assumptions that Holdings in good faith believes are fair, accurate and
reasonable at the time, and in which assumptions the Holdings Notes
Agent concurs), in each case under the assumption that such incurrence
occurred at the beginning of the applicable period, and under the
assumption that interest for such period had been or will be equal to
the interest expected to accrue during the term of such Indebtedness)
and, in the event that the aggregate amount of such Indebtedness shall
exceed $5,000,000, Holdings shall have delivered to the Holdings Notes
Agent a certificate of a Financial Officer showing
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calculations in reasonable detail to demonstrate compliance with this
clause (A) and (B) such Indebtedness shall not contain covenants,
defaults, mandatory redemption provisions and other terms (including
maturity) less favorable in any respect (from the standpoint of
Holdings) than Holdings' 10% Senior Notes due 2009.
(b) RESTRICTED SUBSIDIARIES. None of the Obligors (other than Holdings,
as to which the provisions of SECTION 6.01(A) shall be applicable) will, nor
will it cause or permit any Restricted Subsidiary to, create, incur or suffer to
exist any Indebtedness except:
(i) Indebtedness to the Holdings Notes Holders under the
Holdings Notes Documents;
(ii) Indebtedness of the Restricted Subsidiaries existing on
the date hereof as set forth on SCHEDULE 6.01;
(iii) Indebtedness of any Restricted Subsidiary to Holdings or
any other Restricted Subsidiary, so long as the obligations in respect
of such Indebtedness of any Obligor to any Restricted Subsidiary not an
Obligor are subordinated to the obligations of such Obligor under the
Holdings Notes Agreement and under the other Holdings Notes Documents
upon terms in form and substance, and pursuant to documentation,
satisfactory to the Holdings Notes Agent;
(iv) Indebtedness of Foreign Subsidiaries (including Acquired
Indebtedness and Capital Lease Obligations, mortgage financings and
purchase money obligations) incurred for the purpose of financing all
or any part of the cost of construction, engineering, acquisition,
installation, development or improvement by such Foreign Subsidiary or
any of its Restricted Subsidiaries of any Telecommunications Assets of
such Foreign Subsidiary or any of its Restricted Subsidiaries and
including any related notes, Guarantees, collateral documents,
instruments and agreements executed in connection therewith, PROVIDED
that the aggregate principal amount thereof shall not exceed
$25,000,000 and any one time outstanding;
(v) Indebtedness of Foreign Subsidiaries incurred in the
ordinary course of business in accordance with customary industry
practices in respect of letters of credit and performance bonds in
amounts and for the purposes customary in Holdings' industry (so long
as no such performance bonds or letters of credit support
Indebtedness);
(vi) Indebtedness arising in connection with the pledge by any
Restricted Subsidiary of its Equity Interest in any Unrestricted
Subsidiary to secure Indebtedness of such Unrestricted Subsidiary, so
long as the obligations of such Restricted Subsidiary in respect of
such Indebtedness is limited in recourse to such Equity Interest;
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(vii) Permitted Refinancing Indebtedness in exchange for, or
the net proceeds of which are used to refund, refinance or replace,
Indebtedness (other than intercompany Indebtedness) that is permitted
under CLAUSES (II) or (IV) of this SECTION 6.01(B);
(viii) Indebtedness of one or more Restricted Subsidiaries
under the Vendor Agreements, PROVIDED that (x) the aggregate principal
amount of such Indebtedness shall not exceed $485,000,000 and (y) none
of such Indebtedness shall be entitled to the benefits of any Lien
except pursuant to the Junior Security Documents (or except as
expressly permitted by the Intercreditor Agreement or the Junior
Intercreditor and Collateral Agency Agreement);
(ix) additional Indebtedness of one or more Restricted
Subsidiaries in respect of vendor financing for the engineering,
construction, installation, acquisition, development or improvement of
Telecommunications Assets up to but not exceeding $15,000,000 at any
one time outstanding; and
(x) additional unsecured Indebtedness of Foreign Subsidiaries
in an aggregate amount not to exceed $50,000,000 (or the equivalent
thereof in foreign currency).
(c) ADDITIONAL PROVISIONS RELATING TO THE ISSUER. Notwithstanding
anything to the contrary contained in SECTION 6.01(B):
(i) the Issuer may create, incur and suffer to exist
Indebtedness to the Holders hereunder and under the Notes;
(ii) all Indebtedness of the Issuer to Holdings or any
Subsidiary of Holdings shall be unsecured and shall be subordinated to
the Obligations of the Issuer hereunder and under the Notes and the
other Note Documents upon terms in form and substance, and pursuant to
documentation, satisfactory to the Administrative Agent; and
(iii) the Issuer will not create, incur or suffer to exist any
Indebtedness, any Attributable Debt, any trade payables or any accrued
liabilities, exclusive of Indebtedness of the Issuer permitted in
accordance with CLAUSE (III) of SECTION 6.01(B), which exceed
$1,200,000,000 in aggregate amount at any time outstanding.
SECTION 1.42. LIENS. None of the Obligors will, nor will it cause or
permit any Restricted Subsidiary to create, incur, assume or permit to exist any
Lien on any property or assets (including stock or other securities of any
Person, including any Subsidiary of Holdings) now owned or hereafter acquired by
it or on any income or revenues or rights in respect of thereof, except, subject
to the provision below:
(a) Liens created pursuant to the Senior Security Documents and the
Junior Security Documents (or expressly permitted by the Intercreditor Agreement
or the Junior Intercreditor and Collateral Agency Agreement); PROVIDED, HOWEVER,
that none of the Liens created pursuant to the
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Junior Security Documents, other than the Liens created pursuant to the Security
Agreement securing the Obligations, may attach to any of the Collateral;
(b) Liens existing on the date hereof listed on a Schedule to be
prepared on or before the Closing Date, the contents of which Schedule shall be
in form and substance satisfactory to each Purchaser;
(c) Liens imposed by any Governmental Authority for taxes, assessments
or charges not yet due or that are being contested in good faith and by
appropriate proceedings if adequate reserves with respect thereto are maintained
on the books of Holdings or the affected Restricted Subsidiaries, as the case
may be, in accordance with GAAP, so long as forfeiture of all or any part of the
property or assets of any Person which is subject to such Lien, does not result
from the failure to pay such taxes, assessments or governmental charges or
levies during the period of such contest;
(d) carriers', warehousemen's, mechanics', materialmen's, repairmen's
or other like Liens arising in the ordinary course of business that are not
overdue for a period of more than 30 days or that are being contested in good
faith and by appropriate proceedings so long as the aggregate amount of all such
Liens shall not at no time exceed $5,000,000;
(e) pledges or deposits under worker's compensation, employment
insurance and other social security legislation, by reason only of an Obligor's
deferred right to pay such amount, but which such Obligor is paying as such
amount becomes due;
(f) cash deposits to secure the performance of bids, trade contracts
(other than for Indebtedness), leases, statutory obligations, surety and appeal
bonds, performance bonds, letters of credit, and other obligations of a like
nature incurred in the ordinary course of business, PROVIDED that in the case of
performance bonds and letters of credit the obligations in respect thereof are
permitted under SECTION 6.01(A)(VI) or SECTION 6.01(B)(V), as applicable;
(g) easements, rights-of-way, restrictions and other similar
encumbrances incurred in the ordinary course of business and encumbrances
consisting of zoning restrictions, easements, licenses, restrictions on the use
of property or minor imperfections in title thereto that, in the aggregate, are
not material in amount, and that do not in any case materially detract from the
value of the property subject thereto or interfere with the ordinary conduct of
the business of Holdings or any of its Subsidiaries;
(h) Liens securing Indebtedness permitted under SECTION 6.01(A)(V) and
(IX) and 6.01(B)(IV), so long as such Liens cover only the assets engineered,
constructed, installed, acquired, developed or improved with such Indebtedness;
(i) Liens arising out of judgments or awards (other than any judgment
that is described in CLAUSE (J) of ARTICLE VII which constitutes an Event of
Default thereunder) in respect of which Holdings shall in good faith be
prosecuting an appeal or proceedings for review and in respect of which it shall
have secured a subsisting stay of execution pending such appeal or proceedings
for
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review, PROVIDED Holdings shall have set aside on its books adequate reserves,
in accordance with GAAP, with respect to such judgment or award;
(j) Liens arising from Uniform Commercial Code or financing statements
and similar documents filed on a precautionary basis in respect of operating
leases intended by the parties to be true leases (other than any such leases
entered into in violation of this Agreement);
(k) Liens consisting of the pledge by Holdings or any Restricted
Subsidiary of its Equity Interest in any Unrestricted Subsidiary securing
Indebtedness permitted under SECTION 6.01(A)(VII) and 6.01(B)(VI);
(l) Liens in favor of Holdings or any Obligor;
(m) Liens to secure any extension, renewal, refinancing or refunding
(or successive extensions, renewals, refinancings or refundings), in whole or in
part, of any Indebtedness secured by Liens referred to in the foregoing CLAUSES
(B) and (H), PROVIDED that such Liens do not extend to any other property of
Holdings or any Restricted Subsidiary and the principal amount of the
Indebtedness secured by such Lien is not increased;
(n) Liens securing Indebtedness permitted under SECTION 6.01(B)(IX),
PROVIDED that each such Lien covers only the assets engineered, constructed,
installed, acquired, developed or improved with the proceeds of such
Indebtedness and does not cover any other assets of Holdings or its Restricted
Subsidiaries;
(o) any interest or title of a lessor in the property subject to any
lease other than in respect of a Capital Lease Obligation;
(p) lease or subleases granted in the ordinary course of business to
others that do not materially interfere with the business of Holdings and its
Restricted Subsidiaries;
(q) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods; and
(r) additional Liens on property to secure Indebtedness so long as the
aggregate principal amount of such Indebtedness to which any Obligors are
subject does not at any time exceed $1,000,000;
PROVIDED, HOWEVER, that, notwithstanding anything to the contrary contained in
this SECTION 6.02 or elsewhere in this Agreement, in no event may (i) any of the
Liens referred to in CLAUSES (A) through (R) above attach to any of the
Collateral except for the Liens created by the Security Agreement, the Liens
created pursuant to the Senior Security Agreement and the Liens referred to in
CLAUSES (C) and (G) above and (ii) the priority of the Liens in the Collateral
created by the Security Agreement be subordinate or junior as to priority to any
other Lien or Liens in the Collateral or any portion thereof other than the
Liens in the Collateral created by the Senior Security Agreement securing the
Holdings Notes.
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SECTION 1.43. UNRESTRICTED SUBSIDIARIES. Holdings shall not designate
any Subsidiary as an "Unrestricted Subsidiary" unless:
(a) such Subsidiary has no Indebtedness other than Indebtedness (i) as
to which neither Holdings nor any Restricted Subsidiary (A) provides credit
support of any kind (including any undertaking, agreement or instrument that
would constitute Indebtedness) or (B) is directly or indirectly liable as a
guarantor or otherwise, and (ii) no default with respect to which (including any
rights that the holders thereof may have to take enforcement action against an
Unrestricted Subsidiary) would permit (upon notice, lapse of time or both) any
holder of any other Indebtedness of Holdings or any Restricted Subsidiary to
declare a default on such other Indebtedness or cause the payment thereof to be
accelerated or payable prior to its stated maturity;
(b) such Subsidiary is a Person with respect to which neither Holdings
nor any Restricted Subsidiary has any direct or indirect obligation to maintain
or preserve such Person's financial condition or to cause such Person to achieve
any specified levels of operating results;
(c) such Subsidiary has not Guaranteed or otherwise directly or
indirectly provided credit support for any Indebtedness of Holdings or any
Restricted Subsidiary; and
(d) at the time thereof and after giving effect thereto, no Default or
Event of Default shall have occurred or be continuing.
Any designation of a Restricted Subsidiary as an Unrestricted
Subsidiary pursuant to this SECTION 6.03 shall constitute an Investment in such
Unrestricted Subsidiary in an amount equal to the aggregate amount of the
Investments (determined in accordance with the penultimate paragraph of SECTION
6.05(A)) by Holdings and its Restricted Subsidiaries in such Unrestricted
Subsidiary at the time of such designation.
Any designation of a Subsidiary of Holdings as an Unrestricted
Subsidiary shall be evidenced to the Administrative Agent by filing with the
Administrative Agent a certified copy of a resolution of the board of directors
of Holdings giving effect to such designation and a certificate of a Financial
Officer of Holdings certifying that such designation complied with the preceding
conditions and is permitted by SECTION 6.05. If, at any time, any Unrestricted
Subsidiary would fail to meet the preceding conditions (other than CLAUSE (D)),
it shall immediately cease to be an Unrestricted Subsidiary for the purposes
hereof and any Indebtedness of such Subsidiary shall be deemed to be incurred by
a Restricted Subsidiary of Holdings as of such date and, if such Indebtedness is
not permitted to be incurred as of such date under SECTION 6.01, the Issuer
shall be in default of such covenant.
The board of directors of Holdings may at any time designate an
Unrestricted Subsidiary to be a Restricted Subsidiary, PROVIDED that such
designation shall be deemed to be an incurrence of Indebtedness by a Restricted
Subsidiary of any outstanding Indebtedness of such Unrestricted Subsidiary and
such designation shall only be permitted if (i) after giving effect to such
deemed
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incurrence of Indebtedness, Holdings shall be in compliance with SECTION 6.13
calculated on a pro forma basis (using assumptions that Holdings in good faith
believes are fair, accurate and reasonable at the time, and in which assumptions
the Administrative Agent concurs) as if such designation had occurred at the
beginning of the relevant fiscal period and (ii) no Default or Event of Default
would occur or be continuing following such designation, and PROVIDED FURTHER
that no such designation shall be permitted with respect to any Unrestricted
Subsidiary that has consummated an Acquisition unless the requirements of
SECTION 6.06(B) would have been satisfied with respect to such Acquisition as if
it had been consummated by a Restricted Subsidiary.
SECTION 1.44. SALE AND LEASE-BACK TRANSACTIONS. None of the Obligors
will, nor will it cause or permit any Restricted Subsidiary to, enter into any
arrangement, directly or indirectly, with any Person whereby it shall sell or
transfer any property, real or personal, used or useful in its business, whether
now owned or hereafter acquired, and thereafter rent or lease such property or
other property which it intends to use for substantially the same purpose or
purposes as the property being sold or transferred, PROVIDED that Holdings may
enter into any such arrangement with respect to one or more Data Centers to the
extent that the Indebtedness or Attributable Debt arising in connection
therewith is permitted under SECTION 6.01(A)(V).
SECTION 1.45. INVESTMENTS AND CONTINGENT INVESTMENTS.
(a) INVESTMENTS. None of the Obligors will, nor will it cause or permit
any Restricted Subsidiary to, make or permit to remain outstanding any
Investments, except:
(i) Investments outstanding on the date hereof and identified
in SCHEDULE 6.05;
(ii) cash and Cash Equivalents, PROVIDED that all such cash
and Cash Equivalents of the Obligors (other than up to $1,000,000 that
may be held in operating deposit accounts) is held in the Collateral
Accounts under and as defined in the Senior Security Agreement;
(iii) Investments by (A) any Restricted Subsidiary that is not
an Obligor in any other Restricted Subsidiary that is not an Obligor,
(B) any Obligor in any other Obligor, (C) any Obligor in a Restricted
Subsidiary that is not an Obligor, PROVIDED that the aggregate amount
of such Investments made after the date hereof either in Foreign
Subsidiaries, or in Subsidiaries that are not Wholly Owned
Subsidiaries, and that are outstanding on any date (excluding
Investments referred to in CLAUSE (IV) below) shall not exceed
$120,000,000, shall be made in the form of loans by an Obligor to such
Foreign Subsidiary or other Wholly Owned Subsidiary (except, to the
extent necessary to avoid material adverse tax consequences, such
Investments may be made in the form equity) and shall be made in
connection with the working capital needs of such Foreign Subsidiary or
other Wholly Owned Subsidiary in the ordinary course of business and
(D) any Restricted Subsidiary that is not an Obligor in any Obligor;
(iv) Investments by the Obligors in Metromedia Fiber Network
(Bermuda) Ltd., a Bermuda company and a Wholly Owned Restricted
Subsidiary, required under the
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consortium arrangements for the undersea cables of TAT-14, APCN-2 and
Japan-US Cable Network of which Metromedia Fiber Network (Bermuda) Ltd.
is a member, in an aggregate amount (A) not to exceed $60,000,000
during the period commencing on the date hereof through and including
December 31, 2001 and (B) not to exceed $70,000,000 during the period
commencing on the date hereof through and including December 31, 2002;
(v) Investments by Holdings and its Restricted Subsidiaries
constituting Acquisitions permitted under SECTION 6.06(b);
(vi) extensions of trade credit having a term not exceeding 90
days arising in the ordinary course of business (including receivables
owing to Holdings and its Restricted Subsidiaries that arise in the
ordinary course of business and are payable or dischargeable in
accordance with customary trade terms) or Investments in the securities
of trade creditors or customers received pursuant to any plan of
reorganization or similar arrangement upon the bankruptcy or insolvency
or such trade creditors or customers;
(vii) Investments consisting of security deposits with
utilities and other like Persons made in the ordinary course of
business;
(viii) Guarantees arising in connection with the pledge by
Holdings or any Restricted Subsidiary of its Equity Interest in any
Unrestricted Subsidiary to secure Indebtedness of such Unrestricted
Subsidiary, so long as the obligations of Holdings and its Restricted
Subsidiaries in respect of such Guarantee is limited in recourse to
such Equity Interest; and
(ix) additional Investments (including loans and advances to
employees of Holdings and its Restricted Subsidiaries for travel,
entertainment and relocation expenses in the ordinary course of their
business), PROVIDED that the aggregate amount of such Investments made
after the date hereof outstanding on any date shall not exceed the sum
of $1,000,000.
For purposes of CLAUSE (III) and CLAUSE (IX) of this SECTION 6.05(A),
the aggregate amount of an Investment at any time shall be deemed to be equal to
(1) the aggregate amount of cash, together with the aggregate fair market value
of property, loaned, advanced, contributed, transferred or otherwise invested
that gives rise to such Investment MINUS (2) the aggregate amount of dividends,
distributions or other payments received in cash in respect of such Investment;
and the amount of an Investment shall not in any event be reduced by reason of
any write-off of such Investment nor increased by any increase in the amount of
earnings retained in the Person in which such Investment is made that have not
been dividended, distributed or otherwise paid out.
As provided in SECTION 6.03, any designation of a Restricted Subsidiary
as an Unrestricted Subsidiary pursuant to SECTION 6.03 shall constitute an
Investment in such Unrestricted Subsidiary in an amount equal to the aggregate
amount of the Investments (determined in accordance with the
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immediately preceding paragraph) by Holdings and its Restricted Subsidiaries in
such Unrestricted Subsidiary at the time of such designation.
(b) CONTINGENT INVESTMENTS. None of the Obligors will, nor will it
permit any Restricted Subsidiary to, directly or indirectly, enter into, incur
or permit to exist any agreement or other arrangement that requires or may
require, whether at the time of entering into such agreement or arrangement,
whether contingently or otherwise, any Investment, unless, at the time such
Obligor or Restricted Subsidiary enters into such agreement or arrangement, such
Investment (treating as Investments all other then-outstanding commitments to
make Investments) would have been permitted under SECTION 6.05(A).
SECTION 1.46. MERGERS, CONSOLIDATIONS, ASSET SALES AND ACQUISITIONS.
(a) MERGERS, CONSOLIDATIONS AND ASSET SALES. None of the Obligors will,
nor will it cause or permit any Restricted Subsidiary to, merge into or
consolidate with any other Person, or permit any other Person to merge into or
consolidate with it, or conduct any Asset Sale of (in one transaction or in a
series of transactions) all or any part of its assets (whether now owned or
hereafter acquired) if, after giving effect thereto, the aggregate net book
value of the assets sold after the date hereof shall exceed in the aggregate 10%
of Net Tangible Assets, except that subject to the provisos below:
(i) if at the time thereof and immediately after giving effect
thereto no Event of Default or Default shall have occurred and be
continuing, (A) any Restricted Subsidiary of Holdings may merge into
Holdings in a transaction in which Holdings is the surviving
corporation, and (B) any Restricted Subsidiary of Holdings may merge
into or consolidate with any other Restricted Subsidiary of Holdings in
a transaction in which (x) the surviving entity is a Restricted
Subsidiary of Holdings, (y) any consideration paid to any Person other
than Holdings or a Wholly Owned Restricted Subsidiary in connection
therewith shall constitute a Restricted Payment permitted under SECTION
6.07, (z) if any such transaction shall be between a Guarantor and a
Restricted Subsidiary that is not a Guarantor, and such Guarantor is
not the continuing or surviving corporation, then the continuing or
surviving corporation shall have assumed all of the obligations of such
Guarantor under this Agreement, the Notes and the other Note Documents
and under the Holdings Notes Documents, PROVIDED that a Wholly Owned
Subsidiary of Holdings may only merge or consolidate with another
Wholly Owned Subsidiary of Holdings;
(ii) Holdings or any Restricted Subsidiary of Holdings may
sell, lease, transfer or otherwise dispose of any or all of its
property (upon voluntary liquidation or otherwise) to Holdings or a
Restricted Subsidiary of Holdings, PROVIDED that (A) if any such sale
is by an Obligor to a Restricted Subsidiary of Holdings that is not a
Guarantor, then such Restricted Subsidiary shall have become a
Guarantor in accordance with the provisions of Section 5.04 of the
Holdings Notes Agreement and (B) a Wholly Owned Subsidiary of Holdings
may only transfer assets to another Wholly Owned Subsidiary of
Holdings; and
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(iii) Holdings and its Restricted Subsidiaries may consummate
any merger or consolidation that constitutes an Acquisition permitted
under SECTION 6.06(b);
PROVIDED, HOWEVER, that, notwithstanding anything to the contrary contained in
this SECTION 6.06(A), (1) the Issuer may not merge or consolidate with Holdings
or any Subsidiary of Holdings or any other Person, (2) the Issuer may not sell,
lease, transfer or otherwise dispose of any of the Collateral without the prior
written consent of the Administrative Agent and the Required Holders, (3) the
Issuer may not sell, lease, transfer or otherwise dispose of any or all of its
other property (other than the Collateral which is subject to CLAUSE (2) above)
(upon voluntary liquidation or otherwise) except in the ordinary course of its
business and for full and fair consideration, and (4) the Issuer may not
consummate any merger or consolidation that constitutes an Acquisition permitted
under SECTION 6.06(b).
(b) ACQUISITIONS. None of the Obligors will, nor will it cause or
permit any of its Restricted Subsidiaries to, acquire any business, and the
related assets, of any other Person (whether by way of purchase of assets or
stock, by merger or consolidation or otherwise), unless, subject to the provisos
below:
(i) the aggregate Purchase Price of all such Acquisitions
(other than any such Acquisition where the sole consideration consists
of Capital Stock (other than Disqualified Stock) of Holdings) shall
not, as at any date, exceed the sum of $2,000,000 PLUS the aggregate
amount of Capital Stock (other than Disqualified Stock) issued in
connection with such Acquisitions;
(ii) each such Acquisition by Holdings or any Restricted
Subsidiary (if by purchase of assets, merger or consolidation) shall be
effected in such manner so that the acquired business, and the related
assets, are owned either by Holdings or a Wholly Owned Restricted
Subsidiary of Holdings and, if effected by merger or consolidation
involving Holdings, Holdings shall be the continuing or surviving
entity and, if effected by merger or consolidation involving a Wholly
Owned Restricted Subsidiary of Holdings, the continuing or surviving
entity shall be a Wholly Owned Restricted Subsidiary of Holdings;
(iii) each such Acquisition by Holdings or any Restricted
Subsidiary (if by purchase of stock) shall be effected in such manner
so that the acquired entity becomes a Wholly Owned Restricted
Subsidiary of Holdings;
(iv) after giving effect to each such Acquisition by Holdings
or any Restricted Subsidiary, Holdings shall be in compliance with
SECTION 6.13 (the determination of such compliance to be calculated on
a pro forma basis, using assumptions that Holdings in good faith
believes are fair, accurate and reasonable at the time, and in which
assumptions the Administrative Agent concurs) (A) as at the end of and
for the period of four fiscal quarters most recently ended prior to the
date of such Acquisition for which financial statements of Holdings and
its Restricted Subsidiaries are available and (B) on a projected basis
until the date six months after the Maturity Date (using assumptions
that Holdings in good faith believes are fair, accurate and reasonable
at the time, and in which assumptions the Holdings
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Note Agent concurs), in each case under the assumption that such
Acquisition shall have occurred, and any Indebtedness in connection
therewith shall have been incurred, at the beginning of the applicable
period, and under the assumption that interest for such period had been
or will be equal to the actual weighted average interest rate in effect
for the Holdings Notes under the Holdings Notes Agreement on the date
of such Acquisition, and, in the event that the aggregate consideration
in respect of such Acquisition shall exceed $5,000,000, Holdings shall
have delivered to the Administrative Agent a certificate of a Financial
Officer showing calculations in reasonable detail to demonstrate
compliance with this CLAUSE (IV);
(v) each such Acquisition is consummated with the consent of
the board of directors (or the equivalent entity) of the Person being
acquired; and
(vi) immediately prior to each such Acquisition and after
giving effect thereto, no Default or Event of Default shall have
occurred and be continuing;
PROVIDED, HOWEVER, that, notwithstanding anything to the contrary contained in
SECTION 6.06(b), (1) the aggregate Purchase Price of all such Acquisitions paid
by the Issuer, in whatever form, shall not, as at any date, exceed $2,000,000
PLUS the aggregate amount of capital contributions in the form of equity made by
Holdings to the Issuer on or after the Closing Date, and (2) the Issuer may not
be a party to any merger or consolidation referred to in CLAUSE (II) of this
SECTION 6.06(b).
SECTION 1.47. RESTRICTED PAYMENTS. None of the Obligors will, nor will
it cause or permit any Restricted Subsidiary to:
(a) declare or pay, directly or indirectly, any dividend or make any
other distribution (by reduction of capital or otherwise), whether in cash,
property, securities or a combination thereof, with respect to any shares of its
Capital Stock (including through the payment to any Person other than Holdings
or a Wholly Owned Restricted Subsidiary in connection with a transaction
described in SECTION 6.06(A)(I)) or directly or indirectly redeem, purchase,
retire or otherwise acquire for value (or permit any Restricted Subsidiary to
purchase or acquire) any shares of any class of its Capital Stock or set aside
any amount for any such purpose (any such payment, a "RESTRICTED PAYMENT");
PROVIDED that any Subsidiary of Holdings may declare and make Restricted
Payments to any Obligor; provided, further, however, that the Issuer may declare
and make Restricted Payment only if and to the extent permitted by applicable
law; and
(b) issue any stock, membership or partnership or other Equity Interest
to any Person unless (i) after giving effect to such issuance, Holdings shall be
in compliance with SECTION 6.13 (determined on a pro forma basis, using
assumptions that Holdings in good faith believes are fair, accurate and
reasonable at the time, and in which assumptions the Holdings Notes Agent
concurs); (ii) after giving effect to such issuance no other Default or Event of
Default shall have occurred and be continuing; and (iii) in the case of any such
issuance by a Restricted Subsidiary, the percentage of the issued and
outstanding shares of Capital Stock of such Restricted Subsidiary owned by
Holdings and its other Restricted Subsidiaries after giving effect to such
issuance shall be greater
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than or equal to such percentage owned by Holdings and its Restricted
Subsidiaries immediately prior to such issuance;
PROVIDED that the foregoing shall not prohibit:
(i) the issuance by Holdings of any additional Capital Stock
(other than Disqualified Stock);
(ii) the redemption, repurchase, retirement, defeasance or
other acquisition of any Capital Stock of Holdings in exchange for, or
out of the proceeds of, the substantially concurrent sale (other than
to a Subsidiary of the Issuer) of Capital Stock of Holdings (other than
Disqualified Stock);
(iii) the repurchase, redemption or other acquisition or
retirement for value of any Capital Stock of Holdings pursuant to any
management or equity subscription agreement or stock option agreement
and the repurchase of Capital Stock of Holdings from employees,
officers or directors of Holdings or their authorized representatives
upon the death, disability or termination of employment of such
officers, directors and employees in an aggregate amount not to exceed
$5,000,000 during the term of this Agreement (or $1,500,000 through
December 31, 2002) PLUS (A) the aggregate cash proceeds from any
issuance during such calendar year of Capital Stock by Holdings to
employees, officers or directors of Holdings and its Restricted
Subsidiaries and (B) the aggregate cash proceeds received by Holdings
or any Restricted Subsidiary from any payments on life insurance
policies in which Holdings or any Restricted Subsidiary is the
beneficiary with respect to any employees, officers or directors of
Holdings or any Restricted Subsidiary which proceeds are used to
purchase Capital Stock of Holdings held by such employees, officers or
directors;
(iv) pro rata dividends or other distributions made by a
Restricted Subsidiary of Holdings to minority stockholders (or owners
of an equivalent interest in the case of a Restricted Subsidiary that
is not a corporation);
(v) the repurchase of Capital Stock of Holdings deemed to
occur upon the exercise of stock options if such Capital Stock
represents a portion of the exercise price thereof; and
(vi) the payment of any dividends in respect of any class of
Capital Stock of Holdings through the issuance of additional shares of
such class of Capital Stock; PROVIDED, HOWEVER, that the Issuer may not
issue any Capital Stock to any Person other than Holdings and Holdings
shall, at all times, continue to own, beneficially and of record, all
issued and outstanding Capital Stock of the Issuer.
SECTION 1.48. RESTRICTIVE AGREEMENTS. None of the Obligors will, nor
will it permit any Restricted Subsidiary to, directly or indirectly, enter into,
incur or permit to exist any agreement or other arrangement that prohibits,
restricts or imposes any condition upon (a) the ability of Holdings
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or any Restricted Subsidiary to create, incur or permit to exist any Lien upon
any of its property or assets, or (b) the ability of any Restricted Subsidiary
to pay dividends or other distributions with respect to any shares of its
Capital Stock or to make or repay loans or advances to Holdings or any other
Restricted Subsidiary or to Guarantee Indebtedness of Holdings or any other
Restricted Subsidiary; PROVIDED that:
(i) the foregoing shall not apply to (A) restrictions in
effect on the date hereof and set forth on a Schedule to be prepared
after the date hereof and on or before the Closing Date, the contents
of which Schedule shall be in form and substance satisfactory to each
Purchaser; (B) restrictions and conditions imposed by law or by this
Agreement or any other Note Document or any of the Holdings Notes
Documents; (C) customary restrictions and conditions contained in
agreements relating to the sale of a Subsidiary pending such sale,
PROVIDED such restrictions and conditions apply only to the Subsidiary
that is to be sold and such sale is permitted hereunder; (D)
restrictions set forth in any instrument pursuant to which Indebtedness
permitted under SECTION 6.01(A)(X) is incurred so long, as provided
therein, such Indebtedness does not contain covenants, defaults,
mandatory redemption provisions and other terms less favorable in any
respect (from the standpoint of Holdings) than Holdings' 10% Senior
Notes due 2009, (E) restrictions set forth in any instrument pursuant
to which Permitted Refinancing Indebtedness shall be issued, PROVIDED
that the restrictions contained in such instruments are no more
restrictive, taken as a whole, than those contained in the agreements
governing the Indebtedness being refinanced; (F) customary limitations
on the disposition or distribution of assets or property in joint
venture agreements and other similar agreements entered into in the
ordinary course of business; and (G) restrictions on cash or other
deposits or net worth imposed by customers under contracts entered into
in the ordinary course of business; and
(ii) CLAUSE (A) above shall not apply to (A) restrictions or
conditions imposed by any agreement relating to secured Indebtedness
permitted by this Agreement if such restrictions or conditions apply
only to the property or assets securing such Indebtedness; (B)
customary non-assignment provisions restricting subletting or
assignment in leases or other agreements entered into in the ordinary
course of business and consistent with past practices; and (C) purchase
money obligations for property acquired in the ordinary course of
business that impose restrictions on the transfer of such property to
Holdings or any Restricted Subsidiary; and
(iii) the Lien of the Administrative Agent in and to the
Collateral as security for the Obligations shall at all times
constitute a perfected, first priority Lien subject only to the Lien
priority afforded to the Holdings Notes Agent pursuant to the
Intercreditor Agreement.
SECTION 1.49. REPAYMENT OF INDEBTEDNESS. None of the Obligors will
purchase, redeem, retire or otherwise acquire for value, or set apart any money
for a sinking, defeasance or other analogous fund for the purchase, redemption,
retirement or other acquisition of, or make any voluntary payment or prepayment
or redemption of the principal of or interest on, or any other amount owing in
respect of, any Indebtedness, except for (a) regularly scheduled payments,
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prepayments or redemptions of principal and interest in respect thereof required
pursuant to the instruments evidencing such Indebtedness and (b) the refinancing
of any Indebtedness permitted under SECTION 6.01.
SECTION 1.50. TRANSACTIONS WITH AFFILIATES.
(a) Except as herein otherwise expressly provided, Holdings will not,
nor will it permit any of its Restricted Subsidiaries to, sell, lease or
otherwise transfer any property or assets to, or purchase, lease or otherwise
acquire any property or assets from, or otherwise engage in any other
transactions with, any of its Affiliates, except (i) transactions in the
ordinary course of business at prices and on terms and conditions not less
favorable to Holdings or such Restricted Subsidiary than could be obtained on an
arm's-length basis from unrelated third parties, (ii) transactions between or
among Holdings and its Restricted Subsidiaries not involving any other
Affiliate, and (iii) transactions pursuant to the Management Agreement dated as
of January 2, 1998 between Holdings and Metromedia Company, as said Management
Agreement shall be amended from time to time, so long as (A) no such amendment
shall result in the terms and conditions of such Management Agreement being less
favorable to Holdings and its Subsidiaries than could be obtained on an
arm's-length basis from unrelated third parties and (B) such amendment shall
have been approved by a majority of the disinterested directors of Holdings.
Notwithstanding the foregoing, in the case of any transaction described in
CLAUSE (I) through CLAUSE (III) of the preceding sentence involving aggregate
consideration in excess of $10,000,000, Holdings shall obtain and deliver a copy
to the Administrative Agent (with sufficient copies thereof to be delivered by
the Administrative Agent to the Holders) of a favorable written opinion from an
accounting, appraisal or investment banking firm of national standing as to the
fairness to Holdings of such transaction from a financial point of view.
(b) Notwithstanding anything to the contrary contained in CLAUSE (A) of
this SECTION 6.10, except for Restricted Payments permitted to be made or paid
by the Issuer in accordance with SECTION 6.07, the Issuer will not sell, lease
or otherwise transfer any of its property or assets to, or purchase, lease or
otherwise acquire any property or assets from, or otherwise engage in any other
transactions with, any of its Affiliates except (i) transactions in the ordinary
course of business at prices and on terms and conditions not less favorable to
the Issuer than could be obtained on an arm's-length basis from unrelated third
parties or (ii) transactions with Holdings, SiteSmith, Inc. or its foreign
Subsidiaries, AboveNet Communications, Inc. or its foreign Subsidiaries,
Paix.net, Inc. or Subsidiaries of the Issuer in the ordinary course of business
and consistent with past practices which could not reasonably be expected
(individually or in the aggregate) to have a Material Adverse Effect.
SECTION 1.51. LINES OF BUSINESS. None of the Obligors will, nor will it
cause or permit any of its Subsidiaries to, engage to any extent in any business
other than a Telecommunications Business and business activities reasonably
incidental thereto in the sixty-seven (67) fiber markets, and twenty-six (26)
ISX markets, identified by Holdings in the business plan dated as of September
2, 2001, or make any Investment, Acquisitions or Capital Expenditures in any
market other than such fiber and ISX markets.
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SECTION 1.52. MODIFICATIONS TO CERTAIN AGREEMENTS. None of the Obligors
will, nor will it cause or permit any Restricted Subsidiary to, permit any
waiver, supplement, modification, amendment, termination or release of (a) the
Holdings Senior Notes or the Holdings Subordinated Notes (or any indenture
relating thereto), (b) the Verizon Debt Agreement or the Verizon Agreement, if,
in the case of any modification to the Verizon Agreement, the same would result
in (or would reasonably be expected to result in) the reduction of the aggregate
amounts payable under the Verizon Agreement to Holdings and its Restricted
Subsidiaries during calendar years 2001 and 2002 by more than 10% in either of
such years, (c) any of the Holdings Notes Documents in any manner that would
increase the amount of any Indebtedness thereunder, increase the rate of
interest applicable to any Indebtedness thereunder, shorten the maturity date or
the date for payment of any Indebtedness thereunder or otherwise be materially
adverse to Holdings or any of its Subsidiaries or the Holders, or (d) any other
Material Agreement, or its articles, charter or by-laws, in each case to the
extent that any such waiver, supplement, modification, amendment, termination or
release under this CLAUSE (D) could reasonably be expected (individually or in
the aggregate) to have a Material Adverse Effect. Without limiting the
generality of the foregoing, Holdings will not issue any shares of Disqualified
Stock.
SECTION 1.53. FINANCIAL COVENANTS.
(a) MAXIMUM CAPITALIZATION RATIOS. The Issuer will cause Holdings to
not permit the ratio (expressed as a percentage) of (i) Total Indebtedness to
Total Capital at any time prior to March 30, 2003 to exceed 66% or (ii) Total
Senior Indebtedness to Total Capital at any time prior to March 30, 2003 to
exceed 10.8%.
(b) MAXIMUM SENIOR INDEBTEDNESS TO FIXED ASSETS RATIO. The Issuer will
cause Holdings to not permit the ratio (expressed as a percentage) of (i) Total
Senior Indebtedness at any date during any period set forth below to (ii) the
aggregate amount of net property, plant and equipment carried on the
consolidated balance sheet of Holdings and its Restricted Subsidiaries as at the
last day of the fiscal quarter ending on or prior to March 30, 2003 to be
greater than 16.2%.
(c) MINIMUM REVENUES. The Issuer will cause Holdings to not permit the
aggregate amount of Revenues of Holdings and its Restricted Subsidiaries for any
period of four fiscal quarters ending on any date set forth below to be less
than the amount set forth below opposite such date:
<Table>
<Caption>
DATE MINIMUM NUMBER
---- --------------
September 30, 2001 $248,000,000
December 31, 2001 $256,000,000
March 31, 2002 $284,000,000
June 30, 2002 $304,000,000
September 30, 2002 $348,000,000
December 31, 2002 $408,000,000
</Table>
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(d) MINIMUM ADJUSTED EBITDA. The Issuer will cause Holdings to not
permit the aggregate Adjusted EBITDA for any period of four fiscal quarters
ending on any date set forth below to be greater in absolute amount (if the
requirement set forth below is negative) or less than the absolute amount (if
the requirement set forth below is positive) set forth below opposite such date:
<Table>
<Caption>
DATE MINIMUM NUMBER
---- --------------
September 30, 2001 $40,800,000
December 31, 2001 $8,000,000
March 31, 2002 $88,000,000
June 30, 2002 $180,000,000
September 30, 2002 $256,000,000
December 31, 2002 $300,000,000
</Table>
(e) MAXIMUM TOTAL LEVERAGE AND TOTAL SENIOR LEVERAGE RATIOS. The Issuer
will cause Holdings to not permit the Total Leverage Ratio or Total Senior
Leverage Ratio at any time during any period set forth below to exceed the
respective ratio set forth below opposite such period:
<Table>
<Caption>
Total Total Senior
Period Leverage Ratio Leverage Ratio
------ -------------- --------------
From and including March 31, 2003
to and including June 29, 2003........... 10.20 to 1.00 1.50 to 1.00
From and including June 30, 2003
to and including September 29, 2003...... 9.78 to 1.00 1.38 to 1.00
From and including September 30, 2003
to and including December 30, 2003....... 9.78 to 1.00 1.38 to 1.00
From and including December 31, 2003
to and including March 30, 2004.......... 9.78 to 1.00 1.38 to 1.00
From and including April 1, 2004
to and including June 29, 2004........... 9.00 to 1.00 1.26 to 1.00
From and including June 30, 2004
to and including September 29, 2004...... 8.40 to 1.00 1.20 to 1.00
From and including September 30, 2004
to and including December 30, 2004....... 7.80 to 1.00 1.08 to 1.00
From and including December 31, 2004
to and including March 30, 2005.......... 7.20 to 1.00 0.96 to 1.00
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<Caption>
Total Total Senior
Period Leverage Ratio Leverage Ratio
------ -------------- --------------
From and including March 31, 2005
to and including March 30, 2006.......... 6.30 to 1.00 0.90 to 1.00
From and including March 31, 2006
and at all times thereafter 5.40 to 1.00 0.60 to 1.00
</Table>
(f) MINIMUM INTEREST EXPENSE COVERAGE RATIO. The Issuer will cause
Holdings to not permit the Interest Expense Coverage Ratio at any date during
any period set forth below to be less than the ratio set forth below opposite
such period:
<Table>
<Caption>
Period Minimum Ratio
------ -------------
From and including March 31, 2003
to and including June 29, 2003.............. 1.12 to 1.00
From and including June 30, 2003
to and including September 29, 2003......... 1.20 to 1.00
From and including September 30, 2003
to and including December 30, 2003.......... 1.32 to 1.00
From and including December 31, 2003
to and including March 30, 2004............. 1.12 to 1.00
From and including April 1, 2004
to and including June 29, 2004.............. 1.24 to 1.00
From and including June 30, 2004
to and including September 29, 2004......... 1.36 to 1.00
From and including September 30, 2004
to and including December 30, 2004.......... 1.44 to 1.00
From and including December 31, 2004
to and including March 30, 2005............. 1.60 to 1.00
From and including March 31, 2005
to and including March 30, 2006............. 1.80 to 1.00
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<Caption>
Period Minimum Ratio
------ -------------
From and including March 31, 2006
and at all times thereafter 2.20 to 1.00
</Table>
(g) MINIMUM PRO FORMA DEBT SERVICE COVERAGE RATIO. The Issuer will
cause Holdings to not permit the Pro Forma Debt Service Coverage Ratio at any
date on or after September 30, 2005 to be less than 1.12 to 1.00.
(h) MAXIMUM CAPITAL EXPENDITURES. The Issuer will cause Holdings to not
permit the aggregate amount of Capital Expenditures of Holdings and its
Restricted Subsidiaries during any period set forth below to exceed the amount
set forth opposite such period:
<Table>
<Caption>
Maximum Capital
Period Expenditures
------ ------------
Fiscal quarter ending September 30, 2001 $426,000,000
Fiscal quarter ending December 31, 2001 $126,000,000
Fiscal quarter ending December 31, 2002 $88,000,000
Fiscal quarter ending December 31, 2003 $98,000,000
Fiscal quarter ending December 31, 2004 $720,000,000
Fiscal quarter ending December 31, 2005 $104,000,000
Fiscal quarter ending December 31, 2006 $169,000,000
</Table>
If the aggregate amount of Capital Expenditures for any fiscal quarter
or fiscal year (herein, a "FISCAL PERIOD") set forth above shall be less than
the amount set forth opposite such Fiscal Period, then 50% of the shortfall
shall be added to the amount of Capital Expenditures permitted for the
immediately succeeding (but not any other) Fiscal Period and, for purposes
hereof, the amount of Capital Expenditures made during any Fiscal Period shall
be deemed to have been made first from the carryover from any previous Fiscal
Period and last from the permitted amount for such Fiscal Period.
The $355,000,000 figure set forth in the Schedule above for the fiscal
quarter ending September 30, 2001 has been prepared under the assumption that
not less than $201,000,000 of the equipment purchased from, or delivered by,
Nortel Networks during such fiscal quarter would be treated as Capital
Expenditures under GAAP. To the extent that, by reason of the execution and
delivery of this Agreement such assumption is incorrect, then such $355,000,000
figure shall be reduced on a dollar-for-dollar basis by the amount of such
equipment so purchased or delivered that is not treated as a Capital Expenditure
under GAAP.
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ARTICLE VII
EVENTS OF DEFAULT
EVENTS OF DEFAULT. If any of the following events ("EVENTS OF DEFAULT")
shall occur and be continuing:
(a) the Issuer shall default in the payment of any principal of or any
interest on any Note when and as the same shall become due and payable, whether
at the due date thereof or at a date fixed for redemption thereof or by
acceleration thereof or otherwise; or
(b) the Issuer shall default in the payment of any fee or any other
amount (other than an amount referred to in CLAUSE (A) above) due under any Note
Document, when and as the same shall become due and payable, and such default
shall continue unremedied for a period of three or more Business Days; or
(c) any representation or warranty of Holdings or any Restricted
Subsidiary made or deemed made in or in connection with any Note Document or the
Notes, or any representation or warranty contained in any report, certificate,
financial statement or other instrument furnished in connection with or pursuant
to any Note Document, shall prove to have been false or misleading in any
material respect when so made, deemed made or furnished; or
(d) the Issuer shall default in the due observance or performance of
any covenant, condition or agreement contained in SECTION 5.03(a) or in ARTICLE
VI; or
(e) the Issuer shall default in the due observance or performance of
any covenant, condition or agreement contained in any Note Document (other than
those specified in CLAUSE (A), CLAUSE (B) and CLAUSE (D) above) and such default
shall continue unremedied for a period of 30 days after notice thereof from the
Administrative Agent or any Holder to the Issuer; or
(f) Holdings or any Restricted Subsidiary shall (i) fail to make any
payment (whether of principal or interest and regardless of amount) in respect
of any Material Indebtedness, when and as the same shall become due and payable
(after giving effect to any grace period provided in the underlying
documentation providing for such Indebtedness) or (ii) fail to observe or
perform any other term, covenant, condition or agreement contained in any
agreement or instrument evidencing or governing any Material Indebtedness if the
effect of any failure referred to in this CLAUSE (II) is to cause or permit such
Indebtedness (without any further lapse of time or other action, other than the
mere giving of notice) to become due prior to its stated maturity; or
(g) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed in a court of competent jurisdiction seeking (i) relief
in respect of Holdings or any Restricted Subsidiary, or of a substantial part of
the property or assets of Holdings or any Restricted Subsidiary, under the
Bankruptcy Code or any other Federal, state or foreign bankruptcy, insolvency,
receivership or similar law, (ii) the appointment of a receiver, trustee,
custodian, sequestrator,
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conservator or similar official for Holdings or any Restricted Subsidiary or for
a substantial part of the property or assets of Holdings or any Restricted
Subsidiary, or (iii) the winding-up or liquidation of Holdings or any Restricted
Subsidiary; and any such proceeding or petition referred to in this CLAUSE (G)
shall continue undismissed for 60 days or an order or decree approving or
ordering any of the foregoing shall be entered; or
(h) Holdings or any Restricted Subsidiary shall (i) voluntarily
commence any proceeding or file any petition seeking relief under the Bankruptcy
Code or any other Federal, state or foreign bankruptcy, insolvency, receivership
or similar law, (ii) consent to the institution of, or fail to contest in a
timely and appropriate manner, any proceeding or the filing of any petition
described in CLAUSE (G) above, (iii) apply for or consent to the appointment of
a receiver, trustee, custodian, sequestrator, conservator or similar official
for Holdings or any Restricted Subsidiary or for a substantial part of the
property or assets of Holdings or any Restricted Subsidiary, (iv) file an answer
admitting the material allegations of a petition filed against it in any such
proceeding, (v) make a general assignment for the benefit of creditors or (vi)
take any action for the purpose of effecting any of the foregoing; or
(i) Holdings or any Restricted Subsidiary shall admit in writing its
inability to, or be generally unable to, pay its debts as such debts become due;
or
(j) a final judgment or judgments for the payment of money in excess of
$5,000,000 in the aggregate (exclusive of judgment amounts fully covered by
insurance where the insurer has admitted liability in respect of such judgment)
shall be rendered by one or more courts, administrative tribunals or other
bodies having jurisdiction against Holdings or any one or more Restricted
Subsidiaries and the same shall not be discharged (or provision shall not be
made for such discharge), or a stay of execution thereof shall not be procured,
within 30 days from the date of entry thereof and Holdings or such Restricted
Subsidiary shall not, within such 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, or any action shall
be legally taken by a judgment creditor to attach or levy upon any assets of
Holdings or any Restricted Subsidiary to enforce any such judgment; or
(k) any security interest purported to be created by any Security
Document and required hereunder or thereunder to be perfected shall (except as
otherwise expressly permitted in this Agreement or the other Note Documents)
cease to be a valid first lien and prior perfected security interest in the
assets or properties covered thereby (except, as to priority, as otherwise
provided in the Intercreditor Agreement), except to the extent that any such
loss of perfection or priority results from any action or failure to take action
of the Administrative Agent; or the Issuer shall assert in writing that any
security interest purported to be created by any Security Document and required
hereunder or thereunder to be perfected is not (except as otherwise expressly
permitted in this Agreement or the other Note Documents) a valid first lien and
prior perfected security interest in the securities, assets or properties
purported to be covered thereby (except, as to priority, as otherwise provided
in the Intercreditor Agreement); or
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(l) a Change in Control shall occur; or
(m) Holdings or any Restricted Subsidiary shall for whatever reason
lose its rights under any Material Agreement, such rights shall be impaired or
any default (as defined therein) shall occur under any Material Agreement and,
if capable of being remedied, shall continue unremedied for a period of 30 days,
in each case that in the opinion of the Required Holders, has had or could
reasonably be expected (individually or in the aggregate) to have a Material
Adverse Effect on the Issuer, or on Holdings and its Restricted Subsidiaries
taken as a whole; or
(n) any ERISA Event shall occur or exist with respect to any Plan or
Multiemployer Plan and, as a result of such event or condition, together with
all other such events or conditions, the Issuer or any ERISA Affiliate shall
incur or in the opinion of the Required Holders shall be reasonably likely to
incur a liability to a Plan, a Multiemployer Plan or the PBGC (or any
combination of the foregoing) that, in the determination of the Required
Holders, either individually or in the aggregate, has had or could reasonably be
expected (individually or in the aggregate) to have a Material Adverse Effect;
or
(o) one or more Franchises, Licenses or Private Licenses of Holdings or
any of its Restricted Subsidiaries shall be terminated or revoked such that
Holdings or such Restricted Subsidiary is no longer able to operate such
Franchises, Licenses or Private Licenses and retain the revenue received
therefrom, or Holdings or such Restricted Subsidiary or the grantors of such
Franchises, Licenses or Private Licenses shall fail to renew such Franchises,
Licenses or Private Licenses at the stated expiration thereof such that Holdings
or such Restricted Subsidiary is no longer able to operate such Franchises,
Licenses or Private Licenses and retain the revenue received therefrom, and the
effect of the foregoing, individually or in the aggregate, could reasonably be
expected (individually or in the aggregate), in the opinion of the Required
Holders, to result in a Material Adverse Effect; or
(p) the Initial Exercise Date (as defined in the Warrant Agreement)
shall not have occurred on or prior to the 90th day following the Closing Date;
or
(q) Holdings shall not have filed, on or prior to the fifth day
following the Closing Date, with the Securities and Exchange Commission (in
accordance with, and meeting the requirements of, Regulation 14C and Schedule
14C under the Exchange Act) an information statement required to be filed
pursuant to Rule 14c-5 under the Exchange Act with respect to the issuance of
common stock (or securities convertible into or exercisable for common stock) of
Holdings pursuant to the terms of the Basic Documents;
then, and in any such event, the Administrative Agent shall at the request, or
may with the consent, of the Required Holders, by notice to the Issuer, declare
the Notes issued by the Issuer, all interest thereon and all other amounts
payable by the Issuer under this Agreement and the other Note Documents to be
forthwith due and payable, whereupon the Notes, all such interest and all such
amounts shall become and be forthwith due and payable, without presentment,
demand, protest or further notice of any kind, all of which are hereby expressly
waived by the Issuer; PROVIDED that in
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the case of the occurrence of an Event of Default referred to in CLAUSE (G) or
CLAUSE (H) of this ARTICLE VII with respect to Holdings or the Issuer, the
Notes, all such interest and all such amounts shall automatically become and be
due and payable, without presentment, demand, protest or any notice of any kind,
all of which are hereby expressly waived by the Issuer.
ARTICLE VIII
THE ADMINISTRATIVE AGENT
SECTION 1.54. AUTHORIZATION AND ACTION. Each Holder hereby appoints and
authorizes the Administrative Agent to take such action as agent on its behalf
and to exercise such powers and discretion under this Agreement and the other
Note Documents to which it is a party, as are delegated to the Administrative
Agent by the terms hereof and thereof, together with such powers and discretion
as are reasonably incidental thereto. As to any matters not expressly provided
for by the Note Documents, the Administrative Agent shall not be required to
exercise any discretion or take any action, and shall not be required to act or
to refrain from acting (and shall be fully protected in so acting or refraining
from acting) except upon the instructions of the Required Holders, and such
instructions shall be binding upon all Holders; PROVIDED that the Administrative
Agent shall not be required to take any action that exposes it to personal
liability or that is contrary to any of the Note Documents or applicable law.
The Administrative Agent agrees to give to the Holders prompt notice of each
notice given to it by any Obligor pursuant to the terms of this Agreement.
SECTION 1.55. ADMINISTRATIVE AGENT'S RELIANCE, ETC. Neither the
Administrative Agent nor any of its directors, officers, agents or employees
shall be liable for any action taken or omitted to be taken by it or them under
or in connection with the Note Documents, except for its or their own gross
negligence or willful misconduct. Without limitation of the generality of the
foregoing, the Administrative Agent (a) may treat the Holder registered in the
Register with respect to any Note as the holder thereof until the Administrative
Agent receives and accepts a Transfer and Acceptance entered into by the
registered Holder, as transferor, and an Eligible Institution, as transferee, as
provided in SECTION 10.09; (b) may consult with legal counsel (including counsel
for the Issuer), 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; (c) makes no warranty or representation to any Holder and shall not be
responsible to any of them for any statements, warranties or representations
made in or in connection with the Note Documents; (d) shall not have any duty to
ascertain or to inquire as to the performance or observance of any of the terms,
covenants or conditions of any Note Document on the part of the Issuer or to
inspect the property (including the books and records) of the Issuer; (e) shall
not be responsible to any Holder for the due execution, legality, validity,
enforceability, genuineness, sufficiency or value of any Note Document or any
other instrument or document furnished pursuant hereto; and (f) shall incur no
liability under or in respect of any Note Document by acting upon any notice,
consent, certificate or other instrument or writing (which may be by telegram,
telecopy, cable or telex) believed by it to be genuine and signed or sent by the
proper party or parties.
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SECTION 1.56. RIGHTS AS A HOLDER. With respect to its Commitment and
the Notes held by it, each Person acting as the Administrative Agent shall have
the same rights and powers under the Note Documents as any other Holder and may
exercise the same as though it were not the Administrative Agent; and the term
"Holder" or "Holders" shall, unless otherwise expressly indicated, include such
Person in its individual capacity. Such Person acting as the Administrative
Agent and its Affiliates may accept deposits from, lend money to, act as trustee
under indentures for, accept investment banking engagements from and generally
engage in any kind of business with, Holdings and any of its Subsidiaries
(including the Issuer), any of their respective Affiliates and any other Person
who may do business with or own securities of Holdings or any such Subsidiary or
Affiliate, all as if such Person acting as the Administrative Agent were not the
Administrative Agent and without any duty to account therefor to the Holders.
SECTION 1.57. HOLDER FINANCIAL DECISION. Each Holder acknowledges that
it has, independently and without reliance upon the Administrative Agent or any
other Holder and based on the financial statements referred to in SECTION
4.01(F) and such other documents and information as it has deemed appropriate,
made its own credit analysis and decision to enter into this Agreement. Each
Holder also acknowledges that it will, independently and without reliance upon
the Administrative Agent or any other Holder 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.
SECTION 1.58. INDEMNIFICATION. The Holders agree to indemnify the
Administrative Agent (to the extent not promptly reimbursed by the Obligors),
ratably according to the principal amounts of the outstanding Notes made by
them, from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever that may be imposed on, incurred by, or asserted
against any of them in any way relating to or arising out of the Note Documents
or any action taken or omitted by any of them under the Note Documents; PROVIDED
that no Holder shall be liable for any portion of such liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements resulting from the gross negligence or willful misconduct of the
Administrative Agent. Without limitation of the foregoing, each Holder agrees to
reimburse (a) the Administrative Agent promptly upon demand for its ratable
share of any costs and expenses payable by the Issuer under SECTION 10.04 of
this Agreement and (b) the Administrative Agent under the Security Documents, in
each case to the extent that the Administrative Agent is not promptly reimbursed
for such costs and expenses by the Issuer.
SECTION 1.59. COLLATERAL DUTIES.
(a) NO DUTY UNLESS INDEMNIFIED. Except for action expressly required of
the Administrative Agent hereunder and under the other Note Documents, the
Administrative Agent shall in all cases be fully justified in refusing to act
hereunder and thereunder unless it shall be further indemnified to its
satisfaction by the Holders proportionately in accordance with the Notes then
due and payable to each of them against any and all liability and expense that
may be incurred by it by reason of taking or continuing to take any such action.
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(b) COLLECTIONS, ETC. Except as expressly provided herein or in the
other Note Documents, the Administrative Agent shall not have any duty to take
any affirmative steps with respect to the collection of amounts payable in
respect of the Collateral. The Administrative Agent shall incur no liability as
a result of any private sale of the Collateral.
(c) RELEASE OF LIENS. The Holders hereby consent, and agree upon
written request by the Administrative Agent to execute and deliver such
instruments and other documents as the Administrative Agent may deem desirable
to confirm such consent, to the release of the Liens on any of the Collateral
that is the subject of a sale of Collateral either permitted hereunder or to
which the Required Holders have consented in accordance with the requirements of
SECTION 10.01.
(d) STANDARD OF CARE. The parties hereto acknowledge that the
Administrative Agent shall be deemed to have exercised reasonable care in the
custody and preservation of the Collateral in its possession if the Collateral
is accorded treatment substantially equal to that which the Administrative Agent
accords its own property, it being understood that neither the Administrative
Agent nor any Holder shall have responsibility for (i) ascertaining or taking
action with respect to calls, conversions, exchanges, maturities, tenders or
other matters relative to any Collateral, whether or not the Administrative
Agent or any Holder has or is deemed to have knowledge of such matters, or (ii)
taking any necessary steps to preserve rights against any parties with respect
to any Collateral.
SECTION 1.60. SUCCESSOR ADMINISTRATIVE AGENT. The Administrative Agent
may resign at any time by giving written notice thereof to the Holders and the
Issuer. Upon any such resignation, the Required Holders shall have the right to
appoint a successor Administrative Agent, which shall be a Holder or a
commercial bank organized under the laws of the United States or of any State
thereof and having an office in New York, New York and a combined capital and
surplus of at least $500,000,000. If no successor shall have been so appointed
by the Required Holders and shall have accepted such appointment within 30 days
after the retiring Administrative Agent gives notice of its resignation or is
removed, then the retiring Administrative Agent's resignation shall nonetheless
become effective and (a) the retiring Administrative Agent shall be discharged
from its duties and obligations hereunder and (b) the Required Holders shall
perform the duties of the Administrative Agent (and all payments and
communications provided to be made by, to or through the Administrative Agent
shall instead be made by or to any or each Holder directly) until such time as
the Required Holders appoint a successor agent as provided for above in this
section. Upon the acceptance of any appointment as the Administrative Agent
hereunder by a successor Administrative Agent such successor Administrative
Agent shall succeed to and become vested with all the rights, powers,
discretion, privileges and duties of the retiring Administrative Agent and such
retiring Administrative Agent shall be discharged from its duties and
obligations under the Note Documents. After any retiring Administrative Agent's
resignation or removal hereunder as the Administrative Agent, the provisions of
this ARTICLE VIII shall inure to the benefit of the Administrative Agent as to
any actions taken or omitted to be taken by it while it was the Administrative
Agent under this Agreement and under the Security Documents.
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SECTION 1.61. ADMINISTRATIVE AGENT'S FEE. The Issuer shall pay to the
Administrative Agent annually, commencing on the Closing Date and continuing
thereafter on each anniversary of the Closing Date until the Obligations are
paid in full, a fee in the amount of $75,000 per annum in consideration for the
Administrative Agent's agreeing to act in its capacity as administrative agent
hereunder.
ARTICLE IX
THE INTERCREDITOR AGREEMENT
Each Holder hereby authorizes the Administrative Agent to execute and
deliver the Intercreditor Agreement as agent on behalf of such Holder and agrees
to be bound by the terms and provisions thereof. Each Holder hereby appoints and
authorizes the Administrative Agent to take such action as agent on behalf of
such Holder and to exercise such powers and discretion under the Intercreditor
Agreement as are delegated to the Administrative Agent by the terms and
provisions thereof, together with such powers and discretion as are reasonably
incidental thereto.
ARTICLE X
MISCELLANEOUS
SECTION 1.62. AMENDMENTS, CONSENTS, ETC.
(a) AMENDMENTS OF NOTE DOCUMENTS GENERALLY. No amendment or waiver of
any provision of this Agreement or the other Note Documents, nor any consent to
any departure by the Issuer from any provision of this Agreement or the other
Note Documents, shall in any event be effective unless the same shall be in
writing and signed by the Issuer and the Administrative Agent and, in the case
of an amendment to this Agreement, the Required Holders and then such waiver or
consent shall be effective only in the specific instance and for the specific
purpose for which given; PROVIDED that:
(i) no amendment, waiver or consent shall, unless in writing
and signed by the Required Holders and each Holder that would be
adversely affected by such amendment, waiver or consent:
(A) change the percentage of the Commitments or the
aggregate unpaid principal amount of the Notes, or the number
or percentage of Holders, that shall be required for the
Holders or any of them to take any action hereunder;
(B) reduce the principal of, or interest on, any Note
or any fees or other amounts payable hereunder;
(C) postpone any date fixed for any payment of
principal of, or interest on, any Note or any fees or other
amounts payable hereunder or amend SECTION 2.03;
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(D) subject such Holder to any additional
obligations; or
(E) change the order of application of any redemption
set forth in SECTION 2.03 in any manner that materially
affects such Holder;
(ii) no amendment, waiver or consent shall, unless in writing
and signed by the Required Supermajority Holders:
(A) increase the aggregate amount of the Commitments
or the aggregate principal amount of the Notes that may be
purchased hereunder (whether on the Closing Date or
thereafter); or
(B) amend or waive SECTION 2.03(B), 5.04 or 6.03;
(iii) no amendment, waiver or consent shall, unless in writing
and signed by each Holder, amend SECTION 8.06(C) or this SECTION 10.01;
(iv) no amendment, waiver or consent shall, unless in writing
and signed by the Administrative Agent in addition to the Holders
required above to take such action, affect the rights or duties of the
Administrative Agent under this Agreement or any other Note Document;
and
(v) notwithstanding anything to the contrary contained in this
SECTION 10.01 or elsewhere in this Agreement, no amendment, waiver or
consent shall, unless in writing and signed by Nortel Networks (whether
or not Nortel Networks is then a Holder hereunder), amend the
definition of "Master Purchase Agreement", the definition of "Nortel
Networks" or any term or provision of SECTION 2.01.
(b) AMENDMENTS OF SECURITY DOCUMENTS. Except as otherwise provided
herein in the Security Documents, the Administrative Agent shall not consent to
release any Collateral or terminate any Lien under any Security Document or to
any Collateral securing additional obligations beyond those presently
contemplated in the Security Documents, unless such release or termination or
additional obligations shall be consented to in writing by the Required
Supermajority Holders; PROVIDED that:
(i) the consent of all Holders shall be required to release
all or substantially all of the Collateral, except no consent of the
Holders shall be required (A) for any such release upon the termination
of the Liens created by each of the Security Documents in accordance
with the terms thereof or (B) in the event that such release is
permitted under SECTION 8.06(C) or otherwise permitted pursuant to the
terms of the Note Documents;
(ii) no such consent shall be required to release any Lien
covering property that is the subject of an Asset Sale or other
disposition permitted under SECTION 6.06(A) or to which the
Administrative Agent and the Required Holders have consented and, upon
any
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such Asset Sale or disposition, such property shall be deemed to be
transferred free and clear of the Lien of the Security Documents
without any action on the part of any party (and the Administrative
Agent is hereby authorized to execute such releases and other
documents, and to take such other action, as the Issuer may reasonably
request to give effect thereto); and
(iii) no consent, other than of the Required Holders, shall be
required for any Collateral securing additional obligations beyond
those presently contemplated in the Security Documents, if such
additional obligations are junior to the Lien in favor of the Holders.
(c) CERTAIN LIMITATIONS ON VOTING RIGHTS. Anything herein to the
contrary notwithstanding, none of the Obligors, nor any of their affiliates,
shall (unless expressly consented to by the Required Supermajority Holders) be
deemed to be "Holders" for purposes of this SECTION 10.01.
SECTION 1.63. NOTICES, ETC. All notices and other communications
provided for hereunder shall be in writing, telecopied or delivered:
(a) if to the Issuer, Metromedia Fiber Network Services, Inc., 360
Hamilton Avenue, White Plains, New York 10601, attention President, telephone
number (914) 421-6700, telecopier number (914) 421-7550, with a copy to General
Counsel at the same address and to Mark Volow, Akin, Gump, Strauss, Hauer &
Feld, L.L.P., 590 Madison Avenue, New York, New York 10022, telephone number
(212) 872-8050, telecopier number (212) 872-1002;
(b) if to any Holder other than Nortel Networks, at the Payment Office
specified in its Administrative Questionnaire and, if to Nortel Networks, at its
address at 2221 Lakeside Blvd., Mail Stop 991 15 A40, Richardson, Texas
75082-4399, Attention: Jay Armstrong, telephone number (972) 684-6921,
telecopier number (972) 684-3679, with a copy to E. Leigh Gillett at the same
address, telephone number (972) 684-4071, telecopier number (972) 684-3679; and
(c) if to the Administrative Agent, at its address at 2221 Lakeside
Blvd., Mail Stop 468 05 B40, Richardson, Texas 75082-4399, Attention: Kimberly
Poe, telephone number (972) 684-7687, telecopier number (972) 685-3613;
or, as to each party, at such other address as shall be designated by such party
in a written notice to the other parties. All such notices and communications
shall, when delivered or telecopied, be effective when delivered or transmitted
by telecopier, respectively, except that notices and communications to the
Administrative Agent pursuant to ARTICLE II, ARTICLE III, ARTICLE VII or ARTICLE
VIII shall not be effective until received by the Administrative Agent.
SECTION 1.64. NO WAIVER; REMEDIES. No failure on the part of any Holder
or the Administrative Agent to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any such right preclude any other or further exercise thereof or the
exercise of any other right. The remedies herein provided are cumulative and not
exclusive of any remedies provided by law.
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SECTION 1.65. COSTS, EXPENSES AND INDEMNIFICATION.
(a) COSTS AND EXPENSES. The Issuer agrees to pay on demand (i) all
reasonable costs and expenses of the Administrative Agent in connection with the
preparation, execution, delivery, modification and amendment of the Note
Documents including (A) all due diligence, syndication (including printing,
distribution and bank meetings), transportation, computer, duplication,
appraisal, insurance, consultant, search, filing and recording fees and expenses
and all other reasonable out-of-pocket expenses incurred by the Administrative
Agent (including, without limitation, the reasonable fees and expenses of
Jenkens & Gilchrist, a Professional Corporation, special counsel to the
Administrative Agent) whether or not any of the transactions contemplated by
this Agreement are consummated, (B) the reasonable fees and expenses of counsel
for the Administrative Agent with respect thereto, with respect to advising the
Administrative Agent as to their rights and responsibilities, or the perfection,
protection or preservation of rights or interests, under the Note Documents, and
(C) with respect to negotiations with any Obligor or with other creditors of the
Issuer, Holdings or any of its Subsidiaries arising out of any Default or Event
of Default or any events or circumstances that may reasonably be expected to
give rise to a Default or Event of Default and with respect to presenting claims
in or otherwise participating in or monitoring any bankruptcy, insolvency or
other similar proceeding involving creditors' rights generally and any
proceeding ancillary thereto, and (ii) all reasonable costs and expenses of the
Administrative Agent and the Holders in connection with the enforcement of the
Note Documents, whether in any action, suit or litigation, any bankruptcy,
insolvency or other similar proceeding affecting creditors' rights generally or
otherwise (including the fees and expenses of counsel for the Administrative
Agent and the Holders with respect thereto).
(b) INDEMNIFICATION. The Issuer agrees to indemnify and hold harmless
each Indemnified Party from and against any and all claims, damages, losses,
liabilities and expenses (including reasonable fees and expenses of counsel)
that may be incurred by or asserted or awarded against any Indemnified Party, in
each case arising out of or in connection with or by reason of, or in connection
with the preparation for a defense of, this Agreement or any other Note Document
or the Transactions or any investigation, litigation or proceeding arising out
of, related to or in connection with the Transactions or any Environmental Claim
relating in any way to Holdings or any of its Subsidiaries, in each case whether
or not such investigation, litigation or proceeding is brought by Holdings or
any of its Subsidiaries, its directors, shareholders or creditors or an
Indemnified Party or any Indemnified Party is otherwise a party thereto and
whether or not the Transactions or the other transactions contemplated hereby
are consummated, except to the extent such claim, damage, loss, liability or
expense resulted from such Indemnified Party's gross negligence or willful
misconduct.
(c) PAYMENTS BY THE ADMINISTRATIVE AGENT OR HOLDERS. If the Issuer
fails to pay when due any costs, expenses or other amounts payable by it under
any Note Document, including reasonable fees and expenses of counsel and
indemnities, such amount may be paid on behalf of the Issuer by the
Administrative Agent or any Holder, in its sole discretion and such payment
shall be without prejudice to the rights of the Administrative Agent or any
Holder against the Issuer.
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SECTION 1.66. RIGHT OF SETOFF. Each Holder is hereby authorized at any
time and from time to time, to the fullest extent permitted by law, to set off
and otherwise apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other Indebtedness at any time owing
by such Holder to or for the credit or the account of the Issuer against any and
all of the obligations of the Issuer now or hereafter existing under this
Agreement that shall not have been paid when due, irrespective of whether such
Holder shall have made any demand under this Agreement or otherwise. Each Holder
agrees promptly to notify the Issuer 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 of each Holder under this SECTION 10.05
are in addition to other rights and remedies (including other rights of setoff)
that such Holder may have.
SECTION 1.67. GOVERNING LAW; SUBMISSION TO JURISDICTION, ETC. This
Agreement and the Notes shall be governed by, and construed in accordance with,
the law of the State of New York. The Issuer hereby submits to the nonexclusive
jurisdiction of the United States District Court for the Southern District of
New York and of any New York state court sitting in New York City for the
purposes of all legal proceedings arising out of or relating to this Agreement
or the transactions contemplated hereby. The Issuer irrevocably waives, to the
fullest extent permitted by applicable law, any objection that 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 forum.
SECTION 1.68. WAIVER OF JURY TRIAL. EACH OF THE ISSUER, THE
ADMINISTRATIVE AGENT, EACH OF THE PURCHASERS AND EACH OF THE HOLDERS HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO ANY OF THE NOTE DOCUMENTS, THE NOTES OR THE ACTIONS OF THE
ADMINISTRATIVE AGENT OR ANY PURCHASER OR ANY HOLDER, OR ANY ACTION ON BEHALF OF
ANY PURCHASER OR HOLDER, IN THE NEGOTIATION, ADMINISTRATION, PERFORMANCE OR
ENFORCEMENT THEREOF.
SECTION 1.69. SUCCESSORS, ASSIGNS AND TRANSFERS. This Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns or transfers, provided that the
Issuer may not assign any of its rights or obligations hereunder or under the
other Note Documents without the prior consent of all of the Holders and the
Administrative Agent.
SECTION 1.70. TRANSFER, REGISTRATION, PARTICIPATIONS AND SUBSTITUTION
OF NOTES.
(a) TRANSFER BY HOLDERS. Each Holder may transfer to one or more
Eligible Institutions all or a portion of its rights and obligations under this
Agreement (including all or a portion of the Notes owing to it); PROVIDED that:
(i) except in the case of a transfer to a Person that,
immediately prior to such transfer, was a Holder or a Holder Affiliate
or a transfer of all of a Holder's rights and
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obligations under this Agreement, the aggregate amount of a Holder's
Commitment or the Notes owing to the transferring Holder being
transferred pursuant to each such transfer (determined as of the date
of the Transfer and Acceptance with respect to such transfer) shall in
no event be less than $5,000,000 (except as otherwise agreed by the
Administrative Agent; and
(ii) the parties to each such transfer shall execute and
deliver to the Administrative Agent, for its acceptance and recording
in the Register, a Transfer and Acceptance and, except in the case of a
transfer to a Person that, immediately prior to such transfer, was a
Holder or a Holder Affiliate, a processing and recordation fee of
$3,500.
Upon such execution, delivery, acceptance and recording, from and after the
effective date specified in such Transfer and Acceptance, (A) the transferee
thereunder shall be a party hereto and, to the extent that rights and
obligations hereunder have been transferred to it pursuant to such Transfer and
Acceptance, have the rights and obligations of a Holder hereunder and (B) the
Holder transferor thereunder shall, to the extent that rights and obligations
hereunder have been transferred by it pursuant to such Transfer and Acceptance,
relinquish its rights and be released from its obligations under this Agreement
(and, in the case of a Transfer and Acceptance covering all or the remaining
portion of a transferring Holder's rights and obligations under this Agreement,
such Holder shall cease to be a party hereto).
(b) UNDERTAKING OF TRANSFEROR AND TRANSFEREE. By executing and
delivering a Transfer and Acceptance, the Holder transferor thereunder and the
transferee thereunder confirm to and agree with each other and the other parties
hereto as follows: (i) other than as provided in such Transfer and Acceptance,
such transferring Holder, makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with this Agreement or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of this Agreement or
any other instrument or document furnished pursuant hereto; (ii) such
transferring Holder makes no representation or warranty and assumes no
responsibility with respect to the financial condition of any Obligor or the
performance or observance by the Issuer or any Obligor of any of their
respective obligations under this Agreement or any other instrument or document
furnished pursuant hereto; (iii) such transferee confirms that it has received a
copy of this Agreement, together with copies of the financial statements
referred to in SECTION 4.01(F) and such other documents and information as it
has deemed appropriate to make its own credit analysis and decision to enter
into such Transfer and Acceptance; (iv) such transferee will, independently and
without reliance upon the Administrative Agent, such transferring Holder or any
other Holder 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; (v) such transferee appoints and
authorizes the Administrative Agent to take such action as agent on its behalf
and to exercise such powers and discretion under this Agreement as are delegated
to the Administrative Agent by the terms hereof and of the other Note Documents,
together with such powers and discretion as are reasonably incidental thereto;
(vi) such transferee agrees that it will perform in accordance with their terms
all of the obligations that by the terms of this Agreement are required to be
performed by it as a Holder; (vii) such transferee agrees that it will be bound
by the provisions
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of the Intercreditor Agreement; (viii) such transferee has provided the Issuer
and the Administrative Agent with the forms and documents with respect to such
transferee referred to in SECTION 2.06; and (ix) such transferee, by its
acceptance of a Note registered in its name, as set forth below in SECTION
10.09(C), shall be deemed to have made the representations and warranties set
forth in SECTION 4.02 or, as to the representation and warranty set forth in
SECTION 4.02(B), shall be deemed to have made the representation and warranty
that such transferee's purchase of such Note is exempt from the registration
requirements under the Securities Act.
(c) REGISTER. The Administrative Agent, acting for this purpose as an
agent of the Issuer, shall maintain at its address referred to in SECTION 10.02
a copy of each Transfer and Acceptance delivered to and accepted by it and a
register for the recordation of the names and addresses of the Holders and
principal amount of the Notes held by each Holder from time to time (the
"REGISTER"). The entries in the Register shall be conclusive and binding for all
purposes, absent manifest error, and the Issuer, the Administrative Agent and
the Holders shall treat each Person whose name is recorded in the Register as a
Holder hereunder for all purposes of this Agreement. No transfer shall be
effective until it is recorded in the Register pursuant to this SECTION
10.09(C). The Register shall be available for inspection by the Issuer or any
Holder at any reasonable time and from time to time upon reasonable prior
notice. The Issuer shall give to any Holder of a Note that is an Institutional
Investor promptly upon request therefor, a complete and correct copy of the
names and addresses of all registered Holders of Notes.
(d) TRANSFER AND ACCEPTANCE. Upon its receipt of a Transfer and
Acceptance executed by a transferring Holder and an transferee and the Note or
Notes, or the portion of thereof, being surrendered for transfer, together with
the fee referred to in SECTION 10.09(A), the Administrative Agent shall, if such
Transfer and Acceptance has been completed and is in substantially the form of
EXHIBIT D hereto, (i) accept such Transfer and Acceptance, (ii) record the
information contained therein in the Register, (iii) give prompt notice thereof
to the Issuer and request that the Issuer, at its own expense (except as
provided below), execute and deliver one or more new Notes (as requested by the
Holder thereof) in exchange therefor, in an aggregate principal amount equal to
the unpaid principal amount of the surrendered Notes, or portions thereof. Each
such new Note shall be payable to the Person as such Holder may request and
shall be substantially in the form of EXHIBIT A. Each such new Note shall be
dated and bear interest from the date to which such interest shall have been
paid on the surrendered Note, or portion thereof, or dated the date of the
surrendered Note, or portion thereof, if no interest shall have been paid
thereon. The Issuer may require payment by the transferee of any such Note, or
portion thereof, of a sum sufficient to cover any stamp tax, transfer tax or
governmental charge imposed in respect of any such transfer of Notes, or
portions thereof.
(e) PARTICIPATIONS. Each Holder may sell participations in or to all or
a portion of its rights and/or obligations under this Agreement (including all
or a portion of the Note owing to it); PROVIDED that (i) such Holder's
obligations under this Agreement shall remain unchanged, (ii) such Holder shall
remain solely responsible to the other parties hereto for the performance of
such obligations, (iii) such Holder shall remain the registered Holder for all
purposes of this Agreement, (iv) the Issuer, the Administrative Agent and the
other Holders shall continue to deal solely and directly with such Holder in
connection with such Holder's rights and obligations under this
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Agreement and (v) no participant under any such participation shall have any
right to approve any amendment or waiver of any provision of any Note Document,
or any consent to any departure by the Issuer therefrom, except to the extent
that such amendment, waiver or consent would reduce the principal of, or
interest on, any Note or any fees or other amounts payable hereunder, in each
case to the extent subject to such participation, postpone any date fixed for
any payment of principal of, or interest on, any Note or any fees or other
amounts payable hereunder, in each case to the extent subject to such
participation or release all or substantially all of the Collateral (unless in
each case such release is permitted pursuant to the terms of the Note
Documents).
(f) DISCLOSURE OF INFORMATION. Any Holder may, in connection with any
transfer or participation or proposed transfer or participation pursuant to this
SECTION 10.09, disclose to the transferee or participant or proposed transferee
or participant, any information relating to the Issuer or Holdings or any of its
Subsidiaries furnished to such Holder by or on behalf of the Issuer; PROVIDED
that, prior to any such disclosure, the transferee or participant or proposed
transferee or participant shall agree in writing to preserve the confidentiality
of any Confidential Information received by it from the Holders in accordance
with SECTION 10.11.
(g) OTHER PLEDGES. Anything in this SECTION 10.09 to the contrary
notwithstanding, each Holder shall be permitted to pledge all or any part of its
right, title and interest in, to and under the Notes to any trustee for the
benefit of the holders of such Holder's securities.
(h) NO PURCHASE, TRANSFERS OR PARTICIPATIONS TO THE ISSUER OR ITS
AFFILIATES. Anything in this SECTION 10.09 to the contrary notwithstanding,
neither the Issuer, Holdings nor any of their respective Subsidiaries or
Affiliates may acquire (whether by purchase, redemption, redemption, transfer,
participation or otherwise) except as expressly permitted by and in accordance
with the terms of this Agreement and the Notes, and no Holder shall sell,
transfer or participate to the Issuer, Holdings or any of their respective
Subsidiaries or Affiliates, directly or indirectly, any Notes. Unless otherwise
agreed by the Required Supermajority Holders, the Issuer shall promptly cancel,
and shall cause Holdings to cancel, all Notes acquired by either the Issuer,
Holdings or any of their respective Subsidiaries or Affiliates pursuant to any
payment, redemption or purchase of Notes pursuant to any provision of this
Agreement and no Notes may be issued in substitution or exchange for any such
Notes.
(i) REPLACEMENT OF NOTES. Upon receipt by the Issuer of evidence
reasonably satisfactory to it of the ownership of and loss, theft, destruction
or mutilation of any Note (which evidence shall be, in the case of an
Institutional Investor, notice from such Institutional Investor of such
ownership and such loss, theft, destruction or mutilation), and
(i) in the case of loss, theft or destruction, of indemnity
reasonably satisfactory to it (PROVIDED that if the Holder of such Note
is, or is a nominee for, an original Purchaser or another Holder of a
Note with a minimum net worth of at least $10,000,000 in excess of the
outstanding principal amount of such Note, such Person's own unsecured
agreement of indemnity shall be deemed to be satisfactory), or
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(ii) in the case of mutilation, upon surrender and
cancellation thereof,
the Issuer at its own expense shall execute and deliver, in lieu thereof, a new
Note of the same series, dated and bearing interest from the date to which
interest shall have been paid on such lost, stolen, destroyed or mutilated Note
or dated the date of such lost, stolen, destroyed or mutilated Note if no
interest shall have been paid thereon.
(j) SYNDICATION EFFORTS. Each of the Issuer and Holdings will provide,
in a timely manner, full and prompt assistance to each Purchaser and the
Administrative Agent as such Purchaser or the Administrative Agent may
reasonably request from time to time in connection with the Administrative
Agent's or such Purchaser's efforts to assign its Commitments and/or Notes or
sell any participation interest therein. Such assistance shall include, if and
to the extent reasonably requested, without limitation, making senior officers
and other representatives of the Issuer and Holdings and their respective
Affiliates available for meetings with prospective Purchasers and participants
and providing, in a timely manner, such assistance as may be reasonably
requested by such Purchaser, the Administrative Agent and/or their advisors,
including, without limitation, providing information to and responding to
inquiries from such prospective Purchasers and participants with respect to the
businesses, operations, business plan, financial condition and results of
operations of Holdings and its Subsidiaries (including, without limitation, the
Issuer).
SECTION 1.71. EXECUTION IN COUNTERPARTS. This Agreement may be executed
in any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same agreement.
Delivery of an executed counterpart of a signature page to this Agreement by
telecopier shall be effective as delivery of a manually executed counterpart of
this Agreement.
SECTION 1.72. CONFIDENTIALITY.
(a) Neither the Administrative Agent nor any Holder shall disclose any
Confidential Information to any Person without the prior consent of the Issuer,
PROVIDED that nothing herein shall limit the disclosure of any such information
(i) to the extent required by statute, rule, regulation or judicial process,
(ii) to counsel for any of the Holders or the Administrative Agent, (iii) to
bank examiners, regulatory authorities, auditors, accountants or, if required by
law, any Governmental Authority, (iv) to the Administrative Agent or any other
Holder (and their respective officers, partners, directors, employees, agents
and advisors, and to any of their respective independent auditors and counsel),
(v) in connection with any litigation which relates to this Agreement to which
any one or more of the Holders or the Administrative Agent is a party, (vi) to a
Subsidiary or Affiliate of such Holder, (vii) to any transferee or participant
(or prospective transferee or participant) or (viii) any actual or prospective
counterparty (or its advisors) to any swap or derivative transaction relating to
the Issuer and its obligations, PROVIDED that such counterparty agrees to be
bound by the provisions of this SECTION 10.11(a), and, PROVIDED, FURTHER, that
in no event shall any Holder or the Administrative Agent be obligated or
required to return any materials furnished by the Issuer. The obligations of
each Holder under this SECTION 10.11 shall supersede and replace the
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obligations of such Holder under any confidentiality letter in respect of this
financing signed and delivered by such Holder to the Issuer.
(b) The Issuer shall not, and shall not permit Holdings or any of its
Affiliates or Subsidiaries (each a "RESTRICTED PARTY") to, disclose any term or
provision of this Agreement or the other Note Documents to any Person without
the prior consent of the Administrative Agent, PROVIDED that nothing herein
shall limit the disclosure of any such information (i) to the extent required by
statute, rule, regulation or judicial process, (ii) to counsel for the Issuer,
(iii) to bank examiners, regulatory authorities, auditors, accountants or, if
required by law, any Governmental Authority, (iv) to any Restricted Party (and
their respective officers, partners, directors, employees, agents and advisors,
and to any of their respective independent auditors and counsel), (v) in
connection with any litigation which relates to this Agreement to which the
Issuer is a party, (vi) to a Subsidiary or Affiliate of Holdings, or (vii) to
the Holdings Notes Agent, any holder of the Holdings Notes, Verizon, Inc. and
the parties to the Holdings Convertible Debt or Equity Documents; PROVIDED that
the Issuer will deliver to the Administrative Agent written notice of any
intention or obligation of the Issuer or any other Restricted Party to deliver
or provide a copy of this Agreement or any other Note Document or any term or
provision hereof or thereof to any Governmental Authority at least ten Business
Days (or, in the event such delivery or provision is required to be made in a
shorter period due to circumstances not reasonably within the control of the
Issuer, within such shorter period) prior to the initial date upon which any
such delivery or provision occurs and the Issuer shall, and shall cause each of
the other Restricted Parties to, use all reasonable efforts to redact or delete
from such copy or such term or provision such terms or provisions or language
relating to rates of interest, fees, financial covenants, availability and other
terms or provisions of a sensitive nature as may be requested by the
Administrative Agent to be so redacted or deleted before the same is so
delivered or provided. Without limiting the generality of the foregoing, the
Issuer agrees that it will not, and will not permit any other Restricted Party
to, without the prior written consent of the Administrative Agent, issue or
publish a press release, tombstone or other similar announcement or publication
relating to this Agreement or any other Note Document or the transactions
contemplated hereby or thereby unless they or it are required to do so by the
order of any court or administrative agency or in accordance with applicable
law.
SECTION 1.73. SURVIVAL AND TERMINATION. The obligations of the Issuer
under SECTION 2.06 and SECTION 10.04, the obligations of the Holders under
SECTION 8.05, the obligations of the Holders under SECTION 10.09(F) and the
obligations of the Holders and the Administrative Agent under SECTION 10.11,
shall survive the repayment of the Notes. In addition, each representation and
warranty made, or deemed to be made by a notice of any Note herein or pursuant
hereto shall survive the making of such representation and warranty, and no
Holder shall be deemed to have waived, by reason of making any Note hereunder,
any Default or Event of Default that may arise by reason of such representation
or warranty proving to have been false or misleading, notwithstanding that such
Holder or the Administrative Agent may have had notice or knowledge or reason to
believe that such representation or warranty was false or misleading at the time
such Note was issued.
Upon any termination of the Commitments of the Purchasers hereunder
prior to the purchase of Notes hereunder, this Agreement shall, except to the
extent of the obligations of the Obligors
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which under the preceding paragraph are stated to survive the repayment of the
Notes, forthwith terminate and cease to be of any effect.
SECTION 1.74. CAPTIONS. The table of contents and captions and section
headings appearing herein are included solely for convenience of reference and
are not intended to affect the interpretation of any provision of this
Agreement.
SECTION 1.75. AUTHORIZATION TO FILE FINANCING STATEMENTS. The Issuer
hereby authorizes the Administrative Agent to prepare and file, at any time on
or after the date of the execution of this Agreement and in such UCC and other
appropriate records as the Administrative Agent may determine, financing
statements, fixture filings, transmitting utility filings and similar filings
naming the Issuer as debtor and the Administrative Agent as secured party and
covering the Collateral.
[signature pages follow]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
METROMEDIA FIBER NETWORK
SERVICES, INC.
By: /s/ Silvia Kessel
---------------------------------
Name: Silvia Kessel
-------------------------------
Title: Executive Vice President
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NORTEL NETWORKS INC.,
as the Administrative Agent and as
Purchaser
By: /s/ Mitch Stone
---------------------------------
Name: Mitch Stone
-------------------------------
Title: Director
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