CREDIT AGREEMENT
DATED AS OF
JULY 14, 1999
AMONG
JATO OPERATING CORP.,
JATO COMMUNICATIONS CORP.,
THE LENDERS PARTY HERETO,
STATE STREET BANK AND
TRUST COMPANY,
AS COLLATERAL AGENT,
AND
LUCENT TECHNOLOGIES INC.,
AS ADMINISTRATIVE AGENT
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TABLE OF CONTENTS
PAGE
ARTICLE I Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . .1
Section 1.01. Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . .1
Section 1.02. Classification of Loans and Borrowings. . . . . . . . . . . . 21
Section 1.03. Terms Generally . . . . . . . . . . . . . . . . . . . . . . . 21
Section 1.04. Accounting Terms; GAAP. . . . . . . . . . . . . . . . . . . . 22
ARTICLE II The Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 2.01. Commitments . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 2.02. Loans and Borrowings. . . . . . . . . . . . . . . . . . . . . 22
Section 2.03. Requests for Borrowings . . . . . . . . . . . . . . . . . . . 23
Section 2.04. Funding of Borrowings . . . . . . . . . . . . . . . . . . . . 24
Section 2.05. Interest Elections. . . . . . . . . . . . . . . . . . . . . . 24
Section 2.06. Termination and Reduction of Commitments. . . . . . . . . . . 26
Section 2.07. Repayment of Loans; Evidence of Debt. . . . . . . . . . . . . 26
Section 2.08. Amortization of Loans . . . . . . . . . . . . . . . . . . . . 27
Section 2.09. Prepayment of Loans . . . . . . . . . . . . . . . . . . . . . 28
Section 2.10. Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 2.11. Interest. . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 2.12. Alternate Rate of Interest. . . . . . . . . . . . . . . . . . 30
Section 2.13. Increased Costs . . . . . . . . . . . . . . . . . . . . . . . 30
Section 2.14. Break Funding Payments; Prepayment Fees . . . . . . . . . . . 31
Section 2.15. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 2.16. Payments Generally; Pro Rata Treatment; Sharing of
Set-offs. . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 2.17. Mitigation Obligations; Replacement of Lenders. . . . . . . . 35
ARTICLE III Representations and Warranties. . . . . . . . . . . . . . . . . . . 36
Section 3.01. Organization; Powers. . . . . . . . . . . . . . . . . . . . . 36
Section 3.02. Authorization; Enforceability . . . . . . . . . . . . . . . . 36
Section 3.03. Governmental Approvals; No Conflicts. . . . . . . . . . . . . 36
Section 3.04. Financial Condition; No Material Adverse Change . . . . . . . 36
Section 3.05. Properties and Licenses . . . . . . . . . . . . . . . . . . . 37
Section 3.06. Litigation and Environmental Matters. . . . . . . . . . . . . 37
Section 3.07. Compliance with Laws and Agreements . . . . . . . . . . . . . 38
Section 3.08. Investment and Holding Company Status . . . . . . . . . . . . 38
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PAGE
Section 3.09. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 3.10. ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
Section 3.11. Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 3.12. Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 3.13. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 3.14. Labor Matters . . . . . . . . . . . . . . . . . . . . . . . . 39
Section 3.15. Supply Agreement. . . . . . . . . . . . . . . . . . . . . . . 39
Section 3.16. Security Documents. . . . . . . . . . . . . . . . . . . . . . 39
Section 3.17. Year 2000 Readiness . . . . . . . . . . . . . . . . . . . . . 39
Section 3.18. Capitalization. . . . . . . . . . . . . . . . . . . . . . . . 40
ARTICLE IV Conditions. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
Section 4.01. Effective Date. . . . . . . . . . . . . . . . . . . . . . . . 40
Section 4.02. Each Borrowing. . . . . . . . . . . . . . . . . . . . . . . . 43
ARTICLE V Affirmative Covenants . . . . . . . . . . . . . . . . . . . . . . . 43
Section 5.01. Financial Statements and Other Information. . . . . . . . . . 44
Section 5.02. Notices of Material Events. . . . . . . . . . . . . . . . . . 45
Section 5.03. Information Regarding Collateral. . . . . . . . . . . . . . . 46
Section 5.04. Existence; Conduct of Business. . . . . . . . . . . . . . . . 47
Section 5.05. Payment of Obligations. . . . . . . . . . . . . . . . . . . . 47
Section 5.06. Maintenance of Properties . . . . . . . . . . . . . . . . . . 47
Section 5.07. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . 47
Section 5.08. Books and Records; Inspection Rights. . . . . . . . . . . . . 48
Section 5.09. Compliance with Laws and Agreements . . . . . . . . . . . . . 48
Section 5.10. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . 49
Section 5.11. Further Assurances. . . . . . . . . . . . . . . . . . . . . . 49
Section 5.12. Casualty and Condemnation . . . . . . . . . . . . . . . . . . 49
Section 5.13. Interest Rate Protection. . . . . . . . . . . . . . . . . . . 49
Section 5.14. Execution of Pledge Agreement (Borrower); Subsidiary
Guarantors; Additional Security Documents . . . . . . . . . . 50
ARTICLE VI Negative Covenants. . . . . . . . . . . . . . . . . . . . . . . . . 50
Section 6.01. Indebtedness. . . . . . . . . . . . . . . . . . . . . . . . . 51
Section 6.02. Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . 52
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PAGE
Section 6.03. Fundamental Changes . . . . . . . . . . . . . . . . . . . . . 53
Section 6.04. Investments, Loans, Advances, Guarantees and
Acquisitions; Asset Sales. . . . . . . . . . . . . . . . . . .53
Section 6.05. Hedging Agreements. . . . . . . . . . . . . . . . . . . . . . 56
Section 6.06. Restricted Payments . . . . . . . . . . . . . . . . . . . . . 56
Section 6.07. Transactions with Affiliates. . . . . . . . . . . . . . . . . 57
Section 6.08. Restrictive Agreements. . . . . . . . . . . . . . . . . . . . 57
Section 6.09. Repayment of Indebtedness . . . . . . . . . . . . . . . . . . 57
Section 6.10. Limitation on Sale-Leaseback Transactions . . . . . . . . . . 57
Section 6.11. Senior Indebtedness to Total Capitalization . . . . . . . . . 57
Section 6.12. Consolidated Indebtedness to Total Capitalization . . . . . . 58
Section 6.13. Consolidated Indebtedness to Annualized EBITDA. . . . . . . . 58
Section 6.14. Senior Indebtedness to Annualized EBITDA. . . . . . . . . . . 59
Section 6.15. Annualized EBITDA to Consolidated Interest Expense. . . . . . 59
Section 6.16. Annualized EBITDA to Consolidated Debt Service. . . . . . . . 60
Section 6.17. Consolidated Gross Revenues . . . . . . . . . . . . . . . . . 60
Section 6.18. Minimum Subscribers . . . . . . . . . . . . . . . . . . . . . 61
Section 6.19. Consolidated Parent Indebtedness to Total Parent
Capitalization. . . . . . . . . . . . . . . . . . . . . . . . 62
Section 6.20. Consolidated Parent Indebtedness to Annualized Parent
EBITDA. . . . . . . . . . . . . . . . . . . . . . . . . . . . 62
Section 6.21. Use of Collateral . . . . . . . . . . . . . . . . . . . . . . 62
ARTICLE VII Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . 63
ARTICLE VIII The Agents. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66
ARTICLE IX Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 9.01. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 67
Section 9.02. Waivers; Amendments . . . . . . . . . . . . . . . . . . . . . 68
Section 9.03. Expenses; Indemnity; Damage Waiver. . . . . . . . . . . . . . 69
Section 9.04. Successors and Assigns. . . . . . . . . . . . . . . . . . . . 70
Section 9.05. Survival. . . . . . . . . . . . . . . . . . . . . . . . . . . 72
Section 9.06. Counterparts; Integration; Effectiveness. . . . . . . . . . . 73
Section 9.07. Severability. . . . . . . . . . . . . . . . . . . . . . . . . 73
Section 9.08. Right of Setoff . . . . . . . . . . . . . . . . . . . . . . . 73
Section 9.09. Governing Law; Jurisdiction; Consent to Service of
Process . . . . . . . . . . . . . . . . . . . . . . . . . . . 73
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PAGE
Section 9.10. WAIVER OF JURY TRIAL. . . . . . . . . . . . . . . . . . . . . 74
Section 9.11. Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . 75
Section 9.12. Confidentiality . . . . . . . . . . . . . . . . . . . . . . . 75
Section 9.13. Interest Rate Limitation. . . . . . . . . . . . . . . . . . . 75
EXHIBITS:
Exhibit A Form of Assignment and Acceptance
Exhibit B Form of Guarantee Agreement
Exhibit C Form of Indemnity and Contribution Agreement
Exhibit D Form of Security Agreement (Borrower)
Exhibit E Form of Pledge Agreement (Borrower)
Exhibit F Form of Pledge Agreement (Parent)
Exhibit G Form of Landlord Letter
Exhibit H Form of Security Agreement (Parent)
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CREDIT AGREEMENT, dated as of July 14, 1999, among JATO OPERATING CORP.,
a Delaware corporation, JATO COMMUNICATIONS CORP., a Delaware corporation, the
LENDERS party hereto, STATE STREET BANK AND TRUST COMPANY, as Collateral Agent,
and LUCENT TECHNOLOGIES INC., as Administrative Agent.
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Section 1.01. DEFINED TERMS. As used in this Agreement, the
following terms have the meanings specified below:
"ABR", when used in reference to any Loan or Borrowing, refers to
whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the Alternate Base Rate.
"ADDITIONAL ASSETS" means any capital assets used or useful in the
business of the Borrower and the Subsidiaries.
"ADJUSTED LIBO RATE" means, with respect to any LIBOR Borrowing
for any Interest Period, an interest rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to (a) the LIBO Rate for such Interest
Period multiplied by (b) the Statutory Reserve Rate.
"ADMINISTRATIVE AGREEMENT" means the Financing and Management
Services Agreement, dated as of July 14, 1999, by and between the Parent and the
Borrower, as in effect on the date hereof.
"ADMINISTRATIVE AGENT" means Lucent, in its capacity as
administrative agent for the Lenders hereunder.
"ADMINISTRATIVE QUESTIONNAIRE" means an Administrative
Questionnaire in a form supplied by the Administrative Agent.
"AFFILIATE" means, 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.
"AGENTS" means the Administrative Agent and the Collateral Agent.
"ALTERNATE BASE RATE" means, for any day, a rate per annum equal
to the greater of (a) the Prime Rate in effect on such day and (b) the Federal
Funds Effective Rate in effect on such day [ * ]. Any change in the
Alternate Base Rate due to a change in the Prime Rate or the Federal Funds
Effective Rate shall be effective from and including the effective date of such
change in the Prime Rate or the Federal Funds Effective Rate, respectively.
* INDICATES CONFIDENTIAL TREATMENT REQUESTED
"ANNUALIZED EBITDA" means, as of any date of determination,
Consolidated EBITDA for the period of two fiscal quarters then most recently
ended times two.
"ANNUALIZED PARENT EBITDA" means, as of any date of determination,
Consolidated Parent EBITDA for the period of two fiscal quarters then most
recently ended times two.
"APPLICABLE RATE" means, for any day, with respect to any Loan,
the applicable rate per annum set forth below under the caption "ABR Spread" or
"Eurodollar Spread", as the case may be:
ABR Spread Eurodollar Spread
--------------- ---------------- ---------------------
Tranche 1 Loans 3.5% 4.5%
Tranche 2 Loans 3.5% 4.5%
"ASSIGNMENT AND ACCEPTANCE" means an assignment and acceptance
entered into by a Lender and an assignee (with the consent of the Borrower and
Administrative Agent if required by Section 9.04), and accepted by the
Administrative Agent, in the form of Exhibit A or any other form approved by the
Administrative Agent.
"AVAILABILITY PERIOD" means, in respect of the Tranche 1 Loans,
the Tranche 1 Availability Period and, in respect of the Tranche 2 Loans,
Tranche 2 Availability Period.
"BOARD" means the Board of Governors of the Federal Reserve System
of the United States of America.
"BORROWER" means Jato Operating Corp., a Delaware corporation.
"BORROWER-RELATED COLLATERAL" has the meaning set forth in the
Security Agreement (Parent).
"BORROWING" means a Loan or group of Loans of the same Class and
Type, made, converted or continued on the same date and, in the case of LIBOR
Loans, as to which a single Interest Period is in effect.
"BORROWING REQUEST" means a request by the Borrower for a
Borrowing in accordance with Section 2.03.
"BUSINESS DAY" means any day that is not a Saturday, Sunday or
other day on which commercial banks in New York City are authorized or required
by law to remain closed; PROVIDED that, when used in connection with a LIBOR
Loan, the term "BUSINESS DAY" shall also exclude any day on which banks are not
open for dealings in dollar deposits in the London interbank market.
"BUSINESS PLAN" means, for any fiscal year, the business plan of
the Borrower and the Subsidiaries for such fiscal year.
2
"CAPITAL EXPENDITURES" means, for any period, the additions to
property, plant and equipment and other capital expenditures of the Borrower and
the Subsidiaries that are (or would be) set forth in a consolidated statement of
cash flows of the Borrower for such period prepared in accordance with GAAP.
"CAPITAL LEASE OBLIGATIONS" of any Person means the obligations 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.
"CHANGE IN CONTROL" means (a) prior to the issuance and sale of
capital stock of the Parent pursuant to an initial public offering registered
under the Securities Act (i) the acquisition of beneficial ownership,
directly or indirectly, by any Person or group (within the meaning of the
Securities Exchange Act), other than the Founders or the Series B Investors,
of shares representing more than [ * ] of the aggregate ordinary voting
power represented by the issued and outstanding capital stock of the Parent;
(ii) occupation of a majority of the seats (other than vacant seats) on the
Board of Directors of the Parent by persons other than one person designated
by CEA Capital Partners USA, L.P., one person designated by Crest
Communications Partners, L.P., the chief executive officer of the Parent, one
person designated by the chief executive officer of the Parent and one person
designated by such other four persons; (iii) a majority of the persons
appointed by the Board of Directors of the Parent as Senior Officers as of
the date hereof shall cease to be Senior Officers; (iv) beneficial ownership,
directly or indirectly, by the Founders of less than [ * ] of the aggregate
ordinary voting power represented by the issued and outstanding capital stock
of the Parent; and (v) the failure of Brian Gast to be a member of the Board
of Directors of the Parent other than by reason of death or permanent
disability or removal for "cause," which shall include without limitation (A)
gross negligence or willful misconduct, (B) failure to perform diligently and
competently his duties as a director and as chief executive officer, or (C)
conviction of a felony; (b) following the issuance and sale of capital stock
of the Parent pursuant to an initial public offering registered under the
Securities Act, (i) the acquisition of beneficial ownership, directly or
indirectly, by any Person or group (within the meaning of Securities Exchange
Act) other than the Founders, of shares representing more than 50% of the
aggregate ordinary voting power represented by the issued and outstanding
capital stock of the Parent; or (ii) occupation of a majority of the seats
(other than vacant seats) on the Board of Directors of the Parent by Persons
who were neither (A) recommended by the Board of Directors of the Parent to
be elected by the stockholders of the Parent nor (B) appointed by directors
so nominated; or (c) the acquisition of ownership, directly or indirectly,
beneficially or of record, by any Person other than the Parent or a wholly
owned Subsidiary of any ownership or equity interest in the Borrower.
"CHANGE IN LAW" means (a) the adoption of any law, rule or
regulation after the date of this Agreement, (b) any change in any law, rule or
regulation or in the interpretation or application thereof by any Governmental
Authority after the date of this Agreement or (c) compliance by any Lender (or,
for purposes of Section 2.13(b), by any lending office of such Lender or by such
Lender's holding company, if any) with any request, guideline or directive
* INDICATES CONFIDENTIAL TREATMENT REQUESTED
3
(whether or not having the force of law) of any Governmental Authority made or
issued after the date of this Agreement.
"CLASS", when used in reference to any Loan or Borrowing, refers
to whether such Loan, or the Loans comprising such Borrowing, are Tranche 1
Loans or Tranche 2 Loans.
"CODE" means the Internal Revenue Code of 1986, as amended from
time to time.
"COLLATERAL" means any and all "Collateral" as defined in the
Security Agreements.
"COLLATERAL AGENT" means State Street Bank and Trust Company, in
its capacity as collateral agent for the Secured Parties.
"COMMITMENT" means, with respect to each Lender, the commitment,
if any, of such Lender to make Loans hereunder during any Availability Period,
expressed as an amount representing the maximum principal amount of the Loans to
be made by such Lender hereunder, as such commitment may be (a) reduced from
time to time pursuant to Section 2.06 and (b) reduced or increased from time to
time pursuant to assignments by or to such Lender pursuant to Section 9.04. The
initial amount of each Lender's Commitment is set forth on Schedule 2.01, or in
the Assignment and Acceptance pursuant to which such Lender shall have assumed
its Commitment, as applicable. The initial aggregate amount of the Lenders'
Commitments is $50,000,000.
"CONSOLIDATED DEBT SERVICE" means, for any period, Consolidated
Interest Expense for such period plus any scheduled payments of principal of
Indebtedness of the Borrower and the Subsidiaries during such period.
"CONSOLIDATED EBITDA" means, for any period, Consolidated Net
Income for such period (adjusted to exclude all extraordinary items and
Non-Recurring Items), plus, without duplication and to the extent deducted from
revenues in determining Consolidated Net Income, the sum of (a) the aggregate
amount of Consolidated Interest Expense for such period, (b) the aggregate
amount of income tax expense for such period, and (c) all amounts attributable
to depreciation and amortization for such period plus, without duplication,
preferred stock dividends payable in cash in respect of any Disqualified Stock
of the Borrower or any Subsidiary for such period, all as determined on a
consolidated basis with respect to the Borrower and the Subsidiaries in
accordance with GAAP.
"CONSOLIDATED GROSS REVENUES" means, for any period, consolidated
gross revenues of the Borrower and the Subsidiaries attributable to sales of its
services to Subscribers (and in any event excluding all revenues arising from
the sales of equipment).
"CONSOLIDATED INDEBTEDNESS" means, as of any date of
determination, the aggregate principal amount of Indebtedness (including
Disqualified Stock) of the Borrower and the Subsidiaries outstanding as of such
date determined on a consolidated basis in accordance with GAAP.
4
"CONSOLIDATED INTEREST EXPENSE" means, for any period, the sum of
(a) the interest expense, both expensed and capitalized (including the interest
component in respect of Capital Lease Obligations, but excluding any such
interest expense of any Person for any period that the income (or loss) of such
Person is excluded from the calculation of Consolidated Net Income by reason of
clause (b) of the definition of "Consolidated Net Income"), accrued by the
Borrower and the Subsidiaries during such period plus (b) preferred stock
dividends in respect of Disqualified Stock of the Borrower and the Subsidiaries
for such period, in each case determined on a consolidated basis in accordance
with GAAP.
"CONSOLIDATED NET INCOME" means, for any period, net income or
loss of the Borrower and the Subsidiaries for such period determined on a
consolidated basis in accordance with GAAP; PROVIDED that there shall be
excluded (a) the income of any Person in which any other Person (other than the
Borrower or any Subsidiary or any director holding qualifying shares in
compliance with applicable law) has a joint interest, except to the extent of
the amount of dividends or other distributions (including distributions made as
a return of capital or repayment of principal of advances) actually paid to the
Borrower or any Subsidiary by such Person, and (b) the income (or loss) of any
Person accrued prior to the date it becomes a Subsidiary or is merged into or
consolidated with the Borrower or any Subsidiary or the date such Person's
assets are acquired by the Borrower or any Subsidiary.
"CONSOLIDATED PARENT EBITDA" means, for any period, Consolidated
Parent Net Income for such period (adjusted to exclude all extraordinary items
and Non-Recurring Parent Items), plus, without duplication and to the extent
deducted from revenues in determining Consolidated Parent Net Income, the sum of
(a) the aggregate amount of Consolidated Parent Interest Expense for such
period, (b) the aggregate amount of income tax expense for such period, and (c)
all amounts attributable to depreciation and amortization for such period plus,
without duplication, preferred stock dividends payable in cash in respect of any
Disqualified Stock of the Parent, the Borrower or any Subsidiary for such
period, all as determined on a consolidated basis with respect to the Parent,
the Borrower and the Subsidiaries in accordance with GAAP.
"CONSOLIDATED PARENT INDEBTEDNESS" means, as of any date of
determination, the aggregate principal amount of Indebtedness (including
Disqualified Stock) of the Parent, the Borrower and the Subsidiaries outstanding
as of such date determined on a consolidated basis in accordance with GAAP.
"CONSOLIDATED PARENT INTEREST EXPENSE" means, for any period, the
sum of (a) the interest expense, both expensed and capitalized (including the
interest component in respect of Capital Lease Obligations, but excluding any
such interest expense of any Person for any period that the income (or loss) of
such Person is excluded from the calculation of Consolidated Parent Net Income
by reason of clause (b) of the definition of "Consolidated Parent Net Income"),
accrued by the Parent, the Borrower and the Subsidiaries during such period plus
(b) preferred stock dividends in respect of Disqualified Stock of the Parent,
the Borrower and the Subsidiaries for such period, in each case determined on a
consolidated basis in accordance with GAAP.
"CONSOLIDATED PARENT NET INCOME" means, for any period, net income
or loss of the Parent, the Borrower and the Subsidiaries for such period
determined on a consolidated basis
5
in accordance with GAAP; PROVIDED that there shall be excluded (a) the income of
any Person in which any other Person (other than the Parent, the Borrower or any
Subsidiary or any director holding qualifying shares in compliance with
applicable law) has a joint interest, except to the extent of the amount of
dividends or other distributions (including distributions made as a return of
capital or repayment of principal of advances) actually paid to the Parent, the
Borrower or any Subsidiary by such Person, and (b) the income (or loss) of any
Person accrued prior to the date it becomes a Subsidiary or is merged into or
consolidated with the Parent, the Borrower or any Subsidiary or the date such
Person's assets are acquired by the Parent, the Borrower or any Subsidiary.
"CONTROL" means the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of a
Person, whether through the ability to exercise voting power, by contract or
otherwise. "CONTROLLING" and "CONTROLLED" have meanings correlative thereto.
"DEFAULT" means any event or condition which constitutes an Event
of Default or which upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.
"DISCLOSED MATTERS" means the actions, suits and proceedings and
the environmental matters disclosed in Schedule 3.06.
"DISQUALIFIED STOCK" means any capital stock of any Person which
by its terms (or by the terms of any security into which it is convertible or
for which it is exchangeable or exercisable) or upon the happening of any event
(i) matures or is mandatorily redeemable pursuant to a sinking fund obligation
or otherwise, (ii) is convertible or exchangeable for Indebtedness or
Disqualified Stock, (iii) requires the payment of dividends other than dividends
payable solely in additional shares of capital stock of such Person (other than
Disqualified Stock) or (iv) is redeemable or subject to required repurchase at
the option of the holder thereof, in whole or in part.
"DOLLARS" or "$" refers to lawful money of the United States of
America.
"EFFECTIVE DATE" means the date on which the conditions specified
in Section 4.01 are satisfied (or waived in accordance with Section 9.02).
"ELIGIBLE INSTITUTION" means a commercial banking institution that
has a combined capital and surplus of not less than $500 million (or its
equivalent in foreign currency) whose debt is rated "A" or better by S&P or "A2"
or better by Moody's at the time as of which any investment or rollover therein
is made.
"ELIGIBLE PERSON" means (a) a commercial bank, an insurance
company or other similar financial institution or (b) any other entity which is
(or which is managed by a manager which manages funds which are) primarily
engaged in making, purchasing or otherwise investing in commercial loans or
extending, or investing in extensions of, credit for its own account in the
ordinary course of business; PROVIDED, HOWEVER, that in no event may any Person
be an Eligible Person if it is engaged in a Qualifying Business or if it is
Controlled by a Person that is engaged in a Qualifying Business.
6
"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), of the Parent or any 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.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time.
"ERISA AFFILIATE" means any trade or business (whether or not
incorporated) that, together with the Borrower, 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 (other than an event for which the 30-day notice period is waived); (b) 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; (c) the filing pursuant to Section 412(d) of the Code or Section 303(d)
of ERISA of an application for a waiver of the minimum funding standard with
respect to any Plan; (d) the incurrence by the Borrower or any of its ERISA
Affiliates of any liability under Title IV of ERISA with respect to the
termination of any Plan; (e) the receipt by the Borrower or any ERISA Affiliate
from the PBGC or a plan administrator of any notice relating to an intention to
terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f)
the incurrence by the Borrower or any of its ERISA Affiliates of any liability
with respect to the withdrawal or partial withdrawal from any Plan or
Multiemployer Plan; or (g) the receipt by the Borrower or any ERISA Affiliate of
any notice, or the receipt by any Multiemployer Plan from the Borrower or any
ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability
or a determination that a Multiemployer Plan is, or is expected to be, insolvent
or in reorganization, within the meaning of Title IV of ERISA.
"EVENT OF DEFAULT" has the meaning assigned to such term in
Article VII.
"EXCESS CASH FLOW" means, for any fiscal year of the Borrower, the
sum (without duplication) of the following (provided that Excess Cash Flow shall
be zero for any fiscal year that the sum of the following would otherwise be
less than zero):
7
(a) Consolidated Net Income for such fiscal year, adjusted to
exclude any gains or losses attributable to Prepayment Events; PLUS
(b) depreciation, amortization and other non-cash charges or
losses deducted in determining such Consolidated Net Income for such fiscal year
(including any interest expense accrued for such fiscal year that is not payable
currently in cash to the extent deducted in determining Consolidated Net
Income); PLUS
(c) the sum of (i) the amount, if any, by which Net Working
Capital decreased during such fiscal year plus (ii) the amount, if any, by which
the consolidated deferred revenues of the Borrower and the Subsidiaries
increased during such fiscal year plus (iii) the aggregate principal amount of
Capital Lease Obligations and other Indebtedness incurred by the Borrower or any
of the Subsidiaries during such fiscal year to finance Capital Expenditures, to
the extent that principal payments in respect of such Indebtedness would not be
excluded from clause (f) below when made; MINUS
(d) the sum of (i) any non-cash gains included in determining
such Consolidated Net Income for such fiscal year plus (ii) the amount, if any,
by which Net Working Capital increased during such fiscal year plus (iii) the
amount, if any, by which the consolidated deferred revenues of the Borrower and
the Subsidiaries decreased during such fiscal year; minus
(e) Capital Expenditures for such fiscal year; minus
(f) the aggregate principal amount of Indebtedness, repaid or
prepaid by the Borrower and the Subsidiaries during such fiscal year, excluding
(i) Loans prepaid pursuant to Section 2.09(b) or (c), (ii) repayments or
prepayments of Indebtedness financed by incurring other Indebtedness, to the
extent that mandatory principal payments in respect of such other Indebtedness
would not be excluded from this clause (f) when made and (iii) Indebtedness
referred to in clause (ii) of Section 6.01.
"EXCLUDED TAXES" means, with respect to either Agent, any Lender
or any other recipient of any payment to be made by or on account of any
obligation of the Borrower hereunder, (a) income or franchise taxes imposed on
(or measured by) its net income by the United States of America, or by the
jurisdiction under the laws of which such recipient is organized or in which its
principal office is located or, in the case of any Lender, in which its
applicable lending office is located, (b) any branch profits taxes imposed by
the United States of America or any similar tax imposed by any other
jurisdiction in which the Borrower is located and (c) in the case of a Foreign
Lender (other than an assignee pursuant to a request by the Borrower under
Section 2.17(b)), any withholding tax that is imposed on amounts payable to such
Foreign Lender at the time such Foreign Lender becomes a party to this Agreement
(or designates a new lending office) or is attributable to such Foreign Lender's
failure to comply with Section 2.15(e), except to the extent that such Foreign
Lender (or its assignor, if any) was entitled, at the time of designation of a
new lending office (or assignment), to receive additional amounts from the
Borrower with respect to such withholding tax pursuant to Section 2.15(a).
"FEDERAL FUNDS EFFECTIVE RATE" means, for any day, the weighted
average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on
overnight Federal funds
8
transactions with members of the Federal Reserve System arranged by Federal
funds brokers, as published on the next succeeding 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 (rounded upwards, if necessary, to the next 1/100
of 1%) of the quotations for such day for such transactions received by the
Administrative Agent from three Federal funds brokers of recognized standing
selected by it.
"FINANCIAL OFFICER" means, with respect to any Person, the chief
executive officer, the chief financial officer, principal accounting officer,
treasurer or controller of such Person.
"FOREIGN LENDER" means any Lender that is organized under the laws
of a jurisdiction other than the United States of America, any State thereof or
the District of Columbia.
"FOUNDERS" means Brian Gast, Leonard Allsup, Bruce E. Dines, Rex
H. Humston and Patrick M. Green.
"GAAP" means, subject to Section 1.04, generally accepted
accounting principles in the United States of America.
"GOVERNMENTAL AUTHORITY" means the government of the United States
of America, any other nation or any political subdivision thereof, whether state
or local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.
"GUARANTEE" of or by any Person (the "GUARANTOR") means any
obligation, contingent or otherwise, of the guarantor guaranteeing or having the
economic effect of guaranteeing any Indebtedness or other obligation of any
other Person (the "PRIMARY OBLIGOR") in any manner, whether directly or
indirectly, and including any obligation of the guarantor, direct or indirect,
(a) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation or to purchase (or to advance or
supply funds for the purchase of) any security for the payment thereof, (b) to
purchase or lease property, securities or services for the purpose of assuring
the owner of such Indebtedness or other obligation of the payment thereof, (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 or other obligation or (d) as an account party
in respect of any letter of credit or letter of guaranty issued to support such
Indebtedness or obligation; PROVIDED, that the term Guarantee shall not include
endorsements for collection or deposit in the ordinary course of business.
"GUARANTEE AGREEMENT" means the Guarantee and Subordination
Agreement among the Parent, the Subsidiaries and the Administrative Agent,
substantially in the form of Exhibit B.
"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
9
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.
"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 upon which interest charges are customarily paid, (d)
all obligations of such Person under conditional sale or other title retention
agreements relating to property acquired by such Person, (e) all obligations of
such Person in respect of the deferred purchase price of property or services
(excluding accounts payable incurred in the ordinary course of business that are
not overdue by more than 60 days), (f) 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 Indebtedness secured thereby has been assumed, (g)
all Guarantees by such Person of Indebtedness of others, (h) all Capital Lease
Obligations of such Person, (i) all obligations, contingent or otherwise, of
such Person as an account party in respect of letters of credit and letters of
guaranty, (j) all obligations, contingent or otherwise, of such Person in
respect of bankers' acceptances and (k) all Disqualified Stock of such Person.
The Indebtedness of any Person shall include the Indebtedness of any other
entity (including any partnership in which such Person is a general partner) to
the extent such Person is liable therefor as a result of such Person's ownership
interest in or other relationship with such entity, except to the extent the
terms of such Indebtedness provide that such Person is not liable therefor. The
amount outstanding at any time of any Indebtedness issued with original issue
discount is the face amount of such Indebtedness less the remaining unamortized
portion of the original issue discount of such Indebtedness at such time as
determined in conformity with GAAP.
"INDEMNIFIED TAXES" means Taxes other than Excluded Taxes.
"INDEMNITY AND CONTRIBUTION AGREEMENT" means the Indemnity,
Subrogation and Contribution Agreement among the Loan Parties and the
Administrative Agent, substantially in the form of Exhibit C.
"INTEREST ELECTION REQUEST" means a request by the Borrower to
convert or continue a Borrowing in accordance with Section 2.05.
"INTEREST PAYMENT DATE" means (a) with respect to any ABR Loan,
the last day of each March, June, September and December and (b) with respect to
any LIBOR Loan, the last day of the Interest Period applicable to the Borrowing
of which such Loan is a part and, in the case of a LIBOR Borrowing with an
Interest Period of more than three months' duration, each day prior to the last
day of such Interest Period that occurs at intervals of three months' duration
after the first day of such Interest Period.
"INTEREST PERIOD" means, with respect to any LIBOR Borrowing, the
period commencing on the date of such Borrowing and ending on the numerically
corresponding day in
10
the calendar month that is one, two, three or six months thereafter, as the
Borrower may elect; PROVIDED, that (a) if any Interest Period would end on a day
other than a Business Day, such Interest Period shall be extended to the next
succeeding Business Day unless such next succeeding Business Day would fall in
the next calendar month, in which case such Interest Period shall end on the
next preceding Business Day and (b) any Interest Period that commences on the
last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the last calendar month of such Interest
Period) shall end on the last Business Day of the last calendar month of such
Interest Period. For purposes hereof, the date of a Borrowing initially shall be
the date on which such Borrowing is made and thereafter shall be the effective
date of the most recent conversion or continuation of such Borrowing.
"LANDLORD LETTER" means a letter in the form of Exhibit G or any
other letter approved by the Administrative Agent.
"LENDERS" means the Persons listed on Schedule 2.01 and any other
Person that shall have become a party hereto pursuant to an Assignment and
Acceptance, other than any such Person that ceases to be a party hereto pursuant
to an Assignment and Acceptance.
"LIBOR", when used in reference to any Loan or Borrowing, refers
to whether such Loan, or the Loans comprising such Borrowing, are bearing
interest at a rate determined by reference to the Adjusted LIBO Rate.
"LIBO RATE" means, with respect to any LIBOR Borrowing for any
Interest Period, the rate appearing on Page 3750 of the Dow Jones Markets
Service (or on any successor or substitute page of such service, or any
successor to or substitute for such Service, providing rate quotations
comparable to those currently provided on such page of such Service, as
determined by the Administrative Agent from time to time for purposes of
providing quotations of interest rates applicable to dollar deposits in the
London interbank market) at approximately 11:00 a.m., London time, two Business
Days prior to the commencement of such Interest Period, as the rate for dollar
deposits with a maturity comparable to such Interest Period. In the event that
such rate is not available at such time for any reason, then the "LIBO RATE"
with respect to such LIBOR Borrowing for such Interest Period shall be the rate
at which dollar deposits of $5,000,000 and for a maturity comparable to such
Interest Period are offered by the principal London office of the Administrative
Agent (or, if the Administrative Agent at the time is not a commercial bank, any
commercial bank based in New York City selected by the Administrative Agent for
the purpose of quoting such rate, provided that such commercial bank has a
combined capital and surplus and undivided profits of not less than
$500,000,000) in immediately available funds in the London interbank market at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period.
"LICENSES" has the meaning set forth in Section 3.05(c).
"LIEN" means, with respect to any asset, (a) any mortgage, deed of
trust, lien, pledge, hypothecation, encumbrance, charge or security interest in,
on or of such asset, (b) the interest of a vendor or a lessor under any
conditional sale agreement, capital lease or title retention agreement (or any
financing lease having substantially the same economic effect as any
11
of the foregoing) relating to such asset and (c) in the case of securities, any
purchase option, call or similar right of a third party with respect to such
securities.
"LOAN DOCUMENTS" means this Agreement, the Guarantee Agreement,
the Security Documents and the Indemnity and Contribution Agreement.
"LOAN PARTIES" means the Parent, the Borrower and the
Subsidiaries.
"LOANS" means the loans made or deemed made to the Borrower
pursuant to this Agreement.
"LUCENT" means Lucent Technologies Inc.
"LUCENT LENDER" means any Lender that is Lucent or an Affiliate of
Lucent.
"LUCENT PRODUCT" means any products or services purchased by the
Borrower pursuant to the Supply Agreement.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (a)
the business, condition (financial or otherwise), operations, performance or
properties of the Parent, (b) the business, condition (financial or otherwise),
operations, performance or properties of the Borrower and the Subsidiaries,
taken as a whole, (c) the ability of the Parent, the Borrower or any other Loan
Party to perform any of its obligations under any Loan Document or (d) the
legality, validity, binding effect or enforceability of this Agreement or any
other Loan Document.
"MATERIAL INDEBTEDNESS" means Indebtedness (other than the Loans),
or obligations in respect of one or more Hedging Agreements, of any one or more
of the Loan Parties in an aggregate principal amount exceeding $500,000. For
purposes of determining Material Indebtedness, the "principal amount" of the
obligations of a Loan Party in respect of any Hedging Agreement at any time
shall be the maximum aggregate amount (giving effect to any netting agreements)
that such Loan Party would be required to pay if such Hedging Agreement were
terminated at such time.
"MATURITY DATE" means June 30, 2006.
"MOODY'S" means Moody's Investors Service, Inc.
"MULTIEMPLOYER PLAN" means a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.
"NET PROCEEDS" means, with respect to any casualty or condemnation
event, (a) the cash proceeds received in respect of such event including (i) in
the case of a casualty, insurance proceeds, and (ii) in the case of a
condemnation or similar event, condemnation awards and similar payments, net of
(b) the sum of all reasonable fees and out-of-pocket expenses paid by the
Borrower and the Subsidiaries to third parties (other than Affiliates) in
connection with such event.
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"NET WORKING CAPITAL" means, at any date, (a) the consolidated
current assets of the Borrower and the Subsidiaries as of such date (excluding
cash and Permitted Investments) minus (b) the consolidated current liabilities
of the Borrower and the Subsidiaries as of such date (excluding current
liabilities in respect of Indebtedness), determined on a consolidated basis in
accordance with GAAP. Net Working Capital at any date may be a positive or
negative number. Net Working Capital increases when it becomes more positive or
less negative and decreases when it becomes less positive or more negative.
"NON-RECURRING ITEMS" means, for any period, (a) all non-recurring
items that do not involve any payment of cash by the Borrower or any Subsidiary
during such period or any future period and (b) non-recurring items set forth on
the Borrower's consolidated statement of operations for such period below the
operating income line in respect of (i) gains or losses on sales or dispositions
of assets outside the ordinary course of business, (ii) discontinued operations,
(iii) the effects of changes in accounting principles or methods, (iv)
write-downs on any investments of the Borrower or any Subsidiary in any Person
(other than the Borrower or a Subsidiary) and (v) any restructuring charges,
including the amount of any such restructuring charge to cover cash payouts to
laid-off employees of the Borrower or a Subsidiary.
"NON-RECURRING PARENT ITEMS" means, for any period, (a) all
non-recurring items that do not involve any payment of cash by the Parent, the
Borrower or any Subsidiary during such period or any future period and (b)
non-recurring items set forth on the Parent's consolidated statement of
operations for such period below the operating income line in respect of (i)
gains or losses on sales or dispositions of assets outside the ordinary course
of business, (ii) discontinued operations, (iii) the effects of changes in
accounting principles or methods, (iv) write-downs on any investments of the
Parent, the Borrower or any Subsidiary in any Person (other than the Parent, the
Borrower or a Subsidiary) and (v) any restructuring charges, including the
amount of any such restructuring charge to cover cash payouts to laid-off
employees of the Parent, the Borrower or a Subsidiary.
"OBLIGATIONS" means all obligations secured under the Loan
Documents.
"OTHER TAXES" means any and all present or future stamp or
documentary taxes or any other excise or property taxes, charges or similar
levies arising from any payment made under any Loan Document or from the
execution, delivery or enforcement of, or otherwise with respect to, any Loan
Document.
"PARENT" means Jato Communications Corp., a Delaware corporation.
"PARTIAL TERMINATION DATE" has the meaning set forth in the
Security Agreement (Parent).
"PAYMENT DATE" means September 30, 2002 and each Quarterly Date
thereafter ending on and including the Maturity Date.
"PBGC" means the Pension Benefit Guaranty Corporation referred to
and defined in ERISA and any successor entity performing similar functions.
"PENDING APPLICATIONS" has the meaning set forth in Section
3.05(c).
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"PERFECTION CERTIFICATE" means, with respect to the Borrower, a
certificate in the form of Exhibit A to the Security Agreement (Borrower), with
respect to any Subsidiary, a similar certificate in the form of the applicable
Security Document delivered by such Subsidiary and, with respect to the Parent,
a certificate in the form of Exhibit A to the Security Agreement (Parent) or any
other form approved by the Collateral Agent.
"PERMITTED ENCUMBRANCES" means:
(a) Liens imposed by law for taxes, assessments, governmental
charges or similar claims that are not yet due or are being contested in
compliance with Section 5.05;
(b) statutory or common law Liens of landlords and carriers,
warehousemen, mechanics, suppliers, materialmen, repairmen and other similar
Liens, arising in the ordinary course of business and securing obligations that
are not yet delinquent or are being contested in compliance with Section 5.05;
(c) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance and
other types of social security;
(d) Liens incurred or deposits made to secure the performance
of tenders, bids, leases, statutory or regulatory obligations, surety and appeal
bonds, government contracts, performance and return-of-money bonds and other
obligations of a like nature, in each case in the ordinary course of business,
and a bank's unexercised right of set-off with respect to deposits made in the
ordinary course;
(e) judgment liens in respect of judgments that do not
constitute an Event of Default under clause (k) of Article VII;
(f) easements, municipal and zoning ordinances, rights-of-way
and similar encumbrances on or defects or other irregularities of title to real
property imposed by law or arising in the ordinary course of business that do
not secure any monetary obligations and do not materially detract from the value
of the affected property or interfere with the ordinary conduct of business of
the Parent, the Borrower or any Subsidiary;
(g) interests of lessees under leases or subleases granted by
the Parent, the Borrower or a Subsidiary as lessor that do not materially
interfere with the ordinary course of business of the Parent or the Borrower and
the Subsidiaries, taken as a whole;
(h) interests of licensees under licenses or sublicenses
granted by the Parent, the Borrower or a Subsidiary as licensor that do not
materially interfere with the ordinary course of business of the Parent or the
Borrower and the Subsidiaries, taken as a whole;
(i) Liens encumbering property or assets under construction
arising from progress or partial payments made by a customer of the Parent, the
Borrower or a Subsidiary relating to such property or assets;
14
(j) any interest or title of a lessor in any property subject
to any lease otherwise not entered into in violation of the Loan Documents;
(k) any interest or title of a licensor in any property subject
to any license otherwise not entered into in violation of the Loan Documents;
(l) 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
(m) Liens in favor of a Securities Intermediary pursuant to
such Securities Intermediary's customary customer account agreement; provided
that any such Liens shall at no time secure any Indebtedness or obligations
other than customary fees and charges payable to such Securities Intermediary.
PROVIDED, that the term "Permitted Encumbrances" shall not include any Lien
securing Indebtedness.
"PERMITTED EXPENSES" means Capital Expenditures (excluding Capital
Expenditures financed by the incurrence of Capital Lease Obligations) for
equipment and other property to be used by the Borrower in the telecommunication
network related to Lucent Product in an aggregate amount not exceeding three
percent (3%) of the Purchase Price, plus any fees paid or payable to Lucent
pursuant to Section 2.10.
"PERMITTED INVESTMENTS" means:
(a) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States of
America (or by any agency thereof to the extent such obligations are backed by
the full faith and credit of the United States of America), in each case
maturing not more than 365 days after the date of acquisition thereof;
(b) commercial paper of a domestic issuer rated "A-1" or better
by S&P or "P-1" or better by Moody's maturing not more than 365 days after the
date of acquisition thereof;
(c) certificates of deposit, banker's acceptances and time
deposits maturing not more than 365 days after the date of acquisition thereof
issued or guaranteed by or placed with, and money market deposit accounts issued
or offered by, an Eligible Institution;
(d) master note or deposit arrangements with securities of the
types described in paragraphs (a), (b) and (c) above;
(e) money market preferred stock of a corporation organized
under the laws of a jurisdiction within the United States of America rated "AA"
or better by S&P or "Aa" or better by Moody's; PROVIDED HOWEVER, that any such
debt security that is rated by both such rating agencies shall be rated "AA" or
better by S&P or Moody's;
(f) fully collateralized repurchase agreements with a term of
not more than 30 days for securities described in clause (a) above and entered
into with an Eligible Institution; and
15
(g) any fund investing exclusively in investments of the types
described in clauses (a) through (f) above.
"PERMITTED JURISDICTION" means a jurisdiction which is both a
Permitted Regulatory Jurisdiction and a Permitted UCC Jurisdiction.
"PERMITTED PREFERRED STOCK" means capital stock of the Borrower
(other than Disqualified Stock of the Borrower) of any class or classes (however
designated) that is preferred as to the payment of dividends, or as to the
distribution of assets upon any voluntary or involuntary liquidation or
dissolution of the Borrower, over shares of capital stock of any other class of
the Borrower.
"PERMITTED REGULATORY JURISDICTION" means a jurisdiction in which
all applicable Governmental Authorities have (i) certified the Borrower as a
competitive local exchange carrier (as defined in the Telecommunications Act of
1996); (ii) approved all interconnection agreements to which the Borrower is a
party relating to such jurisdiction; and (iii) approved the Borrower's tariff or
tariffs with respect to such jurisdiction; PROVIDED, HOWEVER, that any such
jurisdiction shall be a Permitted Regulatory Jurisdiction only if the Agents and
the Lenders shall have received an opinion of legal counsel for the Borrower in
form and substance reasonably satisfactory to the Administrative Agent as to
such matters.
"PERMITTED UCC JURISDICTION" means (i) the jurisdictions in which
the Borrower indicates in the certificate delivered pursuant to clause (i) of
Section 4.01 that the Borrower maintains or anticipates maintaining equipment at
any time the Loans are to be outstanding and (ii) any other jurisdiction in
which the Borrower or a Subsidiary indicates in a certificate delivered pursuant
to clause (b) of Section 5.03 or (in the case of a Subsidiary) in connection
with the execution and delivery of any Security Document pursuant to Section
5.14 that the Borrower or such Subsidiary maintains or anticipates maintaining
equipment at any time the Loans are to be outstanding; PROVIDED that (x) any
such jurisdiction described in clause (i) or (ii) of this definition shall be a
Permitted UCC Jurisdiction only if the certificate most recently delivered by
the Borrower or such Subsidiary pursuant to clause (i) of Section 4.01 (in the
case of the Borrower), in connection with the execution and delivery of any
Security Documents required to be delivered pursuant to Section 5.14 (in the
case of a Subsidiary) or pursuant to clause (b) of Section 5.03 (in the case of
the Borrower or any Subsidiary) certifies to the effect required under clause
(ii) of clause (b) of Section 5.03 with respect in such jurisdiction and (y) in
the case of any such other jurisdiction described in clause (ii) of this
definition, such other jurisdiction shall be a Permitted UCC Jurisdiction only
if the Collateral Agent shall have received an opinion of legal counsel for the
Borrower in form and substance reasonably satisfactory to the Collateral Agent
as to the actions taken in order for the Borrower or such Subsidiary to be able
to make the certifications required under clause (ii) of clause (b) of Section
5.03 and the validity and effectiveness of such actions, including without
limitation, their ability to withstand any challenge in a bankruptcy proceeding
and the priority of security interest created by the Security Documents on
equipment to be located in such jurisdiction.
"PERSON" means any natural person, corporation, limited liability
company, trust, joint venture, association, company, partnership, Governmental
Authority or other entity.
16
"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 302 of ERISA, and in respect of which the
Parent or the Borrower 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.
"PLEDGE AGREEMENT (BORROWER)" means the Pledge Agreement between
the Borrower and the Collateral Agent, substantially in the form of Exhibit E.
"PLEDGE AGREEMENT (PARENT)" means the Pledge Agreement between
the Parent and the Collateral Agent, substantially in the form of Exhibit F.
"PREPAYMENT EVENT" means any casualty or other insured damage to,
or any taking under power of eminent domain or by condemnation or similar
proceeding of, any property or asset of the Borrower or any Subsidiary after the
Effective Date; PROVIDED that (i) such events shall not constitute "Prepayment
Events" to the extent that the aggregate Net Proceeds from all such events are
less than $100,000 during any fiscal year of the Borrower and (ii) any such
event shall not constitute a "Prepayment Event" if the Borrower elects (by
notice to the Administrative Agent within five Business Days after receipt of
the Net Proceeds of such event) to apply the Net Proceeds of such event to
repair, restore or replace the affected property or asset or to reinvest such
Net Proceeds in Additional Assets as promptly as practicable, but in any event
within 90 days, after the receipt of the Net Proceeds of such event; PROVIDED
FURTHER that, if at the expiration of the 90-day period referred to in this
clause (ii) less than all the Net Proceeds of such event have been reinvested or
applied as provided therein, then a "Prepayment Event" shall be deemed to have
occurred at the expiration of such 90-day period with Net Proceeds equal to the
Net Proceeds that have not been so reinvested or applied.
"PRIME RATE" means the rate of interest per annum published from
time to time in the "Money Rates" column (or any successor column) of THE WALL
STREET JOURNAL as the prime rate or, if such rate shall cease to be so published
or is not available for any reason, the rate of interest publicly announced from
time to time by any "money center" bank based in New York City selected by the
Administrative Agent for the purpose of quoting such rate, provided such
commercial bank has a combined capital and surplus and undivided profits of not
less than $500,000,000. Each change in the Prime Rate shall be effective from
and including the date such change is published.
"PURCHASE PRICE" means amounts paid or payable for Lucent Product
pursuant to invoices delivered pursuant to the Supply Agreement.
"QUALIFYING BUSINESS" means the business of providing digital
connections to broadband networks and related telecommunications services and
products.
"QUARTERLY DATE" means the last day of each of March, June,
September and December.
"REGISTER" has the meaning set forth in Section 9.04.
17
"RELATED PARTIES" means, with respect to any specified Person,
such Person's Affiliates and the respective directors, officers, employees,
agents and advisors of such Person and such Person's Affiliates.
"REPAYMENT" means, in respect of any Indebtedness, the direct or
indirect repayment, prepayment, redemption, purchase, acquisition, defeasance,
retirement or other satisfaction of the principal of such Indebtedness, in whole
or in part, whether optional or mandatory. "REPAY" has a meaning correlative
thereto.
"REQUIRED LENDERS" means, at any time, Lenders having outstanding
Loans and Commitments representing more than 50% of the sum of the total
outstanding Loans and Commitments at such time; PROVIDED that at any time that
Lucent Lenders have outstanding Loans and Commitments representing more than 50%
of the sum of all outstanding Loans and Commitments at such time, "Required
Lenders" means each of (i) the Lucent Lenders at such time and (ii) other
Lenders holding more than 50% of the outstanding Loans and Commitments
(excluding those held by Lucent Lenders) at such time.
"RESTRICTED PAYMENT" means (a) any dividend or other distribution
(whether in cash, securities or other property) with respect to any shares of
any class of capital stock of the Borrower or any Subsidiary (or until the
Partial Termination Date, the Parent), (b) any Repayment of any Subordinated
Indebtedness (or until the Partial Termination Date, any Repayment of any
Indebtedness of the Parent incurred pursuant to clause (vii) of Section 6.01) or
(c) any payment (whether in cash, securities or other property), including any
sinking fund or similar deposit, on account of the purchase, redemption,
retirement, acquisition, cancellation or termination of any shares of any class
of capital stock of the Borrower or any Subsidiary (or until the Partial
Termination Date, the Parent) or any option, warrant or other right to acquire
any such shares of capital stock of the Borrower or any Subsidiary ( or until
the Partial Termination Date, the Parent).
"S&P" means Standard & Poor's Ratings Services, a Division of the
McGraw-Hill Companies.
"SECURED PARTIES" means the Collateral Agent, the Administrative
Agent and the Lenders.
"SECURITIES ACCOUNT CONTROL AGREEMENT (BORROWER)" means the
Securities Account Control Agreement (Borrower) between the Borrower, the
Securities Intermediary (as defined therein) and the Collateral Agent,
substantially in the form of Exhibit G to the Securities Agreement (Borrower).
"SECURITIES ACCOUNT CONTROL AGREEMENT (PARENT)" means the
Securities Account Control Agreement (Parent) between the Parent, the Securities
Intermediary (as defined therein) and the Collateral Agent, substantially in the
form of Exhibit G to the Securities Agreement (Parent).
"SECURITIES ACT" means the Securities Act of 1933, as amended.
18
"SECURITIES EXCHANGE ACT" means the Securities Exchange Act of
1934, as amended, and the rules of the Securities and Exchange Commission
thereunder as in effect from time to time.
"SECURITIES INTERMEDIARY" means any Person that is a party to a
Securities Account Control Agreement (Parent) or Securities Account Control
Agreement (Borrower) as the "Securities Intermediary" thereunder.
"SECURITY AGREEMENT (BORROWER)" means the Security Agreement
(Borrower) between the Borrower and the Collateral Agent, substantially in the
form of Exhibit D.
"SECURITY AGREEMENT (PARENT)" means the Security Agreement
(Parent) between the Parent and the Collateral, substantially in the form of
Exhibit H.
"SECURITY AGREEMENTS" means the Security Agreement (Borrower) and
the Security Agreement (Parent).
"SECURITY DOCUMENTS" means the Security Agreement (Borrower), the
Security Agreement (Parent), the Pledge Agreement (Borrower), the Pledge
Agreement (Parent), the Securities Account Control Agreement (Borrower) and the
Securities Account Control Agreement (Parent) and any other agreements delivered
pursuant to Section 5.14.
"SENIOR INDEBTEDNESS" means any Indebtedness of the Borrower or
any Subsidiary included in Consolidated Indebtedness that is not Subordinated
Indebtedness.
"SENIOR OFFICER" means any senior officer of the Parent having
substantial responsibilities for the management and supervision of the business,
operations and affairs of the Parent, including, with respect to finance, sales,
customer care, carrier relations, marketing, operations, technology and product
development.
"SERIES B INVESTORS" means the holders of the Series B Preferred
Stock of the Parent.
"STATUTORY RESERVE RATE" means a fraction (expressed as a
decimal), the numerator of which is the number one and the denominator of which
is the number one minus the aggregate of the maximum reserve percentages
(including any marginal, special, emergency or supplemental reserves) expressed
as a decimal established by the Board to which any Lender subject to regulation
by the Board is subject with respect to the Adjusted LIBO Rate, for eurocurrency
funding (currently referred to as "Eurocurrency Liabilities" in Regulation D of
the Board). Such reserve percentages shall include those imposed pursuant to
such Regulation D. LIBOR Loans shall be deemed to constitute eurocurrency
funding and to be subject to such reserve requirements without benefit of or
credit for proration, exemptions or offsets that may be available from time to
time to any Lender under such Regulation D or any comparable regulation. The
Statutory Reserve Rate shall be adjusted automatically on and as of the
effective date of any change in any reserve percentage.
19
"SUBORDINATED INDEBTEDNESS" of means any Indebtedness of the
Borrower owing to the Parent subordinated in right of payment to the payment of
the Obligations upon terms and conditions satisfactory to the Required Lenders.
"SUBSCRIBERS" means customers of the Borrower or any Subsidiary
obligated to pay cash for services of the Borrower or such Subsidiary at market
rates.
"SUBSIDIARY" means, with respect to any Person (the "PARENT") at
any date, any corporation, limited liability company, partnership, association
or other 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, in
the case of a partnership, more than 50% of the general partnership interests
are, as of such date, owned, controlled or held by the parent or one or more
subsidiaries of the parent or by the parent and one or more subsidiaries of the
parent.
"SUBSIDIARY" means any subsidiary of the Borrower.
"SUPPLY AGREEMENT" means the Supply Agreement dated as of February
12, 1999 between Lucent and the Parent.
"TAXES" means any and all present or future taxes, levies,
imposts, duties, deductions, charges or withholdings imposed by any Governmental
Authority.
"TOTAL CAPITALIZATION" means, as of any date of determination, the
sum of (a) Consolidated Indebtedness as of such date plus (b) the amount of paid
in capital of the Borrower on such date determined on a consolidated basis in
accordance with GAAP plus (c), if positive, the retained earnings of the
Borrower on such date determined on a consolidated basis in accordance with
GAAP.
"TOTAL PARENT CAPITALIZATION" means, as of any date of
determination, the sum of (a) Consolidated Parent Indebtedness as of such date
plus (b) the amount of paid in capital of the Parent on such date determined on
a consolidated basis in accordance with GAAP plus (c), if positive, the retained
earnings of the Parent on such date determined on a consolidated basis in
accordance with GAAP.
"TRANCHE 1 AVAILABILITY PERIOD" means the period from and
including the Effective Date to but excluding the earlier of (i) the Tranche 1
Availability Termination Date and (ii) the date of termination of the Tranche 1
Commitment.
"TRANCHE 1 AVAILABILITY TERMINATION DATE" means the earlier of (i)
the date [ * ] after the Effective Date and (ii) the [ * ].
"TRANCHE 1 COMMITMENT" means the Commitment with respect to
Tranche 1 Loans in an amount not to exceed $[ * ].
"TRANCHE 1 LOANS" means Loans made or deemed made pursuant to this
Agreement during the Tranche 1 Availability Period.
* INDICATES CONFIDENTIAL TREATMENT REQUESTED
20
"TRANCHE 2 AVAILABILITY PERIOD" means the period from and
including the Tranche 1 Availability Termination Date to but excluding the
earlier of (i) the Tranche 2 Availability Termination Date and the (ii) date of
termination of the Tranche 2 Commitment.
"TRANCHE 2 AVAILABILITY TERMINATION DATE" means the earlier of
(i) the date [ * ] after the Effective Date and (ii) the [ * ], unless
extended pursuant to Section 2.06(a).
"TRANCHE 2 COMMITMENT" means the Commitment with respect to
Tranche 2 Loans in an amount not to exceed $[ * ].
"TRANCHE 2 LOANS" means Loans made or deemed made pursuant to this
Agreement during the Tranche 2 Availability Period.
"TRANSACTIONS" means the execution, delivery and performance by
each Loan Party of the Loan Documents to which it is to be a party, the
borrowing of Loans and the use of the proceeds thereof.
"TYPE", when used in reference to any Loan or Borrowing, refers to
whether the rate of interest on such Loan, or on the Loans comprising such
Borrowing, is determined by reference to the Adjusted LIBO Rate or the Alternate
Base Rate.
"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.
Section 1.02. CLASSIFICATION OF LOANS AND BORROWINGS. For
purposes of this Agreement, Loans may be classified and referred to by Class
(e.g., a "Tranche 1 Loan") or by Type (e.g., a "LIBOR Loan") or by Class and
Type (e.g., a "Tranche 1 LIBOR Loan"). Borrowings also may be classified and
referred to by Class (e.g., a "Tranche 1 Borrowing") or by Type (e.g., a "LIBOR
Borrowing") or by Class and Type (e.g., a "Tranche 1 LIBOR Borrowing").
Section 1.03. TERMS GENERALLY. The definitions of terms herein
shall apply equally to the singular and plural forms of the terms defined.
Whenever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The words "include", "includes" and
"including" shall be deemed to be followed by the phrase "without
limitation." The word "will" shall be construed to have the same meaning and
effect as the word "shall." Unless the context requires otherwise (a) any
definition of or reference to any agreement, instrument or other document
herein shall be construed as referring to such agreement, instrument or other
document as from time to time amended, supplemented or otherwise modified
(subject to any restrictions on such amendments, supplements or modifications
set forth herein), (b) any reference herein to any Person shall be construed
to include such Person's successors and assigns, (c) the words "herein",
"hereof" and "hereunder", and words of similar import, shall be construed to
refer to this Agreement in its entirety and not to any particular provision
hereof, (d) all references herein to Articles, Sections, Exhibits and
Schedules shall be construed to refer to Articles and Sections of, and
Exhibits and Schedules to, this Agreement and (e) the words "asset" and
"property" shall be construed to have the same
* INDICATES CONFIDENTIAL TREATMENT REQUESTED
21
meaning and effect and to refer to any and all tangible and intangible assets
and properties, including cash, securities, accounts, contract rights,
licenses and intellectual property.
Section 1.04. ACCOUNTING TERMS; 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; PROVIDED
that, if the Parent notifies the Administrative Agent that the Parent 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 Parent
that the Required Lenders 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.
ARTICLE II
THE LOANS
Section 2.01. COMMITMENTS. Subject to the terms and conditions
set forth herein, each Lender agrees to make Loans to the Borrower at any time
and from time to time during each Availability Period in an aggregate principal
amount not exceeding its Commitment at the time. Amounts repaid in respect of
Loans thereon may not be reborrowed.
Section 2.02. LOANS AND BORROWINGS.
(a) Each Loan shall be made as part of a Borrowing consisting
of Loans of the same Class and Type made by the Lenders ratably in accordance
with their respective Commitments. The failure of any Lender to make any Loan
required to be made by it shall not relieve any other Lender of its obligations
hereunder; PROVIDED that the Commitments of the Lenders are several and no
Lender shall be responsible for any other Lender's failure to make Loans as
required.
(b) Subject to Section 2.12, each Borrowing shall be comprised
entirely of LIBOR Loans or ABR Loans as the Borrower may request in accordance
herewith. Each Lender at its option may make any LIBOR Loan by causing any
domestic or foreign branch or Affiliate of such Lender to make such Loan;
PROVIDED that any exercise of such option shall not affect the obligation of the
Borrower to repay such Loan thereon in accordance with the terms of this
Agreement.
(c) At the commencement of each Interest Period for any LIBOR
Borrowing, such Borrowing shall be in an aggregate amount that is an integral
multiple of $100,000 and not less than $1,000,000. Borrowings of more than one
Type and Class may be outstanding at the same time; PROVIDED that there shall
not be more than six LIBOR Borrowings with respect to Tranche 1 Loans and six
LIBOR Borrowings with respect to Tranche 2 Loans outstanding at the same time.
22
(d) Notwithstanding any other provision of this Agreement, the
Borrower shall not be entitled to request, or to elect to convert or continue,
any Borrowing as a LIBOR Borrowing if the Interest Period requested with respect
thereto would end after the Maturity Date for the Loans included in such
Borrowing.
Section 2.03. REQUESTS FOR BORROWINGS. To request a Borrowing,
the Borrower shall notify the Administrative Agent of such request by telephone
(a) in the case of a LIBOR Borrowing, not later than 11:00 a.m., New York City
time, three Business Days before the date of the proposed Borrowing or (b) in
the case of an ABR Borrowing, not later than 11:00 a.m., New York City time, one
Business Day before the date of the proposed Borrowing; PROVIDED that (i) the
Borrower may make only one request for a Borrowing in any single calendar month
(it being understood that all Borrowings made by the Borrower on the same date
shall be treated as a single request for a Borrowing for purposes of this
limitation) and (ii) if any Lucent Lender has a Commitment at the time of such
Borrowing and any portion of the proceeds of such Borrowing to be funded by such
Lucent Lender would be required to be funded by such Lucent Lender other than as
a credit against amounts owing to Lucent or an Affiliate of Lucent as provided
in Section 2.04, then the applicable Borrowing Request shall be made not later
than five Business Days before the date of the proposed Borrowing (in the case
of a LIBOR Borrowing) or three Business Days before the date of the proposed
Borrowing (in the case of an ABR Borrowing). Each such telephonic Borrowing
Request shall be irrevocable and shall be confirmed promptly by hand delivery or
telecopy to the Administrative Agent of a written Borrowing Request in a form
approved by the Administrative Agent and signed by the Borrower. Each such
telephonic and written Borrowing Request shall specify the following information
in compliance with Section 2.02:
(i) the aggregate amount of such Borrowing and a reasonably
detailed description of the use of the proceeds therefrom (and each
written Borrowing Request shall attach copies of all invoices to be paid
with such proceeds);
(ii the date of such Borrowing, which shall be a Business Day;
(iii) whether such Borrowing is to be a LIBOR Borrowing or an ABR
Borrowing;
(iv) in the case of a LIBOR Borrowing, the initial Interest
Period to be applicable thereto, which shall be a period contemplated by
the definition of the term "Interest Period"; and
(v) the location and number of the account or accounts to which
funds (if any) are to be disbursed, which shall comply with the
requirements of Section 2.04.
If no election as to the Type of Borrowing is specified, then the requested
Borrowing shall be an ABR Borrowing. If no Interest Period is specified with
respect to any requested LIBOR Borrowing, then the Borrower shall be deemed to
have selected an Interest Period of one month's duration. Promptly following
receipt of a Borrowing Request in accordance with this Section, the
Administrative Agent shall advise each Lender of the details thereof and of the
amount of such Lender's Loan to be made as part of the requested Borrowing.
23
Section 2.04. FUNDING OF BORROWINGS.
(a) Each Lender shall make each Loan to be made by it hereunder
on the proposed date thereof by wire transfer of immediately available funds by
12:00 noon, New York City time, to the account of the Administrative Agent most
recently designated by it for such purpose by notice to the Lenders. The
Administrative Agent will make such Loans available to the Borrower by promptly
crediting the amounts so received, in like funds, to an account of the Borrower
designated by the Borrower in the applicable Borrowing Request. Notwithstanding
the foregoing, if the proceeds of any Borrowing are to be used to make any
payment to or for the account of Lucent or any Affiliate thereof (i) if any
Lucent Lender has a Commitment, then such Lucent Lender may make its Loan by
crediting the amount thereof against the payment obligations to Lucent or any
such Affiliate and shall be deemed to have made a Loan in the amount of such
credit and (ii) the Administrative Agent will make the Loans of the other
Lenders available to the Borrower by promptly crediting the amounts so received
from such other Lenders, in immediately available funds, to an account of Lucent
maintained with the Administrative Agent for such purpose, to the extent of the
proceeds of such Loans designated to be used to make payments to Lucent or any
of its Affiliates (after giving effect to any credits pursuant to clause (i)
above) and the balance, if any, of such proceeds shall be made available to the
Borrower as provided in the preceding sentence.
(b) Unless the Administrative Agent shall have received notice
from a Lender prior to the proposed date of any Borrowing that such Lender will
not make available to the Administrative Agent such Lender's share of such
Borrowing, the Administrative Agent may assume that such Lender has made such
share available on such date in accordance with paragraph (a) of this Section
and may, in reliance upon such assumption, make available to the Borrower a
corresponding amount. In such event, if a Lender has not in fact made its share
of the applicable Borrowing available to the Administrative Agent, then the
applicable Lender and the Borrower severally agree to pay to the Administrative
Agent forthwith on demand such corresponding amount with interest thereon, for
each day from and including the date such amount is made available to the
Borrower to but excluding the date of payment to the Administrative Agent, at
(i) in the case of such Lender, the greater of the Federal Funds Effective Rate
and a rate determined by the Administrative Agent in accordance with banking
industry rules on interbank compensation or (ii) in the case of the Borrower,
the interest rate applicable to ABR Loans of the same Class. If such Lender
pays such amount to the Administrative Agent, then such amount shall constitute
such Lender's Loan included in such Borrowing. Nothing in this Section 2.04(b)
shall prejudice the Borrower's rights against any such defaulting Lender.
Section 2.05. INTEREST ELECTIONS.
(a) Each Borrowing initially shall be of the Type specified in
the applicable Borrowing Request and, in the case of a LIBOR Borrowing, shall
have an initial Interest Period as specified in such Borrowing Request.
Thereafter, the Borrower may elect to convert such Borrowing to a different Type
or to continue such Borrowing and, in the case of a LIBOR Borrowing, may elect
Interest Periods therefor, all as provided in this Section. The Borrower may
elect different options with respect to different portions of the affected
Borrowing, in which case each such portion shall be allocated ratably among the
Lenders holding the Loans
24
comprising such Borrowing, and the Loans comprising each such portion shall
be considered a separate Borrowing.
(b) To make an election pursuant to this Section, the Borrower
shall notify the Administrative Agent of such election by telephone by the time
that a Borrowing Request would be required under Section 2.03 if the Borrower
were requesting a Borrowing of the Type resulting from such election to be made
on the effective date of such election. Each such telephonic Interest Election
Request shall be irrevocable and shall be confirmed promptly by hand delivery or
telecopy to the Administrative Agent of a written Interest Election Request in a
form approved by the Administrative Agent and signed by the Borrower.
(c) Each telephonic and written Interest Election Request shall
specify the following information in compliance with Section 2.02 and paragraph
(f) of this Section:
(i) the Borrowing to which such Interest Election Request
applies and, if different options are being elected with respect to
different portions thereof, the portions thereof to be allocated to each
resulting Borrowing (in which case the information to be specified
pursuant to clauses (iii) and (iv) below shall be specified for each
resulting Borrowing);
(ii) the effective date of the election made pursuant to such
Interest Election Request, which shall be a Business Day;
(iii) whether the resulting Borrowing is to be a LIBOR Borrowing
or an ABR Borrowing; and
(iv) if the resulting Borrowing is a LIBOR Borrowing, the
Interest Period to be applicable thereto after giving effect to such
election, which shall be a period contemplated by the definition of the
term "Interest Period."
If any such Interest Election Request requests a LIBOR Borrowing but does not
specify an Interest Period, then the Borrower shall be deemed to have selected
an Interest Period of one month's duration.
(d) Promptly following receipt of an Interest Election Request,
the Administrative Agent shall advise each Lender of the details thereof and of
such Lender's portion of each resulting Borrowing.
(e) If the Borrower fails to deliver a timely Interest Election
Request with respect to a LIBOR Borrowing prior to the end of the Interest
Period applicable thereto, then, unless such Borrowing is repaid as provided
herein, at the end of such Interest Period such Borrowing shall be converted to
an ABR Borrowing. Notwithstanding any contrary provision hereof, if an Event of
Default has occurred and is continuing, then, so long as an Event of Default is
continuing (i) no outstanding Borrowing may be converted to or continued as a
LIBOR Borrowing at the end of the then current Interest Period and (ii) unless
repaid, each LIBOR Borrowing shall be converted to an ABR Borrowing at the end
of the Interest Period applicable thereto.
25
(f) A Borrowing of any Class may not be converted to or
continued as a LIBOR Borrowing if after giving effect thereto (i) the Interest
Period therefor would commence before and end after a date on which any
principal of the Loans of such Class is scheduled to be repaid and (ii) the sum
of the aggregate principal amount of outstanding LIBOR Borrowings of such Class
with Interest Periods ending on or prior to such scheduled repayment date plus
the aggregate principal amount of outstanding ABR Borrowings of such Class would
be less than the aggregate principal amount of Loans of such Class required to
be repaid on such scheduled repayment date.
Section 2.06. TERMINATION AND REDUCTION OF COMMITMENTS.
(a) Unless previously terminated, the Commitments with respect
to Tranche 1 Loans shall terminate on the Tranche 1 Availability Termination
Date and the Commitments with respect to Tranche 2 Loans shall terminate on the
Tranche 2 Availability Termination Date.
(b) On the date of each Loan made by any Lender such Lender's
Commitment shall be reduced by an amount equal to such Loan.
(c) If a prepayment would be required pursuant to paragraph (b)
or (c) of Section 2.09, all Commitments then in effect shall be reduced ratably
by an aggregate amount equal to the excess, if any, of the amount of the
required prepayment over the aggregate principal amount of Loans outstanding
immediately prior to giving effect to such prepayment.
(d) The Borrower may at any time terminate, or from time to
time reduce, the Commitments; PROVIDED that each reduction of the Commitments
pursuant to this paragraph (d) shall be in an amount that is an integral
multiple of $1,000,000 and not less than $1,000,000.
(e) The Borrower shall notify the Administrative Agent of any
election to terminate or reduce the Commitments under paragraph (d) of this
Section at least one Business Day prior to the effective date of such
termination or reduction, specifying such election and the effective date
thereof. Promptly following receipt of any such notice, the Administrative
Agent shall advise the Lenders of the contents thereof. Each notice delivered
by the Borrower pursuant to this Section shall be irrevocable. Any termination
or reduction of the Commitments shall be permanent. Each reduction of the
Commitments pursuant to paragraph (d) of this Section shall be made ratably
among the Lenders in accordance with their respective Commitments; PROVIDED that
the Borrower may, in its discretion, reduce the Commitments of Lucent Lenders
pursuant to such paragraph (d) without reducing the Commitments of other
Lenders.
Section 2.07. REPAYMENT OF LOANS; EVIDENCE OF DEBT.
(a) The Borrower hereby unconditionally promises to pay to the
Administrative Agent for the account of each Lender the then unpaid principal
amount of each Loan of such Lender as provided in Section 2.08.
(b) Each Lender shall maintain in accordance with its usual
practice an account or accounts evidencing the indebtedness of the Borrower to
such Lender resulting from each Loan made by such Lender, including the amounts
of principal and interest payable and paid to such Lender from time to time
hereunder.
26
(c) The Administrative Agent shall maintain accounts in which
it shall record (i) the amount of each Loan made hereunder, the Class and Type
thereof and the Interest Period applicable thereto, (ii) the amount of any
principal or interest due and payable or to become due and payable from the
Borrower to each Lender hereunder and (iii) the amount of any sum received by
the Administrative Agent hereunder for the account of the Lenders and each
Lender's share thereof.
(d) The entries made in the accounts maintained pursuant to
paragraph (b) or (c) of this Section shall be PRIMA FACIE evidence of the
existence and amounts of the obligations recorded therein; PROVIDED that the
failure of any Lender or the Administrative Agent to maintain such accounts or
any error therein shall not in any manner affect the obligation of the Borrower
to repay the Loans in accordance with the terms of this Agreement.
(e) Any Lender may request that Loans of any Class made by it
be evidenced by a promissory note. In such event, the Borrower shall prepare,
execute and deliver to such Lender such a promissory note payable to the order
of such Lender (or, if requested by such Lender, to such Lender and its
registered assigns) and in a form approved by the Administrative Agent.
Thereafter, the Loans evidenced by such promissory note and interest thereon
shall at all times (including after assignment pursuant to Section 9.04) be
represented by one or more promissory notes in such form payable to the order of
the payee named therein (or, if such promissory note is a registered note, to
such payee and its registered assigns).
Section 2.08. AMORTIZATION OF LOANS.
(a) Subject to adjustment pursuant to paragraph (c) of this
Section, the Borrower shall repay Borrowings on each of the first four
Payment Dates in an aggregate amount equal to [ * ] of the sum of all Loans
made or deemed made hereunder (including amounts previously repaid or
prepaid), on each of the second four Payment Dates in an aggregate amount
equal to [ * ] of the sum of all Loans made or deemed made hereunder
(including amounts previously repaid or prepaid) and on each of the remaining
Payment Dates in an aggregate amount equal to [ * ] of the sum of all Loans
made or deemed made hereunder (including amounts previously repaid or
prepaid).
(b) To the extent not previously paid, all Loans of each Class
shall be due and payable on the Maturity Date with respect to Loans of such
Class.
(c) Any prepayment of a Borrowing of any Class shall be applied
to reduce ratably the subsequent scheduled repayments of the Borrowings of such
Class to be made pursuant to this Section; PROVIDED that any prepayment of a
Borrowing of any Class that is made pursuant to Section 2.09(a) shall be applied
to reduce the subsequent scheduled repayments of the Borrowings of such Class to
be made pursuant to this Section in reverse chronological order or, at the
election of any Lender with respect to any portion of such prepayment payable to
such Lender, to reduce ratably the subsequent scheduled repayments of the
Borrowings of such Class to be made pursuant to this Section.
(d) Prior to any repayment of any Borrowings of any Class
hereunder, the Borrower shall select the Borrowing or Borrowings of the
applicable Class to be repaid and shall
* INDICATES CONFIDENTIAL TREATMENT REQUESTED
27
notify the Administrative Agent by telephone (confirmed by telecopy) of such
selection not later than 11:00 a.m., New York City time, three Business Days
before the scheduled date of such repayment; PROVIDED that each repayment of
Borrowings of any Class shall be applied to repay any outstanding ABR Borrowings
of such Class before any other Borrowings of such Class. If the Borrower fails
to make a timely selection of the Borrowing or Borrowings to be repaid, such
repayment shall be applied, first, to repay any outstanding ABR Borrowings of
the applicable Class and, second, to other Borrowings of the applicable Class in
the order of the remaining duration of their respective Interest Periods (the
Borrowing with the shortest remaining Interest Period to be repaid first). Each
repayment of a Borrowing shall be applied, ratably to the Loans included in the
repaid Borrowing. Repayments of Borrowings shall be accompanied by the payment
of accrued interest on the amount thereof.
Section 2.09. PREPAYMENT OF LOANS.
(a) The Borrower shall have the right at any time and from time
to time to prepay any Borrowing in whole or in part subject to the requirements
of this Section without penalty or premium (except as provided in Section 2.14
or 2.15).
(b) In the event and on each occasion that any Net Proceeds are
received by or on behalf of the Borrower or any Subsidiary in respect of any
Prepayment Event, the Borrower shall, within six Business Days after such Net
Proceeds are received, prepay Borrowings in an aggregate amount equal to such
Net Proceeds.
(c) Following the end of each fiscal year of the Borrower,
commencing with the fiscal year ending on or after the Effective Date, for
which there is any Excess Cash Flow, the Borrower shall prepay Borrowings in
an aggregate amount equal to [ * ]. Each prepayment pursuant to this
paragraph shall be made on or before the date on which financial statements
are delivered pursuant to Section 5.01 with respect to the fiscal year for
which Excess Cash Flow is being calculated (and in any event within 90 days
after the end of such fiscal year).
(d) Prior to any optional or mandatory prepayment of Borrowings
hereunder, the Borrower shall select the Borrowing or Borrowings to be prepaid
and shall specify such selection in the notice of such prepayment pursuant to
paragraph (e) of this Section; PROVIDED that each prepayment of Borrowings of
any Class shall be applied to prepay ABR Borrowings of such Class before any
other Borrowings of such Class. If optional or mandatory prepayment of
Borrowings made at a time when Borrowings of more than one Class are
outstanding, the Borrower shall select Borrowings to be prepaid so that the
aggregate amount of such prepayment is allocated among the Classes pro rata
based on the aggregate principal amount of outstanding Borrowings of each such
Class.
(e) The Borrower shall notify the Administrative Agent by
telephone (confirmed by telecopy) of any prepayment hereunder (i) in the case of
prepayment of a LIBOR Borrowing, not later than 1:00 p.m., New York City time,
three Business Days before the date of prepayment or (ii) in the case of
prepayment of an ABR Borrowing, not later than 11:00 a.m., New York City time,
one Business Day before the date of prepayment. Each such notice shall be
irrevocable and shall specify the prepayment date, the principal amount of each
Borrowing or
* INDICATES CONFIDENTIAL TREATMENT REQUESTED
28
portion thereof to be prepaid and, in the case of a mandatory prepayment, a
reasonably detailed calculation of the amount of such prepayment. Promptly
following receipt of any such notice, the Administrative Agent shall advise the
Lenders of the contents thereof. Each partial prepayment of any Borrowing shall
be in an amount that is an integral multiple of $100,000 and not less than
$1,000,000, except as necessary to apply fully the required amount of a
mandatory prepayment. Each prepayment of a Borrowing shall be applied ratably to
the Loans included in the prepaid Borrowing. Prepayments of Borrowings shall be
accompanied by the payment of accrued interest on the amount prepaid.
Section 2.10. FEES.
(a) The Borrower agrees to pay to the Administrative Agent
for the account of each Lender (i) a commitment fee, which shall accrue (at
the rate per annum separately agreed) on the [ * ] of such Lender during
the period from and including the Effective Date to but excluding the date on
which the Tranche 1 Commitments terminate and (ii) a commitment fee, which
shall accrue (at a rate per annum separately agreed) on the [ * ] of such
Lender during the period from and including the [ * ] to but excluding the
date on which the [ * ] terminate. Accrued commitment fees shall be
payable in arrears on each Interest Payment Date and, in the case of
commitment fees in respect of [ * ], on the date on which the [ * ]
terminate and, in the case of commitment fees in respect of the [ * ], on
the date on which the [ * ] terminate, commencing on the first such date to
occur after the Effective Date. All commitment fees shall be computed on the
basis of a year of 360 days and shall be payable for the actual number of
days elapsed (including the first day but excluding the last day).
(b) The Borrower agrees to pay to Lucent, for its own account,
fees in the [ * ].
(c) The Borrower agrees to pay to the Administrative Agent (if
other than Lucent) and the Collateral Agent, for its own account, fees in the
[ * ].
(d) All fees payable hereunder shall be paid on the dates due,
in immediately available funds, (i) to the applicable Agent, (ii) to Lucent, in
the case of fees payable to it, or (iii) to the Administrative Agent, in the
case of commitment fees, for distribution to the Lenders entitled thereto. Fees
paid shall not be refundable under any circumstances.
Section 2.11. INTEREST.
(a) The Loans comprising each ABR Borrowing shall bear interest
at the Alternate Base Rate plus the Applicable Rate.
(b) The Loans comprising each LIBOR Borrowing shall bear
interest at the Adjusted LIBO Rate for the Interest Period in effect for such
Borrowing plus the Applicable Rate.
* INDICATES CONFIDENTIAL TREATMENT REQUESTED
29
(c) Notwithstanding the foregoing if any principal of or
interest on any Loan or any fee or other amount payable by the Borrower
hereunder is not paid when due, whether at stated maturity, upon acceleration
or otherwise, such overdue amount shall bear interest, after as well as
before judgment, at a rate per annum equal to [ * ] plus the rate
applicable to ABR Loans as provided in paragraph (a) of this Section.
(d) All accrued interest on each Loan shall be payable in
arrears on each Interest Payment Date for such Loan; PROVIDED that (i) interest
accrued pursuant to paragraph (c) of this Section shall be payable [ * ],
(ii) in the event of any repayment or prepayment of any Loan, accrued interest
on the principal amount of such Loan repaid or prepaid shall be payable on the
date of such repayment or prepayment, or (iii) in the event of any conversion of
any Loan prior to the end of the current Interest Period therefor, accrued
interest on such Loan shall be payable on the effective date of such conversion.
(e) All interest hereunder shall be computed on the basis of a
year of 360 days, except that interest computed by reference to the Alternate
Base Rate at times when the Alternate Base Rate is based on the Prime Rate shall
be computed on the basis of a year of 365 days (or 366 days in a leap year), and
in each case shall be payable for the actual number of days elapsed (including
the first day but excluding the last day). The applicable Alternate Base Rate
or Adjusted LIBO Rate shall be determined in accordance with this Agreement by
the Administrative Agent, and such determination shall be conclusive absent
manifest error.
Section 2.12. ALTERNATE RATE OF INTEREST. If prior to the
commencement of any Interest Period for a LIBOR Borrowing:
(a) the Administrative Agent determines (which determination
shall be conclusive absent manifest error) that adequate and reasonable means do
not exist for ascertaining the Adjusted LIBO Rate for such Interest Period; or
(b) the Administrative Agent is advised by a majority in
interest of the Lenders participating in such Borrowing that the Adjusted LIBO
Rate for such Interest Period will not adequately and fairly reflect the cost to
such Lenders of making or maintaining their Loans included in such Borrowing for
such Interest Period;
then the Administrative Agent shall give notice thereof to the Borrower and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a LIBOR Borrowing shall be ineffective and
(ii) if any Borrowing Request requests a LIBOR Borrowing, such Borrowing shall
be made as an ABR Borrowing.
Section 2.13. INCREASED COSTS.
(a) If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of, deposits with or for
the account of, or credit
* INDICATES CONFIDENTIAL TREATMENT REQUESTED
30
extended by, any Lender (except any such reserve requirement reflected
in the Adjusted LIBO Rate); or
(ii) impose on any Lender or the London interbank market any
other condition affecting this Agreement or LIBOR Loans made by such
Lender;
and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any LIBOR Loan (or of maintaining its obligation
to make any such Loan) or to reduce the amount of any sum received or receivable
by such Lender hereunder (whether of principal, interest or otherwise), then the
Borrower will pay to such Lender such additional amount or amounts as will
compensate such Lender for such additional costs incurred or reduction suffered.
(b) If any Lender determines that any Change in Law regarding
capital requirements has or would have the effect of reducing the rate of return
on such Lender's capital or on the capital of such Lender's holding company, if
any, as a consequence of this Agreement or the Loans made by such Lender to a
level below that which such Lender or such Lender's holding company could have
achieved but for such Change in Law (taking into consideration such Lender's
policies and the policies of such Lender's holding company with respect to
capital adequacy), then from time to time the Borrower will pay to such Lender
such additional amount or amounts as will compensate such Lender or such
Lender's holding company for any such reduction suffered.
(c) A certificate of a Lender setting forth the amount or
amounts necessary to compensate such Lender or its holding company, as the case
may be, as specified in paragraph (a) or (b) of this Section and the basis
therefor shall be delivered to the Borrower by the applicable Lender (with a
copy to the Administrative Agent) and shall be conclusive absent manifest error
The Borrower shall pay such Lender the amount shown as due on any such
certificate within 30 days after receipt thereof.
(d) Failure or delay on the part of any Lender to demand
compensation pursuant to this Section shall not constitute a waiver of such
Lender's right to demand such compensation; PROVIDED that the Borrower shall not
be required to compensate a Lender pursuant to this Section for any increased
costs or reductions incurred more than 270 days prior to the date that such
Lender notifies the Borrower of the Change in Law giving rise to such increased
costs or reductions and of such Lender's intention to claim compensation
therefor; PROVIDED FURTHER that, if the Change in Law giving rise to such
increased costs or reductions is retroactive, then the 270-day period referred
to above shall be extended to include the period of retroactive effect thereof.
Section 2.14. BREAK FUNDING PAYMENTS; PREPAYMENT FEES. In the
event of (i) the payment of any principal of any LIBOR Loan other than on the
last day of an Interest Period applicable thereto (including as a result of an
Event of Default), (ii) the conversion of any LIBOR Loan other than on the last
day of the Interest Period applicable thereto, (iii) the failure to borrow,
convert, continue or prepay any Loan on the date specified in any notice
delivered pursuant hereto, or (iv) the assignment of any LIBOR Loan other than
on the last day of the Interest Period applicable thereto as a result of a
request by the Borrower pursuant to Section
31
2.17, then, in any such event, the Borrower shall compensate each Lender for the
loss, cost and expense attributable to such event. In the case of a LIBOR Loan,
such loss, cost or expense to any Lender shall be deemed to include an amount
determined by such Lender to be the excess, if any, of (i) the amount of
interest which would have accrued on the principal amount of such Loan had such
event not occurred, at the Adjusted LIBO Rate that would have been applicable to
such Loan, for the period from the date of such event to the last day of the
then current Interest Period therefor (or, in the case of a failure to borrow,
convert or continue, for the period that would have been the Interest Period for
such Loan), over (ii) the amount of interest which would accrue on such
principal amount for such period at the interest rate which such Lender would
bid were it to bid, at the commencement of such period, for dollar deposits of a
comparable amount and period from other banks in the eurodollar market. A
certificate of any Lender setting forth any amount or amounts that such Lender
is entitled to receive pursuant to this paragraph shall be delivered to the
Borrower and shall be conclusive absent manifest error. The Borrower shall pay
such Lender the amount shown as due on any such certificate within 10 days after
receipt thereof.
Section 2.15. TAXES.
(a) Any and all payments by or on account of any obligation of
the Borrower hereunder or under any other Loan Document shall be made free and
clear of and without deduction for any Indemnified Taxes or Other Taxes;
PROVIDED that if the Borrower shall be required to deduct any Indemnified Taxes
or Other Taxes from such payments, then (i) the sum payable shall be increased
as necessary so that after making all required deductions (including deductions
applicable to additional sums payable under this Section) the Administrative
Agent or Lender receives an amount equal to the sum it would have received had
no such deductions been made, (ii) the Borrower shall make such deductions and
(iii) the Borrower shall pay the full amount deducted to the relevant
Governmental Authority in accordance with applicable law.
(b) In addition, the Borrower shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) The Borrower shall indemnify the Administrative Agent and
each Lender, within 10 days after written demand therefor, for the full amount
of any Indemnified Taxes or Other Taxes paid by the Administrative Agent or such
Lender on or with respect to any payment by or on account of any obligation of
the Borrower hereunder or under any other Loan Document (including Indemnified
Taxes or Other Taxes imposed or asserted on or attributable to amounts payable
under this Section) and any penalties, interest and reasonable expenses arising
therefrom or with respect thereto, whether or not such Indemnified Taxes or
Other Taxes were correctly or legally imposed or asserted by the relevant
Governmental Authority. A certificate as to the amount of such payment
delivered to the Borrower by a Lender, or by the Administrative Agent on its own
behalf or on behalf of a Lender, shall be conclusive absent manifest error.
(d) As soon as practicable after any payment of Indemnified
Taxes or Other Taxes by the Borrower to a Governmental Authority, the Borrower
shall deliver to the Administrative Agent the original or a certified copy of a
receipt issued by such Governmental Authority evidencing such payment, a copy of
the return reporting such payment or other evidence of such payment reasonably
satisfactory to the Administrative Agent.
32
(e) Each Foreign Lender shall deliver to the Borrower (with a
copy to the Administrative Agent) two copies of either United States Internal
Revenue Service Form 1001 or Form 4224, or, in the case of a Foreign Lender
claiming exemption from U.S. Federal withholding tax under Section 871(h) or
881(c) of the Code with respect to payments of "portfolio interest", a Form W-8,
or any subsequent versions thereof or successors thereto (and, if such Foreign
Lender delivers a Form W-8, a certificate representing that such Foreign Lender
is not a bank for purposes of Section 881(c) of the Code, is not a ten percent
(10%) shareholder of the Borrower (within the meaning of Section 871(h)(3)(B) of
the Code) and is not a controlled foreign corporation related to the Borrower
(within the meaning of Section 864(d)(4) of the Code)), properly completed and
duly executed by such Foreign Lender claiming complete exemption from, or
reduced rate of, U.S. Federal withholding tax on payments by the Borrower under
this Agreement or any other Loan Document. Such forms shall be delivered by
each Foreign Lender on or before the date it becomes a party to this Agreement
or designates a new lending office. In addition, each Foreign Lender shall
deliver such forms promptly upon the obsolescence, expiration or invalidity of
any form previously delivered by such Foreign Lender. Notwithstanding any other
provision of this Section 2.15, a Foreign Lender shall not be required to
deliver any form pursuant to this Section 2.15 that such Foreign Lender is not
legally able to deliver.
(f) If the Administrative Agent or a Lender determines, in its
sole discretion, that it has received a refund of any Taxes as to which it has
been indemnified by the Borrower pursuant to this Section 2.15, it shall pay
over such refund to the Borrower (but only to the extent of indemnity payments
made by the Borrower under this Section 2.15 with respect to the Taxes giving
rise to such refund), net of all reasonable out-of-pocket expenses of the
Administrative Agent or such Lender and without interest (other than any
interest paid by the relevant Governmental Authority with respect to such
refund); PROVIDED, HOWEVER, that the Borrower, upon the request of the
Administrative Agent or such Lender, agrees to repay the amount paid over to the
Borrower (plus any penalties, interest or other charges imposed by the relevant
Governmental Authority) to the Administrative Agent or such Lender in the event
the Administrative Agent or such Lender is required to repay such refund to such
Governmental Authority. Nothing contained in this Section 2.15 shall require
the Administrative Agent or any Lender to make available its tax returns (or any
other information relating to its Taxes which it deems confidential) to the
Borrower or any other Person.
Section 2.16. PAYMENTS GENERALLY; PRO RATA TREATMENT; SHARING OF
SET-OFFS.
(a) The Borrower shall make each payment required to be made by it
hereunder or under any other Loan Document (whether of principal, interest or
fees, or of amounts payable under Sections 2.13, 2.14 or 2.15, or otherwise)
prior to 12:00 noon, New York City time, on the date when due, in immediately
available funds, without set-off or counterclaim. Any amounts received after
such time on any date may, in the discretion of the Administrative Agent, be
deemed to have been received on the next succeeding Business Day for purposes of
calculating interest thereon. All such payments shall be made to the
Administrative Agent at The Chase Manhattan Bank, New York, New York, ABA no.
021000021, account no. 9101449099, phone no. (212) 552-2222 (or such other
account as the Administrative Agent shall from time to time specify by notice),
except that payments pursuant to Sections 2.10(b), 2.10(c), 2.13, 2.14, 2.15 and
9.03 shall be made directly to the Persons entitled thereto and payments
pursuant to
33
other Loan Documents shall be made to the Persons specified therein. The
Administrative Agent shall distribute any such payments received by it for the
account of any other Person to the appropriate recipient promptly following
receipt thereof. If any payment under any Loan Document shall be due on a day
that is not a Business Day, the date for payment shall be extended to the next
succeeding Business Day, and, in the case of any payment accruing interest,
interest thereon shall be payable for the period of such extension. All payments
under each Loan Document shall be made in dollars.
(b) If at any time insufficient funds are received by and
available to the Administrative Agent to pay fully all amounts of principal,
interest and fees then due hereunder, such funds shall be applied (i) first,
towards payment of interest and fees then due hereunder, ratably among the
parties entitled thereto in accordance with the amounts of interest and fees
then due to such parties, and (ii) second, towards payment of principal then due
hereunder, ratably among the parties entitled thereto in accordance with the
amounts of principal then due to such parties.
(c) If any Lender shall, by exercising any right of set-off or
counterclaim or otherwise, obtain payment in respect of any principal of or
interest on any of its Loans resulting in such Lender receiving payment of a
greater proportion of the aggregate amount of its Loans and accrued interest
thereon than the proportion received by any other Lender, then the Lender
receiving such greater proportion shall purchase (for cash at face value)
participations in the Loans of other Lenders to the extent necessary so that the
benefit of all such payments shall be shared by the Lenders ratably in
accordance with the aggregate amount of principal of and accrued interest on
their respective Loans; PROVIDED that (i) if any such participations are
purchased and all or any portion of the payment giving rise thereto is
recovered, such participations shall be rescinded and the purchase price
restored to the extent of such recovery, without interest, and (ii) the
provisions of this paragraph shall not be construed to apply to any payment made
by the Borrower pursuant to and in accordance with the express terms of this
Agreement or any payment obtained by a Lender as consideration for the
assignment of or sale of a participation in any of its Loans to any assignee or
participant, other than to the Borrower or any Subsidiary or Affiliate thereof
(as to which the provisions of this paragraph shall apply). The Borrower
consents to the foregoing and agrees, to the extent it may effectively do so
under applicable law, that any Lender acquiring a participation pursuant to the
foregoing arrangements may exercise against the Borrower rights of set-off and
counterclaim with respect to such participation as fully as if such Lender were
a direct creditor of the Borrower in the amount of such participation.
(d) Unless the Administrative Agent shall have received notice
from the Borrower prior to the date on which any payment is due to the
Administrative Agent for the account of the Lenders hereunder that the Borrower
will not make such payment, the Administrative Agent may assume that the
Borrower has made such payment on such date in accordance herewith and may, in
reliance upon such assumption, distribute to the Lenders the amount due. In
such event, if the Borrower has not in fact made such payment, then each of the
Lenders severally agrees to repay to the Administrative Agent forthwith on
demand the amount so distributed to such Lender with interest thereon, for each
day from and including the date such amount is distributed to it to but
excluding the date of payment to the Administrative Agent, at
34
the greater of the Federal Funds Effective Rate and a rate determined by the
Administrative Agent in accordance with banking industry rules on interbank
compensation.
(e) Without limiting the generality of paragraph (a) above, the
Borrower's obligations to make each payment required to be made by it hereunder
or under any other Loan Document (whether of principal, interest, fees or
otherwise) shall be absolute and unconditional and shall not be subject to any
delay, reduction, set-off, counterclaim, defense or recoupment for any reason,
including any failure of any equipment or other assets acquired pursuant to the
Supply Agreement or any part thereof, or any dispute with, breach of
representation or warranty by or claim against any supplier, manufacturer,
installer, vendor or distributor, including Lucent. The provisions of this
paragraph shall not be construed as a waiver by the Parent or the Borrower of
any rights they may have under the Supply Agreement.
Section 2.17. MITIGATION OBLIGATIONS; REPLACEMENT OF LENDERS.
(a) If any Lender requests compensation under Section 2.13, or
if the Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.15,
then, if requested by the Borrower, such Lender shall use reasonable efforts to
designate a different lending office for funding or booking its Loans hereunder
or to assign its rights and obligations hereunder to another of its offices,
branches or affiliates, if, in the reasonable judgment of such Lender, such
designation or assignment (i) would eliminate or reduce amounts payable pursuant
to Section 2.13 or 2.15, as the case may be, in the future and (ii) would not
subject such Lender to any unreimbursed cost or expense and would not otherwise
be disadvantageous to such Lender. The Borrower hereby agrees to pay all
reasonable costs and expenses incurred by any Lender in connection with any such
designation or assignment made at the Borrower's request.
(b) If any Lender requests compensation under Section 2.13, or
if the Borrower is required to pay any additional amount to any Lender or any
Governmental Authority for the account of any Lender pursuant to Section 2.15,
then the Borrower may, at its sole expense and effort, upon notice to such
Lender and the Administrative Agent, require such Lender to assign and delegate,
without recourse (in accordance with and subject to the restrictions contained
in Section 9.04), all its interests, rights and obligations under this Agreement
to an assignee that shall assume such obligations (which assignee may be another
Lender, if a Lender accepts such assignment); PROVIDED that (i) the Borrower
shall have received the prior written consent of the Administrative Agent, which
consent shall not unreasonably be withheld, (ii) such Lender shall have received
payment of an amount equal to the outstanding principal of its Loans, and
accrued interest thereon, accrued fees and all other amounts payable to it
hereunder, from the assignee (to the extent of such outstanding principal and
accrued interest and fees) or the Borrower (in the case of all other amounts)
and (iii) such assignment will result in a reduction in such compensation or
payments. A Lender shall not be required to make any such assignment and
delegation if, prior thereto, as a result of a waiver by such Lender or
otherwise, the circumstances entitling the Borrower to require such assignment
and delegation cease to apply.
35
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Each of the Parent and the Borrower represents and warrants to the
Lenders that:
Section 3.01. ORGANIZATION; POWERS. Each of the Parent, the
Borrower and the Subsidiaries is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization, has all
requisite company or corporate, as the case may be, power and authority to carry
on its business as now conducted and, except where the failure to do so,
individually or in the aggregate, could not reasonably be expected to result in
a Material Adverse Effect, is qualified to do business in, and is in good
standing in, every jurisdiction where such qualification is required.
Section 3.02. AUTHORIZATION; ENFORCEABILITY. The Transactions to
be entered into by each Loan Party are within such Loan Party's corporate or
company, as the case may be, powers and have been duly authorized by all
necessary corporate or company, as the case may be, and, if required,
stockholder or member, as the case may be, action. This Agreement has been duly
executed and delivered by each of the Parent and the Borrower and constitutes,
and each other Loan Document to which any Loan Party is to be a party, when
executed and delivered by such Loan Party, will constitute, a legal, valid and
binding obligation of the Parent, the Borrower or such Loan Party (as the case
may be), enforceable in accordance with its terms, subject to applicable
bankruptcy, insolvency, reorganization, moratorium or other laws affecting
creditors' rights generally and subject to general principles of equity,
regardless of whether considered in a proceeding in equity or at law.
Section 3.03. GOVERNMENTAL APPROVALS; NO CONFLICTS. The
Transactions (a) do not require any consent or approval of, registration or
filing with, or any other action by, any Governmental Authority, except such as
have been obtained or made and are in full force and effect and except filings
necessary to perfect Liens created under the Security Documents, (b) will not
violate any applicable law or regulation or the charter, by-laws or other
organizational documents of any Loan Party or any order of any Governmental
Authority, (c) will not violate or result in a default under any indenture,
agreement or other instrument evidencing or governing any Material Indebtedness
or any other material indenture, agreement or other instrument binding upon any
Loan Party or its assets, or give rise to a right thereunder to require any
payment to be made by any Loan Party, and (d) will not result in the creation or
imposition of any Lien on any asset of any Loan Party, except Liens created
under the Security Documents.
Section 3.04. FINANCIAL CONDITION; NO MATERIAL ADVERSE CHANGE.
(a) The Parent has heretofore furnished to the Lenders its
consolidated balance sheet and statements of income, stockholders equity and
cash flows as of and for the fiscal year ended December 31, 1998, and its
consolidated balance sheet and statements of income, stockholders equity and
cash flows as of and for the fiscal quarter ended March 31, 1999, each certified
by a Financial Officer of the Parent. Such financial statements present fairly,
in all material respects, the financial position and results of operations and
cash flows of the Parent and its consolidated subsidiaries as of such dates and
for such periods in accordance
36
with GAAP, subject to year end audit adjustments. As of the date hereof, neither
the Parent nor the Borrower has liabilities in excess of $75,000 except as
disclosed on Schedule 3.04(a).
(b) Since December 31, 1998, there has been no material adverse
change in the business, condition (financial or otherwise), operations,
performance or properties of the Parent or the Borrower and the Subsidiaries,
taken as a whole.
Section 3.05. PROPERTIES AND LICENSES.
(a) Each of the Loan Parties has good title to, or valid
leasehold interests in, all the real and personal property material to its
business, except for minor defects in title that do not interfere with its
ability to conduct its business as currently conducted or to utilize such
properties for their intended purposes.
(b) Each of the Loan Parties owns, or is licensed to use, all
trademarks, tradenames, copyrights, patents and other intellectual property
material to its business, and the use thereof by the Loan Parties 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 to
result in a Material Adverse Effect.
(c) The certificates, licenses and approvals identified on
Schedule 3.05 (the "Licenses") are all the certificates, licenses and approvals
that have been issued or provided to the Parent or the Borrower by any
Governmental Authority having jurisdiction over the telecommunications business,
and each such License is in full force and effect and has not been revoked,
cancelled, suspended or modified in an adverse way. Schedule 3.05 also
accurately identifies and describes all applications ("Pending Applications")
that have been made by the Parent or the Borrower to obtain any certificates,
licenses or approvals from any Governmental Authority having jurisdiction over
the telecommunications business. The Parent and the Borrower are not aware of
any reason that any Governmental Authority would not approve the assignment to
the Borrower of any License owned by the Parent or the assignment or the
modification of any Pending Application made by the Parent so as to be made on
behalf of the Borrower or the assignment to the Borrower of any certificates,
licenses or approvals for which Pending Applications have been made. The
Parent, the Borrower and the Subsidiaries have all licenses and permits that are
material to the business of the Parent, the Borrower and the Subsidiaries except
for the License with respect to New Mexico, which may or may not be material.
Each license or permit that is material to the business of the Parent, the
Borrower and the Subsidiaries, is valid and in full force and effect, and the
Parent, the Borrower and the Subsidiaries are in compliance in all material
respects with the terms and conditions thereof.
Section 3.06. LITIGATION AND ENVIRONMENTAL MATTERS.
(a) There are no actions, suits or proceedings by or before any
arbitrator or Governmental Authority pending against or, to the knowledge of the
Parent or the Borrower, threatened against or affecting the Parent, the Borrower
or any of its Subsidiaries (i) as to which there is a reasonable possibility of
an adverse determination and that, if adversely determined, could reasonably be
expected, individually or in the aggregate, to result in a Material Adverse
37
Effect (other than the Disclosed Matters) or (ii) that involve any of the Loan
Documents or the Transactions.
(b) Except with respect to any other matters that, individually
or in the aggregate, could not reasonably be expected to result in a Material
Adverse Effect, none of the Parent, the Borrower or any of its Subsidiaries (i)
has failed to comply with any Environmental Law or to obtain, maintain or comply
with any permit, license or other approval required under any Environmental Law,
(ii) has become subject to any Environmental Liability, (iii) has received
notice of any claim with respect to any Environmental Liability or (iv) knows of
any basis for any Environmental Liability.
Section 3.07. COMPLIANCE WITH LAWS AND AGREEMENTS. Each of the
Parent, the Borrower and its Subsidiaries is in compliance with all laws,
regulations and orders of any Governmental Authority applicable to it or its
property and all indentures, agreements and other instruments binding upon it or
its property, except where the failure to do so, individually or in the
aggregate, could not reasonably be expected to result in a Material Adverse
Effect. No Default has occurred and is continuing. True and correct copies of
all material agreements to which the Parent, the Borrower or any Subsidiary is a
party or by which any of them or their properties is bound have been provided to
special counsel to Lucent.
Section 3.08. INVESTMENT AND HOLDING COMPANY STATUS. None of the
Loan Parties is (a) an "investment company" as defined in, or subject to
regulation under, the Investment Company Act of 1940 or (b) a "holding company"
as defined in, or subject to regulation under, the Public Utility Holding
Company Act of 1935.
Section 3.09. TAXES. Each of the Loan Parties has timely filed or
caused to be filed all Tax returns and reports required to have been filed and
has paid or caused to be paid all Taxes required to have been paid by it, except
(a) Taxes that are being contested in good faith by appropriate proceedings and
for which the applicable Loan Party has set aside on its books adequate reserves
or (b) the filing of local Tax returns and reports to the extent that the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.
Section 3.10. ERISA. Each Plan has been administered in
compliance with all applicable laws except for such instances of noncompliance
as have not resulted in and could not reasonably be expected to result in 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 for which
liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Effect. The present value of all accumulated
benefit obligations under each Plan (based on the assumptions used for purposes
of Statement of Financial Accounting Standards No. 87) did not, as of the date
of the most recent financial statements reflecting such amounts, exceed the fair
market value of the assets of such Plan, and the present value of all
accumulated benefit obligations of all underfunded Plans (based on the
assumptions used for purposes of Statement of Financial Accounting Standards No.
87) did not, as of the date of the most recent financial statements reflecting
such amounts, exceed the fair market value of the assets of all such underfunded
Plans.
38
Section 3.11. DISCLOSURE. The Parent and the Borrower have
disclosed to the Lenders all agreements, instruments and corporate or other
restrictions to which any of the Loan Parties is subject that, individually or
in the aggregate, could reasonably be expected to result in a Material Adverse
Effect. None of the reports, financial statements, certificates or other
information furnished by or on behalf of any Loan Party to the Administrative
Agent or any Lender in connection with the negotiation of this Agreement or any
other Loan Document or delivered hereunder or thereunder (as modified or
supplemented by other information so furnished, including the Parent's publicly
available filings with the Securities and Exchange Commission) contains any
material misstatement of fact or omits to state any material fact necessary to
make the statements therein, taken as a whole, in the light of the circumstances
under which they were made, not misleading; PROVIDED that, with respect to
projected financial information, the Parent and the Borrower represent only that
such information was prepared in good faith based upon assumptions believed to
be reasonable at the time. The Borrower has furnished to the Administrative
Agent a true and correct copy of the Administrative Agreement, and such
agreement is in full force and effect on the date hereof.
Section 3.12. SUBSIDIARIES. Schedule 3.12 sets forth as of the
date of this Agreement the name of, and the ownership interest of the Borrower
in, each Subsidiary of the Borrower.
Section 3.13. INSURANCE. Schedule 3.13 sets forth a description
of all insurance maintained by or on behalf of the Borrower and its Subsidiaries
as of the date of this Agreement. As of the date of this Agreement, all
premiums in respect of such insurance have been paid.
Section 3.14. LABOR MATTERS. As of the date hereof, there are no
strikes, lockouts or slowdowns against any Loan Party pending or, to the
knowledge of the Parent or the Borrower, threatened. The hours worked by and
payments made to employees of the Loan Parties have not been in violation of the
Fair Labor Standards Act or any other applicable Federal, state, local or
foreign law dealing with such matters. All payments due from any Loan Party, or
for which any claim may be made against any Loan Party, on account of wages and
employee health and welfare insurance and other benefits, have been paid or
accrued as a liability on the books of the applicable Loan Party. The
consummation of the Transactions will not give rise to any right of termination
or right of renegotiation on the part of any union under any collective
bargaining agreement to which any Loan Party is bound.
Section 3.15. SUPPLY AGREEMENT. The Supply Agreement is in full
force and effect and except as disclosed in Schedule 3.15 no payment default or
any other default that (with or without notice or the passage of time or both)
would permit Lucent to terminate the Supply Agreement has occurred and is
continuing under the Supply Agreement. The Borrower has not terminated, nor
taken any action which could result in the termination of, the Supply Agreement.
Section 3.16. SECURITY DOCUMENTS. The representations and
warranties in each Security Document are true and correct.
Section 3.17. YEAR 2000 READINESS. Any reprogramming required to
permit the proper functioning, in and following the year 2000, of (a) the
computer systems of the Parent, the
39
Borrower and the Subsidiaries and (b) equipment of the Parent, the Borrower and
the Subsidiaries containing embedded microchips and the testing of all such
systems and equipment, as so reprogrammed, will be completed by November 30,
1999, except to the extent that failure to do so would not have a Material
Adverse Effect. The cost to the Parent, the Borrower and the Subsidiaries of
such reprogramming and testing and of the reasonably foreseeable consequences of
year 2000 to the Parent, the Borrower and the Subsidiaries (including
reprogramming errors) could not reasonably be expected to have a Material
Adverse Effect. The Parent, the Borrower and the Subsidiaries have used
commercially reasonable efforts to identify all possible failures of the systems
or equipment of their material suppliers, vendors and customers and to assess
the impact of any such failures on the business, condition (financial or
otherwise), operations, performance or properties of the Parent, the Borrower
and the Subsidiaries .
Section 3.18. CAPITALIZATION.
(a) There are no shareholders agreements, voting trusts,
proxies or other agreements, commitments or understandings of any character to
which the Parent, the Borrower or any of its Subsidiaries is a party or by which
the Parent, the Borrower or any of its Subsidiaries is bound with respect to the
voting of any shares of capital stock of the Parent or any of its Subsidiaries.
(b) All securities issued by the Parent, the Borrower or any of
its Subsidiaries have been offered, issued, sold and delivered, in compliance
with, or pursuant to exemptions from, the Securities Act, and the rules and
regulations of the Securities and Exchange Commission thereunder, and all other
laws of any jurisdiction, and the rules and regulations of any Governmental
Authority, applicable to the offering, issuance, sale or delivery of securities
Neither the Parent nor any of its Subsidiaries is required to file, nor has it
filed, any information with the Securities and Exchange Commission pursuant to
the Securities Exchange Act. Neither the Parent, the Borrower nor any of its
Subsidiaries has registered any securities under the Securities Act. No holder
of securities of the Parent, the Borrower or any of its Subsidiaries has any
contractual right to require the Parent, the Borrower or any of its Subsidiaries
to include any such securities in any registration statement under the
Securities Act.
ARTICLE IV
CONDITIONS
Section 4.01. EFFECTIVE DATE. The obligations of the Lenders to
make the initial Loans hereunder shall not become effective until the date on
which each of the following conditions is satisfied (or waived in accordance
with Section 9.02):
(a) The Administrative Agent (or its counsel) shall have
received from each party hereto either (i) a counterpart of this Agreement
signed on behalf of such party or (ii) written evidence satisfactory to the
Administrative Agent (which may include telecopy transmission of a signed
signature page of this Agreement) that such party has signed a counterpart of
this Agreement.
40
(b) The Administrative Agent shall have received a favorable
written opinion (addressed to the Agents and the Lenders, dated the Effective
Date and addressing such matters relating to the Loan Parties, the Loan
Documents and the Transactions as the Administrative Agent shall reasonably
request, in each case in form and substance reasonably satisfactory to the
Administrative Agent) of each of (i) Cooley Godward LLP, counsel for the Parent
and the Borrower, (ii) Kelley Drye & Warren, LLP, special communications counsel
to the Parent and the Borrower, and (iii) Orrick, Herrington & Sutcliffe LLP,
special counsel for Lucent. The Parent and the Borrower hereby request their
counsel referred to in clauses (i) and (ii) of this paragraph to deliver such
opinions.
(c) The Administrative Agent shall have received such documents
and certificates as the Administrative Agent or its counsel may reasonably
request relating to the organization, existence and good standing of the Loan
Parties, the authorization of the Transactions and any other legal matters
relating to the Loan Parties, the Loan Documents or the Transactions, all in
form and substance satisfactory to the Administrative Agent and its counsel.
(d) The Administrative Agent shall have received a certificate,
dated the Effective Date and signed by the Chief Executive Officer, President, a
Vice President or a Financial Officer of each of the Parent and the Borrower,
confirming compliance with the conditions set forth in paragraphs (a), (b) and
(c) of Section 4.02.
(e) The Agents and Lucent shall be satisfied that all fees and
other amounts due and payable to them hereunder on or prior to the Effective
Date, including, to the extent invoiced, reimbursement or payment of all
expenses required to be reimbursed or paid by the Borrower hereunder or under
any other Loan Document, have been paid or will be paid from the proceeds of a
Borrowing to be made on the Effective Date.
(f) The Lenders shall be reasonably satisfied with the
corporate and legal structure and capitalization of the Parent, the Borrower and
the Subsidiaries, including the charter and by-laws of the Parent, the Borrower
and each Subsidiary and each agreement or instrument evidencing Indebtedness.
(g) The Administrative Agent shall have received (i)
counterparts of the Guarantee Agreement signed on behalf of the Parent and each
Subsidiary, and (ii) counterparts of the Indemnity and Contribution Agreement
signed on behalf of each Loan Party.
(h) The Collateral Agent shall have received (i) counterparts
of the Security Documents (other than the Pledge Agreement (Borrower))signed on
behalf of the Loan Party that is a party thereto and (ii) evidence satisfactory
to the Required Lenders that all documents and instruments, including Uniform
Commercial Code financing statements, required by law or reasonably requested by
the Collateral Agent to be filed, registered or recorded to create or perfect
the Liens intended to be created under the Security Documents, and to protect
the respective ownership interests of the Parent, the Borrower and the
Subsidiaries in (and the Liens of the Security Documents on) all Collateral,
have been so filed, registered or recorded.
(i) The Collateral Agent shall have received a completed
Perfection Certificate from each of the Borrower and the Parent, dated the
Effective Date and signed by a
41
Financial Officer of the Borrower and the Parent, respectively, together with
all attachments contemplated thereby, including (i) the results of a search of
the Uniform Commercial Code (or equivalent) filings made with respect to the
Borrower and the Parent in the jurisdictions contemplated by the Perfection
Certificate and (ii) copies of the financing statements (or similar documents)
disclosed by such search and evidence reasonably satisfactory to the Collateral
Agent that the Liens indicated by such financing statements (or similar
documents) are permitted by Section 6.02 or have been released.
(j) The Administrative Agent shall have received evidence
satisfactory to it that the insurance required by Section 5.07 is in effect and
that the Collateral Agent has been named as an additional insured and loss payee
under all insurance policies to be maintained with respect to the properties of
the Borrower constituting the Collateral.
(k) The Lenders shall have received the most recent Business
Plan, including financial projections, and there shall have been no material
adverse changes in the Business Plan compared to the information disclosed to
Lucent prior to the date of execution of this Agreement.
(l) The Lenders (i) shall have been given access to the
management, records, books of account, contracts and properties of the Loan
Parties and shall have received such financial, business and other information
regarding the Loan Parties as the Lenders shall have reasonably requested and
(ii) shall have completed their due diligence review of the Loan Parties and
shall be reasonably satisfied with the results of such review.
(m) The Administrative Agent shall have received evidence
reasonably satisfactory to it that the Subsidiaries hold all material
governmental approvals reasonably necessary to conduct their respective
businesses.
(n) The Parent shall have received cash equity contributions of
at least $15,000,000 from various investors and the Borrower shall have received
cash equity contributions of at least $15,000,000 from the Parent; PROVIDED,
HOWEVER, that the Parent may pay certain construction and engineering costs on
behalf of the Borrower for an aggregate amount not exceeding $1,416,559.50 in
lieu of contributing cash in an equal amount; PROVIDED, FURTHER, the Parent
shall have delivered a certificate of one of its Financial Officers to the
Administrative Agent certifying that any such costs were incurred in an arm's
length transaction and that the Borrower otherwise would have been required to
pay such costs in order to implement the Business Plan.
(o) Each holder of an equity interest in the Parent exceeding
5% of outstanding equity shall be reasonably acceptable to the Lenders.
The Administrative Agent shall notify the Borrower and the Lenders of the
Effective Date, and such notice shall be conclusive and binding.
Notwithstanding the foregoing, the obligations of the Lenders to make Loans
hereunder shall not become effective unless each of the foregoing conditions is
satisfied (or waived pursuant to Section 9.02) at or prior to 3:00 p.m., New
York City time, on August 15, 1999 (and, in the event such conditions are not so
satisfied or waived, the Commitments shall terminate at such time).
42
Section 4.02. EACH BORROWING. The obligation of each Lender to
make a Loan on the occasion of any Borrowing is subject to the satisfaction of
the following conditions:
(a) At the time of and immediately after giving effect to such
Borrowing, the representations and warranties of the Loan Parties set forth in
the Loan Documents shall be true and correct in all respects (or, in the case of
any representation or warranty that is not qualified as to materiality, in all
material respects) on and as of the date of such Borrowing (or, in the case of
any representation and warranty that expressly relates to an earlier date, on
and as of such earlier date).
(b) At the time of and immediately after giving effect to such
Borrowing no Default shall have occurred and be continuing.
(c) At the time of and immediately after giving effect to such
Borrowing, the Supply Agreement shall be in full force and effect, no payment
default shall have occurred and be continuing and no other default that (with or
without notice or the passage of time or both) would permit Lucent to terminate
the Supply Agreement and with respect to which Lucent has notified the Borrower
shall have occurred and be continuing under the Supply Agreement.
(d) With respect to any Tranche 2 Loans, at the time of and
immediately after giving effect to such Borrowing, the aggregate amount of
all Tranche 2 Loans outstanding shall be equal to or less than [ * ] of the
aggregate amount of paid in capital and Subordinated Indebtedness in excess
of $[ * ].
(e) The Lucent Product of which the Purchase Price is to be
paid with the proceeds of such Borrowing is intended to be used in a Permitted
Jurisdiction.
Each Borrowing shall be deemed to constitute a representation and warranty by
the Borrower on the date thereof as to the matters specified in paragraphs (a),
(b), (c), (d) and (e) of this Section. For purposes of this Section 4.02, the
condition set forth in Section 4.02(a), to the extent that it relates to the
representation of the Parent and the Borrower that no default (excluding payment
defaults) that (with or without notice or the passage of time or both) would
permit Lucent to terminate the Supply Agreement has occurred and is continuing,
shall not be deemed unsatisfied at the time of any Borrowing unless Lucent has
notified the Borrower that such a default has occurred.
ARTICLE V
AFFIRMATIVE COVENANTS
Until the Commitments have expired or been terminated and the
principal of and interest on each Loan and all fees payable hereunder shall have
been paid in full, each of the Parent and the Borrower covenants and agrees with
the Lenders that:
* INDICATES CONFIDENTIAL TREATMENT REQUESTED
43
Section 5.01. FINANCIAL STATEMENTS AND OTHER INFORMATION. The
Parent and the Borrower will furnish to the Administrative Agent:
(a) within 120 days after the end of each fiscal year of the
Parent, the audited consolidated balance sheet of the Parent and its
consolidated subsidiaries and related statements of operations, stockholders'
equity and cash flows as of the end of and for such year, setting forth in each
case in comparative form the figures for the previous fiscal year, all reported
on by Arthur Andersen LLP or other independent public accountants of recognized
national standing (without a "going concern" or like qualification or exception
and without any qualification or exception as to the scope of such audit) to the
effect that such consolidated financial statements present fairly in all
material respects the financial condition and results of operations of the
Parent and its consolidated subsidiaries on a consolidated basis in accordance
with GAAP consistently applied;
(b) within 45 days after the end of each of the first three
fiscal quarters of each fiscal year of the Parent and its consolidated
subsidiaries, the consolidated balance sheet of the Parent and its consolidated
subsidiaries and related statements of operations and cash flows as of the end
of and for such fiscal quarter and the then elapsed portion of the fiscal year,
setting forth in each case in comparative form the figures for the corresponding
period or periods of (or, in the case of the balance sheet, as of the end of)
the previous fiscal year, all certified by one of its Financial Officers as
presenting fairly in all material respects the financial condition and results
of operations of the Parent and its consolidated subsidiaries on a consolidated
basis in accordance with GAAP consistently applied, subject to normal year-end
audit adjustments and the absence of footnotes;
(c) within 120 days after the end of each fiscal year of the
Borrower, the consolidated balance sheet of the Borrower and its consolidated
Subsidiaries and related statements of operations, stockholders' equity and cash
flows as of the end of and for such year, setting forth in each case in
comparative form the figures for the previous fiscal year, all certified by one
of its Financial Officers as presenting fairly in all material respects the
financial condition and results of operations of the Borrower and its
consolidated Subsidiaries on a consolidated basis in accordance with GAAP
consistently applied;
(d) within 45 days after the end of each of the first three
fiscal quarters of each fiscal year of the Borrower and its consolidated
Subsidiaries, the consolidated balance sheet of the Borrower and its
consolidated Subsidiaries and related statements of operations and cash flows as
of the end of and for such fiscal quarter and the then elapsed portion of the
fiscal year, setting forth in each case in comparative form the figures for the
corresponding period or periods of (or, in the case of the balance sheet, as of
the end of) the previous fiscal year, all certified by one of its Financial
Officers as presenting fairly in all material respects the financial condition
and results of operations of the Borrower and its consolidated Subsidiaries on a
consolidated basis in accordance with GAAP consistently applied, subject to
normal year-end audit adjustments and the absence of footnotes;
(e) concurrently with any delivery of the Parent's and
Borrower's financial statements under clause (a) , (b), (c) and (d) above, a
certificate of a Financial Officer of each of the Parent and the Borrower (i)
certifying as to whether a Default has occurred and, if a Default
44
has occurred, specifying the details thereof and any action taken or proposed to
be taken with respect thereto, (ii) setting forth reasonably detailed
calculations demonstrating compliance with Sections 6.11 through 6.20 and (iii)
stating whether any change in GAAP or in the application thereof that materially
affects the Parent's or the Borrower's financial statements accompanying such
certificate (it being understood that any change that would affect compliance
with any covenant set forth herein or the Applicable Rate shall be considered
material) has occurred since the date of the Parent's or the Borrower's audited
financial statements referred to in Section 3.04 and, if any such change has
occurred, specifying the effect of such change on the financial statements
accompanying such certificate (it being understood that such certificate may
also satisfy the requirements of Section 5.03(b) and (c), but any such
certificate intended to satisfy both those requirements and the requirements of
this clause (e) shall be delivered to both the Administrative Agent and the
Collateral Agent);
(f) concurrently with any delivery of financial statements
under clause (a) or (c) above, a certificate of the accounting firm that
reported on such financial statements stating whether they obtained knowledge
during the course of their examination of such financial statements of any
Default (which certificate may be limited to the extent required by accounting
rules or guidelines);
(g) promptly after the same become available but in any event
within 120 days after the end of each fiscal year of the Borrower, an annual
operating and cash flow budget in reasonable detail for the current fiscal year
and updated financial projections through the fiscal year during which the
Maturity Date is scheduled to occur;
(h) promptly after the same become publicly available, copies
of all periodic and other reports, proxy statements and other materials filed by
the Parent, the Borrower or any Subsidiary with the Securities and Exchange
Commission, or any Governmental Authority succeeding to any or all of the
functions of said Commission, or with any national securities exchange, or
financial information or other material information distributed by the Parent or
the Borrower to either of their shareholders generally, as the case may be; and
(i) promptly following any request therefor, such other
information regarding the operations, business affairs and financial condition
of the Parent, the Borrower or any Subsidiary, or compliance with the terms of
any Loan Document, as either Agent or any Lender may reasonably request.
Section 5.02. NOTICES OF MATERIAL EVENTS.
(a) The Borrower will furnish to the Administrative Agent, the
Collateral Agent and each Lender written notice of the following promptly upon
obtaining knowledge thereof:
(i) the occurrence of any Default;
(ii) the filing or commencement of any action, suit or
proceeding by or before any arbitrator or Governmental Authority against
or affecting the Parent, the Borrower or any Affiliate thereof that, if
adversely determined, could reasonably be expected to result in a
Material Adverse Effect; and
45
(iii) any other development that results in, or could reasonably
be expected to result in, a Material Adverse Effect.
(b) The Borrower will furnish to the Administrative Agent and
the Collateral Agent written notice of the occurrence of any Prepayment Event
promptly after the occurrence of such event.
(c) Each notice delivered under this Section shall be
accompanied by a statement of a Financial Officer or other executive officer of
the Borrower setting forth the details of the event or development requiring
such notice and any action taken or proposed to be taken with respect thereto.
Section 5.03. INFORMATION REGARDING COLLATERAL.
(a) The Borrower will furnish to the Collateral Agent prompt
written notice of any change (i) in corporate name of the Borrower or any
Subsidiary or in any trade name used to identify any such Person in the conduct
of its business or in the ownership of its properties, (ii) in the location of
the chief executive office of the Borrower or any Subsidiary, its principal
place of business or any asset constituting Collateral (other than the
installation of any asset constituting Collateral in a jurisdiction in which all
Uniform Commercial Code financing statements (including fixture filings, if
applicable) and other appropriate filings, recordings or registrations,
containing a description of the Collateral have been filed of record in each
governmental, municipal or other appropriate office in such jurisdiction to the
extent necessary to perfect the security interests under the Security Documents,
(iii) in the identity or corporate structure of the Borrower or any Subsidiary
or (iv) in the Federal Taxpayer Identification Number of the Borrower or any
Subsidiary. The Borrower agrees not to effect or permit any change referred to
in the preceding sentence unless all filings have been made under the Uniform
Commercial Code or otherwise that are required in order for the Collateral Agent
to continue at all times following such change to have a valid, legal and
perfected security interest in all the Collateral.
(b) Each year, at the time of delivery of annual financial
statements for the Borrower with respect to the preceding fiscal year pursuant
to clause (c) of Section 5.01, the Borrower will and will cause each Subsidiary
to deliver to the Collateral Agent a certificate of a Financial Officer of the
Borrower or such Subsidiary (i) setting forth the information required pursuant
to Sections 1 and 2 of the Perfection Certificate with respect to the Borrower
or such Subsidiary or confirming that there has been no change in such
information since the date of the Perfection Certificate delivered on the
Effective Date or the date of the most recent certificate delivered pursuant to
this Section and (ii) certifying that all Uniform Commercial Code financing
statements (including fixture filings, as applicable) or other appropriate
filings, recordings or registrations, including all refilings, rerecordings and
reregistrations, containing a description of the Collateral have been filed of
record in each governmental, municipal or other appropriate office in each
jurisdiction identified pursuant to clause (i) above to the extent necessary to
protect and perfect the security interests under the Security Documents for a
period of not less than 18 months after the date of such certificate (except as
noted therein with respect to any continuation statements to be filed within
such period).
46
(c) Each year, at the time of delivery of annual financial
statements for the Parent with respect to the preceding fiscal year pursuant to
clause (a) of Section 5.01, the Parent will deliver to the Collateral Agent a
certificate of a Financial Officer of the Parent (i) setting forth the
information required pursuant to Sections 1 and 2 of the Perfection Certificate
with respect to the Parent (and following the Partial Termination Date, only the
information required pursuant to Sections 1 and 2(a), (b) and (c) of the
Perfection Certificate of the Parent) or confirming that there has been no
change in such information since the date of the Perfection Certificate
delivered on the Effective Date or the date of the most recent certificate
delivered pursuant to this Section and (ii) certifying that all Uniform
Commercial Code financing statements (including fixture filings, as applicable)
or other appropriate filings, recordings or registrations, including all
refilings, rerecordings and reregistrations, containing a description of the
Collateral have been filed of record in each governmental, municipal or other
appropriate office in each jurisdiction identified pursuant to clause (i) above
to the extent necessary to protect and perfect the security interests under the
Security Documents for a period of not less than 18 months after the date of
such certificate (except as noted therein with respect to any continuation
statements to be filed within such period).
Section 5.04. EXISTENCE; CONDUCT OF BUSINESS. Each of the Parent
and the Borrower will, and will cause each of the Subsidiaries to, do or cause
to be done all things necessary to preserve, renew and keep in full force and
effect its legal existence and the rights, licenses, permits, privileges and
franchises material to the conduct of the business of the Parent, the Borrower
and the Subsidiaries, taken as a whole; PROVIDED that the foregoing shall not
prohibit any merger, consolidation, liquidation or dissolution permitted under
Section 6.03.
Section 5.05. PAYMENT OF OBLIGATIONS. Each of the Parent and the
Borrower will, and will cause each of the Subsidiaries to, pay its Indebtedness
and other obligations, including Tax liabilities, before the same shall become
delinquent or in default, except where (i) the validity or amount thereof is
being contested in good faith by appropriate proceedings, (ii) the Parent, the
Borrower or such Subsidiary has set aside on its books adequate reserves with
respect thereto in accordance with GAAP, (iii) such contest effectively suspends
collection of the contested obligation and the enforcement of any Lien securing
such obligation and (iv) the failure to make payment pending the resolution of
such contest could not reasonably be expected to result in a Material Adverse
Effect.
Section 5.06. MAINTENANCE OF PROPERTIES. Each of the Parent and
the Borrower will, and will cause each of the Subsidiaries to, keep and maintain
all Collateral, and all other property material to the conduct of the business
of the Parent, the Borrower and the Subsidiaries, taken as a whole, in good
working order and condition, ordinary wear and tear excepted, PROVIDED, that
this Section 5.06 shall not prevent sales permitted under Sections 6.03 and
6.04.
Section 5.07. INSURANCE.
(a) Each of the Parent and the Borrower will, and will cause
each of the Subsidiaries to, maintain, with financially sound and reputable
insurance companies with AM Best's rating of A minus (A-) or better, All-Risk
property insurance for the full replacement value of all property and other
insurance, including public liability insurance against claims for personal
injury, death or property damage occurring upon, about or in connection with the
use of
47
any properties owned, occupied or controlled by it as well as such other
insurance as may be required by law.
(b) All policies of All-Risk property insurance maintained by
or for the benefit of the Borrower with respect to the Collateral shall be (i)
maintained in an amount not less than the full replacement value of all property
thereof, with deductibles or self insured retention not exceeding $75,000, and
(ii) endorsed or otherwise amended to include a "standard" or "New York"
lender's loss payable endorsement, in favor of and satisfactory to the
Collateral Agent, which endorsement shall provide that the insurance carrier
shall pay all proceeds otherwise payable to any Loan Party under such policies
directly to the Collateral Agent. All such policies also shall provide that
none of the Borrower, the Administrative Agent, the Collateral Agent nor any
other party shall be a coinsurer thereunder and shall contain a "Replacement
Cost Endorsement", without any deduction for depreciation, "mortgagee's
interest"/"breach of warranty coverage" and such other provisions as the
Administrative Agent or the Collateral Agent may reasonably require from time to
time to protect the interests of the Lenders. Each such policy also shall
provide that it shall not be canceled (i) by reason of nonpayment of premium
except upon not less than 10 days' prior written notice thereof by the insurer
to the Administrative Agent and the Collateral Agent (giving the Administrative
Agent and the Collateral Agent the right to cure defaults in the payment of
premiums) or (ii) for any other reason except upon not less than 30 days' prior
written notice thereof by the insurer to the Administrative Agent and the
Collateral Agent. The Borrower shall deliver to the Administrative Agent and
the Collateral Agent, upon not less than 30 days' prior written notice to the
cancellation, modification or nonrenewal of any such policy of insurance, a copy
of a renewal or replacement policy (or other evidence of renewal of a policy
previously delivered to the Administrative Agent and the Collateral Agent)
together with evidence satisfactory to the Administrative Agent and the
Collateral Agent of payment of the premium therefor.
(c) The Borrower shall notify the Administrative Agent and the
Collateral Agent immediately whenever any separate insurance concurrent in form
or contributing in the event of loss with that required to be maintained under
this Section is taken out by any Loan Party, and shall promptly deliver to the
Administrative Agent and the Collateral Agent a duplicate original copy of such
policy or policies.
Section 5.08. BOOKS AND RECORDS; INSPECTION RIGHTS. Each of the
Parent and the Borrower will, and will cause each of the Subsidiaries to, keep
proper books of record and account in which full, true and correct entries are
made of all material dealings and transactions in relation to their business and
activities. Each of the Parent and the Borrower will, and will cause each of
the Subsidiaries to, permit any representatives designated by either Agent or
any Lender, at such Agent's or Lender's expense (unless an Event of Default has
occurred and is continuing, in which case at Borrower's expense) upon reasonable
prior notice, to visit and inspect its properties, to examine and make extracts
from its books and records, and to discuss its affairs, finances and condition
with its officers and independent accountants, all at such reasonable times and
as often as reasonably requested. Any such inspection shall be subject to the
confidentiality restrictions set forth in Section 9.12.
Section 5.09. COMPLIANCE WITH LAWS AND AGREEMENTS. Each of the
Parent and the Borrower will, and will cause each of the Subsidiaries to, comply
with all laws, rules,
48
regulations and orders of any Governmental Authority (including ERISA and all
Environmental Laws) applicable to it or its property and all indentures,
agreements and other instruments binding upon it or its property, except where
the failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.
Section 5.10. USE OF PROCEEDS. The proceeds of the Loans will be
used solely to make payments of the Purchase Price and Permitted Expenses
including up to $200,000 to cover the value of equipment shipped to the Borrower
prior to the date of this Agreement and which will be included under the Supply
Agreement.
Section 5.11. FURTHER ASSURANCES. Each of the Parent and the
Borrower will, and will cause each other Loan Party to, execute any and all
further documents, financing statements, agreements and instruments, and take
all such further actions (including the filing and recording of financing
statements, fixture filings and other documents), which may be required under
any applicable law, or which either Agent or the Required Lenders may reasonably
request, to effectuate the transactions contemplated by the Loan Documents or to
grant, preserve, protect or perfect the Liens created or intended to be created
by the Security Documents or the validity or priority of any such Lien, all at
the expense of the Borrower. The Borrower also agrees to provide to either
Agent, upon request, evidence reasonably satisfactory to such Agent as to the
perfection and priority of the Liens created or intended to be created by the
Security Documents.
Section 5.12. CASUALTY AND CONDEMNATION.
(a) The Borrower will furnish to the Agents and the Lenders
prompt notice of any casualty or other damage to any portion of the Collateral
having a value in excess of $50,000 or the commencement of any action or
proceeding for the taking of any Collateral or any part thereof or interest
therein under power of eminent domain or by condemnation or similar proceeding.
(b) If any event described in paragraph (a) of this Section
results in Net Proceeds (whether in the form of insurance proceeds, condemnation
award or otherwise), the Collateral Agent is authorized to collect such Net
Proceeds and, if received by the Parent, the Borrower or any other Subsidiary,
such Net Proceeds shall be paid over to the Collateral Agent. All such Net
Proceeds retained by or paid over to the Collateral Agent shall be held by the
Collateral Agent and released from time to time to pay the costs of repairing,
restoring or replacing the affected property in accordance with the terms of
this Agreement and the applicable provisions of the Security Documents, subject
to the provisions of the Security Documents regarding application of such Net
Proceeds during a Default.
(c) If any Net Proceeds retained by or paid over to the
Collateral Agent as provided above continue to be held by the Collateral Agent
on the date that any prepayment is due pursuant to Section 2.09(b) in respect of
the event resulting in such Net Proceeds, then such Net Proceeds shall be
applied to prepay Borrowings as provided in Section 2.09(b).
Section 5.13. INTEREST RATE PROTECTION. If at any time, the
Borrower or any Subsidiary shall agree to enter into or maintain or shall enter
into any Hedging Agreement in order to limit the interest cost risk to the
Borrower and Subsidiaries related to any Indebtedness
49
other than the Loans, the Borrower will from time to time thereafter enter into
and maintain in effect one or more Hedging Agreements with respect to the
Indebtedness represented by the Loans reasonably satisfactory to the Required
Lenders on terms and conditions comparable to such other Hedging Agreement. The
Borrower agrees upon request to consult from time to time with the
Administrative Agent regarding the advisability of entering into Hedging
Agreements.
Section 5.14. EXECUTION OF PLEDGE AGREEMENT (BORROWER); SUBSIDIARY
GUARANTORS; ADDITIONAL SECURITY DOCUMENTS.
(a) Upon the formation the first Subsidiary to be formed or the
acquisition by the Borrower of a Person that as a result becomes the first
Subsidiary, the Borrower will (i) deliver an executed counterpart of the Pledge
Agreement (Borrower) signed on behalf of the Borrower to the Collateral Agent,
(ii) cause legal counsel to deliver opinions as to the enforceability thereof,
the creation and perfection of Liens thereunder and such other matters as the
Collateral Agent and the Required Lenders reasonably may request, and (iii) take
all other actions as the Collateral Agent or the Required Lenders reasonably may
require in connection therewith.
(b) If any Subsidiary of the Borrower is formed or acquired
after the date hereof, the Borrower will notify the Administrative Agent and the
Lenders thereof and will cause such Subsidiary to become a party to the
Guarantee Agreement and the Indemnity and Contribution Agreement promptly, and
in any event within five Business Days, thereafter. At the time of such
formation or acquisition, the Borrower (i) will cause such Subsidiary to enter
into a pledge agreement, security agreement or other additional Security
Documents in favor of the Collateral Agent, in form and substance satisfactory
to the Required Lenders, to obtain all necessary consents and to take all other
actions necessary or appropriate to create and perfect Liens upon the assets of
such Subsidiary, (ii) will cause legal counsel to deliver opinions as to the
enforceability of such Security Documents, the creation and perfection of Liens
thereunder and such other matters as the Collateral Agent and the Required
Lenders reasonably may request, (iii) cause any Persons other than the Borrower
that owns or will acquire any equity interest in such Subsidiary to enter into a
pledge agreement in favor of the Collateral Agent, in form and substance
satisfactory to the Required Lenders, to obtain all necessary consents and to
take all other actions necessary or appropriate to create and perfect Liens upon
such equity interest, and (iv) will take, or cause such Person and its officers,
to take such other actions as the Collateral Agent or the Required Lenders
reasonably may require in connection therewith.
ARTICLE VI
NEGATIVE COVENANTS
Until the Commitments have expired or terminated and the principal
of and interest on each Loan and all fees payable hereunder have been paid in
full, each of the Parent and the Borrower covenants and agrees with the Lenders
that:
50
Section 6.01. Indebtedness. The Borrower and until the Partial
Termination Date, the Parent will not, and neither the Parent nor the Borrower
will permit any Subsidiary to, create, incur, assume or permit to exist any
Indebtedness, except:
(i) Indebtedness created under the Loan Documents;
(ii) subject to Section 6.04, Indebtedness of the Borrower to
any Subsidiary, and of any Subsidiary to the Borrower or any other
Subsidiary;
(iii) Indebtedness outstanding on the date hereof and set forth
on Schedule 6.01;
(iv) Indebtedness of the Borrower or any Subsidiary incurred
after the date of this Agreement to finance the acquisition of any
equipment, inventory or general intangibles, or the acquisition,
improvement or construction of any real property, by Borrower or such
Subsidiary (other than assets constituting Collateral or other assets the
removal or loss of which would adversely affect the value of any assets
constituting Collateral), including Capital Lease Obligations and any
Indebtedness assumed in connection with the acquisition of any such
assets or secured by a Lien on any such assets prior to the acquisition
thereof; PROVIDED that (A) any Indebtedness described in this clause (iv)
incurred in connection with any particular acquisition, improvement or
construction shall be incurred prior to or within 90 days after the
acquisition or the completion of such improvement or construction, as the
case may be, (B) any Indebtedness described in this clause (iv) incurred
in connection with any particular acquisition, improvement or
construction shall not exceed the cost of such acquisition, improvement
or construction and (C) the aggregate amount of all Indebtedness
described in this clause (iv) and Indebtedness set forth on Schedule 6.01
shall not any time exceed the lesser of (I) $[ * ] and (II) the
[ * ];
(v) Indebtedness of the Borrower incurred to refinance any
Indebtedness referred to in clause (iii) or (iv) above, Indebtedness of
any Subsidiary incurred to refinance any Indebtedness of such Subsidiary
referred to in clause (iii) or (iv) above, and until the Partial
Termination Date, Indebtedness of the Parent incurred to refinance any
Indebtedness referred to in clause (viii) below; PROVIDED that (A) the
principal amount of any Indebtedness described in this clause (v) shall
not exceed the principal amount of, plus accrued interest and any
prepayment premiums applicable to, the Indebtedness refinanced thereby,
(B) any Indebtedness described in this clause (v) shall have a scheduled
maturity date that is on or after the scheduled maturity date of the
Indebtedness refinanced thereby, (C) any Indebtedness described in this
clause (v) shall have a weighted average life to maturity that is equal
to or longer than the remaining weighted average life to maturity of the
Indebtedness refinanced thereby (determined immediately prior to giving
effect to such refinancing), (D) any Indebtedness described in this
clause (v) shall not include any provisions that may require mandatory
Repayment thereof prior to scheduled maturity, other than scheduled
repayments taken into account in determining compliance with clause (C)
above and other provisions that are not materially more burdensome than
any such provisions included in the Indebtedness refinanced thereby,
* INDICATES CONFIDENTIAL TREATMENT REQUESTED
51
and (D) any Indebtedness described in this clause (v) shall not be
secured by any Lien other than Liens on assets securing the Indebtedness
being refinanced thereby and shall not be Guaranteed by any Subsidiary
other than any Subsidiary that Guaranteed the Indebtedness being
refinanced;
(vi) Subordinated Indebtedness;
(vii) until the Partial Termination Date, Indebtedness of the
Parent subordinated in right of payment to the payment of the Obligations
upon terms and conditions satisfactory to the Required Lenders; and
(viii) until the Partial Termination Date, Indebtedness of the
Parent incurred after the date of this Agreement to finance the
acquisition of any equipment, inventory or general intangibles, or the
acquisition, improvement or construction of any real property, by Parent
(other than assets constituting Collateral or other assets the removal or
loss of which would adversely affect the value of any assets constituting
Collateral), including Capital Lease Obligations and any Indebtedness
assumed in connection with the acquisition of any such assets or secured
by a Lien on any such assets prior to the acquisition thereof; PROVIDED
that (A) any Indebtedness described in this clause (viii) incurred in
connection with any particular acquisition, improvement or construction
shall be incurred prior to or within 90 days after the acquisition or the
completion of such improvement or construction, as the case may be, (B)
any Indebtedness described in this clause (viii) incurred in connection
with any particular acquisition, improvement or construction shall not
exceed the cost of such acquisition, improvement or construction and (C)
the aggregate amount of all Indebtedness described in this clause (viii)
shall not any time exceed $[ * ].
Section 6.02. LIENS. The Borrower and until the Partial
Termination Date, the Parent will not, and neither the Parent nor the Borrower
will permit any Subsidiary to, create, incur, assume or permit to exist any Lien
on any property or asset now owned or hereafter acquired by it, or assign or
sell any income or revenues (including accounts receivable) or rights in respect
of any thereof, except:
(i) Liens created under the Security Documents;
(ii) Permitted Encumbrances;
(iii) any Lien on any property or asset of the Parent, the
Borrower or any Subsidiary existing on the date hereof and set forth in
Schedule 6.02; PROVIDED that (A) such Lien shall not apply to any other
property or asset of the Parent, the Borrower or any Subsidiary and (B)
such Lien shall secure only those obligations which it secures on the
date hereof; and
(iv) Liens on equipment, inventory, general intangibles or real
property (other than assets constituting Collateral or other assets that
become accessions to assets constituting Collateral or the removal or
loss of which would adversely affect the value of any assets constituting
Collateral) acquired, constructed or improved by the Parent, the Borrower
or a Subsidiary; provided that (A) such Liens secure only Indebtedness
* INDICATES CONFIDENTIAL TREATMENT REQUESTED
52
permitted by clause (iv) (or until the Partial Termination Date, clause
(viii)) of Section 6.01 or a refinancing thereof permitted by clause (v)
of Section 6.01, (B) such Liens and the Indebtedness secured thereby are
incurred prior to or within 90 days after such acquisition, construction
or improvement of such equipment, inventory, general intangibles or real
property, (C) the Indebtedness secured thereby does not exceed 100% of
the cost of acquiring such equipment, inventory or general intangibles or
acquiring, constructing or improving such real property and (D) such
Liens shall not apply to any other property or assets of the Borrower or
any Subsidiary (or until the Partial Termination Date, the Parent).
Notwithstanding the foregoing, the Borrower will not, and it will not permit any
Subsidiary to, create, incur, assume or permit to exist any Lien on any
Collateral consisting of equipment acquired under the Supply Agreement except
(i) Liens created under the Security Documents and (ii) Liens described in the
definition of clauses (a) and (b) of Permitted Encumbrances.
Section 6.03. FUNDAMENTAL CHANGES.
(a) Neither the Parent nor the Borrower will, and neither of
them will permit any Subsidiary to, merge into or consolidate with any other
Person, or permit any other Person to merge into or consolidate with it, or
sell, transfer, lease or otherwise dispose of (in one transaction or in a series
of transactions) all or substantially all of its assets, or all or substantially
all of the stock of any of its Subsidiaries (in each case, whether now owned or
hereafter acquired), or liquidate or dissolve, except that, if at the time
thereof and immediately after giving effect thereto no Default shall have
occurred and be continuing (i) the Parent may merge with or into any other
Person so long as the Parent is the surviving entity, (ii) the Borrower may
merge with or into any other Person so long as the Borrower is the surviving
entity and remains a wholly owned subsidiary of the Parent, (iii) any Subsidiary
may merge with or into any other wholly owned Subsidiary in a transaction in
which the surviving entity is a Subsidiary and any Subsidiary may merge with or
into Borrower in a transaction in which the Borrower is the surviving entity,
(iv) any Subsidiary may sell, transfer, lease or otherwise dispose of its assets
to the Borrower or to another Subsidiary and (v) any Subsidiary may liquidate or
dissolve if the Borrower determines in good faith that such liquidation or
dissolution is in its best interests and is not disadvantageous to the Lenders.
(b) Neither the Parent nor the Borrower will, and neither of
them will permit any Subsidiary to, and the Parent will not permit any of its
other subsidiaries, to engage to any material extent in any business other than
a Qualifying Business and any businesses incidental, related or ancillary to, or
which are entered into as a means of facilitating or enhancing, any of the
foregoing.
Section 6.04. INVESTMENTS, LOANS, ADVANCES, GUARANTEES AND
ACQUISITIONS; ASSET SALES.
(a) The Borrower will not, and neither the Parent nor the
Borrower will permit any Subsidiary to, purchase, hold or acquire (including
pursuant to any merger with any Person that was not a wholly owned Subsidiary
prior to such merger) any capital stock, evidences of indebtedness or other
securities (including any option, warrant or other right to
53
acquire any of the foregoing) of, make or permit to exist any loans or advances
to, Guarantee any obligations of, or make or permit to exist any investment or
any other interest in, any other Person, or purchase or otherwise acquire (in
one transaction or a series of transactions) any assets of any other Person
constituting a business unit, except:
(i) Permitted Investments;
(ii) investments by the Borrower in the capital stock of the
Subsidiaries and investments by any Subsidiary in the capital stock of
other Subsidiaries;
(iii) loans or advances made by the Borrower to any Subsidiary or
made by any Subsidiary to the Borrower or any other Subsidiary; PROVIDED
that any such Indebtedness shall be subordinated to the Obligations of
the Borrower or the Subsidiary, as applicable, pursuant to a written
subordination agreement in form and substance satisfactory to the
Required Lenders;
(iv) investments received in connection with the bankruptcy or
reorganization of, or settlement of delinquent accounts and disputes
with, customers and suppliers, in each case in the ordinary course of
business;
(v) (A) payroll, travel and similar advances made in the
ordinary course of business that are expected at the time such advances
are made ultimately to be treated as expenses in accordance with GAAP and
(B) other loans and advances by the Borrower or any Subsidiary to their
respective directors, officers or employees in an aggregate principal
amount not exceeding $400,000 at any one time outstanding;
(vi) investments existing on the date hereof and set forth on
Schedule 6.04; and
(vii) Guarantees pursuant to the Loan Documents.
(b) The Borrower will not, and neither the Parent nor the
Borrower will permit any Subsidiary to, sell, transfer, lease or otherwise
dispose of any asset, including any capital stock of or ownership interest in
any other Person owned by it, and the Borrower will not permit any Subsidiary to
issue (other than to the Borrower or a wholly owned Subsidiary) any additional
shares of its capital stock or other ownership interest in such Subsidiary,
except:
(i) transfers constituting investments permitted by paragraph
(a) of this Section or Restricted Payments permitted by Section 6.06;
(ii) sales, transfers and dispositions to the Borrower or a
Subsidiary;
(iii) sales, transfers and dispositions of obsolete, uneconomic
or surplus assets made when no Default has occurred and is continuing;
(iv) dispositions of inventory (other than equipment) in the
ordinary course of business; and
54
(v) non-exclusive licenses of software to customers of the
Borrower or any Subsidiary in the ordinary course of business.
PROVIDED that all sales, transfers, leases and other dispositions permitted
hereby (other than pursuant to clause (iii) above) shall be made for fair value
and solely for cash consideration.
(c) Until the Partial Termination Date, the Parent will not
purchase, hold or acquire (including pursuant to any merger with any Person that
was not a wholly owned subsidiary prior to such merger) any capital stock,
evidences of indebtedness or other securities (including any option, warrant or
other right to acquire any of the foregoing) of, make or permit to exist any
loans or advances to, Guarantee any obligations of, or make or permit to exist
any investment or any other interest in, any other Person, or purchase or
otherwise acquire (in one transaction or a series of transactions) any assets of
any other Person constituting a business unit, except:
(i) Permitted Investments;
(ii) investments in the capital stock of the Borrower or the
Subsidiaries;
(iii) loans or advances made to the Borrower or any Subsidiary;
(iv) investments in the capital stock of or other equity
interests in, and loans and advances to, any Person (other than the
Borrower and the Subsidiaries) provided that the aggregate amount of such
investments, loans and advances made shall not exceed the amount of the
aggregate net cash proceeds of the issuance and sale after the date
hereof by the Parent of any of its capital stock or any Indebtedness
incurred pursuant to Section 6.01(vii).
(v) investments received in connection with the bankruptcy or
reorganization of, or settlement of delinquent accounts and disputes
with, customers and suppliers, in each case in the ordinary course of
business;
(vi) (A) payroll, travel and similar advances made in the
ordinary course of business that are expected at the time such advances
are made ultimately to be treated as expenses in accordance with GAAP and
(B) other loans and advances by the Parent to its directors, officers or
employees, PROVIDED that the aggregate principal amount of loans and
advances of the type described under this clause (vi) and Section
6.04(a)(v) at any one time outstanding shall not exceed $400,000;
(vii) Guarantees by the Parent of the obligations (other than
Indebtedness) of any subsidiary of the Parent required by any
Governmental Authority in connection with the application by such
subsidiary for certification as a competitive local exchange carrier; and
(viii) Guarantees by the Parent pursuant to the Loan Documents.
55
(d) Until the Partial Termination Date, the Parent will not
sell, transfer, lease or otherwise dispose of any asset, including any capital
stock of or ownership interest in any other Person owned by it, except:
(i) transfers constituting investments permitted by paragraph
(c) of this Section;
(ii) sales, transfers and dispositions to the Borrower or a
Subsidiary;
(iii) sales, transfers and dispositions of obsolete, uneconomic
or surplus assets made when no Default has occurred and is continuing;
(iv) dispositions of inventory (other than equipment) in the
ordinary course of business; and
(v) non-exclusive licenses of software to customers of the
Parent in the ordinary course of business;
PROVIDED that all sales, transfers, leases and other dispositions permitted
pursuant to clauses (i) and (iv) above shall be made for fair value and solely
for cash consideration and all sales, transfers, leases and other dispositions
permitted pursuant to clause (ii) shall be made solely for capital stock or
Indebtedness of the Borrower.
(e) The Parent will not sell, transfer, lease or otherwise
dispose of any capital stock, ownership interest or other investment in the
Borrower owned by it, or permit the Borrower to issue any capital stock to any
Person other than the Parent.
Section 6.05. HEDGING AGREEMENTS. The Borrower will not, and
neither the Parent nor the Borrower will permit any Subsidiary to, enter into
any Hedging Agreement, other than Hedging Agreements required by Section 5.13
and other Hedging Agreements entered into in the ordinary course of business to
hedge or mitigate risks to which the Borrower or any Subsidiary is exposed in
the conduct of its business or the management of its liabilities.
Section 6.06. RESTRICTED PAYMENTS. The Borrower will not, and
neither the Parent nor the Borrower will permit any Subsidiary to, declare or
make, or agree to pay or make, directly or indirectly, any Restricted Payment,
except (i) the Borrower may make Restricted Payments to the Parent (x) in
additional shares of its common stock or Permitted Preferred Stock (including
options, warrants and other rights to purchase shares of such common stock or
Permitted Preferred Stock), and (y) in cash in an amount not exceeding any
amount that shall be then due and payable by the Borrower in respect of any
Subordinated Indebtedness, provided that any such Restricted Payment may be made
only to the extent that such amount then due and payable may be paid by the
Borrower in compliance with the subordination agreement applicable to the
payment of such Subordinated Indebtedness, and (ii) Subsidiaries may make
Restricted Payments to the Borrower or other wholly owned Subsidiaries. Until
the Partial Termination Date, the Parent will not declare or make, or agree to
pay or make, directly or indirectly, any Restricted Payment.
56
Section 6.07. TRANSACTIONS WITH AFFILIATES. The Borrower will
not, and neither the Parent nor the Borrower will permit any Subsidiary 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 (a) transactions that are
at prices and on terms and conditions not less favorable to the Borrower or such
Subsidiary than could be obtained on an arm's-length basis from unrelated third
parties, (b) transactions between or among the Borrower and the Subsidiaries not
involving any other Affiliate; and (c) pursuant to the Administrative
Agreement.
Section 6.08. RESTRICTIVE AGREEMENTS. The Borrower will not, and
neither the Parent nor the Borrower will permit any 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 the ability
of any 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 the
Borrower or to Guarantee Indebtedness of the Borrower; PROVIDED that (a) the
foregoing shall not apply to restrictions and conditions imposed by law or by
any Loan Document and (b) the foregoing shall not apply to restrictions and
conditions existing on the date hereof identified on Schedule 6.08 (but shall
apply to any extension or renewal of, or any amendment or modification expanding
the scope of, any such restriction or condition).
Section 6.09. REPAYMENT OF INDEBTEDNESS. The Borrower will not
make any Repayment in respect of any Subordinated Indebtedness in violation of
the subordination agreement applicable to the payment of such Subordinated
Indebtedness.
Section 6.10. LIMITATION ON SALE-LEASEBACK TRANSACTIONS. The
Borrower will not, and neither the Parent nor the Borrower will permit any
Subsidiary to, enter into any arrangement, directly or indirectly, 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 that it intends to use for substantially the
same purpose or purposes as the property sold or transferred, except for any
such sale of any fixed or capital asset that is made for cash consideration in
an amount not less than the cost of such fixed or capital asset and is
consummated within 90 days after the Borrower or such Subsidiary acquires or
completes the construction of such fixed or capital asset.
Section 6.11. SENIOR INDEBTEDNESS TO TOTAL CAPITALIZATION.
Neither the Parent nor the Borrower will permit the ratio of Senior Indebtedness
to Total Capitalization at any time during any period set forth below to be
greater than the ratio set forth below opposite such period:
Period Ratio
------ -----
On or after the Effective Date, but prior to [ * ]
March 31, 2001
On or after March 31, 2001, but prior to [ * ]
* INDICATES CONFIDENTIAL TREATMENT REQUESTED
57
Period Ratio
------ -----
June 30, 2003
On or after June 30, 2003, but prior to [ * ]
December 31, 2003
On or after December 31, 2003, but prior [ * ]
to March 31, 2004
On or after March 31, 2004, but prior [ * ]
to June 30, 2004
On or after June 30, 2004, but prior [ * ]
to March 30, 2005
On or after March 30, 2005 [ * ]
Section 6.12. CONSOLIDATED INDEBTEDNESS TO TOTAL CAPITALIZATION.
Neither the Parent nor the Borrower will permit the ratio of Consolidated
Indebtedness to Total Capitalization at any time during any period set forth
below to be greater than the ratio set forth below opposite such period:
Period Ratio
------ -----
On or after the Effective Date, but prior [ * ]
to March 31, 2000
On or after March 31, 2000, but prior [ * ]
to March 31, 2001
On or after March 31, 2001, but prior [ * ]
to June 30, 2003
On or after June 30, 2003 [ * ]
Section 6.13. CONSOLIDATED INDEBTEDNESS TO ANNUALIZED EBITDA.
Neither the Parent nor the Borrower will permit the ratio of (a) Consolidated
Indebtedness to (b) Annualized EBITDA at any time during any period set forth
below to be greater than the ratio set forth below opposite such period:
Period Ratio
------ -----
On or after September 30, 2001, but prior [ * ]
* INDICATES CONFIDENTIAL TREATMENT REQUESTED
58
Period Ratio
------ -----
to December 31, 2001
On or after December 31, 2001, but prior [ * ]
to September 30, 2002
On or after September 30, 2002, but prior [ * ]
to December 31, 2002
On or after December 31, 2002 [ * ]
Section 6.14. SENIOR INDEBTEDNESS TO ANNUALIZED EBITDA. Neither
the Parent nor Borrower will permit the ratio of (a) Senior Indebtedness to (b)
Annualized EBITDA at any time during any period set forth below to be greater
than the ratio set forth below opposite such period:
Period Ratio
------ -----
On or after June 30, 2001, but prior to [ * ]
September 30, 2001
On or after September 30, 2001, but prior [ * ]
to December 31, 2001
On or after December 31, 2001, but prior [ * ]
to September 30, 2002
On or after September 30, 2002, but prior [ * ]
to December 31, 2002
On or after December 31, 2002, but prior [ * ]
to June 30, 2003
On or after June 30, 2003 [ * ]
Section 6.15. ANNUALIZED EBITDA TO CONSOLIDATED INTEREST EXPENSE.
Neither the Parent nor the Borrower will permit the ratio of (a) Annualized
EBITDA to (b) Consolidated Interest Expense for the period of four fiscal
quarters then most recently ended at any time during any period set forth below
to be less than the ratio set forth below opposite such period:
Period Ratio
------ -----
On or after June 30, 2001, but prior to [ * ]
* INDICATES CONFIDENTIAL TREATMENT REQUESTED
59
Period Ratio
------ -----
September 30, 2001
On or after September 30, 2001, but prior [ * ]
to December 31, 2001
On or after December 31, 2001, but prior [ * ]
to September 30, 2002
On or after September 30, 2002, but prior [ * ]
to June 30, 2004
On or after June 30, 2004 [ * ]
Section 6.16. ANNUALIZED EBITDA TO CONSOLIDATED DEBT SERVICE.
Neither the Parent nor the Borrower will permit the ratio of (a) Annualized
EBITDA to (b) Consolidated Debt Service for the period of four fiscal quarters
then most recently ended at any time during any period set forth below to be
less than the ratio set forth below opposite such period:
Period Ratio
------ -----
On or after June 30, 2001, but prior to [ * ]
September 30, 2001
On or after September 30, 2001, but prior [ * ]
to December 31, 2001
On or after December 31, 2001 [ * ]
Section 6.17. CONSOLIDATED GROSS REVENUES. Neither the Parent nor
the Borrower will permit Consolidated Gross Revenues for any 12-calendar month
period ended on any date set forth below to be less than the amount set forth
below opposite such date:
December 31, 1999 [ * ]
March 31, 2000 [ * ]
June 30, 2000 [ * ]
September 30, 2000 [ * ]
December 31, 2000 [ * ]
* INDICATES CONFIDENTIAL TREATMENT REQUESTED
60
March 31, 2001 [ * ]
June 30, 2001 [ * ]
September 30, 2001 [ * ]
December 31, 2001 [ * ]
March 31, 2002 [ * ]
June 30, 2002 [ * ]
September 30, 2002 [ * ]
December 31, 2002 [ * ]
Section 6.18. MINIMUM SUBSCRIBERS. Neither the Parent nor the
Borrower will permit the minimum number of Subscribers as of any date set forth
below to be less than the number set forth opposite such date:
Date Number
---- ------
September 30, 1999 [ * ]
December 31, 1999 [ * ]
March 31, 2000 [ * ]
June 30, 2000 [ * ]
September 30, 2000 [ * ]
December 31, 2000 [ * ]
March 31, 2001 [ * ]
June 30, 2001 [ * ]
September 30, 2001 [ * ]
December 31, 2001 [ * ]
March 31, 2002 [ * ]
June 30, 2002 [ * ]
September 30, 2002 [ * ]
* INDICATES CONFIDENTIAL TREATMENT REQUESTED
61
December 31, 2002 [ * ]
Section 6.19. CONSOLIDATED PARENT INDEBTEDNESS TO TOTAL PARENT
CAPITALIZATION. The Parent will not permit the ratio (a) of Consolidated Parent
Indebtedness to (b) Total Parent Capitalization at any time during any period
set forth below to be greater than the ratio set forth below opposite such
period:
Period Ratio
------ -----
On or after the Effective Date, but
prior to March 31, 2000 [ * ]
On or after March 31, 2000, but
prior to June 30, 2001 [ * ]
On or after June 30, 2001, but
prior to June 30, 2003 [ * ]
On or after June 30, 2003 [ * ]
Section 6.20. CONSOLIDATED PARENT INDEBTEDNESS TO ANNUALIZED
PARENT EBITDA. The Parent will not permit the ratio of (a) Consolidated
Parent Indebtedness to (b) Annualized Parent EBITDA at any time during any
period set forth below to exceed the ratio set forth below opposite such
period:
Period Ratio
------ -----
On or after September 30, 2001, but
prior to June 30, 2002 [ * ]
On or after June 30, 2002, but
prior to June 30, 2003 [ * ]
On or after June 30, 2003 [ * ]
Section 6.21. USE OF COLLATERAL.
(a) Except as otherwise provided in clause (b) of this Section
6.21, neither the Parent nor the Borrower will permit, and neither of them will
permit any Subsidiary to permit, any tangible asset constituting Collateral to
be located (i) outside a Permitted UCC Jurisdiction, (ii) outside the possession
of the Borrower or a Subsidiary or (iii) on any property not (A) owned by the
Borrower or a Subsidiary or (B) leased by the Borrower or a Subsidiary (or
subject to an
* INDICATES CONFIDENTIAL TREATMENT REQUESTED
62
interconnection agreement granting rights to the Borrower or Subsidiary
substantially similar to a lease) from a Person that has not delivered a
Landlord Letter to the Agents.
(b) The Parent or the Borrower may permit, and either of them
may permit any Subsidiary to permit, (i) Collateral other than Lucent Product to
be in the possession of or located on property owned or leased by the Parent (or
subject to an interconnection agreement granting rights to the Parent
substantially similar to a lease) until the Partial Termination Date; (ii)
Borrower-Related Collateral to be in the possession of the Parent and located on
property owned or leased by the Parent; and (iii) Collateral other than Lucent
Product to be located at the principal office of the Parent and the Borrower
without the delivery by the lessor of such property of a Landlord Letter to the
Agents.
(c) This Section 6.21 shall not be construed to prohibit (i)
the return of any asset constituting Collateral to the vendor thereof for
repairs, services, modifications or other similar purposes or (ii) the storage
of any asset constituting Collateral in any warehouse or similar facility.
(d) Neither the Parent nor the Borrower will permit any asset
constituting Collateral to be located outside a Permitted UCC Jurisdiction
unless (i) the Parent or the Borrower shall have notified the Lenders thereof
reasonably in advance of any such assets being transferred outside the Permitted
UCC Jurisdiction and (ii) the Required Lenders shall be reasonably satisfied
that (A) the laws of the jurisdiction in which such assets are to be located
adequately protect the interests of the Lenders in such Collateral, (B) the
security interests in such Collateral granted under the Security Documents will
continue to be adequately protected and perfected, (C) there are not any
material risks relating to the political or economic stability of the
jurisdiction in which such Collateral is to be located or the Person that will
possess such Collateral in such jurisdiction, and (D) the location of such
Collateral in such jurisdiction is not otherwise materially disadvantageous to
the Lenders. The Borrower shall deliver to the Lenders, with a copy to the
Agents, such legal opinions and other documentation as either Agent or the
Required Lenders shall reasonably request in connection with their consideration
or approval of any proposed transfer of Collateral outside a Permitted UCC
Jurisdiction.
ARTICLE VII
EVENTS OF DEFAULT
If any of the following events ("EVENTS OF DEFAULT") shall occur:
(a) the Borrower shall fail to pay any principal of any Loan
when and as the same shall become due and payable, whether at the due date
thereof or at a date fixed for prepayment thereof or otherwise;
(b) the Borrower shall fail to pay any interest on any Loan or
any fee or any other amount (other than an amount referred to in clause (a) of
this Article) payable under this Agreement, when and as the same shall become
due and payable, and such failure shall continue unremedied for a period of five
days (in the case of interest or fees) or five days after notice thereof from
the Administrative Agent or any Lender (in the case of any such other amount);
63
(c) any representation or warranty made or deemed made by or on
behalf of any Loan Party in or in connection with any Loan Document or any
amendment or modification thereof or waiver thereunder, or in any report,
certificate, financial statement or other document furnished pursuant to or in
connection with any Loan Document or any amendment or modification thereof or
waiver thereunder, shall prove to have been incorrect in any respect (or, in the
case of any representation or warranty that is not qualified as to materiality,
in any material respect) when made or deemed made;
(d) the Parent or the Borrower shall fail to observe or perform
any covenant, condition or agreement contained in Section 5.02(a)(i), 5.04 (with
respect to the legal existence of the Parent or the Borrower and subject to the
proviso contained therein) or 5.10 or in Article VI;
(e) any Loan Party shall fail to observe or perform any
covenant, condition or agreement contained in any Loan Document (other than
those specified in clause (a), (b) or (d) of this Article), and such failure
shall continue unremedied for a period of 30 days after notice thereof from the
Administrative Agent to the Borrower (which notice will be given at the request
of any Lender);
(f) any Loan Party shall 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 period of grace expressly applicable thereto);
(g) any event or condition occurs that results in any Material
Indebtedness becoming due prior to its scheduled maturity or that enables or
permits (after giving effect to any period of grace expressly applicable
thereto) the holder or holders of any Material Indebtedness or any trustee or
agent on its or their behalf to cause any Material Indebtedness to become due,
or to require the prepayment, repurchase, redemption or defeasance thereof,
prior to its scheduled maturity; PROVIDED that this clause (g) shall not apply
to secured Indebtedness that becomes due as a result of the voluntary sale or
transfer of the property or assets securing such Indebtedness;
(h) an involuntary proceeding shall be commenced or an
involuntary petition shall be filed seeking (i) liquidation, reorganization or
other relief in respect of the Parent, the Borrower or any Subsidiary or its
debts, or of a substantial part of its assets, under any Federal, state or
foreign bankruptcy, insolvency, receivership or similar law now or hereafter in
effect or (ii) the appointment of a receiver, trustee, custodian, sequestrator,
conservator or similar official for the Parent, the Borrower or any Subsidiary
or for a substantial part of its assets, and, in any such case, such proceeding
or petition shall continue undismissed for 60 days or an order or decree
approving or ordering any of the foregoing shall be entered;
(i) the Parent, the Borrower or any Subsidiary shall (i)
voluntarily commence any proceeding or file any petition seeking liquidation,
reorganization or other relief under any Federal, state or foreign bankruptcy,
insolvency, receivership or similar law now or hereafter in effect, (ii) consent
to the institution of, or fail to contest in a timely and appropriate manner,
any proceeding or petition described in clause (h) of this Article, (iii) apply
for or consent to the appointment of a receiver, trustee, custodian,
sequestrator, conservator or similar official for the
64
Parent, the Borrower or any Subsidiary or for a substantial part of its assets,
(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;
(j) the Parent, the Borrower or any Subsidiary shall become
unable, admit in writing its inability or fail generally to pay its debts as
they become due;
(k) one or more judgments for the payment of money in an
aggregate amount in excess of $500,000 shall be rendered against the Parent, the
Borrower or any Subsidiary or any combination thereof and the same shall remain
undischarged for a period of 30 consecutive days during which execution shall
not be effectively stayed, or any action shall be legally taken by a judgment
creditor to attach or levy upon any assets of the Parent, the Borrower or any
Subsidiary to enforce any such judgment;
(l) any Lien on any material portion of the Collateral
purported to be created under the Security Documents shall cease to be, or shall
be asserted by the Parent, the Borrower or any Subsidiary not to be, a valid and
perfected Lien on any Collateral, with the priority required by the Security
Documents, except as a result of the sale or other disposition of the applicable
Collateral in a transaction permitted under the Loan Documents;
(m) a Change in Control shall occur;
(n) the loss, revocation, suspension or material impairment of
any license or agreement (or combination of licenses and agreements) of (i) the
Parent or (ii) the Borrower and the Subsidiaries shall occur that results in or
could reasonably be expected to result in a Material Adverse Effect; or
(o) an ERISA Event shall have occurred that when taken together
with all other ERISA Events that have occurred, could reasonably be expected to
result in a Material Adverse Effect; then, and in every such event (other than
an event with respect to the Borrower described in clause (h) or (i) of this
Article), and at any time thereafter during the continuance of such event, the
Administrative Agent may, and at the request of the Required Lenders shall, by
notice to the Borrower, take either or both of the following actions, at the
same or different times: (i) terminate the Commitments, and thereupon the
Commitments shall terminate immediately, and (ii) declare the Loans then
outstanding to be due and payable in whole (or in part, in which case any
principal not so declared to be due and payable may thereafter be declared to be
due and payable), and thereupon the principal of the Loans so declared to be due
and payable, together with accrued interest thereon and all fees and other
obligations of the Borrower accrued hereunder, shall become due and payable
immediately, without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by the Borrower; and in case of any event with
respect to the Borrower described in clause (h) or (i) of this Article, the
Commitments shall automatically terminate and the principal of the Loans then
outstanding, together with accrued interest thereon and all fees and other
obligations of the Borrower accrued hereunder, shall automatically become due
and payable, without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by the Borrower.
65
ARTICLE VIII
THE AGENTS
Each of the Lenders hereby irrevocably appoints each Agent as its
agent and authorizes each Agent to take such actions on its behalf and to
exercise such powers as are delegated to such Agent by the terms of the Loan
Documents, together with such actions and powers as are reasonably incidental
thereto.
Any Person serving as an Agent hereunder shall have the same
rights and powers in its capacity as a Lender as any other Lender and may
exercise the same as though it were not an Agent, and such Person and its
Affiliates may accept deposits from, lend money to and generally engage in any
kind of business with the Parent or any Subsidiary or other Affiliate thereof as
if it were not an Agent hereunder.
Neither Agent shall have any duties or obligations except those
expressly set forth in the Loan Documents. Without limiting the generality of
the foregoing, (a) neither Agent shall be subject to any fiduciary or other
implied duties, regardless of whether a Default has occurred and is continuing,
(b) neither Agent shall have any duty to take any discretionary action or
exercise any discretionary powers, except discretionary rights and powers
expressly contemplated by the Loan Documents that such Agent is required to
exercise in writing by the Required Lenders (or such other number or percentage
of the Lenders as shall be necessary under the circumstances as provided in
Section 9.02), and (c) except as expressly set forth in the Loan Documents,
neither Agent shall have any duty to disclose, and shall not be liable for the
failure to disclose, any information relating to the Parent or any of its
Subsidiaries that is communicated to or obtained by the Person serving as Agent
or any of its Affiliates in any capacity. Neither Agent shall be liable for any
action taken or not taken by it with the consent or at the request of the
Required Lenders (or such other number or percentage of the Lenders as shall be
necessary under the circumstances as provided in Section 9.02) or in the absence
of its own gross negligence or willful misconduct. Each Agent shall be deemed
not to have knowledge of any Default unless and until written notice thereof is
given to such Agent by a Loan Party or a Lender, and neither Agent shall be
responsible for or have any duty to ascertain or inquire into (i) any statement,
warranty or representation made in or in connection with any Loan Document, (ii)
the contents of any certificate, report or other document delivered thereunder
or in connection therewith, (iii) the performance or observance of any of the
covenants, agreements or other terms or conditions set forth in any Loan
Document, (iv) the validity, enforceability, effectiveness or genuineness of any
Loan Document or any other agreement instrument or document, or (v) the
satisfaction of any condition set forth in Article IV or elsewhere in any Loan
Document, other than to confirm receipt of items expressly required to be
delivered to such Agent.
Each Agent shall be entitled to rely upon, and shall not incur any
liability for relying upon, any notice, request, certificate, consent,
statement, instrument, document or other writing believed by it to be genuine
and to have been signed or sent by the proper Person. Each Agent also may rely
upon any statement made to it orally or by telephone and believed by it to be
made by the proper Person, and shall not incur any liability for relying
thereon. Each Agent may consult with legal counsel (who may be counsel for the
Parent or the Borrower), independent accountants and other experts selected by
it, and shall not be liable for any action
66
taken or not taken by it in accordance with the advice of any such counsel,
accountants or experts.
Each Agent may perform any and all its duties and exercise its
rights and powers by or through any one or more sub-agents appointed by such
Agent. Each Agent and any such sub-agent may perform any and all its duties and
exercise its rights and powers through their respective Related Parties. The
exculpatory provisions of the preceding paragraphs shall apply to any such
sub-agent and to the Related Parties of each Agent and any such sub-agent, and
shall apply to their respective activities in connection with the syndication of
the credit facilities provided for herein as well as activities as Agent.
Subject to the appointment and acceptance of a successor Agent as
provided in this paragraph, an Agent may resign at any time by notifying the
Lenders and the Borrower. Upon any such resignation, the Required Lenders shall
have the right to appoint a successor with the approval of the Borrower (which
approval shall not be unreasonably withheld or delayed and, if an Event of
Default has occurred and is continuing, shall not be required). If no successor
shall have been so appointed by the Required Lenders and shall have accepted
such appointment within 30 days after the retiring Agent gives notice of its
resignation, then the retiring Agent may, on behalf of the Lenders, appoint a
successor Agent with the approval of the Borrower (which approval shall not be
unreasonably withheld or delayed and, if an Event of Default has occurred and is
continuing, shall not be required) which shall be a bank with an office in New
York, New York, or an Affiliate of any such bank. Upon the acceptance of its
appointment as Agent hereunder by a successor, such successor shall succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring Agent, and the retiring Agent shall be discharged from its duties and
obligations hereunder. The fees payable by the Borrower to a successor Agent
shall be the same as those payable to its predecessor unless otherwise agreed
between the Borrower and such successor. After an Agent's resignation
hereunder, the provisions of this Article and Section 9.03 shall continue in
effect for the benefit of such retiring Agent, its sub-agents and their
respective Related Parties in respect of any actions taken or omitted to be
taken by any of them while it was acting as Agent.
Each Lender acknowledges that it has, independently and without
reliance upon either Agent or any other Lender and based on such documents and
information as it has deemed appropriate, made its own credit analysis and
decision to enter into this Agreement. Each Lender also acknowledges that it
will, independently and without reliance upon either Agent or any other Lender
and based on such documents and information as it shall from time to time deem
appropriate, continue to make its own decisions in taking or not taking action
under or based upon this Agreement, any other Loan Document or related agreement
or any document furnished hereunder or thereunder.
ARTICLE IX
MISCELLANEOUS
Section 9.01. NOTICES. Except in the case of notices and other
communications expressly permitted to be given by telephone, all notices and
other communications provided for
67
herein shall be in writing and shall be delivered by hand or overnight courier
service, mailed by certified or registered mail or sent by telecopy, as follows:
(a) if to the Borrower or the Parent, to it at 1099 18th
Street, Suite 700, Denver, Colorado 80202 (Telecopy No. (303) 226-8305);
(b) if to the Collateral Agent, to it at 2 Avenue de Lafayette,
Boston, Massachusetts 02111-174, Attention of Global Investor Services Group
Corporate Trust (Telecopy No. (617) 662-1465);
(c) if to the Administrative Agent, to it at 283 King George
Road, Warren, New Jersey 07059, Attention of Assistant Treasurer-Project Finance
(Telecopy No. (908) 559-1711);
(d) if to Lucent, to it at 283 King George Road, Warren, New
Jersey 07059, Attention of Assistant Treasurer-Project Finance (Telecopy No.
(908) 559-1711); and
(e) if to any other Lender, to it at its address (or telecopy
number) set forth in its Administrative Questionnaire.
Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. All notices and
other communications given to any party hereto in accordance with the provisions
of this Agreement shall be deemed to have been given on the date of receipt.
Section 9.02. WAIVERS; AMENDMENTS.
(a) No failure or delay by either Agent or any Lender in
exercising any right or power hereunder or under any other Loan Document shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right or power, or any abandonment or discontinuance of steps to enforce
such a right or power, preclude any other or further exercise thereof or the
exercise of any other right or power. The rights and remedies of the Agents and
the Lenders hereunder and under the other Loan Documents are cumulative and are
not exclusive of any rights or remedies that they would otherwise have. No
waiver of any provision of any Loan Document or consent to any departure by any
Loan Party therefrom shall in any event be effective unless the same shall be
permitted by paragraph (b) of this Section, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. Without limiting the generality of the foregoing, the making of a Loan
shall not be construed as a waiver of any Default, regardless of whether an
Agent or any Lender may have had notice or knowledge of such Default at the
time.
(b) Neither this Agreement nor any other Loan Document nor any
provision hereof or thereof may be waived, amended or modified except, in the
case of this Agreement, pursuant to an agreement or agreements in writing
entered into by the Parent, the Borrower and the Required Lenders or, in the
case of any other Loan Document, pursuant to an agreement or agreements in
writing entered into by the applicable Agent and the Loan Party or Loan Parties
that are parties thereto with the consent of the Required Lenders; PROVIDED that
no such agreement shall (i) increase the Commitment of any Lender without the
written consent of such
68
Lender, (ii) reduce the principal amount of any Loan or reduce the rate of
interest on such Loan, or reduce any fees payable hereunder, without the written
consent of each Lender affected thereby, (iii) postpone the scheduled date of
payment of the principal amount of any Loan or any interest thereon, or any fees
payable hereunder, or reduce the amount of, waive or excuse any such payment, or
postpone the scheduled date of expiration of any Commitment, without the written
consent of each Lender affected thereby, (iv) change Section 2.16(b) or (c) in a
manner that would alter the pro rata sharing of payments required thereby,
without the written consent of each Lender, (v) change any of the provisions of
this Section or the definition of "Required Lenders" or any other provision of
any Loan Document specifying the number or percentage of Lenders required to
waive, amend or modify any rights thereunder or make any determination or grant
any consent thereunder, without the written consent of each Lender, (vi) release
all or any substantial part of the Collateral from the Liens of the Security
Documents (except as expressly provided therein), without the written consent of
each Lender, (vii) release the Parent or any Guarantor Subsidiary from its
Guarantee under the Guarantee Agreement (except as expressly provided in the
Guarantee Agreement) or limit or condition its obligations thereunder, without
the written consent of each Lender, or (viii) change any provisions of any Loan
Document in a manner that by its terms adversely affects the rights in respect
of payments due to Lenders holding Loans of any Class differently than those
holding Loans of any other Class, without the written consent of Lenders holding
a majority in interest of the outstanding Loans of each affected Class and, in
the case of a Class with respect to which the Availability Period has not ended,
a majority in interest of the Commitments (in addition to any other consents
required by this sentence); PROVIDED FURTHER that no such agreement shall amend,
modify or otherwise affect the rights or duties of either Agent without the
prior written consent of such Agent.
Section 9.03. EXPENSES; INDEMNITY; DAMAGE WAIVER.
(a) Each of the Parent and the Borrower shall pay (i) all costs
and expenses incurred by Lucent and each Agent, including the reasonable fees,
charges and disbursements of counsel for Lucent or the Agents, in connection
with the negotiation, preparation, execution and delivery of the Loan Documents
(including, in the case of Lucent, expenses incurred in connection with its due
diligence activities) and (ii) all costs and expenses incurred by either Agent
or any Lender, including the reasonable fees, charges and disbursements of any
counsel for either Agent or any Lender, in connection with (A) the enforcement
or protection of its rights in connection with the Loan Documents, including its
rights under this Section, or in connection with the Loans made hereunder,
including all such costs and expenses incurred during any workout, restructuring
or negotiations in respect of such Loans, and (B) in the case of Lucent and the
Agents, the administration of, and any amendments, modifications, waivers or
supplements of or to the provisions of, any of the Loan Documents.
(b) Each of the Parent and the Borrower shall indemnify each
Agent and each Lender, and each Related Party of any of the foregoing Persons
(each such Person being called an "INDEMNITEE") against, and hold each
Indemnitee harmless from, any and all losses, claims, damages, liabilities and
related expenses, including the reasonable fees, charges and disbursements of
any counsel for any Indemnitee, incurred by or asserted against any Indemnitee
arising out of, in connection with, or as a result of (i) the execution or
delivery of any Loan Document or any other agreement or instrument contemplated
hereby, the performance by the parties to the Loan Documents of their respective
obligations thereunder or the consummation of
69
the Transactions or any other transactions contemplated hereby, (ii) any Loan or
the use of the proceeds therefrom, (iii) any actual or alleged presence or
release of Hazardous Materials on or from any property owned or operated by the
Parent, the Borrower or any of the Subsidiaries or at which any Collateral is
located, or any Environmental Liability related in any way to the Parent, the
Borrower or any of its Subsidiaries, or (iv) any actual or prospective claim,
litigation, investigation or proceeding relating to any of the foregoing,
whether based on contract, tort or any other theory and regardless of whether
any Indemnitee is a party thereto; PROVIDED that such indemnity shall not, as to
any Indemnitee, be available to the extent that such losses, claims, damages,
liabilities or related expenses have resulted from the gross negligence or
willful misconduct of such Indemnitee.
(c) To the extent that the Parent and the Borrower fail to pay
any amount required to be paid by it to either Agent under paragraph (a) or (b)
of this Section, each Lender severally agrees to pay to such Agent such Lender's
pro rata share (determined as of the time that the applicable unreimbursed
expense or indemnity payment is sought) of such unpaid amount; PROVIDED that the
unreimbursed expense or indemnified loss, claim, damage, liability or related
expense, as the case may be, was incurred by or asserted against such Agent in
its capacity as such. For purposes hereof, a Lender's "pro rata share" shall be
determined based upon its share of the sum of the total outstanding Loans and
Commitments at the time.
(d) To the extent permitted by applicable law, neither the
Parent nor the Borrower shall assert, and each of them hereby waives, any claim
against any Indemnitee, on any theory of liability, for special, indirect,
consequential or punitive damages (as opposed to direct or actual damages)
arising out of, in connection with, or as a result of, this Agreement or any
agreement or instrument contemplated hereby, the Transactions, any Loan or the
use of the proceeds thereof.
(e) All amounts due under this Section shall be payable not
later than 30 days after written demand therefor.
Section 9.04. SUCCESSORS AND ASSIGNS.
(a) The provisions of this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns permitted hereby, except that neither the Parent nor the Borrower may
assign or otherwise transfer any of its rights or obligations hereunder without
the prior written consent of each Lender (and any attempted assignment or
transfer by the Borrower without such consent shall be null and void). Nothing
in this Agreement, expressed or implied, shall be construed to confer upon any
Person (other than the parties hereto, their respective successors and assigns
permitted hereby and, to the extent expressly contemplated hereby, the Related
Parties of each of the Agents and the Lenders) any legal or equitable right,
remedy or claim under or by reason of this Agreement.
(b) Any Lender may, without the consent of the Parent or the
Borrower, assign to one or more Eligible Persons all or a portion of its rights
and obligations under this Agreement (including all or a portion of its
Commitment and the Loans at the time owing to it); PROVIDED that (i) except in
the case of an assignment to Lucent or a Lender or to an Affiliate of Lucent or
a Lender, the Administrative Agent must give its prior written consent to such
70
assignment (which consent shall not be unreasonably withheld or delayed and,
while an Event of Default has occurred and is continuing, shall not be
required), (ii) except in the case of an assignment to Lucent, a Lender or an
Affiliate of Lucent or a Lender or an assignment of the entire remaining amount
of the assigning Lender's Commitment or entire remaining Loans of any Class, the
amount of the Commitment and Loans of such Class of the assigning Lender subject
to each such assignment (determined as of the date the Assignment and Acceptance
with respect to such assignment is delivered to the Administrative Agent) shall
not be less than $1,000,000 unless the Borrower otherwise consents, (iii) each
partial assignment shall be made as an assignment of a proportionate part of all
the assigning Lender's rights and obligations under this Agreement, except that
this clause (iii) shall not be construed to prohibit the assignment of a
proportionate part of all of the assigning Lender's rights and obligations in
respect of (A) one or more Classes of Loans, (B) one or more Classes of Loans
separately from (or without assigning) Commitments or (C) Commitments separately
from (or without assigning) Loans, (iv) the parties to each assignment shall
execute and deliver to the Administrative Agent an Assignment and Acceptance,
together with a processing fee of $5,000, and (v) the assignee, if it shall not
be a Lender, shall deliver to the Administrative Agent an Administrative
Questionnaire. Subject to acceptance and recording thereof pursuant to
paragraph (d) of this Section, from and after the effective date specified in
each Assignment and Acceptance the assignee thereunder shall be a party hereto
and, to the extent of the interest assigned by such Assignment and Acceptance,
have the rights and obligations of a Lender under this Agreement, and the
assigning Lender thereunder shall, to the extent of the interest assigned by
such Assignment and Acceptance, be released from its obligations under this
Agreement (and, in the case of an Assignment and Acceptance covering all of the
assigning Lender's rights and obligations under this Agreement, such Lender
shall cease to be a party hereto but shall continue to be entitled to the
benefits of Sections 2.13, 2.14, 2.15 and 9.03). Any assignment or transfer by
a Lender of rights or obligations under this Agreement that does not comply with
this paragraph shall be treated for purposes of this Agreement as a sale by such
Lender of a participation in such rights and obligations in accordance with
paragraph (e) of this Section.
(c) The Administrative Agent, acting for this purpose as an
agent of the Borrower, shall maintain at one of its offices a copy of each
Assignment and Acceptance delivered to it and a register for the recordation of
the names and addresses of the Lenders, and the Commitments of, and principal
amount of the Loans owing to, each Lender pursuant to the terms hereof from time
to time (the "REGISTER"). The entries in the Register shall be conclusive, and
the Borrower, the Agents and the Lenders may treat each Person whose name is
recorded in the Register pursuant to the terms hereof as a Lender hereunder for
all purposes of this Agreement, notwithstanding notice to the contrary. The
Register shall be available for inspection by the Borrower and any Lender, at
any reasonable time and from time to time upon reasonable prior notice.
(d) Upon its receipt of a duly completed Assignment and
Acceptance executed by an assigning Lender and an assignee, the assignee's
completed Administrative Questionnaire (unless the assignee shall already be a
Lender hereunder) and the processing fee referred to in clause (v) of paragraph
(b) of this Section, subject to the Borrower's right to consent to such
assignment to the extent provided in paragraph (b)(ii) of this Section and the
Administrative Agent's right to consent to such assignment to the extent
provided in paragraph (b) of this Section, the Administrative Agent shall accept
such Assignment and Acceptance and
71
record the information contained therein in the Register. No assignment shall be
effective for purposes of this Agreement unless it has been recorded in the
Register as provided in this paragraph.
(e) Any Lender may, without the consent of the Borrower or the
Administrative Agent, sell participations to one or more Eligible Persons (a
"PARTICIPANT") in all or a portion of such Lender's rights and obligations under
this Agreement (including all or a portion of its Commitments and the Loans
owing to it); PROVIDED that (i) such Lender's obligations under this Agreement
shall remain unchanged, (ii) such Lender shall remain solely responsible to the
other parties hereto for the performance of such obligations and (iii) the
Borrower, the Agents and the other Lenders shall continue to deal solely and
directly with such Lender in connection with such Lender's rights and
obligations under this Agreement. Any agreement or instrument pursuant to which
a Lender sells such a participation shall provide that such Lender shall retain
the sole right to enforce the Loan Documents and to approve any amendment,
modification or waiver of any provision of the Loan Documents; PROVIDED that
such agreement or instrument may provide that such Lender will not, without the
consent of the Participant, agree to any amendment, modification or waiver
described in the first proviso to Section 9.02(b) that affects such Participant
Subject to paragraph (f) of this Section, the Borrower agrees that each
Participant shall be entitled to the benefits of Sections 2.13, 2.14 and 2.15 to
the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to paragraph (b) of this Section provided that such
Participant agrees to be subject to Sections 2.15(f) and 2.17 as though it was a
Lender. To the extent permitted by law, each Participant also shall be entitled
to the benefits of Section 9.08 as though it were a Lender, provided such
Participant agrees to be subject to Section 2.16(c) as though it were a Lender.
(f) A Participant that would be a Foreign Lender if it were a
Lender shall not be entitled to the benefits of Section 2.15 unless the Borrower
is notified of the participation sold to such Participant and such Participant
agrees, for the benefit of the Borrower, to comply with Section 2.15(e) as
though it were a Lender.
(g) Any Lender may at any time pledge or assign a security
interest in all or any portion of its rights under this Agreement to secure
obligations of such Lender, including any pledge or assignment to secure
obligations to a Federal Reserve Bank, and this Section shall not apply to any
such pledge or assignment of a security interest; PROVIDED that no such pledge
or assignment of a security interest shall release a Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such Lender
as a party hereto.
Section 9.05. SURVIVAL. All covenants, agreements,
representations and warranties made by the Loan Parties in the Loan Documents
and in the certificates or other instruments delivered in connection with or
pursuant to this Agreement or any other Loan Document shall be considered to
have been relied upon by the other parties hereto and shall survive the
execution and delivery of the Loan Documents and the making of any Loans,
regardless of any investigation made by any such other party or on its behalf
and notwithstanding that either Agent or any Lender may have had notice or
knowledge of any Default or incorrect representation or warranty at the time any
credit is extended hereunder, and shall continue in full force and effect as
long as the principal of or any accrued interest on any Loan or any fee or any
other amount payable under this Agreement is outstanding and unpaid and so long
as the
72
Commitments have not expired or terminated. The provisions of Sections 2.13,
2.14, 2.15 and 9.03 and Article VIII shall survive and remain in full force and
effect regardless of the consummation of the transactions contemplated hereby,
the repayment of the Loans, the expiration or termination of the Commitments or
the termination of this Agreement or any provision hereof.
Section 9.06. COUNTERPARTS; INTEGRATION; EFFECTIVENESS. This
Agreement may be executed in counterparts (and by different parties hereto on
different counterparts), each of which shall constitute an original, but all of
which when taken together shall constitute a single contract. This Agreement,
the other Loan Documents and any separate letter agreements with respect to (i)
the agreement of the Parent and the Borrower to cooperate with Lucent with
respect to marketing, selling or syndicating Loans and Commitments or with
respect to fees payable to Lucent or either Agent and (ii) the agreement of the
Parent and the Borrower with the Collateral Agent and Lucent as to the identity
of the Senior Officers of the Parent on the date hereof, constitute the entire
contract among the parties relating to the subject matter hereof and supersede
any and all previous agreements and understandings, oral or written, relating to
the subject matter hereof. Except as provided in Section 4.01(a), this
Agreement shall become effective when it shall have been executed by the
Administrative Agent and when the Administrative Agent shall have received
counterparts hereof which, when taken together, bear the signatures of each of
the other parties hereto, and thereafter shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns.
Delivery of an executed counterpart of a signature page of this Agreement by
telecopy shall be effective as delivery of a manually executed counterpart of
this Agreement.
Section 9.07. SEVERABILITY. Any provision of this Agreement held
to be invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or
unenforceability without affecting the validity, legality and enforceability of
the remaining provisions hereof; and the invalidity of a particular provision in
a particular jurisdiction shall not invalidate such provision in any other
jurisdiction.
Section 9.08. RIGHT OF SETOFF. If an Event of Default shall have
occurred and be continuing, each Lender and each of its Affiliates is hereby
authorized at any time and from time to time, to the fullest extent permitted by
law, to set off and apply any and all deposits (general or special, time or
demand, provisional or final) at any time held and other obligations at any time
owing by such Lender or Affiliate to or for the credit or the account of the
Borrower against any of and all the obligations of the Borrower now or hereafter
existing under this Agreement held by such Lender, irrespective of whether or
not such Lender shall have made any demand under this Agreement and although
such obligations may be unmatured. The rights of each Lender under this Section
are in addition to other rights and remedies (including other rights of setoff)
which such Lender may have.
Section 9.09. GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF
PROCESS.
(a) This Agreement shall be construed in accordance with and
governed by the law of the State of New York.
73
(b) Each of the Parent and the Borrower hereby irrevocably and
unconditionally submits, for itself and its property, to the nonexclusive
jurisdiction of the Supreme Court of the State of New York sitting in New York
County and of the United States District Court of the Southern District of New
York, and any appellate court from any thereof, in any action or proceeding
arising out of or relating to any Loan Document, or for recognition or
enforcement of any judgment, and each of the parties hereto hereby irrevocably
and unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the extent
permitted by law, in such Federal court. Each of the parties hereto agrees that
a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner
provided by law. Nothing in this Agreement or any other Loan Document shall
affect any right that either Agent or any Lender may otherwise have to bring any
action or proceeding relating to this Agreement or any other Loan Document
against the Parent, the Borrower or their properties in the courts of any
jurisdiction.
(c) Each of the Parent and the Borrower hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, any objection which it may now or hereafter have to the laying of venue of
any suit, action or proceeding arising out of or relating to this Agreement or
any other Loan Document in any court referred to in paragraph (b) of this
Section. Each of the parties hereto hereby irrevocably waives, to the fullest
extent permitted by law, the defense of an inconvenient forum to the maintenance
of such action or proceeding in any such court.
(d) Each of the Parent and the Borrower hereby irrevocably
appoints and designates CT Corporation System, whose address is 1633 Broadway,
New York, New York 10019, or any other person having and maintaining a place of
business in the State of New York whom the Parent or the Borrower may from time
to time hereafter designate (having given 30 days' notice thereof to the
Administrative Agent, each Lender and the Collateral Agent), as the true and
lawful attorney and duly authorized agent for acceptance of service of legal
process of the Parent and the Borrower. Without prejudice to the foregoing,
each party to this Agreement irrevocably consents to service of process in the
manner provided for notices in Section 9.01. Nothing in this Agreement or any
other Loan Document will affect the right of any party to this Agreement to
serve process in any other manner permitted by law.
Section 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF
OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.
74
Section 9.11. HEADINGS. Article and Section headings and the
Table of Contents used herein are for convenience of reference only, are not
part of this Agreement and shall not affect the construction of, or be taken
into consideration in interpreting, this Agreement.
Section 9.12. CONFIDENTIALITY. Each of the Agents and the Lenders
agrees to maintain the confidentiality of the Information (as defined below) and
not use the Information for any purpose not contemplated by this Agreement,
except that Information may be disclosed (a) to its and its Affiliates'
directors, officers, employees and agents, including accountants, legal counsel
and other advisors (it being understood that the Persons to whom such disclosure
is made will be informed of the confidential nature of such Information and
instructed to keep such Information confidential), (b) to the extent requested
by any regulatory authority, (c) to the extent required by applicable laws or
regulations or by any subpoena or similar legal process, (d) to any other party
to this Agreement, (e) in connection with the exercise of any remedies hereunder
or any suit, action or proceeding relating to this Agreement or any other Loan
Document or the enforcement of rights hereunder or thereunder, (f) subject to an
agreement containing provisions substantially the same as those of this Section,
to any assignee of or Participant in, or any prospective assignee of or
Participant in, any of its rights or obligations under this Agreement, (g) with
the consent of the Parent or the Borrower or (h) to the extent such Information
(i) becomes publicly available other than as a result of a breach of this
Section or (ii) becomes available to either Agent or any Lender on a
nonconfidential basis from a source other than the Parent or the Borrower. For
the purposes of this Section, "INFORMATION" means all information received from
the Parent or the Borrower relating to the Parent, the Borrower or their
businesses, other than any such information that is publicly available or
available to either Agent or any Lender on a nonconfidential basis prior to
disclosure by the Parent or the Borrower, provided that such information is
identified at the time of delivery as confidential. Any Person required to
maintain the confidentiality of Information as provided in this Section shall be
considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information.
Section 9.13. INTEREST RATE LIMITATION. Notwithstanding anything
herein to the contrary, if at any time the interest rate applicable to any Loan,
together with all fees, charges and other amounts which are treated as interest
on such Loan under applicable law (collectively the "CHARGES"), shall exceed the
maximum lawful rate (the "MAXIMUM RATE") which may be contracted for, charged,
taken, received or reserved by the Lender holding such Loan in accordance with
applicable law, the rate of interest payable in respect of such Loan hereunder,
together with all Charges payable in respect thereof, shall be limited to the
Maximum Rate and, to the extent lawful, the interest and Charges that would have
been payable in respect of such Loan but were not payable as a result of the
operation of this Section shall be cumulated and the interest and Charges
payable to such Lender in respect of other Loans or periods shall be increased
(but not above the Maximum Rate therefor) until such cumulated amount, and if
lawful, together with interest thereon at the Federal Funds Effective Rate to
the date of repayment, shall have been received by such Lender.
(Signatures Follow on Next Page)
75
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed by their respective authorized officers as of the day and
year first above written.
JATO OPERATING CORP.
By: /s/ Brian E. Gast
----------------------------------
Name:
Title:
JATO COMMUNICATIONS CORP.
By: /s/ Brian E. Gast
----------------------------------
Name:
Title:
STATE STREET BANK AND TRUST COMPANY,
individually and as Collateral Agent,
By: /s/ Gary Dougherty
----------------------------------
Name:
Title:
LUCENT TECHNOLOGIES INC., individually
and as Administrative Agent,
By: /s/ Leslie L. Rogers
----------------------------------
Name:
Title:
EXHIBIT A
[FORM OF ASSIGNMENT AND ACCEPTANCE]
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Credit Agreement, dated as of July 14,
1999 (as the same may be amended, supplemented or otherwise modified from time
to time, the "CREDIT AGREEMENT"), among JATO COMMUNICATIONS CORP., a Delaware
corporation ("PARENT"), JATO OPERATING CORP., a Delaware corporation (the
"BORROWER"), the Lenders party thereto, STATE STREET BANK AND TRUST COMPANY, as
Collateral Agent, and LUCENT TECHNOLGIES INC., as Administrative Agent.
Capitalized terms used herein but not defined herein shall have the meanings
assigned to such terms in the Credit Agreement.
1. The Assignor sells and assigns, without recourse, to the
Assignee, and the Assignee hereby purchases and assumes, without recourse, from
the Assignor, effective as of the Effective Date set forth below, the interests
set forth below (the "ASSIGNED INTEREST") in the Assignor's rights and
obligations under the Credit Agreement, including, without limitation, the
percentages and amounts set forth on the reverse hereof of (a) the Commitments
of the Assignor on the Effective Date and (b) the Loans and Borrowings owing to
the Assignor that are outstanding on the Effective Date. The Assignee hereby
acknowledges receipt of a copy of the Credit Agreement. From and after the
Effective Date (a) the Assignee shall be a party to and be bound by the
provisions of the Credit Agreement and, to the extent of the interests assigned
by this Assignment and Acceptance, have the rights and obligations of a Lender
thereunder and under the Loan Documents and (b) the Assignor shall, to the
extent of the interests assigned by this Assignment and Acceptance, relinquish
its rights and be released from its obligations under the Credit Agreement (and
in the event that this Assignment and Acceptance covers all or the remaining
portion of the Assignor's rights and obligations under the Credit Agreement, the
Assignor shall cease to be a party thereto but shall continue to be entitled to
the benefits of Sections 2.13, 2.15, 2.19 and 9.05 thereof, as well as to any
fees accrued for its account and not yet paid).
2. This Assignment and Acceptance is being delivered to the
Administrative Agent together with (a) if the Assignee is organized under the
laws of a jurisdiction outside the United States, the forms specified in Section
2.15 of the Credit Agreement, duly completed and executed by such Assignee, (b)
if the Assignee is not already a Lender under the Credit Agreement, an
Administrative Questionnaire and (c) a processing and recordation fee of
$[____________].
3. This Agreement and Acceptance shall be governed by, and
construed in accordance with, the laws of the State of New York.
A-1
Date of Assignment:
Legal Name of Assignee:
Legal Name of Assignor:
Assignee's Address for Notices
Effective Date of Assignment (may not be fewer than five Business
Days after the Date of Assignment):
PERCENTAGE ASSIGNED OF
FACILITY AND COMMITMENTS
THEREUNDER (SET FORTH TO
AT LEAST EIGHT DECIMALS,
AS A PERCENTAGE OF THE
FACILITY AND THE
AGGREGATE COMMITMENTS OF
COMMITMENT PRINCIPAL AMOUNTASSIGNED ALL LENDERS THEREUNDER)
---------- ------------------------ -----------------------
Loans :
Tranche 1: $ %
Tranche 2: $ %
Loan Commitments:
Tranche 1: $ %
Tranche 2: $ %
A-2
The terms set forth above are hereby agreed to:
[ ]
-----------------------
as Assignor,
By:
----------------------------------
Name:
Title:
[ ]
---------------------------
as Assignee,
By:
----------------------------------
Name:
Title:
Consented to by (if required under
Section 9.04(b)(ii) of the Credit
Agreement):
LUCENT TECHNOLOGIES INC.,
as Administrative Agent
By:
----------------------------------
Name:
Title:
A-3
EXHIBIT B
[FORM OF GUARANTEE AGREEMENT]
GUARANTEE AND SUBORDINATION AGREEMENT
GUARANTEE AND SUBORDINATION AGREEMENT dated as of July 14, 1999, by JATO
COMMUNICATIONS CORP., a Delaware corporation (together with its successors,
the "Parent"), and the subsidiaries of the Borrower (as defined below) listed
on the signature pages hereof (each of the Parent and such subsidiaries,
together with its successors, a "Guarantor" and collectively, the
"Guarantors"), in favor of STATE STREET BANK AND TRUST COMPANY, as collateral
agent (together with its successors in such capacity, the "Collateral Agent").
WITNESSETH:
WHEREAS, Jato Operating Corp., a Delaware corporation (together with its
successors, the "Borrower"), the Parent, certain lenders (the "Lenders"),
State Street Bank and Trust Company, as Collateral Agent, and Lucent
Technologies Inc., as administrative agent (the "Administrative Agent") have
entered into a Credit Agreement dated as of July 14, 1999, (as the same may
be amended, restated or supplemented and in effect from time to time, the
"Credit Agreement"), providing, subject to the terms and conditions thereof,
for the making of loans by the Lenders to the Borrower;
WHEREAS, the Borrower is a wholly owned Subsidiary of the Parent and
each Guarantor (other than Parent) is a subsidiary of the Borrower;
WHEREAS, the obligations of the Lenders to make Loans under the Credit
Agreement that each Guarantor execute and deliver a guarantee and
subordination agreement whereby such Guarantor shall guarantee the payment
when due of all principal, interest and other amounts that shall be at any
time payable by the Borrower under the Credit Agreement or any other Loan
Document; and
WHEREAS, the Guarantors are willing to guarantee the obligations of the
Borrower to pay any amounts under the Credit Agreement and the other Loan
Documents;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION 1. DEFINITIONS. Terms defined in the Credit Agreement and not
otherwise defined herein have, as used herein, the respective meanings
provided for therein.
SECTION 2. REPRESENTATIONS AND WARRANTIES. Each Guarantor represents
as to itself that:
(a) Such Guarantor (i) is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
organization; (ii) has all requisite corporate
power, and has all governmental licenses, authorizations, consents and
approvals necessary to own its assets and carry on its business as now being
or as proposed to be conducted, except in the case of such licenses,
authorizations, consents and approvals, where the failure to obtain them
would not have a material adverse effect on its condition (financial or
otherwise), business, operations or prospects and (iii) is qualified to do
business in all jurisdictions in which the nature of the business conducted
by it makes such qualification necessary and where failure so to qualify
would have a material adverse effect on its condition (financial or
otherwise), business, operations or prospects.
(b) Such Guarantor has all necessary corporate power and authority to
execute, deliver and perform its obligations under this Guarantee Agreement;
the execution, delivery and performance by such Guarantor of this Guarantee
Agreement has been duly authorized by all necessary corporate action; and
this Guarantee Agreement has been duly and validly executed and delivered by
such Guarantor and constitutes the legal, valid and binding obligation of
such Guarantor, enforceable in accordance with its terms, except as the
enforceability thereof may be limited by bankruptcy, insolvency,
reorganization or moratorium or other similar laws relating to the
enforcement of creditors' rights generally and by general equitable
principles.
(c) Neither the execution and delivery by such Guarantor of the Loan
Documents to which it is party nor compliance with the terms and provisions
thereof by such Guarantor will conflict with or result in a breach of, or
require any consent under, the certificate of incorporation or by-laws of
such Guarantor or any applicable law or regulation, or any order, writ,
injunction or decree of any court or governmental authority or agency, or any
agreement or instrument to which such Guarantor is a party or by which it is
bound or to which it is subject, or constitute a default under any such
agreement or instrument, or (except for the Liens created pursuant to, or
permitted by, the Security Documents) result in the creation or imposition of
any Lien upon any of the revenues or assets of such Guarantor pursuant to the
terms of any such agreement or instrument.
(d) There are no legal or arbitral proceedings or any proceedings by or
before any governmental or regulatory authority or agency, now pending or, to
the knowledge of such Guarantor, threatened against or affecting such
Guarantor as to which there is a reasonable possibility of an adverse
determination and that, if adversely determined, could reasonably be
expected, individually or in the aggregate, to result in a Material Adverse
Effect (other than Disclosed Matters).
(e) Such Guarantor has obtained all authorizations, approvals and
consents of, and has made all filings and registrations with, any
governmental or regulatory authority or agency and any third party necessary
for the consummation of the transactions contemplated hereby and the
execution, delivery or performance by it of any Loan Document to which it is
a party, or for the validity or enforceability thereof, except for filing and
recordings of the Liens created pursuant to, or permitted by, the Security
Documents.
SECTION 3. THE GUARANTEE. Each Guarantor hereby unconditionally
guarantees the full and punctual payment of the principal of and interest
(including interest accruing at the then applicable rate provided in the
Credit Agreement after the maturity of the Loans thereunder and interest
accruing at the then applicable rate provided in the Credit Agreement after
the filing of
2
any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to any Loan Party thereunder
whether or not a claim for post-filing or post-petition interest is allowed
in such proceeding) on the Loans payable by the Borrower under the Credit
Agreement, when and as due, whether at maturity, by acceleration, upon one or
more dates set for prepayment or otherwise, and (b) all other amounts payable
by the Borrower from time to time to any of the Secured Parties under the
Credit Agreement and the other Loan Documents, whether on account of
principal, interest, reimbursement obligations, fees, indemnities, costs,
expenses or otherwise (including all fees and disbursements of counsel to any
of the Secured Parties that are required to be paid by the Borrower pursuant
to the terms of the Credit Agreement or any other Loan Document). Upon
failure by the Borrower to pay punctually any such amount, each Guarantor
agrees that it shall forthwith on demand pay the amount not so paid at the
place and in the manner specified in the Credit Agreement or the relevant
other Loan Document, as the case may be.
SECTION 4. GUARANTEE UNCONDITIONAL. The obligations of each Guarantor
hereunder shall be unconditional and absolute and, without limiting the
generality of the foregoing, shall not be released, discharged or otherwise
affected by:
(i) any extension, renewal, settlement, compromise, waiver or
release in respect of any obligation of the Borrower under the Credit
Agreement or any other Loan Document or any obligation of any Guarantor
hereunder or under any Security Document, by operation of law or otherwise;
(ii) any modification or amendment of or supplement to the Credit
Agreement or any other Loan Document;
(iii) any release, non-perfection or invalidity of any direct or
indirect security for any obligation of the Borrower under the Credit
Agreement or any other Loan Document or any obligation of the Guarantor
hereunder or under any Security Document;
(iv) any change in the corporate existence, structure or
ownership of the Borrower, or any insolvency, bankruptcy, reorganization or
other similar proceeding affecting the Borrower or its assets or any
resulting release or discharge of any obligation of the Borrower contained in
the Credit Agreement or any other Loan Document;
(v) the existence of any claim, set-off or other rights which
any Guarantor may have at any time against the Borrower, any of the Secured
Parties or any other Person, whether in connection herewith or any unrelated
transactions, PROVIDED that nothing herein shall prevent the assertion of any
such claim by separate suit or compulsory counterclaim;
(vi) any invalidity or unenforceability relating to or against
the Borrower for any reason of the Credit Agreement or any other Loan
Document or any provision of applicable law or regulation purporting to
prohibit the payment by the Borrower of the principal of or interest on any
Loan (except as otherwise expressly provided in Section 9.13 of the Credit
Agreement) or any other amount payable by the Borrower under the Credit
Agreement or any other Loan Document; or
3
(vii) any other act or omission to act or delay of any kind by the
Borrower, any Guarantor, any of the Secured Parties or any other Person or
any other circumstance whatsoever which might, but for the provisions of this
paragraph, constitute a legal or equitable discharge of each Guarantor's
obligations hereunder.
SECTION 5. DISCHARGE ONLY UPON PAYMENT IN FULL; REINSTATEMENT IN
CERTAIN CIRCUMSTANCES. Each Guarantor's obligations hereunder shall remain
in full force and effect until the principal of and interest on the Loans and
all other amounts payable by the Borrower under the Credit Agreement and any
other Loan Documents shall have been paid in full and the Commitments under
the Credit Agreement shall have terminated or expired. If at any time any
payment of the principal of or interest on any Loan or any other amount
payable by the Borrower under the Credit Agreement or any other Loan Document
is rescinded or must be otherwise restored or returned upon the insolvency,
bankruptcy or reorganization of the Borrower or otherwise, the Guarantor's
obligations hereunder with respect to such payment shall be reinstated as
though such payment had been due but not made at such time.
SECTION 6. WAIVER BY GUARANTOR. Each Guarantor waives acceptance
hereof, presentment, demand, protest and, to the fullest extent permitted by
law, any notice not provided for herein, as well as any requirement that at
any time any action be taken or any recourse exhausted by any Person against
the Borrower, any Guarantor hereunder, or any other Person.
SECTION 7. STAY OF ACCELERATION. If acceleration of the time for
payment of any amount payable by the Borrower under the Credit Agreement is
stayed upon the insolvency, bankruptcy or reorganization of the Borrower, all
such amounts otherwise subject to acceleration under the terms of the Credit
Agreement nonetheless shall be payable by any Guarantor hereunder forthwith
on demand by the Collateral Agent made at the request of the Required Lenders.
SECTION 8. LIMITATION ON GUARANTORS' OBLIGATIONS. Notwithstanding
anything to the contrary set forth herein, the obligations of each Guarantor
hereunder shall be limited to an aggregate amount equal to the largest amount
that would not render its obligations hereunder subject to avoidance under
Section 548 of the United States Bankruptcy Code or any applicable provisions
of comparable U.S. state law.
SECTION 9. SUBORDINATION.
(a) Each Guarantor agrees that the payment by the Borrower or any other
Guarantor of any indebtedness in favor of such Guarantor (the "Subordinated
Lender") shall be subordinated and subject to the prior payment in full of
all amounts payable by the Borrower or such other Guarantor under the Credit
Agreement or this Guarantee Agreement, as the case may be, and any other Loan
Document to which the Borrower or such Guarantor is a party ("Senior Debt")
upon the terms of this Section.
(b) Upon any distribution of assets of the Borrower or a Guarantor to
creditors upon a liquidation or dissolution of the Borrower or such Guarantor
or in a bankruptcy, reorganization, insolvency, receivership or similar
proceeding relating to the Borrower or such Guarantor or its property, (i)
the Secured Parties shall be entitled to receive payment in full of all
Senior Debt
4
before the Subordinated Lender shall be entitled to receive any payment of
principal of or interest on or any other amounts in respect of Indebtedness
of the Borrower or such Guarantor in favor of the Subordinated Lender (the
"Subordinated Debt"); and (ii) until payment in full of the Senior Debt, any
distribution of assets of any kind or character to which the Subordinated
Lender would otherwise be entitled shall be paid by the Borrower or such
Guarantor or by any receiver, trustee in bankruptcy, liquidating trustee,
agents or other person making such payment or distribution to, or if received
by the Borrower or such Guarantor, shall be held for the benefit of and shall
be forthwith paid or delivered to, the Collateral Agent for distribution to
the Secured Parties.
(c) If the Subordinated Lender does not file proper claims or proofs of
claim in the form required in a bankruptcy, reorganization, insolvency,
receivership or similar proceeding relating to the Borrower or such Guarantor
or its property prior to 45 days before the expiration of the time to file
such claims, then (a) upon the request of the Collateral Agent, the
Subordinated Lender shall file such claims and proofs of claim in respect of
this instrument and execute and deliver such powers of attorney, assignments
and other instruments as are required to enable the Secured Parties to
enforce any and all claims upon or in respect of the Subordinated Debt and to
collect and receive any and all payments or distributions which may be
payable or deliverable at any time upon or in respect of Subordinated Debt,
and (b) whether or not the Subordinated Lender shall take the action
described in the preceding clause (a) the Collateral Agent and the other
Secured Parties shall nevertheless be deemed to have such powers of attorney
as may be necessary for them to file appropriate claims and proofs of claim
and otherwise exercise the powers described above.
(d) No right of any Secured Party to enforce the terms of this Section
shall be impaired by any act or failure to act by the Borrower or any
Guarantor. Neither the terms of this Section nor the rights of the rights of
the Secured Parties hereunder shall be affected by any extension, renewal or
modification of the terms of, or the granting of any security in respect of,
any Senior Debt or any exercise or nonexercise of any right, power or remedy
with respect thereto.
(e) After all Senior Debt is paid in full and until Subordinated Debt
is paid in full, the Subordinated Lender shall be subrogated to the rights of
the Secured Parties in respect of the Senior Debt.
(f) Nothing in this Section shall (i) impair, as between the Borrower
or such Guarantor and the Subordinated Lender, the obligation of the Borrower
or such Guarantor, which is absolute and unconditional, to pay the principal
of and interest on Subordinated Debt in accordance with its terms; (ii)
affect the relative rights of the Subordinated Lender and creditors of the
Borrower or such Guarantor other than the Secured Parties; or (iii) prevent
the Subordinated Lender from exercising its available remedies upon an event
of default under the Subordinated Debt, subject to the rights of the Secured
Parties to receive cash, property or other assets otherwise payable to the
Subordinated Lender to the extent set forth in this Section.
SECTION 10. NOTICES. All notices and other communications hereunder to
any party hereto shall be given or made in the manner provided in the Credit
Agreement to such party at its address set forth therein, or in the case of
5
any Guarantor other than the Parent, in care of the Borrower at its address
set forth therein, or in the case of any party hereto, to such other address
as such party may have provided by notice to the other parties hereto.
SECTION 11. NO WAIVERS. No failure or delay by the Collateral Agent or
any Lender in exercising any right, power or privilege hereunder shall
operate as a waiver thereof nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies provided in this
Guarantee Agreement, the Credit Agreement and the Security Documents shall be
cumulative and not exclusive of any rights or remedies provided by law.
SECTION 12. SUCCESSORS AND ASSIGNS. This Guarantee Agreement is in
favor of the Collateral Agent for the benefit of the Secured Parties and
their respective successors and assigns and, in the event of an assignment of
the Loans or other amounts payable under the Credit Agreement or the other
Loan Documents, the rights hereunder, to the extent applicable to the
indebtedness so assigned, may be transferred with such indebtedness. This
Guarantee Agreement shall be binding upon each Guarantor and its successors
and assigns.
SECTION 13. CHANGES IN WRITING. Neither this Guarantee Agreement nor
any provision hereof may be changed, waived, discharged or terminated orally,
but only in writing signed by each Guarantor and the Collateral Agent with
the consent of the Required Lenders.
SECTION 14. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY
TRIAL; SERVICE OF PROCESS.
(a) This Agreement shall be construed in accordance with and governed
by the law of the State of New York.
(b) Each of the Guarantors hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive jurisdiction of the
Supreme Court of the State of New York sitting in New York County and of the
United States District Court of the Southern District of New York, and any
appellate court from any thereof, in any action or proceeding arising out of
or relating to this Guarantee Agreement, or for recognition or enforcement of
any judgment, and each of the parties hereto hereby irrevocably and
unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the
extent permitted by law, in such Federal court. Each of the parties hereto
agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law. Nothing in this Guarantee Agreement
shall affect any right that any Secured Party may otherwise have to bring any
action or proceeding relating to this Guarantee Agreement against any
Guarantor or its properties in the courts of any jurisdiction.
(c) Each of the Guarantors hereby irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection which it may now or hereafter have to the laying of venue of any
suit, action or proceeding arising out of or relating to this Agreement in
any court referred to in paragraph (b) of this Section. Each of the parties
hereto hereby irrevocably waives, to the fullest extent permitted by law, the
defense of an inconvenient forum to the maintenance of such action or
proceeding in any such court.
6
(d) Each of the Guarantors hereby irrevocably appoints and designates
CT Corporation System, whose address is 1633 Broadway, New York, New York
10019, or any other person having and maintaining a place of business in the
State of New York whom the Guarantor may from time to time hereafter
designate (having given 30 days' notice thereof to the Collateral Agent), as
the true and lawful attorney and duly authorized agent for acceptance of
service of legal process of the Guarantor. Without prejudice to the
foregoing, each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 10. Nothing in this
Agreement or any other Loan Document will affect the right of any party to
this Agreement to serve process in any other manner permitted by law.
SECTION 15. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF
OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).
EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF
ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER
PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION.
SECTION 16. WAIVER OF IMMUNITY. To the extent that any Guarantor has or
hereafter may acquire any immunity from jurisdiction of any court or from any
legal process (whether through service or notice, attachment prior to
judgment, attachment in aid or execution, or otherwise) with respect to
itself or its property, such Guarantor hereby irrevocably waives such
immunity in respect of its obligations hereunder and under the other
Financing Documents to the extent permitted by applicable law and, without
limiting the generality of the foregoing, agrees that the waivers set forth
in this Section shall have effect to the fullest extent permitted under the
Foreign Sovereign Immunities Act of 1976 of the United States of America and
are intended to be irrevocable for purposes of such Act.
(Signatures Follow on Next Page)
7
IN WITNESS WHEREOF, each of the undersigned has caused this Guarantee
Agreement to be duly executed by its authorized officer as of the day and
year first above written.
GUARANTORS:
JATO COMMUNICATIONS CORP.
By:
---------------------------------------
Name:
Title:
------------------------------
By:
---------------------------------------
Name:
Title:
EXHIBIT C
[FORM OF INDEMNITY, SUBROGATION
AND CONTRIBUTION AGREEMENT]
INDEMNITY, SUBROGATION
AND CONTRIBUTION AGREEMENT
INDEMNITY, SUBROGATION and CONTRIBUTION AGREEMENT, dated as of July 14,
1999, among JATO COMMUNICATIONS CORP., a Delaware corporation (the "PARENT"),
JATO OPERATING CORP., a Delaware corporation, as borrower (the "BORROWER"),
each of the subsidiaries of the Borrower party hereto (collectively, the
"SUBSIDIARY GUARANTORS"), and STATE STREET BANK AND TRUST COMPANY, as
collateral agent (the "COLLATERAL AGENT") for the Administrative Agent and
the Lenders (such term and each other capitalized term used but not defined
herein having the respective meanings given them in the Credit Agreement,
dated as of July 14, 1999 (as the same may be amended, supplemented or
otherwise modified from time to time, the "CREDIT AGREEMENT"), among the
Borrower, the Parent, the Lenders party thereto, the Collateral Agent, and
Lucent Technologies Inc., as administrative agent (the "ADMINISTRATIVE
AGENT").
The Lenders have agreed to make Loans pursuant to, and upon the
terms and subject to the conditions specified in, the Credit Agreement. Each
of the Subsidiary Guarantors has agreed to guarantee, among other things, all
the obligations of the Borrower under the Credit Agreement.
The obligations of the Lenders to make the Loans under the Credit
Agreement are conditioned upon, among other things, the execution and
delivery by the Subsidiary Guarantors of an indemnity, subrogation and
contribution agreement in the form hereof (this "AGREEMENT") to support the
due and punctual payment of, with respect to each Subsidiary Guarantor, its
obligations as obligor or guarantor in respect of (a) the principal of and
interest (including interest accruing at the then applicable rate provided in
the Credit Agreement after the maturity of the Loans thereunder and interest
accruing at the then applicable rate provided in the Credit Agreement after
the filing of any petition in bankruptcy, or the commencement of any
insolvency, reorganization or like proceeding, relating to any Loan Party
thereunder whether or not a claim for post-filing or post-petition interest
is allowed in such proceeding) on the Loans payable by the Borrower under the
Credit Agreement, when and as due, whether at maturity, by acceleration, upon
one or more dates set for prepayment or otherwise, and (b) all other amounts
payable by the Borrower from time to time to any of the Secured Parties under
the Credit Agreement or any other Loan Document, whether on account of
principal, interest, reimbursement obligations, fees, indemnities, costs,
expenses or otherwise (including all fees and disbursements of counsel to any
of the Secured Parties that are required to be paid by the Borrower pursuant
to the terms of the Credit Agreement or such other Loan Document) (all of the
foregoing obligations collectively, the "OBLIGATIONS").
Accordingly, the Parent and the Borrower, each Subsidiary Guarantor
and the Collateral Agent agree as follows:
SECTION 1. INDEMNITY AND SUBROGATION. In addition to all such
rights of indemnity and subrogation as the Subsidiary Guarantors may have
under applicable law (but subject to Section 3), the Parent and the Borrower
agree that (a) in the event a payment shall be made by any Subsidiary
Guarantor under the Guarantee Agreement, the Parent and the Borrower shall
indemnify such Subsidiary Guarantor for the full amount of such payment and
such Subsidiary Guarantor shall be subrogated to the rights of the person to
whom such payment shall have been made to the extent of such payment and (b)
in the event any assets of any Subsidiary Guarantor shall be sold pursuant to
any applicable security agreement or similar instrument or agreement to
satisfy a claim of any Secured Party, the Parent and the Borrower shall
indemnify such Subsidiary Guarantor in an amount equal to the greater of the
book value or the fair market value of the assets so sold.
SECTION 2. CONTRIBUTION AND SUBROGATION. Each Subsidiary
Guarantor agrees (subject to Section 3) that in the event a payment shall be
made by any Subsidiary Guarantor under the Guarantee Agreement or assets of
any Subsidiary Guarantor shall be sold pursuant to any applicable security
agreement or similar instrument or agreement to satisfy a claim of any
Secured Party, and such Subsidiary Guarantor (the "CLAIMING SUBSIDIARY
GUARANTOR") shall not have been indemnified by the Parent or the Borrower as
provided in Section 1, each other Subsidiary Guarantor (a "CONTRIBUTING
SUBSIDIARY GUARANTOR") shall indemnify the Claiming Subsidiary Guarantor in
an amount equal to the amount of such payment or the greater of the book
value or the fair market value of such assets, as the case may be, multiplied
by a fraction of which the numerator shall be the net worth of the
Contributing Subsidiary Guarantor on the date of the claim and the
denominator shall be the aggregate net worth of all the Subsidiary Guarantors
on the date of the claim. Any Contributing Subsidiary Guarantor making any
payment to a Claiming Subsidiary Guarantor pursuant to this Section 2 shall
be subrogated to the rights of such Claiming Subsidiary Guarantor under
Section 1 to the extent of such payment.
SECTION 3. SUBORDINATION. Notwithstanding any provision of this
Agreement to the contrary, all rights of the Subsidiary Guarantors under
Sections 1 and 2 and all other rights of indemnity, contribution or
subrogation under applicable law or otherwise shall be fully subordinated to
the indefeasible payment in full of the Obligations. No failure on the part
of the Parent, the Borrower or any Subsidiary Guarantor to make the payments
required by Sections 1 and 2 (or any other payments required under applicable
law or otherwise) shall in any respect limit the obligations and liabilities
of any other Subsidiary Guarantor with respect to the Guarantee Agreement,
and each Subsidiary Guarantor shall remain liable for the full amount of the
obligations that such Subsidiary Guarantor has otherwise guaranteed.
SECTION 4. TERMINATION. This Agreement shall terminate when all
the Obligations have been indefeasibly paid in full, and the Lenders have no
further Commitments under the Credit Agreement.
SECTION 5. CONTINUED EFFECTIVENESS. The Parent, the Borrower and
each Subsidiary Guarantor further agree that this Agreement shall continue to
be effective or be reinstated, as the case may be, if at any time the payment
of any Obligation, or any part thereof,
2
by the Parent, the Borrower or any Subsidiary Guarantor is rescinded or must
otherwise be restored upon the bankruptcy or reorganization of the Parent,
the Borrower, any Subsidiary Guarantor or otherwise.
SECTION 6. GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF
PROCESS.
(a) This Agreement shall be construed in accordance with and
governed by the law of the State of New York.
(b) Each of the Parent, the Borrower and each Subsidiary Guarantor
hereby irrevocably and unconditionally submits, for itself and its property,
to the nonexclusive jurisdiction of the Supreme Court of the State of New
York sitting in New York County and of the United States District Court of
the Southern District of New York, and any appellate court from any thereof,
in any action or proceeding arising out of or relating to this Agreement, or
for recognition or enforcement of any judgment, and each of the parties
hereto hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in such
New York State or, to the extent permitted by law, in such Federal court.
Each of the parties hereto agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. Nothing in this
Agreement shall affect any right any party hereto may otherwise have to bring
any action or proceeding relating to this Agreement against any party hereto
or its properties in the courts of any jurisdiction.
(c) Each of the Parent, the Borrower and each Subsidiary Guarantor
hereby irrevocably and unconditionally waives, to the fullest extent it may
legally and effectively do so, any objection which it may now or hereafter
have to the laying of venue of any suit, action or proceeding arising out of
or relating to this Agreement in any court referred to in paragraph (b) of
this Section. Each of the parties hereto hereby irrevocably waives, to the
fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.
(d) Each of the Parent, the Borrower and each Subsidiary Guarantor
hereby irrevocably appoints and designates CT Corporation System, whose
address is 1633 Broadway, New York, New York 10019, or any other person
having and maintaining a place of business in the State of New York whom the
Parent, the Borrower or the Subsidiary Guarantor may from time to time
hereafter designate (having given 30 days' notice thereof to the other
parties hereto), as the true and lawful attorney and duly authorized agent
for acceptance of service of legal process of such Person. Without prejudice
to the foregoing, each party to this Agreement irrevocably consents to
service of process in the manner provided for notices in Section 8. Nothing
in this Agreement or any other Loan Document will affect the right of any
party to this Agreement to serve process in any other manner permitted by law.
SECTION 7. WAIVERS; AMENDMENT.
(a) No failure or delay of any Secured Party or any Guarantor in
exercising any power or right hereunder shall operate as a waiver thereof,
nor shall any single or partial exercise of any such right or power or any
abandonment or discontinuance of steps to enforce
3
such a right or power preclude any other or further exercise thereof or the
exercise of any other right or power. The rights and the remedies of the
Secured Parties under the Loan Documents are cumulative and are not exclusive
of any rights or remedies that they would otherwise have. No waiver of any
provisions of this Agreement or consent to any departure by any Subsidiary
Guarantor therefrom shall in any event be effective unless the same shall be
permitted by paragraph (b) below, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given.
No notice or demand on any Subsidiary Guarantor in any case shall entitle
such Subsidiary Guarantor to any other or further notice or demand in similar
or other circumstances.
(b) Except for the operation of Section 15 of this Agreement,
neither this Agreement nor any provision hereof may be waived, amended or
modified except pursuant to a written agreement entered into between the
Subsidiary Guarantors and the Collateral Agent, with the prior written
consent of the Required Lenders.
SECTION 8. NOTICES. All notices and other communications to any
party hereto hereunder shall be given or made in the manner provided in the
Credit Agreement to such party at its address set forth therein, or in the
case of any Subsidiary Guarantor, in care of the Borrower at its address set
forth therein, or in the case of any party hereto, to such other address as
such party may have provided by notice to the other parties hereto.
SECTION 9. BINDING AGREEMENT; ASSIGNMENTS. This Agreement shall
become effective as to any of the Parent, the Borrower and the Subsidiary
Guarantors when a counterpart hereof executed on behalf of such Person shall
have been delivered to the Collateral Agent and a counterpart hereof shall
have been executed on behalf of the Collateral Agent, and thereafter shall be
binding upon such person and the Collateral Agent and their respective
successors and permitted assigns, and shall inure to the benefit of the
Agents and the Lenders, and their respective successors and permitted
assigns, except that no such person shall have the right to assign its rights
hereunder or any interest herein (and any such attempted assignment shall be
void), except as expressly contemplated by this Agreement or the other Loan
Documents.
SECTION 10. SUCCESSORS AND ASSIGNS. Whenever in this Agreement any
of the parties hereto is referred to, such reference shall be deemed to
include the successors and permitted assigns of such party, and all
covenants, promises and agreements by or on behalf of each of the Parent, the
Borrower, each Subsidiary Guarantor and the Collateral Agent that are
contained in this Agreement shall bind and inure to the benefit of their
respective successors and permitted assigns.
SECTION 11. SURVIVAL OF AGREEMENT; SEVERABILITY.
(a) All covenants, agreements, representations and warranties made
by each of the Parent, the Borrower and each Subsidiary Guarantor herein and
in any certificates or other instruments prepared or delivered in connection
with or pursuant to this Agreement or any other Loan Document shall be
considered to have been relied upon by the Secured Parties and each
Subsidiary Guarantor and shall survive the making by the Lenders of the Loans
and the execution and delivery to the Lenders of the Loan Documents,
regardless of any investigation made by the Lenders or on their behalf, and
shall continue in full force and effect as long as the
4
principal of or any accrued interest on any Loan or any fee or any other
amount payable under, or in respect of, this Agreement or under any of the
other Loan Documents is outstanding and unpaid and so long as the Commitments
have not been terminated.
(b) If any provision hereof is invalid and unenforceable in any
jurisdiction, then, to the fullest extent permitted by law, (i) the other
provisions hereof shall remain in full force and effect in such jurisdiction
and shall be liberally construed in favor of the Collateral Agent and the
other Secured Parties in order to carry out the intentions of the parties
hereto as nearly as may be possible; and (ii) the invalidity or
unenforceability of any provision hereof in any jurisdiction shall not affect
the validity or enforceability of such provision in any other jurisdiction.
SECTION 12. COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall constitute an original, but all of
which, when taken together, shall constitute but one instrument.
SECTION 13. RULES OF INTERPRETATION. The rules of interpretation
specified in Section 1.03 of the Credit Agreement shall be applicable to this
Agreement.
SECTION 14. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT
OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT. EACH PARTY HERETO (A)
CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 14.
SECTION 15. ADDITIONAL SUBSIDIARY GUARANTORS. Pursuant to Section
5.14 of the Credit Agreement, each Subsidiary (an "ADDITIONAL SUBSIDIARY")
that was not in existence or not a subsidiary on the date thereof is required
to enter into this Agreement as a Subsidiary Guarantor upon becoming a
subsidiary. Upon execution and delivery, after the date hereof, by the
Collateral Agent and an Additional Subsidiary of an instrument in the form of
Annex 1, such Additional Subsidiary shall become a Subsidiary Guarantor
hereunder with the same force and effect as if originally named as a
Subsidiary Guarantor hereunder. The execution and delivery of any such
instrument shall not require the consent of any Subsidiary Guarantor
hereunder. The rights and obligations of each Subsidiary Guarantor hereunder
shall remain in full force and effect notwithstanding the addition of any
Additional Subsidiary as a party to this Agreement.
5
SECTION 16. HEADINGS. Article and Section headings used herein are
for convenience of reference only, are not part of this Agreement and are not
to affect the construction of, or to be taken into consideration in
interpreting, this Agreement.
(Signatures Follow on Next Page)
6
IN WITNESS WHEREOF, the parties hereto have caused this Indemnity,
Subrogation and Contribution Agreement to be executed by their duly
authorized officers as of the date first appearing above.
JATO COMMUNICATIONS CORP.
By:
------------------------------------
Name:
Title:
JATO OPERATING CORP.
By:
------------------------------------
Name:
Title:
STATE STREET BANK AND TRUST COMPANY, as Collateral
Agent
By
-------------------------------------
Name:
Title:
SCHEDULE I
TO INDEMNITY SUBROGATION
AND CONTRIBUTION AGREEMENT
SUBSIDIARY GUARANTORS
None.
ANNEX I TO
INDEMNITY, SUBROGATION
AND CONTRIBUTION AGREEMENT
SUPPLEMENT NO. _____, dated as of [__________________], to the
Indemnity, Subrogation and Contribution Agreement, dated as of as of July 14,
1999 (the "INDEMNITY, SUBROGATION AND CONTRIBUTION AGREEMENT"), among JATO
COMMUNICATIONS CORP., a Delaware corporation (the "PARENT"), JATO OPERATING
CORP., a Delaware corporation (the "BORROWER"), each of the Subsidiary
Guarantors (each capitalized term used but not defined having the meaning
given it in the Indemnity, Subrogation and Contribution Agreement or the
Credit Agreement (defined below)) party thereto and STATE STREET BANK AND
TRUST COMPANY, as Collateral Agent (the "COLLATERAL AGENT") for the Lenders.
A. Reference is made to the Credit Agreement, dated as of July
14, 1999 (as the same may be amended, supplemented or otherwise modified from
time to time, the "CREDIT AGREEMENT"), among the Borrower, the Parent, the
Lenders party thereto, the Collateral Agent, and Lucent Technologies Inc., as
the Administrative Agent.
B. Certain Subsidiary Guarantors, among others, have entered into
the Indemnity, Subrogation and Contribution Agreement in order to induce the
Lenders to make Loans pursuant to, and upon the terms and subject to the
conditions specified in, the Credit Agreement. Pursuant to Section 5.14 of
the Credit Agreement, promptly after its creation or acquisition, each
Additional Subsidiary is required to become a party to the Indemnity,
Subrogation and Contribution Agreement as a Subsidiary Guarantor. Section 15
of the Indemnity, Subrogation and Contribution Agreement provides that
Additional Subsidiaries may become Subsidiary Guarantors under the Indemnity,
Subrogation and Contribution Agreement by execution and delivery of an
instrument in the form of this Supplement. The undersigned (the "NEW
SUBSIDIARY GUARANTOR") is an Additional Subsidiary and is executing this
Supplement in accordance with the requirements of the Credit Agreement to
become a Subsidiary Guarantor under the Indemnity, Subrogation and
Contribution Agreement in order to induce the Lenders to make additional
Loans and as consideration for Loans previously made.
Accordingly, the Collateral Agent and the New Subsidiary Guarantor
agree as follows:
SECTION 1. In accordance with Section 15 of the Indemnity,
Subrogation and Contribution Agreement, the New Subsidiary Guarantor by its
signature below becomes a Subsidiary Guarantor under the Indemnity,
Subrogation and Contribution Agreement with the same force and effect as if
originally named therein as a Subsidiary Guarantor and the New Subsidiary
Guarantor hereby agrees to all the terms and provisions of the Indemnity,
Subrogation and Contribution Agreement applicable to it as a Subsidiary
Guarantor thereunder. Each reference to a "Subsidiary Guarantor" in the
Indemnity, Subrogation and Contribution Agreement shall be deemed to include
the New Subsidiary Guarantor. The Indemnity, Subrogation and Contribution
Agreement is hereby incorporated herein by reference.
SECTION 2. The New Subsidiary Guarantor represents and warrants to
the Lenders and the Agents that this Supplement has been duly authorized,
executed and delivered by it and constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its terms, subject to
the effects of applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally and equitable principles of general applicability.
SECTION 3. This Supplement may be executed in two or more
counterparts, each of which shall constitute an original, but all of which,
when taken together, shall constitute but one instrument. This Supplement
shall become effective when the Collateral Agent shall have received
counterparts of this Supplement that, when taken together, bear the
signatures of the New Subsidiary Guarantor and the Collateral Agent.
SECTION 4. Except as expressly supplemented hereby, the Indemnity,
Subrogation and Contribution Agreement shall remain in full force and effect.
SECTION 5. THIS SUPPLEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 6. If any one or more of the provisions contained in this
Supplement should be held invalid, illegal or unenforceable in any respect,
neither party hereto shall be required to comply with such provision for so
long as such provision is held to be invalid, illegal or unenforceable, but
the validity, legality and enforceability of the remaining provisions
contained herein and in the Indemnity, Subrogation and Contribution Agreement
shall not in any way be affected or impaired. The parties hereto shall
endeavor in good faith negotiations to replace the invalid, illegal or
unenforceable provisions with valid provisions the economic effect of which
comes as close as possible to that of the invalid, illegal or unenforceable
provisions.
SECTION 7. All notices and other communications hereunder to any
party to the Indemnity, Subrogation and Contribution Agreement shall be given
or made in the manner provided in the Credit Agreement to such party at its
address set forth therein, or in the case of any New Subsidiary Guarantor, in
care of the Borrower at its address set forth therein, or in the case of any
party hereto, to such other address as such party may have provided by notice
to the other parties hereto.
2
IN WITNESS WHEREOF, the New Subsidiary Guarantor and the Collateral
Agent have duly executed this Supplement to the Indemnity, Subrogation and
Contribution Agreement as of the day and year first above written.
[NAME OF NEW SUBSIDIARY
GUARANTOR]
By:
------------------------------------
Name:
Title:
STATE STREET BANK AND TRUST COMPANY, as Collateral
Agent
By:
------------------------------------
Name
Title:
3
EXHIBIT D
[FORM OF SECURITY AGREEMENT (BORROWER)]
SECURITY AGREEMENT (BORROWER)
This SECURITY AGREEMENT (BORROWER), dated as of July 14, 1999, is made
between JATO OPERATING CORP., a Delaware corporation (with its successors,
the "Company") and STATE STREET BANK AND TRUST COMPANY, as Collateral Agent
for the Administrative Agent and the Lenders (each term as defined below)
(with its successors in such capacity, the "Collateral Agent").
WITNESSETH:
WHEREAS, the Company, Jato Communications Corp. (the "Parent"), certain
lenders (the "Lenders"), the Collateral Agent, and Lucent Technologies Inc.,
as administrative agent (the "Administrative Agent"), are parties to a Credit
Agreement dated as of July 14, 1999 (as the same may be amended, restated or
supplemented and in effect from time to time, the "Credit Agreement"),
providing, subject to the terms and conditions thereof, for extensions of
credit to be made by the Lenders to the Company;
WHEREAS, in order to induce the Lenders and the Administrative Agent to
enter into the Credit Agreement, the Company has agreed to grant a continuing
security interest in and to the Collateral (as defined below) to secure its
obligations under the Loan Documents (as defined below), including, without
limitation, its obligations under the Credit Agreement; and
WHEREAS, the Lenders have appointed the Collateral Agent to act as their
collateral agent in connection with the foregoing transactions;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION 1. DEFINITIONS. Terms defined in the Credit Agreement and
not otherwise defined herein have, as used herein, the respective meanings
provided for therein. The following additional terms, as used herein, have
the following respective meanings:
"ACCOUNTS" means all "ACCOUNTS" (as defined in the UCC) now owned or
hereafter acquired by the Company and shall also mean and include all
accounts receivable, contract rights, book debts, notes, drafts and other
obligations or indebtedness owing to the Company arising from the sale, lease
or exchange of goods or other property by it or the performance of services
by it or both (including, without limitation, any such obligation which might
be characterized as an account, contract right or general intangible under
the Uniform Commercial Code in effect in any jurisdiction) and all of the
Company's rights in, to and under all purchase orders for goods, services or
other property, and all of the Company's rights to any goods,
services or other property represented by any of the foregoing (including
returned or repossessed goods and unpaid sellers' rights of rescission,
replevin, reclamation and rights to stoppage in transit) and all monies due
to or to become due to the Company under all contracts for the sale, lease or
exchange of goods or other property or the performance of services by it or
both (whether or not yet earned by performance on the part of the Company),
in each case whether now in existence or hereafter arising or acquired
including, without limitation, the right to receive the proceeds of said
purchase orders and contracts and all collateral security and guarantees of
any kind given by any Person with respect to any of the foregoing.
"COLLATERAL" has the meaning set forth in Section 3(a).
"COLLATERAL ACCOUNT" has the meaning set forth in Section 5(a).
"COPYRIGHT LICENSE" means any agreement now or hereafter in existence
granting to the Company, or pursuant to which the Company has granted to any
other Person, any right to use, copy, reproduce, distribute, prepare
derivative works, display or publish any records or other materials on which
a Copyright is in existence or may come into existence.
"COPYRIGHT SECURITY AGREEMENT" means a Copyright Security Agreement
executed and delivered by the Company in favor of the Collateral Agent, for
the benefit of the Secured Parties, substantially in the form of Exhibit D
hereto, as the same may be amended from time to time.
"COPYRIGHTS" means all the following: (i) all copyrights under the laws
of the United States or any other country (whether or not the underlying
works of authorship have been published), all registrations and recordings
thereof, all intellectual property rights to works of authorship (whether or
not published), and all applications for copyrights under the laws of the
United States or any other country, including, without limitation,
registrations, recordings and applications in the United States Copyright
Office or in any similar office or agency of the United States, any State
thereof or any other country or any political subdivision thereof, (ii) all
reissues, renewals and extensions thereof, (iii) all claims for, and rights
to sue for, past or future infringements of any of the foregoing, and (iv)
all income, royalties, damages and payments now or hereafter due or payable
with respect to any of the foregoing, including, without limitation, damages
and payments for past or future infringements thereof.
"DEPOSIT ACCOUNTS" shall mean all deposit accounts (as defined in the
UCC) of the Company including, without limitation, any demand, time, savings,
passbook or like account maintained by the Company with any bank, savings and
loan association, credit union or like organization, and all money, cash and
cash equivalents of the Company, whether or not deposited in any such deposit
account, and all certificates and instruments, if any, from time to time
representing, evidencing or deposited into such accounts.
"DOCUMENTS" means all "DOCUMENTS" (as defined in the UCC) or other
receipts covering, evidencing or representing goods, now owned or hereafter
acquired, by the Company.
"EQUIPMENT" means all "EQUIPMENT" (as defined in the UCC) now owned or
hereafter acquired by the Company, including, without limitation, all motor
vehicles, trucks, and trailers other than equipment acquired in connection
with Indebtedness of the type permitted under Section 6.01(iv) of the Credit
Agreement.
2
"EXCLUDED CONTRACTS" shall mean one or more contracts which by their
terms would be breached by the grant of the security interests created
therein pursuant to the terms of this Agreement or with respect to which the
granting of a security interest is prohibited under applicable law (it being
understood and agreed, however, that notwithstanding the foregoing, all
rights to payment for money due or to become due pursuant to any Excluded
Contract shall be subject to the security interests created pursuant to this
Agreement).
"GENERAL INTANGIBLES" means all "GENERAL INTANGIBLES" (as defined in the
UCC) now owned or hereafter acquired by the Company, including, without
limitation, (i) all obligations or indebtedness owing to the Company (other
than Accounts) from whatever source arising, (ii) all Copyright Licenses,
Copyrights, Patent Licenses, Patents, Trademark Licenses, Trademarks, rights
in intellectual property, goodwill, trade names, service marks, trade
secrets, permits and licenses, (iii) all rights or claims in respect of
refunds for taxes paid and (iv) all rights in respect of any pension plan or
similar arrangement maintained for employees of any member of the Loan
Parties other than general intangibles acquired in connection with
Indebtedness of the type permitted under Section 6.01(iv) of the Credit
Agreement.
"INSTRUMENTS" means all "INSTRUMENTS", "CHATTEL PAPER" or "LETTERS OF
CREDIT" (each as defined in the UCC) evidencing, representing, arising from
or existing in respect of, relating to, securing or otherwise supporting the
payment of, any of the Accounts, including (but not limited to) promissory
notes, drafts, bills of exchange and trade acceptances, now owned or
hereafter acquired by the Company, but Instruments shall exclude Instruments
representing Indebtedness to the extent pledged pursuant to the Pledge
Agreement (Borrower).
"INVENTORY" means all "INVENTORY" (as defined in the UCC), now owned or
hereafter acquired by the Company, wherever located, and shall also mean and
include, without limitation, all raw materials and other materials and
supplies, work-in-process and finished goods and any products made or
processed therefrom and all substances, if any, commingled therewith or added
thereto other than inventory acquired in connection with Indebtedness of the
type permitted under Section 6.01(iv) of the Credit Agreement.
"INVESTMENT PROPERTY" shall mean and include all of the Company's
investment property (as defined in the UCC) and all of the Company's other
securities (whether certificated or uncertificated), security entitlements,
financial assets, securities accounts, commodity contracts, and commodity
accounts (as each such term is defined in the UCC), including all
substitutions and additions thereto, all dividends, distributions and sums
distributable or payable from, upon, or in respect of such property, and all
rights and privileges incident to such property, but Investment Property
shall exclude the Company's interest in its Subsidiaries to the extent
pledged pursuant to the Pledge Agreement (Borrower).
"LICENSES" means any license, approval or other authorization issued by
the Federal Communications Commission or any state public utility commission
or any other Governmental Authority having jurisdiction over the
telecommunications business.
"LIQUID INVESTMENTS" means an investment meeting the criteria set forth
in Section 5(e).
3
"LOCKBOX ACCOUNT" means a "Lockbox Account" established under a Lockbox
Agreement.
"LOCKBOX AGREEMENT" means a Lockbox Agreement among the Company, the
Collateral Agent and a Lockbox Bank substantially in the form of Exhibit F
hereto or otherwise in form and substance reasonably satisfactory to the
Collateral Agent.
"LOCKBOX BANK" means a "money center" commercial bank selected by the
Company and satisfactory to the Collateral Agent, and each such other bank as
may from time to time enter into a Lockbox Agreement.
"PATENT LICENSE" means any agreement now or hereafter in existence
granting to the Company, or pursuant to which the Company has granted to any
other Person, any right with respect to any Patent or any invention now or
hereafter in existence, whether patentable or not, whether a patent or
application for patent is in existence on such invention or not, and whether
a patent or application for patent on such invention may come into existence,
including, without limitation, the agreements identified in Schedule I to
Exhibit B hereto.
"PATENTS" means all the following: (i) all letters patent and design
letters patent of the United States or any other country and all applications
for letters patent and design letters patent of the United States or any
other country, including, without limitation, applications in the United
States Patent and Trademark Office or in any similar office or agency of the
United States, any State thereof or any other country or any political
subdivision thereof, including, without limitation, those described in
Schedule I to Exhibit B hereto, (ii) all reissues, divisions, continuations,
continuations-in-part, renewals and extensions thereof, (iii) all claims for,
and rights to sue for, past or future infringements of any of the foregoing
and (iv) all income, royalties, damages and payments now or hereafter due or
payable with respect to any of the foregoing, including, without limitation,
damages and payments for past or future infringements thereof.
"PATENT SECURITY AGREEMENT" means a Patent Security Agreement executed
and delivered by the Company in favor of the Collateral Agent, for the
benefit of the Secured Parties, substantially in the form of Exhibit B
hereto, as the same may be amended from time to time.
"PERFECTION CERTIFICATE" means a certificate substantially in the form
of Exhibit A hereto, completed and supplemented with the schedules and
attachments contemplated thereby to the satisfaction of the Collateral Agent,
and duly executed by any authorized officer of the Company.
"PERMITTED LIENS" means the Security Interests and the other Liens on
the Collateral permitted to be created, assumed or exist pursuant to Section
6.02 of the Credit Agreement.
"PROCEEDS" means all proceeds of, and all other profits, products,
rentals or receipts, in whatever form, arising from the collection, sale,
lease, exchange, assignment, licensing or other disposition of, or other
realization upon, collateral, including, without limitation, all claims of
the Company against third parties for loss of, damage to or destruction of,
or for proceeds payable under, or unearned premiums with respect to, policies
of insurance in respect of, any collateral,
4
and any condemnation or requisition payments with respect to any collateral,
in each case whether now existing or hereafter arising.
"SECURED OBLIGATIONS" means the obligations secured under this
Agreement, including (a) all principal of and interest (including, without
limitation, any interest which accrues after the commencement of any case,
proceeding or other action relating to the bankruptcy, insolvency or
reorganization of the Company, whether or not allowed or allowable as a claim
in any such case, proceeding or other action) on any Loan to the Company
under the Credit Agreement; (b) all other amounts payable by the Company
hereunder or under any other Loan Document; and (c) any renewals or
extensions of any of the foregoing.
"SECURED PARTIES" means (i) the Lenders, (ii) the Administrative Agent
and (iii) the Collateral Agent.
"SECURITY INTERESTS" means the security interests granted pursuant to
Section 3, as well as all other security interests created or assigned as
additional security for the Secured Obligations pursuant to the provisions of
this Agreement.
"TRADEMARK LICENSE" means any agreement now or hereafter in existence
granting to the Company, or pursuant to which the Company has granted to any
other Person, any right to use any Trademark, including, without limitation,
the agreements identified on Schedule I to Exhibit C hereto.
"TRADEMARKS" means all of the following: (i) all trademarks, trade
names, corporate names, company names, business names, fictitious business
names, trade styles, service marks, logos, brand names, trade dress, prints
and labels on which any of the foregoing have appeared or appear, package and
other designs, and any other source or business identifiers, and general
intangibles of like nature, and the rights in any of the foregoing which
arise under applicable law, (ii) the goodwill of the business symbolized
thereby or associated with each of them, (iii) all registrations and
applications in connection therewith, including, without limitation,
registrations and applications in the United States Patent and Trademark
Office or in any similar office or agency of the United States, any State
thereof or any other country or any political subdivision thereof, (iv) all
reissues, extensions and renewals thereof, (v) all claims for, and rights to
sue for, past or future infringements of any of the foregoing and (vi) all
income, royalties, damages and payments now or hereafter due or payable with
respect to any of the foregoing, including, without limitation, damages and
payments for past or future infringements thereof.
"TRADEMARK SECURITY AGREEMENT" means a Trademark Security Agreement
executed and delivered by the Company in favor of the Collateral Agent, for
the benefit of the Secured Parties, substantially in the form of Exhibit C
hereto, as the same may be amended from time to time.
"UCC" means the Uniform Commercial Code as in effect on the date hereof
in the State of New York; PROVIDED that if by reason of mandatory provisions
of law, the perfection or the effect of perfection or non-perfection of the
Security Interest in any Collateral is governed by the Uniform Commercial
Code as in effect in a jurisdiction other than New York, "UCC" means the
Uniform Commercial Code as in effect in such other jurisdiction for purposes
of the provisions hereof relating to such perfection or effect of perfection
or non-perfection.
5
SECTION 2. REPRESENTATIONS AND WARRANTIES. The Company represents
and warrants as follows:
(a) The Company has good and marketable title to all of the Collateral,
free and clear of any Liens other than the Permitted Liens. All actions have
been taken that are necessary under the UCC to perfect its interest in any
Accounts in which it has an interest, as against its assignors and creditors
of its assignors.
(b) The Company has not performed any acts which might prevent the
Collateral Agent from enforcing any of the terms of this Agreement or which
would limit the Collateral Agent in any such enforcement. Other than
financing statements or other similar or equivalent documents or instruments
with respect to the Security Interests and Permitted Liens, no financing
statement, mortgage, security agreement or similar or equivalent document or
instrument covering all or any part of the Collateral is on file or of record
in any jurisdiction in which such filing or recording would be effective to
perfect a Lien on such Collateral. No Collateral is in the possession of any
Person (other than the Company) asserting any claim thereto or security
interest therein, except that the Collateral Agent or its designee may have
possession of Collateral as contemplated hereby.
(c) Not later than the date of the first borrowing under the Credit
Agreement, the Company shall deliver the Perfection Certificate to the
Collateral Agent. The information set forth therein shall be correct and
complete. Not later than 60 days following the date of the first Borrowing,
the Company shall furnish to the Collateral Agent file search reports from
each filing office set forth in Schedule 7 to the Perfection Certificate or
other evidence satisfactory to the Collateral Agent, acting on behalf of the
Required Lenders confirming the filing information set forth in such Schedule.
(d) The Security Interests constitute valid security interests under
the UCC securing the Secured Obligations to the extent that a security
interest may be created in the Collateral under the UCC. When the Patent
Security Agreement and the Trademark Security Agreement have been filed with
the United States Patent and Trademark Office, the Security Interests shall
constitute perfected security interests in all right, title and interest of
the Company in Patents or Trademarks, prior to all other Liens and rights of
others therein except for Permitted Liens to the extent that a perfected
security interest may be created in such Collateral under the U.S. Patent Act
or the Lanham Act. When the Copyright Security Agreement has been filed with
the United States Copyright Office, the Security Interests shall constitute
perfected security interests in all right, title and interest of the Company
in Copyrights, prior to all other Liens and rights of others therein except
for the Permitted Liens to the extent that a perfected security interest may
be created in such Collateral under the U.S. Copyright Act.
(e) Other than those listed on Schedule I to the Copyright Security
Agreement, Schedule I to the Trademark Security Agreement, and Schedule I to
the Patent Security Agreement delivered on the date hereof (as the same may
be modified from time to time), the Company has no Copyright Licenses,
Copyrights, Patent Licenses, Patents, Trademark Licenses or Trademarks.
6
SECTION 3. THE SECURITY INTERESTS. (a) In order to secure the full
and punctual payment of the Secured Obligations in accordance with the terms
thereof, and to secure the performance of all of the obligations of the
Company hereunder and under the other Loan Documents, the Company hereby
pledges, hypothecates, assigns by way of security, transfers and grants to
the Collateral Agent for the ratable benefit of the Secured Parties a
continuing security interest in and to all right, title and interest of the
Company in and to the following property, whether now owned or existing or
hereafter acquired or arising and regardless of where located (all being
collectively referred to as the "Collateral"):
(i) Accounts;
(ii) Inventory;
(iii) General Intangibles;
(iv) Documents;
(v) Instruments;
(vi) Equipment;
(vii) Investment Property;
(viii) Deposit Accounts;
(ix) The Collateral Account, all cash deposited therein from time
to time, the Liquid Investments made pursuant to Section 5(e) and other
monies and property of any kind of the Company in the possession or under the
control of the Collateral Agent;
(x) All books and records (including, without limitation,
customer lists, marketing information, credit files, price lists, operating
records, vendor and supplier price lists, sales literature, computer
programs, printouts and other computer materials and records) of the Company
pertaining to any of the Collateral;
(xi) All Proceeds of, attachments or accessions to, or
substitutions for, all or any of the Collateral described in clauses (i)
through (x) hereof;
PROVIDED, HOWEVER, the Collateral shall not include any Excluded Contracts.
(b) The Security Interests are granted as security only and shall not
subject the Collateral Agent or any other Secured Party to, or transfer or in
any way affect or modify, any obligation or liability of the Company with
respect to any of the Collateral or any transaction in connection therewith.
(c) Notwithstanding anything herein or in the other Loan Documents to
the contrary, to the extent this Agreement or any other Security Document
purports to grant to the Collateral Agent a Lien in any License held directly
or indirectly by the Company or any of its Subsidiaries, now owned or
hereafter acquired, the Collateral Agent shall only have a Lien in
7
such Licenses at such times and to the extent that a Lien in such Licenses is
permitted under applicable law; PROVIDED, that any such Lien shall to the
extent permitted by applicable law be deemed effective as of the later of (i)
the Effective Date or (ii) the date on which the Company was assigned, or
acquired control over, the applicable License.
SECTION 4. FURTHER ASSURANCES; COVENANTS. (a) (i) The Company
will not establish or change (A) the location of its chief executive office
or its chief place of business or (B) except for sales in the ordinary course
of business, the locations where it keeps or holds any Collateral or records
relating thereto from the applicable location described in the Perfection
Certificate unless it shall have given the Collateral Agent notice thereof
and an opinion of counsel with respect thereto in accordance with Section
4(k). The Company shall not in any event change the location of any
Collateral if such change would cause the Security Interests in such
Collateral to lapse or cease to be perfected.
(ii) The Company will not change its name, identity or corporate
structure (except as expressly permitted in the Credit Agreement) in any
manner unless it shall have given the Collateral Agent prior notice thereof
and delivered an opinion of counsel with respect thereto in accordance with
Section 4(k).
(b) The Company will, from time to time, at its expense, execute,
deliver, file and record any statement, assignment, instrument, document,
agreement or other paper and take any other action (including, without
limitation, any filings with the United States Patent and Trademark Office
(including without limitation, a Patent Security Agreement and a Trademark
Security Agreement), any filings with the United States Copyright Office
(including without limitation a Copyright Security Agreement), any filings of
financing or continuation statements under the UCC and any filings in, or
agreements governed by the laws of, any foreign jurisdictions) that from time
to time may be necessary or desirable, or that the Collateral Agent
reasonably may request, in order to create, preserve, upgrade in rank (to the
extent required hereby), perfect, confirm or validate the Security Interests
or to enable the Collateral Agent and the other Secured Parties to obtain the
full benefits of this Agreement, or to enable the Collateral Agent to
exercise and enforce, or facilitate the exercise and enforcement of, any of
its rights, powers and remedies hereunder with respect to any of the
Collateral. To the extent permitted by law, the Company hereby authorizes
the Collateral Agent to execute and file financing statements or continuation
statements without the Company's signature appearing thereon. The Company
agrees that a carbon, photographic or other reproduction of this Agreement or
of a financing statement is sufficient as a financing statement. The Company
shall pay the costs of, or incidental to, any recording or filing of any
financing or continuation statements concerning the Collateral.
(c) If any Collateral is at any time in the possession or control of
any warehouseman, bailee or any of the Company's agents or processors, the
Company shall, upon the request of the Collateral Agent acting on the
instructions of the Required Lenders, notify such warehouseman, bailee, agent
or processor of the Security Interests created hereby and instruct such
Person to hold all such Collateral for the Collateral Agent's account subject
to the Collateral Agent's instructions.
8
(d) The Company shall keep full and accurate books and records relating
to the Collateral, and stamp or otherwise mark such books and records in such
manner as the Required Lenders may reasonably request in order to reflect the
Security Interests. The Company shall provide the Collateral Agent with
reasonable access to such books and records during normal business hours in
accordance with Section 5.08 of the Credit Agreement.
(e) The Company will immediately deliver and pledge each Instrument
constituting Collateral to the Collateral Agent (other than checks and drafts
constituting payments in respect of Accounts, as to which the provisions of
Section 5(b) shall apply), in each case appropriately endorsed to the
Collateral Agent; PROVIDED that so long as no Event of Default (as defined
under the Credit Agreement) shall have occurred and be continuing, the
Company may retain any Instruments (i) that in the aggregate have a principal
or face amount of $1,000 or less or (ii) in which a security interest has
been and continues to be effectively created and perfected in favor of the
Collateral Agent under the other Security Documents, and the Collateral Agent
shall, promptly upon request of the Company, make appropriate arrangements
for making any Instrument pledged by the Company and delivered to the
Collateral Agent available to it for purposes of presentation, collection or
renewal (any such arrangement to be effected, to the extent deemed
appropriate to the Collateral Agent, against trust receipt or like document).
All certificates or instruments representing or evidencing Investment
Property (other than Investment Property held by a securities intermediary, a
commodities intermediary or another financial intermediary) shall be
delivered to and held by or on behalf of the Collateral Agent, for the
ratable benefit of the Secured Parties, pursuant hereto and shall be in
suitable form for transfer by delivery, duly endorsed and shall be
accompanied by undated duly executed instruments of transfer or assignment in
blank, with signatures appropriately guaranteed, and accompanied in each case
by any required transfer tax stamps, all in form and substance satisfactory
to the Collateral Agent. With respect to any Investment Property held by a
securities intermediary, commodity intermediary or other financial
intermediary of any kind, the Company shall execute and deliver, and shall
cause any such intermediary to execute and deliver, a securities control
agreement ("Securities Control Agreement") among the Company, the Collateral
Agent, and such intermediary substantially in the form of Exhibit G which
provides, among other things, for the intermediary's agreement that it will
comply with such entitlement orders, and apply any value distributed on
account o any Investment Property maintained in an account with such
intermediary, as directed by the Collateral Agent without further consent by
the Company. The Collateral Agent shall have the right, at any time in its
discretion and without notice to the Company after the occurrence and during
the continuance of an Event of Default, to cause any or all of the Investment
Property to be transferred of record into the name of the Collateral Agent or
its nominee.
(f) The Company shall use its best efforts to cause to be collected
from its account debtors, as and when due, any and all amounts owing under or
on account of each Account constituting Collateral (including, without
limitation, Accounts which are delinquent, such Accounts to be collected in
accordance with lawful collection procedures) and to apply forthwith upon
receipt thereof all such amounts as are so collected to the outstanding
balance of such Account. Unless an Event of Default (as defined under the
Credit Agreement) has occurred and is continuing and the Collateral Agent is
exercising its rights hereunder to collect Accounts, the Company may allow in
the ordinary course of business as adjustments to amounts owing under its
Accounts constituting Collateral (i) an extension or renewal of the time or
times of payment,
9
or settlement for less than the total unpaid balance, which the Company finds
appropriate in accordance with sound business judgment and (ii) a refund or
credit due as a result of returned or damaged merchandise or deficient
service, all in accordance with the Company's ordinary course of business
consistent with its historical collection practices. The costs and expenses
(including, without limitation, reasonable attorney's fees) of collection,
whether incurred by the Company or the Collateral Agent, shall be borne by
the Company.
(g) Upon the occurrence and during the continuance of any Event of
Default under the Credit Agreement, upon the request of the Required Lenders
acting through the Collateral Agent, the Company will promptly notify (and
the Company hereby authorizes the Collateral Agent so to notify) each account
debtor in respect of any Account or Instrument constituting Collateral that
such Collateral has been assigned to the Collateral Agent hereunder, and that
any payments due or to become due in respect of such Collateral are to be
made directly to the Collateral Agent or its designee.
(h) The Company shall, (i) as soon as practicable after the date
hereof, in the case of Equipment now owned constituting goods in which a
security interest is perfected by a notation on the certificate of title or
similar evidence of the ownership of such goods (unless such security
interest may otherwise be perfected and is so perfected), and (ii) within 10
days of acquiring any other similar Equipment, in each case, (a) having a
value in excess of $25,000 or (b) having a value in excess of $10,000, if the
aggregate of all such items owned by the Company at any time is greater than
$50,000, deliver to the Collateral Agent any and all certificates of title,
applications for title or similar evidence of ownership of such Equipment and
shall cause the Collateral Agent to be named as lienholder on any such
certificate of title or other evidence of ownership. The Company shall
promptly inform the Collateral Agent of any additions to or deletions from
such Equipment in excess of $10,000. The Company shall not permit any items
of Equipment to become a fixture to real estate..
(i) The Company will, promptly upon request, provide to the Collateral
Agent all information and evidence it may reasonably request concerning the
Collateral, and in particular the Accounts, to enable the Collateral Agent to
enforce the provisions of this Agreement.
(j) The Company shall notify the Collateral Agent immediately if it
knows, or has reason to know, that any application or registration relating
to any Material Copyright, Material Patent or Material Trademark may become
abandoned, or of any adverse determination or development (including, without
limitation, the institution of, or any such determination or development in,
any proceeding in the United States Copyright Office, the United States
Patent and Trademark Office, or any court) regarding the Company's ownership
of any Material Copyright, Material Patent or Material Trademark, its right
to register or patent the same, or to keep and maintain the same. For
purposes of this Section 4(j), "Material Patent", "Material Trademark" and
"Material Copyright" shall mean one or more Copyrights, Patents or
Trademarks, respectively, which individually has a fair market value in
excess of $10,000 or are individually or in the aggregate otherwise material
to the business of the Company. In the event that any right to any
Copyright, Copyright License, Patent, Patent License, Trademark or Trademark
License is infringed, misappropriated or diluted by a third party, the
Company shall notify the Collateral Agent promptly after it learns thereof
and shall, unless the Company shall reasonably determine that any such action
would be of negligible economic value, promptly sue
10
for infringement, misappropriation or dilution and to recover any and all
damages for such infringement, misappropriation or dilution, and take such
other actions as the Company shall reasonably deem appropriate under the
circumstances to protect such Copyright, Copyright License, Patent, Patent
License, Trademark or Trademark License. In no event shall the Company,
either itself or through any agent, employee or licensee, file an application
for the registration of any Copyright with the United States Copyright Office
or any Material Patent or Material Trademark with the United States Patent
and Trademark Office, or with any similar office or agency in any other
country or any political subdivision thereof, unless not less than 30 days
prior thereto it informs the Collateral Agent, and, upon request of the
Collateral Agent, executes and delivers any and all agreements, instruments,
documents and papers the Collateral Agent may request to evidence the
Security Interests in such Copyright, Patent or Trademark and the goodwill
and general intangibles of the Company relating thereto or represented
thereby, and the Company hereby constitutes the Collateral Agent its
attorney-in-fact to execute and file all such writings for the foregoing
purposes, all acts of such attorney being hereby ratified and confirmed; such
power, being coupled with an interest, shall be irrevocable until the Secured
Obligations are paid in full.
(k) Not more than four months nor less than 10 days prior to each date
on which the Company proposes to take any action contemplated by Section
4(a)(i) or (ii), the Company shall, at its cost and expense, cause to be
delivered to the Secured Parties an opinion of counsel satisfactory to the
Collateral Agent (the Company's general counsel being deemed to be
satisfactory unless the Collateral Agent notifies the Company otherwise), to
the effect of Exhibit E hereto and in a form and substance reasonably
satisfactory to the Administrative Agent, to the effect that all financing
statements and amendments or supplements thereto, continuation statements and
other documents required to be recorded or filed in order to perfect and
protect the Security Interests for a period, specified in such opinion,
continuing until a date not earlier than eighteen months from the date of
such opinion, against all creditors of and purchasers from the Company have
been filed in each filing office necessary for such purpose and that all
filing fees and taxes, if any, payable in connection with such filings have
been paid in full (except as noted therein with respect to any continuation
statements to be filed within such period).
SECTION 5. COLLATERAL ACCOUNT AND LOCKBOX ACCOUNT. If requested by the
Collateral Agent at any time following the occurrence of an Event of Default
(whether or not such Event of Default is subsequently cured), the following
provisions of this Section shall become effective and the Company shall take
all necessary action to give effect thereto:
(a) The Company shall establish with the Collateral Agent or a
commercial bank designated by the Collateral Agent a cash collateral account
(such account, together with any additional account so established for such
purpose from time to time, the "Collateral Account") in the name and under
the control of the Collateral Agent into which there shall be deposited from
time to time the cash proceeds of the Collateral required to be delivered to
the Collateral Agent pursuant to subsection (d) of this Section 5 or any
other provision of this Agreement or any other Loan Document. Any income
received by the Collateral Agent with respect to the balance from time to
time standing to the credit of the Collateral Account, including any interest
or capital gains on Liquid Investments, shall remain, or be deposited, in the
Collateral Account. All right, title and interest in and to the cash amounts
on deposit from time to time in the Collateral Account together with any
Liquid Investments from time to time made pursuant to
11
subsection (e) of this Section shall vest in the Collateral Agent, shall
constitute part of the Collateral hereunder and shall not constitute payment
of the Secured Obligations until applied thereto as hereinafter provided.
(b) The Company shall deliver to the Collateral Agent counterparts of
the Lockbox Agreement executed and delivered on behalf of the Company and the
Lockbox Bank. The Company shall instruct all account debtors and other
Persons obligated in respect of all Accounts to make all payments in respect
of such Accounts constituting Collateral directly to the Lockbox Bank (by
instructing that such payments be remitted to the Post Office Box referred to
in the Lockbox Agreement with the Lockbox Bank). In addition to the
foregoing, the Company agrees that if the proceeds of any Collateral
hereunder (including the payments made in respect of such Accounts) shall be
received by it, the Company shall as promptly as possible deposit such
proceeds into the Lockbox Account. Until so deposited, all such proceeds
shall be held in trust by the Company for and as the property of the
Collateral Agent and the Secured Parties and shall not be commingled with any
other funds or property of the Company.
(c) The balance from time to time standing to the credit of the Lockbox
Account shall, except upon the occurrence and continuation of an Event of
Default (as defined under the Credit Agreement), be distributed to the
Company upon the order of the Company. Amounts on deposit in the Lockbox
Account shall, except upon the occurrence and continuation of an Event of
Default, be invested and re-invested from time to time in Permitted
Investments as the Company shall determine.
(d) Upon the occurrence and continuation of an Event of Default (as
defined under the Credit Agreement), the Collateral Agent shall, if so
instructed by the Required Lenders, (i) deliver a Stop Transfer Notice (as
defined in the Lockbox Agreement) to the Lockbox Bank and instruct the
Lockbox Bank to transfer to the Collateral Account all funds then and
thereafter standing to the credit of the Lockbox Account with the Lockbox
Bank and (ii) apply or cause to be applied (subject to collection) any or all
of the balance from time to time standing to the credit of the Collateral
Account and such Lockbox Account in the manner specified in Section 9.
(e) Amounts on deposit in the Collateral Account and, during the
continuance of an Event of Default, the Lockbox Account shall be invested and
re-invested from time to time in such Liquid Investments as the Company shall
determine, which Liquid Investments shall be held in the name and be under
the control of the Collateral Agent, provided that, if an Event of Default
has occurred and is continuing, the Collateral Agent shall, if instructed by
the Required Lenders, liquidate any such Liquid Investments and apply or
cause to be applied the proceeds thereof to the payment of the Secured
Obligations in the manner specified in Section 9. For this purpose, (i) each
Liquid Investment shall mature within 30 days after it is acquired by the
Collateral Agent and (ii) in order to provide the Collateral Agent, for the
benefit of the Secured Parties, with a perfected security interest therein,
each Liquid Investment shall be either:
(i) evidenced by negotiable certificates or instruments, or
if non-negotiable then issued in the name of the Collateral Agent, which
(together with any appropriate instruments of transfer) are delivered to,
and held by, the Collateral Agent or an agent thereof (which shall not be
the Company or any of its Affiliates) in the State of New York or the
Commonwealth of Massachusetts; or
12
(ii) in book-entry form and issued by the United States and
subject to pledge under applicable state law and Treasury regulations and
as to which (in the opinion of counsel to the Collateral Agent) appropriate
measures shall have been taken for perfection of the Security Interests.
SECTION 6. GENERAL AUTHORITY. The Company hereby irrevocably appoints the
Collateral Agent its true and lawful attorney, with full power of substitution,
in the name of the Company, the Collateral Agent, the Secured Parties or
otherwise, for the sole use and benefit of the Collateral Agent and the other
Secured Parties, but at the Company's expense, to the extent permitted by law to
exercise, at any time and from time to time while an Event of Default (as
defined under the Credit Agreement) has occurred and is continuing, all or any
of the following powers with respect to all or any of the Collateral:
(i) to demand, sue for, collect, receive and give acquittance for
any and all monies due or to become due thereon or by virtue thereof,
(ii) to settle, compromise, compound, prosecute or defend any action
or proceeding with respect thereto,
(iii) to sell, transfer, assign or otherwise deal in or with the same
or the proceeds or avails thereof, as fully and effectually as if the
Collateral Agent were the absolute owner thereof, and
(iv) to extend the time of payment of any or all thereof and to make
any allowance and other adjustments with reference thereto;
PROVIDED that the Collateral Agent shall give the Company not less than ten
days' prior written notice of the time and place of any sale or other intended
disposition of any of the Collateral, except any Collateral which is perishable
or threatens to decline speedily in value or is of a type customarily sold on a
recognized market. To the extent permitted by law, the Company agrees that such
notice constitutes "reasonable notification" within the meaning of Section
9-504(3) of the UCC.
SECTION 7. REMEDIES UPON EVENT OF DEFAULT. (a) If any Event of
Default under the Credit Agreement has occurred and is continuing, the
Collateral Agent may, in accordance with the written instructions of the
Required Lenders, exercise on behalf of the Secured Parties all rights of a
secured party under the UCC (whether or not in effect in the jurisdiction
where such rights are exercised) and, in addition, the Collateral Agent may,
without being required to give any notice, except as herein provided or as
may be required by mandatory provisions of law, (i) withdraw all cash and
Liquid Investments in the Collateral Account and apply such monies, Liquid
Investments and other cash, if any, then held by it as Collateral as
specified in Section 9 and (ii) if there shall be no such monies, Liquid
Investments or cash or if such monies, Liquid Investments or cash shall be
insufficient to pay all the Secured Obligations in full, sell the Collateral
or any part thereof at public or private sale, for cash, upon credit or for
future delivery, and at such price or prices as the Collateral Agent may deem
satisfactory. The Collateral Agent or any other Secured Party may be the
purchaser of any or all of the Collateral so sold at any public sale (or, if
the Collateral is of a type customarily sold in a recognized market or is of
a
13
type which is the subject of widely distributed standard price quotations, at
any private sale) and thereafter hold the same, absolutely, free from any
right or claim of whatsoever kind. The Company will execute and deliver such
documents and take such other action as the Collateral Agent deems necessary
or advisable in order that any such sale may be made in compliance with law.
Upon any such sale the Collateral Agent shall have the right to deliver,
assign and transfer to the purchaser thereof the Collateral so sold. Each
purchaser at any such sale shall hold the Collateral so sold to it
absolutely, free from any claim or right of whatsoever kind, including any
equity or right of redemption of the Company which may be waived, and the
Compan, to the extent permitted by law, hereby specifically waives all rights
of redemption, stay or appraisal which it has or may have under any law now
existing or hereafter adopted. The notice (if any) of such sale required by
Section 6 shall (1) in case of a public sale, state the time and place fixed
for such sale, and (2) in the case of a private sale, state the day after
which such sale may be consummated. Any such public sale shall be held at
such time or times within ordinary business hours and at such place or places
as the Collateral Agent may fix in the notice of such sale. At any such sale
the Collateral may be sold in one lot as an entirety or in separate parcels,
as the Collateral Agent may determine. The Collateral Agent shall not be
obligated to make any such sale pursuant to any such notice. The Collateral
Agent may, without notice or publication, adjourn any public or private sale
or cause the same to be adjourned from time to time by announcement at the
time and place fixed for the sale, and such sale may be made at any time or
place to which the same may be so adjourned. In case of any sale of all or
any part of the Collateral on credit or for future delivery, the Collateral
so sold may be retained by the Collateral Agent until the selling price is
paid by the purchaser thereof, but the Collateral Agent shall not incur any
liability in case of the failure of such purchaser to take up and pay for the
Collateral so sold and, in case of any such failure, such Collateral may
again be sold upon like notice. The Collateral Agent, instead of exercising
the power of sale herein conferred upon it, may in accordance with the
instructions of the Required Lenders proceed by a suit or suits at law or in
equity to foreclose the Security Interests and sell the Collateral, or any
portion thereof, under a judgment or decree of a court or courts of competent
jurisdiction.
(b) For the purpose of enforcing any and all rights and remedies under
this Agreement the Collateral Agent may (i) require the Company to, and the
Company agrees that it will, at its expense and upon the request of the
Collateral Agent, forthwith assemble all or any part of the Collateral as
directed by the Collateral Agent and make it available at a place designated
by the Collateral Agent which is, in the opinion of the Collateral Agent,
reasonably convenient to the Collateral Agent and the Company, whether at the
premises of the Company or otherwise, (ii) to the extent permitted by
applicable law, enter, with or without process of law and without breach of
the peace, any premise where any of the Collateral is or may be located, and
without charge or liability to it seize and remove such Collateral from such
premises, (iii) have access to and use the Company's books and records
relating to the Collateral and (iv) prior to the disposition of the
Collateral, store or transfer it without charge in or by means of any storage
or transportation facility owned or leased by the Company, process, repair or
recondition it or otherwise prepare it for disposition in any manner and to
the extent the Collateral Agent reasonably deems appropriate and, in
connection with such preparation and disposition, use without charge any
copyright, trademark, trade name, patent or technical process used by the
Company.
14
(c) Without limiting the generality of the foregoing, if any Event of
Default (as defined under the Credit Agreement) has occurred and is
continuing,
(i) the Collateral Agent may license, or sublicense, whether
general, special or otherwise, and whether on an exclusive or non-exclusive
basis, any Copyrights, Patents or Trademarks included in the Collateral
throughout the world for such term or terms, on such conditions and in such
manner as the Collateral Agent shall in its sole discretion determine;
(ii) the Collateral Agent may (without assuming any obligations or
liability thereunder), at any time and from time to time, in its sole
discretion, enforce (and shall have the exclusive right to enforce) against
any licensee or sublicensee all rights and remedies of the Company in, to
and under any Copyright Licenses, Patent Licenses or Trademark Licenses
included in the Collateral and take or refrain from taking any action under
any thereof, and the Company hereby releases the Collateral Agent and each
of the other Secured Parties from, and agrees to hold the Collateral Agent
and each of the other Secured Parties free and harmless from and against
any claims and expenses arising out of, any lawful action so taken or
omitted to be taken with respect thereto; and
(iii) upon request by the Collateral Agent, the Company will execute
and deliver to the Collateral Agent a power of attorney, in form and
substance satisfactory to the Collateral Agent, for the implementation of
any lease, assignment, license, sublicense, grant of option, sale or other
disposition of a Copyright, Patent or Trademark included in the Collateral
or any action related thereto. In the event of any such disposition
pursuant to this Section, the Company shall supply its know-how and
expertise relating to the manufacture and sale of the products bearing
Trademarks or the products or services made or rendered in connection with
Patents, and its customer lists and other records relating to such Patents
or Trademarks and to the distribution of said products, to the Collateral
Agent.
(d) Notwithstanding anything to the contrary contained herein or any
other Loan Document, neither the Collateral Agent nor any Secured Party
shall, without first obtaining the approval of a Governmental Authority, take
any action pursuant to this Agreement or any other Loan Document which would
constitute or result in an assignment of any License held by the Company or a
transfer of control of the Company if such assignment or transfer would
require, under the existing applicable law, the prior approval of such
Governmental Authority. The Company agrees to take, and the Company agrees
to cause each of its Subsidiaries to take, in each case upon the occurrence
and during the continuance of an Event of Default, any action that the
Collateral Agent may reasonably request in order to obtain from any
Governmental Authority such approval as may be necessary to enable the
Collateral Agent to assign or transfer control of the Licenses pursuant to
this Agreement, the Loan Documents and each other agreement, instrument and
document delivered to the Collateral Agent in connection herewith and
therewith, including specifically, at the expense of the Company, the use of
the Company's and each of its Subsidiaries' commercially reasonable efforts
to assist in obtaining approval of such Governmental Authority for any action
or transaction contemplated by this Agreement for which such approval is or
shall be required by law, and specifically, without limitation, upon request,
to prepare, sign and file with such Governmental Authority, the assignor's or
transferor's portion of
15
any application or applications for consent to the assignment of any License
or transfer of control necessary or appropriate under the rules and
regulations of such Governmental Authority for approval of any sale or sales
of any of the Collateral by or on behalf of the Collateral Agent.
SECTION 8. LIMITATION ON DUTY OF COLLATERAL AGENT IN RESPECT OF
COLLATERAL. Beyond the exercise of reasonable care in the custody thereof,
the Collateral Agent shall have no duty as to any Collateral in its
possession or control or in the possession or control of any agent or bailee
or any income thereon or as to the preservation of rights against prior
parties or any other rights pertaining thereto. The Collateral Agent shall
be deemed to have exercised reasonable care in the custody of the Collateral
in its possession if the Collateral is accorded treatment substantially equal
to that which it accords its own property, and shall not be liable or
responsible for any loss or damage to any of the Collateral, or for any
diminution in the value thereof, by reason of the act or omission of any
warehouseman, carrier, forwarding agency, consignee or other agent or bailee
selected by the Collateral Agent in good faith; PROVIDED, HOWEVER, nothing in
this Section 8 shall be deemed to prejudice any rights of the Company against
such warehouseman, carrier, forwarding agency, consignee or other agent or
bailee.
SECTION 9. APPLICATION OF PROCEEDS. Upon the occurrence and
during the continuance of an Event of Default (as defined under the Credit
Agreement), the proceeds of any sale of, or other realization upon, all or
any part of the Collateral and any cash held in the Collateral Account shall
be applied by the Collateral Agent in accordance with the Credit Agreement.
SECTION 10. APPOINTMENT OF CO-COLLATERAL AGENTS. At any time or
times, in order to comply with any legal requirement in any jurisdiction, the
Collateral Agent may appoint another bank or trust company or one or more
other persons, either to act as co-agent or co-agents, jointly with the
Collateral Agent, or to act as separate agent or agents on behalf of the
Secured Parties with such power and authority as may be necessary for the
effectual operation of the provisions hereof and may be specified in the
instrument of appointment.
SECTION 11. EXPENSES. In the event that the Company fails to
comply with the provisions of the Loan Documents or this Agreement, such that
the value of any Collateral or the validity, perfection, rank or value of any
Security Interest is thereby diminished or potentially diminished or put at
risk, the Collateral Agent if requested by the Required Lenders (i) shall
deliver written notice of such non-compliance to the Company requesting that
it cure such non-compliance, and (ii) if within ten Business Days after
delivery of such notice the Company has failed to cure such non-compliance,
the Collateral Agent may, but shall not be required to, effect such
compliance on behalf of the Company, and the Company shall reimburse the
Collateral Agent for the reasonable costs thereof on demand. All insurance
expenses and all expenses of protecting, storing, warehousing, appraising,
insuring, handling, maintaining and shipping the Collateral, any and all
excise, property, sales, and use taxes imposed by any state, federal, or
local authority on any of the Collateral, or in respect of periodic
appraisals and inspections of the Collateral to the extent the same may
reasonably be requested by the Required Lenders acting through the Collateral
Agent from time to time, or in respect of the sale or other disposition
thereof, shall be borne and paid by the Company; and if the Company fails to
promptly pay any portion thereof when due, except, if no Event of Default (as
defined under the Credit Agreement) has occurred and is continuing, with
respect to taxes which are being contested as permitted by
16
Section 5.05 of the Credit Agreement, the Collateral Agent or any other
Secured Party may, at its option, but shall not be required to, pay the same
and charge the Company's account therefor, and the Company agrees to
reimburse the Collateral Agent or such Secured Party therefor on demand. All
reasonable sums so paid or incurred by the Collateral Agent or any other
Secured Party for any of the foregoing and any and all other sums for which
the Company may become liable hereunder and all costs and expenses (including
attorneys' fees, legal expenses and court costs) reasonably incurred by the
Collateral Agent or any other Secured Party in enforcing or protecting the
Security Interests or any of their rights or remedies under this Agreement,
shall, together with interest thereon for each day until paid at the
Alternate Base plus the Applicable Rate plus interest at a rate per annum
equal to two percent (2%) for such day, be additional Secured Obligations
hereunder.
SECTION 12. TERMINATION OF SECURITY INTERESTS; RELEASE OF
COLLATERAL. (a) Upon the repayment in full of all Secured Obligations and the
termination of the Commitments, the Security Interests shall terminate and
all rights to the Collateral shall revert to the Company.
(b) At any time and from time to time prior to such termination of the
Security Interests, the Collateral Agent shall release the Collateral in
accordance with Section 5(c) hereof.
(c) If any Collateral is sold, leased, exchanged, assigned or otherwise
disposed of, or with respect to which on option has been granted, in
accordance with and as permitted under the Credit Agreement, the Security
Interests created hereby in such item (but not in any Proceeds arising from
such sale or exchange) shall cease immediately without any further action on
the part of the Collateral Agent.
(d) Upon any such termination of the Security Interests or release of
Collateral, the Collateral Agent will, at the expense of the Company, execute
and deliver to the Company such documents as the Company shall reasonably
request to evidence the termination of the Security Interests or the release
of such Collateral, as the case may be.
SECTION 13. NOTICES. All notices, approvals, requests, demands
and other communications hereunder shall be given in accordance with Section
9.01 of the Credit Agreement.
SECTION 14. WAIVERS, NON-EXCLUSIVE REMEDIES. No failure on the
part of the Collateral Agent to exercise, and no delay in exercising and no
course of dealing with respect to, any right under this Agreement or any
other Loan Document shall operate as a waiver thereof, nor shall any single
or partial exercise by the Collateral Agent of any right under this Agreement
or any other Loan Document preclude any other or further exercise thereof or
the exercise of any other right. The rights in this Agreement or the Loan
Documents are cumulative and are not exclusive of any other remedies provided
by law.
SECTION 15. SUCCESSORS AND ASSIGNS. This Agreement is for the
benefit of the Collateral Agent and the other Secured Parties and their
successors and assigns, and in the event of an assignment of all or any of
the Secured Obligations, the rights hereunder, to the extent applicable to
the indebtedness so assigned, may be transferred with such indebtedness.
This Agreement shall be binding on the Company and its successors and assigns
and the rights of the
17
Company hereunder shall inure to the benefit of the Company's successors and
permitted assigns.
SECTION 16. CHANGES IN WRITING. Neither this Agreement nor any
provision hereof may be changed, waived, discharged or terminated orally, but
only in writing signed by the Company and the Collateral Agent with the
consent of the Required Lenders.
SECTION 17. SEVERABILITY. If any provision hereof is invalid and
unenforceable in any jurisdiction, then, to the fullest extent permitted by
law, (i) the other provisions hereof shall remain in full force and effect in
such jurisdiction and shall be liberally construed in favor of the Collateral
Agent and the other Secured Parties in order to carry out the intentions of
the parties hereto as nearly as may be possible; and (ii) the invalidity or
unenforceability of any provision hereof in any jurisdiction shall not affect
the validity or enforceability of such provision in any other jurisdiction.
SECTION 18. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and
the same instrument and any of the parties hereto may execute this Agreement
by signing any such counterpart.
SECTION 19. GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF
PROCESS. (a) This Agreement shall be construed in accordance with and
governed by the law of the State of New York.
(b) The Company hereby irrevocably and unconditionally submits, for
itself and its property, to the nonexclusive jurisdiction of the Supreme
Court of the State of New York sitting in New York County and of the United
States District Court of the Southern District of New York, and any appellate
court from any thereof, in any action or proceeding arising out of or
relating to any Loan Document, or for recognition or enforcement of any
judgment, and each of the parties hereto hereby irrevocably and
unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the
extent permitted by law, in such Federal court. Each of the parties hereto
agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law. Nothing in this Agreement or any
other Loan Document shall affect any right that either Agent or any Lender
may otherwise have to bring any action or proceeding relating to this
Agreement or any other Loan Document against the Parent, the Borrower or
their properties in the courts of any jurisdiction.
(c) The Company hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it
may now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this Agreement or any other Loan
Document in any court referred to in paragraph (b) of this Section. Each of
the parties hereto hereby irrevocably waives, to the fullest extent permitted
by law, the defense of an inconvenient forum to the maintenance of such
action or proceeding in any such court.
(d) Each of the Parent and the Borrower hereby irrevocably appoints and
designates CT Corporation System, whose address is 1633 Broadway, New York,
New York 10019, or any other person having and maintaining a place of
business in the State of New York whom the
18
Parent or the Borrower may from time to time hereafter designate (having
given 30 days' notice thereof to the Administrative Agent, each Lender and
the Collateral Agent), as the true and lawful attorney and duly authorized
agent for acceptance of service of legal process of the Parent and the
Borrower. Without prejudice to the foregoing, each party to this Agreement
irrevocably consents to service of process in the manner provided for notices
in Section 9.01 of the Credit Agreement. Nothing in this Agreement or any
other Loan Document will affect the right of any party to this Agreement to
serve process in any other manner permitted by law.
SECTION 20. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF
OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY).
EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF
ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER
PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING
WAIVER AND (B) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN
INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION.
SECTION 21. WAIVER OF IMMUNITY. To the extent that the Company has
or hereafter may acquire any immunity from jurisdiction of any court or from
any legal process (whether through service or notice, attachment prior to
judgment, attachment in aid or execution, or otherwise) with respect to
itself or its property, the Company hereby irrevocably waives such immunity
in respect of its obligations hereunder and under the other Loan Documents to
the extent permitted by applicable law and, without limiting the generality
of the foregoing, agrees that the waivers set forth in this Section shall
have effect to the fullest extent permitted under the Foreign Sovereign
Immunities Act of 1976 of the United States of America and are intended to be
irrevocable for purposes of such Act.
(Signatures Follow on Next Page)
19
IN WITNESS WHEREOF, the parties hereto have caused this Security
Agreement (Borrower) to be duly executed by their respective authorized
officers as of the day and year first above written.
JATO OPERATING CORP.
By:
------------------------------------
Name:
Title:
STATE STREET BANK AND TRUST COMPANY, as
Collateral Agent
By:
------------------------------------
Name:
Title:
EXHIBIT A
TO
SECURITY
AGREEMENT
PERFECTION CERTIFICATE
The undersigned, [____________], Chief Executive Officer of JATO
OPERATING CORP., a Delaware corporation (the "Company"), hereby certifies
with reference to the Security Agreement (Borrower), dated as of July 14,
1999, between the Company and State Street Bank and Trust Company, as
Collateral Agent (terms defined therein or as provided therein being used
herein as therein defined), to the Administrative Agent and each Lender as
follows:
SECTION 1. NAMES.
(a) The exact corporate name of the Company as it appears in its
certificate of incorporation is as follows: [___________________]
(b) The Company has not had any other corporate name since its
organization.
(c) Except as set forth in Schedule 1, the Company has not changed
its identity or corporate structure in any way within the past five years.
(d) The following is a list of all other names (including trade
names or similar appellations) used by the Company or any of its divisions
or other business units at any time during the past five years:
[___________________]
SECTION 2. CURRENT LOCATIONS. As of the date hereof, (a) the chief
executive office of the Company is located at the following address:
NAME MAILING ADDRESS
---------------------------------------------
(b) The following are all the locations where the Company maintains
any books or records relating to any Accounts:
NAME MAILING ADDRESS
---------------------------------------------
(c) The following are all the places of business of the Company not
identified above:
NAME MAILING ADDRESS
---------------------------------------------
Exhibit A-1
(d) The following are all the locations not identified above where
the Company maintains any Inventory:
NAME MAILING ADDRESS
---------------------------------------------
(e) The following are all the locations not identified above where
the Company maintains or contemplates maintaining at any time when the
Loans are to be outstanding any Equipment:
NAME MAILING ADDRESS
---------------------------------------------
(f) The following are the names and addresses of all Persons other
than the Company which have possession of any of the Company's Inventory:
NAME MAILING ADDRESS
---------------------------------------------
(g) The following are the names and addresses of all Persons other
than the Company which have possession of any of the Company's Investment
Property:
NAME MAILING ADDRESS
---------------------------------------------
SECTION 3. PRIOR LOCATIONS.
(a) Set forth below is the information required by subparagraphs
(a), (b) and (c) of paragraph 2 with respect to each location or place of
business maintained by the Company at any time during the past five years:
(b) Set forth below is the information required by subparagraphs
(d) and (e) of paragraph 2 with respect to each location or bailee where or
with whom Inventory has been lodged at any time during the past four
months:
SECTION 4. UNUSUAL TRANSACTIONS. All Accounts have been originated by
the Company and all Inventory and Equipment has been acquired by the Company
in the ordinary course of its business.
SECTION 5. FILE SEARCH REPORTS. Attached hereto as Schedule 5(a) is a
true copy of a file search report from the Uniform Commercial Code filing
officer in each jurisdiction identified in paragraph 2 or 3 above with
respect to each name set forth in paragraph 1. Attached hereto as Schedule
5(b) is a true copy of each financing statement or other filing identified in
such file search reports.
SECTION 6. UCC FILINGS. (a) A duly signed financing statement on Form
UCC- 1 in substantially the form of Schedule 6 hereto has been duly delivered
to the Collateral Agent for
Exhibit A-2
filing in the Uniform Commercial Code filing office in each jurisdiction
identified in paragraph 2 hereof.
Attached hereto as Schedule 6(b) is a true copy of each such filing duly
acknowledged by the filing officer.
SECTION 7. SCHEDULE OF FILINGS. Attached hereto as Schedule 7 is a
schedule setting forth filing information with respect to the filings
described in paragraph 6 above.
SECTION 8. FILING FEES. All filing fees and taxes payable in
connection with the filings described in paragraph 6 above have been paid.
IN WITNESS WHEREOF, I have hereunto set my hand this _____ day of [_________],
1999.
---------------------------------
Name:
Title
Exhibit A-3
SCHEDULE 1
CHANGE IN CORPORATE STRUCTURE
SCHEDULE 6(b)
UCC FILINGS
SCHEDULE 7
SCHEDULE OF FILINGS
EXHIBIT B
TO
SECURITY
AGREEMENT
PATENT SECURITY AGREEMENT
(PATENTS, PATENT APPLICATIONS AND PATENT LICENSES)
WHEREAS, JATO OPERATING CORP., a Delaware corporation (herein
referred to as "Grantor") owns the Patents (as defined in the Security
Agreement referred to below) (including design patents and applications for
patents) listed on Schedule I annexed hereto, and is a party to the Patent
Licenses (as defined in the Security Agreement referred to below) identified
in Schedule I annexed hereto;
WHEREAS, Grantor, Jato Communications Corp., certain lenders, State
Street Bank and Trust Company, as Collateral Agent, and Lucent Technologies
Inc., as administrative agent, are parties to a Credit Agreement of even date
herewith (as the same may be amended and in effect from time to time among
said parties and such lenders (the "Lenders") as may from time to time be
parties thereto, the "Credit Agreement");
WHEREAS, pursuant to the terms of the Security Agreement (Borrower)
of even date herewith (as said Agreement may be amended and in effect from
time to time, the "Security Agreement") between Grantor and State Street Bank
and Trust Company, as collateral agent for the Secured Parties referred to
therein (in such capacity, together with its successors in such capacity,
"Grantee"), Grantor has granted to Grantee for the benefit of such Secured
Parties a continuing security interest in substantially all the assets of
Grantor, including all right, title and interest of Grantor in, to and under
the Patent Collateral (as defined herein) whether now owned or existing or
hereafter acquired or arising, to secure the Secured Obligations (as defined
in the Security Agreement);
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Grantor does hereby grant to
Grantee a continuing security interest in all of Grantor's right, title and
interest in, to and under the following (all of the following items or types
of property being herein collectively referred to as the "Patent
Collateral"), whether now owned or existing or hereafter acquired or arising:
(i) each Patent (including each design patent and patent
application), including, without limitation, each Patent (including each
design patent and patent application) referred to in Schedule I annexed
hereto;
(ii) each Patent License, including, without limitation, each Patent
License identified in Schedule I annexed hereto; and
Exhibit B-1
(iii) all proceeds of and revenues from the foregoing, including,
without limitation, all proceeds of and revenues from any claim by Grantor
against third parties for past, present or future infringement of any
Patent (including any design patent), including, without limitation, any
Patent referred to in Schedule I annexed hereto (including, without
limitation, any such Patent issuing from any application referred to in
Schedule I annexed hereto), and all rights and benefits of Grantor under
any Patent License, including, without limitation, any Patent License
identified in Schedule I annexed hereto.
Grantor hereby irrevocably constitutes and appoints Grantee and any
officer or agent thereof, with full power of substitution, as its true and
lawful attorney-in-fact with full power and authority in the name of Grantor
or in its name, from time to time, in Grantee's discretion, so long as any
Event of Default (as defined in the Credit Agreement) has occurred and is
continuing, to take with respect to the Patent Collateral any and all
appropriate action which Grantor might take with respect to the Patent
Collateral and to execute any and all documents and instruments which may be
necessary or desirable to carry out the terms of this Patent Security
Agreement and to accomplish the purposes hereof.
Except to the extent not prohibited in the Security Agreement, Grantor
agrees not to sell, license, exchange, assign or otherwise transfer or
dispose of, or grant any rights with respect to, or mortgage or otherwise
encumber, any of the foregoing Patent Collateral.
This security interest is granted in conjunction with the security
interests granted to Grantee pursuant to the Security Agreement. Grantor
does hereby further acknowledge and affirm that the rights and remedies of
Grantee with respect to the security interest in the Patent Collateral made
and granted hereby are more fully set forth in the Security Agreement, the
terms and provisions of which are incorporated by reference herein as if
fully set forth herein.
IN WITNESS WHEREOF, Grantor has caused this Patent Security Agreement to
be duly executed by its officer thereunto duly authorized as of the ____ day
of _____________, _____.
JATO OPERATING CORP.
By:
-----------------------------------
Name:
Title:
Acknowledged:
STATE STREET BANK AND TRUST COMPANY,
as Collateral Agent
By:
--------------------------------
Name:
Title:
Exhibit B-2
SCHEDULE I
TO PATENT
SECURITY
AGREEMENT
PATENTS
A. U.S. PATENTS AND DESIGN PATENTS
I.D. NO. PATENT NO, ISSUE DATE TITLE
B. U. S. PATENT APPLICATIONS
SERIAL NO. DATE FILE TITLE
EXHIBIT C
TO
SECURITY
AGREEMENT
TRADEMARK SECURITY AGREEMENT
(TRADEMARKS, TRADEMARK REGISTRATIONS, TRADEMARK
APPLICATIONS AND TRADEMARK LICENSES)
WHEREAS, JATO OPERATING CORP., a Delaware corporation (herein referred
to as "Grantor"), owns the Trademarks (as defined in the Security Agreement
referred to below) listed on Schedule I annexed hereto, and is a party to the
Trademark Licenses (as defined in the Security Agreement referred to below)
identified in Schedule 1 annexed hereto;
WHEREAS, Grantor, Jato Communications Corp., certain lenders, State
Street Bank and Trust Company, as Collateral Agent, and Lucent Technologies
Inc., as administrative agent, are parties to a Credit Agreement of even date
herewith (as the same may be amended and in effect from time to time among
said parties and such lenders (the "Lenders") as may from time to time be
parties thereto, the "Credit Agreement");
WHEREAS, pursuant to the terms of the Security Agreement (Borrower) of
even date herewith (as said Agreement may be amended and in effect from time
to time, the "Security Agreement") between Grantor and State Street Bank and
Trust Company, as collateral agent for the Secured Parties referred to
therein (in such capacity, together with its successors in such capacity,
"Grantee"), Grantor has granted to Grantee for the benefit of such Secured
Parties a security interest in substantially all the assets of Grantor,
including all right, title and interest of Grantor in, to and under the
Trademark Collateral (as defined herein), whether now owned or existing or
hereafter acquired or arising, to secure the Secured Obligations (as defined
in the Security Agreement);
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Grantor does hereby grant to
Grantee a continuing security interest in all of Grantor's right, title and
interest in, to and under the following (all of the following items or types
of property being herein collectively referred to as the "Trademark
Collateral"), whether now owned or existing or hereafter acquired or arising:
(i) each Trademark, including, without limitation, each Trademark
application referred to in Schedule I annexed hereto, and all of the
goodwill of the business connected with the use of, or symbolized by, each
such Trademark;
(ii) each Trademark License, including, without limitation, each
Trademark License identified in Schedule I annexed hereto, and all of the
goodwill of the business connected with the use of, or symbolized by, each
Trademark licensed pursuant thereto; and
Exhibit C-1
(iii) all proceeds of and revenues from the foregoing, including,
without limitation, all proceeds of and revenues from any claim by Grantor
against third parties for past, present or future unfair competition with,
or violation of intellectual property rights in connection with or injury
to, or infringement or dilution of, any Trademark, including, without
limitation, any Trademark referred to in Schedule I hereto, and all rights
and benefits of Grantor under any Trademark License, including, without
limitation, any Trademark License identified in Schedule I hereto, or for
injury to the goodwill associated with any of the foregoing.
Grantor hereby irrevocably constitutes and appoints Grantee and any
officer or agent thereof, with full power of substitution, as its true and
lawful attorney-in-fact with full power and authority in the name of Grantor
or in its name, from time to time, in Grantee's discretion, so long as any
Event of Default (as defined in the Credit Agreement) has occurred and is
continuing, to take with respect to the Trademark Collateral any and all
appropriate action which Grantor might take with respect to the Trademark
Collateral and to execute any and all documents and instruments which may be
necessary or desirable to carry out the terms of this Trademark Security
Agreement and to accomplish the purposes hereof.
Except to the extent not prohibited in the Security Agreement, Grantor
agrees not to sell, license, exchange, assign or otherwise transfer or
dispose of, or grant any rights with respect to, or mortgage or otherwise
encumber, any of the foregoing Trademark Collateral.
This security interest is granted in conjunction with the security
interests granted to Grantee pursuant to the Security Agreement. Grantor
does hereby further acknowledge and affirm that the rights and remedies of
Grantee with respect to the security interest in the Trademark Collateral
made and granted hereby are more fully set forth in the Security Agreement,
the terms and provisions of which are incorporated by reference herein as if
fully set forth herein.
IN WITNESS WHEREOF, Grantor has caused this Trademark Security Agreement
to be duly executed by its officer thereunto duly authorized as of the ____
day of ___________, ____.
JATO OPERATING CORP.
By:
--------------------------------
Name:
Title:
Acknowledged:
STATE STREET BANK AND TRUST COMPANY,
as Collateral Agent
By:
-----------------------------
Name:
Title:
Exhibit C-2
SCHEDULE I
TO
TRADEMARK
SECURITY
AGREEMENT
U.S. TRADEMARKS AND TRADEMARK REGISTRATIONS
A. U.S. TRADEMARKS AND TRADEMARK REGISTRATIONS
REG. NO. REG. DATE MARK
-------- --------- ----
B. U.S. TRADEMARK APPLICATIONS
SERIAL NO. DATE FILED MARK
---------- ---------- ----
EXCLUSIVE TRADEMARK LICENSES
PARTIES
NAME OF DATE OF
AGREEMENT LICENSOR LICENSEE AGREEMENT SUBJECT MATTER
--------- -------- -------- --------- --------------
EXHIBIT D TO
SECURITY
AGREEMENT
COPYRIGHT SECURITY AGREEMENT
(COPYRIGHTS, COPYRIGHT REGISTRATIONS, COPYRIGHT
APPLICATIONS AND COPYRIGHT LICENSES)
WHEREAS, JATO OPERATING CORP., a Delaware corporation (herein referred
to as "Grantor") owns the Copyrights (as defined in the Security Agreement
referred to below) listed on Schedule I annexed hereto, and is a party to the
Copyright Licenses (as defined in the Security Agreement referred to below)
identified in Schedule I annexed hereto;
WHEREAS, Grantor, Jato Communications Corp., certain lenders, State
Street Bank and Trust Company, as Collateral Agent, and Lucent Technologies
Inc., as administrative agent, are parties to a Credit Agreement of even date
herewith (as the same may be amended and in effect from time to time among
said parties and such lenders (the "Lenders") as may from time to time be
parties thereto, the "Credit Agreement");
WHEREAS, pursuant to the terms of the Security Agreement (Borrower) of
even date herewith (as said Agreement may be amended and in effect from time
to time, the "Security Agreement") between Grantor and State Street Bank and
Trust Company, as collateral agent for the Secured Parties referred to
therein (in such capacity, together with its successors in such capacity, the
"Grantee"), Grantor has granted to Grantee for the benefit of such Secured
Parties a security interest in substantially all the assets of the Grantor,
including all right, title and interest of Grantor in, to and under the
Copyright Collateral (as defined herein), whether now owned or existing or
hereafter acquired or arising, to secure the Secured Obligations (as defined
in the Security Agreement);
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Grantor does hereby grant to
Grantee a continuing security interest in all of Grantor's right, title and
interest in, to and under the following (all of the following items or types
of property being herein collectively referred to as the "Copyright
CoIlateral"), whether now owned or existing or hereafter acquired or arising:
(i) each Copyright, including, without limitation, each Copyright
referred to in Schedule I annexed hereto;
(ii) each Copyright License, including, without limitation, each
Copyright License identified in Schedule I annexed hereto; and
(iii) all proceeds of and revenues from the foregoing, including,
without limitation, all proceeds of and revenues from any claim by Grantor
against third parties for past, present or future infringement of any
Copyright, including, without limitation, any Copyright referred to in
Schedule I annexed hereto, and all rights and benefits of
Exhibit D-1
Grantor under any Copyright License, including, without limitation, any
Copyright License identified in Schedule I annexed hereto.
Grantor hereby irrevocably constitutes and appoints Grantee and any
officer or agent thereof, with full power of substitution, as its true and
lawful attorney-in-fact with full power and authority in the name of Grantor
or in its name, from time to time, in Grantee's discretion, so long as any
Event of Default (as defined in the Credit Agreement) has occurred and is
continuing, to take with respect to the Copyright Collateral any and all
appropriate action which Grantor might take with respect to the Copyright
Collateral and to execute any and all documents and instruments which may be
necessary or desirable to carry out the terms of this Copyright Security
Agreement and to accomplish the purposes hereof.
Except to the extent not prohibited in the Security Agreement, Grantor
agrees not to sell, license, exchange, assign or otherwise transfer or
dispose of, or grant any rights with respect to, or mortgage or otherwise
encumber, any of the foregoing Copyright Collateral.
This security interest is granted in conjunction with the security
interests granted to Grantee pursuant to the Security Agreement. Grantor
does hereby further acknowledge and affirm that the rights and remedies of
Grantee with respect to the security interest in the Copyright Collateral
made and granted hereby are more fully set forth in the Security Agreement,
the terms and provisions of which are incorporated by reference herein as if
fully set forth herein.
IN WITNESS WHEREOF, Grantor has caused this Copyright Security Agreement
to be duly executed by its officer thereunto duly authorized as of the
_____day of _______, _____.
JATO OPERATING CORP.
By:
---------------------------------
Name:
Title:
Acknowledged:
STATE STREET BANK AND TRUST COMPANY,
as Collateral Agent
By:
-----------------------------
Name:
Title:
Exhibit D-2
SCHEDULE I
TO
COPYRIGHT
SECURITY
AGREEMENT
COPYRIGHTS AND COPYRIGHT REGISTRATION
REGISTRATION NO. REG. DATE TITLE
---------------- --------- -----
COPYRIGHT APPLICATIONS
SERIAL NO. DATE FILED TITLE
---------- ---------- -----
COPYRIGHT LICENSES
PARTIES
NAME OF DATE OF SUBJECT
AGREEMENT LICENSOR LICENSEE AGREEMENT MATTER
--------- -------- -------- --------- ------
EXHIBIT E TO
SECURITY
AGREEMENT
OPINION OF
COUNSEL FOR THE COMPANY
The Security Agreement creates and constitutes as security for the
Secured Obligations (as defined in the Security Agreement and including any
future obligations which are Secured Obligations), in favor of the Collateral
Agent for the ratable benefit of the Secured Parties, a valid security
interest in all right, title and interest of the Company in the Collateral
and all right, title and interest of the Company in the Collateral Account.
The security interests of the Collateral Agent in all right, title and
interest of the Company in the Collateral created by the Security Agreement
constitute perfected security interests under the Uniform Commercial Code, as
in effect in the State of New York ("UCC"), the United States Copyright Act
("CA"), the United States Patent Act ("PA") and the United States Trademark
Act ("TA"), to the extent that a security interest therein may be perfected
under the UCC, the CA, the PA or the TA. Insofar as the priority thereof is
governed by the UCC, the priority of the security interests created by the
Security Agreement in the Collateral in which the Company has rights on the
date hereof will be the same with respect to Loans made or deemed made
pursuant to the Credit Agreement after the date hereof, except to the extent
that any priority may be affected by any security interest, lien or other
encumbrance imposed by law in favor of any government or governmental
authority or agency. Unless otherwise specifically defined herein, each term
defined herein has the meaning assigned to such term in the Security
Agreement.
With respect to the enforceability of the Security Documents, we express
no opinion as to the availability of specific performance. Moreover, our
opinion with respect to the enforceability of the Security Documents is
subject to the further qualification that certain remedial provisions thereof
may be limited by the law of the State of New York and applicable law of the
United States of America, but such laws do not, in our opinion, make the
remedies afforded thereby inadequate for the practical realization of the
benefits of the security intended to be provided thereby.
Exhibit E-1
EXHIBIT F TO
SECURITY
AGREEMENT
LOCKBOX AGREEMENT
LOCKBOX AGREEMENT, dated as of [___________], [_____], among JATO
OPERATING CORP., a Delaware corporation (the "Company"), STATE STREET BANK
AND TRUST COMPANY, as Collateral Agent under the Security Agreement referred
to below (the "Collateral Agent"), and [______________] (the "Lockbox Bank").
WITNESSETH:
WHEREAS, the Company and the Collateral Agent have entered into a
Security Agreement (Borrower), dated as of July 14, 1999 (as the same may be
amended from time to time, the "Security Agreement") under which the Company
has granted a continuing security interest in and to the Collateral (as
defined in the Security Agreement) to secure its obligations under the Loan
Documents (defined as provided in the Security Agreement);
WHEREAS, pursuant to the Security Agreement, the Company has agreed to
instruct certain obligors to make payments to (the "Post Office Box"); and
WHEREAS, the Company has requested that the Lockbox Bank establish and
maintain a bank account as further described herein, and the Lockbox Bank is
willing to establish and maintain such account pursuant to this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained and for other good and valuable consideration, the
receipt of which is hereby acknowledged, the parties hereto agree as follows:
SECTION 1. POST OFFICE BOX; DEPOSITS INTO THE LOCK BOX ACCOUNT. (a) The
Lockbox Bank shall have unrestricted and exclusive access to the Post Office
Box for the purpose of collecting mail for delivery and deposit into the
Lockbox Account (as defined below) (even though addressed to the Company) and
shall collect the mail delivered thereto on each business day in accordance
with the Lockbox Bank's regular collection schedule.
(b) The contents of the mail collected from the Post Office Box,
whether consisting of cash, checks, drafts, bills of exchange, money orders
or other instruments or documents, shall be promptly deposited by the Lockbox
Bank into the Lockbox Account. The term "Lockbox Account" means account no.
[____________] opened and maintained by the Lockbox Bank for the Company.
(c) The Lockbox Bank shall prepare one photocopy of the front and back
of each check, draft, bill of exchange, money order or other instrument or
document (collectively, hereinafter called the "checks"; individually, a
"check") with the date of deposit to be shown on the bottom edge thereof.
Attachments received with payments, such as detachable stubs,
Exhibit F-1
together with any correspondence and the individual envelope, are to be
affixed to the photocopy of the check. All of the above instruments will be
delivered by the Lockbox Bank to the Company on a same day basis.
(d) The Lockbox Bank shall endorse all checks which appear to be in
order for deposit into the Lockbox Account and shall process each item under
the same terms and conditions as would apply if the Lockbox Bank or the
Company had made the deposit directly. The Lockbox Bank shall endorse all
such checks as follows:
"DEPOSIT TO THE ACCOUNT OF AND WITHOUT PREJUDICE TO THE WITHIN
NAMED PAYEE LOCKBOX SERVICES"
This endorsement may be made by use of a payee endorsement stamp.
(e) Undated checks may be dated by the Lockbox Bank to agree with the
postmark date and included in the regular deposit. Checks incorrectly made
out, where numerical and written amounts differ, are to be deposited for the
written amount only. Checks bearing no signature are to be stamped with a
"Kindly Refer to Maker" stamp and processed. Third-party checks may be
deposited into the Lockbox Account if properly endorsed.
(f) Checks bearing the legend "Payment in Full" or words of similar
import, either typed or handwritten, and checks that the Lockbox Bank, in its
normal banking practices and in its sole discretion, decides to submit to the
special attention of the Company or the Collateral Agent, shall be withheld
from the clearing system and sent to the Company or, at any time after
receipt by the Lockbox Bank of written notice from (which notice may be
delivered only upon the occurrence and during the continuation of an Event of
Default (as defined in the Credit Agreement)) the Collateral Agent, to the
entity designated in a written notice from the Collateral Agent. Should the
Lockbox Bank by reason of the exercise of its judgment, or through
inadvertence or oversight, process any of the checks covered by this Section
1(f) for collection and credit such checks to the Lockbox Account, the
Company and the Collateral Agent agree that the Lockbox Bank shall incur no
responsibility or liability.
(g) The details representing deposited items, adding machine tapes,
advice of credit, etc., together with all other materials rejected for
various reasons, and so marked, shall be sent by the Lockbox Bank to the
Company or, at any time after receipt by the Lockbox Bank of written notice
(which notice may be delivered only upon the occurrence and during the
continuation of an Event of Default (as defined in the Credit Agreement))
from the Collateral Agent, to the entity designated in a written notice from
the Collateral Agent. Checks returned unpaid because of uncollected or
insufficient funds shall be redeposited without advice. Checks returned a
second time shall be charged to the Lockbox Account and mailed with
appropriate advice to the Company or, at any time after receipt by the
Lockbox Bank of written notice (which notice may be delivered only upon the
occurrence and during the continuation of an Event of Default (as defined in
the Credit Agreement)) from the Collateral Agent, to the entity designated in
a written notice from the Collateral Agent.
Exhibit F-2
(h) The Lockbox Bank shall maintain a microfilm record of each check
included in the Lockbox Account in accordance with the Lockbox Bank's normal
lockbox procedures. This film shall be available for use by the Company and
the Collateral Agent.
(i) The Company shall deposit such amounts into the Lockbox Account as
are required to be so deposited pursuant to Section 5 of the Security
Agreement.
SECTION 2. THE LOCKBOX ACCOUNT AND TRANSFERS THEREFROM. (a) Unless and
until the Lockbox Bank receives notice (which notice may be delivered only
upon the occurrence and during the continuation of an Event of Default (as
defined in the Credit Agreement)) from the Collateral Agent that the
provisions of Section 2(b) are to be implemented, which notice shall be
effective upon receipt by the Lockbox Bank (a "Stop Transfer Notice"), the
Lockbox Bank will debit the Lockbox Account in accordance with the Company's
instructions.
(b) After receipt by the Lockbox Bank of a Stop Transfer Notice, the
Lockbox Bank will cease debiting the Lockbox Account in accordance with the
Company's instructions (but may continue to debit the Lockbox Account in
accordance with Section 1(g)) and will disburse funds from the Lockbox
Account only in accordance with instructions from the Collateral Agent.
SECTION 3. MISCELLANEOUS. (a) The Company hereby agrees to immediately
notify its account debtors which have not already been notified to send all
their remittances to the Post Office Box.
(b) The Lockbox Bank's compensation for providing the services
contemplated herein shall be as mutually agreed between the Company and the
Lockbox Bank from time to time.
(c) The Lockbox Bank undertakes to perform only such duties as are
expressly set forth herein and are normally undertaken by the Lockbox Bank in
connection with its lockbox processing. Notwithstanding any other provision
of this Agreement, it is agreed by the parties to this Agreement that the
Lockbox Bank shall not be liable for any action taken by the Lockbox Bank or
any of its directors, officers, agents or employees in accordance with this
Agreement except for the Lockbox Bank's (or any director's, officer's,
agent's or employee's) gross negligence or willful misconduct. In no event
shall the Lockbox Bank be liable for losses or delays resulting from acts of
God, force majeure, computer malfunctions, interruptions of communication
facilities, labor difficulties or other causes beyond the Lockbox Bank's
reasonable control or for indirect, special or consequential damages.
(d) All notices or other written communications hereunder shall be sent:
in the case of the Lockbox Bank, to:
--------------------
--------------------
--------------------
--------------------
Exhibit F-3
in the case of the Company, to:
--------------------
--------------------
--------------------
--------------------
in the case of the Collateral Agent, to:
--------------------
--------------------
--------------------
--------------------
(e) The Lockbox Bank shall not assert, claim or endeavor to exercise
any right of set-off or banker's lien against any funds which may at any time
be deposited in the Lockbox Account, or any items or proceeds thereof that
come into the Lockbox Bank's possession in connection with this Agreement,
except to the extent otherwise provided in the last sentence of Section 1(g)
and except for fees payable pursuant to Section 3(b).
(f) During the term of the Security Agreement, this Agreement may be
terminated only by the Lockbox Bank, and then only upon written notice to the
other parties; PROVIDED that such termination shall not be effective until
the earlier of (i) such time as a successor bank shall have been appointed
and shall have accepted the responsibilities, duties and obligations of the
Lockbox Bank under this Agreement and (ii) 5:00 P.M. (New York time) on the
60th day after receipt of such written notice. In the event that the Lockbox
Bank receives remittances following such termination, it will forward such
remittances to such successor bank (or, if no successor bank has been
appointed and shall have accepted the responsibilities, duties and
obligations of the Lockbox Bank under this Agreement, then as directed by the
Collateral Agent) and the Company shall compensate the Lockbox Bank for such
services at the price agreed to pursuant to Section 3(b) hereof.
(g) Neither this Agreement nor any provision hereof may be changed,
amended, modified or waived orally, but only by an instrument in writing
signed by the parties hereto.
(h) This Agreement shall be governed by and construed in accordance
with the laws of the State of New York.
(i) This Agreement shall be binding upon and shall inure to the benefit
of the parties hereto and their respective successors and assigns.
(j) This Agreement may be executed in any number of counterparts which
together shall constitute one and the same instrument.
(k) The Company agrees to pay, indemnify and hold the Lockbox Bank
harmless from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever (including,
Exhibit F-4
without limitation, legal fees) with respect to the performance of this
Agreement by the Lockbox Bank or of its directors, officers, agents or
employees, unless arising from its or such natural persons' own gross
negligence or willful misconduct. The provisions of this paragraph shall
survive termination of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first above written.
JATO OPERATING CORP.
By:
-------------------------------
Name:
Title:
[BANK]
By:
-------------------------------
Name:
Title:
STATE STREET BANK AND TRUST
COMPANY, as Collateral Agent
By:
-------------------------------
Name:
Title:
Exhibit F-5
EXHIBIT G
TO SECURITY AGREEMENT
[FORM OF SECURITIES CONTROL ACCOUNT AGREEMENT]
Exhibit G-1
EXHIBIT G TO
SECURITY
AGREEMENT
(BORROWER)
[FORM OF SECURITIES ACCOUNT CONTROL AGREEMENT (BORROWER)]
SECURITIES ACCOUNT CONTROL AGREEMENT (BORROWER)
This SECURITIES ACCOUNT CONTROL AGREEMENT (BORROWER) (the
"AGREEMENT"), dated as of July 14, 1999, by and among Jato Operating Corp., a
Delaware corporation (the "BORROWER"), Lehman Brothers Inc. (the "SECURITIES
INTERMEDIARY"), and State Street Bank and Trust Company, as Collateral Agent
(the "COLLATERAL AGENT") for the benefit of the Secured Parties (as defined
in the Credit Agreement referred to below). Capitalized terms not otherwise
defined herein shall have the meanings set forth in the Credit Agreement,
dated as of July 14, 1999, among the Borrower, Jato Communications Corp., the
lenders party thereto, the Collateral Agent and Lucent Technologies Inc., as
Administrative Agent, as amended, supplemented and modified from time to time
(the "CREDIT AGREEMENT"), and references herein to the "UCC" are references
to the Uniform Commercial Code as in effect in the State of New York.
WHEREAS, pursuant to the Security Agreement (Borrower), the
Borrower has granted a security interest in substantially all of its assets;
and
WHEREAS, the Security Agreement (Borrower) requires the
Borrower and the Securities Intermediary to enter into this Agreement;
NOW THEREFORE, the parties hereto hereby agree, for good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, as follows:
1. ESTABLISHMENT OF SECURITIES ACCOUNT. The Securities
Intermediary hereby confirms that the Securities Intermediary has established
account number 833-33166-1-3 under the name "Jato Operating Corp. pledge
account for State Street Bank and Trust Company, as Collateral Agent"
(together with any successor accounts, the "SECURITIES ACCOUNT") for the
Borrower.
2. TREATMENT OF THE SECURITIES ACCOUNT.
(a) The Securities Account is, and shall be treated as, a
"securities account" within the meaning of Section 8-501 of the UCC.
(b) The Securities Account is an account to which financial
assets are or may be credited.
(c) The Securities Intermediary shall treat the Collateral
Agent as (i) entitled to exercise the rights that comprise any financial
asset credited to the Securities Account, and (ii) the "entitlement holder"
(within the meaning of Section 8-102 of the UCC), for the benefit of the
Secured Parties, with respect to the Securities Account on the books and
records of the Securities Intermediary.
(d) All property delivered to the Securities Intermediary
shall be promptly credited to the Securities Account.
(e) All securities or other property (other than cash)
capable of being issued or registered in the name of a Person or in bearer
form underlying any financial assets credited to the Securities Account shall
be registered in the name of "Jato Operating Corp. pledge account for State
Street Bank and Trust Company, as Collateral Agent" or indorsed to the
Securities Intermediary or in blank, and in no case shall any such financial
asset credited to the Securities Account be registered in the name of the
Borrower, payable to the order of the Borrower or specially indorsed to the
Borrower, except as provided in Section 5 hereof.
3. "FINANCIAL ASSETS" ELECTION. Each item of property
(whether investment property, financial asset, security, instrument or cash
or any other property of any kind) credited to the Securities Account shall
be treated as a "financial asset" (within the meaning of Section 8-102(a)(9)
of the UCC) under Article 8 of the UCC.
4. CONTROL BY COLLATERAL AGENT. Upon receipt of a Notice
of Exclusive Control, the Securities Intermediary shall: (i) comply with all
notifications it receives directing it to transfer or redeem any financial
asset in the Securities Account (each an "ENTITLEMENT ORDER") originated by
the Collateral Agent without further consent by the Borrower; and (ii) take
directions with respect to the Securities Account from the Collateral Agent.
5. BORROWER'S RIGHTS IN THE SECURITIES ACCOUNT.
(a) Except as otherwise provided in this Section 5, the
Securities Intermediary shall comply with Entitlement Orders originated by
the Borrower without further consent by the Collateral Agent.
(b) If the Securities Intermediary shall have received from
the Collateral Agent a notice of exclusive control substantially in the form
of Exhibit A attached (a "NOTICE OF EXCLUSIVE CONTROL"), the Securities
Intermediary shall cease:
(i) complying with Entitlement Orders or other
directions concerning the Securities Account originated by the Borrower;
and
(ii) distributing to the Borrower earnings, income,
dividends, interest, or other distributions on investment property,
instruments, money, or other property credited to the Securities Account.
(c) The Collateral Agent hereby agrees, solely for the benefit
of the Borrower and its successors and assigns, that the Collateral Agent will
not issue a Notice of Exclusive
2
Control or any Entitlement Order unless an Event of Default has occurred and
is continuing on such date.
(d) Notwithstanding any contrary provisions hereof, unless
and until the Securities Intermediary receives a Notice of Exclusive Control
from the Collateral Agent, (i) the Borrower shall have the right to (1) trade
and exercise rights over the Securities Account, including Entitlement Orders
that would require the Securities Intermediary to make a delivery to or for
the account of the Borrower or any other Person and (2) originate Entitlement
Orders with respect to the Securities Account and (ii) the Securities
Intermediary shall handle, invest, disburse and dispose of all financial
assets credited to the Securities Account in accordance with Entitlement
Orders or other directions originated by the Borrower.
(e) Upon receipt of a Notice of Exclusive Control, the
Securities Intermediary shall cease complying with any Entitlement Orders
originated by the Borrower that would require the Securities Intermediary to
make a delivery to or for the account of the Borrower or any other Person,
except where the Collateral Agent has confirmed in writing that such delivery
is acceptable to the Collateral Agent.
6. SECURITY INTERMEDIARY'S LIEN. The Securities
Intermediary agrees that, except for payment of its fees, commissions and
settlement of open orders, it will not assert any lien, encumbrance, claim or
right against the Securities Account or any asset carried in the Securities
Account.
7. SECURITIES INTERMEDIARY'S RESPONSIBILITY.
(a) The Securities Intermediary shall not be liable to the
Collateral Agent (for the benefit of the Secured Parties) for complying with
Entitlement Orders from the Borrower that are received by the Securities
Intermediary before the Securities Intermediary receives and has a reasonable
opportunity to act on a Notice of Exclusive Control.
(b) The Securities Intermediary shall not be liable to the
Borrower for complying with a Notice of Exclusive Control or with Entitlement
Orders originated by the Collateral Agent, even if the Borrower notifies the
Securities Intermediary that the Collateral Agent is not legally entitled to
issue the Entitlement Order or Notice of Exclusive Control.
(c) This Agreement does not create any obligation of the
Securities Intermediary except for those expressly set forth in this
Agreement. In particular, the Securities Intermediary need not investigate
whether the Collateral Agent is entitled under the Collateral Agent's
agreements with the Borrower to give an Entitlement Order or a Notice of
Exclusive Control. The Securities Intermediary may rely on notices and
communications that it believes were given by the appropriate party.
8. STATEMENTS, CONFIRMATIONS, AND NOTICES OF ADVERSE
CLAIMS. The Securities Intermediary shall provide to the Collateral Agent
duplicate copies of all statements, confirmations and other communications
sent by the Securities Intermediary to the Borrower. Except for the claims
and interests of the Collateral Agent (for the benefit of the Secured
Parties) and of the Borrower, the Securities Intermediary does not know of
any claim to, or interest in, the Securities Account or in any financial
assets credited thereto. If any person asserts any lien,
3
encumbrance or adverse claim (including any writ, garnishment, judgment,
warrant of attachment, execution or similar process) against the Securities
Account or in any financial asset credited thereto, the Securities
Intermediary shall notify the Collateral Agent and the Borrower thereof
promptly after becoming aware thereof.
9. REPRESENTATIONS, WARRANTIES, AND COVENANTS OF THE
SECURITIES INTERMEDIARY. The Securities Intermediary hereby represents,
warrants and covenants that:
(a) The Securities Account has been or shall be established
as described in Section 1 above, and the Securities Account shall be
maintained in the manner set forth herein until termination of this
Agreement. The Securities Intermediary shall not change the name or account
numbers of the Securities Account without the prior written consent of the
Collateral Agent.
(b) No financial asset is registered in the name of the
Borrower, or payable to the Borrower's order, or specifically indorsed to the
Borrower, except to the extent that such financial asset has been indorsed to
the Securities Intermediary or in blank. Except as otherwise provided in
Section 5 hereof, no financial asset shall be registered in the name of the
Borrower or payable to the Borrower's order or specially indorsed to the
Borrower, except to the extent that such financial asset has been indorsed to
the Securities Intermediary or in blank.
(c) This Agreement is the valid and legally binding
obligation of the Securities Intermediary.
(d) Other than this Agreement, (i) the Securities
Intermediary has not entered into, and until the termination of this
Agreement shall not enter into, any agreement with any other Person relating
to the Securities Account and/or any financial assets credited thereto
pursuant to which it has agreed to comply with Entitlement Orders of such
Person; and (ii) the Securities Intermediary has not entered into any other
agreement with the Borrower or the Collateral Agent purporting to limit or
condition the obligation of the Securities Intermediary to comply with
Entitlement Orders as set forth in Section 4 and Section 5 hereof; provided
that, the Collateral Agent acknowledges that the Securities Account is
managed on a discretionary basis by the Securities Intermediary on behalf of
the Borrower.
10. INDEMNITY. The Borrower hereby indemnifies and agrees
to defend and hold harmless the Securities Intermediary, its officers,
directors, employees, and agents against claims, liabilities, and expenses
arising out of this Agreement (including attorneys' fees and disbursements),
except to the extent that such claims, liabilities, or expenses are caused by
or arise from the Securities Intermediary's gross negligence or willful
misconduct.
11. GOVERNING LAW. This Agreement and the Securities
Account shall be governed by the laws of the State of New York. Regardless of
any provisions in any other agreement, for purposes of the UCC, New York
shall be deemed to be the jurisdiction of the Securities Intermediary with
respect to the Securities Account and Entitlement Orders related thereto.
4
12. CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL.
(a) THE BORROWER IRREVOCABLY CONSENTS THAT ANY LEGAL ACTION
OR PROCEEDING BY THE COLLATERAL AGENT AGAINST IT UNDER, ARISING OUT OF OR IN
ANY MANNER RELATING TO THIS AGREEMENT OR ANY TRANSACTION RELATED HERETO MAY
BE BROUGHT IN ANY COURT OF THE STATE OF NEW YORK, COUNTY OF NEW YORK, OR IN
THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK. THE
BORROWER, BY THE EXECUTION AND DELIVERY OF THIS AGREEMENT, EXPRESSLY AND
IRREVOCABLY ASSENTS AND SUBMITS TO THE PERSONAL JURISDICTION OF ANY OF SUCH
COURTS IN ANY SUCH ACTION OR PROCEEDING. AS AN ALTERNATIVE METHOD OF
SERVICE, THE BORROWER FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF ANY
COMPLAINT, SUMMONS, NOTICE OR OTHER PROCESS RELATING TO ANY SUCH ACTION OR
PROCEEDING BY DELIVERY THEREOF TO IT BY HAND OR BY MAIL IN THE MANNER
PROVIDED FOR IN SECTION 17 HEREOF. THE BORROWER HEREBY EXPRESSLY AND
IRREVOCABLY WAIVES ANY CLAIM OR DEFENSE IN ANY SUCH ACTION OR PROCEEDING
BASED ON ANY ALLEGED LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM
NON CONVENIENS OR ANY SIMILAR BASIS. THE BORROWER SHALL NOT BE ENTITLED IN
ANY SUCH ACTION OR PROCEEDING TO ASSERT ANY DEFENSE GIVEN OR ALLOWED UNDER
THE LAWS OF ANY STATE OTHER THAN THE STATE OF NEW YORK UNLESS SUCH DEFENSE IS
ALSO GIVEN OR ALLOWED BY THE LAWS OF THE STATE OF NEW YORK. NOTHING IN THIS
SECTION 12 SHALL AFFECT OR IMPAIR IN ANY MANNER OR TO ANY EXTENT THE RIGHT OF
THE COLLATERAL AGENT OR ANY OTHER SECURED PARTY TO COMMENCE LEGAL PROCEEDINGS
OR OTHERWISE PROCEED AGAINST THE BORROWER IN ANY JURISDICTION OR TO SERVE
PROCESS IN ANY MANNER PERMITTED BY LAW.
(b) EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL
RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT
OF OR RELATING TO THIS AGREEMENT OR ANY TRANSACTION RELATING HERETO.
13. ENTIRE AGREEMENT. This Agreement is the entire
agreement, and supersedes any prior agreements and contemporaneous oral
agreements, of the parties concerning its subject matter.
14. AMENDMENTS. No amendment or modification of this
Agreement or waiver of any right hereunder shall be binding on any party
hereto unless it is in writing and is signed by all of the parties hereto.
15. SEVERABILITY. To the extent a provision of this
Agreement is unenforceable, this Agreement shall be construed, to the maximum
extent permitted by applicable law, as if the unenforceable provision were
omitted.
16. SUCCESSORS. The terms of this Agreement shall be
binding upon, and shall inure to the benefit of, the parties hereto and their
respective successors and assigns.
5
17. NOTICES. All notices and other communications required
or permitted to be given hereunder shall be in writing, shall be addressed as
provided below and shall be considered as properly given (a) if delivered in
person, (b) if mailed by first class United States mail, postage prepaid,
registered or certified with return receipt requested or (c) if sent by
prepaid facsimile transmission confirmed by telephone. Notice so given shall
be effective upon receipt by the addressee, except that communication or
notice so transmitted by facsimile transmission and confirmed by telephone
shall be deemed to have been validly and effectively given on the day (if a
Business Day and, if not, on the next following Business Day) on which it is
transmitted by facsimile and confirmed by telephone before 4:00 p.m.,
recipient's time, and if transmitted by facsimile and confirmed by telephone
after that time, on the next following Business Day; PROVIDED, HOWEVER, that
if any notice is tendered to an addressee and the delivery thereof is refused
by such addressee, such notice shall be effective upon such tender. Any
party shall have the right to change its address for notice hereunder to any
other location within the continental United States by giving of thirty (30)
days' notice to the other parties in the manner set forth hereinabove. Any
communications between the parties hereto or notices provided herein may be
given to the following addresses:
(1) Collateral Agent: State Street Bank and Trust Company
2 Avenue de Lafayette
Boston, MA 02111-174
Attention: Global Investor Services Group
Corporate Trust
Telecopy No.: (617) 662-1465
Copy to: Lucent Technologies Inc.
283 King George Road
Warren, NJ 07059
Attention: Assistant Treasurer - Project Finance
Telecopy No.: (908) 559-1711
(2) Borrower: Jato Operating Corp.
1099 18th Street
Suite 800
Denver, CO 80202
Attention: Vice President of Finance
Telecopy No.: (303) 226-8305
Copy to: Cooley Godward LLP
2595 Canyon Boulevard
Suite 250
Boulder, CO 80302
Attention: Rex R. O'Neal, Esq.
Telecopy No.: (303) 546-4099
6
(3) Securities
Intermediary: Lehman Brothers Inc.
555 California Street
30th Floor
San Francisco, CA 94104
Attention: William E. Welsh III, Branch Manager
Telecopy No.: (415) 263-4400
18. TERMINATION. The rights and powers granted herein to
the Collateral Agent have been granted in order to perfect its security
interests in the Securities Account for the benefit of the Secured Parties,
are powers coupled with an interest and shall be affected neither by the
bankruptcy of the Borrower nor by the lapse of time. The obligations of the
Securities Intermediary hereunder shall continue in effect until the security
interests of the Collateral Agent for the benefit of the Secured Parties in
the Securities Account have been terminated and the Collateral Agent has
notified the Securities Intermediary of such termination in writing.
19. COUNTERPARTS. This Agreement may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts, each of which, when so executed and delivered, shall be an
original, but all such counterparts shall together constitute but one and the
same instrument.
20. HEADINGS. Section headings have been inserted in this
Agreement as a matter of convenience for reference only, and it is agreed
that such section headings are not a part of this Agreement and shall not be
used in the interpretation of any provision of this Agreement.
(Signatures Follow on Next Page)
7
IN WITNESS WHEREOF, the parties have caused this Securities
Account Control Agreement to be duly executed by their duly authorized
representatives as of the day and year first above written.
JATO OPERATING CORP.
By:
-------------------------------
Name:
Title:
STATE STREET BANK AND TRUST COMPANY,
as Collateral Agent
By:
-------------------------------
Name:
Title:
LEHMAN BROTHERS INC.,
as Securities Intermediary
By:
-------------------------------
Name:
Title:
EXHIBIT A
[Letterhead of the Collateral Agent]
[Date]
Lehman Brothers Inc.
555 California Street
30th Floor
San Francisco, CA 94104
Attention: William E. Welsh III, Branch Manager
Notice of Exclusive Control
Ladies and Gentlemen:
As referenced in the Securities Account Control Agreement
(Borrower), dated as of July 14, 1999, among Jato Operating Corp., Lehman
Brothers, Inc. and State Street Bank and Trust Company, as Collateral Agent
(a copy of which is attached), we hereby give you notice of our exclusive
control over securities account number 833-33166-1-3 (the "SECURITIES
ACCOUNT") and all financial assets, cash and instruments credited thereto.
You are hereby instructed not to accept any direction, instruction or
entitlement order with respect to the Securities Account or the financial
assets, cash and instruments credited thereto from any person other than the
undersigned.
You are instructed to deliver a copy of this notice by
facsimile transmission to Jato Operating Corp.
Very truly yours,
STATE STREET BANK AND TRUST
COMPANY, as Collateral Agent
By:
--------------------------
Title
EXHIBIT E
[FORM OF PLEDGE AGREEMENT (BORROWER)]
PLEDGE AGREEMENT
(BORROWER)
This PLEDGE AGREEMENT (BORROWER), dated as of July 14, 1999, is made
between JATO OPERATING CORP., a Delaware corporation (with its successors,
the "PLEDGOR") and STATE STREET BANK AND TRUST COMPANY, as collateral agent
for and on behalf of and for the benefit of itself, the Administrative Agent
(as hereinafter defined) and the Lenders (as hereinafter defined), including
without limitation itself in its capacity at any time or from time to time as
a Lender (as hereinafter defined) (with its successors in such capacity, the
"COLLATERAL AGENT").
W I T N E S S E T H:
WHEREAS, the Pledgor owns all of the common stock of
[____________], a [____________] corporation (with its successors, the
"SUBSIDIARY"); and
WHEREAS, the Pledgor, Jato Communications Corp., the
Lenders, State Street Bank and Trust Company, as Collateral Agent, and Lucent
Technologies Inc., as administrative agent (the "ADMINISTRATIVE AGENT"), are
parties to a Credit Agreement, dated as of July 14, 1999, (as the same may be
amended, supplemented, restated or replaced from time to time, the "CREDIT
AGREEMENT"), providing, subject to the terms and conditions thereof, for
making Loans by the Lenders to the Pledgor; and
NOW, THEREFORE, in consideration of the premises and other
good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
SECTION 1. DEFINITIONS. Terms defined in the Credit
Agreement and not otherwise defined herein have, as used herein, the
respective meanings provided for therein. The following additional terms as
used herein, have the following respective meanings:
"COLLATERAL" has the meaning assigned to such term in
Section 3(a).
"COLLATERAL ACCOUNT" has the meaning set forth in the
Security Agreement.
"EVENT OF DEFAULT" or "EVENTS OF DEFAULT" has any meaning
assigned to such terms(s) in the Credit Agreement.
"ISSUER" means (1) the Subsidiary and (ii) each other
direct subsidiary of the Pledgor that shall hereafter become, in accordance
with Section 4, an "ISSUER" for purposes of this Pledge Agreement.
"LENDERS" and "LIEN" have the meanings assigned to such
terms in the Credit Agreement.
"PLEDGED INSTRUMENTS" means (i) the intercompany notes, if
any, listed on Exhibit A hereto and (ii) any instrument required to be
pledged to the Collateral Agent pursuant to Section 3(b).
"PLEDGED SECURITIES" means the Pledged Instruments and the
Pledged Stock.
"PLEDGED STOCK" means the Subsidiary Shares and any other
capital stock or securities required to be pledged to the Collateral Agent
pursuant to Section 3(b), and in respect of which such pledge or the Security
Interests or both has not been released pursuant to Section 14 or other terms
or provisions of this Pledge Agreement.
"REQUIRED LENDERS" has the meaning assigned to such term in
the Credit Agreement.
"SECURED OBLIGATIONS" means, collectively:
(i) the Secured Obligations (as defined in the
Security Agreement); and
(ii) the Pledgor's obligations under this Pledge
Agreement.
"SECURED PARTIES" means, collectively (i) the Lenders, (ii)
the Administrative Agent and (iii) the Collateral Agent.
"SECURITY AGREEMENT" means the Security Agreement (Borrower),
dated as of July 14, 1999, between tile Pledgor and the Collateral Agent, as the
same may be modified, amended, supplemented, restated or replaced and
supplemented and in effect from time to time.
"SECURITY INTERESTS" means the security interests in the
Collateral granted hereunder securing the Secured Obligations.
"SUBSIDIARY SHARES" means, in aggregate, (a) the [________]
shares in the capital stock of the Subsidiary owned by the Pledgor, which share
as at the date hereof is represented by certificate No. [___] issued by the
Subsidiary and registered in the name of the Pledgor.
"UCC" means the Uniform Commercial Code of the State of New
York.
Unless otherwise defined herein, or unless the context
otherwise requires, all terms used herein which are defined in the UCC as in
effect on the date hereof shall have the meanings ascribed thereto in the UCC.
2
SECTION 2. REPRESENTATIONS AND WARRANTIES. The Pledgor
represents and warrants as follows:
(a) TITLE TO PLEDGED SECURITIES. The Pledgor owns all of
the Pledged Securities, free and clear of any Liens other than the Security
Interests. All of the Pledged Stock has been duly authorized and validly
issued, is fully paid and nonassessable (if applicable), and is subject to no
options to purchase or similar rights of any person, and constitutes all and
not less than all the Pledgor's securities of any class in the capital of
each Issuer. The Pledgor is not and agrees that it will not become a party to
or otherwise bound by any agreement, other than this Pledge Agreement or any
of the Loan Documents, which might affect or restrict in any manner the
rights of the Collateral Agent or the other Secured Parties or both or any
present or future holder of any of the Pledged Stock with respect thereto.
(b) VALIDITY, PERFECTION AND PRIORITY OF SECURITY
INTERESTS. Upon the delivery in New York of the Pledged Instruments and the
certificates representing the Pledged Stock to the Collateral Agent in
accordance with Section 3 hereof, the Collateral Agent will have valid and
perfected security interests in the Collateral subject to no prior Lien. If
the Collateral is held in New, York. then no registration, recordation or
filing with any governmental body, agency or official is required under New
York law in connection with the execution or delivery of this Pledge
Agreement or necessary for the validity or enforceability hereof or for the
perfection or enforcement of' the Security Interests (other than filing of
appropriate financing statements in New York pursuant to the UCC). Neither
the Pledgor nor the Subsidiary has performed or will perform any acts which
might prevent the Collateral Agent from enforcing any of the terms and
conditions of this Pledge Agreement or which would limit the Collateral Agent
in any such enforcement.
SECTION 3. THE SECURITY INTERESTS. In order to secure the
full and punctual payment of the Secured Obligations in accordance with the
terms thereof, and to secure the performance of all the obligations of the
Pledgor hereunder:
(a) The Pledgor hereby assigns, transfers and pledges to
the Collateral Agent for the benefit of itself and the other Secured Parties
and grants to the Collateral Agent for the benefit of itself and the other
Secured Parties a security interest in the Pledged Securities, and all of its
rights and privileges with respect thereto, all renewals thereof,
substitutions therefor and accretions thereto, all proceeds, income and
profits thereon, and all dividends (in cash or specie) and other payments and
distributions with respect thereto and all securities and certificates
therefor which shall be from time to time held by the Collateral Agent in
safe custody (all such securities, renewals thereof, accretions thereto,
proceeds thereof and income therefrom, collectively but excluding any
Collateral released or distributable from time to time pursuant to Sections
6, Section 14 or other terms or provisions of this Pledge Agreement, the
"COLLATERAL"), as general and continuing collateral security and as a pledge,
assignment and transfer, all the foregoing being subject to the Pledgor's
rights under Sections 6 and 7. Contemporaneously with the execution and
delivery hereof, the Pledgor is delivering the Pledged Instruments and the
certificates representing the Pledged Stock
(b) Subject to Section 6, in the event that (i) any Issuer
other than the Subsidiary at any time issues shares of capital stock of any
class to the Pledgor, (ii) any Issuer at
3
any time issues to the Pledgor any Collateral in addition to the Subsidiary
Shares, including without limitation shares of any class or series in its
capital issued in respect of any new equity investment or other consideration
of any kind from the Pledgor, or any additional or substitute certificates
and/or shares of capital stock of any class, including without limitation any
certificates and/or shares representing a stock dividend, a stock split or a
distribution in connection with any reclassification, increase, reduction or
return of capital or issued in connection with any recapitalization or any
reorganization, options or rights, whether as an addition to, in substitution
or exchange for the Subsidiary Shares, any of the Pledged Securities or other
Collateral, or otherwise, or (iii) any Issuer at any time issues any note or
substitute note, or owes any other Indebtedness to the Pledgor, the Pledgor
shall accept the same as agent for and hold the same in trust for the benefit
of the Secured Parties and deliver the same forthwith to the Collateral Agent
in the exact form received, with the endorsement in blank of the Pledgor
accompanied by stock powers executed by the Pledgor when necessary or
appropriate, in the opinion of and in form and substance satisfactory to, the
Collateral Agent, acting reasonably, to be held by the Collateral Agent as
additional security for the Secured Obligations, and such shall thereupon be
deemed included in the Collateral for all purposes of this Pledge Agreement
and made subject to the Security Interests, and the Pledgor will immediately
pledge to and deposit with the Collateral Agent certificates representing all
such shares and such note or an instrument evidencing such other Indebtedness
or such other Collateral as additional security for the Secured Obligations.
All such shares, notes and instruments constitute Pledged Securities and are
subject to all provisions of this Pledge Agreement.
(c) The Security Interests are granted as security only and
shall not subject the Collateral Agent or any Secured Party to, or transfer
or in any way affect or modify, any obligation or liability of the Pledgor or
the Issuers with respect to any of the Collateral or any transaction in
connection therewith.
(d) All Pledged Instruments delivered to the Collateral
Agent by the Pledgor pursuant hereto shall be endorsed in suitable form for
transfer by endorsement and delivery by the Collateral Agent, and accompanied
by any required transfer tax stamps, all in form and Substance satisfactory
to the Collateral Agent. All certificates representing Pledged Stock
delivered to the Collateral Agent by the Pledgor pursuant hereto shall be in
suitable form for transfer by delivery, or shall be accompanied by duly
executed instruments of transfer or assignment or contract notes, where
applicable, in blank, and accompanied by any required transfer tax stamps,
all in form and substance satisfactory to the Collateral Agent.
SECTION 4. FILING FURTHER ASSURANCES.
(a) The Pledgor agrees that it will, in such manner and
form as the Collateral Agent may require, execute, deliver, file and record
any financing statement, specific assignment or other paper and take any
other action that the Collateral Agent reasonably may determine to be
necessary or desirable in order to create, preserve, perfect or validate any
Security Interest or to enable the Collateral Agent to exercise and enforce
its rights hereunder with respect to any of the Collateral. Without limiting
the generality of the foregoing, whenever any person other than the
Subsidiary shall become a subsidiary of the Pledgor, such subsidiary shall
automatically become an Issuer and the Pledgor shall, if requested by the
Collateral Agent, promptly deliver to the Collateral Agent an opinion of
counsel to the Pledgor covering such matters relating to the
4
validity, perfection and priority of the Security Interests in the Pledged
Securities of such Issuer as the Collateral Agent shall reasonably request.
(b) The Pledgor agrees that it shall notify the Collateral
Agent in writing at least twenty (20) days prior to any change of name of the
Pledgor.
SECTION 5. FORM OF SHARES. The certificates representing
any of the Pledged Stock or other shares included in the Collateral at any
time shall be free of any restrictive or cautionary legends other than with
respect to the Securities Act of 1933 or blue sky laws.
SECTION 6. RIGHT TO RECEIVE DISTRIBUTIONS ON COLLATERAL.
(a) So long as no Event of Default shall at any applicable
time have occurred and be continuing, the Pledgor shall have the right to
receive all dividends (in cash or specie), interest, returns of capital and
other payments or distributions made upon or with respect to, and all options
and rights issued in connection with, the Collateral.
(b) The Collateral Agent shall, upon the occurrence and
during the continuance of an Event of Default, have the right to receive (for
deposit in the Collateral Account, if cash) and to retain as Collateral
hereunder all dividends (in cash or specie), interest and other payments and
distributions made upon or with respect to the Collateral and the Pledgor
shall take all such action as the Collateral Agent may deem necessary or
appropriate to give effect to such right. All such dividends, interest and
other payments and distributions which are received by the Pledgor, upon the
occurrence and during the continuance of an Event of Default, shall be
received in trust for the benefit of the Collateral Agent and the other
Secured Parties and, if the Collateral Agent so directs, upon the occurrence
and during the continuance of an Event of Default, shall be segregated from
other funds of the Pledgor and shall, forthwith upon demand by the Collateral
Agent during the continuance of an Event of Default, be paid over to the
Collateral Agent as Collateral in the same form as received (with any
necessary endorsement, and accompanied by any necessary stock powers executed
by the Pledgor). After all Events of Default have been cured, the Collateral
Agent's right to retain dividends, interest and other payments and
distributions under this Section 6 shall cease and the Collateral Agent shall
pay over to the Pledgor any such Collateral retained by the Collateral Agent
during the continuance of an Event of Default.
SECTION 7. RIGHT TO VOTE PLEDGED STOCK. Unless an Event of
Default shall have occurred and be continuing, the Pledgor shall have the
right, from time to time, to vote and to give consents, ratifications and
waivers with respect to the Pledged Stock.
If an Event of Default shall have occurred and be
continuing, then the Collateral Agent shall have the right to the extent
permitted or recognized by law, and the Pledgor shall take all such action as
may be necessary or appropriate to give effect to such right, to vote and to
give consents, ratifications and waivers, and take any other action with
respect to any or all of the Pledged Stock with the same force and effect as
if the Collateral Agent were the absolute and sole owner thereof.
SECTION 8. GENERAL AUTHORITY. The Pledgor hereby
irrevocably (to the extent permitted or recognized by law) appoints the
Collateral Agent its true and lawful attorney, with
5
full power of substitution, in the name of the Pledgor, the Collateral Agent
and the other Secured Parties or otherwise, for the sole use and benefit of
the Collateral Agent and the other Secured Parties to the extent permitted or
recognized by law, to exercise, at any time and from time to time while an
Event of Default has occurred and is continuing, all or any of the following
powers with respect to all or any of the Collateral:
(i) to demand, sue for, collect, receive and give
acquittance for any and all moneys due or to become due upon
or by virtue thereof,
(ii) to settle, compromise, compound, prosecute or
defend any action or proceeding with respect thereto,
(iii) to sell, transfer, assign or otherwise deal in
or with the same or the proceeds or avails thereof, as fully
and effectually as if the Collateral Agent were the absolute
owner thereof, and
(iv) to extend the time of payment of any or all
thereof and to make any allowance and other adjustments with
reference thereto;
PROVIDED that the Collateral Agent shall give the Pledgor not less than
fifteen days' prior written notice of the time and place of any sale or other
intended disposition of any of the Collateral except any Collateral which
threatens to decline speedily in value or is of a type customarily sold on a
recognized market.
SECTION 9. REMEDIES UPON EVENT OF DEFAULT.
(a) If any Event of Default shall have occurred and be
continuing, the Collateral Agent may exercise on behalf of the Secured
Parties all the rights of a secured party under the UCC and, in addition, the
Collateral Agent may, without obligation to resort to other security under
any other Security Documents or to recourse against any other guarantor
(including without limitation the Subsidiary), surety or other person liable,
and without being required to give any notice, except as herein provided or
as may be required by mandatory provisions of applicable law, (a) apply the
cash, if any, then held by it as Collateral as specified in Section 12, and
(b) if there shall be no such cash or if such cash shall be insufficient to
pay all the Secured Obligations in full, sell the Collateral or any parts
thereof at public or private sale or at any broker's board or on any
securities exchange, for cash, upon credit or for future delivery, and at
such price or prices as the Collateral Agent, acting reasonably, may deem
satisfactory. The Collateral Agent or any other Secured Party may be the
purchaser of any or all of the Collateral so sold at any public sale (or, if
the Collateral is of a type customarily sold in a recognized market or is of
a type which is the subject of widely distributed standard price quotations
at any private sale) and thereafter hold the same, absolutely, free from any
equity or right of redemption, or other right or claim of whatsoever kind.
(b) Notwithstanding anything to the contrary contained
herein or any other Loan Document, neither the Collateral Agent nor any
Secured Party shall, without first obtaining approval of a Governmental
Authority, take any action pursuant to this Pledge Agreement or any other
Loan Document which would constitute or result in an assignment of any
License held by the Pledgor or any of its Subsidiaries, or which would
constitute a transfer of control of any
6
Subsidiary that holds a License (including without limitation, any voting of
the Pledged Stock), if such assignment or transfer would require, under the
existing applicable law, the prior approval of such Governmental Authority.
The Pledgor agrees to take, and the Pledgor agrees to cause each of its
Subsidiaries to take, in each case upon the occurrence and during the
continuance of an Event of Default, any action that the Collateral Agent may
reasonably request in order to obtain from any Governmental Authority such
approval as may be necessary to enable the Collateral Agent to transfer the
Pledged Securities pursuant to this Pledge Agreement, the Loan Documents and
each other agreement, instrument and document delivered to the Collateral
Agent in connection herewith and therewith, including specifically, at the
expense of the Pledgor, the use of the Pledgor's and each of its
Subsidiaries' commercially reasonable efforts to assist in obtaining approval
of such Governmental Authority for any action or transaction contemplated by
this Agreement for which such approval is or shall be required by law, and
specifically, without limitation, upon request, to prepare, sign and file
with such Governmental Authority, the assignor's or transferor's portion of
any application or applications for consent to the transfer of any Pledged
Securities necessary or appropriate under the rules and regulations of such
Governmental Authority for approval of any sale or sales of any of the
Collateral by or on behalf of the Collateral Agent or any assumption by the
Collateral Agent of voting rights relating thereto effected in accordance
with the terms of this Agreement.
SECTION 10. EXPENSES. The Pledgor agrees that it will
forthwith upon demand pay the following amounts:
(i) the amount of any taxes which the Collateral
Agent may have been required to pay by reason of the Security
Interests or to free any of the Collateral from any Lien
thereon, and
(ii) the amount of any and all out-of-pocket
expenses, including the reasonable fees and disbursements of
counsel and of any other experts employed to evaluate, protect
or realize the value of the Collateral, which the Collateral
Agent may incur in connection with (w) the administration or
enforcement of this Pledge Agreement, including such expenses
as are incurred to preserve the value of the Collateral and
the validity, perfection, rank and value of any Security
Interest, (x) the collection, sale or other disposition of any
of the Collateral, (y) the exercise by the Collateral Agent of
any of the rights conferred upon it hereunder or (z) any
Default or Event of Default.
Any such amount not paid on demand shall bear interest for
each day until paid at the Alternate Base Rate plus the Applicable Rate plus
two percent (2%) per annum for such day.
SECTION 11. LIMITATION ON DUTY OF COLLATERAL AGENT IN
RESPECT OF COLLATERAL. Beyond the exercise of reasonable care in the custody
thereof, the Collateral Agent shall not have any duty as to any Collateral in
its possession or control or in the possession or control of any agent or
bailee or any proceeds thereof or as to the preservation of rights against
prior parties or any other rights pertaining thereto. The Collateral 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 it accords its own
property, and shall not be liable or responsible for any loss or damage to
any of the Collateral, or for any diminution in
7
the value thereof, by reason of the act or omission of any agent or bailee
selected by the Collateral Agent, as the case may be, in good faith. Without
limitation of the foregoing, and except as specifically provided for in this
Pledge Agreement, or otherwise as might be required by applicable laws, the
Collateral Agent and the other Secured Parties shall have no duty to send any
notices, perform any services, vote, pay, exercise any options or make any
elections with respect to, or pay any taxes or charges associated with, or
otherwise take any other action of any kind with respect to the Collateral.
SECTION 12. APPLICATION OF PROCEEDS. Upon the occurrence
and during the continuance of an Event of Default, the proceeds of any sale
of, or other realization upon, all or any parts of the Collateral and any
cash held shall be applied by the Collateral Agent in payment of the Secured
Obligations, in accordance with the Credit Agreement.
SECTION 13. APPOINTMENT OF CO-COLLATERAL AGENTS. At any
time or times, in order to comply with any legal requirement in any
jurisdiction, the Collateral Agent may appoint another bank or trust company
or one or more other persons, either to act as co-collateral agent or
co-collateral agents, jointly with the Collateral Agent, or to act as
separate collateral agent or collateral agents on behalf of the Secured
Parties with such power and authority as may be necessary for the effectual
operation of the provisions hereof and may be specified in the instrument of
appointment.
SECTION 14. TERMINATION OF SECURITY INTERESTS; RELEASE OF
COLLATERAL.
(a) Upon the repayment in full of all Secured Obligations
and the termination of the Commitments under the Credit Agreement, the
Security Interests shall terminate and all rights to the Collateral shall
revert to the Pledgor.
(b) At any time and from time to time prior to such
termination of the Security Interests, the Collateral Agent may release all
or any part of the Collateral in accordance with the Credit Agreement,
whereupon the Security Interests in such released Collateral shall terminate
and the rights to such released Collateral shall revert to the Pledgor.
(c) Upon any such termination of the Security Interest or
release of Collateral, the Collateral Agent will, at the expense of the
Pledgor, execute and deliver to the Pledgor such documents as the Pledgor
shall reasonably request to evidence the termination of the Security
Interests or the release of such Collateral, as the case may be.
SECTION 15. NOTICES. All notices, requests and other
communications to any party hereunder shall be given in accordance with
Section 9.01 of the Credit Agreement.
SECTION 16. WAIVERS, NON-EXCLUSIVE REMEDIES. No failure on
the part of the Collateral Agent to exercise, and no delay in exercising and
no course of dealing with respect to, any right under this Pledge Agreement
shall operate as a waiver thereof, nor shall any single or partial exercise
by the Collateral Agent of any right under the Credit Agreement or this
Pledge Agreement preclude any other or further exercise thereof or the
exercise of any other right. The rights in this Pledge Agreement and the
Credit Agreement are cumulative and are not exclusive of any other remedies
provided by law.
8
SECTION 17. SUCCESSORS AND ASSIGNS. This Pledge Agreement
is for the benefit of the Collateral Agent and the other Secured Parties and
their successors and assigns, and in the event of an assignment of all or any
of the Secured Obligations, the rights hereunder, to the extent applicable to
the indebtedness so assigned, may be transferred with such indebtedness. This
Pledge Agreement shall be binding on the Pledgor and its assigns and the
rights of the Pledgor hereunder shall inure to the benefit of the Pledgor's
permitted assigns.
SECTION 18. CHANGES IN WRITING. Neither this Pledge
Agreement nor any provision hereof may be changed, waived, discharged or
terminated orally, but only in writing signed by Pledgor and the Collateral
Agent with the consent of the Required Lenders (or in the case of Section 14,
all of the Lenders).
SECTION 19. ATTACHMENT. The Security Interests are intended
to attach and take effect forthwith upon the execution of this Pledge
Agreement and Pledgor acknowledges that value has been given and that the
Pledgor has rights in the Collateral. With respect to any Collateral which is
in addition to, or which is a renewal, replacement or substitution for any of
the Collateral (as constituted on the date hereto) the Security Interests
created hereby are intended to attach and take effect at the time of such
addition, renewal, replacement or substitution, and the Pledgor represents
and warrants that it shall have rights in such Collateral at the time of such
addition, renewal, replacement or substitution, as the case may be.
SECTION 20. GOVERNING LAW. THIS PLEDGE AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK.
SECTION 21. SEVERABILITY. If any provision hereof is
invalid or unenforceable in any jurisdiction, then, to the fullest extent
permitted by law, (i) the other provisions hereof shall remain in full force
and effect in such jurisdiction in order to carry out the intentions of the
parties hereto as nearly as may be possible; and (ii) the invalidity or
unenforceability of any provision hereof in any jurisdiction shall not affect
the validity or enforceability of such provision in any other jurisdiction.
SECTION 22. COUNTERPARTS. This Pledge Agreement may be
executed in any number of counterparts, all of which taken together shall
constitute one and the same instrument and any of the parties hereto may
execute this Pledge Agreement by signing any such counterpart.
(Signatures Follow on Next Page)
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IN WITNESS WHEREOF, the par-ties hereto have caused this Pledge
Agreement (Borrower) to be duly executed by their respective authorized
officers as of the day and year first above written.
JATO OPERATING CORP.
By:
---------------------------------
Name:
Title:
STATE STREET BANK AND TRUST
COMPANY, as Collateral Agent
By:
---------------------------------
Name:
Title:
EXHIBIT A
INTERCOMPANY NOTES
Exhibit F
PLEDGE AGREEMENT
(PARENT)
This PLEDGE AGREEMENT (PARENT), dated as of July 14, 1999, is made
between JATO COMMUNICATIONS CORP., a Delaware corporation (with its
successors, the "PLEDGOR") and STATE STREET BANK AND TRUST COMPANY, as
collateral agent for and on behalf of and for the benefit of itself, the
Administrative Agent (as hereinafter defined) and the Lenders (as hereinafter
defined), including without limitation itself in its capacity at any time or
from time to time as a Lender (as hereinafter defined) (with its successors
in such capacity, the "COLLATERAL AGENT").
W I T N E S S E T H:
WHEREAS, the Pledgor owns all of the common stock of Jato Operating
Corp., a corporation organized under the laws of Delaware (with its
successors, the "SUBSIDIARY"); and
WHEREAS, the Subsidiary, the Pledgor, the Lenders, State Street
Bank and Trust Company, as Collateral Agent, and Lucent Technologies Inc., as
administrative agent (the "ADMINISTRATIVE AGENT"), are parties to a Credit
Agreement, dated as of July 14, 1999 (as the same may be amended,
supplemented, restated or replaced from time to time, the "CREDIT
AGREEMENT"), providing, subject to the terms and conditions thereof, for
making Loans by the Lenders to the Subsidiary; and
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION 1. DEFINITIONS. Terms defined in the Credit Agreement and
not otherwise defined herein have, as used herein, the respective meanings
provided for therein. The following additional terms as used herein, have
the following respective meanings:
"COLLATERAL" has the meaning assigned to such term in Section 3(a).
"COLLATERAL ACCOUNT" has the meaning set forth in the Security
Agreement.
"EVENT OF DEFAULT" or "EVENTS OF DEFAULT" has any meaning assigned
to such term(s) in the Credit Agreement.
"LENDERS" and "LIEN" have the meanings assigned to such terms in
the Credit Agreement.
"PLEDGED INSTRUMENTS" means (i) the intercompany notes, if any,
listed on Exhibit A hereto and (ii) any instrument required to be pledged to
the Collateral Agent pursuant to Section 3(b).
"PLEDGED SECURITIES" means the Pledged Instruments and the Pledged
Stock.
"PLEDGED STOCK" means the Subsidiary Shares and any other capital
stock or securities required to be pledged to the Collateral Agent pursuant
to Section 3(b), and in respect of which such pledge or the Security
Interests or both has not been released pursuant to Section 14 or other terms
or provisions of this Pledge Agreement.
"REQUIRED LENDERS" has the meaning assigned to such term in the
Credit Agreement.
"SECURED OBLIGATIONS" means, collectively:
(i) all amounts payable by the Pledgor under any Loan Document;
and
(ii) the Pledgor's obligations under this Pledge Agreement.
"SECURED PARTIES" means, collectively (i) the Lenders, (ii) the
Administrative Agent and (iii) the Collateral Agent.
"SECURITY AGREEMENT" means the Security Agreement (Parent), dated
as of July 14, 1999, between the Pledgor and the Collateral Agent, as the
same may be modified, amended, supplemented, restated or replaced and
supplemented and in effect from time to time.
"SECURITY INTERESTS" means the security interests in the Collateral
granted hereunder securing the Secured Obligations.
"SUBSIDIARY SHARES" means the 1,100 shares in the capital stock of
the Subsidiary owned by the Pledgor, which shares as at the date hereof are
represented by certificates Nos. CS-1 and CS-2 issued by the Subsidiary and
registered in the name of the Pledgor.
"UCC" means the Uniform Commercial Code of the State of New York.
Unless otherwise defined herein, or unless the context otherwise
requires, all terms used herein which are defined in the UCC as in effect on
the date hereof shall have the meanings ascribed thereto in the UCC.
SECTION 2. REPRESENTATIONS AND WARRANTIES. The Pledgor represents
and warrants as follows:
(a) TITLE TO PLEDGED SECURITIES. The Pledgor owns all of the
Pledged Securities, free and clear of any Liens other than the Security
Interests. All of the Pledged Stock has been duly authorized and validly
issued, is fully paid and nonassessable (if applicable), and is subject to no
options to purchase or similar rights of any person, and constitutes all and
not less than all the Pledgor's securities of any class in the capital of the
Subsidiary. The Pledgor is
2
not and agrees that it will not become a party to or otherwise bound by any
agreement, other than this Pledge Agreement or any of the Loan Documents,
which might affect or restrict in any manner the rights of the Collateral
Agent or the other Secured Parties or both or any present or future holder of
any of the Pledged Stock with respect thereto.
(b) VALIDITY, PERFECTION AND PRIORITY OF SECURITY INTERESTS. Upon
the delivery in New York or Massachusetts of the Pledged Instruments and the
certificates representing the Pledged Stock to the Collateral Agent in
accordance with Section 3 hereof, the Collateral Agent will have valid and
perfected security interests in the Collateral subject to no prior Lien. If
the Collateral is held in Massachusetts, then no registration, recordation or
filing with any governmental body, agency or official is required in
connection with the execution or delivery of this Pledge Agreement or
necessary for the validity or enforceability hereof or for the perfection or
enforcement of the Security Interests. Neither the Pledgor nor the
Subsidiary has performed or will perform any acts which might prevent the
Collateral Agent from enforcing any of the terms and conditions of this
Pledge Agreement or which would limit the Collateral Agent in any such
enforcement.
SECTION 3. THE SECURITY INTERESTS. In order to secure the full and
punctual payment of the Secured Obligations in accordance with the terms
thereof, and to secure the performance of all the obligations of the Pledgor
hereunder:
(a) The Pledgor hereby assigns, transfers and pledges to the
Collateral Agent for the benefit of itself and the other Secured Parties and
grants to the Collateral Agent for the benefit of itself and the other
Secured Parties a security interest in the Pledged Securities, and all of its
rights and privileges with respect thereto, all renewals thereof,
substitutions therefor and accretions thereto, all proceeds, income and
profits thereon, and all dividends (in cash or specie) and other payments and
distributions with respect thereto and all securities and certificates
therefor which shall be from time to time held by the Collateral Agent in
safe custody (all such securities, renewals thereof, accretions thereto,
proceeds thereof and income therefrom, collectively but excluding any
Collateral released or distributable from time to time pursuant to Section 6,
Section 14 or other terms or provisions of this Pledge Agreement, the
"COLLATERAL"), as general and continuing collateral security and as a pledge,
assignment and transfer, all the foregoing being subject to the Pledgor's
rights under Sections 6 and 7. Contemporaneously with the execution and
delivery hereof, the Pledgor is delivering the Pledged Instruments and the
certificates representing the Pledged Stock.
(b) Subject to Section 6, in the event that the Subsidiary (i) at
any time issues to the Pledgor any Collateral in addition to the Subsidiary
Shares, including without limitation shares of any class or series in its
capital issued in respect of any new equity investment or other consideration
of any kind from the Pledgor, or any additional or substitute certificates
and/or shares of capital stock of any class, including without limitation any
certificates and/or shares representing a stock dividend, a stock split or a
distribution in connection with any reclassification, increase, reduction or
return of capital or issued in connection with any recapitalization or any
reorganization, options or rights, whether as an addition to, in substitution
or exchange for the Subsidiary Shares, any of the Pledged Securities or other
Collateral, or otherwise, or (ii) at any time issues any note or substitute
note, or owes any other Indebtedness to the Pledgor, the Pledgor shall accept
the same as agent for and hold the same in trust for the
3
benefit of the Secured Parties and deliver the same forthwith to the
Collateral Agent in the exact form received, with the endorsement in blank of
the Pledgor accompanied by stock powers executed by the Pledgor when
necessary or appropriate, in the opinion of and in form and substance
satisfactory to, the Collateral Agent, acting reasonably, to be held by the
Collateral Agent as additional security for the Secured Obligations, and such
shall thereupon be deemed included in the Collateral for all purposes of this
Pledge Agreement and made subject to the Security Interests, and the Pledgor
will immediately pledge to and deposit with the Collateral Agent certificates
representing all such shares and such note or an instrument evidencing such
other Indebtedness or such other Collateral as additional security for the
Secured Obligations. All such shares, notes and instruments constitute
Pledged Securities and are subject to all provisions of this Pledge Agreement.
(c) The Security Interests are granted as security only and shall
not subject the Collateral Agent or any Secured Party to, or transfer or in
any way affect or modify, any obligation or liability of the Pledgor or the
Subsidiary with respect to any of the Collateral or any transaction in
connection therewith.
(d) All Pledged Instruments delivered to the Collateral Agent by
the Pledgor pursuant hereto shall be endorsed in suitable form for transfer
by endorsement and delivery by the Collateral Agent, and accompanied by any
required transfer tax stamps, all in form and substance satisfactory to the
Collateral Agent. All certificates representing Pledged Stock delivered to
the Collateral Agent by the Pledgor pursuant hereto shall be in suitable form
for transfer by delivery, or shall be accompanied by duly executed
instruments of transfer or assignment or contract notes, where applicable, in
blank, and accompanied by any required transfer tax stamps, all in form and
substance satisfactory to the Collateral Agent.
SECTION 4. FILING FURTHER ASSURANCES. (a) The Pledgor agrees
that it will, in such manner and form as the Collateral Agent may require,
execute, deliver, file and record any financing statement, specific
assignment or other paper and take any other action that the Collateral Agent
reasonably may determine to be necessary or desirable in order to create,
preserve, perfect or validate any Security Interest or to enable the
Collateral Agent to exercise and enforce its rights hereunder with respect to
any of the Collateral.
(b) The Pledgor agrees that it shall notify the Collateral Agent
in writing at least twenty (20) days prior to any change of name of the
Pledgor.
SECTION 5. FORM OF SHARES. The certificates representing any of
the Pledged Stock or other shares included in the Collateral at any time
shall be free of any restrictive or cautionary legends other than with
respect to the Securities Act of 1933 or state blue sky laws.
SECTION 6. RIGHT TO RECEIVE DISTRIBUTIONS ON COLLATERAL. (a) So
long as no Event of Default shall at any applicable time have occurred and be
continuing, the Pledgor shall have the right to receive all dividends (in
cash or specie), interest, returns of capital and other payments or
distributions made upon or with respect to, and all options and rights issued
in connection with, the Collateral.
4
(b) The Collateral Agent shall, upon the occurrence and during the
continuance of an Event of Default, have the right to receive (for deposit in
the Collateral Account, if cash) and to retain as Collateral hereunder all
dividends (in cash or specie), interest and other payments and distributions
made upon or with respect to the Collateral and the Pledgor shall take all
such action as the Collateral Agent may deem necessary or appropriate to give
effect to such right. All such dividends, interest and other payments and
distributions which are received by the Pledgor, upon the occurrence and
during the continuance of an Event of Default, shall be received in trust for
the benefit of the Collateral Agent and the other Secured Parties and, if the
Collateral Agent so directs, upon the occurrence and during the continuance
of an Event of Default, shall be segregated from other funds of the Pledgor
and shall, forthwith upon demand by the Collateral Agent during the
continuance of an Event of Default, be paid over to the Collateral Agent as
Collateral in the same form as received (with any necessary endorsement, and
accompanied by any necessary stock powers executed by the Pledgor). After
all Events of Default have been cured, the Collateral Agent's right to retain
dividends, interest and other payments and distributions under this Section 6
shall cease and the Collateral Agent shall pay over to the Pledgor any such
Collateral retained by the Collateral Agent during the continuance of an
Event of Default.
SECTION 7. RIGHT TO VOTE PLEDGED STOCK. Unless an Event of Default
shall have occurred and be continuing, the Pledgor shall have the right, from
time to time, to vote and to give consents, ratifications and waivers with
respect to the Pledged Stock.
If an Event of Default shall have occurred and be continuing, then
the Collateral Agent shall have the right to the extent permitted or
recognized by law, and the Pledgor shall take all such action as may be
necessary or appropriate to give effect to such right, to vote and to give
consents, ratifications and waivers, and take any other action with respect
to any or all of the Pledged Stock with the same force and effect as if the
Collateral Agent were the absolute and sole owner thereof.
SECTION 8. GENERAL AUTHORITY. The Pledgor hereby irrevocably (to
the extent permitted or recognized by law) appoints the Collateral Agent its
true and lawful attorney, with full power of substitution, in the name of the
Pledgor, the Collateral Agent and the other Secured Parties or otherwise, for
the sole use and benefit of the Collateral Agent and the other Secured
Parties to the extent permitted or recognized by law, to exercise, at any
time and from time to time while an Event of Default has occurred and is
continuing, all or any of the following powers with respect to all or any of
the Collateral:
(i) to demand, sue for, collect, receive and give acquittance
for any and all moneys due or to become due upon or by virtue thereof,
(ii) to settle, compromise, compound, prosecute or defend any
action or proceeding with respect thereto,
(iii) to sell, transfer, assign or otherwise deal in or with
the same or the proceeds or avails thereof, as fully and effectually
as if the Collateral Agent were the absolute owner thereof, and
5
(iv) to extend the time of payment of any or all thereof and to
make any allowance and other adjustments with reference thereto;
PROVIDED that the Collateral Agent shall give the Pledgor not less than
fifteen days' prior written notice of the time and place of any sale or other
intended disposition of any of the Collateral except any Collateral which
threatens to decline speedily in value or is of a type customarily sold on a
recognized market.
SECTION 9. REMEDIES UPON EVENT OF DEFAULT.
(a) If any Event of Default shall have occurred and be continuing,
the Collateral Agent may exercise on behalf of the Secured Parties all the
rights of a secured party under the UCC and, in addition, the Collateral
Agent may, without obligation to resort to other security under any other
Security Documents or to recourse against any other guarantor (including
without limitation the Subsidiary or any other Guarantor Subsidiary), surety
or other person liable, and without being required to give any notice, except
as herein provided or as may be required by mandatory provisions of
applicable law, (a) apply the cash, if any, then held by it as Collateral as
specified in Section 12, and (b) if there shall be no such cash or if such
cash shall be insufficient to pay all the Secured Obligations in full, sell
the Collateral or any parts thereof at public or private sale or at any
broker's board or on any securities exchange, for cash, upon credit or for
future delivery, and at such price or prices as the Collateral Agent, acting
reasonably, may deem satisfactory. The Collateral Agent or any other Secured
Party may be the purchaser of any or all of the Collateral so sold at any
public sale (or, if the Collateral is of a type customarily sold in a
recognized market or is of a type which is the subject of widely distributed
standard price quotations at any private sale) and thereafter hold the same,
absolutely, free from any equity or right of redemption, or other right or
claim of whatsoever kind.
(b) Notwithstanding anything to the contrary contained herein or
any other Loan Document, neither the Collateral Agent nor any Secured Party
shall, without first obtaining approval of a Governmental Authority, take any
action pursuant to this Pledge Agreement or any other Loan Document which
would constitute or result in an assignment of any License held by the
Pledgor, the Subsidiary or any of its subsidiaries, or which would constitute
a transfer of control of the Subsidiary or any of its subsidiaries that hold
a License (including without limitation, any voting of the Pledged Stock), if
such assignment or transfer would require, under the existing applicable law,
the prior approval of such Governmental Authority. The Pledgor agrees to
take, and the Pledgor agrees to cause the Subsidiary and each of its
subsidiaries to take, in each case upon the occurrence and during the
continuance of an Event of Default, any action that the Collateral Agent may
reasonably request in order to obtain from any Governmental Authority such
approval as may be necessary to enable the Collateral Agent to transfer the
Pledged Securities pursuant to this Pledge Agreement, the Loan Documents and
each other agreement, instrument and document delivered to the Collateral
Agent in connection herewith and therewith, including specifically, at the
expense of the Pledgor, the use of the Pledgor's and the Subsidiary's and
each of its subsidiaries' commercially reasonable efforts to assist in
obtaining approval of such Governmental Authority for any action or
transaction contemplated by this Agreement for which such approval is or
shall be required by law, and specifically, without limitation, upon request,
to prepare, sign and file with such Governmental Authority, the assignor's or
transferor's portion of any application or applications for consent to the
transfer of
6
any Pledged Securities necessary or appropriate under the rules and
regulations of such Governmental Authority for approval of any sale or sales
of any of the Collateral by or on behalf of the Collateral Agent or any
assumption by the Collateral Agent of voting rights relating thereto effected
in accordance with the terms of this Agreement.
SECTION 10. EXPENSES. The Pledgor agrees that it will forthwith
upon demand pay the following amounts:
(i) the amount of any taxes which the Collateral Agent may have
been required to pay by reason of the Security Interests or to free
any of the Collateral from any Lien thereon, and
(ii) the amount of any and all out-of-pocket expenses, including
the reasonable fees and disbursements of counsel and of any other
experts employed to evaluate, protect or realize the value of the
Collateral, which the Collateral Agent may incur in connection with
(w) the administration or enforcement of this Pledge Agreement,
including such expenses as are incurred to preserve the value of the
Collateral and the validity, perfection, rank and value of any
Security Interest, (x) the collection, sale or other disposition of
any of the Collateral, (y) the exercise by the Collateral Agent of any
of the rights conferred upon it hereunder or (z) any Default or Event
of Default.
Any such amount not paid on demand shall bear interest for each day
until paid at the Alternate Base Rate plus the Applicable Rate plus two
percent (2%) per annum for such day.
SECTION 11. LIMITATION ON DUTY OF COLLATERAL AGENT IN RESPECT OF
COLLATERAL. Beyond the exercise of reasonable care in the custody thereof,
the Collateral Agent shall not have any duty as to any Collateral in its
possession or control or in the possession or control of any agent or bailee
or any proceeds thereof or as to the preservation of rights against prior
parties or any other rights pertaining thereto. The Collateral 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 it accords its own property, and shall not
be liable or responsible for any loss or damage to any of the Collateral, or
for any diminution in the value thereof, by reason of the act or omission of
any agent or bailee selected by the Collateral Agent, as the case may be, in
good faith. Without limitation of the foregoing, and except as specifically
provided for in this Pledge Agreement, or otherwise as might be required by
applicable laws, the Collateral Agent and the other Secured Parties shall
have no duty to send any notices, perform any services, vote, pay, exercise
any options or make any elections with respect to, or pay any taxes or
charges associated with, or otherwise take any other action of any kind with
respect to the Collateral.
SECTION 12. APPLICATION OF PROCEEDS. Upon the occurrence and
during the continuance of an Event of Default, the proceeds of any sale of,
or other realization upon, all or any parts of the Collateral and any cash
held shall be applied by the Collateral Agent in payment of the Secured
Obligations, in accordance with the Credit Agreement.
7
SECTION 13. APPOINTMENT OF CO-COLLATERAL AGENTS. At any time or
times, in order to comply with any legal requirement in any jurisdiction, the
Collateral Agent may appoint another bank or trust company or one or more
other persons, either to act as co-collateral agent or co-collateral agents,
jointly with the Collateral Agent, or to act as separate collateral agent or
collateral agents on behalf of the Secured Parties with such power and
authority as may be necessary for the effectual operation of the provisions
hereof and may be specified in the instrument of appointment.
SECTION 14. TERMINATION OF SECURITY INTERESTS; RELEASE OF
COLLATERAL.
(a) Upon the repayment in full of all Secured Obligations and the
termination of the Commitments under the Credit Agreement, the Security
Interests shall terminate and all rights to the Collateral shall revert to
the Pledgor.
(b) At any time and from time to time prior to such termination of
the Security Interests, the Collateral Agent may release all or any part of
the Collateral in accordance with the Credit Agreement, whereupon the
Security Interests in such released Collateral shall terminate and the rights
to such released Collateral shall revert to the Pledgor.
(c) Upon any such termination of the Security Interest or release
of Collateral, the Collateral Agent will, at the expense of the Pledgor,
execute and deliver to the Pledgor such documents as the Pledgor shall
reasonably request to evidence the termination of the Security Interests or
the release of such Collateral, as the case may be.
SECTION 15. NOTICES. All notices, requests and other
communications to any party hereunder shall be given in accordance with
Section 9.01 of the Credit Agreement.
SECTION 16. WAIVERS, NON-EXCLUSIVE REMEDIES. No failure on the
part of the Collateral Agent to exercise, and no delay in exercising and no
course of dealing with respect to, any right under this Pledge Agreement
shall operate as a waiver thereof, nor shall any single or partial exercise
by the Collateral Agent of any right under the Credit Agreement or this
Pledge Agreement preclude any other or further exercise thereof or the
exercise of any other right. The rights in this Pledge Agreement and the
Credit Agreement are cumulative and are not exclusive of any other remedies
provided by law.
SECTION 17. SUCCESSORS AND ASSIGNS. This Pledge Agreement is for
the benefit of the Collateral Agent and the other Secured Parties and their
successors and assigns, and in the event of an assignment of all or any of
the Secured Obligations, the rights hereunder, to the extent applicable to
the indebtedness so assigned, may be transferred with such indebtedness.
This Pledge Agreement shall be binding on the Pledgor and its assigns and the
rights of the Pledgor hereunder shall inure to the benefit of the Pledgor's
permitted assigns.
SECTION 18. CHANGES IN WRITING. Neither this Pledge Agreement nor
any provision hereof may be changed, waived, discharged or terminated orally,
but only in writing signed by Pledgor and the Collateral Agent with the
consent of the Required Lenders (or in the case of Section 14, all of the
Lenders).
8
SECTION 19. ATTACHMENT. The Security Interests are intended to
attach and take effect forthwith upon the execution of this Pledge Agreement
and Pledgor acknowledges that value has been given and that the Pledgor has
rights in the Collateral. With respect to any Collateral which is in
addition to, or which is a renewal, replacement or substitution for any of
the Collateral (as constituted on the date hereto) the Security Interests
created hereby are intended to attach and take effect at the time of such
addition, renewal, replacement or substitution, and the Pledgor represents
and warrants that it shall have rights in such Collateral at the time of such
addition, renewal, replacement or substitution, as the case may be.
SECTION 20. GOVERNING LAW. THIS PLEDGE AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK.
SECTION 21. SEVERABILITY. If any provision hereof is invalid or
unenforceable in any jurisdiction, then, to the fullest extent permitted by
law, (i) the other provisions hereof shall remain in full force and effect in
such jurisdiction in order to carry out the intentions of the parties hereto
as nearly as may be possible; and (ii) the invalidity or unenforceability of
any provision hereof in any jurisdiction shall not affect the validity or
enforceability of such provision in any other jurisdiction.
SECTION 22. COUNTERPARTS. This Pledge Agreement may be executed
in any number of counterparts, all of which taken together shall constitute
one and the same instrument and any of the parties hereto may execute this
Pledge Agreement by signing any such counterpart.
9
IN WITNESS WHEREOF, the parties hereto have caused this Pledge
Agreement (Parent) to be duly executed by their respective authorized
officers as of the day and year first above written.
JATO COMMUNICATIONS CORP.
By:
---------------------------------
Name:
Title:
STATE STREET BANK AND TRUST COMPANY, as
Collateral Agent
By:
---------------------------------
Title:
EXHIBIT A
INTERCOMPANY NOTES
None
EXHIBIT G
[On Southwestern Bell Telephone Company letterhead]
STATE STREET BANK AND TRUST COMPANY,
as Collateral Agent (the "Collateral Agent"),
LUCENT TECHNOLOGIES INC.,
as Administrative Agent (the "Administrative Agent"), and
The Lenders (the "Lenders")
Under that certain Credit Agreement
Among the Collateral Agent, the Administrative Agent,
The Lenders, Jato Communications Corp. and Jato Operating Corp.:
SOUTHWESTERN BELL TELEPHONE COMPANY ("SWBT") is the
owner and landlord of certain real property and the
improvements thereon (the "Premises"), including
SWBT's Central Offices, within its seven-state
region. Pursuant to that certain Interconnection
Agreement between SWBT and JATO Communications Corp.
(together with its subsidiary, JATO Operating Corp.,
and its other subsidiaries, "JATO") made as of
_______________ ("Interconnection Agreement"),
related SWBT tariffs and applicable law, JATO has the
right to place certain of its own personal property
or equipment (collectively, "Equipment") on some or
all of the Premises from time to time. Equipment thus
placed by JATO on the Premises from time to time is
deemed, as between SWBT and JATO, to be the personal
property of JATO even though it may be placed on or
affixed to the Premises.
SWBT represents and warrants that it does not now
assert, claim or possess, and SWBT agrees that it
shall not hereafter assert, claim or possess, any
right, title or interest in, to and under any
Equipment placed or to be placed by JATO on the
Premises under the Interconnection Agreement and
related SWBT tariffs. SWBT will not oppose, subject
to the procedures set forth herein, any reasonable
attempt by the Collateral Agent or any Lender, or any
successor in interest or assignee or agent of any
such person (the "Secured Parties"), to exercise any
legal right any Secured Party may have with respect
to the Equipment, including, without limitation, to
take possession and dispose of the Equipment. In the
event that a Secured Party has cause to exercise any
of its legal rights in the Equipment and intends to
reclaim possession of all or part of the Equipment,
then upon 30 business days prior written
notice to SWBT, or other mutually agreed period in
unusual circumstances, SWBT will remove, at JATO's
expense, any specified Equipment from its Central
Offices or other Premises and will make such
Equipment available to a Secured Party from a safe
and secure storage location where possession of the
Equipment may be transferred from SWBT to the
Secured Party.
Without limiting the foregoing, any right or interest
in the Equipment which SWBT now has or may hereafter
acquire because of the location or installation of
the Equipment on the Premises or otherwise
(including, without limitation, any claim by SWBT or
any party holding a lien on, or security interest in,
the Premises that claims a lien on, or security
interest in, the Equipment as a fixture attached to
the Premises) is hereby made subject, subordinate and
inferior to the right, title and interest of Secured
Parties in and to the Equipment, whether such right,
title and interest is now existing or hereafter
created. This letter shall not prohibit SWBT from
bringing any legal actions against JATO for
non-payment of charges otherwise due; provided that
no legal action shall be taken that results in the
creation of any lien on, or security interest in, or
would otherwise interfere with the rights of JATO or
any Secured Party in, any Equipment now or hereafter
placed by JATO on the Premises under the
Interconnection Agreement and related SWBT tariffs.
This letter is furnished by SWBT solely at JATO's
request and to facilitate the efforts of JATO to
finance the purchase of equipment that JATO proposes
to place on the Premises pursuant to JATO's rights
under the Interconnection Agreement, related SWBT
tariffs and applicable law, and this letter is not
intended to alter, and shall not have the effect of
altering, the rights and obligations of either JATO
or SWBT under their existing contractual and other
arrangements.
Sincerely,
----------------------------------------------------
By SOUTHWESTERN BELL, TELEPHONE COMPANY On Behalf of
Itself, its Successors and Assigns [name, title and
date]
EXHIBIT H
[FORM OF SECURITY AGREEMENT (PARENT)]
SECURITY AGREEMENT (PARENT)
This SECURITY AGREEMENT (PARENT), dated as of July 14, 1999, is made
between JATO COMMUNICATIONS CORP., a Delaware corporation (with its
successors, the "Company"), and STATE STREET BANK AND TRUST COMPANY, as
Collateral Agent for the Administrative Agent and the Lenders (each term as
defined below) (with its successors in such capacity, the "Collateral Agent").
W I T N E S S E T H:
WHEREAS, the Company, Jato Operating Corp. (the "Borrower"), certain
lenders (the "Lenders"), the Collateral Agent, and Lucent Technologies Inc.,
as administrative agent (the "Administrative Agent"), are parties to a Credit
Agreement, dated as of July 14, 1999 (as the same may be amended, restated or
supplemented and in effect from time to time, the "Credit Agreement"),
providing, subject to the terms and conditions thereof, for extensions of
credit to be made by the Lenders to the Borrower;
WHEREAS, in order to induce the Lenders and the Administrative Agent
to enter into the Credit Agreement, the Company has agreed to grant a
continuing security interest in and to the Collateral (as defined below) to
secure the Borrower's and its obligations under the Loan Documents (as
defined below), including, without limitation, the Borrower's and its
obligations under the Credit Agreement; and
WHEREAS, the Lenders have appointed the Collateral Agent to act as
their collateral agent in connection with the foregoing transactions;
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
SECTION 1. DEFINITIONS. Terms defined in the Credit Agreement and
not otherwise defined herein have, as used herein, the respective meanings
provided for therein. The following additional terms, as used herein, have
the following respective meanings:
"ACCOUNTS" means all "ACCOUNTS" (as defined in the UCC) now owned or
hereafter acquired by the Company and shall also mean and include all
accounts receivable, contract rights, book debts, notes, drafts and other
obligations or indebtedness owing to the Company arising from the sale, lease
or exchange of goods or other property by it or the performance of services
by it or both (including, without limitation, any such obligation which might
be characterized as an account, contract right or general intangible under
the Uniform Commercial
Code in effect in any jurisdiction) and all of the Company's rights in, to
and under all purchase orders for goods, services or other property, and all
of the Company's rights to any goods, services or other property represented
by any of the foregoing (including returned or repossessed goods and unpaid
sellers' rights of rescission, replevin, reclamation and rights to stoppage
in transit) and all monies due to or to become due to the Company under all
contracts for the sale, lease or exchange of goods or other property or the
performance of services by it or both (whether or not yet earned by
performance on the part of the Company), in each case whether now in
existence or hereafter arising or acquired including, without limitation, the
right to receive the proceeds of said purchase orders and contracts and all
collateral security and guarantees of any kind given by any Person with
respect to any of the foregoing.
"BORROWER-RELATED COLLATERAL" means all Accounts, General Intangibles
and Instruments representing obligations of the Borrower to the Company or
other rights of the Company in respect of the Borrower, all books and records
of the Company pertaining to any such Accounts, General Intangibles and
Instruments and all Proceeds of or substitutions for any such Accounts,
General Intangibles and Instruments.
"COLLATERAL" has the meaning set forth in Section 3(a).
"COLLATERAL ACCOUNT" has the meaning set forth in Section 5(a).
"COPYRIGHT LICENSE" means any agreement now or hereafter in existence
granting to the Company, or pursuant to which the Company has granted to any
other Person, any right to use, copy, reproduce, distribute, prepare
derivative works, display or publish any records or other materials on which
a Copyright is in existence or may come into existence.
"COPYRIGHT SECURITY AGREEMENT" means a Copyright Security Agreement
executed and delivered by the Company in favor of the Collateral Agent, for
the benefit of the Secured Parties, substantially in the form of Exhibit D
hereto, as the same may be amended from time to time.
"COPYRIGHTS" means all the following: (i) all copyrights under the
laws of the United States or any other country (whether or not the underlying
works of authorship have been published), all registrations and recordings
thereof, all intellectual property rights to works of authorship (whether or
not published), and all applications for copyrights under the laws of the
United States or any other country, including, without limitation,
registrations, recordings and applications in the United States Copyright
Office or in any similar office or agency of the United States, any State
thereof or any other country or any political subdivision thereof, (ii) all
reissues, renewals and extensions thereof, (iii) all claims for, and rights
to sue for, past or future infringements of any of the foregoing, and (iv)
all income, royalties, damages and payments now or hereafter due or payable
with respect to any of the foregoing, including, without limitation, damages
and payments for past or future infringements thereof.
"DEPOSIT ACCOUNTS" shall mean all deposit accounts (as defined in the
UCC) of the Company including, without limitation, any demand, time, savings,
passbook or like account maintained by the Company with any bank, savings and
loan association, credit union or like organization, and all money, cash and
cash equivalents of the Company, whether or not
2
deposited in any such deposit account, and all certificates and instruments,
if any, from time to time representing, evidencing or deposited into such
accounts.
"DOCUMENTS" means all "DOCUMENTS" (as defined in the UCC) or other
receipts covering, evidencing or representing goods, now owned or hereafter
acquired, by the Company.
"EQUIPMENT" means all "EQUIPMENT" (as defined in the UCC) now owned or
hereafter acquired by the Company, including, without limitation, all motor
vehicles, trucks, and trailers other than equipment acquired in connection
with Indebtedness of the type permitted under Section 6.01(viii) of the
Credit Agreement.
"EXCLUDED CONTRACTS" shall mean one or more contracts which by their
terms would be breached by the grant of the security interests created
therein pursuant to the terms of this Agreement or with respect to which the
granting of a security interest is prohibited under applicable law (it being
understood and agreed, however, that notwithstanding the foregoing, all
rights to payment for money due or to become due pursuant to any Excluded
Contract shall be subject to the security interests created pursuant to this
Agreement).
"GENERAL INTANGIBLES" means all "GENERAL INTANGIBLES" (as defined in
the UCC) now owned or hereafter acquired by the Company, including, without
limitation, (i) all obligations or indebtedness owing to the Company (other
than Accounts) from whatever source arising, (ii) all Copyright Licenses,
Copyrights, Patent Licenses, Patents, Trademark Licenses, Trademarks, rights
in intellectual property, goodwill, trade names, service marks, trade
secrets, permits and licenses, (iii) all rights or claims in respect of
refunds for taxes paid and (iv) all rights in respect of any pension plan or
similar arrangement maintained for employees of any member of the Loan
Parties other than general intangibles acquired in connection with
Indebtedness of the type permitted under Section 6.01(viii) of the Credit
Agreement.
"INSTRUMENTS" means all "INSTRUMENTS", "CHATTEL PAPER" or "LETTERS OF
CREDIT" (each as defined in the UCC) evidencing, representing, arising from
or existing in respect of, relating to, securing or otherwise supporting the
payment of, any of the Accounts, including (but not limited to) promissory
notes, drafts, bills of exchange and trade acceptances, now owned or
hereafter acquired by the Company, but Instruments shall exclude Instruments
representing Indebtedness owing to the Company by any of its subsidiaries
other than the Borrower or to the extent pledged pursuant to the Pledge
Agreement (Parent).
"INVENTORY" means all "INVENTORY" (as defined in the UCC), now owned
or hereafter acquired by the Company, wherever located, and shall also mean
and include, without limitation, all raw materials and other materials and
supplies, work-in-process and finished goods and any products made or
processed therefrom and all substances, if any, commingled therewith or added
thereto other than inventory acquired in connection with Indebtedness of the
type permitted under Section 6.01(viii) of the Credit Agreement.
"INVESTMENT PROPERTY" shall mean and include all of the Company's
investment property (as defined in the UCC) and all of the Company's other
securities (whether certificated or uncertificated), security entitlements,
financial assets, securities accounts, commodity contracts, and commodity
accounts (as each such term is defined in the UCC), including all
substitutions
3
and additions thereto, all dividends, distributions and sums distributable or
payable from, upon, or in respect of such property, and all rights and
privileges incident to such property, but Investment Property shall exclude
the Company's interest in its subsidiaries other than the Borrower or to the
extent pledged pursuant to the Pledge Agreement (Parent).
"LIQUID INVESTMENTS" means an investment meeting the criteria set
forth in Section 5(e).
"LICENSES" means any license, approval or other authorization issued
by the Federal Communications Commission or any state public utility
commission or any other Governmental Authority having jurisdiction over the
telecommunications business.
"LOCKBOX ACCOUNT" means a "Lockbox Account" established under a
Lockbox Agreement.
"LOCKBOX AGREEMENT" means a Lockbox Agreement among the Company, the
Collateral Agent and a Lockbox Bank substantially in the form of Exhibit F
hereto or otherwise in form and substance reasonably satisfactory to the
Collateral Agent.
"LOCKBOX BANK" means a "money center" commercial bank selected by the
Company and satisfactory to the Collateral Agent, and each such other bank as
may from time to time enter into a Lockbox Agreement.
"PARTIAL TERMINATION DATE" means the date on or prior to which (i) the
Company shall have assigned or transferred to the Borrower all of the
Company's right, title and interest in the Licenses described on Schedule
3.05 to the Credit Agreement, in all interconnection agreements approved
pursuant to or related to such Licenses, all Accounts created through the
conduct by the Company of its business pursuant to such Licenses and all of
the Company's other assets, properties and rights related to the past or
future conduct of the business contemplated to be conducted by the licensee
pursuant to such Licenses and (ii) the chief executive officer of the Company
shall have delivered a certificate to the Collateral Agent to the effect that
all necessary approvals of Governmental Authorities of such assignments and
transfers have been obtained and all such assignments and transfers have been
effected.
"PATENT LICENSE" means any agreement now or hereafter in existence
granting to the Company, or pursuant to which the Company has granted to any
other Person, any right with respect to any Patent or any invention now or
hereafter in existence, whether patentable or not, whether a patent or
application for patent is in existence on such invention or not, and whether
a patent or application for patent on such invention may come into existence,
including, without limitation, the agreements identified in Schedule I to
Exhibit B hereto.
"PATENTS" means all the following: (i) all letters patent and design
letters patent of the United States or any other country and all applications
for letters patent and design letters patent of the United States or any
other country, including, without limitation, applications in the United
States Patent and Trademark Office or in any similar office or agency of the
United States, any State thereof or any other country or any political
subdivision thereof, including, without limitation, those described in
Schedule I to Exhibit B hereto, (ii) all reissues, divisions, continuations,
continuations-in-part, renewals and extensions thereof, (iii) all claims for,
and rights to sue for, past or future infringements of any of the foregoing
and (iv) all income,
4
royalties, damages and payments now or hereafter due or payable with respect
to any of the foregoing, including, without limitation, damages and payments
for past or future infringements thereof.
"PATENT SECURITY AGREEMENT" means a Patent Security Agreement executed
and delivered by the Company in favor of the Collateral Agent, for the
benefit of the Secured Parties, substantially in the form of Exhibit B
hereto, as the same may be amended from time to time.
"PERFECTION CERTIFICATE" means a certificate substantially in the form
of Exhibit A hereto, completed and supplemented with the schedules and
attachments contemplated thereby to the satisfaction of the Collateral Agent,
and duly executed by any authorized officer of the Company.
"PERMITTED LIENS" means the Security Interests and the other Liens on
the Collateral of the type permitted to be created, assumed or exist pursuant
to Section 6.02 of the Credit Agreement.
"PROCEEDS" means all proceeds of, and all other profits, products,
rentals or receipts, in whatever form, arising from the collection, sale,
lease, exchange, assignment, licensing or other disposition of, or other
realization upon, collateral, including, without limitation, all claims of
the Company against third parties for loss of, damage to or destruction of,
or for proceeds payable under, or unearned premiums with respect to, policies
of insurance in respect of, any collateral, and any condemnation or
requisition payments with respect to any collateral, in each case whether now
existing or hereafter arising.
"SECURED OBLIGATIONS" means the obligations secured under this
Agreement, including (a) all principal of and interest (including, without
limitation, any interest which accrues after the commencement of any case,
proceeding or other action relating to the bankruptcy, insolvency or
reorganization of the Company, whether or not allowed or allowable as a claim
in any such case, proceeding or other action) on any Loan to the Borrower
under the Credit Agreement; (b) all other amounts payable by the Company or
the Borrower hereunder or under any other Loan Document; and (c) any renewals
or extensions of any of the foregoing.
"SECURED PARTIES" means (i) the Lenders, (ii) the Administrative Agent
and (iii) the Collateral Agent.
"SECURITY INTERESTS" means the security interests granted pursuant to
Section 3, as well as all other security interests created or assigned as
additional security for the Secured Obligations pursuant to the provisions of
this Agreement.
"TRADEMARK LICENSE" means any agreement now or hereafter in existence
granting to the Company, or pursuant to which the Company has granted to any
other Person, any right to use any Trademark, including, without limitation,
the agreements identified on Schedule I to Exhibit C hereto.
"TRADEMARKS" means all of the following: (i) all trademarks, trade
names, corporate names, company names, business names, fictitious business
names, trade styles, service marks, logos, brand names, trade dress, prints
and labels on which any of the foregoing have appeared
5
or appear, package and other designs, and any other source or business
identifiers, and general intangibles of like nature, and the rights in any of
the foregoing which arise under applicable law, (ii) the goodwill of the
business symbolized thereby or associated with each of them, (iii) all
registrations and applications in connection therewith, including, without
limitation, registrations and applications in the United States Patent and
Trademark Office or in any similar office or agency of the United States, any
State thereof or any other country or any political subdivision thereof, (iv)
all reissues, extensions and renewals thereof, (v) all claims for, and rights
to sue for, past or future infringements of any of the foregoing and (vi) all
income, royalties, damages and payments now or hereafter due or payable with
respect to any of the foregoing, including, without limitation, damages and
payments for past or future infringements thereof.'
"TRADEMARK SECURITY AGREEMENT" means a Trademark Security Agreement
executed and delivered by the Company in favor of the Collateral Agent, for
the benefit of the Secured Parties, substantially in the form of Exhibit C
hereto, as the same may be amended from time to time.
"UCC" means the Uniform Commercial Code as in effect on the date
hereof in the State of New York; PROVIDED that if by reason of mandatory
provisions of law, the perfection or the effect of perfection or
non-perfection of the Security Interest in any Collateral is governed by the
Uniform Commercial Code as in effect in a jurisdiction other than New York,
"UCC" means the Uniform Commercial Code as in effect in such other
jurisdiction for purposes of the provisions hereof relating to such
perfection or effect of perfection or non-perfection.
SECTION 2. REPRESENTATIONS AND WARRANTIES. The Company represents
and warrants as follows:
(a) The Company has good and marketable title to all of the
Collateral, free and clear of any Liens other than the Permitted Liens. All
actions have been taken that are necessary under the UCC to perfect its
interest in any Accounts in which it has an interest, as against its
assignors and creditors of its assignors.
(b) The Company has not performed any acts which might
prevent the Collateral Agent from enforcing any of the terms of this
Agreement or which would limit the Collateral Agent in any such enforcement.
Other than financing statements or other similar or equivalent documents or
instruments with respect to the Security Interests and Permitted Liens, no
financing statement, mortgage, security agreement or similar or equivalent
document or instrument covering all or any part of the Collateral is on file
or of record in any jurisdiction in which such filing or recording would be
effective to perfect a Lien on such Collateral. No Collateral is in the
possession of any Person (other than the Company) asserting any claim thereto
or security interest therein, except that the Collateral Agent or its
designee may have possession of Collateral as contemplated hereby.
(c) Not later than the date of the first borrowing under the
Credit Agreement, the Company shall deliver the Perfection Certificate to the
Collateral Agent. The information set forth therein shall be correct and
complete. Not later than 60 days following the date of the first Borrowing,
the Company shall furnish to the Collateral Agent file search reports from
each filing office set forth in Schedule 7 to the Perfection Certificate or
other evidence satisfactory to the
6
Collateral Agent, acting on behalf of the Required Lenders confirming the
filing information set forth in such Schedule.
(d) The Security Interests constitute valid security
interests under the UCC securing the Secured Obligations to the extent that a
security interest may be created in the Collateral under the UCC. When the
Patent Security Agreement and the Trademark Security Agreement have been
filed with the United States Patent and Trademark Office, the Security
Interests shall constitute perfected security interests in all right, title
and interest of the Company in Patents or Trademarks, prior to all other
Liens and rights of others therein except for Permitted Liens, to the extent
that a perfected security interest may be created in such Collateral under
the U.S. Patent Act or the Lanham Act. When the Copyright Security Agreement
has been filed with the United States Copyright Office, the Security
Interests shall constitute perfected security interests in all right, title
and interest of the Company in Copyrights, prior to all other Liens and
rights of others therein except for the Permitted Liens to the extent a
perfected security interest may be created in such Collateral under the U.S.
Copyright Act..
(e) Other than those listed on Schedule I to the Copyright
Security Agreement, Schedule I to the Trademark Security Agreement, and
Schedule I to the Patent Security Agreement delivered on the date hereof (as
the same may be modified from time to time), the Company has no Copyright
Licenses, Copyrights, Patent Licenses, Patents, Trademark Licenses or
Trademarks.
SECTION 3. THE SECURITY INTERESTS. (a) In order to secure the
full and punctual payment of the Secured Obligations in accordance with the
terms thereof, and to secure the performance of all of the obligations of the
Company hereunder and under the other Loan Documents, the Company hereby
pledges, hypothecates, assigns by way of security, transfers and grants to
the Collateral Agent for the ratable benefit of the Secured Parties a
continuing security interest in and to all right, title and interest of the
Company in and to the following property, whether now owned or existing or
hereafter acquired or arising and regardless of where located (all being
collectively referred to as the "Collateral"):
(i) Accounts;
(ii) Inventory;
(iii) General Intangibles;
(iv) Documents;
(v) Instruments;
(vi) Equipment;
(vii) Investment Property;
(viii) Deposit Accounts;
7
(ix) The Collateral Account, all cash deposited
therein from time to time, the Liquid Investments made pursuant to Section
5(e) and other monies and property of any kind of the Company in the
possession or under the control of the Collateral Agent;
(x) All books and records (including, without
limitation, customer lists, marketing information, credit files, price lists,
operating records, vendor and supplier price lists, sales literature,
computer programs, printouts and other computer materials and records) of the
Company pertaining to any of the Collateral;
(xi) All Proceeds of, attachments or accessions to, or
substitutions for, all or any of the Collateral described in clauses (i)
through (x) hereof;
PROVIDED, HOWEVER, the Collateral shall not include any Excluded Contracts.
(b) The Security Interests are granted as security only and
shall not subject the Collateral Agent or any other Secured Party to, or
transfer or in any way affect or modify, any obligation or liability of the
Company with respect to any of the Collateral or any transaction in
connection therewith.
(c) Notwithstanding anything herein or in the other Loan
Documents to the contrary, to the extent this Agreement or any other Security
Document purports to grant to the Collateral Agent a Lien in any License held
directly or indirectly by the Company, the Borrower or any of the Borrower's
subsidiaries, now owned or hereafter acquired, the Collateral Agent shall
only have a Lien in such Licenses at such times and to the extent that a Lien
in such Licenses is permitted under applicable law; PROVIDED, that any such
Lien shall to the extent permitted by applicable law be deemed effective as
of the later of (i) the Effective Date or (ii) the date on which the Company
was assigned, or acquired control over, the applicable License.
SECTION 4. FURTHER ASSURANCES; COVENANTS. (a)(i) The Company will
not establish or change (A) the location of its chief executive office or its
chief place of business or (B) except for sales in the ordinary course of
business, the locations where it keeps or holds any Collateral or records
relating thereto from the applicable location described in the Perfection
Certificate unless it shall have given the Collateral Agent notice thereof
and an opinion of counsel with respect thereto in accordance with Section
4(k). The Company shall not in any event change the location of any
Collateral if such change would cause the Security Interests in such
Collateral to lapse or cease to be perfected.
(ii) The Company will not change its name, identity or
corporate structure (except as expressly permitted in the Credit Agreement)
in any manner unless it shall have given the Collateral Agent prior notice
thereof and delivered an opinion of counsel with respect thereto in
accordance with Section 4(k).
(b) The Company will, from time to time, at its expense,
execute, deliver, file and record any statement, assignment, instrument,
document, agreement or other paper and take any other action (including,
without limitation, any filings with the United States Patent and Trademark
Office (including without limitation, a Patent Security Agreement and a
Trademark Security Agreement), any filings with the United States Copyright
Office (including without limitation a Copyright Security Agreement), any
filings of financing or continuation statements
8
under the UCC and any filings in, or agreements governed by the laws of, any
foreign jurisdictions) that from time to time may be necessary or desirable,
or that the Collateral Agent reasonably may request, in order to create,
preserve, upgrade in rank (to the extent required hereby), perfect, confirm
or validate the Security Interests or to enable the Collateral Agent and the
other Secured Parties to obtain the full benefits of this Agreement, or to
enable the Collateral Agent to exercise and enforce, or facilitate the
exercise and enforcement of, any of its rights, powers and remedies hereunder
with respect to any of the Collateral. To the extent permitted by law, the
Company hereby authorizes the Collateral Agent to execute and file financing
statements or continuation statements without the Company's signature
appearing thereon. The Company agrees that a carbon, photographic or other
reproduction of this Agreement or of a financing statement is sufficient as a
financing statement. The Company shall pay the costs of, or incidental to,
any recording or filing of any financing or continuation statements
concerning the Collateral.
(c) If any Collateral is at any time in the possession or
control of any warehouseman, bailee or any of the Company's agents or
processors, the Company shall, upon the request of the Collateral Agent
acting on the instructions of the Required Lenders, notify such warehouseman,
bailee, agent or processor of the Security Interests created hereby and
instruct such Person to hold all such Collateral for the Collateral Agent's
account subject to the Collateral Agent's instructions.
(d) The Company shall keep full and accurate books and
records relating to the Collateral, and stamp or otherwise mark such books
and records in such manner as the Required Lenders may reasonably request in
order to reflect the Security Interests. The Company shall provide the
Collateral Agent with reasonable access to such books and records during
normal business hours in accordance with Section 5.08 of the Credit Agreement.
(e) The Company will immediately deliver and pledge each
Instrument constituting Collateral to the Collateral Agent (other than checks
and drafts constituting payments in respect of Accounts, as to which the
provisions of Section 5(b) shall apply), in each case appropriately endorsed
to the Collateral Agent; PROVIDED that so long as no Event of Default (as
defined under the Credit Agreement) shall have occurred and be continuing,
the Company may retain any Instruments (i) that in the aggregate have a
principal or face amount of $1,000 or less or (ii) in which a security
interest has been and continues to be effectively created and perfected in
favor of the Collateral Agent under the other Security Documents, and the
Collateral Agent shall, promptly upon request of the Company, make
appropriate arrangements for making any Instrument pledged by the Company and
delivered to the Collateral Agent available to it for purposes of
presentation, collection or renewal (any such arrangement to be effected, to
the extent deemed appropriate to the Collateral Agent, against trust receipt
or like document). Until the Partial Termination Date, all certificates or
instruments representing or evidencing Investment Property (other than
Investment Property held by a securities intermediary, a commodities
intermediary or another financial intermediary) shall be delivered to and
held by or on behalf of the Collateral Agent, for the ratable benefit of the
Secured Parties, pursuant hereto and shall be in suitable form for transfer
by delivery, duly endorsed and shall be accompanied by undated duly executed
instruments of transfer or assignment in blank, with signatures appropriately
guaranteed, and accompanied in each case by any required transfer tax stamps,
all in form and substance satisfactory to the Collateral Agent. Until the
Partial Termination Date,
9
with respect to any Investment Property held by a securities intermediary,
commodity intermediary or other financial intermediary of any kind, the
Company shall execute and deliver, and shall cause any such intermediary to
execute and deliver, a securities control agreement ("Securities Control
Agreement") among the Company, the Collateral Agent, and such intermediary
substantially in the form of Exhibit G which provides, among other things,
for the intermediary's agreement that it will comply wth such entitlement
orders, and apply any value distributed on account of any Investment Property
maintained in an account with such intermediary, as directed by the
Collateral Agent without further consent by the Company. Until the Partial
Termination Date, the Collateral Agent shall have the right, at any time in
its discretion and without notice to the Company after the occurrence and
during the continuance of an Event of Default, to cause any or all of the
Investment Property to be transferred of record into the name of the
Collateral Agent or its nominee.
(f) The Company shall use its best efforts to cause to be
collected from its account debtors, as and when due, any and all amounts
owing under or on account of each Account constituting Collateral (including,
without limitation, Accounts which are delinquent, such Accounts to be
collected in accordance with lawful collection procedures) and to apply
forthwith upon receipt thereof all such amounts as are so collected to the
outstanding balance of such Account. Unless an Event of Default (as defined
under the Credit Agreement) has occurred and is continuing and the Collateral
Agent is exercising its rights hereunder to collect Accounts, the Company may
allow in the ordinary course of business as adjustments to amounts owing
under its Accounts constituting Collateral (i) an extension or renewal of the
time or times of payment, or settlement for less than the total unpaid
balance, which the Company finds appropriate in accordance with sound
business judgment and (ii) a refund or credit due as a result of returned or
damaged merchandise or deficient service, all in accordance with the
Company's ordinary course of business consistent with its historical
collection practices. The costs and expenses (including, without limitation,
reasonable attorney's fees) of collection, whether incurred by the Company or
the Collateral Agent, shall be borne by the Company.
(g) Upon the occurrence and during the continuance of any
Event of Default under the Credit Agreement, upon the request of the Required
Lenders acting through the Collateral Agent, the Company will promptly notify
(and the Company hereby authorizes the Collateral Agent so to notify) each
account debtor in respect of any Account or Instrument constituting
Collateral that such Collateral has been assigned to the Collateral Agent
hereunder, and that any payments due or to become due in respect of such
Collateral are to be made directly to the Collateral Agent or its designee.
(h) Until the Partial Termination Date, the Company shall,
(i) as soon as practicable after the date hereof, in the case of Equipment
now owned constituting goods in which a security interest is perfected by a
notation on the certificate of title or similar evidence of the ownership of
such goods (unless such security interest may otherwise be perfected and is
so perfected), and (ii) within 10 days of acquiring any other similar
Equipment, in each case, (a) having a value in excess of $25,000 or (b)
having a value in excess of $10,000, if the aggregate of all such items owned
by the Company at any time is greater than $50,000, deliver to the Collateral
Agent any and all certificates of title, applications for title or similar
evidence of ownership of such Equipment and shall cause the Collateral Agent
to be named as lienholder on any such certificate of title or other evidence
of ownership. Until the Partial Termination Date,
10
the Company shall promptly inform the Collateral Agent of any additions to or
deletions from such Equipment in excess of $10,000. Until the Partial
Termination Date, the Company shall not permit any item of Equipment to
become a fixture to real estate.
(i) The Company will, promptly upon request, provide to the
Collateral Agent all information and evidence it may reasonably request
concerning the Collateral, and in particular the Accounts, to enable the
Collateral Agent to enforce the provisions of this Agreement.
(j) Until the Partial Termination Date: The Company shall
notify the Collateral Agent immediately if it knows, or has reason to know,
that any application or registration relating to any Material Copyright,
Material Patent or Material Trademark may become abandoned, or of any adverse
determination or development (including, without limitation, the institution
of, or any such determination or development in, any proceeding in the United
States Copyright Office, the United States Patent and Trademark Office, or
any court) regarding the Company's ownership of any Material Copyright,
Material Patent or Material Trademark, its right to register or patent the
same, or to keep and maintain the same. For purposes of this Section 4(j),
"Material Patent", "Material Trademark" and "Material Copyright" shall mean
one or more Copyrights, Patents or Trademarks, respectively, which
individually has a fair market value in excess of $10,000 or are individually
or in the aggregate otherwise material to the business of the Company. In
the event that any right to any Copyright, Copyright License, Patent, Patent
License, Trademark or Trademark License is infringed, misappropriated or
diluted by a third party, the Company shall notify the Collateral Agent
promptly after it learns thereof and shall, unless the Company shall
reasonably determine that any such action would be of negligible economic
value, promptly sue for infringement, misappropriation or dilution and to
recover any and all damages for such infringement, misappropriation or
dilution, and take such other actions as the Company shall reasonably deem
appropriate under the circumstances to protect such Copyright, Copyright
License, Patent, Patent License, Trademark or Trademark License. In no event
shall the Company, either itself or through any agent, employee or licensee,
file an application for the registration of any Copyright with the United
States Copyright Office or any Material Patent or Material Trademark with the
United States Patent and Trademark Office, or with any similar office or
agency in any other country or any political subdivision thereof, unless not
less than 30 days prior thereto it informs the Collateral Agent, and, upon
request of the Collateral Agent, executes and delivers any and all
agreements, instruments, documents and papers the Collateral Agent may
request to evidence the Security Interests in such Copyright, Patent or
Trademark and the goodwill and general intangibles of the Company relating
thereto or represented thereby, and the Company hereby constitutes the
Collateral Agent its attorney-in-fact to execute and file all such writings
for the foregoing purposes, all acts of such attorney being hereby ratified
and confirmed; such power, being coupled with an interest, shall be
irrevocable until the Secured Obligations are paid in full.
(k) Not more than four months nor less than 10 days prior to
each date on which the Company proposes to take any action contemplated by
Section 4(a)(i) or (ii), the Company shall, at its cost and expense, cause to
be delivered to the Secured Parties an opinion of counsel satisfactory to the
Collateral Agent (the Company's general counsel being deemed to be
satisfactory unless the Collateral Agent notifies the Company otherwise), to
the effect of Exhibit E hereto and in a form and substance reasonably
satisfactory to the Administrative Agent, to the
11
effect that all financing statements and amendments or supplements thereto,
continuation statements and other documents required to be recorded or filed
in order to perfect and protect the Security Interests for a period,
specified in such opinion, continuing until a date not earlier than eighteen
months from the date of such opinion, against all creditors of and purchasers
from the Company have been filed in each filing office necessary for such
purpose and that all filing fees and taxes, if any, payable in connection
with such filings have been paid in full (except as noted therein with
respect to any continuation statements to be filed within such period).
SECTION 5. COLLATERAL ACCOUNT AND LOCKBOX ACCOUNT. If requested by
the Collateral Agent at any time following the occurrence of an Event of
Default (whether or not such Event of Default is subsequently cured), the
following provisions of this Section shall become effective and the Company
shall take all necessary action to give effect thereto:
(a) The Company shall establish with the Collateral Agent or
a commercial bank designated by the Collateral Agent a cash collateral
account (such account, together with any additional account so established
for such purpose from time to time, the "Collateral Account") in the name and
under the control of the Collateral Agent into which there shall be deposited
from time to time the cash proceeds of the Collateral required to be
delivered to the Collateral Agent pursuant to subsection (d) of this Section
5 or any other provision of this Agreement or any other Loan Document. Any
income received by the Collateral Agent with respect to the balance from time
to time standing to the credit of the Collateral Account, including any
interest or capital gains on Liquid Investments, shall remain, or be
deposited, in the Collateral Account. All right, title and interest in and to
the cash amounts on deposit from time to time in the Collateral Account
together with any Liquid Investments from time to time made pursuant to
subsection (e) of this Section shall vest in the Collateral Agent, shall
constitute part of the Collateral hereunder and shall not constitute payment
of the Secured Obligations until applied thereto as hereinafter provided.
(b) The Company shall deliver to the Collateral Agent
counterparts of the Lockbox Agreement executed and delivered on behalf of the
Company and the Lockbox Bank. The Company shall instruct all account debtors
and other Persons obligated in respect of all Accounts constituting
Collateral to make all payments in respect of such Accounts directly to the
Lockbox Bank (by instructing that such payments be remitted to the Post
Office Box referred to in the Lockbox Agreement with the Lockbox Bank). In
addition to the foregoing, the Company agrees that if the proceeds of any
Collateral hereunder (including the payments made in respect of such
Accounts) shall be received by it, the Company shall as promptly as possible
deposit such proceeds into the Lockbox Account. Until so deposited, all such
proceeds shall be held in trust by the Company for and as the property of the
Collateral Agent and the Secured Parties and shall not be commingled with any
other funds or property of the Company.
(c) The balance from time to time standing to the credit of
the Lockbox Account shall, except upon the occurrence and continuation of an
Event of Default (as defined under the Credit Agreement), be distributed to
the Company upon the order of the Company. Amounts on deposit in the Lockbox
Account shall, except upon the occurrence and continuation of an Event of
Default, be invested and re-invested from time to time in Permitted
Investments as the Company shall determine.
12
(d) Upon the occurrence and continuation of an Event of
Default (as defined under the Credit Agreement), the Collateral Agent shall,
if so instructed by the Required Lenders, (i) deliver a Stop Transfer Notice
(as defined in the Lockbox Agreement) to the Lockbox Bank and instruct the
Lockbox Bank to transfer to the Collateral Account all funds then and
thereafter standing to the credit of the Lockbox Account with the Lockbox
Bank and (ii) apply or cause to be applied (subject to collection) any or all
of the balance from time to time standing to the credit of the Collateral
Account and such Lockbox Account in the manner specified in Section 9.
(e) Amounts on deposit in the Collateral Account and, during
the continuance of an Event of Default, the Lockbox Account shall be invested
and re-invested from time to time in such Liquid Investments as the Company
shall determine, which Liquid Investments shall be held in the name and be
under the control of the Collateral Agent, provided that, if an Event of
Default has occurred and is continuing, the Collateral Agent shall, if
instructed by the Required Lenders, liquidate any such Liquid Investments and
apply or cause to be applied the proceeds thereof to the payment of the
Secured Obligations in the manner specified in Section 9. For this purpose,
(i) each Liquid Investment shall mature within 30 days after it is acquired
by the Collateral Agent and (ii) in order to provide the Collateral Agent,
for the benefit of the Secured Parties, with a perfected security interest
therein, each Liquid Investment shall be either:
(i) evidenced by negotiable certificates or
instruments, or if non-negotiable then issued in the name of the Collateral
Agent, which (together with any appropriate instruments of transfer) are
delivered to, and held by, the Collateral Agent or an agent thereof (which
shall not be the Company or any of its Affiliates) in the State of New York
or the Commonwealth of Massachusetts; or
(ii) in book-entry form and issued by the United
States and subject to pledge under applicable state law and Treasury
regulations and as to which (in the opinion of counsel to the Collateral
Agent) appropriate measures shall have been taken for perfection of the
Security Interests.
SECTION 6. GENERAL AUTHORITY. The Company hereby irrevocably
appoints the Collateral Agent its true and lawful attorney, with full power
of substitution, in the name of the Company, the Collateral Agent, the
Secured Parties or otherwise, for the sole use and benefit of the Collateral
Agent and the other Secured Parties, but at the Company's expense, to the
extent permitted by law to exercise, at any time and from time to time while
an Event of Default (as defined under the Credit Agreement) has occurred and
is continuing, all or any of the following powers with respect to all or any
of the Collateral:
(i) to demand, sue for, collect, receive and give
acquittance for any and all monies due or to become due thereon or by
virtue thereof,
(ii) to settle, compromise, compound, prosecute or defend
any action or proceeding with respect thereto,
13
(iii) to sell, transfer, assign or otherwise deal in or
with the same or the proceeds or avails thereof, as fully and effectually
as if the Collateral Agent were the absolute owner thereof, and
(iv) to extend the time of payment of any or all thereof
and to make any allowance and other adjustments with reference thereto;
PROVIDED that the Collateral Agent shall give the Company not less than ten
days' prior written notice of the time and place of any sale or other
intended disposition of any of the Collateral, except any Collateral which is
perishable or threatens to decline speedily in value or is of a type
customarily sold on a recognized market. To the extent permitted by law, the
Company agrees that such notice constitutes "reasonable notification" within
the meaning of Section 9-504(3) of the UCC.
SECTION 7. REMEDIES UPON EVENT OF DEFAULT. (a) If any Event of
Default under the Credit Agreement has occurred and is continuing, the
Collateral Agent may, in accordance with the written instructions of the
Required Lenders, exercise on behalf of the Secured Parties all rights of a
secured party under the UCC (whether or not in effect in the jurisdiction
where such rights are exercised) and, in addition, the Collateral Agent may,
without being required to give any notice, except as herein provided or as
may be required by mandatory provisions of law, (i) withdraw all cash and
Liquid Investments in the Collateral Account and apply such monies, Liquid
Investments and other cash, if any, then held by it as Collateral as
specified in Section 9 and (ii) if there shall be no such monies, Liquid
Investments or cash or if such monies, Liquid Investments or cash shall be
insufficient to pay all the Secured Obligations in full, sell the Collateral
or any part thereof at public or private sale, for cash, upon credit or for
future delivery, and at such price or prices as the Collateral Agent may deem
satisfactory. The Collateral Agent or any other Secured Party may be the
purchaser of any or all of the Collateral so sold at any public sale (or, if
the Collateral is of a type customarily sold in a recognized market or is of
a type which is the subject of widely distributed standard price quotations,
at any private sale) and thereafter hold the same, absolutely, free from any
right or claim of whatsoever kind. The Company will execute and deliver such
documents and take such other action as the Collateral Agent deems necessary
or advisable in order that any such sale may be made in compliance with law.
Upon any such sale the Collateral Agent shall have the right to deliver,
assign and transfer to the purchaser thereof the Collateral so sold. Each
purchaser at any such sale shall hold the Collateral so sold to it
absolutely, free from any claim or right of whatsoever kind, including any
equity or right of redemption of the Company which may be waived, and the
Company, o the extent permitted by law, hereby specifically waives all rights
of redemption, stay or appraisal which it has or may have under any law now
existing or hereafter adopted. The notice (if any) of such sale required by
Section 6 shall (1) in case of a public sale, state the time and place fixed
for such sale, and (2) in the case of a private sale, state the day after
which such sale may be consummated. Any such public sale shall be held at
such time or times within ordinary business hours and at such place or places
as the Collateral Agent may fix in the notice of such sale. At any such sale
the Collateral may be sold in one lot as an entirety or in separate parcels,
as the Collateral Agent may determine. The Collateral Agent shall not be
obligated to make any such sale pursuant to any such notice. The Collateral
Agent may, without notice or publication, adjourn any public or private sale
or cause the same to be adjourned from time to time by announcement at the
time and place fixed for the sale, and such sale may be made at any time or
14
place to which the same may be so adjourned. In case of any sale of all or
any part of the Collateral on credit or for future delivery, the Collateral
so sold may be retained by the Collateral Agent until the selling price is
paid by the purchaser thereof, but the Collateral Agent shall not incur any
liability in case of the failure of such purchaser to take up and pay for the
Collateral so sold and, in case of any such failure, such Collateral may
again be sold upon like notice. The Collateral Agent, instead of exercising
the power of sale herein conferred upon it, may in accordance with the
instructions of the Required Lenders proceed by a suit or suits at law or in
equity to foreclose the Security Interests and sell the Collateral, or any
portion thereof, under a judgment or decree of a court or courts of competent
jurisdiction.
(b) For the purpose of enforcing any and all rights and
remedies under this Agreement the Collateral Agent may (i) require the
Company to, and the Company agrees that it will, at its expense and upon the
request of the Collateral Agent, forthwith assemble all or any part of the
Collateral as directed by the Collateral Agent and make it available at a
place designated by the Collateral Agent which is, in the opinion of the
Collateral Agent, reasonably convenient to the Collateral Agent and the
Company, whether at the premises of the Company or otherwise, (ii) to the
extent permitted by applicable law, enter, with or without process of law and
without breach of the peace, any premise where any of the Collateral is or
may be located, and without charge or liability to it seize and remove such
Collateral from such premises, (iii) have access to and use the Company's
books and records relating to the Collateral and (iv) prior to the
disposition of the Collateral, store or transfer it without charge in or by
means of any storage or transportation facility owned or leased by the
Company, process, repair or recondition it or otherwise prepare it for
disposition in any manner and to the extent the Collateral Agent reasonably
deems appropriate and, in connection with such preparation and disposition,
use without charge any copyright, trademark, trade name, patent or technical
process used by the Company.
(c) Without limiting the generality of the foregoing, if any
Event of Default (as defined under the Credit Agreement) has occurred and is
continuing,
(i) the Collateral Agent may license, or sublicense,
whether general, special or otherwise, and whether on an exclusive or
non-exclusive basis, any Copyrights, Patents or Trademarks included in
the Collateral throughout the world for such term or terms, on such
conditions and in such manner as the Collateral Agent shall in its sole
discretion determine;
(ii) the Collateral Agent may (without assuming any
obligations or liability thereunder), at any time and from time to time,
in its sole discretion, enforce (and shall have the exclusive right to
enforce) against any licensee or sublicensee all rights and remedies of
the Company in, to and under any Copyright Licenses, Patent Licenses or
Trademark Licenses included in the Collateral and take or refrain from
taking any action under any thereof, and the Company hereby releases the
Collateral Agent and each of the other Secured Parties from, and agrees
to hold the Collateral Agent and each of the other Secured Parties free
and harmless from and against any claims and expenses arising out of, any
lawful action so taken or omitted to be taken with respect thereto; and
15
(iii) upon request by the Collateral Agent, the Company
will execute and deliver to the Collateral Agent a power of attorney, in
form and substance satisfactory to the Collateral Agent, for the
implementation of any lease, assignment, license, sublicense, grant of
option, sale or other disposition of a Copyright, Patent or Trademark
included in the Collateral or any action related thereto. In the event
of any such disposition pursuant to this Section, the Company shall
supply its know-how and expertise relating to the manufacture and sale of
the products bearing Trademarks or the products or services made or
rendered in connection with Patents, and its customer lists and other
records relating to such Patents or Trademarks and to the distribution of
said products, to the Collateral Agent.
(d) Notwithstanding anything to the contrary contained
herein or any other Loan Document, neither the Collateral Agent nor any
Secured Party shall, without first obtaining the approval of a Governmental
Authority, take any action pursuant to this Agreement or any other Loan
Document which would constitute or result in an assignment of any License
held by the Company or a transfer of control of the Company if such
assignment or transfer would require, under the existing applicable law, the
prior approval of such Governmental Authority. The Company agrees to take,
and the Company agrees to cause the Borrower and each of its Subsidiaries to
take, in each case upon the occurrence and during the continuance of an Event
of Default, any action that the Collateral Agent may reasonably request in
order to obtain from any Governmental Authority such approval as may be
necessary to enable the Collateral Agent to assign or transfer control of the
Licenses pursuant to this Agreement, the Loan Documents and each other
agreement, instrument and document delivered to the Collateral Agent in
connection herewith and therewith, including specifically, at the expense of
the Company, the use of the Company's and the Borrower's and each of its
Subsidiaries' commercially reasonable efforts to assist in obtaining approval
of such Governmental Authority for any action or transaction contemplated by
this Agreement for which such approval is or shall be required by law, and
specifically, without limitation, upon request, to prepare, sign and file
with such Governmental Authority, the assignor's or transferor's portion of
any application or applications for consent to the assignment of any License
or transfer of control necessary or appropriate under the rules and
regulations of such Governmental Authority for approval of any sale or sales
of any of the Collateral by or on behalf of the Collateral Agent.
SECTION 8. LIMITATION ON DUTY OF COLLATERAL AGENT IN RESPECT OF
COLLATERAL. Beyond the exercise of reasonable care in the custody thereof,
the Collateral Agent shall have no duty as to any Collateral in its
possession or control or in the possession or control of any agent or bailee
or any income thereon or as to the preservation of rights against prior
parties or any other rights pertaining thereto. The Collateral Agent shall
be deemed to have exercised reasonable care in the custody of the Collateral
in its possession if the Collateral is accorded treatment substantially equal
to that which it accords its own property, and shall not be liable or
responsible for any loss or damage to any of the Collateral, or for any
diminution in the value thereof, by reason of the act or omission of any
warehouseman, carrier, forwarding agency, consignee or other agent or bailee
selected by the Collateral Agent in good faith; PROVIDED, HOWEVER, nothing in
this Section 8 shall be deemed to prejudice any rights of the Company against
such warehouseman, carrier, forwarding agency, consignee or other agent or
bailee.
16
SECTION 9. APPLICATION OF PROCEEDS. Upon the occurrence and during
the continuance of an Event of Default (as defined under the Credit
Agreement), the proceeds of any sale of, or other realization upon, all or
any part of the Collateral and any cash held in the Collateral Account shall
be applied by the Collateral Agent in accordance with the Credit Agreement.
SECTION 10. APPOINTMENT OF CO-COLLATERAL AGENTS. At any time or
times, in order to comply with any legal requirement in any jurisdiction, the
Collateral Agent may appoint another bank or trust company or one or more
other persons, either to act as co-agent or co-agents, jointly with the
Collateral Agent, or to act as separate agent or agents on behalf of the
Secured Parties with such power and authority as may be necessary for the
effectual operation of the provisions hereof and may be specified in the
instrument of appointment.
SECTION 11. EXPENSES. In the event that the Company fails to comply
with the provisions of the Loan Documents or this Agreement, such that the
value of any Collateral or the validity, perfection, rank or value of any
Security Interest is thereby diminished or potentially diminished or put at
risk, the Collateral Agent if requested by the Required Lenders (i) shall
deliver written notice of such non-compliance to the Company requesting that
it cure such non-compliance, and (ii) if within ten Business Days after
delivery of such notice the Company has failed to cure such non-compliance,
the Collateral Agent may, but shall not be required to, effect such
compliance on behalf of the Company, and the Company shall reimburse the
Collateral Agent for the reasonable costs thereof on demand. All insurance
expenses and all expenses of protecting, storing, warehousing, appraising,
insuring, handling, maintaining and shipping the Collateral, any and all
excise, property, sales, and use taxes imposed by any state, federal, or
local authority on any of the Collateral, or in respect of periodic
appraisals and inspections of the Collateral to the extent the same may
reasonably be requested by the Required Lenders acting through the Collateral
Agent from time to time, or in respect of the sale or other disposition
thereof, shall be borne and paid by the Company; and if the Company fails to
promptly pay any portion thereof when due, except, if no Event of Default (as
defined under the Credit Agreement) has occurred and is continuing, with
respect to taxes which are being contested as permitted by Section 5.05 of
the Credit Agreement, the Collateral Agent or any other Secured Party may, at
its option, but shall not be required to, pay the same and charge the
Company's account therefor, and the Company agrees to reimburse the
Collateral Agent or such Secured Party therefor on demand. All reasonable
sums so paid or incurred by the Collateral Agent or any other Secured Party
for any of the foregoing and any and all other sums for which the Company may
become liable hereunder and all costs and expenses (including attorneys'
fees, legal expenses and court costs) reasonably incurred by the Collateral
Agent or any other Secured Party in enforcing or protecting the Security
Interests or any of their rights or remedies under this Agreement, shall,
together with interest thereon for each day until paid at the Alternate Base
plus the Applicable Rate plus interest at a rate per annum equal to two
percent (2%) for such day, be additional Secured Obligations hereunder.
SECTION 12. TERMINATION OF SECURITY INTERESTS; RELEASE OF
COLLATERAL. (a) Upon the repayment in full of all Secured Obligations and
the termination of the Commitments, the Security Interests shall terminate
and all rights to the Collateral shall revert to the Company. Upon the
Partial Termination Date, the Security Interests in all Collateral other than
Borrower-Related Collateral shall terminate and all rights in the Collateral
other than Borrower-Related Collateral shall revert to the Company.
17
(b) At any time and from time to time prior to such
termination of the Security Interests, the Collateral Agent shall release the
Collateral in accordance with Section 5(c) hereof.
(c) If any Collateral is sold, leased, exchanged, assigned
or otherwise disposed of, or with respect to which on option has been
granted, in accordance with and as permitted under the Credit Agreement, the
Security Interests created hereby in such item (but not in any Proceeds
arising from such sale or exchange) shall cease immediately without any
further action on the part of the Collateral Agent.
(d) Upon any such termination of the Security Interests or
release of Collateral, the Collateral Agent will, at the expense of the
Company, execute and deliver to the Company such documents as the Company
shall reasonably request to evidence the termination of the Security
Interests or the release of such Collateral, as the case may be.
SECTION 13. NOTICES. All notices, approvals, requests, demands and
other communications hereunder shall be given in accordance with Section 9.01
of the Credit Agreement.
SECTION 14. WAIVERS, NON-EXCLUSIVE REMEDIES. No failure on the part
of the Collateral Agent to exercise, and no delay in exercising and no course
of dealing with respect to, any right under this Agreement or any other Loan
Document shall operate as a waiver thereof, nor shall any single or partial
exercise by the Collateral Agent of any right under this Agreement or any
other Loan Document preclude any other or further exercise thereof or the
exercise of any other right. The rights in this Agreement or the Loan
Documents are cumulative and are not exclusive of any other remedies provided
by law.
SECTION 15. SUCCESSORS AND ASSIGNS. This Agreement is for the
benefit of the Collateral Agent and the other Secured Parties and their
successors and assigns, and in the event of an assignment of all or any of
the Secured Obligations, the rights hereunder, to the extent applicable to
the indebtedness so assigned, may be transferred with such indebtedness.
This Agreement shall be binding on the Company and its successors and assigns
and the rights of the Company hereunder shall inure to the benefit of the
Company's successors and permitted assigns.
SECTION 16. CHANGES IN WRITING. Neither this Agreement nor any
provision hereof may be changed, waived, discharged or terminated orally, but
only in writing signed by the Company and the Collateral Agent with the
consent of the Required Lenders.
SECTION 17. SEVERABILITY. If any provision hereof is invalid and
unenforceable in any jurisdiction, then, to the fullest extent permitted by
law, (i) the other provisions hereof shall remain in full force and effect in
such jurisdiction and shall be liberally construed in favor of the Collateral
Agent and the other Secured Parties in order to carry out the intentions of
the parties hereto as nearly as may be possible; and (ii) the invalidity or
unenforceability of any provision hereof in any jurisdiction shall not affect
the validity or enforceability of such provision in any other jurisdiction.
18
SECTION 18. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and
the same instrument and any of the parties hereto may execute this Agreement
by signing any such counterpart.
SECTION 19. GOVERNING LAW; JURISDICTION; CONSENT TO SERVICE OF
PROCESS. (a) This Agreement shall be construed in accordance with and
governed by the law of the State of New York.
(b) The Company hereby irrevocably and unconditionally
submits, for itself and its property, to the nonexclusive jurisdiction of the
Supreme Court of the State of New York sitting in New York County and of the
United States District Court of the Southern District of New York, and any
appellate court from any thereof, in any action or proceeding arising out of
or relating to any Loan Document, or for recognition or enforcement of any
judgment, and each of the parties hereto hereby irrevocably and
unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such New York State or, to the
extent permitted by law, in such Federal court. Each of the parties hereto
agrees that a final judgment in any such action or proceeding shall be
conclusive and may be enforced in other jurisdictions by suit on the judgment
or in any other manner provided by law. Nothing in this Agreement or any
other Loan Document shall affect any right that either Agent or any Lender
may otherwise have to bring any action or proceeding relating to this
Agreement or any other Loan Document against the Parent, the Borrower or
their properties in the courts of any jurisdiction.
(c) The Company hereby irrevocably and unconditionally
waives, to the fullest extent it may legally and effectively do so, any
objection which it may now or hereafter have to the laying of venue of any
suit, action or proceeding arising out of or relating to this Agreement or
any other Loan Document in any court referred to in paragraph (b) of this
Section. Each of the parties hereto hereby irrevocably waives, to the
fullest extent permitted by law, the defense of an inconvenient forum to the
maintenance of such action or proceeding in any such court.
(d) Each of the Parent and the Borrower hereby irrevocably
appoints and designates CT Corporation System, whose address is 1633
Broadway, New York, New York 10019, or any other person having and
maintaining a place of business in the State of New York whom the Parent or
the Borrower may from time to time hereafter designate (having given 30 days'
notice thereof to the Administrative Agent, each Lender and the Collateral
Agent), as the true and lawful attorney and duly authorized agent for
acceptance of service of legal process of the Parent and the Borrower.
Without prejudice to the foregoing, each party to this Agreement irrevocably
consents to service of process in the manner provided for notices in Section
9.01 of the Credit Agreement. Nothing in this Agreement or any other Loan
Document will affect the right of any party to this Agreement to serve
process in any other manner permitted by law.
SECTION 20. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF
OR RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY (WHETHER
19
BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO (A)
CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION.
SECTION 21. WAIVER OF IMMUNITY. To the extent that the Company has
or hereafter may acquire any immunity from jurisdiction of any court or from
any legal process (whether through service or notice, attachment prior to
judgment, attachment in aid or execution, or otherwise) with respect to
itself or its property, the Company hereby irrevocably waives such immunity
in respect of its obligations hereunder and under the other Loan Documents to
the extent permitted by applicable law and, without limiting the generality
of the foregoing, agrees that the waivers set forth in this Section shall
have effect to the fullest extent permitted under the Foreign Sovereign
Immunities Act of 1976 of the United States of America and are intended to be
irrevocable for purposes of such Act.
(Signatures Follow on Next Page)
20
IN WITNESS WHEREOF, the parties hereto have caused this Security
Agreement (Parent) to be duly executed by their respective authorized
officers as of the day and year first above written.
JATO COMMUNICATIONS CORP
By:
-------------------------------------
Name:
Title:
STATE STREET BANK AND TRUST COMPANY,
as Collateral Agent
By:
-------------------------------------
Name:
Title:
EXHIBIT A
TO
SECURITY
AGREEMENT
PERFECTION CERTIFICATE
The undersigned, [ ], Chief Executive Officer of
JATO COMMUNICATIONS CORP., a Delaware corporation (the "Company"), hereby
certifies with reference to the Security Agreement (Parent), dated as of July
14, 1999, between the Company and State Street Bank and Trust Company, as
Collateral Agent (terms defined therein or as provided therein being used
herein as therein defined), to the Administrative Agent and each Lender as
follows:
SECTION 1. NAMES.
(a) The exact corporate name of the Company as it appears in its
certificate of incorporation is as follows: [____________________________]
(b) The Company has not had any other corporate name since its
organization.
(c) Except as set forth in Schedule 1, the Company has not changed
its identity or corporate structure in any way within the past five years.
(d) The following is a list of all other names (including trade
names or similar appellations) used by the Company or any of its divisions or
other business units at any time during the past five years: [_________________]
SECTION 2. CURRENT LOCATIONS. As of the date hereof, (a) the chief
executive office of the Company is located at the following address:
NAME MAILING ADDRESS
---- ---------------
(b) The following are all the locations where the Company
maintains any books or records relating to any Accounts:
NAME MAILING ADDRESS
---- ---------------
Exhibit A-1
(c) The following are all the places of business of the Company
not identified above:
NAME MAILING ADDRESS
---- ---------------
(d) The following are all the locations not identified above
where the Company maintains any Inventory:
NAME MAILING ADDRESS
---- ---------------
(e) The following are all the locations not identified above
where the Company maintains any Equipment or contemplates maintaining at any
time when the Loans are to be outstanding:
NAME MAILING ADDRESS
---- ---------------
(f) The following are the names and addresses of all Persons
other than the Company which have possession of any of the Company's Inventory:
NAME MAILING ADDRESS
---- ---------------
(g) The following are the names and addresses of all Persons
other than the Company which have possession of any of the Company's Investment
Property:
NAME MAILING ADDRESS
---- ---------------
Exhibit A-2
SECTION 3. PRIOR LOCATIONS.
(a) Set forth below is the information required by subparagraphs
(a), (b) and (c) of paragraph 2 with respect to each location or place of
business maintained by the Company at any time during the past five years:
(b) Set forth below is the information required by subparagraphs
(d) and (e) of paragraph 2 with respect to each location or bailee where or
with whom Inventory has been lodged at any time during the past four months:
SECTION 4. UNUSUAL TRANSACTIONS. All Accounts have been originated
by the Company and all Inventory and Equipment has been acquired by the
Company in the ordinary course of its business.
SECTION 5. FILE SEARCH REPORTS. Attached hereto as Schedule 5(a) is
a true copy of a file search report from the Uniform Commercial Code filing
officer in each jurisdiction identified in paragraph 2 or 3 above with
respect to each name set forth in paragraph 1. Attached hereto as Schedule
5(b) is a true copy of each financing statement or other filing identified in
such file search reports.
SECTION 6. UCC FILINGS. (a) A duly signed financing statement on
Form UCC-1 in substantially the form of Schedule 6 hereto has been duly
delivered to the Collateral Agent for filing in the Uniform Commercial Code
filing office in each jurisdiction identified in paragraph 2 hereof.
Attached hereto as Schedule 6(b) is a true copy of each such filing duly
acknowledged by the filing officer.
SECTION 7. SCHEDULE OF FILINGS. Attached hereto as Schedule 7 is a
schedule setting forth filing information with respect to the filings
described in paragraph 6 above.
SECTION 8. FILING FEES. All filing fees and taxes payable in
connection with the filings described in paragraph 6 above have been paid.
Exhibit A-3
IN WITNESS WHEREOF, I have hereunto set my hand this _________ day of
[_____________________], 1999.
----------------------------------
Name:
Title:
Exhibit A-4
SCHEDULE 1
CHANGE IN CORPORATE STRUCTURE
SCHEDULE 6(b)
UCC FILINGS
SCHEDULE 7
SCHEDULE OF FILINGS
EXHIBIT B
TO
SECURITY
AGREEMENT
PATENT SECURITY AGREEMENT
(PATENTS, PATENT APPLICATIONS AND PATENT LICENSES)
WHEREAS, JATO COMMUNICATIONS CORP., a Delaware corporation (herein
referred to as "Grantor") owns the Patents (as defined in the Security
Agreement referred to below) (including design patents and applications for
patents) listed on Schedule I annexed hereto, and is a party to the Patent
Licenses (as defined in the Security Agreement referred to below) identified
in Schedule I annexed hereto;
WHEREAS, Grantor, Jato Operating Corp., certain lenders, State Street
Bank and Trust Company, as Collateral Agent, and Lucent Technologies Inc., as
administrative agent, are parties to a Credit Agreement of even date herewith
(as the same may be amended and in effect from time to time among said
parties and such lenders (the "Lenders") as may from time to time be parties
thereto, the "Credit Agreement");
WHEREAS, pursuant to the terms of the Security Agreement (Parent) of
even date herewith (as said Agreement may be amended and in effect from time
to time, the "Security Agreement") between Grantor and State Street Bank and
Trust Company, as collateral agent for the Secured Parties referred to
therein (in such capacity, together with its successors in such capacity,
"Grantee"), Grantor has granted to Grantee for the benefit of such Secured
Parties a continuing security interest in substantially all the assets of
Grantor, including all right, title and interest of Grantor in, to and under
the Patent Collateral (as defined herein) whether now owned or existing or
hereafter acquired or arising, to secure the Secured Obligations (as defined
in the Security Agreement);
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Grantor does hereby grant to
Grantee a continuing security interest in all of Grantor's right, title and
interest in, to and under the following (all of the following items or types
of property being herein collectively referred to as the "Patent
Collateral"), whether now owned or existing or hereafter acquired or arising:
(i) each Patent (including each design patent and patent
application), including, without limitation, each Patent (including each
design patent and patent application) referred to in Schedule I annexed
hereto;
(ii) each Patent License, including, without limitation,
each Patent License identified in Schedule I annexed hereto; and
(iii) all proceeds of and revenues from the foregoing,
including, without limitation, all proceeds of and revenues from any
claim by Grantor against third
Exhibit B-1
parties for past, present or future infringement of any Patent (including
any design patent), including, without limitation, any Patent referred to
in Schedule I annexed hereto (including, without limitation, any such
Patent issuing from any application referred to in Schedule I annexed
hereto), and all rights and benefits of Grantor under any Patent License,
including, without limitation, any Patent License identified in Schedule I
annexed hereto.
Until the Partial Termination Date, Grantor hereby irrevocably
constitutes and appoints Grantee and any officer or agent thereof, with full
power of substitution, as its true and lawful attorney-in-fact with full
power and authority in the name of Grantor or in its name, from time to time,
in Grantee's discretion, so long as any Event of Default (as defined in the
Credit Agreement) has occurred and is continuing, to take with respect to the
Patent Collateral any and all appropriate action which Grantor might take
with respect to the Patent Collateral and to execute any and all documents
and instruments which may be necessary or desirable to carry out the terms of
this Patent Security Agreement and to accomplish the purposes hereof.
Until the Partial Termination Date, except to the extent not prohibited
in the Security Agreement, Grantor agrees not to sell, license, exchange,
assign or otherwise transfer or dispose of, or grant any rights with respect
to, or mortgage or otherwise encumber, any of the foregoing Patent Collateral.
This security interest is granted in conjunction with the security
interests granted to Grantee pursuant to the Security Agreement. Grantor
does hereby further acknowledge and affirm that the rights and remedies of
Grantee with respect to the security interest in the Patent Collateral made
and granted hereby are more fully set forth in the Security Agreement, the
terms and provisions of which are incorporated by reference herein as if
fully set forth herein.
IN WITNESS WHEREOF, Grantor has caused this Patent Security Agreement to
be duly executed by its officer thereunto duly authorized as of the _________
day of _____________________, _________.
JATO COMMUNICATIONS CORP.
By:
-------------------------------------
Name:
Title:
Exhibit B-2
Acknowledged:
STATE STREET BANK AND TRUST COMPANY,
as Collateral Agent
By:
--------------------------------
Name:
Title:
Exhibit B-3
SCHEDULE I
TO PATENT
SECURITY
AGREEMENT
PATENTS
A. U.S. PATENTS AND DESIGN PATENTS
I.D. NO. PATENT NO. ISSUE DATE TITLE
B. U. S. PATENT APPLICATIONS
SERIAL NO. DATE FILE TITLE
EXHIBIT C
TO
SECURITY
AGREEMENT
TRADEMARK SECURITY AGREEMENT
(TRADEMARKS, TRADEMARK REGISTRATIONS, TRADEMARK
APPLICATIONS AND TRADEMARK LICENSES)
WHEREAS, JATO COMMUNICATIONS CORP., a Delaware corporation (herein
referred to as "Grantor"), owns the Trademarks (as defined in the Security
Agreement referred to below) listed on Schedule I annexed hereto, and is a
party to the Trademark Licenses (as defined in the Security Agreement
referred to below) identified in Schedule 1 annexed hereto;
WHEREAS, Grantor, Jato Operating Corp., certain lenders, State Street
Bank and Trust Company, as Collateral Agent, and Lucent Technologies Inc., as
administrative agent, are parties to a Credit Agreement of even date herewith
(as the same may be amended and in effect from time to time among said
parties and such lenders (the "Lenders") as may from time to time be parties
thereto, the "Credit Agreement");
WHEREAS, pursuant to the terms of the Security Agreement (Parent) of
even date herewith (as said Agreement may be amended and in effect from time
to time, the "Security Agreement") between Grantor and State Street Bank and
Trust Company, as collateral agent for the Secured Parties referred to
therein (in such capacity, together with its successors in such capacity,
"Grantee"), Grantor has granted to Grantee for the benefit of such Secured
Parties a security interest in substantially all the assets of Grantor,
including all right, title and interest of Grantor in, to and under the
Trademark Collateral (as defined herein), whether now owned or existing or
hereafter acquired or arising, to secure the Secured Obligations (as defined
in the Security Agreement);
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Grantor does hereby grant to
Grantee a continuing security interest in all of Grantor's right, title and
interest in, to and under the following (all of the following items or types
of property being herein collectively referred to as the "Trademark
Collateral"), whether now owned or existing or hereafter acquired or arising:
(i) each Trademark, including, without limitation, each
Trademark application referred to in Schedule I annexed hereto, and all
of the goodwill of the business connected with the use of, or symbolized
by, each such Trademark;
(ii) each Trademark License, including, without
limitation, each Trademark License identified in Schedule I annexed
hereto, and all of the goodwill of the
Exhibit C-1
business connected with the use of, or symbolized by, each Trademark
licensed pursuant thereto; and
(iii) all proceeds of and revenues from the foregoing,
including, without limitation, all proceeds of and revenues from any
claim by Grantor against third parties for past, present or future unfair
competition with, or violation of intellectual property rights in
connection with or injury to, or infringement or dilution of, any
Trademark, including, without limitation, any Trademark referred to in
Schedule I hereto, and all rights and benefits of Grantor under any
Trademark License, including, without limitation, any Trademark License
identified in Schedule I hereto, or for injury to the goodwill associated
with any of the foregoing.
Until the Partial Termination Date, Grantor hereby irrevocably
constitutes and appoints Grantee and any officer or agent thereof, with full
power of substitution, as its true and lawful attorney-in-fact with full
power and authority in the name of Grantor or in its name, from time to time,
in Grantee's discretion, so long as any Event of Default (as defined in the
Credit Agreement) has occurred and is continuing, to take with respect to the
Trademark Collateral any and all appropriate action which Grantor might take
with respect to the Trademark Collateral and to execute any and all documents
and instruments which may be necessary or desirable to carry out the terms of
this Trademark Security Agreement and to accomplish the purposes hereof.
Until the Partial Termination Date, except to the extent not prohibited
in the Security Agreement (Parent), Grantor agrees not to sell, license,
exchange, assign or otherwise transfer or dispose of, or grant any rights
with respect to, or mortgage or otherwise encumber, any of the foregoing
Trademark Collateral.
This security interest is granted in conjunction with the security
interests granted to Grantee pursuant to the Security Agreement. Grantor
does hereby further acknowledge and affirm that the rights and remedies of
Grantee with respect to the security interest in the Trademark Collateral
made and granted hereby are more fully set forth in the Security Agreement,
the terms and provisions of which are incorporated by reference herein as if
fully set forth herein.
IN WITNESS WHEREOF, Grantor has caused this Trademark Security Agreement
to be duly executed by its officer thereunto duly authorized as of the ______
day of _____________________, ________.
JATO COMMUNICATIONS CORP.
By:
-----------------------------------
Name:
Title:
Exhibit C-2
Acknowledged:
STATE STREET BANK AND TRUST COMPANY,
as Collateral Agent
By:
--------------------------------------
Name:
Title:
Exhibit C-3
SCHEDULE I
TO
TRADEMARK
SECURITY
AGREEMENT
U.S. TRADEMARKS AND TRADEMARK REGISTRATIONS
A. U.S. TRADEMARKS AND TRADEMARK REGISTRATIONS
REG. NO. REG. DATE MARK
-------- --------- ----
B. U.S. TRADEMARK APPLICATIONS
SERIAL NO. DATE FILED MARK
---------- ---------- ----
EXCLUSIVE TRADEMARK LICENSES
PARTIES
NAME OF DATE OF
AGREEMENT LICENSOR LICENSEE AGREEMENT SUBJECT MATTER
--------- -------- -------- --------- --------------
EXHIBIT D TO
SECURITY
AGREEMENT
COPYRIGHT SECURITY AGREEMENT
(COPYRIGHTS, COPYRIGHT REGISTRATIONS, COPYRIGHT
APPLICATIONS AND COPYRIGHT LICENSES)
WHEREAS, JATO COMMUNICATIONS CORP., a Delaware corporation (herein
referred to as "Grantor") owns the Copyrights (as defined in the Security
Agreement referred to below) listed on Schedule I annexed hereto, and is a
party to the Copyright Licenses (as defined in the Security Agreement
referred to below) identified in Schedule I annexed hereto;
WHEREAS, Grantor, Jato Operating Corp., certain lenders, State Street
Bank and Trust Company, as Collateral Agent, and Lucent Technologies Inc., as
administrative agent, are parties to a Credit Agreement of even date herewith
(as the same may be amended and in effect from time to time among said
parties and such lenders (the "Lenders") as may from time to time be parties
thereto, the "Credit Agreement");
WHEREAS, pursuant to the terms of the Security Agreement (Parent) of
even date herewith (as said Agreement may be amended and in effect from time
to time, the "Security Agreement") between Grantor and State Street Bank and
Trust Company, as collateral agent for the Secured Parties referred to
therein (in such capacity, together with its successors in such capacity, the
"Grantee"), Grantor has granted to Grantee for the benefit of such Secured
Parties a security interest in substantially all the assets of the Grantor,
including all right, title and interest of Grantor in, to and under the
Copyright Collateral (as defined herein), whether now owned or existing or
hereafter acquired or arising, to secure the Secured Obligations (as defined
in the Security Agreement);
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Grantor does hereby grant to
Grantee a continuing security interest in all of Grantor's right, title and
interest in, to and under the following (all of the following items or types
of property being herein collectively referred to as the "Copyright
CoIlateral"), whether now owned or existing or hereafter acquired or arising:
(i) each Copyright, including, without limitation, each
Copyright referred to in Schedule I annexed hereto;
(ii) each Copyright License, including, without
limitation, each Copyright License identified in Schedule I annexed
hereto; and
(iii) all proceeds of and revenues from the foregoing,
including, without limitation, all proceeds of and revenues from any
claim by Grantor against third
Exhibit D-1
parties for past, present or future infringement of any Copyright,
including, without limitation, any Copyright referred to in Schedule I
annexed hereto, and all rights and benefits of Grantor under any Copyright
License, including, without limitation, any Copyright License identified
in Schedule I annexed hereto.
Until the Partial Termination Date, Grantor hereby irrevocably
constitutes and appoints Grantee and any officer or agent thereof, with full
power of substitution, as its true and lawful attorney-in-fact with full
power and authority in the name of Grantor or in its name, from time to time,
in Grantee's discretion, so long as any Event of Default (as defined in the
Credit Agreement) has occurred and is continuing, to take with respect to the
Copyright Collateral any and all appropriate action which Grantor might take
with respect to the Copyright Collateral and to execute any and all documents
and instruments which may be necessary or desirable to carry out the terms of
this Copyright Security Agreement and to accomplish the purposes hereof.
Until the Partial Termination Date, except to the extent not prohibited
in the Security Agreement, Grantor agrees not to sell, license, exchange,
assign or otherwise transfer or dispose of, or grant any rights with respect
to, or mortgage or otherwise encumber, any of the foregoing Copyright
Collateral.
This security interest is granted in conjunction with the security
interests granted to Grantee pursuant to the Security Agreement. Grantor
does hereby further acknowledge and affirm that the rights and remedies of
Grantee with respect to the security interest in the Copyright Collateral
made and granted hereby are more fully set forth in the Security Agreement,
the terms and provisions of which are incorporated by reference herein as if
fully set forth herein.
IN WITNESS WHEREOF, Grantor has caused this Copyright Security Agreement
to be duly executed by its officer thereunto duly authorized as of the _____ day
of __________________, ______.
JATO COMMUNICATIONS CORP.
By:
----------------------------------
Name:
Title:
Exhibit D-2
Acknowledged:
STATE STREET BANK AND TRUST COMPANY,
as Collateral Agent
By:
----------------------------------
Name:
Title:
Exhibit D-3
SCHEDULE I
TO
COPYRIGHT
SECURITY
AGREEMENT
COPYRIGHTS AND COPYRIGHT REGISTRATION
REGISTRATION NO. REG. DATE TITLE
---------------- --------- -----
COPYRIGHT APPLICATIONS
SERIAL NO. DATE FILED TITLE
---------- ---------- -----
COPYRIGHT LICENSES
PARTIES
NAME OF DATE OF
AGREEMENT LICENSOR LICENSEE AGREEMENT SUBJECT MATTER
--------- -------- -------- --------- --------------
EXHIBIT E TO
SECURITY
AGREEMENT
OPINION OF
COUNSEL FOR THE COMPANY
The Security Agreement creates and constitutes as security for the
Secured Obligations (as defined in the Security Agreement and including any
future obligations which are Secured Obligations), in favor of the Collateral
Agent for the ratable benefit of the Secured Parties, a valid security
interest in all right, title and interest of the Company in the Collateral
and all right, title and interest of the Company in the Collateral Account.
The security interests of the Collateral Agent in all right, title and
interest of the Company in the Collateral created by the Security Agreement
constitute perfected security interests under the Uniform Commercial Code, as
in effect in the State of New York ("UCC"), the United States Copyright Act
("CA"), the United States Patent Act ("PA") and the United States Trademark
Act ("TA"), to the extent that a security interest therein may be perfected
under the UCC, the CA, the PA or the TA. Insofar as the priority thereof is
governed by the UCC, the priority of the security interests created by the
Security Agreement in the Collateral in which the Company has rights on the
date hereof will be the same with respect to Loans made or deemed made
pursuant to the Credit Agreement after the date hereof, except to the extent
that any priority may be affected by any security interest, lien or other
encumbrance imposed by law in favor of any government or governmental
authority or agency. Unless otherwise specifically defined herein, each term
defined herein has the meaning assigned to such term in the Security
Agreement.
With respect to the enforceability of the Security Documents, we express
no opinion as to the availability of specific performance. Moreover, our
opinion with respect to the enforceability of the Security Documents is
subject to the further qualification that certain remedial provisions thereof
may be limited by the law of the State of New York and applicable law of the
United States of America, but such laws do not, in our opinion, make the
remedies afforded thereby inadequate for the practical realization of the
benefits of the security intended to be provided thereby.
Exhibit E-1
EXHIBIT F TO
SECURITY
AGREEMENT
LOCKBOX AGREEMENT
LOCKBOX AGREEMENT, dated as of [_________________], [____________],
among JATO COMMUNICATIONS CORP., a Delaware corporation (the "Company"),
STATE STREET BANK AND TRUST COMPANY, as Collateral Agent under the Security
Agreement referred to below (the "Collateral Agent"), and [________________]
(the "Lockbox Bank").
W I T N E S S E T H :
WHEREAS, the Company and the Collateral Agent have entered into a
Security Agreement (Parent), dated as of July 14, 1999 (as the same may be
amended from time to time, the "Security Agreement") under which the Company
has granted a continuing security interest in and to the Collateral (as
defined in the Security Agreement) to secure its obligations under the Loan
Documents (defined as provided in the Security Agreement);
WHEREAS, pursuant to the Security Agreement, the Company has agreed to
instruct certain obligors to make payments to (the "Post Office Box"); and
WHEREAS, the Company has requested that the Lockbox Bank establish and
maintain a bank account as further described herein, and the Lockbox Bank is
willing to establish and maintain such account pursuant to this Agreement;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained and for other good and valuable consideration, the
receipt of which is hereby acknowledged, the parties hereto agree as follows:
SECTION 1. POST OFFICE BOX; DEPOSITS INTO THE LOCK BOX ACCOUNT. (a)
The Lockbox Bank shall have unrestricted and exclusive access to the Post
Office Box for the purpose of collecting mail for delivery and deposit into
the Lockbox Account (as defined below) (even though addressed to the Company)
and shall collect the mail delivered thereto on each business day in
accordance with the Lockbox Bank's regular collection schedule.
(b) The contents of the mail collected from the Post Office Box,
whether consisting of cash, checks, drafts, bills of exchange, money orders
or other instruments or documents, shall be promptly deposited by the Lockbox
Bank into the Lockbox Account. The term "Lockbox Account" means account no.
[___________________] opened and maintained by the Lockbox Bank for the
Company.
(c) The Lockbox Bank shall prepare one photocopy of the front and
back of each check, draft, bill of exchange, money order or other instrument
or document (collectively,
Exhibit F-1
hereinafter called the "checks"; individually, a "check") with the date of
deposit to be shown on the bottom edge thereof. Attachments received with
payments, such as detachable stubs, together with any correspondence and the
individual envelope, are to be affixed to the photocopy of the check. All of
the above instruments will be delivered by the Lockbox Bank to the Company on
a same day basis.
(d) The Lockbox Bank shall endorse all checks which appear to be
in order for deposit into the Lockbox Account and shall process each item
under the same terms and conditions as would apply if the Lockbox Bank or the
Company had made the deposit directly. The Lockbox Bank shall endorse all
such checks as follows:
"DEPOSIT TO THE ACCOUNT OF AND WITHOUT
PREJUDICE TO THE WITHIN NAMED PAYEE
LOCKBOX SERVICES"
This endorsement may be made by use of a payee endorsement stamp.
(e) Undated checks may be dated by the Lockbox Bank to agree with
the postmark date and included in the regular deposit. Checks incorrectly
made out, where numerical and written amounts differ, are to be deposited for
the written amount only. Checks bearing no signature are to be stamped with
a "Kindly Refer to Maker" stamp and processed. Third-party checks may be
deposited into the Lockbox Account if properly endorsed.
(f) Checks bearing the legend "Payment in Full" or words of
similar import, either typed or handwritten, and checks that the Lockbox
Bank, in its normal banking practices and in its sole discretion, decides to
submit to the special attention of the Company or the Collateral Agent, shall
be withheld from the clearing system and sent to the Company or, at any time
after receipt by the Lockbox Bank of written notice from (which notice may be
delivered only upon the occurrence and during the continuation of an Event of
Default (as defined in the Credit Agreement)) the Collateral Agent, to the
entity designated in a written notice from the Collateral Agent. Should the
Lockbox Bank by reason of the exercise of its judgment, or through
inadvertence or oversight, process any of the checks covered by this Section
1(f) for collection and credit such checks to the Lockbox Account, the
Company and the Collateral Agent agree that the Lockbox Bank shall incur no
responsibility or liability.
(g) The details representing deposited items, adding machine
tapes, advice of credit, etc., together with all other materials rejected for
various reasons, and so marked, shall be sent by the Lockbox Bank to the
Company or, at any time after receipt by the Lockbox Bank of written notice
(which notice may be delivered only upon the occurrence and during the
continuation of an Event of Default (as defined in the Credit Agreement))
from the Collateral Agent, to the entity designated in a written notice from
the Collateral Agent. Checks returned unpaid because of uncollected or
insufficient funds shall be redeposited without advice. Checks returned a
second time shall be charged to the Lockbox Account and mailed with
appropriate advice to the Company or, at any time after receipt by the
Lockbox Bank of written notice (which notice may be delivered only upon the
occurrence and during the continuation of an Event of Default (as defined in
the Credit Agreement)) from the Collateral Agent, to the entity designated in
a written notice from the Collateral Agent.
Exhibit F-2
(h) The Lockbox Bank shall maintain a microfilm record of each
check included in the Lockbox Account in accordance with the Lockbox Bank's
normal lockbox procedures. This film shall be available for use by the
Company and the Collateral Agent.
(i) The Company shall deposit such amounts into the Lockbox
Account as are required to be so deposited pursuant to Section 5 of the
Security Agreement.
SECTION 2. THE LOCKBOX ACCOUNT AND TRANSFERS THEREFROM. (a) Unless
and until the Lockbox Bank receives notice (which notice may be delivered
only upon the occurrence and during the continuation of an Event of Default
(as defined in the Credit Agreement)) from the Collateral Agent that the
provisions of Section 2(b) are to be implemented, which notice shall be
effective upon receipt by the Lockbox Bank (a "Stop Transfer Notice"), the
Lockbox Bank will debit the Lockbox Account in accordance with the Company's
instructions.
(b) After receipt by the Lockbox Bank of a Stop Transfer Notice,
the Lockbox Bank will cease debiting the Lockbox Account in accordance with
the Company's instructions (but may continue to debit the Lockbox Account in
accordance with Section 1(g)) and will disburse funds from the Lockbox
Account only in accordance with instructions from the Collateral Agent.
SECTION 3. MISCELLANEOUS. (a) The Company hereby agrees to
immediately notify its account debtors which have not already been notified
to send all their remittances to the Post Office Box.
(b) The Lockbox Bank's compensation for providing the services
contemplated herein shall be as mutually agreed between the Company and the
Lockbox Bank from time to time.
(c) The Lockbox Bank undertakes to perform only such duties as are
expressly set forth herein and are normally undertaken by the Lockbox Bank in
connection with its lockbox processing. Notwithstanding any other provision
of this Agreement, it is agreed by the parties to this Agreement that the
Lockbox Bank shall not be liable for any action taken by the Lockbox Bank or
any of its directors, officers, agents or employees in accordance with this
Agreement except for the Lockbox Bank's (or any director's, officer's,
agent's or employee's) gross negligence or willful misconduct. In no event
shall the Lockbox Bank be liable for losses or delays resulting from acts of
God, force majeure, computer malfunctions, interruptions of communication
facilities, labor difficulties or other causes beyond the Lockbox Bank's
reasonable control or for indirect, special or consequential damages.
(d) All notices or other written communications hereunder shall be
sent:
in the case of the Lockbox Bank, to:
-------------------------
-------------------------
-------------------------
-------------------------
Exhibit F-3
in the case of the Company, to:
-------------------------
-------------------------
-------------------------
-------------------------
in the case of the Collateral Agent, to:
-------------------------
-------------------------
-------------------------
-------------------------
(e) The Lockbox Bank shall not assert, claim or endeavor to
exercise any right of set-off or banker's lien against any funds which may at
any time be deposited in the Lockbox Account, or any items or proceeds
thereof that come into the Lockbox Bank's possession in connection with this
Agreement, except to the extent otherwise provided in the last sentence of
Section 1(g) and except for fees payable pursuant to Section 3(b).
(f) During the term of the Security Agreement, this Agreement may
be terminated only by the Lockbox Bank, and then only upon written notice to
the other parties; PROVIDED that such termination shall not be effective
until the earlier of (i) such time as a successor bank shall have been
appointed and shall have accepted the responsibilities, duties and
obligations of the Lockbox Bank under this Agreement and (ii) 5:00 P.M. (New
York time) on the 60th day after receipt of such written notice. In the
event that the Lockbox Bank receives remittances following such termination,
it will forward such remittances to such successor bank (or, if no successor
bank has been appointed and shall have accepted the responsibilities, duties
and obligations of the Lockbox Bank under this Agreement, then as directed by
the Collateral Agent) and the Company shall compensate the Lockbox Bank for
such services at the price agreed to pursuant to Section 3(b) hereof.
(g) Neither this Agreement nor any provision hereof may be
changed, amended, modified or waived orally, but only by an instrument in
writing signed by the parties hereto.
(h) This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
(i) This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and assigns.
(j) This Agreement may be executed in any number of counterparts
which together shall constitute one and the same instrument.
Exhibit F-4
(k) The Company agrees to pay, indemnify and hold the Lockbox Bank
harmless from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever (including, without
limitation, legal fees) with respect to the performance of this Agreement by
the Lockbox Bank or of its directors, officers, agents or employees, unless
arising from its or such natural persons' own gross negligence or willful
misconduct. The provisions of this paragraph shall survive termination of
this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first above written.
JATO COMMUNICATIONS CORP.
By:
------------------------------------
Name:
Title:
[BANK]
By:
------------------------------------
Name:
Title:
STATE STREET BANK AND TRUST COMPANY,
as Collateral Agent
By:
------------------------------------
Name:
Title:
Exhibit F-5
EXHIBIT G
TO SECURITY AGREEMENT
[FORM OF SECURITIES ACCOUNT CONTROL AGREEMENT]
Exhibit G-1
EXHIBIT G TO
SECURITY AGREEMENT
(PARENT)
[FORM OF SECURITIES ACCOUNT CONTROL AGREEMENT (PARENT)]
SECURITIES ACCOUNT CONTROL AGREEMENT (PARENT)
This SECURITIES ACCOUNT CONTROL AGREEMENT (PARENT) (the
"AGREEMENT"), dated as of July 14, 1999, by and among Jato Communications
Corp., a Delaware corporation (the "PARENT"), Lehman Brothers Inc. (the
"SECURITIES INTERMEDIARY"), and State Street Bank and Trust Company, as
Collateral Agent (the "COLLATERAL AGENT") for the benefit of the Secured
Parties (as defined in the Credit Agreement referred to below). Capitalized
terms not otherwise defined herein shall have the meanings set forth in the
Credit Agreement, dated as of July 14, 1999, among Jato Operating Corp., the
Parent, the lenders party thereto, the Collateral Agent and Lucent
Technologies Inc., as Administrative Agent, as amended, supplemented and
modified from time to time (the "CREDIT AGREEMENT"), and references herein to
the "UCC" are references to the Uniform Commercial Code as in effect in the
State of New York.
WHEREAS, pursuant to the Security Agreement (Parent), the Parent
has granted a security interest in substantially all of its assets; and
WHEREAS, the Security Agreement (Parent) requires the Parent and
the Securities Intermediary to enter into this Agreement;
NOW THEREFORE, the parties hereto hereby agree, for good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, as follows:
1. ESTABLISHMENT OF SECURITIES ACCOUNT. The Securities
Intermediary hereby confirms that the Securities Intermediary has established
account number 833-79146-11394 under the name "Jato Communications Corp.
pledge account for State Street Bank and Trust Company, as Collateral Agent"
(together with any successor accounts, the "SECURITIES ACCOUNT") for the
Parent.
2. TREATMENT OF THE SECURITIES ACCOUNT.
(a) The Securities Account is, and shall be treated as, a
"securities account" within the meaning of Section 8-501 of the UCC.
(b) The Securities Account is an account to which financial assets
are or may be credited.
(c) The Securities Intermediary shall treat the Collateral Agent
as (i) entitled to exercise the rights that comprise any financial asset
credited to the Securities Account, and (ii) the "entitlement holder" (within
the meaning of Section 8-102 of the UCC), for the benefit of the
Secured Parties, with respect to the Securities Account on the books and
records of the Securities Intermediary.
(d) All property delivered to the Securities Intermediary shall be
promptly credited to the Securities Account.
(e) All securities or other property (other than cash) capable of
being issued or registered in the name of a Person or in bearer form
underlying any financial assets credited to the Securities Account shall be
registered in the name of "Jato Communications Corp. pledge account for State
Street Bank and Trust Company, as Collateral Agent" or indorsed to the
Securities Intermediary or in blank, and in no case shall any such financial
asset credited to the Securities Account be registered in the name of the
Parent, payable to the order of the Parent or specially indorsed to the
Parent, except as provided in Section 5 hereof.
3. "FINANCIAL ASSETS" ELECTION. Each item of property (whether
investment property, financial asset, security, instrument or cash or any
other property of any kind) credited to the Securities Account shall be
treated as a "financial asset" (within the meaning of Section 8-102(a)(9) of
the UCC) under Article 8 of the UCC.
4. CONTROL BY COLLATERAL AGENT. Upon receipt of a Notice of
Exclusive Control, the Securities Intermediary shall: (i) comply with all
notifications it receives directing it to transfer or redeem any financial
asset in the Securities Account (each an "ENTITLEMENT ORDER") originated by
the Collateral Agent without further consent by the Parent; and (ii) take
directions with respect to the Securities Account from the Collateral Agent.
5. PARENT'S RIGHTS IN THE SECURITIES ACCOUNT.
(a) Except as otherwise provided in this Section 5, the Securities
Intermediary shall comply with Entitlement Orders originated by the Parent
without further consent by the Collateral Agent.
(b) If the Securities Intermediary shall have received from the
Collateral Agent a notice of exclusive control substantially in the form of
Exhibit A attached (a "NOTICE OF EXCLUSIVE CONTROL"), the Securities
Intermediary shall cease:
(i) complying with Entitlement Orders or other directions
concerning the Securities Account originated by the Parent; and
(ii) distributing to the Parent earnings, income, dividends,
interest, or other distributions on investment property, instruments,
money, or other property credited to the Securities Account.
(c) The Collateral Agent hereby agrees, solely for the benefit of
the Parent and its successors and assigns, that the Collateral Agent will not
issue a Notice of Exclusive Control or any Entitlement Order unless an Event
of Default has occurred and is continuing on such date.
2
(d) Notwithstanding any contrary provisions hereof, unless and
until the Securities Intermediary receives a Notice of Exclusive Control from
the Collateral Agent, (i) the Parent shall have the right to (1) trade and
exercise rights over the Securities Account and (2) originate Entitlement
Orders with respect to the Securities Account, including Entitlement Orders
that would require the Securities Intermediary to make a delivery to or for
the account of the Parent or any other Person and (ii) the Securities
Intermediary shall handle, invest, disburse and dispose of all financial
assets credited to the Securities Account in accordance with Entitlement
Orders or other directions originated by the Parent.
(e) Upon receipt of a Notice of Exclusive Control, the Securities
Intermediary shall cease complying with any Entitlement Orders originated by
the Parent that would require the Securities Intermediary to make a delivery
to or for the account of the Parent or any other Person, except where the
Collateral Agent has confirmed in writing that such delivery is acceptable to
the Collateral Agent.
6. SECURITIES INTERMEDIARY'S LIEN. The Securities Intermediary
agrees that, except for the payment of its fees, commissions and settlement
of open orders, it will not assert any lien, encumbrance, claim or right
against the Securities Account or any asset carried in the Securities Account.
7. SECURITIES INTERMEDIARY'S RESPONSIBILITY.
(a) The Securities Intermediary shall not be liable to the
Collateral Agent (for the benefit of the Secured Parties) for complying with
Entitlement Orders from the Parent that are received by the Securities
Intermediary before the Securities Intermediary receives and has a reasonable
opportunity to act on a Notice of Exclusive Control.
(b) The Securities Intermediary shall not be liable to the Parent
for complying with a Notice of Exclusive Control or with Entitlement Orders
originated by the Collateral Agent, even if the Parent notifies the
Securities Intermediary that the Collateral Agent is not legally entitled to
issue the Entitlement Order or Notice of Exclusive Control.
(c) This Agreement does not create any obligation of the
Securities Intermediary except for those expressly set forth in this
Agreement. In particular, the Securities Intermediary need not investigate
whether the Collateral Agent is entitled under the Collateral Agent's
agreements with the Parent to give an Entitlement Order or a Notice of
Exclusive Control. The Securities Intermediary may rely on notices and
communications that it believes were given by the appropriate party.
8. STATEMENTS, CONFIRMATIONS, AND NOTICES OF ADVERSE CLAIMS. The
Securities Intermediary shall provide to the Collateral Agent duplicate
copies of all statements, confirmations and other communications sent by the
Securities Intermediary to the Parent. Except for the claims and interests
of the Collateral Agent (for the benefit of the Secured Parties) and of the
Parent, the Securities Intermediary does not know of any claim to, or
interest in, the Securities Account or in any financial assets credited
thereto. If any person asserts any lien, encumbrance or adverse claim
(including any writ, garnishment, judgment, warrant of attachment, execution
or similar process) against the Securities Account or in any financial asset
3
credited thereto, the Securities Intermediary shall notify the Collateral
Agent and the Parent thereof promptly after becoming aware thereof.
9. REPRESENTATIONS, WARRANTIES, AND COVENANTS OF THE SECURITIES
INTERMEDIARY. The Securities Intermediary hereby represents, warrants and
covenants that:
(a) The Securities Account has been or shall be established as
described in Section 1 above, and the Securities Account shall be maintained
in the manner set forth herein until termination of this Agreement. The
Securities Intermediary shall not change the name or account numbers of the
Securities Account without the prior written consent of the Collateral Agent.
(b) No financial asset is registered in the name of the Parent, or
payable to the Parent's order, or specifically indorsed to the Parent, except
to the extent that such financial asset has been indorsed to the Securities
Intermediary or in blank. Except as otherwise provided in Section 5 hereof,
no financial asset shall be registered in the name of the Parent or payable
to the Parent's order or specially indorsed to the Parent, except to the
extent that such financial asset has been indorsed to the Securities
Intermediary or in blank.
(c) This Agreement is the valid and legally binding obligation of
the Securities Intermediary.
(d) Other than this Agreement, (i) the Securities Intermediary has
not entered into, and until the termination of this Agreement shall not enter
into, any agreement with any other Person relating to the Securities Account
and/or any financial assets credited thereto pursuant to which it has agreed
to comply with Entitlement Orders of such Person; and (ii) the Securities
Intermediary has not entered into any other agreement with the Parent or the
Collateral Agent purporting to limit or condition the obligation of the
Securities Intermediary to comply with Entitlement Orders as set forth in
Section 4 and Section 5 hereof; provided that, the Collateral Agent
acknowledges that the Security Account is managed on a discretionary basis by
the Securities Intermediary on behalf of the Parent.
10. INDEMNITY. The Parent hereby indemnifies and agrees to defend
and hold harmless the Securities Intermediary, its officers, directors,
employees, and agents against claims, liabilities, and expenses arising out
of this Agreement (including attorneys' fees and disbursements), except to
the extent that such claims, liabilities, or expenses are caused by or arise
from the Securities Intermediary's gross negligence or willful misconduct.
11. GOVERNING LAW. This Agreement and the Securities Account
shall be governed by the laws of the State of New York. Regardless of any
provisions in any other agreement, for purposes of the UCC, New York shall be
deemed to be the jurisdiction of the Securities Intermediary with respect to
the Securities Account and Entitlement Orders related thereto.
12. CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL.
(a) THE PARENT IRREVOCABLY CONSENTS THAT ANY LEGAL ACTION OR
PROCEEDING BY THE COLLATERAL AGENT AGAINST IT UNDER,
4
ARISING OUT OF OR IN ANY MANNER RELATING TO THIS AGREEMENT OR ANY TRANSACTION
RELATED HERETO MAY BE BROUGHT IN ANY COURT OF THE STATE OF NEW YORK, COUNTY
OF NEW YORK, OR IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT
OF NEW YORK. THE PARENT, BY THE EXECUTION AND DELIVERY OF THIS AGREEMENT,
EXPRESSLY AND IRREVOCABLY ASSENTS AND SUBMITS TO THE PERSONAL JURISDICTION OF
ANY OF SUCH COURTS IN ANY SUCH ACTION OR PROCEEDING. AS AN ALTERNATIVE
METHOD OF SERVICE, THE PARENT FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF
ANY COMPLAINT, SUMMONS, NOTICE OR OTHER PROCESS RELATING TO ANY SUCH ACTION
OR PROCEEDING BY DELIVERY THEREOF TO IT BY HAND OR BY MAIL IN THE MANNER
PROVIDED FOR IN SECTION 17 HEREOF. THE PARENT HEREBY EXPRESSLY AND
IRREVOCABLY WAIVES ANY CLAIM OR DEFENSE IN ANY SUCH ACTION OR PROCEEDING
BASED ON ANY ALLEGED LACK OF PERSONAL JURISDICTION, IMPROPER VENUE OR FORUM
NON CONVENIENS OR ANY SIMILAR BASIS. THE PARENT SHALL NOT BE ENTITLED IN ANY
SUCH ACTION OR PROCEEDING TO ASSERT ANY DEFENSE GIVEN OR ALLOWED UNDER THE
LAWS OF ANY STATE OTHER THAN THE STATE OF NEW YORK UNLESS SUCH DEFENSE IS
ALSO GIVEN OR ALLOWED BY THE LAWS OF THE STATE OF NEW YORK. NOTHING IN THIS
SECTION 12 SHALL AFFECT OR IMPAIR IN ANY MANNER OR TO ANY EXTENT THE RIGHT OF
THE COLLATERAL AGENT OR ANY OTHER SECURED PARTY TO COMMENCE LEGAL PROCEEDINGS
OR OTHERWISE PROCEED AGAINST THE PARENT IN ANY JURISDICTION OR TO SERVE
PROCESS IN ANY MANNER PERMITTED BY LAW.
(b) EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ALL RIGHT
TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY TRANSACTION RELATING HERETO.
13. ENTIRE AGREEMENT. This Agreement is the entire agreement, and
supersedes any prior agreements and contemporaneous oral agreements, of the
parties concerning its subject matter.
14. AMENDMENTS. No amendment or modification of this Agreement or
waiver of any right hereunder shall be binding on any party hereto unless it
is in writing and is signed by all of the parties hereto.
15. SEVERABILITY. To the extent a provision of this Agreement is
unenforceable, this Agreement shall be construed, to the maximum extent
permitted by applicable law, as if the unenforceable provision were omitted.
16. SUCCESSORS. The terms of this Agreement shall be binding
upon, and shall inure to the benefit of, the parties hereto and their
respective successors and assigns.
17. NOTICES. All notices and other communications required or
permitted to be given hereunder shall be in writing, shall be addressed as
provided below and shall be considered as properly given (a) if delivered in
person, (b) if mailed by first class United States mail,
5
postage prepaid, registered or certified with return receipt requested or (c)
if sent by prepaid facsimile transmission confirmed by telephone. Notice so
given shall be effective upon receipt by the addressee, except that
communication or notice so transmitted by facsimile transmission and
confirmed by telephone shall be deemed to have been validly and effectively
given on the day (if a Business Day and, if not, on the next following
Business Day) on which it is transmitted by facsimile and confirmed by
telephone before 4:00 p.m., recipient's time, and if transmitted by facsimile
and confirmed by telephone after that time, on the next following Business
Day; PROVIDED, HOWEVER, that if any notice is tendered to an addressee and
the delivery thereof is refused by such addressee, such notice shall be
effective upon such tender. Any party shall have the right to change its
address for notice hereunder to any other location within the continental
United States by giving of thirty (30) days' notice to the other parties in
the manner set forth hereinabove. Any communications between the parties
hereto or notices provided herein may be given to the following addresses:
(1) Collateral Agent: State Street Bank and Trust Company
2 Avenue de Lafayette
Boston, MA 02111-174
Attention: Global Investor Services Group
Corporate Trust
Telecopy No.: (617) 664-1465
Copy to: Lucent Technologies Inc.
283 King George Road
Warren, NJ 07059
Attention: Assistant Treasurer - Project
Finance
Telecopy No.: (908) 559-1711
(2) Parent: Jato Communications Corp.
1099 18th Street
Suite 800
Denver, CO 80202
Attention: Vice President of Finance
Telecopy No.: (303) 226-8305
Copy to: Cooley Godward LLP
2595 Canyon Boulevard
Suite 250
Boulder, CO 80302
Attention: Rex R. O'Neal, Esq.
Telecopy No.: (303) 546-4099
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(3) Securities
Intermediary: Lehman Brothers Inc.
555 California Street
30th Floor
San Francisco, CA 94104
Attention: William E. Welsh III, Branch
Manager
Telecopy No.: (415) 263-4400
18. TERMINATION. The rights and powers granted herein to the
Collateral Agent have been granted in order to perfect its security interests
in the Securities Account for the benefit of the Secured Parties, are powers
coupled with an interest and shall be affected neither by the bankruptcy of
the Parent nor by the lapse of time. The obligations of the Securities
Intermediary hereunder shall continue in effect until the Partial Termination
Date and the Collateral Agent has notified the Securities Intermediary of
such event in writing.
19. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the different parties hereto on separate counterparts,
each of which, when so executed and delivered, shall be an original, but all
such counterparts shall together constitute but one and the same instrument.
20. HEADINGS. Section headings have been inserted in this
Agreement as a matter of convenience for reference only, and it is agreed
that such section headings are not a part of this Agreement and shall not be
used in the interpretation of any provision of this Agreement.
(Signatures Follow on Next Page)
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IN WITNESS WHEREOF, the parties have caused this Securities Account
Control Agreement to be duly executed by their duly authorized
representatives as of the day and year first above written.
JATO COMMUNICATIONS CORP.
By
--------------------------------
Name:
Title:
STATE STREET BANK AND TRUST COMPANY,
as Collateral Agent
By:
--------------------------------
Name:
Title:
LEHMAN BROTHERS INC.,
as Securities Intermediary
By:
--------------------------------
Name:
Title:
EXHIBIT A
[Letterhead of the Collateral Agent]
[Date]
LEHMAN BROTHERS INC.
555 California Street
30th Floor
San Francisco, CA 94104
Attention: William E. Welsh, Branch Manager
Notice of Exclusive Control
Ladies and Gentlemen:
As referenced in the Securities Account Control Agreement (Parent),
dated as of July 14, 1999, among Jato Communications Corp., Lehman Brothers
Inc. and State Street Bank and Trust Company, as Collateral Agent (a copy of
which is attached), we hereby give you notice of our exclusive control over
securities account number 833-79146-11394 (the "SECURITIES ACCOUNT") and all
financial assets, cash and instruments credited thereto. You are hereby
instructed not to accept any direction, instruction or entitlement order with
respect to the Securities Account or the financial assets, cash and
instruments credited thereto from any person other than the undersigned.
You are instructed to deliver a copy of this notice by facsimile
transmission to Jato Communications Corp.
Very truly yours,
STATE STREET BANK AND TRUST COMPANY, as Collateral
Agent
By:
--------------------------------
Title
Credit Agreement - Jato Communications Corp., Lenders, State Street Bank and Trust Co. and Lucent Technologies Inc.
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