FIRST AMENDMENT AND CONSENT TO
THIRD AMENDED AND RESTATED CREDIT AGREEMENT
This First Amendment and Consent to Third Amended and Restated Credit
Agreement (the "AMENDMENT"), made as of the _ day of November, 2001, by and
among NET2000 COMMUNICATIONS GROUP, INC., a Delaware corporation (the
"Borrower"), each of the lending entities signatory hereto (individually, a
"Lender," and collectively, the "Lenders"), TORONTO DOMINION (TEXAS), INC.
("TD Texas"), as Administrative Agent for the Lenders (in such capacity,
together with its successors in such capacity, the "Administrative Agent"), TD
SECURITIES (USA) INC. ("TDSI"), as lead arranger (in such capacity, the "Lead
Arranger") and book manager (in such capacity, the "Book Manager"), ROYAL BANK
OF CANADA as syndication agent (in such capacity, the "Syndication Agent"),
and Xxxxxxx Xxxxx Credit Partners L.P. as documentation agent, First Union
Securities, Inc. ("First Union Securities"), as co-documentation agent (GSCP
and First Union Securities, in their respective capacities as documentation
agent and co-documentation agent, the "Documentation Agents"),
WITNESSETH:
WHEREAS, the Borrower, the Lenders, the Administrative Agent, the Lead
Arranger, the Syndication Agent and the Documentation Agents are parties to
that certain Third Amended and Restated Credit Agreement dated as of April 12,
2001 (as modified, amended or restated from time to time, the "Credit
Agreement");
WHEREAS, the Borrower is negotiating an asset purchase agreement (a
draft dated as of November ___, 2001 having been provided to the
Administrative Agent and the Lenders, the "Asset Purchase Agreement") to sell
certain Property used in or related to that certain line of business commonly
known by the parties hereto as the "video business" either by way of an asset
sale or a sale of stock of any agreed upon operating subsidiaries (the "Video
Business");
WHEREAS, the Borrower is also or will be negotiating for the sale of
certain Property used in or related to certain closed office locations (the
"Closed Offices");
WHEREAS, Section 9.8 of the Credit Agreement requires the Borrower to
comply with certain conditions in connection with the disposition of its
Property; and
WHEREAS, the Borrower has requested that the Administrative Agent and
the Lenders consent to the sale and disposition of its Property used in or
connected to the Video Business pursuant to the term of the Asset Purchase
Agreement and the sale and disposition of the Property used in or connected
with the Closed Offices;
NOW, THEREFORE, in consideration of the premises set forth above, the terms
and conditions contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree
that all capitalized terms used but not otherwise defined herein shall have
the meanings ascribed thereto in the Credit Agreement and further agree as
follows:
1. Amendment to Section 8.1 of the Credit Agreement. Section 8.1 of
the Credit Agreement is hereby modified and amended by deleting the, word
"and" at the end of subsection (o) thereof, by deleting the period after
subsection (p) and substituting therefor, and by adding the following
subsections (q) and (r) thereto,
"(q) On or before each Tuesday (with first such report being due on
Tuesday, November 13, 2001), for the activity of the prior week, a written
report of any closed office or locations of any Loan Party setting forth (i)
the Property located or removed from each such office or location, (ii) the
estimated liquidation value of such Property, and (iii) if authorized by the
Administrative Agent and Required Lenders, the amount of any proceeds received
from the sale and disposition of the Property located at such offices or
locations; and
(r) On or before every other Tuesday (with first such report being due
on Tuesday, November 20, 2001), for the activity of the prior two weeks, a
written report detailing cash receipts, disbursements, revenues, expenses and
any variance to the weekly budget (the "Budget") agreed upon by the Borrower,
the Administrative Agent and the Required Lenders, along with detailed
explanations thereof, which explanations shall be in a form and in substance
satisfactory to the Administrative Agent in its sole discretion."
2. Disposition of Video Business Property. (a) The Administrative
Agent and the Lenders hereby waive the provisions of Section 2.8(a) and
Section 9.8 of the Credit Agreement to the extent necessary to permit the
Borrower to sell the Property used in or connected to the Video Business (the
"Video Business Property") and retain the proceeds of such sale to be used
exclusively as working capital, and hereby consent to the sale of the Video
Business Property; provided that (i) the xxxx of the Video Business Property
occurs on the terms act forth herein and on terms substantially set forth in
the Asset Purchase Agreement, as approved in final form and substance by the
Administrative Agent and the Required Lenders, (ii) the Borrower notifies the
Administrative Agent and Lenders in writing of the date of such sale and the
not cash proceeds TO be received by the Borrower, (iii) the net cash proceeds
received by the Borrower in correction with the sale of the Video Business
Property shall be used exclusively by the Borrower in accordance with the
Budget (subject to the permitted variances therein as set forth in Section 4
below), and (iv) such sale shall be expressly subject to and conditioned upon
the Administrative Agent and the Lenders retaining a perfected, first priority
security interest in all proceeds of such sale.
(b) The Administrative Agent and the Lenders agree to release their
Lien on the Video Business Property to the extent necessary to consummate the
sale of the Video Business Property pursuant to the Asset Purchase Agreement,
as approved in final form and substance by the Administrative Agent and the
Required Lenders; provided, however, the Administrative Agent and the Lenders
shall retain their Lien in any and all proceeds received from such sale and
disposition of the Video Business Property.
3. Disposition of Closed Office Property. (a) Subject to Section 3(c),
the Administrative Agent and the Lenders hereby waive the provisions of
Section 2.8(a) and
Section 9.8 of the Credit Agreement to the extent necessary to permit the
Borrower to sell the Property used in or connected to the Closed Offices (the
"Closed Office Property") pursuant to the terms and conditions hereof and
retain the proceeds of such sale to be used exclusively as working capital,
and hereby consent to the sale of the Closed Office Property; provided that
(i) the sale of the Closed Property is conducted in an "arms length"
transaction and the purchase price therefor represents fair market value for
such Closed Office Property, (ii) the Borrower notifies the Administrative
Agent and Lenders in writing of the date of such sale and the net cash
proceeds to be received by the Borrower, (iii) the net cash proceeds received
by the Borrower in connection with the sale of the Closed Office Property
shall be used exclusively by the Borrower in accordance with the Budget
(subject to the permitted variances therein as set forth in Section 4 below),
and (iv) such sale shall be expressly subject to and conditioned upon the
Administrative Agent and the Lenders retaining a perfected, first priority
security interest In all proceeds of such sale.
(b) Subject to Section 3(c), the Administrative Agent and the
Lenders agree to release their Lien on the Closed Office Property to the
extent necessary to consummate the sale of the Closed Office Property in
accordance with this Section 3; provided, however, the Administrative Agent
and the Lenders shall retain their Lien in any and all proceeds received from
such sale and disposition of the Closed Office Property.
(c) Notwithstanding anything to the contrary contained
elsewhere in this Amendment, should the proposed sale proceeds to be received
from the Closed Office Property located at any one location exceed $100,000,
then the Administrative Agent and the Required Lenders must approve the terms
and conditions of any proposed sale before such sale is authorized.
4. Variance from Budget; Event of Default. During the term of the
Credit Agreement, and thereafter for so long as there are any Obligations to
the Lenders, the Borrower covenants that, unless, consented to by the
Administrative Agent and the Required Lenders in writing, it shall not suffer
a variance (exclusive of variances as to line items in the Budget relating to
cost of goods sold relating to critical vendors for maintaining Borrower's
network) with the Budget with respect to expenses or proposed disbursements in
an aggregate amount of ten percent (10%) or more, measured on a cumulative
basis for the week then ended. The Borrower's failure to comply with this
Section 4 or any other provision of this Amendment, shall be deemed an Event
of Default under the Credit Agreement.
5. Covenant to not Request Advances. In consideration of the waiver
and consent granted by the Lenders and the Administrative Agent in this
Amendment, Borrower hereby covenants and agrees that on or before November 19,
2001, it shall not request any borrowing or advance under the Credit
Agreement.
6. No Other Amendment or Waiver. The execution, delivery and
effectiveness of this Amendment shall not, except as expressly provided above,
operate as a waiver of any right, power or remedy of the Administrative Agent
or the Lenders under the Credit Agreement or any of the other Loan Documents,
nor constitute a waiver of any provision of the Credit Agreement
or any of the other Loan Documents. Except for the amendments expressly set
forth above, the text of the Credit Agreement and all other Loan Documents
shall remain unchanged and in full force and effect and the Borrower hereby
ratifies and confirms its obligations thereunder. This Amendment shall not
constitute a modification of the Credit Agreement or a course of dealing with
the Administrative Agent or the Lenders at variance with the Credit Agreement
such as to require further notice by the Administrative Agent or the Lenders
to require strict compliance with the terms of the Credit Agreement and the
other Loan Documents in the in the future, except as expressly set forth
herein. The Borrower has no knowledge of any challenge to the Administrative
Agent's or Lender's claims arising under the Loan Documents or the
effectiveness of the Loan Documents.
7. Effectiveness. This Amendment shall become effective as of the
date first written above upon the Administrative Agents receipt of (a)
counterparts of this Amendment executed by the Borrower, the Credit Support
Parties (as set forth on the signature pages hereto), the Administrative Agent
and the Lenders; and (b) such other information, documents, instruments or
approvals as the Administrative Agent or the Administrative Agent's counsel
may require prior to the execution and delivery of such Amendment by the
Lenders.
8. Representations and Warranties of the Borrower.
(a) The execution, delivery, and performance by the Borrower
of this Amendment and the Loan Documents to which it is a party, are within
the Borrower's corporate powers, have been duly authorized by all necessary
corporate action and do not and will not (i) violate any provision of federal,
state, or local law or regulation applicable to the Borrower, the governing
documents of the Borrower, or any order, judgment, or decree of any court, or
Governmental Authorization binding on the Borrower, (ii) conflict with, result
in a breach of, or constitute (with due notice or lapse of time or both) a
default under any material contractual obligation of the Borrower, or (iii)
result in or require the creation or imposition of any Lien of any nature
whatsoever upon any properties or assets of the Borrower, other than Permitted
Liens;
(b) The execution, delivery, and performance by the Borrower
of this Amendment and the Loan Documents to which it is a party, do not and
will not require any registration with, consent, or approval of, or notice to,
or other action with or by any governmental authority or other Person; and
(c) This Amendment and each other Loan Document to which the
Borrower is a party, and all other documents contemplated hereby and thereby,
when executed and delivered by the Borrower will be the legally valid and
binding obligations of the Borrower, enforceable against the Borrower in
accordance with their respective terms, except as enforcement may be limited
by equitable principles or by bankruptcy, insolvency, reorganization,
moratorium, or similar laws relating to or limiting creditors' rights
generally.
9. Reference to and Effect on the Loan Documents.
Upon the effectiveness of this Amendment, on and after the date hereof
each reference in the Credit Agreement to "this Agreement," "hereunder,"
"hereof" or words of like import relating to the Credit Agreement and each
reference in the other Loan Documents to "the Credit Agreement" "thereunder,"
"thereof" or words of like import referring to the Credit Agreement, shall
mean and be a reference to the Credit Agreement as amended hereby.
10. Costs, Expenses and Taxes.
The Borrower agrees to pay on demand all reasonable costs and expenses
in connection with the preparation, execution, delivery, administration,
modification and amendment of this Amendment and the other instruments and
documents to be delivered hereunder, including, without limitation, the
reasonable fees and out-of-pocket expenses of counsel for the Administrative
Agent and the Lenders with respect thereto and with respect to advising the
Administrative Agent and the Lenders as to their rights and responsibilities
hereunder and thereafter.
11. Release of Lien. As consideration to induce the Administrative
Agent and the Lenders to execute, deliver and perform this Amendment, the
Borrower and the Credit Support Parties (as set forth on the signature pages
hereto) represent and warrant that there are no claims, causes of action,
suits, debts, obligations, liabilities, demands of any kind, character or
nature whatsoever, fixed or contingent, which the Borrower or any of the
Credit Support Parties may have, or claim to have,, against the Administrative
Agent or any of the Lenders and the Borrower and each Credit Support Party
hereby release, acquits and forever discharges each of the Administrative
Agent and the Lenders and their respective agents, employees, officers,
directors, servants, representatives, attorneys, affiliates, successors and
assigns (collectively, the "Released Parties") from any and all liabilities,
claims, suits, debts, causes of action and the like of any kind, character or
nature whatsoever, known or unknown, fixed or contingent that the Borrower or
any Credit Support Party may have. or claim to have, against each of such
Released Parties from the beginning of time until and through the dates of
execution and delivery of this Amendment.
12. Governing Law. This Amendment shall be governed by and construed
in accordance with the laws of the State of New York, without regard to
conflict of laws principles of such state.
13. Loan Document. This Amendment shall be deemed to be a Loan
Document for all purposes.
14. Third Party Beneficiary. Visual Systems Group, Inc., a Delaware
corporation as purchaser under the Asset Purchase Agreement, is hereby
designated as a third party beneficiary of this Amendment solely for the
consent to sell the Video Business Property as set fort in Section 2 hereof.
15. Counterparts. This Amendment may be executed by one or more of
the parties hereto on any number of separate counterparts, each of which shall
be deemed an original and
all of which, taken together, shall be deemed to constitute one and the same
instrument. Delivery of an executed counterpart of this Amendment by facsimile
transmission shall be as effective as delivery of a manually executed
counterpart hereof.
[remainder of this page intentionally left blank]
IN WITNESS WHMOF, the parties hereto have caused their respective duly
authorized offices or representatives to execute and deliver this Amendment as
of the day and year first written above.
BORROWER. NET2000 COMMUNICATIONS GROUP, INC
By: /s/ Xxxxxx X. Xxxxxx
---------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Financial Officer
CREDIT SUPPORT
PARTIES: NET2000 COMMUNICATIONS CAPITAL EQUIPMENT, INC.
By: /s/ Xxxxxx X. Xxxxxx
---------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Financial Officer
NET2000 COMMUNICATIONS HOLDINGS, INC.
By: /s/ Xxxxxx X. Xxxxxx
---------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Financial Officer
NET2000 COMMUNICATIONS OPERATIONS, INC.
By: /s/ Xxxxxx X. Xxxxxx
---------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Financial Officer
NET2000 COMMUNICATIONS REAL ESTATE,
INC.
By: /s/ Xxxxxx X. Xxxxxx
---------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Financial Officer
NET2000 COMMUNICATIONS SERVICES
INC.
By: /s/ Xxxxxx X. Xxxxxx
---------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Financial Officer
XXX0000 XXXXXXXXXXXXXX XX XXXXXXXX, LLC
By: /s/ Xxxxxx X. Xxxxxx
---------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Financial Officer
FREBON INTERNATIONAL CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
---------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Financial Officer
VISION I.T.
By: /s/ Xxxxxx X. Xxxxxx
---------------------
Name: Xxxxxx X. Xxxxxx
Title: Chief Financial Officer
LENDERS AND AGENTS: TORONTO DOMINION BANK, as Administrative
Agent and as a Lender
By: /s/Xxxxxxx Small
---------------
Name: Xxxxxxx Small
Title: Vice President
THE TORONTO-DOMINION BANK,
as Issuing Bank and as a Lender
By: /s/Xxxxxxx Small
---------------
Name: Xxxxxxx Small
Title: Vice President
BARCLAYS BANK PLC, as a Lender
By: /s/ Xxxx Umski
--------------
Name: Xxxx Umski
Title: Director
FIRST UNION NATIONAL BANK, as a Lender
By: /s/ Xxx Xxxxxx
--------------
Name: Xxx Xxxxxx
Title: Vice President
XXXXXXX XXXXX CREDIT PARTNERS L.P.,
as a Lender
By: /s/ Xxxxx X. Xxxxxxxxxx
------------------------
Name: Xxxxx X. Xxxxxxxxxx
Title: Authorized Signatory
IBM CREDIT CORPORATION, as a Lender
By: /s/ Xxx X. Xxxxxxxx
-------------------
Name: Xxx X. Xxxxxxxx
Title: Manager Special Heading
RFC CAPITAL CORPORATION, as a Lender
By: /s/ Xxxxxxx X. Xxxxxx
---------------------
Name: Xxxxxxx X. Xxxxxx
Title: AVP
ROYAL BANK OF CANADA, as a Lender
By: /s/ Xxxxxxxxx Xxxxxx
--------------------
Name: Xxxxxxxxx Xxxxxx
Title: Senior Manager
NORTEL NETWORKS, INC.. as a Lender
By: /s/ Xxxxx Xxxxxx
----------------
Name: Xxxxx Xxxxxx
Title: Director, Customer Finance
