Document:

GUARANTY

Exhibit 10(c)(1)

 

GUARANTY

 

                FOR VALUE

RECEIVED, and in consideration of any loan or other financial accommodation

made to MONTANA MEGAWATTS I, LLC  (the

“Company”) by the Banks (as defined below) under the Committed Facility Letter

dated as of September 28, 2001 (as amended or otherwise modified from time to

time, the “Facility Letter”; capitalized terms used but not otherwise defined

herein have the respective meanings given to them in the Facility Letter) among

the Company, various financial institutions (the “Banks”) and ABN AMRO Bank

N.V., as agent (in such capacity, the “Agent”), NorthWestern Corporation, a

corporation organized and existing under the laws of the State of Delaware (the

“Guarantor”), hereby furnishes its guaranty (the “Guaranty”) of the Obligations

(as defined below) as follows:

                (1)           The Guaranty.  The Guarantor unconditionally and

irrevocably guarantees (as primary obligor and not merely as surety) to the

Agent, for the benefit of the Banks, the following (collectively, the “Obligations”):

(i) the payment in full as and when payable by the Company of any and all

amounts that may become due and payable by the Company under or in accordance

with the Facility Letter and any other Loan Document (including, without

limitation, principal, interest, fees, indemnities, costs and expenses, whether

payable at stated maturity, by acceleration, by required prepayment, on demand

or otherwise); and (ii) the timely performance and discharge by the Company of

all of its other obligations and liabilities under and in accordance with the

Facility Letter and the other Loan Documents (whether such obligations are

absolute or contingent or are liquidated or unliquidated). NOTWITHSTANDING ANY

OTHER PROVISION OF THIS GUARANTY, THE AGGREGATE AMOUNT PAYABLE BY THE GUARANTOR

UNDER THIS GUARANTY IS LIMITED TO $27,500,000, PLUS ANY AND ALL COSTS AND

EXPENSES PAYABLE BY THE GUARANTOR PURSUANT TO SECTION 8 OF THIS

GUARANTY.  The books and records of the

Agent and the Banks showing the amount of the payment Obligations shall be

admissible in evidence in any action or proceeding, shall be binding upon the

Guarantor and shall be conclusive (absent demonstrable error) for the purpose

of establishing the amount of the payment Obligations.  The liability of the Guarantor under this

Guaranty shall be absolute and unconditional irrespective of any lack of

genuineness, validity, legality or enforceability of the Facility Letter, any

other Loan Document or any document, agreement or instrument relating to those

documents or any assignment or transfer of any of those documents.  This is a continuing guaranty and shall

remain in full force and effect and be binding upon the Guarantor and the

Guarantor’s successors and assigns until the date (the “Termination Date”)

which is the earlier to occur of (i) the payment in full and in cash of the

payment Obligations (and any and all other amounts payable by the Guarantor

hereunder), the performance of all other Obligations and the termination of all

Commitments; or (ii) the release by the Agent of the Guarantor’s obligations

hereunder.  Notwithstanding the

immediately preceding sentence, Section 3 shall remain in full force and effect

for a period of 366 days after any occurrence of the Termination Date pursuant

to clause (ii) of the immediately preceding sentence.

                (2)           Waiver of Suretyship Defenses.  The Guarantor authorizes the Agent and each

Bank, without notice or demand and without affecting the Guarantor’s liability

hereunder, from time to time to renew, extend, accelerate, compromise, settle,

restructure, refinance, refund or otherwise change the

 

 

 

amount and time for payment

of the Obligations, or otherwise change the terms of the Obligations or any

part thereof.  Neither the Agent nor any

Bank shall have any obligation to perfect, secure, marshall, protect or insure

any collateral or any Collateral Document and the Guarantor’s liability

hereunder shall not be affected by the non-perfection, invalidity, impairment

or lack of enforceability of any collateral or Collateral Document.

                (3)

          Returned Payments.  The Guarantor agrees that if at any time all

or any part of any payment theretofore applied by the Agent or any Bank to any

of the Obligations is or must be rescinded or returned by the Agent or such

Bank for any reason whatsoever (including the insolvency, bankruptcy or

reorganization of the Company or the Guarantor), such Obligations shall, for

the purposes of this Guaranty, to the extent that such payment is or must be

rescinded or returned, be deemed to have continued in existence,

notwithstanding such application by the Agent or such Bank, and this Guaranty

shall continue to be effective or be reinstated, as the case may be, as to such

Obligations, all as though such application by the Agent or such Bank had not

been made.

                (4)           Guarantor Covenants.  The Guarantor agrees that, so long as the

Termination Date has not occurred, it will:

                (a)           observe and perform each covenant of

the Guarantor set forth in Article 5 (other than Sections 5.10 and 5.11

thereof) and Article 6 of the Guarantor Credit Agreement as if such covenants

(and all related defined terms) mutatis  mutandis were set forth

herein (it being understood that, for purposes of this Guaranty, (i) all

references therein to “Lender”, “Lenders”, and “Required Lenders” shall be

deemed to be references to the Bank, the Banks and the Required Banks,

respectively, (ii) all references to the “Agent” shall be deemed to be

references to the Agent; (iii) all references therein to “Default” and “Event

of Default” shall be deemed to be references to Unmatured Event of Default and

Event of Default, respectively; (iv) all references therein to this “Agreement”

shall be deemed to be references to this Guaranty; and (v) Section 6.2 of the

Guarantor Credit Agreement shall be construed as if clause (ii) of the proviso

therein reads in its entirety as follows: “(ii) the long-term, unsecured and

unenhanced debt obligations of the Borrower shall not have been reduced to

below Baa3 (or the equivalent) by Moody’s (or a successor rating agency thereto)

or to below BBB- (or the equivalent) by S&P (or a successor rating agency

thereto)”; and

                (b)           cause each of NorthWestern Generation

I, LLC and the Company to comply with each covenant set forth on Schedule 2 of

the Facility Letter;

                (5)           Exhaustion of Other Remedies Not

Required.  The obligations of the

Guarantor hereunder are those of a primary obligor, and not merely a surety,

and are independent of the Obligations. 

The Guarantor unconditionally waives any right to require the Agent or

any Bank to (a) proceed against the Company or any other obligor in respect of

the Obligations; (b) proceed against or exhaust any security held directly or

indirectly on account of the Obligations; or (c) pursue any other remedy in the

Agent’s or such Bank’s powers whatsoever. 

No failure or delay by the Agent or any Bank in exercising any right,

power or privilege hereunder shall operate as a waiver thereof nor shall any

 

S-1

 

single or partial exercise

thereof preclude any other or further exercise thereof or the exercise of any

other right, power or privilege.

                (6)           Waiver of Notices.  The Guarantor hereby waives (i) notice of

acceptance of this Guaranty and of any extension of any loan or other financial

accommodation by the Agent or any Bank to the Company; (ii) presentment and

demand for payment of any of the Obligations; (iii) all diligence in collection

or protection of or realization upon any obligations or any security for or

guaranty of any Obligations; (iv) protest and notice of dishonor or default to

the Guarantor or to any other party with respect to any of the Obligations; and

(v) all other notices to which the Guarantor might otherwise be entitled, in

each case to the fullest extent permitted by applicable law and, in the case of

each notice, to the extent not otherwise expressly provided herein.

                (7)           Amendments.  No amendment or waiver of any provision of

this Guaranty shall in any event be effective unless the same shall be in

writing and signed by the Guarantor and the Agent.

                (8)           Payment of Expenses.  The Guarantor agrees to pay all reasonable

attorneys’ fees and charges (including the reasonable allocated cost of

internal legal services and all reasonable disbursements of internal counsel) and

all other reasonable costs and expenses which may be incurred by the Agent or

any Bank in the enforcement  by the

Agent, on behalf of the Banks, of this Guaranty.

                (9)           Governing Law.  This Guaranty and the rights and obligations

of the Guarantor and the Agent, on behalf of the Banks, under this Guaranty

shall be governed by, and construed and interpreted in accordance with, the

internal laws of the State of New York (determined without reference to

principles of conflicts of law, other than Title 14 of Article 5 of the New

York General Obligations Law).

                (10)   Jurisdiction and Venue. 

ANY LITIGATION BASED HEREON, OR

ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS GUARANTY, SHALL BE BROUGHT AND

MAINTAINED EXCLUSIVELY IN THE SUPREME COURT OF THE STATE OF NEW YORK SITTING IN

NEW YORK COUNTY OR IN THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN

DISTRICT OF NEW YORK, AND APPELLATE COURTS OF ANY THEREOF.  THE GUARANTOR AND, BY ITS ACCEPTANCE HEREOF,

THE AGENT EACH HEREBY EXPRESSLY AND IRREVOCABLY SUBMITS TO THE JURISDICTION OF

THE AFORESAID COURTS FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH

ABOVE.  THE GUARANTOR FURTHER

IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE

PREPAID, TO THE ADDRESS SET FORTH FOR THE GUARANTOR IN SECTION 13 HEREOF (OR

SUCH OTHER ADDRESS AS IT SHALL HAVE SPECIFIED IN WRITING TO THE AGENT AS ITS

ADDRESS FOR NOTICES HEREUNDER) OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE

STATE OF NEW YORK.  THE GUARANTOR AND, BY

ITS ACCEPTANCE HEREOF, THE AGENT EACH

 

 

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HEREBY

EXPRESSLY AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY

OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY SUCH

LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY

SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.

                (11)         Waiver of Jury Trial.  THE

GUARANTOR AND, BY ACCEPTING THE BENEFITS HEREOF, THE AGENT AND EACH BANK EACH

WAIVES ANY RIGHT IT MAY HAVE TO A JURY TRIAL IN CONNECTION WITH ANY ACTION,

SUIT OR PROCEEDING ARISING OUT OF OR RELATED IN ANY WAY TO THIS GUARANTY.

                (12)         Subrogation.  The Guarantor shall not exercise any

subrogation rights which it may have under this Guaranty nor shall the

Guarantor seek any reimbursement from the Company of amounts paid by the

Guarantor under this Guaranty unless and until the Termination Date has

occurred.

                (13)         Notices.  All notices and other communications

hereunder shall be in writing and shall be deemed to have been given (a) when

received (or when delivery is refused), for notices sent by courier or by hand

delivery, (b) three Banking Days after the date when sent by registered or

certified United States mail, postage prepaid, or (c) when sent by facsimile

(receipt confirmed), in each case to the appropriate address or number set

forth below (or at such other address or number for a person as shall be

specified by like notice):

	

  If to the Guarantor:

  	

  NorthWestern Corporation

  
	

   

  	

  125 S. Dakota Avenue

  
	

   

  	

  Sioux Falls, SD 57104

  
	

   

  	

  Attention: Vice President

  and General Counsel 

  
	

   

  	

  Facsimile: (605) 978-2908

  
	

   

  	

   

  
	

  If to the Agent: 

  	

  ABN AMRO Bank N.V.

  
	

   

  	

  135 S. LaSalle Street

  
	

   

  	

  Suite 710

  
	

   

  	

  Chicago, IL 60603

  
	

   

  	

  Attention: Frank Van deur

  
	

   

  	

  Facsimile: (312) 904-6387

  
			

 

Each notice shall be deemed

effective on receipt by the addressee as aforesaid; provided that notice

received by facsimile after 5:00 p.m. (Central time) at the location of the

addressee of such notice shall be deemed received on the first Banking Day

following the date of such receipt.

                (14)         Transfer of Obligations; Successor Agent.  Any Bank may from time to time, without

notice to the Guarantor but subject to Section 9.14 or 9.15 of the Facility

Letter, as applicable, assign

 

 

S-1

 

or transfer any or all of

the Obligations or any interest therein; and, notwithstanding any such

assignment or transfer or any subsequent assignment or transfer thereof, such

Obligations shall be and remain Obligations for the purposes of this Guaranty,

and each and every immediate and successive assignee or transferee of any of

the Obligations or of any interest therein shall, to the extent of the interest

of such assignee or transferee in the Obligations, be entitled to the benefits

of this Guaranty to the same extent as if such assignee or transferee were such

Bank. The rights and privileges of the Agent under this Guaranty shall inure to

the benefit of its successors and assigns as Agent under the Facility Letter.

                (15)         Creation of Additional Obligations.  The creation or existence from time to time

of additional Obligations to the Agent or any Bank is hereby authorized,

without notice to the Guarantor, and shall in no way affect or impair the

rights of the Agent or any Bank or the obligations of the Guarantor under this

Guaranty, including the Guarantor’s guaranty of such additional Obligations.

                (16)         Section Captions and References.  Section captions used in this Guaranty are

for convenience only and shall not affect the construction of this

Guaranty.  Section references are

to this Guaranty unless otherwise specified.

                (17)         Severability.  Whenever possible each provision of this

Guaranty shall be interpreted in such manner as to be effective and valid under

applicable law, but if any provision of this Guaranty shall be prohibited by or

invalid under applicable law, such provision shall be ineffective to the extent

of such prohibition or invalidity, without invalidating the remainder of such

provision or the remaining provisions of this Guaranty.

                (18)         Counterparts. This Guaranty may

be executed by Guarantor and accepted by Agent on separate counterparts, each

of which shall constitute an original but both of which, taken together, shall

constitute one and the same Guaranty.

[The remainder of this page

is intentionally left blank.]

 

 

S-1

 

                IN WITNESS

WHEREOF, the Guarantor has caused this Guaranty to be executed as of September

28, 2001.

	

   

  	

  NORTHWESTERN CORPORATION

  
	

   

  	

   

  	

   

  
	

   

  	

  By:

  	

  /s/ Eric R. Jacobsen

  
	

   

  	

  Name:

  	

  Eric R. Jacobsen

  
	

   

  	

  Title:

  	

  Vice President, General Counsel, Chief Legal Officer & Assistant

  Corporate Secretary

  

 

ACCEPTED AND AGREED

as of the date first above written

 

 

ABN AMRO BANK N.V., as Agent

	

  By:

  	

  /s/ Jeffrey Dodd

  
	

  Name:

  	

  Jeffrey Dodd

  
	

  Title:

  	

  Group Vice President

  
	

   

  	

   

  
	

  By:

  	

  /s/ Frank Van Deur

  
	

  Name:

  	

  Frank Van Deur

  
	

  Title:

  	

  Assistant Vice President

  

 

 

 

S-1Exhibit 10(d)(1)

 

 

EXECUTION COPY

 

 

 

 

CREDIT AND SECURITY AGREEMENT

 

 

Dated as of March 31,

2001

 

 

Between

 

EXPANETS, INC.

 

as Debtor

 

and

 

AVAYA INC.,

 

as Creditor

 

 

CREDIT AND SECURITY AGREEMENT dated as of March 31,

2001, between EXPANETS, INC., a Delaware corporation (“Debtor”) and AVAYA INC.,

a Delaware corporation (“Creditor”).

 

RECITALS

 

WHEREAS, pursuant

to the terms of a certain Agreement for the Purchase and Sale of Assets dated

as of March 31, 2000 (the “Asset Purchase Agreement”) by and among Debtor,

Lucent Technologies Inc. (“Lucent”) and Atlantic of Tampa Inc. (“Atlantic”, and

together with Lucent, the “Sellers”), Debtor purchased certain assets and

assumed certain liabilities which were part of the Sellers;

 

WHEREAS, in connection with the execution of the Asset

Purchase Agreement, Sellers and Debtor entered into the Collateral Agreements

(as defined in the Asset Purchase Agreement and as defined herein as the

“Original Collateral Agreements”), including, without limitation, a certain

Dealer Agreement dated as of March 31, 2000 (the “Original Dealer Agreement”)

by and between Lucent and Debtor pursuant to which, among other things, Lucent

agreed to sell and Debtor agreed to purchase the Lucent Products (as defined in

the Original Dealer Agreement);

 

WHEREAS, on September 30, 2000, Lucent contributed its

enterprise networking business to Creditor and distributed all of the

outstanding shares of Creditor’s capital stock to Lucent’s shareholders  (the

“Spin-Off”);

 

WHEREAS, as a result of the Spin-Off, Creditor

acquired all rights and obligations of Lucent under the Original Dealer

Agreement and the other Original Collateral Agreements;

 

WHEREAS, Creditor and Debtor have agreed to

restructure their relationship with respect to the Original Dealer Agreement

and certain other Original Collateral Agreements (the “Restructuring”) by

entering into this Agreement, the Note (defined below), that certain Master

Restructuring and Settlement Agreement dated as of March 31, 2001 (the “Master

Restructuring Agreement”) by and between Debtor and Creditor, and several

additional agreements (this Agreement, the Note, the Master Restructuring

Agreement and the documents executed in connection with the Master

Restructuring Agreement shall hereinafter be referred to collectively as the

“Restructuring Documents”); and

 

WHEREAS, as part of the Restructuring, the parties

hereto desire to enter into this Agreement in order to (i) amend certain terms

under which Creditor sells and Debtor purchases products and services pursuant

to the Original Collateral Agreements and (ii) provide security for certain

obligations of Debtor to Creditor.

 

NOW, THEREFORE, the parties agree as follows:

 

2

 

ARTICLE I

 

DEFINITIONS AND

ACCOUNTING TERMS

 

SECTION 1.1         Certain

Defined Terms.  As used in this

Agreement, the following terms shall have the following meanings (such meanings

to be equally applicable to both the singular and plural forms of the terms

defined):

 

“Account” shall

be used herein as defined in the Uniform Commercial Code, but in any event

shall include, but not be limited to, any right to payment arising out of goods

or other property (including, without limitation, intellectual property) sold

or leased, licensed, assigned or disposed of or for services rendered which is

not evidenced by an instrument or chattel paper, whether or not it has been

earned by performance including all rights to payment of rents under a lease or

license and payment under a charter or other contract and all rights incident

to such lease, charter or contract.

 

“Affiliate” of a Person means (A) any other

Person which directly or indirectly controls, or is controlled by, or is under

common control with, such Person, and (B) any director or officer (or, in the

case of a Person which is not a corporation, any individual having analogous

powers) of such Person or of a Person who is an Affiliate of such Person.  For purposes of the preceding sentence,

“control” of a Person means (1) the possession, directly or indirectly, of the

power to direct or cause the direction of the management or policies of such

Person, whether through the ownership of voting securities, by contract or

otherwise and (2) in any case shall include direct or indirect ownership

(beneficially or of record) of, or direct or indirect power to vote, 35% or

more of the outstanding shares of any class of capital stock of such Person (or

in the case of a Person that is not a corporation, 35% or more of any class of

equity interest).

 

“Agreement” means this Credit and Security

Agreement, as amended, modified, extended or restated from time to time.

 

“Applicable Law” means,

with respect to any Person, all provisions of constitutions, statutes, rules,

regulations and orders of governmental bodies or regulatory agencies applicable

to such Person, and all orders, decisions, judgments and decrees of all courts

and arbitrators in proceedings or actions to which the Person is a party or by

which it (or any of its property) is bound.

 

“Assigned Property” has the meaning given to

such term in Section 7.3 hereof.

 

“Avaya Products” means

the Lucent Products, as defined in the Original Dealer Agreement, and any other

goods or products sold by Creditor and purchased by Debtor pursuant to the

terms of any Collateral Agreement.

 

3

 

“Avaya Services” means any services sold by

Creditor and purchased by Debtor pursuant to the terms of any Collateral

Agreement.

 

“Books and Records” means all books, records,

tapes, information, data, stored material, computer media, passwords, access

codes arising or related to Debtor’s business.

 

“Borrowing Base” at any time means (without

duplication) the sum of (A) 75% of Debtor’s Eligible Accounts at such time, plus

(B) 60% of Debtor’s Eligible Inventory at such time.

 

“Business Day” means a day other than a

Saturday, Sunday, or other day on which banks are authorized or required to

close under the laws of New York or under Federal law.

 

“Capital Lease” means,

with respect to any Person, any lease which has been, or should be in

accordance with GAAP, accounted for as a capital lease in respect of which such

Person is liable as lessee.

 

“Capital Lease Obligation”

means that portion of any obligation of a Person as lessee under a Capital

Lease which at the time appears, or in accordance with GAAP should appear, on

the balance sheet of such Person or in a note to such balance sheet.

 

“Chattel Paper” shall be used herein as defined in the Uniform Commercial Code, but in

any event shall include, but not be limited to, a writing or writings which

evidence both a monetary obligation and a security interest in, or a lease of,

specific goods.

 

“Collateral” means all property of Debtor which

serves as collateral for any of the Liabilities under Article III hereof, or

otherwise.

 

“Collateral Agreements” means the Original

Collateral Agreements, as amended by this Agreement and the other Restructuring

Documents, and as amended hereafter from time to time.

 

“Contingent Assignment” has the meaning given

to such term in Section 7.3 hereof.

 

“Credit Documents” means, collectively, this

Agreement and the Note.

 

“Credit Limit” at any time means the lesser of

(A) One Hundred Twenty Five Million Dollars ($125,000,000.00), or (B) the

Borrowing Base.

 

“Dealer Agreement” means the Original Dealer

Agreement, as amended by this Agreement and the other Restructuring Documents,

and as amended hereafter from time to time.

 

4

 

“Default” means the occurrence or

non-occurrence of an event which but for the expiration of any cure period, the

giving of notice, the passage of time or both would constitute an Event of

Default.

 

“Delinquent Purchaser” means a Purchaser more

than 50% of whose aggregate Account indebtedness to Debtor is more than 120

days past due.

 

“Document” shall

be used herein as defined in the Uniform Commercial Code, but in any event

shall include, but not be limited to, a bill of lading, dock warrant, dock

receipt, warehouse receipt or order for the delivery of goods, and also any

other document which in the regular course of business or financing is treated

as adequately evidencing that the Person in possession of it is entitled to

receive, hold and dispose of the document and the goods it covers.

 

“Eligible Account” means any Account of Debtor

created in an arm’s length transaction in the ordinary course of Debtor’s

business which meets all the following specifications at the time of

determination of Eligible Accounts: (A) the Account is lawfully owned by Debtor

free and clear of all liens, security interests or prior assignments except as

set forth in subsection (B) hereof, and Debtor has the right of assignment

thereof and the power to grant a security interest therein; (B) the Account is

subject to a first priority security interest in favor of Creditor; (C) the

Account is valid and enforceable, representing the undisputed indebtedness of a

Purchaser to Debtor; (D) the Account is not subject to any defense, setoff,

counterclaim, credit, allowance or adjustment, including without limitation,

reserves for quality and special pricing; (E) the Purchaser has accepted the

goods, the sale of which to such Purchaser has given rise to the Account; and

no part of such goods have been returned, rejected, lost or damaged; (F) if the

Account arises from the sale of goods by Debtor, such sale was an absolute sale

and not on consignment or on approval or on a sale-or-return basis nor subject

to any other guaranty, repurchase or return agreements, and such goods have

been shipped to the Purchaser; (G) if the Account arises from the performance

of services, such services have actually been performed; (H) no notice of the

death, bankruptcy, receivership, reorganization, or insolvency of the Purchaser

owing such Account has been received by Creditor or Debtor; (I) the Purchaser

is not a Subsidiary or Affiliate of Debtor; (J) the Account is less than 120

days past the invoice date; (K) the original invoice creating such Account was

delivered on the date the underlying goods or services were provided or within

30 days after such date; (L) the Account is not an International Account,

unless such Account is an Eligible International Account, in which case, the

Account shall not be deemed an International Account; (M) the Purchaser for

such Account has not submitted to Debtor a medium of payment therefor which has

been returned uncollected for any reason; (N) the Purchaser for such Account is

not otherwise in default pursuant to the terms underlying the agreement

creating such Account; (O) such Account is not a contra Account; and (P) such

Account is not owed by a Delinquent Purchaser or any Subsidiary or Affiliate of

a Delinquent Purchaser.  In addition,

not more than 25% of the aggregate Eligible Accounts at any one time shall be

owing from any one Purchaser or affiliated Purchasers.  Any Account or portion of an Account that

does not comply with the limitations set forth in the preceding sentences

 

5

 

shall not constitute an Eligible Account, provided however that,

to the extent a portion of such Account does comply with the limitations set

forth in the preceding sentence such portion shall be counted as an Eligible

Account, but only to the extent that it does so comply.

 

“Eligible International Account” means an

International Account of Debtor either (A) secured by a letter of credit in the

amount of the International Account issued by a bank acceptable to Creditor,

(B) insured under a foreign credit insurance policy acceptable to Creditor with

respect to such International Account in favor of Debtor, or (C) otherwise

acceptable to Creditor in its sole discretion, provided  however

that no International Account will be an Eligible International Account unless

Creditor has informed Debtor in writing that such International Account will be

accepted by Creditor as an Eligible International Account hereunder.

 

“Eligible Inventory” means any item of

Inventory of Debtor meeting all the following specifications:  (A) (1) it is lawfully owned by Debtor, (2)

is in the possession of Debtor at a location specified on Schedule 3.4

attached hereto, (3) to the extent such location is not owned by Debtor,

Creditor has received a Landlord’s Waiver or warehouseman’s waiver or consent

with respect to such location, (4) except as set forth in subsection (B) below

or a Permitted Subordinated Lien, is subject to no mortgage, pledge, security

interest, lien, or other encumbrances of any kind, and (5) Debtor has the power

to grant a security interest therein; (B) it is subject to a first priority

perfected security interest in favor of Creditor; (C) it is insured as required

by Section 3.12 hereof pursuant to policies in full compliance with the

requirements of such Section; (D) it is in good condition and repair; (E) it constitutes

readily saleable finished goods or raw materials, excluding the packaging

portion of raw materials; (F) is not in transit inventory; and (G) it is not a

consignment or damaged inventory.

 

“Event of Default” has the meaning given to

such term in Section 7.1 hereof.

 

“GAAP” means generally accepted accounting

princi­ples, applied in a consistent manner.

 

“Indebtedness” means, with respect to any Person (without duplication):

 

(A)       all indebtedness for borrowed money of

such Person;

 

(B)        all obligations of such Person for the

deferred purchase price of capital assets or other property or services;

 

(C)        all obligations of such Person evidenced

by notes, bonds, debentures or other instruments;

 

(D)        all indebtedness created or arising

under any conditional sale or other title retention agreement with respect to

property acquired by such Person (even though the rights and remedies of the

seller or lender

 

6

 

under such

agreement in the event of default are limited to repossession or sale of such

property);

 

(E)        all Capital Lease Obligations of such

Person;

 

(F)        all obligations, contingent or

otherwise, of such Person under acceptances, letters of credit or similar

facilities;

 

(G)        all obligations of such Person to

purchase, redeem, retire or otherwise acquire for value any capital stock of

such Person or any warrants, rights or options to acquire such capital stock,

which obligations shall be valued, in the case of redeemable preferred stock,

at the greater of its voluntary or involuntary liquidation preference plus

accrued and unpaid dividends and, in the case of other such obligations, at the

amount that, in light of all the facts and circumstances existing at the time

of determination, is reasonably expected to be payable;

 

(H)        interest accrued but not paid on the

scheduled date;

 

(I)         all guarantees of obligations of others

of the type referred to in clauses (A) through (H) above;

 

(J)         all synthetic lease or similar

off-balance sheet obligations of such person;

 

(K)        all Indebtedness referred to in clauses

(A) through (I) above secured by (or which the holder of such Indebtedness has

an existing right, contingent or otherwise, to be secured by) any Lien on

property (including, without limitation, accounts and contract rights) owned by

such Person, even though such Person has not assumed or become liable for the

payment of such Indebtedness; and

 

(L)        all unfunded pension liabilities.

 

“Instruments” shall

be used herein as defined in the Uniform Commercial Code, but in any event

shall include, but not be limited to, promissory notes, negotiable certificates

of deposit, a negotiable instrument or a security or any other writing which

evidences a right to the payment of money and is not itself a security

agreement or lease and is of a type which is, in the ordinary course of

business, transferred by delivery with any necessary endorsement or assignment.

 

“Interest Free Period” has the meaning given to

such term in Section 2.1 hereof.

 

“International Account” means an Account which

arises out of a transaction between Debtor and a Purchaser who meets at least

one of the following criteria: (A) the Purchaser is a non-United States

government, governmental agency or government-controlled business, (B) the

Purchaser is not subject to the jurisdiction of

 

7

 

the court system of the United States or any state of the United

States, (C) the Purchaser does not maintain in the United States an office to

which such Account is invoiced, or (D) the Purchaser does not maintain net

assets in the United States at least five times as great as the aggregate of

all Accounts arising from transactions between Debtor and such Person.

 

“Inventory” shall

be used herein as defined in the Uniform Commercial Code but in any event shall

include, but not be limited to, tangible personal property held by or on behalf

of the Debtor (or in which the Debtor has an interest in mass or a joint or

other interest) for sale or lease or to be furnished under contracts of

service, tangible personal property which the Debtor has so leased or

furnished, and raw materials, work in process and materials used, produced or

consumed in the Debtor’s business, and shall include tangible personal property

returned to the Debtor by the purchaser following a sale thereof by the Debtor

and tangible personal property represented by Documents.

 

“Invoices” has the meaning given to such term

in Section 2.1 hereof.

 

“Landlord’s Waiver” has the meaning given to

such term in Section 3.3 hereof.

 

“Liabilities” has the meaning given to such

term in Section 3.1 hereof.

 

“Lien” means any

mortgage, lien, pledge, adverse claim, assignment, charge, security interest,

title retention agreement, separate beneficial interest, levy, execution, seizure,

attachment, garnishment or other encumbrance in respect of any property,

whether created by statute, contract, common law or otherwise, and whether or

not choate, vested or perfected.

 

“NorthWestern” means NorthWestern Corporation,

a Delaware corporation.

 

“Note” has the meaning given to such term in

Section 2.1 hereof.

 

“Original Collateral Agreements” has the

meaning given to such term in the Recitals hereof.

 

“Original Dealer Agreement” has the meaning

given to such term in the Recitals hereof.

 

“Outstanding Invoice” means, as of the date of

determination, any unpaid and outstanding Invoice.

 

“Overdue Invoice” has the meaning given to such

term in Section 2.1 hereof.

 

“Permitted Liens” means:

 

(A)          Liens

on real estate for real estate taxes not yet delinquent and Liens for taxes,

assessments, judgments, governmental charges or levies or claims the

 

8

 

non-payment of which is being diligently contested in good faith by

appropriate proceedings and for which adequate reserves have been set aside on

such Person’s books, but only so long as no foreclosure, distraint, sale or

similar proceedings have been commenced with respect thereto;

 

(B)           Liens

of carriers, warehousemen, mechanics, laborers and materialmen incurred in the

ordinary course of business for sums not yet due;

 

(C)           Liens

incurred in the ordinary course of business in connection with worker’s

compensation and unemployment insurance which are not overdue for more than

sixty (60) days;

 

(D)          Zoning

restrictions, easements, minor restrictions on the use of real property, minor

irregularities in title to real property and other minor Liens that do not

secure the payment of money or the performance of an obligation and that do

not, in the aggregate, materially detract from the value of a property or asset

to, or materially impair its use in the business of such Person;

 

(E)           Liens

in favor of Creditor (in its individual capacity and in its capacity as agent

for the benefit of NorthWestern pursuant to NorthWestern’s purchase of a

participation under Section 7.3(B)), including without limitation the Liens

created under the Credit Documents;

 

(F)           Purchase

money security interests and proceeds thereof;

 

(G)           Liens

created under Capital Lease Obligations relating to property of Debtor other

than Accounts and Inventory, and

 

(H)          Liens

and security interests incurred or granted in the ordinary course of business,

provided any such lien or security interest in the Collateral  (other than subsection (F) above) is subordinate

to the lien granted to Creditor hereunder.

 

“Permitted Refinancing” has the meaning given

to such term in Section 2.4 hereof.

 

“Permitted Subordinated Lien” means a lien or

security interest in Inventory subordinate to the lien of Creditor, the subordination

of which is governed by the terms of a Subordination Agreement in which the

subordinate lienholder agrees to take no action to foreclose or otherwise

enforce its security interest while Creditor’s lien is in effect without first

obtaining the prior written consent of Creditor.

 

“Person” means an individual, corporation,

partnership, trust or any other entity.

 

“Proceeds” shall

be used herein as defined in the Uniform Commercial Code but, in any event,

shall include, but not be limited to, (i) any and all proceeds of any insurance

(whether or not Creditor is named as the loss payee thereof), indemnity,

warranty or 

 

9

 

guaranty payable to the Debtor or Creditor from

time to time with respect to any of the Collateral, (ii) any and all payments

(in any form whatsoever) made or due and payable to the Debtor from time to

time in connection with any requisition, confiscation, condemnation, seizure or

forfeiture of all or any part of the Collateral by any governmental authority

(or any person acting under color of governmental authority), (iii) any and all

amounts received when Collateral is sold, leased, licensed, exchanged,

collected or disposed of, (iv) any rights arising out of Collateral, and (v)

any and all other amounts from time to time paid or payable under or in

connection with any of the Collateral.

 

“Purchase Price” has the meaning given to such

term in Section 7.3 hereof.

 

“Purchaser” means a buyer of goods from Debtor

or a customer for whom services have been rendered or materials furnished by

Debtor.

 

“Restructuring” has the meaning given to such

terms in the Recitals hereof.

 

“Restructuring Documents” has the meaning given

to such term in the Recitals hereof.

 

“Subsidiary” of a Person (identified for

purposes of this definition as “Z”) means any Person, 50% or more of the voting

capital stock (or other ownership interests) of which is owned, directly or

indirectly, by Z.

 

“Supporting Obligations”  shall be

used herein as defined in the Uniform Commercial Code but in any event shall

include guarantees and letters of credit that support payment of another

obligation.

 

“Termination Date” means the earlier of (A) the

date on which Creditor’s obligations to finance Debtor’s purchase of Avaya Products and Avaya Services pursuant

to the Collateral Agreements terminates pursuant to any provision of this

Agreement,  (B) March 31, 2002, or (C)

the date on which all obligations of Debtor to Creditor under the Credit Documents

are satisfied in full.

 

“Uniform Commercial Code”

shall mean the Uniform Commercial Code in effect on the date hereof and as

amended from time to time, and as enacted in the State of New York or in any

state or states which, pursuant to the Uniform Commercial Code as enacted in

the State of New York, has jurisdiction with respect to all, or any portion of,

the Collateral or this Agreement, from time to time.  It is the intent of the parties that the definitions set forth

above should be construed in their broadest sense so that Collateral will be

construed in its broadest sense. 

Accordingly if there are, from time to time, proposed changes to defined

terms in the Uniform Commercial Code that broaden the definitions, they are

incorporated herein and if existing definitions in the Uniform Commercial Code

are broader than the amended definitions, the existing ones shall be

controlling.  Similarly, where the

phrase “as defined in the Uniform Commercial Code, but in any event shall

include, but not be limited to . . .” is used above, it means as defined in the

Uniform Commercial Code except that if any of the enumerated types of items 

 

10

 

specified thereafter would not fall within the

Uniform Commercial Code definition, they shall none the less be included in the

applicable definition for purposes of this Agreement.

 

SECTION 1.2         Accounting

Terms.  All accounting terms not

specifically defined herein shall be construed, and all financial data

submitted pursuant to this Agreement shall be prepared, in accordance with

GAAP.

 

 

ARTICLE II

 

EXTENSIONS OF CREDIT

 

SECTION 2.1         Extensions

of Credit; Amendments to Collateral Agreements.

 

(A)          Creditor shall continue to sell the Avaya Products and Avaya Services to

Debtor and Debtor shall continue to purchase the Avaya Products and Avaya Services from Creditor under the terms

set forth in the Collateral Agreements and any Restructuring Document.  Any term contained in this Agreement, which

expressly conflicts with any term in any Original Collateral Agreement, shall

amend the term contained in such Original Collateral Agreement to conform to

the term contained in this Agreement.

 

(B)           Creditor’s invoices for Avaya Products or Avaya Services

(“Invoices”) purchased by Debtor pursuant to the Collateral Agreements,

including any Invoices dated prior to the date of this Agreement, shall be paid

in full, less disputed amounts or agreed adjustments (as provided in the Dealer

Agreement), within 45 days of the date of such Invoices (the “Interest Free

Period”).

 

(C)           The portion of any Invoice not paid

in full during the Interest Free Period (“Overdue Invoice”) shall accrue

interest at a rate of 12% per annum, commencing on the day immediately

following the expiration of the Interest Free Period for such Invoice.  Debtor shall pay such interest in arrears

until such Overdue Invoice has been repaid in full, (1) monthly on the

first day of each month commencing with the first day of the first month

following the date of this Agreement and (2) on the Termination Date (except as

set forth in subsection (E) below).  If

Debtor does not make any such interest payment within five (5) days of its due

date, such overdue amount (including interest accruing since the interest

payment due date) shall thereafter be added to the amount of Overdue Invoices,

and thereafter, shall accrue interest hereunder; provided, that,

Creditor, in lieu of adding such delinquent interest to the amount of Overdue

Invoices, may elect (in its sole discretion) to reduce or eliminate the amount

of delinquent interest by offsetting against such delinquent interest payment  (i)

all or a portion of the amount of any payables or other amounts due by Creditor

to Debtor and (ii) all or a portion of any amounts collected by Creditor on

behalf of Debtor.  Interest on the

amounts outstanding under the Overdue Invoices shall be computed on the basis

of a year of 360 days for the actual number of days elapsed.

 

11

 

(D)          The aggregate amount of all unpaid and

outstanding Overdue Invoices (including any interest added to the principal

amount of such Overdue Invoices pursuant to Section 2.1(C) above) shall not at

any time exceed the Credit Limit.  If

the aggregate amount of the Overdue Invoices at any time exceeds the Credit

Limit, Debtor shall repay immediately the amount of the excess.  In addition to any remedies available to

Creditor hereunder or otherwise, Creditor shall have the right (in its sole

discretion) to offset against such excess (i) all or a portion of the amount of

any payables or other amounts due by Creditor to Debtor and (ii) all or a

portion of any amounts collected by Creditor on behalf of Debtor.

 

(E)           On the Termination Date, Debtor shall

repay in full the aggregate principal amount of all Outstanding Invoices which

have been outstanding for 30 or more days (the “Net 30 Day Outstanding

Invoices”), all accrued but unpaid interest thereon and any other amount owing

in connection herewith, except that if the Termination Date occurs on March 31,

2002 and Debtor is not in Default hereunder, (i) Debtor shall be required to

pay all Net 30 Day Outstanding Invoices dated on or prior to March 31, 2002 in

accordance with the terms set forth in the Credit Documents (including any

unpaid and accrued interest), and (ii) the payment of all other Outstanding

Invoices shall be governed by the terms of the Collateral Agreements without

taking into account any of the amendments to the Collateral Agreements set

forth in this Agreement or the Note.

 

(F)           The obligation of Debtor to repay the

Outstanding Invoices shall be evidenced by a promissory note, dated the date of

this Agreement, payable to the order of Creditor, in the principal amount of

One Hundred Twenty Five Million Dollars ($125,000,000.00) (the “Note”).

 

SECTION 2.2         Place and

Manner of Payments.  All payments by

Debtor on account of principal, interest or any other sums due under this

Agreement or the Note, shall be made without setoff or counterclaim to Creditor

at the address specified in Section 8.2 hereof.  All payments received by Creditor from Debtor shall be applied in

the following order: (A) to the payment of fees and other costs and expenses

then due and owing from Debtor under this Agreement or the Note, (B) to the

payment of accrued and unpaid interest then due under the Credit Documents, (C)

to the payment of any principal then due and owing under the Overdue Invoices

and (D) to the payment of any other Outstanding Invoices.

 

SECTION 2.3         Payment on

Non-Business Days.  Whenever any

payment to be made hereunder or under the Note shall be stated to be due on a

day that is not a Business Day, such payment shall be made on the next

succeeding Business Day, and, except as otherwise specifically provided herein,

such extension of time shall in such case be included in the computation of

payment of interest hereunder or under the Note, as the case may be.

 

SECTION 2.4         Prepayment;

Refinancing.

 

(A)          Debtor may prepay the Note at any time

without premium or penalty.

 

12

 

(B)           Debtor hereby covenants and agrees to

(i) exercise reasonable best efforts to, as soon as possible, obtain

commercially reasonable third party financing from a third party lender  (“New Lender”) for a minimum of $125,000,000,

the proceeds of which shall be used to satisfy all Net 30 Day Outstanding

Invoices (and all accrued and unpaid interest) and otherwise finance Debtor’s

future purchase of Avaya Products or

Avaya Services pursuant to the Collateral Agreements (a “Permitted

Refinancing”), (ii) fully and diligently cooperate with one or more

prospective New Lenders to obtain the Permitted Refinancing; and

(iii) promptly accept a commitment for a Permitted Refinancing offered by

a New Lender (a “Refinancing Commitment”) if such commitment contains in the

aggregate commercially reasonable financing terms.  Any disagreement or dispute as to whether a Refinancing

Commitment is commercially reasonable shall be resolved pursuant to the

mediation and arbitration provisions incorporated into this Agreement pursuant

to Section 8.6 hereof, subject to the following additional conditions (which

shall override any expressly inconsistent provision therein): (1) Creditor may

not commence arbitration hereunder prior to August 27, 2001; (2) Creditor may

not on or after August 27, 2001 commence arbitration with respect to the

commercial reasonableness of a Refinancing Commitment until the earlier of  Debtor’s rejection of the Refinancing

Commitment or 10 days after Debtor’s receipt of such Refinancing Commitment;

(3) Arbitration shall be conclusively determined by the majority vote of a 3

person panel comprised of independent experts in commercial finance, one of

whom is selected by each party within 5 days after commencement of arbitration

(determined by the date of formal demand) and the third of whom is selected

within 10 days after the end of such 5 day period by the joint decision of the

arbitrators (any failure to timely appoint an arbitrator shall be a waiver of

the right to appoint); (4) Each party shall provide and complete discovery of

all information reasonably requested by the other party and reasonably related

to the commercial reasonableness of the Refinancing Commitment within 20 days

after commencement of arbitration; (5) Debtor hereby authorizes any prospective

New Lender to provide Creditor with disclosure of any  terms and conditions of the Refinancing Commitment; and  (6) Evidence or other documentary support

and legal argument, if any, shall be submitted to the arbitration panel within

20 days after the expiration of the 20 day discovery period.  No other discovery or oral testimony shall

be permitted unless required by the arbitrators.  No evidence submitted after such 20 day period by a party shall

be considered by the arbitrators unless due to the failure by the other party

or a New Lender to timely provide the information required hereunder. If

Creditor prevails in the arbitration, Creditor’s sole remedy hereunder,

exercisable at its option, is to suspend its obligation to extend credit to

Debtor under this Agreement upon the expiration of 30 days after the date of

the determination by the arbitrators; provided nothing herein shall be

construed to otherwise limit Creditor’s remedies upon the earlier occurrence of

an Event of Default.

 

(C)           In connection with the Permitted

Financing, if requested by New Lender, Creditor will (1)  subordinate its rights to New Lender upon

default by Debtor under its obligations thereto in the following: (i) the

lien on Maintenance Agreements securing certain of Debtor’s obligation to

Creditor under the Transaction Documents and (ii) set-off rights to any

accounts collected by Creditor on behalf of Debtor, (2) provide such

 

13

 

reasonable nonconfidential financial information within its possession

relating to billings and collections made by Creditor on behalf of Debtor where

the information is not otherwise available to Debtor, and (3) in good faith

diligently cooperate and assist Debtor and the New Lender in connection with

Debtor’s efforts to obtain a Refinancing Commitment , including without

limitation, providing reasonably requested nonconfidential  information, documents and personnel to

assist with the New Lender’s due diligence review, and responding to requests

from the New Lender for delivery of estoppels and a Subordination Agreement

providing that Creditor will take no action to foreclose or otherwise enforce

its security interest in the subordinated assets described in subparagraph (C

)(1) above while New Lender’s lien is in effect without first obtaining the

prior written consent of New Lender.

 

SECTION 2.5         Subordinated

Promissory Note

 

The execution of this Agreement and consummation of

the transactions contemplated hereby shall not constitute an event of default

under the $35,000,000 Promissory Note by Debtor to Creditor dated March 31,

2000.

 

 

ARTICLE III

 

COLLATERAL

 

SECTION 3.1         Security

Interests.  As security for Debtor’s

payment of the Overdue Invoices, the payment of principal and interest under

the Credit Documents and the payment of all other liabilities of Debtor to

Creditor arising from Creditor’s sale and Debtor’s purchase of the Avaya

Products and Avaya Services, whether absolute or contingent, matured or

unmatured, direct or indirect, sole, joint, several, or joint and several,

similar or dissimilar (the “Liabilities”), Debtor hereby grants, pledges, and

assigns to Creditor a security interest in the following assets of Debtor now

owned or hereafter acquired:

 

(A)          all Inventory in all of its forms of

Debtor, wherever located, including, without limitation, (i) all raw materials

and work in process therefor, finished goods thereof, and materials used or

consumed in the manufacture or production thereof, (ii)  all goods in which Debtor has an interest in

mass or a joint or other interest or right of any kind (including goods in

which such Debtor has an interest or right as consignee), and (iii)  all goods which are returned to or

repossessed by Debtor, and all accessions thereto, products thereof and

documents therefor;

 

(B)           all Accounts in all of its forms of

Debtor, wherever located, including, without limitation, contracts, contract

rights, chattel paper, documents, instruments, and 

 

14

 

general intangibles (including tax refunds) of Debtor, whether or not

arising out of or in connection with the sale or lease of goods or the

rendering of services, and all rights of Debtor now or hereafter existing in

and to all security agreements, guaranties, leases and other contracts securing

or otherwise relating to any such accounts, contracts, contract rights, chattel

paper, documents, instruments, and general intangibles;

 

(C)           all Supporting Obligations, in all

their forms wherever located, relating to any Accounts or Inventory; and

 

(D)          all Proceeds of any and all of the

foregoing.

 

SECTION 3.2         Financing

Statements.  Debtor will join with

Creditor in executing such financing statements and continuation statements (in

form reasonably satisfactory to Creditor) under the Uniform Commercial Code as

Creditor may specify, and will pay the cost of filing the same in such public

offices as Creditor shall designate. Debtor agrees to take whatever action

Creditor reasonably requests to perfect and to continue perfection of

Creditor’s first priority security interest in the Collateral.

 

SECTION 3.3         Landlord’s

Waiver.  Debtor shall exercise its

best efforts to cause the owners of the locations identified on Schedule 3.4

to execute and deliver to Creditor an instrument (in form satisfactory to

Creditor) by which each such owner waives its right to distrain on any of the

Collateral, and by which such owner grants to Creditor the right to remove the

Collateral from such owner’s location on terms substantially similar to those

reflected on the attached Exhibit 3.3 (the “Landlord’s Waiver”).

 

SECTION 3.4         Places of

Business; Location of Collateral.

 

(A)          Debtor represents that the properties

listed on part A of Schedule 3.4 attached hereto serves as Debtor’s

chief place of business, chief executive office, and the place where it keeps

its Books and Records, and that all of the Inventory serving as Collateral

hereunder are kept at the locations listed on part B of Schedule 3.4

attached hereto.

 

(B)           In furtherance of Section 3.2 above,

Debtor will notify Creditor prior to (1) any change in the location of the

chief place of business or chief executive office of Debtor, (2) any change in

the place where Debtor keeps its Inventory or its Books and Records, (3) the

establishment of any new or the discontinuance of any existing place of

business, and (4) the establishment of any new or the discontinuance of any

location where Inventory or Books and Records are kept.

 

SECTION 3.5         Creditor’s

Rights With Respect to Accounts. 

With respect to any Account that is Collateral hereunder, Creditor shall

have the right at any time and from time to time without notice to Debtor to:

(A) upon the occurrence and during the continuance of an Event of Default,

notify Purchasers under Debtor’s Accounts that such Accounts have been assigned

to Creditor, (B) upon the occurrence and during the continuance of an Event of

Default, forward invoices to Purchasers directing them to make payments to

Creditor, collect all Accounts of Debtor in Creditor’s or Debtor’s

 

15

 

name, and take control of any cash or non-cash proceeds of Debtor’s

Accounts; (C) upon the occurrence and during the continuance of an Event of

Default, compromise, extend, or renew any Account of Debtor or deal with Debtor’s

Accounts as Creditor may deem advisable; (D) upon the occurrence and during the

continuance of an Event of Default, make exchanges, substitutions, or

surrenders of Collateral; and (E) upon the occurrence and during the

continuance of an Event of Default, take control of any cash or non-cash

proceeds of any Collateral.

 

SECTION 3.6         Eligible

Accounts.

 

(A)          With respect to each of Debtor’s

Eligible Accounts, Debtor represents that: 

(1) such Account is not evidenced by a judgment, an Instrument or

Chattel Paper or secured by a letter of credit (except (a) such judgment as has

been assigned to Creditor, (b) such Instrument or Chattel Paper as has been

endorsed and delivered to Creditor and (c) such letter of credit as has been

assigned and delivered to Creditor) and represents a bona fide completed

transaction; (2) the amount shown on Debtor’s Books and Records and on any

list, invoice or statement furnished to Creditor is owing to Debtor; (3) the

title of Debtor to the Account and, except as against the Purchaser, to any

goods represented thereby is absolute; (4) the Account has not been transferred

to any other person, and, at the time such Account is created, no person except

Debtor has any claim thereto or, with the sole exception of the Purchaser therefor,

to the goods represented thereby; and (5) no set-off or counter-claim to such

Account exists, and no agreement has been made with any person under which any

deduction or discount may be claimed.

 

(B)           Debtor will promptly, and in any

event within thirty (30) days of the creation thereof, notify Creditor if any

Eligible Account arises out of contracts with the United States or any state of

the United States, or any department, agency or instrumentality thereof,

furnish Creditor with copies of each such contract and execute any instruments

and take any steps reasonably required by Creditor in order that all moneys due

and to become due under any such contract shall be assigned to Creditor and

notice given under the Federal Assignment of Claims Act or any similar statute

of a state of the United States.

 

(C)           Debtor will,  (1) 

if requested by Creditor, upon the occurrence and during the continuance

of an Event of Default, mark Debtor’s records concerning each of its Accounts

in a manner satisfactory to Creditor so as to show that each Account has been

assigned to Creditor; (2) if requested by Creditor, furnish Creditor with

satisfactory evidence of the shipment and receipt of any goods and the

performance of any services represented by any Accounts; and (3) furnish

Creditor with such other information as Creditor may from time to time

reasonably request.

 

SECTION 3.7         Letters of

Credit.  Debtor represents and

warrants to Creditor that it has delivered to Creditor and covenants that it

will deliver to Creditor promptly on receipt all originals of letters of credit

securing its Eligible Accounts now in its possession or hereafter acquired,

each properly assigned and/or endorsed over to 

 

16

 

Creditor, which letters of credit shall be held by Creditor as security

hereunder.  Debtor shall remain solely

responsible for the observance and performance of all of its covenants and

obligations under all such letters of credit, and Creditor shall not be

required to observe or perform any such covenants or obligations.

 

SECTION 3.8           Inventory.  Debtor represents and agrees that (A) Debtor

is the absolute owner of its Inventory, subject only to the security interests

created hereby and Permitted Liens;  (B)

Debtor will sell its Inventory only in the ordinary course of business; and (C)

if any Eligible Inventory is or becomes represented by a Document, Creditor may

reasonably require that such Document be in such form as to permit Creditor or

anyone to whom Creditor may negotiate the same to obtain delivery to it of the

Inventory represented thereby.

 

SECTION 3.9         Condition

of Inventory.  Debtor will promptly,

and in any event within two (2) Business Days of the occurrence thereof, notify

Creditor of any event of deterioration, loss or depreciation of value of any

substantial portion of its Inventory and the amount of such deterioration, loss

or depreciation.

 

SECTION 3.10       Expenses of

Creditor.  Debtor will reimburse

Creditor on demand for all expenses (including the reasonable fees and expenses

of legal counsel for Creditor) in connection with the enforcement of Creditor’s

rights to take possession of the Collateral and the proceeds thereof and to

hold, collect, render in material compliance with applicable environmental laws

and regulations, prepare for sale, sell and dispose of the Collateral.

 

SECTION 3.11       Notices.  If notice of sale, disposi­tion or other

intended action by Creditor with respect to the Collateral is required by the

Uniform Commercial Code or other applicable law, any notice thereof sent to

Debtor at the address specified in Section 8.2 hereof or such other address of

Debtor as may from time to time be specified by Debtor (or if the address of

Debtor specified in Section 8.2 has changed, to the address shown on the records

of Creditor) at least thirty (30) days prior to such action, shall constitute

reasonable notice to Debtor.

 

SECTION 3.12       Insurance;

Discharge of Taxes, etc.  Creditor

shall have the right at any time and from time to time, with at least 5 days

prior written notice to Debtor, to (A) obtain insurance covering any of the

Collateral if Debtor fails to do so, (B) discharge taxes, liens, security

interests or other encumbrances at any time levied or placed on any of the

Collateral and (C) pay for the maintenance and preservation of any of the

Collateral. Debtor will reimburse Creditor, on demand, with interest at the

rate of 12% per annum for any payment Creditor makes, or any expense Creditor

incurs under this authorization. Such interest shall commence to accrue no

earlier than 10 days after delivery of the written notice to Debtor specified

above.  Debtor assigns to Creditor all

right to receive the proceeds of insurance covering the Collateral, directs any

insurer to pay all such proceeds directly to Creditor and authorizes Creditor

to endorse in the name of Debtor any draft for such proceeds.

 

17

 

SECTION 3.13       Waiver and

Release by Debtor.  Debtor (A)

waives protest of all commercial paper at any time held by Creditor on which

Debtor is in any way liable, notice of nonpayment at maturity of any and all

Accounts of Debtor and, except where required hereby or by law, notice of

action taken by Creditor, and (B) releases Creditor from all claims for loss or

damage caused by any failure to collect any Account or by any act or omission

on the part of Creditor or its officers, agents and employees, except gross

negligence and willful misconduct.

 

SECTION 3.14       Access to

Inventory.  Debtor shall permit

Creditor’s representatives to have access to its Inventory from time to time,

as requested by Creditor, for purposes of audit, examination, inspection, and

appraisal thereof and verification of Debtor’s records pertaining thereto.  Except after the occurrence and during the

continuance of a Default or an Event of Default, Creditor shall give Debtor at

least 72 hours written notice (which notice need not be in writing) before

exercising the rights granted in the preceding sentence and such audit,

examination, inspection, appraisal or verification shall be conducted, to the

extent taking place on Debtor’s premises, during normal business hours.  Upon demand by Creditor, after an Event of

Default and the expiration of any applicable cure period, Debtor shall assemble

its Inventory which constitutes Collateral hereunder and make it available to

Creditor at Debtor’s place of business. 

At the request of Creditor, after the occurrence and during the

continuance of an Event of Default, Debtor shall provide warehousing space in

its own premises to Creditor for the purpose of taking Inventory into the

custody of Creditor without removal thereof from such premises and will erect

such structures and post such signs as Creditor may require in order to place

such Inventory under the exclusive control of Creditor.

 

SECTION 3.15       Records and

Reports.  Debtor shall keep accurate

and complete records of its Accounts (and the collection thereof), Chattel

Paper, Instruments, Documents and Inventory and furnish Creditor such

information about its Accounts, Chattel Paper, Instruments, Documents, and

Inventory as Creditor may reasonably request. 

Creditor shall have the right to conduct periodic examinations and

verifications of Debtor’s Books and Records, which examination may include,

without limitation, verifications of Accounts by contacting Purchasers after

the occurrence of an Event of Default. 

Debtor agrees to make its Books and Records available to Creditor at

Debtor’s principal place of business for purposes of such examination.  Provided there does not exist an Event of

Default, Creditor agrees to give Debtor at least 72 hours written notice of

such examination (which notice need not be in writing) and to conduct such

examination during normal business hours. 

Debtor shall reimburse Creditor for the reasonable costs and expenses

(whether internal or external) of any such examination. Debtor shall reimburse

Creditor for the costs and expenses (whether internal or external) of any such

examination.

 

SECTION 3.16       Further

Assurances.  From time to time

Debtor will execute and deliver to Creditor such additional instruments as

Creditor may reasonably request to effectuate the purposes of this Agreement

and to assure to Creditor, as secured party, a first priority security interest

in the Collateral.  After the occurrence

and during the continuance of an Event of Default, Debtor hereby irrevocably

appoints Creditor as

 

18

 

Debtor’s attorney-in-fact (A) to take any action Creditor deems

necessary to perfect or maintain perfection of any security interest granted to

Creditor herein or in connection herewith, including the execution of any

document on Debtor’s behalf, and (B) to take any other action to effectuate the

rights granted in this Article III, which power of attorney is coupled with

an interest and irrevocable until all of the Liabilities are paid in full.  Until all of the Liabilities are paid in

full, Creditor may, at any time and from time to time, send to any Purchaser a

verification form, make such calls or otherwise contact Purchasers of Debtor as

are necessary or desirable, in Creditor’s sole discretion, to verify Accounts

and the balance due.

 

SECTION 3.17       Application

of Proceeds of Collateral.  All

Proceeds of Collateral shall be applied (A) to the costs of preservation and,

after the occurrence of an Event of Default, liquidation of such Collateral and

Creditor’s exercise of its rights under Articles III and VII hereof, then (B)

to any unpaid interest due hereunder or under the Note, then (C) to the

principal payable hereunder or under the Note, then (D) to all other amounts

due under the Credit Documents.  Any

excess proceeds shall be remitted to Debtor.

 

SECTION 3.18       Continuing

Collateral.  Creditor shall be under

no obligation to proceed first against any part of the Collateral before

proceeding against any other part of the Collateral.  It is expressly agreed that all of the Collateral stands as equal

security for all Liabilities and Creditor shall have the right to proceed

against or sell any and/or all of the Collateral in any order, or

simultaneously, as it, in its sole discretion, shall determine.

 

ARTICLE IV

 

CONDITIONS OF EXTENSIONS

OF CREDIT

 

SECTION 4.1         Conditions

Precedent.  The obligations of

Creditor hereunder to finance Debtor’s purchase of Avaya Products and Avaya Services after the date hereof are

subject to the conditions precedent that:

 

(A)          the representations and warranties

contained in this Agreement, in the Collateral Agreements and in the other

Restructuring Documents shall be correct and accurate in all material respects

on and as of the date of sale of Avaya

Products or Avaya Services financed by Creditor as though made on and as

of such date (excluding representations and warranties which speak as of a

particular date, which shall continue to be true and correct in all material

respects as of such date); and

 

(B)           no Default or Event of Default shall

have occurred and be continuing or will result from the making of any sale of Avaya Products or Avaya Services financed

by Creditor.

 

19

 

ARTICLE V

 

REPRESENTATIONS AND WARRANTIES

 

In addition to all other representations and

warranties set forth in this Agreement (including, without limitation, those in

Article III hereof), Debtor represents and warrants as follows:

 

SECTION 5.1         Existence.  Debtor is a corporation, duly formed,

validly existing, and in good standing under the laws of the State of

Delaware.  Debtor has all requisite

power and authority to conduct its business as presently conducted and to own

its properties and is duly qualified as a foreign corporation in good standing

in all other jurisdictions in which its failure so to qualify could have a

material adverse effect on its financial condition or business.

 

SECTION 5.2         Authorization.  The execution, delivery, and performance by

Debtor of each Restructuring Document to which it is a party has been duly

authorized by all necessary corporate action, and does not and will not violate

any provision of law or of the certificate of incorporation or by-laws of

Debtor or result in a material breach of or constitute a default under any

agreement, indenture, or instrument to which Debtor is a party or by which

Debtor, or any of its properties, may be bound.

 

SECTION 5.3         Enforceability;

Consents.  This Agreement is, and

each of the other Restructuring  Documents when delivered hereunder will

be, a legal, valid and binding obligation of Debtor which is enforceable

against Debtor in accordance with its terms. 

No recording, filing, registration, notice, consent (governmental or

otherwise) or other similar action including, without limitation, any action

involving any federal, state or local regulatory body, is required in order to

insure the legality, validity, binding effect or enforceability of this

Agreement or the other Restructuring Documents as against all Persons, except

the filing of UCC-1 financing statements as contemplated by Article III and

except for such consents as have been duly obtained and are in full force and effect.

 

SECTION 5.4         Litigation.  Except as disclosed on Schedule 5.4

attached hereto as of the date hereof, there are no actions, suits, or

proceedings pending or, to the knowledge of Debtor, threatened, against Debtor

or any of its properties before any court or governmental department,

commission, board, bureau, agency, or instrumentality (domestic or foreign)

that, if determined adversely to such entity, would have a material adverse

effect on the financial condition or operations of Debtor or which relate to

its entering into the Restructuring Documents, or the consummation of the

transactions contemplated thereby.

 

SECTION 5.5         Condition

of Collateral.  All of the Eligible

Inventory of Debtor is in good and merchantable condition.

 

SECTION 5.6         Security Interests

in Collateral.  Upon the filing of

the UCC-1 financing statements in the jurisdictions listed on Schedule 5.6

attached hereto, no further action, including without limitation, any filing or

recording of any document or the obtaining of any consent, is necessary in

order to establish, perfect and maintain the Creditor’s first priority security

interests in the assets Debtor purported to be created by this

 

20

 

Agreement, except for the periodic filing of continuation statements

with respect to such UCC-1 financing statements.

 

SECTION 5.7         Taxes.  Debtor has filed all tax returns and reports

required to be filed before the date hereof and has paid all taxes,

assessments, and charges imposed upon it or its property, or that it is

required to withhold and pay over, to the extent that they were required to be

paid before the date hereof, subject to any statutorily permitted good faith

contests thereof.

 

SECTION 5.8         Title to

Assets.  The property and assets of

Debtor are not subject to any Liens, 

except for Permitted Liens.

 

SECTION 5.9         Absence of

Conflict with Other Agreements, Etc. 

The execution, delivery and performance by Debtor of this Agreement and

the other Restructuring  Documents to which it is, or will be, a

party do not and will not (i) require any consent or approval, governmental or

otherwise, not already obtained, (ii) violate any Applicable Law respecting

Debtor, (iii) conflict with, result in a breach of, or constitute a default

under, the charter documents or bylaws of Debtor, or under any indenture,

agreement, license or other instrument to which Debtor is a party or by which

any of them or their respective properties may be bound, or (iv) result in, or

require the creation or imposition of, any Lien upon or with respect to any

property now owned or hereafter acquired by Debtor.

 

SECTION 5.10       Compliance

with Laws Generally.  Debtor is in

material compliance with all Applicable Law.

 

SECTION 5.11       Indebtedness.  Schedule 5.11 attached hereto describes

all outstanding Indebtedness of Debtor, and any commitments of Debtor to incur

additional Indebtedness (other than Indebtedness to Creditor or NorthWestern).

 

SECTION 5.12       Fictitious

Names.  Except as indicated on Schedule

5.12 attached hereto, within the last five (5) years, Debtor has not (A)

operated under any other name, (B) acquired all or substantially all of the

assets of any other Person, or (C) merged or consolidated with any other

Person.

 

SECTION 5.13       Full

Disclosure.  No representation or

warranty by Debtor in this Agreement and no information in any statement,

certificate, Schedule or other document furnished or to be furnished to

Creditor pursuant hereto, or in connection with the transactions contemplated

hereby, contains or will contain any untrue statement of a material fact, or

omits or will omit to state a material fact necessary to make the statements

contained herein or therein not misleading.

 

21

 

ARTICLE VI

 

COVENANTS

 

In addition to all other covenants set forth in this

Agreement, the Collateral Agreements or any Restructuring Document, Debtor

shall comply with the following covenants:

 

SECTION 6.1         Financial

Information.

 

(A)        In

addition to the reports which Debtor is obligated to deliver pursuant to

Article III hereof, Debtor will furnish to Creditor:

 

(1)         as soon as available, and in any event

no later than the twentieth (20) day of each month, (a) an aging report of the

Accounts of Debtor showing the names of Purchasers (to the extent such names

are known to Debtor), the amounts owed by them respectively, and the invoice

dates for each such Account, (b) a monthly calculation of Accounts which are

not Eligible Accounts, (c) a monthly reconciliation report reconciling the last

two monthly Accounts aging reports provided to Creditor, (d) a monthly

inventory report, all of which shall be in form and detail reasonably

satisfactory to Creditor and (e) a completed Borrowing Base certificate in the

form attached hereto as Exhibit 6.1;

 

(2)         a completed Borrowing Base certificate

in the form attached hereto as Exhibit 6.1 by Tuesday of each week, provided

further that Creditor in its sole discretion shall have the right at any

time and from time to time to increase the frequency of Debtor’s delivery of

Borrowing Base certificates. 

Notwithstanding the above, Debtor shall not be deemed to be in default

of this Agreement prior to the earlier of 180 days from the date hereof or the

date of its implementation of the Oracle (or comparable) accounting system

provided (1) Debtor is exercising its commercially reasonable best efforts to

deliver duly executed Borrowing Base Certificates on a weekly basis and (2)

such Certificates are delivered at least every 30 days;

 

(3)         promptly upon the request of Creditor,

a list containing the name, address and telephone number of all current

Purchasers (subject to an agreement by Creditor to use such list only in

connection with the enforcement of its rights hereunder); and

 

(4)         promptly upon the request of Creditor,

any other information reasonably requested by Creditor.

 

(B)         All

data will be prepared according to GAAP.

 

SECTION 6.2         Insurance.  In addition to the requirements of Article

III hereof, Debtor will at all times carry insurance, in form and amount reasonably

satisfactory to Creditor, and underwritten by financially sound and reputable

insurers reasonably satisfactory to Creditor, against fire (with extended

coverage and, if required by the location of any of Debtor’s premises on a

flood plain, flood coverage), liability, business interruption, errors and

omissions, product liability and all other hazards specified by Creditor and

will furnish to Creditor a copy of all such insurance policies which shall

insure the interest of Creditor in accordance with a standard lender’s loss

payable clause as to all

 

22

 

non-liability policies.  All

insurance policies will name Creditor as an additional insured and contain

provisions (A) that with respect to Creditor, the insurance policies may be

cancelled only for nonpayment of premiums by Debtor after not less than 30 days

notice of intent to cancel provided to Creditor and (B) that the insured will

make payment to Creditor under any such policy notwithstanding any defense

which such insurer may have against any of the other insureds on such policy.

 

SECTION 6.3         Liens.  Debtor shall not create, assume, incur or

permit to exist directly or indirectly, any Lien on any of its properties or

assets, whether now owned or hereafter acquired, except for Permitted Liens.

 

SECTION 6.4           Accounting

Methods.  Without the prior written

consent of Creditor, Debtor shall not change its accounting methods except as

otherwise in accordance with GAAP.

 

SECTION 6.5         Payment of

Taxes and Claims.  Debtor shall

timely file all tax and information returns required by federal, state or local

tax authorities.  Debtor shall pay and

discharge all taxes, including, without limitation, withholding taxes,

assessments and governmental charges or levies required to be paid by it or

imposed on it or on its income or profits or upon any properties belonging to

it, prior to the date on which penalties attach thereto, and all lawful claims

for labor, materials and supplies which, if unpaid, might become a Lien or

charge upon its properties; except that no such tax, assessment, charge, levy

or claim need be paid which is being diligently contested in good faith by

appropriate proceedings and for which adequate reserves shall have been set

aside on the appropriate books, but only so long as such tax, assessment,

charge, levy or claim does not become a Lien or charge and no foreclosure,

distraint, sale or similar proceeding shall have been commenced.

 

SECTION 6.6         Preservation

of Existence.  Debtor shall (i)

preserve and maintain its existence in the state of its formation, and (ii)

qualify and remain qualified and authorized to do business in each jurisdiction

in which the character of its properties requires such qualification.

 

SECTION 6.7         Maintenance

of Property.  Debtor will maintain

all of its Inventory in good and merchantable condition.

 

SECTION 6.8         Inspection

by Creditor.  Debtor will permit

representatives of Creditor to inspect, examine and/or audit the Collateral,

any of its other property and/or its Books and Records and to make extracts

therefrom at Debtor’s expense (in the event that an Event of Default has

occurred or Creditor has a reasonable basis to believe an Event of Default has

occurred, otherwise at Creditor’s expense) and at all reasonable times, provided

however that except after the occurrence and during the continuance of an

Event of Default, Creditor shall give Debtor at least 72 hours written notice

before exercising the rights granted in the preceding clause and such audit,

examination or inspection shall be conducted, to the extent taking place on

Debtor’s premises, during normal business hours.

 

23

 

SECTION 6.9         Reports.  Debtor will furnish the following to

Creditor:

 

(A)          as soon as possible and in any event

within 5 days after Debtor becomes aware of the occurrence of any Default or

Event of Default a written statement of Debtor signed by the chief executive

officer or a senior financial officer of Debtor setting forth details of such

Default or Event of Default, stating whether or not the same is continuing and,

if so, the action proposed to be taken with respect thereto;

 

(B)           as soon as possible and in any event

within 5 days after Debtor receives knowledge thereof, notice in writing of all

actions, suits, or proceedings before any court or governmental department,

commission, board, bureau, agency, or instrumentality, domestic or foreign,

directly affecting Debtor;

 

(C)           as soon as possible and in any event

within 5 days after Debtor becomes aware of the occurrence of a significant

material adverse change in the business, properties, operations, or condition

(financial or otherwise) of Debtor, a written statement of Debtor signed by the

chief executive or a senior financial officer of Debtor setting forth details

of such significant material adverse change and the action proposed to be taken

with respect thereto;

 

(D)          to the extent not in the possession of

Creditor, if requested by Creditor, furnish to Creditor copies, with such

duplicate copies as Creditor may request, of any invoice applicable to Debtor’s

Accounts; and

 

(E)           such other information respecting the

business properties, operations, and condition (financial or otherwise) of

Debtor as Creditor may at any time and from time to time reasonably request.

 

SECTION 6.10       Liquidation,

Merger or Sale of Assets.  Debtor

shall not (i) liquidate or dissolve itself (or suffer any liquidation or

dissolution) or otherwise wind up, (ii) enter into any merger or consolidation,

other than a merger or consolidation among the Debtor and one or more of its

Subsidiaries, provided that Debtor is the surviving corporation, (iii)

sell or lease or otherwise transfer all or any substantial part of its assets

to any Person, (iv) except for the sale of inventory in the ordinary course of

business, dispose of any Collateral, or (v) enter into any agreement to take

any of the actions described in the foregoing clauses (i), (ii),(iii) and (iv).

 

SECTION 6.11       Indemnification.  Debtor hereby indemnifies and agrees to protect,

defend, and hold harmless Creditor and its directors, officers, employees,

agents, attorneys and shareholders from and against any and all losses,

damages, expenses or liabilities of any kind or nature and from any suits,

claims, or demands, including all reasonable counsel fees incurred in

investigating, evaluating, or defending such claims, suffered by any of them

and caused by, relating to, arising out of, resulting from, or in any way

connected with the Credit Documents, including any Exhibit thereto, and any

document or certificate delivered in connection therewith, including, but not

limited to, claims based upon any act or omission by Creditor in connection

with the Credit Documents, including any Exhibit thereto, and any document or

certificate delivered in

 

24

 

connection therewith, to the extent not caused by the gross negligence,

bad faith or willful misconduct of Creditor or its directors, officers,

employees, agents or attorneys.  If

Debtor shall have knowledge of any claim or liability hereby indemnified

against, it shall promptly and, in any event, within ten days after Debtor

acquires knowledge thereof, give written notice to Creditor.  THIS COVENANT SHALL SURVIVE THE PAYMENT OF

THE LIABILITIES.

 

SECTION 6.12       Restrictive

Agreements.  Debtor will not enter

into any agreement which restricts Debtor’s rights to make payments hereunder

or under the Note.

 

SECTION 6.13       Further

Assurances.  Debtor, at its expense, will promptly

execute and deliver or cause to be executed and delivered to Creditor all such

other and further documents, agreements and instruments, and shall provide or

cause to be provided to Creditor such additional information, and shall do or

cause to be done such further acts, as may be necessary or proper in the

reasonable opinion of the Creditor to carry out more effectively the provisions

and purposes of the Credit Documents.

 

ARTICLE VII

 

DEFAULT

 

SECTION 7.1         Events of

Default.  Each of the following

shall be an event of default (“Event of Default”):

 

(A)          Debtor shall fail to make any payment

of interest or any other amount due under the Credit Documents, the Collateral

Agreements or any Restructuring Document, when the same shall become due and

payable, whether at stated maturity or at a date fixed for any installment or

prepayment thereof or otherwise, and such failure is not cured within five (5)

days of the date such payment was due;

 

(B)           Any representation or warranty made

in any this Agreement or any other Restructuring Document shall prove to have

been incorrect or misleading in any material respect when made or deemed to

have been made;

 

(C)           If Debtor receives a commitment for a

Permitted Refinancing under Section 2.4 and refuses to accept such commitment

(provided that any dispute as to whether a proposed financing is a Permitted

Refinancing shall be resolved in accordance with the mediation and arbitration

provisions set forth in Article 8);

 

(D)          Debtor shall fail to perform or observe

any agreement or covenant contained in Section 6.3;

 

(E)           Debtor shall materially fail to perform

or observe any other material agreement or covenant contained in this

Agreement, any other Restructuring Document or any Collateral Agreement and, if

such failure is capable of being remedied, such

 

25

 

failure shall not be

cured within a period of thirty (30) days from written notice of the occurrence

thereof;

 

(F)           Debtor shall default

(as payor, guarantor or other obligor) in the payment of one or more

obligations which constitute Indebtedness (other than the obligations under the

Restructuring Documents) and the underlying obligation with respect to which

the default has occurred aggregates $10,000,000  or more or could result in a

required payment by Debtor of $10,000,000 or more; or any event shall occur or

condition shall exist in respect of one or more obligations which constitute

Indebtedness in said amount, which would permit, or which after the giving of

notice or passage of time would permit, the acceleration of the payment or

maturity of any such obligations;

 

(G)           This Agreement shall at any time

after its execution and delivery for any reason cease to create a valid and

perfected first priority security interest in and to the Collateral other than

a Permitted Subordinated Lien or Permitted Liens;

 

(H)          Judgments, assessments or orders for

the payment of money which aggregate at any time in excess of $1,000,000 shall

be entered against Debtor by a court or other tribunal of competent jurisdiction,

which judgments, assessments or orders are not discharged, vacated, bonded or

stayed pending appeal within a period of thirty (30) days from the date of

entry;

 

(I)            Debtor shall suspend or discontinue

its business, shall make an assignment for the benefit of creditors or a

composition with creditors, shall admit its inability to pay its debts as they

mature, shall file a petition in bankruptcy, shall become insolvent under state

law (howsoever such insolvency may be evidenced), shall be adjudicated insolvent

or bankrupt, shall petition or apply to any tribunal for the appointment of any

receiver, custodian, liquidator or trustee of or for it or any substantial part

of its property or assets, shall commence any proceeding relating to it under

any bankruptcy, reorganization, arrangement, readjustment of debt,

receivership, dissolution or liquidation law or statute of any jurisdiction,

whether now or hereafter in effect; or if there shall be commenced against

Debtor, any such proceeding and the same shall not be dismissed within sixty

(60) days after an order, judgment or decree approving the petition in any such

proceeding shall be entered against Debtor; or if Debtor shall by any act or

failure to act indicate its consent to, approval of or acquiescence in, any

such proceeding or any appointment of any receiver, custodian, liquidator or

trustee of or for it or for any substantial part of its property or assets; or

if any court of competent jurisdiction shall assume jurisdiction with respect

to any such proceeding and the same shall not be dismissed within sixty (60)

days; or if a receiver or a trustee or other officer or representative of a

court, governmental office or agency, shall, under color of legal authority,

take and hold possession of any substantial part of the property or assets of

Debtor, and shall not have relinquished possession within sixty (60) days; or

if Debtor shall have concealed, removed, or permitted to be concealed or

removed, any part of its property, with intent to hinder, delay or defraud its

creditors, or any of them, or shall have made or suffered a transfer of any of

its property which may be fraudulent under any bankruptcy, fraudulent

conveyance or similar law; or if Debtor, shall have made any transfer of its

property to or for the benefit of a creditor which

 

26

 

constitutes a

preferential transfer under any bankruptcy or similar law; or if Debtor, shall

have suffered or permitted, while insolvent, any creditor to obtain a Lien upon

any of its property through legal proceedings or distraint;

 

(J)            Any Restructuring Document or any

Collateral Agreement shall cease to be a legal, valid and binding agreement,

enforceable against each signatory thereto, in accordance with its terms or shall

in any way be declared ineffective or inoperative or shall in any way be

challenged or contested by any party.

 

SECTION 7.2         Remedies.  If any Event of Default shall occur and be

continuing then automatically:

 

(A)          the obligations of Creditor to finance

Debtor’s purchase of Avaya Products and Avaya Services under the Credit

Documents shall cease;

 

(B)           all Overdue Invoices shall be due and

payable immediately without presentment, demand, protest, or further action of

any kind, all of which are hereby waived;

 

(C)           Creditor may exercise all of the

rights and remedies of a secured party under the Uniform Commercial Code or any

other applicable law with respect to the Collateral;

 

(D)          with respect to any Inventory of Debtor

serving as Collateral hereunder, Creditor may require Debtor to assemble its

Inventory and make it available to Creditor at a place designated by Creditor

which is reasonably convenient to it and to Debtor;

 

(E)           Creditor may exercise its rights

under any Collateral Agreement or Restructuring Document (including this

Agreement);

 

(F)           Creditor shall have and is hereby

granted a right of set-off in all property of Debtor now or at any time

hereafter in Creditor’s possession in any capacity whatsoever, including,

without limitation, any balance or share of any deposit, trust or agency

account; and

 

(G)           Creditor may exercise any other

rights and remedies available to Creditor whether available at law, in equity,

or otherwise.

 

SECTION 7.3         Contingent

Assignment; Obligation to Purchase Participation.

 

(A)          As additional security for the

Liabilities, Debtor has executed and delivered to the Creditor the Contingent

Assignment attached hereto as Exhibit 7.3 (the “Contingent Assignment”)

providing for Debtor’s assignment to the Creditor or Creditor’s assignee of the

Accounts and Inventory of Debtor to be described on Schedule A to the

Contingent Assignment.  Upon the

occurrence of a Default, in addition to all other rights and remedies

hereunder, Creditor shall have the option to require Debtor to immediately

assign to Creditor Accounts and Inventory of Debtor having an aggregate

 

27

 

value (the value of any

Account shall be such Account’s face value and the value of any Inventory shall

be the Debtor’s cost for such Inventory) equal to the amount by which the

Overdue Invoices in the aggregate exceed $100,000,000, on the following

terms:  (i) Creditor shall select (in

its sole discretion) which Accounts and Inventory of Debtor are assigned to

Creditor (the “Assigned Property”) and a description of the Assigned Property

shall be set forth on Schedule A to the Contingent Assignment and (ii) the

amount of Overdue Invoices shall be reduced by the aggregate value of the

Assigned Property.  Upon NorthWestern’s

receipt of notice that such assignment has taken place, NorthWestern shall be

obligated to purchase the Assigned Property from Creditor for a cash purchase

price equal to 100% of the aggregate value of the Assigned Property (and

Creditor shall release its lien on the Assigned Property upon payment by

NorthWestern); provided, however, that NorthWestern shall not be

required to purchase in the aggregate more than $25,000,000 in Accounts and

Inventory with respect to this Agreement.

 

(B)           If either NorthWestern’s obligation

to purchase or Debtor’s obligation to assign the Assigned Property is voided,

limited or restricted by law or if for any reason whatsoever (other than delays

caused by Creditor) or such assignment and purchase have not been consummated

within 30 days after Creditor gives Debtor notice of Debtor’s obligation to

assign the Assigned Property, NorthWestern shall be required to purchase a

participation in the credit extended under this Agreement and the Note in an

amount equal to the aggregate value of the Assigned Property that NorthWestern

would have purchased pursuant to Section 7.3(A) (the “Purchase Price”) if its

obligation was not voided, limited or restricted.  Such participation shall be purchased on the following

terms:  (i) NorthWestern shall not be

entitled to exercise any of the rights or powers of Creditor under the Credit

Documents, including without limitation the right to declare a Default or Event

of Default or the right to foreclose on any of the Collateral, (ii) Creditor as

agent or otherwise shall not be required to remit any interest, cost, expense

or other amount to NorthWestern for any reason and (iii) the obligations of

Creditor as agent or otherwise arising from NorthWestern’s purchase of a

participation hereunder shall be limited to remitting to NorthWestern any

payments received on behalf of NorthWestern only after the Liabilities have

been satisfied in full and only to the extent of the Purchase Price.

 

ARTICLE VIII

 

ADDITIONAL PROVISIONS

 

SECTION 8.1         No Waiver,

Cumulative Remedies.  No failure or

delay on the part of Creditor in exercising any right, power, or remedy

hereunder shall operate as a waiver thereof; nor shall any single or partial

exercise of any such right, power, or remedy preclude any other or further

exercise thereof or the exercise of any other right, power, or remedy

hereunder.  No waiver of any provision

hereof shall be effec­tive unless the same shall be in writing and signed by

Creditor. The remedies herein provided are cumulative and not exclusive of any

remedies provided by law.

 

28

 

SECTION 8.2         Notices.  All notices, requests, demands and other

communications under this Agreement shall be in writing and shall be given to

each party hereto by overnight delivery service at its address specified below

or at such other address as shall be designated by such party in a notice to

each other party complying with the terms of this Section 8.2:

 

If to Debtor:

 

29

 

If to NorthWestern:

 

 

	

  If to Creditor:

  	

   

  	

  Avaya, Inc.

  
	

   

  	

   

  	

  211 Mount Airy Road

  
	

   

  	

   

  	

  Basking Ridge, NJ 07920

  
	

   

  	

   

  	

  Attn: 

  Controller

  
	

   

  	

   

  	

   

  
	

   

  	

   

  	

  Copy:  Justin

  Choi, VP, Corporate Law Department

  

 

 

All notices, requests, demands and other communications provided for

hereunder shall be effective when delivered or received at the aforesaid

addresses.

 

SECTION 8.3         Costs and

Expenses.  Debtor agrees to pay on

demand (A) all reasonable costs and expenses of Creditor in connection with the

preparation, execution, delivery and administration of the Credit Documents and

in connection with any request for an amendment, modification, or waiver of any

of the provisions of any thereof (including the reasonable fees and

out-of-pocket expenses of counsel with respect thereto) in an amount not exceeding

$25,000, plus outside legal counsel’s out-of-pocket expenses; (B) all filing,

recording, and similar fees and charges; (C) all costs and expenses, if any, of

Creditor in connection with the enforcement of any Credit Document (including

the reasonable fees and out-of-pocket expenses of legal counsel with respect

thereto) after the occurrence of a Default or an Event of Default; and (D) all

costs and expenses, if any, of Creditor in connection with the enforcement of

Creditor’s right to take possession of the Collateral after the occurrence of a

Default or an Event of Default and the proceeds thereof and to hold, collect,

prepare for sale, render in compliance with federal, state or local

environmental statutes, ordinances, regulations, orders, directives, and

permits, sell and dispose of the Collateral (including the reasonable fees and

out-of-pocket expenses of legal counsel with respect thereto).

 

SECTION 8.4         Governing

Law.  This Agreement shall be

governed in all respects by the law of the State of New York, the jurisdiction

in which this Agreement has been executed and delivered, and for all purposes

shall be construed in accordance with such law.

 

SECTION 8.5         Survival of

Agreements and Representations.  All

agreements, representations and warranties made herein shall survive the

delivery of the Restructuring Documents.

 

SECTION 8.6         Mediation

and Arbitration.  Upon demand of any

party hereto whether made before or after the institution of any judicial

proceeding, any claim or controversy arising out of or relating to the Credit

Documents between parties hereto shall be resolved in accordance with the

mediation and arbitration provisions set forth in the Dealer Agreement.

 

30

 

SECTION 8.7         Preservation

and Limitation of Remedies. 

Notwithstanding the mediation and arbitration provisions contained in

the Dealer Agreement and incorporated herein, the parties agree to preserve,

without dimunition, certain remedies that any party may exercise before or

after a mediation or arbitration proceeding is brought.  The parties shall have the right to proceed

in any court of proper jurisdiction or by self-help to exercise or prosecute

the following remedies, as applicable: (A) all rights of foreclosure against

any real or personal property or other security by exercising a power of sale

or under applicable law by judicial foreclosure including a proceeding to

confirm the sale; (B) all rights of self-help including peaceful occupation of

real property and collection of rents, set-off and peaceful possession of

personal property; and (C) obtaining provisional or ancillary remedies

appropriate to enforce Creditor’s nonmonetary remedies under the Credit

Documents, including injunctive relief, sequestration, garnishment, attachment,

appointment of a receiver and filing of an involuntary bankruptcy proceeding.

 

SECTION 8.8         Jurisdiction.  Any and all judicial proceedings brought by

Creditor against Debtor with respect to the Credit Documents may be brought in:

(A) any court of competent jurisdiction in the State of New York; and (B) any

Federal district court having subject matter jurisdiction and being located in

the State of New York.  Debtor hereby

accepts, for itself and its properties, the non-exclusive jurisdiction of the aforesaid

courts and agrees to be bound by any judgments rendered by such courts in

connection with this Agreement.  No

Debtor will move to transfer any such proceeding to any different court.  Any such process may be mailed by registered

or certified mail to Debtor at the address referred to in Section 8.2

hereof.  Debtor agrees that service by

mail at the address referred to in Section 8.2 hereof will constitute

sufficient notice.  Service will be

considered complete upon delivery.

 

SECTION 8.9         Binding Effect;

Assignment.  The Credit Documents

shall be binding upon and inure to the benefit of Debtor, Creditor, and their

respective successors and assigns, except that Debtor shall not have the right

to assign or delegate its respective rights or obligations under any of such

documents.

 

SECTION 8.10       Headings.  Article, Section and subsection headings

used in this Agreement are for convenience only and shall not affect the

construction of this Agreement.

 

SECTION 8.11       Time of the

Essence.  Whether or not elsewhere

herein expressly stated, all dates and times for performance herein set forth

shall be of the essence of this Agreement.

 

SECTION 8.12       Amendments.  Any of the provisions of this Agreement may

be waived, modified or amended only by written agreement or agreements entered

into by Debtor and Creditor, except that no such waiver, modification or

amendment shall extend to or affect any obligation not expressly waived,

modified or amended, or impair any right of Creditor related to such

obligation.

 

31

 

SECTION 8.13       Usury.  Nothing herein contained or in the Note nor

any transaction related thereto shall be construed or shall so operate either

presently or prospectively to require Debtor (A) to pay interest at a rate

greater than is now lawful in such case to contract for, but shall require

payment of interest only to the extent of such lawful rate, or (B) to make any

payment or do any act contrary to law, but if any provision herein or therein

contained shall otherwise so operate to invalidate this Agreement, the Note, or

any other Restructuring Document, in whole or in part, then such provision

only shall be held for naught as though not herein or therein contained and the

remainder of this Agreement, the Note, and the other Restructuring Document

shall remain operative and in full force and effect.  Any interest paid in excess of the lawful rate shall be refunded

to Debtor.  Such refund shall be made by

application of the excessive amount of interest paid against any sums

outstanding under this Agreement and shall be applied in such order as Creditor

may determine.  If the excessive amount

of interest paid exceeds the sums outstanding hereunder, the portion exceeding

the said sums outstanding shall be refunded in cash by Creditor.  Any such crediting or refund shall not cure

or waive any default by Debtor hereunder or under the Note or any other

Restructuring Document.  Debtor agree, however,

that in determining whether or not any interest payable exceeds the highest

rate permitted by law, any non-principal payment (except payments specifically

stated in this Agreement to be “interest”), including without limitation

prepayment premiums, shall be deemed, to the extent permitted by law, to be an

expense, fee, premium or penalty rather than interest.

 

SECTION 8.14       Entire

Agreement.  This Agreement, the

Exhibits and Schedules attached hereto and the Restructuring Documents

constitute the entire understanding among the parties with respect to the

subject matter hereof, and supersedes any and all contemporaneous and prior

agreements between the parties hereto with respect to the subject matter

hereof.

 

SECTION 8.15       Participations.  Debtor acknowledges and agrees that Creditor

may sell a participation interest or participating interests in the credit

extended hereunder only to NorthWestern pursuant to Section 7.3(B).  After such sale and provided Creditor shall

notify Debtor thereof, Debtor shall, at the option of Creditor, have a direct

obligation to the purchaser under such sale to the extent of the participation

interest purchased.  Debtor acknowledges

that Creditor may share with any participant or prospective participant, any

and all information obtained by Creditor in connection with the credit extended

hereunder, including without limitation information delivered to Creditor by

Debtor, and Debtor consents thereto. 

Debtor agrees to cooperate with Creditor in connection with any

reasonable request made by Creditor with respect to any such sale or

prospective sale

 

SECTION 8.16       Termination

of this Agreement; Release of Lien. 

This Agreement and the Note shall terminate and the Creditor shall

release its lien on the Collateral (i) upon payment in full of all Net 30 Day

Outstanding Invoices, all accrued but unpaid interest thereon and any other

amount owing in connection herewith, or (ii) with respect to the occurrence of

the Termination Date on March 31, 2002 while Debtor is not in Default

hereunder, when the Net 30 Day Outstanding Invoices as of March 31, 2002 (and

any

 

32

 

accrued and unpaid interest) shall be paid in full.  After the occurrence of the Termination Date

under the foregoing clause (ii), the terms for the purchase and sale of the

Avaya Products and Avaya Services invoiced after March 31, 2002 shall be

governed by the Collateral Agreements without the amendments to the Collateral

Agreements contained herein or in the Note.

 

SECTION 8.17       No Joint

Venture.  The parties expressly

agree that the relationship of Creditor to Debtor is that of Creditor only, and

Creditor is not a partner or co-venturer of Debtor.

 

33

 

EXECUTION

COPY

 

IN WITNESS

WHEREOF, the parties hereto, intending to be legally bound, have caused this Agreement

to be executed by their respective officers thereunto duly authorized, as of

the date first above written.

 

 

	

   

  	

   

  	

  EXPANETS, INC.

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  By: 

  	

  /s/ Chris Younger

  	

   

  
	

   

  	

   

  	

   

  	

  Name: Chris Younger

  	

   

  
	

   

  	

   

  	

   

  	

  Title: Vice President

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  AVAYA INC.

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

  By:

  	

  /s/ Garry McGuire

  	

   

  
	

   

  	

   

  	

   

  	

  Name: Garry McGuire

  	

   

  
	

   

  	

   

  	

   

  	

  Title: Chief Financial Officer

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  Solely to consent to perform 

  	

   

  	

   

  	

   

  
	

  the obligations set forth in

  	

   

  	

   

  	

   

  
	

  Section 7.3 of this Agreement.

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  NORTHWESTERN CORPORATION

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

   

  	

   

  	

   

  	

   

  
	

  By:

  	

  /s/ Kipp Orme

  	

   

  	

   

  	

   

  	

   

  
	

  Name:

  	

  Kipp D. Orme

  	

   

  	

   

  	

   

  	

   

  
	

  Title:

  	

  Vice President — Finance and Chief Financial Officer

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00037-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00037-of-00352.parquet"}]]