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SECOND AMENDED AND RESTATED
CREDIT AGREEMENT
dated as of August 1, 2000
by and among
CHOICE ONE COMMUNICATIONS INC.,
as Guarantor,
the Subsidiaries designated herein, as Borrowers,
the Lenders referred to herein,
FIRST UNION INVESTORS, INC.,
as Administrative Agent,
GENERAL ELECTRIC CAPITAL
CORPORATION, as Syndication Agent
and
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ SENIOR FUNDING, INC.,
as Documentation Agent,
FIRST UNION SECURITIES, INC.
acted as Sole Lead Arranger
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TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS.................................................................................................... 1
SECTION 1.1 Definitions....................................................................................... 1
SECTION 1.2 General........................................................................................... 23
SECTION 1.3 Other Definitions and Provisions.................................................................. 23
ARTICLE II REVOLVING CREDIT FACILITY...................................................................................... 23
SECTION 2.1 Revolving Credit Loans............................................................................ 24
SECTION 2.2 Swingline Loans................................................................................... 24
SECTION 2.3 Procedure for Advances of Revolving Credit and Swingline Loans.................................... 25
SECTION 2.4 Repayment of Revolving Credit Loans............................................................... 26
SECTION 2.5 Notes............................................................................................. 27
SECTION 2.6 Permanent Reduction of the Revolving Credit Commitment............................................ 28
SECTION 2.7 Termination of Revolving Credit Facility.......................................................... 29
ARTICLE III LETTER OF CREDIT FACILITY...................................................................................... 29
SECTION 3.1 L/C Commitment.................................................................................... 29
SECTION 3.2 Procedure for Issuance of Letters of Credit....................................................... 29
SECTION 3.3 Commissions and Other Charges..................................................................... 30
SECTION 3.4 L/C Participations................................................................................ 30
SECTION 3.5 Reimbursement Obligation of the Borrower.......................................................... 31
SECTION 3.6 Obligations Absolute.............................................................................. 32
SECTION 3.7 Effect of Application............................................................................. 32
ARTICLE IV TERM LOAN FACILITY............................................................................................. 32
SECTION 4.1 Term Loans........................................................................................ 32
SECTION 4.2 Procedure for Advances of Term Loans.............................................................. 33
SECTION 4.3 Scheduled Repayment of Term Loans................................................................. 34
SECTION 4.4 Excess Term Loans................................................................................. 35
SECTION 4.5 Commitment Reduction; Prepayments of Term Loans................................................... 35
SECTION 4.6 Term Notes........................................................................................ 38
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SECTION 4.7 Increase in Term A Loan Commitment................................................................ 38
ARTICLE V GENERAL LOAN PROVISIONS.................................................................................... 39
SECTION 5.1 Interest.......................................................................................... 39
SECTION 5.2 Notice and Manner of Conversion or Continuation of Loans.......................................... 42
SECTION 5.3 Fees.............................................................................................. 42
SECTION 5.4 Manner of Payment................................................................................. 43
SECTION 5.5 Crediting of Payments and Proceeds................................................................ 44
SECTION 5.6 Adjustments....................................................................................... 45
SECTION 5.7 Nature of Obligations of Lenders Regarding Extensions of Credit; Assumption by the Administrative 45
Agent.............................................................................................
SECTION 5.8 Changed Circumstances............................................................................. 46
SECTION 5.9 Indemnity......................................................................................... 48
SECTION 5.10 Capital Requirements.............................................................................. 48
SECTION 5.11 Taxes............................................................................................. 48
SECTION 5.12 Security.......................................................................................... 50
ARTICLE VI CLOSING; CONDITIONS OF CLOSING AND BORROWING............................................................... 50
SECTION 6.1 Closing........................................................................................... 50
SECTION 6.2 Conditions to Closing............................................................................. 50
SECTION 6.3 Conditions to All Extensions of Credit............................................................ 55
ARTICLE VII REPRESENTATIONS AND WARRANTIES............................................................................. 56
SECTION 7.1 Representations and Warranties.................................................................... 56
SECTION 7.2 Survival of Representations and Warranties, Etc................................................... 64
ARTICLE VIII FINANCIAL INFORMATION AND NOTICES.......................................................................... 64
SECTION 8.1 Financial Statements and Projections.............................................................. 64
SECTION 8.2 Officer's Compliance Certificate.................................................................. 66
SECTION 8.3 Accountants' Certificate.......................................................................... 66
SECTION 8.4 Other Reports..................................................................................... 66
SECTION 8.5 Notice of Litigation and Other Matters............................................................ 67
SECTION 8.6 Accuracy of Information........................................................................... 68
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ARTICLE IX AFFIRMATIVE COVENANTS....................................................................................... 68
SECTION 9.1 Preservation of Corporate Existence and Related Matters........................................... 68
SECTION 9.2 Maintenance of Property........................................................................... 69
SECTION 9.3 Insurance......................................................................................... 69
SECTION 9.4 Accounting Methods and Financial Records.......................................................... 69
SECTION 9.5 Payment and Performance of Obligations............................................................ 69
SECTION 9.6 Compliance With Laws and Approvals................................................................ 69
SECTION 9.7 Environmental Laws................................................................................ 69
SECTION 9.8 Compliance with ERISA............................................................................. 70
SECTION 9.9 Compliance With Agreements........................................................................ 70
SECTION 9.10 Conduct of Business............................................................................... 70
SECTION 9.11 Visits and Inspections............................................................................ 70
SECTION 9.12 Additional Subsidiaries and Collateral............................................................ 71
SECTION 9.13 Year 2000 Compatibility........................................................................... 72
SECTION 9.14 Transfer of Capital Contributions................................................................. 72
SECTION 9.15 Hedging Agreements................................................................................ 72
SECTION 9.16 Further Assurances................................................................................ 72
SECTION 9.17 Use of Proceeds................................................................................... 72
SECTION 9.18 Company Covenants Relating to Preferred Equity.................................................... 73
SECTION 9.19 Maintenance of Bridge Loans....................................................................... 73
SECTION 9.20 Inactive Subsidiaries............................................................................. 73
SECTION 9.21 Indiana Subsidiary PUC Authorization.............................................................. 73
SECTION 9.22 Limited Subsidiary PUC Authorization.............................................................. 73
SECTION 9.23 Certain Post-Closing Matters...................................................................... 73
ARTICLE X FINANCIAL COVENANTS......................................................................................... 74
SECTION 10.1 Stage 1 Covenants................................................................................. 74
SECTION 10.2 Stage 2 Covenants................................................................................. 77
SECTION 10.3 Guarantor Covenant................................................................................ 79
ARTICLE XI NEGATIVE COVENANTS.......................................................................................... 80
SECTION 11.1 Limitations on Debt............................................................................... 80
SECTION 11.2 Limitations on Guaranty Obligations............................................................... 81
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SECTION 11.3 Limitations on Liens.............................................................................. 82
SECTION 11.4 Limitations on Loans, Advances, Investments and Acquisitions...................................... 83
SECTION 11.5 Limitations on Mergers and Liquidation............................................................ 84
SECTION 11.6 Limitations on Sale of Assets..................................................................... 84
SECTION 11.7 Limitations on Dividends and Distributions........................................................ 85
SECTION 11.8 Limitations on Exchange and Issuance of Capital Stock............................................. 86
SECTION 11.9 Transactions with Affiliates...................................................................... 86
SECTION 11.10 Certain Accounting Changes........................................................................ 86
SECTION 11.11 Amendments; Payments and Prepayments of Subordinated Debt......................................... 87
SECTION 11.12 Charter Documents................................................................................. 87
SECTION 11.13 Restrictive Agreements............................................................................ 87
SECTION 11.14 US Xchange Lucent Agreement....................................................................... 87
ARTICLE XII DEFAULT AND REMEDIES......................................................................................... 87
SECTION 12.1 Events of Default................................................................................. 87
SECTION 12.2 Remedies.......................................................................................... 91
SECTION 12.3 Rights and Remedies Cumulative; Non-Waiver; etc................................................... 91
ARTICLE XIII THE ADMINISTRATIVE AGENT..................................................................................... 92
SECTION 13.1 Appointment....................................................................................... 92
SECTION 13.2 Delegation of Duties.............................................................................. 92
SECTION 13.3 Exculpatory Provisions............................................................................ 92
SECTION 13.4 Reliance by the Administrative Agent.............................................................. 93
SECTION 13.5 Notice of Default................................................................................. 93
SECTION 13.6 Non-Reliance on the Administrative Agent and Other Lenders........................................ 94
SECTION 13.7 Indemnification................................................................................... 94
SECTION 13.8 The Administrative Agent in Its Individual Capacity............................................... 94
SECTION 13.9 Resignation of the Administrative Agent; Successor Administrative Agent........................... 95
SECTION 13.10 Agents............................................................................................ 95
ARTICLE XIV UNCONDITIONAL GUARANTY....................................................................................... 95
SECTION 14.1 Guaranty of Obligations........................................................................... 95
SECTION 14.2 Nature of Guaranty................................................................................ 96
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SECTION 14.3 Demand by the Administrative Agent................................................................ 96
SECTION 14.4 Waivers........................................................................................... 97
SECTION 14.5 Modification of Loan Documents etc................................................................ 97
SECTION 14.6 Reinstatement..................................................................................... 98
SECTION 14.7 No Subrogation.................................................................................... 98
ARTICLE XV MISCELLANEOUS............................................................................................... 98
SECTION 15.1 Notices........................................................................................... 98
SECTION 15.2 Expenses; Indemnity............................................................................... 99
SECTION 15.3 Set-off........................................................................................... 100
SECTION 15.4 Governing Law..................................................................................... 100
SECTION 15.5 Consent to Jurisdiction........................................................................... 100
SECTION 15.6 Binding Arbitration; Waiver of Jury Trial......................................................... 101
SECTION 15.7 Reversal of Payments.............................................................................. 102
SECTION 15.8 Injunctive Relief; Punitive Damages............................................................... 102
SECTION 15.9 Accounting Matters................................................................................ 103
SECTION 15.10 Successors and Assigns; Participations............................................................ 103
SECTION 15.11 Amendments, Waivers and Consents.................................................................. 106
SECTION 15.12 Performance of Duties............................................................................. 107
SECTION 15.13 All Powers Coupled with Interest.................................................................. 107
SECTION 15.14 Survival of Indemnities........................................................................... 108
SECTION 15.15 Titles and Captions............................................................................... 108
SECTION 15.16 Severability of Provisions........................................................................ 108
SECTION 15.17 Counterparts...................................................................................... 108
SECTION 15.18 Term of Agreement................................................................................. 108
SECTION 15.19 Inconsistencies with Other Documents; Independent Effect of Covenants............................. 108
SECTION 15.20 Company as Agent for Borrowers; Obligations Joint and Several; Agreements for Contribution........ 109
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EXHIBITS
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Exhibit A-1 - Form of Revolving Credit Note
Exhibit A-2 - Form of Swingline Note
Exhibit A-3 - Form of Term A Note
Exhibit A-4 - Form of Term B Note
Exhibit B - Form of Notice of Borrowing
Exhibit C - Form of Notice of Account Designation
Exhibit D - Form of Notice of Prepayment
Exhibit E - Form of Notice of Conversion/Continuation
Exhibit F - Form of Officer's Compliance Certificate
Exhibit G - Form of Assignment and Acceptance
Exhibit H - Form of Security Agreement
Exhibit I - Form of Pledge Agreement
Exhibit J - Form of Joinder Agreement
Exhibit K-1 - Form of New Lender Supplement
Exhibit K-2 - Form of Term A Loan Commitment Increase Supplement
SCHEDULES
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Schedule 1.1(a) - Lenders Addresses and Commitments
Schedule 1.1(b) - Interconnection Leases
Schedule 7.1(a) - Jurisdictions of Organization and Qualification
Schedule 7.1(b) - Subsidiaries and Capitalization
Schedule 7.1(i) - ERISA Plans
Schedule 7.1(l) - Material Contracts
Schedule 7.1(m) - Labor and Collective Bargaining Agreements
Schedule 7.1(r) - List of Real Property
Schedule 7.1(t) - Debt and Guaranty Obligations
Schedule 7.1(u) - Litigation
Schedule 7.1(w) - Communications Licenses
Schedule 9.3 - Insurance Coverage
Schedule 11.3 - Existing Liens
Schedule 11.4 Existing Loans, Advances and Investments
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Exhibit 10.8
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This SECOND AMENDED AND RESTATED CREDIT AGREEMENT, dated as of the 1st day
of August, 2000, by and among CHOICE ONE COMMUNICATIONS INC., a Delaware
corporation, as Guarantor, its Subsidiaries listed on the signature pages hereto
and any additional Subsidiaries joined hereto, as Borrowers, the Lenders who are
or may become a party to this Agreement, FIRST UNION INVESTORS, INC., as
Administrative Agent, GENERAL ELECTRIC CAPITAL CORPORATION, as Syndication Agent
and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ SENIOR FUNDING, INC., as Documentation Agent.
STATEMENT OF PURPOSE
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Pursuant to the Credit Agreement dated as of October 14, 1998 (the "Initial
Credit Agreement"), by and among the Company, as guarantor, the Subsidiaries of
the Company party thereto as borrowers (the "Initial Borrowers"), the lenders
party thereto, and the agents listed therein, such lenders extended certain
credit facilities to the Initial Borrowers pursuant to the terms thereof.
Pursuant to the Amended and Restated Credit Agreement dated as of November
3, 1999 (the "Existing Credit Agreement"), the parties thereto agreed to modify
the Initial Credit Agreement in certain respects as reflected in the Existing
Credit Agreement.
The Guarantor and the Borrowers have requested, and, subject to the terms
and conditions hereof, the Agents and the Lenders have agreed, to modify the
Existing Credit Agreement to provide for, among other things, (i) the increase
of the Aggregate Commitment from $150,000,000 to $350,000,000, (ii) the addition
of a term B loan facility and (iii) the addition of an incremental facility, all
as set forth herein.
For ease of reference, the parties hereto have agreed that the Existing
Credit Agreement and certain other Loan Documents should be amended and restated
in order to reflect such modifications.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged by the parties hereto, such parties
hereby agree as follows:
ARTICLE I
DEFINITIONS
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SECTION 1.1 Definitions. The following terms when used in this
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Agreement shall have the meanings assigned to them below:
"Acquisition Agreement" means the Agreement and Plan of Merger, dated as of
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May 14, 2000, by and among the Company, Barter Acquisition Corporation, a
wholly-owned Subsidiary of the Company, US Xchange, Inc. and the stockholders of
US Xchange, Inc.
"Acquisition Documents" means the Acquisition Agreement and all of the
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documents executed and delivered by the Company, US Xchange, its shareholders
and subsidiaries at the closing of the US Xchange Acquisition pursuant to the
Acquisition Agreement.
"Administrative Agent" means First Union in its capacity as Administrative
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Agent hereunder, and any successor thereto appointed pursuant to Section 13.9.
"Administrative Agent's Office" means the office of the Administrative
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Agent specified in or determined in accordance with the provisions of Section
15.1(c).
"Affiliate" means, with respect to any Person, any other Person (other
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than, with respect to the Company, any of its Subsidiaries) which directly or
indirectly through one or more intermediaries, controls, or is controlled by, or
is under common control with, such first Person or any of its Subsidiaries. For
the purposes of the preceding sentence, the term "control" means (a) the power
to vote five percent (5%) or more of the securities or other equity interests of
a Person having ordinary voting power, or (b) the possession, directly or
indirectly, of any other power to direct or cause the direction of the
management and policies of a Person, whether through ownership of voting
securities, by contract or otherwise.
"Agents" means the collective reference to the Administrative Agent,
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Documentation Agent and Syndication Agent.
"Aggregate Commitment" means the aggregate amount of the Lenders'
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Commitments hereunder, as such amount may be reduced or modified at any time or
from time to time pursuant to the terms hereof. On the Closing Date, the
Aggregate Commitment shall be Three Hundred Fifty Million Dollars
($350,000,000).
"Agreement" means this Second Amended and Restated Credit Agreement, as
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further amended, restated, supplemented or otherwise modified from time to time.
"Applicable Law" means all applicable provisions of constitutions, laws,
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statutes, ordinances, rules, treaties, regulations, permits, licenses,
approvals, interpretations and orders of courts or Governmental Authorities and
all orders and decrees of all courts and arbitrators.
"Applicable Margin" shall have the meaning assigned thereto in Section
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5.1(c).
"Application" means an application, in the form specified by the Issuing
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Lender from time to time, requesting the Issuing Lender to issue a Letter of
Credit.
"Approved Budget" means the annual budget of the Company and its
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Subsidiaries prepared in accordance with the Transaction Agreement, and approved
by the Board of Directors of the Company pursuant thereto.
"Approved Business Plan" means each of the business plans for the Company
----------------------
and its Subsidiaries prepared on a city-by-city basis in accordance with the
Transaction Agreement and approved by the Board of Directors of the Company
pursuant thereto.
2
"Arbitration Rules" shall have the meaning assigned thereto in Section
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15.6.
"Assignment and Acceptance" shall have the meaning assigned thereto in
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Section 15.10.
"Available Commitment" means, as to any Lender at any time, an amount equal
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to (a) such Lender's Commitment less (b) such Lender's Extensions of Credit.
----
"Base Rate" means, at any time, the higher of (a) the Prime Rate and (b)
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the sum of (i) the Federal Funds Rate plus (ii) 1/2 of 1%; each change in the
----
Base Rate shall take effect simultaneously with the corresponding change or
changes in the Prime Rate or the Federal Funds Rate.
"Base Rate Loan" means any Loan bearing interest at a rate based upon the
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Base Rate as provided in Section 5.1(a).
"Benefited Lender" shall have the meaning assigned thereto in Section 5.6.
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"Borrower Fixed Charges" means, for any period, the sum of the following
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determined on a Consolidated basis, without duplication, for the Borrowers and
their Subsidiaries in accordance with GAAP: (a) scheduled principal and cash
interest payments, (b) Capital Expenditures, (c) cash taxes and (d) cash
dividends.
"Borrower Leverage Ratio" means with respect to the Borrowers and their
-----------------------
Subsidiaries on a Consolidated basis as of the last day of any fiscal quarter,
the ratio of (a) Total Debt thereof as of such date to (b) EBITDA thereof for
the six-month period ending on such date times two (2).
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"Borrowers" means the Subsidiaries of the Company set forth on Schedule
--------- --------
7.1(b) and listed on the signature pages hereto, together with any additional
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Subsidiary that becomes a Borrower hereunder pursuant to Section 9.12, each in
its capacity as borrower hereunder.
"Borrowing Base" means (a) during any Stage 1 Covenant Period, an amount
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equal to one hundred percent (100%) of Telecommunications Equipment owned by the
Borrowers and their Subsidiaries as of the most recent calendar month end for
which financial information has been delivered pursuant to Section 8.1(a);
provided, that all Telecommunications Equipment either (i) constituting Excluded
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Equipment or (ii) located at any real property subject to an Excluded Lease
shall not be included in such amount, and (b) during any Stage 2 Covenant Period
an amount equal to the Aggregate Commitment then in effect. The Administrative
Agent, with the written consent of the Required Lenders, shall have the right
based on any field audit completed pursuant to Section 9.11 to adjust the items
or value of Telecommunications Equipment included in the Borrowing Base from
time to time by written notice to the Borrowers and Lenders upon completing any
such audit.
"Bridge Loans" means the $180,000,000 senior unsecured increasing rate
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bridge loans made to the Company pursuant to the Bridge Loan Documents, and any
rollover loans made to the Company on the maturity date of such bridge loans in
order to refinance such bridge loans
3
and to pay any rollover fees in connection therewith, as contemplated by the
Bridge Loan Documents.
"Bridge Loan Documents" means the Bridge Loan Agreement, the Bridge Notes
---------------------
and all of the documents contemplated thereby, as amended as permitted hereby.
"Bridge Loan Agreement" means the bridge financing agreement, dated as of
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August 1, 2000, by and among the Company, the lenders party thereto and ▇▇▇▇▇▇
▇▇▇▇▇▇▇ Senior Funding, Inc., as administrative agent, as amended as permitted
hereby.
"Bridge Notes" means the promissory notes issued by the Company pursuant to
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the Bridge Loan Agreement.
"Business Day" means (a) for all purposes other than as set forth in clause
------------
(b) below, any day other than a Saturday, Sunday or legal holiday on which banks
in Charlotte, North Carolina and New York, New York, are open for the conduct of
their commercial banking business, and (b) with respect to all notices and
determinations in connection with, and payments of principal and interest on,
any LIBOR Rate Loan, any day that is a Business Day described in clause (a) and
that is also a day for trading by and between banks in Dollar deposits in the
London interbank market.
"Cash Equivalents" shall have the meaning assigned thereto in Section
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11.4(b).
"Capital Expenditures" means, with respect to any specified Person and its
--------------------
Subsidiaries for any period, the aggregate cost of all PP&E acquired by such
Person and/or its Subsidiaries during such period, less capitalized labor, each
----
as determined in accordance with GAAP.
"Capital Lease" means, with respect to the Company and its Subsidiaries, or
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the Borrowers and their Subsidiaries, as applicable, any lease of any property
that should, in accordance with GAAP, be classified and accounted for as a
capital lease on a Consolidated balance sheet thereof.
"Change in Control" shall have the meaning assigned thereto in Section
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12.1(i).
"CLEC" means a competitive local exchange carrier under applicable
----
Communications Law.
"Closing Date" means the date of this Agreement or such later Business Day
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upon which each condition described in Section 6.2 shall be satisfied or waived
in all respects in a manner acceptable to the Administrative Agent in its
reasonable discretion.
"Code" means the Internal Revenue Code of 1986, and the rules and
----
regulations thereunder, each as amended, supplemented or otherwise modified.
"Commitment" means, as to any Lender, the sum of such Lender's Revolving
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Credit Commitment, Term A Loan Commitment and Term B Loan Commitment as set
forth opposite
4
such Lender's name on Schedule 1.1(a) hereto, as the same may be reduced or
---------------
increased at any time or from time to time pursuant to the terms hereof.
"Commitment Percentage" means, as to any Lender at any time, the ratio of
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(a) the amount of the Commitment of such Lender to (b) the Aggregate Commitment
of all of the Lenders.
"Communications Law" means the Communications Act of 1934, as amended, and
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all rules and regulations thereunder, or any successor statute or statutes
thereto (including, without limitation, the Telecommunications Act of 1996) and
all rules and regulations thereunder, and all rules and regulations of the FCC,
any applicable PUC or any other applicable Governmental Authority related to the
provision of telecommunication or broadcast services, each as amended or
supplemented from time to time.
"Communications License" means any license for the provision of CLEC
----------------------
telephony service, and any other license, permit, consent, certificate of
compliance, franchise, approval, waiver or authorization granted or issued by
FCC or other applicable Governmental Authority, including, without limitation,
any PUC, each of the foregoing authorizing or permitting the acquisition,
construction or operation of Network Facilities or any other system for the
provision of CLEC telephony service.
"Company" means Choice One Communications Inc., a Delaware corporation, and
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its successors and permitted assigns.
"Company Fixed Charges" means, for any period, the sum of the following
---------------------
determined on a Consolidated basis, without duplication, for the Company and its
Subsidiaries in accordance with GAAP; (a) scheduled principal and cash interest
payments, (b) Capital Expenditures, (c) cash taxes and (d) cash dividends.
"Company Leverage Ratio" means with respect to the Company and its
----------------------
Subsidiaries on a Consolidated basis as of the last day of any fiscal quarter,
the ratio of (a) Total Consolidated Debt thereof as of such date to (b) EBITDA
of the Borrowers for the six-month period ending on such date times two (2).
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"Consolidated" means, when used with reference to financial statements or
------------
financial statement items of the Company and its Subsidiaries, or the Borrowers
and their Subsidiaries, as applicable, such statements or items on a
consolidated basis in accordance with applicable principles of consolidation
under GAAP (it being understood that any references to the Borrowers and their
Subsidiaries on a Consolidated basis shall not include the Company
notwithstanding any requirements of GAAP to the contrary).
"Contributed Capital" means, with respect to the Borrowers and their
-------------------
Subsidiaries at any date of determination, all consideration paid on and prior
to such date for the common and preferred stock thereof, determined on a
Consolidated basis in accordance with GAAP, plus Total Debt as of such date.
----
5
"Contributed Consolidated Capital" means, with respect to the Company and
--------------------------------
its Subsidiaries at any date of determination, all consideration paid on and
prior to such date for the common and preferred stock thereof (including common
stock issued as consideration for the US Xchange Acquisition), determined on a
Consolidated basis in accordance with GAAP, plus Total Consolidated Debt as of
----
such date.
"Credit Facility" means, collectively, the Revolving Credit Facility, the
---------------
Term A Loan Facility, the Term B Loan Facility and the L/C Facility.
"DSL" means technology which permits broadband transmission over copper
---
telephone lines, allowing for the provision of high speed data services.
"Debt" means, with respect to the Company and its Subsidiaries or the
----
Borrowers and their Subsidiaries, as applicable, at any date and without
duplication, the sum of the following calculated in accordance with GAAP: (a)
all liabilities, obligations and indebtedness for borrowed money including but
not limited to obligations evidenced by bonds, debentures, notes or other
similar instruments of any such Person, (b) all obligations to pay the deferred
purchase price of property or services of any such Person (including, without
limitation, all obligations under non-competition agreements), except for trade
payables arising in the ordinary course of business not more than ninety (90)
days past due and except for all obligations in respect of any IRU, (c) all
obligations of any such Person as lessee under Capital Leases, (d) all Debt of
any other Person secured by a Lien on any asset of any of the Company and its
Subsidiaries or the Borrowers and their Subsidiaries, as applicable, (e) all
Guaranty Obligations of any such Person, except as permitted by Section 11.2(c),
(f) all obligations, contingent or otherwise, of any such Person relative to the
stated amount of letters of credit, whether or not drawn, including without
limitation any Reimbursement Obligation, and banker's acceptances issued for the
account of any such Person, (g) all obligations of any such Person to redeem,
repurchase, exchange, defease or otherwise make payments in respect of capital
stock or other securities of such Person and (h) all net termination payments
(or other net obligations) owed by any such Person pursuant to Hedging
Agreements.
"Default" means any of the events specified in Section 12.1 which with the
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passage of time, the giving of notice or any other condition, would constitute
an Event of Default.
"Disputes" shall have the meaning set forth in Section 15.6.
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"Documentation Agent" means ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Senior Funding, Inc. in its
-------------------
capacity as Documentation Agent.
"Dollars" or "$" means, unless otherwise qualified, dollars in lawful
--------------
currency of the United States.
"EBITDA" means, with respect to any specified Person and its Subsidiaries,
------
for any period, the sum of the following determined on a Consolidated basis,
without duplication, in accordance with GAAP: (a) Net Income for such period
plus (b) the sum of the following to the extent deducted in determining Net
----
Income: (i) income and franchise taxes, (ii) Interest Expense,
6
(iii) amortization, depreciation and other non-cash charges less (c) (i)
----
capitalized labor, (ii) interest income and (iii) any extraordinary gains.
EBITDA shall be adjusted in a manner reasonably satisfactory to the
Administrative Agent to include, on a pro forma basis, as of the first day of
any calculation period any acquisition consummated during such period in
accordance with this Agreement and exclude, on a pro forma basis, as of the
first day of any calculation period any Subsidiary or assets sold in accordance
with this Agreement during such period.
"Eligible Assignee" means, with respect to any assignment of the rights,
-----------------
interest and obligations of a Lender hereunder, a Person that is at the time of
such assignment (a) a commercial bank organized under the laws of the United
States or any state thereof, having combined capital and surplus in excess of
$500,000,000, (b) a commercial bank organized under the laws of any other
country that is a member of the Organization of Economic Cooperation and
Development, or a political subdivision of any such country, having combined
capital and surplus in excess of $500,000,000, (c) a finance company, insurance
company or other financial institution which in the ordinary course of business
extends credit of the type extended hereunder and that has total assets in
excess of $1,000,000,000, (d) already a Lender hereunder (whether as an original
party to this Agreement or as the assignee of another Lender), (e) the successor
(whether by transfer of assets, merger or otherwise) to all or substantially all
of the commercial lending business of the assigning Lender, or (f) any other
Person that has been approved in writing as an Eligible Assignee by the Company
and the Administrative Agent.
"Employee Benefit Plan" means any employee benefit plan within the meaning
---------------------
of Section 3(3) of ERISA which (a) is maintained for employees of the Borrowers
or any ERISA Affiliate or (b) has at any time within the preceding six years
been maintained for the employees of the Borrowers or any current or former
ERISA Affiliate.
"Environmental Laws" means any and all federal, state and local laws,
------------------
statutes, ordinances, rules, regulations, permits, licenses, approvals,
interpretations and orders of courts or Governmental Authorities, relating to
the protection of human health or the environment, including, but not limited
to, requirements pertaining to the manufacture, processing, distribution, use,
treatment, storage, disposal, transportation, handling, reporting, licensing,
permitting, investigation or remediation of Hazardous Materials.
"ERISA" means the Employee Retirement Income Security Act of 1974, and the
-----
rules and regulations thereunder, each as amended, supplemented or otherwise
modified.
"ERISA Affiliate" means any Person who together with the Company is treated
---------------
as a single employer within the meaning of Section 414(b), (c), (m) or (o) of
the Code or Section 4001(b) of ERISA.
"Eurodollar Reserve Percentage" means, for any day, the percentage
-----------------------------
(expressed as a decimal and rounded upwards, if necessary, to the next higher
1/100th of 1%) which is in effect for such day as prescribed by the Federal
Reserve Board (or any successor) for determining the maximum reserve requirement
(including without limitation any basic, supplemental or
7
emergency reserves) in respect of eurocurrency liabilities or any similar
category of liabilities for a member bank of the Federal Reserve System in New
York City.
"Event of Default" means any of the events specified in Section 12.1;
----------------
provided, that any requirement for passage of time, giving of notice, or any
--------
other condition, has been satisfied.
"Excess Cash Flow" means, with respect to the Company and its Subsidiaries
----------------
for any period, the sum of the following for such period on a Consolidated basis
(a) EBITDA thereof minus (b) the sum of (i) Company Fixed Charges, plus (ii) to
----- ----
the extent not already included in Company Fixed Charges, all optional
prepayments of the Term Loans and any other Debt of the Company and its
Subsidiaries which does not permit the reborrowing of amounts prepaid, plus
(minus) (iii) decrease (increase) in Working Capital.
"Excess Proceeds" shall have the meaning assigned thereto in Section
---------------
4.5(c)(vi).
"Excluded Equipment" means any Telecommunications Equipment of the
------------------
Guarantor and the Borrowers not subject to a valid and perfected first priority
Lien under the Security Agreement in favor of the Administrative Agent for the
ratable benefit of itself and the Lenders, subject only to Liens permitted by
Section 11.3 hereof.
"Excluded Lease" means (i) any Interconnection Lease, (ii) that certain
--------------
lease with respect to the real property located at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇, (iii) that certain lease with respect to the real property
located at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇ and (iv) any additional lease of real
property by a Borrower designated in writing by the Company and the Required
Lenders.
"Existing Credit Agreement" shall have the meaning assigned thereto in the
-------------------------
Statement of Purpose.
"Expanded Business Plan" means any Approved Business Plan with respect to
----------------------
the buildout of markets other than those included in the definition of Permitted
Markets which expanded business plan has been approved by the Required Lenders
(such approval not to be unreasonably withheld or delayed).
"Extensions of Credit" means, as to any Lender at any time, (a) an amount
--------------------
equal to the sum of (i) the aggregate principal amount of all Revolving Credit
Loans made by such Lender then outstanding, (ii) such Lender's Revolving Credit
Commitment Percentage of the L/C Obligations then outstanding, (iii) such
Lender's Revolving Credit Commitment Percentage of the Swingline Loans then
outstanding and (iv) the aggregate principal amount of all Term Loans made by
such Lender then outstanding, or (b) the making of any Loan or participation in
any Letter of Credit by such Lender, as the context requires.
"FCC" means the Federal Communications Commission or any successor
---
Governmental Authority.
"FDIC" means the Federal Deposit Insurance Corporation, or any successor
----
thereto.
8
"Federal Funds Rate" means, the rate per annum (rounded upwards, if
------------------
necessary, to the next higher 1/100th of 1%) representing the daily effective
federal funds rate as quoted by the Administrative Agent and confirmed in
Federal Reserve Board Statistical Release H.15 (519) or any successor or
substitute publication selected by the Administrative Agent. If, for any
reason, such rate is not available, then "Federal Funds Rate" shall mean a daily
rate which is determined, in the opinion of the Administrative Agent, to be the
rate at which federal funds are being offered for sale in the national federal
funds market at 9:00 a.m. (Charlotte time). Rates for weekends or holidays
shall be the same as the rate for the most immediate preceding Business Day.
"Final Maturity Date" means the later to occur of the Revolving Credit
-------------------
Termination Date and the Term B Loan Maturity Date.
"First Union" means First Union Investors, Inc. and its successors.
-----------
"Fiscal Year" means the fiscal year of the Borrowers and their Subsidiaries
-----------
ending on December 31.
"GAAP" means generally accepted accounting principles, as recognized by the
----
American Institute of Certified Public Accountants and the Financial Accounting
Standards Board, consistently applied and maintained on a consistent basis for
the Company and its Subsidiaries and the Borrowers and their Subsidiaries, as
applicable, throughout the period indicated.
"Governmental Approvals" means all authorizations, consents, approvals,
----------------------
licenses and exemptions of, registrations and filings with, and reports to, all
Governmental Authorities.
"Governmental Authority" means any nation, province, state or political
----------------------
subdivision thereof, and any government or any Person exercising executive,
legislative, regulatory or administrative functions of or pertaining to
government, and any corporation or other entity owned or controlled, through
stock or capital ownership or otherwise, by any of the foregoing.
"Guarantor" means the Company in its capacity as guarantor under the
---------
Guaranty.
"Guaranty" means the unconditional guaranty of the Obligations by the
--------
Company under Article XIV hereof.
"Guaranteed Obligations" shall have the meaning assigned thereto in Section
----------------------
14.1.
"Guaranty Obligation" means, with respect to the Company and its
-------------------
Subsidiaries, or the Borrowers and their Subsidiaries, as applicable, at any
date and without duplication, any obligation, contingent or otherwise, of any
such Person pursuant to which such Person has directly or indirectly guaranteed
any Debt or other obligation of any other Person and, without limiting the
generality of the foregoing, any obligation, direct or indirect, contingent or
otherwise, of any such Person (a) to purchase or pay (or advance or supply funds
for the purchase or payment of) such Debt or other obligation (whether arising
by virtue of partnership arrangements, by agreement to keep well, to purchase
assets, goods, securities or services, to
9
take-or-pay, or to maintain financial statement condition or otherwise) or (b)
entered into for the purpose of assuring in any other manner the obligee of such
Debt or other obligation of the payment thereof or to protect such obligee
against loss in respect thereof (in whole or in part); provided, that the term
--------
Guaranty Obligation shall not include endorsements for collection or deposit in
the ordinary course of business.
"Hazardous Materials" means any substances or materials (a) which are or
-------------------
become defined as hazardous wastes, hazardous substances, pollutants,
contaminants, chemical substances or mixtures or toxic substances under any
Applicable Law, (b) which are toxic, explosive, corrosive, flammable,
infectious, radioactive, carcinogenic, mutagenic or otherwise harmful to human
health or the environment and are or become regulated by any Governmental
Authority, (c) the presence of which require investigation or remediation under
any Applicable Law, (d) the discharge or emission or release of which requires a
permit or license under any Applicable Law or other Governmental Approval, (e)
which are deemed to constitute a nuisance, a trespass or pose a health or safety
hazard to persons or neighboring properties, (f) which consist of underground or
aboveground storage tanks, whether empty, filled or partially filled with any
substance, or (g) which contain, without limitation, asbestos, polychlorinated
biphenyls, urea formaldehyde foam insulation, petroleum hydrocarbons, petroleum
derived substances or waste, crude oil, nuclear fuel, natural gas or synthetic
gas.
"Hedging Agreement" means any agreement with respect to an interest rate
-----------------
swap, collar, cap, floor or a forward rate agreement or other agreement
regarding the hedging of interest rate risk exposure executed in connection with
hedging the interest rate exposure of the Borrowers, and any confirming letter
executed pursuant to such hedging agreement, all as amended, restated or
otherwise modified.
"Inactive Subsidiary" means, as at any date, any non-Borrower Subsidiary
-------------------
that (a) has not been certified by the PUC of each applicable state to provide
telecommunications service and (b) as at the end of and for the fiscal quarter
ending on or most recently ended prior to such date, shall have less than
$100,000 in assets and less than $25,000 in gross revenues for such fiscal
quarter; provided, that at no time shall all Inactive Subsidiaries have in
--------
excess of $1,000,000 in total assets or generate in excess of $250,000 gross
revenue for any fiscal quarter.
"Indiana Subsidiary" means US Xchange of Indiana, L.L.C., a Delaware
------------------
limited liability company.
"Initial Credit Agreement" shall have the meaning assigned thereto in the
------------------------
Statement of Purpose.
"Interconnection Agreement" means any interconnection agreement entered
-------------------------
into by any Borrower, and any other agreement entered into thereby with respect
to collocation of Telecommunications Equipment, in each case with another
telecommunications provider.
"Interconnection Lease" means any real property lease executed by the
---------------------
Company or any Borrower for the sole purpose of collocating Telecommunications
Equipment in connection with any Interconnection Agreement relating to the
collocation sites described on Schedule 1.1(b);
---------------
10
provided, that in no event shall the aggregate number of Potential Business
--------
Lines to be served from such leased real property exceed 5% of the aggregate
number of Potential Business Lines to be served by the Company and the
Borrowers.
"Interest Expense" means, for any period, total interest expense
----------------
(including, without limitation, interest expense attributable to Capital Leases
and plus all net payment obligations pursuant to Hedging Agreements) determined
on a consolidated basis, without duplication, for any specified Person and its
Subsidiaries in accordance with GAAP.
"Interest Period" shall have the meaning assigned thereto in Section
---------------
5.1(b).
"IRU" means a noncancellable indefeasible right to use telecommunications
---
bandwidth (or similar network bandwidth) or capacity therein, related equipment
or other Telecommunications Equipment, or any other right substantially similar
to the foregoing.
"ISPA98" means the International Standby Practices (1998 Revision,
------
effective January 1, 1999), International Chamber of Commerce Publication No.
590.
"Issuing Lender" means First Union (or applicable affiliate thereof
--------------
designated by First Union), in its capacity as issuer of any Letter of Credit,
or any successor thereto.
"Joinder Agreement" means, collectively, each joinder agreement executed in
-----------------
favor of the Administrative Agent for the ratable benefit of itself and the
Lenders, substantially in the form of Exhibit J.
---------
"L/C Commitment" means the lesser of (a) $2,000,000 and (b) the Revolving
--------------
Credit Commitment.
"L/C Facility" means the letter of credit facility established pursuant to
------------
Article III hereof.
"L/C Obligations" means at any time, an amount equal to the sum of (a) the
---------------
aggregate undrawn and unexpired amount of the then outstanding Letters of Credit
and (b) the aggregate amount of drawings under Letters of Credit which have not
then been reimbursed pursuant to Section 3.5.
"L/C Participants" means the collective reference to all Revolving Credit
----------------
Lenders other than the Issuing Lender.
"Lender" means each Person executing this Agreement as a Lender (including,
------
without limitation, the Revolving Credit Lenders, the Term A Lenders, the Term B
Lenders, the Issuing Lender and the Swingline Lender unless the context
otherwise requires) set forth on the signature pages hereto and each Person that
hereafter becomes a party to this Agreement as a Lender pursuant to Section
15.10.
"Lending Office" means, with respect to any Lender, the office of such
--------------
Lender maintaining such Lender's Commitment Percentage of the Extensions of
Credit.
11
"Letters of Credit" shall have the meaning assigned thereto in Section 3.1.
-----------------
"LIBOR" means the rate of interest per annum determined on the basis of the
-----
rate for deposits in Dollars in minimum amounts of at least $5,000,000 for a
period equal to the applicable Interest Period which appears on the Dow ▇▇▇▇▇
Market Screen 3750 at approximately 11:00 a.m. (London time) two (2) Business
Days prior to the first day of the applicable Interest Period. If, for any
reason, such rate does not appear on the Dow ▇▇▇▇▇ Market Screen 3750, then
"LIBOR" shall be determined by the Administrative Agent to be the arithmetic
average of the rate per annum at which deposits in Dollars would be offered by
first class banks in the London interbank market to the Administrative Agent at
approximately 11:00 a.m. (London time) two (2) Business Days prior to the first
day of the applicable Interest Period for a period equal to such Interest Period
and in an amount substantially equal to the amount of the applicable Loan.
"LIBOR Rate" means a rate per annum (rounded upwards, if necessary, to the
----------
next higher 1/100th of 1%) determined by the Administrative Agent pursuant to
the following formula.
LIBOR Rate = LIBOR
-------------------------------------------
1.00-Eurodollar Reserve Percentage
"LIBOR Rate Loan" means any Loan bearing interest at a rate based upon the
---------------
LIBOR Rate as provided in Section 5.1(a).
"Lien" means, with respect to any asset, any mortgage, deed of trust, lien,
----
pledge, charge, security interest, hypothecation or encumbrance of any kind in
respect of such asset. For the purposes of this Agreement, a Person shall be
deemed to own subject to a Lien any asset which it has acquired or holds subject
to the interest of a vendor or lessor under any conditional sale agreement,
Capital Lease or other title retention agreement relating to such asset.
"Limited Subsidiary" means, as of any date of determination, either Choice
------------------
One Communications of Pennsylvania Inc., a Delaware corporation or Choice One
Communications of Ohio Inc., a Delaware corporation and "Limited Subsidiaries"
means both of such entities; provided, that each entity shall cease to be a
--------
Limited Subsidiary upon receipt by such entity (with a copy to the
Administrative Agent) of authorization by each applicable PUC to borrow an
amount equal to the Aggregate Commitment and perform its corresponding
obligations under the Loan Documents.
"Loans" means the collective reference to the Revolving Credit Loans, the
-----
Term Loans and the Swingline Loans and "Loan" means any of such Loans.
"Loan Documents" means, collectively, this Agreement, the Notes, the
--------------
Applications, any Hedging Agreement with any Lender (which such Hedging
Agreement is permitted or required hereunder), the Security Documents, the
Syndication Letter, each Joinder Agreement and each other document, instrument,
certificate and agreement executed and delivered by the Company or any of its
Subsidiaries or their counsel in connection with this Agreement, all as may be
amended, restated or otherwise modified.
12
"Lucent Agreement" means the General Agreement Number LNM980612RMCO,
----------------
effective as of July 17, 1998, by and between the Company and Lucent
Technologies Inc., as amended.
"Management Members" shall have the meaning assigned thereto in the
------------------
Transaction Agreement.
"Material Adverse Effect" means, with respect to the Company and its
-----------------------
Subsidiaries, (a) a material adverse effect on (i) the properties, business,
prospects, operations or condition (financial or otherwise) of such Persons
taken as a whole or (ii) the ability of any such Person to perform its
obligations under the Loan Documents in each case to which it is a party or (b)
during the Stage 1 Covenant period, any liability to the Company or its
Subsidiaries (other than liabilities incurred thereby which are permitted
hereunder) in excess of $2,000,000.
"Material Contract" means (a) any contract or other agreement, written or
-----------------
oral, of the Borrowers or any of their Subsidiaries involving monetary liability
of or to any such Person in an amount in excess of $3,000,000 per annum, (b) the
Lucent Agreement, any Interconnection Agreement or any other Network Agreement
or (c) any other contract or agreement, of the Borrowers or any of their
Subsidiaries the failure to comply with which could reasonably be expected to
have a Material Adverse Effect.
"Mortgage" means each fee or leasehold mortgage, deed of trust, or
--------
collateral assignment of lease, executed by a Borrower or Subsidiary in favor of
the Administrative Agent (and in form and substance reasonably satisfactory
thereto) for the ratable benefit of itself and the Lenders, as each such
agreement may be amended, restated or otherwise modified.
"MSDWCP" means, collectively, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Capital Partners III, L.P.,
------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Capital Investors, L.P., MSCP III 892 Investors, L.P.; ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Capital Partners IV, L.P., MSDW IV 892 Investors, L.P.;
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Capital Investors IV, L.P. and any private equity
investment fund or similar entity managed by any of the Affiliates of any of the
foregoing.
"Multiemployer Plan" means a "multiemployer plan" as defined in Section
------------------
4001(a)(3) of ERISA to which the Company or any ERISA Affiliate is making, or is
accruing an obligation to make, contributions within the preceding six years.
"Net Cash Proceeds" means, as applicable, (a) with respect to any sale or
-----------------
other disposition of assets, the gross cash proceeds received by the Company or
any of its Subsidiaries from such sale less the sum of (i) all income taxes and
----
other taxes assessed or estimated by the such Persons (with such amount approved
by the Administrative Agent) to be assessed by a Governmental Authority as a
result of such sale and any other fees and expenses incurred in connection
therewith and (ii) the principal amount of, premium, if any, and interest on any
Debt secured by a Lien on the asset (or a portion thereof) sold, which Debt is
required to be repaid in connection with such sale, (b) with respect to any
offering of capital stock or issuance of Debt, the gross cash proceeds received
by the Company or any of its Subsidiaries therefrom less all
----
13
legal, underwriting and other fees and expenses incurred in connection therewith
and (c) with respect to any payment under an insurance policy or in connection
with a condemnation proceeding, the amount of cash proceeds received by the
Company or its Subsidiaries from an insurance company or Governmental Authority,
as applicable, net of all expenses of collection; provided, that,
--------
notwithstanding clause (b) to the contrary, Net Cash Proceeds shall not include
the proceeds from the issuance of (x) capital stock by any Subsidiary to the
Company or any other Subsidiary, (y) stock options or warrants by the Company or
any of its Subsidiaries to any director, officer or employee thereof in
connection with such Person's employment or hire after the Closing Date, or (z)
capital stock by the Company or any other Subsidiary in connection with exercise
of stock options or warrants held by any director, officer or employee of the
Company or any of its Subsidiaries; so long as, in the case of clauses (y) and
(z), such stock options or warrants are granted or issued pursuant to a plan or
other employment agreement duly approved by the board of directors of the
applicable entity.
"Net Income" means, with respect to any specified Person and its
----------
Subsidiaries for any period, the net income (or loss) of such Persons for such
period calculated on a Consolidated basis in accordance with GAAP; provided,
--------
that there shall be excluded from net income (or loss): (a) the income (or
loss) of any other Person (other than a Wholly-Owned Subsidiary of such first
Person) in which such first Person or Subsidiary thereof has an ownership
interest unless received by such first Person or Subsidiary in a cash
distribution and (b) the income (or loss) of any other Person accrued prior to
the date it became a Subsidiary or is merged into or consolidated with such
first Person or Subsidiary.
"Network Agreement" means any Interconnection Agreement or other document
-----------------
or agreement entered into by any Borrower or any of its Subsidiaries regarding
the use, operation or maintenance of, or otherwise concerning, any of the
Network Facilities.
"Network Facility" means the Switches and network of digital and analog
----------------
facilities owned or leased by any Borrower or any of its Subsidiaries for use in
the provision of CLEC telephony service or other voice or data transmission
services.
"New Lender Supplement" shall have the meaning assigned thereto in Section
---------------------
4.7(b).
"Notes" means the collective reference to the Revolving Credit Notes, the
-----
Term A Notes, the Term B Notes and the Swingline Note and "Note" means any of
such Notes.
"Notice of Account Designation" shall have the meaning assigned thereto in
-----------------------------
Section 2.3(b).
"Notice of Borrowing" shall have the meaning assigned thereto in Section
-------------------
2.3(a).
"Notice of Conversion/Continuation" shall have the meaning assigned thereto
---------------------------------
in Section 5.2.
"Notice of Prepayment" shall have the meaning assigned thereto in Section
--------------------
2.4(d).
14
"Obligations" means, in each case, whether now in existence or hereafter
-----------
arising: (a) the principal of and interest on (including interest accruing after
the filing of any bankruptcy or similar petition) the Loans, (b) the L/C
Obligations, (c) all payment and other obligations owing by any Borrower to any
Lender or the Administrative Agent under any Hedging Agreement related to the
Obligations with any Lender (which such Hedging Agreement is permitted or
required hereunder), and (d) all other fees and commissions (including
attorney's fees), charges, indebtedness, loans, liabilities, financial
accommodations, obligations, covenants and duties owing by the Company or any
Borrower to the Lenders or the Administrative Agent, of every kind, nature and
description, direct or indirect, absolute or contingent, due or to become due,
contractual or tortious, liquidated or unliquidated, and whether or not
evidenced by any note, in each case under or in respect of this Agreement, any
Note, any Letter of Credit or any of the other Loan Documents.
"Officer's Compliance Certificate" shall have the meaning assigned thereto
--------------------------------
in Section 8.2.
"Other Taxes" shall have the meaning assigned thereto in Section 5.11(b).
-----------
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
----
agency.
"Payment Refusal" shall have the meaning assigned thereto in Section
---------------
4.5(c)(vi).
"Pension Plan" means any Employee Benefit Plan, other than a Multiemployer
------------
Plan, which is subject to the provisions of Title IV of ERISA or Section 412 of
the Code and which (a) is maintained for employees of the Company or any ERISA
Affiliates or (b) has at any time within the preceding six years been maintained
for the employees of the Company or any of their current or former ERISA
Affiliates.
"Permanent Financing" shall have the meaning assigned hereto in Section
-------------------
11.1(c).
"Permitted Markets" means the collective reference to (i) voice and DSL
-----------------
network buildout in the twenty-nine (29) markets as set forth in the Twenty-Nine
Market Business Plan and (ii) any additional market approved in writing by the
Required Lenders.
"Person" means an individual, corporation, limited liability company,
------
partnership, association, trust, business trust, joint venture, joint stock
company, pool, syndicate, sole proprietorship, unincorporated organization,
Governmental Authority or any other form of entity or group thereof.
"Pledge Agreement" means the second amended and restated pledge agreement
----------------
of even date executed by the Company and the Borrowers in favor of the
Administrative Agent for the ratable benefit of itself and the Lenders,
substantially in the form of Exhibit I, as amended, restated or otherwise
---------
modified.
"Potential Business Lines" means, as of any date of determination, the
------------------------
potential business lines of the Borrowers as identified in the Twenty-Nine
Market Business Plan.
15
"PP&E" means with respect to any specified Person and its Subsidiaries as
----
of any date of determination, the gross property, plant and equipment (including
capitalized labor) thereof as of such date determined on a Consolidated basis in
accordance with GAAP.
"Preferred Equity" means the Series A Senior Cumulative Preferred Stock
----------------
issued by the Company pursuant to the Preferred Equity Documents.
"Preferred Equity Documents" means the Preferred Equity Purchase Agreement
--------------------------
and all of the documents referred to therein, including without limitation, the
provisions of the articles of incorporation or other charter documents of the
Company designating the terms of the Preferred Equity.
"Preferred Equity Purchase Agreement" means the Securities Purchase
-----------------------------------
Agreement, dated as of August 1, 2000 by and between the Company and the
applicable signatories listed in the definition of MSDWCP.
"Prime Rate" means, at any time, the rate of interest per annum publicly
----------
announced from time to time by First Union National Bank as its prime rate.
Each change in the Prime Rate shall be effective as of the opening of business
on the day such change in the Prime Rate occurs. The parties hereto acknowledge
that the rate announced publicly by First Union National Bank as its Prime Rate
is an index or base rate and shall not necessarily be its lowest or best rate
charged to its customers or other banks.
"PUC" means any state, provincial or other local regulatory agency or body
---
that exercises jurisdiction over the rates or services or the ownership,
construction or operation of any Network Facility or CLEC telephony system or
over Persons who own, construct or operate a Network Facility or any such
system, in each case by reason of the nature or type of the business subject to
regulation and not pursuant to laws and regulations of general applicability to
Persons conducting business in any such jurisdiction.
"Public Offering" shall have the meaning given thereto in the Transaction
---------------
Agreement.
"PUC Authorizations" means all applications, filings, reports, documents,
------------------
recordings and registrations with, and all validations, exemptions, franchises,
waivers, approvals, orders or authorizations, consents, licenses, certificates
and permits from, any PUC.
"Refinancing Securities" means any capital stock, debt securities, any
----------------------
other debt or combination of any of the foregoing issued or incurred by the
Company, in each case, the documents and the terms and conditions of which are
reasonably satisfactory to the Administrative Agent and the Required Lenders and
the proceeds of which are used in full or in part to terminate or reduce the
commitment for the Bridge Loans and to repay in full or in part any outstanding
Bridge Loans, including accrued and unpaid interest, fees and expenses with
respect thereto.
"Refused Proceeds" shall have the meaning assigned thereto in Section
----------------
4.5(c)(vi).
16
"Register" shall have the meaning assigned thereto in Section 15.10(d).
--------
"Reimbursement Obligation" means the obligation of the Borrowers to
------------------------
reimburse the Issuing Lender pursuant to Section 3.5 for amounts drawn under
Letters of Credit.
"Related Transactions" means the US Xchange Acquisition, the issuance of
--------------------
the Bridge Notes and the issuance of the Preferred Equity.
"Related Transactions Documents" means the Acquisition Documents, the
------------------------------
Preferred Equity Documents and the Bridge Loan Documents.
"Replacement Equity" shall have the meaning assigned thereto in Section
------------------
4.5(c)(ii).
"Required Lenders" means, at any date, any combination of Lenders whose
----------------
Commitment Percentages aggregate at least fifty-one percent (51%) of the
Aggregate Commitment, or, if the Credit Facility has been terminated pursuant to
Section 12.2, any combination of Lenders holding at least fifty-one percent
(51%) of the aggregate Extensions of Credit.
"Responsible Officer" means any of the following: the chief executive
-------------------
officer, chief financial officer or vice president of finance of the Company or
any Borrower, as applicable, or any other officer thereof reasonably acceptable
to the Administrative Agent.
"Revolving Credit Commitment" means (a) as to any Revolving Credit Lender,
---------------------------
the obligation of such Revolving Credit Lender to make Revolving Credit Loans
and to participate in Letters of Credit and Swingline Loans for the account of
the Borrowers hereunder in an aggregate principal amount at any time outstanding
not to exceed the amount set forth opposite such Revolving Credit Lender's name
on Schedule 1.1(a) hereto, as such amount may be reduced or modified at any time
---------------
or from time to time pursuant to the terms hereof and (b) as to all Revolving
Credit Lenders, the aggregate commitment of all Revolving Credit Lenders to make
Revolving Credit Loans and to participate in Letters of Credit and Swingline
Loans, as such amount may be reduced at any time or from time to time pursuant
to the terms hereof. The Revolving Credit Commitment of all Revolving Credit
Lenders on the Closing Date shall be $100,000,000.
"Revolving Credit Commitment Percentage" means, as to any Revolving Credit
--------------------------------------
Lender at any time, the ratio of (a) the amount of the Revolving Credit
Commitment of such Lender to (b) the Revolving Credit Commitments of all
Revolving Credit Lenders.
"Revolving Credit Facility" means the revolving credit facility established
-------------------------
pursuant to Article II hereof.
"Revolving Credit Lender" means each Lender with a Revolving Credit
-----------------------
Commitment.
"Revolving Credit Loans" means any revolving loan made to the Borrowers
----------------------
pursuant to Section 2.1, and all such revolving loans collectively as the
context requires.
17
"Revolving Credit Notes" means the collective reference to the Revolving
----------------------
Credit Notes made by the Borrowers payable to the order of each Revolving Credit
Lender, substantially in the form of Exhibit A-1 hereto, evidencing the
-----------
Revolving Credit Facility, and any amendments and modifications thereto, any
substitutes therefor, and any replacements, restatements, renewals or extension
thereof, in whole or in part; "Revolving Credit Note" means any of such
Revolving Credit Notes.
"Revolving Credit Termination Date" means the earliest of the dates
---------------------------------
referred to in Section 2.7.
"Security Agreement" means the second amended and restated security
------------------
agreement of even date executed by the Company and the Borrowers in favor of the
Administrative Agent for the ratable benefit of itself and the Lenders,
substantially in the form of Exhibit H, as amended, restated or otherwise
---------
modified.
"Security Documents" means the collective reference to the Security
------------------
Agreement, the Pledge Agreement, each Mortgage, and each other agreement or
writing pursuant to which any Borrower or any Subsidiary thereof purports to
pledge or grant a security interest in any property or assets securing the
Obligations or any such Person purports to guaranty the payment and/or
performance of the Obligations.
"Solvent" means, with respect to the Company, each Borrower and its
-------
Subsidiaries on a particular date, that any such Person (a) has capital (or
access to immediately available capital, including, if applicable, under the
Credit Facility), sufficient to carry on its business and transactions and all
business and transactions in which it is about to engage and is able to pay its
debts as they mature, (b) owns property having a value, both at fair valuation
and at present fair saleable value, greater than the amount required to pay its
probable liabilities (including contingencies), and (c) does not believe that it
will incur debts or liabilities beyond its ability to pay such debts or
liabilities as they mature.
"Stage 1 Covenant Period" means the period commencing on the Closing Date
-----------------------
and ending on the day immediately prior to the first day of the Stage 2 Covenant
Period.
"Stage 2 Covenant Period" means the period commencing on the first day
-----------------------
following the fiscal quarter end in respect of which the Company has delivered
financial information pursuant to Section 8.1(b) and the accompanying Officer's
Compliance Certificate in each case evidencing that (a) the Company Leverage
Ratio (as at the last day of such quarter) is less than or equal to 10.0 to 1.0
(but greater than zero), (b) the Borrower Leverage Ratio (as at the last day of
such quarter) is less than or equal to 6.0 to 1.0 (but greater than zero) and
(c) EBITDA for the Borrowers for each of the two fiscal quarters then ended was
a positive number.
"Stage 2 Effective Date" means the first day of the Stage 2 Covenant
----------------------
Period.
18
"Subordinated Debt" means any Debt of the Borrowers or any Subsidiary
-----------------
thereof subordinated to the Obligations on terms reasonably satisfactory to the
Administrative Agent and the Required Lenders.
"Subsidiary" means as to any Person, any corporation, partnership, limited
----------
liability company or other entity of which more than fifty percent (50%) of the
outstanding capital stock or other ownership interests having ordinary voting
power to elect a majority of the board of directors or other managers of such
corporation, partnership, limited liability company or other entity is at the
time, directly or indirectly, owned by or the management is otherwise controlled
by such Person (irrespective of whether, at the time, capital stock or other
ownership interests of any other class or classes of such corporation,
partnership, limited liability company or other entity shall have or might have
voting power by reason of the happening of any contingency). Unless otherwise
qualified, references to "Subsidiary" or "Subsidiaries" herein shall refer to
those of the Company (and such references shall include any such Subsidiary
which is also a Borrower).
"Swingline Commitment" means the lesser of (a) $5,000,000 and (b) the
--------------------
Revolving Credit Commitment.
"Swingline Facility" means the swingline facility established pursuant to
------------------
Section 2.2.
"Swingline Lender" means First Union in its capacity as swingline lender
----------------
hereunder.
"Swingline Loan" means any swingline loan made by the Swingline Lender to
--------------
the Borrowers pursuant to Section 2.2, and all such swingline loans collectively
as the context requires.
"Swingline Note" means the Swingline Note made by the Borrowers payable to
--------------
the order of the Swingline Lender, substantially in the form of Exhibit A-2
-----------
hereto, evidencing the Swingline Loans, and any amendments, modifications or
supplements thereto, any substitutes therefor, and any replacements,
restatements, renewals or extensions thereof, in whole or in part.
"Swingline Termination Date" means the first to occur of (a) the
--------------------------
resignation of First Union as Administrative Agent in accordance with Section
13.9 and (b) the Revolving Credit Termination Date.
"Switch" means any Lucent 5-ESS Switch or other comparable switch for the
------
provision of CLEC telephony service or a packet-based switch for the provision
of DSL and/or voice services.
"Syndication Agent" means General Electric Capital Corporation in its
-----------------
capacity as Syndication Agent.
"Syndication Letter" means that certain letter agreement dated as of even
------------------
date herewith among the Company, the Agents and certain affiliates thereof
regarding the syndication of the Credit Facility.
19
"Taxes" shall have the meaning assigned thereto in Section 5.11(a).
-----
"Telecommunications Equipment" means fiber optic cable, Switches,
----------------------------
transmission equipment and other ancillary hardware necessary for the
installation and operation of a switch room or central office and collocation
with other telecommunications providers which will enable the Borrowers to offer
CLEC telephony and DSL. Telecommunications Equipment shall also include
software associated with the Network Facility and back office systems (including
without limitation billing systems, operations systems and support, customer
service and DSL services) and other related software and hardware products
integral to developing a viable CLEC telephony and DSL business. For purposes
of determining the Borrowing Base, Telecommunications Equipment shall equal the
cost thereof as reflected in the financial information delivered pursuant to
Section 8.1(a) and each applicable accompanying Officer's Compliance
Certificate.
"Term A Lender" means each Lender which has a Term A Loan Commitment or
-------------
which has extended Term A Loans to the Borrowers.
"Term A Loan Commitment" means (a) as to any Term A Lender, the obligation
----------------------
of such Lender to make the Term A Loans to the account of the Borrowers
hereunder in an aggregate principal amount not to exceed the amount set forth
opposite such Lender's name on Schedule 1.1(a) hereto, as such amount may be
---------------
reduced or modified at any time or from time to time pursuant to the terms
hereof and (b) as to all Term A Lenders, the aggregate commitment to make Term A
Loans. The Term A Loan Commitment of all Term A Lenders as of the Closing Date
shall be One Hundred Twenty-Five Million Dollars ($125,000,000).
"Term A Loan Commitment Increase Supplement" shall have the meaning
------------------------------------------
assigned thereto in Section 4.7(b).
"Term A Loan Commitment Termination Date" means the first to occur of (a)
---------------------------------------
January 31, 2002 (b) the date of termination by the Borrowers pursuant to
Section 4.5(a), or (c) the date of termination by the Administrative Agent on
behalf of the Lenders pursuant to Section 12.2(a).
"Term A Loan Facility" means the term loan facility established pursuant to
--------------------
Article IV.
"Term A Loan Maturity Date" means the first to occur of (a) July 31, 2008,
-------------------------
(b) the date of termination by the Borrowers pursuant to Section 4.5(a), or (c)
the date of termination by the Administrative Agent on behalf of the Lenders
pursuant to Section 12.2(a).
"Term A Loan Percentage" means, as to any Term A Lender, (a) on or prior to
----------------------
the Term A Loan Commitment Termination Date, the ratio of (i) the Term A Loan
Commitment of such Term A Lender to (ii) the Term A Loan Commitments of all Term
A Lenders and (b) after the Term A Loan Commitment Termination Date, the ratio
of (i) the outstanding principal balance of the Term A Loans of such Term A
Lender to (ii) the aggregate outstanding balance of the Term A Loans of all Term
A Lenders.
20
"Term A Loans" means the term loans to be made to the Borrowers by the Term
------------
A Lenders pursuant to Section 4.1(a).
"Term A Notes" means the Term A Notes made by the Borrowers payable to the
------------
order of each of the Term A Lenders, substantially in the form of Exhibit A-3
-----------
hereto, evidencing the Debt incurred by the Borrowers pursuant to the Term A
Loan Facility, and any amendments, modifications and supplements thereto, any
substitutes therefor, and any replacements, restatements, renewals or extensions
thereof, in whole or in part.
"Term B Lender" means each Lender which has a Term B Loan Commitment or
-------------
which has extended Term B Loans to the Borrowers.
"Term B Loan Commitment" means (a) as to any Term B Lender, the obligation
----------------------
of such Term B Lender to make the Term B Loans to the account of the Borrowers
hereunder in an aggregate principal amount not to exceed the amount set forth
opposite such Term B Lender's name on Schedule 1.1(a) hereto, as such amount may
---------------
be reduced or modified at any time or from time to time pursuant to the terms
hereof and (b) as to all Term B Lenders, the aggregate commitment to make Term B
Loans. The Term B Loan Commitment of all Term B Lenders as of the Closing Date
shall be One Hundred Twenty-Five Million Dollars ($125,000,000).
"Term B Loan Facility" means the term loan facility established pursuant to
--------------------
Article IV.
"Term B Loan Maturity Date" means the first to occur of (a) January 31,
-------------------------
2009, (b) the date of termination by the Borrowers pursuant to Section 4.5(a),
or (c) the date of termination by the Administrative Agent on behalf of the
Lenders pursuant to Section 12.2(a).
"Term B Loan Percentage" means, as to any Term B Lender, the ratio of (i)
----------------------
the outstanding principal balance of the Term B Loans of such Term B Lender to
(ii) the aggregate outstanding balance of the Term B Loans of all Term B
Lenders.
"Term B Loans" means the term loans to be made to the Borrowers by the Term
------------
B Lenders pursuant to Section 4.1(b).
"Term B Notes" means the Term B Notes made by the Borrowers payable to the
------------
order of each of the Term B Lenders, substantially in the form of Exhibit A-4
-----------
hereto, evidencing the Debt incurred by the Borrowers pursuant to the Term B
Loan Facility, and any amendments, modifications and supplements thereto, any
substitutes therefor, and any replacements, restatements, renewals or extensions
thereof, in whole or in part.
"Term Loans" means the Term A Loans or the Term B Loans made to the
----------
Borrowers by the Term A Lenders or Term B Lenders, as applicable, pursuant to
Sections 4.1(a) and (b) or all such Term A Loans and Term B Loans, as the
context requires.
"Termination Event" means: (a) except for any such event that could not
-----------------
reasonably be expected to have a Material Adverse Effect, a "Reportable Event"
described in Section 4043 of ERISA for which the notice requirement has not been
waived by the PBGC, or (b) except that
21
could not reasonably be expected to have a Material Adverse Effect, the
withdrawal of the Company or any ERISA Affiliate from a Pension Plan during a
plan year in which it was a "substantial employer" as defined in Section
4001(a)(2) of ERISA, or (c) the termination of a Pension Plan, the filing of a
notice of intent to terminate a Pension Plan or the treatment of a Pension Plan
amendment as a termination, each under Section 4041(c) of ERISA, or (d) the
institution of proceedings to terminate, or the appointment of a trustee with
respect to, any Pension Plan by the PBGC, or (e) any other event or condition
which would constitute grounds under Section 4042(a) of ERISA for the
termination of, or the appointment of a trustee to administer, any Pension Plan,
or (f) the imposition of a Lien pursuant to Section 412 of the Code or Section
302 of ERISA, or (g) except for any such event that could not reasonably be
expected to have a Material Adverse Effect, any event or condition which results
in the reorganization or insolvency of a Multiemployer Plan under Sections 4241
or 4245 of ERISA, or (h) except for any such event that could not reasonably be
expected to have a Material Adverse Effect, any event or condition which results
in the termination of a Multiemployer Plan under Section 4041A of ERISA or the
institution by PBGC of proceedings to terminate a Multiemployer Plan under
Section 4042 of ERISA.
"Total Consolidated Debt" means, without duplication, all Debt of the
-----------------------
Company and its Subsidiaries determined on a Consolidated basis at any date of
determination. For the purpose of the calculation of the financial covenants
hereunder (including for purposes of determining the Applicable Margin), "Total
Consolidated Debt" shall not include obligations to redeem or repurchase the
Preferred Equity and/or any Replacement Equity or obligations to repurchase or
redeem certain other capital stock which is permitted under Section 11.7(e).
"Total Debt" means, without duplication, all Debt of the Borrowers and
----------
their Subsidiaries determined on a Consolidated basis at any date of
determination. For the purpose of the calculation of the financial covenants,
"Total Debt" shall not include obligations to redeem or repurchase the Preferred
Equity and/or any Replacement Equity or obligations to repurchase or redeem
certain other capital stock which is permitted under Section 11.7(e).
"Total Revenue" means, with respect to the Borrowers and their Subsidiaries
-------------
for any period, total revenue thereof for such period determined on a
Consolidated basis in accordance with GAAP.
"Transaction Agreement" means the Transaction Agreement dated as of July 8,
---------------------
1998 by and among the Company, and the investors party thereto, as modified
prior to the date hereof, and as further may be amended, restated or modified
subject to the terms hereof.
"Twenty-Nine Market Business Plan" means the Approved Business Plan dated
--------------------------------
as of April 27, 2000 setting forth the voice and data network buildout of the
twenty-nine (29) markets targeted by the Company (comprised of the twenty (20)
markets contained in the Company's existing business plan and nine (9)
additional markets in which US Xchange Inc. was operating immediately prior to
the Closing Date).
"Uniform Customs" means the Uniform Customs and Practice for Documentary
---------------
Credits (1993 Revision), International Chamber of Commerce Publication No. 500.
22
"UCC" means the Uniform Commercial Code as in effect in the State of North
---
Carolina, as amended, restated or otherwise modified.
"United States" means the United States of America.
-------------
"US Xchange Acquisition" means the acquisition by Barter Acquisition
----------------------
Corporation, a wholly-owned Subsidiary of the Company of all of the issued and
outstanding capital stock of US Xchange Inc. through a forward subsidiary merger
pursuant to the terms of the Acquisition Documents.
"Wholly-Owned" means, with respect to a Subsidiary, that all of the shares
------------
of capital stock or other ownership interests of such Subsidiary are, directly
or indirectly, owned or controlled by a Borrower or the Company, as applicable,
and/or one or more of its Wholly-Owned Subsidiaries.
"Working Capital" means, as of any date of determination with respect to
---------------
any specified Person and its Subsidiaries on a Consolidated basis without
duplication, the sum of the following determined utilizing financial statements
prepared in accordance with GAAP (i) current assets (excluding cash and
unrestricted Cash Equivalents) minus (ii) current liabilities (excluding any
-----
current portion of Debt included therein) in each case as of such date of
determination.
SECTION 1.2 General. Unless otherwise specified, a reference in this
-------
Agreement to a particular article, section, subsection, Schedule or Exhibit is a
reference to that article, section, subsection, Schedule or Exhibit of this
Agreement. Wherever from the context it appears appropriate, each term stated in
either the singular or plural shall include the singular and plural, and
pronouns stated in the masculine, feminine or neuter gender shall include the
masculine, the feminine and the neuter. Any reference herein to "Charlotte time"
shall refer to the applicable time of day in Charlotte, North Carolina.
SECTION 1.3 Other Definitions and Provisions.
--------------------------------
(a) Use of Capitalized Terms. Unless otherwise defined therein, all
------------------------
capitalized terms defined in this Agreement shall have the defined meanings when
used in this Agreement, the Notes and the other Loan Documents or any
certificate, report or other document made or delivered pursuant to this
Agreement.
(b) Miscellaneous. The words "hereof", "herein" and "hereunder" and words
-------------
of similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement.
ARTICLE II
REVOLVING CREDIT FACILITY
-------------------------
23
SECTION 2.1 Revolving Credit Loans. Subject to the terms and conditions
----------------------
of this Agreement, each Revolving Credit Lender severally agrees to make
Revolving Credit Loans to the Borrowers from time to time from the Closing Date
through the Revolving Credit Termination Date as requested by the Borrowers in
accordance with the terms of Section 2.3; provided, that (a) the aggregate
--------
principal amount of all outstanding Revolving Credit Loans (after giving effect
to any amount requested) shall not exceed the lesser of (i) the Borrowing Base
less the sum of all L/C Obligations, all outstanding Swingline Loans and all
----
outstanding Term Loans and (ii) the Revolving Credit Commitment less the sum of
----
all L/C Obligations and all outstanding Swingline Loans and (b) the principal
amount of outstanding Revolving Credit Loans from any Lender to the Borrowers
shall not at any time exceed such Lender's Revolving Credit Commitment less such
----
Lender's Revolving Credit Commitment Percentage of the sum of all outstanding
L/C Obligations and all outstanding Swingline Loans. Each Revolving Credit Loan
by a Revolving Credit Lender shall be in a principal amount equal to such
Lender's Revolving Credit Commitment Percentage of the aggregate principal
amount of Revolving Credit Loans requested on such occasion. Subject to the
terms and conditions hereof, the Borrowers may borrow, repay and reborrow
Revolving Credit Loans hereunder until the Revolving Credit Termination Date.
SECTION 2.2 Swingline Loans.
---------------
(a) Availability. Subject to the terms and conditions of this Agreement,
------------
the Swingline Lender agrees to make Swingline Loans to the Borrowers from time
to time from the Closing Date to, but not including, the Swingline Termination
Date; provided, that the aggregate principal amount of all outstanding Swingline
--------
Loans (after giving effect to any amount requested), shall not exceed the lesser
of (i) the Revolving Credit Commitment less the sum of all outstanding Revolving
----
Credit Loans and L/C Obligations and (ii) the Swingline Commitment.
(b) Refunding.
---------
(i) Swingline Loans shall be refunded by the Revolving Credit Lenders
on demand by the Swingline Lender. Such refundings shall be made by the
Revolving Credit Lenders in accordance with their respective Revolving Credit
Commitment Percentages and shall thereafter be reflected as Revolving Credit
Loans of the Revolving Credit Lenders on the books and records of the
Administrative Agent. Each Revolving Credit Lender shall fund its respective
Revolving Credit Commitment Percentage of Revolving Credit Loans as required to
repay Swingline Loans outstanding to the Swingline Lender upon demand by the
Swingline Lender but in no event later than 2:00 p.m. (Charlotte time) on the
next succeeding Business Day after such demand is made. No Revolving Credit
Lender's obligation to fund its respective Revolving Credit Commitment
Percentage of a Swingline Loan shall be affected by any other Revolving Credit
Lender's failure to fund its Revolving Credit Commitment Percentage of a
Swingline Loan, nor shall any Revolving Credit Lender's Revolving Credit
Commitment Percentage be increased as a result of any such failure of any other
Revolving Credit Lender to fund its Revolving Credit Commitment Percentage of a
Swingline Loan.
(ii) The Borrowers shall pay to the Swingline Lender on demand the
amount of such Swingline Loans to the extent amounts received from the Revolving
Credit Lenders are
24
not sufficient to repay in full the outstanding Swingline Loans requested or
required to be refunded. In addition, the Borrowers hereby authorize the
Administrative Agent to charge any account maintained by the Borrowers with the
Swingline Lender (up to the amount available therein) in order to immediately
pay the Swingline Lender the amount of such Swingline Loans to the extent
amounts received from the Revolving Credit Lenders are not sufficient to repay
in full the outstanding Swingline Loans requested or required to be refunded. If
any portion of any such amount paid to the Swingline Lender shall be recovered
by or on behalf of the Borrowers from the Swingline Lender in bankruptcy or
otherwise, the loss of the amount so recovered shall be ratably shared among all
the Revolving Credit Lenders in accordance with their respective Revolving
Credit Commitment Percentages (unless the amounts so recovered by or on behalf
of the Borrowers pertain to a Swingline Loan extended after the occurrence and
during the continuance of an Event of Default of which the Administrative Agent
has received notice in the manner required pursuant to Section 13.5 and which
such Event of Default has not been waived in accordance with Section 15.11.
(iii) Each Revolving Credit Lender acknowledges and agrees that its
obligation to refund Swingline Loans in accordance with the terms of this
Section 2.2 is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including, without limitation, non-satisfaction of the
conditions set forth in Article VI. Further, each Revolving Credit Lender
agrees and acknowledges that if prior to the refunding of any outstanding
Swingline Loans pursuant to this Section 2.2, one of the events described in
Section 12.1(j) or (k) shall have occurred, each Revolving Credit Lender will,
on the date the applicable Revolving Credit Loan would have been made, purchase
an undivided participating interest in the Swingline Loan to be refunded in an
amount equal to its Revolving Credit Commitment Percentage of the aggregate
amount of such Swingline Loan. Each Revolving Credit Lender will immediately
transfer to the Swingline Lender, in immediately available funds, the amount of
its participation and upon receipt thereof the Swingline Lender will deliver to
such Revolving Credit Lender a certificate evidencing such participation dated
the date of receipt of such funds and for such amount. Whenever, at any time
after the Swingline Lender has received from any Revolving Credit Lender such
Revolving Credit Lender's participating interest in a Swingline Loan, the
Swingline Lender receives any payment on account thereof, the Swingline Lender
will distribute to such Revolving Credit Lender its participating interest in
such amount (appropriately adjusted, in the case of interest payments, to
reflect the period of time during which such Revolving Credit Lender's
participating interest was outstanding and funded).
SECTION 2.3 Procedure for Advances of Revolving Credit and Swingline
--------------------------------------------------------
Loans.
-----
(a) Requests for Borrowing. The Borrowers shall give the Administrative
----------------------
Agent irrevocable prior written notice in the form attached hereto as Exhibit B
---------
(a "Notice of Borrowing") not later than 11:00 a.m. (Charlotte time) (i) on the
same Business Day as each Base Rate Loan and each Swingline Loan and (ii) at
least three (3) Business Days before each LIBOR Rate Loan, of its intention to
borrow, specifying (A) the date of such borrowing, which shall be a Business
Day, (B) the amount of such borrowing, which shall be in an amount equal to the
maximum amount of the Revolving Credit Commitment then available to the
Borrowers, or if less, (x) with respect to Base Rate Loans in an aggregate
principal amount of $500,000 or a whole multiple of $250,000 in excess thereof,
(y) with respect to LIBOR Rate Loans in an
25
aggregate principal amount of $2,000,000 or a whole multiple of $500,000 in
excess thereof and (z) with respect to Swingline Loans in an aggregate principal
amount of $100,000 or any amount in excess thereof, (C) whether such Loan is to
be a Revolving Credit Loan or a Swingline Loan, (D) in the case of a Revolving
Credit Loan, whether the Loans are to be LIBOR Rate Loans or Base Rate Loans,
and (E) in the case of a LIBOR Rate Loan, the duration of the Interest Period
applicable thereto. A Notice of Borrowing received after 11:00 a.m. (Charlotte
time) shall be deemed received on the next Business Day. The Administrative
Agent shall promptly notify the Revolving Credit Lenders of each such Notice of
Borrowing.
(b) Disbursement of Revolving Credit and Swingline Loans. Not later than
----------------------------------------------------
2:00 p.m. (Charlotte time) on the proposed borrowing date, (i) each Revolving
Credit Lender will make available to the Administrative Agent, for the account
of the Borrowers, at the office of the Administrative Agent in funds immediately
available to the Administrative Agent, such Revolving Credit Lender's Revolving
Credit Commitment Percentage of the Revolving Credit Loans to be made on such
borrowing date and (ii) the Swingline Lender will make available to the
Administrative Agent, for the account of the Borrowers, at the office of the
Administrative Agent in funds immediately available to the Administrative Agent,
the Swingline Loans to be made on such borrowing date. The Borrowers hereby
irrevocably authorize the Administrative Agent to disburse the proceeds of each
borrowing requested pursuant to this Section 2.3 in immediately available funds
by crediting or wiring such proceeds to the deposit account of the Borrowers
identified in the most recent notice substantially in the form of Exhibit C
---------
hereto (a "Notice of Account Designation") delivered by the Borrowers to the
Administrative Agent or may be otherwise agreed upon by the Borrowers and the
Administrative Agent from time to time. Subject to Section 5.7 hereof, the
Administrative Agent shall not be obligated to disburse the portion of the
proceeds of any Revolving Credit Loan requested pursuant to this Section 2.3 to
the extent that any Revolving Credit Lender has not made available to the
Administrative Agent its Revolving Credit Commitment Percentage of such Loan.
Revolving Credit Loans to be made for the purpose of refunding Swingline Loans
shall be made by the Revolving Credit Lenders as provided in Section 2.2(b).
SECTION 2.4 Repayment of Revolving Credit Loans.
-----------------------------------
(a) Repayment on Termination Date. The Borrowers shall repay the
-----------------------------
outstanding principal amount of (i) all Revolving Credit Loans in full on the
Revolving Credit Termination Date and (ii) all Swingline Loans in accordance
with Section 2.2(b), together, in each case, with all accrued but unpaid
interest thereon, and any other amounts payable with respect thereto.
(b) Mandatory Repayment of Excess Revolving Credit Loans. If at any time
----------------------------------------------------
the outstanding principal amount of all Revolving Credit Loans exceeds the
maximum permitted outstanding amount pursuant to Section 2.1(a), the Borrowers
shall repay no later than the next Business Day following notice from the
Administrative Agent, by payment to the Administrative Agent for the account of
the Revolving Credit Lenders, Extensions of Credit (other than Term Loans) in an
amount equal to such excess, with each such repayment applied first to the
-----
principal amount of outstanding Swingline Loans, second to the principal amount
------
of outstanding Revolving Credit Loans and third, with respect to any Letters of
-----
Credit then outstanding, a payment of cash collateral into a cash collateral
account opened by the Administrative Agent, for
26
the benefit of the Revolving Credit Lenders in an amount equal to the aggregate
then undrawn and unexpired amount of such Letters of Credit (such cash
collateral to be applied in accordance with Section 12.2(b)).
(c) Repayment with Excess Proceeds. The Borrowers shall repay the
------------------------------
outstanding principal balance of the Revolving Credit Loans with any Excess
Proceeds and Refused Proceeds in an amount determined in accordance with Section
4.5(c)(vi).
(d) Optional Repayments. The Borrowers may at any time and from time to
-------------------
time repay the Revolving Credit Loans or Swingline Loans, in whole or in part,
upon at least three (3) Business Days' irrevocable notice to the Administrative
Agent with respect to LIBOR Rate Loans and one (1) Business Day irrevocable
notice with respect to Base Rate Loans and Swingline Loans, in the form attached
hereto as Exhibit D (a "Notice of Prepayment") specifying the date and amount of
---------
repayment and whether the repayment is of LIBOR Rate Loans, Base Rate Loans,
Swingline Loans or a combination thereof, and, if of a combination thereof, the
amount allocable to each. Upon receipt of such notice, the Administrative Agent
shall promptly notify each applicable Lender. If any such notice is given, the
amount specified in such notice shall be due and payable on the date set forth
in such notice. Partial repayments shall be in an aggregate amount of $500,000
or a whole multiple of $250,000 in excess thereof with respect to Base Rate
Loans, $2,000,000 or a whole multiple of $500,000 in excess thereof with respect
to LIBOR Rate Loans and $100,000 or any amount in excess thereof with respect to
Swingline Loans.
(e) Limitation on Repayment of LIBOR Rate Loans. The Borrowers may not
-------------------------------------------
repay any LIBOR Rate Loan (on an optional or mandatory basis) on any day other
than on the last day of the Interest Period applicable thereto unless such
repayment is accompanied by any amount required to be paid pursuant to Section
5.9 hereof.
SECTION 2.5 Notes.
-----
(a) Revolving Credit Notes. Each Revolving Credit Lender's Revolving
----------------------
Credit Loans and the obligation of the Borrowers to repay such Revolving Credit
Loans shall be evidenced by a separate Revolving Credit Note executed by the
Borrowers payable to the order of such Revolving Credit Lender. Each Revolving
Credit Note shall be dated the date hereof and shall bear interest on the unpaid
principal amount thereof at the applicable interest rate per annum specified in
Section 5.1.
(b) Swingline Notes. The Swingline Loans and the obligation of the
---------------
Borrowers to repay such Swingline Loans shall be evidenced by a separate
Swingline Note executed by the Borrowers payable to the order of the Swingline
Lender. The Swingline Note shall be dated the date hereof and shall bear
interest on the unpaid principal amount thereof at the applicable interest rate
per annum specified in Section 5.1.
27
SECTION 2.6 Permanent Reduction of the Revolving Credit Commitment.
------------------------------------------------------
(a) Voluntary Reduction. The Borrowers shall have the right at any time
-------------------
and from time to time, upon at least five (5) Business Days prior written notice
to the Administrative Agent, to permanently reduce, without premium or penalty,
(i) the entire Revolving Credit Commitment at any time or (ii) portions of the
Revolving Credit Commitment, from time to time, in an aggregate principal amount
not less than $2,000,000 or any whole multiple of $500,000 in excess thereof.
The amount of each partial permanent reduction on or after December 31, 2003
shall be applied pro rata to reduce the remaining mandatory reduction amounts
--- ----
required under Section 2.6(b).
(b) Scheduled Reductions. The Revolving Credit Commitment shall be
--------------------
permanently reduced on the last Business Day of each of September, December,
March and June and on the Revolving Credit Termination Date, by multiplying the
corresponding quarterly percentage times the Revolving Credit Commitment in
-----
effect on December 30, 2003 in accordance with the following table:
---------------------------------------------------------------------------------------------------
Percentage Annual
Reduction Percentage
Quarters Ending Per Quarter Reduction
--------------------------------------------------------------------------------------------------
12/31/2003 through 9/30/2004 1.25% 5.0%
12/31/2004 through 9/30/2005 2.50% 10.0%
12/31/2005 through 9/30/2006 6.25% 25.0%
12/31/2006 through 9/30/2007 7.50% 30.0%
12/31/2007 through
Revolving Credit Termination Date 7.50% 30.0%
-----
100.0%
--------------------------------------------------------------------------------------------------
Any reductions pursuant to Section 2.6(a) or 2.6(c) shall be applied pro rata to
--------
reduce the remaining scheduled reduction amounts required by this paragraph (b).
(c) Mandatory Reductions. If at any time Excess Proceeds (or Refused
--------------------
Proceeds) remain after the prepayment of Term B Loans pursuant to Section
4.5(c)(vi), the Revolving Credit Commitment shall be permanently reduced on the
date of the required prepayment under Section 4.5(c) by an amount determined in
accordance with Section 4.5(c)(vi); provided, that Excess Proceeds or Refused
--------
Proceeds from any prepayment required by Sections 4.5(c)(i) and 4.5(c)(ii) shall
reduce the Revolving Credit Commitment only if an Event of Default has occurred
and is continuing on the date of the required prepayment under Section 4.5(c).
(d) Corresponding Prepayment. Each permanent reduction permitted or
------------------------
required pursuant to this Section 2.6 shall be accompanied by a payment of
principal sufficient to reduce the aggregate outstanding Revolving Credit Loans,
Swingline Loans and L/C Obligations, as applicable, after such reduction to the
Revolving Credit Commitment as so reduced and if the Revolving Credit Commitment
as so reduced is less than the aggregate amount of all outstanding Letters of
Credit, the Borrowers shall be required to deposit in a cash collateral account
opened by the Administrative Agent an amount equal to the aggregate then undrawn
and unexpired
28
amount of such Letters of Credit. Any reduction of the Revolving Credit
Commitment to zero shall be accompanied by payment of all outstanding
Obligations (and furnishing of such cash collateral for all L/C Obligations) and
shall result in the termination of the Revolving Credit Commitments and
Revolving Credit Facility. Any such cash collateral shall be applied in
accordance with Section 12.2(b). If the reduction of the Revolving Credit
Commitment requires the repayment of any LIBOR Rate Loan, such repayment shall
be accompanied by any amount required to be paid pursuant to Section 5.9 hereof.
SECTION 2.7 Termination of Revolving Credit Facility. The Revolving
----------------------------------------
Credit Facility shall terminate on the first to occur of (a) July 31, 2008, (b)
the date of termination by the Borrowers pursuant to Section 2.6(a), and (c) the
date of termination by the Administrative Agent on behalf of the Lenders
pursuant to Section 12.2(a) (any such date, the "Revolving Credit Termination
Date").
ARTICLE III
LETTER OF CREDIT FACILITY
-------------------------
SECTION 3.1 L/C Commitment. Subject to the terms and conditions hereof,
--------------
the Issuing Lender, in reliance on the agreements of the other Revolving Credit
Lenders set forth in Section 3.4(a), agrees to issue standby letters of credit
("Letters of Credit") for the account of any Borrower (as specified by the
Company) on any Business Day from the Closing Date through but not including the
Revolving Credit Termination Date in such form as may be approved from time to
time by the Issuing Lender; provided, that the Borrowers shall be jointly and
--------
severally liable for all L/C Obligations and that the Issuing Lender shall have
no obligation to and shall not issue any Letter of Credit if, after giving
effect to such issuance, (a) the L/C Obligations would exceed the L/C Commitment
or (b) the sum of all outstanding Revolving Credit Loans, plus all outstanding
----
Swingline Loans, plus all outstanding L/C Obligations would exceed the lesser of
----
(i) Revolving Credit Commitment and (ii) the Borrowing Base. Each Letter of
Credit shall (i) be denominated in Dollars in a minimum amount of $100,000, (ii)
be a standby letter of credit issued to support obligations of any Borrower or
any of its Subsidiaries, contingent or otherwise, incurred in the ordinary
course of business, (iii) expire on a date satisfactory to the Issuing Lender,
which date shall be no later than the earlier of one year after the date of
issuance and the Revolving Credit Termination Date and (iv) be subject to the
Uniform Customs and/or ISPA98, as set forth in the Application or as determined
by the Issuing Lender and, to the extent not inconsistent therewith, the laws of
the State of North Carolina. The Issuing Lender shall not at any time be
obligated to issue any Letter of Credit hereunder if such issuance would
conflict with, or cause the Issuing Lender or any L/C Participant to exceed any
limits imposed by, any Applicable Law. References herein to "issue" and
derivations thereof with respect to Letters of Credit shall also include
extensions or modifications of any existing Letters of Credit, unless the
context otherwise requires.
SECTION 3.2 Procedure for Issuance of Letters of Credit. The Company,
-------------------------------------------
on behalf of any Borrower, may from time to time request that the Issuing Lender
issue a Letter of Credit by delivering to the Issuing Lender at the
Administrative Agent's Office an Application therefor, completed to the
satisfaction of the Issuing Lender, and such other certificates,
29
documents and other papers and information as the Issuing Lender may request.
Upon receipt of any Application, the Issuing Lender shall process such
Application and the certificates, documents and other papers and information
delivered to it in connection therewith in accordance with its customary
procedures and shall, subject to Section 3.1 and Article V hereof, promptly
issue the Letter of Credit requested thereby (but in no event shall the Issuing
Lender be required to issue any Letter of Credit earlier than three (3) Business
Days after its receipt of the Application therefor and all such other
certificates, documents and other papers and information relating thereto) by
issuing the original of such Letter of Credit to the beneficiary thereof or as
otherwise may be agreed by the Issuing Lender and the Company, on behalf of such
Borrower. The Issuing Lender shall promptly furnish to the Company, on behalf of
such Borrower, a copy of such Letter of Credit and promptly notify each
Revolving Credit Lender of the issuance and upon request by any Revolving Credit
Lender, furnish to such Revolving Credit Lender a copy of such Letter of Credit
and the amount of such Revolving Credit Lender's L/C Participation therein.
SECTION 3.3 Commissions and Other Charges.
-----------------------------
(a) The Borrowers shall pay to the Administrative Agent, for the account of
the Issuing Lender and the L/C Participants, a letter of credit commission with
respect to each Letter of Credit in an amount equal to the Applicable Margin
then in effect for Revolving Credit Loans which are LIBOR Rate Loans on a per
annum basis on the stated amount of such Letter of Credit. Such commission
shall be payable quarterly in arrears on the last Business Day of each calendar
quarter and on the Revolving Credit Termination Date.
(b) In addition to the foregoing commission, the Borrowers shall pay the
Issuing Lender an issuance fee of one-eighth of one percent (0.125%) per annum
on the stated amount of each Letter of Credit, payable quarterly in arrears on
the last Business Day of each calendar quarter and on the Revolving Credit
Termination Date.
(c) The Administrative Agent shall, promptly following its receipt thereof,
distribute to the Issuing Lender and the L/C Participants each Letter of Credit
commission received by the Administrative Agent in accordance with their
respective Revolving Credit Commitment Percentages.
SECTION 3.4 L/C Participations.
------------------
(a) The Issuing Lender irrevocably agrees to grant and hereby grants to
each L/C Participant, and, to induce the Issuing Lender to issue Letters of
Credit hereunder, each L/C Participant irrevocably agrees to accept and purchase
and hereby accepts and purchases from the Issuing Lender, on the terms and
conditions hereinafter stated, for such L/C Participant's own account and risk
an undivided interest equal to such L/C Participant's Revolving Credit
Commitment Percentage in the Issuing Lender's obligations and rights under each
Letter of Credit issued hereunder and the amount of each draft paid by the
Issuing Lender thereunder. Each L/C Participant unconditionally and irrevocably
agrees with the Issuing Lender that, if a draft is paid under any Letter of
Credit for which the Issuing Lender is not reimbursed in full by the Borrowers
through a Revolving Credit Loan or otherwise in accordance with the terms of
this
30
Agreement, such L/C Participant shall pay to the Issuing Lender upon demand at
the Issuing Lender's address for notices specified herein an amount equal to
such L/C Participant's Revolving Credit Commitment Percentage of the amount of
such draft, or any part thereof, which is not so reimbursed.
(b) Upon becoming aware of any amount required to be paid by any L/C
Participant to the Issuing Lender pursuant to Section 3.4(a) in respect of any
unreimbursed portion of any payment made by the Issuing Lender under any Letter
of Credit, the Issuing Lender shall notify each L/C Participant of the amount
and due date of such required payment and such L/C Participant shall pay to the
Issuing Lender the amount specified on the applicable due date. If any such
amount is paid to the Issuing Lender after the date such payment is due, such
L/C Participant shall pay to the Issuing Lender on demand, in addition to such
amount, the product of (i) such amount, times (ii) the daily average Federal
-----
Funds Rate as determined by the Administrative Agent during the period from and
including the date such payment is due to the date on which such payment is
immediately available to the Issuing Lender, times (iii) a fraction the
-----
numerator of which is the number of days that elapse during such period and the
denominator of which is 360. A certificate of the Issuing Lender with respect
to any amounts owing under this Section 3.4(b) shall be conclusive in the
absence of manifest error. With respect to payment to the Issuing Lender of the
unreimbursed amounts described in this Section 3.4(b), if the L/C Participants
receive notice that any such payment is due (A) prior to 1:00 p.m. (Charlotte
time) on any Business Day, such payment shall be due that Business Day, and (B)
after 1:00 p.m. (Charlotte time) on any Business Day, such payment shall be due
on the following Business Day.
(c) Whenever, at any time after the Issuing Lender has made payment under
any Letter of Credit and has received from any L/C Participant its Revolving
Credit Commitment Percentage of such payment in accordance with this Section
3.4, the Issuing Lender receives any payment related to such Letter of Credit
(whether directly from the Borrowers or otherwise, or any payment of interest on
account thereof, the Issuing Lender will distribute to such L/C Participant its
pro rata share thereof; provided, that in the event that any such payment
--- ---- --------
received by the Issuing Lender shall be required to be returned by the Issuing
Lender, such L/C Participant shall return to the Issuing Lender the portion
thereof previously distributed by the Issuing Lender to it.
SECTION 3.5 Reimbursement Obligation of the Borrower. The Borrowers
----------------------------------------
agree to reimburse the Issuing Lender on each date on which the Issuing Lender
notifies the Borrowers of the date and amount of a draft paid under any Letter
of Credit for the amount of (a) such draft so paid and (b) any taxes, fees,
charges or other costs or expenses incurred by the Issuing Lender in connection
with such payment. Each such payment shall be made to the Issuing Lender at its
address for notices specified herein in lawful money of the United States and in
immediately available funds. Interest shall be payable on any and all amounts
remaining unpaid by the Borrowers under this Article III from the date such
amounts become payable (whether at stated maturity, by acceleration or
otherwise) until payment in full at the rate which would be payable on any
outstanding Base Rate Loans which were then overdue. If the Borrowers fail to
timely reimburse the Issuing Lender on the date the Borrowers receive the notice
referred to in this Section 3.5, the Borrowers shall be deemed to have timely
given a Notice of Revolving Credit/Swingline Borrowing hereunder to the
Administrative Agent requesting the Lenders to
31
make a Base Rate Loan on such date in an amount equal to the amount of such
drawing and, regardless of whether or not the conditions precedent specified in
Article VI have been satisfied, the Lenders shall make Base Rate Loans in such
amount, the proceeds of which shall be applied to reimburse the Issuing Lender
for the amount of the related drawing and costs and expenses. In the event that
any Revolving Credit Loan cannot for any reason be made on the date otherwise
required above, including, without limitation, as a result of the commencement
of a proceeding of the type described in Section 12.1(j) or (k), then each
Lender shall forthwith purchase (as of the date such borrowing would otherwise
have occurred) from the Issuing Lender an undivided participating interest in
the unreimbursed draft as in an amount equal to its Revolving Credit Commitment
Percentage of such unreimbursed draft.
SECTION 3.6 Obligations Absolute. The Borrowers' obligations under this
--------------------
Article III (including without limitation the Reimbursement Obligation) shall be
absolute and unconditional under any and all circumstances and irrespective of
any set-off, counterclaim or defense to payment which the Borrowers may have or
have had against the Issuing Lender or any beneficiary of a Letter of Credit.
The Borrowers also agree with the Issuing Lender that the Issuing Lender shall
not be responsible for, and the Borrowers' Reimbursement Obligation under
Section 3.5 shall not be affected by, among other things, the validity or
genuineness of documents or of any endorsements thereon, even though such
documents shall in fact prove to be invalid, fraudulent or forged, or any
dispute between or among the Borrowers and any beneficiary of any Letter of
Credit or any other party to which such Letter of Credit may be transferred or
any claims whatsoever of a Borrower against any beneficiary of such Letter of
Credit or any such transferee. The Issuing Lender shall not be liable for any
error, omission, interruption or delay in transmission, dispatch or delivery of
any message or advice, however transmitted, in connection with any Letter of
Credit, except for errors or omissions caused by the Issuing Lender's gross
negligence or willful misconduct. The Borrowers agree that any action taken or
omitted by the Issuing Lender under or in connection with any Letter of Credit
or the related drafts or documents, if done in the absence of gross negligence
or willful misconduct and in accordance with the standards of care specified in
the Uniform Customs and, to the extent not inconsistent therewith, the UCC shall
be binding on the Borrowers and shall not result in any liability of the Issuing
Lender to the Borrowers. The responsibility of the Issuing Lender to the
Borrowers in connection with any draft presented for payment under any Letter of
Credit shall, in addition to any payment obligation expressly provided for in
such Letter of Credit, be limited to determining that the documents (including
each draft) delivered under such Letter of Credit in connection with such
presentment are in conformity with such Letter of Credit.
SECTION 3.7 Effect of Application. To the extent that any provision of
---------------------
any Application related to any Letter of Credit is inconsistent with the
provisions of this Article III, the provisions of this Article III shall apply.
ARTICLE IV
TERM LOAN FACILITY
------------------
SECTION 4.1 Term Loans.
----------
32
(a) Subject to the terms and conditions of this Agreement, each Term A
Lender severally agrees to make Term A Loans to the Borrowers from time to time
from the Closing Date through the Term A Loan Commitment Termination Date. The
Term A Loans shall be funded by each Term A Lender in a principal amount equal
to such Lender's Term A Loan Percentage of the aggregate principal amount of the
Term A Loans made on the applicable borrowing date. The aggregate principal
amount of the Term A Loans shall not exceed the lesser of (a) the Borrowing Base
less the sum of all outstanding Revolving Credit Loans, all outstanding Term B
Loans, all outstanding Swingline Loans and all L/C Obligations and (b) the total
Term A Loan Commitment. Each Term A Loan borrowing pursuant to this Article IV
will constitute a permanent reduction in the Term A Loan Commitment and once
prepaid or repaid (in each case for any reason), Term A Loans may not be
reborrowed. Any portion of the Term A Loan Commitment not funded on or prior to
the Term A Loan Commitment Termination Date shall expire on such date.
(b) Subject to the terms and conditions of this Agreement, each Term B
Lender severally agrees to make Term B Loans to the Borrowers on the Closing
Date. The Term B Loans shall be funded by each Term B Lender in a principal
amount equal to such Lender's Term B Loan Percentage of the Term B Loan
Commitment. The aggregate principal amount of the Term B Loans shall not exceed
the lesser of (a) the Borrowing Base less the sum of all outstanding Revolving
Credit Loans, all outstanding Term A Loans, all outstanding Swingline Loans and
all L/C Obligations and (b) the total Term B Loan Commitment.
SECTION 4.2 Procedure for Advances of Term Loans.
------------------------------------
(a) Procedure for Advances of Term A Loans. The Borrowers shall give the
--------------------------------------
Administrative Agent irrevocable prior written notice in the form of a Notice of
Borrowing not later than 11:00 a.m. (Charlotte time) (i) on the same Business
Day as each Base Rate Loan and (ii) at least three (3) Business Days before each
LIBOR Rate Loan, of its intention to borrow, specifying (A) that such Loan is to
be a Term A Loan, (B) the date of such borrowing, which shall be a Business Day,
(C) the amount of such borrowing, which shall be in an amount equal to the
maximum amount of the Term A Loan Commitment then available to the Borrowers, or
if less, (x) with respect to Base Rate Loans in an aggregate principal amount of
$500,000 or a whole multiple of $250,000 in excess thereof, (y) with respect to
LIBOR Rate Loans in an aggregate principal amount of $2,000,000 or a whole
multiple of $500,000 in excess thereof and (D) whether the Loans are to be LIBOR
Rate Loans or Base Rate Loans, and (E) in the case of a LIBOR Rate Loan, the
duration of the Interest Period applicable thereto. A Notice of Borrowing
received after 11:00 a.m. (Charlotte time) shall be deemed received on the next
Business Day. The Administrative Agent shall promptly notify the Term A Lenders
of each such Notice of Borrowing.
(b) Procedure for Advances of Term B Loans. The Borrowers shall give the
--------------------------------------
Administrative Agent irrevocable prior written notice in the form of a Notice of
Borrowing not later than 11:00 a.m. (Charlotte time) on the Closing Date
requesting that the Term B Lenders make the Term B Loan on such date.
33
(c) Disbursement of Term Loans. Not later than 2:00 p.m. (Charlotte time)
---------------------------
on the applicable borrowing date, each Term A and Term B Lender, as applicable,
will make available to the Administrative Agent, for the account of the
Borrowers, at the office of the Administrative Agent in funds immediately
available to the Administrative Agent, such Lender's Term A Loan Percentage of
the Term A Loans and such Lender's Term B Loan Percentage of the Term B Loans to
be made on such borrowing date. The Borrowers hereby irrevocably authorize the
Administrative Agent to disburse the proceeds of each borrowing requested
pursuant to this Section 4.2 in immediately available funds by crediting or
wiring such proceeds to the deposit account of the Borrowers identified in the
most recent Notice of Account Designation delivered by the Borrowers to the
Administrative Agent or as may be otherwise agreed upon by the Borrowers and the
Administrative Agent from time to time. Subject to Section 5.7 hereof, the
Administrative Agent shall not be obligated to disburse the portion of the
proceeds of any Term Loan requested pursuant to this Section 4.2 to the extent
that any Lender has not made available to the Administrative Agent its Term A
Loan Percentage of any Term A Loan or its Term B Loan Percentage of any Term B
Loan.
SECTION 4.3 Scheduled Repayment of Term Loans.
---------------------------------
(a) The Borrowers shall repay the aggregate outstanding principal amount of
the Term A Loans in consecutive quarterly installments on the last Business Day
of each of September, December, March and June and on the Term A Loan Maturity
Date, by multiplying the corresponding quarterly percentage times the aggregate
-----
principal amount of the Term A Loans outstanding on December 30, 2003 in
accordance with the following table:
--------------------------------------------------------------------------------------------------
Amount of Total
Reduction Annual
Quarters Ending Per Quarter Reduction
--------------------------------------------------------------------------------------------------
12/31/2003 through 9/30/2004 1.25% 5.0%
12/31/2004 through 9/30/2005 2.50% 10.0%
12/31/2005 through 9/30/2006 6.25% 25.0%
12/31/2006 through 9/30/2007 7.50% 30.0%
12/31/2007 through
Term A Loan Maturity Date 7.50% 30.0%
-----
100.0%
--------------------------------------------------------------------------------------------------
If not sooner paid, the Term A Loans shall be paid in full, together with
accrued interest thereon and any other amounts payable with respect thereto, on
the Term A Loan Maturity Date.
(b) The Borrowers shall repay the aggregate outstanding principal
amount of the Term B Loans in consecutive quarterly installments on the last
Business Day of each of September, December, March and June and on the Term B
Loan Maturity Date, by multiplying the corresponding quarterly percentage times
-----
the aggregate principal amount of the Term B Loans outstanding on December 30,
2003 in accordance with the following table:
34
--------------------------------------------------------------------------------------------------
Amount of Total
Reduction Annual
Quarters Ending Per Quarter Reduction
--------------------------------------------------------------------------------------------------
12/31/2003 through 9/30/2004 0.25% 1.0%
12/31/2004 through 9/30/2005 0.25% 1.0%
12/31/2005 through 9/30/2006 0.25% 1.0%
12/31/2006 through 9/30/2007 0.25% 1.0%
12/31/2007 through 9/30/2008 0.25% 1.0%
12/31/2008 through
Term B Loan Maturity Date 47.5% 95.0%
-----
100.0%
--------------------------------------------------------------------------------------------------
If not sooner paid, the Term B Loans shall be paid in full, together with
accrued interest thereon and any other amounts payable with respect thereto, on
the Term B Loan Maturity Date.
SECTION 4.4 Excess Term Loans.
-----------------
(a) Excess Term A Loans. If at any time the outstanding principal
-------------------
amount of all Term A Loans exceeds the maximum permitted outstanding amount
pursuant to Section 4.1(a), the Borrowers shall repay no later than the next
Business Day following notice from the Administrative Agent, by payment to the
Administrative Agent for the account the Term A Lenders, Term A Loans in an
amount equal to such excess, provided, that if any simultaneous repayment of
--------
excess Revolving Credit Loans is required pursuant to Section 2.4(b), such
repayment shall be made simultaneously with any repayment required by this
Section 4.4(a) and provided further, that if any simultaneous repayment of
-------- -------
excess Term B Loans is required pursuant to Section 4.4(b), such repayment shall
be made prior to any repayment required by this Section 4.4(a) (to the extent
any repayment under this Section 4.4(a) is still required after any such
repayment pursuant to Section 4.4(b)).
(b) Excess Term B Loans. If at any time the outstanding principal
-------------------
amount of all Term B Loans exceeds the maximum permitted outstanding amount
pursuant to Section 4.1(b), the Borrowers shall repay no later than the next
Business Day following notice from the Administrative Agent, by payment to the
Administrative Agent for the account the Term B Lenders, Term B Loans in an
amount equal to such excess, provided, that if any simultaneous repayment of
--------
excess Revolving Credit Loans or excess Term A Loans is required pursuant to
Section 2.4(b) or 4.4(a), as applicable, repayment required pursuant to this
Section 4.4(b) shall be made prior to any repayment required pursuant to
Sections 2.4(b) and 4.4(a).
SECTION 4.5 Commitment Reduction; Prepayments of Term Loans.
-----------------------------------------------
(a) Voluntary Commitment Reduction. The Borrowers shall have the
------------------------------
right at any time and from time to time, upon at least five (5) Business Days
prior written notice to the Administrative Agent, to permanently reduce, without
premium or penalty any unused portion of the Term A Loan Commitment, from time
to time, in an aggregate principal amount not less than $2,000,000 or any whole
multiple of $500,000 in excess thereof.
35
(b) Optional Repayment of Term Loans. The Borrowers shall have the
--------------------------------
right at any time and from time to time, upon delivery to the Administrative
Agent of a Notice of Prepayment at least three (3) Business Days prior to any
repayment, to prepay the Term Loans in whole or in part. Each optional
prepayment of the Term Loans hereunder shall be in an aggregate principal amount
of at least $2,000,000 or any whole multiple of $500,000 in excess thereof and
shall be applied to the Term A Loans and the Term B Loans on a pro rata basis.
With respect to Term A Loans, each such prepayment shall be applied (i) to
outstanding Term A Loans with respect to each prepayment made prior to or on
December 30, 2003, and (ii) in addition, to reduce the outstanding principal
installments of the Term A Loans on a pro rata basis with respect to each
prepayment made after December 30, 2003. With respect to Term B Loans, each
such prepayment shall be applied to reduce the outstanding principal
installments of the Term B Loans on a pro rata basis. Each repayment shall be
accompanied by any amount required to be paid pursuant to Section 4.5(d) and
Section 5.9 hereof.
(c) Mandatory Prepayment of Term Loan.
---------------------------------
(i) Debt Proceeds. The Borrowers shall make mandatory principal
-------------
prepayments of the Term Loans in the manner set forth in Section 4.5(c)(vi) in
amounts equal to one hundred percent (100%) of the aggregate Net Cash Proceeds
from any issuance of Debt permitted by Section 11.1(c) (other than (A) so long
as no Event of Default then exists, the Net Cash Proceeds from any such Debt
issued and utilized to finance the Twenty-Nine Market Business Plan and/or any
Expanded Business Plan and (B) the Net Cash Proceeds from that portion of any
such Debt that constitutes Refinancing Securities) by the Company, any Borrower
or any of their respective Subsidiaries. Such prepayment shall be made within
three (3) Business Days after the date of issuance of any such Debt.
(ii) Equity Proceeds. The Borrowers shall make mandatory
---------------
principal prepayments of the Term Loans in the manner set forth in Section
4.5(c)(vi) in amounts equal to one hundred percent (100%) of the aggregate Net
Cash Proceeds from any offering of equity securities permitted hereunder (other
than (A) the Net Cash Proceeds from any equity issued and utilized to finance
the Twenty Nine Market Business Plan and/or any Expanded Business Plan, (B) the
Preferred Equity issued on the Closing Date, (C) the Net Cash Proceeds from any
equity issued and utilized to redeem in full the Preferred Equity and on terms
and conditions reasonably satisfactory to the Administrative Agent and the
Required Lenders (the "Replacement Equity") and (D) the aggregate Net Cash
Proceeds from any equity issuance by the Company that constitutes Refinancing
Securities) by the Company, any Borrower or any of their respective
Subsidiaries. Such prepayment shall be made within three (3) Business Days after
the date of consummation of any such equity offering.
(iii) Asset Sale Proceeds. The Borrowers shall make mandatory
-------------------
principal prepayments of the Term Loans in the manner set forth in Section
4.5(c)(vi) in amounts equal to one hundred percent (100%) of the aggregate Net
Cash Proceeds (as long as such Net Cash Proceeds exceed $1,000,000 in the
aggregate in any Fiscal Year and then only such excess) from the sale or other
disposition of assets by the Company, any Borrower or any of their respective
Subsidiaries in each case pursuant to Section 11.6(e) which proceeds have not
been utilized by
36
the applicable seller within 180 days of such sale to purchase replacement
assets. Such reduction shall be made on the earlier of 180 days after the date
of consummation of any such transaction or the date the Borrowers notify the
Administrative Agent of the applicable seller's intention not to so utilize such
Net Cash Proceeds.
(iv) Insurance and Condemnation Proceeds. The Borrowers shall make
-----------------------------------
mandatory principal prepayments of the Term Loans in the manner set forth in
Section 4.5(c)(vi) in amounts equal to one hundred percent (100%) of the
aggregate Net Cash Proceeds (as long as such Net Cash Proceeds exceed $1,000,000
in the aggregate in any Fiscal Year and then only such excess) received by the
Company, any Borrower or any of their respecting Subsidiaries (or by the
Administrative Agent as loss payee) under any property or casualty insurance
policy thereof or from any condemnation proceeding which proceeds have not been
utilized within 180 days of receipt by such Person to purchase replacement
assets. Such reduction shall be made on the earlier of 180 days after any such
receipt or the date the Borrowers notify the Administrative Agent of such
Person's intention not to so utilize such Net Cash Proceeds.
(v) Excess Cash Flow. Commencing with the Fiscal Year ending December
----------------
31, 2003, the Borrowers shall make mandatory principal prepayments of the Term
Loans in the manner set forth in Section 4.5(c)(vi) in amounts equal to fifty
percent (50%) of Excess Cash Flow, if any, for each Fiscal Year. Such prepayment
shall be made within ninety (90) days of the corresponding Fiscal Year end.
(vi) Notice; Manner of Payment. Upon the occurrence of any event
-------------------------
triggering the prepayment requirement under Sections 4.5(c)(i) through and
including 4.5(c)(v), the Borrowers shall promptly deliver a Notice of Prepayment
to the Administrative Agent and upon receipt of such notice, the Administrative
Agent shall promptly so notify the Lenders. Each prepayment under this Section
4.5(c) shall be applied as follows: first, to the Term B Loans reducing the
-----
outstanding principal installments of the Term B Loans on a pro rata basis and
second, to the extent of any excess (such excess, the "Excess Proceeds"), (x)
------
with respect to any such prepayment on or prior to the Term A Loan Commitment
Termination Date pro rata between the Term A Loan Facility and the Revolving
Credit Facility and (y) with respect to any such prepayment thereafter, first to
the Term A Loan Facility and then to the Revolving Credit Facility as follows:
(A) (1) to reduce permanently the Term A Loan Commitment and
repay Term A Loans with respect to each prepayment made prior to
or on the Term A Loan Commitment Termination Date, and (2) to the
Term A Loans reducing the outstanding principal installments
thereof on a pro rata basis with respect to each prepayment made
after the Term A Loan Commitment Termination Date; provided, that
--------
Excess Proceeds from any prepayment required by Sections
4.5(c)(i) and 4.5(c)(ii) shall reduce the Term A Loan Commitment
only if an Event of Default has occurred and is continuing on the
date of the required prepayment under Section 4.5(c); and
37
(B) to repay Revolving Credit Loans pursuant to Section 2.4(c),
and, subject to the proviso therein, to reduce permanently the
Revolving Credit Commitment pursuant to Section 2.6(c);
provided, that any Term B Lender may elect to have its pro rata share (based on
--------
its Term B Loan Percentage) of any mandatory prepayment under Section 4.5(c)(vi)
(any such amount, "Refused Proceeds") be applied to the Term A Loan Facility and
the Revolving Credit Facility as set forth above (any such election, a "Payment
Refusal"); provided further, that if Refused Proceeds remain after the
-------- -------
prepayment applied in accordance with the foregoing proviso, the amount of such
excess Refused Proceeds shall be reapplied to the pro rata share of any Term B
Lenders that have made a Payment Refusal election (which repayment such Term B
Lenders may not refuse) and applied to the Term B Loans as set forth above. Any
such Term B Lender that makes a Payment Refusal shall, no later than 11:00 a.m.
(Charlotte time) two (2) Business Days preceding the date specified for any
prepayment of the Loans, notify the Administrative Agent in writing of such
election. Each mandatory prepayment shall be accompanied by any amount required
to be paid pursuant to Section 4.5(d) and Section 5.9 hereof.
(d) Term B Loan Pre-Payment Premium. Any prepayment made pursuant to
-------------------------------
Section 4.5(b) or 4.5(c) with respect to the Term B Loans only shall be
accompanied by a prepayment premium in an amount equal to the product of the
amount of the Term B Loans prepaid (and accepted by the relevant Term B Lenders)
multiplied by the percentage for the corresponding period in which such
prepayment is made as set forth below:
Prepayment
Period Premium
--------------------- ------------------
Prior to 8/1/01 2.00%
From 8/1/01 to 1.00%
8/1/02
Thereafter 0.00%
SECTION 4.6 Term Notes.
----------
(a) Term A Notes. Each Term A Lender's Term A Loan and the obligation
------------
of the Borrowers to repay such Term A Loan shall be evidenced by a separate Term
A Note executed by the Borrowers payable to the order of such Lender. Each Term
A Loan Note shall be dated the date hereof and shall bear interest on the unpaid
principal amount thereof at the applicable interest rate per annum specified in
Section 5.1.
(b) Term B Notes. Each Term B Lender's Term B Loan and the obligation
------------
of the Borrowers to repay such Term B Loan shall be evidenced by a separate Term
B Note executed by the Borrowers payable to the order of such Lender. Each Term
B Loan Note shall be dated the date hereof and shall bear interest on the unpaid
principal amount thereof at the applicable interest rate per annum specified in
Section 5.1.
SECTION 4.7 Increase in Term A Loan Commitment. At any time prior
----------------------------------
to the Term A Loan Commitment Termination Date, the Borrowers shall have the
right to request a
38
single increase in the aggregate amount of the Term A Loan Commitment of up to
$50,000,000 by:
(a) accepting the offer or offers of any Person or Persons (not then a Term A
Lender) constituting an Eligible Assignee and approved by the Company and the
Administrative Agent, which consents shall not be unreasonably withheld or
delayed, to become a new Term A Lender hereunder with a Term A Loan Commitment
in an aggregate amount (taken together with any increase in the Term A Loan
Commitments of any existing Term A Lenders pursuant to Section 4.7(b)) of up to
the aggregate amount of any such increase, and/or
(b) accepting the offer of any existing Term A Lender or Term A Lenders to
increase its (or their) Term A Loan Commitment(s) in an aggregate amount (taken
together with any Term A Loan Commitments of any new Term A Lenders pursuant to
Section 4.7(a)) of up to the aggregate amount of any such increase;
provided, that (i) no Default or Event of Default shall exist immediately before
--------
and after giving effect thereto, (ii) the Borrowers shall have provided, prior
to the date of any such increase, updated financial projections, in form and
substance reasonably satisfactory to the Administrative Agent, demonstrating pro
---
forma compliance with the covenants set forth in Articles X and XI, (iii) the
-----
Company shall have provided the Administrative Agent with thirty (30) days (or
such shorter time period as may be reasonably satisfactory to the Administrative
Agent) prior written notice of a request for any such increase prior to the
proposed effectiveness thereof, (iv) in no event shall any Term A Lenders' Term
A Loan Commitment be increased without the consent of such Lender, and (v) in no
event shall the aggregate amount of the Term A Loan Commitments of all Term A
Lenders after giving effect to such increase in the Term A Loan Commitments
exceed $150,000,000. Any increase to the Term A Loan Commitment pursuant to (x)
clause (a) of this Section 4.7 shall become effective upon the execution of a
New Lender Supplement in the form of Exhibit K-1 hereto (each, a "New Lender
Supplement") by the Borrower, Administrative Agent and relevant new Term A
Lender or Term A Lenders, (y) clause (b) of this Section 4.7 shall become
effective upon the execution of an Term A Loan Commitment Increase Supplement in
the form of Exhibit K-2 hereto (each, a "Term A Loan Commitment Increase
Supplement"), executed by the Borrowers, the Administrative Agent and the
increasing Term A Lender or Term A Lenders and (z) either clause (a) or (b) of
Section 4.7 shall become effective upon the execution of both such supplements.
The Administrative Agent shall forward copies of any such supplement to the
Lenders promptly upon receipt thereof.
ARTICLE V
GENERAL LOAN PROVISIONS
-----------------------
SECTION 5.1 Interest.
--------
(a) Interest Rate Options. Subject to the provisions of this Section 5.1,
---------------------
(i) at the election of the Borrowers, the Revolving Credit Loans, the Term A
Loans and the Term B Loans shall bear interest at (A) the Base Rate plus the
Applicable Margin as set forth in Section 5.1(c) or (B) the LIBOR Rate plus the
----
Applicable Margin as set forth in Section 5.1(c); provided, that
--------
39
unless the Borrowers shall have delivered to the Administrative Agent a LIBOR
Rate indemnity letter reasonably satisfactory thereto, the LIBOR Rate shall not
be available until three (3) Business Days after the Closing Date, and (ii) any
Swingline Loan shall bear interest at the Base Rate plus the Applicable Margin
as set forth in Section 5.1(c). The Borrowers shall select the rate of interest
and Interest Period, if any, applicable to any Loan at the time a Notice of
Borrowing is given pursuant to Section 2.3 or at the time a Notice of
Conversion/Continuation is given pursuant to Section 5.2. Each Loan or portion
thereof bearing interest based on the Base Rate shall be a "Base Rate Loan",
each Loan or portion thereof bearing interest based on the LIBOR Rate shall be a
"LIBOR Rate Loan." Any Loan or any portion thereof as to which the Borrowers
have not duly specified an interest rate as provided herein shall be deemed a
Base Rate Loan.
(b) Interest Periods. In connection with each LIBOR Rate Loan, the
----------------
Borrowers, by giving notice at the times described in Section 5.1(a), shall
elect an interest period (each, an "Interest Period") to be applicable to such
Loan, which Interest Period shall be a period of one (1), two (2), three (3), or
six (6) months with respect to each LIBOR Rate Loan; provided, that:
--------
(i) the Interest Period shall commence on the date of advance of or
conversion to any LIBOR Rate Loan and, in the case of immediately successive
Interest Periods, each successive Interest Period shall commence on the date on
which the next preceding Interest Period expires;
(ii) if any Interest Period would otherwise expire on a day that is
not a Business Day, such Interest Period shall expire on the next succeeding
Business Day; provided, that if any Interest Period with respect to a LIBOR Rate
--------
Loan would otherwise expire on a day that is not a Business Day but is a day of
the month after which no further Business Day occurs in such month, such
Interest Period shall expire on the next preceding Business Day;
(iii) any Interest Period with respect to a LIBOR Rate Loan that
begins on the last Business Day of a calendar month (or on a day for which there
is no numerically corresponding day in the calendar month at the end of such
Interest Period) shall end on the last Business Day of the relevant calendar
month at the end of such Interest Period;
(iv) no Interest Period shall extend beyond the Revolving Credit
Termination Date or the Term Loan Maturity Date, as applicable to the respective
LIBOR Rate Loan, and Interest Periods shall be selected by the Borrowers so as
to permit the Borrowers to make mandatory reductions of the Revolving Credit
Commitment pursuant to Section 2.6(b) and the Term Loan Commitment pursuant to
Section 4.3(a) without payment of any amounts pursuant to Section 5.9; and
(v) there shall be no more than eight (8) Interest Periods
outstanding at any time.
(c) Applicable Margin. The Applicable Margin provided for in Section
-----------------
5.1(a) with respect to the Loans (the "Applicable Margin") (i) with respect to
Term B Loans, shall be as follows:
40
---------------------------------------------------------------------------------------
Applicable Margin Applicable Margin
LIBOR Rate Base Rate
---------------------------------------------------------------------------------------
4.750% 3.750%
---------------------------------------------------------------------------------------
and (ii) with respect to Revolving Credit Loans and Term A Loans, shall be
determined by reference to the Company Leverage Ratio as of the end of the
fiscal quarter immediately preceding the delivery of the applicable Officer's
Compliance Certificate as follows:
----------------------------------------------------------------------------------------------------------
Company Leverage Applicable Margin Applicable Margin
Ratio LIBOR Rate Base Rate
----------------------------------------------------------------------------------------------------------
* 10.0x 4.000% 3.000%
* 9.0x but ** 10.0x 3.750% 2.750%
* 8.0x but ** 9.0x 3.500% 2.500%
* 7.0x but ** 8.0x 3.250% 2.250%
* 6.0x but ** 7.0x 3.000% 2.000%
* 5.0x but ** 6.0x 2.750% 1.750%
* 4.0x but ** 5.0x 2.500% 1.500%
* 4.0x 2.250% 1.250%
----------------------------------------------------------------------------------------------------------
_______________________
* greater than or equal to sign
** less than sign
Adjustments, if any, in the Applicable Margin with respect to Revolving Credit
Loans and Term A Loans shall be made by the Administrative Agent on the fifth
(5th) Business Day after receipt by the Administrative Agent of quarterly
financial statements for the Company and its Subsidiaries and the accompanying
Officer's Compliance Certificate setting forth the Company Leverage Ratio as of
the most recent fiscal quarter end. Subject to Section 5.1(d), in the event the
Company fails to deliver such financial statements and certificate within the
time required by Sections 8.1(b) and 8.2 hereof, the Applicable Margin shall be
the highest Applicable Margin set forth above until the delivery of such
financial statements and certificate.
(d) Default Rate. Subject to Section 12.3, if notified by the
------------
Administrative Agent at the direction of the Required Lenders, upon the
occurrence and during the continuance of an Event of Default, (i) the Borrowers
shall no longer have the option to request LIBOR Rate Loans or Swingline Loans,
(ii) all outstanding LIBOR Rate Loans shall bear interest at a rate per annum of
two percent (2%) in excess of the highest possible rate set forth in Section
5.1(c) applicable to LIBOR Rate Loans until the end of the applicable Interest
Period and thereafter at a rate equal to two percent (2%) in excess of the
highest possible rate set forth in Section 5.1(c) applicable to Base Rate Loans,
and (iii) all outstanding Base Rate Loans and other Obligations shall bear
interest at a rate per annum equal to two percent (2%) in excess of the highest
possible rate set forth in Section 5.1(c) applicable to Base Rate Loans or such
other Obligations. Interest shall continue to accrue on the Notes after the
filing by or against the Borrowers of any petition seeking any relief in
bankruptcy or under any act or law pertaining to insolvency or debtor relief,
whether state, federal or foreign.
(e) Interest Payment and Computation. Interest on each Base Rate Loan
--------------------------------
shall be payable in arrears on the last Business Day of each calendar quarter
commencing September 30, 2000; and interest on each LIBOR Rate Loan shall be
payable on the last day of each Interest
41
Period applicable thereto, and if such Interest Period extends over three (3)
months, at the end of each three (3) month interval during such Interest Period.
Interest on LIBOR Rate Loans shall be computed on the basis of a 360-day year
and assessed for the actual number of days elapsed and interest on Base Rate
Loans and all fees payable hereunder shall be computed on the basis of a 365/66-
day year and assessed for the actual number of days elapsed.
(f) Maximum Rate. In no contingency or event whatsoever shall the
------------
aggregate of all amounts deemed interest hereunder or under any of the Notes
charged or collected pursuant to the terms of this Agreement or pursuant to any
of the Notes exceed the highest rate permissible under any Applicable Law which
a court of competent jurisdiction or an arbitration panel shall, in a final
determination, deem applicable hereto. In the event that such a court or
arbitration panel determines that the Lenders have charged or received interest
hereunder in excess of the highest applicable rate, the rate in effect hereunder
shall automatically be reduced to the maximum rate permitted by Applicable Law
and the Lenders shall at the Administrative Agent's option (i) promptly refund
to the Borrowers any interest received by Lenders in excess of the maximum
lawful rate or (ii) shall apply such excess to the principal balance of the
Obligations. It is the intent hereof that the Borrowers not pay or contract to
pay, and that neither the Administrative Agent nor any Lender receive or
contract to receive, directly or indirectly in any manner whatsoever, interest
in excess of that which may be paid by the Borrowers under Applicable Law.
SECTION 5.2 Notice and Manner of Conversion or Continuation of Loans.
--------------------------------------------------------
Provided that no Event of Default has occurred and is then continuing, the
Borrowers shall have the option to (a) convert at any time following the third
Business Day after the Closing Date all or any portion of its outstanding Base
Rate Loans (other than Swingline Loans) in a principal amount equal to $500,000
or any whole multiple of $250,000 in excess thereof into one or more LIBOR Rate
Loans and (b) upon the expiration of any Interest Period, (i) convert all or any
part of its outstanding LIBOR Rate Loans in a principal amount equal to
$2,000,000 or a whole multiple of $500,000 in excess thereof into Base Rate
Loans (other than Swingline Loans) or (ii) continue such LIBOR Rate Loans as
LIBOR Rate Loans. Whenever the Borrowers desire to convert or continue Loans as
provided above, the Borrowers shall give the Administrative Agent irrevocable
prior written notice in the form attached as Exhibit E (a "Notice of
---------
Conversion/Continuation") not later than 11:00 a.m. (Charlotte time) three (3)
Business Days before the day on which a proposed conversion or continuation of
such Loan is to be effective specifying (A) the Loans to be converted or
continued, and, in the case of any LIBOR Rate Loan to be converted or continued,
the last day of the Interest Period therefor, (B) the effective date of such
conversion or continuation (which shall be a Business Day), (C) the principal
amount of such Loans to be converted or continued, and (D) the Interest Period
to be applicable to such converted or continued LIBOR Rate Loan. The
Administrative Agent shall promptly notify the Lenders of such Notice of
Conversion/Continuation.
SECTION 5.3 Fees.
----
(a) Commitment Fee. (i) Commencing on the Closing Date, the Borrowers
--------------
shall pay to the Administrative Agent, for the account of the Revolving Credit
Lenders, a non-refundable commitment fee accrued on the aggregate unused portion
of the Revolving Credit Commitment
42
(less any L/C Obligations), which commitment fee shall fluctuate based on the
daily utilization of the Revolving Credit Facility (measured as of 5:00 p.m. on
such day) for each calendar quarter at a rate per annum determined in accordance
with the following table:
--------------------------------------------------------------------------------------
Average Percent of Commitment
Facility Utilization Fee
-------------------------------------------------------------------------------------
** 33% 1.500%
* 33% and ** 67% 1.125%
* 67% 0.750%
-------------------------------------------------------------------------------------
_______________
* greater than or equal to sign
** less than sign
The commitment fee shall accrue on the Revolving Credit Commitment so long as it
remains in effect (and shall not have expired or terminated) and shall be
payable in arrears on the last Business Day of each calendar quarter during the
term of this Agreement commencing September 30, 2000, and on the Final Maturity
Date. Such commitment fee shall be distributed by the Administrative Agent to
the Revolving Credit Lenders pro rata in accordance with such Lenders'
--- ----
respective Revolving Credit Commitment Percentages.
(ii) Commencing on the Closing Date, the Borrowers shall pay to the
Administrative Agent, for the account of the Term A Lenders, a non-refundable
commitment fee accrued on the aggregate unused portion of the Term A Loan
Commitment, which commitment fee shall fluctuate based on the daily utilization
of the Term A Loan Facility (measured as of 5:00 p.m. on such day) for each
calendar quarter at a rate per annum determined in accordance with the following
table:
-------------------------------------------------------------------------------------
Average Percent of Commitment
Facility Utilization Fee
-------------------------------------------------------------------------------------
* 33% 1.500%
** 33% and * 67% 1.125%
** 67% 0.750%
-------------------------------------------------------------------------------------
_____________
* greater than or equal to sign
** less than sign
The commitment fee shall accrue on the Term A Loan Commitment so long as it
remains in effect (and shall not have expired or terminated) and shall be
payable in arrears on the last Business Day of each calendar quarter during the
term of this Agreement commencing September 30, 2000, and on the Term A Loan
Commitment Termination Date. Such commitment fee shall be distributed by the
Administrative Agent to Term A Lenders pro rata in accordance with such Lenders'
--- ----
respective Term A Commitment Percentages.
(b) Agents' and Other Fees. In order to compensate the Agents with
----------------------
respect to the Credit Facility, the Borrowers agree to pay to First Union and
First Union Securities, Inc. the fees set forth in the separate fee letter
agreement executed by the Company with respect to the Credit Facility dated
April 27, 2000.
SECTION 5.4 Manner of Payment. (a) Each payment by the Borrowers
-----------------
on account of the principal of or interest on the Revolving Credit Loans or of
any fee, commission
43
or other amounts (including the Reimbursement Obligation) payable to the
Revolving Credit Lenders under this Agreement with respect to the Revolving
Credit Loans, the Swingline Loans, the Letters of Credit, any Revolving Credit
Note or any Swingline Note shall be made not later than 1:00 p.m. (Charlotte
time) on the date specified for payment under this Agreement to the
Administrative Agent at the Administrative Agent's Office for the account of the
Revolving Credit Lenders pro rata in accordance with their respective Revolving
--- ----
Credit Commitment Percentages (except as specified below), in Dollars, in
immediately available funds and shall be made without any set-off, counterclaim
or deduction whatsoever, (b) each payment by the Borrowers on account of the
principal of or interest on the Term A Loans or of any fee, commission or other
amounts payable to the Term A Lenders under this Agreement with respect to the
Term A Loans or any Term A Note shall be made in like manner, except for the
account of the Term A Lenders pro rata in accordance with their respective Term
--- ----
A Loan Percentages, (c) each payment by the Borrowers on account of the
principal of or interest on the Term B Loans or of any fee, commission or other
amounts payable to the Term B Lenders under this Agreement with respect to the
Term B Loans or any Term B Note shall be made in like manner, except for the
account of the Term B Lenders pro rata in accordance with their respective Term
--- ----
B Loan Percentages and (d) any other amounts payable to the Lenders under this
Agreement shall be made in like manner, except for the account of the Lenders
pro rata in accordance with their respective share of the Obligations with
--- ----
respect to which such payment was received. Any payment received after such time
but before 2:00 p.m. (Charlotte time) on such day shall be deemed a payment on
such date for the purposes of Section 12.1, but for all other purposes shall be
deemed to have been made on the next succeeding Business Day. Any payment
received after 2:00 p.m. (Charlotte time) shall be deemed to have been made on
the next succeeding Business Day for all purposes. Upon receipt by the
Administrative Agent of each such payment, the Administrative Agent shall
distribute to each Lender at its address for notices set forth herein its pro
---
rata share of such payment in accordance with such Lender's Revolving Credit
----
Commitment Percentage, Term A Loan Percentage or Term B Loan Percentage, as
applicable (except as specified below), and shall wire advice of the amount of
such credit to each Lender. Each payment to the Administrative Agent of the
Issuing Lender's fees or L/C Participants' commissions shall be made in like
manner, but for the account of the Issuing Lender or the L/C Participants, as
the case may be. Each payment to the Administrative Agent of Administrative
Agent's fees or expenses shall be made for the account of the Administrative
Agent and any amount payable to any Lender under Sections 5.8, 5.9, 5.10, 5.11
or 15.2 shall be paid to the Administrative Agent for the account of the
applicable Lender. Subject to Section 5.1(b)(ii), if any payment under this
Agreement or any Note shall be specified to be made upon a day which is not a
Business Day, it shall be made on the next succeeding day which is a Business
Day and such extension of time shall in such case be included in computing any
interest if payable along with such payment.
SECTION 5.5 Crediting of Payments and Proceeds. In the event
----------------------------------
that the Borrowers shall fail to pay any of the Obligations when due and the
Obligations have been accelerated pursuant to Section 12.2, all payments
received by the Lenders upon the Notes and the other Obligations and all net
proceeds from the enforcement of the Obligations shall be applied first to all
expenses then due and payable by the Borrowers hereunder, then to all indemnity
obligations then due and payable by the Borrowers hereunder, then to all
Administrative Agent's and Issuing Lender's fees then due and payable, then to
all commitment
44
and other fees and commissions then due and payable, then to accrued and unpaid
interest hereunder on the Swingline Notes to the Swingline Lender, then to the
principal amount outstanding under the Swingline Notes to the Swingline Lender,
then to accrued but unpaid interest on the other Notes, the Reimbursement
Obligation and any termination payments due in respect of a Hedging Agreement
related to the Obligations with any Lender (which such Hedging Agreement is
permitted or required hereunder) (pro rata in accordance with all such amounts
--- ----
due), then to the principal amount of the other Notes and Reimbursement
Obligation (pro rata in accordance with all such amounts due) and then to the
--- ----
cash collateral account described in Section 12.2(b) hereof to the extent of any
L/C Obligations then outstanding, in that order.
SECTION 5.6 Adjustments. If any Lender (a "Benefited Lender")
-----------
shall at any time receive any payment of all or part of the Obligations owing to
it, or interest thereon, or if any Lender shall at any time receive any
collateral in respect to the Obligations owing to it (whether voluntarily or
involuntarily, by set-off or otherwise) in a greater proportion than any such
payment to and collateral received by any other Lender, if any, in respect of
the Obligations owing to such other Lender, or interest thereon, such Benefited
Lender shall purchase for cash from the other Lenders such portion of each such
other Lender's Extensions of Credit, or shall provide such other Lenders with
the benefits of any such collateral, or the proceeds thereof, as shall be
necessary to cause such Benefited Lender to share the excess payment or benefits
of such collateral or proceeds ratably with each of the Lenders; provided, that
--------
if all or any portion of such excess payment or benefits is thereafter recovered
from such Benefited Lender, such purchase shall be rescinded, and the purchase
price and benefits returned to the extent of such recovery, but without interest
unless the Benefitted Lender is required to pay interest thereon, in which case
each Lender returning funds to the Benefitted Lender shall pay its pro rata
share of such interest. The Borrowers agree that each Lender so purchasing a
portion of another Lender's Extensions of Credit may exercise all rights of
payment (including, without limitation, rights of set-off) with respect to such
portion as fully as if such Lender were the direct holder of such portion.
SECTION 5.7 Nature of Obligations of Lenders Regarding
------------------------------------------
Extensions of Credit; Assumption by the Administrative Agent. The obligations
------------------------------------------------------------
of the Lenders under this Agreement to make the Loans and issue or participate
in Letters of Credit are several and are not joint or joint and several. Unless
the Administrative Agent shall have received notice from a Lender prior to a
proposed borrowing date that such Lender will not make available to the
Administrative Agent such Lender's ratable portion of the amount to be borrowed
on such date (which notice shall not release such Lender of its obligations
hereunder), the Administrative Agent may assume that such Lender has made such
portion available to the Administrative Agent on the proposed borrowing date in
accordance with Section 2.3(b) and/or Section 4.2(b), and the Administrative
Agent may, in reliance upon such assumption, make available to the Borrowers on
such date a corresponding amount. If such amount is made available to the
Administrative Agent on a date after such borrowing date, such Lender shall pay
to the Administrative Agent on demand an amount, until paid, equal to the
product of (a) the amount not made available by such Lender in accordance with
the terms hereof, times (b) the daily average Federal Funds Rate during such
-----
period as determined by the Administrative Agent, times (c) a fraction the
-----
numerator of which is the number of days that elapse from and including such
borrowing date to the date on which such amount not made available by such
Lender in
45
accordance with the terms hereof shall have become immediately available to the
Administrative Agent and the denominator of which is 360. A certificate of the
Administrative Agent with respect to any amounts owing under this Section 5.7
shall be conclusive, absent manifest error. If such Lender's Revolving Credit
Commitment Percentage, Term A Loan Percentage or Term B Loan Percentage, as
applicable, of such borrowing is not made available to the Administrative Agent
by such Lender within three (3) Business Days after such borrowing date, the
Administrative Agent shall be entitled to recover such amount made available by
the Administrative Agent with interest thereon at the rate per annum applicable
to Base Rate Loans hereunder, on demand, from the Borrowers. The failure of any
Lender to make available its Revolving Credit Commitment Percentage, Term A Loan
Percentage or Term B Loan Percentage, as applicable, of any Loan requested by
the Borrowers shall not relieve it or any other Lender of its obligation, if
any, hereunder to make its Revolving Credit Commitment Percentage, Term A Loan
Percentage or Term B Loan Percentage, as applicable, of such Loan available on
the borrowing date, but no Lender shall be responsible for the failure of any
other Lender to make its Revolving Credit Commitment Percentage, Term A Loan
Percentage or Term B Loan Percentage, as applicable, of such Loan available on
the borrowing date.
SECTION 5.8 Changed Circumstances.
---------------------
(a) Circumstances Affecting LIBOR Rate Availability. If with respect
-----------------------------------------------
to any Interest Period the Administrative Agent or any Lender (after
consultation with the Administrative Agent) shall determine that, by reason of
circumstances affecting the foreign exchange and interbank markets generally,
deposits in eurodollars, in the applicable amounts are not being quoted via the
Dow ▇▇▇▇▇ Market Screen 3750 or offered to the Administrative Agent or such
Lender for such Interest Period, then the Administrative Agent shall forthwith
give notice thereof to the Borrowers. Thereafter, until the Administrative
Agent notifies the Borrowers that such circumstances no longer exist, the
obligation of the Lenders to make LIBOR Rate Loans and the right of the
Borrowers to convert any Loan to or continue any Loan as a LIBOR Rate Loan shall
be suspended, and the Borrowers shall repay in full (or cause to be repaid in
full) the then outstanding principal amount of each such LIBOR Rate Loans
together with accrued interest thereon, on the last day of the then current
Interest Period applicable to such LIBOR Rate Loan or convert the then
outstanding principal amount of each such LIBOR Rate Loan to a Base Rate Loan as
of the last day of such Interest Period.
(b) Laws Affecting LIBOR Rate Availability. If, after the date
--------------------------------------
hereof, the introduction of, or any change in, any Applicable Law or any change
in the interpretation or administration thereof by any Governmental Authority,
central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by any Lender (or any of their respective
Lending Offices) with any request or directive (whether or not having the force
of law) of any such Authority, central bank or comparable agency, shall make it
unlawful or impossible for any of the Lenders (or any of their respective
Lending Offices) to honor its obligations hereunder to make or maintain any
LIBOR Rate Loan, such Lender shall promptly give notice thereof to the
Administrative Agent and the Administrative Agent shall promptly give notice to
the Borrowers and the other Lenders. Thereafter, until the Administrative Agent
notifies the Borrowers that such circumstances no longer exist, (i) the
obligations of the Lenders to make LIBOR Rate Loans and the right of the
Borrowers to convert any Loan or continue any
46
Loan as a LIBOR Rate Loan shall be suspended and thereafter the Borrowers may
select only Base Rate Loans hereunder, and (ii) if any of the Lenders may not
lawfully continue to maintain a LIBOR Rate Loan to the end of the then current
Interest Period applicable thereto as a LIBOR Rate Loan, the applicable LIBOR
Rate Loan shall immediately be converted to a Base Rate Loan for the remainder
of such Interest Period.
(c) Increased Costs. If, after the date hereof, the introduction of,
---------------
or any change in, any Applicable Law, or in the interpretation or administration
thereof by any Governmental Authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by any of the
Lenders (or any of their respective Lending Offices) with any request or
directive (whether or not having the force of law) of such Authority, central
bank or comparable agency:
(i) shall subject any of the Lenders (or any of their
respective Lending Offices) to any tax, duty or other charge with respect to any
Note, Letter of Credit or Application or shall change the basis of taxation of
payments to any of the Lenders (or any of their respective Lending Offices) of
the principal of or interest on any Note, Letter of Credit or Application or any
other amounts due under this Agreement in respect thereof (except for changes in
the rate of tax on the overall net income of any of the Lenders or any of their
respective Lending Offices imposed by the jurisdiction in which such Lender is
organized or is or should be qualified to do business or such Lending Office is
located); or
(ii) shall impose, modify or deem applicable any reserve
(including, without limitation, any imposed by the Board of Governors of the
Federal Reserve System), special deposit, insurance or capital or similar
requirement against assets of, deposits with or for the account of, or credit
extended by any of the Lenders (or any of their respective Lending Offices) or
shall impose on any of the Lenders (or any of their respective Lending Offices)
or the foreign exchange and interbank markets any other condition affecting any
Note;
and the result of any of the foregoing is to increase the costs to any of the
Lenders of maintaining any LIBOR Rate Loan or issuing or participating in
Letters of Credit or to reduce the yield or amount of any sum received or
receivable by any of the Lenders under this Agreement or under the Notes in
respect of a LIBOR Rate Loan or Letter of Credit or Application, then such
Lender shall promptly notify the Administrative Agent, and the Administrative
Agent shall promptly notify the Borrowers of such fact and demand compensation
therefor and, within fifteen (15) days after such notice by the Administrative
Agent, the Borrowers shall pay to such Lender such additional amount or amounts
as will compensate such Lender or Lenders for such increased cost or reduction.
The Administrative Agent will promptly notify the Borrowers of any event of
which it has knowledge which will entitle such Lender to compensation pursuant
to this Section 5.8(c); provided, that the Administrative Agent shall incur no
--------
liability whatsoever to the Lenders or the Borrowers in the event it fails to do
so. The amount of such compensation shall be determined by such Lender in its
reasonable discretion based upon the assumption that such Lender funded its
Revolving Credit Commitment Percentage, Term A Loan Percentage or Term B Loan
Percentage, as applicable, of the LIBOR Rate Loans in the London interbank
market and using any reasonable attribution or averaging methods which such
Lender deems reasonably appropriate and practical. A certificate of such Lender
setting forth the basis for determining
47
such amount or amounts necessary to compensate such Lender shall be forwarded to
the Borrowers through the Administrative Agent and shall be conclusively
presumed to be correct save for manifest error.
SECTION 5.9 Indemnity. The Borrowers hereby indemnify each of the
---------
Lenders against any loss or expense which may arise or be attributable to each
Lender's obtaining, liquidating or employing deposits or other funds acquired to
effect, fund or maintain any Loan (a) as a consequence of any failure by the
Borrowers to make any payment when due of any amount due hereunder in connection
with a LIBOR Rate Loan, (b) due to any failure of the Borrowers to borrow or
convert on a date specified therefor in a Notice of Borrowing or Notice of
Continuation/Conversion, as applicable or (c) due to any payment, prepayment or
conversion of any LIBOR Rate Loan on a date other than the last day of the
Interest Period therefor. The amount of such loss or expense shall be determined
by such Lender in its reasonable discretion based upon the assumption that such
Lender funded its Revolving Credit Commitment Percentage, Term A Loan Percentage
or Term B Loan Percentage, as applicable, of the LIBOR Rate Loans in the London
interbank market and using any reasonable attribution or averaging methods which
such Lender deems reasonably appropriate and practical. A certificate of such
Lender setting forth the basis for determining such amount or amounts necessary
to compensate such Lender shall be forwarded to the Borrowers through the
Administrative Agent and shall be conclusively presumed to be correct save for
manifest error.
SECTION 5.10 Capital Requirements. If either (a) the introduction of, or
--------------------
any change in, or in the interpretation of, any Applicable Law or (b) compliance
with any guideline or request from any central bank or comparable agency or
other Governmental Authority (whether or not having the force of law), has or
would have the effect of reducing the rate of return on the capital of, or has
affected or would affect the amount of capital required to be maintained by, any
Lender or any corporation controlling such Lender as a consequence of, or with
reference to the Commitments and other commitments of this type, below the rate
which such Lender or such other corporation could have achieved but for such
introduction, change or compliance, then within five (5) Business Days after
written demand by any such Lender, the Borrowers shall pay to such Lender from
time to time as specified by such Lender additional amounts sufficient to
compensate such Lender or other corporation for such reduction. A certificate as
to such amounts submitted to the Borrowers and the Administrative Agent by such
Lender, shall, in the absence of manifest error, be presumed to be correct and
binding for all purposes.
SECTION 5.11 Taxes.
-----
(a) Payments Free and Clear. Any and all payments by the Borrowers
-----------------------
hereunder or under the Notes or the Letters of Credit shall be made free and
clear of and without deduction for any and all present or future taxes, levies,
imposts, deductions, charges or withholding, and all liabilities with respect
thereto excluding, (i) in the case of each Lender and the Administrative Agent,
income and franchise taxes imposed by the jurisdiction under the laws of which
such Lender or the Administrative Agent (as the case may be) is organized or is
or should be qualified to do business or any political
48
subdivision thereof and (ii) in the case of each Lender, income and franchise
taxes imposed by the jurisdiction of such Lender's Lending Office or any
political subdivision thereof (all such non-excluded taxes, levies, imposts,
deductions, charges, withholdings and liabilities being hereinafter referred to
as "Taxes"). If the Borrowers shall be required by law to deduct or withhold any
Taxes from or in respect of any sum payable hereunder or under any Note or in
respect of any Letter of Credit to any Lender or the Administrative Agent, (A)
the sum payable shall be increased as may be necessary so that after making all
required deductions or withholdings (including deductions or withholdings
applicable to additional sums payable under this Section 5.11) such Lender or
the Administrative Agent (as the case may be) receives an amount equal to the
amount such party would have received had no such deductions been made, (B) the
Borrowers shall make such deductions, (C) the Borrowers shall pay the full
amount deducted to the relevant taxing authority or other authority in
accordance with Applicable Law, and (D) the Borrowers shall deliver to the
Administrative Agent evidence of such payment to the relevant taxing authority
or other Governmental Authority in the manner provided in Section 5.11(d).
(b) Stamp and Other Taxes. In addition, the Borrowers shall pay any
---------------------
present or future stamp, registration, recordation or documentary taxes or any
other similar fees or charges or excise or property taxes, levies of the United
States or any state or political subdivision thereof or any applicable foreign
jurisdiction which arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Agreement, the
Loans, the Letters of Credit, the other Loan Documents, or the perfection of any
rights or security interest in respect thereof (hereinafter referred to as
"Other Taxes").
(c) Indemnity. The Borrowers shall indemnify each Lender and the
---------
Administrative Agent for the full amount of Taxes and Other Taxes (including,
without limitation, any Taxes and Other Taxes imposed by any jurisdiction on
amounts payable under this Section 5.11) paid by such Lender or the
Administrative Agent (as the case may be) and any liability (including
penalties, interest and expenses) arising therefrom or with respect thereto,
whether or not such Taxes or Other Taxes were correctly or legally asserted,
except for any such penalties, interest and expenses assessed against or
incurred by the Administrative Agent or such Lender as a result of its own gross
negligence or willful misconduct as determined (in a formal determination) by a
court of competent jurisdiction or an arbitration panel. Such indemnification
shall be made within thirty (30) days from the date such Lender or the
Administrative Agent (as the case may be) makes written demand therefor.
(d) Evidence of Payment. Within thirty (30) days after the date of any
-------------------
payment of Taxes or Other Taxes, the Borrowers shall furnish to the
Administrative Agent, at its address referred to in Section 15.1, the original
or a certified copy of a receipt evidencing payment thereof or other evidence of
payment satisfactory to the Administrative Agent.
(e) Delivery of Tax Forms. Each Lender organized under the laws of a
---------------------
jurisdiction other than the United States or any state thereof shall deliver to
the Borrowers, with a copy to the Administrative Agent, on the Closing Date or
concurrently with the delivery of the relevant Assignment and Acceptance or New
Lender Supplement, as applicable, (i) two United States Internal Revenue Service
Forms W-8ECI or Forms W-8BEN, as applicable (or successor forms) properly
completed and certifying in each case that such Lender is entitled to a complete
exemption from withholding or deduction for or on account of any United States
federal income
49
taxes, and (ii) either (A) an Internal Revenue Service Form W-8 or W-9 or
successor applicable form, as the case may be, to establish an exemption from
United States backup withholding taxes or (B) a certificate executed by such
Lender certifying that such Lender is not a "bank" and that such Lender
qualifies for such exemption under Section 881(c) of the Code. Each such Lender
further agrees to deliver to the Borrowers, with a copy to the Administrative
Agent, a Form W-8BEN or W-8ECI and Form W-8 or W-9, or successor applicable
forms or manner of certification, as the case may be, on or before the date that
any such form expires or becomes obsolete or after the occurrence of any event
requiring a change in the most recent form previously delivered by it to the
Borrowers, certifying in the case of a Form W-8BEN or W-8ECI that such Lender is
entitled to receive payments under this Agreement without deduction or
withholding of any United States federal income taxes (unless in any such case
an event (including without limitation any change in treaty, law or regulation)
has occurred prior to the date on which any such delivery would otherwise be
required which renders such forms inapplicable or the exemption to which such
forms relate unavailable and such Lender notifies the Borrowers and the
Administrative Agent that it is not entitled to receive payments without
deduction or withholding of United States federal income taxes) and, in the case
of a Form W-8BEN or W-8BECI, establishing an exemption from United States backup
withholding tax.
(f) Survival. Without prejudice to the survival of any other agreement of
--------
the Borrowers hereunder, the agreements and obligations of the Borrowers
contained in this Section 5.11 shall survive the payment in full of the
Obligations and the termination of the Commitments.
SECTION 5.12 Security. The Obligations of the Company and the
--------
Borrowers shall be secured as provided in the Security Documents.
ARTICLE VI
CLOSING; CONDITIONS OF CLOSING AND BORROWING
--------------------------------------------
SECTION 6.1 Closing. The closing shall take place at the offices of
-------
▇▇▇▇▇ ▇▇▇▇▇▇▇, LLP at 10:00 a.m. on August 1, 2000 or on such other date as the
parties hereto shall mutually agree.
SECTION 6.2 Conditions to Closing. The obligation of the Lenders to
---------------------
close the transactions contemplated by this Agreement is subject to the
satisfaction or waiver of each of the following conditions:
(a) Executed Loan Documents. This Agreement, the Revolving Credit Notes,
-----------------------
the Term A Notes, the Term B Notes, the Swingline Note, the Security Agreement,
the Pledge Agreement, and each Mortgage required hereunder shall have been duly
authorized, executed and delivered to the Administrative Agent by the parties
thereto, shall be in full force and effect and no default or event of default
shall exist thereunder, and the Borrowers shall have delivered original
counterparts thereof to the Administrative Agent.
50
(b) Closing Certificates; etc.
--------------------------
(i) Officer's Certificate of the Company. The Administrative
------------------------------------
Agent shall have received a certificate from a Responsible Officer, in form and
substance satisfactory to the Administrative Agent, to the effect that all
representations and warranties of the Company and the Borrowers contained in
this Agreement and the other Loan Documents are true, correct and complete; that
the Company and the Borrowers are not in violation of any of the covenants
contained in this Agreement and the other Loan Documents; that, after giving
effect to the transactions contemplated by this Agreement and the Related
Transactions, no Default or Event of Default has occurred and is continuing;
that attached thereto are copies of the Transaction Agreement, the Acquisition
Agreement, the Bridge Loan Agreement and the Preferred Equity Purchase Agreement
as in effect at the Closing Date; and that the Company and the Borrowers have
satisfied each of the closing conditions set forth in this Agreement.
(ii) Certificate of Secretary of the Company and Each Borrower.
---------------------------------------------------------
The Administrative Agent shall have received a certificate of the secretary or
assistant secretary of the Company and each Borrower certifying as to the
incumbency and genuineness of the signature of each officer thereof executing
Loan Documents to which it is a party and certifying that attached thereto is a
true, correct and complete copy of (A) the articles of incorporation or
certificate of formation of the Company or the corresponding Borrower, as
applicable, and all amendments thereto, certified as of a recent date by the
appropriate Governmental Authority in its jurisdiction of incorporation (B) the
bylaws or limited liability company agreements of the Company or the
corresponding Borrower, as applicable, as in effect on the date of such
certifications and (C) resolutions duly adopted by the board of directors of the
Company or the corresponding Borrower, as applicable, authorizing the execution,
delivery and performance of this Agreement and the other Loan Documents to which
it is a party.
(iii) Certificates of Good Standing. To the extent requested by
-----------------------------
the Administrative Agent, the Administrative Agent shall have received
certificates as of a recent date of the good standing of the Company and each
Borrower under the laws of its jurisdiction of organization each other
jurisdiction where such Person is qualified to do business and to the extent so
requested a certificate of the relevant taxing authorities of such jurisdictions
certifying that such Person has filed required tax returns and owes no
delinquent taxes.
(iv) Opinions of Counsel. The Administrative Agent (A) shall
-------------------
have received favorable opinions of counsel (including corporate and
communications law regulatory counsel) to the Company addressed to the
Administrative Agent and the Lenders with respect to the Company, the Borrowers,
the Loan Documents and such other matters as the Lenders shall request and (B)
shall be entitled to rely on all opinions delivered in connection with the
Preferred Equity Documents and Bridge Loan Documents pursuant to reliance
language reasonably satisfactory to the Administrative Agent.
(v) Tax Forms. The Administrative Agent shall have received
---------
copies of the United States Internal Revenue Service forms required by Section
5.11(e) hereof.
51
(c) Collateral.
----------
(i) Filings and Recordings. All filings or recordations that
----------------------
are necessary to perfect the Liens of the Lenders in the collateral described in
the Security Documents shall have been either filed or recorded or forwarded for
filing or recording in all appropriate locations and the Administrative Agent
shall have received evidence satisfactory to the Administrative Agent that such
Liens constitute or upon such filings and recordations such Liens shall
constitute valid and perfected first priority Liens therein.
(ii) Pledged Collateral. The Administrative Agent shall have
------------------
received (A) original stock certificates or other certificates evidencing the
capital stock or other ownership interests pledged pursuant to the Pledge
Agreement, together with an undated stock power for each such certificate duly
executed in blank by the registered owner thereof and (B) each original
promissory note pledged pursuant to the Pledge Agreement.
(iii) Lien Searches. To the extent requested thereby, the
-------------
Administrative Agent shall have received the results of a Lien search (including
a search as to judgments, pending litigation and tax matters) made against the
Company and the Borrowers under the Uniform Commercial Code (or applicable
judicial docket) as in effect in the state in which each of them is incorporated
and any state in which any of their respective assets are located, indicating
among other things that such assets are free and clear of any Lien except for
Liens permitted hereunder.
(iv) Hazard and Liability Insurance. The Administrative Agent
------------------------------
shall have received certificates of insurance, evidence of payment of all
insurance premiums for the current policy year of each, and, if requested by the
Administrative Agent, copies (certified by a Responsible Officer) of insurance
policies in the form required under the Security Documents and otherwise in form
and substance reasonably satisfactory to the Administrative Agent.
(v) Real Property Security and Information. The Administrative
--------------------------------------
Agent shall have received (A) with respect to each Mortgage in existence on the
Closing Date, duly executed counterparts of modifications to such Mortgage in
form and substance satisfactory thereto (the originals of which shall have been
forwarded on the Closing Date for recordation in the appropriate jurisdiction);
(B) with respect to each landlord consent and mortgagee estoppel letter in
existence on the Closing Date, letters notifying each party to such agreement of
this Agreement and the transactions contemplated thereby (the originals of which
shall have been forwarded on the Closing Date to such parties); (C) with respect
to any additional real property at which any Switch or any material
Telecommunications Equipment is or is to be located, owned or leased by the
Company or any Borrower, such Mortgages, landlord consents, mortgagee estoppel
letters, title insurance, flood hazard certification, surveys, environmental
assessments as required by Section 9.12(b) and (D) such other certificates,
documents, opinions of counsel and information related thereto, in each case as
are reasonably requested by the Lenders, in form and substance satisfactory to
the Administrative Agent; provided, that, with respect to any real property at
--------
which any Switch or any material Telecommunications Equipment is or is to be
located acquired by the Company or any Borrower or in which the Company or any
Borrower assumes a leasehold interest, in each case pursuant to the US Xchange
Acquisition, the Company and the
52
Borrowers shall have until the date that is ninety (90) days after the Closing
Date to comply with the requirements of Section 6.2(c)(v)(C) and (D).
(d) Consents; Defaults.
------------------
(i) No Injunction, Etc. No action, proceeding, investigation,
-------------------
regulation or legislation shall have been instituted, threatened or proposed
before any Governmental Authority to enjoin, restrain, or prohibit, or to obtain
substantial damages in respect of this Agreement or the other Loan Documents or
the consummation of the transactions contemplated hereby or thereby.
(ii) No Event of Default. No Default or Event of Default shall
-------------------
have occurred and be continuing.
(e) Financial Matters.
-----------------
(i) Financial Statements. The Administrative Agent shall have
--------------------
received the most recent form 10-Q filed by the Company with the SEC.
(ii) Financial Condition Certificate. The Company shall have
-------------------------------
delivered to the Administrative Agent a certificate, in form and substance
satisfactory to the Administrative Agent, and certified as accurate by a
Responsible Officer, that (A) the Company and each Borrower are Solvent, (B) the
Borrowers' payables are current and not past due (except for those the validity
or amount of which are being contested in good faith by any Borrower by
reasonably appropriate means), (C) the financial projections previously
delivered to the Administrative Agent represent the good faith estimates of the
Borrowers and senior management thereof as to the projected results contained
therein and (D) attached thereto are calculations evidencing compliance with the
covenants contained in Article X hereof.
(iii) Payment at Closing; Fee Letters. The Company or Borrowers
-------------------------------
shall have paid the fees set forth or referenced in Section 5.3 and any other
accrued and unpaid fees or commissions due hereunder (including, without
limitation, legal fees and expenses) to the Administrative Agent and Lenders,
and to any other Person such amount as may be due thereto in connection with the
transactions contemplated hereby, including all taxes, fees and other charges in
connection with the execution, delivery, recording, filing and registration of
any of the Loan Documents. The Administrative Agent shall have received duly
authorized and executed copies of the fee letter agreement referred to in
Section 5.3(b).
(f) Miscellaneous.
-------------
(i) Proceedings and Documents. All opinions, certificates and
-------------------------
other instruments and all proceedings in connection with the transactions
contemplated by this Agreement and the Related Transaction Documents shall be
reasonably satisfactory in form and substance to the Lenders. The Administrative
Agent shall have received copies of the Transaction Agreement, the Related
Transaction Documents (certified as true, correct and complete by a Responsible
Officer), and all other instruments and other evidence as the Lender
53
may reasonably request, in form and substance reasonably satisfactory to the
Lenders, with respect to the transactions contemplated by this Agreement and the
taking of all actions in connection therewith.
(ii) Business Plans. The Lenders shall have received copies of the
--------------
Twenty-Nine Market Business Plan and any other Approved Business Plans and any
Approved Budgets currently in effect with respect to the Permitted Markets in
form and substance reasonably satisfactory to the Lenders.
(iii) Lucent Subordination and Consent Agreement. A fully executed
------------------------------------------
copy of the subordination and consent agreement (with respect to the
Lucent Agreement) dated as of October 14, 1998 by and among Lucent Technologies
Inc., the Company and the Administrative Agent shall have been received by the
Administrative Agent, and a copy of the Lucent Agreement as in effect on the
Closing Date.
(iv) Other Documents. The Company and the Borrowers shall have
---------------
delivered to the Lenders such other documents, certificates and opinions as the
Lenders have reasonably requested (including any documents, certificates and
opinions in connection with the Related Transactions).
(v) Refinancing of the Existing Loans. On the Closing Date, (i) all
---------------------------------
loans under the Existing Credit Agreement (the "Existing Loans") made by any
Existing Lender who is not a Lender hereunder shall be repaid in full, and the
commitments and other obligations and rights (except as expressly set forth in
the Existing Credit Agreement) of such Existing Lender shall be terminated, (ii)
all outstanding Existing Loans shall be deemed Term B Loans hereunder and the
Administrative Agent shall make such transfers of funds as are necessary in
order that the outstanding balance of such Term B Loans, together with any Term
B Loans funded on the Closing Date, reflect the Term B Commitments of the Term B
Lenders hereunder, (iii) there shall have been paid in cash (or otherwise
credited) in full all accrued but unpaid interest due on the Existing Loans to
the Closing Date, (iv) there shall have been paid in cash in full all accrued
but unpaid fees under the Existing Credit Agreement due to the Closing Date and
all other amounts, costs and expenses then owing to any of the Existing Lenders
and/or First Union, as administrative agent under the Existing Credit Agreement,
and (v) all outstanding promissory notes issued by the Borrowers to the Existing
Lenders under the Existing Credit Agreement shall be deemed canceled and the
originally executed copies thereof shall be promptly returned to the
Administrative Agent who shall forward such notes to the Company, on behalf of
the Borrowers.
(vi) Governmental and Third Party Approvals. The Company and the
--------------------------------------
Borrowers shall have obtained all necessary approvals, authorizations and
consents of any Person and of all Governmental Authorities and courts having
jurisdiction with respect to the transactions contemplated by this Agreement and
the other Loan Documents and the Related Transactions (including any approvals
of the FCC, any PUC and pursuant to the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Anti-Trust
Improvements Act of 1976).
54
(g) Related Transactions.
--------------------
(i) US Xchange Acquisition. All conditions to the
----------------------
consummation of the US Xchange Acquisition set forth in the Acquisition
Documents shall have been satisfied, and the transactions contemplated by the
Acquisition Documents shall have been consummated contemporaneously with the
closing of the transactions contemplated by this Agreement. The cash component
and capital stock component of the Merger Consideration (as such term is defined
in the Acquisition Agreement) shall have been determined in accordance with the
terms of the Acquisition Agreement and total fees and expenses of the Related
Transactions shall not have exceeded $25,000,000. The Promissory Note pursuant
to the Acquiror Loan (as each such term is defined in the Acquisition Agreement)
shall have been repaid in full (by way of direct payment, credit against any
consideration to be paid by the Company in respect of the US Xchange Acquisition
or other form of payment reasonably satisfactory to the Company and the
Administrative Agent). The Senior Notes (as such term is defined in the
Acquisition Agreement) shall have been redeemed in full on terms and conditions
reasonably satisfactory to the Administrative Agent.
(ii) Preferred Equity Investment. All conditions to the
---------------------------
consummation of the issuance of the Preferred Equity set forth in the Preferred
Equity Documents shall have been satisfied. The Company shall have received a
minimum of $195,000,000 in Net Cash Proceeds from the issuance of the Preferred
Equity in accordance with the terms and conditions of the Preferred Equity
Documents and shall have transferred such funds to the Borrowers as an equity
contribution thereto on terms and conditions reasonably satisfactory to the
Administrative Agent.
(iii) Bridge Notes. All conditions to the consummation of the
------------
issuance of the Bridge Notes set forth in the Bridge Loan Documents shall have
been satisfied and the Bridge Loan Documents shall be effective, such that the
Company shall be entitled to receive a minimum of $150,000,000 in Net Cash
Proceeds from the issuance of the Bridge Notes in accordance with the terms and
conditions of the Bridge Loan Documents.
SECTION 6.3 Conditions to All Extensions of Credit. The obligations of
--------------------------------------
the Lenders to make any Extensions of Credit are subject to the satisfaction of
the following conditions precedent on the relevant borrowing or issue date, as
applicable:
(a) Notice of Borrowing and Notice of Account Designation. The
-----------------------------------------------------
Administrative Agent shall have received a Notice of Borrowing in accordance
with Section 2.3(a) and 4.2(a), as applicable, and a Notice of Account
Designation specifying the account or accounts to which the proceeds of any
Loans made on and after the Closing Date are to be disbursed.
(b) Continuation of Representations and Warranties. The representations
----------------------------------------------
and warranties contained in Article VII shall be true and correct in all
material respects on and as of such borrowing or issuance date with the same
effect as if made on and as of such date; except for any representation and
warranty made as of an earlier date, which representation and warranty shall
remain true and correct as of such earlier date.
55
(c) No Existing Default. No Default or Event of Default shall have
-------------------
occurred and be continuing hereunder (i) on the borrowing date with respect to
such Loan or after giving effect to the Loans to be made on such date or (ii) or
the issue date with respect to such Letter of Credit or after giving affect to
such Letters of Credit on such date.
(d) Officer's Compliance Certificate; Additional Documents. The
------------------------------------------------------
Administrative Agent shall have received the current Officer's Compliance
Certificate and each additional document, instrument, or other item of
information reasonably requested by it.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
-------------------------------
SECTION 7.1 Representations and Warranties. To induce the
------------------------------
Administrative Agent and Lenders to enter into this Agreement and to induce the
Lenders to make Extensions of Credit, the Company and the Borrowers hereby
represent and warrant to the Administrative Agent and Lenders that, after giving
effect to the US Xchange Acquisition:
(a) Organization; Power; Qualification. Each of the Company and its
----------------------------------
Subsidiaries is duly organized, validly existing and in good standing under the
laws of the jurisdiction of its incorporation or formation, has the power and
authority to own its properties and to carry on its business as now being and
hereafter proposed to be conducted, and is duly qualified and authorized to do
business in each jurisdiction in which the character of its properties or the
nature of its business requires such qualification and authorization, except to
the extent that the failure to be so qualified and in good standing could not,
in the aggregate, reasonably be expected to have a Material Adverse Effect. The
jurisdictions in which the Company and the Borrowers are organized and qualified
to do business as of the Closing Date are described on Schedule 7.1(a).
---------------
(b) Ownership. Each Subsidiary of the Company as of the Closing Date is
---------
listed on Schedule 7.1(b), and each Inactive Subsidiary of the Company as of the
---------------
Closing Date is designated thereon. As of the Closing Date, the capitalization
of the Company and its Subsidiaries consists of the number of shares,
authorized, issued and outstanding, of such classes and series, with or without
par value, described on Schedule 7.1(b). All outstanding shares have been duly
---------------
authorized and validly issued and are fully paid and nonassessable. The
shareholders of the Subsidiaries of the Company and the number of shares owned
by each as of the Closing Date are described on Schedule 7.1(b). As of the
---------------
Closing Date, there are no outstanding stock purchase warrants, subscriptions,
options, securities, instruments or other rights of any type or nature
whatsoever, which are convertible into, exchangeable for or otherwise provide
for or permit the issuance of capital stock of the Company or its Subsidiaries,
except as described on Schedule 7.1(b).
---------------
(c) Authorization of Agreement, Loan Documents and Borrowing. Each of the
--------------------------------------------------------
Company and its Subsidiaries has the right, power and authority and has taken
all necessary corporate and other action to authorize the execution, delivery
and performance of this Agreement and each of the other Loan Documents to which
it is a party in accordance with their respective terms. This Agreement and
each of the other Loan Documents have been duly
56
executed and delivered by the duly authorized officers of the Company and each
of its Subsidiaries party thereto, and each such document constitutes the legal,
valid and binding obligation of the Company or its Subsidiary party thereto,
enforceable in accordance with its terms, except as such enforcement may be
limited by bankruptcy, insolvency, reorganization, moratorium or similar state
or federal debtor relief laws from time to time in effect which affect the
enforcement of creditors' rights in general and the availability of equitable
remedies.
(d) Compliance of Agreement, Loan Documents and Borrowing with Laws, Etc.
---------------------------------------------------------------------
The execution, delivery and performance by the Company and its Subsidiaries of
the Loan Documents to which each such Person is a party, in accordance with
their respective terms, the borrowings hereunder and the transactions
contemplated hereby do not and will not, by the passage of time, the giving of
notice or otherwise, (i) require any Governmental Approval or violate any
Applicable Law relating to the Company or any of its Subsidiaries, (ii) conflict
with, result in a breach of or constitute a default under the articles of
incorporation, bylaws or other organizational documents of the Company or any of
its Subsidiaries or any indenture, agreement or other instrument to which such
Person is a party or by which any of its properties may be bound or any
Governmental Approval relating to such Person, or (iii) result in or require the
creation or imposition of any Lien upon or with respect to any property now
owned or hereafter acquired by such Person other than Liens arising under the
Loan Documents, except with respect to clauses (i) and (iii), except where the
failure of any of the foregoing to be correct in all respects could not, in the
aggregate, reasonably be expected to have a Material Adverse Effect.
(e) Compliance with Law; Governmental Approvals. Each of the Company and
-------------------------------------------
its Subsidiaries (i) has all material Governmental Approvals required by any
Applicable Law for it to conduct its business, each of which is in full force
and effect, is final and not subject to review on appeal and is not the subject
of any pending or, to the best of its knowledge, threatened attack by direct or
collateral proceeding, and (ii) is in compliance with each such Governmental
Approval applicable to it and in compliance with all other Applicable Laws
relating to it or any of its respective properties, except where the failure of
any of the foregoing to be correct in all respects could not, in the aggregate,
reasonably be expected to have a Material Adverse Effect.
(f) Tax Returns and Payments. Each of the Company and its Subsidiaries has
------------------------
duly filed or caused to be filed all federal and all material state, local and
other tax returns required by Applicable Law to be filed, and has paid, or made
adequate provision for the payment of, all federal and all material state, local
and other taxes, assessments and governmental charges or levies upon it and its
property, income, profits and assets which are due and payable (except for those
taxes, assessments and governmental charges or levies which are contested by the
Company or any Subsidiary in good faith and as to which adequate reserves are
maintained with respect thereto in accordance with GAAP). No Governmental
Authority has asserted any Lien or other claim against the Company or Subsidiary
thereof with respect to unpaid taxes which has not been discharged or resolved
(except with respect to such taxes which are being contested by the Company or
any Subsidiary in good faith and as to which adequate reserves are maintained
with respect thereto in accordance with GAAP). The charges, accruals and
reserves on the books of the Company and any of its Subsidiaries in respect of
federal, state, local and other taxes for all Fiscal Years and portions thereof
since the organization of the Company and any of its
57
Subsidiaries are in the judgment of the Company adequate, and the Company does
not anticipate any additional taxes or assessments for any of such years.
(g) Intellectual Property Matters. Each of the Company and its
-----------------------------
Subsidiaries owns or possesses rights to use all material franchises, licenses,
copyrights, copyright applications, patents, patent rights or licenses, patent
applications, trademarks, trademark rights, trade names, trade name rights,
copyrights and rights with respect to the foregoing which are required to
conduct its business. No event has occurred which permits, or after notice or
lapse of time or both would permit, the revocation or termination of any such
rights, and to the best of the Company's knowledge, neither the Company nor any
Subsidiary thereof is liable to any Person for infringement under Applicable Law
with respect to any such rights as a result of its business operations other
than any such infringement which, if successfully asserted against or determined
adversely to the Company or any Subsidiary, could not reasonably be expected to
have a Material Adverse Effect.
(h) Environmental Matters. Except where the failure of any of the
---------------------
following representations to be correct in all respects could not reasonably be
expected to have a Material Adverse Effect:
(i) The properties of the Company and its Subsidiaries do not
contain, and to their knowledge have not previously contained, any Hazardous
Materials in amounts or concentrations which (A) constitute or constituted a
material violation of applicable Environmental Laws or (B) could give rise to
liability under applicable Environmental Laws;
(ii) Such properties and all operations conducted in connection
therewith are in material compliance, and have been in compliance, with all
applicable Environmental Laws, and there is no contamination at, under or about
such properties or such operations which could interfere with the continued
operation of such properties or impair the fair saleable value thereof;
(iii) Neither the Company nor any Subsidiary thereof has received any
notice of violation, alleged violation, non-compliance, liability or potential
liability regarding environmental matters or compliance with Environmental Laws
with regard to any of their properties or the operations conducted in connection
therewith, nor does the Company or any Subsidiary thereof have knowledge or
reason to believe that any such notice will be received or is being threatened;
(iv) Hazardous Materials have not been transported or disposed of
from the properties of the Company and its Subsidiaries in violation of, or in a
manner or to a location which could give rise to liability under, Environmental
Laws, nor have any Hazardous Materials been generated, treated, stored or
disposed of at, on or under any of such properties in violation of, or in a
manner that could give rise to liability under, any applicable Environmental
Laws;
(v) No judicial proceedings or governmental or administrative action
is pending, or, to the knowledge of the Company, threatened, under any
Environmental Law to which the Company or any Subsidiary thereof is or will be
named as a party with respect to such
58
properties or operations conducted in connection therewith, nor are there any
consent decrees or other decrees, consent orders, administrative orders or other
orders, or other administrative or judicial requirements outstanding under any
Environmental Law with respect to such properties or such operations; and
(vi) There has been no release, or to the best of the Company's
knowledge, the threat of release, of Hazardous Materials at or from such
properties, in violation of or in amounts or in a manner that could give rise to
liability under Environmental Laws.
(i) ERISA.
-----
(i) As of the Closing Date, neither the Company nor any ERISA
Affiliate maintains or contributes to, or has any obligation under, any Employee
Benefit Plans other than those identified on Schedule 7.1(i);
---------------
(ii) The Company and each ERISA Affiliate is in material compliance
with all applicable provisions of ERISA and the regulations and published
interpretations thereunder with respect to all Employee Benefit Plans except for
any required amendments for which the remedial amendment period as defined in
Section 401(b) of the Code has not yet expired and except where a failure to so
comply could not reasonably be expected to have a Material Adverse Effect. Each
Employee Benefit Plan that is intended to be qualified under Section 401(a) of
the Code has been determined by the Internal Revenue Service to be so qualified,
and each trust related to such plan has been determined to be exempt under
Section 501(a) of the Code except for such plans that have not yet received
determination letters but for which the remedial amendment period for submitting
a determination letter has not yet expired. No liability has been incurred by
the Company or any ERISA Affiliate which remains unsatisfied for any taxes or
penalties with respect to any Employee Benefit Plan or any Multiemployer Plan
except for a liability that could not reasonably be expected to have a Material
Adverse Effect;
(iii) As of the Closing Date, no Pension Plan has been terminated, nor
has any accumulated funding deficiency (as defined in Section 412 of the Code)
been incurred (without regard to any waiver granted under Section 412 of the
Code), nor has any funding waiver from the Internal Revenue Service been
received or requested with respect to any Pension Plan, nor has the Company or
any ERISA Affiliate failed to make any contributions or to pay any amounts due
and owing as required by Section 412 of the Code, Section 302 of ERISA or the
terms of any Pension Plan prior to the due dates of such contributions under
Section 412 of the Code or Section 302 of ERISA, nor has there been any event
requiring any disclosure under Section 4041(c)(3)(C) or 4063(a) of ERISA with
respect to any Pension Plan;
(iv) Except where the failure of any of the following representations
to be correct in all material respects could not reasonably be expected to have
a Material Adverse Effect, neither the Company nor any ERISA Affiliate has: (A)
engaged in a nonexempt prohibited transaction described in Section 406 of the
ERISA or Section 4975 of the Code, (B) incurred any liability to the PBGC which
remains outstanding other than the payment of premiums and there are no premium
payments which are due and unpaid, (C) failed to make a
59
required contribution or payment to a Multiemployer Plan, or (D) failed to make
a required installment or other required payment under Section 412 of the Code;
(v) No Termination Event has occurred or is reasonably expected
to occur; and
(vi) Except where the failure of any of the following representations
to be correct in all material respects could not reasonably be expected to have
a Material Adverse Effect, no proceeding, claim (other than a benefits claim in
the ordinary course of business), lawsuit and/or investigation is existing or,
to the best knowledge of the Company after due inquiry, threatened concerning or
involving any (A) employee welfare benefit plan (as defined in Section 3(1) of
ERISA) currently maintained or contributed to by the Company or any ERISA
Affiliate, (B) Pension Plan or (C) Multiemployer Plan.
(j) Margin Stock. Neither the Company nor any Subsidiary thereof is
------------
engaged principally or as one of its activities in the business of extending
credit for the purpose of "purchasing" or "carrying" any "margin stock" (as each
such term is defined or used in Regulation U of the Board of Governors of the
Federal Reserve System). No part of the proceeds of any of the Loans or Letters
of Credit will be used for purchasing or carrying margin stock or for any
purpose which violates, or which would be inconsistent with, the provisions of
Regulation T, U or X of such Board of Governors.
(k) Government Regulation. Neither the Company nor any Subsidiary thereof
---------------------
is an "investment company" or a company "controlled" by an "investment company"
(as each such term is defined or used in the Investment Company Act of 1940, as
amended) and neither the Company nor any Subsidiary thereof is, or after giving
effect to any Extension of Credit will be, subject to regulation under the
Public Utility Holding Company Act of 1935 or the Interstate Commerce Act, each
as amended, or any other Applicable Law which limits its ability to incur or
consummate the transactions contemplated hereby.
(l) Material Contracts. Schedule 7.1(l) sets forth a complete and accurate
------------------ ---------------
list of all Material Contracts of the Company and its Subsidiaries in effect as
of the Closing Date not listed on any other Schedule hereto; other than as set
forth in Schedule 7.1(l), each such Material Contract is, and after giving
---------------
effect to the consummation of the transactions contemplated by the Loan
Documents will be, in full force and effect on the Closing Date in accordance
with the terms thereof. The Company and its Subsidiaries have delivered to the
Administrative Agent a true and complete copy of each Material Contract required
to be listed on Schedule 7.1(l) or any other Schedule hereto as of the Closing
---------------
Date.
(m) Employee Relations. Each of the Company and its Subsidiaries has a
------------------
stable work force in place and is not, as of the Closing Date, party to any
collective bargaining agreement nor has any labor union been recognized as the
representative of its employees except as set forth on Schedule 7.1(m). The
---------------
Company knows of no pending, threatened or contemplated strikes, work stoppage
or other collective labor disputes involving its employees or those of its
Subsidiaries.
60
(n) Burdensome Provisions. Neither the Company nor any Subsidiary thereof
---------------------
is a party to any indenture, agreement, lease or other instrument, or subject to
any corporate or partnership restriction, Governmental Approval or Applicable
Law which is so unusual or burdensome as in the foreseeable future could be
reasonably expected to have a Material Adverse Effect. The Company and its
Subsidiaries do not presently anticipate that future expenditures needed to meet
the provisions of any statutes, orders, rules or regulations of a Governmental
Authority will be so burdensome as to have a Material Adverse Effect.
(o) Financial Statements. The Consolidated balance sheets of the Company
--------------------
and its Subsidiaries as of March 31, 2000 and the related statements of income
and cash flows for the three (3) calendar months then ended, copies of which
have been furnished to the Administrative Agent and each Lender, are complete
and correct, in all material respects, and fairly present, in all material
respects, the assets, liabilities and financial position of the Company and its
Subsidiaries as at such dates, and the results of the operations and changes of
financial position for the periods then ended (subject to normal year-end audit
adjustments). All such financial statements, including the related schedules
and notes thereto, have been prepared in accordance with GAAP, except for the
absence of footnote disclosures. The Company and its Subsidiaries have no Debt,
obligation or other unusual forward or long-term commitment which is not fairly
reflected in the foregoing financial statements.
(p) No Material Adverse Change. Since December 31, 1999, there has been no
--------------------------
material adverse change in the properties, business, operations, prospects, or
condition (financial or otherwise) of the Company and its Subsidiaries and no
event has occurred or condition arisen that could reasonably be expected to have
a Material Adverse Effect.
(q) Solvency. As of the Closing Date and after giving effect to each
--------
Extension of Credit made hereunder, the Company and each of its Subsidiaries
will be Solvent.
(r) Titles to Properties. Each of the Company and its Subsidiaries has
--------------------
such title to the real property owned or leased by it as is necessary or
desirable to the conduct of its business and valid and legal title to all of its
personal property and assets, including, but not limited to, those reflected on
the balance sheets of the Company and its Subsidiaries delivered pursuant to
Section 7.1(o), except those which have been disposed of by the Company or its
Subsidiaries subsequent to such date which dispositions have been in the
ordinary course of business or as otherwise expressly permitted hereunder.
Schedule 7.1(r) sets forth as of the Closing Date the address of each parcel of
---------------
real property owned or leased by the Company or any Subsidiary hereof, and with
respect to all leasehold interests, a summary of the relevant lease terms.
(s) Liens. None of the properties and assets of the Company or any
-----
Subsidiary thereof is subject to any Lien, except Liens permitted pursuant to
Section 11.3. No financing statement under the Uniform Commercial Code of any
state which names the Company or any Subsidiary thereof or any of their
respective trade names or divisions as debtor and which has not been terminated,
has been filed in any state or other jurisdiction and neither the Company nor
any Subsidiary thereof has signed any such financing statement or any security
agreement authorizing any secured party thereunder to file any such financing
statement, except to perfect those Liens permitted by Section 11.3 hereof.
61
(t) Debt and Guaranty Obligations. Schedule 7.1(t) is a complete and
----------------------------- ---------------
correct listing of all Debt and Guaranty Obligations of the Company and its
Subsidiaries as of the Closing Date in excess of $2,000,000. The Company and
its Subsidiaries have performed and are in material compliance with all of the
terms of such Debt and Guaranty Obligations and all instruments and agreements
relating thereto, and, to the Company's knowledge, no default or event of
default, or event or condition which with notice or lapse of time or both would
constitute such a default or event of default on the part of the Company or its
Subsidiaries exists with respect to any such Debt or Guaranty Obligation.
(u) Litigation. Except for matters existing on the Closing Date and set
----------
forth on Schedule 7.1(u), there are no actions, suits or proceedings pending
---------------
nor, to the knowledge of the Company, threatened against or in any other way
relating adversely to or affecting the Company or any Subsidiary thereof or any
of their respective properties in any court or before any arbitrator of any kind
or before or by any Governmental Authority that could, in the aggregate,
reasonably be expected to have a Material Adverse Effect.
(v) Absence of Defaults. On the Closing Date, no event has occurred or is
-------------------
continuing (i) which constitutes a Default or an Event of Default, or (ii) which
constitutes, or which with the passage of time or giving of notice or both would
constitute, a default or event of default by the Company or any Subsidiary
thereof under any Material Contract or judgment, decree or order to which the
Company or its Subsidiaries is a party or by which the Company or its
Subsidiaries or any of their respective properties may be bound or which would
require the Company or its Subsidiaries to make any payment thereunder prior to
the scheduled maturity date therefor.
(w) Communications Regulatory Matters.
---------------------------------
(i) Each Network Agreement has been duly executed and delivered by
the Company and its Subsidiaries party thereto, is in full force and effect and
neither the Company, any Subsidiary thereof nor, to the best knowledge of the
Company, any of the other parties thereto, is in default of any of the
provisions thereof in any material respect except for any such default that
could not reasonably be expected to have a Material Adverse Effect.
(ii) Schedule 7.1(w) hereto sets forth, as of the date hereof, a true
---------------
and complete list of the following information for each Communications License
issued to the Company or any its Subsidiaries: (A) for all Communications
Licenses, the name of the licensee, the type of service and the expiration
dates; and (B) for each PUC Authorization only, the geographic area covered by
such PUC Authorization, the services that may be provided thereunder and the
expiration date, if any.
(iii) Neither the Company nor any Subsidiary is in material violation
of any Communications Law applicable thereto that could reasonably be expected
to have a Material Adverse Effect. The Communications Licenses specified on
Schedule 7.1(w) hereto are valid and in full force and effect without conditions
---------------
except for such conditions as are generally applicable to holders of such
Communications Licenses and except as set forth on such Schedule. No event has
occurred and is continuing which could reasonably be expected to (A)
62
result in the imposition of a material forfeiture or the revocation, termination
or adverse modification of any such Communications License or (B) materially and
adversely affect any rights of the Company or any of its Subsidiaries
thereunder. The Company has no reason to believe and has no knowledge that
Communications Licenses will not be approved or renewed, as applicable, in the
ordinary course.
(iv) All of the Network Facilities and other material properties,
equipment and systems owned, leased or managed by the Company and its
Subsidiaries are, and (to the best knowledge of the Company) all such property,
equipment and systems to be acquired or added in connection with any
contemplated system expansion or construction will be, in good repair, working
order and condition (reasonable wear and tear excepted) and are and will be in
material compliance with all terms and conditions of the Communications Licenses
and all material standards or rules imposed by applicable Communications Law and
any Governmental Authority or as imposed under any agreements with telephone
companies and customers.
(v) The Company and each of its Subsidiaries have paid all material
franchise, license or other fees and charges which have become due pursuant to
any Governmental Approval in respect of their business and have made appropriate
provision as is required by GAAP for any such fees and charges which have
accrued.
(x) Accuracy and Completeness of Information. All written information,
----------------------------------------
reports and other papers and data produced by or on behalf of the Company or any
Subsidiary thereof and furnished to the Lenders were, at the time the same were
so furnished, complete and correct in all respects to the extent necessary to
give the recipient a true and accurate knowledge of the subject matter; provided
that all projection and financial forecasts shall represent the good faith
estimates of the Company and senior management thereof as to the projected
results contained therein based on the assumptions at the time when prepared.
No document furnished or written statement made to the Administrative Agent or
the Lenders by the Company or any Subsidiary thereof in connection with the
negotiation, preparation or execution of this Agreement or any of the Loan
Documents contains or will contain any untrue statement of a fact material to
the creditworthiness of the Company or its Subsidiaries or omits or will omit to
state a fact necessary in order to make the statements contained therein not
misleading in any material respect. The Company is not aware of any facts which
it has not disclosed in writing to the Administrative Agent having a Material
Adverse Effect, or insofar as the Company can now foresee, could reasonably be
expected to have a Material Adverse Effect.
(y) Year 2000 Compatibility. The Company and its Subsidiaries have taken
-----------------------
all actions reasonably necessary to assure that the Borrowers' computer based
systems are able to operate and effectively process data which includes dates on
and after January 1, 2000.
(z) Related Transaction Documents. The Company has delivered to the
-----------------------------
Administrative Agent true, complete and correct copies of the Related
Transaction Documents, together with all amendments and modifications thereto.
The Related Transaction Documents (including the schedules and exhibits thereto)
comprise a full and complete copy of all agreements between the parties thereto
with respect to the subject matter thereof and all transactions related thereto,
and there are no agreements or understandings, oral or written, or side
agreements not contained therein
63
that relate to or modify the substance thereof which have not been previously
disclosed in writing to the Administrative Agent. Such Related Transaction
Documents have been duly authorized by all necessary corporate action on the
part of the Company and each of its Subsidiaries party thereto, and, when
executed and delivered by the Company and each such Subsidiary a party thereto,
shall be enforceable in accordance with their respective terms except as such
enforcement may be limited by bankruptcy, insolvency, fraudulent conveyance,
moratorium or similar state or federal debtor relief laws which affect the
enforcement of creditors' rights in general and the availability of equitable
remedies. The representations and warranties made by the Company and its
Subsidiaries contained in the Related Transaction Documents are true and correct
and no default or event of default exists under the Related Transaction
Documents, and such representations and warranties are hereby incorporated
herein by reference with the same effect as though set forth in their entirety
herein, as qualified herein.
SECTION 7.2 Survival of Representations and Warranties, Etc. All
-----------------------------------------------
representations and warranties set forth in this Article VII and all
representations and warranties contained in any certificate, or any of the Loan
Documents (including but not limited to any such representation or warranty made
in or in connection with any amendment thereto) shall constitute representations
and warranties made under this Agreement. All representations and warranties
made under this Agreement shall be made or deemed to be made at and as of the
Closing Date, shall survive the Closing Date and shall not be waived by the
execution and delivery of this Agreement, any investigation made by or on behalf
of the Lenders or any borrowing hereunder.
ARTICLE VIII
FINANCIAL INFORMATION AND NOTICES
---------------------------------
Until all the Obligations have been paid and satisfied in full and the
Commitments terminated, unless consent has been obtained in the manner set forth
in Section 15.11 hereof, the Company will furnish or cause to be furnished to
the Administrative Agent and to the Lenders at their respective addresses as set
forth on Schedule 1.1(a), or such other office as may be designated by the
---------------
Administrative Agent and Lenders from time to time:
SECTION 8.1 Financial Statements and Projections.
------------------------------------
(a) Monthly Financial Statements. As soon as available but in any event
----------------------------
within thirty (30) days after the end of each monthly accounting period in each
fiscal year: (i) unaudited and Consolidated statements of income and cash flows
of the Company and its Subsidiaries for such monthly period and for the period
from the beginning of the fiscal year to the end of such month (including
statements of income for each Permitted Market), and unaudited Consolidated
balance sheets of the Company and its Subsidiaries as of the end of such monthly
period, setting forth in each case comparisons to the Company's annual budget
and the end of the corresponding period in the preceding fiscal year. All such
statements shall be prepared in accordance with GAAP, consistently applied
(subject to the absence of footnote disclosures and to changes resulting from
normal year-end adjustments for recurring accruals), and shall be certified by a
Responsible Officer, and (ii) a status report prepared by a Responsible Officer,
reporting the number of access
64
lines then maintained by the Company and its Subsidiaries and indicating whether
the Company has met its budgeted financial goals (including, without limitation,
those specified in any Approved Business Plan or Approved Budget) discussing in
reasonable detail the reasons for any variation from such goals, and describing
what actions the Company and its Subsidiaries have taken and propose to take in
order to meet budgeted financial targets in the future.
(b) Quarterly Financial Statements. As soon as practicable and in any
------------------------------
event within forty-five (45) days after the end of each fiscal quarter of each
Fiscal Year, the Company's Form 10-Q, which will include an unaudited
Consolidated balance sheet of the Company and its Subsidiaries as of the close
of such fiscal quarter and unaudited Consolidated statements of income, retained
earnings and cash flows for the fiscal quarter then ended and that portion of
the Fiscal Year then ended, all in reasonable detail setting forth in
comparative form the corresponding figures for the preceding Fiscal Year and
prepared by the Company in accordance with GAAP and, if applicable, containing
disclosure of the effect on the financial position or results of operations of
any change in the application of accounting principles and practices during the
period, and certified by a Responsible Officer to present fairly in all material
respects the financial condition of the Company and its Subsidiaries as of their
respective dates and the results of operations of the Company and its
Subsidiaries for the respective periods then ended, subject to normal year end
adjustments.
(c) Annual Financial Statements. As soon as practicable and in any event
---------------------------
within ninety (90) days after the end of each Fiscal Year, the Company's Form
10-K, which will include an audited Consolidated balance sheet of the Company
and its Subsidiaries as of the close of such Fiscal Year and audited
Consolidated statements of income, retained earnings and cash flows for the
Fiscal Year then ended, including the notes thereto, all in reasonable detail
setting forth in comparative form the corresponding figures for the preceding
Fiscal Year and prepared by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP or other independent certified
public accounting firm reasonably acceptable to the Administrative Agent in
accordance with GAAP and, if applicable, containing disclosure of the effect on
the financial position or results of operation of any change in the application
of accounting principles and practices during the year, and accompanied by a
report thereon by such certified public accountants that is not qualified with
respect to scope limitations imposed by the Company or any of its Subsidiaries
or with respect to accounting principles followed by the Company or any of its
Subsidiaries not in accordance with GAAP.
(d) Budgets and Business Plans. As soon as practicable and in any event
--------------------------
within five (5) Business Days after its approval in accordance with the
provisions of the Transaction Agreement, (i) each Approved Business Plan and
(ii) each Approved Budget, in each case accompanied by a certificate from a
Responsible Officer to the effect that, to the best of such officer's knowledge,
such projections are good faith estimates of the financial condition and
operations of the Company and its Subsidiaries for such period; provided, that
--------
in the event that there is no Approved Budget for any given Fiscal Year, an
annual budget shall be provided no later than February 1 of such Fiscal Year
prepared on a monthly basis and displaying anticipated statements of income and
cash flows and balance sheets and budgeted Capital Expenditures in form and
substance satisfactory to the Required Lenders.
65
SECTION 8.2 Officer's Compliance Certificate. At each time financial
--------------------------------
statements are delivered pursuant to Sections 8.1(a) and 8.1(b) and at such
other times as the Administrative Agent shall reasonably request, a certificate
of a Responsible Officer or the treasurer of the Company including (a) for each
certificate a calculation of the Borrowing Base and (b) for the quarterly
certificate (i) calculations evidencing compliance with Article X hereof, (ii)
an updated Schedule 7.1(b) as in effect as of such fiscal quarter end if and to
the extent any change has occurred with respect to the information on such
Schedule since the previous fiscal quarter end and (iii) copies of any amendment
to any Material Contract (not previously delivered pursuant to Section 8.5(e))
which amendment was completed during such quarter and, which certificate shall
be in the form of Exhibit F attached hereto (an "Officer's Compliance
---------
Certificate") and in detail reasonably satisfactory to the Administrative Agent.
SECTION 8.3 Accountants' Certificate. At each time financial statements
------------------------
are delivered pursuant to Section 8.1(c), a certificate of the independent
public accountants certifying such financial statements addressed to the
Administrative Agent for the benefit of the Lenders:
(a) stating that in making the examination necessary for the certification
of such financial statements, they obtained no knowledge of any Event of Default
pursuant to Article X hereof or, if such is not the case, specifying such
Default or Event of Default and its nature and period of existence; and
(b) including the calculations prepared by such accountants required to
establish whether or not the Company and its Subsidiaries are in compliance with
the financial covenants set forth in Article X hereof as at the end of each
respective period.
SECTION 8.4 Other Reports.
-------------
(a) Promptly upon receipt thereof, copies of all reports, if any, submitted
to the Company, any Borrower or their respective board of directors by its
independent public accountants in connection with their auditing function,
including, without limitation, any management report and any management
responses thereto;
(b) Within ten (10) Business Days after the receipt by the Company or any
of its Subsidiaries of notice that any Communications License has been lost or
canceled, copies of any such notice accompanied by a report describing the
measures undertaken by the Company or any of its Subsidiaries to prevent such
loss or cancellation (and the anticipated impact, if any, that such loss or
cancellation will have upon the business of the Company and its Subsidiaries);
(c) Promptly but in any event within ten (10) Business Days after the
filing thereof, a copy of (i) each report or other filing made by the Company or
any of its Subsidiaries with the Securities and Exchange Commission and required
by the SEC to be delivered to the shareholders of the Company or any of its
Subsidiaries, (ii) each report made by the Company or any of its Subsidiaries to
the SEC on Form 8-K and (iii) each final registration statement of the Company
or any of its Subsidiaries filed with the SEC;
66
(d) At such time as the monthly financial statements and accompanying
Officers' Compliance Certificate are delivered pursuant to Sections 8.1(a) and
8.2, a certificate of a Responsible Officer in reasonable detail satisfactory to
the Administrative Agent setting forth the number of Potential Business Lines
relating to each Interconnection Lease and certifying compliance with the 5%
limitation contained in the definition of Interconnection Lease; and
(e) Such other information regarding the operations, business affairs and
financial condition of the Company, any Borrower or any of its Subsidiaries as
the Administrative Agent or any Lender may reasonably request.
SECTION 8.5 Notice of Litigation and Other Matters. Prompt (but in no
--------------------------------------
event later than five (5) days after an officer of the Company or any Borrower
obtains knowledge thereof) telephonic and written notice of:
(a) the commencement of all proceedings and investigations by or before any
Governmental Authority and all actions and proceedings in any court or before
any arbitrator against or involving the Company, any Borrower or any Subsidiary
thereof or any of their respective properties, assets or businesses unless the
action or proceeding could not reasonably be expected to result in a liability
of the Company or any Borrower in an amount greater than $1,000,000;
(b) any notice of any violation received by the Company, any Borrower or
any Subsidiary thereof from any Governmental Authority including, without
limitation, any notice of violation of Environmental Laws which in any such case
could reasonably be expected to have a Material Adverse Effect;
(c) any labor controversy that has resulted in, or threatens to result in,
a strike or other work action against the Company, any Borrower or any
Subsidiary thereof;
(d) any attachment, judgment, lien, levy or order exceeding $1,000,000 that
may be assessed against or threatened against the Company, any Borrower or any
Subsidiary thereof;
(e) (i) the execution of any Material Contract by the Company, any Borrower
or any Subsidiary, along with a copy thereof, and a copy of any amendments to
any Material Contract relating to Telecommunications Equipment (but only to the
extent such amendment relates to the length, overall pricing, other payment
terms and commitments under any such contract), (ii) any default or event of
default, or any event which constitutes or which with the passage of time or
giving of notice or both would constitute a material default or material event
of default, or in any case a default in payment of any amounts due (after
expiration of applicable grace and cure periods), under any Material Contract or
Related Transaction Documents to which the Company, any Borrower or any of its
Subsidiaries is a party or by which the Company, any Borrower or any Subsidiary
thereof or any of their respective properties may be bound and (iii) any Default
or Event of Default hereunder;
(f) (i) any unfavorable determination letter from the Internal Revenue
Service regarding the qualification of an Employee Benefit Plan under Section
401(a) of the Code (along
67
with a copy thereof), (ii) all notices received by the Company, any Borrower or
any ERISA Affiliate of the PBGC's intent to terminate any Pension Plan or to
have a trustee appointed to administer any Pension Plan, (iii) all notices
received by the Company, any Borrower or any ERISA Affiliate from a
Multiemployer Plan sponsor concerning the imposition or amount of withdrawal
liability pursuant to Section 4202 of ERISA and (iv) the Company, any Borrower
obtaining knowledge or reason to know that the Company, any Borrower or any
ERISA Affiliate has filed or intends to file a notice of intent to terminate any
Pension Plan under a distress termination within the meaning of Section 4041(c)
of ERISA;
(g) the enactment or promulgation after the date hereof of any federal,
state, provincial or local statute, regulation or ordinance or judicial or
administrative decision or order (or, to the extent that the Company or any
Borrower has knowledge thereof, any such proposed statute, regulation,
ordinance, decision or order, whether by the introduction of legislation or the
commencement of rulemaking or similar proceedings or otherwise) having a
material effect or relating to the operation of the Network Facilities by the
Company or any of its Subsidiaries (including, without limitation, any statutes,
decisions or orders affecting long distance telecommunication resellers
generally and not directed against the Company or any of its Subsidiaries
specifically) which have been issued or adopted (or which have been proposed)
and which could reasonably be expected to have a Material Adverse Effect;
(h) any event which makes any of the representations set forth in Section
7.1 inaccurate in any respect; and
(i) the creation of any Subsidiary by the Company or any Borrower.
SECTION 8.6 Accuracy of Information. All written information, reports,
-----------------------
statements and other papers and data furnished by or on behalf of the Company or
any Borrower to the Administrative Agent or any Lender whether pursuant to this
Article VIII or any other provision of this Agreement, or any of the Security
Documents, shall, at the time the same is so furnished comply with Section
7.1(x).
ARTICLE IX
AFFIRMATIVE COVENANTS
---------------------
Until all of the Obligations have been paid and satisfied in full and the
Commitments terminated, unless consent has been obtained in the manner provided
for in Section 15.11, the Company will, and will cause each of its Subsidiaries
to:
SECTION 9.1 Preservation of Corporate Existence and Related Matters.
-------------------------------------------------------
Except as permitted by Section 11.5 and except with respect to any Inactive
Subsidiary, (a) preserve and maintain its separate corporate existence (or with
respect to any applicable Subsidiary its limited liability company existence)
and (b) except where the failure to do so could not reasonably be expected to
have a Material Adverse Effect, preserve and maintain all rights, franchises,
licenses and privileges necessary to the conduct of its business and qualify and
remain qualified as a
68
foreign corporation and authorized to do business in each jurisdiction where the
nature and scope of its activities require it to so qualify under Applicable
Law.
SECTION 9.2 Maintenance of Property. In addition to the requirements
-----------------------
of any of the Security Documents and except with respect to any Inactive
Subsidiary, protect and preserve all properties useful in and material to its
business, including copyrights, patents, trade names and trademarks; maintain in
good working order and condition all buildings, equipment and other tangible
real and personal property; and from time to time make or cause to be made all
renewals, replacements and additions to such property necessary for the conduct
of its business, so that the business carried on in connection therewith may be
properly and advantageously conducted at all times, in each case except where
the failure of any of the foregoing to be correct in all respects could not, in
the aggregate, reasonably be expected to have a Material Adverse Effect.
SECTION 9.3 Insurance. Maintain with insurance companies that have an
---------
A.M. Best rating of A:X or better, insurance against such risks and in such
minimum amounts as are set forth on Schedule 9.3 and any additional insurance
------------
customarily maintained by similar businesses and as may be required by
Applicable Law and the Security Documents, and on the Closing Date and from time
to time thereafter deliver to the Administrative Agent upon its request (a) a
detailed list of the insurance then in effect, stating the names of the
insurance companies, the amounts and rates of the insurance, the dates of the
expiration thereof and the properties and risks covered thereby and (b)
annually, a report from an independent insurance broker as to the insurance then
in effect.
SECTION 9.4 Accounting Methods and Financial Records. Maintain a
----------------------------------------
system of accounting, and keep such books, records and accounts (which shall be
true and complete in all material respects) as may be required or as may be
necessary to permit the preparation of financial statements in accordance with
GAAP and in compliance with the regulations of any Governmental Authority having
jurisdiction over it or any of its properties.
SECTION 9.5 Payment and Performance of Obligations. Pay and perform
--------------------------------------
all Obligations under this Agreement and the other Loan Documents, and pay or
perform (a) all taxes, assessments and other governmental charges that may be
levied or assessed upon it or any of its property, and (b) all other
indebtedness, obligations and liabilities in accordance with customary trade
practices; provided, that the Company or such Subsidiary may contest any item
--------
described in clauses (a) or (b) of this Section 9.5 in good faith so long as
adequate reserves are maintained with respect thereto in accordance with GAAP.
SECTION 9.6 Compliance With Laws and Approvals. Observe and remain in
----------------------------------
compliance with all material Applicable Laws and maintain in full force and
effect all material Governmental Approvals, in each case material to the conduct
of its business.
SECTION 9.7 Environmental Laws. In addition to and without limiting
------------------
the generality of Section 9.6, (a) comply with, and use reasonable efforts to
ensure such compliance by all tenants and subtenants with all material
applicable Environmental Laws and obtain and comply with and maintain, and use
reasonable efforts to ensure that all tenants and subtenants
69
obtain and comply with and maintain, any and all licenses, approvals,
notifications, registrations or permits required by applicable Environmental
Laws, (b) conduct and complete all investigations, studies, sampling and
testing, and all remedial, removal and other actions required under
Environmental Laws, and promptly comply with all lawful orders and directives of
any Governmental Authority regarding Environmental Laws, and (c) defend,
indemnify and hold harmless the Administrative Agent and the Lenders, and their
respective parents, Subsidiaries, Affiliates, employees, agents, officers and
directors, from and against any claims, demands, penalties, fines, liabilities,
settlements, damages, costs and expenses of whatever kind or nature known or
unknown, contingent or otherwise, arising out of, or in any way relating to the
violation of, noncompliance with or liability under any Environmental Laws
applicable to the operations of the Company or such Subsidiary, or any orders,
requirements or demands of Governmental Authorities related thereto, including,
without limitation, reasonable attorney's and consultant's fees, investigation
and laboratory fees, response costs, court costs and litigation expenses, except
to the extent that any of the foregoing directly result from the gross
negligence or willful misconduct of the party seeking indemnification therefor.
SECTION 9.8 Compliance with ERISA. In addition to and without limiting
---------------------
the generality of Section 9.6, (a) except where the failure to so comply could
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect, (i) comply with all material applicable provisions of ERISA and
the regulations and published interpretations thereunder with respect to all
Employee Benefit Plans, (ii) not take any action or fail to take action the
result of which could be a liability to the PBGC or to a Multiemployer Plan,
(iii) not participate in any prohibited transaction that could result in any
civil penalty under ERISA or tax under the Code and (iv) operate each Employee
Benefit Plan in such a manner that will not incur any tax liability under
Section 4980B of the Code or any liability to any qualified beneficiary as
defined in Section 4980B of the Code and (b) furnish to the Administrative Agent
upon the Administrative Agent's request such additional information about any
Employee Benefit Plan as may be reasonably requested by the Administrative
Agent.
SECTION 9.9 Compliance With Agreements. Comply in all material respects
--------------------------
with each term, condition and provision of any Material Contract and, except
where the failure to so comply could not, in the aggregate, reasonably be
expected to have a Material Adverse Effect, with each term, condition and
provision of all other contracts and agreements entered into in the conduct of
its business; provided, that the Company or such Subsidiary may contest any
--------
Material Contract or other contract or agreement in good faith through
applicable proceedings so long as adequate reserves are maintained in accordance
with GAAP.
SECTION 9.10 Conduct of Business. Engage only in the provision of voice
-------------------
and data wireline telecommunications services and in lines of business directly
related thereto; provided, that such service and related business shall be
--------
conducted solely by the Borrowers, and the Company shall act as a holding
company for the capital stock of the Borrowers and engage only in business
operations incidental thereto and incidental to the creation and capitalization
of the Borrowers and to making other investments therein.
SECTION 9.11 Visits and Inspections. Permit the Administrative Agent, or
----------------------
any Lender (or any consultant retained thereby), from time to time upon at least
2 Business Days,
70
prior notice and at the Borrowers' expense, to visit and inspect its properties;
conduct periodic field audits and otherwise inspect, audit and make extracts
from its books, records and files, including, but not limited to, management
letters prepared by independent accountants; once during each fiscal year of the
Company (or, if a Default or an Event of Default shall have occurred and for so
long as it shall be continuing, at any time) conduct periodic field audits; and
discuss with its principal officers, and its independent accountants, its
business, assets, liabilities, financial condition, results of operations and
business prospects.
SECTION 9.12 Additional Subsidiaries and Collateral.
--------------------------------------
(a) (i) Within thirty (30) days of (x) the creation of any newly-formed
Subsidiary (other than an Inactive Subsidiary) and (y) the date that any
Inactive Subsidiary ceases to qualify as an Inactive Subsidiary, and upon the
acquisition of any Subsidiary permitted by Section 11.4(c) (or such other date
as may be specified in any consent executed pursuant to Section 11.4(c)), cause
to be executed and delivered to the Administrative Agent (A) a Joinder Agreement
such that such Subsidiary shall become a Borrower hereunder, a grantor under the
Security Agreement and an issuer under the Pledge Agreement (and, if applicable,
the parent of such Subsidiary shall become a pledgor under the Pledge
Agreement), (B) subject to clause (ii) below, such other applicable Security
Documents in form and substance reasonably satisfactory to the Administrative
Agent such that the assets of such Subsidiary shall become Collateral for the
Obligations, (C) favorable legal opinions addressed to the Administrative Agent
and Lenders in form and substance satisfactory thereto with respect to such
supplements and agreements and (D) such other documents and closing certificates
as consistent with Article VI as may be requested by the Administrative Agent
and (ii) within sixty (60) days after the joinder of such Subsidiary, a Mortgage
for each parcel of real property owned or leased thereby at the time of such
joinder; provided, that, with respect to any real property acquired by the
--------
Company or any Borrower or in which the Company or any Borrower assumes a
leasehold interest, in each case pursuant to the US Xchange Acquisition, the
Company and the Borrowers shall have until the date that is ninety (90) days
after the Closing Date to comply with the requirements of this Section 9.12.
(b) Within sixty (60) days of the consummation by the Company or any
Subsidiary of any lease (including without limitation in connection with any
assignment or assumption of an existing lease to or by a new landlord) with
respect to real property at which any Switch or any material Telecommunications
Equipment is or is to be located, cause to be executed and delivered to the
Administrative Agent in form and substance satisfactory thereto (i) (A) a copy
of the lease and all related documents, (B) a legal description of the premises,
(C) a Mortgage with respect to such property, (D) a landlord consent and (ii) to
the extent requested by the Administrative Agent, (A) a mortgagee estoppel
letter, (B) UCC-1 Financing Statements and any additional filings or recordings
or actions necessary to perfect the security interests of the Lenders in all
Collateral related to such premises, (C) favorable opinions of counsel to the
Company addressed to the Administrative Agent and the Lenders with respect to
such Mortgages and security interests and (D) each additional document,
instrument or other item of information reasonably requested by the
Administrative Agent.
(c) In connection with the execution by the Company or any Subsidiary of
any Interconnection Agreement, use their reasonable best efforts to cause to be
executed and
71
delivered to the Administrative Agent at the time such Interconnection Agreement
is entered into (or as soon as reasonably practicable thereafter, or with
respect to any such agreement that is in effect on the Closing Date, as soon as
reasonably practicable after such date), a consent agreement regarding the Lien
of the Administrative Agent in form and substance reasonably satisfactory
thereto and each additional document, instrument or other item of information
reasonably requested by the Administrative Agent.
(d) Promptly deliver from time to time such additional Security Documents
to the Administrative Agent upon the request of the Required Lenders with
respect to any assets of any such Person not subject to an existing Lien in
favor of the Administrative Agent for the ratable benefit of itself and the
Lenders.
SECTION 9.13 Year 2000 Compatibility. Take all actions reasonably
-----------------------
necessary to assure that the Borrowers' computer based systems are able to
operate and effectively process data which includes dates on and after January
1, 2000. At the request of the Administrative Agent or any Lender, the Borrowers
shall provide reasonable assurances satisfactory to the Administrative Agent of
the Borrowers' Year 2000 compatibility.
SECTION 9.14 Transfer of Capital Contributions. With respect to any Net
---------------------------------
Cash Proceeds received by the Company by way of any equity issuance permitted
hereunder, the Permanent Financing, any other issuance of Refinancing Securities
or from a Public Offering, transfer the amount thereof (except the amount
necessary to satisfy any payment of interest, fees or expenses in respect of the
Bridge Loans or the Permanent Financing pursuant to an escrow arrangement or to
the extent necessary to replace the Preferred Equity or repay any outstanding
Bridge Loans, in each case in accordance with the terms hereof) to the Borrowers
in the form of capital contributions reasonably satisfactory to the
Administrative Agent.
SECTION 9.15 Hedging Agreements. Maintain during the term of the Credit
------------------
Facility (commencing on the date the Borrowers utilize fifty percent (50%) or
more of the Aggregate Commitment), a Hedging Agreement with minimum notional
amount at any date of determination equal to fifty percent (50%) of the
outstanding principal balance on the Loans at an interest rate and upon other
terms and conditions reasonably satisfactory to the Administrative Agent.
SECTION 9.16 Further Assurances. Make, execute and deliver all such
------------------
additional and further acts, things, deeds and instruments as the Administrative
Agent or any Lender may reasonably require to document and consummate the
transactions contemplated hereby and to vest completely in and insure the
Administrative Agent and the Lenders their respective rights under this
Agreement, the Notes, the Letters of Credit and the other Loan Documents.
SECTION 9.17 Use of Proceeds. The Borrowers shall use the proceeds of
---------------
the Extensions of Credit (a) to finance the US Xchange Acquisition and other
acquisitions permitted under this Agreement, (b) to finance investments
permitted under this Agreement (provided, that on the Closing Date, the US
Xchange Acquisition shall be financed from the proceeds of the Term B Loans and,
to the extent necessary, from the proceeds of the Revolving Credit Loans), (c)
to finance the direct cost of multiple Switches and other ancillary
Telecommunications
72
Equipment and services comprising direct construction costs and other related
Capital Expenditures, in each case in the Permitted Markets and (d) for working
capital and general corporate requirements of the Borrowers, including the
payment of certain fees and expenses incurred in connection with the
transactions and the repayment of outstanding Bridge Loans.
SECTION 9.18 Company Covenants Relating to Preferred Equity. The Company
----------------------------------------------
shall give the Administrative Agent prior written notice of any proposed "change
in control" (as such term is defined in the Preferred Equity Purchase Agreement)
within a reasonable time period in advance of such "change in control." In
addition, the Company shall immediately notify the Administrative Agent and the
Lenders upon the receipt of any notice (written or otherwise) from any holder of
Preferred Equity that such holder intends to exercise its right to put its
shares of Preferred Equity to the Company in accordance with the terms of the
Preferred Equity Documents.
SECTION 9.19 Maintenance of Bridge Loans. Maintain the commitment to
---------------------------
fund the Bridge Loans pursuant to the terms of the Bridge Loan Documents, except
to the extent (and only to the extent) that such commitment may be reduced in
part or terminated pursuant to any issuance of Refinancing Securities.
SECTION 9.20 Inactive Subsidiaries. Within ninety (90) days after the
---------------------
Closing Date, dissolve each Inactive Subsidiary which was acquired by the
Company pursuant to the Acquisition Documents.
SECTION 9.21 Indiana Subsidiary PUC Authorization. Use its reasonable
------------------------------------
best efforts to cause the Indiana Subsidiary to be authorized by each applicable
PUC to incur the Debt under the Loan Documents and perform the corresponding
obligations thereunder until the Final Maturity Date.
SECTION 9.22 Limited Subsidiary PUC Authorization. Use its reasonable
------------------------------------
best efforts to cause each Limited Subsidiary to be authorized by each
applicable PUC to borrow an amount equal to the Aggregate Commitment and perform
its corresponding obligations under the Loan Documents, as soon as practicable
after the Closing Date.
SECTION 9.23 Certain Post-Closing Matters. (a) Use its reasonable best
----------------------------
efforts to cause UCC-3 Termination Statements to be filed within forty-five (45)
days after the Closing Date with respect to certain UCC-1 Financing Statements
on record in Massachusetts and New Hampshire in favor of Citizens Bank of
Massachusetts, which UCC-1 Financing Statements result from a credit facility in
favor of ACL Telecommunications, Ltd. and Atlantic Communications, L.L.C. which
has been paid in full and terminated, (b) cause the Board of Managers of Fiber
Technologies, LLC to execute a resolution consenting to the Lien of the
Administrative Agent in the units of Fiber Technologies, LLC owned by the
Company within forty-five (45) after the Closing Date and (c) within forty-five
(45) days after the Closing Date, order UCC Lien searches as directed by the
Administrative Agent in order to confirm the filings perfecting the Liens of the
Administrative Agent and confirm compliance with Section 11.3.
73
ARTICLE X
FINANCIAL COVENANTS
-------------------
SECTION 10.1 Stage 1 Covenants. Until all of the Obligations have been
-----------------
paid and satisfied in full and the Commitments terminated, unless consent has
been obtained in the manner set forth in Section 15.11 hereof, during the Stage
1 Covenant Period, the Borrowers on a Consolidated basis will not:
(a) Total Debt to Contributed Capital Ratio: As of any date of
---------------------------------------
determination, the Borrowers shall not permit the ratio of Total Debt to
Contributed Capital to exceed fifty percent (50%).
(b) Total Consolidated Debt to Contributed Consolidated Capital Ratio. As
-----------------------------------------------------------------
of any date of determination, the Borrowers shall not permit the ratio of Total
Consolidated Debt to Contributed Consolidated Capital to exceed sixty-five
percent (65%).
(c) Minimum Revenue: As of any fiscal quarter end during the applicable
---------------
period set forth below, permit Total Revenue for the fiscal quarter ending on
such date to be less than the corresponding amount set forth below:
74
-----------------------------------------------------------------
Period Ending Minimum Revenue (in thousands)
-----------------------------------------------------------------
9/30/00 16,500
12/31/00 29,000
3/31/01 36,000
6/30/01 43,500
9/30/01 52,500
12/31/01 62,500
3/31/02 70,000
6/30/02 80,000
9/30/02 92,500
12/31/02 102,500
3/31/03 112,500
6/30/03 122,500
9/30/03 132,500
12/31/03 140,000
3/31/04 150,000
6/30/04 157,000
9/30/04 167,500
12/31/04 175,000
3/31/05 182,500
6/30/05 190,000
9/30/05 197,500
12/31/05 205,000
3/31/06 212,500
6/30/06 220,000
9/30/06 227,500
12/31/06 235,000
3/31/07 240,000
6/30/07 247,500
9/30/07 255,000
12/31/07 262,500
3/31/08 267,500
6/30/08 275,000
9/30/08 280,000
12/31/08 287,500
3/31/09 290,000
-----------------------------------------------------------------
(d) Maximum EBITDA Losses/Minimum EBITDA: As of any fiscal quarter end during
------------------------------------
the applicable period set forth below, permit (i) EBITDA losses thereof for the
fiscal quarter ending on such date to exceed the corresponding negative amount
set forth below; provided, that for each fiscal quarter ending during 2000 and
--------
2001, either (A) the EBITDA loss for such fiscal quarter shall not exceed the
corresponding negative amount set forth below or (B) the cumulative EBITDA loss
from July 1, 2000 to such fiscal quarter end shall not exceed the cumulative
negative amounts set forth below for such period or (ii) permit EBITDA thereof
to be less than the corresponding positive amount set forth below:
75
------------------------------------------------------------------
Max EBITDA Losses/
Period Min EBITDA (in thousands)
------------------------------------------------------------------
9/30/00 (22,000)
12/31/00 (25,000)
3/31/01 (24,800)
6/30/01 (20,200)
9/30/01 (14,626)
12/31/01 (10,040)
3/31/02 (6,140)
6/30/02 (237)
9/30/02 5,122
12/31/02 10,217
3/31/03 17,000
6/30/03 23,000
9/30/03 28,000
12/31/03 32,000
3/31/04 38,000
6/30/04 41,000
9/30/04 45,000
12/31/04 48,000
3/31/05 53,000
6/30/05 56,000
9/30/05 59,000
12/31/05 63,000
3/31/06 66,000
6/30/06 69,000
9/30/06 72,000
12/31/06 76,000
3/31/07 78,000
6/30/07 81,000
9/30/07 85,000
12/31/07 88,000
3/31/08 90,000
6/30/08 92,000
9/30/08 94,000
12/31/08 97,000
3/31/09 98,000
------------------------------------------------------------------
(e) Maximum Capital Expenditures: As of the end of any Fiscal Year, permit
----------------------------
Capital Expenditures for such Fiscal Year to exceed the corresponding amount set
forth below:
76
---------------------------------------------------------------------
Fiscal Year Maximum Capital
Ending Expenditures (in thousands)
---------------------------------------------------------------------
12/31/00 138,500
12/31/01 126,500
12/31/02 84,000
12/31/03 70,000
12/31/04 67,000
12/31/05 64,000
12/31/06 67,000
12/31/07 70,000
12/31/08 62,000
---------------------------------------------------------------------
; provided that if the Borrowers make Capital Expenditures in any Fiscal Year in
--------
an amount less than the amount set forth above for any such Fiscal Year (such
unused amount for any single Fiscal Year, or the cumulative unused amount for
any number of Fiscal Years, as applicable, referred to below as the "Stage 1
Carryover Amount"), then (i) the Borrowers may make Capital Expenditures in any
succeeding fiscal year in an amount not to exceed the sum of (A) the amount set
forth above for such fiscal year and (B) the Stage 1 Carryover Amount and (ii)
for purposes of determining whether any Capital Expenditure exceeds the maximum
amount permitted for any given Fiscal Year, the Capital Expenditure for such
Fiscal Year shall be applied first to the Stage 1 Carryover Amount then
outstanding.
(f) Minimum Asset Coverage: As of any fiscal quarter end, permit the ratio of
----------------------
(i) the Total Debt of the Borrowers and their Subsidiaries as of such date to
(ii) PP&E thereof as of such date to exceed 1.00 to 1.00.
SECTION 10.2 Stage 2 Covenants. Until all of the Obligations have been paid
-----------------
and satisfied in full and the Commitments terminated, unless consent has been
obtained in the manner set forth in Section 15.11 hereof, during the Stage 2
Covenant Period (during which time the covenants set forth in Section 10.1 shall
cease to be applicable) the Borrowers on a Consolidated basis will not:
(a) Borrower Leverage Ratio: As of any fiscal quarter end during the
-----------------------
applicable period set forth below, permit the Borrower Leverage Ratio to exceed
the corresponding ratio set forth below:
77
-----------------------------------------------------------------------------------
Period Ratio
-----------------------------------------------------------------------------------
Stage 2 Effective
Date through
06/29/2004 6.00 to 1.00
06/30/2004 through
06/29/2005 5.00 to 1.00
06/30/2005 through
06/29/2006 4.00 to 1.00
06/30/2006 and 3.00 to 1.00
thereafter
-----------------------------------------------------------------------------------
(b) Borrower Fixed Charge Coverage Ratio: As of any fiscal quarter end during
------------------------------------
the applicable period set forth below, permit the ratio of (i) EBITDA thereof
for the six-month period ending on such fiscal quarter end times two (2) to (ii)
-----
Borrower Fixed Charges for the period of four (4) consecutive fiscal quarters
ending on such fiscal quarter end to be less than the corresponding ratio set
forth below:
----------------------------------------------------------------------------------
Period Ratio
----------------------------------------------------------------------------------
Stage 2 Effective
Date through
06/29/2003 N/A
06/30/2003 through
06/29/2004 1.00 to 1.00
06/30/2004 and
thereafter 1.10 to 1.00
----------------------------------------------------------------------------------
(c) Interest Coverage Ratio: As of any fiscal quarter end during the
-----------------------
applicable period set forth below, permit the ratio of (i) EBITDA thereof for
the six-month period ending on such fiscal quarter end to (ii) cash Interest
Expense thereof for the six-month period ending on such fiscal quarter end, to
be less than the corresponding ratio set forth below:
---------------------------------------------------------------------------------
Period Ratio
---------------------------------------------------------------------------------
Stage 2 Effective
Date through
06/29/2003 1.50 to 1.00
06/30/2003
and
thereafter 2.00 to 1.00
---------------------------------------------------------------------------------
78
(d) Maximum Capital Expenditures: As of the end of any Fiscal Year, permit
----------------------------
Capital Expenditures for such Fiscal Year to exceed the corresponding amount set
forth below:
-------------------------------------------------------------------------------
Fiscal Year Maximum Capital
Ending Expenditures (in thousands)
-------------------------------------------------------------------------------
12/31/00 138,500
12/31/01 126,500
12/31/02 84,000
12/31/03 70,000
12/31/04 67,000
12/31/05 64,000
12/31/06 67,000
12/31/07 70,000
12/31/08 62,000
-------------------------------------------------------------------------------
; provided, that if the Borrowers make Capital Expenditures in any Fiscal Year
--------
(other than any Fiscal Year all or a part of which was included in the Stage 1
Covenant Period) in an amount less than the amount set forth above for any such
Fiscal Year (such unused amount for any single Fiscal Year, or the cumulative
unused amount for any number of Fiscal Years, as applicable, referred to below
as the "Stage 2 Carryover Amount"), then (i) the Borrowers may make Capital
Expenditures in any succeeding fiscal year in an amount not to exceed the sum of
(A) the amount set forth above for such fiscal year and (B) the Stage 2
Carryover Amount and (ii) for purposes of determining whether any Capital
Expenditure exceeds the maximum amount permitted for any given Fiscal Year, the
Capital Expenditure for such Fiscal Year shall be applied first to the Stage 2
Carryover Amount then outstanding.
SECTION 10.3 Guarantor Covenant. Until all of the Obligations have been
------------------
paid and satisfied in full and the Commitments terminated, unless consent has
been obtained in the manner set forth in Section 15.11 hereof, during the Stage
2 Covenant Period the Company on a Consolidated basis will not, as of any fiscal
quarter end during the applicable period set forth below, permit the Company
Leverage Ratio to be greater than the corresponding ratio set forth below:
-------------------------------------------------------------------------------
Period Ratio
-------------------------------------------------------------------------------
Stage 2 Effective
Date through
06/29/2004 10.00 to 1.00
06/30/2004 through
06/29/2005 8.00 to 1.00
06/30/2005 through
06/29/2006 6.00 to 1.00
06/30/2006 and
thereafter 4.00 to 1.00
-------------------------------------------------------------------------------
79
ARTICLE XI
NEGATIVE COVENANTS
------------------
Until all of the Obligations have been paid and satisfied in full and the
Commitments terminated, unless consent has been obtained in the manner set forth
in Section 15.11 hereof, the Company shall not and shall not permit any of its
Subsidiaries to:
SECTION 11.1 Limitations on Debt. Create, incur, assume or suffer to exist
-------------------
any Debt except:
(a) the Obligations;
(b) Debt of the Company or any Borrower incurred in connection with a Hedging
Agreement (i) required by Section 9.15 or (ii) otherwise executed to hedge
against interest rate fluctuation with a counterparty and upon terms and
conditions (including interest rate) reasonably satisfactory to the
Administrative Agent;
(c) Debt arising under or in connection with publicly or privately placed
notes, debentures, bonds or debt securities, loans or related indentures or
other agreements (including without limitation Debt convertible into capital
stock of the Company) with aggregate Net Cash Proceeds not to exceed
$250,000,000 and, to the extent that any Bridge Loans are outstanding at the
time such Debt is issued, applied to the Bridge Loans, so long as (i) to the
extent that such Debt does not constitute Refinancing Securities, no Default or
Event of Default exists on the date any such Debt is created or arises as a
result of any borrowing thereunder, (ii) the provisions of the documents
evidencing such Debt are not materially more restrictive (as reasonably
determined by the Administrative Agent) than the covenants in the Loan
Documents, including without limitation any "change in control" provision, (iii)
such Debt provides for no scheduled payment of principal on or prior to the date
that is six (6) months after the eighth anniversary of the Closing Date, (iv)
such Debt provides for no scheduled cash payment of interest on or prior to the
third anniversary of the Closing Date (except for such interest payments made
pursuant to an escrow arrangement or by original discount), (v) such Debt is
either (A) unsecured Debt issued by the Borrowers subordinated to the
Obligations and the terms of such subordination are reasonably satisfactory to
the Administrative Agent and the Required Lenders or (B) unsecured Debt issued
by the Company and (vi) the documents and other terms pursuant to which such
Debt is issued are reasonably satisfactory to the Administrative Agent and the
Required Lenders (any such Debt issued pursuant to this Section 11.1(c) that
constitutes Refinancing Securities, the "Permanent Financing");
(d) Debt existing on the Closing Date and not otherwise permitted under or
referred to in this Section 11.1, as set forth on Schedule 7.1(t), and the
---------------
renewal and refinancing (but not the increase of the aggregate principal amount)
thereof;
(e) Debt of the Borrowers not to exceed $5,000,000 in the aggregate on any
date of determination which may be used for (i) Capital Leases, (ii) short-term
debt in the ordinary
80
course of business, (iii) temporary overdrafts or (iv) any other use previously
approved in writing by the Required Lenders;
(f) Debt consisting of Guaranty Obligations permitted by Section 11.2;
(g) Debt of the Company in respect of the Bridge Loans; and
(h) Debt of the any Borrower to another Borrower or Debt of the Company to any
Borrower;
provided, that none of the Debt permitted to be incurred by this Section 11.1
--------
shall restrict, limit or otherwise encumber (by covenant or otherwise) the
ability of any Subsidiary of the Company to make any payment to the Company or
any Subsidiary thereof (in the form of dividends, intercompany advances or
otherwise) for the purpose of enabling the Borrowers to pay the Obligations and
the Company to pay the Guaranteed Obligations; and provided further, that the
-------- -------
limitations set forth in this Section 11.1 shall not be construed to prohibit or
otherwise limit the Company's ability to obtain the commitment for or issue the
Preferred Equity or the Replacement Equity.
SECTION 11.2 Limitations on Guaranty Obligations. Create, incur, assume or
-----------------------------------
suffer to exist any Guaranty Obligations except:
(a) Guaranty Obligations in favor of the Administrative Agent for the benefit
of the Administrative Agent and the Lenders;
(b) Guaranty Obligations of the Borrowers with respect to any subordinated
Debt issued by the Company pursuant to Section 11.1(c) as long as such Guaranty
Obligations (i) are unsecured and constitute Subordinated Debt and (ii) the
documents and other terms pursuant to which such Guaranty Obligations are
entered into are reasonably satisfactory to the Administrative Agent and the
Required Lenders;
(c) Guaranty Obligations in an amount not to exceed $1,000,000 to secure
payment or performance of customer service contracts incurred in the ordinary
course of business;
(d) Guaranty Obligations of the Company with respect to any real or personal
property lease to which any Borrower is a party and entered into in the ordinary
course of business; provided, that no Default or Event of Default exists on the
--------
date any such Guaranty Obligation is created, incurred or assumed or arises as a
result thereof and provided further, that upon entering into any such Guaranty
----------------
Obligation with respect to any lease subject to Section 9.12, the Borrowers
shall be in compliance with Section 9.12 with respect to such lease;
(e) Guaranty Obligations of the Company or any Borrower of any Debt of the
Borrowers which is permitted by Section 11.1(e); and
81
(f) Guaranty Obligations of the Company and its Subsidiaries which consist of
customary indemnification and purchase price adjustment obligations incurred in
connection with the purchase of assets or capital stock in each case permitted
hereunder.
SECTION 11.3 Limitations on Liens. Create, incur, assume or suffer to exist,
--------------------
any Lien on or with respect to any of its assets or properties (including
without limitation shares of capital stock or other ownership interests held by
the Company or any Subsidiary thereof), real or personal, whether now owned or
hereafter acquired, except:
(a) Liens for taxes, assessments and other governmental charges or levies
(excluding any Lien imposed pursuant to any of the provisions of ERISA or
Environmental Laws) not yet due or as to which the period of grace (not to
exceed thirty (30) days), if any, related thereto has not expired or which are
being contested in good faith and by appropriate proceedings if adequate
reserves are maintained to the extent required by GAAP;
(b) the claims of materialmen, mechanics, carriers, warehousemen, processors
or landlords for labor, materials, supplies or rentals incurred in the ordinary
course of business, (i) which are not overdue for a period of more than thirty
(30) days or (ii) which are being contested in good faith and by appropriate
proceedings;
(c) Liens consisting of deposits or pledges made in the ordinary course of
business in connection with, or to secure payment of, obligations under workers'
compensation, unemployment insurance or similar legislation or obligations (not
to exceed $500,000) under customer service contracts;
(d) Liens constituting encumbrances in the nature of zoning restrictions,
easements and rights or restrictions of record on the use of real property,
which in the aggregate are not substantial in amount and which do not, in any
case, materially detract from the value of such property or impair the use
thereof in the ordinary conduct of business;
(e) Liens of the Administrative Agent for the benefit of the Administrative
Agent and the Lenders;
(f) Liens created under the Lucent Agreement and any other Liens not otherwise
permitted by or referred to in this Section 11.3 and in existence on the Closing
Date, in each case as described on Schedule 11.3;
-------------
(g) Liens evidencing the interest of lessors under Capital Leases permitted by
Section 11.1(e) and Liens securing any purchase money Debt permitted under
Section 11.1(e); provided, that with respect to any such purchase money Liens,
--------
(i) such Liens shall be created substantially simultaneously with the
acquisition of the related asset, (ii) such Liens do not at any time encumber
any property other than the property financed by such Debt, (iii) the amount of
Debt secured thereby is not increased and (iv) the principal amount of Debt
secured by any such Lien shall at no time exceed one hundred percent (100%) of
the original purchase price of such property at the time it was acquired; and
82
(h) Liens against any account (including any proceeds on investment thereof)
consisting of a portion of the Net Cash Proceeds of the Bridge Loans or the
Permanent Financing escrowed or set aside in a restricted account for the
purpose of paying interest accrued on such Bridge Loans or Permanent Financing
which Liens are granted for the benefit of holders of such Debt or any Person
acting on behalf of such holders.
SECTION 11.4 Limitations on Loans, Advances, Investments and Acquisitions.
------------------------------------------------------------
Purchase, own, invest in or otherwise acquire, directly or indirectly, any
capital stock, interests in any partnership or joint venture (including without
limitation the creation or capitalization of any Subsidiary), evidence of Debt
or other obligation or security, substantially all or a substantial portion of
the business or assets of any other Person or any other investment or interest
whatsoever in any other Person, or make or permit to exist, directly or
indirectly, any loans, advances or extensions of credit to, or any investment in
cash or by delivery of property in, any Person except:
(a) existing loans, advances and investments not otherwise permitted by this
Section 11.4 described on Schedule 11.4;
-------------
(b) investments by the Company or any of its Subsidiaries in (i) marketable
direct obligations issued or unconditionally guaranteed by the United States or
any agency thereof maturing within 120 days from the date of acquisition
thereof, (ii) commercial paper maturing no more than 120 days from the date of
creation thereof and currently having the highest rating obtainable from either
Standard & Poor's Ratings Services, a division of The ▇▇▇▇▇▇-▇▇▇▇ Companies,
Inc. or ▇▇▇▇▇'▇ Investors Service, Inc., (iii) certificates of deposit maturing
no more than 120 days from the date of creation thereof issued by commercial
banks incorporated under the laws of the United States, each having combined
capital, surplus and undivided profits of not less than $500,000,000 and having
a rating of "A" or better by a nationally recognized rating agency; provided,
--------
that the aggregate amount invested in such certificates of deposit shall not at
any time exceed $5,000,000 for any one such certificate of deposit and
$10,000,000 for any one such bank, or (iv) time deposits maturing no more than
30 days from the date of creation thereof with commercial banks or savings banks
or savings and loan associations each having membership either in the FDIC or
the deposits of which are insured by the FDIC and in amounts not exceeding the
maximum amounts of insurance thereunder (any such investment referred to in this
Section 11.4(b), a "Cash Equivalent");
(c) investments by the Company in the form of acquisitions of all or
substantially all of the business or a line of business (by way of acquisition
of capital stock or other equity interests only) of any other Person, and
investments by the Borrowers or any Subsidiary thereof in the form of
acquisitions of all or substantially all of the business or a line of business
(whether by the acquisition of capital stock, assets or any combination thereof)
of any other Person in each case if such acquisition has been previously
approved in writing by the Required Lenders; provided that (i) if the aggregate
consideration (including cash, debt, capital stock and any earn-out) for any
such acquisition does not exceed $5,000,000, then no such consent shall be
required so long as no Default or Event of Default shall be in existence or
would occur after giving effect thereto and (ii) subject to compliance with the
other applicable provisions of the Loan Documents;
83
(d) any investment by the Company in any Borrower or by any Borrower in
another Borrower or any loan permitted by Section 11.1(h);
(e) loans and advances to directors, officers and employees of the Company and
its Subsidiaries in the ordinary course of business; provided, that the
--------
aggregate outstanding amount of all investments under this clause (e) shall not
exceed $500,000 at any one time;
(f) investments by the Company or any Borrower in businesses engaging in
telecommunications activities (other than any non-Borrower Subsidiary) related
to those in which the Company and the Borrowers are engaging as of the Closing
Date; provided, that the aggregate amount of all investments under this clause
--------
(f) shall not exceed $25,000,000 at any one time; and
(g) any investment consisting of the funds deposited in any escrow account or
restricted account (and interest thereon) permitted by Section 11.3(h).
SECTION 11.5 Limitations on Mergers and Liquidation. Merge, consolidate or
--------------------------------------
enter into any similar combination with any other Person or liquidate, wind-up
or dissolve itself (or suffer any liquidation or dissolution) except:
(a) any Wholly-Owned Subsidiary of the Company may merge with any other
Wholly-Owned Subsidiary of the Company;
(b) any Wholly-Owned Subsidiary may merge into the Person such Wholly-Owned
Subsidiary was formed to acquire in connection with an acquisition permitted by
Section 11.4(c); and
(c) any Wholly-Owned Subsidiary of any Borrower may wind-up into such Borrower
or any other Wholly-Owned Subsidiary of such Borrower.
SECTION 11.6 Limitations on Sale of Assets. Convey, sell, lease, assign,
-----------------------------
transfer or otherwise dispose of any of its property, business or assets
(including, without limitation, the sale of any receivables and leasehold
interests and any sale-leaseback or similar transaction), whether now owned or
hereafter acquired except:
(a) the sale or lease by any Borrower in the ordinary course of business of
any portion of the Network Facility not then in use by such Borrower and not
contemplated to be used thereby;
(b) the sale by any Borrower of assets no longer used or usable in the
business of the Borrowers or any of their Subsidiaries;
(c) the transfer of assets to any Borrower or any Wholly-Owned Subsidiary of
any Borrower pursuant to Section 11.5(c);
84
(d) the sale or discount without recourse by any Borrower of accounts
receivable arising in the ordinary course of business in connection with the
compromise or collection thereof; and
(e) any asset sale not referenced above under Section 11.6 as long as such
sale is in the ordinary course of business and the Net Cash Proceeds thereof
are, if applicable, applied in accordance with Section 4.5 and/or Section 2.6,
as applicable; provided that the aggregate Net Cash Proceeds from such sales
--------
shall not exceed $6,000,000 during any period of four consecutive fiscal
quarters.
SECTION 11.7 Limitations on Dividends and Distributions. Declare or pay any
------------------------------------------
dividends upon any of its capital stock or other equity interests; purchase,
redeem, retire or otherwise acquire, directly or indirectly, any shares of its
capital stock or other equity interests; return capital of the Borrowers to the
Company; or make any distribution of cash, property or assets among the holders
of shares of its capital stock or make other payments or distributions to any
Affiliate of the Company or any of its Subsidiaries; provided, that, if no
--------
Default or Event of Default has occurred and is continuing nor would occur as a
result of the following action:
(a) the Company and its Subsidiaries may make payments to Affiliates of fees
or compensation for services which are in the nature of management, corporate
overhead or administrative services to the extent such payments are reflected in
the then effective Approved Budget or Approved Business Plan and do not exceed
arms' length pricing;
(b) the Company and its Subsidiaries may pay dividends (including paid-in-kind
dividends) in shares of their capital stock;
(c) any Borrower may declare and pay dividends and make any other distribution
of cash property or assets to another Borrower;
(d) the Borrowers may pay cash dividends to the Company on each dividend
payment date with respect to the Preferred Equity or the Replacement Equity, as
applicable, and on each interest payment date with respect to the Bridge Loans
or the Permanent Financing, in each case in an amount equal to the dividend
payment and/or the interest payment payable on such date and which is permitted
to be paid under this Agreement (and the Company may make corresponding cash
dividend or interest payments, as applicable in respect of such equity or Debt,
as applicable to the holders thereof), provided, that (i) the Company and the
--------
Borrowers shall remain in compliance with the covenants set forth in Articles X
and XI hereof after giving effect to such payment, and shall deliver evidence
thereof reasonably satisfactory to the Administrative Agent, (ii) the Company
Leverage Ratio shall not exceed 4.0 to 1.0 after giving effect to such payment
and (iii) the Company shall use the proceeds of such dividends solely for the
payment of scheduled dividend payments to the holders of the Preferred Equity or
the Replacement Equity, as applicable or for the payment of scheduled interest
payments on the Bridge Loans or the Permanent Financing, as applicable;
(e) to the extent that the Company has issued Refinancing Securities for
aggregate gross cash proceeds in excess of $200,000,000, in addition to the
Preferred Equity or that portion
85
of the Replacement Equity used to refinance the Preferred Equity in full, the
Borrowers may pay cash dividends to the Company on each dividend or interest
payment date with respect to such Refinancing Securities, provided, that (i) the
--------
aggregate amount of such dividend payments shall not exceed an amount equal to
$50,000,000, less the difference between the gross cash proceeds of such
----
Refinancing Securities and the Net Cash Proceeds thereof (if such Net Cash
Proceeds are less than $200,000,000) and (ii) the Company shall use the proceeds
of such dividends solely for the payment of scheduled dividend and interest
payments to the holders of such Refinancing Securities; and
(f) the Company shall be permitted to repurchase its capital stock owned by
employees or former employees so long as (i) no Event of Default has occurred
and is continuing hereunder at the time of such repurchase or would occur after
giving effect thereto and (ii) the aggregate amount paid, or proposed to be
paid, by the Company with respect to such repurchase, when aggregated with all
previous repurchases of its capital stock made since the date hereof, does not
exceed $2,000,000.
SECTION 11.8 Limitations on Exchange and Issuance of Capital Stock. Issue,
-----------------------------------------------------
sell or otherwise dispose of any class or series of capital stock that, by its
terms or by the terms of any security into which it is convertible or
exchangeable, is, or upon the happening of an event or passage of time would be,
(a) convertible or exchangeable into Debt or (b) required to be redeemed or
repurchased, including at the option of the holder, in whole or in part, or has,
or upon the happening of an event or passage of time would have, a redemption or
similar payment due, in each such case before the date that is six (6) months
after the Term B Loan Maturity Date (except for (i) capital stock issued in the
ordinary course to employees of the Company and its Subsidiaries the repurchase
options in respect of which do not exceed $1,000,000 in the aggregate, (ii) the
Preferred Equity and the Replacement Equity and (iii) equity that constitutes
Refinancing Securities applied in the manner set forth in Section 4.5(c)(ii)).
SECTION 11.9 Transactions with Affiliates. Directly or indirectly (a) make
----------------------------
any loan or advance to, or purchase or assume any note or other obligation to or
from, any of its officers, directors, shareholders or other Affiliates, or to or
from any member of the immediate family of any of its officers, directors,
shareholders or other Affiliates, or subcontract any operations to any of its
Affiliates (other than as disclosed on Schedule 11.4 and other than advances to
-------------
employees of the Company or any of its Subsidiaries for travel expenses in the
ordinary course of business not to exceed $500,000 in the aggregate at any time)
or (b) enter into, or be a party to, any other transaction with any of its
Affiliates (other than transactions expressly contemplated by the Preferred
Equity Documents and Bridge Loan Documents), except, in each case, pursuant to
the reasonable requirements of its business and upon fair and reasonable terms
that are fully disclosed to and, if the aggregate payments thereunder are likely
to exceed $500,000 in any fiscal year, approved in writing by the Required
Lenders prior to the consummation thereof and are no less favorable to it than
it would obtain in a comparable arm's length transaction with a Person not its
Affiliate.
SECTION 11.10 Certain Accounting Changes. Change its Fiscal Year end, or
--------------------------
make any change in its accounting treatment and reporting practices except as
required by GAAP.
86
SECTION 11.11 Amendments; Payments and Prepayments of Subordinated Debt.
---------------------------------------------------------
(a) Amend or modify (or permit the modification or amendment of) any of the
terms or provisions of any Subordinated Debt, the Preferred Equity, the Bridge
Loans, Refinancing Securities, or any Debt issued pursuant to Section 11.1(c)
which amendment or modification could reasonably be expected to materially
adversely effect the Lenders (as reasonably determined by the Administrative
Agent), or (b) cancel or forgive, make any voluntary or optional payment or
prepayment of any principal of or interest on, or redeem or acquire for value
(including without limitation by way of depositing with any trustee with respect
thereto money or securities before due for the purpose of paying when due) the
Bridge Loans, the Permanent Financing or any Subordinated Debt; except the
Company may use the proceeds of Refinancing Securities to terminate or reduce
the commitment for the Bridge Loans and to repay in full or in part any
outstanding Bridge Loans, including accrued and unpaid interest, fees and
expenses with respect thereto.
SECTION 11.12 Charter Documents. Amend or modify the Transaction Agreement,
-----------------
any Related Transaction Document or certificate of incorporation or certificate
of formation of the Company or any Borrower, in any respect that could
reasonably be expected to materially adversely effect the Lenders (as reasonably
determined by the Administrative Agent).
SECTION 11.13 Restrictive Agreements. Enter into any Debt which contains any
----------------------
negative pledge on assets or which restricts, limits or otherwise encumbers its
ability to incur Liens on or with respect to any of its assets or properties
other than the assets or properties securing such Debt, in each such case other
than such restrictions, limitations or encumbrances imposed by any agreement or
instrument evidencing the Obligations, the Bridge Loans or the Permanent
Financing, or enter into any Debt which contains any covenants more restrictive
than the provisions of Articles IX, X and XI hereof.
SECTION 11.14 US Xchange Lucent and Octel Agreements. Order, purchase or
--------------------------------------
otherwise receive any equipment (including without limitation Telecommunications
Equipment) or other products under either (a) the General Agreement Number
LNM970123RUSX, effective as of April 9, 1997, by and between US Xchange, L.L.C.
and Lucent Technologies Inc., as amended or (b) the Agreement for Purchase and
Service of Voice Processing Systems, effective as of August 1, 1997, by and
between US Xchange, L.L.C. and Octel Communications Corporation (and assigned to
Lucent Technologies, Inc.), in each case without the prior written consent of
the Administrative Agent and the Required Lenders.
ARTICLE XII
DEFAULT AND REMEDIES
--------------------
SECTION 12.1 Events of Default. Each of the following shall constitute an
-----------------
Event of Default, whatever the reason for such event and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment or order of any court or any order, rule or regulation of any
Governmental Authority or otherwise:
87
(a) Default in Payment of Principal of Loans and Reimbursement Obligations.
----------------------------------------------------------------------
The Borrowers shall default in any payment of principal of any Loan, Note or
Reimbursement Obligation when and as due (whether at maturity, by reason of
acceleration or otherwise).
(b) Other Payment Default. The Borrowers shall default in the payment when
---------------------
and as due (whether at maturity, by reason of acceleration or otherwise) of
interest on any Loan, Note or Reimbursement Obligation or the payment of any
other Obligation, and such default shall continue unremedied for three (3)
Business Days.
(c) Misrepresentation. Any representation or warranty made or deemed to be
-----------------
made by the Company or any of its Subsidiaries under this Agreement, any Loan
Document or any amendment hereto or thereto, shall at any time prove to have
been incorrect or misleading in any material respect when made or deemed made.
(d) Default in Performance of Certain Covenants. The Company or Borrowers, as
-------------------------------------------
applicable, shall default in the performance or observance of any covenant or
agreement contained in Section 8.5(e) or Articles X or XI of this Agreement and
such default shall continue unremedied for three (3) Business Days.
(e) Default in Performance of Other Covenants and Conditions. The Company or
--------------------------------------------------------
any Subsidiary thereof shall default in the performance or observance of any
term, covenant, condition or agreement contained in this Agreement (other than
as specifically provided for otherwise in this Section 12.1) or any other Loan
Document and such default shall continue for a period of thirty (30) days after
written notice thereof has been given to the Company by the Administrative
Agent.
(f) Hedging Agreement. Any termination payment shall be due by a Borrower
-----------------
under any Hedging Agreement and such amount is not paid within thirty (30)
Business Days of the due date thereof (unless such payment is contested in good
faith by appropriate proceedings by the Company or such Borrower).
(g) Debt Cross-Default. The Company or any of its Subsidiaries shall (i)
------------------
default in the payment of any Debt (other than the Notes or any Reimbursement
Obligation) the aggregate outstanding amount of which Debt is in excess of
$2,000,000 beyond the period of grace if any, provided in the instrument or
agreement under which such Debt was created, or (ii) default in the observance
or performance of any other agreement or condition relating to any Debt (other
than the Notes or any Reimbursement Obligation) the aggregate outstanding amount
of which Debt is in excess of $2,000,000 or contained in any instrument or
agreement evidencing, securing or relating thereto or any other event shall
occur or condition exist, the effect of which default or other event or
condition is to cause, or to permit the holder or holders of such Debt (or a
trustee or agent on behalf of such holder or holders) to cause, in each case
with the giving of notice if required, any such Debt to become due prior to its
stated maturity (any applicable grace period having expired).
(h) Other Cross-Defaults. The Company or any of its Subsidiaries shall
--------------------
default in the payment when due, or in the performance or observance, of any
obligation or condition of any
88
Material Contract unless, but only as long as, the existence of any such default
is being contested by the Company or such Subsidiary in good faith by
appropriate proceedings and adequate reserves in respect thereof have been
established on the books of the Company or such Subsidiary to the extent
required by GAAP and, with respect to contracts described in clause (a) of the
definition of Material Contracts, such default could not reasonably be expected
to have a Material Adverse Effect.
(i) Change in Control. (a) Any person or group of persons (within the meaning
-----------------
of Section 13(d) of the Securities Exchange Act of 1934, as amended) other than
MSDWCP or the Management Members shall obtain ownership or control in one or
more series of transactions of more than twenty-five percent (25%) of the common
stock or other voting securities or control of the board of directors of the
Company or (b) except as otherwise permitted herein, any Borrower shall no
longer be a Wholly-Owned Subsidiary of the Company or any such Person shall be
party to any agreement which contemplates that it shall not be such a Wholly-
Owned Subsidiary or (c) there shall have occurred under the Preferred Equity
Documents or under any indenture or other instrument evidencing any Debt in
excess of $2,000,000 any "change in control" (as defined in the Preferred Equity
Documents or in such indenture or other evidence of Debt) obligating the
Borrowers or the Company to repurchase, redeem or repay all or any part of the
Debt or capital stock provided for therein (any such event, a "Change in
Control").
(j) Voluntary Bankruptcy Proceeding. The Company or any Subsidiary thereof
-------------------------------
shall (i) commence a voluntary case under the federal bankruptcy laws (as now or
hereafter in effect), (ii) file a petition seeking to take advantage of any
other laws, domestic or foreign, relating to bankruptcy, insolvency,
reorganization, winding up or composition for adjustment of debts, (iii) consent
to or fail to contest in a timely and appropriate manner any petition filed
against it in an involuntary case under such bankruptcy laws or other laws, (iv)
apply for or consent to, or fail to contest in a timely and appropriate manner,
the appointment of, or the taking of possession by, a receiver, custodian,
trustee, or liquidator of itself or of a substantial part of its property,
domestic or foreign, (v) admit in writing its inability to pay its debts as they
become due, (vi) make a general assignment for the benefit of creditors, or
(vii) take any corporate action for the purpose of authorizing any of the
foregoing.
(k) Involuntary Bankruptcy Proceeding. A case or other proceeding shall be
---------------------------------
commenced against the Company or any Subsidiary thereof in any court of
competent jurisdiction seeking (i) relief under the federal bankruptcy laws (as
now or hereafter in effect) or under any other laws, domestic or foreign,
relating to bankruptcy, insolvency, reorganization, winding up or adjustment of
debts, or (ii) the appointment of a trustee, receiver, custodian, liquidator or
the like for the Company or any Subsidiary thereof or for all or any substantial
part of their respective assets, domestic or foreign, and such case or
proceeding shall continue without dismissal or stay for a period of sixty (60)
consecutive days, or an order granting the relief requested in such case or
proceeding (including, but not limited to, an order for relief under such
federal bankruptcy laws) shall be entered.
(l) Failure of Agreements. Any provision of this Agreement or of any other
---------------------
Loan Document shall for any reason cease to be valid and binding on the Company
or Subsidiary party thereto or any such Person shall so state in writing, or
this Agreement or any other Loan
89
Document shall for any reason cease to create a valid and perfected first
priority Lien on, or security interest in, any of the collateral purported to be
covered thereby, in each case other than in accordance with the express terms
hereof or thereof and excluding any such collateral with a fair market value of
less than $2,000,000 in the aggregate.
(m) Termination Event. The occurrence of any of the following events: (i)
-----------------
the Company or any ERISA Affiliate fails to make full payment when due of all
amounts which, under the provisions of any Pension Plan or Section 412 of the
Code, the Company or any ERISA Affiliate is required to pay as contributions
thereto, (ii) an accumulated funding deficiency in excess of $2,000,000 occurs
or exists, whether or not waived, with respect to any Pension Plan, (iii) a
Termination Event or (iv) the Company or any ERISA Affiliate as employers under
one or more Multiemployer Plan makes a complete or partial withdrawal from any
such Multiemployer Plan and the plan sponsor of such Multiemployer Plans
notifies such withdrawing employer that such employer has incurred a withdrawal
liability requiring payments in an amount exceeding $2,000,000.
(n) Judgment. A judgment or order for the payment of money which causes the
--------
aggregate amount of all such judgments which are not covered by insurance to
exceed $2,000,000 in any Fiscal Year shall be entered against the Company or any
of its Subsidiaries by any court and such judgment or order shall continue
without discharge or stay for a period of thirty (30) days.
(o) Loss of License. Any Communications License of the Company or any
---------------
Subsidiary thereof shall expire, terminate, be canceled or otherwise lost or any
application therefor be rejected, which event could reasonably be expected to
have a Material Adverse Effect.
(p) Transaction Agreement and Related Transactions.
----------------------------------------------
(i) Any default or event of default shall occur under the Transaction
Agreement which default or event of default shall continue unremedied for a
period of thirty (30) days after written notice thereof has been given to the
Company by the Administrative Agent.
(ii) Any event of default shall occur and be continuing under the Bridge
Loan Documents, the Preferred Equity Documents or any instrument governing the
Refinancing Securities.
(iii) Any holder of Preferred Equity shall exercise its right to put its
shares of Preferred Equity to the Company in accordance with the terms of the
Preferred Equity Documents.
(q) Indiana Subsidiary. The Indiana Subsidiary shall not receive the PUC
------------------
Authorizations set forth in Section 9.21 by January 31, 2001.
(r) Limited Subsidiaries. Any Limited Subsidiary shall not receive the PUC
--------------------
Authorizations set forth in Section 9.22 by January 31, 2001.
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SECTION 12.2 Remedies. Upon the occurrence of an Event of Default, with the
--------
consent of the Required Lenders, the Administrative Agent may, or upon the
request of the Required Lenders, the Administrative Agent shall, by notice to
the Company:
(a) Acceleration; Termination of Credit Facility. Declare the principal of
--------------------------------------------
and interest on the Loans, the Notes and the Reimbursement Obligations at the
time outstanding, and all other amounts owed to the Lenders and to the
Administrative Agent under this Agreement or any of the other Loan Documents
(other than any Hedging Agreement) (including, without limitation, all L/C
Obligations, whether or not the beneficiaries of the then outstanding Letters of
Credit shall have presented the documents required thereunder) and all other
Obligations (other than obligations owing under any Hedging Agreement), to be
forthwith due and payable, whereupon the same shall immediately become due and
payable without presentment, demand, protest or other notice of any kind, all of
which are expressly waived, anything in this Agreement or the other Loan
Documents to the contrary notwithstanding, and terminate the Credit Facility and
any right of the Borrowers to request borrowings or Letters of Credit
thereunder; provided, that upon the occurrence of an Event of Default specified
--------
in Section 12.1(j) or (k), the Credit Facility shall be automatically terminated
and all Obligations (other than obligations owing under any Hedging Agreement)
shall automatically become due and payable.
(b) Letters of Credit. With respect to all Letters of Credit with respect to
-----------------
which presentment for honor shall not have occurred at the time of an
acceleration pursuant to the preceding paragraph, require the Borrowers at such
time to deposit in a cash collateral account opened by the Administrative Agent
an amount equal to the aggregate then undrawn and unexpired amount of such
Letters of Credit. Amounts held in such cash collateral account shall be
applied by the Administrative Agent to the payment of drafts drawn under such
Letters of Credit, and the unused portion thereof after all such Letters of
Credit shall have expired or been fully drawn upon, if any, shall be applied to
repay the other Obligations. After all such Letters of Credit shall have
expired or been fully drawn upon, the Reimbursement Obligation shall have been
satisfied and all other Obligations shall have been paid in full, the balance,
if any, in such cash collateral account shall be returned to the Borrowers.
(c) Rights of Collection. Exercise on behalf of the Lenders all of its other
--------------------
rights and remedies under this Agreement, the other Loan Documents and
Applicable Law, in order to satisfy all of the Obligations. In connection
therewith, the Company and its Subsidiaries hereby consent to the appointment of
a trustee, receiver, custodian, liquidator or the like for the Company or any
Subsidiary thereof or for all or any substantial part of their respective
assets.
SECTION 12.3 Rights and Remedies Cumulative; Non-Waiver; etc. The
-----------------------------------------------
enumeration of the rights and remedies of the Administrative Agent and the
Lenders set forth in this Agreement is not intended to be exhaustive and the
exercise by the Administrative Agent and the Lenders of any right or remedy
shall not preclude the exercise of any other rights or remedies, all of which
shall be cumulative, and shall be in addition to any other right or remedy given
hereunder or under the Loan Documents or that may now or hereafter exist in law
or in equity or by suit or otherwise. No delay or failure to take action on the
part of the Administrative Agent or any Lender in exercising any right, power or
privilege shall operate as a
91
waiver thereof, nor shall any single or partial exercise of any such right,
power or privilege preclude other or further exercise thereof or the exercise of
any other right, power or privilege or shall be construed to be a waiver of any
Event of Default. No course of dealing between the Company, any Borrower, the
Administrative Agent and the Lenders or their respective agents or employees
shall be effective to change, modify or discharge any provision of this
Agreement or any of the other Loan Documents or to constitute a waiver of any
Event of Default.
ARTICLE XIII
THE ADMINISTRATIVE AGENT
------------------------
SECTION 13.1 Appointment. Each of the Lenders hereby irrevocably designates
-----------
and appoints First Union as Administrative Agent of such Lender under this
Agreement and the other Loan Documents for the term hereof and each such Lender
irrevocably authorizes First Union as Administrative Agent for such Lender, to
take such action on its behalf under the provisions of this Agreement and the
other Loan Documents and to exercise such powers and perform such duties as are
expressly delegated to the Administrative Agent by the terms of this Agreement
and such other Loan Documents, together with such other powers as are reasonably
incidental thereto. Notwithstanding any provision to the contrary elsewhere in
this Agreement or such other Loan Documents, the Administrative Agent shall not
have any duties or responsibilities, except those expressly set forth herein and
therein, or any fiduciary relationship with any Lender, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into this Agreement or the other Loan Documents or otherwise exist
against the Administrative Agent. Any reference to the Administrative Agent in
this Article XIII shall be deemed to refer to the Administrative Agent solely in
its capacity as Administrative Agent and not in its capacity as a Lender.
SECTION 13.2 Delegation of Duties. (a) The Administrative Agent may execute
--------------------
any of its respective duties under this Agreement and the other Loan Documents
by or through agents or attorneys-in-fact and shall be entitled to advice of
counsel concerning all matters pertaining to such duties. The Administrative
Agent shall not be responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by the Administrative Agent with reasonable care.
(b) First Union may delegate any or all of its powers and duties as
Administrative Agent hereunder and under the other Loan Documents to First Union
National Bank as agreed to by such Persons.
SECTION 13.3 Exculpatory Provisions. Neither the Administrative Agent nor
----------------------
any of its officers, directors, employees, agents, attorneys-in-fact,
Subsidiaries or Affiliates shall be (a) liable for any action lawfully taken or
omitted to be taken by it or such Person under or in connection with this
Agreement or the other Loan Documents (except for actions occasioned by its or
such Person's own gross negligence or willful misconduct), or (b) responsible in
any manner to any of the Lenders for any recitals, statements, representations
or warranties made by the Company or its Subsidiaries or any officer thereof
contained in this Agreement or the other Loan Documents or in any certificate,
report, statement or other document referred to or
92
provided for in, or received by the Administrative Agent under or
in connection with, this Agreement or the other Loan Documents or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement or the other Loan Documents or for any failure of the Company or any
Subsidiary thereof to perform its obligations hereunder or thereunder. The
Administrative Agent shall not be under any obligation to any Lender to
ascertain or to inquire as to the observance or performance of any of the
agreements contained in, or conditions of, this Agreement, or to inspect the
properties, books or records of the Company or any of its Subsidiaries.
SECTION 13.4 Reliance by the Administrative Agent. The Administrative Agent
------------------------------------
shall be entitled to rely, and shall be fully protected in relying, upon any
note, writing, resolution, notice, consent, certificate, affidavit, letter,
cablegram, telegram, telecopy, telex or teletype message, statement, order or
other document or conversation believed by it to be genuine and correct and to
have been signed, sent or made by the proper Person or Persons and upon advice
and statements of legal counsel (including, without limitation, counsel to the
Company and the Borrowers), independent accountants and other experts selected
by the Administrative Agent. The Administrative Agent may deem and treat the
payee of any Note as the owner thereof for all purposes unless such Note shall
have been transferred in accordance with Section 15.10 hereof. The
Administrative Agent shall be fully justified in failing or refusing to take any
action under this Agreement and the other Loan Documents unless it shall first
receive such advice or concurrence of the Required Lenders (or, when expressly
required hereby or by the relevant other Loan Document, all the Lenders) as it
deems appropriate or it shall first be indemnified to its satisfaction by the
Lenders against any and all liability and expense which may be incurred by it by
reason of taking or continuing to take any such action except for its own gross
negligence or willful misconduct. The Administrative Agent shall in all cases be
fully protected in acting, or in refraining from acting, under this Agreement
and the Notes in accordance with a request of the Required Lenders (or, when
expressly required hereby, all the Lenders), and such request and any action
taken or failure to act pursuant thereto shall be binding upon all the Lenders
and all future holders of the Notes.
SECTION 13.5 Notice of Default. The Administrative Agent shall not be deemed
-----------------
to have knowledge or notice of the occurrence of any Default or Event of Default
hereunder other than a Default or Event of Default of the types specified in
Section 12.1(a) or (b) unless it has received notice from a Lender, the Company
or any Borrower referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default". In the event that
the Administrative Agent receives such a notice, it shall promptly give notice
thereof to the Lenders. The Administrative Agent shall take such action with
respect to such Default or Event of Default as shall be reasonably directed by
the Required Lenders; provided, that unless and until the Administrative Agent
--------
shall have received such directions, the Administrative Agent may (but shall not
be obligated to) take such action, or refrain from taking such action, with
respect to such Default or Event of Default as it shall deem advisable in the
best interests of the Lenders, except to the extent that other provisions of
------
this Agreement expressly require that any such action be taken or not be taken
only with the consent and authorization or the request of the Lenders or
Required Lenders, as applicable.
93
SECTION 13.6 Non-Reliance on the Administrative Agent and Other Lenders.
----------------------------------------------------------
Each Lender expressly acknowledges that neither the Administrative Agent nor any
of its respective officers, directors, employees, agents, attorneys-in-fact,
Subsidiaries or Affiliates has made any representations or warranties to it and
that no act by the Administrative Agent hereinafter taken, including any review
of the affairs of the Company or any of its Subsidiaries, shall be deemed to
constitute any representation or warranty by the Administrative Agent to any
Lender. Each Lender represents to the Administrative Agent that it has,
independently and without reliance upon the Administrative Agent or any other
Lender, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
operations, property, financial and other condition and creditworthiness of the
Company and its Subsidiaries and made its own decision to make its Loans and
issue or participate in Letter of Credit hereunder and enter into this
Agreement. Each Lender also represents that it will, independently and without
reliance upon the Administrative Agent or any other Lender, and based on such
documents and information as it shall deem appropriate at the time, continue to
make its own credit analysis, appraisals and decisions in taking or not taking
action under this Agreement and the other Loan Documents, and to make such
investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of the
Company and its Subsidiaries. Except for notices, reports and other documents
expressly required to be furnished to the Lenders by the Administrative Agent
hereunder or by the other Loan Documents, the Administrative Agent shall not
have any duty or responsibility to provide any Lender with any credit or other
information concerning the business, operations, property, financial and other
condition or creditworthiness of the Company or any of its Subsidiaries which
may come into the possession of the Administrative Agent or any of its
respective officers, directors, employees, agents, attorneys-in-fact,
Subsidiaries or Affiliates.
SECTION 13.7 Indemnification. The Lenders agree to indemnify the
---------------
Administrative Agent in its capacity as such and (to the extent not reimbursed
by the Borrowers and without limiting the obligation of the Borrowers to do so),
ratably according to the respective amounts of their Revolving Credit Commitment
Percentages, Term A Loan Percentages and Term B Loan Percentages, as applicable
from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind whatsoever which may at any time (including, without limitation, at any
time following the payment of the Notes or any Reimbursement Obligation) be
imposed on, incurred by or asserted against the Administrative Agent in any way
relating to or arising out of this Agreement or the other Loan Documents, or any
documents contemplated by or referred to herein or therein or the transactions
contemplated hereby or thereby or any action taken or omitted by the
Administrative Agent under or in connection with any of the foregoing; provided,
--------
that no Lender shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from the Administrative Agent's bad
faith, gross negligence or willful misconduct. The agreements in this Section
13.7 shall survive the payment of the Notes, any Reimbursement Obligation and
all other amounts payable hereunder and the termination of this Agreement.
SECTION 13.8 The Administrative Agent in Its Individual Capacity. The
---------------------------------------------------
Administrative Agent in its individual capacity and its respective Subsidiaries
and Affiliates may
94
make loans to, accept deposits from and generally engage in any kind of business
with the Company and its Subsidiaries as though the Administrative Agent were
not an Administrative Agent hereunder. With respect to any Loans made or renewed
by it and any Note issued to it and with respect to any Letter of Credit issued
by it or participated in by it, the Administrative Agent in its individual
capacity shall have the same rights and powers under this Agreement and the
other Loan Documents as any Lender and may exercise the same as though it were
not an Administrative Agent, and the terms "Lender" and "Lenders" shall include
the Administrative Agent in its individual capacity.
SECTION 13.9 Resignation of the Administrative Agent; Successor
--------------------------------------------------
Administrative Agent. Subject to the appointment and acceptance of a successor
--------------------
as provided below, the Administrative Agent may resign at any time by giving
thirty (30) days prior notice thereof to the Lenders and the Borrowers. Upon any
such resignation, the Required Lenders shall have the right to appoint a
successor Administrative Agent, which successor shall have minimum capital and
surplus of at least $500,000,000. If no successor Administrative Agent shall
have been so appointed by the Required Lenders and shall have accepted such
appointment within thirty (30) days after the Administrative Agent's giving of
notice of resignation, then the Administrative Agent may, on behalf of the
Lenders, appoint a successor Administrative Agent, which successor shall have
minimum capital and surplus of at least $500,000,000. Upon the acceptance of any
appointment as Administrative Agent hereunder by a successor Administrative
Agent, such successor Administrative Agent shall thereupon succeed to and become
vested with all rights, powers, privileges and duties of the retiring
Administrative Agent, and the retiring Administrative Agent shall be discharged
from its duties and obligations hereunder. After any retiring Administrative
Agent's resignation hereunder as Administrative Agent, the provisions of this
Article 13 shall continue in effect for its benefit in respect of any actions
taken or omitted to be taken by it while it was acting as Administrative Agent.
SECTION 13.10 Agents. The Syndication Agent and the Documentation Agent,
------
each in its capacity as such, shall have no duties or responsibilities and no
liabilities under this Agreement or any other Loan Document.
ARTICLE XIV
UNCONDITIONAL GUARANTY
SECTION 14.1 Guaranty of Obligations. The Company hereby unconditionally
-----------------------
guarantees to the Administrative Agent for the ratable benefit of the Agents and
the Lenders, and their respective successors, endorsees, transferees and
assigns, the prompt payment and performance of all Obligations of the Borrowers,
whether primary or secondary (whether by way of endorsement or otherwise),
whether now existing or hereafter arising, whether or not from time to time
reduced or extinguished (except by payment thereof) or hereafter increased or
incurred, whether or not recovery may be or hereafter become barred by the
statute of limitations, whether enforceable or unenforceable as against any such
Borrower, whether or not discharged, stayed or otherwise affected by any
bankruptcy, insolvency or other similar law or proceeding, whether created
directly with any Agent or Lender or acquired by any Agent or Lender through
assignment, endorsement or otherwise, whether matured or unmatured, whether
95
joint or several, as and when the same become due and payable (whether at
maturity or earlier, by reason of acceleration, mandatory repayment or
otherwise), in accordance with the terms of any such instruments evidencing any
such obligations, including all renewals, extensions or modifications thereof
(all Obligations of each such Borrower to any Agent or Lender, including all of
the foregoing, being hereinafter collectively referred to as the "Guaranteed
Obligations").
SECTION 14.2 Nature of Guaranty. The Company agrees that this Guaranty
------------------
is a continuing, unconditional guaranty of payment and performance and not of
collection, and that its obligations under this Guaranty shall be primary,
absolute and unconditional, irrespective of, and unaffected by (a) the
genuineness, validity, regularity, enforceability or any future amendment of, or
change in, this Agreement or any other Loan Document or any other agreement,
document or instrument to which any such Borrower is or may become a party, (b)
the absence of any action to enforce this Guaranty, this Agreement or any other
Loan Document or the waiver or consent by the Administrative Agent or any Lender
with respect to any of the provisions of this Guaranty, this Agreement or any
other Loan Document, (c) the existence, value or condition of, or failure to
perfect its Lien against, any security for or other guaranty of the Guaranteed
Obligations or any action, or the absence of any action, by the Administrative
Agent or any Lender in respect of such security or guaranty (including, without
limitation, the release of any such security or guaranty) or (d) any other
action or circumstances which might otherwise constitute a legal or equitable
discharge or defense of a surety or guarantor; it being agreed by the Company
that its obligations under this Guaranty shall not be discharged until the final
and indefeasible payment and performance, in full, of the Guaranteed Obligations
and the termination of the Commitments. The Company expressly waives all rights
it may now or in the future have under any statute (including without limitation
North Carolina General Statutes Section 26-7, et seq. or similar law), or at law
or in equity, or otherwise, to compel the Administrative Agent or any Lender to
proceed in respect of the Guaranteed Obligations against any such Borrower or
any other party or against any security for or other guaranty of the payment and
performance of the Guaranteed Obligations before proceeding against, or as a
condition to proceeding against, the Company. The Company further expressly
waives and agrees not to assert or take advantage of any defense based upon the
failure of the Administrative Agent or any Lender to commence an action in
respect of the Guaranteed Obligations against any such Borrower, the Company or
any other party or any security for the payment and performance of the
Guaranteed Obligations. The Company agrees that any notice or directive given at
any time to the Administrative Agent or any Lender which is inconsistent with
the waivers in the preceding two sentences shall be null and void and may be
ignored by the Administrative Agent or Lender, and, in addition, may not be
pleaded or introduced as evidence in any litigation relating to this Guaranty
for the reason that such pleading or introduction would be at variance with the
written terms of this Guaranty, unless the Administrative Agent and the Required
Lenders have specifically agreed otherwise in writing. The foregoing waivers are
of the essence of the transaction contemplated by the Loan Documents and, but
for this Guaranty and such waivers, the Agents and Lenders would decline to
enter into this Agreement.
SECTION 14.3 Demand by the Administrative Agent. In addition to the
----------------------------------
terms set forth in Section 14.2, and in no manner imposing any limitation on
such terms, if all or any portion of the then outstanding Guaranteed Obligations
under this Agreement are declared to be immediately due and payable, then the
Company shall, upon demand in writing therefor by the
96
Administrative Agent to the Company, pay all or such portion of the outstanding
Guaranteed Obligations then declared due and payable. Payment by the Company
shall be made to the Administrative Agent, to be credited and applied upon the
Guaranteed Obligations, in immediately available funds to an account designated
by the Administrative Agent or at the Administrative Agent's office or at any
other address that may be specified in writing from time to time by the
Administrative Agent.
SECTION 14.4 Waivers. In addition to the waivers contained in Section
-------
14.2, the Company waives, and agrees that it shall not at any time insist upon,
plead or in any manner whatever claim or take the benefit or advantage of, any
appraisal, valuation, stay, extension, marshalling of assets or redemption laws,
or exemption, whether now or at any time hereafter in force, which may delay,
prevent or otherwise affect the performance by the Company of its obligations
under, or the enforcement by the Administrative Agent or the Lenders of, this
Guaranty. The Company further hereby waives diligence, presentment, demand,
protest and notice of whatever kind or nature with respect to any of the
Guaranteed Obligations and waives the benefit of all provisions of law which are
or might be in conflict with the terms of this Guaranty. The Company represents,
warrants and agrees that its obligations under this Guaranty are not and shall
not be subject to any counterclaims, offsets or defenses of any kind against the
Administrative Agent, the Lenders or any such Borrower whether now existing or
which may arise in the future.
SECTION 14.5 Modification of Loan Documents etc. If the Administrative
----------------------------------
Agent or the Lenders shall at any time or from time to time, with or without the
consent of, or notice to, the Company (a) change or extend the manner, place or
terms of payment of, or renew or alter all or any portion of, the Guaranteed
Obligations, (b) take any action under or in respect of the Loan Documents in
the exercise of any remedy, power or privilege contained therein or available to
it at law, in equity or otherwise, or waive or refrain from exercising any such
remedies, powers or privileges, (c) amend or modify, in any manner whatsoever,
the Loan Documents, (d) extend or waive the time for performance by the Company,
any such Borrower or any other Person of, or compliance with, any term, covenant
or agreement on its part to be performed or observed under a Loan Document
(other than this Guaranty), or waive such performance or compliance or consent
to a failure of, or departure from, such performance or compliance, (e) take and
hold security or collateral for the payment of the Guaranteed Obligations or
sell, exchange, release, dispose of, or otherwise deal with, any property
pledged, mortgaged or conveyed, or in which the Administrative Agent or the
Lenders have been granted a Lien, to secure any Debt of the Company or any such
Borrower to any Agent or the Lenders, (f) release anyone who may be liable in
any manner for the payment of any amounts owed by the Company or any such
Borrower to any Agent or Lender, (g) modify or terminate the terms of any
intercreditor or subordination agreement pursuant to which claims of other
creditors of the Company or any such Borrower are subordinated to the claims of
any Agent or Lender or (h) apply any sums by whomever paid or however realized
to any amounts owing by the Company or any such Borrower to any Agent or Lender
on account of the Obligations in such manner as the Administrative Agent or any
Lender shall determine in its reasonable discretion; then neither the
Administrative Agent nor any Lender shall incur any liability to the Company as
a result thereof, and no such action shall impair or release the obligations of
the Company under this Guaranty.
97
SECTION 14.6 Reinstatement. The Company agrees that, if any payment made
-------------
by any such Borrower or any other Person applied to the Obligations is at any
time annulled, set aside, rescinded, invalidated, declared to be fraudulent or
preferential or otherwise required to be refunded or repaid, or the proceeds of
Collateral are required to be returned by any Agent or Lender to any such
Borrower, its estate, trustee, receiver or any other party, including, without
limitation, the Company, under any Applicable Law or equitable cause, then, to
the extent of such payment or repayment, the Company's liability hereunder (and
any Lien or Collateral securing such liability) shall be and remain in full
force and effect, as fully as if such payment had never been made, and, if prior
thereto, this Guaranty shall have been canceled or surrendered (and if any Lien
or Collateral securing the Company's liability hereunder shall have been
released or terminated by virtue of such cancellation or surrender), this
Guaranty (and such Lien or Collateral) shall be reinstated in full force and
effect, and such prior cancellation or surrender shall not diminish, release,
discharge, impair or otherwise affect the obligations of the Company in respect
of the amount of such payment (or any Lien or Collateral securing such
obligation).
SECTION 14.7 No Subrogation. Until all amounts owing to the Agents and
--------------
Lenders on account of the Obligations are paid in full and the Commitments are
terminated, the Company hereby waives any claims or other rights which it may
now or hereafter acquire against any such Borrower that arise from the existence
or performance of the Company's obligations under this Guaranty, including,
without limitation, any right of subrogation, reimbursement, exoneration,
indemnification, any right to participate in any claim or remedy of the
Administrative Agent or the Lenders against any such Borrower or any Collateral
which the Administrative Agent or the Lenders now have or may hereafter acquire,
whether or not such claim, remedy or right arises in equity or under contract,
statute or common law, by any payment made hereunder or otherwise, including
without limitation, the right to take or receive from any such Borrower,
directly or indirectly, in cash or other property or by set-off or in any other
manner, payment or security on account of such claim or other rights. If any
amount shall be paid to the Company on account of such rights at any time when
all of the Obligations shall not have been paid in full, such amount shall be
held by the Company in trust for the Administrative Agent, segregated from other
funds of the Company, and shall, forthwith upon receipt by the Company, be
turned over to the Administrative Agent in the exact form received by the
Company (duly indorsed by the Company to the Administrative Agent, if required)
to be applied against the Obligations, whether matured or unmatured, in such
order as set forth herein.
ARTICLE XV
MISCELLANEOUS
-------------
SECTION 15.1 Notices.
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(a) Method of Communication. Except as otherwise provided in this
-----------------------
Agreement, all notices and communications hereunder shall be in writing, or by
telephone subsequently confirmed in writing. Any notice shall be effective if
delivered by hand delivery or sent via telecopy, recognized overnight courier
service or certified mail, return receipt requested, and shall be presumed to be
received by a party hereto (i) on the date of delivery if delivered by hand or
sent by telecopy, (ii) on the next Business Day if sent by recognized overnight
courier service
98
and (iii) on the third Business Day following the date sent by certified mail,
return receipt requested. A telephonic notice to the Administrative Agent as
understood by the Administrative Agent will be deemed to be the controlling and
proper notice in the event of a discrepancy with or failure to receive a
confirming written notice.
(b) Addresses for Notices. Notices to any party shall be sent to it at the
---------------------
following addresses, or any other address as to which all the other parties are
notified in writing.
If to the Company or
Borrowers: Choice One Communications Inc.
▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to First Union as First Union Investors, Inc.
Administrative Agent: Charlotte Plaza CP-23
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Syndication Agency Services
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to First Union as First Union Investors, Inc.
Administrative Agent Charlotte Plaza CP-6
(Article VIII notices and ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
and reports only): ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
If to any Lender: To the Address set forth on Schedule 1.1(a)
---------------
hereto or in any questionnaire delivered by any Lender to the Administrative
Agent after the Closing Date.
(c) Administrative Agent's Office. The Administrative Agent hereby
-----------------------------
designates its office located at the address set forth above, or any subsequent
office which shall have been specified for such purpose by written notice to the
Borrowers and Lenders, as the Administrative Agent's Office referred to herein,
to which payments due are to be made and at which Loans will be disbursed and
Letters of Credit issued.
SECTION 15.2 Expenses; Indemnity. The Borrowers on a joint and
-------------------
several basis will (a) pay all out-of-pocket expenses of the Administrative
Agent in connection with (i) the preparation, execution and delivery of this
Agreement and each other Loan Document, whenever
99
the same shall be executed and delivered, including without limitation all out-
of-pocket syndication and due diligence expenses and reasonable fees and
disbursements of counsel for the Administrative Agent and (ii) the preparation,
execution and delivery of any waiver, amendment or consent by the Administrative
Agent or the Lenders relating to this Agreement or any other Loan Document,
including without limitation reasonable fees and disbursements of counsel for
the Administrative Agent, (b) pay all reasonable out-of-pocket expenses of the
Administrative Agent and each Lender actually incurred in connection with the
administration and enforcement of any rights and remedies of the Administrative
Agent and Lenders under the Credit Facility, including consulting with
appraisers, accountants, engineers, attorneys and other Persons concerning the
nature, scope or value of any right or remedy of the Administrative Agent or any
Lender hereunder or under any other Loan Document or any factual matters in
connection therewith, which expenses shall include without limitation the
reasonable fees and disbursements of such Persons, and (c) defend, indemnify and
hold harmless the Administrative Agent and the Lenders, and their respective
parents, Subsidiaries, Affiliates, employees, Administrative Agents, officers
and directors, from and against any losses, penalties, fines, liabilities,
settlements, damages, costs and expenses, suffered by any such Person in
connection with any claim, investigation, litigation or other proceeding
(whether or not the Administrative Agent or any Lender is a party thereto) and
the prosecution and defense thereof, arising out of or in any way connected with
the Agreement, any other Loan Document or the Loans, including without
limitation reasonable attorney's and consultant's fees, except to the extent
that any of the foregoing directly result from the gross negligence or willful
misconduct of the party seeking indemnification therefor.
SECTION 15.3 Set-off. In addition to any rights now or hereafter
-------
granted under Applicable Law and not by way of limitation of any such rights,
upon and after the occurrence of any Event of Default and during the continuance
thereof, the Lenders and any assignee or participant of a Lender in accordance
with Section 15.10 are hereby authorized by the Borrowers at any time or from
time to time, without notice to the Borrowers or to any other Person, any such
notice being hereby expressly waived, to set off and to appropriate and to apply
any and all deposits (general or special, time or demand, including, but not
limited to, indebtedness evidenced by certificates of deposit, whether matured
or unmatured) and any other indebtedness at any time held or owing by the
Lenders, or any such assignee or participant to or for the credit or the account
of the Borrowers against and on account of the Obligations irrespective of
whether or not (a) the Lenders shall have made any demand under this Agreement
or any of the other Loan Documents or (b) the Administrative Agent shall have
declared any or all of the Obligations to be due and payable as permitted by
Section 11.2 and although such Obligations shall be contingent or unmatured.
SECTION 15.4 Governing Law. This Agreement, the Notes and the other
-------------
Loan Documents, unless otherwise expressly set forth therein, shall be governed
by, construed and enforced in accordance with the laws of the State of North
Carolina, without reference to the conflicts or choice of law principles
thereof.
SECTION 15.5 Consent to Jurisdiction. The Company and each Borrower
-----------------------
hereby irrevocably consents to the personal jurisdiction of the state and
federal courts located in Mecklenburg County, North Carolina, in any action,
claim or other proceeding arising out of any
100
dispute in connection with this Agreement, the Notes and the other Loan
Documents, any rights or obligations hereunder or thereunder, or the performance
of such rights and obligations. The Company and each Borrower hereby irrevocably
consents to the service of a summons and complaint and other process in any
action, claim or proceeding brought by the Administrative Agent or any Lender in
connection with this Agreement, the Notes or the other Loan Documents, any
rights or obligations hereunder or thereunder, or the performance of such rights
and obligations, on behalf of itself or its property, in the manner specified in
Section 15.1. Nothing in this Section 15.5 shall affect the right of the
Administrative Agent or any Lender to serve legal process in any other manner
permitted by Applicable Law or affect the right of the Administrative Agent or
any Lender to bring any action or proceeding against the Company and each
Borrower or its properties in the courts of any other jurisdictions.
SECTION 15.6 Binding Arbitration; Waiver of Jury Trial.
-----------------------------------------
(a) Binding Arbitration. Upon demand of any party, whether made before or
-------------------
after institution of any judicial proceeding, any dispute, claim or controversy
arising out of, connected with or relating to this Agreement or any other Loan
Documents ("Disputes"), between or among parties hereto or any other Loan
Document shall be resolved by binding arbitration as provided herein.
Institution of a judicial proceeding by a party does not waive the right of that
party to demand arbitration hereunder. Disputes may include, without
limitation, tort claims, counterclaims, claims brought as class actions, claims
arising from Loan Documents executed in the future, disputes as to whether a
matter is subject to arbitration, or claims concerning any aspect of the past,
present or future relationships arising out of or connected with the Loan
Documents. Arbitration shall be conducted under and governed by the Commercial
Financial Disputes Arbitration Rules (the "Arbitration Rules") of the American
Arbitration Association ("AAA") and the Federal Arbitration Act. All
arbitration hearings shall be conducted in Charlotte, North Carolina. The
expedited procedures set forth in Rule 51, et seq. of the Arbitration Rules
-- ----
shall be applicable to claims of less than $1,000,000. All applicable statutes
of limitation shall apply to any Dispute. A judgment upon the award may be
entered in any court having jurisdiction. Notwithstanding anything foregoing to
the contrary, any arbitration proceeding demanded hereunder shall begin within
ninety (90) days after such demand thereof and shall be concluded within one-
hundred and twenty (120) days after such demand. These time limitations may not
be extended unless a party hereto shows cause for extension and then such
extension shall not exceed a total of sixty (60) days. The panel from which all
arbitrators are selected shall be comprised of licensed attorneys selected from
the Commercial Financial Dispute Arbitration Panel of the AAA. The single
arbitrator selected for expedited procedure shall be a retired judge from the
highest court of general jurisdiction, state or federal, of the state where the
hearing will be conducted. The parties hereto do not waive any applicable
Federal or state substantive law except as provided herein. Notwithstanding the
foregoing, this paragraph shall not apply to any Hedging Agreement that is a
Loan Document.
(b) Jury Trial. THE ADMINISTRATIVE AGENT, EACH LENDER, THE COMPANY AND EACH
----------
BORROWER HEREBY ACKNOWLEDGE THAT BY AGREEING TO BINDING ARBITRATION THEY HAVE
IRREVOCABLY WAIVED THEIR RESPECTIVE RIGHTS TO A JURY TRIAL WITH RESPECT TO ANY
ACTION, CLAIM OR OTHER PROCEEDING ARISING OUT OF ANY DISPUTE IN
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CONNECTION WITH THIS AGREEMENT, THE NOTES OR THE OTHER LOAN DOCUMENTS, ANY
RIGHTS OR OBLIGATIONS HEREUNDER OR THEREUNDER, OR THE PERFORMANCE OF SUCH RIGHTS
AND OBLIGATIONS.
(c) Preservation of Certain Remedies. Notwithstanding the preceding
--------------------------------
binding arbitration provisions, the parties hereto and the other Loan Documents
preserve, without diminution, certain remedies that such Persons may employ or
exercise freely, either alone, in conjunction with or during a Dispute. Each
such Person shall have and hereby reserves the right to proceed in any court of
proper jurisdiction or by self help to exercise or prosecute the following
remedies: (i) all rights to foreclose against any real or personal property or
other security by exercising a power of sale granted in the Loan Documents or
under applicable law or by judicial foreclosure and sale, (ii) all rights of
self help including peaceful occupation of property and collection of rents, set
off, and peaceful possession of property, (iii) obtaining provisional or
ancillary remedies including injunctive relief, sequestration, garnishment,
attachment, appointment of receiver and in filing an involuntary bankruptcy
proceeding, and (iv) when applicable, a judgment by confession of judgment.
Preservation of these remedies does not limit the power of an arbitrator to
grant similar remedies that may be requested by a party in a Dispute.
SECTION 15.7 Reversal of Payments. To the extent the Company or any
--------------------
Borrower makes a payment or payments to the Administrative Agent for the ratable
benefit of the Lenders or the Administrative Agent receives any payment or
proceeds of the collateral which payments or proceeds or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
and/or required to be repaid to a trustee, receiver or any other party under any
bankruptcy law, state or federal law, common law or equitable cause, then, to
the extent of such payment or proceeds repaid, the Obligations or part thereof
intended to be satisfied shall be revived and continued in full force and effect
as if such payment or proceeds had not been received by the Administrative
Agent.
SECTION 15.8 Injunctive Relief; Punitive Damages.
-----------------------------------
(a) The Company and each Borrower recognize that, in the event any such
Person fails to perform, observe or discharge any of its obligations or
liabilities under this Agreement, any remedy of law may prove to be inadequate
relief to the Lenders. Therefore, the Company and each Borrower agree that the
Lenders, at the Lenders' option, shall be entitled to temporary and permanent
injunctive relief in any such case without the necessity of proving actual
damages.
(b) The Agents, Lenders and the Company and each Borrower (on behalf of
itself and its Subsidiaries) hereby agree that no such Person shall have a
remedy of punitive or exemplary damages against any other party to a Loan
Document and each such Person hereby waives any right or claim to punitive or
exemplary damages that they may now have or may arise in the future in
connection with any Dispute, whether such Dispute is resolved through
arbitration or judicially.
102
SECTION 15.9 Accounting Matters. All financial and accounting
------------------
calculations, measurements and computations made for any purpose relating to
this Agreement, including, without limitation, all computations utilized by the
Company or any Subsidiary thereof to determine compliance with any covenant
contained herein, shall, except as otherwise expressly contemplated hereby or
unless there is an express written direction by the Administrative Agent to the
contrary agreed to by the Company, be performed in accordance with GAAP as in
effect on the Closing Date. In the event that changes in GAAP shall be mandated
by the Financial Accounting Standards Board, or any similar accounting body of
comparable standing, or shall be recommended by the Company's certified public
accountants, to the extent that such changes would modify such accounting terms
or the interpretation or computation thereof, such changes shall be followed in
defining such accounting terms only from and after the date the Company or
Borrowers and the Lenders shall have amended this Agreement to the extent
necessary to reflect any such changes in the financial covenants and other terms
and conditions of this Agreement.
SECTION 15.10 Successors and Assigns; Participations.
--------------------------------------
(a) Benefit of Agreement. This Agreement shall be binding upon and inure
--------------------
to the benefit of the Company, the Borrowers, the Administrative Agent and the
Lenders, all future holders of the Notes, and their respective successors and
assigns, except that the Company and each Borrower shall not assign or transfer
any of its rights or obligations under this Agreement without the prior written
consent of each Lender.
(b) Assignment by Lenders. Each Lender may, with the consent of the
---------------------
Borrowers (so long as no Default or Event of Default has occurred and is
continuing) and the consent of the Administrative Agent, which consents shall
not be unreasonably withheld, assign to one or more Eligible Assignees all or a
portion of its interests, rights and obligations under this Agreement
(including, without limitation, all or a portion of the Extensions of Credit at
the time owing to it and the Notes held by it); provided, that:
--------
(i) no consent of the Administrative Agent or Borrowers shall be
required of any such assignment to an Affiliate of the assigning Lender or any
of its Subsidiaries or in the case of any assigning Lender that is a fund that
invests in commercial loans, to any other fund that invests in commercial loans
and that is managed or advised by the same investment advisor or fund manager as
such assigning Lender or an Affiliate of such investment advisor or fund
manager, so long as the assignment otherwise complies with the terms hereof;
(ii) (A) with respect to its Revolving Credit Commitment and Term A
Loan Commitment and Loans thereunder, each such assignment shall be of a
constant, and not a varying, percentage of all such assigning Lender's rights
and obligations under the Revolving Credit Facility and the Term A Loan Facility
and (B) with respect to its Term B Loan Commitment and Term B Loans, each such
assignment shall be of a constant, and not varying, percentage of all of such
assigning Lender's rights and obligations under the Term B Loan Facility;
103
(iii) if less than all of the assigning Lender's Revolving
Credit Commitment, Term A Loan Commitment or Term B Loan Commitment, as
applicable, is to be assigned, the Commitment so assigned shall not be less than
$5,000,000;
(iv) the parties to each such assignment shall execute and deliver
to the Administrative Agent, for its acceptance and recording in the Register,
an Assignment and Acceptance in the form of Exhibit G attached hereto (an
---------
"Assignment and Acceptance"), together with any Note or Notes subject to such
assignment;
(v) such assignment shall not, without the consent of the
Borrowers, require the Borrowers to file a registration statement with the
Securities and Exchange Commission or apply to or qualify the Loans or the Notes
under the blue sky laws of any state; and
(vii) the assigning Lender shall pay to the Administrative Agent an
assignment fee of $3,500 upon the execution by such Lender of the Assignment
and Acceptance; provided, that no such fee shall be payable upon any assignment
--------
by a Lender to an Affiliate thereof or any of its Subsidiaries or in the case of
any assigning Lender that is a fund that invests in commercial loans, to any
other fund that invests in commercial loans and that is managed or advised by
the same investment advisor or fund manager as such assigning Lender or an
Affiliate of such investment advisor or fund manager.
Upon such execution, delivery, acceptance and recording, from and after the
effective date specified in each Assignment and Acceptance, which effective date
shall be at least five (5) Business Days after the execution thereof, (A) the
assignee thereunder shall be a party hereto and, to the extent provided in such
Assignment and Acceptance, have the rights and obligations of a Lender hereby
and (B) the Lender thereunder shall, to the extent provided in such assignment,
be released from its obligations under this Agreement.
(c) Rights and Duties Upon Assignment. By executing and delivering an
---------------------------------
Assignment and Acceptance, the assigning Lender thereunder and the assignee
thereunder confirm to and agree with each other and the other parties hereto as
set forth in such Assignment and Acceptance.
(d) Register. The Administrative Agent shall maintain a copy of each
--------
Assignment and Acceptance delivered to it and a register for the recordation of
the names and addresses of the Lenders and the amount of the Extensions of
Credit with respect to each Lender from time to time (the "Register"). The
entries in the Register shall be conclusive, in the absence of manifest error,
and the Borrowers, the Administrative Agent and the Lenders may treat each
person whose name is recorded in the Register as a Lender hereunder for all
purposes of this Agreement. The Register shall be available for inspection by
the Borrowers or Lender at any reasonable time and from time to time upon
reasonable prior notice.
(e) Issuance of New Notes. Upon its receipt of an Assignment and
---------------------
Acceptance executed by an assigning Lender and an Eligible Assignee together
with any Note or Notes subject to such assignment and the written consent to
such assignment, the Administrative Agent
104
shall, if such Assignment and Acceptance has been completed and is substantially
in the form of Exhibit G:
---------
(i) accept such Assignment and Acceptance;
(ii) record the information contained therein in the Register;
(iii) give prompt notice thereof to the Lenders and the
Borrowers; and
(iv) promptly deliver a copy of such Assignment and Acceptance
to the Borrowers.
Within five (5) Business Days after receipt of notice, the Borrowers shall
execute and deliver to the Administrative Agent, in exchange for the surrendered
Note or Notes, a new Note or Notes to the order of such Eligible Assignee in
amounts equal to the Commitment assumed by it pursuant to such Assignment and
Acceptance and a new Note or Notes to the order of the assigning Lender in an
amount equal to the Commitment retained by it hereunder. Such new Note or Notes
shall be in an aggregate principal amount equal to the aggregate principal
amount of such surrendered Note or Notes, shall be dated the effective date of
such Assignment and Acceptance and shall otherwise be in substantially the form
of the assigned Notes delivered to the assigning Lender. Each surrendered Note
or Notes shall be canceled and returned to the Borrowers.
(f) Participations. Each Lender may sell participations to one or more
--------------
banks or other entities in all or a portion of its rights and obligations under
this Agreement (including, without limitation, all or a portion of its
Extensions of Credit and the Notes held by it); provided, that:
--------
(i) each such participation shall be in an amount not less
than $5,000,000;
(ii) such Lender's obligations under this Agreement (including,
without limitation, its Revolving Credit Commitment, Term A Loan Commitment or
Term B Loan Commitment, as applicable) shall remain unchanged;
(iii) such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations;
(iv) such Lender shall remain the holder of the Notes held by
it for all purposes of this Agreement;
(v) the Company, the Borrowers, the Administrative Agent and
the other Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement;
(vi) such Lender shall not permit such participant the right to
approve any waivers, amendments or other modifications to this Agreement or any
other Loan Document other than waivers, amendments or modifications which would
reduce the principal of or the
105
interest rate on any Loan or Reimbursement Obligation, extend the term or
increase the amount of the Commitment, reduce the amount of any fees to which
such participant is entitled, extend any scheduled payment date for principal of
any Loan or, except as expressly contemplated hereby or thereby, release
substantially all of the Collateral; and
(vii) any such disposition shall not, without the consent of the
Borrowers, require the Borrowers to file a registration statement with the
Securities and Exchange Commission to apply to qualify the Loans or the Notes
under the blue sky law of any state.
(g) Disclosure of Information; Confidentiality. The Administrative Agent
------------------------------------------
and the Lenders shall hold all non-public information with respect to the
Company and the Borrowers obtained pursuant to the Loan Documents in accordance
with their customary procedures for handling confidential information; provided,
--------
that the Administrative Agent may disclose information relating to this
Agreement to Gold Sheets and other similar bank trade publications, such
-----------
information to consist of deal terms and other information customarily found in
such publications and provided further, that the Administrative Agent and
-------- -------
Lenders may disclose any such information to the extent such disclosure is
required by law or requested by any regulatory authority. Any Lender may, in
connection with any assignment, proposed assignment, participation or proposed
participation pursuant to this Section 15.10, disclose to the assignee,
participant, proposed assignee or proposed participant, any information relating
to the Company and the Borrowers furnished to such Lender by or on behalf of the
Borrowers; provided, that prior to any such disclosure, each such assignee,
--------
proposed assignee, participant or proposed participant shall agree with the
Borrowers or such Lender to preserve the confidentiality of any confidential
information relating to the Borrowers received from such Lender.
(h) Certain Pledges or Assignments. Nothing herein shall prohibit any
------------------------------
Lender from pledging or assigning any Note to any Federal Reserve Bank in
accordance with Applicable Law.
SECTION 15.11 Amendments, Waivers and Consents. Any term, covenant,
--------------------------------
agreement or condition of this Agreement or any of the other Loan Documents
(other than any Hedging Agreement, the terms and conditions of which may be
amended, modified or waived by the parties thereto) may be amended or waived by
the Lenders, and any consent given by the Lenders, if, but only if, such
amendment, waiver or consent is in writing signed by the Required Lenders (or by
the Administrative Agent with the consent of the Required Lenders) and delivered
to the Administrative Agent and, in the case of an amendment, signed by the
Company, on behalf of itself and the Borrowers; provided, that in addition no
--------
amendment, waiver or consent shall:
(a) (i) increase the Revolving Credit Commitment of any Revolving
Credit Lender, (ii) reduce the rate of interest or fees payable on any
Revolving Credit Loan, Revolving Credit Commitment or Reimbursement
Obligation, (iii) reduce or forgive the principal amount of any Revolving
Credit Loan or the amount of any Reimbursement Obligation, (iv) extend the
originally scheduled time or times of payment of the principal of any
Revolving Credit Loan or Reimbursement Obligation or the time or times of
payment of interest on any
106
Revolving Credit Loan or Reimbursement Obligation or any fee or commission
with respect thereto, (v) permit any subordination of the principal or
interest on any Revolving Credit Loan or Reimbursement Obligation or (vi)
extend the time of the obligation of the Revolving Credit Lenders to make
or issue or participate in Letters of Credit, in any case, without the
written consent of each Revolving Credit Lender;
(b) (i) increase the Term A Loan Commitment of any Lender, (ii) reduce
the rate of interest or fees payable on any Term A Loan or Term A Loan
Commitment, (iii) reduce or forgive the principal amount of any Term A
Loan, (iv) permit any subordination of the principal or interest on any
Term A Loan or (v) extend the originally scheduled time or times of payment
of the principal of any Term A Loan or the time or times of payment of
interest on any Term A Loan or any fee or commission with respect thereto,
in any case, without the written consent of each Term A Lender;
(c) (i) increase the Term B Loan Commitment of any Lender, (ii) reduce
the rate of interest or fees payable on any Term B Loan, (iii) reduce or
forgive the principal amount of any Term B Loan, (iv) permit any
subordination of the principal or interest on any Term B Loan or (v) extend
the originally scheduled time or times of payment of the principal of any
Term B Loan or the time or times of payment of interest on any Term B Loan
or any fee or commission with respect thereto, in any case, without the
written consent of each Term B Lender;
(d) (i) release the Company or any Borrower from its Obligations
hereunder or under any other Loan Document, (ii) permit any assignment
(other than as specifically permitted or contemplated in this Agreement) of
any of the Company's or Borrower's rights and obligations hereunder or
under any other Loan Document, (iii) release any material portion of the
Collateral or release any Security Document or any Guarantor (other than
asset sales permitted pursuant to Section 11.6 and as otherwise
specifically permitted or contemplated in this Agreement or the applicable
Security Document), (iv) amend or waive any provision of this Agreement
relating to the allocation of prepayments hereunder or (v) amend the
provisions of this Section 15.11 or the definition of Required Lenders or
the definition of Borrowing Base, without the prior written consent of
each Lender.
In addition, no amendment, waiver or consent to the provisions of (a) Article
XIII shall be made without the written consent of the Administrative Agent and,
(b) Article III without the written consent of the Issuing Lender.
SECTION 15.12 Performance of Duties. The Company's and the Borrowers'
---------------------
obligations under this Agreement and each of the Loan Documents shall be
performed thereby at their sole cost and expense.
SECTION 15.13 All Powers Coupled with Interest. All powers of
--------------------------------
attorney and other authorizations granted to the Lenders, the Administrative
Agent and any Persons designated by the Administrative Agent or any Lender
pursuant to any provisions of this Agreement or any of the other Loan Documents
shall be deemed coupled with an interest and
107
shall be irrevocable so long as any of the Obligations remain unpaid or
unsatisfied or the Credit Facility has not been terminated.
SECTION 15.14 Survival of Indemnities. Notwithstanding any
-----------------------
termination of this Agreement, the indemnities to which the Administrative Agent
and the Lenders are entitled under the provisions of this Article XV and any
other provision of this Agreement and the Loan Documents shall continue in full
force and effect and shall protect the Administrative Agent and the Lenders
against events arising after such termination as well as before.
SECTION 15.15 Titles and Captions. Titles and captions of Articles,
-------------------
Sections and subsections in this Agreement are for convenience only, and neither
limit nor amplify the provisions of this Agreement.
SECTION 15.16 Severability of Provisions. Any provision of this
--------------------------
Agreement or any other Loan Document which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective only to the extent
of such prohibition or unenforceability without invalidating the remainder of
such provision or the remaining provisions hereof or thereof or affecting the
validity or enforceability of such provision in any other jurisdiction.
SECTION 15.17 Counterparts. This Agreement may be executed in any
------------
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed shall be deemed to be an original and shall be
binding upon all parties, their successors and assigns, and all of which taken
together shall constitute one and the same agreement.
SECTION 15.18 Term of Agreement. This Agreement shall remain in
-----------------
effect from the Closing Date through and including the date upon which all
Obligations shall have been indefeasibly and irrevocably paid and satisfied in
full. The Administrative Agent is hereby permitted to release all Liens on the
Collateral in favor of the Administrative Agent, for the ratable benefit of
itself and the Lenders, upon repayment of the outstanding principal of and all
accrued interest on the Loans, payment of all outstanding fees and expenses
hereunder and the termination of the Lender's Commitments. No termination of
this Agreement shall affect the rights and obligations of the parties hereto
arising prior to such termination.
SECTION 15.19 Inconsistencies with Other Documents; Independent Effect
--------------------------------------------------------
of Covenants.
------------
(a) In the event there is a conflict or inconsistency between this
Agreement and any other Loan Document, the terms of this Agreement shall
control; provided, that any provision of the Security Documents which imposes
--------
additional burdens on the Company or its Subsidiaries or further restricts the
rights of the Company or its Subsidiaries or gives the Administrative Agent or
Lenders additional rights shall not be deemed to be in conflict or inconsistent
with this Agreement and shall be given full force and effect.
(b) The Company and the Borrowers expressly acknowledge and agree that each
covenant contained in Articles IX, X or XI hereof shall be given independent
effect. Accordingly, neither the Company nor any Borrower shall not engage in
any transaction or other
108
act otherwise permitted under any covenant contained in Articles IX, X or XI if,
before or after giving effect to such transaction or act, the Company or such
Borrower shall or would be in breach of any other covenant contained in Articles
IX, X or XI.
SECTION 15.20 Company as Agent for Borrowers; Obligations Joint and
-----------------------------------------------------
Several; Agreements for Contribution.
------------------------------------
(a) The Borrowers hereby irrevocably appoint and authorize the Company (i)
to provide the Administrative Agent with all notices with respect to Extensions
of Credit obtained for the benefit of any Borrower and all other notices and
instructions under this Agreement and (ii) to take such action on behalf of the
Borrowers as it deems appropriate to obtain Extensions of Credit and to exercise
such other powers as are reasonably incidental thereto to carry out the purposes
of this Agreement.
(b) All of the Borrowers shall be jointly and severally liable for the
Obligations, however incurred, and references to the Borrowers with respect to
the Obligations or any portion thereof shall mean each Borrower on a joint and
several basis; provided, that notwithstanding anything else herein to the
--------
contrary, any Limited Subsidiary shall only be liable for up to $150,000,000 of
the Obligations while designated a Limited Subsidiary and provided further, that
-------- -------
notwithstanding anything else herein to the contrary, unless the Indiana
Subsidiary has received the PUC Authorizations set forth in Section 9.12, all
Obligations of the Indiana Subsidiary shall become due and payable on the first
anniversary of the Closing Date.
(c) To the extent any Borrower is required, by reason of its Obligations
hereunder, to pay to the Administrative Agent and the Lenders an amount greater
than the amount of Extensions of Credit actually made available to or for the
account of such Borrower, such Borrower shall have an enforceable right of
contribution against the remaining Borrowers, and the remaining Borrowers shall
be jointly and severally liable, for repayment of the full amount of such excess
payment. Subject only to the subordination provided in the following subsection
(f), such Borrower further shall be subrogated to any and all rights of the
Administrative Agent and the Lenders against the remaining Borrowers to the
extent of such excess payment.
(d) To the extent that any Borrower would, but for the operation of this
Section 15.20 and by reason of its Obligations hereunder or its obligations to
other Subsidiaries under this Section 15.20, be rendered insolvent for any
purpose under Applicable Law, each of the Borrowers hereby agrees to indemnify
such Borrower in an amount at least equal to the amount necessary to prevent
such Borrower from having been rendered insolvent by reason of the incurring of
any such obligations.
(e) To the extent that any Borrower would, but for the operation of this
Section 15.20, be rendered insolvent under any Applicable Law by reason of its
incurring of obligations to any other Borrower under the foregoing subsections
(c) and (d) above, such Borrower shall, in turn, have rights of contribution and
indemnity, to the full extent provided in the foregoing subsections (c) and (d)
above, against the remaining Borrowers, such that all Obligations of all of the
Borrowers hereunder and under this Section 15.20 shall be allocated in a manner
such that no
109
Borrower shall be rendered insolvent for any purpose under Applicable Law by
reason of its incurring of such obligations.
(f) The rights of any Borrower to contribution, subrogation and indemnity
under this Section 15.20 or under Applicable Law shall in all events and all
respects be subject and subordinate to the rights of the Administrative Agent
and the Lenders under this Agreement and subject to the prior full, final and
indefeasible payment to the Administrative Agent and the Lenders of all
Obligations and no such right may be exercised until all of such Obligations
have been fully, finally and indefeasibly aid and such payments are in no event
subject to avoidance under title 11 of the United States code or any other
Applicable Law.
[Signature pages to follow]
110
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed under seal by their duly authorized officers, all as of the day and
year first written above.
BORROWERS:
[CORPORATE SEAL] CHOICE ONE COMMUNICATIONS OF NEW YORK INC.
[CORPORATE SEAL] CHOICE ONE COMMUNICATIONS OF PENNSYLVANIA INC.
[CORPORATE SEAL] CHOICE ONE COMMUNICATIONS OF MASSACHUSETTS INC.
[CORPORATE SEAL] CHOICE ONE COMMUNICATIONS INTERNATIONAL INC.
[CORPORATE SEAL] CHOICE ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ INC.
[CORPORATE SEAL] CHOICE ONE COMMUNICATIONS OF CONNECTICUT INC.
[CORPORATE SEAL] CHOICE ONE COMMUNICATIONS OF MAINE INC.
[CORPORATE SEAL] CHOICE ONE OF NEW HAMPSHIRE INC.
[CORPORATE SEAL] CHOICE ONE COMMUNICATIONS OF OHIO INC.
[CORPORATE SEAL] CHOICE ONE COMMUNICATIONS OF VERMONT INC.
ATLANTIC CONNECTIONS, L.L.C.
[CORPORATE SEAL] ACL TELECOMMUNICATIONS, LTD.
[CORPORATE SEAL] CHOICE ONE ONLINE INC.
[CORPORATE SEAL] CHOICE ONE COMMUNICATIONS OF VIRGINIA INC.
[CORPORATE SEAL] CHOICE ONE COMMUNICATIONS OF NORTH CAROLINA INC.
[CORPORATE SEAL] CHOICE ONE COMMUNICATIONS OF TENNESSEE INC.
[CORPORATE SEAL] CHOICE ONE COMMUNICATIONS OF KENTUCKY INC.
[CORPORATE SEAL] US XCHANGE INC. (formerly known as Barter
Acquisition Corp.)
US XCHANGE, L.L.C.
US XCHANGE FINANCE COMPANY, L.L.C.
US XCHANGE OF INDIANA, L.L.C.
US XCHANGE OF ILLINOIS, L.L.C.
US XCHANGE OF WISCONSIN, L.L.C.
US XCHANGE OF MICHIGAN, L.L.C.
By: /S/ ▇▇▇▇ ▇. ▇▇▇▇▇▇ [SEAL]
---------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President - Finance, for each
of the entities set forth above
GUARANTOR:
[CORPORATE SEAL] CHOICE ONE COMMUNICATIONS INC.
By: /S/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
Vice President - Finance
[Signature pages continue]
FIRST UNION INVESTORS, INC.,
as Administrative Agent and Lender
By: /S/ ▇▇▇▇ ▇. ▇▇▇▇
----------------
Name: ▇▇▇▇ ▇. ▇▇▇▇
Title: Senior Vice President
[Signature pages continue]
GENERAL ELECTRIC CAPITAL CORPORATION,
as Syndication Agent and Lender
By: /S/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-----------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Manager, Operations
[Signature pages continue]
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ SENIOR FUNDING, INC., as
Documentation Agent and Lender
By: /S/ ▇▇▇▇ ▇▇▇▇▇
-------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: Managing Director
[Signature pages continue]
CIBC INC., as Lender
By: /S/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Executive Director
[Signature pages continue]
PNC BANK, NATIONAL ASSOCIATION,
as Lender
By: /S/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Assistant Vice President
[Signature pages continue]
THE BANK OF NEW YORK, as Lender
By: /S/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------
Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President
[Signature pages continue]
DRESDNER BANK AG, NEW YORK AND
GRAND CAYMAN BRANCHES, as Lender
By: /S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
By: /S/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Assistant Vice President
[Signature pages continue]
FORTIS CAPITAL CORP., as Lender
By: /S/ ▇. ▇▇▇▇▇▇
---------------------------
Name: ▇. ▇▇▇▇▇▇
Title: Managing Director
By: /S/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Executive Vice President
[Signature pages continue]
IBM CREDIT CORPORATION, as Lender
By: /S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Manager of Credit
[Signature pages continue]
CREDIT LYONNAIS N.Y. BRANCH, as Lender
By: /S/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Vice President