EXHIBIT 10.4
THIRD AMENDMENT TO BRIDGE FINANCING AGREEMENT
THIS THIRD AMENDMENT (the "AMENDMENT") is made and entered
into as of the 13th day of September, 2002 with respect to the Bridge Financing
Agreement, dated as of August 1, 2000, (as previously amended, as amended hereby
and as further amended, amended and restated, supplemented or otherwise modified
from time to time, the "BRIDGE AGREEMENT") by and among CHOICE ONE
COMMUNICATIONS INC., a Delaware corporation (the "BORROWER"), ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
SENIOR FUNDING, INC., as Administrative Agent (the "ADMINISTRATIVE AGENT") and
the Lenders (the "LENDERS") set forth on the signature pages hereto.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Borrower, the Lenders and the Administrative
Agent are parties to the Bridge Agreement, pursuant to which the Lenders have
extended certain rollover loans to the Borrower;
WHEREAS, it is a condition precedent to the granting of the
New Loans (as defined herein) and the LIFO Loans (as defined herein) under the
Senior Credit Agreement that the Borrower, the Lenders and the Administration
Agent enter into this Amendment;
WHEREAS, the Borrower desires to amend the Bridge Agreement in
accordance with the provisions of Section 9.02 thereof;
WHEREAS, the Lenders have consented to this Amendment, as
indicated on the signature pages hereto;
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
SECTION 1
_________
AMENDMENTS TO THE BRIDGE FINANCING AGREEMENT
____________________________________________
1.1. AMENDMENTS TO SECTION 1.01 OF THE BRIDGE AGREEMENT. Section 1.01
of the Bridge Agreement is hereby amended as follows:
(a) The following new definitions are hereby inserted in the
appropriate alphabetical order:
"Blockage Notice" has the meaning set forth in
Section 2.17.
"Cash Equivalents" means investments by the Borrower
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 S&P
or ▇▇▇▇▇'▇, (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.
"Existing Warrants" means the warrants issued by the
Borrower prior to the Amendment Effective Date to the Lenders
to purchase shares of common stock of the Borrower, as amended
as of the date hereof and as may be amended, amended and
restated, supplemented or otherwise modified from time to
time.
"Holders" means all of the Persons who are holders of
the New Warrants.
"Intercreditor Agreement" means the Intercreditor
Agreement by and among the Borrower, the Administrative Agent,
as Lender and on behalf of the Lenders, and the Senior
Representative, as a lender of Senior Facility Debt and on
behalf of the lenders of Senior Facility Debt, dated as of the
date hereof, as may be amended, amended and restated,
supplemented or otherwise modified from time to time, as
permitted thereby and by the Senior Credit Agreement.
"LIFO Loans" means loans made pursuant to Section
4.1(d) of the Senior Credit Agreement by some or all of the
lenders of Senior Facility Debt in an aggregate principal
amount not to exceed to $4,375,000.
"Limited Subsidiary" means, as of any date of
determination, either Choice One Communications of
Pennsylvania Inc., a Delaware corporation, Choice One
Communications of Ohio Inc., a Delaware corporation, or US
Xchange of Indiana, L.L.C., a Delaware limited liability
company, and "Limited Subsidiaries" means all 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 guarantee the Obligations (as defined in the
Subordinated Guarantee).
"Mortgage" means each fee or leasehold mortgage, deed
of trust, or collateral assignment of lease, executed by the
Borrower or any Subsidiary in favor of the Senior Collateral
Agent and the Subordinated Collateral Agent (and in form and
substance reasonably satisfactory thereto) for the ratable
benefit of itself, the lenders of Senior Facility Debt and the
Lenders, as each such agreement may be amended, amended and
restated, supplemented or otherwise modified from time to
time.
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"New Loans" means loans made pursuant to Section
4.1(c) of the Senior Credit Agreement in an aggregate
principal amount equal to $44,500,000.
"New Warrants" means the five-year warrants issued by
the Borrower as of the date hereof to purchase shares of
common stock of the Borrower, in the forms attached to this
Amendment as Exhibit E-1, Exhibit E-2 and Exhibit E-3.
"Payment Blockage Period" has the meaning set forth
in Section 2.17.
"Qualified Capital Markets Transaction" shall have
the meaning set forth in the Rollover Warrants.
"Revolving Credit Facility" means the revolving
credit facility established pursuant to Article II of the
Senior Credit Agreement.
"Rollover Warrants" means the warrants to be issued
to the Lenders on the Amendment Effective Date, substantially
in the form of Exhibit E-3 hereto.
"Senior Collateral Agent" means Wachovia Investors,
Inc. in its capacity as administrative agent and/or collateral
agent for purposes of the Senior Pledge Agreement, the Senior
Security Agreement and the Mortgages, together with any duly
appointed successors thereto.
"Senior Pledge Agreement" means the third amended and
restated pledge agreement of even date herewith executed by
the Borrower and the Subsidiaries in favor of the Senior
Collateral Agent for the ratable benefit of itself and the
lenders under the Senior Credit Agreement, as may be amended,
amended and restated, supplemented or otherwise modified from
time to time.
"Senior Representative" means the administrative
agent under the Senior Credit Agreement.
"Senior Security Agreement" means the third amended
and restated security agreement of even date herewith executed
by the Borrower and the Subsidiaries in favor of the Senior
Collateral Agent for the ratable benefit of itself and the
lenders under the Senior Credit Agreement, as may be amended,
amended and restated, supplemented or otherwise modified from
time to time.
"Subordinated Collateral Agent" means ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Senior Funding, Inc., in its capacity as subordinated
collateral agent for purposes of the Subordinated Security
Agreement and Subordinated Pledge Agreement, together with any
duly appointed successors thereto.
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"Subordinated Guarantee" means the subordinated
guarantee by the Subsidiaries of the Rollover Loans and all
other obligations and liabilities under the Bridge Agreement
in favor of the Lenders, dated as of the date hereof and as
may be amended, amended and restated, supplemented or
otherwise modified from time to time.
"Subordinated Pledge Agreement" means the pledge
agreement of even date herewith executed by the Borrower and
the Subsidiaries in favor of the Subordinated Collateral Agent
securing the obligations of the Subsidiaries under the
Subordinated Guarantee, as may be amended, amended and
restated, supplemented or otherwise modified from time to
time.
"Subordinated Security Documents" means the
Subordinated Security Agreement, Subordinated Pledge Agreement
and the Mortgages.
"Subordinated Security Agreement" means the
subordinated security agreement of even date herewith among
the Borrower, the Subsidiaries and the Subordinated Collateral
Agent for the Lenders, securing the obligations of the
Subsidiaries under the Subordinated Guarantee, as may be
amended, amended and restated, supplemented or otherwise
modified from time to time.
"Term A Loan Facility" means the term A loan facility
established pursuant to Article IV of the Senior Credit
Facility.
"Term B Loan Facility" means the term B loan facility
established pursuant to Article IV of the Senior Credit
Facility.
"Warrant Agreements" means the New Warrants and the
Existing Warrants.
(b) The definition of "Capital Expenditures" is hereby amended and
restated to read as follows:
"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, including in any event
capitalized labor but excluding in any event IRU's, each as
determined in accordance with GAAP.
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(c) The definition of "Incremental Senior Facility Debt" is hereby
amended and restated to read as follows:
"Incremental Senior Facility Debt" means Senior
Facility Debt, but only if, and solely to the extent that,
after giving effect to the incurrence of any such Debt, the
principal amount of such Debt (including any Reimbursement
Obligations, but excluding interest accrued whether or not
added to the principal amount) exceeds $425,000,000.
(d) The definition of "Loan Documents" is hereby amended and
restated to read as follows:
"Loan Documents" means this Agreement, the Notes, the
Registration Rights Agreement, the Subordinated Guarantee, the
Subordinated Pledge Agreement, Subordinated Security Agreement
and the Intercreditor Agreement.
(e) The definition of "Reset Date" is hereby amended and restated
to read as follows:
"Reset Date" means the fifth anniversary of the
Rollover Borrowing Date.
(f) The definition of "Rollover Loans" is hereby amended and restated
to read as follows:
"Rollover Loans" has the meaning set forth in Section
2.01(b).
(g) The definition of "Senior Credit Agreement" is hereby amended
and restated to read as follows:
"Senior Credit Agreement" means the Third Amended and
Restated Credit Agreement, as amended through and as of the
date hereof among the Borrower, as guarantor, the Subsidiaries
party thereto as borrowers, Wachovia Investors, Inc., as
administrative agent and collateral agent, General Electric
Capital Corporation, as syndication agent, and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Senior Funding, Inc., as documentation agent, as may be
amended, amended and restated, supplemented or otherwise
modified from time to time.
(h) The definition of "Senior Facility Debt" is hereby amended and
restated to read as follows:
"Senior Facility Debt" means any Debt outstanding
from time to time under the Senior Facility Documents,
provided the aggregate principal amount of such Debt
(including any Reimbursement Obligations, but excluding
interest accrued whether or not added to the principal amount)
shall not exceed $425,000,000.
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(i) The definition of "Senior Facility Documents" is hereby amended and
restated to read as follows:
"Senior Facility Documents" means collectively (i)
the Senior Credit Agreement, (ii) the Senior Security
Agreement, (iii) the Senior Pledge Agreement, (iv) the
Mortgages (as defined in the Senior Credit Agreement), (v) the
Intercreditor Agreement and (vi) the other Loan Documents
referred to (and as such term is defined) in such Senior
Credit Agreement, in each case as may be amended, amended and
restated, supplemented or otherwise modified from time to
time.
1.2. AMENDMENT OF SECTION 2.08(B) OF THE BRIDGE AGREEMENT. Section 2.08(b
of the Bridge Agreement is hereby amended and restated to read as follows:
(b) Subject to the Intercreditor Agreement, within five
Business Days after any Net Proceeds are received by or on behalf of
the Borrower or any Subsidiary in respect of any Prepayment Event, the
Borrower shall prepay Loans in a aggregate principal amount equal to
such Net Proceeds.
1.3. AMENDMENT OF SECTION 2.08(D) OF THE BRIDGE AGREEMENT. Section 2.08(d)
of the Bridge Agreement is hereby amended and restated to read as follows:
(d) Subject to the Intercreditor Agreement, if on any date on
or after the Rollover Borrowing Date a Change in Control shall occur,
the Borrower shall repay in full the Rollover Loans.
1.4. AMENDMENT OF SECTION 2.08(E) OF THE BRIDGE AGREEMENT. Section 2.08(e
of the Bridge Agreement is hereby amended and restated to read as follows:
(e) Subject to the Intercreditor Agreement, each mandatory
prepayment of any Rollover Loan Borrowing made prior to the Reset Date
(other than a mandatory prepayment pursuant to clause (d)) shall be for
an amount equal to the Accreted Value of the Rollover Loans included in
such Borrowing, such Accreted Value calculated on the date of such
prepayment. Each mandatory prepayment of any Rollover Loan Borrowing
made prior to the Reset Date pursuant to clause (d) shall be for an
amount equal to 101% of the Accreted Value of the Rollover Loans
included in such Borrowing, such Accreted Value calculated on the date
of such prepayment. Each mandatory prepayment of any Rollover Loan
Borrowing made on or after the Reset Date (other than a mandatory
prepayment pursuant to clause (d)) shall be for an amount equal to
aggregate principal amount of the Rollover Loans included in such
Borrowing. Each mandatory prepayment of any Rollover Loan Borrowing
made on or after the Reset Date pursuant to clause (d) shall be for an
amount equal to 101% of the aggregate principal amount of the Rollover
Loans included in such Borrowing.
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1.5. ADDITION OF SECTION 2.17 OF THE BRIDGE AGREEMENT. The Bridge
Agreement is hereby amended to add a new Section 2.17 which shall read as
follows:
Section 2.17 Payment Blockage. (a)(i) Prior to the payment in
full of all principal and interest on the LIFO loans, the Required Term
D Lenders (as defined in the Senior Credit Agreement) can, by notice to
the Borrower at any time, block the payment of cash interest on the
Rollover Loans for one period of 180 days (a "PAYMENT BLOCKAGE PERIOD")
and (ii) in any event no cash interest can be paid on the Rollover
Loans if a default has occurred and is continuing under the Senior
Facility Documents, PROVIDED, HOWEVER, that such Payment Blockage
Period under this clause (ii), if in respect of non-payment defaults
under the Senior Facility Documents, shall be for a period of not more
than 180 days from the date the Company is notified in writing of such
non-payment default (and any subsequent 180 day dividend block in
respect of such non-payment defaults may not be made until 360 days
have elapsed since receipt of the aforementioned notice) and no
non-payment default that existed or was continuing under the Senior
Facility Documents on the date of delivery of the aforementioned notice
to the Senior Representative shall be, or be made, the basis for a
subsequent Payment Blockage Period, unless such default has been cured
or waived for a period of not less than 180 days. During any Payment
Blockage Period, interest shall accrue on such unpaid interest at the
rate specified in Section 2.10(h).
(b) The provisions of this Section 2.17 are, and are intended
solely, for the purpose of defining the relative rights of the Lenders
on the one hand and the lenders of Senior Facility Debt on the other
hand. Nothing contained in this Section 2.17 or elsewhere in this
Agreement is intended to or will (i) impair, as between the Borrower
and the Lenders, the obligations of the Borrower, which are absolute
and unconditional, to pay to the Lenders the principal of and interest
on the Rollover Loans as and when the same will become due and payable
in accordance with their terms; or (ii) affect the relative rights
against the Borrower of the Lenders and creditors of the Borrower other
than the lenders of Senior Facility Debt; or (iii) prevent the Lenders
from exercising all remedies otherwise permitted by applicable law upon
default under this Agreement, subject to the rights under this Section
2.17 and under the Intercreditor Agreement of the lenders of Senior
Facility Debt.
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1.6. ADDITION OF SECTION 2.18 OF THE BRIDGE AGREEMENT. The Bridge
Agreement is hereby amended to add a new Section 2.18 which shall read as
follows:
Section 2.18 Payment Priorities. If the Borrower consummates a
Qualified Capital Markets Transaction, the parties hereto agree that
the proceeds from such transaction shall be applied as follows: FIRST,
to all accrued and unpaid interest on the LIFO Loans, on a PRO RATA
basis; SECOND, to the outstanding principal installments of the LIFO
Loans on a PRO RATA basis; THIRD, in accordance with Section 4.5(c)(vi)
of the Senior Credit Agreement; and fOURTH, to the extent of any
excess, to the payment of any interest, principal and premium (if any)
on the Rollover Loans and any other amounts outstanding under the Loan
Documents.
1.7. AMENDMENT OF SECTION 3.04(E) OF THE BRIDGE AGREEMENT. Section 3.04(e)
of the Bridge Agreement is hereby amended and restated to read as follows:
(e) Since June 30, 2002, there has been no material adverse
change in the properties, business, operations, prospects, or condition
(financial or otherwise) of the Borrower and its Subsidiaries and no
event has occurred or condition arisen that could reasonably be
expected to have a Material Adverse Effect.
1.8. AMENDMENT OF SECTION 3.16 OF THE BRIDGE AGREEMENT. Section 3.16
of the Bridge Agreement is hereby amended and restated to read as follows:
Section 3.16 Solvency. As of the Amendment Effective Date and
after giving effect to the New Loans, the Borrower and each of its
Subsidiaries (a) will have capital (or access to immediately available
capital, including, if applicable, under the Senior 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 and (b) does not believe that it will incur debts
or liabilities beyond its ability to pay such debts or liabilities as
they mature.
1.9. ADDITION OF SECTION 5.12 OF THE BRIDGE AGREEMENT. The Bridge
Agreement is hereby amended to add a new Section 5.12 which shall read as
follows:
Section 5.12. Additional Agreements. The Borrower will, and
will cause each of its Subsidiaries to enter into and keep in full
force and effect, subject to the terms thereof, each of the Loan
Documents and the Warrant Agreements.
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1.10. ADDITION OF SECTION 5.13 OF THE BRIDGE AGREEMENT. The Bridge
Agreement is hereby amended to add a new Section 5.13 which shall read as
follows:
Section 5.13 Amendments to the Indenture. The Borrower and the
Lenders shall amend the form of indenture filed as Exhibit A to the
Registration Rights Agreement to the extent necessary to make it
consistent herewith prior to the use of such indenture, including,
without limitation, the provision of the Subordinated Guarantee and the
Subordinated Security Documents.
1.11. ADDITION OF SECTION 5.14 OF THE BRIDGE AGREEMENT. The Bridge
Agreement is hereby amended to add a new Section 5.14 which shall read as
follows:
Section 5.14 Subsidiary PUC Authorization. Each Limited
Subsidiary shall make all necessary filings to be authorized by each
applicable PUC to enter into the Subordinated Guarantee and the
Subordinated Security Documents and perform the corresponding
obligations thereunder as soon as practicable but in any event, no
later than 10 days after the Amendment Effective Date. The Borrower
shall use its reasonable best efforts to cause each Limited Subsidiary
to be authorized by each applicable PUC to enter into the Subordinated
Guarantee and the Subordinated Security Documents and perform the
corresponding obligations thereunder as soon as practicable after the
Amendment Effective Date, but in any event, no later than December 30,
2002.
1.12. AMENDMENT TO SECTION 6.01(A)(VI) OF THE BRIDGE AGREEMENT. Section
6.01(a)(vi) of the Bridge Agreement is hereby amended and restated to read as
follows:
(vi) Debt of the Borrower or any Subsidiary not to
exceed $20,000,000 in the aggregate on any date of
determination which consists of Capital Lease Obligations
and/or other purchase money Debt;
1.13. ADDITION OF SECTION 6.01(A)(X) OF THE BRIDGE AGREEMENT. The Bridge
Agreement is hereby amended to add a new Section 6.01(a)(x) which shall read as
follows:
(x) Debt arising under or in connection with a
Qualified Capital Markets Transaction, so long as the proceeds
thereof are applied to the Debt of the Borrower in accordance
with Section 2.18 hereof;
1.14. AMENDMENT TO SECTION 6.01(B) OF THE BRIDGE AGREEMENT. Section 6.01(b)
of the Bridge Agreement is hereby amended and restated to read as follows:
(b) The Borrower will not and will not permit any Subsidiary
to, issue any preferred stock or other preferred Equity Interests,
other than (i) the Preferred Equity, (ii) additional shares of
Preferred Equity issued as payment of dividends with respect thereto,
(iii) any such Equity Interests issued pursuant to a Permanent
Financing (including any convertible preferred stock issued by the
Company) so long as the Net Proceeds thereof are applied in full in
accordance with Section 2.08(d) and (iv) issuances pursuant to a
Qualified Capital Markets Transaction.
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1.15. ADDITION OF SECTION 6.01(D)(VI) OF THE BRIDGE AGREEMENT. The Bridge
Agreement is hereby amended to add a new Section 6.01(d)(vi) which shall read
as follows:
(vi) Guarantees of the Rollover Loans.
1.16. AMENDMENT TO SECTION 6.02 OF THE BRIDGE AGREEMENT. Section 6.02
of the Bridge Agreement is hereby amended and restated to read as follows:
Section 6.02 Liens. (a) The Borrower will not, and will not
permit any Subsidiary to, create or permit to exist any Lien on any
property now owned or hereafter acquired by it, or assign or sell any
income or revenues (including accounts receivable) or rights in respect
of any thereof, except:
(i) Liens securing Senior Facility Debt;
(ii) 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;
(iii) 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;
(iv) 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 in the aggregate) under customer
service contracts;
(v) 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;
(vi) Liens created under the Lucent Agreement, and
any other Liens not otherwise permitted by or referred to in
this Section 6.02 and in existence on the Closing Date, in
each case as described on Schedule 6.02;
(vii) Liens evidencing the interest of lessors under
Capital Lease Obligations permitted by Section 6.01(a)(vi) and
Liens securing any purchase money Debt (or refinancings
thereof) permitted under Section 6.01(a)(vi); provided, that
with respect to any such purchase money Liens, (w) such Liens
shall be created substantially simultaneously with the
acquisition of the related asset, (x) such Liens do not at any
time encumber any property other than the property financed by
such Debt (or the Debt so refinanced), (y) the amount of Debt
secured thereby is not increased and (z) 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
(viii) Liens securing the Rollover Loans and
Guarantees thereof.
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1.17. AMENDMENT TO SECTION 6.04(I) OF THE BRIDGE AGREEMENT. Section 6.04(i)
of the Bridge Agreement is hereby amended and restated to read as follows:
(i) existing loans, advances, Investments
and Hedging Agreements not otherwise permitted by this
Section 6.04 described on Schedule 6.04;
1.18. AMENDMENT TO SECTION 6.04(XI) OF THE BRIDGE AGREEMENT. Section
6.04(xi) of the Bridge Agreement is hereby amended and restated to read as
follows:
(xi) loans and advances to directors, officers and
employees of the Borrower and the Subsidiaries existing on the
Amendment Effective Date in an aggregate principal amount not
exceeding $2,400,000 as described on Schedule 6.04 and
advances to employees in the ordinary course of business for
travel and other business expenses not exceeding $500,000 in
the aggregate at any time; and
1.19. AMENDMENT TO SECTION 6.05(D) OF THE BRIDGE AGREEMENT. Section 6.05(d)
of the Bridge Agreement is hereby amended and restated to read as follows:
(d) any asset sale not referenced above under this
Section 6.05 as long as no Default has occurred and is
continuing, such sale is in the ordinary course of business
and the Net Proceeds thereof are, if applicable, applied in
accordance with Section 2.08; provided that the aggregate Net
Proceeds from such sales shall not exceed $2,000,000 during
any period of four consecutive fiscal quarters hereafter.
1.20. AMENDMENT TO SECTION 6.07(B) OF THE BRIDGE AGREEMENT. Section 6.07(b)
of the Bridge Agreement is hereby amended and restated to read as follows:
(b) The Borrower will not and will not permit any
Subsidiary to, make or agree to pay or make, directly or
indirectly, any prepayments (whether in cash, securities or
other property) on any Debt that is subordinated to the Debt
hereunder.
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1.21. AMENDMENT TO SECTION 6.10 OF THE BRIDGE AGREEMENT. Section 6.10
of the Bridge Agreement is hereby amended and restated to read as follows:
Section 6.10 Restrictive Agreements. The Borrower will not and
will not permit any Subsidiary to, directly or indirectly, enter into
or permit to exist any agreement or other arrangement that prohibits,
restricts or imposes any condition on (a) the ability of any Choice One
Company to create or permit to exist any Lien on any of its property,
or (b) the ability of any Subsidiary to pay dividends or other
distributions with respect to any shares of its capital stock or to
make or repay loans or advances to the Borrower or any other Subsidiary
or to Guarantee Debt of the Borrower or any other Subsidiary; provided
that (i) the foregoing shall not apply to restrictions and conditions
imposed by law or by any Loan Document, or any Preferred Equity
Document, or any Senior Facility Document, (ii) the foregoing shall not
apply to restrictions and conditions existing on the date hereof (but
shall apply to any extension or renewal of, or any amendment or
modification expanding the scope of, any such restriction or
condition), (iii) the foregoing shall not apply to customary
restrictions and conditions contained in agreements relating to the
sale of a Subsidiary pending such sale, provided that such restrictions
and conditions apply only to the Subsidiary that is to be sold and such
sale is permitted hereunder, (iv) ) the foregoing shall not apply to
customary restrictions and conditions contained in agreements relating
to a Qualified Capital Markets Transaction, (v) clause (a) of this
Section shall not apply to restrictions or conditions imposed by any
agreement relating to secured Debt permitted by this Agreement if such
restrictions or conditions apply only to the property securing such
Debt and (vi) clause (a) of this Section shall not apply to customary
provisions in leases and other contracts restricting the assignment
thereof.
1.22. AMENDMENT TO SECTION 6.12 OF THE BRIDGE AGREEMENT. Section 6.12
of the Bridge Agreement is hereby amended and restated to read as follows:
Section 6.12 Maximum Capital Expenditures. For each
Fiscal Year, permit the sum of (i)Capital Expenditures
and (ii) payments made in respect of any IRU, in the
aggregate, for such Fiscal Year to exceed the corresponding
amount set forth below
-------------------------- --------------------------------------
Fiscal Year Maximum Capital
Ending Expenditures (in thousands)
-------------------------- --------------------------------------
12/31/02 35,000
12/31/03 39,000
12/31/04 43,000
12/31/05 52,000
12/31/06 59,000
12/31/07 66,000
12/31/08 74,000
-------------------------- --------------------------------------
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1.23. AMENDMENT TO SECTION 9.01(A) OF THE BRIDGE AGREEMENT. Section 9.01(a)
of the Bridge Agreement is hereby amended and restated as follows:
(a) if to the Borrower, to it at Choice One
Communications Inc., 1 HSBC Plaza, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇, Attention of
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇,
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇;
1.24. ADDITION OF SECTION 9.04(H) OF THE BRIDGE AGREEMENT. The Bridge
Agreement is hereby amended to add a new Section 9.04(h) which shall read as
follows:
(h) Any successors and assigns of the rights and
obligations of a Lender permitted hereunder shall become party
to the Intercreditor Agreement, if then in effect, immediately
upon Assignment and the terms of the Intercreditor Agreement
shall be binding on and inure to the benefit of any such
successors and the Form of Assignment attached as Exhibit A
will be amended to include express acknowledgement and
agreement to be bound by the Intercreditor Agreement.
1.25. The schedules attached hereto (the "UPDATED SCHEDULES") shall amend and
restate in their entirety the Schedules to the Bridge Amendment in effect prior
to the Amendment Effective Date.
SECTION 2
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EFFECTIVENESS
-------------
2.1 EFFECTIVENESS. This Amendment shall become effective on
September 13, 2002 (the "AMENDMENT EFFECTIVE DATE") subject to the
satisfaction or waiver of each of the following conditions:
13
(a) CERTIFICATES; OPINIONS.
(i) OFFICER'S CERTIFICATE OF THE BORROWER. The Administrative
Agent shall have received a certificate from a Responsible
Officer, addressed, and in form and substance satisfactory, to
the Administrative Agent, in the form contemplated by Section
6.2(b)(i) of the Senior Credit Agreement.
(ii) CERTIFICATE OF SECRETARY OF THE BORROWER AND THE SUBSIDIARIES.
The Administrative Agent shall have received a certificate of
the secretary or assistant secretary of the Borrower and each
Subsidiary, addressed, and in form and substance satisfactory,
to the Administrative Agent, in the form contemplated by
Section 6.2(b)(ii) of the Senior Credit Agreement.
(iii) CERTIFICATES OF GOOD STANDING. The Administrative Agent shall
have received certificates as of a recent date of the good
standing of the Borrower and each Subsidiary under the laws of
its jurisdiction of organization and each other jurisdiction
where such Person is qualified to do business and a
certificate of a Responsible Officer of the Borrower
certifying that the Borrower and each of its Subsidiaries have
filed all required tax returns and that the Company has no
knowledge or notice of any 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 Borrower
addressed to the Administrative Agent and the Lenders with
respect to the Borrower, the Subsidiaries, the Loan Documents
and such other matters as the Lenders shall request and (B)
shall be entitled to rely on all opinions delivered on or
around the Amendment Effective Date in connection with the
Senior Facility Documents pursuant to reliance language
reasonably satisfactory to the Administrative Agent.
14
(b) 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 Subordinated 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 Liens therein.
(ii) PLEDGED COLLATERAL. The Administrative Agent shall have
received confirmation from the Senior Collateral Agent that it
has received (A) original stock certificates or other
certificates evidencing the capital stock or other ownership
interests pledged pursuant to the Subordinated Security
Agreement and Subordinated 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 Subordinated Security
Agreement and Subordinated 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 Borrower and the
Subsidiaries 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 Subordinated 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 the information regarding the real
property securing the Subordinated Loan Documents required by
Section 6.02(c)(v) of the Senior Credit Agreement.
15
(c) FINANCIAL MATTERS.
(i) FINANCIAL STATEMENTS. The Administrative Agent shall have
received the most recent form 10-Q filed by the Borrower with
the SEC.
(ii) FINANCIAL CONDITION CERTIFICATE. The Borrower shall have
delivered to the Administrative Agent a certificate, in
form and substance satisfactory to the Administrative
Agent, in the form contemplated by Section 6.02(e)(ii) of
the Senior Credit Agreement.
(iii) PAYMENT OF FEES. The Borrower or Subsidiaries shall have paid
the fees and expenses set forth or referenced in Section
2.09(c) and Section 9.03 of the Bridge Agreement and any other
accrued and unpaid fees or commissions due under the Bridge
Agreement (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
preparation, execution, delivery, administration, recording,
filing and registration of any of the Loan Documents.
(iv) RETENTION OF FINANCIAL ADVISORS. The Subsidiaries shall have
retained independent financial and restructuring advisers
acceptable to the Lenders to evaluate and make recommendations
with respect to the operations of the Subsidiaries, including
market-by-market, shutdown and headcount rationalization
analyses and the cash flow budget, it being understood that
Crossroads, LLC (the financial advisors already engaged by the
Subsidiaries to perform such role) shall be acceptable.
(v) THIRTEEN WEEK CASH-FLOWS. The Borrower shall have delivered to
the Administrative Agent a 13-week cash flow projection in the
form contemplated by Section 8.1(e) of the Senior Credit
Agreement.
16
(d) MISCELLANEOUS.
(i) PROCEEDINGS AND DOCUMENTS. All opinions, certificates
and other instruments and all proceedings in connection
with the transactions contemplated by the Loan Documents
and the Senior Facility Documents shall be reasonably
satisfactory in form and substance to the Lenders. The
Administrative Agent shall have received signed copies of
this Amendment and each of the other documents executed and
delivered pursuant hereto including the Updated Schedules,
the Senior Facility Documents, and the Subordinated
Security Documents (certified as true, correct and
complete by a Responsible Officer), and all other
instruments and other evidence as the Lender may reasonably
request, in form and substance reasonably satisfactory to the
Lenders.
(ii) BUSINESS PLANS. The Lenders shall have received copies of any
business plans and budgets contemplated by Section 6.02(f)(ii)
of the Senior Credit Agreement, that are in form and substance
satisfactory to the Lenders, and demonstrate to their
respective satisfaction that no further funding (other than as
contemplated herein) whether in the form of Debt or equity is
required to achieve the results projected in such plans and
budgets.
(iii) OTHER DOCUMENTS. The Borrower shall have delivered to the
Lenders such other documents, certificates and opinions as the
Lenders have reasonably requested (including any documents,
certificates and opinions delivered in connection with the
Senior Facility Documents).
(iv) GOVERNMENTAL AND THIRD PARTY APPROVALS. The Borrower 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 the Bridge Agreement and the other Loan
Documents (including any approvals of the FCC and pursuant to
the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Anti-Trust Improvements Act of 1976 but
excluding any SEC authorizations in connection with the New
Warrants and any required PUC authorizations in connection
with the Subordinated Guarantee and the Subordinated Security
Documents).
17
(e) RELATED TRANSACTIONS.
(i) ISSUANCE OF NEW WARRANTS. The Borrower shall have issued
and delivered the New Warrants to (A) the lenders of the
New Loans pro rata in accordance with their respective
Term C Commitment (as defined in the Senior Credit
Agreement) to purchase 20% of the common stock of the
Borrower on a fully-diluted basis after giving effect to
the issuance of such New Warrants; and (B) to the Lenders
pro rata in accordance with their respective commitment
under the Bridge Agreement to purchase 10% of the common
stock of the Borrower on a fully-diluted basis after giving
effect to the issuance of such New Warrants which shall
not be currently exercisable, it being understood and
agreed that the New Warrants, by the Amendment Effective
Date, shall have been duly approved by the Borrower's
Board of Directors and a majority of the Borrower's
shareholders;
(ii) AMENDMENTS TO EXISTING WARRANTS. The Borrower shall have
amended the Existing Warrants to extend the expiration date of
the Existing Warrants to the expiration date of the New
Warrants and otherwise in a manner satisfactory to the
Lenders.
(iii) AMENDMENTS TO CERTIFICATE OF DESIGNATIONS. The Borrower shall
have amended the Preferred Equity Documents in the form set
forth in Exhibit L to the Senior Credit Agreement.
18
SECTION 3
---------
MISCELLANEOUS
-------------
3.1. DEFINED TERMS. Capitalized terms used and not otherwise defined
herein shall have the meanings assigned to such terms in the Bridge Agreement.
3.2. REPRESENTATIONS AND WARRANTIES; COVENANTS. By its execution hereof, the
Borrower hereby certifies that each of the representations and warranties set
forth in the Bridge Agreement and the other Loan Documents as amended hereby is,
subject to the information contained in the Updated Schedules, true and correct
in all material respects as of the date hereof as if fully set forth herein,
except for any representations and warranties made as of an earlier date, which
representations and warranties shall be true and correct in all material
respects as of such earlier date, and that as of the date hereof no Default or
Event of Default has occurred and is continuing.
3.3. EFFECT OF THE AMENDMENT. Except for the amendments contemplated hereby, the
Bridge Agreement and the Loan Documents shall be and remain in full force and
effect. The amendments granted herein are specific and limited and shall not
constitute a modification, acceptance or waiver of any other provision or
default of the Bridge Agreement, the Loan Documents or any other document or
instrument entered into in connection therewith or a further modification,
acceptance or waiver of the provisions set forth therein.
3.4. WAIVER AND EXTENSION. By execution hereof, each of the parties signatory
hereto waives the terms and conditions of the commitment letter dated August 13,
2002, as extended September 6, 2002, that provide for termination of the
commitments thereunder by not later than the close of business on September 12,
2002 and hereby consents to a further extension through the close of business on
September 13, 2002.
3.5. EXPENSES. The Borrower shall pay all reasonable out-of-pocket
expenses incurred by the Administrative Agent in connection with the
preparation of this Amendment, including, but not limited to, the reasonable
fees and disbursements of counsel for the Administrative Agent.
3.6. GOVERNING LAW. This Agreement shall be construed in accordance
with and governed by the law of the State of New York.
19
3.7. COUNTERPARTS. This Amendment may be executed in any number of
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A set of counterparts
executed by all the parties hereto shall be lodged with the Borrower and the
Administrative Agent.
3.8. FAX TRANSMISSION. A facsimile, telecopy or other reproduction of this
Amendment may be executed by one or more parties hereto, and an executed copy of
this Amendment may be delivered by one or more parties hereto by facsimile or
similar instantaneously electronic transmission devise pursuant to which the
signature of or on behalf of such party can be seen, and such execution and
delivery shall be considered valid, binding and effective for all purposes. At
the request of any party hereto, all parties hereto agree to execute an original
of this Amendment as well as any facsimile, telecopy or other reproduction
hereof.
3.9. AMENDMENT OF SENIOR FACILITY DOCUMENTS. Each Lender hereby consents to the
execution and delivery, by the Borrower and its Subsidiaries, of the amendment
or amendment and restatement of each of the Senior Facility Documents and the
Preferred Equity Documents entered into on the date hereof (and the transactions
contemplated thereby), a true, correct and complete copy of which has been
delivered by the Borrower to the Lenders and unconditionally, irrevocably and
expressly makes all necessary waivers regarding all of the transactions
contemplated herewith and therewith.
20
IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed as of the date and year first above written.
CHOICE ONE COMMUNICATIONS INC.,
as Borrower
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Executive Vice President
& Chief Financial Officer
[Signature Pages Continued]
21
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ SENIOR FUNDING, INC.,
as Administrative Agent and Lender
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Managing Director
WACHOVIA INVESTORS, INC., as Lender
By: /s/ ▇▇▇▇ ▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇
Title: Managing Director
CIBC INC., as Lender
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Managing Director