Exhibit 10.16.1
Execution Copy
_____________________________________________________________________________
SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
Dated as of August 4, 2000
Among
PAETEC COMMUNICATIONS, INC.,
PAETEC INTERNATIONAL, INC.,
PAETEC ONLINE, INC.,
PAETEC COMMUNICATIONS OF VIRGINIA, INC.,
PAETEC CAPITAL CORP.,
PINNACLE SOFTWARE CORPORATION,
DATA VOICE NETWORKS, INC.,
and
EAST FLORIDA COMMUNICATIONS, INC.
as Borrowers,
THE FINANCIAL INSTITUTIONS FROM TIME TO
TIME PARTIES HERETO,
as Lenders,
and
CANADIAN IMPERIAL BANK OF COMMERCE
as Administrative Agent for the Lenders,
and
CIT LENDING SERVICES CORPORATION,
as Collateral Agent for the Lenders,
BANKERS TRUST COMPANY
and
GENERAL ELECTRIC CAPITAL CORPORATION,
as Co-Syndication Agents
and
▇▇▇▇▇▇▇ ▇▇▇▇▇ CAPITAL CORPORATION
and
BEAR ▇▇▇▇▇▇▇ CORPORATE LENDING INC.
as Co-Agents
_____________________________________________________________________________
TABLE OF CONTENTS
Page
ARTICLE I
AMENDMENT AND RESTATEMENT; DEFINITIONS.............................................................. ........ 1
SECTION 1.01. Amendment and Restatement........................................................................... 2
SECTION 1.02. Definitions......................................................................................... 2
SECTION 1.03. Accounting Terms.................................................................................... 20
SECTION 1.04. Others Defined in New York Uniform Commercial Code.................................................. 20
SECTION 1.05. Supplemental Disclosure............................................................................. 21
ARTICLE II
LOANS AND LETTERS OF CREDIT.................................................................................. 21
SECTION 2.01. Agreement to Lend................................................................................... 21
SECTION 2.02 ..................................................................................................... 22
SECTION 2.03. Procedure for Loan Request and Borrowing Commitment................................................. 22
SECTION 2.04. The Notes........................................................................................... 24
SECTION 2.05. Interest on Loans................................................................................... 24
SECTION 2.06. Conversion or Continuation.......................................................................... 25
SECTION 2.07. Special Provisions Governing LIBOR Loans............................................................ 25
SECTION 2.08. Scheduled Payments.................................................................................. 27
SECTION 2.09. Optional and Mandatory Prepayment of Loans; Optional and Mandatory Reduction of Commitment Amount... 29
SECTION 2.10. Letters of Credit................................................................................... 30
SECTION 2.11. Fees................................................................................................ 35
SECTION 2.12. Borrower Payments, etc.; Special Tax Considerations................................................. 35
SECTION 2.13. Maximum Lawful Interest Rate........................................................................ 39
SECTION 2.14. Funding Issues...................................................................................... 39
SECTION 2.15. Joint and Several Liability; Contribution........................................................... 40
ARTICLE III
REPRESENTATIONS AND WARRANTIES............................................................................... 41
SECTION 3.01. Organization; Powers................................................................................ 41
SECTION 3.02. Corporate Authorization............................................................................. 41
SECTION 3.03. Financial Statements................................................................................ 42
SECTION 3.04. No Material Adverse Change.......................................................................... 42
SECTION 3.05. Litigation.......................................................................................... 42
SECTION 3.06. Tax Returns......................................................................................... 42
SECTION 3.07. No Defaults......................................................................................... 42
SECTION 3.08. Properties.......................................................................................... 43
SECTION 3.09. Licenses, Material Agreements, Intellectual Property................................................ 43
SECTION 3.10. Compliance With Laws................................................................................ 43
SECTION 3.11. ERISA............................................................................................... 43
SECTION 3.12. Investment Company Act; Public Utility Holding Company Act.......................................... 44
SECTION 3.13. Federal Reserve Regulations......................................................................... 44
SECTION 3.14. Collateral.......................................................................................... 44
SECTION 3.15. Chief Place of Business............................................................................. 45
SECTION 3.16. Other Corporate Names............................................................................... 45
SECTION 3.17. Insurance........................................................................................... 45
SECTION 3.18. Milestone Plan...................................................................................... 45
SECTION 3.19. Capitalization and Subsidiaries..................................................................... 45
SECTION 3.20. Real Property, Leases and Easements................................................................. 46
SECTION 3.21. Solvency............................................................................................ 46
SECTION 3.22. Brokers, etc........................................................................................ 46
SECTION 3.23. No Material Misstatements........................................................................... 46
SECTION 3.24. Year 2000 Issues.................................................................................... 46
SECTION 3.25. Switching Equipment................................................................................. 46
SECTION 3.26. Campuslink Property................................................................................. 47
ARTICLE IV
CONDITIONS FOR LOANS......................................................................................... 47
SECTION 4.01. Conditions Precedent to Initial Loan on or after the Closing Date................................... 47
SECTION 4.02. Conditions Precedent to All Loans and Letters of Credit............................................. 50
ARTICLE V
AFFIRMATIVE COVENANTS........................................................................................ 51
SECTION 5.01. Corporate and Franchise Existence................................................................... 51
SECTION 5.02. Compliance with Laws, Etc........................................................................... 52
SECTION 5.03. Maintenance of Properties........................................................................... 52
SECTION 5.04. Insurance........................................................................................... 52
SECTION 5.05. Obligations and Taxes............................................................................... 54
SECTION 5.06. Financial Statements, Reports, etc.................................................................. 54
SECTION 5.07. Litigation and Other Notices........................................................................ 56
SECTION 5.08. Mortgages; Landlord Consents; Licenses and Other Agreements......................................... 57
SECTION 5.09. ERISA............................................................................................... 57
SECTION 5.10. Access to Premises and Records...................................................................... 57
SECTION 5.11. Design and Construction............................................................................. 58
SECTION 5.12. Environmental Notices............................................................................... 58
SECTION 5.13. Amendment of Organizational Documents............................................................... 58
SECTION 5.14. Pledge Agreements................................................................................... 58
SECTION 5.15. Accounts Payable.................................................................................... 58
SECTION 5.16. Post-Closing Items.................................................................................. 58
SECTION 5.17. Fiscal Year......................................................................................... 59
SECTION 5.18. Reserved............................................................................................ 59
SECTION 5.19. Subsidiary Guarantees and Pledges................................................................... 59
SECTION 5.20. Accounting.......................................................................................... 59
SECTION 5.21. Landlord Letters of Credit.......................................................................... 59
SECTION 5.22. Pledge of East Florida Common Stock................................................................. 59
SECTION 5.23. Interest Rate Agreement............................................................................. 59
SECTION 5.24. Marcap Debt......................................................................................... 60
SECTION 5.25. Further Assurances.................................................................................. 60
ARTICLE VI
NEGATIVE COVENANTS........................................................................................... 60
ii
SECTION 6.01. Liens, etc.......................................................................................... 60
SECTION 6.02. Use of Proceeds..................................................................................... 62
SECTION 6.03. Sale of Assets, Consolidation, Merger, etc.......................................................... 62
SECTION 6.04. Dividends and Distributions; Sale of Equity Interests............................................... 62
SECTION 6.05. Management Fees and Permitted Corporate Overhead.................................................... 62
SECTION 6.06. Guarantees; Third Party Sales and Leases............................................................ 62
SECTION 6.07. Investments......................................................................................... 63
SECTION 6.08. Subsidiaries; Permitted Acquisitions................................................................ 63
SECTION 6.09. Permitted Activities................................................................................ 64
SECTION 6.10. Disposition of Licenses, etc........................................................................ 64
SECTION 6.11. Transactions with Affiliates........................................................................ 65
SECTION 6.12. ERISA............................................................................................... 65
SECTION 6.13. Indebtedness........................................................................................ 65
SECTION 6.14. Sale and Leaseback Transactions..................................................................... 66
SECTION 6.15. Margin Regulation................................................................................... 66
ARTICLE VII
FINANCIAL COVENANTS.......................................................................................... 66
SECTION 7.01. Financial Covenants on or Prior to September 30, 2002............................................... 67
SECTION 7.02. Financial Covenants on and After October 1, 2002.................................................... 68
ARTICLE VIII
COLLATERAL SECURITY.......................................................................................... 71
SECTION 8.01. Collateral Security................................................................................. 71
SECTION 8.02. Preservation of Collateral and Perfection of Security Interests Therein............................. 72
SECTION 8.03. Appointment of the Collateral Agent as the Borrowers' Attorney-in-Fact.............................. 72
SECTION 8.04. Collection of Accounts and Restricted Account Arrangements.......................................... 73
SECTION 8.05. Cure Rights......................................................................................... 73
ARTICLE IX
EVENTS OF DEFAULT; REMEDIES.................................................................................. 73
SECTION 9.01. Events of Default................................................................................... 74
SECTION 9.02. Termination of Commitment; Acceleration............................................................. 76
SECTION 9.03. Waivers............................................................................................. 76
SECTION 9.04. Rights and Remedies Generally....................................................................... 77
SECTION 9.05. Entry Upon Premises and Access to Information....................................................... 77
SECTION 9.06. Sale or Other Disposition of Collateral by the Administrative Agent or the Collateral Agent......... 77
SECTION 9.07. Governmental Approvals.............................................................................. 78
SECTION 9.08. Appointment of Receiver or Trustee.................................................................. 79
SECTION 9.09. Right of Setoff..................................................................................... 79
ARTICLE X
THE ADMINISTRATIVE AGENT AND THE COLLATERAL AGENT............................................................ 80
SECTION 10.01. Appointment of Administrative Agent................................................................ 80
iii
SECTION 10.02. Administrative Agent's Reliance, Etc............................................................... 81
SECTION 10.03. CIBC and Affiliates................................................................................ 81
SECTION 10.04. Lender Credit Decision............................................................................. 81
SECTION 10.05. Indemnification.................................................................................... 82
SECTION 10.06. Successor Agent.................................................................................... 82
SECTION 10.07. Payments; Non-Funding Lenders; Information; Actions in Concert..................................... 83
SECTION 10.08. Collateral Matters................................................................................. 84
SECTION 10.09. Agency for Perfection.............................................................................. 85
SECTION 10.10. Concerning the Collateral and the Related Loan Documents and the Collateral Agent.................. 85
ARTICLE XI
MISCELLANEOUS................................................................................................ 86
SECTION 11.01. Notices; Action on Notices, etc.................................................................... 86
SECTION 11.02. No Waivers; Amendments............................................................................. 87
SECTION 11.03. GOVERNING LAW AND JURISDICTION..................................................................... 88
SECTION 11.04. Expenses; Documentary Taxes........................................................................ 88
SECTION 11.05. Equitable Relief................................................................................... 88
SECTION 11.06. Indemnification; Limitation of Liability........................................................... 88
SECTION 11.07. Survival of Representations and Warranties, etc.................................................... 89
SECTION 11.08. Successors and Assigns; Assignments; Participations................................................ 89
SECTION 11.09. Severability....................................................................................... 92
SECTION 11.10. Cover Page, Table of Contents and Section Headings................................................. 93
SECTION 11.11. Counterparts....................................................................................... 93
SECTION 11.12. Application of Payments............................................................................ 93
SECTION 11.13. Marshalling; Payments Set Aside.................................................................... 93
SECTION 11.14. SERVICE OF PROCESS................................................................................. 93
SECTION 11.15. WAIVER OF JURY TRIAL, ETC.......................................................................... 93
SECTION 11.16. Confidentiality.................................................................................... 94
SECTION 11.17. Entire Agreement, etc.............................................................................. 94
SECTION 11.18. No Strict Construction............................................................................. 95
iv
EXHIBITS
EXHIBIT A Milestone Plan
EXHIBIT B Form of General Reaffirmation and Modification Agreement
EXHIBIT C Form of Accession Agreement
EXHIBIT D Form of Landlord Waiver
EXHIBIT E-1 Form of Revolving Loan Note
EXHIBIT E-2 Form of Term Loan Note
EXHIBIT F Form of Periodic Reporting Certificate
EXHIBIT G Form of Amended and Restated Guaranty
EXHIBIT H-1 Form of Notice of Borrowing
EXHIBIT H-2 Form of Notice of Continuation/Conversion
EXHIBIT I Financials
EXHIBIT J-1 Form of Secretary's Certificate of Borrower
EXHIBIT J-2 Form of Secretary's Certificate of Guarantor
EXHIBIT K-1 Form of Opinion of Borrowers' Special Counsel
EXHIBIT K-2 Form of Opinion of Borrowers' Regulatory Counsel
EXHIBIT L Form of Pledge Agreement
EXHIBIT M Form of Loss Payable Endorsement
EXHIBIT N Form of Restricted Account Agreement
EXHIBIT O Form of Assignment Agreement
EXHIBIT P Collateral Assignment of Leases
EXHIBIT Q Collateral Assignment of Licenses
v
SCHEDULES
SCHEDULE 3.02 Consents
SCHEDULE 3.05 Litigation
SCHEDULE 3.06 Taxes
SCHEDULE 3.08 Properties
SCHEDULE 3.09(a) Governmental Authorizations and Approvals
SCHEDULE 3.09(b) Material Agreements
SCHEDULE 3.09(c) Intellectual Property
SCHEDULE 3.10 Environmental Matters
SCHEDULE 3.11 Plans
SCHEDULE 3.14 Filing Offices
SCHEDULE 3.15 Chief Executive Office and Principal Place of Business
SCHEDULE 3.16 Corporate and Fictitious Names
SCHEDULE 3.17 Insurance
SCHEDULE 3.19 Capitalization and Subsidiaries
SCHEDULE 3.20 Real Property, Leased Real Property and Easements
SCHEDULE 3.25 Switching Equipment
SCHEDULE 3.26 Campuslink Property
SCHEDULE 5.16 Consents to Collateral Assignment
SCHEDULE 6.11 Transactions With Affiliates
SCHEDULE 8.04 Collection Accounts
vi
SECOND AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT ("Agreement")
---------
dated as of August 4, 2000 among PAETEC COMMUNICATIONS, INC., a Delaware
corporation ("PaeTec"), PAETEC INTERNATIONAL, INC., a Delaware corporation
------
("PaeTec International"), PAETEC ONLINE, INC., a Delaware corporation ("PaeTec
---------------------- ------
Online"), PAETEC COMMUNICATIONS OF VIRGINIA, INC., a Virginia corporation
------
("PaeTec Virginia"), PAETEC CAPITAL CORP., a Delaware corporation ("PaeTec
----------------- ------
Capital"), PINNACLE SOFTWARE CORPORATION, a New York corporation ("Pinnacle"),
------- --------
DATA VOICE NETWORKS, INC., a Delaware corporation ("DVN"), EAST FLORIDA
---
COMMUNICATIONS, INC., a Florida corporation ("Florida"; PaeTec, PaeTec
-------
International, PaeTec Online, PaeTec Virginia, PaeTec Capital, Pinnacle, DVN and
Florida being hereinafter collectively referred to hereinafter as the
"Borrowers"), the financial institutions from time to time parties thereto (the
---------
"Lenders"), CANADIAN IMPERIAL BANK OF COMMERCE as contractual representative for
-------
the Lenders ( in such capacity, the "Administrative Agent"), CIT LENDING
--------------------
SERVICES CORPORATION (f/k/a NEWCOURT COMMERCIAL FINANCE CORPORATION), as
collateral agent for the Lenders (in such capacity, the "Collateral Agent"), and
----------------
BANKERS TRUST COMPANY and GENERAL ELECTRIC CAPITAL CORPORATION, in their
capacities as Co-Syndication Agents (in such capacities, the "Co-Syndication
Agents").
RECITALS
A. The Borrowers (other than Pinnacle and DVN), the Lenders, Canadian
Imperial Bank of Commerce, as Administrative Agent for the Lenders, and CIT
Lending Services Corporation, as Collateral Agent for the Lenders, are parties
to a certain Amended and Restated Loan and Security Agreement dated as of
October 29, 1999, as amended pursuant to that certain Amendment No. 1 thereto
dated as of March 28, 2000 (such Amended and Restated Loan and Security
Agreement, as so amended being hereinafter referred to as the "Existing
--------
Agreement"), pursuant to which the Lenders have provided loans to the Borrowers
---------
(the "Existing Loans").
--------------
B. The Borrowers, the Lenders, the Administrative Agent and the
Collateral Agent have agreed to amend the Existing Agreement in certain
respects, to, among other things, increase the Commitment Amount to
$155,000,000, and to add Pinnacle and DVN as Borrowers, and have agreed to
execute this Agreement as a restatement of the Existing Agreement, in order to
incorporate such amendments and the Existing Agreement into a single document.
C. It is the intent of the parties hereto that the execution and
delivery of this Agreement, made for the purpose described in the immediately
preceding Recital, not effectuate a refinancing or novation of the Existing
Loans, but rather a modification to the terms governing the repayment of the
Existing Loans, which Existing Loans shall remain outstanding as Term Loans as
of the date hereof and remain secured by the "Collateral" referred to and
defined in the Existing Agreement.
ARTICLE I
AMENDMENT AND RESTATEMENT; DEFINITIONS
SECTION 1.01. Amendment and Restatement. The Borrowers, the
-------------------------
Administrative Agent, the Collateral Agent and the Lenders hereby agree that,
effective upon the execution and delivery of this Agreement by each such party:
(a) the terms and provisions of the Existing Agreement shall be and hereby are
amended, superseded and restated in their entirety by the terms and provisions
of this Agreement, except that any grant of security by any Borrower pursuant to
Section 8.01 of the Existing Agreement or Section 8.01 of the Prior Agreement
shall remain effective as of the date any such grant first became effective, and
(b) the Existing Loans shall constitute the initial outstanding Term Loans under
this Agreement and shall be payable solely in accordance with the terms of this
Agreement and any Loan Documents delivered pursuant hereto. No party hereto
shall have any obligations under the Existing Agreement, except to the extent
that any obligations thereunder may be restated in this Agreement or the other
Loan Documents. The Borrowers, the Administrative Agent, the Collateral Agent
and the Lenders agree that the execution and delivery of this Agreement shall
not effectuate a novation or refinancing of the Existing Loans, but rather a
substitution of certain of the terms governing the payment and performance of
the Existing Loans.
SECTION 1.02. Definitions. As used in this Agreement, the following
-----------
words and terms shall have the meanings specified below:
"Accession Agreement" shall mean an agreement substantially in the
-------------------
form of Exhibit C hereto.
---------
"Accounts" shall mean all present and future rights of any Borrower to
--------
payment for goods sold or leased or for services rendered which are not
evidenced by instruments or chattel paper, and whether or not they have been
earned by performance.
"Affiliate" shall mean any Person other than any Lender or Borrower
---------
directly or indirectly controlling, controlled by or under common control with
any Borrower and any officer or shareholder of such Person or any Borrower,
which shareholder beneficially owns at least ten percent (10%) of the Equity
Interests of such Person or any Borrower. For the purposes of this definition,
"control" (including, with correlative meanings, the terms "controlling,"
"controlled by", and "under common control with"), as used with respect to any
Person, means the possession, directly or indirectly, of the power to direct or
cause the direction of the management or policies of such Person, whether
through the ownership of voting securities, by agreement or otherwise; provided,
--------
however, that beneficial ownership of at least 10% of the Equity Interests of a
-------
Person shall be deemed to constitute control.
"Agents" shall mean collectively, the Administrative Agent, the
------
Collateral Agent and the Co-Syndication Agents.
"Aggregate Principal Amount" shall mean the amount equal to the total
--------------------------
outstanding principal amount of the Term Loans determined on the Term Loan
Commitment Termination Date.
"Aggregate Utilization" shall mean at any given time, the sum of the
---------------------
principal amounts of the Existing Loans made under the Existing Agreement prior
to the Closing Date, without giving effect to any repayments thereof.
2
"Applicable Margin" shall mean, with respect to the LIBO Rate or the
-----------------
Base Rate (a) at any time when EBITDA for the Borrowers on a combined basis is
less than zero, 3.25% for Base Rate Loans and 4.25% for LIBOR Loans, and (b) at
any time when EBITDA for the Borrowers on a combined basis is greater than or
equal to zero, the percentage per annum set forth below which corresponds to the
Consolidated Leverage Ratio on such date:
▇▇▇▇▇ ▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇ Level V
-----------------------------------------------------------------------------------------------------------------------------------
Consolidated CLR greater than CLR less than CLR less than 8.0 to CLR less than 6.0 to CLR less than
Leverage or equal to 10.0 10.0 to 1.0 but 1.0 but greater than 1.0 but greater than 4.0 to 1.0
Ratio ("CLR") to 1.0 greater than or or equal to 6.0 to 1.0 or equal to 4.0 to 1.0
equal to 8.0 to 1.0
-----------------------------------------------------------------------------------------------------------------------------------
Applicable Margin 3.00% 2.75% 2.50% 2.25% 2.00%
for Base Rate
-----------------------------------------------------------------------------------------------------------------------------------
Applicable Margin 4.00% 3.75% 3.50% 3.25% 3.00%
for LIBO Rate
Upon receipt of the financial statements delivered pursuant to Section 5.06(b),
---------------
the Applicable Margin in connection with any Loan shall be adjusted, such
adjustment being effective five (5) Business Days following the Administrative
Agent's receipt of such financial statements; provided, that if the Borrower
--------
shall not have timely delivered its financial statements in accordance with
Section 5.06(b), then commencing on the date on which such financial statements
---------------
should have been delivered and continuing until the date on which such financial
statements are actually delivered, it shall be assumed for purposes of
determining the Applicable Margin that EBITDA was less than zero and the pricing
set forth in clause (a) above shall be applicable, unless on the date such
financial statements are due the pricing is at Level II or at a higher Level, in
which case the pricing will reset on such date to one Level lower than the
pricing then in effect until the date on which such financial statements are
actually delivered.
"Assignment Agreement" shall mean an assignment agreement entered into
--------------------
in connection with an assignment pursuant to Section 11.08 hereof substantially
-------------
in the form of Exhibit O hereof.
---------
"Bankruptcy Code" shall have the meaning given to such term in Section
--------------- -------
2.15(b).
-------
"Base Rate" shall mean, with respect to any calendar quarter, the per
---------
annum rate equal to the sum of (a) the Applicable Margin for Base Rate Loans
plus (b) the higher of (i) the Reference Bank Base Rate on the first Business
----
Day of such calendar quarter and (ii) the sum of the Federal Funds Effective
Rate plus one-half percent (0.50%) per annum.
"Base Rate Loan" shall mean a Loan, or portion thereof, during any
--------------
period in which it bears interest at a rate based upon the Base Rate.
"Base Rate Revolving Loan" shall mean a Revolving Loan during any
------------------------
period for which it is a Base Rate Loan.
3
"Base Rate Term Loan" shall mean any portion of the Term Loans during
-------------------
any period for which such portion is a Base Rate Loan.
"Benefit Plan" shall mean a defined benefit plan as defined in Section
------------
3(35) of ERISA (other than a Multiemployer Plan) in respect of which any
Borrower or any ERISA Affiliate is, or within the immediately preceding six (6)
years was, an "employer" as defined in Section 3(5) of ERISA.
"Borrower" shall mean any of PaeTec, PaeTec International, PaeTec
--------
Online, PaeTec Virginia, PaeTec Capital, Pinnacle, DVN, Florida and any
Subsidiary of any of the foregoing or of the Guarantor that enters into an
Accession Agreement, is acceptable to the Requisite Lenders, and the outstanding
Equity Interests of which are pledged to the Collateral Agent pursuant to a
pledge agreement substantially in the form of Exhibit L attached hereto.
---------
"Borrowing Base" shall mean the sum of (i) $10,000,000 and (ii) the
--------------
aggregate cost of Telecommunications Equipment purchased by and delivered to the
Borrowers on or after February 1, 2000 or financed under the Existing Agreement.
"Business" shall mean, with respect to any Borrower, the business of
--------
constructing, operating and maintaining the Systems owned by such Borrower and
all operations related thereto or in support thereof.
"Business Day" shall mean (a) any day not a Saturday, Sunday or legal
------------
holiday in the State of New York or New Jersey, on which banks are open for
business in New York and New Jersey and (b) with respect to all notices,
determinations, fundings and payments in connection with the LIBO Rate or LIBOR
Loans, any day that is a Business Day pursuant to clause (a) above and that is
also a day on which trading is carried on by and between banks in the London
interbank market.
"Capitalization" shall mean the amount at any time of the sum of
--------------
Consolidated Debt plus Funded Equity of the Guarantor without taking into
account operating losses.
"Capitalized Lease Obligations" shall mean Debt represented by
-----------------------------
obligations under a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP, and the amount of such Debt shall be
the capitalized amount of such obligations determined in accordance with GAAP.
"Change of Control" shall mean (A) ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ceases to have
-----------------
senior management responsibilities with respect to the Borrowers or the
Guarantor, (B) four or more of the Key Employees cease to have senior management
responsibilities with respect to the Borrowers or the Guarantor at any time
during the period commencing on the Closing Date and ending on the second
anniversary thereof, (C) the Guarantor no longer beneficially owns and controls
(i) all of the outstanding Equity Interests of each Borrower other than PaeTec
Online, or (ii) at least ninety-five (95%) of the outstanding Equity Interests
of PaeTec Online, (D) prior to the date of the consummation of an initial public
offering of common stock of the Guarantor pursuant to a firm commitment
underwriting registered under the Securities Act of 1933 that provides the
Guarantor with net cash proceeds of at least $75,000,000 (a "Qualified Public
Offering"), which net cash proceeds are used solely to make cash capital
contributions to the
4
Borrowers, the Existing Stockholders cease to beneficially own and control at
least 41% of the Voting Power of the Voting Stock of the Guarantor on a fully
diluted basis or a "person" or "group" (within the meaning of Sections 13(d) and
14(d)(2) of the Exchange Act) other than the Existing Stockholders becomes the
ultimate "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act) of
a percentage of the total voting power of the Voting Stock of the Guarantor on a
fully diluted basis which represents a greater percentage of the total Voting
Power of the Voting Stock of the Guarantor, on a fully diluted basis, than is
held by the Existing Stockholders on such date, (E) on and after the date of the
consummation of a Qualified Public Offering, the net cash proceeds of which are
used solely to make cash capital contributions to the Borrowers, any "person" or
"group" (within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act)
other than the Existing Stockholders becomes the ultimate "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act) of more than 30% of the total
voting power of the Voting Stock of the Guarantor on a fully diluted basis
unless at all times the Existing Stockholders beneficially own 5% more of the
total voting power of the Voting Stock of the Guarantor on a fully diluted basis
than such person or group, (F) individuals who on the Closing Date constitute
the Board of Directors of the Guarantor (together with any new directors whose
election by the Board of Directors or whose nomination by the Board of Directors
for election by the Guarantor's stockholders was approved by a vote of at least
a majority of the members of the Board of Directors then in office who either
were members of the Board of Directors on the Closing Date or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the members of the Board of Directors of the Guarantor
then in office, or (G) Madison Dearborn Capital Partners III, L.P., Madison
Dearborn Special Equity III, L.P., Special Advisors Fund I, LLC and their Equity
Affiliates, and Blackstone CCC Capital Partners L.P., Blackstone CCC Offshore
Capital Partners L.P., Blackstone Family Investment Partnership III L.P. and
their Equity Affiliates cease to beneficially own and control in the aggregate
at any time on or prior to the first anniversary of the Closing Date at least
(i) prior to the date of a Qualified Public Offering, the net cash proceeds of
which are used solely to make cash capital contributions to the Borrowers, 25%
of the outstanding Equity Interests of the Guarantor , and (ii) thereafter, the
amount of Equity Interests described in clause (i) above as diluted after giving
effect to the Qualified Public Offering.
"CIBC" shall mean Canadian Imperial Bank of Commerce in its individual
----
capacity, and its successors and assigns.
"CIT LSC" shall mean CIT Lending Services Corporation, in its
-------
individual capacity, and its successors and assigns.
"Closing Date" shall mean the date on which this Agreement is executed
------------
and delivered by the parties hereto.
"Collateral" shall mean, all property and interests in property now
----------
owned or hereafter acquired by any Borrower in or upon which a security
interest, lien or mortgage is granted to the Collateral Agent by any Borrower,
whether under this Agreement or the other Loan Documents.
"Collateral Assignments of Leases" shall mean (i) that certain
--------------------------------
Collateral Assignment of Leases dated as of November 16, 1998 among PaeTec,
International and the
5
Collateral Agent, as amended, modified, supplemented and restated from time to
time and (ii) that certain Collateral Assignment of Leases dated as of September
8, 1999 among the other Borrowers and the Collateral Agent, as amended modified
supplemented and restated from time to time, copies of which are attached as
Exhibit P hereto.
---------
"Collateral Assignment of Licenses" shall mean (i) that certain
---------------------------------
Collateral Assignment of Licenses dated as of November 16, 1998 among PaeTec,
International and the Collateral Agent, as amended, modified, supplemented and
restated from time to time and (ii) that certain Collateral Assignment of
Licenses dated as of September 8, 1999 among the other Borrowers and the
Collateral Agent, as amended, modified, supplemented and restated from time to
time, copies of which are attached as Exhibit Q hereto.
---------
"Collection Accounts" and "Collection Agent" shall have the meanings
------------------------------------------
given to such terms in Section 8.04 hereof.
------------
"Commitment" shall mean Lenders' commitment to lend as set forth in
----------
Section 2.01 hereof.
------------
"Commitment Amount" shall mean, (a) as to any Lender, the aggregate of
-----------------
such Lender's Revolving Loan Commitment Amount and Term Loan Commitment Amount
as set forth opposite such Lender's name on Annex A to this Agreement or in the
-------
most recent Assignment Agreement executed by such Lender, and (b) as to all
Lenders, the aggregate of all Lenders' Revolving Loan Commitment Amounts and
Term Loan Commitment Amounts as set forth on Annex A to this Agreement, which
-------
aggregate commitment shall be One Hundred Fifty Five Million Dollars
($155,000,000) on the Closing Date, in each case as such amount may be adjusted
from time to time pursuant to the terms of this Agreement.
"Common Stock" shall mean with respect to any Person, all Equity
------------
Interests of such Person that are generally entitled to (i) vote in the election
of directors of such Person or (ii) if such Person is not a corporation, vote or
otherwise participate in the selection of the governing body, partners, managers
or others that will control the management and policies of such Person.
"Consolidated" or "consolidated" refers, with respect to any Person,
------------ ------------
to the consolidation of the accounts of such Person and its Subsidiaries, if
any, in accordance with GAAP.
"Consolidated Debt" shall mean, at any date, all Debt of the Guarantor
-----------------
and its Subsidiaries calculated on a consolidated basis in accordance with GAAP
on such date.
"Consolidated Leverage Ratio" shall mean, for any fiscal quarter, the
---------------------------
ratio of (i) Consolidated Debt as of the last day of such fiscal quarter, to
(ii) EBITDA of the Borrowers on a combined basis, for the two fiscal quarter
period ending on such day, multiplied by two.
"Contaminant" shall mean any pollutant, hazardous substance, toxic
-----------
substance, hazardous waste, special waste, petroleum or petroleum derived
substance or waste, or any constituent of any such substance or waste.
6
"Co-Syndication Agents" shall mean Bankers Trust Company and General
---------------------
Electric Capital Corporation.
"Debt" shall mean, with respect to any Person, (i) indebtedness for
----
borrowed money, (ii) obligations evidenced by bonds, debentures, notes or other
similar instruments, (iii) obligations which have been incurred in connection
with the acquisition of property or services (including, without limitation,
obligations to pay the deferred purchase price of property or services),
excluding trade payables and accrued expenses incurred in the ordinary course of
business, (iv) obligations as lessee under leases which shall have been or
should be, in accordance with GAAP, recorded as capital or operating leases (it
being assumed with respect to operating leases that the present value of the
rental payments thereunder is determined by discounting such payments at a rate
per annum equal to the sum of LIBOR on the date of determination plus four
percent (4.00%)), (v) all Guarantees of such Person, including, without
limitation, Debt of any other Person secured by a Lien on any property of such
Person, (vi) all reimbursement obligations, contingent or otherwise, with
respect to letters of credit and banker's acceptances issued for the account of
any Borrower, and (vii) all indebtedness, obligations or other liabilities in
respect of any Interest Rate Agreement, provided that the amount outstanding at
--------
any time of any Debt issued with original issue discount is the principal amount
of such Debt less the remaining unamortized portion of the original issue
discount of such Debt at such time as determined in conformity with GAAP, and
that Debt shall not include any liability for Federal, state, local or other
taxes. Notwithstanding any other provision of the foregoing definition, any
trade payable arising from the purchase of goods or materials or for services
obtained in the ordinary course of business shall not be deemed to be "Debt" of
any Borrower for purposes of this definition. Furthermore, guarantees of (or
obligations with respect to letters of credit supporting) Debt otherwise
included in the determination of such amount shall not also be included.
"Debt Service" shall mean the amount determined as of the last day of
------------
any fiscal quarter equal to the sum of (i) scheduled principal and interest
payments with respect to Debt for borrowed money of the Borrowers for the two
(2) fiscal quarters then ending, multiplied by two plus (ii) scheduled implicit
----
principal and interest payments of the Borrowers with respect to capital and
operating leases for the two (2) fiscal quarters then ending, multiplied by two.
"Default" shall mean any event which but for the passage of time or
-------
giving of notice would constitute an Event of Default.
"Dollars" or "$" shall mean lawful money of the United States of
------- -
America.
"Easements" shall have the meaning given to such term in Section 3.20
--------- ------------
hereof.
"EBITDA" shall mean, with respect to any Person, for any period, an
------
amount equal to (i) Net Income plus (ii) the sum of the following, to the extent
----
deducted in determining Net Income: (A) income and franchise taxes, (B)
interest expense, (C) amortization, depreciation and other non-cash charges,
minus (iii) the sum of interest income plus extraordinary gains, as determined
-----
in accordance with GAAP as calculated at the end of such period.
7
"Environmental Laws" shall mean all federal, state and local laws,
------------------
rules, regulations, ordinances, programs, permits, guidance, orders and consent
decrees or other binding determination of any Public Authority relating to
health, safety, hazardous substances, and environmental matters applicable to a
Borrower and/or its business and facilities (whether or not owned by it). Such
laws and regulations include but are not limited to the Resource Conservation
and Recovery Act, 42 U.S.C. (S) 6901 et seq., as amended; the Comprehensive
-- ----
Environmental Response, Compensation and Liability Act, 42 U.S.C. (S) 9601 et
--
seq., as amended; the Toxic Substances Control Act, 15 U.S.C. (S) 2601 et seq.,
---- -- ----
as amended; the Clean Water Act, 42 U.S.C. (S) 466 et seq., as amended; the
-- ----
Clean Air Act, 46 U.S.C. (S) 7401 et seq., as amended; state and federal lien
-- ----
and environmental cleanup programs; the Occupational Safety and Health Act, 29
U.S.C. (S) 651 et seq.; and U.S. Department of Transportation regulations, each
-- ----
as from time to time hereafter in effect.
"Equity Affiliate" shall mean, as applied to any Person, any other
----------------
Person directly or indirectly controlling, controlled by, or under direct or
indirect common control with, such Person. For purposes of this definition,
"control" (including, with correlative meanings, the terms "controlling",
"controlled by" and "under common control with"), as applied to any Person,
means the possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of such Person, whether through the
ownership of voting securities, by contract or otherwise.
"Equity Interest" shall mean, with respect to any Person, any and all
---------------
shares or other equivalents (however designated) of capital stock, membership
units, partnership interests or any other participation right or other interest
in the nature of an equity interest in such Person or any option, warrant or
other security convertible into any of the foregoing.
"ERISA" shall mean the Employee Retirement Income Security Act of
-----
1974, as amended from time to time.
"ERISA Affiliate" shall mean (i) any corporation which is a member of
---------------
the same controlled group of corporations (within the meaning of Section 414(b)
of the IRC) as any Borrower, (ii) any partnership or other trade or business
(whether or not incorporated) under common control (within the meaning of
Section 414(c) of the IRC) with any Borrower and (iii) any member of the same
affiliated service group (within the meaning of Section 414(m) of the IRC) as
any Borrower, any corporation described in clause (i) above or any partnership
or trade or business described in clause (ii) above.
"Eurocurrency Liabilities" shall have the meaning assigned to that
------------------------
term in Regulation D of the Federal Reserve Board, as in effect from time to
time.
"Event of Default" shall have the meaning given to such term in
----------------
Article IX hereof.
----------
"Event of Loss" shall mean, with respect to any item of Collateral,
-------------
the actual or constructive loss of such item of Collateral or the use thereof,
due to theft, destruction, damage beyond repair or damage from any reason
whatsoever, to an extent which makes repair uneconomical, or rendition thereof
unfit for normal use, or the condemnation, confiscation or
8
seizure of, or requisition of title to or use of, such item of Collateral by any
Governmental Authority or any other Person, acting under or deemed to be acting
under color of any Governmental Authority.
"Excess Cash Flow" shall mean for any fiscal year, Net Income of the
----------------
Borrowers plus non-cash interest expense, depreciation and amortization and any
other non-cash items of the Borrowers, minus scheduled principal payments of the
Borrowers to Lenders, lease payments and capital expenditures of the Borrowers.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
------------
amended from time to time.
"Existing Agreement" shall have the meaning given to such term in the
------------------
introductory paragraphs of this Agreement.
"Existing Loans" shall have the meaning given to such term in the
--------------
introductory paragraphs of this Agreement.
"Existing Stockholders" shall mean ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and shall
---------------------
include his Equity Affiliates and any lineal descendant and/or any member of
each of the foregoing Person's immediate family and/or any trusts established
for the benefit of such Person.
"FCC" shall mean the Federal Communications Commission or any
---
successor commission or agency of the United States of America having
jurisdiction over any Borrower or any System.
"Federal Funds Effective Rate" shall mean, for any period, a
----------------------------
fluctuating interest rate per annum equal for each day during such period to (a)
the weighted average of the rates on overnight federal funds transactions with
members of the Federal Reserve System arranged by federal funds brokers, as
published for such day (or if such day is not a Business Day, for the preceding
Business Day) by the Federal Reserve Bank of New York in the Composite Closing
Quotations for U.S. Government Securities; or (b) if such rate is not so
published for any day which is a Business Day, the average of the quotations at
approximately 10:30 a.m. (New York time) for such day on such transactions
received by the Reference Bank from three federal funds brokers of recognized
standing selected by it.
"Federal Reserve Board" shall mean the Board of Governors of the
---------------------
Federal Reserve System or any successor thereto.
"Fee Letters" shall mean (i) that certain letter agreement dated as of
-----------
July 14, 2000 among CIBC, CIT LSC, General Electric Capital Corporation, Bankers
Trust Company, Capital Syndication Corporation, CIBC World Markets Corp.,
Deutsche Bank Securities Inc., the Borrowers and the Guarantor, and (ii) that
certain letter agreement dated as of July 14, 2000 among CIBC, CIT LSC, Capital
Syndication Corporation, CIBC World Markets Corp., the Borrowers and the
Guarantor.
"Financials" shall have the meaning given to such term in Section
---------- -------
3.03.
----
9
"Fixed Charges" shall mean, with respect to any period, the sum of the
-------------
following amounts calculated at the end of such period without duplication with
respect the Borrowers and the Guarantor, and determined on a combined,
consolidated basis and in accordance with GAAP: (i) scheduled principal and
interest payments with respect to Debt for borrowed money; (ii) scheduled
implicit principal and interest payments with respect to capital and operating
leases; (iii) capital expenditures; and (iv) tax expenses paid in cash.
"Funded Equity" shall mean with respect to the Guarantor at any date
-------------
of determination, all proceeds of the sale of Equity Interests received by the
Guarantor directly or as a result of capital contributions.
"Funding Date" shall mean the date upon which, subject to the
------------
satisfaction of all conditions precedent contained in Sections 4.01 and 4.02,
------------- ----
the initial Loans made on or after the Closing Date, shall be funded.
"General Reaffirmation" shall mean the General Reaffirmation and
---------------------
Modification Agreement of even date herewith among the Borrowers, the Guarantor
and the Collateral Agent, substantially in the form of Exhibit B hereto.
"Governmental Approval" shall mean, with respect to any Borrower, any
---------------------
license, permit or certificate of public convenience and necessity issued or
required to be issued to any Borrower by the FCC, any PUC or any other
Governmental Authority in connection with any System.
"Governmental Authority" shall mean any United States federal, state,
----------------------
local or other political subdivision thereof and any United States or foreign
entity exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
"Guarantee" shall mean any obligation, contingent or otherwise, of any
---------
Person guaranteeing any indebtedness of any other Person (the "Primary Obligor")
in any manner, whether directly or indirectly, and including any obligation of
such Person, direct or indirect, (i) to purchase or pay (or advance or supply
funds for the purchase or payment of) such indebtedness or to purchase (or to
advance or supply funds for the purchase of) any security for the payment of
such indebtedness; (ii) to purchase property, securities or services for the
purpose of assuring the owner of such indebtedness of the payment of such
indebtedness; or (iii) to maintain working capital, equity capital or other
financial statement condition of the Primary Obligor so as to enable the Primary
Obligor to pay such indebtedness.
"Guarantor" shall mean PaeTec Corp., a Delaware corporation.
---------
"Guaranty" shall mean that certain Amended and Restated Guaranty dated
--------
as of October 29, 1999, executed by the Guarantor in favor of the Collateral
Agent, substantially in the form of Exhibit G hereto, as amended pursuant to the
---------
terms of the General Reaffirmation, and as may be further amended or modified
from time to time.
"Interest Expense" shall mean for any period, the total interest
----------------
expense (including, without limitation, interest expense attributable to capital
leases) determined on a combined basis, without duplication for the Borrowers in
accordance with GAAP.
10
"Interest Period" shall mean, with respect to each LIBOR Loan, the
---------------
interest period applicable to such LIBOR Loan as set forth in the applicable
Notice of Borrowing or Notice of Conversion/Continuation.
"Interest Rate Agreement" shall mean for any Person, any interest rate
-----------------------
swap agreement, interest rate cap agreement, interest rate collar agreement or
other similar agreement designed to protect the party indicated therein against
fluctuations in interest rates.
"Investment" shall mean, as applied to any Person, any direct or
----------
indirect purchase or other acquisition by that Person of securities, or of a
beneficial interest in securities, of any other Person, and any direct or
indirect loan, advance (other than deposits with financial institutions
available for withdrawal on demand, prepaid expenses, advances to employees,
officers and directors and similar items, each made or incurred in the ordinary
course of business), or capital contribution by that Person to any other Person,
including all Debt of such other Person to that Person, but excluding accounts
owed by that other Person in the ordinary course of business. Investments shall
exclude (i) extensions of trade credit on commercially reasonable terms in
accordance with normal trade practices and (ii) the repurchase of securities of
any Person by such Person. The amount of any Investment shall be determined in
conformity with GAAP.
"IRC" shall mean the Internal Revenue Code of 1986, as amended from
---
time to time, and the rules and regulations promulgated thereunder, and any
successor statutes or rules and regulations.
"IRS" shall mean the Internal Revenue Service or any successor agency.
---
"Key Employees" shall mean ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇,
-------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇.
"Landlord L/C" shall have the meaning given to such term in Section
------------ -------
5.21 hereof.
----
"Leased Real Property" shall have the meaning given to such term in
--------------------
Section 3.20 hereof.
------------
"Lending Office" shall mean with respect to a Lender or the
--------------
Administrative Agent, any office, branch, subsidiary or affiliate of such Lender
or the Administrative Agent.
"Letter of Credit" shall mean a standby letter of credit issued for
----------------
the account of a Borrower pursuant to Section 2.10.
------------
"Letter of Credit Obligations" shall mean without duplication, the sum
----------------------------
of the aggregate maximum undrawn face amount of all outstanding Letters of
Credit and unpaid reimbursement obligations with respect to all Letters of
Credit.
"LIBOR" shall mean, a rate of interest equal to the per annum rate
-----
equal to the one, three or six-month "London Interbank Offered Rate", as
applicable based on the tenor of the applicable Interest Period for such Loan,
displayed on the Telerate Screen Page 3750 or any successor service on the
applicable LIBOR Interest Rate Determination Date. In the event that
11
such rate is not displayed or published, the Administrative Agent shall
determine the applicable one, three or six-month "London Interbank Offered Rate"
using such means as it deems appropriate to reasonably approximate the interest
rate at which deposits in U.S. dollars having a maturity of one, three or six-
months, as applicable, are offered in London, England to prime banks in the
London interbank market.
"LIBOR Interest Payment Date" shall mean, with respect to a LIBOR
---------------------------
Loan, the last day of each Interest Period applicable to such Loan, and, if such
Interest Period has a duration of more than three months, on each day which
occurs during such Interest Period every three months from the first day of such
Interest Period.
"LIBOR Interest Rate Determination Date" shall mean each date of
--------------------------------------
calculating the LIBO Rate for purposes of determining the interest rate with
respect to an Interest Period. The LIBOR Interest Rate Determination Date for
any LIBOR Loan shall be the second Business Day prior to the first day of the
related Interest Period for such LIBOR Loan.
"LIBOR Loan" shall mean a Loan, or portion thereof, during any period
----------
in which it bears interest at a rate based upon the LIBO Rate.
"LIBO Rate" shall mean, for any Interest Period, a rate per annum
---------
determined in accordance with the following formula (rounded upward to the
nearest 1/100th of 1%, if necessary):
The Applicable Margin + LIBOR
------------------------------
1.00 - LIBOR Reserve Percentage
"LIBOR Reserve Percentage" shall mean, for any day for any Interest
------------------------
Period, the maximum reserve percentage (expressed as a decimal, rounded upward
to the next 1/100th of 1.0%) in effect on such day (whether or not applicable to
any Lender) for United States domestic banks under regulations issued from time
to time by the Federal Reserve Board for determining the maximum reserve
requirement (including any emergency, supplemental or other marginal reserve
requirement) with respect to Eurocurrency Liabilities having a term comparable
to such Interest Period.
"LIBOR Revolving Loan" shall mean a Revolving Loan during any period
--------------------
for which it is a LIBOR Loan.
"LIBOR Term Loan" shall mean any portion of the Term Loans during any
---------------
period for which such portion is a LIBOR Loan.
"Lien" shall mean any mortgage, pledge, deed of trust, assignment,
----
lien, charge, encumbrance or security interest of any kind, or the interest of a
vendor or lessor under any conditional sale agreement, capital lease or other
title retention agreement, but excluding easements, rights of way or similar
encumbrances on real property which are in the ordinary course and which do not
materially affect the value, use and insurability of title of such real
property.
12
"Loan" shall mean a Revolving Loan or a Term Loan and each Existing
----
Loan.
"Loan Documents" shall mean this Agreement, the Existing Agreement,
--------------
each "Loan Document" under and as defined in the Existing Agreement, the General
Reaffirmation, the Collateral Assignments of Leases, the Collateral Assignments
of Licenses, the Letters of Credit, the Mortgages, the Notes, the Pledge
Agreements, the Guaranty, the Fee Letters, all other agreements, instruments and
documents, including, without limitation, security agreements, loan agreements,
notes, guarantees, mortgages, deeds of trust, subordination agreements, pledges,
trademark security agreements, powers of attorney, consents, assignments,
contracts, notices, leases, financing statements, Interest Rate Agreements
between the Borrower and the Administrative Agent, the Collateral Agent or any
Lender or any affiliate of any of the foregoing, reaffirmations by any Borrower
or the Guarantor, and all other written matter whether heretofore, now, or
hereafter executed by or on behalf of any Borrower or any other Person in
connection with the transactions contemplated hereby and delivered to the
Administrative Agent, the Collateral Agent or the Lenders, including, without
limitation, all amendments, restatements, waivers, consents, reaffirmations and
other modifications to any of the foregoing, together with all agreements and
documents referred to therein or contemplated thereby.
"Lucent" shall mean Lucent Technologies Inc.
------
"Lucent Purchase Agreement" shall mean an agreement between any
-------------------------
Borrower and Lucent for the purchase of Telecommunications Equipment, on terms
and conditions satisfactory to the Requisite Lenders.
"Marcap Agreement" shall mean that certain Master Lease Agreement
----------------
dated as of July 29, 1998 between Campuslink Communications Systems, Inc. (now
merged into PaeTec) and Marcap Corporation.
"Material Adverse Effect" shall mean, with respect to any Person, a
-----------------------
material adverse effect upon the condition (financial or otherwise), operations,
properties or prospects of such Person, or upon the ability of such Person to
perform under the Loan Documents.
"Maximum Rate" shall have the meaning given to such term in Section
------------ -------
2.13 hereof.
----
"Milestone Plan" shall mean that certain PaeTec $155,000,000 Financing
--------------
Plan of the Borrowers, a copy of which has been furnished to the Administrative
Agent pursuant to the Non Disclosure Agreement and is attached hereto as Exhibit
-------
A. Such Milestone Plan may be amended from time to time with the prior written
-
consent of the Requisite Lenders.
"Mortgages" shall mean mortgages or deeds of trust in favor of the
---------
Collateral Agent, with respect to any Borrower's (i) owned real property and
(ii) other interests in those items of real property and Easements, as specified
by the Collateral Agent, which mortgages and deeds of trust shall be in form and
substance satisfactory to the Collateral Agent.
"Multiemployer Plan" shall mean a "multiemployer plan" as defined in
------------------
Section 4001(a)(3) of ERISA which is, or within the immediately preceding six
(6) years was, contributed to by any Borrower or an ERISA Affiliate.
13
"Net Income" shall mean, with respect to any Person for any period,
----------
the net income (loss) of such Person determined in accordance with GAAP.
"Non Disclosure Agreement" shall have the meaning given such term in
------------------------
Section 11.17.
-------------
"Note" shall mean any Revolving Loan Note or any Term Loan Note.
----
"Notice of Borrowing" shall mean a notice substantially in the form of
-------------------
Exhibit H-1 attached hereto.
-----------
"Notice of Conversion/Continuation" shall have the meaning given to
---------------------------------
such term in Section 2.06(b).
---------------
"Obligations" shall mean all the payment, performance and
-----------
indemnification obligations, covenants and duties of any Borrower now or
hereafter existing under this Agreement or any other Loan Document to which any
Borrower is a party, whether for principal, interest, fees, expenses,
reimbursement, indemnification, performance or otherwise. Obligations shall
include all interest which accrues after the commencement of any case or
proceeding in bankruptcy after the insolvency of, or for the reorganization of
any Borrower, whether or not allowed in such proceeding.
"Operating Leverage Ratio" shall mean, as of the last day of each
------------------------
fiscal quarter, the ratio of (i) Senior Debt of the Borrowers as of such day to
(ii) combined EBITDA of the Borrowers for the two fiscal quarter period ending
on such day, multiplied by two.
"Payment Account" shall mean the Administrative Agent's Account No.
---------------
▇▇▇-▇▇▇▇-▇▇▇ at Bank of New York, New York, New York, ABA# ▇▇▇-▇▇▇-▇▇▇, for
further credit to Agented Loans Account. No. 07-09611, Attention: Agency
Services, reference PaeTec.
"Payment Date" shall mean the last day of March, June, September and
------------
December in each calendar year, but if any such date is not a Business Day, the
next preceding Business Day, commencing September 30, 2000.
"PBGC" shall mean the Pension Benefit Guaranty Corporation referred to
----
and defined in ERISA.
"Periodic Reporting Certificate" shall mean a periodic reporting
------------------------------
certificate in the form of Exhibit F attached hereto.
---------
"Permitted Assignee" shall mean any bank or other financial
------------------
institution engaged in the business of lending (or making other financial
accommodations) to entities similar to the Borrowers and which has a tangible
net worth of not less than $50,000,000.
"Permitted Acquisition" shall have the meaning set forth in Section
--------------------- -------
6.08 hereof.
----
"Permitted Liens" shall have the meaning set forth in Section 6.01
--------------- ------------
hereof.
14
"Person" shall mean any natural person, corporation, division of a
------
corporation, business trust, joint venture, association, company, partnership,
unincorporated organization or other legal entity, or a government or any agency
or political subdivision thereof.
"Plan" shall mean any employee benefit plan as defined in Section 3(3)
----
of ERISA (other than a Multiemployer Plan) in respect of which any Borrower or
any ERISA Affiliate is, or within the immediately preceding six (6) years was,
an "employer" as defined in Section 3(5) of ERISA.
"Pledge Agreement" shall mean a pledge agreement substantially in the
----------------
form of the pledge agreements executed and delivered pursuant to the Existing
Agreement, copies of which are attached as Exhibit L hereto.
---------
"Principal Payments" shall mean, for any period, total required
------------------
amortization (including, without limitation, the principal payments attributable
to capital leases and operating leases) determined on a combined basis, without
duplication, for the Borrowers in accordance with GAAP.
"Prior Agreement" shall mean that certain Loan and Security Agreement
---------------
dated as of November 16, 1998 among certain of the Borrowers, the financial
institutions parties thereto as lenders, and Newcourt Commercial Finance
Corporation, as agent for said lenders.
"Pro Rata Share" shall mean with respect to all matters relating to
--------------
any Lender, (a) with respect to the Revolving Loans and the Letters of Credit,
the percentage obtained by dividing (1) at any time on or prior to the Revolving
Loan Commitment Termination Date, the Revolving Loan Commitment Amount of such
Lender by the aggregate Revolving Loan Commitment Amount of all Lenders, and (2)
at any time after the Revolving Loan Commitment Termination Date, the aggregate
outstanding principal balance of the sum of the Revolving Loans held by that
Lender plus the Letter of Credit Obligations incurred by such Lender by the sum
of the aggregate outstanding principal balance of the Revolving Loans held by
all Lenders plus the aggregate Letter of Credit Obligations incurred by all the
Lenders, and (b) with respect to the Term Loans, the percentage obtained by
dividing (1) at any time prior to the Term Loan Commitment Termination Date, the
Term Loan Commitment Amount of such Lender by the aggregate Term Loan Commitment
Amount of all Lenders, and (2) at any time after the Term Loan Commitment
Termination Date, the aggregate outstanding principal balance of the Term Loans
held by that Lender by the aggregate outstanding principal balance of the Term
Loans held by all Lenders.
"PUC" shall mean any state Governmental Authority having utility or
---
telecommunications regulatory authority over any Borrower or any System.
"Purchase Debt" shall have the meaning given to such term in Section
------------- -------
6.13(d).
-------
"Reference Bank" shall mean Canadian Imperial Bank of Commerce.
--------------
"Reference Bank Base Rate" shall mean a rate per annum equal to the
------------------------
corporate base rate, prime rate or base rate of interest, as applicable,
announced by the Reference Bank
15
from time to time, changing when and as such rate changes, it being understood
that such rate of interest is not necessarily the lowest or best rate charged by
the Reference Bank to its customers.
"Register" shall have the meaning given to such term in Section
-------- -------
11.08(c)(iii).
-------------
"Release" shall mean any release, spill, emission, leaking, pumping,
-------
injection, deposit, disposal, discharge, dispersal, leaching or migration into
the environment or into or out of any property, including the movement of
Contaminants through or in the air, soil, surface water, groundwater or
property.
"Remedial Action" shall mean actions required to (1) clean up, remove,
---------------
treat or in any other way address Contaminants in the environment; (2) prevent
the Release or threat of Release or prevent or minimize the further Release of
Contaminants so they do not migrate or endanger or threaten to endanger public
health or welfare or the environment; or (3) perform preremedial studies and
investigations and postremedial monitoring and care.
"Reportable Event" shall mean any reportable event as defined in
----------------
Section 4043 of ERISA unless the reporting requirement with respect to such
reportable event has been waived by the PBGC or other appropriate Governmental
Authority.
"Requisite Lenders" shall mean (a) prior to the Term Loan Commitment
-----------------
Termination Date, Lenders holding at least fifty one percent (51.0%) of the
aggregate Commitment Amount of all Lenders, (b) on and after the Term Loan
Commitment Termination Date and prior to the date on which all Lenders'
Commitment to make Revolving Loans has been terminated, Lenders holding at least
fifty one percent (51.0%) of the sum of (i) the aggregate outstanding amount of
the Term Loans and (ii) the Revolving Loan Commitment Amount of all the Lenders,
or (c) on and after the date on which all Lenders' Commitments to make Revolving
Loans have been terminated, Lenders holding at least fifty one percent (51.0%)
of the aggregate outstanding amount of the sum of all Loans and Letter of Credit
Obligations.
"Revolving Lenders" shall mean, as of any date of determination on or
-----------------
prior to the Revolving Loan Commitment Termination Date, Lenders having a
Revolving Loan Commitment Amount, and thereafter Lenders having outstanding
Revolving Loans or Letter of Credit Obligations.
"Revolving Loan" shall mean any loan made to the Borrowers pursuant to
--------------
the provisions of Section 2.01(b) below.
---------------
"Revolving Loan Commitment Amount" shall mean (a) as to any Revolving
--------------------------------
Lender, the aggregate commitment of such Revolving Lender to make Revolving
Loans and/or incur Letter of Credit Obligations as set forth opposite such
Revolving Lender's name on Annex A to this Agreement or in the most recent
-------
Assignment Agreement executed by such Revolving Lender and (b) as to all
Revolving Lenders, the aggregate commitment of all Revolving Lenders to make
Revolving Loans and/or incur Letter of Credit Obligations, which aggregate
commitment shall be Fifty Five Million Dollars ($55,000,000) on the Closing
Date, in each case as such amount may be adjusted from time to time pursuant to
the terms of this Agreement.
"Revolving Loan Commitment Termination Date" shall mean June 30, 2008.
------------------------------------------
16
"Revolving Loan Note" shall mean a promissory note of the Borrowers
-------------------
substantially in the form of Exhibit E-1 attached hereto.
-----------
"Senior Debt" shall mean, with respect to the Borrowers, at any date,
-----------
the sum of the Debt described in the following clauses of Section 6.13: (a),
------------
(b), (c), (d), (g) and (h).
"Solvent" shall mean, at any time of determination, with respect to
-------
any Person:
(1) the assets of such Person, at a fair valuation, are in excess of
the total amount of its debts (including, without limitation, contingent
liabilities); and
(2) the present fair saleable value of its assets is greater than its
probable liability on its existing debts as such debts become absolute and
matured; and
(3) it is then able and expects to be able to pay its debts
(including, without limitation, contingent debts and other commitments) as
they mature; and
(4) it has capital sufficient to carry on its business as conducted.
For purposes of determining whether a Person is Solvent, the amount of any
contingent liability shall be computed as the amount that, in light of all the
facts and circumstances existing at such time, represents the amount that can
reasonably be expected to become an actual or mature liability.
"Specified Government Securities" shall mean (i) United States
-------------------------------
Treasury bills, notes and bonds, (ii) United States Treasury securities
designated by the United States Department of Treasury as eligible to
participate in the STRIPS (Separate Trading of Registered Interest and Principal
of Securities) program, (iii) debt obligations of the Student Loan Marketing
Association, (iv) consolidated systemwide bonds/notes of Federal Farm Credit
Banks, (v) mortgage participation certificates fully guaranteed by the Federal
Home Loan Mortgage Corporation, (vi) obligations of the Federal National
Mortgage Association, (vii) certificates of the Government National Mortgage
Association, (viii) obligations of Federal Land Banks, (ix) debentures and
certificates fully guaranteed by the United States Small Business
Administration, and (x) time drafts drawn under letters of credit issued to the
Commodity Credit Corporation and fully guaranteed by the Commodity Credit
Corporation as to payment.
"Subsidiary" shall mean, with respect to any Person, any corporation,
----------
partnership, joint venture, association or other business entity, whether now
existing or hereafter organized or acquired, (i) in the case of a corporation,
of which more than 50% of the total voting power of the Equity Interests
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, officers or trustees thereof is held by such Person or
any of its Subsidiaries; or (ii) in the case of a partnership, joint venture,
association or other business entity, with respect to which such Person or any
of its Subsidiaries has the power to direct or cause the direction of the
management and policies of such entity by contract or otherwise or if in
accordance with GAAP such entity is consolidated with the such Person for
financial statement purposes.
"Supporting Letter of Credit" shall have the meaning given to such
---------------------------
term in Section 2.10(j).
---------------
17
"Switching Equipment" shall mean telecommunications switches and
-------------------
associated electronics.
"System" shall mean each telecommunications system to be constructed,
------
developed, owned and operated by any Borrower in the United States of America as
an integrated communications provider in a designated metropolitan area, in
accordance with the Milestone Plan, and all replacements, enhancements or
additions thereto.
"Taxes" shall mean any and all license, documentation, recording and
-----
registration fees, and all taxes (including, without limitation, income (other
than those on the income of the Lenders or the Agents), gross receipts, sales,
value-added, use, excise, personal property (tangible and intangible), real
estate and stamp, documentary, transfer or recording taxes, levies, imposts,
deductions, duties, assessments, fees, charges, and withholdings of any nature
whatsoever, whether or not presently in existence, together with any penalties,
fines, additions to tax, or interest thereon, imposed by any taxing authority or
other Governmental Authority.
"Telecommunications Equipment" shall mean fiber optic cable, Lucent
----------------------------
5-ESS switches or other comparable switches, transmission equipment and other
ancillary equipment necessary for the installation and operation of a switch
room or central office and co-location with other telecommunications providers
that will enable a Borrower to offer telephony services, as well as all software
and hardware associated with the network operating center and back office
systems (including operations systems and support, billing systems and data
services), together with all related support and installation costs associated
with an operational system, provided that such costs are capitalized according
to GAAP.
"Term Lenders" shall mean those Lenders having Term Loan Commitment
------------
Amounts or who have made Term Loans.
"Term Loan" shall mean any Loan made to the Borrowers pursuant to
---------
Section 2.01(a) below and shall include all Existing Loans (which shall be
---------------
deemed to be Term Loans in accordance with Section 2.01(a) below).
"Term Loan Commitment Amount" shall mean (a) as to any Lender, the
---------------------------
commitment of such Lender to make Term Loans as set forth opposite such Lender's
name on Annex A to this Agreement and (b) as to all Lenders, the aggregate
-------
commitment of all Lenders to make Term Loans, which aggregate commitment shall
be One Hundred Million Dollars ($100,000,000) on the Closing Date.
"Term Loan Commitment Termination Date" shall mean December 31, 2000.
-------------------------------------
"Term Loan Note" shall mean a promissory note of the Borrowers
--------------
substantially in the form of Exhibit E-2 attached hereto.
-----------
"Term Loan Termination Date" shall mean June 30, 2008.
--------------------------
"Temporary Cash Investments" shall mean (i) Investments in marketable,
--------------------------
direct obligations issued or guaranteed by the United States of America, or of
any governmental agency or political subdivision thereof, maturing within 365
days of the date of purchase, including,
18
without limitation, Specified Government Securities; (ii) Investments in
certificates of deposit issued by a bank organized under the laws of the United
States of America or any state thereof or the District of Columbia, in each case
having capital, surplus and undivided profits totaling more than $500,000,000
and rated at least A by Standard & Poor's Ratings Service and A-2 by ▇▇▇▇▇'▇
Investors Service, Inc. maturing within 365 days of purchase; or (iii)
Investments not exceeding 365 days in duration in money market funds that invest
substantially all of such funds' assets in the Investments described in the
preceding clauses (i) and (ii).
"Termination Event" shall mean (i) a Reportable Event with respect to
-----------------
a Benefit Plan; (ii) the withdrawal of any Borrower or any ERISA Affiliate from
a Benefit Plan during a plan year in which any Borrower or such ERISA Affiliate
was a "substantial employer" as defined in Section 4001(a)(2) of ERISA; (iii)
the imposition of an obligation on any Borrower or any ERISA Affiliate under
Section 4041 of ERISA to provide affected parties written notice of intent to
terminate a Benefit Plan in a distress termination described in Section 4041(c)
of ERISA; (iv) the institution by the PBGC of proceedings to terminate a Benefit
Plan; (v) any event or condition which might constitute grounds under Section
4042 of ERISA for the termination of, or the appointment of a trustee to
administer, any Benefit Plan; or (vi) the partial or complete withdrawal of any
Borrower or any ERISA Affiliate from a Multiemployer Plan.
"Third Party Interactives" shall mean all Persons with whom any
------------------------
Borrower exchanges data electronically in the ordinary course of business,
including without limitation, customers, suppliers, third-party vendors,
subcontractors, processors-converters, shippers and warehousemen.
"UFCA" shall have the meaning given to such term in Section 2.15(b).
---- ---------------
"UFTA" shall have the meaning given to such term in Section 2.15(b).
---- ---------------
"Unused Letter of Credit Subfacility" shall mean an amount equal to
-----------------------------------
the lesser of (i) $10,000,000 minus the Letter of Credit Obligations, and (ii)
the undrawn portion of the Revolving Loan Commitment Amount of all Lenders.
"Variable Rate" shall mean the Base Rate or the LIBO Rate.
-------------
"Voting Power" shall mean, with respect to Voting Stock, the ability
------------
to exercise the voting rights of such Voting Stock either by direct ownership or
control of such Voting Stock or through the granting of proxy rights by any
owner of such Voting Stock.
"Voting Stock" shall mean securities of any class or classes of a
------------
corporation, the holders of which are ordinarily, in the absence of
contingencies, entitled to vote for the election of corporate directors (or
Persons performing similar functions).
"West Point Contract" shall mean that certain Contract No. DAAG60-98-
-------------------
C-O dated as of April 22, 1998 between PaeTec and the Department of the Army, as
amended from time to time.
"Year 2000 Corrective Actions" shall mean, as to each Borrower, all
----------------------------
actions necessary to eliminate such Person's Year 2000 Problems, including,
without limitation,
19
computer code enhancements and revisions, upgrades and replacements of Year 2000
Date-Sensitive Systems/Components, and coordination of such enhancements,
revisions, upgrades and replacements with Third Party Interactives.
"Year 2000 Corrective Plan" shall mean, with respect to each Borrower,
-------------------------
a comprehensive plan to eliminate all of its Year 2000 Problems including
without limitations (i) computer code enhancements or revisions, (ii) upgrades
or replacements of Year 2000 Date-Sensitive Systems/Components, (iii) test and
validation procedures, (iv) an implementation time line and budget and (v)
designation of specific employees who will be responsible for planning,
coordinating and implementing each phase or subpart of the Year 2000 Corrective
Plan.
"Year 2000 Date-Sensitive System/Component" shall mean, as to any
-----------------------------------------
Person, any system software, network software, applications software, database,
computer file, embedded microchip, firmware or hardware that accepts, creates,
manipulates, sorts, sequences, calculates, compares or outputs calendar-related
data accurately; such systems and components shall include, without limitation,
mainframe computers, file server/client system, computer workstations, routers,
hubs, other network-related hardware, and other computer-related software,
firmware or hardware and information processing and delivery systems of any kind
and telecommunications systems and other communications processors, security
systems, alarms, elevators and HVAC systems.
"Year 2000 Implementation Testing" shall mean, as to each Borrower,
--------------------------------
(i) the performance of test and validation procedures regarding Year 2000
Corrective Actions on a unit basis and a systemwide basis, (ii) the performance
of test and validation procedures regarding data exchanges among the Borrowers'
Year 2000 Date-Sensitive Systems/Components and data exchanges with Third Party
Interactives, and (iii) the design and implementation of additional Corrective
Actions, the need for which has been demonstrated by test and validation
procedures.
"Year 2000 Problems" shall mean, with respect to each Borrower,
------------------
limitations on the capacity or readiness of any such Borrower's Year 2000
Date-Sensitive Systems/Components to accurately accept, create, manipulate,
sort, sequence, calculate, compare or output calendar date information with
respect to calendar year 1999 or any subsequent calendar year beginning on or
after January 1, 2000 (including leap year computations), including, without
limitation, exchanges of information among Year 2000 Date-Sensitive
Systems/Components of the Borrowers and exchanges of information among the
Borrowers and Year 2000 Date-Sensitive Systems/Components of Third Party
Interactives and functionality of peripheral interfaces, firmware and embedded
microchips.
SECTION 1.03. Accounting Terms. Except as otherwise herein
----------------
specifically provided, each accounting term used herein shall have the meaning
given to it under generally accepted ac counting principles applied on a
consistent basis ("GAAP").
------
SECTION 1.04. Others Defined in New York Uniform Commercial Code.
---------------------------------------------------
All other terms contained in this Agreement (and which are not otherwise
specifically defined herein) shall have the meanings provided by the Uniform
Commercial Code of the State of New York (the "Code") to the extent the same are
----
used or defined therein.
20
SECTION 1.05. Supplemental Disclosure. At any time or times as the
-----------------------
Borrowers determine necessary, the Borrowers shall supplement any schedule
hereto with respect to any matter hereafter arising which, if existing or
occurring prior to the date hereof, would have been required to be set forth or
described in such schedule or which is necessary to correct any information in
such schedule which has been rendered inaccurate thereby. If any such supplement
to such schedule discloses the existence or occurrence of events, facts or
circumstances which are restricted or prohibited by the terms of this Agreement,
or would reasonably be likely to result in a Material Adverse Effect, such
supplement to such schedule shall not be deemed an amendment thereof unless
expressly consented to in writing by the Administrative Agent and the Requisite
Lenders, and no such amendments, except as the same may be consented to in
writing which expressly includes a waiver, shall be or be deemed a waiver by the
Administrative Agent or any Lender of an Event of Default or Default hereunder.
ARTICLE II
LOANS AND LETTERS OF CREDIT
SECTION 2.01. Agreement to Lend.
-----------------
(a) Existing Loans made to the Borrowers in the aggregate amount of
$70,000,000 shall remain outstanding under this Agreement and constitute a
portion of the Term Loans. Each Term Lender severally agrees, on the terms and
conditions hereinafter set forth, to make one or more Term Loans to the
Borrowers on the Funding Date or any date thereafter until the Term Loan
Commitment Termination Date in an amount not to exceed an amount equal to (i)
the Term Loan Commitment Amount of such Lender minus (ii) such Lender's
-----
Pro Rata Share of the Aggregate Utilization in effect as of the Funding Date.
(b) Each Revolving Lender severally agrees, on the terms and
conditions hereinafter set forth, to make on or after the Closing Date and until
but not including the Revolving Loan Commitment Termination Date, one or more
Revolving Loans to the Borrowers in an amount not to exceed the Revolving Loan
Commitment Amount of such Revolving Lender less such Lender's Pro Rata Share of
the Letter of Credit Obligations.
(c) Term Loans which are repaid or prepaid under the Loan Documents
may not be reborrowed. Revolving Loans which are repaid or prepaid may be
reborrowed at any time prior to the Revolving Loan Commitment Termination Date
provided that the principal amount reborrowed does not exceed the then
applicable Revolving Loan Commitment Amount.
(d) In no event shall the aggregate principal amount of Loans
(exclusive of the Loans the proceeds of which are used to finance Permitted
Acquisitions) exceed the Borrowing Base. In no event shall the aggregate
principal amount of Loans made to Florida exceed $1,000,000 prior to the date on
which the Collateral Agent shall have obtained a first priority Lien on all the
outstanding Equity Interests of Florida subject to no other Liens. In no event
shall any Loan in excess of $1,750,000 be made against PaeTec's Switching
Equipment located in Chicago, Illinois until such time as the Lien thereon
described in Section 6.01(l) has been removed.
---------------
21
SECTION 2.02.
(a) The proceeds of the Loans shall be used by the Borrowers to
purchase Telecommunications Equipment, to pay transaction costs incurred in
connection with the execution, delivery and performance of the Loan Documents,
to finance Permitted Acquisitions and for working capital and other general
corporate purposes (including, without limitation, payment of interest on the
Loans), all as specified in the Notice of Borrowing and in accordance with the
Milestone Plan; provided, however, that (i) not more than $30,000,000 of the
-------- -------
proceeds of the Loans may be used by the Borrowers for the purpose of making
Permitted Acquisitions, and not more than $7,500,000 of such $30,000,000 amount
may be applied to a single Permitted Acquisition and (ii) not more that
$10,000,000 of the proceeds of the Loans may be used for working capital or
other general corporate purposes.
(b) Loans bearing interest at the LIBOR Rate shall be in a minimum
principal amount of $2,500,000 and in $500,000 increments in excess thereof and
Loans bearing interest at the Base Rate shall be in a minimum principal amount
of $1,000,000 and in $250,000 increments in excess thereof.
(c) No more than four (4) Loans per calendar month shall be made.
SECTION 2.03. Procedure for Loan Request and Borrowing Commitment.
---------------------------------------------------
(a) A Borrower requesting a Loan shall deliver to each of the
Administrative Agent and the Collateral Agent a Notice of Borrowing
substantially in the form of Exhibit H-1 attached hereto by 11:00 a.m. on the
date at least five (5) Business Days prior to the date on which such Loan is
requested to be made if such Loan is requested to be a LIBOR Loan and at least
two (2) Business Days prior to the date on which such Loan is requested to be
made if such Loan is requested to be a Base Rate Loan, which notice, once given,
shall be irrevocable; provided, however, that only the Collateral Agent shall
receive the attachments to the Notice of Borrowing, as outlined below. In the
case of a Loan the proceeds of which will be used to purchase Telecommunications
Equipment, the Notice of Borrowing delivered to the Collateral Agent will
include a certificate of delivery and acceptance in the form included in Exhibit
-------
H-1 and a copy of the invoice from the seller of the Telecommunications
---
Equipment described in such invoice. In the case of a Loan the proceeds of which
will be used to pay transaction and construction costs, the Notice of Borrowing
delivered to the Collateral Agent will include a copy of the invoice from the
provider of the service or other appropriate supporting documentation. In the
case of a Loan, the proceeds of which will be used for the financing of working
capital or other general corporate purposes, the Notice of Borrowing delivered
to the Collateral Agent will contain a certified schedule of the Borrowers'
current outstanding accounts payable in detail satisfactory to the Collateral
Agent together with a description of the intended use of proceeds of such Loan.
The Notice of Borrowing shall, with respect to any Loans requested, specify
whether such requested Loans are to be Base Rate Loans or LIBOR Loans, and if
such requested Loans are to be LIBOR Loans, the requested Interest Period for
such Loans.
(b) The Administrative Agent agrees, promptly upon (i) receipt of a
Notice of Borrowing and (ii) acknowledgment by the Collateral Agent that the
Borrowers have delivered and the Collateral Agent has reviewed to its
satisfaction (x) each of the invoices or certificates
22
required to be provided to the Collateral Agent pursuant to Section 2.03(a)
---------------
above and (y) each of the collateral documents, including, without limitation,
all third party agreements and the related consents to collateral assignments
required pursuant to Section 5.08 of the Loan Agreement, as requested by the
------------
Collateral Agent, which acknowledgment shall be delivered by the Collateral
Agent at least three (3) Business Days prior to the date on which any LIBOR Loan
is requested to be made and one (1) Business Day prior to the date on which any
Base Rate Loan is requested to be made, to notify each Lender of the date and
amount of the Loan proposed thereunder and the amount of such Lender's Pro Rata
Share therein. So long as no Event of Default has occurred and is continuing and
upon fulfillment of the applicable conditions set forth in Article IV, each such
----------
Lender severally agrees, on or before 12:00 P.M. (New York time) on the date of
each proposed Loan, to pay into the Payment Account, an amount equal to such
Lender's Pro Rata Share of such Loan in dollars and in same day funds. After the
Administrative Agent's receipt of such Lender's Loan proceeds, the
Administrative Agent shall make available such proceeds to the Borrower
requesting the Loan or the Person entitled to payment thereof at the bank
account(s) specified in the Notice of Borrowing on the date specified in such
Notice of Borrowing in Dollars in immediately available funds; provided,
--------
however, that if any Loan proceeds are to be applied to pay invoices from
-------
Lucent, such invoices shall be paid directly by the Administrative Agent to
Lucent.
(c) Unless the Administrative Agent has received written notice from
a Lender prior to the date of any proposed Loan that such Lender will not make
available to the Administrative Agent such Lender's Pro Rata Share of such Loan,
the Administrative Agent may, but is not obligated to, assume that such Lender
has made its Pro Rata Share of such Loan available to the Administrative Agent
on the date of such Loan in accordance with paragraph (b) above, and the Lenders
------------
may, in reliance upon such assumption, make available to the Borrower on such
date a corresponding amount. If such Pro Rata Share is not, in fact, paid to
Administrative Agent by such Lender when due, the Administrative Agent will be
entitled to recover such amount on demand from such Lender or the Borrower which
received the proceeds of such Loan without set-off, counterclaim or deduction of
any kind, together with interest thereon, for each day from the date such amount
is made available to such Borrower until the date such amount is repaid to the
Administrative Agent either by such Borrower or such Lender, at, (1) in the case
of such Borrower, the interest rate applicable to such Loan, and (2) in the case
of such Lender, the Federal Funds Effective Rate plus any applicable fees
charged by the Administrative Agent. Nothing in this Section 2.03(c) or
--------------
elsewhere in this Agreement or the other Loan Documents shall be deemed to
require the Administrative Agent to advance funds on behalf of any Lender or to
relieve any Lender from its obligation to fulfill its Commitment hereunder or to
prejudice any rights that the Borrower may have against any Lender as a result
of any default by such Lender hereunder. Without limiting the foregoing, with
respect to any Lender which for any reason fails to make timely payment to the
Administrative Agent of its Pro Rata Share of any Loan, the Administrative
Agent, in addition to other rights and remedies which it may have, shall be
entitled to withhold or set off from any payments due to such Lender hereunder,
an amount equal to the Pro Rata Share required to have been paid by such Lender
plus interest as described above, and to withhold from such Lender any right of
consent provided to such Lender by Article 5 or 6 of this Agreement and to bring
--------- -
an action or suit against such Lender in a court of competent jurisdiction to
recover such Pro Rata Share thereof and any related interest thereon. If such
Lender shall repay to the Administrative Agent such corresponding amount, such
amount so repaid shall constitute such Lender's applicable Pro Rata
23
Share of such Loan for purposes of this Agreement. If both such Lender and such
Borrower shall have repaid the corresponding amount, the Administrative Agent
shall promptly return to such Borrower its corresponding amount.
(d) The Borrowers commit to the Lenders to request (i) on or prior to
the Closing Date, Term Loans in such amount that when combined with the then
outstanding principal balance of the Existing Loans, would total $50,000,000,
(ii) on or prior to September 30, 2000, Term Loans in such amount that when
combined with the then outstanding principal balance of the Existing Loans,
would total $75,000,000, and (iii) on or prior to December 31, 2000, Term Loans
in the amount of the undrawn Term Loan Commitment Amount.
SECTION 2.04. The Notes. The Borrowers shall execute and deliver
---------
to each Revolving Lender that so requests, a Revolving Loan Note and to each
Term Lender that so requests, a Term Loan Note to evidence the Commitment of
that Lender. Each Revolving Loan Note shall be in the principal amount of the
Revolving Loan Commitment Amount of the applicable Lender, dated the Closing
Date, stated to mature on the Revolving Loan Commitment Termination Date and
substantially in the form of Exhibit E-1. Each Term Loan Note shall be in the
-----------
principal amount of the Term Loan Commitment Amount of the applicable Term
Lender, dated the Closing Date, stated to mature on the Term Loan Termination
Date and substantially in the form of Exhibit E-2. The Term Loan Notes also
-----------
evidence the Existing Loans. The Notes payable to a Lender shall represent the
obligation of the Borrowers to pay the amount of each Lender's Revolving Loan
Commitment Amount or Term Loan Commitment Amount or, if less, the applicable
Lender's Pro Rata Share of the aggregate unpaid principal amount of all Loans to
the Borrowers and Letter of Credit Obligations incurred by such Lender together
with interest thereon as prescribed in Section 2.05. The Administrative Agent is
------------
hereby authorized by each Borrower to record in the Register the date and amount
of each Loan made to such Borrower, as applicable, and to record therein the
date and amount of each payment on each Loan made to such Borrower, and such
recordations shall be conclusive evidence against such Borrower of the amounts
owing to the Lenders with respect to the Loans in the absence of manifest error;
provided, however, that the failure of the Administrative Agent to register any
such information on such schedule shall not in any manner affect the obligation
of such Borrower to repay the Loans made to such Borrower in accordance with the
terms of this Agreement.
SECTION 2.05. Interest on Loans.
-----------------
(a) General. Each Loan shall bear interest at a rate per annum equal
-------
to the Base Rate or the LIBO Rate, as selected in the applicable Notice of
Borrowing delivered by the Borrower or as converted pursuant to Section 2.06,
------------
computed on the basis of (i) a 360 day year composed of twelve 30-day months for
LIBOR Loans and (ii) a 365/366 day year, as applicable, for Base Rate Loans, and
with respect to both clauses (i) and (ii), the actual number of days elapsed.
Interest on Base Rate Loans shall be compounded quarterly.
(b) Default Interest. Notwithstanding any provision in this
----------------
Agreement to contrary, if an Event of Default shall occur and be continuing,
then the Borrowers shall, on demand from the Administrative Agent, thereafter
pay interest on all Loans at a rate that is two percent (2.00%) per annum above
the rates of interest otherwise payable on all the Loans from
24
the date such payment is due to the date such Event of Default is either cured
or waived in writing by the Requisite Lenders.
SECTION 2.06. Conversion or Continuation.
--------------------------
(a) Subject to the provisions of Section 2.07, on any Payment Date or
------------
Interest Payment Date, as applicable, each Borrower shall have the option (i) to
convert any of its outstanding Loans, from Base Rate Loans to LIBOR Loans; (ii)
to convert any of its outstanding Loans from LIBOR Loans to Base Rate Loans; and
(iii) to continue any portion of such LIBOR Loans as LIBOR Loans; provided,
--------
however, that no outstanding Loans may be converted into, or continued as, LIBOR
-------
Loans when any Default or Event of Default has occurred and is continuing. Any
conversion or continuation made with respect to less than the entire outstanding
balance of a Borrower's Revolving Loans or Term Loans must be applied pro rata
to such Borrower's Revolving Loans or Term Loans, as applicable, according to
the outstanding principal balance of such Revolving Loans or Term Loans.
(b) Whenever a Borrower elects to convert or continue Loans under
this Section 2.06, such Borrower shall deliver to the Administrative Agent a
------------
written notice substantially in the form of that attached hereto as Exhibit H-2
-----------
(a "Notice of Conversion/ Continuation"), signed by an authorized officer of
such Borrower (i) no later than 10:00 a.m. (New York time) three (3) Business
Days in advance of the requested conversion date, in the case of a conversion
into Base Rate Loans, and (ii) no later than 10:00 a.m. (New York time) three
(3) Business Days in advance of the requested conversion or continuation date,
in the case of a conversion into, or continuation of, LIBOR Loans. The Notice of
Conversion/Continuation shall specify (1) the conversion or continuation date
(which shall be a Business Day), (2) the amount and type of the Loans to be
converted or continued, (3) the nature of the requested conversion or
continuation, and (4) in the case of a conversion into, or continuation of,
LIBOR Loans, the requested Interest Period. Promptly after receipt of a Notice
of Conversion/Continuation pursuant to this Section 2.06(b), the Administrative
---------------
Agent shall notify the Revolving Lenders or Term Lenders, as applicable, by
telecopy, telephone or other similar form of transmission, of the requested
conversion or continuation. In the event that a Borrower should fail to provide
a Notice of Conversion/Continuation with respect to any LIBOR Loans as provided
above, such Loans shall, on the last day of the Interest Period with respect to
such Loans, convert to Base Rate Loans.
(c) Any Notice of Conversion/Continuation for conversion to, or
continuation of, Loans made pursuant to this Section 2.06 shall be irrevocable
------------
and the applicable Borrower shall be bound to convert or continue in accordance
therewith.
SECTION 2.07. Special Provisions Governing LIBOR Loans.
----------------------------------------
Notwithstanding any other provisions to the contrary contained in this
Agreement, the following provisions shall govern with respect to LIBOR Loans as
to the matters covered:
(a) Determination of Interest Period. By giving notice as set forth in
--------------------------------
Section 2.06(b), a Borrower shall have the option, subject to the other
provisions of this Section 2.07, to specify whether the Interest Period for such
LIBOR Loan shall be a one, three or
25
six month period. The determination of Interest Periods shall be subject to the
following provisions:
(1) In the case of immediately successive Interest Periods, each
successive Interest Period shall commence on the day on which the next
preceding Interest Period expires.
(2) If any Interest Period would otherwise expire on a day which is
not a Business Day, the Interest Period shall be extended to expire on the
next succeeding Business Day; provided, however, that if the next
succeeding Business Day occurs in the following calendar month, then such
Interest Period shall expire on the immediately preceding Business Day.
(3) A Borrower may not select an Interest Period for any LIBOR Loan,
which Interest Period expires later than June 30, 2008.
(4) A Borrower may not select an Interest Period with respect to any
portion of such Borrower's Term Loans which extends beyond an installment
payment date for such Term Loans unless, after giving effect to such
selection, the portion of such Term Loans not subject to Interest Periods
ending after such installment payment date is equal or greater than the
principal due on such installment payment date.
(5) A Borrower may not select an Interest Period with respect to any
portion of such Borrower's Revolving Loans which extends beyond any date on
which the Revolving Loan Commitment Amounts are scheduled to be reduced
unless, after giving effect to such selection, the portion of the Revolving
Loans not subject to Interest Periods ending after any such date is equal
to or greater than any amount of the Revolving Loans required to be repaid
as a result of any such reduction.
(6) There shall be no more than six (6) Interest Periods in effect at
any one time.
(b) Determination of Interest Rate. As soon as practicable after
------------------------------
10:00 a.m. (New York time) on the LIBOR Interest Rate Determination Date, the
Administrative Agent shall determine (which determination shall, absent manifest
error, be presumptively correct) the interest rate for the LIBOR Loans for which
an interest rate is then being determined and shall promptly give notice thereof
(in writing or by telephone confirmed in writing) to the applicable Borrower. In
the event that on any LIBOR Interest Rate Determination Date the Administrative
Agent shall have determined (which determination shall, absent manifest error,
be presumptively correct and binding upon all parties) that:
(1) adequate and fair means do not exist for ascertaining the
applicable interest rates by reference to which the LIBO Rate then being
determined is to be fixed; or
(2) the LIBO Rate for any Interest Period for such Loans will not
adequately reflect the cost to any Lender of making, funding or maintaining
its LIBOR Loan for such Interest Period, the Administrative Agent shall
forthwith so notify the applicable Borrower and the Lender, whereupon:
26
(A) each LIBOR Loan will automatically, on the last day of the
then existing Interest Period therefor, convert into a Base Rate Loan;
and
(B) the obligation o f the Lenders to make, or to convert Loans
into, LIBOR Loans shall be suspended until the Administrative Agent
shall notify the applicable Borrower and the Lenders that the
circumstances causing such suspension no longer exist.
(c) Illegality. Notwithstanding any other provision of this
----------
Agreement, if any Lender shall notify the Administrative Agent that the
introduction of or any change in or in the interpretation of any law or
regulation makes it unlawful, or any central bank or other Governmental
Authority asserts that it is unlawful, for any Lender to perform its obligations
hereunder to make LIBOR Loans or to fund or maintain LIBOR Loans hereunder, (i)
the obligation of the Lenders to make, or to convert Loans into or to continue
Loans as, LIBOR Loans shall be suspended until the Administrative Agent shall
notify the Borrowers and the Lenders that the circumstances causing such
suspension no longer exist and (ii) the Borrowers shall on the termination of
the Interest Period then applicable thereto, or on such earlier date required by
law, prepay in full all LIBOR Loans then outstanding together with accrued
interest thereon, or convert all such LIBOR Loans into Base Rate Loans in
accordance with Section 2.06.
------------
(d) Compensation. In addition to such amounts as are required to be
------------
paid by the Borrowers pursuant to the other Sections of this Article II, the
Borrowers agree to compensate any Lender for all losses, expenses and
liabilities, including, without limitation, any loss or expense incurred by
reason of the liquidation or reemployment of deposits or other funds acquired by
such Lender to fund or maintain such Lender's LIBOR Loans to the Borrowers,
which such Lender may sustain (i) if for any reason a funding of any LIBOR Loans
does not occur on a date specified therefor in a Notice of Borrowing or Notice
of Conversion/Continuation, or a successive Interest Period does not commence
after notice therefor is given pursuant to Section 2.06, (ii) if any voluntary
------------
or mandatory prepayment of any LIBOR Loans occurs for any reason on a date which
is not the last scheduled day of an Interest Period, (iii) as a consequence of
any required conversion of LIBOR Loans to Base Rate Loans as a result of any of
the events indicated in Section 2.07(d), or (iv) as a consequence of any other
--------------
failure by a Borrower to repay LIBOR Loans when required by the terms of this
Agreement.
(e) Booking of LIBOR Loans. The Lenders may make, carry or transfer
----------------------
LIBOR Loans at, to, or for the account of, any of their respective branch
offices or the office of any of their respective affiliates.
(f) LIBOR Loans After Event of Default. Unless the Requisite Lenders
----------------------------------
shall otherwise agree, after the occurrence of and during the continuance of any
Event of Default, the Borrowers may not borrow Loans as LIBOR Loans or elect to
have any Loans continued as, or converted to, LIBOR Loans after the expiration
of any Interest Period then in effect for such Loans.
SECTION 2.08. Scheduled Payments.
------------------
27
(a) Interest on each LIBOR Loan shall be payable in arrears on the
last day of each LIBOR Interest Payment Date for such LIBOR Loan and upon
payment in full thereof. Interest on each Base Rate Loan shall be payable
quarterly in arrears on each Payment Date and upon payment in full thereof.
After the occurrence and during the continuance of any Event of Default,
interest shall be payable on demand.
(b) Subject to the provisions of Sections 2.09 and 9.02, the
------------- ----
outstanding principal balance of the Term Loans shall be payable in twenty
quarterly installments commencing on September 30, 2003, and continuing on the
last day of each December, March, June and September thereafter through and
including June 30, 2008 with each such quarterly installment other than the last
one to be in an amount equal to 5.00% of the Aggregate Principal Amount, and the
last such quarterly installment to be in an amount equal to the then remaining
unpaid portion of the Aggregate Principal Amount.
(c) Payments made with respect to the Loans by each Borrower shall be
applied by the Administrative Agent first to unpaid and accrued fees and
interest and then to the outstanding unpaid principal balance of the Loans of
such Borrower; provided, however, that upon the occurrence and during the
-------- -------
continuance of an Event of Default, all payments and prepayments with respect to
the Obligations and all proceeds of Collateral shall be applied in the following
order by the Administrative Agent; provided, further, that the order of priority
set forth in the following clauses may be altered upon direction from the
Requisite Lenders to the Administrative Agent:
(1) first, to pay Obligations in respect of any expenses then due and
payable by the Borrowers to the Administrative Agent or the Lenders or any
Person which is not a Lender that has issued a Letter of Credit
(2) second, to pay Obligations in respect of any reimbursement or
indemnities then due and payable to the Administrative Agent or the Lenders
or any Person which is not a Lender that has issued a Letter of Credit
(excluding any reimbursement obligations with respect to any Letters of
Credit);
(3) third, to pay Obligations in respect of any fees due and owing to
the Administrative Agent;
(4) fourth, to pay Obligations in respect of the commitment fee and
any other fees and commissions then due and owing to the Administrative
Agent, the Collateral Agent or the Lenders or any Person which is not a
Lender that has issued a Letter of Credit;
(5) fifth, to pay Obligations in respect of any accrued and unpaid
interest due in respect of Loans and Letter of Credit Obligations;
(6) sixth, to the ratable payment or prepayment of principal of any
outstanding Loans and reimbursement obligations with respect to Letters of
Credit;
(7) seventh, to pay termination payments due and payable pursuant to
any Interest Rate Agreement or hedging agreement to which any Lender or its
affiliate is a counterparty; and
(8) eighth, to the ratable payment of all other Obligations.
28
SECTION 2.09. Optional and Mandatory Prepayment of Loans; Optional
----------------------------------------------------
and Mandatory Reduction of Commitment Amount.
--------------------------------------------
(a) Provided that no Event of Default has occurred and is continuing,
the Borrowers shall have the right upon the provision of (1) twenty-five days'
prior written notice on or prior to the six month anniversary of the Closing
Date to the Administrative Agent, and (2) forty-five days' prior written notice
to the Administrative Agent at any time thereafter, which notice, once given,
shall be irrevocable, on any Payment Date with respect to any Base Rate Term
Loans and on the last day of the applicable Interest Period with respect to any
LIBOR Term Loans, to prepay the outstanding principal thereof in a minimum
principal amount of $1,000,000 and increments of $500,000 in excess thereof,
together in each case with accrued interest thereon as determined on the date of
such prepayment.
(b) Upon the occurrence of any Event of Loss with respect to any item
of Collateral that is not repaired or replaced within 180 days after the
occurrence of such Event of Loss (other than an item of Collateral no longer
used or useful in the Business), the Borrowers shall make a principal prepayment
in an amount equal to the replacement value of the item of Collateral which
suffered the Event of Loss, together with accrued interest thereon with such
principal payments to be applied, pro rata, to the outstanding principal balance
of the Revolving Loans and the Term Loans.
(c) Simultaneously with the delivery of the financial statements
required to be delivered under Section 5.06(a) for the fiscal years ending
--------------
December 31, 2002 and thereafter, the Revolving Loan Commitment Amounts of all
the Lenders shall be permanently reduced and the outstanding principal balance
of the Term Loans shall be prepaid on a pro rata basis (together with accrued
and unpaid interest on the Term Loans being prepaid) in an amount equal to fifty
percent (50%) of Excess Cash Flow, if any, as determined for such fiscal year;
provided, however, that such reduction in the Revolving Loan Commitment Amounts
and prepayment of the Term Loans shall not be required with respect to any
fiscal year in which the Borrowers maintained throughout such fiscal year an
Operating Leverage Ratio of less than 5.0 to 1.0.
(d) The Revolving Loan Commitment Amounts of all the Lenders shall be
permanently reduced and the outstanding principal balance of the Term Loans
shall be prepaid on a pro rata basis in an amount equal to (i) all of the net
proceeds of any sales of assets of any Borrower other than sales to another
Borrower or otherwise made in the ordinary course of business, which proceeds
are not reinvested within 180 days after receipt thereof in replacement assets,
plus accrued interest thereon, and (ii) the proceeds of insurance policies and
condemnation awards paid to any Borrower if the proceeds thereof are not applied
within 180 days after such payment to the replacement, reconstruction or
restoration of equipment which was the subject of the insurance loss or award,
plus accrued interest thereon.
(e) The Revolving Loan Commitment Amount of all the Lenders shall be
reduced on each Payment Date beginning September 30, 2003, in an amount equal to
five percent (5.00%) of the original Revolving Loan Commitment Amount on each
such Payment Date.
29
(f) On each date that the Revolving Loan Commitment Amount is reduced,
the Borrowers shall prepay first, the Revolving Loans, and second, provide to
the Administrative Agent cash collateral with respect to the Letter of Credit
Obligations in such amounts such that the sum of the outstanding principal
balance of the Revolving Loans plus the Letter of Credit Obligations does not
exceed the Revolving Loan Commitment Amount of all the Revolving Lenders after
giving effect to the reduction thereof effective on such date. Any reduction in
the Revolving Loan Commitment Amount of all the Lenders shall be allocated to
each Revolving Lender based on its Pro Rata Share. All prepayments of principal
shall be applied to the remaining principal payments of the type of Loans
prepaid in the inverse order of maturity. The Letter of Credit Obligations shall
be reduced on a dollar-for-dollar basis by the cash collateral.
(g) Each prepayment of the Loans made by the Borrowers under this
Agreement, whether voluntary or mandatory, shall be applied to the remaining
principal payments of the type of Loans prepaid (and in the inverse order of
maturity with respect to Term Loans) and shall be accompanied by payment of
accrued and unpaid interest thereon and any compensation payable under Section
-------
2.07(d).
-------
SECTION 2.10. Letters of Credit.
-----------------
(a) Agreement to Issue. Subject to the terms and conditions of this
------------------
Agreement, and in reliance upon the representations and warranties of the
Borrowers herein set forth, the Administrative Agent agrees to issue Letters of
Credit for the respective accounts of the Borrowers in accordance with this
Section 2.10 from time to time during the term of this Agreement.
------------
(b) Amounts; Outside Expiration Date. The Administrative Agent shall
--------------------------------
not have any obligation to issue any Letter of Credit at any time if: (1) the
maximum undrawn face amount of the Letter of Credit is greater than the Unused
Letter of Credit Subfacility; or (2) such Letter of Credit has an expiration
date later than thirty (30) days prior to the Revolving Loan Commitment
Termination Date, or more than one (1) year from the date of issuance.
(c) Other Conditions. In addition to being subject to the satisfaction
----------------
of the applicable conditions precedent contained in Article IV, the obligation
----------
of the Administrative Agent to issue any Letter of Credit is subject to the
following conditions precedent having been satisfied in a manner satisfactory to
the Administrative Agent:
(1) the applicable Borrower shall have delivered to the Administrative
Agent, at such times and in such manner as the Administrative Agent may
prescribe, an application in form and substance satisfactory to the
Administrative Agent for the issuance of the Letter of Credit and such
other documents as may be required pursuant to the terms thereof and the
form and terms of the proposed Letter of Credit shall be satisfactory to
the Administrative Agent; and
(2) as of the date of issuance, no order of any court, arbitrator or
Governmental Authority shall purport by its terms to enjoin or restrain
money center banks generally from issuing letters of credit of the type and
in the amount of the proposed Letter of Credit, and no law, rule or
regulation applicable to money center banks generally and no request or
directive (whether or not having the force of law) from
30
any Governmental Authority with jurisdiction over money center banks
generally shall prohibit, or request that the Administrative Agent refrain
from, the issuance of letters of credit generally or the issuance of such
Letters of Credit.
(d) Issuance of Letters of Credit.
-----------------------------
(1) Request for Letter of Credit. The applicable Borrower shall give
----------------------------
the Administrative Agent five (5) Business Days' prior written notice,
containing the original signature of an authorized officer of such
Borrower, of such Borrower's request for the issuance of a Letter of
Credit. Such notice shall be irrevocable and shall specify the original
face amount of the Letter of Credit, the effective date (which date shall
be a Business Day) of issuance of such proposed Letter of Credit, whether
such Letter of Credit may be drawn in a single or in partial draws, the
date on which such proposed Letter of Credit is to expire (which date shall
be a Business Day), the purpose for which such Letter of Credit is to be
issued, and the beneficiary of such Letter of Credit. The applicable
Borrower shall attach to such notice the form of the proposed Letter of
Credit.
(2) Responsibilities of the Administrative Agent; Issuance. The
------------------------------------------------------
Administrative Agent shall determine, as of the Business Day immediately
preceding the requested effective date of issuance of the Letter of Credit
set forth in the notice from the applicable Borrower pursuant to Section
-------
2.10(d)(1), the amount of the applicable Unused Letter of Credit
----------
Subfacility. If (A) the undrawn face amount of the proposed Letter of
Credit is not greater than the applicable Unused Letter of Credit
Subfacility, (B) the conditions set forth in Section 2.10(c) have been
---------------
satisfied, and (C) the Administrative Agent has received a certificate from
such Borrower stating that the applicable conditions set forth in Article
-------
IV have been satisfied, the Administrative Agent shall issue such Letter of
--
Credit on such proposed effective date of issuance.
(3) Notice of Issuance. The Administrative Agent shall promptly give
------------------
each Lender written notice of the issuance of each Letter of Credit.
(4) No Extensions or Amendment. No Letter of Credit shall be extended
--------------------------
or amended unless the requirements of this Section 2.10(d) are met as
---------------
though a new Letter of Credit were being requested and issued.
(e) Payments Pursuant to Letters of Credit.
--------------------------------------
(1) Payment of Letter of Credit Obligations. The Borrowers agree to
---------------------------------------
reimburse the Administrative Agent for any draw under any Letter of Credit
immediately upon demand, and to pay the Administrative Agent the amount of
all other Obligations and other amounts payable to the Administrative Agent
under or in connection with any Letter of Credit immediately when due,
irrespective of any claim, set-off, defense or other right which a Borrower
may have at any time against the Administrative Agent or any other Person.
(2) Revolving Loans to Satisfy Reimbursement Obligations. In the event
----------------------------------------------------
that the Administrative Agent honors a draw under such Letter of Credit,
and the Borrowers shall not have repaid such amount to the Administrative
Agent pursuant to Section 2.10(e)(1), the Administrative Agent shall, upon
------------------
receiving notice of such failure, notify each Revolving Lender of such
failure, and each Revolving Lender shall unconditionally
31
pay to the Administrative Agent, for the account of the Administrative
Agent, as and when provided hereinbelow, an amount equal to such Revolving
Le nder's Pro Rata Share of the amount of such payment in Dollars and in
same day funds. If the Administrative Agent so notifies the Revolving
Lenders prior to 12:00 p.m. (New York time) on any Business Day, each
Revolving Lender shall make available to the Administrative Agent the
amount of such payment, as provided in the immediately preceding sentence,
on such Business Day. Such amounts paid by the Revolving Lenders to the
Administrative Agent shall constitute Revolving Loans which shall be deemed
to have been requested by the applicable Borrower pursuant to Section 2.03.
------------
(f) Participations.
--------------
(1) Purchase of Participations. Immediately upon issuance of any
--------------------------
Letter of Credit in accordance with Section 2.10(d), each Revolving Lender
---------------
shall be deemed to have irrevocably and unconditionally purchased and
received without recourse or warranty, an undivided interest and
participation in such Letter of Credit, equal to such Revolving Lender's
Pro Rata Share of the face amount of such Letter of Credit (including,
without limitation, all obligations of the Borrowers with respect thereto,
and any security therefor or guaranty pertaining thereto).
(2) Sharing of Reimbursement Obligation Payments. Whenever the
--------------------------------------------
Administrative Agent receives a payment from a Borrower on account of
reimbursement obligations in respect of a Letter of Credit as to which the
Administrative Agent has previously received for its account payment from a
Revolving Lender pursuant to this Section 2.10(f)(2), the Administrative
------------------
Agent shall promptly pay to such Lender such Revolving Lender's Pro Rata
Share of such payment from such Borrower in Dollars. Each such payment
shall be made by the Administrative Agent on the Business Day on which the
Administrative Agent receives immediately available funds paid to such
Person pursuant to the immediately preceding sentence, if received prior to
11:00 a.m. (New York time) on such Business Day and otherwise on the next
succeeding Business Day.
(3) Documentation. Upon the request of any Revolving Lender, the
-------------
Administrative Agent shall furnish to such Revolving Lender copies of any
Letter of Credit, reimbursement agreement executed in connection therewith,
application for any Letter of Credit in connection with the issuance of any
Letter of Credit, and such other documentation as may reasonably be
requested by such Revolving Lender.
(4) Obligations Irrevocable. The obligations of each Revolving Lender
-----------------------
to make payments to the Administrative Agent with respect to any Letter of
Credit, and the obligations of the Borrowers to make payments to the
Administrative Agent, for the account of the Revolving Lenders, shall be
irrevocable, not subject to any qualification or exception whatsoever and
shall be made in accordance with the terms and conditions of this
Agreement, including, without limitation, any of the following
circumstances:
(A) any lack of validity or enforceability of this Agreement or
any of the other Loan Documents;
32
(B) the existence of any claim, set-off, defense or other right
which a Borrower may have at any time against a beneficiary named in a
Letter of Credit or any transferee of any Letter of Credit (or any
Person for whom any such transferee may be acting), any Lender, the
Administrative Agent, the Collateral Agent or any other Person, whether
in connection with this Agreement, any Letter of Credit, the
transactions contemplated herein or any unrelated transactions
(including any underlying transactions between a Borrower or any other
Person and the beneficiary named in any Letter of Credit)
(C) any draft, certificate or any other document presented under
the Letter of Credit proving to be forged, fraudulent, invalid or
insufficient in any respect or any statement therein being untrue or
inaccurate in any respect;
(D) the surrender or impairment of any security for the
performance or observance of any of the terms of any of the Loan
Documents; or
(E) the occurrence of any Default or Event of Default.
(g) Recovery or Avoidance of Payments. In the event any payment by or
---------------------------------
on behalf of a Borrower received by the Administrative Agent with respect to a
Letter of Credit (or any guaranty by a Borrower or reimbursement obligation of a
Borrower relating thereto) and distributed by the Administrative Agent to the
Revolving Lenders on account of their respective participations therein, is
thereafter set aside, avoided or recovered from the Administrative Agent in
connection with any receivership, liquidation or bankruptcy proceeding, the
Revolving Lenders shall, upon demand by the Administrative Agent, pay to the
Administrative Agent their respective Pro Rata Shares of such amount set aside,
avoided or recovered, together with interest at the rate required to be paid by
the Administrative Agent upon the amount required to be repaid by it.
(h) Compensation for Letters of Credit. The Borrowers agree to pay the
----------------------------------
fees set forth in Section 2.11 with respect to any Letters of Credit.
(i) Indemnification; Exoneration.
----------------------------
(1) Indemnification. In addition to amounts payable as elsewhere
---------------
provided in this Section 2.10, the Borrowers hereby agree to protect,
------------
indemnify, pay and save the Lenders and the Administrative Agent harmless
from and against any and all claims, demands, liabilities, damages, losses,
costs, charges and expenses (including reasonable attorneys' fees) which
any Lender or the Administrative Agent may incur or be subject to as a
consequence, direct or indirect, of the issuance of any Letter of Credit
The agreements contained in this Section 2.10(i)(1) shall survive the
------------------
payment in full of the Obligations.
(2) Assumption of Risk by the Borrowers. As among the Borrowers, the
-----------------------------------
Lenders and the Administrative Agent, each Borrower assumes all risks of
the acts and omissions of, or misuse of any of the Letters of Credit by,
the respective beneficiaries of such Letters of Credit. In furtherance and
not in limitation of the foregoing, the Lenders and the Administrative
Agent shall not be responsible for: (A) the form, validity,
33
sufficiency, accuracy, genuineness or legal effect of any document
submitted by any Person in connection with the application for and issuance
of and presentation of drafts with respect to any of the Letters of Credit,
even if it should prove to be in any or all respects invalid, insufficient,
inaccurate, fraudulent or forged; (B) the validity or sufficiency of any
instrument transferring or assigning or purporting to transfer or assign
any Letter of Credit or the rights or benefits thereunder or proceeds
thereof, in whole or in part, which may prove to be invalid or ineffective
for any reason; (C) the failure of the beneficiary of any Letter of Credit
to comply duly with conditions required in order to draw upon such Letter
of Credit; (D) errors, omissions, interruptions or delays in transmission
or delivery of any messages, by mail, cable, telegraph, telex or otherwise,
whether or not they be in cipher; (E) errors in interpretation of technical
terms; (F) any loss or delay in the transmission or otherwise of any
document required in order make a drawing under any Letter of Credit or of
the proceeds thereof; (G) the misapplication by the beneficiary of any
Letter of Credit of the proceeds of any drawing under such Letter of
Credit; or (H) any consequences arising from causes beyond the control of
the Lenders or the Administrative Agent, including, without limitation, any
act or omission, whether rightful or wrongful, of any present or future de
--
jure or de facto Governmental Authority. None of the foregoing shall
---- -- -----
affect, impair or prevent the vesting of any rights or powers of the
Administrative Agent or any Lender under this Section 2.10(i).
---------------
(3) Exoneration. In furtherance and extension, and not in limitation,
-----------
of the specific provisions set forth above, any action taken or omitted by
the Administrative Agent or any Lender under or in connection with any of
the Letters of Credit or any related certificates, if taken or omitted in
good faith, shall not put the Administrative Agent or any Lender under any
resulting liability to any Borrower or relieve any Borrower of any of its
obligations hereunder to any such Person.
(j) Supporting Letter of Credit; Cash Collateral. If, notwithstanding
--------------------------------------------
the provisions of Section 2.10(b), any Letter of Credit is outstanding upon the
---------------
termination of this Agreement, then upon such termination the Borrowers shall
cause the termination of such Letter of Credit. If, at the Administrative
Agent's election, any such Letter of Credit remains outstanding, then the
Borrowers shall deposit with the Administrative Agent, for the ratable benefit
of the Administrative Agent and the Revolving Lenders, with respect to each
Letter of Credit then outstanding, as the Administrative Agent shall specify,
either (A) a standby letter of credit (a "Supporting Letter of Credit") in form
---------------------------
and substance satisfactory to the Administrative Agent, issued by an issuer
satisfactory to the Administrative Agent in an amount equal to the greatest
amount for which such Letter of Credit may be drawn, plus any fees and expenses
associated with such Letter of Credit, under which Supporting Letter of Credit
the Administrative Agent is entitled to draw amounts necessary to reimburse the
Administrative Agent and the Revolving Lenders for payments made by the
Administrative Agent and the Revolving Lenders under such Letter of Credit and
any fees and expenses associated with such Letter of Credit, or (B) cash in
amounts necessary to reimburse the Administrative Agent and the Revolving
Lenders for payments made by the Administrative Agent or the Revolving Lenders
under such Letter of Credit, and any fees and expenses associat ed with such
Letter of Credit. Such Supporting Letter of Credit or deposit of cash shall be
held by the Administrative Agent, for the ratable benefit of the Administrative
Agent and the Revolving Lenders, as security for,
34
and to provide for the payment of, the aggregate undrawn face amount of such
Letters of Credit remaining outstanding.
SECTION 2.11. Fees.
-----
(a) The Borrowers shall be jointly and severally liable to pay the
Administrative Agent for the account of the Lenders a nonutilization fee payable
on each Payment Date occurring during the period commencing on the Funding Date
through and including the Payment Date immediately after the Revolving Loan
Commitment Termination Date based upon the applicable per annum rate set forth
below (calculated based on a 365-day year and payable quarterly) on the undrawn
portion of the Commitment Amount during the quarterly period ending on such
Payment Date:
Drawn Portion of Commitment Amount Per Annum Fee
---------------------------------- -------------
Less than 33% of Commitment Amount 1.50%
Greater than or equal to 33% of Commitment
Amount and less than or equal to 66% of 1.25%
Commitment Amount
Greater than 66% of Commitment Amount 0.75%
(b) The Borrowers shall be jointly and severally liable to pay the
Administrative Agent the administrative agency fee set forth in the Fee Letter
referred to in clause (ii) of the definition thereof at the times and in the
amounts so specified in such letter.
(c) The Borrowers shall pay and the Borrowers shall be jointly and
severally liable to the Administrative Agent (i) for the account of the
Revolving Lenders for payment in arrears on each Payment Date of a fee equal to
the product of the Applicable Margin in effect with respect to LIBOR Loans for
the preceding calendar quarter on an annualized basis, multiplied by the average
Letter of Credit Obligations outstanding during such calendar quarter, and (ii)
for the account of the Administrative Agent, for payment in arrears on each
Payment Date of a fee equal to the product of one-eighth percent (0.125%) per
annum multiplied by the average face amount of Letters of Credit issued by the
Administrative Agent and outstanding during the preceding calendar quarter.
(d) All fees once paid shall be nonrefundable.
SECTION 2.12. Borrower Payments, etc.; Special Tax Considerations
---------------------------------------------------
(a) All payments by the Borrowers hereunder and under the Notes shall
be made to the Administrative Agent by wire transfer or other electronic payment
method to the Payment Account, or to such bank account as the Administrative
Agent may designate, for the account of the Lenders in Dollars in immediately
available funds by 12:00 p.m., New York time, on the date on which such payment
shall be due. The Administrative Agent will promptly thereafter cause to be
distributed like funds relating to the payment of principal or interest or other
fees ratably (other than amounts payable pursuant to Section 2.14) to each
------------
Lender in
35
accordance with Section 10.07 hereof. Interest in respect of any Loan
-------------
hereunder shall accrue from the day such Loan is made up to and including
the day prior to the date on which such Loan is paid in full. Payments
received after 12:00 p.m. shall not be given credit until the next Business
Day, and the Borrowers shall be liable for interest, if any, accruing on
such payment until the next Business Day
(b)
(1) Any and all payments by each Borrower hereunder shall be made free
and clear of and without deduction for any and all Taxes. If any Borrower
shall be required by law to deduct any Taxes from or in respect of any sum
payable hereunder or under the other Loan Documents 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 (including
deductions applicable to additional sums payable under this Section 2.12)
------------
such Lender or the Administrative Agent receives an amount equal to the sum
it would have received had no such deductions been made, (B) such Borrower
shall make such deductions, and (C) such Borrower shall pay the full amount
deducted to the relevant taxation authority or other authority in
accordance with applicable law and within thirty (30) days after the date
of any such payment, such Borrower will furnish to the Administrative
Agent, at its address referred to in Section 11.01, the original or a
-------------
certified copy of a receipt evidencing payment thereof. If a withholding
tax of the United States of America or any other Governmental Authority
shall be or become applicable (y) after the date of this Agreement, to the
payments by any Borrower made to the Lending Office or any other office
that a Lender may claim as its Lending Office, or (z) after such Lender's
selection and designation of any other Lending Office, to such payments
made to such other Lending Office, such Lender shall use reasonable efforts
to make, fund and maintain its Loans through another Lending Office of such
Lender in another jurisdiction so as to reduce, but not increase, the
applicable Borrower's liability hereunder, if the making, funding or
maintenance of such Loans through such other Lending Office of such Lender
is not, in the judgment of such Lender, disadvantageous to such Lender.
Notwithstanding anything to the contrary hereunder, if a Person becomes a
Lender under this Agreement pursuant to Section 11.08 hereof, the Borrowers
-------------
shall in no event be required to increase any payment pursuant to paragraph
(b) of this Section 2.12 by an amount that would exceed the amount of any
------------
increase that would be required to be made under paragraph (b) of this
Section 2.12 to the assigning Lender.
------------
(2) The Borrowers will jointly and severally indemnify each Lender
and the Administrative Agent and hold them harmless for the full amount of
Taxes (including, without limitation, any Taxes imposed by any Governmental
Authority on amounts payable under this Section 2.12 or any other
------------
documentary taxes, assessments or charges made by any Governmental
Authority by reason of the execution and delivery of this Agreement or any
other Loan Document) 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. This indemnification
shall be made within thirty (30) days after the date such Lender or the
Administrative Agent (as the case may be) makes written demand therefor. A
certificate as to any additional amount payable to any Lender or the
Administrative Agent under this Section 2.12 submitted to the Borrowers and
------------
the Administrative Agent (if a Lender is so submitting) by such Lender or
36
the Administrative Agent shall show in reasonable detail the amount payable
and the calculations used to determine such amount, and shall be conclusive
and binding, absent manifest error. With respect to such deduction or
withholding for or on account of any Taxes and to confirm that all such
Taxes have been paid to the appropriate Governmental Authorities, the
applicable Borrower shall promptly (and in any event not later than thirty
(30) days after receipt) furnish to each Lender and the Administrative
Agent such certificates, receipts and other documents as may be required
(in the judgment of such Lender or the Administrative Agent) to establish
any tax credit to which such Lender or the Administrative Agent may be
entitled.
(3) Without prejudice to the survival of any other agreement of any
Borrower hereunder, the agreements and obligations of such Borrower
contained in this Section 2.12 shall survive the payment in full of
------------
principal and interest hereunder and the termination of this Agreement.
(4) Without limiting the obligations of the Borrowers under this
Section 2.12, each Lender that is not created or organized under the laws
------------
of the United States of America or a political subdivision thereof shall
deliver to the Borrowers and the Administrative Agent on or before the
effective date hereof, or, if later, the date on which such Lender becomes
a Lender pursuant to Section 11.08 hereof, a true and accurate certificate
-------------
executed in duplicate by a duly authorized officer of such Lender, in a
form satisfactory to the Borrowers and the Administrative Agent, to the
effect that such Lender is capable under the provisions of an applicable
tax treaty concluded by the United States of America (in which case the
certificate shall be accompanied by two original, executed copies of
Form W-8 BEN of the IRS) or under Section 1442 of the IRC (in which case
the certificate shall be accompanied by two original, executed copies of
Form W-8 ECI of the IRS) of receiving payments of interest hereunder exempt
from or at a reduced deduction or withholding of United States federal
income tax or that such Lender is not a bank described in Section
881(c)(3)(A) of the IRC (in which case the certificate should be
accompanied by two original, executed copies of Form W-8 or W-9 of the
IRC). Each such Lender further agrees to deliver to the Borrowers and the
Administrative Agent from time to time a true and accurate certificate
executed in duplicate by a duly authorized officer of such Lender
substantially in a form satisfactory to the Borrowers and the
Administrative Agent, before or promptly upon the occurrence of any event
requiring a change in the most recent certificate previously delivered by
it to the Borrowers and the Administrative Agent pursuant to this Section
-------
2.12(b)(4). Further, each Lender which delivers a certificate accompanied
----------
by Form W-8 BEN of the IRS covenants and agrees to deliver to the Borrowers
and the Administrative Agent within fifteen (15) days prior to the Closing
Date, and every third anniversary of such date thereafter, on which this
Agreement is still in effect, another such certificate and two accurate and
complete original signed copies of Form W-8 BEN (or any successor form or
37
forms required under the IRC or the applicable regulations promulgated
thereunder), and each Lender that delivers a certificate accompanied by
Form W-8 ECI of the IRS covenants and agrees to deliver to the Borrowers
and the Administrative Agent within fifteen (15) days prior to the
beginning of each subsequent taxable year of such Lender during which this
Agreement is still in effect, another such certificate and two accurate and
complete original signed copies of IRS Form W-8 ECI (or any successor form
or forms required under the IRC or the applicable regulations promulgated
thereunder). Each such certificate shall certify as to one of the
following:
(A) that such Lender is capable of receiving payments of interest
hereunder exempt from or at a reduced deduction or withholding of
United States of America federal income tax;
(B) that such Lender is not capable of receiving payments of
interest hereunder exempt from or at a reduced deduction or
withholding of United States of America federal income tax as
specified therein but is capable of recovering the full amount of any
such deduction or withholding from a source other than the Borrowers
and will not seek any such recovery from the Borrowers; or
(C) that, as a result of the adoption of or any change in any
law, treaty, rule, regulation, guideline or determination of a
Governmental Authority or any change in the interpretation or
application thereof by a Governmental Authority after the date such
Lender became a party hereto, such Lender is not capable of receiving
payments of interest hereunder without deduction or withholding of
United States of America federal income tax as specified therein and
that it is not capable of recovering the full amount of the same from
a source other than the Borrowers.
Each Lender shall promptly furnish to the Borrowers and the
Administrative Agent such additional documents as may be reasonably required by
the Borrowers or the Administrative Agent to establish any exemption from or
reduction of any Taxes required to be deducted or withheld and which may be
obtained without undue expense to such Lender.
(5) For a period with respect to which a Lender has failed to provide
the Administrative Agent and the Borrowers with the appropriate form
described in Section 2.12(b)(4) (other than if such failure is due to a
change in law occurring subsequent to the date on which a form originally
was required to be provided), such Lender shall not be entitled to
indemnification under this Section 2.12 with respect to Taxes imposed by
the United States by reason of such failure; provided, however, that should
a Lender become subject to Taxes because of its failure to deliver a form
required hereunder, the Borrowers shall take such steps as such Lender
shall reasonably request to assist such Lender to recover such Taxes.
(c)
(1) If a Borrower pays any additional amount under this Section 2.12
------------
and, as a result, any Lender, together with the Administrative Agent,
subsequently, in their sole discretion and based on their own
interpretation of any relevant laws (but acting in good faith) receive or
are granted a final and non-appealable credit against or deduction from or
in respect of any tax payable by such Lender, or obtain any other final and
non-appealable relief in respect of any tax, which in the opinion of such
Lender and the Administrative Agent, acting in good faith, is both
reasonably identifiable and quantifiable by them without requiring any
Lender, the Administrative Agent or their professional advisers to expend a
material amount of time or incur a material cost in so
38
identifying or quantifying (any of the foregoing, to the extent so
reasonably identifiable and quantifiable, being referred to as a "Saving"),
such Lender shall, to the extent that it can do so without prejudice to the
retention of the Saving, reimburse such Borrower promptly after such
identification and quantification with the amount of such Saving; provided,
however, that any such Saving shall be reduced by any costs incurred by
such Lender or the Administrative Agent in obtaining such Saving.
(2) Nothing in this Section 2.12(c) shall require any Lender to
---------------
disclose to any Person any information regarding its tax affairs or to
arrange its tax and other affairs in any particular manner.
SECTION 2.13. Maximum Lawful Interest Rate. Notwithstanding any
----------------------------
provision contained herein, the total liability of the Borrowers for payment of
interest pursuant hereto and the Notes, including any other charges or other
amounts, to the extent such charges and other amounts are deemed to be interest,
shall not exceed the maximum amount of such interest permitted by law to be
charged, collected, or received from the Borrowers (the "Maximum Rate"). If any
payments by any Borrower for the account of any Lender include interest in
excess of the Maximum Rate, such Lender shall apply such excess to the reduction
of the unpaid principal amount owing by such Borrower, or if none is due, such
excess shall be returned to such Borrower.
SECTION 2.14. Funding Issues.
--------------
(a) Increased Costs. If, due to either (i) the introduction after the
date hereof of, or any change after the date hereof in or in the interpretation
of, any applicable law, rule or regulation by any Governmental Authority,
central bank or comparable agency charged with the interpretation or
administration thereof or (ii) compliance by any Lender after the date hereof
with any final request or final directive issued after the date hereof (whether
or not having the force of law) by any such Governmental Authority, central bank
or comparable agency, and, as a result of any of the events set forth in the
above clauses (i) and (ii), (x) there shall be any increase in the cost to such
Lender in maintaining its Commitment under this Agreement, funding or
maintaining its Pro Rata Share of the Loans under this Agreement or maintaining
its commitment to participate (as provided for in Section 2.10(f)) in any Letter
of Credit in connection with the issuance of any Letter of Credit or other
commitments of this type, or (y) any Lender is subjected to any charge or
withholding on its obligations hereunder, or changes in the basis of taxation of
payments to any Lender in connection with any of the foregoing (except for
changes in the rate of tax on overall net income of any Lender) (collectively,
"Increased Costs"), then the Borrowers shall, from time to time, pay, to the
Administrative Agent for the benefit of such Lender within 15 days after such
Lender shall have provided notice to the Administrative Agent (and the
Administrative Agent shall have provided notice to the Borrowers) of such
Increased Cost, an amount sufficient to compensate such Lender for such
Increased Cost, as provided herein. A certificate setting forth in reasonable
detail the computation of the amount of such Increased Cost (which increase in
cost shall be determined by such Lender's reasonable allocation of the aggregate
of such cost increases resulting from such event), submitted to the Borrowers by
such Lender, shall be conclusive and binding for all purposes, absent manifest
error.
39
(b) Increased Capital. If any Lender which is subject to minimum
-----------------
capital requirements determines that compliance by such Lender, with any
guideline or request from any central bank or other Governmental Authority
(whether or not having the force of law) affects or would affect the amount
of capital required or expected to be maintained by such Lender, or any
corporation controlling such Lender, and such Lender reasonably determines
that the amount of such capital is increased by or based upon any
commitment to lend hereunder or making or maintaining Loans, its commitment
to participate (as provided for in Section 2.10(f)) in any Letter of Credit
----------------
in connection with the issuance of any Letter of Credit or other
commitments of this type, then, upon demand by such Person, the Borrowers
agree to, within five (5) days of such demand, pay to such Person, from
time to time as specified by such Person, additional amounts sufficient to
compensate such Person in the light of such circumstances, to the extent
that such Person reasonably determines such increase in capital to be
allocable to such Person's commitment or maintenance of Loans hereunder or
such Person's commitment to participate in any Letter of Credit. A
certificate as to the amount of such increased cost, submitted to the
Borrowers by the applicable Person shall, absent manifest error, be
conclusive and binding on the Borrowers for all purposes.
SECTION 2.15. Joint and Several Liability; Contribution.
-----------------------------------------
(a) Notwithstanding anything to the contrary in this Agreement
or the other Loan Documents, all payment and performance Obligations
arising under this Agreement and the other Loan Documents shall be joint
and several obligations of each Borrower secured by all the Collateral. The
Administrative Agent and the Collateral Agent may apply any portion of any
Collateral to satisfy any of the Obligations of any other Borrower.
(b) Contribution and Indemnification between the Borrowers. To
------------------------------------------------------
the extent that any Borrower shall, as a result of the operation of Section
2.15, pay (whether directly or by the application of proceeds of Collateral
owned by such Borrower) any Obligation of any other Borrower under the Loan
Documents (such payment being referred to as an "Accommodation Payment"),
then such Borrower shall be entitled to contribution and indemnification
from, and be reimbursed by each other Borrower, in an amount equal to a
fraction of such Accommodation Payment, the numerator of which fraction is
such other Borrower's "Allocable Amount" (as defined below) and the
denominator of which is the sum of the Allocable Amounts of all the
Borrowers. As of any date of determination, the "Allocable Amount" of each
Borrower shall be equal to the maximum amount of liability for
Accommodation Payments which could be asserted against such Borrower
hereunder without (a) rendering such Borrower "insolvent" within the
meaning of Section 101(32) of the United States Bankruptcy Code (11 U.S.C.
(S)101 et. seq) (the "Bankruptcy Code"), Section 2 of the Uniform
---------------
Fraudulent Transfer Act (the "UFTA") or Section 2 of the Uniform Fraudulent
----
Conveyance Act (the "UFCA"), (ii) leaving such Borrower with unreasonably
----
small capital or assets, within the meaning of Section 548 of the
Bankruptcy Code, Section 4 of the UFTA, or Section 5 of the UFCA, or (iii)
leaving such Borrower unable to pay its debts as they become due within the
meaning of Section 548 of the Bankruptcy Code or Section 4 of the UFTA, or
Section 5 of the UFCA. All rights and claims of subrogation, contribution,
indemnification and reimbursement under this section shall be subordinate
in right of payment to the prior payment in full of the Obligations. Each
Borrower agrees that any extension, forbearance or amendment, or any
acceptance, release or substitution of security, or any impairment or
suspension of the Administrative Agent's, the Collateral Agent's or the
40
Lenders' remedies or rights against any other Borrower or the cessation of
the liability of any other Borrower for any reason other than full and
indefeasible satisfaction of all Obligations shall not in any way affect
the liability of such Borrower. Each Borrower has provided itself of the
means of remaining informed of the financial condition of each other
Borrower, and waives any right to require any Lender or the Administrative
Agent to keep it informed of the financial condition of any other Borrower.
The provisions of this section shall, to the extent expressly inconsistent
with any provision in any Loan Document, supersede such inconsistent
provision.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
Each Borrower represents and warrants to the Administrative
Agent, the Collateral Agent and the Lenders that:
SECTION 3.01. Organization; Powers.
--------------------
(a) Such Borrower (i) is a corporation or limited liability
company duly organized, validly existing and in good standing under the
laws of its jurisdiction of organization and (ii) is qualified to do
business in the jurisdiction in which its principal place of business is
located and in every other jurisdiction where such qualification is
necessary unless the failure to be so qualified would not reasonably be
expected to have a Material Adverse Effect on such Borrower;
(b) such Borrower has the power and authority to own its
properties, to carry on its business as now conducted; and
(c) such Borrower has the power and authority to execute and
deliver and perform this Agreement and the other Loan Documents to which it
is a party, to borrow hereunder, and will have the power to execute and
deliver any Mortgages and Collateral Assignments of Leases or other
instruments to be delivered by it subsequent to the date hereof.
SECTION 3.02. Corporate Authorization. The execution, delivery
-----------------------
and performance of this Agreement and the other Loan Documents to which
such Borrower is a party, and the Loans hereunder:
(a) have been duly authorized by such Borrower's Board of
Directors or managers and, if necessary, such Borrower's stockholders or
members;
(b) (1) do not violate (i) any existing provision of law
applicable to such Borrower and not immaterial to its business, (ii) such
Borrower's Certificate or Articles of Incorporation or other organizational
documents, as the case may be, or (iii) any applicable order of any court
or other governmental agency, and (2) do not conflict with, result in a
breach of or constitute (with due notice or lapse of time or both) a
default under any indenture, agreement for borrowed money, bond, note or
other similar instrument or any other material agreement to which such
Borrower is a party or by which such Borrower or any of such Borrower's
property is bound;
41
(c) do not result in the creation or imposition of any Lien of
any nature whatsoever upon any property or assets of such Borrower other
than the Liens granted pursuant to this Loan Agreement or the other Loan
Documents;
(d) constitute legal, valid and binding obligations of such
Borrower, enforceable against such Borrower in accordance with their
respective terms; and
(e) do not, as of the date of execution hereof, require any
governmental consent, filing, registration or approval except as set forth
on Schedule 3.02.
-------------
SECTION 3.03. Financial Statements. The Borrowers have
furnished to the Administrative Agent and the Lenders the management
prepared consolidated financial statements of the Guarantor dated as of May
31, 2000, which statements are attached hereto as Exhibit I (collectively,
the "Financials"). The Financials have been prepared in accordance with
GAAP applied on a basis consistent with that of preceding periods and are
complete and correct in all material respects. As of the date of the
Financials, (a) the Financials fairly represent the Guarantor's financial
position and results of operations; and (b) there are no omissions from the
Financials or any other facts or circumstances not reflected in the
Financials which are or may be material according to GAAP.
SECTION 3.04. No Material Adverse Change. There has been no
--------------------------
material adverse change in the condition (financial or otherwise),
operations or properties of such Borrower since December 31, 1999.
SECTION 3.05. Litigation. Except as set forth on Schedule 3.05
-------------
hereto, there are no actions, suits or proceedings at law or in equity or
by or before any Governmental Authority now pending or, to the knowledge of
such Borrower against or affecting such Borrower or any property or rights
of such Borrower as to which there is a reasonable possibility of an
adverse determination and which, if adversely determined, would
individually or in the aggregate materially impair the right of any
Borrower to carry on business substantially as now being conducted or as
presently contemplated or would result in any Material Adverse Effect.
SECTION 3.06. Tax Returns. Except as set forth on Schedule
--------
3.06 hereto, such Borrower has filed or caused to be filed all Federal,
----
state and local tax returns which are required to be filed and has paid or
caused to be paid all taxes as shown on such returns or on any assessment
received by it to the extent that such taxes have become due, except such
taxes the amount, applicability or validity of which are being contested in
good faith by appropriate proceedings and with respect to which such
Borrower shall have set aside on its books adequate reserves with respect
to such taxes as are required by GAAP.
SECTION 3.07. No Defaults. Such Borrower is not in default (i)
-----------
with respect to any judgment, writ, injunction, decree, rule or regulation of
any Governmental Authority which is likely to have a Material Adverse Effect, or
(ii) in the performance, observance or fulfillment of any of the obligations,
covenants or conditions contained in any material agreement or instrument to
which such Borrower is a party or by which any of its assets are bound, which is
likely to have a Material Adverse Effect.
42
SECTION 3.08. Properties. Except as set forth on Schedule 3.08
---------- -------------
hereto, such Borrower has good and marketable title to all its material
properties and assets and all Collateral of such Borrower is free and clear
of all Liens of any nature whatsoever, except Permitted Liens.
SECTION 3.09. Licenses, Material Agreements, Intellectual
-------------------------------------------
Property.
--------
(a) Such Borrower has obtained all Governmental Approvals and
approvals of any Governmental Authority having jurisdiction over such
Borrower, which Governmental Approvals and approvals are necessary or
appropriate for the construction and operation of the Systems as are
presently operating. Such Governmental Approvals and approvals are
correctly listed on Schedule 3.09(a) and constitute the only material
----------------
licenses, permits or franchises or other Governmental Approvals of any
Governmental Authority required in connection with the Systems as are
presently operating. All Governmental Approvals of such Borrower are in
full force and effect, are duly issued in the name of, or validly assigned
to, such Borrower and such Borrower has the power and authority to operate
thereunder.
(b) Schedule 3.09(b) accurately and completely lists all
----------------
material agreements to which such Borrower is a party, including, without
limitation, all purchase agreements, construction contracts, right of way
or right of occupancy agreements, lease agreements, consulting, employment,
management and related agreements. All of the foregoing agreements are
valid, subsisting and in full force and effect and none of such Borrower,
or, to the best of such Borrower's knowledge and belief, any other parties,
are in material default thereunder. Such Borrower has given true and
complete copies of all such agreements to the Administrative Agent and the
Lenders.
(c) Such Borrower possesses or is applying for all the patents,
trademarks, service marks, trade names, copyrights and licenses, and all
rights with respect to the foregoing, necessary for the conduct of its
business as presently conducted without any known conflict with the rights
of others. Schedule 3.09(c) accurately and completely lists all such
----------------
rights.
SECTION 3.10. Compliance With Laws. Except as disclosed on
--------------------
Schedule 3.10, the operations of such Borrower comply in all material respects
-------------
with all applicable federal, state or local laws and regulations, including
environmental, health and safety statutes and regulations. None of the
operations of such Borrower is subject to any judicial or administrative
proceeding alleging the violation of any federal, state or local environmental,
health or safety statute or regulation. None of the operations of such Borrower
is the subject of federal or state investigation evaluating whether any Remedial
Action is needed to respond to a Release. Except as disclosed on Schedule 3.10,
such Borrower has not filed any notice under any federal or state law indicating
past or present treatment, storage or disposal of a hazardous waste or reporting
a Release. Except as disclosed on Schedule 3.10, such Borrower has no contingent
-------------
liability of which such Borrower has knowledge or reasonably should have
knowledge in connection with any Release.
SECTION 3.11. ERISA. None of such Borrower or any ERISA
Affiliate of such Borrower maintains or contributes to any Plan other than a
Plan listed on Schedule 3.11 hereto. Each Plan which is intended to be qualified
under Section 401(a) of the IRC has been determined by the IRS to be so
qualified, and each trust related to any such Plan has been determined to be
43
exempt from federal income tax under Section 501(a) of the IRC. Except as
disclosed on Schedule 3.11, none of such Borrower or any ERISA Affiliate
-------------
maintains or contributes to any employee welfare benefit plan within the meaning
of Section 3(1) of ERISA which provides benefits to employees after termination
of employment other than as required by Section 601 of ERISA. None of such
Borrower or any ERISA Affiliate has breached any of the responsibilities,
obligations or duties imposed on it by ERISA or regulations promulgated
thereunder with respect to any Plan. No Plan has incurred any accumulated
funding deficiency (as defined in Section 302(a)(2) of ERISA and Section 412(a)
of the IRC), whether waived or not waived. None of such Borrower or any ERISA
Affiliate nor any fiduciary of any Plan which is not a Multiemployer Plan (i)
has engaged in a nonexempt "prohibited transaction" described in Section 406 of
ERISA or Section 4975 of the IRC or (ii) has taken or failed to take any action
which would constitute or result in a Termination Event. None of such Borrower
or any ERISA Affiliate has incurred any liability to the PBGC which remains
outstanding other than the payment of premiums, and there are no premium
payments which have become due which are unpaid. Schedule B to the most recent
annual report filed with the IRS with respect to each Plan with respect to which
a Schedule B is required to be filed is complete and accurate. Since the date of
each such Schedule B, there has been no adverse change in the funding status or
financial condition of the Plan relating to such Schedule B. None of such
Borrower or any ERISA Affiliate has (i) failed to make a required contribution
or payment to a Multiemployer Plan or (ii) made a complete or partial withdrawal
under Sections 4203 or 4205 of ERISA from a Multiemployer Plan. None of such
Borrower or any ERISA Affiliate has failed to make a required installment or any
other required payment under Section 412 of the IRC on or before the due date
for such installment or other payment. None of such Borrower or any ERISA
Affiliate is required to provide security to a Plan under Section 401(a)(29) of
the IRC due to a Plan amendment that results in an increase in current liability
for the plan year.
SECTION 3.12. Investment Company Act; Public Utility Holding Company
------------------------------------------------------
Act. Such Borrower is not an "investment company" as that term is defined in,
---
and is not otherwise subject to regulation under, the Investment Company Act of
1940. Such Borrower is not a "holding company" as that term is defined in, and
is not otherwise subject to regulation under, the Public Utility Holding Company
Act of 1935.
SECTION 3.13. Federal Reserve Regulations. Such Borrower is not
---------------------------
engaged principally, or as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying any margin stock
(within the meaning of Regulation G of the Board of Governors of the Federal
Reserve System of the United States), and no part of the proceeds of the Loans
made to such Borrower will be used to purchase or carry any such margin stock or
to extend credit to others for the purpose of purchasing or carrying any such
margin stock or for any purpose that violates, or is inconsistent with, the
provisions of Regulation T, U or X of said Board of Governors.
SECTION 3.14. Collateral. The security interests granted by Article
---------- -------
VIII hereof, together with those granted pursuant to the Existing Agreement and
----
the Prior Agreement and accompanying financing statements, when duly filed in
the offices and jurisdictions set forth on Schedule 3.14 hereof, create valid
-------------
and perfected first priority Liens in and to the Collateral of such Borrower,
enforceable against other Persons in all jurisdictions securing the payment, as
applicable, of the Obligations hereunder. Upon filing such financing statements,
to the extent
44
that the filing of a financing statement is sufficient to perfect a security
interest, no further action is required to perfect the Liens of the Collateral
Agent in favor of the Lenders in the Collateral of such Borrower described in
Section 8.01.
------------
SECTION 3.15. Chief Place of Business. As of the Closing Date, the
-----------------------
chief executive office and principal place of business of such Borrower is as
set forth on Schedule 3.15. If any change in any such location occurs, such
-------------
Borrower shall notify the Administrative Agent and the Collateral Agent thereof
not later than ten days after the occurrence thereof. As of the date of
execution hereof, the books and records of such Borrower and all chattel paper
and all records of account are located at the principal place of business or
chief executive office of such Borrower and if any change in such location
occurs, such Borrower shall notify the Administrative Agent and the Collateral
Agent thereof not later than ten days after the occurrence thereof.
SECTION 3.16. Other Corporate Names. Except as set forth on Schedule
--------
3.16, such Borrower has not used and does not now use and will not use any
----
corporate or fictitious name.
SECTION 3.17. Insurance. Schedule 3.17 contains a description of all
--------- -------------
insurance which such Borrower maintains or has maintained on its behalf. All of
such insurance is in full force and effect.
SECTION 3.18. Milestone Plan. The Milestone Plan represents good
--------------
faith projections of future financial performance of the Borrowers for the
periods set forth therein. Such document has been prepared on the basis of the
assumptions set forth therein, which the Borrowers believe are reasonable in
light of current and reasonably foreseeable business conditions.
SECTION 3.19. Capitalization and Subsidiaries. The classes of Equity
-------------------------------
Interests, number of authorized shares, number of outstanding shares and par
values or other designations of the Equity Interests or other equity securities
or beneficial interests of such Borrower and the Guarantor are correctly set
forth on Schedule 3.19. All the outstanding shares of Equity Interests or other
-------------
equity securities or beneficial interests of such Borrower and the Guarantor are
duly and validly issued, fully paid and nonassessable, and none of such issued
and outstanding shares, equity securities or beneficial interests has been
issued in violation of, or is subject to, any preemptive or subscription rights.
Except as set forth on Schedule 3.19, there are no: (A) outstanding shares of
-------------
Equity Interests or other equity securities or beneficial interests or other
securities convertible into or exchangeable for shares of Equity Interests or
other equity securities or other beneficial interests of such Borrower or the
Guarantor, (B) outstanding rights of subscription, warrants, calls, options,
contracts or other agreements of any kind, issued, made or granted to or with
any Person under which such Borrower or the Guarantor may be obligated to issue,
sell, purchase, retire or redeem or otherwise acquire or dispose of any shares
of Equity Interests or other equity securities or beneficial interests of such
Borrower or the Guarantor, or (C) Subsidiaries of such Borrower or the
Guarantor. Except as set forth on Schedule 3.19, the Guarantor beneficially
-------------
owns all of the equity interests of such Borrower.
45
SECTION 3.20. Real Property, Leases and Easements. Such Borrower owns
-----------------------------------
the real property described on Schedule 3.20. Set forth on Schedule 3.20 is a
------------- -------------
list of (i) all real property leased by such Borrower (the "Leased Real
-----------
Property") and (ii) all easements, rights of way, rights of occupancy, licenses
--------
and similar rights with respect to real property granted to such Borrower not
otherwise disclosed to the Collateral Agent and the Lenders on a title report
delivered to the Collateral Agent and the Lenders pursuant to the terms hereof
(together with all easements, rights of way, rights of occupancy, licenses and
similar rights with respect to real property granted to such Borrower which are
so disclosed, collectively, the "Easements"). Also set forth on Schedule 3.20 is
--------- -------------
a street address of the real property and Leased Real Property locations
described above, including a description of such properties' current use. Except
as set forth in Schedule 3.20, such Borrower's interests in the owned real
-------------
property, the Leased Real Property and the Easements are sufficient in order for
such Borrower to conduct its business and operations as presently conducted.
SECTION 3.21. Solvency. After giving effect to any Loans made to such
--------
Borrower hereunder, the disbursement of the proceeds of such Loans pursuant to
such Borrower's instructions and the execution, delivery and performance of each
of the Loan Documents and transactions contemplated thereby, such Borrower is
Solvent and is not contemplating either the filing of a petition by it under any
state or federal bankruptcy or insolvency laws or the liquidation of all or a
substantial portion of its property, and has no knowledge of any Person
contemplating the filing of any such petition against such Borrower.
SECTION 3.22. Brokers, etc. Such Borrower has not dealt with any
------------
broker, finder, commission agent or other similar Person in connection with the
Loans or the transactions being effected contemporaneously with this Agreement
and such Borrower covenants and agrees to indemnify and hold harmless the
Administrative Agent, the Collateral Agent and the Lenders from and against, any
broker's fee, finder's fee or commission in connection with such transactions.
SECTION 3.23. No Material Misstatements. Neither any report,
-------------------------
financial statement, notice, certificate, exhibit or schedule furnished by or on
behalf of such Borrower to the Administrative Agent, the Collateral Agent or any
Lender in connection with the negotiation of this Agreement and the other Loan
Documents or included herein or therein, nor any other information required to
be furnished pursuant to the provisions of Article V hereof, contains any
---------
material misstatement of fact or omits to state any material fact necessary to
make the statements therein not materially misleading.
SECTION 3.24. Year 2000 Issues. Such Borrower has completed and
----------------
implemented a Year 2000 Corrective Plan and Year 2000 Corrective Actions, has
completed Year 2000 Implementation Testing and has eliminated all Year 2000
Problems, except where the failure to correct the same could not reasonably be
expected to have a Material Adverse Effect.
SECTION 3.25. Switching Equipment. The ownership of the Borrowers'
-------------------
Switching Equipment with respect to each market of the Borrowers is correctly
set forth on Schedule 3.25 hereto.
-------------
46
SECTION 3.26. Campuslink Property. With respect to its exclusive
-------------------
telecommunications service contracts with colleges and universities, PaeTec owns
or possesses a security interest in equipment related to such contracts in the
designated locations set forth on Schedule 3.26 hereto, and PaeTec has no
-------------
ownership, security interest or leasehold interest in the equipment related to
such contracts in the designated locations set forth on Schedule 3.26 hereto.
-------------
ARTICLE IV
CONDITIONS FOR LOANS
The obligations of each Lender to make Loans hereunder, and the
obligation of the Administrative Agent to issue Letters of Credit are subject to
the accuracy, as of the Funding Date and as of the date of making of each of the
Loans or the date of the issuance of any Letter of Credit after the Funding
Date, of the representations and warranties contained in Article III and the
-----------
other Loan Documents, to the performance by each Borrower of its obligations to
be performed hereunder on or before the date of such Loan or issuance of such
Letter of Credit and to the satisfaction of the following further conditions:
SECTION 4.01. Conditions Precedent to Initial Loan on or after the
----------------------------------------------------
Closing Date. In the case of the Loans to be made on the Funding Date:
------------
(a) All the applicable legal matters incident to this Agreement and the
other Loan Documents shall be reasonably satisfactory to counsel for the
Administrative Agent.
(b) The Administrative Agent shall have received payment in full of the
fees set forth in the Fee Letters then due and payable and all the other
documented out-of-pocket costs and expenses of the Administrative Agent and the
Lenders incurred on or prior to the Funding Date, including, without limitation,
reasonable attorneys' and paralegal' fees and expenses and the fees and expenses
incurred in connection with preparation of any environmental audits.
(c) The Agents shall have received the following items, in each case in
form and substance satisfactory to each of them:
(1) the Financials;
(2) the Milestone Plan showing in reasonable detail and specifying any
material underlying assumptions, the Borrowers' anticipated revenues and
expenses and projected statements of cash flow and information with respect
to projected capital expenditures and changes in working capital over such
period;
(3) certificates substantially in the form of Exhibits J-1 and J-2
hereto, dated the Funding Date or dated the Closing Date and a
reaffirmation of such certificate dated the Funding Date, of the
secretaries or assistant secretaries of each of the Borrowers and the
Guarantor, certifying (1) the names and true signatures of the officers
authorized to sign each Loan Document being signed as of the Closing Date
to which such Borrower or the Guarantor, as applicable, is a party, (2) the
resolutions of the Board of Directors of such Borrower the Guarantor, as
applicable, approving the transactions contemplated by
47
the Loan Documents to which each is a party, and (3) such Borrower's or the
Guarantor's, as applicable, bylaws;
(4) the written opinion of special and regulatory counsel for the
Borrowers and the Guarantor, dated the Funding Date, addressed to the
Administrative Agent, the Collateral Agent and the Lenders satisfactory to
(and containing only such qualifications and limitations as are
satisfactory to) counsel for the Administrative Agent and the Collateral
Agent, which opinions shall be substantially in the forms set forth in
Exhibits K-1 and K-2 attached hereto;
(5) certificates of appropriate public officials dated not more than 30
days prior to the Funding Date, as to the legal existence or qualification,
and good standing of each Borrower and the Guarantor from such Person's
jurisdiction of organization and from the jurisdiction in which such Person
has its principal place of business;
(6) each Borrower's and the Guarantor's Certificate or Articles of
Incorporation, as amended, modified or supplemented on or prior to the
Funding Date, each certified to be true, correct and complete by the
Secretary of State of the state in which such Person is organized;
(7) the Revolving Loan Notes duly executed and delivered by the
Borrowers;
(8) the Term Loan Notes duly executed and delivered by the Borrowers;
(9) General Reaffirmation;
(10) a Pledge Supplement from the Guarantor evidencing the pledge to the
Collateral Agent of all outstanding Equity Interests of Pinnacle and DVN,
together with the stock certificates evidencing such Equity Interests and
undated stock powers executed in blank;
(11) loss payable endorsements substantially in the form of Exhibit M
---------
attached hereto with respect to each Borrower's insurance policies relating
to the Collateral, and insurance certificates required by Section 5.04(g)
---------------
from nationally recognized insurance brokers with respect to each
Borrower's insurance policies with the certification for excess or umbrella
liability insurance to be limited to $10,000,000;
(12) with respect to each Borrower's then existing Collection Accounts,
Restricted Account Agreements substantially in the form of such agreements
executed and delivered pursuant to the Existing Agreement, copies of which
are attached as Exhibit N hereto, duly executed by the applicable Borrower
---------
and the financial institutions maintaining the Collection Accounts (except
to the extent previously delivered pursuant to the Existing Agreement);
(13) a duly executed Collateral Assignment of Licenses by each Borrower,
together with consents to assignment of licenses and rights from Persons
designated by the Collateral Agent duly executed by such Persons, including
agreements as to default notices, cure rights, waiver of lien rights,
conveyance of nondisturbance rights and other terms satisfactory to the
Collateral Agent (except to the extent previously delivered pursuant to the
Existing Agreement, in which case such document shall be supplemented if
necessary); and
48
(14) a duly executed Collateral Assignment of Leases by each Borrower
(except to the extent previously delivered pursuant to the Existing
Agreement, in which case such document shall be supplemented if necessary),
together with consents to assignment (or such other documentation described
in Section 5.21), duly executed by the appropriate Persons, including
------------
agreements as to default notices, cure rights, waiver of lien rights,
conveyance of nondisturbance rights and other terms satisfactory to the
Collateral Agent with respect to those leased properties specified by the
Collateral Agent, together with landlord waivers in the form of Exhibit D
---------
hereto executed by the appropriate landlord.
(d) The Collateral Agent shall have satisfactorily completed its review
of any Lucent Purchase Agreement, construction and maintenance contracts, right
of way agreements and interconnection agreements related to the Systems being
financed with the initial Loan made on the Funding Date.
(e) The Collateral Agent shall have received evidence satisfactory to
the Collateral Agent that the Collateral Agent's security interests in the
Collateral have been properly perfected and constitute first and prior security
interests subject only to Permitted Liens, including by means of the filing of
Mortgages, the Collateral Assignment of Licenses, the Collateral Assignment of
Leases, obtaining consents thereto, leasehold mortgages and UCC-1 financing
statements in certain filing and recording offices, and the taking of possession
of stock certificates and other instruments.
(f) The Collateral Agent shall have received evidence satisfactory to
the Collateral Agent, including the results of searches conducted in the
mortgage recording, UCC, tax Lien and judgment filing records in each
appropriate filing office or jurisdiction, that there are no Liens against the
Collateral except Permitted Liens.
(g) The Administrative Agent shall have received evidence satisfactory
to the Administrative Agent that no Borrower has any Debt other than as
described in Section 6.13 and that the holders of any such Debt shall have
------------
executed subordination and standstill agreements satisfactory to the
Administrative Agent.
(h) The Collateral Agent shall have obtained or waived in writing with
respect to each real estate and material equipment lease and each mortgage of
any Borrower relating to the Systems being financed with the initial Loan made
after the Closing Date (i) the right from the applicable lessors and mortgagees
to cure all payment defaults under such leases and mortgages by making payment
directly to the applicable lessors and mortgagees and (ii) landlord waivers and
consents, as the Collateral Agent may require, with respect to each leased
facility.
(i) The Agents shall have satisfactorily completed their due diligence
investigation of the Borrowers and the Systems and the Borrowers' other assets,
and their respective officers and directors including, without limitation,
environmental reviews, engineering reviews, review of material agreements of the
Borrowers and review of easement matters.
49
(j) All right of way agreements with respect to each System under
construction shall be sufficient to allow full operation of such System and
shall be assignable to the Collateral Agent or its designee.
SECTION 4.02. Conditions Precedent to All Loans and Letters of
------------------------------------------------
Credit. In the case of each Loan hereunder and the obligation to issue Letters
------
of Credit:
(a) The representations and warranties of each Borrower set forth in
Article III or in any other Loan Document and of the Guarantor in each Loan
-----------
Document to which the Guarantor is a party shall be true and correct in all
material respects on and as of the date of such Loan or the issuance of such
Letter of Credit with the same effect as though such representations and
warranties had been made on and as of such date.
(b) At the time of each such Loan or the issuance of such Letter of
Credit, and after giving effect to such Loan or Letter of Credit, each Borrower
shall be in compliance with all the terms and provisions set forth herein on its
part to be observed or performed, and no Event of Default or Default shall have
occurred and be continuing.
(c) At the time of each such Loan or the issuance of such Letter of
Credit and after giving effect to each such Loan or Letter of Credit, there
shall have been no material adverse change in the condition (financial or
otherwise), operations, properties or prospects of any Borrower since the date
of the Financials.
(d) Such Loan or Letter of Credit, when combined with all Loans
previously made to, and Letters of Credit previously issued for the account of,
the Borrowers, shall not exceed the Commitment Amount, such Loan if not for the
purpose of making a Permitted Acquisition, when combined with Loans previously
made to the Borrowers that were not for the purpose of making Permitted
Acquisitions, shall not exceed the Borrowing Base, such Loan if for the purpose
of making a Permitted Acquisition, when combined with all Loans previously made
to the Borrowers that were for the purpose of making Permitted Acquisitions,
shall not exceed $30,000,000, and such Letter of Credit, after giving effect to
the issuance thereof, would not exceed the Unused Letter of Credit Subfacility.
(e) All legal matters incident to such Loan or Letter of Credit and the
Loan Documents shall be satisfactory to counsel for the Administrative Agent and
the Collateral Agent.
(f) The Agent shall have received a Notice of Borrowing for any
requested Loan and acceptance certificate and invoices required by Section 2.03,
------------
and with respect to any requested Letter of Credit, the conditions precedent
specified in Section 2.10(c) shall have been complied with.
(g) Except as otherwise provided in Section 2.01(d) with respect to the
Lien on PaeTec's Switching Equipment located in Chicago, Illinois, the
Collateral Agent shall have first priority Liens on all personal and real
property assets that comprise or relate to each System to be funded by such
Loan, shall have received collateral assignments of all material third party
agreements relating to such Systems, consented to by the applicable third
parties, as requested by
50
the Collateral Agent, and shall have received evidence that all necessary
Governmental Approvals for such System have been obtained.
(h) The Collateral Agent shall have received copies of such lien
waivers and other acknowledgments from Persons constructing the Systems, any
subcontractors or vendors (including Lucent) with respect to the construction of
the Systems as the Collateral Agent may reasonably request.
(i) All fees and expenses which are due and payable to the
Administrative Agent on or prior to the date of the advance of such Loan or the
issuance of such Letter of Credit shall have been paid.
(j) The Lenders shall have satisfactorily completed their review of any
construction and maintenance contracts related to the Systems being financed
with such Loan and the interconnection agreements for each System being financed
with such Loan.
(k) The Collateral Agent shall have obtained or waived in writing with
respect to each real estate and material equipment lease, each mortgage, and
each material third party agreement relating to the Systems being financed with
such Loan (i) the right from the applicable lessors and mortgagees to cure all
payment defaults under such leases and mortgages by making payments directly to
the applicable lessors and mortgagees, (ii) landlord waivers and consents (or
such other documentation described in Section 5.21), as the Collateral Agent may
------------
require, with respect to each leased facility, and (iii) consents to collateral
assignment, as the Collateral Agent may require, with respect to each such
material third party agreement.
(l) If the use of the Loan proceeds are for purposes of financing a
particular System for the first time, the Collateral Agent shall have received
copies of all interconnection agreements, right of way agreements, easement
agreements, real property leases, construction agreements, equipment purchase
agreements, fiber leases, telephone line leases, state and local franchise
agreements and other agreements with municipalities, that in each case relate to
such System.
ARTICLE V
AFFIRMATIVE COVENANTS
Each Borrower covenants and agrees that so long as this Agreement
shall remain in effect, any Commitment hereunder shall be outstanding or any
Obligations hereunder or under any of the other Loan Documents are unpaid,
unless the Requisite Lenders shall have otherwise given prior written consent:
SECTION 5.01. Corporate and Franchise Existence. Such Borrower shall
---------------------------------
preserve and maintain its corporate or limited liability company existence,
rights, franchises, licenses and privileges in its jurisdiction of its
organization, and in all other jurisdictions in which such qualification is
necessary in view of its business and operations and property and preserve,
protect and keep in full force and effect its material rights and its
Governmental Approvals.
51
SECTION 5.02. Compliance with Laws, Etc. Such Borrower shall comply
--------------------------
in all material respects with all laws and regulations applicable to it,
including, without limitation, Environmental Laws, regulations promulgated by
the FCC and any PUC, and other telecommunications laws and regulations, and all
material contractual obligations applicable to it.
SECTION 5.03. Maintenance of Properties. Such Borrower shall at all
-------------------------
times maintain in good repair, working order and condition, excepting ordinary
wear and tear, all of its properties material to its operations and make all
appropriate repairs, replacements and renewals thereof, in each case consistent
with prudent industry practices and sound business judgment and with respect to
the maintenance of machinery and equipment, in compliance with applicable
government regulations, manufacturers' warranty requests and any licensing
requirements.
SECTION 5.04. Insurance. Such Borrower shall at its own expense,
---------
with insurers and with maximum deductibles satisfactory to the Collateral Agent:
(a) keep its insurable properties, including its Telecommunications
Equipment, real property and other tangible Collateral, adequately insured on an
all risk basis for the full replacement value thereof at all times;
(b) maintain in full force and effect, pay all premiums when due in
respect of, and comply with all terms and conditions of the following insurance
coverages for each System:
(1) All Risk Property Insurance. Such Borrower shall maintain all risk
---------------------------
property insurance covering each of its Systems against physical loss or
damage, including but not limited to fire and extended coverage, collapse,
flood, earth movement and comprehensive boiler and machinery coverage
(including electrical and mechanical breakdown). Such insurance shall
cover each and every component of such System and shall not contain any
exclusion for resultant damage caused by faulty workmanship, design or
materials. Coverage shall be written on a replacement cost basis in an
amount acceptable to the Collateral Agent. Such insurance policy shall
contain an agreed amount endorsement waiving any coinsurance penalty; and
(2) Business Interruption. As an extension of the coverage required
---------------------
under Section 5.04(b)(1), such Borrower shall maintain business
------------------
interruption insurance in an agreed amount equal to twelve (12) months
projected loss of net profits, continuing expenses and debt service
payments of such System and shall contain an agreed amount endorsement
waiving any coinsurance penalty. Contingent business interruption insurance
shall also be included to cover the major suppliers and customers of the
Borrower. Coverage shall be included for expediting expenses in an amount
not less than $15,000,000. Such insurance shall also cover service
interruption. Deductibles shall not exceed thirty (30) days; and
(3) Comprehensive or Commercial General Liability Insurance. Such
-------------------------------------------------------
Borrower shall maintain comprehensive general liability insurance written
on an occurrence basis with a limit of not less than $1,000,000. Such
coverage shall include, but not be limited to, premises/operations,
explosion, collapse, underground hazards, contractual liability,
independent contractors, products, completed operations, property
52
damage and personal injury liability. Such insurance shall not exclude
coverage for punitive or exemplary damages where insurable by law; and
(4) Workers' Compensation/Employer's Liability. Such Borrower shall
------------------------------------------
maintain workers' compensation insurance in accordance with statutory
provisions covering accidental injury, illness or death of an employee of
such Borrower while at work or in the scope of his or her employment with
such Borrower and employer's liability insurance in an amount not less than
$500,000. Such coverage shall not contain any occupational disease
exclusions; and
(5) Automobile Liability. Such Borrower shall maintain automobile
--------------------
liability insurance covering owned, non-owned, leased, hired or borrowed
vehicles against bodily injury or property damage. Such coverage shall have
a limit of not less than $1,000,000; and
(6) Excess/Umbrella Liability. Such Borrower shall maintain excess or
-------------------------
umbrella liability insurance in an amount not less than $20,000,000,
written on an occurrence basis providing coverage limits in excess of the
insurance limits required under Sections 5.04(b)(3), (b)(4) (employer's
------------------- ------
liability only), and (b)(5). Such insurance shall follow from the primary
------
insurance and drop down in case of exhaustion of underlying limits and/or
aggregates. Such insurance shall not exclude coverage for punitive or
exemplary damages where insurable by law; and
(7) Directors and Officers Insurance. Such Borrower shall maintain
--------------------------------
directors and officers liability insurance including entity employment
practices liability and fiduciary liability insurance of at least
$5,000,000 at all times, including defense costs, with a retention amount
of $50,000 or less for directors and officers liability claims and a
retention amount of $75,000 or less for employment practices liability
claims.
(c) maintain such other insurance to such extent and against such
risks, as are reasonably satisfactory to Collateral Agent (the insurance
policies described on Schedule 3.17 hereto being acceptable to the Collateral
-------------
Agent as of the date hereof);
(d) cause each insurance policy (other than any policy referred to in
clause (b)(4) above related to workmen's compensation) pertaining to the
Collateral to (i) name the Collateral Agent and its affiliates (all of the
foregoing are hereinafter referred to as the "Additional Insureds") as an
-------------------
"additional insured" if such policy is a liability policy, (ii) name each of the
Additional Insureds as a "mortgagee" and "loss payee" as to claims in excess of
$500,000 and include a standard agent's loss payable endorsement in favor of
each of the Additional Insureds substantially in the form of Exhibit M if such
---------
policy is a property insurance policy, (iii) provide that, the Collateral Agent
shall be notified in writing of any proposed cancellation or modification of
such policy initiated by the Borrower's insurer at least thirty (30) days in
advance prior to any proposed cancellation or modification and will have
sufficient time to correct any deficiencies justifying such proposed
cancellation or modification, (iv) provide that all insurance proceeds for
losses shall be payable to each of the Additional Insureds as their interests
may appear in the event of any omission or breach by the Borrower, (v) waive any
right of subrogation of the insurers against the Additional Insureds and waive
any right of the insurers to any setoff or counterclaim or any other deduction,
whether by attachment or otherwise, in respect of any liability of the Borrower,
and (vi) provide that such insurance shall be primary
53
insurance, that the insurers under such insurance policies shall be liable under
such policies without right of contribution from any other insurance coverage
and expressly provide that all provisions thereof, except the limits of
liability (which shall be applicable to all insureds as a group), shall operate
in the same manner as if there were a separate policy covering each insured, and
liability for premiums shall be solely a liability of the Borrower;
(e) direct all insurers under policies of insurance described in clause
(d) above and payors of any condemnation claim or award relating to the property
to pay all proceeds payable under such policies or with respect to such claim or
award for any loss with respect to the Collateral directly to the Collateral
Agent, which amounts shall be applied by the Agent, upon request by such
Borrower and provision to the Collateral Agent of detailed information,
including a construction schedule and cost estimates, which establish to the
reasonable satisfaction of the Collateral Agent that the amounts available and
the proposed schedule are adequate to restore, replace or rebuild the property
subject to any insurance or condemnation award in a timely manner, to such
restoration, replacement or rebuilding unless an Event of Default or Default
shall have occurred and be continuing or such Borrower shall have failed to make
such request within thirty days after receipt of such amounts by Agent, in which
case such amounts shall be applied in the Required Lenders' sole discretion to
the prepayment of the Obligations or such restoration, replacement or
rebuilding;
(f) on or prior to the renewal date of each policy deliver to the
Collateral Agent copies of all policies or broker's certificates and loss
payable endorsements issued by such Borrower's insurers in respect of all
policies and endorsements, as renewed. Each such policy, certificate and
endorsement shall be accompanied by a statement from the Borrowers' insurance
broker or insurance agent stating whether, in the opinion of such broker or
agent, such policies comply with the requirements of this Section 5.04 that all
------------
premiums due thereon have been paid and that upon the renewal date, such policy
shall be in full force and effect; and
(g) immediately upon receiving notice from the broker or insurance
carrier of cancellation or material modification of any policy required
hereunder, provide the Collateral Agent with notice thereof.
SECTION 5.05. Obligations and Taxes. Such Borrower shall pay all of
---------------------
its indebtedness and obligations promptly and in accordance with their terms and
pay and discharge promptly all taxes, assessments and governmental charges or
levies imposed upon it or upon its income or profits or in respect of its
property, before the same shall become in default, as well as all lawful claims
for labor, materials and supplies or otherwise which, if unpaid, might become a
Lien upon such properties or any part thereof; provided, however, that such
-------- -------
Borrower shall not be required to pay and discharge or to cause to be paid and
discharged any such tax, assessment, charge, levy or claim so long as the
validity or amount thereof shall be contested in good faith by appropriate
proceedings diligently pursued, and such Borrower shall set aside on its books
such reserves as are required by GAAP with respect to any such tax, assessment,
charge, levy or claim so contested.
SECTION 5.06. Financial Statements, Reports, etc. Such Borrower shall
-----------------------------------
furnish to the Administrative Agent, the Collateral Agent and the Lenders:
54
(a) within ninety (90) days after the end of each fiscal year of such
Borrower, an annual audited consolidated financial statement of the Guarantor,
including consolidating statements showing the separate results of the
Borrowers, consisting of the balance sheets and statements of operations,
income, stockholders' equity and cash flows, for such fiscal year, prepared in
accordance with GAAP, which consolidated financial statements and other above
described financial information shall have been audited by a nationally
recognized independent certified public accounting firm satisfactory to the
Administrative Agent, and accompanied by such independent certified public
accounting firm's unqualified opinion;
(b) within forty-five (45) days after the end of each month and each
fiscal quarter during each fiscal year of the Guarantor, consolidated unaudited
balance sheets and statements of operations for the Guarantor, and consolidating
statements showing the separate results of the Borrowers as of the end of each
such month or fiscal quarter, as applicable, and for the then elapsed portion of
the fiscal year;
(c) concurrently with (a) and (b) above, a certificate of the
Guarantor's independent certified public accountant or the Guarantor's chief
financial officer, as applicable, to the effect that the financial statements
referred to in clause (a) or (b) above, present fairly the financial position
and results of operations of the Guarantor and the Borrowers and as having been
prepared in accordance with GAAP consistently applied, in each case subject to
normal year end audit adjustments except for the statements referred to in
clause (a) above;
(d) concurrently with (a) above, and any statements delivered pursuant
to (b) above in respect of the month of March and the period ending March 31,
the month of June and the period ending June 30 or the month of September and
the period ending September 30, (i) a Periodic Reporting Certificate of the
chief financial officer of the Guarantor setting forth the calculations
contemplated in Article VII hereof, and certifying as to the fact that such
-----------
Person has examined the provisions of this Agreement and that no Event of
Default or any Default, shall have occurred and be continuing or if such an
event has occurred, a statement explaining its nature and extent and setting
forth the steps the Borrowers propose to take to cure or prevent any Event of
Default and (ii) a narrative summary prepared by the chief financial officer of
the Guarantor that contains a detailed explanation of the financial performance
of the Borrowers for the preceding fiscal quarter as compared against the
projected financial performance of the Borrowers in the Milestone Plan;
(e) prior to February 15 of each year for such year, an operating
budget of the Guarantor and the Borrowers, showing projected consolidated and
consolidating revenues, expenses and a projected balance sheet on a month-by-
month basis in reasonable detail, prepared by the Guarantor and the Borrowers
and in form and substance reasonably satisfactory to the Administrative Agent
and the Lenders, a draft of such operating budget to be delivered to the
Administrative Agent and the Lenders as soon as available, and in any event on
or prior to December 1 of the preceding year for approval by the Administrative
Agent and the Lenders, which approval shall be automatically deemed to have
occurred with respect to such draft operating budget if the Administrative Agent
and the Lenders fail to comment on such draft operating budget within 31 days of
receipt thereof;
55
(f) all material agreements or licenses affecting the Governmental
Approvals of any Borrower or any System promptly after any execution, or
material amendment thereto;
(g) promptly upon their becoming available, copies of any periodic or
special documents, statements or other information filed by any Borrower with
the FCC, PUC or other Governmental Authority in connection with the construction
and/or operation of any System or with respect to the transactions contemplated
by any of the Loan Documents, and copies of any material notices and other
material communications from the FCC, PUC or from any other Governmental
Authority;
(h) immediately upon any officer of any Borrower obtaining knowledge of
any condition or event (i) which either constitutes an Event of Default or a
Default, (ii) which renders any representation, covenant or warranty contained
herein materially false or misleading, or (iii) which would result in any
financial results for any fiscal year to materially deviate from the financial
results projected for such fiscal year in the Milestone Plan or the financial
projections described in clause (e) above, a certificate signed by an authorized
officer of such Borrower specifying in reasonable detail the nature and period
of existence thereof and what corrective action such Borrower has taken or
proposes to take with respect thereto;
(i) within forty-five (45) days after the end of each fiscal year of
such Borrower, a certificate signed by an authorized officer of such Borrower
(x) setting forth all the Leased Real Property, Easements, licenses, rights of
way and other similar interests in real property acquired by such Borrower in
the preceding year and (y) confirming that no Default or Event of Default has
occurred and is continuing;
(j) evidence of insurance complying with Section 5.04;
------------
(k) following the written request of the Administrative Agent, not
later than forty-five (45) days after the end of each fiscal month, reports on
accounts receivable and accounts payable of such Borrower in such detail and
format as may be reasonably requested by the Administrative Agent;
(l) promptly upon the filing thereof, copies of all registration
statements and annual, quarterly, monthly or other regular reports which such
Borrower or the Guarantor files, if at all, with the Securities and Exchange
Commission; and
(m) promptly from time to time such other information regarding the
operations (including, without limitation, construction budgeting and System
completion), business affairs and condition (financial or otherwise) of such
Borrower or the Guarantor as the Administrative Agent or the Collateral Agent
may reasonably request.
SECTION 5.07. Litigation and Other Notices. Such Borrower shall give
----------------------------
the Administrative Agent prompt written notice upon obtaining knowledge of the
following: (a) all events of default or defaults and all events of default or
any event that would become an event of default upon notice or lapse of time or
both under any of the terms or provisions of any note, or of any other evidence
of indebtedness or agreement or contract governing the borrowing of money in
excess of $25,000 in the aggregate, of such Borrower; (b) any levy, attachment,
execution or other process against any of the property or assets, real or
personal, of such
56
Borrower in an amount in excess of $100,000; (c) the filing or commencement of
any action, suit or proceeding by or before any court or any Governmental
Authority which, if adversely determined against such Borrower, would result in
a Material Adverse Effect; (d) any material notice, letter or other
correspondence of any kind from the FCC or the PUC relating to the Governmental
Approvals or any System; (e) any default under any other material license,
agreement or contract to which such Borrower is or may become a party; and (f)
any matter which has resulted in, or which such Borrower reasonably believes
will result in, a Material Adverse Effect on such Borrower.
SECTION 5.08. Mortgages; Landlord Consents; Licenses and Other
------------------------------------------------
Agreements. As security for the Obligations, such Borrower shall with respect to
----------
each System (i) promptly execute and deliver to the Collateral Agent (1)
Mortgages in favor of the Collateral Agent with respect to any real property
purchased by such Borrower, together with lender's title policies for such real
property satisfactory to the Collateral Agent, (2) leasehold mortgages or
collateral assignments of leases with respect to any real property leased by
such Borrower, satisfactory to the Collateral Agent, (3) Mortgages or collateral
assignments with respect to such Borrower's Easements and rights of way, as
specified by the Collateral Agent, satisfactory to the Collateral Agent, (4) in
the case of any leased facilities, Easements or rights of way, landlord waivers
or consents satisfactory to the Collateral Agent; provided, however, that with
respect to PaeTec's leased premises in Chicago, Illinois in which Switching
Equipment is located, such landlord waiver shall not be required until
termination or expiration of the current term of the lease for such premises,
whichever occurs earlier, and (ii) (1) update Schedule 1 to the Collateral
Assignment of Licenses to cover all Governmental Approvals obtained by such
Borrower after the Closing Date and agreements entered into by such Borrower
after the Closing Date with third Persons, (2) obtain consents to collateral
assignments from the licensors granting the Governmental Approvals referred to
in clause (ii) (1) above and from those third Persons referred to in clause (ii)
(1) above that are specified by the Collateral Agent, such consents to
collateral assignment to be in form and substance satisfactory to the Collateral
Agent, and it being understood that with respect to each exclusive
telecommunications service contract that PaeTec enters into after the Closing
Date, PaeTec shall use commercially reasonable best efforts to obtain such
consents.
SECTION 5.09. ERISA. Such Borrower shall comply in all material
-----
respects with the applicable provisions of ERISA and furnish to the
Administrative Agent, (i) as soon as possible, and in any event within thirty
(30) days after such Borrower or any officer of such Borrower knows or has
reason to know that any Reportable Event with respect to any Plan has occurred
or any Termination Event has occurred, a statement of an officer of such
Borrower setting forth details as to such Reportable Event or Termination Event
and the corrective action that such Borrower proposes to take with respect
thereto, together with a copy of the notice of any such Reportable Event given
to the PBGC, and (ii) promptly after receipt thereof, a copy of any notice such
Borrower may receive from the PBGC relating to the intention of the PBGC to
terminate any Plan or to appoint a trustee to administer any such Plan.
SECTION 5.10. Access to Premises and Records. Such Borrower shall
------------------------------
permit representatives of the Administrative Agent, the Collateral Agent and the
Lenders to have access to such Borrower's books and records and to the
Collateral and the premises of such Borrower at
57
reasonable times upon reasonable notice and to make such excerpts from such
records as such representatives deem necessary and to inspect the Collateral.
SECTION 5.11. Design and Construction. Such Borrower shall design,
-----------------------
construct, equip and operate its Systems substantially as previously disclosed
to Lenders in the Milestone Plan and in accordance with prudent industry
standards.
SECTION 5.12. Environmental Notices. If such Borrower shall (a)
---------------------
receive notice that any violation of any federal, state or local environmental
law or regulation may have been committed or is about to be committed by such
Borrower, (b) receive notice that any administrative or judicial complaint or
order has been filed or is about to be filed against such Borrower alleging
violations of any federal, state or local environmental law or regulation or
requiring such Borrower to take any action in connection with any Release of any
Contaminant into the environment, or (c) receive any notice from a Governmental
Authority or private party alleging that such Borrower may be liable or
responsible for costs associated with a response to or cleanup of a Release or
any damages caused thereby, such Borrower shall provide the Administrative Agent
with a copy of such notice within twenty (20) Business Days of such Borrower's
receipt thereof.
SECTION 5.13. Amendment of Organizational Documents. Such Borrower
-------------------------------------
shall notify the Administrative Agent and the Collateral Agent of any amendment
to its Certificate or Articles of Incorporation or other organizational
documents within ten (10) days of the occurrence of any such event, and provide
the Administrative Agent and the Collateral Agent with copies of any amendments
certified by the secretary of such Borrower and of all other relevant
documentation. Such Borrower shall promptly deliver to the Collateral Agent such
financing statements executed by such Borrower which the Collateral Agent may
request as a result of any such event.
SECTION 5.14. Pledge Agreements. In the event that any Person other
-----------------
the Guarantor becomes a shareholder of any Borrower, the applicable Borrower
shall cause each such Person to execute and deliver to the Collateral Agent a
Pledge Agreement substantially in the form of Exhibit L attached hereto and a
limited nonrecourse guaranty (if such Person is not a Borrower), which guaranty
shall contain substantially the same provisions as the guaranty attached as
Exhibit G hereto except that the liability of such Person shall be nonrecourse
to such Person and shall be limited to the value of the "Pledged Collateral" (as
defined in the Pledge Agreement) and the payment of certain expenses. This
provision shall not constitute a waiver of the Event of Default specified in
Section 9.01(q).
--------------
SECTION 5.15. Accounts Payable. Such Borrower shall pay each of its
accounts payable in accordance with its practices as of the Closing Date but in
any event no later than sixty (60) days after the due date, provided, however,
-------- -------
that such Borrower shall not be required to pay any account payable as long as
the validity thereof shall be contested in good faith by appropriate proceedings
and such Borrower shall have set aside adequate reserves with respect thereto in
accordance with GAAP.
SECTION 5.16. Post-Closing Items. Not later than thirty days
------------------
following the Closing Date, the Borrowers shall deliver to the Collateral Agent
an updated certificate of
58
insurance evidencing the increase in the Borrowers' excess or umbrella liability
insurance to $20,000,000. The Borrowers shall use commercially reasonable best
efforts to obtain a consent to collateral assignment not later than 120 days
after the Closing Date and in form satisfactory to the Collateral Agent of the
Fiber Capacity Agreement executed March 31, 2000 between Global Crossing
Bandwidth, Inc. and PaeTec. Not later than thirty days after the Closing Date,
the Borrowers shall obtain a "Restricted Account Agreement" (as defined in
Section 8.04) with respect to the Borrowers' Collection Accounts relating to the
Collateral at The Chase Manhattan Bank in Rochester, New York.
SECTION 5.17. Fiscal Year. Such Borrower shall maintain a fiscal
-----------
year ending on December 31.
SECTION 5.18. Reserved.
--------
SECTION 5.19. Subsidiary Guarantees and Pledges. Such Borrower shall
---------------------------------
(i) cause each Person which becomes a Subsidiary of such Borrower and does not
become a Borrower under this Agreement to execute a guaranty of the Obligations
substantially in the form of Exhibit G hereto, but exclusive of any financial
covenants, and (ii) execute a Pledge Agreement, pursuant to which all of the
Equity Interests in such Person will be pledged to the Collateral Agent.
SECTION 5.20. Accounting. Such Borrower shall maintain a system of
----------
accounting established and administered in accordance with GAAP.
SECTION 5.21. Landlord Letters of Credit. In the event that any
--------------------------
consent to a collateral assignment of a real property lease from any landlord as
required by Sections 4.01(c)(14), 4.02(k) or 5.16 is not obtained by a Borrower,
-------------------- ------- ----
then in lieu of meeting the requirements under such Sections, such Borrower may
cause such landlord to accept a letter of credit ("Landlord L/C") naming such
------------
landlord as beneficiary, as security for no less than six months of lease
payments due at any time under such lease; provided that such letter of credit
--------
is in form and substance satisfactory to the Collateral Agent, the Borrower
shall cause such letter of credit to be renewed or replaced so that it remains
outstanding as long as any of the Obligations remain unpaid, and the landlord
waiver from such landlord has addressed the application of any draws from such
letter of credit in a manner satisfactory to the Collateral Agent.
SECTION 5.22. Pledge of East Florida Common Stock. PaeTec shall
-----------------------------------
immediately upon the earlier of (i) payment in full of the Debt referred to in
Section 6.13(g) below, or (ii) the release of the Common Stock of Florida from
---------------
the pledge described in Section 6.01(i) below, pledge all of the Common Stock
---------------
and other Equity Interests in Florida to the Collateral Agent pursuant to a
Pledge Agreement.
SECTION 5.23. Interest Rate Agreement. At all times on and after
-----------------------
September 30, 2000 and prior to March 31, 2001, the Borrowers shall maintain one
or more Interest Rate Agreements with a tenor of at least two years on terms and
conditions and with counterparties reasonably satisfactory to the Administrative
Agent with respect to at least $50,000,000 of the outstanding principal balance
of the Loans. At all times on and after March 31, 2001, in the event that less
than fifty percent (50%) of the Debt (assuming that the entire portion of the
59
Revolving Loan Commitment Amount has been drawn upon) of the Guarantor and the
Borrowers on a consolidated basis bears interest at a fixed rate, the Borrowers
shall maintain one or more Interest Rate Agreements with a tenor of at least two
years on terms and conditions and with counterparties reasonably satisfactory to
the Administrative Agent with respect to such amount of the outstanding
principal balance of the Loans that would result in at least fifty percent (50%)
of such Debt of the Guarantor and the Borrowers on a consolidated basis bearing
interest at a fixed rate.
SECTION 5.24. Marcap Debt. In the event that PaeTec is in default
-----------
under the Marcap Agreement, upon written request from the Administrative Agent
delivered at least five (5) Business Days before any date specified in Section
13 of the Marcap Agreement that permits prepayment in full of the obligations of
PaeTec to Marcap Corporation under the Marcap Agreement and provided that Loans
are made available to PaeTec for such purpose, PaeTec shall on such date prepay
in full all of its obligations to Marcap Corporation. As soon as possible after
the obligations of PaeTec to Marcap Corporation have been discharged in full,
whether as a result of prepayment or otherwise, PaeTec shall terminate all
security interests granted in any of its assets to Marcap Corporation,
collaterally assign the West Point Contract to the Collateral Agent, use its
reasonable best efforts to obtain a consent to collateral assignment of the West
Point Contract in a form satisfactory to the Collateral Agent from the
Department of the Army, and cause the Collection Agent which receives the
payments due under the West Point Contract to enter into a Restricted Account
Agreement with the Collateral Agent with respect to such payments in a form
satisfactory to the Collateral Agent. PaeTec shall notify the Administrative
Agent and the Collateral Agent of any default by PaeTec under the Marcap
Agreement immediately upon any officer of PaeTec obtaining knowledge thereof,
and in the event that the Lenders are willing to make Loans to PaeTec in an
amount necessary to cure any such default, PaeTec shall apply the proceeds of
such Loans to cure such default.
SECTION 5.25. Further Assurances. Such Borrower agrees to do such
------------------
further acts and things and to execute and deliver to the Administrative Agent
or the Collateral Agent such additional assignments, agreements, powers and
instruments, at such Borrower's expense, as the Administrative Agent or the
Collateral Agent may reasonably require or deem advisable to carry into effect
the purposes of this Agreement and the other Loan Documents or to better assure
and confirm unto the Administrative Agent or the Collateral Agent its rights,
powers and remedies hereunder and thereunder.
ARTICLE VI
NEGATIVE COVENANTS
Each Borrower covenants and agrees with the Administrative Agent, the
Collateral Agent and the Lenders that as long as this Agreement shall remain in
effect, any Commitment hereunder shall be outstanding or any Obligations
hereunder or under any of the Loan Documents shall be unpaid, unless the
Requisite Lenders shall have otherwise given prior written consent:
SECTION 6.01. Liens, etc. Such Borrower shall not create, incur,
----------
assume or suffer to exist, directly or indirectly, any Lien upon or with respect
to any of its properties or the
60
Collateral, now owned or hereafter acquired, or upon any proceeds, products,
issues, income or profits therefrom except for the following "Permitted Liens":
---------------
(a) Liens granted pursuant to the Loan Documents;
(b) Liens securing any Purchase Debt to the extent that the Liens cover
only the subject assets purchased with such Purchase Debt;
(c) Liens for taxes, assessments or governmental charges or levies on
such Borrower's property if the same shall not at the time be delinquent or
thereafter can be paid without penalty, or are being diligently contested in
good faith and by appropriate proceedings and for which such Borrower shall have
set aside reserves on its books as required by GAAP;
(d) Liens imposed by law, such as landlord's, carrier's, warehousemen's
and mechanic's liens, which liens shall be waived in writing to the extent
waivable, and with respect to obligations not yet due or being contested in good
faith by appropriate proceedings and in either case for which such Borrower
shall have set aside reserves on its books as required by GAAP;
(e) Liens arising out of pledges or deposits under workmen's
compensation laws, unemployment insurance, old age pensions, or other social
security benefits other than any Lien imposed by ERISA;
(f) Liens incurred or deposits made in the ordinary course of business
to secure surety bonds provided that such Liens shall extend only to cash
collateral for such surety bonds;
(g) an assignment, if any, of leasehold interests of PaeTec, as lessee,
under a lease (the "Manhattan Lease") between PaeTec and ▇▇▇ ▇▇▇ ▇▇▇▇▇▇ LLC, in
---------------
connection with the premises located at ▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, in
favor of Star Telecommunications, Inc. so long as such assignment of the
Manhattan Lease shall only be effective in the event that the Collateral Agent
shall have notified PaeTec in writing of its decision not to enforce its rights
under the Collateral Assignment of Leases executed by PaeTec, with respect to
the Manhattan Lease;
(h) Liens on cash collateral securing reimbursement obligations arising
out of (1) any Landlord L/C or (2) any other letter of credit issued for the
benefit of a landlord of a Borrower as a security deposit for rent due to such
landlord, the aggregate amount of such cash collateral not to exceed the
aggregate face amount of all such letters of credit;
(i) Liens on the capital stock of Florida granted to J. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
and ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ solely to secure the Debt referred to in Section 6.13(g)
---------------
below;
(j) Liens of Marcap Corporation on the West Point Contract and the
equipment subject to the West Point Contract prior to any date on which the
Lenders require PaeTec to repay its obligations to Marcap Corporation in full in
accordance with the provisions of Section 5.24;
------------
61
(k) Liens listed on Schedule 3.08 hereto; and
-------------
(l) Until June 1, 2001, Liens of Winstar Switch Acquisition Corp. on
the Switching Equipment of PaeTec located in Chicago, Illinois.
SECTION 6.02. Use of Proceeds. Such Borrower shall not use the
---------------
proceeds of any Loan for any purpose other than as provided in Section 2.02
------------
hereof, and shall not request the issuance of Letters of Credit for any purposes
other than general corporate purposes.
SECTION 6.03. Sale of Assets, Consolidation, Merger, etc. Such
------------------------------------------
Borrower shall not consolidate with or merge into any other Person (except as
permitted under Section 6.08, and only if the Borrower is the surviving entity),
------------
or without the prior written consent of the Requisite Lenders, sell, lease,
transfer or otherwise dispose of any Collateral, except for (a) sales of
inventory in the ordinary course of business (b) sales of Telecommunications
Equipment from one Borrower to another so long as the Collateral Agent maintains
a first priority perfected security interest in such Telecommunications
Equipment, for the benefit of the Lenders, and (c) any sale, lease, transfer or
other disposition of assets no longer used or useful in the conduct of the
Business for the fair market value thereof not to exceed $50,000 in the
aggregate.
SECTION 6.04. Dividends and Distributions; Sale of Equity Interests.
-----------------------------------------------------
(a) Such Borrower shall not purchase, redeem or otherwise acquire any
interest of such Borrower, declare or make or pay any dividends in any fiscal
year of such Borrower on any class or classes of stock, return capital of such
Borrower to its shareholders, make any other distribution on or in respect of
any shares of any class of capital stock of such Borrower or make other payments
to any shareholder of such Borrower (including in the form of non-salary
compensation, loan, expense reimbursement or management fee); provided, however,
-------- -------
that provided no Event of Default or Default has occurred and is continuing or
would result therefrom, such Borrower may make payments of fees or compensation
for services which are in the nature of management, corporate overhead or
administrative services to the extent permitted by Section 6.05 hereof.
------------
(b) Such Borrower shall not sell or issue any additional Equity
Interests except to the Guarantor for the purpose of permitting the Guarantor to
make cash capital contributions to the Borrowers in an amount equal to the
consideration paid for such Equity Interests and except pursuant to the PaeTec
Online, Inc. 1999 Incentive Compensation Plan.
SECTION 6.05. Management Fees and Permitted Corporate Overhead. Such
------------------------------------------------
Borrower shall not pay or enter into any arrangement to pay any fee or
compensation, or reimburse expenses of, an Affiliate or any other Person for
services which are in the nature of management, corporate overhead or
administrative services except to the extent provided for in the Milestone Plan
or as described on Schedule 6.11 attached hereto.
-------------
SECTION 6.06. Guarantees; Third Party Sales and Leases. Such Borrower
----------------------------------------
shall not directly or indirectly, (i) assume any obligation or indebtedness of
another Person, (ii) make or assume any Guarantee, or (iii) finance any third
party sales or leases, other than its obligations under Section 2.15 or
------------
obligations of other Borrowers
62
SECTION 6.07. Investments. Such Borrower shall not, directly or
-----------
indirectly, make any Investments except any of the following Investments with a
maturity not to exceed ninety days for any individual Investment and an average
maturity for all such Investments in the aggregate not to exceed forty-five
days:
(a) Temporary Cash Investments;
(b) Investments in certificates of deposit, repurchase agreements,
money market or other cash management accounts, bankers acceptances and short
term Eurodollar time deposits with financial institutions having a long term
deposit rating of at least A+ from ▇▇▇▇▇'▇ Investors Service, Inc. or Standard &
Poor's Ratings Group, respectively;
(c) Investments in commercial paper rated P1 or A1 by ▇▇▇▇▇'▇ Investors
Service, Inc. or Standard & Poor's Ratings Group respectively;
(d) Investments in corporate bonds, medium term notes rated Aa2 or AA
by ▇▇▇▇▇'▇ Investors Service, Inc. or Standard & Poor's Ratings Group
respectively;
(e) Investments in municipal notes and bonds rated Aaa orAAA by ▇▇▇▇▇'▇
Investors Service, Inc. or Standard & Poor's Ratings Group respectively; and
(f) Investments in auction rate securities rated Aaa or AAA by ▇▇▇▇▇'▇
Investors Service, Inc. or Standard & Poor's Ratings Group respectively.
SECTION 6.08. Subsidiaries; Permitted Acquisitions. Such Borrower
------------------------------------
shall not create or acquire any Subsidiary or acquire all or any significant
portion of the assets or Equity Interests of another Person; provided, however,
-------- -------
that each Borrower may acquire the Equity Interests of or all or any significant
portion of the assets of another Person if such acquisition meets the following
requirements (each such acquisition constituting a "Permitted Acquisition"):
---------------------
(a) no Default or Event of Default shall have occurred and be
continuing or would result from such transaction or transactions or the
incurrence of any Debt by any Borrower or the Guarantor in connection therewith;
(b) if such acquisition is being effectuated by means of the
acquisition of Equity Interests of any Person (or the formation of a new
Subsidiary in order to acquire assets of another Person), such acquired Person
shall become a Borrower hereunder pursuant to an Accession Agreement and shall
deliver such documentation as is reasonably required by the Administrative Agent
to evidence the enforceability of such Accession Agreement;
(c) the Collateral Agent shall, immediately upon the consummation of
such acquisition, obtain a first priority Lien, for the benefit of the Lenders
and as collateral for the payment of the Obligations, in the assets being
purchased or acquired by virtue of an acquisition of Equity Interests and the
Borrowers shall have complied in all respects with the provisions of Section
-------
8.02 with respect to such assets;
----
63
(d) the business being acquired shall be substantially similar, related
or incidental to the Businesses and shall have generated positive EBITDA for the
two most recent fiscal quarters then ended;
(e) after giving effect to such acquisition, the representations and
warranties set forth in Article III hereof shall be true and correct in all
-----------
material respects on and as of the date of such acquisition with the same effect
as though made on and as of such date and including with respect to any new
Borrower pursuant to paragraph (b) above;
(f) prior to each such acquisition, the Borrowers shall cause to be
delivered to the Administrative Agent and the Lenders a certificate from the
Guarantor's Chief Financial Officer demonstrating to the satisfaction of the
Administrative Agent and the Requisite Lenders that after giving effect to such
transaction or transactions and the incurrence of any Debt permitted by Section
-------
6.13 in connection therewith on a pro forma basis as if such acquisition and
----
such incurrence of Debt had occurred on the first day of the twelve-month period
ending on the last day of the Guarantor's and the Borrowers' most recently
completed fiscal quarter, the Borrowers would have been in compliance with all
of the covenants contained in this Agreement at all times during such twelve-
month period;
(g) the purchase is consummated pursuant to a negotiated acquisition
agreement on a non-hostile basis;
(h) the purchase price (including assumed Debt) in connection with any
and all such transactions shall not exceed:
(1) for any single transaction or series of related transactions,
$20,000,000; and
(2) for all such transactions, $60,000,000, which shall be applied from
the following sources only: $30,000,000 of the Commitment Amount as provided
in Section 2.02(a), the cash proceeds of Funded Equity received by the
---------------
Borrowers from the Guarantor after the Closing Date, Equity Interests in
PaeTec Corp. given as consideration for payment of all or a portion of the
purchase price of such acquisition (subject to compliance with applicable
anti-dilution provisions) and unsecured Debt of the Guarantor to the extent
permitted under the Guaranty; and
(i) after giving effect to such acquisition and any Loans made in
connection therewith, the aggregate outstanding principal balance of the Loans
would not exceed the Borrowing Base by more than $10,000,000.
SECTION 6.09. Permitted Activities. Such Borrower shall not engage
--------------------
in any business or activity other than the operation of its Business in
accordance with the Milestone Plan without the prior written consent of the
Requisite Lenders.
SECTION 6.10. Disposition of Licenses, etc. Such Borrower shall not
----------------------------
sell, assign, transfer or otherwise dispose or attempt to dispose of in any way
any Governmental Approval or any other licenses, permits or approvals necessary
or appropriate for the operation of any System or of the Business in accordance
with the Milestone Plan.
64
SECTION 6.11. Transactions with Affiliates. Except as set forth on
----------------------------
Schedule 6.11, such Borrower shall not directly or indirectly, enter into any
-------------
transaction, including, without limitation, leases or other agreements for the
purchase or use of any goods or services, with any Affiliate, except in the
ordinary course of and pursuant to reasonable requirements of such Borrower's
business upon fair and reasonable terms no less favorable to such Borrower than
it would obtain in a comparable arm's length transaction with an unaffiliated
Person.
SECTION 6.12. ERISA. Such Borrower shall not:
-----
(a) engage, or permit any ERISA Affiliate to engage, in any prohibited
transaction described in Section 406 of ERISA or 4975 of the IRC for which a
statutory or class exemption is not available or a private exemption has not
been previously obtained from the United States Department of Labor;
(b) permit to exist any accumulated funding deficiency (as defined in
Section 302 of ERISA and Section 412 of the IRC), whether or not waived;
(c) fail, or permit any ERISA Affiliate to fail, to pay timely required
contributions or annual installments due with respect to any waived funding
deficiency to any Benefit Plan;
(d) terminate, or permit any ERISA Affiliate to terminate, any Benefit
Plan which would result in any material liability of such Borrower under Title
IV of ERISA;
(e) fail to make any contribution or payment to any Multiemployer Plan
which such Borrower or any ERISA Affiliate may be required to make under any
agreement relating to such Multiemployer Plan, or any law pertaining thereto;
(f) amend, or permit any ERISA Affiliate to amend, a Plan resulting in
an increase in current liability for the plan year such that such Borrower is
required to provide security to such Plan under Section 401(a)(29) of the IRC;
or
(g) fail, or permit any ERISA Affiliate to fail, to pay any required
installment under Section 412 of the IRC on or before the due date for such
installment or other payment.
SECTION 6.13. Indebtedness. Such Borrower shall not create or suffer
------------
to exist any Debt or any other obligations for the deferred purchase price of
property or services except:
(a) the Obligations;
(b) the obligations arising under any Loan Document;
(c) obligations under real property leases contemplated in the
Milestone Plan;
(d) obligations under Capitalized Leases, financing leases or loan
agreements or similar debt documents with respect to the financing and
contemplated purchase of office equipment, vehicles and non-essential
telecommunications equipment, not to exceed an aggregate amount for the
Borrowers at any time of $15,000,000, including, without limitation,
65
the outstanding balance owing by PaeTec under that certain Master Lease
Agreement dated as of June 17, 1997 between The CIT Group/Equipment Financing,
Inc. and PaeTec ("Purchase Debt"); provided, however, that prior to the payment
-------------
in full of the Debt referred to in Section 6.13(g)(ii) below and the discharge
-------------------
of the Lien of Winstar Switch Acquisition Corp. referred to in Section 6.01(l)
---------------
above, the maximum amount of such obligations shall not exceed $13,250,000.
(e) performance bonds executed solely in connection with the
construction of Systems in the ordinary course of business;
(f) reimbursement obligations arising out of (1) any Landlord L/C or
(2) any other letter of credit issued for the benefit of a landlord of a
Borrower as a security deposit for rent due to such landlord;
(g) Debt of PaeTec (i) under that certain Promissory Note dated August
31, 1999 payable to J. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, of a principal
amount of $1,028,157.78, together with interest accrued on the unpaid principal
balance outstanding from time to time, and (ii) payable to Winstar Switch
Acquisition Corp. of a principal amount of $1,750,000, together with interest
accrued on the unpaid principal balance outstanding from time to time, pursuant
to that certain letter agreement dated June 20, 2000 among PaeTec, Winstar
Communications, Inc. and Winstar Switch Acquisition Corp. and relating to the
purchase by PaeTec of Switching Equipment in Chicago, Illinois.
(h) Debt under Interest Rate Agreements approved by the Administrative
Agent; and
(i) prior to any date on which the Lenders require PaeTec to pay its
obligations to Marcap Corporation in full in accordance with the provisions of
Section 5.24, the Debt of PaeTec to Marcap Corporation under that certain Master
------------
Lease Agreement dated as of July 29, 1998 between Campuslink Communications
Systems, Inc. (now merged into PaeTec) and Marcap Corporation.
SECTION 6.14. Sale and Leaseback Transactions. Such Borrower shall
-------------------------------
not, directly or indirectly, enter into any arrangement with any Person other
than another Borrower providing for such Borrower to lease or rent property that
any Borrower or the Guarantor has sold or will sell or otherwise transfer to
such Person.
SECTION 6.15. Margin Regulation. Such Borrower shall not use or
-----------------
permit any other Person to use any portion of the proceeds of any credit
extended under this Agreement in any manner which might cause the extension of
credit made by any Lender or the application of such proceeds to violate the
Securities Act of 1933 or Securities Exchange Act of 1934 (each as amended from
time to time, and any successor statute) or to violate Regulation G, Regulation
U, or Regulation X, or any other regulation of the Federal Reserve Board, in
each case as in effect on the date or dates of such extension of credit and such
use of proceeds.
ARTICLE VII
FINANCIAL COVENANTS
66
Each Borrower covenants and agrees with the Administrative Agent and the
Lenders that as long as this Agreement shall remain in effect, any Commitment
hereunder shall be outstanding or the Obligations hereunder or under any of the
Loan Documents shall be unpaid, unless the Requisite Lenders shall have
otherwise given prior written consent:
SECTION 7.01. Financial Covenants on or Prior to September 30, 2002.
-----------------------------------------------------
At all times on or prior to September 30, 2002:
(a) Senior Debt to Capitalization. With respect to each period set
-----------------------------
forth below, the Borrowers shall not at any time during such period permit the
ratio of Senior Debt to Capitalization to exceed the amount set forth below for
such period:
Period Maximum Ratio
------ -------------
September 30, 2000 through and including 0.35 to 1.00
December 30, 2000
December 31, 2000 through and including 0.35 to 1.00
March 30, 2001
March 31, 2001 through and including 0.35 to 1.00
June 29, 2001
June 30, 2001 through and including 0.40 to 1.00
September 29, 2001
September 30, 2001 0.45 to 1.00
(b) Consolidated Debt to Capitalization. The Borrowers shall not at
-----------------------------------
any time permit the ratio of Consolidated Debt to Capitalization to exceed (i)
during the period from the Closing Date through and including March 31, 2001,
0.60 to 1.00, and (ii) thereafter, 0.65 to 1.00.
(c) Minimum Revenues. As of the last day of each fiscal quarter set
----------------
forth below, the Borrowers shall on a combined basis have revenues at least
equal to the amount set forth opposite each such date:
Fiscal Quarter Minimum Revenues
-------------- ----------------
September 30, 2000 $22,800,000
December 31, 2000 $29,900,000
March 31, 2001 $37,200,000
June 30, 2001 $40,800,000
September 30, 2001 $44,100,000
December 31, 2001 $54,800,000
March 31, 2002 $63,600,000
June 30, 2002 $68,100,000
September 30, 2002 $68,500,000
67
(d) EBITDA. As of the last day of each fiscal quarter set forth below
------
until the fiscal quarter ending December 31, 2001, the Borrowers shall not
permit the EBITDA losses for all the Borrowers on a combined basis to exceed the
amount set forth opposite each such date. As of the last day of each fiscal
quarter set forth below and ending thereafter, the EBITDA for all the Borrowers
on a combined basis shall at least equal the amount set forth opposite each such
date:
Fiscal Quarter EBITDA
-------------- ------
September 30, 2000 ($17,600,000)
December 31, 2000 ($16,500,000)
March 31, 2001 ($12,500,000)
June 30, 2001 ($13,000,000)
September 30, 2001 ($12,800,000)
December 31, 2001 ($6,700,000)
March 31, 2002 $3,500,000
June 30, 2002 $4,900,000
September 30, 2002 $4,200,000
(e) Minimum Cash on Hand. At all times, the amount of the Borrowers'
---------------------
consolidated cash, as determined in accordance with GAAP, shall be greater than
or equal to $2,000,000.
(f) Maximum Capital Expenditures. With respect to the last day of each
----------------------------
fiscal quarter set forth below, the Borrowers shall not on a cumulative,
combined basis for the period beginning on December 31, 1999 and ending on such
date make capital expenditures, as determined in accordance with GAAP, in excess
of the amount set forth below opposite such quarter.
Fiscal Quarter Ending Maximum Capital Expenditures
--------------------- ----------------------------
September 30, 2000 $40,700,000
December 31, 2000 $53,700,000
March 31, 2001 $61,300,000
June 30, 2001 $65,800,000
September 30, 2001 $71,200,000
December 31, 2001 $76,700,000
March 31, 2002 $83,900,000
June 30, 2002 $90,500,000
September 30, 2002 $96,500,000
SECTION 7.02. Financial Covenants on and After October 1, 2002. On
------------------------------------------------
and after October 1, 2002:
(a) Interest Coverage Ratio. At the end of each fiscal quarter set
-----------------------
forth below, the ratio of (i) the sum of the combined EBITDA of the Borrowers
for the two fiscal quarters then ending, multiplied by two, to (ii) cash
Interest Expense for the Borrowers on a combined basis for the two fiscal
quarters then ending multiplied by two, as measured at such time, shall equal at
least the ratio set forth below opposite such quarter:
Fiscal Quarter Ratio
-------------- -----
68
December 31, 2002 1.50 to 1.00
March 31, 2003 1.75 to 1.00
June 30, 2003 2.00 to 1.00
September 30, 2003 2.00 to 1.00
December 31, 2003 2.00 to 1.00
March 31, 2004 2.50 to 1.00
and each quarter thereafter
(b) Maximum Capital Expenditures. During the period beginning on
----------------------------
December 31, 1999 and ending on December 31, 2002, the Borrowers shall not on a
cumulative combined basis, make capital expenditures, as determined in
accordance with GAAP in excess of $104,000,000.
(c) Maximum Operating Leverage Ratio. With respect to each period set
forth below, the Borrowers shall not at any time during such period permit the
Operating Leverage Ratio as measured on any date during such period to exceed
the ratio set forth below for such period:
Period Ratio
------ -----
December 31, 2002 through 6.00 to 1.00
and including March 30,
2003
March 31, 2003 through 3.00 to 1.00
and including June 29, 2003
June 30, 2003 through and 3.00 to 1.00
including September 29, 2003
September 30, 2003 2.50 to 1.00
through and including
December 30, 2003
December 31, 2003 through 2.50 to 1.00
and including March 30,
2004
March 31, 2004 through 2.50 to 1.00
and including June 29, 2004
June 30, 2004 through and 2.50 to 1.00
including September 29,
2004
September 30, 2004 2.50 to 1.00
through and including
December 30, 2004
December 31, 2004 2.00 to 1.00
and each quarter thereafter
(d) Minimum Debt Service Coverage Ratio. At the end of each fiscal
-----------------------------------
quarter set forth below, the ratio of (i) the sum of the combined EBITDA of the
Borrowers for the two
69
fiscal quarters then ending, multiplied by two, to (ii) Debt Service, as
measured at such time, shall equal at least the ratio set forth below opposite
such quarter:
Fiscal Quarter Ratio
----------------------- ---------------------------------------
December 31, 2002 1.25 to 1.00
March 31, 2003 1.25 to 1.00
June 30, 2003 1.25 to 1.00
September 30, 2003 1.25 to 1.00
December 31, 2003 1.25 to 1.00
March 31, 2004 1.75 to 1.00
June 30, 2004 1.75 to 1.00
September 30, 2004 1.75 to 1.00
December 31, 2004 2.00 to 1.00
March 31, 2005 2.50 to 1.00
and each quarter
thereafter
(e) Minimum Fixed Charge Coverage Ratio. As of the last day of any
-----------------------------------
fiscal quarter ending on and after March 31, 2003, the Borrowers shall not
permit the ratio of (1) EBITDA for the Borrowers and the Guarantor on a
combined, consolidated basis for the two fiscal quarters then ended, multiplied
by two, to (2) Fixed Charges for the Borrowers and the Guarantor on a combined,
consolidated basis for the same two quarters, multiplied by two, to be less than
the ratio set forth below opposite such quarter:
Fiscal Quarter Ratio
-------------- -----
December 31, 2002 Not tested
March 31, 2003 1.00 to 1.00
June 30, 2003 1.00 to 1.00
September 30, 2003 1.00 to 1.00
December 31, 2003 1.00 to 1.00
March 31, 2004 1.10 to 1.00
and each quarter thereafter
(f) Maximum Consolidated Leverage Ratio. With respect to each period
-----------------------------------
set forth below, the Borrowers shall not on any day during such period permit
the ratio of (1) Consolidated Debt as of such day to (2) EBITDA for the
Guarantor and the Borrowers on a consolidated basis for the six month period
then ended, multiplied by two, to be greater than the ratio set forth below for
such period:
Period Ratio
------ -----
December 31, 2002 through 10.00 to 1.00
and including March 30, 2003
March 31, 2003 through and 6.00 to 1.00
including June 29, 2003
June 30, 2003 through and 5.50 to 1.00
including September 29, 2003
70
September 30, 2003 through and including 5.00 to 1.00
December 30, 2003
December 31, 2003 through and including 4.50 to 1.00
March 30, 2004
March 31, 2004 through and including 4.00 to 1.00
June 29, 2004
June 30, 2004 through and including 3.50 to 1.00
September 29, 2004
September 30, 2004 through and including 3.50 to 1.00
December 30, 2004
December 31, 2004 3.00 to 1.00
and each quarter thereafter
ARTICLE VIII
COLLATERAL SECURITY
SECTION 8.01. Collateral Security. To secure payment and performance
-------------------
of all of the Obligations, each of the Borrowers hereby reaffirms its grant to
the Collateral Agent of, and hereby regrants to the Collateral Agent for the
benefit of the Collateral Agent, the Administrative Agent and the Lenders, to
the extent permitted by law, a right of setoff against and a continuing security
interest in and to all of such Borrower's tangible and intangible personal
property, fixtures and real property leasehold and easement interests, whether
now owned or existing, or hereafter acquired or arising, wheresoever located,
including, without limitation, all of the following property, or interests in
property: (a) all machinery, equipment, Telecommunications Equipment and
fixtures, including without limitation, fiber optic and other cables,
transmission and switching equipment, transmission facilities, connection
equipment, conduit, carrier pipes, junctions, regenerators, power sources, alarm
systems, electronics, structures and shelters and cable laying equipment; (b)
all Accounts, accounts receivable, other receivables, contract rights, leases,
chattel paper, investment property, and general intangibles of such Borrower
(including, without limitation, goodwill, going concern value, patents,
trademarks, trade names, service marks, blueprints, designs, product lines and
research and development), including, without limitation, all of such Borrower's
rights under all present and future Governmental Approvals, permits, licenses
and franchises heretofore or hereafter granted to such Borrower for the
operation and ownership of its Systems (excluding licenses and permits issued by
the FCC, any PUC or any other Governmental Authority to the extent, and only to
the extent, it is unlawful to grant a security interest in such licenses and
permits, but including, to the maximum extent permitted by law, all rights
incident or appurtenant to such licenses and
71
permits, including, without limitation, the right to receive all proceeds
derived from or in connection with the sale, assignment or transfer of such
licenses and permits), whether now owned or hereafter acquired by such Borrower,
or in which such Borrower may now have or hereafter acquire an interest; (c) all
instruments, letters of credit, documents of title, policies and certificates of
insurance, securities, bank deposits, deposit accounts (including such
Borrower's Collection Accounts), checking accounts and cash now or hereafter
owned by such Borrower, or in which such Borrower may now have or hereafter
acquire an interest; (d) all inventory, including all merchandise, raw
materials, work in process, finished goods and supplies, now or hereafter owned
by such Borrower or in which such Borrower may now have or hereafter acquire an
interest; (e) all of such Borrower's leasehold interest in any real property,
all of such Borrower's licenses, easements and rights of way with respect to
real property; (f) all accessions, additions or improvements to, substitutions
for and all proceeds and products of, all of the foregoing, including proceeds
of insurance; and (g) all books, records, documents, computer tapes and discs
relating to all of the foregoing.
SECTION 8.02. Preservation of Collateral and Perfection of Security
-----------------------------------------------------
Interests Therein. Such Borrower shall execute and deliver to the Collateral
-----------------
Agent for the benefit of the Collateral Agent, the Administrative Agent and the
Lenders, prior to the Funding Date, and at any time or times thereafter at the
request of the Collateral Agent, all financing statements or other documents
(and pay the cost of filing or recording the same in all public offices deemed
necessary by the Collateral Agent), as the Collateral Agent may request, in a
form satisfactory to the Collateral Agent, to perfect and keep perfected the
security interest in the Collateral granted by such Borrower to the Collateral
Agent or to otherwise protect and preserve the Collateral and the Collateral
Agent's security interest therein or to enforce the Collateral Agent's security
interest in the Collateral. Should such Borrower fail to do so, the Collateral
Agent is authorized to sign any such financing statements as such Borrower's
agent. Such Borrower further agrees that a carbon, photographic or other
reproduction of this Agreement or of a financing statement is sufficient as a
financing statement.
SECTION 8.03. Appointment of the Collateral Agent as the Borrowers'
-----------------------------------------------------
Attorney-in-Fact. Such Borrower hereby irrevocably designates, makes,
----------------
constitutes and appoints the Collateral Agent (and all persons designated by the
Collateral Agent) as such Borrower's true and lawful attorney-in-fact, and
authorizes the Collateral Agent, in such Borrower's or the Collateral Agent's
name, to, following the occurrence and during the continuance of an Event of
Default: (i) demand payment of such Borrower's Accounts; (ii) enforce payment of
such Borrower's Accounts by legal proceedings or otherwise; (iii) exercise all
of such Borrower's rights and remedies with respect to proceedings brought to
collect an Account; (iv) sell or assign any Account upon such terms, for such
amount and at such time or times as the Collateral Agent deems advisable; (v)
settle, adjust, compromise, extend or renew an Account; (vi) discharge and
release any Account; (vii) prepare, file and sign such Borrower's name on any
proof of claim in bankruptcy or other similar document against an account debtor
of such Borrower; (viii) notify the post office authorities to change the
address for delivery of such Borrower's mail to an address designated by the
Collateral Agent, and open and deal with all mail addressed to such Borrower;
(ix) do all acts and things which are necessary, in the Collateral Agent's sole
discretion, to fulfill such Borrower's obligations under this Agreement; (x)
take control in any manner of any item of payment or proceeds thereof; (xi) have
access to any lockbox or postal box into which such Borrower's mail is
deposited; (xii) endorse such Borrower's name upon any
72
items of payment or proceeds thereof and deposit the same in the Collateral
Agent's account on account of the Obligations; (xiii) endorse such Borrower's
name upon any chattel paper, document, instrument, invoice, or similar document
or agreement relating to any Account or any goods pertaining thereto; and (xiv)
sign such Borrower's name on any verification of Accounts and notices thereof to
account debtors.
SECTION 8.04. Collection of Accounts and Restricted Account
---------------------------------------------
Arrangements. Such Borrower hereby represents and warrants that each depository
------------
account ("Collection Account") now maintained by such Borrower at any bank
--------------------
("Collection Agent") for the collection of checks and cash constituting proceeds
------------------
of Accounts and sales of other personal property which are part of the
Collateral is identified on Schedule 8.04 attached hereto and made a part
-------------
hereof. With respect to each Collection Account, such Borrower shall, no later
than the Funding Date, deliver (to the extent not previously delivered pursuant
to the Existing Agreement) to the Collateral Agent, a "Restricted Account
------------------
Agreement" substantially in the form of Exhibit N attached hereto and made a
--------- ---------
part hereof, duly executed and delivered by such Borrower and the applicable
Collection Agent, authorizing and directing such Collection Agent, upon receipt
of written notice from the Collateral Agent that an Event of Default has
occurred and is continuing, to deposit all checks and cash received into a
restricted account (a "Restricted Account") and remit all amounts deposited in
------------------
such Restricted Account to the Collateral Agent's account specified in such
Restricted Account Agreement until such time as the Collection Agent receives
written notice from the Collateral Agent rescinding such instruction. Such
Borrower shall, following the occurrence and during the continuance of an Event
of Default and any subsequent request by the Collateral Agent therefor, take
such further action as the Collateral Agent may reasonably deem desirable to
effect the transfer of exclusive ownership and control of the Restricted
Accounts and all Collection Accounts to the Collateral Agent. Until all of the
Obligations have been indefeasibly paid in full, such Borrower agrees not to
enter into any agreement or execute and deliver any direction which would
modify, impair or adversely affect the rights and benefits of the Collateral
Agent under any Restricted Account Agreement. Such Borrower shall not open,
establish or maintain any Collection Account (other than those identified on
Schedule 8.04 hereto) without first having delivered to the Collateral Agent a
-------------
duly executed and delivered Restricted Account Agreement with respect to such
Collection Account. Such Borrower shall notify the Collateral Agent in writing
not less than five (5) days prior to the date it shall open or establish any
Collection Account other than an account described on Schedule 8.04 hereto.
-------------
SECTION 8.05. Cure Rights. Such Borrower expressly authorizes the
-----------
Collateral Agent, and the Collateral Agent may, but shall not be required to, at
any time and from time to time, to take any and all action that it reasonably
determines to be necessary or desirable to cure any default or violation
(including a payment default) of such Borrower in connection with any real
estate lease, license agreement, Governmental Approval or any other material
lease, agreement or contract entered into with respect to the Systems. Any and
all amounts expended by the Collateral Agent in connection with such actions
shall constitute Obligations secured by the Collateral.
ARTICLE IX
EVENTS OF DEFAULT; REMEDIES
73
SECTION 9.01. Events of Default. The following events shall each
-----------------
constitute an "Event of Default":
----------------
(a) Any Borrower shall fail to pay the principal of or interest on its
Notes or any other amounts payable hereunder or under any of the other Loan
Documents when due, whether as scheduled, at a date fixed for prepayment, by
acceleration or otherwise, and such failure remains uncured for five (5)
Business Days; or
(b) Any Borrower or the Guarantor shall fail to observe or perform any
other covenant, condition or agreement to be observed or performed by any
Borrower or the Guarantor in any of the Loan Documents, in any material
agreement of any Borrower and any Borrower or the Guarantor fails to cure such
breach within fifteen (15) Business Days after written notice thereof unless the
breach relates to a covenant contained in Sections 5.04, or Article VI (other
------------- ----------
than Section 6.05 or Section 6.07) or VII, in which case no notice or grace
------------ ------------ ---
period shall apply, or unless the breach relates to Section 5.06, in which case
------------
an Event of Default shall occur on the thirtieth day following the breach
without any notice requirement, unless the breach shall have been cured before
such date; or
(c) Any representation or warranty made by any Borrower or the
Guarantor in connection with this Agreement or any other Loan Document, the
Loans or any Letter of Credit or any statement or representation made in any
report, certificate, financial statement or other instrument furnished by or on
behalf of such Borrower or the Guarantor pursuant to this Agreement or any other
Loan Document, shall prove to have been false or misleading in any material
respect when made or delivered or when deemed made in accordance with the terms
hereof or thereof; or
(d) Any Borrower or the Guarantor shall fail to make any payment due
(whether by scheduled maturity, required prepayment, acceleration, demand or
otherwise) on any other obligation for borrowed money in excess of $250,000, and
such failure shall continue after the applicable grace period, if any, specified
in the agreement or instrument relating to such indebtedness; or any other
default or event under any agreement or instrument relating to any indebtedness
for borrowed money in excess of $250,000 or any other event, shall occur and
shall continue after the applicable grace period, if any, specified in such
agreement or instrument if the effect of such default or event is to accelerate,
or to permit the acceleration of, the maturity of such indebtedness in excess of
$250,000, or any such indebtedness in excess of $250,000 shall be declared to be
due and payable or required to be prepaid (other than by a regularly scheduled
required prepayment) prior to the stated maturity thereof; or
(e) Any Borrower or the Guarantor shall (i) apply for or consent to the
appointment of a receiver, trustee, custodian, sequestrator or similar official
for such Borrower or the Guarantor or for a substantial part of its property,
(ii) make a general assignment for the benefit of creditors, (iii) become
unable, or admit in writing its inability, to pay its debts as they become due,
(iv) voluntarily or involuntarily dissolve, liquidate or wind up its affairs, or
(v) take action for the purpose of effecting any of the foregoing; or
(f) a proceeding under any bankruptcy, reorganization, arrangement of
debts, insolvency or receivership law is filed by or against any Borrower or the
Guarantor, or any
74
Borrower or the Guarantor takes any action to authorize any of the foregoing
matters, and in the case of any such proceeding instituted against any Borrower
or the Guarantor (but not instituted by any Borrower or the Guarantor), either
such proceeding shall remain undismissed or unstayed for a period of 60 days or
any of the actions sought in such proceeding (including, without limitation, the
entry of an order for relief against, or the appointment of a receiver, trustee
or other similar official for any Borrower or the Guarantor or any substantial
part of its property) shall be granted or shall occur; or
(g) a Termination Event occurs which the Requisite Lenders in good
faith believe would subject any Borrower to a material liability; or
(h) the plan administrator of any Plan applies under Section 412(d) of
the IRC for a waiver of the minimum funding standards of Section 412(a) of the
IRC and the Requisite Lenders in good faith believe that the approval of such
waiver could subject any Borrower or any ERISA Affiliate to material liability;
or
(i) any of the Governmental Approvals or any other license,
Governmental Approval or other governmental consent or approval necessary for
the continuing operation of any Borrower or any System or any other material
Governmental Approval or approval of or material filing with the FCC, any PUC or
any other Governmental Authority with respect to the conduct by any Borrower of
its business and operations, including its Business, shall not be obtained or
shall cease to be in full force and effect, which in respect of any of the
Governmental Approvals shall, in the case of an order of the FCC, any PUC or
other Governmental Authority having jurisdiction with respect thereto, revoking,
or deciding not to renew, any such Governmental Approval, occur upon the
issuance of such order, and, in the case of any other order revoking or
terminating any of the Governmental Approvals or deciding not to renew such
Governmental Approvals prior to the termination thereof, occur when such order
becomes final; or
(j) the FCC, any PUC or any other Governmental Authority, by final
order, determines that the existence or performance of this Agreement or any
other Loan Document will result in a revocation, suspension or material adverse
modification of any of the Governmental Approvals for any System; or
(k) for any reason any Loan Document shall not be in full force and
effect or shall not be enforceable in accordance with its terms, or any security
interest or lien granted pursuant thereto shall fail to be perfected or to have
its intended priority, or any party thereto other than the Administrative Agent
or any Lender shall contest the validity of any Lien granted under, or shall
disaffirm its obligations under any Loan Document; or
(l) any Borrower shall have wrongfully failed to accept
Telecommunications Equipment in accordance with any Lucent Purchase Agreement
within the period specified in such Lucent Purchase Agreement or shall otherwise
default under any Lucent Purchase Agreement, which default shall not have been
cured or waived within the applicable grace period thereunder; or
75
(m) for any reason, any Borrower ceases to operate its Business or
ceases to own any of its Governmental Approvals necessary for the continuing
conduct of its Business; or
(n) a judgment or judgments for the payment of money in excess of
$250,000 individually or $500,000 in the aggregate at any one time shall have
been rendered against any Borrower or a judgment or judgments for the payment of
money in excess of $500,000 individually or $1,000,000 in the aggregate at any
one time shall have been rendered against the Guarantor, and in each case such
judgment or judgments shall have remained unsatisfied and in effect for any
period of sixty (60) days during which no stay of execution shall have been
obtained; or
(o) any Borrower is enjoined, restrained or in any way prevented by the
order of any court or administrative or regulatory agency from conducting its
business in any material respect with respect to any one or more of its Systems;
or
(p) any Borrower becomes subject to any liabilities, costs, expenses,
damages, fines or penalties which could reasonably be expected to have a
Material Adverse Effect arising out of or related to (i) any Remedial Action in
response to a Release or threatened Release at any location of any Contaminant
into the indoor or outdoor environment or (ii) any material violation of any
environmental, health or safety requirement of law; or
(q) the Guarantor shall fail to pay any amounts due on the Guaranty, or
shall fail to observe or perform any covenant, condition or agreement to be
observed or performed by the Guarantor in the Guaranty; or
(r) a Change of Control shall occur.
SECTION 9.02. Termination of Commitment; Acceleration. Upon the
---------------------------------------
occurrence and at any time during the continuance of any Event of Default, the
Administrative Agent may upon direction from the Requisite Lenders:
(a) by notice to the Borrowers, terminate Lenders' Commitment to make
Loans hereunder; or
(b) by notice to the Borrowers, declare the Obligations to be
immediately due and payable, whereupon all the Obligations shall be immediately
due and payable without further notice of any kind, provided, however, that if
-------- -------
an Event of Default described in Section 9.01(f) shall exist or occur, all of
---------------
the Obligations shall automatically, without declaration or notice of any kind,
be immediately due and payable and the Commitment shall be automatically
terminated.
SECTION 9.03. Waivers. Demand, presentment, protest and notices of
-------
nonpayment, protest, dishonor and acceptance are hereby waived by each Borrower.
Each Borrower also waives the benefit of all valuation, appraisal and exemption
laws and the posting of any bond required of the Administrative Agent, the
Collateral Agent or any Lender in connection with any judicial process to
realize on the Collateral, to enforce any judgment or other court order entered
in favor of the Administrative Agent, the Collateral Agent or any Lender or to
enforce by specific performance, temporary restraining order, or preliminary or
76
permanent injunction, this Agreement or any other Loan Documents. Each Borrower
waives the right, if any, to the benefit of, or to direct the application of,
any Collateral. Each Borrower hereby acknowledges that none of the
Administrative Agent, the Collateral Agent or any Lender has any obligation to
resort to any Collateral or make claim against any other Person before seeking
payment or performance from any Borrower.
SECTION 9.04. Rights and Remedies Generally. If an Event of Default
-----------------------------
occurs and is continuing, the Administrative Agent and the Collateral Agent
shall have, in addition to any other rights and remedies contained in this
Agreement or in any of the other Loan Documents, all of the rights and remedies
of a secured party under the Code or other applicable laws, all of which rights
and remedies shall be cumulative, and none exclusive, to the extent permitted by
law. In addition to all such rights and remedies, the sale, lease or other
disposition of the Collateral, or any part thereof, by the Administrative Agent
or the Collateral Agent after the occurrence of an Event of Default may be for
cash, credit or any combination thereof, and the Administrative Agent or the
Collateral Agent may purchase all or any part of the Collateral at public or, if
permitted by law, private sale, and in lieu of actual payment of such purchase
price, may set off the amount of such purchase price against the Obligations
then owing. Any sales of the Collateral may be adjourned from time to time with
or without notice. The Administrative Agent or the Collateral Agent may, in its
sole discretion, cause the Collateral to remain on the premises of any Borrower,
at the expense of the Borrowers, pending sale or other disposition of the
Collateral. The Administrative Agent or the Collateral Agent shall have the
right to conduct such sales on the premises of any Borrower, at the expense of
the Borrowers, or elsewhere, on such occasion or occasions as it may see fit.
SECTION 9.05. Entry Upon Premises and Access to Information. If an
---------------------------------------------
Event of Default occurs and is continuing, the Administrative Agent and the
Collateral Agent shall have the right to enter upon the premises of any Borrower
where any Collateral is located (or is believed to be located) without any
obligation to pay rent to such Borrower, or any other place or places where the
Collateral is believed to be located and kept, and render the Collateral
unusable or remove the Collateral therefrom to the premises of the
Administrative Agent or the Collateral Agent or any agent thereof, for such time
as the Administrative Agent or the Collateral Agent may desire, in order
effectively to collect or liquidate the Collateral, and/or the Administrative
Agent or the Collateral Agent may require any Borrower to assemble the
Collateral and make it available to the Administrative Agent or the Collateral
Agent at a place or places to be designated by the Administrative Agent or the
Collateral Agent. If an Event of Default occurs and is continuing, the
Administrative Agent or the Collateral Agent shall have the right to obtain
access to any Borrower's data processing equipment, computer hardware and
software relating to the Collateral and to use all of the foregoing and the
information contained therein in any manner the Administrative Agent or the
Collateral Agent deems appropriate.
SECTION 9.06. Sale or Other Disposition of Collateral by the
----------------------------------------------
Administrative Agent or the Collateral Agent. Any notice required to be given by
--------------------
the Administrative Agent or the Collateral Agent of a sale, lease or other
disposition or other intended action by the Administrative Agent or the
Collateral Agent with respect to any of the Collateral which is deposited in the
United States mails, registered or certified, postage prepaid and duly addressed
to the Borrowers at the address specified in Section 11.01 below, at least ten
-------------
days prior to such proposed action shall constitute fair and reasonable notice
to the Borrowers of any such action.
77
The net proceeds realized by the Administrative Agent or the Collateral Agent
upon any such sale or other disposition, after deduction for the expense of
retaking, holding, preparing for sale, selling or the like and the reasonable
attorneys' fees and legal expenses incurred by the Administrative Agent or the
Collateral Agent in connection therewith, shall be applied as provided herein
toward satisfaction of the Obligations. The Administrative Agent or the
Collateral Agent, as applicable, shall account for and pay to the Borrowers any
surplus realized upon such sale or other disposition, and the Borrowers shall
remain liable for any deficiency. The commencement of any action, legal or
equitable, or the rendering of any judgment or decree for any deficiency shall
not affect the Administrative Agent's or the Collateral Agent's security
interest in the Collateral. The Borrowers agree that the Collateral Agent has no
obligation to preserve rights to the Collateral against any other parties. The
Administrative Agent and the Collateral Agent are hereby granted a license or
other right to use, without charge, the Borrowers' labels, patents, copyrights,
rights of use of any name, trade secrets, trade names, trademarks, service marks
and advertising matter, or any property of a similar nature, as it pertains to
the Collateral, and the Borrowers' rights under all licenses and all franchise
agreements shall inure to the Administrative Agent's and the Collateral Agent's
benefit until the Obligations are paid in full.
SECTION 9.07. Governmental Approvals. In connection with the
----------------------
enforcement by the Administrative Agent or the Collateral Agent of any remedies
available to it as a result of any Event of Default, each Borrower agrees that
it shall join and cooperate fully with, at the request of the Administrative
Agent or the Collateral Agent, any receiver referred to below and/or the
successful bidder or bidders at any foreclosure sale in a filing of an
application (and furnishing any additional information that may be required in
connection with such application or which the Administrative Agent or the
Collateral Agent may believe relevant to such application) with the FCC, any PUC
and all other applicable Governmental Authorities, requesting their prior
approval of (i) the operation or abandonment of all or the portion of any System
and/or (ii) the transfer of control of such Borrower or assignment of all
licenses, certificates, Governmental Approvals, approvals and permits, issued to
such Borrower by the FCC, any PUC or any such Governmental Authorities with
respect to any System and the operation thereof, to the Administrative Agent or
the Collateral Agent, the receiver or to the successful bidder or bidders. In
connection with the foregoing, each Borrower shall take such further actions,
and execute all such instruments, as the Administrative Agent or the Collateral
Agent reasonably deems necessary or desirable. Each Borrower agrees that the
Administrative Agent or the Collateral Agent may enforce any obligation of such
Borrower as set forth in this section by an action for specific performance. In
addition, each Borrower hereby irrevocably constitutes and appoints the
Administrative Agent and the Collateral Agent and any agent or officer thereof
(which appointment is coupled with an interest) as its true and lawful attorney-
in-fact with full irrevocable power and authority and in the place and stead of
such Borrower and in the name of such Borrower or in its own name, from time to
time in its discretion after the occurrence and during the continuance of an
Event of Default and in connection with the foregoing, for the purpose of
executing on behalf and in the name of such Borrower any and all of the above-
referenced instruments and to take any and all appropriate action in furtherance
of the foregoing. The exercise of any rights or remedies hereunder or under any
other Loan Document by any Lender, the Administrative Agent or the Collateral
Agent that may require FCC, any PUC or any other Governmental Authority approval
shall be subject to obtaining such approval. Pending the receipt of any FCC, any
78
PUC or any other Governmental Authority approval, no Borrower shall do anything
to delay, hinder, interfere or obstruct the exercise of the Administrative
Agent's or the Collateral Agent's rights or remedies hereunder in obtaining such
approvals.
SECTION 9.08. Appointment of Receiver or Trustee. In connection with
----------------------------------
the exercise of its remedies under this Agreement, the Administrative Agent or
the Collateral Agent may, upon the occurrence of an Event of Default, obtain the
appointment of a receiver or trustee to assume, upon receipt of all necessary
judicial, FCC, any PUC or other Governmental Authority consents or approvals,
control of or ownership of any of the Governmental Approvals. Such receiver or
trustee shall have all rights and powers provided to it by law or by court
order or provided to the Administrative Agent or the Collateral Agent under this
Agreement. Upon the appointment of such trustee or receiver, the Borrowers agree
to cooperate, to the extent necessary or appropriate, in the expeditious
preparation, execution and filing of an application to the FCC, any PUC or any
other Governmental Authority or for consent to the transfer to control or
assignment of any Borrower's Governmental Approvals to the receiver or trustee.
SECTION 9.09. Right of Setoff. In addition to any rights now or
---------------
hereafter granted under applicable law and not by way of limitation of any such
rights, upon the occurrence and during the continuance of any Event of Default,
each Lender and each holder of any Note is hereby authorized at any time or from
time to time, without notice to any Borrower or to any other Person, any such
notice being hereby expressly waived, to set off and to appropriate and to apply
any and all balances held by it at any of its offices for the account of any
Borrower (regardless of whether such balances are then due to such Borrower) and
any other properties or assets any time held or owing by that Lender or that
holder to or for the credit or for the account of any Borrower against and on
account of any of the Obligations which are not paid when due. Any Lender or
holder of any Note exercising a right to set off or otherwise receiving any
payment on account of the Obligations in excess of its Pro Rata Share thereof
shall purchase for cash (and the other Lenders or holders shall sell) such
participation in each such other Lender's or holder's Pro Rata Share of the
Obligations as would be necessary to cause such Lender to share the amount so
set off or otherwise received with each other Lender or holder in accordance
with their respective Pro Rata Shares. Each Borrower agrees, to the fullest
extent permitted by law, that (a) any Lender or holder may exercise its right to
set off with respect to amounts in excess of its Pro Rata Share of the
Obligations and may sell participations in such amount so set off to other
Lenders and holders and (b) any Lender or holder so purchasing a participation
in the Loans made or other Obligations held by other Lenders or holders may
exercise all rights of set-off, bankers' lien, counterclaim or similar rights
with respect to such participation as fully as if such Lender or holder were a
direct holder of the Loans and the other Obligations in the amount of such
participation. Notwithstanding the foregoing, if all or any portion of the set-
off amount or payment otherwise received is thereafter recovered from the Lender
that has exercised the right of set-off, the purchase of participations by that
Lender shall be rescinded and the purchase price restored without interest. Each
Borrower hereby agrees that the foregoing provisions are intended to be
construed so as to satisfy the requirements of Section 553 of the Federal
Bankruptcy Code or amendments thereto (including any requirement of mutuality of
obligations therein).
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ARTICLE X
THE ADMINISTRATIVE AGENT AND THE COLLATERAL AGENT
SECTION 10.01. Appointment of Administrative Agent.
-----------------------------------
(a) CIBC is hereby appointed to act as contractual
representative on behalf of all Lenders under this Agreement and the other Loan
Documents. The Administrative Agent agrees to act as such contractual
representative upon the express conditions contained in this Article X. The
---------
provisions of this Section 10.01 are solely for the benefit of the
-------------
Administrative Agent and the Lenders and no Borrower or any other Person shall
have any rights as a third party beneficiary of any of the provisions hereof. In
performing its functions and duties under this Agreement and the other Loan
Documents, the Administrative Agent shall act solely as an agent of the Lenders
and does not assume and shall not be deemed to have assumed any obligation
toward or relationship of agency or trust with or for any Borrower or any other
Person. The Administrative Agent shall have no duties or responsibilities except
for those expressly set forth in this Agreement and the other Loan Documents.
Notwithstanding the use of the defined term "Administrative Agent", it is
expressly understood and agreed that the Administrative Agent shall not have any
fiduciary responsibilities to any Lender by reason of this Agreement and that
the Administrative Agent is merely acting as the representative of the Lenders
with only those duties as are expressly set forth in this Agreement and the
other Loan Documents. In its capacity as the Lenders' contractual
representative, the Administrative Agent (i) does not assume any fiduciary
duties to any of the Lenders, (ii) is a "representative" of the Lenders within
the meaning of Section 9-105 of the UCC and (iii) is acting as an independent
contractor, the rights and duties of which are limited to those expressly set
forth in this Agreement and the other Loan Documents.
(b) If the Administrative Agent shall request instructions from
all Lenders, Requisite Lenders or all affected Lenders with respect to any act
or action (including failure to act) in connection with this Agreement or any
other Loan Document, then the Administrative Agent shall be entitled to refrain
from such act or taking such action unless and until the Administrative Agent
shall have received instructions from all Lenders, Requisite Lenders or all
affected Lenders, as the case may be, and the Administrative Agent shall not
incur liability to any Person by reason of so refraining. The Administrative
Agent shall be fully justified in failing or refusing to take any action
hereunder or under any other Loan Document (a) if such action would, in the
opinion of the Administrative Agent, be contrary to law or the terms of this
Agreement or any other Loan Document, (b) if such action would, in the
reasonable opinion of the Administrative Agent, expose the Administrative Agent
to liabilities beyond the limits of this Agreement or (c) if the Administrative
Agent shall not first be indemnified to its satisfaction against any and all
liability and expense which may be incurred by it by reason of taking or
continuing to take any such action. Without limiting the foregoing, no Lender
shall have any right of action whatsoever against the Administrative Agent as a
result of the Administrative Agent acting or refraining from acting hereunder or
under any other Loan Document in accordance with the instructions of all
Lenders, Requisite Lenders or all affected Lenders, as applicable.
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SECTION 10.02. Administrative Agent's Reliance, Etc. Neither the
------------------------------------
Administrative Agent nor any of its Affiliates nor any of their respective
directors, officers, agents or employees shall be liable to any Lender for any
action taken or omitted to be taken by it or them under or in connection with
this Agreement or the other Loan Documents, except for damages caused by its or
their own gross negligence or willful misconduct. Without limitation of the
generality of the foregoing, the Administrative Agent: (a) may treat the payee
of any Note as the holder thereof until the Administrative Agent receives
written notice of the assignment or transfer thereof signed by such payee and in
form satisfactory to the Administrative Agent; (b) may consult with legal
counsel, independent public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken in good faith by
it in accordance with the advice of such counsel, accountants or experts; (c)
makes no warranty or representation to any Lender and shall not be responsible
to any Lender for any statements, warranties or representations made in or in
connection with this Agreement or the other Loan Documents; (d) shall not have
any duty to ascertain or to inquire as to the performance or observance of any
of the terms, covenants or conditions of this Agreement or the other Loan
Documents on the part of any Borrower or to inspect the Collateral (including
the books and records); (e) shall not be responsible to any Lender for the due
execution, legality, validity, enforceability, genuineness, sufficiency or value
of this Agreement or the other Loan Documents or any other instrument or
document furnished pursuant hereto or thereto; and (f) shall incur no liability
under or in respect of this Agreement or the other Loan Documents by acting upon
any notice, consent, certificate or other instrument or writing (which may be by
telecopy, telegram, cable or telex) reasonably believed by it to be genuine and
signed or sent by the proper party or parties.
SECTION 10.03. CIBC and Affiliates. With respect to its
-------------------
Commitments hereunder, CIBC shall have the same rights and powers under this
Agreement and the other Loan Documents as any other Lender and may exercise the
same as though it were not the Administrative Agent; and the term "Lender" or
"Lenders" shall, unless otherwise expressly indicated, include CIBC in its
individual capacity. CIBC and its Affiliates may lend money to, invest in, and
generally engage in any kind of business with, any Borrower, any of its
Affiliates and any Person who may do business with or own securities of any
Borrower or any such Affiliate, all as if CIBC were not the Administrative Agent
and without any duty to account therefor to Lenders. CIBC and its Affiliates may
accept fees and other consideration from any Borrower for services in connection
with this Agreement or otherwise without having to account for the same to
Lenders. CIBC may also purchase or hold Equity Interests or warrants in the
Guarantor or any Borrower and make subordinated loans to any Borrower. Each
Lender acknowledges the potential conflict of interest between CIBC as a Lender
holding disproportionate interests in the Loans, CIBC as a shareholder of the
Guarantor, and CIBC, as Administrative Agent.
SECTION 10.04. Lender Credit Decision. Each Lender acknowledges
----------------------
that it has, independently and without reliance upon the Administrative Agent or
any other Lender and based on the financial information given it by the
Borrowers and such other documents and information as it has deemed appropriate,
made its own credit and financial analysis of the Borrowers and its own decision
to enter into this Agreement. Each Lender also acknowledges 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,
81
continue to make its own credit decisions in taking or not taking action under
this Agreement. Each Lender acknowledges the potential conflict of interest of
each other Lender as a result of Lenders holding disproportionate interests in
the Loans, and expressly consents to, and waives any claim based upon, such
conflict of interest.
SECTION 10.05. Indemnification. Each of the Lenders agrees to
---------------
indemnify the Administrative Agent (to the extent not reimbursed by the
Borrowers and without limiting the obligations of Borrowers hereunder), ratably
according to their respective Pro Rata Shares, from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever which may be
imposed on, incurred by, or asserted against the Administrative Agent in any way
relating to or arising out of this Agreement or any other Loan Document or any
action taken or omitted by the Administrative Agent in connection therewith;
provided, however, that no Lender shall be liable for any portion of such
-------- -------
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting from the Administrative Agent's gross
negligence or willful misconduct. Without limiting the foregoing, each Lender
agrees to reimburse the Administrative Agent promptly upon demand for its
ratable share of any out-of-pocket expenses (including counsel fees) incurred by
the Administrative Agent in connection with the preparation, execution,
delivery, administration, modification, amendment or enforcement (whether
through negotiations, legal proceedings or otherwise) of, or legal advice in
respect of rights or responsibilities under, this Agreement and each other Loan
Document, to the extent that the Administrative Agent is not reimbursed for such
expenses by the Borrowers.
SECTION 10.06. Successor Agent. The Administrative Agent may
---------------
resign at any time by giving not less than thirty (30) days' prior written
notice thereof to Lenders and the Borrowers. Upon any such resignation, the
Requisite Lenders shall have the right to appoint a successor Administrative
Agent. If no successor Administrative Agent shall have been so appointed by the
Requisite Lenders and shall have accepted such appointment within 30 days after
the resigning Administrative Agent's giving notice of resignation, then the
resigning Administrative Agent may, on behalf of Lenders, appoint a successor
Administrative Agent, which shall be a Lender, if a Lender is willing to accept
such appointment, or otherwise shall be a commercial bank or financial
institution or a subsidiary of a commercial bank or financial institution if
such commercial bank or financial institution is organized under the laws of the
United States of America or of any State thereof and has a combined capital and
surplus of at least $300,000,000. If no successor Administrative Agent has been
appointed pursuant to the foregoing, by the thirtieth day after the date such
notice of resignation was given by the resigning Administrative Agent, such
resignation shall become effective and the Requisite Lenders shall thereafter
perform all the duties of Administrative Agent hereunder until such time, if
any, as the Requisite Lenders appoint a successor Administrative Agent as
provided above. Any successor Administrative Agent appointed by the Requisite
Lenders hereunder shall be subject to the approval of Borrowers, such approval
not to be unreasonably withheld or delayed; provided that such approval shall
--------
not be required if a Default or an Event of Default shall have occurred and be
continuing. Upon the acceptance of any appointment as Administrative Agent
hereunder by a successor Administrative Agent, such successor Administrative
Agent shall succeed to and become vested with all the rights, powers, privileges
and duties of the resigning Administrative Agent. Upon the earlier of the
acceptance of any appointment as Administrative Agent hereunder by a successor
Administrative Agent or the effective date of the resigning
82
Administrative Agent's resignation, the resigning Administrative Agent shall be
discharged from its duties and obligations under this Agreement and the other
Loan Documents, except that any indemnity rights or other rights in favor of
such resigning Administrative Agent shall continue. After any resigning
Administrative Agent's resignation hereunder, the provisions of this Section
10.06 shall inure to its benefit as to any actions taken or omitted to be taken
by it while it was Administrative Agent under this Agreement and the other Loan
Documents.
SECTION 10.07. Payments; Non-Funding Lenders; Information;
-------------------------------------------
Actions in Concert.
------------------
(a) Loans; Payments. Whenever the Administrative Agent receives
a payment of principal, interest, fee or premium (if any) or other payment, or
whenever the Administrative Agent makes an application of funds, in connection
with the Loans or the Notes (including, without limitation, any payment or
application from any Collateral), the Administrative Agent will on the date such
payment is received or applied, if on or prior to 12:00 p.m. (Eastern time) on
such date, or otherwise on the next Business Day, pay over to each Lender as
instructed by such Lender in writing, an amount equal to such Lender's Pro Rata
Share of such payment provided that such Lender has funded all Loans required to
be made by it and has purchased all participation required to be purchased by it
under this Agreement and the other Loan Documents as of such date. To the extent
that any Lender (a "Non-Funding Lender") has failed to fund all such payments
------------------
and Loans or failed to fund the purchase of all such participation, the
Administrative Agent shall be entitled to set off the funding short-fall against
that Non-Funding Lender's Pro Rata Share of all payments received from the
Borrowers. All payments by Administrative Agent shall be made by wire transfer
to such Lender's account (as specified by such Lender) not later than 3:00 p.m.
(Eastern time) on the applicable Business Day.
(b) Return of Payments.
------------------
(1) If the Administrative Agent pays an amount to a Lender under
this Agreement in the belief or expectation that a related payment has been
or will be received by the Administrative Agent from the Borrowers and such
related payment is not received by Administrative Agent, then the
Administrative Agent will be entitled to recover such amount from such
Lender on demand without set-off, counterclaim or deduction of any kind.
(2) If the Administrative Agent determines at any time that any
amount received by the Administrative Agent under this Agreement must be
returned to any Borrower or paid to any other Person pursuant to any
insolvency law or otherwise, then, notwithstanding any other term or
condition of this Agreement or any other Loan Document, the Administrative
Agent will not be required to distribute any portion thereof to any Lender.
In addition, each Lender will repay to the Administrative Agent on demand
any portion of such amount that the Administrative Agent has distributed to
such Lender, together with interest at such rate, if any, as the
Administrative Agent is required to pay to any Borrower or such other
Person, without set-off, counterclaim or deduction of any kind.
(c) Non-Funding Lenders. The failure of any Non-Funding Lender
-------------------
to make any portion of its Loans or any payment required by it hereunder on the
date specified therefor
83
shall not relieve any other Lender (each such other Lender, an "Other Lender")
------------
of its obligations to make any such Loan on such date, but neither any Other
Lender nor the Administrative Agent shall be responsible for the failure of any
Non-Funding Lender to make any Loan. Notwithstanding anything set forth herein
to the contrary, a Non-Funding Lender shall not have any voting or consent
rights under or with respect to any Loan Document or constitute a "Lender" (or
be included in the calculation of "Requisite Lenders" hereunder) for any voting
or consent rights under or with respect to any Loan Document.
(d) Dissemination of Information. The Administrative Agent will
----------------------------
use reasonable efforts to provide Lenders with any notice of Default or Event of
Default received by the Administrative Agent from, or delivered by the
Administrative Agent to, the Borrowers, with notice of any Event of Default of
which the Administrative Agent has actually become aware and with notice of any
action taken by the Administrative Agent following any Event of Default;
provided, however, that the Administrative Agent shall not be liable to any
--------
Lender for any failure to do so, except to the extent that such failure is
attributable to the Administrative Agent's gross negligence or willful
misconduct. Lenders acknowledge that the Borrowers are required to provide
financial statements and other documents to Lenders pursuant to this Agreement
and agree that the Administrative Agent shall have no duty to provide the same
to Lenders.
(e) Actions in Concert. Anything in this Agreement to the
------------------
contrary notwithstanding, each Lender hereby agrees with each other Lender that
no Lender shall take any action to protect or enforce its rights arising out of
this Agreement or the Notes (including exercising any rights of set-off) without
first obtaining the prior written consent of the Administrative Agent and
Requisite Lenders, it being the intent of Lenders that any such action to
protect or enforce rights under this Agreement and the Notes shall be taken in
concert and at the direction or with the consent of Administrative Agent.
SECTION 10.08. Collateral Matters.
------------------
(a) The Lenders hereby irrevocably authorize the Collateral
Agent, at its option and in its reasonable business judgment, to release any
Lien upon any Collateral (i) upon the termination of the Commitments and payment
and satisfaction of all Loans and all other Obligations and which the Collateral
Agent has been notified in writing are then due and payable; (ii) constituting
property being sold or disposed of if the applicable Borrower certifies to the
Collateral Agent that the sale or disposition is made in compliance with Section
-------
6.03 (and the Collateral Agent may rely conclusively on any such certificate,
----
without further inquiry); or (iii) constituting property leased to the
applicable Borrower under a lease which has expired or been terminated in a
transaction permitted under this Agreement or which will expire imminently and
which has not been, and is not intended by such Borrower to be, renewed or
extended and with respect to which such Borrower has not exercised any purchase
option. Except as provided above, the Collateral Agent will not release or
subordinate any of the Liens without the prior written authorization of the
Requisite Lenders; provided that the Collateral Agent may not release or
--------
subordinate the Liens on Collateral valued in the aggregate in excess of
$500,000 without the prior written authorization of the Requisite Lenders and
may not release all or substantially all of the Collateral or subordinate the
Liens thereon without the consent of the Lenders. Upon request by the Collateral
Agent or the Borrowers at any time, the Lenders will
84
confirm in writing the Collateral Agent's authority to release any Liens upon
particular types or items of Collateral pursuant to this Section 10.08(a).
----------------
(b) Upon receipt by the Collateral Agent of any authorization
required pursuant to Section 10.08(a) from the Requisite Lenders or Lenders, as
----------------
applicable, of the Collateral Agent's authority to release any Liens upon
particular types or items of Collateral, and upon at least five (5) Business
Days' prior written request by the applicable Borrower, and provided that no
Event of Default has occurred and is then continuing, the Collateral Agent shall
(and is hereby irrevocably authorized by the Lenders to) execute such documents
as may be necessary to evidence the release of the Liens upon such Collateral;
provided, however, that (i) the Collateral Agent shall not be required to
-------- -------
execute any such document on terms which, in the Collateral Agent's opinion,
would expose the Collateral Agent to liability or create any obligation or
entail any consequence other than the release of such Liens without recourse or
warranty, and (ii) such release shall not in any manner discharge, affect or
impair the Obligations or any Liens (other than those expressly being released)
upon (or obligations of the applicable Borrower in respect of) all interests
retained by the applicable Borrower, including (without limitation) the proceeds
of any sale, all of which shall continue to constitute part of the Collateral.
(c) The Collateral Agent shall have no obligation whatsoever to
any of the Lenders to assure that the Collateral exists or is owned by any
Borrower or is cared for, protected or insured or has been encumbered, or, other
than a duty to act without recklessness, willful misconduct or gross (but not
mere) negligence, that the Liens have been properly or sufficiently or lawfully
created, perfected, protected or enforced or are entitled to any particular
priority, or to exercise at all or in any particular manner or under any duty of
care, disclosure or fidelity, or to continue exercising, any of the rights,
authorities and powers granted or available to the pursuant to this Section
-------
10.08 or pursuant to any of the Loan Documents, it being understood and agreed
-----
that in respect of the Collateral, or any act, omission or event related
thereto, the Collateral Agent may act in any manner it may deem appropriate, in
its reasonable business judgment, given the Collateral Agent's own interest in
the Collateral in its capacity as one of the Lenders and that the Collateral
Agent shall have no other duty or liability whatsoever to any Lender as to any
of the foregoing.
SECTION 10.09. Agency for Perfection. Each Lender hereby
---------------------
appoints each other Lender as agent for the purpose of perfecting the Lenders'
security interest in assets which, in accordance with Article 9 of the UCC can
be perfected only by possession. Should any Lender (other than the Collateral
Agent) obtain possession of any such Collateral, such Lender shall notify the
Collateral Agent thereof, and, promptly upon the Collateral Agent's request
therefor shall deliver such Collateral to the Collateral Agent.
SECTION 10.10. Concerning the Collateral and the Related Loan
----------------------------------------------
Documents and the Collateral Agent.
----------------------------------
(a) Each Lender authorizes and directs the Collateral Agent to
enter into this Agreement and the other Loan Documents relating to the
85
Collateral, for the ratable benefit of the Lenders. Each Lender agrees that any
action taken by the Collateral Agent or Requisite Lenders in accordance with the
terms of this Agreement or the other Loan Documents relating to the Collateral,
and the exercise by the Collateral Agent or the Requisite Lenders of their
respective powers set forth therein or herein, together with such other powers
that are reasonably incidental thereto, shall be binding upon all of the
Lenders.
(b) The Collateral Agent with respect to the administration of
the Collateral shall have the same rights, obligations and status as the
Administrative Agent as are set forth in Section 10.01, 10.02, 10.03, 10.04,
------------- ----- ----- -----
10.05, and 10.06 above.
----- -----
ARTICLE XI
MISCELLANEOUS
SECTION 11.01. Notices; Action on Notices, etc.
--------------------------------
(a) Notices and other communications provided for herein shall
be in writing and shall be delivered by a courier service of recognized standing
(specifying one (1) day delivery), or by registered or certified mail, postage
prepaid, return receipt requested (or, if by telecopy communications equipment
of the sending party, delivered by such equipment) addressed, if to the
Borrowers, at PaeTec Communications, Inc., ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇; Attention: Vice President, Finance (telecopy no. (▇▇▇) ▇▇▇-▇▇▇▇
confirmation no. (▇▇▇) ▇▇▇-▇▇▇▇) with a copy to General Counsel; (telecopy no.
(▇▇▇) ▇▇▇-▇▇▇▇ confirmation no. (▇▇▇) ▇▇▇-▇▇▇▇), if to the Administrative
Agent (or CIBC as a Lender), at Canadian Imperial Bank of Commerce, ▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Executive Director, Media
Telecom Group (telecopy no. (▇▇▇) ▇▇▇-▇▇▇▇, confirmation no. (▇▇▇) ▇▇▇-▇▇▇▇),
with copies to Canadian Imperial Bank of Commerce, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Agency Services (telecopy no. (▇▇▇) ▇▇▇-▇▇▇▇,
confirmation no. (▇▇▇) ▇▇▇-▇▇▇▇), if to the Collateral Agent (or CIT LSC, as a
Lender), at ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Media and
Communications , Vice President-Operations Manager (telecopy no. (▇▇▇) ▇▇▇-▇▇▇▇,
confirmation no. (▇▇▇) ▇▇▇-▇▇▇▇), with copies to CIT Lending Services
Corporation, ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Vice
President-Credit (telecopy no. (▇▇▇) ▇▇▇-▇▇▇▇, confirmation no. (973) 401-
6730) and Attention: Vice President-Legal (telecopy no. (▇▇▇) ▇▇▇-▇▇▇▇,
confirmation no. (▇▇▇) ▇▇▇-▇▇▇▇), if to any Lender (other than CIBC or CIT LSC),
at its address set forth below its signature line on Annex A hereto or as
-------
otherwise specified by any Lender in an Assignment Agreement or otherwise in
writing. All notices and other communications given to any party hereto in
accordance with the provisions of this Agreement shall be deemed to have been
given (a) five Business Days after mailing when sent by registered or certified
mail, postage prepaid, return receipt requested, or (b) upon receipt, if by
courier service or any telecopy communications equipment of the sender, in each
case addressed to such party as provided in this Section or in accordance with
the latest unrevoked direction from such party.
(b) Each Borrower agrees that the Administrative Agent and the
Collateral Agent may act upon any notice, consent, certificate, cable, telex or
other instrument or writing believed by the Administrative Agent or the
Collateral Agent or to be genuine, that the Administrative Agent or the
Collateral Agent may consult with legal counsel, selected by the Administrative
Agent or the Collateral Agent and shall not be liable to any Borrower for any
86
action taken or omitted to be taken in good faith by Lender in accordance with
the advice of such counsel.
SECTION 11.02. No Waivers; Amendments.
----------------------
(a) No failure or delay of the Administrative Agent, the
Collateral Agent or any Lender to exercise any right hereunder or under any
other Loan Document shall operate as a waiver thereof, nor shall any single or
partial exercise of any such right, preclude any other or further exercise
thereof or the exercise of any other right. No waiver of any provision of this
Agreement or any other Loan Document (exclusive of any Interest Rate Agreement)
nor consent to any departure by any Borrower therefrom shall in any event be
effective unless the same shall be in writing and signed by the Administrative
Agent and the Requisite Lenders, and then such waiver or consent shall be
effective only in the specific instance and for the purpose for which given. No
notice or demand on any Borrower in any case shall entitle any Borrower to any
other or further notice or demand in similar or other circumstances.
(b) Subject to the provisions of this Section 11.02(b), the
----------------
Requisite Lenders (or the Administrative Agent with the consent in writing of
the Requisite Lenders) and the Borrowers may enter into agreements supplemental
hereto for the purpose of adding or modifying any provisions to the Loan
Documents or changing in any manner the rights of the Lenders or the Borrowers
hereunder or waiving any Event of Default or Default hereunder; provided, that
any Interest Rate Agreement which constitutes a Loan Document may be amended or
modified solely with the consent of the parties thereto; provided, further,
-------- -------
however, that no such supplemental agreement shall, without the consent of each
-------
Lender affected thereby:
(1) Postpone or extend the Revolving Loan Commitment Termination
Date, the Term Loan Commitment Termination Date, the maturity date for the
Loans or any other date fixed for any payment of principal of, or interest
on, the Loans or any fees or other amounts payable to such Lender except
with respect to (A) any modifications of the provisions relating to
prepayments of Loans and other Obligations and (B) a waiver of the
application of the default rate of interest pursuant to Section 2.05(b)
---------------
hereof.
(2) Reduce the principal amount of any Loans, or reduce the rate
or extend the time of payment of interest or fees thereon.
(3) Reduce the percentage specified in the definition of
Requisite Lenders or any other percentage of Lenders specified to be the
applicable percentage in this Agreement to act on specified matters or
amend the definition of "Pro Rata Share".
(4) Increase the amount of any Commitment of any Lender
hereunder or increase any Lender's Pro Rata Share.
(5) Permit any Borrower to assign its rights under this
Agreement.
(6) Release all or substantially all of the Collateral.
(7) Amend this Section 11.02(b).
----------------
No amendment of any provision of this Agreement relating to the Administrative
Agent or the Collateral Agent shall be effective without the written consent of
the Administrative Agent or the Collateral Agent, as applicable.
87
SECTION 11.03. GOVERNING LAW AND JURISDICTION. THIS AGREEMENT
------------------------------
AND THE OTHER LOAN DOCUMENTS SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED
BY THE INTERNAL LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO ANY
CONFLICTS OF LAWS PRINCIPLES. THE BORROWERS, THE ADMINISTRATIVE AGENT, THE
COLLATERAL AGENT AND THE LENDERS CONSENT TO THE JURISDICTION OF ANY LOCAL, STATE
OR FEDERAL COURT LOCATED IN THE STATE OF NEW YORK AND WAIVE ANY OBJECTION
RELATING TO IMPROPER VENUE OR FORUM NON CONVENIENCE TO THE CONDUCT OF ANY
PROCEEDING BY SUCH COURT.
SECTION 11.04. Expenses; Documentary Taxes. The Borrowers will
---------------------------
pay, and have joint and several liability for, all documented out-of-pocket
third-party expenses (i) incurred by the Administrative Agent and the Collateral
Agent in connection with the negotiation, preparation and execution of the Loan
Documents (whether or not the transactions contemplated hereby shall be
consummated), and (ii) by the Administrative Agent, the Collateral Agent or the
Lenders in connection with the administration of the Loan Documents, the
creation, perfection, priority and protection of the Liens in the Collateral,
and the enforcement of the rights of the Administrative Agent, the Collateral
Agent or the Lenders in connection with this Agreement, any other Loan Documents
or the Collateral, including all reasonable attorneys' and paralegals' fees and
related expenses and costs. The Borrowers agree that they shall jointly and
severally indemnify the Administrative Agent, the Collateral Agent and the
Lenders from and hold them harmless against any documentary taxes, assessments
or charges made by any Governmental Authority by reason of the execution and
delivery of this Agreement or any other Loan Document unless prohibited by law.
SECTION 11.05. Equitable Relief. Each Borrower recognizes that,
----------------
in the event such Borrower fails to perform, observe or discharge any of its
obligations or liabilities under this Agreement, or any other Loan Document, any
remedy at law may prove to be inadequate relief to the Administrative Agent, the
Collateral Agent and the Lenders; therefore, such Borrower agrees that the
Administrative Agent or the Collateral Agent, if it so requests, shall be
entitled to temporary and permanent injunctive relief in any such case without
the necessity of proving actual damages.
SECTION 11.06. Indemnification; Limitation of Liability.
----------------------------------------
(a) The Borrowers jointly and severally agree to protect,
indemnify and hold harmless the Administrative Agent, the Collateral Agent, each
Lender and each of their respective officers, affiliates, directors, employees,
attorneys, accountants, consultants, representatives and agents (collectively
called the "Indemnitees") from and against any and all liabilities, obligations,
-----------
losses, damages, penalties, actions, judgments, suits, claims, costs, expenses
and disbursements (including, without limitation, payment by the Administrative
Agent, the Collateral Agent or any Lender of any obligations due or past due
under any contract or agreement to which any Borrower is or becomes a party) of
any kind or nature whatsoever (including, without limitation, the fees and
disbursements of counsel for and consultants of such Indemnitees in connection
with any investigative, administrative or judicial proceeding, whether or not
such Indemnitees shall be designated a party thereto), which may be imposed on,
incurred by, or asserted against such Indemnitees (whether direct, indirect, or
consequential and whether
88
based on any federal or state laws or other statutory regulations, including,
without limitation, securities, environmental and commercial laws and
regulations, under common law or at equitable cause or on contract or otherwise)
in any manner relating to or arising out of this Agreement or any of the other
Loan Documents (other than claims arising solely from a dispute between the
Administrative Agent, the Collateral Agent and any number of Lenders or between
any two or more Lenders), or any act, event or transaction related or attendant
thereto, the agreements of the Administrative Agent, the Collateral Agent or the
Lenders contained herein, the making of Loans or the issuance of Letters of
Credit, the management of such Loans, Letters of Credit or the Collateral
(including any liability under federal, state or local environmental laws or
regulations) or the use or intended use of the proceeds of such Loans hereunder
or of such Letters of Credit hereunder (collectively, the "Indemnified
-----------
Matters"); provided that the Borrowers shall not have any obligation to any
------- --------
Indemnitee hereunder with respect to Indemnified Matters caused by or resulting
from the willful misconduct or gross negligence of such Indemnitee; provided,
--------
further that no Borrower shall have any obligation to any Indemnitee hereunder
-------
with respect to taxes that are imposed on the net income of any Indemnitee or
any franchise or doing business taxes imposed on any Indemnitee. To the extent
that the undertaking to indemnify, pay and hold harmless set forth in the
preceding sentence may be unenforceable because it is violative of any law or
public policy, the Borrowers shall contribute the maximum portion which they are
permitted to pay and satisfy under applicable law, to the payment and
satisfaction of all Indemnified Matters incurred by the Indemnitees.
(b) To the extent permitted by applicable law, no claim may be
made by the Borrowers or any other Person against the Administrative Agent, the
Collateral Agent, any Lender or any of their respective affiliates, directors,
officers, employees, agents, attorneys, accountants, representatives or
consultants for any special, indirect, consequential or punitive damages in
respect of any claim for breach of contract or any other theory of liability
arising out of or related to the transactions contemplated by any of the Loan
Documents or any act, omission or event occurring in connection therewith; and
the Borrowers hereby waive, release and agree not to ▇▇▇ upon any claim for any
such damages, whether or not accrued and whether or not known or suspected to
exist in its favor.
SECTION 11.07. Survival of Representations and Warranties, etc.
------------------------------------------------
All warranties and representations made by any Borrower in any Loan Document
shall survive the execution and delivery of this Agreement and the other Loan
Documents and the making and repayment of the Obligations. The confidentiality
obligations of each Borrower in Section 11.16, the indemnification obligations
-------------
of each Borrower in Section 11.06, and to the extent the second sentence of
Section 11.13 is applicable, all covenants of each Borrower, survive the
-------------
repayment of the Obligations.
SECTION 11.08. Successors and Assigns; Assignments;
------------------------------------
Participations.
--------------
(a) General. The terms and provisions of the Loan Documents
-------
shall be binding upon and inure to the benefit of the Borrowers, the
Administrative Agent, the Collateral Agent and the Lenders and their respective
successors and assigns, except that (i) no Borrower shall have any right to
assign its rights or obligations under the Loan Documents and (ii) any
assignment by any Lender must be made in compliance with subsection (c) below.
Notwithstanding the foregoing, any Lender may at any time, without the consent
of the
89
Borrowers or the Administrative Agent, assign all or any portion of its rights
under this Agreement and its Notes to a Federal Reserve Bank or to an affiliate
of such Lender; provided, however, that no such assignment shall release the
-------- -------
transferor Lender from its obligations hereunder. The Administrative Agent shall
be entitled to utilize its Register to determine the payee of any Note for all
purposes hereof. Any request, authority or consent of any Person, who at the
time of making such request or giving such authority or consent is the holder of
any Note, shall be conclusive and binding on any subsequent holder, transferee
or assignee of such Note or of any Note or Notes issued in exchange therefor.
(b) Participations.
--------------
(1) Subject to the terms set forth in this Section 11.08(b), any
----------------
Lender may, in the ordinary course of its business and in accordance with
applicable law, at any time sell to one or more banks or other entities
("Participants") participating interests in any Loan owing to such Lender,
any Note held by such Lender, any Commitment of such Lender or any other
interest of such Lender under the Loan Documents on a pro rata or non-pro
rata basis in an aggregate principal amount of at least $1,000,000. In the
event of any such sale by a Lender of participating interests to a
Participant, such Lender's obligations under the Loan Documents shall
remain unchanged, such Lender shall remain solely responsible to the other
parties hereto for the performance of such obligations, such Lender shall
remain the holder of any such Note for all purposes under the Loan
Documents, such Lender shall be solely responsible for any withholding
taxes or any filing or reporting requirements in connection therewith
relating to such Participant, all amounts payable by the Borrowers under
this Agreement shall be determined as if such Lender had not sold such
participating interests, and the Borrowers and the Administrative Agent
shall continue to deal solely and directly with such Lender in connection
with such Lender's rights and obligations under the Loan Documents except
that, for purposes of Sections 2.12(b), 2.13 and 2.14 hereof, the
---------------- ---- ----
Participants shall be entitled to the same rights as if they were Lenders,
provided that no Participant shall be entitled to receive any greater
--------
amount pursuant to Sections 2.12(b), 2.13 and 2.14 than such Lender would
---------------- ---- ----
have been entitled to receive in respect of the amount of the participation
transferred to such Participant had no transfer occurred.
(2) Each Lender shall retain the sole right to approve, without
the consent of any Participant, any amendment, modification or waiver of
any provision of the Loan Documents other than any amendment, modification
or waiver with respect to any Loan or Commitment in which such Participant
has an interest which forgives principal, interest or fees or reduces the
interest rate or fees payable pursuant to the terms of this Agreement with
respect to any such Loan or Commitment, postpones any date fixed for any
regularly-scheduled payment of principal of, or interest or fees on, any
such Loan or Commitment, or releases all or substantially all of the
Collateral, if any, securing any such Loan.
(3) The Borrowers agree that each Participant shall be deemed to
have the right of setoff provided in Section 9.09 hereof in respect to its
------------
participating interest in amounts owing under the Loan Documents to the
same extent as if the amount of its participating interest were owing
directly to it as a Lender under the Loan Documents, provided that each
Lender shall retain the right of setoff provided in Section 9.09 hereof
------------
90
with respect to the amount of participating interests sold to each
Participant except to the extent such Participant exercises its right of
setoff. The Lenders agree to share with each Participant, and each
Participant, by exercising the right of setoff provided in Section 9.09
hereof, agrees to share with each Lender, any amount received pursuant to
the exercise of its right of setoff, such amounts to be shared in
accordance with Section 9.09 as if each Participant were a Lender.
(c) Assignments.
-----------
(1) Any Lender may, in the ordinary course of its business and
in accordance with applicable law, at any time assign to one or more
Permitted Assignees ("Purchasers") all or a portion of its rights and
obligations under this Agreement (including, without limitation, its
Commitment and the Loans owing to it hereunder) in accordance with the
provisions of this Section 11.08(c). Each assignment shall be of a
----------------
constant, and not a varying, ratable percentage of all of the assigning
Lender's rights and obligations under this Agreement. Such assignment shall
be evidenced by an Assignment Agreement in form and substance reasonably
satisfactory to the Administrative Agent and shall not be permitted
hereunder unless such assignment (A) is either for all of such Lender's
rights and obligations under the Loan Documents or for Loans and
Commitments in an aggregate principal amount equal to the lesser of
$1,000,000 (which minimum amount may be waived by the Administrative Agent
and the Borrower at any time that an Event of Default has not occurred and
is not continuing and solely by the Administrative Agent upon the
occurrence and during the continuance of an Event of Default) and such
Lender's Commitment Amount, and (B) is consented to by the Administrative
Agent (such consent not to be unreasonably withheld) at any time that an
Event of Default has not occurred and is not continuing.
(2) Upon (i) delivery to the Administrative Agent of a notice of
assignment (a "Notice of Assignment"), together with any consent required
--------------------
hereunder, and (ii) payment of a $3,500 processing fee to the
Administrative Agent for processing such assignment (unless such assignment
is made by one of the Agents to one of its affiliates, in which case no
processing fee shall be assessed), such assignment shall become effective
on the effective date specified in such Notice of Assignment. The assigning
Lender shall be obligated to reimburse the Administrative Agent for all
other costs and expenses associated with the preparation and execution of
such assignment (including reasonable attorneys' fees arising out of such
preparation and execution of such assignment). The Notice of Assignment
shall contain a representation by the Purchaser to the effect that none of
the consideration used to make the purchase of the Commitment and Loans
under the applicable assignment agreement are "plan assets" as defined
under ERISA and that the rights and interests of the Purchaser in and under
the Loan Documents will not be "plan assets" under ERISA. On and after the
effective date of such assignment, such Purchaser, if not already a Lender,
shall for all purposes be a Lender party to this Agreement and any other
Loan Documents executed by the Lenders and shall have all the rights and
obligations of a Lender under the Loan Documents, to the same extent as if
it were an original party hereto, and no further consent or action by the
Borrowers, the Lenders or the Administrative Agent shall be required to
release the transferor Lender with respect to the percentage of the
aggregate Commitment and Loans assigned to such Purchaser. Upon the
consummation of any assignment to a Purchaser pursuant to this
91
Section 11.08(c)(2), the transferor Lender, the Administrative Agent and
-------------------
the Borrowers shall make appropriate arrangements so that replacement Notes
are issued to such transferor Lender and new Notes or, as appropriate,
replacement Notes, are issued to such Purchaser, in each case in principal
amounts reflecting their Commitment and their Loans, as adjusted pursuant
to such assignment.
(3) The Administrative Agent shall maintain at its address
referred to in Section 11.01 a copy of each assignment delivered to and
-------------
accepted by it pursuant to this Section 11.08 and a register (the
-------------
"Register") for the recordation of the names and addresses of the Lenders
--------
and the Commitment of and principal amount of the Loans owing to, each
Lender from time to time and whether such Lender is an original Lender or
the assignee of another Lender pursuant to an assignment under this Section
-------
11.08. The entries in the Register shall be conclusive and binding for all
-----
purposes, absent 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 any Lender
at any reasonable time and from time to time upon reasonable prior notice.
(4) On the Closing Date, CIBC, CIT LSC, General Electric Capital
Corporation and Union Bank of California (each an "Assignor Lender") shall
assign to Bankers Trust Company, ▇▇▇▇▇▇▇ ▇▇▇▇▇ Capital Corporation and Bear
▇▇▇▇▇▇▇ Corporate Lending Inc. (each an "Assignee Lender") such principal
amount of the Term Loans as will result in each Lender having the
outstanding principal balance of the Term Loans opposite such Lender's name
on Annex B hereto (such assignment being hereinafter referred to as the
"Master Assignment"), as described in more detail on Annex B hereto. The
Master Assignment shall be effected in accordance with the provisions of
this clause (4) and not in accordance with the provisions of clauses (1)
and (2) above. As of the Closing Date, each Assignor Lender makes the
representations, warranties and covenants set forth in Section 3.2 of the
Assignment Agreement attached as Exhibit O hereto with respect to itself
and the Term Loans it is assigning pursuant to the Master Assignment, and
each Assignee Lender makes the representations, warranties and covenants
set forth in Section 3.1 of the Assignment Agreement with respect to
itself. The Master Assignment shall be subject to the provisions of Section
4 of the Assignment Agreement attached as Exhibit O hereto. The purchase
price payable by each Assignee Lender with respect to the Master Assignment
shall be the outstanding principal balance of the Term Loans purchased by
it, and such Assignee Lender shall on the Closing Date pay such purchase
price to the Administrative Agent by wire transfer of immediately available
funds, and the Administrative Agent shall immediately disburse such funds
to each Assignor Lender in an amount equal to the outstanding principal
balance of the Term Loans assigned by such Assignor Lender pursuant to the
Master Assignment.
SECTION 11.09. Severability. In case any one or more of the
------------
provisions contained in this Agreement or any other Loan Document shall be
invalid, illegal or unenforceable in any respect, the validity, legality and
enforceability of the remaining provisions contained herein and therein shall
not in any way be affected or impaired thereby.
92
SECTION 11.10. Cover Page, Table of Contents and Section
-----------------------------------------
Headings. The cover page, Table of Contents and section headings used herein are
--------
for convenience of reference only, are not part of this Agreement and are not to
affect the construction of or be taken into consideration in interpreting this
Agreement.
SECTION 11.11. Counterparts. This Agreement may be signed in
------------
counterparts with the same effect as if the signatures thereof and hereto were
upon the same instrument.
SECTION 11.12. Application of Payments. Notwithstanding any
-----------------------
contrary provision contained in this Agreement or in any of the other Loan
Documents, upon the occurrence and during the continuance of any Event of
Default, each Borrower irrevocably waives the right to direct the application of
any and all payments at any time or times hereafter received by the
Administrative Agent or any Lender from such Borrower or with respect to any of
the Collateral, and such Borrower does hereby irrevocably agree that the
Administrative Agent or any Lender shall have the continuing exclusive right to
apply and reapply any and all payments received at any time or times hereafter,
whether with respect to the Collateral or otherwise, against the Obligations in
such manner as the Administrative Agent or any Lender may deem advisable,
notwithstanding any entry by the Administrative Agent or any Lender upon any of
its books and records, subject, however, to the provisions of Section 2.08(c).
SECTION 11.13. Marshalling; Payments Set Aside. Neither the
-------------------------------
Administrative Agent nor the Collateral Agent shall be under any obligation to
▇▇▇▇▇▇▇▇ any assets in favor of any Borrower or any other party or against or in
payment of any or all of the Obligations. To the extent that any Borrower makes
a payment or payments to the Administrative Agent, the Collateral Agent or any
Lender or the Administrative Agent, the Collateral Agent or any Lender enforces
its security interests or exercises its rights of setoff, and such payment or
payments or the proceeds of such enforcement or setoff 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 recovery, the obligation or part thereof originally intended to
be satisfied shall be revived and continued in full force and effect as if such
payment had not been made or such enforcement or setoff had not occurred.
SECTION 11.14. SERVICE OF PROCESS. EACH BORROWER WAIVES
------------------
PERSONAL SERVICE OF ANY PROCESS UPON IT AND, CONSENTS THAT ALL SERVICE OF
PROCESS SHALL BE MADE BY REGISTERED MAIL, RETURN RECEIPT REQUESTED, DIRECTED TO
SUCH BORROWER AT THE ADDRESS INDICATED IN SECTION 11.01 AND SERVICE SO MADE
-------------
SHALL BE DEEMED TO BE COMPLETED FIVE (5) BUSINESS DAYS AFTER SAME SHALL HAVE
BEEN POSTED AS AFORESAID.
SECTION 11.15. WAIVER OF JURY TRIAL, ETC. EACH OF THE
-------------------------
BORROWERS, THE ADMINISTRATIVE AGENT, THE COLLATERAL AGENT AND THE LENDERS WAIVES
ANY RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE, WHETHER SOUNDING
IN CONTRACT, TORT, OR OTHERWISE, BETWEEN THE ADMINISTRATIVE AGENT, THE
COLLATERAL AGENT OR ANY LENDER AND ANY BORROWER ARISING OUT OF, CONNECTED WITH,
RELATED TO OR
93
INCIDENTAL TO THE RELATIONSHIP ESTABLISHED BETWEEN THEM IN CONNECTION WITH THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY OTHER INSTRUMENT, DOCUMENT OR
AGREEMENT EXECUTED OR DELIVERED IN CONNECTION THEREWITH OR THE TRANSACTIONS
RELATED THERETO. EACH OF THE BORROWERS, THE ADMINISTRATIVE AGENT, THE COLLATERAL
AGENT AND THE LENDERS HEREBY AGREES AND CONSENTS THAT ANY SUCH CLAIM, DEMAND,
ACTION OR CAUSE OF ACTION SHALL BE DECIDED BY COURT TRIAL WITHOUT A JURY AND
THAT ANY OF THEM MAY FILE AS AN ORIGINAL COUNTERPART OR A COPY OF THIS AGREEMENT
WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE PARTIES HERETO TO THE
WAIVER OF THEIR RIGHT TO TRIAL BY JURY.
SECTION 11.16. Confidentiality. No Borrower shall at any time
---------------
before or after payment in full and satisfaction of all of the Obligations,
reveal, divulge or make known, or knowingly permit to be so revealed, divulged
or made known, to any Person (including Persons within its own organization who
do not have a definite need to know for the purpose of performance of this
Agreement), the terms or conditions of this Agreement or any document or
agreement now or hereafter executed in connection herewith except (i) the
Borrowers may reveal such terms and conditions to their respective legal counsel
and accountants who agree to keep such terms and conditions confidential, (ii)
the Borrowers may disclose the aggregate amount and maturity of the credit
facility evidenced by this Agreement and the identity of the Administrative
Agent to its investors, (iii) with the prior consent of the Administrative Agent
as to timing and content, the Borrowers may issue a press release relating to
this Agreement and the facilities evidenced hereby, (iv) information required to
be disclosed by order of a court of competent jurisdiction or in connection with
any governmental investigation (in each case to the extent disclosure is
required, but no further) may be disclosed so long as such Borrower notifies the
Administrative Agent in writing of any circumstances of which such Borrower is
aware that may lead to such a requirement or order, so as to allow the
Administrative Agent to take steps to contest such order or investigation, (v)
information which is required to be disclosed by such Borrower or information
which in the reasonable determination of such Borrower is desirable for such
Borrower to disclose (including, without limitation, in each case, this
Agreement), pursuant to federal or state securities laws, pursuant to the rules
or regulations of the FCC, any PUC or other applicable Governmental Authority
may be so disclosed and (vi) information may be disclosed to Persons who may
potentially provide debt financing (other than a lender providing secured
financing to such Borrower or any debt financing in replacement of the Loans) or
equity financing to such Borrower or any Affiliate with respect to its Business
and any consultants or advisors of such Person, or to Persons who are
consultants, advisors (including but not limited to attorneys and auditors),
officers, directors or employees of such Borrower, provided that each such
Person is required by such Borrower to keep such information confidential.
SECTION 11.17. Entire Agreement, etc. This Agreement (including
----------------------
all schedules and exhibits referred to herein), the Notes, the Fee Letters and
all other Loan Documents constitute the entire contract between the parties
hereto with respect to the subject matter hereof and thereof and shall supersede
and take the place of any other instrument purporting to be an agreement of the
parties hereto relating to such subject matter. Notwithstanding the foregoing,
the terms of that certain Non Disclosure Agreement dated July 16, 1998 and the
Addendum thereto date July 27, 1998 (collectively, the "Non Disclosure
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94
Agreement") among the Collateral Agent, PaeTec and International, shall survive
---------
the execution and effectiveness of this Agreement.
SECTION 11.18. No Strict Construction. The parties hereto have
-----------------------
participated, jointly in the negotiation and drafting of this Agreement. In the
event of any ambiguity or question of intent or interpretation arises, this
Agreement shall be construed as if drafted jointly by the parties hereto and no
presumption or burden of proof shall arise favoring or disfavoring any party by
virtue of authorship of any provisions of this Agreement.
95
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed by their duly authorized officers as of the day and year
first above written.
PAETEC COMMUNICATIONS, INC., as a Borrower
PAETEC INTERNATIONAL, INC., as a Borrower
PAETEC ONLINE, INC., as a Borrower
PAETEC COMMUNICATIONS OF VIRGINIA, INC., as
a Borrower
PAETEC CAPITAL CORP., as a Borrower
PINNACLE SOFTWARE CORPORATION, as a Borrower
DATA VOICE NETWORKS, INC., as a Borrower
EAST FLORIDA COMMUNICATIONS, INC., as a
Borrower
In each case:
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President, Finance
CANADIAN IMPERIAL BANK OF COMMERCE, as
Administrative Agent and as a Lender
By: /s/ ▇▇▇▇▇ ▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇
Title: Executive Director
CIBC World Markets Corp. As Agent
CIT LENDING SERVICES CORPORATION, as
Collateral Agent and a Lender
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President
BANKERS TRUST COMPANY, as a Lender
By: /s/ M.A. Orlando
-------------------------------------
Name: M.A. Orlando
Title: Principal
GENERAL ELECTRIC CAPITAL CORPORATION, as
a Lender
By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Manager, Operations
UNION BANK OF CALIFORNIA, N.A., as a Lender
By: [signature illegible]
-------------------------------------
Name: [name illegible]
Title: Assistant Vice President
▇▇▇▇▇▇▇ ▇▇▇▇▇ CAPITAL CORPORATION, as a
Lender
By: /s/ ▇▇▇▇▇ ▇'▇▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇'▇▇▇▇▇▇▇▇
Title: Vice President
SECOND AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT SIGNATURE PAGE
BEAR, ▇▇▇▇▇▇▇ CORPORATE LENDING INC., as a Lender
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Authorized Signatory
SECOND AMENDED AND RESTATED
LOAN AND SECURITY AGREEMENT