Exhibit 10.16
_____________________________________________________________________________
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
Dated as of October 29, 1999
Among
PAETEC COMMUNICATIONS, INC.,
PAETEC INTERNATIONAL, INC.,
PAETEC ONLINE, INC.,
PAETEC COMMUNICATIONS OF VIRGINIA, INC.,
PAETEC CAPITAL CORP.,
CAMPUSLINK COMMUNICATIONS SYSTEMS, INC.,
SELECT SWITCH ACQUISITION CO.,
PARKLINK COMMUNICATIONS, 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
NEWCOURT COMMERCIAL FINANCE CORPORATION,
as Collateral Agent for the Lenders
_____________________________________________________________________________
TABLE OF CONTENTS
Page
ARTICLE I AMENDMENT AND RESTATEMENT; DEFINITIONS......................................... 1
SECTION 1.01. Amendment and Restatement............................................... 1
SECTION 1.02. Definitions............................................................. 2
SECTION 1.03. Accounting Terms........................................................ 18
SECTION 1.04. Others Defined in New York Uniform Commercial Code...................... 19
SECTION 1.05. Supplemental Disclosure................................................. 19
ARTICLE II LOANS......................................................................... 19
SECTION 2.01. Agreement to Lend....................................................... 19
SECTION 2.02. Loans................................................................... 19
SECTION 2.03. Procedure for Loan Request and Borrowing Commitment..................... 20
SECTION 2.04. The Notes............................................................... 22
SECTION 2.05. Interest on Loans....................................................... 22
SECTION 2.06. Conversion or Continuation.............................................. 23
SECTION 2.07. Special Provisions Governing LIBOR Loans................................ 23
SECTION 2.08. Scheduled Payments...................................................... 25
SECTION 2.09. Optional and Mandatory Prepayment of Loans; Optional and Mandatory
Reduction of Commitment Amount..................................................... 26
SECTION 2.10. Application of Prepayments.............................................. 27
SECTION 2.11. Fees.................................................................... 27
SECTION 2.12. Borrower Payments, etc.................................................. 27
SECTION 2.13. Maximum Lawful Interest Rate............................................ 28
SECTION 2.14. Funding Issues.......................................................... 28
SECTION 2.15. Joint and Several Liability; Contribution............................... 29
ARTICLE III REPRESENTATIONS AND WARRANTIES............................................... 30
SECTION 3.01. Organization; Powers.................................................... 30
SECTION 3.02. Corporate Authorization................................................. 30
SECTION 3.03. Financial Statements.................................................... 31
SECTION 3.04. No Material Adverse Change.............................................. 31
SECTION 3.05. Litigation.............................................................. 31
SECTION 3.06. Tax Returns............................................................. 31
SECTION 3.07. No Defaults............................................................. 31
SECTION 3.08. Properties.............................................................. 31
SECTION 3.09. Licenses, Material Agreements, Intellectual Property.................... 32
SECTION 3.10. Compliance With Laws.................................................... 32
SECTION 3.11. ERISA................................................................... 32
SECTION 3.12. Investment Company Act; Public Utility Holding Company Act.............. 33
SECTION 3.13. Federal Reserve Regulations............................................. 33
SECTION 3.14. Collateral.............................................................. 33
SECTION 3.15. Chief Place of Business................................................. 34
SECTION 3.16. Other Corporate Names................................................... 34
SECTION 3.17. Insurance. Schedule 3.17............................................... 34
SECTION 3.18. Milestone Plan.......................................................... 34
SECTION 3.19. Capitalization and Subsidiaries......................................... 34
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SECTION 3.20. Real Property, Leases and Easements........................................ 34
SECTION 3.21. Solvency................................................................... 35
SECTION 3.22. Brokers, etc............................................................... 35
SECTION 3.23. No Material Misstatements.................................................. 35
SECTION 3.24. Year 2000 Issues........................................................... 35
SECTION 3.25. Switching Equipment........................................................ 35
SECTION 3.26. Campuslink Property........................................................ 35
ARTICLE IV CONDITIONS FOR LOANS............................................................. 36
SECTION 4.01. Conditions Precedent to Initial Loan on or after the Closing Date.......... 36
SECTION 4.02. Conditions Precedent to All Loans.......................................... 39
ARTICLE V AFFIRMATIVE COVENANTS............................................................. 40
SECTION 5.01. Corporate and Franchise Existence.......................................... 41
SECTION 5.02. Compliance with Laws, Etc.................................................. 41
SECTION 5.03. Maintenance of Properties.................................................. 41
SECTION 5.04. Insurance.................................................................. 41
SECTION 5.05. Obligations and Taxes...................................................... 43
SECTION 5.06. Financial Statements, Reports, etc......................................... 44
SECTION 5.07. Litigation and Other Notices............................................... 46
SECTION 5.08. Mortgages; Landlord Consents; Licenses and Other Agreements................ 46
SECTION 5.09. ERISA...................................................................... 46
SECTION 5.10. Access to Premises and Records............................................. 47
SECTION 5.11. Design and Construction.................................................... 47
SECTION 5.12. Environmental Notices...................................................... 47
SECTION 5.13. Amendment of Organizational Documents...................................... 47
SECTION 5.14. Pledge Agreements.......................................................... 47
SECTION 5.15. Accounts Payable........................................................... 48
SECTION 5.16. Collateral Assignments..................................................... 48
SECTION 5.17. Fiscal Year................................................................ 48
SECTION 5.18. Completed Systems.......................................................... 48
SECTION 5.19. Year 2000 Issues........................................................... 48
SECTION 5.20. Subsidiary Guarantees and Pledges.......................................... 48
SECTION 5.21. Accounting................................................................. 48
SECTION 5.22. Landlord Letters of Credit................................................. 48
SECTION 5.23. Pledge of East Florida Common Stock........................................ 49
SECTION 5.24. Interest Rate Agreement.................................................... 49
SECTION 5.25. Marcap Debt................................................................ 49
SECTION 5.26. Further Assurances......................................................... 50
ARTICLE VI NEGATIVE COVENANTS............................................................... 50
SECTION 6.01. Liens, etc................................................................. 50
SECTION 6.02. Use of Proceeds............................................................ 51
SECTION 6.03. Sale of Assets, Consolidation, Merger, etc................................. 51
SECTION 6.04. Dividends and Distributions; Sale of Equity Interests...................... 51
SECTION 6.05. Management Fees and Permitted Corporate Overhead........................... 52
SECTION 6.06. Guarantees; Third Party Sales and Leases................................... 52
SECTION 6.07. Investments................................................................ 52
SECTION 6.08. Subsidiaries; Permitted Acquisitions....................................... 52
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SECTION 6.09. Permitted Activities.................................................................. 53
SECTION 6.10. Disposition of Licenses, etc.......................................................... 54
SECTION 6.11. Transactions with Affiliates.......................................................... 54
SECTION 6.12. ERISA................................................................................. 54
SECTION 6.13. Indebtedness.......................................................................... 54
SECTION 6.14. Sale and Leaseback Transactions....................................................... 55
SECTION 6.15. Margin Regulation..................................................................... 56
SECTION 6.16. Unsecured Loan Documents.............................................................. 56
ARTICLE VII FINANCIAL COVENANTS........................................................................ 56
SECTION 7.01. Financial Covenants Prior to Commitment Termination Date.............................. 56
SECTION 7.02. Financial Covenants After the Commitment Termination Date............................ 57
ARTICLE VIII COLLATERAL SECURITY....................................................................... 58
SECTION 8.01. Collateral Security................................................................... 58
SECTION 8.02. Preservation of Collateral and Perfection of Security Interests Therein............... 59
SECTION 8.03. Appointment of the Collateral Agent as the Borrowers' Attorney-in-Fact................ 59
SECTION 8.04. Collection of Accounts and Restricted Account Arrangements............................ 60
SECTION 8.05. Cure Rights........................................................................... 60
ARTICLE IX EVENTS OF DEFAULT; REMEDIES................................................................. 61
SECTION 9.01. Events of Default..................................................................... 61
SECTION 9.02. Termination of Commitment; Acceleration............................................... 63
SECTION 9.03. Waivers............................................................................... 64
SECTION 9.04. Rights and Remedies Generally......................................................... 64
SECTION 9.05. Entry Upon Premises and Access to Information......................................... 64
SECTION 9.06. Sale or Other Disposition of Collateral by the Administrative Agent or the Collateral
Agent........................................................................................ 65
SECTION 9.07. Governmental Approvals................................................................ 65
SECTION 9.08. Appointment of Receiver or Trustee.................................................... 66
SECTION 9.09. Right of Setoff....................................................................... 66
ARTICLE X THE ADMINISTRATIVE AGENT AND THE COLLATERAL AGENT............................................ 67
SECTION 10.01. Appointment of Administrative Agent................................................... 67
SECTION 10.02. Administrative Agent's Reliance, Etc.................................................. 68
SECTION 10.03. CIBC and Affiliates................................................................... 68
SECTION 10.04. Lender Credit Decision................................................................ 69
SECTION 10.05. Indemnification....................................................................... 69
SECTION 10.06. Successor Agent....................................................................... 69
SECTION 10.07. Payments; Non-Funding Lenders; Information; Actions in Concert........................ 70
SECTION 10.08. Collateral Matters.................................................................... 72
SECTION 10.09. Agency for Perfection................................................................. 73
SECTION 10.10. Concerning the Collateral and the Related Loan Documents and the Collateral Agent..... 73
ARTICLE XI MISCELLANEOUS............................................................................... 73
SECTION 11.01. Notices; Action on Notices, etc....................................................... 73
SECTION 11.02. No Waivers; Amendments................................................................ 74
SECTION 11.03. Governing Law And Jurisdiction........................................................ 75
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SECTION 11.04. Expenses; Documentary Taxes.......................................................... 75
SECTION 11.05. Equitable Relief..................................................................... 76
SECTION 11.06. Indemnification; Limitation of Liability............................................. 76
SECTION 11.07. Survival of Representations and Warranties, etc...................................... 77
SECTION 11.08. Successors and Assigns; Assignments; Participations.................................. 77
SECTION 11.09. Severability......................................................................... 79
SECTION 11.10. Cover Page, Table of Contents and Section Headings................................... 80
SECTION 11.11. Counterparts......................................................................... 80
SECTION 11.12. Application of Payments.............................................................. 80
SECTION 11.13. Marshalling; Payments Set Aside...................................................... 80
SECTION 11.14. Service Of Process................................................................... 80
SECTION 11.15. Waiver Of Jury Trial, Etc............................................................ 80
SECTION 11.16. Confidentiality...................................................................... 81
SECTION 11.17. Entire Agreement, etc................................................................ 81
SECTION 11.18. No Strict Construction............................................................... 82
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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 Form of 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
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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 Busine
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
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AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT ("Agreement") dated as of
October 29, 1999 among PAETEC COMMUNICATIONS, INC., a Delaware corporation
("PaeTec"), PAETEC INTERNATIONAL, INC., a Delaware corporation
("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"), CAMPUSLINK COMMUNICATIONS SYSTEMS, INC., a Delaware corporation
("Campuslink"), SELECT SWITCH ACQUISITION CO., a Delaware corporation
("Select"), PARKLINK COMMUNICATIONS, INC., a Delaware corporation ("Parklink"),
EAST FLORIDA COMMUNICATIONS, INC., a Florida corporation ("Florida"; PaeTec,
PaeTec International, PaeTec Online, PaeTec Virginia, PaeTec Capital,
Campuslink, Select, Parklink, 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") and NEWCOURT COMMERCIAL FINANCE CORPORATION (f/k/a AT&T
---------------------
COMMERCIAL FINANCE CORPORATION), as collateral agent for the Lenders (in such
capacity, the "Collateral Agent").
----------------
RECITALS
A. The Borrowers, the Lenders and Newcourt Commercial Finance Corporation,
as agent, are parties to a certain Loan and Security Agreement dated as of
November 16, 1998, as amended pursuant to that certain Amendment No. 1 thereto
dated as of May 12, 1999 and that certain Amendment No. 2 thereto dated as of
September 8, 1999 (such 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
Administrative Agent have agreed to amend the Existing Agreement in certain
respects, to, among other things, increase the Commitment Amount to $70,000,000,
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 remain outstanding 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
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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 shall remain effective as of the date any such grant first became
effective, and (b) the Existing Loans shall constitute the initial outstanding
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
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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
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Person shall be deemed to constitute control.
"Agents" shall mean collectively, the Administrative Agent and the
------
Collateral Agent.
"Aggregate Principal Amount" shall mean the amount equal to the total
--------------------------
outstanding principal amount of the Loans determined on the 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.
"Applicable Margin" shall mean, with respect to the LIBO Rate or the
-----------------
Base Rate (a) at any time prior to the date upon which the Borrower has eight
(8) Completed Systems and the date upon which the Administrative Agent has first
received financial statements of the Borrowers demonstrating compliance with the
applicable Total Revenue Threshhold for the
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fiscal quarter to which such financial statements relate, 3.25% for Base Rate
Loans and 4.25% for LIBOR Loans, and (b) at any time thereafter, the percentage
per annum set forth below which corresponds to the Consolidated Leverage Ratio
on such date:
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Level I Level II Level III Level IV Level V
--------------------------------------------------------------------------------------------------------
EBITDA ** 0
Consolidated or CLR * 12.0 to CLR * 10.0 CLR * 8.0 CLR * 6.0
Leverage CLR ** 12.0 1.0 but ** 10.0 to 1.0 but ** to 1.0 but ** 1.0
Ratio ("CLR") to 1.0 to 1.0 8.0 to 1.0 6.0 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
--------------------------------------------------------------------------------------------------------
* more
** less than or equal to
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 the Consolidated Leverage Ratio was
greater than 12.0 to 1.0 and the Level I pricing above shall be applicable.
"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.
"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.
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"Borrower" shall mean any of PaeTec, International, PaeTec Online,
--------
PaeTec Virginia, PaeTec Capital, Campuslink, Select, Parklink, 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.
---------
"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) the Guarantor no longer beneficially owns (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,
(C) the Existing Stockholders cease to have 51% 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, or (D) 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.
"CIBC" shall mean Canadian Imperial Bank of Commerce in its individual
----
capacity, and its successors and assigns.
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"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 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.
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"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 among PaeTec Online, PaeTec Virginia, PaeTec Capital, Campuslink,
Select, Parklink, Florida 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 amount set
-----------------
forth opposite such Lender's name on Annex A to this Agreement or in the most
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recent Assignment Agreement executed by such Lender and (b) as to all Lenders,
the total amount of the Commitments of all Lenders as set forth on Annex A to
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this Agreement, which aggregate commitment shall be Seventy Million Dollars
($70,000,000) on the Closing Date, as such amount may be adjusted from time to
time in accordance with this Agreement.
"Commitment Termination Date" shall mean December 31, 2000.
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"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.
"Completed System" shall mean any System which is fully operational,
----------------
shall have a Lucent 5-ESS Switch or other comparable Switch deployed, shall be
switching paid traffic on its owned Telecommunications Equipment, shall have
sales, customer service and billing systems operational to the satisfaction of
the Collateral Agent with switching capabilities, shall have generated at least
$25,000 of revenue and with respect to which all Governmental
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Approvals have been obtained and connectivity to at least one major
interexchange carrier point-of-presence or a local exchange tandem has been
achieved.
"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.
"Contributed Capital" shall mean, with respect to the Borrowers, at
-------------------
any date of determination, all contributed capital to such Borrowers.
"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, (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) combined cash interest expense of the
Borrowers for the two (2) fiscal quarters then ending, multiplied by two plus
----
(ii) scheduled principal payments of the Borrower for the two (2) fiscal
quarters then ending, multiplied by two.
-6-
"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.
"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
-7-
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 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.
-8-
"Federal Reserve Board" shall mean the Board of Governors of the
---------------------
Federal Reserve System or any successor thereto.
"Fee Letter"shall have the meaning given to such term in Section
---------- -------
2.11(b).
-------
"Financials" shall have the meaning given to such term in Section
---------- -------
3.03.
"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 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 principal and interest payments with
respect to capital 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.
"Governmental Approval" shall mean, with respect to any Borrower, any
---------------------
license, permit or certificate of public convenience and necessity issued to any
Borrower by the FCC, any PUC or any other Governmental Authority in connection
with any System.
"Governmental Authority" shall mean any federal, state, local or other
----------------------
political subdivision thereof and any 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 of
--------
even date herewith executed by the Guarantor in favor of the Collateral Agent,
substantially in the form of Exhibit G hereto.
---------
"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.
-9-
"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.
---
"Landlord L/C" shall have the meaning give to such term in Section
------------ -------
5.22 hereof.
----
"Leased Real Property" shall have the meaning given to such term in
--------------------
Section 3.20 hereof.
------------
"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 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.
-10-
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.
"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.
"Loan" shall mean any loan made to the Borrower pursuant to the
----
provisions of Section 2.01 below 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
Collateral Assignments of Leases, the Collateral Assignments of Licenses, the
Mortgages, the Notes, the Pledge Agreements, the Guaranty, the Fee Letter, 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; provided, however, that none of the Unsecured Loan
Documents or any documents executed in connection with the purchase by any
Lender of equity interests in the Guarantor shall constitute Loan Documents.
-11-
"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 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 Amount" shall mean $65,000,000 prior to the earlier of the
--------------
date on which (i) the Debt of the Borrower to Marcap Corporation has been
discharged in full, or (ii) in the event that the Borrowers receive cash capital
contributions from the Guarantor in an aggregate amount of at least $50,000,000
on or prior to June 30, 1999, the date of receipt of such cash capital
contributions, and on and after such date, $70,000,000.
"Maximum Rate" shall have the meaning given to such term in Section
------------ -------
2.13 hereof.
----
"Milestone Plan" shall mean that certain PaeTec-Campuslink-Final B
--------------
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 all the 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.
"Net Income" shall mean, with respect to any Person for any period,
----------
the net income (loss) of such Person determined in accordance with GAAP.
"Newcourt CFC" shall mean Newcourt Commercial Finance Corporation, in
------------
its individual capacity, and its successors and assigns.
"Non Disclosure Agreement" shall have the meaning given such term in
------------------------
Section 11.17.
-------------
"Note" shall mean a promissory note of the Borrower substantially in
----
the form of Exhibit E attached hereto.
---------
-12-
"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 December 31, 1999.
"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.
"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.
-13-
"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.
---------
"Prepayment Premium" shall mean the amount determined by multiplying
------------------
(A) the principal amount of the relevant Loans being prepaid times (B) the
-----
applicable Prepayment Percentage determined as of the date of such prepayment.
"Prepayment Percentage" shall mean, with respect to each period set
---------------------
forth below, the percentage set forth opposite such period:
----------------------------------------------------------------------------------------
Period Prepayment Percentage
------ ---------------------
----------------------------------------------------------------------------------------
Closing Date 1.50%
through and including
the 1st anniversary thereof
----------------------------------------------------------------------------------------
Any date thereafter 1.00%
until
the 2nd anniversary
of the Closing Date
----------------------------------------------------------------------------------------
Any date thereafter 0.75%
until
the 3rd anniversary
of the Closing Date
----------------------------------------------------------------------------------------
at any date thereafter 0.00%
----------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------
"Principal Payments" shall mean, for any period, total required
------------------
amortization (including, without limitation, the principal payments attributable
to capital leases) determined on a combined basis, without duplication, for the
Borrowers in accordance with GAAP.
"Pro Rata Share" shall mean with respect to all matters relating to
--------------
any Lender, the percentage obtained by dividing (1) at any time prior to the
Commitment Termination Date, the Commitment Amount of such Lender by the
aggregate Commitment Amount of all Lenders, and (2) at any time after the
Commitment Termination Date, the aggregate outstanding principal balance of the
Loans held by that Lender by the aggregate outstanding principal balance of the
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(iv).
--------
"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 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.
-14-
"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 date on which the
-----------------
Commitment has been terminated, Lenders holding at least sixty-six and two-
thirds percent (66 2/3%) of the aggregate Commitment Amount of all the Lenders,
and (b) on and after the date on which the Commitment has been terminated,
Lenders holding at least sixty-six and two-thirds percent (66 2/3%) of the
aggregate outstanding amount of the sum of all Loans.
"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: (i),
------------
(ii), (iii), (iv), (viii) and (ix).
"Solvent" shall mean, at any time of determination, with respect to
-------
any Person:
(i) 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
(ii) 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
(iii) 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
(iv) 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.
"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;
-15-
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.
"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
a competitive local exchange carrier 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).
"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; (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
-16-
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.
"Total Revenue Threshhold" shall mean that the Borrowers on a combined
------------------------
basis have total revenues of at least an amount equal to ninety-five percent
(95%) of the amount set forth below for the fiscal quarter ending on the date
opposite such amount:
Fiscal Quarter Total Revenues
-------------- --------------
March 31, 2000 $24,431,268
June 30, 2000 $30,470,697
September 30, 2000 $39,648,347
December 31, 2000 $55,684,612
"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).
---- ---------------
"Unsecured Loan Agreement" shall mean that certain Loan Agreement
------------------------
dated as of October 13, 1999 among the Borrowers, the financial institutions
from time to time parties thereto as Lenders, and Newcourt Commercial Finance
Corporation, as Administrative Agent for said Lenders, evidencing a $10,000,000
unsecured credit facility.
"Unsecured Loan Documents" shall mean the Unsecured Loan Agreement and
------------------------
all promissory notes, guaranties, warrants and other documents and instruments
contemplated by the Unsecured Loan Agreement.
"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 elect a majority of the 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 Campuslink 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,
-17-
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 accounting 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.
-18-
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
SECTION 2.01. Agreement to Lend. (a) Each Lender severally agrees, on
-----------------
the terms and conditions hereinafter set forth, to make one or more Loans to the
Borrowers on the Funding Date or any date thereafter until the Commitment
Termination Date in an amount not to exceed an amount equal to (i) the
Commitment Amount of such Lender minus (ii) such Lender's Pro Rata Share of the
-----
Aggregate Utilization in effect as of the Funding Date. Amounts repaid or
prepaid under the Loan Documents may not be reborrowed except those Loans that
are prepaid in accordance with clause (ii) of the proviso to Section 2.09(a) and
---------------
those Loans that are prepaid in accordance with the provisions of Section
-------
2.09(e). In no event shall the aggregate principal amount of Loans made to
-------
Florida exceed $1,000,000.
(b) The Lenders shall not be obligated to make any Loan which, when
added together with all Loans outstanding at such time, would cause the
aggregate outstanding principal balance of all Loans made hereunder to exceed
the Maximum Amount determined at such time.
SECTION 2.02. Loans. (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), and refinancing of Debt of Campuslink existing on the Closing
Date, all as specified in the Notice of Borrowing and in accordance with the
Milestone Plan; provided, however, that (i) not more than $6,000,000 of the
proceeds of the Loans may be used by the Borrowers for the purpose of making
Permitted Acquisitions or for working capital or other general corporate
purposes, and not more than $2,500,000 of such $6,000,000 amount may be applied
to a single Permitted Acquisition and (ii) proceeds of any of the Loans shall
not be used by Campuslink for any purpose in the State of New York until and
unless Campuslink receives regulatory approval from the New York Public Service
Commission to participate in the Loans. 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
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interest at the Base Rate shall be in a minimum principal amount of $1,000,000
and in $250,000 increments in excess thereof. 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
-20-
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 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
-21-
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 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.
SECTION 2.04. The Notes. Each Borrower shall execute and deliver to
---------
each Lender a Note to evidence the Commitment of that Lender. Each Note shall be
in the principal amount of the Commitment Amount of the applicable Lender, dated
the Funding Date, stated to mature on December 31, 2006, and substantially in
the form of Exhibit E. The Note payable to each Lender shall represent the
---------
obligation of such Borrower to pay the amount of each Lender's Commitment Amount
or, if less, the applicable Lender's Pro Rata Share of the aggregate unpaid
principal amount of all Loans to such Borrower 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 the Borrower shall default in the payment of the
principal of or interest on any Loan or any other amount becoming due hereunder
on its due date, then the Borrower shall, on demand from the Administrative
Agent, thereafter pay interest on all Loans at a rate that is four percent
(4.00%) per annum above the rates of interest otherwise payable on all the Loans
from the date such payment is due to the date such payment default is either
cured or waived in writing by the Requisite Lenders. If any other Event of
Default shall occur and be continuing, then the Borrower shall, on demand,
thereafter pay interest on all the Loans at a rate that is two percent (2.00%)
per annum above the rates of interest otherwise payable on such Loans from the
-22-
date of the occurrence of such Event of Default until the date such Event of
Default has been cured or waived in writing by the Requisite Lenders; provided,
--------
that in the event that an Event of Default described in the first sentence of
this clause (b) shall occur at any time that a Default described in this
sentence has occurred and is continuing, then the rate of interest described in
the first sentence of this clause (b) shall apply.
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.
(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 Lenders 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 six month period. The determination of
Interest Periods shall be subject to the following provisions:
-23-
(i) 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.
(ii) 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.
(iii) A Borrower may not select an Interest Period for any LIBOR
Loan, which Interest Period expires later than December 31, 2006.
(iv) A Borrower may not select an Interest Period with respect to any
portion of such Borrower's Loans which extends beyond any date on which the
outstanding principal amount of the Loans are scheduled to be reduced
pursuant to Section 2.08(b) unless, after giving effect to such selection,
---------------
the portion of the Loans not subject to Interest Periods ending after any
such date is equal to or greater than any amount of such scheduled
principal payments of Loans.
(v) 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:
(i) 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
(ii) 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:
(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 of 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.
-24-
(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. (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 Loans shall be payable in twenty-four (24)
quarterly installments commencing on March 31, 2001, and continuing on the last
day of each June, September, December and March thereafter through and including
December 31, 2006 with (i) the first four of such quarterly principal payments
due hereunder to be in an amount equal to 2.50% of the Aggregate Principal
Amount, (ii) the fifth through the twelfth principal payments due hereunder to
be in an amount
-25-
equal to 3.75% of the Aggregate Principal Amount, and (iii) the remaining
principal payments due hereunder to be in an amount equal to 5.00% 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 on and after the occurrence and during
-------- -------
the continuance of an Event of Default, any payments received by the
Administrative Agent shall be applied to the Obligations in any manner the
Requisite Lenders shall determine.
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 Loans and on the last day of the applicable
Interest Period with respect to any LIBOR Loans, to prepay the outstanding
principal thereof in a minimum principal amount of $500,000, together in each
case with accrued interest thereon and the aggregate Prepayment Premium
applicable thereto as determined on the date of such prepayment; provided that
--------
no Prepayment Premium shall be applicable to any voluntary prepayments hereunder
which are made (i) in connection with a refinancing of the Loans by a group of
lenders led by the Administrative Agent or the Collateral Agent, (ii) within six
month after the Closing Date, solely to the extent that such prepayments were
made with the proceeds of the issuance of high-yield Debt or Equity Interests of
the Guarantor and do not reduce the outstanding principal balance of the
Obligations below $25,000,000, or (iii) pursuant to Section 2.09(e).
---------------
(b) Upon the occurrence of any Event of Loss with respect to any item
of Collateral that is not repaired or replaced (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 (but
without the Prepayment Premium).
(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, 2000 and thereafter, the Borrowers shall immediately prepay the
Loans by an amount equal to fifty percent (50%) of Excess Cash Flow, if any, as
determined for such fiscal year, without Prepayment Premium; provided, however,
that such prepayment 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 Borrowers shall prepay the Loans in a principal 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 the applicable Prepayment
Premium, 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
-26-
replacement, reconstruction or restoration of equipment which was the subject of
the insurance loss or award, plus accrued interest thereon without any
Prepayment Premium.
(e) The Borrowers shall prepay the Loans in a principal amount equal
to one-half of the net cash proceeds received by the Guarantor from the issuance
of high-yield Debt or Equity Interests, when such proceeds first equal or exceed
an aggregate amount as measured from the Closing Date of at least $25,000,000
but not in excess of an amount that would reduce the outstanding principal
balance of the Loans below $25,000,000, plus accrued interest thereon without
any Prepayment Penalty. Such prepayment shall be required only once.
SECTION 2.10. Application of Prepayments. Each prepayment of the
--------------------------
Loans made by the Borrowers under this Agreement, whether voluntary or
mandatory, shall be applied to unpaid principal installments of the Loans in the
inverse order of their respective maturities.
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 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 $23,100,000 1.50%
Greater than or equal to $23,100,000 1.25%
and less than or equal to $46,200,000
Greater than $46,200,000 0.75%
(b) The Borrowers shall be jointly and severally liable to pay the
Administrative Agent each of the fees set forth in a fee letter (the "Fee
---
Letter") from the Administrative Agent dated September 8, 1999 addressed to the
------
Borrowers at the times and in the amounts so specified in such letter.
(c) All fees once paid shall be nonrefundable.
SECTION 2.12. Borrower Payments, etc. 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 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
-27-
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.
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 or funding or maintaining its Pro Rata Share of the Loans
under this Agreement, 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.
(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, 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. A
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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 Borrowers' Collateral. The Administrative Agent and
the Collateral Agent may apply any portion of any Borrower's 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 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:
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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;
(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 June 30, 1999 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
-30-
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 the date of the Financials.
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.
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,
-31-
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 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)
-32-
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
----
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 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.
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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.
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
-34-
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. Each Borrower has made a full and
----------------
complete assessment of the Year 2000 Issues and has a realistic and achievable
program for remediating the Year 2000 Issues on a timely basis. Based on such
assessment and program, such Borrower does not reasonably anticipate that Year
2000 Issues will 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.
-------------
SECTION 3.26. Campuslink Property. With respect to its customer
-------------------
contracts, Campuslink owns or possesses a security interest in equipment related
to such contracts in the locations set forth on Schedule 3.26 hereto.
-------------
ARTICLE IV
CONDITIONS FOR LOANS
The obligations of each Lender to make Loans hereunder are subject to
the accuracy, as of the Funding Date and as of the date of making of each of the
Loans 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 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.
-35-
(b) The Administrative Agent shall have received payment in full of
the fees set forth in the Fee Letter 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) (1) The Administrative Agent and the Collateral Agent shall have
received the following items, in each case in form and substance satisfactory to
the Administrative Agent and the Collateral Agent:
(i) the Financials;
(ii) 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;
(iii) 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 the Loan Documents to which
each is a party, and (3) such Borrower's or the
Guarantor's, as applicable, bylaws;
(iv) 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;
------------ ---
(v) 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;
-36-
(vi) 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;
(vii) updated Year 2000 questionnaires executed by each
Borrower;
(viii) the Notes duly executed and delivered by the Borrowers;
(ix) General Reaffirmation and Modification Agreement among the
Guarantor, the Borrowers, the Administrative Agent and the
Collateral Agent;
(x) the Amended and Restated Guaranty, duly executed by the
Guarantor;
(xi) 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;
(xii) 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);
(xiii) 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);
(xiv) 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 5.22), duly executed by the
------------
appropriate Persons, including agreements as to default
notices, cure rights, waiver of lien rights, conveyance of
nondisturbance
-37-
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;
(xv) environmental questionnaires or updates of previously
------------
submitted environmental questionnaires executed by each Borrower with respect to
each of its premises described in Section 3.10; and
(xvi) the note payable by Campuslink to the Guarantor in the
original principal amount of $4,000,000, duly pledged by the Guarantor to the
Collateral Agent.
(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 Administrative Agent and the Collateral Agent 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.
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(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.
(k) The Guarantor shall have raised and contributed $60,000,000 in
equity capital to the Borrowers.
SECTION 4.02. Conditions Precedent to All Loans. In the case of each
---------------------------------
Loan hereunder:
(a) The representations and warranties of each Borrower set forth in
Article III or in any other Loan Document shall be true and correct in all
-----------
material respects on and as of the date of such Loan 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, and after giving effect to such
Loan, 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 and after giving effect to each such
Loan, 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, when combined with Loans previously made to the
Borrowers, shall not exceed the Commitment Amount.
(e) All legal matters incident to such Loan 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 the Loan
and acceptance certificate and invoices required by Section 2.03.
------------
(g) 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 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 shall
have been paid.
-39-
(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 5.22), 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.
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
-40-
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:
(i) 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
(ii) Business Interruption. As an extension of the coverage
---------------------
required under Section 5.04(b)(i), 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
(iii) 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 damage
and personal injury liability. Such insurance shall not exclude coverage
for punitive or exemplary damages where insurable by law; and
(iv) 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
-41-
(v) 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
(vi) Excess/Umbrella Liability. Such Borrower shall maintain
-------------------------
excess or umbrella liability insurance in an amount not less than
$10,000,000, written on an occurrence basis providing coverage limits in
excess of the insurance limits required under Sections 5.04(b)(iii),
---------------------
(b)(iv) (employer's liability only), and (b)(v). Such insurance shall
------- ------
follow from the primary insurances 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
(vii) 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)(iv) 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 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
-42-
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:
(a) within 120 days after the end of the 1999 fiscal year of such
Borrower and within ninety (90) days after the end of each subsequent 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;
-43-
(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, a Periodic Reporting Certificate of the chief
financial officer of the Guarantor setting forth the calculations contemplated
in Article VII hereof, the number of Completed Systems 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;
(e) prior to February 15 of each year for such year, an operating
budget of the Guarantors 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
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;
(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
-44-
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 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 Completed System, and each System which is not a Completed System but
which is requested to be financed with the proceeds of Loans (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,
-45-
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, 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.
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 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.
-46-
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
ection 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. Collateral Assignments. Such Borrower shall furnish to
----------------------
the Collateral Agent collateral assignments of, and if requested by the
Collateral Agent, consents to such assignments from the applicable counter
parties, for each material license, lease, contract or other agreement or
instrument entered into by such Borrower after the date hereof. Campuslink has
contacted the customers listed on Schedule 5.16 to obtain consents to collateral
-------------
assignments to the Collateral Agent of the contracts or agreements to which
Campuslink and such customers are parties. Campuslink shall exercise its
reasonable best efforts to obtain such consents within ninety days after the
Closing Date.
SECTION 5.17. Fiscal Year. Such Borrower shall maintain a fiscal
-----------
year ending on December 31.
SECTION 5.18. Completed Systems. Such Borrower, together with all
-----------------
other Borrowers, shall have (in the aggregate) five (5) Completed Systems on or
prior to October 31, 1999, six (6) Completed Systems on or prior to February 28,
2000, seven (7) Completed Systems on or prior to March 31, 2000, and eight (8)
Completed Systems on or prior to April 30, 2000.
SECTION 5.19. Year 2000 Issues. Within three months of any Borrower
----------------
discovering a Year 2000 Problem, such Borrower shall implement Year 2000
Corrective Actions with respect to such Year 2000 Problem. Within two months of
implementing a Year 2000 Corrective Action, each Borrower shall eliminate all
Year 2000 Problems, except where the
-47-
failure to correct the same could not reasonably be expected to have a Material
Adverse Effect, individually or in the aggregate.
SECTION 5.20. 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 5.21. Accounting. Such Borrower shall maintain a system of
----------
accounting established and administered in accordance with GAAP.
SECTION 5.22. 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)(1)(xiv), 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 5.23. Pledge of East Florida Common Stock. Campuslink shall
-----------------------------------
immediately upon the earlier of (i) payment in full of the Debt referred to in
Section 6.13(viii) below, or (ii) the release of the Common Stock of Florida
------------------
from the pledge described in Section 6.01(ix) below, pledge all of the Common
----------------
Stock and other Equity Interests in Florida to the Collateral Agent pursuant to
a Pledge Agreement.
SECTION 5.24. Interest Rate Agreement. At all times on and after
-----------------------
December 1, 1999 and on or prior to the Commitment Termination Date, the
Borrowers shall maintain one or more Interest Rate Agreements on terms and
conditions and with counterparties reasonably satisfactory to the Administrative
Agent with respect to at least $25,000,000 of the outstanding principal balance
of the Loans. At all times after the Commitment Termination Date, in the event
that less than fifty percent (50%) of the Debt 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 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 the Debt of the Guarantor and
the Borrowers on a consolidated basis bearing interest at a fixed rate.
SECTION 5.25. Marcap Debt. In the event that Campuslink 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
Campuslink to Marcap Corporation under the Marcap Agreement and provided that
Loans are made available to Campuslink for such purpose, Campuslink shall on
such date prepay in full all of its obligations to Marcap Corporation. As
-48-
soon as possible after the obligations of Campuslink to Marcap Corporation have
been discharged in full, whether as a result of prepayment or otherwise,
Campuslink 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. Campuslink shall notify
the Administrative Agent and the Collateral Agent of any default by Campuslink
under the Marcap Agreement immediately upon any officer of Campuslink obtaining
knowledge thereof, and in the event that the Lenders are willing to make Loans
to Campuslink in an amount necessary to cure any such default, Campuslink shall
apply the proceeds of such Loans to cure such default.
SECTION 5.26. 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 Collateral, now owned or hereafter acquired, or
upon any proceeds, products, issues, income or profits therefrom except for the
following "Permitted Liens":
---------------
(i) Liens granted pursuant to the Loan Documents;
(ii) Liens securing any Purchase Debt to the extent that the Liens
cover only the subject assets purchased with such Purchase Debt;
(iii) 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;
-49-
(iv) 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;
(v) 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;
(vi) 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;
(vii) an assignment, if any, of leasehold interests of PaeTec, as
lessee, under a lease (the "Manhattan Lease") between PaeTec and 111 8th
---------------
Avenue 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;
(viii) 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;
(ix) Liens on the capital stock of Florida granted to J. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ solely to secure the Debt referred to in
Section 6.13(viii) below ;
------------------
(x) 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 Campuslink to repay its obligations to Marcap Corporation in
full in accordance with the provisions of Section 5.25.
------------
(x) Liens listed on Schedule 3.08 hereto.
-------------
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.
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)
-50-
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
------------
SECTION 6.07. Investments. Such Borrower shall not, directly or
-----------
indirectly, make any Investments except:
(i) Temporary Cash Investments;
(ii) 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;
(iii) Investments in commercial paper rated P1 or A1 by ▇▇▇▇▇'▇
Investors Service, Inc. or Standard & Poor's Ratings Group respectively;
and
(iv) the Investment by Campuslink in 10.1% of the outstanding Equity
Interests in Campuslink, Inc.
-51-
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"):
---------------------
(1) 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;
(2) if such acquisition is being effectuated by means of the
acquisition of Equity Interests 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;
(3) 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;
------------
(4) the business being acquired shall be substantially similar,
related or incidental to the Businesses;
(5) 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 (2) above;
(6) 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;
(7) the purchase is consummated pursuant to a negotiated acquisition
agreement on a non-hostile basis; and
(8) the cash portion of the purchase price (including assumed Debt)
in connection with any and all such transactions shall not exceed:
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(A) for any single transaction or series of related
transactions, $2,500,000; and
(B) for all such transactions, $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.
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.
-53-
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:
(i) the Obligations;
(ii) the obligations arising under any Loan Document;
(iii) obligations under real property leases contemplated in the
Milestone Plan;
(iv) 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 $1,000,000 plus the outstanding balance owing by
Select under that certain Master Lease Agreement dated as of June 17, 1997
between The CIT Group/Equipment Financing, Inc. and Select ("Purchase
--------
Debt");
----
(v) performance bonds executed solely in connection with the
construction of Systems in the ordinary course of business;
(vi) 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;
(vii) Debt issued pursuant to the Unsecured Loan Documents in an
aggregate outstanding principal amount not exceeding $10,000,000; provided,
--------
however, that, in no event shall the Borrower, or any other Person on behalf of
-------
the Borrowers, (x) pay, repay or prepay any such Debt, or any interest, fees or
other amounts with respect thereto, in violation of Article VIII of the
Unsecured Loan Agreement, or (y) voluntarily pay, repay or prepay any such Debt
or other amounts prior to the date on which such amounts are required or
permitted to be paid, repaid or prepaid pursuant to the terms and conditions of
the Unsecured Loan Documents;
(viii) Debt of PaeTec 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;
(ix) Debt under Interest Rate Agreements approved by the
Administrative Agent;
(x) Debt of Campuslink payable to the Guarantor in the aggregate
principal amount of $4,000,000; and
(xi) prior to any date on which the Lenders require Campuslink to
pay its obligations to Marcap Corporation in full in accordance with the
provisions of Section 5.25, the Debt of Campuslink to Marcap Corporation under
------------
that certain Master Lease Agreement dated as of July 29, 1998 between Campuslink
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
-54-
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.
SECTION 6.16. Unsecured Loan Documents. Such Borrower shall not
------------------------
modify any provision of Articles II, VI, VII, VIII or IX of the Unsecured Loan
Agreement.
ARTICLE VII
FINANCIAL COVENANTS
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 Prior to Commitment Termination
---------------------------------------------------
Date. At all times prior to the Commitment Termination Date:
----
(a) Senior Debt to Capitalization. The Borrowers shall not at any
------------------------------
time permit the ratio of Senior Debt to Capitalization to exceed 0.55 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 0.70
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
-------------- ----------------
December 31, 1999 $15,000,750
March 31, 2000 $20,750,000
June 30, 2000 $25,900,000
September 30, 2000 $33,700,000
December 31, 2000 $47,300,000
(d) EBITDA. As of the last day of each fiscal quarter set forth below
------
until the fiscal quarter ending June 30, 2000, 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
-55-
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
-------------- ------
December 31, 1999 ($3,900,000)
March 31, 2000 ($2,300,000)
June 30, 2000 ($1,400,000)
September 30, 2000 $ 500,000
December 31, 2000 $6,000,000
(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 $200,000.
SECTION 7.02. Financial Covenants After the Commitment Termination
Date. On and after March 31, 2001:
(a) Senior Debt to Capitalization. The Borrowers shall not at any
-----------------------------
time permit the ratio of Senior Debt to Capitalization to exceed ) 0.55 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 0.70
to 1.00
(c) Maximum Operating Leverage Ratio. At the end of each fiscal
--------------------------------
quarter set forth below, the Operating Leverage Ratio as measured at such time
shall not exceed the ratio set forth below opposite such quarter:
Fiscal Quarter Ratio
-------------- ------
March 31, 2001 4.00 to 1.00
June 30, 2001 3.50 to 1.00
September 30, 2001 3.00 to 1.00
December 31, 2001 2.50 to 1.00
March 31, 2002 2.50 to 1.00
June 30, 2002 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 fiscal quarters then ending, multiplied by two, minus the
-----
combined capital expenditures of the Borrowers for the same two fiscal quarters,
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
-------------- -----
March 31, 2001 2.00 to 1.00
June 30, 2001 1.75 to 1.00
September 30, 2001 1.75 to 1.00
December 31, 2001 2.00 to 1.00
and each quarter thereafter
-56-
(e) Minimum Fixed Charge Coverage Ratio. As of the last day of any
-----------------------------------
fiscal quarter ending on and after March 31, 2001, the Borrowers shall not
permit the ratio of (1) EBITDA for the Borrowers and the Guarantor on a combined
basis for the two fiscal quarters then ended, multiplied by two, to (2) Fixed
Charges for the Borrowers and the Guarantor on a combined basis for the same two
quarters, multiplied by two, to be less than 1.00 to 1.00, for the fiscal
quarters ending on March 31, 2001 and June 30, 2001 and 1.10 to 1.00 for any
fiscal quarter thereafter.
(f) Maximum Consolidated Leverage Ratio. As of the last day of any
-----------------------------------
fiscal quarter set forth below, the Borrowers shall not 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 two fiscal quarters then ended,
multiplied by two, to be greater than the ratio set forth below opposite such
quarter:
Fiscal Quarter Ratio
-------------- -----
March 31, 2001 5.50 to 1.00
June 30, 2001 5.50 to 1.00
September 30, 2001 4.75 to 1.00
December 31, 2001 4.00 to 1.00
and each quarter thereafter
ARTICLE VIII
COLLATERAL SECURITY
SECTION 8.01. Collateral Security. (a) 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 permits, including, without limitation, the right to receive all
proceeds derived from or in
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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 items of payment or
proceeds thereof and deposit the same in the
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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
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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, or the
Loans 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 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
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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 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
(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
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(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 and the same 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) the Guarantor shall have failed to contribute an aggregate amount
of at least $60,000,000 in equity capital into the Borrowers prior to the
Funding Date;
(s) a Change of Control shall occur; or
(t) a "Default" or "Event of Default" (as defined in the Unsecured
Loan Agreement) shall exist or 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
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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.
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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
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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 of 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. Each
of the Lenders agrees to assert no claim against the Administrative Agent on any
agency theory or any other theory of liability for breach of fiduciary duty, all
of which claims each Lender waives. Neither the Administrative Agent nor any of
its Affiliates nor any of their respective officers, directors, employees,
agents or representatives shall be liable to any Lender for any action taken or
omitted to be taken by it hereunder or under any other Loan Document, or in
connection herewith or therewith, except for damages caused by its or their own
gross negligence or willful misconduct.
(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 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
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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.
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 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) 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 subordinated lender to any
Borrower, 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
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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, 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 30th 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
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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 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 11:00 a.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 2:00 p.m.
(Eastern time) on the applicable Business Day.
(b) Return of Payments. (i) If 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.
(ii) 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 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
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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 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).
----------------
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(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 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.
----- -----
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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. (716) 340-
2512) 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. (212)
856-3550, confirmation no. (▇▇▇) ▇▇▇-▇▇▇▇), with copies to Canadian Imperial
Bank of Commerce, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention:
Agency Services (telecopy no. (▇▇▇) ▇▇▇-▇▇▇▇, confirmation no. (▇▇▇) ▇▇▇-▇▇▇▇),
if to the Collateral Agent (or Newcourt CFC, as a Lender), at ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: Media and Communications , Vice
President-Operations Manager (telecopy no. (▇▇▇) ▇▇▇-▇▇▇▇, confirmation no.
(▇▇▇) ▇▇▇-▇▇▇▇), with copies to Newcourt Commercial Finance Corporation, ▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: Vice President - Credit
(telecopy no. (▇▇▇) ▇▇▇-▇▇▇▇, confirmation no. (▇▇▇) ▇▇▇-▇▇▇▇) and Attention:
Vice President - Legal (telecopy no. (▇▇▇) ▇▇▇-▇▇▇▇, confirmation no. (973) 355-
7609), if to any Lender (other than CIBC or Newcourt CFC), 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
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
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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:
(i) Postpone or extend the 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.
---------------
(ii) Reduce the principal amount of any Loans, or reduce the rate or
extend the time of payment of interest or fees thereon.
(iii) 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".
(iv) Increase the amount of any Commitment of any Lender hereunder
or increase any Lender's Pro Rata Share.
(v) Permit any Borrower to assign its rights under this Agreement.
(vi) Release all or substantially all of the Collateral.
(vii) 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.
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
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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 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, the management of such Loans or the Collateral (including any liability
under federal, state or local environmental
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laws or regulations) or the use or intended use of the proceeds of such Loans
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 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.
--------------
-75-
(i) 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 $2,500,000. 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 Section 2.13 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
Section 2.13 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.
(ii) 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.
(iii) 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
------------
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.
-----------
(i) 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
----------
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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
$5,000,000 (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.
(ii) 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 Section
-------
11.08(c)(ii), 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.
(iii) 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
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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.
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.
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.
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
-78-
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
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 Borrower's 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, 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
-79-
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 Letter 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
--------------
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.
-80-
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
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President, Finance
PAETEC INTERNATIONAL, INC., as a Borrower
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President, Finance
PAETEC ONLINE, INC., as a Borrower
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President, Finance
PAETEC COMMUNICATIONS OF VIRGINIA, INC.,
as a Borrower
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President, Finance
PAETEC CAPITAL CORP., as a Borrower
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President, Finance
CAMPUSLINK COMMUNICATIONS SYSTEMS, INC.,
as a Borrower
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President, Finance
SELECT SWITCH ACQUISITION CO., as a Borrower
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President, Finance
PARKLINK COMMUNICATIONS, INC., as a Borrower
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President, Finance
EAST FLORIDA COMMUNICATIONS, INC., as a
Borrower
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President, Finance
CANADIAN IMPERIAL BANK OF COMMERCE, as
Administrative Agent and as a Lender
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Managing Director
NEWCOURT COMMERCIAL FINANCE CORPORATION, as Collateral
Agent and a Lender
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President
▇▇▇▇▇▇▇ ▇▇▇▇▇ CAPITAL CORP., as a Lender
By: /s/ ▇▇▇▇ Lucid
---------------------------------------------
Name: ▇▇▇▇ Lucid
Title: Vice President
Annex A
Lender Commitment Amount
------ -----------------
Canadian Imperial Bank of Commerce $ 32,500,000
Newcourt Commercial Finance Corporation $ 32,500,000
▇▇▇▇▇▇▇ ▇▇▇▇▇ Capital Corp. $ 5,000,000
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telecopier No.: ▇▇▇-▇▇▇-▇▇▇▇
Confirmation No.: ▇▇▇-▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇