Credit Agreement - Birch Telecom Inc., Birch Telecom Finance Inc., Lehman Brothers Inc., Bankers Trust Co., Bank of America NA and Lehman Commercial Paper Inc.
EXECUTION COPY
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AMENDED AND RESTATED
CREDIT AGREEMENT
dated as of
February 2, 2000
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BIRCH TELECOM, INC.,
BIRCH TELECOM FINANCE, INC.
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the Several Lenders
from time to time Parties Hereto,
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LEHMAN BROTHERS INC.,
as Advisor, Lead Arranger and Book Manager
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BANKERS TRUST COMPANY,
as Syndication Agent
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BANK OF AMERICA, N.A.,
as Documentation Agent
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LEHMAN COMMERCIAL PAPER INC.,
as Administrative Agent
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TABLE OF CONTENTS
Page
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SECTION 1. DEFINITIONS......................................................1
1.1 Defined Terms.........................................................1
1.2 Other Definitional Provisions........................................26
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS.................................26
2.1 Term Loan Commitments...............................................26
2.2 Procedure for Term Loan Borrowing...................................26
2.3 Repayment of Term Loans.............................................27
2.4 Revolving Credit Commitments........................................28
2.5 Procedure for Revolving Credit Borrowing............................29
2.6 Swing Line Commitment...............................................29
2.7 Procedure for Swing Line Borrowing; Refunding of Swing Line Loans...30
2.8 Repayment of Loans; Evidence of Debt................................31
2.9 Commitment Fees, etc................................................32
2.10 Termination or Reduction of Commitments.............................32
2.11 Optional Prepayments................................................33
2.12 Mandatory Prepayments and Commitment Reductions.....................33
2.13 Conversion and Continuation Options.................................34
2.14 Minimum Amounts and Maximum Number of Eurodollar Tranches...........34
2.15 Interest Rates and Payment Dates....................................35
2.16 Computation of Interest and Fees....................................35
2.17 Inability to Determine Interest Rate................................35
2.18 Pro Rata Treatment and Payments.....................................36
2.19 Requirements of Law.................................................38
2.20 Taxes...............................................................39
2.21 Indemnity...........................................................40
2.22 Illegality..........................................................41
2.23 Change of Lending Office............................................41
2.24 Replacement of Lenders under Certain Circumstances..................41
SECTION 3. REPRESENTATIONS AND WARRANTIES..................................42
3.1 Financial Condition..................................................42
3.2 No Change............................................................43
3.3 Corporate Existence; Compliance with Law.............................43
3.4 Corporate Power; Authorization; Enforceable Obligations..............43
3.5 No Legal Bar.........................................................43
3.6 No Material Litigation...............................................44
3.7 No Default...........................................................44
3.8 Ownership of Property; Liens.........................................44
3.9 Intellectual Property................................................44
3.10 Taxes................................................................44
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3.11 Federal Regulations.................................................44
3.12 ERISA...............................................................44
3.13 Investment Company Act; Public Utility Holding Company Act; Other
Regulations.........................................................45
3.14 Capitalization; Subsidiaries; Certain Investments...................45
3.15 Purpose of Loans....................................................45
3.16 Environmental Matters...............................................46
3.17 Accuracy of Information, etc........................................47
3.18 Security Documents..................................................47
3.19 Solvency............................................................48
3.20 Real Property.......................................................48
3.21 Year 2000 Matters...................................................48
3.22 Restricted Subsidiary...............................................48
3.23 Network.............................................................48
SECTION 4. CONDITIONS PRECEDENT............................................48
4.1 Effectiveness.......................................................48
4.2 Conditions to Each Extension of Credit..............................51
4.3 Conditions to Each Term Loan........................................51
SECTION 5. AFFIRMATIVE COVENANTS...........................................51
5.1 Financial Statements................................................51
5.2 Certificates; Other Information.....................................52
5.3 Payment of Obligations..............................................53
5.4 Conduct of Business and Maintenance of Existence, etc...............54
5.5 Maintenance of Property; Insurance..................................54
5.6 Inspection of Property; Books and Records; Discussions..............54
5.7 Notices.............................................................55
5.8 Environmental Laws..................................................55
5.9 Additional Collateral, etc..........................................56
5.10 Further Assurances..................................................57
SECTION 6. NEGATIVE COVENANTS..............................................57
6.1 Financial Condition Covenants.......................................57
6.2 Limitation on Indebtedness..........................................61
6.3 Limitation on Liens.................................................62
6.4 Limitation on Fundamental Changes...................................64
6.5 Limitation on Disposition of Property...............................64
6.6 Limitation on Restricted Payments...................................65
6.7 Limitation on Investments...........................................66
6.8 Limitation on Optional Payments and Modifications of Instruments
and Agreements, etc.............................................67
6.9 Limitation on Transactions with Affiliates..........................67
6.10 Limitation on Sales and Leasebacks..................................68
6.11 Limitation on Changes in Fiscal Periods.............................68
6.12 Limitation on Negative Pledge Clauses...............................68
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6.13 Limitation on Restrictions on Subsidiary Distributions..............68
6.14 Limitation on Lines of Business.....................................69
6.15 Limitation on Capital Expenditures..................................69
6.16 Hedge Agreements; Equity Forward Agreements.........................69
6.17 Limitation on Activities of the Company.............................69
SECTION 7. EVENTS OF DEFAULT...............................................70
SECTION 8. THE AGENTS......................................................73
8.1 Appointment..........................................................73
8.2 Delegation of Duties.................................................73
8.3 Exculpatory Provisions...............................................73
8.4 Reliance by Agents...................................................73
8.5 Notice of Default....................................................74
8.6 Non-Reliance on Agents and Other Lenders.............................74
8.7 Indemnification......................................................75
8.8 Agent in Its Individual Capacity.....................................75
8.9 Successor Agents.....................................................75
8.10 Authorization to Release Liens......................................76
8.11 The Arranger, Documentation Agent and Syndication Agent.............76
SECTION 9. MISCELLANEOUS...................................................76
9.1 Amendments and Waivers...............................................76
9.2 Notices..............................................................77
9.3 No Waiver; Cumulative Remedies.......................................78
9.4 Survival of Representations and Warranties...........................78
9.5 Payment of Expenses..................................................78
9.6 Successors and Assigns; Participations and Assignments...............79
9.7 Adjustments; Set-off.................................................82
9.8 Counterparts.........................................................82
9.9 Severability.........................................................82
9.10 Integration.........................................................83
9.11 Governing Law.......................................................83
9.12 Submission to Jurisdiction; Waivers.................................83
9.13 Acknowledgments.....................................................83
9.14 Confidentiality.....................................................84
9.15 Accounting Changes..................................................84
9.16 Delivery of Lender Addenda..........................................85
9.17 Waivers of Jury Trial...............................................85
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SCHEDULES:
I Pricing Grid
1.1 Permitted Investors
3.1(a) Contingent Liabilities, etc.
3.4 Consents, Authorizations, Filings and Notices
3.14 Capitalization, Subsidiaries and Investments
3.18 UCC Filing Jurisdictions
3.20 Real Property
3.23 Network
6.2(d) Existing Indebtedness
6.3(f) Existing Liens
EXHIBITS:
A Form of Guarantee and Collateral Agreement
B Form of Compliance Certificate
C Form of Closing Certificate
D Form of Assignment and Acceptance
E-1 Form of Legal Opinion of Simpson Thacher & Bartlett,
special counsel to the Credit Parties E-2 Form of Legal Opinion
of the General Counsel of the Company E-3 Form of Legal Opinion
of Milbank, Tweed, Hadley & McCloy LLP, special counsel to LCPI
F-1 Form of Term Note
F-2 Form of Revolving Credit Note
F-3 Form of Swing Line Note
G Form of Non-U.S. Lender Certificate
H Form of Lender Addendum
I Form of Notice of Borrowing
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AMENDED AND RESTATED CREDIT AGREEMENT, dated as of February 2,
2000 among BIRCH TELECOM, INC., a Delaware corporation (the "Company"), BIRCH
TELECOM FINANCE, INC., a Delaware corporation (the "Borrower"), the several
banks and other financial institutions or entities from time to time parties to
this Agreement (the "Lenders") and LEHMAN COMMERCIAL PAPER INC. ("LCPI"), as
administrative agent (in such capacity, the "Administrative Agent").
The Company, the Borrower, the lenders named therein (including
certain of the Lenders hereunder), Lehman Brothers Inc., as advisor, lead
arranger and book manager, Lehman Commercial Paper Inc., as syndication agent,
and the Administrative Agent are party to a Credit Agreement dated as of
December 20, 1999 (as in effect on the date hereof immediately before giving
effect to the amendment and restatement contemplated hereby, the "Existing
Credit Agreement"). The Borrower has requested that the Lenders party hereto
amend the Existing Credit Agreement to provide for (i) the extension of credit
to it in an aggregate amount not exceeding $125,000,000 and (ii) the addition of
certain lenders thereunder.
In that connection, the parties wish to amend and restate the
Existing Credit Agreement and, accordingly, the parties hereto agree that the
Existing Credit Agreement shall be amended and restated as of the date hereof
(but subject to Section 4.1) in its entirety as follows:
SECTION 1. DEFINITIONS
1.1 Defined Terms. As used in this Agreement, the terms listed in
this Section shall have the respective meanings set forth in this Section.
"Adjustment Date": the fifth day following the date on which the
financial statements for the most recently completed fiscal period furnished
pursuant to Section 5.1(a) or (b), as the case may be, and the compliance
certificate with respect to such financial statements furnished pursuant to
Section 5.2(b) are delivered to the Administrative Agent.
"Administrative Agent": as defined in the preamble hereto.
"Affiliate": as to any Person, any other Person which, directly or
indirectly, is in control of, is controlled by, or is under common control
with, such Person. For purposes of this definition, "control" of a Person
means the power, directly or indirectly, either to (a) vote 10% or more of
the securities having ordinary voting power for the election of directors
(or persons performing similar functions) of such Person or (b) direct or
cause the direction of the management and policies of such Person, whether
by contract or otherwise.
"Agents": the collective reference to the Administrative Agent, the
Documentation Agent and the Syndication Agent.
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"Aggregate Exposure": with respect to any Lender at any time, an
amount equal to the sum of (i) the amount of such Lender's Term Loan
Commitment then in effect or, if the Term Loan Commitments have been
terminated, the aggregate then unpaid principal amount of such Lender's
Term Loans and (ii) the amount of such Lender's Revolving Credit
Commitment then in effect or, if the Revolving Credit Commitments have
been terminated, the amount of such Lender's Revolving Extensions of
Credit then outstanding.
"Aggregate Exposure Percentage": with respect to any Lender at any
time, the ratio (expressed as a percentage) of such Lender's Aggregate
Exposure at such time to the Aggregate Exposure of all Lenders at such
time.
"Agreement": this Credit Agreement, as amended, supplemented or
otherwise modified from time to time.
"Annualized Consolidated EBITDA": (a) during Stage 1, Consolidated
EBITDA for the most recently completed fiscal quarter times four and (b)
during Stage 2, Consolidated EBITDA for the most recently completed two
fiscal quarters times two.
"Applicable Margin": for each Type of Loan, the rate per annum set
forth on the Pricing Grid under the relevant column heading opposite the
level of the Total Leverage Ratio most recently determined; provided that
(a) the Applicable Margin for each Type of Loan commencing on the Closing
Date shall be that set forth on the Pricing Grid under the relevant column
opposite a Total Leverage Ratio captioned "> 8.0 to 1" until the first
Adjustment Date, (b) the Applicable Margin for each Type of Loan
determined for any Adjustment Date (including the first Adjustment Date)
shall remain in effect until a subsequent Adjustment Date for which the
Total Leverage Ratio falls within a different level and (c) if the
financial statements and related compliance certificate for any fiscal
period are not delivered by the date due pursuant to Section 5.1 and 5.2,
the Applicable Margin for each Type of Loan shall be (i) for the first 35
days subsequent to such due date, the Applicable Margin for such Type of
Loan in effect prior to such due date and (ii) thereafter, that set forth
on the Pricing Grid under the relevant column opposite a Total Leverage
Ratio captioned "> 8.0 to 1", in either case, until the date of delivery
of such financial statements and compliance certificate.
"Arranger": Lehman Brothers Inc.
"Asset Sale": any Disposition of Property or series of related
Dispositions of Property (excluding any such Disposition permitted by
clause (a), (b), (c) or (d) of Section 6.5) which yields gross proceeds to
the Company or any of its Subsidiaries in excess of $1,000,000.
"Assignee": as defined in Section 9.6(c).
"Assignor": as defined in Section 9.6(c).
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"Available Amount": on any date (each, a "Reference Date"), an
amount equal to (a) the sum of (i) an amount equal to (x) the cumulative
amount of Excess Cash Flow for all complete fiscal years ended after the
Original Closing Date and prior to such Reference Date minus (y) the
portion of such Excess Cash Flow that has been on or prior to (or will be
on) such Reference Date applied to the prepayment of Loans in accordance
with Section 2.12, (ii) the amount of any capital contributions made in
cash to the Company (and contributed by the Company as cash equity to the
Borrower and/or any Subsidiary Guarantors) from and including the Business
Day immediately following the Original Closing Date through and including
such Reference Date, (iii) an amount equal to the Net Cash Proceeds
received by the Company on or prior to such Reference Date from any
issuance of its Capital Stock (and contributed by the Company as cash
equity to the Borrower and/or any Subsidiary Guarantors) and (iv) the
aggregate amount of all cash dividends, cash distributions or other
returns of capital (including proceeds of any Disposition) to the extent
received in respect of any Investment made pursuant to Section 6.7(j)
received by the Company or any Subsidiary on or prior to such Reference
Date (other than the portion of any such dividends and other distributions
used by the Company or any Subsidiary to pay taxes) minus (b) sum of (i)
the aggregate amount of any Investments made by the Company or any
Subsidiary pursuant to Section 6.7(j) on or prior to such Reference Date
and (ii) the aggregate amount of Capital Expenditures made by the Company
or any Subsidiary pursuant to Section 6.15 on or prior to such Reference
Date, in each case to the extent made with the Available Amount.
"Available Commitment": (a) as to any Revolving Credit Lender at any
time, an amount equal to the excess, if any, of (i) such Lender's
Revolving Credit Commitment then in effect over (ii) such Lender's
Revolving Extensions of Credit then outstanding, provided that in
calculating any Lender's Revolving Extensions of Credit for the purpose of
determining such Lender's Available Revolving Credit Commitment pursuant
to Section 2.9(a), the aggregate principal amount of Swing Line Loans then
outstanding shall be deemed to be zero; and (b) as to any Term Lender at
any time, an amount equal to the excess, if any, of (i) such Lender's Term
Loan Commitment then in effect over (ii) the aggregate principal amount of
such Lender's Term Loans then outstanding.
"Base CD Rate": as defined in the definition of "Base Rate" in this
Section.
"Base Rate": for any day, a rate per annum (rounded upwards, if
necessary, to the next 1/16 of 1%) equal to the greatest of (a) the Prime
Rate in effect on such day, (b) the Base CD Rate in effect on such day
plus 1.00% and (c) the Federal Funds Effective Rate in effect on such day
plus 0.50%. For purposes hereof, "Prime Rate" shall mean the rate of
interest per annum publicly announced from time to time by the Reference
Lender as its prime or base rate in effect at its principal office in New
York City (the Prime Rate not being intended to be the lowest rate of
interest charged by the Reference Lender in connection with extensions of
credit to debtors); "Base CD Rate" shall mean the sum of (a) the product
of (i) the Three-Month Secondary CD Rate and (ii) a fraction, the
numerator of which is one and the denominator of which is one minus the
C/D Reserve
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Percentage and (b) the C/D Assessment Rate; and "Three-Month Secondary CD
Rate" shall mean, for any day, the secondary market rate for three-month
certificates of deposit reported as being in effect on such day (or, if
such day shall not be a Business Day, the next preceding Business Day) by
the Board through the public information telephone line of the Federal
Reserve Bank of New York (which rate will, under the current practices of
the Board, be published in Federal Reserve Statistical Release H.15(519)
during the week following such day), or, if such rate shall not be so
reported on such day or such next preceding Business Day, the average of
the secondary market quotations for three-month certificates of deposit of
major money center banks in New York City received at approximately 10:00
A.M., New York City time, on such day (or, if such day shall not be a
Business Day, on the next preceding Business Day) by the Reference Lender
from three New York City negotiable certificate of deposit dealers of
recognized standing selected by it. Any change in the Base Rate due to a
change in the Prime Rate, the Three-Month Secondary CD Rate or the Federal
Funds Effective Rate shall be effective as of the opening of business on
the effective day of such change in the Prime Rate, the Three-Month
Secondary CD Rate or the Federal Funds Effective Rate, respectively.
"Base Rate Loans": Loans the rate of interest applicable to which is
based upon the Base Rate.
"Benefitted Lender": as defined in Section 9.7.
"Board": the Board of Governors of the Federal Reserve System of the
United States (or any successor).
"Borrower": as defined in the preamble hereto.
"Borrowing Date": any Business Day specified by the Borrower as a
date on which the Borrower requests the relevant Lenders to make Loans
hereunder.
"Business Day": (a) for all purposes other than as covered by clause
(b) below, a day other than a Saturday, Sunday or other day on which
commercial banks in New York City are authorized or required by law to
close and (b) with respect to all notices and determinations in connection
with, and payments of principal and interest on, Eurodollar Loans, any day
which is a Business Day described in clause (a) and which is also a day
for trading by and between banks in Dollar deposits in the interbank
eurodollar market.
"Capital Expenditures": for any period, with respect to any Person,
the aggregate of all expenditures by such Person and its Subsidiaries for
the acquisition or leasing (pursuant to a capital lease) of fixed or
capital assets or additions to equipment (including replacements,
capitalized repairs and improvements during such period) which are
capitalized in accordance with GAAP on a consolidated balance sheet of
such Person and its Subsidiaries.
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5
"Capital Lease Obligations": as to any Person, the obligations of
such Person to pay rent or other amounts under any lease of (or other
arrangement conveying the right to use) real or personal property, or a
combination thereof, which obligations are classified and accounted for as
capital leases on a balance sheet of such Person in accordance with GAAP,
and, for the purposes of this Agreement, the amount of such obligations at
any time shall be the capitalized amount thereof at such time determined
in accordance with GAAP.
"Capital Stock": any and all shares, interests, participations or
other equivalents (however designated) of capital stock of a corporation,
any and all equivalent ownership interests in a Person (other than a
corporation) and any and all warrants, rights or options to purchase any
of the foregoing.
"Cash Equivalents": (a) marketable direct obligations issued by, or
unconditionally guaranteed by, the United States Government or issued by
any agency thereof and backed by the full faith and credit of the United
States, in each case maturing within one year from the date of
acquisition; (b) certificates of deposit, time deposits, eurodollar time
deposits or overnight bank deposits having maturities of one year or less
from the date of acquisition issued by any Lender or by any commercial
bank organized under the laws of the United States of America or any state
thereof having combined capital and surplus of not less than $500,000,000;
(c) commercial paper of a domestic issuer rated at least A-2 by Standard &
Poor's Ratings Services ("S&P") or P-2 by Moody's Investors Service, Inc.
("Moody's"), or carrying an equivalent rating by a nationally recognized
rating agency, if both of the two named rating agencies cease publishing
ratings of commercial paper issuers generally; (d) repurchase obligations
of any Lender or of any commercial bank satisfying the requirements of
clause (b) of this definition, having a term of not more than 90 days with
respect to securities issued or fully guaranteed or insured by the United
States government; (e) securities with maturities of one year or less from
the date of acquisition issued or fully guaranteed by any state,
commonwealth or territory of the United States, by any political
subdivision or taxing authority of any such state, commonwealth or
territory or by any foreign government, the securities of which state,
commonwealth, territory, political subdivision, taxing authority or
foreign government (as the case may be) are rated at least A by S&P or A
by Moody's; (f) securities with maturities of one year or less from the
date of acquisition backed by standby letters of credit issued by any
Lender or any commercial bank satisfying the requirements of clause (b) of
this definition; or (g) shares of money market mutual or similar funds
which invest exclusively in assets satisfying the requirements of clauses
(a) through (f) of this definition.
"C/D Assessment Rate": for any day as applied to any Base Rate Loan,
the annual assessment rate in effect on such day which is payable by a
member of the Bank Insurance Fund maintained by the Federal Deposit
Insurance Corporation (the "FDIC") classified as well-capitalized and
within supervisory subgroup "B" (or a comparable successor assessment risk
classification) within the meaning of 12 C.F.R. ss. 327.4 (or any
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6
successor provision) to the FDIC (or any successor) for the FDIC's (or
such successor's) insuring time deposits at offices of such institution in
the United States.
"C/D Reserve Percentage": for any day as applied to any Base Rate
Loan, that percentage (expressed as a decimal) which is in effect on such
day, as prescribed by the Board, for determining the maximum reserve
requirement for a Depositary Institution (as defined in Regulation D of
the Board as in effect from time to time) in respect of new non-personal
time deposits in Dollars having a maturity of 30 days or more.
"Change in Control": the occurrence of any of the following events:
(a) Permitted Investors shall at any time not own, in the aggregate,
directly or indirectly, beneficially and of record, at least 35% of the
outstanding voting interests in the Capital Stock of the Company (other
than as a result of one or more widely distributed offerings of common
stock of the Company, in each case whether by the Company or by Permitted
Investors); (b) any person, entity or "group" (within the meaning of
Section 13(d) or 14(d) of the Securities Exchange Act of 1934, as amended)
shall at any time have acquired direct or indirect beneficial ownership of
a percentage of the outstanding voting interests in the Capital Stock of
the Company that exceeds the percentage of such voting interests then
beneficially owned, in the aggregate, by Permitted Investors; (c)
Permitted Investors shall at any time not have the right or the ability by
voting power, contract or otherwise to elect or designate for election a
majority of the Board of Directors of the Company; (d) the board of
directors of the Company shall cease to consist of a majority of
Continuing Directors; or (e) the Company shall cease to own and control,
of record and beneficially, directly, 100% of each class of outstanding
Capital Stock of the Borrower free and clear of all Liens (except Liens
created by the Guarantee and Collateral Agreement).
"Class": when used in reference to any Loans, refers to whether such
Loan is a Term Loan, a Revolving Credit Loan or a Swing Line Loan and,
when used in reference to any Commitment, refers to whether such
Commitment is a Term Loan Commitment or a Revolving Credit Commitment.
"Closing Date": the date on which the conditions precedent set forth
in Section 4.1 shall have been satisfied, and the initial Loans hereunder
shall be made.
"Code": the Internal Revenue Code of 1986, as amended from time to
time.
"Collateral": all Property of the Credit Parties, now owned or
hereafter acquired, upon which a Lien is purported to be created by any
Security Document.
"Collocation Sites": the central office premises of a local exchange
carrier on which a Subsidiary of the Borrower has located
telecommunications transmission equipment.
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"Commitment": as to any Lender, the sum of the Term Loan Commitment
and the Revolving Credit Commitment of such Lender.
"Commitment Fee Rate": (a) a rate of 1.25% per annum if the Facility
Usage shall be equal to or less than 33-1/3%, (b) a rate of 1.00% per
annum if the Facility Usage shall be greater than 33-1/3% but equal to or
less than 66-2/3% and (c) a rate of 0.75% per annum if the Facility Usage
shall be greater than 66-2/3%.
"Commitment Reduction Dates": the last Business Day of March, June,
September and December of each year, commencing with such day falling on
or nearest to March 31, 2003.
"Commonly Controlled Entity": an entity, whether or not
incorporated, which is under common control with the Company within the
meaning of Section 4001 of ERISA or is part of a group which includes the
Company and which is treated as a single employer under Section 414 of the
Code.
"Company": as defined in the preamble hereto.
"Compliance Certificate": a certificate duly executed by a
Responsible Officer substantially in the form of Exhibit B.
"Confidential Information Memorandum": the Confidential Information
Memorandum dated December 1999 and furnished to the initial Lenders.
"Consolidated Current Assets": at any date, all amounts (other than
cash and Cash Equivalents) which would, in conformity with GAAP, be set
forth opposite the caption "total current assets" (or any like caption) on
a consolidated balance sheet of the Company and its Subsidiaries at such
date.
"Consolidated Current Liabilities": at any date, all amounts which
would, in conformity with GAAP, be set forth opposite the caption "total
current liabilities" (or any like caption) on a consolidated balance sheet
of the Company and its Subsidiaries at such date, but excluding (a) the
current portion of any Funded Debt of the Company and its Subsidiaries and
(b) without duplication of clause (a) above, all Indebtedness consisting
of Revolving Credit Loans or Swing Line Loans to the extent otherwise
included therein.
"Consolidated EBITDA": for any period, Consolidated Net Income for
such period plus, without duplication and to the extent reflected as a
charge in the statement of such Consolidated Net Income for such period,
the sum of (a) income tax expense, (b) Consolidated Interest Expense,
amortization or writeoff of debt discount and debt issuance costs and
commissions, discounts and other fees and charges associated with
Indebtedness (including the Loans), (c) depreciation and amortization
expense, (d) amortization of intangibles (including,
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8
but not limited to, goodwill) and organization costs, (e) any
extraordinary, unusual or non-recurring expenses or losses (including,
whether or not otherwise includable as a separate item in the statement of
such Consolidated Net Income for such period, losses on sales of assets
outside of the ordinary course of business), (f) any other non-cash
charges or reserves, (g) transaction expenses directly related to the
Preferred Stock Purchase Agreement and this Agreement and (h) transaction
expenses directly related to acquisitions permitted under Section 6.7(j),
and minus, to the extent included in the statement of such Consolidated
Net Income for such period, the sum of (a) interest income (except to the
extent deducted in determining Consolidated Interest Expense), (b) any
extraordinary, unusual or non-recurring income or gains (including,
whether or not otherwise includable as a separate item in the statement of
such Consolidated Net Income for such period, gains on the sales of assets
outside of the ordinary course of business) and (c) any other non-cash
income, all as determined on a consolidated basis.
Notwithstanding the foregoing, for purposes of calculating
Consolidated EBITDA of the Company and its Subsidiaries for any period,
the Consolidated EBITDA of any Person or assets constituting a business
unit acquired by the Company or its Subsidiaries during such period shall
be included on a pro forma basis for such period (assuming the
consummation of such acquisition and the incurrence or assumption of any
Indebtedness in connection therewith occurred on the first day of such
period) if the consolidated balance sheet of such acquired Person and its
consolidated Subsidiaries or such acquired assets as at the end of the
period preceding the acquisition of such Person or such assets and the
related consolidated statements of income and stockholders' equity and of
cash flows for the period in respect of which Consolidated EBITDA is to be
calculated (i) have been previously provided to the Administrative Agent
and the Lenders and (ii) either (A) have been reported on without a
qualification arising out of the scope of the audit by independent
certified public accountants of nationally recognized standing or (B) are
acceptable to the Administrative Agent.
"Consolidated Interest Expense": for any period, total cash interest
expense (including that attributable to Capital Lease Obligations) of the
Company and its Subsidiaries for such period (whether paid or past due)
with respect to all outstanding Indebtedness of the Company and its
Subsidiaries (including, without limitation, all commissions, discounts
and other fees and charges owed with respect to letters of credit and
bankers' acceptance financing and net costs under Hedge Agreements in
respect of interest rates to the extent such net costs are allocable to
such period in accordance with GAAP) net of cash interest income for such
period.
Notwithstanding the foregoing, for purposes of calculating
Consolidated Interest Expense of the Company and its Subsidiaries for any
period, the Consolidated Interest Expense of any Person or assets
constituting a business unit acquired by the Company or its Subsidiaries
during such period shall be included on a pro forma basis for such period
(assuming the consummation of such acquisition and the incurrence or
assumption of any Indebtedness in connection therewith occurred on the
first day of such period), but only if Consolidated EBITDA of such Person
or assets is included for purposes of calculating
<PAGE>
9
Consolidated EBITDA for such period pursuant to the last paragraph of the
definition of "Consolidated EBITDA".
"Consolidated Net Income": for any period, the consolidated net
income (or loss) of the Company and its Subsidiaries, determined on a
consolidated basis in accordance with GAAP; provided that there shall be
excluded (a) the income (or deficit) of any Person accrued prior to the
date it becomes a Subsidiary of the Company or is merged into or
consolidated with the Company or any of its Subsidiaries, (b) the income
(or deficit) of any Person (other than a Subsidiary of the Company) in
which the Company or any of its Subsidiaries has an ownership interest,
except to the extent that any such income is actually received by the
Company or such Subsidiary in the form of dividends or similar
distributions and (c) the undistributed earnings of any Subsidiary of the
Company to the extent that the declaration or payment of dividends or
similar distributions by such Subsidiary is not at the time permitted by
the terms of any Contractual Obligation (other than under any Credit
Document) or Requirement of Law applicable to such Subsidiary.
"Consolidated Total Assets": at any date, all assets of the Company
and its Subsidiaries as determined according to the consolidated balance
sheet most recently delivered pursuant to Section 5.1 or, if no such
balance sheet has yet been delivered pursuant to Section 5.1, the most
recent consolidated balance sheet referred to in Section 3.1(a).
"Consolidated Total Debt": at any date, the aggregate principal
amount of all Funded Debt of the Company and its Subsidiaries on such
date, determined on a consolidated basis in accordance with GAAP minus,
other than for purposes of calculating Total Capitalization, the aggregate
amount of Cash Equivalents pledged (i) under the Existing Senior Notes or
(ii) as security for mandatory cash payments of interest in respect of
Indebtedness permitted by Section 6.2(h) (but, in the case of clause (ii),
only so long as such pledge of Cash Equivalents is permitted by Section
6.3(k)), in each case on such date.
"Consolidated Working Capital": at any date, the excess of
Consolidated Current Assets on such date over Consolidated Current
Liabilities on such date.
"Continuing Directors": the directors of the Company on the Original
Closing Date and each other director, if, in each case, (i) such other
director's nomination for election to the board of directors of the
Company is recommended by at least a majority of the then Continuing
Directors or (ii) such other director receives the vote of the Permitted
Investors in his or her election by the shareholders of the Company.
"Contractual Obligation": as to any Person, any provision of any
security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
Property is bound.
<PAGE>
10
"Control Investment Affiliate": as to any Person, any other Person
which (a) directly or indirectly, is in control of, is controlled by, or
is under common control with, such Person and (b) is organized by such
Person primarily for the purpose of making equity or debt investments in
one or more companies. For purposes of this definition, "control" of a
Person means the power, directly or indirectly, to direct or cause the
direction of the management and policies of such Person whether by
contract or otherwise.
"Credit Documents": collectively, this Agreement, the Security
Documents and the Notes.
"Credit Parties": collectively, the Company, the Borrower and each
other Subsidiary which is a party to a Credit Document.
"Default": any of the events specified in Section 7, whether or not
any requirement for the giving of notice, the lapse of time, or both, has
been satisfied.
"Disposition": with respect to any Property, any sale, lease, sale
and leaseback, assignment, conveyance, transfer or other disposition
thereof; the terms "Dispose" and "Disposed of" shall have correlative
meanings.
"Documentation Agent": Bank of America, N.A.
"Dollars" and "$": dollars in lawful currency of the United States
of America.
"ECF Percentage": with respect to any fiscal year, 75%; provided
that the ECF Percentage with respect to any fiscal year shall be 50% if
the Total Leverage Ratio as of the last day of such fiscal year is not
greater than 5.5 to 1.0.
"Environmental Laws": any and all laws, rules, orders, regulations,
statutes, ordinances, guidelines, codes, decrees, or other legally
enforceable requirements (including, without limitation, common law) of
any international authority, foreign government, the United States, or any
state, local, municipal or other governmental authority, regulating,
relating to or imposing liability or standards of conduct concerning
protection of the environment or of human health, or employee health and
safety, as has been, is now, or may at any time hereafter be, in effect.
"Environmental Permits": any and all permits, licenses, approvals,
registrations, notifications, exemptions and/or other authorization
required under any applicable Environmental Law.
"ERISA": the Employee Retirement Income Security Act of 1974, as
amended from time to time.
<PAGE>
11
"Eurocurrency Reserve Requirements": for any day as applied to a
Eurodollar Loan, the aggregate (without duplication) of the maximum rates
(expressed as a decimal fraction) of reserve requirements in effect on
such day (including, without limitation, basic, supplemental, marginal and
emergency reserves under any regulations of the Board or other
Governmental Authority having jurisdiction with respect thereto) dealing
with reserve requirements prescribed for eurocurrency funding (currently
referred to as "Eurocurrency Liabilities" in Regulation D of the Board)
maintained by a member bank of the Federal Reserve System.
"Eurodollar Rate": with respect to each day during each Interest
Period pertaining to a Eurodollar Loan, the rate per annum (rounded
upward, if necessary, to the nearest 1/100 of 1%) determined on the basis
of the rate for deposits in Dollars for a period equal to such Interest
Period commencing on the first day of such Interest Period appearing on
Page 3750 of the Telerate screen as of 11:00 A.M., London time, two
Business Days prior to the beginning of such Interest Period. In the event
that such rate does not appear on Page 3750 of the Telerate screen (or
otherwise on such screen), the "Eurodollar Rate" for purposes of this
definition shall be determined by reference to such other comparable
publicly available service for displaying eurodollar rates as may be
selected by the Administrative Agent or, in the absence of such
availability, by reference to the rate at which the Reference Lender is
offered Dollar deposits at or about 11:00 A.M., New York City time, two
Business Days prior to the beginning of such Interest Period in the
interbank eurodollar market where its eurodollar and foreign currency and
exchange operations are then being conducted for delivery on the first day
of such Interest Period for the number of days comprised therein.
"Eurodollar Loans": Loans the rate of interest applicable to which
is based upon the Eurodollar Rate.
"Eurodollar Tranche": the collective reference to Eurodollar Loans
the then current Interest Periods with respect to all of which begin on
the same date and end on the same later date (whether or not such Loans
shall originally have been made on the same day).
"Event of Default": any of the events specified in Section 7;
provided that any requirement for the giving of notice, the lapse of time,
or both, has been satisfied.
"Excess Cash Flow": for any fiscal year of the Company, the excess,
if any, of (a) the sum, without duplication, of (i) Consolidated Net
Income for such fiscal year, (ii) an amount equal to the amount of all
non-cash charges (including depreciation and amortization) deducted in
arriving at such Consolidated Net Income, (iii) an amount equal to the
aggregate net non-cash loss on the Disposition of Property by the Company
and its Subsidiaries during such fiscal year (other than sales of
inventory in the ordinary course of business), to the extent deducted in
arriving at such Consolidated Net Income and (iv) the net increase during
such fiscal year (if any) in deferred tax accounts of the Company over (b)
the sum, without duplication, of (i) an amount equal to the amount of
<PAGE>
12
all non-cash credits included in arriving at such Consolidated Net Income,
(ii) the aggregate amount actually paid by the Company and its
Subsidiaries in cash during such fiscal year on account of Capital
Expenditures (excluding (x) the principal amount of Indebtedness incurred
in connection with such expenditures and any such expenditures financed
with the proceeds of any Reinvestment Deferred Amount except to the extent
such proceeds are included in Consolidated Net Income and (y) any such
expenditures to the extent made with the Available Amount), (iii) the
aggregate amount of all prepayments of Revolving Credit Loans and Swing
Line Loans during such fiscal year to the extent accompanying permanent
optional reductions of the Revolving Credit Commitments and all optional
prepayments of the Term Loans during such fiscal year, (iv) the aggregate
amount of all principal payments of Funded Debt (including, without
limitation, the Term Loans) of the Company and its Subsidiaries made
during such fiscal year (other than (A) in respect of any revolving credit
facility to the extent there is not an equivalent permanent reduction in
commitments thereunder or (B) any such principal payment prohibited
hereby), (v) increases in Consolidated Working Capital for such fiscal
year, (vi) an amount equal to the aggregate net non-cash gain on the
Disposition of Property by the Company and its Subsidiaries during such
fiscal year (other than sales of inventory in the ordinary course of
business), to the extent included in arriving at such Consolidated Net
Income, (vii) the net decrease during such fiscal year (if any) in
deferred tax accounts of the Company and (viii) the amount of Investments
made during such period pursuant to Section 6.7 to the extent that such
Investments were financed with internally generated cash flow of the
Company and its Subsidiaries.
"Excess Cash Flow Application Date": as defined in Section 2.12(b).
"Existing Senior Notes": the 14% Senior Notes Due 2008 of the
Company issued pursuant to the Existing Senior Notes Indenture in an
aggregate principal amount of $115,000,000 outstanding on the date hereof.
"Existing Senior Notes Documents": the collective reference to the
Existing Senior Notes Indenture and the Existing Senior Notes.
"Existing Senior Notes Indenture": the Indenture dated as of June
23, 1998 among the Company and Norwest Bank Minnesota, National
Association, as Trustee, as amended, supplemented or otherwise modified
from time to time in accordance with Section 6.8.
"FCC": the U.S. Federal Communications Commission.
"Facility": each of (a) the Term Loan Commitments and the Term Loans
made thereunder (the "Term Loan Facility") and (b) the Revolving Credit
Commitments and the extensions of credit made thereunder (the "Revolving
Credit Facility").
"Facility Usage": a fraction, calculated as of the last day of each
fiscal quarter, the numerator of which is equal to the average daily
aggregate principal amount of the
<PAGE>
13
Revolving Extensions of Credit and the Term Loans (or, after the Term Loan
Commitment Termination Date, the Revolving Extensions of Credit) during
such fiscal quarter, and the denominator of which is equal to the average
daily aggregate Commitments (or, after the Term Loan Commitment
Termination Date, the Revolving Credit Commitments) for all Lenders during
such fiscal quarter.
"Federal Funds Effective Rate": for any day, 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 on
the next succeeding Business Day by the Federal Reserve Bank of New York,
or, if such rate is not so published for any day which is a Business Day,
the average of the quotations for the day of such transactions received by
the Reference Lender from three federal funds brokers of recognized
standing selected by it.
"Funded Debt": as to any Person, all Indebtedness of such Person of
the type described in clauses (a), (c), (e) and (to the extent that such
Indebtedness would be included in determining total liabilities as shown
on the liability side of a consolidated balance sheet of the Company and
its Subsidiaries prepared in accordance with GAAP) (b) and (d) of the
definition of "Indebtedness" that matures more than one year from the date
of its creation or matures within one year from such date but is renewable
or extendible, at the option of such Person, to a date more than one year
from such date or arises under a revolving credit or similar agreement
that obligates the lender or lenders to extend credit during a period of
more than one year from such date, including, without limitation, all
current maturities and current sinking fund payments in respect of such
Indebtedness whether or not required to be paid within one year from the
date of its creation and, in the case of the Borrower, Indebtedness in
respect of the Loans.
"Funding Office": the office specified from time to time by the
Administrative Agent as its funding office by notice to the Borrower and
the Lenders.
"GAAP": generally accepted accounting principles in the United
States of America as in effect from time to time, except that for purposes
of Section 6.1, GAAP shall be determined on the basis of such principles
in effect on the date hereof and consistent with those used in the
preparation of the most recent audited financial statements delivered
pursuant to Section 3.1(b).
"Governmental Authority": any nation or government, any state or
other political subdivision thereof and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government (including, without limitation, the FCC).
"Guarantee and Collateral Agreement": the Amended and Restated
Guarantee and Collateral Agreement to be executed and delivered by the
Company, the Borrower and each Subsidiary Guarantor, substantially in the
form of Exhibit A, as the same may be amended, supplemented or otherwise
modified from time to time.
<PAGE>
14
"Guarantee Obligation": as to any Person (the "guaranteeing
person"), any obligation of (a) the guaranteeing person or (b) another
Person (including, without limitation, any bank under any letter of
credit) to induce the creation of which the guaranteeing person has issued
a reimbursement, counterindemnity or similar obligation, in either case
guaranteeing or in effect guaranteeing any Indebtedness, leases, dividends
or other obligations (the "primary obligations") of any other third Person
(the "primary obligor") in any manner, whether directly or indirectly,
including, without limitation, any obligation of the guaranteeing person,
whether or not contingent, (i) to purchase any such primary obligation or
any Property constituting direct or indirect security therefor, (ii) to
advance or supply funds (1) for the purchase or payment of any such
primary obligation or (2) to maintain working capital or equity capital of
the primary obligor or otherwise to maintain the net worth or solvency of
the primary obligor, (iii) to purchase Property, securities or services
primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such
primary obligation or (iv) otherwise to assure or hold harmless the owner
of any such primary obligation against loss in respect thereof; provided,
however, that the term Guarantee Obligation shall not include endorsements
of instruments for deposit or collection in the ordinary course of
business. The amount of any Guarantee Obligation of any guaranteeing
person shall be deemed to be the lower of (a) an amount equal to the
stated or determinable amount of the primary obligation in respect of
which such Guarantee Obligation is made and (b) the maximum amount for
which such guaranteeing person may be liable pursuant to the terms of the
instrument embodying such Guarantee Obligation, unless such primary
obligation and the maximum amount for which such guaranteeing person may
be liable are not stated or determinable, in which case the amount of such
Guarantee Obligation shall be such guaranteeing person's maximum
reasonably anticipated liability in respect thereof as determined by the
Borrower in good faith.
"Guarantors": the collective reference to the Company and the
Subsidiary Guarantors.
"Hedge Agreements": all interest rate swaps, caps or collar
agreements or similar arrangements entered into by the Company or the
Borrower providing for protection against fluctuations in interest rates
or currency exchange rates or the exchange of nominal interest
obligations, either generally or under specific contingencies.
"Indebtedness": of any Person at any date, without duplication, (a)
all indebtedness of such Person for borrowed money, (b) all obligations of
such Person for the deferred purchase price of Property or services, (c)
all obligations of such Person evidenced by notes, bonds, debentures or
other similar instruments, (d) all indebtedness created or arising under
any conditional sale or other title retention agreement with respect to
Property acquired by such Person (even though the rights and remedies of
the seller or lender under such agreement in the event of default are
limited to repossession or sale of such Property), (e) all Capital Lease
Obligations of such Person, (f) all obligations
<PAGE>
15
of such Person, contingent or otherwise, as an account party under
acceptance, letter of credit or similar facilities, (g) all obligations of
such Person, contingent or otherwise, to purchase, redeem, retire or
otherwise acquire for value any Capital Stock of such Person (other than
obligations of such Person to purchase Capital Stock from present or
former officers or employees of such Person upon the death, disability or
termination of employment of such officer or employee) prior to the date
that is 91 days after the final scheduled maturity date of the Loans, (h)
all Guarantee Obligations of such Person in respect of obligations of the
kind referred to in clauses (a) through (h) above and (i) all obligations
of the kind referred to in clauses (a) through (i) above secured by (or
for which the holder of such obligation has an existing right, contingent
or otherwise, to be secured by) any Lien on Property (including, without
limitation, accounts and contract rights) owned by such Person, whether or
not such Person has assumed or become liable for the payment of such
obligation; provided that Indebtedness shall not include trade payables or
accrued expenses incurred in the ordinary course of such Person's
business.
"Indemnified Liabilities": as defined in Section 9.5.
"Indemnitee": as defined in Section 9.5.
"Insolvency": with respect to any Multiemployer Plan, the condition
that such Plan is insolvent within the meaning of Section 4245 of ERISA.
"Insolvent": pertaining to a condition of Insolvency.
"Intellectual Property": the collective reference to all rights,
priorities and privileges relating to intellectual property, whether
arising under United States, multinational or foreign laws or otherwise,
including, without limitation, copyrights, copyright licenses, patents,
patent licenses, trademarks, trademark licenses, technology, know-how and
processes, and all rights to sue at law or in equity for any infringement
or other impairment thereof, including the right to receive all proceeds
and damages therefrom.
"Interest Coverage Ratio": the ratio as of the last day of any
fiscal quarter of (a) Annualized Consolidated EBITDA to (b) Consolidated
Interest Expense for the period of four consecutive fiscal quarters then
ended.
"Interest Payment Date": (a) as to any Base Rate Loan, the last day
of each March, June, September and December to occur while such Loan is
outstanding and the final maturity date of such Loan, (b) as to any
Eurodollar Loan having an Interest Period of three months or less, the
last day of such Interest Period, (c) as to any Eurodollar Loan having an
Interest Period longer than three months, each day which is three months,
or a whole multiple thereof, after the first day of such Interest Period
and the last day of such Interest Period and (d) as to any Loan (other
than any Revolving Credit Loan that is a Base Rate Loan and any Swing Line
Loan), the date of any repayment or prepayment made in respect thereof.
<PAGE>
16
"Interest Period": as to any Eurodollar Loan, (a) initially, the
period commencing on the borrowing or conversion date, as the case may be,
with respect to such Eurodollar Loan and ending one, two, three or six
months (or nine or twelve months, if approved by all Lenders) thereafter,
as selected by the Borrower in its Notice of Borrowing or notice of
conversion, as the case may be, given with respect thereto; and (b)
thereafter, each period commencing on the last day of the next preceding
Interest Period applicable to such Eurodollar Loan and ending one, two,
three or six months (or nine or twelve months, if approved by all Lenders)
thereafter, as selected by the Borrower by irrevocable notice to the
Administrative Agent not less than three Business Days prior to the last
day of the then current Interest Period with respect thereto; provided
that all of the foregoing provisions relating to Interest Periods are
subject to the following:
(i) if any Interest Period would otherwise end on a day that
is not a Business Day, such Interest Period shall be extended to the
next succeeding Business Day unless the result of such extension
would be to carry such Interest Period into another calendar month
in which event such Interest Period shall end on the immediately
preceding Business Day;
(ii) any Interest Period that would otherwise extend beyond
the Scheduled Revolving Credit Termination Date or beyond the date
final payment is due on the Term Loans shall end on the Revolving
Credit Termination Date or such due date, as applicable; and
(iii) any Interest Period that begins on the last Business Day
of a calendar month (or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period) shall end on the last Business Day of a calendar month.
"Investments": as defined in Section 6.7.
"LCPI": as defined in the preamble hereto.
"Lender Addendum": with respect to any initial Lender, a Lender
Addendum, substantially in the form of Exhibit H, to be executed and
delivered by such Lender on the Closing Date as provided in Section 9.16.
"Lenders": as defined in the preamble hereto.
"Lien": any mortgage, pledge, hypothecation, assignment in the
nature of a security interest, deposit arrangement, lien (statutory or
other), charge or other security interest or any similar encumbrance or
other security agreement or similar arrangement of any kind or nature
whatsoever (including, without limitation, any conditional sale or other
title retention agreement and any capital lease having substantially the
same economic effect as any of the foregoing).
<PAGE>
17
"Line": a line (whether switched, resale, UNE-P or any other type)
in service made available by the Borrower or any of its Subsidiaries to a
bona fide customer for telecommunications services which have been
provisioned and have been provided by the Borrower and its Subsidiaries.
"Loan": any loan made by any Lender pursuant to this Agreement.
"Majority Facility Lenders": with respect to any Facility, the
holders of more than 50% of the aggregate unpaid principal amount of the
Total Revolving Extensions of Credit or the Term Loans, as the case may
be, outstanding under such Facility (or (i) in the case of the Revolving
Credit Facility, prior to any termination of the Revolving Credit
Commitments, the holders of more than 50% of the Total Revolving Credit
Commitments or (ii) in the case of the Term Loan Facility, prior to any
termination of the Term Loan Commitments, the holders of more than 50% of
the Term Loan Commitments).
"Material Adverse Effect": a material adverse effect on (a) the
business, properties, assets or financial condition of the Company and its
Subsidiaries taken as a whole or (b) the validity or enforceability of
this Agreement and the other Credit Documents or the rights or remedies of
the Agents or the Lenders hereunder or thereunder, in each case taken as a
whole.
"Materials of Environmental Concern": any gasoline or petroleum
(including crude oil or any fraction thereof) or petroleum products,
polychlorinated biphenyls, urea-formaldehyde insulation, asbestos,
pollutants, contaminants, radioactivity, and any other substances or
forces of any kind, whether or not any such substance or force is defined
as hazardous or toxic under any Environmental Law, that is regulated
pursuant to or could give rise to liability under any Environmental Law.
"Mortgaged Properties": any real property acquired after the
Original Closing Date that is required to be subject to a Mortgage
pursuant to Section 5.9(b), and ancillary rights relating thereto, as to
which the Administrative Agent for the benefit of the Lenders shall be
granted a Lien pursuant to the Mortgages.
"Mortgages": each of the mortgages and deeds of trust made by any
Credit Party in favor of, or for the benefit of, the Administrative Agent
(and/or one or more trustees or other Persons designated therein) for the
benefit of the Lenders, in form and substance satisfactory to the
Administrative Agent, executed and delivered by the Borrower or one of its
Subsidiaries pursuant to Section 5.9(b), as the same may be amended,
supplemented or otherwise modified from time to time.
"Multiemployer Plan": a Plan which is a multiemployer plan as
defined in Section 4001(a)(3) of ERISA.
<PAGE>
18
"Net Cash Proceeds": (a) in connection with any Asset Sale or any
Recovery Event, the proceeds thereof in the form of cash and Cash
Equivalents (including any such proceeds received by way of deferred
payment of principal pursuant to a note or installment receivable or
purchase price adjustment receivable or otherwise, but only as and when
received) of such Asset Sale or Recovery Event, net of attorneys' fees,
accountants' fees, investment banking fees, amounts required to be applied
to the repayment of Indebtedness as a result of such event, including
Indebtedness secured by a Lien expressly permitted hereunder on any asset
which is the subject of such Asset Sale or Recovery Event (other than any
Lien pursuant to a Security Document) and other customary fees and
expenses actually incurred in connection therewith and net of taxes paid
or reasonably estimated to be payable as a result thereof (after taking
into account any available tax credits or deductions and any tax sharing
arrangements) and (b) in connection with any issuance or sale of equity
securities or debt securities or instruments or the incurrence of loans,
the cash proceeds received from such issuance or incurrence, net of
attorneys' fees, investment banking fees, accountants' fees, underwriting
discounts and commissions and other customary fees and expenses actually
incurred in connection therewith.
"Non-Excluded Taxes": as defined in Section 2.20(a).
"Non-U.S. Lender": as defined in Section 2.20(d).
"Notes": the collective reference to any promissory note evidencing
Loans.
"Notice of Borrowing": a request by the Borrower that the relevant
Lenders make Loans hereunder, substantially in the form of Exhibit I.
"Obligations": the unpaid principal of and interest on (including,
without limitation, interest accruing after the maturity of the Loans and
interest accruing after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding,
relating to the Borrower, whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding) the Loans and all
other obligations and liabilities of the Borrower and the other Credit
Parties to the Administrative Agent or to any Lender (or, in the case of
Hedge Agreements, any Affiliate of any Lender), whether direct or
indirect, absolute or contingent, due or to become due, or now existing or
hereafter incurred, which may arise under, out of, or in connection with,
this Agreement, any other Credit Document, any Hedge Agreement entered
into with any Lender or any Affiliate of any Lender or any other document
made, delivered or given in connection herewith or therewith, whether on
account of principal, interest, reimbursement obligations, fees,
indemnities, costs, expenses (including, without limitation, all fees,
charges and disbursements of counsel to the Administrative Agent or to any
Lender that are required to be paid by the Borrower pursuant hereto or
thereto) or otherwise.
"Original Closing Date": December 20, 1999.
<PAGE>
19
"Other Taxes": any and all present or future stamp or documentary
taxes or any other excise or property taxes, charges or similar levies
arising from any payment made hereunder or from the execution, delivery or
enforcement of, or otherwise with respect to, this Agreement or any other
Credit Document.
"Participant": as defined in Section 9.6(b).
"Payment Office": the office specified from time to time by the
Administrative Agent as its payment office by notice to the Borrower and
the Lenders.
"PBGC": the Pension Benefit Guaranty Corporation established
pursuant to Subtitle A of Title IV of ERISA (or any successor).
"Permitted Equipment Financing": one or more purchase money, vendor
or similar equipment financing facilities (including leases) (i) in an
aggregate principal amount not in excess of $25,000,000 outstanding at any
time, (ii) pursuant to which the Company or any of its Subsidiaries may be
advanced funds principally for, and substantially concurrent with, the
purchase or lease of network equipment or services, or such type of
financing existing in respect of such Property at the time of the
acquisition thereof, (iii) which may be secured only by the assets being
financed thereby and (iv) the terms of which are reasonably satisfactory
to the Administrative Agent (and not objected to by the Required Lenders
within five Business Days after the Borrower notifies the Lenders of the
terms thereof in reasonable detail).
"Permitted Investors": the collective reference to (i) Kohlberg
Kravis Roberts & Co. L.P. and its Control Investment Affiliates and (ii)
each Person listed in Schedule 1.1.
"Person": an individual, partnership, corporation, limited liability
company, business trust, joint stock company, trust, unincorporated
association, joint venture, Governmental Authority or other entity of
whatever nature.
"Plan": at a particular time, any employee benefit plan which is
covered by ERISA and in respect of which the Company or a Commonly
Controlled Entity is (or, if such plan were terminated at such time, would
under Section 4069 of ERISA be deemed to be) an "employer" as defined in
Section 3(5) of ERISA.
"Pledged Stock": all Capital Stock or other equity interests, now
owned or hereafter acquired, upon which a Lien is purported to be created
by a Security Document.
"Preferred Stock Purchase Agreement": the Series F Preferred Stock
Purchase Agreement dated as of July 13, 1999 by and among the Company and
BTI Ventures L.L.C.
"Pricing Grid": the pricing grid attached hereto as Schedule I.
<PAGE>
20
"Prime Rate": as defined in the definition of "Base Rate" in this
Section.
"Principal Payment Dates": the last Business Day of March, June,
September and December of each year, commencing with such day falling on
or nearest to March 31, 2003.
"Pro Forma Consolidated Debt Service": at any date, the sum, without
duplication, of (a) Consolidated Interest Expense and (b) all scheduled
amortization (including any payment or prepayment of principal of,
premium, if any, or interest on, or redemption, purchase, retirement,
defeasance (including in-substance or legal defeasance), sinking, fund or
similar payment) in respect of Indebtedness; in each case payable by the
Company and its Subsidiaries during the next four consecutive fiscal
quarters.
"Pro Forma Debt Service Coverage Ratio": the ratio as of the last
day of any fiscal quarter of (a) Annualized Consolidated EBITDA to (b) Pro
Forma Consolidated Debt Service for the next four consecutive fiscal
quarters.
"Projected Financial Statements": as defined in Section 3.1(b).
"Projections": as defined in Section 5.2(c).
"Property": any right or interest in or to property of any kind
whatsoever, whether real, personal or mixed and whether tangible or
intangible, including, without limitation, Capital Stock.
"Recovery Event": any settlement of or payment in respect of any
property or casualty insurance claim or any condemnation proceeding
relating to any asset of the Company or any of its Subsidiaries.
"Reference Lender": Bankers Trust Company (or such other commercial
bank designated as such by the Administrative Agent with the consent of
the Borrower, such consent not to be unreasonably withheld).
"Refunded Swing Line Loans": as defined in Section 2.7.
"Refunding Date": as defined in Section 2.7.
"Register": as defined in Section 9.6(d).
"Regulation U": Regulation U of the Board as in effect from time to
time.
"Reinvestment Deferred Amount": with respect to any Reinvestment
Event, the aggregate Net Cash Proceeds received by the Company or any of
its Subsidiaries in
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21
connection therewith which are not applied to prepay the Term Loans or
reduce the Revolving Credit Commitments or the Term Loan Commitments
pursuant to Section 2.12(b) as a result of the delivery of a Reinvestment
Notice.
"Reinvestment Event": any Asset Sale or Recovery Event in respect of
which the Borrower has delivered a Reinvestment Notice.
"Reinvestment Notice": a written notice executed by a Responsible
Officer stating that no Default or Event of Default has occurred and is
continuing and that the Company (indirectly through a Subsidiary) intends
and expects to use all or a specified portion of the Net Cash Proceeds of
an Asset Sale or Recovery Event to acquire assets useful in the business
of the Company and its Subsidiaries.
"Reinvestment Prepayment Amount": with respect to any Reinvestment
Event, the Reinvestment Deferred Amount relating thereto less any amount
expended prior to the relevant Reinvestment Prepayment Date to acquire
assets useful in the business of the Company and its Subsidiaries.
"Reinvestment Prepayment Date": with respect to any Reinvestment
Event, the earlier of (a) the date occurring one year after such
Reinvestment Event and (b) the date on which the Company shall have
determined not to, or shall have otherwise ceased to, acquire assets
useful in the business of the Company and its Subsidiaries with all or any
portion of the relevant Reinvestment Deferred Amount.
"Reorganization": with respect to any Multiemployer Plan, the
condition that such plan is in reorganization within the meaning of
Section 4241 of ERISA.
"Reportable Event": any of the events set forth in Section 4043(c)
of ERISA, other than those events as to which the thirty day notice period
is waived under subsections .27, .28, .29, .30, .31, .32, .34 or .35 of
PBGC Reg. ss.4043.
"Required Lenders": at any time, the holders of more than 50% of the
sum of (i) the Term Loan Commitments then in effect or, if the Term Loan
Commitments have been terminated, the aggregate unpaid principal amount of
the Term Loans then outstanding and (ii) the Total Revolving Credit
Commitments then in effect or, if the Revolving Credit Commitments have
been terminated, the Total Revolving Extensions of Credit then
outstanding.
"Requirement of Law": as to any Person, the Certificate of
Incorporation and By-Laws or other organizational or governing documents
of such Person, and any law, treaty, rule or regulation or determination
of an arbitrator or a court or other Governmental Authority, in each case
applicable to or binding upon such Person or any of its Property or to
which such Person or any of its Property is subject.
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22
"Responsible Officer": the chief executive officer, president,
senior vice president or chief financial officer of the Company and the
Borrower, but in any event, with respect to financial matters, the chief
financial officer of the Company and the Borrower or senior officer
fulfilling equivalent duties.
"Restricted Payments": as defined in Section 6.6.
"Revenues": for any period, the gross revenues of the Company and
its Subsidiaries on a consolidated basis for such period determined in
accordance with GAAP.
"Revolving Credit Commitment": as to any Lender, the obligation of
such Lender, if any, to make Revolving Credit Loans and participate in
Swing Line Loans, in an aggregate principal amount not to exceed the
amount set forth under the heading "Revolving Credit Commitment" opposite
such Lender's name on Schedule I to the Lender Addendum delivered by such
Lender, or, as the case may be, in the Assignment and Acceptance pursuant
to which such Lender became a party hereto, as the same may be changed
from time to time pursuant to the terms hereof. The original amount of the
Total Revolving Credit Commitments is $25,000,000.
"Revolving Credit Commitment Period": the period from and including
the Closing Date to the Revolving Credit Termination Date.
"Revolving Credit Facility": as defined in the definition of
"Facility" in this Section.
"Revolving Credit Lender": each Lender which has a Revolving Credit
Commitment or which is the holder of Revolving Credit Loans.
"Revolving Credit Loans": as defined in Section 2.4.
"Revolving Credit Note": any Note evidencing a Lender's Revolving
Credit Commitment and Revolving Credit Loans made thereunder,
substantially in the form of Exhibit F-2.
"Revolving Credit Percentage": as to any Revolving Credit Lender at
any time, the percentage which such Lender's Revolving Credit Commitment
then constitutes of the Total Revolving Credit Commitments (or, at any
time after the Revolving Credit Commitments shall have expired or
terminated, the percentage which the aggregate principal amount of such
Lender's Revolving Credit Loans then outstanding constitutes of the
aggregate principal amount of the Revolving Credit Loans then
outstanding).
"Revolving Credit Termination Date": the earlier of (a) the
Scheduled Revolving Credit Termination Date and (b) the date on which the
Term Loans shall be paid in full.
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23
"Revolving Extensions of Credit": as to any Revolving Credit Lender
at any time, an amount equal to the sum of (a) the aggregate principal
amount of all Revolving Credit Loans made by such Lender then outstanding
and (b) such Lender's Revolving Credit Percentage of the aggregate
principal amount of Swing Line Loans then outstanding.
"Scheduled Revolving Credit Termination Date": December 31, 2006.
"SEC": the Securities and Exchange Commission (or successors thereto
or an analogous Governmental Authority).
"Security Documents": the collective reference to the Guarantee and
Collateral Agreement, the Mortgages and all other security documents
hereafter delivered to the Administrative Agent granting a Lien on any
Property of any Person to secure the obligations and liabilities of any
Credit Party under any Credit Document.
"Senior Leverage Ratio": the ratio as of the last day of any fiscal
quarter of (i) Senior Secured Debt on such day to (ii) Annualized
Consolidated EBITDA.
"Senior Secured Debt": an amount equal to the sum of aggregate
principal amount of all outstanding Loans and the outstanding principal
amount of all Permitted Equipment Financings and all Capital Lease
Obligations of, in each case, the Company and its Subsidiaries.
"Single Employer Plan": any Plan which is covered by Title IV of
ERISA, but which is not a Multiemployer Plan.
"Solvent": as of any date of determination, (a) the amount of the
"present fair saleable value" of the assets of the Company and its
Subsidiaries, taken as a whole, will, as of such date, exceed the amount
of all "liabilities, contingent or otherwise" of the Company and its
Subsidiaries, taken as a whole, as of such date, as such quoted terms are
determined in accordance with applicable federal and state laws governing
determinations of the insolvency of debtors, (b) the present fair saleable
value of the assets of the Company and its Subsidiaries, taken as a whole,
will, as of such date, be greater than the amount that will be required to
pay the liability of the Company and its Subsidiaries, taken as a whole,
on their respective debts as such debts become absolute and matured, (c)
the Company and each of its Subsidiaries will not have, as of such date,
an unreasonably small amount of capital with which to conduct its
business, and (d) the Company and each of its Subsidiaries will be able to
pay its debts as they mature. For purposes of this definition, (i) "debt"
means liability on a "claim", and (ii) "claim" means any (x) right to
payment, whether or not such a right is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed,
legal, equitable, secured or unsecured or (y) right to an equitable remedy
for breach of performance if such breach gives rise to a right to payment,
whether or not such right to an equitable remedy is reduced to judgment,
fixed, contingent, matured or unmatured, disputed, undisputed, secured or
unsecured.
<PAGE>
24
"Stage 1": the period from the Original Closing Date to June 30,
2001.
"Stage 2": the period from and after June 30, 2001.
"Subsidiary": as to any Person, a corporation, partnership, limited
liability company or other entity of which shares of stock or other
ownership interests having ordinary voting power (other than stock or such
other ownership interests having such power only by reason of the
happening of a contingency) to elect a majority of the board of directors
or other managers of such corporation, partnership or other entity are at
the time owned, or the management of which is otherwise controlled,
directly or indirectly through one or more intermediaries, or both, by
such Person. Unless otherwise qualified, all references to a "Subsidiary"
or to "Subsidiaries" in this Agreement shall refer to a Subsidiary or
Subsidiaries of the Company.
"Subsidiary Guarantor": each Subsidiary of the Company other than
the Borrower.
"Swing Line Commitment": the obligation of the Swing Line Lender to
make Swing Line Loans pursuant to Section 2.6 in an aggregate principal
amount at any one time outstanding not to exceed $5,000,000.
"Swing Line Lender": LCPI, in its capacity as the lender of Swing
Line Loans.
"Swing Line Loans": as defined in Section 2.6.
"Swing Line Note": the Note evidencing the Swing Line Lender's Swing
Line Commitment and each Swing Line Loan made thereunder, substantially in
the form of Exhibit F-3.
"Swing Line Participation Amount": as defined in Section 2.7.
"Syndication Agent": Bankers Trust Company.
"Term Loans": as defined in Section 2.1.
"Term Loan Facility": as defined in the definition of "Facility" in
this Section.
"Term Loan Commitment": as to any Lender, the obligation of such
Lender, if any, to make one or more Term Loans to the Borrower hereunder
in an aggregate principal amount not to exceed the amount set forth under
the heading "Term Loan Commitment" opposite such Lender's name on Schedule
I to the Lender Addendum delivered by such Lender, or, as the case may be,
in the Assignment and Acceptance pursuant to which such Lender became a
party hereto, as the same may be changed from
<PAGE>
25
time to time pursuant to the terms hereof. The original aggregate amount
of the Term Loan Commitments is $100,000,000.
"Term Loan Commitment Period": the period from and including the
Closing Date to the Term Loan Commitment Termination Date.
"Term Loan Commitment Termination Date": December 20, 2000.
"Term Loan Lender": each Lender which has a Term Loan Commitment or
is the holder of a Term Loan.
"Term Loan Maturity Date": December 31, 2006.
"Term Loan Percentage": as to a Term Loan Lender at any time, the
percentage which such Lender's Term Loan Commitment then constitutes of
the aggregate Term Loan Commitments (or, at any time after the Term Loan
Commitments shall have expired or terminated, the percentage which the
aggregate principal amount of such Lender's Term Loans then outstanding
constitutes of the aggregate principal amount of the Term Loans then
outstanding).
"Term Note": any Note evidencing a Lender's Term Loan Commitment and
Term Loans of any Class, substantially in the form of Exhibit F-1.
"Three-Month Secondary CD Rate": as defined in the definition of
"Base Rate" in this Section.
"Total Capitalization": the sum of (a) Consolidated Total Debt and
(b) paid-in-equity capital of the Company (including preferred stock but
excluding additional equity issued as pay-in-kind dividends on issued and
outstanding equity securities) and excluding any accumulated deficits
resulting from operations, determined on a consolidated basis in
accordance with GAAP.
"Total Leverage Ratio": the ratio as at the last day of any fiscal
quarter of (a) Consolidated Total Debt on such day to (b) Annualized
Consolidated EBITDA.
"Total Revolving Credit Commitments": at any time, the aggregate
amount of the Revolving Credit Commitments then in effect.
"Total Revolving Extensions of Credit": at any time, the aggregate
amount of the Revolving Extensions of Credit of the Revolving Credit
Lenders outstanding at such time.
"Transferee": as defined in Section 9.14.
"Type": as to any Loan, its nature as a Base Rate Loan or a
Eurodollar Loan.
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26
"Wholly Owned Subsidiary": as to any Person, any other Person all of
the Capital Stock of which (other than directors' qualifying shares
required by law) is owned by such Person directly and/or through other
Wholly Owned Subsidiaries.
1.2 Other Definitional Provisions. (a) Unless otherwise specified
therein, all terms defined in this Agreement shall have the defined meanings
when used in the other Credit Documents or any certificate or other document
made or delivered pursuant hereto or thereto.
(b) As used herein and in the other Credit Documents, and any
certificate or other document made or delivered pursuant hereto or thereto,
accounting terms relating to the Company and its Subsidiaries not defined in
Section 1.1 and accounting terms partly defined in Section 1.1, to the extent
not defined, shall have the respective meanings given to them under GAAP. As
used herein, "fiscal quarter" or "fiscal year" shall refer to the relevant
fiscal quarter or fiscal year, respectively, of the Company.
(c) The words "hereof", "herein" and "hereunder" and words of
similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section,
Schedule and Exhibit references are to this Agreement unless otherwise
specified.
(d) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
SECTION 2. AMOUNT AND TERMS OF COMMITMENTS
2.1 Term Loan Commitments. (a) Subject to the terms and conditions
hereof, each Term Loan Lender severally agrees to make term loans ("Term Loans")
to the Borrower during the Term Loan Commitment Period in an aggregate amount
not exceeding the amount of the Term Loan Commitment of such Lender. The Term
Loans may from time to time be Eurodollar Loans or Base Rate Loans, as
determined by the Borrower and notified to the Administrative Agent in
accordance with Sections 2.2 and 2.13.
(b) Any unused portion of the Term Loan Commitments shall
automatically terminate at 5:00 p.m. (New York City time) on the Term Loan
Commitment Termination Date.
2.2 Procedure for Term Loan Borrowing. The Borrower may borrow under
the Term Loan Commitments during the Term Loan Commitment Period on any Business
Day; provided that the Borrower shall give the Administrative Agent irrevocable
notice (by delivering to the Administrative Agent a Notice of Borrowing, which
Notice of Borrowing must be received by the Administrative Agent prior to 12:00
Noon, New York City time, (a) three Business Days prior to the requested
Borrowing Date, in the case of Eurodollar Loans, or (b) one Business Day prior
to the requested Borrowing Date, in the case of Base Rate Loans), specifying (i)
the amount and Type of Term Loans to be borrowed, (ii) the requested Borrowing
Date and (iii) in the case
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27
of Eurodollar Loans, the length of the initial Interest Period therefor. Each
borrowing under the Term Loan Commitments shall be in an amount equal to (x) in
the case of Base Rate Loans, $1,000,000 or a whole multiple of $100,000 in
excess thereof (or, if the then aggregate Available Term Loan Commitments are
less than $1,000,000, such lesser amount) and (y) in the case of Eurodollar
Loans, $1,000,000 or a whole multiple of $100,000 in excess thereof; provided
that, notwithstanding the foregoing, the Borrower may borrow Base Rate Loans
under the Term Loan Commitments on the Closing Date so long as the Notice of
Borrowing with respect thereto is delivered to the Administrative Agent prior to
12:00 Noon, New York time on such date. Upon receipt of such notice the
Administrative Agent shall promptly notify each Term Loan Lender thereof. Each
Term Lender will make the amount of its pro rata share of each borrowing
available to the Administrative Agent for the account of the Borrower at the
Funding Office prior to 12:00 Noon, New York City time, on the Borrowing Date
requested by the Borrower in funds immediately available to the Administrative
Agent. Such borrowing will then be made available to the Borrower, upon its
instructions, by the Administrative Agent in like funds as received by the
Administrative Agent.
2.3 Repayment of Term Loans. The Term Loan(s) of each Term Loan
Lender shall mature in 16 consecutive quarterly installments on the Principal
Payment Dates specified below, each of which shall be in an amount equal to such
Lender's Term Loan Percentage multiplied by the percentage set forth below
opposite such day of the aggregate principal amount of the Term Loans
outstanding on the Term Loan Commitment Termination Date:
Principal Payment
Date Falling on or
Nearest to Percentage
------------------- ----------
March 31, 2003 2.5%
June 30, 2003 2.5%
September 30, 2003 2.5%
December 31, 2003 2.5%
March 31, 2004 5.0%
June 30, 2004 5.0%
September 30, 2004 5.0%
December 31, 2004 5.0%
March 31, 2005 7.5%
June 30, 2005 7.5%
September 30, 2005 7.5%
December 31, 2005 7.5%
March 31, 2006 10.0%
June 30, 2006 10.0%
September 30, 2006 10.0%
December 31, 2006 10.0%
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28
To the extent not previously paid, all Term Loans shall be due and payable on
the Term Loan Maturity Date.
2.4 Revolving Credit Commitments. (a) Subject to the terms and
conditions hereof, each Revolving Credit Lender severally agrees to make
revolving credit loans ("Revolving Credit Loans") to the Borrower from time to
time during the Revolving Credit Commitment Period in an aggregate principal
amount at any one time outstanding which, when added to such Lender's Revolving
Credit Percentage of the aggregate principal amount of the Swing Line Loans then
outstanding, does not exceed the amount of such Lender's Revolving Credit
Commitment. During the Revolving Credit Commitment Period the Borrower may use
the Revolving Credit Commitments by borrowing, prepaying the Revolving Credit
Loans in whole or in part, and reborrowing, all in accordance with the terms and
conditions hereof. The Revolving Credit Loans may from time to time be
Eurodollar Loans or Base Rate Loans, as determined by the Borrower and notified
to the Administrative Agent in accordance with Sections 2.5 and 2.13.
(b) The Borrower shall repay all outstanding Revolving Credit Loans
on the Revolving Credit Termination Date.
(c) The Total Revolving Credit Commitments shall be automatically
reduced on each Commitment Reduction Date specified below to the aggregate
amount set forth opposite such date (unless the Revolving Credit Commitments
shall theretofore have been reduced to or below such amount):
Commitment Reduction Reduced
Date Falling or Commitment
Nearest to Amount
-------------------- ------------
March 31, 2003 $24,375,000
June 30, 2003 $23,750,000
September 30, 2003 $23,125,000
December 31, 2003 $22,500,000
March 31, 2004 $21,875,000
June 30, 2004 $21,250,000
September 30, 2004 $20,625,000
December 31, 2004 $20,000,000
March 31, 2005 $19,375,000
June 30, 2005 $18,750,000
September 30, 2005 $18,125,000
December 31, 2005 $17,500,000
March 31, 2006 $13,125,000
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29
June 30, 2006 $8,750,000
September 30, 2006 $4,375,000
December 31, 2006 $0
; provided that if upon any date after giving effect to such reduction the Total
Revolving Extensions of Credit shall exceed the amount of the Total Revolving
Credit Commitments as so reduced, the Borrowers shall prepay Revolving Credit
Loans and/or Swing Line Loans, if any, to the extent of such excess (such
prepayment to be applied, first, to Base Rate Loans and, second, on Eurodollar
Loans).
2.5 Procedure for Revolving Credit Borrowing. The Borrower may
borrow under the Revolving Credit Commitments during the Revolving Credit
Commitment Period on any Business Day; provided that the Borrower shall give the
Administrative Agent irrevocable notice (by delivering to the Administrative
Agent a Notice of Borrowing, which Notice of Borrowing must be received by the
Administrative Agent prior to 12:00 Noon, New York City time, (a) three Business
Days prior to the requested Borrowing Date, in the case of Eurodollar Loans, or
(b) one Business Day prior to the requested Borrowing Date, in the case of Base
Rate Loans), specifying (i) the amount and Type of Revolving Credit Loans to be
borrowed, (ii) the requested Borrowing Date and (iii) in the case of Eurodollar
Loans, the length of the initial Interest Period therefor. Each borrowing under
the Revolving Credit Commitments shall be in an amount equal to (x) in the case
of Base Rate Loans, $1,000,000 or a whole multiple of $100,000 in excess thereof
(or, if the then aggregate Available Revolving Credit Commitments are less than
$1,000,000, such lesser amount) and (y) in the case of Eurodollar Loans,
$1,000,000 or a whole multiple of $100,000 in excess thereof; provided that (i)
the Swing Line Lender may request, on behalf of the Borrower, borrowings under
the Revolving Credit Commitments which are Base Rate Loans in other amounts
pursuant to Section 2.7 and (ii) the Borrower may borrow Base Rate Loans under
the Revolving Credit Commitments on the Closing Date so long as the Notice of
Borrowing with respect thereto is delivered to the Administrative Agent prior to
12:00 Noon, New York time, on such date. Upon receipt of any such notice from
the Borrower, the Administrative Agent shall promptly notify each Revolving
Credit Lender thereof. Each Revolving Credit Lender will make the amount of its
pro rata share of each borrowing available to the Administrative Agent for the
account of the Borrower at the Funding Office prior to 12:00 Noon, New York City
time, on the Borrowing Date requested by the Borrower in funds immediately
available to the Administrative Agent. Such borrowing will then be made
available to the Borrower, upon its instructions, by the Administrative Agent in
like funds as received by the Administrative Agent.
2.6 Swing Line Commitment. (a) Subject to the terms and conditions
hereof, the Swing Line Lender agrees to make a portion of the credit otherwise
available to the Borrower under the Revolving Credit Commitments from time to
time during the Revolving Credit Commitment Period by making swing line loans
("Swing Line Loans") to the Borrower; provided that (i) the aggregate principal
amount of Swing Line Loans outstanding at any time shall not exceed the Swing
Line Commitment then in effect (notwithstanding that the Swing Line Loans
outstanding at any time, when aggregated with the Swing Line Lender's other
outstanding Revolving Credit Loans hereunder, may exceed the Swing Line
Commitment then in effect) and
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30
(ii) the Borrower shall not request, and the Swing Line Lender shall not make,
any Swing Line Loan if, after giving effect to the making of such Swing Line
Loan, the aggregate amount of the Available Revolving Credit Commitments would
be less than zero. During the Revolving Credit Commitment Period, the Borrower
may use the Swing Line Commitment by borrowing, repaying and reborrowing, all in
accordance with the terms and conditions hereof. Swing Line Loans shall be Base
Rate Loans only.
(b) The Borrower shall repay all outstanding Swing Line Loans on the
Revolving Credit Termination Date.
2.7 Procedure for Swing Line Borrowing; Refunding of Swing Line
Loans. (a) Whenever the Borrower desires that the Swing Line Lender make Swing
Line Loans it shall give the Swing Line Lender irrevocable telephonic notice
confirmed promptly in writing (which telephonic notice must be received by the
Swing Line Lender not later than 1:00 P.M., New York City time, on the proposed
Borrowing Date), specifying (i) the amount to be borrowed and (ii) the requested
Borrowing Date (which shall be a Business Day during the Revolving Credit
Commitment Period). Each borrowing under the Swing Line Commitment shall be in
an amount equal to $500,000 or a whole multiple of $100,000 in excess thereof.
Not later than 3:00 P.M., New York City time, on the Borrowing Date specified in
a notice in respect of Swing Line Loans, the Swing Line Lender shall make
available to the Administrative Agent at the Funding Office an amount in
immediately available funds equal to the amount of the Swing Line Loan to be
made by the Swing Line Lender. The Administrative Agent shall make the proceeds
of such Swing Line Loan available to the Borrower, upon its instructions, on
such Borrowing Date in immediately available funds.
(b) The Swing Line Lender, at any time and from time to time in its
sole and absolute discretion may, on behalf of the Borrower (which hereby
irrevocably directs the Swing Line Lender to act on its behalf), on one Business
Day's notice given by the Swing Line Lender no later than 12:00 Noon, New York
City time, request each Revolving Credit Lender to make, and each Revolving
Credit Lender hereby agrees to make, a Revolving Credit Loan, in an amount equal
to such Revolving Credit Lender's Revolving Credit Percentage of the aggregate
amount of the Swing Line Loans (the "Refunded Swing Line Loans") outstanding on
the date of such notice, to repay the Swing Line Lender. Each Revolving Credit
Lender shall make the amount of such Revolving Credit Loan available to the
Administrative Agent at the Funding Office in immediately available funds, not
later than 10:00 A.M., New York City time, one Business Day after the date of
such notice. The proceeds of such Revolving Credit Loans shall be immediately
made available by the Administrative Agent to the Swing Line Lender for
application by the Swing Line Lender to the repayment of the Refunded Swing Line
Loans.
(c) If prior to the time a Revolving Credit Loan would have
otherwise been made pursuant to Section 2.7(b), one of the events described in
Section 7(f) shall have occurred and be continuing with respect to the Borrower
or if for any other reason, as determined by the Swing Line Lender in its sole
discretion, Revolving Credit Loans may not be made as contemplated by Section
2.7(b), each Revolving Credit Lender shall, on the date such Revolving Credit
Loan was to have been made pursuant to the notice referred to in Section 2.7(b)
(the "Refunding Date"),
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31
purchase for cash an undivided participating interest in the then outstanding
Swing Line Loans by paying to the Swing Line Lender an amount (the "Swing Line
Participation Amount") equal to (i) such Revolving Credit Lender's Revolving
Credit Percentage times (ii) the sum of the aggregate principal amount of Swing
Line Loans then outstanding which were to have been repaid with such Revolving
Credit Loans.
(d) Whenever, at any time after the Swing Line Lender has received
from any Revolving Credit Lender such Lender's Swing Line Participation Amount,
the Swing Line Lender receives any payment on account of the Swing Line Loans,
the Swing Line Lender will distribute to such Lender its Swing Line
Participation Amount (appropriately adjusted, in the case of interest payments,
to reflect the period of time during which such Lender's participating interest
was outstanding and funded and, in the case of principal and interest payments,
to reflect such Lender's pro rata portion of such payment if such payment is not
sufficient to pay the principal of and interest on all Swing Line Loans then
due); provided, however, that in the event that such payment received by the
Swing Line Lender is required to be returned, such Revolving Credit Lender will
return to the Swing Line Lender any portion thereof previously distributed to it
by the Swing Line Lender.
(e) Each Revolving Credit Lender's obligation to make the Loans
referred to in Section 2.7(b) and to purchase participating interests pursuant
to Section 2.7(c) shall be absolute and unconditional and shall not be affected
by any circumstance, including, without limitation, (i) any setoff,
counterclaim, recoupment, defense or other right which such Revolving Credit
Lender or the Borrower may have against the Swing Line Lender, the Borrower or
any other Person for any reason whatsoever, (ii) the occurrence or continuance
of a Default or an Event of Default or the failure to satisfy any of the other
conditions specified in Section 4, (iii) any adverse change in the condition
(financial or otherwise) of the Borrower, (iv) any breach of this Agreement or
any other Credit Document by the Borrower, any other Credit Party or any other
Revolving Credit Lender, or (v) any other circumstance, happening or event
whatsoever, whether or not similar to any of the foregoing.
2.8 Repayment of Loans; Evidence of Debt. (a) The Borrower hereby
unconditionally promises to pay to the Administrative Agent for the account of
the appropriate Revolving Credit Lender or Term Loan Lender, as the case may be,
(i) the then unpaid principal amount of each Revolving Credit Loan of such
Revolving Credit Lender on the Revolving Credit Termination Date (or such
earlier date on which the Loans become due and payable pursuant to Section 7),
(ii) the then unpaid principal amount of each Swing Line Loan of such Swing Line
Lender on the Revolving Credit Termination Date (or such earlier date on which
the Loans become due and payable pursuant to Section 7) and (iii) the principal
amount of each Term Loan of such Term Loan Lender in installments according to
the amortization schedule set forth in Section 2.3 (or on such earlier date on
which the Loans become due and payable pursuant to Section 7). The Borrower
hereby further agrees to pay interest on the unpaid principal amount of the
Loans from time to time outstanding from the date hereof until payment in full
thereof at the rates per annum, and on the dates, set forth in Section 2.15.
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32
(b) Each Lender shall maintain in accordance with its usual practice
an account or accounts evidencing indebtedness of the Borrower to such Lender
resulting from each Loan of such Lender from time to time, including the amounts
of principal and interest payable and paid to such Lender from time to time
under this Agreement.
(c) The Administrative Agent, on behalf of the Borrower, shall
maintain the Register pursuant to Section 9.6(d), and a subaccount therein for
each Lender, in which shall be recorded (i) the amount of each Loan made
hereunder and any Note evidencing such Loan, the Type thereof and each Interest
Period applicable thereto, (ii) the amount of any principal or interest due and
payable or to become due and payable from the Borrower to each Lender hereunder
and (iii) both the amount of any sum received by the Administrative Agent
hereunder from the Borrower and each Lender's share thereof.
(d) The entries made in the Register and the accounts of each Lender
maintained pursuant to Section 2.8(b) shall, to the extent permitted by
applicable law, be prima facie evidence of the existence and amounts of the
obligations of the Borrower therein recorded; provided, however, that the
failure of any Lender or the Administrative Agent to maintain the Register or
any such account, or any error therein, shall not in any manner affect the
obligation of the Borrower to repay (with applicable interest) the Loans made to
such Borrower by such Lender in accordance with the terms of this Agreement.
(e) The Borrower agrees that, upon the request to the Administrative
Agent by any Lender, the Borrower will execute and deliver to such Lender a
promissory note of the Borrower evidencing any Term Loans, Revolving Credit
Loans or Swing Line Loans, as the case may be, of such Lender, substantially in
the forms of Exhibit F-1, F-2 or F-3, respectively, with appropriate insertions
as to date and principal amount.
2.9 Commitment Fees, etc. (a) The Borrower agrees to pay to the
Administrative Agent for the account of each Lender a commitment fee equal to
the Commitment Fee Rate multiplied by the average daily amount of the respective
Available Commitment of such Lender during the fiscal quarter then ended (or, if
applicable, shorter period commencing with the date upon which such Lender's
Commitment was in effect), payable quarterly in arrears on the last day of each
March, June, September and December and on (in the case of the Revolving Credit
Lenders) the Revolving Credit Termination Date or (in the case of the Term
Lenders) the Term Loan Commitment Termination Date, commencing on the first of
such dates to occur after the date hereof.
(b) The Borrower agrees to pay to the Administrative Agent the fees
in the amounts and on the dates from time to time agreed to in writing by the
Borrower and the Administrative Agent.
2.10 Termination or Reduction of Commitments. The Borrower shall
have the right, upon not less than three Business Days' notice to the
Administrative Agent, to terminate the Commitments or, from time to time, to
reduce the amount of the Commitments; provided that no such termination or
reduction of Revolving Credit Commitments shall be permitted if, after
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33
giving effect thereto and to any prepayments of the Revolving Credit Loans and
Swing Line Loans made on the effective date thereof, the Total Revolving
Extensions of Credit would exceed the Total Revolving Credit Commitments. Any
such reduction shall be in an amount equal to $1,000,000, or a whole multiple
thereof, and shall reduce permanently the relevant Commitments then in effect.
2.11 Optional Prepayments. The Borrower may at any time and from
time to time prepay the Loans, in whole or in part, without premium or penalty,
upon irrevocable notice delivered to the Administrative Agent at least three
Business Days prior thereto in the case of Eurodollar Loans and at least one
Business Day prior thereto in the case of Base Rate Loans, which notice shall
specify the date and amount of prepayment and whether the prepayment is of
Eurodollar Loans or Base Rate Loans; provided that if a Eurodollar Loan is
prepaid on any day other than the last day of the Interest Period applicable
thereto, the Borrower shall also pay any amounts owing pursuant to Section 2.21.
Upon receipt of any such notice the Administrative Agent shall promptly notify
each relevant Lender thereof. If any such notice is given, the amount specified
in such notice shall be due and payable on the date specified therein, together
with (except in the case of Revolving Credit Loans which are Base Rate Loans and
Swing Line Loans) accrued interest to such date on the amount prepaid. Partial
prepayments of Revolving Credit Loans and Term Loans shall be in an aggregate
principal amount of $1,000,000 or a whole multiple thereof. Partial prepayments
of Swing Line Loans shall be in an aggregate principal amount of $100,000 or a
whole multiple thereof.
2.12 Mandatory Prepayments and Commitment Reductions. (a) If on any
date the Company or any of its Subsidiaries shall receive Net Cash Proceeds from
any Asset Sale or Recovery Event then, unless a Reinvestment Notice shall be
delivered in respect thereof, such Net Cash Proceeds shall be applied on such
date toward the prepayment of the Term Loans and the reduction of the Revolving
Credit Commitments as set forth in Section 2.12(c); provided that,
notwithstanding the foregoing, on each Reinvestment Prepayment Date, an amount
equal to the Reinvestment Prepayment Amount with respect to the relevant
Reinvestment Event shall be applied toward the prepayment of the Term Loans and
the reduction of the Commitments as set forth in Section 2.12(c).
(b) If, for any fiscal year ending on or after December 31, 2003,
there shall be Excess Cash Flow, the Borrower shall, on the relevant Excess Cash
Flow Application Date, apply the ECF Percentage of such Excess Cash Flow toward
the prepayment of the Term Loans and the reduction of the Revolving Credit
Commitments as set forth in Section 2.12(c). Each such prepayment and commitment
reduction shall be made on a date (an "Excess Cash Flow Application Date") no
later than five days after the earlier of (i) the latest date on which the
financial statements of the Company referred to in Section 5.1(a), for the
fiscal year with respect to which such prepayment is made, are required to be
delivered to the Lenders and (ii) the date such financial statements are
actually delivered.
(c) Amounts to be applied in connection with prepayments and
Commitment reductions made pursuant to this Section shall be applied, first, to
reduce permanently the unused portion (if any) of Term Loan Commitments, second,
to the prepayment of the Term Loans and,
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34
finally, to reduce permanently the Revolving Credit Commitments. Any such
reduction of the Revolving Credit Commitments shall be accompanied by prepayment
of the Revolving Credit Loans and/or Swing Line Loans to the extent, if any,
that the Total Revolving Extensions of Credit exceed the amount of the Total
Revolving Credit Commitments as so reduced. The application of any prepayment
pursuant to this Section shall be made, first, to Base Rate Loans and, second,
to Eurodollar Loans. Each prepayment of the Loans under this Section (except in
the case of Revolving Credit Loans that are Base Rate Loans and Swing Line
Loans) shall be accompanied by accrued interest to the date of such prepayment
on the amount prepaid.
2.13 Conversion and Continuation Options. (a) The Borrower may elect
from time to time to convert Eurodollar Loans to Base Rate Loans by giving the
Administrative Agent at least two Business Days' prior irrevocable notice of
such election; provided that any such conversion of Eurodollar Loans may only be
made on the last day of an Interest Period with respect thereto. The Borrower
may elect from time to time to convert Base Rate Loans to Eurodollar Loans by
giving the Administrative Agent at least three Business Days' prior irrevocable
notice of such election (which notice shall specify the length of the initial
Interest Period therefor); provided that no Base Rate Loan under a particular
Facility may be converted into a Eurodollar Loan when any Event of Default has
occurred and is continuing and the Administrative Agent or the Majority Facility
Lenders in respect of such Facility have determined in its or their sole
discretion not to permit such conversion. Upon receipt of any such notice the
Administrative Agent shall promptly notify each relevant Lender thereof.
(b) Any Eurodollar Loan may be continued as such upon the expiration
of the then current Interest Period with respect thereto by the Borrower giving
irrevocable notice to the Administrative Agent, in accordance with the
applicable provisions of the term "Interest Period" set forth in Section 1.1, of
the length of the next Interest Period to be applicable to such Loans; provided
that no Eurodollar Loan under a particular Facility may be continued as such (i)
when any Event of Default has occurred and is continuing and the Administrative
Agent has or the Majority Facility Lenders in respect of such Facility have
determined in its or their sole discretion not to permit such continuations or
(ii) after the date that is one month prior to the final scheduled termination
or maturity date of such Facility, and provided, further, that if the Borrower
shall fail to give any required notice as described above in this paragraph or
if such continuation is not permitted pursuant to the preceding proviso such
Loans shall be automatically converted to Base Rate Loans on the last day of
such then expiring Interest Period. Upon receipt of any such notice the
Administrative Agent shall promptly notify each relevant Lender thereof.
2.14 Minimum Amounts and Maximum Number of Eurodollar Tranches.
Notwithstanding anything to the contrary in this Agreement, all borrowings,
conversions, continuations and optional prepayments of Eurodollar Loans
hereunder and all selections of Interest Periods hereunder shall be in such
amounts and be made pursuant to such elections so that, (a) after giving effect
thereto, the aggregate principal amount of the Eurodollar Loans comprising each
Eurodollar Tranche shall be equal to $5,000,000 or a whole multiple of $100,000
in excess thereof and (b) no more than 15 Eurodollar Tranches shall be
outstanding at any one time.
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35
2.15 Interest Rates and Payment Dates. (a) Each Eurodollar Loan
shall bear interest for each day during each Interest Period with respect
thereto at a rate per annum equal to the Eurodollar Rate determined for such day
plus the Applicable Margin.
(b) Each Base Rate Loan shall bear interest at a rate per annum
equal to the Base Rate plus the Applicable Margin.
(c) (i) If all or a portion of the principal amount of any Loan
shall not be paid when due (whether at the stated maturity, by acceleration or
otherwise), such overdue amount shall bear interest at a rate per annum which is
equal to the rate that would otherwise be applicable thereto pursuant to the
foregoing provisions of this Section plus 2% and (ii) if all or a portion of any
interest payable on any Loan or any commitment fee or other amount payable
hereunder shall not be paid when due (whether at the stated maturity, by
acceleration or otherwise), such overdue amount shall bear interest at a rate
per annum equal to the rate then applicable to Base Rate Loans under the
relevant Facility plus 2%, in each case, with respect to clauses (i) and (ii)
above, from the date of such non-payment until such amount is paid in full (as
well after as before judgment).
(d) Interest shall be payable in arrears on each Interest Payment
Date; provided that interest accruing pursuant to paragraph (c) of this Section
shall be payable from time to time on demand.
2.16 Computation of Interest and Fees. (a) Interest, fees and
commissions payable pursuant hereto shall be calculated on the basis of a
360-day year for the actual days elapsed, except that, with respect to Base Rate
Loans the rate of interest on which is calculated on the basis of the Prime
Rate, the interest thereon shall be calculated on the basis of a 365- (or 366-,
as the case may be) day year for the actual days elapsed. The Administrative
Agent shall as soon as practicable notify the Borrower and the relevant Lenders
of each determination of a Eurodollar Rate. Any change in the interest rate on a
Loan resulting from a change in the Base Rate or the Eurocurrency Reserve
Requirements shall become effective as of the opening of business on the day on
which such change becomes effective. The Administrative Agent shall as soon as
practicable notify the Borrower and the relevant Lenders of the effective date
and the amount of each such change in interest rate.
(b) Each determination of an interest rate by the Administrative
Agent pursuant to any provision of this Agreement shall be conclusive and
binding on the Borrower and the Lenders in the absence of manifest error. The
Administrative Agent shall, at the request of the Borrower, deliver to the
Borrower a statement showing the quotations used by the Administrative Agent in
determining any interest rate pursuant to Section 2.15(a).
2.17 Inability to Determine Interest Rate. If prior to the first day
of any Interest Period:
(a) the Administrative Agent shall have determined (which
determination shall be conclusive and binding upon the Borrower) that, by
reason of circumstances affecting the
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36
interbank eurodollar market arising after the date hereof, adequate and
reasonable means do not exist for ascertaining the Eurodollar Rate for
such Interest Period, or
(b) the Administrative Agent shall have received notice from the
Majority Facility Lenders in respect of the relevant Facility that, by
reason of circumstances arising after the date hereof affecting the
interbank eurodollar market, the Eurodollar Rate determined or to be
determined for such Interest Period will not adequately and fairly reflect
the cost to such Lenders (as conclusively certified by such Lenders) of
making or maintaining their affected Loans during such Interest Period,
the Administrative Agent shall give telecopy or telephonic notice thereof to the
Borrower and the relevant Lenders as soon as practicable thereafter. If such
notice is given (x) any Eurodollar Loans under the relevant Facility requested
to be made on the first day of such Interest Period shall be made as Base Rate
Loans, (y) any Loans under the relevant Facility that were to have been
converted on the first day of such Interest Period to Eurodollar Loans shall be
continued as Base Rate Loans and (z) any outstanding Eurodollar Loans under the
relevant Facility shall be converted, on the last day of the then current
Interest Period with respect thereto, to Base Rate Loans. Until such notice has
been withdrawn by the Administrative Agent, no further Eurodollar Loans under
the relevant Facility shall be made or continued as such, nor shall the Borrower
have the right to convert Loans under the relevant Facility to Eurodollar Loans.
2.18 Pro Rata Treatment and Payments. (a) Each borrowing by the
Borrower from the Lenders hereunder, each payment by the Borrower on account of
any commitment fee and any reduction of the Commitments of the Lenders shall be
made pro rata according to the respective Term Loan Percentages or Revolving
Credit Percentages, as the case may be, of the relevant Lenders. Each payment
(other than prepayments) in respect of principal or interest in respect of the
Loans, each payment in respect of fees payable hereunder shall be applied to the
amounts of such obligations owing to the Lenders pro rata according to the
respective amounts then due and owing to the Lenders.
(b) Each optional prepayment pursuant to Section 2.11 in respect of
the Term Loans shall be applied to the installments of such Loans, in each case
as the Borrower shall specify.
(c) Each payment (including each prepayment) of the Loans
outstanding under the Term Loan Facility shall be allocated among the Lenders
holding such Loans pro rata based on the principal amount of such Loans held by
such Lenders, and shall be applied to the installments of such Loans pro rata
based on the remaining outstanding principal amount of such installments.
Amounts prepaid on account of the Term Loans may not be reborrowed.
(d) Each payment (including each prepayment) by the Borrower on
account of principal of and interest on the Revolving Credit Loans shall be made
pro rata according to the respective outstanding principal amounts of the
Revolving Credit Loans then held by the Revolving Credit Lenders.
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37
(e) All payments (including prepayments) to be made by the Borrower
hereunder, whether on account of principal, interest, fees or otherwise, shall
be made without setoff or counterclaim and shall be made prior to 12:00 Noon,
New York City time, on the due date thereof to the Administrative Agent, for the
account of the respective Lenders, at the Payment Office, in Dollars and in
immediately available funds. The Administrative Agent shall distribute such
payments to the respective Lenders promptly upon receipt in like funds as
received. If any payment hereunder (other than payments on the Eurodollar Loans)
becomes due and payable on a day other than a Business Day, such payment shall
be extended to the next succeeding Business Day. If any payment on a Eurodollar
Loan becomes due and payable on a day other than a Business Day, the maturity
thereof shall be extended to the next succeeding Business Day unless the result
of such extension would be to extend such payment into another calendar month,
in which event such payment shall be made on the immediately preceding Business
Day. In the case of any extension of any payment of principal pursuant to the
preceding two sentences, interest thereon shall be payable at the then
applicable rate during such extension.
(f) Unless the Administrative Agent shall have been notified in
writing by any Lender prior to a borrowing that such Lender will not make the
amount that would constitute its share of such borrowing available to the
Administrative Agent, the Administrative Agent may assume that such Lender is
making such amount available to the Administrative Agent, and the Administrative
Agent may, in reliance upon such assumption, make available to the Borrower a
corresponding amount. If such amount is not made available to the Administrative
Agent by the required time on the Borrowing Date therefor, such Lender shall pay
to the Administrative Agent, on demand, such amount with interest thereon at a
rate equal to the daily average Federal Funds Effective Rate for the period
until such Lender makes such amount immediately available to the Administrative
Agent. A certificate of the Administrative Agent submitted to any Lender with
respect to any amounts owing under this paragraph shall be conclusive in the
absence of manifest error. If such Lender's share of such borrowing is not made
available to the Administrative Agent by such Lender within three Business Days
of such Borrowing Date, the Administrative Agent shall also be entitled to
recover such amount with interest thereon at the rate per annum applicable to
Base Rate Loans under the relevant Facility, on demand, from the Borrower.
(g) Unless the Administrative Agent shall have been notified in
writing by the Borrower prior to the date of any payment being made hereunder
that the Borrower will not make such payment to the Administrative Agent, the
Administrative Agent may assume that the Borrower is making such payment, and
the Administrative Agent may, but shall not be required to, in reliance upon
such assumption, make available to the Lenders their respective pro rata shares
of a corresponding amount. If such payment is not made to the Administrative
Agent by the Borrower within three Business Days of such required date, the
Administrative Agent shall be entitled to recover, on demand, from each Lender
to which any amount which was made available pursuant to the preceding sentence,
such amount with interest thereon at the rate per annum equal to the daily
average Federal Funds Effective Rate. Nothing herein shall be deemed to limit
the rights of the Administrative Agent or any Lender against the Borrower.
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38
2.19 Requirements of Law. (a) If the adoption of or any change in
any Requirement of Law or in the interpretation or application thereof or
compliance by any Lender with any request or directive (whether or not having
the force of law) from any central bank or other Governmental Authority, in each
case occurring or made subsequent to the date hereof:
(i) shall subject any Lender to any tax of any kind whatsoever with
respect to this Agreement or any Eurodollar Loan made by it, or change the
basis of taxation of payments to such Lender in respect thereof (except
for Non-Excluded Taxes covered by Section 2.20 and changes in the rate of
tax on the overall net income of such Lender);
(ii) shall impose, modify or hold applicable any reserve, special
deposit, compulsory loan or similar requirement against assets held by,
deposits or other liabilities in or for the account of, advances, loans or
other extensions of credit by, or any other acquisition of funds by, any
office of such Lender which is not otherwise included in the determination
of the Eurodollar Rate hereunder (including, without limitation, any
Eurocurrency Reserve Requirement); or
(iii) shall impose on such Lender any other condition;
and the result of any of the foregoing is to increase the cost to such Lender,
by an amount which such Lender deems to be material, of making, converting into,
continuing or maintaining Eurodollar Loans, or to reduce any amount receivable
hereunder in respect thereof, then, in any such case, the Borrower shall
promptly pay such Lender, upon its demand, any additional amounts necessary to
compensate such Lender for such increased cost or reduced amount receivable. If
any Lender becomes entitled to claim any additional amounts pursuant to this
Section, it shall promptly notify the Borrower (with a copy to the
Administrative Agent) of the event by reason of which it has become so entitled.
(b) If any Lender shall have determined that the adoption of or any
change in any Requirement of Law regarding capital adequacy or in the
interpretation or application thereof or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) from any Governmental
Authority, in each case occurring or made subsequent to the date hereof, shall
have the effect of reducing the rate of return on such Lender's or such
corporation's capital as a consequence of its obligations hereunder to a level
below that which such Lender or such corporation could have achieved but for
such adoption, change or compliance (taking into consideration such Lender's or
such corporation's policies with respect to capital adequacy) by an amount
deemed by such Lender to be material, then from time to time, after submission
by such Lender to the Borrower (with a copy to the Administrative Agent) of a
written request therefor, the Borrower shall pay to such Lender such additional
amount or amounts as will compensate such Lender for such reduction; provided
that the Borrower shall not be required to compensate a Lender pursuant to this
paragraph for any increased costs or reductions incurred more than 120 days
prior to the date that such Lender notifies the Borrower of the Requirement of
Law giving rise to such increased costs or reductions and of such Lender's
intention to claim compensation therefor; and provided, further, that, if the
circumstances giving rise to such claim have a
<PAGE>
39
retroactive effect, then such 120 day period shall be extended to include the
period of such retroactive effect.
(c) A certificate as to any additional amounts payable pursuant to
this Section submitted by any Lender to the Borrower (with a copy to the
Administrative Agent) shall be conclusive in the absence of manifest error. The
obligations of the Borrower pursuant to this Section shall survive the
termination of this Agreement and the payment of the Loans and all other amounts
payable hereunder.
2.20 Taxes. (a) All payments made by the Borrower under this
Agreement shall be made free and clear of, and without deduction or withholding
for or on account of, any present or future income, stamp or other taxes,
levies, imposts, duties, charges, fees, deductions or withholdings, now or
hereafter imposed, levied, collected, withheld or assessed by any Governmental
Authority, excluding net income taxes and franchise taxes (imposed in lieu of
net income taxes) imposed on any Agent or any Lender as a result of a present or
former connection between such Agent or such Lender and the jurisdiction of the
Governmental Authority imposing such tax or any political subdivision or taxing
authority thereof or therein (other than any such connection arising solely from
such Agent or such Lender having executed, delivered or performed its
obligations or received a payment under, or enforced, this Agreement or any
other Credit Document). If any such non-excluded taxes, levies, imposts, duties,
charges, fees, deductions or withholdings ("Non-Excluded Taxes") or Other Taxes
are required to be withheld from any amounts payable to any Agent or any Lender
hereunder, the amounts so payable to such Agent or such Lender shall be
increased to the extent necessary to yield to such Agent or such Lender (after
payment of all Non-Excluded Taxes and Other Taxes) interest or any such other
amounts payable hereunder at the rates or in the amounts specified in this
Agreement; provided, however, that the Borrower shall not be required to
increase any such amounts payable to any Lender with respect to any Non-Excluded
Taxes (i) that are attributable to such Lender's failure to comply with the
requirements of paragraph (d) or (e) of this Section or (ii) that are United
States withholding taxes imposed on amounts payable to such Lender at the time
the Lender becomes a party to this Agreement, except to the extent that such
Lender's assignor (if any) was entitled, at the time of assignment, to receive
additional amounts from the Borrower with respect to such Non-Excluded Taxes
pursuant to Section 2.20(a).
(b) In addition, the Borrower shall pay any Other Taxes to the
relevant Governmental Authority in accordance with applicable law.
(c) Whenever any Non-Excluded Taxes or Other Taxes are payable by
the Borrower, as promptly as possible thereafter the Borrower shall send to the
Administrative Agent for the account of the Administrative Agent or Lender, as
the case may be, a certified copy of an original official receipt received by
the Borrower showing payment thereof. If the Borrower fails to pay any
Non-Excluded Taxes or Other Taxes when due to the appropriate taxing authority
or fails to remit to the Administrative Agent the required receipts or other
required documentary evidence, the Borrower shall indemnify the Administrative
Agent and the Lenders for any incremental taxes, interest or penalties that may
become payable by any Agent or any Lender as a
<PAGE>
40
result of any such failure. The agreements in this Section shall survive the
termination of this Agreement and the payment of the Loans and all other amounts
payable hereunder.
(d) Each Lender (or Transferee) that is not U.S. person as defined
in Section 7701(a)(30) of the Code (a "Non-U.S. Lender") shall deliver to the
Borrower and the Administrative Agent (or, in the case of a Participant, to the
Lender from which the related participation shall have been purchased) two
copies of either U.S. Internal Revenue Service Form W-8 BEN or Form W-8 ECI, or,
in the case of a Non-U.S. Lender claiming exemption from U.S. federal
withholding tax under Section 871(h) or 881(c) of the Code with respect to
payments of "portfolio interest" a statement substantially in the form of
Exhibit G and a Form W-8 BEN, or any subsequent versions thereof or successors
thereto properly completed and duly executed by such Non-U.S. Lender claiming
complete exemption from, or a reduced rate of, U.S. federal withholding tax on
all payments by the Borrower under this Agreement and the other Credit
Documents. Such forms shall be delivered by each Non-U.S. Lender on or before
the date it becomes a party to this Agreement (or, in the case of any
Participant, on or before the date such Participant purchases the related
participation). In addition, each Non-U.S. Lender shall deliver such forms
promptly upon the obsolescence or invalidity of any form previously delivered by
such Non-U.S. Lender. Each Non-U.S. Lender shall promptly notify the Borrower at
any time it determines that it is no longer in a position to provide any
previously delivered certificate to the Borrower (or any other form of
certification adopted by the U.S. taxing authorities for such purpose).
Notwithstanding any other provision of this paragraph, a Non-U.S. Lender shall
not be required to deliver any form pursuant to this paragraph that such
Non-U.S. Lender is not legally able to deliver.
(e) A Lender that is entitled to an exemption from or reduction of
non-U.S. withholding tax, with respect to payments under this Agreement shall
deliver to the Borrower (with a copy to the Administrative Agent), at the time
or times reasonably requested by the Borrower, such properly completed and
executed documentation prescribed by applicable law as will permit such payments
to be made without withholding or at a reduced rate; provided that such Lender
is legally entitled to complete, execute and deliver such documentation and in
such Lender's reasonable judgment such completion, execution or submission would
not materially prejudice the legal position of such Lender.
2.21 Indemnity. The Borrower agrees to indemnify each Lender and to
hold each Lender harmless from any loss or expense which such Lender may sustain
or incur as a consequence of (a) default by the Borrower in making a borrowing
of, conversion into or continuation of Eurodollar Loans after the Borrower has
given a notice requesting the same in accordance with the provisions of this
Agreement, (b) default by the Borrower in making any prepayment after the
Borrower has given a notice thereof in accordance with the provisions of this
Agreement or (c) the making of a prepayment or conversion of Eurodollar Loans on
a day which is not the last day of an Interest Period with respect thereto. Such
indemnification may include an amount equal to the excess, if any, of (i) the
amount of interest which would have accrued on the amount so prepaid, or not so
borrowed, converted or continued, for the period from the date of such
prepayment or of such failure to borrow, convert or continue to the last day of
such Interest Period (or, in the case of a failure to borrow, convert or
continue, the Interest
<PAGE>
41
Period that would have commenced on the date of such failure) in each case at
the applicable rate of interest for such Loans provided for herein (excluding,
however, the Applicable Margin included therein, if any) over (ii) the amount of
interest (as reasonably determined by such Lender) which would have accrued to
such Lender on such amount by placing such amount on deposit for a comparable
period with leading banks in the interbank eurodollar market. A certificate as
to any amounts payable pursuant to this Section submitted to the Borrower by any
Lender shall be conclusive in the absence of manifest error. This covenant shall
survive the termination of this Agreement and the payment of the Loans and all
other amounts payable hereunder.
2.22 Illegality. Notwithstanding any other provision herein, if the
adoption of or any change in any Requirement of Law or in the interpretation or
application thereof shall make it unlawful for any Lender to make or maintain
Eurodollar Loans as contemplated by this Agreement, (a) the commitment of such
Lender hereunder to make Eurodollar Loans, continue Eurodollar Loans as such and
convert Base Rate Loans to Eurodollar Loans shall forthwith be cancelled and (b)
such Lender's Loans then outstanding as Eurodollar Loans, if any, shall be
converted automatically to Base Rate Loans on the respective last days of the
then current Interest Periods with respect to such Loans or within such earlier
period as required by law. If any such conversion of a Eurodollar Loan occurs on
a day which is not the last day of the then current Interest Period with respect
thereto, the Borrower shall pay to such Lender such amounts, if any, as may be
required pursuant to Section 2.21.
2.23 Change of Lending Office. Each Lender agrees that, upon the
occurrence of any event giving rise to the operation of Section 2.19, 2.20(a) or
2.22 with respect to such Lender, it will, if requested by the Borrower, use
reasonable efforts (subject to overall policy considerations of such Lender) to
designate another lending office for any Loans affected by such event with the
object of avoiding the consequences of such event; provided that such
designation is made on terms that, in the sole judgment of such Lender, cause
such Lender and its lending office(s) to suffer no economic, legal or regulatory
disadvantage, and provided, further, that nothing in this Section shall affect
or postpone any of the obligations of any Borrower or the rights of any Lender
pursuant to Section 2.19, 2.20(a) or 2.22.
2.24 Replacement of Lenders under Certain Circumstances. The
Borrower shall be permitted to replace any Lender which (a) requests
reimbursement for amounts owing pursuant to Section 2.19 or 2.20 or (b) defaults
in its obligation to make Loans hereunder, with a replacement financial
institution; provided that (i) such replacement does not conflict with any
Requirement of Law, (ii) no Event of Default shall have occurred and be
continuing at the time of such replacement, (iii) prior to any such replacement,
such Lender shall have taken no action under Section 2.22 so as to eliminate the
continued need for payment of amounts owing pursuant to Section 2.19 or 2.20,
(iv) the replacement financial institution shall purchase, at par, all Loans and
other amounts owing to such replaced Lender on or prior to the date of
replacement, (v) the Borrower shall be liable to such replaced Lender under
Section 2.21 (as though Section 2.21 were applicable) if any Eurodollar Loan
owing to such replaced Lender shall be purchased other than on the last day of
the Interest Period relating thereto, (vi) the replacement financial
institution, if not already a Lender, shall be reasonably satisfactory to the
Administrative Agent,
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42
(vii) the replaced Lender shall be obligated to make such replacement in
accordance with the provisions of Section 9.6 (provided that the Borrower shall
be obligated to pay the registration and processing fee referred to therein),
(viii) until such time as such replacement shall be consummated, the Borrower
shall pay all additional amounts (if any) required pursuant to Section 2.19 or
2.20, as the case may be, and (ix) any such replacement shall not be deemed to
be a waiver of any rights which the Borrower, the Administrative Agent or any
other Lender shall have against the replaced Lender.
SECTION 3. REPRESENTATIONS AND WARRANTIES
To induce the Agents and the Lenders to enter into this Agreement
and to make the Loans, the Company and the Borrower hereby jointly and severally
represent and warrant to each Agent and each Lender that:
3.1 Financial Condition. (a) The audited consolidated balance sheets
of the Company and its consolidated Subsidiaries as at December 31, 1998 and
December 31, 1997 and the related consolidated statements of income and of cash
flows for the fiscal years ended on such dates, reported on by and accompanied
by an unqualified report from Ernst & Young LLP present fairly the consolidated
financial condition of the Company and its consolidated Subsidiaries as at each
such date, and the consolidated results of its operations and its consolidated
cash flows for the respective fiscal years then ended. The unaudited
consolidated balance sheets of the Company and its consolidated Subsidiaries as
at September 30, 1999, and the related unaudited consolidated statements of
income and cash flows for the nine-month period ended on such date, present
fairly the consolidated financial condition of the Company and its consolidated
Subsidiaries as at each such date, and the consolidated results of its
operations and its consolidated cash flows for the three-month period then ended
(subject to normal year-end audit adjustments). All such financial statements,
including the related schedules and notes thereto, have been prepared in
accordance with GAAP applied consistently throughout the periods involved
(except as approved by the aforementioned firm of accountants and disclosed
therein). The Company and its Subsidiaries do not have any material Guarantee
Obligations, contingent liabilities and liabilities for taxes, or any material
long-term leases or unusual forward or long-term commitments, including, without
limitation, any interest rate or foreign currency swap or exchange transaction
or other obligation in respect of derivatives, which are not reflected in the
most recent financial statements referred to in this paragraph or set forth on
Schedule 3.1(a). During the period from December 31, 1998 to and including the
date hereof there has been no Disposition by the Company or any of its
Subsidiaries of any material part of its business or Property.
(b) The consolidated balance sheet projections, the consolidated
statements of income projections and the consolidated statements of cash flow
projections of the Company and its consolidated Subsidiaries for the 1999
through 2007 fiscal years (the "Projected Financial Statements"), copies of
which have heretofore been furnished to each Lender requesting the same, have
been prepared giving effect (as if such events had occurred on September 30,
1999) to (i) the Loans to be made on the Original Closing Date and the use of
proceeds thereof, (ii) the
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43
payment of fees and expenses in connection with the
foregoing and (iii) the purchase of equity of the Company contemplated by
Preferred Stock Purchase Agreement.
3.2 No Change. Since December 31, 1998 there has been no development
or event which has had or would have a Material Adverse Effect.
3.3 Corporate Existence; Compliance with Law. The Company and its
each of Subsidiaries (a) is duly organized, validly existing and in good
standing under the laws of the jurisdiction of its organization, (b) has the
corporate power and authority, and the legal right, to own and operate its
Property, to lease the Property it operates as lessee and to conduct the
business in which it is currently engaged, (c) is duly qualified as a foreign
corporation and in good standing under the laws of each jurisdiction where its
ownership, lease or operation of Property or the conduct of its business
requires such qualification and (d) is in compliance with all Requirements of
Law (including, without limitation, the obtaining and maintaining all
authorizations, licenses and permits from any Governmental Authority that are
required or necessary for the conduct of the business of the Company and its
Subsidiaries), except, in the case of clauses (c) and (d), to the extent that
the failure to be so qualified or to comply therewith would not, in the
aggregate, reasonably be expected to have a Material Adverse Effect.
3.4 Corporate Power; Authorization; Enforceable Obligations. Each
Credit Party has the corporate power and authority, and the legal right, to
make, deliver and perform the Credit Documents to which it is a party and, in
the case of the Borrower, to borrow hereunder. Each Credit Party has taken all
necessary corporate action to authorize the execution, delivery and performance
of the Credit Documents to which it is a party and, in the case of the Borrower,
to authorize the borrowings on the terms and conditions of this Agreement. No
consent or authorization of, filing with, notice to or other act by or in
respect of, any Governmental Authority or any other Person is required in
connection with the borrowings hereunder or with the execution, delivery,
performance, validity or enforceability of this Agreement or any of the Credit
Documents, except (i) consents, authorizations, filings and notices described in
Schedule 3.4, which consents, authorizations, filings and notices have been
obtained or made and are in full force and effect and (ii) the filings referred
to in Section 3.18. Each Credit Document has been duly executed and delivered on
behalf of each Credit Party party thereto. This Agreement constitutes, and each
other Credit Document upon execution will constitute, a legal, valid and binding
obligation of each Credit Party party thereto, enforceable against each such
Credit Party in accordance with its terms, except as enforceability may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally and by
general equitable principles (whether enforcement is sought by proceedings in
equity or at law).
3.5 No Legal Bar. The execution, delivery and performance of this
Agreement and the other Credit Documents, the borrowings hereunder and the use
of the proceeds thereof will not violate any Requirement of Law or any
Contractual Obligation of the Company or any of its Subsidiaries and will not
result in, or require, the creation or imposition of any Lien on any of their
respective properties or revenues pursuant to any Requirement of Law or any such
Contractual Obligation (other than the Liens created by the Security Documents).
As of the
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44
Closing Date, no Requirement of Law or Contractual Obligation applicable to the
Company or any of its Subsidiaries would reasonably be expected to have a
Material Adverse Effect.
3.6 No Material Litigation. No litigation, investigation or
proceeding of or before any arbitrator or Governmental Authority is pending or,
to the knowledge of the Company or the Borrower, threatened by or against the
Company or any of its Subsidiaries or against any of their respective properties
or revenues (a) with respect to any of the Credit Documents or any of the
transactions contemplated hereby or thereby or (b) that would reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect.
3.7 No Default. No Default or Event of Default has occurred and is
continuing.
3.8 Ownership of Property; Liens. Each of the Company and its
Subsidiaries has title in fee simple to, or a valid leasehold interest in, all
its real property, and good title to, or a valid leasehold interest in, all its
other Property, and none of such Property is subject to any Lien except as
permitted by Section 6.3, except for such defects in title which, individually
or in the aggregate, would not reasonably be expected to have a Material Adverse
Effect.
3.9 Intellectual Property. Each of the Company and its Subsidiaries
owns, or is licensed to use, all Intellectual Property necessary for the conduct
of its business as currently conducted. No material claim has been asserted and
is pending by any Person challenging or questioning the use of any Intellectual
Property or the validity or effectiveness of any Intellectual Property, nor does
the Company or the Borrower know of any valid basis for any such claim. The use
of Intellectual Property by the Company and its Subsidiaries does not infringe
on the rights of any Person in any material respect.
3.10 Taxes. Each of the Company and its Subsidiaries has filed or
caused to be filed all Federal, state and other material tax returns which are
required to be filed and has paid all taxes shown to be due and payable on said
returns or on any assessments made against it or any of its Property and all
other taxes, fees or other charges imposed on it or any of its Property by any
Governmental Authority (other than any the amount or validity of which are
currently being contested in good faith by appropriate proceedings and with
respect to which any reserves necessary in accordance with GAAP have been
provided on the books of the Company or its Subsidiaries, as the case may be);
no material tax Lien has been filed, and, to the knowledge of the Company and
the Borrower, no material claim is being asserted, with respect to any such tax,
fee or other charge.
3.11 Federal Regulations. No part of the proceeds of any Loans will
be used for "purchasing" or "carrying" any "margin stock" within the respective
meanings of each of the quoted terms under Regulation U as now and from time to
time hereafter in effect or for any purpose which violates the provisions of the
Regulations of the Board.
3.12 ERISA. During the five-year period prior to the date on which
this representation is made or deemed made with respect to any Plan, except as
would not reasonably be expected to have a Material Adverse Effect, (i) none of
(x) a Reportable Event, (y) an
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45
"accumulated funding deficiency" (within the meaning of Section 412 of the Code
or Section 302 of ERISA) or (z) a termination of a Single-Employer Plan has
occurred, (ii) each Plan has complied in all material respects with the
applicable provisions of ERISA and the Code and (iii) no Lien in favor of the
PBGC or a Plan has arisen. The present value of all accrued benefits under each
Single Employer Plan (based on those assumptions used to fund such Plans) did
not, as of the last annual valuation date prior to the date on which this
representation is made or deemed made, exceed the value of the assets of such
Plan allocable to such accrued benefits by an amount that would not reasonably
be expected to have a Material Adverse Effect. Neither the Company nor any
Commonly Controlled Entity has had a complete or partial withdrawal from any
Multiemployer Plan which has resulted or would reasonably be expected to result
in a material liability under ERISA, and neither the Company nor any Commonly
Controlled Entity would become subject to any liability under ERISA that would
reasonably be expected to have a Material Adverse Effect if the Company or any
such Commonly Controlled Entity were to withdraw completely from all
Multiemployer Plans as of the valuation date most closely preceding the date on
which this representation is made or deemed made. No such Multiemployer Plan is
in Reorganization or Insolvent.
3.13 Investment Company Act; Public Utility Holding Company Act;
Other Regulations. No Credit Party is (a) an "investment company" as defined in,
or subject to regulation under, the Investment Company Act of 1940, as amended
or (b) a "holding company" as defined in, or subject to regulation under, the
Public Utility Holding Company Act of 1935, as amended.
3.14 Capitalization; Subsidiaries; Certain Investments. (a) As of
the Closing Date, (i) Part A of Schedule 3.14 sets forth a complete and correct
list of the authorized Capital Stock of the Company, together with the number of
such shares that are duly and validly issued and outstanding, and each of which
shares is fully paid and nonassessable and (ii) Part B of Schedule 3.14 contains
a complete and correct list of each of record and beneficial owner of issued and
outstanding Capital Stock of the Company, together with, for each such owner,
the percentage of such Capital Stock owned by them.
(b) Set forth on Part C of Schedule 3.14 is a complete and correct
list of all of the direct and indirect Subsidiaries of the Company as of the
Closing Date, together with, for each such Subsidiary, the jurisdiction of
incorporation of each such Subsidiary and the percentage of each class of
Capital Stock owned by any Credit Party.
(c) Set forth on Part D of Schedule 3.14 is a complete and correct
list of all Investments (other than Investments disclosed in Part C of Schedule
3.14 and other than Investments of the types referred to in Sections 6.7(a),
(b), (c), (d) and (f)) held by the Company or any of its Subsidiaries in any
Person as of the Closing Date, together with, for each such Investment, the
identity of the Person or Persons holding such Investment and the nature of such
Investment.
3.15 Purpose of Loans. The proceeds of the Term Loans shall be used
to finance or reimburse the cost of development, design, installation and
acquisition of telecommunications
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46
equipment, inventory and/or network assets and back office systems for the
business of the Subsidiaries of the Company and for purposes reasonably related
thereto. The proceeds of the Revolving Extensions of Credit shall be used to
finance the general corporate purposes of the Subsidiaries of the Company.
3.16 Environmental Matters. Other than exceptions to any of the
following that would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect:
(a) The Company and its Subsidiaries: (i) are, and at all times have
been, in compliance with all applicable Environmental Laws; (ii) hold all
Environmental Permits (each of which is in full force and effect) required
for any of their current or intended operations or for any property owned,
leased, or otherwise operated by any of them; (iii) are, and at all times
have been, in compliance with all of their Environmental Permits; and (iv)
reasonably believe that: each of their Environmental Permits will be
timely renewed and complied with, without material expense; any additional
Environmental Permits that may be required of any of them will be timely
obtained and complied with, without material expense; and compliance with
any Environmental Law that is or is expected to become applicable to any
of them will be timely attained and maintained, without material expense.
(b) Materials of Environmental Concern are not present at, on,
under, in, or about any real property now or formerly owned, leased or
operated by the Company or any of its Subsidiaries, or at any other
location (including, without limitation, any location to which Materials
of Environmental Concern have been sent for re-use or recycling or for
treatment, storage, or disposal) which would reasonably be expected to (i)
give rise to liability of the Company or any of its Subsidiaries under any
applicable Environmental Law or otherwise result in costs to the Company
or any of its Subsidiaries, or (ii) interfere with the Company's or any of
its Subsidiaries' continued operations, or (iii) impair the fair saleable
value of any real property owned or leased by the Company or any of its
Subsidiaries.
(c) There is no judicial, administrative, or arbitral proceeding
(including any notice of violation or alleged violation) under or relating
to any Environmental Law to which the Company or any of its Subsidiaries
is, or to the knowledge of the Company or any of its Subsidiaries will be,
named as a party that is pending or, to the knowledge of the Company or
any of its Subsidiaries, threatened.
(d) Neither the Company nor any of its Subsidiaries has received any
written request for information, or been notified that it is a potentially
responsible party under or relating to the federal Comprehensive
Environmental Response, Compensation, and Liability Act of 1980 or any
similar Environmental Law, or with respect to any Materials of
Environmental Concern.
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47
(e) Neither the Company nor any of its Subsidiaries has entered into
or agreed to any consent decree, order, or settlement or other agreement,
or is subject to any judgment, decree, or order or other agreement, in any
judicial, administrative, arbitral, or other forum for dispute resolution,
relating to compliance with or liability under any Environmental Law.
(f) Neither the Company nor any of its Subsidiaries has assumed or
retained, by contract or operation of law, any liabilities of any kind,
fixed or contingent, known or unknown, under any Environmental Law,
relating to noncompliance with any Environmental Law or with respect to
any Material of Environmental Concern.
3.17 Accuracy of Information, etc. No statement or information
contained in this Agreement, any other Credit Document or any other document,
certificate or written statement (including, without limitation, the
Confidential Offering Memorandum) furnished to the Administrative Agent or the
Lenders or any of them, by or on behalf of any Credit Party for use in
connection with the transactions contemplated by this Agreement or the other
Credit Documents, contained, as of the date such statement, information,
document or certificate was so furnished and when taken as a whole with other
such statements and information theretofore so furnished, any untrue statement
of a material fact or omitted to state a material fact necessary in order to
make the statements contained herein or therein not misleading. The projections
and pro forma financial information contained in the materials referenced above
(including, without limitation, the Projected Financial Statements) are based
upon good faith estimates and assumptions believed by management of the Company
to be reasonable at the time made, it being recognized by the Lenders that such
financial information as it relates to future events is not to be viewed as fact
and that actual results during the period or periods covered by such financial
information may differ from the projected results set forth therein by a
material amount. There is no fact known to any Credit Party that would
reasonably be expected to have a Material Adverse Effect that has not been
expressly disclosed herein, in the other Credit Documents, in the Confidential
Information Memorandum or in any other documents, certificates and statements
furnished to the Administrative Agent and the Lenders for use in connection with
the transactions contemplated hereby and by the other Credit Documents.
3.18 Security Documents. The Guarantee and Collateral Agreement is
effective to create in favor of the Administrative Agent, for the benefit of the
Lenders, a legal, valid and enforceable security interest in the Collateral
described therein and proceeds thereof. In the case of the Pledged Stock covered
by the Guarantee and Collateral Agreement, when any stock certificate
representing such Pledged Stock is delivered to the Administrative Agent, and in
the case of the other Collateral described in the Guarantee and Collateral
Agreement, when financing statements in appropriate form are filed in the
offices specified on Schedule 3.18 (which financing statements have been duly
completed and executed and delivered to the Administrative Agent) and such other
filings as are specified on applicable Schedules, if any, to the Guarantee and
Collateral Agreement (all of which filings have been duly completed), the
Guarantee and Collateral Agreement shall constitute a fully perfected Lien on,
and security interest in, all right, title and interest of the Credit Parties in
such Collateral and the proceeds thereof, as security for the Obligations (as
defined in the Guarantee and Collateral Agreement), prior and superior in
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48
right to any other Person (except, in the case of Collateral other than Pledged
Stock, Liens permitted by Section 6.3).
3.19 Solvency. On the Closing Date, assuming that Indebtedness in an
amount equal to the aggregate amount of the Commitments is incurred hereunder on
such date, the Company will be Solvent.
3.20 Real Property. Set forth on Schedule 3.20 is complete and
correct list, as of the Closing Date, of all of the real property interests held
by the Company and its Subsidiaries, indicating in each case whether the
respective property is owned or leased, the identity of the owner or lessee and
the location of the respective property.
3.21 Year 2000 Matters. Any reprogramming required to permit the
proper functioning, in and following the year 2000, of (i) the Company's and its
Subsidiaries' computer systems and (ii) equipment containing embedded microchips
(including systems and equipment supplied by others or with which Company's or
any of its Subsidiaries' systems interface) and the testing of all such systems
and equipment, as so reprogrammed, has been completed in all material respects.
The cost to the Company or its Subsidiaries of the reasonably foreseeable
consequences of year 2000 to the Company and its Subsidiaries (including,
without limitation, reprogramming errors and the failure of others' systems or
equipment) would not reasonably be expected to result in a Default or a Material
Adverse Effect. The computer and management information systems of the Company
and its Subsidiaries are and, with ordinary course upgrading and maintenance,
will continue for the term of this Agreement to be, sufficient to permit the
Company and its Subsidiaries to conduct their respective business, other than
any insufficiency that would not reasonably be expected to have a Material
Adverse Effect.
3.22 Restricted Subsidiary. Each of the Borrower and each Subsidiary
Guarantor is, and at all times shall remain, a "Restricted Subsidiary" under and
as defined in the Existing Senior Notes Indenture.
3.23 Network. Schedule 3.23 sets forth, as of the Closing Date, (i)
the location of each switch owned by the Company or any of its Subsidiaries and
the switch's make and model and (ii) the location of each Collocation Site. As
of the Closing Date, the Company's and its Subsidiaries' switches are (i) fully
installed, (ii) interconnected to the incumbent telephone company's local
network and (iii) capable of commercial traffic. As of the Closing Date, each
Collocation Site possesses all the necessary equipment to carry commercial
traffic and is linked via leased or owned transmission cable to a switch owned
by the Company or one of its Subsidiaries.
SECTION 4. CONDITIONS PRECEDENT
4.1 Effectiveness. The effectiveness of this Agreement (and the
amendment and restatement of the Existing Credit Agreement to be effected
hereby) and of the obligations of the
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49
Lenders to make extensions of credit hereunder is subject to the conditions
precedent that each of the following conditions shall have been satisfied:
(a) Credit Documents. The Administrative Agent shall have received
(i) this Agreement, executed and delivered by a duly authorized officer of
the Company and the Borrower, (ii) the Guarantee and Collateral Agreement,
executed and delivered by a duly authorized officer of the Company, the
Borrower and each Subsidiary Guarantor, and (iii) for the account of each
requesting Lender, Notes conforming to the requirements hereof and
executed and delivered by a duly authorized officer of the Borrower.
(b) Pro Forma Financial Statements; Financial Statements;
Projections. The Lenders shall have received (i) the Pro Forma Financial
Statements, (ii) audited consolidated financial statements of the Company
and its consolidated Subsidiaries for the 1997 and 1998 fiscal years,
(iii) unaudited interim consolidated financial statements of the Company
and its consolidated Subsidiaries as at September 30, 1999 and (iv) the
Projected Financial Statements, and such financial statements or
projections shall not, in the reasonable judgment of the Lenders, reflect
any material adverse change in the consolidated financial condition of the
Company and its consolidated Subsidiaries.
(c) Approvals. All authorizations and approvals referred to in
Section 3.4, and all material governmental and third party approvals
(including landlords' and other consents) necessary in connection with the
continuing operations of the Company and its Subsidiaries, shall have been
obtained and be in full force and effect, and all applicable waiting
periods shall have expired without any action being taken or threatened by
any competent authority which would restrain, prevent or otherwise impose
adverse conditions on the financing contemplated hereby.
(d) Solvency. The Administrative Agent shall have received a
reasonably satisfactory certificate of the chief financial officer of the
Company as to the solvency of the Company and its Subsidiaries after
giving effect to the transactions contemplated hereby.
(e) Closing Certificate. The Administrative Agent shall have
received a certificate of each Credit Party, dated the Closing Date,
substantially in the form of Exhibit C, with appropriate insertions and
attachments (or such other evidence satisfactory to the Administrative
Agent that none of the organizational documents of such Credit Party has
been modified since the Original Closing Date).
(f) Legal Opinions. The Administrative Agent shall have received the
following executed legal opinions:
(i) the legal opinion of Simpson Thacher & Bartlett, special counsel
to the Company and its Subsidiaries, substantially in the form of Exhibit
E-1;
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50
(ii) the legal opinion of the General Counsel of the Company,
substantially in the form of Exhibit E-2; and
(iii) the legal opinion of Milbank, Tweed, Hadley & McCloy LLP,
special New York counsel to the Administrative Agent, substantially in the
form of Exhibit E-3.
Each such legal opinion shall cover such other matters incident to the
transactions contemplated by this Agreement as the Administrative Agent
may reasonably require.
(g) Pledged Stock; Stock Powers; Pledged Notes. The Administrative
Agent shall have received (i) the certificates representing the shares of
Capital Stock pledged pursuant to the Guarantee and Collateral Agreement,
together with an undated stock power for each such certificate executed in
blank by a duly authorized officer of the pledgor thereof and (ii) each
promissory note pledged to the Administrative Agent pursuant to the
Guarantee and Collateral Agreement endorsed (without recourse) in blank
(or accompanied by an executed transfer form in blank satisfactory to the
Administrative Agent) by the pledgor thereof.
(h) Filings, Registrations and Recordings. Each document (including,
without limitation, any Uniform Commercial Code financing statement)
required by the Security Documents or under law or reasonably requested by
the Administrative Agent to be filed, registered or recorded in order to
create in favor of the Administrative Agent, for the benefit of the
Lenders, a perfected Lien on the Collateral described therein, prior and
superior in right to any other Person (other than with respect to Liens
expressly permitted by Section 6.3), shall be in proper form for filing,
registration or recordation.
(i) Insurance. The Administrative Agent shall have received
insurance certificates satisfying the requirements of Section 5.5(b).
(j) Existing Credit Agreement. All extensions of credit outstanding
under the Existing Credit Agreement immediately prior to the Closing Date,
together with any accrued and unpaid interest thereon and any accrued and
unpaid fees under the Existing Credit Agreement, shall have been paid in
full. No Default or Event of Default under and as defined in the Existing
Credit Agreement shall have occurred and be continuing on the Closing
Date.
(k) Fees and Expenses The Administrative Agent shall have received
all fees and other amounts due and payable on or prior to the Closing
Date, including, to the extent invoiced, reimbursement or payment of all
out of pocket expenses required to be reimbursed or paid by the Borrower
hereunder.
(l) Other Documents, etc. The Administrative Agent shall have
received such other certificates, legal opinions and documents as the
Administrative Agent or any Lender may reasonably request.
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51
4.2 Conditions to Each Extension of Credit. The agreement of each
Lender to make any extension of credit requested to be made by it on any date
(including, without limitation, its initial extension of credit) is subject to
the satisfaction of the following conditions precedent:
(a) Representations and Warranties. Each of the representations and
warranties made by any Credit Party in or pursuant to the Credit Documents
shall be true and correct on and as of such date as if made on and as of
such date (or if any such representation or warranty is expressly stated
to have been made as of a specific date, as of such specific date).
(b) No Default. No Default or Event of Default shall have occurred
and be continuing on such date or after giving effect to the extensions of
credit requested to be made on such date.
Each borrowing by the Borrower hereunder shall constitute a representation and
warranty by the Borrower as of the date of such extension of credit that the
conditions contained in this Section have been satisfied.
4.3 Conditions to Each Term Loan. The agreement of each Term Lender
to make a Term Loan requested to be made by it on any date (including, without
limitation, its initial Term Loan) are subject to the satisfaction of the
conditions precedent that on or prior to the date of such Term Loan, the Company
shall have received cash from the issuance of equity on or after August 3, 1999
and shall have contributed such amount as cash equity to the Borrower or any
Subsidiary Guarantor in an aggregate amount at least equal to the aggregate
principal amount of the Term Loans after giving effect to the making of such
Term Loan, and the Borrower shall have delivered to the Administrative Agent a
certificate of a Responsible Officer to that effect.
SECTION 5. AFFIRMATIVE COVENANTS
The Company and the Borrower hereby jointly and severally agree
that, so long as the Commitments remain in effect or any Loan or other amount is
owing to any Lender or any Agent hereunder, each of the Company and the Borrower
shall and shall cause each of its Subsidiaries to:
5.1 Financial Statements. Furnish to each Agent and each Lender:
(a) as soon as available, but in any event within 90 days after the
end of each fiscal year, a copy of the audited consolidated balance sheet
of the Company and its consolidated Subsidiaries as at the end of such
year and the related audited consolidated statements of income and of cash
flows for such year, setting forth in each case in comparative form the
figures for the previous year, reported on without a "going concern"
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52
or like qualification or exception, or qualification arising out of the
scope of the audit, by Ernst & Young LLP or other independent certified
public accountants of nationally recognized standing; and
(b) as soon as available, but in any event not later than 45 days
after the end of each of the first three quarterly periods of each fiscal
year, the unaudited consolidated balance sheet of the Company and its
consolidated Subsidiaries as at the end of such quarter and the related
unaudited consolidated statements of income and of cash flows for such
quarter and the portion of the fiscal year through the end of such
quarter, setting forth in each case in comparative form the figures for
the previous year, certified by a Responsible Officer as being fairly
stated in all material respects (subject to normal year-end audit
adjustments).
All such financial statements shall be complete and correct in all material
respects and shall be prepared in reasonable detail and in accordance with GAAP
applied consistently throughout the periods reflected therein and with the
periods reflected in the financial statements referred to in Section 4.1(b)
(except as approved by such accountants or officer, as the case may be, and
disclosed therein).
5.2 Certificates; Other Information. Furnish to the Administrative
Agent and each Lender, or, in the case of clause (g), to the relevant Lender:
(a) concurrently with the delivery of the financial statements
referred to in Section 5.1(a), a certificate of the independent certified
public accountants reporting on such financial statements stating, in
performing their audit, nothing came to their attention that caused them
to believe that the Company and the Borrower failed to comply with the
provisions of Section 6.1, except as specified in such certificate;
(b) concurrently with the delivery of any financial statements
pursuant to Section 5.1, (i) a certificate of a Responsible Officer
stating that, to the best of each such Responsible Officer's knowledge,
each Credit Party during such period has observed or performed all of its
covenants and other agreements, and satisfied every condition, contained
in this Agreement and the other Credit Documents to which it is a party to
be observed, performed or satisfied by it, and that such Responsible
Officer has obtained no knowledge of any Default or Event of Default
except as specified in such certificate and (ii) in the case of quarterly
or annual financial statements, (x) a Compliance Certificate containing
all information and calculations necessary for determining compliance by
the Company and its Subsidiaries with the provisions of this Agreement
referred to therein as of the last day of the fiscal quarter or fiscal
year, as the case may be (which Compliance Certificate shall, during Stage
1, contain a breakdown of the number of Lines by type of Line), and (y) to
the extent not previously disclosed to the Administrative Agent, a listing
of any county or state within the United States where any Credit Party
keeps inventory or equipment and of any Intellectual Property acquired by
any Credit Party since the date of the most recent list delivered pursuant
to this clause (y) (or, in the case of the first such list so delivered,
since the Closing Date);
<PAGE>
53
(c) as soon as available, and in any event prior to 60 days after
the commencement of each fiscal year, a detailed consolidated budget for
such fiscal year (including a projected consolidated balance sheet of the
Company as of the end of such fiscal year, and the related consolidated
statements of projected cash flow, projected changes in financial position
and projected income), and, as soon as available, significant revisions,
if any, of such budget and projections with respect to such fiscal year
(collectively, the "Projections");
(d) (i) concurrently with the delivery of any financial statements
pursuant to Section 5.1(a), a narrative discussion and analysis of the
financial condition and results of operations of the Company and its
Subsidiaries for such fiscal year and (ii) concurrently with the delivery
of any financial statements pursuant to Section 5.1(b), a narrative
discussion and analysis of the financial condition and results of
operations of the Company and its Subsidiaries for such fiscal quarter,
and for the period from the beginning of the then current fiscal year to
the end of such fiscal quarter (it being understood that delivery to the
Administrative Agent and each Lender of the Company's Report on Form 10-K
or 10-Q, as applicable, filed with the SEC shall satisfy the requirements
of this Section so long as the information required to be contained in the
"Management's Discussion and Analysis of Financial Condition and Results
of Operations" section of such Report is substantially the same as that
required under this Section);
(e) within five days after the same are sent or filed, copies of all
financial statements and reports which the Company or the Borrower sends
to the holders of any class of its debt securities (including, without
limitation, the holders of the Existing Senior Notes but excluding any
debt securities held by fewer than three holders) or public equity
securities and all periodic financial statements, final registration
statements (excluding exhibits) and reports which the Company or the
Borrower may make to, or file with, the SEC;
(f) as soon as possible and in any event within five days of
obtaining knowledge thereof: (i) any development, event, or condition
that, individually or in the aggregate with other developments, events or
conditions, would reasonably be expected to result in the payment by the
Company and its Subsidiaries, in the aggregate, of a Material
Environmental Amount; and (ii) any notice that any governmental authority
may deny any application for an Environmental Permit sought by, or revoke
or refuse to renew any Environmental Permit held by, the Company or any of
its Subsidiaries; and
(g) promptly, such additional financial and other information as any
Lender may from time to time reasonably request.
5.3 Payment of Obligations. Pay, discharge or otherwise satisfy at
or before maturity or before they become delinquent, as the case may be, all its
material obligations of
<PAGE>
54
whatever nature, except to the extent the failure to do so would not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
5.4 Conduct of Business and Maintenance of Existence, etc. (a) (i)
Preserve, renew and keep in full force and effect its corporate existence and
(ii) take all reasonable action to maintain all rights, privileges and
franchises (including, without limitation, renewing and keeping in full force
and effect all collocation and interconnection agreements) necessary or
desirable in the normal conduct of its business, except, in each case, as
otherwise permitted by Section 6.4 and except, in the case of clauses (i) (other
than with respect to the Company and the Borrower) and (ii) above, to the extent
that failure to do so would not reasonably be expected to have a Material
Adverse Effect; and (b) comply with all Contractual Obligations and Requirements
of Law except to the extent that failure to comply therewith would not, in the
aggregate, reasonably be expected to have a Material Adverse Effect.
5.5 Maintenance of Property; Insurance. (a) Keep all Property and
systems useful and necessary in its business in good working order and
condition, ordinary wear and tear excepted, except to the extent failure to do
so would not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.
(b) Maintain with financially sound and reputable insurance
companies insurance on all its Property in at least such amounts and against at
least such risks (but including in any event public liability and business
interruption) as are usually insured against in the same general area by
companies engaged in the same or a similar business; and furnish to the
Administrative Agent with copies for each Lender, upon written request, full
information as to the insurance carried. The Administrative Agent and the
Lenders shall be named as additional insureds in respect of all public liability
insurance maintained by the Company or its Subsidiaries and the Administrative
Agent shall be named as loss payee in respect of all property and casualty
insurance maintained by the Company or its Subsidiaries on their respective
Property. All insurance shall provide that no cancellation, material reduction
in amount or material change in coverage thereof shall be effective until at
least 30 days after receipt by the Administrative Agent of written notice
thereof.
5.6 Inspection of Property; Books and Records; Discussions. (a) Keep
proper books of records and account in which full, true and correct entries in
conformity with GAAP and all Requirements of Law shall be made and (b) permit
representatives of the Required Lenders or the Administrative Agent (or, upon
the occurrence and during the continuation of any Default or Event of Default,
any Lender) to visit and inspect any of its properties and examine and make
abstracts from any of its books and records (except to the extent any such
access is restricted by a Requirement of Law) at any reasonable time and as
often as may reasonably be desired and to discuss the business, operations,
properties and financial and other condition of the Company and its Subsidiaries
with officers of the Company and its Subsidiaries and with its independent
certified public accountants; provided that (x) the Borrower shall notify the
Administrative Agent of any such visits, inspections or discussions by or with
any Lender prior to the occurrence thereof and (y) any request by a Lender for
any visit, inspection or discussion shall be made through the Administrative
Agent.
<PAGE>
55
5.7 Notices. Promptly after any Credit Party obtains knowledge
thereof, give notice to the Administrative Agent and each Lender of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any Contractual
Obligation of the Company or any of its Subsidiaries that would reasonably
be expected to have a Material Adverse Effect or (ii) litigation,
investigation or proceeding which may exist at any time between the
Company or any of its Subsidiaries and any Governmental Authority, which
in either case, if not cured or if adversely determined, as the case may
be, would reasonably be expected to have a Material Adverse Effect;
(c) any other litigation or proceeding affecting the Company or any
of its Subsidiaries in which the amount involved is $2,000,000 or more and
not covered by insurance or in which injunctive or similar relief is
sought;
(d) the following events, as soon as possible and in any event
within 30 days after the Borrower knows or has reason to know thereof: (i)
the occurrence of any Reportable Event with respect to any Plan, a failure
to make any required contribution to a Plan, the creation of any Lien in
favor of the PBGC or a Plan or any withdrawal from, or the termination,
Reorganization or Insolvency of, any Multiemployer Plan or (ii) the
institution of proceedings or the taking of any other action by the PBGC
or the Company or any Commonly Controlled Entity or any Multiemployer Plan
with respect to the withdrawal from, or the termination, Reorganization or
Insolvency of, any Plan; and
(e) any development or event which has had or would reasonably be
expected to have a Material Adverse Effect.
Each notice pursuant to this Section shall be accompanied by a statement of a
Responsible Officer setting forth details of the occurrence referred to therein
and stating what action the Company or the relevant Subsidiary proposes to take
with respect thereto.
5.8 Environmental Laws. (a) Comply in all material respects with,
and ensure compliance in all material respects by all tenants and subtenants, if
any, with, all applicable Environmental Laws, and obtain and comply in all
material respects with and maintain, and ensure that all tenants and subtenants
obtain and comply in all material respects with and maintain, any and all
Environmental Permits required by applicable Environmental Laws.
(b) Conduct and complete all investigations, studies, sampling and
testing, and all remedial, removal and other actions required under
Environmental Laws and, except as being challenged by appropriate legal
proceedings, promptly comply in all material respects with all lawful orders and
directives of all Governmental Authorities regarding Environmental Laws.
<PAGE>
56
5.9 Additional Collateral, etc. (a) With respect to any Property of
the type covered by the Security Documents acquired after the Closing Date by
the Company or any of its Subsidiaries (other than any real property or the
Capital Stock of any new Subsidiary) as to which the Administrative Agent, for
the benefit of the Lenders, does not have a perfected Lien, promptly (but in any
event within 30 days after the acquisition thereof) (i) execute and deliver to
the Administrative Agent such amendments to the relevant Security Documents or
such other documents as the Administrative Agent deems necessary or advisable to
grant to the Administrative Agent, for the benefit of the Lenders, a security
interest in such Property, (ii) take all actions necessary or advisable to grant
to the Administrative Agent, for the benefit of the Lenders, a perfected first
priority security interest in such Property, including without limitation, the
filing of Uniform Commercial Code financing statements in such jurisdictions as
may be required by such Security Documents or by law or as may be requested by
the Administrative Agent and (iii) if requested by the Administrative Agent,
deliver to the Administrative Agent legal opinions as to the matters described
in clauses (i) and (ii) of this Section, which opinions shall be in form and
substance, and from counsel, reasonably satisfactory to the Administrative
Agent.
(b) With respect to any fee interest in any real property having a
value (together with improvements thereof) of at least $1,000,000 acquired after
the Closing Date by the Company or any of its Subsidiaries, promptly (but in any
event within 30 days after the acquisition thereof), to the extent permitted by
any mortgage covering such real property, (i) execute and deliver a first
priority Mortgage in favor of the Administrative Agent, for the benefit of the
Lenders, covering such real property, (ii) if requested by the Administrative
Agent, provide the Lenders with (x) title and extended coverage insurance
covering such real property in an amount at least equal to the purchase price of
such real estate (or such other amount as shall be reasonably specified by the
Administrative Agent) as well as a current ALTA survey thereof, together with a
surveyor's certificate and (y) any consents or estoppels reasonably deemed
necessary or advisable by the Administrative Agent in connection with such
mortgage or deed of trust, each of the foregoing in form and substance
reasonably satisfactory to the Administrative Agent and (iii) if requested by
the Administrative Agent, deliver to the Administrative Agent legal opinions
relating to the matters described above, which opinions shall be in form and
substance, and from counsel, reasonably satisfactory to the Administrative
Agent.
(c) With respect to any new Subsidiary created or acquired after the
Closing Date, by the Company or any of its Subsidiaries, promptly (but in any
event within 30 days after the acquisition thereof) (i) execute and deliver to
the Administrative Agent such amendments to the relevant Security Documents or
such other documents as the Administrative Agent deems necessary or advisable to
grant to the Administrative Agent, for the benefit of the Lenders, a perfected
first priority security interest in the Capital Stock of such new Subsidiary
which is owned by the Company or any of its Subsidiaries, (ii) deliver to the
Administrative Agent the certificates representing such Capital Stock, together
with undated stock powers, in blank, executed and delivered by a duly authorized
officer of the Company or such Subsidiary, as the case may be, (iii) cause such
new Subsidiary (A) to become a party to such Security Documents and (B) to take
such actions necessary or advisable to grant to the Administrative Agent for the
benefit of the Lenders a perfected first priority security interest in the
Collateral described in such
<PAGE>
57
Security Documents with respect to such new Subsidiary, including, without
limitation, the filing of Uniform Commercial Code financing statements in such
jurisdictions as may be required by such Security Documents or by law or as may
be requested by the Administrative Agent, and (iv) if requested by the
Administrative Agent, deliver to the Administrative Agent legal opinions
relating to the matters described above, which opinions shall be in form and
substance, and from counsel, reasonably satisfactory to the Administrative
Agent.
5.10 Further Assurances. From time to time execute and deliver, or
cause to be executed and delivered, such additional instruments, certificates or
documents, and take all such actions, as the Administrative Agent may reasonably
request, for the purposes of more fully perfecting or renewing the rights of the
Administrative Agent and the Lenders with respect to the Collateral (or with
respect to any additions thereto or replacements or proceeds thereof or with
respect to any other property or assets hereafter acquired by the Borrower which
may be deemed to be part of the Collateral) pursuant hereto or thereto. Upon the
exercise by the Administrative Agent or any Lender of any power, right,
privilege or remedy pursuant to this Agreement or the other Credit Documents
which requires any consent, approval, recording, qualification or authorization
of any Governmental Authority, the Borrower will execute and deliver, or will
cause the execution and delivery of, all applications, certifications,
instruments and other documents and papers that the Administrative Agent or such
Lender may be required to obtain from the Company or any of its Subsidiaries for
such governmental consent, approval, recording, qualification or authorization.
SECTION 6. NEGATIVE COVENANTS
The Company and the Borrower hereby jointly and severally agree
that, so long as the Commitments remain in effect or any Loan or other amount is
owing to any Lender or any Agent hereunder, each of the Company and the Borrower
shall not, and shall not permit any of its Subsidiaries to, directly or
indirectly:
6.1 Financial Condition Covenants.
I. Stage 1 Financial Covenants. During Stage 1:
(a) Revenues. Permit the Revenues for any fiscal quarter set forth
below to be less than the amount set forth below opposite such fiscal quarter:
Fiscal Quarter Ending Minimum Revenues
--------------------- ---------------------
March 31, 2000 $22,300,000
June 30, 2000 $30,100,000
September 30, 2000 $39,700,000
December 31, 2000 $48,000,000
March 31, 2000 $57,700,000
June, 30, 2001 $66,600,000
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58
(b) Consolidated EBITDA for any fiscal quarter set forth below to be
less than the amount (or, if the amount specified below is a negative number, to
be greater than such amount) set forth below opposite such fiscal quarter:
Fiscal Quarter Ending EBITDA
--------------------- --------------
March 31, 2000 ($14,900,000)
June 30, 2000 ($11,600,000)
September 30, 2000 ($5,300,000)
December 31, 2000 ($100,000)
March 31, 2001 $5,200,000
June, 30, 2001 $10,300,000
(c) Lines. Permit the aggregate number of Lines as at the last day
of any fiscal quarter set forth below to be less than the amount set forth below
opposite such fiscal quarter:
Fiscal Quarter Ending Minimum Number of Lines
--------------------- -----------------------
March 31, 2000 120,000
June 30, 2000 150,000
September 30, 2000 185,000
December 31, 2000 220,000
March 31, 2001 250,000
June, 30, 2001 285,000
(d) Senior Secured Debt to Total Capitalization Ratio. Permit, as at
the last day of any fiscal quarter, the ratio of (a) Senior Secured Debt on such
day to (b) Total Capitalization on such day to exceed 0.50 to 1 at any time
during Stage 1.
II. Stage 2 Financial Covenants. During Stage 2:
(a) Senior Leverage Ratio. Permit the Senior Leverage Ratio as at
the last day of any fiscal quarter set forth below to exceed the ratio set forth
below opposite such fiscal quarter:
Fiscal Quarter Ending Senior Leverage Ratio
--------------------- ---------------------
September 30, 2001 5.0 to 1
December 31, 2001 5.0 to 1
March 31, 2002 5.0 to 1
June 30, 2002 5.0 to 1
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59
September 30, 2002 4.5 to 1
December 31, 2002 4.5 to 1
March 31, 2003 4.0 to 1
June 30, 2003 4.0 to 1
September 30, 2003 3.5 to 1
December 31, 2003 3.0 to 1
March 31, 2004 2.5 to 1
June 30, 2004 2.0 to 1
September 30, 2004 2.0 to 1
December 31, 2004 2.0 to 1
March 31, 2005 2.0 to 1
June 30, 2005 2.0 to 1
September 30, 2005 2.0 to 1
December 31, 2005 2.0 to 1
March 31, 2006 2.0 to 1
June 30, 2006 2.0 to 1
September 30, 2006 2.0 to 1
December 31, 2006 2.0 to 1
(b) Total Leverage Ratio. Permit the Total Leverage Ratio as at the
last day of any fiscal quarter set forth below to exceed the ratio set forth
below opposite such fiscal quarter:
Fiscal Quarter Ending Total Leverage Ratio
--------------------- --------------------
September 30, 2001 10.0 to 1
December 31, 2001 10.0 to 1
March 31, 2002 10.0 to 1
June 30, 2002 10.0 to 1
September 30, 2002 9.0 to 1
December 31, 2002 9.0 to 1
March 31, 2003 8.0 to 1
June 30, 2003 8.0 to 1
September 30, 2003 8.0 to 1
December 31, 2003 8.0 to 1
March 31, 2004 7.0 to 1
June 30, 2004 7.0 to 1
September 30, 2004 7.0 to 1
December 31, 2004 7.0 to 1
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60
March 31, 2005 6.0 to 1
June 30, 2005 6.0 to 1
September 30, 2005 6.0 to 1
December 31, 2005 6.0 to 1
March 31, 2006 6.0 to 1
June 30, 2006 6.0 to 1
September 30, 2006 6.0 to 1
December 31, 2006 6.0 to 1
(c) Interest Coverage Ratio. Permit the Interest Coverage Ratio as
of the last day of any fiscal quarter set forth below to be less than the ratio
set forth below opposite such fiscal quarter:
Fiscal Quarter Ending Interest Coverage Ratio
--------------------- -----------------------
September 30, 2001 1.50 to 1
December 31, 2001 1.50 to 1
March 31, 2002 1.75 to 1
June 30, 2002 1.75 to 1
September 30, 2002 2.0 to 1
December 31, 2002 2.0 to 1
March 31, 2003 2.0 to 1
June 30, 2003 2.0 to 1
September 30, 2003 2.5 to 1
December 31, 2003 2.5 to 1
March 31, 2004 2.5 to 1
June 30, 2004 2.75 to 1
September 30, 2004 2.75 to 1
December 31, 2004 2.75 to 1
March 31, 2005 2.75 to 1
June 30, 2005 2.75 to 1
September 30, 2005 2.75 to 1
December 31, 2005 2.75 to 1
March 31, 2006 2.75 to 1
June 30, 2006 2.75 to 1
September 30, 2006 2.75 to 1
December 31, 2006 2.75 to 1
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61
(d) Pro Forma Debt Service Coverage. Permit the Pro Forma Debt
Service Coverage Ratio as of the last day of any fiscal quarter set forth below
to be less than the ratio set forth below opposite such fiscal quarter:
Fiscal Quarter Ending Pro Forma Debt Service
--------------------- ----------------------
Coverage Ratio
--------------
September 30, 2001 1.5 to 1
December 31, 2001 1.5 to 1
March 31, 2002 1.75 to 1
June 30, 2002 1.75 to 1
September 30, 2002 1.75 to 1
December 31, 2002 1.75 to 1
March 31, 2003 1.75 to 1
June 30, 2003 1.75 to 1
September 30, 2003 1.75 to 1
December 31, 2003 1.75 to 1
March 31, 2004 1.75 to 1
June 30, 2004 2.0 to 1
September 30, 2004 2.0 to 1
December 31, 2004 2.0 to 1
March 31, 2005 2.0 to 1
June 30, 2005 2.0 to 1
September 30, 2005 2.0 to 1
December 31, 2005 2.0 to 1
March 31, 2006 2.0 to 1
June 30, 2006 2.0 to 1
September 30, 2006 2.0 to 1
December 31, 2006 2.0 to 1
6.2 Limitation on Indebtedness. Create, incur, assume or suffer to
exist any Indebtedness, except:
(a) Indebtedness of any Credit Party pursuant to any Credit
Document;
(b) Indebtedness of the Borrower to the Company or any Subsidiary
and of any Subsidiary Guarantor to the Company, the Borrower or any other
Subsidiary;
(c) Permitted Equipment Financing;
<PAGE>
62
(d) Indebtedness outstanding on the Original Closing Date and listed
on Schedule 6.2(d) and any refinancings, refundings, renewals or
extensions thereof (without any increase in the principal amount thereof
or any shortening of the maturity of any principal amount thereof);
(e) Guarantee Obligations made by the Company or any of its
Subsidiaries of obligations of the Borrower or any Subsidiary Guarantor;
and
(f) Indebtedness in respect of any bankers' acceptance, letter of
credit, warehouse receipt or similar facilities entered into in the
ordinary course of business in an aggregate principal amount not to exceed
$5,000,000;
(g) Indebtedness in respect of Hedge Agreements permitted under
Section 6.16;
(h) Indebtedness of the Company in an aggregate amount not to exceed
the Net Cash Proceeds received by the Company from the issuance on or
after August 3, 1999 of any Capital Stock (but only to the extent such
proceeds are invested in the business of the Borrower and its
Subsidiaries) times two, so long as (i) at the time of incurrence (after
giving effect thereto), (x) no Default or Event of Default exists and (y)
the Company shall be in pro forma compliance with the covenants set forth
in Section 6.1 as if such Indebtedness had been outstanding on the date of
determination under the relevant financial covenant tests and (ii) such
Indebtedness shall (x) have a maturity no earlier than (and shall not
contain any amortization or prepayment requirements prior to) the maturity
of the Existing Senior Notes, (y) not provide for mandatory cash payments
of interest prior to the third anniversary of the Closing Date (other
than, in connection with the issuance by the Company of "overfund" notes,
cash payments of interest made by applying Cash Equivalents purchased with
a portion of the proceeds of such Indebtedness and pledged as security for
such Indebtedness in accordance with the terms thereof) and (z) otherwise
contain terms and conditions (including, without limitation, covenants and
events of default) not (in the opinion of the Administrative Agent, acting
reasonably) more restrictive that the terms of the Existing Senior Notes;
and
(i) additional Indebtedness; provided that the aggregate amount of
Indebtedness incurred and remaining outstanding pursuant to this clause
(i) shall not at any time exceed $10,000,000 in the aggregate.
6.3 Limitation on Liens. Create, incur, assume or suffer to exist
any Lien upon any of its Property, whether now owned or hereafter acquired,
except for:
(a) Liens for taxes not yet due or which are being contested in good
faith by appropriate proceedings; provided that adequate reserves with
respect thereto are maintained on the books of the Company or any of its
Subsidiaries, as the case may be, in conformity with GAAP;
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63
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of business
which are not overdue for a period of more than 60 days or which are being
contested in good faith by appropriate proceedings;
(c) pledges or deposits in connection with workers' compensation,
unemployment insurance and other social security legislation and deposits
securing liability to insurance carriers under insurance or self-insurance
arrangements;
(d) deposits to secure the performance of bids, trade contracts
(other than for borrowed money), leases (other than Capital Lease
Obligations), statutory obligations, surety and appeal bonds, performance
bonds and other obligations of a like nature incurred in the ordinary
course of business;
(e) easements, rights-of-way, zoning restrictions, other
restrictions and other similar encumbrances incurred in the ordinary
course of business which, in the aggregate, are not substantial in amount
and which do not in any case materially detract from the value of the
Property subject thereto or materially interfere with the ordinary conduct
of the business of the Subsidiaries or which are set forth in any title
insurance policy delivered to the Administrative Agent pursuant to the
terms of this Agreement;
(f) Liens in existence on the Original Closing Date and listed on
Schedule 6.3(f), securing Indebtedness permitted by Section 6.2(d);
(g) Liens securing Indebtedness of the Borrower or any other
Subsidiary permitted by Section 6.2(c); provided that (i) such Liens shall
be created within 90 days of the acquisition of such fixed or capital
assets, (ii) such Liens do not at any time encumber any Property other
than the Property financed by such Indebtedness (other than after acquired
title in or on such Property and proceeds of the existing collateral in
accordance with the instrument creating such Lien) and (iii) the principal
amount of Indebtedness secured by any such Lien shall at no time exceed
100% of the original purchase price of such Property at the time it was
acquired;
(h) Liens created pursuant to this Agreement and the Security
Documents;
(i) any interest or title of a lessor under any lease entered into
by the Borrower or any other Subsidiary in the ordinary course of its
business and covering only the assets so leased;
(j) so long as no Default or Event of Default shall have occurred
and be continuing under clause (h) of Section 7, Liens arising from
judgments or decrees in respect of which judgments or decrees that have
been satisfied, vacated, discharged, stayed or bonded pending appeal
within 60 days from the entry thereof or Liens arising from judgments or
decrees in an aggregate amount outstanding at any one time not in excess
of $2,000,000 (to the extent not paid or fully covered by insurance as to
which the
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64
relevant insurance company has not denied in writing coverage above
applicable deductibles);
(k) Cash Equivalents purchased with a portion of the proceeds of
Indebtedness of the Company permitted by Section 6.2(h) and pledged as
security for (and to be applied toward) mandatory payments of cash
interest in accordance with the terms of such Indebtedness; and
(l) additional Liens so long as the aggregate person principal
amount of the obligations so secured does not exceed $10,000,000 at any
time outstanding.
6.4 Limitation on Fundamental Changes. Enter into any merger,
consolidation or amalgamation, or liquidate, wind up or dissolve itself (or
suffer any liquidation or dissolution), or Dispose of all or substantially all
of its Property or business, except that:
(a) any Subsidiary of the Company may be merged or consolidated with
or into the Borrower (provided that the Borrower shall be the continuing
or surviving corporation) or with or into any Subsidiary Guarantor
(provided that a Subsidiary Guarantor shall be the continuing or surviving
corporation);
(b) any Subsidiary of the Company may Dispose of any or all of its
assets (upon voluntary liquidation or otherwise) to the Borrower or any
Subsidiary Guarantor; and
(c) any transaction permitted by Section 6.5, 6.7 or 6.8 may be
consummated as contemplated thereby.
6.5 Limitation on Disposition of Property. Dispose of any of its
Property (including, without limitation, receivables and leasehold interests),
whether now owned or hereafter acquired, or, in the case of any Subsidiary,
issue or sell any shares of such Subsidiary's Capital Stock to any Person,
except:
(a) the Disposition of obsolete or worn out property in the ordinary
course of business;
(b) the sale of inventory, cash or Cash Equivalents, in each case in
the ordinary course of business;
(c) Dispositions permitted by Sections 6.4(a) and (b);
(d) the sale or issuance of any Subsidiary's Capital Stock to the
Company, the Borrower or any Subsidiary Guarantor;
(e) the Disposition of other assets having a fair market value not
to exceed $10,000,000 (or, if greater at the time of any such Disposition,
10% of the consolidated total assets of the Company and its Subsidiaries
at such time, determined in accordance
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65
with GAAP) in the aggregate during the term of this Agreement; provided
that the requirements of Section 2.12(a) are complied with in connection
therewith; and
(f) the Disposition of non-core assets or businesses acquired in
connection with any acquisition permitted by Section 6.7; provided that
(x) each such Disposition shall occur not more than 120 days following
such acquisition, (y) each such Disposition shall be in an amount equal to
the fair market value thereof and (z) the requirements of Section 2.12(a)
are complied with in connection therewith.
6.6 Limitation on Restricted Payments. Declare or pay any dividend
(other than dividends payable solely in common stock of the Person making such
dividend) on, or make any payment on account of, or set apart assets for a
sinking or other analogous fund for, the purchase, redemption, defeasance,
retirement or other acquisition of, any Capital Stock of the Company or any
Subsidiary, whether now or hereafter outstanding, or make any other distribution
in respect thereof, either directly or indirectly, whether in cash or property
or in obligations of the Company or any Subsidiary (collectively, "Restricted
Payments"), except that:
(a) any Subsidiary may make Restricted Payments to the Borrower or
any Subsidiary Guarantor;
(b) so long as no Default or Event of Default shall have occurred
and be continuing, the Borrower or any other Subsidiary may pay dividends
to the Company to permit the Company to (and the Company may) repurchase
shares of its Capital Stock (and/or options or warrants in respect
thereof) from present or former directors, officers or employees of the
Company, the Borrower or any other Subsidiary upon the death, disability
or termination of employment of such director, officer or employee or
otherwise pursuant to, and in accordance with the terms of, stock option
plans, stock subscription agreements or shareholder agreements; provided
that the aggregate amount of payments under this clause (b) shall not
exceed $1,000,000 in any fiscal year;
(c) the Borrower or any other Subsidiary may pay dividends to the
Company to permit the Company to (i) pay operating expenses incurred in
the ordinary course of business (and other similar corporate overhead
costs and expenses) not to exceed $1,000,000 in any fiscal year and (ii)
pay any taxes which are due and payable by the Company as part of a
consolidated group;
(d) so long as no Default or Event of Default shall have occurred
and be continuing, the Borrower or any other Subsidiary may pay dividends
to the Company in an amount sufficient for the Company pay regularly
scheduled interest on Existing Senior Notes (and the proceeds of such
dividends shall be used only for such purpose);
(e) so long as no Event of Default specified in clause (i), (ii),
(iv) or (v) of Section 7(f) with respect to the Company shall have
occurred and be continuing, any Subsidiary may pay dividends to the
Company; provided that the amount of such
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dividend is, immediately upon receipt by the Company, contributed as cash
equity to the Borrower or any Subsidiary Guarantor;
(f) the Company may redeem in whole or in part any Capital Stock of
the Company for another class of Capital Stock or rights to acquire
Capital Stock of the Company or with proceeds from substantially
concurrent equity contributions or issuances of new shares of Capital
Stock; provided that the terms and conditions of such other class of
Capital Stock shall (in the reasonable judgment of the Administrative
Agent) be no less favorable to the Lenders than those contained in the
Capital Stock redeemed thereby; and
(g) the Company and its Subsidiaries may make Investments permitted
by Section 6.7.
6.7 Limitation on Investments. Make any advance, loan, extension of
credit (by way of guaranty or otherwise) or capital contribution to, or purchase
any Capital Stock, bonds, notes, debentures or other debt securities of, or any
assets constituting an ongoing business from, or make any other investment in,
any other Person (all of the foregoing, "Investments"), except:
(a) extensions of trade credit in the ordinary course of business;
(b) Investments in Cash Equivalents;
(c) Investments arising in connection with the incurrence of
Indebtedness permitted by Section 6.2(b) or Guarantee Obligations
permitted by Section 6.2(e);
(d) loans and advances to employees of the Company or any
Subsidiaries in the ordinary course of business (including, without
limitation, for travel, entertainment and relocation expenses) in an
aggregate amount for the Company and its Subsidiaries not to exceed
$1,000,000 at any one time outstanding;
(e) Investments (other than those relating to the incurrence of
Indebtedness permitted by Section 6.7(c)) by the Company or any of its
Subsidiaries in the Borrower or any Person that, prior to such investment,
is a Subsidiary Guarantor;
(f) Investments in existence on the Original Closing Date set forth
in Part D of Schedule 3.14 and extensions, renewals, modifications,
restatements or replacements thereof; provided that no such extension,
renewal, modification or replacement shall increase the original amount of
such Investment;
(g) Investments in Hedge Agreements permitted by Section 6.16;
(h) Investments received in connection with the bankruptcy or
reorganization of suppliers or customers and in settlement of delinquent
obligations of, and other disputes with, customers arising in the ordinary
course of business;
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(i) Investments constituting non-cash proceeds of sales, transfers
and other Dispositions of Property to the extent permitted by Section 6.5;
and
(j) Investments made to acquire all of the Capital Stock, or all or
substantially all of the assets (or all or substantially all of the assets
of any division or business unit), of any Person that is engaged in a
business permitted under Section 6.14; provided that (a) if such
Investment is an acquisition of the voting Capital Stock of any Person,
such Person's board of directors or similar governing body shall have
approved such acquisition, (b) at the time of each such Investment (both
immediately prior to and after giving effect to such Investment), (i)
there shall exist no Default or Event of Default and (ii) the aggregate
consideration paid (regardless of form, including in the case of an
acquisition of assets, the amount of any assumed obligations, but
excluding consideration paid with Capital Stock of the Company, which
shall be permitted in an unlimited amount) in connection with (x) all
Investments made pursuant to this paragraph (j) during the term of this
Agreement shall not exceed the lesser of (1) $10,000,000 plus the
Available Amount at the time of such Investment and (2) $50,000,000 and
(y) any one Investment shall not exceed $25,000,000 and (c) at least five
Business Days prior to each such Investment, the Administrative Agent
shall have received a certificate of a Responsible Officer certifying as
to the foregoing and containing calculations, in form and substance
reasonably satisfactory to the Administrative Agent, demonstrating in
reasonable detail compliance with this paragraph (j) and Section 6.1
(calculated on a pro forma basis after giving effect to such Investment).
6.8 Limitation on Optional Payments and Modifications of Instruments
and Agreements, etc. (a) (i) Make or offer to make any optional or voluntary
payment, prepayment, repurchase or redemption of, or otherwise voluntarily or
optionally defease, the Existing Senior Notes or any Indebtedness permitted by
Section 6.2(h), or segregate funds for any such payment, prepayment, repurchase,
redemption or defeasance or (ii) amend, modify or otherwise change, or consent
or agree to any amendment, modification, waiver or other change to, any of the
terms of the Existing Senior Notes (other than any such amendment, modification,
waiver or other change which (x) would extend the maturity or reduce the amount
of any payment of principal thereof, reduce the rate or extend the date for
payment of interest thereon or relax any covenant or other restriction
applicable to the Company or any of its Subsidiaries and (y) does not involve
the payment of a consent fee); provided that, so long as no Default or Event of
Default exists at the time thereof, the Company may redeem, repurchase or
otherwise acquire Existing Senior Notes with the proceeds of substantially
concurrent equity contributions from, or issuances of new shares of Capital
Stock to, Permitted Investors.
(b) Amend its certificate of incorporation in any manner which would
reasonably be expected to adversely affect the rights of the Lenders under the
Credit Documents or their ability to enforce such rights.
6.9 Limitation on Transactions with Affiliates. Enter into any
transaction, including, without limitation, any purchase, sale, lease or
exchange of Property, the rendering of
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any service or the payment of any management, advisory or similar fees, with any
Affiliate (other than the Company, the Borrower or any Subsidiary Guarantor)
unless such transaction is (a) otherwise permitted under this Agreement, (b) in
the ordinary course of business of the Company or such Subsidiary, as the case
may be, and (c) upon fair and reasonable terms no less favorable to the Company
or such Subsidiary, as the case may be, than it would obtain in a comparable
arm's length transaction with a Person which is not an Affiliate.
6.10 Limitation on Sales and Leasebacks. Enter into any arrangement
with any Person providing for the leasing by the Company or any Subsidiary of
real or personal property which has been or is to be sold or transferred by the
Company or such Subsidiary to such Person or to any other Person to whom funds
have been or are to be advanced by such Person on the security of such property
or rental obligations of the Company or such Subsidiary, except for any such
leasing arrangement that is permitted by Section 6.5(e).
6.11 Limitation on Changes in Fiscal Periods. Permit the fiscal year
of the Company or any of its Subsidiaries to end on a day other than December 31
or change the Company's or any such Subsidiary's method of determining fiscal
quarters; provided that the Company and its Subsidiaries may change their
respective fiscal year ends if the Borrower enters into such amendments to this
Agreement as the Administrative Agent and the Borrower shall reasonably agree as
necessary to reflect such change, including modifications to Section 6.1, such
that the covenants affected by such change shall have the same effect (or, in
any case, be substantively no less favorable to the Lenders, in the
determination of the Administrative Agent) after giving effect thereto as if
such change were not made. The Lenders hereby authorize the Administrative Agent
to enter into such amendments to effect such modifications, if any, in
accordance with the provisions of this Section.
6.12 Limitation on Negative Pledge Clauses. Enter into or suffer to
exist or become effective any agreement which prohibits or limits the ability of
the Company or any of its Subsidiaries to create, incur, assume or suffer to
exist any Lien upon any of its Property or revenues, whether now owned or
hereafter acquired, to secure the Obligations or, in the case of any Guarantor,
its obligations under the Guarantee and Collateral Agreement, other than (a)
this Agreement and the other Credit Documents, (b) the Existing Senior Notes
Indenture, (c) any agreements governing any purchase money Liens or Capital
Lease Obligations otherwise permitted hereby (in which case, any prohibition or
limitation shall only be effective against the assets financed thereby), (d)
agreements relating to the Disposition, acquisition or lease of Property, in
each case otherwise permitted under this Agreement, so long as such restrictions
relate only to the assets subject to such transaction, (e) agreements relating
to Liens permitted by this Agreement or Liens on Property not purported to be
covered by the Security Documents or required by this Agreement to be so covered
and (f) agreements entered into in the ordinary course of business containing
restrictions customary for such agreements that do not materially affect the
rights or remedies of the Agents or the Lenders under the Credit Documents with
respect to the Collateral or otherwise.
6.13 Limitation on Restrictions on Subsidiary Distributions. Enter
into or suffer to exist or become effective any consensual encumbrance or
restriction on the ability of any
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Subsidiary of the Company to make Restricted Payments in respect of any Capital
Stock of such Subsidiary held by, or pay any Indebtedness owed to, the Borrower
or any other Subsidiary, except for such encumbrances or restrictions existing
under or by reason of (i) any restrictions existing under the Credit Documents
or the Existing Senior Notes Indenture and (ii) any restrictions with respect to
a Subsidiary imposed pursuant to an agreement which has been entered into in
connection with the Disposition of all or substantially all of the Capital Stock
or assets of such Subsidiary.
6.14 Limitation on Lines of Business. Enter into any business,
either directly or through any Subsidiary, except for those businesses in which
the Company and its Subsidiaries are engaged on the date of this Agreement, the
data or telecommunications business or any businesses which are reasonably
related to any of the foregoing.
6.15 Limitation on Capital Expenditures. Make or commit to make any
Capital Expenditure, except Capital Expenditures of the Company and its
Subsidiaries in the ordinary course of business not exceeding $75,000,000 in the
aggregate for the Company and its Subsidiaries during any fiscal year; provided
that (i) up to 25% of any such amount referred to above, if not so expended in
the fiscal year for which it is permitted, may be carried over for expenditure
in the next succeeding fiscal year, (ii) up to 25% of the amount referred to
above for any fiscal year may be expended in the immediately prior fiscal year
(but any amount so expended in any such prior fiscal year may not be expended in
such fiscal year) and (iii) Capital Expenditures made pursuant to this Section
during any fiscal year shall be deemed made, first, in respect of amounts
permitted for such fiscal year as provided above and, second, in respect of
amounts carried over from the prior fiscal year pursuant to subclause (i) above;
and provided, further, that no more than 20% of Capital Expenditures in any
fiscal year may be incurred for expenditures not related to the Company's and
its Subsidiaries' core CLEC switched access business as conducted as of the
Closing Date and similar or related businesses. Notwithstanding the foregoing
limitations, the Company and its Subsidiaries may make Capital Expenditures with
(i) the proceeds of any Reinvestment Deferred Amount received in connection with
a Recovery Event and (ii) the Available Amount at the time any such Capital
Expenditure is made.
6.16 Hedge Agreements; Equity Forward Agreements. Enter into or
suffer to exist or become effective (a) any Hedge Agreement, other than Hedge
Agreements entered into and for non-speculative purposes or (b) any equity
exchange or forward agreement or similar derivative contract or any option to
enter into any such agreement or contract.
6.17 Limitation on Activities of the Company. In the case of the
Company, notwithstanding anything to the contrary in this Agreement or any other
Credit Document, (a) conduct, transact or otherwise engage in, or commit to
conduct, transact or otherwise engage in, any business or operations other than
those incidental to its ownership of the Capital Stock of the Borrower and the
other Subsidiaries of the Company, (b) incur, create, assume or suffer to exist
any Indebtedness or other liabilities or financial obligations, except (i)
nonconsensual obligations imposed by operation of law, (ii) pursuant to the
Credit Documents to which it is a party, (iii) Indebtedness permitted under
Section 6.2 and (iv) obligations with respect to its Capital Stock, or (c) own,
lease, manage or otherwise operate any properties or assets (including
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cash (other than cash received in connection with dividends made by the Borrower
and the other Subsidiaries of the Company in accordance with Section 6.6 pending
application in the manner contemplated by said Section) and cash equivalents)
other than the ownership of shares of Capital Stock of the Borrower and the
other Subsidiaries of the Company.
SECTION 7. EVENTS OF DEFAULT
If any of the following events shall occur and be continuing:
(a) the Borrower shall fail to pay any principal of any Loan when
due in accordance with the terms hereof; or the Borrower shall fail to pay
any interest on any Loan, or any other amount payable hereunder or under
any other Credit Document, within five days after any such interest or
other amount becomes due in accordance with the terms hereof; or
(b) any representation or warranty made or deemed made by any Credit
Party herein or in any other Credit Document or which is contained in any
certificate, document or financial or other statement furnished by it at
any time under or in connection with this Agreement or any other Credit
Document shall prove to have been inaccurate in any material respect on or
as of the date made or deemed made; or
(c) (i) any Credit Party shall default in the observance or
performance of any agreement contained in clause (i) or (ii) of Section
5.4(a) (with respect to the Company and the Borrower only), Section
5.7(a), Section 6 (other than Section 6.10, Section 6.16 and Section 6.17)
or Section 2 of the Guarantee and Collateral Agreement; or
(d) any Credit Party shall default in the observance or performance
of any other agreement contained in this Agreement or any other Credit
Document (other than as provided in paragraphs (a) through (c) of this
Section), and such default shall continue unremedied for a period of 30
days; or
(e) the Company or any of its Subsidiaries shall (i) default in
making any payment of any principal of any Indebtedness (including,
without limitation, any Guarantee Obligation, but excluding the Loans) on
the scheduled or original due date with respect thereto; or (ii) default
in making any payment of any interest on any such Indebtedness beyond the
period of grace, if any, provided in the instrument or agreement under
which such Indebtedness was created; or (iii) default in the observance or
performance of any other agreement or condition relating to any such
Indebtedness or contained in any instrument or agreement evidencing,
securing or relating thereto, or any other event shall occur or condition
exist, the effect of which default or other event or condition is to
cause, or to permit the holder or beneficiary of such Indebtedness (or a
trustee or agent on behalf of such holder or beneficiary) to cause, with
the giving of notice if required, such Indebtedness to become due prior to
its stated maturity or (in the case of any such Indebtedness constituting
a Guarantee Obligation) to become payable;
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provided that a default, event or condition described in clause (i), (ii)
or (iii) of this paragraph (e) shall not at any time constitute an Event
of Default unless, at such time, one or more defaults, events or
conditions of the type described in clauses (i), (ii) and (iii) of this
paragraph (e) shall have occurred and be continuing with respect to
Indebtedness the outstanding principal amount of which exceeds in the
aggregate $3,000,000; or
(f) (i) the Company or any of its Subsidiaries shall commence any
case, proceeding or other action (A) under any existing or future law of
any jurisdiction, domestic or foreign, relating to bankruptcy, insolvency,
reorganization or relief of debtors, seeking to have an order for relief
entered with respect to it, or seeking to adjudicate it a bankrupt or
insolvent, or seeking reorganization, arrangement, adjustment, winding-up,
liquidation, dissolution, composition or other relief with respect to it
or its debts, or (B) seeking appointment of a receiver, trustee,
custodian, conservator or other similar official for it or for all or any
substantial part of its assets, or the Company or any of its Subsidiaries
shall make a general assignment for the benefit of its creditors; or (ii)
there shall be commenced against the Company or any of its Subsidiaries
any case, proceeding or other action of a nature referred to in clause (i)
above which (A) results in the entry of an order for relief or any such
adjudication or appointment or (B) remains undismissed, undischarged or
unbonded for a period of 60 days; or (iii) there shall be commenced
against the Company or any of its Subsidiaries any case, proceeding or
other action seeking issuance of a warrant of attachment, execution,
distraint or similar process against all or any substantial part of its
assets which results in the entry of an order for any such relief which
shall not have been vacated, discharged, or stayed or bonded pending
appeal within 60 days from the entry thereof; or (iv) the Company or any
of its Subsidiaries shall take any action in furtherance of, or indicating
its consent to, approval of, or acquiescence in, any of the acts set forth
in clause (i), (ii), or (iii) above; or (v) the Company or any of its
Subsidiaries shall generally not, or shall be unable to, or shall admit in
writing its inability to, pay its debts as they become due; or
(g) (i) any Person shall engage in any "prohibited transaction" (as
defined in Section 406 of ERISA or Section 4975 of the Code) involving any
Plan, (ii) any "accumulated funding deficiency" (as defined in Section 302
of ERISA), whether or not waived, shall exist with respect to any Plan or
any Lien in favor of the PBGC or a Plan shall arise on the assets of the
Borrower or any Commonly Controlled Entity, (iii) a Reportable Event shall
occur with respect to, or proceedings shall commence to have a trustee
appointed, or a trustee shall be appointed, to administer or to terminate,
any Single Employer Plan, which Reportable Event or commencement of
proceedings or appointment of a trustee is, in the reasonable opinion of
the Required Lenders, likely to result in the termination of such Plan for
purposes of Title IV of ERISA, (iv) any Single Employer Plan shall
terminate for purposes of Title IV of ERISA, (v) the Borrower or any
Commonly Controlled Entity shall, or in the reasonable opinion of the
Required Lenders is likely to, incur any liability in connection with a
withdrawal from, or the Insolvency or Reorganization of, a Multiemployer
Plan or (vi) any other event or condition shall occur or exist with
respect to a Plan; and in each case in clauses (i) through (vi) above,
such event or condition, together with all other such events or
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conditions, if any, could, in the sole judgment of the Required Lenders,
reasonably be expected to have a Material Adverse Effect; or
(h) one or more judgments or decrees shall be entered against the
Company or any of its Subsidiaries involving for the Company and its
Subsidiaries taken as a whole a liability (to the extent not paid or fully
covered by insurance as to which the relevant insurance company has not
denied in writing coverage) of $3,000,000 or more, and all such judgments
or decrees shall not have been satisfied, vacated, discharged, stayed or
bonded pending appeal within 60 days from the entry thereof; or
(i) (i) any provision of the Security Documents shall cease, for any
reason, to be in full force and effect (unless released by the
Administrative Agent at the direction of the requisite Lenders or as
otherwise permitted under this Agreement or the other Credit Documents),
or any Credit Party or any Affiliate of any Credit Party shall so assert,
or (ii) any Lien created by any of the Security Documents shall cease
(with respect to Collateral having a value, in the reasonable judgment of
the Administrative Agent, of at least $1,500,000) to be enforceable and of
the same effect and priority purported to be created thereby (unless
released by the Administrative Agent at the direction of the requisite
Lenders or as otherwise permitted under this Agreement or the other Credit
Documents); or
(j) the guarantee of any Credit Party contained in Section 2 of the
Guarantee and Collateral Agreement shall cease, for any reason, to be in
full force and effect or any Credit Party or any Affiliate of any Credit
Party shall deny or disaffirm its obligation in respect of such guarantee;
or
(k) a Change in Control shall occur;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) above with respect to the Borrower,
automatically the Commitments shall immediately terminate and the Loans
hereunder (with accrued interest thereon) and all other amounts owing under this
Agreement and the other Credit Documents shall immediately become due and
payable, and (B) if such event is any other Event of Default, either or both of
the following actions may be taken: (i) with the consent of the Required
Lenders, the Administrative Agent may, or upon the request of the Required
Lenders, the Administrative Agent shall, by notice to the Borrower declare the
Commitments to be terminated forthwith, whereupon the Commitments shall
immediately terminate; and (ii) with the consent of the Required Lenders, the
Administrative Agent may, or upon the request of the Required Lenders, the
Administrative Agent shall, by notice to the Borrower, declare the Loans
hereunder (with accrued interest thereon) and all other amounts owing under this
Agreement and the other Credit Documents to be due and payable forthwith,
whereupon the same shall immediately become due and payable.
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SECTION 8. THE AGENTS
8.1 Appointment. Each Lender hereby irrevocably designates and
appoints the Agents as the agents of such Lender under this Agreement and the
other Credit Documents, and each such Lender irrevocably authorizes each Agent,
in such capacity, to take such action on its behalf under the provisions of this
Agreement and the other Credit Documents and to exercise such powers and perform
such duties as are expressly delegated to the such Agent by the terms of this
Agreement and the other Credit Documents, together with such other powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary
elsewhere in this Agreement, no Agent shall have any duties or responsibilities,
except those expressly set forth herein, or any fiduciary relationship with any
Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or any other Credit
Document or otherwise exist against any Agent.
8.2 Delegation of Duties. Each Agent may execute any of its duties
under this Agreement and the other Credit Documents by or through agents or
attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. No Agent shall be responsible for the
negligence or misconduct of any agents or attorneys in-fact selected by it with
reasonable care.
8.3 Exculpatory Provisions. Neither any Agent nor any of their
respective officers, directors, employees, agents, attorneys-in-fact or
affiliates shall be (i) liable for any action lawfully taken or omitted to be
taken by it or such Person under or in connection with this Agreement or any
other Credit Document (except to the extent that any of the foregoing are found
by a final and nonappealable decision of a court of competent jurisdiction to
have resulted from its or such Person's own gross negligence or willful
misconduct) or (ii) responsible in any manner to any of the Lenders for any
recitals, statements, representations or warranties made by any Credit Party or
any officer thereof contained in this Agreement or any other Credit Document or
in any certificate, report, statement or other document referred to or provided
for in, or received by the Agents under or in connection with, this Agreement or
any other Credit Document or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other Credit
Document or for any failure of any Credit Party a party thereto to perform its
obligations hereunder or thereunder. The Agents shall not be under any
obligation to any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions of, this
Agreement or any other Credit Document, or to inspect the properties, books or
records of any Credit Party.
8.4 Reliance by Agents. Each Agent shall be entitled to rely, and
shall be fully protected in relying, upon any instrument, writing, resolution,
notice, consent, certificate, affidavit, letter, telecopy, telex or teletype
message, statement, order or other document or conversation believed by it to be
genuine and correct and to have been signed, sent or made by the proper Person
or Persons and upon advice and statements of legal counsel (including, without
limitation, counsel to any of the Credit Parties), independent accountants and
other experts selected by the Administrative Agent. The Agents may deem and
treat the payee of any Note as the owner thereof for all purposes unless a
written notice of assignment, negotiation or transfer
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thereof shall have been filed with the Administrative Agent. Each Agent shall be
fully justified in failing or refusing to take any action under this Agreement
or any other Credit Document unless it shall first receive such advice or
concurrence of the Required Lenders (or, if so specified by this Agreement, all
Lenders) as it deems appropriate or it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and expense which may
be incurred by it by reason of taking or continuing to take any such action.
Each Agent shall in all cases be fully protected in acting, or in refraining
from acting, under this Agreement and the other Credit Documents in accordance
with a request of the Required Lenders (or, if so specified by this Agreement,
all Lenders), and such request and any action taken or failure to act pursuant
thereto shall be binding upon all the Lenders and all future holders of the
Loans.
8.5 Notice of Default. No Agent shall be deemed to have knowledge or
notice of the occurrence of any Default or Event of Default hereunder unless
such Agent has received notice from a Lender, the Company or the Borrower
referring to this Agreement, describing such Default or Event of Default and
stating that such notice is a "notice of default". In the event that the
Administrative Agent receives such a notice, the Administrative Agent shall give
notice thereof to the Lenders. The Administrative Agent shall take such action
with respect to such Default or Event of Default as shall be reasonably directed
by the Required Lenders (or, if so specified by this Agreement, all Lenders);
provided that unless and until the Administrative Agent shall have received such
directions, the Administrative Agent may (but shall not be obligated to) take
such action, or refrain from taking such action, with respect to such Default or
Event of Default as it shall deem advisable in the best interests of the
Lenders.
8.6 Non-Reliance on Agents and Other Lenders. Each Lender expressly
acknowledges that neither the Agents nor any of their respective officers,
directors, employees, agents, attorneys-in-fact or affiliates have made any
representations or warranties to it and that no act by any Agent hereinafter
taken, including any review of the affairs of a Credit Party or any affiliate of
a Credit Party, shall be deemed to constitute any representation or warranty by
any Agent to any Lender. Each Lender represents to the Agents that it has,
independently and without reliance upon any Agent or any other Lender, and based
on such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, operations, property,
financial and other condition and creditworthiness of the Credit Parties and
their affiliates and made its own decision to make its Loans hereunder and enter
into this Agreement. Each Lender also represents that it will, independently and
without reliance upon any Agent or any other Lender, and based on such documents
and information as it shall deem appropriate at the time, continue to make its
own credit analysis, appraisals and decisions in taking or not taking action
under this Agreement and the other Credit Documents, and to make such
investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition and creditworthiness of the
Credit Parties and their affiliates. Except for notices, reports and other
documents expressly required to be furnished to the Lenders by the
Administrative Agent hereunder, no Agent shall have any duty or responsibility
to provide any Lender with any credit or other information concerning the
business, operations, property, condition (financial or otherwise), prospects or
creditworthiness of any Credit Party or any affiliate of a Credit Party which
may come into the possession of such Agent or any of its officers, directors,
employees, agents, attorneys-in-fact or affiliates.
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8.7 Indemnification. The Lenders agree to indemnify each Agent in
its capacity as such (to the extent not reimbursed by the Company or the
Borrower and without limiting the obligation of the Company or the Borrower to
do so), ratably according to their respective Aggregate Exposure Percentages in
effect on the date on which indemnification is sought under this Section (or, if
indemnification is sought after the date upon which the Commitments shall have
terminated and the Loans shall have been paid in full, ratably in accordance
with such Aggregate Exposure Percentages immediately prior to such date), from
and against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind
whatsoever which may at any time (including, without limitation, at any time
following the payment of the Loans) be imposed on, incurred by or asserted
against such Agent in any way relating to or arising out of, the Commitments,
this Agreement, any of the other Credit Documents or any documents contemplated
by or referred to herein or therein or the transactions contemplated hereby or
thereby or any action taken or omitted by such Agent under or in connection with
any of the foregoing; provided that no Lender shall be liable for the payment of
any portion of such liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements which are found by a
final and nonappealable decision of a court of competent jurisdiction to have
resulted from such Agent's gross negligence or willful misconduct. The
agreements in this Section shall survive the payment of the Loans and all other
amounts payable hereunder.
8.8 Agent in Its Individual Capacity. Each Agent and its affiliates
may make loans to, accept deposits from and generally engage in any kind of
business with any Credit Party as though such Agent was not an Agent. With
respect to its Loans made or renewed by it, each Agent shall have the same
rights and powers under this Agreement and the other Credit Documents as any
Lender and may exercise the same as though it were not an Agent, and the terms
"Lender" and "Lenders" shall include each Agent in its individual capacity.
8.9 Successor Agents. The Administrative Agent may resign as
Administrative Agent upon 10 days' notice to the Lenders and the Borrower. If
the Administrative Agent shall resign as Administrative Agent under this
Agreement and the other Credit Documents, then the Required Lenders shall
appoint from among the Lenders a successor agent for the Lenders, which
successor agent shall (unless an Event of Default under Section 7(a) or Section
7(f) with respect to the Borrower shall have occurred and be continuing) be
subject to approval by the Borrower (which approval shall not be unreasonably
withheld or delayed), whereupon such successor agent shall succeed to the
rights, powers and duties of the Administrative Agent, and the term
"Administrative Agent" shall mean such successor agent effective upon such
appointment and approval, and the former Administrative Agent's rights, powers
and duties as Administrative Agent shall be terminated, without any other or
further act or deed on the part of such former Administrative Agent or any of
the parties to this Agreement or any holders of the Loans. If no successor agent
has accepted appointment as Administrative Agent by the date that is 10 days
following a retiring Administrative Agent's notice of resignation, the retiring
Administrative Agent's resignation shall nevertheless thereupon become
effective, and the Lenders shall assume and perform all of the duties of the
Administrative Agent hereunder until such time, if any, as the Required Lenders
appoint a successor agent as provided for above.
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76
After the retiring Administrative Agent's resignation as Administrative Agent,
the provisions of this Section 8 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 Credit Documents.
8.10 Authorization to Release Liens. The Administrative Agent is
hereby irrevocably authorized by each of the Lenders to release any Lien
covering any Property of the Borrower or any of its Subsidiaries that is the
subject of a Disposition which is permitted by this Agreement or which has been
consented to in accordance with Section 9.1.
8.11 The Arranger, Documentation Agent and Syndication Agent. The
Arranger, the Documentation Agent and the Syndication Agent listed on the cover
page hereof shall have no duties or responsibilities, and shall incur no
liability, under this Agreement and the other Credit Documents, except in their
capacity, if any, as Lenders hereunder.
SECTION 9. MISCELLANEOUS
9.1 Amendments and Waivers. Neither this Agreement or any other
Credit Document, nor any terms hereof or thereof may be amended, supplemented or
modified except in accordance with the provisions of this Section. The Required
Lenders and each Credit Party party to the relevant Credit Document may, or
(with the written consent of the Required Lenders) the Administrative Agent and
each Credit Party party to the relevant Credit Document may, from time to time,
(a) enter into written amendments, supplements or modifications hereto and to
the other Credit Documents (including amendments and restatements hereof or
thereof) for the purpose of adding any provisions to this Agreement or the other
Credit Documents or changing in any manner the rights of the Lenders or of the
Credit Parties hereunder or thereunder or (b) waive, on such terms and
conditions as may be specified in the instrument of waiver, any of the
requirements of this Agreement or the other Credit Documents or any Default or
Event of Default and its consequences; provided, however, that no such waiver
and no such amendment, supplement or modification shall (i) forgive the
principal amount or extend the final scheduled date of maturity of any Loan,
extend the scheduled date of any amortization payment in respect of any Loan,
reduce the stated rate of any interest or fee payable hereunder or extend the
scheduled date of any payment thereof, in each case without the consent of each
Lender directly and adversely affected thereby, or increase the amount or extend
the expiration date of any Commitment of any Lender, without the consent of such
Lender; (ii) amend, modify or waive any provision of this Section or reduce any
percentage specified in the definition of Required Lenders, or consent to the
assignment or transfer by the Company or the Borrower of any of its rights and
obligations under this Agreement and the other Credit Documents, in each case
without the consent of all Lenders; (iii) release all or substantially all of
the Collateral or release all or substantially all of the Guarantors from their
guarantee obligations under the Credit Documents (except as otherwise expressly
permitted under the Credit Documents), in each case without the consent of all
Lenders; (iv) reduce the percentage specified in the definition of Majority
Facility Lenders with respect to any Facility without the written consent of all
Lenders under such Facility; (v) amend, modify or waive any provision of Section
8 without the consent of any Agent directly affected thereby; or (vi) amend,
modify or waive any provision of Section 2.6 or 2.7 without the written consent
of the Swing Line Lender.
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77
Notwithstanding anything to the contrary contained herein or in any
Security Document, upon request of the Borrower, the Administrative Agent shall
(without notice to or vote or consent of any Lender) take action having the
effect of releasing any Collateral and/or guarantee obligations provided for in
such Security Document to the extent necessary to permit consummation, by the
relevant Person in accordance with the terms of this Agreement and the other
Credit Documents, of any transaction not prohibited hereunder. Any waiver and
any amendment, supplement or modification of a type referred to above shall
apply equally to each of the Lenders and shall be binding upon the Credit
Parties, the Lenders, the Administrative Agent and all future holders of the
Loans. In the case of any waiver, the Credit Parties, the Lenders and the
Administrative Agent shall be restored to their former position and rights
hereunder and under the other Credit Documents, and any Default or Event of
Default waived shall be deemed to be cured and not continuing; but no such
waiver shall extend to any subsequent or other Default or Event of Default, or
impair any right consequent thereon. Any such waiver, amendment, supplement or
modification shall be effected by a written instrument signed by the parties
required to sign pursuant to the foregoing provisions of this Section; provided
that delivery of an executed signature page of any such instrument by facsimile
transmission shall be effective as delivery of a manually executed counterpart
thereof.
9.2 Notices. All notices, requests and demands to or upon the
respective parties hereto to be effective shall be in writing (including by
telecopy), and, unless otherwise expressly provided herein, shall be deemed to
have been duly given or made when delivered, or three Business Days after being
deposited in the mail, postage prepaid, or, in the case of telecopy notice, when
received, addressed (a) in the case of the Company, the Borrower and the Agents,
as follows and (b) in the case of the Lenders, as set forth on Schedule I to the
Lender Addendum to which such Lender is a party or, in the case of a Lender
which becomes a party to this Agreement pursuant to an Assignment and
Acceptance, in such Assignment and Acceptance or (c) in the case of any party,
to such other address as such party may hereafter notify to the other parties
hereto:
The Company: Birch Telecom, Inc.
2020 Baltimore Avenue
Kansas City, MO 64108
Attention: General Counsel
Telecopy: (816) 300-3291
Telephone: (816) 300-3000
The Borrower: Birch Telecom Finance, Inc.
2020 Baltimore Avenue
Kansas City, MO 64108
Attention: General Counsel
Telecopy: (816) 300-3291
Telephone: (816) 300-3000
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78
The Administrative Agent: Lehman Commercial Paper Inc.
3 World Financial Center
New York, New York 10285
Attention: Michael O'Brien
Telecopy: (212) 526-7691
Telephone: (212) 526-0437
provided that any notice, request or demand to or upon the Administrative Agent
or any Lender shall not be effective until received.
9.3 No Waiver; Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of any Agent or any Lender, any right, remedy,
power or privilege hereunder or under the other Credit Documents shall operate
as a waiver thereof; nor shall any single or partial exercise of any right,
remedy, power or privilege hereunder preclude any other or further exercise
thereof or the exercise of any other right, remedy, power or privilege. The
rights, remedies, powers and privileges herein provided are cumulative and not
exclusive of any rights, remedies, powers and privileges provided by law.
9.4 Survival of Representations and Warranties. All representations
and warranties made hereunder, in the other Credit Documents and in any
document, certificate or statement delivered pursuant hereto or in connection
herewith shall survive the execution and delivery of this Agreement and the
making of the Loans and other extensions of credit hereunder.
9.5 Payment of Expenses. The Borrower agrees (a) to pay or reimburse
the Administrative Agent for all their reasonable out-of-pocket costs and
expenses incurred in connection with the syndication of the Facilities (other
than fees payable to syndicate members) and the development, preparation and
execution of, and any amendment, supplement or modification to, this Agreement
and the other Credit Documents and any other documents prepared in connection
herewith or therewith, and the consummation and administration of the
transactions contemplated hereby and thereby, including, without limitation, the
reasonable fees and disbursements and other charges of counsel to the
Administrative Agent, (b) to pay or reimburse each Lender and the Agents for all
its costs and expenses incurred in connection with the enforcement or
preservation of any rights under this Agreement, the other Credit Documents and
any such other documents, including, without limitation, the fees and
disbursements of counsel (including the allocated fees and disbursements and
other charges of in-house counsel) to each Lender and of counsel to the Agents,
(c) to pay, indemnify, and hold each Lender and the Agents harmless from, any
and all recording and filing fees and any and all liabilities with respect to,
or resulting from any delay in paying, stamp, excise and other taxes, if any,
which may be payable or determined to be payable in connection with the
execution and delivery of, or consummation or administration of any of the
transactions contemplated by, or any amendment, supplement or modification of,
or any waiver or consent under or in respect of, this Agreement, the other
Credit Documents and any such other documents, and (d) to pay, indemnify, and
hold each Lender and the Agents and their respective officers, directors,
trustees, employees, affiliates, agents, controlling persons, attorneys and
advisers (each, an "Indemnitee") harmless
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79
from and against any and all other liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses or disbursements of any
kind or nature whatsoever with respect to the execution, delivery, enforcement,
performance and administration of this Agreement, the other Credit Documents and
any such other documents, including, without limitation, any of the foregoing
relating to the use of proceeds of the Loans or the violation of, noncompliance
with or liability under, any Environmental Law applicable to the operations of
the Company or any of its Subsidiaries or any of the Properties and the fees and
disbursements and other charges of legal counsel in connection with claims,
actions or proceedings by any Indemnitee against the Borrower hereunder (all the
foregoing in this clause (d), collectively, the "Indemnified Liabilities");
provided that the Borrower shall have no obligation hereunder to any Indemnitee
with respect to Indemnified Liabilities to the extent such Indemnified
Liabilities are found by a final and nonappealable decision of a court of
competent jurisdiction to have resulted from the gross negligence or willful
misconduct of such Indemnitee. Without limiting the foregoing, and to the extent
permitted by applicable law, the Company agrees not to assert and to cause its
Subsidiaries not to assert, and hereby waives and agrees to cause its
Subsidiaries so to waive, all rights for contribution or any other rights of
recovery with respect to all claims, demands, penalties, fines, liabilities,
settlements, damages, costs and expenses of whatever kind or nature, under or
related to Environmental Laws, that any of them might have by statute or
otherwise against any indemnitee. The agreements in this Section shall survive
repayment of the Loans and all other amounts payable hereunder.
9.6 Successors and Assigns; Participations and Assignments. (a) This
Agreement shall be binding upon and inure to the benefit of the Company, the
Borrower, the Lenders, the Agents, all future holders of the Loans and their
respective successors and assigns, except that neither the Company nor the
Borrower may assign or transfer any of its respective rights or obligations
under this Agreement without the prior written consent of the Administrative
Agent and each Lender.
(b) Any Lender may, without the consent of the Borrower, in
accordance with applicable law, at any time sell to one or more banks, financial
institutions or other entities (each, a "Participant") participating interests
in any Loan owing to such Lender, any Commitment of such Lender or any other
interest of such Lender hereunder and under the other Credit Documents. In the
event of any such sale by a Lender of a participating interest to a Participant,
such Lender's obligations under this Agreement to the other parties to this
Agreement shall remain unchanged, such Lender shall remain solely responsible
for the performance thereof, such Lender shall remain the holder of any such
Loan for all purposes under this Agreement and the other Credit Documents, and
the Borrower and the Agents shall continue to deal solely and directly with such
Lender in connection with such Lender's rights and obligations under this
Agreement and the other Credit Documents. In no event shall any Participant
under any such participation have any right to approve any amendment or waiver
of any provision of any Credit Document, or any consent to any departure by any
Credit Party therefrom, except for those matters specified in clauses (i), (ii)
and (iii) of the proviso in Section 9.1. The Borrower agrees that if amounts
outstanding under this Agreement and the Loans are due or unpaid, or shall have
been declared or shall have become due and payable upon the occurrence of an
Event of Default, each Participant shall, to the maximum extent permitted by
applicable law, be deemed to have
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80
the right of setoff in respect of its participating interest in amounts owing
under this Agreement to the same extent as if the amount of its participating
interest were owing directly to it as a Lender under this Agreement; provided
that, in purchasing such participating interest, such Participant shall be
deemed to have agreed to share with the Lenders the proceeds thereof as provided
in Section 9.7(a) as fully as if it were a Lender hereunder. The Borrower also
agrees that each Participant shall be entitled to the benefits of Sections 2.19,
2.20 and 2.21 with respect to its participation in the Commitments and the Loans
outstanding from time to time as if it was a Lender; provided that, in the case
of Section 2.20, such Participant shall have complied with the requirements of
Section 2.20 and provided, further, that no Participant shall be entitled to
receive any greater amount pursuant to any such Section than the transferor
Lender would have been entitled to receive in respect of the amount of the
participation transferred by such transferor Lender to such Participant had no
such transfer occurred.
(c) Any Lender (an "Assignor") may, in accordance with applicable
law and upon written notice to the Administrative Agent, at any time and from
time to time assign to any Lender or any Affiliate thereof or, with the written
consent of the Borrower and the Administrative Agent and, in the case of any
assignment of Revolving Credit Commitments and Revolving Credit Loans only, the
written consent of the Swing Line Lender (which, in each case, shall not be
unreasonably withheld or delayed and shall not be required in connection with an
assignment involving LCPI or any of its Affiliates) to an additional bank,
financial institution or other entity (an "Assignee") all or any part of its
rights and obligations under this Agreement pursuant to an Assignment and
Acceptance, substantially in the form of Exhibit D, executed by such Assignee
and such Assignor (and, where the consent of the Borrower, the Administrative
Agent or the Swing Line Lender is required pursuant to the foregoing provisions,
by the Borrower and such other Persons) and delivered to the Administrative
Agent for its acceptance and recording in the Register; provided that (i) no
such assignment to an Assignee (other than any Lender or any Affiliate thereof,
including, without limitation, in the case of any Lender that is an investment
fund which is regularly engaged in making, purchasing or investing in loans or
securities, any other such fund which is under common (or affiliated) management
with such Lender) shall (other than in the case of an assignment of all of a
Lender's rights under this Agreement) be in an aggregate principal amount of
less than $5,000,000 (or such lesser amount as may be agreed to by the Borrower
and the Administrative Agent) and (ii) each partial assignment of any Class of
Commitment and/or Loans shall be made as an assignment or a proportionate part
of all the assigning Lender's rights and obligations of such Class of
Commitments and Loans under this Agreement. Any such assignment need not be
ratable as among the Facilities. Upon such execution, delivery, acceptance and
recording, from and after the effective date determined pursuant to such
Assignment and Acceptance, (x) the Assignee thereunder shall be a party hereto
and, to the extent provided in such Assignment and Acceptance, have the rights
and obligations of a Lender hereunder with a Commitment and/or Loans as set
forth therein, and (y) the Assignor thereunder shall, to the extent provided in
such Assignment and Acceptance, be released from its obligations under this
Agreement (and, in the case of an Assignment and Acceptance covering all of an
Assignor's rights and obligations under this Agreement, such Assignor shall
cease to be a party hereto). Notwithstanding any provision of this Section, the
consent of the Borrower shall not be required for any assignment which occurs at
any time when any Event of Default shall have occurred and be continuing.
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81
(d) The Administrative Agent shall, on behalf of the Borrower,
maintain at its address referred to in Section 9.2 a copy of each Assignment and
Acceptance delivered to it and a register (the "Register") for the recordation
of the names and addresses of the Lenders and the Commitment of, and principal
amount of the Loans owing to, each Lender from time to time. The entries in the
Register shall be conclusive, in the absence of manifest error, and the
Borrower, the Administrative Agent and the Lenders shall treat each Person whose
name is recorded in the Register as the owner of the Loans and any Notes
evidencing such Loans recorded therein for all purposes of this Agreement. Any
assignment of any Loan, whether or not evidenced by a Note, shall be effective
only upon appropriate entries with respect thereto being made in the Register
(and each Note shall expressly so provide). Any assignment or transfer of all or
part of a Loan evidenced by a Note shall be registered on the Register only upon
surrender for registration of assignment or transfer of the Note evidencing such
Loan, accompanied by a duly executed Assignment and Acceptance; thereupon one or
more new Notes in the same aggregate principal amount shall be issued to the
designated Assignee, and the old Notes shall be returned by the Administrative
Agent to the Borrower marked "cancelled". The Register shall be available for
inspection by the Borrower or any Lender at any reasonable time and from time to
time upon reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed by an
Assignor and an Assignee (and, in any case where the consent of any other Person
is required by Section 9.6(c), by each such other Person) together with payment
to the Administrative Agent of a registration and processing fee of $3,500
(except that no such registration and processing fee shall be payable (y) in
connection with an assignment by or to LCPI or any of its Affiliates or (z) in
the case of an Assignee which is already a Lender or is an Affiliate of a Lender
(including, without limitation in the case of any Lender that is an investment
fund which is regularly engaged in making, purchasing or investing in loans or
securities, any other such fund which is under common (or affiliated) management
with such Lender), the Administrative Agent shall (i) promptly accept such
Assignment and Acceptance and (ii) on the effective date determined pursuant
thereto record the information contained therein in the Register and give notice
of such acceptance and recordation to the Lenders and the Borrower. On or prior
to such effective date, the Borrower, at its own expense, upon request, shall
execute and deliver to the Administrative Agent (in exchange for the Revolving
Credit Note and/or Term Note, as the case may be, of the assigning Lender) a new
Revolving Credit Note and/or Term Note, as the case may be, to the order of such
Assignee in an amount equal to the Revolving Credit Commitment and/or Term
Commitment or Term Loans, as the case may be, assumed or acquired by it pursuant
to such Assignment and Acceptance and, if the Assignor has retained a Revolving
Credit Commitment and/or Term Commitment or Term Loans, as the case may be, upon
request, a new Revolving Credit Note and/or Term Notes, as the case may be, to
the order of the Assignor in an amount equal to the Revolving Credit Commitment
and/or applicable Term Commitment or Term Loans, as the case may be, retained by
it hereunder. Such new Note or Notes shall be dated the Closing Date and shall
otherwise be in the form of the Note or Notes replaced thereby.
(f) For avoidance of doubt, the parties to this Agreement
acknowledge that the provisions of this Section concerning assignments of Loans
and Notes relate only to absolute
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82
assignments and that such provisions do not prohibit assignments creating
security interests, including, without limitation, any pledge or assignment by a
Lender of any Loan or Note to any Person including, without limitation, any
Federal Reserve Bank in accordance with applicable law.
9.7 Adjustments; Set-off. (a) Except to the extent that this
Agreement provides for payments to be allocated to a particular Lender or to the
Lenders under a particular Facility, if any Lender (a "Benefitted Lender") shall
at any time receive any payment of all or part of the Obligations owing to it,
or receive any collateral in respect thereof (whether voluntarily or
involuntarily, by set-off, pursuant to events or proceedings of the nature
referred to in Section 7(f), or otherwise), in a greater proportion than any
such payment to or collateral received by any other Lender, if any, in respect
of such other Lender's Obligations, such Benefitted Lender shall purchase for
cash from the other Lenders a participating interest in such portion of each
such other Lender's Obligations, or shall provide such other Lenders with the
benefits of any such collateral, as shall be necessary to cause such Benefitted
Lender to share the excess payment or benefits of such collateral ratably with
each of the Lenders; provided, however, that if all or any portion of such
excess payment or benefits is thereafter recovered from such Benefitted Lender,
such purchase shall be rescinded, and the purchase price and benefits returned,
to the extent of such recovery, but without interest.
(b) In addition to any rights and remedies of the Lenders provided
by law, each Lender shall have the right, without prior notice to the Company or
the Borrower, any such notice being expressly waived by the Company and the
Borrower to the extent permitted by applicable law, upon any amount becoming due
and payable by the Company or the Borrower hereunder (whether at the stated
maturity, by acceleration or otherwise), to set off and appropriate and apply
against such amount any and all deposits (general or special, time or demand,
provisional or final), in any currency, and any other credits, indebtedness or
claims, in any currency, in each case whether direct or indirect, absolute or
contingent, matured or unmatured, at any time held or owing by such Lender or
any branch or agency thereof to or for the credit or the account of the Company
or the Borrower, as the case may be. Each Lender agrees promptly to notify the
Borrower and the Administrative Agent after any such setoff and application made
by such Lender; provided that the failure to give such notice shall not affect
the validity of such setoff and application.
9.8 Counterparts. This Agreement may be executed by one or more of
the parties to this Agreement on any number of separate counterparts, and all of
said counterparts taken together shall be deemed to constitute one and the same
instrument. Delivery of an executed signature page of this Agreement by
facsimile transmission shall be effective as delivery of a manually executed
counterpart hereof. A set of the copies of this Agreement signed by all the
parties shall be lodged with the Borrower and the Administrative Agent.
9.9 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any
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83
such prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
9.10 Integration. This Agreement and the other Credit Documents
represent the agreement of the Company, the Borrower, the Administrative Agent
and the Lenders with respect to the subject matter hereof, and there are no
promises, undertakings, representations or warranties by the Administrative
Agent or any Lender relative to subject matter hereof not expressly set forth or
referred to herein or in the other Credit Documents.
9.11 GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF
THE PARTIES UNDER THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
9.12 Submission to Jurisdiction; Waivers. Each of the Company and
the Borrower hereby irrevocably and unconditionally:
(a) submits for itself and its Property in any legal action or
proceeding relating to this Agreement and the other Credit Documents to
which it is a party, or for recognition and enforcement of any judgment in
respect thereof, to the non-exclusive general jurisdiction of the courts
of the State of New York, the courts of the United States of America for
the Southern District of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have to
the venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not
to plead or claim the same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form of mail), postage prepaid, to the
Company or the Borrower, as the case may be, at its address set forth in
Section 9.2 or at such other address of which the Administrative Agent
shall have been notified pursuant thereto;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right
it may have to claim or recover in any legal action or proceeding referred
to in this Section any special, exemplary, punitive or consequential
damages.
9.13 Acknowledgments. Each of the Company and the Borrower hereby
acknowledges that:
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(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Credit Documents;
(b) neither the Administrative Agent nor any Lender has any
fiduciary relationship with or duty to the Company or the Borrower arising
out of or in connection with this Agreement or any of the other Credit
Documents, and the relationship between Administrative Agent and Lenders,
on one hand, and the Company and the Borrower, on the other hand, in
connection herewith or therewith is solely that of debtor and creditor;
and
(c) no joint venture is created hereby or by the other Credit
Documents or otherwise exists by virtue of the transactions contemplated
hereby among the Lenders or among the Company, the Borrower and the
Lenders.
9.14 Confidentiality. Each of the Agents and the Lenders agrees to
keep confidential all non-public information provided to it by any Credit Party
pursuant to this Agreement that is designated by such Credit Party as
confidential (including any such information already in the possession of such
Lender or provided to such Lender by a third party not in violation of this
Agreement which, in either case, is not, to the knowledge of such Lender,
subject to a confidentiality agreement); provided that nothing herein shall
prevent any Agent or any Lender from disclosing any such information (a) to any
Agent or any other Lender or any of its Affiliates, (b) to any Participant or
Assignee (each, a "Transferee") or prospective Transferee or to any direct or
indirect contractual counterparties in swap agreements or such contractual
counterparties' professional advisors which receives such information and agrees
to comply with the provisions of this Section, (c) any of its employees,
directors, agents, attorneys, accountants and other professional advisors, (d)
upon the request or demand of any Governmental Authority having jurisdiction
over it, (e) in response to any order of any court or other Governmental
Authority or as may otherwise be required pursuant to any Requirement of Law,
(f) if requested or required to do so in connection with any litigation or
similar proceeding, (g) which has been publicly disclosed other than in breach
of this Section, (h) to the National Association of Insurance Commissioners or
any similar organization or any nationally recognized rating agency that
requires access to information about a Lender's investment portfolio in
connection with ratings issued with respect to such Lender or (i) in connection
with the exercise of any remedy hereunder or under any other Credit Document.
9.15 Accounting Changes. In the event that any "Accounting Changes"
(as defined below) shall occur and such changes result in a change in the method
of calculation of financial covenants, standards or terms in this Agreement,
then the Company, the Borrower and the Administrative Agent agree to enter into
negotiations in order to amend such provisions of this Agreement so as to
equitably reflect such Accounting Changes with the desired result that the
criteria for evaluating the Company's and the Borrower's financial condition
shall be the same after such Accounting Changes as if such Accounting
Changes had not been made. Until such time as such an amendment shall have been
executed and delivered by the Company, the Borrower, the Administrative Agent
and the Required Lenders, all financial covenants, standards and terms in this
Agreement shall continue to be calculated or construed as if such Accounting
<PAGE>
85
Changes had not occurred. "Accounting Changes" refers to changes in accounting
principles required by the promulgation of any rule, regulation, pronouncement
or opinion by the Financial Accounting Standards Board of the American Institute
of Certified Public Accountants or, if applicable, the SEC.
9.16 Delivery of Lender Addenda. Each initial Lender shall become a
party to this Agreement by delivering to the Administrative Agent a Lender
Addendum duly executed by such Lender, the Borrower and the Administrative
Agent.
9.17 WAIVERS OF JURY TRIAL. THE COMPANY, THE BORROWER, THE
ADMINISTRATIVE AGENT AND THE LENDERS HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVE TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT
OR ANY OTHER CREDIT DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
<PAGE>
86
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed and delivered by their proper and duly authorized officers as
of the day and year first above written.
BIRCH TELECOM, INC.
By:
_______________________________
Name:
Title:
BIRCH TELECOM FINANCE, INC.
By:
_______________________________
Name:
Title:
<PAGE>
87
LEHMAN COMMERCIAL PAPER INC.,
as Administrative Agent
By:_______________________________
Name:
Title:
<PAGE>
SCHEDULE I
PRICING GRID
=================== ========================== =========================
Term Loan Facility
Term Loan Facility and
and Revolving Credit
Revolving Credit Facility Facility
Total Leverage Applicable Margin for Applicable Margin for
Ratio Eurodollar Loans Base Rate Loans
------------------- -------------------------- -------------------------
> 8.01:1 (or 3.75% 2.50%
negative EBITDA)
------------------- -------------------------- -------------------------
> 7.00: 1 < 8:00.1 3.50% 2.25%
-
------------------- -------------------------- -------------------------
> 6.00:1 < 7.00:1 3.25% 2.00%
-
------------------- -------------------------- -------------------------
> 5.00:1 < 6.00:1 3.00% 1.75%
-
------------------- -------------------------- -------------------------
< 5.00:1 2.75% 1.50%
-
=================== ========================== =========================
<PAGE>
Schedule 6.2(d)
EXISTING INDEBTEDNESS
1. The Company has the following mortgage:
Mortgage dated June 23, 1992 between Valu-Line Companies, Inc. and Bank IV
for the property at 1420 C of E Drive, Emporia, Kansas in the amount of
$244,460.
2. Birch Telecom of Kansas, Inc., f/k/a Valu-Line of Kansas, Inc., is a party
to that certain Capital Lease dated December 14, 1995, by and between Bank
IV and Valu-Line of Kansas, Inc. for the switch equipment located at 155
North Market, Wichita, Kansas in the amount of $237,363.
3. The Company is a party to a Capital Lease with Lewis Leasing for service
vehicles in the amount of $341,258.
4. Master Lease Agreement dated March 5, 1999, by and between the Company and
Cisco Systems Capital Corporation in the amount of $744,555.
5. Master Lease Agreement dated January 5, 1999, by and between the Company
and Ascend Credit Corporation in the amount of $213,688.
6. Master Lease dated July 14, 1998, by and between Mike Collin & Associates,
Inc. and the Company in the amount of $378,013.
7. Indebtedness under the Existing Senior Notes.
<PAGE>
EXHIBIT A
FORM OF AMENDED AND RESTATED
GUARANTEE AND COLLATERAL AGREEMENT
-------------------------------------------------------------------------------
AMENDED AND RESTATED
GUARANTEE AND COLLATERAL AGREEMENT
made by
BIRCH TELECOM, INC.
BIRCH TELECOM FINANCE, INC.
and certain other Subsidiaries of Birch Telecom, Inc.
in favor of
LEHMAN COMMERCIAL PAPER INC.,
as Administrative Agent
Dated as of February 2, 2000
-----------------------------------
--------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
SECTION 1. DEFINED TERMS....................................................1
1.1 Definitions......................................................1
1.2 Other Definitional Provisions....................................5
SECTION 2. GUARANTEE........................................................6
2.1 Guarantee........................................................6
2.2 Right of Contribution............................................6
2.3 No Subrogation...................................................7
2.4 Amendments, etc. with respect to the Borrower Obligations........7
2.5 Guarantee Absolute and Unconditional.............................7
2.6 Reinstatement....................................................8
2.7 Payments.........................................................9
SECTION 3. GRANT OF SECURITY INTEREST.......................................9
SECTION 4. REPRESENTATIONS AND WARRANTIES...................................9
4.1 Representations in Credit Agreement.............................10
4.2 Title; No Other Liens...........................................10
4.3 Perfected First Priority Liens..................................10
4.4 Chief Executive Office..........................................10
4.5 Inventory and Equipment.........................................10
4.6 Farm Products...................................................10
4.7 Pledged Securities..............................................11
4.8 Receivables.....................................................11
4.9 Intellectual Property...........................................11
SECTION 5. COVENANTS.......................................................12
5.1 Covenants in Credit Agreement...................................12
5.2 Delivery of Instruments and Chattel Paper.......................12
5.3 Maintenance of Insurance........................................12
5.4 Payment of Obligations..........................................13
5.5 Maintenance of Perfected Security Interest; Further
Documentation...................................................13
5.6 Changes in Locations, Name, etc.................................13
5.7 Notices.........................................................14
5.9 Receivables.....................................................15
5.10 Intellectual Property...........................................16
5.11 Vehicles........................................................17
SECTION 6. REMEDIAL PROVISIONS.............................................17
6.1 Certain Matters Relating to Receivables.........................17
Guarantee and Collateral Agreement
<PAGE>
ii
6.2 Communications with Obligors; Grantors Remain Liable............18
6.3 Pledged Stock...................................................19
6.4 Proceeds to be Turned Over to Administrative Agent..............19
6.5 Application of Proceeds.........................................20
6.6 Code and Other Remedies.........................................20
6.7 Waiver; Deficiency..............................................21
SECTION 7. THE ADMINISTRATIVE AGENT........................................21
7.1 Administrative Agent's Appointment as Attorney-in-Fact, etc.....21
7.2 Duty of Administrative Agent....................................23
7.3 Execution of Financing Statements...............................23
7.4 Authority of Administrative Agent...............................24
SECTION 8. MISCELLANEOUS...................................................24
8.1 Amendments in Writing...........................................24
8.2 Notices.........................................................24
8.3 No Waiver by Course of Conduct; Cumulative Remedies.............24
8.4 Enforcement Expenses; Indemnification...........................24
8.5 Successors and Assigns..........................................25
8.6 Set-Off.........................................................25
8.7 Counterparts....................................................25
8.8 Severability....................................................25
8.9 Section Headings................................................26
8.10 Integration.....................................................26
8.11 GOVERNING LAW...................................................26
8.12 Submission to Jurisdiction; Waivers.............................26
8.13 Acknowledgements................................................27
8.14 Additional Guarantors...........................................27
8.15 Releases........................................................27
8.16 WAIVER OF JURY TRIAL............................................28
8.17 Governmental Approvals..........................................28
Guarantee and Collateral Agreement
<PAGE>
AMENDED AND RESTATED
GUARANTEE AND COLLATERAL AGREEMENT
AMENDED AND RESTATED GUARANTEE AND COLLATERAL AGREEMENT, dated as of
February 2, 2000, made by each of the signatories hereto (together with any
other entity that may become a party hereto as provided herein, the "Grantors"),
in favor of LEHMAN COMMERCIAL PAPER INC., as Administrative Agent (in such
capacity, the "Administrative Agent") for the banks and other financial
institutions (the "Lenders") from time to time parties to the Amended and
Restated Credit Agreement, dated as of February 2, 2000 (as amended,
supplemented or otherwise modified from time to time, the "Credit Agreement"),
among BIRCH TELECOM, INC., a Delaware corporation (the "Company"), BIRCH TELECOM
FINANCE, INC., a Delaware corporation (the "Borrower"), the Lenders and LEHMAN
COMMERCIAL PAPER INC. as Administrative Agent.
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, pursuant to the Credit Agreement, the Lenders have
severally agreed to make extensions of credit to the Borrower upon the terms and
subject to the conditions set forth therein;
WHEREAS, the Borrower is a member of an affiliated group of
companies that includes each other Grantor;
WHEREAS, the Borrower and the other Grantors are engaged in related
businesses, and each Grantor will derive substantial direct and indirect benefit
from the making of the extensions of credit under the Credit Agreement; and
WHEREAS, it is a condition precedent to the obligation of the
Lenders to make their respective extensions of credit to the Borrower under the
Credit Agreement that the Grantors shall have executed and delivered this
Agreement to the Administrative Agent for the ratable benefit of the Lenders;
NOW, THEREFORE, in consideration of the premises and to induce the
Agents and the Lenders to enter into the Credit Agreement and to induce the
Lenders to make their respective extensions of credit to the Borrower
thereunder, each Grantor hereby agrees with the Administrative Agent, for the
ratable benefit of the Lenders, as follows:
SECTION 1. DEFINED TERMS
1.1. Definitions.
(a) Unless otherwise defined herein, terms defined in the Credit
Agreement and used herein shall have the meanings given to them in the Credit
Agreement, and the following terms which are defined in the Uniform Commercial
Code in effect in the State of
Guarantee and Collateral Agreement
<PAGE>
2
New York on the date hereof are used herein as so defined: Accounts, Chattel
Paper, Documents, Equipment, Farm Products, Instruments, Inventory and
Investment Property.
(b) The following terms shall have the following meanings:
"Agreement": this Guarantee and Collateral Agreement, as the same
may be amended, supplemented or otherwise modified from time to time.
"Borrower Obligations": the collective reference to the unpaid
principal of and interest on the Loans and all other obligations and liabilities
of the Borrower (including, without limitation, interest accruing at the then
applicable rate provided in the Credit Agreement after the maturity of the Loans
and interest accruing at the then applicable rate provided in the Credit
Agreement after the filing of any petition in bankruptcy, or the commencement of
any insolvency, reorganization or like proceeding, relating to the Borrower,
whether or not a claim for post-filing or post-petition interest is allowed in
such proceeding) to any Agent or any Lender (or, in the case of any Hedge
Agreement referred to below, any Affiliate of any Lender), whether direct or
indirect, absolute or contingent, due or to become due, or now existing or
hereafter incurred, which may arise under, out of, or in connection with, the
Credit Agreement, this Agreement, the other Credit Documents, any Letter of
Credit or any Hedge Agreement entered into by the Borrower with any Lender (or
any Affiliate of any Lender) or any other document made, delivered or given in
connection therewith, in each case whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses or otherwise
(including, without limitation, all fees and disbursements of counsel to the
Administrative Agent or to the Lenders that are required to be paid by the
Borrower pursuant to the terms of any of the foregoing agreements).
"Collateral": as defined in Section 3.
"Collateral Account": any collateral account established by the
Administrative Agent as provided in Section 6.1 or 6.4.
"Copyrights": (i) all copyrights arising under the laws of the
United States, any other country or any political subdivision thereof, whether
registered or unregistered and whether published or unpublished (including,
without limitation, those listed in Schedule 6), all registrations and
recordings thereof, and all applications in connection therewith, including,
without limitation, all registrations, recordings and applications in the United
States Copyright Office, and (ii) the right to obtain all renewals thereof.
"Copyright Licenses": any written agreement naming any Grantor as
licensor or licensee (including, without limitation, those listed in Schedule
6), granting any right under any Copyright, including, without limitation, the
grant of rights to manufacture, distribute, exploit and sell materials derived
from any Copyright.
"General Intangibles": all "general intangibles" as such term is
defined in Section 9-106 of the Uniform Commercial Code in effect in the State
of New York on the date hereof and, in any event, including, without limitation,
with respect to any Grantor, (a) all contracts, agreements, instruments and
indentures in any form, and portions thereof, to which such Grantor is a party
or under which
Guarantee and Collateral Agreement
<PAGE>
3
such Grantor has any right, title or interest or to which such Grantor or any
property of such Grantor is subject, as the same may from time to time be
amended, supplemented or otherwise modified, including, without limitation, (i)
all rights of such Grantor to receive moneys due and to become due to it
thereunder or in connection therewith, (ii) all rights of such Grantor to
damages arising thereunder and (iii) all rights of such Grantor to perform and
to exercise all remedies thereunder, in each case to the extent the grant by
such Grantor of a security interest pursuant to this Agreement in its right,
title and interest in such contract, agreement, instrument or indenture is not
prohibited by such contract, agreement, instrument or indenture without the
consent of any other party thereto, would not give any other party to such
contract, agreement, instrument or indenture the right to terminate its
obligations thereunder, or is permitted with consent if all necessary consents
to such grant of a security interest have been obtained from the other parties
thereto (it being understood that the foregoing shall not be deemed to obligate
such Grantor to obtain such consents), provided that the foregoing limitation
shall not affect, limit, restrict or impair the grant by such Grantor of a
security interest pursuant to this Agreement in any Receivable or any money or
other amounts due or to become due under any such contract, agreement,
instrument or indenture; and (b) all rights of such Grantor under or relating to
any license, permit, consent, certificate of compliance, franchise, approval,
waiver or authorization granted or issued by any Governmental Authority (each a
"Governmental Approval") and the proceeds from the sale of any such Governmental
Approval or any goodwill or other intangible rights or benefits associated
therewith, provided that such security interest does not include at any time any
Governmental Approval to the extent (but only to the extent) that at such time
the Administrative Agent may not validly possess a security interest therein
under applicable law and regulations, as in effect at such time, but such
security interest does include, to the maximum extent permitted by law, all
rights incident or appurtenant to Governmental Approvals and the right to
receive all proceeds derived from or in connection with the sale, assignment or
transfer thereof.
"Governmental Approval": as defined in the definition of "General
Intangibles" in this Section 1.1.
"Guarantor Obligations": with respect to any Guarantor, all
obligations and liabilities of such Guarantor which may arise under or in
connection with this Agreement (including, without limitation, Section 2) or any
other Credit Document to which such Guarantor is a party, in each case whether
on account of guarantee obligations, reimbursement obligations, fees,
indemnities, costs, expenses or otherwise (including, without limitation, all
fees and disbursements of counsel to the Administrative Agent or to the Lenders
that are required to be paid by such Guarantor pursuant to the terms of this
Agreement or any other Credit Document).
"Guarantors": the collective reference to each Grantor other
than the Borrower.
"Hedge Agreements": as to any Person, all interest rate swaps, caps
or collar agreements or similar arrangements entered into by such Person
providing for protection against fluctuations in interest rates or currency
exchange rates or the exchange of nominal interest obligations, either generally
or under specific contingencies.
"Intellectual Property": the collective reference to all rights,
priorities and privileges relating to intellectual property, whether arising
under United States, multinational or foreign laws or otherwise, including,
without limitation, the Copyrights, the Copyright Licenses, the Patents, the
Patent Licenses, the Trademarks and the Trademark Licenses, and all rights to
Guarantee and Collateral Agreement
<PAGE>
4
sue at law or in equity for any infringement or other impairment thereof,
including the right to receive all proceeds and damages therefrom, in the case
of any Copyright Licenses, Patent Licenses or Trademark Licenses to the extent
the grant by such Grantor of a security interest pursuant to this Agreement in
its right, title and interest therein is not prohibited by such Copyright
License, Patent License or Trademark License without the consent of any other
party thereto, would not give any other party to such Copyright License, Patent
License or Trademark License the right to terminate its obligations thereunder,
or is permitted with consent if all necessary consents to such grant of a
security interest have been obtained from the other parties thereto (it being
understood that the foregoing shall not be deemed to obligate such Grantor to
obtain such consents); provided that the foregoing limitation shall not affect,
limit, restrict or impair the grant by such Grantor of a security interest
pursuant to this Agreement in any Receivable or any money or other amounts due
or to become due under any such Copyright License, Patent License or Trademark
License.
"Intercompany Note": any promissory note evidencing loans made by
any Grantor to the Company or any of its Subsidiaries.
"Issuers": the collective reference to each issuer of a Pledged
Security.
"New York UCC": the Uniform Commercial Code as from time to time in
effect in the State of New York.
"Obligations": (i) in the case of the Borrower, the Borrower
Obligations, and (ii) in the case of each Guarantor, its Guarantor Obligations.
"Patents": (i) all letters patent of the United States, any other
country or any political subdivision thereof, all reissues and extensions
thereof and all goodwill associated therewith, including, without limitation,
any of the foregoing referred to in Schedule 6, (ii) all applications for
letters patent of the United States or any other country and all divisions,
continuations and continuations-in-part thereof, including, without limitation,
any of the foregoing referred to in Schedule 6, and (iii) all rights to obtain
any reissues or extensions of the foregoing.
"Patent License": all agreements, whether written or oral, providing
for the grant by or to any Grantor of any right to manufacture, use or sell any
invention covered in whole or in part by a Patent, including, without
limitation, any of the foregoing referred to in Schedule 6.
"Pledged Notes": all promissory notes listed on Schedule 2, all
Intercompany Notes at any time issued to any Grantor and all other promissory
notes issued to or held by any Grantor (other than promissory notes issued in
connection with extensions of trade credit by any Grantor in the ordinary course
of business).
"Pledged Securities": the collective reference to the Pledged Notes
and the Pledged Stock.
"Pledged Stock": the shares of Capital Stock listed on Schedule 2,
together with any other shares, stock certificates, options or rights of any
nature whatsoever in respect of
Guarantee and Collateral Agreement
<PAGE>
5
the Capital Stock of any Person that may be issued or granted to, or held by,
any Grantor while this Agreement is in effect.
"Proceeds": all "proceeds" as such term is defined in Section
9-306(l) of the Uniform Commercial Code in effect in the State of New York on
the date hereof and, in any event, shall include, without limitation, all
dividends or other income from the Pledged Securities, collections thereon or
distributions or payments with respect thereto.
"Receivable": any right to payment for goods sold or leased or for
services rendered, whether or not such right is evidenced by an Instrument or
Chattel Paper and whether or not it has been earned by performance (including,
without limitation, any Account).
"Trademarks": (i) all trademarks, trade names, corporate names,
company names, business names, fictitious business names, trade styles, service
marks, logos and other source or business identifiers, and all goodwill
associated therewith, now existing or hereafter adopted or, acquired, all
registrations and recordings thereof, and all applications in connection
therewith, whether in the United States Patent and Trademark Office or in any
similar office or agency of the United States, any State thereof or any other
country or any political subdivision thereof, or otherwise, and all common-law
rights related thereto, including, without limitation, any of the foregoing
referred to in Schedule 6, and (ii) the right to obtain all renewals thereof.
"Trademark License": any agreement, whether written or oral,
providing for the grant by or to any Grantor of any right to use any Trademark,
including, without limitation, any of the foregoing referred to in Schedule 6.
"Vehicles": all cars, trucks, trailers, construction and earth
moving equipment and other vehicles covered by a certificate of title law of any
state and, in any event including, without limitation all tires and other
appurtenances to any of the foregoing.
1.2. Other Definitional Provisions.
(a) The words "hereof," "herein", "hereto" and "hereunder" and words
of similar import when used in this Agreement shall refer to this Agreement as a
whole and not to any particular provision of this Agreement, and Section and
Schedule references are to this Agreement unless otherwise specified.
(b)The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
(c) Where the context requires, terms relating to the Collateral
or any part thereof, when used in relation to a Grantor, shall refer to such
Grantor's Collateral or the relevant part thereof.
SECTION 2. GUARANTEE
2.1 Guarantee.
Guarantee and Collateral Agreement
<PAGE>
6
(a) Each of the Guarantors hereby, jointly and severally,
unconditionally and irrevocably, guarantees to the Administrative Agent, for the
ratable benefit of the Lenders and their respective successors, indorsees,
transferees and assigns, the prompt and complete payment and performance by the
Borrower when due (whether at the stated maturity, by acceleration or otherwise)
of the Borrower Obligations.
(b) Anything herein or in any other Credit Document to the
contrary notwithstanding, the maximum liability of each Guarantor hereunder and
under the other Credit Documents shall in no event exceed the amount which can
be guaranteed by such Guarantor under applicable federal and state laws relating
to the insolvency of debtors (after giving effect to the right of contribution
established in Section 2.2).
(c) Each Guarantor agrees that the Borrower Obligations may at any
time and from time to time exceed the amount of the liability of such Guarantor
hereunder without impairing the guarantee contained in this Section 2 or
affecting the rights and remedies of the Administrative Agent or any Lender
hereunder.
(d) The guarantee contained in this Section 2 shall remain in full
force and effect until all the Borrower Obligations and the obligations of each
Guarantor under the guarantee contained in this Section 2 shall have been
satisfied by payment in full, no Letter of Credit shall be outstanding and the
Commitments shall be terminated, notwithstanding that from time to time during
the term of the Credit Agreement the Borrower may be free from any Borrower
Obligations.
(e) No payment made by the Borrower, any of the Guarantors, any
other guarantor or any other Person or received or collected by the
Administrative Agent or any Lender from the Borrower, any of the Guarantors, any
other guarantor or any other Person by virtue of any action or proceeding or any
set-off or appropriation or application at any time or from time to time in
reduction of or in payment of the Borrower Obligations shall be deemed to
modify, reduce, release or otherwise affect the liability of any Guarantor
hereunder which shall, notwithstanding any such payment (other than any payment
made by such Guarantor in respect of the Borrower Obligations or any payment
received or collected from such Guarantor in respect of the Borrower
Obligations), remain liable for the Borrower Obligations up to the maximum
liability of such Guarantor hereunder until the Borrower Obligations are paid in
full, no Letter of Credit shall be outstanding and the Commitments are
terminated.
2.2 Right of Contribution. Each Subsidiary Guarantor hereby agrees
that to the extent that a Subsidiary Guarantor shall have paid more than its
proportionate share of any payment made hereunder, such Subsidiary Guarantor
shall be entitled to seek and receive contribution from and against any other
Subsidiary Guarantor hereunder which has not paid its proportionate share of
such payment. Each Subsidiary Guarantor's right of contribution shall be subject
to the terms and conditions of Section 2.3. The provisions of this Section 2.2
shall in no respect limit the obligations and liabilities of any Subsidiary
Guarantor to the Administrative Agent and the Lenders, and each Subsidiary
Guarantor shall remain liable to the Administrative Agent and the Lenders for
the full amount guaranteed by such Subsidiary Guarantor hereunder.
2.3 No Subrogation. Notwithstanding any payment made by any
Guarantor hereunder or any set-off or application of funds of any Guarantor by
the
Guarantee and Collateral Agreement
<PAGE>
7
Administrative Agent or any Lender, no Guarantor shall be entitled to be
subrogated to any of the rights of the Administrative Agent or any Lender
against the Borrower or any other Guarantor or any collateral security or
guarantee or right of offset held by the Administrative Agent or any Lender for
the payment of the Borrower Obligations, nor shall any Guarantor seek or be
entitled to seek any contribution or reimbursement from the Borrower or any
other Guarantor in respect of payments made by such Guarantor hereunder, until
all amounts owing to the Administrative Agent and the Lenders by the Borrower on
account of the Borrower Obligations are paid in full, no Letter of Credit shall
be outstanding and the Commitments are terminated. If any amount shall be paid
to any Guarantor on account of such subrogation rights at any time when all of
the Borrower Obligations shall not have been paid in full, such amount shall be
held by such Guarantor in trust for the Administrative Agent and the Lenders,
segregated from other funds of such Guarantor, and shall, forthwith upon receipt
by such Guarantor, be turned over to the Administrative Agent in the exact form
received by such Guarantor (duly indorsed by such Guarantor to the
Administrative Agent, if required), to be applied against the Borrower
Obligations, whether matured or unmatured, in such order as the Administrative
Agent may determine.
2.4 Amendments, etc. with respect to the Borrower Obligations.
Each Guarantor shall remain obligated hereunder notwithstanding that, without
any reservation of rights against any Guarantor and without notice to or further
assent by any Guarantor, any demand for payment of any of the Borrower
Obligations made by the Administrative Agent or any Lender may be rescinded by
the Administrative Agent or such Lender and any of the Borrower Obligations
continued, and the Borrower Obligations, or the liability of any other Person
upon or for any part thereof, or any collateral security or guarantee therefor
or right of offset with respect thereto, may, from time to time, in whole or in
part, be renewed, extended, amended, modified, accelerated, compromised, waived,
surrendered or released by the Administrative Agent or any Lender, and the
Credit Agreement and the other Credit Documents and any other documents executed
and delivered in connection therewith may be amended, modified, supplemented or
terminated, in whole or in part, as the Administrative Agent (or the Required
Lenders or all Lenders, as the case may be) may deem advisable from time to
time, and any collateral security, guarantee or right of offset at any time held
by the Administrative Agent or any Lender for the payment of the Borrower
Obligations may be sold, exchanged, waived, surrendered or released. Neither the
Administrative Agent nor any Lender shall have any obligation to protect,
secure, perfect or insure any Lien at any time held by it as security for the
Borrower Obligations or for the guarantee contained in this Section 2 or any
property subject thereto.
2.5 Guarantee Absolute and Unconditional. Each Guarantor waives
any and all notice of the creation, renewal, extension or accrual of any of the
Borrower Obligations and notice of or proof of reliance by the Administrative
Agent or any Lender upon the guarantee contained in this Section 2 or acceptance
of the guarantee contained in this Section 2; the Borrower Obligations, and any
of them, shall conclusively be deemed to have been created, contracted or
incurred, or renewed, extended, amended or waived, in reliance upon the
guarantee contained in this Section 2; and all dealings between the Borrower and
any of the Guarantors, on the one hand, and the Administrative Agent and the
Lenders, on the other hand, likewise shall be conclusively presumed to have been
had or consummated in reliance upon the guarantee contained in this Section 2.
Each Guarantor waives diligence, presentment, protest,
Guarantee and Collateral Agreement
<PAGE>
8
demand for payment and notice of default or nonpayment to or upon the Borrower
or any of the Guarantors with respect to the Borrower Obligations. Each
Guarantor understands and agrees that the guarantee contained in this Section 2
shall be construed as a continuing, absolute and unconditional guarantee of
payment without regard to (a) the validity or enforceability of the Credit
Agreement or any other Credit Document, any of the Borrower Obligations or any
other collateral security therefor or guarantee or right of offset with respect
thereto at any time or from time to time held by the Administrative Agent or any
Lender, (b) any defense, set-off or counterclaim (other than a defense of
payment or performance) which may at any time be available to or be asserted by
the Borrower or any other Person against the Administrative Agent or any Lender,
or (c) any other circumstance whatsoever (with or without notice to or knowledge
of the Borrower or such Guarantor) which constitutes, or might be construed to
constitute, an equitable or legal discharge of the Borrower for the Borrower
Obligations, or of such Guarantor under the guarantee contained in this Section
2, in bankruptcy or in any other instance. When making any demand hereunder or
otherwise pursuing its rights and remedies hereunder against any Guarantor, the
Administrative Agent or any Lender may, but shall be under no obligation to,
make a similar demand on or otherwise pursue such rights and remedies as it may
have against the Borrower, any other Guarantor or any other Person or against
any collateral security or guarantee for the Borrower Obligations or any right
of offset with respect thereto, and any failure by and Agent or any Lender to
make any such demand, to pursue such other rights or remedies or to collect any
payments from the Borrower, any other Guarantor or any other Person or to
realize upon any such collateral security or guarantee or to exercise any such
right of offset, or any release of the Borrower, any other Guarantor or any
other Person or any such collateral security, guarantee or right of offset,
shall not relieve any Guarantor of any obligation or liability hereunder, and
shall not impair or affect the rights and remedies, whether express, implied or
available as a matter of law, of any Agent or any Lender against any Guarantor.
For the purposes hereof "demand" shall include the commencement and continuance
of any legal proceedings.
2.6 Reinstatement. The guarantee contained in this Section 2 shall
continue to be effective, or be reinstated, as the case may be, if at any time
payment, or any part thereof, of any of the Borrower Obligations is rescinded or
must otherwise be restored or returned by the Administrative Agent or any Lender
upon the insolvency, bankruptcy, dissolution, liquidation or reorganization of
the Borrower or any Guarantor, or upon or as a result of the appointment of a
receiver, intervenor or conservator of, or trustee or similar officer for, the
Borrower or any Guarantor or any substantial part of its property, or otherwise,
all as though such payments had not been made.
2.7 Payments. Each Guarantor hereby guarantees that payments
hereunder will be paid to the Administrative Agent without set-off or
counterclaim in Dollars at the office of the Administrative Agent located at the
Payment Office specified in the Credit Agreement.
SECTION 3. GRANT OF SECURITY INTEREST
Each Grantor hereby assigns and transfers to the Administrative
Agent, and hereby grants to the Administrative Agent, for the ratable benefit of
the Lenders, a security interest in, all of the following property now owned or
at any time hereafter acquired by such
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Grantor or in which such Grantor now has or at any time in the future may
acquire any right, title or interest (collectively, the "Collateral"), as
collateral security for the prompt and complete payment and performance when due
(whether at the stated maturity, by acceleration or otherwise) of such Grantor's
Obligations,:
(a) all Accounts;
(b) all Chattel Paper;
(c) all Documents;
(d) all Equipment;
(e) all General Intangibles;
(f) all Instruments;
(g) all Intellectual Property;
(h) all Inventory;
(i) all Pledged Securities;
(j) all Vehicles;
(k) all Investment Property;
(l) all deposit accounts and other bank accounts;
(m) all books and records pertaining to the Collateral; and
(n) to the extent not otherwise included, all Proceeds and products
of any and all of the foregoing and all collateral security and guarantees
given by any Person with respect to any of the foregoing.
SECTION 4. REPRESENTATIONS AND WARRANTIES
To induce the Agents and the Lenders to enter into the Credit
Agreement and to induce the Lenders to make their respective extensions of
credit to the Borrower thereunder, each Grantor hereby represents and warrants
to the Agents and each Lender that:
4.1 Representations in Credit Agreement. In the case of each
Guarantor, the representations and warranties set forth in Section 4 of the
Credit Agreement as they relate to such Guarantor or to the Credit Documents to
which such Guarantor is a party, each of which is hereby incorporated herein by
reference, are true and correct, and the Agents and each Lender shall be
entitled to rely on each of them as if they were fully set forth herein,
provided that each reference in each such representation and warranty to the
Borrower's
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10
knowledge shall, for the purposes of this Section 4.1, be deemed to be a
reference to such Guarantor's knowledge.
4.2 Title; No Other Liens. Except for the security interest
granted to the Administrative Agent for the ratable benefit of the Lenders
pursuant to this Agreement and the other Liens permitted to exist on the
Collateral by the Credit Agreement, such Grantor owns each item of the
Collateral free and clear of any and all Liens or claims of others. No financing
statement or other public notice with respect to all or any part of the
Collateral is on file or of record in any public office, except such as have
been filed in favor of the Administrative Agent, for the ratable benefit of the
Lenders, pursuant to this Agreement or as are permitted by the Credit Agreement.
4.3 Perfected First Priority Liens. The security interests granted
pursuant to this Agreement (a) upon completion of the filings and other actions
specified on Schedule 3 (which, in the case of all filings and other documents
referred to on said Schedule, have been delivered to the Administrative Agent in
completed and duly executed form) will constitute valid perfected security
interests in all of the Collateral (to the extent perfection of a security
interest in such Collateral can be obtained by such filings and other actions)
in favor of the Administrative Agent, for the ratable benefit of the Lenders, as
collateral security for such Grantor's Obligations, enforceable in accordance
with the terms hereof against all creditors of such Grantor and any Persons
purporting to purchase any Collateral from such Grantor and (b) are prior to all
other Liens on the Collateral in existence on the date hereof except for (i)
Liens permitted by the Credit Agreement and (ii) Liens described on Schedule 7.
4.4 Chief Executive Office. On the date hereof, such Grantor's
jurisdiction of organization and the location of such Grantor's chief executive
office or sole place of business are specified on Schedule 4.
4.5 Inventory and Equipment. On the date hereof, the Inventory and
the Equipment (other than mobile goods) are kept at the locations listed on
Schedule 5.
4.6 Farm Products. None of the Collateral constitutes, or is the
Proceeds of, Farm Products.
4.7 Pledged Securities.
(a) The shares of Pledged Stock pledged by such Grantor hereunder
constitute all of the issued and outstanding shares of all classes of the
Capital Stock of each Issuer owned by such Grantor.
(b) All the shares of the Pledged Stock have been duly and validly
issued and are fully paid and nonassessable.
(c) Each of the Pledged Notes constitutes the legal, valid and
binding obligation of the obligor with respect thereto, enforceable in
accordance with its terms, subject to the effects of bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally, general equitable
principles
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11
(whether considered in a proceeding in equity or at law) and an implied covenant
of good faith and fair dealing.
(d) Such Grantor is the record and beneficial owner of, and has
good and marketable title to, the Pledged Securities pledged by it hereunder,
free of any and all Liens or options in favor of, or claims of, any other
Person, except the security interest created by this Agreement.
4.8 Receivables.
(a) No amount payable to such Grantor under or in connection with
any Receivable is evidenced by any Instrument or Chattel Paper which has not
been delivered to the Administrative Agent, other than such Instrument or
Chattel Paper received by such Grantor in the ordinary course of its business.
(b) None of the obligors on any material Receivable is a
Governmental Authority.
(c) The amounts represented by such Grantor to the Lenders from
time to time as owing to such Grantor in respect of the Receivables will at such
times be accurate in all material respects.
4.9 Intellectual Property.
(a) Schedule 6 lists all material Intellectual Property owned by
such Grantor in its own name on the date hereof that is material to the conduct
of its business, including, without limitation, all Intellectual Property that
is registered in the United States Patent and Trademark Office or the United
States Copyright Office in the name of such Grantor on the date hereof.
(b) On the date hereof, all material Intellectual Property is
valid, subsisting, unexpired and enforceable, has not been abandoned and does
not infringe the intellectual property rights of any other Person.
(c) Except as set forth in Schedule 6, on the date hereof, none of
the Intellectual Property is the subject of any licensing or franchise agreement
pursuant to which such Grantor is the licensor or franchisor.
SECTION 5. COVENANTS
Each Grantor covenants and agrees with the Administrative Agent and
the Lenders that, from and after the date of this Agreement until the
Obligations shall have been paid in full, no Letter of Credit shall be
outstanding and the Commitments shall have terminated:
5.1 Covenants in Credit Agreement. In the case of each Guarantor,
such Guarantor shall take, or shall refrain from taking, as the case may be,
each action that is necessary to be taken or not taken, as the case may be, so
that no Default or Event of Default is
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12
caused by the failure to take such action or to refrain from taking such action
by such Guarantor or any of its Subsidiaries.
5.2 Delivery of Instruments and Chattel Paper. If any amount
payable under or in connection with any of the Collateral shall be or become
evidenced by any Instrument or Chattel Paper, such Instrument or Chattel Paper
shall be immediately delivered to the Administrative Agent, duly indorsed in a
manner satisfactory to the Administrative Agent to be held as Collateral
pursuant to this Agreement; provided that so long as no Event of Default shall
have occurred and be continuing, the relevant Grantor may retain for collection
in the ordinary course of its business any Instruments or Chattel Paper received
by such Grantor in the ordinary course of its business.
5.3 Maintenance of Insurance.
(a) Such Grantor will maintain, with financially sound and
reputable companies, insurance policies (i) insuring the Inventory, Equipment
and Vehicles against loss by fire, explosion, theft and such other casualties as
may be reasonably satisfactory to the Administrative Agent and (ii) to the
extent requested by the Administrative Agent, insuring such Grantor, the Agents
and the Lenders against liability for personal injury and property damage
relating to such Inventory, Equipment and Vehicles, such policies to be in such
form and amounts and having such coverage as may be reasonably satisfactory to
the Administrative Agent and the Lenders.
(b) All such insurance shall (i) provide that no cancellation,
material reduction in amount or material change in coverage thereof shall be
effective until at least 30 days after receipt by the Administrative Agent of
written notice thereof, (ii) name the Administrative Agent as insured party or
loss payee, (iii) if reasonably requested by the Administrative Agent, include a
breach of warranty clause and (iv) be reasonably satisfactory in all other
respects to the Administrative Agent.
(c) The Borrower shall deliver to the Administrative Agent and the
Lenders a report of a reputable insurance broker with respect to such insurance
as the Administrative Agent may from time to time reasonably request.
5.4 Payment of Obligations. Such Grantor will pay and discharge or
otherwise satisfy at or before maturity or before they become delinquent, as the
case may be, all taxes, assessments and government charges or levies imposed
upon the Collateral or in respect of income or profits therefrom, as well as all
claims of any kind (including, without limitation, claims for labor, materials
and supplies) against or with respect to the Collateral, except that no such
charge need be paid if the amount or validity thereof is currently being
contested in good faith by appropriate proceedings, reserves in conformity with
GAAP with respect thereto have been provided on the books of such Grantor and
such proceedings could not reasonably be expected to result in the sale,
forfeiture or loss of any material portion of the Collateral or any interest
therein.
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5.5 Maintenance of Perfected Security Interest; Further
Documentation.
(a) Such Grantor shall maintain the security interest created by
this Agreement as a perfected security interest having at least the priority
described in Section 4.3 and shall defend such security interest against the
claims and demands of all Persons whomsoever.
(b) Such Grantor will furnish to the Administrative Agent and the
Lenders from time to time statements and schedules further identifying and
describing the Collateral and such other reports in connection with the
Collateral as the Administrative Agent may reasonably request, all in reasonable
detail.
(c) At any time and from time to time, upon the written request of
the Administrative Agent, and at the sole expense of such Grantor, such Grantor
will promptly and duly execute and deliver, and have recorded, such further
instruments and documents and take such further actions as the Administrative
Agent may reasonably request for the purpose of obtaining or preserving the full
benefits of this Agreement and of the rights and powers herein granted,
including, without limitation, the filing of any financing or continuation
statements under the Uniform Commercial Code (or other similar laws) in effect
in any jurisdiction with respect to the security interests created hereby.
5.6 Changes in Locations, Name, etc. Such Grantor will not, except
upon 15 days' prior written notice to the Administrative Agent and delivery to
the Administrative Agent of (a) all additional executed financing statements and
other documents reasonably requested by the Agents to maintain the validity,
perfection and priority of the security interests provided for herein, and (b)
if applicable, a written supplement to Schedule 5 showing any additional
location at which Inventory or Equipment shall be kept:
(i) permit any of the Inventory or Equipment (other than Equipment
that has been temporarily removed from any such location for maintenance
or repair and goods which are mobile and which are of a type normally used
in more than one jurisdiction) to be kept at a location other than those
listed on Schedule 5 under its name or in transit from one of such
locations to another;
(ii) change the location of its chief executive office or sole place
of business from that referred to in Section 4.4; or
(iii) change its name, identity or corporate structure to such an
extent that any financing statement filed by the Administrative Agent in
connection with this Agreement would become misleading.
5.7 Notices. Such Grantor will advise the Administrative Agent and
the Lenders promptly, in reasonable detail, of:
(a) any Lien (other than security interests created hereby or Liens
permitted under the Credit Agreement) on any of the Collateral which would
adversely affect the ability of the Agents to exercise any of its remedies
hereunder; and
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14
(b) of the occurrence of any other event which could reasonably be
expected to have a material adverse effect on the aggregate value of the
Collateral or on the security interests created hereby.
5.8 Pledged Securities.
(a) If such Grantor shall become entitled to receive or shall
receive any stock certificate (including, without limitation, any certificate
representing a stock dividend or a distribution in connection with any
reclassification, increase or reduction of capital or any certificate issued in
connection with any reorganization), option or rights in respect of the Capital
Stock of any Issuer, whether in addition to, in substitution of, as a conversion
of, or in exchange for, any shares of the Pledged Stock, or otherwise in respect
thereof, such Grantor shall accept the same as the agent of the Administrative
Agent and the Lenders, hold the same in trust for the Administrative Agent and
the Lenders and deliver the same forthwith to the Administrative Agent in the
exact form received, duly indorsed by such Grantor to the Administrative Agent,
if required, together with an undated stock power covering such certificate duly
executed in blank by such Grantor and with, if the Administrative Agent so
requests, signature guaranteed, to be held by the Administrative Agent, subject
to the terms hereof, as additional collateral security for the Obligations. Any
sums paid upon or in respect of the Pledged Securities upon the liquidation or
dissolution of any Issuer shall be paid over to the Administrative Agent to be
held by it hereunder as additional collateral security for the Obligations, and
in case any distribution of capital shall be made on or in respect of the
Pledged Securities or any property shall be distributed upon or with respect to
the Pledged Securities pursuant to the recapitalization or reclassification of
the capital of any Issuer or pursuant to the reorganization thereof, the
property so distributed shall, unless otherwise subject to a perfected security
interest in favor of the Administrative Agent, be delivered to the
Administrative Agent to be held by it hereunder as additional collateral
security for the Obligations. If any sums of money or property so paid or
distributed in respect of the Pledged Securities shall be received by such
Grantor, such Grantor shall, until such money or property is paid or delivered
to the Administrative Agent, hold such money or property in trust for the
Lenders, segregated from other funds of such Grantor, as additional collateral
security for the Obligations.
(b) Except pursuant to a transaction permitted by the Credit
Agreement, without the prior written consent of the Administrative Agent, such
Grantor will not (i) vote to enable, or take any other action to permit, any
Issuer to issue any stock or other equity securities of any nature or to issue
any other securities convertible into or granting the right to purchase or
exchange for any stock or other equity securities of any nature of any Issuer,
(ii) sell, assign, transfer, exchange, or otherwise dispose of, or grant any
option with respect to, the Pledged Securities or Proceeds thereof, (iii)
create, incur or permit to exist any Lien or option in favor of, or any claim of
any Person with respect to, any of the Pledged Securities or Proceeds thereof,
or any interest therein, except for the security interests created by this
Agreement or (iv) enter into any agreement or undertaking restricting the right
or ability of such Grantor or the Administrative Agent to sell, assign or
transfer any of the Pledged Securities or Proceeds thereof.
(c) In the case of each Grantor which is an Issuer, such Issuer
agrees that (i) it will be bound by the terms of this Agreement relating to the
Pledged Securities issued by it and will comply with such terms insofar as such
terms are applicable to it, (ii) it will notify the
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15
Administrative Agent promptly in writing of the occurrence of any of the events
described in Section 5.8(a) with respect to the Pledged Securities issued by it
and (iii) the terms of Section 6.3(c) shall apply to it, mutatis mutandis, with
respect to all actions that may be required of it pursuant to Section 6.3(c)
with respect to the Pledged Securities issued by it.
(d) Birch Texas Holdings, Inc., as the sole General Partner, and
Birch Telecom Inc., as the sole Limited Partner, of Birch Telecom of Texas Ltd.,
L.L.P. (the "Partnership"), pursuant to the Limited Partnership Agreement dated
as of August 26, 1998 (as amended and in effect from time to time, the
"Partnership Agreement"), (i) unconditionally consents to the creation of the
security interests in all of the partnership interests in the Partnership (the
"Partnership Interests") in favor of the Administrative Agent pursuant to this
Agreement, (ii) unconditionally consents to any subsequent transfer of the
Partnership Interests by the Administrative Agent pursuant to this Agreement and
(iii) agrees that (x) any such transfer shall not be subject to any of the terms
and conditions of, and shall be given full force and effect for the purposes of,
the Partnership Agreement and (y) this Section 5.8(d) shall constitute an
amendment to the Partnership Agreement to the extent provided herein, and such
amendment shall continue in full force and effect for the term of this
Agreement.
5.9 Receivables.
(a) Other than in the ordinary course of business consistent with
its past practice, such Grantor will not (i) grant any extension of the time of
payment of any Receivable, (ii) compromise or settle any Receivable for less
than the full amount thereof, (iii) release, wholly or partially, any Person
liable for the payment of any Receivable, (iv) allow any credit or discount
whatsoever on any Receivable or (v) amend, supplement or modify any Receivable
in any manner that could adversely affect the value thereof, in each case
involving a material amount of Receivables.
(b) Such Grantor will deliver to the Administrative Agent a copy
of each material demand, notice or document received by it that questions or
calls into doubt the validity or enforceability of more than 5% of the aggregate
amount of the then outstanding Receivables.
5.10 Intellectual Property.
(a) Except as would not reasonably be expected to have a Material
Adverse Effect:
(i) such Grantor (either itself or through licensees) will (i)
continue to use each material Trademark on each and every trademark class
of goods applicable to its current line as reflected in its current
catalogs, brochures and price lists in order to maintain such Trademark in
full force free from any claim of abandonment for non-use, (ii) maintain
as in the past the quality of products and services offered under such
Trademark, (iii) use such Trademark with the appropriate notice of
registration and all other notices and legends required by applicable
Requirements of Law, (iv) not adopt or use any mark which is confusingly
similar or a colorable imitation of such Trademark unless the
Administrative Agent, for the ratable benefit of the Lenders, shall obtain
a perfected security interest in such mark pursuant to this Agreement, and
(v) not (and not
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16
permit any licensee or sublicensee thereof to) do any act or knowingly
omit to do any act whereby such Trademark may become invalidated or
impaired in any way;
(ii) such Grantor (either itself or through licensees) will
not do any act, or, omit to do any act, whereby any material Patent may
become forfeited, abandoned or dedicated to the public;
(iii) such Grantor (either itself or through licensees) (i)
will employ each material Copyright and (ii) will not (and will not permit
any licensee or sublicensee thereof to) do any act or knowingly omit to do
any act whereby any material portion of the Copyrights may become
invalidated or otherwise impaired, and such Grantor will not (either
itself or through licensees) do any act whereby any material portion of
the Copyrights may fall into the public domain; and
(iv) such Grantor (either itself or through licensees) will
not do any act that knowingly uses any material Intellectual Property to
infringe the intellectual property rights of any other Person.
(b) Such Grantor will notify the Administrative Agent and the
Lenders immediately if it knows, or has reason to know, that any application or
registration relating to any material Intellectual Property may become
forfeited, abandoned or dedicated to the public, or of any adverse determination
or development (including, without limitation, the institution of, or any such
determination or development in, any proceeding in the United States Patent and
Trademark Office, the United States Copyright Office or any court or tribunal in
any country) regarding such Grantor's ownership of, or the validity of, any
material Intellectual Property or such Grantor's right to register the same or
to own and maintain the same.
(c) Whenever such Grantor, either by itself or through any agent,
employee, licensee or designee, shall file an application for the registration
of any Intellectual Property with the United States Patent and Trademark Office,
the United States Copyright Office or any similar office or agency in any other
country or any political subdivision thereof, such Grantor shall report such
filing to the Administrative Agent within five Business Days after the last day
of the fiscal quarter in which such filing occurs. Upon request of the
Administrative Agent, such Grantor shall execute and deliver, and have recorded,
any and all agreements, instruments, documents, and papers as the Administrative
Agent may request to evidence the Administrative Agent's and the Lenders'
security interest in any Copyright, Patent or Trademark and the goodwill and
general intangibles of such Grantor relating thereto or represented thereby.
(d) Such Grantor will take all reasonable and necessary steps,
including, without limitation, in any proceeding before the United States Patent
and Trademark Office, the United States Copyright Office or any similar office
or agency in any other country or any political subdivision thereof, to maintain
and pursue each application (and to obtain the relevant registration) and to
maintain each registration of the material Intellectual Property, including,
without limitation, filing of applications for renewal, affidavits of use and
affidavits of incontestability.
(e) In the event that any material Intellectual Property is
infringed, misappropriated or diluted by a third party, such Grantor shall (i)
take such actions as such
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17
Grantor shall reasonably deem appropriate under the circumstances to protect
such Intellectual Property and (ii) if such Intellectual Property is of material
economic value, promptly notify the Agents after it learns thereof and sue for
infringement, misappropriation or dilution, to seek injunctive relief where
appropriate and to recover any and all damages for such infringement,
misappropriation or dilution.
5.11 Vehicles. Upon the request of the Administrative Agent, all
applications for certificates of title in respect of Vehicles having a fair
market value in excess of $100,000, indicating the Administrative Agent's first
priority security interest in the Vehicles covered by such certificate, and any
other necessary documentation, shall be filed in each office in each
jurisdiction which the Administrative Agent shall deem advisable to perfect its
security interest in the Vehicles.
SECTION 6. REMEDIAL PROVISIONS
6.1 Certain Matters Relating to Receivables.
(a) At any time an Event of Default has occurred and is
continuing, the Administrative Agent shall have the right to make test
verifications of the Receivables in any manner and through any medium that it
reasonably considers advisable, and each Grantor shall furnish all such
assistance and information as the Administrative Agent may require in connection
with such test verifications. At any time an Event of Default has occurred and
is continuing, upon the Administrative Agent's request and at the expense of the
relevant Grantor, such Grantor shall cause independent public accountants or
others satisfactory to the Administrative Agent to furnish to the Administrative
Agent reports showing reconciliations, aging and test verifications of, and
trial balances for, the Receivables.
(b) The Administrative Agent hereby authorizes each Grantor to
collect such Grantor's Receivables, subject to the Administrative Agent's
direction and control at any time an Event of Default has occurred and is
continuing, and the Administrative Agent may curtail or terminate said authority
at any time after the occurrence and during the continuance of an Event of
Default. If required by the Administrative Agent at any time after the
occurrence and during the continuance of an Event of Default, any payments of
Receivables, when collected by any Grantor, (i) shall be forthwith (and, in any
event, within two Business Days) deposited by such Grantor in the exact form
received, duly indorsed by such Grantor to the Administrative Agent if required,
in a Collateral Account maintained under the sole dominion and control of the
Administrative Agent, subject to withdrawal by the Administrative Agent for the
account of the Lenders only as provided in Section 6.5, and (ii) until so turned
over, shall be held by such Grantor in trust for the Administrative Agent and
the Lenders, segregated from other funds of such Grantor. Each such deposit of
Proceeds of Receivables shall be accompanied by a report identifying in
reasonable detail the nature and source of the payments included in the deposit.
(c) At the Administrative Agent's request at any time an Event of
Default has occurred and is continuing, each Grantor shall deliver to the
Administrative Agent all original and other documents evidencing, and relating
to, the agreements and transactions which gave rise to the Receivables,
including, without limitation, all original orders, invoices and shipping
receipts.
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6.2 Communications with Obligors; Grantors Remain Liable.
(a) The Administrative Agent in its own name or in the name of
others may at any time after the occurrence and during the continuance of an
Event of Default communicate with obligors under the Receivables and the General
Intangibles to verify with them to the Administrative Agent's satisfaction the
existence, amount and terms of any Receivables or General Intangible.
(b) Upon the request of the Administrative Agent at any time after
the occurrence and during the continuance of an Event of Default, each Grantor
shall notify obligors on the Receivables and the General Intangibles that the
Receivables and the General Intangibles have been assigned to the Administrative
Agent for the ratable benefit of the Lenders and that payments in respect
thereof shall be made directly to the Administrative Agent.
(c) Anything herein to the contrary notwithstanding, each Grantor
shall remain liable under each of the Receivables and General Intangibles to
observe and perform all the conditions and obligations to be observed and
performed by it thereunder, all in accordance with the terms of any agreement
giving rise thereto. Neither the Administrative Agent nor any Lender shall have
any obligation or liability under any Receivable (or any agreement giving rise
thereto) or General Intangible by reason of or arising out of this Agreement or
the receipt by the Administrative Agent or any Lender of any payment relating
thereto, nor shall the Administrative Agent or any Lender be obligated in any
manner to perform any of the obligations of any Grantor under or pursuant to any
Receivable (or any agreement giving rise thereto) or General Intangible, to make
any payment, to make any inquiry as to the nature or the sufficiency of any
payment received by it or as to the sufficiency of any performance by any party
thereunder, to present or file any claim, to take any action to enforce any
performance or to collect the payment of any amounts which may have been
assigned to it or to which it may be entitled at any time or times.
6.3 Pledged Stock.
(a) Unless an Event of Default shall have occurred and be
continuing and the Administrative Agent shall have given notice to the relevant
Grantor of the Administrative Agent's intent to exercise its corresponding
rights pursuant to Section 6.3(b), each Grantor shall be permitted to receive
all cash dividends paid in respect of the Pledged Stock and all payments made in
respect of the Pledged Notes, in each case paid in the normal course of business
of the relevant Issuer and consistent with past practice, to the extent
permitted in the Credit Agreement, and to exercise all voting and corporate
rights with respect to the Pledged Securities; provided, however, that no vote
shall be cast or corporate right exercised or other action taken which, in the
Administrative Agent's reasonable judgment, would impair the Collateral in any
material respect or which is inconsistent with or results in any violation of
any provision of the Credit Agreement, this Agreement or any other Credit
Document.
(b) If an Event of Default shall occur and be continuing and the
Administrative Agent shall give notice of its intent to exercise such rights to
the relevant Grantor or Grantors, (i) the Administrative Agent shall have the
right to receive any and all cash dividends, payments or other Proceeds paid in
respect of the Pledged Securities and make application thereof to the
Obligations in the order set forth in Section 6.5, and (ii) any or all of
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19
the Pledged Securities shall be registered in the name of the Administrative
Agent or its nominee, and the Administrative Agent or its nominee may thereafter
exercise (x) all voting, corporate and other rights pertaining to such Pledged
Securities at any meeting of shareholders of the relevant Issuer or issuers or
otherwise and (y) any and all rights of conversion, exchange and subscription
and any other rights, privileges or options pertaining to such Pledged
Securities as if it were the absolute owner thereof (including, without
limitation, the right to exchange at its discretion any and all of the Pledged
Securities upon the merger, consolidation, reorganization, recapitalization or
other fundamental change in the corporate structure of any Issuer, or upon the
exercise by any Grantor or the Administrative Agent of any right, privilege or
option pertaining to such Pledged Securities, and in connection therewith, the
right to deposit and deliver any and all of the Pledged Securities with any
committee, depositary, transfer agent, registrar or other designated agency upon
such terms and conditions as the Administrative Agent may determine), all
without liability except to account for property actually received by it, but
the Administrative Agent shall have no duty to any Grantor to exercise any such
right, privilege or option and shall not be responsible for any failure to do so
or delay in so doing.
(c) Each Grantor hereby authorizes and instructs each Issuer of
any Pledged Securities pledged by such Grantor hereunder to (i) comply with any
instruction received by it from the Administrative Agent in writing that (x)
states that an Event of Default has occurred and is continuing and (y) is
otherwise in accordance with the terms of this Agreement, without any other or
further instructions from such Grantor, and each Grantor agrees that each Issuer
shall be fully protected in so complying, and (ii) unless otherwise expressly
permitted hereby, pay any dividends or other payments with respect to the
Pledged Securities directly to the Administrative Agent.
6.4 Proceeds to be Turned Over to Administrative Agent. In
addition to the rights of the Administrative Agent and the Lenders specified in
Section 6.1 with respect to payments of Receivables, if an Event of Default
shall occur and be continuing, all Proceeds received by any Grantor consisting
of cash, checks and other near-cash items shall be held by such Grantor in trust
for the Administrative Agent and the Lenders, segregated from other funds of
such Grantor, and shall, forthwith upon receipt by such Grantor, be turned over
to the Administrative Agent in the exact form received by such Grantor (duly
indorsed by such Grantor to the Administrative Agent, if required). All Proceeds
received by the Administrative Agent hereunder shall be held by the
Administrative Agent in a Collateral Account maintained under its sole dominion
and control. All Proceeds while held by the Administrative Agent in a Collateral
Account (or by such Grantor in trust for the Administrative Agent and the
Lenders) shall continue to be held as collateral security for all the
Obligations and shall not constitute payment thereof until applied as provided
in Section 6.5.
6.5 Application of Proceeds. At such intervals as may be agreed
upon by the Borrower and the Administrative Agent, or, if an Event of Default
shall have occurred and be continuing, at any time at the Agents' election, the
Administrative Agent may apply all or any part of Proceeds constituting
Collateral, whether or not held in any Collateral Account, and any proceeds of
the guarantee set forth in Section 2, in payment of the Obligations in the
following order:
Guarantee and Collateral Agreement
<PAGE>
20
First, to pay incurred and unpaid fees and expenses of the
Administrative Agent under the Credit Documents;
Second, to the Administrative Agent, for application by it towards
payment of amounts then due and owing and remaining unpaid in respect of
the Obligations, pro rata among the Lenders according to the amounts of
the Obligations then due and owing and remaining unpaid to the Lenders;
Third, to the Administrative Agent, for application by it towards
prepayment of the Obligations, pro rata among the Lenders according to the
amounts of the Obligations then held by the Lenders; and
Fourth, any balance of such Proceeds remaining after the Obligations
shall have been paid in full, no Letters of Credit shall be outstanding
and the Commitments shall have terminated shall be paid over to the
Borrower or to whomsoever may be lawfully entitled to receive the same.
6.6 Code and Other Remedies. If an Event of Default shall occur and
be continuing, the Administrative Agent, on behalf of the Lenders, may exercise,
in addition to all other rights and remedies granted to them in this Agreement
and in any other instrument or agreement securing, evidencing or relating to the
Obligations, all rights and remedies of a secured party under the New York UCC
or any other applicable law. Without limiting the generality of the foregoing,
the Administrative Agent, without demand of performance or other demand,
presentment, protest, advertisement or notice of any kind (except any notice
required by law referred to below) to or upon any Grantor or any other Person
(all and each of which demands, defenses, advertisements and notices are hereby
waived), may in such circumstances forthwith collect, receive, appropriate and
realize upon the Collateral, or any part thereof, and/or may forthwith sell,
lease, assign, give option or options to purchase, or otherwise dispose of and
deliver the Collateral or any part thereof (or contract to do any of the
foregoing), in one or more parcels at public or private sale or sales, at any
exchange, broker's board or office of the Administrative Agent or any Lender or
elsewhere upon such terms and conditions as it may deem advisable and at such
prices as it may deem best, for cash or on credit or for future delivery without
assumption of any credit risk. The Administrative Agent or any Lender shall have
the right upon any such public sale or sales, and, to the extent permitted by
law, upon any such private sale or sales, to purchase the whole or any part of
the Collateral so sold, free of any right or equity of redemption in any
Grantor, which right or equity is hereby waived and released. Each Grantor
further agrees, at the Administrative Agent's request to assemble the Collateral
and make it available to the Administrative Agent at places which the
Administrative Agent shall reasonably select, whether at such Grantor's premises
or elsewhere. The Administrative Agent shall apply the net proceeds of any
action taken by it pursuant to this Section 6.6, after deducting all reasonable
costs and expenses of every kind incurred in connection therewith or incidental
to the care or safekeeping of any of the Collateral or in any way relating to
the Collateral or the rights of the Administrative Agent and the Lenders
hereunder, including, without limitation, reasonable attorneys' fees and
disbursements, to the payment in whole or in part of the Obligations, in such
order as the Administrative Agent may elect, and only after such application and
after the payment by the Administrative Agent of any other amount required by
any provision of law, including, without limitation, Section 9-504(l)(c) of the
New York UCC, need
Guarantee and Collateral Agreement
<PAGE>
21
the Administrative Agent account for the surplus, if any, to any Grantor. To the
extent permitted by applicable law, each Grantor waives all claims, damages and
demands it may acquire against the Administrative Agent or any Lender arising
out of the exercise by them of any rights hereunder. If any notice of a proposed
sale or other disposition of Collateral shall be required by law, such notice
shall be deemed reasonable and proper if given at least 10 days before such sale
or other disposition.
6.7 Waiver; Deficiency. Each Grantor waives and agrees not to
assert any rights or privileges which it may acquire under Section 9-112 of the
New York UCC. Each Grantor shall remain liable for any deficiency if the
proceeds of any sale or other disposition of the Collateral are insufficient to
pay its Obligations and the fees and disbursements of any attorneys employed by
the Agents or any Lender to collect such deficiency.
SECTION 7. THE ADMINISTRATIVE AGENT
7.1 Administrative Agent's Appointment as Attorney-in-Fact, etc.
(a) Without limiting any rights or powers granted by this
Agreement to the Administrative Agent while no Event of Default has occurred and
is continuing, each Grantor hereby irrevocably constitutes and appoints the
Administrative Agent and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of such Grantor and in the name of
such Grantor or in its own name at any time an Event of Default has occurred and
is continuing, for the purpose of carrying out the terms of this Agreement, to
take any and all appropriate action and to execute any and all documents and
instruments which may be necessary or desirable to accomplish the purposes of
this Agreement, and, without limiting the generality of the foregoing, each
Grantor hereby gives the Administrative Agent the power and right, on behalf of
such Grantor, without notice to or assent by such Grantor, to do any or all of
the following at any time an Event of Default has occurred and is continuing:
(i) in the name of such Grantor or its own name, or otherwise, take
possession of and indorse and collect any checks, drafts, notes,
acceptances or other instruments for the payment of moneys due under any
Receivable or General Intangible or with respect to any other Collateral
and file any claim or take any other action or proceeding in any court of
law or equity or otherwise deemed appropriate by the Administrative Agent
for the purpose of collecting any and all such moneys due under any
Receivable or General Intangible or with respect to any other Collateral
whenever payable;
(ii) in the case of any Intellectual Property, execute and deliver,
and have recorded, any and all agreements, instruments, documents and
papers as the Administrative Agent may request to evidence the
Administrative Agent's and the Lenders' security interest in such
Intellectual Property and the goodwill and general intangibles of such
Grantor relating thereto or represented thereby;
Guarantee and Collateral Agreement
<PAGE>
22
(iii) pay or discharge taxes and Liens levied or placed on or
threatened against the Collateral, effect any repairs or any insurance
called for by the terms of this Agreement and pay all or any part of the
premiums therefor and the costs thereof,
(iv) execute, in connection with any sale provided for in Section
6.6, any endorsements, assignments or other instruments of conveyance or
transfer with respect to the Collateral; and
(v) (1) direct any party liable for any payment under any of the
Collateral to make payment of any and all moneys due or to become due
thereunder directly to the Administrative Agent or as the Administrative
Agent shall direct; (2) ask or demand for, collect, and receive payment of
and receipt for, any and all moneys, claims and other amounts due or to
become due at any time in respect of or arising out of any Collateral; (3)
sign and indorse any invoices, freight or express bills, bills of lading,
storage or warehouse receipts, drafts against debtors, assignments,
verifications, notices and other documents in connection with any of the
Collateral; (4) commence and prosecute any suits, actions or proceedings
at law or in equity in any court of competent jurisdiction to collect the
Collateral or any portion thereof and to enforce any other right in
respect of any Collateral; (5) defend any suit, action or proceeding
brought against such Grantor with respect to any Collateral; (6) settle,
compromise or adjust any such suit, action or proceeding and, in
connection therewith, give such discharges or releases as the
Administrative Agent may deem appropriate; (7) assign any Copyright,
Patent or Trademark (along with the goodwill of the business to which any
such Copyright, Patent or Trademark pertains), throughout the world for
such term or terms, on such conditions, and in such manner, as the
Administrative Agent shall in its sole discretion determine; and (8)
generally, sell, transfer, pledge and make any agreement with respect to
or otherwise deal with any of the Collateral as fully and completely as
though the Administrative Agent were the absolute owner thereof for all
purposes, and do, at the Administrative Agent's option and such Grantor's
expense, at any time, or from time to time, all acts and things which the
Administrative Agent deems necessary to protect, preserve or realize upon
the Collateral and the Administrative Agent's and the Lenders' security
interests therein and to effect the intent of this Agreement, all as fully
and effectively as such Grantor might do.
Anything in this Section 7.1(a) to the contrary notwithstanding, the
Administrative Agent agrees that it will not exercise any rights under the power
of attorney provided for in this Section 7.1(a) unless an Event of Default shall
have occurred and be continuing.
(b) If any Grantor fails to perform or comply with any of its
agreements contained herein, the Administrative Agent, at its option, but
without any obligation so to do, may perform or comply, or otherwise cause
performance or compliance, with such agreement.
(c) The expenses of the Administrative Agent incurred in
connection with actions undertaken as provided in this Section 7.1, together
with interest thereon at a rate per annum equal to the rate per annum at which
interest would then be payable on past due Revolving Credit Loans that are Base
Rate Loans under the Credit Agreement, from the date of
Guarantee and Collateral Agreement
<PAGE>
23
payment by the Administrative Agent to the date reimbursed by the relevant
Grantor, shall be payable by such Grantor to the Administrative Agent on demand.
(d) Each Grantor hereby ratifies all that said attorneys shall
lawfully do or cause to be done by virtue hereof. All powers, authorizations and
agencies contained in this Agreement are coupled with an interest and are
irrevocable until this Agreement is terminated and the security interests
created hereby are released.
7.2 Duty of Administrative Agent. The Administrative Agent's sole
duty with respect to the custody, safekeeping and physical preservation of the
Collateral in its possession, under Section 9-207 of the New York UCC or
otherwise, shall be to deal with it in the same manner as the Administrative
Agent deals with similar property for its own account. Neither the
Administrative Agent, any Lender nor any of their respective officers,
directors, employees or agents shall be liable for failure to demand, collect or
realize upon any of the Collateral or for any delay in doing so or shall be
under any obligation to sell or otherwise dispose of any Collateral upon the
request of any Grantor or any other Person or to take any other action
whatsoever with regard to the Collateral or any part thereof. The powers
conferred on the Administrative Agent and the Lenders hereunder are solely to
protect the Administrative Agent's and the Lenders' interests in the Collateral
and shall not impose any duty upon the Administrative Agent or any Lender to
exercise any such powers. The Administrative Agent and the Lenders shall be
accountable only for amounts that they actually receive as a result of the
exercise of such powers, and neither they nor any of their officers, directors,
employees or agents shall be responsible to any Grantor for any act or failure
to act hereunder, except for their own gross negligence or willful misconduct.
7.3 Execution of Financing Statements. Pursuant to Section 9-402
of the New York UCC and any other applicable law, each Grantor authorizes the
Administrative Agent to file or record financing statements and other filing or
recording documents or instruments with respect to the Collateral without the
signature of such Grantor in such form and in such offices as the Administrative
Agent reasonably determines appropriate to perfect the security interests of the
Administrative Agent under this Agreement. A photographic or other reproduction
of this Agreement shall be sufficient as a financing statement or other filing
or recording document or instrument for filing or recording in any jurisdiction.
7.4 Authority of Administrative Agent. Each Grantor acknowledges
that the rights and responsibilities of the Administrative Agent under this
Agreement with respect to any action taken by the Administrative Agent or the
exercise or non-exercise by the Administrative Agent of any option, voting
right, request, judgment or other right or remedy provided for herein or
resulting or arising out of this Agreement shall, as between the Administrative
Agent and the Grantors, the Administrative Agent shall be conclusively presumed
to be acting as agent for the Lenders with full and valid authority so to act or
refrain from acting, and no Grantor shall be under any obligation, or
entitlement, to make any inquiry respecting such authority.
Guarantee and Collateral Agreement
<PAGE>
24
SECTION 8. MISCELLANEOUS
8.1 Amendments in Writing. None of the terms or provisions of this
Agreement may be waived, amended, supplemented or otherwise modified except in
accordance with Section 8.1 of the Credit Agreement.
8.2 Notices. All notices, requests and demands to or upon the
Administrative Agent or any Grantor hereunder shall be effected in the manner
provided for in Section 8.2 of the Credit Agreement; provided that any such
notice, request or demand to or upon any Guarantor shall be addressed to such
Guarantor at its notice address set forth on Schedule 1.
8.3 No Waiver by Course of Conduct; Cumulative Remedies. Neither
the Agents nor any Lender shall by any act (except by a written instrument
pursuant to Section 8.1 of the Credit Agreement), delay, indulgence, omission or
otherwise be deemed to have waived any right or remedy hereunder or to have
acquiesced in any Default or Event of Default. No failure to exercise, nor any
delay in exercising, on the part of any Agent or any Lender, any right, power or
privilege hereunder shall operate as a waiver thereof. No single or partial
exercise of any right, power or privilege hereunder shall preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
A waiver by any Agent or any Lender of any right or remedy hereunder on any one
occasion shall not be construed as a bar to any right or remedy which such Agent
or such Lender would otherwise have on any future occasion. The rights and
remedies herein provided are cumulative, may be exercised singly or concurrently
and are not exclusive of any other rights or remedies provided by law.
8.4 Enforcement Expenses; Indemnification.
(a) Each Guarantor agrees to pay or reimburse each Lender and the
Administrative Agent for all its costs and expenses incurred in collecting
against such Guarantor under the guarantee contained in Section 2 or otherwise
enforcing or preserving any rights under this Agreement and the other Credit
Documents to which such Guarantor is a party, including, without limitation, the
fees and disbursements of counsel (including the allocated fees and expenses of
in-house counsel) to each Lender and of counsel to the Administrative Agent.
(b) Each Guarantor agrees to pay, and to save the Administrative
Agent and the Lenders harmless from, any and all liabilities with respect to, or
resulting from any delay in paying, any and all stamp, excise, sales or other
taxes which may be payable or determined to be payable with respect to any of
the Collateral or in connection with any of the transactions contemplated by
this Agreement.
(c) Each Guarantor agrees to pay, and to save the Administrative
Agent and the Lenders harmless from, any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever with respect to the execution,
delivery, enforcement, performance and administration of this Agreement to the
extent the Borrower would be required to do so pursuant to Section 9.5 of the
Credit Agreement.
Guarantee and Collateral Agreement
<PAGE>
25
(d) The agreements in this Section 8.4 shall survive repayment of
the Obligations and all other amounts payable under the Credit Agreement and the
other Credit Documents.
8.5 Successors and Assigns. This Agreement shall be binding upon
the successors and assigns of each Grantor and shall inure to the benefit of the
Agents and the Lenders and their successors and assigns; provided that no
Grantor may assign, transfer or delegate any of its rights or obligations under
this Agreement without the prior written consent of the Agents.
8.6 Set-Off. In addition to any rights and remedies of the
Administrative Agent and the Lenders provided by law, the Administrative Agent
and each Lender shall have the right, without prior notice to any Grantor, any
such notice being expressly waived by each Grantor to the extent permitted by
applicable law, upon any amount becoming due and payable by such Grantor under
the Credit Agreement or any other Credit Document (whether at the stated
maturity, by acceleration or otherwise), to set off and appropriate and apply
against such amount any and all deposits (general or special, time or demand,
provisional or final), in any currency, and any other credits, indebtedness or
claims, in any currency, in each case whether direct or indirect, absolute or
contingent, matured or unmatured, at any time held or owing by the
Administrative Agent or such Lender or any branch or agency thereof to or for
the credit or the account of such Grantor, as the case may be. Each Lender
agrees promptly to notify the relevant Grantor and the Administrative Agent
after any such setoff and application made by such Lender; provided that the
failure to give such notice shall not affect the validity of such setoff and
application.
8.7 Counterparts. This Agreement may be executed by one or more of
the parties to this Agreement on any number of separate counterparts (including
by telecopy), and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
8.8 Severability. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
8.9 Section Headings. The Section headings used in this Agreement
are for convenience of reference only and are not to affect the construction
hereof or be taken into consideration in the interpretation hereof.
Guarantee and Collateral Agreement
<PAGE>
26
8.10 Integration. This Agreement and the other Credit Documents
represent the agreement of the Grantors, the Agents and the Lenders with respect
to the subject matter hereof and thereof, and there are no promises,
undertakings, representations or warranties by the Agents or any Lender relative
to subject matter hereof and thereof not expressly set forth or referred to
herein or in the other Credit Documents.
8.11 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
8.12 Submission to Jurisdiction; Waivers. Each Grantor hereby
irrevocably and unconditionally:
(a) submits for itself and its property in any legal action or
proceeding relating to this Agreement and the other Credit Documents to
which it is a party, or for recognition and enforcement of any judgment in
respect thereof, to the non-exclusive general jurisdiction of the Courts
of the State of New York, the courts of the United States of America for
the Southern District of New York, and appellate courts from any thereof;
(b) consents that any such action or proceeding may be brought in
such courts and waives any objection that it may now or hereafter have to
the venue of any such action or proceeding in any such court or that such
action or proceeding was brought in an inconvenient court and agrees not
to plead or claim the same;
(c) agrees that service of process in any such action or proceeding
may be effected by mailing a copy thereof by registered or certified mail
(or any substantially similar form of mail), postage prepaid, to such
Grantor at its address referred to in Section 8.2 or at such other address
of which the Administrative Agent shall have been notified pursuant
thereto;
(d) agrees that nothing herein shall affect the right to effect
service of process in any other manner permitted by law or shall limit the
right to sue in any other jurisdiction; and
(e) waives, to the maximum extent not prohibited by law, any right
it may have to claim or recover in any legal action or proceeding referred
to in this Section 8.12 any special, exemplary, punitive or consequential
damages.
8.13 Acknowledgements. Each Grantor hereby acknowledges that:
(a) it has been advised by counsel in the negotiation, execution and
delivery of this Agreement and the other Credit Documents to which it is a
party;
(b) neither the Agents nor any Lender has any fiduciary relationship
with or duty to any Grantor arising out of or in connection with this
Agreement or any of the other Credit Documents, and the relationship
between the Grantors, on the one hand, and
Guarantee and Collateral Agreement
<PAGE>
27
the Agents and Lenders, on the other hand, in connection herewith or
therewith is solely that of debtor and creditor; and
(c) no joint venture is created hereby or by the other Credit
Documents or otherwise exists by virtue of the transactions contemplated
hereby among the Lenders or among the Grantors and the Lenders.
8.14 Additional Guarantors. Each Subsidiary of the Company that is
required to become a party to this Agreement pursuant to Section 5.9(c) of the
Credit Agreement shall become a Guarantor (and, thereby a Grantor) for all
purposes of this Agreement upon execution and delivery by such Subsidiary of an
Assumption Agreement in the form of Annex I hereto.
8.15 Releases.
(a) At such time as the Loans and the other Obligations shall have
been paid in full, the Commitments have been terminated and no Letters of Credit
shall be outstanding, the Collateral shall be released from the Liens created
hereby, and this Agreement and all obligations (other than those expressly
stated to survive such termination) of the Agents and each Grantor hereunder
shall terminate, all without delivery of any instrument or performance of any
act by any party, and all rights to the Collateral shall revert to the Grantors.
At the request and sole expense of any Grantor following any such termination,
the Administrative Agent shall deliver to such Grantor any Collateral held by
the Administrative Agent hereunder, and execute and deliver to such Grantor such
documents as such Grantor shall reasonably request to evidence such termination.
(b) If any of the Collateral shall be sold, transferred or
otherwise disposed of by any Grantor in a transaction permitted by the Credit
Agreement, then the Administrative Agent, at the request and sole expense of
such Grantor, shall execute and deliver to such Grantor all releases or other
documents reasonably necessary or desirable for the release of the Liens created
hereby on such Collateral. At the request and sole expense of the Borrower, a
Guarantor shall be released from its obligations hereunder in the event that
such Guarantor ceases to be a Subsidiary of the Company by virtue of being sold,
transferred or otherwise disposed of in a transaction permitted by the Credit
Agreement; provided that the Borrower shall have delivered to the Administrative
Agent at least ten Business Days prior to the date of the proposed release, a
written request for release identifying the relevant Guarantor and the terms of
the sale or other disposition in reasonable detail, including the price thereof
and any expenses in connection therewith, together with a certification by the
Borrower stating that such transaction is in compliance with the Credit
Agreement and the other Credit Documents.
8.16 WAIVER OF JURY TRIAL. EACH GRANTOR HEREBY IRREVOCABLY AND
UNCONDITIONALLY WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING
TO THIS AGREEMENT OR ANY OTHER CREDIT DOCUMENT AND FOR ANY COUNTERCLAIM THEREIN.
8.17 Governmental Approvals. Notwithstanding anything to the
contrary contained herein or in the other Credit Documents, no action shall be
taken by the Administrative Agent pursuant to this Agreement, the Credit
Agreement or any other Credit
Guarantee and Collateral Agreement
<PAGE>
28
Document with respect to any item of Collateral that would constitute or result
in any assignment of any Governmental Approval or any change of control of the
holder of such Governmental Approval without first obtaining the prior approval
of the relevant Governmental Authority, if, under the existing law, such
assignment of any such Governmental Approval or change of control would require
the prior approval of such Governmental Authority. Prior to the exercise by the
Administrative Agent of any power, right, privilege or remedy pursuant to this
Agreement which requires any consent, approval, recording, qualification or
authorization of any Governmental Authority, each Grantor will execute and
deliver, or will cause the execution and delivery of, all applications,
certificates, instruments and other documents and papers as the Administrative
Agent may reasonably request in order to obtain such governmental consent,
approval, recording, qualification or authorization. Without limiting the
generality of the foregoing, each Grantor will use its best efforts upon the
reasonable request of the Administrative Agent to obtain from the appropriate
Governmental Authorities the necessary consents and approvals, if any (i) for
the granting to the Administrative Agent pursuant hereto of the security
interests provided for in this Agreement to the extent, if any, such security
interests may be granted under existing statutes or regulations and (ii) for the
assignment or transfer of any such Governmental Approval to the Administrative
Agent or its designee upon or following acceleration of the payment of the Loans
in accordance with the provisions of the Credit Agreement.
Guarantee and Collateral Agreement
<PAGE>
29
IN WITNESS WHEREOF, each of the undersigned has caused this
Guarantee and Collateral Agreement to be duly executed and delivered as of the
date first above written.
BIRCH TELECOM, INC.
By: ____________________________
Name:
Title:
BIRCH TELECOM FINANCE, INC.
By: ____________________________
Name:
Title:
AMERICAN LOCAL TELECOMMUNICATIONS, LLC
By: ____________________________
Name:
Title:
BIRCH EQUIPMENT, INC.
By: ____________________________
Name:
Title:
BIRCH INTERNET SERVICES, INC.
By: ____________________________
Name:
Title:
Guarantee and Collateral Agreement
<PAGE>
30
BIRCH TELECOM OF ARIZONA, INC.
By: ____________________________
Name:
Title:
BIRCH TELECOM OF ARKANSAS, INC.
By: ____________________________
Name:
Title:
BIRCH TELECOM OF KANSAS, INC.
By: ____________________________
Name:
Title:
BIRCH TELECOM OF NEBRASKA, INC.
By: ____________________________
Name:
Title:
BIRCH TELECOM OF OKLAHOMA, INC.
By: ____________________________
Name:
Title:
Guarantee and Collateral Agreement
<PAGE>
31
BIRCH TELECOM OF TEXAS LTD., LLP
By: ____________________________
Name:
Title:
BIRCH TEXAS HOLDINGS, INC.
By: ____________________________
Name:
Title:
CAPITAL COMMUNICATIONS CORPORATION
By: ____________________________
Name:
Title:
DUNN & ASSOCIATES, INC.
By: ____________________________
Name:
Title:
G.B.S. COMMUNICATIONS, INC.
By: ____________________________
Name:
Title:
I.S. ADVERTISING, INC.
By: ____________________________
Name:
Title:
Guarantee and Collateral Agreement
<PAGE>
32
M.B.S. LEASING, INC.
By: ____________________________
Name:
Title:
TELESOURCE COMMUNICATIONS, INC.
By: ____________________________
Name:
Title:
BIRCH TELECOM OF MISSOURI, INC.
By: ____________________________
Name:
Title:
BIRCH KANSAS HOLDINGS, INC.
By: ____________________________
Name:
Title:
BIRCH MANAGEMENT CORPORATION
By: ____________________________
Name:
Title:
BIRCH TELECOM OF MICHIGAN, INC.
By: ____________________________
Name:
Title:
Guarantee and Collateral Agreement
<PAGE>
33
BIRCH TELECOM OF WISCONSIN, INC.
By: ____________________________
Name:
Title:
BIRCH TELECOM OF ILLINOIS, INC.
By: ____________________________
Name:
Title:
BIRCH TELECOM OF OHIO, INC.
By: ____________________________
Name:
Title:
BIRCH TELECOM OF INDIANA, INC.
By: ____________________________
Name:
Title:
Guarantee and Collateral Agreement
<PAGE>
34
LEHMAN COMMERCIAL PAPER INC.,
as Administrative Agent
By: ____________________________
Name:
Title:
Guarantee and Collateral Agreement
<PAGE>
Schedule 1
NOTICE ADDRESSES OF GUARANTORS
Schedule 1 to Guarantee and Collateral Agreement
<PAGE>
Schedule 2
DESCRIPTION OF PLEDGED SECURITIES
Pledged Stock:
Stock Certificate
Issuer Class of Stock No. No. of Shares
------------------ ------------------- ------------------- -----------------
Pledged Notes:
Issuer Payee Principal Amount
------------------------- ----------------------- ---------------------------
Schedule 2 to Guarantee and Collateral Agreement
<PAGE>
Schedule 3
FILINGS AND OTHER ACTIONS
REQUIRED TO PERFECT SECURITY INTERESTS
Uniform Commercial Code Filings
[List each office where a financing statement is to be filed]
Patent and Trademark Filings
[List all filings]
Actions with respect to Pledged Stock
Other Actions
[Describe other actions to be taken]
Schedule 3 to Guarantee and Collateral Agreement
<PAGE>
Schedule 4
LOCATION OF JURISDICTION OF ORGANIZATION AND CHIEF EXECUTIVE OFFICE
Grantor Location
------- --------
Schedule 4 to Guarantee and Collateral Agreement
<PAGE>
Schedule 5
LOCATION OF INVENTORY AND EQUIPMENT
Grantor Locations
Schedule 5 to Guarantee and Collateral Agreement
<PAGE>
Schedule 6
COPYRIGHTS AND COPYRIGHT LICENSES
PATENTS AND PATENT LICENSES
TRADEMARKS AND TRADEMARK LICENSES
Schedule 6 to Guarantee and Collateral Agreement
<PAGE>
Schedule 7
EXISTING PRIOR LIENS
Schedule 7 to Guarantee and Collateral Agreement
<PAGE>
Annex I to
Amended and Restated Guarantee
and Collateral Agreement
ASSUMPTION AGREEMENT, dated as of ______ __, ____made by
___________________________, a ____________ corporation (the "Additional
Guarantor"), in favor of LEHMAN COMMERCIAL PAPER INC., as administrative agent
(in such capacity, the "Administrative Agent") for the banks and other financial
institutions (the "Lenders") parties to the Credit Agreement referred to below.
All capitalized terms not defined herein shall have the meaning ascribed to them
in such Credit Agreement.
W I T N E S S E T H:
WHEREAS, BIRCH TELECOM, INC., a corporation duly organized and
validly existing under the law of the State of Delaware (the "Company"), BIRCH
TELECOM FINANCE, INC., a corporation duly organized and validly existing under
the law of the State of Delaware (the "Borrower"), the Lenders and the
Administrative Agent have entered into an Amended and Restated Credit Agreement,
dated as of February 2, 2000 (as amended, supplemented or otherwise modified
from time to time, the "Credit Agreement");
WHEREAS, in connection with the Credit Agreement, the Company, the
Borrower and certain other Subsidiaries of the Company (other than the
Additional Guarantor) have entered into the Amended and Restated Guarantee and
Collateral Agreement, dated as of February 2, 2000 (as amended, supplemented or
otherwise modified from time to time, the "Guarantee and Collateral Agreement")
in favor of the Administrative Agent for the benefit of the Lenders;
WHEREAS, the Credit Agreement requires the Additional Guarantor to
become a party to the Guarantee and Collateral Agreement as a "Guarantor" (and
thereby a "Grantor") thereunder; and
WHEREAS, the Additional Guarantor has agreed to execute and deliver
this Assumption Agreement in order to become a party to the Guarantee and
Collateral Agreement;
NOW, THEREFORE, IT IS AGREED:
1. Guarantee and Collateral Agreement. By executing and delivering
this Assumption Agreement, the Additional Guarantor, as provided in Section 8.14
of the Guarantee and Collateral Agreement, hereby becomes a party to the
Guarantee and Collateral Agreement as a Guarantor (and thereby a Grantor)
thereunder with the same force and effect as if originally named therein as a
Guarantor (and a Grantor) and, without limiting the generality of the foregoing,
hereby expressly assumes all obligations and liabilities of a Guarantor (and a
Grantor) thereunder. The information set forth in Annex I-A hereto is hereby
added to the information set
Assumption Agreement
<PAGE>
2
forth in Schedules _______________1**** to the Guarantee and Collateral
Agreement. The Additional Guarantor hereby represents and warrants that each of
the representations and warranties contained in Section 4 of the Guarantee and
Collateral Agreement is true and correct on and as the date hereof (after giving
effect to this Assumption Agreement) as if made on and as of such date.
2. GOVERNING LAW. THIS ASSUMPTION AGREEMENT SHALL BE GOVERNED BY,
AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW
YORK.
IN WITNESS WHEREOF, the undersigned has caused this Assumption
Agreement to be duly executed and delivered as of the date first above written.
[ADDITIONAL GUARANTOR]
By: ___________________________
Name:
Title:
Assumption Agreement
<PAGE>
Annex I-A to
Assumption Agreement
[Insert information updating schedules, if any]
Assumption Agreement
<PAGE>
EXHIBIT B
[FORM OF COMPLIANCE CERTIFICATE]
This Compliance Certificate is delivered to you pursuant to Section
5.2(6) of the Amended and Restated Credit Agreement, dated as of February 2,
2000, as amended, supplemented or modified from time to time (the "Credit
Agreement"), among BIRCH TELECOM, INC., a corporation duly organized and validly
existing under the law of the State of Delaware corporation (the "Company"),
BIRCH TELECOM FINANCE, INC., a corporation duly organized and validly existing
under the law of the State of Delaware (the "Borrower"), the several banks and
other financial institutions or entities from time to time parties thereto (the
"Lenders") and LEHMAN COMMERCIAL PAPER INC., as administrative agent (in such
capacity, the "Administrative Agent"). Terms defined in the Credit Agreement and
not otherwise defined herein are used herein with the meanings so defined.
1. I am the duly elected, qualified and acting [Chief Financial
Officer] [Vice President - Finance] of the Borrower.
2. I have reviewed and am familiar with the contents of this
Certificate.
3. I have reviewed the terms of the Credit Agreement and the other
Credit Documents and have made or caused to be made under my supervision, a
review in reasonable detail of the transactions and condition of the Borrower
during the accounting period covered by the financial statements attached hereto
as Attachment 1 (the "Financial Statements"). Such review did not disclose the
existence during or at the end of the accounting period covered by the Financial
Statements, and I have no knowledge of the existence, as of the date of this
Certificate, of any condition or event which constitutes a Default or Event of
Default [, except as set forth below].
4. Attached hereto as Attachment 2 are the computations showing
compliance with the covenants set forth in Section 6.1, 6.2, 6.5, 6.6, 6.7 and
6.8 of the Credit Agreement.
IN WITNESS WHEREOF, I execute this Certificate this ___ day of ____
, 200_.
BIRCH TELECOM FINANCE, INC.
By:_________________________
Name:
Title:
Compliance Certificate
<PAGE>
Attachment 1
to Compliance Certificate
The information described herein is as of ____________,200_, and
pertains to the period from ____________, 200_ to _____________, 200_.
Compliance Certificate
<PAGE>
Attachment 2
to Compliance Certificate
[Set forth Covenant Calculations]
Compliance Certificate
<PAGE>
EXHIBIT C
[FORM OF CLOSING CERTIFICATE]
Pursuant to Section 4.1(f) of the Amended and Restated Credit
Agreement dated as of February 2, 2000 as amended, supplemented or modified from
time to time (the "Credit Agreement"), among BIRCH TELECOM, INC., a corporation
duly organized and validly existing under the law of the State of Delaware (the
"Company"), BIRCH TELECOM FINANCE, INC., a corporation duly organized and
validly existing under the law of the State of Delaware (the "Borrower"), the
several banks and other financial institutions or entities from time to time
parties thereto (the "Lenders") and LEHMAN COMMERCIAL PAPER INC., as
administrative agent (in such capacity, the "Administrative Agent"), the
undersigned [INSERT TITLE OF OFFICER] of [INSERT NAME OF COMPANY] (the
"Company") hereby certifies as follows:
1. The representations and warranties of the Company set forth in
each of the Credit Documents to which it is a party are true and correct on and
as of the date hereof with the same effect as if made on the date hereof, except
for representations and warranties expressly stated to relate to a specific
earlier date, in which case such representations and warranties were true and
correct in all material respects as of such earlier date.
2. _______________ is the duly elected and qualified Corporate
Secretary of the Company and the signature set forth for such officer below is
such officer's true and genuine signature.
3. No Default or Event of Default has occurred and is continuing as
of the date hereof or will have occurred and be continuing after giving effect
to the Loans to be made on the Closing Date. [Borrower only]
4. The conditions precedent set forth in Section 4.1 of the Credit
Agreement have been satisfied as of the Closing Date. [Borrower only]
The undersigned Corporate Secretary of the Company certifies as
follows:
5. There are no liquidation or dissolution proceedings pending or to
my knowledge threatened against the Company, nor has any other event occurred
adversely affecting or threatening the continued corporate existence of the
Company.
6. The Company is a corporation duly incorporated, validly existing
and in good standing under the laws of the jurisdiction of its organization.
7. Attached hereto as Annex 1 is a true and complete copy of
resolutions duly adopted by the Board of Directors of the Company on
_______________; such resolutions have not in any way been amended, modified,
revoked or rescinded, have been in full force and effect since their adoption to
and including the date hereof and are now in full force and effect
Closing Certificate
<PAGE>
2
and are the only corporate proceedings of the Company now in force relating to
or affecting the matters referred to therein.
8. Attached hereto as Annex 2 is a true and complete copy of the
By-Laws of the Company as in effect on the date hereof.
9. Attached hereto as Annex 3 is a true and complete copy of the
Certificate of Incorporation of the Company as in effect on the date hereof, and
such certificate has not been amended, repealed, modified or restated.
10. The following persons are now duty elected and qualified
officers of the Company holding the offices indicated next to their respective
names below, and such officers have held such offices with the Company at all
times since the date indicated next to their respective titles to and including
the date hereof, and the signatures appearing opposite their respective names
below are the true and genuine signatures of such officers, and each of such
officers is duly authorized to execute and deliver on behalf of the Company each
of the Credit Documents to which it is a party and any certificate or other
document to be delivered by the Company pursuant to the Credit Documents to
which it is a party:
Name Office Date Signature
---- ------ ---- ---------
IN WITNESS WHEREOF, the undersigned have hereunto set our names as
of the date set forth below.
By: By:
____________________ __________________________
Name: Name:
Title: Title:
Date: ______ __, 2000
Closing Certificate
<PAGE>
EXHIBIT D
[ASSIGNMENT AND ACCEPTANCE]
Reference is made to the Amended and Restated Credit Agreement dated
as of February 2, 2000 (as amended, supplemented or otherwise modified from time
to time, the "Credit Agreement"), among BIRCH TELECOM, INC., a corporation duly
organized and validly existing under the law of the State of Delaware (the
"Company"), BIRCH TELECOM FINANCE, INC., a corporation duly organized and
validly existing under the law of the State of Delaware (the "Borrower"), the
several banks and other financial institutions or entities from time to time
parties thereto (the "Lenders") and LEHMAN COMMERCIAL PAPER INC., as
administrative agent (in such capacity, the "Administrative Agent"). Unless
otherwise defined herein, terms defined in the Credit Agreement and used herein
shall have the meanings given to them in the Credit Agreement.
The Assignor identified on Schedule I hereto (the "Assignor") and
the Assignee identified on Schedule I hereto (the "Assignee") agree as follows:
1. The Assignor hereby irrevocably sells and assigns to the Assignee
without recourse to the Assignor, and the Assignee hereby irrevocably purchases
and assumes from the Assignor without recourse to the Assignor, as of the
Assignment Effective Date (as defined below), the interest described in Schedule
I hereto (the "Assigned Interest") in and to the Assignor's rights and
obligations under the Credit Agreement with respect to those credit facilities
contained in the Credit Agreement as are set forth on Schedule I hereto
(individually, an "Assigned Facility"; collectively, the "Assigned Facilities"),
in a principal amount for each Assigned Facility as set forth on Schedule I
hereto.
2. The Assignor (a) makes no representation or warranty and assumes
no responsibility with respect to any statements, warranties or representations
made in or in connection with the Credit Agreement or with respect to the
execution, legality, validity, enforceability, genuineness, sufficiency or value
of the Credit Agreement, any other Credit Document or any other instrument or
document furnished pursuant thereto, other than that the Assignor has not
created any adverse claim upon the interest being assigned by it hereunder and
that such interest is free and clear of any such adverse claim; (b) makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of the Borrower, any of its Subsidiaries or any other
obligor or the performance or observance by the Borrower, any of its
Subsidiaries or any other obligor of any of their respective obligations under
the Credit Agreement or any other Credit Document or any other instrument or
document furnished pursuant hereto or thereto; and (c) attaches any Notes held
by it evidencing the Assigned Facilities and (i) requests that the
Administrative Agent, upon request by the Assignee, exchange the attached Notes
for a new Note or Notes payable to the Assignee and (ii) if the Assignor has
retained any interest in the Assigned Facility, requests that the Administrative
Agent exchange the attached Notes for a new Note or Notes payable to the
Assignor, in each case in amounts
Assignment and Acceptance
<PAGE>
- 2 -
which reflect the assignment being made hereby (and after giving effect to any
other assignments which have become effective on the Assignment Effective Date).
3. The Assignee (a) represents and warrants that it is legally
authorized to enter into this Assignment and Acceptance; (b) confirms that it
has received a copy of the Credit Agreement, together with copies of the
financial statements delivered pursuant to Section 3.1 thereof and such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Assignment and Acceptance; (c) agrees
that it will, independently and without reliance upon the Assignor, the Agents
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 the Credit Agreement, the other Credit Documents or any
other instrument or document furnished pursuant hereto or thereto; (d) appoints
and authorizes the Agents to take such action as agent on its behalf and to
exercise such powers and discretion under the Credit Agreement, the other Credit
Documents or any other instrument or document furnished pursuant hereto or
thereto as are delegated to the Agents by the terms thereof, together with such
powers as are incidental thereto; and (e) agrees that it will be bound by the
provisions of the Credit Agreement and will perform in accordance with its terms
all the obligations which by the terms of the Credit Agreement are required to
be performed by it as a Lender including, if it is organized under the laws of a
jurisdiction outside the United States, its obligation pursuant to Section
2.20(d) of the Credit Agreement.
4. The effective date of this Assignment and Acceptance shall be the
Assignment Effective Date of Assignment described in Schedule I hereto (the
"Assignment Effective Date"). Following the execution of this Assignment and
Acceptance, it will be delivered to the Administrative Agent for acceptance by
it and recording by the Administrative Agent pursuant to the Credit Agreement,
effective as of the Assignment Effective Date (which shall not, unless otherwise
agreed to by the Administrative Agent, be earlier than five Business Days after
the date of such acceptance and recording by the Administrative Agent).
5. Upon such acceptance and recording, from and after the Assignment
Effective Date, the Administrative Agent shall make all payments in respect of
the Assigned Interest (including payments of principal, interest, fees and other
amounts) [to the Assignor for amounts which have accrued to the Assignment
Effective Date and to the Assignee for amounts which have accrued subsequent to
the Assignment Effective Date] [to the Assignee whether such amounts have
accrued prior to the Assignment Effective Date or accrue subsequent to the
Assignment Effective Date. The Assignor and the Assignee shall make all
appropriate adjustments in payments by the Agent for periods prior to the
Assignment Effective Date or with respect to the making of this assignment
directly between themselves.]
6. From and after the Assignment Effective Date, (a) the Assignee
shall be a party to the Credit Agreement and, to the extent provided in this
Assignment and Acceptance, have the rights and obligations of a Lender
thereunder and under the other Credit Documents and shall be bound by the
provisions thereof and (b) the Assignor shall, to the extent provided in this
Assignment and Acceptance, relinquish its rights and be released from its
obligations under the Credit Agreement.
Assignment and Acceptance
<PAGE>
- 3 -
7. This Assignment and Acceptance shall be governed by and construed in
accordance with the law of the State of New York
IN WITNESS WHEREOF, the parties hereto have caused this Assignment and
Acceptance to be executed as of the date first above written by their respective
duly authorized officers on Schedule I hereto.
<PAGE>
Schedule I
to Assignment and Acceptance
Name of Assignor:_____________________________
Name of Assignee:_____________________________
Assignment Effective Date:____________________
Credit Principal
Facility Assigned Amount Assigned Commitment Percentage Assigned(1)
_________________ _______________ _________________________________
$______________ _____________%
[Name of Assignee] [Name of Assignor]
By:__________________________________ By:_________________________
Title: Title:
______________________
1 Calculate the Commitment Percentage that is assigned to at least 15
decimal places and show as a percentage of the aggregate commitments of
all Lenders
Assignment and Acceptance
<PAGE>
Accepted: Consented To:
LEHMAN COMMERCIAL PAPER INC. [BIRCH TELECOM FINANCE, INC.](2)
as Administrative Agent
By:_______________________________ By:____________________________
Title: Title:
DEUTSCHE BANK SECURITIES INC.,
as Syndication Agent
By:____________________________
Title:
[SWINGLINE LENDER](2)
By:____________________________
Title:
[ISSUER LENDER](2)
By:____________________________
Title:
_______________
2 Include if applicable consent is required pursuant to Section 9.6(c) of
the Credit Agreement.
Assignment and Acceptance
<PAGE>
EXHIBIT E-1
<PAGE>
EXHIBIT E-2
<PAGE>
EXHIBIT E-3
[FORM OF LEGAL OPINION OF MILBANK, TWEED,
HADLEY & McCLOY LLP]
February 2, 2000
To the Administrative Agent and
each of the Lenders party to the
Credit Agreement referred to below:
Re: Birch Telecom, Inc.
Ladies and Gentlemen:
We have acted as special New York counsel to Lehman Commercial Paper
Inc. in connection with (i) that certain Amended and Restated Credit Agreement
dated as of February 2, 2000 (the "Credit Agreement") among BIRCH TELECOM, INC.,
a Delaware corporation (the "Company"), BIRCH TELECOM FINANCE, INC., a Delaware
corporation (the "Borrower"), the several banks and other financial institutions
or entities from time to time parties thereto (the "Lenders") and LEHMAN
COMMERCIAL PAPER INC., as administrative agent (in such capacity, the
"Administrative Agent"), providing for, among other things, extensions of credit
to be made by the Lenders to the Borrower in an aggregate principal amount not
exceeding $125,000,000 and (ii) the various agreements and instruments referred
to in the next following paragraph. Except where indicated, capitalized terms
used in this opinion and not otherwise defined herein shall have the meanings
given them by the Credit Agreement. This opinion letter is being delivered
pursuant to Section 4.1(f)(iii) of the Credit Agreement.
In rendering the opinions expressed below, we have examined the
Credit Agreement and the Guarantee and Collateral Agreement (collectively, the
"Credit Documents"), and have made such examination of laws as we have deemed
relevant for the purposes hereof. In our examination, we have assumed the
authenticity of all documents submitted to us as originals and the conformity
with authentic original documents of all documents submitted to us as copies.
When relevant facts were not independently established, we have relied upon
representations made in or pursuant to the Credit Documents.
Legal Opinion of Milbank, Tweed, Hadley & McCloy LLP
<PAGE>
- 2 -
In rendering the opinions expressed below, we have assumed, with
respect to the Credit Documents, that:
(i) the Credit Documents have been duly authorized by, have been
duly executed and delivered by, and (except to the extent set
forth in the opinions expressed below as to the Credit
Parties) constitute legal, valid, binding and enforceable
obligations of, all of the parties thereto;
(ii) all signatories to the Credit Documents have been duly
authorized; and
(iii) all of the parties to the Credit Documents are duly organized
and validly existing and have the power and authority
(corporate or other) to execute, deliver and perform the
Credit Documents.
Based upon and in reliance on the foregoing, and subject to the
assumptions and qualifications hereinafter set forth, we are of the opinion
that:
1. Each Credit Document constitutes the legal, valid and binding
obligation of each Credit Party party thereto, enforceable against such
Credit Party in accordance with its respective terms, except as may be
limited by bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or other similar laws relating to or affecting the rights of
creditors generally and except as the enforceability of the Credit
Documents is subject to the application of general principles of equity
(regardless of whether considered in a proceeding in equity or at law),
including (a) the possible unavailability of specific performance,
injunctive relief or any other equitable remedy and (b) concepts of
materiality, reasonableness, good faith and fair dealing.
2. The Guarantee and Collateral Agreement is effective to create, in
favor of the Administrative Agent for the benefit of the Administrative
Agent and the Lenders, a valid security interest under the Uniform
Commercial Code as in effect in the State of New York (the "Uniform
Commercial Code") in all of the right, title and interest of each Credit
Party party thereto in, to and under the Collateral (as defined in the
Guarantee and Collateral Agreement) as collateral security for the payment
of the Obligations (as so defined).
3. The security interest referred to in paragraph 2 above in that
portion of the Collateral consisting of Pledged Stock (as defined in the
Guarantee and Collateral Agreement) represented by certificates in bearer
form or in registered form indorsed (as provided in Section 8-102(a)(11)
of the Uniform Commercial Code) to the Administrative Agent or in blank by
an effective indorsement (as so provided) or registered in the name of the
Administrative Agent will, upon the creation of such
Legal Opinion of Milbank, Tweed, Hadley & McCloy LLP
<PAGE>
- 3 -
security interest, be perfected by the Administrative Agent taking
possession thereof in the State of New York, and such perfected security
interest will remain perfected thereafter so long as such certificates are
retained by the Administrative Agent in its possession in the State of New
York. If such security interest therein is perfected by the Administrative
Agent in the manner specified in the immediately preceding sentence for
value without notice (within the meaning of Section 8-105 of the Uniform
Commercial Code) of any adverse claim (within the meaning of Section
8-102(a)(1) of the Uniform Commercial Code) to the Pledged Stock so
represented by certificates, then the Administrative Agent will acquire
such security interest free of any adverse claim (as so defined).
The foregoing opinions are subject to the following comments and
qualifications:
A. The enforceability of Section 9.5 of the Credit Agreement (and
any similar provisions in any of the other Credit Documents) may be
limited by laws restricting the enforceability of provisions exculpating
or exempting a party, or requiring indemnification of a party for,
liability for its own action or inaction, to the extent the action or
inaction involves gross negligence, recklessness, willful misconduct or
unlawful conduct.
B. The enforceability of provisions in the Credit Documents to the
effect that terms may not be waived or modified except in writing may be
limited under certain circumstances.
C. Sections 2.1(c), 2.4 and 2.5 of the Guarantee and Collateral
Agreement may not be enforceable to the extent that the Obligations (as
defined in the Guarantee and Collateral Agreement) are materially
modified.
D. We express no opinion as to (i) the effect of the laws of any
jurisdiction in which any Lender is located (other than the State of New
York) that limit the interest, fees or other charges such Lender may
impose, (ii) the penultimate sentence of Section 9.6(b) of the Credit
Agreement and (iii) Section 9.12(a) of the Credit Agreement, insofar as
such section relates to the subject matter jurisdiction of the United
States District Court for the Southern District of New York to adjudicate
any controversy related to any of the Credit Documents.
E. We express no opinion as to the applicability to the obligations
of any Credit Party of Section 548 of the Bankruptcy Code of 1978, as
amended (the "Bankruptcy Code"), Article 10 of the New York Debtor and
Creditor Law or any other provision of law relating to fraudulent
conveyances, transfers or obligations.
Legal Opinion of Milbank, Tweed, Hadley & McCloy LLP
<PAGE>
- 4 -
F. We wish to point out that the obligations of the Credit Parties,
and the rights and remedies of the Administrative Agent and the Lenders,
under the Guarantee and Collateral Agreement may be subject to possible
limitations upon the exercise of remedial or procedural provisions
contained in the Guarantee and Collateral Agreement, provided that such
limitations do not, in our opinion (but subject to the other comments and
qualifications set forth in this opinion letter), make the remedies and
procedures that will be afforded to the Administrative Agent and the
Lenders inadequate for the practical realization of the substantive
benefits purported to be provided to the Administrative Agent and the
Lenders by the Guarantee and Collateral Agreement.
G. With respect to the security interests referred to in paragraph 2
above, (i) such security interest will continue in the relevant Collateral
after its sale, exchange or other disposition only to the extent provided
in Sections 9-306, 9-307 and 9-308 of the Uniform Commercial Code and (ii)
such security interest in Collateral in which any Credit Party acquires
rights after the commencement of a case under the Bankruptcy Code in
respect of such Credit Party may be limited by Section 552 of the
Bankruptcy Code.
H. With respect to paragraphs 2 and 3 above, we express no opinion
as to the creation, perfection or priority of any security interest in (or
other lien on) any Collateral (as defined in the Guarantee and Collateral
Agreement) (i) to the extent that, pursuant to Section 9-104 of the
Uniform Commercial Code, Article 9 of the Uniform Commercial Code does not
apply thereto, (ii) consisting of uncertificated securities (as defined in
Section 8-102(a)(18) of the Uniform Commercial Code), (iii) consisting of
fixtures, timber to be cut or minerals (including oil and gas), (iv)
covered by a certificate of title or (v) consisting of the proceeds of a
letter of credit.
I. We wish to point out that the acquisition by any Credit Party
after the initial extension of credit under the Credit Agreement of an
interest in Property that becomes subject to the Lien of the Guarantee and
Collateral Agreement may constitute a voidable preference under Section
547 of the Bankruptcy Code.
J. We express no opinion as to the existence of, or the right, title
or interest of the Credit Parties in, to or under, any of the Collateral
(as defined in the Guarantee and Collateral Agreement).
K. Except as expressly provided in paragraphs 2 and 3 above, we
express no opinion as to the creation, perfection or priority of any
security interest in, or other Lien on, the Collateral (as defined in the
Guarantee and Collateral Agreement).
Legal Opinion of Milbank, Tweed, Hadley & McCloy LLP
<PAGE>
- 5 -
The foregoing opinions are limited to matters involving the Federal
laws of the United States and the law of the State of New York, and we do not
express any opinion as to the laws of any other jurisdiction nor do we express
any opinion as to the applicability to the transactions under the agreements
referred to herein, or the effect upon such transactions, of the Communications
Act of 1935, and the rules, regulations and policies of the FCC thereunder.
At the request of our client, this opinion letter is, pursuant to
Section 4.1(f)(iii) of the Credit Agreement, provided to you by us in our
capacity as special New York counsel to LCPI and may not be relied upon by any
Person for any purpose other than in connection with the transactions
contemplated by the Credit Agreement without, in each instance, our prior
written consent.
Very truly yours,
WJM/RJW
Legal Opinion of Milbank, Tweed, Hadley & McCloy LLP
<PAGE>
EXHIBIT F-1
[FORM OF TERM NOTE]
THIS NOTE AND THE OBLIGATIONS REPRESENTED HEREBY MAY NOT BE TRANSFERRED EXCEPT
IN COMPLIANCE WITH THE TERMS AND PROVISIONS OF THE CREDIT AGREEMENT REFERRED TO
BELOW. TRANSFERS OF THIS NOTE AND THE OBLIGATIONS REPRESENTED HEREBY MUST BE
RECORDED IN THE REGISTER MAINTAINED BY THE ADMINISTRATIVE AGENT PURSUANT TO THE
TERMS OF SUCH CREDIT AGREEMENT.
$___________ New York, New York
FOR VALUE RECEIVED, the undersigned, BIRCH TELECOM FINANCE, INC., a
corporation duly organized and validly existing under the law of the State of
Delaware (the "Borrower"), hereby unconditionally promises to pay to __________
(the "Lender") or its registered assigns at the Payment Office specified in the
Credit Agreement (as hereinafter defined) in lawful money of the United States
and in immediately available funds, the principal amount of (a) ___________
($________) or, if less, (b) the unpaid principal amount of all Term Loans made
by the Lender pursuant to Section 2.1 of the Credit Agreement. The principal
amount shall be paid in the amounts and on the dates specified in Section 2.3 of
the Credit Agreement. The Borrower further agrees to pay interest in like money
at such office on the unpaid principal amount hereof from time to time
outstanding at the rates and on the dates specified in Section 2.15 of the
Credit Agreement.
The holder of this Note is authorized to endorse on the schedules
annexed hereto and made a part hereof or on a continuation thereof which shall
be attached hereto and made a part hereof the date, Type and amount of each Term
Loan and the date and amount of each payment or prepayment of principal with
respect thereto, each conversion of all or a portion thereof to another Type,
each continuation of all or a portion thereof as the same Type and, in the case
of Eurodollar Loans, the length of each Interest Period with respect thereto.
Each such endorsement shall constitute prima facie evidence of the accuracy of
the information endorsed. The failure to make any such endorsement or any error
in any such endorsement shall not affect the obligations of the Borrower in
respect of any Term Loan.
This Note (a) is one of the Term Notes referred to in the Amended
and Restated Credit Agreement dated as of February 2, 2000 (as amended,
supplemented or otherwise modified from time to time, the "Credit Agreement"),
among BIRCH TELECOM, INC., the Borrower, the several banks and other financial
institutions or entities from time to time parties thereto (the "Lenders"), and
LEHMAN COMMERCIAL PAPER INC., as administrative agent (in such capacity, the
"Administrative Agent"), (b) is subject to the provisions of the Credit
Agreement and (c) is subject to optional and mandatory prepayment in whole or in
part as provided in the Credit Agreement. This Note is secured and guaranteed as
provided in the Credit Documents. Reference is hereby made to the Credit
Documents for a description of the properties and assets in which a security
interest has been granted, the nature and extent of the
Term Note
<PAGE>
- 2 -
security and the guarantees, the terms and conditions upon which the security
interests and each guarantee were granted and the rights of the holder of this
Note in respect thereof.
Upon the occurrence of any one or more of the Events of Default, all
principal and all accrued interest then remaining unpaid on this Note shall
become, or may be declared to be, immediately due and payable, all as provided
in the Credit Agreement.
All parties now and hereafter liable with respect to this Note,
whether maker, principal, surety, guarantor, endorser or otherwise, hereby waive
presentment, demand, protest and all other notices of any kind.
Unless otherwise defined herein, terms defined in the Credit
Agreement and used herein shall have the meanings given to them in the Credit
Agreement
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN OR IN THE
CREDIT AGREEMENT, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT PURSUANT TO AND IN
ACCORDANCE WITH THE REGISTRATION AND OTHER PROVISIONS OF SECTION 9.6 OF THE
CREDIT AGREEMENT.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
BIRCH TELECOM FINANCE, INC.
By:___________________________
Name:
Title:
Term Note
<PAGE>
Schedule A
to Term Note
LOANS, CONVERSIONS AND REPAYMENT OF BASE RATE LOANS
------------------------------------------------------------------------------------------------------------------
Amount of Amount of Base Unpaid
Amount Principal of Rate Loans Principal
Amount of Base Converted to Base Rate Loans Converted to Balance of
Date Rate Loans Base Rate Loans Repaid Eurodollar Loans Base Rate Loans Notation Made By
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
Term Note
<PAGE>
Schedule B
to Term Note
LOANS, CONVERSIONS AND REPAYMENT OF EURODOLLAR LOANS
----------------------------------------------------------------------------------------------------------------------
Interest Amount of Unpaid
Amount Period and Amount of Eurodollar Principal
Amount of Converted to Eurodollar Principal of Loans Balance of
Eurodollar Eurodollar Rate with Eurodollar Converted to Eurodollar Notation
Date Loans Loans Respect Thereto Loans Repaid Base Rate Loans Loans Made By
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
Term Note
<PAGE>
EXHIBIT F-2
[FORM OF REVOLVING CREDIT NOTE]
THIS NOTE AND THE OBLIGATIONS REPRESENTED HEREBY MAY NOT BE TRANSFERRED EXCEPT
IN COMPLIANCE WITH THE TERMS AND PROVISIONS OF THE CREDIT AGREEMENT REFERRED TO
BELOW. TRANSFERS OF THIS NOTE AND THE OBLIGATIONS REPRESENTED HEREBY MUST BE
RECORDED IN THE REGISTER MAINTAINED BY THE ADMINISTRATIVE AGENT PURSUANT TO THE
TERMS OF SUCH CREDIT AGREEMENT.
$_____________ New York, New York
FOR VALUE RECEIVED, the undersigned, BIRCH TELECOM FINANCE, INC., a
corporation duly organized and validly existing under the law of the State of
Delaware (the "Borrower"), hereby unconditionally promises to pay to ___________
(the "Lender") or its registered assigns at the Payment Office specified in the
Credit Agreement (as hereinafter defined) in lawful money of the United States
and in immediately available funds, on the Revolving Credit Termination Date the
principal amount of (a) ___________ ($________), or, if less, (b) the aggregate
unpaid principal amount of all Revolving Credit Loans made by the Lender to the
Borrower pursuant to Section 2.4 of the Credit Agreement. The Borrower further
agrees to pay interest in like money at such Payment Office on the unpaid
principal amount hereof from time to time outstanding at the rates and on the
dates specified in Section 2.15 of the Credit Agreement.
The holder of this Note is authorized to endorse on the schedules
annexed hereto and made a part hereof or on a continuation thereof which shall
be attached hereto and made a part hereof the date, Type and amount of each
Revolving Credit Loan made pursuant to the Credit Agreement and the date and
amount of each payment or prepayment of principal thereof, each continuation
thereof, each conversion of all or a portion thereof to another Type and, in the
case of Eurodollar Loans, the length of each Interest Period with respect
thereto. Each such endorsement shall constitute prima facie evidence of the
accuracy of the information endorsed. The failure to make any such endorsement
or any error in any such endorsement shall not affect the obligations of the
Borrower in respect of any Revolving Credit Loan.
This Note (a) is one of the Revolving Credit Notes referred to in
the Amended and Restated Credit Agreement dated as of February 2, 2000 (as
amended, supplemented or otherwise modified from time to time, the "Credit
Agreement"), among BIRCH TELECOM, INC., the Borrower, the several banks and
other financial institutions or entities from time to time parties thereto (the
"Lenders"), and LEHMAN COMMERCIAL PAPER INC., as administrative agent (in such
capacity, the "Administrative Agent"), (b) is subject to the provisions of the
Credit Agreement and (c) is subject to optional and mandatory prepayment in
whole or in part as provided in the Credit Agreement. This Note is secured and
guaranteed as provided in the Credit Documents. Reference is hereby made to the
Credit Documents for a
Revolving Credit Note
<PAGE>
- 2 -
description of the properties and assets in which a security interest has been
granted, the nature and extent of the security and the guarantees, the terms and
conditions upon which the security interests and each guarantee were granted and
the rights of the holder of this Note in respect thereof.
Upon the occurrence of any one or more of the Events of Default, all
principal and all accrued interest then remaining unpaid on this Note shall
become, or may be declared to be, immediately due and payable, all as provided
in the Credit Agreement.
All parties now and hereafter liable with respect to this Note,
whether maker, principal, surety, guarantor, endorser or otherwise, hereby waive
presentment, demand, protest and all other notices of any kind.
Unless otherwise defined herein, terms defined in the Credit
Agreement and used herein shall have the meanings given to them in the Credit
Agreement.
NOTWITHSTANDING ANYTHING TO THE CONTRARY CONTAINED HEREIN OR IN THE
CREDIT AGREEMENT, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT PURSUANT TO AND IN
ACCORDANCE WITH THE REGISTRATION AND OTHER PROVISIONS OF SECTION 9.6 OF THE
CREDIT AGREEMENT.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
BIRCH TELECOM FINANCE, INC.
By:___________________________
Name:
Title:
Revolving Credit Note
<PAGE>
Schedule A
to Revolving Credit Note
LOANS, CONVERSIONS AND REPAYMENT OF BASE RATE LOANS
------------------------------------------------------------------------------------------------------------------
Amount of Amount of Base Unpaid
Amount Principal of Rate Loans Principal
Amount of Base Converted to Base Rate Loans Converted to Balance of
Date Rate Loans Base Rate Loans Repaid Eurodollar Loans Base Rate Loans Notation Made By
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------
Revolving Credit Note
<PAGE>
Schedule B
to Revolving Credit Note
LOANS, CONVERSIONS AND REPAYMENT OF EURODOLLAR LOANS
----------------------------------------------------------------------------------------------------------------------
Interest Amount of Unpaid
Amount Period and Amount of Eurodollar Principal
Amount of Converted to Eurodollar Principal of Loans Balance of
Eurodollar Eurodollar Rate with Eurodollar Converted to Eurodollar Notation
Date Loans Loans Respect Thereto Loans Repaid Base Rate Loans Loans Made By
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------
Revolving Credit Note
<PAGE>
EXHIBIT F-3
[FORM OF SWING LINE NOTE]
THIS NOTE AND THE OBLIGATIONS REPRESENTED HEREBY MAY NOT BE TRANSFERRED EXCEPT
IN COMPLIANCE WITH THE TERMS AND PROVISIONS OF THE CREDIT AGREEMENT REFERRED TO
BELOW. TRANSFERS OF THIS NOTE AND THE OBLIGATIONS REPRESENTED HEREBY MUST BE
RECORDED IN THE REGISTER MAINTAINED BY THE ADMINISTRATIVE AGENT PURSUANT TO THE
TERMS OF SUCH CREDIT AGREEMENT.
$___________ New York, New York
FOR VALUE RECEIVED, BIRCH TELECOM FINANCE, INC., a corporation duly
organized and validly existing under the law of the State of Delaware (the
"Borrower"), hereby unconditionally promises to pay to ___________ (the "Swing
Line Lender") or its registered assigns at the Payment Office specified in the
Credit Agreement (as hereinafter defined) in lawful money of the United States
and in immediately available funds, on the Revolving Credit Termination Date the
principal amount of (a) ___________ ($________), or, if less, (b) the aggregate
unpaid principal amount of all Swing Line Loans made by the Swing Line Lender to
the Borrower pursuant to Section 2.6 of the Credit Agreement, as hereinafter
defined. The Borrower further agrees to pay interest in like money at such
office on the unpaid principal amount hereof from time to time outstanding at
the rates and on the dates specified in Section 2.15 of such Credit Agreement.
The holder of this Note is authorized to endorse on the schedules
annexed hereto and made a part hereof or on a continuation thereof which shall
be attached hereto and made a part hereof the date and amount of each Swing Line
Loan made pursuant to the Credit Agreement and the date and amount of each
payment or prepayment of principal thereof. Each such endorsement shall
constitute prima facie evidence of the accuracy of the information endorsed. The
failure to make any such endorsement or any error in any such endorsement shall
not affect the obligations of the Borrower in respect of any Swing Line Loan.
This Note (a) is the Swing Line Note referred to in the Amended and
Restated Credit Agreement dated as of February 2, 2000 (as amended, supplemented
or otherwise modified from time to time, the "Credit Agreement"), among BIRCH
TELECOM, INC., the Borrower, the several banks and other financial institutions
or entities from time to time parties thereto (the "Lenders"), and LEHMAN
COMMERCIAL PAPER INC., as administrative agent (in such capacity, the
"Administrative Agent"), (b) is subject to the provisions of the Credit
Agreement and (c) is subject to optional and mandatory prepayment in whole or in
part as provided in the Credit Agreement. This Note is secured and guaranteed as
provided in the Credit Documents. Reference is hereby made to the Credit
Documents for a description of the properties and assets in which a security
interest has been granted, the nature and extent of the security and the
guarantees, the terms and conditions upon which the security interests and each
guarantee were granted and the rights of the holder of this Note in respect
thereof.
Swing Line Note
<PAGE>
- 2 -
Upon the occurrence of any one or more of the Events of Default, all
principal and all accrued interest then remaining unpaid on this Note shall
become, or may be declared to be, immediately due and payable, all as provided
in the Credit Agreement.
All parties now and hereafter liable with respect to this Note,
whether maker, principal, surety, guarantor, endorser or otherwise, hereby waive
presentment, demand, protest and all other notices of any kind.
Unless otherwise defined herein, terms defined in the Credit
Agreement and used herein shall have the meanings given to them in the Credit
Agreement.
NOTWITHSTANDING ANYTHING TO TIRE CONTRARY CONTAINED HEREIN OR IN THE
CREDIT AGREEMENT, THIS NOTE MAY NOT BE TRANSFERRED EXCEPT PURSUANT TO AND IN
ACCORDANCE WITH THE REGISTRATION AND OTHER PROVISIONS OF SECTION 9.6 OF THE
CREDIT AGREEMENT.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK
BIRCH TELECOM FINANCE, INC.
By:___________________________
Name:
Title:
Swing Line Note
<PAGE>
Schedule A
to Swing Line Note
LOANS, CONVERSIONS AND REPAYMENT OF BASE RATE LOANS
`
----------------------------------------------------------------------------------------------
Amount of Principal Unpaid Principal
Amount of of Swing Line Loans Balance of Swing Notation Made
Date Swing Line Loans Repaid Line Loans By
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------
Swing Line Note
<PAGE>
EXHIBIT G
[FORM OF NON-U.S. LENDER CERTIFICATE]
Reference is made to the Amended and Restated Credit Agreement,
dated as of February 2, 2000 (as amended, supplemented or otherwise modified
from time to time, the "Credit Agreement") among BIRCH TELECOM, INC., a
corporation duly organized and validly existing under the law of the State of
Delaware (the "Company"), BIRCH TELECOM FINANCE, INC., a corporation duly
organized and validly existing under the law of the State of Delaware (the
"Borrower"), the several banks and other financial institutions or entities from
time to time parties thereto (the "Lenders") and LEHMAN COMMERCIAL PAPER INC.,
as administrative agent (in such capacity, the "Administrative Agent").
Capitalized terms used herein that are not defined herein shall have the
meanings ascribed to them in the Credit Agreement.
_____________ (the "Non-U.S. Lender") is providing this certificate
pursuant to Section 2.20(d) of the Credit Agreement. The Non-U.S. Lender hereby
represents and warrants that:
1. The Non-U.S. Lender is the sole record and beneficial owner of
the Loans or the obligations evidenced by Note(s) in respect of which it
is providing this certificate;
2. The Non-U.S. Lender is not a "bank" for purposes of Section
881(c)(3)(A) of the Internal Revenue Code of 1986, as amended (the
"Code"). In this regard, the Non-U.S. Lender further represents and
warrants that:
(a) the Non-U.S. Lender is not subject to regulatory or other
legal requirements as a bank in any jurisdiction; and
(b) the Non-U.S. Lender has not been treated as a bank for
purposes of any tax, securities law or other filing or
submission made to any Governmental Authority, any application
made to a rating agency or qualification for any exemption
from tax, securities law or other legal requirements;
3. The Non-U.S. Lender is not a 10-percent shareholder of the
Borrower within the meaning of Section 881(c)(3)(B) of the Code; and
Non-U.S. Lender Certificate
<PAGE>
- 2 -
4. The Non-U.S. Lender is not a controlled foreign corporation
receiving interest from a related person within the meaning of Section
881(c)(3)(C) of the Code.
IN WITNESS WHEREOF, the undersigned has duly executed this
certificate.
[NAME OF NON-U.S. LENDER]
By:___________________________
Name:
Title:
Date: ________________
Non-U.S. Lender Certificate
<PAGE>
EXHIBIT H
[FORM OF LENDER ADDENDUM]
Reference is made to the Amended and Restated Credit Agreement,
dated as of February 2, 2000 (as amended, supplemented or otherwise modified
from time to time, the "Credit Agreement"), among BIRCH TELECOM, INC., a
corporation duly organized and validly existing under the law of the State of
Delaware (the "Company"), BIRCH TELECOM FINANCE, INC., a corporation duly
organized and validly existing under the law of the State of Delaware (the
"Borrower"), the several banks and other financial institutions or entities from
time to time parties thereto (the "Lenders") and LEHMAN COMMERCIAL PAPER INC.,
as administrative agent (in such capacity, the "Administrative Agent"). Unless
otherwise defined herein, terms defined in the Credit Agreement and used herein
shall have the meanings given to them in the Credit Agreement.
Upon execution and delivery of this Lender Addendum by the parties
hereto as provided in Section 9.16 of the Credit Agreement, the undersigned
hereby becomes a Lender thereunder having the Commitments set forth in Schedule
I hereto, effective as of the Closing Date.
THIS LENDER ADDENDUM SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
This Lender Addendum may be executed by one or more of the parties
hereto on any number of separate counterparts, and all of said counterparts
taken together shall be deemed to constitute one and the same instrument.
Delivery of an executed signature page hereof by facsimile transmission shall be
effective as delivery of a manually executed counterpart hereof.
Lender Addendum
<PAGE>
- 2 -
IN WITNESS WHEREOF, the parties hereto have caused this Lender
Addendum to be duly executed and delivered by their proper and duly authorized
officers as of this ___ day of February, 2000.
[NAME OF LENDER]
By:___________________________
Name:
Title:
Accepted and agreed:
BIRCH TELECOM FINANCE, INC.
By:___________________________
Name:
Title:
LEHMAN COMMERCIAL PAPER INC.,
as Administrative Agent
By:___________________________
Name:
Title:
Lender Addendum
<PAGE>
Schedule I
to
Lender Addendum
Name of Lender Revolving Credit Commitment Term Loan Commitment
-------------- --------------------------- --------------------
<PAGE>
EXHIBIT I
FORM OF NOTICE OF BORROWING
[DATE]
Lehman Commercial Paper Inc.,
as Administrative Agent for the
Lenders party to the Credit Agreement
referred to below
Ladies and Gentlemen:
The undersigned refers to the Amended and Restated Credit Agreement,
dated as of February 2, 2000 (as amended, supplemented or otherwise modified
from time to time, the "Credit Agreement"; the terms defined therein being used
herein as therein defined), among BIRCH TELECOM, INC., a corporation duly
organized and validly existing under the law of the State of Delaware (the
"Company"), BIRCH TELECOM FINANCE, INC., a corporation duly organized and
validly existing under the law of the State of Delaware (the "Borrower"), the
several banks and other financial institutions or entities from time to time
parties thereto (the "Lenders") and LEHMAN COMMERCIAL PAPER INC., as
administrative agent (in such capacity, the "Administrative Agent"), and hereby
gives you irrevocable notice, pursuant to Section [2.2/2.5] of the Credit
Agreement, that the undersigned hereby requests a Borrowing under the Credit
Agreement, and in that connection sets forth below the information relating to
such Borrowing (the "Proposed Borrowing") as required by Section [2.2/2.5] of
the Credit Agreement:
(i) The requested Borrowing Date of the Proposed Borrowing is
__________, ____.1
(ii) The aggregate principal amount of the Proposed Borrowing is
$_______.
(iii) The Proposed Borrowing is to consist of [Base Rate Loans]
[Eurodollar Loans.]
[(iv) The initial Interest Period for the Proposed Borrowing is
______ months.]2
The undersigned hereby certifies that the following statements are
true on the date hereof, and will be true on the date of the Proposed Borrowing:
--------------------
1 A notice of Borrowing must be given no later than 12:00 Noon (New York City
time) one Business Day prior to the Proposed Borrowing in the case of a Base
Rate Borrowing and no later than 12:00 noon (New York City time) three Business
Days prior to the date of the Proposed Borrowing in the case of a Eurodollar
Borrowing.
2 To be included for a Proposed Borrowing of Eurodollar Loans.
Notice of Borrowing
<PAGE>
- 2 -
(A) the representations and warranties contained in the Credit Agreement
or the other Credit Documents are and will be true and correct,
before and after giving effect to the Proposed Borrowing and to the
application of the proceeds thereof, as though made on and as of
such date, unless stated to relate to a specific earlier date, in
which case such representations and warranties shall be true and
correct as of such earlier date; and
(B) no Default or Event of Default has occurred and is continuing, or
would result from the Proposed Borrowing or from the application of
the proceeds thereof.
Very truly yours,
BIRCH TELECOM FINANCE, INC.
By_______________________________
Name:
Title:
Notice of Borrowing