EXHIBIT 10.3
AGREEMENT, LIMITED WAIVER AND SEVENTH AMENDMENT, dated as of October 30,
2002 (this "Seventh Amendment"), among FIBERNET OPERATIONS, INC., a Delaware
corporation ("FiberNet"), DEVNET L.L.C., a Delaware limited liability company
("Devnet" and, together with FiberNet, the "Borrowers"), and the financial
institutions party to the Credit Agreement (as defined below) as lenders
(collectively, the "Lenders"), to the AMENDED AND RESTATED CREDIT AGREEMENT,
dated as of February 9, 2001 (the "Credit Agreement"), among the Borrowers, the
Lenders, DEUTSCHE BANK AG NEW YORK BRANCH ("DBAG"), as administrative agent for
the Lenders (in such capacity, the "Administrative Agent"), TD SECURITIES (USA)
INC. ("TD"), as syndication agent for the Lenders (in such capacity, the
"Syndication Agent"), and WACHOVIA INVESTORS, INC., as documentation agent for
the Lenders (in such capacity, the "Documentation Agent").
RECITALS
--------
WHEREAS, the Borrowers wish to make certain amendments to the Credit
Agreement, which are more particularly described herein and to waive an Event of
Default identified herein.
AGREEMENT
---------
NOW, THEREFORE, in consideration of the promises and the mutual agreements
herein contained and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, agree as follows:
ARTICLE I.
DEFINITIONS
Capitalized terms used but not otherwise defined herein shall have the
meanings given to such terms in the Credit Agreement.
ARTICLE II.
REDUCTION OF COMMITMENTS AND RELATED ACTIONS
Pursuant to Section 2.5 of the Credit Agreement, the Borrowers hereby
cancel permanently $1,000,000 of Term Loan Commitments (in respect of which no
Term Loans are currently outstanding) and $611,465 of Revolving Loan Commitments
(in respect of which no Revolving Loans or Letters of Credit are currently
outstanding), which cancellation shall be effective, without any further action
on the part of the Borrowers or any other Person, upon the Lender Common Stock
Closing. All outstanding Letters of Credit shall remain outstanding on the date
of the Lender Common Stock Closing, provided that the aggregate amount of all
outstanding Letter of Credit Obligations shall not exceed $7,140,535 In
addition, the Borrowers shall, concurrently with the Lender Common Stock
Closing, prepay Term Loans in an aggregate principal amount of $41,000,000 (to
be allocated to the Lenders in the amounts set forth on Schedule A attached
hereto) and prepay, and, pursuant to Section 2.5 of the Credit Agreement, cancel
permanently Revolving Loan Commitments in an aggregate principal amount of
$25,000,000, which prepayment shall be made by the issuance to the Lenders of
common stock and warrants pursuant to the Stock Purchase Agreement and which
cancellation of commitments
1
shall be effective without any further action on the part of the Borrowers, any
Lender or any other Person upon the Lender Common Stock Closing. In connection
with and at the same time as the prepayments of Term Loans and Revolving Loans
described in the preceding sentence, the Borrowers shall pay accrued interest
thereon in the amount of $3,156,579.77 (which amount represents a portion of the
$5,156,579.77 of interest on such Loans which was due and payable, but was not
paid, on any Interest Payment Date occurring prior to the date of the Seventh
Amendment) in the manner set forth in clause (i) of the proviso that is being
added to Section 2.3.C. of the Credit Agreement in accordance with Section 3.05
hereof. All other interest in respect of such Loans which accrued but was unpaid
as of the date of the Seventh Amendment shall be subject to the provisions set
forth with respect thereto in the proviso that is being added to Section 2.3.C.
of the Credit Agreement in accordance with Section 3.05 hereof. After giving
effect to the forgoing transactions, the aggregate amount of the Term Loan
Commitments on the date of the Seventh Amendment shall be $26,156,579.77 and the
aggregate amount of the Revolving Loan Commitments on the date of the Seventh
Amendment shall be $14,388,535, which amounts the parties hereto hereby
acknowledge are the total respective Term Loan and Revolving Loan principal
amounts outstanding as of the date hereof.
ARTICLE III.
AMENDMENTS
Section 3.01 Definitions.
(a) The following defined terms are added to Section 1.1 of the Credit
Agreement in their proper alphabetical order:
"Consolidated Revenue" means, for any period, all revenue received by any
member of the Borrower Group that would, in conformity with GAAP, be included on
the consolidated income statement of the Borrower Group as revenue for such
period.
"Investors" means DBAG, TD, Nortel Networks, IBM Credit Corporation, Bank
One, NA and Wachovia Investors, Inc.
"Investors' Rights Agreement" means the Investor's Rights Agreement, dated
October 30, 2002, among the Parent and the Investors.
"Lender Common Stock and Warrants" means the common stock and warrants of
Parent issued to the Lenders pursuant to the Stock Purchase Agreement.
"Lender Common Stock Closing" means the issuance by Parent to the Lenders
of 440,000,000 shares of Lender Common Stock and Warrants to purchase
110,000,000 shares of Parent's common stock, and the satisfaction of all
conditions precedent to closing under the Stock Purchase Agreement.
"Lender Common Stock Conversion" means the conversion of debt to the equity
capital of the Parent by the Lenders in an aggregate amount of $66,000,000, as
more particularly described in Article II of the Seventh Amendment.
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"Lender Common Stock Conversion Documents" means the Stock Purchase
Agreement, the Investors' Rights Agreement, the Stockholders' Agreement and the
warrants issued in connection therewith, together with any other instruments and
agreements entered into by the Parent or its Subsidiaries in connection
therewith, as the same may be amended, supplemented, replaced or otherwise
modified from time to time in accordance with this Agreement.
"LOC Revolving Loan" has the meaning assigned to that term in Section
2.2.A.
"Required Equity" means the issuance of common stock and warrants of the
same class and series as, and otherwise identical to, the Lender Common Stock
and Warrants, yielding Net Proceeds of at least $3,300,000.
"Seventh Amendment" means the Agreement and Seventh Amendment to the Credit
Agreement, dated October 30, 2002, among the Borrowers and the Administrative
Agent.
"Stock Purchase Agreement" means the Common Stock and Warrant Purchase
Agreement, dated October 30, 2002, among the Parent and the Investors.
"Stockholders' Agreement" means the Stockholders' Agreement, dated October
30, 2002, among the Parent and the Investors.
(b) The definition of "Applicable Margin" is amended by (i) replacing the
period (".") at the end of the first proviso with a semicolon (";") and (ii)
adding the following new sentence before the words "If any financial statement
referred to in Section 5.1(ii)" in the twenty-second line thereof:
"provided further that, notwithstanding the foregoing, until December 31,
2003, the Applicable Margin for Eurodollar Rate Loans shall be 3.75% and for
Base Rate Loans shall be 2.75%."
(c) The definition of "Change in Control" is amended by (i) replacing the
period (".") at the end of the definition with a semicolon (";") and (ii) adding
the following immediately thereafter:
"provided, however, that, notwithstanding the foregoing, no transaction
effected by any of the Borrowers with the consent of the Lenders in connection
with the Lender Common Stock Conversion shall be deemed a Change in Control."
(d) The definition of "Consolidated Capitalization" is deleted in its
entirety.
(e) The definition of "Consolidated Fixed Charge Coverage Ratio" is amended
by (i) replacing the words "two preceding Fiscal Quarters" in the third line
thereof with the words "four preceding Fiscal Quarters", (ii) deleting the words
"multiplied by two" in the third line thereof and (iii) replacing the words
"such period" in the fourth line thereof with the words "the then just ended
Fiscal Quarter".
3
(f) The definition of "Consolidated Interest Coverage Ratio" is amended by
(i) replacing the words "prior two consecutive Fiscal Quarters" in the second
and third lines thereof with the words "prior four consecutive Fiscal Quarters"
and (ii) deleting the words "multiplied by two" in the third line thereof.
(g) The definition of "Consolidated Leverage Ratio" is amended by (i)
replacing the words "two preceding Fiscal Quarters" in the third line thereof
with the words "four preceding Fiscal Quarters" and (ii) deleting the words
"multiplied by two" in the fourth line thereof.
(h) The definition of "Fee Letters" is amended by (i) replacing the word
"and" in the fifth line thereof with a comma (",") and (ii) adding the following
new clause after the words "and IBM Credit Corporation" in the sixth line
thereof:
"and (v) the Fee Letter, dated October 30, 2002, among the Borrowers,
DBAG, Wachovia Securities, Inc., TD, Bank One, NA, Nortel Networks and IBM
Credit Corporation."
(i) The definition of "Net Revenue" is deleted in its entirety.
(j) The definition of "NPPE" is deleted in its entirety.
(k) The definition of "Restricted Payment" is amended by (i) replacing the
period (".") at the end of the definition with a semicolon (";") and (ii) adding
the following immediately thereafter:
"provided, however, that, notwithstanding the foregoing, no transaction
effected by any of the Borrowers with the consent of the Lenders in connection
with the Lender Common Stock Closing shall be deemed a Restricted Payment."
Section 3.02 Term Loans.
(a) Section 2.1.A.(i) of the Credit Agreement is amended by (i) replacing
the words "each Term Lender's Commitment as of the Closing Date" in the sixth
line thereof with the words "each Term Lender's Commitment as of the date of the
Seventh Amendment" and (ii) replacing the words "the Term Loan Commitments is
$65,000,000" in the eighth line thereof with the words "the Term Loan
Commitments is $26,156,579.77".
(b) Schedule 2.1.A of the Credit Agreement is amended by deleting it in its
entirety and replacing it with the revised Schedule 2.1.A set forth on Annex I
hereto.
Section 3.03 Revolving Loans.
(a) Section 2.1.A.(ii) of the Credit Agreement is amended by deleting it in
its entirety and replacing it with the following:
"(ii) Revolving Loans. Each Revolving Lender severally agrees to make
revolving loans ("Revolving Loans") to the Borrowers from the Closing Date until
the
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Revolving Loan Commitment Termination Date in an aggregate amount not exceeding
its Pro Rata Share of the aggregate amount of the Revolving Loan Commitments.
Each Borrower shall use the proceeds of any such Revolving Loans solely for the
purposes identified in Section 5.12. The amount of each Revolving Lender's
Commitment as of the date of the Seventh Amendment is set forth opposite its
name on Schedule 2.1.A annexed hereto and the aggregate amount of the Revolving
Loan Commitments is $14,388,535; provided that the Revolving Loan Commitments of
the applicable Revolving Lenders shall be adjusted to give effect to any
assignments of such Revolving Lender's respective Revolving Loan Commitments
pursuant to Section 9.1.; and provided further that the amount of the Revolving
Loan Commitments shall be reduced from time to time by the amount of any
reductions thereto made pursuant to Section 2.5. Notwithstanding anything to the
contrary herein, the outstanding principal amount of Revolving Loans made
pursuant to this Section 2.1.A(ii) shall not at any time exceed $7,248,000. Each
Revolving Lender's Revolving Loan Commitments shall expire immediately and
without further action on the Revolving Loan Commitment Termination Date and no
Revolving Loans shall be made after such date. Amounts borrowed under this
Section 2.1.A.(ii) and subsequently repaid or prepaid may be reborrowed;
provided, however, that (i) the aggregate principal amount of Revolving Loans
outstanding that were made pursuant to this Section 2.1.A(ii) shall not at any
time exceed $7,248,000 and (ii) the aggregate principal amount of the Revolving
Loans (including LOC Revolving Loans) outstanding at any time, when taken
together with the outstanding Letter of Credit Obligations, may not exceed the
aggregate amount of the Revolving Loan Commitments."
Section 3.04 Letters of Credit.
(a) Section 2.2.A. of the Credit Agreement is amended by deleting it in its
entirety and replacing it with the following:
"A. Issuance of Letters of Credit. Subject to the terms and conditions
hereof and in reliance upon the representations and warranties set forth herein,
the Issuing Bank agrees to issue, and each Revolving Loan Lender severally
agrees to participate in the issuance by the Issuing Bank of, Letters of Credit
in Dollars from time to time from the Closing Date until the Revolving Loan
Commitment Termination Date as any Borrower may request, in a form acceptable to
the Issuing Bank; provided, however, that (i) the sum of the outstanding Letter
of Credit Obligations and any outstanding Revolving Loans made under Section
2.2.E. (each such Revolving Loan an "LOC Revolving Loan") shall not at any time
exceed $7,140,535 (the "LOC Committed Amount") and (ii) the sum of the aggregate
outstanding principal amount of Revolving Loans (including LOC Revolving Loans)
plus outstanding Letter of Credit Obligations shall not at any time exceed the
aggregate amount of the Revolving Loan Commitments. No Letter of Credit shall
(a) have an original expiry date more than one year from the date of issuance
(provided that any such Letter of Credit may contain customary "evergreen"
provisions pursuant to which the expiry date is automatically extended by a
specific time period unless the Issuing Bank gives notice of expiration or
termination to the beneficiary of such Letter of Credit at least a specified
time period prior to the expiry date then in effect) or (b) as originally issued
or as extended, have an expiry date extending beyond the date which is 30 days
prior to the Maturity Date. Each Letter of Credit shall comply with the terms
and conditions of the related LOC Documents. The issuance and expiry dates of
each Letter of Credit shall be a Business Day."
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Section 3.05 Interest on the Loans.
(a) Section 2.3.C. of the Credit Agreement is amended by adding the
following proviso after the words "maturity (including final maturity)" in the
fourth line thereof:
"provided, however, that, notwithstanding the foregoing, (i) accrued but
unpaid interest on the Loans being prepaid on the date of the Seventh Amendment
as set forth in Article II thereof in the amount of $3,156,579.77 shall, on such
date, be capitalized and added to the outstanding principal amount of the Term
Loans, (ii) if, on or prior to November 8, 2002, accrued but unpaid interest on
the Loans being prepaid on the date of the Seventh Amendment as set forth in
Article II thereof in the amount of $2,000,000 has not been paid to the Lenders
on terms and conditions satisfactory to the Administrative Agent, then an Event
of Default shall occur at such time and the provisions of Section 2.3.E. shall
apply thereto, (iii) all accrued but unpaid interest on the Loans being prepaid
on the date of the Seventh Amendment as set forth in Article II thereof (other
than the accrued but unpaid interest that is referred to in clause (i) or clause
(ii) of this proviso) shall be capitalized and added to the outstanding
principal amount of the Term Loans on the next Interest Payment Date on which
such interest otherwise would have been due and payable and (iv) all interest on
any Loan that accrues during the period beginning on the date of the Seventh
Amendment and ending on June 30, 2003 shall, on the earlier to occur of the next
Interest Payment Date on which such interest otherwise would be due and payable
and June 30, 2003, be capitalized and added to the outstanding principal amount
of the Term Loans, and, in the case of each of clauses (i), (iii) and (iv)
above, all interest on such Term Loans shall, thereafter, subject to the
provisions of Section 2.3.E, be payable in arrears on and to each Interest
Payment Date applicable to the Term Loans, upon any prepayment of that Loan (to
the extent accrued on the amount being prepaid) and at maturity (including final
maturity)"
Section 3.06 Prepayments Due to Issuance of Debt or Equity.
(a) Section 2.5.B.(iii)(a) of the Credit Agreement is amended by deleting
it in its entirety and replacing it with the following:
"(a) Automatic Reductions of Commitments. The Revolving Loan Commitments
and the Term Loan Commitments in effect from time to time shall be permanently
reduced on the dates and by the amounts (calculated from the amount of the
Revolving Loan Commitments and the Term Loan Commitments, as the case may be,
outstanding as of the date of the Seventh Amendment) set forth below:
--------------------------------------------
Aggregate Reduction
(Expressed as a
Date of Reduction Percentage)
--------------------------------------------
03/31/2004 3.00%
--------------------------------------------
06/30/2004 3.00%
--------------------------------------------
09/30/2004 6.50%
--------------------------------------------
12/31/2004 6.50%
--------------------------------------------
03/31/2005 9.00%
--------------------------------------------
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--------------------------------------------
06/30/2005 9.00%
--------------------------------------------
09/30/2005 9.00%
--------------------------------------------
12/31/2005 9.00%
--------------------------------------------
03/31/2006 9.00%
--------------------------------------------
06/30/2006 9.00%
--------------------------------------------
09/30/2006 9.00%
--------------------------------------------
12/31/2006 9.00%
--------------------------------------------
Maturity 9.00%
--------------------------------------------
All such reductions shall reduce (1) the Revolving Loan Commitment of each
Revolving Loan Lender proportionately to its Pro Rata Share of the Revolving
Loan Commitments and (2) the Term Loan Commitment of each Term Loan Lender
proportionately to its Pro Rata share of the Term Loan Commitments. In
connection with any such reduction, the Borrowers shall prepay the Revolving
Loans and the Term Loans, as the case may be, in accordance with Section
2.5.B(v)."
(b) Section 2.5.B.(iii)(d) of the Credit Agreement is amended by (i)
deleting clause (v) in its entirety and (ii) adding the following clauses (v, vi
and vii) immediately prior to the words "in each case to prepay the Loans or
permanently" in the twenty-third line thereof:
"(v) such Net Proceeds received in connection with the Lender Common Stock
Conversion, (vi) such Net Proceeds received in connection with the issuance, on
or before December 31, 2002, of equity (other than the Required Equity) at a
price equal to or greater than $0.15 per share and in an amount not to exceed
$2,000,000 and (vii) such Net Proceeds received in connection with the Required
Equity,"
Section 3.07 Compensation For Breakage Costs
(a) Section 2.6.D. of the Credit Agreement is amended by (i) deleting the
word "or" in the fourteenth line thereof and (ii) adding the following new
clause after the words "by the terms of this Agreement" in the sixteenth line
thereof:
"or (v) as a consequence of the consummation of the transactions
contemplated by the Lender Common Stock Conversion Documents."
Section 3.08 Interest Rate Protection.
(a) Section 5.15 of the Credit Agreement is amended by replacing the words
"On or before June 30, 2002" in the first line thereof with the words "On or
before June 30, 2003".
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Section 3.09 Additional Equity Contribution.
(a) Section 5.16. of the Credit Agreement is amended by deleting it in its
entirety and replacing it with the following:
"SECTION 5.16. [Intentionally omitted]"
Section 3.10 Indebtedness.
(a) Section 6.1(viii) of the Credit Agreement is amended by replacing the
words "aggregate annual payments not to exceed $1,000,000" in the second line
thereof with the words "aggregate annual payments not to exceed $500,000".
Section 3.11 Financial Covenants.
(a) Section 6.6. of the Credit Agreement is amended by deleting it in its
entirety and replacing it with the following:
"SECTION 6.6. Financial Covenants.
A. Minimum Consolidated Revenue. At the end of each Fiscal Quarter of the
Borrower Group, no Borrower shall permit the Consolidated Revenue for the
immediately preceding four Fiscal Quarters ending on any date set forth below to
be less than the amount set forth below opposite such date:
==================================================
Date Minimum Consolidated
Revenue
(in Dollars)
--------------------------------------------------
September 30, 2002 27,095,700
--------------------------------------------------
December 31, 2002 24,818,600
--------------------------------------------------
March 31, 2003 23,211,600
--------------------------------------------------
June 30, 2003 22,695,200
--------------------------------------------------
September 30, 2003 24,538,700
--------------------------------------------------
December 31, 2003 27,011,000
--------------------------------------------------
March 31, 2004 29,708,600
--------------------------------------------------
June 30, 2004 32,527,400
--------------------------------------------------
September 30, 2004 35,134,100
--------------------------------------------------
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--------------------------------------------------
December 31, 2004 37,689,200
--------------------------------------------------
March 31, 2005 40,347,200
--------------------------------------------------
June 30, 2005 42,809,100
--------------------------------------------------
September 30, 2005 45,023,700
--------------------------------------------------
December 31, 2005 46,969,700
--------------------------------------------------
March 31, 2006 48,605,500
--------------------------------------------------
June 30, 2006 50,162,100
--------------------------------------------------
September 30, 2006 51,558,800
--------------------------------------------------
December 31, 2006 52,777,800
--------------------------------------------------
B. Minimum Consolidated EBITDA. At the end of each Fiscal Quarter of the
Borrower Group, no Borrower shall permit the Consolidated EBITDA for the
immediately preceding four Fiscal Quarters ending on any date set forth below to
be less than the amount set forth below opposite such date:
===================================================
Date Minimum Consolidated
EBITDA
(in Dollars)
---------------------------------------------------
September 30, 2002 1,359,100
---------------------------------------------------
December 31, 2002 1,805,000
---------------------------------------------------
March 31, 2003 1,174,800
---------------------------------------------------
June 30, 2003 31,600
---------------------------------------------------
September 30, 2003 1,474,500
---------------------------------------------------
December 31, 2003 3,459,400
---------------------------------------------------
March 31, 2004 5,799,700
---------------------------------------------------
June 30, 2004 8,242,500
---------------------------------------------------
September 30, 2004 10,438,700
---------------------------------------------------
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---------------------------------------------------
December 31, 2004 12,570,900
---------------------------------------------------
March 31, 2005 14,714,100
---------------------------------------------------
June 30, 2005 16,666,700
---------------------------------------------------
September 30, 2005 18,382,100
---------------------------------------------------
December 31, 2005 19,824,700
---------------------------------------------------
March 31, 2006 26,561,700
---------------------------------------------------
June 30, 2006 33,281,700
---------------------------------------------------
September 30, 2006 39,914,800
---------------------------------------------------
December 31, 2006 46,442,100
===================================================
C. Maximum Cumulative Capital Expenditures. At the end of each Fiscal
Quarter of the Borrower Group, no Borrower shall permit Consolidated Capital
Expenditures for the period commencing on September 30, 2002 and ending on the
dates set forth below to be greater than the amounts set forth below:
===================================================
Date Maximum Cumulative
Consolidated Capital
Expenditures
From September 30, 2002
(In Dollars)
---------------------------------------------------
September 30, 2002 550,000
---------------------------------------------------
December 31, 2002 1,650,000
---------------------------------------------------
March 31, 2003 3,186,700
---------------------------------------------------
June 30, 2003 4,262,500
---------------------------------------------------
September 30, 2003 5,404,300
---------------------------------------------------
December 31, 2003 6,679,200
---------------------------------------------------
March 31, 2004 8,284,100
---------------------------------------------------
June 30, 2004 9,758,100
---------------------------------------------------
10
---------------------------------------------------
September 30, 2004 10,968,100
---------------------------------------------------
December 31, 2004 12,707,200
---------------------------------------------------
March 31, 2005 13,852,300
---------------------------------------------------
June 30, 2005 15,130,500
---------------------------------------------------
September 30, 2005 16,408,700
---------------------------------------------------
December 31, 2005 17,754,000
---------------------------------------------------
March 31, 2006 19,001,400
---------------------------------------------------
June 30, 2006 20,279,600
---------------------------------------------------
September 30, 2006 21,584,200
---------------------------------------------------
December 31, 2006 22,914,100
===================================================
D. Consolidated Leverage Ratio. At the end of each Fiscal Quarter of the
Borrower Group set forth below (after giving effect to any incurrence of
Indebtedness and any payment of principal of Indebtedness on such day), no
Borrower shall permit the Consolidated Leverage Ratio to be greater than the
ratios set forth below:
==================================================
Date Consolidated Leverage
Ratio
--------------------------------------------------
December 31, 2003 10.0 to 1.0
--------------------------------------------------
March 31, 2004 5.9 to 1.0
--------------------------------------------------
June 30, 2004 4.0 to 1.0
--------------------------------------------------
September 30, 2004 3.0 to 1.0
--------------------------------------------------
December 31, 2004 2.25 to 1.0
--------------------------------------------------
March 31, 2005 2.0 to 1.0
--------------------------------------------------
June 30, 2005 2.0 to 1.0
--------------------------------------------------
September 30, 2005 2.0 to 1.0
--------------------------------------------------
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--------------------------------------------------
December 31, 2005 2.0 to 1.0
--------------------------------------------------
March 31, 2006 2.0 to 1.0
--------------------------------------------------
June 30, 2006 2.0 to 1.0
--------------------------------------------------
September 30, 2006 2.0 to 1.0
--------------------------------------------------
December 31, 2006 2.0 to 1.0
--------------------------------------------------
E. Consolidated Interest Coverage Ratio. At the end of each Fiscal Quarter
of the Borrower Group, no Borrower shall permit the Consolidated Interest
Coverage Ratio to be less than the ratios set forth below:
==================================================
Date Consolidated Interest
Coverage Ratio
--------------------------------------------------
December 31, 2003 1.6 to 1.0
--------------------------------------------------
March 31, 2004 2.75 to 1.0
--------------------------------------------------
June 30, 2004 3.0 to 1.0
--------------------------------------------------
September 30, 2004 3.0 to 1.0
--------------------------------------------------
December 31, 2004 3.0 to 1.0
--------------------------------------------------
March 31, 2005 3.0 to 1.0
--------------------------------------------------
June 30, 2005 3.0 to 1.0
--------------------------------------------------
September 30, 2005 3.0 to 1.0
--------------------------------------------------
December 31, 2005 3.0 to 1.0
--------------------------------------------------
March 31, 2006 3.0 to 1.0
--------------------------------------------------
June 30, 2006 3.0 to 1.0
--------------------------------------------------
September 30, 2006 3.0 to 1.0
--------------------------------------------------
December 31, 2006 3.0 to 1.0
--------------------------------------------------
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F. Consolidated Fixed Charge Coverage Ratio. At the end of each Fiscal
Quarter of the Borrower Group, no Borrower shall permit the Consolidated Fixed
Charge Coverage Ratio to be less than the ratios set forth below:
==================================================
Date Consolidated Fixed Charge
Coverage Ratio
--------------------------------------------------
December 31, 2003 1.2 to 1.0
--------------------------------------------------
March 31, 2004 1.25 to 1.0
--------------------------------------------------
June 30, 2004 1.3 to 1.0
--------------------------------------------------
September 30, 2004 1.3 to 1.0
--------------------------------------------------
December 31, 2004 1.3 to 1.0
--------------------------------------------------
March 31, 2005 1.3 to 1.0
--------------------------------------------------
June 30, 2005 1.3 to 1.0
--------------------------------------------------
September 30, 2005 1.3 to 1.0
--------------------------------------------------
December 31, 2005 1.3 to 1.0
--------------------------------------------------
March 31, 2006 1.75 to 1.0
--------------------------------------------------
June 30, 2006 1.75 to 1.0
--------------------------------------------------
September 30, 2006 1.75 to 1.0
--------------------------------------------------
December 31, 2006 1.75 to 1.0
--------------------------------------------------
Section 3.12 Sale or Discount of Receivables.
(a) Section 6.9 of the Credit Agreement is amended by adding the following
after the words "any of its notes or accounts receivable" in the third line
thereof:
"provided, however, that the Borrowers shall be permitted to engage a
collection agency for the collection of accounts receivable that have been fully
reserved for by the Borrowers and that do not, in the aggregate, exceed
$500,000, and to pay such firm reasonable and customary fees which may be based
on the amounts recovered by such firm."
13
Section 3.13 Transactions with Shareholders and Affiliates.
(a) Section 6.10 of the Credit Agreement is amended by adding the following
new sentence after Section 6.10(v):
"Notwithstanding anything to the contrary in this Section 6.10 and for the
avoidance of doubt, the Borrowers are hereby expressly permitted to make all
payments required or permitted to made to the Lenders under this Agreement and
the Lender Common Stock Conversion Documents."
Section 3.14 Events of Default.
(a) The following Event of Default shall be added to Article VII of the
Credit Agreement:
"SECTION 7.20. KEY OFFICER.
Xxxxxxx Xxxx shall have failed for a period of 30 days to participate in
the affairs of the Parent as the Chief Executive Officer thereof, or shall,
despite continuing to hold the title of Chief Executive Officer of the Parent,
no longer have the responsibilities and authority related to such executive
management position as of the date of the Seventh Amendment, in each case, for
any reason other than the death or disability of Xxxxxxx Xxxx."
Section 3.15 Assignments.
(a) Section 9.1.B. of the Credit Agreement is amended by replacing the
words "in an aggregate amount of not less than $5,000,000" in the fifth line
thereof with the words "in an aggregate amount of not less than $1,000,000".
ARTICLE IV.
LIMITED WAIVER
Subject to the conditions and upon the terms set forth in this Seventh
Amendment and in reliance on the representations and warranties of the Borrowers
set forth in Section 5.02 of this Seventh Amendment, the Lenders hereby waive
any right or remedy arising in favor of the Lenders under the Credit Agreement
by reason of the failure of the Borrowers to comply on June 30, 2002 with the
provisions of Section 5.15 of the Credit Agreement as in effect immediately
prior to the amendment set forth in Section 3.08 of this Seventh Amendment.
ARTICLE V.
CONSENT
The Lenders hereby consent to the execution and delivery and performance by
Parent and/or the Borrowers (as applicable) of (i) the Stock Purchase Agreement,
(ii) the Common Stock Purchase Agreement, dated as of October 30, 2002, by and
between Parent and the purchasers listed on Schedule I thereto providing for the
purchase and sale of the Required
14
Equity and (iii) each of the agreements referred to in the agreement described
in clause (i) or (ii) of this sentence.
ARTICLE VI.
MISCELLANEOUS
Section 6.01 Execution of this Seventh Amendment; Effectiveness.
This Seventh Amendment is executed and shall be construed as an amendment
to the Credit Agreement, and, as provided in the Credit Agreement, this Seventh
Amendment forms a part thereof. This Seventh Amendment shall be effective upon
the satisfaction of the following condition:
(a) The transactions contemplated by Article II above and the Lender Common
Stock Conversion Documents shall have been consummated on the terms set forth in
the Lender Common Stock Conversion Documents and upon satisfaction of the
conditions therein set forth.
Section 6.02 Representations and Warranties.
The Borrowers hereby represent and warrant to the Administrative Agent and
the Lenders that (a) all consents, approvals and authorizations necessary for
the Borrowers' execution, delivery and performance of this Seventh Amendment
have been obtained or made and (b) this Seventh Amendment has been duly executed
and delivered by the Borrowers and constitutes a legal, valid and binding
obligation of each Borrower, enforceable against such Borrower in accordance
with its terms.
Section 6.03 Waiver.
This Seventh Amendment is made in amendment and modification of, but not
extinguishment of, the obligations set forth in the Credit Agreement and the
other Loan Documents and, except as specifically modified pursuant to the terms
of this Seventh Amendment, the terms and conditions of the Credit Agreement and
the other Loan Documents remain in full force and effect. Nothing herein shall
limit in any way the rights and remedies of the Administrative Agent and the
Lenders under the Credit Agreement and the other Loan Documents. Except for the
waiver set forth in Article IV of this Seventh Amendment, the execution and
delivery by the Lenders of this Seventh Amendment shall not constitute a waiver,
forbearance or other indulgence with respect to any Potential Event of Default
or Event of Default now existing or hereafter arising.
Section 6.04 Counterparts; Integration; Effectiveness.
This Seventh Amendment may be executed in counterparts (and by different
parties hereto on different counterparts), each of which shall constitute an
original, but all of which when taken together shall constitute a single
contract. This Seventh Amendment and any agreements referred to herein
constitute the entire contract among the parties hereto relating to the subject
matter hereof and supersede any and all previous agreements and understandings,
oral
15
or written, relating to the subject matter hereof. In addition to the
requirements set forth above in Section 6.01, this Seventh Amendment shall
become effective when it shall have been executed by each of the Borrowers and
each of the Lenders, and thereafter shall be binding upon and inure to the
benefit of the parties hereto and, subject to and in accordance with Section
9.16 of the Credit Agreement, their respective successors and assigns. Delivery
of an executed counterpart of a signature page of this Seventh Amendment by
telecopy shall be as effective as delivery of a manually executed counterpart of
this Seventh Amendment.
Section 6.05 Severability.
Any provision of this Seventh Amendment held to be invalid, illegal or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such invalidity, illegality or unenforceability without
affecting the validity, legality or enforceability of the remaining provisions
hereof, and the invalidity of a particular provision in a particular
jurisdiction shall not invalidate such provision in any other jurisdiction.
Section 6.06 Governing Law.
This Seventh Amendment shall be construed in accordance with and governed
by the laws of the State of New York without regard to the conflicts of law
provisions thereof, other than Sections 5-1401 and 5-1402 of the General
Obligations Law of the State of New York.
Section 6.07 Headings.
Article and Section headings used herein are for convenience of reference
only, are not part of this Seventh Amendment and shall not affect the
construction of, or be taken into consideration in interpreting, this Seventh
Amendment.
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IN WITNESS WHEREOF, the parties hereto have caused this Seventh Amendment
to be duly executed by their respective authorized officers as of the day and
year first above written.
FIBERNET OPERATIONS, INC.
By: /s/ Xxxxxxx X. Xxxx
------------------------------
Name: Xxxxxxx X. Xxxx
Title: President
DEVNET L.L.C.
By: /s/ Xxxxxxx X. Xxxx
------------------------------
Name: Xxxxxxx X. Xxxx
Title: Chairman
DEUTSCHE BANK AG NEW YORK BRANCH
By: /s/ Xxxxx X. Xxxx
------------------------------
Name: Xxxxx X. Xxxx
Title: Director
By: /s/ Xxxxxxxxx Xxxxxxx
------------------------------
Name: Xxxxxxxxx Xxxxxxx
Title: Vice President
WACHOVIA INVESTORS, INC.
By: /s/ Xxxxxxx Xxxx
------------------------------
Name: Xxxxxxx Xxxx
Title: Authorized Officer
BANK ONE, N.A.
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Assistant Vice President
IBM CREDIT CORPORATION
By: /s/ Xxx Xxxxxx
------------------------------
Name: Xxx Xxxxxx
Title: Director, Credit Operations
NORTEL NETWORKS INC.
By: /s/ Xxxxx Xxxxxx
------------------------------
Name: Xxxxx Xxxxxx
Title: Director, Customer Finance
TORONTO DOMINION (TEXAS), INC.
By: /s/ Xxxx Xxxxx
----------------------------
Name: Xxxx Xxxxx
Title: Vice President
