Exhibit 4.39
EXECUTION COPY
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CREDIT AGREEMENT
dated as of
May 31, 2000
among
McLEODUSA INCORPORATED
The Lenders Party Hereto
and
THE CHASE MANHATTAN BANK,
as Agent
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CHASE SECURITIES INC.,
as Sole Book Manager and Lead Arranger
XXXXXXX XXXXX XXXXXX INC.,
as Syndication Agent
BANK OF AMERICA, N.A. and
XXXXXXX SACHS CREDIT PARTNERS L.P.,
as Co-Documentation Agents
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TABLE OF CONTENTS
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ARTICLE I Definitions............................................................................. 1
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SECTION 1.01. Defined Terms....................................................................... 1
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SECTION 1.02. Classification of Loans and Borrowings.............................................. 32
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SECTION 1.03. Terms Generally..................................................................... 32
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SECTION 1.04. Accounting Terms; GAAP.............................................................. 32
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ARTICLE II The Credits............................................................................. 33
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SECTION 2.01. Commitments......................................................................... 33
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SECTION 2.02. Loans and Borrowings................................................................ 33
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SECTION 2.03. Requests for Borrowings............................................................. 34
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SECTION 2.04. Swingline Loans..................................................................... 35
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SECTION 2.05. Letters of Credit................................................................... 37
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SECTION 2.06. Funding of Borrowings............................................................... 42
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SECTION 2.07. Interest Elections.................................................................. 42
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SECTION 2.08. Termination and Reduction of Commitments............................................ 44
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SECTION 2.09. Repayment of Loans; Evidence of Debt................................................ 45
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SECTION 2.10. Amortization of Term Loans.......................................................... 46
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SECTION 2.11. Prepayment of Loans................................................................. 48
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SECTION 2.12. Fees................................................................................ 49
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SECTION 2.13. Interest............................................................................ 50
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SECTION 2.14. Alternate Rate of Interest.......................................................... 51
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SECTION 2.15. Increased Costs..................................................................... 52
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SECTION 2.16. Break Funding Payments.............................................................. 54
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SECTION 2.17. Taxes............................................................................... 54
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SECTION 2.18. Payments Generally; Pro Rata Treatment; Sharing of Set-offs......................... 55
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SECTION 2.19. Mitigation Obligations; Replacement of Lenders...................................... 57
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SECTION 2.20. Incremental Facility................................................................ 58
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ARTICLE III Representations and Warranties.......................................................... 60
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SECTION 3.01. Organization; Powers................................................................ 60
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SECTION 3.02. Authorization; Enforceability....................................................... 60
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SECTION 3.03. Governmental Approvals; No Conflicts................................................ 60
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SECTION 3.04. Financial Condition; No Material Adverse Change..................................... 61
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SECTION 3.05. Properties.......................................................................... 61
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SECTION 3.06. Litigation and Environmental Matters................................................ 62
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SECTION 3.07. Compliance with Laws and Agreements................................................. 62
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SECTION 3.08. Investment and Holding Company Status............................................... 63
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SECTION 3.09. Taxes............................................................................... 63
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SECTION 3.10. ERISA............................................................................... 63
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SECTION 3.11. Disclosure.......................................................................... 63
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SECTION 3.12. Subsidiaries........................................................................ 64
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SECTION 3.13. Insurance........................................................................... 64
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SECTION 3.14. Labor Matters....................................................................... 64
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SECTION 3.15. Security Interests.................................................................. 64
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SECTION 3.16. FCC Compliance...................................................................... 66
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ARTICLE IV Conditions.............................................................................. 66
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SECTION 4.01. Effective Date...................................................................... 66
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SECTION 4.02. Each Credit Event................................................................... 69
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ARTICLE V Affirmative Covenants................................................................... 69
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SECTION 5.01. Financial Statements and Other Information.......................................... 70
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SECTION 5.02. Notices of Material Events.......................................................... 71
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SECTION 5.03. Information Regarding Collateral.................................................... 72
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SECTION 5.04. Existence; Conduct of Business...................................................... 73
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SECTION 5.05. Payment of Obligations.............................................................. 73
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SECTION 5.06. Maintenance of Properties........................................................... 73
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SECTION 5.07. Insurance........................................................................... 73
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SECTION 5.08. Casualty and Condemnation........................................................... 74
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SECTION 5.09. Books and Records; Inspection and Audit Rights...................................... 74
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SECTION 5.10. Compliance with Laws................................................................ 74
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SECTION 5.11. Use of Proceeds and Letters of Credit............................................... 74
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SECTION 5.12. Additional Subsidiaries............................................................. 75
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SECTION 5.13. Further Assurances.................................................................. 75
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SECTION 5.14. Interest Rate Protection............................................................ 76
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SECTION 5.15. Post-Effective Approvals............................................................ 77
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ARTICLE VI Negative Covenants...................................................................... 77
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SECTION 6.01. Indebtedness of the Borrower; Certain Equity Securities............................. 77
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SECTION 6.02. Indebtedness of Restricted Subsidiaries............................................. 79
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SECTION 6.03. Liens............................................................................... 80
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SECTION 6.04. Sale and Lease-Back Transactions.................................................... 81
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SECTION 6.05. Fundamental Changes................................................................. 81
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SECTION 6.06. Investments, Loans, Advances, Guarantees and Acquisitions........................... 82
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SECTION 6.07. Asset Sales......................................................................... 84
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SECTION 6.08. Hedging Agreements.................................................................. 84
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SECTION 6.09. Restricted Payments; Certain Payments of Indebtedness............................... 84
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SECTION 6.10. Transactions with Affiliates........................................................ 86
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SECTION 6.11. Restrictive Agreements.............................................................. 86
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SECTION 6.12. Amendment of Material Documents..................................................... 87
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SECTION 6.13. Leverage Ratio...................................................................... 87
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SECTION 6.14. Senior Secured Debt to Total Capital................................................ 87
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SECTION 6.15. Total Debt to Total Capital......................................................... 88
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SECTION 6.16. Minimum Access Lines in Service..................................................... 88
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SECTION 6.17. Interest Expense Coverage Ratio..................................................... 88
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SECTION 6.18. Minimum Consolidated Revenue........................................................ 89
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SECTION 6.19. Designation of Unrestricted Subsidiaries............................................ 89
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ARTICLE VII Events of Default....................................................................... 91
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ARTICLE VIII The Administrative Agent................................................................ 94
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ARTICLE IX Miscellaneous........................................................................... 96
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SECTION 9.01. Notices............................................................................. 96
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SECTION 9.02. Waivers; Amendments................................................................. 97
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SECTION 9.03. Expenses; Indemnity; Damage Waiver.................................................. 99
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SECTION 9.04. Successors and Assigns.............................................................. 101
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SECTION 9.05. Survival............................................................................ 104
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SECTION 9.06. Counterparts; Integration; Effectiveness............................................ 105
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SECTION 9.07. Severability........................................................................ 105
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SECTION 9.08. Right of Setoff..................................................................... 105
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SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of Process.......................... 106
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SECTION 9.10. WAIVER OF JURY TRIAL................................................................ 106
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SECTION 9.11. Headings............................................................................ 107
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SECTION 9.12. Confidentiality..................................................................... 107
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SECTION 9.13. Interest Rate Limitation............................................................ 108
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SECTION 9.14. Special Funding Option.............................................................. 108
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SECTION 9.15. Release of Subsidiaries............................................................. 110
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SCHEDULES:
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Schedule 2.01 -- Commitments
Schedule 3.03 -- Governmental Approvals, etc.
Schedule 3.05 -- Mortgaged Properties
Schedule 3.06 -- Disclosed Matters
Schedule 3.12 -- Subsidiaries
Schedule 3.15 -- Mortgage Filing Offices
Schedule 6.01(a) -- Existing Indebtedness of the Borrower
Schedule 6.02 -- Existing Subsidiary Indebtedness
Schedule 6.03 -- Existing Liens
Schedule 6.06 -- Existing Investments
Schedule 6.10 -- Existing Affiliate Transactions
Schedule 6.11 -- Existing Restrictions
EXHIBITS:
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Exhibit A -- Form of Assignment and Acceptance
Exhibit B-1 -- Form of Opinion of Xxxxxxx Xxxx & Xxxxxxxxx
Exhibit B-2 -- Form of Opinion of Vice President, General
Counsel & Secretary of the Borrower
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Exhibit B-3 -- Form of Opinion of Regulatory Counsel
Exhibit B-4 -- Form of Opinion of Local Counsel
Exhibit C -- Form of Borrower Security Agreement
Exhibit D -- Form of Borrower Pledge Agreement
Exhibit E -- Form of Subsidiary Guarantee Agreement
Exhibit F -- Form of Subsidiary Pledge Agreement
Exhibit G -- Form of Subsidiary Security Agreement
Exhibit H -- Form of Indemnity, Subrogation and
Contribution Agreement
Exhibit I -- Form of Promissory Note
Exhibit J -- Form of Mortgage
Exhibit K -- Form of Intercompany Loan Agreement
Exhibit L -- Form of Intercompany Security Agreement
Exhibit M -- Form of Approved Lease Agreement
Exhibit N -- Form of Perfection Certificate
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CREDIT AGREEMENT dated as of May 31, 2000 among McLEODUSA
INCORPORATED, the LENDERS party hereto, and THE CHASE MANHATTAN BANK,
as Administrative Agent and Collateral Agent.
The parties hereto agree as follows:
ARTICLE I
Definitions
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SECTION 1.01. Defined Terms. As used in this Agreement, the following
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terms have the meanings specified below:
"ABR", when used in reference to any Loan or Borrowing, refers to whether
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such Loan, or the Loans comprising such Borrowing, are bearing interest at a
rate determined by reference to the Alternate Base Rate.
"Additional Lender" is defined in Section 2.20.
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"Administrative Agent" means The Chase Manhattan Bank, in its capacity as
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administrative agent for the Lenders hereunder.
"Administrative Questionnaire" means an Administrative Questionnaire in a
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form supplied by the Administrative Agent.
"Access Lines in Service" means, at any time, the number of distinct
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customer service lines maintained by the Borrower at such time.
"Affiliate" means, with respect to a specified Person, another Person that
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directly, or indirectly through one or more intermediaries, Controls or is
Controlled by or is under common Control with the Person specified.
"Agent" means The Chase Manhattan Bank, in its capacities as
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Administrative Agent and Collateral Agent.
"Alternate Base Rate" means, for any day, a rate per annum equal to the
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greater of (a) the Prime Rate in effect on such day and (b) the Federal Funds
Effective Rate in effect on such day plus 1/2 of 1%. Any change in the
Alternate Base Rate due to a change in the Prime Rate or the Federal Funds
Effective Rate shall be effective from and including the effective date of such
change in the Prime Rate or the Federal Funds Effective Rate, respectively.
"Applicable Commitment Fee Rate" means, with respect to the commitment fee
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payable pursuant to Section 2.12(a), a rate per annum equal to (x) 1.00% for
each day on which Usage is less
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than 25.0%, (y) 0.75% for each day on which Usage is equal to or greater than
25.0% but less than or equal to 50.0% and (z) 0.50% for each day on which Usage
is greater than 50.0%. For purposes of the foregoing, "Usage" means, on any
date, the percentage obtained by dividing (i) the sum of the aggregate
outstanding Tranche A Term Loans and the aggregate Revolving Exposure on such
date by (ii) the sum of the aggregate outstanding Tranche A Term Loans,
unutilized Tranche A Commitments and Revolving Commitments on such date.
"Applicable Percentage" means, with respect to any Revolving Lender, the
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percentage of the total Revolving Commitments represented by such Lender's
Revolving Commitment. If the Revolving Commitments have terminated or expired,
the Applicable Percentages shall be determined based upon the Revolving
Commitments most recently in effect, giving effect to any assignments.
"Applicable Rate" means, for any day with respect to any Loan, the
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applicable rate per annum set forth below under the applicable caption based
upon the ratings established by Xxxxx'x and S&P for the Index Debt.
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Level Ratings LIBOR Spread for ABR Spread for LIBOR Spread ABR Spread
Revolving Loans Revolving Loans for Tranche for Tranche
and Tranche A and Tranche A B Term Loans B Term
Term Loans Term Loans Loans
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V *=BBB-/Baa3 1.00% 0.00% 2.75% 1.75%
IV BB+/Ba1 1.50% 0.50% 2.75% 1.75%
III BB/Ba2 2.00% 1.00% 3.00% 2.00%
II BB-/Ba3 2.25% 1.25% 3.00% 2.00%
I +BB-/Ba3 2.50% 1.50% 3.25% 2.25%
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For purposes of the foregoing, (a) each change in the Applicable Rate
resulting from a publicly announced change in the ratings shall be effective, in
the case of an upgrade, during the period commencing on and including the date
of delivery to the Administrative Agent of written notification thereof from the
Borrower and ending on the date immediately preceding the effective date of the
next such change and, in the case of a downgrade, during the period commencing
on and including the date of public announcement thereof and ending on the date
immediately preceding the effective date of the next such change, (b) in the
event the ratings established by Xxxxx'x and S&P fall within different Levels,
interest rate spreads shall be based on the lower of the two ratings unless the
different ratings are two or more Levels apart, in which case interest rate
spreads will be based on a rating one Level above
the lower of the two ratings and (c) if neither Xxxxx'x nor S&P maintains a
rating for the Index Debt, the ratings shall be deemed to be in Level I. If the
rating system of Xxxxx'x or S&P shall change, or if either of them shall cease
rating the Index Debt (other than by reason of any action or nonaction by the
Borrower following or in anticipation of a ratings downgrade), the Borrower and
the Administrative Agent shall negotiate in good faith to amend (with the
consent of the Required Lenders) the references to specific ratings in this
definition (including by way of substituting another rating agency mutually
acceptable to the Borrower and the Administrative Agent for the rating agency
with respect to which the rating system has changed or for which no rating is
then in effect) to reflect such changed rating system or the nonavailability of
ratings from such rating agency, and pending agreement on such amendment, the
rating in effect immediately prior to such change or cessation will apply. If
any rating agency shall not have a rating in effect by reason of any action or
nonaction by the Borrower following or in anticipation of a ratings downgrade,
then such rating agency shall be deemed to have established a rating in Level I.
"Approved Lease Agreement" means a lease agreement in the form attached
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hereto as Exhibit M or such other form of lease agreement that may from time to
time be approved by the Administrative Agent.
"Assessment Rate" means, for any day, the annual assessment rate in effect
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on such day that is payable by a member of the Bank Insurance Fund classified as
"well-capitalized" and within supervisory subgroup "B" (or a comparable
successor risk classification) within the meaning of 12 C.F.R. Part 327 (or any
successor provision) to the Federal Deposit Insurance Corporation for insurance
by such Corporation of time deposits made in dollars at the offices of such
member in the United States; provided that if, as a result of any change in any
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law, rule or regulation, it is no longer possible to determine the Assessment
Rate as aforesaid, then the Assessment Rate shall be such annual rate as shall
be determined by the Administrative Agent to be representative of the cost of
such insurance to the Lenders.
"Assignment and Acceptance" means an assignment and acceptance entered
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into by a Lender and an assignee (with the consent of any party whose consent is
required by Section 9.04), and accepted by the Administrative Agent, in the form
of Exhibit A or any other form approved by the Administrative Agent.
"Attributable Debt" means, on any date, in respect of any lease of the
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Borrower or any Restricted Subsidiary entered into as part of a sale and
leaseback transaction subject to Section 6.04, (i) if such lease is a Capital
Lease Obligation, the capitalized amount thereof that would appear on a balance
sheet of such Person prepared as of such date in accordance with GAAP, and (ii)
if such lease is not a Capital Lease Obligation, the
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capitalized amount of the remaining lease payments under such lease that would
appear on a balance sheet of such Person prepared as of such date in accordance
with GAAP if such lease were accounted for as a Capital Lease Obligation.
"Board" means the Board of Governors of the Federal Reserve System of the
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United States of America.
"Board of Directors" means the Board of Directors of the Borrower, or any
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committee thereof duly authorized to act on behalf of the Board of Directors.
"Borrower" means McLeodUSA Incorporated, a Delaware corporation.
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"Borrower Collateral" is defined in the Borrower Security Agreement.
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"Borrower Pledge Agreement" means the Borrower Pledge Agreement between
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the Borrower and the Collateral Agent, substantially in the form of Exhibit D.
"Borrower Secured Obligations" is defined in the Borrower Security
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Agreement.
"Borrower Security Agreement" means the Borrower Security Agreement
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between the Borrower and the Collateral Agent, substantially in the form of
Exhibit C.
"Borrowing" means (a) Loans of the same Class and Type, made, converted or
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continued on the same date and, in the case of Eurodollar Loans, as to which a
single Interest Period is in effect, or (b) a Swingline Loan.
"Borrowing Request" means a request by the Borrower for a Borrowing in
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accordance with Section 2.03.
"Business Day" means any day that is not a Saturday, Sunday or other day
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on which commercial banks in New York City are authorized or required by law to
remain closed; provided that, when used in connection with a Eurodollar Loan,
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the term "Business Day" shall also exclude any day on which banks are not open
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for dealings in dollar deposits in the London interbank market.
"Capital Lease Obligations" of any Person means the obligations of such
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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 required to be classified and accounted for as capital
leases on a balance sheet of such Person under GAAP, and the amount of such
obligations shall be the capitalized amount thereof determined in accordance
with GAAP.
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"Capital Stock" means any and all shares, interests, participations or
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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 or subscribe for any of
the foregoing, or any warrants, rights or options to purchase or subscribe for
any such warrants, rights or options.
"Change in Law" means (a) the adoption of any law, rule or regulation
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after the date of this Agreement, (b) any change in any law, rule or regulation
or in the interpretation or application thereof by any Governmental Authority
after the date of this Agreement or (c) compliance by any Lender or the Issuing
Bank (or, for purposes of Section 2.15(b), by any lending office of such Lender
or by such Lender's or the Issuing Bank's holding company, if any) with any
request, guideline or directive (whether or not having the force of law) of any
Governmental Authority made or issued after the date of this Agreement.
"Change of Control" means (i) the sale, conveyance, transfer or lease of
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all or substantially all of the assets of the Borrower to any "Person" or
"group" (within the meaning of Sections 13(d)(3) and 14(d)(2) of the Exchange
Act or any successor provision to either of the foregoing, including any group
acting for the purpose of acquiring, holding or disposing of securities within
the meaning of Rule 13d-5(b)(i) under the Exchange Act), other than any
Permitted Holder or any Restricted Subsidiary; (ii) any "Person" or "group"
(within the meaning of Sections 13(d)(3) and 14(d)(2) of the Exchange Act or any
successor provision to either of the foregoing, including any group acting for
the purpose of acquiring, holding or disposing of securities within the meaning
of Rule 13d-5(b)(i) under the Exchange Act), other than any Permitted Holder,
becoming the "beneficial owner" (as defined in Rule 13d-3 under the Exchange
Act) of more than 35% of the total voting power of all classes of the Voting
Stock of the Borrower (including any warrants, options or rights to acquire such
Voting Stock), calculated on a fully diluted basis, and such voting power
percentage is greater than or equal to the total voting power percentage then
beneficially owned by the Permitted Holders in the aggregate; or (iii) during
any period of two consecutive years, individuals who at the beginning of such
period constituted the Board of Directors (together with any directors whose
election or appointment by the Board of Directors or whose nomination for
election by the stockholders of the Borrower was approved by a vote of a
majority of the directors then still in office who were either directors at the
beginning of such period or whose election or nomination for election was
previously so approved) ceasing for any reason to constitute a majority of the
Board of Directors then in office.
"Class", when used in reference to any Loan or Borrowing, refers to
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whether such Loan, or the Loans comprising such Borrowing, are Revolving Loans,
Tranche A Term Loans, Tranche B
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Term Loans or Swingline Loans and, when used in reference to any Commitment,
refers to whether such Commitment is a Revolving Commitment, Tranche A
Commitment or Tranche B Commitment.
"Code" means the Internal Revenue Code of 1986, as amended from time to
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time.
"Collateral" means the Borrower Collateral and the Guaranteed Obligations
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Collateral.
"Collateral Agent" means The Chase Manhattan Bank, in its capacity as
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collateral agent under the Loan Documents.
"Collateral and Guarantee Requirement" means the requirement that:
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(a) the Collateral Agent shall have received (i) from the Borrower a
counterpart of each of the Borrower Security Agreement and the Borrower
Pledge Agreement duly executed and delivered on behalf of the Borrower and
(ii) from each Subsidiary Loan Party either (A) a counterpart of the
Subsidiary Security Documents duly executed and delivered on behalf of
such Loan Party or (B) in the case of any Person that becomes a Subsidiary
Loan Party after the Effective Date, a supplement to each Subsidiary
Security Document, in the form specified therein, duly executed and
delivered on behalf of such Subsidiary Loan Party;
(b) all outstanding Equity Interests of each Subsidiary owned by or
on behalf of any Loan Party shall have been pledged pursuant to the
applicable Pledge Agreement (except that the Loan Parties shall not be
required to pledge more than 65% of the outstanding voting Equity
Interests of any Foreign Subsidiary) and the Agent shall have received
certificates or other instruments representing all such Equity Interests,
together with stock powers or other instruments of transfer with respect
thereto endorsed in blank;
(c) Each promissory note evidencing any Indebtedness of the Borrower
or any Subsidiary that is owing to any Loan Party (other than promissory
notes issued by Illinois Consolidated Telephone Company and listed on
Schedule 6.02) shall have been pledged pursuant to the applicable Pledge
Agreement and the Agent shall have received all such promissory notes,
together with instruments of transfer with respect thereto endorsed in
blank;
(d) all documents and instruments, including Uniform Commercial Code
financing statements, required by law or reasonably requested by the Agent
to be filed, registered or recorded to create the Liens intended to be
created by the Security Documents and perfect such Liens to the extent
required by, and with the priority required by,
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the Security Documents, shall have been filed, registered or recorded or
delivered to the Agent for filing, registration or recording;
(e) the Collateral Agent shall have received (i) counterparts of a
Mortgage with respect to each Mortgaged Property duly executed and
delivered by the record owner of such Mortgaged Property, (ii) a policy or
policies of title insurance issued by a nationally recognized title
insurance company insuring the Lien of each such Mortgage as a valid first
Lien on the Mortgaged Property described therein, free of any other Liens
except as expressly permitted by Section 6.03, together with such
endorsements, coinsurance and reinsurance as the Agent or the Required
Lenders may reasonably request, and (iii) such surveys, abstracts,
appraisals, legal opinions and other documents as the Agent or the
Required Lenders may reasonably request with respect to any such Mortgage
or Mortgaged Property; and
(f) each Loan Party shall have obtained all material consents and
approvals required to be obtained by it in connection with the execution
and delivery of all Security Documents to which it is a party, the
performance of its obligations thereunder and the granting by it of the
Liens thereunder; provided, that (i) the approvals listed in Schedule 3.03
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need not be obtained so long as the Borrower complies with Section 5.15
and (ii) with respect to any Person that becomes a Subsidiary Loan Party
after the date hereof, such Person shall have until the 120th day after
such Person becomes a Subsidiary Loan Party to obtain any approvals that
are required by this clause (f) and that cannot reasonably be obtained at
or before the time such Person becomes a Subsidiary Loan Party.
"Commitment" means a Revolving Commitment, Tranche A Commitment or Tranche
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B Commitment, or any combination thereof (as the context requires).
"Communications Act" means the Communications Act of 1934 and any similar
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or successor Federal statute and the rules, regulations and published policies
of the Federal Communications Commission thereunder, all as amended and as the
same may be in effect from time to time.
"Consolidated Cash Interest Expense" means, for any period, the excess of
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(a) the sum of (i) the interest expense (including imputed interest expense in
respect of Capital Lease Obligations) of the Borrower and the Restricted
Subsidiaries for such period, determined on a consolidated basis in accordance
with GAAP, (ii) any interest accrued during such period in respect of
Indebtedness of the Borrower or any Restricted Subsidiary that is required to be
capitalized rather than included in consolidated interest expense for such
period in accordance with GAAP, (iii) any cash payments made during such
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period in respect of obligations referred to in clause (b) below that were
amortized or accrued in a previous period, plus (iv) any cash payments,
distributions or dividends to holders of New Preferred Stock during such period,
minus (b) the sum of (i) to the extent included in such consolidated interest
expense for such period, non-cash amounts attributable to amortization of
financing costs paid in a previous period, plus (ii) to the extent included in
such consolidated interest expense for such period, non-cash amounts
attributable to amortization of debt discounts or accrued interest payable in
kind for such period.
"Consolidated EBITDA" means, for any period, Consolidated Net Income for
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such period plus (a) without duplication and to the extent deducted in
determining such Consolidated Net Income, the sum of (i) consolidated interest
expense for such period, (ii) consolidated income tax expense for such period,
(iii) all amounts attributable to depreciation and amortization for such period,
(iv) other non-operating expenses and (v) any extraordinary losses, and minus
(b) without duplication and to the extent included in determining such
Consolidated Net Income, (i) any extraordinary gains for such period, (ii) any
non-operating income and (iii) until such time as the subsidiaries of Splitrock
shall have satisfied the Collateral and Guarantee Requirement as Subsidiary Loan
Parties, any positive Splitrock EBITDA for such period that is not actually
distributed to the Borrower in the form of a cash dividend, all determined on a
consolidated basis in accordance with GAAP.
"Consolidated Net Income" means, for any period, the net income or loss of
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the Borrower and the Restricted Subsidiaries for such period determined on a
consolidated basis in accordance with GAAP; provided that there shall be
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excluded (a) the income of any Person (other than the Borrower) in which any
other Person (other than the Borrower or any Restricted Subsidiary or any
director holding qualifying shares in compliance with applicable law) owns an
Equity Interest, except to the extent of the amount of dividends or other
distributions actually paid to the Borrower or any of the Restricted
Subsidiaries during such period, and (b) the income or loss of any Person
accrued prior to the date it becomes a Subsidiary or is merged into or
consolidated with the Borrower or any Restricted Subsidiary or the date that
such Person's assets are acquired by the Borrower or any Restricted Subsidiary.
"Consolidated Revenue" means, for any period, the revenues of the Borrower
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and the Restricted Subsidiaries for such period, excluding any revenues (i)
representing interest or investment income, (ii) representing dividends or
distributions from Unrestricted Subsidiaries and (iii) from the sale or
disposition of businesses, assets (other than in the ordinary course of
business, including sales of network capacity) or investments or from any
repayment Event.
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"Contributed Capital" means, at any date, the sum (without duplication) of
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(a) $2,525,157,000, plus (b) Equity Proceeds received by the Borrower subsequent
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to December 31, 1999, plus (c) the amount of Equity Purchase Consideration
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received by the Borrower or any Restricted Subsidiary after December 31, 1999,
plus (d) the amount of Conversion Proceeds received by the Borrower after
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December 31, 1999 in respect of convertible securities that were not included in
the combined stockholders equity of the Borrower and the Restricted Subsidiaries
as of December 31, 1999.
"Control" means the possession, directly or indirectly, of the power to
-------
direct or cause the direction of the management or policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise.
"Controlling" and "Controlled" have meanings correlative thereto.
------------ ----------
"Conversion Proceeds" means an amount deemed for purposes hereof to have
-------------------
been received by the Borrower at the time of conversion of any convertible debt
securities or preferred stock (other than Non-Cash Pay Preferred Stock) of the
Borrower into common stock or Non-Cash Pay Preferred Stock of the Borrower equal
to the principal amount (or Imputed Principal Amount, as applicable) of such
debt securities or preferred stock so converted and any accrued and unpaid
interest thereon which is forfeited in connection with such conversion.
"Default" means any event or condition which constitutes an Event of
-------
Default or which upon notice, lapse of time or both would, unless cured or
waived, become an Event of Default.
"Derivatives Counterparty" means any financial institution, commodities or
------------------------
stock exchange or clearinghouse with which the Borrower or any Restricted
Subsidiary enters into a derivatives transaction.
"Designated Equity Proceeds Use" means the application of Equity Proceeds
------------------------------
or Conversion Proceeds to any of the following: (i) Restricted Payments pursuant
to stock option plans or other benefit plans for management or employees of the
Borrower and the Restricted Subsidiaries in excess of $5,000,000 in any twelve-
month period, (ii) cash dividend payments on the Borrower's Series B Preferred
Stock outstanding on the date hereof, (iii) payments of cash consideration in
connection with Permitted Business Acquisitions pursuant to Section 6.06(e) and
(iv) Investments permitted by Section 6.06(k) or (l).
"Disclosed Matters" means the actions, suits and proceedings and the
-----------------
environmental matters disclosed in Schedule 3.06.
"dollars" or "$" refers to lawful money of the United States of America.
------- -
9
"Effective Date" means the date on which the conditions specified in
--------------
Section 4.01 are satisfied (or waived in accordance with Section 9.02).
"Environmental Laws" means all laws, rules, regulations, codes,
------------------
ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by any Governmental Authority,
relating to the pollution or protection of the environment, preservation or
reclamation of natural resources, the management, release or threatened release
of any Hazardous Material.
"Environmental Liability" means any liability, contingent or otherwise
-----------------------
(including any liability for damages, costs of environmental remediation, fines,
penalties or indemnities), of the Borrower, any Restricted Subsidiary or (to the
extent that the Borrower or any Restricted Subsidiary may be liable as a result
thereof) any Unrestricted Subsidiary, directly or indirectly resulting from or
based upon (a) violation of any Environmental Law, (b) the generation, use,
handling, transportation, storage, treatment or disposal of any Hazardous
Materials, (c) exposure to any Hazardous Materials, (d) the release or
threatened release of any Hazardous Materials into the environment or (e) any
contract, agreement or other consensual arrangement pursuant to which liability
is assumed or imposed with respect to any of the foregoing.
"Equity Interests" means shares of capital stock, partnership interests,
----------------
membership interests in a limited liability company, beneficial interests in a
trust or other equity ownership interests in a Person, but excluding any New
Preferred Stock issued by the Borrower.
"Equity Proceeds" means the cash Net Proceeds received by the Borrower
---------------
from the issuance and sale of common stock of the Borrower or Non-Cash Pay
Preferred Stock of the Borrower or the conversion of Indebtedness of the
Borrower into common stock of the Borrower.
"Equity Purchase Consideration" means the net fair market value of any
-----------------------------
assets or properties other than cash transferred to or acquired by the Borrower
or any Restricted Subsidiary in consideration of or exchange for the issuance of
shares of common stock of the Borrower or Non-Cash Pay Preferred Stock of the
Borrower, including in connection with mergers and stock acquisitions (such net
fair market value being the fair market value of such common stock or Non-Cash
Pay Preferred Stock (as reasonably determined in good faith by the Chief
Financial Officer of the Borrower, which determination shall, if applicable, be
based on the trading value of such common stock or Non-Cash Pay Preferred Stock
on the closing date of the transaction)).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time.
10
"ERISA Affiliate" means any trade or business (whether or not
---------------
incorporated) that, together with the Borrower, is treated as a single employer
under Section 414(b) or (c) of the Code or, solely for purposes of Section 302
of ERISA and Section 412 of the Code, is treated as a single employer under
Section 414 of the Code.
"ERISA Event" means (a) any "reportable event", as defined in Section 4043
-----------
of ERISA or the regulations issued thereunder with respect to a Plan (other than
an event for which the 30-day notice period is waived); (b) the existence with
respect to any Plan of an "accumulated funding deficiency" (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of any
liability under Title IV of ERISA with respect to the termination of any Plan;
(e) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan
administrator of any notice relating to an intention to terminate any Plan or
Plans or to appoint a trustee to administer any Plan; (f) the incurrence by the
Borrower or any of its ERISA Affiliates of any liability with respect to the
withdrawal or partial withdrawal from any Plan or Multiemployer Plan; or (g) the
receipt by the Borrower or any ERISA Affiliate of any notice, or the receipt by
any Multiemployer Plan from the Borrower or any ERISA Affiliate of any notice,
concerning the imposition of Withdrawal Liability or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA.
"Eurocurrency Reserve Requirements" means with respect to any Lender the
---------------------------------
aggregate of the maximum reserve percentages (including any marginal, special,
emergency or supplemental reserves) expressed as a decimal established by the
Board and any other banking authority to which such Lender is subject and
applicable to "Eurocurrency Liabilities", as such term is defined in Regulation
D of the Board, or any similar category of assets or liabilities relating to
eurocurrency fundings. Eurocurrency Reserve Requirements shall be adjusted
automatically on and as of the effective date of any change in any reserve
percentage.
"Eurodollar", when used in reference to any Loan or Borrowing, refers to
----------
whether such Loan, or the Loans comprising such Borrowing, are bearing interest
at a rate determined by reference to the LIBO Rate.
"Event of Default" has the meaning assigned to such term in Article VII.
----------------
11
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
------------
the rules and regulations promulgated thereunder.
"Excluded Taxes" means, with respect to the Administrative Agent, any
--------------
Lender, the Issuing Bank or any other recipient of any payment to be made by or
on account of any obligation of the Borrower hereunder, (a) income or franchise
taxes imposed on (or measured by) its net income by the United States of
America, or by the jurisdiction under the laws of which such recipient is
organized or in which its principal office is located or, in the case of any
Lender, in which its applicable lending office is located, (b) any branch
profits taxes imposed by the United States of America or any similar tax imposed
by any other jurisdiction described in clause (a) above and (c) in the case of a
Foreign Lender (other than an assignee pursuant to a request by the Borrower
under Section 2.19(b)), any withholding tax that (i) is in effect and would
apply to amounts payable to such Foreign Lender at the time such Foreign Lender
becomes a party to this Agreement (or designates a new lending office), except
to the extent that such Foreign Lender (or its assignor, if any) was entitled,
at the time of designation of a new lending office (or assignment), to receive
additional amounts from the Borrower with respect to any withholding tax
pursuant to Section 2.17(a), or (ii) is attributable to such Foreign Lender's
failure to comply with Section 2.17(e).
"Executive Officer" means the chief executive officer, the president, the
-----------------
chief financial officer, the secretary or the treasurer of the Borrower.
"FCC" means the United States Federal Communications Commission.
---
"Federal Funds Effective Rate" means, for any day, the weighted average
----------------------------
(rounded upwards, if necessary, to the next 1/100 of 1%) 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 that is a Business Day, the average (rounded upwards, if
necessary, to the next 1/100 of 1%) of the quotations for such day for such
transactions received by the Administrative Agent from three Federal funds
brokers of recognized standing selected by it.
"Financed Telecommunications Assets" means Telecommunications Assets that
----------------------------------
are purchased with the proceeds of Purchase Money Revolving Loans or Term Loans
in accordance with Section 5.11.
"Financial Officer" means the chief financial officer, principal
-----------------
accounting officer, treasurer or controller of the Borrower.
13
"Foreign Lender" means any Lender that is organized under the laws of a
--------------
jurisdiction other than that in which the Borrower is located. For purposes of
this definition, the United States of America, each State thereof and the
District of Columbia shall be deemed to constitute a single jurisdiction.
"Foreign Subsidiary" means any Subsidiary that is organized under the
------------------
laws of a jurisdiction other than the United States of America or any State
thereof or the District of Columbia.
"Funded Debt" means, as of any date, the sum of (a) all Indebtedness for
-----------
borrowed money of the Borrower and its Restricted Subsidiaries, determined on a
consolidated basis, which by its terms matures more than one year after such
date, and any such Indebtedness for borrowed money maturing within one year from
such date which is renewable or extendible at the option of the obligor to a
date more than one year from such date plus (b) the Imputed Principal Amount of
all New Preferred Stock outstanding on such date.
"GAAP" means generally accepted accounting principles in the United States
----
of America.
"Government Securities" means direct obligations of, or obligations fully
---------------------
and unconditionally guaranteed or insured by, the United States of America or
any agency or instrumentality thereof.
"Governmental Authority" means the government of the United States of
----------------------
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.
13
"Guarantee" of or by any Person (the "guarantor") means any obligation,
--------- ---------
contingent or otherwise, of the guarantor guaranteeing or having the economic
effect of guaranteeing any Indebtedness or other obligation of any other Person
(the "primary obligor") in any manner, whether directly or indirectly, and
---------------
including any obligation of the guarantor, direct or indirect, (a) to purchase
or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or other obligation or to purchase (or to advance or supply funds
for the purchase of) any security for the payment thereof, (b) to purchase or
lease property, securities or services for the purpose of assuring the owner of
such Indebtedness or other obligation of the payment thereof, (c) to maintain
working capital, equity capital or any other financial statement condition or
liquidity of the primary obligor so as to enable the primary obligor to pay such
Indebtedness or other obligation or (d) as an account party in respect of any
letter of credit or letter of guaranty issued to support such Indebtedness or
obligation; provided, that the term Guarantee shall not include endorsements for
--------
collection or deposit in the ordinary course of business.
"Guaranteed Obligations" is defined in the Subsidiary Guarantee Agreement.
----------------------
"Guaranteed Obligations Collateral" is defined in the Subsidiary Security
---------------------------------
Agreement.
"Hazardous Materials" means all explosive or radioactive substances or
-------------------
wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law.
"Hedging Agreement" means any interest rate protection agreement, foreign
-----------------
currency exchange agreement, commodity price protection agreement or other
interest or currency exchange rate or commodity price hedging arrangement.
"Imputed Principal Amount" means, with respect to any class of New
------------------------
Preferred Stock, the maximum amount that would be payable upon mandatory
redemption or repurchase of all such New Preferred Stock or, if no mandatory
redemption or repurchase is applicable, the greater of the issue price or
liquidation preference of such New Preferred Stock.
"Incremental Facility Amendment" is defined in Section 2.20.
------------------------------
"Incremental Loans" is defined in Section 2.20.
-----------------
14
"Indebtedness" of any Person means, without duplication, (a) all
------------
obligations of such Person for borrowed money (b) all obligations of such Person
evidenced by bonds, debentures, notes or similar instruments, (c) all
obligations of such Person under conditional sale or other title retention
agreements relating to property acquired by such Person, (d) all obligations of
such Person in respect of the deferred purchase price of property or services
(excluding current accounts payable incurred in the ordinary course of
business), (e) all Indebtedness of others secured by (or for which the holder of
such Indebtedness has an existing right, contingent or otherwise, to be secured
by) any Lien on property owned or acquired by such Person, whether or not the
Indebtedness secured thereby has been assumed, (f) all Guarantees by such Person
of Indebtedness of others, (g) all Capital Lease Obligations of such Person, (h)
all obligations, contingent or otherwise, of such Person as an account party in
respect of letters of credit and letters of guaranty and (i) all obligations,
contingent or otherwise, of such Person in respect of bankers' acceptances. The
Indebtedness of any Person shall include the Indebtedness of any other entity
(including any partnership in which such Person is a general partner) to the
extent such Person is liable therefor as a result of such Person's ownership
interest in or other relationship with such entity, except to the extent the
terms of such Indebtedness provide that such Person is not liable therefor.
"Indemnified Taxes" means Taxes other than Excluded Taxes.
-----------------
"Indemnity, Subrogation and Contribution Agreement" means the Indemnity,
-------------------------------------------------
Subrogation and Contribution Agreement substantially in the form of Exhibit H
hereto.
"Indentures" means (a) the Indenture dated as of March 4, 1997, between
----------
the Borrower (as successor to XxXxxx, Inc.) and United States Trust Company of
New York, as Trustee, in respect of $500,000,000 10-1/2% Senior Discount Notes
due 2007, (b) the Indenture dated as of July 21, 0000, xxxxxxx xxx Xxxxxxxx xxx
Xxxxxx Xxxxxx Trust Company of New York, as Trustee, in respect of $225,000,000
9-1/4% Senior Notes due 2007, (c) the Indenture dated as of March 16, 0000,
xxxxxxx xxx Xxxxxxxx xxx Xxxxxx Xxxxxx Trust Company of New York, as Trustee, in
respect of $300,000,000 Senior Notes due 2008, (d) the Indenture dated as of
October 30, 0000, xxxxxxx xxx Xxxxxxxx xxx Xxxxxx Xxxxxx Trust Company of New
York, as Trustee, in respect of $300,000,000 Senior Notes due 2008, (e) the
Indenture dated as of February 22, 0000, xxxxxxx xxx Xxxxxxxx xxx Xxxxxx Xxxxxx
Trust Company of New York, as Trustee, in respect of $500,000,000 Senior Notes
due 2009, and (f) the Splitrock Indenture.
"Index Debt" means the highest rated senior secured Long-Term Indebtedness
----------
for borrowed money of the Borrower that is not
15
guaranteed by any Person other than a Loan Party or otherwise credit enhanced.
"Information Memorandum" means the Confidential Information Memorandum
----------------------
dated April 2000 relating to the Borrower and the Transactions.
"Intercompany Loan Agreement" means an Intercompany Loan Agreement between
---------------------------
the Borrower and one or more Restricted Subsidiaries, substantially in the form
of Exhibit K.
"Intercompany Security Agreement" means an Intercompany Security Agreement
-------------------------------
between the Borrower and one or more Restricted Subsidiaries, substantially in
the form of Exhibit L.
"Interest Election Request" means a request by the Borrower to convert or
-------------------------
continue a Revolving Borrowing or Term Borrowing in accordance with Section
2.07.
"Interest Payment Date" means (a) with respect to any ABR Loan (other than
---------------------
a Swingline Loan), the last day of each March, June, September and December, (b)
with respect to any Eurodollar Loan, the last day of the Interest Period
applicable to the Borrowing of which such Loan is a part and, in the case of a
Eurodollar Borrowing with an Interest Period of more than three months'
duration, each day prior to the last day of such Interest Period that occurs at
intervals of three months' duration after the first day of such Interest Period,
and (c) with respect to any Swingline Loan, the day that such Loan is required
to be repaid.
"Interest Period" means, with respect to any Eurodollar Borrowing, the
---------------
period commencing on the date of such Borrowing and ending on the numerically
corresponding day in the calendar month that is one, two, three or six months
thereafter (or nine or twelve months thereafter if, at the time of the relevant
Borrowing, all Lenders participating therein agree to make an interest period of
such duration available), as the Borrower may elect; provided, that (a) if any
--------
Interest Period would end on a day other than a Business Day, such Interest
Period shall be extended to the next succeeding Business Day unless such next
succeeding Business Day would fall in the next calendar month, in which case
such Interest Period shall end on the next preceding Business Day and (b) any
Interest Period that commences on the last Business Day of a calendar month (or
on a day for which there is no numerically corresponding day in the last
calendar month of such Interest Period) shall end on the last Business Day of
the last calendar month of such Interest Period. For purposes hereof, the date
of a Borrowing initially shall be the date on which such Borrowing is made and
thereafter shall be the effective date of the most recent conversion or
continuation of such Borrowing.
"Investment" means purchasing, holding or acquiring (including pursuant to
----------
any merger with any Person that was not a
16
Wholly Owned Restricted Subsidiary prior to such merger) any Capital Stock,
evidences of indebtedness or other securities (including any option, warrant or
other right to acquire any of the foregoing) of, or making or permitting to
exist any loans or advances (other than commercially reasonable extensions of
trade credit) to, guaranteeing any obligations of, or making or permitting to
exist any investment in, any other Person, or purchasing or otherwise acquiring
(in one transaction or a series of transactions) any assets of any Person
constituting a business unit. The amount, as of any date of determination, of
any Investment shall be the original cost of such Investment (including any
Indebtedness of a Person existing at the time such Person becomes a Restricted
Subsidiary in connection with any Investment and any Indebtedness assumed in
connection with any acquisition of assets), plus the cost of all additions, as
----
of such date, thereto and minus the amount, as of such date, of any portion of
-----
such Investment repaid to the investor in cash as a repayment of principal or a
return of capital, as the case may be (except to the extent such repaid amount
has been included in Consolidated Net Income), but without any other adjustments
for increases or decreases in value, or write-ups, write-downs or write-offs
with respect to such Investment. In determining the amount of any Investment
involving a transfer of any property other than cash, such property shall be
valued at its fair market value at the time of such transfer.
"Issuing Bank" means The Chase Manhattan Bank, in its capacity as the
------------
issuer of Letters of Credit hereunder, and its successors in such capacity as
provided in Section 2.05(i). The Issuing Bank may, in its discretion, arrange
for one or more Letters of Credit to be issued by Affiliates of the Issuing
Bank, in which case the term "Issuing Bank" shall include any such Affiliate
with respect to Letters of Credit issued by such Affiliate.
"knowledge" means (a) with respect to the Borrower to the knowledge of any
---------
Executive Officer or any Financial Officer of the Borrower and (b) with respect
to any other Loan Party, the chief executive officer or chief financial officer
of such Loan Party.
"LC Disbursement" means a payment made by the Issuing Bank pursuant to a
---------------
Letter of Credit.
"LC Exposure" means, at any time, the sum of (a) the aggregate undrawn
-----------
amount of all outstanding Letters of Credit at such time plus (b) the aggregate
amount of all LC Disbursements that have not yet been reimbursed by or on behalf
of the Borrower at such time. The LC Exposure of any Revolving Lender at any
time shall be its Applicable Percentage of the total LC Exposure at such time.
"Lenders" means the Persons listed on Schedule 2.01 and any other Person
-------
that shall have become a party hereto pursuant to
17
an Assignment and Acceptance or an Incremental Facility Amendment, other than
any such Person that ceases to be a party hereto pursuant to an Assignment and
Acceptance. Unless the context otherwise requires, the term "Lenders" includes
the Swingline Lender.
"Lender Affiliate" means (a) with respect to any Lender, (i) an Affiliate
----------------
of such Lender or (ii) any entity (whether a corporation, partnership, trust or
otherwise) that is engaged in making, purchasing, holding or otherwise investing
in bank loans and similar extensions of credit in the ordinary course of its
business and is administered or managed by a Lender or an Affiliate of such
Lender and (b) with respect to any Lender that is a fund which invests in bank
loans and similar extensions of credit, any other fund that invests in bank
loans and similar extensions of credit and is managed by the same investment
advisor as such lender or by an Affiliate of such investment advisor; provided,
--------
that no entity shall be a "Lender Affiliate" unless such entity is capable of
performing the applicable obligations of a Lender hereunder.
"Letter of Credit" means any letter of credit issued pursuant to this
----------------
Agreement.
"Leverage Ratio" means, on any date, the ratio of (a) Total Debt as of
--------------
such date to (b) Consolidated EBITDA for the period of four consecutive fiscal
quarters of the Borrower ended on such date (or, if such date is not the last
day of a fiscal quarter, ended on the last day of the fiscal quarter of the
Borrower most recently ended prior to such date).
"LIBO Rate" means, with respect to any Eurodollar Borrowing for any
---------
Interest Period, the rate appearing on Page 3750 of the Dow Xxxxx Market Service
(or on any successor or substitute page of such Service, or any successor to or
substitute for such Service, providing rate quotations comparable to those
currently provided on such page of such Service, as determined by the
Administrative Agent from time to time for purposes of providing quotations of
interest rates applicable to dollar deposits in the London interbank market),
rounded upwards, if necessary, to the nearest 1/100th of a percent, at
approximately 11:00 a.m., London time, two Business Days prior to the
commencement of such Interest Period, as the rate for dollar deposits with a
maturity comparable to such Interest Period. In the event that such rate is not
available at such time for any reason, then the "LIBO Rate" with respect to such
---------
Eurodollar Borrowing for such Interest Period shall be the rate at which dollar
deposits of $5,000,000 and for a maturity comparable to such Interest Period are
offered by the principal London office of the Administrative Agent in
immediately available funds in the London interbank market at approximately
11:00 a.m., London time, two Business Days prior to the commencement of such
Interest Period.
18
"License" means any license granted by the FCC or any foreign
-------
telecommunications regulatory body.
"Lien" means, with respect to any asset, (a) any mortgage, deed of trust,
----
lien, pledge, hypothecation, encumbrance, charge or security interest in, on or
of such asset, (b) the interest of a vendor or a lessor under any conditional
sale agreement, capital lease or title retention agreement (or any financing
lease having substantially the same economic effect as any of the foregoing)
relating to such asset and (c) in the case of securities (other than any capital
stock of the Borrower that is subject to issuance upon the exercise of any
purchase option, call or similar right granted by the Borrower), any purchase
option, call or similar right of a third party with respect to such securities.
"Loan Documents" means this Agreement and the Security Documents.
--------------
"Loan Parties" means the Borrower and the Subsidiary Loan Parties.
------------
"Loans" means the loans made by the Lenders to the Borrower pursuant to
-----
this Agreement.
"Long-Term Indebtedness" means any Indebtedness that, in accordance with
----------------------
GAAP, constitutes (or, when incurred, constituted) a long-term liability.
"Material Adverse Effect" means a material adverse effect on (a) the
-----------------------
business, assets, operations or financial condition of the Borrower and the
Restricted Subsidiaries taken as a whole, (b) the ability of any Loan Party to
perform any of its obligations under any Loan Document or (c) the rights of or
benefits available to the Administrative Agent, the Collateral Agent and the
Lenders under any Loan Document.
"Material Indebtedness" means Indebtedness (other than the Loans and
---------------------
Letters of Credit), or obligations in respect of one or more Hedging Agreements,
of any one or more of the Borrower and its Restricted Subsidiaries in an
aggregate principal amount exceeding $25,000,000. For purposes of determining
Material Indebtedness, the "principal amount" of the obligations of the Borrower
or any Restricted Subsidiary in respect of any Hedging Agreement at any time
shall be the maximum aggregate amount (giving effect to any netting agreements)
that the Borrower or such Restricted Subsidiary would be required to pay if such
Hedging Agreement were terminated at such time (or is required to pay, if such
Hedging Agreement has been terminated).
"Moody's" means Xxxxx'x Investors Service, Inc., or, if Xxxxx'x Investors
-------
Service, Inc. shall cease rating the specified debt securities, and such ratings
business has been transferred to a successor Person, such successor Person.
19
"Mortgage" means a mortgage, deed of trust, assignment of leases and
--------
rents, leasehold mortgage or other security document granting a Lien on any
Mortgaged Property to secure the Obligations. Each Mortgage shall be in the
form of Exhibit J or otherwise satisfactory in form and substance to the
Collateral Agent.
"Mortgaged Property" means, initially, each parcel of real property and
------------------
the improvements thereto owned by a Loan Party and identified as a Mortgaged
Property on Schedule 3.05, and includes each other parcel of real property and
improvements thereto with respect to which a Mortgage is granted pursuant to
Section 5.12 or 5.13.
"Multiemployer Plan" means a multiemployer plan as defined in Section
------------------
4001(a)(3) of ERISA.
"Net Proceeds" means, with respect to any event (a) the cash proceeds
------------
received in respect of such event including (i) any cash received in respect of
any non-cash proceeds, but only as and when received, (ii) in the case of a
casualty, insurance proceeds, and (iii) in the case of a condemnation or similar
event, condemnation awards and similar payments, net of (b) the sum of (i) all
reasonable fees and out-of-pocket expenses paid by the Borrower and the
Subsidiaries to third parties (other than Affiliates) in connection with such
event, (ii) in the case of a sale, transfer or other disposition of an asset
(including pursuant to a sale and leaseback transaction or a casualty or a
condemnation or similar proceeding), the amount of all payments required to be
made by the Borrower and the Restricted Subsidiaries as a result of such event
to repay Indebtedness (other than Loans) secured by such asset or otherwise
subject to mandatory prepayment as a result of such event, and (iii) the amount
of all taxes paid (or reasonably estimated to be payable, provided, that such
--------
amounts withheld or estimated for tax payments shall, to the extent not utilized
for the payment of taxes, be deemed to be Net Proceeds) by the Borrower and the
Subsidiaries, and the amount of any reserves established by the Borrower and the
Subsidiaries to fund contingent liabilities reasonably estimated to be payable,
in each case that are directly attributable to such event (as determined
reasonably and in good faith by the chief financial officer of the Borrower).
"New Preferred Stock" means any preferred stock (other than Non-Cash Pay
-------------------
Preferred Stock) issued by the Borrower on or after December 31, 1999 that is
(a) not secured by any assets of the Borrower or any Restricted Subsidiary and
(b) not Guaranteed by any Restricted Subsidiary.
"Non-Cash Pay Preferred Stock" means preferred stock of the Borrower which
----------------------------
(i) is not mandatorily redeemable, in whole or part, or required to be
repurchased or reacquired, in whole or in part, by the Borrower or any
Restricted Subsidiary, and which
20
does not require any payment of cash dividends, in each case, prior to the date
that is six months after the Tranche B Maturity Date; provided, however, that
-------- -------
any preferred stock which would constitute Non-Cash Pay Preferred Stock but for
provisions thereof giving holders thereof the right to require the Borrower to
repurchase or redeem such preferred stock upon the occurrence of a change of
control occurring prior to the Tranche B Maturity Date shall constitute Non-Cash
Pay Preferred Stock if the change of control provisions (other than the purchase
price) applicable to such preferred stock are no more favorable to the holders
of such preferred stock than the provisions applicable to the Loans contained in
this Agreement and such preferred stock specifically provides that the Borrower
will not repurchase or redeem any such preferred stock pursuant to such
provisions prior to the Borrower's repayment of the Loans and LC Disbursements
and the termination of all Commitments hereunder, (ii) is not secured by any
assets of the Borrower or any Restricted Subsidiary, (iii) is not Guaranteed by
any Restricted Subsidiary and (iv) is not exchangeable or convertible into
Indebtedness of the Borrower or any Restricted Subsidiary or any preferred stock
(other than Non-Cash Pay Preferred Stock) of the Borrower or any Subsidiary.
"Non-Purchase Money Loans" means $100,000,000 in principal amount of the
------------------------
Loans outstanding at any time (or, if less, the amount of all Loans outstanding
at such time), consisting of (a) Revolving Loans in a principal amount of up to
$35,000,000, (b) Tranche A Term Loans in a principal amount of up to $21,000,000
and (c) Tranche B Term Loans in a principal amount of up to $44,000,000;
provided, that if the outstanding principal amount of any Class of Loans is less
--------
than the maximum specified in clause (a), (b) or (c) above, as applicable, the
excess of such maximum over the principal amount of outstanding Loans of such
Class shall be allocated among the other Classes of Loans pro rata on the basis
of the principal amounts of outstanding Loans of each such other Class.
"Obligations" means the Borrower Secured Obligations and the Guaranteed
-----------
Obligations.
"Other Taxes" means any and all present or future recording, stamp,
-----------
documentary, excise, transfer, sales, property or similar taxes, charges or
levies arising from any payment made under any Loan Document or from the
execution, delivery or enforcement of, or otherwise with respect to, any Loan
Document.
"PBGC" means the Pension Benefit Guaranty Corporation referred to and
----
defined in ERISA and any successor entity performing similar functions.
"Perfection Certificate" means a certificate in the form of Exhibit N or
----------------------
any other form approved by the Collateral Agent.
21
"Permitted Business Acquisition" means any acquisition (by merger or
------------------------------
otherwise) by the Borrower or a Subsidiary Loan Party of all or substantially
all the assets of, or all the Equity Interests in, a Person or division or line
of business of a Person, if (a) immediately after giving effect thereto, no
Default has occurred and is continuing or would result therefrom, (b) such
acquired Person or business is predominately engaged in one or more
Telecommunications Businesses in the United States of America, (c) each
Subsidiary resulting from such acquisition (and which survives such acquisition)
shall be a Subsidiary Loan Party and all the Equity Interests of each such
Subsidiary shall be owned directly by the Borrower and/or Subsidiary Loan
Parties and shall have been (or within five Business Days after such acquisition
shall be) pledged pursuant to the applicable Pledge Agreement, (d) the
Collateral and Guarantee Requirement shall have been (or within five Business
Days after such acquisition shall be) satisfied with respect to each such
Subsidiary, (e) the Borrower and the Restricted Subsidiaries are in compliance,
on a pro forma basis after giving effect to such acquisition (without giving
effect to operating expense reductions), with the financial covenants contained
in Sections 6.13, 6.14, 6.15, 6.16, 6.17 and 6.18 to the extent then applicable,
as if such acquisition had occurred on the first day of the relevant period for
testing compliance, and (f) the Borrower has delivered to the Agent an officer's
certificate to the effect set forth in clauses (a), (b), (c), (d) and (e) above,
together with all relevant financial information for the Person or assets
acquired and reasonably detailed calculations demonstrating satisfaction of the
requirement set forth in clause (e) above.
"Permitted Encumbrances" means:
----------------------
(a) Liens imposed by law for taxes that are not yet due or are being
contested in compliance with Section 5.05;
(b) carriers', warehousemen's, mechanics', materialmen's, repairmen's
and other like Liens imposed by law, arising in the ordinary course of
business and securing obligations that are not overdue by more than 30
days or are being contested in compliance with Section 5.05;
(c) pledges and deposits made in the ordinary course of business in
compliance with workers' compensation, unemployment insurance and other
social security laws or regulations;
(d) cash pledges and deposits to secure the performance of bids,
trade contracts, leases, statutory obligations or governmental franchise
obligations, surety and appeal bonds, performance bonds and other
obligations of a like nature, in each case in the ordinary course of
business;
22
(e) judgment liens in respect of judgments that do not constitute an
Event of Default under clause (k) of Article VII;
(f) other liens incidental to the conduct of business or the
ownership of property which do not in the aggregate materially detract
from the value of the Borrower's and its Restricted Subsidiaries' property
when taken as a whole, or materially impair the use thereof in the
operation of their businesses; and
(g) any interest or title of a lessor in the property subject to any
lease other than (A) a Capital Lease or (B) a lease entered into as part
of a sale and leaseback transaction subject to Section 6.04;
provided that the term "Permitted Encumbrances" shall not include any Lien
--------
securing Indebtedness.
"Permitted Holders" means Xxxxx X. and Xxxx X. XxXxxx and foundations and
-----------------
trusts controlled by them or either of them, and Affiliates (other than the
Borrower and the Restricted Subsidiaries) of each of the foregoing.
"Permitted Investments" means:
---------------------
(a) Government Securities maturing, or subject to tender at the
option of the holder thereof, within five years after the date of
acquisition thereof;
(b) time deposits and certificates of deposit of any commercial bank
organized in the United States having capital and surplus in excess of
$500 million or a commercial bank organized under the law of any other
country that is a member of the OECD having total assets in excess of $500
million (or its foreign currency equivalent at the time) with a maturity
date not more than one year from the date of acquisition;
(c) repurchase obligations with a term of not more than 30 days for
underlying securities of the types described in clause (a) above entered
into with (x) any bank meeting the qualifications specified in clause (b)
above or (y) any primary government securities dealer reporting to the
Market Reports Division of the Federal Reserve Bank of New York;
(d) direct obligations issued by any state of the United States of
America or any political subdivision of any such state or any public
instrumentality thereof maturing, or subject to tender at the option of
the holder thereof, within 270 days after the date of acquisition thereof,
provided that, at the time of acquisition, the
--------
23
long-term debt of such state, political subdivision or public
instrumentality has a rating of A (or higher) from S&P or A-2 (or higher)
from Moody's (or, if at any time neither S&P nor Moody's shall be rating
such obligations, then an equivalent rating from such other nationally
recognized rating service acceptable to the Administrative Agent);
(e) commercial paper issued by the parent corporation of any
commercial bank organized in the United States having capital and surplus
in excess of $500 million or a commercial bank organized under the laws of
any other country that is a member of the OECD having total assets in
excess of $500 million (or its foreign currency equivalent at the time),
and commercial paper issued by others having a rating of A-2 or higher
from S&P or a rating of P-2 or higher from Moody's (or, if at any time
neither S&P nor Moody's shall be rating such obligations, then equivalent
ratings from such other nationally recognized rating services acceptable
to the Administrative Agent) and in each case maturing within one year
after the date of acquisition;
(f) overnight bank deposits and bankers' acceptances at any
commercial bank organized in the United States having capital and surplus
in excess of $500 million or a commercial bank organized under the laws of
any other country that is a member of the OECD having total assets in
excess of $500 million (or its foreign currency equivalent at the time);
(g) deposits available for withdrawal on demand with a commercial
bank organized in the United States having capital and surplus in excess
of $500 million or a commercial bank organized under the laws of any other
country that is a member of the OECD having total assets in excess of $500
million) or its foreign currency equivalent at the time); and
(h) investments in money market funds substantially all of whose
assets comprise securities of the types described in clauses (a) through
(g).
"Person" means any natural person, corporation, limited liability company,
------
trust, joint venture, association, company, partnership, Governmental Authority
or other entity.
"Plan" means any employee pension benefit plan (other than a
----
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA, and in respect of which the Borrower or
any ERISA Affiliate is (or, if such plan were terminated, would under Section
4069 of ERISA be deemed to be) an "employer" as defined in Section 3(5) of
ERISA.
24
"Pledge Agreements" means the Borrower Pledge Agreement and the Subsidiary
-----------------
Pledge Agreement.
"Prepayment Event" means:
----------------
(a) any sale, transfer or other disposition (including pursuant to a
sale and leaseback transaction) of any property or asset of the Borrower
or any Restricted Subsidiary, other than (i) dispositions described in
clauses (a) and (b) of Section 6.07 and (ii) other dispositions resulting
in aggregate Net Proceeds not exceeding $5,000,000 during any fiscal year
of the Borrower; or
(b) any casualty or other insured damage to, or any taking under power
of eminent domain or by condemnation or similar proceeding of, any
property or asset of the Borrower or any Restricted Subsidiary, but only
to the extent that the Net Proceeds therefrom have not been applied to
repair, restore or replace such property or asset or to purchase
Telecommunications Assets within twelve months after such event.
"Prime Rate" means the rate of interest per annum publicly announced from
----------
time to time by The Chase Manhattan Bank as its prime rate in effect at its
principal office in New York City; each change in the Prime Rate shall be
effective from and including the date such change is publicly announced as being
effective.
"Purchase Money Revolving Loans" means all Revolving Loans that are not
------------------------------
Non-Purchase Money Loans.
"Register" has the meaning set forth in Section 9.04.
--------
"Related Fund" means with respect to any Lender that is a fund that
------------
invests in bank loans in the ordinary course of business, any other fund that
invests in bank loans in the ordinary course of business and is advised or
managed by the same investment advisor as such Lender or by an Affiliate of such
investment advisor.
"Related Parties" means, with respect to any specified Person, such
---------------
Person's Affiliates and the respective directors, trustees, partners, members,
officers, employees, agents and advisors of such Person and such Person's
Affiliates.
"Required Lenders" means, at any time, Lenders having aggregate Revolving
----------------
Exposures, Term Loans and unused Commitments representing more than 50.0% of the
sum of the total Revolving Exposures, outstanding Term Loans and unused
Commitments at such time.
25
"Restricted Payment" means (a) any dividend or other distribution (whether
------------------
in cash, securities or other property) with respect to any Equity Interests in
the Borrower or any Restricted Subsidiary, or any payment (whether in cash,
securities or other property), including any sinking fund or similar deposit, on
account of the purchase, redemption, retirement, acquisition, cancelation or
termination of (i) any Equity Interests in the Borrower or any Restricted
Subsidiary or (ii) any option, warrant or other right to acquire any such Equity
Interests in the Borrower or any Restricted Subsidiary or (b) any payment to any
Derivatives Counterparty as a result of any change in the market value of any
class of capital stock or other Equity Interests in the Borrower or any
Restricted Subsidiary that is publicly traded (provided, that (i) payments shall
--------
be deemed to have been made to Derivatives Counterparties only to the extent the
cumulative amount of such payments exceeds the cumulative amount of any payments
received by the Borrower and the Restricted Subsidiaries from Derivatives
Counterparties as a result of changes in the market value of such publicly
traded capital stock or other Equity Interests and (ii) it is understood that
the intent of the above language relating to payments to and from Derivatives
Counterparties is to treat transactions entered into with Derivatives
Counterparties as Restricted Payments only if the Borrower intends such
transactions to have substantially the same economic effect as the dividends,
distributions and payments referred to in clause (a) above). For the avoidance
of doubt, the granting of options to purchase common stock of the Borrower and
the issuance of common stock of the Borrower upon the exercise of such options
shall not be deemed a "Restricted Payment."
"Restricted Subsidiary" means (i) each Subsidiary of the Borrower on the
---------------------
date hereof and (ii) each Subsidiary of the Borrower organized or acquired after
the date hereof that has not been designated an Unrestricted Subsidiary in
accordance with the provisions of Section 6.19.
"Revolving Availability Period" means the period from and including the
-----------------------------
Effective Date to but excluding the earlier of the Revolving Maturity Date and
the date of termination of the Revolving Commitments.
"Revolving Commitment" means, with respect to each Lender, the commitment,
--------------------
if any, of such Lender to make Revolving Loans and to acquire participations in
Letters of Credit and Swingline Loans hereunder, expressed as an amount
representing the maximum aggregate amount of such Lender's Revolving Exposure
hereunder, as such commitment may be (a) reduced from time to time pursuant to
Section 2.08 and (b) reduced or increased from time to time pursuant to
assignments by or to such Lender pursuant to Section 9.04. The initial amount
of each Lender's Revolving Commitment is set forth on Schedule 2.01, or in the
Assignment and Acceptance pursuant to which such Lender shall have assumed its
26
Revolving Commitment, as applicable. The initial aggregate amount of the
Lenders' Revolving Commitments is $450,000,000.
"Revolving Exposure" means, with respect to any Lender at any time, the
------------------
sum of the outstanding principal amount of such Lender's Revolving Loans and its
LC Exposure and Swingline Exposure at such time.
"Revolving Lender" means a Lender with a Revolving Commitment or, if the
----------------
Revolving Commitments have terminated or expired, a Lender with Revolving
Exposure.
"Revolving Loan" means a Loan made pursuant to clause (c) of Section 2.01.
--------------
"Revolving Maturity Date" means May 31, 2007.
-----------------------
"S&P" means Standard & Poor's Ratings Services, a division of McGraw Hill
---
Companies, or, if Standard & Poor's Ratings Group shall cease rating the
specified debt securities, and such ratings business has been transferred to a
successor Person, such successor Person.
"Security Agreements" means the Borrower Security Agreement and the
-------------------
Subsidiary Security Agreement.
"Security Documents" means the Security Agreements, the Pledge Agreements,
------------------
the Subsidiary Guarantee Agreement, the Indemnity, Subrogation and Contribution
Agreement, the Mortgages and each other security agreement or other instrument
or document executed and delivered pursuant to Section 5.12 or 5.13 to secure
any of the Obligations.
"Secured Parties" is defined in the Borrower Security Agreement.
---------------
"Senior Secured Debt" means, on any date, the Loans and all other
-------------------
Indebtedness that would be reflected as a liability on a consolidated balance
sheet of the Borrower and the Restricted Subsidiaries prepared as of such date
in accordance with GAAP and that is secured by any assets of the Borrower or any
Restricted Subsidiary.
"Significant Subsidiary" means a Restricted Subsidiary, or any group of
----------------------
Restricted Subsidiaries, collectively, that would constitute a "Significant
Subsidiary" of the Borrower within the meaning of Rule 1-02 under Regulation S-X
promulgated by the Securities and Exchange Commission as in effect on the date
hereof.
"Splitrock" means Splitrock Services, Inc., a Delaware corporation.
---------
27
"Splitrock EBITDA" means, for any period, the Splitrock Net Income for
----------------
such period plus (a) without duplication and to the extent deducted in
determining such Splitrock Net Income, the sum of (i) consolidated interest
expense for such period, (ii) consolidated income tax expense for such period,
(iii) all amounts attributable to depreciation and amortization for such period,
(iv) other non-operating expenses and (v) any extraordinary losses, and minus
(b) without duplication and to the extent included in determining such Splitrock
Net Income, (i) any extraordinary gains for such period and (ii) any non-
operating income, all determined on a consolidated basis in accordance with
GAAP.
"Splitrock Indenture" means the Indenture dated as of July 24, 1998, as
-------------------
amended between Splitrock Services, Inc. and Bank of Montreal Trust Company, as
Trustee, in respect of 11 3/4% Senior Notes due 2008.
"Splitrock Net Income" means, for any period, the net income or loss of
--------------------
the Splitrock and its consolidated subsidiaries for such period determined on a
consolidated basis in accordance with GAAP; provided that there shall be
--------
excluded (a) the income of any Person (other than Splitrock) in which any other
Person (other than Splitrock or any Restricted Subsidiary or any director
holding qualifying shares in compliance with applicable law) owns an Equity
Interest, except to the extent of the amount of dividends or other distributions
actually paid to Splitrock or any of its consolidated subsidiaries during such
period, and (b) the income or loss of any Person accrued prior to the date it
becomes a subsidiary of Splitrock or is merged into or consolidated with
Splitrock or any subsidiary of Splitrock or the date that such Person's assets
are acquired by Splitrock or any of its subsidiaries.
"subsidiary" means, with respect to any Person (the "parent") at any date,
---------- ------
any corporation, limited liability company, partnership, association or other
entity the accounts of which would be consolidated with those of the parent in
the parent's consolidated financial statements if such financial statements were
prepared in accordance with GAAP as of such date, as well as any other
corporation, limited liability company, partnership, association or other entity
(a) of which securities or other ownership interests representing more than 50%
of the equity or more than 50% of the ordinary voting power or, in the case of a
partnership, more than 50% of the general partnership interests are, as of such
date, owned, controlled or held, or (b) that is, as of such date, otherwise
Controlled, by the parent or one or more subsidiaries of the parent or by the
parent and one or more subsidiaries of the parent.
"Subsidiary" means any subsidiary of the Borrower.
----------
"Subsidiary Guarantee Agreement" means the Subsidiary Guarantee Agreement
------------------------------
between the Subsidiary Loan Parties and the Collateral Agent, substantially in
the form of Exhibit E.
28
"Subsidiary Loan Party" means any Restricted Subsidiary that is not a
---------------------
Foreign Subsidiary; provided, that (a) subsidiaries of Splitrock shall not be
--------
"Subsidiary Loan Parties" until the notes under the Splitrock Indenture have
been retired or defeased (or the Splitrock Indenture has been amended to enable
the Collateral and Guarantee Requirement to be fully satisfied) unless, with
respect to any such Person, the Borrower shall designate it as a Subsidiary Loan
Party and such Person shall satisfy the Collateral and Guarantee Requirement,
(b) McLeodUSA Telecommunications Services, Inc. shall not be a "Subsidiary Loan
Party" until the earlier of (i) the date the approvals listed in Schedule 3.03
are obtained and (ii) September 15, 2000, (c) Xxxxxx County Partners, Inc. shall
not be a "Subsidiary Loan Party" so long as it is prohibited from satisfying the
Collateral and Guarantee Requirement by the terms of its Indebtedness identified
in Schedule 6.02, (d) Midwest Cellular Associates and Illinois Consolidated
Telephone Company shall not be "Subsidiary Loan Parties", and (e) other non-
wholly owned Restricted Subsidiaries formed or acquired after the date hereof
shall not be "Subsidiary Loan Parties" if the entire amount of the Investment by
the Borrower and the Restricted Subsidiaries in such non-Wholly Owned Restricted
Subsidiary has been designated by the Borrower as made pursuant to Section
6.06(k) or (l).
"Subsidiary Pledge Agreement" means the Subsidiary Pledge Agreement
---------------------------
between the Subsidiary Loan Parties and the Collateral Agent, substantially in
the form of Exhibit F.
"Subsidiary Security Agreement" means the Subsidiary Security Agreement
-----------------------------
between the Subsidiary Loan Parties and the Collateral Agent, substantially in
the form of Exhibit G.
"Subsidiary Security Documents" means the Subsidiary Guarantee Agreement,
-----------------------------
the Subsidiary Security Agreement, the Subsidiary Pledge Agreement and the
Indemnity, Subrogation and Contribution Agreement.
"Swingline Exposure" means, at any time, the aggregate principal amount of
------------------
all Swingline Loans outstanding at such time. The Swingline Exposure of any
Lender at any time shall be its Applicable Percentage of the total Swingline
Exposure at such time.
"Swingline Lender" means The Chase Manhattan Bank, in its capacity as
----------------
lender of Swingline Loans hereunder.
"Swingline Loan" means a Loan made pursuant to Section 2.04.
--------------
"Taxes" means any and all present or future taxes, levies, imposts,
-----
duties, deductions, charges or withholdings imposed by any Governmental
Authority.
29
"Telecommunications Assets" means all assets, rights (contractual or
-------------------------
otherwise) and properties, whether tangible or intangible, used or intended for
use in connection with a Telecommunications Business.
"Telecommunications Business" means the business of (i) transmitting, or
---------------------------
providing services relating to the transmission of, voice, video or data through
owned or leased wireline or wireless transmission facilities, (ii) creating,
developing, constructing, installing, repairing, maintaining or marketing
communications-related systems, network equipment and facilities, software and
other products, (iii) creating, developing, producing or marketing audiotext or
videotext, (iv) publishing or distributing telephone (including Internet)
directories, whether in paper, electronic, audio or video format, (v) marketing
(including direct marketing and telemarketing), or (vi) evaluating,
participating in or pursuing any other business that is primarily related to
those identified in the foregoing clauses (i), (ii), (iii), (iv) or (v) above
(in the case of clauses (iii), (iv) and (v), however, in a manner consistent
with the Borrower's manner of business on the Effective Date), and shall, in any
event, include all businesses in which the Borrower or any of its Subsidiaries
are engaged on the Effective Date; provided that the determination of what
--------
constitutes a Telecommunications Business shall be made in good faith by the
Board of Directors in accordance with the criteria set forth in clauses (i)
through (vi) above.
"Term Loans" means Tranche A Term Loans and Tranche B Term Loans.
----------
"Total Capital" means, on any date, the sum of Funded Debt and Contributed
-------------
Capital on such date.
"Total Debt" means, on any date, the sum of (a) all Indebtedness of the
----------
Borrower and its Restricted Subsidiaries (including Indebtedness of Splitrock)
that would be reflected as a liability on a consolidated balance sheet of the
Borrower and its Restricted Subsidiaries prepared as of such date in accordance
with GAAP plus (b) the Imputed Principal Amount of any New Preferred Stock
outstanding on such date.
"Tranche A Availability Period" means the period commencing with the date
-----------------------------
hereof and ending on the earlier of (a) the date the Tranche A Commitments are
terminated and (b) the date that is two years after the date hereof.
"Tranche A Commitment" means, with respect to each Lender, the commitment,
--------------------
if any, of such Lender to make a Tranche A Term Loan hereunder on the Effective
Date, expressed as an amount representing the maximum principal amount of the
Tranche A Term Loan to be made by such Lender hereunder, as such commitment may
be (a) reduced from time to time pursuant to Section 2.08 and (b) reduced or
increased from time to time pursuant to
30
assignments by or to such Lender pursuant to Section 9.04. The initial amount of
each Lender's Tranche A Commitment is set forth on Schedule 2.01, or in the
Assignment and Acceptance pursuant to which such Lender shall have assumed its
Tranche A Commitment, as applicable. The initial aggregate amount of the
Lenders' Tranche A Commitments is $275,000,000.
"Tranche A Lender" means a Lender with a Tranche A Commitment or an
----------------
outstanding Tranche A Term Loan.
"Tranche A Maturity Date" means May 31, 2007.
-----------------------
"Tranche A Term Loan" means a Loan made pursuant to clause (a) of Section
-------------------
2.01.
"Tranche B Commitment" means, with respect to each Lender, the commitment,
--------------------
if any, of such Lender to make a Tranche B Term Loan hereunder on the Effective
Date, expressed as an amount representing the maximum principal amount of the
Tranche B Term Loan to be made by such Lender hereunder, as such commitment may
be (a) reduced from time to time pursuant to Section 2.08 and (b) reduced or
increased from time to time pursuant to assignments by or to such Lender
pursuant to Section 9.04. The initial amount of each Lender's Tranche B
Commitment is set forth on Schedule 2.01, or in the Assignment and Acceptance
pursuant to which such Lender shall have assumed its Tranche A Commitment, as
applicable. The initial aggregate amount of the Lenders' Tranche B Commitments
is $575,000,000.
"Tranche B Lender" means a Lender with a Tranche B Commitment or an
----------------
outstanding Tranche B Term Loan.
"Tranche B Maturity Date" means May 30, 2008.
-----------------------
"Tranche B Term Loan" means a Loan made pursuant to clause (b) of Section
-------------------
2.01.
"Transactions" means the execution, delivery and performance by each Loan
------------
Party of the Loan Documents to which it is to be a party, the borrowing of
Loans, the use of the proceeds thereof and the issuance of Letters of Credit
hereunder.
"Type", when used in reference to any Loan or Borrowing, refers to whether
----
the rate of interest on such Loan, or on the Loans comprising such Borrowing, is
determined by reference to the LIBO Rate or the Alternate Base Rate.
"Unrestricted Subsidiary" means any Subsidiary of the Borrower that has
-----------------------
been designated as an Unrestricted Subsidiary by the Borrower pursuant to and in
compliance with Section 6.19. No Unrestricted Subsidiary may own any Capital
Stock of a Restricted Subsidiary.
31
"Voting Stock" means, with respect to any Person, securities of any class
------------
or classes of Capital Stock in such Person entitling the holders thereof
(whether at all times or at the times that such class of Capital Stock has
voting power by reason of the happening of any contingency) to vote in the
election of members of the board of directors or comparable body of such Person.
"Wholly Owned subsidiary" of any Person shall mean a subsidiary of such
-----------------------
Person of which securities or other ownership interests (except for directors'
qualifying shares and other de minimis amounts of outstanding securities or
ownership interests) representing 100% of the ordinary voting power and 100% of
equity or 100% of the general partnership interests are, at the time any
determination is being made, owned, controlled or held by such Person or one or
more Wholly Owned subsidiaries of such Person or by such Person and one or more
Wholly Owned subsidiaries of such Person.
"Withdrawal Liability" means liability to a Multiemployer Plan as a result
--------------------
of a complete or partial withdrawal from such Multiemployer Plan, as such terms
are defined in Part I of Subtitle E of Title IV of ERISA.
SECTION 1.02. Classification of Loans and Borrowings. For purposes of
---------------------------------------
this Agreement, Loans may be classified and referred to by Class (e.g., a
----
"Revolving Loan") or by Type (e.g., a "Eurodollar Loan") or by Class and Type
----
(e.g., a "Eurodollar Revolving Loan"). Borrowings also may be classified and
-----
referred to by Class (e.g., a "Revolving Borrowing") or by Type (e.g., a
---- ----
"Eurodollar Borrowing") or by Class and Type (e.g., a "Eurodollar Revolving
----
Borrowing").
SECTION 1.03. Terms Generally. The definitions of terms herein shall
----------------
apply equally to the singular and plural forms of the terms defined. Whenever
the context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including"
shall be deemed to be followed by the phrase "without limitation". The word
"will" shall be construed to have the same meaning and effect as the word
"shall". Unless the context requires otherwise (a) any definition of or
reference to any agreement, instrument or other document herein shall be
construed as referring to such agreement, instrument or other document as from
time to time amended, supplemented or otherwise modified (subject to any
restrictions on such amendments, supplements or modifications set forth herein),
(b) any reference herein to any Person shall be construed to include such
Person's successors and assigns, (c) the words "herein", "hereof" and
"hereunder", and words of similar import, shall be construed to refer to this
Agreement in its entirety and not to any particular provision hereof, (d) all
references herein to Articles, Sections, Exhibits and Schedules shall be
construed to refer to Articles and Sections of, and Exhibits and Schedules
32
to, this Agreement and (e) the words "asset" and "property" shall be construed
to have the same meaning and effect and to refer to any and all tangible and
intangible assets and properties, including cash, securities, accounts and
contract rights.
SECTION 1.04. Accounting Terms; GAAP. Except as otherwise expressly
-----------------------
provided herein, all terms of an accounting or financial nature shall be
construed in accordance with GAAP, as in effect from time to time; provided
--------
that, if the Borrower notifies the Administrative Agent that the Borrower
requests an amendment to any provision hereof to eliminate the effect of any
change occurring after the date hereof in GAAP or in the application thereof on
the operation of such provision (or if the Administrative Agent notifies the
Borrower that the Required Lenders request an amendment to any provision hereof
for such purpose), regardless of whether any such notice is given before or
after such change in GAAP or in the application thereof, then such provision
shall be interpreted on the basis of GAAP as in effect and applied immediately
before such change shall have become effective until such notice shall have
been withdrawn or such provision amended in accordance herewith.
ARTICLE II
The Credits
-----------
SECTION 2.01. Commitments. Subject to the terms and conditions set forth
------------
herein, each Lender agrees (a) to make Tranche A Term Loans to the Borrower from
time to time during the Tranche A Availability Period in an aggregate principal
amount not exceeding its Tranche A Commitment, (b) to make a Tranche B Term Loan
to the Borrower on the Effective Date in a principal amount not exceeding its
Tranche B Commitment and (c) to make Revolving Loans to the Borrower from time
to time during the Revolving Availability Period in an aggregate principal
amount that will not result in such Lender's Revolving Exposure exceeding such
Lender's Revolving Commitment. Within the foregoing limits and subject to the
terms and conditions set forth herein, the Borrower may borrow, prepay and
reborrow Revolving Loans. Amounts repaid in respect of Term Loans may not be
reborrowed.
SECTION 2.02. Loans and Borrowings. (a) Each Loan (other than a
---------------------
Swingline Loan) shall be made as part of a Borrowing consisting of Loans of the
same Class and Type made by the Lenders ratably in accordance with their
respective Commitments of the applicable Class. The failure of any Lender to
make any Loan required to be made by it shall not relieve any other Lender of
its obligations hereunder; provided that the Commitments of the Lenders are
--------
several and no Lender shall be responsible for any other Lender's failure to
make Loans as required.
33
(b) Subject to Section 2.14, each Revolving Borrowing and Term Borrowing
shall be comprised entirely of ABR Loans or Eurodollar Loans as the Borrower may
request in accordance herewith. Each Swingline Loan shall be an ABR Loan. Each
Lender at its option may make any Eurodollar Loan by causing any domestic or
foreign branch or Affiliate of such Lender to make such Loan; provided that any
--------
exercise of such option shall not affect the obligation of the Borrower to repay
such Loan in accordance with the terms of this Agreement.
(c) At the commencement of each Interest Period for any Eurodollar
Borrowing, such Borrowing shall be in an aggregate amount that is an integral
multiple of $1,000,000 and not less than $10,000,000. At the time that each ABR
Revolving Borrowing is made, such Borrowing shall be in an aggregate amount that
is an integral multiple of $1,000,000 and not less than $10,000,000; provided
--------
that an ABR Revolving Borrowing may be in an aggregate amount that is equal to
the entire unused balance of the total Revolving Commitments or that is required
to finance the reimbursement of an LC Disbursement as contemplated by Section
2.05(e). Notwithstanding the foregoing, the Borrower may request Tranche A Term
Borrowings only in a principal amount equal to or greater than $50,000,000.
Each Swingline Loan shall be in an amount that is an integral multiple of
$1,000,000. Borrowings of more than one Type and Class may be outstanding at
the same time; provided that there shall not at any time be more than a total of
--------
20 Eurodollar Borrowings outstanding.
(d) Notwithstanding any other provision of this Agreement, the Borrower
shall not be entitled to request, or to elect to convert or continue, any
Borrowing if the Interest Period requested with respect thereto would end after
the Revolving Maturity Date, Tranche A Maturity Date or Tranche B Maturity Date,
as applicable.
34
SECTION 2.03. Requests for Borrowings. To request a Revolving Borrowing
------------------------
or Term Borrowing, the Borrower shall notify the Administrative Agent of such
request by telephone (a) in the case of a Eurodollar Borrowing, not later than
11:00 a.m., New York City time, three Business Days before the date of the
proposed Borrowing or (b) in the case of an ABR Borrowing, not later than 11:00
a.m., New York City time, one Business Day before the date of the proposed
Borrowing; provided that any such notice of an ABR Revolving Borrowing to
--------
finance the reimbursement of an LC Disbursement as contemplated by Section
2.05(e) may be given not later than 10:00 a.m., New York City time, on the date
of the proposed Borrowing. Each such telephonic Borrowing Request shall be
irrevocable and shall be confirmed promptly by hand delivery or telecopy to the
Administrative Agent of a written Borrowing Request in a form approved by the
Administrative Agent and signed by the Borrower. Each such telephonic and
written Borrowing Request shall specify the following information in compliance
with Section 2.02:
(i) whether the requested Borrowing is to be a Revolving Borrowing,
Tranche A Term Borrowing or Tranche B Term Borrowing;
(ii) the aggregate amount of such Borrowing;
(iii) the date of such Borrowing, which shall be a Business Day;
(iv) whether such Borrowing is to be an ABR Borrowing or a Eurodollar
Borrowing;
(v) in the case of a Eurodollar Borrowing, the initial Interest Period
to be applicable thereto, which shall be a period contemplated by the
definition of the term "Interest Period";
(vi) the location and number of the Borrower's account to which funds
are to be disbursed, which shall comply with the requirements of Section
2.06; and
(v) if such Borrowing is for Purchase Money Revolving Loans or Term
Loans, (A) a description of the Financed Telecommunications Assets being
acquired with the proceeds of such Borrowing, (B) all information required
in Section 2 of the Perfection Certificate with respect to such assets to
the extent not previously provided and (C) if not previously delivered to
the Agent and if such Financed Telecommunications Assets are to be leased
to a Subsidiary, copies of the Approved Lease Agreement applicable to such
Financed Telecommunications Assets.
If no election as to the Type of Borrowing is specified, then the requested
Borrowing shall be an ABR Borrowing. If no Interest Period is specified with
respect to any requested Eurodollar Revolving Borrowing, then the Borrower shall
be
35
deemed to have selected an Interest Period of one month's duration. Promptly
following receipt of a Borrowing Request in accordance with this Section, the
Administrative Agent shall advise each Lender of the details thereof and of the
amount of such Lender's Loan to be made as part of the requested Borrowing.
SECTION 2.04. Swingline Loans. (a) Subject to the terms and conditions
----------------
set forth herein, the Swingline Lender agrees to make Swingline Loans to the
Borrower from time to time during the Revolving Availability Period, in an
aggregate principal amount at any time outstanding that will not result in (i)
the aggregate principal amount of outstanding Swingline Loans exceeding
$20,000,000 or (ii) the sum of the total Revolving Exposures exceeding the total
Revolving Commitments; provided that the Swingline Lender shall not be required
--------
to make a Swingline Loan to refinance an outstanding Swingline Loan. Within the
foregoing limits and subject to the terms and conditions set forth herein, the
Borrower may borrow, prepay and reborrow Swingline Loans.
(b) To request a Swingline Loan, the Borrower shall notify the
Administrative Agent of such request by telephone (confirmed by telecopy), not
later than 12:00 noon, New York City time, on the day of a proposed Swingline
Loan. Each such notice shall be irrevocable and shall specify the requested
date (which shall be a Business Day) and amount of the requested Swingline Loan.
The Administrative Agent will promptly advise the Swingline Lender of any such
notice received from the Borrower. The Swingline Lender shall make each
Swingline Loan available to the Borrower by means of a credit to the general
deposit account of the Borrower with the Swingline Lender (or, in the case of a
Swingline Loan made to finance the reimbursement of an LC Disbursement as
provided in Section 2.05(e), by remittance to the Issuing Bank) by 3:00 p.m.,
New York City time, on the requested date of such Swingline Loan.
(c) The Swingline Lender may by written notice given to the
Administrative Agent not later than 12:00 noon, New York City time, on any
Business Day require the Revolving Lenders to acquire participations on such
Business Day in all or a portion of the Swingline Loans outstanding. Such
notice shall specify the aggregate amount of Swingline Loans in which Revolving
Lenders will participate. Promptly upon receipt of such notice, the
Administrative Agent will give notice thereof to each Revolving Lender,
specifying in such notice such Lender's Applicable Percentage of such Swingline
Loan or Loans. Each Revolving Lender hereby absolutely and unconditionally
agrees, upon receipt of notice as provided above, to pay to the Administrative
Agent, for the account of the Swingline Lender, such Lender's Applicable
Percentage of such Swingline Loan or Loans. Each Revolving Lender acknowledges
and agrees that its obligation to acquire participations in Swingline Loans
pursuant to this paragraph is absolute and unconditional and shall not be
36
affected by any circumstance whatsoever, including the occurrence and
continuance of a Default or reduction or termination of the Commitments, and
that each such payment shall be made without any offset, abatement, withholding
or reduction whatsoever. Each Revolving Lender shall comply with its obligation
under this paragraph by wire transfer of immediately available funds, in the
same manner as provided in Section 2.06 with respect to Loans made by such
Lender (and Section 2.06 shall apply, mutatis mutandis, to the payment
------- --------
obligations of the Revolving Lenders), and the Administrative Agent shall
promptly pay to the Swingline Lender the amounts so received by it from the
Revolving Lenders. The Administrative Agent shall notify the Borrower of any
participations in any Swingline Loan acquired pursuant to this paragraph, and
thereafter payments in respect of such Swingline Loan shall be made to the
Administrative Agent and not to the Swingline Lender. Any amounts received by
the Swingline Lender from the Borrower (or other party on behalf of the
Borrower) in respect of a Swingline Loan after receipt by the Swingline Lender
of the proceeds of a sale of participations therein shall be promptly remitted
to the Administrative Agent; any such amounts received by the Administrative
Agent shall be promptly remitted by the Administrative Agent to the Revolving
Lenders that shall have made their payments pursuant to this paragraph and to
the Swingline Lender, as their interests may appear. The purchase of
participations in a Swingline Loan pursuant to this paragraph shall not relieve
the Borrower of any default in the payment thereof.
SECTION 2.05. Letters of Credit. (a) General. Subject to the terms and
------------------ --------
conditions set forth herein, the Borrower may request the issuance of Letters of
Credit for its own account, in a form reasonably acceptable to the
Administrative Agent and the Issuing Bank, at any time and from time to time
during the Revolving Availability Period. In the event of any inconsistency
between the terms and conditions of this Agreement and the terms and conditions
of any form of letter of credit application or other agreement submitted by the
Borrower to, or entered into by the Borrower with, the Issuing Bank relating to
any Letter of Credit, the terms and conditions of this Agreement shall control.
Such terms and conditions of any such application shall not, in any event,
contain any operating covenants or restrictions, provide for any collateral not
provided under the Loan Documents or provide for the imposition of fees (other
than customary charges).
(b) Notice of Issuance, Amendment, Renewal, Extension; Certain
----------------------------------------------------------
Conditions. To request the issuance of a Letter of Credit (or the amendment,
-----------
renewal or extension of an outstanding Letter of Credit), the Borrower shall
hand deliver or telecopy (or transmit by electronic communication, if
arrangements for doing so have been approved by the Issuing Bank) to the Issuing
Bank and the Administrative Agent (reasonably in advance of the requested date
of issuance, amendment, renewal or extension) a
37
notice requesting the issuance of a Letter of Credit, or identifying the Letter
of Credit to be amended, renewed or extended, and specifying the date of
issuance, amendment, renewal or extension (which shall be a Business Day), the
date on which such Letter of Credit is to expire (which shall comply with
paragraph (c) of this Section), the amount of such Letter of Credit, the name
and address of the beneficiary thereof and such other information as shall be
necessary to prepare, amend, renew or extend such Letter of Credit. If requested
by the Issuing Bank, the Borrower also shall submit a letter of credit
application on the Issuing Bank's standard form in connection with any request
for a Letter of Credit. A Letter of Credit shall be issued, amended, renewed or
extended only if (and upon issuance, amendment, renewal or extension of each
Letter of Credit the Borrower shall be deemed to represent and warrant that),
after giving effect to such issuance, amendment, renewal or extension (i) the LC
Exposure shall not exceed $50,000,000 and (ii) the total Revolving Exposures
shall not exceed the total Revolving Commitments.
(c) Expiration Date. Each Letter of Credit shall expire at or prior to
----------------
the close of business on the earlier of (i) the date one year after the date of
the issuance of such Letter of Credit (or, in the case of any renewal or
extension thereof, one year after such renewal or extension) and (ii) the date
that is five Business Days prior to the Revolving Maturity Date.
(d) Participations. By the issuance of a Letter of Credit (or an
---------------
amendment to a Letter of Credit increasing the amount thereof) and without any
further action on the part of the Issuing Bank or the Lenders, the Issuing Bank
hereby grants to each Revolving Lender, and each Revolving Lender hereby
acquires from the Issuing Bank, a participation in such Letter of Credit equal
to such Lender's Applicable Percentage of the aggregate amount available to be
drawn under such Letter of Credit. In consideration and in furtherance of the
foregoing, each Revolving Lender hereby absolutely and unconditionally agrees to
pay to the Administrative Agent, for the account of the Issuing Bank, such
Lender's Applicable Percentage of each LC Disbursement made by the Issuing Bank
and not reimbursed by the Borrower on the date due as provided in paragraph (e)
of this Section, or of any reimbursement payment required to be refunded to the
Borrower for any reason. Each Lender acknowledges and agrees that its
obligation to acquire participations pursuant to this paragraph in respect of
Letters of Credit is absolute and unconditional and shall not be affected by any
circumstance whatsoever, including any amendment, renewal or extension of any
Letter of Credit or the occurrence and continuance of a Default or reduction or
termination of the Commitments, and that each such payment shall be made without
any offset, abatement, withholding or reduction whatsoever.
(e) Reimbursement. If the Issuing Bank shall make any LC Disbursement in
--------------
respect of a Letter of Credit, the Borrower
38
shall reimburse such LC Disbursement by paying to the Administrative Agent an
amount equal to such LC Disbursement not later than 12:00 noon, New York City
time, on the date that such LC Disbursement is made, if the Borrower shall have
received notice of such LC Disbursement prior to 10:00 a.m., New York City time,
on such date, or, if such notice has not been received by the Borrower prior to
such time on such date, then not later than 12:00 noon, New York City time, on
(i) the Business Day that the Borrower receives such notice, if such notice is
received prior to 10:00 a.m., New York City time, on the day of receipt, or (ii)
the Business Day immediately following the day that the Borrower receives such
notice, if such notice is not received prior to such time on the day of receipt;
provided that, if such LC Disbursement is not less than $10,000,000, the
--------
Borrower may, subject to the conditions to borrowing set forth herein, request
in accordance with Section 2.03 or 2.04 that such payment be financed with an
ABR Revolving Borrowing or Swingline Loan in an equivalent amount and, to the
extent so financed, the Borrower's obligation to make such payment shall be
discharged and replaced by the resulting ABR Revolving Borrowing or Swingline
Loan. If the Borrower fails to make such payment when due, the Administrative
Agent shall notify each Revolving Lender of the applicable LC Disbursement, the
payment then due from the Borrower in respect thereof and such Lender's
Applicable Percentage thereof. Promptly following receipt of such notice, each
Revolving Lender shall pay to the Administrative Agent its Applicable Percentage
of the payment then due from the Borrower, in the same manner as provided in
Section 2.06 with respect to Loans made by such Lender (and Section 2.06 shall
apply, mutatis mutandis, to the payment obligations of the Revolving Lenders),
------- --------
and the Administrative Agent shall promptly pay to the Issuing Bank the amounts
so received by it from the Revolving Lenders. Promptly following receipt by the
Administrative Agent of any payment from the Borrower pursuant to this
paragraph, the Administrative Agent shall distribute such payment to the Issuing
Bank or, to the extent that Revolving Lenders have made payments pursuant to
this paragraph to reimburse the Issuing Bank, then to such Lenders and the
Issuing Bank as their interests may appear. Any payment made by a Revolving
Lender pursuant to this paragraph to reimburse the Issuing Bank for any LC
Disbursement (other than the funding of ABR Revolving Loans or a Swingline Loan
as contemplated above) shall not constitute a Loan and shall not relieve the
Borrower of its obligation to reimburse such LC Disbursement.
(f) Obligations Absolute. The Borrower's obligation to reimburse LC
---------------------
Disbursements as provided in paragraph (e) of this Section shall be absolute,
unconditional and irrevocable, and shall be performed strictly in accordance
with the terms of this Agreement under any and all circumstances whatsoever and
irrespective of (i) any lack of validity or enforceability of any Letter of
Credit or this Agreement, or any term or provision therein, (ii) any draft or
other document presented under a
39
Letter of Credit proving to be forged, fraudulent or invalid in any respect or
any statement therein being untrue or inaccurate in any respect, (iii) payment
by the Issuing Bank under a Letter of Credit against presentation of a draft or
other document that does not comply with the terms of such Letter of Credit, or
(iv) any other event or circumstance whatsoever, whether or not similar to any
of the foregoing, that might, but for the provisions of this Section, constitute
a legal or equitable discharge of, or provide a right of setoff against, the
Borrower's obligations hereunder. Neither the Administrative Agent, the Lenders
nor the Issuing Bank, nor any of their Related Parties, shall have any liability
or responsibility by reason of or in connection with the issuance or transfer of
any Letter of Credit or any payment or failure to make any payment thereunder
(irrespective of any of the circumstances referred to in the preceding
sentence), or any error, omission, interruption, loss or delay in transmission
or delivery of any draft, notice or other communication under or relating to any
Letter of Credit (including any document required to make a drawing thereunder),
any error in interpretation of technical terms or any consequence arising from
causes beyond the control of the Issuing Bank; provided that the foregoing shall
--------
not be construed to excuse the Issuing Bank from liability to the Borrower to
the extent of any direct damages (as opposed to consequential damages, claims in
respect of which are hereby waived by the Borrower to the extent permitted by
applicable law) suffered by the Borrower that are caused by the Issuing Bank's
failure to exercise care when determining whether drafts and other documents
presented under a Letter of Credit comply with the terms thereof. The parties
hereto expressly agree that, in the absence of gross negligence or wilful
misconduct on the part of the Issuing Bank (as finally determined by a court of
competent jurisdiction), the Issuing Bank shall be deemed to have exercised care
in each such determination. In furtherance of the foregoing and without limiting
the generality thereof, the parties agree that, with respect to documents
presented which appear on their face to be in substantial compliance with the
terms of a Letter of Credit, the Issuing Bank may, in its sole discretion,
either accept and make payment upon such documents without responsibility for
further investigation, regardless of any notice or information to the contrary,
or refuse to accept and make payment upon such documents if such documents are
not in strict compliance with the terms of such Letter of Credit.
(g) Disbursement Procedures. The Issuing Bank shall, promptly following
------------------------
its receipt thereof, examine all documents purporting to represent a demand for
payment under a Letter of Credit. The Issuing Bank shall promptly notify the
Administrative Agent and the Borrower by telephone (confirmed by telecopy) of
such demand for payment and whether the Issuing Bank has made or will make an LC
Disbursement thereunder; provided that any failure to give or delay in giving
--------
such notice shall not relieve the Borrower of its obligation to reimburse
40
the Issuing Bank and the Revolving Lenders with respect to any such LC
Disbursement.
(h) Interim Interest. If the Issuing Bank shall make any LC
-----------------
Disbursement, then, unless the Borrower shall reimburse such LC Disbursement in
full on the date such LC Disbursement is made, the unpaid amount thereof shall
bear interest, for each day from and including the date such LC Disbursement is
made to but excluding the date that the Borrower reimburses such LC
Disbursement, at the rate per annum then applicable to ABR Revolving Loans;
provided that, if the Borrower fails to reimburse such LC Disbursement when due
--------
pursuant to paragraph (e) of this Section, then Section 2.13(c) shall apply.
Interest accrued pursuant to this paragraph shall be for the account of the
Issuing Bank, except that interest accrued on and after the date of payment by
any Revolving Lender pursuant to paragraph (e) of this Section to reimburse the
Issuing Bank shall be for the account of such Lender to the extent of such
payment.
(i) Replacement of the Issuing Bank. The Issuing Bank may be replaced at
--------------------------------
any time by written agreement among the Borrower, the Administrative Agent, the
replaced Issuing Bank and the successor Issuing Bank. The Administrative Agent
shall notify the Lenders of any such replacement of the Issuing Bank. At the
time any such replacement shall become effective, the Borrower shall pay all
unpaid fees accrued for the account of the replaced Issuing Bank pursuant to
Section 2.12(b). From and after the effective date of any such replacement, (i)
the successor Issuing Bank shall have all the rights and obligations of the
Issuing Bank under this Agreement with respect to Letters of Credit to be issued
thereafter and (ii) references herein to the term "Issuing Bank" shall be deemed
to refer to such successor or to any previous Issuing Bank, or to such successor
and all previous Issuing Banks, as the context shall require. After the
replacement of an Issuing Bank hereunder, the replaced Issuing Bank shall remain
a party hereto and shall continue to have all the rights and obligations of an
Issuing Bank under this Agreement with respect to Letters of Credit issued by it
prior to such replacement, but shall not be required to issue additional Letters
of Credit.
(j) Cash Collateralization. If any Event of Default shall occur and be
-----------------------
continuing, on the Business Day that the Borrower receives notice from the
Administrative Agent or the Required Lenders (or, if the maturity of the Loans
has been accelerated, Revolving Lenders with LC Exposure representing greater
than 50% of the total LC Exposure) demanding the deposit of cash collateral
pursuant to this paragraph, the Borrower shall deposit in an account with the
Administrative Agent, in the name of the Administrative Agent and for the
benefit of the Lenders, an amount in cash equal to the LC Exposure as of such
date plus any accrued and unpaid interest thereon; provided that the obligation
--------
to deposit such cash collateral shall become effective immediately, and such
deposit shall become immediately
41
due and payable, without demand or other notice of any kind, upon the occurrence
of any Event of Default with respect to the Borrower described in clause (h) or
(i) of Article VII. Each such deposit shall be held by the Administrative Agent
as collateral for the payment and performance of the obligations of the Borrower
under this Agreement. The Administrative Agent shall have exclusive dominion and
control, including the exclusive right of withdrawal, over such account. Other
than any interest earned on the investment of such deposits in readily
marketable Permitted Investments maturing in not more than 60 days, which
investments shall be made at the direction of the Borrower and at the Borrower's
risk and expense, such deposits shall not bear interest. Interest or profits, if
any, on such investments shall accumulate in such account. Moneys in such
account shall be applied by the Administrative Agent to reimburse the Issuing
Bank for LC Disbursements for which it has not been reimbursed and, to the
extent not so applied, shall be held for the satisfaction of the reimbursement
obligations of the Borrower for the LC Exposure at such time or, if the maturity
of the Loans has been accelerated (but subject to the consent of Revolving
Lenders with LC Exposure representing greater than 50% of the total LC
Exposure), be applied to satisfy other obligations of the Borrower under this
Agreement or the other Loan Documents. If the Borrower is required to provide an
amount of cash collateral hereunder as a result of the occurrence of an Event of
Default, such amount (to the extent not applied as aforesaid) shall be returned
to the Borrower within three Business Days after all Events of Default have been
cured or waived. If the Borrower is required to provide an amount of cash
collateral hereunder pursuant to Section 2.11(b), such amount (to the extent not
applied as aforesaid) shall be returned to the Borrower as and to the extent
that, after giving effect to such return, the Borrower would remain in
compliance with Section 2.11(b) and no Default shall have occurred and be
continuing.
SECTION 2.06. Funding of Borrowings. (a) Each Lender shall make each
----------------------
Loan to be made by it hereunder on the proposed date thereof by wire transfer of
immediately available funds by 12:00 noon, New York City time, to the account of
the Administrative Agent most recently designated by it for such purpose by
notice to the Lenders; provided that Swingline Loans shall be made as provided
--------
in Section 2.04. The Administrative Agent will make such Loans available to the
Borrower by promptly crediting the amounts so received, in like funds, to an
account of the Borrower maintained with the Administrative Agent in New York
City and designated by the Borrower in the applicable Borrowing Request;
provided that ABR Revolving Loans made to finance the reimbursement of an LC
--------
Disbursement as provided in Section 2.05(e) shall be remitted by the
Administrative Agent to the Issuing Bank.
(b) Unless the Administrative Agent shall have received notice from a
Lender prior to the proposed date of any Borrowing
42
that such Lender will not make available to the Administrative Agent such
Lender's share of such Borrowing, the Administrative Agent may assume that such
Lender has made such share available on such date in accordance with paragraph
(a) of this Section and may, in reliance upon such assumption, make available to
the Borrower a corresponding amount. In such event, if a Lender has not in fact
made its share of the applicable Borrowing available to the Administrative
Agent, then the applicable Lender and the Borrower severally agree to pay to the
Administrative Agent forthwith on demand such corresponding amount with interest
thereon, for each day from and including the date such amount is made available
to the Borrower to but excluding the date of payment to the Administrative
Agent, at (i) in the case of such Lender, the greater of the Federal Funds
Effective Rate and a rate determined by the Administrative Agent in accordance
with banking industry rules on interbank compensation or (ii) in the case of the
Borrower, the interest rate applicable to ABR Loans. If such Lender pays such
amount to the Administrative Agent, then such amount shall constitute such
Lender's Loan included in such Borrowing.
SECTION 2.07. Interest Elections. (a) Each Revolving Borrowing and Term
-------------------
Borrowing initially shall be of the Type specified in the applicable Borrowing
Request and, in the case of a Eurodollar Borrowing, shall have an initial
Interest Period as specified in such Borrowing Request. Thereafter, the
Borrower may elect to convert such Borrowing to a different Type or to continue
such Borrowing and, in the case of a Eurodollar Borrowing, may elect Interest
Periods therefor, all as provided in this Section. The Borrower may elect
different options with respect to different portions of the affected Borrowing,
in which case each such portion shall be allocated ratably among the Lenders
holding the Loans comprising such Borrowing, and the Loans comprising each such
portion shall be considered a separate Borrowing. This Section shall not apply
to Swingline Loans, which may not be converted or continued.
(b) To make an election pursuant to this Section, the Borrower shall
notify the Administrative Agent of such election by telephone by the time that a
Borrowing Request would be required under Section 2.03 if the Borrower were
requesting a Revolving Borrowing of the Type resulting from such election to be
made on the effective date of such election. Each such telephonic Interest
Election Request shall be irrevocable and shall be confirmed promptly by hand
delivery or telecopy to the Administrative Agent of a written Interest Election
Request in a form approved by the Administrative Agent and signed by the
Borrower.
(c) Each telephonic and written Interest Election Request shall specify
the following information in compliance with Section 2.02:
43
(i) the Borrowing to which such Interest Election Request applies
and, if different options are being elected with respect to different
portions thereof, the portions thereof to be allocated to each resulting
Borrowing (in which case the information to be specified pursuant to
clauses (iii) and (iv) below shall be specified for each resulting
Borrowing);
(ii) the effective date of the election made pursuant to such Interest
Election Request, which shall be a Business Day;
(iii) whether the resulting Borrowing is to be an ABR Borrowing or a
Eurodollar Borrowing; and
(iv) if the resulting Borrowing is a Eurodollar Borrowing, the
Interest Period to be applicable thereto after giving effect to such
election, which shall be a period contemplated by the definition of the
term "Interest Period".
If any such Interest Election Request requests a Eurodollar Borrowing but does
not specify an Interest Period, then the Borrower shall be deemed to have
selected an Interest Period of one month's duration.
(d) Promptly following receipt of an Interest Election Request, the
Administrative Agent shall advise each Lender of the details thereof and of such
Lender's portion of each resulting Borrowing.
(e) If the Borrower fails to deliver a timely Interest Election Request
with respect to a Eurodollar Borrowing prior to the end of the Interest Period
applicable thereto, then, unless such Borrowing is repaid as provided herein, at
the end of such Interest Period such Borrowing shall be converted to an ABR
Borrowing. Notwithstanding any contrary provision hereof, if an Event of
Default has occurred and is continuing and the Administrative Agent, at the
request of the Required Lenders, so notifies the Borrower, then, so long as an
Event of Default is continuing (i) no outstanding Borrowing may be converted to
or continued as a Eurodollar Borrowing (except for a Eurodollar Borrowing with
an Interest Period of one month) and (ii) unless repaid, each Eurodollar
Borrowing shall be continued as a Eurodollar Borrowing with an Interest Period
of one month at the end of the Interest Period applicable thereto.
SECTION 2.08. Termination and Reduction of Commitments. (a) Unless
-----------------------------------------
previously terminated, (i) the Tranche A Commitments, shall terminate at 5:00
p.m. on the last day of the Tranche A Availability Period and (ii) Tranche B
Commitments shall terminate at 5:00 p.m., New York City time, on the Effective
Date and (iii) the Revolving Commitments shall terminate on the Revolving
Maturity Date.
44
(b) The Borrower may at any time terminate, or from time to time reduce,
the Commitments of any Class; provided that (i) each reduction of the
--------
Commitments of any Class shall be in an amount that is an integral multiple of
$1,000,000 and not less than $10,000,000 and (ii) the Borrower shall not
terminate or reduce the Revolving Commitments if, after giving effect to any
concurrent prepayment of the Revolving Loans in accordance with Section 2.11,
the sum of the Revolving Exposures would exceed the total Revolving Commitments.
(c) If any prepayment of Term Borrowings is required pursuant to Section
2.11 but cannot be made because there are no Term Borrowings outstanding, or
because the amount of the required prepayment exceeds the outstanding amount of
Term Borrowings, then, on the date that such prepayment is required, first, the
Tranche A Term Commitments, and, if insufficient, second the Revolving
Commitments shall be reduced by an aggregate amount equal to the amount of the
required prepayment, or the excess of such amount over the outstanding amount of
Term Borrowings, as the case may be.
(d) The Borrower shall notify the Administrative Agent of any election to
terminate or reduce the Commitments under paragraph (b) of this Section, or any
required reduction of the Revolving Commitments under paragraph (c) of this
Section, at least three Business Days prior to the effective date of such
termination or reduction, specifying such election and the effective date
thereof. Promptly following receipt of any notice, the Administrative Agent
shall advise the Lenders of the contents thereof. Each notice delivered by the
Borrower pursuant to this Section shall be irrevocable; provided that a notice
--------
of termination of the Revolving Commitments delivered by the Borrower may state
that such notice is conditioned upon the effectiveness of other credit
facilities, in which case such notice may be revoked by the Borrower (by notice
to the Administrative Agent on or prior to the specified effective date) if such
condition is not satisfied. Any termination or reduction of the Commitments of
any Class shall be permanent. Each reduction of the Commitments of any Class
shall be made ratably among the Lenders in accordance with their respective
Commitments of such Class.
SECTION 2.09. Repayment of Loans; Evidence of Debt. (a) The Borrower
-------------------------------------
hereby unconditionally promises to pay (i) to the Administrative Agent for the
account of each Lender the then unpaid principal amount of each Revolving Loan
of such Lender on the Revolving Maturity Date, (ii) to the Administrative Agent
for the account of each Lender the then unpaid principal amount of each Term
Loan of such Lender as provided in Section 2.10 and (iii) to the Swingline
Lender the then unpaid principal amount of each Swingline Loan on the earlier of
the Revolving Maturity Date and the first date after such Swingline Loan is made
that is the 15th or last day of a calendar month and is at least five
45
Business Days after such Swingline Loan is made; provided that on each date that
--------
a Revolving Borrowing is made, the Borrower shall repay all Swingline Loans that
were outstanding on the date such Borrowing was requested.
(b) Each Lender shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness of the Borrower to such Lender
resulting from each Loan made by such Lender, including the amounts of principal
and interest payable and paid to such Lender from time to time hereunder.
(c) The Administrative Agent shall maintain accounts in which it shall
record (i) the amount of each Loan made hereunder, the Class and Type thereof
and the 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) the amount of any sum received by the Administrative
Agent hereunder for the account of the Lenders and each Lender's share thereof.
(d) The entries made in the accounts maintained pursuant to paragraph (b)
or (c) of this Section shall be prima facie evidence of the existence and
----- -----
amounts of the obligations recorded therein; provided that the failure of any
--------
Lender or the Administrative Agent to maintain such accounts or any error
therein shall not in any manner affect the obligation of the Borrower to repay
the Loans and LC Disbursements in accordance with the terms of this Agreement.
(e) Any Lender may request that Loans of any Class made by it be
evidenced by a promissory note. In such event, the Borrower shall prepare,
execute and deliver to such Lender a promissory note payable to the order of
such Lender (or, if requested by such Lender, to such Lender and its registered
assigns) and in a form approved by the Administrative Agent. Thereafter, the
Loans evidenced by such promissory note and interest thereon shall at all times
(including after assignment pursuant to Section 9.04) be represented by one or
more promissory notes in such form payable to the order of the payee named
therein (or, if such promissory note is a registered note, to such payee and its
registered assigns).
46
SECTION 2.10. Amortization of Term Loans. (a) Subject to adjustment
---------------------------
pursuant to paragraph (d) of this Section, the Borrower shall repay Tranche A
Term Borrowings on each date set forth below in the aggregate principal amount
of Tranche A Term Loans outstanding on the last day of the Tranche A
Availability Period as are set forth opposite such date:
Date Amount
---- ------
September 30, 2003 $ 6,875,000
December 31, 2003 $ 6,875,000
March 31, 2004 $ 6,875,000
June 30, 2004 $ 6,875,000
September 30, 2004 $10,312,500
December 31, 2004 $10,312,500
March 31, 2005 $10,312,500
June 30, 2005 $10,312,500
September 30, 2005 $24,062,500
December 31, 2005 $24,062,500
March 31, 2006 $24,062,500
June 30, 2006 $24,062,500
September 30, 2006 $27,500,000
December 31, 2006 $27,500,000
March 31, 2007 $27,500,000
Tranche A Maturity Date $27,500,000
(b) Subject to adjustment pursuant to paragraph (d) of this Section, the
Borrower shall repay Tranche B Term Borrowings on each date set forth below in
the aggregate principal amount set forth opposite such date:
Date Amount
---- ------
September 30, 2003 $ 1,437,500
December 31, 2003 $ 1,437,500
March 31, 2004 $ 1,437,500
June 30, 2004 $ 1,437,500
September 30, 2004 $ 1,437,500
December 31, 2004 $ 1,437,500
March 31, 2005 $ 1,437,500
June 30, 2005 $ 1,437,500
September 30, 2005 $ 1,437,500
December 31, 2005 $ 1,437,500
March 31, 2006 $ 1,437,500
June 30, 2006 $ 1,437,500
September 30, 2006 $ 1,437,500
December 31, 2006 $ 1,437,500
March 31, 2007 $ 1,437,500
June 30, 2007 $ 1,437,500
September 30, 2007 $138,000,000
December 31, 2007 $138,000,000
March 31, 2008 $138,000,000
47
Date Amount
---- ------
Tranche B Maturity Date $138,000,000
(c) To the extent not previously paid, (i) all Tranche A Term Loans shall
be due and payable on the Tranche A Maturity Date and (ii) all Tranche B Term
Loans shall be due and payable on the Tranche B Maturity Date.
(d) Any prepayment of a Term Borrowing of either Class shall be applied
to reduce the subsequent scheduled repayments of the Term Borrowings of such
Class to be made pursuant to this Section ratably. If the initial aggregate
amount of the Lenders' Term Commitments of either Class exceeds the aggregate
principal amount of Term Loans of such Class that are made during the Tranche A
Term Availability Period, in the case of Tranche A Term Loans, or made on the
Effective Date, in the case of Tranche B Term Loans, then the scheduled
repayments of Term Borrowings of such Class to be made pursuant to this Section
shall be reduced ratably by an aggregate amount equal to such excess.
(e) Prior to any repayment of any Term Borrowings of either Class
hereunder, the Borrower shall select the Borrowing or Borrowings of the
applicable Class to be repaid and shall notify the Administrative Agent by
telephone (confirmed by telecopy) of such selection not later than 11:00 a.m.,
New York City time, three Business Days before the scheduled date of such
repayment. Each repayment of a Borrowing shall be applied ratably to the Loans
included in the repaid Borrowing. Repayments of Term Borrowings shall be
accompanied by accrued interest on the amount repaid.
SECTION 2.11. Prepayment of Loans. (a) The Borrower shall have the
--------------------
right at any time and from time to time to prepay any Borrowing in whole or in
part, subject to the requirements of this Section.
(b) In the event and on such occasion that the sum of the Revolving
Exposures exceeds the total Revolving Commitments, the Borrower shall prepay
Revolving Borrowings or Swingline Borrowings (or, if no such Borrowings are
outstanding, deposit cash collateral in an account with the Administrative Agent
pursuant to Section 2.05(j)) in an aggregate amount equal to such excess.
(c) In the event and on each occasion that any Net Proceeds are received
by or on behalf of the Borrower or any Subsidiary in respect of any Prepayment
Event, the Borrower shall, immediately after such Net Proceeds are received,
prepay Term Borrowings in an aggregate amount equal to such Net Proceeds;
provided that, in the case of any event described in clause (a) of the
--------
definition of the term Prepayment Event, if
48
the Borrower shall deliver to the Administrative Agent a certificate of a
Financial Officer to the effect that the Borrower and the Subsidiaries intend to
apply the Net Proceeds from such event (or a portion thereof specified in such
certificate), within twelve months after receipt of such Net Proceeds, to
acquire Telecommunications Assets to be used in the business of the Borrower and
the Subsidiaries, and certifying that no Default has occurred and is continuing,
then no prepayment shall be required pursuant to this paragraph in respect of
the Net Proceeds in respect of such event (or the portion of such Net Proceeds
specified in such certificate, if applicable) except to the extent of any such
Net Proceeds therefrom that have not been so applied by the end of such twelve-
month period, at which time a prepayment shall be required in an amount equal to
such Net Proceeds that have not been so applied.
(d) Prior to any optional or mandatory prepayment of Borrowings hereunder,
the Borrower shall select the Borrowing or Borrowings to be prepaid and shall
specify such selection in the notice of such prepayment pursuant to paragraph
(e) of this Section. In the event of any optional or mandatory prepayment of
Term Borrowings made at a time when Term Borrowings of both Classes remain
outstanding, the Borrower shall select Term Borrowings to be prepaid so that the
aggregate amount of such prepayment is allocated between the Tranche A Term
Borrowings and Tranche B Term Borrowings pro rata based on the aggregate
principal amount of outstanding Borrowings of each such Class; provided that any
--------
Tranche B Lender may elect, by notice to the Administrative Agent by telephone
(confirmed by telecopy) at least one Business Day prior to the prepayment date,
to decline all or any portion of any prepayment of its Tranche B Term Loans
pursuant to this Section (other than an optional prepayment pursuant to
paragraph (a) of this Section, which may not be declined), in which case the
aggregate amount of the prepayment that would have been applied to prepay
Tranche B Term Loans but was so declined shall be applied to prepay Tranche A
Term Borrowings.
(e) The Borrower shall notify the Administrative Agent (and, in the case
of prepayment of a Swingline Loan, the Swingline Lender) by telephone (confirmed
by telecopy) of any prepayment hereunder (i) in the case of prepayment of a
Eurodollar Borrowing, not later than 11:00 a.m., New York City time, three
Business Days before the date of prepayment, (ii) in the case of prepayment of
an ABR Borrowing, not later than 11:00 a.m., New York City time, one Business
Day before the date of prepayment or (iii) in the case of prepayment of a
Swingline Loan, not later than 12:00 noon, New York City time, on the date of
prepayment. Each such notice shall be irrevocable and shall specify the
prepayment date, the principal amount of each Borrowing or portion thereof to be
prepaid and, in the case of a mandatory prepayment, a reasonably detailed
calculation of the amount of such prepayment; provided that, if a notice of
--------
49
optional prepayment is given in connection with a conditional notice of
termination of the Revolving Commitments as contemplated by Section 2.08, then
such notice of prepayment may be revoked if such notice of termination is
revoked in accordance with Section 2.08(d). Promptly following receipt of any
such notice (other than a notice relating solely to Swingline Loans), the
Administrative Agent shall advise the Lenders of the contents thereof. Each
partial prepayment of any Borrowing shall be in an amount that would be
permitted in the case of an advance of a Borrowing of the same Type as provided
in Section 2.02, except as necessary to apply fully the required amount of a
mandatory prepayment. Each prepayment of a Borrowing shall be applied ratably to
the Loans included in the prepaid Borrowing. Prepayments shall be accompanied by
accrued interest to the extent required by Section 2.13.
SECTION 2.12. Fees. (a) The Borrower agrees to pay to the Administrative
-----
Agent for the account of each Lender a commitment fee, which shall accrue at the
Applicable Commitment Fee Rate on the average daily unused amount of each
Revolving Commitment and Tranche A Commitment of such Lender during the period
from and including the date hereof to but excluding the date on which such
Commitment terminates. Accrued commitment fees shall be payable in arrears on
the last day of March, June, September and December of each year and on the date
on which the applicable Commitment terminates, commencing on the first such date
to occur after the date hereof. All commitment fees shall be computed on the
basis of a year of 360 days and shall be payable for the actual number of days
elapsed (including the first day but excluding the last day). For purposes of
computing commitment fees with respect to Revolving Commitments, a Revolving
Commitment of a Lender shall be deemed to be used to the extent of the
outstanding Revolving Loans and LC Exposure of such Lender (and the Swingline
Exposure of such Lender shall be disregarded for such purpose).
(b) The Borrower agrees to pay (i) to the Administrative Agent for the
account of each Revolving Lender a participation fee with respect to its
participations in Letters of Credit, which shall accrue at the same Applicable
Rate as interest on Eurodollar Revolving Loans on the average daily amount of
such Lender's LC Exposure (excluding any portion thereof attributable to
unreimbursed LC Disbursements) during the period from and including the
Effective Date to but excluding the later of the date on which such Lender's
Revolving Commitment terminates and the date on which such Lender ceases to have
any LC Exposure, and (ii) to the Issuing Bank a fronting fee, which shall accrue
at the rate or rates per annum equal to 0.25% per annum (or such other rate as
may be separately agreed upon between the Borrower and the Issuing Bank) on the
average daily amount of the LC Exposure (excluding any portion thereof
attributable to unreimbursed LC Disbursements) during the period from and
including the Effective Date to but excluding the later of the date of
termination of the Revolving Commitments and the date on
50
which there ceases to be any LC Exposure, as well as the Issuing Bank's standard
fees with respect to the issuance, amendment, renewal or extension of any Letter
of Credit or processing of drawings thereunder. Participation fees and fronting
fees accrued through and including the last day of March, June, September and
December of each year shall be payable on the third Business Day following such
last day, commencing on the first such date to occur after the Effective Date;
provided that all such fees shall be payable on the date on which the Revolving
--------
Commitments terminate and any such fees accruing after the date on which the
Revolving Commitments terminate shall be payable on demand. Any other fees
payable to the Issuing Bank pursuant to this paragraph shall be payable within
10 days after demand. All participation fees and fronting fees shall be computed
on the basis of a year of 360 days and shall be payable for the actual number of
days elapsed (including the first day but excluding the last day).
(c) The Borrower agrees to pay to the Administrative Agent, for its own
account, fees payable in the amounts and at the times separately agreed upon
between the Borrower and the Administrative Agent.
(d) All fees payable hereunder shall be paid on the dates due, in
immediately available funds, to the Administrative Agent (or to the Issuing
Bank, in the case of fees payable to it) for distribution, in the case of
commitment fees and participation fees, to the Lenders entitled thereto. Fees
paid shall not be refundable under any circumstances.
SECTION 2.13. Interest. (a) The Loans comprising each ABR Borrowing
---------
(including each Swingline Loan) shall bear interest at the Alternate Base Rate
plus the Applicable Rate.
(b) The Loans comprising each Eurodollar Borrowing shall bear interest at
the LIBO Rate for the Interest Period in effect for such Borrowing plus the
Applicable Rate.
(c) Notwithstanding the foregoing, if any principal of or interest on any
Loan or any fee or other amount payable by the Borrower hereunder is not paid
when due, whether at stated maturity, upon acceleration or otherwise, such
overdue amount shall bear interest, after as well as before judgment, at a rate
per annum equal to (i) in the case of overdue principal of any Loan, 2% plus the
rate otherwise applicable to such Loan as provided in the preceding paragraphs
of this Section or (ii) in the case of any other amount, 2% plus the rate
applicable to ABR Revolving Loans as provided in paragraph (a) of this Section.
(d) Accrued interest on each Loan shall be payable in arrears on each
Interest Payment Date for such Loan and, in the case of Revolving Loans, upon
termination of the Revolving Commitments; provided that (i) interest accrued
--------
pursuant to paragraph (c) of this Section shall be payable on demand, (ii)
51
in the event of any repayment or prepayment of any Loan (other than a prepayment
of an ABR Revolving Loan prior to the end of the Revolving Availability Period),
accrued interest on the principal amount repaid or prepaid shall be payable on
the date of such repayment or prepayment and (iii) in the event of any
conversion of any Eurodollar Loan prior to the end of the current Interest
Period therefor, accrued interest on such Loan shall be payable on the effective
date of such conversion.
(e) All interest hereunder shall be computed on the basis of a year of
360 days, except that interest computed by reference to the Alternate Base Rate
at times when the Alternate Base Rate is based on the Prime Rate shall be
computed on the basis of a year of 365 days (or 366 days in a leap year), and in
each case shall be payable for the actual number of days elapsed (including the
first day but excluding the last day). The applicable Alternate Base Rate or
LIBO Rate shall be determined by the Administrative Agent, and such
determination shall be conclusive absent manifest error.
SECTION 2.14. Alternate Rate of Interest. If prior to the commencement
---------------------------
of any Interest Period for a Eurodollar Borrowing:
(a) the Administrative Agent determines (which determination shall be
conclusive absent manifest error) that adequate and reasonable means do not
exist for ascertaining the LIBO Rate for such Interest Period; or
(b) the Administrative Agent is advised by the Required Lenders that
the LIBO Rate for such Interest Period will not adequately and fairly
reflect the cost to such Lenders of making or maintaining their Loans
included in such Borrowing for such Interest Period;
then the Administrative Agent shall give notice thereof to the Borrower and the
Lenders by telephone or telecopy as promptly as practicable thereafter and,
until the Administrative Agent notifies the Borrower and the Lenders that the
circumstances giving rise to such notice no longer exist, (i) any Interest
Election Request that requests the conversion of any Borrowing to, or
continuation of any Borrowing as, a Eurodollar Borrowing shall be ineffective
and (ii) if any Borrowing Request requests a Eurodollar Borrowing, such
Borrowing shall be made as an ABR Borrowing.
SECTION 2.15. Increased Costs. (a) If any Lender shall give notice to
----------------
the Administrative Agent and the Borrower at any time to the effect that
Eurocurrency Reserve Requirements are, or are scheduled to become, effective and
that such Lender is or will be generally subject to such Eurocurrency Reserve
Requirements as a result of which such Lender will incur additional costs, then
such Lender shall, for each day from the later of the date of such notice and
the date on which such Eurocurrency Reserve Requirements become effective, be
entitled
52
to additional interest on each Eurodollar Loan made by it at a rate per annum
determined for such day (rounded upward to the nearest 100th of 1%) equal to the
remainder obtained by subtracting (i) the LIBO Rate for such Eurodollar Loan
from (ii) the rate obtained by dividing such LIBO Rate by a percentage equal to
100% minus the then-applicable Eurocurrency Reserve Requirements. Such
additional interest will be payable in arrears to the Administrative Agent, for
the account of such Lender, on each Interest Payment Date relating to such
Eurodollar Loan and on any other date when interest is required to be paid
hereunder with respect to such Loan. Any Lender which gives a notice under this
paragraph (a) shall promptly withdraw such notice (by written notice of
withdrawal given to the Administrative Agent and the Borrower) in the event
Eurocurrency Reserve Requirements cease to apply to it or the circumstances
giving rise to such notice otherwise cease to exist.
(b) If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special
deposit or similar requirement against assets of, deposits with or for the
account of, or credit extended by, any Lender (except any such reserve
Eurocurrency Reserve Requirement) or the Issuing Bank; or
(ii) impose on any Lender or the Issuing Bank or the London
interbank market any other condition affecting this Agreement or Eurodollar
Loans made by such Lender or any Letter of Credit or participation therein;
and the result of any of the foregoing shall be to increase the cost to such
Lender of making or maintaining any Eurodollar Loan (or of maintaining its
obligation to make any such Loan) or to increase the cost to such Lender or the
Issuing Bank of participating in, issuing or maintaining any Letter of Credit or
to reduce the amount of any sum received or receivable by such Lender or the
Issuing Bank hereunder (whether of principal, interest or otherwise), then the
Borrower will pay to such Lender or the Issuing Bank, as the case may be, such
additional amount or amounts as will compensate such Lender or the Issuing Bank,
as the case may be, for such additional costs incurred or reduction suffered.
This Section 2.15(b) shall not apply to any additional costs or reductions
relating to Taxes, which are governed by Section 2.17.
(c) If any Lender or the Issuing Bank determines that any Change in Law
regarding capital requirements has or would have the effect of reducing the rate
of return on such Lender's or the Issuing Bank's capital or on the capital of
such Lender's or the Issuing Bank's holding company, if any, as a consequence of
this Agreement or the Loans made by, or participations in Letters of Credit or
Swingline Loans held by, such Lender, or the Letters of Credit issued by the
Issuing Bank, to a level
53
below that which such Lender or the Issuing Bank or such Lender's or the Issuing
Bank's holding company could have achieved but for such Change in Law (taking
into consideration such Lender's or the Issuing Bank's policies and the policies
of such Lender's or the Issuing Bank's holding company with respect to capital
adequacy), then from time to time the Borrower will pay to such Lender or the
Issuing Bank, as the case may be, such additional amount or amounts as will
compensate such Lender or the Issuing Bank or such Lender's or the Issuing
Bank's holding company for any such reduction suffered.
(d) A certificate of a Lender or the Issuing Bank setting forth the amount
or amounts necessary to compensate such Lender or the Issuing Bank or its
holding company, as the case may be, as specified in paragraph (a), (b) or (c)
of this Section shall be delivered to the Borrower and shall be conclusive
absent manifest error. The Borrower shall pay such Lender or the Issuing Bank,
as the case may be, the amount shown as due on any such certificate within 10
days after receipt thereof.
(e) Failure or delay on the part of any Lender or the Issuing Bank to
demand compensation pursuant to this Section shall not constitute a waiver of
such Lender's or the Issuing Bank's right to demand such compensation; provided
--------
that the Borrower shall not be required to compensate a Lender or the Issuing
Bank pursuant to this Section for any increased costs or reductions incurred
more than 180 days prior to the date that such Lender or the Issuing Bank, as
the case may be, notifies the Borrower of the Change in Law giving rise to such
increased costs or reductions and of such Lender's or the Issuing Bank's
intention to claim compensation therefor; provided further that, if the Change
-------- -------
in Law giving rise to such increased costs or reductions is retroactive, then
the 180-day period referred to above shall be extended to include the period of
retroactive effect thereof.
SECTION 2.16. Break Funding Payments. In the event of (a) the payment of
-----------------------
any principal of any Eurodollar Loan other than on the last day of an Interest
Period applicable thereto (including as a result of an Event of Default), (b)
the conversion of any Eurodollar Loan other than on the last day of the Interest
Period applicable thereto, (c) the failure to borrow, convert, continue or
prepay any Revolving Loan or Term Loan on the date specified in any notice
delivered pursuant hereto (regardless of whether such notice may be revoked
under Section 2.11(e) and is revoked in accordance therewith), or (d) the
assignment of any Eurodollar Loan other than on the last day of the Interest
Period applicable thereto as a result of a request by the Borrower pursuant to
Section 2.19, then, in any such event, the Borrower shall compensate each Lender
for the loss, cost and expense attributable to such event. In the case of a
Eurodollar Loan, such loss, cost or expense to any Lender shall be deemed to
include an amount determined by such Lender to be the excess, if any, of (i) the
amount of interest which
54
would have accrued on the principal amount of such Loan had such event not
occurred, at the LIBO Rate (excluding any Applicable Margin) that would have
been applicable to such Loan, for the period from the date of such event to the
last day of the then current Interest Period therefor (or, in the case of a
failure to borrow, convert or continue, for the period that would have been the
Interest Period for such Loan), over (ii) the amount of interest which would
accrue on such principal amount for such period at the interest rate which such
Lender would bid were it to bid, at the commencement of such period, for dollar
deposits of a comparable amount and period from other banks in the Eurodollar
market. A certificate of any Lender setting forth any amount or amounts that
such Lender is entitled to receive pursuant to this Section shall be delivered
to the Borrower and shall be conclusive absent manifest error. The Borrower
shall pay such Lender the amount shown as due on any such certificate within 10
days after receipt thereof.
SECTION 2.17. Taxes. (a) Any and all payments by or on account of any
------
obligation of the Borrower hereunder or under any other Loan Document shall be
made free and clear of and without deduction for any Indemnified Taxes or Other
Taxes; provided that if the Borrower shall be required to deduct any Indemnified
--------
Taxes or Other Taxes from such payments, then (i) the sum payable shall be
increased as necessary so that after making all required deductions (including
deductions applicable to additional sums payable under this Section) the
Administrative Agent, Lender or Issuing Bank (as the case may be) receives an
amount equal to the sum it would have received had no such deductions been made,
(ii) the Borrower shall make such deductions and (iii) the Borrower shall pay
the full amount deducted to the relevant Governmental Authority in accordance
with applicable law.
(b) In addition, the Borrower shall pay any Other Taxes to the relevant
Governmental Authority in accordance with applicable law.
(c) The Borrower shall indemnify the Administrative Agent, each Lender
and the Issuing Bank, within 10 days after written demand therefor, for the full
amount of any Indemnified Taxes or Other Taxes paid by the Administrative Agent,
such Lender or the Issuing Bank, as the case may be, on or with respect to any
payment by or on account of any obligation of the Borrower hereunder or under
any other Loan Document (including Indemnified Taxes or Other Taxes imposed or
asserted on or attributable to amounts payable under this Section) and any
penalties, interest and reasonable expenses arising therefrom or with respect
thereto, whether or not such Indemnified Taxes or Other Taxes were correctly or
legally imposed or asserted by the relevant Governmental Authority. A
certificate as to the amount of such payment or liability delivered to the
Borrower by a Lender or the Issuing Bank, or by the Administrative Agent on
55
its own behalf or on behalf of a Lender or the Issuing Bank, shall be conclusive
absent manifest error.
(d) As soon as practicable after any payment of Indemnified Taxes or Other
Taxes by the Borrower to a Governmental Authority, the Borrower shall deliver to
the Administrative Agent the original or a certified copy of a receipt issued by
such Governmental Authority evidencing such payment, a copy of the return
reporting such payment or other evidence of such payment reasonably satisfactory
to the Administrative Agent; provided, however, that in no case shall the
-------- -------
Borrower be required to deliver documentation not normally issued by such
Governmental Authority.
(e) Any Foreign Lender that is entitled to an exemption from or reduction
of withholding tax under the law of the jurisdiction in which the Borrower is
located, or any treaty to which such jurisdiction is a party, with respect to
payments under this Agreement shall deliver to the Borrower (with a copy to the
Administrative Agent), at the time or times prescribed by applicable law, such
properly completed and executed documentation prescribed by applicable law or
reasonably requested by the Borrower as will permit such payments to be made
without withholding or at a reduced rate.
SECTION 2.18. Payments Generally; Pro Rata Treatment; Sharing of Set-offs.
------------------------------------------------------------
(a) The Borrower shall make each payment required to be made by it hereunder or
under any other Loan Document (whether of principal, interest, fees or
reimbursement of LC Disbursements, or of amounts payable under Section 2.15,
2.16 or 2.17, or otherwise) prior to the time expressly required hereunder or
under such other Loan Document for such payment (or, if no such time is
expressly required, prior to 1:00 p.m., New York City time), on the date when
due, in immediately available funds, without set-off or counterclaim. Any
amounts received after such time on any date may, in the discretion of the
Administrative Agent, be deemed to have been received on the next succeeding
Business Day for purposes of calculating interest thereon. All such payments
shall be made to the Administrative Agent at its offices at 000 Xxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx, except payments to be made directly to the Issuing Bank or
Swingline Lender as expressly provided herein and except that payments pursuant
to Sections 2.15, 2.16, 2.17 and 9.03 shall be made directly to the Persons
entitled thereto and payments pursuant to other Loan Documents shall be made to
the Persons specified therein. The Administrative Agent shall distribute any
such payments received by it for the account of any other Person to the
appropriate recipient promptly following receipt thereof. If any payment under
any Loan Document shall be due on a day that is not a Business Day, the date for
payment shall be extended to the next succeeding Business Day, and, in the case
of any payment accruing interest, interest thereon shall be payable for the
period of such extension. All payments under each Loan Document shall be made in
dollars.
56
(b) If at any time insufficient funds are received by and available to
the Administrative Agent to pay fully all amounts of principal, unreimbursed LC
Disbursements, interest and fees then due hereunder, such funds shall be applied
(i) first, towards payment of interest and fees then due hereunder, ratably
among the parties entitled thereto in accordance with the amounts of interest
and fees then due to such parties, and (ii) second, towards payment of principal
and unreimbursed LC Disbursements then due hereunder, ratably among the parties
entitled thereto in accordance with the amounts of principal and unreimbursed LC
Disbursements then due to such parties.
(c) If any Lender shall, by exercising any right of set-off or
counterclaim or otherwise, obtain payment in respect of any principal of or
interest on any of its Revolving Loans, Term Loans or participations in LC
Disbursements or Swingline Loans resulting in such Lender receiving payment of a
greater proportion of the aggregate amount of its Revolving Loans, Term Loans
and participations in LC Disbursements and Swingline Loans and accrued interest
thereon than the proportion received by any other Lender, then the Lender
receiving such greater proportion shall purchase (for cash at face value)
participations in the Revolving Loans, Term Loans and participations in LC
Disbursements and Swingline Loans of other Lenders to the extent necessary so
that the benefit of all such payments shall be shared by the Lenders ratably in
accordance with the aggregate amount of principal of and accrued interest on
their respective Revolving Loans, Term Loans and participations in LC
Disbursements and Swingline Loans; provided that (i) if any such participations
--------
are purchased and all or any portion of the payment giving rise thereto is
recovered, such participations shall be rescinded and the purchase price
restored to the extent of such recovery, without interest, and (ii) the
provisions of this paragraph shall not be construed to apply to any payment made
by the Borrower pursuant to and in accordance with the express terms of this
Agreement or any payment obtained by a Lender as consideration for the
assignment of or sale of a participation in any of its Loans or participations
in LC Disbursements to any assignee or participant, other than to the Borrower
or any Subsidiary or Affiliate thereof (as to which the provisions of this
paragraph shall apply). The Borrower consents to the foregoing and agrees, to
the extent it may effectively do so under applicable law, that any Lender
acquiring a participation pursuant to the foregoing arrangements may exercise
against the Borrower rights of set-off and counterclaim with respect to such
participation as fully as if such Lender were a direct creditor of the Borrower
in the amount of such participation.
(d) Unless the Administrative Agent shall have received notice from the
Borrower prior to the date on which any payment is due to the Administrative
Agent for the account of the Lenders or the Issuing Bank hereunder that the
Borrower will not
57
make such payment, the Administrative Agent may assume that the Borrower has
made such payment on such date in accordance herewith and may, in reliance upon
such assumption, distribute to the Lenders or the Issuing Bank, as the case may
be, the amount due. In such event, if the Borrower has not in fact made such
payment, then each of the Lenders or the Issuing Bank, as the case may be,
severally agrees to repay to the Administrative Agent forthwith on demand the
amount so distributed to such Lender or Issuing Bank with interest thereon, for
each day from and including the date such amount is distributed to it to but
excluding the date of payment to the Administrative Agent, at the greater of the
Federal Funds Effective Rate and a rate determined by the Administrative Agent
in accordance with banking industry rules on interbank compensation.
(e) If any Lender shall fail to make any payment required to be made by
it pursuant to Section 2.04(c), 2.05(d) or (e), 2.06(b), 2.18(d) or 9.03(c),
then the Administrative Agent may, in its discretion (notwithstanding any
contrary provision hereof), apply any amounts thereafter received by the
Administrative Agent for the account of such Lender to satisfy such Lender's
obligations under such Sections until all such unsatisfied obligations are fully
paid.
SECTION 2.19. Mitigation Obligations; Replacement of Lenders. (a) If
-----------------------------------------------
any Lender requests compensation under Section 2.15 (other than paragraph (a) of
such Section), or if the Borrower is required to pay any additional amount to
any Lender or any Governmental Authority for the account of any Lender pursuant
to Section 2.17, then such Lender shall use reasonable efforts to designate a
different lending office for funding or booking its Loans hereunder or to assign
its rights and obligations hereunder to another of its offices, branches or
affiliates, if, in the judgment of such Lender, such designation or assignment
(i) would eliminate or reduce amounts payable pursuant to Section 2.15 or 2.17,
as the case may be, in the future and (ii) would not subject such Lender to any
unreimbursed cost or expense and would not otherwise be disadvantageous to such
Lender. The Borrower hereby agrees to pay all reasonable costs and expenses
incurred by any Lender in connection with any such designation or assignment.
(b) If any Lender requests compensation under Section 2.15 (other than
paragraph (a) of such Section), or if the Borrower is required to pay any
additional amount to any Lender or any Governmental Authority for the account of
any Lender pursuant to Section 2.17, or if any Lender defaults in its obligation
to fund Loans hereunder, then the Borrower may, at its sole expense and effort,
upon notice to such Lender and the Administrative Agent, require such Lender to
assign and delegate, without recourse (in accordance with and subject to the
restrictions contained in Section 9.04), all its interests, rights and
obligations under this Agreement to an assignee that shall assume such
obligations (which assignee may be another lender,
58
if a Lender accepts such assignment); provided that (i) the Borrower shall have
--------
received the prior written consent of the Administrative Agent (and, if a
Revolving Commitment is being assigned, the Issuing Bank and Swingline Lender),
which consent shall not unreasonably be withheld, (ii) such Lender shall have
received payment of an amount equal to the outstanding principal of its Loans
and participations in LC Disbursements and Swingline Loans, accrued interest
thereon, accrued fees and all other amounts payable to it hereunder, from the
assignee (to the extent of such outstanding principal and accrued interest and
fees) or the Borrower (in the case of all other amounts) and (iii) in the case
of any such assignment resulting from a claim for compensation under Section
2.15 or payments required to be made pursuant to Section 2.17, such assignment
will result in a reduction in such compensation or payments. A Lender shall not
be required to make any such assignment and delegation if, prior thereto, as a
result of a waiver by such Lender or otherwise, the circumstances entitling the
Borrower to require such assignment and delegation cease to apply.
SECTION 2.20. Incremental Facility. At any time prior to the Tranche B
---------------------
Maturity Date, the Borrower may, by notice to the Administrative Agent (which
shall promptly deliver a copy to each of the Lenders), request the addition of a
new tranche of Term Loans and/or Revolving Loans (all such Loans, collectively,
the "Incremental Loans") provided, however, that both at the time of any such
----------------- -------- -------
request and after giving effect to any such Incremental Loans (i) no Default
shall exist and (ii) the Borrower shall be in pro forma compliance with Sections
6.13, 6.14, 6.15, 6.16, 6.17 and 6.18, to the extent then applicable. The
Incremental Loans (i) shall be in an aggregate principal amount of at least
$100,000,000 and not in excess of $700,000,000, (ii) shall rank pari passu in
---- -----
right of payment and of security (including under the Subsidiary Guarantee
Agreement) with the Revolving Loans and the Term Loans, (iii) shall mature no
sooner than, and have a longer average weighted life than, the Tranche B Term
Loans, (iv) will not amortize (other than nominal amortization customary in the
institutional loan market) and will not mature earlier than eight years from the
date hereof, (v) shall not be available unless the Tranche A Commitments and
Tranche B Commitments have been fully utilized and (vi) shall otherwise be
treated no more favorably than the Term Loans, in the case of term Incremental
Loans, or Revolving Loans, in the case of revolving Incremental Loans (in each
case, including with respect to mandatory and voluntary prepayments); provided
--------
that (i) an amount not in excess of $100,000,000 in principal amount of the
Incremental Loans may mature on the Tranche A Maturity Date (and amortize on a
pro rata basis with the then remaining Tranche A Loans prior to such date), (ii)
an amount equal to not more than the excess of $100,000,000 over the amount of
Incremental Loans, if any, maturing as set forth in clause (i) may mature on the
Tranche B Maturity Date (and amortize on a pro rata basis with the then
remaining Tranche B Loans prior to such date), and (iii) the terms and
conditions
59
applicable to the Incremental Loans may provide for additional or different
financial or other covenants applicable only during periods after the Tranche B
Maturity Date. Such notice shall set forth the requested amount of Incremental
Loans (which amount shall not exceed $700,000,000). In the event that existing
Lenders provide commitments in an aggregate amount less than the total amount of
the Incremental Loans requested by the Borrower, the Borrower shall arrange for
one or more banks, other financial institutions or vendors of telecommunications
equipment (any such bank, other financial institution or vendor being called an
"Additional Lender") to extend commitments to provide Incremental Loans in an
-----------------
aggregate amount equal to the unsubscribed amount, provided that each Additional
--------
Lender that is not a vendor of telecommunication equipment shall be subject to
the approval of the Administrative Agent (which approval shall not be
unreasonably withheld). Commitments in respect of Incremental Loans shall become
Commitments under this Agreement pursuant to an amendment (an "Incremental
-----------
Facility Amendment")to this Agreement and, as appropriate, the other Loan
------------------
Documents, executed by the Borrower, each Lender agreeing to provide such
Commitment, if any, each Additional Lender, if any, and the Administrative
Agent. The Incremental Facility Amendment may, without the consent of any other
Lenders, effect such amendments to this Agreement and the other Loan Documents
as may be necessary or appropriate, in the opinion of the Administrative Agent,
to effect the provisions of this Section. The effectiveness of any Incremental
Facility Amendment shall be subject to the satisfaction on the date thereof of
each of the conditions set forth in Section 4.02. No Lender shall be obligated
to provide any Incremental Loans unless it so agrees.
ARTICLE III
Representations and Warranties
------------------------------
The Borrower represents and warrants to the Lenders that:
SECTION 3.01. Organization; Powers. Each of the Borrower and its
---------------------
Restricted Subsidiaries is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization, has all requisite power
and authority to carry on its business as now conducted and, except where the
failure to do so, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect, is qualified to do business in,
and is in good standing in, every jurisdiction where such qualification is
required.
SECTION 3.02. Authorization; Enforceability. The Transactions to be
------------------------------
entered into by each Loan Party are within such Loan Party's corporate powers
and have been duly authorized by all necessary corporate and, if required,
stockholder action. This Agreement has been duly executed and delivered by the
Borrower and constitutes, and each other Loan Document to which
60
any Loan Party is to be a party, when executed and delivered by such Loan Party,
will constitute, a legal, valid and binding obligation of the Borrower or such
Loan Party (as the case may be), enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting creditors' rights generally and subject to general
principles of equity, regardless of whether considered in a proceeding in equity
or at law.
SECTION 3.03. Governmental Approvals; No Conflicts. The Transactions (a)
-------------------------------------
do not require any consent or approval of, registration or filing with, or any
other action by, any Governmental Authority, except such as have been obtained
or made and are in full force and effect and except those set forth on Schedule
3.03 (the failure of which to be obtained could not reasonably be expected to
result in a Material Adverse Effect) and filings necessary to perfect Liens
created under the Loan Documents, (b) will not violate any applicable law or
regulation or the charter, by-laws or other organizational documents of the
Borrower or any of its Subsidiaries or any order of any Governmental Authority,
(c) will not violate or result in a default under any indenture, or any material
agreement or other material instrument binding upon the Borrower or any of its
Subsidiaries or its assets, or give rise to a right thereunder to require any
payment to be made by the Borrower or any of its Subsidiaries, and (d) will not
result in the creation or imposition of any Lien on any asset of the Borrower or
any of its Restricted Subsidiaries, except Liens created under the Loan
Documents.
SECTION 3.04. Financial Condition; No Material Adverse Change. The
------------------------------------------------
Borrower has heretofore furnished to the Lenders its consolidated balance sheet
and statements of income, stockholders equity and cash flows (i) as of and for
the fiscal year ended December 31, 1999, reported on by Xxxxxx Xxxxxxxx LLP,
independent public accountants, and (ii) as of and for the fiscal quarter and
the portion of the fiscal year ended March 31, 2000, certified by its chief
financial officer. Such financial statements present fairly, in all material
respects, the financial position and results of operations and cash flows of the
Borrower and its consolidated Subsidiaries as of such dates and for such periods
in accordance with GAAP, subject to year-end audit adjustments and the absence
of footnotes in the case of the statements referred to in clause (ii) above.
(b) Since December 31, 1999, there has been no material adverse change in
the business, assets, operations or financial condition of the Borrower and its
Restricted Subsidiaries, taken as a whole.
SECTION 3.05. Properties. (a) Each of the Borrower and its Restricted
-----------
Subsidiaries has good title to, or valid leasehold interests in, all its real
and personal property material to the business (including its Mortgaged
Properties) of
61
the Borrower and its Restricted Subsidiaries taken as a whole, except for
defects in title that do not interfere with its ability to conduct its business
as currently conducted or to utilize such properties for their intended
purposes.
(b) Each of the Borrower and its Restricted Subsidiaries owns, or is
licensed to use, all trademarks, trade names, copyrights, patents and other
intellectual property material to its business, and the use thereof by the
Borrower and its Restricted Subsidiaries does not to the knowledge of the
Borrower infringe upon the rights of any other Person, except for any such
infringements that, individually or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.
(c) Except for the Mortgaged Properties, the real properties identified
in Schedule 6.03 and real properties subject to Liens permitted under Section
6.03(v), there are no (i) real properties owned by the Borrower with an
individual fair market value (including fixtures and improvements) that exceeds
$1,500,000 or (ii) real properties owned by any Restricted Subsidiary with an
individual fair market value (including fixtures and improvements) that exceeds
$12,500,000.
(d) As of the Effective Date, neither the Borrower nor any of its
Restricted Subsidiaries has received notice of, or has knowledge of, any pending
or contemplated condemnation proceeding affecting any Mortgaged Property or any
sale or disposition thereof in lieu of condemnation. Neither any Mortgaged
Property nor any interest therein is subject to any right of first refusal,
option or other contractual right to purchase such Mortgaged Property or
interest therein.
SECTION 3.06. Litigation and Environmental Matters. (a) There are no
-------------------------------------
actions, suits or proceedings by or before any arbitrator or Governmental
Authority pending against or, to the knowledge of the Borrower, threatened
against or affecting the Borrower or any of its Restricted Subsidiaries (i) that
could reasonably be expected, individually or in the aggregate, to result in a
Material Adverse Effect (other than the Disclosed Matters) or (ii) that involve
any of the Loan Documents or the Transactions.
(b) Except for the Disclosed Matters and except with respect to any other
matters that, individually or in the aggregate, could not reasonably be expected
to result in a Material Adverse Effect, none of the Borrower, the Restricted
Subsidiaries or (to the extent that the Borrower or any Restricted Subsidiary
may be liable as a result thereof) the Unrestricted Subsidiaries, (i) has failed
to comply with any Environmental Law or to obtain, maintain or comply with any
permit, license or other approval required under any Environmental Law, (ii) has
become subject to any Environmental Liability, (iii) has received notice of any
claim with respect
62
to any Environmental Liability or (iv) knows of any basis for any Environmental
Liability.
(c) Since the date of this Agreement, there has been no change in the
status of the Disclosed Matters that, individually or in the aggregate, has
resulted in, or materially increased the likelihood of, a Material Adverse
Effect.
SECTION 3.07. Compliance with Laws and Agreements. Each of the Borrower
------------------------------------
and its Restricted Subsidiaries is in compliance with (a) all laws, regulations
and orders of any Governmental Authority applicable to it or its property and
(b) all indentures, agreements and other instruments binding upon it or its
property, except, in the case of clause (a) and clause (b), where the failure to
do so, individually or in the aggregate, could not reasonably be expected to
result in a Material Adverse Effect. No Default has occurred and is continuing.
SECTION 3.08. Investment and Holding Company Status. Neither the
--------------------------------------
Borrower nor any of its Restricted Subsidiaries is (a) an "investment company"
as defined in, or subject to regulation under, the Investment Company Act of
1940 or (b) a "holding company" as defined in, or subject to regulation under,
the Public Utility Holding Company Act of 1935.
SECTION 3.09. Taxes. Each of the Borrower, the Restricted Subsidiaries
------
and (to the extent that the Borrower or any Restricted Subsidiary may be liable
as a result thereof) the Unrestricted Subsidiaries has timely filed or caused to
be filed all Tax returns and reports required to have been filed and has paid or
caused to be paid all Taxes required to have been paid by it, except (a) any
Taxes that are being contested in good faith by appropriate proceedings and for
which the Borrower or such Subsidiary, as applicable, has set aside on its books
adequate reserves or (b) to the extent that the failure to do so could not
reasonably be expected to result in a Material Adverse Effect.
SECTION 3.10. ERISA. No ERISA Event has occurred or is reasonably
------
expected to occur that, when taken together with all other such ERISA Events for
which liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Effect. The present value of all accumulated
benefit obligations under each Plan (based on the assumptions used for purposes
of Statement of Financial Accounting Standards No. 87) did not, as of the date
of the most recent financial statements reflecting such amounts, exceed the fair
market value of the assets of such Plan by an amount that could reasonably be
expected to result in a Material Adverse Effect, and the present value of all
accumulated benefit obligations of all underfunded Plans (based on the
assumptions used for purposes of Statement of Financial Accounting Standards No.
87) did not, as of the date of the most recent financial statements reflecting
such amounts, exceed the fair market value of the assets of all such
63
underfunded Plans by an amount that could reasonably be expected to result in a
Material Adverse Effect.
SECTION 3.11. Disclosure. As of the Effective Date the Borrower has
-----------
disclosed to the Lenders (a) all material agreements, material instruments and
material corporate or other restrictions to which the Borrower or any of its
Restricted Subsidiaries is subject and (b) all other matters known to any of
them, that, in the case of this clause (b), individually or in the aggregate,
could reasonably be expected to result in a Material Adverse Effect. Neither
the Information Memorandum nor any of the other reports, financial statements,
certificates or other information that has been prepared by any Loan Party or on
its behalf (and by or under the direction of any officer of any Loan Party) and
furnished by or on behalf of any Loan Party to the Administrative Agent or any
Lender in connection with the negotiation of this Agreement or any other Loan
Document or delivered hereunder or thereunder (as of the date thereof as
modified or supplemented by other information so furnished when taken as a
whole) contains any material misstatement of fact or omits to state any material
fact necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided that, with respect to
--------
projected financial information, the Borrower represents only that such
information was prepared in good faith based upon assumptions believed to be
reasonable at the time.
SECTION 3.12. Subsidiaries. Schedule 3.12 sets forth the name of, and
-------------
the ownership interest of the Borrower in, each Subsidiary of the Borrower and
identifies each Subsidiary that is a Subsidiary Loan Party, in each case as of
the Effective Date.
SECTION 3.13. Insurance. The Borrower believes that the insurance
----------
maintained by or on behalf of the Borrower and its Restricted Subsidiaries is
adequate. All premiums in respect of any such insurance that is material have
been paid to the extent due.
SECTION 3.14. Labor Matters. As of the Effective Date, there are no
--------------
strikes, lockouts or slowdowns against the Borrower or any Restricted Subsidiary
pending or, to the knowledge of the Borrower, threatened. The hours worked by
and payments made to employees of the Borrower and the Subsidiaries have not
been in violation of the Fair Labor Standards Act or any other applicable
Federal, state, local or foreign law dealing with such matters, except where the
failure to do so could not reasonably be expected to result in a Material
Adverse Effect. All payments due from the Borrower or any Restricted
Subsidiary, or for which any claim may be made against the Borrower or any
Restricted Subsidiary, on account of wages and employee health and welfare
insurance and other benefits, have been paid or accrued as a liability on the
books of the Borrower or such Restricted Subsidiary in accordance with GAAP.
The consummation
64
of the Transactions will not give rise to any right of termination or right of
renegotiation on the part of any union under any collective bargaining agreement
to which the Borrower or any Restricted Subsidiary is bound.
SECTION 3.15. Security Interests. (a) When executed and delivered, each
-------------------
Pledge Agreement will be effective to create in favor of the Agent for the
ratable benefit of the Secured Parties a valid and enforceable security interest
in the Collateral (as defined in each Pledge Agreement) and, when the portion of
the Collateral constituting certificated securities (as defined in the Uniform
Commercial Code) is delivered to the Collateral Agent thereunder together with
instruments of transfer duly endorsed in blank, each Pledge Agreement shall
constitute a fully perfected first priority Lien on, and security interest in,
all right, title and interest of the pledgors thereunder in such Collateral,
prior and superior in right to any other Person.
(b) The Borrower Security Agreement and the Subsidiary Security Agreement
are each effective to create in favor of the Collateral Agent for the ratable
benefit of the Secured Parties a valid and enforceable security interest in the
Borrower Collateral and the Guaranteed Obligations Collateral, respectively,
and, when financing statements in appropriate form are filed in the offices
specified in the Perfection Certificate, each Security Agreement shall
constitute a fully perfected Lien on, and security interest in, all right, title
and interest of the grantors thereunder in such Collateral, to the extent
perfection can be obtained by filing Uniform Commercial Code financing
statements, other than the Intellectual Property (as defined in the Security
Agreements), in which a security interest may be perfected by filing, recording
or registering a security agreement, financing statement or analogous document
in the United States Patent and Trademark Office or the United States Copyright
Office, as applicable, in each case prior and superior in right to any other
Person to the extent perfection can be obtained by filing Uniform Commercial
Code financing statements, other than with respect to the rights of Persons
pursuant to Liens expressly permitted by Section 6.03.
(c) When each Security Agreement is filed in the United States Patent and
Trademark Office and the United States Copyright Office, the security interest
created thereunder shall constitute a fully perfected Lien on, and security
interest in, all right, title and interest of the Loan Parties in the
Intellectual Property (as defined in such Security Agreement) in which a
security interest may be perfected by filing, recording or registering a
security agreement, financing statement or analogous document in the United
States Patent and Trademark Office or the United States Copyright Office, as
applicable, in each case prior and superior in right to any other Person, other
than with respect to the rights of Persons pursuant to Liens
65
expressly permitted by Section 6.03 (it being understood that subsequent
recordings in the United States Patent and Trademark Office and the United
States Copyright Office may be necessary to perfect a lien on registered
trademarks, trademark applications and copyrights acquired by the Loan Parties
after the date hereof).
(d) The Mortgages are effective to create, subject to the exceptions
listed in each title insurance policy covering such Mortgage, in favor of the
Agent for the ratable benefit of the Secured Parties a legal, valid and
enforceable Lien on all of the Loan Parties' right, title and interest in and to
the Mortgaged Properties thereunder and the proceeds thereof, and when the
Mortgages are filed in the offices specified on Schedule 3.15, the Mortgages
shall constitute a perfected Lien on, and security interest in, all right, title
and interest of the Loan Parties in such Mortgaged Properties and the proceeds
thereof, in each case prior and superior in right to any other Person, other
than with respect to Permitted Encumbrances.
SECTION 3.16. FCC Compliance. (a) The Borrower and each Restricted
---------------
Subsidiary are in compliance with the Communications Act except where the
failure to do so could not reasonably be expected to result in a Material
Adverse Effect.
(b) To the knowledge of the Borrower, there is no investigation, notice
of apparent liability, violation, forfeiture or other order or complaint issued
by or before the FCC, or of any other proceedings of or before the FCC,
affecting it or any Restricted Subsidiary which could reasonably be expected to
have a Material Adverse Effect.
(c) No event has occurred which (i) results in, or after notice or lapse
of time or both would result in, revocation, suspension, adverse modifications,
non-renewal, impairment, restriction or termination of, or order of forfeiture
with respect to, any License in any respect which could reasonably be expected
to have a Material Adverse Effect or (ii) affects or could reasonably be
expected in the future to affect any of the rights of the Borrower or any
Restricted Subsidiary under any License held by the Borrower or such Subsidiary
in any respect which could reasonably be expected to have a Material Adverse
Effect.
(d) The Borrower and each Restricted Subsidiary have duly filed in a
timely manner all material filings, reports, applications, documents,
instruments and information required to be filed by it under the Communications
Act, and all such filings were when made true, correct and complete in all
respects except where the failure to do so could not reasonably be expected to
result in a Material Adverse Effect.
66
ARTICLE IV
Conditions
----------
SECTION 4.01. Effective Date. The obligations of the Lenders to make
---------------
Loans and of the Issuing Bank to issue Letters of Credit hereunder shall not
become effective until the date on which each of the following conditions is
satisfied (or waived in accordance with Section 9.02):
(a) The Administrative Agent (or its counsel) shall have received
from each party hereto either (i) a counterpart of this Agreement signed
on behalf of such party or (ii) written evidence satisfactory to the
Administrative Agent (which may include telecopy transmission of a signed
signature page of this Agreement) that such party has signed a counterpart
of this Agreement.
(b) The Administrative Agent shall have received a favorable written
opinion (addressed to the Administrative Agent and the Lenders and dated
the Effective Date) of each of (i) Xxxxxxx Xxxx and Xxxxxxxxx, counsel for
the Borrower, substantially in the form of Exhibit B-1, (ii) Xxxxxxx
Rings, Esq., Vice President, General Counsel & Secretary of the Borrower,
substantially in the form of Exhibit B-2 and (iii) Xxxxxxx Berlin Shereff
Xxxxxxxx, LLP, special communications counsel for the Borrower,
substantially in the form of Exhibit B-3, and (iv) Shuttleworth,
Ingersoll, P.C., Iowa counsel for the Borrower and, in the case of each
such opinion required by this paragraph, covering such other matters
relating to the Loan Parties, the Loan Documents or the Transactions as
the Required Lenders shall reasonably request. The Borrower hereby
requests such counsel to deliver such opinions.
(c) The Administrative Agent shall have received such documents and
certificates as the Administrative Agent or its counsel may reasonably
request relating to the organization, existence and good standing of each
Loan Party, the authorization of the Transactions and any other legal
matters relating to the Loan Parties, the Loan Documents or the
Transactions, all in form and substance satisfactory to the Administrative
Agent and its counsel.
(d) The Administrative Agent shall have received a certificate, dated
the Effective Date and signed by the President, a Vice President or a
Financial Officer of the Borrower, confirming compliance with the
conditions set forth in paragraphs (a) and (b) of Section 4.02.
(e) The Administrative Agent shall have received all fees and other
amounts due and payable on or prior to the Effective Date, including, to
the extent invoiced, reimbursement or payment of all reasonable out-of-
pocket
67
expenses (including reasonable fees, charges and disbursements of counsel)
required to be reimbursed or paid by any Loan Party hereunder or under any
other Loan Document.
(f) The Collateral and Guarantee Requirement shall have been
satisfied and the Administrative Agent shall have received a completed
Perfection Certificate dated the Effective Date and signed by an Executive
Officer or Financial Officer of the Borrower, together with all
attachments contemplated thereby, including the results of a search of the
Uniform Commercial Code (or equivalent) filings made with respect to the
Loan Parties in the jurisdictions contemplated by the Perfection
Certificate and copies of the financing statements (or similar documents)
disclosed by such search and evidence reasonably satisfactory to the
Administrative Agent that the Liens indicated by such financing statements
(or similar documents) are permitted by Section 6.03 or have been
released.
(g) The Administrative Agent shall have received evidence that the
insurance required by Section 5.07 and the Security Documents is in
effect.
(h) The Borrower shall, on a pro forma basis, be in compliance with
Sections 6.13, 6.14, 6.15, 6.16, 6.17 and 6.18.
(i) All consents and approvals (other than those set forth on
Schedule 3.03) required to be obtained from any Governmental Authority or
other Person in connection with the Transactions shall have been obtained,
and all applicable waiting periods and appeal periods shall have expired,
in each case without the imposition of any burdensome conditions.
(j) The Lenders shall have received a pro forma consolidated balance
sheet of the Borrower as of the Effective Date, reflecting all pro forma
adjustments as if the Transactions had been consummated on such date, and
such pro forma consolidated balance sheet shall be consistent in all
material respects with the 10-year business plan and other information
previously provided to the Lenders. After giving effect to the
Transactions, neither the Borrower nor any of its Subsidiaries shall have
outstanding any shares of preferred stock or any Indebtedness, other than
(i) Indebtedness incurred under the Loan Documents and (ii) the
Indebtedness listed on Schedules 6.01(a) or 6.02 and any preferred stock
of the Borrower.
(k) The Agent shall have received evidence reasonably satisfactory to
it that all existing bank credit facilities
68
and other Indebtedness of Splitrock (other than Indebtedness listed on
Schedule 6.02 and Indebtedness permitted pursuant to Section 6.02(vii))
shall have been repaid and all commitments in connection therewith shall
have been terminated.
(l) the Administrative Agent shall have received copies of the
Intercompany Loan Agreement and Intercompany Security Agreement executed
by the Borrower and each Restricted Subsidiary, together with evidence
satisfactory to the Administrative Agent that all Uniform Commercial Code
filings necessary to perfect the Liens of the Intercompany Security
Agreement have been executed by the Restricted Subsidiaries and filed or
delivered to the Administrative Agent for filing.
The Administrative Agent shall notify the Borrower and the Lenders of the
Effective Date, and such notice shall be conclusive and binding.
Notwithstanding the foregoing, the obligations of the Lenders to make Loans and
of the Issuing Bank to issue Letters of Credit hereunder shall not become
effective unless each of the foregoing conditions is satisfied (or waived
pursuant to Section 9.02) at or prior to 5:00 p.m., New York City time, on June
30, 2000 (and, in the event such conditions are not so satisfied or waived, the
Commitments shall terminate at such time).
SECTION 4.02. Each Credit Event. The obligation of each Lender to make a
------------------
Loan on the occasion of any Borrowing, and of the Issuing Bank to issue, amend,
renew or extend any Letter of Credit, is subject to receipt of the request
therefor in accordance herewith and to the satisfaction of the following
conditions:
(a) The representations and warranties of each Loan Party set forth
in the Loan Documents shall be true and correct on and as of the date of
such Borrowing or the date of issuance, amendment, renewal or extension of
such Letter of Credit, as applicable except to the extent that any
representation or warranty expressly relates to an earlier date (in which
case such representation shall be correct as of such earlier date);
provided, that the representation in Section 3.04(b) shall not be restated
--------
on the occasion of a Borrowing that does not increase the principal amount
of outstanding Loans.
(b) At the time of and immediately after giving effect to such
Borrowing or the issuance, amendment, renewal or extension of such Letter
of Credit, as applicable, no Default shall have occurred and be
continuing.
Each Borrowing and each issuance, amendment, renewal or extension of a Letter of
Credit shall be deemed to constitute a
69
representation and warranty by the Borrower on the date thereof as to the
matters specified in paragraphs (a) and (b) of this Section.
ARTICLE V
Affirmative Covenants
---------------------
Until the Commitments have expired or been terminated and the principal of
and interest on each Loan and all fees payable hereunder shall have been paid in
full and all Letters of Credit shall have expired or terminated and all LC
Disbursements shall have been reimbursed, the Borrower covenants and agrees with
the Lenders that:
SECTION 5.01. Financial Statements and Other Information. The Borrower
-------------------------------------------
will furnish to the Administrative Agent and each Lender:
(a) within 100 days after the end of each fiscal year of the Borrower,
an audited consolidated balance sheet of the Borrower and the Restricted
Subsidiaries and related statements of operations, stockholders' equity
and cash flows as of the end of and for such year, setting forth in each
case in comparative form the figures for the previous fiscal year, all
reported on by Xxxxxx Xxxxxxxx LLP or other independent public accountants
of recognized national standing (without a "going concern" or like
qualification or exception and without any qualification or exception as
to the scope of such audit) to the effect that such consolidated financial
statements present fairly in all material respects the financial condition
and results of operations of the Borrower and its Restricted Subsidiaries
on a consolidated basis in accordance with GAAP consistently applied;
(b) within 50 days after the end of each of the first three fiscal
quarters of each fiscal year of the Borrower, a consolidated balance sheet
of the Borrower and its Restricted Subsidiaries and related statements of
operations, stockholders' equity and cash flows as of the end of and for
such fiscal quarter and the then elapsed portion of the fiscal year,
setting forth in each case in comparative form the figures for the
corresponding period or periods of (or, in the case of the balance sheet,
as of the end of) the previous fiscal year, all certified by one of its
Financial Officers as presenting fairly in all material respects the
financial condition and results of operations of the Borrower and its
Restricted Subsidiaries on a consolidated basis in accordance with GAAP
consistently applied, subject to normal year-end audit adjustments and the
absence of footnotes;
70
(c) concurrently with any delivery of financial statements under clause
(a) or (b) above, a certificate of a Financial Officer of the Borrower (i)
certifying as to whether a Default has occurred and, if a Default has occurred,
specifying the details thereof and any action taken or proposed to be taken
with respect thereto, (ii) setting forth reasonably detailed calculations
demonstrating compliance with Sections 6.13, 6.14, 6.15 and 6.17, (iii) stating
whether any change in GAAP or in the application thereof has occurred since the
date of the Borrower's audited financial statements referred to in Section 3.04
and, if any such change has occurred, specifying the effect of such change on
the financial statements accompanying such certificate and (iv) attaching
statements, certified to be true and correct, of Consolidated Revenue, Access
Lines in Service and churn rate for the period or periods of such accompanying
financial statements;
(d) concurrently with any delivery of financial statements under clause
(a) above, a certificate of the accounting firm that reported on such financial
statements stating whether they obtained knowledge during the course of their
examination of such financial statements of any Default (which certificate may
be limited to the extent required by accounting rules or guidelines);
(e) within 10 Business Days after final approval thereof by the Board of
Directors (but in any event no later than February 28 of each fiscal year of
the Borrower), a budget of the Borrower and its Restricted Subsidiaries for
such fiscal year, prepared to show information on a quarterly basis, and, to
the extent all relevant internal approvals have been obtained, any significant
revisions of such budget;
(f) promptly after the same become publicly available, copies of all
periodic and other reports, proxy statements and other materials filed by the
Borrower or any Restricted Subsidiary with the Securities and Exchange
Commission, or any Governmental Authority succeeding to any or all of the
functions of said Commission, or with any national securities exchange, or
distributed by the Borrower to its shareholders generally, as the case may be;
and
(g) promptly following any request therefor, such other information
regarding the operations, business affairs and financial condition of the
Borrower or any Restricted Subsidiary, or compliance with the terms of any Loan
Document, as the Administrative Agent or any Lender may reasonably request.
71
SECTION 5.02. Notices of Material Events. The Borrower will furnish to
---------------------------
the Administrative Agent and each Lender prompt written notice of the following:
(a) the occurrence of any Default;
(b) the filing or commencement of any action, suit or proceeding by or
before any arbitrator or Governmental Authority against or affecting the
Borrower or any Affiliate thereof that could reasonably be expected to
result in a Material Adverse Effect; and
(c) any other development (including any ERISA Event) that results in,
or could reasonably be expected to result in, a Material Adverse Effect.
Each notice delivered under this Section shall be accompanied by a statement of
a Financial Officer or other Executive Officer of the Borrower setting forth the
details of the event or development requiring such notice and any action taken
or proposed to be taken with respect thereto.
SECTION 5.03. Information Regarding Collateral. (a) The Borrower will
---------------------------------
furnish to the Administrative Agent prompt written notice of any change (i) in
any Loan Party's corporate name, (ii) in the location of any Loan Party's chief
executive office, its principal place of business, any office in which it
maintains books or records relating to Collateral owned by it or any office or
facility at which Collateral (other than real property and improvements and
fixtures thereto) owned by it with a book value in excess of $250,000 is located
(including the establishment of any such new office or facility), (iii) in any
Loan Party's identity, corporate structure or jurisdiction of incorporation or
formation or (iv) in any Loan Party's Federal Taxpayer Identification Number.
The Borrower agrees not to effect or permit any change referred to in the
preceding sentence unless all filings have been made under the Uniform
Commercial Code or otherwise that are required in order for the Agent to
continue at all times following such change to have a valid, legal and perfected
security interest in all the Collateral and for the Borrower at all times
following such change to have a valid, legal and perfected security interest as
contemplated in the Intercompany Security Agreement. The Borrower also agrees
promptly to notify the Administrative Agent if any material portion of the
Collateral is damaged or destroyed.
(b) Each year, at the time of delivery of annual financial statements
with respect to the preceding fiscal year pursuant to clause (a) of Section
5.01, the Borrower shall deliver to the Administrative Agent a certificate of a
Financial Officer and a legal officer of the Borrower (i) setting forth the
information required pursuant to Section 2 of the Perfection Certificate or
confirming that there has been no change in such information
72
since the date of the Perfection Certificate delivered on the Effective Date or
the date of the most recent certificate delivered pursuant to this Section and
(ii) certifying that all Uniform Commercial Code financing statements (including
fixture filings, as applicable) or other appropriate filings, recordings or
registrations, including all refilings, rerecordings and reregistrations,
containing a description of the Collateral and the collateral under the
Intercompany Security Agreement have been filed of record in each governmental,
municipal or other appropriate office in each jurisdiction identified pursuant
to clause (i) above to the extent necessary to protect and perfect the security
interests under the Security Agreements and the Intercompany Security Agreement
for a period of not less than 18 months after the date of such certificate
(except as noted therein with respect to any continuation statements to be filed
within such period).
SECTION 5.04. Existence; Conduct of Business. The Borrower will, and
-------------------------------
will cause each of its Restricted Subsidiaries to, do or cause to be done all
things necessary to preserve, renew and keep in full force and effect its legal
existence and its rights, licenses, permits, privileges, franchises, patents,
copyrights, trademarks and trade names, except to the extent that the failure to
do so could not reasonably be expected to result in a Material Adverse Effect;
provided that the foregoing shall not prohibit any merger, consolidation,
--------
liquidation or dissolution permitted under Section 6.05.
SECTION 5.05. Payment of Obligations. The Borrower will, and will cause
-----------------------
each of its Restricted Subsidiaries to, pay its Tax liabilities, before the same
shall become delinquent or in default, except where (a) the validity or amount
thereof is being contested in good faith by appropriate proceedings, (b) the
Borrower or such Subsidiary has set aside on its books adequate reserves with
respect thereto in accordance with GAAP, (c) such contest effectively suspends
collection of the contested obligation and the enforcement of any Lien securing
such obligation and (d) the failure to make payment pending such contest could
not reasonably be expected to result in a Material Adverse Effect.
SECTION 5.06. Maintenance of Properties. The Borrower will, and will
--------------------------
cause each of its Restricted Subsidiaries to, keep and maintain all property
material to the conduct of its business in good working order and condition,
ordinary wear and tear excepted.
SECTION 5.07. Insurance. The Borrower will, and will cause each of its
----------
Restricted Subsidiaries to, maintain, with financially sound and reputable
insurance companies (a) insurance in such amounts (with no greater risk
retention) and against such risks as are customarily maintained by companies of
established repute engaged in the same or similar businesses
73
operating in the same or similar locations and (b) all insurance required to be
maintained pursuant to the Security Documents. The Borrower will furnish to the
Lenders, upon request of the Administrative Agent, information in reasonable
detail as to the insurance so maintained.
SECTION 5.08. Casualty and Condemnation. The Borrower (a) will furnish
--------------------------
to the Administrative Agent and the Lenders prompt written notice of any
casualty or other insured damage to the Collateral in any material respect or
the commencement of any action or proceeding for the taking of the Collateral in
any material respect under power of eminent domain or by condemnation or similar
proceeding and (b) will ensure that the Net Proceeds of any such event (whether
in the form of insurance proceeds, condemnation awards or otherwise) are
collected and applied in accordance with the applicable provisions hereof and of
the Security Documents.
SECTION 5.09. Books and Records; Inspection and Audit Rights. The
-----------------------------------------------
Borrower will, and will cause each of its Restricted Subsidiaries to, keep
proper books of record and account in which full, true and correct entries are
made of all dealings and transactions in relation to its business and
activities. The Borrower will, and will cause each of its Restricted
Subsidiaries to, permit any representatives designated by the Administrative
Agent or any Lender, upon reasonable prior notice, to visit and inspect its
properties, to examine and make extracts from its books and records, and to
discuss its affairs, finances and condition with its officers and independent
accountants, all at such reasonable times and as often as reasonably requested.
SECTION 5.10. Compliance with Laws. The Borrower will, and will cause
---------------------
each of its Restricted Subsidiaries to, comply with all laws (including the
Communications Act), rules, regulations and orders of any Governmental Authority
applicable to it or its property (including obligations under Licenses), except
where the failure to do so, individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.
SECTION 5.11. Use of Proceeds and Letters of Credit. (a) The proceeds of
--------------------------------------
the Term Loans and Purchase Money Revolving Loans, will be used solely to
finance the purchase, construction, expansion, development or acquisition by the
Borrower or Restricted Subsidiaries of Telecommunications Assets (including, to
the extent permitted by the Indentures, Telecommunications Assets owned on the
date of this Agreement or acquired within 180 days after the date of the
relevant Borrowing) which will be pledged to the Collateral Agent for the
benefit of the Secured Parties pursuant to the applicable Security Agreement or
appropriate Mortgages and to repay the Indebtedness outstanding under the
Splitrock Indenture. Term Loans and Purchase Money Revolving Loans may not
exceed 100% (or
74
such lower percentage as may be the maximum then permitted by the Indentures) of
the purchase price of the assets being financed with the proceeds thereof. The
proceeds of the Revolving Loans that are Non-Purchase Money Loans and Swingline
Loans and the issuance of Letters of Credit will be used by the Borrower for
working capital and general corporate purposes, including the construction,
expansion, development or acquisition of Telecommunications Assets and
Telecommunications Businesses. No part of the proceeds of any Loan will be used,
whether directly or indirectly, for any purpose that entails a violation of any
of the Regulations of the Board, including Regulations U and X.
(b) If any Financed Telecommunications Assets are to be held by any
Subsidiary, the Borrower will ensure that such Subsidiary is a Restricted
Subsidiary and that (i) such Financed Telecommunications Assets are acquired by
the Borrower and leased to such Restricted Subsidiary pursuant to an Approved
Lease Agreement, (ii) such Financed Telecommunications Assets are sold to such
Restricted Subsidiary in exchange for Indebtedness issued pursuant to the
Intercompany Loan Agreement and such Financed Telecommunications Assets are
subject to the Liens of the Intercompany Security Agreement or (iii) such
Financed Telecommunications Assets are acquired by such Restricted Subsidiary
using the proceeds of Loans that are further loaned by the Borrower to such
Restricted Subsidiary pursuant to the Intercompany Loan Agreement and such
Financed Telecommunications Assets are subject to the Liens of the Intercompany
Security Agreement, but which Restricted Subsidiary may lease such Financed
Telecommunications Assets pursuant to an Approved Lease Agreement and may sell
such assets subject to such Liens, in each case to another Restricted
Subsidiary.
SECTION 5.12. Additional Subsidiaries. If any additional Subsidiary is
------------------------
formed or acquired (and such Subsidiary has assets in excess of $10,000 or
acquires assets in excess of $10,000) after the Effective Date, the Borrower
will, within three Business Days after such Subsidiary is formed or acquired,
notify the Administrative Agent and the Lenders thereof and promptly cause the
Collateral and Guarantee Requirement to be satisfied with respect to such
Subsidiary (if it is a Subsidiary Loan Party) and with respect to any Equity
Interest in or Indebtedness of such Subsidiary owned by or on behalf of any Loan
Party.
SECTION 5.13. Further Assurances. (a) The Borrower will, and will cause
-------------------
each Subsidiary Loan Party to, execute any and all further documents, financing
statements, agreements and instruments, and take all such further actions
(including the filing and recording of financing statements, fixture filings,
mortgages, deeds of trust and other documents), which may be required under any
applicable law, or which the Agent or the Required Lenders may reasonably
request, to cause the Collateral and Guarantee Requirement to be and remain
satisfied and to
75
cause the Liens of the Intercompany Security Agreement to be and remain
perfected as contemplated therein, all at the expense of the Loan Parties;
provided, that the Collateral and Guarantee Requirement need not be satisfied
--------
with respect to (i) real properties owned by the Borrower with an individual
fair market value (including fixtures and improvements) that is less than
$1,500,000, (ii) real properties owned by any Restricted Subsidiary with an
individual fair market value (including fixtures and improvements) that is less
than $12,500,000 and (iii) the real properties identified in Schedule 6.03 and
properties subject to Liens permitted under Section 6.03(v). The Borrower also
agrees to provide to the Agent, from time to time upon request, evidence
reasonably satisfactory to the Agent as to the perfection and priority of the
Liens created or intended to be created by the Security Documents and the
Intercompany Security Agreement.
(b) If any material assets (including any real property or improvements
thereto or any interest therein) are acquired by the Borrower or any Subsidiary
Loan Party after the Effective Date (other than assets constituting Collateral
under the Security Documents that become subject to the Lien of the Security
Documents and the Intercompany Security Agreement upon acquisition thereof), the
Borrower will notify the Agent and the Lenders thereof, and, if requested by the
Agent or the Required Lenders, the Borrower will cause such assets to be
subjected to a Lien securing the Obligations and subject to the Lien of the
Intercompany Security Agreement and will take, and cause the Subsidiary Loan
Parties to take, such actions as shall be necessary or reasonably requested by
the Agent to grant and perfect such Liens, including actions described in
paragraph (a) of this Section, all at the expense of the Loan Parties; provided,
--------
that the Collateral and Guarantee Requirement need not be satisfied with respect
to (i) real properties owned by the Borrower with an individual fair market
value (including fixtures and improvements) that is less than $1,500,000, (ii)
real properties owned by any Restricted Subsidiary with an individual fair
market value (including fixtures and improvements) that is less than $12,500,000
and (iii) the real properties identified in Schedule 6.03 and properties subject
to Liens permitted under Section 6.03(v).
(c) If at any time the notes under the Splitrock Indenture have been
retired or defeased (or the Splitrock Indenture has been amended to enable the
Collateral and Guarantee Requirement to be satisfied with respect to
subsidiaries of Splitrock), the Borrower shall promptly cause all such
subsidiaries to satisfy the Collateral and Guarantee Requirement.
SECTION 5.14. Interest Rate Protection. Within 180 days after the
-------------------------
Effective Date, the Borrower, if necessary to satisfy the requirements set
forth in this Section 5.14, will enter into, and thereafter will maintain in
effect, one or more interest rate protection agreements on such terms and with
such
76
parties as shall be reasonably satisfactory to the Administrative Agent, the
effect of which (when taken together with other fixed rate debt and interest
rate protection agreements) shall be to fix or limit the interest cost to the
Borrower with respect to at least 50% of the Borrower's and the Restricted
Subsidiaries' outstanding Total Debt.
SECTION 5.15. Post-Effective Approvals. The Borrower will (a) use its
-------------------------
reasonable best efforts to obtain, as soon as practicable after the date hereof,
all of the governmental approvals specified in Schedule 3.03 and (b) in any
event ensure that McLeodUSA Telecommunications Services, Inc. satisfies the
Collateral and Guarantee Requirement no later than September 15, 2000.
ARTICLE VI
Negative Covenants
------------------
Until the Commitments have expired or terminated and the principal of and
interest on each Loan and all fees payable hereunder have been paid in full and
all Letters of Credit have expired or terminated and all LC Disbursements shall
have been reimbursed, the Borrower covenants and agrees with the Lenders that:
SECTION 6.01. Indebtedness of the Borrower; Certain Equity Securities.
--------------------------------------------------------
(a) The Borrower will not create, incur, assume or permit to exist any
Indebtedness or any Attributable Debt in respect of sale-leaseback transactions,
except:
(i) Indebtedness created under the Loan Documents (including under
Section 2.20);
(ii) Indebtedness existing on the date hereof and set forth in
Schedule 6.01(a);
(iii) Indebtedness of the Borrower to any Restricted Subsidiary;
(iv) Guarantees by the Borrower of Indebtedness of any Restricted
Subsidiary; provided that Guarantees by the Borrower of Indebtedness of
--------
any Restricted Subsidiary that is not a Loan Party shall be subject to
Section 6.06;
(v) Indebtedness of the Borrower incurred to finance the
acquisition, construction, installation, development or improvement of any
fixed or capital assets, including Capital Lease Obligations and any
Indebtedness assumed in connection with the acquisition of any such assets
or secured by a Lien on any such assets prior to the acquisition thereof;
provided that (A) such Indebtedness is incurred prior to or within 270
--------
days after such acquisition
77
or the completion of such construction, installation, development or
improvement, (B) the Borrower and the Restricted Subsidiaries are in
compliance, on a pro forma basis after giving effect to the incurrence of
such Indebtedness, with the financial covenants contained in Sections 6.13,
6.14, 6.15, 6.16, 6.17 and 6.18 to the extent then applicable and (C) the
aggregate amount of secured Indebtedness incurred under this clause (v)
shall not exceed $800,000,000 less the principal amount of such
Indebtedness refinanced under Section 6.01(vii) at any time outstanding;
(vi) Indebtedness of the Borrower pursuant to Hedging Agreements
entered into to fix the effective rate of interest on the Loans or other
Indebtedness, provided such transactions are entered into to hedge actual
interest rate exposures and not for the purpose of speculation;
(vii) Indebtedness incurred to refinance any Indebtedness permitted
under clauses (ii), (v) and (ix) of this Section 6.01; provided that (a)
--------
such refinancing Indebtedness (i) shall not have a greater outstanding
principal amount (except to the extent necessary to pay fees, expenses,
underwriting discounts and prepayment premiums in connection therewith), an
earlier maturity date or a decreased weighted average life than the
Indebtedness refinanced and (ii) shall be subordinated to the Indebtedness
created under the Loan Documents to at least the extent of, and shall
otherwise be issued on terms no less favorable in any material respect to
the Lenders than, the Indebtedness refinanced, (b) the proceeds of such
Indebtedness shall be used solely to repay the Indebtedness refinanced
thereby and fees, expenses, underwriting discounts and prepayment premiums
in connection therewith and (c) such refinancing Indebtedness is not
Guaranteed by any Restricted Subsidiary;
(viii) surety, performance and other similar bonds incurred in the
ordinary course of business not securing Indebtedness for borrowed money;
and
(ix) other unsecured Indebtedness so long as the Borrower and the
Restricted Subsidiaries are in compliance, on a pro forma basis after
giving effect to the incurrence of such Indebtedness, with the financial
covenants contained in Sections 6.13, 6.14, 6.15, 6.16, 6.17 and 6.18 to
the extent then applicable.
For purposes of determining any particular amount of Indebtedness under this
Section 6.01, in the event an item of Indebtedness meets the criteria of more
than one of the types of Indebtedness described in the above clauses, the
Borrower, in its sole discretion, may classify such item of Indebtedness and
78
only be required to include the amount and type of such Indebtedness in one of
such clauses.
(b) The Borrower will not, and it will not permit any Restricted
Subsidiary to, (i) issue any preferred stock or (ii) be or become liable in
respect of any obligation (contingent or otherwise) to purchase, redeem, retire,
acquire or make any other payment in respect of any shares of Capital Stock of
the Borrower or any Restricted Subsidiary or any option, warrant or other right
to acquire any such shares of Capital Stock; provided, that the Borrower may
--------
issue Non-Cash Pay Preferred Stock and New Preferred Stock so long as the
Borrower and the Restricted Subsidiaries are in compliance, on a pro forma basis
after giving effect to the issuance of such preferred stock, with the financial
covenants contained in Sections 6.13, 6.14, 6.15, 6.16, 6.17 and 6.18 to the
extent then applicable.
SECTION 6.02. Indebtedness of Restricted Subsidiaries. The Borrower will
----------------------------------------
not permit any Restricted Subsidiary to create, incur, assume or permit to exist
any Indebtedness or any Attributable Debt in respect of sale-leaseback
transactions, except:
(i) Indebtedness created under the Loan Documents;
(ii) Indebtedness existing on the date hereof and set forth in
Schedule 6.02.
(iii) Indebtedness of any Restricted Subsidiary to the Borrower or
any other Restricted Subsidiary; provided that Indebtedness of any
--------
Restricted Subsidiary that is not a Loan Party to the Borrower or any
Subsidiary Loan Party shall be subject to Section 6.06;
(iv) Guarantees by any Restricted Subsidiary of Indebtedness of any
other Restricted Subsidiary; provided that Guarantees by any Subsidiary
--------
Loan Party of Indebtedness of any Subsidiary that is not a Loan Party shall
be subject to Section 6.06;
(v) Indebtedness of any Person that becomes a Restricted Subsidiary
after the date hereof; provided that (A) such Indebtedness exists at the
--------
time such Person becomes a Restricted Subsidiary and is not created in
contemplation of or in connection with such Person becoming a Restricted
Subsidiary and (B) the Borrower and the Restricted Subsidiaries are in
compliance, on a pro forma basis after giving effect to the incurrence of
such Indebtedness, with the financial covenants contained in Sections 6.13,
6.14, 6.15, 6.16, 6.17 and 6.18 to the extent then applicable; provided,
--------
further, that any such Indebtedness may be permitted by this clause (v)
-------
only until such time as such Person merges or consolidates with the
79
Borrower or another Person that is a Restricted Subsidiary on the date
hereof;
(vi) surety, performance and other similar bonds incurred in the
ordinary course of business not securing Indebtedness for borrowed money;
(vii) Capital Lease Obligations of Splitrock and its subsidiaries in
an amount that, together with any outstanding Capital Lease Obligations of
Splitrock and its subsidiaries listed on Schedule 6.02, does not exceed
$45,000,000 at any time outstanding; and
(viii) other unsecured Indebtedness in a principal amount at any time
outstanding not to exceed the lesser of (A) $10,000,000 and (B) the maximum
amount then permitted to be incurred by the Indentures.
SECTION 6.03. Liens. The Borrower will not, and will not permit any
------
Restricted Subsidiary to, create, incur, assume or permit to exist any Lien on
any property or asset now owned or hereafter acquired by it, or assign or sell
any income or revenues (including accounts receivable) or rights in respect of
any thereof, except:
(i) Liens created under the Loan Documents;
(ii) Permitted Encumbrances;
(iii) any Lien on any property or asset of the Borrower or any
Restricted Subsidiary existing on the date hereof and set forth in Schedule
6.03; provided that (i) such Lien shall not apply to any other property or
--------
asset of the Borrower or any Restricted Subsidiary and (ii) such Lien shall
secure only those obligations which it secures on the date hereof and
extensions, renewals and replacements thereof that do not (except as
permitted by Section 6.01(a)(vii)) increase the outstanding principal
amount thereof;
(iv) any Lien existing on any property or asset prior to the
acquisition thereof by the Borrower or any Restricted Subsidiary or
existing on any property or asset of any Person that becomes a Restricted
Subsidiary after the date hereof prior to the time such Person becomes a
Restricted Subsidiary; provided that (A) such Lien is not created in
--------
contemplation of or in connection with such acquisition or such Person
becoming a Restricted Subsidiary, as the case may be, (B) such Lien shall
not apply to any other property or assets of the Borrower or any Restricted
Subsidiary and (C) such Lien shall secure only those obligations which it
secures on the date of such acquisition or the date such Person becomes a
Restricted Subsidiary, as the case may be and extensions, renewals and
80
replacements thereof that do not increase the outstanding principal amount
thereof (except as permitted by Section 6.01(a)(vii));
(v) Liens (including pursuant to any Capital Lease Obligation) on
fixed or capital assets acquired, constructed, developed, installed or
improved by the Borrower; provided that (A) such security interests secure
--------
Indebtedness permitted by clause (v) of Section 6.01(a) or clause (vii) of
Section 6.02, (B) such security interests and the Indebtedness secured
thereby are incurred prior to or within 270 days after such acquisition or
the completion of such construction, development, installation or
improvement, (C) the Indebtedness secured thereby does not exceed 100% of
the cost of acquiring, constructing, developing, installing or improving
such fixed or capital assets and (D) such security interests shall not
apply to any other property or assets of the Borrower or any Restricted
Subsidiary (it being understood that all Indebtedness to any single lender
or group of related lenders or outstanding under any single credit
facility, and in any case relating to the same group or collection of
Telecommunications Assets financed thereby, shall be considered a single
purchase money Indebtedness, whether drawn at one time or from time to
time); and
(vi) Liens securing Indebtedness of the Borrower to any Restricted
Subsidiary and of any Restricted Subsidiary to any Subsidiary Loan Party;
and
(vii) Liens securing Indebtedness permitted by Section 6.01(a)(vii)
and 6.02(vii).
SECTION 6.04. Sale and Lease-Back Transactions. The Borrower will not,
---------------------------------
nor will it permit any Restricted Subsidiary to, enter into any arrangement,
directly or indirectly, with any Person whereby it shall sell or transfer any
property, real or personal, used or useful in its business, whether now owned or
hereafter acquired, and thereafter rent or lease such property or other property
which it intends to use for substantially the same purpose as the property being
sold or transferred, except to the extent all Capital Lease Obligations,
Attributable Debt and Liens associated with such sale and lease-back transaction
are permitted by Sections 6.01, 6.02 and 6.03 (treating the property subject
thereto as being subject to a Lien securing the related Attributable Debt, in
the case of a sale and lease-back not accounted for as a Capital Lease
Obligation).
SECTION 6.05. Fundamental Changes. (a) The Borrower will not, nor will
--------------------
it permit any Restricted Subsidiary to, merge into or consolidate with any other
Person, or permit any other Person to merge into or consolidate with it, or
liquidate or dissolve, except that, if at the time thereof and immediately after
giving effect thereto no Default shall have occurred and be continuing
81
(i) any Person may merge into the Borrower in a transaction in which the
Borrower is the surviving corporation, (ii) any Person may merge into any
Restricted Subsidiary in a transaction in which the surviving entity is a Wholly
Owned Restricted Subsidiary and (if any party to such merger is a Subsidiary
Loan Party) is a Subsidiary Loan Party and (iii) any Subsidiary may liquidate or
dissolve if the Borrower determines in good faith that such liquidation or
dissolution is in the best interests of the Borrower and is not materially
disadvantageous to the Lenders; provided that any such merger involving a Person
--------
that is not a Wholly Owned Subsidiary immediately prior to such merger shall not
be permitted unless also permitted by Section 6.06.
(b) The Borrower will not, and will not permit any of its Restricted
Subsidiaries to, engage to any material extent in any business other than
Telecommunications Business or any businesses of the type conducted by the
Borrower and its Restricted Subsidiaries on the date of execution of this
Agreement and businesses reasonably related thereto.
(c) The Borrower will not permit any Wholly Owned Restricted Subsidiary
to merge or consolidate with any other Person other than the Borrower, issue or
sell shares of its Capital Stock or take any other action if as a result thereof
such Restricted Subsidiary would cease to be a Wholly Owned Restricted
Subsidiary of the Borrower, unless such merger or consolidation is designated as
an Investment made in such non-Wholly Owned Restricted Subsidiary pursuant to
Section 6.06(l).
SECTION 6.06. Investments, Loans, Advances, Guarantees and Acquisitions.
----------------------------------------------------------
The Borrower will not, and will not permit any of its Restricted Subsidiaries to
make or permit to exist any Investment in any other Person, or purchase or
otherwise acquire (in one transaction or a series of transactions) any assets of
any other Person constituting a business unit, except:
(a) Permitted Investments;
(b) Investments existing on the date hereof or which on the date
hereof are obligated to be made and set forth on Schedule 6.06;
(c) Investments by the Borrower and its Restricted Subsidiaries in
the Capital Stock of Restricted Subsidiaries that are Loan Parties (or of
McLeodUSA Telecommunications Services, Inc., whether or not it is a Loan
Party); provided that such shares of Capital Stock shall be pledged
--------
pursuant to the Borrower Pledge Agreement or the Subsidiary Pledge
Agreement, as applicable;
(d) loans or advances made by the Borrower to any Restricted
Subsidiary and made by any Restricted Subsidiary to the Borrower or any
other Restricted Subsidiary (other
82
than any Foreign Subsidiary); provided that any such loans and advances
--------
made by a Loan Party shall (i) if evidenced by a promissory note, be
pledged pursuant to the applicable Pledge Agreement (provided, that
--------
promissory notes issued by Illinois Consolidated Telephone Company need not
be pledged if such pledge is prohibited by applicable law or contractual
arrangements, including the Indentures) and (ii) in the case of loans to be
used to acquire Financed Telecommunications Assets, be made pursuant to the
Intercompany Loan Agreement;
(e) Permitted Business Acquisitions;
(f) Guarantees constituting Indebtedness permitted by Sections 6.01
or 6.02 (other than by Section 6.01(a)(iv) or 6.02(iv));
(g) Investments received in satisfaction of judgments or in
connection with the bankruptcy or reorganization of, or settlement of
delinquent accounts and disputes with, customers and suppliers, in each
case in the ordinary course of business;
(h) loans, advances or extensions of credit to employees and
directors made in the ordinary course of business;
(i) negotiable instruments held for collection and lease, utility and
workers' compensation, performance and other similar deposits in the
ordinary course of business;
(j) Investments in Hedging Agreements;
(k) any Investment by the Borrower in any Person engaged in the
Telecommunications Business if the Board of Directors of the Borrower
approves such Investment (to the extent required by the Borrower's
constitutional documents) and the Borrower or any Restricted Subsidiary has
an ongoing business relationship with such Person, provided that the
--------
aggregate amount of Investments made in all such Persons pursuant to this
paragraph shall not exceed $100,000,000 plus Equity Proceeds and Conversion
Proceeds received after the date hereof and not applied to any other
Designated Equity Proceeds Use; and
(l) other Investments in Unrestricted Subsidiaries or other Persons
in an aggregate amount not to exceed $100,000,000 plus Equity Proceeds and
Conversion Proceeds received after the date hereof and not applied to any
other Designated Equity Proceeds Use.
83
SECTION 6.07. Asset Sales. The Borrower will not, and will not permit any
------------
of its Restricted Subsidiaries to, sell, transfer, lease or otherwise dispose of
any asset, including any Capital Stock owned by it, nor will the Borrower permit
any of its Restricted Subsidiaries to issue any additional shares of its Capital
Stock or other ownership interests in such Restricted Subsidiary, except:
(a) sales of inventory, used or surplus equipment and Permitted
Investments in the ordinary course of business;
(b) sales, transfers and dispositions to the Borrower or a Restricted
Subsidiary or to another Person as an Investment permitted by Section 6.06;
provided that any such sales, transfers or dispositions involving a
--------
Restricted Subsidiary that is not a Loan Party shall be made in compliance
with Section 6.10; and
(c) sales, transfers and other dispositions of assets (including
Capital Stock of Unrestricted Subsidiaries, but excluding Capital Stock of
Restricted Subsidiaries) that are not permitted by any other clause of this
Section; provided that the Net Proceeds therefrom are utilized by the
--------
Borrower to acquire Telecommunications Assets, effect Permitted Business
Acquisitions or repay Term Loans;
provided that all sales, transfers, leases and other dispositions permitted
--------
hereby (other than those permitted by clause (b) above) shall be made for fair
value and for consideration consisting of at least 75% cash or
Telecommunications Assets or of Capital Stock of Persons engaged in the
Telecommunications Business, provided the aggregate amount of all such Capital
Stock of Persons engaged in the Telecommunications Business (other than Persons
that become Restricted Subsidiaries as a result of the receipt of such Capital
Stock) received as part of such 75% consideration for all such sales, transfers,
leases and other dispositions during the term of this Agreement does not exceed
$100,000,000.
SECTION 6.08. Hedging Agreements. The Borrower will not, and will not
-------------------
permit any of its Restricted Subsidiaries to, enter into any Hedging Agreement,
other than (a) Hedging Agreements required by Section 5.14 and (b) Hedging
Agreements entered into in the ordinary course of business to hedge or mitigate
risks to which the Borrower or any Restricted Subsidiary is exposed in the
conduct of its business or the management of its liabilities.
SECTION 6.09. Restricted Payments; Certain Payments of Indebtedness. (a)
------------------------------------------------------
The Borrower will not, nor will it permit any Restricted Subsidiary to, declare
or make, or agree to pay or make, directly or indirectly, any Restricted
Payment, or incur any obligation (contingent or otherwise) to do so, except (i)
the Borrower may declare and pay dividends with respect to
84
its Capital Stock payable solely in additional shares of its common stock, (ii)
Restricted Subsidiaries may declare and pay dividends ratably with respect to
their Capital Stock, (iii) the Borrower may make Restricted Payments, pursuant
to and in accordance with stock option plans or other benefit plans for
management or employees of the Borrower and the Restricted Subsidiaries, in an
aggregate amount not in excess of (A) Equity Proceeds and Conversion Proceeds
received after the date hereof and not applied to any other Designated Equity
Proceeds Use plus (B) to the extent not made with such Equity Proceeds or
Conversion Proceeds, $5,000,000 during any 12-month period, (iv) the Borrower
may, provided that no Event of Default is continuing or would result therefrom,
pay cash dividends in respect of its Series B Preferred Stock and (v) the
Borrower may purchase or otherwise retire any Capital Stock of the Borrower to
the extent necessary (as determined in good faith by a majority of the
disinterested members of the Board of Directors of the Borrower, whose
determination shall be conclusive) to prevent the loss, or to secure the
reinstatement, of any material license or franchise held by the Borrower or any
Restricted Subsidiary from any Governmental Authority, provided that (A) the
--------
Borrower shall notify the Administrative Agent of any purchases or retirements
pursuant to this clause (v) in an amount greater than $5,000,000 and (B) such
purchases or retirements shall not result in a Material Adverse Effect.
(b) The Borrower will not, nor will it permit any Restricted Subsidiary
to, make or agree to pay or make, directly or indirectly, (i) any payment or
other distribution (whether in cash, securities or other property) of or in
respect of principal of or interest on any Indebtedness, or any payment or other
distribution (whether in cash, securities or other property), including any
sinking fund or similar deposit, on account of the purchase, redemption,
retirement, acquisition, cancelation or termination of any Indebtedness or New
Preferred Stock or (ii) any payment to any Derivatives Counterparty as a result
of any change in the market value of any such Indebtedness that is publicly
traded (provided, that (A) no payment shall be deemed to have been made to any
--------
Derivatives Counterparty to the extent Derivatives Counterparties have made
cumulative payments to the Borrower or any Restricted Subsidiary as a result of
changes in the market value of such publicly traded Indebtedness in a cumulative
amount in excess of the payments made to Derivatives Counterparties by the
Borrower and the Restricted Subsidiaries as a result of such changes and (B) it
is understood that the intent of the above language relating to payments to and
from Derivatives Counterparties is to prohibit payments and distributions
pursuant to transactions entered into with Derivatives Counterparties only if
the Borrower intends such transactions to have substantially the same economic
effect as the payments and distributions referred to in clause (i) above),
except:
85
(i) payment of Indebtedness created under the Loan Documents;
(ii) payment of regularly scheduled interest and principal payments
as and when due in respect of any Indebtedness and payment of mandatory
sinking fund payments and regular dividends on New Preferred Stock;
(iii) refinancings of Indebtedness to the extent permitted by Section
6.01; and
(iv) payments to prepay, purchase or redeem the Indebtedness of the
Splitrock Indenture or the outstanding indebtedness of Xxxxxx County
Partners, Inc. listed on Schedule 6.02.
SECTION 6.10. Transactions with Affiliates. The Borrower will not, nor
-----------------------------
will it permit any Restricted Subsidiary to, sell, lease or otherwise transfer
any property or assets to, or purchase, lease or otherwise acquire any property
or assets from, or otherwise engage in any other transactions with, any of its
Affiliates, except (a) transactions in the ordinary course of business that are
at prices and on terms and conditions not less favorable to the Borrower or such
Restricted Subsidiary than could be obtained on an arm's-length basis from
unrelated third parties (or, in the event that there are no comparable
transactions involving Persons who are not Affiliates of the Borrower or the
relevant Restricted Subsidiary to apply for comparative purposes, is otherwise
on terms that, taken as a whole, are fair to the Borrower or the relevant
Restricted Subsidiary as determined by (i) with respect to a transaction or
group of related transactions of $5,000,000 or more, the board of directors or
executive committee of the board of directors of the Borrower including the
affirmative vote of a majority of the disinterested directors and (ii) with
respect to a transaction or group of transactions of less than $5,000,000, an
Executive Officer of the Borrower), (b) transactions between or among the
Borrower and the Subsidiary Loan Parties not involving any other Affiliate, (c)
any Restricted Payment permitted by Section 6.09, (d) any agreement or
arrangement with respect to the compensation of a director or officer of the
Borrower or any Restricted Subsidiary approved by a majority of the
disinterested members of the board of directors and consistent with industry
practice and (e) transactions pursuant to any agreement or arrangement existing
on the date hereof and set forth in Schedule 6.10.
SECTION 6.11. Restrictive Agreements. The Borrower will not, nor will it
-----------------------
permit any Restricted Subsidiary to, directly or indirectly, enter into, incur
or permit to exist any agreement or other arrangement that prohibits, restricts
or imposes any condition upon (a) the ability of the Borrower or any Restricted
Subsidiary to create, incur or permit to exist any Lien upon any of its property
or assets (other than any such
86
restrictions or conditions that affect property or assets with an aggregate
value less than $2,000,000), or (b) the ability of any Restricted Subsidiary to
pay dividends or other distributions with respect to any shares of its Capital
Stock or to make or repay loans or advances to the Borrower or any other
Restricted Subsidiary or to Guarantee Indebtedness of the Borrower or any other
Restricted Subsidiary; provided that (i) the foregoing shall not apply to
--------
restrictions and conditions imposed by law or by any Loan Document or the
Indentures, (ii) the foregoing shall not apply to restrictions and conditions
existing on the date hereof identified on Schedule 6.11 (but shall apply to any
extension or renewal of, or any amendment or modification expanding the scope
of, any such restriction or condition), (iii) the foregoing shall not apply to
customary restrictions and conditions contained in agreements relating to the
sale of a Restricted Subsidiary pending such sale, provided such restrictions
and conditions apply only to the Restricted Subsidiary that is to be sold and
such sale is permitted hereunder, (iv) clause (a) of the foregoing shall not
apply to restrictions or conditions imposed by any agreement relating to secured
Indebtedness permitted by this Agreement if such restrictions or conditions
apply only to the property or assets securing such Indebtedness and (v) clause
(a) of the foregoing shall not apply to customary provisions restricting the
assignment thereof in (A) leases, (B) joint fiber construction agreements and
"indefeasible rights to use" agreements for transmission capacity for which the
Borrower or a Restricted Subsidiary is not the owner or lessor, (C) pole or
conduit use agreements in which the Borrower or a Restricted Subsidiary is the
user, (D) rights of way and (E) franchises.
SECTION 6.12. Amendment of Material Documents. The Borrower will not, nor
--------------------------------
will it permit any Restricted Subsidiary to, amend, modify or waive any of its
rights under (a) its certificate of incorporation, by-laws or other
organizational documents or (b) the Indentures, in each case in a manner adverse
to the Lenders.
SECTION 6.13. Leverage Ratio. The Borrower will not permit the Leverage
---------------
Ratio as of any date during any period set forth below to exceed the ratio set
forth opposite such period:
Period Ratio
------ -----
January 1, 2003 to March 30, 2004 7.00 to 1.00
March 31, 2004 to March 30, 2005 4.00 to 1.00
March 31, 2005 to March 30, 2006 3.00 to 1.00
March 31, 2006 and thereafter 2.00 to 1.00
SECTION 6.14. Senior Secured Debt to Total Capital. The Borrower will
-------------------------------------
not permit the ratio of (a) Senior Secured Debt to (b) Total Capital, as of any
date, to exceed 0.30 to 1.00.
87
SECTION 6.15. Total Debt to Total Capital. The Borrower will not permit
----------------------------
the ratio of (a) Total Debt to (b) Total Capital, as of any date, to exceed 0.60
to 1.00.
SECTION 6.16. Minimum Access Lines in Service. The Borrower will not
--------------------------------
permit the Access Lines in Service as of any of the dates set forth below to be
less than the minimum amount indicated opposite to such date:
Date Minimum
---- -------
December 31, 2000 900,000
March 31, 2001 900,000
June 30, 2001 900,000
September 30, 2001 900,000
December 31, 2001 1,200,000
March 31, 2002 1,200,000
June 30, 2002 1,200,000
September 30, 2002 1,200,000
December 31, 2002 1,700,000
March 31, 2003 1,700,000
June 30, 2003 1,700,000
September 30, 2003 1,700,000
December 31, 2003 2,500,000
March 31, 2004 2,500,000
June 30, 2004 2,500,000
September 30, 2004 2,500,000
December 31, 2004 and thereafter no minimum
SECTION 6.17. Interest Expense Coverage Ratio. The Borrower will not
--------------------------------
permit the ratio of (a) Consolidated EBITDA to (b) Consolidated Cash Interest
Expense, in each case for any period of four consecutive fiscal quarters ending
on or after March 31, 2003, to be less than 2.00 to 1.00.
88
SECTION 6.18. Minimum Consolidated Revenue. The Borrower will not permit
-----------------------------
Consolidated Revenue for any period of four consecutive fiscal quarters ending
during any period set forth below, to be less than the amount set forth opposite
such period:
Period Minimum
------ -------
December 31, 2000 to $1,100,000,000
December 30, 2001
December 31, 2001 to $1,600,000,000
December 30, 2002
December 31, 2002 to $2,200,000,000
December 30, 2003
December 31, 2003 to $3,200,000,000
December 30, 2004
December 31, 2004 and thereafter no minimum
SECTION 6.19. Designation of Unrestricted Subsidiaries. (a) The Borrower
-----------------------------------------
may not designate any Restricted Subsidiary as an Unrestricted Subsidiary and
may hereafter designate any other Subsidiary as an Unrestricted Subsidiary under
this Agreement (a "Designation") only if:
-----------
(i) such Subsidiary does not own any Capital Stock of any Restricted
Subsidiary;
(ii) no Event of Default shall have occurred and be continuing at the
time of or after giving effect to such Designation;
(iii) after giving effect to such Designation and any related
Investment to be made in such designated Subsidiary by the Borrower or any
Restricted Subsidiary (which shall in any event include the existing
Investment in such Subsidiary at the time it is designated as an
Unrestricted Subsidiary), (A) any such existing Investment and related
Investment would comply with Section 6.06 and (B) the Borrower would be in
compliance with each of the covenants set forth in Sections 6.13, 6.14,
6.15, 6.16, 6.17 and 6.18 calculated on a pro forma basis as if such
Designation and Investment had occurred immediately prior to the first day
of the period of four consecutive fiscal quarters most recently ended in
respect of which financial statements have been delivered by the Borrower
pursuant to Section 5.01(a) or (b); and
(iv) the Borrower has delivered to the Administrative Agent (x)
written notice of such Designation and (y) a certificate, dated the
effective date of such Designation,
89
of a Financial Officer stating that no Event of Default has occurred and is
continuing and setting forth reasonably detailed calculations demonstrating
pro forma compliance with Sections 6.13, 6.14, 6.15, 6.16, 6.17 and 6.18 in
accordance with paragraph (iii) above.
(b) The Borrower may designate any Unrestricted Subsidiary as a Restricted
Subsidiary under this Agreement (an "RS Designation") only if:
--------------
(i) such Subsidiary is predominantly engaged in one or more
Telecommunications Businesses;
(ii) no Event of Default shall have occurred and be continuing at the
time of or after giving effect to such RS Designation, and after giving
effect thereto, the Borrower would be in compliance with each of the
covenants set forth in Sections 6.13, 6.14, 6.15, 6.16, 6.17 and 6.18
calculated on a pro forma basis as if such RS Designation had occurred
immediately prior to the first day of the period of four consecutive fiscal
quarters most recently ended in respect of which financial statements have
been delivered by the Borrower pursuant to Section 5.01(a) or (b); and
(iii) all Liens on assets of such Unrestricted Subsidiary and all
Indebtedness of such Unrestricted Subsidiary outstanding immediately
following the RS Designation would, if initially incurred at such time,
have been permitted to be incurred pursuant to Sections 6.02 and 6.03
without reliance on Section 6.02(v) or Section 6.03(iv).
Upon any such RS Designation with respect to an Unrestricted Subsidiary (i)
the Borrower and the Restricted Subsidiaries shall be deemed to have received a
return of their Investment in such Unrestricted Subsidiary equal to the lesser
of (x) the amount of such Investment immediately prior to such RS Designation
and (y) the fair market value (as reasonably determined by the Borrower) of the
net assets of such Subsidiary at the time of such RS Designation and (ii) the
Borrower and the Restricted Subsidiaries shall be deemed to have a permanent
Investment in an Unrestricted Subsidiary equal to the excess, if positive, of
the amount referred to in clause (i)(x) above over the amount referred to in
clause (i)(y) above.
(c) Neither the Borrower nor any Restricted Subsidiary shall at any time
(x) provide a Guarantee of any Indebtedness of any Unrestricted Subsidiary, (y)
be directly or indirectly liable for any Indebtedness of any Unrestricted
Subsidiary or (z) be directly or indirectly liable for any other Indebtedness
which provides that the holder thereof may (upon notice, lapse of time or both)
declare a default thereon (or cause such Indebtedness or the payment thereof to
be accelerated, payable
90
or subject to repurchase prior to its final scheduled maturity) upon the
occurrence of a default with respect to any other Indebtedness that is
Indebtedness of an Unrestricted Subsidiary, except in the case of clause (x) or
(y) to the extent permitted under Section 6.01 and Section 6.06 hereof. Except
as provided in clause (b) above, each Designation shall be irrevocable, and no
Unrestricted Subsidiary may become a Restricted Subsidiary, be merged with or
into the Borrower or a Restricted Subsidiary or liquidate into or transfer
substantially all its assets to the Borrower or a Restricted Subsidiary.
ARTICLE VII
Events of Default
-----------------
If any of the following events ("Events of Default") shall occur:
-----------------
(a) the Borrower shall fail to pay any principal of any Loan or any
reimbursement obligation in respect of any LC Disbursement when and as the
same shall become due and payable, whether at the due date thereof or at a
date fixed for prepayment thereof or otherwise;
(b) the Borrower shall fail to pay any interest on any Loan or any
fee or any other amount (other than an amount referred to in clause (a) of
this Article) payable under this Agreement or any other Loan Document, when
and as the same shall become due and payable, and such failure shall
continue unremedied for a period of five days;
(c) any representation or warranty made or deemed made by or on
behalf of the Borrower or any Restricted Subsidiary in or in connection
with any Loan Document or any amendment or modification thereof or waiver
thereunder, or in any report, certificate, financial statement or other
document furnished pursuant to or in connection with any Loan Document or
any amendment or modification thereof or waiver thereunder, shall prove to
have been incorrect in any material respect when made or deemed made;
(d) the Borrower shall fail to observe or perform any covenant,
condition or agreement contained in Section 5.02, 5.04 (with respect to the
existence of the Borrower) or 5.11 or in Article VI (other than in Section
6.10 or 6.11, if such failure to observe or perform is capable of being
remedied within 30 days of the occurrence thereof and could not reasonably
be expected to result in a Material Adverse Effect in such 30-day period);
(e) any Loan Party shall fail to observe or perform any covenant,
condition or agreement contained in any Loan Document (other than those
specified in clause (a), (b) or
91
(d) of this Article), and such failure shall continue unremedied for a
period of 30 days after notice thereof from the Administrative Agent to the
Borrower (which notice will be given at the request of any Lender);
(f) the Borrower or any Restricted Subsidiary shall fail to make any
payment (whether of principal or interest and regardless of amount) in
respect of any Material Indebtedness, when and as the same shall become due
and payable;
(g) any event or condition occurs that results in any Material
Indebtedness becoming due prior to its scheduled maturity or that enables
or permits (with or without the giving of notice, the lapse of time or
both) the holder or holders of any Material Indebtedness or any trustee or
agent on its or their behalf to cause any Material Indebtedness to become
due, or to require the prepayment, repurchase, redemption or defeasance
thereof, prior to its scheduled maturity; provided that this clause (g)
--------
shall not apply to secured Indebtedness that becomes due as a result of the
voluntary sale or transfer of the property or assets securing such
Indebtedness;
(h) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) liquidation, reorganization or other
relief in respect of the Borrower or any Significant Subsidiary or its
debts, or of a substantial part of its assets, under any Federal, state or
foreign bankruptcy, insolvency, receivership or similar law now or
hereafter in effect or (ii) the appointment of a receiver, trustee,
custodian, sequestrator, conservator or similar official for the Borrower
or any Significant Subsidiary or for a substantial part of its assets, and,
in any such case, such proceeding or petition shall continue undismissed
for 60 days or an order or decree approving or ordering any of the
foregoing shall be entered;
(i) the Borrower or any Significant Subsidiary shall (i) voluntarily
commence any proceeding or file any petition seeking liquidation,
reorganization or other relief under any Federal, state or foreign
bankruptcy, insolvency, receivership or similar law now or hereafter in
effect, (ii) consent to the institution of, or fail to contest in a timely
and appropriate manner, any proceeding or petition described in clause (h)
of this Article, (iii) apply for or consent to the appointment of a
receiver, trustee, custodian, sequestrator, conservator or similar official
for the Borrower or any Significant Subsidiary or for a substantial part of
its assets, (iv) file an answer admitting the material allegations of a
petition filed against it in any such proceeding, (v) make a general
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assignment for the benefit of creditors or (vi) take any action for the
purpose of effecting any of the foregoing;
(j) the Borrower or any Significant Subsidiary shall become unable,
admit in writing its inability or fail generally to pay its debts as they
become due;
(k) one or more judgments (other than to the extent covered by
insurance as to which the insurance company has acknowledged coverage and
other than to the extent covered by an indemnity given by an insurance
company) for the payment of money in an aggregate amount in excess of
$25,000,000 shall be rendered against the Borrower, any Restricted
Subsidiary or any combination thereof and the same shall remain
undischarged for a period of 30 consecutive days during which execution
shall not be effectively stayed, or any action shall be legally taken by a
judgment creditor to attach or levy upon any assets of the Borrower or any
Restricted Subsidiary to enforce any such judgment;
(l) an ERISA Event shall have occurred that, in the opinion of the
Required Lenders, when taken together with all other ERISA Events that have
occurred, could reasonably be expected to result in a Material Adverse
Effect;
(m) any Lien purported to be created under any Security Document
shall cease to be, or shall be asserted by any Loan Party not to be, a
valid and perfected Lien on any Collateral (other than immaterial portions
of the Collateral), with the priority required by the applicable Security
Document, except (i) as a result of the sale or other disposition of the
applicable Collateral in a transaction permitted under the Loan Documents
or (ii) as a result of the Agent's failure to maintain possession of any
stock certificates, promissory notes or other instruments delivered to it
under the Pledge Agreements; or the Subsidiary Guarantee Agreement shall
cease to be, or shall be asserted by any Subsidiary Loan Party not to be,
valid and enforceable; or
(n) a Change of Control shall occur;
then, and in every such event (other than an event with respect to the Borrower
described in clause (h) or (i) of this Article), and at any time thereafter
during the continuance of such event, the Administrative Agent may, and at the
request of the Required Lenders shall, by notice to the Borrower, take either or
both of the following actions, at the same or different times: (i) terminate the
Commitments, and thereupon the Commitments shall terminate immediately, and (ii)
declare the Loans then outstanding to be due and payable in whole (or in part,
in which case any principal not so declared to be due and payable may thereafter
be declared to be due and payable), and thereupon the
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principal of the Loans so declared to be due and payable, together with accrued
interest thereon and all fees and other obligations of the Borrower accrued
hereunder, shall become due and payable immediately, without presentment,
demand, protest or other notice of any kind, all of which are hereby waived by
the Borrower; and in case of any event with respect to the Borrower described in
clause (h) or (i) of this Article, the Commitments shall automatically terminate
and the principal of the Loans then outstanding, together with accrued interest
thereon and all fees and other obligations of the Borrower accrued hereunder,
shall automatically become due and payable, without presentment, demand, protest
or other notice of any kind, all of which are hereby waived by the Borrower.
ARTICLE VIII
The Administrative Agent
------------------------
Each of the Lenders and the Issuing Bank hereby irrevocably appoints the
Agent as its agent and authorizes the Agent to take such actions on its behalf
and to exercise such powers as are delegated to the Agent by the terms of the
Loan Documents, together with such actions and powers as are reasonably
incidental thereto.
The bank serving as the Agent hereunder shall have the same rights and
powers in its capacity as a Lender as any other Lender and may exercise the same
as though it were not the Agent, and such bank and its Affiliates may accept
deposits from, lend money to and generally engage in any kind of business with
the Borrower or any Subsidiary or other Affiliate thereof as if it were not the
Agent hereunder.
The Agent shall not have any duties or obligations except those expressly
set forth in the Loan Documents. Without limiting the generality of the
foregoing, (a) the Agent shall not be subject to any fiduciary or other implied
duties, regardless of whether a Default has occurred and is continuing, (b) the
Agent shall not have any duty to take any discretionary action or exercise any
discretionary powers, except discretionary rights and powers expressly
contemplated by the Loan Documents that the Agent is required to exercise in
writing by the Required Lenders (or such other number or percentage of the
Lenders as shall be necessary under the circumstances as provided in Section
9.02), and (c) except as expressly set forth in the Loan Documents, the Agent
shall not have any duty to disclose, and shall not be liable for the failure to
disclose, any information relating to the Borrower or any of its Subsidiaries
that is communicated to or obtained by the bank serving as Agent or any of its
Affiliates in any capacity. The Agent shall not be liable for any action taken
or not taken by it with the consent or at the request of the Required Lenders
(or such other number or percentage of the Lenders as shall be
94
necessary under the circumstances as provided in Section 9.02) or in the absence
of its own gross negligence or wilful misconduct. The Agent shall be deemed not
to have knowledge of any Default unless and until written notice thereof is
given to the Agent by the Borrower or a Lender, and the Agent shall not be
responsible for or have any duty to ascertain or inquire into (i) any statement,
warranty or representation made in or in connection with any Loan Document, (ii)
the contents of any certificate, report or other document delivered thereunder
or in connection therewith, (iii) the performance or observance of any of the
covenants, agreements or other terms or conditions set forth in any Loan
Document, (iv) the validity, enforceability, effectiveness or genuineness of any
Loan Document or any other agreement, instrument or document, or (v) the
satisfaction of any condition set forth in Article IV or elsewhere in any Loan
Document, other than to confirm receipt of items expressly required to be
delivered to the Agent.
The Agent shall be entitled to rely upon, and shall not incur any liability
for relying upon, any notice, request, certificate, consent, statement,
instrument, document or other writing believed by it to be genuine and to have
been signed or sent by the proper Person. The Agent also may rely upon any
statement made to it orally or by telephone and believed by it to be made by the
proper Person, and shall not incur any liability for relying thereon. The Agent
may consult with legal counsel (who may be counsel for the Borrower),
independent accountants and other experts selected by it, and shall not be
liable for any action taken or not taken by it in accordance with the advice of
any such counsel, accountants or experts.
The Agent may perform any and all its duties and exercise its rights and
powers by or through any one or more sub-agents appointed by the Agent. The
Agent and any such sub-agent may perform any and all its duties and exercise its
rights and powers through their respective Related Parties. The exculpatory
provisions of the preceding paragraphs shall apply to any such sub-agent and to
the Related Parties of each Agent and any such sub-agent, and shall apply to
their respective activities in connection with the syndication of the credit
facilities provided for herein as well as activities as Agent.
Subject to the appointment and acceptance of a successor Agent as provided
in this paragraph, the Agent may resign at any time by notifying the Lenders,
the Issuing Bank and the Borrower. Upon any such resignation, the Required
Lenders shall have the right, with, so long as no Default or Event of Default
shall have occurred and be continuing, the consent of the Borrower (which
consent shall not be unreasonably withheld or delayed), to appoint a successor.
If no successor shall have been so appointed by the Required Lenders and shall
have accepted such appointment within 30 days after the retiring Agent gives
notice of its resignation, then the retiring Agent may, on behalf of the Lenders
and the Issuing Bank, appoint a
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successor Agent which shall be a bank with an office in New York, New York, or
an Affiliate of any such bank. Upon the acceptance of its appointment as Agent
hereunder by a successor, such successor shall succeed to and become vested with
all the rights, powers, privileges and duties of the retiring Agent, and the
retiring Agent shall be discharged from its duties and obligations hereunder.
The fees payable by the Borrower to a successor Agent shall be the same as those
payable to its predecessor unless otherwise agreed between the Borrower and such
successor. After the Agent's resignation hereunder, the provisions of this
Article and Section 9.03 shall continue in effect for the benefit of such
retiring Agent, its sub-agents and their respective Related Parties in respect
of any actions taken or omitted to be taken by any of them while it was acting
as Agent.
Each Lender acknowledges that it has, independently and without reliance
upon the Agent or any other Lender and based on such documents and information
as it has deemed appropriate, made its own credit analysis and decision to enter
into this Agreement. Each Lender also acknowledges that it will, independently
and without reliance upon the Agent or any other Lender and based on such
documents and information as it shall from time to time deem appropriate,
continue to make its own decisions in taking or not taking action under or based
upon this Agreement, any other Loan Document or related agreement or any
document furnished hereunder or thereunder.
None of the Lenders identified on the facing page of, or elsewhere in, this
Agreement or in any other Loan Document as a "syndication agent" or a "co-
documentation agent", shall have any right, power, obligation, liability,
responsibility or duty under this Agreement or the other Loan Documents other
than those applicable to all of the Lenders as such. Without limiting the
foregoing, none of the Lenders so identified shall have or be deemed to have any
fiduciary relationship with any Lender.
ARTICLE IX
Miscellaneous
-------------
SECTION 9.01. Notices. Except in the case of notices and other
--------
communications expressly permitted to be given by telephone, all notices and
other communications provided for herein shall be in writing and shall be
delivered by hand or overnight courier service, mailed by certified or
registered mail or sent by telecopy, as follows:
(a) if to the Borrower, to it at McLeodUSA Technology Park, 0000 X
Xxxxxx XX, Xxxxx Xxxxxx, Xxxx 00000-0000, Attention of Mr. J. Xxxx Xxxxxxx,
Group Vice President and Chief Financial Officer, (Telecopy NO. 319 790-
7008);
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(b) if to the Agent, the Issuing Bank or the Swingline Lender, to The
Chase Manhattan Bank, Loan and Agency Services Group, One Chase Xxxxxxxxx
Xxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention of Xx. Xxxxxx Xxxxxx
(Telecopy No. (000) 000-0000), with a copy to The Chase Manhattan Bank,
000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention of Xx. Xxxxx Xxxxx
(Telecopy No. (000) 000-0000); and
(c) if to any other Lender, to it at its address (or telecopy number)
set forth in its Administrative Questionnaire.
Any party hereto may change its address or telecopy number for notices and other
communications hereunder by notice to the other parties hereto. All notices and
other communications given to any party hereto in accordance with the provisions
of this Agreement shall be deemed to have been given on the date of receipt.
SECTION 9.02. Waivers; Amendments. (a) No failure or delay by the Agent,
-------------------
the Issuing Bank or any Lender in exercising any right or power hereunder or
under any other Loan Document shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right or power, or any abandonment or
discontinuance of steps to enforce such a right or power, preclude any other or
further exercise thereof or the exercise of any other right or power. The rights
and remedies of the Agent, the Issuing Bank and the Lenders hereunder and under
the other Loan Documents are cumulative and are not exclusive of any rights or
remedies that they would otherwise have. No waiver of any provision of any Loan
Document or consent to any departure by any Loan Party therefrom shall in any
event be effective unless the same shall be permitted by paragraph (b) of this
Section, and then such waiver or consent shall be effective only in the specific
instance and for the purpose for which given. Without limiting the generality of
the foregoing, the making of a Loan or issuance of a Letter of Credit shall not
be construed as a waiver of any Default, regardless of whether the Agent, any
Lender or the Issuing Bank may have had notice or knowledge of such Default at
the time.
(b) Except as provided in Section 2.20 with respect to an Incremental
Facility Amendment, neither this Agreement nor any other Loan Document nor any
provision hereof or thereof may be waived, amended or modified except, in the
case of this Agreement, pursuant to an agreement or agreements in writing
entered into by the Borrower and the Required Lenders or, in the case of any
other Loan Document, pursuant to an agreement or agreements in writing entered
into by the Administrative Agent and the Loan Party or Loan Parties that are
parties thereto, in each case with the consent of the Required Lenders; provided
--------
that no such agreement shall (i) increase the Commitment or
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extend the Commitment of any Lender without the written consent of such Lender,
(ii) reduce the principal amount of any Loan or LC Disbursement or reduce the
rate of interest thereon, or reduce any fees payable hereunder, without the
written consent of each Lender affected thereby, (iii) postpone the maturity of
any Loan, or any scheduled date of payment of the principal amount of any Term
Loan under Section 2.10, or the required date of reimbursement of any LC
Disbursement, or any date for the payment of any interest or fees payable
hereunder, or reduce the amount of, waive or excuse any such payment, or
postpone the scheduled date of expiration of any Commitment, without the written
consent of each Lender affected thereby, (iv) change Section 2.18(b) or (c) in a
manner that would alter the pro rata sharing of payments required thereby,
without the written consent of each Lender, (v) change any of the provisions of
this Section or the percentage set forth in the definition of "Required Lenders"
or any other provision of any Loan Document specifying the number or percentage
of Lenders (or Lenders of any Class) required to waive, amend or modify any
rights thereunder or make any determination or grant any consent thereunder,
without the written consent of each Lender (or each Lender of such Class, as the
case may be), (vi) release any Subsidiary Loan Party from its Guarantee under
the Subsidiary Guarantee Agreement (except as expressly provided in Section
9.15), or limit its liability in respect of such Guarantee, without the written
consent of each Lender, (vii) (A) release Collateral from the Liens of the
Security Documents that comprises 15% or more of the book value of the
consolidated total assets of the Borrower and its Subsidiaries (as reflected on
the balance sheet of the Borrower and its Subsidiaries in the periodic report
most recently delivered pursuant to Section 5.01(f)), without the written
consent of Lenders holding 66.67% of the aggregate Revolving Exposures, Term
Loans and unused Commitments then outstanding, or (B) release all or
substantially all of the Collateral from the Liens of the Security Documents,
without the written consent of each Lender, in each case other than in
connection with any sale of Collateral permitted by this Agreement, (viii)
change any provisions of any Loan Document in a manner that by its terms
adversely affects the rights in respect of payments due to Lenders holding Loans
of any Class differently than those holding Loans of any other Class, without
the written consent of Lenders holding a majority in interest of the outstanding
Loans and unused Commitments of each affected Class or (ix) change the rights of
the Tranche B Lenders to decline mandatory prepayments as provided in Section
2.11, without the written consent of Tranche B Lenders holding a majority of the
outstanding Tranche B Loans; provided further that (A) no such agreement shall
----------------
amend, modify or otherwise affect the rights or duties of the Administrative
Agent, the Issuing Bank or the Swingline Lender without the prior written
consent of the Administrative Agent, the Issuing Bank or the Swingline Lender,
as the case may be, (B) any waiver, amendment or modification of this Agreement
that by its terms affects the rights or duties under this Agreement
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of the Revolving Lenders (but not the Tranche A Lenders and Tranche B Lenders),
the Tranche A Lenders (but not the Revolving Lenders and Tranche B Lenders) or
the Tranche B Lenders (but not the Revolving Lenders and Tranche A Lenders) may
be effected by an agreement or agreements in writing entered into by the
Borrower and requisite percentage in interest of the affected Class of Lenders
that would be required to consent thereto under this Section if such Class of
Lenders were the only Class of Lenders hereunder at the time and (C) any
amendment to Section 9.14 is subject to Section 9.14(e). Notwithstanding the
foregoing, any provision of this Agreement may be amended by an agreement in
writing entered into by the Borrower, the Required Lenders and the
Administrative Agent (and, if their rights or obligations are affected thereby,
the Issuing Bank and the Swingline Lender) if (i) by the terms of such agreement
the Commitment of each Lender not consenting to the amendment provided for
therein shall terminate upon the effectiveness of such amendment and (ii) at the
time such amendment becomes effective, each Lender not consenting thereto
receives payment in full of the principal of and interest accrued on each Loan
made by it and all other amounts owing to it or accrued for its account under
this Agreement.
SECTION 9.03. Expenses; Indemnity; Damage Waiver. (a) The Borrower shall
----------------------------------
pay (i) all reasonable out-of-pocket expenses incurred by the Administrative
Agent and its Affiliates, including the reasonable fees, charges and
disbursements of counsel for the Administrative Agent, in connection with the
syndication of the credit facilities provided for herein, the preparation and
administration of the Loan Documents or any amendments, modifications or waivers
of the provisions thereof (whether or not the transactions contemplated hereby
or thereby shall be consummated), (ii) all reasonable out-of-pocket expenses
incurred by the Issuing Bank in connection with the issuance, amendment, renewal
or extension of any Letter of Credit or any demand for payment thereunder and
(iii) all reasonable out-of-pocket expenses incurred by the Administrative
Agent, the Issuing Bank or any Lender, including the reasonable fees, charges
and disbursements of not more than three separate firms of outside counsel (as
well as separate local and regulatory counsel) for the Administrative Agent, the
Issuing Bank or any Lender, in connection with the enforcement or protection of
its rights in connection with the Loan Documents, including its rights under
this Section, or in connection with the Loans made or Letters of Credit issued
hereunder, including all such out-of-pocket expenses incurred during any
workout, restructuring or negotiations in respect of such Loans or Letters of
Credit.
(b) The Borrower shall indemnify the Administrative Agent, the Issuing
Bank and each Lender, and each Related Party of any of the foregoing Persons
(each such Person being called an "Indemnitee") against, and hold each
----------
Indemnitee harmless from, any and all losses, claims, damages, liabilities and
related
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expenses, including the reasonable fees, charges and disbursements of any
counsel for any Indemnitee (which shall be limited to one joint counsel of each
applicable type or qualification to all Indemnitees, subject to the provisions
of the next paragraph), incurred by or asserted against any Indemnitee arising
out of, in connection with, or as a result of (i) the execution or delivery of
any Loan Document or any other agreement or instrument contemplated hereby, the
performance by the parties to the Loan Documents of their respective obligations
thereunder or the consummation of the Transactions or any other transactions
contemplated hereby, (ii) any Loan or Letter of Credit or the use of the
proceeds therefrom (including any refusal by the Issuing Bank to honor a demand
for payment under a Letter of Credit if the documents presented in connection
with such demand do not strictly comply with the terms of such Letter of
Credit), (iii) any actual or alleged presence or release of Hazardous Materials
on or from any Mortgaged Property or any other property currently or formerly
owned or operated by the Borrower or any of its Subsidiaries, or any
Environmental Liability related in any way to the Borrower or any of its
Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation
or proceeding relating to any of the foregoing, whether based on contract, tort
or any other theory and regardless of whether any Indemnitee is a party thereto;
provided that such indemnity shall not, as to any Indemnitee, be available to
--------
the extent that such losses, claims, damages, liabilities or related expenses
resulted from the bad faith, gross negligence or wilful misconduct of such
Indemnitee.
Each Indemnitee will provide the Borrower with prompt written notification
of any claim for which indemnification may be sought, provided that the failure
of any Indemnitee to give such notice shall not affect the Borrower's indemnity
obligations hereunder, except to the extent the Borrower has been prejudiced by
such Indemnitee's failure to notify. The Borrower shall, upon confirming in
writing to the applicable Indemnitee that the Borrower assumes full liability
for all claims and related costs and damages, be entitled to assume the defense
of any action for which indemnification is sought hereunder with counsel of its
choice at its expense (in which case the Borrower shall not thereafter be
responsible for the fees and expenses of any separate counsel retained by an
Indemnitee except as set forth below); provided, however, that such counsel
-------- -------
shall be reasonably satisfactory to each such Indemnitee. Notwithstanding the
Borrower's right to assume the defense of such action, each Indemnitee shall
have the right to employ separate counsel and to participate in the defense of
such action, and the Borrower shall bear the reasonable fees, costs and expenses
of such separate counsel, if (i) the relevant proceeding involves claims or
actions between the Borrower and such Indemnitee or the use of counsel chosen by
the Borrower to represent such Indemnitee would otherwise present such counsel
with a conflict of interest; (ii) the actual or potential defendants in, or
targets of, any such action include both the
Borrower and such Indemnitee and such Indemnitee shall reasonably have concluded
that there may be legal defenses available to it that are different from or
additional to those presented by the Borrower (in which case the Borrower shall
not have the right to assume the defense of such action on behalf of such
Indemnitee); (iii) the Borrower shall not have employed counsel reasonably
satisfactory to such Indemnitee to represent it within a reasonable time after
notice of the institution of such action; or (iv) the Borrower shall authorize
such Indemnitee to employ separate counsel at the Borrower's expense. The
Borrower shall not be liable to any Indemnitee for any settlement of an
indemnified claim made without the Borrower's consent (such consent not to be
unreasonably withheld). No settlement or adjustment will be made without such
Indemnitee's prior written consent if the settlement or adjustment involves any
performance by, or adverse admission of, such Indemnitee.
(c) To the extent that the Borrower fails to pay any amount required to
be paid by it to the Administrative Agent, the Issuing Bank or the Swingline
Lender under paragraph (a) or (b) of this Section, each Lender severally agrees
to pay to the Administrative Agent, the Issuing Bank or the Swingline Lender, as
the case may be, such Lender's pro rata share (determined as of the time that
the applicable unreimbursed expense or indemnity payment is sought) of such
unpaid amount; provided that the unreimbursed expense or indemnified loss,
--------
claim, damage, liability or related expense, as the case may be, was incurred by
or asserted against the Administrative Agent, the Issuing Bank or the Swingline
Lender in its capacity as such. For purposes hereof, a Lender's "pro rata
share" shall be determined based upon its share of the sum of the total
Revolving Exposures, outstanding Term Loans and unused Commitments at the time.
(d) To the extent permitted by applicable law, the Borrower shall not
assert, and hereby waives, any claim against any Indemnitee, on any theory of
liability, for special, indirect, consequential or punitive damages (as opposed
to direct or actual damages) arising out of, in connection with, or as a result
of, this Agreement or any agreement or instrument contemplated hereby, the
Transactions, any Loan or Letter of Credit or the use of the proceeds thereof.
(e) All amounts due under this Section shall be payable promptly after
written demand therefor.
SECTION 9.04. Successors and Assigns. (a) The provisions of this Agreement
----------------------
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns permitted hereby (including any Affiliate of
the Issuing Bank that issues any Letter of Credit), except that the Borrower may
not assign or otherwise transfer any of its rights or obligations hereunder
without the prior written consent of each Lender (and any attempted assignment
or transfer by the Borrower
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without such consent shall be null and void). Nothing in this Agreement,
expressed or implied, shall be construed to confer upon any Person (other than
the parties hereto, their respective successors and assigns permitted hereby
(including any Affiliate of the Issuing Bank that issues any Letter of Credit)
and, to the extent expressly contemplated hereby, the Related Parties of each of
the Administrative Agent, the Issuing Bank and the Lenders) any legal or
equitable right, remedy or claim under or by reason of this Agreement.
(b) Any Lender may assign to one or more assignees all or a portion of
its rights and obligations under this Agreement (including all or a portion of
its Commitment and the Loans at the time owing to it); provided that (i) except
--------
in the case of an assignment to a Lender, a Lender Affiliate or a Related Fund
of a Lender, each of the Borrower and the Administrative Agent (and, in the case
of an assignment of all or a portion of a Revolving Commitment or any Lender's
obligations in respect of its LC Exposure or Swingline Exposure, the Issuing
Bank and the Swingline Lender) must give their prior written consent to such
assignment (which consent shall not be unreasonably withheld or delayed), (ii)
except in the case of an assignment to a Lender or an Affiliate of a Lender or a
Related Fund of a Lender or an assignment of the entire remaining amount of the
assigning Lender's Commitment or Loans, the amount of the Commitment or Loans of
the assigning Lender subject to each such assignment (determined as of the date
the Assignment and Acceptance with respect to such assignment is delivered to
the Administrative Agent) shall not be less than $5,000,000 (or less than
$1,000,000, in the case of an assignment of Tranche B Term Loans) unless each of
the Borrower and the Administrative Agent otherwise consent, (iii) each partial
assignment shall be made as an assignment of a proportionate part of all the
assigning Lender's rights and obligations under this Agreement, except that this
clause (iii) shall not be construed to prohibit the assignment of a
proportionate part of all the assigning Lender's rights and obligations in
respect of one Class of Commitments or Loans, (iv) the parties to each
assignment shall execute and deliver to the Administrative Agent an Assignment
and Acceptance, together with a processing and recordation fee of $3,500, and
(v) the assignee, if it shall not be a Lender, shall deliver to the
Administrative Agent an Administrative Questionnaire; and provided further that
----------------
any consent of the Borrower otherwise required under this paragraph shall not be
required if an Event of Default under clause (h) or (i) of Article VII has
occurred and is continuing. Subject to acceptance and recording thereof
pursuant to paragraph (d) of this Section, from and after the effective date
specified in each Assignment and Acceptance the assignee thereunder shall be a
party hereto and, to the extent of the interest assigned by such Assignment and
Acceptance, have the rights and obligations of a Lender under this Agreement,
and the assigning Lender thereunder shall, to the extent of the interest
assigned by such Assignment and Acceptance, be released from its obligations
102
under this Agreement (and, in the case of an Assignment and Acceptance covering
all of the assigning Lender's rights and obligations under this Agreement, such
Lender shall cease to be a party hereto but shall continue to be entitled to the
benefits of Sections 2.15, 2.16, 2.17 and 9.03). Any assignment or transfer by
a Lender of rights or obligations under this Agreement that does not comply with
this paragraph shall be treated for purposes of this Agreement as a sale by such
Lender of a participation in such rights and obligations in accordance with
paragraph (e) of this Section.
(c) The Administrative Agent, acting for this purpose as an agent of the
Borrower, shall maintain at one of its offices in The City of New York a copy of
each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitment of,
and principal amount of the Loans and LC Disbursements owing to, each Lender
pursuant to the terms hereof from time to time (the "Register"). The entries in
--------
the Register shall be conclusive, and the Borrower, the Administrative Agent,
the Issuing Bank and the Lenders may treat each Person whose name is recorded in
the Register pursuant to the terms hereof as a Lender hereunder for all purposes
of this Agreement, notwithstanding notice to the contrary. The Register shall
be available for inspection by the Borrower, the Issuing Bank and any Lender, at
any reasonable time and from time to time upon reasonable prior notice.
(d) Upon its receipt of a duly completed Assignment and Acceptance
executed by an assigning Lender and an assignee, the assignee's completed
Administrative Questionnaire (unless the assignee shall already be a Lender
hereunder), the processing and recordation fee referred to in paragraph (b) of
this Section and any written consent to such assignment required by paragraph
(b) of this Section, the Administrative Agent shall accept such Assignment and
Acceptance and record the information contained therein in the Register. No
assignment shall be effective for purposes of this Agreement unless it has been
recorded in the Register as provided in this paragraph.
(e) Any Lender may, without the consent of the Borrower, the
Administrative Agent, the Issuing Bank or the Swingline Lender, sell
participations to one or more banks or other entities (a "Participant") in all
-----------
or a portion of such Lender's rights and obligations under this Agreement
(including all or a portion of its Commitment and the Loans owing to it);
provided that (i) such Lender's obligations under this Agreement shall remain
--------
unchanged, (ii) such Lender shall remain solely responsible to the other parties
hereto for the performance of such obligations and (iii) the Borrower, the
Administrative Agent, the Issuing Bank and the other Lenders shall continue to
deal solely and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement. Any agreement or instrument
pursuant to which a Lender sells such a participation shall provide that such
Lender shall retain the
103
sole right to enforce the Loan Documents and to approve any amendment,
modification or waiver of any provision of the Loan Documents; provided that
--------
such agreement or instrument may provide that such Lender will not, without the
consent of the Participant, agree to any amendment, modification or waiver
described in the first proviso to Section 9.02(b) that affects such Participant.
Subject to paragraph (f) of this Section, the Borrower agrees that each
Participant shall be entitled to the benefits of Sections 2.15, 2.16 and 2.17 to
the same extent as if it were a Lender and had acquired its interest by
assignment pursuant to paragraph (b) of this Section. To the extent permitted by
law, each Participant also shall be entitled to the benefits of Section 9.08 as
though it were a Lender, provided such Participant agrees to be subject to
Section 2.18(c) as though it were a Lender.
(f) A Participant shall not be entitled to receive any greater payment
under Section 2.15 or 2.17 than the applicable Lender would have been entitled
to receive with respect to the participation sold to such Participant, unless
the sale of the participation to such Participant is made with the Borrower's
prior written consent. A Participant that would be a Foreign Lender if it were
a Lender shall not be entitled to the benefits of Section 2.17 unless the
Borrower is notified of the participation sold to such Participant and such
Participant agrees, for the benefit of the Borrower, to comply with Section
2.17(e) as though it were a Lender.
(g) Any Lender may at any time pledge or assign a security interest in
all or any portion of its rights under this Agreement to secure obligations of
such Lender, including, without limitation, any pledge or assignment to secure
obligations to a Federal Reserve Bank, and this Section shall not apply to any
such pledge or assignment of a security interest; provided that no such pledge
--------
or assignment of a security interest shall release a Lender from any of its
obligations hereunder or substitute any such pledgee or assignee for such Lender
as a party hereto.
SECTION 9.05. Survival. All covenants, agreements, representations and
--------
warranties made by the Loan Parties in the Loan Documents and in the
certificates or other instruments delivered in connection with or pursuant to
this Agreement or any other Loan Document shall be considered to have been
relied upon by the other parties hereto and shall survive the execution and
delivery of the Loan Documents and the making of any Loans and issuance of any
Letters of Credit, regardless of any investigation made by any such other party
or on its behalf and notwithstanding that the Administrative Agent, the Issuing
Bank or any Lender may have had notice or knowledge of any Default or incorrect
representation or warranty at the time any credit is extended hereunder, and
shall continue in full force and effect as long as the principal of or any
accrued interest on any Loan or any fee or any other amount payable under this
Agreement is
104
outstanding and unpaid or any Letter of Credit is outstanding and so long as the
Commitments have not expired or terminated. The provisions of Sections 2.15,
2.16, 2.17 and 9.03 and Article VIII shall survive and remain in full force and
effect regardless of the consummation of the transactions contemplated hereby,
the repayment of the Loans, the expiration or termination of the Letters of
Credit and the Commitments or the termination of this Agreement or any provision
hereof.
SECTION 9.06. Counterparts; Integration; Effectiveness. This Agreement 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 Agreement, the other
Loan Documents and any separate letter agreements with respect to fees payable
to the Administrative Agent constitute the entire contract among the parties
relating to the subject matter hereof and supersede any and all previous
agreements and understandings, oral or written, relating to the subject matter
hereof. Except as provided in Section 4.01, this Agreement shall become
effective when it shall have been executed by the Administrative Agent and when
the Administrative Agent shall have received counterparts hereof which, when
taken together, bear the signatures of each of the other parties hereto, and
thereafter shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns. Delivery of an executed counterpart
of a signature page of this Agreement by telecopy shall be effective as delivery
of a manually executed counterpart of this Agreement.
SECTION 9.07. Severability. Any provision of this Agreement 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 and 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 9.08. Right of Setoff. If an Event of Default shall have occurred
---------------
and be continuing, each Lender and each of its Affiliates is hereby authorized
at any time and from time to time, to the fullest extent permitted by law, to
set off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other obligations at any time owing
by such Lender or Affiliate to or for the credit or the account of the Borrower
against any of and all the obligations of the Borrower now or hereafter existing
under this Agreement held by such Lender, irrespective of whether or not such
Lender shall have made any demand under this Agreement and although such
obligations may be unmatured. The rights of each Lender under this Section are
in addition to other rights and remedies (including other rights of setoff)
which such Lender may have.
105
SECTION 9.09. Governing Law; Jurisdiction; Consent to Service of Process.
----------------------------------------------------------
(a) This Agreement shall be construed in accordance with and governed by the law
of the State of New York.
(b) The Borrower hereby irrevocably and unconditionally submits, for
itself and its property, to the nonexclusive jurisdiction of the Supreme Court
of the State of New York sitting in New York County and of the United States
District Court of the Southern District of New York, and any appellate court
from any thereof, in any action or proceeding arising out of or relating to any
Loan Document, or for recognition or enforcement of any judgment, and each of
the parties hereto hereby irrevocably and unconditionally agrees that all claims
in respect of any such action or proceeding may be heard and determined in such
New York State or, to the extent permitted by law, in such Federal court. Each
of the parties hereto agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions by
suit on the judgment or in any other manner provided by law. Nothing in this
Agreement or any other Loan Document shall affect any right that the
Administrative Agent, the Issuing Bank or any Lender may otherwise have to bring
any action or proceeding relating to this Agreement or any other Loan Document
against the Borrower or its properties in the courts of any jurisdiction.
(c) The Borrower hereby irrevocably and unconditionally waives, to the
fullest extent it may legally and effectively do so, any objection which it may
now or hereafter have to the laying of venue of any suit, action or proceeding
arising out of or relating to this Agreement or any other Loan Document in any
court referred to in paragraph (b) of this Section. Each of the parties hereto
hereby irrevocably waives, to the fullest extent permitted by law, the defense
of an inconvenient forum to the maintenance of such action or proceeding in any
such court.
(d) Each party to this Agreement irrevocably consents to service of
process in the manner provided for notices in Section 9.01. Nothing in this
Agreement or any other Loan Document will affect the right of any party to this
Agreement to serve process in any other manner permitted by law.
SECTION 9.10. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO
--------------------
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RELATING TO THIS AGREEMENT, ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH
PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY
OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO
106
HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
SECTION 9.11. Headings. Article and Section headings and the Table of
--------
Contents used herein are for convenience of reference only, are not part of this
Agreement and shall not affect the construction of, or be taken into
consideration in interpreting, this Agreement.
SECTION 9.12. Confidentiality. Each of the Administrative Agent, the
---------------
Issuing Bank and the Lenders agrees to maintain the confidentiality of the
Information (as defined below), except that Information may be disclosed (a) to
its and its Affiliates' directors, officers, employees and agents, including
accountants, legal counsel and other advisors (it being understood that the
Persons to whom such disclosure is made will be informed of the confidential
nature of such Information and instructed to keep such Information
confidential), (b) to the extent requested by any regulatory authority, (c) to
the extent required by applicable laws or regulations or by any subpoena or
similar legal process, (d) to any other party to this Agreement, (e) in
connection with the exercise of any remedies hereunder or any suit, action or
proceeding relating to this Agreement or any other Loan Document or the
enforcement of rights hereunder or thereunder, (f) subject to an agreement
containing provisions substantially the same as those of this Section (in the
case of the following clauses (i) and (ii)), (i) to any assignee of or
Participant in, or any prospective assignee of or Participant in, any of its
rights or obligations under this Agreement, (ii) to any direct or indirect
contractual counterparty in swap agreements or such contractual counterparty's
professional advisor (so long as such contractual counterparty or professional
advisor to such contractual counterparty agrees to be bound by the provisions of
this Section 9.12) or (iii) 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, (g) with the
consent of the Borrower or (h) to the extent such Information (i) becomes
publicly available other than as a result of a breach of this Section or (ii)
becomes available to the Agent, the Issuing Bank or any Lender on a
nonconfidential basis from a source other than the Borrower. For the purposes of
this Section, "Information" means all information received from the Borrower
-----------
relating to the Borrower or its business, other than any such information that
is available to the Administrative Agent, the Issuing Bank or any Lender on a
nonconfidential basis prior to disclosure by the Borrower. Any Person required
to maintain the confidentiality of Information as provided in this Section shall
be considered to have complied with its obligation to do so if such Person has
exercised the same degree of care to maintain the confidentiality of such
Information as such Person would accord to its own confidential information.
107
SECTION 9.13. Interest Rate Limitation. Notwithstanding anything herein
-------------------------
to the contrary, if at any time the interest rate applicable to any Loan,
together with all fees, charges and other amounts which are treated as interest
on such Loan under applicable law (collectively the "Charges"), shall exceed the
-------
maximum lawful rate (the "Maximum Rate") which may be contracted for, charged,
------------
taken, received or reserved by the Lender holding such Loan in accordance with
applicable law, the rate of interest payable in respect of such Loan hereunder,
together with all Charges payable in respect thereof, shall be limited to the
Maximum Rate and, to the extent lawful, the interest and Charges that would have
been payable in respect of such Loan but were not payable as a result of the
operation of this Section shall be cumulated and the interest and Charges
payable to such Lender in respect of other Loans or periods shall be increased
(but not above the Maximum Rate therefor) until such cumulated amount, together
with interest thereon at the Federal Funds Effective Rate to the date of
repayment, shall have been received by such Lender.
SECTION 9.14. Special Funding Option. (a) Notwithstanding anything to
-----------------------
the contrary contained herein, any Lender (for the purposes of this Section
9.16, a "Granting Lender") may grant to a special purpose funding vehicle (for
---------------
the purposes of this Section 9.16, an "SPC") the option to make, on behalf of
---
such Granting Lender, all or a portion of the Loans which such Granting Lender
is obligated to make (a "Funding Obligation") under the Revolving Credit
------------------
Facility, such option to be exercisable in the sole discretion of the SPC,
provided, however, that
-------- -------
(i) such Granting Lender's obligations under this Agreement and the
Loan Documents shall remain unchanged, including without limitation the
indemnification obligations of the Granting Lender pursuant to Section
9.03 hereof;
(ii) such Granting Lender shall remain solely responsible to the
other parties hereto for the performance of all Funding Obligations;
(iii) the Borrower and the Lenders shall continue to deal solely and
directly with such Granting Lender in connection with such Granting
Lender's rights and obligations under this Agreement; the Agent shall
continue to deal directly with the Granting Lender as agent for the SPC
with respect to distribution of payment of principal; interest and fees,
notices of Conversion and Continuation and all other matters;
(iv) such Granting Lender shall retain the sole right to enforce the
obligations of the Borrower relating to its Loans and its Notes and to
approve any amendment,
108
modification, or waiver of any provisions of this Agreement, each of which
may, if so agreed in writing between the Granting Lender and the SPC,
require the prior consent of any such SPC which has exercised the option
to undertake the Funding Obligation in connection with such Granting
Lender's Commitments and Obligations owing thereto before the Granting
Lender approves any such amendment, modification or waiver;
(v) the granting of such option shall not constitute an assignment
to or participation of such SPC of or in the Granting Lender's Commitments
and Obligations owing thereto;
(vi) such SPC shall not become a Lender hereunder as a result of
the granting of such option;
(vii) such SPC shall not become obligated or committed to make Loans
as a result of the granting of such option;
(viii) if such SPC elects not to exercise such option or otherwise
fails to make all or any part of a Loan, the Granting Lender shall retain
its Funding Obligation and be obligated to make the entire Loan or any
portion of such Loan not made by such SPC; and
(ix) any SPC may, with notice to, but without the prior written
consent of, the Borrowers and the Agent and without paying any processing
fee therefor, assign all or a portion of its interests as a participant or
subparticipant in any Loans to the Granting Bank or to any financial
institutions (consented to by the Borrowers and Agent) providing liquidity
and/or credit support to or for the account of such SPC to support the
funding or maintenance of Loans.
(b) Loans made by an SPC hereunder shall be deemed to satisfy the Funding
Obligation and utilize the Revolving Credit Commitment of the Granting Lender as
if, and to the same extent, such Loans were made by such Granting Lender.
(c) Each party hereto agrees that no SPC shall be liable for any indemnity
or payment under this Agreement for which a Granting Lender would otherwise be
liable so long as, and to the extent that, the Granting Lender provides such
indemnity or makes such payment. In furtherance of the foregoing, each party
hereto hereby agrees (which agreement shall survive the termination of this
Agreement) that, prior to the date that is one year and one day after the
payment in full of all outstanding commercial paper or other senior Indebtedness
of any SPC, it will not institute against, or join any other person in
instituting against, such SPC any bankruptcy, reorganization, arrangement,
insolvency or liquidation proceedings under the laws of the United States or any
State thereof arising out of or
109
relating to transactions under this Agreement or the other Loan Documents.
(d) Notwithstanding anything to the contrary contained in this Agreement,
an SPC may disclose on a confidential basis any nonpublic information relating
to Loans made by such SPC hereunder to any rating agency, commercial paper
dealer or provider of any surety or guarantee to such SPC.
(e) This Section 9.14 may not be amended without the prior written consent
of the Granting Lenders on behalf of which each SPC has made all or any part of
its Loans which remain outstanding at the time of such amendment.
SECTION 9.15. Release of Subsidiaries. (a) If (i) the Agent receives a
------------------------
certificate from the chief executive officer, the chief financial officer or
treasurer of the Borrower certifying as of the date of that certificate that,
after the consummation of the transaction or series of transactions described in
reasonable detail satisfactory to the Administrative Agent in such certificate
on such date, the Subsidiary Loan Party identified in such certificate will no
longer be a Subsidiary of the Company and (ii) such transactions are consummated
on such date in accordance with and without violating the provisions of this
Agreement or any other Loan Document then such Subsidiary's
Guarantee shall automatically terminate and such Subsidiary shall cease to be a
party to any Loan Document.
(b) No such termination or cessation shall release, reduce, or otherwise
adversely affect the obligations of any other Loan Party under this Agreement,
any other Guarantee, or any other Loan Document, all of which obligations
continue to remain in full force and effect.
(c) The Agent shall, at the Borrower's expense, execute such documents as
the Company may reasonably request to evidence such termination or cessation, as
the case may be.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
McLEODUSA INCORPORATED,
by
Name:
110
Title:
THE CHASE MANHATTAN BANK,
individually and as Agent,
by
Name:
Title:
CITICORP USA, INC.,
by
Name:
Title:
BANK OF AMERICA, N.A.,
by
Name:
Title:
XXXXXXX XXXXX CREDIT PARTNERS L.P.,
by
Name:
Title:
XXXXXXX XXXXX BARNEY INC.,
111
by
Name:
Title:
ABN AMRO BANK N.V.,
by
Name:
Title:
BANK AUSTRIA CREDITANSTALT
CORPORATE FINANCE, INC.,
by
Name:
Title:
by
Name:
Title:
THE BANK OF NOVA SCOTIA,
by
Name:
Title:
CREDIT SUISSE FIRST BOSTON,
by
Name:
Title:
112
by
Name:
Title:
FIRSTAR BANK, N.A.,
by
Name:
Title:
FLEET NATIONAL BANK,
by
Name:
Title:
XXXXXX TRUST & SAVINGS BANK,
by
Name:
Title:
BAYERISCHE HYPO-UND VEREINSBANK AG,
New York Branch,
by
Name:
Title:
IBM CREDIT CORPORATION,
113
by
Name:
Title:
ING (US) CAPITAL LLC,
by
Name:
Title:
CREDIT AGRICOLE INDOSUEZ,
by
Name:
Title:
by
Name:
Title:
114
GENERAL ELECTRIC CAPITAL CORPORATION,
by
Name:
Title:
PINEHURST TRADING, INC.,
by
Name:
Title:
BANK OF MONTREAL,
by
Name:
Title:
XXXXXX FINANCIAL, INC.,
by
Name:
Title:
METROPOLITAN LIFE INSURANCE COMPANY,
by
Name:
Title:
115
XXXXXX XXXXXXX XXXX XXXXXX PRIME
INCOME TRUST,
by
Name:
Title:
PPM AMERICA, INC., as attorney in fact,
on behalf of Xxxxxxx
National Life Insurance Company,
by
Name:
Title:
Liberty - Xxxxx Xxx Advisor Floating
Rate Advantage Fund,
By Xxxxx Xxx & Farnham Incorporated,
As Advisor
by
Name:
Title:
Xxxxx Xxx Floating Rate Limited
Liability Company,
by
Name:
Title:
116
THE SUMITOMO TRUST & BANKING CO., LTD.,
New York Branch,
by
Name:
Title:
Galaxy CLO 1999-1, Ltd.
By SAI Investment Adviser, Inc.
its Collateral Manager,
by
Name:
Title:
KZH SHOSHONE LLC,
by
Name:
Title:
KZH ING-3 LLC,
by
Name:
Title:
KZH ING-1 LLC,
by
Name:
Title:
117
TORONTO DOMINION (NEW YORK), INC.,
by
Name:
Title:
TEXTRON FINANCIAL CORPORATION,
by
Name:
Title:
CypressTree Investment Management
Company, Inc.
As: Attorney-in-Fact and on behalf
of First Allmerica Financial Life
Insurance Company as Portfolio Manager
by
Name:
Title:
CypressTree Investment Fund, LLC,
By: CypressTree Investment Management
Company, Inc. its Managing Member
by
Name:
Title:
118
KZH CYPRESSTREE-1 LLC,
by
Name:
Title:
CYPRESSTREE SENIOR FLOATING RATE FUND
By: CypressTree Investment Management
Company, Inc. as Portfolio Manager
by
Name:
Title:
NORTH AMERICAN SENIOR FLOATING RATE FUND
By: CypreeTree Investment Management
Company, Inc. as Portfolio Manager
by
Name:
Title:
KZH STERLING LLC,
by
Name:
Title:
119
METROPOLITAN PROPERTY AND CASUALTY
INSURANCE COMPANY,
by
Name:
Title:
Olympic Funding Trust, Series
1999-1,
by
Name:
Title:
Muirfield Trading LLC,
by
Name:
Title:
Foothill Income Trust II, L.P.,
by
Name:
Title:
Xxxxxx Floating Rate Fund,
by
Name:
Title:
120
Xxxxxxxxxxx Senior Floating Rate Fund,
by
Name:
Title:
XXXXXXX BANK,
by
Name:
Title:
NUVEEN FLOATING RATE FUND
By: Nuveen Senior Loan Asset
Management Inc.,
by
Name:
Title:
NUVEEN SENIOR INCOME FUND
By: Nuveen Senior Loan Asset
Management Inc.,
by
Name:
Title:
121
Pilgrim Prime Rate Trust
By: Pilgrim Investments Inc.,
as its investment manager
by
Name:
Title:
122
