SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT
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This SECOND AMENDMENT TO LOAN AND SECURITY AGREEMENT (this "Amendment") is
dated as of November 30, 2000, by and among the following parties:
LENDER/SECURED PARTY: NTFC CAPITAL CORPORATION, a Delaware
corporation with offices at ▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
(the "Lender"),
and
BORROWERS/DEBTOR: FOCAL COMMUNICATIONS CORPORATION, a Delaware
corporation with its principal place of
business at ▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (together with its subsidiaries
identified on Schedule A hereto, collectively
referred to as the "Borrower").
This Second Amendment to Loan and Security Agreement (i) amends that certain
Loan and Security Agreement between the Borrower and the Lender dated as of
December 30, 1998 (as amended by that certain First Amendment to Loan and
Security Agreement dated as of April 15, 2000, the "Existing Agreement" and as
further amended by this Amendment, the "Agreement"), (ii) amends certain
provisions of the Unconditional Guaranty, dated as of December 30, 1998 (the
"Guaranty"), and (iii) includes the general terms and conditions herein and
all the exhibits and schedules attached hereto, all of which are incorporated
herein. In the event of a conflict between the general terms and conditions and
any schedule, the additional terms and conditions stated in the schedule shall
control.
ARTICLE 1: AMENDMENTS TO EXISTING AGREEMENT
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The Existing Agreement is hereby amended as follows:
1.01 Schedule 7.15 of the Existing Agreement is hereby amended by deleting
the present Schedule 7.15 and replacing it with Schedule B hereto.
1.02 Section 8.04(a) of the Existing Agreement is hereby amended by
inserting the following after the phrase "whether now owned or hereafter
acquired":
"; provided, the foregoing shall not prohibit any of the following: (1) the
merger of any wholly-owned subsidiary of Focal Communications Corporation
("FCC") with FCC or with any other wholly-owned subsidiary of FCC, (ii) the
contribution by FCC of the stock of any of its wholly-owned subsidiaries to
Focal Financial Services, Inc. ("FFS"), (iii) the formation of any of Focal
Equipment Finance, LLC ("FEF") or Focal Fiber Leasing, LLC ("FFL"), each a
Delaware single member limited liability company, (iv) the leasing by FFS, FEF
or FFL of any
Telecommunications Assets to any other wholly-owned subsidiary of FCC, (v)
the contribution of cash by FCC to FFS as an addition to the share capital
of FFS and (vi) the equitization of intercompany debt owing among the
Borrower and the Guarantors.
1.03 Section 8.04(b) of the Existing Agreement is hereby amended by
inserting the following after the phrase "shall have been taken":
"; provided, the foregoing shall not require consent from the Lender with
respect to any of the transactions described in the proviso to clause (a)
above".
1.04 Section 8.06 of the Existing Agreement is hereby amended by adding
the following at the end thereof (immediately prior to the period):
"; it being understood that any of the foregoing shall be permitted to the
extent being done in connection with the telecommunications business".
1.05 Section 9.01(f) of the Existing Agreement is hereby amended by
replacing the dollar amount "$300,000" with the dollar amount "$5,000,000".
1.06 Section 1.01 of the Existing Agreement is hereby amended by inserting
the following definitions in alphabetical order:
"Credit and Guaranty Agreement" means that certain Credit and Guaranty
Agreement, dated as of August 25, 2000, among the Borrower and certain
lending and financial institutions party thereto, as the same may be
amended, modified or supplemented from time to time in accordance with the
Intercreditor Agreement.
"Intercreditor Agreement" means that certain Intercreditor Agreement, dated
as of November __, 2000, by and between Lender and Citibank, N.A., as the
Collateral Agent for the lenders party to the Credit and Guaranty
Agreement.
ARTICLE 2: AMENDMENT TO GUARANTY
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The Guaranty is hereby amended as follows:
2.01 Section 2.10 of the Guaranty is hereby amended by adding the following
sentence at the end thereof:
"Notwithstanding anything in the foregoing to the contrary, (i) Guarantor
shall be permitted to pledge intercompany obligations in favor of the
lenders under the Credit and Guaranty Agreement (and to perfect the
interests therein by delivery, filing of financing statements and
otherwise), and (ii) Borrower may incur and guarantee obligations under the
Credit and Guaranty Agreement, in each case as and to the extent more fully
described in the Intercreditor Agreement."
ARTICLE 3: AFFIRMATIONS
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3.01. Borrower hereby represents and warrants that (a) the representations
and warranties contained in Article 4 of the Loan Agreement are true and correct
on and as of the date hereof as though made on and as of the date hereof (b) on
the date hereof no Default or Event of Default has occurred and is continuing or
exists or will occur or exist after giving effect to this Second Amendment.
ARTICLE 4: CONDITIONS PRECEDENT
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4.01. The effectiveness of this Second Amendment shall be subject to
Lender's receipt of such additional UCC filings and other documents as Lender
may reasonably require to secure the Loans.
ARTICLE 5: MISCELLANEOUS
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5.01. Except as amended and provided above, the Loan Agreement shall
remain in full force and effect, and the Loan Agreement, as amended, is hereby
ratified by Borrower and Lender.
5.02. Borrower represents and warrants that the execution and terms of
this Second Amendment have been duly authorized by all necessary and appropriate
corporate action.
5.03. This Second Amendment shall be governed by and construed in
accordance with the internal laws of the State of Tennessee.
5.04. All capitalized terms used herein shall, unless otherwise
specifically defined herein, have the meanings assigned to such terms in the
Loan Agreement.
Schedule A
to
Second Amendment to Loan And Security Agreement
Type of Jurisdiction of
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Name of Subsidiary Organization Organization
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Focal Communications Corporation of California Corporation Delaware
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Focal Communications Corporation of Colorado Corporation Delaware
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Focal Communications Corporation of Florida Corporation Delaware
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Focal Communications Corporation of Georgia Corporation Delaware
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Focal Communications Corporation of Illinois Corporation Delaware
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Focal Communications Corporation of Massachusetts Corporation Delaware
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Focal Communications Corporation of Michigan Corporation Delaware
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Focal Communications Corporation of Mid-Atlantic Corporation Delaware
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Focal Communications Corporation of Minnesota Corporation Delaware
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Focal Communications Corporation of Missouri Corporation Delaware
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Focal Communications Corporation of New Jersey Corporation Delaware
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Focal Communications Corporation of New York Corporation Delaware
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Focal Communications Corporation of Ohio Corporation Delaware
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Focal Communications Corporation of Pennsylvania Corporation Delaware
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Focal Communications Corporation of Texas Corporation Delaware
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Focal Communications Corporation of Virginia Corporation Virginia
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Focal Communications Corporation of Washington Corporation Delaware
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Focal Communications Corporation of Wisconsin Corporation Delaware
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Focal Financial Services, Inc. Corporation Delaware
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Focal International Corp. Corporation Delaware
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Focal Telecommunications Corporation Corporation Delaware
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Focal Equipment Finance, LLC Limited Liability Delaware
Company
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Fiber Leasing, LLC Limited Liability Delaware
Company
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Schedule B
to
Second Amendment to Loan And Security Agreement
1. Total Secured Debt to Total Capitalization. At the time of each advance and
at the end of each fiscal quarter, Borrower shall maintain a ratio of Total
Secured Debt to Total Capitalization of not more than *** to ***. For
purposes of this ratio, the following definitions apply:
Total Capitalization: The sum of (a) Total Consolidated Debt and (b)
paid-in-equity capital (including preferred stock but excluding
additional equity issued as pay-in-kind dividends on issued and
outstanding equity securities and excluding any accumulated deficits
resulting from operations).
Total Secured Debt: Indebtedness of Borrower secured by a lien on
assets of the Borrower, excluding Indebtedness secured by accounts
receivable.
2. Cash Flow Coverage Ratio. Borrower shall maintain a minimum Cash Flow
Coverage Ratio (measured at the end of each fiscal quarter for the past
four fiscal quarters) of at least ***, beginning in the last fiscal
quarter of fiscal year 2003. For purposes of this ratio, the following
definitions apply:
Cash Flow Coverage Ratio: At the end of any fiscal period, the ratio
of Borrower's Cash Flow (as defined in the agreement) plus interest
income for such fiscal period to Borrower's Debt Service for such
fiscal period.
Debt Service: For any fiscal period of Borrower, the sum of all
principal and interest payments that Borrower is required to make
during such period on account of all its Indebtedness including,
without limitation, (a) amounts due during such period on account of
capitalized leases, (b) the then current portion of any long term
Indebtedness, including any Subordinated Indebtedness, (c) amounts due
on short term Indebtedness, and (d) amounts due under the NTFC
Agreement and the Note.
3. Minimum Revenues: Borrower shall maintain minimum revenues in an amount
equal to or greater than 85% of the levels set forth below:
Fiscal Year Ended Projected Revenues
December 31, 1999 $***
December 31, 2000 $***
December 31, 2001 $***
December 31, 2002 $***
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***Confidential information omitted pursuant to a request for confidential
treatment filed separately with the Securities and Exchange Commission.
-5-
December 31, 2003 $***
December 31, 2004 $***
4. Minimum EBITDA. Borrower shall maintain minimum EBITDA in an amount equal
to or greater than the levels set forth below:
Fiscal Year Ended Projected EBITDA
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December 31, 1999 $***
December 31, 2000 $***
December 31, 2001 $***
December 31, 2002 $***
December 31, 2003 $***
December 31, 2004 $***
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***Confidential information omitted pursuant to a request for confidential
treatment filed separately with the Securities and Exchange Commission.
-6-
IN WITNESS WHEREOF, the parties hereto have duly executed this Second
Amendment to Loan and Security Agreement as of the date and year first above
written.
LENDER: BORROWER:
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NTFC CAPITAL CORPORATION FOCAL COMMUNICATIONS CORPORATION
BY: /s/ ▇▇▇▇▇ ▇▇▇▇ BY: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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TITLE: Vice President TITLE: VP and Treasurer
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DATE: 12/04/00 DATE: 12/04/00
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