Exhibit 10.1
FIFTH FORBEARANCE AGREEMENT
FIFTH FORBEARANCE AGREEMENT, dated as of September 30, 2005 (this
"Agreement"), among (1) McLeodUSA Incorporated, a Delaware corporation (the
"Borrower"), (2) each of the Subsidiaries of the Borrower listed on Schedule I
hereto (the "Subsidiary Guarantors"), (3) the financial institutions named on
the signature pages hereto (together with their respective successors and
assigns, the "Participant Lenders") and (4) JPMorgan Chase Bank, N.A., as
agent for the Lenders (the "Administrative Agent").
WITNESSETH:
A. WHEREAS, the Borrower, certain Participant Lenders, the
Administrative Agent and certain other financial institutions are parties to a
Credit Agreement dated as of May 31, 2000 (as amended, the "2000 Credit
Agreement");
B. WHEREAS, the Borrower, certain Participant Lenders, the
Administrative Agent and certain other financial institutions are parties to a
Credit Agreement dated as of April 16, 2002 (as amended, the "2002 Credit
Agreement," together with the 2000 Credit Agreement, the "Credit Agreements");
C. WHEREAS, the Subsidiary Guarantors and JPMorgan Chase Bank, N.A.,
as Collateral Agent for the Secured Parties, are parties to a Subsidiary
Guarantee Agreement dated as of May 31, 2000, as amended and restated as of
April 16, 2002 (the "Guarantee Agreement");
D. WHEREAS, the Borrower and the Subsidiary Guarantors have proposed
a restructuring plan that is under discussion with the Participant Lenders (as
such plan may be modified, the "Plan");
E. WHEREAS, the Borrower has advised the Administrative Agent and the
Lenders that the Specified Defaults (as defined in section 1(c) below),
including, without limitation, the failure to make scheduled amortization
payments under the Credit Agreements and interest payments under the 2000
Credit Agreement, might occur or continue occurring during the Prior
Forbearance Periods or the Forbearance Period (each as defined below);
F. WHEREAS, in order to permit completion of the negotiation of the
Plan and exploration of other possible strategic transactions, the Borrower,
the Subsidiary Guarantors, the Participant Lenders (as defined in the First
Forbearance Agreement) and the Administrative Agent executed a Forbearance
Agreement, dated as of March 16, 2005 (the "First Forbearance Agreement"),
pursuant to which the Participant Lenders (as defined in the First Forbearance
Agreement) and the Administrative Agent agreed to forbear from exercising
certain default-related remedies against the Borrower and the Subsidiary
Guarantors on account of the Specified Defaults (as defined in the First
Forbearance Agreement) for a limited period of time and upon the terms and
conditions set forth therein;
G. WHEREAS, the Borrower paid to the Administrative Agent, and has
periodically replenished, an advance of $1.5 million (the "Advance") in
accordance with section 2(e) of the Prior Forbearance Agreements, on account
of the Borrower's obligations to pay expenses and other amounts (including the
fees and expenses of counsel and financial advisors) under sections 9.03 of
the Credit Agreements;
H. WHEREAS, on March 29, 2005 the Borrower entered into an engagement
letter (the "A&M Engagement Letter") with, and retained Xxxxxxx & Marsal, LLC
(the "Restructuring Adviser") as an adviser of the Borrower to validate and
provide information regarding the Borrower and its Subsidiaries to the
Lenders, prospective buyers and other parties, and to assist the Borrower in
developing strategies relating to any restructuring or other strategic
transactions;
I. WHEREAS, the Forbearance Period under and as defined in the First
Forbearance Agreement (the "First Forbearance Period") came to an end on May
23, 2005;
J. WHEREAS, in order to permit completion of the negotiation of the
Plan and exploration of other possible strategic transactions, the Borrower,
the Subsidiary Guarantors, the Participant Lenders (as defined in the Second
Forbearance Agreement) and the Administrative Agent executed the Second
Forbearance Agreement, dated as of May 23, 2005 (the "Second Forbearance
Agreement"), pursuant to which the Participant Lenders (as defined in the
Second Forbearance Agreement) and the Administrative Agent agreed to forbear
from exercising certain default-related remedies against the Borrower and the
Subsidiary Guarantors on account of the Specified Defaults (as defined in the
Second Forbearance Agreement) for a limited period of time and upon the terms
and conditions set forth therein;
K. WHEREAS, the Second Forbearance Period under and as defined in the
Second Forbearance Agreement (the "Second Forbearance Period") came to an end
on July 21, 2005;
L. WHEREAS, in order to permit completion of the negotiation of the
Plan, the Borrower, the Subsidiary Guarantors, the Participant Lenders (as
defined in the Third Forbearance Agreement) and the Administrative Agent
executed the Third Forbearance Agreement, dated as of July 21, 2005 (the
"Third Forbearance Agreement"), pursuant to which the Participant Lenders (as
defined in the Third Forbearance Agreement) and the Administrative Agent
agreed to forbear from exercising certain default-related remedies against the
Borrower and the Subsidiary Guarantors on account of the Specified Defaults
(as defined in the Third Forbearance Agreement) for a limited period of time
and upon the terms and conditions set forth therein;
M. WHEREAS, on August 12 the A&M Engagement Letter was amended and
restated to provide for, among other things, the appointment of Xxxx Xxxxxxxx,
a Managing Director of Xxxxxxx & Marsal, LLC, to serve as Chief Restructuring
Officer (the "Chief Restructuring Officer") of the Borrower;
N. WHEREAS, the Forbearance Period under and as defined in the Third
Forbearance Agreement (the "Third Forbearance Period") came to an end on
September 9, 2005;
O. WHEREAS, in order to permit completion of the negotiation of the
Plan, the Borrower, the Subsidiary Guarantors, the Participant Lenders (as
defined in the Fourth Forbearance Agreement) and the Administrative Agent
executed the Fourth Forbearance Agreement, dated as of September 9, 2005 (the
"Fourth Forbearance Agreement," together with the First Forbearance Agreement,
the Second Forbearance Agreement and the Third Forbearance Agreement, the
"Prior Forbearance Agreements"), pursuant to which the Participant Lenders (as
defined in the Fourth Forbearance Agreement) and the Administrative Agent
agreed to forbear from exercising certain default-related remedies against the
Borrower and the Subsidiary Guarantors on account of the Specified Defaults
(as defined in the Fourth Forbearance Agreement) for a limited period of time
and upon the terms and conditions set forth therein;
P. WHEREAS, the Forbearance Period under and as defined in the Fourth
Forbearance Agreement (the "Fourth Forbearance Period," together with the
First Forbearance Period, the Second Forbearance Period and the Third
Forbearance Period, the "Prior Forbearance Periods") was to expire on
September 30, 2005; and
Q. WHEREAS, in order to permit completion of the negotiation of the
Plan, the Borrower and the Subsidiary Guarantors have asked the Participant
Lenders, and the Participant Lenders are willing, to continue to forbear from
exercising certain default-related remedies against the Borrower and the
Subsidiary Guarantors on account of the Specified Defaults for a further
limited period of time and upon the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing, the covenants and
conditions contained herein and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
Section 1 . Defined Terms. Unless otherwise specifically defined
herein, each term used herein which is defined in the Credit Agreements has
the meaning assigned to such term in the Credit Agreements. As used in this
Agreement, the following terms have the meanings specified below:
(a) "Forbearance Period" means the period beginning on the date
hereof and ending on the earliest to occur of (any such occurrence being a
"Termination Event"):
(i) October 31, 2005;
(ii) the occurrence of any Event of Default other than a
Specified Default;
(iii) any holder of Indebtedness or other obligations of $7
million or more of the Borrower or any of its Subsidiaries shall take
any action to collect or enforce any claim or to create or enforce
any lien against the Borrower or any of its Subsidiaries, excluding
the making of a demand or the assertion of a claim by a vendor or
customer that is disputed in good faith by the Borrower or such
Subsidiary in the ordinary course of business and with respect to
which such vendor or customer has not obtained a lien or otherwise
obtained the ability to collect or enforce such claim; and
(iv) a breach of any term, condition or representation
contained in this Agreement by the Borrower or the Subsidiary
Guarantors, including without limitation, any failure by the Borrower
or Subsidiary Guarantors to comply with the undertakings in Section 2
hereof.
(b) "Other Assets" means all assets of the Borrower and the
Subsidiary Guarantors other than Guaranteed Obligations Collateral (as defined
in the Security Agreement).
(c) "Specified Defaults" means existing or anticipated Events of
Default, as listed (i) on Schedule II to the First Forbearance Agreement that
occurred during the First Forbearance Period, (ii) on Schedule II to the
Second Forbearance Agreement that occurred during the Second Forbearance
Period, (iii) on Schedule II to the Third Forbearance Agreement that occurred
during the Third Forbearance Period, (iv) on Schedule II to the Fourth
Forbearance Agreement that occurred during the Fourth Forbearance Period or
(v) on Schedule II hereto that might occur or continue during the Forbearance
Period (as defined in section 1(a)).
(d) "Steering Committee Members" means those Lenders who are members
of the informal steering committee of Lenders whose names have been provided
to the Borrower in a letter from the Administrative Agent dated May 23, 2005,
as amended from time to time.
Section 2. Acknowledgements and Undertakings.
(a) The Borrower and the Subsidiary Guarantors agree and acknowledge
that certain of the Specified Defaults (as defined in the First Forbearance
Agreement, the Second Forbearance Agreement, the Third Forbearance Agreement
and the Fourth Forbearance Agreement) occurred during the First Forbearance
Period, the Second Forbearance Period, the Third Forbearance Period and the
Fourth Forbearance Period, respectively, and that the Specified Defaults (as
defined in section 1(c) hereof) might occur or continue during the Forbearance
Period (as defined in section 1(a) hereof) and that certain of the Specified
Defaults (as defined in the Prior Forbearance Agreements) constituted, and the
Specified Defaults (as defined in section 1(c) hereof) should they occur will
constitute material Events of Default.
(b) In addition to the information required to be furnished under the
Loan Documents to the Administrative Agent and the Lenders (and without
prejudice to sections 5.01 or any other provision of the Credit Agreements),
the Borrower shall, as promptly as practicable, provide to the Administrative
Agent and the Steering Committee Members any information reasonably requested
by the Administrative Agent or the Lenders. Without limiting the generality of
the foregoing, the Borrower shall promptly provide to the Administrative Agent
and the Steering Committee Members, in a form acceptable to the Administrative
Agent,
(i) on Tuesday of each week, a detailed forecast of receipts
and disbursements for the Borrower and the Subsidiary Guarantors
providing, on a weekly basis, the Borrower's good faith estimate of
projected receipts and disbursements for the 13 weeks commencing with
the immediately following week, together with a reconciliation of
such forecast against the forecast delivered the previous week and a
reasonably detailed explanation of any variance between the current
forecast and such previously delivered forecast;
(ii) not later than the tenth day following the end of each
calendar month, an operational report, including management's good
faith estimate of receipts and disbursements for such month, the cash
balances of the Borrower and Subsidiary Guarantors as of the end of
such calendar month, and an analysis of performance against projected
performance as set forth in the phased business plan dated March 9,
2005 previously delivered to the Participant Lenders;
(iii) on Tuesday of each week, a written or oral (in the
sole discretion of the Borrower) update, and at any time on request
of the Administrative Agent, a written update, addressed to the
financial advisor of the Administrative Agent regarding the status of
the Borrower's restructuring activities, including the Borrower's
efforts to sell any material assets or to sell all or any portion of
its business, including, without limitation, a list of all contacts
made with potential purchasers (including the identities of those
contacted and the dates of such contacts), copies (if in writing) or
descriptions (if not in writing) of any proposals, offers or
indications of interest received by the Borrower or its attorneys or
financial advisors, and any responses thereto by the Borrower or any
such attorney or financial advisor;
(iv) all material information (except for information
previously provided by the Borrower to the Administrative Agent and
the Steering Committee Members) that the Borrower proposes or intends
to disclose to the public as far in advance of such disclosure as
practicable; and
(v) direct access to the officers and employees, and books
and records of the Borrower and its Subsidiaries (including the Chief
Restructuring Officer and the Restructuring Adviser) to obtain such
information as the Participant Lenders deem reasonably necessary to
evaluate, negotiate and implement any restructuring plan and to
verify and analyze to the reasonable satisfaction of the Participant
Lenders the matters referred to in subparagraphs (i), (ii), (iii) and
(iv) above.
(c) The Chief Restructuring Officer (and the Restructuring Advisor)
shall continue to be actively employed by the Borrower at all times during the
Forbearance Period and shall have direct access to all information, personnel
and other resources necessary to the performance of his duties.
(d) The Borrower shall make all scheduled interest payments under the
2002 Credit Agreement at the non-default contract rate.
(e) The Administrative Agent has been paid and shall continue to
retain the Advance as an advance payment in respect of the Borrower's
obligations to pay expenses and other amounts under sections 9.03 of the
Credit Agreements, and shall continue to be entitled to pay such amounts
(including sums payable in respect of expenses or other liabilities incurred
or paid by the Administrative Agent prior to the date hereof) as they come
due, including, without limitation, (i) the reasonable fees and expenses of
counsel and financial advisors (including FTI Consulting, Inc.) provided for
in such sections and (ii) travel and other incidental expenses of Lenders
actively participating with the Administrative Agent in restructuring
discussions with the Borrower. The Borrower shall from time to time, within
three Business Days following the receipt of a demand from the Administrative
Agent, make further advances to the Administrative Agent in order to restore
the balance of the Advance held by the Administrative Agent to $1.5 million.
(f) The Borrower shall furnish to the Administrative Agent prompt
written notice of the occurrence of a Termination Event.
(g) The Borrower and the Subsidiary Guarantors acknowledge and agree
that, under the Credit Agreements, as amended, they are not currently entitled
to request any new Loans or Letters of Credit.
(h) Notwithstanding anything to the contrary in any Loan Document,
the Borrower and the Subsidiary Guarantors, as applicable, shall not, unless
the Required Lenders under each Credit Agreement give their written consent,
sell, transfer or otherwise dispose of any Other Assets, except for sales,
transfers or dispositions entered into (i) in the ordinary course of business
or (ii) with Net Proceeds totaling up to $2 million in the aggregate,
calculated from May 23, 2005.
(i) The Required Lenders under each Credit Agreement may, without
prejudice to the rights of the Required Lenders under each Credit Agreement to
refuse or condition their consent in any way, require, as a condition to any
consent to any sale, transfer or disposition of any Guaranteed Obligations
Collateral or Other Assets (including Non-Core Assets) that the Net Proceeds
realized from such sale, transfer or disposition be applied first, to prepay
Borrowings (as defined in the 2002 Credit Agreement) in an aggregate amount
equal to such Net Proceeds and second, to the extent of any remaining Net
Proceeds, as required by section 2.11(c) of the 2000 Credit Agreement.
(j) For the avoidance of doubt, the restrictions on the disposition
of Guaranteed Obligations Collateral contained in section 4.09 of the Security
Agreement while an Existing Agreement Event of Default or a New Agreement
Event of Default (as such terms are defined in the Security Agreement) shall
have occurred and be continuing, shall apply during the Forbearance Period and
remain in full force and effect.
(k) All depository, operating, investment accounts and other accounts
of the Borrower and the Subsidiary Guarantors opened at any time (in each case
other than payroll, withholding tax and other fiduciary accounts or accounts
held by the Collateral Agent) shall be or continue to be subject to control
agreements that are in favor of and reasonably acceptable to the
Administrative Agent ("Control Agreement Accounts").
(l) The Borrower and the Subsidiary Guarantors agree that they will
continue to maintain with the Collateral Agent (or, if approved in writing by
the Collateral Agent, any of its affiliates) an account or accounts to be used
by the Borrower and the Subsidiary Guarantors as their overnight investment
account or other holding account for daily excess funds ("Collateral Agent
Accounts", collectively with the Control Agreement Accounts and accounts in
the name of the Collateral Agent holding funds of the Borrower and/or one or
more Subsidiary Guarantors as cash collateral, "Collateral Accounts").
(m) In any event, and in addition to any other requirements that may
be applicable under the Loan Documents or sections 2(k) and 2(l) above, the
Borrower and the Subsidiary Guarantors shall not maintain more than $5 million
of its available cash and cash investments in the aggregate in accounts that
are not Collateral Accounts; provided that no funds shall be maintained in
accounts other than the Collateral Accounts except for the purposes specified
in the next sentence. In addition, funds shall be transferred to payroll,
withholding tax and other fiduciary accounts of the Borrower and the
Subsidiary Guarantors solely to the extent required to cover immediate
disbursement needs in respect of employee payroll incurred and paid in the
ordinary course of business and in accordance with past practice, and, with
respect to fiduciary and withholding tax accounts, solely to the extent
necessary to meet legal requirements in respect of such payroll.
(n) The Borrower and the Subsidiary Guarantors shall use their
reasonable commercial efforts to complete as soon as possible the
documentation of a restructuring reasonably satisfactory to the Required
Lenders under each Credit Agreement.
Section 3. Forbearance.
(a) The Participant Lenders agree that until the expiration of the
Forbearance Period, the Participant Lenders will temporarily forbear (subject
to the terms hereof) from the exercise of their default-related remedies under
the Credit Agreements, Loan Documents or otherwise, against the Borrower and
the Subsidiary Guarantors solely to the extent the availability of such
remedies arises exclusively from the Specified Defaults; provided that the
Borrower and the Subsidiary Guarantors shall comply during the Forbearance
Period with all provisions, limitations, restrictions or prohibitions that
would otherwise be effective or applicable under any of the Loan Documents
during the continuance of any Default or Event of Default; provided further
that the agreement of the Participant Lenders temporarily to forbear shall not
apply to nor preclude any remedy available to the Administrative Agent or the
Lenders in connection with any proceeding commenced under any bankruptcy or
insolvency law, including without limitation, to any relief in respect of
adequate protection or relief from any stay imposed under such law.
(b) Upon a Termination Event, the agreement of the Participant
Lenders hereunder to forbear from exercising their default-related remedies
shall immediately terminate without the requirement of any demand,
presentment, protest or notice of any kind, all of which the Borrower and the
Subsidiary Guarantors hereby waive. The Borrower and the Subsidiary Guarantors
agree that the Administrative Agent and the Lenders may at any time thereafter
proceed to exercise any and all of their respective rights and remedies under
any or all of the Loan Documents and/or applicable law, including, without
limitation, their respective rights and remedies in connection with any or all
of the Defaults and Events of Default, including, without limitation, the
Specified Defaults.
(c) For the avoidance of doubt, nothing herein limits the right of
the Administrative Agent or the Lenders, including during the Forbearance
Period, to take any action to preserve or exercise rights or remedies against
parties other than the Borrower and the Subsidiary Guarantors ("Third Party
Rights"). For purposes of the foregoing, the Borrower and the Subsidiary
Guarantors acknowledge and agree that execution and delivery of this Agreement
shall constitute the making of any necessary demand or the giving of any
necessary notice for purposes of preserving and/or permitting the exercise of
any such Third Party Rights of the Administrative Agent and the Lenders.
(d) Execution of this Agreement constitutes a direction by the
Participant Lenders that the Administrative Agent act in accordance with its
terms. Each Participant Lender agrees that, notwithstanding anything to the
contrary in the Credit Agreements, the Administrative Agent shall not be
required to act if directed against the Borrower or the Subsidiary Guarantors
if such action is contrary to the terms of this Agreement.
(e) The Borrower and the Subsidiary Guarantors acknowledge and agree
that the agreement of the Participant Lenders hereunder to forbear from
exercising their default-related remedies with respect to the Specified
Defaults shall not constitute a waiver of such Specified Defaults and that the
Lenders expressly reserve all rights and remedies that the Administrative
Agent and the Lenders now or may in the future have under any or all of the
Loan Documents and/or applicable law in connection with all Defaults and
Events of Default (including without limitation the Specified Defaults).
Section 4. Interest Rate During the Forbearance Period.
(a) For the avoidance of doubt, the parties acknowledge and agree
that if any principal or interest on any Loan or any fee or other amount
payable by the Borrower under the Credit Agreements has not been paid when
actually due during the Prior Forbearance Periods or is not paid when actually
due from the date hereof, in each case whether at stated maturity, upon
acceleration or otherwise, such overdue amount shall bear interest in
accordance with section 2.13(c) of the Credit Agreements.
(b) Notwithstanding the foregoing, the Participant Lenders are hereby
advised that, during the Forbearance Period (i) the Borrower does not intend
to pay interest in cash on a current basis under the 2000 Credit Agreement,
and (ii) the Borrower intends to pay interest in cash under the 2002 Credit
Agreement only at the pre-default rate.
(c) Any interest accrued under the Credit Agreements that has not
been paid in cash shall compound on each Interest Payment Date until paid.
Section 5. Reference to and Effect upon the Credit Agreements.
(a) Except as expressly set forth herein, all terms, conditions,
covenants, representations and warranties contained in the Credit Agreements,
and any other Loan Document, and all rights of the Administrative Agent and
the Lenders and all obligations of the Borrower and the Subsidiary Guarantors
thereunder, shall remain in full force and effect. The Borrower and the
Subsidiary Guarantors hereby confirm that the Credit Agreements and the other
Loan Documents are in full force and effect.
(b) Except as expressly provided herein, nothing contained in this
Agreement and no action by, or inaction on the part of, any Lender or the
Administrative Agent shall, or shall be deemed to, directly or indirectly (i)
constitute a consent to or waiver of any past, present or future violations of
any provisions of the Credit Agreements, or any other Loan Document, (ii)
amend, modify or operate as a waiver of any provision of the Credit
Agreements, or any other Loan Document, except as expressly set forth herein,
of any right, power or remedy of the Administrative Agent or any Lender
thereunder or (iii) constitute a course of dealing or other basis for altering
any obligations of the Borrower under the Loan Documents, or any other
contract or instrument.
(c) This Agreement shall constitute a Loan Document.
Section 6. Representations and Warranties. To induce the
Administrative Agent and the Participant Lenders to execute and deliver this
Agreement, the Borrower and the Subsidiary Guarantors represent and warrant
that:
(a) The execution, delivery and performance by the Borrower and the
Subsidiary Guarantors of this Agreement have been duly authorized by all
necessary corporate action. This Agreement constitutes the legal, valid and
binding obligations of the Borrower and the Subsidiary Guarantors, enforceable
against the Borrower and the Subsidiary Guarantors in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, or similar laws affecting the enforcement of creditors' rights
generally or by equitable principles relating to enforceability.
(b) No approval, consent, exemption, authorization, or other action
by, or notice to, or filing with, any Governmental Authority is necessary or
required in connection with the execution, delivery or performance by, or
enforcement against, the Borrower or the Subsidiary Guarantors of this
Agreement.
(c) As of the Forbearance Effective Date (as defined in section 12
below), no Defaults or Events of Default exist, other than the Specified
Defaults.
Section 7. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of New York.
Section 8. Counterparts. This Agreement may be signed in any number
of counterparts, each of which shall be an original, with the same effect as
if the signatures thereto and hereto were upon the same instrument.
Section 9. Severability. The invalidity, illegality or
unenforceability of any provision in or obligation under this Agreement in any
jurisdiction shall not affect or impair the validity, legality or
enforceability of the remaining provisions or obligations under this Agreement
or of such provision or obligation in any other jurisdiction.
Section 10. Further Assurances. The Borrower and the Subsidiary
Guarantors agree to take all further actions and execute all further documents
as the Administrative Agent may from time to time reasonably request to carry
out the transactions contemplated by this Agreement.
Section 11. Notices. All notices, requests and demands to or upon
the respective parties hereto shall be given in accordance with sections 9.01
of the Credit Agreements.
Section 12. Effectiveness. This Agreement shall become effective, and
shall supersede the terms and conditions of the Prior Forbearance Agreements
where such terms and conditions conflict with this Agreement, as of the date
hereof on the date (the "Forbearance Effective Date") when the following
conditions are satisfied:
(a) the Administrative Agent shall have received from the Borrower,
the Subsidiary Guarantors, and the Required Lenders under each Credit
Agreement a counterpart hereof signed by such party or facsimile or other
written confirmation (in form satisfactory to the Administrative Agent) that
such party has signed a counterpart hereof;
(b) the Administrative Agent shall have received certificates of the
chief financial officer of the Borrower and the Subsidiary Guarantors
certifying that, to the best of his knowledge, the representations and
warranties made by the Borrower and the Subsidiary Guarantors pursuant to
section 6 of this Agreement are true and correct on and as of the date of this
Agreement; and
(c) the Borrower shall have fully replenished the Advance referred to
in section 2(e) above to restore it to a balance of $1.5 million.
Section 13. 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 (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
HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE
MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION.
Section 14. No Third Party Beneficiaries. This Agreement shall be
binding upon and inure to the benefit of the Borrower, the Subsidiary
Guarantors, the Administrative Agent and the Lenders and their respective
successors and assigns; provided that the Lenders (other than the Participant
Lenders and their respective successors and assigns) shall not be bound by the
forbearance granted hereunder. No Person other than the parties hereto and any
other Lender and their successors and assigns shall have any rights hereunder
or be entitled to rely on this Agreement, and all third-party beneficiary
rights (other than the rights of any other Lender and its successors and
assigns) are hereby expressly disclaimed.
Section 15. Limitation on Assignments. In addition to, and without
limiting the requirements set forth in sections 9.04 of the Credit Agreements,
each Participant Lender agrees that it will not assign all, or any ratable
part, of its Loans, Commitments or other rights or obligations under the Loan
Documents to any Person (other than a Participant Lender) unless such Person
shall have agreed to be bound by this Agreement (including the forbearance
granted hereunder). Each Participant Lender agrees that, notwithstanding
anything to the contrary in the Credit Agreements, the Administrative Agent
shall be entitled to withhold its consent to, and shall not be required to
give effect to, any purported assignment of such Participant Lender's Loans,
Commitments or other rights or obligations under the Loan Documents if the
conditions set forth in the previous sentence are not satisfied.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the date first above written.
MCLEODUSA INCORPORATED
By: /s/ Xxxxxx Xxxxxxxx
-------------------------------
Name: Xxxxxx Xxxxxxxx
Title: Acting CFO
MCLEODUSA HOLDINGS, INC.
By: /s/ Xxxxxx Xxxxxxxx
-------------------------------
Name: Xxxxxx Xxxxxxxx
Title: Acting CFO
MCLEODUSA TELECOMMUNICATIONS SERVICES, INC.
By: /s/ Xxxxxx Xxxxxxxx
-------------------------------
Name: Xxxxxx Xxxxxxxx
Title: Acting CFO
MCLEODUSA NETWORK SERVICES, INC.
By: /s/ Xxxxxx Xxxxxxxx
-------------------------------
Name: Xxxxxx Xxxxxxxx
Title: Acting CFO
MCLEODUSA PURCHASING L.L.C.
By: /s/ Xxxxxx Xxxxxxxx
-------------------------------
Name: Xxxxxx Xxxxxxxx
Title: Acting CFO
MCLEODUSA INFORMATION SERVICES, INC.
By: /s/ Xxxxxx Xxxxxxxx
-------------------------------
Name: Xxxxxx Xxxxxxxx
Title: Acting CFO
JPMORGAN CHASE BANK, N.A., as
Administrative Agent
By: /s/ Xxxxx X. Xxxxxx
-------------------------------
Name: Xxxxx X. Xxxxxx
Title: Managing Director
Banc of America Strategic Solutions, Inc.
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Print Name of Lender
---------------------------------------------
By: /s/ X.X. Xxxxxxxx
-----------------------------------------
Name: X.X. Xxxxxxxx
Title: Senior Vice President
Jefferies & Co., Inc.
---------------------------------------------
Print Name of Lender
By: /s/ Xxxxxxxx X. Xxxxxxxx
-----------------------------------------
Name: Xxxxxxxx X. Xxxxxxxx
Title: E.V.P.
JPMorgan Chase Bank NA
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Print Name of Lender
By: /s/ Xxxxx X. Xxxxxx
----------------------------------
Name: Xxxxx X. Xxxxxx
Title: Managing Director
Fidelity Management &
Research Co., on behalf of funds and
accounts managed by it
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Print Name of Lender
By: /s/ Nate Voubuzer
-----------------------------------------
Name: Nate Voubouzer
Title: Director, Restructuring and Legal
Affairs
Millennium Partners, L.P.
By: Wayzata Investment Partners LLC,
its Agent
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Print Name of Lender
---------------------------------------------
By: /s/ Xxxx X. XxXxxx
-----------------------------------------
Name: Xxxx X. XxXxxx
Title: Authorized Signatory
Wayland Recovery Fund, LLC
By: Wayzata Investment Partners LLC, its
Manager
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Print Name of Lender
---------------------------------------------
By: /s/ Xxxx X. XxXxxx
-----------------------------------------
Name: Xxxx X. XxXxxx
Title: Authorized Signatory
Wayland Distressed Opportunities Fund I-C,
LLC
By: Wayzata Investment Partners LLC, its
Manager
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Print Name of Lender
---------------------------------------------
By: /s/ Xxxx X. XxXxxx
-----------------------------------------
Name: Xxxx X. XxXxxx
Title: Authorized Signatory
Wayzata Recovery Fund, LLC
By: Wayzara Investment Partners LLC, its
Manager
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Print Name of Lender
---------------------------------------------
By: /s/ Xxxx X. XxXxxx
----------------------------------------
Name: Xxxx X. XxXxxx
Title: Authorized Signatory
Sapphire Special Opportunities Fund, LLC
By: Wayzata Investment Partners LLC, its
Manager
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Print Name of Lender
---------------------------------------------
By: /s/ Xxxx X. XxXxxx
-----------------------------------------
Name: Xxxx X. XxXxxx
Title: Authorized Signatory
Wayland Distressed Opportunities Fund I-B,
LLC
By: Wayzata Investment Partners LLC, its
Manager
---------------------------------------------
Print Name of Lender
---------------------------------------------
By: /s/ Xxxx X. XxXxxx
-----------------------------------------
Name: Xxxx X. XxXxxx
Title: Authorized Signatory
Wayland Distressed Opportunities Fund I-A,
LLC
By: Wayzata Investment Partners LLC, its
Manager
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Print Name of Lender
---------------------------------------------
By: /s/ Xxxx X. XxXxxx
-----------------------------------------
Name: Xxxx X. XxXxxx
Title: Authorized Signatory
SCHEDULE I
Subsidiary Guarantors
1. McLeodUSA Holdings, Inc.
2. McLeodUSA Telecommunications Services, Inc.
3. McLeodUSA Network Services, Inc.
4. McLeodUSA Purchasing L.L.C.
5. McLeodUSA Information Services, Inc.
SCHEDULE II
SPECIFIED DEFAULTS
1. Section 2.05(j). Any Default or Event of Default occurring under
either Credit Agreement as a result of the failure by the Borrower to
deposit cash in an account with the Administrative Agent pursuant to
Section 2.05(j) of such Credit Agreement.
2. Section 2.09. Any Default or Event of Default occurring under the
2000 Credit Agreement as a result of the failure by the Borrower to
pay to the Administrative Agent for the account of each Lender when
due the then unpaid principal amount of each Term Loan of such Lender
as provided in Section 2.10 of the 2000 Credit Agreement.
3. Section 2.10. Any Default or Event of Default occurring under the
2000 Credit Agreement as a result of the failure by the Borrower to
repay Term Loans on the dates set forth in Section 2.10 of the 2000
Credit Agreement.
4. Section 2.13. (a) Any Default or Event of Default occurring under the
2000 Credit Agreement as a result of the failure by the Borrower to
pay accrued interest on the dates and/or in the amounts specified in
Section 2.13 of the 2000 Credit Agreement.
(b) Any Default or Event of Default occurring under the 2002
Credit Agreement as a result of the failure by the Borrower to pay on
a current cash pay basis that portion of the interest representing
the default rate interest required by Section 2.13(c) of the 2002
Credit Agreement.
5. Section 5.01(a). Any Default or Event of Default occurring under
either Credit Agreement as a result of the failure by the Borrower
for the 2004 fiscal year to furnish to the Administrative Agent and
each Lender financial statements reported on by independent public
accountants of nationally recognized standing without a "going
concern" or like qualification or exception and without any
qualification or exception as to the scope of audit, as required by
Section 5.01(a) of such Credit Agreement.
6. Section 5.01(d). Any Default or Event of Default occurring under
either Credit Agreement as a result of the failure by the Borrower to
furnish to the Administrative Agent and each Lender a certificate of
accounting firm as required by Section 5.01(d) of such Credit
Agreement with respect to the 2004 fiscal year financial statements
due under section 5.01(a).
7. Section 5.01(e). Any Default or Event of Default occurring under
either Credit Agreement as a result of the failure by the Borrower to
furnish to the Administrative Agent and each Lender a budget as
required by Section 5.01(e) of such Credit Agreement.
8. Section 5.02(a). Any Default or Event of Default occurring under
either Credit Agreement as a result of the failure by the Borrower to
furnish to the Administrative Agent and each Lender prompt written
notice of any Specified Default.
9. Section 6.13. Any Default or Event of Default occurring after the
Forbearance Effective Date under either Credit Agreement as a result
of the failure by the Borrower to satisfy the requirements of Section
6.13 of such Credit Agreement.
10. Section 6.17. Any Default or Event of Default occurring after the
Forbearance Effective Date under either Credit Agreement as a result
of the failure by the Borrower to satisfy the requirements of Section
6.17 of such Credit Agreement.
11. Article VII, clause (a). Any Default or Event of Default occurring
under either Credit Agreement of the type described in clause (a) of
Article VII of such Credit Agreement arising from the failure to make
any payment when due after the Forbearance Effective Date.
12. Article VII, clause (b). (a) Any Default or Event of Default
occurring under the 2000 Credit Agreement of the type described in
clause (b) of Article VII of such Credit Agreement arising from the
failure to pay interest when due after the Forbearance Effective
Date.
(b) Any Default or Event of Default occurring under the 2002
Credit Agreement of the type described in clause (b) of Article VII
of such Credit Agreement, but solely to the extent of the additional
interest, if any, required to be paid hereunder and pursuant to
Section 2.13(c) of the 2002 Credit Agreement.
13. (a) Any Default or Event of Default occurring under the 2000 Credit
Agreement as a result of a Specified Default occurring under the 2002
Credit Agreement, or (b) any Default or Event of Default occurring
under the 2002 Credit Agreement as a result of a Specified Default
occurring under the 2000 Credit Agreement.
14. Any Default or Event of Default occurring under either Credit
Agreement as a result of the failure by any Subsidiary Loan Party to
make any required payments under the Subsidiary Guarantee Agreement
during the Forbearance Period as a consequence of another Specified
Default.
