* IMPORTANT NOTE: CERTAIN MATERIAL, INDICATED BY AN ASTERISK ("*"), HAS BEEN
OMITTED FROM THIS DOCUMENT PURSUANT TO A REQUEST FOR CONFIDENTIAL TREATMENT.
[GRAPHIC OMITTED][GRAPHIC OMITTED]
As of September 7, 2000
Pathnet Operating, Inc.
11720 Sunrise Valley Drive
Reston, Virginia 20191
Attn: Mr. James Craig
Ladies and Gentlemen:
Cisco Systems Capital Corporation, a corporation organized and
existing under the laws of the State of Nevada, is pleased to make available to
Pathnet Operating, Inc., a corporation organized and existing under the laws of
the State of Delaware, a credit facility in the aggregate principal amount of
$50,000,000, on the following terms and conditions:
SECTION 1. DEFINITIONS.
1.1 DEFINITIONS. As used in this agreement (this "Agreement"), the
following terms shall have the following meanings:
"AFFILIATE" means, as to any Person (the "SUBJECT PERSON"), any other
Person (a) that directly or indirectly through one or more intermediaries
controls or is controlled by, or is under direct or indirect common control
with, the subject Person, (b) that directly or indirectly beneficially owns or
holds 10% or more of any class of voting capital stock of the subject Person, or
(c) 10% or more of the voting capital stock of which is directly or indirectly
beneficially owned or held by the subject Person. For the purposes of this
definition, "control" when used with respect to any Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing. Neither Lender nor any Loan Party shall be deemed to be an Affiliate
of Borrower for purposes of the Loan Documents.
"ADDITIONAL BORROWER" means any Additional Borrower designated in the
Schedule or any Subsidiary of Borrower acceding hereto as an Additional Borrower
as contemplated by the Schedule.
"APPROVED SERVICES AGREEMENT" means the Intercompany Services Agreement
dated August 9, 2000 between PNI and Borrower.
"APPROVED TAX ALLOCATION AGREEMENT" means the Tax Sharing Agreement dated
August 9, 2000 between Holdings and Borrower.
"ASSET CONTRIBUTION AGREEMENT" means the Asset Contribution Agreement dated
as of August 9, 2000 between Holdings, Borrower, PFE and PRE.
"AVAILABILITY PERIOD" has the meaning set forth in the Schedule.
"BANKING DAY" has the meaning set forth in the Note(s).
"BANKRUPTCY CODE" means Title 11 of the United States Code entitled
"Bankruptcy".
"BORROWER" means Pathnet Operating, Inc. (subject to Section 7.15).
"BORROWER SECURITY AGREEMENT" means the Pledge and Security Agreement dated
as of August 9, 2000 between Borrower and Collateral Agent, as such agreement
may be amended, modified, supplemented, renewed, extended or restated with the
prior written consent of Lender
"BORROWING DATE" means any date on which a Loan is made to Borrower.
"BUSINESS PLAN" means the business plan of the Borrower in effect from time
to time, as approved by Lender. The initial business plan of Borrower is dated
as of August 4, 2000 and was delivered to Lender prior to the date hereof.
"CHANGE OF CONTROL" means (i) the acquisition of beneficial ownership,
directly or indirectly, by any Person or group (within the meaning of the
Securities Exchange Act of 1934 and the rules of the Securities and Exchange
Commission thereunder as in effect on the date hereof) of shares representing
more than 35% of the aggregate ordinary voting power represented by the issued
and outstanding capital stock of Holdings other than such an acquisition by
Permitted Holders or a group controlled by Permitted Holders; (ii) occupation of
a majority of the seats (other than vacant seats) on the Board of Directors of
Holdings by Persons who were neither (A) nominated by the Board of Directors of
Holdings nor (B) appointed by directors so nominated; (iii) Holdings shall cease
to own and control directly, of record and beneficially, 100% of each class of
outstanding capital stock of Borrower free and clear of all Liens (other than
any Liens under the Collateral Documents); or (iv) the consummation of any
transaction the result of which is that any Person or group beneficially owns
more of the Voting Stock of Holdings than is beneficially owned, in the
aggregate, by the Permitted Holders.
"CISCO SYSTEMS" means Cisco Systems, Inc. or any Subsidiary or affiliate
thereof.
"CISCO PRODUCTS" means networking and telecommunications equipment and
other goods, spare parts, accessories, software and services which Cisco Systems
manufactures, assembles, sells, licenses or provides.
"CISCO PURCHASE AGREEMENT" has the meaning set forth in the Schedule.
"CLOSING DATE" means the date occurring on or before the Closing Deadline
on which all conditions precedent set forth in Section 3.1 are satisfied (or
waived by Lender).
"CLOSING DEADLINE" has the meaning set forth in the Schedule.
"COLLATERAL" means the property described in the Collateral Documents, and
all other property now existing or hereafter acquired which may at any time be
or become subject to a Lien in favor of Lender or, if the Collateral Agency and
Intercreditor Agreement is in place, the Collateral Agent pursuant to the
Collateral Documents or otherwise, securing the payment and performance of the
Obligations.
"COLLATERAL AGENT" means State Street Bank and Trust Company in its
capacity as collateral agent under the terms of the Collateral Agency and
Intercreditor Agreement and any successor thereof.
"COLLATERAL AGENCY AND INTERCREDITOR AGREEMENT" means that certain Amended
and Restated Collateral Agency and Intercreditor Agreement dated as of September
7, 2000 among the Collateral Agent, and the "Represented Holders" and
"Unrepresented Holders" referred to therein.
"COLLATERAL DOCUMENTS" means each Collateral Document identified in the
Schedule, any security agreement provided by a Subsidiary of Borrower hereunder
and any other agreement pursuant to which any Loan Party or any other Person
provides a Lien on its assets in favor of Lender or, if the Collateral Agency
and Intercreditor Agreement is in place, the Collateral Agent, to secure the
Obligations and all filings, documents and agreements made or delivered pursuant
thereto.
"COMMITMENT" means the Dollar amount set forth in the Schedule or where the
context so requires, the obligation of Lender to make Loans up to such aggregate
principal amount on the terms and conditions set forth in this Agreement.
"COMPLIANCE CERTIFICATE" means a certificate of Borrower, in substantially
the form of Exhibit B, with such changes thereto as Lender may from time to time
reasonably request.
"CONDUIT" means any conduit capable of containing one or more strands of
Fiber.
"CONTRACT RIGHTS-OF-WAY" means any and all rights-of-way (whether an
easement, lease, contract or agreement in any form) or similar authorization to
use any real property or any interest therein contractually granted by any
Person to or in favor of any Loan Party or Holdings in connection with, and used
in connection with, the Network, including leases and licenses entered into in
connection with the Master Rights-of-Way Agreements.
"CONTRIBUTED RIGHTS-OF-WAY CAPITALIZATION VALUE" means, for purposes of
Section 5.1(o) only, $10,000 for each mile of right-of-way contributed to the
Borrower by Holdings pursuant to the terms of the Rights-of-Way Contribution
Agreement or any additional or future agreement between Holdings and Borrower
for the contribution of rights-of-way to Borrower from Holdings as capital.
"CREDITOR" has the meaning set forth in the Schedule.
"CUSTOMER AGREEMENTS" means an agreement with a Person who is not an
Affiliate of Borrower providing for the sale, lease, transfer, swap, exchange or
other disposition of, or the grant of any other right to use, or the grant of an
option to purchase, acquire, lease or otherwise use, all or any part of the
Network, whether relating to transmission capacity, Conduit or any individual
strand or strands of Fiber.
"DEFAULT" means an Event of Default or an event or condition which with
notice or lapse of time or both would constitute an Event of Default.
"DOLLARS" and the sign "$" each means lawful money of the United States.
"ELIGIBLE ENTITY" means (a) a Person that is primarily engaged in the
business of banking or commercial finance with a combined capital and surplus of
at least $500,000,000, (b) a Person purchasing the division(s) or business
unit(s) of Cisco Systems responsible for producing a substantial portion of the
Financed Products, (c) a Person acquiring or merging with Lender or Cisco
Systems, or (d) any Affiliate of Lender or Cisco Systems.
"ELIGIBLE SECURED DEBT" means (a) Indebtedness of Borrower in respect of
the Loans, (b) any other Indebtedness for borrowed money of Borrower incurred to
finance the acquisition, construction, installation or improvement of capital
assets (including Fiber and Conduit) that constitute part of the Collateral or
the Real Estate Assets and (c) any Indebtedness for borrowed money of Borrower
incurred to refinance Indebtedness referred to in clause (b) above; PROVIDED
that (i) in the case of any Indebtedness described in clause (b) above, such
Indebtedness is incurred within 270 days of such acquisition or the completion
of such construction, installation or improvement and the principal amount
thereof does not exceed 100% of the aggregate cost of such acquisition,
construction, installation or improvement, (ii) in the case of any Indebtedness
described in clause (b) or (c) above, the holder or holders of such Indebtedness
(or a duly authorized representative thereof on behalf of such holders) shall
have become a party to the Collateral Agency and Intercreditor Agreement as
provided therein, (iii) in the case of any Indebtedness described in clause (b)
or (c) above, at the time any such Indebtedness is incurred (including pursuant
to any increase in the principal amount thereof) no Default shall have occurred
and be continuing (both before and after giving effect to such incurrence) and
Borrower shall be in compliance with each of the covenants set forth in Section
5.1(o) determined on a pro forma basis as of the last day of the most recently
ended fiscal quarter of Borrower for which financial statements are available as
though such Indebtedness had been incurred on the last day of such fiscal
quarter for testing compliance with each such covenant, and Borrower shall have
delivered to Lender a reasonably detailed calculation demonstrating such
compliance, and (iv) in the case of any Indebtedness referred to in clause (b)
or (c) above, such Indebtedness is not guaranteed by any Person (other than
pursuant to a Guaranty) or secured by any Lien (other than Liens granted under
the Collateral Documents).
"ELIGIBLE SECURED DEBT DOCUMENTS" means the agreements, documents and
instruments evidencing or governing any Eligible Secured Debt.
"EVENT OF DEFAULT" has the meaning set forth in Section 6.1.
"FCC' means the Federal Communications Commission, or any successor
thereto, administering the Communications Act of 1934.
"FIBER" means fiber optic cable that is, or is intended to be, installed in
the Network or any strand or strands of fiber included in any such cable, as the
context may provide.
"FIBER OR CONDUIT PURCHASE" means, with respect to Borrower or any of its
Subsidiaries, any acquisition (by purchase, lease, exchange or otherwise) of any
Fiber or Conduit or right to use Fiber or Conduit for use in the Network.
"FIBER OR CONDUIT SALE" means, with respect to the Borrower or any of its
Subsidiaries, any sale, lease, transfer or other disposition of, or any grant of
any other right to use, or any grant of an option to purchase, acquire, lease or
otherwise use, all or part of the Network, whether relating to transmission
capacity or any individual Conduit or Conduits or any individual strand or
strands of Fiber.
"FINANCED PRODUCTS" means the Cisco Products and other goods, services and
other property the acquisition of which is financed by Lender or with respect to
which Lender is otherwise providing financing or extending credit to enable
Borrower to acquire.
"FINANCING DOCUMENTS" has the meaning set forth in the Schedule.
"FUNDING PROCEDURES AND POLICIES" means Lender's "Funding Procedures and
Policies" as in effect from time to time, as communicated to Borrower. "GAAP"
means generally accepted accounting principles as in effect from time to time.
"GOVERNMENTAL AUTHORITY" means any national government, or any state,
province or other political subdivision thereof or therein, or any governmental
ministry, department, body, commission, board, bureau, agency, central bank,
court, tribunal or other instrumentality or authority exercising executive,
legislative, judicial, regulatory or administrative functions of or pertaining
to government.
"GUARANTOR" means PFE, PRE, any Subsidiary of Borrower or Holdings becoming
a guarantor as provided under Section 5.1(n) and any other guarantor identified
in the Schedule.
"GUARANTOR DOCUMENTS" means any Guaranty and all other documents,
agreements and instruments delivered to the Collateral Agent under or in
connection with any Guaranty.
"GUARANTY" means the guaranty of any Guarantor, as provided
under Section 5.1(n), and any guaranty of any Guarantor identified in the
Schedule.
"HOLDINGS" means Pathnet Telecommunications, Inc., a corporation organized
and existing under the laws of the State of Delaware.
"HOLDINGS PLEDGE AGREEMENT" means the Pledge and Security Agreement dated
as of August 9, 2000 between Holdings and the Collateral Agent, as such
agreement may be amended, modified, supplemented, renewed, extended or restated
with the prior written consent of Lender.
"INDEBTEDNESS" means, for any Person, (i) all indebtedness or other
obligations of such Person for borrowed money, or for the deferred purchase
price of property or services (acquired or obtained other than on normal trade
credit terms); (ii) all obligations evidenced by notes, bonds, debentures or
similar instruments, including obligations so evidenced incurred in connection
with the acquisition of property, assets or businesses; (iii) all non-contingent
reimbursement and other obligations of such Person in respect of letters of
credit and bankers acceptances and all net obligations in respect of interest
rate swaps, caps, floors and collars, currency swaps, or other similar financial
products; (iv) all obligations under leases which shall have been or should be,
in accordance with GAAP, recorded as capital leases; and (v) all indebtedness of
another Person of the types referred to in clauses (i) through (iv) guaranteed
directly or indirectly in any manner by the Person for whom Indebtedness is
being determined.
"INSOLVENCY PROCEEDING" means (i) any case, action or proceeding before any
court or other Governmental Authority relating to bankruptcy, reorganization,
insolvency, liquidation, receivership, dissolution, winding-up or relief of
debtors, or (ii) any general assignment for the benefit of creditors,
composition, marshalling of assets for creditors, or other, similar arrangement
in respect of its creditors generally or any substantial portion of its
creditors, in each case undertaken under U.S. federal, state or foreign law,
including the Bankruptcy Code.
"INDEMNITY AND CONTRIBUTION AGREEMENT" means the Indemnity, Subrogation and
Contribution Agreement dated as of August 9, 2000 among the Borrower, the
Subsidiaries from time to time party thereto, and the Collateral Agent, as any
such agreement may be amended, modified, supplemented, renewed, extended or
restated with the prior written consent of Lender.
"INTEREST RATE PROTECTION AGREEMENT" means an interest rate swap, cap or
collar agreement or similar arrangement providing for the transfer or mitigation
of interest rate risks either generally or under specified contingencies.
"LENDER" means Cisco Systems Capital Corporation.
"LIEN" means any mortgage, pledge, security interest, assignment, deposit
arrangement, charge or encumbrance, lien or other type of preferential
arrangement (other than a financing statement filed by a lessor in respect of an
operating lease not intended as security).
"LOAN DOCUMENTS" means this Agreement, the Notes, any Collateral Documents,
any Guaranty, any Guarantor Documents and all other certificates, documents,
agreements and instruments delivered to Lender under or in connection with this
Agreement.
"LOAN PARTY" means Borrower, each Additional Borrower and each Guarantor.
"LOANS" has the meaning set forth in Section 2.1.
"MAGTEN LITIGATION" means the litigation evidenced by the Complaint filed
with the Supreme Court of the State of New York, County of New York, Index No.
602083/00 styled as Magten Partners, L.P. and others as plaintiffs against
Pathnet, Inc., Pathnet Telecommunications, Inc., Richard Jalkut, The Bank of New
York, Colonial Pipeline Company, The Burlington Northern and Sante Fe Railway
Company and CSX Transportation, Inc., as defendants.
"MASTER RIGHTS-OF-WAY AGREEMENTS" means that certain (a) Fiber Optic Access
Agreement dated as of March 30, 2000, between Holdings and The Burlington
Northern and Santa Fe Railway Company, (b) Fiber Optic Access and License
Agreement dated as of March 30, 2000, between CSX Transportation, Inc., for
itself and as operator for New York Central Lines LLC, and Holdings, and (c)
Fiber Optic Access and Purchase Agreement dated as of March 30, 2000, between
Holdings and Colonial Pipeline Company, in each case as any such agreement may
be amended or modified from time to time in accordance with Section 5.1(r).
"MATERIAL ADVERSE CHANGE" means (i) a material adverse change in the
business, operations or financial condition of Borrower and its Subsidiaries
taken as a whole, or (ii) any event, matter, condition or circumstance which (A)
would materially impair the ability of any Loan Party or any other Person to
perform or observe its obligations under or in respect of the Loan Documents, or
(B) materially affects the legality, validity, binding effect or enforceability
of any of the Loan Documents.
"MATERIAL CONTRACTS" means, as to any Loan Party, any Customer Agreement or
supply, purchase, service, employment, tax, indemnity, shareholder or other
agreement or contract for which the aggregate amount or value of services
performed or to be performed for or by, or funds or other property transferred
or to be transferred to or by, any Loan Party to such agreement or contract, or
by which any Loan Party or any of its properties is otherwise bound, during any
fiscal year of such Loan Party exceeds (i) $1,000,000 (or the equivalent amount
in any currency) with respect to other than Customer Agreements or (ii)
$5,000,000 (or the equivalent amount in any currency) with respect to any
Customer Agreement, and any and all amendments, modifications, supplements,
renewals or restatements thereof. Each Material Contract existing as of the date
of this Agreement is set forth in the Schedule.
"NETWORK" means Borrower's telecommunications network (including populated
or unpopulated Conduit), consisting primarily of fiber optic cable but also
including copper lines, wireless assets and other telecommunication media, for
the provision of communications or related services developed, installed and/or
operated, or to be developed, installed and/or operated, in each case, as
described in or contemplated by the Business Plan.
"NOTE" means each Promissory Note referred to in the Schedule.
"OBLIGATIONS" means the indebtedness, liabilities and other obligations of
any Loan Party to Lender under or in connection with the Loan Documents,
including all Loans, all interest accrued thereon, all fees due under this
Agreement and all other amounts payable by any Loan Party to Lender thereunder
or in connection therewith.
"PFE" means Pathnet Fiber Equipment LLC, a Delaware limited liability
company.
"PRE" means Pathnet Real Estate LLC, a Delaware limited liability company.
"PERMITTED HOLDERS" means the Persons identified on Schedule 1.1(a) who are
shareholders of Holdings as of the Closing Date together with their respective
Affiliates and (b) any spouse, parent, sibling, child or grandchild of any of
the aforesaid individuals (in each case whether such relationship arises from
birth or adoption or through marriage) or any trust established for the benefit
of any such individuals or any spouse, parent, sibling, child or grandchild or
any such individuals (in each case whether such relationship arises from birth
or adoption or through marriage).
"PERMITTED LIENS" means: (i) Liens in favor of Lender or Cisco Systems,
(ii) Liens in favor of the Collateral Agent pursuant to the Collateral
Documents, (iii) the existing Liens disclosed in writing to Lender on Schedule
1.1; (iv) Liens for Taxes, assessments or other governmental charges that are
not delinquent or which are being contested in good faith by appropriate
proceedings, which proceedings have the effect of preventing the forfeiture or
sale of the property subject to such Liens or the forfeiture or sale of which
property has been prevented by the posting of bonds or the taking of other
appropriate actions, and for which adequate reserves (as determined in
accordance with GAAP) have been established; (v) Liens of materialmen,
mechanics, warehousemen, carriers or employees or other similar Liens provided
for by mandatory provisions of law and securing obligations either not
delinquent or being contested in good faith by appropriate proceedings and which
do not in the aggregate materially impair the use or value of the property or
risk the loss or forfeiture thereof or for which adequate reserves (as
determined in accordance with GAAP) have been established; (vi) Liens consisting
of deposits or pledges or resulting from performance or surety bonds required to
secure the performance of bids, trade contracts, leases, public or statutory
obligations, or other obligations of a like nature incurred in the ordinary
course of business (other than for Indebtedness); (vii) Liens upon or in any
property acquired or held by Borrower or any of its Subsidiaries to secure the
purchase price of such property or Indebtedness incurred solely for the purpose
of financing the acquisition of such property; PROVIDED that (A) any such Lien
attaches to such property concurrently with or within 90 days after the
acquisition thereof, (B) such Lien attaches solely to the property so acquired
in such transaction, (C) the Indebtedness secured by any such Lien so created,
assumed or existing shall not exceed the lesser of the cost or fair market value
at the time of acquisition of the property covered thereby (inclusive of the
cost of engineering, furnishing and installation services directly relating to
such Property) and shall not be less than 75% of the amortized value of the
property acquired with the proceeds of such indebtedness, (D) the aggregate
amount of all Indebtedness secured by all such Liens, when aggregated with the
Indebtedness secured by all purchase-money Liens and all Liens in connection
with any conditional sale or other title retention agreement or capital lease
obligation (other than Qualifying Fiber or Conduit Purchases) existing as of the
Closing Date or at any other time, shall not exceed $30,000,000 at any time
outstanding in the aggregate, and (E) no Default would occur hereunder as a
result of the incurrence of such Indebtedness; (viii) Liens on specific tangible
assets of Persons which become Subsidiaries of Borrower after the date of this
Agreement; provided, however, that (A) such Liens existed at the time the
respective Persons became Subsidiaries and were not created in anticipation
thereof, (B) any such Lien does not by its terms cover any assets after the time
such Person becomes a Subsidiary which were not covered immediately prior
thereto, (C) any such Lien does not by its terms secure any Indebtedness other
than Indebtedness existing immediately prior to the time such Person becomes a
Subsidiary, (D) the acquisition of such Person is permitted hereby, and (E) no
Default would occur hereunder as a result of the incurrence of such
Indebtedness; (ix) Liens consisting of judgment or judicial attachment Liens,
PROVIDED that the enforcement of such Liens is effectively stayed, discharged or
bonded over within sixty (60) days and all such Liens in the aggregate at any
time outstanding for Holdings and its Subsidiaries do not exceed $1,000,000; (x)
restrictions and other minor encumbrances on real property (including easements,
rights-of-way, zoning or other restrictions) which do not in the aggregate
materially impair the use or value of such property or risk the loss or
forfeiture thereof; (xi) Liens created under the Eligible Secured Debt Documents
securing the Eligible Secured Debt permitted to be incurred under this
Agreement, which Liens must be PARI PASSU and of equal priority to the Liens
securing the Obligations and must be subject to the terms and provisions of the
Collateral Agency and Intercreditor Agreement; (xii) deposits with insurance
companies to secure obligations in respect of insurance premiums other than life
insurance premiums, which deposits do not exceed the lesser of the amount of
premiums payable in respect of such insurance within one year after the date of
deposit or $500,000 in aggregate amount at any time payable; (xiii) any interest
or title of a lessor under any lease not prohibited by this Agreement in respect
of the leased asset, including rights of lessors under ground leases in respect
of real property; (xiv) rights in respect of the Network arising pursuant to
Customer Agreements relating thereto, PROVIDED that none of such rights may
result in Borrower's failure to comply with the terms and provisions of this
Agreement; (xv) Liens attaching to Fiber or Conduit acquired as a result of
Fiber or Conduit Purchases, which Liens existed at the time of such acquisition,
were not created in contemplation of such acquisition and were not granted by
any Loan Party and which Liens do not have a material adverse effect on or
interfere with Borrower's and its Subsidiaries' ability to operate such Fiber or
Conduit; (xvi) leases, subleases or rights-of-way granted to others by Borrower
or its Subsidiaries that are not prohibited by this Agreement and do not
materially interfere with the ordinary conduct of business of the Borrower or
any of its Subsidiaries; and (xvii) any extension, renewal or replacement of any
of the foregoing Permitted Liens, PROVIDED that Liens permitted under this
clause (xvii) shall not be extended or spread to cover any additional
Indebtedness or property; PROVIDED, HOWEVER, that (A) none of the Permitted
Liens (except those in favor of Lender securing payment of the Obligations or,
if the Collateral Agency Intercreditor Agreement is in effect, in favor of the
Collateral Agent securing payment of the Obligations and Eligible Secured Debt)
may attach or relate to the capital stock of or any other ownership interest in
Borrower or any of its Subsidiaries, (B) none of the Permitted Liens referenced
in clauses (iii), (ix) and (xii) may attach to any Real Estate Assets, and (C)
except for the Liens disclosed in connection with clause (iii) which are
expressly identified as constituting purchase money Liens, none of the Permitted
Liens referred to in such clause may have a priority equal or prior to the Liens
in favor of Lender or Collateral Agent as security for the Obligations.
"PERMITTED TELECOMMUNICATIONS JOINT VENTURE" means a Person that is not a
Subsidiary of Borrower engaged in one or more Telecommunications Businesses in
which Borrower owns, directly or indirectly, an equity interest.
"PERMITTED TRANSACTION." means (a) any transaction or series of related
transactions (the "Transaction") for the purpose of or resulting, directly or
indirectly, in (i) the acquisition of all or substantially all of the assets of
a Person, or of any business or division of a Person, (ii) the acquisition of
all or any of the capital stock, partnership interests, membership interests or
equity of any Person, or otherwise causing such Person to become a Subsidiary,
or (iii) a merger or consolidation or any other combination with another Person,
that in each case conforms to the following requirements: (i) Borrower or the
applicable Subsidiary is the surviving Person or if such Loan Party is not the
surviving Person, the surviving Person takes all actions reasonably required to
assume and succeed to the rights and obligations of such Loan Party under the
Loan Documents and to grant Collateral Agent or Lender (as the case may be) a
perfected security interest in such surviving Person's property (subject to no
Liens other than Permitted Liens); (ii) after giving effect to such Transaction,
Borrower and each of its Subsidiaries remains in compliance with Section 5.1(g),
(iii) Lender shall have received promptly, and in any event no less than ten
Banking Days prior to the consummation of such Transaction, (A) financial
information regarding the assets, Person or business which is the subject of the
Transaction, including pro forma projected financial statements showing the
effect of the Transaction on Borrower and its Subsidiaries, and (B) a completed
worksheet in substantially the form of Schedule 1 to the Compliance Certificate
demonstrating PRO FORMA compliance with the financial covenants set forth
herein, measured as of the last day of the fiscal quarter then most recently
ended, after giving effect to such Transaction, (iv) the Transaction shall be
consummated in accordance with applicable Requirements of Law, (v) after giving
effect to such Transaction: (A) no Default or Event of Default shall have
occurred and be continuing or would result therefrom, (B) 100% of the capital
stock of any acquired or newly formed corporation, partnership, limited
liability company or other business entity is owned directly by Borrower,
Holdings or a Subsidiary of Borrower or Holdings, and (C) all actions required
to be taken with respect to such acquired or newly formed Subsidiary under
Section 5.1(n) or as otherwise required under Section 5.1(n) shall have been
taken, and (vi) such Transaction complies with either of the following: (A) the
consideration for such acquisition consists of Borrower's equity securities or
(B) in the case of any such Transaction including cash, cash equivalents and/or
the assumption of Indebtedness, the aggregate amount thereof shall not exceed
$5,000,000 (or its equivalent in another currency) in the aggregate for all such
Transactions from the Closing Date to the date of repayment of the Loans; or (b)
cash investments in one or more Permitted Telecommunications Joint Ventures;
PROVIDED that the remainder of (i) the aggregate amount of such investments
MINUS (ii) the aggregate amount of income received on the amount invested shall
not exceed $5,000,000.
"PERSON" means an individual, corporation, partnership, joint venture,
trust, unincorporated organization or any other entity of whatever nature or any
Governmental Authority.
"PNI" means Pathnet, Inc., a Delaware corporation.
"PNI SENIOR NOTES" means the "Notes" as such term is defined in the PNI
Senior Notes Indenture.
"PNI SENIOR NOTES INDENTURE" means that certain Indenture dated as of April
8, 1998, between PNI and The Bank of New York, as trustee, as amended and
supplemented by that certain Supplemental Indenture dated as of March 30, 2000
between PNI and The Bank of New York, as trustee.
"QUALIFYING FIBER OR CONDUIT PURCHASES" means Fiber or Conduit Purchases
which constitute capital lease obligations and for which all consideration
payable therefor was paid in full by Borrower or its Subsidiaries at the time of
acquisition.
"REAL ESTATE ASSETS" means (a) the Rights-of-Way Contribution Agreement,
the Contract Rights-of-Way and all other interests in real estate, or in
contracts relating to real estate, comprising the right-of-way (whether an
easement, lease, contract or agreement in any form) for the Network, (b) all the
Fiber or Conduit installed in the Network, (c) any other assets comprising part
of the Network that constitute real property or fixtures and (d) all fiber optic
cable or strands of fiber or conduit obtained pursuant to any swap or exchange
agreement, but excludes any real property or interests therein not referred to
in clauses (a), (b) or (c) preceding.
"REQUIREMENT OF LAW" means, as to any Person, any law, treaty, rule or
regulation or determination of an arbitrator or of a Governmental Authority, in
each case applicable to or binding upon the Person or any of its property or to
which the Person or any of its property is subject.
"RESPONSIBLE OFFICER" means, as to any Person, the chief financial officer
or treasurer of such Person (or any other senior officer of such Person involved
principally in the financial administration or controllership function of such
Person).
"RESTRICTED PAYMENT" means (a) any dividend or other distribution, payment
or penalty (whether in cash, property or obligations), direct or indirect, paid
or payable by Borrower or any of its Subsidiaries on account of, with respect to
or in connection with (or the setting apart of money for a sinking or other
analogous fund for) any shares of any class of capital stock of Borrower or any
of its Subsidiaries now or hereafter outstanding, except a dividend payable
solely in shares of that class of stock to the holders of that class; (b) any
redemption, conversion, exchange, retirement, sinking fund or similar payment,
purchase or other acquisition for value, direct or indirect, of any shares of
any class of capital stock of Borrower or any of its Subsidiaries now or
hereafter outstanding; (c) any payment or prepayment of principal of, premium,
if any, or interest on, or any redemption, conversion, exchange, purchase,
retirement or defeasance of, or payment with respect to, any subordinated debt
(including Subordinated Debt and any Indebtedness which is subordinated pursuant
to the Subordination Agreement); and (d) any payment made to retire, or to
obtain the surrender of, any outstanding warrants, options or other rights to
acquire shares of any class of capital stock of Borrower or any of its
Subsidiaries now or hereafter outstanding.
"RIGHTS-OF-WAY CONTRIBUTION AGREEMENT" means the Right of Way Contribution
Agreement dated as of August 9, 2000 between Holdings as assignor, and Borrower
and PRE as assignees pursuant to which all rights, titles and interests of
Holdings in and to the Master Rights-of-Way Agreements, as they relate to at
least 4,000 miles of Contract Rights-of-Way to be selected by Borrower from time
to time, is assigned to Borrower and PRE.
"SCHEDULE" means the Schedule of Information attached hereto.
"SECURITY AGREEMENTS" means the Holdings Pledge Agreement, the Borrower
Security Agreement, the Subsidiary Security Agreements, any other security
agreements, pledge agreements, securities pledge agreements and other
agreements, documents or instruments evidencing or creating a Lien as security
for the Obligations or any portion thereof, in form and substance satisfactory
to Lender, executed by any Loan Party, in favor of Lender or in favor of the
Collateral Agent, and any such agreement, document or instrument subsequently
executed in accordance or connection with this Agreement or any other Loan
Document.
"SUBSIDIARY SECURITY AGREEMENTS" means, collectively, (i) the Pledge and
Security Agreement dated as of August 9, 2000 between PFE and the Collateral
Agent and (ii) the Pledge and Security Agreement dated as of August 9, 2000
between PRE and the Collateral Agent, in each case, as any such agreement may be
amended, modified, supplemented, renewed, extended or restated with the prior
written consent of Lender.
"SUBORDINATED DEBT" means unsecured Indebtedness (i) subordinated to the
payment of the Obligations on terms satisfactory to Lender and (ii) the other
terms and conditions of which are satisfactory to Lender (including terms and
conditions relating to the interest rate and payments, fees, amortization,
maturity, covenants, events of default and remedies).
"SUBORDINATED DEBT DOCUMENTS" means any and all agreements, documents and
instruments now or hereafter evidencing or governing any Subordinated Debt.
"SUBORDINATION AGREEMENT" means the Subordination Agreement dated as of
August 9, 2000 among the Loan Parties and the Collateral Agent, as any such
agreement may be amended, modified, supplemented, renewed, extended or restated
with the prior written consent of Lender.
"SUBSIDIARY" means any corporation, association, partnership, joint venture
or other business entity of which more than 50% of the voting stock or other
equity interest is owned directly or indirectly by any Person or one or more of
the other Subsidiaries of such Person or a combination thereof.
"TAXES" means any and all present or future taxes, levies, imposts, duties,
deductions, charges or withholdings imposed by any Governmental Authority.
"UNITED STATES" and "U.S." each means the United States of America.
"VENDOR" means Cisco Systems, or any distributor or other reseller or
provider of Cisco Products.
"VOTING STOCK" of any Person means the capital stock of such Person which
ordinarily has voting power for the election of directors, managers or general
partners (or persons performing similar functions) of such Person, whether at
all times or only for so long as no senior class of securities has such voting
power by reason of any contingency.
1.2 INTERPRETATION. (a) In the Loan Documents, except to the extent the
context otherwise requires: (i) any reference to an Article, a Section, a
Schedule or an Exhibit is a reference to an article or section thereof, or a
schedule or an exhibit thereto, respectively, and to a subsection or a clause
is, unless otherwise stated, a reference to a subsection or a clause of the
Section or subsection in which the reference appears; (ii) the words "hereof,"
"herein," "hereto," "hereunder" and the like mean and refer to this Agreement or
any other Loan Document as a whole and not merely to the specific Article,
Section, subsection, paragraph or clause in which the respective word appears;
(iii) the meaning of defined terms shall be equally applicable to both the
singular and plural forms of the terms defined; (iv) the words "including,"
"includes" and "include" shall be deemed to be followed by the words "without
limitation;" (v) references to agreements and other contractual instruments
shall be deemed to include all subsequent amendments and other modifications
thereto; (vi) references to statutes or regulations are to be construed as
including all statutory and regulatory provisions consolidating, amending or
replacing the statute or regulation referred to; (vii) any table of contents,
captions and headings are for convenience of reference only and shall not affect
the construction of this Agreement or any other Loan Document; and (viii) in the
computation of periods of time from a specified date to a later specified date,
the word "from" means "from and including"; the words "to" and "until" each mean
"to but excluding"; and the word "through" means "to and including." (b) Unless
Lender has consented in writing to an amendment, waiver or other modification of
the Financing Documents, or an amendment, waiver or other modification of the
Financing Documents is otherwise permitted under this Agreement, the term
"Financing Documents" as used herein shall not be deemed to refer to any such
Financing Document as modified by any such amendment, waiver or other
modification to such Financing Document and shall instead mean and be such
Financing Document without giving effect to such amendment, waiver or other
modification. If any provision of any Financing Document is incorporated herein
by reference and such Financing Document shall terminate, the provisions thereof
referred to herein shall continue to be incorporated by reference herein, as and
to the extent applicable, MUTATIS MUTANDIS, in each case in the form thereof on
the date of such termination.
SECTION 2. THE LOAN FACILITY.
2.1 THE LOANS. Subject to compliance with the conditions precedent set
forth in Sections 3.1 and 3.2, Lender agrees, on the terms and conditions
hereinafter set forth, to make loans (each a "Loan" and, collectively, the
"Loans") to Borrower during the Availability Period, in an aggregate principal
amount up to but not exceeding the Commitment. Any amount of the Loans repaid
may not be reborrowed.
2.2 USE OF PROCEEDS. Borrower agrees to use the proceeds of any Loans made
hereunder solely for the purposes described in the Schedule.
2.3 BORROWING PROCEDURE. Each Loan to be made hereunder shall be in such
minimum principal amount and subject to such advance written notice, or
telephonic notice (confirmed immediately in writing), as shall be specified in
the Schedule. Each such written notice of borrowing shall be in substantially
the form of EXHIBIT A (with appropriate completions). Upon fulfillment of the
applicable conditions set forth in Section 3.1 and 3.2, and subject to the
Funding Procedures and Policies, Lender shall make the proceeds of the Loan
available in accordance with Borrower's payment instructions. Without limiting
the generality of the foregoing, in the case of any Loan made hereunder for the
purpose of paying the purchase price of Cisco Products, (i) Lender shall make
the Loan available directly to the Vendor, and (ii) if the Vendor is Cisco
Systems, each such Loan shall be deemed to be outstanding hereunder and under
the Note evidencing such Loan effective as of the date 30 days after the invoice
date of the Cisco Products which are being financed by such Loan (or on such
date thereafter as Cisco Systems shall agree to in its sole discretion), and
Lender is hereby authorized to make such Loans without being required to receive
a notice of borrowing with respect thereto, PROVIDED that if Borrower provides
written notice to Lender within 25 days after the invoice date that payment or
performance due Cisco Systems is not then due because one or more conditions of
payment or performance has or have not been satisfied by Cisco Systems, then
clause (ii) of this section shall not apply and no such Loan shall be made until
Borrower provides a notice of borrowing with respect to such invoice. Borrower
hereby authorizes and directs Lender to make direct payment to any Vendor and
any other intended recipient, if any, of Loan proceeds. Notwithstanding anything
in the Funding Procedures and Policies to the contrary, Lender will make Loan
proceeds available to any Vendor or other recipient thereof on or not later than
five Banking Days following the requested Borrowing Date.
2.4 EVIDENCE OF INDEBTEDNESS. As additional evidence of the Indebtedness of
Borrower to Lender resulting from the Loans made by Lender, Borrower shall
execute and deliver the Note (or Notes) required pursuant to the Schedule.
2.5 INTEREST AND FEES.
(a) INTEREST. Borrower shall pay interest on the unpaid principal amount of
each Loan at the interest rate and on the dates set forth in the Note evidencing
such Loan.
(b) FEES. Borrower agrees to pay to Lender such fees as may be specified in
the Schedule, payable on the dates set forth in the Schedule. All fees payable
under this Section 2.5 shall be nonrefundable.
(c) DETERMINATIONS. Each determination by Lender of any applicable rate of
interest, and of any change therein, in the absence of manifest error shall be
conclusive and binding on the parties hereto.
2.6 COMPUTATIONS. All computations of fees and interest hereunder shall be
made on the basis of a year of 360 days for the actual number of days occurring
in the period for which any such interest or fee is payable.
2.7 HIGHEST LAWFUL RATE. Anything herein to the contrary notwithstanding,
if during any period for which interest is computed hereunder, the applicable
interest rate, together with all fees, charges and other payments which are
treated as interest under applicable law, as provided for herein or in any other
Loan Document, would exceed the maximum rate of interest which may be charged,
contracted for, reserved, received or collected by Lender in connection with
this Agreement under applicable law (the "Maximum Rate"), Borrower shall not be
obligated to pay, and Lender shall not be entitled to charge, collect, receive,
reserve or take, interest in excess of the Maximum Rate, and during any such
period the interest payable hereunder shall be limited to the Maximum Rate.
2.8 REPAYMENT OF THE LOANS. Borrower shall repay to Lender the principal
amount of each Loan in accordance with the terms and conditions of the Note
evidencing such Loan.
2.9 PREPAYMENTS. Borrower may prepay the outstanding amount of the Loans in
whole or in part, in a principal amount of at least $100,000 or any amount in
excess thereof. If any mandatory prepayments are required under the Schedule,
Borrower shall prepay the outstanding Loans in the amounts and at the times
specified in the Schedule. Any such prepayments shall not be subject to any fee,
premium, penalty or other charges except as provided in Section 2.12 and except
to the extent a prepayment fee is required under the Schedule. Borrower shall
give prior notice to Lender of any such prepayment identifying the Loan to be
prepaid and specifying the date and amount of the prepayment. Partial
prepayments of any amortizing Loan shall be applied to the installments of
principal thereof in the inverse order of maturity. Accrued interest on any such
Loan prepaid shall be due on the prepayment date as to the principal amount of
such Loan prepaid.
2.10 REDUCTION OR TERMINATION OF THE COMMITMENT. Borrower may, upon prior
notice to Lender, terminate in whole or reduce in part, as of the date specified
by Borrower in such notice, any then unused portion of the Commitment. From the
effective date of any reduction or termination, any commitment fee payable
pursuant to the Schedule shall be computed on the basis of the Commitment as so
reduced or terminated. Once reduced or terminated, the Commitment may not be
increased or otherwise reinstated.
2.11 INCREASED COSTS. If, due to either (i) the adoption of, or any change
in, any applicable law, rule or regulation, or any change in the interpretation
or administration thereof by any Governmental Authority charged with the
interpretation or administration thereof (a "Regulatory Change"), or (ii)
compliance by Lender with any request, guideline or directive (whether or not
having the force of law) of any such Governmental Authority, there shall be any
increase in the cost to Lender of agreeing to make or making, or funding or
maintaining, any Loan, or any reduction of any amount received or receivable by
Lender under this Agreement or the Note with respect thereto, then from time to
time, within 15 days after demand by Lender, Borrower shall pay to Lender such
additional amounts as shall compensate Lender for such increased cost or
reduction. Any such request for compensation by Lender under this Section 2.11
shall set forth the basis of calculation thereof and shall, in the absence of
manifest error, be conclusive and binding for all purposes. In determining the
amount of such compensation, Lender may use any reasonable averaging and
attribution methods.
2.12 FUNDING LOSSES. In addition to such amounts as are required to be paid
by Borrower pursuant to the Schedule, Borrower shall compensate Lender, promptly
upon receipt of Lender's written request, for all losses, costs and expenses
(including any reasonable loss or expense incurred by Lender in obtaining,
liquidating or re-employing deposits or other funds to fund or maintain the
Loans), if any, which Lender sustains if: (i) Borrower repays or prepays any
Loan on a date other than the last day of an Interest Period for such Loan
(whether as a result of an optional prepayment, a mandatory prepayment, a
payment as a result of acceleration or otherwise) (except in the case of a
scheduled payment of an installment of principal on a principal payment date
which does not fall on the last day of an Interest Period); (ii) Borrower fails
to borrow a Loan after giving its notice of borrowing under Section 2.3; or
(iii) Borrower fails to prepay a Loan after giving its notice thereof. Any such
request for compensation shall set forth the basis for requesting such
compensation and shall, in the absence of manifest error, be conclusive and
binding for all purposes. As used herein, "Interest Period" has the meaning set
forth in the Note(s).
2.13 RIGHTS OF CSCC/ASSIGNEE Notwithstanding anything to the contrary in
Sections 2.11 and 2.12, such Sections shall not apply to any Loans held by Cisco
Systems Capital Corporation (or an Affiliate thereof), as Lender, but shall be
in full force and effect with respect to any Loans held by a Lender other than
Cisco Systems Capital Corporation (or an Affiliate thereof) and shall inure to
the benefit of any assignee receiving the assignment of a Loan (or any portion
thereof) under the terms of this Agreement.
2.14 PAYMENTS. Borrower shall make each payment under the Loan Documents
unconditionally in full and free and clear of, and without reduction for or on
account of, any present and future Taxes or withholdings, and all liabilities
with respect thereto. Each such payment shall be made without set-off,
counterclaim or, to the extent permitted by applicable law, other defense,
including without any deduction or setoff arising out of or in connection with
the purchase of the Financed Products, all of which rights of Borrower are
hereby expressly waived by Borrower; provided, however, that no payment
hereunder shall be deemed to be a waiver of any right or claim that Borrower may
have against Cisco Systems or other Vendor with respect to the Cisco Products.
Each such payment shall be made on the day when due to Lender in Dollars and in
immediately available funds, to Lender's account specified in the Schedule or to
such other bank and/or account of Lender as it from time to time shall designate
in a written notice to Borrower. Whenever any payment hereunder shall be stated
to be due, or whenever any other date specified hereunder would otherwise occur,
on a day other than a Banking Day, then, except to the extent otherwise provided
hereunder, such payment shall be made, and such other date shall occur, on the
next succeeding Banking Day. Each payment by or on behalf of Borrower hereunder
shall, unless a specific determination is made by Lender with respect thereto,
be applied (i) first, to any fees, costs, expenses and other amounts (other than
principal and interest) due Lender; (ii) second, to accrued and unpaid interest
due Lender; and (iii) third, to principal due Lender.
SECTION 3. CONDITIONS PRECEDENT.
3.1 CONDITIONS PRECEDENT TO THE INITIAL LOAN. The obligation of Lender to
make its Loan on the initial Borrowing Date shall be subject to the satisfaction
of each of the following conditions precedent before or concurrently with the
making of such initial Loan:
(a) DOCUMENTS. Lender shall have received the following, in form and
substance satisfactory to it: (i) the Note (or Notes) required under the
Schedule, executed by Borrower; (ii) any required Guaranty and any additional
Loan Documents specified in the Schedule, executed by each of the respective
parties thereto, and (iii) any other documents and information specified in the
Schedule.
(b) ADDITIONAL CLOSING DOCUMENTS. Lender shall have received the following,
in form and substance satisfactory to it: (i) evidence that all approvals or
consents of any other Person, required in connection with the execution,
delivery and performance of the Loan Documents shall have been obtained; and
(ii) a certificate of the Secretary or other appropriate officer of each Loan
Party, dated the Closing Date, or a date not more than five Banking Days prior
to the Closing Date, certifying (A) copies of the certificate or articles of
incorporation and bylaws of such Loan Party and the resolutions adopted by such
Loan Party and other actions taken or adopted by such Loan Party authorizing the
execution, delivery and performance of the Loan Documents, and (B) the
incumbency, authority and signatures of each officer of such Loan Party
authorized to execute and deliver the Loan Documents and act with respect
thereto.
(c) LEGAL OPINION. Lender shall have received a legal opinion of legal
counsel to the Loan Parties, dated the Closing Date, or a date not more than
five Banking Days prior to the Closing Date, in form and substance satisfactory
to Lender.
(d) COLLATERAL. If any Collateral Documents are referred to in the
Schedule, Lender shall have received the following, in form and substance
satisfactory to it: (i) executed copies of all UCC-1 financing statements
necessary or appropriate in the reasonable opinion of Lender and Collateral
Agent to perfect the security interests created under the Collateral Documents;
(ii) written advice relating to such Lien and judgment searches as Lender and
Collateral Agent shall have requested, and such termination statements or other
documents, as may be necessary to confirm that the Collateral described in the
Collateral Documents is subject to no other Liens in favor of any Persons (other
than Permitted Liens); (iii) evidence that all other actions necessary or
appropriate in the reasonable opinion of Lender and Collateral Agent to perfect
and protect the security interest created by the Collateral Documents have been
taken; and (iv) evidence of insurance coverage, together with evidence that
Collateral Agent has been named as loss payee under all policies of property
insurance and as additional insured under all policies of liability insurance,
in each case as required by the Collateral Documents.
(e) FEES, COSTS AND EXPENSES. Borrower shall have paid (i) all fees then
due in accordance with the Schedule, and (ii) all invoiced costs and expenses
then due in accordance with Section 7.4.
(f) COMPLIANCE CERTIFICATE. Lender shall have received a completed
Compliance Certificate of a Responsible Officer of Borrower, as of the end of
the fiscal quarter immediately preceding the Closing Date, with respect to any
of the financial covenants set forth in Section 5.1 in effect as of such date.
(g) MATERIAL CONTRACTS. If requested by Lender, Borrower shall have
delivered to Lender a complete and current copy of each Material Contract in
existence as of the Closing Date, except that Borrower shall not have any
obligation to deliver such Material Contract if such delivery is prohibited by
the terms of such Material Contract and if such prohibition was required by a
party other than Borrower or any of its Subsidiaries.
3.2 CONDITIONS PRECEDENT TO ALL LOANS. The obligation of Lender to make
each Loan shall be subject to the satisfaction of each of the following
conditions precedent:
(a) USE OF PROCEEDS. Lender shall have received details with respect to the
use of proceeds of the Loan at least five Banking Days prior to the proposed
funding date (in the form of a schedule or other listing of the Financed
Products or otherwise in a form as shall be specified by Lender or in the
Funding Procedures and Policies), and the foregoing (including the proposed use
of proceeds) shall be satisfactory to Lender.
(b) REPRESENTATIONS AND WARRANTIES; NO DEFAULT. On and as of the date of
such Loan, both before and after giving effect thereto and to the application of
proceeds therefrom: (i) the representations and warranties contained in Section
4.1 and in the other Loan Documents shall be true, correct and complete as
though made on and as of such date (unless they expressly refer to an earlier
date, in which case they shall be true, complete and correct as of such earlier
date); and (ii) no Default shall have occurred and be continuing or shall result
from the making of such Loan. For purposes of this Section 3.2, clause (i) shall
take into account any amendments to any disclosures made in writing by any Loan
Party to Lender after the Closing Date and approved by Lender. The giving of any
notice of borrowing and the acceptance by Borrower of the proceeds of each Loan
made following the Closing Date shall each be deemed a certification to Lender
that on and as of the date of such Loan such statements are true.
(c) MATERIAL ADVERSE CHANGE. On and as of the date of such Loan, there
shall have occurred no Material Adverse Change since the date of the financial
statements furnished to Lender prior to the Closing Date.
(d) CLOSING DATE. The Closing Date has occurred.
(e) ADDITIONAL DOCUMENTS AND CONDITIONS. Lender shall have received, in
form and substance satisfactory to it, such additional approvals, opinions,
documents and other information as Lender may reasonably request, including any
specified in the Schedule; and any additional conditions precedent set forth in
the Schedule shall have been satisfied.
SECTION 4. REPRESENTATIONS AND WARRANTIES.
4.1 REPRESENTATIONS AND WARRANTIES OF HOLDINGS AND BORROWER. Borrower
represents and warrants to Lender that:
(a) ORGANIZATION AND POWERS. Borrower (i) is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation, (ii) has all requisite power and authority to own its assets and
carry on its business and to execute, deliver and perform its obligations under
the Loan Documents to which it is a party, (iii) is qualified to do business and
is in good standing in each jurisdiction in which the failure so to qualify or
be in good standing would result in a Material Adverse Change, and (iv) is in
compliance with all Requirements of Law, except to the extent that such
noncompliance could not reasonably be expected to result in a Material Adverse
Change.
(b) AUTHORIZATION; NO CONFLICT. The execution, delivery and performance by
Borrower of the Loan Documents to which it is a party have been duly authorized
by all necessary corporate action of Borrower and do not and will not (i)
contravene the terms of the articles or certificate of incorporation, or bylaws,
of Borrower or result in a breach of or constitute a default under any Material
Contract or any material lease, instrument, contract or other agreement to which
Borrower is a party or by which it or its properties may be bound or affected;
or (ii) violate any provision of any law, rule, regulation, order, judgment,
decree or the like binding on or affecting Borrower.
(c) BINDING OBLIGATIONS. The Loan Documents to which Borrower is a party
constitute, or when delivered under this Agreement will constitute, legal, valid
and binding obligations of Borrower, enforceable against Borrower in accordance
with their respective terms, except as limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to or affecting
creditors' rights generally and by general equity principles.
(d) CONSENTS. No authorization, consent, approval, license, exemption of,
or filing or registration with, any Governmental Authority, or approval or
consent of any other Person, is required for the due execution, delivery or
performance by any Loan Party of any of the Loan Documents or the purchase of
the Financed Products, except as may be set forth in the Schedule and except for
any filings necessary to perfect any Liens on any Collateral.
(e) LITIGATION. Except for the Magten Litigation, there are no actions,
suits or proceedings pending or, to the best of Borrower's knowledge, threatened
against or affecting Borrower or any of its Subsidiaries before any Governmental
Authority or arbitrator which if determined adversely to Borrower or any such
Subsidiary would result in a Material Adverse Change.
(f) FINANCIAL STATEMENTS. All financial statements of Borrower and its
Subsidiaries delivered to Lender are complete and correct and fairly present the
financial condition of Borrower and its Subsidiaries as at the times and for the
periods covered by such statements, in each case in accordance with GAAP,
consistently applied, subject, in the case of any unaudited financial
statements, to normal year-end adjustments and any absence of notes. Since the
date of the most recent financial statements furnished to Lender prior to the
Closing Date, there has not been any Material Adverse Change.
(g) PURCHASE TRANSACTION. Each purchase transaction to be financed with any
Loan represents a bona fide and undisputed transaction between Borrower and the
Vendor (or other applicable vendor of Financed Products) entered into in
compliance with all applicable laws and regulations.
(h) SUBSIDIARIES. Except as set forth in the Schedule, on the date of this
Agreement Borrower has no Subsidiaries.
(i) LICENSES, PATENTS, TRADEMARKS AND OTHER RIGHTS. Each of Borrower and
its Subsidiaries possesses all material approvals, authorizations, permits,
franchises, licenses, patents, trademarks, trade names, service marks,
copyrights, leases and all rights with respect thereto, free from burdensome
restrictions, that are reasonably necessary for the ownership, maintenance and
operation of its business, and neither Borrower nor any such Subsidiary is in
material violation of any rights of others with respect to the foregoing.
Without limiting the generality of the foregoing, the Schedule sets forth all
material authorizations, permits, licenses and approvals of or from the FCC or
any other Governmental Authority ("Permits and Licenses") held by Borrower and
each Subsidiary existing on the date of this Agreement (other than Permits and
Licenses pertaining to construction or rights of way); each Permit and License
is in full force and effect and has not been revoked, suspended, canceled, or
modified in any materially adverse way and, except as may be set forth in the
Schedule, is not subject to any materially adverse conditions or requirements;
and Borrower has no knowledge of the occurrence of any event (including any
investigation, proceeding, notice, violation, or other order or complaint issued
by or before and Governmental Authority) which (i) results in, or after notice
or lapse of time or both would result in, revocation, suspension, adverse
modifications, non-renewal, impairment, restriction, loss or termination of, or
order of forfeiture with respect to, any Permit or License in any respect that
could reasonably be expected to result in a Material Adverse Change, or (ii)
affects or could reasonably be expected in the future to affect any of the
rights of Borrower or any of its Subsidiaries under any Permit or License in any
respect that could reasonably be expected to result in a Material Adverse
Change.
(j) INSURANCE. The properties of Borrower and its Subsidiaries are insured,
with financially sound and reputable insurance companies, in such amounts, with
such deductibles and covering such risks as is customarily carried by companies
engaged in similar businesses and owning similar properties in the localities
where Borrower or such Subsidiary operates.
(k) TAXES. Borrower and its Subsidiaries have filed all federal and other
material tax returns and reports required to be filed, have made timely
remittance of all material amounts as required by any Governmental Authority and
have paid all federal and other material Taxes, assessments, fees and other
governmental charges levied or imposed upon them or their properties, income or
assets otherwise due and payable, except those which are being or will be
contested in good faith by appropriate proceedings and for which adequate
reserves have been provided in accordance with GAAP. Borrower has not received
any notice of any proposed tax assessment against Holdings, Borrower or any of
Borrower's Subsidiaries that would, if made, result in a Material Adverse
Change.
(l) LIENS. There are no Liens upon or with respect to any of properties or
assets of Borrower and its Subsidiaries, including any of the Collateral, except
for Permitted Liens.
(m) REGULATED ENTITIES. None of Holdings, Borrower, any Person controlling
Holdings, or any Subsidiary of Borrower or Holdings, is an "Investment Company"
within the meaning of the Investment Company Act of 1940. No Loan Party is
subject to regulation under the Public Utility Holding Company Act of 1935, the
Federal Power Act, the Interstate Commerce Act, or any other Federal or state
statute or regulation limiting its ability to incur Indebtedness.
(n) MATERIAL CONTRACTS. All of the Material Contracts are in full force and
effect and, to the best knowledge of Borrower, (i) no Loan Party is in default
in any material respect under the terms of a Material Contract and (ii) no other
Person who is a party to a Material Contract is in default in any material
respect under the terms of such Material Contract except such defaults as would
not reasonably be expected to result in a Material Adverse Change.
(o) DISCLOSURE. (i) Borrower has disclosed to Lender the existence, as of
the date of this Agreement, of each credit agreement, loan agreement, indenture,
purchase agreement, guarantee, letter of credit or other arrangement providing
for or otherwise relating to any Indebtedness or any extension of credit (or
commitment for any extension of credit) to, or guarantee by, Borrower or any of
its Subsidiaries the aggregate principal or face amount of which equals or
exceeds (or may equal or exceed) $100,000 and any Liens with respect thereto.
(ii) None of the representations or warranties made by any Loan Party in the
Loan Documents as of the date of such representations and warranties, and none
of the statements contained in any other information with respect to Borrower
and its Subsidiaries, including each exhibit or report, furnished by or on
behalf of Borrower to Lender in connection with the Loan Documents, contains any
untrue statement of a material fact or omits any material fact required to be
stated therein or necessary to make the statements made therein, in the light of
the circumstances under which they are made, not misleading.
4.2 REPRESENTATIONS AND WARRANTIES OF LENDER. Lender represents and
warrants to Borrower that Lender: (i) will acquire each Note for its own account
for investment and (subject to the disposition of its property being at all
times within its control) not with a view to any resale or other distribution of
such Note in a transaction constituting a public offering or otherwise requiring
registration under the Securities Act of 1933 (the "Securities Act") or in a
transaction that would result in noncompliance with applicable state securities
laws; (ii) has such knowledge and experience in financial and business matters
as to be capable of evaluating the merits and the risks of its acquisition of
any Note and credit extensions to Borrower, (iii) is an accredited investor as
such term is defined in Rule 501 of Regulation D under the Securities Act, and
(iv) understands that such Note has not been, and will not be, registered under
the Securities Act or any state securities laws.
SECTION 5. COVENANTS.
5.1 COVENANTS. So long as any of the Obligations shall remain unpaid or
Lender shall have any Commitment, Borrower agrees that:
(a) FINANCIAL STATEMENTS AND OTHER INFORMATION. Borrower shall furnish to
Lender: (i) as soon as available and in any event within 45 days after the end
of the first three fiscal quarters of each fiscal year of Borrower, its
quarterly consolidated financial statements, prepared in accordance with GAAP,
and, if requested by Lender, its quarterly consolidating financial statements,
accompanied by a certificate of a Responsible Officer of Borrower stating that
such financial statements fairly present the financial condition of Borrower and
its Subsidiaries as at such date and the results of operations of Borrower and
its Subsidiaries for the period ended on such date and have been prepared in
accordance with GAAP consistently applied, subject to changes from normal,
year-end adjustments and except for the absence of notes, (ii) as soon as
available and in any event within 105 days after the end of each fiscal year of
Borrower, its consolidated annual financial statements, prepared in accordance
with GAAP and, if requested by Lender, consolidating annual financial
statements, and in the case of consolidated financial statements, accompanied by
an unqualified report thereon of independent certified public accountants of
recognized standing; (iii) as soon as available and in any event not more than
105 days after the commencement of each fiscal year, the business plan and
financial projections of Borrower and its Subsidiaries, for such fiscal year;
(iv) promptly after Borrower has knowledge or becomes aware thereof, notice of
(A) the occurrence of any Default hereunder, and (B) any default or event of
default under any Financing Documents; (v) prompt written notice of any
condition or event which has resulted, or that could reasonably be expected to
result, in a Material Adverse Change; (vi) together with the financial
statements required pursuant to clauses (i) and (ii), a Compliance Certificate
of a Responsible Officer of Borrower as of the end of the applicable accounting
period; and (vii) such other information respecting the operations, properties,
business or financial condition of Borrower and their Subsidiaries as Lender may
from time to time reasonably request or as may be specified in the Schedule.
(b) PRESERVATION OF EXISTENCE, ETC. Borrower shall, and shall cause each of
its Subsidiaries to, maintain and preserve (i) its corporate existence, and (ii)
all material copyrights, patents, trademarks, trade names and service marks and
other intellectual property rights, and all other material rights,
qualifications, permits, licenses, franchises and privileges, necessary or
desirable in the normal course of its business and operations and the ownership
of its properties, except for the dissolution of any shell or dormant Subsidiary
and except in connection with any transactions expressly permitted by this
Section 5.1.
(c) LICENSES. Borrower shall, and shall cause each of its Subsidiaries to,
obtain and maintain all licenses, authorizations, consents, filings, exemptions,
registrations and other governmental approvals of any Government Authority
necessary or desirable (i) in connection with the execution, delivery and
performance of the Loan Documents, the purchase of the Financed Products or the
consummation of the transactions therein contemplated, or (ii) in the normal
course of its business and operations and the ownership of its properties,
except, in the case of this clause (ii), to the extent that the failure to do so
could not reasonably be expected to result in a Material Adverse Change.
(d) COMPLIANCE WITH LAWS. Borrower shall comply, and shall cause each of
its Subsidiaries to comply, in all material respects with all Requirements of
Law of any Governmental Authority having jurisdiction over it or its business,
except such as may be contested in good faith or as to which a bona fide dispute
may exist or where noncompliance could not reasonably be expected to result in a
Material Adverse Change.
(e) PAYMENT OF OBLIGATIONS. Borrower shall, and shall cause each of its
Subsidiaries to, pay and discharge (i) all federal and other material Taxes,
fees, assessments and governmental charges or levies imposed upon it or upon its
properties or assets prior to the date on which penalties attach thereto, and
all lawful claims for labor, materials and supplies which, if unpaid, might
become a Lien upon any properties or assets of Borrower or any of its
Subsidiaries, except to the extent such Taxes, fees, assessments or governmental
charges or levies, or such claims, are being contested in good faith by
appropriate proceedings and are adequately reserved against in accordance with
GAAP; (ii) all lawful claims which, if unpaid, would by law become a Lien upon
its property not constituting a Permitted Lien; and (iii) all Indebtedness, as
and when due and payable, but subject to any subordination provisions contained
in any instrument or agreement evidencing such Indebtedness (except where
failure to do so would not otherwise constitute a Default or Event of Default
hereunder).
(f) INSURANCE. Borrower shall, and shall cause each of its Subsidiaries to,
carry and maintain in full force and effect, at its own expense and with
financially sound and reputable insurance companies, insurance in such amounts,
with such deductibles and covering such risks as is customarily carried by
companies engaged in the same or similar businesses and owning similar
properties in the localities where Borrower or such Subsidiary operates. Without
limiting the generality of the foregoing, Borrower shall, and shall cause each
of its Subsidiaries to, comply with all requirements of the Collateral Documents
pertaining to maintenance of insurance.
(g) CHANGE IN NATURE OF BUSINESS. Borrower shall not, and shall not permit
any of its Subsidiaries to, engage in any material line of business other than
that of being a telecommunications services provider through the Network.
(h) RESTRICTIONS ON FUNDAMENTAL CHANGES. Borrower shall not, and shall not
permit any of its Subsidiaries to, merge with or consolidate into, or acquire
all or substantially all of the assets of, any Person, or sell, transfer, lease
or otherwise dispose of (whether in one transaction or in a series of
transactions) all or substantially all of its assets, except that (i) any of
Borrower's wholly owned Subsidiaries may merge with, consolidate into or
transfer all or substantially all of its assets to another of Borrower's wholly
owned Subsidiaries or to Borrower and in connection therewith such Subsidiary
may be liquidated or dissolved (provided that if any such transaction shall be
between an Additional Borrower and another Subsidiary not an Additional
Borrower, or a Subsidiary which is a Guarantor and a Subsidiary which is not a
Guarantor, and such Additional Borrower or Subsidiary Guarantor is not the
continuing or surviving Person, then the continuing or surviving Person shall
have assumed all of the obligations of such Additional Borrower or Subsidiary
Guarantor, as the case may be, under the Loan Documents to which it is a party);
(ii) Borrower or any of its Subsidiaries may enter into a Permitted Transaction;
(iii) Borrower or any of its Subsidiaries may sell or dispose of assets in
accordance with the provisions of subsection (i) below; and (iv) subject to any
restrictions set forth in subsection (i) below regarding Fiber or Conduit Sales,
the Borrower or PRE may purchase or acquire Fiber or Conduit that constitutes
all or a material or substantial part of the business or properties of a Person
pursuant to a purchase, swap or exchange agreement.
(i) SALES OF ASSETS. Borrower shall not, and shall not permit any of its
respective Subsidiaries to, sell, lease, transfer, or otherwise dispose of
(whether in one transaction or a series of transactions) any assets (including
any shares of stock in any Subsidiary or other Person) outside the ordinary
course of business (each a "Transfer"), or enter into or consummate any Transfer
(i) to be made by Borrower or any Subsidiary to Holdings (other than as
permitted by Section 5.1((m)), (ii) involving Financed Products (other than in
the ordinary course of business to a wholly owned Subsidiary that is a Guarantor
hereunder and that has granted to Lender a perfected, first priority Lien on
such Financed Products under a security agreement in form and substance
satisfactory to Lender (except as permitted by Clause (b) to this Section 5.1(i)
below)), (iii) that could reasonably be expected to result in a Material Adverse
Change or (iv) that would violate the terms of any other Loan Document; provided
that as a condition to consummating any Transfer to any such Subsidiary of
Financed Products other than PFE, Borrower shall provide ten Banking Days' prior
written notice to Lender of the proposed Transfer and obtain Lender's prior
written consent thereto. For purposes of this Section 5.1(i), the term ordinary
course of business shall include, without limitation, (a) sales, leases,
transfers, assignments, or other dispositions of property, other than the
Network (or any portion thereof), Fiber, Conduit, accounts or receivables, by
the Borrower or its Subsidiaries if each of the following conditions have been
satisfied: (i)(A) the net proceeds from any such single sale, lease, transfer,
assignment or other disposition or series of related sales, leases, transfers,
assignments or other dispositions shall not exceed $5,000,000 in the aggregate
at any time and (B) the Borrower or any Subsidiary (as applicable) receives fair
consideration for such assets; and (ii) no Default exists at the time thereof;
(b) sales, leases, transfers, assignments or other dispositions of property,
accounts and receivables, by any Loan Party to any other Loan Party; (c) Fiber
or Conduit Sales pursuant to Customer Agreements for full and fair consideration
in the ordinary course of Borrower's business and in accordance with or as
contemplated by the Business Plan, PROVIDED that Borrower will ensure that it
and its Subsidiaries retain, at all times, the ownership of or right to use a
minimum of six strands of Fiber with respect to each long-haul segment of the
Network, PROVIDED, HOWEVER, that, in connection with any Fiber or Conduit
Purchases, Borrower and its Subsidiaries may acquire and retain a minimum of two
strands of Fiber installed or intended to be installed in the Network; (d)
dispositions of an entire operating segment of the Network if (i) Borrower
receives fair consideration for such segment of the Network disposed of and (ii)
no Default exists at the time of or will result from such disposition, PROVIDED,
HOWEVER, that, as of any date of determination, not more than 20% of the
aggregate amount of completed Network route miles at any time owned or then
previously owned by Borrower and its Subsidiaries (excluding any Network route
miles exchanged for other Network route miles) may be, or have been, disposed of
after giving effect to all previous dispositions and all dispositions being made
or proposed to be made as of such date of determination; and (e) sales or leases
of customer premises equipment or sublicenses of software, or other equipment
purchased by Borrower and intended for resale, made in the ordinary course of
business; PROVIDED that any such equipment or software shall not consist of
Cisco Products.
(j) NEGATIVE PLEDGE. Borrower shall not, and shall not permit any of its
respective Subsidiaries to, create, incur, assume or suffer to exist any Lien
upon or with respect to any of its properties, revenues or assets, whether now
owned or hereafter acquired, other than Permitted Liens.
(k) INDEBTEDNESS. Borrower shall not, and shall not permit any of its
Subsidiaries to, create, incur, assume or otherwise become liable for or suffer
to exist any Indebtedness, other than: (i) Indebtedness of Borrower to Lender;
(ii) Indebtedness of Borrower and its Subsidiaries existing on the date hereof
and disclosed to Lender, or incurred pursuant to subsection 5.1(k)(xiv) below,
or extensions, renewals and refinancings of such Indebtedness, provided that the
principal amount of such Indebtedness being extended, renewed or refinanced does
not increase; (iii) Indebtedness of Borrower and its Subsidiaries under the
Financing Documents (if any) or any refinancings, extensions and renewals of
such Indebtedness, provided that the principal amount of such Indebtedness being
extended, renewed or refinanced does not increase; (iv) Indebtedness
constituting Eligible Secured Debt; (v) accounts payable to trade creditors for
goods and services and current operating liabilities (not the result of the
borrowing of money) incurred in the ordinary course of Borrower's or any of its
Subsidiary's business in accordance with customary terms and paid within the
specified time, unless contested in good faith by appropriate proceedings and
reserved for in accordance with GAAP; (vi) Indebtedness of Borrower incurred to
finance the acquisition, construction, installation or improvement of any
capital assets; PROVIDED that (A) such Indebtedness is incurred within 270 days
of such acquisition or the completion of such construction, installation or
improvement, (B) any such Indebtedness incurred in connection with any
particular acquisition, construction, installation or improvement shall not
exceed 100% of the cost of such acquisition, construction, installation or
improvement, and (C) the aggregate principal amount of all Indebtedness
permitted by this subsection 5.1(k)(vi) or a refinancing thereof shall not
exceed $1,000,000 at any time outstanding, (vii) Indebtedness consisting of
guarantees resulting from endorsement of negotiable instruments for collection
by Borrower or any such Subsidiary in the ordinary course of business; (viii)
purchase money Indebtedness of Borrower and its Subsidiaries (including capital
leases) secured by purchase money Liens, which Indebtedness and Liens are
permitted under and meet all of the requirements of clause (vii) of the
definition of Permitted Liens in Section 1.1; (ix) Indebtedness constituting
Subordinated Debt of Borrower or a refinancing thereof (as permitted under this
Agreement); (x) Indebtedness between or among Borrower or any of Borrower's
wholly owned Subsidiaries to Borrower or another of its wholly owned
Subsidiaries (subordinated to the payment of the Obligations on terms
satisfactory to Lender); (xi) Indebtedness of Borrower and its Subsidiaries
consisting of Qualifying Fiber or Conduit Purchases entered into in the ordinary
course of business; (xii) unsecured Indebtedness under Interest Rate Protection
Agreements permitted under the Financing Documents; (xiii) Indebtedness
constituting of guaranties by Borrower of Indebtedness of its Subsidiaries,
other than PRE, permitted pursuant to this Agreement and Guaranties by any of
Borrower's Subsidiaries, other than PRE, of Indebtedness of Borrower permitted
pursuant to this Agreement; and (xiv) additional Indebtedness of Borrower in an
aggregate principal amount not to exceed $1,000,000 at any time outstanding.
Notwithstanding the foregoing or anything to the contrary contained in this
Agreement, Borrower shall not, and shall not permit any Subsidiary of Borrower
to, incur, create, assume or permit to exist any Indebtedness which is secured
by any Lien created, evidenced or governed by any of the Collateral Documents
other than the Obligations and other Eligible Secured Debt.
(l) LOANS AND INVESTMENTS. Except as otherwise permitted in Sections 5.1(h)
or 5.1(i), Borrower shall not, and shall not permit any of its Subsidiaries to,
purchase or otherwise acquire the capital stock, assets (constituting a business
unit), obligations or other securities of or any interest in any Person, or
otherwise extend any credit to or make any additional investments in any Person,
other than in connection with: (i) extensions of credit in the nature of
accounts receivable or notes receivable arising from the sales of goods or
services in the ordinary course of business; (ii) (A) extensions of credit by
Holdings to, and other investments by Holdings in, Borrower, provided that any
such Indebtedness is subordinated to the payment of the Obligations on terms
satisfactory to Lender, (B) extensions of credit by Borrower to, and other
investments by Borrower in, any of its wholly owned Subsidiaries or (C)
extensions of credit by any of Borrower's wholly owned Subsidiaries to another
of its wholly owned Subsidiaries or Borrower; (iii) employee loans and
guarantees in the ordinary course of business in accordance with Borrower's or
any of its Subsidiary's usual and customary practices with respect thereto that
do not exceed $1,000,000 in aggregate amount at any one time outstanding; (iv)
short term, investment grade instruments, in accordance with Borrower's usual
and customary treasury management policies; (v) Interest Rate Protection
Agreements permitted by the Financing Documents; and (vi) any Permitted
Transaction.
(m) DISTRIBUTIONS. Borrower shall not, and shall not permit any of its
Subsidiaries to, make or pay, or obligate itself to make or pay, any Restricted
Payments, except: (i) subject to the subordination provisions relating thereto,
Borrower may make (and may obligate itself to make) regularly scheduled payments
of interest accrued on any Subordinated Debt if and to the extent (but only if
and to the extent) permitted by the express terms of the Subordinated Debt
Documents governing such Subordinated Debt, which terms shall have been
expressly approved in writing by Lender; (ii) Subsidiaries of Borrower may make
Restricted Payments to Borrower; (iii) commencing on or after March 15, 2001
(but not prior thereto), if and to the extent permitted by applicable law,
Borrower may declare and pay (and may obligate itself to declare and pay)
dividends to Holdings during any fiscal year in an aggregate amount not to
exceed the positive remainder, if any, of (A) the accrued interest on the PNI
Senior Notes required to be paid in cash in accordance with the PNI Senior Notes
Indenture and, subject to the proviso below, actually paid in cash by Holdings
or PNI, MINUS (B) the aggregate amount of cash that is otherwise available to
PNI or Holdings at such time for the payment of such accrued interest, which
amount referred to in this clause (B) shall be determined in good faith from
time to time by PNI and Holdings and shall be certified by the chief financial
officer of each of such entities to Lender and Borrower as being true and
correct at least 30 days prior to the date upon which such dividends are
proposed to be paid by Borrower, provided, HOWEVER, that the entirety of the
proceeds of such dividends must be used, substantially concurrently with the
payment of such dividends by Borrower, by Holdings or PNI to pay the same amount
of accrued interest on the PNI Senior Notes required to be paid in accordance
with the PNI Senior Notes Indenture, and actually paid, by Holdings or PNI in
cash (and no such dividends may be paid by Borrower to Holdings more than 30
days prior to the applicable date upon which such accrued interest is required
to be paid and is actually paid by Holdings or PNI or in amounts exceeding the
amounts of such accrued interest required to be paid and actually paid by
Holdings in cash); and (iv) Borrower and its Subsidiaries may make loans or
advances to employees, officers and directors of the Loan Parties as set forth
in Section 5.1(l); PROVIDED that no Restricted Payments may be made pursuant to
clause (i), clause (ii) or clause (iii) preceding if a Default exists at the
time of such Restricted Payment or would result therefrom.
(n) ADDITIONAL SUBSIDIARIES. (i) If Borrower proposes to incorporate,
create or acquire any additional Subsidiary, Borrower shall notify Lender
thereof. After the incorporation, creation or acquisition of any such
Subsidiary, within five Banking Days following receipt by Borrower from
Collateral Agent of a security agreement and stock pledge agreement, each in
form and substance satisfactory to Lender and Collateral Agent, and a guaranty
of the Obligations in form and substance satisfactory to Lender and Collateral
Agent, Borrower shall (A) cause such Subsidiary to execute and deliver such
guaranty and security agreement to Collateral Agent and (B) pledge (or cause to
be pledged) the capital stock or other ownership interests of such Subsidiary to
Collateral Agent pursuant to such stock pledge agreement. Lender may elect in
its sole discretion to waive any such requirement for any Subsidiary that will
remain a dormant or shell Subsidiary. (ii) Within five Banking Days after
receipt from Collateral Agent of any request to do so, Borrower shall, or shall
cause such Subsidiary to, have executed and filed any UCC-1 financing statements
furnished by Collateral Agent in each jurisdiction in which such filing is
necessary to perfect the security interest of Collateral Agent in the Collateral
of such Subsidiary and in which Collateral Agent requests that such filing be
made. (iii) Additionally, Borrower and such Subsidiary shall execute and deliver
to Collateral Agent such other items as reasonably requested by Collateral Agent
in connection with the foregoing, including resolutions, incumbency and
officers' certificates, opinions of counsel, search reports and other
certificates and documents.
(o) FINANCIAL COVENANTS(i) . (i) LEVERAGE RATIO. On a consolidated basis,
Borrower and its Subsidiaries shall not, as of the last day of any fiscal
quarter, permit its ratio of Consolidated Funded Debt to Annualized EBITDA to be
greater than the ratios indicated below:
QUARTERLY PERIOD ENDING REQUIRED RATIO
June 30, 2002 28.5 to 1
September 30, 2002 8.1 to 1
December 31, 2002 4.7 to 1
March 31, 2003 3.3 to 1
June 30, 2003 2.7 to 1
September 30, 2003 2.1 to 1
December 31, 2003 1.7 to 1
March 31, 2004 1.4 to 1
June 30, 2004 1.1 to 1
September 30, 2004 .9 to 1
December 31, 2004 .8 to 1
March 31, 2005 .7 to 1
June 30, 2005 .6 to 1
September 30, 2005 .4 to 1
Last day of each calendar quarter .4 to 1
thereafter
(ii) MINIMUM TOTAL REVENUES. On a consolidated basis, Borrower and its
Subsidiaries shall not fail to maintain total revenues of Borrower and its
Subsidiaries for each quarterly period set forth below of not less than the
correlative amount indicated:
QUARTERLY PERIOD ENDING REQUIRED AMOUNT
June 30, 2000 $2,000
September 30, 2000 $3,000
December 31, 2000 $6,000
March 31, 2001 $9,000
June 30, 2001 $14,000
September 30, 2001 $20,000
December 31, 2001 $31,000
March 31, 2002 $47,000
June 30, 2002 $70,000
September 30, 2002 $102,000
December 31, 2002 $146,000
March 31, 2003 $196,000
June 30, 2003 $248,000
September 30, 2003 $300,000
December 31, 2003 $349,000
March 31, 2004 $385,000
June 30, 2004 $428,000
September 30, 2004 $477,000
December 31, 2004 $533,000
March 31, 2005 $586,000
June 30, 2005 $645,000
September 30, 2005 $712,000
December 31, 2005 $785,000
March 31, 2006 $853,000
June 30, 2006 $927,000
September 30, 2006 $1,004,000
December 31, 2006 $1,086,000
March 31, 2007 $1,159,000
June 30, 2007 $1,226,000
September 30, 2007 $1,289,000
December 31, 2007 $1,349,000
March 31, 2008 $1,414,000
June 30, 2008 $1,478,000
September 30, 2008 $1,541,000
(iii) INTEREST COVERAGE RATIO. On a consolidated basis, Borrower and its
Subsidiaries shall not permit the ratio of Annualized EBITDA to Interest Expense
(Interest Expense to be measured on a rolling four quarter basis) to be less
than the ratio set forth below (determined as of the end of the quarterly period
set forth below):
QUARTERLY PERIOD ENDING REQUIRED RATIO
September 30, 2002 .5 to 1
December 31, 2002 1.2 to 1
March 31, 2003 1.9 to 1
June 30, 2003 2.5 to 1
September 30, 2003 3.2 to 1
December 31, 2003 3.9 to 1
March 31, 2004 4.5 to 1
June 30, 2004 5.2 to 1
September 30, 2004 6.1 to 1
December 31, 2004 7.2 to 1
March 31, 2005 8.5 to 1
June 30, 2005 10.0 to 1
September 30, 2005 11.9 to 1
December 31, 2005 14.2 to 1
March 31, 2006 16.9 to 1
June 30, 2006 20.0 to 1
Last day of each calendar quarter 20.0 to 1
thereafter
(iv) DEBT SERVICE COVERAGE RATIO. On a consolidated basis, Borrower and its
Subsidiaries shall not permit the ratio of Annualized EBITDA to Debt Service
(Debt Service to be measured on a rolling four quarter basis) to be less than
the ratio set forth below (determined as of the end of the quarterly period set
forth below):
QUARTERLY PERIOD ENDING REQUIRED RATIO
September 30, 2002 .5 to 1
December 31, 2002 1.2 to 1
March 31, 2003 1.9 to 1
June 30, 2003 2.5 to 1
September 30, 2003 2.2 to 1
December 31, 2003 2.1 to 1
March 31, 2004 1.9 to 1
June 30, 2004 1.8 to 1
September 30, 2004 2.0 to 1
December 31, 2004 2.3 to 1
March 31, 2005 2.6 to 1
June 30, 2005 2.9 to 1
September 30, 2005 3.2 to 1
December 31, 2005 3.6 to 1
March 31, 2006 4.0 to 1
June 30, 2006 4.5 to 1
September 30, 2006 5.0 to 1
Last day of each calendar quarter 5.0 to 1
thereafter
(v) MAXIMUM FUNDED DEBT TO CAPITALIZATION. On a consolidated basis,
Borrower and its Subsidiaries shall not permit the ratio of Consolidated Funded
Debt to Capitalization to exceed the percentage amount set forth below
(determined as of the end of the quarterly period set forth below):
QUARTERLY PERIOD ENDING PERCENTAGE
June 30, 2000 65%
Last day of each calendar quarter 65%
thereafter
As used in this subsection (o), the following terms shall have the
following meanings: "Annualized EBITDA" means EBITDA for the two most recently
completed fiscal quarters multiplied by two; "Capitalization" means, on any
date, the sum of (i) Consolidated Funded Debt, and (ii) the sum of capital stock
plus paid in capital of Borrower (including the Rights-of-Way Capitalization
Value of any rights-of-way contributed to Borrower by Holdings as capital) and
its Subsidiaries on such date, on a consolidated basis and as determined in
accordance with GAAP; "Consolidated Funded Debt" means, as of any date of
determination, all Indebtedness of Borrower and its Subsidiaries on such date,
on a consolidated basis and as determined in accordance with GAAP; "Debt
Service" means, for any period with respect to Borrower and its Subsidiaries,
(i) the amount of interest expense, both expensed and capitalized (including the
portion of any payments in respect of any capital leases allocable to interest
expense but excluding Qualifying Fiber or Conduit Purchases), on a consolidated
basis and as determined in accordance with GAAP, paid or payable during such
period in respect of any Indebtedness of Borrower and its Subsidiaries, PLUS
(ii) all scheduled payments of principal on Indebtedness of Borrower and its
Subsidiaries (including the principal component of any capital leases but
excluding any Qualifying Fiber or Conduit Purchases), on a consolidated basis
and as determined in accordance with GAAP, for the period involved, whether
expensed or capitalized; "EBITDA" means, for any period with respect to Borrower
and its Subsidiaries, net income (excluding extraordinary items), PLUS (except
to the extent attributable to extraordinary items) the amount of any interest,
Taxes, depreciation, and amortization deducted in determining such net income,
all of the foregoing as determined on a consolidated basis for Borrower and its
Subsidiaries in conformity with GAAP; and "Interest Expense" means, for any
period with respect to Borrower and its Subsidiaries, the amount of interest
expense, both expensed and capitalized (including the portion of any payments in
respect of any capital leases allocable to interest expense but excluding
Qualifying Fiber or Conduit Purchases), on a consolidated basis and as
determined in accordance with GAAP, paid or payable during such period in
respect of any Indebtedness of Borrower and its Subsidiaries.
(p) AMENDMENTS OF FINANCING DOCUMENTS. Borrower shall not, and shall not
permit any of its Subsidiaries to, agree to or permit any amendment,
modification or waiver of any provision of the Financing Documents if such
amendment, modification or waiver would materially adversely affect the rights
of Lender hereunder.
(q) SUBORDINATED DEBT. Borrower shall not, and shall not permit any of its
Subsidiaries to, agree to or permit any material amendment, modification or
waiver of any provision of any document or instrument governing or evidencing
Subordinated Debt.
(r) MATERIAL CONTRACTS. Borrower shall not, and shall not permit any of
their Subsidiaries to, agree to or permit any amendment, modification or waiver
of any material provision of any Material Contract, if the effect thereof could
reasonably be expected to result in a Material Adverse Change. If Borrower or
any of their Subsidiaries enters into a Material Contract after the Closing
Date, if requested by Lender, Borrower shall deliver to Lender a complete and
current copy of such Material Contract in a reasonably prompt fashion after the
creation thereof, except that Borrower shall not have any obligation to deliver
such Material Contract if such delivery is prohibited by the terms of such
Material Contract and if such prohibition was required by a party other than
Borrower or any of its Subsidiaries. Borrower shall not terminate the Cisco
Purchase Agreement (as defined in the Schedule) during the Availability Period
(as defined in the Schedule).
(s) ACCOUNTING CHANGES. Borrower shall not, and shall not suffer or permit
any of its Subsidiaries to, make any significant change in accounting treatment
or reporting practices, except as required by GAAP, or change the fiscal year of
Borrower or of any of its Subsidiaries, except to change the fiscal year of a
Subsidiary to conform its fiscal year to Borrower's.
(t) BOOKS AND RECORDS; INSPECTIONS. Holdings and Borrower shall, and shall
cause each of its Subsidiaries to, keep adequate records and books of account,
in which complete entries will be made in accordance with GAAP. Holdings and
Borrower shall provide Lender and its agents access to their premises and the
premises of their Subsidiaries at any time and from time to time, during normal
business hours and upon reasonable notice under the circumstances, and at any
time on and after the occurrence of a Default or Event of Default, for the
purposes of (i) inspecting and verifying the Collateral, (ii) inspecting and
copying (at Borrower's expense) any and all records pertaining thereto, and
(iii) discussing the affairs, finances and business of Holdings and its
Subsidiaries with any officer, employee or director of Holdings and Borrower or
with their accountants. Borrower shall reimburse Lender for the reasonable
travel and related expenses of Lender's employees or, at Lender's option, of
such outside accountants or examiners as may be retained by Lender to verify or
inspect Collateral, records or documents of Holdings and Borrower on a regular
basis or for a special inspection if Lender deems the same appropriate. If
outside examiners or accountants are used, Borrower shall also pay Lender such
sum as Lender may be obligated to pay as fees therefor; PROVIDED that prior to
the occurrence of a Default or an Event of Default, Borrower shall only be
liable to Lender for one such inspection during any twelve month period.
(u) TRANSACTIONS WITH AFFILIATES. (i) Borrower shall not, and shall not
permit any of its Subsidiaries to, enter into any transaction, including,
without limitation, the purchase, sale or exchange of property or the rendering
of any service, with any Affiliate of Borrower or other Loan Party except (A) in
the ordinary course of and pursuant to the reasonable requirements of Borrower's
or such Subsidiary's (as applicable) business and upon fair and reasonable terms
no less favorable to Borrower or such Subsidiary (as applicable) than would be
obtained in a comparable arms-length transaction with a Person not an Affiliate
of Borrower or such Subsidiary (as applicable), (B) pursuant to the Approved
Services Agreement and the Approved Tax Allocation Agreement or (C) as may be
approved in writing by Lender; PROVIDED, that transactions between or among
Borrower and its Affiliates may be on terms more favorable to Borrower than
would be obtained in a comparable arms-length transaction with a Person not an
Affiliate of Borrower and the Approved Tax Allocation Agreement and the Approved
Services Agreement are not prohibited by this Section 5.1(u); (ii) None of
Borrower and its Subsidiaries will make any loan, advance or payment to any
officer, director, shareholder or member of any Loan Party (other than a
shareholder or member consisting of a Loan Party), except for loans or advances
permitted under Section 5.1(n)(iii), or reasonable compensation paid to
officers, directors or employees in the ordinary course of business and payments
made for goods sold or services rendered which comply with clause (i) above;
(iii) Neither Borrower nor any of its Subsidiaries shall make any payment to
Holdings or PNI or any of their Affiliates with respect to any federal or state
income tax liability of Borrower or any of its Subsidiaries, PROVIDED, HOWEVER,
that Borrower may make such payments to Holdings from time to time in amounts
which are based upon the federal and state income tax liabilities of Borrower
and its Subsidiaries in order for Holdings to pay Taxes as a part of a
consolidated, combined or unitary Tax filing group, PROVIDED, FURTHER, that (A)
the amounts of such payments shall not exceed the amounts of liabilities for
Taxes that would be payable by Borrower and its Subsidiaries if they were not
part of a consolidated, combined or unitary Tax filing group with respect to
such Taxes, (B) all such payments shall be required to be paid in accordance
with the terms and provisions of the Approved Tax Allocation Agreement and shall
not be paid substantially prior to the dates upon which the corresponding
amounts would be required to be paid by Holdings to the applicable tax
authorities, and (C) at least 10 days prior to the making of any payment
referred to in this Section 5.1(u)(iii), Borrower shall have given Lender
written notice of its intention to make such payment and the amount thereof and
shall have delivered to Lender calculations and other appropriate information,
in reasonable detail, evidencing and certifying that such payment is permitted
in accordance with this Section 5.1(u)(iii); (iv) Neither Borrower nor any of
its Subsidiaries shall make any payment or reimbursement to Holdings with
respect to any management, administrative, overhead, legal, accounting,
operating, reporting, compliance or other costs or expenses, PROVIDED, HOWEVER,
that Borrower may pay to Holdings, or reimburse Holdings for Holdings' payment
of, management fees in accordance with Section 5.1(v) and administrative,
overhead, legal, accounting, operating, reporting, compliance and other costs or
expenses in an aggregate amount not to exceed $500,000 during any calendar year
if (but only if) all such payments or reimbursements shall be required to be
paid by Borrower to Holdings in accordance with the terms and provisions of the
Approved Services Agreement; (v) Neither Borrower nor any of its Subsidiaries
shall make any payment (whether cash or other property, but excluding property
in the form of capital stock of Holdings) to or for the benefit of the
employees, officers or directors of Holdings, Borrower or any Subsidiary of
Borrower with respect to any stock option or other benefit plan relating to any
capital stock, PROVIDED, HOWEVER, that Borrower may make such payments pursuant
to and in accordance with stock option or other benefit plans for employees,
officers or directors of Holdings, Borrower or any Subsidiary of Borrower in an
aggregate amount not to exceed $500,000 during any calendar year.
(v) MANAGEMENT FEES. Borrower shall not, and shall not permit any
Subsidiary of Borrower to, pay any management fees to any Affiliate of Borrower
other than management fees (if any) as may be required to be paid by Borrower to
PNI pursuant to the Approved Services Agreement.
(w) CERTAIN AGREEMENTS. Borrower shall not, and shall not permit any of its
Subsidiaries to, agree to or permit any material amendment, modification or
waiver of any provision of the Approved Services Agreement, the Approved
Allocation Agreement, the Asset Contribution Agreement, the Indemnity and
Contribution Agreement or the Subordination Agreement if such amendment,
modification or waiver taken as a whole as to each such amendment, modification
or waiver would adversely affect the rights of Lender hereunder (as determined
by Lender in its sole discretion).
(x) FURTHER ASSURANCES AND ADDITIONAL ACTS. Borrower shall execute,
acknowledge, deliver, file, notarize and register at its own expense all such
further agreements, instruments, certificates, documents and assurances and
perform such acts as Lender shall deem necessary or appropriate to effectuate
the purposes of the Loan Documents, and promptly provide Lender with evidence of
the foregoing satisfactory in form and substance to Lender.
SECTION 6. EVENTS OF DEFAULT.
6.1 EVENTS OF DEFAULT. Any of the following events which shall occur shall
constitute an "Event of Default":
(a) PAYMENTS. (i) Borrower shall fail to pay when due any amount of
principal of any Loan or Note; or (ii) Borrower shall fail to pay when due any
amount of interest on any Loan or Note, or any fee or other amount payable under
any of the Loan Documents, or Holdings or any other Loan Party shall fail to pay
when due any amount payable under any of the Loan Documents, and in the case of
this clause (ii) any such default shall remain unremedied for five days.
(b) REPRESENTATIONS AND WARRANTIES. Any representation or warranty by any
Loan Party under or in connection with the Loan Documents shall prove to have
been incorrect in any material respect when made or deemed made.
(c) FAILURE BY BORROWER TO PERFORM CERTAIN COVENANTS. Borrower shall fail
to perform or observe any term, covenant or agreement contained in subsections
(b)(i) or (g) through (w) of Section 5.1.
(d) FAILURE BY BORROWER TO PERFORM OTHER COVENANTS. Borrower shall fail to
perform or observe any other term, covenant or agreement contained in any Loan
Document on its part to be performed or observed and any such failure shall
remain unremedied for a period of 30 days from the occurrence thereof (unless
Lender reasonably determines that such failure is not capable of remedy).
(e) INSOLVENCY. (i) Holdings, Borrower or any of their respective
Subsidiaries shall be dissolved, liquidated, wound up or cease its corporate
existence, except to the extent expressly permitted by Section 5.1; or (ii)
Holdings, Borrower or any such Subsidiary (A) shall make a general assignment
for the benefit of creditors, or shall generally fail to pay, or admit in
writing its inability to pay, its debts as they become due, subject to
applicable grace periods, if any, whether at stated maturity or otherwise; (B)
shall voluntarily cease to conduct its business in the ordinary course, except
to the extent expressly permitted by Section 5.1; (C) shall commence any
Insolvency Proceeding with respect to itself; or (D) shall take any action to
effectuate or authorize any of the foregoing.
(f) INVOLUNTARY PROCEEDINGS. (i) Any involuntary Insolvency Proceeding is
commenced or filed against Holdings, Borrower or any or their respective
Subsidiaries, or any writ, judgment, warrant of attachment, execution or similar
process, is issued or levied against a substantial part of Holdings', Borrower's
or any such Subsidiary's properties, and any such proceeding or petition shall
not be dismissed, or such writ, judgment, warrant of attachment, execution or
similar process shall not be released, vacated or fully bonded within 60 days
after commencement, filing or levy; (ii) Holdings, Borrower or any such
Subsidiary admits the material allegations of a petition against it in any
Insolvency Proceeding, or an order for relief (or similar order under non-U.S.
law) is ordered in any Insolvency Proceeding; or (iii) Holdings, Borrower or any
such Subsidiary acquiesces in the appointment of a receiver, trustee, custodian,
conservator, liquidator, mortgagee in possession (or agent therefor), or other
similar Person for itself or a substantial portion of its property or business.
(g) DEFAULTS UNDER OTHER INDEBTEDNESS. Holdings, Borrower or any of their
respective Subsidiaries shall fail (i) to make any payment of any Indebtedness
evidenced by or arising under any Financing Document, or any amount of any other
Indebtedness in an aggregate principal amount of at least $1,000,000 (or its
equivalent in another currency) when due (whether by scheduled maturity,
required prepayment, acceleration, demand or otherwise), and such failure shall
continue after the applicable grace or notice period, if any, specified in the
agreement or instrument relating to such Indebtedness as of the date of such
failure, or (ii) to perform or observe any term, covenant or condition on its
part to be performed or observed under any Financing Document, or any other
agreement, note or instrument relating to any such Indebtedness, when required
to be performed or observed, or any other event shall occur or condition shall
exist thereunder, and such failure, event or condition shall continue after the
applicable grace or notice period, if any, specified in such agreement, note or
instrument, if the effect of such failure, event or condition is to accelerate,
or to permit the acceleration of, the maturity of such Indebtedness; or any such
Indebtedness shall be declared to be due and payable, or required to be prepaid
(other than by a regularly scheduled required prepayment), prior to the stated
maturity thereof; or (without limiting the generality of the foregoing) any
defined "Event of Default" (as defined in any Financing Document) shall have
occurred and be continuing.
(h) CISCO DEFAULTS. Any Loan Party (i) shall fail to pay any Indebtedness
or other obligations owing under any other agreement with Cisco Systems, Lender
or any of their respective Subsidiaries or under any note or instrument in favor
of Cisco Systems, Lender or any of their respective Subsidiaries, when due
(whether at scheduled maturity or by required prepayment, acceleration, demand
or otherwise), or (ii) shall otherwise be in breach of or material default in
any of its obligations under any such agreement, note or instrument, and such
failure, breach or default shall continue after the applicable grace period, if
any, specified in such agreement, note or instrument. .
(i) MATERIAL ADVERSE CHANGE. Any Material Adverse Change shall occur that
gives Lender grounds to conclude that any Loan Party may not, or will be unable
to, perform or observe in the normal course its obligations under the Loan
Documents.
(j) FAILURE BY GUARANTOR TO PERFORM COVENANTS; INVALIDITY OF GUARANTY. Any
Guarantor shall fail to perform or observe any term, covenant or agreement
contained in any Guaranty on its part to be performed or observed, or any
default shall occur under any Guaranty, and any such failure or default shall
continue after the applicable grace period, if any, specified in any Guaranty as
of the date of such failure, or any defined "Event of Default" or "Default" as
defined in any Guaranty shall have occurred and is continuing; or any Guaranty
or any other Guarantor Document shall for any reason be revoked or invalidated,
or otherwise cease to be in full force and effect, or any Guarantor or any other
Person shall contest in any manner the validity or enforceability thereof or
deny that it has any further liability or obligation thereunder.
(k) DEFAULT UNDER OTHER DOCUMENTS. Any defined "Event of Default" (as
defined in any other Loan Document) shall have occurred; or Borrower or any of
its Subsidiaries shall be in breach of or default in any of its material
obligations under any Material Contract, and such failure, breach or default
shall continue after the applicable grace period, if any, specified in such
Material Contract and could reasonably be expected to result in a Material
Adverse Change.
(l) CONSENTS, ETC. Any law, decree, license, consent, authorization,
registration or approval now or hereafter necessary to enable any Loan Party to
comply in all material respects with its obligations incurred in the Loan
Documents or in connection with the purchase of Financed Products shall be
modified in a materially adverse manner, or shall be revoked, withdrawn or
withheld or shall cease to remain in full force and effect.
(m) JUDGMENTS. A final judgment or order for the payment of money in excess
of $1,000,000 (or its equivalent in another currency) which is not fully covered
by third-party insurance shall be rendered against Holdings, Borrower or any of
their respective Subsidiaries and the same shall not be discharged, bonded or a
stay of execution thereof not be procured within sixty (60) days from the date
of the entry thereof and Holdings, Borrower or any of their respective
Subsidiaries (as the case may be) shall not, within said sixty day period, or
such longer period during which execution of the same shall have been stayed,
appeal therefrom and cause the execution thereof to be stayed during such
appeal; or (ii) any non-monetary judgment or order shall be rendered against
Holdings, Borrower or any such Subsidiary which has resulted in or would
reasonably be expected to result in a Material Adverse Change; and in each case
there shall be any period of 30 consecutive days during which such judgment
continues unsatisfied or during which a stay of enforcement of such judgment or
order, by reason of a pending appeal or otherwise, shall not be in effect.
(n) CHANGE OF CONTROL. Any Change of Control shall occur and Lender shall
have notified Borrower that such Change of Control is an Event of Default within
30 days of Lender having received notice from Borrower of such Change of
Control; PROVIDED that any Change of Control shall automatically constitute an
Event of Default if Borrower fails to notify Lender of such Change of Control
within ten days of the occurrence of such Change of Control.
(o) COLLATERAL DOCUMENTS. Any of the Collateral Documents after delivery
thereof shall for any reason be revoked or invalidated, or otherwise cease to be
in full force and effect, or any Loan Party or any other Person shall contest in
any manner the validity or enforceability thereof, or any Loan Party or any
other Person shall deny that it has any further liability or obligation
thereunder; or any of the Collateral Documents for any reason, except to the
extent permitted by the terms thereof, shall cease to create a valid and
perfected Lien subject only to Permitted Liens in any of the Collateral
purported to be covered thereby; or any of the Financed Products shall at any
time be located outside of the United States.
6.2 EFFECT OF EVENT OF DEFAULT. If any Event of Default shall occur and is
continuing, Lender may by notice to Borrower, (i) declare its Commitment to be
terminated, whereupon the same shall forthwith terminate, and (ii) declare the
entire unpaid principal amount of the Loans and the Note(s), all interest
accrued and unpaid thereon and all other Obligations to be forthwith due and
payable, whereupon the Loans and the Note(s), all such accrued interest and all
such other Obligations shall become and be forthwith due and payable, without
presentment, demand, protest or further notice of any kind, all of which are
hereby expressly waived by Borrower, provided that if an event described in
Section 6.1(e) or 6.1(f) shall occur, the result which would otherwise occur
only upon giving of notice by Lender to Borrower as specified in this Section
6.2 shall occur automatically, without the giving of any such notice.
Additionally, Lender may exercise any or all of its rights and remedies under
the Collateral Documents, and proceed to enforce all other rights and remedies
available to it under the Loan Documents and applicable law.
SECTION 7. MISCELLANEOUS.
7.1 AMENDMENTS. No amendment to any provision of this Agreement shall be
effective unless it is in writing and has been signed by Lender and Borrower,
and no waiver of any provision of this Agreement, or consent to any departure by
Borrower therefrom, shall be effective unless it is in writing and has been
signed by Lender. Any such amendment, waiver or consent shall be effective only
in the specific instance and for the specific purpose for which given.
7.2 NOTICES. All notices and other communications provided for hereunder
and under the other Loan Documents shall, unless otherwise stated herein, be in
writing (including by facsimile transmission) and mailed, sent or delivered to
the respective parties hereto at or to their respective addresses or facsimile
numbers set forth in the Schedule, or at or to such other address or facsimile
number as shall be designated by any party in a written notice to the other
party hereto. All such notices and communications shall be effective (i) if
delivered by hand, when delivered; (ii) if sent by courier service, when
delivered; (iii) if sent by mail, upon the earlier of the date of receipt or
five Banking Days after deposit in the mail, first class (or air mail, with
respect to communications to be sent to or from the United States), postage
prepaid; and (iv) if sent by facsimile transmission, when sent; provided,
however, that notices and communications to Lender pursuant to Section 2 shall
not be effective until received.
7.3 NO WAIVER; CUMULATIVE REMEDIES. No failure on the part of Lender to
exercise, and no delay in exercising, any right, remedy, power or privilege
under any Loan Document shall operate as a waiver thereof, nor shall any single
or partial exercise of any such right, remedy, power or privilege preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power or privilege. The rights and remedies under the Loan Documents are
cumulative and not exclusive of any rights, remedies, powers and privileges that
may otherwise be available to Lender.
7.4 COSTS AND EXPENSES; INDEMNIFICATION. Borrower agrees to pay on demand
(i) the reasonable out-of-pocket costs and expenses of Lender and any of its
affiliates, and the reasonable fees and disbursements of counsel to Lender
(excluding allocated costs and expenses for internal legal services), in
connection with the negotiation, preparation, execution and delivery of the Loan
Documents; and (ii) all costs and expenses of Lender and its affiliates, and
fees and disbursements of counsel (excluding allocated costs and expenses for
internal legal services), in connection with any amendments, modifications or
waivers of the terms of any Loan Documents, any Default, the enforcement or
attempted enforcement of, and preservation of any rights or interests under, the
Loan Documents, and any out-of-court workout or other refinancing or
restructuring or any bankruptcy or insolvency case or proceeding. In addition,
whether or not the transactions contemplated hereby shall be consummated,
Borrower hereby agrees to indemnify Lender, any affiliate thereof and their
respective directors, officers, employees, agents, counsel and other advisors
(each an "Indemnified Person") against, and hold each of them harmless from, any
and all liabilities, obligations, losses, claims, damages, penalties, actions,
judgments, suits, costs, expenses or disbursements of any kind or nature
whatsoever, including the reasonable fees and disbursements of counsel to an
Indemnified Person (excluding allocated costs and expenses for internal legal
services), which may be imposed on, incurred by, or asserted against any
Indemnified Person, in any way relating to or arising out of any of the Loan
Documents, the use or intended use of the proceeds of the Loans or the
transactions contemplated hereby or thereby, including with respect to any
investigation, litigation or other proceeding relating to any of the foregoing,
irrespective of whether the Indemnified Person shall be designated a party
thereto (the "Indemnified Liabilities"); provided that Borrower shall not be
liable to any Indemnified Person for any portion of such Indemnified Liabilities
to the extent they are found by a final decision of a court of competent
jurisdiction to have resulted from such Indemnified Person's gross negligence or
willful misconduct. If and to the extent that the foregoing indemnification is
for any reason held unenforceable, Borrower agrees to make the maximum
contribution to the payment and satisfaction of each of the Indemnified
Liabilities which is permissible under applicable law.
7.5 SURVIVAL. All covenants, agreements, representations and warranties
made in any Loan Documents shall, except to the extent otherwise provided
therein, survive the execution and delivery of this Agreement, the making of the
Loans and the execution and delivery of any Note, and shall continue in full
force and effect so long as Lender has any Commitment, any Loans remain
outstanding or any other Obligations remain unpaid or any obligation to perform
any other act hereunder or under any other Loan Document remains unsatisfied.
Without limiting the generality of the foregoing, the obligations of Borrower
under Section 7.4, and all similar obligations under the other Loan Documents
(including all obligations to pay costs and expenses and all indemnity
obligations), shall survive the repayment of the Loans and the termination of
the Commitment.
7.6 BENEFITS OF AGREEMENT. The Loan Documents are entered into for the sole
protection and benefit of the parties hereto and their successors and assigns
and the Indemnified Persons referred to in Section 7.4, and no other Person
(other than Cisco Systems) shall be a direct or indirect beneficiary of, or
shall have any direct or indirect cause of action or claim in connection with,
any Loan Document.
7.7 BINDING EFFECT; SUCCESSORS AND ASSIGNS. This Agreement shall become
effective when it shall have been executed by Borrower and Lender and thereafter
shall be binding upon and shall inure to the benefit of Lender and Borrower and
their respective successors and permitted assigns, except as otherwise provided
herein. Borrower may not assign, transfer, hypothecate or otherwise convey its
rights, benefits, obligations or duties hereunder or under any other Loan
Document without the prior express written consent of Lender. Any such purported
assignment, transfer, hypothecation or other conveyance by Borrower without the
prior express written consent of Lender shall be void. Borrower acknowledges and
agrees that Lender may assign, or grant participations in, all or a portion of
its rights and obligations hereunder and under the other Loan Documents,
including the benefit of Section 7.4; PROVIDED, that Lender may not assign any
of its rights or obligations hereunder to an assignee with a substantial
presence as a telecommunications service provider or with a line of business
that competes in any significant or material way with the business of Borrower.
Upon any assignment of Lender's rights hereunder and under the other Loan
Documents, such assignee shall have, to the extent of such assignment, all
rights of Lender hereunder and thereunder and may in turn assign such rights.
Upon any assignment and delegation of Lender's obligations hereunder and under
the other Loan Documents, such assignee shall have, to the extent of such
assignment, all obligations of Lender hereunder and thereunder and may in turn
assign such obligations. If any such assignee (i) has expressly assumed Lender's
obligations hereunder and thereunder and (ii) is an Eligible Entity, Lender
shall be relieved of its obligations hereunder and thereunder to the extent of
such assignment and assumption. Borrower agrees that, upon any such assignment,
such assignee may enforce directly, without joinder of Lender, the rights of
Lender set forth in this Agreement and in the other Loan Documents. Any such
assignee shall be entitled to enforce Lender's rights and remedies under this
Agreement and under any other Loan Document to the same extent as if it were the
"Lender" party hereto or thereto. In the event of any partial assignment,
Lender, Borrower and such assignee shall enter into such amendments to this
Agreement and the other Loan Documents as shall be necessary to effect such
assignment. Additionally, Borrower shall execute and deliver substitute Notes to
the assignee, or to Lender and the assignee (in the case of a partial
assignment), dated the effective date of such assignment, and containing other
appropriate insertions as to the payee, principal amount and place for payments.
7.8 CONFIDENTIALITY. (a) Lender agrees to take normal and reasonable
precautions and exercise due care to maintain the confidentiality of all
information respecting Borrower and its business ("Customer Information").
Borrower agrees that Lender may disclose from time to time all Customer
Information in its possession to Lender's legal counsel, agents and other
professional advisors, and to its Subsidiaries and affiliates, to any potential
assignees or participants of the rights and/or obligations of Lender hereunder,
to any underwriters or placement agents for any securities to be issued by
Lender or any of its Subsidiaries or affiliates (or any transferee of any such
Subsidiaries or affiliates) and to any rating agency rating such securities and
to their respective legal counsel, agents and other professional advisors;
PROVIDED that such recipients agree not to disclose such Customer Information
for any purposes other than as contemplated herein. Borrower also consents to
the disclosure of Customer Information by Lender, or any of its Subsidiaries or
affiliates, (i) at the request of any Governmental Authority having jurisdiction
over Lender or such Subsidiary or affiliate, (ii) pursuant to subpoena or other
court process, (iii) to the extent reasonably required in connection with any
litigation to which Lender or any of its Subsidiaries or affiliates is a party,
(iv) to the extent reasonably required in connection with the exercise of any
remedy hereunder or under any other Loan Document, (iv) when otherwise required
to do so in accordance with applicable law, and (v)(A) to the extent such
information is made available by Borrower or was or becomes generally available
to the public other than as a result of disclosure by Lender, or (B) was or
becomes available on a non-confidential basis from a source other than Borrower,
provided that such source is not bound by a confidentiality agreement with
Borrower known to Lender.
(b) Borrower agrees to take normal and reasonable precautions and exercise
due care to maintain the confidentiality of this Agreement and the terms and
provisions hereof. Lender agrees that Borrower may disclose from time to time
the existence of this Agreement and the terms and provisions hereof to
Borrower's legal counsel, agents and other professional advisors, to their
Subsidiaries and affiliates, as reasonably required in connection with
negotiations with a prospective acquirer of Borrower or substantially all of
Borrower's assets or a prospective merger partner, to any prospective equity
investor in Borrower, to any co-development partner permitted hereunder, to any
bank or other financial institution providing financing to Borrower or any of
its Subsidiaries or affiliates, to any underwriters or placement agents for any
securities to be issued by Borrower or any of its Subsidiaries or affiliates and
to any rating agency rating such securities and to their respective legal
counsel, agents and other professional advisors. Lender also consents to the
disclosure of this Agreement and the terms and provisions hereof by Borrower, or
any of their Subsidiaries or affiliates, (i) at the request of any Governmental
Authority having jurisdiction over Borrower or any of its Subsidiaries or
affiliates, (ii) pursuant to subpoena or other court process, (iii) to the
extent reasonably required in connection with any litigation to which Borrower
or any of its Subsidiaries or affiliates is a party, and (iv) when otherwise
required to do so in accordance with applicable law. THE FOREGOING PERMITTED
DISCLOSURE DOES NOT INCLUDE DISCLOSURE TO ANY OTHER VENDOR PROVIDING VENDOR
FINANCING TO BORROWER OR ANY OF THEIR SUBSIDIARIES (WHETHER DIRECTLY OR
INDIRECTLY); PROVIDED THAT BORROWER MAY PROVIDE A COPY OF THIS AGREEMENT TO
NORTEL NETWORKS, INC. ("NORTEL") IN CONNECTION WITH THE FINANCING DOCUMENTS OR
TO LUCENT TECHNOLOGIES, INC. (OR ITS AFFILIATES) ("LUCENT") IN CONNECTION WITH A
PROSPECTIVE FINANCING CONSISTENT WITH THE TERMS HEREOF IF SUCH COPY PROVIDED TO
NORTEL IN CONNECTION WITH THE FINANCING DOCUMENTS OR TO LUCENT IN CONNECTION
WITH A PROSPECTIVE FINANCING HAS BEEN REDACTED TO EXCLUDE ALL REFERENCES TO THE
FEES, INTEREST RATE AND OTHER PRICING INFORMATION SET FORTH HEREIN. BORROWER
SHALL PROVIDE PRIOR NOTICE TO LENDER OF ANY PROPOSED PUBLIC ANNOUNCEMENTS OR
OTHER PUBLIC DISCLOSURE OR FILINGS OF OR RELATING TO THIS AGREEMENT AND THE
TERMS AND PROVISIONS HEREOF AS PERMITTED BY THIS SUBSECTION (B) ("PUBLIC
DISCLOSURE"), AND NO PUBLIC DISCLOSURE MAY BE MADE IN RESPECT OF THE FEES,
INTEREST RATE AND OTHER PRICING INFORMATION WITH RESPECT HERETO WITHOUT LENDER'S
PRIOR CONSENT (SUCH CONSENT NOT TO BE UNREASONABLY WITHHELD). PRIOR TO MAKING
ANY REQUIRED FILING WITH THE U.S. SECURITIES AND EXCHANGE COMMISSION OR ANY
OTHER FEDERAL, STATE, PROVINCIAL OR FOREIGN GOVERNMENTAL AUTHORITY AS PART OF
ANY PUBLIC DISCLOSURE, BORROWER SHALL REQUEST CONFIDENTIAL TREATMENT OF THE
FEES, INTEREST RATE AND OTHER PRICING INFORMATION WITH RESPECT HERETO TO THE
EXTENT PERMITTED BY APPLICABLE LAW.
7.9 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
7.10 SUBMISSION TO JURISDICTION. (a) Borrower hereby (i) submits to the
non-exclusive jurisdiction of the courts of the State of New York and the
Federal courts of the United States sitting in the Borough of Manhattan
(collectively, the "New York Courts"), for the purpose of any action or
proceeding arising out of or relating to the Loan Documents, (ii) irrevocably
waives (to the extent permitted by applicable law) any objection which it now or
hereafter may have to the laying of venue of any such action or proceeding
brought in any of the New York Courts, and any objection on the ground that any
such action or proceeding in any New York Court has been brought in an
inconvenient forum, and (iii) agrees that (to the extent permitted by applicable
law) a final judgment in any such action or proceeding brought in a New York
Court shall be conclusive and may be enforced in other jurisdictions by suit on
the judgment or in any other manner permitted by law.
(b) If a process agent (the "Process Agent") is specified in the Schedule,
Borrower hereby irrevocably appoints the Process Agent as its authorized agent
with all powers necessary to receive on its behalf service of copies of the
summons and complaint and any other process which may be served in any action or
proceeding arising out of or relating to the Loan Documents in any of the New
York Courts. Such service may be made by mailing or delivering a copy of such
process to Borrower in care of the Process Agent at the Process Agent's above
address and Borrower hereby irrevocably authorizes and directs the Process Agent
to accept such service on its behalf and agrees that the failure of the Process
Agent to give any notice of any such service to Borrower shall not impair or
affect the validity of such service or of any judgment rendered in any action or
proceeding based thereon. As an alternative method of service, Borrower also
irrevocably consents to the service of any and all process in any such action or
proceeding by the mailing of copies of such process to Borrower at its address
specified in the Schedule. If for any reason the Process Agent specified in the
Schedule shall cease to act as such, Borrower shall appoint forthwith, in the
manner provided for herein, a successor Process Agent qualified to act as an
agent for service of process with respect to all New York Courts and acceptable
to Lender.
(c) NO LIMITATION. Nothing in this Section 7.10 shall affect the right of
Lender to serve legal process in any other manner permitted by law or limit the
right of Lender to bring any action or proceeding against Borrower or its
property in the courts of other jurisdictions.
7.11 WAIVER OF JURY TRIAL. EACH OF LENDER AND BORROWER HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY JURY
IN RESPECT OF ANY LITIGATION IN CONNECTION WITH ANY LOAN DOCUMENT.
7.12 ENTIRE AGREEMENT. The Loan Documents reflect the entire agreement
among Borrower and Lender with respect to the matters set forth therein and
supersede any prior agreements, commitments, drafts, communication, discussions
and understandings, oral or written, with respect thereto.
7.13 SEVERABILITY. Whenever possible, each provision of the Loan Documents
shall be interpreted in such manner as to be effective and valid under all
applicable laws and regulations. If, however, any provision of any of the Loan
Documents shall be prohibited by or invalid under any such law or regulation in
any jurisdiction, it shall, as to such jurisdiction, be deemed modified to
conform to the minimum requirements of such law or regulation, or, if for any
reason it is not deemed so modified, it shall be ineffective and invalid only to
the extent of such prohibition or invalidity without affecting the remaining
provisions of such Loan Document, or the validity or effectiveness of such
provision in any other jurisdiction.
7.14 COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute but one and the same agreement.
7.15 JOINT AND SEVERAL LIABILITY. If any Additional Borrowers are
designated in the Schedule, the liability of Borrower and such Additional
Borrowers shall be joint and several, and, except as the context otherwise
requires, each reference herein to "Borrower" shall mean and be a reference to
each Borrower and such Additional Borrowers. Borrower and any such Additional
Borrowers agree that any and all of the Obligations shall be the joint and
several responsibility of each of them notwithstanding any absence herein or in
any other Loan Document of a reference such as "jointly and severally" with
respect to such Obligation. The compromise of any claim with, or the release of,
Borrower shall not constitute a compromise with, or a release of, any Additional
Borrower, and the compromise of any claim with, or the release of, any
Additional Borrower shall not constitute a compromise with, or a release of,
Borrower or any other Additional Borrower.
7.16 NON-DISTURBANCE AND ATTORNMENT. *
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Please indicate Borrower's and any Additional Borrower's agreement and
acceptance below and return a copy of this Agreement to Lender. Upon the
signature of Borrower and any Additional Borrower below, this Agreement shall
become a binding agreement of Lender and Borrower (and any Additional Borrower)
as of the date first written above.
Very truly yours,
Cisco Systems Capital Corporation
By:/s/ Brian P. Fukuhara
-------------------------
Title: Chief Credit Officer
ACKNOWLEDGED AND AGREED:
- -----------------------
Pathnet Operating, Inc.
By: /s/ James M. Craig
-------------------------------------
Title: Vice President and Treasurer
[GRAPHIC OMITTED][GRAPHIC OMITTED]
As of September 7, 2000
SCHEDULE OF INFORMATION
This Schedule of Information (this "Schedule") is an integral part of the
Agreement dated as of September 7, 2000 (as amended, modified, renewed or
extended from time to time, the "Credit Agreement") among Pathnet
Telecommunications, Inc., Pathnet Operating, Inc. and Cisco Systems Capital
Corporation. Capitalized terms used herein shall have the respective meanings
assigned to them in the Credit Agreement.
1. INFORMATION RELATING TO THE LOANS, HOLDINGS AND BORROWER:
(A) AVAILABILITY PERIOD: From the Closing Date through the second
anniversary of the Closing Date (the last day of such availability period
hereinafter referred to as the "Commitment Expiry Date").
(B) NOTICE OF BORROWING, MINIMUM AMOUNTS AND OTHER LIMITATIONS: Borrower
shall provide five Banking Days' advance notice of any proposed borrowing.
Except to the extent otherwise permitted by Lender in its sole discretion, no
more than two Loan drawdowns under any Tranche will be permitted in any month.
(C) COMMITMENT: $50,000,000.
(D) FEES:
(i) CLOSING FEE: * of the Commitment as of the Closing Date, payable on
such date.
(ii) COMMITMENT FEE: * per annum on the average daily unused portion of the
Commitment, computed on a quarterly basis in arrears on the last Banking Day of
each quarter based on the daily utilization for that quarter as calculated by
Lender. Such Commitment Fee shall accrue from the Closing Date to the Commitment
Expiry Date and shall be due and payable quarterly in arrears on the last
Banking Day of each calendar quarter, with the final payment to be made on the
Commitment Expiry Date; PROVIDED that, in connection with any reduction or
termination of the Commitment, the accrued Commitment Fee calculated for the
period ending on such reduction or termination date shall also be paid on the
date thereof. The Commitment Fee provided for herein shall accrue at all times
after the abovementioned commencement date, including at any time during which
one or more conditions precedent in Section 3.2 are not satisfied.
(iii) FACILITY FEE: * per quarter in which any amount of principal,
interest or fees is payable. Such Facility Fee shall accrue from the Closing
Date until the date upon which all Obligations due under the Credit Agreement
shall have been paid in full and shall be due and payable quarterly in arrears
on the last Banking Day of each calendar quarter, with a final payment to be
made on the date upon which such final payment of Obligations is made. Any
payment of Facility Fee for a partial quarter shall be calculated on a prorated
basis.
(iv) PREPAYMENT FEE: None.
(E) CLOSING DEADLINE: September 11, 2000.
(F) ADDITIONAL CLOSING DOCUMENTS AND INFORMATION: Completion of additional
due diligence satisfactory to Lender including satisfactory analysis validating
underlying industry and market assumptions with regard to Borrower's business
plan and pro forma financials.
(G) OTHER CONDITIONS:
(i) CONDITIONS PRECEDENT TO CLOSING DATE: The following condition(s)
precedent shall be satisfied on or prior to the Closing Date: (A) Creditor and
Lender shall have entered into an intercreditor agreement in form and substance
satisfactory to Lender; (B) Financing Documents shall be in form and substance
satisfactory to Lender; (C) Borrower shall have executed an equipment purchase
agreement with Cisco Systems (the "Cisco Purchase Agreement"), in form and
substance satisfactory to Lender, and (D) Borrower shall have provided evidence
reasonably satisfactory to Lender that Borrower has received total aggregate
capital contributions in cash from Holdings of not less than $35,000,000.
(ii) CONDITIONS PRECEDENT TO EACH BORROWING DATE: Additionally, the
following condition(s) precedent shall be satisfied on or prior to each
Borrowing Date: After giving effect to any borrowing of Tranche B Loans, the
aggregate principal amount of outstanding Tranche B Loans shall not exceed * of
the aggregate principal amount of Tranche A Loans then outstanding.
(H) MULTIPLE BORROWER PROVISIONS: No Additional Borrowers.
(I) SUBSIDIARIES: Pathnet Fiber Equipment LLC, a limited liability company
organized and existing under the laws of the State of Delaware and Pathnet Real
Estate LLC, a limited liability company organized and existing under the laws of
the State of Delaware.
2. ADDITIONAL TERMS AND CONDITIONS:
(A) USE OF PROCEEDS: Up to $40,000,000 for the financing of Borrower's
purchase of Cisco Systems networking and telecommunications equipment and
services from the Vendor thereof ("Tranche A"); PROVIDED that proceeds from
Loans made under Tranche A may be used for the financing of Cisco Systems
networking and telecommunications equipment and services purchased by Borrower
on or after April 24, 2000; and up to $10,000,000 for the financing of any costs
incurred by the Borrower for hardware or other goods and services associated
with the integration and installation of Cisco Systems networking and
telecommunications equipment, but excluding any such costs for hardware, goods
or services payable to direct competitors of Cisco Systems ("Tranche B").
(B) NOTE(S): Promissory Note in substantially the form of EXHIBIT C
evidencing the Loans under Tranche A (the "Tranche A Loans"); and Promissory
Note in the form of EXHIBIT D, evidencing the Loans under Tranche B (the
"Tranche B Loans").
(C) MANDATORY PREPAYMENT:(i) (i) Promptly after the end of each fiscal
year, Borrower shall calculate Excess Cash Flow for the fiscal year then ended
and shall, not later than 90 days after the end of such fiscal year, prepay to
the holders of Eligible Secured Debt on a PRO RATA basis the outstanding
principal amount of the Loans in an amount equal to 50% of the Excess Cash Flow
for such fiscal year; provided, however, that any such prepayment shall not be
required if the amount of Excess Cash Flow for such year is less than $500,000.
(ii) The Loans shall be subject to mandatory prepayment on any date
Borrower makes any voluntary prepayments on any term loans or other Indebtedness
for borrowed money (other than revolving working capital loans, unless a
permanent commitment reduction occurs simultaneously with the principal
payment), on a PRO RATA basis with the principal payment made to the holder(s)
of such Indebtedness.
Notwithstanding the foregoing, Borrower shall not be required to prepay any
such Indebtedness in connection with any of the following: (a) prepayments of
Eligible Secured Debt permitted by and in accordance with the terms and
provisions of the Collateral Agency and Intercreditor Agreement, provided,
however, that, if and to the extent required by the Collateral Agency and
Intercreditor Agreement, such prepayments shall be shared with the Lender in
accordance with the terms and provisions of the Collateral Agency and
Intercreditor Agreement; (b) prepayments made with the proceeds of new
Indebtedness incurred for the purpose of refinancing the Indebtedness being
prepaid, provided that (i) no portion of such new Indebtedness matures or is
required to be prepaid, purchased or otherwise retired earlier than the
corresponding portion of the Indebtedness being prepaid (including as a result
of any prepayment or redemption upon the occurrence of a condition), (ii) such
new Indebtedness (A) is subordinated to the Obligations to at least the same
extent as the Indebtedness being refinanced if such Indebtedness is Subordinated
Debt or (B) is permitted in accordance with this Agreement, and (iii) no Default
or Event of Default then exists or would result from such prepayment or
refinancing; (c) prepayments of purchase money Indebtedness permitted to be
incurred in accordance with the Credit Agreement; or (d) prepayments of trade
payables incurred in the ordinary course of business.
(iii) Borrower shall, within two Banking Days after it receives (A) any net
proceeds from the sale, transfer or other disposition of Borrower's or any of
its Subsidiary's assets, other than (i) sales, transfers or other dispositions
constituting Fiber or Conduit Sales expressly permitted to be consummated by the
Credit Agreement, (ii) sales of inventory in the ordinary course of business,
and (iii) the grant of a Lien as security expressly permitted under the terms of
the Credit Agreement, or (B) proceeds from insurance relating to any Casualty
Event aggregating in excess of $500,000, during any period of 12 consecutive
months or less (the aggregate amount of all such net proceeds or proceeds
exceeding $500,000 received during any such period are herein called the "Excess
Proceeds Amount"), pay to Lender, as a prepayment of the Loans (which prepayment
shall be without premium or penalty), an aggregate amount equal to the Excess
Proceeds Amount; provided, however, that (1) no such prepayment will be required
if and to the extent that the Excess Proceeds Amount is under binding contract
to be re-invested in productive assets used in the ordinary course of Borrower's
or its Subsidiary's (as applicable) business within 180 days of the receipt of
such Excess Proceeds Amount and is, in fact, so re-invested within 360 days of
the receipt of such Excess Proceeds Amount, (2) the Excess Proceeds Amount shall
be deposited into a cash collateral account held by Lender pursuant to an
agreement in form and substance satisfactory to Lender until such time as such
amount (exclusive of any interest accrued thereon) is either re-invested within
such 360 day period or applied to the Loans or other Obligations as provided in
this subsection 2(c)(iii), and (3) if, at the time of any such required
prepayment, any Eligible Secured Debt is outstanding, then the Excess Proceeds
Amount may be paid to the Collateral Agent (as opposed to the Administrative
Agent) and distributed pro rata to Lender and the holders of the Eligible
Secured Debt (or their representatives) for application to the Loans or other
Obligations and to such Eligible Secured Debt in accordance with the Collateral
Agency and Intercreditor Agreement.
Except to the extent that any such prepayment is required to be applied to
a particular tranche, any such amounts received as a mandatory prepayment of the
Loans shall be applied first to the Tranche B Loans and second to the Tranche A
Loans.
As used herein, "Casualty Event" means, with respect to any property of any
Person, any loss of or damage to, or any condemnation or other taking of, such
property for which such Person or any of its Subsidiaries receives insurance
proceeds, or proceeds of a condemnation award or other compensation; "Excess
Cash Flow" means, with respect to the Borrower and its Subsidiaries, for any
fiscal year, and without duplication, the positive remainder (if any) of (a)
EBITDA for such fiscal year MINUS (b) the sum of (i) Taxes payable in cash for
such fiscal year, PLUS (ii) all principal and cash interest payments on
Indebtedness (including the principal component of any capital lease obligations
but excluding Qualifying Fiber or Conduit Purchases) made during such fiscal
year, whether optional, mandatory or scheduled payments, PLUS (iii) Capital
Expenditures (but only to the extent paid in cash and not financed) made during
such fiscal year; and "Capital Expenditures" means, with respect to Borrower and
its Subsidiaries, amounts paid or Indebtedness incurred by such Persons in
connection with the purchase or lease by such Persons of property that would be
required to be capitalized and shown on the balance sheet of such Persons in
accordance with GAAP.
(D) COLLATERAL DOCUMENTS:. The Security Agreements, The Subordination
Agreement, the Indemnity and Contribution Agreement and the Collateral Agency
and Intercreditor Agreement, as any such agreement may be amended, modified,
supplemented, renewed, extended or restated from time to time with the prior
written consent of Lender, and any and all other agreements, deeds of trust,
mortgages, chattel mortgages, security agreements, pledges, guaranties,
assignments of proceeds, assignments of income, assignments of contract rights,
assignments of partnership interests, assignments of royalty interests,
assignments of performance or other collateral assignments, subordination
agreements, undertakings and other agreements, documents, instruments and
financing statements now or hereafter executed and/or delivered by any Person as
security or assurance for the payment or performance of the Obligations or any
part thereof.
(E) GUARANTY: Guaranty dated as of August 9, 2000 made by PRE, as a
guarantor, in favor of Collateral Agent; Guaranty dated as of August 9, 2000
made by PFE, as a guarantor, in favor of Collateral Agent.
(F) ADDITIONAL LOAN DOCUMENTS: None.
(G) FINANCING DOCUMENTS: Credit Agreement dated as of August 9, 2000,
between Borrower and Nortel Networks, Inc. as the administrative Agent and
Lenders named therein. The parties to the Financing Documents are referred
to herein collectively as the "Creditor".
(H) GOVERNMENTAL LICENSES AND PERMITS: None.
(I) REQUIRED CONSENTS: None.
(J) ADDITIONAL PERMITTED LIENS: None.
(K) ADDITIONAL REPORTING REQUIREMENTS: None.
(L) MATERIAL CONTRACTS: See Schedule 2(l).
3. ADDRESSES FOR NOTICES:
(A) BORROWER:
Pathnet Operating, Inc. 11720 Sunrise Valley Drive Reston, Virginia
20191 Attn: Mr. James Craig Fax No.: (703) 860-5682
(B) LENDER:
Cisco Systems Capital Corporation
Mailstop SJ-Linc 1/2
170 West Tasman Drive
San Jose, California 95134-1706
Attn: Loan Administration, Worldwide Financial Services
Fax No.: (408) 527-3993
4. LENDER'S ACCOUNT FOR PAYMENTS:
Account no.: 1233124070
Ref. "Pathnet Operating, Inc."
ABA no.: 121000358
Account maintained with:
Bank of America, N.A.
Concord, California
5. PROCESS AGENT:
CT Corporation System
111 Eighth Avenue
New York, NY 10011
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ACKNOWLEDGED AND AGREED:
- -----------------------
Cisco Systems Capital Corporation
By: /s/ Brian P. Fukuhara
-------------------------------------------------
Title: Chief Credit Officer
Pathnet Operating, Inc.
By: /s/ James M. Craig
-------------------------------------------------
Title: Vice President and Treasurer
EXHIBIT A
NOTICE OF BORROWING
EXHIBIT B
COMPLIANCE CERTIFICATE
EXHIBIT C
FORM OF TRANCHE A PROMISSORY NOTE
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY OTHER APPLICABLE SECURITIES LAWS. IT MAY NOT BE SOLD OR
OTHERWISE TRANSFERRED UNDER CIRCUMSTANCES THAT WOULD RESULT IN A
VIOLATION OF THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF
1933 OR SUCH OTHER LAWS.
U.S.$40,000,000
FOR VALUE RECEIVED, the undersigned, Pathnet Operating, Inc.
("Borrower"), a limited liability company organized and existing under the laws
of the State of Delaware, HEREBY UNCONDITIONALLY PROMISES TO PAY to the order of
Cisco Systems Capital Corporation ("Lender"), a corporation organized and
existing under the laws of the State of Nevada, the principal sum of FORTY
MILLION United States Dollars (U.S.$40,000,000), or such greater or lesser
amount as represents the aggregate principal amount of the Tranche A loans (the
"Loans") made by Lender to Borrower pursuant to the Credit Agreement referred to
below, quarterly in arrears, payable on the dates and in the amounts indicated
in the amortization schedules set forth in the Annex attached hereto (the last
such date being hereinafter referred to as the "Maturity Date").
Borrower further promises to pay interest on the principal
amount of each Loan outstanding hereunder on each Interest Payment Date (as
defined below) until the Maturity Date, at a rate per annum equal at all times
during each Interest Period for such Loan to LIBOR for such Interest Period plus
* per annum.
The period between the date of a Loan and the Maturity Date
shall be divided into successive periods, each such period being an "Interest
Period" for purposes of this Promissory Note. The initial Interest Period for a
Loan shall begin on the date such Loan is made and end on the next Quarterly
Date. Each subsequent Interest Period shall begin on the last day of the
immediately preceding Interest Period and shall end on the next succeeding
Quarterly Date (with the last Interest Period to end on the Maturity Date). As
used herein, "LIBOR" means for any Interest Period the rate of interest per
annum determined by Lender to be the rate of interest per annum (rounded upward,
if necessary, to the nearest 1/100 of 1%) for deposits in Dollars for three
months appearing on the display page designated as "3750" in the Dow Jones
Market Service (formerly known as the Telerate Service), or any replacement page
thereof in the Dow Jones Market Service displaying London interbank offered
rates of major banks for Dollar deposits, at or about 11:00 a.m. (London time)
on the second Banking Day preceding the first day of the applicable calendar
quarter in which such Interest Period occurs, provided that if no, or only one,
such offered quotation appears on such display page (or such other replacement
page), "LIBOR" shall be determined by reference to the Reuters Screen LIBO Page
of the Reuters Monitor Money Rates Service (or any replacement page thereof or
other applicable Reuters display page) or other comparable source of interest
quotations for such interbank rates selected by Lender; and "Quarterly Date"
means the last day of each calendar quarter.
Interest on each Loan shall be payable in arrears to Lender on
the last day of each calendar quarter and on the Maturity Date (each such date,
an "Interest Payment Date"); provided that if any prepayment hereof is effected
other than on an Interest Payment Date, accrued interest hereon shall be due on
such prepayment date as to the principal amount prepaid.
In the event that any amount of principal hereof or interest
thereon, or any other amount payable hereunder or under the Credit Agreement,
shall not be paid in full when due (whether at stated maturity, by acceleration
or otherwise), Borrower shall pay interest (after as well as before entry of
judgment thereon to the extent permitted by law) on such unpaid amount to
Lender, from the date such amount becomes due until the date such amount is paid
in full, payable on demand of Lender, at a fluctuating rate per annum equal at
all times to the Prime Rate (as defined below) plus * per annum (the "Default
Rate"). Additionally, and without limiting the foregoing, following the
occurrence and during the continuance of any Event of Default, at the option of
Lender, the interest rate on all Loans outstanding hereunder shall be the
Default Rate.
As used herein, "Prime Rate" means for any day the rate of
interest in effect for such day as publicly announced from time to time by Bank
of America, N.A., as its prime rate. Each change in the interest rate hereon
based on a change in the prime rate shall be effective at the opening of
business on the day specified in the public announcement of such change.
All computations of interest hereunder shall be made on the
basis of a year of 360 days for the actual number of days occurring in the
period for which any such interest or fee is payable.
Whenever any payment hereunder shall be stated to be due, or
whenever any Interest Payment Date or any other date specified hereunder would
otherwise occur, on a day other than a Banking Day, then, except to the extent
otherwise provided hereunder, such payment shall be made, and such Interest
Payment Date or other date shall occur, on the next succeeding Banking Day, and
such extension of time shall in such case be included in the computation of
payment of interest hereunder; PROVIDED, HOWEVER, that if such extension would
cause such payment to be made, or such Interest Payment Date or other date to
occur, in the next following calendar month, such payment shall be made and such
Interest Payment Date or other date shall occur on the next preceding Banking
Day. As used herein, "Banking Day" means a day other than a Saturday or Sunday
on which commercial banks are not required or authorized by law to close in San
Jose, California, except that if the applicable Banking Day relates to any
determination of LIBOR, "Banking Day" means such a day on which dealings are
carried out in the applicable offshore U.S. Dollar interbank market.
Each such payment shall be made on the date when due, in
immediately available funds, to Lender's account at Bank of America, N.A.,
Concord, California, ABA no. 12100358, to account number 1233124070, ref.
"Pathnet Operating, Inc.," or to such other account of Lender as it from time to
time shall designate in a written notice to Borrower.
All payments of principal, interest and other amounts made on
or in respect to this Promissory Note shall be made in United States Dollars for
value received on the date of payment, without setoff, counterclaim or, to the
extent permitted by applicable law, defense, and free and clear of and without
deduction for any present and future Taxes or charges whatsoever.
Lender shall record the date and amount of each Loan made to
Borrower, the amount of principal and interest due and payable from time to time
hereunder, each payment thereof, and the resulting unpaid principal balance
hereof, in Lender's internal records, and any such records shall be conclusive
evidence absent manifest error of the amount of the Loans made by Lender and the
interest and payments thereon; PROVIDED, however, that Lender's failure so to
record shall not limit or otherwise affect the obligations of Borrower hereunder
and under the Credit Agreement to repay the principal of and interest on the
Loans.
This Promissory Note is a Note referred to in, and is subject
to and entitled to the benefits of, the Agreement dated as of September 7, 2000
(as amended, modified, renewed or extended from time to time, the "Credit
Agreement") among Pathnet Telecommunications, Inc. ("Holdings"), Borrower and
Lender. Capitalized terms used herein shall have the respective meanings
assigned to them in the Credit Agreement.
The Credit Agreement provides, among other things, for
acceleration (which in certain cases shall be automatic) of the maturity hereof
upon the occurrence of certain stated events, in each case without presentment,
demand, protest or further notice of any kind, all of which are hereby expressly
waived.
This Promissory Note is subject to prepayment in whole or in
part as provided in the Credit Agreement.
Borrower hereby waives diligence, presentment, protest or
notice of total or partial nonpayment or dishonor with respect to this
Promissory Note.
Failure by the holder hereof to exercise any of its rights
hereunder in any instance shall not constitute a waiver thereof in that or any
other instance.
Borrower agrees to pay on demand all costs and expenses of
Lender and its affiliates, and fees and disbursements of counsel (excluding
allocated costs and expenses for internal legal services), in connection with
the enforcement or attempted enforcement of, and preservation of any rights or
interests under, (i) this Promissory Note, and (ii) any out-of-court workout or
other refinancing or restructuring or any bankruptcy or insolvency case or
proceeding, including any losses, costs and expenses sustained by Lender as a
result of any failure by Borrower to perform or observe its obligations
contained herein.
THIS PROMISSORY NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
Borrower hereby (a) submits to the non-exclusive jurisdiction
of the courts of the State of New York and the Federal courts of the United
States sitting in the Borough of Manhattan (collectively, the "New York
Courts"), for the purpose of any action or proceeding arising out of or relating
to this Promissory Note, (b) irrevocably waives (to the extent permitted by
applicable law) any objection which it now or hereafter may have to the laying
of venue of any such action or proceeding brought in any of the New York Courts,
and any objection on the ground that any such action or proceeding in any New
York Court has been brought in an inconvenient forum, and (c) agrees that (to
the extent permitted by applicable law) a final judgment in any such action or
proceeding brought in a New York Court shall be conclusive and may be enforced
in other jurisdictions by suit on the judgment or in any other manner permitted
by law.
IN WITNESS WHEREOF, Borrower by its duly authorized legal
representatives has executed this Promissory Note on the date and in the year
first above mentioned.
BORROWER
Pathnet Operating, Inc.
By:
---------------------------------------------
Title:
ANNEX TO TRANCHE A PROMISSORY NOTE
AMORTIZATION
Payments shall commence on the last day of the quarter in which the
Commitment Expiry Date occurs and shall amortize quarterly in arrears. The first
four payments of principal shall be in substantially equal amounts and shall
total * of the aggregate draw downs made by Borrower under Tranche A. The next
four payments of principal shall be in substantially equal amounts and shall
total * of the aggregate draw downs made by Borrower under Tranche A. The next
four payments of principal shall be in substantially equal amounts and shall
total * of the aggregate draw downs made by Borrower under Tranche A. The
remaining four payments shall be in substantially equal amounts and shall total
* of the aggregate draw downs made by Borrower with respect to Tranche A;
PROVIDED that the final installment shall be in the amount necessary to repay in
full the unpaid principal balance of this Tranche A Note.
EXHIBIT D
FORM OF TRANCHE B PROMISSORY NOTE
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY OTHER APPLICABLE SECURITIES LAWS. IT MAY NOT BE SOLD OR
OTHERWISE TRANSFERRED UNDER CIRCUMSTANCES THAT WOULD RESULT IN A
VIOLATION OF THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF
1933 OR SUCH OTHER LAWS.
U.S.$10,000,000
FOR VALUE RECEIVED, the undersigned, Pathnet Operating, Inc.
("Borrower"), a limited liability company organized and existing under the laws
of the State of Delaware, HEREBY UNCONDITIONALLY PROMISES TO PAY to the order of
Cisco Systems Capital Corporation ("Lender"), a corporation organized and
existing under the laws of the State of Nevada, the principal sum of TEN MILLION
United States Dollars (U.S.$10,000,000), or such greater or lesser amount as
represents the aggregate principal amount of the Tranche B loans (the "Loans")
made by Lender to Borrower pursuant to the Credit Agreement referred to below,
quarterly in arrears, payable on the dates and in the amounts indicated in the
amortization schedules set forth in the Annex attached hereto (the last such
date being hereinafter referred to as the "Maturity Date").
Borrower further promises to pay interest on the principal
amount of each Loan outstanding hereunder on each Interest Payment Date (as
defined below) until the Maturity Date, at a rate per annum equal at all times
during each Interest Period for such Loan to LIBOR for such Interest Period plus
* per annum.
The period between the date of a Loan and the Maturity Date
shall be divided into successive periods, each such period being an "Interest
Period" for purposes of this Promissory Note. The initial Interest Period for a
Loan shall begin on the date such Loan is made and end on the next Quarterly
Date. Each subsequent Interest Period shall begin on the last day of the
immediately preceding Interest Period and shall end on the next succeeding
Quarterly Date (with the last Interest Period to end on the Maturity Date). As
used herein, "LIBOR" means for any Interest Period the rate of interest per
annum determined by Lender to be the rate of interest per annum (rounded upward,
if necessary, to the nearest 1/100 of 1%) for deposits in Dollars for three
months appearing on the display page designated as "3750" in the Dow Jones
Market Service (formerly known as the Telerate Service), or any replacement page
thereof in the Dow Jones Market Service displaying London interbank offered
rates of major banks for Dollar deposits, at or about 11:00 a.m. (London time)
on the second Banking Day preceding the first day of the applicable calendar
quarter in which such Interest Period occurs, provided that if no, or only one,
such offered quotation appears on such display page (or such other replacement
page), "LIBOR" shall be determined by reference to the Reuters Screen LIBO Page
of the Reuters Monitor Money Rates Service (or any replacement page thereof or
other applicable Reuters display page) or other comparable source of interest
quotations for such interbank rates selected by Lender; and "Quarterly Date"
means the last day of each calendar quarter.
Interest on each Loan shall be payable in arrears to Lender on
the last day of each calendar quarter and on the Maturity Date (each such date,
an "Interest Payment Date"); provided that if any prepayment hereof is effected
other than on an Interest Payment Date, accrued interest hereon shall be due on
such prepayment date as to the principal amount prepaid.
In the event that any amount of principal hereof or interest
thereon, or any other amount payable hereunder or under the Credit Agreement,
shall not be paid in full when due (whether at stated maturity, by acceleration
or otherwise), Borrower shall pay interest (after as well as before entry of
judgment thereon to the extent permitted by law) on such unpaid amount to
Lender, from the date such amount becomes due until the date such amount is paid
in full, payable on demand of Lender, at a fluctuating rate per annum equal at
all times to the Prime Rate (as defined below) plus * per annum (the "Default
Rate"). Additionally, and without limiting the foregoing, following the
occurrence and during the continuance of any Event of Default, at the option of
Lender, the interest rate on all Loans outstanding hereunder shall be the
Default Rate.
As used herein, "Prime Rate" means for any day the rate of
interest in effect for such day as publicly announced from time to time by Bank
of America, N.A., as its prime rate. Each change in the interest rate hereon
based on a change in the prime rate shall be effective at the opening of
business on the day specified in the public announcement of such change.
All computations of interest hereunder shall be made on the
basis of a year of 360 days for the actual number of days occurring in the
period for which any such interest or fee is payable.
Whenever any payment hereunder shall be stated to be due, or
whenever any Interest Payment Date or any other date specified hereunder would
otherwise occur, on a day other than a Banking Day, then, except to the extent
otherwise provided hereunder, such payment shall be made, and such Interest
Payment Date or other date shall occur, on the next succeeding Banking Day, and
such extension of time shall in such case be included in the computation of
payment of interest hereunder; PROVIDED, HOWEVER, that if such extension would
cause such payment to be made, or such Interest Payment Date or other date to
occur, in the next following calendar month, such payment shall be made and such
Interest Payment Date or other date shall occur on the next preceding Banking
Day. As used herein, "Banking Day" means a day other than a Saturday or Sunday
on which commercial banks are not required or authorized by law to close in San
Jose, California, except that if the applicable Banking Day relates to any
determination of LIBOR, "Banking Day" means such a day on which dealings are
carried out in the applicable offshore U.S. Dollar interbank market.
Each such payment shall be made on the date when due, in
immediately available funds, to Lender's account at Bank of America, N.A.,
Concord, California, ABA no. 12100358, to account number 1233124070, ref.
"Pathnet Operating, Inc.," or to such other account of Lender as it from time to
time shall designate in a written notice to Borrower.
All payments of principal, interest and other amounts made on
or in respect to this Promissory Note shall be made in United States Dollars for
value received on the date of payment, without setoff, counterclaim or, to the
extent permitted by applicable law, defense, and free and clear of and without
deduction for any present and future Taxes or charges whatsoever.
Lender shall record the date and amount of each Loan made to
Borrower, the amount of principal and interest due and payable from time to time
hereunder, each payment thereof, and the resulting unpaid principal balance
hereof, in Lender's internal records, and any such records shall be conclusive
evidence absent manifest error of the amount of the Loans made by Lender and the
interest and payments thereon; PROVIDED, however, that Lender's failure so to
record shall not limit or otherwise affect the obligations of Borrower hereunder
and under the Credit Agreement to repay the principal of and interest on the
Loans.
This Promissory Note is a Note referred to in, and is subject
to and entitled to the benefits of, the Agreement dated as of September 7, 2000
(as amended, modified, renewed or extended from time to time, the "Credit
Agreement") among Pathnet Telecommunications, Inc. ("Holdings"), Borrower and
Lender. Capitalized terms used herein shall have the respective meanings
assigned to them in the Credit Agreement.
The Credit Agreement provides, among other things, for
acceleration (which in certain cases shall be automatic) of the maturity hereof
upon the occurrence of certain stated events, in each case without presentment,
demand, protest or further notice of any kind, all of which are hereby expressly
waived.
This Promissory Note is subject to prepayment in whole or in
part as provided in the Credit Agreement.
Borrower hereby waives diligence, presentment, protest or
notice of total or partial nonpayment or dishonor with respect to this
Promissory Note.
Failure by the holder hereof to exercise any of its rights
hereunder in any instance shall not constitute a waiver thereof in that or any
other instance.
Borrower agrees to pay on demand all costs and expenses of
Lender and its affiliates, and fees and disbursements of counsel (excluding
allocated costs and expenses for internal legal services), in connection with
the enforcement or attempted enforcement of, and preservation of any rights or
interests under, (i) this Promissory Note, and (ii) any out-of-court workout or
other refinancing or restructuring or any bankruptcy or insolvency case or
proceeding, including any losses, costs and expenses sustained by Lender as a
result of any failure by Borrower to perform or observe its obligations
contained herein.
THIS PROMISSORY NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
Borrower hereby (a) submits to the non-exclusive jurisdiction
of the courts of the State of New York and the Federal courts of the United
States sitting in the Borough of Manhattan (collectively, the "New York
Courts"), for the purpose of any action or proceeding arising out of or relating
to this Promissory Note, (b) irrevocably waives (to the extent permitted by
applicable law) any objection which it now or hereafter may have to the laying
of venue of any such action or proceeding brought in any of the New York Courts,
and any objection on the ground that any such action or proceeding in any New
York Court has been brought in an inconvenient forum, and (c) agrees that (to
the extent permitted by applicable law) a final judgment in any such action or
proceeding brought in a New York Court shall be conclusive and may be enforced
in other jurisdictions by suit on the judgment or in any other manner permitted
by law.
IN WITNESS WHEREOF, Borrower by its duly authorized legal
representatives has executed this Promissory Note on the date and in the year
first above mentioned.
BORROWER
Pathnet Operating, Inc.
By:
---------------------------------------------
Title:
ANNEX TO TRANCHE B PROMISSORY NOTE
AMORTIZATION
Payments shall commence on the last day of the quarter in which the
Commitment Expiry Date occurs and shall amortize quarterly in arrears. The first
four payments of principal shall be in substantially equal amounts and shall
total * of the aggregate draw downs made by Borrower under Tranche B. The next
four payments of principal shall be in substantially equal amounts and shall
total * of the aggregate draw downs made by Borrower under Tranche B. The next
four payments of principal shall be in substantially equal amounts and shall
total * of the aggregate draw downs made by Borrower under Tranche B. The
remaining four payments shall be in substantially equal amounts and shall total
* of the aggregate draw downs made by Borrower with respect to Tranche B;
PROVIDED that the final installment shall be in the amount necessary to repay in
full the unpaid principal balance of this Tranche B Note.
SCHEDULE 1.1
EXISTING LIENS
None.
SCHEDULE 2(L)
MATERIAL CONTRACTS
1. Master Service Agreement between I-Link Communications, Inc., Pathnet,
Inc. and Pathnet Operating, Inc. dated May 19, 2000
2. Master Service Agreement between DSL Internet Corporation, Pathnet,
Inc. and Pathnet Operating, Inc. dated May 24, 2000
3. Service Agreement between Henkels and McCoy, Inc. and Pathnet, Inc.
dated March 6, 2000 concerning certain construction services, as
assigned to Borrower (consent to assignment required)
4. Fiber Optic Cable Engineering and Construction Agreement dated January
31, 2000 between Pathnet, Inc., and Alcoa Fujikura, Ltd., as assigned
to Borrower
5. Statement of Work designated Pathnet_Staging_TSOW_2000.v6 between
Pathnet Operating, Inc. and Cisco Systems, Inc., executed by Pathnet on
May 26, 2000 (pending execution - consent to assignment required)
6. Construction Agreement dated March 31, 1999 between Pacific Fiber Link,
LLC and Pathnet, Inc., as amended and assigned to Borrower
7. Fiber Optic Cable Construction and Use Agreement between Public Service
Company of New Mexico and Pathnet, Inc., dated 6/9/99, as assigned to
Borrower (consent to assignment required)
8. Fiber Optic Cable License Agreement between Pathnet, Inc. and Public
Service Company of New Mexico, dated 12/23/99, as assigned to Borrower
(consent to assignment required)
9. Agreement between Pathnet, Inc and CapRock Telecommunications, dated
11/18/99 as assigned to Borrower
10. Dark Fiber Network Agreement dated August 1999 between Tri-State
Generation and Transmission Association, Inc., Empire Electric
Association, Inc., La Plata Electric Association, Inc., Delta-Montrose
Electric Association, Inc. San Miguel Power Association, Inc. and
Pathnet, Inc., as assigned to Borrower
11. Fiber Optic Lease between Burlington Northern and Santa Fe Railway
Company and Pathnet Telecommunications, Inc., dated March 31, 2000, as
assigned to Borrower and PRE pursuant to the Right of Way Contribution
Agreement (consent to assignment required)
12. Goldman Sachs engagement letter dated May 2, 2000
13. Master Software License and Services Agreement dated December 1999
between MetaSolv Software, Inc. and Pathnet, Inc., and executed by
Pathnet, Inc. on December 29, 2000, as assigned to Borrower (consent to
assignment required)
14. Intercompany Services Agreement dated on or about the date hereof
between Pathnet Operating, Inc. and Pathnet, Inc.
15. Tax Sharing Agreement dated on or about the date hereof between Pathnet
Operating, Inc. and Pathnet Telecommunications, Inc. (consent to
assignment required)