EXHIBIT 10.7 EXECUTION COPY
WAIVER AGREEMENT AND AMENDMENT
TO SWAP TRANSACTION DOCUMENTS
THIS WAIVER AGREEMENT AND AMENDMENT TO SWAP TRANSACTION DOCUMENTS,
dated as of August 9, 2004 (this "AGREEMENT"), is being entered into among the
subsidiaries of Choice One Communications Inc., a Delaware corporation (the
"COMPANY"), listed on the signature pages hereto, with each such subsidiary
being a "COUNTERPARTY" and collectively the "COUNTERPARTIES"), and WACHOVIA
BANK, NATIONAL ASSOCIATION, a national banking association formerly known as
First Union National Bank (the "BANK").
PRELIMINARY STATEMENTS
1. The Counterparties and the Bank are parties to that certain ISDA
Master Agreement dated as of August 24, 2000 (the "MASTER AGREEMENT"), as
modified and supplemented by that certain Schedule thereto of even date
therewith among such parties (the "SCHEDULE") and that certain Swap Transaction
Confirmation dated September 1, 2000 among such parties (the "CONFIRMATION"),
pursuant to which the Counterparties and the Bank entered into an interest rate
swap transaction in the notional amount of $125,000,000 with respect to
specified fixed and floating rate payments effective February 8, 2001 and
terminating on February 8, 2006 (the Master Agreement, as modified and
supplemented by the Schedule and Confirmation, being referred to, collectively,
as the "SWAP AGREEMENT").
2. Unless otherwise defined herein, terms defined in the Swap Agreement
and used herein shall have the meanings given to them in the Swap Agreement as
amended by this Agreement.
3. Pursuant to the Swap Agreement, the Bank agreed to make certain
floating rate payments to and for the benefit of the Counterparties and the
Counterparties agreed to make certain fixed rate payments to and the for the
benefit of the Bank.
4. Pursuant to the Swap Agreement the Counterparties are obligated to
pay to the Bank on August 9, 2004 a net amount approximately equal to
$1,820,000, such amount to be exactly determined pursuant to the Swap Agreement
on or prior to such due date (the "AUGUST SWAP PAYMENT").
5. In order to permit the Counterparties and the Bank and certain other
creditors of the Counterparties time to implement a possible restructuring of
the indebtedness of the Counterparties, the Counterparties have requested that
(a) the Bank agree to amend the Swap Agreement to postpone the date on which the
August Swap Payment is required to be made to September 30, 2004 and (b) the
Bank waive until September 30, 2004 any Events of Default that have occurred and
may occur solely under Section 5(a)(vi) of the Master Agreement and any
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rights and remedies that it may have under or in connection with the Swap
Agreement as a result of the occurrence of such Events of Default, and, the Bank
has agreed to such amendments and to provide such waivers, in each case, subject
to the terms and conditions set forth below.
NOW, THEREFORE, in consideration of the foregoing, and for other
good and valuable consideration, the sufficiency and receipt of which are hereby
acknowledged, the parties hereto hereby agree as follows:
SECTION 1. Amendment to Swap Agreement. Upon and subject to the
occurrence of the Effective Date (as defined below), the Swap Agreement is
hereby amended to add the following proviso to the end of each of the references
to "Payment Dates:" in the Confirmation under the headings "Fixed Amounts" and
"Floating Amounts:"
"; provided, however, that the Payment Date which would otherwise occur on
August 9, 2004 pursuant to the foregoing provision shall instead occur on
September 30, 2004 or, if earlier, on the date of the initial funding
under any debtor-in-possession financing with respect to any Counterparty
in any bankruptcy or insolvency proceeding."
SECTION 2. Waivers with Respect to the Swap Agreement. Upon and
subject to the occurrence of the Effective Date (as defined below) and subject
to the other terms and conditions set forth below, and until September 30, 2004,
the Bank hereby:
(a) waives the occurrence of any now existing Event of
Default and any other Events of Default arising hereafter solely under
Section 5(a)(vi) of the Master Agreement as modified and supplemented by
the Schedule (any and all such now existing and hereafter arising Events
of Default being referred to herein, collectively, as "SPECIFIED EVENTS OF
DEFAULT"); and
(b) agrees that the Swap Agreement, and each provision
thereof, shall be read and construed as if no Specified Event of Default
shall have occurred; and
(c) waives all of its rights to exercise any remedies
arising under the Swap Agreement as a result of any Specified Event of
Default, including, without limitation, (i) any assertion of the failure
of any condition under Section 2(a)(iii) of the Master Agreement, (ii) any
right to charge the Default Rate with respect to the August Swap Payment
or any other amount pursuant to Section 2(d) of the Master Agreement and
(iii) any right to effect an Early Termination Date under Sections 6(a) or
6(c) of the Master Agreement.
Notwithstanding anything to the contrary contained in this Section 2, on
September 30, 2004, (i) each of the waivers and agreements set forth in clauses
(a) through (c) of this Section 2 shall automatically terminate and be of no
further force or effect, (ii) each Specified Event of Default that may have
occurred and is then continuing is, without further action, reinstated and shall
have the same force and effect as if the waivers and agreements set forth in
clauses (a) through (c) of this Section 2 had not been provided by the Bank and
(iii) subject to the terms of the Swap Agreement and applicable law, the Bank
may thereupon and thereafter exercise all of its rights
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and remedies with respect to any Specified Events of Default which may have
occurred and are then continuing, including, without limitation, those described
in clause (c) of this Section 2.
SECTION 3. Conditions to Effectiveness. This Agreement shall be
effective as of the date first above written when, and only when, the following
condition precedent has been fulfilled in a manner satisfactory to the Bank (the
"EFFECTIVE DATE"): the Bank and each Counterparty shall have executed and
delivered this Agreement.
SECTION 4. Representations and Warranties by Counterparties. To
induce the Bank to enter into this Agreement, each of the Counterparties hereby
represents and warrants to the Bank the following:
(a) The execution, delivery and performance by such Counterparty
of this Agreement and the Swap Agreement, as amended hereby, are within such
entity's corporate or limited liability company powers, have been duly
authorized by all necessary corporate or limited liability company action, and
do not (i) contravene such entity's constituent documents, (ii) violate any law
(including, without limitation, the Securities Exchange Act of 1934), rule,
regulation (including, without limitation, Regulation X of the Board of
Governors of the Federal Reserve System), order, writ, judgment, injunction,
decree, determination or award applicable to such entity, or (iii) conflict with
or result in the breach of, or constitute a default under, any contractual
obligation. As of the Effective Date, except as previously disclosed to the
Bank, no Counterparty is in violation of any such law, rule, regulation, order,
writ, judgment, injunction, decree, determination or award or in breach of any
such contract, loan agreement, indenture, mortgage, deed of trust, lease or
other instrument, the violation or breach of which could reasonably be expected
to have a material adverse effect upon the financial condition of the
Counterparties', taken as a whole.
(b) No authorization or approval or other action by, and no notice
to or filing with, any governmental authority or regulatory body or any other
third party is required to be obtained by any Counterparty in connection with
the execution and delivery, or performance by any such entity of any of its
obligations under, this Agreement or the Swap Agreement, as amended hereby.
(c) This Agreement has been duly executed and delivered by each
Counterparty, and is the legal, valid and binding obligation of such entity,
enforceable against such entities in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium or other laws relating to or limiting creditors' rights or by
equitable principles generally.
(d) Such Counterparty has no knowledge of any Event of Default
other than any Specified Event of Default.
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SECTION 5. Representations and Warranties by the Bank. To induce the
Counterparties to enter into this Agreement, the Bank hereby represents and
warrants to the Counterparties that the Bank has no knowledge of the existence
of any Event of Default other than any Specified Event of Default.
SECTION 6. Reference to and Effect on the Swap Agreement.
(a) On and after the Effective Date, each reference in the Swap
Agreement to "this Agreement", "hereunder", "hereof" or words of like import
referring to the Swap Agreement or any portion thereof, shall mean and be a
reference to the Swap Agreement, as amended or otherwise modified hereby.
(b) The Swap Agreement, as specifically amended or otherwise
modified by this Agreement, are and shall continue to be in full force and
effect and are hereby in all respects ratified and confirmed.
(c) The execution, delivery and effectiveness of this Agreement
shall not, except as expressly provided herein, operate as a waiver of any
right, power or remedy of the Bank under the Swap Agreement, nor constitute a
waiver of any provision of any of the Swap Agreement.
SECTION 7. Amendments. This Agreement may not be amended,
supplemented or modified except in a writing executed and delivered by each of
the parties hereto and General Electric Capital Corporation, as Administrative
Agent (the "SENIOR AGENT") under that certain Third Amended and Restated Credit
Agreement dated as of September 13, 2002, as amended (the "SENIOR CREDIT
AGREEMENT"), among the Company, certain of its affiliates, such Administrative
Agent and certain lenders (the "SENIOR LENDERS").
SECTION 8. Third Party Beneficiaries. The Senior Agent and the
Senior Lenders shall be third party beneficiaries of this Agreement, and the
Senior Agent, on behalf of itself and the Senior Lenders, shall be entitled to
enforce the provisions of this Agreement against any of the parties hereto as if
the Senior Agent were a direct party hereto.
SECTION 9. Costs and Expenses. The Counterparties agree to pay all
reasonable costs and expenses of the Bank associated with the preparation,
execution, delivery, administration, and enforcement of this Agreement,
including, without limitation, the reasonable fees and expenses of legal counsel
to the Bank with respect to this Agreement.
SECTION 10. GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HERETO SHALL BE GOVERNED BY, AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
SECTION 11. Waiver of Jury Trial. Each of the COUNTERPARTIES and the
BANK irrevocably waives all right to trial by jury in any action, proceeding or
counterclaim (whether based on contract, tort or otherwise) arising out of or
relating to this
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Agreement or the actions of SUCH PARTIES hereto in the negotiation,
administration, performance or enforcement thereof.
SECTION 12. Execution in Counterparts. This Agreement may be
executed by one or more of the parties to this Agreement on any number of
separate counterparts, and all of said counterparts taken together shall be
deemed to constitute one and the same instrument.
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CHOICE ONE COMMUNICATIONS OF NEW
YORK INC.
By: /s/ Xxxx Xxxxxxxxx
-----------------------------
Name: Xxxx Xxxxxxxxx
Title: CFO
CHOICE ONE COMMUNICATIONS OF
CONNECTICUT INC.
By: /s/ Xxxx Xxxxxxxxx
-----------------------------
Name: Xxxx Xxxxxxxxx
Title: CFO
CHOICE ONE COMMUNICATIONS OF
MAINE INC.
By: /s/ Xxxx Xxxxxxxxx
-----------------------------
Name: Xxxx Xxxxxxxxx
Title: CFO
CHOICE ONE COMMUNICATIONS OF
MASSACHUSETTS INC.
By: /s/ Xxxx Xxxxxxxxx
-----------------------------
Name: Xxxx Xxxxxxxxx
Title: CFO
Waiver Agreement and Amendment
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CHOICE ONE OF NEW HAMPSHIRE INC.
By: /s/ Xxxx Xxxxxxxxx
-----------------------------
Name: Xxxx Xxxxxxxxx
Title: CFO
CHOICE ONE COMMUNICATIONS OF OHIO
INC.
By: /s/ Xxxx Xxxxxxxxx
-----------------------------
Name: Xxxx Xxxxxxxxx
Title: CFO
CHOICE ONE COMMUNICATIONS OF
PENNSYLVANIA INC.
By: /s/ Xxxx Xxxxxxxxx
-----------------------------
Name: Xxxx Xxxxxxxxx
Title: CFO
CHOICE ONE COMMUNICATIONS OF
RHODE ISLAND INC.
By: /s/ Xxxx Xxxxxxxxx
-----------------------------
Name: Xxxx Xxxxxxxxx
Title: CFO
Waiver Agreement and Amendment
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CHOICE ONE COMMUNICATIONS OF
VERMONT INC.
By: /s/ Xxxx Xxxxxxxxx
-----------------------------
Name: Xxxx Xxxxxxxxx
Title: CFO
CHOICE ONE COMMUNICATIONS
INTERNATIONAL INC.
By: /s/ Xxxx Xxxxxxxxx
-----------------------------
Name: Xxxx Xxxxxxxxx
Title: CFO
CHOICE ONE ONLINE INC.
By: /s/ Xxxx Xxxxxxxxx
-----------------------------
Name: Xxxx Xxxxxxxxx
Title: CFO
CHOICE ONE COMMUNICATIONS OF
VIRGINIA INC.
By: /s/ Xxxx Xxxxxxxxx
-----------------------------
Name: Xxxx Xxxxxxxxx
Title: CFO
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CHOICE ONE COMMUNICATIONS
SERVICES INC.
By: /s/ Xxxx Xxxxxxxxx
-----------------------------
Name: Xxxx Xxxxxxxxx
Title: CFO
US XCHANGE, INC.
By: /s/ Xxxx Xxxxxxxxx
-----------------------------
Name: Xxxx Xxxxxxxxx
Title: CFO
US XCHANGE OF INDIANA, L.L.C.
By: /s/ Xxxx Xxxxxxxxx
-----------------------------
Name: Xxxx Xxxxxxxxx
Title: CFO
US XCHANGE OF ILLINOIS, L.L.C.
By: /s/ Xxxx Xxxxxxxxx
-----------------------------
Name: Xxxx Xxxxxxxxx
Title: CFO
US XCHANGE OF MICHIGAN, L.L.C.
By: /s/ Xxxx Xxxxxxxxx
-----------------------------
Name: Xxxx Xxxxxxxxx
Title: CFO
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US XCHANGE OF WISCONSIN, LLC.
By: /s/ Xxxx Xxxxxxxxx
-----------------------------
Name: Xxxx Xxxxxxxxx
Title: CFO
WACHOVIA BANK, NATIONAL
ASSOCIATION
By: /s/ Xxxx Xxxxxx
-----------------------------
Name: Xxxx Xxxxxx
Title: Director
Acknowledged and Accepted:
GENERAL ELECTRIC CAPITAL CORPORATION,
as the Senior Agent
By: /s/ Xxxxxxxxxxx X. Xxxxxxxx
-------------------------------------
Name: Xxxxxxxxxxx X. Xxxxxxxx
Title: Authorized Signatory
Acknowledged and Accepted:
CHOICE ONE COMMUNICATIONS INC.,
a Delaware corporation
By: /s/ Xxxx Xxxxxxxxx
-------------------------------------
Name: Xxxx Xxxxxxxxx
Title: CFO
Waiver Agreement and Amendment
