Exhibit 10.1
Execution Version
THIRD AMENDMENT TO CREDIT AGREEMENT
This THIRD AMENDMENT TO CREDIT AGREEMENT (this “Amendment”), dated as of
November 17, 2011, by and among ZAYO GROUP, LLC, a Delaware limited liability
company (“Zayo”), ZAYO CAPITAL, INC., a Delaware corporation (“Zayo Capital”;
and together with Zayo, each, individually as a “Borrower” and, collectively, as
the “Borrowers”), the Guarantors (as defined below) signatory hereto, the
Lenders (as defined below) and SUNTRUST BANK, in its capacity as administrative
agent for the Lenders (the “Administrative Agent”).
W I T N E S S E T H:
WHEREAS, the Borrowers, the Persons party thereto from time to time as
Guarantors (the “Guarantors”), the financial institutions party thereto from
time to time (the “Lenders”), SunTrust Bank, as the Issuing Bank, SunTrust Bank,
as the Collateral Agent, and the Administrative Agent are parties to that
certain Credit Agreement, dated as of March 12, 2010 (as amended, restated,
supplemented or otherwise modified from time to time prior to the date hereof,
the “Credit Agreement”; capitalized terms used herein and not otherwise defined
shall have the meanings assigned to such terms in the Credit Agreement),
pursuant to which the Lenders have made certain financial accommodations
available to the Borrowers; and
WHEREAS, the Borrowers have requested that the Lenders and the Administrative
Agent amend certain provisions of the Credit Agreement as set forth herein and,
subject to the terms and conditions hereof, the Lenders and the Administrative
Agent are willing to do so;
NOW THEREFORE, in consideration of the premises, the terms and conditions
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
Section 1. Amendments to the Credit Agreement.
(a) Section 1.1 of the Credit Agreement, “Definitions”, is hereby amended and
modified by inserting the following new definitions in the appropriate
alphabetical order:
““360networks” shall mean 360networks Holdings (USA) inc., a Nevada corporation.
“360 Acquisition” shall mean the acquisition of all of the Equity Interests of
360networks pursuant to and in accordance with the Stock Purchase Agreement,
dated as of October 6, 2011 and as amended from time to time, among 360networks
Corporation, 360networks (fiber holdco) ltd., 360networks (fiber subco) ltd. and
Zayo.

 

 

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“360 Acquisition Closing Date” shall mean the date of consummation of the 360
Acquisition and the other 360 Transactions, provided, that the VOIP Disposition
may be consummated on or after the 360 Acquisition Closing Date.
“360 Acquisition Note Indebtedness” shall mean all payment and performance
obligations as existing from time to time of the Borrower Parties to the holders
of the 360 Acquisition Notes and the trustee, or any of them, under the
definitive documentation in respect of the 360 Acquisition Notes (including any
interest, fees and expenses that, but for the provisions of the Bankruptcy Code,
would have accrued); provided that the 360 Acquisition Note Indebtedness shall
constitute Additional Loan and Notes Obligations (as defined in the
Intercreditor Agreement) and the trustee in respect of the 360 Acquisition Notes
shall, as the Authorized Representative (as defined in the Intercreditor
Agreement) of the holders of 360 Acquisition Notes, accede to the Intercreditor
Agreement by delivering to the Joint Collateral Agent (as defined in the
Intercreditor Agreement) a Joinder Agreement (as defined in the Intercreditor
Agreement) in accordance with Section 7.17 thereof.
“360 Acquisition Notes” shall mean senior secured notes, the proceeds of which
are utilized solely (x) to finance the 360 Acquisition and pay fees and expenses
in connection with the 360 Transactions or (y) to repay the Term Loan
Indebtedness.
“360 Transactions” shall mean the 360 Acquisition, the VOIP Divestiture, the
incurrence of the Term Loan Indebtedness and the Bridge Indebtedness and the
issuance of any 360 Acquisition Notes.
“Bridge Facility” shall mean a senior unsecured bridge loan facility, the
proceeds of which are utilized solely to finance the 360 Acquisition and pay
fees and expenses in connection with the 360 Transactions.
“Bridge Indebtedness” shall mean all payment and performance obligations as
existing from time to time of the Borrower Parties to the lenders and the
administrative agent, or any of them, under the definitive documentation in
respect of the Bridge Facility (including any interest, fees and expenses that,
but for the provisions of the Bankruptcy Code, would have accrued), or as a
result of the making of loans thereunder.
“Cure Right” shall have the meaning specified in Section 9.3(a).

 

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“Disqualified Equity Interests” shall mean any Equity Interest which, by its
terms (or by the terms of any security or other Equity Interests into which it
is convertible or for which it is exchangeable), or upon the happening of any
event or condition (a) matures or is mandatorily redeemable (other than solely
for Qualified Equity Interests), pursuant to a sinking fund obligation or
otherwise (except as a result of a change of control or asset sale so long as
any rights of the holders thereof upon the occurrence of a change of control or
asset sale event shall be subject to the prior repayment in full of the Loans
and all other Obligations that are accrued and payable and the termination of
the Revolving Loan Commitments and all outstanding Letters of Credit), (b) is
redeemable at the option of the holder thereof (other than solely for Qualified
Equity Interests), in whole or in part, (c) provides for the scheduled payments
of dividends in cash (except for cash payments that are expressly limited to the
extent permitted by the senior credit facility of the issuer of such Equity
Interest including, without limitation, this Agreement and the definitive
documentation in respect of the Term Loan Facility) or (d) is or becomes
convertible into or exchangeable for Funded Debt or any other Equity Interests
that would constitute Disqualified Equity Interests, in each case, prior to the
date that is ninety-one (91) days after the Maturity Date; provided that, if
such Equity Interests are issued pursuant to a plan for the benefit of employees
of the Borrowers or any of their Subsidiaries or by any such plan to such
employees, such Equity Interests shall not constitute Disqualified Equity
Interests solely because it may be required to be repurchased by either Borrower
or any of their Subsidiaries in order to satisfy applicable statutory or
regulatory obligations.
“Qualified Equity Interests” shall mean any Equity Interests that are not
Disqualified Equity Interests.
“Specified Equity Contribution” shall mean any cash contribution to the equity
of Zayo and/or any purchase or investment in Equity Interests of Zayo pursuant
to Section 9.3 in each case other than Disqualified Equity Interests, as
evidenced by a certificate of an Authorized Signatory of the Administrative
Borrower delivered to the Administrative Agent.
“Term Loan Facility” shall mean a senior term loan facility, the proceeds of
which are utilized solely to finance the 360 Acquisition and pay fees and
expenses in connection with the 360 Transactions; provided, that the financial
covenants in respect of the Term Loan Facility shall not, as of the 360
Acquisition Closing Date, be more restrictive than the Financial Covenants.

 

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“Term Loan Indebtedness” shall mean all payment and performance obligations as
existing from time to time of the Borrower Parties to the lenders and the
administrative agent, or any of them, under the definitive documentation in
respect of the Term Loan Facility (including any interest, fees and expenses
that, but for the provisions of the Bankruptcy Code, would have accrued), or as
a result of the making of loans thereunder; provided that the Term Loan
Indebtedness shall constitute Additional Loan and Notes Obligations (as defined
in the Intercreditor Agreement) and the administrative agent in respect of the
Term Loan Facility shall, as the Authorized Representative (as defined in the
Intercreditor Agreement) of the lenders under the Term Loan Facility, accede to
the Intercreditor Agreement by delivering to the Joint Collateral Agent (as
defined in the Intercreditor Agreement) a Joinder Agreement (as defined in the
Intercreditor Agreement) in accordance with Section 7.17 thereof.
“Test Period” shall have the meaning specified in Section 9.3(a).
“VOIP Assets” shall mean the assets and liabilities associated with the VOIP
business of 360networks.
“VOIP Divestiture” shall mean the disposition or distribution of the VOIP Assets
by the Borrowers to Holdings or any of its Subsidiaries pursuant to
Section 8.4(d) or Section 8.07(b)(vii).
“Voting Agreement” shall have the meaning specified in Section 11.12.”
(b) Section 1.1 of the Credit Agreement, “Definitions”, is hereby amended and
modified by deleting the definitions of “Available Amount”, “EBITDA”, “Fixed
Charge Coverage Ratio”, “Majority Lenders”, “Pro Forma Basis” and “Secured
Obligations” in its entirety and inserting the following in lieu thereof:
““Available Amount” shall mean, as of any date of determination, the amount of
Equity Proceeds received by the Borrowers on or after the Agreement Date and on
or prior to such date, other than any proceeds of a Specified Equity
Contribution.

 

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“EBITDA” shall mean, with respect to the Borrowers and their Subsidiaries for
any period, determined on a consolidated basis in accordance with GAAP, the Net
Income for such period, plus, without duplication and to the extent deducted in
determining Net Income for such period, (i) income taxes, (ii) Interest Expense,
(iii) depreciation and amortization expense, (iv) non-cash charges or reserves,
(v) restructuring charges and severance costs in an aggregate amount not to
exceed $15,000,000 and (vi) charges or expenses attributed to the
Recapitalization Transaction and any actual or proposed acquisitions or joint
ventures, equity offerings, issuances and retirement of debt and divestitures of
assets; provided, however, that if, at any time since the beginning of the four
fiscal quarter period ending as of the date of the most recent financial
statements that are required to be delivered by the Administrative Borrower
pursuant to Section 7.1, an acquisition or sale of a Person or all or
substantially all of the assets of a Person occurred, then such calculation
shall be made on a Pro Forma Basis.
“Fixed Charge Coverage Ratio” shall mean, with respect to the Borrowers and
their Subsidiaries on a consolidated basis for any calendar quarter ended, for
the twelve-month period then ended, the ratio of (a) Annualized EBITDA for such
period then ended minus Capital Expenditures (excluding, without duplication,
Capital Expenditures for the twelve-month period then ended (i) that are
directly related to new sales to, or made at the request of, Persons to whom any
Borrower Party has agreed to provide either goods or services (or both) pursuant
to a written agreement, (ii) to the extent financed with Funded Debt for
Borrowed Money (other than Funded Debt incurred hereunder), (iii) made with the
proceeds of a disposition permitted hereunder and (iv) made with the proceeds of
an equity issuance permitted hereunder), to (b) Interest Expense for the
twelve-month period then ended.
“Majority Lenders” shall mean, as of any date of calculation, Lenders the sum of
whose unutilized portions of the Revolving Loan Commitment plus Loans (other
than Swing Loans and Agent Advances) outstanding plus participation interests in
Letter of Credit Obligations, Swing Loans and Agent Advances outstanding on such
date of calculation exceeds fifty percent (50%) of the sum of the aggregate
unutilized Revolving Loan Commitment plus Loans (other than Swing Loans and
Agent Advances) outstanding plus participation interests in Letter of Credit
Obligations, Swing Loans and Agent Advances outstanding of all of the Lenders as
of such date of calculation; provided, however, that so long as there are two or
fewer Lenders party to this Agreement, Majority Lenders shall include all
Lenders; provided, further, Defaulting Lenders and their portion of the
Revolving Loan Commitment, Loans and participation interests in Letter of Credit
Obligations, Swing Loans and Agent Advances shall be excluded for purposes of
determining “Majority Lenders” hereunder; provided, further, that as long as the
Voting Agreement is in effect, any amendment, waiver, modification or other vote
hereunder requiring the consent of the Majority Lenders shall be subject to the
provisions of the Voting Agreement.

 

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“Pro Forma Basis” shall mean for purposes of determining compliance with the
Financial Covenants and the defined terms relating thereto or any other covenant
contained in this Agreement, giving pro forma effect to any acquisition or sale
of a Person, all or substantially all of the business or assets of a Person, and
any related incurrence, repayment or refinancing of Funded Debt, Capital
Expenditures or other related transactions, including pro forma adjustments
arising out of events that are directly attributable to such transaction, are
factually supportable and are expected to have a continuing impact, as certified
by the chief financial officer of the Administrative Borrower and reasonably
satisfactory to the Administrative Agent, in each case, as if such acquisition
or sale and related transactions were realized on the first day of the relevant
period.
“Secured Obligations” shall mean, collectively, the Obligations, the Senior Note
Indebtedness, the Term Loan Indebtedness and any 360 Acquisition Note
Indebtedness.”
(c) Section 1.1 of the Credit Agreement, “Definitions”, is hereby amended and
modified by deleting the definitions of “Specified Fiber-to-Tower Capex” and
“Subordinated Funded Debt” in their entirety.
(d) Section 4.2 of the Credit Agreement, “Conditions Precedent to Each Advance”,
is hereby amended and modified by inserting the following new paragraph at the
end of such Section:
“Notwithstanding the foregoing, an Advance the proceeds of which are used solely
to repay the Bridge Indebtedness in full (as certified by an Authorized
Signatory of the Administrative Borrower in a writing accompanying the Request
for Advance in respect of such Advance, which certification shall also represent
that the Bridge Facility shall be terminated substantially concurrently with the
making of such Advance) shall not be subject to the fulfillment of the
conditions set forth in clauses (a), (b) or (c) of the first paragraph of this
Section 4.2.”
(e) Section 5.1(w) of the Credit Agreement, “Real Property”, is hereby amended
and modified by deleting the fourth sentence thereof in its entirety and
inserting the following in lieu thereof:
“The Administrative Borrower shall provide notice to the Administrative Agent
upon the purchase by any Borrower Party of any real property with a value in
excess of $500,000 and, upon the request of the Collateral Agent, the applicable
Borrower Party shall deliver a Mortgage with respect to such real property and
all other documentation reasonably requested by the Collateral Agent, including,
without limitation, one or more opinions of counsel.”

 

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(f) Section 7.6(f) of the Credit Agreement, “Notice of Litigation and Other
Matters”, is hereby amended by deleting the number “250,000” and inserting the
number “500,000” in lieu thereof.
(g) Section 8.1(d) of the Credit Agreement, “Funded Debt”, is hereby amended and
modified by deleting the number “35,000,000” and inserting the number
“70,000,000” in lieu thereof.
(h) Section 8.1(h) of the Credit Agreement, “Funded Debt”, is hereby amended and
modified by deleting the number “250,000,000” and inserting the number
“350,000,000” in lieu thereof.
(i) Section 8.1(i) of the Credit Agreement, “Funded Debt”, is hereby amended and
modified by deleting subsection (i) in its entirety and inserting the following
in lieu thereof:
“(i) Intentionally Omitted;”
(j) Section 8.1 of the Credit Agreement, “Funded Debt”, is hereby amended and
modified by deleting subsection (j) thereof and inserting the following in lieu
thereof:
“(j) other unsecured Funded Debt of any Borrower Party so long as (i) such
Funded Debt has no mandatory sinking fund, redemption or amortization, or
maturity earlier than one year and one day prior to the Maturity Date, (ii) the
Leverage Ratio, on a pro forma basis for the issuance of such Funded Debt, is
not greater than 4.25:1.00 as of the last day of the immediately preceding
fiscal quarter for which financial statements are available (and the
Administrative Borrower shall provide to the Administrative Agent a certificate
from an Authorized Signatory of the Administrative Borrower certifying such
compliance) and (iii) at the time of and immediately after giving effect to the
incurrence of such Funded Debt and the application of the proceeds thereof, on a
pro forma basis, no Default of Event of Default is in existence;”
(k) Section 8.1(o) of the Credit Agreement, “Funded Debt”, is hereby amended and
modified by deleting subsection (o) thereof and inserting the following in lieu
thereof:
“(o) Permitted Refinancing Indebtedness in exchange for, or the net cash
proceeds of which are used to refund, refinance or replace Funded Debt that was
permitted by clauses (b), (d), (h), (o), (q), (r) and (t) of this Section 8.1;”

 

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(l) Section 8.1 of the Credit Agreement, “Funded Debt”, is hereby further
amended and modified by (i) deleting the word “and” at the end of subsection
(p) thereof and (ii) deleting subsection (q) in its entirety and inserting the
following in lieu thereof:
“(q) (i) Permitted Secured Indebtedness existing on the 360 Acquisition Closing
Date and (ii) other Permitted Secured Indebtedness in an aggregate amount
outstanding at any time not to exceed $250,000,000, provided, that at the time
of incurrence of any Permitted Secured Indebtedness under this clause (ii), the
Senior Secured Leverage Ratio for the most recent fiscal quarter then ended is
no greater, calculated on a pro forma basis, than 3.50 to 1.00;
(r) Term Loan Indebtedness in an aggregate principal amount not to exceed
$315,000,000 less the aggregate principal amount of any 360 Acquisition Notes
permitted by Section 8.1(t);
(s) Bridge Indebtedness in an aggregate principal amount not to exceed
$60,000,000; and
(t) 360 Acquisition Note Indebtedness in an aggregate principal amount not to
exceed $315,000,000 less the aggregate principal amount of any outstanding Term
Loan Indebtedness permitted by Section 8.1(r).”
(m) Section 8.4 of the Credit Agreement, “Restricted Payments and Purchases”, is
hereby further amended and modified by deleting subsection (c) thereof in its
entirety and inserting the following in lieu thereof:
“(c) any Borrower may make additional Restricted Payments and Restricted
Purchases in the following amounts after the Agreement Date, so long as both
before and after giving effect to such Restricted Payment or Restricted
Purchase, no Default has occurred and is continuing or would result from the
making of such Restricted Payment or Restricted Purchase: (i) if minimum
Availability is greater than or equal to $65,000,000 and the Leverage Ratio is
less than 4.00 to 1.00 but greater than or equal to 3.50 to 1.00 at the time of
the proposed payment of the Restricted Payments or the proposed Restricted
Purchase, $20,000,000 and (ii) if minimum Availability is greater than or equal
to $32,500,000 and (A) if the Leverage Ratio is less than 3.50 to 1.00 but
greater than or equal to 2.50 to 1.00 at the time of the proposed payment of the
Restricted Payments or the proposed Restricted Purchase, $50,000,000, (B) if the
Leverage Ratio is less than 2.50 to 1.00 but greater than or equal to 1.50 to
1.00 at the time of the proposed payment of the Restricted Payments or the
proposed Restricted Purchase, $70,000,000, and (C) if the Leverage Ratio is less
than 1.50 to 1.00 at the time of the proposed payment of the Restricted Payments
or the proposed Restricted Purchase, $90,000,000.”

 

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(n) Section 8.4 of the Credit Agreement, “Restricted Payments and Purchases”, is
hereby further amended and modified by (i) deleting the word “and” at the end of
subsection (b) thereof and substituting a comma in lieu thereof and
(ii) inserting the following immediately after subsection (c) thereof:
“(d) the Borrowers may, within 180 days of any acquisition permitted by
Section 8.7(c), distribute any assets or liabilities so acquired by the
Borrowers that are determined by the Administrative Borrower to be non-core to
the business of the Borrowers and their Subsidiaries; provided, that the fair
market value of any assets and liabilities so distributed in respect of any such
acquisition shall not exceed 5.0% of the Annualized EBITDA of Zayo based on the
most recent fiscal quarter of Zayo then ended in respect of which financial
statements are available (and the Administrative Borrower shall provide to the
Administrative Agent a certificate from an Authorized Signatory of the
Administrative Borrower certifying as to compliance with this clause (d)) and
(e) the VOIP Divestiture shall be permitted to be consummated on or after the
360 Acquisition Closing Date.”
(o) Section 8.7(b) of the Credit Agreement, “Liquidation; Change in Ownership,
Name, or Year; Disposition or Acquisition of Assets; Etc.”, is hereby amended
and modified by (i) deleting the word “and” at the end of subclause (v) thereof
and substituting a comma in lieu thereof and (ii) inserting the following
immediately after subclause (vi) thereof:
“and (vii) the VOIP Divestiture.”
(p) Section 8.7(c) of the Credit Agreement, “Liquidation; Change in Ownership,
Name, or Year; Disposition or Acquisition of Assets; Etc.”, is hereby amended
and modified by (i) deleting the number “4.00” and inserting the number “4.25”
in lieu thereof and (ii) adding the following immediately preceding the
semicolon at the end thereof:
“; provided, further, that notwithstanding the foregoing or anything to the
contrary contained herein, the Borrower Parties shall be permitted to consummate
the 360 Acquisition on the 360 Acquisition Closing Date”

 

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(q) Section 8.8 of the Credit Agreement, “Financial Covenants”, is hereby
amended and modified by deleting subsection (a) in its entirety and inserting
the following in lieu thereof:
“(a) Senior Secured Leverage Ratio. The Borrower Parties shall not permit, at
the end of each applicable fiscal quarter, the Senior Secured Leverage Ratio for
the immediately preceding twelve (12) month period then ended to be greater than
the required amount for the applicable period set forth below:

              Applicable   Applicable Period   Ratio  
For the twelve-month periods ending December 31, 2011 and March 31, 2012
    4.50 to 1.00  
For the twelve-month periods ending June 30, 2012, September 30, 2012,
December 31, 2012, March 31, 2013, June 30, 2013 and September 30, 2013
    4.00 to 1.00  
For the twelve-month periods ending December 31, 2013 and for each fiscal
quarter thereafter
    3.50 to 1.00  

(r) Section 8.8 of the Credit Agreement, “Financial Covenants”, is hereby
further amended and modified by deleting subsection (b) in its entirety and
inserting the following in lieu thereof:
“(b) Fixed Charge Coverage Ratio. The Borrower Parties shall not permit, at the
end of each applicable fiscal quarter, the Fixed Charge Coverage Ratio for the
immediately preceding twelve (12) month period then ended to be less than the
required amount for the applicable period set forth below:

              Applicable   Applicable Period   Ratio  
For the twelve-month periods ending December 31, 2011, March 31, 2011, June 30,
2012, September 30, 2012 and December 31, 2012
    2.25 to 1.00  
For the twelve-month periods ending March 31, 2013 and June 30, 2013
    2.50 to 1.00  
For the twelve-month periods ending September 30, 2013 and December 31, 2013
    2.75 to 1.00  
For the twelve-month periods ending March 31 2014, June 30, 2014 and
September 30, 2014
    3.00 to 1.00  
For the twelve-month periods ending December 31, 2014 and for each fiscal
quarter thereafter
    3.25 to 1.00  

(s) Section 8.15 of the Credit Agreement, “Negative Pledge”, is hereby amended
and modified by deleting such section in its entirety and substituting the
following in lieu thereof:
“Section 8.15 Negative Pledge. No Borrower Party shall, or shall permit any
Subsidiary of any Borrower Party to, directly or indirectly, enter into any
agreement with any Person that prohibits or restricts or limits the ability of
any Borrower Party or any such Subsidiary to create, incur, pledge, or suffer to
exist any Lien upon any of its respective assets, or restricts the ability of
any Subsidiary of a Borrower to pay Dividends to such Borrower except
prohibitions or conditions (a) under the Loan Documents, (b) under the
definitive documentation in respect of the Term Loan Facility, (c) under the
definitive

 

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documentation in respect of the Bridge Facility, (d) under the definitive
documentation in respect of any 360 Acquisition Notes, (e) under the definitive
documentation in respect of any Funded Debt permitted by Section 8.1(d) solely
to the extent that the agreement or instrument governing such Funded Debt or
Capitalized Lease Obligation prohibits a Lien on the property acquired with the
proceeds of such Indebtedness or the property subject to such Capitalized Lease
Obligation, respectively, (f) existing by reason of customary provisions
restricting pledges, assignments, subletting or other transfers contained in
leases, licenses and similar agreements entered into in the ordinary course of
business; provided, that such restrictions are limited to the property or assets
subject to such leases, licenses or similar agreements, as the case may be,
(g) with respect to a Subsidiary imposed pursuant to an agreement that has been
entered into in connection with the disposition of all or substantially all of
the Equity Interests or assets of such Subsidiary, (h) imposed by any amendments
or refinancings that are otherwise permitted by the Loan Documents or the
contracts, instruments or obligations referred to in clause (e) or (g) above;
provided that such amendments or refinancings are no more materially restrictive
with respect to such prohibitions and limitations than those in effect prior to
such amendment or refinancing (as determined in good faith and, if requested by
the Administrative Agent, certified in writing to the Administrative Agent by an
Authorized Signatory of the Administrative Borrower or (i) under any Funded Debt
of a Person outstanding on the date such Person first becomes a Subsidiary of a
Borrower; provided, that the agreements imposing such prohibitions or conditions
were not entered into solely in contemplation of such Person becoming a
Subsidiary of a Borrower.”
(t) Section 9.1 of the Credit Agreement, “Events of Default”, is hereby amended
and modified by deleting each instance the number “10,000,000” in subsections
(i), (j) and (k) thereof and inserting the number “20,000,000” in lieu thereof.

 

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(u) Article 9 of the Credit Agreement, “Default”, is hereby further amended and
modified by inserting the following new Section 9.3 immediately following
Section 9.2 thereof:
“Section 9.3 Right to Cure.
(a) Notwithstanding anything to the contrary contained in Section 9.1(c), in the
event that the Borrowers fail to comply with either of the Financial Covenants,
until the expiration of the tenth day after the date on which financial
statements are required to be delivered pursuant to Section 7.1 with respect to
the fiscal quarter ending on the last day of the twelve-month period in respect
of which such Financial Covenant is being measured (the “Test Period”), if Zayo
receives a Specified Equity Contribution, Zayo may apply the amount of the net
proceeds of such Specified Equity Contribution to increase Annualized EBITDA
with respect to such applicable fiscal quarter (the “Cure Right”) and the
Financial Covenants shall be recalculated, giving effect to a pro forma increase
to Annualized EBITDA for such Test Period in an amount equal to such net cash
proceeds; provided that such pro forma adjustment to Annualized EBITDA shall be
given solely for the purpose of determining the existence of a Default or an
Event of Default under the Financial Covenants with respect to any Test Period
that includes the fiscal quarter for which such Cure Right was exercised and not
for any other purpose under any Loan Document.
(b) If, after the exercise of the Cure Right and the recalculations pursuant to
subsection (a) above, the Borrowers shall then be in compliance Financial
Covenants during such Test Period (including for purposes of Section 4.2 and
4.3), the Borrower shall be deemed to have satisfied the requirements of the
Financial Covenants as of the relevant date of determination with the same
effect as though there had been no failure to comply therewith at such date, and
the applicable Default or Event of Default under Section 9.1(c) that had
occurred shall be deemed cured; provided that (i) in each four-fiscal quarter
period, there shall be at least two fiscal quarters in which the Cure Right is
not exercised, (ii) there shall be no more than four Specified Equity
Contributions during the term of this Agreement, (iii) with respect to any
exercise of the Cure Right, the Specified Equity Contribution shall be no
greater than the amount required to cause the Borrowers to be in compliance with
the Financial Covenants and (iv) all Specified Equity Contributions will be
disregarded for purposes of determining the Available Amount or the availability
of any baskets or carve-outs with respect to the covenants contained in Article
8 hereof.”
(v) Section 11.12 of the Credit Agreement, “Amendments and Waivers”, is hereby
amended and modified by inserting the following new subsection (d) immediately
following subsection (c) thereof:
“(d) Notwithstanding the foregoing or anything to the contrary contained herein
or in the other Loan Documents, the Lenders hereby authorize and instruct the
Administrative Agent, concurrently with the incurrence by the Borrowers of any
Term Loan Indebtedness, to enter into an agreement (in form and substance
reasonably satisfactory to the Administrative Agent and the Majority Lenders)
(the “Voting Agreement”) with the Borrower Parties and the administrative agent
under

 

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the definitive documentation in respect of the Term Loan Facility, acting as the
representative of the lenders and the other secured parties under the Term Loan
Facility, which Voting Agreement shall, inter alia, provide that (i) any
amendment, waiver or other modification of any provision of Articles 6, 7, 8 or
9 hereof (or any related definition) or any corresponding provision of the
definitive documentation in respect of the Term Loan Facility shall require the
consent of Lenders and lenders in respect of the Term Loan Facility
(collectively, the “Combined Majority Lenders”) the sum of whose unutilized
portions of the Revolving Loan Commitment plus Loans (other than Swing Loans and
Agent Advances) outstanding plus participation interests in Letter of Credit
Obligations, Swing Loans and Agent Advances plus loans and commitments in
respect of the Term Loan Facility outstanding on the date of such amendment
exceeds fifty percent (50%) of the sum of the aggregate unutilized Revolving
Loan Commitment plus Loans (other than Swing Loans and Agent Advances)
outstanding plus participation interests in Letters of Credit Obligations, Swing
Loans and Agent Advances plus loans and commitments in respect of the Term Loan
Facility outstanding of all the Lenders and all the lenders in respect of the
Term Loan Facility as of such date, (ii) the second proviso to the definition of
“Majority Lenders” shall not restrict any amendment, waiver or modification
requiring the consent of the Majority Lenders which is consented to by Combined
Majority Lenders and (iii) Defaulting Lenders, defaulting lenders under the Term
Loan Facility and the portion of the Revolving Loan Commitment, Loans,
participation interests in Letter of Credit Obligations, Swing Loans and Agent
Advances and loans and commitments in respect of the Term Loan Facility held by
Defaulting Lenders or defaulting lenders under the Term Loan Facility shall be
excluded for purposes of determining “Combined Majority Lenders.””
(w) Exhibit C to the Credit Agreement, “Form of Compliance Certificate”, is
hereby amended and modified by deleting such Exhibit C in its entirety and
substituting the attached Exhibit C in lieu thereof.
Section 2. No Other Amendments. The execution, delivery and effectiveness of
this Amendment shall not, except as expressly provided above, operate as a
waiver of any right, power or remedy of the Administrative Agent, the Lenders or
the Issuing Bank under the Credit Agreement or any of the other Loan Documents,
nor constitute a waiver of any provision of the Credit Agreement or any of the
other Loan Documents. Except for the amendment set forth above, the text of the
Credit Agreement and all other Loan Documents shall remain unchanged and in full
force and effect and each Borrower hereby ratifies and confirms its obligations
thereunder. This Amendment shall not constitute a modification of the Credit
Agreement or a course of dealing with the Administrative Agent, the Lenders or
the Issuing Bank at variance with the Credit Agreement such as to require
further notice by the Administrative Agent, the Lenders or the Issuing Bank to
require strict compliance with the terms of the Credit Agreement and the other
Loan Documents in the future. Nothing in this Amendment is intended, or shall be
construed, to constitute a novation or an accord and satisfaction of any of the
Obligations or to modify, affect or impair the perfection or continuity of the
Administrative Agent’s or the Lenders’ security interests in, security titles
to, or other Liens on, any Collateral for the Obligations.

 

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Section 3. Conditions to Effectiveness. This Amendment shall become effective as
of the first date (the “Effective Date”) on which all of the following
conditions have been satisfied:
(a) the Administrative Agent, on behalf of the Issuing bank and the Lenders,
shall have received the following:
(i) counterparts of this Amendment duly executed by the Borrowers, the
Guarantors and the Lenders;
(ii) for the account of the Lenders who have executed and delivered this
Amendment to the Administrative Agent on or before 5:00 p.m. (New York City
time) on November 16, 2011 (each, an “Approving Lender”), an amendment fee from
the Borrowers equal to 0.50% of the Loans and Revolving Loan Commitments of such
Approving Lender, which shall be fully earned, non-refundable and due and
payable on the Effective Date in immediately available funds; and
(iii) if any Term Loan Indebtedness (as defined in the Credit Agreement (as
amended by this Agreement)) is incurred on the 360 Acquisition Closing Date (as
defined in the Credit Agreement (as amended by this Agreement)), counterparts of
the Voting Agreement (as defined in the Credit Agreement (as amended by this
Agreement)) duly executed by the Borrowers, the Guarantors and the
administrative agent for the lenders in respect of the Term Loan Facility;
(b) all fees and expenses required to be paid hereunder or pursuant to the
Credit Agreement and invoiced at least two (2) Business Days prior to the
Effective Date shall have been paid in full in cash or will be paid on the
Effective Date; and
(c) the 360 Transactions (as defined in the Credit Agreement (as amended by this
Agreement)) shall have been consummated; provided, that, notwithstanding the
foregoing, the VOIP Divestiture (as defined in the Credit Agreement (as amended
by this Agreement)) may be consummated on or after the Effective Date.
It is understood and agreed by each party hereto that the consent of each
Approving Lender to this Amendment shall be irrevocable upon the satisfaction of
the conditions specified in the foregoing Section 3(a)(i) above and that this
Amendment shall become effective upon the satisfaction of the conditions
specified in Section 3(a)(ii) and (iii), (b) and (c).

 

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Section 4. Representations and Warranties. Each Borrower Party hereby represents
and warrants that all representations and warranties of the Borrower Parties
made in the Credit Agreement and the other Loan Documents are true and correct
in all material respects (unless any such representation or warranty is
qualified as to materiality, in which case such representation and warranty
shall be true and correct in all respects) as of the date hereof (in each case,
except to the extent that such representation or warranty specifically refers to
an earlier date, in which case it shall be so true and correct as of such
earlier date). As of the date hereof and as of the Effective Date, each Borrower
Party further represents and warrants as follows:
(a) such Borrower Party is a corporation or limited liability company duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation;
(b) the execution, delivery and performance by such Borrower Party of this
Amendment and the Loan Documents are within such Borrower Party’s legal powers,
have been duly authorized by all necessary company action and do not contravene
(i) such Borrower Party’s organizational documents, or (ii) law or contractual
restrictions binding on or affecting such Borrower Party;
(c) no authorization, approval or other action by, and no notice to or filing
with, any governmental authority or regulatory body, is required for the due
execution, delivery and performance by such Borrower Party of this Amendment or
any of the Loan Documents to which such Borrower Party is or will be a party;
(d) this Amendment and each of the other Loan Documents to which such Borrower
Party is a party constitute legal, valid and binding obligations of such
Borrower Party, enforceable against such Borrower Party in accordance with their
respective terms; and
(e) no Default or Event of Default exists.
Section 5. Amendment of Intercreditor Agreement and the Security Agreement. Each
Lender party hereto herby authorizes the Administrative Agent to enter into an
amendment to the Intercreditor Agreement (which shall be in form satisfactory to
the Administrative Agent) and to instruct the Collateral Agent to enter into an
amendment to the Security Agreement (which shall be in form satisfactory to the
Administrative Agent), in each case, for the purpose of allowing the Term Loan
Facility and/or the 360 Acquisition Notes, as applicable, to be secured by less
than all of the collateral securing the Obligations.
Section 6. Acknowledgment of Security Interests. Each Borrower Party hereby
acknowledges that, as of the date hereof and as of the Effective Date, the
security interests and liens granted to the Administrative Agent and the Lenders
under the Credit Agreement and the other Loan Documents are in full force and
effect and are enforceable in accordance with the terms of the Credit Agreement
and the other Loan Documents.
Section 7. Reaffirmation of Guaranty. Each Guarantor hereby specifically (a)
acknowledges and reaffirms its obligations owing to the Lender Group under the
Credit Agreement and any other Loan Documents to which each such Guarantor is a
party and (b) agrees that each of the Loan Documents to which it is a party is
and shall remain in full force and effect.
Section 8. Costs, Expenses and Taxes. Each Borrower agrees, jointly and
severally, to pay on demand all out-of-pocket expenses of the Administrative
Agent in connection with the preparation, negotiation, execution and delivery of
this Amendment, including, but not limited to, the reasonable fees and
disbursements of counsel for the Administrative Agent.

 

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Section 9. Governing Law. This Amendment shall be construed in accordance with
and governed by the laws of the State of New York.
Section 10. Loan Document. This Amendment shall be deemed to be a Loan Document
for all purposes.
Section 11. Counterparts. This Amendment may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
separate counterparts shall together constitute but one and the same instrument.
In proving this Amendment in any judicial proceeding, it shall not be necessary
to produce or account for more than one such counterpart signed by the party
against whom enforcement is sought. Any signatures delivered by a party by
facsimile or other electronic transmission shall be deemed an original signature
hereto.
Section 12. Release. In consideration for the accommodations provided pursuant
to this Amendment, and acknowledging that the Administrative Agent and Lenders
will be specifically relying on the following provisions as a material
inducement in entering into this Amendment, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, each
Borrower Party hereby releases, remises and forever discharges the
Administrative Agent and the Lenders and their respective agents, servants,
employees, directors, officers, attorneys, accountants, consultants, affiliates,
representatives, receivers, trustees, subsidiaries, predecessors, successors and
assigns (collectively, the “Released Parties”) from any and all claims, damages,
losses, demands, liabilities, obligations, actions and causes of action
whatsoever (whether arising in contract or in tort, and whether at law or in
equity), whether known or unknown, matured or contingent, liquidated or
unliquidated, in any way arising from, in connection with, or in any way
concerning or relating to the Credit Agreement, the other Loan Documents, and/or
any dealings with any of the Released Parties in connection with the
transactions contemplated by such documents or this Amendment prior to date
hereof. This release shall be and remain in full force and effect
notwithstanding the discovery by each Borrower Party after the date hereof
(a) of any new or additional claim against any Released Party, (b) of any new or
additional facts in any way relating to the subject matter of this release,
(c) that any fact relied upon by it was incorrect or (d) that any representation
made by any Released Party was untrue or that any Released Party concealed any
fact, circumstance or claim relevant to such Borrower’s execution of this
release; provided, however, this release shall not extend to any claims arising
after the execution of this Amendment.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

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Execution Version
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly
executed by their respective authorized officers as of the day and year first
above written.

          BORROWERS:   ZAYO GROUP, LLC
ZAYO CAPITAL, INC.
      By:   /s/ Scott Beer         Name:   Scott Beer        Title:   General
Counsel, VP & Secretary   

 

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          GUARANTORS:   ZAYO COLOCATION, INC.
AMERICAN FIBER SYSTEMS, INC.
AMERICAN FIBER SYSTEMS HOLDING CORP.
FIBERNET TELECOM, INC.
LOCAL FIBER, LLC
      By:   /s/ Scott Beer         Name:   Scott Beer        Title:   General
Counsel, VP & Secretary   

 

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          AGENT AND LENDERS:   SUNTRUST BANK,
as the Administrative Agent
and a Lender
      By:   /s/ Mark Kelley         Name:   Mark Kelley        Title:   Managing
Director   

 

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            ROYAL BANK OF CANADA,
as a Lender
      By:   /s/ Mark Gronich         Name:   Mark Gronich        Title:  
Authorized Signatory   

 

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            BARCLAYS BANK PLC,
as a Lender
      By:   /s/ Kevin Cullen         Name:   Kevin Cullen        Title:  
Director   

 

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            OPY CREDIT CORP.,
as a Lender
      By:   /s/ Brian S Perman         Name:   Brian S Perman        Title:  
Managing Director     

 

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            CO BANK,
as a Lender
      By:   /s/ Lennie Blakeslee         Name:   Lennie Blakeslee       
Title:   Vice President     

 

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            MORGAN STANLEY BANK N.A,
as a Lender
      By:   /s/ Nick Zangari         Name:   Nick Zangari        Title:  
Authorized Signatory     

 

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EXHIBIT C
FORM OF COMPLIANCE CERTIFICATE
The undersigned hereby certifies that he or she is an Authorized Signatory of
ZAYO GROUP, LLC, a Delaware limited liability company (the “Administrative
Borrower”). In connection with that certain Credit Agreement, dated as of
March 12, 2010 (as amended, restated, supplemented or otherwise modified from
time to time, the “Credit Agreement”; capitalized terms used herein without
definition shall have the meanings ascribed thereto in the Credit Agreement), by
and among the Administrative Borrower, Zayo Capital, Inc., a Delaware
corporation (“Zayo Capital”; and together with Administrative Borrower, each,
individually a “Borrower” and, collectively, the “Borrowers”), the Persons party
thereto from time to time as Guarantors, the financial institutions party
thereto from time to time as lenders (the “Lenders”), SunTrust Bank, as the
Issuing Bank, SunTrust Bank, as the Collateral Agent, and SunTrust Bank, as the
administrative agent (the “Administrative Agent”), the undersigned does hereby
further certify that:

  1.  
To the extent applicable, true and correct calculations demonstrating compliance
with Section 8.8 of the Credit Agreement for the fiscal period ended [DATE] are
set forth on Schedule 1 attached hereto;

  2.  
No material change in GAAP or the application thereof has occurred since the
date of the Borrower Parties’ audited financial statements delivered on the
Agreement Date for the fiscal year ended June 30, 2009 [, except as set forth on
Schedule 2 (which schedule describes the effect of such change on the financial
statements accompanying this Compliance Certificate)];

  3.  
To the best of my knowledge, no Default or Event of Default has occurred during
the period ended [DATE] [, except as described on Schedule 3 attached hereto
(which Schedule describes the nature of such Default/Event of Default and when
it occurred and whether it is continuing)]; and

  4.  
The Leverage Ratio for the fiscal period ended [DATE] is [_____]:1.00, as
calculated on Schedule 4 attached hereto.

[remainder of page intentionally left blank]

 

 

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IN WITNESS WHEREOF, I have executed this Compliance Certificate as of
                      ____, 20__.

            ZAYO GROUP, LLC, as the Administrative Borrower
      By:           Name:           Title:      

 

 

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Schedule 1

         
A. Compliance Calculation Section 8.8(a) — Senior Secured Leverage Ratio
       
 
       
(a) Funded Debt for Borrowed Money of the Borrowers and their Subsidiaries on a
consolidated basis, and without duplication, as of the applicable date of
determination, constituting senior debt that is not subordinated in right of
payment to the Obligations, and is secured by Liens on the Collateral or any
material portion thereof that are not subordinated to the Liens on such portion
of the Collateral securing the Obligations
  $                       
 
       
(b) Net Income1
  $                       
 
       
(c) To the extent deducted in determining Net Income, income taxes
  $                       
 
       
(d) To the extent deducted in determining Net Income, Interest Expense
  $                       
 
       
(e) To the extent deducted in determining Net Income, depreciation and
amortization expense
  $                       
 
       
(f) To the extent deducted in determining Net Income, non-cash charges or
reserves
  $                       
 
       
(g) To the extent deducted in determining Net Income, restructuring charges and
severance costs in an aggregate amount not to exceed $15,000,000
  $                       
 
       
(h) To the extent deducted in determining Net Income, charges or expenses
attributed to the Recapitalization Transaction and any actual or proposed
acquisitions or joint ventures, equity offerings, issuances and retirement of
debt and divestitures of assets
  $                       
 
       

 

      1  
Provided, however, that if, at any time since the beginning of the four fiscal
quarter period ending as of the date of the most recent financial statements
that are required to be delivered by the Administrative Borrower pursuant to
Section 7.1 of the Credit Agreement, an acquisition or sale of a Person or all
or substantially all of the assets of a Person occurred, then such calculation
shall be made on a Pro Forma Basis.

 

 

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(i) EBITDA ((b) + (c) + (d) + (e) + (f) + (g) + (h))
  $                       
 
       
(j) Annualized EBITDA (EBITDA for the most recently ended fiscal quarter,
multiplied by 4)
  $                       
 
       
(k) Senior Secured Leverage Ratio for the immediately proceeding twelve
(12) month period: (a) : (j)
    ____:____  
 
       
In compliance?
  o Yes o No

 

 

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B. Compliance Calculation Section 8.8(b) — Fixed Charge Coverage Ratio
       
 
       
(a) Annualized EBITDA for the immediately proceeding twelve (12) month period:
Item (j) from the previous section (“Compliance Calculation Section 8.8(a) —
Senior Secured Leverage Ratio”)
       
 
       
(b) Capital Expenditures for the immediately proceeding twelve (12) month period
  $                       
 
       
(c) Capital Expenditures directly related to new sales to, or made at the
request of, Persons to whom any Borrower Party has agreed to provide goods
and/or services pursuant to a written agreement, for the immediately proceeding
twelve (12) month period
  $                       
 
       
(d) Capital Expenditures, to the extent financed with Funded Debt for Borrowed
Money (other than Funded Debt incurred under the Credit Agreement), for the
immediately proceeding twelve (12) month period
  $                       
 
       
(e) Capital Expenditures made with the proceeds of dispositions permitted under
the Credit Agreement for the immediately proceeding twelve (12) month period
  $                       
 
       
(f) Capital Expenditures made with the proceeds of equity issuances permitted
under the Credit Agreement for the immediately proceeding twelve (12) month
period
  $                       
 
       
(g) (b) — (c) — (d) — (e) — (f)
  $                       
 
       
(h) (a) — (g)
  $                       
 
       
(i) Interest Expense for the immediately proceeding twelve (12) month period:
  $                       
 
       
(j) Fixed Charge Coverage Ratio the immediately proceeding twelve (12) month
period: (h) : (i)
    ____:____  
 
       
In compliance?
  o Yes o No

 

 

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Schedule [4]

         
Leverage Ratio
       
 
       
(a) Funded Debt for Borrowed Money of the Borrowers and their Subsidiaries on a
consolidated basis, and without duplication, as of the applicable date of
determination
  $                       
 
       
(b) EBITDA: Item (i) from Section A of the previous schedule (“Compliance
Calculation Section 8.8(a) — Senior Secured Leverage Ratio”)
  $                       
 
       
(c) Annualized EBITDA (EBITDA for the most recently ended fiscal quarter,
multiplied by 4)
  $                       
 
       
(d) Leverage Ratio for the immediately proceeding twelve (12) month period: (a)
: (j)
    ____:____