Eleventh Amendment to the Amended & Restated Credit Agreement, dated 01/30/2004


 EXHIBIT 10.3 
  
 AGREEMENT AND ELEVENTH AMENDMENT, dated as of January 27, 2004 (this “Eleventh Amendment”), among FIBERNET
OPERATIONS, INC., a Delaware corporation (“FiberNet”), DEVNET L.L.C., a Delaware limited liability company (“Devnet” and, together with FiberNet, the “Borrowers”), and the financial institutions
party to the Credit Agreement (as defined below) as lenders (collectively, the “Lenders”), to the AMENDED AND RESTATED CREDIT AGREEMENT, dated as of February 9, 2001 (the “CreditAgreement”), among the
Borrowers, the Lenders, DEUTSCHE BANK AG NEW YORK BRANCH (“DBAG”), as administrative agent for the Lenders (in such capacity, the “Administrative Agent”), TD SECURITIES (USA) INC. (“TD”), as
syndication agent for the Lenders (in such capacity, the “Syndication Agent”), and WACHOVIA INVESTORS, INC., as documentation agent for the Lenders (in such capacity, the “Documentation Agent”). 
  
 RECITALS 
  
 WHEREAS, the Borrowers wish to make certain amendments to the Credit Agreement which are more particularly described herein.

  
 AGREEMENT 
  
 NOW, THEREFORE, in consideration of the promises and the mutual agreements
herein contained and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto, intending to be legally bound, agree as follows: 
  
 ARTICLE I. 
 DEFINITIONS 
  
 Capitalized terms used but not otherwise defined herein shall have the meanings given to such terms in the Credit Agreement. 
  
 ARTICLE II. 
 AMENDMENTS

  
 Section 2.01 Definitions. 
  
 (a) The following defined terms are added to Section
1.1 of the Credit Agreement in their proper alphabetical order: 
  
 “Gateway Asset Purchase Agreement” means the Asset Purchase Agreement, dated as of December 31, 2003 among gateway.realty.newjersey.llc, FiberNet Telecom Group, Inc. and Local Fiber, LLC. 
  
 “Gateway Transaction Equity” means the issuance on or after
January 27, 2004 but on or prior to March 26, 2004 of common stock by the Parent, which common stock shall be valued at not less than $8,000,000.00 and which shall result in Net Proceeds of not less than $7,360,000.00. 






 (b) the definition of “Equity Financing Fee” is deleted in its entirety.

  
 Section 2.02 Prepayments Due to Issuance of Debt or
Equity. 
  
 (a) Section 2.5.B.(iii)(a)
of the Credit Agreement is amended by (i) replacing the words “Seventh Amendment” in the fifth line thereof with the words “Eleventh Amendment” and (ii) deleting the table therein in its entirety and replacing it with the
following table: 
  

			
	 Date of Reduction

	  	 Aggregate Reduction
 (Expressed as a
 Percentage)


	 03/31/2004
	  	2.00%
	 06/30/2004
	  	2.00%
	 9/30/2004
	  	2.00%
	 12/31/2004
	  	2.00%
	 03/31/2005
	  	10.00%
	 06/30/2005
	  	10.00%
	 9/30/2005
	  	10.00%
	 12/31/2005
	  	10.00%
	 03/31/2006
	  	12.00%
	 06/30/2006
	  	12.00%
	 9/30/2006
	  	12.00%
	 12/31/2006
	  	12.00%
	 Maturity Date
	  	 4.00% or any greater
 amount
remaining


  
 (b)
Section 2.5.B.(iii)(d) of the Credit Agreement is amended by (i) deleting the word “and” which appears immediately before clause (xi), (ii) adding a comma (“,”) immediately before clause (xi) and (iii) adding the following
clauses (xii) and (xiii) immediately prior to the words “in each case to prepay the Loans or permanently reduce the Commitments hereunder”: 
  
 “, (xii) up to $4,142,541.34 of the aggregate amount of such Net Proceeds received in respect of the Gateway Transaction Equity and
(xiii) fifty percent (50%) of the Net Proceeds in respect of any Gateway Transaction Equity in excess of $5,520,000.00” 
  

 2 







 Section 2.5D(iii) of the Credit Agreement shall be amended by adding to the last sentence thereof
a proviso (to appear immediately after the words “each such type of Loan”) as follows: 
  
 “, provided that mandatory prepayments of Loans made with the Net Proceeds of the Gateway Transaction Equity in an amount up to $1,377,458.66 shall
be made in direct order of maturity (assuming for such purpose that such Loans mature in the order in which the commitments in respect thereof are required to be reduced pursuant to Section 2.5.B.(iii)(a)” 
  

	Section	2.03 Use of Proceeds. 

  
 Section 5.12 of the Credit Agreement is amended by adding “City, New Jersey” immediately following the word “New York” and
prior to the word “Chicago” (i) in the eighth line thereof and (ii) in the fifteenth line thereof. 
  
 Section 2.04 Adjustments to Financial Covenants. 
  
 (a) Section 6.6.A. of the Credit Agreement is amended by deleting the table at the end thereof in its entirety and replacing it
with the following table: 
  

			
	 Date

	  	 Minimum Consolidated
 Revenue
 (in Dollars)


	 September 30, 2002
	  	27,095,700
	 December 31, 2002
	  	24,818,600
	 March 31, 2003
	  	23,211,600
	 June 30, 2003
	  	22,695,200
	 September 30, 2003
	  	24,538,700
	 December 31, 2003
	  	26,103,900
	 March 31, 2004
	  	26,798,800
	 June 30, 2004
	  	27,457,600
	 September 30, 2004
	  	27,855,600
	 December 31, 2004
	  	28,799,500
	 March 31, 2005
	  	30,246,100
	 June 30, 2005
	  	31,922,000

  

 3 








			
	 September 30, 2005
	  	33,830,100
	 December 31, 2005
	  	35,960,400
	 March 31, 2006
	  	38,415,100
	 June 30, 2006
	  	41,250,600
	 September 30, 2006
	  	44,467,100
	 December 31, 2006
	  	48,064,500

  
 (b)
Section 6.6.B. of the Credit Agreement is amended by deleting the table at the end thereof in its entirety and replacing it with the following table: 
  

			
	 Date

	  	 Minimum Consolidated
EBITDA
 (in Dollars)


	 September 30, 2002
	  	1,359,100
	 December 31, 2002
	  	1,805,000
	 March 31, 2003
	  	1,174,800
	 June 30, 2003
	  	31,600
	 September 30, 2003
	  	1,474,500
	 December 31, 2003
	  	1,769,500
	 March 31, 2004
	  	1,944,300
	 June 30, 2004
	  	1,900,200
	 September 30, 2004
	  	1,776,800
	 December 31, 2004
	  	2,945,300
	 March 31, 2005
	  	3,713,100
	 June 30, 2005
	  	4,652,400
	 September 30, 2005
	  	5,767,100

  

 4 








			
	 December 31, 2005
	  	7,047,600
	 March 31, 2006
	  	8,528,100
	 June 30, 2006
	  	10,243,800
	 September 30, 2006
	  	12,194,400
	 December 31, 2006
	  	14,379,400

  
 (c)
Section 6.6.C. of the Credit Agreement is amended by deleting the table at the end thereof in its entirety and replacing it with the following table: 
  

			
	 Date

	  	Maximum Cumulative
Consolidated Capital
Expenditures
From September 30, 2002
(In Dollars)


	 September 30, 2002
	  	550,000
	 December 31, 2002
	  	1,650,000
	 March 31, 2003
	  	3,186,700
	 June 30, 2003
	  	4,262,500
	 September 30, 2003
	  	5,404,300
	 December 31, 2003
	  	3,329,200
	 March 31, 2004
	  	4,390,300
	 June 30, 2004
	  	5,368,400
	 September 30, 2004
	  	6,213,500
	 December 31, 2004
	  	7,060,200
	 March 31, 2005
	  	8,036,600
	 June 30, 2005
	  	9,013,000
	 September 30, 2005
	  	9,989,300

  

 5 








			
	 December 31, 2005
	  	10,965,700
	 March 31, 2006
	  	12,283,200
	 June 30, 2006
	  	13,600,600
	 September 30, 2006
	  	14,918,100
	 December 31, 2006
	  	16,235,600

  
 (d)
Section 6.6.D. of the Credit Agreement is amended by deleting the table at the end thereof in its entirety and replacing it with the following table: 
  

			
	 Date

	  	 Consolidated Leverage Ratio


	 December 31, 2003
	  	12.00 to 1.00
	 March 31, 2004
	  	11.50 to 1.00
	 June 30, 2004
	  	11.50 to 1.00
	 September 30, 2004
	  	11.30 to 1.00
	 December 31, 2004
	  	7.10 to 1.00
	 March 31, 2005
	  	5.20 to 1.00
	 June 30, 2005
	  	3.75 to 1.00
	 September 30, 2005
	  	2.75 to 1.00
	 December 31, 2005
	  	2.00 to 1.00
	 March 31, 2006
	  	2.00 to 1.00
	 June 30, 2006
	  	2.00 to 1.00
	 September 30, 2006
	  	2.00 to 1.00
	 December 31, 2006
	  	2.00 to 1.00

  

 6 







 (e) Section 6.6.E. of the Credit Agreement is amended by deleting the table at the
end thereof in its entirety and replacing it with the following table: 
  

			
	 Date

	  	 Consolidated Interest
Coverage Ratio


	 December 31, 2003
	  	1.50 to 1.00
	 March 31, 2004
	  	1.50 to 1.00
	 June 30, 2004
	  	1.50 to 1.00
	 September 30, 2004
	  	1.50 to 1.00
	 December 31, 2004
	  	2.30 to 1.00
	 March 31, 2005
	  	2.95 to 1.00
	 June 30, 2005
	  	3.85 to 1.00
	 September 30, 2005
	  	5.10 to 1.00
	 December 31, 2005
	  	6.90 to 1.00
	 March 31, 2006
	  	8.00 to 1.00
	 June 30, 2006
	  	8.00 to 1.00
	 September 30, 2006
	  	8.00 to 1.00
	 December 31, 2006
	  	8.00 to 1.00

  
 (f)
Section 6.6.F. of the Credit Agreement is amended by deleting the table at the end thereof in its entirety and replacing it with the following table: 
  

			
	 Date

	  	 Consolidated Fixed Charge
Coverage Ratio


	 December 31, 2003
	  	0.90 to 1.00
	 March 31, 2004
	  	0.40 to 1.00

  

 7 








			
	 June 30, 2004
	  	0.40 to 1.00
	 September 30, 2004
	  	0.40 to 1.00
	 December 31, 2004
	  	0.71 to 1.00
	 March 31, 2005
	  	0.58 to 1.00
	 June 30, 2005
	  	0.57 to 1.00
	 September 30, 2005
	  	0.59 to 1.00
	 December 31, 2005
	  	0.62 to 1.00
	 March 31, 2006
	  	0.71 to 1.00
	 June 30, 2006
	  	0.85 to 1.00
	 September 30, 2006
	  	1.01 to 1.00
	 December 31, 2006
	  	1.18 to 1.00

  
 Section 2.05
Gateway Acquisition. 
  
 Section 6.7 of the Credit
Agreement is amended by (a) deleting the word “or” that appears at the end of clause (ii) thereof, (b) deleting the period (“.”) at the end of clause (iii) thereof and replacing such period (“.”) with “; or”
and (c) inserting a new clause (iv) immediately thereafter which shall read as follows: 
  
 “(iv) Parent and Local Fiber may enter into and consummate the acquisition contemplated by the Gateway Asset Purchase Agreement.” 
  
 Section 2.06 Nature of Business. 
  
 Section 6.15 of the Credit Agreement is amended by adding “, New Jersey” immediately following the words
“New York City” and prior to the word “Chicago” in the fifth line thereof. 
  
 ARTICLE III. 
 MISCELLANEOUS 
  
 Section 3.01 Execution of this Eleventh Amendment; Effectiveness. 
  
 This Eleventh Amendment is executed and shall be construed as an amendment to
the Credit Agreement, and, as provided in the Credit Agreement, this Eleventh Amendment forms a part thereof. This Eleventh Amendment shall be effective only upon (i) the execution of the 
  

 8 







 Gateway Asset Purchase Agreement and the delivery of such fully executed document to the Administrative Agent and (ii)
the repricing of the warrants referred to in Section 3.08 hereof, provided that, notwithstanding such effectiveness, in the event that (x) the transactions contemplated by the Gateway Asset Purchase Agreement to occur at Closing (as defined
therein) have not been consummated by March 26, 2004 and (y) the Parent shall not have issued the Gateway Transaction Equity by March 26, 2004, then this Eleventh Amendment shall be void and all of the amendments set forth above shall have no
further effect. 
  
 Section 3.02 Representations and
Warranties. 
  
 The Borrowers hereby represent and warrant to
the Administrative Agent and the Lenders that (a) all consents, approvals and authorizations necessary for the Borrowers’ execution, delivery and performance of this Eleventh Amendment have been obtained or made and (b) this Eleventh Amendment
has been duly executed and delivered by the Borrowers and constitutes a legal, valid and binding obligation of each Borrower, enforceable against such Borrower in accordance with its terms. 
  
 Section 3.03 Waiver. 
  
 This Eleventh Amendment is made in amendment and modification of, but not
extinguishment of, the obligations set forth in the Credit Agreement and the other Loan Documents and, except as specifically modified pursuant to the terms of this Eleventh Amendment, the terms and conditions of the Credit Agreement and the other
Loan Documents remain in full force and effect. Nothing herein shall limit in any way the rights and remedies of the Administrative Agent and the Lenders under the Credit Agreement and the other Loan Documents. The execution and delivery by the
Lenders of this Eleventh Amendment shall not constitute a waiver, forbearance or other indulgence with respect to any Potential Event of Default or Event of Default now existing or hereafter arising. 
  
 Section 3.04 Counterparts; Integration; Effectiveness. 
  
 This Eleventh Amendment may be executed in counterparts (and by different
parties hereto on different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. This Eleventh Amendment and any agreements referred to herein constitute the entire
contract among the parties hereto relating to the subject matter hereof and supersede any and all previous agreements and understandings, oral or written, relating to the subject matter hereof. In addition to the requirements set forth above in
Section 3.01, this Eleventh Amendment shall become effective when it shall have been executed by each of the Borrowers and each of the Lenders, and thereafter shall be binding upon and inure to the benefit of the parties hereto and, subject
to and in accordance with Section 9.16 of the Credit Agreement, their respective successors and assigns. Delivery of an executed counterpart of a signature page of this Eleventh Amendment by telecopy shall be as effective as delivery of a
manually executed counterpart of this Eleventh Amendment. 
  

 9 







 Section 3.05 Severability. 
  
 Any provision of this Eleventh Amendment held to be invalid, illegal or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such invalidity, illegality or unenforceability without affecting the validity, legality or enforceability of the remaining provisions hereof, and the invalidity of a particular provision in a particular
jurisdiction shall not invalidate such provision in any other jurisdiction. 
  
 Section 3.06 Governing Law. 
  
 This Eleventh Amendment shall be construed in accordance with and governed by the laws of the State of New York without regard to the conflicts of law provisions thereof, other than Sections 5-1401 and 5-1402 of the General Obligations Law
of the State of New York. 
  
 Section 3.07 Headings.

  
 Article and Section headings used herein are for convenience
of reference only, are not part of this Eleventh Amendment and shall not affect the construction of, or be taken into consideration in interpreting, this Eleventh Amendment. 
  
 Section 3.08 Eleventh Amendment Fee. 
  
 The Borrower agrees to reprice a total of 379,230 shares of the warrants dated October 30, 2002 and November 11, 2002 and
held by the Lenders to $0.001 upon execution of this Eleventh Amendment in connection with the transactions contemplated herein. 
  
 [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK] 
  
  

 10 







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

			
	FIBERNET OPERATIONS, INC.
		
	By:	 	 
	 	 	

	 Name:
 Title:
	 	 


  
  

			
	DEVNET L.L.C.
		
	By:	 	 
	 	 	

	 Name:
 Title:
	 	 


  
  
  
 [SIGNATURES CONTINUED ON NEXT PAGE] 







			
	 DEUTSCHE BANK AG NEW YORK
 BRANCH, as a
Lender

		
	By:	 	 
	 	 	

	 Name:
 Title:
	 	 
		
	By:	 	 
	 	 	

	 Name:
 Title:
	 	 


  
  

			
	WACHOVIA INVESTORS, INC., as a Lender
		
	By:	 	 
	 	 	

	 Name:
 Title:
	 	 


  
  

			
	IBM CREDIT LLC, as a Lender
		
	By:	 	 
	 	 	

	 Name:
 Title: