Document:

exv10w2

 

Exhibit 10.2

U S AIRWAYS GROUP, INC.

2007 Performance-Based Award Program

(Established Effective March 26, 2007)

Section I. Purpose

The purpose of the US Airways Group, Inc. 2007 Performance-Based Award Program (the “Program”) is
to

	•	 	Focus management efforts on the creation of long-term stockholder value.

	 
	•	 	Encourage strategic decision-making by providing rewards for the long-term achievement of Company goals.

The Program sets forth the terms and conditions for performance cash awards to be paid to
eligible officers under the US Airways Group, Inc. 2005 Equity Incentive Plan (the “Plan”).

Section II. Eligibility Criteria

Officers of US Airways Group, Inc. (the “Company”) or an Affiliate (as that term is defined in the
Plan) whose responsibilities have a direct and significant impact on Company results are eligible
to participate in the Program. The Compensation and Human Resources Committee of the Board of
Directors of the Company (the “Committee”) will, at its sole discretion, select individual officers
to participate in the Program (each a “Participant”). Participation in one performance cycle (as
such term is defined in Section IV) under the Program does not assure participation in any other
performance cycle.

A person who is hired by the Company (or an Affiliate) as an eligible officer or promoted to
eligible officer status, in either case after the commencement of a performance cycle (as such term
is defined in Section IV) shall participate in performance cycles on such basis, if any, as the
Committee may provide.

Section III. Award Levels

Participants have the opportunity to earn cash awards under the Program based on the achievement of
long-term Company performance and, with certain exceptions set forth in Section V, continued active
employment by the Company (or an Affiliate) in an eligible position through the date of payment of
the cash awards. Threshold, target, and maximum award levels are set forth below. All award
levels are expressed as a percentage of a Participant’s base salary, as in effect on the date of
payment of the cash award.

 

Award Levels Expressed as 

Percentages of Base Salary

	 	 	 	 	 	 	 	 	 	 	 	 	 
	Officer Level	 	Threshold	 	Target	 	Maximum
	CEO
	 	 	54	%	 	 	125	%	 	 	200	%
	President
	 	 	49	%	 	 	115	%	 	 	200	%
	EVP
	 	 	43	%	 	 	100	%	 	 	175	%
	SVP
	 	 	30	%	 	 	70	%	 	 	140	%
	VP
	 	 	20	%	 	 	45	%	 	 	90	%

Performance below the threshold level for any performance cycle (as such term is defined in
Section IV) will result in no cash award. The maximum award for any performance cycle is two times
the target award, subject to further limitations contained in the Plan.

Section IV. Award Calculation

Awards are calculated based on Total Stockholder Return (“TSR”) of the Company over the performance
cycle (as such term is defined in this section) relative to the TSRs of a pre-defined competitive
peer group. TSR, for purposes of this Program, is the rate of return, including both the price
appreciation of the Company’s Class A Common Stock or a competitive peer company’s common stock and
the reinvestment of any dividends declared on such common stock, over the relevant performance
cycle. In order to smooth out market fluctuations, the average daily closing price (adjusted for
splits and dividends) for the common stock of the Company and of the companies in the pre-defined
competitive peer group for the three months prior to the first and last days of the performance
cycle will be used to determine TSR. Daily closing price of a share of common stock is the stock
price at the close of trading (4:00 p.m. Eastern Time) of the national exchange (New York Stock
Exchange, the Nasdaq Stock Market or the American Stock Exchange) on which such stock is traded.

	A)	 	Performance Cycles

	 
	 	 	A performance cycle, over which TSR is measured, is the three-year period beginning January
1 of a given year and ending December 31 of the second following year (each a “Performance
Cycle”). The Committee, in its sole discretion, may authorize Performance Cycles, and it is
anticipated, although not assured, that a three-year Performance Cycle will begin each
January 1.

	 
	 	 	All officers of the Company (or an Affiliate) otherwise eligible to participate in the
Program will be eligible to participate in a Performance Cycle commencing January 1, 2007,
and ending December 31, 2009.

	 
	B)	 	Peer Group and Award Payout Percentages

	 
	 	 	The competitive peer group consists of the following thirteen companies: AirTran Holdings,
Inc., Alaska Air Group, Inc., AMR Corporation, Continental Airlines, Inc., Delta Air Lines,
Inc., Frontier Airlines Holdings, Inc., Hawaiian Holdings, Inc., JetBlue Airways
Corporation, Midwest Air Group, Inc., Northwest Airlines Corporation, Southwest Airlines Co.
and UAL Corporation. Such competitive peer group is subject to

Page 2

 

	 	 	modification, in the Committee’s sole discretion, to take account of unforeseen events such
as mergers, dispositions, bankruptcies and other significant business changes.

Award payout percentages will be based on the TSR of the Company relative to the TSRs of
competitive peer group companies, as follows:

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	Company TSR	 	Payout as a %	 	 	 	 
	Relative Rank	 	of Base Salary	 	 	 	 
	 	 	VP	 	SVP	 	EVP	 	President	 	CEO	 	 	 	 
	 
	1-2 of 13
	 	 	90	%	 	 	140	%	 	 	175	%	 	 	200	%	 	 	200	%	 	(Maximum)
	 
	3 of 13
	 	 	81	%	 	 	126	%	 	 	160	%	 	 	183	%	 	 	185	%	 	 	 	 
	4 of 13
	 	 	72	%	 	 	112	%	 	 	145	%	 	 	166	%	 	 	170	%	 	 	 	 
	5 of 13
	 	 	63	%	 	 	98	%	 	 	130	%	 	 	149	%	 	 	155	%	 	 	 	 
	6 of 13
	 	 	54	%	 	 	84	%	 	 	115	%	 	 	132	%	 	 	140	%	 	 	 	 
	 
	7 of 13
	 	 	45	%	 	 	70	%	 	 	100	%	 	 	115	%	 	 	125	%	 	(Target)
	 
	8 of 13
	 	 	20	%	 	 	30	%	 	 	43	%	 	 	49	%	 	 	54	%	 	(Threshold)
	 
	9-13 of 13
	 	 	0	%	 	 	0	%	 	 	0	%	 	 	0	%	 	 	0	%	 	 	 	 

Section V. Award Payment Timing, Early Payment and Termination

If the TSR of the Company is at or above the threshold for a Performance Cycle, awards will be paid
in cash within sixty (60) days following the end of the Performance Cycle. For example, awards for
the Performance Cycle that runs from January 1, 2007, through December 31, 2009 will be paid no
later than March 1, 2010. Payments will be subject to all required federal, state, and local tax
withholding.

In the event of the termination of a Participant’s employment with the Company (or an Affiliate) on
account of retirement (as defined below), total disability (as defined in the long term disability
plan under which the Participant is covered) or death, (i) the Company shall pay to the Participant
(or the Participant’s estate in the case of death), at the same time as awards, if any, are paid to
other Participants for the same Performance Cycle, the award that the Participant would have earned
and received with respect to the Performance Cycle, if any, that ends with the calendar year in
which such termination occurs, had the Participant’s employment continued until the award payment
date for such Performance Cycle. For purposes of the foregoing,

Page 3

 

“retirement” shall mean the termination of the Participant’s employment with the Company (or an
Affiliate) after attainment of age fifty-five (55) and completion of ten (10) years of service with
the Company (or an Affiliate). Awards for any other Performance Cycles will not be earned or paid.

If the Participant’s employment with the Company (or an Affiliate) is terminated for any reason
other than retirement, total disability or death (whether such termination is voluntary or
involuntary), no awards will be earned or paid under the Program with respect to any Performance
Cycles.

Section VI. Program Administration

The Program will be administered by the Committee in accordance with the Plan and in a manner that
satisfies the requirements of Section 162(m) of the Internal Revenue Code for qualified
“performance-based” compensation.

Awards generally are calculated and distributed as provided in Sections IV and V; provided,
however, that no award payments will be made unless the Committee certifies in writing (a) the
relative TSR ranking of the Company, (b) that all other material terms of the Program have been
satisfied and (c) that payments to Participants in stated amounts are appropriate under the
Program.

Section VII. Absence of Program Funding; No Equity Interest

Benefits under the Program shall be paid from the general funds of the Company, and a Participant
(or the Participant’s estate in the event of death) shall be no more than an unsecured general
creditor of the Company with no special or prior right to any assets of the Company.

Nothing contained in the Program shall be deemed to give any Participant any equity or other
interest in the assets, business or affairs of the Company or any related company. It is not
intended that a Participant’s interest in the Program shall constitute a security or equity
interest within the meaning of any state or federal securities laws.

Section VIII. No Transferability

A Participant shall not have any right to transfer, sell, alienate, assign, pledge, mortgage,
collateralize or otherwise encumber any of the payments provided by this Program.

Section IX. No Employment Rights

This Program is not intended to be a contract of employment. Both the Participant and the Company
have the right to end their employment relationship with or without cause or notice.

Section X. Interpretation, Amendment and Termination

The Committee shall have the power to interpret all provisions of the Program, which
interpretations shall be final and binding on all persons. The provisions of this document shall

Page 4

 

supersede all provisions of any and all such prior documents relating to the Program and its
subject matter. However, if the provisions of this document conflict with any provision of the
Plan, the provisions set forth in the Plan shall govern in all cases. The laws of the State of
Delaware shall govern all questions concerning the construction, validity and interpretation of the
Program, without regard to such state’s conflict of laws rules.

The Committee reserves the right to amend or terminate the Program at any time, with or without
prior notice; provided, however, that all amendments to the Program shall preserve the
qualification of awards under the Program as “performance-based” compensation under Section 162(m)
of the Internal Revenue Code. Notwithstanding the foregoing, (a) except as provided in Section IV
with respect to the calculation of TSR and in the following clause (b), the Committee may not amend
the Program in a way that would materially impair the rights of a Participant with respect to a
Performance Cycle that already has begun at the time of such amendment, unless such Participant has
consented in writing to such amendment; and (b) in the event of any act of God, war, natural
disaster, aircraft grounding, revocation of operating certificate, terrorism, strike, lockout,
labor dispute, work stoppage, fire, epidemic or quarantine restriction, act of government, critical
materials shortage, or any other act beyond the control of the Company, whether similar or
dissimilar (each a “Force Majeure Event”), which Force Majeure Event affects the Company or its
subsidiaries or other affiliates, the Committee, in its sole discretion, may (i) terminate or (ii)
suspend, delay, defer (for such period of time as the Committee may deem necessary), or substitute
any awards due currently or in the future under the Program, including, but not limited to, any
awards that have accrued to the benefit of Participants but have not yet been paid.

Page 5exv10w1

 

Exhibit 10.1

AMENDMENT NO. 2

TO

LOAN AND SECURITY AGREEMENT

     This Amendment No. 2 to Loan and Security Agreement (this “Amendment”) is entered
into this 20th day of April, 2007, by and among Silicon Valley Bank, a California
corporation (“Bank”), and Covad Communications Group, Inc., a Delaware corporation
(“Group”), Covad Communications Company, a California corporation (“Company”), and
NextWeb, Inc., a California corporation (“Nextweb”, together with Company and Group,
individually a “Borrower” and collectively, “Borrowers”). Capitalized terms used herein without
definition shall have the same meanings given them in the Loan Agreement (as defined below).

Recitals

     A. Borrowers and Bank have entered into that certain Loan and Security Agreement dated as of
April 13, 2006 (as may be amended, restated, or otherwise modified, the “Loan Agreement”), pursuant
to which the Bank has agreed to extend and make available to Borrowers certain advances of money.

     B. Subject to the representations and warranties of Borrowers herein and upon the terms and
conditions set forth in this Amendment, Bank is willing to so amend the Loan Agreement.

agreement

     NOW, THEREFORE, in consideration of the foregoing Recitals and intending to be legally bound,
the parties hereto agree as follows:

1. Amendments to Loan Agreement.

          1.1 Section 6.7 Financial Covenants. Section 6.7 of the Loan Agreement is amended and restated
in its entirety with the following:

          6.7 Financial Covenants.

          (a) Borrowers shall maintain, measured as of the last day of each fiscal quarter
during the following periods, on a consolidated basis with respect to Group and its
Subsidiaries, Tangible Net Worth of at least the following:

	 	 	 	 	 
	Period
	 	Tangible Net Worth
	Effective Date through March 31, 2006
	 	$	40,000,000	 
	April 1, 2006 through June 30, 2006
	 	$	35,000,000	 
	July 1, 2006 through September 30, 2006
	 	$	20,000,000	 
	October 1, 2006 through December 31, 2006
	 	$	10,000,000	 

 

 

	 	 	 	 	 
	Period
	 	Tangible Net Worth
	January 1, 2007 through March 31, 2007
	 	$	32,000,000	 
	April 1, 2007 through June 30, 2007
	 	$	22,000,000	 
	July 1, 2007 through September 30, 2007
	 	$	16,000,000	 
	October 1, 2007 through December 31, 2007 and each
fiscal quarter thereafter
	 	$	8,000,000	 

          (b) Borrowers shall maintain, measured as of the last day of each month, on a consolidated
basis with respect to Group and its Subsidiaries:

          Liquidity Coverage. A ratio of unrestricted cash and Cash Equivalents plus short term
and long term Investments (each determined according to GAAP) plus 25% of Eligible Accounts to the
outstanding Obligations hereunder of not less than (1) 1.50:1.00 measured as of the last day of
March, June, September and December and (2) 1.25:1.00 measured as of the last day of any other
month.

          (c) Capital expenditures (as determined according to GAAP) shall not exceed (1) $30,000,000
for the fiscal year ending 2006, (2) $35,000,000 for the fiscal year ending 2007 and (3)
$35,000,000 for the fiscal year ending 2008; provided however, Fully Funded Capital Expenditures
will be excluded from such calculations.

          1.2 Section 6.2(b) Financial Statements, Reports, Certificates. Section 6.2(b) of the Loan
Agreement is amended and restated in its entirety with the following:

          (b) [Intentionally Blank]

          1.3 The definition of “Revolving Line Maturity Date” in Section 13.1 of the of the Loan
Agreement is amended and restated in its entirety with the following::

          “Revolving Line Maturity Date” is April 19, 2009.

          1.4 Exhibit D, “Compliance Certificate” of the Loan Agreement is amended and restated in its
entirety and replaced with Exhibit A attached hereto.

     2. Borrowers’ Representations And Warranties. Each Borrower represents and warrants
that:

          (a) immediately upon giving effect to this Amendment (i) the representations and warranties
contained in the Loan Documents are true, accurate and complete in all material respects as of the
date hereof (except to the extent such representations and warranties relate to an earlier date, in
which case they are true and correct as of such date), and (ii) no Event of Default has occurred
and is continuing;

          (b) each Borrower has the corporate power and authority to execute and deliver this Amendment
and to perform its obligations under the Loan Agreement, as amended by this Amendment;

2

 

          (c) the certificate of incorporation or articles of incorporation (as applicable), bylaws and
other organizational documents of each Borrower delivered to Bank on the Effective Date remain
true, accurate and complete and have not been amended, supplemented or restated and are and
continue to be in full force and effect;

          (d) the execution and delivery by each Borrower of this Amendment and the performance by each
Borrower of its obligations under the Loan Agreement, as amended by this Amendment, have been duly
authorized by all necessary corporate action on the part of each Borrower;

          (e) this Amendment has been duly executed and delivered by each Borrower and is the binding
obligation of such Borrower, enforceable against it in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization, liquidation, moratorium or
other similar laws of general application and equitable principles relating to or affecting
creditors’ rights; and

          (f) as of the date hereof, such Borrower has no defenses against the obligations to pay any
amounts under the Obligations. Each Borrower acknowledges that Bank has acted in good faith and
has conducted in a commercially reasonable manner its relationships with such Borrower in
connection with this Amendment and in connection with the Loan Documents.

          Each Borrower understands and acknowledges that Bank is entering into this Amendment in
reliance upon, and in partial consideration for, the above representations and warranties, and
agrees that such reliance is reasonable and appropriate.

     3. Limitation. The amendments set forth in this Amendment shall be limited precisely
as written and shall not be deemed (a) to be a modification of any other term or condition of the
Loan Agreement or of any other instrument or agreement referred to therein or to prejudice any
right or remedy which Bank may now have or may have in the future under or in connection with the
Loan Agreement or any instrument or agreement referred to therein; or (b) to be a consent to any
future amendment or modification to any instrument or agreement the execution and delivery of which
is consented to hereby. Except as expressly amended hereby, the Loan Agreement shall continue in
full force and effect.

     4. Effectiveness. This Amendment shall become effective upon (a) the receipt by Bank
of this Amendment duly executed by Borrowers and reaffirmation of Unconditional Secured Guarantees
executed by each of the Guarantors attached hereto as Exhibit B, (b) receipt by Bank of an
amendment fee equal to $110,000, (c) receipt by Bank of certificates of Borrowers’ good standings
from their respective states of organization and (d) payment by Borrowers of all Bank Expenses
(including all reasonable attorneys’ fees and reasonable expenses) incurred through the date of
this Amendment.

     5. Counterparts. This Amendment may be signed in any number of counterparts, and by
different parties hereto in separate counterparts, with the same effect as if

3

 

the signatures to
each such counterpart were upon a single instrument. All counterparts shall be deemed an original
of this Amendment.

     6. Integration. This Amendment and any documents executed in connection herewith or
pursuant hereto contain the entire agreement between the parties with respect to the subject matter
hereof and supersede all prior agreements, understandings, offers and negotiations, oral or
written, with respect thereto and no extrinsic evidence whatsoever may be introduced in any
judicial or arbitration proceeding, if any, involving this Amendment; except that any financing
statements or other agreements or instruments filed by Bank with respect to Borrowers shall remain
in full force and effect.

     7. Governing Law; Venue. THIS AMENDMENT SHALL BE GOVERNED BY AND SHALL BE CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA. Borrowers and Bank each
submit to the exclusive jurisdiction of the State and Federal courts in Santa Clara County,
California.

[signature page follows]

4

 

     IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed as of the
date first written above.

	 	 	 	 	 
	BORROWERS:
	 	 
	 
	 	 	 	 
	COVAD COMMUNICATIONS GROUP, INC.	 	 
	 
	 	 	 	 
	By

	 	/s/ Justin Spencer	 	 
	Name:

	 	 

Justin Spencer
	 	 
	Title:

	 	Acting Chief Financial Officer	 	 
	 
	 	 	 	 
	COVAD COMMUNICATIONS COMPANY	 	 
	 
	 	 	 	 
	By

	 	/s/ Justin Spencer	 	 
	Name:

	 	 

Justin Spencer
	 	 
	Title:

	 	Acting Chief Financial Officer
	 	
	 
	 	 	 	 
	NEXTWEB, INC.	 	 
	 
	 	 	 	 
	By

	 	/s/ Justin Spencer	 	 
	
Name: 

Title:

	 	 

Justin Spencer

Acting Chief Financial Officer
	 	 
	 
	 	 	 	 
	BANK:	 	 
	 
	 	 	 	 
	SILICON VALLEY BANK	 	 
	 
	 	 	 	 
	By

	 	/s/ Tom Smith	 	 
	Name:

	 	 

Tom Smith
	 	 

	Title:

	 	Senior Relationship Manager
	 	
	 
	Effective Date: April 20, 2007

	 	

 

 

EXHIBIT A

EXHIBIT D

COMPLIANCE CERTIFICATE

	 	 	 	 	 
	TO:

	 	SILICON VALLEY BANK
	 	Date:                                         
	FROM:

	 	COVAD COMMUNICATIONS GROUP, INC. and	 	 
	 

	 	COVAD COMMUNICATIONS COMPANY	 	 

The undersigned authorized officers of COVAD COMMUNICATIONS GROUP, INC. (“Group”), COVAD
COMMUNICATIONS COMPANY (“Company”), and NEXTWEB, INC. (“NextWeb”, together with Company and Group,
each individually a “Borrower” and collectively, “Borrowers”) certify on behalf of the Borrower for
which the authorizing officer in question is signing that under the terms and conditions of the
Loan and Security Agreement among Borrowers and Bank (the “Agreement”), (1) such Borrower is in
complete compliance for the period ending                      with all required covenants except as
noted below, (2) there are no Events of Default regarding such Borrower, (3) all representations
and warranties in the Agreement regarding such Borrower are true and correct in all material
respects on this date except as noted below; provided, however, that such materiality qualifier
shall not be applicable to any representations and warranties that already are qualified or
modified by materiality in the text thereof; and provided, further that those representations and
warranties expressly referring to a specific date shall be true, accurate and complete in all
material respects as of such date, (4) such Borrower, and each of Group’s Subsidiaries, has timely
filed all required tax returns and reports, and each Borrower has timely paid all foreign, federal,
state and local taxes, assessments, deposits and contributions owed by such Borrower except as
otherwise permitted pursuant to the terms of Section 5.9 of the Agreement, and (5) no Liens have
been levied or claims made against such Borrower or any of Group’s Subsidiaries relating to unpaid
employee payroll or benefits of which such Borrower has not previously provided written
notification to Bank. Attached are the required documents supporting the certification. The
undersigned certify that these are prepared in accordance with generally GAAP consistently applied
from one period to the next except as explained in an accompanying letter or footnotes. The
undersigned acknowledge that no borrowings may be requested at any time or date of determination
that such Borrower is not in compliance with any of the terms of the Agreement, and that compliance
is determined not just at the date this certificate is delivered. Capitalized terms used but not
otherwise defined herein shall have the meanings given them in the Agreement.

Please indicate compliance status by circling Yes/No under “Complies” column.

	 	 	 	 	 	 	 
	Reporting Covenant
	 	Required	 	Complies
	Monthly CC

	 	Monthly within 30 days if any Obligations
are outstanding at such time
	 	Yes
	 	No
	 
	 	 	 	 	 	 
	Annual financial statement (CPA Audited) + CC

	 	FYE within 90 days
	 	Yes
	 	No
	 
	 	 	 	 	 	 
	10-Q, 10-K and 8-K

	 	Within 5 days after filing with SEC
	 	Yes
	 	No
	 
	 	 	 	 	 	 
	Borrowing Base Certificate A/R & A/P Agings
when Advances are requested

	 	Monthly within 30 days
	 	Yes
	 	No

1

 

	 	 	 	 	 	 	 
	Financial Covenant
	 	Required 	 	Actual	 	Complies
	Maintain on a Quarterly Basis:
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Minimum Tangible Net Worth
	 	Through 3/31/06  $40,000,000	 	 	 	 
	 
	 	4/1/06-6/30/06     $35,000,000	 	 	 	 
	 
	 	7/1/06-9/30/06     $20,000,000	 	 	 	 
	 
	 	10/1/06-12/31/06 $10,000,000	 	 	 	 
	 
	 	1/1/07 3/31/07     $32,000,000	 	 	 	 
	 
	 	4/1/07-6/30/07     $22,000,000	 	 	 	 
	 
	 	7/1/07-9/30/07     $16,000,000	 	 	 	 
	 
	 	10/1/07-12/31/07 and each fiscal	 	 	 	 
	 
	 	quarter thereafter   $8,000,000	 	$                    	 	Yes   No
	 
	 	 	 	 	 	 
	Maintain on a Monthly Basis:
	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	Minimum Liquidity Coverage
	 	1.50:1.00 measured as of the	 	 	 	 
	 
	 	last day of March, June,	 	 	 	 
	 
	 	September and December	 	 	 	 
	 
	 	1.25:1.00 measured as of the	 	 	 	 
	 
	 	last day of any other month	 	$                    	 	$                    
	 
	 	 	 	 	 	 
	Capital Expenditures
	 	Fiscal year 2006  $30,000,000	 	 	 	 
	 
	 	Fiscal year 2007  $35,000,000	 	 	 	 
	 
	 	Fiscal year 2008  $35,000,000	 	$                    	 	$                    

     The following financial covenant analys[is][es] and information set forth in Schedule 1
attached hereto are true and accurate as of the date of this Certificate.

     The following are the exceptions with respect to the certification above: (If no exceptions
exist, state “No exceptions to note.”)

 

 

 

	 	 	 	 	 	 	 	 	 
	COVAD COMMUNICATIONS GROUP, INC.	 	BANK USE ONLY	 	 
	 
	 	 	 	 	 	 	 	 
	By

	 	 	 	Received by:	 	 	 	 
	 

	 	 
	 	 	 	 	 	 
	Name:

	 	 	 	 	 	  authorized signer	 	 
	 

	 	 	 	 	 	 	 	 
	Title:

	 	 	 	Date:	 	 	 	 
	 

	 	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	COVAD COMMUNICATIONS COMPANY	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	By

	 	 	 	Verified:	 	 	 	 
	 

	 	 
	 	 	 	 	 	 
	Name:

	 	 	 	 	 	  authorized signer	 	 
	 

	 	 	 	 	 	 	 	 
	Title:

	 	 	 	Date:	 	 	 	 
	 

	 	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	Compliance Status: Yes No	 	 
	 
	 	 	 	 	 	 	 	 
	NEXTWEB, INC.	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	By
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	Name:
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	Title:
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 

2

 

Schedule 1 to Compliance Certificate

Financial Covenants of Borrowers

Dated:                     

I. Tangible Net Worth (Section 6.7(a))

Required: $___

	 	 	 	 	 
	Effective Date through March 31, 2006
	 	$	40,000,000	 
	 
	April 1, 2006 through June 30, 2006
	 	$	35,000,000	 
	July 1, 2006 through September 30, 2006
	 	$	20,000,000	 
	October 1, 2006 through December 31, 2006
	 	$	10,000,000	 
	January 1, 2007 through March 31, 2007
	 	$	32,000,000	 
	April 1, 2007 through June 30, 2007
	 	$	22,000,000	 
	July 1, 2007 through September 30, 2007
	 	$	16,000,000	 
	October 1, 2007 through December 31, 2007 and each fiscal
quarter thereafter
	 	$	8,000,000	 

Actual:

	 	 	 	 	 
	A. Tangible Net Worth
	 	$	                    	 

Is line A equal to or greater than the corresponding amount for the quarter referenced above?

	 	 	 
	___ No, not in compliance

	 	___ Yes, in compliance

II. Liquidity Coverage (Section 6.7(b)

Required:  1.50:1.00 measured as of the last day of March, June, September and December

1.25:1.00 measured as of the last day of any other month

Actual:

	 	 	 	 	 
	A. Unrestricted cash and Cash Equivalents
	 	$	                    	 
	B. 25% of Eligible Accounts
	 	$	                    	 
	C. Short term and long term Investments
	 	$	                    	 
	D. Liquidity (line A plus line B plus line C)
	 	$	                    	 
	E. Aggregate outstanding Obligations
	 	$	                    	 
	F. Liquidity Coverage (line D divided by line E)
	 	 	 	 

Is line C equal to or greater than 1.50:1:00 or 1.25:1.00, as applicable?

	 	 	 
	___ No, not in compliance

	 	___ Yes, in compliance

III. Capital Expenditures (Section 6.7(c)

			
	Required:	 	$30,000,000 for the fiscal year ending 2006

$35,000,000 for the fiscal year ending 2007

$35,000,000 for the fiscal year ending 2008

Fully Funded Capital Expenditures will be excluded from such calculations.

Actual:

Is the actual capital expenditures less than the corresponding amount for the quarter referenced
above?

	 	 	 
	___ No, not in compliance
	 	___ Yes, in compliance

3

 

EXHIBIT B

Reaffirmation of Unconditional Secured Guaranty

     This Reaffirmation of Unconditional Secured Guaranty is entered into as of April 20, 2007, by
each of the undersigned (individually a “Guarantor” and collectively, the “Guarantors”) in favor of
SILICON VALLEY BANK (“Bank”).

     Whereas, Guarantors executed and delivered to Bank the Unconditional Secured Guarantees dated
as of April 13, 2006 (the “Guaranty”) with respect to the obligations of Covad Communications
Group, Inc., a Delaware corporation (“Group”), Covad Communications Company, a
California corporation (“Company”), and NextWeb, Inc., a California corporation
(“Nextweb”, together with Company and Group, individually a “Borrower” and collectively,
“Borrowers”) under a Loan and Security Agreement dated as of April 13, 2006 (the “Loan Agreement”)
by and among Borrowers and Bank; and

     Whereas, Borrowers and Bank are amending the Loan Agreement pursuant to that certain Amendment
No.2 to the Loan and Security Agreement dated as of the date hereof (“Amendment No. 2”) to, among
other things, increase the Revolving Line Maturity Date from April 13, 2008 to April 19, 2009
(undefined terms herein shall have the meanings provided in the Loan Agreement).

     Now therefore, for valuable consideration, receipt of which is acknowledged, each Guarantor
hereby agrees as follows:

     1. Reaffirmation of Guaranty. Each Guarantor hereby ratifies and reaffirms its obligations
under its Guaranty and agrees that none of the modifications to the Loan Agreement as set forth in
Amendment No. 2 shall impair such Guarantor’s obligations under its Guaranty or Bank’s rights under
its Guaranty.

     2. Continuing Effect and Absence of Defenses. Each Guarantor acknowledges that its Guaranty
is still in full force and effect and that such Guarantor has no defenses, other than actual
payment of the guaranteed obligations, to enforcement of the Guaranty. Each Guarantor waives any
and all defenses to enforcement of the Guaranty that might otherwise be available as a result of
the amendment of the Loan Agreement.

	 	 	 	 	 
	 

	 	DIECA COMMUNICATIONS, INC.
	 	 
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Title:	 	 
	 
	 	 	 	 
	 

	 	LASER LINK.NET, INC.	 	 
	 
	 	 	 	 
	 

	 	By:	 	 
	 

	 	 	 	 
	 

	 	Title:

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