<PAGE>
EXHIBIT 10.3
LOCK UP AGREEMENT
This Lock Up Agreement (the "Agreement") is made and entered into
as
of August 30, 2004, and sets forth certain
terms and conditions pursuant to
which Choice One Communications Inc.
("CWON") and certain of its affiliates
(collectively with CWON, the "Proposed
Debtors") will implement a restructuring
(the "Restructuring") on a consensual basis
with (i) the undersigned lenders
(the "Consenting Senior Lenders") under
that certain Third Amended and Restated
Credit Agreement dated as of September 13,
2002 (as amended, the "Credit
Agreement"), by and among CWON as
guarantor, certain subsidiaries of CWON, as
borrowers, General Electric Capital
Corporation, as administrative agent and
collateral agent (the "Senior Agent") and
various lenders (collectively, the
"Senior Lenders"; and the claims of the
Senior Lenders under or in connection
with the Credit Agreement are referred to
herein as "Senior Lender Claims"); and
(ii) the undersigned lenders (the
"Consenting Bridge Lenders"; and, together
with the Consenting Senior Lenders, the
"Consenting Lenders") under that certain
Bridge Financing Agreement dated as of
August 1, 2000 (as amended, the "Bridge
Loan Agreement") among CWON, Morgan Stanley
Senior Funding, Inc., as
administrative agent (the "Bridge Agent"),
and various lenders (collectively,
the "Bridge Lenders"; and the claims of the
Bridge Lenders in connection with
the Bridge Loan Agreement are referred to
herein as the "Bridge Lender Claims").
CWON, the Consenting Senior Lenders and the
Consenting Bridge Lenders are
referred to herein individually as a
"Party", and collectively as the "Parties".
The loans made under the Credit Agreement
are referred to herein as the "Senior
Loans". The loans made under the Bridge
Loan Agreement are referred to herein as
the "Bridge Loans".
1. Chapter 11 Filing; Proposed Plan of Reorganization
It is anticipated that on or before September 30, 2004, the
Proposed
Debtors will commence voluntary cases (the
"Chapter 11 Cases") under chapter 11
of title 11 of the United States Code (the
"Bankruptcy Code") in the United
States Bankruptcy Court for the Southern
District of New York (the "Bankruptcy
Court"), which Chapter 11 Cases are
intended to be implemented through the
proposed "prepackaged" or "pre-negotiated"
plan of reorganization described
below. Attached hereto as Exhibit A is a
term sheet (the "Term Sheet") that sets
forth the principal terms of the
Restructuring.
The
Parties agree that the Proposed Debtors will draft a plan of
reorganization (the "Proposed Plan") that
effects the Restructuring consistent
with the Term Sheet, and a related
disclosure statement (the "Disclosure
Statement"), and will circulate such drafts
to the Consenting Lenders. On such
date (the "Document Approval Date") as the
Proposed Plan, Disclosure Statement
and any exhibits thereto, including,
without limitation, documents evidencing
proposed debtor-in-possession financing,
the terms of a revolving exit
financing, the terms of new senior notes,
warrants and corporate governance
documents (collectively, the "Plan
Documents") are in form and substance
<PAGE>
reasonably acceptable to the Senior Agent,
the unofficial steering committee of
holders of Senior Loans (the "Senior Loan
Steering Committee"), and the
unofficial steering committee of holders of
Bridge Loans (the "Bridge Loan
Steering Committee"), the Proposed Debtors
will (i) if the Document Approval
Date is on or before September 9, 2004,
commence, within five business days
after such Document Approval Date, a
solicitation of votes on the Proposed Plan
from holders of Senior Lender Claims and
Bridge Loan Claims in accordance with
section 1126(b) of the Bankruptcy Code, or
(ii) if the Document Approval Date is
before September 23, 2004, but no
solicitation has been commenced by such date,
within five business days after
confirmation that counterpart signature pages of
this Agreement have been executed by
holders of at least 66 2/3% in dollar
amount and more than one-half in number of
each of the Senior Loans and the
Bridge Loans, the Proposed Debtors will
either (x) commence the Chapter 11 Cases
on a pre-negotiated basis, and file the
Proposed Plan, Disclosure Statement and
related documents, all in form and
substance reasonably satisfactory to the
Senior Agent, the Senior Loan Steering
Committee and the Bridge Loan Steering
Committee, or (y) with the consent of the
Senior Agent, the Senior Loan Steering
Committee and the Bridge Loan Steering
Committee, commence a solicitation of
votes on the Proposed Plan in accordance
with section 1126(b) of the Bankruptcy
Code; provided, that if by the Document
Approval Date, executed signature pages
of this Agreement have been received by the
holders of 66 2/3% in dollar amount
but not more than one-half in number of
either the Senior Loans or Bridge Loans,
then the Proposed Debtors will, within five
business days after receipt of the
written representation described in this
section, commence the Chapter 11 Cases
on the pre-negotiated or pre-packaged basis
as set forth in clause (x) or (y)
above, in any case, if the financial
advisor to the Senior Lenders or the Bridge
Lenders, as applicable, shall have
represented in writing its belief, after
reasonable due diligence, that after a vote
taken holders of more than one-half
in number of the Senior Loans or Bridge
Loans, as applicable, will vote to
accept the plan of reorganization under
section 1126(c) of the Bankruptcy Code.
2. Forbearance
Upon receipt of counterpart pages of this Agreement executed by
CWON
and by the holders of at least 66 2/3% in
dollar amount of each of the Senior
Loans and the Bridge Loans, the Consenting
Lenders agree to extend their
respective standstill and waiver agreements
through and including September 30,
2004; provided, that such extended
standstill and waiver agreements shall have
termination provisions similar to those set
forth in this Agreement.
3. Holdings by Consenting Lenders
Each
Consenting Lender represents that, as of the date hereof, such
Consenting Lender (i) either (A) is the
sole legal and beneficial owner of the
principal amount of Senior Lender Claims or
Bridge Lender Claims, as applicable,
set forth opposite its name on Schedule 1
hereto and all related claims, rights
and causes of action arising out of or in
connection with or otherwise relating
to such claims (for each such Consenting
Lender, the "Consenting Lender
Claims"), in each case free and clear of
all claims, liens and encumbrances, or
(B) has investment or voting discretion
with respect
-2-
<PAGE>
to its Consenting Lender Claims and has the
power and authority to bind the
beneficial owner(s) of such Consenting
Lender Claims to the terms of this
Agreement, (ii) has full power and
authority to vote on and consent to matters
concerning such Consenting Lender Claims,
and (iii) does not hold any claim or
interest against the Proposed Debtors other
than the Consenting Lender Claims.
4. Transfer of Lender Claims
Each of the Consenting Lenders hereby agrees that, so long as
its
agreement hereunder has not been
terminated, it shall not sell, transfer, assign
or grant any participation in any of its
Consenting Lender Claims or any option
thereon or any right or interest (voting or
otherwise) therein, unless the
transferee thereof or participant therein
agrees in writing for the benefit of
the other Parties hereto to be bound by all
of the terms of this Agreement and
executes a counterpart signature page of
this Agreement and the transferor
provides each of the Parties hereto with a
copy thereof, in which event (a) each
Party shall be deemed to have acknowledged
that its obligations to the
Consenting Lenders hereunder shall be
deemed to constitute obligations in favor
of such transferee and (b) the transferee
shall be a Party hereto and all
obligations of the transferor to the other
Parties hereto shall be deemed to be
obligations of the transferee.
5. Agreement to Vote; Support for the Proposed Plan
Each of the Consenting Lenders agrees that, so long as its
agreement
hereunder has not been terminated, and
subject to the conditions that (i) the
Proposed Plan, Disclosure Statement and
Plan Documents provide for the treatment
of Senior Lender Claims and Bridge Lender
Claims consistent with the treatment
contemplated and set forth in the Term
Sheet and the DIP Term Sheet (as defined
herein), and (ii) the Proposed Debtors
fulfill their obligations as contemplated
herein, including conducting a solicitation
of votes on the Proposed Plan,
filing the Chapter 11 Cases, filing the
Proposed Plan and Disclosure Statement
and continuing to support the Proposed Plan
in accordance with the treatment of
the Senior Lender Claims and the Bridge
Lender Claims as set forth in the Term
Sheet and the DIP Term Sheet, it shall (a)
vote in favor of the Proposed Plan,
and (b) support the Proposed Plan. Such
support shall include the following:
each Consenting Lender (together with its
affiliates, officers, directors,
stockholders, members, employees, partners,
employees, representatives and
agents) shall not: (v) object to the
Proposed Plan or to any efforts to obtain
acceptance of, and to confirm and
implement, the Proposed Plan; (w) vote for,
consent to, support or participate in the
formulation of any plan other than the
Proposed Plan; (x) solicit, encourage,
entertain or engage in any inquiries,
discussions, offers or proposals, or enter
into any agreements, relating to any
disposition of the Proposed Debtors or
their assets out of the ordinary course
of business or any plan of reorganization
or liquidation for the Proposed
Debtors other than the Proposed Plan or any
amendment thereto, this Agreement
and any documents in support hereof; (y)
encourage or support in any fashion any
person or entity to vote against the
Proposed Plan or to take any other action
prohibited to the Consenting Lenders in
this Agreement; or (z) take any other
action directly or indirectly for the
purpose of delaying, preventing,
frustrating or impeding acceptance,
confirmation or implementation of the
Proposed Plan.
-3-
<PAGE>
6. Termination of Obligations
Each Consenting Lender under this Agreement may terminate its
obligations under this Agreement by notice
to counsel to the Proposed Debtors,
counsel to the Senior Agent, and counsel to
the Bridge Loan Steering Committee,
in which case its agreement hereto shall
terminate and be of no further force
and effect, if:
(a) any Party (including the Proposed Debtors, in furtherance
of
their fiduciary duties) files a chapter 11
plan providing for treatment of the
Consenting Lender Claims that is
inconsistent with the terms and conditions set
forth in the Term Sheet or the DIP Term
Sheet in a manner that is adverse to any
of the Consenting Lenders; provided: that
the right to terminate under this
clause (a) shall only inure to a Consenting
Lender whose treatment under the
filed chapter 11 plan is inconsistent with
the Term Sheet or DIP Term Sheet in
an adverse manner;
(b) on September 30, 2004, the Document Approval Date has not
occurred;
(c) on September 30, 2004, the Proposed Debtors have completed
the
solicitation of votes on the Proposed Plan
pursuant to section 1126(b) of the
Bankruptcy Code, in accordance with
applicable nonbankruptcy law and consistent
with the Term Sheet and the DIP Term Sheet,
but the Proposed Debtors have not
obtained the acceptance of the Proposed
Plan by the requisite majorities under
section 1126(c) of the Bankruptcy Code of
each of the classes of Senior Loans
and Bridge Loans;
(d) on September 30, 2004, the Parties have received
counterpart
signatures of this Agreement executed by
the requisite bankruptcy majorities of
each of the classes of Senior Lenders and
Bridge Lenders in accordance with
section 1126(c) of the Bankruptcy Code, but
the Proposed Debtors have not either
(x) commenced the Chapter 11 Cases on a
pre-negotiated basis, including the
filing of the Proposed Plan, Disclosure
Statement and related documents, all in
form and substance reasonably satisfactory
to the Senior Agent, the Senior Loan
Steering Committee and the Bridge Loan
Steering Committee, or (y) with the
written consent of the Senior Agent, the
Senior Loan Steering Committee and the
Bridge Loan Steering Committee, commenced a
solicitation of votes on the
Proposed Plan in accordance with section
1126(b) of the Bankruptcy Code;
(e) on September 30, 2004, the Parties have not received
counterpart
signatures of this Agreement executed by
the holders of 66 2/3% in dollar amount
and more than one-half in number of each of
the Senior Loans and Bridge Loans;
provided, that if by such date, counterpart
pages of this Agreement have been
executed by holders of at least 66 2/3% in
dollar amount but not more than
one-half in number of either the class of
Senior Loans or the class of Bridge
Loans (either such class, a "Non-Consenting
Class"), then it shall not be a
termination event under this clause (e) if
the financial advisor to the Senior
Lenders or the Bridge Lenders, as
applicable, shall have represented in writing
its belief, after reasonable due diligence,
that after a vote taken in the
Chapter 11 Cases the class of Senior
Lenders or Bridge Lenders, as applicable,
will vote to accept
-4-
<PAGE>
the Proposed Plan under section 1126(c) of
the Bankruptcy Code; and provided,
further, that it shall not be a termination
event under this clause (e) for any
Consenting Lender of the Non-Consenting
Class if CWON and the requisite
bankruptcy majorities under section 1126(c)
if the Bankruptcy Code of the other
class determine to proceed with the
Restructuring in accordance with the terms
of this Agreement and the Term Sheet and
DIP Term Sheet;
(f) within five business days after the commencement of the
Chapter
11 Cases, the Proposed Debtors have not
obtained interim approval of a
debtor-in-possession financing facility
(the "DIP Financing") consistent with
the terms set forth in the DIP Financing
term sheet attached hereto as Exhibit B
(the "DIP Term Sheet"); and within 30 days
after the commencement of the Chapter
11 Cases, the Proposed Debtors have not
obtained final approval of the DIP
Financing consistent with the DIP Term
Sheet;
(g) after filing, there shall be any modification to the
Proposed
Plan or Disclosure Statement that is
inconsistent with the terms and conditions
set forth in the Term Sheet or the DIP Term
Sheet in a manner that is adverse to
any of the Consenting Lenders;
(h) in the event of non-performance in any material respect by
any
Party hereto (the "Breaching Party"), five
business days after the giving of
written notice of termination by any Party
hereto that has not failed to
perform, in any material respect, any of
its obligations hereunder, to each of
the other Parties hereto of the material
non-performance of the Breaching Party
and such non-performance remains uncured at
the conclusion of such five-business
day period;
(i) upon: (i) the dismissal of the Chapter 11 Cases; (ii) the
conversion of the Chapter 11 Cases to cases
under chapter 7 of the Bankruptcy
Code; (iii) the appointment of a trustee or
receiver; or (iv) the effective date
of the Proposed Plan; or
(j) upon the occurrence of an event of default that results in
acceleration under the DIP Financing.
No Party shall have any liability to the
other or any other person as a result
of the termination of such Party's
obligations hereunder in accordance with this
paragraph.
7. Good Faith Negotiation of Documents
Each party to this Agreement hereby further covenants and agrees
to
negotiate the Plan Documents in good faith
and, in any event, in all respects
consistent with the Term Sheet and the DIP
Term Sheet.
8. Prior Negotiations
This Agreement, the Term Sheet and the DIP Term Sheet attached
hereto constitute the entire understanding
of the parties with respect to the
subject matter hereof. No representations,
oral or written, other than those set
forth herein and in the Term
-5-
<PAGE>
Sheet and the DIP Term Sheet, may be relied
on by any party in connection with
the subject matter hereof.
9. No Due Diligence Condition
Any provision contained in the Term Sheet or the DIP Term Sheet
to
the contrary notwithstanding, (a) the
completion of due diligence (including,
without limitation, tax due diligence and
due diligence on the benefits obtained
from contract rejections in the Chapter 11
Cases) with respect to the Proposed
Debtors is not a condition precedent to any
Party's obligations and agreements
under this Agreement; and (b) no Party
hereto may seek to condition or avoid the
performance of its obligations hereunder
based on or subject to the completion
of any such due diligence.
10. Representations of CWON and the Subsidiaries
CWON, for
itself and on behalf of its subsidiaries, hereby
represents and warrants to each Consenting
Lender as follows:
(a) Corporate Power and Authority. It has all requisite
corporate,
partnership or limited liability company
power and authority to enter into this
Agreement and to carry out the transactions
contemplated by, and perform its
obligations under, this Agreement.
(b) Authorization. The execution and delivery of this Agreement
and
the performance of its obligations
hereunder have been duly authorized by all
necessary corporate, partnership or limited
liability company action on its
part.
(c) No Conflicts. The execution, delivery and performance by it
of
this Agreement do not and shall not (i)
violate any provision of law, rule or
regulation applicable to it or any of its
subsidiaries or its certificate of
incorporation or bylaws or other
organizational documents or those of any of its
subsidiaries or (ii) conflict with, result
in a breach of or constitute (with
due notice or lapse of time or both) a
default under any material contractual
obligation to which it or any of its
subsidiaries is a party, other than as a
result of the commencement of the Chapter
11 Cases.
(d) Governmental Consents. The execution, delivery and
performance
by it of this Agreement do not and shall
not require any registration or filing
with, consent or approval of, or notice to,
or other action to, with or by, any
federal, state or other governmental
authority or regulatory body, other than
filings under the Securities Exchange Act
of 1934, as amended, which have been
or will be made.
(e) Binding Obligation. Subject to the provisions of sections
1125
and 1126 of the Bankruptcy Code, this
Agreement is the legally valid and binding
obligation of it, enforceable against it in
accordance with its terms.
(f) Information True and Correct. The financial and other
information concerning it which it or its
representatives have made available to
the Consenting Lenders (other than any
projected financial information included
therein) was complete and correct in all
material respects when delivered and
did not contain any untrue
-6-
<PAGE>
statement of a material fact or omit to
state a material fact necessary in order
to make the statements therein not
materially misleading in light of the
circumstances under which such statements
were made, and the projected financial
information concerning it which it or its
representatives made available to the
Consenting Lenders was prepared in good
faith and on the basis of assumptions
which, in light of the circumstances under
which they were made, were believed
by its management to be reasonable.
(g) No Litigation. There are no material actions, suits,
claims,
proceedings, or investigations
pending or, to its knowledge, threatened against
it, except those that have been
publicly disclosed by CWON in the periodic or
current reports filed with the
Securities and Exchange Commission by CWON
pursuant to the reporting
requirements set forth in the Securities Exchange Act
of 1934, as amended.
11. Representations of the Consenting Lenders
Each of the Consenting Lenders represents and warrants,
severally
but not jointly, to CWON and the other
Consenting Lenders, as follows:
(a) Corporate Power and Authority. It has all requisite
corporate,
partnership or limited liability company
power and authority to enter into this
Agreement and to carry out the transactions
contemplated by, and perform its
obligations under, this Agreement.
(b) Authorization. The execution and delivery of this Agreement
and
the performance of its obligations
hereunder have been duly authorized by all
necessary corporate, partnership or limited
liability company action on its
part.
(c) No Conflicts. The execution, delivery and performance by it
of
this Agreement do not and shall not (i)
violate any provision of law, rule or
regulation applicable to it or any of its
subsidiaries or its certificate of
incorporation or bylaws or other
organizational documents or those of any of its
subsidiaries or (ii) conflict with, result
in a breach of or constitute (with
due notice or lapse of time or both) a
default under any material contractual
obligation to which it or any of its
subsidiaries is a party.
(d) Governmental Consents. The execution, delivery and
performance
by it of this Agreement do not and shall
not require any registration or filing
with, consent or approval of, or notice to,
or other action to, with or by, any
federal, state or other governmental
authority or regulatory body.
(e) Binding Obligation. Subject to the provisions of sections
1125
and 1126 of the Bankruptcy Code, this
Agreement is the legally valid and binding
obligation of it, enforceable against it in
accordance with its terms.
12. Further Acquisition of Claims
This Agreement shall in no way be construed to preclude the
Consenting Lenders from acquiring
additional claims against CWON or any of its
subsidiaries. However, any such additional
claims so acquired shall
automatically be deemed to be Consenting
Lender Claims subject to the terms of
this Agreement.
-7-
<PAGE>
13. No Oral Amendments
No modification or amendment of the terms of this Agreement shall
be
valid unless such modification or amendment
is in writing and has been signed by
each of the Parties.
14. Governing Law
This Agreement shall be governed by, and construed in
accordance
with, the laws of the State of New York,
without regard to such state's choice
of law provisions which would require the
application of the law of any other
jurisdiction. By its execution and delivery
of this Agreement, each of the
Parties hereby irrevocably and
unconditionally agrees for itself that any legal
action, suit or proceeding against it with
respect to any matter arising under
or arising out of or in connection with
this Agreement or for recognition or
enforcement of any judgment rendered in any
such action, suit or proceeding, may
be brought in the United States District
Court for the Southern District of New
York, and by execution and delivery of this
Agreement, each of the Parties
hereby irrevocably accepts and submits
itself to the exclusive jurisdiction of
such court, generally and unconditionally,
with respect to any such action, suit
or proceeding. Notwithstanding the
foregoing consent to New York jurisdiction,
upon the commencement of the Chapter 11
Cases, each of the Parties hereto hereby
agrees that the Bankruptcy Court shall have
exclusive jurisdiction of all
matters arising out of or in connection
with this Agreement.
15. Specific Performance
It is understood and agreed by the Parties that money damages
would
not be a sufficient remedy for any breach
of this Agreement by any Party and
each non-breaching Party shall be entitled
to specific performance and
injunctive or other equitable relief as a
remedy of any such breach, including,
without limitation, an order of the
Bankruptcy Court or other court of competent
jurisdiction requiring any Party to comply
promptly with any of its obligations
hereunder.
16.
Reasonable Best Efforts
The Senior Agent shall (a) exercise its reasonable best efforts
to
obtain the consent of the requisite
bankruptcy majorities of the class of Senior
Lenders to this Agreement, (b) notify the
Proposed Debtors in writing if and
when such approvals have been received, (c)
promptly notify the other Parties in
writing if and when any Senior Lender
indicates its intention not to provide its
approval to this Agreement, and (d)
promptly provide copies of such approvals to
the other Parties. Each of the Consenting
Bridge Lenders shall (a) exercise its
reasonable best efforts to obtain the
consent of the requisite bankruptcy
majorities of the class of Bridge Lenders
to this Agreement, (b) notify (or
cause the notification of) the other
Parties in writing if and when such
approvals have been received, (c) promptly
notify (or cause the notification of)
the other Parties in writing if and when
any Bridge Lender indicates its
intention not to provide its
-8-
<PAGE>
approval to this Agreement, and (d)
promptly provide (or cause the provision of)
copies of such approvals to the other
Parties.
17. Reservation of Rights
This Agreement is part of a proposed consensual Restructuring
among
the Parties hereto. Except as expressly
provided in this Agreement, nothing
herein is intended to, or does, in any
manner waive, limit, impair or restrict
the ability any party to protect and
preserve its rights, remedies and
interests, including, without limitation,
its claims against the Proposed
Debtors. If the Restructuring contemplated
herein and in the Term Sheet is not
consummated, or if this Agreement is
terminated for any reason, the Parties
hereto fully reserve any and all of their
rights.
18. Headings
The section headings of this Agreement are for convenience of
reference only and shall not, for any
purpose, be deemed a part of this
Agreement.
19. Successors and Assigns, Several Obligations
This Agreement is intended to bind and inure to the benefit of
the
Parties and their respective successors,
permitted assigns, heirs, executors,
administrators and representatives. The
invalidity or unenforceability at any
time of any provision hereof shall not
affect or diminish in any way the
continuing validity and enforceability of
the remaining provisions hereof. The
agreements, representations and obligations
of the Consenting Lenders under this
Agreement are several and not joint in all
respects. Any breach of this
Agreement by a Consenting Lender shall not
result in liability for any other
non-breaching Consenting Lender.
20. Third-Party Beneficiaries
Unless expressly stated herein, this Agreement shall be solely
for
the benefit of the Parties hereto and no
other person or entity shall be a third
party beneficiary hereof.
21. Counterparts
This Agreement may be executed in several counterparts, each of
which shall be deemed to be an original,
and all of which together shall be
deemed to be one and the same agreement.
Execution copies of this agreement may
be delivered by facsimile which shall be
deemed to be an original for the
purposes of this paragraph.
22. Consideration
It is hereby acknowledged by the Parties that no consideration
shall
be due or paid to the Consenting Lenders in
exchange for their support of the
Proposed Plan, in accordance with the terms
and conditions of this Agreement,
other than the obligations imposed upon the
Proposed Debtors pursuant to the
terms of this Agreement, including,
-9-
<PAGE>
without limitation, the Proposed Debtors'
obligations to use reasonable best
efforts to confirm the Proposed Plan in
accordance with the terms and conditions
of this Agreement.
23. Acknowledgement
This Agreement is not, and shall not be deemed to be, a
solicitation
for consents to the Proposed Plan. Each
Consenting Lender's acceptance of the
Proposed Plan shall not be solicited until
it has received the Disclosure
Statement for the Proposed Plan.
24. Disclosure of Individual Consenting Lenders
Unless required by applicable law or
regulation, including attaching this
Agreement, as executed, to the Disclosure
Statement, and other than to the other
Parties hereto, the Proposed Debtors shall
not disclose any Consenting Lender's
holdings of Senior Lender Claims or Bridge
Lender Claims without the prior
written consent of such Consenting Lender;
and if such announcement or
disclosure is so required by law or
regulation (other than in connection with
the filing of this Agreement as part of an
8-K filing with the Securities and
Exchange Commission (an "8-K") or as an
attachment to the Disclosure Statement),
the Proposed Debtors shall afford the
Consenting lenders a reasonable
opportunity to review and comment upon any
such announcement or disclosure prior
to making such announcement or disclosure.
The foregoing shall not prohibit the
Proposed Debtors from disclosing the
approximate aggregate holdings of Senior
Lender Claims or Bridge Lender Claims by
the Consenting Lenders as a group. If
this Agreement, as executed, is attached to
an 8-K or the Disclosure Statement,
the Debtors agree that only the aggregate
amount of Bridge Lender Claims, but
not the individual amount held by any
Consenting Bridge Lender, shall be
disclosed therein, subject, however, to the
first sentence of this Section 24,
if such disclosure is required by
applicable law or regulation.
-10-
<PAGE>
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement
to
be executed and delivered by their
respective duly authorized officers, solely
in their respective capacity as officers of
the undersigned and not in any other
capacity, as of the date first set forth
above.
CHOICE ONE COMMUNICATIONS INC.
By: /s/ Ajay Sabherwal
-----------------------------------------
Name: AJAY SABHERWAL
Title: CHIEF FINANCIAL OFFICER
<PAGE>
SENIOR LENDERS
GENERAL ELECTRIC CAPITAL CORPORATION,
as Administrative Agent, Collateral Agent
and
Syndication Agent under the Credit
Agreement
and as a Senior Lender
By:/s/ Christopher T. Nicholls
--------------------------------------
Name: Christopher T. Nicholls
Title: Senior Vice President; Authorized
Signatery
MORGAN STANLEY SENIOR FUNDING, INC.,
as Documentation Agent under the Credit
Agreement
and as a Senior Lender
By:/s/ Daniel Allen
--------------------------------------
Name: Daniel Allen
Title: Vice President
BANK OF AMERICA, N.A., as a Senior
Lender
By:/s/ Laura I. Sweet
--------------------------------------
Name: Laura I. Sweet
Title: Assistant Vice President
BEAR STEARNS INVESTMENT PRODUCTS INC.,
as a Senior Lender
By:/s/ John E. McDermott
--------------------------------------
Name: John E. McDermott
Title: Vice President
CARGILL FINANCIAL SERVICES INTERNATIONAL,
Inc.,
as a Senior Lender
By:/s/ Mark Guidinger
--------------------------------------
Name: Mark Guidinger
Title: Portfolio Manager
By:/s/ Kelly Schreurs
--------------------------------------
Name: Kelly Schreurs
Title: Controller
<PAGE>
CREDIT SUISSE FIRST BOSTON
INTERNATIONAL,
as a Senior Lender
By:/s/
----------------------------
Name:
Title:
DEUTSCHE BANK AND TRUST COMPANY AMERICAS,
as a Senior Lender
By: /s/ Jay Hopkins
---------------------------
Name: Jay Hopkins
Title: Assistant Vice President
FIDELITY ADVISORS SERIES II: FIDELITY
ADVISORS HIGH INCOME
ADVANTAGE (218), as a Senior Lender
By: /s/ John H. Costello
-----------------------------
Name: John H. Costello
Title: Assistant Vice Treasurer
Pension Investment Committee of
General Motors for General Motors
Employees
Domestic Group Pension Trust, as a Senior
Lender
By: Fidelity Management Trust Company,
as Investment Manager under Power of
Attorney
By: /s/ John P. O'Reilly
----------------------------
Name: John P. O'Reilly
Title: Executive Vice President
<PAGE>
GOLDMAN SACHS CREDIT PARTNERS, L.P.,
as a Senior Lender
By: /s/ Pedro Ramirez
---------------------------
Name: Pedro Ramirez
Title: Authorized Signatory
GRACIE CAPITAL, L.P.
P+S Capital Partners, LLC
By: /s/ Greg Pearson
----------------------------
Name: Greg Pearson
Title: CFO
LITESPEED MASTER FUND LTD
By:/s/ Jamie Zimmerman
------------------------------
Name: Jamie Zimmerman
Title: Managing Partner
MERRILL LYNCH CREDIT PRODUCTS, LLC, as a
Senior Lender
By: /s/ Peter Chin
------------------------------
Name: Peter Chin
Title: Vice President
<PAGE>
ORE HILL HUB FUND, LTD, as a Senior
Lender
By: /s/ Frederick Wahl
----------------------------
Name: Frederick Wahl
Title:
QUANTUM PARTNERS LDC, as a Senior
Lender
By: /s/ Armando Belly
-----------------------------
Name: Armando Belly
Title: Attorney-in-Fact
SATELLITE SENIOR INCOME FUND, LLC, as a
Senior Lender
By: Satellite Asset Management L.P., its
manage
By: /s/ Simon Raykhar
------------------------------
Name: Simon Raykhar
Title: General Counsel
SCOGGIN CAPITAL MANAGEMENT, LP II, as a
Senior Lender
By: S+E Partners, LP its: General
Partner
By: Scoggin, Inc its: General Partner
By: /s/ Craig Effron
-------------------------------
Name: Craig Effron
Title: President of Scoggin, Inc.
STRATEGIC VALUE MASTER FUND, LTD, as a
Senior Lender
By: Strategic Value Partners Inc.
its Investment
By: /s/ Victor Khosla
--------------------------------
Name: Victor Khosla
Title: President
<PAGE>
TRIAGE CAPITAL MANAGEMENT, LP, as a Senior
Lender
By: /s/ Mark D. Wittman
---------------------------
Name: Mark D. Wittman
Title: Partner
VARDE PARTNERS, INC., as a Senior
Lender
By: /s/ George G. Hicks
---------------------------
Name: George G. Hicks
Title: Managing Partner
WACHOVIA BANK, N.A., as a Senior Lender
WAYLAND DISTRESSED OPPORTUNITIES FUND I-B,
LLC.,
as a Senior Lender
By: Wayzata Investment Partners, LLC, its
Manager
By: /s/ Joseph M. Deignan
----------------------------
Name: Joseph M. Deignan
Title: Authorized Signatory
WAYLAND DISTRESSED OPPORTUNITIES FUND I-C,
LLC.,
as a Senior Lender
By: Wayzata Investment Partners, LLC, its
Manager
By: /s/ Joseph M. Deignan
----------------------------
Name: Joseph M. Deignan
Title: Authorized Signatory
<PAGE>
BRIDGE LENDERS
QUANTUM PARTNERS LDC, as a Bridge
Lender
By: /s/ Armando Belly
Name:
Title:
CREDIT SUISSE FIRST BOSTON
INTERNATIONAL, as a Bridge
Lender
By: /s/ Louis J. Impellizeri
---------------------------------------------
Name: Louis J. Impellizeri
Title: Authorized Signatory
By: /s/ Vittorio Selaloja
---------------------------------------------
Title: Authorized Signatory
WACHOVIA INVESTORS, INC., as a
Bridge Lender
By: /s/ Robert Haley
---------------------------------------------
Name: Robert Haley
Title: Authorized Signatory
Director
<PAGE>
CHOICE ONE COMMUNICATIONS INC.
SUMMARY OF TERMS AND CONDITIONS
FOR POSSIBLE DEBTOR-IN-POSSESSION FINANCING
CONFIDENTIAL - FOR DISCUSSION PURPOSES ONLY; NOT A COMMITMENT TO
LEND
This term sheet consists of a summary
description of the material terms and
conditions of the debtor-in-possession
credit facility described herein, and is
not intended to provide a comprehensive
description of all of the terms and
conditions of such facility. Until such
time as definitive written agreements
among the Borrowers, the DIP Agent and the
DIP Lenders containing terms and
conditions consistent with the terms and
conditions set forth herein and
otherwise in form and substance
satisfactory to the DIP Agent and DIP Lenders
are fully executed and delivered, no
negotiations, discussions, representations
or other communications of any kind shall
be deemed to create any binding
agreements or offers capable of acceptance
or any basis for detrimental
reliance. The DIP Agent and the DIP Lenders
reserve their rights to terminate
discussions regarding the subject matter
hereof at any time, in their sole
discretion, and without liability of any
kind.
BORROWERS:
Choice One Communications Inc. and each of its
subsidiaries, as debtors-in-possession subject to Chapter
11 cases (collectively, the "Borrowers" or the "Debtors").
Each Borrower would be jointly and severally liable to
repay any and all indebtedness incurred under the Facility.
Each Borrower will appoint one of the Borrowers as its
agent for administrative purposes under the Facility.
ADMINISTRATIVE
AGENT:
General Electric Capital Corporation ("GE Capital") or one
or more of its affiliates (in such capacity, the "DIP
Agent").
FACILITY;
AVAILABILITY:
Revolving debtor-in-possession credit facility (the
"Facility") of up to an overall maximum amount of
$20,000,000 (the "Maximum Amount"), including a swingline
subfacility of up to $_______________; provided, however,
that, (i) from and after the entry of an order of the
bankruptcy court acceptable in form and substance to the
DIP Agent and the Required DIP Lenders (the "Interim
Order"), and prior to the entry of the Final Order (as
defined below), the Maximum Amount shall be limited to
$____________ and (ii) the Maximum Amount shall be
permanently reduced from time to time pursuant to the
mandatory prepayment provisions described below.
Notwithstanding the foregoing, loans under the Facility
will only be available to the Borrowers from time to time
prior to the Maturity Date in an aggregate amount not to
exceed the lesser of:
a. an amount equal to the lesser of (i) the Maximum Amount
and (ii) an amount equal to the Borrowing Base minus the
amount of the Carve-Out (as defined below); and
b. a positive amount (if any) equal to (i) 110% of (x) the
sum of the weekly amounts of all projected disbursements of
the Borrowers and their subsidiaries, as set forth in a
budget approved on or prior to the Closing Date (as defined
below) by the DIP Agent, the Senior Lender
<PAGE>
Steering Committee (as defined below) and the Bridge Loan
Steering Committee (as defined below) (the "Budget"), for
the period from the Closing Date through the last day of
the week in which the loan is requested (excluding
reasonable professional fees and expenses) minus (y) the
sum of the weekly amounts of all projected operating cash
receipts set forth in the Budget for such period minus (ii)
(A) aggregate amount of advances actually made under the
Facility to the Borrowers during such period (prior to
giving effect to any requested loan not yet made) minus (B)
the aggregate amount of reasonable professional fees and
expenses actually paid during such period; provided,
however, that the limitation described in this paragraph
(b) shall not be applicable with respect to any requested
loan the proceeds of which are actually applied to the
payment of reasonable professional fees and expenses. The
formula as set forth in this paragraph shall be applied,
with respect to each of the periods described herein, on a
cumulative, period to period basis. The Budget shall not be
modified or otherwise amended without (i) the consent of
the Required DIP Lenders and (ii) the consent of (a) the
Prepetition Senior Agent, the Senior Loan Steering
Committee and the Bridge Loan Steering Committee or (b) the
bankruptcy court.
"Borrowing Base" shall mean, as of any date, the sum of, in
each case less reserves established from time to time by
the DIP Agent in its reasonable credit judgment, up to 85%
of the Borrowers' eligible accounts. The DIP Agent will
retain the right from time to time to establish standards
of eligibility and reserves against availability in its
reasonable credit judgment, which reserves against
availability will take into account and be
