EXECUTION
AMENDMENT NO. 5 AND LIMITED WAIVER
TO
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
AMENDMENT NO. 5 TO AMENDED AND RESTATED LOAN AND SECURITY
AGREEMENT ("Amendment and Limited Waiver"), dated as of July 16, 2001, is among
KMC TELECOM INC., a Delaware corporation ("KMC"), KMC TELECOM II, INC., a
Delaware corporation ("KMC II"), KMC TELECOM III, INC., a Delaware corporation
("KMC III"), KMC TELECOM OF VIRGINIA, INC., a Virginia public service company
("KMC Virginia"), KMC TELECOM LEASING I LLC, a Delaware limited liability
company ("Leasing I"), KMC TELECOM LEASING II LLC, a Delaware limited liability
company ("Leasing II"), KMC TELECOM LEASING III LLC, a Delaware limited
liability company ("Leasing III"), KMC TELECOM.COM, INC., a Delaware corporation
("Telecom.com"); KMC III SERVICES LLC, a Delaware limited liability company
("Services"; KMC, KMC II, KMC III, KMC Virginia, Leasing I , Leasing II, Leasing
III, Telecom.com and Services being hereinafter collectively referred to
hereinafter as the "Borrowers"), the "Lenders" party hereto, and FIRST UNION
NATIONAL BANK ("First Union"), as administrative agent for the Lenders (the
"Agent").
WHEREAS, the Borrowers, the Agents and the Lenders are parties
to that certain Amended and Restated Loan and Security Agreement dated as of
February 15, 2000, as amended by Amendment No. 1 thereto dated as of March 28,
2000, Amendment No. 2 thereto dated as of July 28, 2000, Amendment No. 3 and
Limited Waiver thereto dated as of February 23, 2001, Amendment No. 4 and
Limited Waiver dated April 12, 2001 (as so amended, the "Loan Agreement";
undefined capitalized terms used herein shall have the meanings assigned thereto
in the Loan Agreement), pursuant to which the Lenders have agreed to make
certain "Loans" and other financial accommodations to the Borrowers;
WHEREAS, the Borrowers have requested that Lenders make
certain amendments to the Loan Agreement, and waive certain provisions thereof,
in the manner set forth herein; and
WHEREAS, the Agent and Lenders have agreed to the amendment
and limited waiver requested by the Borrowers and set forth below, but only on
the terms and conditions set forth in this Amendment.
NOW, THEREFORE, in consideration of the premises set forth
above, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Borrowers, the Agent and the
Lenders agree as follows:
1. Amendment to the Loan Agreement. Effective as of the date
first above written and subject to the satisfaction of the conditions set forth
in Section 2 below, the Loan Agreement shall be and hereby is amended as
follows:
Execution
1.1 Amendment to Section 2.10.
(a) Clause (b) of Section 2.10 of the Loan Agreement is hereby
amended to delete Clause (2) thereof in its entirety and replace it with the
following:
"(2) such Letter of Credit has an expiration date (i)
later than thirty (30) days prior to the Revolving Credit Commitment
Termination Date or (ii) more than one (1) year from the date of
issuance; provided that the immediately preceding clause (ii) shall not
prevent the Agent from causing any Letter of Credit to be issued by any
Lender solely because such Lender has agreed that such Letter of Credit
will automatically be extended for one or more successive periods not
to exceed one year each unless such issuing Lender elects not to extend
for any such additional period; and provided further that such issuing
Lender shall elect not to extend such Letter of Credit if it has
knowledge that an Event of Default has occurred and is continuing (and
has not been waived in accordance with Clause (a) of Section 11.02
hereof) at the time such issuing Lender must elect whether or not to
allow such extension."
(b) Clause(d) of Section 2.10 of the Loan Agreement is hereby
amended to insert the following in Clause (4) thereof after the word "extended"
and before the word "or":
"(other than by automatic extension permitted by
Clause (2) of Clause (b) of this Section 2.10)".
2. Limited Waiver to Loan Agreement.
2.1 KNT Proposal. On the basis of the representations and
warranties contained in this Amendment and Limited Waiver, and subject to the
terms and conditions of this Amendment and Limited Waiver, the Agents and
Requisite Lenders hereby agree to waive compliance with Section 5.23 of the Loan
Agreement solely to the extent necessary to extend to August 3, 2001 the
deadline for delivery of the proposal for the resolution of the proposed
transfer of assets comprising the Borrowers' construction business to KNT;
provided, that this Limited Waiver shall cease to be of force or effect if the
Borrowers fail to deliver such proposal pursuant to the terms of Section 5.23 of
the Loan Agreement on or before August 3, 2001.
3. Limitation of Waiver. Without limiting the generality of
the provisions of Section 11.02(b) of the Loan Agreement, the waivers set forth
above shall be limited precisely as written and relate solely to noncompliance
by the Borrowers with the provisions of Sections 5.23 and 9.01(b) of the Loan
Agreement in the manner and to the extent described above and nothing in this
Amendment and Limited Waiver shall be deemed to:
(a) constitute a waiver of compliance by Borrower with respect
to (i) Sections 5.23 and 9.01(b) of the Loan Agreement in any other instance or
(ii) any other term, provision or condition of the Loan Agreement or any other
instrument or agreement referred to therein; or
(b) prejudice any right or remedy that the Agents or any
Lender may now have (except to the extent such right or remedy was based upon
existing defaults that will not exist after giving effect to this Amendment and
Limited Waiver) or may have in the future under or in connection with the Loan
Agreement or any other instrument or agreement referred to therein.
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4. Conditions Precedent. This Amendment and Limited Waiver
shall become effective as of the date above written if, and only if, the
following conditions are satisfied:
(a) the Agent shall have received the following items, in each
case in form and substance satisfactory to the Agent:
(1) this Amendment and Limited Waiver duly executed by the
Borrowers, the Requisite Lenders and the Agent; and
(2) a Reaffirmation of Guaranty in the form of Exhibit A
annexed hereto duly executed by KMC Holdings, Services I, Services II, Data
Holdco, KMC Financing and KMC Financial Services.
(b) Borrowers shall have paid all documented out-of-pocket
third party expenses (including, in each case, all reasonable attorneys' and
paralegals' fees and related expenses and costs) incurred by the Agents or any
Lenders in connection with the Fourth Amendment; and
(c) the Agents and Lenders shall have received such other
documents, agreements and instruments as the Agent may reasonably require.
5. Representations and Warranties of the Borrowers. In order
to induce the Lenders to enter into this Amendment and Limited Waiver, to amend
the Loan Agreement in the manner provided herein, and to waive certain
provisions thereof in the manner provided herein, each Borrower hereby
represents and warrants, as to each Borrower or each Loan Party, as the case may
be, that after giving effect to this Amendment:
(a) Authorization of Agreements; Binding Obligations. The
execution and delivery of this Amendment and Limited Waiver and the performance
of the Loan Agreement as amended by this Amendment (as so amended, the "Amended
Agreement") have been duly authorized by all necessary corporate action on the
part of such Borrower and constitute the legal, valid and binding obligations of
such Borrower, enforceable against such Borrower in accordance with their
respective terms except as may be limited by bankruptcy, insolvency
reorganization, moratorium or similar laws relating to or limiting creditors'
rights generally or by equitable principles relating to enforceability.
(b) Corporate Power and Authority. Such Borrower has all
requisite corporate power and authority to enter into this Amendment and Limited
Waiver, and such Loan Party has all requisite corporate power and authority to
carry out the transactions contemplated by, and perform its obligations under,
the Amended Agreement.
(c) No Conflict. The execution and delivery by such Borrower
of this Amendment and Limited Waiver and the performance by such Borrower of the
Amended Agreement do not and will not (i) violate any provision of any law or
any governmental rule or regulation applicable such Borrower, the Certificate or
Articles of Incorporation or Bylaws (or comparable organizational documents) of
such Borrower or any order, judgment or decree of any court or other agency or
government binding on such Borrower, (ii) conflict with, result in a breach of
or constitute (with due notice or lapse of time or both) a default under any
contractual
3 Execution
obligation of such Borrower, (iii) result in or require the creation or
imposition of any Lien upon any of the properties or assets of such Borrower
(other than Liens created under any of the Loan Documents in favor of the
Collateral Agent on behalf of Lenders), or (iv) require any approval of
stockholders or any approval or consent of any Person under any contractual
obligation of such Borrower.
(d) Government Consents. The execution and delivery by such
Borrower of this Amendment and Limited Waiver and the performance by such
Borrower of the Amended Agreement do not and will not require any registration
with, consent or approval of or notice to, or other action to, with or by, any
multi-national, federal, provincial, state, municipal, local or other
governmental authority or regulatory body.
(e) Absence of Defaults. As of the date hereof, and after
giving effect to this Amendment and Limited Waiver, such Borrower shall be in
compliance with all the terms and provisions set forth in the Amended Agreement
on its part to be observed or performed, and no Event of Default or Default
shall have occurred and be continuing
(f) Reaffirmation. Upon the effectiveness of this Amendment
and Limited Waiver, such Borrower hereby reaffirms all representations and
warranties made in the Loan Agreement, and to the extent the same are not
amended hereby, agrees that all such representations and warranties shall be
deemed to have been remade as of the date of delivery of this Amendment, unless
and to the extent that any such representation and warranty is stated to relate
solely to an earlier date, in which case such representation and warranty shall
be true and correct as of such earlier date.
6. Reference to and Effect on the Loan Agreement.
(a) Upon the effectiveness of Section 1 hereof, on and after
the date hereof, each reference in the Loan Agreement to "this Loan Agreement,"
"this Agreement," "hereunder," "hereof," "herein" or words of like import shall
mean and be a reference to the Loan Agreement as amended hereby, and each
reference to the Loan Agreement in any other document, instrument or agreement
shall mean and be a reference to the Loan Agreement as modified hereby.
(b) The Loan Agreement, as amended hereby, and all other
documents, instruments and agreements executed and/or delivered in connection
therewith, shall remain in full force and effect, and are hereby ratified and
confirmed.
(c) Except as expressly provided herein, the execution,
delivery and effectiveness of this Amendment and Limited Waiver shall not
operate as a waiver of any right, power or remedy of the Agents or the Lenders,
nor constitute a waiver of any provision of the Loan Agreement or any other
documents, instruments and agreements executed and/or delivered in connection
therewith.
7. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE OTHER REMAINING TERMS OF THE LOAN AGREEMENT AND
THE INTERNAL LAWS (AS OPPOSED TO CONFLICT OF LAW PROVISIONS) OF THE STATE OF NEW
YORK.
4 Execution
8. Paragraph Headings. The paragraph headings contained in
this Amendment are and shall be without substance, meaning or content of any
kind whatsoever and are not a part of the agreement among the parties thereto.
9. Counterparts. This Amendment may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
5 Execution
EXECUTION
IN WITNESS WHEREOF, this Amendment has been duly executed as
of the day and year first above written.
THE BORROWERS:
KMC TELECOM INC.
KMC TELECOM II, INC.
KMC TELECOM III, INC.
KMC TELECOM OF VIRGINIA, INC.
KMC TELECOM.COM, INC.
In each case:
By: /s/ Constance Loosemore
------------------------
Name: Constance Loosemore
Title: Vice President, Treasurer
KMC TELECOM LEASING I LLC
By: KMC TELECOM INC., as its Sole Member
By: /s/ Constance Loosemore
------------------------
Name: Constance Loosemore
Title: Vice President, Treasurer
KMC TELECOM LEASING II LLC
By: KMC TELECOM II, INC., as its Sole Member
By: /s/ Constance Loosemore
------------------------
Name: Constance Loosemore
Title: Vice President, Treasurer
S-1 Execution
KMC TELECOM LEASING III LLC
KMC III SERVICES LLC
In each case:
By: KMC TELECOM III, INC., as its Sole
Member
By: /s/ Constance Loosemore
------------------------
Name: Constance Loosemore
Title: Vice President, Treasurer
FIRST UNION NATIONAL BANK, as the Agent
and as a Lender
By: /s/ G.C. Ullrich
------------------------
Name: G.C. Ullrich
Title: Senior Vice President
CIT LENDING SERVICES CORPORATION
(f/k/a NEWCOURT COMMERCIAL FINANCE
CORPORATION), as the Collateral Agent and as a
Lender
By:________________________
Name:
Title:
CANADIAN IMPERIAL BANK OF
COMMERCE, as a Lender
By: /s/ Jacqueline Stewart
------------------------
Name: Jacqueline Stewart
Title: Assistant General Manager
S-2 Execution
GENERAL ELECTRIC CAPITAL
CORPORATION, as a Lender
By: /s/ Brian P. Ward
------------------------
Name: Brian P. Ward
Title: Manager-Operations
LUCENT TECHNOLOGIES INC., as a Lender
By: /s/ Dina Fede
------------------------
Name: Dina Fede
Title: Director-NA Customer Finance
CREDIT SUISSE FIRST BOSTON, as a Lender
By: /s/ David L. Sawyer
------------------------
Name: David L. Sawyer
Title: Vice President
By: /s/ Ian Naliff
------------------------
Name: Ian Naliff
Title: Assistant Vice President
DRESDNER BANK AG NEW YORK AND
GRAND CAYMAN BRANCHES, as a Lender
By: /s/ Jane A. Majeski
------------------------
Name: Jane A. Majeski
Title: Director
By: /s/ Brian K. Schneider
------------------------
Name: Brian K. Schneider
Title: Associate
S-3 Execution
MORGAN STANLEY SENIOR FUNDING, INC.,
as a Lender
By:________________________
Name:
Title:
MORGAN STANLEY DEAN WITTER PRIME
INCOME TRUST, as a Lender
By:________________________
Name:
Title:
UNION BANK OF CALIFORNIA, N.A., as a
Lender
By: /s/ Jean-Pierre Knight
------------------------
Name: Jean-Pierre Knight
Title: Assistant Vice President
STEIN ROE & FARNHAM INCORPORATED as
agent for KEYPORT LIFE INSURANCE
COMPANY, as a Lender
By:________________________
Name:
Title:
STEIN ROE FLOATING RATE LIMITED
LIABILITY COMPANY, as a Lender
By:________________________
Name:
Title:
S-4 Execution
IBM CREDIT CORPORATION, as a Lender
By:________________________
Name:
Title:
S-5 Execution
EXECUTION
EXHIBIT A
TO FIFTH AMENDMENT
REAFFIRMATION OF GUARANTY
Reference is hereby made to (i) that certain Amended and
Restated Guaranty and Security Agreement dated as of April 12, 2001 (as amended
to the date hereof and as it may be further restated, supplemented or otherwise
modified from time to time, the "KMC Holdings Guaranty") by KMC Telecom
Holdings, Inc., a Delaware corporation ("KMC Holdings"), in favor of Newcourt
Commercial Finance Corporation, an affiliate of The CIT Group, Inc., as
collateral agent for the ratable benefit of the "Lenders" (defined below) (in
such capacity, the "Collateral Agent"), (ii) that certain Amended and Restated
Guaranty and Security Agreement dated as of June 1, 2001 (as amended to the date
hereof and as it may be further restated, supplemented or otherwise modified
from time to time, the "KMC I Services Guaranty") by KMC I Services LLC, a
Delaware limited liability company ("KMC I Services"), in favor of Collateral
Agent, (iii) that certain Amended and Restated Guaranty and Security Agreement
dated as of June 1, 2001 (as amended to the date hereof and as it may be further
restated, supplemented or otherwise modified from time to time, the "KMC II
Services Guaranty") by KMC II Services LLC, a Delaware limited liability company
("KMC II Services"), in favor of the Collateral Agent; (iv) that certain
Guaranty dated as of June 1, 2001 (as amended to the date hereof and as it may
be further restated, supplemented or otherwise modified from time to time, the
"Data Holdco Guaranty") of KMC Data Holdco LLC, a Delaware limited liability
company ("Data Holdco"), in favor of the Collateral Agent; (v) that certain
Guaranty and Security Agreement dated as of June 1, 2001 (as amended to the date
hereof and as it may be further restated, supplemented or otherwise modified
from time to time, the "KMC Financing Guaranty") by KMC Telecom Financing, Inc.,
a Delaware corporation ("KMC Financing"), in favor of the Collateral Agent; (vi)
that certain Guaranty and Security Agreement dated as of June 1, 2001 (as
amended to the date hereof and as it may be further restated, supplemented or
otherwise modified from time to time, the "KMC Financial Services Guaranty";
together with the KMC Holdings Guaranty, KMC I Services Guaranty, KMC II
Services Guaranty, Data Holdco Guaranty and KMC Financing Guaranty,
collectively, the "Guaranties") by KMC Financial Services LLC, a Delaware
limited liability company ("KMC Financial Services"; together with KMC Holdings,
KMC I Services, KMC II Services, Data Holdco and KMC Financing, the
"Guarantors"), in favor of the Collateral Agent; (vii) that certain Amended and
Restated Loan and Security Agreement dated as of February 15, 2000 (as amended
to the date hereof and as it may be further restated, supplemented or otherwise
modified from time to time, the "Loan Agreement") among KMC Telecom, Inc., KMC
Telecom II, Inc., KMC Telecom III, Inc., KMC Telecom of Virginia, Inc., KMC
Telecom Leasing I LLC, KMC Telecom Leasing II LLC, KMC Telecom Leasing III LLC,
KMC Telecom.com, KMC III Services LLC (each of the foregoing being referred to
collectively as the "Borrowers"), the financial institutions from time to time
parties thereto (the "Lenders"), First Union National Bank, as administrative
agent for the Lenders (the "Agent"), and the Collateral Agent; and (viii) that
certain Amendment No. 5 and Limited Waiver to Amended and Restated Loan and
Security Agreement dated as of the date hereof (the "Amendment and Limited
Waiver") among the Borrowers, the Lenders, and the
Exhibit A-1 Execution
Agent. Undefined capitalized terms used herein shall have the meanings assigned
thereto in the Loan Agreement.
Each Guarantor, by its signature below, without in any way
establishing a course of dealing, hereby (i) acknowledges and consents to the
execution and delivery of the Amendment and Limited Waiver by the parties
thereto, (ii) agrees that the Amendment and Limited Waiver shall not limit or
diminish the obligations of such Guarantor to guarantee all of the "Obligations"
of each Borrower under and as defined in the Loan Agreement and such other
amounts as are more specifically described in the Guaranty to which such
Guarantor is a party, (iii) reaffirms all of its obligations under the Guaranty
to which such Guarantor is a party, and (iv) agrees that the Guaranty to which
such Guarantor is a party remains in full force and effect and is hereby
ratified and confirmed.
Exhibit A-2 Execution
IN WITNESS WHEREOF, this instrument has been executed and
delivered as of this 16th day of July, 2001.
KMC TELECOM HOLDINGS, INC.
KMC TELECOM FINANCING, INC.
In each case:
By: /s/ Constance Loosemore
------------------------
Name: Constance Loosemore
Title: Vice President, Treasurer
KMC I SERVICES LLC
By: KMC Telecom, Inc., as its Sole Member
By: /s/ Constance Loosemore
------------------------
Name: Constance Loosemore
Title: Vice President, Treasurer
KMC II SERVICES LLC
By: KMC Telecom II, Inc., as its Sole Member
By: /s/ Constance Loosemore
------------------------
Name: Constance Loosemore
Title: Vice President, Treasurer
KMC DATA HOLDCO LLC
By: KMC Telecom Holdings, Inc., as its Sole
Member
By: /s/ Constance Loosemore
------------------------
Name: Constance Loosemore
Title: Vice President, Treasurer
S-1 Execution
KMC FINANCIAL SERVICES LLC
By: KMC Telecom III, Inc., as its Sole Member
By: /s/ Constance Loosemore
------------------------
Name: Constance Loosemore
Title: Vice President, Treasurer
S-2 Execution