AMENDMENT NO. 1
TO
LOAN AND SECURITY AGREEMENT
AMENDMENT NO. 1 TO LOAN AND SECURITY AGREEMENT ("AMENDMENT") dated as
of March 3, 1999, among KMC TELECOM INC., a Delaware corporation ("KMC"), KMC
Telecom II, Inc., a Delaware corporation ("KMC II"), 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, KMC II, KMC
Virginia, Leasing I and Leasing II being hereinafter collectively referred to
hereinafter 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 NEWCOURT COMMERCIAL FINANCE CORPORATION
(f/k/a AT&T COMMERCIAL FINANCE CORPORATION), as collateral agent for the Lenders
(the "COLLATERAL AGENT"; the Agent together with the Collateral Agent being
referred to as the "AGENTS").
WHEREAS, the Borrowers, the Agents and the Lenders are parties to that
certain Loan and Security Agreement (the "LOAN AGREEMENT"; undefined capitalized
terms used herein shall have the meanings assigned thereto in the Loan
Agreement) dated as of December 22, 1998, pursuant to which the Lenders have
agreed to make certain "Loans" and other financial accommodations to the
Borrowers; and
WHEREAS, the Borrowers have requested that the Agents and the Lenders
amend the Loan Agreement in the manner set forth herein, and the Agents and the
Lenders have agreed to such request;
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 Agents and the Lenders agree as
follows:
1. AMENDMENT TO THE LOAN AGREEMENT. Effective as of the date first
above written and subject to the execution of this Amendment by the parties
hereto, the Loan Agreement shall be and hereby is amended as follows:
1.1 SECTIONS 2.03(A) and (B) of the Loan Agreement are hereby deleted
in their entirety and the following language is substituted therefor:
SECTION 2.03. PROCEDURE FOR LOAN REQUEST AND BORROWING COMMITMENT. (a)
A Borrower requesting a Loan shall deliver to each of the Agent and the
Collateral Agent a Notice of Borrowing substantially in the form of
EXHIBIT H-1 attached hereto on or before 11:00 a.m. (New York time) at
least five (5) Business Days prior to the date on which such Loan is
requested to be made if such Loan is requested to be a LIBOR Loan and
at least two (2) Business Days prior to the date on which such Loan is
requested to be made if such Loan is requested to be a Base Rate Loan,
which notice, once given, shall be irrevocable; provided, however, that
only the Collateral Agent shall receive the attachments to the Notice
of Borrowing, as outlined below. The Revolving Loans made on the
Initial Funding Date shall be Base Rate Loans and thereafter may be
continued as Base Rate Loans or converted into LIBOR Loans in the
manner provided in SECTION 2.06 and subject to the other conditions and
limitations therein set forth and set forth in this ARTICLE II. In the
case of a Loan the proceeds of which will be used to purchase or
reimburse any Borrower for Telecommunications Equipment (including any
Telecommunications Equipment being purchased or reimbursed under the
Lucent Purchase Agreement), the Notice of Borrowing delivered to the
Collateral Agent will include a schedule supporting one hundred percent
(100%) of Telecommunications Equipment requested to be funded. Such
schedule will detail all invoices for equipment, third party labor,
permits, other third party costs and all capitalized internal costs of
the Borrowers with respect to such Telecommunications Equipment
permitted under GAAP. All invoices over $25,000 will be attached to
such schedule delivered to the Collateral Agent who shall review such
invoices and verify that, when combined with the above described
capitalized internal costs, such invoices will support at least seventy
percent (70%) of the total requested funding. In addition, if the
Telecommunications Equipment is being purchased or reimbursed under the
Lucent Purchase Agreement, a certificate of delivery and acceptance in
the form of EXHIBIT R shall be attached to the Notice of Borrowing
delivered to the Collateral Agent. In the case of a Loan the proceeds
of which will be used to pay or reimburse any Borrower for transaction
costs, the Notice of Borrowing delivered to the Collateral Agent will
include a copy of the invoice from the provider of the service or other
appropriate supporting documentation. In the case of a Loan, the
proceeds of which will be used for working capital or other general
corporate purposes, the Notice of Borrowing delivered to the Collateral
Agent will contain a certification that the making of such Loan does
not violate any provision of the Indenture. The Notice of Borrowing
shall, with respect to any Loans requested, specify whether such
requested Loans are to be Base Rate Loans or LIBOR Loans, and if such
requested Loans are to be LIBOR Loans, the requested Interest Period
for such Loans.
(b) The Agent agrees, promptly upon (i) receipt of a Notice of
Borrowing and (ii) acknowledgment by the Collateral Agent that the
Borrowers have delivered and the Collateral Agent has reviewed to its
satisfaction (x) each of the invoices or certificates required to be
provided to the Collateral Agent pursuant to SECTION 2.03(A) above and
(y) each of the collateral documents, including, without limitation,
all third party agreements and the related consents to collateral
assignments required pursuant to SECTION 5.08 of the Loan Agreement, as
requested by the Collateral Agent, to notify each Revolving or Term
Lender of the date and amount of the Loan proposed thereunder and the
amount of such Lender's Pro Rata Share therein. So long as no Event of
Default has occurred and is continuing and upon fulfillment of the
applicable conditions set forth in ARTICLE IV and the
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requirements set forth in SECTION 2.03(A) above and in the applicable
Notice of Borrowing, each such Lender severally agrees, on or before
12:00 P.M. (New York time) on the date of each proposed Loan, to pay
into the Payment Account, an amount equal to such Lender's Pro Rata
Share of such Loan in dollars and in same day funds. After the Agent's
receipt of such Lender's Loan proceeds, the Agent shall make available
such proceeds to the Borrower requesting the Loan or the Person
entitled to payment thereof at the bank account(s) specified in the
Notice of Borrowing on the date specified in such Notice of Borrowing
in Dollars in immediately available funds.
1.2 EXHIBIT H-1 to the Loan Agreement is hereby deleted in its
entirety and the Form of Notice of Borrowing attached hereto as EXHIBIT
H-1 is substituted therefor.
2. CONDITIONS PRECEDENT. This Amendment shall become effective as of
the date above written, if, and only if, the Agents have received duly executed
originals of this Amendment from the Borrowers, the Lenders and the Agents.
3. REPRESENTATIONS AND WARRANTIES OF THE BORROWERS. The Borrowers
hereby represent and warrant as follows:
(a) This Amendment and the Loan Agreement, as amended hereby,
constitute legal, valid and binding obligations of the Borrowers and are
enforceable against the Borrowers in accordance with their terms.
(b) Upon the effectiveness of this Amendment, the Borrowers hereby
reaffirm all representations and warranties made in the Loan Agreement, and to
the extent the same are not amended hereby, agree 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.
4. 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,"
"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.
3
(c) Except as expressly provided herein, the execution, delivery and
effectiveness of this Amendment 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.
5. 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.
6. 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 hereto.
7. 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.
[Signature Page Follows]
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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 OF VIRGINIA, INC.
In each case:
By:/s/ CYNTHIA WORTHMAN
----------------------------------
Name: Cynthia Worthman
Title: Vice President and CFO
KMC TELECOM LEASING I LLC
By: KMC TELECOM INC., as its Sole
Member
By:/s/ CYNTHIA WORTHMAN
----------------------------------
Name: Cynthia Worthman
Title: Vice President and CFO
KMC TELECOM LEASING II LLC
By: KMC TELECOM II, INC., as its Sole
Member
By:/s/ CYNTHIA WORTHMAN
----------------------------------
Name: Cynthia Worthman
Title: Vice President and CFO
Signature Page-1
Amendment No. 1 to Loan Agreement
FIRST UNION NATIONAL BANK, as the
Agent and as a Lender
By:/s/ MARK M. HARDEN
----------------------------------
Name: Mark M. Harden
Title: Senior Vice President
NEWCOURT COMMERCIAL FINANCE
CORPORATION (f/k/a AT&T COMMERCIAL
FINANCE CORPORATION), as the
Collateral Agent and as a Lender
By:/s/ MICHAEL V. MONIHAN
----------------------------------
Name: Michael V. Monihan
Title: Vice President
CANADIAN IMPERIAL BANK OF COMMERCE,
as a Lender
By:/s/ ELLEN MARSHALL
----------------------------------
Name: Ellen Marshall
Title: Managing Director
GENERAL ELECTRIC CAPITAL
CORPORATION, as a Lender
By:/s/ MARK F. MYLON
----------------------------------
Name: Mark F. Mylon
Title: Manager - Operations
Signature Page-2
Amendment No. 1 to Loan Agreement
BANKBOSTON, N.A., as a Lender
By:/s/ ILLEGIBLE
----------------------------------
Name:
Title: Vice President
CREDIT SUISSE FIRST BOSTON, as a
Lender
By:/s/ KRISTEN LEPRI
----------------------------------
Name: Kristin Lepri
Title: Associate
DRESDNER BANK AG NEW YORK AND
GRAND CAYMAN BRANCHES, as a
Lender
By:/s/ CONSTANCE ROOSMORE
----------------------------------
Name: Constance Roosmore
Title: Assistant Vice President
By:/s/ LAURA FAZIO
----------------------------------
Name: Laura Fazio
Title: Assistant Vice President
MORGAN STANLEY SENIOR
FUNDING, INC., as a Lender
By:
----------------------------------
Name:
Title:
By:
----------------------------------
Name:
Title:
Signature Page-3
Amendment No. 1 to Loan Agreement
SUMMIT BANK, as a Lender
By:
----------------------------------
Name:
Title:
MORGAN STANLEY DEAN WITTER
PRIME INCOME TRUST, as a Lender
By:/s/ ILLEGIBLE
----------------------------------
Name: ILLEGIBLE
Title: AUTHORIZED SIGNATORY
UNION BANK OF CALIFORNIA, as a
Lender
By:/s/ RYAN D. FLANAGAN
----------------------------------
Name: Ryan D. Flanagan
Title: Assistant Vice President
Signature Page-4
Amendment No. 1 to Loan Agreement
EXHIBIT H-1
NOTICE OF BORROWING
To: First Union National Bank, as Agent
Agency Services-PA4830
1339 Chestnut Street
Philadelphia, Pennsylvania 19107
Facsimile no. (215) 973-1887
Newcourt Commercial Finance Corporation
(f/k/a AT&T Commercial Finance Corporation),
as Collateral Agent
2 Gatehall Drive
Parsippany, New Jersey 07054
Attention: Vice President-Operations/Media & Communication
Dated:______________________
Ladies and Gentlemen:
The undersigned, KMC Telecom Inc., a Delaware corporation, KMC Telecom
II, Inc., a Delaware corporation, KMC Telecom of Virginia, Inc., a Virginia
public service company, KMC Telecom Leasing I LLC, a Delaware limited liability
company, KMC Telecom Leasing II LLC, a Delaware limited liability company, the
"Additional Borrowers" signatory thereto from time to time (collectively, the
"BORROWERS"), refer to that certain Loan and Security Agreement dated as of
December 22, 1998 among the Borrowers, the financial institutions signatory
thereto from time to time (the "LENDERS"), First Union National Bank, as
administrative agent for the Lenders (the "AGENT") and AT&T Commercial Finance
Corporation, as collateral agent for the Lenders (the "COLLATERAL AGENT";
together with the Agent, the "AGENTS") (as amended, restated, supplemented or
otherwise modified from time to time, the "LOAN AGREEMENT"; undefined,
capitalized terms used herein shall have the meanings assigned thereto in the
Loan Agreement) and hereby give the Agent notice, irrevocably, pursuant to
SECTION 2.03 of the Loan Agreement that [KMC Telecom Inc.] [KMC Telecom II,
Inc.] [KMC Telecom of Virginia, Inc.] [KMC Telecom Leasing I LLC] [KMC Telecom
Leasing II LLC] [Additional Borrower] hereby requests a Loan under the Loan
Agreement, and in that connection sets forth below the information relating to
such Loan (the "PROPOSED LOAN") as required by SECTION 2.03 of the Loan
Agreement:
(i) The Business Day of the Proposed Loan is _________ __, ____;
H-1
(ii) The proceeds of the Proposed Loan are to be used for the purposes
as specified on SCHEDULE A attached hereto;
(iii) The bank account into which the proceeds of the Proposed Loan
are to be [credited]1[transferred]2 is account no. [___________________]3
maintained at [___________]4;
(iv) If the bank referenced in (iii) above is not the Agent, the ABA
number of the above-referenced bank is [___________], and the name and address,
phone and fax numbers of the contact person at such bank, are as follows:
________________________________________
________________________________________
________________________________________
Telephone Number:_______________________
Fax Number: ______________________;
(v) The aggregate amount of the Proposed Loan is $[_____________];
(vi) Such Loan, if the initial Loan is to bear interest at the Base
Rate;
(vii) Such Loan, if after the initial Loan, is to bear interest at the
[Base Rate] [LIBO Rate, with an applicable Interest Period of [one month] [two
months] [three months] [six months]];
(viii) The Borrowing Base at such time is $[________________].
The undersigned hereby certifies that the following statements are true
on the date hereof, and will be true on the Business Day of the Proposed Loan:
(A) The representations and warranties contained in ARTICLE III of the
Loan Agreement and contained in the other Loan Documents are correct in all
respects, before and after giving effect to the Proposed Loan and to the
application of the proceeds therefrom, as though made on as of such date;
(B) No event has occurred and is continuing, or would result from such
Proposed Loan or from the application of the proceeds therefrom, which
constitutes either an Event of Default or an event which but for the requirement
- - -----------------------
1 Select if the Agent is the depository bank.
2 Select if the depository bank is not the Agent.
3 Insert specific account number.
4 Insert name of financial institution.
H-2
that notice be given and/or the elapse of time, would constitute an Event of
Default; and
(C) All agreements and all conditions to the Proposed Loan, contained
in the Loan Agreement or any other of the Loan Documents which are required to
be performed or satisfied by the Borrower on the date hereof or by the Business
Day of the Proposed Loan have been and will be performed and satisfied.
(D) [To be included in the Notice of Borrowing at any time that the
Total Leverage Ratio is greater than 6:1 as determined by reference to the
financial statements delivered pursuant to SECTION 5.06 of the Loan Agreement]
The sum of the Proposed Loans and all other Revolving Loans outstanding at the
time of such Proposed Loan do not exceed the Borrowing Base and transaction
costs incurred in connection with the execution and delivery of the Loan
Documents, MINUS, if the Term Loans have not yet been made, the Term Loan
Commitment Amounts of all Term Lenders, and otherwise, the outstanding principal
balance of the Term Loans.
(E) In addition, by its acknowledgment signature below, the Collateral
Agent hereby confirms that the Borrowers have delivered and the Collateral Agent
has reviewed to its satisfaction (i) each of the invoices or certificates
required to be provided to the Collateral Agent pursuant to SECTION 2.03(A) of
the Loan Agreement and (ii) each of the collateral documents, including, without
limitation, all third party agreements and the related consents to collateral
assignments required pursuant to SECTION 5.08 of the Loan Agreement, as
requested by the Collateral Agent.
H-3
The undersigned hereby further certifies that in accordance with
SECTION 6.02 of the Loan Agreement the proceeds of the Proposed Loan shall be
used only for the purposes permitted in accordance with SECTION 2.02 of the Loan
Agreement.
Very truly yours,
KMC TELECOM INC.
KMC TELECOM II, INC.
KMC TELECOM OF VIRGINIA, INC.
In each case:
---------------------------
By:
Its:
KMC TELECOM LEASING I LLC
By: KMC TELECOM INC., as Sole
Member
---------------------------
By:
Its:
KMC TELECOM LEASING II LLC
By: KMC TELECOM II, INC., as Sole
Member
---------------------------
By:
Its:
H-4
Acknowledged and agreed solely with respect to the assertions set forth in
section (E) above this [____] day of [______________]:
NEWCOURT COMMERCIAL FINANCE
CORPORATION
(f/k/a AT&T COMMERCIAL FINANCE
CORPORATION),
as Collateral Agent
- - ------------------------------
By:
Its:
H-5
SCHEDULE A
TO
NOTICE OF BORROWING
DESCRIPTION OF THE PURPOSES FOR WHICH THE PROCEEDS
OF THE PROPOSED LOAN WILL BE USED
[If the proceeds of the Proposed Loan will be used to fund the costs and
expenses of a System, copies of lien waivers and other acknowledgments from
Persons constructing such System and any subcontractors or vendors with respect
to such construction, will be required to be delivered to the Collateral Agent,
together with all applicable consents to collateral assignments of any licenses
or leases with respect to such System. Additionally, any schedules to the Loan
Agreement which, as of the date of such proposed Loan, require modification,
shall be appropriately supplemented and delivered to the Agent. Exceptions to
such requirements should be set forth and attached to the Notice of Borrowing.]
[If the proceeds of the Proposed Loan will be used to purchase or reimburse any
Borrower for Telecommunications Equipment, a schedule supporting one hundred
percent (100%) of Telecommunications Equipment requested to be funded shall be
delivered to the Collateral Agent. Such schedule will detail all invoices for
equipment, third party labor, permits, other third party costs and all
capitalized internal costs of the Borrowers with respect to such
Telecommunications Equipment permitted under GAAP. All invoices over $25,000
will be attached to such schedule delivered to the Collateral Agent, who shall
review such invoices and verify that, when combined with the above described
capitalized internal costs, such invoices will support at least seventy percent
(70%) of the total requested funding. Additionally, any schedules to the Loan
Agreement which, as of the date of such Proposed Loan, require modification,
shall be supplemented and delivered to the Agent. In addition, if the
Telecommunications Equipment is being purchased or reimbursed under the Lucent
Purchase Agreement, a certificate of delivery and acceptance in the form of
EXHIBIT R shall be attached to the Notice of Borrowing delivered to the
Collateral Agent.]
[If the proceeds of the Proposed Loan will be used to pay or reimburse for
transaction costs, a copy of the invoice from the provider of the service or
other appropriate supporting documentation must be included for the Collateral
Agent.]
[If the proceeds of the Proposed Loan will be used for working capital or other
general corporate purposes, a certificate will be required to be delivered to
the Collateral Agent verifying that the making of the Proposed Loan does not
violate any provision of the Indenture.]
H-6