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KMC TELECOM HOLDINGS, INC.,
as Issuer,
KMC TELECOM FINANCING, INC.
as Guarantor,
and
THE CHASE MANHATTAN BANK,
as Trustee
First Supplemental Indenture
Dated as of May 24, 1999
12 1/2% Senior Discount Notes due 2008
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THIS FIRST SUPPLEMENTAL INDENTURE, dated as of May 24, 1999, among KMC
TELECOM HOLDINGS, INC., a Delaware corporation, as issuer (the "COMPANY"), KMC
TELECOM FINANCING, INC., a Delaware corporation and a Restricted Subsidiary of
the Company, as guarantor (the "GUARANTOR"), and THE CHASE MANHATTAN BANK, as
trustee (the "TRUSTEE").
RECITALS OF THE COMPANY
WHEREAS, the Company and the Trustee have entered into that certain
indenture dated as of January 29, 1998 (the "SENIOR DISCOUNT NOTES INDENTURE"),
pursuant to which the Company issued in the original aggregate principal amount
at maturity of $460,800,000 12 1/2% Senior Discount Notes due 2008 (thE "SENIOR
DISCOUNT NOtes");
WHEREAS, the Company covenanted and agreed pursuant to the terms of
the Senior Discount Notes Indenture not to permit any Restricted Subsidiary (as
defined in the Senior Discount Notes Indenture), directly or indirectly, to
guarantee any indebtedness of the Company which is equal or subordinate in right
of payment with the Senior Discount Notes unless such Restricted Subsidiary
simultaneously executes and delivers a supplemental indenture to the Senior
Discount Notes Indenture to provide for a Guarantee of the payment of the Senior
Discount Notes by such Restricted Subsidiary;
WHEREAS, the Guarantor is a Restricted Subsidiary of the Company;
WHEREAS, the Company, the Guarantor and the Trustee have entered into
that certain indenture dated as of the date hereof (as amended, restated,
supplemented or otherwise modified from time to time, the "INDENTURE"), pursuant
to which the Company is issuing on the date hereof $275,000,000 in aggregate
principal amount of 13 1/2% Senior Notes due 2009 (thE "NOtes") which are equal
in right of payment with the Senior Discount Notes; and
WHEREAS, the Notes are guaranteed by the Guarantor pursuant to the
terms of the Indenture.
NOW, THEREFORE, for and in consideration of the premises and the
mutual covenants and agreements hereinafter set forth, the parties hereto agree,
for the equal and proportionate benefit of all Holders of the Senior Discount
Notes, as follows:
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ARTICLE I
RATIFICATION; DEFINITIONS
SECTION 1.01. FIRST SUPPLEMENTAL INDENTURE. This First Supplemental
Indenture is supplemental to, and is entered into in accordance with Section
9.01 of the Senior Discount Notes Indenture, and except as modified, amended and
supplemented by this First Supplemental Indenture, the provisions of the Senior
Discount Notes Indenture are in all respects ratified and confirmed and shall
remain in full force and effect; and
SECTION 1.02. DEFINITIONS. Unless the context shall otherwise require,
all terms which are defined in Section 1.01 of the Senior Discount Notes
Indenture shall have the same meanings, respectively, in this First Supplemental
Indenture as such terms are given in said Section 1.01 of the Senior Discount
Notes Indenture.
ARTICLE II
GUARANTEE OF SENIOR DISCOUNT NOTES
SECTION 2.01. GUARANTEE. (a) Subject to the provisions of this
Supplemental Indenture, the Guarantor hereby fully, unconditionally and
irrevocably guarantees (hereinafter referred to as the "SUBSIDIARY GUARANTEE")
to each holder of the Senior Discount Notes (each, a "HOLDER" and collectively,
the "HOLDERS") and to the Trustee on behalf of itself and such Holders:
(i) the due and punctual payment of the Accreted Value or principal
amount at maturity of, premium, if any, on and interest on each Senior
Discount Note outstanding as of the date hereof, when and as the same shall
become due and payable, whether at maturity, by acceleration or otherwise,
the due and punctual payment of interest on the overdue principal of and
interest, if any, on such Senior Discount Notes, to the extent lawful, and
the due and punctual performance of all other obligations of the Company to
the Holders or the Trustee, all in accordance with the terms of such Senior
Discount Note and the Senior Discount Note Indenture; and
(ii) in the case of any extension of time of payment or renewal of any
such Senior Discount Note or any of such other obligations, that the same
will be promptly paid in full when due or performed in accordance with the
terms of the extension or renewal, at Stated Maturity, by acceleration or
otherwise.
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(b) The Guarantor hereby waives diligence, presentment, demand of
payment, filing of claims with a court in the event of merger or bankruptcy of
the Company, any right to require a proceeding first against the Company, the
benefit of discussion, protest or notice with respect to any such Senior
Discount Note or the debt evidenced thereby and all demands whatsoever, and
covenants that this Subsidiary Guarantee will not be discharged as to any such
Senior Discount Note except by payment in full of the Accreted Value or
principal amount at maturity thereof and interest thereon in the manner
contemplated by the terms of the Senior Discount Notes Indenture. For the
purposes of this First Supplemental Indenture, the maturity of the obligations
guaranteed hereby may be accelerated as set forth under Article Six of the
Senior Discount Notes Indenture (hereinafter referred to as "ARTICLE SIX"). In
the event of any declaration of acceleration of such obligations as provided in
such Article Six, such obligations (whether or not due and payable) shall
forthwith become due and payable by the Guarantor for the purpose of this First
Supplemental Indenture. In addition, without limiting the foregoing provisions,
upon the effectiveness of an acceleration under Article Six, the Trustee may
make a demand for payment on the Senior Discount Notes under this Subsidiary
Guarantee. Notwithstanding the foregoing, this Subsidiary Guarantee by the
Guarantor shall automatically terminate upon the earlier of (i) the payment in
full of the Accreted Value or principal amount at maturity of, premium, if any,
and interest on all outstanding Senior Discount Notes and (ii) the termination
of the guarantee of the Notes by the Guarantor in accordance with Section 11.01
of the Indenture, unless such termination under Section 11.01 of the Indenture
results from a payment by the Guarantor under the Note Guarantee. If the Trustee
or the Holder is required by any court or otherwise to return to the Company or
the Guarantor, or any custodian, receiver, liquidator, trustee, sequestrator or
other similar official acting in relation to the Company or the Guarantor, any
amount paid to the Trustee or such Holder in respect of a Senior Discount Note,
this Subsidiary Guarantee, to the extent theretofore discharged, shall be
reinstated in full force and effect. The Guarantor further agrees, to the
fullest extent that it may lawfully do so, that, as between it, on the one hand,
and the Holders and the Trustee, on the other hand, the maturity of the
obligations guaranteed hereby may be accelerated as provided in Article Six for
the purposes of this Subsidiary Guarantee, notwithstanding any stay, injunction
or other prohibition extant under any applicable bankruptcy law preventing such
acceleration in respect of the obligations guaranteed hereby.
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(c) Until such time as the Senior Discount Notes outstanding as of the
date hereof are fully and finally paid, including all interest, premium,
principal and liquidated damages with respect thereto, the Guarantor hereby
irrevocably waives any claim or other rights which it may now or hereafter
acquire against the Company that arise from the existence, payment, performance
or enforcement of its obligations under this Subsidiary Guarantee and this
Supplemental Indenture, including, without limitation, any right of subrogation,
reimbursement, exoneration, contribution, indemnification, any right to
participate in any claim or remedy of the Holders against the Company or any
collateral which any such Holder or the Trustee on behalf of such Holder
hereafter acquires, whether or not such claim, remedy or right arises in equity,
or under contract, statute or common law, including, without limitation, the
right to take or receive from the Company, directly or indirectly, in cash or
other property or by set-off or in any other manner, payment or security on
account of such claim or other rights. If any amount shall be paid to the
Guarantor in violation of the preceding sentence and the Accreted Value or
principal amount at maturity of, premium, if any, and accrued interest on the
Senior Discount Notes or any other amounts payable by the Company under the
Senior Discount Notes Indenture shall not have been paid in full, such amount
shall be deemed to have been paid to the Guarantor for the benefit of, and held
in trust for the benefit of, the Holders and the Trustee, and shall forthwith be
paid to the Trustee for the benefit of itself and the Holders to be credited and
applied upon the principal of, premium, if any, and accrued interest on the
Senior Discount Notes.
(d) This Subsidiary Guarantee shall not be valid or become obligatory
for any purpose with respect to a Senior Discount Note until the certificate of
authentication on the Note shall have been signed by or on behalf of the Trustee
pursuant to the terms of the Indenture.
SECTION 2.02. OBLIGATIONS UNCONDITIONAL. (a) Subject to Section 2.05,
nothing contained in this First Supplemental Indenture or in the Senior Discount
Notes is intended to or shall impair, as among the Guarantor, the Trustee and
the Holders, the obligation of the Guarantor, which is absolute and
unconditional, upon failure by the Company, to pay to the Holders the Accreted
Value or principal amount at maturity of, premium, if any, and interest on the
Senior Discount Notes outstanding as of the date hereof as and when the same
shall become due and payable in accordance with their terms or any other amounts
payable by the Company under the Senior Discount Notes Indenture, or is intended
to or shall affect the relative rights of the Holders, the Trustee and creditors
of the Guarantor, nor shall anything herein or therein prevent the Holders of
such Senior Discount Notes or the Trustee on their behalf from exercising all
remedies otherwise permitted by applicable law upon default under this
Indenture.
(b) Without limiting the foregoing, nothing contained in this First
Supplemental Indenture will restrict the right of the Trustee or the Holders to
take any action to declare this Subsidiary Guarantee to be due and payable prior
to the Stated Maturity of the Senior Discount Notes or to pursue any rights or
remedies hereunder.
SECTION 2.03. NOTICE TO TRUSTEE. The Guarantor shall give prompt
written notice to the Trustee of any fact known to the Guarantor which would
prohibit the making of any payment to or by the Trustee in respect of this
Subsidiary Guarantee pursuant to the provisions of this First Supplemental
Indenture.
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SECTION 2.04. THIS ARTICLE NOT TO PREVENT EVENTS OF DEFAULT. The
failure to make a payment on account of the Accreted Value or principal amount
at maturity of, premium, if any, or interest on the Senior Discount Notes by
reason of any provision of this First Supplemental Indenture will not be
construed as preventing the occurrence of an Event of Default.
SECTION 2.05. NET WORTH LIMITATION. Notwithstanding any other
provision of the Senior Discount Notes Indenture, this First Supplemental
Indenture or the Senior Discount Notes and this Subsidiary Guarantee, this First
Supplemental Indenture shall not be enforceable against the Guarantor in an
amount in excess of the net worth of the Guarantor at the time that
determination of such net worth is, under applicable law, relevant to the
enforceability of the Note Guarantee pursuant to the terms of the Indenture and
the Collateral Pledge and Security Agreement. Such net worth shall include any
claim or future claim of the Guarantor against the Company for reimbursement and
any claim against any grantor of a Guarantee for contribution.
ARTICLE III
MISCELLANEOUS
SECTION 3.01. NOTICES. Any notice or communication shall be
sufficiently given if in writing and delivered in person or mailed by first
class mail, commercial courier service or telecopier communication, addressed as
follows:
IF TO THE COMPANY OR THE GUARANTOR:
KMC Telecom Holdings, Inc.
1545 Route 206, Suite 300
Bedminster, New Jersey 07921
Telecopier Number: (908) 719-8775
Attention: Chief Financial Officer
With a copy to:
Kelley Drye & Warren LLP
101 Park Avenue
New York, NY 10178
Attention: Alan M. Epstein, Esq.
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and a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017 - 3954
Attention: Arthur D. Robinson, Esq.
IF TO THE TRUSTEE:
The Chase Manhattan Bank
450 West 33rd Street, 15th Floor
New York, New York 10001-2697
Telecopier Number: (212) 946-8159/8160
Attention: Capital Markets Fiduciary Services
With a copy to:
Pryor Cashman Sherman & Flynn, LLP
410 Park Avenue
New York, NY 10022
Attention: Eric Hellige, Esq.
The Company, the Guarantor or the Trustee by notice to the others may
designate additional or different addresses for subsequent notices or
communications.
SECTION 3.02. SUCCESSORS AND ASSIGNS. All covenants and agreements of
the Company, the Guarantor and the Trustee in this First Supplemental Indenture
shall bind their respective successors.
SECTION 3.03. COUNTERPARTS. This First Supplemental Indenture may be
executed in any number of counterparts and by the parties hereto in separate
counterparts, each of which when so executed shall be deemed to be an original
and all of which taken together shall constitute one and the same First
Supplemental Indenture.
SECTION 3.04. GOVERNING LAW. This First Supplemental Indenture shall
be governed by and construed in accordance with the internal laws of the State
of New York.
SECTION 3.05. SEPARABILITY. In case any provision in this First
Supplemental Indenture shall be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
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SECTION 3.06. EFFECTIVE DATE. This First Supplemental Indenture shall
become effective as of the date hereof.
SECTION 3.07. INCORPORATION INTO INDENTURE. All provisions of this
First Supplemental Indenture shall be deemed to be incorporated in, and made
part of, the Senior Discount Notes Indenture; and the Senior Discount Notes
Indenture, as amended and supplemented by this First Supplemental Indenture,
shall be read, taken and construed as one and the same instrument.
SECTION 3.08. THE TRUSTEE. The Trustee shall not be responsible for or
in respect of the validity or sufficiency of this First Supplemental Indenture
or for or in respect of the recitals contained herein, all of which are made
solely by the Company.
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture to be duly executed, all as of the date first written
above.
KMC TELECOM HOLDINGS, INC.
By: /s/ James D. Grenfell
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Name: James D. Grenfell
Title: Executive Vice President
Chief Financial Officer
KMC TELECOM FINANCING, INC.
as Guarantor
By: /s/ James D. Grenfell
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Name: James D. Grenfell
Title: Executive Vice President
Chief Financial Officer
THE CHASE MANHATTAN BANK,
as Trustee
By: /s/ P. Kelly
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Name: Patricia Kelly
Title: Vice President