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EXHIBIT 10.13
SECOND AMENDMENT dated as of March 8, 2000 (this
"Amendment") to the Credit Agreement dated as of June 29,
1999, as amended (the "Credit Agreement") by and among
LEXENT INC. (formerly known as National Network
Technologies, Inc.), a Delaware corporation (the "Company"),
EUROPEAN AMERICAN BANK, a New York banking corporation
("EAB"), as Administrative Agent and the Lenders Party
Thereto.
WHEREAS, the Company has requested and the Administrative Agent and the Lenders
have agreed, subject to the terms and conditions of this Amendment, to amend
certain provisions to the Credit Agreement as set forth herein;
NOW, THEREFORE, in consideration of the premises and of the mutual agreements
herein contained, the parties hereto agree as follows:
1. AMENDMENTS.
(a) The following defined terms are added to Section 1.01 in alphabetical
order:
"Permitted Acquisition" shall mean the acquisition by the Company or any
Corporate Guarantor of the capital stock, membership interests or other
ownership interests of a Person engaged in the same or similar business as
the business of the Company or such Corporate Guarantor or the purchase of
all or substantially all of the assets used by such Person in connection
with such business or assets comprising a line of business or a division of
such Person, provided in each case, (i) no Default or Event of Default
shall have occurred and be continuing or would occur after giving effect to
the acquisition, (ii) in the event of an acquisition of stock or of a
membership interest of a Person, the Board of Directors or other governing
body of such Person shall have recommended the sa1e by its shareholders or
its members of their equity interest to the Company or the Corporate
Guarantor, as the case may be, and (iii) Company shall have complied with
the provisions of Section 6.13 hereof.
"Qualifying IPO" shall mean an initial public offering of the Company's
common stock pursuant to an effective registration statement on Form S-1
pursuant to which the Company has received proceeds, net of underwriting
fees and reasonable out-of-pocket expenses incurred in connection
therewith, of not less than $65,000,000.
(b) The following defined terms are hereby amended and restated in their
entirety to provide as follows:
"Revolving Credit Commitment" shall mean with respect to each Lender the
obligation of such Lender to make Revolving Credit Loans to the Company in
aggregate amount not to exceed $6,000,000 with respect to SBLI and
$14,000,000 with respect to EAB.
"Revolving Credit Commitment Termination Date" shall mean June 30, 2003.
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"Total Revolving Credit Commitments" shall mean, at any time, the aggregate
of the Revolving Credit Commitments in effect at such time, which shall be
initially $20,000,000.
(c) Section 2.01(f) is hereby amended in its entirety to provide as
follows:
"(f) Intentionally Omitted."
(d) Section 3.04(b) is hereby amended by deleting the reference to the
phrase "1/8 of 1%" on the fifth line thereof and replacing it with the
phrase "1/4 of 1%" in its place and stead.
(e) Section 3.07 is hereby amended in its entirety to provide as follow:
"PRO RATA TREATMENT AND PAYMENTS. Each borrowing by the Company from
the Lenders shall be made by the Lenders as follows: (a) up to the
first $12,000,000 of Revolving Credit Loans made by the Lenders shall
be allocated between the Lenders as follows: (i) 50% to SBLI and (ii)
50% to EAB and (b) any requests for borrowings in excess of
$12,000,000 shall be made solely by EAB. Each payment by the Company
on account of any fee and any reduction of the Revolving Credit
Commitment of the Lenders hereunder shall be made pro rata according
to the respective relevant Commitment Proportions of the Lenders,
provided that if the outstanding principal amount of the Revolving
Credit Loans is greater than $12,000,000, then (a) that portion of the
fee required to be paid pursuant to Section 3.04(b) which is allocable
to that portion of the Revolving Credit Commitment which is in excess
of $12,000,000 shall be paid solely to EAB for its account, with the
balance of such such fee shared pro rata according the respective
relevant Commitment Proportions of the Lenders and (b) any reduction
of the Revolving Credit Commitment shall first reduce that portion of
the Revolving Credit Commitment which is in excess of $12,000,000 and
the balance thereof shall be be used to reduce the balance of the
Revolving Credit Commitment. Each payment (including each prepayment)
by the Company on account of principal of and interest on each Loan
shall be made pro rata according to the respective outstanding
principal amounts of such Loans held by each Lender; provided,
however, if the outstanding principal amount of the Revolving Credit
Loans is in excess of $12,000,000, then (i) all payments of principal
received in respect to the Revolving Credit Loans shall be applied
first to those Revolving Credit Loans in excess of $12,000,000 which
were made solely by EAB, until the principal amount of all such
Revolving Credit Loans have been paid in full and (ii) all prepayments
shall first be applied to those Revolving Credit Loans which are in
excess of $12,000,000 and which were funded solely by EAB. All
payments (including prepayments) to be made by the Company on account
of principal, interest, fees and reimbursement obligations shall be
made without set-off or counterclaim and shall be made to the
Administrative Agent, for the account of the Lenders (or EAB as set
forth above) at the Payment Office of the Administrative Agent in
Dollars in immediately available funds. The Administrative Agent shall
distribute such payments to the Lenders promptly upon receipt in like
funds by wire
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transfer of each Lender's portion of such payment to such Lender
for the account of its Lending Office. The Administrative Agent
may, in its sole discretion, directly charge principal and
interest payments due in respect of the Loans to the Company's or
any Corporate Guarantors' accounts at the Payment Office or other
office of the Administrative Agent. Except as otherwise provided
in the definition of "Interest Period", if any payment hereunder
becomes due and payable on a day other than a Business Day, such
payment shall be extended to the next succeeding Business Day,
and, with respect to payments of principal, interest thereon shall
be payable at the then applicable rate during such extension.
(f) Section 6.03 is hereby amended to redesignate clause (l) as
clause (m) and to add a new clause (l) which shall read in its
entirety as follows:
"Notify the Agent and Lenders of the consummation of a Qualifying
IPO on the date thereof."
(g) Section 6.03 is further amended to insert the following text at
the beginning of clause (i):
"Prior to consummation of a Qualifying IPO,"
(h) Clause (j) of Section 6.03 is hereby amended and restated in
its entirety to read as follows:
"(j) (i) Prior to consummation of a Qualifying IPO, and after
consummation of a Qualifying IPO if the aggregate principal amount
of the Loans outstanding as of the end of the preceding month is
equal to or greater than $5,000,000, as soon as available and in
any event within twenty-one (21) days after the end of each
month, detailed monthly schedules of accounts receivable and
accounts payables aging and a revenue summary, each in form and
substance satisfactory to the Lenders and, (ii) after
consummation of a Qualifying IPO (but subject to clause (i)) as
soon as available and in any event within twenty-one (21) days
after the end of each fiscal quarter, detailed quarterly
schedules of accounts receivable and accounts payables aging and
a revenue summary, each in form and substance satisfactory to
the Lenders."
(i) Section 7.12 is hereby amended to delete all the text thereof
commencing after the text "provided, however," and to add the text
"the Company may consummate Permitted Acquisitions" in lieu thereof."
(j) Section 7.14 is hereby amended to add the following text at the
end thereof:
"; provided, however, following the consummation of a Qualifying
IPO the Company may prepay Subordinated Debt provided that after
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giving effect to each such payment no Default or Event of Default
shall have occurred and be continuing, including, without
limitation, any Default or Event of Defau1t pursuant to Section
7.13."
(k) Section 7.15 is hereby amended to add the following sentence at
the end thereof:
"Notwithstanding the foregoing, following consummation of a
Qualifying IPO the Company may pay cumulative dividends with
respect to its preferred stock accrued and unpaid for the period
commencing January 1, 1999 through the date on which the
Qualifying IPO is consummated provided no Default or Event of
Default shall have occurred and be continuing or would occur
after giving effect to such payment."
(l) Section 8.01(k) is hereby amended to add the following text
after the text "of record at least 51%":
"or, following consummation of a Qualifying IPO, at least 40%,"
(m) Clauses (a), (b), (c), (d), (e) and (f) of Section 7.13 are
hereby deleted in their entirety and the following new clauses
(a),(b), (c) and (d) are added in lieu thereof:
"(a) Minimum Consolidated EBITDA. Permit Consolidated EBITDA as
of the last day of any calendar quarter to be less than the
amount set forth below opposite the relevant calendar year:
Calendar Year Amount
2000 $15,500,000
2001 $20,000,000
2002 and each calendar year thereafter $21,000,000
(b) Consolidated Fixed Charge Ratio. Permit the Consolidated Fixed
Charge Ratio as of the last day of any calendar quarter to be
less than the amount set forth below opposite the relevant
calendar year:
Calendar Year Ratio
2000 2.0:1.00
2001 2.75:1.00
2002 and each calendar year thereafter 2.75:1.00
(d) Consolidated Tangible Net Worth Plus Subordinated Debt. Prior to
consummation of a Qualifying IPO, permit Consolidated Tangible Net
Worth plus Subordinated Debt, as of the last day of any calendar
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quarter, to be less than the amount set forth below opposite the
relevant calendar year:
Calendar Year Amount
2000 $17,500,000
2001 $25,000,000
2002 and each calendar year thereafter $32,500,000
After consummation of a Qualifying IPO permit Consolidated Tangible
Net Worth plus Subordinated Debt, as of the last day of any fiscal
quarter, commencing with the fiscal quarter in which the Qualifying
IPO occurs to be less than $75,000,000.
(e) Consolidated Leverage Ratio. Prior to consummation of a
Qualifying IPO, permit the Consolidated Leverage Ratio as of the last
day of any fiscal quarter to exceed the ratio set forth opposite the
relevant calendar year:
Calendar Year Ratio
2000 2.15:1.00
2001 1.85:1.00
2002 and each calendar year thereafter 1.45:1.00
After consummation of a Qualifying IPO, permit the Consolidated Leverage
Ratio to exceed 1.0:1.0 as of the end of any fiscal quarter commencing with
the fiscal quarter in which the Qualifying IPO occurs.
(n) Article 10 is hereby amended to add a new Section 10.14 which shall
read as follows:
Section 10.14. RELEASE OF GUARANTEES. The Administrative Agent and the
Lenders agree that provided no Default or Event of Default shall have
occurred and be continuing as of the date of the consummation of a
Qualifying IPO, effective upon the consummation of a Qualifying IPO the
Individual Guarantors shall be released from their Individual Guaranties.
Following such release, the Administrative Agent and the Lenders shall
upon request of the Company deliver to the Company for the benefit of the
Individual Guarantors a writing confirming that the Individual Guarantors
are released from their obligations under their respective Individual
Guarantees;
(o) Exhibit A to the Credit Agreement is hereby amended and restated and is
replaced with Exhibit A attached to this Amendment.
2. CONDITIONS TO EFFECTIVENESS. The amendments set forth herein are subject
to satisfaction of the following conditions on the date hereof:
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(a) The Administrative Agent shall have received a facility
fee in the amount of $43,750, $13,125 of which shall be payable to SBLI
and $30,625 of which shall be payable to EAB.
(b) Each Lender shall have received an original Amended and
Restated Note, in the applicable form attached hereto as Exhibit A,
with the appropriate insertions and duly executed by the Company.
(c) The Administrative Agent shall have been reimbursed
for the reasonable legal fees of counsel incurred in connection with the
preparation of the amendments.
(d) The Administrative Agent shall have received the following:
(i) UCC search results identifying the financing
statements on file with respect to the Company;
(ii) a certificate of the Secretary of the Borrower, (A)
attesting to all corporate action taken by the
Borrower, including resolutions of its Board of
Directors authorizing the execution, delivery and
performance of this Amendment and each other
document to be delivered pursuant to this Amendment;
(B) stating that, except as set forth in such
certificate, the corporate documents previously
delivered to the Lenders have not been amended,
modified, revoked or rescinded as of the date of
their prior certification and (C) certifying the
names and true signatures of certain officers of the
Borrower authorized to sign this Amendment and the
other Loan Documents.
(iii) a certificate of an Executive Officer of the
Borrower stating that, except as set forth in such
certificate with respect to a matter concerning the
representations contained in clause (a) of Section
4.06 of the Credit Agreement, the representations
and warranties in Article IV of the Credit Agreement
are true and correct on such date as though made on
and as of such date, unless such representation is
as of a specific date, in which case, as of such
date, and that no event has occurred as is
continuing which constitutes a Default or Event of
Default,
(iv) such other documents, instruments, approvals,
opinions and evidence as the Lenders may reasonably
require.
3. MISCELLANEOUS.
Capitalized terms used herein and not otherwise defined herein shall have
the same meanings as defined in the Credit Agreement.
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Except as expressly amended hereby, the Credit Agreement shall remain in
full force and effect in accordance with the original terms thereof.
The amendments herein contained are limited specifically to the matters set
forth above and do not constitute directly or by implication an amendment or
waiver of any other provision of Credit Agreement or any default which may
occur or may have occurred under the Credit Agreement.
The Company hereby represents and warrants that (a) except as set forth in
Schedule A hereto with respect to a matter concerning the representations
contained in clause (a) of Section 4.06 of the Credit Agreement, after
giving effect to this Amendment, the representations and warranties by the
Company and each Corporate Guarantor pursuant to the Credit Agreement and
the Loan Documents to which each is a party are true and correct in all
material respects as of the date hereof with the same effect as those such
representations and warranties have been made on and as of such date, unless
such representation is as of a specific date, in which case, as of such
date, (b) after giving effect to this Amendment, no Default or Event of
Default has occurred and is continuing.
This Amendment may be executed in one or more counterparts, each of which
shall constitute an original, but all of which when taken together shall
constitute but one Amendment. This Amendment shall become effective when
duly executed counterparts hereof which, when taken together, bear the
signatures of each of the parties hereto shall have been delivered to the
Administrative Agent.
This Amendment shall constitute a Loan Document.
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IN WITNESS WHEREOF, the Company,the Administrative Agent and the Lenders
have caused this Amendment to be duly executed by their duly authorized
officers, all as of the day and year first above written.
LEXENT INC. (formerly known as National Network
Technologies, Inc.)
By: /s/ JONATHAN H. STERN
-------------------------
Name: Jonathan H. Stern
Title: Executive Vice President, CFO
EUROPEAN AMERICAN BANK, as Administrative Agent
and as a Lender
By: /s/ ANDREW CUNNINGHAM
--------------------------
Name: Andrew Cunningham
Title: Vice President
STATE BANK OF LONG ISLAND, as a Lender
By: /s/ MICHAEL SABALA
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Name: Michael Sabala
Title: Vice President
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The undersigned, not as parties to the Credit Agreement, but as Guarantors under
the Guarantees, each dated as of June 29, 1999, do hereby accept and agree to
the terms of this Amendment and Waiver and further acknowledge that their
respective Guaranty is in full force and effect with respect to such Guarantor.
NATIONAL NETWORK TECHNOLOGIES, LLC
By /s/ JONATHAN H. STERN
-----------------------
Title: Executive Vice President, CFO
HUGH O'KANE ELECTRIC CO. LLC
By:/s/ JONATHAN H. STERN
----------------------
Title: Executive Vice President, CFO
/s/ HUGH J. O'KANE JR.
----------------------
Hugh J. O'Kane, Jr.
/s/ KEVIN M. O'KANE
------------------
Kevin M. O'Kane
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EXHIBIT A
AMENDED AND RESTATED NOTE
$6,000,000 New York, New York
as of March , 2000
FOR VALUE RECEIVED, LEXENT INC. (f/k/a/ National Network Technologies,
Inc.), a Delaware corporation (the "Company"), promises to pay to the order of
STATE BANK OF LONG ISLAND (the "Lender"), on or before the Revolving Credit
Commitment Termination Date, SIX MILLION DOLLARS ($6,000,000) or, if less, the
unpaid principal amount of all Revolving Credit Loans made by the Lender to the
Company under the Credit Agreement referred to below. The Company also promises
to pay interest on the unpaid principal amount hereof from the date hereof until
paid in full at the rates and at the times which shall be determined in
accordance with the provisions of the Credit Agreement referred to below.
This Note is the "Note" issued pursuant to and entitled to the
benefits of the Credit Agreement dated as of June 29, 1999 by and among the
Company, the Lender, European American Bank, as Agent for the Lenders and the
Lenders referred to therein (as the same may be amended, modified or
supplemented from time to time, the "Credit Agreement"), to which reference is
hereby made for a more complete statement of the terms and conditions under
which the Loan evidenced hereby was made and is to be repaid. Capitalized terms
used herein without definition shall have the meanings set forth in the Credit
Agreement.
Each of the Lender and any subsequent holder of this Note agrees, by
its acceptance hereof, that before transferring this Note, it shall record the
date and amount of each payment or prepayment of principal of the Loan
previously made hereunder on the grid schedule annexed to this Note; provided,
however, that the failure of the Lender or holder to set forth the Loan,
payments and other information on the attached grid schedule shall not in any
manner affect the obligation of the Company to repay the Loan made by the Lender
in accordance with the terms of this Note.
This Note is subject to optional prepayments pursuant to Section 3.03
of the Credit Agreement.
Upon the occurrence of an Event of Default, the unpaid balance of the
principal amount of this Note, together with all accrued but unpaid interest
thereon, may become, or may be declared to be, due and payable in the manner,
upon the conditions and with the effect provided in the Credit Agreement.
All payments of principal and interest in respect of this Note shall
be made in lawful money of the United States of America in immediately available
funds at the office of the Agent located at 335 Madison Avenue, New York, New
York 10017, or at such other place as shall be designated in writing for such
purpose in accordance with the terms of the Credit Agreement.
This Note is an amendment and restatement of and is being issued in
replacement of
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and in substitution for, the Note, dated as of June 29, 1999, in the original
principal amount of $5,000,000, issued by the Company to the order of the Lender
(the "Original Note"); provided, however, that all principal unpaid and all
interest accrued and unpaid under the Original Note shall be deemed to be
evidenced by this Note and payable hereunder from and after the date hereof.
The execution and delivery of this Note shall not be construed (i) to have
constituted repayment of any principal or interest on the Original Note or (ii)
to release, cancel, terminate or otherwise impair all or any part of the lien or
security interest granted to the Lender as collateral security for the Original
Note, all of which liens and security interests shall secure this Note.
No reference herein to the Credit Agreement and no provision of this
Note or the Credit Agreement shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of and
interest on this Note at the place, at the respective times, and in the currency
herein prescribed.
The Company and endorsers of this Note waive diligence, presentment,
protest, demand, and notice of any kind in connection with this Note.
THIS NOTE SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAW.
IN WITNESS WHEREOF, the Company has caused this Note to be executed
and delivered by its duly authorized officer as of the day and year and at the
place first above written.
LEXENT INC. (f/k/a National Network
Technologies, Inc.)
By
-------------------------------------
Name: Jonathan Stern
Title: Executive Vice President, CFO
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SCHEDULE
Amount of Outstanding Type Applicable Amount of Notation
Principal Principal of Interest Interest Principal Made
Date Payment Balance Loan Rate Period Paid By
- ---- ------- ------- ---- ---- ------ ---- --
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AMENDED AND RESTATED NOTE
$14,000,000 New York, New York
as of March__, 2000
FOR VALUE RECEIVED, LEXENT INC. (f/k/a National Network Technologies,
Inc.), a Delaware corporation (the "Company"), promises to pay to the order of
EUROPEAN AMERICAN BANK (the "Lender"), on or before the Revolving Credit
Commitment Termination Date, FOURTEEN MILLION DOLLARS ($14,000,000) or, if less,
the unpaid principal amount of all Revolving Credit Loans made by the Lender to
the Company under the Credit Agreement referred to below. The Company also
promises to pay interest on the unpaid principal amount hereof from the date
hereof until paid in full at the rates and at the times which shall be
determined in accordance with the provisions of the Credit Agreement referred to
below.
This Note is the "Note" issued pursuant to and entitled to the
benefits of the Credit Agreement dated as of June 29, 1999 by and among the
Company, the Lender, European American Bank, as Agent for the Lenders and the
Lenders referred to therein (as the same may be amended, modified or
supplemented from time to time, the "Credit Agreement"), to which reference is
hereby made for a more complete statement of the terms and conditions under
which the Loan evidenced hereby was made and is to be repaid. Capitalized terms
used herein without definition shall have the meanings set forth in the Credit
Agreement.
Each of the Lender and any subsequent holder of this Note agrees, by
its acceptance hereof, that before transferring this Note, it shall record the
date and amount of each payment or prepayment of principal of the Loan
previously made hereunder on the grid schedule annexed to this Note; provided,
however, that the failure of the Lender or holder to set forth the Loan,
payments and other information on the attached grid schedule shall not in any
manner affect the obligation of the Company to repay the Loan made by the Lender
in accordance with the terms of this Note.
This Note is subject to optional prepayments pursuant to Section 3.03
of the Credit Agreement.
Upon the occurrence of an Event of Default, the unpaid balance of the
principal amount of this Note, together with all accrued but unpaid interest
thereon, may become, or may be declared to be, due and payable in the manner,
upon the conditions and with the effect provided in the Credit Agreement.
All payments of principal and interest in respect of this Note shall
be made in lawful money of the United States of America in immediately available
funds at the office of the Agent
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located at 335 Madison Avenue, New York, New York 10017, or at such other place
as shall be designated in writing for such purpose in accordance with the terms
of the Credit Agreement.
This Note is an amendment and restatement of and is being issued in
replacement of and in substitution for, the Note, dated as of June 29, 1999, in
the original principal amount of $7,500,000, issued by the Company to the order
of the Lender (the "Original Note"); provided, however, that all principal
unpaid and all interest accrued and unpaid under the Original Note shall be
deemed to be evidenced by this Note and payable hereunder from and after the
date hereof. The execution and delivery of this Note shall not be construed (i)
to have constituted repayment of any principal or interest on the Original Note
or (ii) to release, cancel, terminate or otherwise impair all or any part of the
lien or security interest granted to the Lender as collateral security for the
Original Note, all of which liens and security interests shall secure this Note.
No reference herein to the Credit Agreement and no provision of this
Note or the Credit Agreement shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of and
interest on this Note at the place, at the respective times, and in the currency
herein prescribed.
The Company and endorsers of this Note waive diligence, presentment,
protest, demand, and notice of any kind in connection with this Note.
THIS NOTE SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO PRINCIPLES
OF CONFLICTS OF LAW.
IN WITNESS WHEREOF, the Company has caused this Note to be executed
and delivered by its duly authorized officer as of the day and year and at the
place first above written.
LEXENT INC. (f/k/a National Network
Technologies, Inc.)
By
------------------------------------
Name: Jonathan Stern
Title: Executive Vice President, CFO
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SCHEDULE
Amount of Outstanding Type Applicable Amount of Notation
Principal Principal of Interest Interest Principal Made
Date Payment Balance Loan Rate Period Paid By
- ---- ------- ------- ---- ---- ------ ---- --
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SCHEDULE A
In August 1999, a former employee of the Borrower filed a
charge of employment discrimination against the Borrower
with the New York State Division of Human Rights and the
Equal Opportunity Commission and has been granted a right to
sue in federal court. If suit is brought, management of the
Borrower is prepared to defend any claims vigorously and
believes that resolution of such claims should not have a
Material Adverse Effect (as such term is defined in the
Credit Agreement). However, although such former employee
has not to date asserted any claims for a specified sum of
money, any such claims, if asserted, could be for an amount
in excess of $200,000. Furthermore, although management of
the Borrower believes that any such claims should be covered
by insurance (other than reasonable and customary
deductibles), there is no assurance that such coverage will
be available.
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