EXECUTION COPY
FOURTH AMENDMENT AND WAIVER dated as of March 31, 2003
(this "Amendment"), to the Credit Agreement dated as of
September 28, 2000, as amended and restated as of April 11,
2001, and amended by the First Amendment dated as of October
31, 2001, the Second Amendment dated as of December 14, 2001
and the Third Amendment dated as of March 29, 2002 (the
"Credit Agreement") and the Security Agreement dated as of
September 28, 2000 (the "Security Agreement") among CCL
Historical, Inc., formerly named CoreComm Limited (the
"Parent"), ATX Communications, Inc., formerly named CoreComm
Holdco, Inc. ("CCI"), CoreComm Communications, Inc. (the
"Borrower"), the lenders party thereto (the "Lenders") and
the administrative agent and collateral agent (in such
capacity, the "Agent").
WHEREAS, the Borrower, CCI and the Parent have requested that the Lenders
(such term and other capitalized terms used herein and not otherwise defined
herein shall have the meanings assigned to such terms in the Credit Agreement)
approve amendments to certain provisions of the Credit Agreement and waive
certain provisions thereof; and
WHEREAS, the undersigned Lenders are willing, on the terms and subject to
the conditions set forth herein, to approve such amendments and waivers to the
Credit Agreement;
ACCORDINGLY, in consideration of the mutual agreements herein contained and
other good and valuable consideration, the sufficiency and receipt of which are
hereby acknowledged, the parties hereto agree as follows:
1. Waivers. Upon effectiveness of this Amendment in accordance with Section
6 hereof, each Lender hereby agrees to waive, until January 31, 2004, compliance
by the Parent, CCI and the Borrower with the covenants set forth in Section
6.13, 6.19, 6.20, 6.21 and 6.22 of the Credit Agreement; provided, however, that
such waiver shall automatically expire on January 31, 2004 with the same effect
as if it had never been granted.
2. Amendment of Credit Agreement. Upon the effectiveness of this Amendment
in accordance with Section 6 hereof, the Credit Agreement is hereby amended as
follows:
(a) Section 1.01 is amended by adding the following definitions in the
appropriate alphabetical order:
"Operating Cash Flow" means, for any period, Consolidated EBITDA
for such period minus the aggregate amount of Capital Expenditures
during such period.
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"Payment Deferral Period" means the period from and including
March 12, 2003, to and excluding February 2, 2004.
(b) Section 2.09 of the Credit Agreement is amended by:
(i) deleting the word "quarterly" in paragraph (a) thereof and
replacing each reference to "December 31, 2003" in paragraph (a) with
a reference to "February 2, 2004"; and
(ii) replacing the reference to "December 31, 2003", in paragraph
(c) thereof with a reference to "February 2, 2004".
(c) Section 2.10(c) is amended by deleting the proviso thereto in its
entirety.
(d) Section 2.12(d) is amended to read in its entirety as follows:
"(d) Accrued interest on each Loan shall be payable in arrears on
each Interest Payment Date for such Loan and, in the case of Revolving
Loans, upon termination of the Revolving Commitments; provided that
(i) payment of accrued interest on each Loan that would otherwise be
payable on an Interest Payment Date occurring during the Payment
Deferral Period ("Deferred Interest") shall be deferred until February
2, 2004, on which date all such Deferred Interest shall be due and
payable in full, (ii) all amounts of Deferred Interest shall bear
interest on each day from the Interest Payment Date therefor referred
to in clause (i) above until the date on which such Deferred Interest
is paid at a rate per annum equal to the Alternate Base Rate plus
5.50%, and all such interest shall be due and payable on February 2,
2004, (iii) interest accrued pursuant to paragraph (c) of this Section
shall be payable on demand, (iv) in the event of any repayment or
prepayment of any Loan (other than a prepayment of an ABR Revolving
Loan prior to the end of the Revolving Availability Period) or of any
Deferred Interest, accrued interest on the principal amount or amount
of Deferred Interest repaid or prepaid shall be payable on the date of
such repayment or prepayment and (v) in the event of any conversion of
any Eurodollar Loan prior to the end of the current Interest Period
therefor accrued interest on such Loan shall be payable on the
effective date of such conversion."
(e) Section 2.12 is further amended by adding a new paragraph (f)
thereto to read as follows:
"(f) Notwithstanding the foregoing or any provision to the
contrary in this Agreement, (i) all outstanding Eurodollar Loans shall
automatically be (and be deemed to have been) converted to ABR Loans
on and as of March 12, 2003, and all Loans shall bear interest on each
day during the Payment Deferral Period at a rate per annum equal to
the Alternate Base Rate plus 5.50%; provided, however, that the
provisions of paragraph (c) shall not apply to any unpaid principal of
or interest on Loans during the Payment Deferral Period and (ii)
except for the Interest Payment Date occurring on March 12, 2003, the
Interest Payment Dates for all Loans during the Payment Deferral
Period will be the last day of each
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calendar month, commencing with March 31, 2003, and concluding with
January 31, 2004."
(f) Sections 5.14, 5.16 and 5.18 of the Credit Agreement are deleted
with the same effect as if such Sections had never been included in the
Credit Agreement.
(g) Section 6.09(a) is amended by deleting clause (iv) thereof in its
entirety and the proviso to clause (ii) of Section 6.09(b) is amended to
read as follows: "provided, that any payment of interest accruing (x) under
the ATX Note shall be made only with common stock of CCI and (y) under
CCI's 10.75% Convertible PIK Notes shall be made only in additional 10.75%
Convertible PIK Notes or with common stock of CCI;"
(h) Section 6.14 is amended to read in its entirety as follows:
"SECTION 6.14. Minimum On-Net Access Lines. The Borrower, CCI and
the Parent will not permit the number of On-Net Access Lines, on any
date set forth below, to be less than the number indicated below for
such date:
Minimum On-Net
--------------
Date Access Lines
---- ------------
March 31, 2003 197,000
June 30, 2003 200,000
September 30, 2003 208,000
December 31, 2003 218,000"
(i) Section 6.15 is amended to read in its entirety as follows:
"SECTION 6.15. Minimum Consolidated Service Revenue. The
Borrower, CCI and the Parent will not permit Consolidated Service
Revenue for any fiscal quarter ending on March 31, 2003, June 30,
2003, September 30, 2003, or December 31, 2003 to be less than
$65,000,000."
(j) Section 6.23 is amended to read in its entirety as follows:
"SECTION 6.23. Maximum Capital Expenditures. The Borrower,
CCI and the Parent will not permit Capital Expenditures of the
Parent, CCI, the Borrower and the other Restricted Subsidiaries
in either period of two consecutive fiscal quarters set forth
below to exceed the amount set forth below opposite such period:
Period of Two Maximum Capital
------------- ---------------
Fiscal Quarters Ending Expenditures
---------------------- ------------
June 30, 2003 $5,198,000
December 31, 2003 5,212,000
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; provided, however, that the amount of Capital Expenditures in the
period of two consecutive fiscal quarters ending December 31, 2003
permitted to be incurred pursuant to the table above shall be
increased by an amount equal to the unused Capital Expenditures
permitted pursuant to the table above for the period of two
consecutive fiscal quarters ending June 30, 2003."
(k) Article VI of the Credit Agreement is amended by adding a new
Section 6.27 to read as follows:
"SECTION 6.27. Minimum Operating Cash Flow. The Borrower, CCI and
the Parent will not permit Operating Cash Flow for any fiscal quarter
set forth below to be less than the amount set forth below opposite
such period:
Fiscal Quarter Ending Minimum Operating Cash Flow
--------------------- ---------------------------
March 31, 2003 $(832,000)
June 30, 2003 364,000
September 30, 2003 487,000
December 31, 2003 596,000
(l) Article VI of the Credit Agreement is amended by adding a new
Section 6.28 to read as follows:
"SECTION 6.28. Settlement of Claims. On and after March 31, 2003,
the Borrower, CCI and the Parent will not, and will not cause or
permit any Restricted Subsidiary to, make any payment or transfer any
assets in payment, satisfaction, compromise or settlement of all or
any portion of a Specified Claim in an aggregate cumulative amount
with respect to any such Specified Claim in excess of $500,000 (any
such assets transferred being valued at their fair market value for
purposes of determining compliance with such limitation), unless, in
each case, the Required Lenders have given their prior written consent
to such payment or transfer. For purposes of the foregoing, the term
"Specified Claim" means any claim asserted in any litigation or
arbitration proceeding against the Borrower, CCI, the Parent or any
Subsidiary that was pending on March 31, 2003, and any claim at any
time asserted in any litigation or arbitration proceeding against any
such Person relating to or in respect of the Convertible Notes or the
10.75% Convertible PIK Notes of CCI."
(m) Article VII of the Credit Agreement is amended by (i) deleting
clause (p) thereof and (ii) replacing the reference to "$2,000,000" in
clause (k) thereof with a reference to "$500,000" and adding the following
proviso at the end of clause (k):
"provided, however, that the existing $1,080,000 judgment in favor of
Easton Telecom shall not result in an Event of Default hereunder so
long as no portion of any such judgment is paid and no attachment of
or levy upon any assets of the Parent, CCI, the Borrower or any other
Restricted Subsidiary having assets in excess of $20,000 is legally
effected to enforce such judgment;"
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3. Amendment of Security Agreement. Upon the effectiveness of this
Amendment in accordance with Section 6 hereof, the Security Agreement is hereby
amended as follows:
(a) The definition of "Collateral" in Section 1.01 is hereby amended
and restated in its entirety as follows:
"Collateral" shall mean all (a) Accounts Receivable, (b)
Documents, (c) Equipment, (d) General Intangibles, (e) Inventory, (f)
cash and cash accounts (g) Investment Property, (h) any Proceeds, (i)
all other assets, rights and interests that uniquely reflect or embody
goodwill associated with the Trademarks and (j) all Commercial Tort
Claims; provided that "Collateral" shall not include Excluded Assets.
(b) Section 1.01 is amended by adding the following definition in the
appropriate alphabetical order:
"Commercial Tort Claims" shall mean any and all right, title and
interest of any Grantor in any Commercial Tort Claim, including but
not limited to claims that are the subject of pending litigation
against Ameritech and certain of its affiliates (Ohio Xxxx Telephone
d/b/a Ameritech vs. CoreComm Newco, Inc., C.A. No. 1:01CV02057 (N.D.
Ohio, Eastern Division)) and Verizon Communications, Inc. and certain
of its affiliates (Verizon Communications, Inc., et. al vs. ATX
Communications, Inc., et al. C.A. No. 02-1374 (SLR) (D. Del)).
The amendments to the Security Agreement effected hereby shall not, by
implication or otherwise, affect any security interest in Commercial Tort Claims
or General Intangibles existing under the Security Agreement prior to the
effectiveness of this Amendment.
4. No Other Amendments or Waivers; Confidentiality. (a) Except as expressly
amended and waived hereby, the provisions of the Credit Agreement and each other
Loan Document are and shall remain in full force and effect. Nothing herein
shall be deemed to entitle any Loan Party to a consent to, or a waiver,
amendment, modification or other change of, any of the terms, conditions,
obligations, covenants or agreements contained in the Credit Agreement or any
Loan Document in similar or different circumstances.
(b) The Borrower, CCI and the Parent will not, and will not permit any
Subsidiary to, name or identify the Lenders in any press release, public
communication or governmental filing made of or with respect to this Amendment
or relating to the subject matter hereof (including pursuant to the filing of
any signature pages hereto). The provisions of this paragraph (b) will be deemed
a covenant under Article VI of the Credit Agreement the breach of which will
result in an immediate Event of Default under Article VII of the Credit
Agreement.
5. Representations and Warranties. After giving effect to this Amendment,
each Loan Party hereby represents and warrants to the Agent and the Lenders
that:
(a) As of the date hereof, no Default or Event of Default has occurred
and is continuing;
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(b) Except as set forth in Exhibit A to this Amendment, all
representations and warranties of each Loan Party set forth in the Loan
Documents are true and correct in all material respects as of the date
hereof, except to the extent that any representation or warranty relates to
an earlier date (in which case such representation or warranty is true and
correct in all material respects as of such earlier date); and
(c) No fee or other compensation has been or will be paid to the Agent
or any Lender (other than as set forth in this Amendment) that is in any
way intended to compensate the Agent or such Lender for its agreement to
the terms of this Amendment, and no contractual relationship currently
exists or is contemplated between the Agent or any Lender and the Borrower
(other than as set forth in this Amendment) that is in any way intended to
compensate the Agent or such Lender for its agreement to the terms of this
Amendment.
6. Conditions Precedent to Effectiveness. This Amendment shall become
effective on the date on which each of the following conditions is satisfied
(the "Effective Date"):
(a) The Agent shall have received counterparts hereof duly executed
and delivered by the Parent, CCI, the Borrower, each of the other Loan
Parties, the Agent and each of the Lenders.
(b) The Agent shall have received all fees and other amounts due and
payable on or prior to the Effective Date, including reimbursement or
payment of all out-of-pocket expenses (including fees, charges and
disbursements of counsel) required to be reimbursed or paid by an Loan
Party hereunder or under any Loan Document, in each case to the extent
invoiced on or prior to the Effective Date.
In the case of provisions relating to changes in interest rates, deferrals of
interest payments and conversions of outstanding Loans to ABR Loans, this
Amendment will be retroactively effective to the dates specified herein for such
changes, deferrals and conversions.
7. Expenses. The Borrower agrees to reimburse the Agent for its
out-of-pocket expenses in connection with this Amendment, including the fees,
charges and disbursements of Cravath, Swaine & Xxxxx and Xxxxxxxx Xxxxxx Xxxxx &
Xxxx, counsel for the Agent, and of FTI Consulting, Inc., advisor to the Agent.
8. Governing Law; Counterparts. (a) This Amendment shall be governed by and
construed in accordance with the laws of the State of New York.
(b) This Amendment may be executed by one or more of the parties to this
Amendment on any number of separate counterparts, and all of such counterparts
taken together shall be deemed to constitute one and the same instrument. This
Amendment may be delivered by facsimile transmission of the signature pages
hereof.
