Exhibit 10.4
WAIVER AND AMENDMENT NO. 3 TO
LOAN AND SECURITY AGREEMENT
WAIVER AND AMENDMENT NO. 3 TO LOAN AND SECURITY AGREEMENT (the
"Amendment") dated as of October 29, 1999, is among KMC TELECOM INC., a
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Delaware corporation ("KMC"), KMC Telecom II, Inc., a Delaware corporation ("KMC
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II"), KMC Telecom of Virginia, Inc., a Virginia public service company ("KMC
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Virginia"), KMC Telecom Leasing I LLC, a Delaware limited liability company
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("Leasing I"), KMC Telecom Leasing II LLC, a Delaware limited liability company
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("Leasing II"; KMC, KMC II, KMC Virginia, Leasing I and Leasing II being
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hereinafter collectively referred to as the "Borrowers"), the financial
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institutions from time to time parties thereto (the "Lenders"), FIRST UNION
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NATIONAL BANK, as administrative agent for the Lenders (the "Agent") and
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NEWCOURT COMMERCIAL FINANCE CORPORATION (f/k/a AT&T COMMERCIAL FINANCE
CORPORATION), as collateral agent for the Lenders (the "Collateral Agent" the
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Agent together with the Collateral Agent hereinafter referred to as the
"Agents").
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WHEREAS, the Borrowers, the Agents and the Lenders are parties to that
certain Loan and Security Agreement (the "Loan Agreement"; undefined capitalized
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terms used herein shall have the meanings assigned thereto in the Loan
Agreement) dated as of December 22, 1998, as amended by Amendment No. 1 thereto
dated as of March 3, 1999, and Amendment No. 2 thereto dated as of August 13,
1999, pursuant to which the Lenders have agreed to make certain "Loans" and
other financial accommodations to the Borrowers;
WHEREAS, the Borrowers have requested that the Agents and the Lenders
amend the Loan Agreement and waive the applicability of certain provisions of
the Loan Agreement in the manner set forth herein, and the Agents and the
Lenders have agreed to such request; and
WHEREAS, the Requisite Lenders and the Borrowers are entering into
this Amendment pursuant to Section 11.02(b) of the Loan Agreement.
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
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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:
Section 7.01(c)(i) shall be deleted in its entirety and replaced with
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the following new Section 7.01(c)(i):
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(c) EBITDA.
(i) As of the last day of each fiscal quarter occurring on or after
the Closing Date and on or prior to September 30, 2000, the Borrowers shall
not permit the EBITDA losses for all the Borrowers on a combined basis for
the two fiscal quarters then ending
to exceed the greater of (A) 115% of such losses projected for each such
date in the Milestone Plan, which amount is set forth in item 2 on Annex B
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attached hereto and (B) $5,000,000 less than the aggregate amount of EBITDA
projected for each such date in the Milestone Plan, which amount is set
forth in item 2 on Annex B attached
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hereto, provided, however, that for the fiscal quarter ending December 31,
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1999, the Borrowers shall not permit the EBITDA losses for all the
Borrowers on a combined basis for the two fiscal quarters then ending to
exceed ($48,000,000).
2. Waiver. The Lenders hereby waive compliance by the Borrowers with
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the provisions of Sections 7.01(b) and 7.01 (c)(i) of the Loan Agreement for the
fiscal quarter ended September 30, 1999.
3. Conditions Precedent. This Amendment shall become effective as of
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the date above written, if, and only if, the Agents have received duly executed
originals of this Amendment from the Borrowers, the Requisite Lenders and the
Agents.
4. Representations and Warranties of the Borrowers. The Borrowers
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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.
(c) As of the date hereof, and after giving effect to this Amendment,
each Borrower shall be in compliance with all the terms and provisions set forth
in the Loan Agreement, as amended hereby, on its part to be observed or
performed, and no Event of Default or Default shall have occurred and be
continuing.
5. Reference to and Effect on the Loan Agreement.
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(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.
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(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.
6. 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.
7. Paragraph Headings. The paragraph headings contained in this
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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.
8. Counterparts. This Amendment may be executed in one or more
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counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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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/ Xxxxx X. Xxxxxxxx
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Name: Xxxxx X. Xxxxxxxx
Title: CFO
KMC TELECOM LEASING I LLC
By: KMC TELECOM INC., as its Sole Member
By: /s/ Xxxxx X. Xxxxxxxx
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Name: Xxxxx X. Xxxxxxxx
Title: CFO
KMC TELECOM LEASING II LLC
By: KMC TELECOM II, INC., as its Sole
Member
By: /s/ Xxxxx X. Xxxxxxxx
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Name: Xxxxx X. Xxxxxxxx
Title: CFO
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FIRST UNION NATIONAL BANK, as the Agent
and as a Lender
By: /s/ Xxxxxxxxx Xxxxxx
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Name: Xxxxxxxxx Xxxxxx
Title: SVP
NEWCOURT COMMERCIAL FINANCE CORPORATION
(f/k/a AT&T COMMERCIAL FINANCE CORPORATION),
as the Collateral Agent and as a Lender
By: /s/ Xxxxxxx X. Xxxxxxx
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Name: Xxxxxxx X. Xxxxxxx
Title: Vice President
CANADIAN IMPERIAL BANK OF
COMMERCE, as a Lender
By: /s/ Xxxxx Xxxxxxxx
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Name: Xxxxx Xxxxxxxx
Title: Managing Director
GENERAL ELECTRIC CAPITAL
CORPORATION, as a Lender
By: /s/ Xxxx X. Xxxxx
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Name: Xxxx X. Xxxxx
Title: Managing Director
BANKBOSTON, N.A., as a Lender
By: /s/ Xxxxxxx Xxxxxx
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Name: Xxxxxxx Xxxxxx
Title: Vice President
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CREDIT SUISSE FIRST BOSTON, as a
Lender
By: /s/ Xxxxxxx Xxxxx
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Name: Xxxxxxx Xxxxx
Title: Associate
DRESDNER BANK AG NEW YORK AND GRAND
CAYMAN BRANCHES, as a Lender
By: /s/ Xxxx X. Fleseler
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Name: Xxxx X. Fleseler
Title: Senior Vice President
By: /s/ Xxxxxxxxx Xxxxxxxxxx
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Name: Xxxxxxxxx Xxxxxxxxxx
Title: Assistant Vice President
XXXXXX XXXXXXX SENIOR
FUNDING, INC., as a Lender
By: /s/ T. Xxxxxx Xxxxxxx III
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Name: T. Xxxxxx Xxxxxxx III
Title: Vice President
By:
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Name:
Title:
SUMMIT BANK, as a Lender
By:
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Name:
Title:
XXXXXX XXXXXXX XXXX XXXXXX
PRIME INCOME TRUST, as a Lender
By: /s/ Xxxxxx Xxxxxxxx
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Name: Xxxxxx Xxxxxxxx
Title: Vice President
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XXXXX XXXX XX XXXXXXXXXX, N.A. as a
Lender
By: /s/ Xxxx X. Xxxxxxxx
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Name: Xxxx X. Xxxxxxxx
Title: Assistant Vice President
KEYPORT LIFE INSURANCE
COMPANY, as a Lender
By: /s/ Xxxxx X. Good
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Name: Xxxxx X. Good
Title: Vice President & Portfolio Manager
XXXXX XXX FLOATING RATE LIMITED
LIABILITY COMPANY, as a Lender
By: /s/ Xxxxx X. Good
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Name: Xxxxx X. Good
Title: Vice President
Xxxxx Xxx & Xxxxxxx Incorporated,
as Advisor to the Xxxxx Xxx
Floating Rate Limited Liability
Company
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REAFFIRMATION OF GUARANTY
Reference is hereby made to (i) that certain Guaranty dated as of
December 22, 1998 (as amended, restated, supplemented or otherwise modified from
time to time, the "Guaranty") by KMC Telecom Holdings, Inc., a Delaware
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corporation (the "Guarantor"), in favor of Newcourt Commercial Finance
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Corporation (formerly known as AT&T Commercial Finance Corporation), as
collateral agent for the ratable benefit of the "Lenders" (defined below) (in
such capacity, the "Collateral Agent"), (ii) that certain Loan and Security
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Agreement dated as of December 22, 1998 (as amended, restated supplemented or
otherwise modified from time to time, the "Loan Agreement") among KMC Telecom,
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Inc., KMC Telecom II, Inc., KMC Telecom of Virginia, Inc., KMC Telecom Leasing I
LLC, KMC Telecom Leasing II LLC (each of the foregoing being referred to
collectively as the "Borrowers"), the financial institutions from time to time
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parties thereto (the "Lenders"), First Union National Bank, as administrative
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agent for the Lenders (the "Agent") and the Collateral Agent, and (iii) that
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certain Waiver and Amendment No. 3 to Loan and Security Agreement dated as of
October 29, 1999 (the "Amendment") among the Borrowers, the Lenders, the Agent
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and the Collateral Agent.
The 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 by the parties thereto, (ii) agrees that the Amendment
shall not limit or diminish the obligations of the 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, (iii)
reaffirms all of its obligations under the Guaranty, and (iv) agrees that the
Guaranty remains in full force and effect and is hereby ratified and confirmed.
IN WITNESS WHEREOF, this instrument has been executed and delivered as
of this 29th day of October, 1999.
KMC TELECOM HOLDINGS, INC.
By: /s/ Xxxxx X. Xxxxxxxx
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Name: Xxxxx X. Xxxxxxxx
Title: CFO, Executive Vice President
and Secretary
