EXHIBIT 10.2
EXECUTION
AMENDMENT NO. 3 AND LIMITED WAIVER
TO
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
AMENDMENT NO. 3 AND LIMITED WAIVER TO AMENDED AND RESTATED LOAN AND
SECURITY AGREEMENT ("AMENDMENT"), dated as of February 23, 2001, is among KMC
TELECOM INC., a Delaware corporation ("KMC"), KMC TELECOM II, INC., a Delaware
corporation ("KMC II"), KMC TELECOM III, INC., a Delaware corporation ("KMC
III"), 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 TELECOM LEASING III LLC, a Delaware limited liability
company ("LEASING III"), KMC XXXXXXX.XXX, INC., a Delaware corporation
("XXXXXXX.XXX"); KMC III SERVICES LLC, a Delaware limited liability company
("SERVICES"; KMC, KMC II, KMC III, KMC Virginia, Leasing I , Leasing II, Leasing
III, Xxxxxxx.xxx and Services being hereinafter collectively referred to
hereinafter as the "BORROWERS"), the "Lenders" party hereto, FIRST UNION
NATIONAL BANK, as administrative agent for the Lenders (the "AGENT") and CIT
LENDING SERVICES CORPORATION (f/k/a NEWCOURT 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 Amended and Restated Loan and Security Agreement dated as of February
15, 2000, as amended by Amendment No. 1 thereto dated as of March 28, 2000 and
Amendment No. 2 thereto dated as of July 28, 2000 (as so amended, the "LOAN
AGREEMENT"; undefined capitalized terms used herein shall have the meanings
assigned thereto in the Loan Agreement), 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 and waive certain provisions of 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. AMENDMENTS TO THE LOAN AGREEMENT. Effective as of the date first
above written and subject to the satisfaction of the conditions set forth in
SECTION 4 below, the Loan Agreement shall be and hereby is amended as follows:
1.1 SECTION 1.02 is hereby amended by adding the following after the
definition of "APPLICABLE MARGIN" and before the definition of "ASSIGNMENT
AGREEMENT":
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"'APPROVED VENDOR PROGRAM' shall mean the Borrowers' program
to purchase Telecommunications Equipment manufactured or produced by
Lucent from Approved Vendors for use and installation in cities to
be financed under this Agreement and in accordance with the
Milestone Plan; PROVIDED, that such program, including the Approved
Vendors participating therein, shall have been approved by Lucent.
'APPROVED VENDORS' shall mean vendors and value-added
resellers participating in the Approved Vendor Program."
1.2 Clause (a) of SECTION 2.02 is hereby deleted in its entirety and
the following new clause (a) is substituted therefor (solely for convenience,
added language is italicized):
"(a) The proceeds of the Revolving Loans shall be used by the
Borrowers to purchase Telecommunications Equipment, to pay
transaction costs incurred in connection with the execution,
delivery and performance of the Loan Documents, for financing
Permitted Acquisitions and for working capital and other general
corporate purposes, all as specified in the Notice of Borrowing and
in accordance with the Milestone Plan; provided, however, that 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, proceeds of Revolving Loans may be used
only to pay transaction costs incurred in connection with the
execution and delivery of the Loan Documents, to purchase
Telecommunications Equipment, and to finance Permitted Acquisitions.
Subject to the provisions of SECTION 2.02(D), the proceeds of the
Term B Loans shall be used by the Borrowers to (i) purchase
Telecommunications Equipment pursuant to the Lucent Purchase
Agreement, (II) TO PURCHASE AND INSTALL TELECOMMUNICATIONS EQUIPMENT
THROUGH THE APPROVED VENDOR PROGRAM AND (III) to refinance the
obligations of KMC III , Leasing III and Services under the Lucent
Loan Agreement. Loans with respect to Telecommunications Equipment
purchases may not be made to finance (i) soft costs (including
installation, delivery and engineering costs) in excess of fifteen
percent (15%) of the invoiced price for the related Switch Equipment
or (ii) any support or installation costs associated with an
operational system that would not be capitalized in accordance with
GAAP."
1.3 Clause (d) of SECTION 2.02 is hereby deleted in its entirety and
the following new clause (d) is substituted therefor (solely for convenience,
added language is italicized):
"(d) The proceeds of any Term B Loan consisting of a Cash Advance
shall be used exclusively to finance or reimburse invoices for
Telecommunications Equipment purchased from Lucent OR FROM APPROVED
VENDORS UNDER THE APPROVED VENDOR PROGRAM by KMC, KMC II or KMC III
during the period commencing on the date that is twelve months prior
to the Closing Date and ending on the Term B Loan Termination Date;
provided, that (i) the maximum principal amount of any Term B Loan
consisting of a Cash Advance shall not exceed $100,000,000, (ii) the
principal amount of all Term B Loans consisting of Cash Advances to
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reimburse invoices for Telecommunications Equipment purchased from
Lucent during the twelve month period prior to the Closing Date
("Pre-Closing Invoices") shall not exceed $241,000,000 in the
aggregate and (iii) the Borrowers may not use the proceeds of any
Term B Loan consisting of a Cash Advance to reimburse Pre-Closing
Invoices after the second anniversary of the Closing Date.
1.4 Clause (a) of SECTION 2.03 is hereby deleted in its entirety and
the following new clause (a) is substituted therefor (solely for convenience,
added language is italicized):
"(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 (i) only the Collateral Agent
shall receive the attachments to the Notice of Borrowing, as
outlined below, (ii) if the requested Loan is a Term B Loan
consisting of a Cash Advance in excess of $50,000,000, the Notice of
Borrowing shall be delivered as least seven (7) Business Days prior
to the date on which such Loan is requested to be made, (iii) the
applicable Borrower(s) shall provide to Lucent simultaneously with
the provision of the Notice of Borrowing to the Agent and the
Collateral Agent a list of the invoices (including dollar amounts)
to be financed or reimbursed with the proceeds of the requested Term
B Loan AND (IV) IN THE CASE OF ANY TERM B LOAN THE PROCEEDS OF WHICH
ARE TO BE USED BY ANY BORROWER TO PAY AMOUNTS OUTSTANDING TO ANY
APPROVED VENDOR, THE AGGREGATE AMOUNT OF ALL SUCH TERM B LOANS SHALL
NOT EXCEED $28,000,000 AND LUCENT MAY ELECT TO MAKE SUCH PAYMENT
DIRECTLY TO SUCH APPROVED VENDOR (OR TO PROVIDE FOR PAYMENT IN ANY
OTHER MANNER ACCEPTABLE TO LUCENT AND SUCH APPROVED VENDOR). 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 AND IN THE CASE OF ANY TERM B LOANS, ALL OR
ANY PORTION OF THE PROCEEDS OF WHICH ARE TO BE USED TO PAY AMOUNTS
OUTSTANDING TO ANY APPROVED VENDOR, INVOICES FROM APPROVED VENDORS
WILL SUPPORT ALL OR SUCH PORTION OF SUCH PROCEEDS. In addition, if
the Telecommunications Equipment is being purchased or reimbursed
under the Lucent Purchase Agreement, a certificate of delivery and
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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 either Indenture or the terms of the preferred Equity
Interests of KMC Holdings. 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."
2. LIMITED WAIVERS TO LOAN AGREEMENT. On the basis of the
representations and warranties contained in this Amendment, and subject to the
terms and conditions of this Amendment, the Agents and Requisite Lenders hereby
agree to waive any Default or Event of Default which may have occurred under
SECTION 9.01(B) of the Loan Agreement solely as a result of the Borrowers'
failure to deliver not later than January 15, 2001 pursuant to SECTION
5.06(F)(II) of the Loan Agreement, an annual operating budget on a quarterly
basis for the 2001 calendar year in compliance with the Milestone Plan.
3. LIMITATION OF WAIVER. Without limiting the generality of the
provisions of SECTION 11.02(B) of the Loan Agreement, the waiver set forth above
shall be limited precisely as written and relates solely to noncompliance by the
Borrowers with the provisions of SECTIONS 5.06(F)(II) and 9.01(B) of the Loan
Agreement in the manner and to the extent described above and nothing in this
Amendment shall be deemed to:
(a) constitute a waiver of compliance by Borrower with respect to (i)
SECTIONS 5.06(f)(ii) and 9.01(B) of the Loan Agreement in any other instance or
(ii) any other term, provision or condition of the Loan Agreement or any other
instrument or agreement referred to therein; or
(b) prejudice any right or remedy that the Agents or any Lender may
now have (except to the extent such right or remedy was based upon existing
defaults that will not exist after giving effect to this Amendment) or may have
in the future under or in connection with the Loan Agreement or any other
instrument or agreement referred to therein.
Except as expressly set forth herein, the terms, provisions and
conditions of the Loan Agreement and the other Loan Documents shall remain in
full force and effect and in all other respects are hereby ratified and
confirmed.
4. 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 (i) this Amendment from the Borrowers, the Requisite Lenders and
the Agents and (ii) a Reaffirmation of Guaranty in the form of Exhibit A annexed
hereto by KMC Holdings, KMC I Services LLC and KMC II Services LLC.
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5. 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.
(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.
6. 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," "this
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.
(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.
7. 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.
8. 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 thereto.
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9. 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.
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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 III, INC.
KMC TELECOM OF VIRGINIA, INC.
KMC XXXXXXX.XXX, INC.
In each case:
By: /S/ XXXXXXXXX XXXXXXXXX
-------------------------------------
Name: Xxxxxxxxx Xxxxxxxxx
Title: Vice President
Assistant Treasurer
KMC TELECOM LEASING I LLC
By: KMC TELECOM INC., as its Sole Member
By: /S/ XXXXXXXXX XXXXXXXXX
-------------------------------------
Name: Xxxxxxxxx Xxxxxxxxx
Title: Vice President
Assistant Treasurer
KMC TELECOM LEASING II LLC
By: KMC TELECOM II, INC., as its Sole Member
By: /S/ XXXXXXXXX XXXXXXXXX
-------------------------------------
Name: Xxxxxxxxx Xxxxxxxxx
Title: Vice President
Assistant Treasurer
S-1
KMC TELECOM LEASING III LLC
KMC III SERVICES LLC
In each case:
By: KMC TELECOM III, INC., as its Sole
Member
By:
------------------------------------
Name:
Title: CFO
FIRST UNION NATIONAL BANK, as the Agent
and as a Lender
By: /S/ X.X. XXXXXXX
-------------------------------------
Name: X.X. Xxxxxxx
Title: Senior Vice President
CIT LENDING SERVICES CORPORATION
(f/k/a NEWCOURT COMMERCIAL FINANCE
CORPORATION), as the Collateral Agent and
as a Lender
By: /S/ XXXXXXX X. XXXXXXX
-------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Vice President
CANADIAN IMPERIAL BANK OF COMMERCE,
as a Lender
By:
-------------------------------------
Name:
Title:
S-2
GENERAL ELECTRIC CAPITAL CORPORATION,
as a Lender
By: /S/ XXXXX X. XXXX
-------------------------------------
Name: Xxxxx X. Xxxx
Title: Manager - Operations
LUCENT TECHNOLOGIES INC., as a Lender
By: /S/ XXXX XXXX
-------------------------------------
Name: Xxxx Xxxx
Title: Director-NA Customer Finance
CREDIT SUISSE FIRST BOSTON, as a Lender
By:
-------------------------------------
Name:
Title:
DRESDNER BANK AG NEW YORK AND GRAND
CAYMAN BRANCHES, as a Lender
By: /S/ XXXXX XXXXXXXXX
-------------------------------------
Name: Xxxxx Xxxxxxxxx
Title: Assistant Vice President
By: /S/ XXXXXXX X. XXXXXXXXX
-------------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
Title: Assistant Vice President
S-3
XXXXXX XXXXXXX SENIOR FUNDING, INC.,
as a Lender
By:
-------------------------------------
Name:
Title:
By:
-------------------------------------
Name:
Title:
XXXXXX XXXXXXX XXXX XXXXXX PRIME INCOME
TRUST, as a Lender
By:
-------------------------------------
Name:
Title:
UNION BANK OF CALIFORNIA, N.A., as a Lender
By:
-------------------------------------
Name:
Title:
Xxxxx Xxx & Farnham Incorporated As Agent
for KEYPORT LIFE INSURANCE COMPANY,
as a Lender
By: /S/ XXXXX X. XXXXXXX
-------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Sr.Vice President & Portfolio Manager
S-4
XXXXX XXX FLOATING RATE LIMITED
LIABILITY COMPANY, as a Lender
By: /S/ XXXXX X. XXXXXXX
-------------------------------------
Name: Xxxxx X. Xxxxxxx
Title: Senior Vice President
IBM CREDIT CORPORATION, as a Lender
By: /S/ XXXXXX X. XXXXXX
-------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Manager of Credit,
Commercial & Specialty Financing
S-5
