EXHIBIT 10.4
AMENDMENT NUMBER 3
TO THE PROFESSIONAL SERVICES AGREEMENT
AMONG
KMC TELECOM INC., KMC TELECOM II, INC., KMC TELECOM III, INC.,
KMC TELECOM IV, INC., KMC TELECOM OF VIRGINIA, INC.,
KMC TELECOM LEASING I LLC, KMC TELECOM LEASING II LLC,
KMC TELECOM LEASING III LLC, KMC TELECOM LEASING IV LLC,
AND LUCENT TECHNOLOGIES INC.
This Amendment Number 3 to the Professional Services Agreement
(hereinafter the "AMENDMENT") is made effective as of 16 April, 2001, by and
between 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 IV, Inc., a Delaware corporation, 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
Telecom Leasing IV LLC, a Delaware limited liability company, each with offices
located at 0000 Xxxxx 000, Xxxxx 000, Xxxxxxxxxx, Xxx Xxxxxx 00000 (hereinafter
collectively referred to as "CUSTOMER"), and Lucent Technologies Inc., a
Delaware corporation, acting through its Global Service Providers Group, with
offices located at 000 Xxxxxxxx Xxxxxx, Xxxxxx Xxxx, Xxx Xxxxxx 00000
(hereinafter "LUCENT").
WHEREAS, Customer and Lucent have entered into a Professional Services
Agreement (Contract Number LNS970602JC) dated September 4, 1997 (as modified and
amended by Amendment Number 1, effective October 1, 1998, as further modified
and amended by Amendment Number 2 and as further amended, amended and restated,
supplemented or otherwise modified from time to time, the "PROFESSIONAL SERVICES
AGREEMENT"), setting forth the terms and conditions pursuant to which Lucent
agreed to provide and Customer agreed to procure certain Professional Services
as such Services are described therein;
WHEREAS, KMC, KMC II, KMC III, KMC Virginia, Leasing I, Leasing II,
Leasing III, KMC III Services LLC and KMC Xxxxxxx.xxx, Inc. (together, the
"BORROWERS") have entered into an Amended and Restated Loan and Security
Agreement dated as of February 15, 2000 (as amended by Amendment No. I thereto
dated March 28, 2000, Amendment No. 2 thereto dated as of July 28, 2000 and
Amendment No. 3 and Limited Waiver thereto dated February 23, 2001, and as
further amended, amended and restated, supplemented or otherwise modified from
time to time, the "KMC LOAN AGREEMENT") among the Borrowers, the lenders party
thereto (the "LENDERS"), First Union National Bank as administrative agent to
the Lenders and CIT Lending Services Corporation as collateral agent for the
Lenders;
WHEREAS, the Borrowers have requested that the Lenders (i) modify certain
financial covenants so that the Borrowers may be in compliance with the February
2001 Business Plan (as defined therein) under the KMC Loan Agreement and (ii)
make certain other amendments to the KMC Loan Agreement pursuant, in each case,
as set forth in Amendment No. 4 and Limited Waiver ("AMENDMENT NO. 4");
WHEREAS, pursuant to Section 4 of Amendment No. 4, it is a condition
precedent to the effectiveness of Amendment No. 4 that the Customer and the
Seller amend the terms of the Professional Services Agreement as set forth in
this Amendment; and
WHEREAS, Customer and Lucent wish to make certain modifications to the
Professional Services Agreement as set forth herein;
NOW THEREFORE, in consideration of the mutual promises hereinafter set
forth and other good and valuable consideration, the receipt and sufficiency of
which is hereby acknowledged, the parties agree as set forth below.
1. AMENDMENTS TO THE PROFESSIONAL SERVICES AGREEMENT
Effective as of the date first above written, the Professional Services
Agreement shall be and hereby is amended as follows:
a. SECTION 1. Terms and Scope. Amend Sections 1(a) and (b) of the
Professional Services Agreement as follows:
i. insert after the first sentence of Section 1(a) the following
phrase:
"; PROVIDED that, Lucent reserves the right to cease performing, or
ensuring the performance of, the Services upon the occurrence and/or
during the continuation of any of the following events: (i) Customer
shall be in default of its payment obligations under this Agreement
or under the General Agreement, except in circumstances where
Customer is contesting in good faith the payment of any amount
otherwise owing to Lucent hereunder or thereunder, to the extent of
such disputed amount; (ii) Customer shall not have in place, or it
shall be unlikely that Customer shall have in place, when payment
for any such Services is due to Lucent, a financing commitment
having available credit equal to the amount of such Services; (iii)
Lucent shall have provided to Customer a notice of a material breach
(other than any breach in respect of any payment obligation referred
to in (i) above) under this Agreement which remains incurred after
any applicable cure period; or (iv) a 'Default' or 'Event of
Default' in respect of any payment obligation or as a result of any
proceeding under any bankruptcy, reorganization, arrangement of
debts, insolvency or receivership law filed by or against Customer
or KMC Holdings or 'Borrower' or 'Issuer', as applicable, shall have
occurred and be continuing under the KMC I, II, and III Facility or
any Subordinated Debt Document; PROVIDED that, in each of case (ii),
(iii) and (iv) above, Lucent will not cease performing, or ensuring
the performance of, the Services if Lucent receives from Customer
adequate assurance of payment for such Services when due to Lucent.
For purposes of this Section 1(a), 'adequate assurance' shall be
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determined by Lucent in the sole and absolute reasonable discretion
of Lucent; PROVIDED that, Lucent hereby agrees that (x) the delivery
to Lucent of an irrevocable letter of credit in a face amount of not
less than an amount equal to twice the average monthly payment by
Customer to Lucent for the provision of Services over the six (6)
month period immediately preceding any request for the provision of
'adequate assurance' (such amount the "Adequate Assurance Amount")
for the benefit of Lucent issued by a bank acceptable to Lucent in
its sole, absolute and reasonable discretion organized in the United
States of America or a State thereof or (y) the deposit by Customer
of cash collateral in an amount of not less than the Adequate
Assurance Amount in an escrow account in the name and to the order
of Lucent, shall constitute 'adequate assurance,"; and
ii. insert after the phrase "Services to be provided hereunder" in
Section 1(b) the phrase "(subject to the terms and conditions set
out in this Agreement)".
b. SECTION 3. Invoices and Terms of Payment: Amend Section 3 of the
Professional Services Agreement by replacing in the third sentence
of paragraph two the phrase "thirty (30)" with the phrase "twenty
(20)".
c. SECTION 20: Termination for Cause: Amend Section 20 of the
Professional Services Agreement as follows:
a. redesignate the existing paragraph as subsection "(a)";
b. in new subsection (a), replace the phrase "referred to
arbitration pursuant to Section 24, Arbitration, until such
dispute has been finally settled" with the phrase "referred to
dispute resolution pursuant to Section 24, until the expiry of
the period specified for such dispute resolution or as determined
by such dispute resolution or otherwise as provided in this
subsection (a)"; and
c. insert after the last sentence the following phrase and new
subsection (b):
"Notwithstanding any other provision of this Agreement, this
Agreement shall terminate at Lucent's option upon the delivery
by Lucent to Customer of a notice of termination if a 'Default'
or 'Event of Default' in respect of any payment obligation or as
a result of any proceeding under any bankruptcy, reorganization,
arrangement of debts, insolvency or receivership law filed by or
against Customer or KMC Holdings or 'Borrower' or 'Issuer,' as
applicable, shall have occurred and be continuing under the KMC
I, II, and III Facility or any Subordinated Debt Document.
(b) Termination of this Agreement in accordance with Section 20
or otherwise shall automatically accelerate the due date of all
outstanding invoices or other amounts owing so that they become
immediately due and payable on the effective date of such
termination.".
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d. SECTION 24. Arbitration: Amend Section 24 of the Professional
Services Agreement by deleting Section 24 in its entirety and
replacing it with the following new Section 24 as follows:
"24. DISPUTE RESOLUTION:
If a dispute arises out of or relates to this
Agreement, or its breach, the parties hereto agree to resolve
the dispute within twenty (20) days, or such longer period as
mutually agreed between the parties, through good faith
confidential discussions between senior executives of each
party. If the parties fail to resolve a dispute after such
discussion, then the parties may initiate formal proceedings at
law or in equity.".
e. SECTION 29: Defined Terms: Add the following new Section 29 to
the Professional Services Agreement:
"29. DEFINED TERMS
For the purposes of this Agreement, the following terms and
their definitions shall apply:
"GENERAL AGREEMENT" means the General Agreement No. LNM970313MP,
dated as of March 6, 1997 (as amended on October 15, 1997,
December 22, 1998, November 15, 1999, February 15, 2000 and as
of the date hereof and as may be amended, amended and restated,
supplemented or otherwise modified from time to time);
"KMC I, II AND III FACILITY" means the Amended and Restated Loan
and Security Agreement dated as of February 15, 2000 (as amended
on March 28, 2000, July 28, 2000, February 23, 2001 and as of
the date hereof and as further amended, restated, amended and
restated, supplemented or otherwise modified from time to time)
among KMC Telecom Inc., KMC Telecom II, Inc., KMC Telecom III,
Inc., KMC Telecom of Virginia, Inc., KMC Telecom Leasing I LLC,
KMC Telecom Leasing II LLC, KMC Telecom Leasing III LLC, KMC
Xxxxxxx.xxx, Inc. and KMC III Services LLC as Borrowers, the
financial institutions signatories thereto as lenders, First
Union National Bank as administrative agent and Newcourt
Commercial Finance Corporation as collateral agent;
"SUBORDINATED DEBT DOCUMENTS" shall mean (i) that certain
Indenture dated as of January 29, 1998 between KMC Telecom
Holdings, Inc., as Issuer, and The Chase Manhattan Bank, as
Trustee, relating to KMC Telecom Holdings, Inc.'s l2 1/2 percent
Senior Discount Notes due 2008, together with the First
Supplemental Indenture relating thereto dated as of May 24, 1999
and (ii) that certain Indenture dated as of May 24, 1999 between
KMC Telecom Holdings, Inc., as Issuer, and The Chase Manhattan
Bank, as Trustee, relating to KMC Telecom Holdings, Inc.'s 13
1/2 percent Senior Notes due 2009.".
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2. ENTIRE AGREEMENT
Except as specifically modified, amended or supplemented herein, all terms
and conditions of the Professional Services Agreement shall remain in full force
and effect. The terms and conditions contained in this Amendment and those
non-conflicting terms and conditions of the Professional Services Agreement
supersede all prior oral and written understandings among the parties and shall
constitute the entire agreement among the parties with respect to the subject
matter herein. This Amendment shall not be modified or amended except by a
writing signed by an authorized representative of each of the parties.
3. COUNTERPARTS; EFFECTIVENESS
(a) This Amendment may be executed by the parties hereto via telecopier or
facsimile transmission in any number of 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 instrument.
(b) This Amendment shall be effective upon (i) receipt of a legal opinion
of Xxxxxx Xxxx & Xxxxxx LLP, counsel to Customer, in a form satisfactory to
Lucent, (ii) payment of all documented out-of-pocket third party expenses
(including, in each case, all reasonable 'attorneys and paralegals' fees and
related expenses and costs) incurred by Lucent, including without limitation,
(x) thc legal fees of Xxxxx, Day, Xxxxxx & Xxxxx, special counsel to Lucent, and
(y) the consulting fees of Xxxxx-Xxxxxx, LLC, advisor to Lucent, and, in each
case of (x) and (y), expenses incidental thereto, and (iii) receipt by Lucent of
this Amendment duly authorized, executed and delivered by the parties hereto.
4. REPRESENTATIONS AND WARRANTIES
The Customer hereby represents and warrants to Lucent as follows:
(a) this Amendment has been duly authorized by all necessary corporate
action on its part, has been duly executed and delivered by its duly authorized
officer or officers, and constitutes its valid and binding agreement,
enforceable against it in accordance with its terms;
(b) the representations and warranties contained in the Professional
Services Agreement, as amended hereby, are true and correct on and as of the
date hereof as though made on and as of the date hereof, except to the extent
that such representations and warranties expressly relate to a specified date,
in which case such representations and warranties are hereby reaffirmed as true
and correct when made;
(c) no default has occurred or is continuing under the Professional
Services Agreement on the date hereof; and
(d) Customer is in full compliance with all covenants and agreements
contained in the Professional Services Agreement.
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5. REFERENCE TO PROFESSIONAL SERVICES AGREEMENT
Upon the effectiveness of this Amendment, on and after the date hereof,
each reference in the Professional Services Agreement to "this Professional
Services Agreement," "this Agreement," "hereunder," "hereof," "herein" or words
of like import shall mean and be a reference to the Professional Services
Agreement as amended hereby, and each reference to the Professional Services
Agreement in any other document, instrument or agreement shall mean and be a
reference to the Professional Services Agreement as modified hereby.
6. GOVERNING LAW
THIS AMENDMENT FIVE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE OTHER REMAINING TERMS OF THE GENERAL AGREEMENT AND THE LAW OF THE STATE OF
NEW YORK (INCLUDING FOR SUCH PURPOSES SECTIONS 5-1401 AND 5-1402 OF THE GENERAL
OBLIGATIONS LAWS OF THE STATE OF NEW YORK). IF ANY PROVISION OF THIS AMENDMENT
FIVE IS CONTRARY TO APPLICABLE LAW, SUCH PROVISION SHALL BE DEEMED INEFFECTIVE
WITHOUT INVALIDATING THE REMAINING PROVISIONS HEREOF.
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IN WITNESS WHEREOF, the parties have caused this Amendment to be executed
by their duly authorized representative on this 16 day of April, 2001.
KMC TELECOM INC. KMC TELECOM LEASING I LLC
By: /S/ XXXXXXXXX XXXXXXXXX By: /S/ XXXXXXXXX XXXXXXXXX
----------------------- -----------------------
Name: Name:
Title: Title:
KMC TELECOM II, INC. KMC TELECOM LEASING II LLC
By: /S/ XXXXXXXXX XXXXXXXXX By: /S/ XXXXXXXXX XXXXXXXXX
----------------------- -----------------------
Name: Name:
Title: Title:
KMC TELECOM III, INC. KMC TELECOM LEASING III LLC
By: /S/ XXXXXXXXX XXXXXXXXX By: /S/ XXXXXXXXX XXXXXXXXX
----------------------- -----------------------
Name: Name:
Title: Title:
KMC TELECOM IV, INC. KMC TELECOM LEASING IV LLC
By: /S/ XXXXXXXXX XXXXXXXXX By: /S/ XXXXXXXXX XXXXXXXXX
----------------------- -----------------------
Name: Name:
Title: Title:
KMC TELECOM OF VIRGINIA, INC.
By: /S/ XXXXXXXXX XXXXXXXXX
-----------------------
Name:
Title:
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LUCENT TECHNOLOGIES INC.
By: /S/ XXXXXXX X. XXXXXXX
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Name: Xxxxxxx X. Xxxxxxx
Title: Area Vice President
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