Exhibit 10.7
FIRST AMENDMENT
FIRST AMENDMENT (the "Amendment"), dated as of January 6, 2003 to be
effective as of the First Amendment Effective Date (defined below) with respect
to that certain Third Amended and Restated Loan and Security Agreement, dated as
of December 31, 2002 (the "Credit Agreement"), among US LEC CORP., a Delaware
corporation ("Holdings"), as Guarantor and Borrower Representative, the entities
party to the Credit Agreement as Borrowers thereunder (each individually a
"Borrower" and collectively, the "Borrowers"), each financial institution or
entity listed on the signature pages thereof as a "Lender" and the other
financial institutions and other entities which become parties thereto as
successors or assigns (each a "Lender" and collectively, "Lenders") and General
Electric Capital Corporation, a Delaware corporation ("GECC"), as Administrative
Agent for Lenders (in such capacity, "Administrative Agent").
W I T N E S S E T H:
WHEREAS, Borrowers, Holdings, Lenders and Administrative Agent are
parties to the Credit Agreement;
WHEREAS, Borrowers have requested that Lenders agree to amend the
Credit Agreement to (i) permit the acquisition of certain assets from Eagle
Telco, Inc. and Eagle Communications, Inc. and (ii) amend certain other
provisions of the Credit Agreement; and
WHEREAS, Lenders are willing to agree to the requested amendments on
the terms and conditions contained herein.
NOW THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the parties agree as follows:
1. Definitions. Unless otherwise defined herein, terms defined in the
Credit Agreement shall have their defined meanings when used herein.
2. Amendments to Credit Agreement.
(a) Section 1.1 of the Credit Agreement shall be amended by adding
thereto the following new definitions in their proper alphabetical order:
"'Eagle Acquisition': the purchase of the Eagle Assets from Eagle
Telco, Inc., a Delaware corporation, by US LEC Acquisition Co., a North
Carolina corporation (or another Borrower), upon the following terms and
conditions: (a) total consideration shall not exceed $3,000,000 of which
(i) $1,250,000 shall be paid in cash on the closing date and (ii)
$1,750,000 shall be
paid by the issuance of a promissory note by Holdings to Eagle Telco, Inc.
(the "Eagle Subordinate Note") and the issuance by Holdings of a warrant to
purchase 921,053 shares of common stock, (b) the Eagle Subordinated Note
shall (i) have a maturity date not earlier than December 31, 2007, (ii)
bear interest at a rate not to exceed 11% per annum, (iii) have no
principal amortization until the maturity date, (iv) be subordinated on
terms not less favorable to Administrative Agent and Lenders than those set
forth in the Subordinated Debt Investment Documents or in such other form
as shall be acceptable to Administrative Agent and Requisite Lenders, and
(v) be in form and substance acceptable to Administrative Agent, (c) the
purchase shall be pursuant to documentation substantially in the form
attached hereto as Exhibit A and such other documentation and with such
changes thereto as shall be acceptable to the Administrative Agent, in each
case with changes thereto that are not adverse to the interests of
Administrative Agent and Lenders without the consent of Administrative
Agent and Requisite Lenders, and (d) such other terms and conditions as
shall be acceptable to Administrative Agent and its counsel."
"'Eagle Assets': the following assets: (a) all of the contracts
and agreements that are part of or which relate to the provision of
telephony services, including primary rate ISDN services, dial up
connectivity, private line and collocation services to Internet service
providers solely as it relates to the states of North Carolina, Tennessee,
Georgia, Florida and Virginia, (b) all notes, trade accounts receivable and
rights to payment relating to the foregoing contracts (other than certain
prepetition accounts receivable of StarNet Corporation), (c) certain
deferred charges, advance payments, prepaid items, security and other
deposits, claim for refunds, rights of offset, and credits of all kinds
relating to the foregoing, and (d) all business records relating to the
foregoing."
(b) The definition of "Existing Loan" set forth in Section 1.1 of the
Credit Agreement shall be deleted in its entirety.
(c) The definition of "Commitment Fees" set forth in Section 1.1 of
the Credit Agreement shall be amended by deleting the phrase "Section 2.20(a)"
in its entirety and substituting therefor the phrase "Section 2.20".
(d) The definition of "Facility A Advance" set forth in Section 1.1 of
the Credit Agreement shall be amended by deleting the phrase "Section 2.1(a)" in
its entirety and substituting therefor the phrase "Section 2.1".
(e) The definition of "LIBOR Period" set forth in Section 1.1 of the
Credit Agreement, Section 2.6(a) of the Credit Agreement and Section 2.11(g) of
the Credit Agreement shall be amended by deleting the phrase "Section 2.11(e)"
or the reference to clause "(e)" of Section 2.11 in their entirety and
substituting therefor "Section 2.11(f)" or clause "(f)", as the case may be.
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(f) The definition of "Maximum Lawful Rate" set forth in Section 1.1
of the Credit Agreement shall be amended by deleting the phrase "Section
2.11(f)" in its entirety and substituting therefor the phrase "Section 2.11(g)".
(g) The definition of "Permitted Subordinated Debt" set forth in
Section 1.1 of the Credit Agreement shall be amended by deleting such definition
in its entirety and substituting therefor the following:
"'Permitted Subordinated Debt': (a) the subordinated debt
evidencing and giving rise to the Subordinated Debt Investment, (b) the
Eagle Subordinated Note, and (c) Indebtedness in an amount not greater than
$150,000,000 that (i) does not require any payment of principal until
twelve (12) months after the later of the Facility A Commitment Termination
Date and the Facility B Loan Maturity Date, (ii) is issued on market terms
prevailing at the time and (iii) is subordinated on terms reasonably
acceptable to Requisite Lenders to the Indebtedness created hereunder or
pursuant to any other Loan Document."
(h) The definitions of "Net Total Debt" and "Fixed Charges Coverage
Ratio" set forth in Section 1.1 of the Credit Agreement shall be amended by
deleting the phrase "the product of" in its entirety and substituting therefor
the phrase "the remainder of".
(i) Section 9.4 shall be amended by deleting the provisos contained in
clause (a) and clause (f) thereof in their entirety and substituting therefor,
in each case, the following:
"; provided, that (i) upon the repayment in full of the Deferred
Amortization Holdings and its Subsidiaries may enter into Permitted
Acquisitions and (ii) Holdings and its Subsidiaries may consummate the
Eagle Acquisition."
(j) Section 9.7 shall be amended by deleting the "and" immediately
preceding clause (f) and inserting the following:
", and (g) the Eagle Acquisition"
(k) Schedule 5.6 attached to the Credit Agreement shall be deleted and
Schedule 5.6 attached hereto shall be substituted in lieu thereof.
(l) Schedule 5.41 attached to the Credit Agreement shall be deleted
and Schedule 5.41 attached hereto shall be substituted in lieu thereof.
3. Representations and Warranties. In order to induce Administrative
Agent and Lenders to enter into this Amendment, the Loan Parties hereby
represent and warrant to Administrative Agent and Lenders that the
representations and warranties of the Loan Parties contained in the Credit
Agreement and the other Loan Documents are
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true and correct in all material respects on and as of the date hereof, except
where such representations and warranties expressly relate to an earlier date in
which case such representations and warranties were true and correct in all
material respects as of such earlier date.
4. Conditions to Effectiveness.
(a) The amendments set forth in Section 2(b), (c), (d), (e), (f), (h)
and (l) of this Amendment shall be effective on the date when all of the
following conditions shall have occurred (the "First Amendment Effective Date"):
(i) Administrative Agent shall have executed this Amendment and
shall have received counterparts hereof duly executed and delivered by
Borrowers, Holdings and the Requisite Lenders; and
(ii) Administrative Agent shall have received counterparts of the
Acknowledgement and Consent attached as Exhibit B to this Amendment, duly
executed and delivered by each Guarantor.
(b) The amendments set forth in Section 2(a), (g), (i), (j) and (k) of
this Amendment shall be effective on the date (which shall occur prior to
January 31, 2003) of the consummation of the Eagle Acquisition.
5. Reference to Credit Agreement. Upon the First Amendment Effective
Date, each reference in the Credit Agreement to "this Agreement," "hereunder,"
or words of like or similar import shall mean and be a reference to the Credit
Agreement, as modified and amended by this Amendment.
6. Governing Law and Jurisdiction. THIS AMENDMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HERETO SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED
AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
7. Expenses. Borrowers agree to pay and reimburse Administrative Agent
for all its reasonable costs and expenses incurred in connection with the
preparation and delivery of this Amendment, including, without limitation, the
reasonable fees and disbursements of counsel to Administrative Agent.
8. Headings. Section headings in the Amendment are included herein for
convenience of reference only and shall not constitute a part of this Amendment
for any other purpose.
9. Counterparts. This Amendment may be executed by the parties hereto
in any number of separate counterparts (including by facsimile transmission) and
all of
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such counterparts taken together shall be deemed to constitute one and the same
instrument.
10. Successors and Assigns. This Amendment shall be binding upon and
inure to the benefit of Borrowers, Holdings and their respective successors and
assigns, and upon Administrative Agent and Lenders and their respective
successors and assigns.
11. Continuing Effect. Except as expressly amended hereby, the Credit
Agreement, as amended by this Amendment, shall continue to be and shall remain
in full force and effect in accordance with its terms. This Amendment shall not
constitute an amendment or waiver of any provision of the Credit Agreement not
expressly referred to herein and shall not be construed as an amendment, waiver
or consent to any action on the part of Borrowers that would require an
amendment, waiver or consent of Administrative Agent or Lenders except as
expressly stated herein. Any reference to the "Agreement" in the Credit
Agreement or to the "Loan Agreement" in the other Loan Documents or any related
documents shall be deemed to be a reference to the Credit Agreement as amended
by this Amendment.
12. NO ORAL AGREEMENTS. THIS AMENDMENT AND THE OTHER LOAN DOCUMENTS
REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
13. GENERAL WAIVER AND RELEASE. IN ADDITION, TO INDUCE ADMINISTRATIVE
AGENT AND LENDERS TO AGREE TO THE TERMS OF THIS AMENDMENT, LOAN PARTIES (BY
THEIR EXECUTION BELOW) REPRESENT AND WARRANT THAT AS OF THE DATE OF THEIR
EXECUTION OF THIS AMENDMENT THERE ARE NO CLAIMS OR OFFSETS AGAINST OR DEFENSES
OR COUNTERCLAIMS TO THEIR RESPECTIVE OBLIGATIONS UNDER THE EXISTING LOAN
AGREEMENT, THE CREDIT AGREEMENT OR THE OTHER LOAN DOCUMENTS. NOTWITHSTANDING THE
FOREGOING, IN THE EVENT THERE EXIST ANY SUCH CLAIMS OR OFFSETS AGAINST OR
DEFENSES OR COUNTERCLAIMS, LOAN PARTIES (BY THEIR EXECUTION BELOW) HEREBY:
(a) FOREVER GENERALLY WAIVE ANY AND ALL CLAIMS, OFFSETS, DEFENSES AND/OR
COUNTERCLAIMS, WHETHER KNOWN OR UNKNOWN, ARISING ON OR PRIOR TO THE DATE OF
THEIR EXECUTION OF THIS AMENDMENT; AND
(b) FOREVER RELEASE, ACQUIT AND DISCHARGE ADMINISTRATIVE AGENT AND LENDERS,
AND THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, AGENTS, SHAREHOLDERS,
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AFFILIATES AND ATTORNEYS (COLLECTIVELY THE "RELEASED PARTIES") FROM ANY AND ALL
OBLIGATIONS, INDEBTEDNESS, LIABILITIES, CLAIMS, RIGHTS, CAUSES OF ACTION OR
DEMANDS WHATSOEVER, WHETHER KNOWN OR UNKNOWN, SUSPECTED OR UNSUSPECTED, IN LAW
OR EQUITY, WHICH ANY LOAN PARTY EVER HAD, NOW HAS, CLAIMS TO HAVE OR MAY HAVE
AGAINST ANY RELEASED PARTY ARISING ON OR PRIOR TO THE DATE HEREOF AND FROM OR IN
CONNECTION WITH THE EXISTING LOAN AGREEMENT, THE CREDIT AGREEMENT AND THE OTHER
LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY AND HEREIN.
The provisions of this Section 13, including without limitation the
representations and warranties contained herein, shall survive termination of
this Amendment indefinitely.
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IN WITNESS WHEREOF, the parties have caused this Amendment to be
executed and delivered by their respective duly authorized officers as of the
day and year first above written.
Borrower Representative And Guarantor:
US LEC CORP.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Executive Vice President and
Chief Financial Officer
Borrowers:
US LEC OF ALABAMA INC.
US LEC COMMUNICATIONS INC.
US LEC OF FLORIDA INC.
US LEC OF GEORGIA INC.
US LEC OF MARYLAND INC.
US LEC OF NORTH CAROLINA INC.
US LEC OF PENNSYLVANIA INC.
US LEC OF SOUTH CAROLINA INC.
US LEC OF TENNESSEE INC.
US LEC OF VIRGINIA L.L.C.
US LEC ACQUISITION CO.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Executive Vice President and
Chief Financial Officer
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GENERAL ELECTRIC CAPITAL
CORPORATION, AS Administrative Agent
and Lender
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: SVP, Special Assets
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WACHOVIA BANK, NATIONAL ASSOCIATION,
as Lender
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
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Name: ▇▇▇▇▇▇▇ ▇▇▇▇
Title: Authorized Officer
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U.S. BANK NATIONAL ASSOCIATION,
as a Lender
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
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PNC BANK, NATIONAL ASSOCIATION,
as a Lender
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President
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IBM CREDIT CORPORATION, as a Lender
By: /s/ ▇▇▇▇▇▇ ▇ ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Manager of Global Special
Handling
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BANK AUSTRIA CREDITANSTALT
CORPORATE FINANCE, INC., as a Lender
By:
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Name:
---------------------------------
Title:
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