Amendment, Waiver and Forbearance Extension Agreement to Credit Agreement among e.spire Communications, Inc., e.spire Finance Corporation, Lenders, and Agents (July 14, 2000)

Summary

This agreement, dated July 14, 2000, is between e.spire Communications, Inc., e.spire Finance Corporation, their lenders, and several agents. It amends and extends certain terms of an existing credit agreement, provides a temporary waiver for specific covenant breaches, and extends the lenders’ agreement to delay exercising remedies for certain defaults until the earlier of a new agreement or August 15, 2000. The agreement also requires a $15 million loan prepayment by the company and includes commitments from The Huff Alternative Income Fund, L.P. to support the transaction.

EX-10.4 5 ex10-4.txt LIMITED WAIVER DATED AS OF JULY 14, 2000 1 EXECUTION E.SPIRE COMMUNICATIONS, INC. E.SPIRE FINANCE CORPORATION AMENDMENT, WAIVER AND FORBEARANCE EXTENSION AGREEMENT THIS AMENDMENT, WAIVER AND FORBEARANCE AGREEMENT TO CREDIT AGREEMENT (this "AGREEMENT") is dated as of July 14, 2000 and entered into by and among e.spire Communications, Inc., a Delaware corporation ("COMPANY"), e.spire Finance Corporation, a Delaware corporation ("FINANCE SUB"; Finance Sub and the Company, collectively referred to as "BORROWERS"), the financial institutions listed on the signature pages hereof ("LENDERS"), Goldman Sachs Credit Partners L.P., as sole Lead Arranger and Syndication Agent, The Bank of New York, as Administrative Agent for Lenders (in such capacity, "ADMINISTRATIVE AGENT"), First Union National Bank, as Documentation Agent, and CIT Lending Services Corporation, f/k/a Newcourt Commercial Finance Corporation, as Collateral Agent, for purposes of Section 8 hereof, the Subsidiaries of Finance Sub listed on the signature pages hereof ("SUBSIDIARY GUARANTORS") and, solely for purposes of Section 3 hereof, The Huff Alternative Income Fund, L.P. (the "HUFF FUND"), and is made with reference to that certain Credit Agreement, dated as of August 11, 1999 (as amended by the First Amendment dated November 24, 1999, the "CREDIT AGREEMENT"), by and among Company, Finance Sub, Lenders and Agents. Capitalized terms used herein without definition shall have the same meanings herein as set forth in the Credit Agreement. RECITALS WHEREAS, the Borrowers and the Lenders have agreed to the terms of an amendment and restatement of the Credit Agreement as set forth in the term sheet attached hereto as Exhibit A (the "TERM SHEET"); WHEREAS, the Borrowers and Lenders desire to enter into this Agreement pursuant to which the Lenders and the Borrowers agree to enter into an amended and restated credit agreement on the terms and conditions set for in the Term Sheet, the Huff Fund agrees to perform its obligations under the Term Sheet, and the Lenders agree to extend their forbearance of exercise of remedies under the Loan Documents as a result of certain Events of Default, in each case subject to the terms, conditions and agreements set forth herein; WHEREAS, the Borrowers have requested that the Lenders waive compliance with subsection 6.5(i) of the Credit Agreement to permit the Company to make its regularly scheduled interest payment on its 13-3/4% Senior Notes which is due on July 17, 2000; and WHEREAS, in consideration of, and as an inducement to, the Lenders entering into this Agreement, the Company has agreed to make a voluntary prepayment in the amount of $15,000,000 of Loans outstanding under the Credit Agreement; 1 2 NOW, THEREFORE, in consideration of the premises and the agreements, provisions and covenants herein contained, the parties hereto agree as follows: SECTION 1. AGREEMENT TO AMEND AND RESTATE CREDIT AGREEMENT. The Borrowers and the Lenders hereby agree to enter into an amendment and restatement of the Credit Agreement on the terms and conditions set forth in the Term Sheet, subject only to (a) the satisfactory negotiation, execution and delivery of an amended and restated agreement reflecting such terms and conditions and (b) there shall not have been any material adverse change in the business, operations, properties, assets, or financial condition of the Company and its Subsidiaries since the date of this Agreement. SECTION 2. EXTENSION OF FORBEARANCE AGREEMENT Lenders hereby agree to forebear, until the earlier of (a) the effective date of an amended and restated credit agreement on the terms set forth in the Term Sheet and (b) August 15, 2000, exercising any remedies under the Loan Documents as a result of the Events of Default caused by Borrowers' failure to be in compliance with (i) the covenants set forth in subsection 6.6A(ii) or subsection 6.6A(iii) of the Credit Agreement for the Fiscal Quarters ended March 31, 2000 and June 30, 2000 and (ii) with subsection 5.8 of the Credit Agreement with respect to Global Advanced Networks (Europe) B.V., as long as no other holder of Indebtedness of any Loan Party has accelerated such Indebtedness or is otherwise exercising any remedies with respect thereto. Such delay or failure by Agents or Lenders to exercise during such time any of their other rights and remedies, shall not impair any power, right or privilege granted to Agents or Lenders in the Credit Agreement or any other Loan Document or by law available to them or be construed to be a waiver of or acquiescence in any Event of Default under the Credit Agreement or any other Loan Document or a forbearance of the exercise of remedies as a result of any other Event of Default under the Credit Agreement. SECTION 3. REPRESENTATIONS AND AGREEMENTS OF HUFF FUND The Huff Fund hereby represents and warrants to the Lenders that (a) it has all requisite power and authority, including without limitation under its partnership agreement and other constituent documents, to enter into this Agreement and the agreement relating to the Lender Put (as defined in the Term Sheet) upon the terms set forth in the Term Sheet (the "PUT AGREEMENT") and (b) this Agreement has been duly executed and delivered by an authorized signatory of the Huff Fund. The Huff Fund hereby further represents, warrants and agrees (a) that it will enter into the Put Agreement on the terms and conditions set forth in the Term Sheet, subject only to the satisfactory negotiation of the definitive Put Agreement reflecting such terms and to the Borrowers and the Lenders entering into an amendment and restatement of the Credit Agreement in accordance with Section 1 hereof, (b) that it has unencumbered Cash, Cash Equivalents, or available committed funds net of any debt or any other obligations of at least $100 million, (c) to agree in the Put Agreement to maintain unencumbered Cash, Cash Equivalents, or available committed funds net of any debt or any other obligations of at least $100 million at all times during the term of the Put Agreement, (d) to use its commercially reasonable efforts to cause the agreements and documentation referred to in paragraphs (a), (b), (c) and (e) of condition 3 (Additional Junior Capital and Prepayment Requirements) set forth 2 3 under the caption "Conditions Precedent to Effectiveness of Amendment" in the Term Sheet to be entered into in a commercially reasonable form. SECTION 4. WAIVERS Subject to the terms and conditions set forth herein and in reliance on the representations and warranties of Borrowers herein contained, Lenders hereby waive compliance with: (a) subsection 2.4(B)(i) of the Credit Agreement to the extent and only to the extent the Company is giving the notice of prepayment set forth in Section 6 hereof on the date of such prepayment rather than three Business Days' prior to such prepayment as required by subsection 2.4(B)(i) of the Credit Agreement; and (b) subsection 6.5(i) of the Credit Agreement to the extent and only to the extent to permit the Company to make its regularly scheduled interest payment in the amount of $15,125,000 on its 13-3/4% Senior Notes which is due on July 17, 2000 despite the occurrence and continuance of certain Events of Default. SECTION 5. LIMITATION OF WAIVERS Without limiting the generality of the provisions of subsection 9.6 of the Credit Agreement, the waiver set forth above shall be limited precisely as written and relates solely to the noncompliance by Company with the provisions of subsections 2.4(B)(i) and 6.5(i) of the Credit Agreement in the manner and to the extent described above, and nothing in this Waiver shall be deemed to: (a) constitute a waiver of compliance by Company with respect to (i) subsections 2.4(B)(i) and 6.5(i) of the Credit Agreement in any other instance or (ii) any other term, provision or condition of the Credit Agreement or any other instrument or agreement referred to therein; or (b) prejudice any right or remedy that 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 Waiver) or may have in the future under or in connection with the Credit Agreement or any other instrument or agreement referred to therein. SECTION 6. VOLUNTARY PREPAYMENT The Company hereby gives notice to Administrative Agent that it is making a voluntary prepayment of the Loans in the amount of $15,000,000, together with accrued and unpaid interest and breakage costs with respect thereto, on July 10, 2000. Notwithstanding anything in subsection 2.4 of the Credit Agreement to the contrary, such prepayment shall be applied to reduce the outstanding Loans as set forth in Exhibit B hereto. 3 4 SECTION 7. REPRESENTATIONS AND WARRANTIES OF BORROWERS In order to induce Lenders to enter into this Agreement, Borrowers hereby represent and warrant that: (a) each Borrower has all requisite corporate power and authority to enter into this Agreement; (b) the execution and delivery of this Agreement and the performance of this Agreement have been duly authorized by all necessary corporate action on the part of each Borrower; (c) the execution and delivery by each Borrower of this Agreement and the performance by each Borrower of this Agreement do not and will not (i) violate any provision of any law or any governmental rule or regulation applicable to Borrower or any of their Subsidiaries, the Certificate or Articles of Incorporation or Bylaws of Borrowers or any of their Subsidiaries or any order, judgment or decree of any court or other agency of government binding on Borrowers or any of their Subsidiaries, (ii) conflict with, result in a breach of or constitute (with due notice or lapse of time or both) a default under any Contractual Obligation of Borrowers or any of their Subsidiaries, (iii) result in or require the creation or imposition of any Lien upon any of the properties or assets of Borrowers or any of their Subsidiaries (other than Liens created under any of the Loan Documents in favor of Agent on behalf of Lenders), or (iv) require any approval of stockholders or any approval or consent of any Person under any Contractual Obligation of Borrowers or any of their Subsidiaries (other than the Stockholder Approval as defined in the Term Sheet); (d) the execution and delivery by each Borrower of this Agreement and the performance by each Borrower of this Agreement do not and will not require any registration with, consent or approval of, or notice to, or other action to, with or by, any federal, state or other governmental authority or regulatory body; (e) this Agreement has been duly executed and delivered by each Borrower and constitutes the legally valid and binding obligations of each Borrower, enforceable against each Borrower in accordance with its terms, except as may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws relating to or limiting creditors' rights generally or by equitable principles relating to enforceability; (f) after giving effect to this Agreement, excluding any Event of Default or Potential Event of Default which is subject to a forbearance agreement between the Borrowers and the Lenders, there exists no Event of Default or Potential Event of Default under the Credit Agreement; (g) all representations and warranties contained in the Credit Agreement and the other Loan Documents are true, correct and complete in all material respects on and as of the date hereof except to the extent such representations and warranties specifically relate (i) to an earlier date, in which case they were true, correct and complete in all material 4 5 respects on and as of such earlier date or (ii) to an Event of Default or Potential Event of Default subject to a forbearance agreement between the Borrowers and the Lenders; and (h) Borrowers have performed all agreements (other than compliance with the covenants subject to the forbearance agreement between Borrowers and Lenders) to be performed on their part as set forth in the Credit Agreement. SECTION 8. ACKNOWLEDGMENT AND CONSENT Borrowers and Subsidiary Guarantors are collectively referred to herein as "CREDIT SUPPORT PARTIES" and the Company Guaranty, the Subsidiary Guaranty and the Collateral Documents to which each Borrower and Subsidiary Guarantor, as applicable, are party are herein referred to collectively as the "CREDIT SUPPORT DOCUMENTS." Each Loan Party hereby acknowledges that it has reviewed the terms and provisions of the Credit Agreement and this Agreement. Each Loan Party hereby confirms that each Credit Support Document to which it is a party or otherwise bound and all Collateral encumbered thereby will continue to guaranty or secure, as the case may be, to the fullest extent possible the payment and performance of all "Guarantied Obligations" and "Secured Obligations" as the case may be (in each case as such terms are defined in the applicable Credit Support Document), including without limitation the payment and performance of all such "Guarantied Obligations" or "Secured Obligations," as the case may be, in respect of the Obligations of Borrowers now or hereafter existing under or in respect of the Credit Agreement. Each Credit Support Party acknowledges and agrees that any of the Credit Support Documents to which it is a party or otherwise bound shall continue in full force and effect and that all of its obligations thereunder shall be valid and enforceable and shall not be impaired or limited by the execution or effectiveness of this Agreement. Each Credit Support Party (other than Borrowers) acknowledges and agrees that (i) notwithstanding the conditions to effectiveness set forth in this Agreement, such Credit Support Party is not required by the terms of the Credit Agreement or any other Loan Document to consent to this Agreement and (ii) nothing in the Credit Agreement, this Agreement or any other Loan Document shall be deemed to require the consent of such Credit Support Party to any future consents or waivers to the Credit Agreement. Each of the Credit Support Parties hereby acknowledges and confirms that it does not have any grounds and hereby agrees not to challenge (or to allege or to pursue any matter, cause or claim arising under or with respect to) the Credit Agreement or any of the other Loan Documents (including, without limitation, any of the Credit Support Documents), any of the terms or conditions thereof or thereunder, or the status of any thereof as legal, valid and binding obligations enforceable in accordance with their respective terms; and it does not possess (and hereby forever waives, remises, releases, discharges and holds harmless the Lenders and the Agent, and their respective affiliates, stockholders, directors, officers, employees, attorneys, agents and representatives and each of their respective heirs, executors, administrators, successors and assigns (collectively, the "INDEMNIFIED PARTIES") from and against, and agrees not to allege or pursue) any action, cause of action, suit, debt, claim, counterclaim, cross-claim, demand, defense, offset, opposition, demand and other right of action whatsoever, whether in law, equity or otherwise (which it, all those claiming by, through or under it, or its successors or assigns, have or may have) against the Indemnified Parties, or any of them, prior to or as of the date of this Agreement and the effective date of this Agreement for, upon, or by reason of, any 5 6 matter, cause or thing whatsoever, arising out of, or relating to the Credit Agreement or any of the other Loan Documents (including, without limitation, any of the Credit Support Documents) (including, without limitation, any payment, performance, validity or enforceability of any or all of the terms or conditions thereof or thereunder) or any transaction relating to any of the foregoing, or any or all actions, courses of conduct or other matters in any manner whatsoever relating to or otherwise connected with any of the foregoing. SECTION 9. MISCELLANEOUS A. EFFECT ON THE CREDIT AGREEMENT AND THE OTHER LOAN DOCUMENTS. (i) The Credit Agreement and the other Loan Documents shall remain in full force and effect and are hereby ratified and confirmed. (ii) The execution, delivery and performance of this Agreement shall not, except as expressly provided herein, constitute a waiver of any provision of, or operate as a waiver of any right, power or remedy of Agents or any Lender under, the Credit Agreement or any of the other Loan Documents. B. HEADINGS. Section and subsection headings in this Agreement are included herein for convenience of reference only and shall not constitute a part of this Agreement for any other purpose or be given any substantive effect. C. APPLICABLE LAW. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF NEW YORK (INCLUDING WITHOUT LIMITATION SECTION 5-1401 OF THE GENERAL OBLIGATIONS LAW OF THE STATE OF NEW YORK), WITHOUT REGARD TO INCONSISTENT CONFLICTS OF LAWS PRINCIPLES. D. FEES AND EXPENSES. Borrowers acknowledge that all costs, fees and expenses as described in subsection 9.3 of the Credit Agreement incurred by Agents and their counsel with respect to this Agreement and the documents and transactions contemplated hereby shall be for the account of Borrowers. Borrowers shall concurrently with the execution and delivery of this Agreement pay $220,000 to The Management Network Group, Inc. and all accrued and unpaid fees of O'Melveny & Myers LLP and Wachtell, Lipton, Rosen & Katz, counsel to Arranger, for which invoices shall have been received by the Company on or prior to the date hereof. E. COUNTERPARTS; EFFECTIVENESS. This Agreement may be executed in any number of counterparts and by different parties hereto in separate counterparts, each of which when so executed and delivered shall be deemed an original, but all such counterparts together shall constitute but one and the same instrument; signature pages may be detached from multiple separate counterparts and attached to a single counterpart so that all signature pages are physically attached to the same document. This Agreement shall become effective upon (i) the execution of counterparts hereof by Borrowers and Subsidiary Guarantors, the Huff Fund and by Lenders constituting Requisite Lenders and receipt by Borrowers and Administrative Agent of 6 7 written or telephonic notification of such execution and authorization of delivery thereof, (ii) payment of the $15,000,000 prepayment referenced in Section 6 hereof, and (iii) payment of the expenses referenced in Section 4.D hereof. [Signature pages to follow] 7 8 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their respective officers thereunto duly authorized as of the date first written above. BORROWERS: e.spire COMMUNICATIONS, INC. By: -------------------------------- Title: -------------------------- e.spire FINANCE CORPORATION By: -------------------------------- Title: -------------------------- LENDERS: GOLDMAN SACHS CREDIT PARTNERS L.P., individually, as Arranger and as Syndication Agent By: -------------------------------- Title: -------------------------- THE BANK OF NEW YORK, individually and as Administrative Agent By: -------------------------------- Title: -------------------------- S-1 9 FIRST UNION NATIONAL BANK, individually and as Documentation Agent By: -------------------------------- Title: -------------------------- CIT LENDING SERVICES CORPORATION (f/k/a Newcourt Commercial Finance Corporation), an affiliate of The CIT Group, Inc., individually and as Collateral Agent By: -------------------------------- Title: -------------------------- BANKERS LIFE AND CASUALTY COMPANY By: -------------------------------- Title: -------------------------- CONSECO ANNUITY ASSURANCE COMPANY By: -------------------------------- Title: -------------------------- DEUTSCHE BANK AG NEW YORK BRANCH By: -------------------------------- Title: -------------------------- By: -------------------------------- Title: -------------------------- S-2 10 FOOTHILL CAPITAL CORPORATION By: -------------------------------- Title: -------------------------- FRANKLIN FLOATING RATE TRUST By: -------------------------------- Title: -------------------------- MERRILL LYNCH GLOBAL INVESTMENT SERIES INCOME STRATEGIES PORTFOLIO By: Merrill Lynch Asset Management, L.P., as Investment Advisor By: -------------------------------- Title: -------------------------- MERRILL LYNCH SENIOR FLOATING RATE FUND INC. By: -------------------------------- Title: -------------------------- S-3 11 FOR PURPOSES OF SECTION 3 ONLY: THE HUFF ALTERNATIVE INCOME FUND, L.P. By: -------------------------------- Name: William R. Huff Title: --------------------------- FOR PURPOSES OF SECTION 8 ONLY: SUBSIDIARY GUARANTORS: e.spire LEASING CORPORATION e.spireDATA, INC. ACSI LOCAL SWITCHED SERVICES, INC. ACSI LOCAL SWITCHED SERVICES OF VIRGINIA, INC. ACSI LONG DISTANCE, INC. ACSI NETWORK TECHNOLOGIES, INC. AMERICAN COMMUNICATION SERVICES OF ALBUQUERQUE, INC. AMERICAN COMMUNICATION SERVICES OF AMARILLO, INC. AMERICAN COMMUNICATION SERVICES OF ATLANTA, INC. AMERICAN COMMUNICATION SERVICES OF AUSTIN, INC. AMERICAN COMMUNICATION SERVICES OF BATON ROUGE, INC. AMERICAN COMMUNICATION SERVICES OF BIRMINGHAM, INC. S-4 12 AMERICAN COMMUNICATION SERVICES OF BOISE, INC. AMERICAN COMMUNICATION SERVICES OF CHARLESTON, INC. AMERICAN COMMUNICATION SERVICES OF CHATTANOOGA, INC. AMERICAN COMMUNICATION SERVICES OF COLORADO SPRINGS, INC. AMERICAN COMMUNICATION SERVICES OF COLUMBIA, INC. AMERICAN COMMUNICATION SERVICES OF COLUMBUS, INC. AMERICAN COMMUNICATION SERVICES OF CORPUS CHRISTI, INC. AMERICAN COMMUNICATION SERVICES OF DALLAS, INC. AMERICAN COMMUNICATION SERVICES OF D.C., INC. AMERICAN COMMUNICATION SERVICES OF EL PASO, INC. AMERICAN COMMUNICATION SERVICES OF FORT WORTH, INC. AMERICAN COMMUNICATION SERVICES OF GREENVILLE, INC. AMERICAN COMMUNICATION SERVICES OF HUNTSVILLE, INC. AMERICAN COMMUNICATION SERVICES OF IRVING, INC. AMERICAN COMMUNICATION SERVICES OF JACKSON, INC. AMERICAN COMMUNICATION SERVICES OF JACKSONVILLE, INC. S-5 13 AMERICAN COMMUNICATION SERVICES OF KANSAS CITY, INC. AMERICAN COMMUNICATION SERVICES OF KNOXVILLE, INC. AMERICAN COMMUNICATION SERVICES OF LAS VEGAS, INC. AMERICAN COMMUNICATION SERVICES OF LEXINGTON, INC. AMERICAN COMMUNICATION SERVICES OF LITTLE ROCK, INC. AMERICAN COMMUNICATION SERVICES, OF LOUISIANA, INC. AMERICAN COMMUNICATION SERVICES OF LOUISVILLE, INC. AMERICAN COMMUNICATION SERVICES OF LUBBOCK, INC. AMERICAN COMMUNICATION SERVICES OF MARYLAND, INC. AMERICAN COMMUNICATION SERVICES OF MIAMI, INC. AMERICAN COMMUNICATION SERVICES OF MOBILE, INC. AMERICAN COMMUNICATION SERVICES OF MONTGOMERY, INC. AMERICAN COMMUNICATION SERVICES OF PENSACOLA, INC. AMERICAN COMMUNICATION SERVICES OF PIMA COUNTY, INC. AMERICAN COMMUNICATION SERVICES OF RALEIGH - DURHAM, INC. AMERICAN COMMUNICATION SERVICES OF RIO RANCHO, INC. S-6 14 AMERICAN COMMUNICATION SERVICES OF ROANOKE, INC. AMERICAN COMMUNICATION SERVICES OF SAN ANTONIO, INC. AMERICAN COMMUNICATION SERVICES OF SAVANNAH, INC. AMERICAN COMMUNICATION SERVICES OF SHREVEPORT, INC. AMERICAN COMMUNICATION SERVICES OF SPARTANBURG, INC. AMERICAN COMMUNICATION SERVICES OF TALLAHASSEE, INC. AMERICAN COMMUNICATION SERVICES OF TAMPA, INC. AMERICAN COMMUNICATION SERVICES OF TULSA, INC. AMERICAN COMMUNICATION SERVICES OF VIRGINIA, INC. AMERICAN COMMUNICATION SERVICES OF WILMINGTON, INC. AMERICAN COMMUNICATIONS SERVICES INTERNATIONAL, INC. CYBERGATE, INC. FLORIDANET, INC. Each by: ---------------------------- Name: Title:Authorized Signatory of each of the foregoing Subsidiary Guarantors S-7