EXHIBIT 10.19
FIRST AMENDMENT TO THE LOAN AGREEMENT
THIS FIRST AMENDMENT TO THE LOAN AGREEMENT (the "Amendment") is made
and entered into as of this 15th day of November, ▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇,
NATIONAL ASSOCIATION ("Bank of America"), a national banking association, as
lender and agent ("Lender"), and BUSINESS TELECOM, INC., a North Carolina
corporation (the "Borrower").
W I T N E S S E T H:
--------------------
WHEREAS, Lender and Borrower are party to that certain Loan Agreement,
dated as of September 8, 1999 (the "Loan Agreement"); all capitalized terms used
herein and not otherwise expressly defined herein shall have the respective
meanings given to such terms in the Loan Agreement; and
WHEREAS, Borrower has requested and, subject to the amendments
contained herein, the Lender has agreed: (i) to amend certain financial
covenants set forth on Schedule 6.11; and (ii) to make certain amendments with
respect to an Equity Issuance or an IPO prior to March 31, 2000.
NOW, THEREFORE, in consideration of the foregoing premises, and other
good and valuable consideration, the receipt and legal sufficiency of which is
hereby acknowledged, the parties hereto hereby agree as follows:
1. Amendments to the Loan Agreement. The Loan Agreement is hereby amended as
follows:
(a) Article 6 of the Loan Agreement is hereby amended by
adding new Section 6.21:
6.21 Equity Infusion by March 31, 2000.
Notwithstanding any other provision herein, the Borrower
agrees that the following shall have occurred no later than
March 31, 2000: (a) an Equity Issuance or an IPO with respect
to which aggregate Proceeds are equal to or greater than
$135,000,000 and the Borrower shall have received such
Proceeds in a manner acceptable to the Agent; or (b) an Equity
Issuance and an IPO with respect to which the combined
aggregate Proceeds are equal to or greater than $135,000,000
and the Borrower shall have received the Proceeds in a manner
acceptable to the Agent.
(b) Schedule 6.11 of the Loan Agreement is amended as follows:
(i) Section 1 of Schedule 6.11 of the Loan Agreement
is hereby amended by deleting the first clause: "After the
occurrence of an Acceptable Equity Issuance-Covenants:."
(ii) Section 1(b) of Schedule 6.11 of the Loan
Agreement is hereby deleted in its entirety and the following
is inserted in lieu thereof:
(b) Minimum Quarterly EBITDA. Borrower shall
not permit its cumulative EBITDA for the four (4)
consecutive Fiscal Quarters on the last day of any
Fiscal Quarters set forth below to be less than the
respective amount shown opposite thereto:
(iii) Section 1(c) of Schedule 6.11 of the Loan
Agreement is hereby deleted in its entirety and the following
is inserted in lieu thereof:
(c) Minimum Consolidated Interest Coverage
Ratio. Borrower shall not permit its Consolidated
Interest Coverage Ratio as of the end of any of the
following Fiscal Quarters to be less than the
respective ratio shown opposite thereto:
Minimum Consolidated Interest
Fiscal Quarter Coverage Ratio
-------------- ----------------------
Second Fiscal Quarter, 2000 1.25:1.00
Third Fiscal Quarter, 2000 1.40:1.00
Fourth Fiscal Quarter, 2000 1.40:1.00
First Fiscal Quarter, 2001 1.40:1.00
Second Fiscal Quarter, 2001 1.40:1.00
Third Fiscal Quarter, 2001 1.40:1.00
Fourth Fiscal Quarter, 2001 1.40:1.00
First Fiscal Quarter, 2002 2.00:1.00
Second Fiscal Quarter, 2002 2.00:1.00
(iv) Section 1(d) of Schedule 6.11 of the Loan
Agreement is hereby deleted in its entirety and the following
is inserted in lieu thereof:
(d) Leverage Ratio. Borrower shall not
permit its Leverage
2
Ratio as of the last day of the Fiscal Quarter set
forth below to be less than the respective ratio
shown opposite thereto:
Fiscal Quarter Leverage Ratio
-------------- --------------
Second Fiscal Quarter, 2000 10.50:1.00
Third Fiscal Quarter, 2000 5.00:1.00
Fourth Fiscal Quarter, 2000 4.00:1.00
First Fiscal Quarter, 2001 4.00:1.00
Second Fiscal Quarter, 2001 4.00:1.00
Third Fiscal Quarter, 2001 4.00:1.00
Fourth Fiscal Quarter, 2001 4.00:1.00
First Fiscal Quarter, 2002 4.00:1.00
Second Fiscal Quarter, 2002 4.00:1.00
(v) Effective as of September 30, 1999, Section 2 of
Schedule 6.11 of the Loan Agreement is hereby deleted in its
entirety and the following is inserted in lieu thereof:
Minimum Quarterly EBITDA. Borrower shall not
permit its cumulative EBITDA for the trailing four
(4) Fiscal Quarters ending on the last day of the
Third Fiscal Quarter, 1999 to be less than $ 350,000.
2. Representations Warranties Covenants and Acknowledgments: Release. To induce
Lender to enter into this Amendment:
(a) Borrower does hereby represent and warrant that (i) as of the date
hereof, all of the representations and warranties made or deemed to be
made under the Loan Documents are true and correct, except such
representations and warranties which, by their express terms, are
applicable only to the Closing Date, (ii) as of the date hereof, after
giving effect to the terms hereof, there exists no Default or Event of
Default under the Loan Agreement or any of the Loan Documents, (iii)
Borrower has the power and is duly authorized to enter into, deliver
and perform this Amendment, and (iv) this Amendment and each of the
Loan Documents is the legal, valid and binding obligation of the
Borrower enforceable against it in accordance with its terms; and
(b) Borrower does hereby reaffirm each of the agreements, covenants,
and undertakings set forth in the Loan Agreement and each and every
other Loan Document executed in connection therewith or pursuant
thereto as if Borrower were making said agreements, covenants and
undertakings on the date hereof; and
(c) Borrower does hereby acknowledge and agree that no right of offset,
defense, counterclaim, claim, causes of action or objection in favor of
Borrower against Lender exists arising out of or with respect to: (i)
the Obligations, this Amendment, the Loan Agreement or any of the other
Loan Documents, (ii) any other documents now or heretofore evidencing,
securing or in any way relating to the foregoing or (iii) the
administration or funding of the Credit Loans; and
3
(d) Borrower does hereby expressly waive, release and relinquish any
and all defenses, setoffs, claims, counterclaims, causes of action or
objections, if any, against Lender.
3. Conditions Precedent. The effectiveness of this Amendment is subject to the
following conditions precedent:
(a) Delivery of Documents. Borrower shall have delivered
to Lender, all in form and substance acceptable to Lender in its sole
discretion, (i) executed counterpart originals of this Amendment, (ii)
an Acknowledgment and Consent of Guarantor, in form and substance
satisfactory to Lender, (iii) an Acknowledgment and Consent of GECC, as
agent and lender, in form and substance satisfactory to Lender; and
(iv) such other documentation as Lender may reasonably require in
connection herewith;
(b) Accuracy of Representations and Warranties. All of the
representations and warranties made or deemed to be made in this
Amendment and under the Loan Documents shall be true and correct as of
the date of this Amendment, except such representations and warranties
which, by their terms, are applicable to a prior specific date or
period; and
(c) Expenses. Borrower shall have paid to Lender the costs
and expenses referred to in Section 5 hereof.
4. Effect of this Amendment. Except as expressly amended
hereby, the Loan Agreement and each other Loan Document shall be and remain in
full force and effect as originally written, and shall constitute the legal,
valid, binding and enforceable obligations of Borrower and Guarantor to Lender.
5. Expenses. Borrower agrees to pay on demand all
reasonable costs and expenses of Lender in connection with the preparation,
execution, delivery and enforcement of this Amendment, and all other documents
and any other transactions contemplated hereby, including, without limitation,
the reasonable fees and out-of-pocket expenses of legal counsel to Lender.
6. Miscellaneous. Borrower agrees to take such further
action as Lender shall reasonably request in connection herewith to evidence the
amendments herein contained to the Loan Agreement. This Amendment 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 to be an original and all of which counterparts, taken together, shall
constitute but one and the same instrument. This Amendment shall be binding upon
and inure to the benefit of the successors and permitted assigns of the parties
hereto. This Amendment shall be governed by, and construed in accordance with,
the laws of the State of California.
[Remainder of this page intentionally left blank.]
4
IN WITNESS WHEREOF, this Amendment has been duly executed as of the
date first written above.
BORROWER:
BUSINESS TELECOM, INC.
By:
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Financial Officer
AGENT:
BANK OF AMERICA, NATIONAL ASSOCIATION
By:
Name:
Title:
LENDER:
BANK OF AMERICA, NATIONAL ASSOCIATION
By:
Name:
Title:
ACKNOWLEDGMENT AND AGREEMENT
The undersigned hereby acknowledges and agrees to the foregoing First
Amendment to the Loan Agreement.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands this
15th day of November 1999.
BTI TELECOM CORP.
By:
Name:
Title:
BUSINESS TELECOM OF VIRGINIA, INC.
By:
Name:
Title:
FS MULTIMEDIA, INC.
By:
Name:
Title:
ACKNOWLEDGMENT AND AGREEMENT
The undersigned hereby acknowledges that the foregoing First Amendment to the
Loan Agreement shall not affect the enforceability or validity of any Loan
Document executed by the undersigned.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
ACKNOWLEDGEMENT AND CONSENT
The undersigned, as agent and lender, hereby acknowledges and consents
to the foregoing First Amendment to the Loan Agreement. Notwithstanding anything
to the contrary contained therein, the undersigned, as agent and lender, hereby
acknowledges and agrees that such amendment does not breach in any manner that
certain Intercreditor Agreement, dated September 8, 1999, among General Electric
Capital Corporation, Bank of America, National Association, Business Telecom
Corp., Business Telecom, Inc., Business Telecom of Virginia, Inc. and FS
Multimedia, Inc.
IN WITNESS WHEREOF, the undersigned has hereunto set her hand this 15th
day of November 1999.
GENERAL ELECTRIC CAPITAL
CORPORATION, as agent and lender
By:
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Senior Vice President as duly authorized