Exhibit 10(i)(1.2)
AMENDMENT AND WAIVER TO THE
CREDIT AGREEMENT
Dated as of March 19, 2004
AMENDMENT AND WAIVER (this "Amendment") TO THE THIRD AMENDMENT AND
RESTATEMENT OF THE CREDIT AGREEMENT (the "Credit Agreement") among CINCINNATI
BELL INC. (f/k/a Broadwing Inc.), an Ohio corporation ("CBI"), and BCSI INC.
(f/k/a Broadwing Communications Services Inc.), a Delaware corporation ("BCSI",
and together with CBI, each a "Borrower" and collectively the "Borrowers"), the
banks, financial institutions and other institutional lenders parties thereto
(the "Lenders"), BANK OF AMERICA, N.A., as syndication agent, CITICORP USA,
INC., as administrative agent (the "Administrative Agent"), and the other agents
party thereto.
PRELIMINARY STATEMENTS:
(1) Capitalized terms not otherwise defined in this Amendment have the
same meanings as specified in the Credit Agreement.
(2) CBI has determined that CBI's Annual Report on Form 10-K for the
fiscal year ended December 31, 2003, will contain a restatement (the
"Restatement") of its Consolidated financial statements for the fiscal years
ended December 31, 2000, December 31, 2001 and December 31, 2002 (such annual
financial statements and the quarterly financial statements for the fiscal
quarters ending March 31, 2000, through September 30, 2003, collectively being
referred to herein as the "Prior Financial Statements") to reflect revised
accounting for a long-term broadband network construction contract to build a
1,774-mile fiber route system entered into in June 2000 (the "Construction
Contract"). The Restatement and the related adjustments to the quarterly Prior
Financial Statements will reflect (and be limited to) adjustments (the
"Accounting Adjustments") related to the manner that the Construction Contract
was recorded related to the timing of revenue recognition resulting from the
inappropriate inclusion of certain costs that had not been fully incurred and
use of estimates regarding the extent to which the construction contract had
been completed, and other matters relating thereto, the effect of which will be
substantially as follows: revenue for the year-to-date period ended September
30, 2003 will remain the same as previously reported, cost of services and
products will decrease by approximately $51 million and net income will increase
by approximately $51 million; revenue and cost of services and products will be
substantially unchanged in 2002 and net loss will increase by approximately $18
million due to an increase in income tax expense; revenue for 2001 will decrease
by approximately $31 million, cost of services and products for 2001 will
increase by approximately $15 million, and net loss for 2001 will increase by
approximately $30 million; and revenue for 2000 will decrease by approximately
$23 million, cost of services and products for 2000 will decrease by
approximately $18 million, and net loss for 2000 will increase by approximately
$3 million. The Accounting Adjustments will be reflected in the appropriate
quarterly periods beginning with the fiscal quarter ending on March 31, 2000,
and ending with the fiscal quarter ending September 30, 2003. CBI believes that
there will be no cumulative change to net income over the reporting period as a
result of the Restatement and the related adjustments to the quarterly Prior
Financial Statements.
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(3) In connection with the Restatement, the Borrowers have requested
that the Lenders waive and amend certain provisions of the Credit Agreement, as
set forth below.
(4) The Lenders are willing to effect such waivers and amendments on
the terms and subject to the conditions set forth in this Amendment.
SECTION 1. Amendment and Waiver to the Credit Agreement. Effective as
of the Amendment Effective Date (as defined below) and subject to the
satisfaction of the conditions precedent set forth in Section 2:
(a) the Lenders hereby for all purposes of the Loan Documents:
(i) waive any failure to satisfy any condition under Section
3.02 of the Credit Agreement solely to the extent such failure was or
is due to any Prior Financial Statement not presenting fairly the
financial condition or results of operations of CBI and its
Subsidiaries (including BRCOM and its Subsidiaries) or not having been
prepared in accordance with GAAP, in each case solely by reason of the
failure of the Prior Financial Statements to include the Accounting
Adjustments,
(ii) waive any Event of Default pursuant to Section 7.01(b) of
the Credit Agreement with respect to any breach of any representation
or warranty set forth in Section 4.01(g) or (j) or made or deemed made
in connection with the delivery of any certificate or financial
statement under Section 5.03 solely to the extent such breach was or is
due to any Prior Financial Statement not presenting fairly the
financial condition or results of operations of CBI and its
Subsidiaries (including BRCOM and its Subsidiaries) or not having been
prepared in accordance with GAAP, in each case solely by reason of the
failure of the Prior Financial Statements to include the Accounting
Adjustments,
(iii) waive any Event of Default pursuant to Section 7.01(e)
of the Credit Agreement with respect to (A) any default or event of
default under the Junior Notes Indenture solely to the extent arising
in connection with the failure of the Prior Financial Statements to
include the Accounting Adjustments, or in connection with any default
or event of default in respect of any other Debt due to such failure,
to the extent that the requisite holders of the Junior Notes waive such
default or event of default under the Junior Notes Indenture on or
before the Amendment Effective Date and (B) any default or event of
default under any other Debt of CBI or any of its Subsidiaries, arising
in connection with the failure of the Prior Financial Statements to
include the Accounting Adjustments, or in connection with any default
or event of default in respect of any other Debt due to such failure,
to the extent such default or event of default is waived or cured
effective upon the effectiveness of this Amendment, and
(iv) waive any Event of Default pursuant to Section 7.01(o) of
the Credit Agreement with respect to any event of default prior to the
date hereof under the Junior Notes Indenture solely to the extent
arising in connection with
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the failure of the Prior Financial Statements to include the
Accounting Adjustments, or in connection with any default or event of
default in respect of any other Debt due to such failure, to the extent
that the requisite holders of the Junior Notes waive such event of
default under the Junior Notes Indenture on or before the Amendment
Effective Date.
(b) Section 4.01(g) is amended and restated, effective as of the later
to occur of the Amendment Effective Date and the date on which CBI's Annual
Report on Form 10-K is filed with the Securities and Exchange Commission, in its
entirety to read as follows:
"(g) The Consolidated balance sheets of CBI and its
Subsidiaries (including BRCOM and its Subsidiaries) as at December 31,
2002, and the related Consolidated and consolidating, if any,
statements of income and Consolidated statement of cash flows of CBI
and its Subsidiaries (including BRCOM and its Subsidiaries) for the
fiscal year then ended, accompanied by an unqualified opinion of PWC
independent public accountants, and the Consolidated and consolidating,
if any, balance sheets of CBI and its Subsidiaries (including BRCOM and
its Subsidiaries) as at June 30, 2003, and the related Consolidated and
consolidating statements of income and Consolidated statement of cash
flows of CBI and its Subsidiaries (including BRCOM and its
Subsidiaries) for the six months then ended, duly certified by the
Chief Financial Officer of CBI, copies of which have been furnished to
each Lender Party, after giving effect to the Restatement and the
Accounting Adjustments (each as defined and described in the Amendment
and Waiver of this Agreement dated as of March 19, 2004), fairly
present the Consolidated and consolidating financial condition of CBI
and its Subsidiaries (including BRCOM and its Subsidiaries) as at such
dates and the Consolidated and consolidating results of operations of
CBI and its Subsidiaries (including BRCOM and its Subsidiaries) for the
periods ended on such dates, all in accordance with generally accepted
accounting principles applied on a consistent basis, and since December
31, 2002, there has been no Material Adverse Change;"
SECTION 2. Conditions of Effectiveness. This Amendment shall become
effective on the date (the "Amendment Effective Date") when the Administrative
Agent (or its counsel) shall have received counterparts of this Amendment
executed by the undersigned and the Required Lenders or, as to any of the
Lenders, advice satisfactory to the Administrative Agent that such Lender has
executed this Amendment, and when, and only when, each of the following
conditions precedent shall have been satisfied:
(a) The representations and warranties set forth in each of
the Loan Documents shall be correct in all material respects on and as
of the Amendment Effective Date, after giving effect to this Amendment,
as though made on and as of such date (except for any such
representation and warranty that, by its terms, refers to a specific
date other than the Amendment Effective Date, in which case as of such
specific date,
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and except to the extent any breach of such representation and
warranty is waived under Section 1(a) above).
(b) After giving effect to this Amendment, no event shall have
occurred and be continuing that constitutes a Default or Event of
Default.
(c) The Borrowers shall have paid to each Lender that has
delivered an executed signature page to this Amendment no later than
2:00 p.m. on Friday, March 19, 2004, an amendment fee equal to 0.05% of
the aggregate outstanding principal amount of the Advances and the
aggregate Unused Revolving Credit Commitments of each Lender.
(d) The Administrative Agent shall have received, on or before
the Amendment Effective Date, evidence satisfactory to it that any
default or event of default under the Junior Notes Indenture arising in
connection with the failure of the Prior Financial Statements to
include the Accounting Adjustments, or in connection with any default
or event of default in respect of any other Debt due to such failure,
has been waived in accordance with the terms of the Junior Notes
Indenture.
This Amendment is subject to the provisions of Sections 9.01 and 9.02 of the
Credit Agreement.
SECTION 3. Effect on the Loan Documents. (a) The Credit Agreement and
the other Loan Documents are and shall continue to be in full force and effect
and are hereby in all respects ratified and confirmed. Without limiting the
generality of the foregoing, the Collateral Documents and all of the Collateral
described therein do and shall continue to secure the payment of all Obligations
of the Loan Parties under the Loan Documents.
(b) The execution, delivery and effectiveness of this Amendment shall
not, except as expressly provided herein, operate as a waiver of any right,
power or remedy of any Lender or the Administrative Agent under any of the Loan
Documents, nor constitute a waiver or amendment of any provision of any of the
Loan Documents.
SECTION 4. Costs, Expenses. Each of the Borrowers hereby agrees to pay
on demand all reasonable costs and expenses of the Administrative Agent in
connection with the preparation, execution, delivery and administration,
modification and amendment of this Amendment (including, without limitation, the
reasonable fees and expenses of counsel for the Administrative Agent) in
accordance with the terms of Section 9.05 of the Credit Agreement.
SECTION 5. Execution in Counterparts. This Amendment may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which will be deemed to be an original and all of which
taken together shall constitute but one and the same agreement. Delivery of an
executed counterpart of a signature page to this Amendment by telecopier shall
be effective as delivery o f a manually executed counterpart of this Amendment.
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SECTION 6. Governing Law. This Amendment shall be governed by, and
construed in accordance with, the laws of the State of New York.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
CINCINNATI BELL INC. (f/k/a
BROADWING INC.)
By
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Name:
Title:
BCSI INC. (f/k/a BROADWING
COMMUNICATIONS SERVICES,
INC.)
By
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Name:
Title:
Agreed as of the date first above written:
CITICORP USA, INC.,
as Administrative Agent and as Lender
By
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Name:
Title:
BANK OF AMERICA, N.A.,
as Syndication Agent and as Lender
By
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Name:
Title:
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SIGNATURE PAGE TO
AMENDMENT AND WAIVER
DATED AS OF MARCH 19, 2004 TO
CINCINNATI BELL INC. CREDIT AGREEMENT
To approve amendment and waiver
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Institution
By
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Name:
Title:
CONSENT
Each of the undersigned, as (i) Grantor under the Second Amendment and
Restatement of the Non-Shared Collateral Security Agreement dated November 9,
1999 and amended and restated July 17, 2002 and further amended and restated
March 26, 2003 (as amended and restated, the "Non-Shared Collateral Security
Agreement") in favor of the Citicorp USA, Inc., as Administrative Agent (the
"Administrative Agent"), for its benefit and the benefit of the Lenders parties
to the Credit Agreement referred to in the foregoing Amendment, and/or (ii)
Grantor under the Second Amendment and Restatement of the Shared Collateral
Security Agreement dated November 9, 1999 and amended and restated July 17, 2002
and further amended and restated March 26, 2003 (as amended and restated, the
"Shared Collateral Security Agreement", and together with the Non-Shared
Collateral Security Agreement, the "Security Agreements") in favor of Wilmington
Trust Company and John M. Beeson, as Collateral Trustees, for their benefit and
the benefit of the Secured Holders referred to therein, and (iii) Guarantor
under the Amendment and Restatement of the BCSI Subsidiary Guaranty dated as of
November 9, 1999 and amended and restated March 26, 2003 (the "BCSI Subsidiary
Guaranty"), in favor of the Secured Parties referred to therein, and/or (iv)
Guarantor under the BRW Subsidiary Guaranty dated as of November 9, 1999 and
amended and restated March 26, 2003 (the "BRW Subsidiary Guaranty", and together
with the BCSI Subsidiary Guaranty, the "Guarantees") in favor of the Secured
Parties referred to therein, hereby consents to the foregoing Amendment and
hereby confirms and agrees that (a) notwithstanding the effectiveness of the
foregoing Amendment, each Security Agreement and Guarantee to which it is a
party is, and shall continue to be, in full force and effect and is hereby
ratified and confirmed in all respects, and (b) the Security Agreements to which
such Grantor is a party and all of the Collateral described therein do, and
shall continue to, secure the payment of all of the Secured Obligations (in each
case, as defined therein.)
CINCINNATI BELL INC. (f/k/a
BROADWING INC.)
By
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Title:
BCSI INC. (f/k/a BROADWING
COMMUNICATIONS SERVICES
INC.)
By
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Title:
2
BRCOM INC. (f/k/a BROADWING
COMMUNICATIONS INC.)
ZOOMTOWN.COM INC.
BRHI INC. (f/k/a BROADWING
HOLDINGS INC.)
CINCINNATI BELL TECHNOLOGY
SOLUTIONS INC. (f/k/a BROADWING
TECHNOLOGY SOLUTIONS INC.)
CINCINNATI BELL ANY DISTANCE
INC.
CINCINNATI BELL WIRELESS
HOLDINGS LLC
CINCINNATI BELL WIRELESS
COMPANY
CINCINNATI BELL
TELECOMMUNICATIONS SERVICES
INC.
CINCINNATI BELL PUBLIC
COMMUNICATIONS INC.
BRFS LLC (f/k/a BROADWING
FINANCIAL LLC)
CINCINNATI BELL COMPLETE
PROTECTION INC.
BRWL, LLC (f/k/a BROADWING
LOGISTICS, LLC)
BTI INC. (f/k/a BROADWING
TELECOMMUNICATIONS INC.)
IXC BUSINESS SERVICES, LLC
BCSIVA INC. (f/k/a BROADWING
COMMUNICATIONS SERVICES OF
VIRGINIA, INC.)
IXC INTERNET SERVICES, INC.
BRWSVCS LLC (f/k/a BROADWING
SERVICES LLC)
By
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Title: