FOURTH AMENDMENT TO SECOND AMENDED
AND RESTATED LOAN AGREEMENT
THIS FOURTH AMENDMENT TO SECOND AMENDED AND RESTATED LOAN AGREEMENT
(the "Agreement") is made and entered into as of this 8th day of September,
1999, between GENERAL ELECTRIC CAPITAL CORPORATION, a New York corporation
having an office at 3379 Peachtree Road, N.E., Suite 600, Atlanta, Georgia
30326, as lender and agent ("Lender"), and BUSINESS TELECOM, INC., a North
Carolina corporation having an office at 4300 Six Forks Road, Raleigh, North
Carolina 27609 ("Borrower").
W I T N E S S E T H:
WHEREAS, Lender and Borrower are party to that certain Second Amended
and Restated Loan Agreement, dated as of September 22, 1997 (as the same has
been amended by (i) that certain First Amendment to Second Amended and Restated
Loan Agreement, dated May 6, 1998 (ii) that certain Second Amendment to Second
Amended and Restated Loan Agreement, dated June 30, 1998, and (iii) that certain
Third Amendment to Second Amended and Restated Loan Agreement, dated July 15,
1999, as so amended, 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 Lender's consent to the transactions
evidenced by that certain Loan Agreement, dated of even date herewith, among
Borrower, Bank of America, National Association, as agent, Bank of America,
National Association, as lender, and the other financial institutions a party
thereto from time to time; and
WHEREAS, Lender is willing to consent to the transaction described
above, on the condition that Borrower enter this Agreement; and
WHEREAS, Borrower is willing to enter this Agreement.
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) Section 1.1(a) of Article 1 of the Loan Agreement is
hereby amended by adding the following new definitions thereto in the
correct alphabetical order:
"Acceptable Equity Issuance" shall mean (a) an Equity
Issuance or an IPO with respect to which aggregate Proceeds
are greater than or equal to $100,000,000; or (b) an IPO and
an Equity Issuance with respect to which the combined
aggregate Proceeds are greater than or equal to $100,000,000
and has
received such Proceeds in a manner acceptable to Agent.
"Average Daily Capital Expenditures" shall mean, as
of the end of each Fiscal Month and as reflected in the
financial statements for such month prepared by Borrower on a
basis consistent with its customary accounting practices, an
amount equal to (A) all payments and accruals for Capital
Expenditures during the then most recently completed six (6)
Fiscal Months, divided by (B) the numbers of days occurring
during such measurement period.
"BofA" shall mean Bank of America, National
Association, in its capacity as agent under the BofA Loan
Agreement, and its successors and assigns.
"BofA Lenders" shall have the meaning ascribed to
such term in the Intercreditor Agreement.
"BofA Leverage Ratio" means, for any period, the
ratio determined by dividing (i) Senior Debt by (ii) current
EBITDA.
"BofA Loan" shall mean the loan evidenced by the BofA
Loan Agreement.
"BofA Loan Agreement" shall have the meaning ascribed
to such term in the Intercreditor Agreement, as the same shall
remain unamended by the parties thereto.
"BTI Pledge Agreement" shall mean a pledge agreement
executed by Borrower in the form attached hereto as Exhibit
A-2, pursuant to which, INTER ALIA, Borrower pledges to Agent
for the benefit of Lenders all of the Stock of FSM and BTOV as
the same may be amended, modified or supplemented from time to
time.
"BTOV" shall mean Business Telecom of Virginia, Inc.,
a wholly-owned subsidiary of Borrower.
"BTOV Guaranty" shall mean the guaranty executed by
BTOV, in favor of Agent for the benefit of Lenders, pursuant
to which BTOV guarantees to Agent for the benefit of Lenders
payment of the Obligations.
"Consolidated Revenue" shall mean, as of any date of
determination, the consolidated revenue of BTITC, Borrower and
its Subsidiaries, as determined in accordance with GAAP.
"Equity Issuance" shall mean one or more related
private issuances of Stock by BTITC or Borrower.
"FSM" shall mean FS Multimedia, Inc., a wholly-owned
subsidiary of Borrower.
"FSM Guaranty" shall mean the guaranty executed by
FSM, in favor of Agent for the benefit of Lenders, pursuant to
which FSM guarantees to Agent for the benefit of Lenders
payment of the Obligations.
"GE Capital Primary Collateral" shall have the
meaning ascribed to such term in the Intercreditor Agreement.
"Identified GE Capital Account(s)" shall have the
meaning ascribed to such term in the Intercreditor Agreement.
"Intercreditor Agreement" shall mean and refer to
that certain Intercreditor Agreement, dated September 8, 1999,
among Borrower, BTITC, BTOV, FSM, Lender, BofA and the BofA
Lenders.
"IPO" shall mean an initial public issuance of Stock
of BTITC or Borrower.
"Pari Passu Collateral" shall have the meaning
ascribed to such term in the Intercreditor Agreement.
"Senior Debt" shall mean the Loans, the BofA Loan and
other Indebtedness permitted by the Lenders from time to time
and designated by the Lenders as "Senior Debt" for the
purposes of this Agreement in writing to the Borrower, but
shall not include the BTITC Subordinated Debt.
(b) Section 1.1(a) of Article 1 of the Loan Agreement is
hereby further amended by deleting from the second line of the
definition of "Accounts Payable Days Outstanding" the phrase "Average
Daily Purchases" and inserting in lieu thereof the phrase "(i) Average
Daily Purchases plus, (ii) Average Daily Capital Expenditures."
(c) Section 1.1(a) of Article 1 of the Loan Agreement is
hereby further amended by deleting the definition of "BTITC
Subordinated Note" in its entirety and the following is inserted in
lieu thereof:
"BTITC Subordinated Note" shall mean that certain
subordinated intercompany note to BTITC by Borrower, as
amended and restated as of September 1, 1999, attached
hereto as Exhibit C.
(d) Section 1.1(a) of Article 1 of the Loan Agreement is
hereby further amended by inserting immediately prior to the phrase
"and the UCC-1 Financing Statements" in the second line of the
definition of "Collateral Documents" the phrase "BTOV Guaranty, FSM
Guaranty, the BTI Pledge Agreement"
(e) Section 1.1(a) of Article 1 of the Loan Agreement is
hereby further amended by deleting from the fourteenth line of the
definition of "Eligible Capital
Expenditures" the phrase "payments or accruals with respect to that
certain IRU Agreement, dated as of October 31, 1997, by and between
Qwest Communications Corporation and Borrower" and inserting in lieu
thereof the phrase "rights, equipment, fixtures or other property which
are the subject of the BofA Loan Agreement or any documents related
thereto."
(f) Section 1.1(a) of Article 1 of the Loan Agreement is
hereby further amended by deleting the reference in the definition of
"Material Adverse Effect" to the number "$150,000" and inserting in
lieu thereof the number "$1,000,000."
(g) Section 1.1(a) of Article 1 of the Loan Agreement is
hereby further amended by adding the following subsection (xii) to the
end of the definition of "Permitted Liens":
(xii) Liens granted by Borrower to BofA, to the extent
such Liens are consistent with the terms and conditions of the
Intercreditor Agreement.
(h) Section 1.2A(1) of Article 1 of the Loan Agreement is
hereby amended by deleting therefrom the sentence: "Amounts repaid
under the Capex Facility may not thereafter be reborrowed."
(i) Section 1.4(b) of Article 1 of the Loan Agreement is
hereby amended by adding the following new subsection (v) thereto:
(v) If BTITC shall consummate an Acceptable Equity
Issuance, BTITC and Borrower shall remit to Lenders an amount
equal to its pro rata portion of such proceeds based upon the
aggregate outstanding indebtedness owed by Borrower to Lenders
and the BofA Lenders, respectively, pursuant to the terms and
conditions of the Intercreditor Agreement, which amount shall
be sufficient to pay all Obligations in full.
(j) Section 1.4 of Article 1 of the Loan Agreement is hereby
further amended by adding the following new subsection (c) thereto:
(c) Prepayment Fee. In the event that Borrower shall
exercise its right to voluntarily prepay the Loans as
described in subsection (a) above on or before (i) March 8,
2001, Borrower shall pay to Lenders on the date of such
prepayment in immediately available funds a prepayment fee
equal to one percent (1%) of the Total Commitment or (ii)
September 8, 2001, Borrower shall pay to Lenders on the date
of such prepayment in immediately available funds a prepayment
fee equal to one-half percent (0.5%) of the Total Commitment
(the "Prepayment Fee"); provided, however that no such
Prepayment Fee shall be due and payable by Borrower to Lenders
(i) in connection with a mandatory prepayment by Borrower
pursuant to Section 1.4(b)(v) hereof, or (ii) upon the
occurrence of all of the following events: (A) the Loans being
prepaid by Borrower in full, and (B) the Revolving Credit
Facility and Capex Facility being terminated, and (C) the
Revolving Credit Facility and Capex Facility being replaced by
a loan facility in which GE Capital holds an interest.
(k) Section 1.10 of Article 1 of the Loan Agreement is hereby
amended by adding the phrase "and the Capex Borrowing Availability" to
the fifth line thereof following the phrase "Revolving Credit Borrowing
Availability."
(l) Section 1.10 of Article 1 of the Loan Agreement is hereby
further amended by adding the following sentence to the end thereof:
"All funds from whatever source (unless the same shall constitute Pari
Passu Collateral or BofA Collateral under the terms of the
Intercreditor Agreement) deposited into a GE Sweep Account shall be
applied on a daily basis first to the outstanding principal balance of
the Revolving Credit Loans, second to the outstanding principal balance
of the Capex Advances and otherwise in accordance with the terms of
this Agreement."
(m) Section 3.21 of Article 3 of the Loan Agreement is hereby
amended by deleting therefrom both references to the number "$300,000"
and inserting in lieu thereof the number "$1,000,000."
(n) Article 3 of the Loan Agreement is hereby further amended
by adding the following new Section 3.29 thereto:
3.29 Year 2000.
(a) The Borrower has developed and budgeted for a
comprehensive program to address the "Year 2000 problem" (that
is, the inability of computers, as well as embedded microchips
in non-computing devices, to perform properly date-sensitive
functions with respect to certain dates prior to and after
December 31, 1999). The Borrower has implemented that program
substantially in accordance with its timetable and budget and
it has designed such program to substantially avoid the Year
2000 problem as to all computers, as well as embedded
microchips in non-computing devices, that are material to its
business, properties or operations. The Borrower has developed
feasible contingency plans that it has designed to ensure
uninterrupted and unimpaired business operation in the event
of failure of its own or a third party's systems or equipment
due to the Year 2000 problem, including those of vendors,
customers and suppliers, as well as a general failure of or
interruption in its communications and delivery
infrastructure.
(b) BTITC and the Borrower's Subsidiaries have not developed
or budgeted for a program to address the Year 2000 problem and
such Person's failure to develop such a program will not
result in a Year 2000 problem with such Person's computers, as
well as embedded microchips in non-computing devices, that are
material to its business properties or operations. In
addition, BTITC and the Borrower's Subsidiaries failure to
develop a program to address the Year 200 problem will not
impair such Person's ability to adequately ensure
uninterrupted
and unimpaired business operation in the event of failure of
its own or a third party's systems or equipment due to the
Year 2000 problem, including those of vendors, customers and
suppliers, as well as a general failure of or interruption in
its communications and delivery infrastructure.
(o) Section 4.1 of Article 4 of the Loan Agreement is hereby
amended to add the following new subsection (k) thereto:
(k) Upon the request of the Agent, a copy of the
Borrower's (and BTITC's and Borrower's Subsidiaries', if
applicable) plan, timetable and budget to address the Year
2000 problem, together with periodic updates thereof and
expenses incurred to the date of the request and all
contingency plans with respect to the Year 2000 problem
(whether such assessment is commissioned by such Person or by
a third party (other than Agent or Lenders).
(p) Section 5.4 of Article 5 of the Loan Agreement is hereby
amended by deleting therefrom the reference to the number "$250,000"
and inserting in lieu thereof the number "$1,000,000."
(q) Section 5.5(b) of Article 5 of the Loan Agreement is
hereby amended by adding the phrase "Subject to the terms of the
Intercreditor Agreement," to the beginning thereof.
(r) Section 5.5(b) of Article 5 of the Loan Agreement is
hereby further amended by adding the phrase "with respect to the GE
Capital Primary Collateral" to the second line thereof following the
word "thereunder."
(s) Section 5.5(b) of Article 5 of the Loan Agreement is
hereby further amended by adding the phrase "only to the extent such
actions relate to the GE Capital Primary Collateral" to the last line
thereof following the word "insurance."
(t) Section 5.5(f) of Article 5 of the Loan Agreement is
hereby amended by adding the phrase "Subject to the terms and
conditions of the Intercreditor Agreement," to the beginning thereof.
(u) Section 5.11 of Article 5 of the Loan Agreement is hereby
amended by adding the following sentence to the end thereof: "Upon
formation of such Subsidiary Borrower shall provide Agent with (a) a
guaranty, in form and substance satisfactory to Agent, pursuant to
which such Subsidiary guarantees to Agent, for the benefit of Lenders,
payment of the Obligations, and (b) a pledge agreement, executed by
Borrower, in form and substance satisfactory to Agent, pursuant to
which, among other things, (i) the Borrower pledges to Agent, for the
benefit of Lenders, all of the Stock of such Subsidiary held by
Borrower at such time and (ii) Borrower agrees to pledge to Agent, for
the benefit of Lenders, any Stock of such Subsidiary subsequently held
by Borrower; provided, however, that the priority of Agent's security
interest in any such Stock shall be subject to the provisions of the
Intercreditor Agreement."
(v) Article 5 of the Loan Agreement is hereby further amended
by adding the following new Sections 5.21 and 5.22 thereto:
5.21 Revolving Loan and Capex Advance Proceeds. Borrower shall
cause and direct proceeds of any Loans requested by Borrower for the
purpose of maintaining cash balances to be deposited into and remain in
the Identified GE Capital Account maintained with Morgan Stanley Dean
Witter Investment Management, Inc.
5.22 Year 2000 Compliance. The Borrower shall promptly notify
the Agent in the event that the Borrower discovers or determines that
any computer application (including those of its suppliers, vendors and
customers) that is material to its or any of its Subsidiaries' business
and operations will not be Year 2000 compliant, except to the extent
that such failure could not reasonably be expected to have a Material
Adverse Effect.
(w) Section 6.3 of Article 6 of the Loan Agreement is hereby
amended by adding the following subsection (j) to the end hereof:
(j) Indebtedness in favor of BofA and the BofA
Lenders pursuant to the BofA Loan Agreement.
(x) Section 6.6 of Article 6 of the Loan Agreement is hereby
amended by adding the phrase "and (c) guarantees of the indebtedness
evidenced by the BofA Loan Agreement by FS Multimedia, Inc. and
Business Telecom of Virginia, Inc. and by any other Subsidiaries of the
Borrower (solely to the extent Lenders contemporaneously receive an
identical guarantee of the Obligations from such Subsidiary)" to the
last line thereof following the word "Agreement."
(y) Section 6.8 of Article 6 of the Loan Agreement is hereby
amended by adding the phrase "Other than sales consisting solely of the
BofA Primary Collateral (which sales shall occur pursuant to the terms
of the Intercreditor Agreement)," to the beginning thereof.
(z) Section 6.11 of Article 6 of the Loan Agreement is amended
as follows:
(i) Section 6.11(a) of Article 6 of the Loan
Agreement is hereby deleted in its entirety and the following
is inserted in lieu thereof:
(a) 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 Minimum Consolidated
Fiscal Quarter Interest Coverage Ratio Interest Coverage Ratio
(PRIOR TO AN ACCEPTABLE (FOLLOWING AN ACCEPTABLE
EQUITY ISSUANCE) EQUITY ISSUANCE)
----------------------------- ----------------------------------------- -----------------------------------------
Fourth Quarter 1999 n/a n/a
----------------------------- ----------------------------------------- -----------------------------------------
First Quarter 2000 n/a 1.25 to 1.00
----------------------------- ----------------------------------------- -----------------------------------------
Second Quarter 2000 1.25 to 1.00 1.40 to 1.00
----------------------------- ----------------------------------------- -----------------------------------------
Third Quarter 2000 1.40 to 1.00 1.40 to 1.00
----------------------------- ----------------------------------------- -----------------------------------------
Fourth Quarter 2000 1.40 to 1.00 1.40 to 1.00
----------------------------- ----------------------------------------- -----------------------------------------
First Quarter 2001 1.40 to 1.00 1.40 to 1.00
----------------------------- ----------------------------------------- -----------------------------------------
Second Quarter 2001 1.40 to 1.00 1.40 to 1.00
----------------------------- ----------------------------------------- -----------------------------------------
Third Quarter 2001 1.40 to 1.00 1.40 to 1.00
----------------------------- ----------------------------------------- -----------------------------------------
Fourth Quarter 2001 1.40 to 1.00 1.40 to 1.00
----------------------------- ----------------------------------------- -----------------------------------------
First Quarter 2002 2.0 to 1.00 2.0 to 1.00
----------------------------- ----------------------------------------- -----------------------------------------
Second Quarter 2002 2.0 to 1.00 2.0 to 1.00
----------------------------- ----------------------------------------- -----------------------------------------
(ii) Section 6.11(b) of Article 6 of the Loan
Agreement is hereby deleted in its entirety and the following
is inserted in lieu thereof:
(b) Maximum Capital Expenditures.
(i) Borrower shall not permit its
Capital Expenditures for Fiscal Year 1999 to
exceed (A) $75,000,000, in the event BTITC
has not consummated an Acceptable Equity
Issuance, or (B) $102,500,000, in the event
BTITC has consummated an Acceptable Equity
Issuance.
(ii) Borrower shall not permit its
Capital Expenditures for Fiscal Year 2000 to
exceed (A)(I) $28,000,000, in the event
BTITC has not consummated an Acceptable
Equity Issuance, or (II) $110,000,000, in
the event BTITC has consummated an
Acceptable Equity Issuance, plus (B) one
hundred percent (100%) of that portion, if
any, of the permitted maximum Capital
Expenditures for Fiscal Year 1999 which were
not expended by Borrower during such year.
(iii) Borrower shall not permit its
Capital Expenditures for Fiscal Year 2001 to
exceed (A) $18,000,000, in the event BTITC
has not consummated an Acceptable Equity
Issuance, or (B) $45,000,000, in the event
BTITC has consummated an Acceptable Equity
Issuance.
(iv) Borrower shall not permit its
Capital Expenditures for Fiscal Year 2002 to
exceed (A) $16,000,000, in the event
BTITC has not consummated an Acceptable
Equity Issuance, or (B) $35,000,000, in the
event BTITC has consummated an Acceptable
Equity Issuance.
(iii) Section 6.11(d) of Article 6 of the Loan
Agreement is hereby deleted in its entirety and the following
is inserted in lieu thereof:
(d) Minimum EBITDA. Borrower shall not
permit its cumulative EBITDA for the four (4) Fiscal
Quarters ending on the last day of the Fiscal
Quarters set forth below to be less than the
respective amount shown opposite thereto:
Four (4) Fiscal Quarters Minimum Cumulative Minimum Cumulative
Ending on Last Day of: EBITDA EBITDA
(PRIOR TO AN ACCEPTABLE (FOLLOWING AN ACCEPTABLE
EQUITY ISSUANCE) EQUITY ISSUANCE)
--------------------------------- ------------------------------------- ----------------------------------------
Third Quarter 1999 $ 750,000 $ 750,000
--------------------------------- ------------------------------------- ----------------------------------------
Fourth Quarter 1999 $3,052,446 $3,219,000
--------------------------------- ------------------------------------- ----------------------------------------
First Quarter 2000 $6,232,318 $6,295,000
--------------------------------- ------------------------------------- ----------------------------------------
Second Quarter 2000 $10,125,506 $10,430,000
--------------------------------- ------------------------------------- ----------------------------------------
Third Quarter 2000 $15,423,000 $16,188,020
--------------------------------- ------------------------------------- ----------------------------------------
Fourth Quarter 2000 $20,557,000 $22,755,000
--------------------------------- ------------------------------------- ----------------------------------------
First Quarter 2001 $28,710,000 $30,565,000
--------------------------------- ------------------------------------- ----------------------------------------
Second Quarter 2001 $37,719,000 $39,115,000
--------------------------------- ------------------------------------- ----------------------------------------
Third Quarter 2001 $46,182,000 $48,825,000
--------------------------------- ------------------------------------- ----------------------------------------
Fourth Quarter 2001 $52,577,000 $59,355,000
--------------------------------- ------------------------------------- ----------------------------------------
First Quarter 2002 $61,774,000 $70,340,000
--------------------------------- ------------------------------------- ----------------------------------------
Second Quarter 2002 $71,121,000 $81,665,000
--------------------------------- ------------------------------------- ----------------------------------------
(iv) Section 6.11(e) of Article 6 of the Loan
Agreement is hereby amended by deleting therefrom the number
"85" and inserting in lieu thereof the number "100."
(v) Section 6.11 of Article 6 of the Loan Agreement
is hereby further amended by adding the following new
subsections (f) and (g) thereto:
(f) Minimum Revenue. Borrower shall not permit its
cumulative Consolidated Revenue for the trailing four (4)
Fiscal Quarters ending on the last day of the Fiscal Quarters
set forth below to be less than the respective amount shown
opposite thereto:
Fiscal Quarter Minimum Revenue Minimum Revenue
(PRIOR TO AN ACCEPTABLE (FOLLOWING AN ACCEPTABLE
EQUITY ISSUANCE) EQUITY ISSUANCE)
--------------------------------- ------------------------------------- ----------------------------------------
Third Quarter 1999 $186,626,000 $190,586,000
--------------------------------- ------------------------------------- ----------------------------------------
Fourth Quarter 1999 $191,187,479 $198,850,949
--------------------------------- ------------------------------------- ----------------------------------------
First Quarter 2000 $199,051,162 $210,869,422
--------------------------------- ------------------------------------- ----------------------------------------
Second Quarter 2000 $208,798,549 $228,979,838
--------------------------------- ------------------------------------- ----------------------------------------
Third Quarter 2000 $224,076,663 $247,283,013
--------------------------------- ------------------------------------- ----------------------------------------
Fourth Quarter 2000 $242,221,720 $267,664,778
--------------------------------- ------------------------------------- ----------------------------------------
First Quarter 2001 $264,253,045 $292,721,334
--------------------------------- ------------------------------------- ----------------------------------------
(g) BofA Leverage Ratio. Borrower shall not permit
its BofA Leverage Ratio as of the last day of the Fiscal
Quarters set forth below to be less than the respective ratio
shown opposite thereto:
Fiscal Quarter BofA Leverage Ratio BofA Leverage Ratio
(PRIOR TO AN ACCEPTABLE (FOLLOWING AN ACCEPTABLE
EQUITY ISSUANCE) EQUITY ISSUANCE)
--------------------------------- ------------------------------------- -----------------------------------------
Third Quarter 1999 n/a n/a
--------------------------------- ------------------------------------- -----------------------------------------
Fourth Quarter 1999 n/a n/a
--------------------------------- ------------------------------------- -----------------------------------------
First Quarter 2000 13.00 to 1.0 10.50 to 1.0
--------------------------------- ------------------------------------- -----------------------------------------
Second Quarter 2000 8.50 to 1.0 6.75 to 1.0
--------------------------------- ------------------------------------- -----------------------------------------
Third Quarter 2000 5.50 to 1.0 4.00 to 1.0
--------------------------------- ------------------------------------- -----------------------------------------
Fourth Quarter 2000 4.00 to 1.0 4.00 to 1.0
--------------------------------- ------------------------------------- -----------------------------------------
First Quarter 2001 4.00 to 1.0 4.00 to 1.0
--------------------------------- ------------------------------------- -----------------------------------------
Second Quarter 2001 4.0 to 1.0 4.0 to 1.0
--------------------------------- ------------------------------------- -----------------------------------------
Third Quarter 2001 4.0 to 1.0 4.0 to 1.0
--------------------------------- ------------------------------------- -----------------------------------------
Fourth Quarter 2001 4.0 to 1.0 4.0 to 1.0
--------------------------------- ------------------------------------- -----------------------------------------
First Quarter 2002 4.0 to 1.0 4.0 to 1.0
--------------------------------- ------------------------------------- -----------------------------------------
Second Quarter 2002 4.0 to 1.0 4.0 to 1.0
--------------------------------- ------------------------------------- -----------------------------------------
(aa) Section 6.15 of Article 6 of the Loan Agreement is
hereby amended by adding the following clause at the end thereto: "and
payments to BofA and the other BofA Lenders to the extent such
payments are consistent with the terms and conditions of the
Intercreditor Agreement."
(bb) Section 6.16 of Article 6 of the Loan Agreement is
hereby amended by deleting therefrom the reference to the number
"$150,000" and inserting in lieu thereof "$1,000,000."
(cc) Article 6 of the Loan Agreement is hereby further
amended by adding the following new Section 6.21 to the end thereof:
6.21 Matters Respecting the BofA Loan. For so long as
an Acceptable Equity Issuance has not occurred, Borrower shall
not, without the written consent of Agent, (i) fail to timely
act in a manner to permit the syndication of the BofA Loans or
(ii) use the proceeds of the Loans (other than proceeds of the
Loans that constitute Pari Passu Collateral) to repay in full
the BofA Loans in connection
with a termination of the BofA Loan Agreements due to a
failure to syndicate; provided, however, that prior to an Event of
Default and otherwise in accordance with this Agreement, Borrower may
use the proceeds of the Loans to continue to make all regularly
scheduled payments of principal, interest or other fees or charges
required pursuant to the BofA Loan Agreements.
(dd) Section 8.1(c) of Article 8 of the Loan Agreement is
hereby deleted in its entirety and the following is inserted in lieu
thereof:
A default or event of default (as defined
therein) shall have occurred under the BTITC
Guaranty, the BTITC Pledge Agreement, the FSM
Guaranty, the BTOV Guaranty, or any guaranty or
pledge by any Subsidiary pursuant to Section 5.11 and
any applicable cure period related thereto has
expired.
(ee) Section 8.1(d) of Article 8 of the Loan Agreement is
hereby amended by adding the phrase "and any applicable cure period
related thereto has expired" to the last line thereof following the
phrase "BTITC Senior Notes."
(ff) Section 8.1(f) of Article 8 of the Loan Agreement is
hereby amended by deleting therefrom both references to the number
"$300,000" and inserting in lieu thereof the number "$1,000,000."
(gg) Section 8.1(k) of Article 8 of the Loan Agreement is
hereby amended by deleting therefrom the reference to the number
"$300,000" and inserting in lieu thereof the number "$1,000,000."
(hh) Section 8.1(l) of Article 8 of the Loan Agreement is
hereby amended by adding the parenthetical "(or second priority, if in
accordance with the Intercreditor Agreement)" to the fourth line
thereof following the word "priority."
(ii) Section 8.1 of Article 8 of the Loan Agreement is hereby
further amended by adding the following new subsections (m) and (n) to
the end hereof:
; or
(m) there shall occur a Default or Event of Default
under the terms of BofA Loan Agreement; or
(n) there shall occur a Change of Control.
(jj) Article 8 of the Loan Agreement is hereby amended by
adding the phrase "Subject to the terms and conditions of the
Intercreditor Agreement:" as the preamble thereof following the
heading: "Remedies."
(kk) Section 8.2(f) of Article 8 of the Loan Agreement is
hereby further
amended by adding the parenthetical "(which Proceeds shall be
determined in accordance with the Intercreditor Agreement)" to the
first line thereof following the word "Proceeds."
(ll) Section 8.2(f) of Article 8 of the Loan Agreement is
hereby further amended by adding the phrase "fifth, as otherwise
required by the Intercreditor Agreement; and" following the phrase
"fourth, to the Agent for the benefit of Lenders in an amount equal to
any other Obligations which are then unpaid."
(mm) Section 8.3 of Article 8 of the Loan Agreement is
hereby amended by adding the phrase ", subject to the terms and
conditions of the Intercreditor Agreement," to the second line thereof
following the word "law."
(nn) Section 10.1(a) of Article 10 of the Loan Agreement is
hereby amended by adding the phrase "including, without limitation,
any assignment pursuant to the Intercreditor Agreement" to the fourth
line thereof following the word "not."
(oo) Section 10.1(a) of Article 10 of the Loan Agreement is
hereby further amended by adding the phrase "and (v) be conditioned
upon such Lender executing a written joinder agreement to the
Intercreditor Agreement, in form and substance acceptable to the Agent
and BofA" to the fourteenth line thereof following the number "3,500."
(pp) Section 10.7 of Article 10 of the Loan Agreement is
hereby amended by adding the phrase ", subject to the terms and
conditions of the Intercreditor Agreement," to the fifth line thereof
following the phrase "set off and."
(qq) Section 11.1 of Article 11 of the Loan Agreement is
hereby amended by adding the phrase "and the BofA Lenders (if
applicable pursuant to the Intercreditor Agreement)" to the ninth line
thereof following the parenthetical "(if applicable)."
(rr) Article 11 of the Loan Agreement is hereby amended by
adding the following new section 11.15 to the end thereof:
11.15 Intercreditor Agreement. In the case of any
conflict between the terms of this Agreement or any other Loan
Document (including, without limitation, the Guaranty, the
BTITC Subordination Agreement, the Loftin Subordination
Agreement, the guaranties made by FS Multimedia, Inc. and
Business Telecom of Virginia, Inc. in favor of the Lenders and
the BofA Lenders, respectively, and the Stock Pledge
Agreements made by Borrower in favor of the Lenders and the
BofA Lenders, respectively) and the Intercreditor Agreement
relating to matters which are the subject to the Intercreditor
Agreement, the terms of the Intercreditor Agreement shall
govern and control.
(oo) The Loan Agreement is hereby further amended by adding a
new Exhibit A-2 thereto in the form attached hereto as Exhibit A-2.
(pp) The Loan Agreement is hereby further amended by deleting
Exhibit C thereto in its entirety and inserting in lieu thereof the
form of Exhibit C attached hereto.
2. Consent to BofA Loans. Lender hereby acknowledges
and consents for all purposes under the Loan Agreement and other Loan Documents
to the loan transaction between the BofA Lenders and Borrower pursuant to the
terms and conditions of the BofA Loan Agreement and the other documents,
instruments and agreements related thereto; provided that Lender shall have been
provided a copy of the final version of the BofA Loan Agreement and the other
documents, instruments and agreements related thereto prior to the date hereof
for review. Lender hereby further agrees that the Intercreditor Agreement shall
govern the relationship between Lender and the BofA Lenders as to the matters
which are the subject matter thereof.
3. Representations, Warranties, Covenants and
Acknowledgments; Release. To induce Lender to enter into this Agreement:
(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 Agreement, and (iv) this
Agreement 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 Agreement, 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 Revolving
Credit Loans or the Capex Facility; and
(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.
4. Conditions Precedent. The effectiveness of this
Agreement 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 Agreement, (ii) an
Acknowledgment and Consent of Guarantor, in form and substance
satisfactory to Lender, (iii) executed counterpart originals of the
Intercreditor Agreement, (iv) an opinion of counsel in form and
substance satisfactory to Lender in its sole discretion regarding the
enforceability of the Intercreditor Agreement, (v) evidence
satisfactory to Lender in its sole discretion that the loans to be
made by the BofA Lenders to Borrower have been or will be consummated
pursuant to documents satisfactory to Lender in its sole discretion;
(vi) true and correct copies of executed counterpart originals of the
BofA Loan Agreement and all other documents, agreements and
instruments executed in connection therewith or pursuant thereto;
(vii) executed counterpart originals of (A) the FSM Guaranty, (B) the
BTOV Guaranty and (C) the BTI Pledge Agreement, together with original
stock certificates representing all of the Stock of FS Multimedia,
Inc. and Business Telecom of Virginia, Inc. owned by Borrower, (viii)
executed counterpart originals of (A) that certain Pledge Agreement
executed by Borrower in favor of Lender relating to the pledge by
Borrower to Lender of the Investment Account (as defined therein), and
(B) that certain Acknowledgment of Morgan Stanley Dean Witter
Investment Management Inc. executed by Morgan Stanley Dean Witter
Investment Management Inc. relating to the Investment Account; (ix)
the original amended and restated BTITC Subordinated Note to be held
by Agent pursuant to the Borrower Pledge Agreement; (ix) executed
counterpart originals of (A) a consent and agreement concerning
Lender's second priority interest in the Qwest Agreement (as that term
is defined in the Intercreditor Agreement), together with an executed
and acknowledged notice of assignment by Qwest (as that term is
defined in the Intercreditor Agreement) and (B) executed counterpart
originals of a consent and agreement concerning Lender's second
priority security interest in the Nortel Agreement (as that term is
defined in the Intercreditor Agreement), together with an executed and
acknowledged notice of assignment by Nortel (as that term is defined
in the Intercreditor Agreement), each of which shall be in form and
substance satisfactory to Lender; provided, however, that such
agreements required to be delivered by Borrower pursuant to this
subsection (ix)(A) and (B) shall be delivered on or before October 31,
1999, and (x) 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
Agreement and under the Loan Documents shall be true and correct as of
the date of this Agreement, except such representations and warranties
which, by their terms, are applicable to a prior specific date or
period;
(c) Expenses. Borrower shall have paid to Lender the costs
and expenses referred to in Section 6 hereof; and
(d) Fees. Borrower shall have paid to Lender the amendment
fee described in that certain side letter, dated of even date
herewith, between Borrower and Lender, which amendment fee shall be
deemed fully earned as of the date hereof.
5. Effect of this Agreement. 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. Lender
acknowledges receipt pursuant to Section 5.8 of the Loan Agreement of the
revised schedules attached hereto as Exhibit A.
6. 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 Agreement, the Intercreditor
Agreement, 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. Borrower authorizes and directs Lender, as
Agent, to charge both the foregoing expenses and the fees described in Section
4(d) of this Agreement to the Borrower's loan account by increasing the
principal amount of the Revolving Credit Loans by the amount of such expenses
owed by Borrower in connection herewith.
7. 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 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 to be an original and all of which counterparts, taken together, shall
constitute but one and the same instrument. This Agreement shall be binding upon
and inure to the benefit of the successors and permitted assigns of the parties
hereto. This Agreement shall be governed by, and construed in accordance with,
the laws of the State of Georgia.
[Remainder of this page intentionally left blank.]
IN WITNESS WHEREOF, Borrower and Lender have caused this Agreement to
be duly executed as of the date first above written.
BUSINESS TELECOM, INC.
By:____________________________________
Name:
Title:
GENERAL ELECTRIC CAPITAL
CORPORATION, AS AGENT AND LENDER
By:____________________________________
Elaine L. Moore
Senior Vice President as duly authorized
ACKNOWLEDGMENT AND AGREEMENT
The undersigned hereby acknowledges and agrees to the foregoing Fourth
Amendment to Second Amended and Restated Loan Agreement.
IN WITNESS WHEREOF, the undersigned have hereunto set their hands
and seals this ___ day of September, 1999.
BTI TELECOM CORP.
By:_________________________________
Its:_________________________________
ACKNOWLEDGMENT AND AGREEMENT
The undersigned hereby acknowledges that the foregoing Fourth Amendment
to Second Amended and Restated Loan Agreement shall not affect the
enforceability or validity of any Loan Document executed by the undersigned.
________________________________(Seal)
Peter T. Loftin
EXHIBIT A-2
FORM OF BTI PLEDGE AGREEMENT
See attached.
EXHIBIT C
FORM OF BTITC SUBORDINATED NOTE
See attached.