EXECUTION COUNTERPART
AMENDMENT XX. 0
XXXXXXXXX XX. 0 dated as of March 30,2001 to the Credit Agreement
referred to below, between BIRCH TELECOM, INC., a corporation duly organized
and validly existing under the laws of the State of Delaware (the "COMPANY");
BIRCH TELECOM FINANCE, INC., a Delaware corporation duly organized and validly
existing under the laws of the State of Delaware (the "BORROWER"); each of the
lenders that is a signatory hereto (individually, a "LENDER" and, collectively,
the "LENDERS"); and XXXXXX COMMERCIAL PAPER INC., as administrative agent for
the Lenders (in such capacity, together with its successors in such capacity,
the "ADMINISTRATIVE AGENT").
The Company, the Borrower, the Lenders and the Administrative Agent
are parties to an Amended and Restated Credit Agreement dated as of February 2,
2000 (as heretofore modified and supplemented and in effect on the date hereof,
the "CREDIT AGREEMENT"), providing, subject to the terms and conditions thereof,
for extensions of credit to be made by said Lenders to the Borrower. The
Borrower, the Company and the Administrative Agent (having been previously
authorized by Lenders constituting the Required Lenders under the Credit
Agreement) wish to amend the Credit Agreement in certain respects, and
accordingly, the parties hereto hereby agree as follows:
Section 1. DEFINITIONS. Except as otherwise defined in this Amendment
No. 2, terms defined in the Credit Agreement are used herein as defined therein.
Section 2. AMENDMENTS. Subject to the satisfaction of the conditions
precedent specified in Section 4 of this Amendment No. 2, but effective as of
the date hereof, the Credit Agreement shall be amended as follows:
2.1. References in the Credit Agreement (including references to the
Credit Agreement as amended hereby) to "this Agreement" (and indirect references
such as "hereunder", "hereby", "herein" and "hereof") shall be deemed to be
references to the Credit Agreement as amended hereby.
2.2. DEFINITIONS. The following definitions set forth in Section 1.01
of the Credit Agreement shall be amended in their entirety to read as follows:
"STAGE 1": the period prior to June 30, 2003.
"STAGE 2": the period from and after June 30, 2003.
AMENDMENT NO. 2
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2.3 Financial Reporting Covenant. Section 5.1 of the Credit Agreement
is hereby amended by inserting in such Section a new clause (c) immediately
after clause (b) as follows:
"(c) as soon as available and in any event within 45 days after the
end of each calendar month for fiscal year 2001 (or, during the calendar
month of December, 2001, within 90 days after the end of such calendar
month), the unaudited debt balance, cash balance and Line count of the
Company and its consolidated Subsidiaries as at the end of such month and
the related unaudited statement of income for such month and the portion of
the fiscal year through the end of such month, setting forth in each case
in comparative form the figures for the previous month, certified by a
Responsible Officer as being fairly stated in all material respects
(subject to normal year-end audit adjustments)."
2.4. FINANCIAL CONDITION COVENANTS. Section 6.1 of the Credit
Agreement is hereby amended in its entirety to read as follows:
"6.1 FINANCIAL CONDITION COVENANTS.
I. STAGE 1 FINANCIAL COVENANTS. During Stage 1:
(a) REVENUES. Permit the Revenues for any fiscal quarter set forth
below to be less than the amount set forth below opposite such fiscal
quarter:
Fiscal Quarter Ending Minimum Revenues
--------------------- ----------------
March 31, 2001 $34,000,000
June 30, 2001 $36,000,000
September 30, 2001 $42,100,000
December 31, 2001 $50,000,000
March 31, 2002 $57,000,000
June 30, 2002 $65,000,000
September 30, 2002 $73,000,000
December 31, 2002 $81,000,000
March 31, 2003 $88,000,000
AMENDMENT NO. 2
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(b) CONSOLIDATED EBITDA. Permit Consolidated EBITDA for any fiscal
quarter set forth below to be less than the amount (or, if the amount
specified below is a negative number, to be a greater negative number) set
forth below opposite such fiscal quarter:
Fiscal Quarter Ending EBITDA
--------------------- ------
March 31, 2001 $(33,000,000)
June 30, 2001 $(23,500,000)
September 30, 2001 $(17,500,000)
December 31, 2001 $(13,750,000)
March 31, 2002 $(9,500,000)
June, 30,2002 $(5,500,000)
September 30, 2002 $(1,000,000)
December 31, 2002 $3,000,000
March 31, 2003 $8,000,000
(c) LINES. Permit the aggregate number of Lines as at the last day of
any fiscal quarter set forth below to be less than the amount set forth
below opposite such fiscal quarter:
Fiscal Quarter Ending Minimum Number of Lines
--------------------- -----------------------
March 31, 2001 240,000
June, 30, 2001 250,000
September 30, 2001 280,000
December 31, 2001 300,000
March 31, 2002 375,000
June, 30, 2002 425,000
September 30, 2002 475,000
December 31, 2002 525,000
March 31, 2003 575,000
(d) SENIOR SECURED DEBT TO TOTAL CAPITALIZATION RATIO. Permit, as at
the last day of any fiscal quarter ending during Stage 1, the ratio of (a)
Senior Secured Debt on such day to (b) Total Capitalization on such day to
exceed 0.45 to 1.
AMENDMENT NO. 2
- 4 -
II. STAGE 2 FINANCIAL COVENANTS. During Stage 2:
(a) SENIOR LEVERAGE RATIO. Permit the Senior Leverage Ratio as at the
last day of any fiscal quarter set forth below to exceed the ratio set
forth below opposite such fiscal quarter:
Fiscal Quarter Ending Senior Leverage Ratio
--------------------- ---------------------
June 30, 2003 6.0 to 1
September 30, 2003 5.0 to 1
December 31, 2003 4.0 to 1
March 31, 2004 3.0 to 1
June 30, 2004 3.0 to 1
September 30, 2004 2.5 to 1
December 31, 2004 2.0 to 1
March 31, 2005 2.0 to 1
June 30, 2005 2.0 to 1
September 30, 2005 2.0 to 1
December 31, 2005 2.0 to 1
March 31, 2006 2.0 to 1
June 30, 2006 2.0 to 1
September 30, 2006 2.0 to 1
December 31, 2006 2.0 to 1
(b) TOTAL LEVERAGE RATIO. Permit the Total Leverage Ratio as at the
last day of any fiscal quarter set forth below to exceed the ratio set
forth below opposite such fiscal quarter:
Fiscal Quarter Ending Total Leverage Ratio
--------------------- --------------------
June 30, 2003 9.0 to 1
September 30, 2003 8.0 to 1
December 31, 2003 8.0 to 1
March 31, 2004 7.0 to 1
June 30, 2004 7.0 to 1
September 30, 2004 7.0 to 1
December 31, 2004 7.0 to 1
AMENDMENT NO. 2
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March 31, 2005 6.0 to 1
June 30, 2005 6.0 to 1
September 30, 2005 6.0 to 1
December 31, 2005 6.0 to 1
March 31, 2006 6.0 to 1
June 30, 2006 6.0 to 1
September 30, 2006 6.0 to 1
December 31, 2006 6.0 to 1
(c) INTEREST COVERAGE RATIO. Permit the Interest Coverage Ratio as at
the last day of any fiscal quarter set forth below to be less than the
ratio set forth below opposite such fiscal quarter:
Fiscal Quarter Ending Interest Coverage Ratio
--------------------- -----------------------
June 30, 2003 1.25 to 1
September 30, 2003 1.50 to 1
December 31, 2003 1.75 to 1
March 31, 2004 2.00 to 1
June 30, 2004 2.50 to 1
September 30, 2004 2.75 to 1
December 31, 2004 2.75 to 1
March 31, 2005 2.75 to 1
June 30, 2005 2.75 to 1
September 30, 2005 2.75 to 1
December 31, 2005 2.75 to 1
March 31, 2006 2.75 to 1
June 30, 2006 2.75 to 1
September 30, 2006 2.75 to 1
December 31, 2006 2.75 to 1
(d) PRO FORMA DEBT SERVICE COVERAGE. Permit the Pro Forma Debt Service
Coverage Ratio as at the last day of any fiscal quarter set forth below to
be less than the ratio set forth below opposite such fiscal quarter:
Pro Forma Debt Service
Fiscal Quarter Ending Coverage Ratio
--------------------- ----------------------
June 30, 2003 waived
September 30, 2003 1.00 to 1
December 31, 2003 1.00 to 1
AMENDMENT NO. 2
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March 31, 2004 1.00 to 1
June 30, 2004 1.00 to 1
September 30, 2004 1.25 to 1
December 31, 2004 1.25 to 1
March 31, 2005 1.50 to 1
June 30, 2005 1.50 to 1
September 30, 2005 1.50 to 1
December 31, 2005 1.50 to 1
March 31, 2006 1.75 to 1
June 30, 2006 2.00 to 1
September 30, 2006 2.00 to 1
December 31, 2006 2.00 to 1"
2.5. LIMITATION ON DISPOSITION OF PROPERTY. Section 6.5 of the Credit
Agreement is hereby amended by inserting in Section 6.5(c), immediately after
the words "Sections 6.4(a) and (b)", the following: "and Section 6.10(ii)".
2.6. LIMITATION ON SALES AND LEASEBACKS. Section 6.10 of the Credit
Agreement is hereby amended by (a) inserting "(i)" immediately after the words
"except for" and (b) inserting, immediately after the words "Section 6.5(e)",
the following: "and (ii) any such arrangements for equipment having an aggregate
fair market value not exceeding $3,000,000".
2.7. LIMITATION ON CAPITAL EXPENDITURES. Section 6.15 of the Credit
Agreement is hereby amended in its entirety to read as follows:
"6.15 LIMITATION ON CAPITAL EXPENDITURES. Make or commit to make any
Capital Expenditure, except Capital Expenditures of the Company and its
Subsidiaries in the ordinary course of business in an aggregate amount not
exceeding (a) $120,000,000 in fiscal year 2000, (b) $25,000,000 in fiscal
year 2001 and (c) for each fiscal year thereafter, the amount set forth
below opposite such fiscal year:
Fiscal Year Capital Expenditures
----------- --------------------
2002 $25,000,000
2003 $25,000,000
2004 $35,000,000
2005 $35,000,000
2006 $35,000,000
; PROVIDED that (i) up to 25% of any such amount referred to above, if not
so expended in the fiscal year for which it is permitted, may be carried
over for expenditure in the next succeeding fiscal year, (ii) up to 25% of
the amount referred to above for any fiscal year
AMENDMENT NO. 2
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may be expended in the immediately prior fiscal year (but any amount so
expended in any such prior fiscal year may not be expended in such fiscal
year) and (iii) Capital Expenditures made pursuant to this Section during
any fiscal year shall be deemed made, FIRST, in respect of amounts
permitted for such fiscal year as provided above and, SECOND, in respect of
amounts carried over from the prior fiscal year pursuant to subclause (i)
above; and PROVIDED, FURTHER, that no more than 20% of Capital Expenditures
in any fiscal year may be incurred for expenditures not related to the
Company's and its Subsidiaries' core CLEC access business as conducted as
of the Closing Date and similar or related businesses. Notwithstanding the
foregoing limitations, the Company and its Subsidiaries may make Capital
Expenditures with (i) the proceeds of any Reinvestment Deferred Amount
received in connection with a Recovery Event, (ii) the Available Amount at
the time any such Capital Expenditure is made, and (iii) the proceeds from
any sale and leaseback transaction permitted by Section 6.10."
Section 3. REPRESENTATIONS AND WARRANTIES. Each of the Company and the
Borrower represents and warrants to the Lenders that (a) after giving effect to
the amendments set forth in Section 2 of this Amendment No. 2, no Default or
Event of Default shall have occurred and be continuing and (b) the
representations and warranties set forth in Section 3 of the Credit Agreement
are true and complete on the date hereof as if made on and as of the date hereof
(or, if any such representations and warranties expressly relate to any earlier
date, as of such earlier date), after giving effect to such amendments and as if
each reference in said Section 3 to "this Agreement" included reference to this
Amendment No. 2.
Section 4. CONDITIONS PRECEDENT. As provided in Section 2 of this
Amendment No. 2, the amendments to the Credit Agreement set forth in said
Section 2 shall become effective as of the date hereof upon satisfaction of the
following conditions precedent:
4.1. AMENDMENT NO. 2; SUBSIDIARY GUARANTOR CONFIRMATION. The
Administrative Agent shall have received one or more counterparts of (i) this
Amendment No. 2, duly executed and delivered by the Company, the Borrower and
the Required Lenders (or the Administrative Agent, with the written consent of
the Required Lenders provided in the form of the Lender Consent attached hereto
as Exhibit A) and (ii) a Confirmation, in form and substance satisfactory to the
Administrative Agent, from each of the Subsidiary Guarantors of their
obligations under the Guarantee and Collateral Agreement after giving effect to
this Amendment No. 2.
4.2. ADDITIONAL EQUITY ISSUANCES. The Administrative Agent shall have
received satisfactory evidence that the Company shall have received not less
than $75,000,000 of aggregate cash proceeds from the issuance of additional
equity of the Company.
4.3 FEES AND EXPENSES. The Administrative Agent shall have received
(i) for the account of each Lender that delivers to the Administrative Agent its
written consent to this Amendment No. 2 no later than 10:30 a.m. New York time
on March 30, 2001, a consent fee in the amount of 0.125% of the sum (determined
without duplication) of the aggregate amount of such Lender's outstanding Loans
and Commitments under the Credit Agreement and (ii) all fees and other amounts
due and payable on or prior to the date hereof, including, to the extent
AMENDMENT NO. 2
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invoiced, reimbursement or payment of all out-of-pocket expenses required to be
reimbursed or paid by the Company or the Borrower under the Credit Agreement.
4.4 OTHER DOCUMENTS. The Administrative Agent shall have received such
other documents as the Administrative Agent or any Lender or Milbank, Tweed,
Xxxxxx & XxXxxx LLP, special New York counsel to the Administrative Agent, may
reasonably request.
Section 5. MISCELLANEOUS. Except as herein provided, the Credit
Agreement shall remain unchanged and in full force and effect. This Amendment
No. 2 may be executed in any number of counterparts, all of which taken together
shall constitute one and the same amendatory instrument and any of the parties
hereto may execute this Amendment No. 2 by signing any such counterpart. This
Amendment No. 2 shall be governed by, and construed in accordance with, the law
of the State of New York.
AMENDMENT NO. 2
IN WITNESS WHEREOF, the parties hereto have caused this Amendment No.
2 to be duly executed and delivered as of the day and year first above written.
BIRCH TELECOM, INC.
By /s/ Xxxxx X. Xxxxx
--------------------------------------
Name: Xxxxx X. Xxxxx
Title: President and Chief Executive
Officer
BIRCH TELECOM FINANCE, INC.
By /s/ Xxxxx X. Xxxxx
--------------------------------------
Name: Xxxxx X. Xxxxx
Title: President and Chief Executive
Officer
LENDERS
XXXXXX COMMERCIAL PAPER INC,
individually, as Swingline Lender and
as Administrative Agent
By /s/ G. Xxxxxx Xxxxx
--------------------------------------
Name: G. Xxxxxx Xxxxx
Title: Authorized Signatory
AMENDMENT NO. 2
EXHIBIT A
LENDER CONSENT
Reference is made to the Amended and Restated Credit Agreement dated
as of February 2, 2000 (as amended and in effect from time to time, the "CREDIT
AGREEMENT") among Birch Telecom, Inc., a Delaware corporation (the "COMPANY"),
Birch Telecom Finance, Inc., a Delaware corporation (the "BORROWER"), the
Lenders named therein, and Xxxxxx Commercial Paper Inc. ("LCPI"), as
administrative agent (in such capacity, the "ADMINISTRATIVE AGENT"), providing,
subject to the terms and conditions thereof, for extensions of credit to be made
by the Lenders to the Borrower in an aggregate principal or face amount not
exceeding $195,000,000. Capitalized terms used and not otherwise defined herein
are deemed to have the respective meanings assigned to such terms in the Credit
Agreement.
The undersigned Lender party to the Credit Agreement hereby (i)
consents to Amendment No. 2 to the Credit Agreement dated as of March 30, 2001,
substantially in the form to which this Lender Consent is attached (the
"AMENDMENT NO. 2")and (ii) authorizes and directs the Administrative Agent to
execute and deliver Amendment No. 2 on behalf of such Lender.
Full Name of Lender:
--------------------------------------------
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
Date: , 2001
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AMENDMENT NO. 2
