AMENDMENT NO. 5
This Amendment No. 5 entered into as of August 31, 1998 (this
"Amendment") by and among GALAXY TELECOM, L.P., ("GTLP"), GALAXY TELECOM
CAPITAL CORP. ("Capital Corp."; and together with GTLP, the "Borrower"),
the financial institutions party to the Amended and Restated Loan
Agreement referred to below (the "Lenders"), and FLEET NATIONAL BANK
("Fleet"), a national banking association organized under the laws of the
United States of America, as agent for itself and the other Lenders (the
"Agent"). Capitalized terms used but not otherwise expressly defined
herein shall have the meanings assigned thereto in the Loan Agreement (as
such term is defined below).
PRELIMINARY STATEMENTS:
WHEREAS, the Borrower, the Lenders, and the Agent have entered into
an Amended and Restated Loan Agreement dated as of September 28, 1995, as
amended by Amendment No. 1 dated as of October 21,1996, Amendment No. 2
dated as of March 28, 1997, Amendment No. 3 dated as of November 14, 1997
and Amendment No. 4 dated as of March 27, 1998 (as amended, the "Loan
Agreement"). Capitalized terms used herein and not otherwise defined shall
have the meanings specified in the Loan Agreement;
WHEREAS, the Borrower has requested that the Lenders amend certain
provisions of the Loan Agreement;
NOW, THEREFORE, in consideration of the mutual covenants herein
contained and good and valuable consideration, the receipt and adequacy of
which are hereby acknowledged, the parties hereto hereby agree as follows:
1. New Lender. Simultaneously herewith, The First National Bank of Chicago
(the "New Lender") and Fleet shall each enter into a Substitution
Agreement with ING pursuant to the terms of Section 9.11 of the Loan
Agreement. Following the execution of such Substitution Agreement, ING
shall no longer be a Lender and shall have no Commitment and no Pro Rata
Share.
2. [Intentionally omitted]
3. Amendment. The parties hereto agree that the Loan Agreement is hereby
amended as follows:
(a) Total Indebtedness and Senior Indebtedness Coverage. Effective
as of the date hereof, Section 5.1.10 of the Loan Agreement is hereby
amended by replacing the required ratios for the period from July 1, 1998
through the periods set forth below with the ratios set forth below
opposite such period:
Total Senior
Indebtedness Indebtedness
Ratio Ratio
July 1, 1998 through 7.00:1.00 2.40:1.00
September 30, 1998
October 1, 1998 through 7.00:1.00 2.25:1.00
December 31, 1998
January 1, 1999 through 6.75:1.00 2.00:1.00
March 31, 1999
April 1, 1999 through 6.50:1.00 2.00:1.00
June 30, 1999
July 1, 1999 through 6.00:1.00 2.00:1.00
December 31, 1999
January 1, 2000 and thereafter 5.75:1.00 2.00:1.00
(b) Total Indebtedness per Subscriber. Effective as of the date
hereof, clause (B) of Section 5.1.11 of the Loan Agreement is hereby
amended to read as follows:
"(B) $1,100:1.00 for the period from September 30, 1998
through June 30, 1999,"
(c) Interest Coverage. Effective as of the date hereof, Section
5.1.12 of the Loan Agreement is hereby amended by deleting the period
"October 1, 1998 through December 31, 1998" and the period "January 1,
1999 through December 31, 1999" and the ratios for such periods and by
substituting the following in place thereof:
October 1, 1998 through 1.25:1.00
December 31, 1998
January 1, 1999 through 1.25:1.00
June 30, 1999
July 1, 1999 through 1.60:1.00
December 31, 1999
(d) Restoration of Revolver. Effective as of the date hereof, the defined
term "Conversion Date" set forth in the Loan Agreement is amended to mean
"June 30, 1999". Notwithstanding anything to the contrary set forth in the
Loan Agreement, upon the consummation of any System Asset Sale after the
date hereof, the Borrower shall apply the net proceeds received by the
Borrower therefrom to repay the Revolving Loans. Thereafter, the Borrower
shall not be permitted, without the prior written consent of all of the
Lenders, to borrow Revolving Loans if the aggregate outstanding principal
balance of the Revolving Loans following such borrowing would exceed the
lesser of (i) $55,900,000 less the aggregate principal amount of net
proceeds applied to repay Revolving Loans pursuant to the foregoing
sentence, or (ii) an amount such that the Borrower would, following such
borrowing, not be in compliance with the financial covenants set forth in
Sections 5.1.10 through 5.1.15 of the Loan Agreement calculated pro forma
as though such borrowing and all other borrowings during the fiscal
quarter in which such borrowing is made had been outstanding on the last
day of the immediately preceding fiscal quarter (it being understood and
agreed that, with respect to a borrowing occurring during a fiscal quarter
in which the Borrower has consummated a System Asset Sale, the Borrower
shall, not less than two days prior to such borrowing, submit to the Agent
a certificate in the form of Exhibit 5.3.5 to the Loan Agreement
calculating the financial covenants set forth thereon as though such
System Asset Sale and all other System Asset Sales made during such fiscal
quarter had occurred as of the first day of the immediately preceding
fiscal quarter without the Operating Cash Flow related to the sold
System(s) and as though the borrowing in question and all previous
borrowings occurring during such fiscal quarter had been outstanding on
the last day of the immediately preceding fiscal quarter, as though the
average interest rate applicable to the Loans for the period from the
first day of such fiscal quarter through the date such certificate is
submitted and as though the interest rate(s) applicable to the Loans as of
the date such certificate is submitted continue to be applicable to the
Loans and such borrowings for the remainder of the fiscal period covered
by the pro forma calculation). The provisions of this subsection (d) may
not be waived or amended without the prior written consent of all of the
Lenders.
(e) Principal Amortization. Notwithstanding anything to the contrary set
forth in Section 2.1.2(b) of the Loan Agreement, no principal payment
shall be required to be made under that Section until September 30, 1999
on which date the Borrower shall be required to make the full amount of
the 6% payment required for 1998, the 4% payment required for March 31,
1999, the 4% payment required for June 30, 1999 and the 4% payment
required for September 30, 1999 (for a total payment to be made on
September 30, 1999 in an amount equal to 18% of the outstanding principal
balance of the Revolving Loans on the Conversion Date). On December 31,
1999, the Borrower shall be required to make payment of the remaining 4%
payment due under the Loan Agreement on such date and, thereafter, the
amortization of the Loans shall continue in accordance with Section
2.1.2(b) of the Loan Agreement.
(f) Commitment Reduction. The defined term "Revolving Commitment" set
forth in the Loan Agreement is amended by deleting the phrase
"$63,000,000" therefrom and by substituting the phrase "$55,900,000" in
place thereof.
(g) System Asset Sales and Permitted Acquisitions. The Lenders hereby
consent to the System Asset Sales described on Exhibit A hereto provided
that such System Asset Sales occur prior to the Conversion Date and that
the proceeds thereof are applied to reduce the Revolving Loans as provided
for in Section 2.1.7.2(a) of the Loan Agreement and further provided that
the Agent, in its discretion, approves in writing (following its receipt
of a reasonably detailed description thereof) the specific terms
(including, without limitation, price) of each such System Asset Sale. The
Lenders further hereby agree that the proposed System acquisitions
described on Exhibit A hereto shall constitute Permitted Acquisitions
under the Loan Agreement provided that the terms of Section 5.2.12.1 are
complied with.
(h) Excess Cash Flow Recapture Deferral. Notwithstanding anything to the
contrary contained in Section 2.1.7.2(b) of the Loan Agreement, the
Borrower shall not be required to make any principal payment with respect
to its Excess Cash Flow for the 1998 fiscal year.
(i) Capital Expenditures. Notwithstanding anything to the contrary set
forth in Section 5.2.17 of the Loan Agreement, the Borrower shall be
permitted to make Capital Expenditures during its 1998 fiscal year in an
amount not to exceed $14,000,000 of which not more than $10,000,000 may be
used with respect to the existing cable television operations of the
Borrower and not more than $4,000,000 may be used in connection with the
installation of fiber optic cable in Nebraska. In addition to the
foregoing, and notwithstanding anything to the contrary set forth in
Section 5.2.17 of the Loan Agreement, up to $250,000 of the Capital
Expenditures otherwise permitted to be made by the Borrower during its
1999 fiscal year may be used in connection with the installation of fiber
optic cable in Nebraska. Notwithstanding anything to the contrary
contained in the Loan Agreement, no unexpended portion of the amounts of
Capital Expenditures permitted to be made pursuant to the foregoing in a
fiscal year may be carried forward to the succeeding fiscal year.
(j) Events of Default. Notwithstanding anything to the contrary set forth
in the Loan Agreement it shall constitute an immediate Event of Default if
the Borrower, GTLP, GTI, LLC or Capital Corp. or any Subsidiary thereof
shall, without the prior written consent of all of the Lenders, become
liable for Indebtedness for Borrowed Money which the Borrower would not be
permitted to have outstanding under the terms of Section 5.2.8. In
addition to the foregoing, the Lenders and the Agent agree that no one of
them will consent to a waiver of, amendment to or departure from the
provisions of Section 6.1.14 of the Loan Agreement unless all of the
Lenders consent in writing to such a waiver, amendment or departure.
(k) Adjustment of Pro Rata Shares. Effective as of the date hereof, the
Loan Agreement is hereby amended by deleting Exhibit 1.8 thereto and by
substituting in place thereof a new Exhibit 1.8 in the form of Exhibit B
hereto. Simultaneously herewith, the Borrower shall issue to Fleet and the
New Lender new Revolving Notes to reflect the changes to Exhibit 1.8
effected by the foregoing.
(l) Operating Cash Flow. Notwithstanding anything to the contrary
contained in the Loan Agreement, from and after the date hereof, in
calculating Operating Cash Flow for any fiscal period of the Borrower,
there shall be excluded from such Operating Cash Flow all operating
results attributable to any System which the Borrower has sold during the
fiscal period in question.
(m) Waiver of Indebtedness. The Borrower has advised the Lenders and the
Agent that it has incurred Indebtedness for the purchase of vehicles which
Indebtedness is owed to First National Bank of the Mid-South. The
outstanding principal balance of such Indebtedness is presently
approximately $3,000,000. The Agent and the Lenders hereby waive
compliance by the Borrower with the provisions of Section 5.2.8.5 of the
Loan Agreement with respect to such Indebtedness provided that the
outstanding principal balance thereof at no time after the date hereof
shall exceed $3,000,000 which amount shall be reduced by the amount of
each principal payment hereafter made on such Indebtedness.
4. The Lenders hereby waive the requirement contained in Amendment
No. 4 to the Loan Agreement that the Borrower pay a fee in an amount equal
to $25,000 to each Lender. In consideration of the foregoing and the
Lenders entering into this Amendment, the Borrower hereby agrees to pay to
the Agent on the date hereof for the pro rata account of each Lender an
amendment fee in an amount equal to $279,500.
5. This Amendment is subject to the provisions of Section 9.5 of the
Loan Agreement, and shall become effective, as of the date first above
written, upon the satisfaction of the following conditions precedent:
(a) receipt by the Agent of counterparts of this Amendment executed by the
Borrowers and the Lenders, and counterparts of the Consent appended hereto
executed by the Guarantors and payment to the Agent of the amendment fee
referred to above;
(b) such other items or documents as may be requested by the Agent or the
Lenders.
6. This Amendment shall be governed by and construed in accordance
with the laws of the Commonwealth of Massachusetts. All parts of the Loan
Agreement not affected by this Amendment are hereby ratified and affirmed
in all respects, provided that if any provision of the Loan Agreement
shall conflict or be inconsistent with this Amendment, the terms of this
Amendment shall supersede and prevail. Upon and after the date of this
Amendment all references to the Loan Agreement in that document, or in any
Financing Document, shall mean the Loan Agreement as amended by this
Amendment. Except as expressly provided in this Amendment, the execution
and delivery of this Amendment does not and will not amend, modify or
supplement any provision of, or constitute a consent to or a waiver of any
noncompliance with the provisions of the Loan Agreement, and, except as
specifically provided in this Amendment, the Loan Agreement shall remain
in full force and effect.
7. The Borrower hereby represents and warrants to the Lenders and
the Agent that the representations and warranties set forth in Section 4
of the Loan Agreement are true and correct in all material respects as of
the date hereof. The Borrower hereby agrees to indemnify and hold the
Lenders, the New Lender and the Agent harmless from and against any claim,
cost, damage (including without limitation consequential damages), expense
(including without limitation reasonable attorneys' fees and expenses),
loss, liability, or judgment now or hereafter arising as a result of any
claim against the Borrower, the Lenders, the New Lender and/or the Agent
arising out of the transactions contemplated by this Amendment. The
provisions of this Section shall continue in effect and shall survive
(among other events) any termination of this Agreement, foreclosure, a
deed in lieu transaction, payment and satisfaction of the Note and other
obligations of the Borrower hereunder, and release of any collateral for
the Loans.
8. This Amendment may be executed in one or more counterparts, each
of which when so executed and delivered shall 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 of a manually
executed counterpart of this Amendment.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment
as of the day and year first above written, under seal.
BORROWERS:
GALAXY TELECOM, L.P.
By: Galaxy Telecom, Inc., its general partner
By: /s/ J. Xxxxx Xxxxxxxx
----------------------------------
Name: J. Xxxxx Xxxxxxxx
Title: EVP & CFO
GALAXY TELECOM CAPITAL CORP.
By: /s/ J. Xxxxx Xxxxxxxx
----------------------------------
Name: J. Xxxxx Xxxxxxxx
Title: EVP & CFO
LENDERS:
FLEET NATIONAL BANK, as Agent and as a Lender
By: /s/ Xxxxxxx X. XxXxxxxxxx
----------------------------------
Name: Xxxxxxx X. XxXxxxxxxx
Title: EVP
STATE STREET BANK AND TRUST COMPANY
By: Xxxxx X. Xxxxxx
----------------------------------
Name: Xxxxx X. Xxxxxx
Title: Vice-President
UNION BANK
By: /s/ Xxxxxxxxx Xxxx
----------------------------------
Name: Xxxxxxxxx Xxxx
Title: Vice-President
THE FIRST NATIONAL BANK OF CHICAGO
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Vice-President
EXHIBIT A
Permitted System Sales and Permitted System Purchases
A. Permitted System Sales
Disposition Number of Subs Closing Date
Blackstone (S.W. GA) 2,280 September, 0000
Xxxxxxxxxx (SC) 2,821 October, 0000
Xxxxxxxxx (XX) 5,422 November, 1998
Charter (SC) 2,349 December, 1998
Comcast (AL/FL/GA) 5,826 April, 1999
New Path 9,408 July, 1999
_______________________ ________________________ __________________________
TOTAL 28,106
B. Permitted System Purchases
Purchase of Nebraska system with approximately 560 subscribers was
approved in the last
amendment.
EXHIBIT B
EXHIBIT 1.8
PRO RATA SHARES
Lender Pro Rata Share
Fleet National Bank 37.2947428
State Street Bank and Trust Company 22.0000000
Union Bank 22.4080848
The First National Bank of Chicago 17.8890877
Schedule A
Name of New Lender, address for notices
and instructions for wire transfers Pro Rata Share
The First National Bank of Chicago 17.89%
CONSENT
Dated as of August 31, 1998
Each of GALAXY TELECOM , INC., as Guarantor under an Unlimited
Guaranty dated as of December 23, 1994 (as amended, the "General Partner
Guaranty"), as Grantor under a Security Agreement dated as of December 23,
1994, and as Assignor under a Collateral Assignment of Contracts, Leases,
Licenses, Easements, Permits and Franchises, a Collateral Assignment of
Easements, and a Collateral Assignment and Pledge of Partnership Interest,
each dated as of December 23, 1994 (as amended, collectively, the "General
Partner Security Documents") , and GALAXY TELECOM INVESTMENTS, L.L.C., as
Guarantor under an Unlimited Guaranty dated as of December 23, 1994 (as
amended, the "Investments Guaranty"), as Grantor under a Security
Agreement dated as of December 23, 1994, and as Assignor under a
Collateral Assignment and Pledge of Partnership Interest dated as of
December 23, 1994 (as amended, collectively, the "Investments Security
Documents"), hereby consents to the foregoing Amendment No. 5 to the Loan
Agreement, and hereby confirms and agrees that (i) the General Partner
Guaranty and the Investments Guaranty, and each of the General Partner
Security Documents and the Investments Security Documents is, and shall
continue to be, in full force and effect and is hereby ratified and
confirmed in all respects except that, upon the effectiveness of and on
and after the date of Amendment No. 5, each reference in such Guaranty to
the Loan Agreement shall mean and be a reference to the Loan Agreement as
amended by Amendment No. 5, and (ii) each of the General Partner Security
Documents and the Investments Security Documents and all of the collateral
described therein do, and shall continue to, secure the payment of all of
the Obligations (as defined therein).
GALAXY TELECOM, INC.
By: /s/ J. Xxxxx Xxxxxxxx
----------------------------------
Name: J. Xxxxx Xxxxxxxx
Title: EVP & CFO
GALAXY TELECOM INVESTMENTS, L.L.C.
By: /s/ J. Xxxxx Xxxxxxxx
----------------------------------
Name: J. Xxxxx Xxxxxxxx
Title: EVP & CFO
