FIRST AMENDMENT TO
TERM CREDIT AGREEMENT
This Amendment is agreed to and effective as of the 1st day of October,
1995, by and between SA Telecommunications, Inc., a Delaware corporation
formerly known as SA Holdings, Inc. (the "Borrower"), and Norwest Bank
Minnesota, National Association, a national banking association (the "Bank").
The Borrower and the Bank have entered into a Term Credit Agreement
dated as of July 31, 1995 (together with all amendments, modifications and
restatements thereof, the "Credit Agreement").
The Borrower and the Bank wish to amend certain provisions of the Credit
Agreement.
ACCORDINGLY, in consideration of the mutual covenants contained in the
Credit Agreement and herein, the parties hereby agree as follows:
1. DEFINITIONS. All terms defined in the Credit Agreement that
are not otherwise defined herein shall have the meanings given them in the
Credit Agreement.
2. AMENDMENT. The Credit Agreement is hereby amended as follows:
(a) The definition of "Adjusted Operating Cash Flow" in Section 1.1
of the Credit Agreement is hereby amended in its entirety to read as
follows:
"Adjusted Operating Cash Flow" means, with respect to any
period, the Operating Cash Flow for such period PLUS the Expense
Reduction Amount, if any, attributable to such period. Adjusted
Operating Cash Flow as of any month-end means (i) with respect to
any month-end occurring on or before the Conversion Date (but after
the Closing Date), the Adjusted Operating Cash Flow during the 6-month
period ending on such date, multiplied by two, and (ii) with respect
to any month-end occurring after the Conversion Date, the Adjusted
Operating Cash Flow during the 12-month period ending on such date.
(b) The phrase, "quarter-end", in the definition of "Borrowing
Certificate" in Section 1.1 of the Credit Agreement is hereby deleted,
and the phrase, "month-end", is substituted therefor.
(c) The table in the definition of "Expense Reduction Amount" in
Section 1.1 of the Credit Agreement is hereby amended in its entirety to
read as follows:
Month Expense Reduction Amount
----- ------------------------
August 1995 $163,000
September 1995 107,000
October 1995 49,000
November 1995 47,000
December 1995 2,000
(d) The phrase, "fiscal quarter-end", in the definitions of "Senior
Debt Service Ratio", "Senior Debt Service Requirements" and "Senior
Leverage Ratio" in Section 1.1 of the Credit Agreement is hereby in each
instance deleted, and the phrase, "month-end", is in each instance
substituted therefor.
(e) The phrase, "during the immediately succeeding four-quarter
period", in the definition of "Senior Debt Service Requirements" in
Section 1.1 of the Credit Agreement is hereby deleted, and the phrase,
"during the immediately succeeding 12-month period", is substituted
therefor.
(f) The phrase, "as at the end of that fiscal quarter", in the
definition of "Senior Leverage Ratio" in Section 1.1 of the Credit
Agreement is hereby deleted, and the phrase, "as of that month-end", is
substituted therefor.
(g) Section 2.4(e) of the Credit Agreement is hereby amended in its
entirety to read as follows:
(e) The Equity Increment shall be o%.
(h) The following new Section 2.16 is hereby inserted at the end of
Article II of the Credit Agreement:
Section 2.16 DEFAULT FEE. The Borrower shall pay the Bank a
default fee in the amount of $25,000 on or before January 31, 1996;
provided, however, that the Bank shall waive the payment of such fee
if the Borrower proves to have been in compliance with Sections 5.9,
5.10 and 5.11 of this Agreement as of December 31, 1995. Such fee
shall be in addition to any other amounts required to be paid by the
Borrower under this Agreement or the Note. Neither the payment nor
acceptance of such fee shall be deemed a waiver or execute of any
Default or Event of Default, including but not limited to any Event
of Default arising from the Borrower s breach of Section 5.9, 5.10
or 5.11 as of December 31, 1995.
(i) The last two sentences of Section 4.4 of the Credit Agreement
are hereby amended in their entirety to read as follows:
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The Borrower hereby represents, warrants and agrees with the Bank
that Borrower has filed a Form 15 with the Securities and Exchange
Commission withdrawing SATC's registration statement and has
delivered to the Bank (i) a security agreement, duly executed by
SATC, in the form of the Security Agreements, (ii) such UCC-1
financing statements and other documents as the Bank has required
to perfect the security interest thereunder, and (iii) a guaranty
duly executed by SATC, in the form of Exhibit D; provided, however,
that such security agreement and guaranty, and the security interest
in SATC's stock granted pursuant to the Borrower's Security Agreement,
shall be released and such UCC-1 financing statements terminated by
the Bank concurrent with the sale or other disposition of at least
80% of the stock or substantially all of the assets of SATC.
(i) Section 5.1(b) of the Credit Agreement is hereby amended as
follows:
(i) The phrase, "45 days", is hereby deleted, and the phrase,
"Applicable Period", is substituted therefor.
(ii) The phrase beginning with the words, "and with respect to the
financial statements delivered for any month", and ending immediately
before the period at the end of that Section 5.1(b) is hereby
deleted, and the following is substituted therefor:
and further accompanied by a Compliance Certificate and a
Borrowing Certificate as of the end of such month, each signed
by the president or the chief financial officer of the Borrower.
(iii) The following is hereby inserted at the end of Section 5.1(b):
As used herein, "Applicable Period" means (i) with respect to
the Borrower's financial statements as of October 31, 1995 and
November 30, 1995, 40 days, and (ii) with respect to the
Borrower's financial statements as of each month-end thereafter,
35 days.
(k) Sections 5.9, 5.10 and 5.11 of the Credit Agreement are hereby
amended in their entirety to read as follows:
Section 5.9 SENIOR LEVERAGE RATIO. The Borrower will at all
times maintain its Senior Leverage Ratio, determined as at the end
of each month designated below, at not more than the amount set
forth below opposite such month:
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Months Ratio
------ -----
October 1995 4.85 to 1
November 1995 3.65 to 1
December 1995 3.10 to 1
January 1996 through September 1996 2.50 to 1
October 1996 through June 1997 2.25 to 1
July 1997 through June 1998 1.75 to 1
July 1998 through June 1999 1.25 to 1
July 1999 and thereafter 0.75 to 1
Section 5.10 SENIOR DEBT SERVICE RATIO. The Borrower will at
all times maintain its Senior Debt Service Ratio, determined at the
end of each calendar month, at no less than 2.0 to 1 through June 30,
1996 and at not less than 1.75 to 1 thereafter.
Section 5.11 OPERATING CASH FLOW. The Borrower shall maintain
its Operating Cash Flow for each period of 12 consecutive calendar
months, determined as of the end of each calendar month, (i) with
respect to each month designated below, in an amount not less than
the amount set forth opposite that month:
Months Operating Cash Flow
------ -------------------
October 1995 $1,443,299
November 1995 $1,876,712
December 1995 $2,209,677
and (ii) with respect to each other month, in an amount not less than
the greater of (A) $2,818,141 or (B) 85% of its Operating Cash Flow
during the period of 12 consecutive calendar months ending one year
prior to the date of determination.
(l) Section 7.1(q) of the Credit Agreement is hereby amended in its
entirety to read as follows:
(q) The Borrower shall fail to have sold or otherwise disposed of
at least 80% of the stock or substantially all of the assets of
SATC on or before February 29, 1996.
(m) Schedule 4.12 of the Credit Agreement is hereby amended in its
entirety to read as set forth in Schedule 4.12 hereto.
(n) Exhibit A to this Amendment is hereby inserted at the end of
Schedule 4.15 of the Credit Agreement as page 8 of that Schedule
4.15.
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3. WAIVER OF SEPTEMBER 30, 1995 FINANCIAL COVENANT VIOLATIONS.
The Bank hereby waives any Event of Default occurring under Section 7.1(b) of
the Credit Agreement on account of the Borrower's breach of Sections 5.9,
5.10 and 5.11 of the Credit Agreement as of September 30, 1995. Such waiver
shall be effective only as expressly set forth in the preceding sentence, it
shall not constitute or imply a waiver of (i) any Event of Default occurring
on or before September 30, 1995 under any other section of the Credit
Agreement or for any other reason, or (ii) any Event of Default (including
any Event of Default on account of the Borrower's breach of Section 5.9, 5.10
or 5.11 of the Credit Agreement) with respect to any date or period after
September 30, 1995.
4. WAIVER AND CONSENT TO PURCHASE OF SWITCH AND RELATED
EQUIPMENT. The Borrower has indicated to the Bank that Long Distance
Network, Inc. ("LDN") has purchased certain switching and related equipment
(the "Switch Equipment"), as described in a document entitled "Security
Agreement Telecommunications, Inc. Operations/Network Planning" and a Lease
Agreement effective on October 11, 1995 between Telecommunications Finance
Group and LDN (collectively, the "Lease"), copies of which have delivered to
the Bank, for a price equal to $1,194,483 (the "Switch Equipment Purchase").
The Bank has consented and hereby consents to the Switch Equipment Purchase
and waives any Event of Default occurring under Section 7.1(b) of the Credit
Agreement on account of the Borrower's breach of Section 6.11 of the Credit
Agreement for failure of the parties to reduce the prior consent of the Bank
for the Switch Equipment Purchase to a formal writing. For purposes of
Section 6.1 and 6.2 of the Credit Agreement, the Bank further consents to the
incurrence of indebtedness and the granting of liens to facilitate the Switch
Equipment Purchase as set forth in the Lease so long as (i) the aggregate
principal amount of such indebtedness does not exceed $1,194,483, and (ii)
the security interest granted therein does not extend to or cover any
property of the Borrower or any Subsidiary other than the Switch Equipment.
5. WAIVER OF REPORTING DEADLINES. The Bank hereby waives any
Event of Default arising under Section 7.1(c) of the Credit Agreement on
account of the Borrower's failure to deliver the projections required to be
delivered under Section 5.1(c) of the Credit Agreement with respect to the
fiscal year commencing January 1, 1996 and the Borrower's failure to deliver,
by November 15, 1995, various reports required under Section 5.1(d) of the
Credit Agreement as of and for the period ended September 30, 1995, so long
as the Borrower delivers all such projections and reports to the Bank not
later than November 30, 1995.
6. ADDITIONAL MANDATORY PREPAYMENT. Not later than November 30,
1995, the Borrower shall pay to the Bank $150,000 for application as a
prepayment of the Note in accordance with Section 2.7 of the Credit
Agreement. Failure to make such payment when due shall constitute an Event
of Default under the Credit Agreement. No prepayment premium shall be
required under Section 2.8 of the Credit Agreement on account of such
prepayment.
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7. DEADLINE FOR ADDITIONAL DOCUMENTS. The Borrower and the Bank
agree that the deadline for delivery of the documents required to be
delivered under paragraphs 2(a) and 3(b) of the closing letter dated August 1,
1995 between the Borrower and the Bank shall be November 30, 1995.
8. WAIVER FEE. In consideration of the Bank's entering into this
Amendment, the Borrower will pay the Bank a waiver fee on the date hereof in
the amount of $10,000. Such fee shall be deemed fully earned by the Bank on
the date hereof and shall be in lieu of any Default Increment required under
Section 2.4(d) of the Credit Agreement on account of the breaches waived
pursuant to this Amendment.
9. REPRESENTATIONS AND WARRANTIES. The Borrower hereby represents
and warrants to the Bank as follows:
(a) The Borrower has all requisite power and authority, corporate or
otherwise, to execute and deliver this Amendment, and to perform this
Amendment and the Credit Agreement as amended hereby. This Amendment has
been duly and validly executed and delivered to the Bank by the Borrower,
and this Amendment and the Credit Agreement as amended hereby constitute
the Borrower's legal, valid and binding obligations, enforceable in
accordance with their respective terms.
(b) The execution, delivery and performance by SATC of the guaranty
and security agreement (the "SATC Documents") required under Section 4.4
of the Credit Agreement, as amended hereby, have been duly authorized by
all necessary corporate action and do not and will not (i) require any
authorization, consent or approval by any governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign,
(ii) violate SATC's articles of incorporation or bylaws or any provision
of any law, rule, regulation or order presently in effect having
applicability to SATC, or (iii) result in a breach of or constitute a
default under any indenture or agreement to which SATC is a party or by
which SATC or its properties may be bound or affected.
(c) The Borrower has prepaid $1,100,000 in principal and $17,813.83
in interest on Subordinated Debt after July 31, 1995 and on or before
November 13, 1995. Such payment was made from the proceeds of one or
more Qualified Equity Offerings.
(d) SATC has all requisite power and authority, corporate or
otherwise, to execute, deliver and perform the SATC Documents. The SATC
Documents have been duly and validly executed and delivered to the Bank
by SATC and constitute SATC's legal, valid and binding obligations,
enforceable in accordance with their respective terms.
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(e) The execution, delivery and performance by the Borrower of this
Amendment, and the performance of the Credit Agreement as amended hereby,
have been duly authorized by all necessary corporate action and do not
and will not (i) require any authorization, consent or approval by any
governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, (ii) violate the Borrower's articles
of incorporation or bylaws or any provision of any law, rule, regulation
or order presently in effect having applicability to the Borrower, or
(iii) result in a breach or of constitute a default under any indenture
or agreement to which the Borrower is a party or by which the Borrower
or its properties may be bound or affected.
(f) All of the representations and warranties contained in Article 4
of the Credit Agreement are correct on and as of the date hereof as though
made on and as of such date, except, as amended by this First Amendment,
to the extent that such representations and warranties relate solely to
an earlier date.
10. CONDITIONS. The amendments, waivers and consents set forth in
this Amendment shall be effectively only if the Bank has received (or waived
the receipt of) each of the following, in form and substance satisfactory to
the Bank, on or before the date hereof (or such later date as the Bank may
agree in writing):
(a) This Amendment duly executed by the Borrower, each
Telecommunications Subsidiary and the Guarantor below.
(b) The waiver fee required under paragraph 8.
(c) A guaranty, security agreement and UCC-1 financing statement,
each duly executed by SATC, as required by Section 4.4 of the Credit
Agreement.
(d) A copy of the resolutions of the board of directors of the
Borrower evidencing approval of this Amendment, the Credit Agreement as
amended herb, and the other matters contemplated hereby, certified as
accurate by the secretary of the Borrower.
(e) A certificate of the secretary of the Borrower and the
Telecommunications Subsidiaries (i) stating that there have been no
amendments to or restatements of the articles of incorporation or bylaws
of the Borrower or the Telecommunications Subsidiaries as furnished to the
Bank in connection with the execution and delivery of the Credit Agreement
other than those that may be attached to the certificate, and (ii)
certifying the names of the officers of the Borrower and the
Telecommunications Subsidiaries that are authorized to sign the documents
to be delivered pursuant to this Agreement, together with the true
signatures of such officers.
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11. MISCELLANEOUS. The consents and waivers granted herein are
limited to the express matters described herein; they do not constitute or
imply any agreement to waive any breach, Default or Event of Default not
expressly described herein, including but not limited to any such breach,
Default or Event of Default hereafter arising. The Borrower shall pay all
costs and expenses of the Bank, including attorneys' fees, incurred in
connection with the drafting and preparation of this Amendment and any
related documents. Except as amended by this Amendment, all of the terms and
conditions of the Credit Agreement shall remain in full force and effect.
This Amendment may be executed in any number of counterparts, each of which
when so executed and delivered shall be deemed to be an original and all of
which counterparts of this Amendment, taken together, shall constitute but
one and the same instrument. This Amendment shall be governed by the
substantive law of the State of Minnesota.
IN WITNESS WHEREOF, the parties have caused this Amendment to be
executed as of the date first above written, but actually on the dates set
forth under their signature below.
SA TELECOMMUNICATIONS, INC. NORWEST BANK MINNESOTA
NATIONAL ASSOCIATION
By__________________________ By________________________
Its__________________________ Its________________________
Date: November 10, 1995 Date: 11-10-95
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CONSENT OF GUARANTORS
Each of the undersigned, as guarantors of all indebtedness of the
Borrower to the Bank under their separate guaranties, each dated July 31,
1995, hereby consents to the foregoing Amendment and acknowledges that all
indebtedness arising under the Credit Agreement, as amended thereby, shall
constitute Indebtedness guarantied under those guaranties. The foregoing
confirmation shall not be deemed to limit the terms of the Guaranties in any
manner. The undersigned acknowledge that this Consent merely confirms the
terms of the Guaranties, and that no such confirmation is required in
connection with this Amendment or any future amendment to or restatement of
the Credit Agreement or any document executed in connection with the Credit
Agreement or this Amendment.
LONG DISTANCE NETWORK, INC. NORTH AMERICAN
TELECOMMUNICATIONS
CORPORATION
By____________________________ By____________________________
Its___________________________ Its____________________________
SOUTHWEST LONG DISTANCE U.S. COMMUNICATIONS, INC.
NETWORK, INC.
By____________________________ By____________________________
Its___________________________ Its____________________________
_______________________________
Xxxx X. Xxxx, Xx., individually
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Schedule 4.12
REAL PROPERTY
SA HOLDINGS, INC.: NONE, except for:
(1) real property owned by SA Holdings in Midland, Texas that may be
sold along with the sale of SATC in as described in Section 4.4 of the
Agreement. The property is described as:
All of LOT Four (4), and the North One-Half (N/2) of LOT FIVE (5) in BLOCK
TWENTY-TWO (22) of XXXXXX ADDITION, an addition to the City of Midland,
Midland County, Texas, according to the map thereof recorded in Volume 36,
Page 447 of the Deed Records of Midland County, Texas.
(2) Lease listed as (A)(1) of Schedule 4.15
LONG DISTANCE NETWORK, INC.:
(1) Leases listed as (B)(1), (B)(8), (B)(9) of Schedule 4.15
(2) Office Lease Agreement dated September 18, 1995 between Long
Distance Network, Inc. and The Equitable Life Assurance Society of the United
States relating to property on the 0xx Xxxxx xx Xxxxxxx Xxxxxxxxx Xxxxxx,
Xxxxxx, Xxxxx
U.S. COMMUNICATIONS, INC.
(1) Lease Agreement entered into as of October 27, 1995 between McCain
Park IV Offices, Ltd. relating to property located at 0000 XxXxxx Xxxx Xxxxx,
Xxxxx 000, Xxxxx Xxxxxx Xxxx, Xxxxxxxx, which lease replaces the Lease listed
as (B)(7) of Schedule 4.15
(2) Leases listed as (D)(10), (D)(11), (D)(12), (D)(13), (D)(14),
(D)(15), D(16), (D)(17), (D)(18), (D)(19), (D)(20), and (D)(21) of Schedule
4.15
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Schedule 4.15
Page 8
Additions to Schedule 4.15 as of 11/9/95
(1) Addition to Section (A) for SA Telecommunications, Inc.
(23) First Amendment to Term Credit Agreement between Norwest and SA
Telecommunications, Inc.
(2) Additions to Section (B) for Long Distance Network, Inc.
(13) Lease Agreement effective on October 11, 1995 between
Telecommunications Finance Group and Long Distance Network, Inc.
(14) Software License Agreement effective on October 11, 1995
between Siemens Xxxxxxxxx-Xxxxxxx and Long Distance Network, Inc.
(15) Office Lease Agreement dated September 18, 1995 between Long
Distance Network, Inc. and The Equitable Life Assurance Society of the
United States relating to property on the 0xx Xxxxx xx Xxxxxxx Xxxxxxxxx
Xxxxxx, Xxxxxx, Xxxxx
(3) Delete Lease Agreement from Section (B)(7) for Long Distance Network,
Inc. relating to Lafayette Building in Little Rock, Arkansas
(4) Addition to Section (D) for U.S. Communications, Inc.
(23) Lease Agreement entered into as of October 27, 1995 between
McCain Park IV Offices, Ltd. relating to property located at 0000 XxXxxx
Xxxx Xxxxx, Xxxxx 000, Xxxxx Xxxxxx Xxxx, Xxxxxxxx, which lease replaces
the Lease listed as (B)(7) of Schedule 4.15
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