Exhibit 10.42
LIMITED WAIVER AND FIRST AMENDMENT
TO TERM LOAN AGREEMENT
THIS LIMITED WAIVER AND FIRST AMENDMENT TO TERM LOAN AGREEMENT (this
"Amendment"), is made as of March 28, 2005, by and among NORTHLAND CABLE
PROPERTIES SEVEN LIMITED PARTNERSHIP ("Borrower"), NORTHLAND COMMUNICATIONS
CORPORATION ("Guarantor" and, together with Borrower, the "Credit Parties") and
CIT LENDING SERVICES CORPORATION, as Agent and Lender.
WHEREAS, Borrower, Guarantor, the Agent and Lender are party to that
certain Term Loan Agreement, dated as of November 6, 2003 (as the same may be
amended, the "Loan Agreement"), whereby Lenders originally extended to Borrower
a term loan of Twenty-one Million Five Hundred Thousand and 00/100ths Dollars
($21,500,000) pursuant to the Loan Agreement and the Loan Documents (as defined
in the Loan Agreement);
WHEREAS, Borrower has failed to maintain (i) the minimum required Total
Debt Service Coverage Ratio; and (ii) the maximum Total Leverage Ratio, in each
case for the Fiscal Quarter ended as of December 31, 2004, as required by
Sections 6.10(b) and 6.10(c) of the Loan Agreement (the "December 31, 2004
Defaults"); and
WHEREAS, Borrower has entered into (i) a Purchase and Sale Agreement,
dated as of February 24, 2005, between Borrower and XxXxxxxx Investment Company,
Inc. (the "Bay City APA") with respect to the sale by Borrower of the System
serving the community of Bay City, Texas (the "Bay City Asset Sale"); and (ii) a
Purchase and Sale Agreement, dated as of February 2, 2005, between Borrower and
Cequel III Communications I, LLC (the "Brenham APA") with respect to the sale by
Borrower of the System serving the community of Brenham, Texas (the "Brenham
Asset Sale" and together with the Bay City Asset Sale, sometimes collectively
the "Planned Asset Sales"); and
WHEREAS, Borrower has requested that Agent and Lender (i) waive any
default resulting from the December 31, 2004 Defaults; and (ii) in light of the
Planned Asset Sales, amend certain provisions of the Loan Agreement relating to
certain amortization requirements and financial covenants for fiscal periods
occurring during the 2005 Fiscal Year; and Agent and Lender have agreed to
provide the waivers and amendments set forth in this Amendment, all on the terms
and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing premises, and other
good and valuable consideration, the receipt and legal sufficiency of which are
hereby acknowledged, the parties hereto hereby agree as follows:
1. DEFINITIONS. Unless otherwise defined herein, capitalized terms used herein
shall have the meanings assigned to them in the Loan Agreement, as amended
hereby.
2. WAIVER OF DEFAULTS. Subject to the terms and conditions of this Amendment,
the Agent and Lender hereby waive any Default or Event of Default currently
existing which arises solely from the December 31, 2004 Defaults.
3. AMENDMENTS TO LOAN AGREEMENT. The Loan Agreement is hereby amended as
follows:
(a) Section 1.1(a)(ii) of the Loan Agreement is hereby deleted in its
entirety and in lieu thereof replaced by the following:
(ii) Borrower shall, without setoff, deduction or counterclaim,
repay the principal amount of the Term Loan in twenty-one (21)
consecutive quarterly installments on the last day of March, June,
September and December of each Fiscal Year, commencing March 31, 2004,
followed by a final installment on the Maturity Date, when all
remaining outstanding principal and accrued interest thereon shall be
due and payable in full without setoff, deduction or counterclaim.
Quarterly payments of principal in respect of the Term Loan shall be in
the amounts set forth below:
AMOUNT OF QUARTERLY
QUARTERLY DUE DATES PRINCIPAL PAYMENT
March 31, 2004 through December 31, 2004 $806,250
March 31, 2005 and June 30, 2005 $0
September 30, 2005 and December 31, 2005 $250,000
March 31, 2006 through December 31, 2006 $1,094,750
March 31, 2007 through December 31, 2007 $1,352,500
March 31, 2008 through December 31, 2008 $1,610,000
Maturity Date The then remaining outstanding
and unpaid principal balance of
the Term Loan.
(b) Section 6.10(b) of the Loan Agreement is hereby deleted in its
entirety and in lieu thereof replaced by the following:
(b) Minimum Total Debt Service Coverage Ratio. Borrower shall
have, at the end of each Fiscal Quarter set forth below, a
Total Debt Service Coverage Ratio of not less than the
following:
1.00 to 1.00 for the Fiscal Quarters ending September 30,
2003, December 31, 2003, March 31, 2004, June
30, 2004, September 30, 2004 and December 31,
2004; and
1.10 to 1.00 for the Fiscal Quarter ending March 31, 2006
and each Fiscal Quarter ending thereafter.
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For purposes of greater certainty, the parties acknowledge and
agree that minimum Total Debt Service Coverage Ratio shall not
be measured during the 2005 Fiscal Year.
(c) Section 6.10(c) of the Loan Agreement is hereby deleted in its
entirety and in lieu thereof replaced by the following:
(c) Maximum Total Leverage Ratio. Borrower shall have, at the
end of each Fiscal Quarter set forth below, a Total Leverage
Ratio as of the last day of such Fiscal Quarter of not more
than the following;
4.75 to 1.00 for the Fiscal Quarters ending September 30,
2003, December 31, 2003 and March 31, 2004;
4.50 to 1.00 for the Fiscal Quarters ending June 30,
2004, September 30, 2004, and December 31,
2004;
4.75 to 1.00 for the Fiscal Quarter ending March 31, 2005;
4.50 to 1.00 for the Fiscal Quarters ending June 30, 2005,
September 30, 2005 and December 31, 2005; and
3.50 to 1.00 for each Fiscal Quarter ending thereafter.
(d) Section 6.10(d) of the Loan Agreement is hereby deleted in its
entirety and in lieu thereof replaced by the following:
(d) Minimum Interest Coverage Ratio. Borrower shall have, at
the end of each Fiscal Quarter set forth below, a Minimum
Interest Coverage Ratio as of the last day of such Fiscal
Quarter of not less than the following;
2.50 to 1.00 for the Fiscal Quarters ending September 30,
2003, December 31, 2003, March 31, 2004, June
30, 2004, September 30, 2004 and December 31,
2004;
2.50 to 1.00 for the Fiscal Quarters ending March 31, 2005,
June 30, 2005, September 30, 2005 and December
31, 2005; and
3.50 to 1.00 for each Fiscal Quarter ending thereafter.
(e) Section 13 of the Loan Agreement is hereby amended as follows:
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(i) The definition of "Applicable Base Rate Margin" is hereby deleted in its
entirety and in lieu thereof replaced by the following:
"Applicable Base Rate Margin" means, at any time of determination, an
amount equal to the sum of: (i) the per annum interest rate margin from
time to time in effect and payable in addition to the Base Rate
applicable to the Term Loan, as determined by reference to Section
1.4(a); plus (ii) at all times prior to the Required Asset Sales
Events, the Additional June 2005 Margin Amount, if applicable; plus
(iii) at all times prior to the Required Asset Sales Events, the
Additional September 2005 Margin Amount, if applicable.
(ii) The definition of "Applicable LIBOR Margin" is hereby deleted in its
entirety and in lieu thereof replaced by the following:
"Applicable LIBOR Margin" means, at any time of determination, an
amount equal to the sum of: (i) the per annum interest rate from time
to time in effect and payable in addition to the LIBOR Rate applicable
to the Term Loan, as determined by reference to Section 1.4(a); plus
(ii) at all times prior to the Required Asset Sales Events, the
Additional June 2005 Margin Amount, if applicable; plus (iii) at all
times prior to the Required Asset Sales Events, the Additional
September 2005 Margin Amount, if applicable.
(iii) The following new definition of "Additional June 2005 Margin Amount" is
hereby added to Section 13 of the Loan Agreement in the proper alphabetical
order:
"Additional June 2005 Margin Amount" means, in the case of the
determination of any Applicable Margin on or after July 1, 2005, an
amount equal to (i) 0.00% if the Required Asset Sale Events have
occurred on or prior to June 30, 2005 or (ii) 1.50%, if the Required
Asset Sale Events have not occurred on or prior to June 30, 2005; it
being acknowledged and agreed that such amount IS IN ADDITION TO (x)
the per annum interest rate from time to time in effect and payable in
addition to the Applicable LIBOR Margin and/or the Applicable Base Rate
Margin, otherwise applicable to the Term Loan, as determined by
reference to Section 1.4(a); and (y) any applicable Default Rate.
(iv) The following new definition of "Additional September 2005 Margin Amount"
is hereby added to Section 13 of the Loan Agreement in the proper alphabetical
order:
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"Additional September 2005 Margin Amount" means, in the case of the
determination of any Applicable Margin on or after October 1, 2005, an
amount equal to (i) 0.00% if the Required Asset Sale Events have
occurred on or prior to September 30, 2005 or (ii) 1.50%, if the
Required Asset Sale Events have not occurred on or prior to September
30, 2005; it being acknowledged and agreed that such amount IS IN
ADDITION TO (x) the per annum interest rate from time to time in effect
and payable in addition to the Applicable LIBOR Margin and/or the
Applicable Base Rate Margin, otherwise applicable to the Term Loan, as
determined by reference to Section 1.4(a); (y) the Additional June 2005
Margin Amount; and (z) any applicable Default Rate.
(v) The following new definition of "Required Asset Sale Events" is hereby added
to Section 13 of the Loan Agreement in the proper alphabetical order:
"Required Asset Sale Events" means satisfaction of each of the
following conditions to the satisfaction of Agent and Lender in their
respective sole discretion: (i) consummation of the Bay City Asset Sale
on terms substantially identical to, and without material waiver of,
the terms and conditions set forth in the Bay City APA; (ii) receipt by
Agent and Lenders of all amounts required by Section 1.2(b)(i) of the
Loan Agreement as a result of the Bay City Asset Sale; (iii)
consummation of the Brenham Asset Sale on terms substantially identical
to, and without material waiver of, the terms and conditions set forth
in the Brenham APA; and (iv) receipt by Agent and Lenders of all
amounts required by Section 1.2(b)(i) of the Loan Agreement as a result
of the Brenham Asset Sale.
4. ACKNOWLEDGMENT. The agreement of the Agent and Lender to make the amendments
and grant the limited waiver contained herein does not and shall not create (nor
shall any Credit Party rely upon the existence of or claim or assert that there
exists) any obligation of the Agent or Lender to consider or agree to any
further amendments or waivers. In the event Agent or Lender subsequently agree
to consider any further amendments or waivers, neither the amendment or waivers
contained herein nor any other conduct of Agent or Lender shall be of any force
or effect on the Agent's or Lender's consideration or decision with respect to
any such requested amendment or waiver.
5. REPRESENTATIONS, WARRANTIES, COVENANTS AND ACKNOWLEDGMENTS. To induce the
Agent and Lender to enter into this Amendment, each Credit Party does hereby:
(a) represent and warrant that (i) as of the date of this Amendment,
Borrower has delivered to Agent complete and correct copies of each of the Bay
City APA and the Brenham APA (in each case, including all schedules, exhibits,
amendments, supplements and
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modifications); (ii) no Credit Party and, to the knowledge of each Credit Party,
no other party to the Bay City APA or the Brenham APA is in default in the
performance or compliance with any provisions of the Bay City APA or the Brenham
APA, as the case may be; (iii) each of the Bay City APA and the Brenham APA are
in full force and effect as of the date of this Amendment and neither the Bay
City APA nor the Brenham APA has been terminated, rescinded or withdrawn; and
(iv) neither any Credit Party nor, to knowledge of any Credit Party, any other
Person party to the Bay City APA or the Brenham APA has been informed that the
approval of any Governmental Authority required for consummation of the Bay City
Asset Sale or the Brenham Asset Sale, as the case may be, is not reasonably
expected to be obtained on or prior to September 30, 2005;
(b) further 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 for 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 other Loan
Documents; (iii) such Credit Party has the power and is duly authorized to enter
into, deliver and perform this Amendment; and (iv) this Amendment is the legal,
valid and binding obligation of such Credit Party enforceable against such
Credit Party in accordance with its terms; and
(c) 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 such Credit Party were making
said agreements, covenants and undertakings on the date hereof; and
(d) acknowledge and agree that no right of offset, defense,
counterclaim, claim, causes of action or objection in favor of such Credit Party
against the Agent or Lender exists arising out of or with respect to (i) this
Amendment, the Loan Agreement or any of the other Loan Documents or (ii) any
other documents now or heretofore evidencing, securing or in any way relating to
the foregoing.
6. RELEASE; INDEMNITEES.
(a) In further consideration of the execution of this Amendment by the
Agent and Lender, each Credit Party, individually and on behalf of its
successors (including, without limitation, any trustees acting on behalf of such
Credit Party and any debtor-in-possession with respect to such Credit Party),
assigns, subsidiaries and Affiliates, hereby forever releases the Agent, Lender
and their respective successors, assigns, parents, subsidiaries, Affiliates,
officers, employees, directors, agents and attorneys (collectively, the
"Releasees") from any and all debts, claims, demands, liabilities,
responsibilities, disputes, causes, damages, actions and causes of actions
(whether at law or in equity) and obligations of every nature whatsoever,
whether liquidated or unliquidated, whether known or unknown, matured or
unmatured, fixed or contingent (collectively, "Claims") that such Credit Party
may have against the Releasees which
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arise from or relate to any actions which the Releasees may have taken or
omitted to take in connection with the Loan Agreement or the other Loan
Documents prior to the date this Amendment, including, without limitation, with
respect to the Obligations, any Collateral, the Loan Agreement, any other Loan
Document and any third parties liable in whole or in part for the Obligations.
This provision shall survive and continue in full force and effect whether or
not each Credit Party shall satisfy all other provisions of this Amendment, the
Loan Agreement or the other Loan Documents, including payment in full of all
Obligations.
(b) Each Credit Party hereby agrees that its obligation to indemnify
and hold the Releasees harmless as set forth in Section 6(a) shall include an
obligation to indemnify and hold the Releasees harmless with respect to any and
all liabilities, obligations, losses, penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever incurred by
the Releasees, or any of them, whether direct, indirect or consequential, as a
result of or arising from or relating to any proceeding by, or on behalf of any
Person, including, without limitation, officers, directors, agents, trustees,
creditors, partners or shareholders of any Credit Party or any parent,
subsidiary or Affiliate of any Credit Party, whether threatened or initiated,
asserting any claim for legal or equitable remedy under any statutes, regulation
or common law principle arising from or in connection with the negotiation,
preparation, execution, delivery, performance, administration and enforcement of
this Amendment and the other Loan Documents. The foregoing indemnity shall
survive the payment in full of the Obligations and the termination of this
Amendment, the Loan Agreement and the other Loan Documents.
7. CONDITIONS TO EFFECTIVENESS. The effectiveness of this Amendment is subject
to the following conditions precedent:
(a) Borrower shall have delivered to Agent six (6) executed counterpart
originals of this Amendment;
(b) All of the representations and warranties made or deemed to be made
in this Amendment and under the Loan Documents shall be true and correct as of
the date of this Amendment;
(c) Delivery to the Agent of complete and correct copies of the Bay
City APA and the Brenham APA (in each case, including all schedules, exhibits,
amendments, supplements and modifications);
(d) In consideration of the waivers and amendments set forth in this
Amendment, Agent and Lender shall have received on or before the date of this
Amendment, an amendment fee in an amount equal to $137,062.50 (the "Amendment
Fee"), which Amendment Fee shall be deemed fully earned and non-refundable as of
the date hereof; and
(e) Borrower shall have paid on or before the date hereof to counsel
for Agent any and all outstanding fees and other charges owing to such counsel
incurred in connection with the
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transactions evidenced by the Loan Agreement and other Loan Documents, including
without limitation, any such fees incurred in connection with this Amendment.
8. EFFECT; RELATIONSHIP OF PARTIES. 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 each Credit Party to the Agent and Lender. The
relationship of the Agent and Lender, on the one hand, and each Credit Party, on
the other hand, has been and shall continue to be, at all times, that of
creditor and debtor and not as joint venturers or partners. Nothing contained in
this Amendment, any instrument, document or agreement delivered in connection
herewith or in the Loan Agreement or any of the other Loan Documents shall be
deemed or construed to create a fiduciary relationship between or among the
parties.
9. MISCELLANEOUS. This Amendment 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 Amendment shall be binding upon and inure to the benefit of the successors
and permitted assigns of the parties hereto. This Amendment shall be governed
by, and construed in accordance with, the laws of the State of New Jersey. This
Amendment embodies the entire agreement and understanding between the parties
hereto with respect to the subject matter hereof and supersedes all prior oral
or written negotiations, agreements and understandings of the parties with
respect to the subject matter hereof. Time is of the essence of this Amendment
and of the Loan Agreement.
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IN WITNESS WHEREOF, the Credit Parties, the Agent and Lenders have
caused this Amendment to be duly executed as of the 28 day of March, 2005.
BORROWER:
NORTHLAND CABLE PROPERTIES
SEVEN LIMITED PARTNERSHIP
By: Northland Communications Corporation,
its Managing General Partner
By: /s/ XXXX X. XXXXX
--------------------------------------
Name: Xxxx X. Xxxxx
Title: President
GUARANTOR:
NORTHLAND COMMUNICATIONS
CORPORATION
By: /s/ XXXX X. XXXXX
--------------------------------------
Name: Xxxx X. Xxxxx
Title: President
AGENT AND LENDER:
CIT LENDING SERVICES CORPORATION,
as Agent and Lender
By: /s/ XXXXXXX X XXXXXXX
--------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title:
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