AMENDMENT NO. 7
This Amendment No. 7 entered into as of March 31, 2000 (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 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").
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 30, 1998, Amendment No. 5 dated as of August 31, 1998 and
Amendment No. 6 dated as of March 31, 1999 (as amended, the "Loan Agreement");
WHEREAS, capitalized terms used herein and not otherwise defined shall
have the meanings specified in the Loan Agreement; and
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. Definitions. The following definitions contained in Section 1.1 of
the Loan Agreement are amended as follows:
(a) The definition of "Annualized Operating Cash Flow" is amended in its
entirety, effective as of December 31, 1999, to read as follows:
""Annualized Operating Cash Flow" means Operating Cash Flow for the
most recently ended calendar month and for the two immediately
preceding calendar months based on the Borrower's accurate monthly
financial statements provided to the Lenders in accordance with
Sections 5.3.3(a) and 5.3.7 for the calendar months in question
times four (4)."
(b) The definition of "Converted Loan Repayment Date" is amended,
effective as of December 31, 1999, by changing "...December 31,
2002..." to "...December 31, 2000...".
(c) The definition of "Effective Prime" is amended in its entirety,
effective as of March 31, 2000, to read as follows:
""Effective Prime" means the Prime Rate plus two percent (2.0%) per
annum until the close of business on June 30, 2000 and thereafter
means the Prime Rate plus four percent (4.0%) per annum."
(d) The definition of "Federal Funds Rate" is amended, effective as of
March 31, 2000, by inserting "...plus one-half percent (.50%)..."
immediately prior to "...provided" in the sixth line of such
definition.
(e) The definition of "Fixed Charge Coverage Ratio" is amended,
effective as of December 31, 1999, in its entirety to read as
follows:
""Fixed Charge Coverage Ratio" means, as of the last day of each
calendar month, a fraction, the numerator of which shall be an
amount equal to Operating Cash Flow for such month and each of the
two immediately preceding calendar months times four (4) less (a)
Capital Expenditures made by the Borrower (other than those Capital
Expenditures paid for with (i) purchase money Indebtedness, (ii)
Loans, (iii) cash (except to the extent that the Borrower's cash
balance at the end of such calendar month is less than $1,500,000),
or (iv) Capitalized Lease Obligations permitted to exist under this
Agreement) and its Subsidiaries times four (4) and (b) Permitted
Restricted Payments paid during such three calendar month period in
each case times four (4), and the denominator of which shall be an
amount equal to Total Debt Service (exclusive of voluntary
prepayments of principal on the Loans and exclusive of Closing
Costs) for such three calendar month period times four (4)."
(f) The definition of "Interest Expense" is amended, effective as of
December 31, 1999, in its entirety to read as follows:
""Interest Expense" means, with respect to any period, the aggregate
amount required to be paid in cash by the Borrower and its
Subsidiaries for interest, fees, charges and expenses, however
characterized, on its Indebtedness, including, without limitation,
all such interest, fees, charges and expenses accrued and required
to be paid in cash with respect to Indebtedness under the Financing
Documents (but not including fees associated with the purchase of
any interest rate protection arrangement)."
(g) The definition of "Prime Rate" is amended in it entirety effective
as of March 31, 2000 to read as follows:
""Prime Rate" means the higher of (i) the floating rate of interest
per annum designated from time to time by the Agent as being its
"prime rate" of interest, such interest rate to be adjusted on the
effective date of any change thereof by the Agent, it being
understood that such rate of interest may not be the lowest rate of
interest from time to time charged by the Agent and (ii) the Federal
Funds Rate plus one-half percent (.50%), such interest rate to be
adjusted on the effective date of any change thereof by the Federal
Reserve Bank of New York."
(h) The definition of "Total Cash Interest Expense" is amended,
effective as of December 31, 1999, in its entirety to read as
follows:
""Total Cash Interest Expense" means, with respect to any period,
Interest Expense for such period. "
(h) The definition of "Total Debt Service" is amended, effective as of
December 31, 1999, in its entirety to read as follows:
""Total Debt Service" means, for any period, the sum of the
Borrower's and its Subsidiaries' Total Cash Interest Expense for
such period (exclusive of any Closing Costs), plus the amount
necessary to meet the regularly scheduled principal amortization on
the Loans, plus regularly scheduled payments on other Indebtedness
and Capitalized Lease Obligations of the Borrower and its
Subsidiaries for such period."
2. Principal Amortization.
(a) Section 2.1.2(b) of the Loan Agreement is amended, effective as of
January 1, 2000, by deleting the second sentence thereof and the
columns entitled "Repayment Dates" and "Percentage of Outstanding
Principal" and replacing same with the following language:
"On the Converted Loan Repayment Date the Borrower shall pay the
outstanding principal balance of the Converted Loan together with
all accrued and unpaid interest, fees and expenses thereon in full
and prior thereto the Borrower shall make the mandatory payments and
prepayments required by Section 2.7, as amended."
(b) Notwithstanding anything to the contrary contained in Section
2.7.1.2 of the Loan Agreement, the Borrower shall not be required to
make any principal payment with respect to its Excess Cash Flow for
its 1999 fiscal year.
(c) Notwithstanding anything to the contrary set forth in the Loan
Agreement, the paragraphs entitled "Principal Amortization" i.e.
paragraph 3(e) of Amendment No. 5 of the Loan Agreement and
paragraph 3 of Amendment No. 6 shall, for the periods commencing
January 1, 2000, be of no further force or effect and shall be
replaced in their entirety by the following paragraph:
Notwithstanding anything to the contrary set forth in the Loan
Agreement, the net cash proceeds (after reasonable expenses) of all Asset
Sales and System Asset Sales occurring after December 31, 1999 and (ii)
the net cash proceeds (after reasonable expenses) received by the
Borrower, GTI and/or LLC from any equity investment in or Indebtedness for
Borrowed Money incurred by any of the Borrower, GTI and/or LLC shall be
applied to repay on a pro rata basis (i) the Loans in the inverse order of
maturity and (ii) that certain $5,000,000 term loan to be funded on or
about April 3, 2000 to the Borrower by certain of the Lenders and secured
on a pari passu basis with the Loans by collateral for the Loans (the
"Other Loan"). Any amendment to or waiver of the terms of the foregoing
sentence shall be deemed to require the consent of all of the Lenders as
provided for under Section 9.5(ii) and (vii) of the Loan Agreement. The
Borrower, the Lenders and the Agent acknowledge and agree that the
Borrower has made all payments of principal required by Section 2.1.2(b)
and 2.7.1, as amended, through December 31, 1999 except for approximately
$475,000 of purchase price holdbacks which are in escrow and which will be
paid to the Agent upon release from escrow to be applied to the Loans and
the Other Loan as set forth above in this paragraph and the Borrower
acknowledges and agrees that all payments of principal made prior to the
date of this Amendment have been applied in accordance with the Loan
Agreement.
3. The Lenders hereby consent to the System Asset Sale described on
Exhibit A hereto; provided that (i) if the Other Loan is closed and funded on or
before April 3, 2000 a portion of the net proceeds thereof in the amount of at
least $2,400,000 is applied to repay the Loans and the Other loan on a pro rata
basis and the balance in the amount of approximately $1,000,000 is applied by
the Borrower to repay certain Capitalized Leases and (ii) if the Other Loan is
not closed and funded on or before April 3, 2000, net proceeds in the amount of
at least $3,400,000 are applied, to repay the Loans and the Other Loan on a pro
rata basis and provided further that in any event the net proceeds in the amount
of $3,400,000 are initially transferred to the Agent to be held subject to the
Agent's first Lien thereon for application as set forth above. The references to
"pro rata basis" in this paragraph and the immediately preceding paragraph shall
have the meaning set forth in paragraph 13, below.
4. Notwithstanding anything to the contrary set forth in the Loan
Agreement, paragraph 3(d) of Amendment No. 5 of the Loan Agreement is amended,
effective as of June 30, 1999 to read in its entirety as follows:
"(d) Conversion Date. Effective as of the date hereof, the defined term
"Conversion Date" set forth in the Loan Agreement is amended to read as
follows:
"Conversion Date" means June 30, 1999."
After the Conversion Date the Borrower shall not be permitted to
borrow Revolving Loans without the prior written consent of all of
the Lenders."
5. Section 2.3.1 of the Loan Agreement is amended, effective as of
December 31, 1999, by adding at the end thereof the following:
"Notwithstanding the foregoing provisions of this Section 2.3.1 or
any other provisions of this Agreement, effective(i) as to each
Prime Rate Loan, on March 31, 2000 and (ii) as to each Libor Loan
outstanding on March 31, 2000, the Interest Adjustment Date for such
Libor Loan and, in all such cases, until the close of business on
June 30, 2000, interest shall accrue and be paid on the outstanding
principal balances of the Loans at Effective Prime."
6. Financial Covenant Amendments. The sections of the Loan Agreement
identified below are hereby amended as set forth below:
(a) Section 5.1.10. Maximum Total Indebtedness and Maximum Senior
Indebtedness to Annualized Operating Cash Flow. Effective as of
December 31, 1999, Section 5.1.10 of the Loan Agreement is hereby
amended (i) by replacing the required ratio at December 31, 1999 and
for the period commencing January 1, 2000 and thereafter with the
periods set forth below and the ratios set forth below opposite such
period is:
Total Senior
Indebtedness
Indebtedness
Ratio Ratio
December 31, 1999 7.25:1.00 2.00:1.00
January 1, 2000 through 7.65:1.00 1.65:1.00
August 31, 2000
September 1, 2000 and thereafter 7.35:1.00 1.65:1.00
and (ii) by adding the following text at the end of said Section:
"The Borrower shall be in compliance with the foregoing covenant as of the last
day of each calendar month."
(b) Section 5.1.11. Maximum Senior Indebtedness to Basic Subscribers.
Effective as of December 31, 1999, Section 5.1.11 of the Loan
Agreement is hereby amended in its entirety to read as follows:
"Section 5.1.11. Total Indebtedness for Borrowed Money to Basic Subscribers."
Maintain at the last day of each calendar month a ratio of (i) total
Indebtedness for Borrowed money (in dollars) to the number of Basic Subscribers
of not greater than (A) $1,175:1:00 at December 31, 1999 and (B) $1,299:1:00
thereafter.
(c) Section 5.1.12. Minimum Ratio of Operating Cash Flow to Interest
Expense.
Effective as of December 31, 1999, Section 5.1.12 of the Loan
Agreement is hereby amended (i) by deleting the periods and ratios
set forth therein and replacing them with the following:
October 1, 1999 through 1.15:1.00
December 31, 1999
January 1, 2000 1.05:1.00
and thereafter
and (ii) by adding the following text at the end of said Section:
"The Borrower shall be in compliance with the foregoing covenant on an
annualized basis as of the last day of each calendar month so that Operating
Cash Flow, Total Cash Interest Expense and each component of each of said terms
are calculated for the calendar month in question and for the two immediately
preceding calendar months and the results of said calculation are multiplied by
four (4)."
(d) Section 5.1.14 of the Loan Agreement is amended, effective as of
December 31, 1999 in its entirety to read as follows:
"Section 5.1.14. Minimum Fixed Charge Coverage. Maintain at the
last day of each calendar month a Fixed Charge Coverage Ratio of not
less than 1.05:1.00."
(e) Section 5.1.13 and Section 5.1.15 of the Loan Agreement are
deleted as of December 31, 1999 and shall be of no further force or
effect.
(f) Section 5.2.8.5 of the Loan Agreement is deleted as of December 31,
1999, shall be of no further force or effect and any past failures
of the Borrower to be in compliance therewith are hereby waived and
shall not constitute Defaults or Events of Defaults.
7. Section 5.2.11. Dividends, Payments and Distributions. Section 5.2.11
is amended, effective as of December 31, 1999, by changing the Period "1998 and
thereafter" to "1998 and through June 30, 1999", adding immediately thereafter
the period "July 1, 1999 through June 30, 2000", inserting in the "Percentage of
Gross Revenues" column "3.00%" immediately opposite "July 1, 1999 through June
30, 2000" and adding the Period "July 1, 2000 and thereafter" and inserting in
the "Percentage of Gross Revenues" column "2.50%" immediately opposite "July 1,
2000 and thereafter".
8. Section 5.2.17. Capital Expenditures. Effective as of December 31,
1999, Section 5.2.17 of the Loan Agreement is hereby amended to provide that for
Borrower's fiscal year ending December 31, 1999, maximum permitted Capital
Expenditures shall be $13,700,000 and for Borrower's fiscal year ending December
31, 2000, maximum permitted Capital Expenditures shall be $8,000,000.
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 any
succeeding fiscal year.
8.1. Section 5.3.2 of the Loan Agreement is amended, effective as of
December 31, 1999 by changing "...90 days..." to "... 105 days...".
9. Section 6.1 of the Loan Agreement is amended, effective as of March 31,
2000 by adding thereto Section 6.1.17 and 6.1.18 which shall read as follows:
"Section 6.1.17. A definitive agreement for the sale of the Borrower
and Galaxy Telecom X.X. XX or System Asset Sales of substantially
all the Systems owned by the Borrower and Galaxy Telecom X.X. XX has
not been executed and delivered on or before, or is not in full
force and effect on May 31, 2000 between the Borrower, Galaxy
Telecom X.X. XX and/or the owners of each of said entities and an
unaffiliated third party buyer in form and substance reasonably
satisfactory in all respects to the Majority Lenders including
without limitation (i) that any such agreement and transaction shall
contain sufficient provision for repayment of the Loans and any
Indebtedness of Galaxy Telecom X.X. XX to the Agent and each of the
Lenders and all interest, fees and expenses in connection therewith
in full and (ii) that any such agreement and any related documents,
instruments or agreements contain no contingencies allowing the
purchaser to terminate such agreement or any such related document,
instrument or agreement (a) arising from the failure of such
purchaser to obtain the financing necessary for such purchase, (b)
arising from the failure of such purchaser to obtain the approvals
necessary for such purchase other than approvals customarily not
obtained until after signing of such an agreement in like
transactions or (c) relating to the completion of any due diligence
review by such purchaser other than completion of reasonable due
diligence customarily to be completed in such transactions after
signing such an agreement; it shall also be considered "Event of
Default" hereunder if said purchase agreement fails to be in full
force and effect at any time after being entered into; or.
"Section 6.1.18." 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.
9.1 Section 9.5 of the Loan Agreement is amended, effective as of March
31, 2000, by adding immediately after clause (ix) thereof the following:
"...(x) waive, amend or terminate Section 6.1.17 or Section 6.1.18."
10. Exhibit 1.8 to the Loan Agreement is amended, effective as of March
31, 2000, in its entirety to read as set forth on Exhibit 1.8 to this Amendment.
11. On the date hereof, the Borrower shall be and remain unconditionally
liable for (a) an amendment fee in the amount of $125,000, to the Agent for the
pro rata accounts of the Lenders in accordance with their Pro Rata Shares, and
(b) reimbursement of the fees and out-of-pocket disbursements of legal counsel
to each Lender up to $1,500 per Lender which fees described in each of clause
(a) and clause (b) shall thereupon be fully earned and nonrefundable and shall
be paid in full on the first to occur of (i) repayment of the Loans in full and
(ii) acceleration of the maturity of the Loans.
12. The Lenders, the Agent and the Borrower each hereby consent to,
acknowledge and agree that the Other Loan may be secured by and
cross-collateralized with the Security Documents and the collateral for the
Obligations (other than, at this time, the Borrower's real estate) and that the
Agent and the Borrower are authorized and directed by the Lenders to enter into
such documents, instruments and agreements as may be necessary or desirable to
accomplish such cross-collateralization including without limitation amendments
and/or restatements of any of the Security Documents.
13. The Borrower, the Agent and the Lenders acknowledge and agree that the
Other Loan and the Obligations shall be secured on a pari passu basis by the
Security Documents, but that the Obligations and the Other Loan shall be treated
on a pari passu basis with respect to any payments, prepayments or proceeds of
the collateral for the Loans and the Other Loan so that any such amounts are
applied to the Loans and the Other Loan pro rata, i.e., in proportion to the
relative amounts of Indebtedness owing on the Loans and the Other Loan, so that,
for example, the amount to be applied to the Loans is equal to: total payment
received multiplied by a fraction, the numerator of which is the amount of
outstanding Indebtedness of the Loans and the denominator is the sum of the
numerator and the amount of outstanding Indebtedness of the Other Loan.
14. The Borrower represents and warrants that (i) prior to January 15,
2000, the Borrower listed substantially all of Borrower's assets for sale with
Communications Equity Associates, a nationally recognized seller's broker with
experience in transactions involving large rural cable television systems, (ii)
concurrently herewith the Borrower has provided the Agent with true copies of
all of Borrower's agreements with such broker, (iii) such agreements with said
broker are in full force and effect as of the date hereof and (iv) on the date
of this Amendment a letter of intent dated March 9, 2000 with Classic Cable,
Inc., a Delaware corporation, for the purchase of all outstanding general and
limited partnership interests of the Borrower and Galaxy Telecom L.P., II is in
full force and effect.
15. Conditions. 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
Borrower and the Lenders, and counterparts of the Consent appended hereto
executed by the Guarantors;
(b) receipt by the Agent of such other items or documents as may
be requested by the Agent or the Lenders; and
(c) the Borrower shall have paid to Messrs. Xxxxxxxx, Xxxxx &
Xxxxxx LLP, counsel to the Agent, all outstanding fees, costs
and expenses and all fees, costs and expenses incurred in
connection with the preparation, negotiation and execution of,
this Amendment and any and all agreements, instruments, and
other documents executed in connection herewith.
16. Miscellaneous. 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 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.
17. Representations and Warranties. 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 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 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 Notes
and other obligations of the Borrower hereunder, and release of any collateral
for the Loans.
18. Counterparts. 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.
[THE REST OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
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:____________________________
Name:
Title:
GALAXY TELECOM CAPITAL CORP.
By:_______________________
Name:
Title:
LENDERS:
FLEET NATIONAL BANK, as Agent and as a Lender
By:____________________________
Name:
Title:
CITIZENS BANK OF MASSACHUSETTS (as assignee
of State Street Bank and Trust Company)
By:____________________________
Name:
Title:
UNION BANK OF CALIFORNIA, N.A.
By:____________________________
Name:
Title:
BANK ONE, N.A. (as successor to The First
National Bank of Chicago)
By:____________________________
Name:
Title:
