SECOND AMENDMENT TO $200,000,000 AMENDED
AND RESTATED CREDIT AGREEMENT
SECOND AMENDMENT TO $200,000,000 AMENDED AND RESTATED CREDIT AGREEMENT
(this "Amendment") is dated as of the 3rd day of July, 1998 and entered into
among GCI HOLDINGS, INC., an Alaskan corporation (herein, together with its
successors and assigns, called the "Borrower"), the Lenders (as defined in the
Credit Agreement as defined below), NATIONSBANK, N.A. (successor by merger to
NationsBank of Texas, N.A.), a national banking association, as Administrative
Agent for itself and the Lenders (the "Administrative Agent"), CREDIT LYONNAIS
NEW YORK BRANCH, as Documentation Agent and TD SECURITIES (USA), INC. as
Syndication Agent.
WITNESSETH:
WHEREAS, the Borrower, the Lenders and the Administrative Agent entered
into a $200,000,000 Amended and Restated Credit Agreement, dated November 14,
1997, as amended by that certain Consent and First Amendment, dated January 27,
1998 (as amended and as further amended, restated or otherwise modified from
time to time, the "Credit Agreement") and a $50,000,000 Amended and Restated
Credit Agreement, dated as of November 14, 1997 (as amended by that certain
Consent and First Amendment, dated January 27, 1998 and that certain Second
Amendment to Amended and Restated Credit Agreement dated as of the date hereof
and as further amended, restated or otherwise modified from time to time, the
"Revolver/Term Credit Agreement");
WHEREAS, the Borrower has requested that, among other things, certain
financial covenants of the Credit Agreement be amended;
WHEREAS, the Lenders, the Administrative Agent and the Borrower have
agreed to modify the Credit Agreement upon the terms and conditions set forth
below;
NOW, THEREFORE, for valuable consideration hereby acknowledged, the
Borrower, the Lenders and the Administrative Agent agree as follows:
SECTION 1. Definitions.
(a) In General. Unless specifically defined or redefined below,
capitalized terms used herein shall have the meanings ascribed thereto in the
Credit Agreement.
(b) Definition of Operating Cash Flow. The definition of "Operating
Cash Flow" in Article I of the Credit Agreement is amended and restated in its
entirety as follows:
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"Operating Cash Flow" means, for the Borrower and the
Restricted Subsidiaries, for any period, determined in accordance with
GAAP, the consolidated net income (loss) for such period taken as a
single accounting period, excluding extraordinary gains and losses,
plus the sum of the following amounts for such period to the extent
included in the determination of such consolidated net income: (a)
depreciation expense, (b) amortization expense and other non-cash
charges reducing income, (c) Net Total Interest Expense, (d) cash
income tax expense for the Borrower and Restricted Subsidiaries, (e)
deferred income Taxes for the Borrower and Restricted Subsidiaries,
plus (f) for the fiscal quarter in which the Borrower purchases the
transponders pursuant to that certain Transponder Purchase Agreement
for Galaxy X, dated August 24, 1995, among GCI Communication Corp. and
Hughes Communications Galaxy, Inc., now held by PanAmSat Corp., as
assignee, and that certain Transponder Service Agreement, dated August
24, 1995, among General Communication Corp. and Hughes Communications
Satellite Services, Inc. (the "Galaxy X Transponders"), now held by
PanAmSat Corp., as assignee, the annualized amount of economic savings
of the Borrower resulting from the Borrower's direct purchase of such
Galaxy X Transponders instead of leasing such Galaxy X Transponders
from GCI Satellite Co., Inc. and leasing transponders from other
providers; provided, the calculation is made after giving effect to
acquisitions and dispositions of assets of the Borrower or any
Restricted Subsidiary during such period as if such transactions had
occurred on the first day of such period.
(c) Addition of definition of "Year 2000 Compliant" . The following
definition of "Year 2000 Compliant" shall be added in alphabetical order to
Article I of the Credit Agreement:
"Year 2000 Compliant" means, with respect to a Person, that
all computer hardware and software that are material to the business
and operations of such Person will on a timely basis be able to perform
properly date-sensitive functions for all dates before and after
January 1, 2000, including functions with respect to any leap year.
SECTION 2. Addition of Section 5.19. The following Section 5.19 shall
be added to the end of Article V of the Credit Agreement:
5.19 Year 2000 Compliance.
(a) The Borrower has (i) undertaken a detailed review and
assessment of all areas within its business and operations that could
be adversely affected by the "Year 2000 Problem" (that is, the risk
that computer hardware and software used by the Borrower may be unable
to recognize and perform properly date-sensitive functions involving
certain dates prior to and any date after December 31, 1999 (including
recognizing and performing properly date-sensitive functions in leap
years)), (ii) developed a detailed plan, timeline and budget for
addressing the Year 2000 Problem on a timely basis, and (iii) to date,
implemented that plan in
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accordance with that timetable and budget. The aggregate costs to and
charges by the Borrower related to the Year 2000 Problem and being Year
2000 Compliant shall not exceed an amount which could result in a
Material Adverse Change.
(b) The Borrower is in the process of making inquiry of each
of its key suppliers, vendors and customers as to whether such Person
will on a timely basis be Year 2000 Compliant in all material respects.
"Key suppliers, vendors and customers" refers to those suppliers,
vendors and customers of the Borrower the business failure of which
could result in a Material Adverse Change.
SECTION 3. Addition of Section 6.17. The following Section 6.17 shall
be added to the end of Article VI of the Credit Agreement:
6.17 Year 2000 Compliance. The Borrower will promptly notify
the Administrative Agent in the event the Borrower discovers or
determines that any computer application (including those of its
suppliers and vendors) that is material to its or any of its
Subsidiaries' business and operations will not be Year 2000 Compliant
on a timely basis, except to the extent that such failure could not be
reasonably expected to cause a Material Adverse Change.
SECTION 4. Amendment to Section 7.01(a). Section 7.01(a) in Article VII
of the Credit Agreement is amended and restated in its entirety to read as
follows:
(a) Total Leverage Ratio. At all times during the term hereof, the
Total Leverage Ratio shall not be greater during the following time periods than
the ratio set forth opposite such time periods:
Time Period Maximum Ratio
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From the Closing Date
through December 31, 1998 7.00 to 1.00
January 1, 1999 through
March 31,1999 6.50 to 1.00
April 1, 1999 through
December 31, 1999 6.00 to 1.00
January 1, 2000
and thereafter 5.50 to 1.00
SECTION 5. Amendment to Section 7.01(e). Section 7.01(e) in Article VII
of the Credit Agreement is amended and restated in its entirety as follows:
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(e) Fixed Charges Coverage Ratio. Commencing January 1, 2001,
and at all times thereafter during the term hereof, the Fixed Charges
Coverage Ratio shall not be less during the following time periods than
the ratio set forth opposite such time periods:
Time Period Minimum Ratio
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From January 1, 2001 through
March 31, 2003 1.00 to 1.00
April 1, 2003 and thereafter 1.05 to 1.00
SECTION 6. Amendment to Section 7.01(f). Section 7.01(f) in Article VII
of the Credit Agreement is amended and restated in its entirety as follows:
(f) Capital Expenditures. Capital Expenditures (not including
any Galaxy X Transponder (as defined in the definition of Operating
Cash Flow) purchases) paid or incurred by the Borrower and the
Restricted Subsidiaries shall not exceed, in the aggregate, the
following amounts during the following years, provided that, any unused
portion for any such year may be used during the following fiscal year
only (but not thereafter):
Fiscal Year Maximum Amount
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1998 $90,000,000
1999 $80,000,000
2000 $90,000,000
2001 and thereafter Not Applicable
SECTION 7. Amendment to Section 7.10. Section 7.10 in Article VII of
the Credit Agreement is amended by deleting the "and" before subparagraph (h)
thereof, removing the period at then of such Section 7.10 and substituting ",
and" for such period, and adding the following subparagraph (i) at the end
thereof:
(i) so long as (A) there is no Default or Event of Default both before
and after giving effect to such Investment or acquisition, (B) for any
such acquisition or Investment by the Borrower for which payment is
made by issuance of Capital Stock of the Borrower for 95% or more of
the purchase price, such acquisition or Investment must be in a Person
that has four full fiscal quarters historical positive cash flow, (C)
if the Capital Stock or assets to be acquired are in a related business
in which the Borrower is not currently in, the Borrower provides the
Lenders with pro forma projections for such related business, (D) all
such Investments and acquisitions are in existing markets of the
Borrower and its Restricted Subsidiaries, and (E) all such assets and
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Properties, including Capital Stock, purchased by the Borrower or any
Restricted Subsidiary of the Borrower, shall be subject to first and
prior perfected Liens (except for Permitted Liens) in favor of the
Administrative Agent and the Lenders securing the Obligations in form
and substance substantially identical to the existing collateral
documentation, Investments of Capital Stock or acquisitions of assets
of Persons engaged in the Borrower's existing lines of business or
businesses related thereto not in excess of $5,000,000 in the aggregate
for the cash portion for all such Investments or acquisitions, provided
that, such $5,000,000 cash portion amount may be increased to
$20,000,000 in the aggregate, if the Total Leverage Ratio is less than
5.00 to 1.00 both before and after giving effect to any such Investment
or acquisition.
SECTION 8. Amendment to Section 8.01. Section 8.01 in Article VIII of
the Credit Agreement is amended by deleting the "or" before subparagraph (w),
deleting the period at the end of subparagraph (w) and substituting ", or"
instead, and adding the following subparagraph (x):
(x) The Borrower shall fail to be Year 2000 Compliant.
SECTION 9. Replacement of Schedule 1.01B. Schedule 1.01B to the Credit
Agreement shall be deleted in its entirety and Schedule 1.01B attached to this
Second Amendment shall be substituted in its stead.
SECTION 10. Conditions Precedent. This Second Amendment shall not be
effective until the Administrative Agent shall have determined in its sole
discretion that all proceedings of the Borrower taken in connection with this
Second Amendment and the transactions contemplated hereby shall be satisfactory
in form and substance to the Administrative Agent and the Borrower has satisfied
the following conditions:
(a) the Borrower shall have delivered to the Administrative
Agent a loan certificate of the Borrower certifying (i) as to the
accuracy of its representations and warranties set forth in Article V
of the Credit Agreement, as amended by this Second Amendment and the
other Loan Papers, (ii) that there exists no Default or Event of
Default, and the execution, delivery and performance of this Second
Amendment will not cause a Default or Event of Default, (iii) as to
resolutions authorizing the Borrower to execute, deliver and perform
this Second Amendment and all Loan Papers and other documents and
instruments delivered or executed in connection with this Second
Amendment, (iv) that it has complied with all agreements and conditions
to be complied with by it under the Credit Agreement, the other Loan
Papers and this Second Amendment by the date hereof and (v) that it has
received all consents, amendments and waivers from all Persons
necessary or required, if any, to (A) enter into this Amendment or (B)
effectuate the amendments set forth above, including, without
limitation, under the Indenture and related documentation and under the
AUSP Credit Agreement and related documentation;
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(b) the Borrower shall have delivered to the Administrative
Agent and Lenders legal opinions from counsel to the Borrower and its
Restricted Subsidiaries regarding this Second Amendment and such other
matters as reasonably requested by Special Counsel, including, without
limitation, opinions regarding the waivers, consents and amendments in
connection with the Indenture and AUSP Credit Agreement, and the
related agreements; and
(c) the Borrower shall have delivered such other documents,
instruments, and certificates, in form and substance satisfactory to
the Administrative Agent, as the Administrative Agent shall deem
necessary or appropriate in connection with this Second Amendment and
the transactions contemplated hereby.
SECTION 11. Representations and Warranties. The Borrower represents and
warrants to the Lenders and the Administrative Agent that (a) this Second
Amendment constitutes its legal, valid, and binding obligation, enforceable in
accordance with the terms hereof (subject as to enforcement of remedies to any
applicable bankruptcy, reorganization, moratorium, or other laws or principles
of equity affecting the enforcement of creditors' rights generally), (b) there
exists no Default or Event of Default under the Credit Agreement, (c) its
representations and warranties set forth in the Credit Agreement and other Loan
Papers are true and correct on the date hereof, (d) it has complied with all
agreements and conditions to be complied with by it under the Credit Agreement
and the other Loan Papers by the date hereof, and (e) the Credit Agreement, as
amended hereby, and the other Loan Papers remain in full force and effect.
SECTION 12. Covenants. The Borrower covenants that prior to or
simultaneous with any purchase of any Galaxy X Transponder (as defined in the
definition of Operating Cash Flow) by the Borrower or any Restricted Subsidiary
of the Borrower, the Borrower shall have delivered to the Administrative Agent
all agreements, documents, certificates and information requested by the
Administrative Agent to effectively grant the Administrative Agent on behalf of
Lenders a first and prior Lien and security interest in the Galaxy X
Transponders owned and to be owned by the Borrower and/or its Restricted
Subsidiaries.
SECTION 13. Entire Agreement; Ratification. THE CREDIT AGREEMENT AND
THE LOAN PAPERS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENT
OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
EXCEPT AS MODIFIED OR SUPPLEMENTED HEREBY, THE CREDIT AGREEMENT, THE OTHER LOAN
PAPERS AND ALL OTHER DOCUMENTS AND AGREEMENTS EXECUTED IN CONNECTION THEREWITH
SHALL CONTINUE IN FULL FORCE AND EFFECT.
SECTION 14. Counterparts. This Second Amendment may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument. In making proof hereof, it shall not be necessary to produce or
account for any counterpart other than one signed by the party against which
enforcement is sought.
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SECTION 15. GOVERNING LAW. THIS SECOND AMENDMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS (AND NOT THE LAW OF CONFLICTS) OF THE STATE OF
TEXAS, BUT GIVING EFFECT TO FEDERAL LAWS.
SECTION 16. CONSENT TO JURISDICTION. THE BORROWER HEREBY IRREVOCABLY
SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED STATES FEDERAL OR TEXAS
STATE COURT SITTING IN DALLAS IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO ANY LOAN PAPERS AND THE BORROWER IRREVOCABLY AGREES THAT ALL CLAIMS
IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH
COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO
THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN SUCH A COURT OR THAT
SUCH COURT IS AN INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF THE
ADMINISTRATIVE AGENT OR ANY LENDER TO BRING PROCEEDINGS AGAINST THE BORROWER IN
THE COURTS OF ANY OTHER JURISDICTION. ANY JUDICIAL PROCEEDING BY THE BORROWER
AGAINST THE ADMINISTRATIVE AGENT OR ANY LENDER OR ANY AFFILIATE OF THE
ADMINISTRATIVE AGENT OR ANY LENDER INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER
IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH ANY LOAN PAPER SHALL BE
BROUGHT ONLY IN A COURT IN DALLAS, TEXAS.
SECTION 17. WAIVER OF JURY TRIAL. THE BORROWER, THE ADMINISTRATIVE
AGENT AND EACH LENDER HEREBY WAIVES TRIAL BY JURY IN ANY JUDICIAL PROCEEDING
INVOLVING, DIRECTLY OR INDIRECTLY, ANY MATTER (WHETHER SOUNDING IN TORT,
CONTRACT OR OTHERWISE) IN ANY WAY ARISING OUT OF, RELATED TO, OR CONNECTED WITH
ANY LOAN PAPER OR THE RELATIONSHIP ESTABLISHED THEREUNDER.
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THE REMAINDER OF THIS PAGE IS INTENTIONALLY LEFT BLANK.
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IN WITNESS WHEREOF, this Second Amendment to Amended and Restated
Credit Agreement is executed as of the date first set forth above.
GCI HOLDINGS, INC.
/s/
By: John M. Lowber
Its: Secretary/Treasurer
NATIONSBANK, N.A. (successor by merger to
NationsBank of Texas, N.A.), Individually
as a Lender and as Administrative Agent
/s/
By: Whitney Busse
Its: Vice President
CREDIT LYONNAIS NEW YORK BRANCH, as
Documentation Agent and Individually as a
Lender
/s/
By: Mark D. Thorsheim
Its: Vice President
TD SECURITIES (USA), INC., as Syndication
Agent
/s/
By:
Its:
TORONTO DOMINION (TEXAS), INC.,
Individually as a Lender
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/s/
By: Debbie A. Greene
Its: Vice President
COBANK, ACB, Individually as a Lender
/s/
By: Teresa L. Fountain
Its: Assistant Corporate Secretary
By:
Its:
BANQUE PARIBAS, Individually as a Lender
/s/
By: Thomas Brandt
Its: Director
/s/
By: Parlynn Ernst
Its: Asst. Vice President
GENERAL ELECTRIC CAPITAL CORPORATION,
Individually as a Lender
/s/
By: Edward Smith Christie
Its: Manager-Operations
THE LONG-TERM CREDIT BANK OF JAPAN, LTD.,
LOS ANGELES AGENCY, Individually as a
Lender
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/s/
By: Noboru Akahane
Its: Deputy General Manager
UNION BANK OF CALIFORNIA, N.A.,
Individually as a Lender
/s/
By: Sonia L. Isaacs
Its: Vice President
BANK OF HAWAII, Individually as a Lender
/s/
By: Elizabeth O. MacLean
Its: Vice President
THE BANK OF NEW YORK, Individually as a
Lender
/s/
By: Gerry Granovsky
Its: Vice President
BANQUE NATIONALE DE PARIS, Individually
as a Lender
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/s/
By: Serge Desrayaud
Its: Vice President
/s/
By: Marcus C. Jones
Its: Vice President
CITY NATIONAL BANK, Individually as a
Lender
/s/
By: Rod Bollins
Its: Vice President
FIRST NATIONAL BANK OF MARYLAND,
Individually as a Lender
/s/
By: Christopher L. Smith
Its: Vice President
FLEET NATIONAL BANK, Individually as a
Lender
/s/
By: Chris Swindell
Its: Vice President
THE FUJI BANK, LIMITED, LOS ANGELES
AGENCY, Individually as a Lender
/s/
By: Masahito Fukuda
Its: Joint General Manager
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THE SUMITOMO BANK, LIMITED, Individually
as a Lender
/s/
By: John C. Kissinger
Its: Joint General Manager
NATIONAL BANK OF ALASKA, Individually as
a Lender
/s/
By: Patricia Jelley Benz
Its: Vice President
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SCHEDULE 1.01B
AUSP FINANCING AGREEMENTS; PROJECT AGREEMENTS
Credit and Security Agreement dated as of January 27, 1998, among
Alaska United Fiber System Partnership as Borrower, and the Lenders referred to
therein, and Credit Lyonnais New York Branch as Administrative Agent,
NationsBank of Texas, N.A. as Syndication Agent and TD Securities (USA) Inc. as
Documentation Agent.
Completion Guaranty dated as of January 27, 1998, by GCI Holdings,
Inc., as Guarantor in favor of Credit Lyonnais New York Branch as Administrative
Agent for the Lenders referred to therein.
Subordination Agreement dated as of January 27, 1998, among Alaska
United Fiber System Partnership, GCI Holdings, Inc., GCI Transport Co., Inc.,
and Credit Lyonnais New York Branch as Administrative Agent for the Lenders
referred to therein.
Operation and Maintenance Contract dated as of January 27, 1998,
between Alaska United Fiber System Partnership and GCI Communication Corp.
Depositary Agreement dated as of January 27, 1998, between Alaska
United Fiber System Partnership and Credit Lyonnais New York Branch as
Administrative Agent for the Lenders referred to therein.
Intercompany Notes by Alaska United Fiber System Partnership to the GCI
Holdings, Inc.
Lease Agreement dated as of January 27, 1998, between GCI Communication
Corp. as Lessee, and Alaska United Fiber System Partnership as Lessor.
Lease Guaranty Agreement dated as of January 27, 1998, among GCI
Holdings, Inc., Alaska United Fiber System Partnership and Credit Lyonnais New
York Branch as Administrative Agent.
Operating Keep Well Agreement dated as of January 27, 1998, among GCI
Holdings, Inc., Alaska United Fiber System Partnership, and Credit Lyonnais New
York Branch as Administrative Agent.
Subordination Agreement dated as of January 27, 1998, among GCI Cable,
Inc., Credit Lyonnais New York Branch, as Administrative Agent under the AUSP
Credit Agreement, and NationsBank of Texas, N.A., as Administrative Agent.
Subordination Agreement dated as of January 27, 1998, among Alaska
United Fiber System Partnership, Credit Lyonnais New York Branch, as
Administrative Agent under the AUSP Credit Agreement, and NationsBank of Texas,
N.A., as Administrative Agent.
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