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WAIVER AND AMENDMENT NO. 5
TO
LOAN AND SECURITY AGREEMENT
THIS WAIVER AND AMENDMENT NO. 5 ("Amendment") is entered into as of
October 22, 1999, by and among Let's Talk Cellular & Wireless, Inc., a
corporation organized under the laws of the State of Florida ("LTC"), Telephone
Warehouse, Inc., a corporation organized under the laws of the State of Delaware
("TWI"), National Cellular, Incorporated, a corporation organized under the laws
of the State of Texas ("NCI"), Cellular USA, a corporation organized under the
laws of the State of Nevada ("USA") and Sosebee Enterprises, Inc., a corporation
organized under the laws of the State of Georgia ("SEI") (LTC, TWI, NCI, USA and
SEI, each a "Borrower" and jointly and severally, the "Borrowers"), the
undersigned financial institutions (each, a "Lender" and collectively, the
"Lenders") and The Chase Manhattan Bank, a corporation organized under the laws
of the State of New York ("Chase") as agent for Lenders (Chase in such capacity,
the "Agent").
BACKGROUND
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Borrowers, Agent and Lenders are parties to a Loan and Security
Agreement dated as of April 2, 1998 (as amended, restated, supplemented or
otherwise modified from time to time, the "Loan Agreement"), pursuant to which
Agent and Lenders provide Borrowers with certain financial accommodations.
Borrowers have requested that Agent and Lenders amend certain
provisions of the Loan Agreement and waive certain financial covenant defaults
that have occurred and Agent and Lenders are willing to do so on the terms and
conditions hereafter set forth.
NOW, THEREFORE, in consideration of any loan or advance or grant of
credit heretofore or hereafter made to or for the account of Borrowers by Agent
and Lenders, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. DEFINITIONS. All capitalized terms not otherwise defined herein
shall have the meanings given to them in the Loan Agreement.
2. WAIVER. Subject to satisfaction of the conditions precedent set
forth in Section 4 below, Agent and Lenders hereby waives the Event of Default
which has occurred as a result of Borrowers' non-compliance with (a) Section
7.19 of the Loan Agreement at the end of the fiscal quarter ended July 31, 1999
with respect to the immediately preceding four fiscal quarter period to the
extent the non-compliance with such Section occurred prior to such period and
(b) Section 7.21 of the Loan Agreement at the end of the fiscal quarter ended
July 31, 1999 with respect to the immediately preceding four fiscal quarter
period to the extent the non-compliance with such Section occurred prior to such
period.
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3. AMENDMENTS TO LOAN AGREEMENT. Subject to satisfaction of the
conditions precedent set forth in Section 4 below, the Loan Agreement is hereby
amended as follows:
(a) Section 1.2 of the Loan Agreement is hereby amended as
follows:
(i) the following defined terms are added in their
appropriate alphabetical order:
"AMENDMENT NO. 5" shall mean Amendment No. 5 to this Agreement
dated as of October 22, 1999.
"AMENDMENT NO. 5 EFFECTIVE DATE" shall mean the date on which
all of the conditions precedent contained in Section 4 of Amendment No.
5 shall have been satisfied.
"CUMULATIVE COMMITMENT PERCENTAGE" of any Lender shall mean
the percentage set forth below such Lender's name on the signature page
of Amendment No. 5 as same may be adjusted upon any assignment by a
Lender pursuant to Section 16.3(b) hereof.
(ii) the definition of "Applicable Margin" is amended
in its entirety to provide as follows:
"APPLICABLE MARGIN" shall mean (I) from the Amendment No. 5
Effective Date through April 30, 2000 (a) 1.75% with respect to
Domestic Rate Loans and (b) 3.50% with respect to Eurodollar Rate
Loans, and (II) thereafter for any fiscal quarter commencing with the
fiscal quarter ending July 31, 2000 shall be determined by the Leverage
Ratio at the end of such fiscal quarter with respect to the four fiscal
quarters then ended and shall be subject to adjustment from time to
time as set forth in Section 3.1. If any Borrower shall complete a
Permitted Acquisition, the EBITDA of such Permitted Acquisition shall
be included on a proforma basis for the four (4) fiscal quarters then
being tested when calculating the Leverage Ratio for the purposes of
determining the Applicable Margin. The Applicable Margin with respect
to Eurodollar Rate Loans and Domestic Rate Loans, as the case may be,
shall be the percentage set forth below as corresponds to the
applicable ratio set forth below:
Domestic Eurodollar
Rate Margin Rate Margin
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LEVERAGE RATIO
Equal to or greater than 2.50 to 1.00 1.75% 3.50%
Equal to or greater than 2.25 to 1.00 but 1.50% 3.25%
less than or equal to 2.49 or 1.00
Equal to or greater than 2.00 to 1.00 but 1.25% 3.00%
less than or equal to 2.24 to 1.00
Equal to or greater than 1.75 to 1.00 but 1.00% 2.75%
less than or equal to 1.99 to 1.00
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Equal to or greater than 1.50 to 1.00 but .75% 2.50%
less than 1.74 to 1.00
Equal to or greater than 1.25 to 1.00 but .50% 2.25%
less than 1.49 to 1.00
Less than 1.25 to1.00 .25% 2.00%
(iii) the definition of "Commitment Percentage" is
hereby amended in its entirety to provide as follows:
"COMMITMENT PERCENTAGE" of any Lender shall mean (i) with
respect to the Term Loan, 25% for each Lender, (ii) with respect to
Advances other than the Term Loan (x) with respect to the first
$13,500,000 of such Advances which are outstanding at any time or from
time to time, 25% for each Lender, and (y) with respect to such
Advances which are in excess of $13,500,000 which are outstanding from
time to time, 0% as to NationsBank, N.A., and 33.33% for each other
Lender, in each case as same may be adjusted upon any assignment by a
Lender pursuant to Section 16.3(b) hereof.
(iv) the definition of "Maximum Revolving Advance
Amount" is hereby amended by deleting "$13,500,000" and inserting the following
in its place and stead: "(a) $16,500,000 from the Amendment No. 5 Effective Date
through and including October 29, 1999 and (b) $13,500,000 from and after
October 30, 1999."
(v) the definition of "Required Lenders" is hereby
amended by (a) deleting "Commitment Percentages" wherever it appears and
inserting "Cumulative Commitment Percentages" in its place and stead and (b)
deleting "fifty one (51%) percent" and inserting "sixty six and two thirds (66
2/3%) percent in its place and stead.
(b) Section 2.1(y)(ii)(B) of the Loan Agreement is hereby
amended in its entirety to provide as follows:
"(B) (a) $10,000,000 for the period beginning on
September 30, 1999 and ending on December 30, 1999, (b) $9,000,000 for
the period beginning December 31, 1999 and ending on January 30, 2000,
(c) $8,000,000 for the period beginning January 31, 2000 and ending on
February 27, 2000, (d) $7,000,00 for the period beginning February 28,
2000 and ending on March 30, 2000 and (e) $6,000,000 from and after
March 31, 2000."
(c) A new Section 2.9(f) is hereby added to the Loan Agreement
which provides as follows:
"(f) Anything in this Agreement to the contrary
notwithstanding, repayments of Revolving Advances shall be deemed
applied first to Revolving Advances which are in excess of $13,500,000
and second to the balance of Revolving Advances which are outstanding at
the time of any such repayment.
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(d) New Sections 2.10(a)(iv) and (v) are hereby added to the
Loan Agreement which provides as follows:
"(iv) In the event that LTC shall enter into an
agreement with a potential investor ("Investor") pursuant to which
Investor (i) purchases up to $7,500,000 of Capital Stock of LTC for a
cash purchase price of $7,500,000 (the "Investment") and /or (ii)
obtains an option to purchase all or substantially all of the issued
and outstanding shares of Capital Stock of LTC owned by HIG in
consideration of the payment of monies to LTC and/or HIG (the "Option
Price"), Borrowers shall repay the Advances in an amount equal to the
lesser of (x) the amount of the Investment and/or the Option Payment
and (y) $3,000,000, such repayments to be made promptly but in no event
more than one (1) Business Day following receipt of the Investment
and/or Option Payment from Investor, and until the date of payment,
such portion of the Investment and/or Option Payment shall be held in
trust for Agent. Such repayment shall be applied to the outstanding
Revolving Advances and the Maximum Revolving Advance Amount shall be
automatically and permanently reduced by an amount equal to such
repayment."
"(v) In the event that LTC shall sell, assign or
transfer all or substantially all of the shares of common stock of
[INSERT NAME] owned by LTC, Borrowers shall repay the Advances in an
amount equal to the Net Proceeds of the sale of such stock, such
repayments to be made promptly but in no event more than one (1)
Business Day following receipt of such Net Proceeds and until the date
of payment, the Net Proceeds shall be held in trust for Agent. Such
repayment shall be applied to the outstanding Revolving Advances and
the Maximum Revolving Advances Amount shall be automatically and
permanently reduced by an amount equal to such repayment."
(e) Section 3.1 is hereby amended by deleting "July 31, 1998"
and inserting "July 31, 2000" in its place and stead.
(f) Section 3.2 is hereby amended by deleting "three-eighths
of one percent (.375%") and inserting "one half of one percent (.50%)" in its
place and stead.
(g) A new Section 6.13 is hereby added to the Loan Agreement
and shall read as follows:
"6.13 WARRANTS AND NOTES. On or before October 29,
1999, Borrowers shall deliver the following to Agent: (a) Warrants issued to
Agent in form and substance satisfying to Agent representing Agent's right to
purchase Capital Stock of LTC in an amount designated in the Term Sheet dated as
of October ___, 1999 entered into between Borrowers and Agent, which warrants
shall contain registration rights, put rights, tag-a-long rights, anti-dilution
provisions, and such other terms and conditions as shall be acceptable to Agent
including, without limitation, the right to cashless exercise and (b) duly
executed amended and restated Revolving Credit Notes for each Lender, in an
amount equal to the applicable each Lender's Commitment Percentage of Revolving
Advances."
(h) Each Lender's Commitment Percentage shall be amended to
read as set forth below its signature to Amendment No. 5.
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4. CONDITIONS OF EFFECTIVENESS. This Amendment shall become effective
upon satisfaction of the following conditions precedent: Agent shall have
received (i) four (4) copies of this Amendment executed by each Borrower and
each Lender, (ii) a non-refundable amendment fee for benefit of all Lenders in
the amount of $163,750, (iii) a non-refundable structuring fee for the benefit
of all Lenders other than NationsBank, N.A. of $75,000, (iv) payment of all fees
specified in the Fee Letter dated this date, among Borrowers and Agent, in
accordance with term sheets, (v) an Inducement Agreement duly executed by HIG in
form and substance satisfactory to Agent evidencing HIG's obligation to make a
cash capital contribution to LTC on or before March 1, 2000 and (vi) such other
certificates, instruments, documents, agreements and opinions of counsel as may
be required by Agent, Lenders or their counsel, each of which shall be in form
and substance satisfactory to Agent, Lenders and their counsel.
5. REPRESENTATIONS AND WARRANTIES. Borrowers hereby represent and
warrant as follows:
(a) This Amendment and the Loan Agreement, as amended hereby,
constitute legal, valid and binding obligations of Borrowers and are enforceable
against Borrowers in accordance with their respective terms.
(b) Upon the effectiveness of this Amendment, Borrowers hereby
reaffirm all covenants, representations and warranties made in the Loan
Agreement to the extent the same are not amended hereby and agree that all such
covenants, representations and warranties shall be deemed to have been remade as
of the effective date of this Amendment.
(c) No Event of Default or Default has occurred and is
continuing or would exist after giving effect to this Amendment.
(d) Borrowers have no defense, counterclaim or offset with
respect to the Loan Agreement.
6. EFFECT ON THE LOAN AGREEMENT.
(a) Upon the effectiveness of this Amendment, each reference
in the Loan Agreement to "this Agreement," "hereunder," "hereof," "herein" or
words of like import shall mean and be a reference to the Loan Agreement as
amended hereby.
(b) Except as specifically amended herein, the Loan Agreement,
and all other documents, instruments and agreements executed and/or delivered in
connection therewith, shall remain in full force and effect, and are hereby
ratified and confirmed.
(c) The execution, delivery and effectiveness of this
Amendment shall not operate as a waiver of any right, power or remedy of Lender,
nor constitute a waiver of any provision of the Loan Agreement, or any other
documents, instruments or agreements executed and/or delivered under or in
connection therewith.
7. GOVERNING LAW. This Amendment shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns and
shall be governed by and construed in accordance with the laws of the State of
New York.
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8. HEADINGS. Section headings in this Amendment are included herein for
convenience of reference only and shall not constitute a part of this Amendment
for any other purpose.
9. COUNTERPARTS. This Amendment may be executed by the parties hereto
in one or more counterparts, each of which shall be deemed an original and all
of which when taken together shall constitute one and the same agreement.
IN WITNESS WHEREOF, this Amendment has been duly executed as of the day
and year first written above.
LET'S TALK CELLULAR & WIRELESS, INC.
By: /s/ Daniel Cammarata
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Name: Daniel Cammarata
Title: CFO
TELEPHONE WAREHOUSE, INC.
By: /s/ Daniel Cammarata
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Name: Daniel Cammarata
Title: CFO
NATIONAL CELLULAR INCORPORATED
By: /s/ Daniel Cammarata
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Name: Daniel Cammarata
Title: CFO
CELLULAR USA
By: /s/ Daniel Cammarata
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Name: Daniel Cammarata
Title: CFO
(Signatures Continued On Following Page)
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SOSEBEE ENTERPRISES, INC.
By: /s/ Daniel Cammarata
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Name: Daniel Cammarata
Title: CFO
THE CHASE MANHATTAN BANK, as Agent and a
Lender
By: /s/ Paula C. Cummings
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Name: Paula C. Cummings
Title: Vice President
Cumulative Commitment Percentage: 25.58%
NATIONSBANK, N.A., Lender
By: /s/ Oscar A. Bruni
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Name: Oscar A. Bruni
Title: Vice President
Cumulative Commitment Percentage: 23.26%
IBJ WHITEHALL BANK & TRUST COMPANY, Lender
By: /s/ Patricia G. McCormack
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Name: Patricia G. McCormack
Title: Director
Cumulative Commitment Percentage: 25.58%
MERRILL LYNCH BUSINESS FINANCIAL
SERVICES, Lender
By: /s/ Hugh E. Johnson
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Name: Hugh E. Johnson
Title: Vice President
Cumulative Commitment Percentage: 25.58%
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