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EXHIBIT (c) 5.
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EXECUTION COPY
FOURTH AMENDMENT TO CREDIT AGREEMENT
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This FOURTH AMENDMENT TO CREDIT AGREEMENT (the "AMENDMENT"), dated as
of September 13, 1996, among PHONETEL TECHNOLOGIES, INC., an Ohio corporation
(the "BORROWER"), INTERNATIONALE NEDERLANDEN (U.S.) CAPITAL CORPORATION, a
Delaware corporation ("ING") and CERBERUS PARTNERS, L.P., a Delaware limited
partnership ("CERBERUS"), constituting all of the Lenders under the Credit
Agreement referenced below, and ING in its capacity as Agent for the Lenders (in
such capacity, the "AGENT").
W I T N E S S E T H:
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RECITALS:
A. The Borrower, the Lenders and the Agent have entered into a certain
Credit Agreement, dated as of March 15, 1996, as amended to the date hereof (the
"CREDIT AGREEMENT"). Capitalized terms used herein and not otherwise defined
shall have the meanings ascribed to such terms in the Credit Agreement.
B. The Borrower has requested an amendment to the Credit Agreement to
increase the amount of the Revolving B Loan Commitment Amount to $4,250,000.
C. The Borrower and its Subsidiaries have incurred Consolidated Capital
Expenditures for the months of May, June and July, 1996 in excess of the amounts
permitted under Section 6.2.5 of the Credit Agreement.
D. The Lenders are agreeable to amending the Credit Agreement to so
increase the Revolving B Loan Commitment Amount, and to waiving said defaults
under Section 6.2.5 of the Credit Agreement on the terms and conditions set
forth herein.
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. AMENDMENT TO SECTION 1.1. Section 1.1 of the Credit
Agreement is hereby amended by inserting the following definition in the
appropriate alphabetical order:
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"FOURTH AMENDMENT" means the Fourth Amendment to Credit
Agreement dated as of September 13, 1996, among the Borrower, ING,
Cerberus and ING in its capacity as Agent.
SECTION 2. AMENDMENT TO SECTION 1.1. Section 1.1 of the Credit
Agreement is hereby further amended by deleting the existing definitions of
"REVOLVING B LOAN COMMITMENT AMOUNT" and "REVOLVING B OVERADVANCE AMOUNT" and
substituting in lieu thereof the following, respectively:
"REVOLVING B LOAN COMMITMENT AMOUNT" means an amount
equal $4,250,000, as such amount may be reduced from time to time
pursuant to SECTION 3.3.4.
"REVOLVING B OVERADVANCE AMOUNT" means an amount
equal to $2,050,000, provided that from and after the earlier of
January 1, 1997 or the Amtel Closing Date such amount shall be reduced
by $50,000.
SECTION 3. AMENDMENT TO SECTION 3.4.4. Section 3.4.4 of the Credit
Agreement is hereby amended by inserting the following new subsection at the end
of such section:
"(e) The Revolving B Loan Commitment (and the Revolving B
Commitment Amount) shall be permanently reduced on each Monthly Payment
Date set forth below by the amount set forth opposite such Monthly
Payment Date:
MONTHLY PAYMENT DATE IN: AMOUNT
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March, 1997 $ 2,250,000
April, 1997 $ 222,222
May, 1997 $ 222,222
June, 1997 $ 222,222
July, 1997 $ 222,222
August, 1997 $ 222,222
September, 1997 $ 222,222
October, 1997 $ 222,222
November, 1997 $ 222,222
December, 1997 $ 222,224."
SECTION 4. AMENDMENT TO SECTION 6.1.1. Section 6.1.1 of the Credit
Agreement is hereby amended by deleting the "and" immediately following clause
(j) thereof, by
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deleting the period immediately following clause (k) thereof and by inserting
the following clauses at the end of such section:
"(l) no later than Thursday of each calendar week, a
detailed aged schedule, in a form satisfactory to the Required Lenders,
of all commissions payable by the Borrower and its Subsidiaries under
Telephone Placement Agreements or otherwise, as of the last Business
Day of the prior week; and
(m) no later than Thursday of each calendar week, a
detailed aged schedule, in a form satisfactory to the Required Lenders,
of all telephone charges and other amounts owing to local exchange
carriers, as of the last Business Day of the prior week."
SECTION 5. AMENDMENT TO SECTION 6.1. Section 6.1 of the Credit
Agreement is hereby amended by adding thereto the following new Section 6.1.19
as follows:
"SECTION 6.1.19. PAYMENT OF COMMISSIONS AND LOCAL
EXCHANGE CHARGES. The Borrower will, and will cause each Subsidiary to,
pay all commissions payable under Telephone Placement Agreements or
otherwise and all charges owing to local exchange carriers within
thirty (30) days of the date such commissions and charges are due and
payable."
SECTION 6. AMENDMENT TO SECTION 6.2.4. Section 6.2.4 of the Credit
Agreement is hereby amended by adding thereto at the end of said section the
following clause (i) as follows:
"(i) LIMITATIONS ON ADDITIONS TO PROPERTY, PLANT AND
EQUIPMENT AND PURCHASE OF INTANGIBLE ASSETS. The Borrower will
not permit the aggregate amount of additions to property,
plant and equipment plus the aggregate amount of additions to
intangible assets for the Borrower and its Subsidiaries during
any calendar month ending on or prior to December 31, 1997 to
exceed $75,000; PROVIDED, HOWEVER, that the Borrower may
consummate the Amtel Purchase.
SECTION 7. AMENDMENT TO SECTION 6.2.5. Section 6.2.5 of the Credit
Agreement is hereby amended by deleting said section in its entirety and
substituting in lieu thereof the following:
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"SECTION 6.2.5. CAPITAL EXPENDITURES. The Borrower will not, and
will not permit any Subsidiary to, make or commit to make any
Consolidated Capital Expenditures, except (a) the Borrower may
consummate the Amtel Purchase, (b) prior to December 31, 1997, the
Borrower and its Subsidiaries (other than the POA Group) may make
Consolidated Capital Expenditures solely for the installation,
maintenance (including purchase of replacement parts) and upgrade of
Telephones owned and in inventory as of September 13, 1996, and no such
Consolidated Capital Expenditures may be made to purchase new
Telephones, and (c) the Borrower and its Subsidiaries (other than the
POA Group) may make Consolidated Capital Expenditures during any Fiscal
Year commencing with the 1998 Fiscal Year provided (x) no Default or
Event of Default has occurred and is continuing, and (y) the aggregate
amount of Consolidated Capital Expenditures made during such Fiscal Year
does not exceed the amount set forth below opposite such Fiscal Year:
FISCAL YEAR AMOUNT
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1998 $4,250,000
1999 $4,325,000
PROVIDED, HOWEVER, that the Borrower and its Subsidiaries shall not make
or incur Consolidated Capital Expenditures prior to May 1, 1996 in
excess of $350,000 in the aggregate; PROVIDED, FURTHER, HOWEVER, that
POA may incur Capitalized Lease Liabilities pursuant to the POA Lease,
and POA may make and incur capital expenditures but only to the extent
necessary to maintain or replace Telephones and related equipment in
operation as of September 13, 1996; PROVIDED, FURTHER, HOWEVER, that the
Borrower and its Subsidiaries (other than the POA Group) may not make or
incur Consolidated Capital Expenditures in the calendar month
immediately following any calendar month where the Borrower and the
Subsidiaries (other than the POA Group) experience negative cash flow on
a consolidated basis (I.E., cash expenditures exceed cash revenues
during such calendar month); PROVIDED, FURTHER, HOWEVER, that
expenditures from insurance proceeds received upon the occurrence of a
Loss which are made to replace or repair damage to destroyed assets will
not be included in the foregoing calculation for the Fiscal Year such
replacement or repair was made."
SECTION 8. AMENDMENT TO SECTION 6.2. Section 6.2 of the Credit
Agreement is hereby amended by adding thereto the following new Section 6.2.22
as follows:
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"SECTION 6.2.22. ACQUISITION EXPENSES. The Borrower
shall not, and shall not permit any of its Subsidiaries to,
incur or agree to incur or reimburse any Person for any
expenses, or make any payment or deposit, in respect of or
related to the acquisition or proposed acquisition of assets or
stock of any Person or any transaction prohibited under SECTION
6.2.10 or SECTION 6.2.11 (any such acquisition or transaction, a
"PROSPECTIVE ACQUISITION") other than (a) any such expenses
incurred or payments or deposits made prior to September 13,
1996, and (b) any such expenses incurred or payments or deposits
made pursuant to agreements relating to the POA Purchase or the
Amtel Purchase; PROVIDED, HOWEVER that the Borrower may
reimburse Peter G. Graf for his reasonable travel and
entertainment expenses incurred to explore Prospective
Acquisitions. The Borrower shall have given notice to all
Persons entitled to be paid or reimbursed in respect of such
expenses (other than any such payable in connection with the POA
Purchase or the Amtel Purchase) that no amounts or expenses
accruing after September 13, 1996 shall be payable or
reimbursable by the Borrower or any of its Subsidiaries."
SECTION 9. REPRESENTATIONS, WARRANTIES AND COVENANTS. In order to
induce the Lenders and the Agent to enter into this Amendment and to consummate
the transactions contemplated herein, the Borrower hereby represents, warrants
and covenants to and with the Agent and each Lender as follows:
(a) as of the date hereof there exists no actual or, to the
best of Borrower's knowledge, threatened termination, cancellation or
limitation of the business relationship of the Borrower or any of its
Subsidiaries with any party to a Telephone Placement Agreement which
individually, or in the aggregate with any other such actual or
threatened terminations, cancellations or limitations of Telephone
Placement Agreements, could result in a Material Adverse Change;
(b) of the proceeds of the Revolving B Loans to be made on the
date hereof not less than $1,500,000 shall be used to pay the accounts
payable and commissions owed by the Borrower and its Subsidiaries which
are due and payable and identified by the Borrower to the Lenders as
priority payables on EXHIBIT A hereto (the "PRIORITY PAYABLES");
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(c) upon payment of the Priority Payables, no commission payable
under any Telephone Placement Agreement or otherwise in respect of a
Telephone in operation, and no charges billed by a local exchange
carrier, shall be more than 30 days past due;
(d) no later than three Business Days following the date hereof,
the Borrower shall have mailed or otherwise delivered payment in respect
of all Priority Payables, and shall have delivered to the Agent and the
Lenders a certificate from its General Counsel to the effect that it has
complied in all respects with the provisions of Section 9 of this
Amendment;
(e) upon effectiveness of this Amendment, no Default or Event of
Default shall exist under the Credit Agreement; and
(f) the breach of any representation, warranty or covenant set
forth in this Section 9 shall constitute an Event of Default under the
Credit Agreement.
SECTION 10. ACKNOWLEDGMENT OF DEFAULT AND WAIVER. The Borrower hereby
expressly acknowledges and agrees that it has been in default under the terms
Section 6.2.5 of the Credit Agreement as a result of Consolidated Capital
Expenditures made in the months of May, June and July, 1996, which followed
months where the Borrower and its Subsidiaries experienced negative cash flow on
a consolidated basis. The Borrower hereby requests that ING and Cerberus waive
such defaults by the Borrower under Section 6.2.5 of the Credit Agreement, and
ING and Cerberus hereby waive such defaults solely for the months of May, June
and July, 1996.
SECTION 11. AMENDMENT FEE. The Borrower agrees to pay to the Agent for
the ratable account of each Lender, an amendment fee in an amount equal to
$60,000 (the "AMENDMENT FEE"). The Amendment Fee shall be payable by the
Borrower upon the execution of this Amendment, and the Borrower hereby
irrevocably authorizes the Agent to deduct from the proceeds of a Borrowing of
Revolving B Loans to be made on the date of this Agreement in the amount of
2,000,000, the sum of $60,000 for the ratable account of each Lender as payment
in full of the Amendment Fee.
SECTION 12. CONTINUING EFFECTIVENESS OF CREDIT AGREEMENT. The Credit
Agreement and each of the other Loan Documents shall remain in full force and
effect in accordance with their respective terms, except as expressly amended or
modified by this Amendment.
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SECTION 13. COST AND EXPENSES. The Borrower agrees to pay all
reasonable out-of-pocket expenses of the Agent and each of the Lenders party to
this Amendment for the negotiation, preparation, execution and delivery of this
Amendment (including reasonable fees and expenses of counsel to the Agent and
such Lenders).
SECTION 14. EFFECTIVENESS. This Amendment shall become effective only
upon (i) receipt by the Agent of a copy of this Amendment, duly executed by each
of the Borrower, the Lenders and the Agent, and duly acknowledged and consented
to by the Subsidiaries of the Borrower party to the Subsidiary Guaranty, in the
form attached to this Amendment, (ii) receipt by each of ING and Cerberus of a
duly executed and delivered Revolving B Note in the amount of $2,125,000, (iii)
receipt by legal counsel to ING and Cerberus of payment for fees and expenses
incurred to date, and (iv) receipt by the Lenders and the Agent of an opinion
letter, dated the date hereof, from Skadden, Arps, Slate, Meagher & Flom,
counsel to the Borrower and its Subsidiaries, and Tammy L. Martin, General
Counsel to Borrower and its Subsidiaries, in the form of EXHIBIT B and EXHIBIT C
hereto, respectively.
SECTION 15. HEADINGS. The various headings of this Amendment are
inserted for convenience only and shall not affect the meaning or interpretation
of this Amendment or any provision hereof.
SECTION 16. COUNTERPARTS. This Amendment may be executed by the parties
hereto in several counterparts, each of which shall be executed by the Borrower,
the Lenders and the Agent and shall be deemed to be an original and all of which
shall constitute together but one and the same agreement.
SECTION 17. GOVERNING LAW. THIS AMENDMENT SHALL BE DEEMED TO BE A
CONTRACT MADE UNDER AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK.
SECTION 18. SUCCESSORS AND ASSIGNS. This Amendment shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and assigns; PROVIDED, HOWEVER, that the Borrower may not assign or
transfer its rights or obligations hereunder or under the Credit Agreement
except in accordance with the terms of the Credit Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
PHONETEL TECHNOLOGIES, INC.
By:_______________________________
Name:
Title:
[CORPORATE SEAL]
INTERNATIONALE NEDERLANDEN
(U.S.) CAPITAL CORPORATION, in its
capacity as Agent and Lender
By:_______________________________
James W. Latimer
Managing Director
CERBERUS PARTNERS, L.P.
By: CERBERUS ASSOCIATES, L.P.,
Its General Partner
By:_________________________
Name: Stephen Feinberg
Title: General Partner
[SIGNATURE PAGE TO FOURTH AMENDMENT TO CREDIT AGREEMENT]
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ACKNOWLEDGMENT AND CONSENT
The undersigned hereby acknowledge receipt of a copy of the foregoing
amendment, consent to the terms and provisions set forth therein, and agree that
the Subsidiary Guaranty dated as of March 15, 1996 (the "SUBSIDIARY GUARANTY")
made by each of the undersigned, jointly and severally, in favor of
Internationale Nederlanden (U.S.) Capital Corporation ("ING") and such other
Lenders as are, or may from time to time become, parties to the Credit
Agreement, and ING as Agent for such Lenders, will continue in full force and
effect without diminution or impairment notwithstanding the execution and
delivery of the amendment. The undersigned further acknowledge and agree that,
upon effectiveness of the amendment and from and after the date thereof, each
reference to the Credit Agreement in the Subsidiary Guaranty and each other Loan
Document (as such term is defined in the Credit Agreement) to which any of the
undersigned is a party shall mean and be a reference to the Credit Agreement as
amended by the foregoing amendment.
PUBLIC TELEPHONE CORPORATION
By:_______________________________
Name:
Title:
[CORPORATE SEAL]
WORLD COMMUNICATIONS, INC.
By:_______________________________
Name:
Title:
[CORPORATE SEAL]
[ACKNOWLEDGMENT AND CONSENT TO FOURTH AMENDMENT]
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NORTH FLORIDA TELEPHONE CORPORATION
By:_______________________________
Name:
Title:
[CORPORATE SEAL]
PARAMOUNT COMMUNICATIONS SYSTEMS, INC.
By:_______________________________
Name:
Title:
[CORPORATE SEAL]
PHONETEL III, INC.
By:_______________________________
Name:
Title:
[CORPORATE SEAL]
[ACKNOWLEDGMENT AND CONSENT TO FOURTH AMENDMENT]
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EXHIBIT A
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[List of Accounts Payable]
[TO BE PROVIDED BY PHONETEL TECHNOLOGIES]
A- 1
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EXHIBIT B
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[Form of Opinion of Skadden, Arps, Slate, Meagher & Flom]
B- 1
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EXHIBIT C
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[Form of Opinion of Tammy L. Martin]
C- 1