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EXHIBIT (c) 6.
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EXECUTION COPY
FIFTH AMENDMENT TO CREDIT AGREEMENT
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THIS FIFTH 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.
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 Revolving A Loan Commitment Amount from $6,000,000 to $7,250,000
and to increase the Revolving B Loan Commitment Amount from $4,250,000 to
$4,750,000 to provide sufficient funds to finance the cash portion of the
purchase price for substantially all of the assets of ACI-HDT Supply Company,
Amtel Communications Services, Inc., Amtel Communications Correctional
Facilities, Inc., Amtel Communications, Inc. and Amtel Communications Payphones,
Inc. (collectively, "AMTEL") pursuant to a certain Asset Purchase Agreement,
dated June 26, 1996, among the Borrower and Amtel, as amended by Amendment No.
1, dated June 26, 1996, as amended by Amendment No. 2, dated August 26, 1996
(the "AMTEL PURCHASE AGREEMENT").
C. The Lenders are agreeable to amending the Credit Agreement on the
terms and conditions set forth herein.
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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 deleting the definition of "Revolving A Loan
Commitment Amount" in its entirety and substituting in lieu thereof the
following:
"REVOLVING A LOAN COMMITMENT AMOUNT" means $7,250,000, as such
amount may be reduced from time to time pursuant to SECTION 3.3.4."
SECTION 2. AMENDMENT TO SECTION 1.1. Section 1.1 of the Credit
Agreement is hereby amended by deleting the definition of "Revolving B Loan
Commitment Amount" in its entirety and substituting in lieu thereof the
following:
"REVOLVING B LOAN COMMITMENT AMOUNT" means $4,750,000, as such
amount may be reduced from time to time pursuant to SECTION 3.3.4."
SECTION 3. AMENDMENT TO SECTION 3.4.4(E). Section 3.4.4(e) of the
Credit Agreement is hereby amended by deleting said section in its entirety and
substituting in lieu thereof the following:
"(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 $ 2,750,000
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."
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SECTION 4. AMENDMENT TO SECTION 3.9(B). Section 3.9(b) of the Credit
Agreement is hereby amended by deleting said section in its entirety and
substituting in lieu thereof the following:
"(b) Borrower shall use the proceeds of (i) Revolving A Loans
made after the Closing Date and prior to or on the Amtel Closing Date
only for the purpose of paying a portion of the cash consideration
required under the Amtel Purchase Agreement and for the payment of the
Amendment Fee payable pursuant to the Second Amendment, (ii) Revolving
A Loans made after the Amtel Closing Date to finance other acquisitions
(PROVIDED, HOWEVER, that this clause (ii) shall not be construed to
permit any acquisitions which are otherwise prohibited by the terms of
this Agreement or the other Loan Documents), (iii) Revolving B Loans
made on or after the effective date of the Third Amendment to finance
the funding of a $250,000 loan to be made by the Borrower to PhoneTel
III to be evidenced by the PhoneTel III Note; (iv) Revolving B Loans
made on the effective date of the Fourth Amendment to pay the Priority
Payables; (v) Revolving B Loans made on the effective date of the Fifth
Amendment for the purpose of paying a portion of the cash consideration
required under the Amtel Purchase Agreement; and (vi) the Revolving B
Loans made on and after the effective date of the Fifth Amendment to
finance its continuing working capital needs; PROVIDED, HOWEVER, that
the Revolving B Loans shall not be used to repay any other outstanding
Loan."
SECTION 5. AMENDMENT TO SECTION 5.21. Section 5.21 of the Credit
Agreement is hereby amended by deleting the first sentence thereof in its
entirety and substituting the following in lieu thereof:
"Set forth in ITEM 14 ("Contracts") of the Disclosure Schedule is an
accurate and complete list of all material Contractual Obligations of
the Borrower and its Subsidiaries as of the Amtel Closing Date."
SECTION 6. AMENDMENT TO SECTION 6.1.16. Section 6.1.16 is hereby
amended by deleting the period at the end of such section and inserting the
following:
"; PROVIDED, HOWEVER, that the Borrower shall be authorized to utilize
Telephone Placement Agreements assumed pursuant to the Amtel Purchase
Agreement with respect to the Payphone Operating Assets purchased
pursuant to the Amtel Purchase Agreement."
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SECTION 7. AMENDMENT TO SECTION 6.2.4. Section 6.2.4 of the Credit
Agreement is hereby amended by deleting said section in its entirety and
substituting in lieu thereof the following:
"SECTION 6.2.4. FINANCIAL CONDITION. The Borrower hereby
covenants and agrees as set forth below:
(a) FIXED CHARGE COVERAGE RATIO. The Borrower will
not permit its Fixed Charge Coverage Ratio for the
twelve-month period ending on the last day of any Fiscal
Quarter to be less than the ratio set forth opposite such
Fiscal Quarter (for each Fiscal Quarter ending prior to March
31, 1997, such ratio to be calculated as provided in clause
(h) of this SECTION 6.2.4):
FISCAL QUARTER ENDING: RATIO
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June 30, 1996 0.4
September 30, 1996 0.8
December 31, 1996 0.9
March 31, 1997 1.0
June 30, 1997 1.3
September 30, 1997 1.6
December 31, 1997 1.8
March 31, 1998 1.9
June 30, 1998 1.9
September 30, 1998 2.0
December 31, 1998 2.0
March 31, 1999 2.1
June 30, 1999 2.2.
(b) EBITDA. The Borrower will not permit EBITDA of
the Borrower and its Subsidiaries for the twelve-month period
ending on the last day of any Fiscal Quarter to be less than
the amount set forth opposite such Fiscal Quarter (for each
Fiscal Quarter ending prior to March 31, 1997, such amount to
be calculated as provided in clause (h) of this SECTION
6.2.4):
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FISCAL QUARTER ENDING: AMOUNT
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June 30, 1996 $ 875,000
September 30, 1996 3 ,028,000
December 31, 1996 6,233,000
March 31, 1997 9,284,000
June 30, 1997 13,213,000
September 30, 1997 16,322,000
December 31, 1997 20,013,000
March 31, 1998 20,706,000
June 30, 1998 21,637,000
September 30, 1998 22,505,000
December 31, 1998 23,394,000
March 31, 1999 23,853,000
June 30, 1999 24,531,000.
(c) CURRENT RATIO. The Borrower will not permit the
Current Ratio of the Borrower and its Subsidiaries on the last
day of any Fiscal Quarter to be less than 0.6.
(d) TANGIBLE NET WORTH. The Borrower will not permit
its Tangible Net Worth on the last day of any Fiscal Quarter
to be less than the amount set forth opposite such Fiscal
Quarter:
FISCAL QUARTER ENDING: AMOUNT
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June 30, 1996 ($9,775,000)
September 30, 1996 (9,170,000)
December 31, 1996 (14,070,000)
March 31, 1997 (13,626,000)
June 30, 1997 (11,326,000)
September 30, 1997 (8,558,000)
December 31, 1997 (4,144,000)
March 31, 1998 (2,750,000)
June 30, 1998 650,000
September 30, 1998 4,454,000
December 31, 1998 9,928,000
March 31, 1999 11,936,000
June 30, 1999 16,170,000
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(e) SENIOR INTEREST COVERAGE RATIO. The Borrower will
not permit the Senior Interest Coverage Ratio of the Borrower
and its Subsidiaries for the twelve-month period ending on the
last day of any Fiscal Quarter to be less than the ratio set
forth opposite such Fiscal Quarter (for each Fiscal Quarter
ending prior to March 31, 1997, such ratio to be calculated as
provided in clause (h) of this Section 6.2.4.):
FISCAL QUARTER ENDING: RATIO
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June 30, 1996 0.9
September 30, 1996 1.6
December 31, 1996 1.7
March 31, 1997 1.9
June 30, 1997 2.7
September 30, 1997 3.2
December 31, 1997 4.1
March 31, 1998 4.4
June 30, 1998 4.7
September 30, 1998 5.1
December 31, 1998 5.4
March 31, 1999 5.7
June 30, 1999 6.0.
(f) MINIMUM GROSS MARGIN PERCENTAGE - NON-COIN CALLS.
The Borrower will not permit the Minimum Gross Margin
Percentage - Non-Coin Calls for the twelve-month period ending
on the last day of any Fiscal Quarter to be less than the
percentage set forth opposite such Fiscal Quarter (for each
Fiscal Quarter ending prior to March 31, 1997, such percentage
to be calculated as provided in clause (h) of this Section
6.2.4.):
FISCAL QUARTER ENDING: PERCENTAGE
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June 30, 1996 55.2%
September 30, 1996 55.2%
December 31, 1996 55.3%
March 31, 1997 54.4%
June 30, 1997 55.0%
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September 30, 1997 55.7%
December 31, 1997 57.6%
March 31, 1998 57.7%
June 30, 1998 57.9%
September 30, 1998 58.1%
December 31, 1998 58.4%
March 31, 1999 58.2%
June 30, 1999 58.2%.
(g) MAXIMUM OVERHEAD EXPENSE. The Borrower will not
permit Maximum Overhead Expense of the Borrower and its
Subsidiaries for the twelve-month period ending on the last
day of any Fiscal Quarter to be more than the amount set forth
opposite such Fiscal Quarter (for each Fiscal Quarter ending
prior to March 31, 1997, such amount to be calculated as
provided in clause (h) of this Section 6.2.4.):
FISCAL QUARTER ENDING: AMOUNT
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June 30, 1996 $ 3,989,000
September 30, 1996 6,862,000
December 31, 1996 10,417,000
March 31, 1997 14,523,000
June 30, 1997 14,960,000
September 30, 1997 16,386,000
December 31, 1997 17,004,000
March 31, 1998 17,452,000
June 30, 1998 17,885,000
September 30, 1998 18,300,000
December 31, 1998 18,691,000
March 31, 1999 19,044,000
June 30, 1999 19,410,000.
(h) CALCULATIONS FOR STUB PERIODS. Notwithstanding
any thing contained herein to the contrary, for purposes of
determining compliance with clauses (a) through (g) of this
SECTION 6.2.4 for any period ending prior to March 31, 1997,
calculation of all items relating to income or expense
(including, without limitation, EBITDA) and increases or
decreases in working capital) shall be
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made for the period commencing on the Closing Date and
ending on the date of determination.
(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 8. AMENDMENT TO SECTION 6.2.5. Section 6.2.5 of the Credit
Agreement is hereby amended by deleting such section in its entirety and
substituting in lieu thereof the following:
"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 $6,636,000
1999 $6,841,000
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
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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 following calculation for the Fiscal Year such
replacement or repair was made."
SECTION 9. AMENDMENT TO ITEM 14 OF DISCLOSURE SCHEDULE. Item 14
("Contracts") of the Disclosure Schedule is hereby amended by deleting said Item
in its entirety and substituting the Contractual Obligations listed on EXHIBIT D
hereto.
SECTION 10. RELEASE OF LIENS ON PAYPHONE OPERATING ASSETS. The Borrower
hereby agrees to obtain and file of record in all appropriate jurisdictions,
within 90 days of the date of this Amendment, releases of lien, UCC-3
termination statements or other instruments as shall be suitable and legally
effective to evidence of record the release of all Liens on the Payphone
Operating Assets (as such term is defined in the Amtel Purchase Agreement),
other than the Liens in favor of the Agent for the benefit of the Lenders. The
Borrower further agrees that the failure to comply with this Section 10 shall
constitute an Event of Default under the Credit Agreement.
SECTION 11. SOLVENCY. The Borrower hereby represents and warrants that
after giving effect to the consummation of the transactions contemplated by the
Amtel Purchase Agreement and the consummation of the transactions contemplated
by this Agreement (including the making of Loans), the Borrower and each of its
Subsidiaries is Solvent.
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 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 in the form attached to this Amendment, (ii)
receipt by the Lenders of Revolving A Notes, dated the date hereof and duly
executed by the Borrower, in the principal amount equal to their respective
Revolving Percentages of the Revolving A Loan Commitment Amount (as such term is
modified by this Amendment), in replacement and substitution of the Revolving A
Notes, (iii) receipt by the Lenders of Revolving B Notes, dated the date hereof
and duly executed by the Borrower, in the principal amount equal to their
respective Revolving Percentages of the Revolving B Loan Commitment Amount (as
such term is modified by this Amendment), in replacement and substitution of the
Revolving B Notes, (iv) receipt by the Agent and the Lenders of (A) a
certificate regarding the location of the "Payphone Operating Assets" (as such
term is defined in the Amtel Purchase Agreement) acquired by the Borrower on the
Amtel Closing Date and other matters relative to the perfection of the Agent's
security interest in such assets, and (B) UCC-1 Financing Statements duly
executed by the Borrower for each jurisdiction where the filing thereof is
required to perfect such security interest, (v) 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, from Tammy L.
Martin, General Counsel to the Borrower and its Subsidiaries, in the form of
EXHIBIT A and EXHIBIT B hereto, respectively, (vi) evidence satisfactory to the
Agent and the Lenders that the Borrower is qualified to do business in the
jurisdictions listed on EXHIBIT C hereto; and (vii) receipt by legal counsel to
ING and Cerberus of payment for their fees and expenses incurred to date.
SECTION 15. OPINIONS OF LOCAL COUNSEL. Upon the request of any Lender,
the Borrower shall obtain an opinion of local counsel in any jurisdiction with
respect to the creation and perfection of the security interest of the Agent in,
and other matters relating to, the "Payphone Operating Assets" (as such term is
defined in the Amtel Purchase Agreement) located in such jurisdiction. Failure
of Borrower to obtain such opinion within 30 days of any such request shall
constitute an Event of Default under the Credit Agreement.
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SECTION 16. 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 17. 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 18. 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 19. 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
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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 as amended and supplemented
to the date hereof (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]
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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]
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EXHIBIT A
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[Form of Opinion]
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EXHIBIT B
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[Form of Opinion]
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EXHIBIT C
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Foreign Qualifications
Colorado
Oregon
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EXHIBIT D
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REVISED ITEM 14
[TO BE PROVIDED BY PHONETEL]