EXHIBIT 10.4
THIRD AMENDMENT AND WAIVER
THIRD AMENDMENT AND WAIVER (this "Amendment"), dated as of January
12, 2000, among MJD COMMUNICATIONS, INC., a Delaware corporation (the
"Borrower"), the lenders from time to time party to the Credit Agreement
referred to below (the "Lenders"), BANK OF AMERICA, N.A. (f/k/a Bank of America
National Trust and Savings Association, successor by merger to Bank of America,
N.A., f/k/a NationsBank, N.A., successor by merger to NationsBank of Texas,
N.A.), as Syndication Agent (the "Syndication Agent"), and BANKERS TRUST
COMPANY, as Administrative Agent (the "Administrative Agent" and together with
the Syndication Agent, collectively, the "Agents"). Unless otherwise indicated,
all capitalized terms used herein and not otherwise defined shall have the
respective meanings provided such terms in the Credit Agreement referred to
below.
W I T N E S S E T H:
WHEREAS, the Borrower, the Lenders and the Agents are parties to a
Credit Agreement, dated as of March 30, 1998, as amended pursuant to the First
Amendment thereto dated as of April 30, 1998 and the Second Amendment thereto
dated as of May 14, 1999 (as hereinafter modified, amended or supplemented from
time to time, the "Credit Agreement");
WHEREAS, the Borrower has advised the Lenders that it intends to
consummate an equity financing (the "Financing") pursuant to which it will raise
up to approximately $148 million, of which approximately $78 million will be
raised from the sale of the Borrower's equity securities to Xxxxxx X. Xxx
Partners, L.P. and its affiliates and approximately $70 million will be raised
from the sale of the Borrower's equity securities to affiliates of Xxxxx &
Company ("Xxxxx");
WHEREAS, the Borrower has also advised the Lenders that it desires
to use up to approximately $130 million of the proceeds from the Financing to
fund further expansion by its subsidiary, FairPoint Communications Corp.
("FairPoint") and to pay transaction and related fees and expenses
(collectively, the "Transactions"); and
WHEREAS, in connection with the consummation of the proposed
Transactions and with respect to the other matters discussed herein, the
Borrower has requested that the Lenders and the Agents (i) amend certain
provisions of the Credit
Agreement and (ii) waive compliance with Sections 7.02, 7.05, 7.06 and 7.10 of
the Credit Agreement on the terms and conditions contained herein;
NOW, THEREFORE, it is agreed:
1. Section 6.07 of the Credit Agreement is hereby amended by:
(a) adding the words "except as set forth in Annex IV" after
the word "Borrower" and before the words "any Subsidiary" in the thirtieth
line of such Section; and
(b) adding the words "(other than any PBGC Form 1)" after
the words "copies of any records, documents or other information required
to be furnished to the PBGC" in the third sentence thereof.
2. Section 7.04 of the Credit Agreement is hereby amended by:
(a) deleting the number "2,000,000" in subsection (c)
thereof and inserting the number "10,000,000" in lieu thereof; and
(b) deleting the number "1,000,000" in subsection (m) each
time it appears in such subsection and inserting the number "$5,000,000"
in lieu thereof.
3. Section 7.05 of the Credit Agreement is hereby amended by
deleting the number "30%" contained in clause (ii) of subsection (a) thereof and
substituting the number "50%" in lieu thereof.
4. Section 7.10 of the Credit Agreement is hereby amended by
deleting clause (iv) contained therein and substituting the following clause
(iv) in lieu thereof:
"(iv) so long as no Default or Event of Default exists at the time
of such payment or would result therefrom, (A) advisory fees paid to Xxxxx
and THL (or their Affiliates) during any fiscal year not to exceed the
greater of (x) $1.0 million or (y) 1.5% of Consolidated EBITDA for such
year and (B) the reimbursement of expenses to Xxxxx and THL (or their
Affiliates) during any fiscal year not to exceed $250,000 in the
aggregate,"
-2-
5. Section 9 of the Credit Agreement is hereby amended by:
(a) deleting the number "12,500" in the definition of
"Existing Warrants" contained therein and substituting the number
"12857.01" in lieu thereof;
(b) deleting the number "5%" contained in clause (iv) of the
definition of "Permitted Acquired Debt" contained therein and substituting
the number "10%" in lieu thereof;
(c) adding the words ", each THL Affiliate" after the words
"each Xxxxx Affiliate" in the definition of "Permitted Holders" contained
therein; and
(d) adding the following definitions in appropriate
alphabetical order:
"THL" shall mean THL Equity Advisors IV, LLC.
"THL Affiliate" shall mean THL, each investment fund
controlled by THL and certain parties that are related to THL that
are investing in the Borrower as part of the Financing.
6. All references in the Credit Agreement to MJD Partners, Inc.
are hereby deleted.
7. The Company is hereby permitted to reset to zero the amounts
used by it under the $40,000,000 basket provided by Section 7.02(f)(i) so that
such basket will be measured on an aggregate basis from the Third Amendment
Effective Date (as defined below).
8. Annex IV of the Credit Agreement is hereby amended and
restated as set forth in the attached Annex IV.
9. Effective as of the Third Amendment Effective Date, the
Lenders hereby waive compliance by the Borrower with (a) the Consolidation,
Merger, Sale or Purchase of Assets, etc. covenant set forth in Section 7.02 of
the Credit Agreement in order to permit ST Long Distance Ltd. to transfer the
capital stock of ST Long Distance, Inc. or to permit ST Long Distance, Inc. to
transfer certain of its assets to FairPoint; (b) the Advances, Investments and
Loans covenant set forth in Section 7.06 of the Credit
-3-
Agreement in order to permit the Borrower, following the closing of the
Financing, to invest up to approximately $130 million in FairPoint, whether as a
loan or through the purchase of common stock of FairPoint or otherwise; (c) the
Transactions with Affiliates covenant set forth in Section 7.10 of the Credit
Agreement in order to permit the Borrower to issue and sell up to approximately
$70 million of its equity securities to Xxxxx in the Financing; and (d) the
Capital Expenditures covenant set forth in Section 7.05 of the Credit Agreement
for the fiscal year ended December 31, 1999.
10. In order to induce the Lenders to enter into this Amendment,
the Borrower hereby (i) makes each of the representations, warranties and
agreements contained in Section 5 of the Credit Agreement and (ii) represents
and warrants that there exists no Default or Event of Default, in each case on
the Third Amendment Effective Date, both before and after giving effect to this
Amendment.
11. This Amendment is limited as specified and shall not
constitute a modification, acceptance or waiver of any other provision of the
Credit Agreement or any other Credit Document.
12. This Amendment may be executed in any number of counterparts
and by the different parties hereto on separate counterparts, each of which
counterparts when executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A complete set of
counterparts shall be lodged with the Borrower and the Administrative Agent.
13. THIS AMENDMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAW OF THE
STATE OF NEW YORK.
14. This Amendment shall become effective on the date (the "Third
Amendment Effective Date") when each of the Borrower and the Required Lenders
shall have signed a counterpart hereof (whether the same or different
counterparts) and shall have delivered (including by way of facsimile
transmission) the same to White & Case LLP, 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx
Xxxx, Xxx Xxxx 00000 Attention: Xxxx Xxxxxxxxx (facsimile number 212-354-8113).
15. From and after the Third Amendment Effective Date, all
references to the Credit Agreement in the Credit Agreement and the other Credit
Documents shall be deemed to be references to the Credit Agreement as modified
hereby.
-4-
IN WITNESS WHEREOF, each of the parties hereto has caused a
counterpart of this Amendment to be duly executed and delivered as of the date
first above written.
MJD COMMUNICATIONS, INC.
By: /s/ Xxxxxxx X. Xxxxx
--------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Vice President of Finance
BANKERS TRUST COMPANY, Individually
and as Administrative Agent
By: /s/ Xxxxx X. Le Fevre
--------------------------------------
Name: Xxxxx X. Le Fevre
Title: Director
BANK OF AMERICA, N.A.,
Individually and as Syndication Agent
By: /s/ Xxxxxx X. Xxxxxxxx
--------------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Vice President
COBANK, ACB
By: /s/ Xxxx Xxxxxxx
--------------------------------------
Name: Xxxx Xxxxxxx
Title: Vice President
FIRST UNION NATIONAL BANK
By: /s/ C. Brand Xxxxxxx
--------------------------------------
Name: C. Brand Xxxxxxx
Title: Vice President
PRIME INCOME TRUST
By: /s/ Xxxxxx Xxxxxxxx
--------------------------------------
Name: Xxxxxx Xxxxxxxx
Title: Vice President
XXXXXX FINANCIAL, INC.
By: /s/ X. Xxxxx Gailehugh
--------------------------------------
Name: X. Xxxxx Gailehugh
Title: Vice President
THE TRAVELERS INSURANCE COMPANY
By: /s/ Xxxxx X. Xxxxxxxx
--------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Investment Officer
UNION BANK OF CALIFORNIA, N.A.
By: /s/ Xxxxx X. Xxxxxx
--------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Assistant Vice President
CENTURA BANK
By: /s/ Xxxxxxx X. Xxxxx
--------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Corporate Banking Officer
THE CIT GROUP/EQUIPMENT
FINANCING, INC.
By: [illegible signature]
--------------------------------------
Name:
Title:
FLEET NATIONAL BANK
By: /s/ Xxxxxxx D. Rainie
--------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Managing Director
DELANO COMPANY
By: _____________________________
Name:
Title:
MEESPIERSON CAPITAL CORP.
By: /s/ Xxxxx X. Xxxxxxx Xx.
--------------------------------------
Name: Xxxxx X. Xxxxxxx Xx.
Title: Vice President
By: /s/ Xxxx X. Xxxxxxx
--------------------------------------
Name: Xxxx X. Xxxxxxx
Title: Executive Vice President
SENIOR DEBT PORTFOLIO
By BOSTON MANAGEMENT AND
RESEARCH, as Investment Manager
By: /s/ Payson X. Xxxxxxxxx
--------------------------------------
Name: Payson X. Xxxxxxxxx
Title: Vice President
OXFORD STRATEGIC INCOME FUND
By: /s/ Payson X. Xxxxxxxxx
--------------------------------------
Name: Payson X. Xxxxxxxxx
Title: Vice President
-9-
Annex IV
The following plans were the only plans maintained by MJD
Communications, Inc. or any of its Subsidiaries subject to Title IV of ERISA:
1. STE/NE Acquisition Corp. Pension Plan for Vermont
Employees of Transferred GTE Operations (Northland). This
plan was terminated in 1997 and the assets of the plan
have been distributed.
2. Chautaqua & Erie Telephone Corporation Management Pension Plan.
This plan was terminated in 1997 and the assets of the plan have
been distributed.
3. Pension Plan for Employees of Chautaqua & Erie Telephone
Corporation Union Pension Plan. This plan was terminated in 1997
and the assets of the plan have been distributed.
4. Taconic Telephone Corp. Union Employee Defined Benefit
Plan. Since the Closing of this Agreement, all assets
have been distributed.
5. Taconic Telephone Corp. Management Employee Defined
Benefit Plan. Since the Closing of this Agreement, all
assets have been distributed.
6. Retirement Plan for Employees of the Ellensburg Telephone
Company. Plan has been terminated and all assets have
been distributed.
7. Retirement Plan of Utilities Inc. and Associated Employers for
Utilities, Inc. Plan is in the termination process and the
assets are not fully distributed. The plan is over-funded and
the excess funding may result in a reversion of plan assets. If
the reversion occurs, the plan's sponsor will pay an excise tax
under Section 4980 of the Code.
8. Retirement Plan of Utilities, Inc. and Associated
Employers for Xxxxxxxx Telephone Company and China
Telephone Company. Plan is in the termination process and
the assets are not fully distributed. The plan is
over-funded and the excess funding may result in a
reversion of plan assets. If the reversion occurs, the
plan's sponsor will pay an excise tax under Section 4980
of the Code.
9. Retirement Plan of Utilities, Inc. and Associated Employers for
Telephone Service Company. Plan is in the termination process
and the assets are not fully distributed. The plan is
over-funded and the excess funding may result in a reversion of
plan assets. If the reversion occurs, the plan's sponsor will
pay an excise tax under Section 4980 of the Code.
The following outlines the retiree health benefits made available to
certain employees of MJD Communications, Inc. and its Subsidiaries:
1. Odin Telephone Exchange, Inc. has made available to retired
employees and surviving spouses of retired employees the ability
to purchase health care benefits at the group rate paid by the
company.
2. Chautaqua & Erie Telephone Corporation has made available to
retired management employees and surviving spouses of retired
management employees the ability to purchase health care
benefits at the group rate paid by the company. The Company also
provides that retired employees can purchase up to $20,000 of
life insurance coverage.
3. C-R Communications has made available retiree health benefits
that may be purchased by retired directors.
4. Big Xxxxx Telephone Inc. has made available to retired employees
and surviving spouses of retired employees the ability to
purchase health care benefits at the group rate paid by the
company.
5. Upon the acquisition of Northland Telephone Company of Maine and
Northland Telephone Company of Vermont, ST Enterprises, Ltd. has
agreed to provide reimbursements for the health benefits for
employees retiring after the age of 62 up to $1,000 and $150 per
year to be provided towards the cost of life insurance.
6. Taconic Telephone Corp. has made available to retired employees
and surviving spouses of retired employees the ability to
purchase health care benefits at the group rate paid by the
company.
