EXHIBIT 10.9
FIRST AMENDMENT
FIRST AMENDMENT (this "Amendment"), dated as of March 9, 2001, among
FAIRPOINT COMMUNICATIONS SOLUTIONS CORP., a Delaware corporation (the
"Borrower"), the lenders party to the Credit Agreement referred to below (each,
a "Lender" and, collectively, the "Lenders") and FIRST UNION NATIONAL BANK, as
Administrative Agent (in such capacity, the "Administrative Agent"). Unless
otherwise defined herein, capitalized terms used herein and defined in the
Credit Agreement referred to below are used as so defined.
W I T N E S S E T H :
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WHEREAS, the Borrower, the Lenders and the Administrative Agent have
entered into a Credit Agreement, dated as of October 20, 1999, as amended and
restated as of March 27, 2000, and as further amended and restated as of
November 9, 2000 (the "Credit Agreement"); and
WHEREAS, subject to the terms and conditions set forth below, the parties
hereto wish to amend the Credit Agreement as provided herein;
NOW, THEREFORE, it is agreed;
A. AMENDMENTS
1. The definition of the term "Consolidated EBITDA" contained in
Section 1 of the Credit Agreement is hereby amended to read in its entirety as
follows:
"Consolidated EBITDA" shall mean, for any period, the sum of the
amounts for such period of, without duplication, (i) Consolidated Net Income,
(ii) provisions for taxes based on income, (iii) Consolidated Interest Expense,
(iv) the non-cash portion of any retirement, pension plan or deferred
compensation expense incurred by the Borrower or any of its Subsidiaries, (v)
depreciation expense, (vi) amortization expense including any amortization or
write-off related to the write-up of any assets as a result of purchase
accounting, (vii) Permitted Non-recurring Cash Restructuring Charges taken on or
after October 1, 2000 to the extent that such Permitted Non-recurring Cash
Restructuring Charges otherwise reduced Consolidated Net Income for such period,
and (viii) Permitted Non-recurring Non-cash Restructuring Charges taken on or
after October 1, 2000 to the extent that such Permitted Non-recurring Non-cash
Restructuring Charges otherwise reduced Consolidated Net Income for such period,
LESS the sum of (i) gains on sales of assets (excluding sales in the ordinary
course of business) and other extraordinary gains and other one-time non-cash
gains, all as determined on a consolidated basis in accordance with GAAP, and
(ii) any cash payment in such period that was made in respect of any non-cash
deferred compensation expense incurred in a previous period but only to the
extent that at or about the same time as such cash payment is made the Borrower
does not receive a cash reimbursement in a like amount; PROVIDED that
Consolidated EBITDA for any such period during
which a Permitted Acquisition was consummated or a disposition of a business was
effected shall be determined on a PRO FORMA basis as if such Permitted
Acquisition were consummated or disposition effected, as the case may be, on the
first day of such period; and PROVIDED FURTHER that, for purposes of calculating
compliance with Section 9.17 only, Consolidated EBITDA for any period also shall
be increased (to the extent not already increased pursuant to this definition)
by the amount of any cash income taxes recoverable by the Parent from the
Borrower pursuant to the Amended and Restated Tax Sharing Agreement during such
period and which are promptly thereafter contributed in cash to the Borrower
during such period.
2. The definitions of the terms "Consolidated Annualized Fixed
Charges," "Consolidated Gross PP&E" and "Consolidated Senior Debt to Gross PP&E
Ratio" contained in Section 1 of the Credit Agreement are hereby deleted in
their entirety.
3. The definition of the term "Phase I" contained in Section 1 of
the Credit Agreement is hereby amended to read in its entirety as follows:
"Phase I" shall mean the period from the Restatement Effective Date
through the earlier of (i) the date on which the Borrower submits a Compliance
Certificate indicating that the Borrower has achieved two consecutive fiscal
quarters of positive Consolidated EBITDA or (ii) the last day of the Borrower's
fiscal quarter ending September 30, 2003.
4. The definition of the term "Permitted Acquisition" contained in
Section 1 of the Credit Agreement is hereby amended to read in its entirety as
follows:
"Permitted Acquisition" shall mean any acquisition by the Borrower
or any Subsidiary Guarantor of a company, business, division or product line
located in the United States if (i) at least 10 Business Days prior to the
consummation of such acquisition, the Borrower shall deliver to the
Administrative Agent (A) a certificate of the Borrower's chief financial officer
certifying that (and showing calculations in reasonable detail) immediately
prior to, and after giving effect to, such acquisition all the covenants
contained in this Agreement (including Sections 9.11 through 9.17, inclusive),
shall be complied with on a PRO FORMA basis (as if the acquisition had been
consummated on the first day of the six month period then last ended) and (B)
projections (in reasonable detail) prepared by the Borrower and in form
consistent with previously delivered projections and in substance reasonably
satisfactory to the Administrative Agent, for the period from the date of the
consummation of such acquisition to the Final Maturity Date, calculated after
giving effect to such acquisition and demonstrating the Borrower's projected
compliance with all of the covenants contained in this Agreement (including
Sections 9.11 through 9.17 inclusive) as would be required to be complied with
so that no Default or Event of Default will exist under such covenants for the
period from the date of the consummation of such acquisition to the Final
Maturity Date and (ii) the acquired company, business, division or product line
is in the Business and, after giving effect to such acquisition, constitutes a
Subsidiary of, or (in the case of a business, division or product line) is owned
by, the Borrower or a Subsidiary thereof.
5. Section 1 of the Credit Agreement is hereby further amended by
inserting therein the following new defined terms in appropriate alphabetical
order:
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"First Amendment Effective Date" shall mean the First Amendment
Effective Date as defined in the First Amendment to this Agreement dated as of
March 9, 2001.
"Permitted Non-recurring Cash Restructuring Charges" shall mean
those non-recurring cash restructuring charges identified in, and up to the
aggregate amounts specified on, Part A of Annex XII hereto (including footnote 1
thereof) relating to the Borrower's plan to consolidate and scale back its
expansion as publicly announced on December 18, 2000 and January 5, 2001;
PROVIDED, HOWEVER, (i) in no event shall more than $39,000,000 of such charges
in the aggregate be added back to Consolidated Net Income during the term of
this Agreement and (ii) to the extent that less than $30,000,000 of such charges
are incurred on or before March 31, 2001, no more than $9,000,000 of such
charges in the aggregate may be added back to Consolidated Net Income as a
result of same being incurred after March 31, 2001.
"Permitted Non-recurring Non-cash Restructuring Charges" shall mean
those non-recurring non-cash restructuring charges identified in, and up to the
aggregate amounts specified on, Part B of Annex XII hereto (including footnote 2
thereof) relating to the Borrower's plan to consolidate and scale back its
expansion as publicly announced on December 18, 2000 and January 5, 2001;
PROVIDED, HOWEVER, (i) in no event shall more than $20,803,760 of such charges
in the aggregate be added back to Consolidated Net Income during the term of
this Agreement and (ii) to the extent that less than $16,000,000 of such charges
are incurred on or before March 31, 2001, no more than $4,803,760 of such
charges in the aggregate may be added back to Consolidated Net Income as a
result of same being incurred after March 31, 2001.
"Permitted Restructuring Charges" shall mean the Permitted
Non-recurring Cash Restructuring Charges and the Permitted Non-recurring
Non-cash Restructuring Charges.
6. Section 2.01(a)(iii) of the Credit Agreement is hereby deleted in
its entirety and the following new Section 2.01(a)(iii) is inserted in lieu
thereof:
"(iii) may not be incurred by the Borrower unless if, after
giving effect thereto, the Consolidated Senior Debt to
Capitalization Ratio is not greater than 50%,".
7. Section 2.01(b)(ii) of the Credit Agreement is hereby deleted in
its entirety and the following new Section 2.01(b)(ii) is inserted in lieu
thereof:
"(ii) may not be incurred by the Borrower unless if, after
giving effect thereto, the Consolidated Senior Debt to
Capitalization Ratio is not greater than 50%, and".
8. Section 3.01(b)(iv) of the Credit Agreement is hereby deleted in
its entirety and the following new Section 3.01(b)(iv) is inserted in lieu
thereof:
"(iv) the Consolidated Senior Debt to Capitalization Ratio is
greater than 50% after giving effect to such issuances of any
Letters of Credit."
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9. Section 4.03 of the Credit Agreement is hereby amended by (i)
redesignating clause (e) thereof as clause (f), and (ii) inserting the following
new clause (e) immediately after clause (d) thereof:
"(e) In addition to any other mandatory commitment reductions
pursuant to this Section 4.03, on the First Amendment Effective Date, the Total
Term Commitment shall be permanently reduced by $50,000,000."
10. Section 8.01(c)(B) of the Credit Agreement is hereby amended by
deleting the phrase "and Consolidated Senior Debt to Gross PP&E Ratio" appearing
therein.
Section 8.01(c) of the Credit Agreement is hereby further amended by
inserting the following new clause (C) at the end thereof:
"(C) Within 45 days after the close of each monthly accounting
period (commencing with the monthly accounting period ended January 31, 2001),
the financial data, computations and other matters required to establish the
Permitted Restructuring Charges added back to Consolidated EBITDA for such
monthly accounting period, all of which shall be certified by the chief
financial officer or vice president of finance of the Borrower, subject to
changes resulting from audit and normal year-end audit adjustments (it being
understood and agreed that (i) the first such report also shall include all such
Permitted Restructuring Charges taken as of December 31, 2000 and (ii) the
provisions of this clause (C) are in addition to the reporting of such Permitted
Restructuring Charges as part of the financial statements and officer's
certificate delivered pursuant to Sections 8.01(a), (b) and (e))."
11. Section 9.05(a) of the Credit Agreement is hereby amended to
read in its entirety as follows:
"9.05 CAPITAL EXPENDITURES. (a) The Borrower will not, and will not
permit any of its Subsidiaries to, make any Consolidated Capital Expenditures,
except that during any period of the Borrower set forth below (taken as one
accounting period), the Borrower and its Subsidiaries may make Consolidated
Capital Expenditures so long as the aggregate amount of all such Consolidated
Capital Expenditures does not exceed in any period set forth below the amount
set forth opposite such period below:
PERIOD AMOUNT
------ ------
Fiscal year ending:
December 31, 2000 $70,000,000
December 31, 2001 $21,000,000
December 31, 2002 $10,500,000
December 31, 2003 $ 6,000,000
December 31, 2004 $ 5,500,000
December 31, 2005 $ 5,000,000
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PERIOD AMOUNT
------ ------
December 31, 2006 $ 5,000,000
December 31, 2007 $ 5,000,000".
12. Section 9.11 of the Credit Agreement is hereby amended to read
in its entirety as follows:
"9.11 MINIMUM CONSOLIDATED REVENUE. During Phase I, the Borrower
will not permit Consolidated Revenue for any six-month period ending on a date
set forth below to be less than the amount set forth opposite such six-month
period below:
SIX-MONTH PERIOD ENDING ON AMOUNT
-------------------------- ------
December 31, 2000 $32,000,000
March 31, 2001 $33,500,000
June 30, 2001 $37,500,000
September 30, 2001 $40,000,000
December 31, 2001 $44,000,000
March 31, 2002 $47,500,000
June 30, 2002 $51,000,000
September 30, 2002 $54,000,000
December 31, 2002 $57,750,000
March 31, 2003 $62,000,000
June 30, 2003 $66,000,000".
13. Section 9.12 of the Credit Agreement is hereby amended to read
in its entirety as follows:
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"9.12 MINIMUM CONSOLIDATED EBITDA. During Phase I, the Borrower will
not permit Consolidated EBITDA for any six-month period ending on a date set
forth below to be less than the amount set forth opposite such six-month period
below:
SIX-MONTH PERIOD ENDING ON AMOUNT
-------------------------- ------
December 31, 2000 $(65,000,000)
March 31, 2001 $(54,000,000)
June 30, 2001 $(28,250,000)
September 30, 2001 $(24,000,000)
December 31, 2001 $(19,000,000)
March 31, 2002 $(14,750,000)
June 30, 2002 $(10,500,000)
September 30, 2002 $ (6,500,000)
December 31, 2002 $ (3,500,000)
March 31, 2003 $ 0
June 30, 2003 $ 4,000,000"
14. Section 9.15 of the Credit Agreement is hereby amended to read
in its entirety as follows:
"9.15 INTEREST COVERAGE RATIO. During Phase II, for any fiscal
quarter ending on any date set forth below, the Borrower will not permit the
ratio of (i) Consolidated Annualized EBITDA to (ii) Consolidated Annualized
Interest Expense to be less than the ratio set forth opposite such date below:
FISCAL QUARTER ENDING RATIO
--------------------- -----
If applicable, the last day of each
fiscal quarter during the period from
the commencement of Phase II to and
including
June 30, 2003 0.45 to 1
September 30, 2003 0.65 to 1
December 31, 2003 0.85 to 1
March 31, 2004 1.25 to 1
June 30, 2004 1.50 to 1
September 30, 2004 1.75 to 1
December 31, 2004 1.75 to 1
March 31,2005 2.00 to 1
June 30, 2005 2.25 to 1
September 30, 2005 and thereafter 2.50 to 1"
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15. Section 9.16 of the Credit Agreement is hereby amended to read
in its entirety as follows:
"9.16 LEVERAGE RATIO. During Phase II, the Borrower will not permit
the Leverage Ratio determined as at the end of the last day of any fiscal
quarter ending on any date set forth below to be more than the ratio set forth
opposite such date below:
FISCAL QUARTER ENDING RATIO
--------------------- -----
If applicable, the last day of each
fiscal quarter during the period from
the commencement of Phase II to and
including
June 30, 2003 16.00 to 1
September 30, 2003 12.00 to 1
December 31, 2003 10.00 to 1
March 31, 2004 6.50 to 1
June 30, 2004 5.25 to 1
September 30, 2004 4.75 to 1
December 31, 2004 4.25 to 1
March 31, 2005 3.75 to 1
June 30, 2005 and thereafter 3.50 to 1"
16. Section 9.17 of the Credit Agreement is hereby amended to read
in its entirety as follows:
"9.17 FIXED CHARGE RATIO. During Phase II, for any six-month period
ending on any date set forth below, the Borrower will not permit the ratio of
(i) Consolidated EBITDA for such six-month period to (ii) Consolidated Fixed
Charges for such six-month period to be less than the ratio set forth opposite
such date below:
SIX-MONTH PERIOD ENDING ON RATIO
-------------------------- -----
The last day of each fiscal
quarter during the period from the
commencement of Phase II to and
including
June 30, 2003 0.40 to 1
September 30, 2003 0.50 to 1.00
December 31, 2003 0.75 to 1.00
March 31, 2004 0.90 to 1.00
June 30, 2004 0.95 to 1.00
September 30, 2004 and thereafter 1.00 to 1.00"
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17. Section 10.12 of the Credit Agreement is hereby amended to read
in its entirety as follows:
"10.12 POSITIVE EBITDA. Without limiting the provisions of Section
9.12 and only so long as Phase II shall not have theretofore occurred, the
Borrower shall fail to have positive Consolidated EBITDA for the fiscal quarters
ending June 30, 2003 and September 30, 2003;".
18. Section 10 of the Credit Agreement is further amended by (i)
inserting the word "or" at the end of Section 10.13 thereof and (ii) inserting
the following new Section 10.14 immediately following such Section 10.13:
"10.14 CONSOLIDATED CASH EQUITY PAYMENTS. The Borrower shall not
have received during the period commencing on the date of its incorporation
through and including each date set forth below aggregate Consolidated Cash
Equity equal to at least that amount set forth opposite each such date below (it
being understood that the amounts set forth below are in excess of any amounts
contributed to the Borrower pursuant to the exercise of the various cure rights
provided for in the last paragraph of this Section 10):
DATE CUMULATIVE
---- ----------
June 30, 2001 $169,617,715
September 30, 2001 $177,917,715
March 31, 2002 $190,917,715
June 30, 2002 $194,721,715;".
19. The Credit Agreement is hereby further amended by adding thereto
as Annex XII the Annex XII attached to this Amendment.
B. MISCELLANEOUS PROVISIONS
1. In order to induce the Lenders to enter into this Amendment, the
Borrower hereby represents and warrants that (i) the representations and
warranties contained in the Credit Agreement and in the other Credit Documents
are true and correct in all material respects on and as of the First Amendment
Effective Date (as defined below) (except with respect to any representations
and warranties limited by their terms to a specific date, which shall be true
and correct in all material respects as of such date) and (ii) there exists no
Default or Event of Default under the Credit Agreement on the First Amendment
Effective Date, in each case both before and after giving effect to this
Amendment.
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2. This Amendment is limited as specified and shall not constitute an
amendment, modification, acceptance or waiver of any other provision of the
Credit Agreement or any other Credit Document.
3. The Borrower hereby agrees to pay each Lender which delivers an
executed copy of this Amendment (by hard copy or facsimile) to the
Administrative Agent by no later than 3:00 p.m. (New York time) on Tuesday,
March 20, 2001, a fee (the "Amendment Fee") in an amount equal to 0.25% of the
sum of (I) the aggregate principal amount of all outstanding Term Loans of such
Lender on the First Amendment Effective Date and (II) the aggregate Commitments
of such Lender on the First Amendment Effective Date (but determined after
giving effect to the reduction to the Total Term Commitment as provided for in
this Amendment), which Amendment Fee shall be due and payable on the First
Amendment Effective Date.
4. 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.
5. This Amendment shall become effective on the date (the "First Amendment
Effective Date") when (i) 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 telecopier) the same to the
Administrative Agent at the Notice Office and (ii) the Borrower shall have
received at least $60,000,000 of new Consolidated Cash Equity during the period
commencing on January 1, 2001 through, and including, the First Amendment
Effective Date.
6. From and after the First Amendment Effective Date, all references in
the Credit Agreement and in the other Credit Documents to the Credit Agreement
shall be deemed to be referenced to the Credit Agreement as amended hereby.
* * *
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IN WITNESS WHEREOF, each of the parties hereto has caused this Amendment
to be duly executed and delivered as of the date first above written.
FAIRPOINT SOLUTIONS COMMUNICATIONS CORP.
By: /s/ Xxxxxxx X. Xxxxx
---------------------------------------
Title: Vice President of Finance
and Treasurer
FIRST UNION NATIONAL BANK,
Individually and as Administrative Agent
By: /s/ Xxxxxxxx X. Xxxxxxxx
---------------------------------------
Title: Vice President
BANK OF AMERICA, N.A.
By: /s/ Xxx X. Xxxxxxxx
---------------------------------------
Title: Principal
BANKERS TRUST COMPANY
By: /s/ Xxxx X. Xxxxxxxx
---------------------------------------
Title: Director
CITICORP USA, INC.
By: /s/ J. Xxxxxxx Xxxxxx
---------------------------------------
Title: Managing Director
CREDIT SUISSE FIRST BOSTON
By: /s/ Xxxx X'Xxxx/Xxxxxx Xxxxxx
---------------------------------------
Title: Vice President/
Assistant Vice President
COBANK, ACB
By: /s/ Xxxx Xxxxxxx
---------------------------------------
Title: Vice President
CIT GROUP/EQUIPMENT FINANCING INC.
By: /s/ Xxxxxxx Xxxxxxx
---------------------------------------
Title: Vice President
ANNEX XII TO THE AMENDED AND RESTATED CREDIT AGREEMENT
RESTRUCTURING CHARGES
A. CASH RESTRUCTURING CHARGES
Description Amount(1)(2)
----------- ------------
1. Severance:
Pay $5,914,597
2. Lay Off Related Costs: $309,775
3. Present Value of
Occupancy Costs: $9,223,000
4. Contractual Costs:
Equipment Leases $4,822,433
5. Fixed Assets:
Colocation Equipment $24,060,000
Recovery of Equipment ($15,425,000)
Dismantling Costs $940,000
Furniture Costs $200,000
Colocation Operating Costs $250,000
6. Legal/Employee Benefits/
Miscellaneous: $300,000
7. Consulting/Public Relations/
Accounting: $115,000
8. Equipment Leases: $675,000
----------
(1) The cash Restructuring Charges identified in categories A1 through A9
above may be higher than those amounts set forth opposite such categories
above; PROVIDED, HOWEVER, in no event shall the aggregate amount of all
such additional cash Restructuring Charges for all of these categories
combined exceed $7,125,195.
(2) The non-cash Restructuring Charges identified in categories B1 through B3
above may be higher than those amounts set forth opposite such categories
above; PROVIDED, HOWEVER, in no event shall the aggregate amount of all
such additional non-cash Restructuring Charges for all of these categories
combined exceed $2,713,534.
9. Miscellaneous Other Costs: $490,000
----------------------------
TOTAL CASH RESTRUCTURE CHARGES $31,874,805
----------------------------
B. NON CASH RESTRUCTURE CHARGES:
1. Leasehold Improvements: $4,449,808
2. Equipment - Lost Assets: $300,000
3. Abandoned Collocation Sites: $13,340,418
TOTAL NON-CASH
RESTRUCTURING CHARGES $18,090,226
----------------------------
TOTAL RESTRUCTURING CHARGES $49,965,031
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