THIRD AMENDMENT TO LOAN AGREEMENT
THIS THIRD AMENDMENT TO LOAN AGREEMENT (this "AMENDMENT"), dated as of
the 17th day of April, 1998 (the "AMENDMENT DATE"), by and among RURAL
CELLULAR CORPORATION, a Minnesota corporation (the "BORROWER"); THE
TORONTO-DOMINION BANK, BANKBOSTON, N.A., ST. ▇▇▇▇ BANK FOR COOPERATIVES,
COBANK, FLEET NATIONAL BANK, FIRST NATIONAL BANK OF MARYLAND, SOCIETE
GENERALE, NEW YORK BRANCH and ▇▇▇▇▇▇ BANK LTD NEW YORK BRANCH (the "BANKS");
BANKBOSTON, N.A. AND ST. ▇▇▇▇ BANK FOR COOPERATIVES, as co-agents (the
"CO-AGENTS"); and TORONTO DOMINION (TEXAS), INC., as administrative agent
(the "ADMINISTRATIVE AGENT") for the Banks;
W I T N E S S E T H:
WHEREAS, the Borrower, the Administrative Agent, the Co-Agents and the
Banks are parties to that certain Loan Agreement, dated as of May 1, 1997, as
amended by that certain First Amendment to Loan Agreement, dated as of August 4,
1997, and that certain Second Amendment to Loan Agreement, dated as of
December 30, 1997 (as hereafter further amended, modified, supplemented and
restated from time to time, the "LOAN AGREEMENT"); and
WHEREAS, the Borrower has requested that the Banks permit the Borrower to
incur up to $150,000,000 of paid-in-kind preferred equity (the "PIK EQUITY")
and up to $200,000,000 of subordinated Indebtedness (the "SUB DEBT"); and
WHEREAS, the Administrative Agent, the Co-Agents and the Banks have
agreed to permit the Borrower to incur such additional Indebtedness on the
terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the premises set forth above, the
covenants and agreements hereinafter set forth, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties hereto agree that all capitalized terms used herein shall have
the meanings ascribed thereto in the Loan Agreement, and further agree as
follows:
1. AMENDMENT TO SECTION 7.1. Section 7.1 of the Loan Agreement,
INDEBTEDNESS OF THE BORROWER AND ITS SUBSIDIARIES, is hereby amended by
inserting the following new Section 7.1(i) and (j) to read as follows:
"(i) Exchangeable preferred equity of the Borrower which does not
exceed $150,000,000 in an aggregate original issue amount after
the Agreement Date; PROVIDED that such preferred equity is issued
(A) with the repayment terms set
forth on SCHEDULE 1 attached to the Third Amendment to this
Agreement and (B) having other terms and conditions substantially
similar to those set forth on SCHEDULE 1 to the Third Amendment
to this Agreement; and"
"(j) Other Indebtedness of the Borrower which does not exceed
$200,000,000 in the aggregate after the Agreement Date; PROVIDED
such additional Indebtedness (A) is subordinated to the
Obligations on terms and conditions satisfactory to the Majority
Banks, (B) has the repayment terms set forth on SCHEDULE 1 to the
Third Amendment to this Agreement, and (C) has other terms and
conditions substantially similar to those set forth on SCHEDULE 1
to the Third Amendment to this Agreement."
2. AMENDMENT TO LOAN DOCUMENTS. All of the Loan Documents are hereby
amended to the extent necessary to give full force and effect to the
amendment contained in this Amendment.
3. USES OF PROCEEDS. In consideration of the Amendment, the Borrower
agrees that the proceeds of any preferred equity raised under Section 7.1(i)
of the Loan Agreement (the "PIK EQUITY PROCEEDS") shall be used to repay the
Obligations then outstanding; PROVIDED, HOWEVER, any such repayment from the
PIK Equity Proceeds shall not reduce the Commitment. In addition, the
Borrower shall apply the proceeds of any subordinated Indebtedness raised
under Section 7.1(j) of the Loan Agreement (the "SUB DEBT PROCEEDS") by
either (A) depositing one-hundred percent (100%) of the Sub Debt Proceeds in
a special purpose account of the Borrower pending the closing of (the
"ATLANTIC CLOSING") the transactions described in that certain Asset Purchase
Agreement among Atlantic Cellular Company, L.P., Atlantic Cellular/New
Hampshire RSA Number One Limited Partnership, on the one hand, and RCC
Atlantic, Inc. and Rural Cellular Corporation, on the other hand, dated as of
February 13, 1998 (the "ATLANTIC PURCHASE AGREEMENT"), or (B) applying a
portion of the Sub Debt Proceeds to repay the Obligations outstanding after
application of the PIK Equity Proceeds and depositing the remaining balance
of the Sub Debt Proceeds in a special purpose account of the Borrower to be
used solely in connection with the Atlantic Closing. In addition, if, for any
reason, the Atlantic Closing shall not occur on or prior to September 30,
1998, (i) all or a portion of the Sub Debt proceeds deposited in a special
purpose account of the Borrower in accordance with this Amendment shall be
withdrawn from such account and contemporaneously used to permanently repay
Sub Debt; and (ii) if the Borrower has made a repayment of the Obligations,
the Borrower may, in compliance with the Loan Agreement, reborrow under the
Commitment up to the amount of such repayment, PLUS all accrued interest,
fees and premiums associated with the repurchase or other redemption of Sub
Debt, PROVIDED that such amounts reborrowed are used as a permanent repayment
or other cancellation of the Sub Debt. Notwithstanding any of the foregoing
or anything contained in the Loan Agreement to the contrary, from the date
on which the Borrower receives the PIK Equity Proceeds until the earlier to
occur of the Atlantic closing (or other termination of the Borrower's
obligations under the Atlantic Purchase Agreement) and September 30, 1998,
the Available
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Commitment, subject to the terms and conditions of the Loan Agreement, shall
not exceed $20,000,000, PLUS fees, costs and expenses associated with the
issuance of the PIK Equity and the Sub Debt. Notwithstanding anything in the
Loan Agreement to the contrary, so long as no Default then exists or would be
caused thereby, the Borrower may (A) make scheduled payments of interest with
respect to the Sub Debt, and (B) make scheduled payments with respect to the
PIK Equity from the portion of Excess Cash Flow for the preceding fiscal year
not required to repay the Loans.
4. REPRESENTATIONS AND WARRANTIES. Borrower hereby reaffirms each and
every representation and warranty heretofore made by it under or in
connection with the Loan Agreement or the Loan Documents (including, without
limitation, those representations and warranties with respect to Borrower's
Subsidiaries), as such representations and warranties are amended hereby, as
fully as though such representations and warranties had been made on the date
hereof. Borrower hereby further represents and warrants that (a) Borrower
and each of its Subsidiaries has the power and authority to enter into this
Amendment and the other instruments, documents or agreements executed by such
party pursuant hereto or in connection herewith (the "Amendment Documents")
and to perform all of its obligations hereunder and thereunder; (b) the
execution and delivery of this Amendment and the Amendment Documents have
been duly authorized by all necessary action (corporate or otherwise) on the
part of Borrower and each of its Subsidiaries; and (c) the execution and
delivery of this Amendment and the Amendment Documents and performance
thereof by Borrower and each of its Subsidiaries does not and will not
violate the Articles of Incorporation, By-laws or other organizational
documents of such party and does not and will not violate or conflict with
any law, order, writ, injunction, or decree of any court, administrative
agency or other governmental authority applicable to such party or its
properties.
5. EFFECT OF AMENDMENT; NO NOVATION. Except as expressly set forth
herein, the Loan Agreement shall remain in full force and effect and shall
constitute the legal, valid, binding and enforceable obligation of Borrower
to the Banks, and Borrower hereby restates, ratifies and reaffirms each and
every term and condition set forth in the Loan Agreement, as amended hereby.
The terms of this Amendment are not intended to and do not serve as a
novation as to the Loan Agreement or the Notes or the indebtedness evidenced
thereby. The parties hereto expressly do not intend to extinguish any debt or
security interest created pursuant to the Loan Agreement or any document
executed in connection therewith. Instead it is the express intention to
affirm the Loan Agreement and the security created thereby.
6. NO OTHER AMENDMENT OR WAIVER. Except for the amendment set forth
above, the text of the Loan Agreement and all other Loan Documents shall
remain unchanged and in full force and effect. No waiver by the
Administrative Agent, the Co-Agents or the Banks under the Loan Agreement or
any other Loan Document is granted or intended except as expressly set forth
herein, and the Administrative Agent, the Co-Agents and the Banks expressly
reserve the right to require strict compliance in all other respects (whether
or not in connection with any Requests for Advance).
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Except as set forth herein, the amendment agreed to herein shall not
constitute a modification of the Loan Agreement or any of the other Loan
Documents, or a course of dealing with the Administrative Agent, the
Co-Agents and the Banks at variance with the Loan Agreement or any of the
other Loan Documents, such as to require further notice by the Administrative
Agent, the Co-Agents and the Banks, or the Majority Banks to require strict
compliance with the terms of the Loan Agreement and the other Loan Documents
in the future.
7. LOAN DOCUMENTS. This document shall be deemed to be a Loan Document
for all purposes under the Loan Agreement and the other Loan Documents.
8. COUNTERPARTS. This Amendment may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
separate counterparts shall together constitute but one and the same
instrument.
9. GOVERNING LAW. This Amendment shall be construed in accordance with
and governed by the laws of the State of New York.
10. SEVERABILITY. Any provision of this Amendment which is prohibited or
unenforceable shall be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof in that
jurisdiction or affecting the validity or enforceability of such provision in
any other jurisdiction.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have executed this Amendment or
caused it to be executed by their duly authorized officers, all as of the day
and year first written.
BORROWER: RURAL CELLULAR CORPORATION, a Minnesota
corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Its: Vice President - Finance CFO
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ADMINISTRATIVE AGENT: TORONTO DOMINION (TEXAS), INC., as
CO-AGENTS AND BANKS: Administrative Agent
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
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Its: VP
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BANKBOSTON, N.A., as a Co-Agent and a Bank
By: /s/ ▇▇▇▇▇▇▇ D. Rainie
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Its: Managing Director
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ST. ▇▇▇▇ BANK FOR COOPERATIVES, as a Co-Agent
and a Bank
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Its: Senior Vice President
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RURAL CELLULAR CORPORATION
THIRD AMENDMENT TO LOAN AGREEMENT
SIGNATURE PAGE 1
THE TORONTO-DOMINION BANK, as a Bank
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
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Its: Mgr Cr Admin
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COBANK, as a Bank
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
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Its: Vice President
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FLEET NATIONAL BANK, as a Bank
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Its: Senior Vice President
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FIRST NATIONAL BANK OF MARYLAND, as a Bank
By: /s/ W. ▇▇▇▇▇ ▇▇▇▇▇▇▇
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Its: Vice President
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SOCIETE GENERALE, NEW YORK BRANCH, as a Bank
By: /s/ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
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Its: Vice President
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RURAL CELLULAR CORPORATION
THIRD AMENDMENT TO LOAN AGREEMENT
SIGNATURE PAGE 2
▇▇▇▇▇▇ BANK LTD NEW YORK BRANCH, as a Bank
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Its: Senior Vice President
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By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Its: Vice President
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RURAL CELLULAR CORPORATION
THIRD AMENDMENT TO LOAN AGREEMENT
SIGNATURE PAGE 3
SCHEDULE I
THE OFFERINGS
The following summary descriptions of the Senior Subordinated Notes and
Exchangeable Preferred Stock are qualified in entirety by the more detailed
information set forth under the caption "Description of Senior Subordinated
Notes" and "Description of Exchangeable Preferred Stock and Exchange
Debentures" contained elsewhere in this Offering Memorandum.
% SENIOR SUBORDINATED NOTES DUE 2008
------------------------------------------
Notes Offered..................... $_______ million aggregate principal amount of ___% Senior
Subordinated Notes due 2008.
Maturity.......................... ______________, 2008
Interest Payment Due.............. ______ and _________ of each year, commencing
______________, 1998.
Optional Redemption............... The Senior Subordinated Notes will be redeemable, in
whole or in part, at the option of the Company at any
time on or after ________1, 2003 at the redemption prices
set forth herein, plus accrued and unpaid interest, if
any, to the date of redemption. In addition, at any time
prior to __________, 2001, the Company may redeem up to [25%]
of the principal amount of Senior Subordinated Notes
actually issued under the Indenture from the net proceeds
of a Qualifying Event (as defined herein) at a redemption
price equal to __________% (expressed as a percentage
of the stated principal amount thereof), together
with accrued and unpaid interest to but excluding
the date fixed for redemption; provided that at least
$[___] million in aggregate principal amount of Senior
Subordinated Notes remain outstanding immediately after the
occurrence of such redemption. See "Description of Senior
Subordinated Notes -- Senior Subordinated Optional Redemption."
Limitations on Use of Proceeds;
Proceeds Purchase Offer........... All net proceeds received by the Company from the Note
Offering shall be applied to Atlantic Acquisition or,
as set forth below, to repay indebtedness under the
Company's Existing Credit Facility pending the
Atlantic Acquisition. Pending the consummation of the
Atlantic Acquisition, all net proceeds from the
Offering shall be held by the Company in a separate
bank account, except to the extent such proceeds are used
to repay indebtedness under the Existing Credit Facility
(which repayment out of such proceeds shall be
permitted only if the lenders thereunder unconditionally
consent to allow an amount equal to the amount repaid
from the proceeds of the Offerings, and any accrued
and unpaid interest then
to be reborrowed for the sole purpose of funding a
repurchase of the Senior Subordinated Notes in the
event that the Atlantic Acquisition does not occur
within 120 days following the closing of the sale of
the Senior Subordinated Notes pursuant to a Proceeds
Purchase Offer (as defined herein).
In the event that all of the net proceeds of the
sale of the Senior Subordinated Notes have not
been so applied, directly or indirectly, to the Atlantic
Acquisition, within 120 days of the closing of the
sale of the Senior Subordinated Notes, then the
Company will make an offer (a "Proceeds Purchase Offer")
to all holders of Senior Subordinated Notes to purchase
on a pro rata basis, at a price of 101% of the
principal amount thereof plus accrued and unpaid interest
to the purchase date, all Senior Subordinated Notes that
may be purchased at such price with such unapplied
net proceeds.
Ranking........................... The Senior Subordinated Notes will be general unsecured
obligations of the Company and will be senior
subordinated obligations of the Company, subordinated
in right of payment to Senior Indebtedness (as defined
herein) and senior or PARI PASSU in right of payment to
all future Subordinated Indebtedness (as defined
herein) of the Company. At December 31, 1997, on a pro
forma basis, after giving effect to the Pending
Acquisitions and the Offerings, Senior Indebtedness
aggregated approximately $___ million, (including $___
million of secured borrowings under the Existing Credit
Facility). In addition, all existing and future
indebtedness and other liabilities of the Company's
Subsidiaries will be effectively senior in right of
payment to the Senior Subordinated Notes. The Notes
Indenture (as defined herein) will allow the Company to
incur additional indebtedness. See "Description of
Senior Subordinated Notes -- Certain Covenants."
Certain Covenants................. The Indenture imposes certain limitations on
the ability of the Company and its Restricted
Subsidiaries (as defined herein) to, among other things,
incur Indebtedness (as defined herein), make Restricted
Payments (as defined herein), effect certain Asset Sales
(as defined herein), enter into certain transactions with
Affiliates and Related Persons (as defined herein), merge
or consolidate with any other person or transfer all or
substantially all of their properties and assets. See
"Description of Senior Subordinated Notes -- Certain
Covenants."
Change of Control................. Upon the occurrence of a Change of Control (as defined
herein), the Company will make an offer to all
holders of the Senior Subordinated Notes to
purchase on a pro rata basis at a price of 101%
of the principal amount thereof, plus accrued and
unpaid interest thereon, if any, to the repurchase date.
Events of Default................. Events of Default under the Senior Subordinated Indenture
include failure to pay principal or interest on the
Senior Subordinated Notes, failure to make payments on
other indebtedness, breach of certain covenants,
certain events of bankruptcy and insolvency and other
customary events. See "Description of Senior
Subordinated Notes --Events of Default and Remedies."
EXCHANGEABLE PREFERRED STOCK OFFERING
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Exchangeable Preferred Stock
Offered........................... _____________ Shares of _____% Exchangeable Preferred
Stock.
Liquidation Preference............ $1,000 per share, plus accumulated and unpaid dividends.
Ranking........................... The Exchangeable Preferred Stock will be senior to all
classes of common stock and junior Exchangeable
Preferred Stock of the Company with respect to dividend
rights and rights on liquidation, winding up and
dissolution of the Company.
Mandatory Redemption.............. _____________, 2010 (subject to the legal availability
of funds therefor) at a redemption price of 100% of the
liquidation preference thereof, plus, without
duplication, accumulated and unpaid dividends to the
date of redemption.
Optional Redemption............... The Exchangeable Preferred Stock will be redeemable in
whole or in part, at the option of the Company at any
time on or after __________, 2003 at the redemption
prices set forth herein, plus accumulated and unpaid
dividends (if any) to the date of redemption.
In addition, prior to ___________, 2001, the Company may
redeem up to [25%] of the aggregate of the liquidation
preference of the Exchangeable Preferred Stock issued
and outstanding with the net proceeds of a Qualifying
Event (as defined herein), provided that at least
[$________] in liquidation preference of such
securities must remain outstanding after the occurrence
of such redemption. See "Description of Exchangeable
Preferred Stock and Exchange Debentures -- Optional
Redemption."
Change of Control................. Within 30 days following a Change of Control, as defined
herein, each holder of Exchangeable Preferred Stock and
Exchange Debentures will have the right to require the
Company to repurchase such holder's Exchangeable
Preferred Stock or Exchange Debentures at a purchase
price equal to 101% of the then effective liquidation
preference thereof, plus, as applicable without
duplication, accumulated and unpaid dividends to the
date of purchase.
Dividends......................... Dividends will accrue from the Issue Date and will be
payable quarterly commencing __________,1998 at a rate
per annum of ____% of the then effective liquidation
preference thereof. Dividends may be paid, at the
Company's option, on any dividend payment date
occurring on or before either _______ in cash or by the
issuance of additional shares of Exchangeable Preferred
Stock having an aggregate liquidation preference equal
to the amount of such dividends.
Voting Rights..................... The Exchangeable Preferred Stock will be non-voting,
except as otherwise required by law and as provided in
the Certificate of Designation. The Certificate of
Designation will provide that upon (i) the accumulation
of accrued and unpaid dividends on the outstanding
Exchangeable Preferred Stock in an amount equal to six
full quarterly dividends (whether or not consecutive);
(ii) the failure of the Company to satisfy any
mandatory redemption or repurchase obligation with
respect to the Exchangeable Preferred Stock; (iii) the
failure of the Company to make a Change of Control
offer on the terms and in accordance with the
provisions contained in the Certificate of
Designations; (iv) the failure of the Company to comply
with any of the other covenants or agreements set forth
in the Certificate of Designation and the continuance
of such failure for [30] days consecutive days or more;
or (v) the failure to pay, when due, the principal,
interest or premium aggregating [$_________ or more]
with respect to any Indebtedness of the Company or any
Restricted Subsidiary or the final maturity of debt is
accelerated, then the holders of a majority of the
outstanding shares of Exchangeable Preferred Stock,
voting as a separate class, will be entitled to elect
the lesser of two directors and that number of
directors constituting 25% of the members of the Board
of Directors.
Ranking........................... The Certificate of Designations will provide that the
Company will not authorize any class of Senior Stock
(as defined herein) or any class of Parity Stock (as
defined herein) without the affirmative vote or consent
of holders of at least (i) 66 2/3% of the shares of
Exchangeable Preferred Stock then outstanding with
respect to Senior Stock; and (ii) a majority of the
shares of Exchangeable Preferred Stock then outstanding
with respect to Parity Stock; PROVIDED, that up to
[______] additional shares of Exchangeable Preferred
Stock may be issued by the Company without the approval
of the holders of the Exchangeable Preferred Stock.
Exchange Option................... The Exchangeable Preferred Stock may be exchanged,
in whole but not in part, at the option of the Company
for ____% Senior Subordinated Exchange Debentures due
2010 (the "Exchange Debentures") in an aggregate
principal amount equal to the liquidation preference of
the shares of Exchangeable Preferred Stock plus
accumulated and unpaid dividends, if any, to the date
of change.
% SENIOR SUBORDINATED NOTES DUE 2010
--------------------------------------------
Notes Offered..................... $_______ million aggregate principal amount of ____%
Exchange Debentures due 2010.
Maturity.......................... __________, 2010.
Interest Payment Due.............. ________________ and _______________ of each year,
commending _____________,____.
Optional Redemption............... The Exchange Debentures will be redeemable, in whole or
in part, at the option of the Company at any time on or
after _______1, 2010, at the redemption prices set forth
herein, plus accrued and unpaid interest, if any, to the
date of redemption. In addition, at any time prior to
________, 2001, the Company may redeem up to [25%] of the
principal amount of Exchange Debentures, if any,
actually issued under the Exchange Indenture from the
net proceeds of a Qualifying Event (as defined herein)
at a redemption price equal to ____% (expressed as a
percentage of the stated principal amount thereof),
together with accrued and unpaid interest to but
excluding the date fixed for redemption; provided that
at least $[__] million in aggregate principal amount of
Senior Subordinated Notes and Exchange Debentures, in
the aggregate, remain outstanding immediately after the
occurance of such redemption. See "Description of
Exchange Debentures -- Optional Redemption."
Ranking........................... The Exchange Debentures will be general unsecured
obligations of the Company and will be senior
subordinated obligations of the Company, subordinated
in right of payment to Senior Indebtedness and senior
or PARI PASSU in right of payment to all future
Subordinated Indebtedness of the Company. In addition,
all existing and future indebtedness and other
liabilities of the Company's Subsidiaries will be
effectively senior in right of payment to the Exchange
Debentures. The Exchange Indenture (as defined herein)
will allow the Company to incur additional
indebtedness. See "Exchange Debentures -- Certain
Covenants."
Certain Covenants................. The Exchange Indenture imposes certain limitations on
the ability of the Company and its Restricted
Subsidiaries to, among other things, incur
Indebtedness, make Restricted Payments, effect certain
Asset Sales, enter into certain transactions with
Affiliates and Related Persons, merge or consolidate
with any other person or transfer all or substantially
all of their properties and assets. See "Description of
Exchange Debentures --Certain Covenants."
Change of Control................. Upon the occurrence of a Change of Control, the Company
will make an offer to all holders of the Exchange
Debentures to purchase on a pro rata basis at a price
of 101% of the principal amount thereof plus accrued and
unpaid interest thereon, if any, to the repurchase date.
Events of Default................. Events of Default under the Exchange Indenture include
failure to pay principal or interest on the Exchange
Debentures, failure to make payments on other
indebtedness, breach of certain covenants, certain
events of bankruptcy and insolvency and other customary
events. See "Description of Exchange Debentures --
Events of Default and Remedies."