EXHIBIT 10.2
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Amendment No. 1
Dated as of March 31, 2003
to Loan Agreement
Dated as of October 24, 2001
Between
Citizens Communications Company
And
Rural Telephone Finance Cooperative
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THIS AMENDMENT NO.1, dated as of March 31, 2003 (this "Amendment"), between
Citizens Communications Company, a Delaware corporation ("Borrower"), and RURAL
TELEPHONE FINANCE COOPERATIVE, a South Dakota cooperative association
("Lender"), amends that certain Loan Agreement, dated as of October 24, 2001
(such agreement, as amended from time to time, the "Loan Agreement"; terms
defined in the Loan Agreement are used herein as defined therein), between the
Lender and the Borrower.
WITNESSETH
WHEREAS, the Borrower has requested that the Lender agree to amend certain
provisions of the Loan Agreement; and
WHEREAS, the Lender has agreed to such amendment upon the terms and subject
to the conditions set forth herein;
NOW THEREFORE, in consideration of the premises contained herein and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
Section 1. Amendments to the Loan Agreement
(a) The definition of "EBITDA" in Section 1.01 is hereby deleted in
its entirety and replaced by the following definition of "Consolidated
EBITDA" to read as follows:
"Consolidated EBITDA" shall mean, with respect to the Borrower and its
Subsidiaries for any period: Consolidated Net Income for such period
plus (a) without duplication and to the extent deducted in determining
such Consolidated Net Income, the sum of (i) consolidated interest
expense for such period, (ii) consolidated income tax expense for such
period, (iii) all amounts attributable to depreciation and
amortization for such period, (iv) dividends on preferred stock, (v)
losses attributable to minority interests, (vi) investment losses,
(vii) any nonrecurring charges for such period relating to severance
costs, restructuring costs or acquisition assimilation expenses,
(viii) any extraordinary charges or non-cash charges for such period
(provided that any cash payment made with respect to any such non-cash
charge shall be subtracted in computing Consolidated EBITDA during the
period in which such cash payment is made) and (ix) net losses in
connection with the early retirement of debt and minus (b) without
duplication and to the extent included in determining such
Consolidated Net Income, (i) income or gains attributable to minority
interests, (ii) investment income and (iii) any extraordinary gains or
non-cash gains for such period, all determined on a consolidated basis
in accordance with GAAP. For purposes of calculating Consolidated
EBITDA for any period of four consecutive fiscal quarters (each, a
"Reference Period") in connection with any determination of the
Leverage Ratio, if after the first day of such Reference Period and on
or prior to any date on which the Leverage Ratio is to be determined
the Borrower or a consolidated Subsidiary shall have effected a
Material Transaction, Consolidated EBITDA for such Reference Period
shall be calculated after giving pro forma effect thereto (without
giving effect to cost savings not actually realized), as determined
reasonably and in good faith by a Financial Officer, as if such
Material Transaction occurred on the first day of such Reference
Period. As used in this definition, `Material Transaction' means any
acquisition or disposition outside the ordinary course of business of
any property or assets that (x) constitute assets comprising all or
substantially all of an operating unit of a business or equity
interests of a Person representing a majority of the ordinary voting
power or economic interests in such Person that are represented by all
its outstanding capital stock and (y) involves aggregate consideration
in excess of $50,000,000. Notwithstanding the foregoing, Consolidated
EBITDA for any period shall not in any event be calculated to include
the operations, income or expenses of any Non-Recourse Joint Venture,
except to the extent of dividends or other distributions actually paid
to the Borrower or any of its consolidated Subsidiaries (other than
Non-Recourse Joint Ventures) during such period.".
(b) A new definition of "Consolidated Net Income" is added to Section
1.01 to read as follows:
"`Consolidated Net Income' shall mean, for any period, the net income
or loss of the Borrower and its consolidated Subsidiaries for such
period determined on a consolidated basis in accordance with GAAP;
provided that there shall be excluded (a) the income of any
Non-Recourse Joint Venture or any other Person (other than the
Borrower) in which any other Person (other than the Borrower or any
consolidated Subsidiary of the Borrower or any director holding
qualifying shares in compliance with applicable law) owns an equity
interest, except to the extent of the amount of dividends or other
distributions actually paid to the Borrower or any of its consolidated
Subsidiaries (other than Non-Recourse Joint Ventures) during such
period, and (b) (except as otherwise specified in the definition of
Consolidated EBITDA in connection with Material Transactions), the
income or loss of any Person accrued prior to the date it becomes a
Subsidiary of the Borrower or is merged into or consolidated with the
Borrower or any Subsidiary of the Borrower or the date that such
Person's assets are acquired by the Borrower or any Subsidiary of the
Borrower."
(c) The definition of "Financial Ratios" in Section 1.01 is hereby
deleted and replaced by a new definition of "Financial Ratio", to read as
follows:
"Financial Ratio" shall mean the Leverage Ratio.
(d) The definition of "Interest Coverage Ratio" in Section 1.01 is
hereby deleted.
(e) The definition of "Interest Expense" in Section 1.01 is hereby
deleted.
(f) The definition of "Leverage Ratio" in Section 1.01 is hereby
amended in its entirety to read as follows:
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"Leverage Ratio" shall mean, with respect to any fiscal quarter, as of
the date ending such fiscal quarter, the ratio of (a) Total
Indebtedness as of such fiscal quarter end to (b) Consolidated EBITDA,
for the four consecutive fiscal quarters immediately prior to such
fiscal quarter end (including such fiscal quarter).
(g) A new definition of "Total Indebtedness" is added to Section 1.01
to read as follows:
"`Total Indebtedness' means, as of any date, the aggregate principal
amount of Indebtedness of the Borrower and its consolidated
Subsidiaries outstanding as of such date, in the amount and only to
the extent that such Indebtedness would be reflected on a balance
sheet prepared as of such date on a consolidated basis in accordance
with GAAP, minus the amount of cash and cash equivalents in excess of
$50,000,000 that would be reflected on such balance sheet; provided,
however, that Total Indebtedness shall not include (i) Non-Recourse
Joint Venture Indebtedness, (ii) the equity units consisting of a
6.75% senior note due 2006 and a warrant for the common stock of the
Borrower (the "6.75% Equity Units") and (iii) the 5% Company Obligated
Mandatorily Redeemable Convertible Preferred Securities due 2036 (the
"EPPICS")."
(h) Section 5.02 of the Credit Agreement is amended by redesignating
paragraphs (c) , (d) , (e) and (f) as paragraphs (d),(e), (f) and (g) ,
respectively, and by adding a new paragraph (c) to read as follows:
"(c) concurrently with any delivery of financial statements under
paragraph (a) or (b) of this Section, a certificate of a Financial
Officer of the Borrower (i) certifying as to whether a Default has
occurred and, if a Default has occurred, specifying the details
thereof and any action taken or proposed to be taken with respect
thereto and (ii) setting forth reasonably detailed calculations
(including with respect to any pro forma effect given to a Material
Transaction) demonstrating compliance with Section 6.03 as of the last
day of the most recent fiscal quarter covered by such financial
statements;"
(i) Section 6.03 is hereby amended in its entirety to read as follows:
6.03 Financial Ratio
As of the end of any fiscal quarter of the Borrower ending during any
period set forth below the Borrower shall maintain a Leverage Ratio less than or
equal to the ratio set forth opposite such period below:
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Period Leverage Ratio
December 31, 2002 to December 30, 2003 4.5 to 1
December 31, 2003 to December 30, 2004 4.25 to 1
December 31, 2004 and after 4.00 to 1
(j) Section 7.08 of the Loan Agreement is hereby deleted.
(k) Appendix A to the Loan Agreement is hereby deleted.
Section 2. Representations and Warranties of the Borrower. To induce the
Lender to enter into this Amendment, the Borrower represents and warrants to the
Lender that, on the Effective Date (as defined below), after giving effect to
this Amendment:
(a) No Default of Event of Default has occurred and is
continuing;
(b) the execution, delivery and performance by the Borrower of
this Amendment have been duly authorized by all necessary corporate
and other action and do not and will not require any registration
with, consent or approval of, notice to or action by, any Person
(including any Governmental Authority). The Loan Agreement as amended
by this Amendment constitutes the legal, valid and binding obligation
of the Borrower, enforceable against the Borrower in accordance with
its terms, except as enforceability may be limited by applicable
bankruptcy, reorganization, insolvency, moratorium or other laws
affecting the enforcement of creditors' rights generally and by
general principles or equity, including an implied covenant of good
faith and fair dealing and
(c) all of the representations and warranties of the Borrower in
or pursuant to any Loan Document shall be true and correct in all
material respects on and as of such date as if made on and as of such
date (other than any such representations or warranties that, by their
terms, refer to a specific date, in which case as of such specific
date).
Section 3. Conditions to Effectiveness. This Amendment shall be effective
(such date, the "Effective Date") when the following conditions precedent shall
have been satisfied:
(a) The Lender shall have received counterparts hereof executed by
duly authorized officers of the Borrower
(b) All fees and expenses due and owing to the Lender shall have been
paid.
(c) The Lender shall have received such other documents, instruments
and legal opinions in respect of any aspect or consequent of the
transactions contemplated hereby as it shall reasonably request.
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Section 4. Reference to and Effect in the Loan Agreement.
(a) Upon the Effective Date, each reference in the Loan Agreement to
"this Agreement", "hereunder", "hereof" or words of like import referring
to the Loan Agreement, shall mean and be a reference to the Loan Agreement
as amended hereby.
(b) Except as specifically amended above, the Loan Agreement is and
shall continue to be in full force and effect and is hereby in all respects
ratified and confirmed.
(c) The execution, delivery and effectiveness of this Amendment shall
not, except as expressly provided herein, operate as a waiver of any right,
power or remedy of the Lender under the Loan Agreement, or constitute a
waiver of any provision of any of the Loan Agreement.
Section 5. Execution in Counterparts. This Amendment may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed to be an original
and all of which taken together shall constitute but one and the same agreement.
Section 6. Governing Law. This Amendment shall be governed by, and
construed in accordance with, the laws of the Commonwealth of Virginia.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed
as of the date first above written.
CITIZENS COMMUNICATIONS COMPANY
By: /s/ Xxxxxx X. Xxxxxx
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Name: Xxxxxx X. Xxxxxx
Title: Senior Vice President, Finance and Treasurer
RURAL TELEPHONE FINANCE COOPERATIVE
By: /s/ Xxxxxxx X. Xxxxx
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Name: Xxxxxxx X. Xxxxx
Title:: Assistant - Secretary Treasurer
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