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ITEM 1.01.
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Entry into a Material Definitive Agreement.
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On July 1, 2021, Shenandoah Telecommunications Company, (“Shentel”
or the “Company”), entered into a Credit Agreement (the “Credit Agreement”) with various
financial institutions party thereto (the “Lenders”) and CoBank, ACB, as administrative agent for the Lenders
(in such capacity, the “Administrative Agent”). The Credit Agreement provides for three credit facilities (collectively,
the “Facilities”), in an aggregate amount equal to $400 million: (i) a $100 million five-year revolving
credit facility (the “Revolver”), (ii) a $150 million five-year delay draw amortizing term loan (the “Term
Loan A-1”) and (iii) a $150 million seven-year delay draw amortizing term loan (the “Term Loan A-2”
and, together with the Term Loan A-1, the “Term Loans”). The Credit Agreement
includes a provision under which the Company may request that additional term loans be made to it in an amount not to exceed the
sum of (1) the greater of (a) $75 million and (b) 100% of Consolidated EBIDTA (as defined in the Credit Agreement), calculated
on a pro forma basis in accordance with the Credit Agreement, plus (2) an additional unlimited amount subject to a maximum Total
Net Leverage Ratio (as defined in the Credit Agreement) of 4.00:1.00, calculated on a pro forma basis in accordance with the Credit
Agreement, subject to the receipt of commitments from one or more lenders for any such additional term loans and other customary
conditions.
The availability of the Facilities to the Company is subject
to the satisfaction or waiver of certain customary conditions set forth in the Credit Agreement. The Company may use the proceeds
from the Revolver and the Term Loans to finance capital expenditures, provide working capital, and for other general corporate
purposes of the Company and its subsidiaries, including the payment of fees and expenses in connection with the foregoing. The
Term Loans will be repaid in quarterly principal installments commencing on the last day of the first full calendar quarter ending
after July 1, 2023, with the unpaid balance of the Term Loans due at maturity, as set forth in the Credit Agreement.
Rates for borrowing under the Credit Agreement are based, at
the Company’s election, upon whether the borrowing is a LIBOR loan or a base rate loan. LIBOR loans will bear interest at
an adjusted LIBOR rate (which shall be no less than 0.00%) plus an applicable margin ranging from 1.50% to 2.75% for the Term Loan
A-1 and the Revolver and from 1.50% to 3.00% for the Term Loan A-2, depending on the Company’s Total Net Leverage Ratio.
Base rate loans will bear interest at a base rate plus an applicable margin ranging from 0.50% to 1.75% for the Term Loan A-1 and
the Revolver and from 0.50% to 2.00% for the Term Loan A-2, depending on the Company’s Total Net Leverage Ratio. In addition,
under the terms of the Credit Agreement, the Company agrees to pay the Lenders under the Revolver a fee on undrawn portions of
the Revolver from time to time. This fee rate is dependent on the Company’s Total Net Leverage Ratio and ranges from a rate
per annum equal to 0.200% to 0.375%.
The Credit Agreement contains representations and warranties,
and affirmative and negative financial covenants usual and customary for similar secured credit facilities, each of which are applicable
to the Company and its subsidiaries, including covenants governing the ability of the Company and its subsidiaries, subject to
negotiated exceptions, to incur additional indebtedness and additional liens on their assets, engage in mergers or acquisitions
or dispose of assets, pay dividends or make other distributions, enter into transactions with affiliated persons, make investments
or change the nature of the Company’s and its subsidiaries’ businesses. The Company is also subject to certain financial
covenants to be measured on a trailing twelve month basis on the last day of each calendar quarter. These covenants include:
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maintaining a Total Net Leverage Ratio (as defined in the Credit Agreement) not greater than 4.25 to 1.00 (subject to customary increased leverage periods following certain qualifying acquisitions); and
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maintaining a Debt Service Coverage Ratio (as defined in the Credit Agreement) not less than 2.00 to 1.00.
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Indebtedness outstanding under any of the Facilities may be
accelerated upon the occurrence of an Event of Default (as defined in the Credit Agreement).
The Administrative Agent and many of the Lenders and their affiliates
have in the past performed, and may in the future from time to time perform, investment banking, financial advisory, lending or
commercial banking services, or other services for the Company and its subsidiaries, for which they have received, and may in the
future receive, customary compensation and expense reimbursement.
The foregoing description of the Credit Agreement does not purport
to be complete and is subject to, and qualified in its entirety by reference to, the full text of the Credit Agreement, a copy
of which is attached to this Current Report on Form 8-K as Exhibit 10.1 and is incorporated herein by reference.