EXHIBIT 4.31
LOAN AGREEMENT
LOAN AGREEMENT ("AGREEMENT") MADE AS OF JUNE 24, 1997, BY AND
BETWEEN DAKOTA COOPERATIVE TELECOMMUNICATIONS, INC. A SOUTH DAKOTA
COOPERATIVE ASSOCIATION, AND DAKOTA TELECOM, INC., A SOUTH DAKOTA
CORPORATION, (COLLECTIVELY HEREINAFTER REFERRED TO AS "BORROWER"), AND RURAL
TELEPHONE FINANCE COOPERATIVE, A SOUTH DAKOTA COOPERATIVE ASSOCIATION
("LENDER").
RECITALS
WHEREAS, Borrower has requested Lender to make the Loan(s) to
Borrower described in Schedule 1 hereto; and
WHEREAS, Lender is willing to make the Loan(s) upon the terms and
conditions set forth in this Agreement;
NOW, THEREFORE, for and in consideration of the mutual covenants
contained herein, Borrower and Lender do hereby agree as follows:
L. CONSTRUCTION AND DEFINITION OF TERMS
ALL ACCOUNTING TERMS NOT SPECIFICALLY DEFINED HEREIN SHALL
HAVE THE MEANINGS ASSIGNED TO THEM AS DETERMINED BY GENERALLY ACCEPTED
ACCOUNTING PRINCIPLES. IN ADDITION TO THE TERMS DEFINED ELSEWHERE IN THIS
AGREEMENT, UNLESS THE CONTEXT OTHERWISE REQUIRES, WHEN USED HEREIN, THE
FOLLOWING TERMS SHALL HAVE THE FOLLOWING MEANINGS:
"ADJUSTMENT DATE" shall mean a date or dates, determined by
the Lender based on the term (or rate period) of the applicable Fixed Rate,
after the date of the initial Advance to the Maturity Date.
"ADVANCE" shall mean an Advance as defined in Section 2.02.
"BUSINESS DAY" shall mean any day that Lender is open for
business.
"CASH MARGINS" for any year shall mean net income plus
depreciation, amortization and any other non-cash charges, less any non-cash
credits and principal on long-term debt payable in such year, as calculated
on a consolidated basis for Borrower and all its Subsidiaries.
"CERTIFIED" shall mean that the information, statement,
schedule, report or other document required to be "Certified" shall contain a
representation of a duly authorized officer of Borrower that such
information, statement, schedule, report or other document is true and
correct and complete.
"CLOSING" shall mean the first date on which funds are
advanced to Borrower hereunder.
"COLLATERAL" shall mean the Mortgaged Property, as such term
is defined in the Mortgage, and all proceeds, cash and non-cash, including
insurance proceeds, of the foregoing, whether in the possession of Borrower
or any other person, and certain stock and related proceeds and dividends
described in, and pledged to Lender pursuant to, a Pledge and Security
Agreement dated as of even date herewith (the "Pledge Agreement").
"COMMITMENT" shall have the meaning set forth in Schedule 1
hereto.
"DEBT SERVICE COVERAGE RATIO" OR "DSC" for any year shall mean
(a) total net income or margins plus depreciation and amortization expense,
and interest on long-term debt for such year, divided by (b) principal and
interest on long-term debt payable in such year, as calculated on a
consolidated basis for the Borrower and all its Subsidiaries.
"EVENT OF DEFAULT" shall mean any of the events described in
Section 8 hereof.
"FIXED RATE" shall mean the interest rate per annum provided
for in Section 2.03 of this Agreement.
"LEASES" shall mean any lease of property by which Borrower
shall be obligated for rental or other payments which in the aggregate are in
excess of $100,000 other than such equipment leases which are in form and
substance substantially in conformity with lease agreements in general use in
Borrower's industry by companies of size and character similar to Borrower.
"LIEN" shall mean any statutory or common law consensual or
non-consensual mortgage, pledge, security interest, encumbrance, lien, right
of set-off, claim or charge of any kind, including, without limitation, any
conditional sale or other title retention transaction, any lease transaction
in the nature thereof and any secured transaction under the Uniform
Commercial Code of any jurisdiction.
"LOAN" shall mean the loan or loans by the Lender to Borrower,
pursuant to this Agreement and the Note, in an aggregate principal amount not
to exceed the Commitment.
"MATURITY DATE" shall mean the maturity date defined in the
Note.
"MINIMUM NET WORTH TEST" shall be calculated on a consolidated
basis for the Borrower and all its Subsidiaries, and shall mean an equity to
total asset ratio of at least forty (40%) percent. Equity shall be
determined by subtracting total liabilities from total assets.
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"MORTGAGE" shall mean the mortgage and security agreement
described in Schedule 1.
"NET WORTH" shall be calculated on a consolidated
basis for the Borrower and all its Subsidiaries taken as a whole and arrived
at by subtracting total liabilities from total assets.
"NOTE" shall mean the note or notes executed and delivered by
Borrower at or prior to Closing pursuant to Subsection 5.02(a) hereof, and
all renewals, replacements and extensions thereof.
"OBLIGATIONS" shall include the full and punctual performance
of all present and future duties, covenants and responsibilities due to the
Lender by Borrower or any of Borrower's Subsidiaries under this Agreement, the
Note, the Other Agreements, all present and future obligations of Borrower or
any of Borrower's Subsidiaries to the Lender for the payment of money under
this Agreement, the Note, the Other Agreements, extending to all principal
amounts, interest, late charges and all other charges and sums, as well as
all costs and expenses payable by Borrower or any of Borrower's Subsidiaries,
under this Agreement, the Note, the Other Agreements, and any and all other
present and future monetary liabilities of Borrower or any of Borrower's
Subsidiaries to the Lender, whether direct or indirect, contingent or
noncontingent, matured or unmatured, accrued or not accrued, related or
unrelated to this Agreement, whether or not of the same character or class as
Borrower's or any of Borrower's Subsidiaries' obligations under this Agreement
and the Note, whether or not secured under any other document, instrument or
statutory or common law provision, as well as all renewals, refinancings,
consolidations, recastings and extensions of any of the foregoing.
"OTHER AGREEMENTS" shall mean any and all promissory notes,
security agreements, assignments, subordination agreements, pledge or
hypothecation agreements, stock powers, mortgages, deeds of trust, leases,
contracts, guaranties, instruments and documents now and hereafter existing
between the Lender and Borrower or any of Borrower's Subsidiaries, executed
and/or delivered pursuant to this Agreement or guaranteeing, securing or in
any other manner relating to any of the Obligations, including, the
instruments and documents referred to in Subsection 5.02 hereof.
"PAYMENT DATE" shall mean the last day of each of the months
referred to in Schedule 1 hereto.
"PAYMENT NOTICE" shall mean the notice furnished to the
Borrower at least quarterly indicating the precise amount of principal and/or
interest due on the next ensuing Payment Date, such notice to be sent to the
Borrower at least ten (10) days before such Payment Date.
"PERSON" shall include natural persons, corporations,
associations, partnerships, joint ventures, trusts, governments and agencies
and departments thereof, and every other entity of every kind.
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"SUBORDINATED CAPITAL CERTIFICATE" OR "SCC" shall mean a
subordinated certificate representing an investment in the Lender purchased
by the Borrower in connection with the Loan.
"SUBSIDIARY" at any time means any entity which is at the time
beneficially owned or controlled directly or indirectly by the Borrower, by
one or more such entities or by the Borrower and one or more such entities.
"TERMINATION DATE" shall mean that date which is four (4)
years from the date hereof for the A-01 loan and two (2) years from the date
hereof for the A-02 loan.
"TIMES INTEREST EARNED RATIO" OR "TIER" for any year shall
mean (a) total net income or margins plus income taxes plus interest payable
on long-term debt for such year, divided by (b) interest on long-term debt
payable in such year, as measured on a consolidated basis for the Borrower
and all its Subsidiaries.
"VARIABLE RATE" shall mean the variable rate established by
the Lender from time to time for loans similarly classified pursuant to
Lender's policies and procedures then in effect.
2. LOAN
2.01 LOAN. The Lender agrees to make the Loan to Borrower
subject to all of the terms and conditions of this Agreement and the Other
Agreements.
2.02 ADVANCES. The Lender agrees to make, and the Borrower
agrees to request, on the terms and conditions of this Agreement, Advances
from time to time at the office of the Lender in Herndon, Virginia, or at
such other place as the Lender may designate, not to exceed the Commitment.
The Borrower shall give the Lender at least one Business Day prior written
notice of the date on which each Advance is to be made. On the Termination
Date the Lender may stop advancing funds and reduce the Commitment to the
aggregate amount theretofore advanced. The obligation of the Borrower to
repay the Advances shall be evidenced by the Note.
2.03 PAYMENT, AMORTIZATION AND INTEREST RATE.
(a) Payment. The Borrower shall pay on each Payment Date
quarterly installments, in an amount as determined by the Lender, of
principal and/or interest as shown in the Payment Notice, except that, if not
sooner paid, any balance of the principal amount and interest accrued thereon
and all other amounts due hereunder shall be due and payable on the Maturity
Date. Payment of principal hereunder shall commence after the first full
quarter following the initial Advance of funds as set forth in Schedule 1 and
on each subsequent Payment Date until the Maturity Date or such earlier date
as all amounts due hereunder and on account of the Note shall have been paid
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in full. Payment of interest hereunder is due on each Payment Date in which
a principal balance is outstanding. Principal will be amortized in
accordance with the method stated in Schedule 1 hereto.
The Lender will use, for purposes of calculating the amortization of
principal, one of the following interest rates, as applicable:
(i) If the Borrower elects the Fixed Rate, the Fixed Rate in effect on
the Adjustment Date; or
(ii) If the Borrower elects the Variable Rate, the Variable Rate in
effect when amortization begins; or
(iii) If the Borrower elects to convert from one interest rate
program to another, the interest rate then in effect for the elected
program.
At the Lender's option, all payments shall be applied first to late payment
charges due, as hereinafter provided, then to interest accrued to the date of
such payment, and then to the reduction of principal balance outstanding.
No provision of this Agreement or the Note shall require the payment, or
permit the collection, of interest in excess of the highest rate permitted by
applicable law.
(b) Interest Rate. Each Advance shall be initially made at
the Variable Rate. Interest shall be computed from the actual number of days
elapsed on the basis of a year of 365 days until the first Payment Date
following the initial Advance. Thereafter, interest shall continue to be
computed for the actual number of days elapsed on the basis of a year of 365
days unless a Fixed Rate is applicable to the Loan, in which case interest
shall be computed on the basis of a 30-day month and 360-day year.
(i) Variable Rate. If Advances are made at the Variable Rate, it shall
apply until the Maturity Date, except as provided hereinbelow.
(ii) Fixed Rate. If the Borrower elects a Fixed Rate, such
Fixed Rate as is available and in effect for loans similarly
classified pursuant to Lender's policies and procedures then in
effect at the time of the election shall apply to such Advance
until the Adjustment Date. Upon notice given by the Borrower five
(5) Business Days prior to such Adjustment Date, Borrower may elect
to reset the interest rate to such Fixed Rate as is available and
in effect at the time of such Adjustment Date. Such reset Fixed
Rate shall apply to that portion of the outstanding principal
balance of the Loan elected to have a Fixed Rate from the
Adjustment Date until a new Adjustment Date or the Maturity Date.
If Borrower does not elect to reset the Fixed Rate, the Variable
Rate shall apply to the outstanding principal balance of the Loan
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that had been bearing interest at the Fixed Rate prior to such
Adjustment Date, from such Adjustment Date to the Maturity Date.
(iii) Conversion to Different Interest Program.
(A) Variable Rate to Fixed Rate. Subject to the conditions set
forth herein, the Borrower may convert from the Variable Rate
to the Fixed Rate for any portion or all of the principal
amount of the Commitment then outstanding at any time provided
the Lender offers a Fixed Rate at such time.
(B) Fixed Rate to Variable Rate The Borrower may convert from a
Fixed Rate to the Variable Rate only on an Adjustment Date.
2.04 PREPAYMENT. In the event the Borrower prepays all or part
of the Loan, the Borrower shall pay such prepayment fee as the Lender may
prescribe from time to time in its policies in connection with any prepayment
of the Loan. All prepayments shall be accompanied by payment of accrued and
unpaid interest on the amount of and to the date of the prepayment. All
prepayments shall be applied first to fees, second to the payment of accrued
and unpaid interest, and then to the unpaid balance of the principal amount
of the Loan. If the Loan bears interest at the Variable Rate the Borrower
may prepay the Loan or any portion thereof, as the case may be, at any time
subject to the terms hereof and said prepayment fee shall be in an amount
equal to fifty (50) basis points times the amount being prepaid. If the Loan
bears interest at the Fixed Rate, the Borrower may prepay the Loan only on an
Adjustment Date or such other date as may be agreed upon by the parties
hereto, and in any such event, Borrower shall pay such prepayment fee as the
Lender may prescribe from time to time pursuant to its policies and
procedures.
2.05 5% SUBORDINATED CAPITAL CERTIFICATES. The Borrower
shall purchase SCCs which in the aggregate shall not exceed the amount
specified in Schedule 1 hereto. Unless otherwise requested in writing by the
Borrower prior to the initial Advance and approved by the Lender, the
Borrower agrees to purchase SCCs either (1) with each Advance in the amount
of five percent (5%) of each such Advance, and each such SCC shall be paid
for with proceeds of such Advance, or (2) by making payments with Borrower's
own funds in twenty (20) equal quarterly installments, commencing with the
first full quarter following the initial Advance. If the Borrower elects to
pay for SCCs other than from Loan funds, the amount of the Commitment will be
correspondingly reduced by said amount when the SCCs are fully paid. If the
Borrower obtains Advances hereunder other than for the purpose of purchasing
SCCs and fails to pay for the SCCs, then the Lender may make Advances for the
account of the Borrower to purchase the SCCs. The Lender agrees to deliver
the SCCs on or about the date on which the SCCs have been paid for in full.
The SCCs shall bear no interest and shall mature in accordance with the terms
thereof.
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3. SECURITY
As security for the payment and performance of all of the
Obligations, Borrower has (i) entered into the Mortgage pledging and granting
to the Lender a prior and continuing security interest in the Collateral that
may be secured by the Mortgage that shall continually exist until all
Obligations have been paid in full, and (ii) executed the Pledge Agreement
with Lender pursuant to which Borrower has pledged certain stock as described
therein. If reasonably required by the Lender at any time, Borrower shall
make notations, satisfactory to the Lender, on its books and records
disclosing the existence of the Lender's security interest in the Collateral.
Borrower agrees that, with respect to the Collateral which is subject to
Article 9 of the Uniform Commercial Code, the Lender shall have, but not be
limited to, all the rights and remedies of a secured party under the Uniform
Commercial Code. The Lender shall have no liability or duty, either before
or after the occurrence of an Event of Default hereunder, on account of loss
of or damage to, or to collect or enforce any of its rights against, the
Collateral, or to preserve any rights against account debtors or other
parties with prior interests in the Collateral.
4. REPRESENTATIONS AND WARRANTIES
TO INDUCE THE LENDER TO ENTER INTO THIS AGREEMENT, EACH
BORROWER REPRESENTS AND WARRANTS TO THE LENDER AS OF THE DATE OF THIS
AGREEMENT THAT:
4.01 GOOD STANDING. Borrower is a corporation duly organized,
validly existing and in good standing under the laws of the state of its
incorporation; has the power to own its property and to carry on its
business; is duly qualified to do business; and is in good standing in each
jurisdiction in which the transaction of its business makes such
qualification necessary.
4.02 AUTHORITY. Borrower has corporate power and authority to
enter into this Agreement, the Mortgage and the Pledge Agreement; to make the
borrowing hereunder; to execute and deliver all documents and instruments
required hereunder and to incur and perform the obligations provided for
herein, in the Mortgage, in the Pledge Agreement and in the Note, all of
which have been duly authorized by all necessary and proper corporate and
other action; and no consent or approval of any person, including, without
limitation, stockholders and members of Borrower and any public authority or
regulatory body, which has not been obtained is required as a condition to
the validity or enforceability hereof or thereof.
4.03 BINDING AGREEMENT. This Agreement has been duly and
properly executed by Borrower, constitutes the valid and legally binding
obligation of Borrower and is fully enforceable against Borrower in
accordance with its terms, subject only to laws affecting the rights of
creditors generally, the exercise of judicial discretion in accordance with
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general principles of equity or because waivers of statutory or common law
rights or remedies may be limited.
4.04 NO CONFLICTING AGREEMENTS. The execution, delivery of
and performance by Borrower of this Agreement, the Mortgage, the Pledge
Agreement and the Note, and the transactions contemplated hereby or thereby,
will not: (a) violate any provision of law, any order, rule or regulation of
any court or other agency of government, any award of any arbitrator, the
charter or by-laws of Borrower, or any indenture, contract, agreement,
mortgage, deed of trust or other instrument to which Borrower is a party or
by which it or any of its property is bound; or (b) be in conflict with,
result in a breach of or constitute (with due notice and/or lapse of time) a
default under, any such award, indenture, contract, agreement, mortgage, deed
of trust or other instrument, or result in the creation or imposition of any
Lien (other than contemplated hereby) upon any of the property or assets of
Borrower.
4.05 LITIGATION. There are no judgments, claims, actions,
suits or proceedings pending or, to the knowledge of Borrower, threatened
against or affecting Borrower or its properties, at law or in equity or
before or by any federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, which may result in any
material adverse change in the business, operations, prospects, properties or
assets or in the condition, financial or otherwise, of Borrower, and Borrower
is not, to its knowledge, in default with respect to any judgment, order,
writ, injunction, decree, rule or regulation of any court or federal, state,
municipal or other governmental department, commission, board, bureau, agency
or instrumentality, domestic or foreign, which would have a material adverse
effect on Borrower.
4.06 FINANCIAL CONDITION. The financial statements of
Borrower as at the date set forth in Schedule 1 hereto, heretofore delivered
to the Lender, are complete and correct, fairly present the financial
condition of Borrower and have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis. There are no
liabilities of Borrower, direct or indirect, fixed or contingent, as of the
date of such statements which are not reflected therein. There has been no
material adverse change in the financial condition or operations of the
Borrower from that set forth in said financial statements except changes
previously disclosed in writing to the Lender prior to the date hereof.
4.07 TAXES. Borrower has paid or caused to be paid all
federal, state and local taxes to the extent that such taxes have become due,
unless the Borrower is contesting in good faith any such tax. Borrower has
filed or caused to be filed all federal, state and local tax returns which
are required to be filed by Borrower.
4.08 TITLE TO PROPERTIES. Borrower has good and marketable
title to all of its real properties and owns all of its other properties
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and assets free and clear of any liens, except (i) the lien of this
Mortgage and taxes or assessments not yet due; (ii) deposits or pledges to
secure payment of workmen's compensation, unemployment insurance, old age
pensions or other social security; and (iii) deposits or pledges to secure
performance of bids, tenders, contracts (other than contracts for the
payment of borrowed money), leases, public or statutory obligations, surety
or appeal bonds, or other deposits or pledges for purposes of like general
nature in the ordinary course of business.
4.09 LICENSES AND PERMITS. Borrower has duly obtained and now
holds all licenses, permits, certifications, approvals and the like necessary
to own and operate its property and business that are required by federal,
state and local laws of the jurisdictions in which Borrower conducts its
business and each remains valid and in full force and effect.
4.10 SUBSIDIARIES. Borrower has no Subsidiaries other than
Subsidiaries heretofore disclosed to the Lender, or hereafter formed or
acquired with the prior written consent of the Lender.
4.11 CERTAIN INDEBTEDNESS. There is no indebtedness of
Borrower owing to any employee, officer, stockholder or director of the board
of Borrower other than accrued salaries, commissions and the like and any
indebtedness subordinated to the Obligations pursuant hereto.
4.12 LOCATION OF OFFICE. The chief place of business of the
Borrower and the office where its records concerning accounts and contract
rights are kept is identified in Schedule 1 hereto.
4.13 REQUIRED APPROVALS. No license, consent, permit or
approval of any governmental agency or authority is required to enable the
Borrower to enter into this Agreement or to perform any of its obligations
provided for herein except as disclosed on Schedule 1 hereto and except with
respect to regulatory approvals which may be required in connection with the
Lender's enforcement of certain remedies hereunder.
4.14 ERISA. Each pension plan of Borrower and its
Subsidiaries providing benefits for employees of Borrower or such Subsidiary
covered by Title IV of the Employee Retirement Income Security Act of 1974,
as amended, and the regulations thereto ("ERISA"), is in compliance with
ERISA in all material respects, and no material liability to the Pension
Benefit Guaranty Corporation ("PBGC") or to a multiemployer plan has been, or
is expected by Borrower or its Subsidiaries to be, incurred by Borrower or
such Subsidiaries.
5. CONDITIONS OF LENDING
THE LENDER SHALL HAVE NO OBLIGATION TO MAKE THE INITIAL
ADVANCE TO BORROWER HEREUNDER UNLESS, AS OF THE DATE OF CLOSING, EACH OF THE
FOLLOWING CONDITIONS PRECEDENT SHALL BE SATISFIED AS PROVIDED BELOW:
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5.01 LEGAL MATTERS. All legal matters incident to the
consummation of the transactions hereby contemplated shall be satisfactory to
counsel for the Lender and to such local counsel as counsel for the Lender
may retain.
5.02 DOCUMENTS. There shall have been delivered to the
Lender, fully completed and duly executed (when applicable), the following,
satisfactory to the Lender and its counsel:
(a) This Agreement and the Note.
(b) Certified copies, satisfactory to the Lender, of all
such corporate documents and proceedings of the Borrower
authorizing the transactions herein contemplated.
(c) A written opinion from Borrower's counsel addressing
such legal matters as the Lender or its counsel shall
reasonably require.
(d) The Borrower shall have (i) executed the Mortgage; (ii)
if any real property is owned by Borrower, recorded a
valid and binding Mortgage granting Lender a first lien
in all real property owned by Borrower; (iii) filed
financing statements in all jurisdictions necessary to
provide Lender a first priority, perfected security
interest in all Collateral which may be perfected by the
filing of financing statements; and (iv) delivered such
other documents as are necessary to create or continue a
perfected security interest in favor of the Lender in
the Collateral.
(e) The Pledge Agreement dated as of even date herewith and
related stock powers.
5.03 GOVERNMENT APPROVALS. The Borrower shall have furnished
to the Lender true and correct copies of all certificates, authorizations and
consents, including without limitation the consents referred to in Section
4.13 hereof, necessary for the execution, delivery or performance by the
Borrower of this Agreement, the Note, the Pledge Agreement and the Mortgage.
5.04 REPRESENTATIONS, WARRANTIES AND MATERIAL CHANGE. At
Closing and at the date of every subsequent Advance hereunder, all covenants,
representations and warranties set forth in this Agreement shall be true and
correct on and as of such time with the same effect as though such covenants,
representations and warranties had been made on and as of such date; no Event
of Default specified in Section 8 and no event which, with the lapse of time
or the notice and lapse of time specified in Section 8 would become such an
Event of Default, shall have occurred and be continuing or will have occurred
after giving effect to the Advance on the books of the Borrower; there shall
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have occurred no material adverse change in the business or condition,
financial or otherwise, of the Borrower; and nothing shall have occurred
which in the opinion of the Lender materially and adversely affects the
Borrower's ability to meet its obligations hereunder.
5.05 SPECIAL CONDITIONS. At Closing and at the time of every
subsequent Advance hereunder, the Lender and its counsel shall be fully
satisfied that the Borrower has complied and will continue to comply with any
special conditions identified in Schedule 1 hereto.
5.06 REQUISITIONS. The Borrower will request Advances in form
and substance satisfactory to the Lender. Pursuant to the terms and
conditions hereof, the Lender will wire the proceeds of the requested Advance
to an account as directed by the Borrower.
6. AFFIRMATIVE COVENANTS
EACH BORROWER COVENANTS AND AGREES WITH THE LENDER THAT, UNTIL
ALL OF THE OBLIGATIONS HAVE BEEN PAID IN FULL, BORROWER WILL:
6.01 MEMBERSHIP. Remain, or an affiliate thereof will remain,
a member in good standing of the Lender.
6.02 FINANCIAL STATEMENTS AND OTHER INFORMATION. Furnish to
the Lender: (a) financial statements as required by the Mortgage; (b) such
other information, reports or statements concerning the operations, business
affairs and/or financial condition of Borrower as the Lender may reasonably
request from time to time; and (c) promptly upon their becoming available
information, in form and substance satisfactory to Lender, evidence of any
and all changes or modification of licenses, permits, certifications,
approvals and the like necessary for Borrower to own or operate its business
or a substantial part of its business.
6.03 FINANCIAL RATIOS. Subject to applicable laws and rules
and orders of regulatory bodies, and to events which in the judgment of the
Lender are beyond the control of the Borrower, so operate and manage its
business as to achieve a DSC of not less than 1.25 and a TIER of not less
than 1.50, said ratios being determined by averaging each of the two highest
annual ratios during the three most recent fiscal years.
6.04 ANNUAL CERTIFICATE. Within one hundred twenty (120) days
after the close of each calendar year, commencing with the year in which the
initial Advance hereunder shall have been made, deliver to the Lender a
written statement signed by the general manager stating that to the best of
said person's knowledge, the Borrower has fulfilled all of its Obligations
under this Agreement, the Note, and the Mortgage throughout such year or, if
there has been a default in the fulfillment of any such Obligations,
specifying each such default known to said person and the nature and status
thereof.
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6.05 USE OF PROCEEDS. Use Advances made hereunder and under
the Note only for the purpose identified in Schedule 1 hereto and for the
payment of the costs, expenses and fees incident to this Agreement and for no
other purpose whatsoever without the prior written consent of the Lender.
6.06 SPECIAL AFFIRMATIVE COVENANTS. During the term hereof,
Lender and its counsel shall be fully satisfied that the Borrower has
complied and will continue to comply with any special affirmative covenants
identified in Schedule 1 hereto.
6.07 MORTGAGE FILING. Within ten (10) days of acquiring any
real property, the Borrower shall cause the Mortgage to be duly recorded as a
first mortgage on all real property and the Mortgage or other appropriate
documentation shall have been duly filed, recorded or indexed as a security
interest in personal property wherever the Lender shall have reasonably
requested, all in accordance with applicable law, and the Borrower shall have
caused satisfactory evidence thereof to be furnished to the Lender.
7. NEGATIVE COVENANTS.
7.01 NOTICE. Borrower covenants and agrees with the Lender
that Borrower will not, directly or indirectly, without giving written notice
to the Lender thirty (30) days prior to the effective date of any change:
(a) Change Location of Chief Place of Business. Change the
location of the Borrower's chief place of business.
(b) Change of Name. Change the name of Borrower.
7.02 CONSENT. Borrower covenants and agrees with the Lender
that Borrower and each of Borrower's Subsidiaries will not, directly or
indirectly, without the prior written consent of the Lender:
(a) Control. Alter or permit alteration of control of the
Borrower. Control shall be as defined by regulations
for telephone companies issued by the Federal
Communications Commission ("FCC").
(b) Subsidiaries. Form or acquire any Subsidiaries.
(c) Additional Indebtedness. Borrow money on a secured
basis from any other lender or incur any additional
secured indebtedness; borrow money or incur any
unsecured indebtedness in excess of five percent (5%) of
total assets; or enter into any Leases, unless at that
time Borrower meets the Minimum Net Worth Test. If
Borrower meets the Minimum Net Worth Test, then Borrower
and its Subsidiaries may incur additional indebtedness
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or enter into Leases without prior written approval of
Lender provided the Borrower meets the Minimum Net Worth
Test after incurring such additional indebtedness or
entering into such Leases; provided, further, however,
Borrower must give at least thirty (30) days written
notice to Lender prior to incurring any additional
indebtedness or entering into such Leases.
7.03 DIVIDENDS AND OTHER CASH DISTRIBUTIONS. The Borrower
will not, in any one calendar year, without the prior approval in writing of
the Lender (i) declare or pay any dividends or make any other distribution to
its stockholders with respect to its capital stock; (ii) purchase or redeem
or retire any of its capital stock; or (iii) pay any management fees or if
already paying a management fee, pay an increase in management fees unless
with respect to any of the foregoing (after giving effect to such
transaction) (a) Borrower meets the Minimum Net Worth Test and (b) the
payment of such dividend, the making of such distribution, or the purchase,
redemption or retirement of such stock, individually or in the aggregate,
does not exceed twenty-five percent (25%) of the prior fiscal year-end Cash
Margins in any one calendar year. In no event may the Borrower make such a
distribution or payment when there is unpaid any due installment of principal
and/or interest on the Note or if the Borrower is otherwise in material
default of any provision of this Agreement or would be in material default
hereunder as a result of such distribution or payment.
7.04 SPECIAL NEGATIVE COVENANTS. During the term hereof,
Lender and its counsel shall be fully satisfied that the Borrower has
complied and will continue to comply with any special negative covenants
identified in Schedule 1 hereto.
8. EVENTS OF DEFAULT
The occurrence of any one or more of the following events
Shall constitute an "Event of Default":
(a) REPRESENTATIONS AND WARRANTIES. Any representation or
warranty made herein, in any of the Other Agreements or
in any statement, report, certificate, opinion,
financial statement or other document furnished or to be
furnished in connection with this Agreement or the Other
Agreements shall be false or misleading in any material
respect.
(b) PAYMENT. Failure of Borrower or any of Borrower's
Subsidiaries to make any of the payment Obligations,
including, without limitation, any sum due the Lender
under this Agreement or any of the Other Agreements,
when and as the same shall become due, whether at the
due date thereof, by demand, by acceleration or
otherwise.
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(c) OTHER COVENANTS. Failure of Borrower or any of
Borrower's Subsidiaries to observe or perform any
warranty, covenant or condition to be observed or
performed by Borrower under this Agreement or any of the
Other Agreements.
(d) CORPORATE EXISTENCE. The Borrower shall forfeit or
Otherwise be deprived of its corporate charter,
Franchises, permits, easements, consents or licenses
Required to carry on any material portion of its
Business.
(e) OTHER OBLIGATIONS. Default by the Borrower or any of
Borrower's Subsidiaries in the payment when due of any
money owed by the Borrower, whether principal, interest,
premium or otherwise, under any other agreement for
borrowing money in an amount in excess of five percent
(5%) of total assets, whether or not such borrowing is
secured.
(f) BANKRUPTCY. A court shall enter a decree or order for
relief with respect to the Borrower or any Subsidiary or
guarantor (if any) in an involuntary case under any
applicable bankruptcy, insolvency or other similar law
now or hereafter in effect, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator
or similar official, or ordering the winding up or
liquidation of its affairs, and such decree or order
shall remain unstayed and in effect for a period of
sixty (60) consecutive days or the Borrower or any
Subsidiary or guarantor (if any) shall commence a
voluntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in
effect, or under any such law, or consent to the
appointment or taking of possession by a receiver,
liquidator, assignee, custodian or trustee, of a
substantial part of its property, or make any general
assignment for the benefit of creditors.
(g) DISSOLUTION OR LIQUIDATION. Other than as provided in
subsection (f) above, the dissolution or liquidation of
the Borrower or any Subsidiary or guarantor (if any), or
failure by the Borrower or any Subsidiary promptly to
forestall or remove any execution, garnishment or
attachment of such consequence as will impair its
ability to continue its business or fulfill its
obligations and such execution, garnishment or
attachment shall not be vacated within sixty (60) days.
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(h) FINAL JUDGMENT. A final non-appealable judgment in
excess of $100,000 shall be entered against the Borrower
and shall remain unsatisfied or without a stay for a
period of sixty (60) days.
9. RIGHTS AND REMEDIES
9.01 RIGHTS AND REMEDIES OF THE LENDER. Upon the occurrence
of an Event of Default, the Lender may, subject to:
(i) thirty (30) days prior written notice during which time
Borrower shall have the opportunity to cure said Event of
Default except with respect to Obligations pursuant to 8(b),
8(f) and 8(g) above which shall require no notice or demand
and shall have no period to cure; and
(ii) compliance, if required, with the rules and regulations of the FCC
and any state public service or utilities commission having
jurisdiction;
exercise in any jurisdiction in which enforcement hereof is sought, the
following rights and remedies, in addition to all rights and remedies
available to the Lender under applicable law, all such rights and remedies
being cumulative and enforceable alternatively, successively or concurrently:
(a) Declare all unpaid principal outstanding on the Note, all
accrued and unpaid interest thereon, and all other Obligations
to be immediately due and payable and the same shall thereupon
become immediately due and payable without presentment,
demand, protest or notice of any kind, all of which are hereby
expressly waived.
(b) Institute any proceeding or proceedings to enforce the
Obligations owed to, or any Liens in favor of the Lender.
(c) Pursue all rights and remedies available to the Lender that
are contemplated by the Mortgage in the manner, upon the
conditions, and with the effect provided in the Mortgage,
including but not limited to a suit for specific performance,
injunctive relief or damages.
(d) Pursue any other rights and remedies available to the Lender
at law or in equity.
9.02 CUMULATIVE NATURE OF REMEDIES. Nothing herein shall limit
the right of the Lender, subject to notice and right to cure provisions
contained herein, to pursue all rights and remedies available to a creditor
following the occurrence of an Event of Default subject to compliance, if
required, with the rules and regulations of the FCC and any state public
service or utilities commission having jurisdiction. Each right, power and
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remedy of the Lender in this Agreement and/or the Other Agreements shall be
cumulative and concurrent, and recourse to one or more rights or remedies
shall not constitute a waiver or any other right, power or remedy.
9.03 COSTS AND EXPENSES. Borrower agrees to pay and to be
liable for any and all reasonable expenses, including attorney's fees and
court costs, incurred by the Lender in exercising or enforcing any of its
rights hereunder or under the Other Agreements, together with interest
thereon at the rate and determined in the manner provided in the Mortgage.
Subject to the Mortgage and applicable law, the Lender may apply all
Collateral and proceeds of all Collateral to the Obligations in any manner
which the Lender, in its sole discretion, deems appropriate, and Borrower
will continue to be liable for any deficiency.
9.04 LATE PAYMENT CHARGES. If payment of any principal and/or
interest due under the terms of the Note is not received at the office of the
Lender in Herndon, Virginia, or as the Lender may otherwise designate to the
Borrower, within such time period as the Lender may prescribe from time to
time in its policies in connection with any late payment charges (such unpaid
amount of principal and/or interest being herein called the "delinquent
amount" and the period beginning after such due date until payment of the
delinquent amount being herein called the "late-payment period"), the
Borrower will pay to the Lender, in addition to all other amounts due under
the terms of the Note, the Mortgage, and this Agreement, any late-payment
charge as may be fixed by the Lender from time to time, on the delinquent
amount for the late-payment period.
9.05 LENDER'S SETOFF. The Lender shall have the right, in
addition to all other rights and remedies available to it, to setoff and to
recover against any or all of the Obligations due to Lender, any monies now
and hereafter owing to Borrower by the Lender. Borrower waives all rights of
setoff, deduction, recoupment or counterclaim.
10. MISCELLANEOUS
10.01 PERFORMANCE FOR BORROWER. Borrower agrees and hereby
authorizes that the Lender may, in its sole discretion, but the Lender shall
not be obligated to, advance funds on behalf of Borrower without prior notice
to Borrower, in order to insure Borrower's compliance with any material
covenant, warranty, representation or agreement of Borrower made in or
pursuant to this Agreement or any of the Other Agreements, to preserve or
protect any right or interest of the Lender in the Collateral or under or
pursuant to this Agreement or any of the Other Agreements, including without
limitation, the payment of any insurance premiums or taxes and the
satisfaction or discharge of any judgment or any Lien upon the Collateral or
other property or assets of Borrower; provided, however, that the making of
any such advance by the Lender shall not constitute a waiver by the Lender of
any Event of Default with respect to which such advance is made nor relieve
Borrower of any such Event or Default. Borrower shall pay to the Lender upon
demand all such advances made by the Lender with interest thereon at the rate
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and determined in the manner provided in the Note. All such advances shall
be deemed to be included in the Obligations and secured by the security
interest granted the Lender hereunder to the extent permitted by law.
10.02 EXPENSES AND FILING FEES. Whether or not any of the
transactions contemplated hereby shall be consummated, Borrower agrees to pay
to the Lender at Closing or thirty (30) days after the execution and delivery
hereof, whichever is earlier, all expenses of the Lender in connection with
the filing or recordation of all financing statements and instruments as may
be required by the Lender at the time of, or subsequent to, the execution of
this Agreement, including, without limitation, all documentary stamps,
recordation and transfer taxes and other costs and taxes incident to
recordation of any document or instrument in connection herewith. Borrower
agrees to save harmless and indemnify the Lender from and against any
liability resulting from the failure to pay any required documentary stamps,
recordation and transfer taxes, recording costs, or any other expenses
incurred by the Lender in connection with this Agreement. The provisions of
this Subsection 10.02 shall survive the execution and delivery of this
Agreement and the payment of all other Obligations.
10.03 WAIVERS BY BORROWER. Borrower hereby waives, to the
extent the same may be waived under applicable law: (a) in the event the
Lender seeks to repossess any or all of the Collateral by judicial
proceedings, any bond(s) or demand(s) for possession which otherwise may be
necessary or required; (b) presentment, demand for payment, protest and
notice of non-payment and all exemptions; and (c) substitution, impairment,
exchange or release of any collateral security for any of the Obligations.
Borrower agrees that the Lender may exercise any or all of its rights and/or
remedies hereunder and under the Other Agreements without resorting to and
without regard to security or sources of liability with respect to any of the
Obligations.
10.04 WAIVERS BY THE LENDER. Neither any failure nor any
delay on the part of the Lender in exercising any right, power or remedy
hereunder or under any of the Other Agreements shall operate as a waiver
thereof, nor shall a single or partial exercise thereof preclude any other or
further exercise thereof or the exercise of any other right, power or remedy.
10.05 LENDER'S RECORDS. Every statement of account or
reconciliation rendered by the Lender to Borrower with respect to any of the
Obligations shall be presumed conclusively to be correct and shall constitute
an account stated between the Lender and Borrower unless, within ten (10)
Business Days after such statement or reconciliation shall have been mailed,
postage prepaid, to Borrower, the Lender shall receive written notice of
specific objection thereto.
10.06 MODIFICATIONS. No modification or waiver of any
provision of this Agreement, the Note or any of the Other Agreements, and no
consent to any departure by Borrower therefrom shall in any event be
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effective unless the same shall be in writing, and then such waiver or
consent shall be effective only in the specific instance and for the purpose
for which given. No notice to or demand upon Borrower in any case shall
entitle Borrower to any other or further notice or demand in the same,
similar or other circumstances.
10.07 NOTICES. All notices, requests and other communications
provided for herein including, without limitation, any modifications of, or
waivers, requests or consents under, this Agreement shall be given or made in
writing (including, without limitation, by telecopy) and delivered to the
intended recipient at the "Address for Notices" specified below; or, as to
any party, at such other address as shall be designated by such party in a
notice to each other party. Except as otherwise provided in this Agreement,
all such communications shall be deemed to have been duly given when
personally delivered or, in the case of a telecopied or mailed notice, upon
receipt, in each case given or addressed as provided for herein. The Address
for Notices of the respective parties are as follows:
Rural Telephone Finance Cooperative
Woodland Park
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Chief Executive Officer
Fax: ▇▇▇-▇▇▇-▇▇▇▇
The Borrower:
The address set forth in
Schedule 1 hereto
10.08 GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF
JURY TRIAL.
(a) THE PERFORMANCE AND CONSTRUCTION OF THIS AGREEMENT AND THE
NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
COMMONWEALTH OF VIRGINIA.
(b) BORROWER HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF
THE UNITED STATES COURTS LOCATED IN VIRGINIA AND OF ANY STATE COURT SO
LOCATED FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. BORROWER IRREVOCABLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT
IT MAY NOW OR HEREAFTER HAVE TO THE ESTABLISHING OF THE VENUE OF ANY SUCH
PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING HAS
BEEN BROUGHT IN AN INCONVENIENT FORUM.
(c) EACH OF THE BORROWER AND THE LENDER HEREBY IRREVOCABLY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL
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BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR THE TRANSACTIONS CONTEMPLATED HEREBY.
10.09 HOLIDAY PAYMENTS. If any payment to be made by the
Borrower hereunder shall become due on a day which is not a Business Day,
such payment shall be made on the next succeeding Business Day and such
extension of time shall be included in computing any interest in respect of
such payment.
10.10 RESCISSION FEE. The Borrower may elect not to borrow all
or any portion of the Loan, in which event the Lender shall release the
Borrower from its obligations hereunder provided the Borrower complies with
such terms and conditions as the Lender may impose for such release
including, without limitation, payment of any rescission fee which shall not
exceed fifty (50) basis points times the amount of the Commitment being
rescinded.
10.11 SURVIVAL; SUCCESSORS AND ASSIGNS. All covenants,
agreements, representations and warranties made herein and in the Other
Agreements shall survive Closing and the execution and delivery to the Lender
of the Note, and shall continue in full force and effect until all of the
Obligations have been paid in full. Whenever in this Agreement any of the
parties hereto is referred to, such reference shall be deemed to include the
successors and assigns of such party. All covenants, agreements,
representations and warranties by or on behalf of Borrower which are
contained in this Agreement and the Other Agreements shall inure to the
benefit of the successors and assigns of the Lender.
10.12 USE OF TERMS. The use of any gender or the neuter
herein shall also refer to the other gender or the neuter and the use of the
plural shall also refer to the singular, and vice versa.
10.13 SEVERABILITY. If any term, provision or condition, or
any part thereof, of this Agreement or any of the Other Agreements shall for
any reason be found or held invalid or unenforceable by any court or
governmental agency of competent jurisdiction, such invalidity or
unenforceability shall not affect the remainder of such term, provision or
condition nor any other term, provision or condition, and this Agreement, the
Note, and the Other Agreements shall survive and be construed as if such
invalid or unenforceable term, provision or condition had not been contained
therein.
10.14 MERGER AND INTEGRATION. This Agreement and the attached
exhibits and matters incorporated by reference contain the entire agreement
of the parties hereto with respect to the matters covered and the
transactions contemplated hereby, and no other agreement, statement or
promise made by any party hereto, or by any employee, officer, agent or
attorney of any party hereto, which is not contained herein, shall be valid
or binding.
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10.15 COUNTERPARTS. This Agreement may be executed in any
number of counterparts and by different parties hereto on separate
counterparts, each of which, when so executed and delivered, shall be an
original, but all such counterparts shall together constitute one and the
same instrument.
10.16 HEADINGS. The headings and sub-headings contained in
this Agreement are intended to be used for convenience only and do not
constitute part of this Agreement.
10.17 ASSIGNMENT. The Lender may assign its rights and
obligations under this Agreement and the Other Agreements without the consent
of the Borrower; provided, however, that no such assignment shall result in
terms or conditions less favorable to Borrower. The Borrower may not assign
any of its rights of obligations under this Agreement or the Other Agreements
without the prior written consent of the Lender.
10.18 RIGHT TO INSPECT. The Borrower shall permit
representatives of the Lender at any time during normal business hours to
inspect and make abstracts from the books and records pertaining to the
Collateral, and permit representatives of the Lender to be present at
Borrower's place of business to receive copies of all communications and
remittances relating to the Collateral, all in such manner as the Lender may
reasonably require.
10.19 CONSENT TO PATRONAGE CAPITAL DISTRIBUTIONS. Borrower
hereby consents that the amount of any distributions with respect to
Borrower's patronage which are made in written notices of allocation (as
defined in Section 1388 of the Internal Revenue Code of 1986, as amended
("Code") including any other comparable successor provision) and which are
received from Lender will be taken into account by Borrower at their stated
dollar amounts in the manner provided in Section 1385(a) of the Code in the
taxable year in which such written notices of allocation are received.
10.20 FURTHER ASSURANCES. The Borrower will, upon demand of
the Lender, make, execute, acknowledge and deliver all such further and
supplemental indentures of mortgage, deeds of trust, mortgages, financing
statements, continuation statements, security agreements and/or any other
instruments and conveyances as may be reasonably requested by the Lender to
effectuate the intention of this Agreement and to provide for the securing
and payment of the principal of and interest on the Note according to the
terms thereof.
10.21 LENDER'S APPROVAL. Wherever prior written approval of
Lender is required under the terms and conditions of this Agreement, Lender
hereby agrees to not unreasonably withhold said approval.
10.22 SCHEDULE 1. Schedule 1 attached hereto is an integral
part of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed or caused to
be executed this Agreement under seal as of the date first above written.
DAKOTA COOPERATIVE TELECOMMUNICATIONS
By: /s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President
(SEAL)
Attest: /s/▇▇▇▇ ▇▇▇▇▇▇▇▇
Secretary
DAKOTA TELECOM, INC.
By: /s/▇▇▇▇ ▇▇▇▇▇▇
Title: President
(SEAL)
Attest: /s/▇▇▇▇▇▇ ▇▇▇▇▇▇
Secretary
RURAL TELEPHONE FINANCE COOPERATIVE
By: /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
(SEAL) Title: Assistant Secretary-Treasurer
Attest: /s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Assistant Secretary-Treasurer
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SCHEDULE 1
1. The "Commitment" shall mean $14,736,842 (A-01 loan) and $13,684,210 (A-02
loan).
2. The Mortgage defined in Section 1 is the Mortgage and Security Agreement
by and between Borrower and Lender dated as of even date herewith.
3. The months relating to the Payment Date are March, June, September, and
December.
4. The method of amortization referred to in Section 2.03 shall be based
upon the method indicated below.
_____ level principal
__X__ level debt service (no principal
deferral)
5. The amount referred to in Section 2.05 is $736,842 (for the A-01 loan)
and $684,210 (for the A-02 loan).
6. The date of Borrower's financial statement referred to in Section 4.06
is December 31, 1996.
7. The chief place of business referred to in Section 4.12 and address of
Borrower referred to in Section 10.07 is ▇.▇. ▇▇▇ ▇▇, ▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇.
8. The government authorities referred to in Section 4.13 are the South
Dakota Public Utilities Commission and the Federal Communications
Commission.
9. The special conditions referred to in Section 5.06 are as follows:
Prior to the initial advance of any funds under the A-01 construction
loan, Borrower shall have advanced under the A-02 refinancing loan and
obtained all necessary releases of liens, as is further outlined in the
special affirmative covenants below.
10. The purpose referred to in Section 6.05 is to (i) modernize plant and
central office equipment and to install fiber optic transmission lines
and centralized switching operations (A-01); (ii) refinance all existing
debt with the Rural Utilities Service ("RUS"); and (iii) to purchase
SCCs.
11. The special affirmative covenants referred to in Section 6.06 are as
follows:
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A. Borrower hereby covenants and agrees that within thirty (30) days of
the initial advance of funds under the A-02 loan, it will file in the
appropriate public recording offices releases of all liens from the RUS.
B. Borrower hereby covenants and agrees that until all of the
Obligations have been satisfied, it will pledge the stock or other equity
interests of all after-acquired or formed Subsidiaries to Lender.
12. The special negative covenants referred to in Section 7.04 are as
follows:
Borrower hereby covenants and agrees that the declaration of an Event of
Default by Lender hereunder or under any of the Other Agreements will
not trigger any of the anti-takeover provisions under its Articles of
Incorporation and Bylaws, nor will Borrower take any action which would
preclude or otherwise hinder Lender from exercising any of its rights
and remedies hereunder or under any of the Other Agreements including
but not limited to the rights and remedies under the Pledge and Security
Agreement executed by Borrower and Lender pursuant to this Agreement.
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