Exhibit 10.45
BUSINESS LOAN AGREEMENT
BORROWER: The Chillicothe Telephone LENDER: The Huntington National Bank
Company HC0810-Columbus Commercial
▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ ▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
================================================================================
THIS BUSINESS LOAN AGREEMENT between THE CHILLICOTHE TELEPHONE COMPANY
("Borrower") and THE HUNTINGTON NATIONAL BANK ("Lender") is made and executed on
the following terms and conditions. Borrower has received prior commercial loans
from Lender or has applied to Lender for the commercial loan or loans and other
financial accommodations. All such loans and financial accommodations, together
with all future loans and financial accommodations from Lender to Borrower, are
referred to in this Agreement individually as the "Loan" and collectively as the
"Loans." Borrower understands and agrees that: (a) in granting, renewing, or
extending any Loan, Lender is relying upon Borrower's representations,
warranties, and agreements, as set forth in this Agreement; (b) the granting,
renewing, or extending of any Loan by Lender at all times shall be subject to
Lender's sole judgment and discretion; and (c) all such Loans shall be and shall
remain subject to the following terms and conditions of this Agreement.
TERM. This Agreement shall be effective as of March 16, 2001 and shall continue
thereafter until all Indebtedness of Borrower to Lender has been performed in
full and the parties terminate this Agreement in writing.
CONDITIONS PRECEDENT TO EACH ADVANCE. Lender's obligation to make the initial
Loan Advance and each subsequent Loan Advance under this Agreement shall be
subject to the fulfillment to Lender's satisfaction of all of the conditions set
forth in this Agreement and in the Related Documents.
LOAN DOCUMENTS. Borrower shall provide to Lender in form satisfactory to
Lender the following documents for the Loan: (a) the Note, (b) Security
Agreements granting to Lender security interests in the Collateral, (c)
Financing Statements perfecting Lender's Security Interests; (d) evidence
of insurance as required below; and (e) any other documents required under
this Agreement or by Lender or its counsel.
BORROWER'S AUTHORIZATION. Borrower shall have provided in form and
substance satisfactory to Lender properly certified resolutions, duly
authorizing the execution and delivery of this Agreement, the Note and the
Related Documents, and such other authorizations and other documents and
instruments as Lender or its counsel, in their sole discretion, may
require.
PAYMENT OF FEES AND EXPENSES. Borrower shall have paid to Lender all fees,
charges, and other expenses which are then due and payable as specified in
this Agreement or any Related Document.
REPRESENTATIONS AND WARRANTIES. The representations and warranties set
forth in this Agreement, in the related Documents, and in any document or
certificate delivered to Lender under this Agreement are true and correct.
NO EVENT OF DEFAULT. There shall not exist at the time of any advance a
condition which would constitute an Event of Default under this Agreement.
REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender, as
of the date of this Agreement, as of the date of each disbursement of Loan
proceeds, as of the date of any renewal, extension modification of any Loan, and
at all times any Indebtedness exists:
ORGANIZATION. Borrower is a corporation which is duly organized, validly
existing, and in good standing under the laws of the State of Ohio and is
validly existing and in good standing in all states in which Borrower is
doing business. Borrower has the full power and authority to own its
properties and to transact the business in which it is presently engaged or
presently proposes to engage. Borrower also is duly qualified as a foreign
corporation and is in good standing in all states in which the failure to
so qualify would have a material adverse effect on its business or
financial condition.
AUTHORIZATION. The execution, delivery, and performance of this Agreement
by Borrower, to the extent to be executed, delivered or performed by
Borrower, have been duly authorized by all necessary action by Borrower; do
not require the consent or approval of any other person, regulatory
authority or government body; and do not conflict with, result in a
violation of, or constitute a default under (a) any provision of articles
of incorporation or organization, or bylaws or code of regulations, or any
agreement or other instrument binding upon Borrower or (b) any law,
governmental regulation, court decree, or order applicable to Borrower.
FINANCIAL INFORMATION. Each financial statement of Borrower supplied to
Lender truly and completely disclosed Borrower's financial condition as of
the date of the statement, and there has been no material adverse change in
Borrower's financial condition subsequent to the date of the most recent
financial statement supplied to Lender. Borrower has no material contingent
obligations except as disclosed in s financial statements.
LEGAL EFFECT. This Agreement constitutes, and any instrument or agreement
required hereunder to be given by Borrower when delivered will constitute,
legal, valid and binding obligations of Borrower enforceable against
Borrower in accordance with their respective terms.
PROPERTIES. Except as contemplated by this Agreement or as previously
disclosed in Borrower's financial statements or in writing to Lender and as
accepted by Lender, and except for property tax liens for taxes presently
due and payable, Borrower owns and has good title to all of Borrower's
properties free and clear of all liens and security interests, and has not
executed any security documents or financing statements relating to such
properties. All of Borrower's properties are titled in Borrower's legal
name, and Borrower has not used, or filed a financing statement under, any
other name for at least the last five (5) years.
HAZARDOUS SUBSTANCES. Except as disclosed to Lender in writing, no property
of Borrower ever has been, or ever will be so long as this Agreement
remains in effect, used for the generation, manufacture, storage,
treatment, disposal, release or threatened release of any hazardous waste
or substance, as those terms are defined in the "CERCLA," "▇▇▇▇,"
applicable state or Federal laws, or regulations adopted pursuant to any of
the foregoing. The representations and warranties contained herein are
based on Borrower's due diligence in investigating the properties for
hazardous waste and hazardous substances. Borrower hereby (a) releases and
waives any future claims against Lender for indemnity or contribution in
the event Borrower becomes liable for cleanup or other costs under any such
laws, and (b) agrees to indemnify and hold harmless Lender against any and
2
all claims and losses resulting from a breach of this provision of this
Agreement. This obligation to indemnify shall survive the payment of the
Indebtedness and the satisfaction of this Agreement.
COMMERCIAL PURPOSES. Borrower intends to use the Loan proceeds solely for
business or commercial related purposes.
AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lender that, while
this Agreement is in effect, Borrower will:
LITIGATION. Promptly inform Lender in writing of (a) all material adverse
changes in Borrower's financial condition, and (b) all existing and all
threatened litigation, claims, investigations, administrative proceedings
or similar actions affecting Borrower or any guarantor of the Loan which
could materially affect the financial condition of Borrower or the
financial condition of any guarantor of the Loan.
FINANCIAL RECORDS. Maintain its books and records in accordance with
accounting principles acceptable to Lender, applied on a consistent basis,
and permit Lender to examine and audit Borrower's books and records at all
reasonable times.
FINANCIAL STATEMENTS. Furnish Lender with, as soon as available, but in no
event later than one hundred twenty (120) days after the end of each fiscal
year, Borrower's balance sheet and income statement for the year ended,
audited by a certified public accountant satisfactory to Lender, and, as
soon as available, but in no event later than sixty (60) days after the end
of each fiscal quarter, Borrower's balance sheet and profit and loss
statement for the period ended, prepared and certified as correct to the
best knowledge and belief by Borrower's chief financial officer or other
officer or person acceptable to Lender. All financial reports required to
be provided under this Agreement shall be prepared in accordance with
accounting principles acceptable to Lender, applied on a consistent basis,
and certified by Borrower as being true and correct.
ADDITIONAL INFORMATION. Furnish such additional information and statements,
lists of assets and liabilities, agings of receivables and payables,
inventory schedules, budgets, forecasts, tax returns, and other reports
with respect to Borrower's financial condition and business operations as
Lender may request from time to time.
FINANCIAL COVENANTS AND RATIOS. Comply with the following covenants and
ratios:
TANGIBLE NET WORTH. Maintain a minimum Tangible Net Worth of not less
than $32,000,000.00.
For purposes of this Agreement and to the extent the following terms are
utilized in this Agreement, the term "Tangible Net Worth" shall mean
Borrower's total assets excluding all intangible assets (i.e., goodwill,
trademarks, patents, copyrights, organizational expenses, and similar
intangible items, but including leaseholds and leasehold improvements) less
total Debt. The term "Debt" shall mean all of Borrower's liabilities
excluding Subordinated Debt. The term "Subordinated Debt" shall mean
indebtedness and liabilities of Borrower which have been subordinated by
written agreement to indebtedness owed by Borrower to Lender in form and
substance acceptable to Lender.
3
The term "Working Capital" shall mean Borrower's current assets, excluding
prepaid expenses, less Borrower's current liabilities. The term "Liquid
Assets" shall mean Borrower's cash on hand plus Borrower's readily
marketable securities. The term "Cash Flow" shall mean net income after
taxes, and exclusive of extraordinary gains and income, plus depreciation
and amortization. Except as provided above, all computations made to
determine compliance with the requirements contained in this paragraph
shall be made in accordance with accounting principles acceptable to
Lender, applied on a consistent basis, and certified by Borrower as being
true and correct.
LOAN PROCEEDS. Use all Loan proceeds solely for Borrower's business
operations, unless specifically consented to the contrary by Lender in
writing.
PERFORMANCE. Perform and comply with all terms, conditions, and provisions
set forth in this Agreement and in the Related Documents in a timely
manner, and promptly notify Lender if Borrower learns of the occurrence of
any event which constitutes an Event of Default under this Agreement or
under any of the Related Documents.
OPERATIONS. Maintain executive and management personnel with substantially
the same qualifications an experience as the present executive and
management personnel; provide written notice to Lender of any change in
executive and management personnel; conduct its business affairs in a
reasonable and prudent manner and in compliance with all applicable
federal, state and municipal laws, ordinances, rules and regulations
respecting its properties, charters, businesses and operations, including
without limitation, compliance with the Americans With Disabilities Act and
with all minimum funding standards and other requirements of ERISA and
other laws applicable to Borrower's employee benefit plans.
INSPECTION. Permit employees or agents of Lender at any reasonable time to
inspect any and all Collateral for the Loan or Loans and Borrower's other
properties and to examine or audit Borrower's books, accounts, and records
and to make copies and memoranda of Borrower's books, accounts, and
records. Borrower now or at any time hereafter maintains any records
(including without limitation computer generated records and computer
software programs for the generation of such records) in the possession of
a third party, Borrower, upon request of Lender, shall notify such party to
permit Lender free access to such records at all reasonable times and to
provide Lender with copies of any records it may request, all at Borrower's
expense.
NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that while this
Agreement is in effect, Borrower shall not, without the prior written consent of
Lender:
INDEBTEDNESS AND LIENS. (a) Except for trade debt incurred in the normal
course of business and indebtedness to Lender contemplated by this
Agreement, create, incur or assume indebtedness for borrowed money,
including capital leases, unless such indebtedness shall be subordinated to
the satisfaction of the Bank to the Borrower's indebtedness to the Bank,
(b) except as allowed as set forth herein, sell, transfer, mortgage,
assign, pledge, lease, grant a security interest in, or encumber any of
Borrower's assets, or (c) sell with recourse any of Borrower's accounts,
except to Lender, (d) create, assume, or suffer to exist any Liens (as
defined in the Note Purchase Agreement described below) upon any of its
property or assets, whether now owned or hereafter acquired by the Borrower
pursuant to the provisions of Section 5(h) of that certain Note Purchase
Agreement dated as of June 1, 1998, as amended as of April 1, 1999, by and
4
between the Borrower and the Note Purchasers signatory thereto (the "Note
Purchase Agreement") pursuant to which the Borrower issued its 6.62% Senior
Notes ("Notes"); and provided further, Borrower agrees to not create,
assume or suffer to exist any such Liens permitted by the provisions of
Section 5(h)(viii) of the Note Purchase Agreement unless and until the
borrower shall have granted to the Bank a pari passu Lien on the same
property, and the holders of any such Lien and the holders of the Notes and
the Bank shall have entered into an intercreditor agreement in form and
substance reasonably satisfactory to the Bank providing for such pari passu
ranking. The Borrower hereby agrees that it will not request or agree to
any amendment or modification to the provisions of Section 5(h) of the Note
Purchase Agreement without the express written consent of the Bank.
CONTINUITY OF OPERATIONS. (a) Engage in any business activities
substantially different than those in which Borrower is presently engaged,
(b) cease operations, liquidate, merge, transfer, acquire or consolidate
with any other entity, change its name, dissolve or transfer or sell
Collateral out of the ordinary course of business, or (c) purchase or
retire any of Borrower's outstanding shares or alter or amend Borrower's
capital structure.
LOANS, ACQUISITIONS AND GUARANTIES. (a) Loan, invest in or advance money or
assets, (b) purchase, create or acquire any interest in any other
enterprise or entity, or (c) incur any obligation as surety or guarantor
other than in the ordinary course of business.
CHANGE IN OWNERSHIP. (a) Shall not change present management of the
Borrower, without prior notification to and written consent of Lender, and
(b) not more than 25% of the equity interests in Borrower shall be
transferred without prior written consent of Lender.
CESSATION OF ADVANCES. If Lender has made any commitment to make any Loan to
Borrower, whether under this Agreement or under any other agreement, Lender
shall have no obligation to make Loan advances or to disburse Loan proceeds if:
(a) Borrower or any guarantor is in default under the terms of this Agreement or
any other agreement that Borrower or any guarantor has with Lender; (b) Borrower
or any Guarantor becomes insolvent, files a petition in bankruptcy or similar
proceedings, or is adjudged a bankrupt; (c) there occurs a material adverse
change in Borrower's financial condition, in the financial condition of any
guarantor, or in the value of any collateral securing any Loan; (d) any
guarantor seeks, claims or otherwise attempts to limit, modify or revoke such
guarantor's guaranty of the Loan or any other loan with Lender; or (e) Lender in
good ▇▇▇▇▇ ▇▇▇▇▇ itself insecure, even though no Event of Default shall have
occurred.
INTEREST COVERAGE RATIO. The Borrower shall maintain an Interest Coverage Ratio
equal to or exceeding 2.5: 1.1.
The "Interest Coverage Ratio" shall mean the ratio of EBITDA minus unfunded
capital expenditures to Borrower's total interest expense. "EBITDA" shall mean
for any period, the sum of the amounts for such period of (I) net income, (II)
interest expense, (III) taxes, and (IV) depreciation, amortization expense and
non-cash charges which were deducted in determining net income. All terms shall
be interpreted in accordance with generally accepted accounting principles,
consistently applied.
RIGHT OF SETOFF. Borrower grants to Lender a contractual security interest in,
and hereby assigns, conveys, delivers, pledges, and transfers to Lender all
5
Borrower's right, title and interest in and to, Borrower's accounts with Lender
(whether checking, savings, or some other account), including without limitation
all accounts held jointly with someone else and all accounts Borrower may open
in the future, excluding however all ▇▇▇ and ▇▇▇▇▇ accounts, and all trust
accounts for which the grant of a security interest would be prohibited by law.
Borrower authorizes Lender, to the extent permitted by applicable law, to charge
or setoff all sums owing on the Indebtedness against any and all such accounts.
EVENTS OF DEFAULT. Each of the following shall constitute an event of default
("Event of Default") under this Agreement:
DEFAULT ON INDEBTEDNESS. Failure of Borrower to make any payment when due
on the Loans.
OTHER DEFAULTS. Failure of Borrower to comply with or to perform when due
any other term, obligation, covenant or condition contained in this
Agreement.
DEFAULT IN FAVOR OF THIRD PARTIES. Should Borrower default under any loan,
extension of credit, security agreement, purchase or sales agreement, or
any other agreement, in favor of any other creditor or person that may
materially affect any of Borrower's property or Borrower's ability to repay
the Loans or perform Borrower's obligations under this Agreement or any
related document.
FALSE STATEMENTS. Any warranty, representation or statement made or
furnished to Lender by or on behalf of Borrower is false or misleading in
any material respect at the time made or furnished, or becomes false or
misleading at any time thereafter.
INSOLVENCY. The dissolution or termination of Borrower's existence as a
going business, the insolvency of Borrower, the appointment of a receiver
for any part of Borrower's property, any assignment for the benefit of
creditors, any type of creditor workout, or the commencement of any
proceeding under any bankruptcy or insolvency laws by or against Borrower.
CREDITOR OR FORFEITURE PROCEEDINGS. Commencement of foreclosure or
forfeiture proceedings, whether by judicial proceeding, self-help,
repossession or any other method, by any creditor of Borrower, or any
creditor of any grantor of collateral for the Loan. This includes a
garnishment, attachment, or levy on or of any of Borrower's deposit
accounts with Lender.
EVENTS AFFECTING GUARANTOR. Any of the preceding events occurs with respect
to any Guarantor of any of the Indebtedness or any Guarantor dies or
becomes incompetent, or revokes or disputes the validity of, liability
under, any Guaranty of the Indebtedness.
CHANGE IN OWNERSHIP. Any change in ownership of twenty-five percent (25%)
or more of the common stock Borrower.
ADVERSE CHANGE. A material adverse change occurs in Borrower's financial
condition, or Lender believes the prospect of payment or performance of the
Indebtedness is impaired.
INSECURITY. Lender, in good faith, deems itself insecure.
6
EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur, except where
otherwise provided n this Agreement or the Related Documents, all commitments
and obligations of Lender under this Agreement immediately will terminate
(including any obligation to make Loan Advances or disbursements), and, at
Lender's option, all Indebtedness immediately will become due and payable, all
without notice of any kind to Borrower, except that in the case of an Event of
Default of the type described in the "Insolvency" subsection above, such
acceleration shall be automatic and not optional. In addition, Lender shall have
all the rights and remedies provided in the Related Documents or available at
law, in equity, or otherwise. Except as may be prohibited by applicable law, all
of Lender's rights and remedies shall be cumulative and may be exercised
singularly or concurrently. Election by Lender to pursue any remedy shall not
exclude pursuit of any other remedy, and an election to make expenditures or to
take action to perform an obligation of Borrower or of any Grantor shall not
affect Lender's right to declare a default and to exercise its rights and
remedies.
BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS BUSINESS LOAN
AGREEMENT, AND BORROWER AGREES TO ITS TERMS. THIS AGREEMENT IS DATED AS OF MARCH
16, 2001.
BORROWER:
THE CHILLICOTHE TELEPHONE COMPANY
BY: /s/▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇, PRESIDENT
LENDER:
THE HUNTINGTON NATIONAL BANK
BY: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------
AUTHORIZED OFFICER
================================================================================
7
THE HUNTINGTON NATIONAL BANK
REVOLVING NOTE
================================================================================
City Office Division Branch [ ] Secured
----------- ----------- ---------------
Account No. Note No. [X] Unsecured
----------------------- --------------------
Account Name The Chillicothe Telephone Company
-------------------------------------------------------------------
[X] Corporation [ ] Partnership [ ] Individual/Proprietorship
Bank Approval Officer Initial Bank Closing Officer Initial /s/
------ -------
================================================================================
$30,000,000.00 Columbus, Ohio March 16, 2001
FOR VALUE RECEIVED, the undersigned, jointly and severally if more than
one, promise to pay to the order of The Huntington National Bank (hereinafter
called the "Bank", which term shall include any holder hereof) at such place as
the Bank may designate or, in the absence of such designation, at any of the
Bank's offices, the sum of Thirty Million and No/100 Dollars ($30,000,000.00),
or so much thereof as shall have been advanced by the Bank at any time and not
hereafter repaid (hereinafter called the "Principal Sum") together with interest
as hereinafter provided, and payable at the time(s) and in the manner(s)
hereinafter provided. The proceeds of the loan evidenced hereby may be advanced,
repaid and readvanced, in partial amounts, during the term of this Note and
prior to maturity; provided, that no partial advance of the Principal Sum shall
be for less than $250,000.00. Each such advance shall be made to the undersigned
upon receipt by the Bank of disbursement instructions and upon receipt, review
and approval by the Bank of the undersigned's application for an advance, which
shall be in such form and contain such information as the Bank shall from time
to time prescribe. The Bank shall be entitled to rely on any oral or telephonic
communication requesting an advance and/or providing disbursement instructions
hereunder, which shall be received by it in good faith from anyone reasonably
believed by the Bank to be the undersigned, or the undersigned's authorized
agent. The undersigned agree that all advances made by the Bank will be
evidenced by entries made by the Bank into its electronic data processing system
and/or internal memoranda maintained by the Bank. The undersigned further agree
that the sum or sums shown on the most recent printout from the Bank's
electronic data processing system and/or such memoranda shall be rebuttably
presumptive evidence of the amount of the Principal Sum and of the amount of any
accrued interest. Each request for an advance shall constitute a warranty and
representation by the undersigned that no event of default hereunder or under
any related loan documents has occurred and is continuing and that no event or
circumstance which would constitute such an event of default, but for the
requirement that notice be given or time elapse or both, has occurred and is
continuing.
This Note is executed and any advances contemplated hereunder are to be
made pursuant to a Business Loan Agreement dated as of March 16, 2001 (as
amended from time to time, hereinafter called the "Agreement"), and. all the
covenants, representations, agreements, terms, and conditions contained therein,
including, but not limited to, additional conditions of default and conditions
to any partial advances, are incorporated herein as if fully rewritten.
INTEREST
--------
Prior to maturity, interest will accrue separately on the unpaid balance of
each respective advance of the Principal Sum at a rate of interest per annum, as
selected by the undersigned as set forth below, equal to a fixed rate of
interest per annum equal to the LIBO Rate (as hereinafter defined) plus the
Spread (as hereinafter defined), all as conclusively determined by the Bank,
such sum to be rounded up, if necessary, to the nearest whole multiple of
one-sixteenth of one percent (1/16 of 1.0%) per annum. If the obligation
evidenced by this Note is not paid at maturity, whether maturity occurs by lapse
of time, demand, acceleration or otherwise, the unpaid balance of the Principal
Sum and any unpaid interest shall, thereafter until paid, bear interest at a
rate equal to 2.00 percentage points in excess of the rate of interest indicated
in the preceding sentence.
At least two LIBO Rate Banking Days (as hereinafter defined) prior to (1)
the day the undersigned desires that an advance be disbursed, or (2) the last
day of any applicable LIBO Rate Interest Period (as hereinafter defined), the
undersigned shall notify the Bank in writing of the requested date of
disbursement (if applicable), the amount of such advance (if applicable) and the
undersigned's selection of the LIBO Rate Interest Period. All such written
notices shall be directed by the undersigned to the Bank's officer who is
handling the undersigned's obligations on behalf of the Bank and must be
received by the Bank on or before the day which is two LIBO Rate Banking Days
prior to either the requested day of disbursement or the last day of any
applicable LIBO Rate Interest Period. If at the end of a LIBO Rate Interest
Period the undersigned does not notify the Bank of its selection of the next
succeeding LIBO Rate Interest Period in the manner and at the time specified in
this Note, interest will accrue hereunder on the respective advance as if the
undersigned had selected a LIBO Rate Interest Period of one (1) month.
All interest hereunder shall be calculated on the basis of a 360 day year
for the actual number of days the Principal Sum or any part thereof remain
unpaid. No advance made hereunder based upon the LIBO Rate shall be prepaid
prior to the expiration of the LIBO Rate Interest Period applicable to said
advance. The amount of any payment shall first be applied to the payment of any
interest which is due.
As used herein, LIBO Rate shall mean the rate obtained by dividing (1) the
actual or estimated per annum rate, or the arithmetic mean of the per annum
rates, of interest for deposits in U.S. dollars for the related LIBO Rate
Interest Period, as determined by the Bank in its discretion based upon
information which appears on page LIBOR01, captioned British Bankers Assoc.
Interest Settlement Rates, of the Reuters America Network, a service of Reuters
America Inc. (or such other page that may replace that page on that service for
the purpose of displaying London interbank offered rates; or, if such service
ceases to be available or ceases to be used by the Bank, such other reasonably
comparable money rate service as the Bank may select) or upon information
obtained from any other reasonable procedure, as of two LIBO Rate Banking Days
prior to the day on which the undersigned indicates that the advance based upon
the LIBO Rate is to be disbursed; by (2) an amount equal to one minus the stated
maximum rate (expressed as a decimal), if any, of all reserve requirements
(including, without limitation, any marginal, emergency, supplemental, special
2
or other reserves) that is specified on the first day of each LIBO Rate Interest
Period by the Board of Governors of the Federal Reserve System (or any successor
agency thereto) for determining the maximum reserve requirement with respect to
eurocurrency funding (currently referred to as "Eurocurrency liabilities" in
Regulation D of such Board) maintained by a member bank of such System, or any
other regulations of any governmental authority having jurisdiction with respect
thereto, all as conclusively determined by the Bank.
As used herein, LIBO Rate Banking Day shall mean any day other than a
Saturday or a Sunday on which banks are open for business in Columbus, Ohio, and
on which banks in London, England, settle payments.
As used herein, LIBO Rate Interest Period shall mean, as selected by the
undersigned in accordance with the terms of this Note, one (1), two (2) or three
(3) months, provided that: (1) if any LIBO Rate Interest Period would otherwise
expire on a day which is not a LIBO Rate Banking Day, the LIBO Rate Interest
Period shall be extended to the next succeeding LIBO Rate Banking Day (provided,
however, that if such next succeeding LIBO Rate Banking Day occurs in the
following calendar month, then the LIBO Rate Interest Period shall expire on the
immediately preceding LIBO Rate Banking Day); and (2) the undersigned shall not
select a LIBO Rate Interest Period which would expire later than March 15, 2002.
In the event that on any date on which the undersigned requests an advance
hereunder based upon the LIBO Rate the Bank reasonably determines that by reason
of (1) any change arising after the date of this Note affecting the interbank
eurocurrency market or affecting the position of the Bank with respect to such
market, adequate and fair means do not exist for ascertaining the applicable
interest rates by reference to which the LIBO Rate then being determined is to
be determined, (2) any change arising after the date of this Note in any
applicable law or governmental rule, regulation or order (or any interpretation
thereof, including the introduction of any new law or governmental rule,
regulation or order), or (3) any other circumstance affecting the Bank or the
interbank market (such as, but not limited to, official reserve requirements
required by Regulation D of the Board of Governors of the Federal Reserve
System), the LIBO Rate plus the applicable spread shall not represent the
effective pricing to the Bank of making advances based upon such rate, then, and
in any such event, the ability of the undersigned to request advances based upon
the LIBO Rate shall be suspended until the Bank shall notify the undersigned
that the circumstances causing such suspension no longer exist and thereafter
interest shall accrue on the unpaid balance of the Principal Sum at a variable
rate of interest per annum, which shall change in the manner set forth below,
equal to the Prime Commercial Rate.
In the event that on any date the Bank shall have reasonably determined
that the making or continuation of advances based upon the LIBO Rate has become
unlawful by compliance by the Bank in good faith with any law, governmental
rule, regulation or order, then, and in any such event, the Bank shall promptly
give notice thereof to the undersigned. In such case, the ability of the
undersigned to request an advance hereunder based upon the LIBO Rate shall be
terminated and thereafter interest shall accrue on the unpaid balance of the
Principal Sum at a variable rate of interest per annum, which shall change in
the manner set forth below, equal to the Prime Commercial Rate.
3
As used herein, Prime Commercial Rate shall mean the rate established by
the Bank from time to time based on its consideration of economic, money market,
business and competitive factors, and it is not necessarily the Bank's most
favored rate. Subject to any maximum or minimum interest rate limitation
specified herein or by applicable law, any variable rate of interest on the
obligation evidenced hereby shall change automatically without notice to the
undersigned immediately with each change in the Prime Commercial Rate. If during
any period when interest is accruing under this Note based upon the Prime
Commercial Rate the obligation evidenced by this Note is not paid at maturity,
whether maturity occurs by lapse of time, demand, acceleration or otherwise, the
unpaid balance of the Principal Sum and any unpaid interest shall, thereafter
until paid, bear interest at a rate equal to 2.00 percentage points in excess of
the variable rate of interest indicated above.
If, due to (1) the introduction of or any change in or in the
interpretation of any law or regulation, (2) the compliance with any guideline
or request from any central bank or other public authority (whether or not
having the force of law), or (3) the failure of the undersigned to repay any
advance when required by the terms of this Note, there shall be any loss or
increase in the cost to the Bank of agreeing to make or making, funding or
maintaining any advance hereunder based upon the LIBO Rate, then the undersigned
agree that the undersigned shall, from time to time, upon demand by the Bank,
pay to the Bank additional amounts determined in good faith by the Bank to be
sufficient to compensate the Bank for such loss or increased cost. A certificate
as to the amount of such loss or increase cost setting forth in reasonable
detail the basis for such determination and submitted to the undersigned by the
Bank, shall be conclusive evidence, absent manifest error, of the correctness of
such amount. Such amount shall be due and payable by the undersigned to the Bank
within ten (10) days after such certificate is received by the undersigned.
INTEREST RATE SPREAD
--------------------
As used herein, Spread shall initially mean 1.50%. On the first day of each
calendar quarter, beginning on March 1, 2001, the Spread may change based upon
the undersigned's Debt to Tangible Net Worth Ratio (as defined below). In the
event that (1) the undersigned's Debt to Tangible Net Worth Ratio is equal to an
amount set forth in the table below, and (2) no Event of Default (as defined
herein) shall have occurred and be continuing at the time of such determination,
then the Spread shall be equal to the applicable Interest Rate Spread as set
forth in the table below. Any change in the Spread shall only apply to advances
made hereunder after the effective date of the change.
DEBT TO TANGIBLE NET WORTH RATIO INTEREST RATE SPREAD
-------------------------------- --------------------
less than 1.00: 1.00 1.25%
1.01:1.00 to and including 2.00:1.00 1.55%
more than 2.01:1.00 1.75%
The undersigned shall determine its Debt to Tangible Net Worth Ratio as of
the end of each fiscal quarter and shall notify the Bank in writing of such
determination contemporaneously with the delivery of the undersigned's financial
statements and other information delivered to the Bank as required by this Note,
the Agreement and the related loan documents. The Bank shall confirm such
4
determination and, once confirmed, any adjustments to the Spread shall be
effective beginning with the first day of the fiscal quarter immediately
following the fiscal quarter during which the determination is made. By way of
example only, if the undersigned's first fiscal quarter ends on March 31st and
the undersigned is required to deliver to the Bank its financial statements and
Debt to Tangible Net Worth Ratio determination in May, then any change to the
Spread would be effective on July 1. If the undersigned does not timely deliver
or cause to be delivered the Debt to Tangible Net Worth Ratio determination or
the financial statements and other information required by this Note, the
Agreement and the related loan documents, the Debt to Tangible Net Worth Ratio
for the fiscal quarter for which the determination was to have been made shall
be deemed to be 1.75: 1.00.
As used herein, Debt to Tangible Net Worth Ratio shall mean the ratio of
Indebtedness (as defined below) to tangible net worth, as determined as of the
last day of each fiscal quarter ending on said day. As used herein, Indebtedness
shall mean all liabilities, obligations and indebtedness, whether now or
hereafter owing, arising, due or payable, including but not limited to (1)
indebtedness in the nature of loans, letters of credit, capital leases,
obligations under derivative contracts (including interest rate swaps) and
guarantees of the obligations of third parties, (2) obligations to trade
creditors, (3) all liabilities of any person secured by a lien on the
undersigned's property, and (4) all accruals and other liabilities listed as
such on the undersigned's balance sheet.
Whenever any accounting term shall be used herein or the character or
amount of any asset or liability or item of income or expense is required to be
determined, or any other accounting computation is required to made, for the
purpose of this Note, such accounting term, such determination or computation
shall, to the extent applicable and except as otherwise specified in this Note,
be defined or made (as the case may be) in accordance with generally accepted
accounting principles in the United States applied (in the case of
determinations or computations) on a basis consistent with those applied in the
preparation of the financial statements delivered to the Bank prior to the
execution of this Note.
MANNER OF PAYMENT
-----------------
The Principal Sum shall be due and payable on March 15, 2002. In addition,
each advance made hereunder based upon the LIBO Rate shall also be payable at
the expiration of the LIBO Rate Interest Period applicable to such advance.
Accrued interest shall be due and payable at the expiration of each LIBO Rate
Interest Period and at final maturity, whether by demand, acceleration or
otherwise. During any period while interest is accruing hereunder based upon the
Prime Commercial Rate, if any, accrued interest shall be payable monthly,
beginning on April 1, 2001, and at final maturity, whether by demand,
acceleration or otherwise.
LATE CHARGE
-----------
Any installment or other payment not be made within 10 days of the date
such payment or installment is due shall be subject to a late charge equal to 5%
of the amount of the installment or payment.
5
DEFAULT
-------
Upon the occurrence of any of the following events (each an "Event of
Default"):
(1) the undersigned fails to make any payment when due or to perform any
obligation undersigned to the Bank;
(2) any event occurs and continues which constitutes a default by the
undersigned under any other obligation to or agreement with the Bank;
(3) the undersigned falls to furnish true and complete financial statements
from time to time on request of the Bank;
(4) the death or dissolution of any of the undersigned, or any indorser,
surety, accommodation party or guarantor;
(5) any representation, warranty or other information given to the Bank by
any of the undersigned, or by an indorser, surety, accommodation party or
guarantor proves to be false, untrue or misleading in any material respect; or
(6) the Bank for any reason deems itself insecure with respect to the
obligations evidenced hereby;
then the Bank may, at its option, without further notice or demand, accelerate
the maturity of the obligations evidenced hereby, which obligations shall become
immediately due and payable and the undersigned shall no longer have the right
to receive advances or readvances hereunder. In the event the Bank shall
institute any action for the enforcement or collection of the obligations
evidenced hereby, the undersigned agree to pay all costs and expenses of such
action, including reasonable attorneys' fees, to the extent permitted by law.
GENERAL PROVISIONS
------------------
All of the parties hereto, including the undersigned, and any indorser,
surety, accommodation party or guarantor, hereby: (1) severally waive
presentment, notice of dishonor, protest, notice of protest, and diligence in
bringing suit against any party hereto; (2) consent that, without discharging or
modifying the duties of any of them and without notice, the Bank may (A) extend
the time of payment an unlimited number of times before or after maturity, (B)
grant any other indulgence at any time and from time to time to any party
hereto, (C) delay in exercising or omit to exercise any right against, or delay
in taking or omit to take any action to collect from or pursue the Bank's
remedies against, any party hereto, (D) release or modify any collateral,
security or guaranties; and (3) severally waive any claim, right or remedy which
such party may now have or hereafter acquire against any other party or parties
hereto that arises hereunder and/or from the performance by such party hereunder
including, without limitation, any claim, remedy or right of subrogation,
reimbursement, exoneration, contribution, indemnification or participation in
any claim, right or remedy of the Bank against the other party or parties, or
any security which the Bank now has or hereafter acquires, whether such claim,
right or remedy arises in equity, under contract, by statute, under common law
6
or otherwise. The Bank shall not be required to pursue any party hereto,
including any guarantor, or to exercise any rights against any Collateral
herefor before exercising any other such rights.
The obligations evidenced hereby may from time to time be evidenced by
another note or notes given in substitution, renewal or extension hereof. Any
security interest or mortgage which secures the obligations evidenced hereby
shall remain in full force and effect notwithstanding any such substitution,
renewal, or extension.
No waiver of any term or condition of this Note shall be effective unless
in writing and signed by the party giving or granting the waiver. No amendment
of any term or condition of this Note shall be effective unless in writing and
signed by the undersigned and the Bank. No failure or delay on the part of the
Bank in exercising any right, power or privilege under this Note, related loan
documents or law nor any course of dealing, shall operate as a waiver of such
right, power or privilege or preclude any other or further exercise thereof or
of any other right, power or privilege.
The captions used herein are for reference only and shall not be deemed a
part of this Note. If any of the terms or provisions of this Note shall be
deemed unenforceable, the enforceability of the remaining terms and provisions
shall not be affected. This Note shall be governed by and construed in
accordance with the law of the State of Ohio.
The undersigned agree that, to the extent that any of the undersigned make
a payment or payments to the Bank, or the Bank receives any proceeds of
Collateral, which payment or payments or proceeds or any part thereof are
subsequently invalidated, declared to be fraudulent or preferential, set aside
and/or required to be repaid to any of the undersigned, its estate, trustee,
receiver or any other party, including without limitation any guarantor, under
any bankruptcy law, state or federal law, common law or equitable cause, then to
the extent of such payment or repayment, the obligations under this Note or the
part thereof which has been paid, reduced or satisfied by such amount shall be
reinstated and continued in full force and effect as of the date such initial
payment, reduction or satisfaction occurred.
WARRANT OF ATTORNEY
-------------------
Each of the undersigned authorizes any attorney at law to appear in any
Court of Record in the State of Ohio or in any other state or territory of the
United States of America after the above indebtedness becomes due, whether by
acceleration or otherwise, to waive the issuing and service of process, and to
confess judgment against any one or more of the undersigned in favor of the Bank
for the amount then appearing due together with costs of suit, and thereupon to
waive all errors and all rights of appeal and stays of execution. No such
judgment or judgments against less than all of the undersigned shall be a bar to
a subsequent judgment or judgments against any one or more of the undersigned
against whom judgment has not been obtained hereon, this being a joint and
several warrant of attorney to confess judgment. The attorney at law authorized
hereby to appear for each of the undersigned may be an attorney at law also
representing the Bank, and each of the undersigned hereby expressly waive any
conflict of interest that may exist by virtue of such representation.
7
WAIVER OF RIGHT TO TRIAL BY JURY
--------------------------------
EACH OF THE UNDERSIGNED ACKNOWLEDGES THAT, AS TO ANY AND ALL DISPUTES THAT
MAY ARISE BETWEEN ANY OF THE UNDERSIGNED AND THE BANK, THE COMMERCIAL NATURE OF
THE TRANSACTION OUT OF WHICH THIS NOTE ARISES MAKES ANY SUCH DISPUTE UNSUITABLE
FOR TRIAL BY JURY. ACCORDINGLY, EACH OF THE UNDERSIGNED HEREBY WAIVES ANY RIGHT
TO TRIAL BY JURY AS TO ANY AND ALL DISPUTES THAT MAY ARISE RELATING TO THIS NOTE
OR TO ANY OF THE INSTRUMENTS OR DOCUMENTS EXECUTED IN CONNECTION HEREWITH.
Borrower: The Chillicothe Telephone Company
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------
Title: President
--------------------------------------
WARNING -- BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT
TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU
WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT
FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE CREDITOR WHETHER FOR
RETURNED GOODS, FAULTY GOODS, FAILURE ON HIS PART TO COMPLY WITH THE AGREEMENT,
OR ANY OTHER CAUSE.
8
The Huntington National Bank
▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇ 00164
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Chillicothe Telephone
▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
COMMERCIAL LOAN INVOICE
ACCOUNT NUMBER 8000220526
Date: 12/27/2000
--------------------------------------------------------------------------------
Effective Date Number Principal Interest/Fee Invoice Description
From Thru Days Balance Rate Amount
--------------------------------------------------------------------------------
Note Number: $30 million Facility
03/16/01 Commitment Fee = $10,000.00
Total Due = $10,000.00
CERTIFIED COPY OF
RESOLUTIONS OF BOARD OF DIRECTORS
AND INCUMBENCY CERTIFICATE
OF
THE CHILLICOTHE TELEPHONE COMPANY
I, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, hereby certify that I am the Secretary and official
custodian of certain records including the charter, bylaws and the minutes of
the meetings of the Board of Directors of The Chillicothe Telephone Company, a
corporation duly organized and existing under the laws of the State of Ohio
(herein the "Corporation"), and that the following is a true, accurate and
compared transcript of the resolutions contained in the minute book of the
Corporation duly adopted by the Board of Directors thereof on the 16th day of
March, 2001, in accordance with the charter and bylaws of the Corporation, and
that said resolutions have not been amended or revoked and are in full force and
effect:
RESOLVED, that either of ▇▇▇▇▇▇ ▇▇▇▇▇▇, President of this Corporation, or
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Secretary and Treasurer of this Corporation, acting singly, or
his duly elected or appointed successor in office, be and hereby is authorized
and empowered on behalf of this Corporation:
(1) to borrow money, establish lines of credit or revolving credits,
discount accounts receivable or other negotiable paper, establish letters
of credit, guarantee obligations of other persons or entities, or otherwise
obtain or establish credit for this Corporation from any office of The
Huntington National Bank (herein "Bank"), in any manner, on such terms as
he may deem advisable;
(2) to execute or indorse, and deliver to Bank on behalf of this
Corporation in form prescribed by Bank a promissory note or notes, drafts,
acceptances, guaranties, agreements or any other evidences of obligations
of this Corporation; and
(3) to do any acts, including but not limited to mortgage, pledge,
grant a security interest in, hypothecate or otherwise encumber from time
to time with Bank any or all assets or property of this Corporation both
real and personal, tangible and intangible, to secure such loan or loans,
guaranty agreements, other agreements or renewals and extensions thereof,
and to execute or indorse, and deliver to Bank, on behalf of this
Corporation, any instruments, agreements, or other documents deemed
necessary or proper by Bank in respect to the collateral securing any
obligation referenced above, and to affix the seal of this Corporation to
any mortgage, pledge, security agreement, or other such instrument or
document if so required.
FURTHER RESOLVED, that Bank is authorized to rely in good faith on any
telephonic or other oral communication which shall be received by it from anyone
reasonably believed by Bank to be one of the officers designated above.
FURTHER RESOLVED, that Bank is authorized to rely on the aforesaid
resolutions until receipt by it of written notice of any change.
I further certify that the following persons are the duly qualified and
acting officers of the Corporation authorized to represent the Corporation in
the capacities set forth opposite his name, and the signature appearing opposite
his name is his genuine signature:
Name Title Signature
---- ----- ---------
▇▇▇▇▇▇ ▇▇▇▇▇▇ President /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Secretary/Treasurer /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
I finally certify that neither the charter nor the bylaws of the
Corporation require any consent of the shareholders for the granting of any
mortgage or other security interest in all or any part of the Corporation's
property and assets.
IN WITNESS WHEREOF, I have hereunto set my hand this 16th day of March,
2001, at Chillicothe, Ohio.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Secretary
------------------------------------
MINUTES OF ACTIONS TAKEN IN WRITING
BY ALL OF THE DIRECTORS
OF
THE CHILLICOTHE TELEPHONE COMPANY
MARCH 16, 2001
The undersigned, being all of the duly elected and acting directors of The
Chillicothe Telephone Company, an Ohio corporation (this "Corporation"), hereby
take the following actions by this writing on the date set forth above
respecting the borrowing of $30,000,000 from Huntington National Bank pursuant
to the provisions of Section 1701.54 of the Ohio Revised Code:
RESOLVED, that either of ▇▇▇▇▇▇ ▇▇▇▇▇▇, President of this Corporation, or
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Secretary and Treasurer of this Corporation, acting singly, or
his duly elected or appointed successor in office, be and hereby is authorized
and empowered on behalf of this Corporation:
(1) to borrow money, establish lines of credit or revolving credits,
discount accounts receivable or other negotiable paper, establish letters
of credit, guarantee obligations of other persons or entities, or otherwise
obtain or establish credit for this Corporation from any office of The
Huntington National Bank (herein "Bank"), in any manner, on such terms as
he may deem advisable;
(2) to execute or indorse, and deliver to Bank on behalf of this
Corporation in form prescribed by Bank a promissory note or notes, drafts,
acceptances, guaranties, agreements or any other evidences of obligations
of this Corporation; and
(3) to do any acts, including but not limited to mortgage, pledge,
grant a security interest in, hypothecate or otherwise encumber from time
to time with Bank any or all assets or property of this Corporation both
real and personal, tangible and intangible, to secure such loan or loans,
guaranty agreements, other agreements or renewals and extensions thereof,
and to execute or indorse, and deliver to Bank, on behalf of this
Corporation, any instruments, agreements, or other documents deemed
necessary or proper by Bank in respect to the collateral securing any
obligation referenced above, and to affix the seal of this Corporation to
any mortgage, pledge, security agreement, or other such instrument or
document if so required.
FURTHER RESOLVED, that Bank is authorized to rely in good faith on any
telephonic or other oral communication which shall be received by it from anyone
reasonably believed by Bank to be one of the officers designated above.
FURTHER RESOLVED, that Bank is authorized to rely on the aforesaid
resolutions until receipt by it of written notice of any change.
IN WITNESS WHEREOF, we have hereunto set our hands on the date first set
forth above.
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇
1352433
