EXHIBIT 4.34
LOAN AGREEMENT
LOAN AGREEMENT ("Agreement") made as of 1/29, 1996, by and
between DAKOTA TELECOM, INC., a South Dakota corporation ("Borrower"), and
RURAL TELEPHONE FINANCE COOPERATIVE, a South Dakota cooperative association
("Lender").
RECITALS
WHEREAS, Borrower has requested Lender to make the Loan to Borrower
described in Schedule 1 hereto; ind
WHEREAS, Lender is willing to make the Loan 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:
1. 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, 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 on a consolidated
basis plus depreciation, amortization and any other non-cash charges, less
any non-cash credits and principal on long-term debt payable in such year.
"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.
"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 interest on long-term
debt for such year, divided by (b) principal and interest on long-term debt
payable in such year.
"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.
"INDEBTEDNESS" shall include all items which would properly be
included in the liability section of a balance sheet or in a footnote to a
financial statement, in accordance with generally accepted accounting
principles, including, without limitation, contingent liabilities.
"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 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 mean an equity to total asset ratio of
at least forty (40) percent. Equity shall be determined by subtracting
total liabilities from total assets.
"MORTGAGE" shall mean the mortgage and security agreement described in
Schedule 1.
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"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 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 under this Agreement, the Note, the Other Agreements, all
present and future obligations of Borrower to the Lender for the payment of
money under this Agreement, the Note, the Other Agreement, extending to
all principal amounts, interest, late charges and all other charges and
sums, as well as all costs and expenses payable by Borrower under this
Agreement, the Note, the Other Agreements, and any and all other present
and future monetary liabilities of Borrower 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 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, mortgages, deeds of trust, leases, contracts, guaranties,
instruments and documents now and hereafter existing between the Lender and
Borrower, 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.
"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.
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"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 one (1) year from the
date hereof.
"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 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
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(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 herein
below.
(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 there in effect at
the time of the election shall apply to such Advance until the
Adjustment Date. Upon notice given by the Borrower five 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
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
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of the principal amount of the Commitment then
outstanding at any time provided the Lender offers a
Fixed Rate at such time for similarly classified loans.
(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 established by Lender on a cost basis
and shall not exceed 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.
2.05 5% SUBORDINATED CAPITAL CERTIFICATE. 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 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.
3. SECURITY
As security for the payment and performance of all of the
Obligations, Borrower has 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
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Obligations have been paid in full. 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, 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 and the Mortgage, 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, 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 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 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
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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 and assets
free and clear of any liens.
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.
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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 Subsidiary.
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:
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
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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.
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 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 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 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.
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5.06 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.
5.07 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
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, 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 an annual DSC of not less than 1.25, beginning with
the year ended December 31, 1996.
6.04 ANNUAL CERTIFICATE. Within ninety (90) 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.
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.
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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.
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 days prior to the effective date of any change:
(a) CHANGE LOCATION OF CHIEF PLACE OF BUSINESS. Change
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 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 of
total assets; or enter into or allow any of its
Subsidiaries to 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 may incur additional indebtedness or enter
into Leases (or allow any of its Subsidiaries to 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
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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) 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) Failure of Borrower 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.
(c) Failure of Borrower 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) 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) Default by the Borrower 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
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amount in excess of 5% of total assets, whether or not such
borrowing is secured.
(f) 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 ninety (90) 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) 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 or guarantor
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
thirty (30) 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:
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(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
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 of any other right, power or remedy.
9.03 COSTS AND EXPENSES. Borrower agrees to pay and to be liable for
any and all 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,
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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 and 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 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.
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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 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 transmitted by telecopier or personally delivered or, in the case of a
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:
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Rural Telephone Finance Cooperative
Woodland Park
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Loan 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 SUBMIT(S) 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 LAYING 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
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 basis points (50) times the amount of the Commitment being
rescinded.
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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.
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.
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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 reasonable 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.
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 TELECOM, INC.
By:/S/
Title:______________________________
(SEAL)
Attest:/S/
Secretary
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RURAL TELEPHONE FINANCE
COOPERATIVE
By:/S/
SEAL)
Title: for Chief Executive Officer
Attest:/S/
Assistant Secretary-Treasurer
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SCHEDULE 1
1. The "Commitment" shall mean $1,585,547 (A-01) and $131,579 (A-02).
2. The Mortgage 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
5. The amount referred to in Section 2.05 is $79,277 (A-01) and $6,579
(A-02).
6. The date of Borrower's financial statement referred to in Section 4.06
is December 31, 1994.
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 not
applicable.
9. The special conditions referred to in Section 5.06 are as follows:
A. Prior to the initial advance of funds hereunder Lender shall
receive in form and content satisfactory to Lender, the
following:
1. Any management, maintenance or service agreements
executed by Borrower as well as RUS's approval of such
agreement(s), if applicable.
2. The final Agreement to Purchase CATV Assets (including
exhibits) between ▇▇▇▇▇▇▇▇ Pacific Corporation
("▇▇▇▇▇▇▇▇") and Borrower and Asset Acquisition
Agreement (including exhibits) between ▇▇▇▇▇▇▇
Communications North, L.P. ("▇▇▇▇▇▇▇") and ▇▇▇▇▇▇▇▇.
3. Evidence of the grant by each local franchise authority
of a new CATV franchise or approval of the transfer of
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the franchise to Borrower and renewal of each franchise
for a period not less than five years from the current
expiration date of each local franchise.
4. If applicable, evidence of the FCC's section 214
authorization.
5. Evidence of an assignment by ▇▇▇▇▇▇▇▇ to Borrower of
its rights and obligations under the Asset Acquisition
Agreement entered into by and between ▇▇▇▇▇▇▇ and
▇▇▇▇▇▇▇▇.
6. Evidence that Borrower has common equity capital of at
least $506,599.
B. The cash proceeds of the loan shall be wired directly to ▇▇▇▇▇▇▇,
except for the margin due and payable pursuant to Section 2 of
the Agreement to Purchase CATV Assets dated October 3, 1995 by
and between Borrower and ▇▇▇▇▇▇▇▇, which shall be wired directly
to ▇▇▇▇▇▇▇▇.
10. The purpose referred to in Section 6.05 is (i) to provide SCCs; (ii)
to finance 75% of the acquisition of CATV assets and exclusive
franchise rights from ▇▇▇▇▇▇▇ for 8 communities in South Dakota (A-01);
and (iii) to retire Borrowers existing mortgage note payable to
Merchant State Bank (A-02).
11. The special affirmative covenants referred to in Section 6.06 are not
applicable.
12. The special negative covenants referred to in Section 7.04 are not
applicable.
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