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MASTER LOAN AGREEMENT
THIS MASTER LOAN AGREEMENT (this "Agreement"), dated as of June 29, 2001,
is made by and between COBANK, ACB ("CoBank") and GLOBE TELECOMMUNICATIONS,
INC., INTERSTATE TELEPHONE COMPANY and VALLEY TELEPHONE CO., INC. (collectively,
the "Borrowers").
WHEREAS, from time to time CoBank may make loans to the Borrowers, and in
order to reduce the amount of paperwork associated therewith, CoBank and the
Borrowers would like to enter into a master loan agreement;
WHEREAS, ITC Global, Inc. ("ITC Globe"; and collectively with all other
subsidiaries of the Borrowers except for Knology Broadband, Inc. and its
subsidiaries referred to as the "Restricted Subsidiaries") will guaranty the
obligations of the Borrowers to CoBank; and
NOW, THEREFORE, in consideration of the foregoing, intending to be legally
bound hereby, and in consideration of CoBank making one or more loans to the
Borrowers, CoBank and the Borrowers agree as follows:
SECTION 1. Supplements. In the event the Borrowers desire to borrow from
CoBank and CoBank is willing to lend to the Borrowers, or in the event CoBank
and the Borrowers desire to consolidate any existing loans hereunder, the
parties will enter into a Supplement to this Agreement (each supplement, as it
may be amended, modified, supplemented, extended or restated from time to time,
a "Supplement" and, collectively, the "Supplements"). Each Supplement will set
forth CoBank's commitment to make a loan or loans (each, a "Loan" and,
collectively, the "Loans") to the Borrowers, the amount of the Loan(s), the
purpose of the Loan(s), the interest rate or rate options applicable to the
Loan(s), the repayment terms of the Loan(s), and any other terms and conditions
applicable to the Loan(s). Each Loan will be governed by the terms and
conditions contained in this Agreement and in the Supplement relating to that
Loan.
SECTION 2. Availability. Advances under the Loans will be made available
on any day on which CoBank and the Federal Reserve Banks are open for business
(a "Business Day") upon the telephonic or written request of an authorized
employee of any Borrower. Requests for advances under the Loans must be received
no later than 12:00 noon Eastern time on the date the advance is desired or at
such earlier date and time as may be specified in the relevant Supplement.
Advances under the Loans will be made available by wire transfer of immediately
available funds. Wire transfers will be made to such account or accounts as may
be authorized by the Borrowers. In taking actions upon telephonic requests,
CoBank shall be entitled to rely on (and shall incur no liability to the
Borrowers in acting upon) any request made by a person identifying himself or
herself as one of the persons authorized by the Borrowers to request advances
hereunder, so long as any funds advanced are wired to an account previously
designated by the Borrowers.
SECTION 3. Notes and Payments. The Borrowers' obligation to repay the
Loans made under each Supplement shall be evidenced by a promissory note in form
and content
acceptable to CoBank (such notes, as they may be amended, modified,
supplemented, extended, restated or replaced from time to time, collectively,
the "Notes", and each a "Note"). The Borrowers shall make each payment which
they are required to make under the terms of this Agreement, each Supplement,
the Notes and all security and other instruments and documents relating hereto
and thereto (such agreements, Supplements, Notes, instruments and documents, as
they may be amended for time to time, collectively, at any time, the "Loan
Documents") by wire transfer of immediately available funds or by check. Wire
transfers shall be made to ABA No. ▇▇▇▇▇▇▇▇▇ for advice to and credit of CoBank
(or to such other account as CoBank may direct by notice). The Borrowers shall
use their best efforts to give CoBank telephonic notice no later than 12:00 noon
Eastern time of their intent to pay by wire. Funds received by wire before 3:00
p.m. Eastern time shall be credited on the day received and funds received by
wire after 3:00 p.m. Eastern time shall be credited on the next Business Day.
Checks shall be mailed to CoBank, at ▇▇▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
(or to such other place as CoBank may direct by notice). Credit for payment by
check will not be given until the later of: (i) the day on which CoBank receives
immediately available funds; or (ii) the next Business Day after receipt of the
check. If any date on which a payment is due under any Loan Document is not a
Business Day, then such payment shall be made on the next Business Day and such
extension of time shall be included in the calculation of interest due.
SECTION 4. Security. The Borrowers' obligations under the Loan Documents
shall be secured by a statutory first lien on all equity which the Borrowers may
now own or hereafter acquire or be allocated in CoBank. In addition, the
Borrowers' obligations under this Agreement, the Supplements and the Notes shall
be secured as provided in the Supplements, and shall be guaranteed as provided
in the Supplements. The Borrowers agree to take such steps (including the
execution of such instruments and documents) as CoBank may from time to time
reasonably require to enable CoBank to obtain, perfect and maintain its security
interests in such property as is described in the Supplements.
SECTION 5. Conditions Precedent.
(A) Conditions to Initial Supplement. CoBank's obligation to extend
credit under the initial Supplement is subject to the conditions precedent that
CoBank receive, in form and substance satisfactory to CoBank, each of the
following:
(1) This Agreement, Etc. A duly executed original of this
Agreement and all instruments and documents contemplated hereby.
(2) Delegation Form. A duly completed and executed original of a
CoBank Delegation and Wire Transfer Authorization form.
(B) Conditions to Each Supplement. CoBank's obligations, if any, to
extend credit under, each Supplement, including the initial Supplement, is
subject to the conditions precedent that CoBank receive, in form and content
satisfactory to CoBank, each of the following:
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(1) Supplement. A duly executed original of such Supplement, the
Note relating thereto, and all other instruments and documents contemplated
by such Supplement.
(2) Evidence of Authority. Such certified board resolutions,
evidence of incumbency, legal opinions and other evidence that CoBank may
require that the Supplement, the Note relating thereto and all other
instruments and documents executed in connection therewith, and, in the
case of the initial Supplement, this Agreement and all instruments and
documents executed in connection herewith, have been duly authorized and
executed and that the Borrowers and Restricted Subsidiaries are in good
standing under the laws of the jurisdictions in which they operate.
(3) Consents and Approvals. Such evidence, including, without
limitation, legal opinions, as CoBank may require that all required
regulatory and other consents and approvals have been obtained and are in
full force and effect.
(4) Fees and Other Charges. All fees and other charges provided
for herein or in the Supplement.
(5) Insurance. Such evidence as CoBank may require that the
Borrowers is in compliance with Subsection 7(D) hereof.
(6) Evidence of Perfection, Etc. Such evidence, including,
without limitation, legal opinions, lien search reports and title
commitments and title insurance policies, as CoBank may require that CoBank
has a duly perfected first priority security interest in all collateral
contemplated by the Supplement.
(7) Opinions of Counsel. Opinions of counsel to the Borrowers
and any other entity party to the Loan Documents relating to such
Supplement acceptable to CoBank, including, without limitation, opinions
relating to corporate authority, regulatory and other approvals and the
status of perfection in any collateral.
(C) Conditions to Each Advance. CoBank's obligation under each
Supplement to make any Loan or advance to the Borrowers thereunder is subject to
the further conditions set forth in such Supplement and that no Event of Default
(as defined in Section 9 hereof) or event which with the giving of notice and/or
the passage of time would become an Event of Default hereunder (a "Potential
Default"), shall have occurred and be continuing.
SECTION 6. Representations and Warranties. The execution by the Borrowers
of each Supplement and each request for an advance thereunder shall constitute a
representation and warranty by each Borrower to CoBank that:
(A) Application. Each representation and warranty and all other
information set forth in any application or other document submitted in
connection with, or to induce CoBank to enter into, such Supplement is correct
in all material respects as of the date of the Supplement or request for
advance, except as such representation or warranty expressly relates to an
earlier date.
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(B) Disclosure. No representation or warranty of the Borrowers
contained in this Agreement, the financial statements referred to in Subsection
6(F), any other document, certificate or written statement furnished to CoBank
by or on behalf of the Borrowers for use in connection with the Loan Documents
contains any untrue statement of a material fact or omitted, omits or will omit
to state a material fact necessary in order to make the statements contained
herein or therein not misleading in light of the circumstances in which the same
were made.
(C) Organization; Powers; Etc. Each of the Borrowers and each of its
Restricted Subsidiaries (i) is duly incorporated, organized, or formed (as
applicable), validly existing, and in good standing under the laws of its state
of incorporation, organization or formation (as applicable); (ii) is duly
qualified to do business and is in good standing in each jurisdiction in which
the character of its properties or the nature of its business requires such
qualification; (iii) has all requisite legal and corporate, partnership or
limited liability company power (as applicable) to own and operate its assets
and to carry on its business and to enter into and perform its obligations under
the Loan Documents to which it is a party; and (iv) has duly and lawfully
obtained and maintained all licenses, certificates, permits, authorizations,
approvals, and the like which are necessary in the conduct of its business, or
which may be otherwise required by law, which if not obtained and maintained,
could have a Material Adverse Effect (as hereinafter defined) on the Borrowers.
The term "Material Adverse Effect" when used with reference to any entity shall
mean a material adverse effect on the condition, financial or otherwise,
operations, properties or business of such entity or on the ability of such
entity to perform its obligations under the Loan Documents to which it is a
party.
(D) Due Authorization; No Violations; Etc. The execution and delivery
by each of the Borrowers and each of its Restricted Subsidiaries of, and the
performance by each of the Borrowers and each such Restricted Subsidiary of its
obligations under, the Loan Documents to which it is a party have been duly
authorized by all requisite corporate, partnership or limited liability company
action (as applicable) and do not and will not (i) violate its articles or
certificate of incorporation, articles or certificate of organization or
articles or certificate of formation (as applicable), its bylaws, partnership
agreement or operating agreement (as applicable), any provision of any law, rule
or regulation, any judgment, order or ruling of any court or Governmental
Authority any material agreement or any indenture, mortgage, or other instrument
to which such Borrower or such Restricted Subsidiary is a party or by which such
Borrower or such Restricted Subsidiary or any of their respective properties are
bound, or (ii) be in conflict with, result in a breach of, or constitute with
the giving of notice or lapse of time, or both, a default under any such
agreement, indenture, mortgage, or other instrument. All actions on the part of
the shareholders, partners or members (as applicable) of the Borrowers and each
of its Restricted Subsidiaries necessary in connection with the execution and
delivery by such Borrower or such Restricted Subsidiary of, and the performance
by such Borrower or such Restricted Subsidiary of their respective obligations
under, the Loan Documents to which it is a party have been taken and remain in
full force and effect.
(E) Binding Agreement. Each of the Loan Documents to which any
Borrower or any of its Restricted Subsidiaries is a party is, or when executed
and delivered will be, the legal, valid, and binding obligation of such Borrower
or such Restricted Subsidiary, enforceable against such Borrower or such
Restricted Subsidiary in accordance with its terms,
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subject only to limitations on enforceability imposed by (i) applicable
bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting
creditors' rights generally, and (ii) general equitable principles.
(F) Financial Statements, Budgets, Projections, Etc. All financial
statements of any entity submitted to CoBank in connection with, or to induce
CoBank to enter into, this Agreement or such Supplement fairly and fully present
the financial condition of such entity in all material respects and the results
of such entity's operations for the periods covered thereby, and are prepared in
accordance with generally accepted accounting principles ("GAAP") consistently
applied. There are no material liabilities of such entity, fixed or contingent,
not reflected in such financial statements or the notes thereto. Since the date
of such Supplement or request for advance, there has been no material adverse
change in the financial condition or operations of such entity. All budgets,
projections, feasibility studies, and other documentation submitted by the
Borrowers to CoBank in connection with, or to induce CoBank to enter into, such
Supplement are based upon assumptions that are reasonable and realistic, and as
of the date of such Supplement or request for advance, no fact has come to
light, and no event or transaction has occurred, which would cause any such
assumption not to be reasonable or realistic.
(G) Consents and Approvals. No consent, permission, authorization,
order or license of any Governmental Authority or of any party to any agreement
to which any Borrower or any of its Restricted Subsidiaries is a party or by
which they or any of their respective property may be bound or affected, is
necessary in connection with the project, acquisition or other activity being
financed by such Supplement, the execution, delivery, performance or enforcement
of the Loan Documents or the creation and perfection of the liens and security
interests granted thereby, except as such have been obtained and are in full
force and effect or which are required in connection with the exercise of
remedies hereunder.
(H) Compliance. Each of the Borrowers and each of its Restricted
Subsidiaries is in compliance with all of the terms of the Loan Documents to
which it is a party and no Event of Default or Potential Default exists.
(I) Compliance with Laws. Each of the Borrowers and each of its
Restricted Subsidiaries is in compliance in all material respects with all laws,
rules, regulations, ordinances, codes, orders, and the like (collectively,
"Laws"), the failure to comply with which could have a Material Adverse Effect
on the Borrowers.
(J) Environmental Compliance. Without limiting the provisions of
Subsection 6(I), all property owned or leased by each of the Borrowers and each
of its Restricted Subsidiaries and all operations conducted by them are in
compliance in all material respects with all Laws relating to environmental
protection, the failure to comply with which could have a Material Adverse
Effect on the Borrowers.
(K) Litigation. There are no pending legal, arbitration, or
governmental actions or proceedings to which any Borrower or any of its
Restricted Subsidiaries is a party or to which any their respective properties
are subject which, if adversely determined, could have a
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Material Adverse Effect on the Borrowers, and to the best of the Borrowers'
knowledge, no such actions or proceedings are threatened or contemplated.
(L) Principal Place of Business; Records. The principal place of
business and chief executive office of the Borrowers and the place where the
records required by Subsection 7(F) are kept is at the address of the Borrowers
shown in Section 14.
(M) Employee Benefit Plans. Each of the Borrowers and each of its
Restricted Subsidiaries is in compliance in all material respects with the
applicable provisions of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and the regulations and published interpretations thereunder,
the failure to comply with which could have a Material Adverse Effect on the
Borrowers.
(N) Taxes. Each of the Borrowers and each of its Restricted
Subsidiaries has filed or caused to be filed all federal, state and local tax
returns that are required to be filed, and has paid and shall continue to pay
when due all taxes as shown on such returns, and has paid and shall continue to
pay when due all other taxes, assessments and governmental charges or levies
upon it and its property, income, profits and assets which are due and payable,
except where the payment of such tax, assessment, government charge or levy is
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being contested in good faith and by appropriate proceedings and adequate
reserves in compliance with GAAP have been set aside on such Borrower's books
therefor.
(O) Investment Company Act; Public Utility Holding Company Act.
Neither any Borrower nor any of its Restricted Subsidiaries is an "investment
company" as that term is defined in, or is otherwise subject to regulation
under, the Investment Company Act of 1940, as amended. Neither any Borrower nor
any of its Restricted Subsidiaries is a "holding company" as that term is
defined in, or is otherwise subject to regulation under, the Public Utility
Holding Company Act of 1935, as amended.
(P) Use of Proceeds. The funds to be borrowed under this Agreement
and each Supplement will be used only as contemplated thereby. No part of such
funds will be used to purchase any "margin securities" or otherwise in violation
of the regulations of the Federal Reserve System.
(Q) Restricted Subsidiaries. The Borrowers have no Restricted
Subsidiaries other than as set forth on Schedule 6(Q) to this Agreement. Each
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Borrower is the registered and beneficial owner of the specified percentage of
the shares of issued and outstanding capital stock or other equity interests of
each of its Restricted Subsidiaries as set forth on Schedule 6(Q), which stock
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and other equity interests are owned free and clear of all liens, warrants,
options, rights to purchase, rights of first refusal and other interests of any
person. The stock or other equity interests of each such Restricted Subsidiary
has been duly authorized and validly issued and is fully paid and non-
assessable.
(R) Licenses; Permits; Etc. Each of the Borrowers and each of its
Restricted Subsidiaries is the valid holder of all franchises, licenses,
certificates, permits, authorizations, approvals and the like which are material
to the conduct of its business or which may be required by law, including,
without limitation, all licenses and permits of the Federal Communications
6
Commission (the "FCC"), the Georgia Public Service Commission (the "GAPSC"), the
Alabama Public Service Commission (the "ALPSC" and collectively with the GAPSC,
the "PUC") and the public utility commissions of any other states in which any
Borrower operates, and all such franchises, licenses, certificates, permits,
authorizations, approvals, and the like are in full force and effect on the date
of such Supplement and request for advance.
(S) Credit Agreements, Etc. Set forth on Schedule 6(S) hereto is a
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complete and correct list of all loan agreements, incentives, guarantees,
Capital Leases (as defined in Subsection 7(I)), and other credit agreements
(including agreements for the issuance of letters of credit) in effect on the
date of this MLA in respect of which any Borrower or any Restricted Subsidiary
is in any manner directly or contingently obligated for an amount in excess of
$100,000.
SECTION 7. Affirmative Covenants. Unless otherwise agreed to in writing
by CoBank, while this Agreement is in effect, each Borrower will, and will cause
each of its Restricted Subsidiaries to:
(A) Existence, Licenses. Etc. (i) Preserve and keep in full force
and effect its existence and good standing in the jurisdiction of its
incorporation, organization or formation (as applicable); (ii) qualify and
remain qualified to transact business in all jurisdictions where such
qualification is required by applicable Laws; and (iii) obtain and maintain all
licenses, certificates, permits, authorizations, approvals, and the like, which
if not obtained and maintained, could have a Material Adverse Effect on the
Borrowers.
(B) Compliance with Laws and Agreements. Comply in all material
respects with (i) all Laws, the failure to comply with which could have a
Material Adverse Effect on the Borrowers, and (ii) all agreements, indentures,
mortgages, and other instruments to which such Borrower or any Restricted
Subsidiary of it is a party or by which it or any of its property is bound, the
failure to comply with which could have a Material Adverse Effect on the
Borrowers.
(C) Compliance with Environmental Laws. Without limiting the
provisions of Subsection 7(B), comply in all material respects with, and cause
all persons occupying or present on any properties owned or leased by it to so
comply with, all Laws relating to environmental protection, the failure to
comply with which could have a Material Adverse Effect on the Borrowers.
(D) Insurance. Maintain insurance with insurance companies or
associations acceptable to CoBank in such amounts and covering such risks as are
usually carried by companies engaged in the same business and similarly
situated, and make such increases in the type or amount of coverage as CoBank
may reasonably request. All such policies insuring any collateral for such
Borrower's obligations to CoBank shall have lender or mortgagee loss payable
clauses or endorsements in form and substance acceptable to CoBank. Such
proceeds shall be applied to the extent applicable as provided in the Loan
Documents governing such collateral. At CoBank's request, such Borrower agrees
to deliver to CoBank such proof of compliance with this Subsection 7(D) as
CoBank may require.
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(E) Property Maintenance. Maintain and preserve all of its property
and each and every part and parcel thereof that is necessary to or useful in the
proper conduct of its business in good repair, working order, and condition,
ordinary wear and tear excepted, and make all alterations, replacements, and
improvements thereto as may from time to time be necessary in order to ensure
that its properties remain in good working order and condition. At CoBank's
request, but not more than once a year, each Borrower will furnish to CoBank a
report on the condition of such Borrower's and any of its Restricted
Subsidiaries' property prepared by a professional engineer satisfactory to
CoBank.
(F) Books and Records. Keep adequate records and books of account in
which complete and accurate entries will be made in accordance with GAAP
consistently applied.
(G) Inspection. Permit CoBank or its representatives, upon reasonable
notice and during normal business hours or at such other times as the parties
may agree, to examine any Borrower's properties, books, and records, and to
discuss such Borrower's affairs, finances, and accounts, with such Borrower's
officers, directors, employees, and independent certified public accountants.
(H) Reports and Notices. Furnish, or cause to be furnished, to
CoBank:
(1) Annual Financial Statements. As soon as available, but in no
event later than 120 days after the end of each fiscal year of the
Borrowers occurring during the term hereof, annual consolidated financial
statements of the Borrowers prepared in accordance with GAAP consistently
applied and in a format that demonstrates any accounting or formatting
change that may be required by the various jurisdictions in which the
business of the Borrowers is conducted (to the extent not inconsistent with
GAAP). Such financial statements shall: (i) be audited by an independent
certified public accountant or firm of independent certified public
accountants selected by the Borrowers and acceptable to CoBank; (ii) be
accompanied by a report of such accountants containing an opinion thereon
acceptable to CoBank; (iii) be prepared in reasonable detail, and in
comparative form; and (iv) include a balance sheet, a statement of income,
a statement of retained earnings, a statement of cash flows, and all notes
and schedules relating thereto.
(2) Quarterly Financial Statements. As soon as available but in
no event later than 45 days after the end of each of the first three fiscal
quarters of each fiscal year of the Borrowers occurring during the term
hereof, unaudited quarterly consolidated financial statements of the
Borrowers prepared in accordance with GAAP consistently applied (except for
the omission of footnotes and for the effect of normal year-end audit
adjustments) and in a format that demonstrates any accounting or formatting
change that may be required by various jurisdictions in which the business
of the Borrowers is conducted (to the extent not inconsistent with GAAP).
Each of such financial statements shall (i) be prepared in reasonable
detail, and (ii) include a balance sheet, a statement of income for such
quarter and for the period year-to-date, and such other quarterly
statements as CoBank may specifically request, which quarterly statements
shall include any and all supplements thereto.
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(3) Notice of Default. Promptly after becoming aware thereof,
notice of (i) the occurrence of any Potential Default or Event of Default
under any of the Loan Documents; and (ii) the occurrence of any breach,
default, event of default, or other event which with the giving of notice
or lapse of time, or both, could become a breach, default, or event of
default under any agreement, indenture, mortgage, or other instrument
(other than the Loan Documents) to which it is a party or by which it or
any of its property is bound or affected if the effect of such breach,
default, event of default, or other event is to accelerate, or to permit
the acceleration of, the maturity of any indebtedness in an amount in
excess of $100,000; provided, however, that the failure to give such notice
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shall not affect the right and power of CoBank to exercise any and all of
the remedies specified herein.
(4) Notice of Non-Environmental Litigation. Promptly after the
commencement thereof, notice of the commencement of all actions, suits, or
proceedings before any court, arbitrator, or governmental department,
commission, board, bureau, agency, or instrumentality affecting any
Borrower or any of its Restricted Subsidiaries which, if determined
adversely, could have a Material Adverse Effect on the Borrowers.
(5) Notice of Environmental Litigation. Promptly after receipt
thereof, notice of the receipt of all pleadings, orders, complaints,
indictments, or any other communication alleging a condition that may
require any Borrower or any of its Restricted Subsidiaries to undertake or
to contribute to a material cleanup or other response under environmental
Laws, or which seek penalties, damages, injunctive relief, or criminal
sanctions related to alleged violations of such Laws, or which claim
personal injury or property damage to any person as a result of
environmental factors or conditions.
(6) Regulatory and Other Notices. Promptly after filing, receipt
or becoming aware thereof, copies of any filings or communications sent to
and notices or other communications received by any Borrower or any of its
Restricted Subsidiaries from any Governmental Authority, including, without
limitation, the Securities and Exchange Commission, the FCC, the PUC, or
any other state utility commission relating to any material noncompliance
by any Borrower or any of its Restricted Subsidiaries with any Laws or with
respect to any matter or proceeding the effect of which, if adversely
determined, could have a Material Adverse Effect on the Borrowers.
(7) Material Adverse Change. Promptly after becoming aware
thereof, notice of any matter which has had or could have a Material
Adverse Effect on the Borrowers.
(8) Compliance Certificates. Concurrently with each statement
required to be furnished pursuant to Subsection 7(H)(1) or (2), a
compliance certificate in the form attached hereto as Exhibit A executed by
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the chief financial officer of each of the Borrowers.
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(9) Management Letters. Promptly after receipt thereof, a copy
of any management letters submitted to any Borrower or any of its
Restricted Subsidiaries by its independent certified public accountants.
(10) ERISA Reportable Events. Within 30 days after it becomes
aware of the occurrence of any Reportable Event (as defined in Section 4043
of ERISA) applicable to any Borrower or any of its Restricted Subsidiaries,
a statement describing such Reportable Event and the actions it proposes to
take in response to such Reportable Event.
(11) Other Information. Such other information regarding the
condition, financial or otherwise, or operations of any Borrower or any of
its Restricted Subsidiaries as CoBank may, from time to time, reasonably
request.
(I) Total Leverage Ratio. The Borrowers shall maintain at all times
on a consolidated basis and measured as of the last day of each fiscal quarter
of the Borrowers (each a "Quarterly Date"), during the periods set forth below,
a Total Leverage Ratio less than or equal to the ratio set forth below opposite
such date:
Date Leverage Ratio
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From the date hereof through and
including December 31, 2002 5.0:1.0
January 1, 2003 through and
including December 31, 2003 4.5:1.0
January 1, 2004 through and
including December 31, 2004 4.0:1.0
January 1, 2005 and thereafter 3.5:1.0
The term "Total Leverage Ratio" shall mean the ratio of Indebtedness to
Operating Cash Flow (as such terms are hereinafter defined). The term
"Indebtedness" shall mean (i) obligations for borrowed money, (ii) obligations
representing the deferred purchase price of property or services other than
accounts payable arising in connection with the purchase of goods or services on
terms customary in the trade, (iii) obligations, whether or not assumed, secured
by liens or a pledge of or an encumbrance on the proceeds or production from
property now or hereafter owned or acquired, (iv) obligations which are
evidenced by notes, acceptances or other instruments, (v) leases of real or
personal property which are or would be required to be capitalized under GAAP
(each a "Capital Lease"), and (vi) fixed payment obligations under guarantees
that are due and remain unpaid. For purposes of this Agreement, the term
"Operating Cash Flow"(i) shall mean the sum of (a) net income or deficit, as the
case may be, excluding extraordinary or non-recurring gains or losses and the
write-up or write-down of any asset, (b) total interest expense (including
non-cash interest), (c) depreciation and amortization expense, (d) cash income
taxes and (e) other non-cash items or reserves to the extent such item
10
or reserves are deducted in determining net income and (ii) shall be measured
for the then most recently completed four fiscal quarters, adjusted to give
effect to any acquisition, sale or other disposition, directly or through a
Restricted Subsidiary, of any business (or any portion thereof) during the
period of calculation as if such acquisition, sale or other disposition occurred
on the first day of such period of calculation.
(J) Debt Service Coverage Ratio. Commencing on the date hereof, the
Borrowers shall maintain at all times on a consolidated basis and measured at
each Quarterly Date, a Debt Service Coverage Ratio not less than 1.25:1.00.
The term "Debt Service Coverage Ratio" shall mean, as of the date of
calculation, the ratio derived by dividing (i) Operating Cash Flow by (ii) the
sum of: (a) all principal payments scheduled to be made on Indebtedness (or
scheduled reductions in commitments on lines of credit to the extent such
reductions would case the repayment of principal amounts then outstanding under
such lines) plus (b) cash interest expense, each measured for the then most
----
recently completed four fiscal quarters.
(K) Capital. Acquire non-voting participation certificates in CoBank
in such amounts and at such times as CoBank may from time to time require in
accordance with its Bylaws and Capital Plan (as each may be amended from time to
time), except that the maximum amount of non-voting participation certificates
that the Borrowers may be required to purchase in connection with a Loan may not
exceed the maximum amount permitted by the Bylaws at the time the Supplement
relating to such Loan is entered into or such Loan is renewed or refinanced by
CoBank. The rights and obligations of the parties with respect to such non-
voting participation certificates and any patronage or other distributions made
by CoBank shall be governed by CoBank's Bylaws. The Borrowers hereby consent and
agree that the amount of any distributions with respect to its patronage with
CoBank that are made in qualified written notices of allocation (as defined in
26 U.S.C. 1388) and that are received by the Borrowers from CoBank, will be
taken into account by the Borrowers at their stated dollar amounts whether the
distribution be evidenced by a participation certificate or other form of
written notice that such distribution has been made and recorded in the name of
the Borrowers on the records of CoBank.
SECTION 8. Negative Covenants. Unless otherwise agreed to in writing by
CoBank, while this Agreement is in effect each Borrower will not and will cause
its Restricted Subsidiaries not to:
(A) Borrowings. Create, incur, assume, or allow to exist, directly or
indirectly, any Indebtedness except for (i) obligations to CoBank, and (ii)
Indebtedness under purchase money security agreements and Capital Leases not to
exceed $1,000,000 in the aggregate for the Borrowers and their Restricted
Subsidiaries at any one time.
(B) Liens. Create, incur, assume, or allow to exist any mortgage,
deed of trust, pledge, lien (including the lien of an attachment, judgment, or
execution), security interest, or other encumbrance of any kind upon any of its
property, real or personal. The foregoing restrictions shall not apply to (i)
liens in favor of CoBank; (ii) liens for taxes, assessments, or governmental
charges that are not past due, unless the same are being contested in good faith
and by appropriate proceedings and then only if and to the extent reserves
required by GAAP have
11
been set aside therefor; (iii) liens, pledges, and deposits under workers'
compensation, unemployment insurance, social security and similar laws; (iv)
liens, deposits, and pledges to secure the performance of bids, tenders,
contracts (other than contracts for the payment of money), and like obligations
arising in the ordinary course of its business; (v) liens imposed by law in
favor of mechanics, materialmen, warehousemen, lessors and like persons that
secure obligations that are not past due, unless the same are being contested in
good faith and by appropriate proceedings and then only if and to the extent
reserves required by GAAP have been set aside therefor; (vi) liens constituting
encumbrances in the nature of zoning restrictions, easements and rights or
restrictions of record on the use of real property of the Borrowers that, in the
sole judgment of CoBank, do not materially detract from the value of such real
property or impair the use thereof in such Borrower's business; (vii) judgment
liens, provided enforcement thereof is effectively stayed and the claims secured
thereby are being contested in good faith by appropriate proceedings and for
which reserves have been established in accordance with GAAP; and (viii)
purchase money security interests and leases securing Indebtedness permitted
under Subsection 8(A)(ii), provided that such security interests and leases do
not encumber any property other than the items purchased with the proceeds
thereof or leased thereby.
(C) Fundamental Changes. (i) Unless, and only to the extent required
by law, amend, modify or waive any provision of its articles or certificate of
incorporation, articles or certificate of organization, articles or certificate
of formation, bylaws, partnership agreement or operating agreement (as
applicable), (ii) merge or consolidate with any other entity, acquire all or
substantially all of the assets of any person or entity, or (iii) form or create
any Restricted Subsidiary or (iv) commence operations under any other name,
organization, or entity, including any joint venture.
(D) Transfer of Assets. Sell, transfer, lease, enter into any
contract for the sale, transfer or lease of, or otherwise dispose of, any of its
assets, except in the ordinary course of its business; provided, however, any
-------- -------
such sale, transfer or lease shall be permitted hereunder so long as the
Borrowers are in compliance with Section 7(B) of the First Supplement.
(E) Loans and Investments. After the date hereof, make any loan or
advance to, invest in, purchase or make any commitment to purchase any stock,
bonds, notes, or other securities of, or guarantee, assume, or otherwise become
obligated or liable with respect to the obligations of any person or entity
(each, whether made directly or indirectly, an "Investment") other than (i)
stock or other securities of, or investments in CoBank or CoBank investment
services or programs, (ii) marketable direct obligations issued or
unconditionally guaranteed by the United States government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one year from the date of acquisition thereof and
(iii) time deposits maturing not more than thirty days from the date of creation
thereof with commercial banks having membership in the Federal Deposit Insurance
Corporation in amounts at any one such institution not exceeding the lessor of
$100,000 or the maximum amount of insurance applicable to the aggregate amount
of such Borrower's deposits at such institution.
(F) Change in Business. Engage in any business activity or operation
different from or unrelated to its current business activities and operations.
12
(G) Disposition of Licenses. Sell, assign, transfer or otherwise
dispose of, or attempt to dispose of, in any way, any franchise, license,
certificates, permits, authorization, approvals and the like which may be
required by law or which are material to the conduct of its business, the
disposition of which could have a Material Adverse Effect on the Borrowers.
(H) Dividends and Other Distributions. Provide, make, declare or pay,
directly or indirectly, any dividend or other distribution of assets to
shareholders, partners or members (as applicable) of such Borrower, or retire,
redeem, purchase or otherwise acquire for value any capital stock or equity
interests (as applicable) of such Borrower; provided, however, the Borrowers may
-------- -------
make a dividend of no more than $40 million to Knology, Inc. ("Knology") for the
purpose set forth in Section 2(i) of the First Supplement hereto, so long as
prior to making such dividend, identified equipment with a fair market value at
least equal to the amount of such dividend, determined within at least 90 days
of such proposed dividend, is pledged by Knology of Knoxville, Inc. to CoBank on
a first priority basis and Knology of Knoxville, Inc. has executed all
documents, including, without limitation, the form of security agreement
attached hereto as Exhibit 8(H), and UCC financing statements, and all other
------------
items necessary to perfect such first-priority lien in favor of CoBank, and
delivered all legal opinions to such effect as CoBank shall request.
(I) Transactions with Affiliates. Directly or indirectly enter into
or permit to exist any transaction (including the purchase, sale, lease or
exchange of any property or the rendering of any service) with any Affiliate (as
hereinafter defined) or with any director, officer or employee of such Borrower
or any Affiliate, except (i) as permitted under Subsection 8(J); (ii)
transactions in the ordinary course of and pursuant to the reasonable
requirements of the business of such Borrower or any of its Restricted
Subsidiaries and upon fair and reasonable terms which are fully disclosed to
CoBank and are no less favorable to such Borrower or such Restricted Subsidiary
than would be obtained in a comparable arm's length transaction with a person or
entity that is not an Affiliate; or (iii) payment of compensation to directors,
officers and employees in the ordinary course of business for services actually
rendered in their capacities as directors, officers and employees, provided such
compensation is reasonable and comparable with compensation paid by companies of
like nature and similarly situated. Notwithstanding the foregoing, upon the
election of CoBank, no payments may be made with respect to any items set forth
in clauses (i) and (ii) of the preceding sentence upon the occurrence and during
the continuation of a Potential Default or Event of Default.
"Affiliate" means any person or entity: (i) directly or indirectly
controlling, controlled by, or under common control with, any Borrower; (ii)
directly or indirectly owning or holding five percent (5%) or more of any equity
interest in any Borrower; or (iii) five percent (5%) or more of whose voting
stock or other equity interest is directly or indirectly owned or held by any
Borrower. For purposes of this definition, "control" (including with correlative
meanings, the terms "controlling," "controlled by" and "under common control
with") means the possession directly or indirectly of the power to direct or
cause the direction of the management and policies of a person, whether through
the ownership of voting securities or by contract or otherwise.
13
(J) Management Fees and Compensation. Directly or indirectly pay any
management, consulting or other similar fees to any person, except (i) any such
fees to Affiliates of the Borrowers not exceeding $3,000,000 in the aggregate
for all Borrowers and their Restricted Subsidiaries with respect to services
actually rendered in any fiscal year and (ii) legal or consulting fees paid to
persons or entities that are not Affiliates of any Borrower or its Restricted
Subsidiaries for services actually rendered and in amounts typically paid by
entities engaged in such Borrower's or such Restricted Subsidiary's business.
Notwithstanding the foregoing, upon the election of CoBank, no payments
otherwise permitted under clause (i) may be made upon the occurrence and during
the continuation of a Potential Default or Event of Default.
SECTION 9. Events of Default. Each of the following shall constitute an
"Event of Default" under this Agreement:
(A) Payment Default. Any Borrower should fail to make any payment to
CoBank when due hereunder, under any Note, or under any other Loan Document to
which it is a party, or should fail to make any investment in CoBank required to
be made hereunder when due.
(B) Representations and Warranties. Any representation or warranty
made herein, in any Supplement or in any other Loan Document, or any factual
statement made in any certificate delivered in connection therewith shall prove
to have been false or misleading in any material respect on or as of the date
made or deemed made.
(C) Certain Affirmative Covenants. Any Borrower should fail to
perform or comply with any covenant set forth in Section 7 hereof (other than
Subsections 7(H)(3) through 7(H)(7)) and such failure continues for 30 days
after written notice thereof shall have been delivered by CoBank to such
Borrower.
(D) Other Covenants and Agreements. Any Borrower should fail to
perform or comply with Subsections 7(H)(3) through 7(H)(7) or any other covenant
or agreement contained herein or in any other Loan Document or should use the
proceeds of any Loan for an unauthorized purpose.
(E) Cross-Default. (i) The occurrence of an Event of Default under
any other Loan Document, (ii) the failure, after any applicable grace period, on
the part of any Borrower or any other entity, other than CoBank, to observe,
keep or perform any covenant or agreement contained in any other Loan Document,
or (iii) the failure, after any applicable grace period, on the part of any
Borrower or any of its Restricted Subsidiaries to observe, keep or perform any
covenant or agreement contained in any agreement (other than the Loan Documents)
between such entity and CoBank, including, without limitation, any guaranty,
loan agreement, security agreement, mortgage, deed to secure debt, or deed of
trust.
(F) Other Indebtedness. Any Borrower or any of its Restricted
Subsidiaries should fail to pay when due any indebtedness to any other person or
entity for borrowed money or any long-term obligation for the deferred purchase
price of property (including any Capital Lease) in a principal amount in excess
of $250,000 or any other event occurs which, under any
14
agreement or instrument relating to such indebtedness or obligation, has the
effect of accelerating or permitting the acceleration of such indebtedness or
obligation, whether or not such indebtedness or obligation is actually
accelerated or such person or entity commences the exercise of its remedies
against such Borrower or such Restricted Subsidiary or any of their respective
assets.
(G) Judgments. A judgment, decree, or order for the payment of money
in excess of $100,000 should be rendered against any Borrower or any of its
Restricted Subsidiaries and either: (i) enforcement proceedings should have been
commenced; (ii) a lien prohibited under Subsection 8(B) hereof shall have been
obtained; or (iii) such judgment, decree, or order should continue unsatisfied
and in effect for a period of 30 consecutive days without being vacated,
discharged, satisfied, or stayed pending appeal.
(H) Insolvency, Etc. Any Borrower or any of its Restricted
Subsidiaries should: (i) become insolvent or should generally not, or should be
unable to, or should admit in writing its inability to, pay its debts as they
come due; or (ii) suspend its business operations or a material part thereof or
make an assignment for the benefit of creditors; or (iii) apply for, consent to,
or acquiesce in the appointment of a trustee, receiver, or other custodian for
it or any of its property or, in the absence of such application, consent, or
acquiescence, a trustee, receiver, or other custodian is so appointed; or (iv)
commence or have commenced against it any proceeding under any bankruptcy,
reorganization, arrangement, readjustment of debt, dissolution, or liquidation
Law of any jurisdiction, which, in the case of a proceeding commenced against
any Borrower or any of its Restricted Subsidiaries, is not dismissed within 45
days.
(I) Security. Any security agreement or other agreement executed by
any Borrower or any other entity (other than CoBank) intended to create a valid
and perfected lien, security interest or security title in property as described
in a Supplement shall for any reason (other than upon payment in full of the
obligations secured thereby) fail (i) to create a valid and perfected first-
priority lien, security interest, or security title (subject only to such
exceptions as are therein permitted) as contemplated by the Supplement, or (ii)
to secure thereunder the obligations purported to be secured thereby. Any
guaranty described in a Supplement as guaranteeing the obligations of the
Borrowers hereunder shall fail for any reason to be the valid and binding
obligation of the guarantor (other than upon payment in full of the obligations
guaranteed thereby), or the guarantor should in any way contest or dispute the
validity and binding effect of any such guaranty.
(J) Change in Ownership of the Borrowers. Knology shall fail to own,
directly or indirectly, 100% of the issued and outstanding voting and other
capital stock in each Borrower.
(K) Licenses and Permits. (i) The loss, suspension or revocation of,
or failure to renew, any license or permit now held or hereafter acquired by any
Borrower or any of its Restricted Subsidiaries, if such loss, suspension,
revocation or failure to renew could reasonably be expected to have a Material
Adverse Effect on the Borrowers or (ii) receipt of notice from any regulatory or
Governmental Authority to the effect that such authority intends to replace the
management of any Borrower or any of its Restricted Subsidiaries or assume
control over any Borrower or such Restricted Subsidiary.
15
Once an Event of Default exists, it shall be deemed to continue, notwithstanding
any curative action by the Borrowers, unless and until CoBank, in its sole
discretion, shall state in writing that the Event of Default no longer exists or
has been waived.
SECTION 10. Remedies. Upon the occurrence and during the continuance of an
Event of Default or any Potential Default, CoBank shall have no obligation to
continue to extend credit to the Borrowers under any Supplement and may
discontinue doing so at any time without prior notice. Upon the occurrence of an
Event of Default under Subsection 9(H) hereof, the entire unpaid principal
balance of the Loans, all accrued interest thereon, and all other amounts
payable under this Agreement, all Supplements, all Notes and all other Loan
Documents and all other agreements between CoBank and the Borrowers shall become
immediately due and payable without protest, presentment, demand or further
notice of any kind, all of which are hereby expressly waived by the Borrowers.
In addition, upon the occurrence and during the continuance of any Event of
Default, CoBank may, upon notice to the Borrowers:
(A) Termination and Acceleration. Terminate any commitment and
declare the entire unpaid principal balance of the Loans, all accrued interest
thereon, and all other amounts payable under this Agreement, all Supplements,
and the other Loan Documents to be immediately due and payable. Upon such a
declaration, the unpaid principal balance of the Loans and all such other
amounts shall become immediately due and payable, without protest, presentment,
demand, or further notice of any kind, all of which are hereby expressly waived
by the Borrowers.
(B) Enforcement. Proceed to protect, exercise, and enforce such
rights and remedies as may be provided by this Agreement, any other Loan
Document or under applicable Laws. Each and every one of such rights and
remedies shall be cumulative and may be exercised from time to time, and no
failure on the part of CoBank to exercise, and no delay in exercising, any right
or remedy shall operate as a waiver thereof, and no single or partial exercise
of any right or remedy shall preclude any other or future exercise thereof, or
the exercise of any other right. Without limiting the foregoing, CoBank may hold
and/or set off and apply against the Borrowers' obligations to CoBank the
proceeds of any equity in CoBank, any cash collateral held by CoBank, or any
balances held by CoBank for the Borrowers' account (whether or not such balances
are then due).
(C) Application of Funds. Apply all payments received by it to the
Borrowers' obligations to CoBank in such order and manner as CoBank may elect in
its sole discretion; provided that any payments received from any guarantor or
--------
from any disposition of any collateral provided by such guarantor shall only be
applied against obligations guaranteed by such guarantor.
(D) Default Rate of Interest. In addition to the rights and remedies
set forth above and notwithstanding any Note and Supplement: (i) if prior to the
maturity of any loan the Borrowers fail to purchase any equity in CoBank when
required or fails to make any payment to CoBank when due, then at CoBank's
option in each instance, such obligation or payment shall bear interest from the
date due to the date paid at 4% per annum in excess of the rate of interest that
would otherwise be applicable to such obligation or payment, (ii) upon the
occurrence and during the continuance of an Event of Default, at CoBank's
option, the unpaid balances of the
16
Loans shall bear interest at 4% per annum in excess of the rate(s) of interest
that would otherwise be in effect on the Loans under the terms of the Note and
Supplement and (iii) after the maturity of any Loan, whether by reason of
acceleration or otherwise, the unpaid principal balance of the Loan (including
without limitation, principal, interest, fees and expenses) shall automatically
bear interest at 4% per annum in excess of the rate of interest that would
otherwise be in effect on the Loan under the terms of the Note and Supplement.
All interest provided for herein shall be payable on demand and shall be
calculated from the date such payment was due to the date paid on the basis of a
year consisting of 360 days.
SECTION 11. Complete Agreement, Amendments. The Loan Documents are
intended by the parties to be a complete and final expression of their
agreement. No amendment, modification, or waiver of any provision of this
Agreement or the other Loan Documents, and no consent to any departure by the
Borrowers herefrom or therefrom, shall be effective unless approved by CoBank
and contained in a writing signed by or on behalf of CoBank, and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given. In the event this Agreement is amended or
restated, each such amendment or restatement shall be applicable to all
Supplements hereto. Each Supplement shall be deemed to incorporate all of the
terms and conditions of this Agreement as if fully set forth therein. Without
limiting the foregoing, any capitalized term utilized in any Supplement (or in
any amendment to this Agreement or Supplement) and not otherwise defined in the
Supplement (or amendment) shall have the meaning set forth herein.
SECTION 12. Other Types of Credit. From time to time, CoBank may issue
letters of credit or extend other types of credit to or for the account of the
Borrowers. In the event the parties desire to do so under the terms of this
Agreement, such extensions of credit may be set forth in any Supplement and this
Agreement shall be applicable thereto.
SECTION 13. Applicable Law. Except to the extent governed by applicable
federal law, this Agreement and each Supplement shall be governed by and
construed in accordance with the laws of the State of Colorado, without
reference to choice of law doctrine.
SECTION 14. Notices. All notices hereunder or under any Supplement shall
be in writing and shall be deemed to be duly given upon delivery if personally
delivered or sent by telegram or facsimile transmission, or 3 days after mailing
if sent by express, certified or registered mail, to the parties at the
following addresses (or such other address for a party as shall be specified by
like notice):
17
If to CoBank, as follows: If to the Borrowers, as follows:
CoBank, ACB ▇▇▇▇ ▇.▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇
900 Circle ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Suite 1400 Attn: Chief Financial Officer
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attn: Communications and Energy
Banking Group With a copy to:
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇ ▇.▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: General Counsel
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
SECTION 15. Costs, Expenses and Taxes. To the extent allowed by law, the
Borrowers agree to pay all reasonable out-of-pocket costs and expenses
(including the fees and expenses of counsel retained by CoBank) incurred by
CoBank in connection with the origination, negotiation, documentation,
administration, collection, and enforcement of this Agreement and the other Loan
Documents, including, without limitation, all costs and expenses incurred in
perfecting, maintaining, determining the priority of, and releasing any security
for the Borrowers' obligations to CoBank, and any stamp, intangible, transfer,
or like tax payable in connection with this Agreement or any other Loan Document
or the recording hereof or thereof.
SECTION 16. Effectiveness and Severability. This Agreement shall continue
in effect until: (i) all indebtedness and obligations of the Borrowers under
this Agreement, all Supplements, all Notes and all other Loan Documents shall
have been paid or satisfied; (ii) CoBank has no commitment to extend credit to
or for the account of the Borrowers under any Supplement; and (iii) either party
sends written notice to the other terminating this Agreement. Any provision of
this Agreement or any other Loan Document which is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof or thereof.
SECTION 17. Regulatory Approvals. Upon any action by CoBank to commence
the exercise of remedies hereunder, or under the Supplements or other Loan
Documents, the Borrowers hereby undertake and agree on behalf of themselves to
cooperate and join with CoBank in any application to any regulatory body
(including the FCC or the PUC), administrative agency, court or other forum (any
such entity, a "Governmental Authority") with respect thereto and to provide
such assistance in connection therewith as CoBank may request, including,
without limitation, the preparation of filings and appearances of officers and
employees of the Borrowers before such Governmental Authority, in each case in
support of any such application made by CoBank, and the Borrowers shall not,
directly or indirectly, oppose any such action by CoBank before any such
Governmental Authority.
18
SECTION 18. Successors and Assigns. This Agreement, each Supplement, and
the other Loan Documents shall be binding upon and inure to the benefit of the
Borrowers and CoBank and their respective successors and assigns, except that
the Borrowers may not assign or transfer its rights or obligations under this
Agreement, any Supplement or any other Loan Document without the prior written
consent of CoBank.
SECTION 19. Consent to Jurisdiction. To the maximum extent permitted by
law, the Borrowers agree that any legal action or proceeding with respect to
this Agreement or any of the other Loan Documents may be brought in the courts
of the State of Colorado, or of the United States of America for the District of
Colorado, all as CoBank may elect. By execution of this Agreement, the Borrowers
hereby irrevocably submit to each such jurisdiction, expressly waiving any
objection it may have to the laying of venue by reason of its present or future
domicile. Nothing contained herein shall affect the right of CoBank to commence
legal proceedings or otherwise proceed against the Borrowers in any other
jurisdiction or to serve process in any manner permitted or required by law.
SECTION 20. Waiver of Jury Trial. THE BORROWERS AND COBANK HEREBY WAIVE
THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED
UPON OR ARISING OUT OF THIS AGREEMENT, ANY SUPPLEMENT, ANY OTHER LOAN DOCUMENT,
OR ANY DEALINGS BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT
AND THE LENDER/BORROWERS RELATIONSHIP THAT IS BEING ESTABLISHED. THE SCOPE OF
THIS WAIVER IS INTENDED TO BE ALL ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY
BE FILED IN ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS AGREEMENT,
INCLUDING WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY
CLAIMS, AND ALL OTHER COMMON LAW AND STATUTORY CLAIMS. THE BORROWERS AND COBANK
ACKNOWLEDGE THAT THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS
RELATIONSHIP, THAT EACH HAS ALREADY RELIED ON THE WAIVER IN ENTERING INTO THIS
AGREEMENT AND THAT EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED
FUTURE DEALINGS. THE BORROWERS AND COBANK FURTHER WARRANT AND REPRESENT THAT
EACH HAS REVIEWED THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT EACH KNOWINGLY
AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THE LOAN DOCUMENTS, OR TO ANY OTHER
DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS. IN THE EVENT OF LITIGATION, THIS
AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT. THE
BORROWERS AND COBANK ALSO WAIVE ANY BOND OR SURETY OR SECURITY UPON SUCH BOND
WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF COBANK.
SECTION 21. Counterparts. This Agreement, each Supplement and any other
Loan Document may be executed in any number of counterparts and by the different
parties hereto in
19
separate counterparts, each of which when executed shall be deemed to be an
original and shall be binding upon all parties and their respective permitted
successors and assigns, and all of which taken together shall constitute one and
the same agreement.
[Signatures follow on next page.]
20
IN WITNESS WHEREOF, the Borrowers have caused this Agreement to be executed
and delivered and attested under seal, and CoBank has caused this Agreement to
be executed and delivered, each by their respective duly authorized officers as
of the date first shown above.
INTERSTATE TELEPHONE COMPANY GLOBE TELECOMMUNICATIONS, INC.
By:_________________________________
Name:____________________________ By:______________________________
Title:___________________________ Name:_________________________
Title:________________________
Attest:_____________________________
Name:________________________ Attest:__________________________
Title:_______________________ Name:_____________________
Title:____________________
[CORPORATE SEAL]
[CORPORATE SEAL]
VALLEY TELEPHONE CO., INC.
By:______________________________
Name:_________________________
Title:________________________
Attest:__________________________
Name:_____________________
Title:____________________
[CORPORATE SEAL]
[Signatures continue on next page.]
21
[Signatures continue from previous page.]
COBANK, ACB
By:__________________________________
▇▇▇▇ ▇▇▇▇▇▇▇, Vice President
22
EXHIBIT A
---------
COMPLIANCE CERTIFICATE
THIS COMPLIANCE CERTIFICATE is given by [Name], [chief
financial officer] of each of Globe Telecommunications, Inc., Interstate
Telephone Company and Valley Telephone Co., Inc. (the "Borrowers"), pursuant to
Subsection 7(H)(8) of that certain Master Loan Agreement, dated as of June 29,
2001, (the "MLA"), by and between the Borrowers and CoBank, ACB.
Capitalized terms used herein and not otherwise defined
herein shall have the meanings ascribed to them in the MLA.
I hereby certify as follows:
1. I am the [chief financial officer] of each of the Borrowers and as such
possess the knowledge and authority to certify to the matters set forth
in this Compliance Certificate;
2. Attached hereto as Annex A are the [audited/unaudited]
-------
[annual/quarterly] financial statements of the Borrowers for the fiscal
[year/quarter] ended ______________, as required by Subsection
[7(H)(1)/(2)] of the MLA. Such financial statements were prepared in
accordance with GAAP consistently applied (except for the omission of
footnotes and for the effect of normal year-end audit adjustments) and
in a format that demonstrates any accounting or formatting changes that
may be required by various jurisdictions in which the business of the
Borrowers is conducted (to the extent not inconsistent with GAAP);
3. As of the date of such financial statements, the Borrowers are in
compliance with the covenants set forth in Subsections 7(I) through
7(J) of the MLA. Attached hereto as Annex B are calculations which
-------
demonstrate the compliance by the Borrowers with such covenants;
4. The representations and warranties contained in Section 6 of the MLA
are true and correct in all material respects as of the date of this
Certificate, except as disclosed on Annex C hereto;
-------
5. I have reviewed the activities of the Borrowers during the fiscal
[year/quarter] ended ______________, and consulted with appropriate
representatives of the Borrowers and all other parties (other than
CoBank) to the Loan Documents, and reviewed the Loan Documents (as
defined in the MLA). As of the date of this Compliance Certificate, I
am not aware of any condition, event or act which constitutes a
Potential Default or an Event of Default under the MLA, except as
disclosed on Annex D hereto; and
-------
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6. Attached hereto as Annex E are the legal descriptions of all real
-------
property purchased or leased by the Borrowers or any Restricted
Subsidiary since the date of the last Compliance Certificate submitted
pursuant to the MLA.
IN WITNESS WHEREOF, I have executed this Compliance Certificate as of
_____________, _____.
--------------------------------------------
[Name], [Chief financial officer] of each of
Globe Telecommunications, Inc., Interstate
Telephone Company and Valley Telephone Co.,
Inc.
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Schedule 6(Q)
RESTRICTED SUBSIDIARIES
Number and Type Percentage of
Name of of Equity Interests Outstanding Equity Interests
Restricted Subsidiary Beneficially Owned Owned
--------------------- ------------------ -----
ITC Globe, Inc. 1,000 shares of 100%
common stock (by Globe Telecommunications,
Inc.)
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Schedule 6(S)
EXISTING CREDIT AGREEMENTS
None.
26
Exhibit 8(H)
FORM OF KNOLOGY OF KNOXVILLE, INC. SECURITY AGREEMENT
[see attached]
27