EXHIBIT 4 (B)
Loan No. S0667
CoBANK, ACB
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LINE OF CREDIT AGREEMENT
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THIS LINE OF CREDIT AGREEMENT (this "Agreement") is made and entered into
as of September 30, 1999, by and between the CoBANK, ACB ("CoBank") and
COMMONWEALTH TELEPHONE COMPANY (the "Borrower").
SECTION 1. The Loan. On the terms and conditions set forth in this
Agreement, and subject to Section 11, CoBank agrees to make loans to the
Borrower during the period set forth below in an aggregate principal amount up
to $30,000,000 at any one time outstanding (the "Loan"). Within the limits of
the Loan, the Borrower may borrow, repay and reborrow.
SECTION 2. Purpose and Use of Proceeds. The proceeds of the Loan shall be
applied by the Borrower to finance the operating needs of the Borrower. The
Borrower agrees that the proceeds of the Loan shall be used for only the purpose
set forth in this Section 2.
SECTION 3. Availability. Subject to Section 11, the Loan will be made on
any day on which CoBank is open for business (a "Business Day"), except any day
when Federal Reserve Banks are closed, by wire transfer of immediately available
funds to such account or accounts as the Borrower may designate, provided that
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(i) an authorized officer of the Borrower shall have provided CoBank with at
least one Business Days' prior written notice of the date on which the Loan is
to be made (the "Funding Date"), unless the Borrower elects to have a portion of
the Loan accrue interest at a LIBOR Rate (as defined in Section 4(A)(2)), in
which case the Borrower shall have provided such notice two Banking Days (as
defined below) prior to the Funding Date and the Funding Date shall be a Banking
Day, and (ii) the Funding Date so designated shall not be later than 364 days
after the date hereof. A "Banking Day" means a Business Day on which dealings
in U.S. dollar deposits are carried out in the London Interbank Market and banks
are open for business in ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇.
SECTION 4. Interest and Fees.
(A) The unpaid principal balance of the Loan shall accrue interest
at the rate or rates selected by the Borrower in accordance with this
Subsection (A).
(1) Floating Rate Option. As to any portion of the unpaid
principal balance of the Loan selected by the Borrower (any such portion,
and any portion selected pursuant to Subsection (A)(2), is hereinafter
referred to as a "Portion" of the Loan), interest shall accrue pursuant to
this floating rate option at a rate per annum for each day during a weekly
period from and including the first Business Day of such week to but not
including the first Business Day of the following week (the "Floating
Rate") equal at all times to the rate of interest established by CoBank on
the first Business Day of such
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week. The rate established by CoBank may not exceed CoBank's "National
Variable Rate" (as hereinafter defined) on that day and shall be effective
until the first Business Day of the next week (or if later, the first
Business Day where a rate is established for these purposes). Each change
in the rate shall be applicable to all balances subject to this option and
information about the then current rate shall be made available upon
telephonic request. The term "National Variable Rate" shall mean the rate
of interest established by CoBank from time to time as its National
Variable Rate, which Rate is intended by CoBank to be a reference rate, and
CoBank may charge other borrowers rates at, above, or below that rate.
(2) LIBOR Option. As to any Portion or Portions of the Loan
selected by the Borrower, interest shall accrue pursuant to this LIBOR
option at a fixed annual interest rate (a "LIBOR Rate") equal to the sum of
LIBOR (as hereinafter defined) plus a margin (the "LIBOR Margin") equal to
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the Applicable Margin (subject to Subsection (B)). Under this option, the
interest rate on any Portion of the Loan, in minimum amounts of $100,000,
may be fixed for an Interest Period of 1 month, 2 months, 3 months, 6
months, or 9 months but not beyond the Maturity Date. The term "LIBOR"
shall mean the interest rate (rounded upwards, if necessary, to the next
higher 1/100th of 1%) indicated by Telerate as having been quoted by the
British Bankers Association at 11:00 a.m., London time, on the date (which
must be a Banking Day) the Borrower elects to fix a rate under this LIBOR
option, for the offering of U.S. dollar deposits in the London Interbank
Market for the Interest Period selected by the Borrower. The term "month"
or "months" shall mean a period commencing two Banking Days after the date
the Borrower elects to fix a rate under this LIBOR option and ending on the
numerically corresponding day in the next calendar month or the month that
is 2, 3, 6, or 9 months thereafter, as the case may be; provided, however,
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that (i) in the event such ending date is not a Banking Day, such period
shall be extended to the next Banking Day unless such next Banking Day
falls in the next calendar month, in which case such period shall end on
the next preceding Banking Day; and (ii) if there is no numerically
corresponding day in the ending month, then such period shall end on the
last Banking Day in such month.
(3) Selection And Changes of Rates. The Borrower shall select
the applicable interest rate option or options at the time it gives CoBank
written notice of the Funding Date pursuant to Section 3. The Borrower may,
on any Banking Day, elect to have the LIBOR Rate apply to any Portion of
the Loan then accruing interest at the Floating Rate. In addition, with
respect to any Portion of the Loan accruing interest pursuant to the LIBOR
Rate, the Borrower may, subject to Subsection (A)(2), two Banking Days
prior to the last day of the Interest Period for such Portion, elect to fix
the interest rate accruing on such Portion for an Interest Period at a
LIBOR Rate. In the absence of any such refix, interest shall automatically
accrue on such Portion of the Loan at the Floating Rate. Notwithstanding
the foregoing, in the event the Borrower elects to have any Portion of the
Loan accruing interest at the LIBOR Rate and the last day of the Interest
Period for such Portion is not a Banking Day, then interest shall accrue on
such Portion at the Floating Rate until the LIBOR Rate becomes effective.
From time to time
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the Borrower may elect on a Business Day and upon payment of the Surcharge
(as defined in, and calculated pursuant to, Section 6), to convert all, but
not part, of any Portion of the Loan accruing interest pursuant to the
LIBOR Rate to accrue interest at the Floating Rate or pursuant to the LIBOR
Rate for an Interest Period selected in accordance with Subsection (A)(2);
provided, however, that any such conversion to a LIBOR Rate shall not be
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effective until two Banking Days after such election, which can only be
made on a Banking Day. Except for the initial selection, all interest rate
selections provided for herein shall be made by telephonic or written
request of an authorized employee of the Borrower by 12:00 noon, Eastern
time, on the relevant day.
(4) Accrual of Interest. Interest shall accrue pursuant to any
LIBOR Rate selected by the Borrower from and including the first day of the
applicable Interest Period to but excluding the last day of the Interest
Period. If the Borrower elects to refix the interest rate on any Portion of
the Loan pursuant to Subsection (A)(3), the first day of the new Interest
Period shall be the last day of the preceding Interest Period. In the
absence of any such refix, interest shall accrue on such Portion at the
Floating Rate from and including the last day of such Interest Period. If
the Borrower elects to convert from the LIBOR Rate to the Floating Rate or
to the LIBOR Rate upon payment of the Surcharge as provided in Subsection
(A)(3), interest at the existing LIBOR Rate shall accrue through the day
before such conversion and either (i) the first day of any new Interest
Period shall be the date of such conversion, or (ii) interest at the
Floating Rate shall accrue on the Portion of the Loan so converted from and
including the date of conversion.
(B) Applicable Margin. For purposes hereof, the "Applicable Margin"
used to determine the LIBOR Rate shall mean the interest rate margin determined
by the Total Leverage Ratio (as defined in Section 13(J) hereof) in accordance
with the following schedule:
Total Leverage Ratio Applicable Margin LIBOR Loans
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Less than or equal to 1.35x +.50%
Greater than 1.35x +.75%
The Total Leverage Ratio of the Borrower will be determined based on the most
recent financial statements and financial covenant certificate delivered to
CoBank pursuant to Section 13(I)(8) hereof, and changes in the Applicable Margin
will not be made until the third Business Day after receipt thereof.
Notwithstanding the foregoing: (1) at closing and until receipt of the first
set of financial statements and financial covenant certificate required pursuant
to Section 13(I)(8), the Applicable Margin shall be .75% for loans bearing
interest at the LIBOR Rate (unless, at closing, the Borrower furnishes its most
recent quarterly financial statement and financial covenant certificate showing
that the Borrower is entitled to a lower rate); and (2) changes in the
Applicable Margin shall be applicable to the Portion of the Loan bearing
interest at the LIBOR Rate, regardless of when made. In the event the Borrower
fails to timely provide the financial statements and financial covenant
certificate referred to in Section 13(I)(8), then, without prejudice to CoBank's
rights under Section 16 hereof, the Applicable Margin shall be .75% for the
Portion of the Loan bearing interest at the LIBOR Rate until it does so
regardless of the Total
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Leverage Ratio.
(C) Payment and Calculation. Interest shall be payable monthly
in arrears by the twentieth (20th) day of the following month, upon any
prepayment and at maturity, and shall be calculated on the actual number of
days the Loan is outstanding on the basis of a year consisting of 360 days.
In calculating accrued interest, the date the Loan is made shall be
included and the date any principal amount of the Loan is repaid or prepaid
shall be excluded as to such amount.
(D) Default Rate. If prior to maturity the Borrower fails to
make any payment or investment required to be made under the terms of this
Agreement or the Note (including this Section 4), then, at CoBank's option
in each instance, such payment or investment shall accrue interest at 2%
per annum in excess of the Floating Rate. After maturity, whether by reason
of acceleration or otherwise, the unpaid principal balance of the Loan
shall automatically accrue interest at 2% per annum in excess of the
Floating Rate. All interest provided for in this Subsection (D) shall be
payable on demand and shall be calculated from and including the date such
payment was due to but excluding the date paid on the basis of a year
consisting of 360 days.
(E) Origination Fee. On the Funding Date, the Borrower shall
pay or shall cause to be paid to CoBank a non-refundable origination fee in
the amount of $37,500.
(F) Commitment Fee. In consideration of the Loan, the Borrower
shall pay a commitment fee on the average daily unused Portion of the Loan
at the rate of 1/4 of 1% per annum (calculated on a 360 day basis), payable
monthly in arrears by the twentieth (20th) day of the following month. Such
fee shall be payable for each month (or portion thereof) occurring during
the original or any extended term of the Loan.
SECTION 5. Principal Repayment and Maturity. The principal balance
of the Loan shall be repaid on the first Business Day following the last
day of the term of the Loan, as the term may be renewed from time to time.
The term of the Loan shall be from the date hereof, up to 364 days after
the date hereof (the "Maturity Date"). On the Maturity Date, the amount of
the then unpaid principal balance of the Loan and any and all other amounts
due and owing hereunder or under any other Loan Document shall be due and
payable. If any Payment Date is not a Business Day, then the principal
installment then due shall be paid on the next Business Day and shall
continue to accrue interest until paid. The Borrower shall have the right,
upon at least three Business Days' prior written notice to CoBank, to
permanently reduce or terminate the Loan, provided, however, no reduction
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or termination shall be permitted if, after giving effect thereto and to
any prepayment made therewith, the aggregate principal balance of the Loan
then outstanding would exceed the Loan as so reduced.
SECTION 6. Prepayment. The Borrower may, on one Business Day's prior
written notice, prepay in full or in part: (i) any Portion of the Loan
accruing interest at the Floating Rate, and (ii) any Portion of the Loan
accruing interest at the LIBOR Rate. Notwithstanding the foregoing, the
Borrower's right to prepay any Portion of the Loan accruing interest at the
LIBOR
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Rate shall be conditioned upon the payment of a surcharge (the "Surcharge")
equal to the present value of any funding losses incurred by CoBank as a
result of such prepayment. The Surcharge, including the amount of any
funding losses, shall be determined and calculated as follows:
(A) Determine the difference between: (i) CoBank's cost of funds
(determined in accordance with its standard methodology) on the date the
interest rate was fixed to fund the Portion of the Loan being prepaid;
minus (ii) CoBank's cost of funds (determined in accordance with such
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methodology) on the date of prepayment to fund a new loan with a weighted
average life equal to the weighted average life over the remainder of the
selected Interest Period of the Portion of the Loan being prepaid. If such
difference is negative, then no Surcharge is payable.
(B) If such difference is positive, divide the result determined
in Subsection (A) by 12.
(C) For each month or part thereof during which the Portion of
the Loan prepaid was scheduled to have been outstanding, multiply the
amount determined in Subsection (B) by that part of the Portion of the Loan
prepaid that was scheduled to have been outstanding during such month (such
that there is a monthly calculation for each month during which the Portion
of the Loan prepaid was scheduled to have been outstanding).
(D) Determine the present value of each monthly calculation made
under Subsection (C) based upon the scheduled time that interest on the
Portion of the Loan prepaid would have been payable and a discount rate
equal to the rate set forth in Subsection (A)(ii).
(E) Add all of the calculations made under Subsection (D). The
result shall be the Surcharge.
A hypothetical example illustrating the above described calculation of the
Surcharge is attached as Schedule 3 hereto.
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SECTION 7. Note. The Borrower's obligation to repay the Loan shall
be evidenced by a promissory note in form and content acceptable to CoBank
(as the same may be amended, modified, supplemented, extended or restated
from time to time and any promissory note that may be issued from time to
time in substitution, renewal, replacement or exchange therefor, the
"Note").
SECTION 8. Manner and Time of Payment. If any date on which payment
is due hereunder is not a Business Day, the payment shall be made on the
next succeeding Business Day. The Borrower shall make each payment under
this Agreement and under the Note 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
designate by notice) with sufficient information to identify the source and
application of such funds. The Borrower shall give CoBank telephonic notice
no later than 12:00 noon, Eastern time, of its intent to pay by wire
transfer. Wire transfers received after 3:00 p.m., Eastern time, shall be
credited on the next Business Day. Checks shall be mailed or delivered to
CoBank at
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▇▇▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ (or to such other address as
CoBank may designate by notice). Credit for payment by check will not be
given until the next Business Day after receipt of the check or the actual
receipt of immediately available funds, whichever is later.
SECTION 9. Capitalization. The Borrower agrees to purchase non-
voting participation certificates in CoBank 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 Borrower may be required to purchase in
connection with a loan may not exceed the maximum amount permitted by the
bylaws at the time the Agreement relating to such loan is entered into or
such loan is renewed or refinanced by CoBank. In connection with the
foregoing, the Borrower hereby acknowledges receipt, prior to the execution
of this Agreement, of CoBank's bylaws, a written description of the terms
and conditions under which the equity is issued, CoBank's Loan-Based
Capital Plan, CoBank's most recent annual report, and if more recent than
CoBank's latest annual report, its latest quarterly report. All such
investments and all other equities which the Borrower may now own or
hereafter acquire or be allocated in CoBank shall be subject to a statutory
first lien in favor of CoBank.
SECTION 10. Security. Except as provided in Section 9 hereof, the
Loan shall be unsecured.
SECTION 11. Conditions Precedent. CoBank's obligation to make the
Loan hereunder is subject to satisfaction of each of the following
conditions precedent on or before the Funding Date:
(A) Loan Documents. That CoBank receive duly executed originals
of this Agreement, the Note, and all other instruments and documents
contemplated hereby or thereby (collectively, the "Loan Documents").
(B) Authorization. That CoBank receive copies of all corporate
documents and proceedings of the Borrower authorizing the execution,
delivery, and performance of the Loan Documents, certified by the Secretary
of the Borrower.
(C) Approvals. That CoBank receive evidence satisfactory to it
that all federal and state consents and approvals (including, without
limitation, all regulatory approvals) which are necessary for, or required
as a condition of, the validity and enforceability of the Loan Documents.
(D) Opinion of Counsel. That CoBank receive an opinion of
counsel for the Borrower (who shall be acceptable to CoBank) in form and
content acceptable to CoBank.
(E) Fees, Expenses and Capital. That the Borrower pay the fee
set forth in Section 4(E) hereof and the costs and expenses required by
Section 20 hereof to be paid by the Borrower.
(F) Event of Default. That no Event of Default (as that term
is defined in
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Section 15) exists, and that there has occurred no event which with the
passage of time or the giving of notice, or both, could become an Event of
Default (each such event, a "Default").
(G) Representations and Warranties. That the representations
and warranties of the Borrower contained in this Agreement and any other
Loan Document be true and correct in all material respects on and as of the
Funding Date, as though made on and as of such date.
(H) No Material Adverse Change. That from December 31, 1998 to
the Funding Date there shall not have occurred any material adverse change
in the business, financial condition or results of operations of the
Borrower; provided, however, that any special dividend made pursuant to
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Section 14(H) shall not be taken into consideration in determining whether
such a material adverse change has occurred (any such material adverse
change is hereinafter referred to as a "Material Adverse Change").
(I) No Injunction. That no court or other government body or
public authority shall have issued an order which shall then be in effect
restraining or prohibiting the completion of the transactions contemplated
hereby.
(J) Closing Certificate. That CoBank receive a certificate, in
the form attached hereto as Exhibit A, dated the Funding Date, signed by
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the President, Chief Financial Officer or Treasurer of the Borrower,
certifying as to the truth and accuracy of the representations and
warranties of the Borrower under the Loan Documents and the satisfaction of
each of the conditions applicable to the making of the Loan specified
herein.
(K) Factual Matters. That CoBank receive a certificate (the
"Factual Matters Certificate"), in the form attached hereto as Exhibit B,
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dated the Funding Date, signed by the President, Chief Financial Officer or
Treasurer of the Borrower, certifying as to the matters set forth therein.
SECTION 12. Representations and Warranties. To induce CoBank to
make advances hereunder, and recognizing that CoBank is relying hereon, the
Borrower represents and warrants, as of the date of this Agreement and as
of the Funding Date, as follows:
(A) Organization; Power; Etc. The Borrower (i) is duly
organized, validly existing, and in good standing under the laws of its
state of incorporation; (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 corporate and legal power to own and operate its assets and to
carry on its business and to enter into and perform its obligations under
the Loan Documents; (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; and (v) is eligible to borrow from CoBank.
(B) Due Authorization; No Violations; Etc. The execution and
delivery by
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the Borrower of, and the performance by the Borrower of its obligations
under, the Loan Documents have been duly authorized by all requisite
corporate action on the part of the Borrower and do not and will not (i)
violate any provision of any law, rule or regulation, any judgment, order
or ruling of any court or governmental agency, the articles of
incorporation or bylaws of the Borrower, or any agreement, indenture,
mortgage, or other instrument to which the Borrower is a party or by which
the Borrower or any of its properties is 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
of the Borrower necessary in connection with the execution and delivery by
the Borrower of, and the performance by the Borrower of its obligations
under, the Loan Documents have been taken and remain in full force and
effect as of the date hereof.
(C) Consents. No consent, permission, authorization, order, or
license of any governmental authority is necessary in connection with the
execution, delivery, performance, or enforcement of the Loan Documents
except such as have been obtained and are in full force and effect, except
to the extent that the failure to do so would not reasonably be expected to
have a Material Adverse Effect.
(D) Binding Agreement. Each of the Loan Documents is, or when
executed and delivered will be, the legal, valid, and binding obligation of
the Borrower, enforceable against the Borrower in accordance with its
terms, 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.
(E) Compliance with Laws. The Borrower is in compliance in all
material respects with all federal, state, and local laws, rules,
regulations, ordinances, codes, and orders (collectively, "Laws"), the
failure to comply with which could have a material adverse effect on the
condition, financial or otherwise, operations, properties, or business of
the Borrower, or on the ability of the Borrower to perform its obligations
under the Loan Documents, except as the Borrower has disclosed on
Schedule 1 hereto.
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(F) Environmental Compliance. Without limiting the provisions
of Subsection (E), all property owned or leased by the Borrower and all
operations conducted by it 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 condition, financial or
otherwise, operations, properties, or business of the Borrower, or on the
ability of the Borrower to perform its obligations under the Loan
Documents, except as the Borrower has disclosed on Schedule 1 hereto.
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(G) Litigation. There are no existing legal, arbitration, or
governmental actions or proceedings to which the Borrower is a party or to
which any of its property is subject which could have a material adverse
effect on the condition, financial or otherwise, operations, properties or
business of the Borrower or on the ability of the Borrower to perform its
obligations under the Loan Documents, and to the best of the Borrower's
knowledge, no such actions or proceedings are threatened or contemplated.
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(H) Financial Statements; No Material Adverse Change; Etc. The
audited financial statements of the Borrower for the fiscal year ended
December 31, 1998, and the unaudited financial statements of the Borrower
for the period ended June 30, 1999, submitted to CoBank in connection with
the Loan fairly and fully present in all material respects the financial
condition of the Borrower, and the results of the Borrower's operations for
the periods covered thereby and were prepared in accordance with generally
accepted accounting principles ("GAAP") consistently applied and any system
of accounts to which the Borrower is subject (except as otherwise disclosed
therein). Since December 31, 1998, there has been no Material Adverse
Change. All budgets, projections, feasibility studies, and other
documentation submitted by the Borrower to CoBank were based upon
assumptions that management of the Borrower believed were reasonable and
realistic at the time submitted, and as of the date hereof, management of
the Borrower is unaware of any fact or event which would cause any
assumption made therein not to be reasonable or realistic in any material
respect.
(I) Principal Place of Business; Records. The principal place
of business and chief executive office of the Borrower and the place where
the records required by Section 13(G) are kept is at the address of the
Borrower shown in Section 19.
(J) Subsidiaries. The Borrower has no subsidiaries.
(K) Employee Benefit Plans. Except as disclosed on Schedule 1
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hereto, the Borrower is in compliance in all material respects with the
applicable provisions of the Employee Retirement Income Security Act of
1974, as amended, and the regulations and published interpretations
thereunder.
(L) Taxes. The Borrower has filed or caused to be filed all
federal, state and local tax returns that are required to be filed, and has
paid all taxes as shown on said returns or on any assessment received by
the Borrower to the extent that such taxes have become due, or are being
contested by the Borrower in good faith and by appropriate proceedings and
then only to the extent adequate reserves have been set aside on the
Borrower's books therefor.
(M) Investment Company Act; Public Utility Holding Company Act.
The Borrower is not an "investment company" as that term is defined in, and
is not otherwise subject to regulation under, the Investment Company Act of
1940, as amended. The Borrower is not a "holding company" as that term is
defined in, and is not otherwise subject to regulation under, the Public
Utility Holding Company Act of 1935, as amended.
(N) Use of Proceeds. The funds to be borrowed hereunder will be
used only as contemplated hereby. 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.
(O) Factual Matters Certificate. The information about the
Borrower contained in paragraphs 2 through 9 of the Factual Matters
Certificate delivered to CoBank will be true and complete with respect to
the matters addressed therein as of the Funding Date .
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Notwithstanding paragraph 1 of such Factual Matters Certificate, the
representations made in this Subsection (O) are not limited by the
Borrower's knowledge.
SECTION 13. Affirmative Covenants. Unless otherwise agreed to in
writing by CoBank, while this Agreement is in effect the Borrower agrees
to:
(A) Corporate Existence. Preserve and keep in full force and
effect its corporate existence and good standing in the jurisdiction of its
incorporation, and its qualification to transact business and good standing
in all places in which the character of its properties or the nature of its
business requires such qualification.
(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 its condition, financial or otherwise,
operations, properties, or business, or on its ability to perform its
obligations under the Loan Documents; and (ii) all agreements, indentures,
mortgages, and other instruments to which it is a party or by which it or
any of its property is bound.
(C) Compliance with Environmental Laws. Without limiting the
provisions of Subsection (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 its
condition, financial or otherwise, operations, properties, or business, or
on its ability to perform its obligations under the Loan Documents.
(D) Licenses; Permits; Etc. Duly and lawfully obtain and
maintain in full force and effect all licenses, certificates, permits,
authorizations, approvals, and the like which are material to the conduct
of its business or which may be required by Law.
(E) Insurance. Maintain insurance with insurance companies or
associations reasonably acceptable to CoBank in such amounts and covering
such risks as are usually carried by companies engaged in the same or
similar business and similarly situated. All such policies insuring any
collateral provided for in any Loan Document shall provide for loss payable
clauses or endorsements in form and content reasonably required by CoBank.
At the request of CoBank, all policies (or such other proof of compliance
with this Section 13(E) as may be reasonably satisfactory) shall be
delivered to CoBank.
(F) Property Maintenance. Maintain and preserve at all times
its property, and each and every part and parcel thereof, in good repair,
working order and condition, ordinary wear and tear excepted.
(G) Books and Records. Keep adequate records and books of
account in accordance with GAAP consistently applied and any system of
accounts to which the Borrower is subject.
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(H) Inspection. Permit CoBank or its agents, during normal
business hours or at such other times as the parties may agree, to examine
its properties, books, and records, and to discuss its affairs, finances,
operations, and accounts with its officers, directors, employees, and
independent certified public accountants. Notwithstanding the provisions of
Section 20, any such examination not made in connection with the
preservation or enforcement of CoBank's rights and remedies hereunder and
under the other Loan Documents shall be made at CoBank's expense.
(I) Reports and Notices. Furnish to CoBank:
(1) Annual Financial Statements. As soon as available, but
in no event later than 90 days after the end of each fiscal year of
the Borrower occurring during the term hereof, annual financial
statements of the Borrower and all of its subsidiaries whose accounts
are at the time in question, in accordance with GAAP, consolidated
with those of the Borrower (such subsidiaries, together with the
Borrower, collectively, the "Companies") prepared on a consolidated
basis (on a "Consolidated Basis") in accordance with GAAP consistently
applied (except for changes with which the Borrower's independent
public accountants concur) and any system of accounts to which the
Companies are subject. Such financial statements shall: (i) be audited
by independent certified public accountants of recognized national
standing selected by the Borrower; (ii) be accompanied by a report of
such accountants containing an opinion acceptable to CoBank; (iii) be
prepared in reasonable detail and in comparative form for the
preceding fiscal year; 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 required by GAAP.
In addition, such audited consolidated annual financial statements
shall be accompanied by unaudited consolidating annual financial
statements, including a balance sheet, a statement of income, a
statement of retained earnings, and a statement of cash flows, each
likewise set forth in comparative form.
(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 Borrower occurring
during the term hereof, unaudited quarterly financial statements of
each of the Companies and unaudited quarterly financial statements of
the Companies prepared on a Consolidated Basis, in each case in
accordance with GAAP consistently applied (except for changes with
which the Borrower's independent public accountants concur) and any
system of accounts to which the Companies are subject (except for the
omission of footnotes and for the effect of normal year-end audit
adjustments). Such financial statements shall: (i) be prepared in
reasonable detail and set forth in comparative form corresponding
figures for the corresponding period of the preceding fiscal year, 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
of the Companies as CoBank may specifically request, which quarterly
statements shall include any and all supplements thereto.
(3) Notice of Default. Promptly after becoming aware
thereof, notice
11
of (i) the occurrence of any Default or Event of Default hereunder or
under any other Loan Document, or (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 under such agreement, indenture, mortgage, or other
instrument; provided, however, that the failure to give
-------- -------
such notice 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 the Borrower as to which there is a reasonable possibility
that it would have a material adverse effect on its condition,
financial or otherwise, operations, properties, or business or on its
ability to perform its obligations under the Loan Documents.
(5) Notice of Environmental Litigation. Without limiting
the provisions of Subsection (I)(4), promptly after receipt thereof,
notice of the receipt of all pleadings, orders, complaints,
indictments, or other communications alleging a condition that may
require the Borrower to undertake or to contribute to a cleanup or
other response under Laws relating to environmental protection, or
which seeks penalties, damages, injunctive relief, or criminal
sanctions related to alleged violations of such Laws, or which claims
personal injury or property damage to any person as a result of
environmental factors or conditions or as to which there is a
reasonable possibility that it would have a material adverse effect on
the condition, financial or otherwise, operations, properties, or
business of the Borrower or on its ability to perform its obligations
under the Loan Documents.
(6) Regulatory and Other Notices. Promptly after receipt
thereof, copies of any filings or communications sent to or notices or
other communications received from any governmental authority,
including without limitation, the Pennsylvania Public Utility
Commission (the "Commission"), the Federal Communications Commission
(the "FCC"), and the Securities and Exchange Commission (the "SEC"),
relating to any noncompliance by the Borrower with any Law or with
respect to any matter or proceeding the effect of which could have a
material adverse effect on its condition, financial or otherwise,
operations, properties, or business or on its ability to perform its
obligations under the Loan Documents.
(7) Material Adverse Change. Prompt notice of any matter
which has resulted or could result in a material adverse effect on the
condition, financial or otherwise, operations, properties, or business
of the Borrower or on its ability to perform its obligations under the
Loan Documents.
12
(8) ERISA Reportable Events. Within 10 days after the
Borrower becomes aware of the occurrence of any Reportable Event (as
defined in Section 4043 of ERISA) as to which there is a reasonable
possibility that it would have a material adverse effect on the
condition, financial or otherwise, operations, properties, or business
of the Borrower, a statement describing such Reportable Event and the
actions proposed to be taken in response to such Reportable Event.
(9) SEC Filings. Promptly upon the filing thereof, copies
of any and all reports on Forms 10-K, 10-Q and 8-K and any and all
proxy statements filed by Commonwealth Telephone Enterprises, Inc.
with the SEC.
(10) Other Information. Such other information regarding
the financial or operational condition of the Borrower as CoBank may,
from time to time, reasonably request.
(J) Financial Covenants.
(1) Total Leverage Ratio. Maintain at all times, on a
Consolidated Basis, a Total Leverage Ratio not in excess of 3.5:1.0.
The term "Total Leverage Ratio" shall mean the ratio of Indebtedness
to Operating Cash Flow. The term "Indebtedness" shall mean, without
duplication, (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
inventory on terms customary in the trade, (iii) obligations, whether
or not assumed, secured by liens or payable out of the proceeds or
production from property now or hereafter owned or acquired, (iv)
obligations which are evidenced by notes, acceptances, or other
instruments, (v) capitalized agreements, (vi) fixed rate hedging
obligations that are due (after giving effect to any period of grace
or notice requirement applicable thereto) and remain unpaid, and (vii)
fixed payment obligations under guaranties that are due and remain
unpaid, all calculated on a Consolidated Basis. The term "Operating
Cash Flow" shall mean the sum of (a) pre-tax income, or deficit, as
the case may be, excluding extraordinary gains or losses and the write
up of any asset, (b) total interest expense (including non-cash
interest), (c) depreciation and amortization expense and other non-
cash charges, (d) accrued and unpaid management fees, (e) minority
interest, to the extent deducted in the calculation of pre-tax income,
or deficit, and (f) non-recurring transaction expenses incurred in
connection with the negotiation and execution of the Loan Documents,
all calculated on a Consolidated Basis. For purposes of determining
any applicable ratio, Operating Cash Flow shall be measured for the
then most recently completed four fiscal quarters, adjusted to give
effect to any acquisition, sale, or other disposition of any operation
during the period of calculation, as if such acquisition, sale, or
other disposition occurred on the first day of such period of
calculation.
13
(2) Interest Coverage Ratio. Maintain at all times, on
a Consolidated Basis, an Interest Coverage Ratio of at least 2.0:1.0.
The term "Interest Coverage Ratio" shall mean the ratio derived by
dividing (i) Operating Cash Flow by (ii) cash interest expense for the
then most recently completed four fiscal quarters (determined in
accordance with GAAP).
(3) Equity to Total Capitalization Ratio. Maintain at
all times, on a Consolidated Basis, an Equity to Total Capitalization
Ratio of not less than 30.0%. The term "Equity to Total Capitalization
Ratio" shall mean the ratio derived by dividing (i) the amount derived
by subtracting total liabilities from total assets by (ii) the amount
derived by subtracting total liabilities from total assets and adding
total Indebtedness (determined in accordance with GAAP).
SECTION 14. Negative Covenants. Unless otherwise agreed to in
writing by CoBank, while this Agreement is in effect, the Borrower shall
not:
(A) Borrowings. Create, incur, assume, or allow to exist,
directly or indirectly, any indebtedness or liability for borrowed money,
for the deferred purchase price of property or services, or for the lease
of real or personal property which lease is required to be capitalized
under GAAP or which is treated as an operating lease under regulations
applicable to it but which otherwise would be required to be capitalized
under GAAP (a "Capital Lease"), except for (i) obligations to CoBank, (ii)
accounts payable to trade creditors and current operating liabilities
(other than for borrowed money) incurred in the ordinary course of its
business, and (iii) (a) other unsecured obligations and (b) Capital Leases,
so long as no Default or Event of Default exists at the time of, or would
result from, the creation, incurrence, assumption, or existence of any such
obligation or Capital Lease referred to in this clause (iii).
(B) Liens. Create, incur, assume, or allow to exist any
mortgage, deed of trust, deed to secure debt, 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, or are being contested in good faith and by appropriate
proceedings and then only to the extent adequate reserves have been set
aside therefor; (iii) liens, pledges, and deposits under workers'
compensation, unemployment insurance, and social security 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 as conducted on the date
hereof; (v) liens imposed by law in favor of mechanics, materialmen,
warehousemen, lessors and like persons that secure obligations that are not
past due, or are being contested in good faith and by appropriate
proceedings and then only to the extent adequate reserves 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 Borrower that do not materially detract from
the value of such real property or impair the use thereof in the business
of the Borrower; and (vii) Capital Leases not secured by any property which
is not subject to such lease.
14
(C) Mergers; Acquisitions; Etc. (i) Merge or consolidate
with any other entity or (ii) acquire all or substantially all of the
assets of any person or entity, or form or create any new subsidiary, or
commence operations under any other name, organization, or entity,
including any joint venture; provided, however, that the Borrower may enter
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into any such transaction described in this clause (ii) involving any
entity or entities engaged in, or assets to be used by the Borrower in, the
telecommunications business without the written agreement of CoBank if no
Default or Event of Default exists at the time of, or would occur as the
result of, any such transaction, including, without limitation, any Event
of Default as described in Section 15(J) and any Default occurring as the
result of a breach of Subsection (F) or Section 13(J).
(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 as provided in the Mortgage or the Security Agreement
(each as defined in the Borrower's Loan Agreement No. T0268 dated March 29,
1994 with CoBank), as the case may be.
(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") in an amount in excess of $1,000,000 as to any single
Investment or in excess of $5,000,000 as to all such Investments existing
at any time, determined for the Companies, on a Consolidated Basis, other
than (i) stock or other securities of CoBank; (ii) Class C stock of the
Rural Telephone Bank; (iii) securities or deposits issued, guaranteed, or
fully insured as to payment by the United States of America or any agency
or instrumentality thereof; (iv) interest bearing deposit accounts (which
may be represented by certificates of deposit) in national or state banks
or savings and loan associations which have (or the parent of which has)
outstanding securities rated by a nationally recognized rating organization
(a "Rating Agency") in either of the two highest rating categories (without
regard to modifiers) for short term securities or in any of the three
highest rating categories (without regard to modifiers) for long term
securities or any equivalent successor rating category; (v) bankers'
acceptances drawn on and accepted by commercial banks which have (or the
parent of which has) outstanding securities rated by a Rating Agency in
either of the two highest rating categories (without regard to modifiers)
for short term securities or in any of the three highest rating categories
(without regard to modifiers) for long term securities or any equivalent
successor rating categories; (vi) direct obligations of, or obligations the
principal of and interest on which are unconditionally guaranteed by, any
State or Territory of the United States of America or the District of
Columbia, or any political subdivision of any of the foregoing, which are
rated by a Rating Agency in either of the two highest rating categories
(without regard to modifiers) for short term securities or in any of the
three highest rating categories (without regard to modifiers) for long term
securities or any equivalent successor rating categories; (vii) commercial
or finance company paper which is rated by a Rating Agency rated in any of
the two highest rating categories (without regard to modifiers) for short
term securities or any equivalent successor rating categories; (viii)
corporate debt securities or preferred stock rated by a Rating Agency in
any of the three highest rating categories (without regard to modifiers)
for long term securities or any equivalent successor rating categories; and
(ix) repurchase agreements with banking or financial institutions which
15
have (or the parent of which has) outstanding securities rated by a Rating
Agency in either of the two highest rating categories (without regard to
modifiers) for short term securities or in any of the three highest rating
categories (without regard to modifiers) for long term securities or any
equivalent successor rating categories with respect to any of the foregoing
obligations or securities.
(F) Change in Business. Engage in any business activities or
operations substantially different from or unrelated to the Borrower's
current business activities or operations.
(G) Disposition of Licenses. Sell, assign, transfer, or
otherwise dispose of, in any way, any registrations, licenses, franchises,
grants, permits, or other governmental approvals necessary or useful in the
operation of its business.
(H) Dividends and Distributions. Make, declare, or pay any
dividend or other distribution of assets to shareholders of the Borrower
during any fiscal year (i) if a Default or Event of Default then exists or
would occur as the result thereof, or (ii) which, in the aggregate with all
other such dividends or distributions during such fiscal year, exceeds the
amount of the after tax net income of the Borrower for the immediately
preceding fiscal year (determined in accordance with GAAP consistently
applied). Notwithstanding the foregoing, the Company may, on or before
December 31, 1999, pay a special dividend to Commonwealth Telephone
Enterprises, Inc. in an aggregate amount not to exceed $30,000,000.
(I) Transactions with Affiliates. Enter into any transaction
with any affiliate except upon fair and reasonable terms no less favorable
to it than would obtain in a comparable arm's-length transaction with a
person or entity that was not an affiliate.
SECTION 15. Events of Default. Each of the following shall
constitute an "Event of Default" hereunder:
(A) Payment Default. The failure by the Borrower to make any
payment of principal, interest, fees, Surcharge or investment required to
be made hereunder, under the Note, or under any other Loan Document when
due, and such payment or investment is not made within five (5) Business
Days thereafter.
(B) Representations and Warranties. Any representation or
warranty made by the Borrower herein or in any other Loan Document, or any
factual statement made in the Factual Matters Certificate, shall prove to
have been false or misleading in any material respect on or as of the date
made.
(C) Certain Affirmative Covenants. The failure by the
Borrower to perform or comply with any covenant set forth in Section 13
(other than Sections 13(A) and 13(I)(3), (4), (5), (6) and (7)), and such
failure continues for thirty (30) days after written notice thereof shall
have been delivered by CoBank to the Borrower.
16
(D) Other Covenants and Agreements. The failure by the
Borrower to perform or comply with any other covenant or agreement
contained herein, including, without limitation, any covenant excluded
under Subsection (C).
(E) Cross-Default. The occurrence of any breach, default,
event of default, or event which with the giving of notice or lapse of
time, or both, could become a default or event of default under (i) any
Loan Document other than this Agreement, or (ii) the terms of any agreement
(other than the Loan Documents) between the Borrower and CoBank, including,
without limitation, any guaranty, loan agreement, security agreement,
mortgage, deed to secure debt, or deed of trust.
(F) Other Indebtedness. The occurrence of any breach,
default, event of default, or event which with the giving of notice or
lapse of time, or both, could become a default or event of default under
any agreement, indenture, mortgage, or other instrument by which the
Borrower or any of its property is bound or affected (other than the Loan
Documents) if the effect of such breach, default, event of default, or
event is to accelerate, or to permit the acceleration of, the maturity of
any indebtedness in excess of $1,000,000 under such agreement, indenture,
mortgage, or other instrument.
(G) Judgments. Judgments, decrees, or orders for the payment
of money in an aggregate amount in excess of $1,000,000 shall be rendered
against any of the Borrower and either (i) enforcement proceedings shall
have been commenced; or (ii) such judgments, decrees, and orders shall
continue unsatisfied and in effect for a period of forty-five (45)
consecutive days without being vacated, discharged, satisfied, or stayed
pending appeal.
(H) Insolvency, Etc. The Borrower (i) shall become insolvent
or shall generally not, or shall be unable to, or shall admit in writing
its inability to, pay its debts as they come due; or (ii) shall suspend its
business operations or a material part thereof or make an assignment for
the benefit of creditors; or (iii) shall 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) shall commence with respect to it or have commenced against it any
proceeding under any bankruptcy, reorganization, arrangement, readjustment
of debt, dissolution, or liquidation law or statute of any jurisdiction;
provided, however, that, with respect to any proceeding commenced against
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the Borrower, the Borrower shall have failed to obtain a dismissal, stay,
or other nullification within sixty (60) days after such commencement.
(I) Eligibility. The failure by the Borrower to maintain its
eligibility to borrow from CoBank.
SECTION 16. Remedies Upon Event of Default.
(A) Automatic Acceleration. Upon the occurrence of an Event
of Default under Section 15(H), the entire unpaid principal balance of the
Note, all accrued interest thereon, and all other amounts payable under
this Agreement, the Note, and all other agreements between
17
CoBank and the Borrower 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 Borrower.
(B) Acceleration; Etc. Upon the occurrence of an Event of
Default other than under Section 15(H), upon notice to the Borrower, CoBank
may declare the entire unpaid principal balance of the Note, all accrued
interest thereon, and all other amounts payable under this Agreement and
all other agreements between CoBank and the Borrower, to be immediately due
and payable. Upon such a declaration, the unpaid principal balance of the
Note 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 Borrower.
(C) Enforcement. Upon the occurrence of an Event of Default,
CoBank may proceed to protect, exercise, and enforce such rights and
remedies as may be provided by agreement or under law including, without
limitation, the rights and remedies provided for in the Note and any of the
other Loan Documents. 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, nor shall any single or partial exercise
of any right or remedy preclude any other or future exercise thereof, or
the exercise of any other right. In addition, CoBank may hold and/or set
off and apply against the Borrower's indebtedness any and all cash,
accounts, securities, or other property in CoBank's possession or under its
control.
(D) Application of Payments. After acceleration of the Loan,
all amounts received by CoBank shall be applied to the amounts owing
hereunder, under the Note, and the other Loan Documents in whatever order
and manner as CoBank shall elect.
SECTION 17. Complete Agreement; Amendment. This Agreement, the
Note, and the other 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 hereof or thereof, nor any consent
to any departure of the Borrower 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.
SECTION 18. Applicable Law. Except to the extent governed by
applicable federal law, this Agreement shall be governed by and construed
in accordance with the laws of the Commonwealth of Pennsylvania, without
reference to choice of law doctrine.
SECTION 19. Notices. All notices hereunder shall be in writing
and shall be deemed to be duly given upon delivery, if delivered by
"Express Mail," overnight courier, messenger or other form of hand delivery
or sent by telegram or facsimile transmission, or three (3) days after
mailing if sent by 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):
18
If to CoBank, as follows: If to the Borrower, as follows:
CoBank, ACB Commonwealth Telephone Company
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ Attn: Chief Financial Officer
Attn: Rural Utility Banking Group Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
SECTION 20. Costs and Expenses. The Borrower shall reimburse
CoBank on demand for all reasonable out-of-pocket costs and expenses
incurred by CoBank in connection with the origination, negotiation, and
preparation of this Agreement and all other Loan Documents, and the
preservation and enforcement of CoBank's rights and remedies hereunder and
thereunder, including, without limitation: (i) costs and expenses
(including intangible and other taxes and any recording fees or expenses)
incurred by CoBank to obtain, perfect, maintain, determine the priority of,
or release any security contemplated hereunder; and (ii) fees and expenses
of any outside counsel retained by CoBank to assist CoBank with respect to
any matter contemplated by this Section or to review this Agreement and all
other Loan Documents and advise CoBank as to its rights and remedies
hereunder or thereunder; and (iii) fees and expenses of any outside counsel
retained by CoBank to represent it in any litigation involving the parties
hereto, including but not limited to, bankruptcy, receivership, or similar
proceedings.
SECTION 21. Effectiveness; Severability. This Agreement shall
continue in effect until all indebtedness and obligations of the Borrower
hereunder and under all other Loan Documents shall have been fully and
finally repaid or the Maturity Date, whichever is later. Any provision of
the Loan Documents 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 22. Successors and Assigns. This Agreement shall be
binding upon and inure to the benefit of the Borrower and CoBank and their
respective successors and assigns, except that the Borrower may not assign
or transfer its rights or obligations hereunder without the prior written
consent of CoBank. Without the consent of, but with notice to, the
Borrower, CoBank may (i) sell participations to one or more banks or other
entities in all or a portion of its rights and obligations under this
Agreement, provided, however, that after any such sale of participations,
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the Borrower shall continue to deal solely and directly with CoBank with
respect to this Agreement and the other Loan Documents, or (ii) assign to
one or more banks or other entities all or a portion of its rights and
obligations under this Agreement.
SECTION 23. Consent to Jurisdiction. To the maximum extent
permitted by law, the Borrower agrees that any legal action or proceeding
with respect to this Agreement or any of the
19
other Loan Documents may be brought in the courts of the Commonwealth of
Pennsylvania or of the United States of America for the Middle District of
Pennsylvania, all as CoBank may elect. By execution of this Agreement, the
Borrower hereby irrevocably submits 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
Borrower in any other jurisdiction or to serve process in any manner
permitted or required by law.
SECTION 24. Obligations Absolute. The obligation of the Borrower
to make all payments required to be made under this Agreement shall be
independent of any action by the Commission with respect to rates and/or
disallowance of debt.
SECTION 25. Defined Terms. For convenience of reference, set
forth below opposite each defined term used in this Agreement is the
location in this Agreement of the definition of such term:
Defined Term Location
------------ --------
Agreement Introductory Paragraph
Applicable Margin Section 4
Banking Day Section 3
Borrower Introductory Paragraph
Business Day Section 3
Capital Lease Section 14(A)
CoBank Introductory Paragraph
Commission Section 13(I)(6)
Companies Section 13(I)(1)
Consolidated Basis Section 13(I)(1)
Default Section 11(I)
Equity to Total Capitalization Ratio Section 13(J)(3)
Event of Default Section 15
Factual Matters Certificate Section 11(N)
FCC Section 13(I)(6)
Floating Rate Section 4(A)(1)
Funding Date Section 3
GAAP Section 12(H)
Governmental Authority Section 16(E)
Indebtedness Section 13(J)(1)
Interest Coverage Ratio Section 13(J)(2)
Interest Period Section 4(A)(2)(a)
Investment Section 14(E)
Laws Section 12(E)
20
LIBOR Section 4(A)(2)(a)
LIBOR Rate Section 4(A)(2)(a)
LIBOR Margin Section 4(A)(2)(a)
Loan Section 1
Loan Documents Section 11(A)
Material Adverse Change Section 11(K)
Maturity Date Section 5
National Variable Rate Section 4(A)(1)
Note Section 7
Operating Cash Flow Section 13(J)(1)
Payment Date Section 5
Portion Section 4(A)(1)
Rating Agency Section 14(E)
SEC Section 13(I)(6)
Surcharge Section 6
Total Leverage Ratio Section 13(J)(1)
SECTION 26. Counterparts. This Agreement may be executed by the
parties hereto in separate counterparts, each of which when so executed and
delivered shall be an original, but all such counterparts shall together
constitute but one and the same instrument.
IN WITNESS WHEREOF, the Borrower has caused this Agreement to be
executed, attested, sealed, and delivered and CoBank has caused this
Agreement to be executed and delivered, each by its duly authorized
officers, as of the date first shown above.
CoBANK, ACB COMMONWEALTH TELEPHONE
COMPANY
By:_______________________________ By:___________________________
Title: ________________________ Title:_____________________
21
SCHEDULE 1
EXCEPTIONS TO REPRESENTATIONS AND WARRANTIES
AND OTHER MATTERS
Section 12(E) - "Compliance with Laws": none
Section 12(F) - "Environmental Compliance": none
Section 12(K) - "Employee Benefit Plans": none