EXHIBIT 10.19
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LOAN AGREEMENT
LOAN AGREEMENT ("Agreement") made as of __________, 199_, between
ATLANTIC TELE-NETWORK CO., a United States Virgin Islands corporation
("Borrower"), and RURAL TELEPHONE FINANCE COOPERATIVE, a South Dakota
cooperative association ("Lender').
RECITALS
WHEREAS, Borrower has requested Lender to make the Loan(s) to Borrower
described in Schedule 1 hereto; and
WHEREAS, Lender is willing to make the Loan(s) upon the terms and
conditions set forth in this Agreement,
NOW, THEREFORE, for and in consideration of the mutual covenants
contained herein, Borrower and Lender do hereby agree as follows:
1. CONSTRUCTION AND DEFINITION OF TERMS
All accounting terms not specifically defined herein shall have the
meanings assigned to them as determined by generally accepted accounting
principles. In addition to the terms defined elsewhere in this Agreement,
unless the context otherwise requires, when used herein, the following terms
shall have the following meanings:
"Adjustment Date" shall mean a date or dates, determined by the Lender
based on the term (or rate period) of the applicable Fixed Rate, after the date
of the initial Advance to the Maturity Date.
"Advance" shall mean an Advance as defined in Section 2.02.
"Business Day" shall mean any day that Lender is open for business.
"Cash Margins" for any year shall mean net income plus depreciation,
amortization and any other non-cash charges, less any non-cash credits and
principal on long-term debt payable in such year, as calculated on a
consolidated basis for Borrower and all its Subsidiaries.
"Certified" shall mean that the information, statement, schedule,
report or other document required to be "Certified" shall contain a
representation of a duly authorized
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officer of Borrower that such information, statement, schedule, report or other
document is true and correct and complete.
"Closing" shall mean the first date on which funds are advanced to
Borrower hereunder.
"Collateral" shall mean the Mortgaged Property, as such term is
defined in the Mortgage, and all proceeds, cash and non-cash, including
insurance proceeds, of the foregoing, whether in the possession of Borrower or
any other person, and certain stock and related proceeds and dividends described
in, and pledged to Lender pursuant to, a Pledge and Security Agreement dated as
of even date herewith (the "Pledge Agreement').
"Commitment" shall have the meaning set forth in Schedule 1 hereto.
"Debt Service Coverage Ratio" or "DSC" for any year shall mean (a)
total net income or margins plus depreciation and amortization expense, and
interest on long-term debt for such year, divided by (b) principal and interest
on long-term debt payable in such year, as measured on a consolidated basis for
the Borrower and all its Subsidiaries.
"Event of Default" shall mean any of the events described in Section 8
hereof.
"Fixed Rate" shall mean the interest rate per annum provided for in
Section 2.03 of this Agreement.
"Leases" shall mean any lease of property by which Borrower or any
Subsidiary shall be obligated for rental or other payments which in the
aggregate are in excess of $100,000 other than such equipment leases which are
in form and substance substantially in conformity with lease agreements in
general use in Borrower's industry by companies of size and character similar to
Borrower.
"Lien" shall mean any statutory or common law consensual or non-
consensual mortgage, pledge, security interest, encumbrance, lien, right of set-
off, claim or charge of any kind, including, without limitation, any conditional
sale or other title retention transaction, any lease transaction in the nature
thereof and any secured transaction under the Uniform Commercial Code of any
jurisdiction.
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"Loan" shall mean the loan or loans by the Lender to Borrower,
pursuant to this Agreement and the Note, in an aggregate principal amount not to
exceed the Commitment.
"Make-Whole Premium" shall mean the excess, if any, of (i) the present
value of the amount of interest that would have accrued during the applicable
Fixed Rate period on that portion of the Loan to be prepaid or converted over
(ii) the present value of the amount of interest Lender would earn if that
portion of the Loan to be prepaid or converted was reinvested for the remainder
of the applicable Fixed Rate period in U.S. Treasury obligations with a maturity
comparable to the remaining term of the applicable Fixed Rate period. For
purposes of calculating the present value in (i) and (ii) above, the discount
rate will be the rate of interest accruing on the U.S. Treasury obligations in
(ii) above.
"Maturity Date" shall mean the maturity date defined in the Note.
"Minimum Net Worth Test" shall be calculated on a consolidated basis
for the Borrower and all its Subsidiaries, and shall mean an equity to total
asset ratio of at least forty percent (40%). Equity shall be determined by
subtracting total liabilities from total assets.
"Mortgage" shall mean the mortgage and security agreement described in
Schedule 1.
"Net Worth" shall be calculated on a consolidated basis for the
Borrower and all its Subsidiaries taken as a whole and arrived at by subtracting
total liabilities from total assets.
"Note" shall mean the Note or Notes executed and delivered by Borrower
at or prior to Closing pursuant to Subsection 5.02(a) hereof, and all renewals,
replacements and extensions thereof.
"Obligations" shall include the full and punctual performance of all
present and future duties, covenants and responsibilities due to the Lender by
Borrower under this Agreement, the Note, the Other Agreements, all present and
future obligations of Borrower to the Lender for the payment of money under this
Agreement, the Note, the Other Agreements, extending to all principal amounts,
interest, late charges and all other charges and sums, as well as all costs and
expenses payable by Borrower under this Agreement, the Note, the Other
Agreements,
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and any and all other present and future monetary liabilities of Borrower to the
Lender, whether direct or indirect, contingent or noncontingent, matured or
unmatured, accrued or not accrued, related or unrelated to this Agreement,
whether or not of the same character or class as Borrower's obligations under
this Agreement and the Note, whether or not secured under any other document,
instrument or statutory or common law provision, as well as all renewals,
refinancings, consolidations, recastings and extensions of any of the foregoing.
"Other Agreements" shall mean any and all promissory notes, security
agreements, assignments, subordination agreements, pledge or hypothecation
agreements, mortgages, deeds of trust, leases, contracts, guaranties,
instruments and documents now and hereafter existing between the Lender and
Borrower, executed and/or delivered pursuant to this Agreement or guaranteeing,
securing or in any other manner relating to any of the Obligations, including,
the instruments and documents referred to in Subsection 5.02 hereof.
"Payment Date" shall mean the last day of each of the months referred
to in Schedule 1 hereto.
"Payment Notice" shall mean the notice furnished to the Borrower at
least quarterly indicating the precise amount of principal and/or interest due
on the next ensuing Payment Date, such notice to be sent to the Borrower at
least ten (10) days before such Payment Date.
"Person" shall include natural persons, corporations, associations,
partnerships, joint ventures, trusts, governments and agencies and departments
thereof, and every other entity of every kind.
"Pledge Agreement" shall mean the Pledge and Security Agreement
executed by and between Borrower and Lender as of even date herewith.
"Subordinated Capital Certificate" or "SCC" shall mean a subordinated
certificate representing an investment in the Lender purchased by the Borrower
in connection with the Loan.
"Subsidiary" at any time means any entity which is at the time
beneficially owned or controlled directly or indirectly by the Borrower, by one
or more such entities or by the Borrower and one or more such entities.
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"Termination Date" shall mean that date which is two (2) years from
the date hereof.
"Times Interest Earned Ratio" or "TIER' for any year shall mean (a)
total net income or margins plus income taxes plus interest payable on long-term
debt for such year, divided by (b) interest on long-term debt payable in such
year, as measured on a consolidated basis for the Borrower and all its
Subsidiaries.
"Total Plant" shall be calculated on a consolidated basis for the
Borrower and all its Subsidiaries and shall mean the total of all assets
included in property, plant and equipment pursuant to generally accepted
accounting principles and shall exclude any goodwill or plant acquisition
adjustments.
"Variable Rate" shall mean the variable rate established by the Lender
from time to time for loans similarly classified pursuant to Lender's policies
and procedures then in effect.
2. LOAN
2.01. Loan. The Lender agrees to make the Loan to Borrower subject
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to all the terms and conditions of this Agreement and the Other Agreements.
2.02. Advances. The Lender agrees to make, and the Borrower agrees
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to request, on the terms and conditions of this Agreement, Advances from time to
time at the office of the Lender in Hemdon, Virginia, or at such other place as
the Lender may designate, not to exceed the Commitment. The Borrower shall give
the Lender at least one Business Day prior written notice of the date on which
each Advance is to be made. On the Termination Date the Lender may stop
advancing funds and reduce the Commitment to the aggregate amount theretofore
advanced. The obligation of the Borrower to repay the Advances shall be
evidenced by the Note.
2.03. Payment, Amortization and Interest Rate.
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(a) Payment. The Borrower shall pay on each Payment Date quarterly
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installments, in an amount as determined by the Lender, of
principal and/or interest as shown in the Payment Notice, except
that, if not sooner paid, any balance of the principal amount and
interest accrued thereon and all other amounts due hereunder
shall be due
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and, payable on the Maturity Date. Payment of principal hereunder
shall commence after the first full quarter following the initial
Advance of funds as set forth in Schedule 1 and on each
subsequent Payment Date until the Maturity Date or such earlier
date as all amounts due hereunder and on account of the Note
shall have been paid in full. Payment of interest hereunder is
due on each Payment Date in which a principal balance is
outstanding. Principal will be amortized in accordance with the
method stated in Schedule 1 hereto.
The Lender will use, for purposes of calculating the amortization of
principal, one of the following interest rates, as applicable:
(i) If the Borrower elects the Fixed Rate, the Fixed Rate in effect
on the Adjustment Date; or
(ii) If the Borrower elects the Variable Rate, the Variable Rate in
effect when amortization begins; or
(iii) If the Borrower elects to convert from one interest rate
program to another, pursuant to the provisions hereunder, the
interest rate then in effect for the elected program.
At the Lenders option, all payments shall be applied to late payment
charges due, as hereinafter provided, then to interest accrued to the date of
such payment, and then to the reduction of principal balance outstanding.
No provision of this Agreement or the Note shall require the payment,
or permit the collection, of interest in excess of the highest rate permitted by
applicable law.
(b) Interest Rate Each Advance shall be initially made at the
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Variable Rate. Interest shall be computed from the actual number
of days elapsed on the basis of a year of 365 days until the
first Payment Date following the Initial Advance. Thereafter,
interest shall continue to be computed for the actual number of
days elapsed on the basis of a year of 365 days unless a Fixed
Rate is applicable to the Loan, in
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which case interest shall be computed on the basis of a 30-day
month and 360-day year.
(i) Variable Rate. If Advances are made at the Variable Rate, it
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shall apply until the Maturity Date, except as provided
hereinbelow.
(ii) Fixed Rate. If the Borrower elects a Fixed Rate, such Fixed
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Rate as is available and in effect for loans similarly classified
pursuant to Lender's policies and procedures then in effect at
the time of the election shall apply to such Advance until the
Adjustment Date. Upon notice given by the Borrower five Business
Days prior to such Adjustment Date, Borrower may elect to reset
the interest rate to such Fixed Rate as is available and in
effect at the time of such Adjustment Date. Such reset Fixed
Rate shall apply to that portion of the outstanding principal
balance of the Loan elected to have a Fixed Rate from the
Adjustment Date until a new Adjustment Date or the Maturity Date.
If Borrower does not elect to reset the Fixed Rate, the Variable
Rate shall apply to the outstanding principal balance of the Loan
that had been bearing interest at the Fixed Rate prior to such
Adjustment Date, from such Adjustment Date to the Maturity Date.
(iii) Conversion to Different Interest Program.
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(A) Variable Rate to Fixed Rate. Subject to the conditions set forth
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herein, the Borrower may convert from the Variable Rate to the
Fixed Rate for any portion or all of the principal amount of the
Commitment then outstanding at any time provided the Lender
offers a Fixed Rate at such time.
(B) Fixed Rate to Variable Rate. The Borrower may convert from a
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Fixed Rate to the Variable Rate: (1) on an Adjustment Date or (2)
at any other time, provided that Borrower shall pay Lender any
applicable Make-Whole Premium.
2.04. Prepayment. In the event the Borrower prepays all or part of
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the Loan, the Borrower shall pay any payment fee as the Lender may prescribe
pursuant to the terms of this Section 2.04. All prepayments shall be
accompanied by payment
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of accrued and unpaid interest on the amount of and to the date of the
prepayment. All prepayments shall be applied first to fees, second to the
payment of accrued and unpaid interest, and then to the unpaid balance of the
principal amount of the Loan. If the Loan bears interest at the Variable Rate
the Borrower may prepay the Loan or any portion thereof, as the case may be, at
any time subject to the terms hereof and said prepayment fee shall be in an
amount equal to fifty (50) basis points times the amount being prepaid. If the
Loan bears interest at the Fixed Rate, the Borrower may prepay the Loan only on
an Adjustment Date or any such other date provided that the Borrower shall pay a
prepayment fee in an amount equal to fifty (50) basis points times the amount
being prepaid plus any applicable Make-Whole Premium.
2.05. 5% Subordinated Capital Certificates. The Borrower shall
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purchase SCCs which in the aggregate shall not exceed the amount specified in
Schedule 1 hereto. Unless otherwise requested in writing by the Borrower prior
to the initial Advance and approved by the Lender, the Borrower agrees to
purchase SCCs either (1) with each Advance in the amount of five percent of each
such Advance, and each such SCC shall be paid for with proceeds of such Advance,
or (2) by making payments with Borrowers own funds in twenty equal quarterly
installments, commencing with the first full quarter following the initial
Advance. If the Borrower elects to pay for SCCs other than from Loan funds, the
amount of the Commitment will be correspondingly reduced by said amount when the
SCCs are fully paid. If the Borrower obtains Advances hereunder other than for
the purpose of purchasing SCCs and fails to pay for the SCCs, then the Lender
may make Advances for the account of the Borrower to purchase the SCCs. The
Lender agrees to deliver the SSCs on or about the date on which the SCCs have
been paid for in full. The SCCs shall bear no interest and shall mature in
accordance with the terms thereof.
3. SECURITY
As security for the payment and performance of all of the Obligations,
Borrower has (i) entered into the Mortgage pledging and granting to the Lender a
prior and continuing security interest in the Collateral that may be secured by
the Mortgage that shall continually exist until all Obligations have been paid
in full and (ii) executed the Pledge Agreement with Lender pursuant to which
Borrower has pledged certain equity interests as described therein. If
reasonably required by the Lender at any time, Borrower shall make notations,
satisfactory to the Lender, on its books and records disclosing the
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existence of the Lender's security interest in the Collateral. Borrower agrees
that, with respect to the Collateral which is subject to Article 9 of the
Uniform Commercial Code, the Lender shall have, but not be limited to, all the
rights and remedies of a secured party under the Uniform Commercial Code. The
Lender shall have no liability or duty, either before or after the occurrence of
an Event of Default hereunder, on account of loss of or damage to, or to collect
or enforce any of its rights against, the Collateral, or to preserve any rights
against account debtors or other parties with prior interests in the Collateral.
4. REPRESENTATIONS AND WARRANTIES
To induce the Lender to enter into this Agreement, Borrower represents
and warrants to the Lender as of the date of this Agreement that:
4.01. Good Standing. Borrower is a corporation duly incorporated,
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validly existing and in good standing under the laws of the territory of its
organization; has the power to own its property and to carry on its business; is
duly qualified to do business; and is in good standing in each jurisdiction in
which the transaction of its business makes such qualification necessary.
4.02. Authority. Borrower has full power and authority to enter into
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this Agreement, the Note, the Mortgage and the Pledge Agreement; to make the
borrowing hereunder, to execute and deliver all documents and instruments
required hereunder and to incur and perform the obligations provided for herein,
in the Mortgage, in the Pledge Agreement and in the Note, all of which have been
duly authorized by all necessary and proper corporate and other action; and no
consent or approval of any person, including, without limitation, stockholders
and members of Borrower and any public authority or regulatory body, which has
not been obtained is required as a condition to the validity or enforceability
hereof or thereof.
4.03. Binding Agreement. This Agreement has been duly and property
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executed by Borrower, constitutes the valid and legally binding obligation of
Borrower and is fully enforceable against Borrower in accordance with its terms,
subject only to laws affecting the rights of creditors generally, the exercise
of judicial discretion in accordance with general principles of equity or
because waivers of statutory or common law rights or remedies may be limited.
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4.04. No Conflicting Agreements. The execution, delivery of and
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performance by Borrower of this Agreement, the Mortgage, the Pledge Agreement
and the Note, and the transactions contemplated hereby or thereby, will not: (a)
violate any provision of law, any order, rule or regulation of any court or
other agency of government, any award of any arbitrator, the articles of
incorporation or by-laws of Borrower, or any indenture, contract, agreement,
mortgage, deed of trust or other instrument to which Borrower is a party or by
which it or any of its property is bound; or (b) be in conflict with, result in
a breach of or constitute (with due notice and/or lapse of time) a default
under, any such award, indenture, contract agreement, mortgage, deed of trust or
other instrument, or result in the creation or imposition of any Lien (other
than contemplated hereby) upon any of the property or assets of Borrower.
4.05. Litigation. There are no judgments, claims, actions, suits or
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proceedings pending or, to the knowledge of Borrower, threatened against or
affecting Borrower or its properties, at law or in equity or before or by any
federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, which may result in any material adverse
change in the business, operations, prospects, properties or assets or in the
condition, financial or otherwise, of Borrower, and Borrower is not, to its
knowledge, in default with respect to any judgment, order, writ, injunction,
decree, rule or regulation of any court or federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, which would have a material adverse effect on Borrower.
4.06. Financial Condition. The financial statements of Borrower as
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at the date set forth in Schedule 1 hereto, heretofore delivered to the Lender,
are complete and correct, fairly present the financial condition of Borrower and
have been prepared in accordance with generally accepted accounting principles
applied on a consistent basis. There are no liabilities of Borrower, direct or
indirect, fixed or contingent, as of the date of such statements which are not
reflected therein. There has been no material adverse change in the financial
condition or operations of the Borrower from that set forth in said financial
statements except changes previously disclosed in writing to the Lender prior to
the date hereof.
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4.07. Taxes. Borrower has paid or caused to be paid all federal,
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state and local taxes to the extent that such taxes have become due, unless the
Borrower is contesting in good faith any such tax. Borrower has filed or caused
to be filed all federal, state and local tax returns which are required to be
filed by Borrower.
4.08. Title to Properties. Borrower has good and marketable title to
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all of its real properties and owns all of its other properties and assets free
and clear of any liens, except (i) the lien of this Mortgage and taxes or
assessments not yet due; (ii) deposits or pledges to secure payment of workmen's
compensation, unemployment insurance, old age pensions or other social security;
and (iii) deposits or pledges to secure performance of bids, tenders, contracts
(other than contracts for the payment of borrowed money), leases, public or
statutory obligations, surety or appeal bonds, or other deposits or pledges for
purposes of like general nature in the ordinary course of business.
4.09. Licenses and Permits. Borrower has duly obtained and now holds
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all licenses, permits, certifications, approvals and the like necessary to own
and operate its property and business that are required by federal, state and
local laws of the jurisdictions in which Borrower conducts its business and each
remains valid and in full force and effect.
4.10. Subsidiaries. Borrower has no Subsidiaries other than
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Subsidiaries heretofore disclosed to the Lender, or hereafter formed or acquired
with the prior written consent of the Lender.
4.11. Certain Indebtedness. There is no indebtedness of Borrower
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owing to any employee, officer, stockholder or director of the board of
Borrower, other than accrued salaries, commissions and the like and any
indebtedness subordinated to the Obligations pursuant hereto.
4.12. Location of Office. The chief place of business of the
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Borrower and the office where its records concerning accounts and contract
rights are kept is identified in Schedule 1 hereto.
4.13. Required Approvals. No license, consent, permit or approval of
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any governmental agency or authority is required to enable the Borrower to enter
into this Agreement or to perform any of its obligations provided for herein
except as disclosed on Schedule 1 hereto and except with respect to
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regulatory approvals which may be required in connection with the Lender's
enforcement of certain remedies hereunder.
4.14. ERISA. Each pension plan of Borrower and its Subsidiaries
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providing benefits for employees of Borrower or such Subsidiary covered by Title
IV of the Employee Retirement Income Security Act of 1974, as amended, and the
regulations thereto ("ERISA"), is in compliance with ERISA in all material
respects, and no material liability to the Pension Benefit Guaranty Corporation
("PBGC') or to a multiemployer plan has been, or is expected by Borrower or its
Subsidiaries to be, incurred by Borrower or such Subsidiaries.
5. CONDITIONS OF LENDING
The Lender shall have no obligation to make the initial Advance to
Borrower hereunder unless, as of the date of Closing, each of the following
conditions precedent shall be satisfied as provided below:
5.01. Legal Matters. All legal matters incident to the consummation
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of the transactions hereby contemplated shall be satisfactory to counsel for the
Lender and to such local counsel as counsel for the Lender may retain.
5.02. Documents. There shall have been delivered to the Lender,
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fully completed and duly executed (when applicable), the following, satisfactory
to the Lender and its counsel:
(a) This Agreement and the Note.
(b) Certified copies, satisfactory to the Lender, of all such
corporate documents and proceedings of the Borrower authorizing
the transactions herein contemplated.
(c) A written opinion from Borrower's counsel addressing such legal
matters as the Lender or its counsel shall reasonably require.
(d) The Borrower shall have (i) executed the Mortgage; (ii) if any
real property is owned by Borrower, recorded a valid and binding
Mortgage granting Lender a first lien in all real property owned
by Borrower, (iii) filed financing statements in all
jurisdictions necessary to provide Lender a first priority,
perfected secu-
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rity interest in all Collateral which may be perfected by the
filing of financing statements; and (iv) delivered such other
documents as are necessary to create or continue a perfected
security interest in favor of the Lender in the Collateral.
(e) The Pledge Agreement dated as of even date herewith and related
stock powers.
5.03. Government Approvals. The Borrower shall have furnished to the
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Lender true and correct copies of all certificates, authorizations and consents,
including without limitation the consents referred to in Section 4.13 hereof,
necessary for the execution, delivery or performance by the Borrower of this
Agreement, the Note, the Pledge and the Mortgage.
5.04. Representations, Warranties and Material Change. At Closing
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and at the date of every subsequent Advance hereunder, all covenants,
representations and warranties set forth in this Agreement shall be true and
correct on and as of such time with the same effect as though such covenants,
representations and warranties had been made on and as of such date; no Event of
Default specified in Section 8 and no event which, with the lapse of time or the
notice and lapse of time specified in Section 8 would become such an Event of
Default, shall have occurred and be continuing or will have occurred after
giving effect to the Advance on the books of the Borrower, there shall have
occurred no material adverse change in the business or condition, financial or
otherwise, of the Borrower, and nothing shall have occurred which in the opinion
of the Lender materially and adversely affects the Borrower's ability to meet
its obligations hereunder.
5.05. Special Conditions. At Closing and at the time of every
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subsequent Advance hereunder, the Lender and its counsel shall be fully
satisfied that the Borrower has complied and will continue to comply with any
special conditions identified in Schedule 1 hereto.
5.06. Requisitions. The Borrower will request Advances in form and
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substance satisfactory to the Lender. Pursuant to the terms and conditions
hereof, the Lender will wire the proceeds of the requested Advance to an account
as directed by the Borrower.
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6. AFFIRMATIVE COVENANTS
Borrower covenants and agrees with the Lender that, until all of the
Obligations have been paid in full, Borrower will:
6.01. Membership. Remain, or an affiliate thereof will remain, a
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member in good standing of the Lender.
6.02. Financial Statements and Other Information. Furnish to the
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Lender: (a) financial statements as required by the Mortgage; (b) such other
information, reports or statements concerning the operations, business affairs
and/or financial condition of Borrower as the Lender may reasonably request from
time to time; and (c) promptly upon their becoming available information, in
form and substance satisfactory to Lender, evidence of any and all changes or
modification of licenses, permits, certifications, approvals and the like
necessary for Borrower to own or operate its business or a substantial part of
its business.
6.03. Financial Ratios. Subject to applicable laws and rules and
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orders of regulatory bodies, and to events which in the judgment of the Lender
are beyond the control of the Borrower, so operate and manage its business as to
achieve a DSC of not less than 1.25 and a TIER of not less than 1.50, said
ratios being determined by averaging each of the two highest annual ratios
during the three most recent fiscal years.
6.04. Annual Certificate. Within one hundred twenty (120) days after
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the close of each calendar year, commencing with the year in which the initial
Advance hereunder shall have been made, deliver to the Lender a written
statement signed by the general manager or such other similar presiding officer
stating that to the best of said person's knowledge, the Borrower has fulfilled
all of its Obligations under this Agreement, the Note, the Pledge and the
Mortgage throughout such year or, if there has been a default in the fulfillment
of any such Obligations, specifying each such default known to said person and
the nature and status thereof.
6.05. Use of Proceeds. Use Advances made hereunder and under the
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Note only for the purpose identified in Schedule 1 hereto and for the payment of
the costs, expenses and fees incident to this Agreement and for no other purpose
whatsoever without the prior written consent of the Lender.
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6.06. Special Affirmative Covenants. During the term hereof, Lender
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and its counsel shall be fully satisfied that the Borrower has complied and will
continue to comply with any special affirmative covenants identified in Schedule
1 hereto.
6.07. Mortgage Filing. Within 10 days of acquiring any real
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property, the Borrower shall cause the Mortgage to be duly recorded as a first
mortgage on all real property and the Mortgage or other appropriate
documentation shall have been duly filed, recorded or indexed as a security
interest in personal property wherever the Lender shall have reasonably
requested, all in accordance with applicable law, and the Borrower shall have
caused satisfactory evidence thereof to be furnished to the Lender.
7. NEGATIVE COVENANTS.
7.01. Notice. Borrower covenants and agrees with the Lender that
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Borrower will not, directly or indirectly, without giving written notice to the
Lender thirty days prior to the effective date of any change:
(a) Change Location of Chief Place of Business. Change the location
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of the Borrower's chief place of business.
(b) Change of Name. Change the name of Borrower.
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7.02. Consent. Borrower covenants and agrees with the Lender that
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Borrower will not, directly or indirectly, without the prior written consent of
the Lender:
(a) Control. Alter or permit alteration of control of the Borrower.
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Control shall be as defined by regulations for telephone
companies issued by the Federal Communications Commission
("FCC").
(b) Subsidiaries. Form or acquire any Subsidiaries.
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(c) Additional Indebtedness. Borrow money on a secured or unsecured
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basis from any other lender or incur any additional secured or
unsecured indebtedness; or enter into or allow any of its
Subsidiaries to enter into any Leases, unless at that time
Borrower meets the Minimum Net Worth Test; provided, however,
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Borrower and its Subsidiaries, may grant purchase money secured
in-
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debtedness or incur unsecured trade debt or pay other current
operating liabilities that arise in the ordinary course of
business so long as the aggregate total of such debt does not
exceed five percent (5%) of Borrower's consolidated total assets.
If Borrower meets the Minimum Net Worth Test, then Borrower and
its Subsidiaries may incur additional indebtedness or enter into
Leases without prior written approval of Lender provided the
--------
Borrower meets the Minimum Net Worth Test after incurring such
additional indebtedness or entering into such Leases; provided,
--------
further, however, Borrower must give at least thirty (30) days
------- -------
written notice to Lender prior to incurring any additional
indebtedness or entering into such Leases.
7.03. Dividends and Other Cash Distributions. The Borrower will not,
--------------------------------------
in any one calendar year, without the prior approval in writing of the Lender
(i) declare or pay any dividends or make any other distribution to its
stockholders with respect to its capital stock; (ii) purchase or redeem or
retire any of its capital stock; or (iii) pay any management fees or if already
paying a management fee, pay an increase in management fees, unless with respect
to any of the foregoing (after giving effect to such transaction): (a) Borrower
shall have a minimum equity (determined by subtracting total liabilities from
total assets) to total assets ratio of twenty percent (20%); (b) Borrower shall
be in compliance with the financial ratios in Section 6.03 herein; and (c) the
payment of such dividend, the making of such distribution, or the purchase,
redemption or retirement of such stock, individually or in the aggregate, does
not exceed fifty percent (50%) of the prior fiscal year-end's net income. In no
event may the Borrower make such a distribution or payment when there is unpaid
any due installment of principal and/or interest on the Note or if the Borrower
is otherwise in material default of any provision of this Agreement or would be
in material default hereunder as a result of such distribution or payment.
7.04. Special Negative Covenants. During the term hereof, Lender and
--------------------------
its counsel shall be fully satisfied that the Borrower has complied and will
continue to comply with any special negative covenants identified in Schedule 1
hereto.
-17-
7.05. Limitations on Loans, Investments and Other Obligations:
-------------------------------------------------------
(a) The Borrower shall not, without first obtaining the written
approval of Lender, (i) purchase or make any commitment to
purchase any stock, bonds, notes, debentures or other securities
or obligations of or beneficial interest in, (ii) make any other
investment in, (iii) make any loan to, or (iv) guarantee, assume,
or otherwise become liable for any obligation of, any
corporation, association, partnership, joint venture, trust,
government or any agency or department thereof, or any other
entity of any kind if the aggregate amount of all such purchases,
investments, loans and guarantees exceeds the greater of ten
percent (10%) of Total Plant or thirty percent (30%) of Net
Worth.
(b) The following shall not be included in the limitation on
purchases investments, loans and guarantees in (a) above: (i)
bonds, notes, debentures, stock, or other securities or
obligations issued by or guaranteed by the United States
government or any agency or instrumentality thereof; (ii) bonds,
notes, debentures, stock, commercial paper, subordinated capital
certificates, or other security or obligation of institutions
whose senior unsecured debt obligations are rated by at least two
nationally recognized rating organizations in either or its two
highest categories; (iii) investments incidental to loans made by
RTFC; (iv) bonds, notes, debentures, commercial paper or any
other security of the National Rural Utilities Cooperative
Finance Corporation; and (v) any deposit that is fully insured by
the Federal Government.
8. EVENTS OF DEFAULT
The occurrence of any one or more of the following events shall
constitute an "Event of Default":
(a) Representations and Warranties. Any representation or warranty
------------------------------
made herein, in any of the Other Agreements or in any statement,
report, certificate, opinion, financial statement or other
document furnished or to be furnished in
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connection with this Agreement or the Other Agreements shall be
false or misleading in any material respect.
(b) Payment. Failure of Borrower to make any of the payment
-------
Obligations, including, without limitation, any sum due the
Lender under this Agreement or any of the Other Agreements, when
and as the same shall become due, whether at the due date
thereof, by demand, by acceleration or otherwise.
(c) Other Covenants. Failure of Borrower to observe or perform any
---------------
warranty, covenant or condition to be observed or performed by
Borrower under this Agreement or any of the Other Agreements.
(d) Existence. The Borrower shall forfeit or otherwise be deprived
---------
of its charter, franchises, permits, easements, consents or
licenses required to carry on any material portion of its
business.
(e) Other Obligations. Default by the Borrower in the payment when
-----------------
due of any money owed by the Borrower, whether principal,
interest, premium or otherwise, under any other agreement for
borrowing money in an amount in excess of five percent (5%) of
total assets, whether or not such borrowing is secured.
(f) Bankruptcy. A court shall enter a decree or order for relief
----------
with respect to the Borrower or any Subsidiary or guarantor (if
any) in an involuntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or
appointing a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official, or ordering the winding up or
liquidation of its affairs, and such decree or order shall remain
unstayed and in effect for a period of sixty (60) consecutive
days or the Borrower or any Subsidiary or guarantor (if any)
shall commence a voluntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or
under any such law, or consent to the appointment or taking of
possession by a receiver, liquidator, as-
-19-
signee, custodian or trustee, of a substantial part of its
property, or make any general assignment for the benefit of
creditors.
(g) Dissolution or Liquidation. Other than as provided in Subsection
--------------------------
(e) above, the dissolution or liquidation of the Borrower or any
Subsidiary or guarantor (if any), or failure by the Borrower or
any Subsidiary promptly to forestall or remove any execution,
garnishment or attachment of such consequence as will impair its
ability to continue its business or fulfill its obligations and
such execution, garnishment or attachment shall not be vacated
within sixty (60) days.
(h) Final Judgment. A final non-appealable judgment in excess of
--------------
$100,000 shall be entered against the Borrower and shall remain
unsatisfied or without a stay for a period of sixty (60) days.
9. RIGHTS AND REMEDIES
9.01. Rights and Remedies of the Lender. Upon the occurrence of an
---------------------------------
Event of Default, the Lender may, subject to:
(i) thirty (30) days prior written notice during which time
Borrower shall have the opportunity to cure said Event of Default
except with respect to Obligations pursuant to 8(b), 8(f) and
8(g) above which shall require no notice or demand and shall have
no period to cure; and
(ii) compliance, if required, with the rules and regulations of the
FCC and any state public service or utilities commission having
jurisdiction;
exercise in any jurisdiction in which enforcement hereof is sought, the
following rights and remedies, in addition to all rights and remedies available
to the Lender under applicable law, all such rights and remedies being
cumulative and enforceable alternatively, successively or concurrently:
(A) Declare all unpaid principal outstanding on the Note, all accrued
and unpaid interest thereon, and all other Obligations to be
immediately due and payable and the same shall thereupon become
-20-
immediately due and payable without presentment, demand, protest
or notice of any kind, all of which are hereby expressly waived.
(B) Institute any proceeding or proceedings to enforce the
Obligations owed to, or any Liens in favor of the Lender.
(C) Pursue all rights and remedies available to the Lender that are
contemplated by the Mortgage in the manner, upon the conditions,
and with the effect provided in the Mortgage, including but not
limited to a suit for specific performance, injunctive relief or
damages.
(D) Pursue any other rights and remedies available to the Lender at
law or in equity.
9.02. Cumulative Nature of Remedies. Nothing herein shall limit the
-----------------------------
right of the Lender, subject to notice and right to cure provisions contained
herein, to pursue all rights and remedies available to a creditor following the
occurrence of an Event of Default subject to compliance, if required, with the
rules and regulations of the FCC and any state public service or utilities
commission having jurisdiction. Each right, power and remedy of the Lender in
this Agreement and/or the Other Agreements shall be cumulative and concurrent,
and recourse to one or more rights or remedies shall not constitute a waiver or
any other right, power or remedy.
9.03. Costs and Expenses. Borrower agrees to pay and to be liable
------------------
for any and all reasonable expenses, including attorneys' fees and court costs,
incurred by the Lender in exercising or enforcing any of its rights hereunder or
under the Other Agreements, together with interest thereon at the rate and
determined in the manner provided in the Mortgage. Subject to the Mortgage and
applicable law, the Lender may apply all Collateral and proceeds of all
Collateral to the Obligations in any manner which the Lender, in its sole
discretion, deems appropriate, and Borrower will continue to be liable for any
deficiency.
9.04. Late Payment Charges. If payment of any principal and/or
--------------------
interest due under the terms of the Note is not received at the office of the
Lender in Hemdon, Virginia, or as the Lender may otherwise designate to the
Borrower, within such time period as the Lender may prescribe from time to time
in its policies in connection with any late payment
-21-
charges (such unpaid amount of principal and/or interest being herein called the
"delinquent amount" and the period beginning after such due date until payment
of the delinquent amount being herein called the "late-payment period"), the
Borrower will pay to the Lender, in addition to all other amounts due under the
terms of the Note, the Mortgage, the Pledge and this Agreement, any late-payment
charge as may be fixed by the Lender from time to time, on the delinquent amount
for the late-payment period.
9.05. Lender's Setoff. The Lender shall have the right, in addition
---------------
to all other rights and remedies available to it, to setoff and to recover
against any or all of the Obligations due to Lender, any monies now and
hereafter owing to Borrower by the Lender. Borrower waives all rights of
setoff, deduction, recoupment or counterclaim.
10. MISCELLANEOUS
10.01. Performance for Borrower. Borrower agrees and hereby
------------------------
authorizes that the Lender may, in its sole discretion, but the Lender shall not
be obligated to, advance funds on behalf of Borrower without prior notice to
Borrower, in order to insure Borrower's compliance with any material covenant,
warranty, representation or agreement of Borrower made in or pursuant to this
Agreement or any of the Other Agreements, to preserve or protect any right or
interest of the Lender in the Collateral or under or pursuant to this Agreement
or any of the Other Agreements, including without limitation, the payment of any
insurance premiums or taxes and the satisfaction or discharge of any judgment or
any Lien upon the Collateral or other property or assets of Borrower, provided,
however, that the making of any such advance by the Lender shall not constitute
a waiver by the Lender of any Event of Default with respect to which such
advance is made nor relieve Borrower of any such Event or Default. Borrower
shall pay to the Lender upon demand all such advances made by the Lender with
interest thereon at the rate and determined in the manner provided in the Note.
All such advances shall be deemed to be included in the Obligations and secured
by the security interest granted the Lender hereunder to the extent permitted by
law.
10.02. Expenses and Filing Fees. Whether or not any of the
------------------------
transactions contemplated hereby shall be consummated, Borrower agrees to pay to
the Lender at Closing or thirty (30) days after the execution and delivery
hereof, whichever is earlier, all expenses of the Lender in connection with the
-22-
filing or recordation of all financing statements and instruments as may be
required by the Lender at the time of, or subsequent to, the execution of this
Agreement, including, without limitation, all documentary stamps, recordation
and transfer taxes and other costs and taxes incident to recordation of any
document or instrument in connection herewith. Borrower agrees to save harmless
and indemnify the Lender from and against any liability resulting from the
failure to pay any required documentary stamps, recordation and transfer taxes,
recording costs, or any other expenses incurred by the Lender in connection with
this Agreement. The provisions of this Subsection 10.02 shall survive the
execution and delivery of this Agreement and the payment of all other
Obligations.
10.03. Waivers by Borrower. Borrower hereby waives, to the extent
-------------------
the same may be waived under applicable law: (a) in the event the Lender seeks
to repossess any or all of the Collateral by judicial proceedings, any bond(s)
or demand(s) for possession which otherwise may be necessary or required; (b)
presentment, demand for payment, protest and notice of non-payment and all
exemptions; and (c) substitution, impairment, exchange or release of any
collateral security for any of the Obligations. Borrower agrees that the Lender
may exercise any or all of its rights and/or remedies hereunder and under the
Other Agreements without resorting to and without regard to security or sources
of liability with respect to any of the Obligations.
10.04. Waivers by the Lender. Neither any failure nor any delay on
---------------------
the part of the Lender in exercising any right, power or remedy hereunder or
under any of the Other Agreements shall operate as a waiver thereof, nor shall a
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or remedy.
10.05. Lender's Records. Every statement of account or
----------------
reconciliation rendered by the Lender to Borrower with respect to any of the
Obligations shall be presumed conclusively to be correct and shall constitute an
account stated between the Lender and Borrower unless, within ten (10) Business
Days after such statement or reconciliation shall have been mailed, postage
prepaid, to Borrower, the Lender shall receive written notice of specific
objection thereto.
10.06. Modifications. No modification or waiver of any provision of
-------------
this Agreement, the Note or any of the Other
-23-
Agreements, and no consent to any departure by Borrower therefrom shall in any
event be effective unless the same shall be in writing, and then such waiver or
consent shall be effective only in the specific instance and for the purpose for
which given. No notice to or demand upon Borrower in any case shall entitle
Borrower to any other or further notice or demand in the same, similar or other
circumstances.
10.07. Notices. All notices, requests and other communications
-------
provided for herein including, without limitation, any modifications of, or
waivers, requests or consents under, this Agreement shall be given or made in
writing (including, without limitation, by telecopy) and delivered to the
intended recipient at the "Address for Notices" specified below, or, as to any
party, at such other address as shall be designated by such party in a notice to
each other party. Except as otherwise provided in this Agreement, all such
communications shall be deemed to have been duly given when personally delivered
or, in the case of a telecopied or mailed notice, upon receipt, in each case
given or addressed as provided for herein. The Address for Notices of the
respective parties are as follows:
Rural Telephone Finance Cooperative
Woodland Park
0000 Xxxxxxxxxxx Xxx
Xxxxxx, Xxxxxxxx 00000-0000
Attention: Chief Executive Officer
Fax: 000-000-0000
The Borrower.
The address set forth in
Schedule 1 hereto
10.08. Governing Law; Submission To Jurisdiction; Waiver of Jury
---------------------------------------------------------
Trial.
-----
(a) THE PERFORMANCE AND CONSTRUCTION OF THIS AGREEMENT AND THE NOTE
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
COMMONWEALTH OF VIRGINIA.
(b) BORROWER HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE
UNITED STATES COURTS LOCATED IN VIRGINIA AND OF ANY STATE COURT SO LOCATED FOR
PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR THE TRANSACTIONS CONTEMPLATED HEREBY. BORROWER IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY
-24-
OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE ESTABLISHING OF THE VENUE OF
ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH
PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
(c) EACH OF THE BORROWER AND THE LENDER HEREBY IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY
JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
10.09. Holiday Payments. If any payment to be made by the Borrower
----------------
hereunder shall become due on a day which is not a Business Day, such payment
shall be made on the next succeeding Business Day and such extension of time
shall be included in computing any interest in respect of such payment.
10.10. Consent to Patronage Capital Distributions. The Borrower
------------------------------------------
hereby consents that the amount of any distributions with respect to Borrower's
patronage which are made in written notices of allocation (as defined in Section
1388 of the Internal Revenue Code of 1986, as amended ("Code") including any
other comparable successor provision) and which are received from Lender will be
taken into account by Borrower at their stated dollar amounts in the manner
provided in Section 1385(a) of the Code in the taxable year in which such
written notices of allocation are received.
10.11. Right to Inspect. The Borrower shall permit representatives
----------------
of the Lender at any time during normal business hours to inspect and make
abstracts from the books and records pertaining to the Collateral, and permit
representatives of the Lender to be present at Borrower's place of business to
receive copies of all communications and remittances relating to the Collateral,
all in such manner as the Lender may reasonably require.
10.12. Survival; Successors and Assigns. All covenants, agreements,
--------------------------------
representations and warranties made herein and in the Other Agreements shall
survive Closing and the execution and delivery to the Lender of the Note, and
shall continue in full force and effect until all of the Obligations have been
paid in full. Whenever in this Agreement any of the parties hereto is referred
to, such reference shall be deemed to include the successors and assigns of such
party. All covenants, agreements, representations and warranties by or on
behalf of Borrower which are contained in this Agreement and
-25-
the Other Agreements shall inure to the benefit of the successors and assigns of
the Lender.
10.13. Assignment. The Lender may assign its rights and obligations
----------
under this Agreement and the Other Agreements without the consent of the
Borrower; provided, however, that no such assignment shall result in terms or
conditions less favorable to Borrower. The Borrower may not assign any of its
rights of obligations under this Agreement or the Other Agreements without the
prior written consent of the Lender.
10.14. Severability. If any term, provision or condition, or any
------------
part thereof, of this Agreement or any of the Other Agreements shall for any
reason be found or held invalid or unenforceable by any court or governmental
agency of competent jurisdiction, such invalidity or unenforceability shall not
affect the remainder of such term, provision or condition nor any other term,
provision or condition, and this Agreement, the Note, and the Other Agreements
shall survive and be construed as if such invalid or unenforceable term,
provision or condition had not been contained therein.
10.15. Counterparts. This Agreement may be executed in any number of
------------
counterparts and by different parties hereto on separate counterparts, each of
which, when so executed and delivered, shall be an original, but all such
counter-parts shall together constitute one and the same instrument.
10.16. Headings/Use of Terms. The headings and sub-headings
---------------------
contained in this Agreement are intended to be used for convenience only and do
not constitute part of this Agreement. The use of any gender or the neuter
herein shall also refer to the other gender or the neuter and the use of the
plural shall also refer to the singular, and vice versa.
10.17. Further Assurances. The Borrower will, upon demand of the
------------------
Lender, make, execute, acknowledge and deliver all such further and supplemental
indentures of mortgage, deeds of trust, mortgages, financing statements,
continuation statements, security agreements and/or any other instruments and
conveyances as may be reasonably requested by the Lender to effectuate the
intention of this Agreement and to provide for the securing and payment of the
principal of and interest on the Note according to the terms thereof.
10.18. Lender's Approval. Wherever prior written approval of Lender
-----------------
is required under the terms and conditions
-26-
of this Agreement, Lender hereby agrees to not unreasonably withhold said
approval.
10.19. Merger and Integration. This Agreement and the attached
----------------------
exhibits and matters incorporated by reference contain the entire agreement of
the parties hereto with respect to the matters covered and the transactions
contemplated hereby, and no other agreement, statement or promise made by any
party hereto, or by any employee, officer, agent or attorney of any party
hereto, which is not contained herein, shall be valid or binding.
10.20. Schedule 1. Schedule 1 attached hereto is an integral part of
----------
this Agreement.
-27-
IN WITNESS WHEREOF, the parties hereto have executed or caused to be
executed this Agreement under seal as of the date first above written.
ATLANTIC TELE-NETWORK CO.
By:
---------------------------------------
Name:
Title:
(SEAL)
Attest:
-------------------------------
Secretary
RURAL TELEPHONE FINANCE COOPERATIVE
By:
---------------------------------------
Name:
Title:
(SEAL)
Attest:
------------------------------------
Secretary
SCHEDULE 1
1. The "Commitment" shall mean $18,315,789.
2. The Mortgage defined in Section 1 is the Mortgage and Security Agreement by
and between Borrower and Lender dated as of even date herewith.
3. The months relating to the Payment Date are September, December, March and
June.
4. The method of amortization referred to in Section 2.03 shall be based upon
the method indicated below.
____level principal
X level debt service (no principal deferral)
----
5. The amount referred to in Section 2.05 is $915,789 (A-02 loan).
6. The date of Borrower's financial statement referred to in Section 4.06 is
December 31, 1996.
7. The chief place of business referred to in Section 4.12 and address of
Borrower referred to in Section 10.07 is Chase Financial Center, X.X. Xxx
0000, Xx. Xxxxx, X.X. Xxxxxx Xxxxxxx 00000-0000.
8. The government authorities referred to in Section 4.13 are the Virgin
Islands Public Service Commission ("VI PSC") and the Securities and
Exchange Commission ("SEC").
9. The special conditions referred to in Section 5.05 are as follows:
Prior to the initial Advance of funds from this loan, Lender shall receive,
in form and content satisfactory to Lender, copies of the following:
a) Borrower's Articles of Incorporation and Bylaws;
b) All definitive agreements relative to the reorganization of Borrower's
parent corporation, Atlantic Tele-Network, Inc. ("ATN-Inc"), into two
separate public companies ("the Split-Off");
-29-
c) The SEC's and all other necessary regulatory, government, lender and
shareholder approvals of the Split-Off;
d) An Internal Revenue Service ("IRS") opinion letter confirming the tax-
free treatment of the Split-Off;
e) A fairness opinion letter issued by an investment banking firm,
reasonably satisfactory to Lender, related to the Split-Off; and
f) Evidence of final approval by the United States Virgin Island's
Industrial Development Commission of Borrower's wholly-owned
Subsidiary, Virgin Islands Telephone Corporation, application for tax
relief.
10. The purpose referred to in Section 6.05 is to: (i) fund the valuation
adjustment payments for the Split-Off and reorganization of Borrower and
ATN, Inc.; and (ii) purchase SCCs.
11. The special affirmative covenants referred to in Section 6.06 are as
follows: None
12. The special negative covenants referred to in Section 7.04 are as follows:
None
