Exhibit 10.12
RURAL TELEPHONE FINANCE COOPERATIVE
SECURED REVOLVING LINE OF CREDIT AGREEMENT
("Agreement")
Gulf Telephone Company, Inc., an Alabama corporation ("Borrower") located at
P.O. Drawer 670, 000 Xxxxx Xxxxxx Xxxxxx, Xxxxx, Xxxxxxx 00000, hereby agrees to
borrow from Rural Telephone Finance Cooperative ("RTFC" or "Lender"), a South
Dakota cooperative association, pursuant to the terms of this Agreement, dated
as of September 29, 1999, for a revolving line of credit loan in an amount not
to exceed ten million dollars ($10,000,000). In consideration of their mutual
premises hereunder and other valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, Lender and Borrower agree to the following
terms and conditions:
1. Revolving Credit and Term. Lender agrees to make advances to the Borrower
pursuant to the terms of this Agreement ("Advances"). The maximum principal
amount outstanding at any point in time shall not exceed $10,000,000.
Within such limits, the Borrower may borrow, repay and reborrow at any time
or from time to time for a period up to five (5) years from the date hereof
( the "Maturity Date").
2. Requisitions. The Borrower shall give Lender such prior notice of requests
for Advances as RTFC may reasonably require from time to time.
3. Interest Rate and Payment. The Borrower unconditionally promises and agrees
to pay, as and when due, interest on all amounts advanced hereunder from
the date of each Advance and to repay all amounts advanced hereunder with
interest on the Maturity Date. Interest shall be due and payable quarterly
on the first day of each January, April, July, and October, commencing on
the first such date after such initial Advance; except that if Lender gives
notice thereof to the Borrower before the first day of any month, interest
shall thereafter be due and payable on the 15th day of such month and each
month thereafter. Lender shall invoice the Borrower at least five days
prior to the due date of any such interest payment. All amounts shall be
payable at RTFC's main office at Woodland Park, 0000 Xxxxxxxxxxx Xxx,
Xxxxxxx, Xxxxxxxx 00000-0000 or at such other location as designated by
Lender from time to time.
The interest rate on all Advances will be equal to RTFC's standard line of
credit as established from time to time by Lender pursuant to its policies
and procedures plus fifty (50) basis points. However, in no event shall the
interest rate exceed the Prevailing Bank Prime Rate (as defined herein),
plus one and one-half percent per annum.
Interest will be computed on the basis of a year of 365 days. The interest
rate will be adjusted as determined from time to time by Lender, provided
that no such adjustment may be effective on a date other than the first or
sixteenth day of any month, and will remain in effect until a subsequent
change in rate occurs.
The "Prevailing Bank Prime Rate" is that bank prime rate published in the
"Money Rates" column of any edition of The Wall Street Journal which Lender
determines in its
discretion to be the representative bank prime rate on the day preceding
the day on which an adjustment in the interest rate hereof shall become
effective. If such preceding day is not a publication day for The Wall
Street Journal then the Prevailing Bank Prime Rate shall be established by
reference to such "Money Rates" column as of the last publication day next
preceding the day on which such adjustment shall become effective; provided
if The Wall Street Journal shall cease to be published, then the Prevailing
Bank Prime Rate shall be determined by RTFC by reference to another
publication reporting bank prime rates in a similar manner.
4. RTFC Accounts. Lender shall maintain in accordance with its usual practice
an account or accounts evidencing the indebtedness of the Borrower
resulting from each Advance made from time to time and the amounts of
principal and interest payable and paid from time to time hereunder. In any
legal action or proceeding in respect of this Agreement, the entries made
in such account or accounts (whether stored on computer memory, microfilm,
invoices or otherwise) shall be presumptive evidence (absent manifest
error) of the existence and amounts of the Borrower's transactions therein
recorded.
5. Corporate and Regulatory Approvals. Borrower represents that it has
obtained any and all necessary corporate and regulatory approvals for
Borrower to execute and perform pursuant to this Agreement.
6. Reports. Borrower agrees to deliver to Lender, promptly upon their becoming
available, a copy of (i) any annual audit report prepared subsequent to the
submission of this Agreement; (ii) its monthly operating report within
thirty (30) days for any month in which there are advances outstanding
pursuant to this Agreement; and (iii) any other reports which Lender
reasonably requests during the term of this Agreement.
7. Covenants/Financial Ratios. Until the later of (i) all Advances and fees
hereunder having been repaid or (ii) the Maturity Date, Borrower agrees to
honor and be bound by the affirmative and negative covenants, and financial
ratios, (collectively, the "Covenants") contained in Sections 6 and 7 of
the Loan Agreement by and between Borrower and Lender dated as of even date
herewith, as it may be amended from time to-time (the "Loan Agreement"),
and such Covenants shall be incorporated by reference as if fully stated
herein.
8. Fees. If any amount outstanding and due hereunder shall not be paid when
due, Borrower agrees to pay on demand Lender's reasonable costs of
collection or enforcement of this Agreement, or preparation therefor,
including reasonable fees of counsel. If payment of any principal and/or
interest due under the terms of this Agreement is not received at Lender's
office in Herndon, Virginia, or such other location designated by Lender
within five (5) business days after the due date thereof (such unpaid
amount of principal and/or interest being herein called the "delinquent
amount," and the period beginning after such due date being herein called
the "late- payment period"), Borrower will pay to Lender, on demand, in
addition to all other amounts due under the
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terms of this Agreement, any late-payment charge as may then be in effect
pursuant to Lender's policy on the delinquent amount for the late payment
period.
9. Credit Support. This Agreement may not be used as credit support for any
other financings without Lender's prior written approval.
10. Notices, Acceleration of Debt and Waivers. While any amount hereunder is
outstanding, Borrower agrees to notify Lender of any delinquency or default
on any of its financial obligations, any material adverse change in its
financial or business condition, and if any representation or warranty made
in this Agreement has become untrue in any respect having a material
adverse effect on the financial condition or business of the Borrower.
Lender may declare at any time all outstanding amounts hereunder
immediately due and payable in full with accrued interest, without
presentment or demand, and may withhold advances of funds upon the
occurrence of any of the following: (i) any delinquency or default in
payment of any sum due the Lender under the Agreement; (ii) a court shall
enter a decree or order for relief with respect to Borrower or any
subsidiary or guarantor in an insolvency or bankruptcy or appoint a
receiver, liquidator, trustee or similar official and such order remains in
effect for a period of ninety (90) days; (iii) Borrower or any subsidiary
shall commence a voluntary case under bankruptcy, insolvency or similar law
or consent to the appointment of a receiver, liquidator, or trustee; (iv)
the dissolution or liquidation of Borrower or subsidiary or guarantor or
failure to forestall or remove any execution, garnishment or attachment of
such consequence as to impair its ability to continue business and such
execution, garnishment or attachment shall not be vacated within thirty
(30) days; or (v) any other event as a result of which any holder of
indebtedness in excess of five percent (5%) of Borrower's total assets may
declare the same due and payable shall occur and continue for more than any
applicable grace period.
If any representation or warranty herein shall become untrue, or Borrower
shall fail to comply with any term of this Agreement or if the financial
condition of Borrower shall have changed to the extent that such change in
the reasonable judgment of RTFC, materially increases RTFC's risk
hereunder, then RTFC at its discretion may withhold advances of funds
and/or declare all outstanding amounts hereunder immediately due and
payable in full with accrued interest, without presentment or demand.
The Borrower waives the defense of usury and all rights to set off,
counterclaim, deduction or recoupment.
11. Purpose, Repayments and Deposit. Borrower agrees that any and all Advances
hereunder will be used only for proper corporate purposes and consistently
with the requirements of outstanding security documents of Borrower
relating to its operations. Borrower agrees that this loan shall be
repayable out of Borrower's general funds and that loan proceeds will not
be deposited in any other account dedicated for secured financing advances.
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12. Additional Indebtedness. While any amount hereunder is outstanding and
unless otherwise disclosed in writing to Lender or permitted pursuant to
the Loan Agreement, Borrower agrees that it will not, without the prior
written consent of Lender, (i) make distributions of cash to its
shareholders, if applicable, or (ii) create, incur, assume, guarantee or
otherwise become obligated for any additional indebtedness, other than as
provided for in the Loan Agreement except that the Borrower may borrow
against another loan previously approved by Lender.
13. Survival of Representations, Warranties and Payment Obligations. Borrower
agrees that the representations and warranties made in this Agreement shall
survive the making of Advances hereunder. Any unsatisfied payment
obligation hereunder shall survive the maturity and cancellation of this
Agreement.
14. Representations and Warranties. Except as set forth in writing and attached
hereto, Borrower represents and warrants as of the date of its application
and on the date of each and every Advance hereunder that:
(a) The Borrower has and will meet all obligations and be in compliance
with all instruments under which it is bound and that all information
submitted in support of its application is true, complete and correct
except where the failure to so comply or the inaccuracy of any such
information could not, in either case, be reasonably be expected to
have a Material Adverse Effect (as defined in the Loan Agreement);
(b) There has been no material adverse change in the Borrower's business
or financial condition from that set forth in its most recent audited
financial statements provided to Lender;
(c) The Borrower has no outstanding loans from sources other than Lender;
(d) The Borrower is not in default in any material respect of any of its
obligations and no litigation is threatened or pending which would
have a material adverse impact on the Borrower's ability to perform
under this Agreement; and
(e) The Borrower has no lines of credit with any other lenders.
15. Consent to Patronage Capital Distributions. Borrower hereby consents that
the amount of any distributions with respect to Borrower's patronage which
are made in written notices of allocation (as defined in Section 1388 of
the Internal Revenue Code of 1986, as amended ("Code") including any other
comparable successor provision) and which are received from Lender will be
taken into account by Borrower at their stated dollar amounts in the manner
provided in Section 1385(a) of the Code in the taxable year in which such
written notices of allocation are received.
16. Severability. If any term, provision or condition, or any part thereof, of
this Agreement
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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
shall survive and be construed as if such invalid or unenforceable term,
provision or condition had not been contained therein.
17. Setoff. Lender is hereby authorized at any time and from time to time
without prior notice to the Borrower to exercise rights of setoff or
recoupment and apply any and all amounts held, or hereafter held, by Lender
or owed to the Borrower or for the credit or account of the Borrower
against any and all of the obligations of the Borrower now or hereafter
existing hereunder. Lender agrees to notify the Borrower promptly after any
such setoff or recoupment and the application thereof, provided that the
failure to give such notice shall not affect the validity of such setoff,
recoupment or application. The rights of Lender under this section are in
addition to any other rights and remedies (including other rights of setoff
or recoupment) which Lender may have.
18. Additional Terms and Conditions. Additional terms and conditions set forth
herein or attached hereto as Exhibit A are an integral part of this
Agreement.
19. Integration. This Agreement and the 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 and binding. No amendment or waiver to
this Agreement shall be valid and binding except if in writing and signed
by both parties.
20. Headings. The headings and sub-headings contained in this Agreement are
intended to be used for convenience only and do not constitute part of this
Agreement.
21. Security. All Advances hereunder shall be secured by a security interest in
certain of Borrower's properties pursuant to a Mortgage and Security
Agreement and Pledge and Security Agreement by and between Borrower and
RTFC entered into as of even date herewith, which has been filed along with
UCC-1 financing statements in all such locations necessary to provide RTFC
with a first priority, perfected lien (except as permitted by the Mortgage)
on all of Borrower's Mortgaged Property (as defined in the Mortgage). Such
Mortgage and Security Agreement, Pledge and Security Agreement and UCC-1
financing statements shall continually exist until the later of (i) all
Advances and fees hereunder having been repaid or (ii) the Maturity Date.
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.
22. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF VIRGINIA.
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23. Special Conditions. Advances under this Agreement shall not occur unless
and until (i) closing on the acquisition of Gulf Coast Services, Inc. and
Gulf Telephone Company, Inc. has occurred, and (ii) the Loan Agreement has
been funded and all prerequisites to advances thereunder have been
satisfied.
IN WITNESS WHEREOF, the parties hereto have executed or caused to be
executed this Agreement under seal as of the date first above written.
GULF TELEPHONE COMPANY
By: XXXX X. XXXX
----------------------------------
Title: CFO
(SEAL)
Attest: XXXXX X. XXXXX
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Asst. Secretary
RURAL TELEPHONE FINANCE COOPERATIVE
By: XXXXX X. XXXX
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Title: Assistant Secretary-Treasurer
(SEAL)
Attest: XXXXXXX XXXXX
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Assistant Secretary-Treasurer
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EXHIBIT A
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Reduce Balance to Zero. Within 360 days of the first Advance, Borrower will
reduce to zero for a period of at least five consecutive business days, (the
last day of such five day period being herein called the "Zero Balance Date")
amounts outstanding hereunder, and will reduce to zero for a period of at least
five consecutive business days (the last day of such five business day period
being called the "Subsequent Zero Balance Date") amounts outstanding hereunder
within 360 days from the Zero Balance Date or Subsequent Zero Balance Date, as
appropriate.
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