LOAN AGREEMENT
LOAN AGREEMENT ("Agreement") made as of _______________, 2000, by and
between HORIZON PERSONAL COMMUNICATIONS, INC., an Ohio corporation ("Borrower")
and RURAL TELEPHONE FINANCE COOPERATIVE, a South Dakota cooperative association
("Lender").
RECITALS
WHEREAS, Borrower has entered into a Sprint PCS Management Agreement dated
as of June 8, 1998 and as it may have been subsequently amended (hereinafter
referred to as the "Management Agreement") with WirelessCo, L.P., SprintCom,
Inc. and Sprint Spectrum L.P. (collectively, "Sprint") to provide Personal
Communications Services ("PCS") in such service areas including, but not
necessarily limited to, Chillicothe, Zanesville, Athens, and Portsmouth Ohio,
Charleston, Huntington and Parkersburg, West Virginia, and
Kingsport-Bristol-Johnson City, Tennessee BTAs ("BTAs");
WHEREAS, Borrower has requested Lender to make the Loan to Borrower
described in Schedule 1 hereto; and
WHEREAS, Lender is willing to make the Loan upon the terms and conditions
set forth in this Agreement.
NOW, THEREFORE, for and in consideration of the mutual covenants contained
herein, Borrower and Lender do hereby agree as follows:
l. 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 the termination date for a Fixed Rate period
applicable to a Fixed Rate Advance as selected by Borrower in accordance with
the terms and conditions hereunder.
"Advance" shall mean an Advance as defined in Section 2.02.
"Annual Operating Cash Flow" for any fiscal year shall mean the sum of (a)
pre-tax income, or deficit, as the case may be (excluding extraordinary gains,
the write-up of any asset and any investment income or loss), (b) total interest
expense (including capitalized, accreted or paid-in-kind interest), and (c)
depreciation and amortization expense, as calculated on a consolidated basis for
the Borrower and all its Subsidiaries, plus any equity capital raised by the
Borrower over and above the corresponding per annum amounts set forth in
Schedule 1, Items 8B and C of this Agreement.
"Bright PCS" shall mean Bright Personal Communications Services, LLC, an
Ohio limited liability company.
"Business Day" shall mean any day that Lender is open for business.
"Cash Margins" for any fiscal 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 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 equity interests described in, and pledged to Lender pursuant to the
Pledge Agreements.
"Commitment" shall have the meaning set forth in Schedule 1 hereto.
"Current Ratio" for any fiscal year shall mean the ratio of total current
assets to total current liabilities, as determined by dividing total current
assets by total current liabilities.
"Debt Service Coverage Ratio" or "DSC" for any fiscal year shall mean (a)
net income, or deficit as the case may be, plus depreciation and amortization
expense and interest on long-term debt for such fiscal year, divided by (b)
principal and interest on long-term debt payable in such fiscal year, as
calculated on a consolidated basis for the Borrower and all its Subsidiaries.
"EBITDA" for any fiscal year shall mean net income plus income taxes,
interest expense, and depreciation and amortization expense, as calculated on a
consolidated basis for Borrower and all its Subsidiaries.
"Event of Default" shall mean any of the events described in Section 8
hereof.
"Excess Cash Flow" shall be calculated on a consolidated basis for Borrower
and all its Subsidiaries and shall mean net cash flow from operations as
evidenced by Borrower's most recent audited statement of cash flow, less
budgeted capital expenditures, less budgeted principal payable on all short and
long-term debt, with budgeted figures coming from Borrower's operating and
capital budget for such next fiscal year as submitted to Lender.
"FCC" shall mean the Federal Communications Commission or any successor
agency thereof.
"Fixed Rate" shall mean the standard fixed interest rate per annum provided
for in Section 2.03 of this Agreement plus one hundred fifty (150) basis points.
"Horizon Telcom, Inc." shall mean Borrower's parent corporation, Horizon
Telcom, Inc., an Ohio corporation.
"Indebtedness" shall include all items which would properly be included in
the liability section of a balance sheet or in a footnote to a financial
statement, in accordance with generally accepted accounting principles,
including, without limitation, contingent liabilities.
"Leases" shall mean any lease of property by which Borrower shall be
obligated for rental or other payments which individually are in excess of
$50,000 per year, or in the aggregate are in excess of $1,500,000 per year.
"Leverage Ratio" for any fiscal year shall mean the ratio derived by
dividing (a) Indebtedness by (b) Annual Operating Cash Flow, as calculated on a
consolidated basis for Borrower and all its Subsidiaries.
"Lien" shall mean any statutory or common law consensual or non-consensual
mortgage, pledge, security interest, encumbrance, lien, right of set-off, claim
or charge of any kind, including, without limitation, any conditional sale or
other title retention transaction, any lease transaction in the nature thereof
and any secured transaction under the Uniform Commercial Code of any
jurisdiction.
"Loan" shall mean the loan 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 (a) 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
(b) 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 (a) and (b) above, the discount
rate will be the rate of interest accruing on the U.S. Treasury obligations in
(b) above.
"Master Site Agreement" shall mean that certain Master Site Agreement by
and between Borrower and SBA, dated as of ___________________, and submitted to
Lender.
"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 promissory note designated OH 803-9002 executed and
delivered by Borrower at or prior to Closing pursuant to Section 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, 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 Section 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 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 Agreements" or "Pledges" shall mean collectively, the Pledge and
Security Agreements by and between the Pledgors and Lender dated as of even date
herewith.
"Pledgors" shall mean individually and collectively, Horizon Telcom, Inc.
and Horizon Personal Communications, Inc..
"Primary Guarantor" shall mean Horizon Telcom, Inc., an Ohio corporation.
"Purchase Agreement" shall mean that certain PCS CDMA Product Supply
Contract by and between Borrower and Vendor dated as of August 17, 1999, as the
same may be amended or supplemented from time to time, and submitted to Lender.
"SBA" shall mean SBA Towers, Inc., a Florida corporation.
"Services Agreement" shall mean that certain Services Agreement by and
between Borrower and Bright Personal Communications Services, LLC dated as of
October 13, 1999, and submitted to Lender.
"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 that is at the time beneficially
owned or controlled directly or indirectly by the Borrower, by one or more such
entities or by the Borrower and one or more such entities.
"Termination Date" shall mean that date which is four (4) years from the
date hereof.
"Tower Agreements" shall mean individually and collectively, the Master
Site Agreement and that certain Master Design Build Agreement by and between
Borrower and SBA, dated as of August 17, 1999, and submitted to Lender.
"Variable Rate" shall mean the standard monthly variable rate established
by the Lender from time to time for long-term loans similarly classified
pursuant to Lender's policies and procedures then in effect, plus one hundred
fifty (150) basis points. The Variable Rate as of the date of this Agreement is
_____%.
"Vendor Guarantor" or "Vendor" shall mean Motorola, Inc., a Delaware
corporation.
"Vendor Supported Loans" shall mean this Loan and Lender's prior loan to
Borrower pursuant to a Loan Agreement and Note both dated as of August 29, 1997,
designated OH 803-A-01.
2. LOAN
2.01. Loan. The Lender agrees to make the Loan to Borrower subject to all
of the terms and conditions of this Agreement and the Other Agreements.
2.02. Advances. The Lender agrees to make, and the Borrower agrees to
request, on the terms and conditions of this Agreement, Advances from time to
time at the office of the Lender in Herndon, Virginia, or at such other place as
the Lender may designate, not to exceed the Commitment; provided, however, that
Lender shall not be obligated to make any further Advances hereunder for the
build-out of Borrower's PCS system until Borrower provides Lender with copies of
its then-existing leasehold agreements and pole attachment agreements, if any
(collectively, the "Cell Site Agreements") and site lease acknowledgments
executed by and between the Borrower and SBA pursuant to the Master Site
Agreement (collectively, the "SLAs"), in form and substance reasonably
satisfactory to Lender. The Borrower shall give the Lender at least two (2)
Business Days prior written notice of the date on which each Advance is to be
made. On the Termination Date, the Lender may stop advancing funds and reduce
the Commitment to the aggregate amount theretofore advanced. The obligation of
the Borrower to repay the Advances shall be evidenced by the Note.
2.03. Payment, Amortization and Interest Rate.
(a) Payment. The Borrower shall pay on each Payment Date quarterly
installments, in an amount as calculated by the Lender in accordance with this
Agreement, of principal and/or interest as shown in the Payment Notice, except
that, if not sooner paid, any balance of the principal amount and interest
accrued thereon and all other amounts due hereunder shall be due and payable on
the Maturity Date. Payment of principal hereunder shall commence 16 quarters
after the first full quarter following the initial Advance of funds in
accordance with the repayment schedule as set forth in Schedule 1 and shall
continue to be made 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.
At the Lender's option, all payments shall be applied first to late payment
charges due, as hereinafter provided, then to interest accrued to the date of
such payment, and then to the reduction of principal balance outstanding.
No provision of this Agreement or the Note shall require the payment, or
permit the collection, of interest in excess of the highest rate permitted by
applicable law.
(b) Interest Rate. Each Advance shall be initially made at the Variable
Rate. Interest shall be computed from the actual number of days elapsed on the
basis of a year of 365 days until the first Payment Date following the initial
Advance. Thereafter, interest shall continue to be computed for the actual
number of days elapsed on the basis of a year of 365 days unless a Fixed Rate is
applicable to the Loan, in which case interest shall be computed on the basis of
a 30-day month and 360-day year. Notwithstanding anything to the contrary
herein, the total amount of Borrower's Fixed Rate debt at any given time
hereunder shall not exceed fifty percent (50%) of the Commitment.
(i) Variable Rate. If Advances are made at the Variable Rate, such
Variable Rate shall apply until the Maturity Date, except as provided
herein below.
(ii) Fixed Rate. If the Borrower elects a Fixed Rate, such Fixed Rate as is
available and in effect for loans similarly classified pursuant to
Lender's policies and procedures 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 (5) Business Days prior to such
Adjustment Date, Borrower may elect to reset the interest rate to such
Fixed Rate as is available and in effect at the time of such
Adjustment Date. Such reset Fixed Rate shall apply to that portion of
the outstanding principal balance of the Loan elected to have a Fixed
Rate from the Adjustment Date until a new Adjustment Date or the
Maturity Date. If Borrower does not elect to reset the Fixed Rate, the
Variable Rate shall apply to the outstanding principal balance of the
Loan that had been bearing interest at the Fixed Rate prior to such
Adjustment Date, from such Adjustment Date to the Maturity Date.
(iii) Conversion to Different Interest Program.
(A) Variable Rate to Fixed Rate. Subject to the conditions set forth
herein, the Borrower may convert from the Variable Rate to the Fixed
Rate for a portion of the principal amount of the Commitment then
outstanding at any time provided the Lender offers a Fixed Rate at
such time, subject to the fifty percent (50%) Fixed Rate debt
limitation set forth above.
(B) Fixed Rate to Variable Rate. The Borrower may convert from a Fixed
Rate to the Variable Rate: (1) on an Adjustment Date or (2) at any
other time, provided that the Borrower shall pay Lender any applicable
Make-Whole Premium.
2.04. Prepayments.
(a) Optional Prepayment. If the Loan bears interest at the Variable Rate
the Borrower may opt to prepay the Loan or any portion thereof, as the case may
be, at any time subject to the terms hereof and provided that the Borrower shall
pay a prepayment fee in an amount established by Lender, up to maximum of fifty
(50) basis points times the amount being prepaid. If the Loan bears interest at
the Fixed Rate, the Borrower may opt to prepay the Loan on an Adjustment Date or
any such other date provided that the Borrower shall pay a prepayment fee in an
amount established by Lender, up to a maximum of fifty (50) basis points times
the amount being prepaid plus any applicable Make-Whole Premium. All prepayments
shall be accompanied by payment of accrued and unpaid interest on the amount of
and to the date of the prepayment. All prepayments shall be applied first to
fees, second to the payment of accrued and unpaid interest, and then to the
unpaid balance of the principal amount of the Loan.
(b) Mandatory Prepayment. Beginning once Borrower's audited fiscal year-end
EBITDA is greater than zero, Lender shall have the option, to be elected
annually, to require Borrower to make annual mandatory prepayments of the Loan
in an amount equal to fifty percent (50%) of Borrower's Excess Cash Flow within
120 days of the close of Borrower's fiscal year. All mandatory prepayments shall
be applied first to fees, second to the payment of accrued and unpaid interest,
and then pro-ratably to the unpaid balance of the principal amount of the Loan
or any other loans by and between Borrower and Lender in inverse order of
Maturity Date. All mandatory prepayments shall not be subject to a prepayment
fee as long as the amount prepaid bears a Variable Rate.
2.05. 5% Subordinated Capital Certificates. The Borrower shall purchase
SCCs which in the aggregate shall not exceed the amount specified in Schedule 1
hereto. Unless otherwise requested in writing by the Borrower prior to the
initial Advance and approved by the Lender, the Borrower agrees to purchase SCCs
with each Advance in the amount of five percent (5%) of each such Advance, and
each such SCC shall be paid for with proceeds of such Advance. The Lender agrees
to deliver the SCCs on or about the date on which the SCCs have been paid for in
full. The SCCs shall bear no interest and shall mature in accordance with the
terms thereof.
3. SECURITY
As security for the payment and performance of all of the Obligations,
Borrower has (a) 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; (b) had the Pledgors execute the Pledge Agreements with Lender pursuant
to which such Pledgors pledged certain interests as described therein; (c)
obtained an unsecured guaranty in amounts, form and substance reasonably
satisfactory to Lender, from the Vendor Guarantor; (d) provided a collateral
assignment, in form and substance reasonably satisfactory to Lender, of the
Purchase Agreement, (e) provided a collateral assignment, in form and substance
reasonably satisfactory to Lender, of the Services Agreement, (f) provided a
collateral assignment, in form and substance reasonably satisfactory to Lender,
of the Tower Agreements; and (g) provided collateral assignments, in form and
substance reasonably satisfactory to Lender, of all of its other material
operating contracts. If reasonably required by the Lender at any time, Borrower
shall make notations, satisfactory to the Lender, on its books and records
disclosing the existence of the Lender's security interest in the Collateral.
Borrower agrees that, with respect to the Collateral which is subject to Article
9 of the Uniform Commercial Code, the Lender shall have, but not be limited to,
all the rights and remedies of a secured party under the Uniform Commercial
Code. The Lender shall have no liability or duty, either before or after the
occurrence of an Event of Default hereunder, on account of loss of or damage to,
or to collect or enforce any of its rights against, the Collateral, or to
preserve any rights against account debtors or other parties with prior
interests in the Collateral.
4. REPRESENTATIONS AND WARRANTIES
To induce the Lender to enter into this Agreement, Borrower represents and
warrants to the Lender as of the date of this Agreement that:
4.01. Good Standing. Borrower is a corporation duly organized, validly
existing and in good standing under the laws of the state of its incorporation,
has the power to own its property and to carry on its business, is duly
qualified to do business, and is in good standing in each jurisdiction in which
the transaction of its business makes such qualification necessary.
4.02. Authority. Borrower has requisite power and authority to enter into
this Agreement the Mortgage, and the Pledge Agreement, to make the borrowings
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, the Vendor
Guarantor and any public authority or regulatory body, which has not been
obtained is required as a condition to the validity or enforceability hereof or
thereof.
4.03. Binding Agreement. This Agreement has been duly and properly executed
by Borrower, constitutes the valid and legally binding obligation of Borrower
and is fully enforceable against Borrower in accordance with its terms, subject
only to laws affecting the rights of creditors generally, the exercise of
judicial discretion in accordance with general principles of equity or because
waivers of statutory or common law rights or remedies may be limited.
4.04. No Conflicting Agreements. The execution, delivery of and performance
by Borrower of this Agreement, the Mortgage and the Note, and the transactions
contemplated hereby or thereby, will not: (a) violate any provision of law, any
order, rule or regulation of any court or other agency of government, any award
of any arbitrator, the articles of organization or operating agreement of
Borrower, or any indenture, contract, agreement, mortgage, deed of trust or
other instrument to which Borrower is a party or by which it or any of its
property is bound; or (b) be in conflict with, result in a breach of or
constitute (with due notice and/or lapse of time) a default under, any such
award, indenture, contract, agreement, mortgage, deed of trust or other
instrument, or result in the creation or imposition of any Lien (other than
contemplated hereby) upon any of the property or assets of Borrower.
4.05. Litigation. There are no judgments, claims, actions, suits or
proceedings pending or, to the knowledge of Borrower, threatened against or
affecting Borrower or its properties, at law or in equity or before or by any
federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, which may result in any material adverse
change in the business, operations, prospects, properties or assets or in the
condition, financial or otherwise, of Borrower, and Borrower is not, to its
knowledge, in default with respect to any judgment, order, writ, injunction,
decree, rule or regulation of any court or federal, state, municipal or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, which would have a material adverse effect on Borrower.
4.06. Financial Condition. The financial statements, business plans, and
other materials submitted by Borrower in connection with the proposed financing
hereunder as delivered to Lender up to the date of this Agreement, are, in all
material respects, complete and correct and fairly present the financial
condition, and as to business plans, management's best intentions, assumptions
and projections as of the date thereto submitted, of the Borrower. There are no
material liabilities of the Borrower, direct or indirect, fixed or contingent,
as of the date of such statements or business plans 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 or
business plans except changes previously disclosed in writing to the Lender
prior to the date hereof.
4.07. Taxes. Borrower has paid or caused to be paid all federal, state and
local taxes to the extent that such taxes have become due, unless the Borrower
is contesting in good faith any such tax. Borrower has filed or caused to be
filed all federal, state and local tax returns which are required to be filed by
Borrower.
4.08. Title to Properties. Borrower owns all of its properties and assets,
including the Collateral, free and clear of any liens, except for those liens
which have been specifically acknowledged by Lender under Section 3.02 of the
Mortgage. Borrower does not presently own any real property.
4.09. Licenses and Permits. Borrower has duly obtained and now holds all
licenses, permits, certifications, approvals and the like necessary to own and
operate their 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 Subsidiaries
heretofore disclosed to the Lender, or hereafter formed or acquired with the
prior written consent of the Lender.
4.11. Certain Indebtedness. There is no Indebtedness of Borrower owing to
any employee, officer, member or member of the management committee of Borrower
other than (a) accrued salaries, commissions and the like, and (b) obligations
under the Services Agreement.
4.12. Location of Office. The chief executive office of the Borrower and
the office where its records concerning accounts and contract rights are kept is
identified in Schedule 1 hereto.
4.13. Required Approvals. No license, consent, permit or approval of any
governmental agency or authority is required to enable the Borrower to enter
into this Agreement or to perform any of its obligations provided for herein
except as disclosed on Schedule 1 hereto and except with respect to regulatory
approvals which may be required in connection with the Lender's enforcement of
certain remedies hereunder.
4.14. ERISA. Each pension plan of Borrower and its Subsidiaries providing
benefits for employees of Borrower or such Subsidiary covered by Title IV of the
Employee Retirement Income Security Act of 1974, as amended, and the regulations
thereto ("ERISA"), is in compliance with ERISA in all material respects, and no
material liability to the Pension Benefit Guaranty Corporation ("PBGC") or to a
multiemployer plan has been, or is expected by Borrower or its Subsidiaries to
be, incurred by Borrower or such 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 of the
transactions hereby contemplated shall be reasonably satisfactory to counsel for
the Lender and to such local counsel as counsel for the Lender may retain.
5.02. Documents. There shall have been delivered to the Lender, fully
completed and duly executed (when applicable), the following, reasonably
satisfactory to the Lender and its counsel:
(a) This Agreement and the Note.
(b) Certified copies of all such organizational documents and proceedings
of the Borrower authorizing the transactions herein contemplated.
(c) A written opinion from Borrower's and Horizon's counsel addressing such
legal matters as the Lender or its counsel shall reasonably require.
(d) The Borrower shall have (i) executed the Mortgage; (ii) if any real
property is owned by Borrower, recorded a valid and binding Mortgage granting
Lender a first lien in all real property owned by Borrower; (iii) filed
financing statements in all jurisdictions necessary to provide Lender a first
priority, perfected security interest in all Collateral which may be perfected
by the filing of financing statements; and (iv) delivered such other documents
as are necessary to create or continue a perfected security interest in favor of
the Lender in the Collateral.
(e) The Pledge Agreements.
(f) A secured guaranty and mortgage and security agreement, in form and
substance satisfactory to Lender, executed by the Guarantor guarantying the
lesser of (i) $7,852,665 of principal plus interest and fees due thereon, or
(ii) 12.26% of Borrower's outstanding debt under the Vendor Supported Loans.
(g) An unsecured guaranty in amount, form and substance satisfactory to
Lender, from the Vendor Guarantor.
(h) A collateral assignment of the Purchase Agreement and all other
material operating and management contracts.
(i) A collateral assignment of the Services Agreement.
(j) A collateral assignment of the Tower Agreements.
(k) A Consent and Agreement by and among Borrower, Lender, Vendor Guarantor
and Sprint setting forth the rights and remedies available to the parties in the
event of a default under the Management Agreement or this Agreement.
(l) Copies of the Cell Site Agreements and SLAs in effect at the time of
Closing for those sites where Borrower intends to build out its PCS system.
(j) A fully executed modification agreement, in form and substance
satisfactory to Lender, amending the August 29, 1997 Loan Agreement by and
between Borrower and Lender (designated OH 803-A-01), modifying the financial
covenant provisions in that agreement so that they conform to the financial
covenant provisions of this Agreement.
5.03. Government Approvals. The Borrower shall have furnished to the Lender
true and correct copies of all certificates, authorizations and consents,
including without limitation the consents referred to in Section 4.13 hereof,
necessary for the execution, delivery or performance by the Borrower of this
Agreement, the Note and the Mortgage.
5.04. Representations, Warranties and Material Change. At Closing and at
the date of every subsequent Advance hereunder, all covenants, representations
and warranties set forth in this Agreement shall be true and correct on and as
of such time with the same effect as though such covenants, representations and
warranties had been made on and as of such date; no Event of Default specified
in Section 8 and no event which, with the lapse of time or the giving of notice
and lapse of time specified in Section 9 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
from the most recent financial statements submitted to Lender prior to the date
of this Agreement by Borrower in connection with the proposed financing
hereunder, of the Borrower or the Vendor Guarantor.
5.05. Mortgage Filing. Within ten (10) days of acquiring any real property
or fixtures, 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.
5.06. Special Conditions. At Closing and at the time of every subsequent
Advance hereunder, the Lender and its counsel shall be reasonably satisfied that
the Borrower has complied and will continue to comply with any special
conditions identified in Schedule 1 hereto.
5.07. Requisitions. The Borrower will request Advances by submitting
requisitions to Lender in the form set forth in Exhibit A attached hereto and
made a part hereof. Pursuant to the terms and conditions hereof, the Lender will
wire the proceeds of the requested Advance to an account as directed by the
Borrower.
6. AFFIRMATIVE COVENANTS
Borrower covenants and agrees with the Lender that, until all of the
Obligations have been paid in full, Borrower will:
6.01. Membership. Remain a member or an affiliate of a member in good
standing of the Lender.
6.02. Financial Reports and Other Information. Furnish, in form and
substance reasonably satisfactory to Lender: (a) a full and complete report of
Borrower's and its Subsidiaries' consolidated financial condition at least once
during each 12-month period during the term hereof but in no event later than
120 days after the end of each fiscal year of Borrower, which shall include (i)
annual financial statements prepared on a consolidated basis and audited by
independent public accountants selected by Borrower and reasonably acceptable to
Lender, accompanied by an opinion of such accountants reasonably acceptable to
Lender, and (ii) unaudited annual consolidating financial statements of Borrower
and its Subsidiaries; (b) unaudited quarterly financial statements of Borrower
and its Subsidiaries prepared on a consolidated basis which shall include a
balance sheet, a statement of income and a statement of cash flows for such
quarter and year-to-date with comparisons to budget for such quarter and
year-to-date, within 60 days after the end of each fiscal quarter of Borrower;
(c) quarterly management or statistical reports which shall include subscriber,
penetration, coverage and other operating statistics, within 60 days after the
end of each fiscal quarter of Borrower; (d) an operating budget, capital budget
and updated 10-year financial projections, prior to the beginning of each fiscal
year of Borrower; (e) such other information, reports or statements concerning
the operations, business affairs and/or financial condition of Borrower and its
Subsidiaries as the Lender may reasonably request from time to time; and (f)
promptly upon their becoming available, information regarding any and all
material changes or modifications 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 Books; Lender Right of Inspection. At all times keep, and
safely preserve, proper books, records and accounts in which full and true
entries will be made of all of the dealings, business and affairs of the
Borrower, in accordance with methods of accounting prescribed by the state
regulatory body having jurisdiction over the Borrower, or in the absence of such
regulatory body or such prescription, by the FCC or in accordance with generally
accepted accounting principles. Upon reasonable notice to the Borrower, the
Lender, through its representatives, shall at all times during reasonable
business hours have access to, and the right to inspect and make copies of, any
or all books, records and accounts, and any or all invoices, contracts, leases,
payrolls, canceled checks, statements and other documents and papers of every
kind belonging to or in possession of the Borrower and its Subsidiaries and
pertaining to the Borrower's and its Subsidiaries' property or business, for the
sole purpose of determining compliance by the Borrower of its obligations under
this Agreement.
6.04. Financial Covenants. To operate its business as to achieve on the
last day of each fiscal year ending December 31st, the thresholds set forth
below.
(a) Annual Operating Cash Flow: Borrower shall achieve Annual Operating
Cash Flow in amounts in excess of:
2000 N/A 2002 $ 6,482,000
2001 N/A 2003 $ 17,902,000
2004 and thereafter $ 29,015,000
(b) Minimum Population Coverage: Borrower shall design and build-out its
PCS network so that the area covered by the Borrower in its markets (including
network and wholesale markets) for which full service is available to
subscribers shall have a population equal to or greater than the numbers
established as of the calendar year-end set forth below as follows:
2000 2,904,000
2001 3,113,000
2002 and thereafter 3,129,000
(c) Wireless Subscribers: Borrower shall have total wireless subscribers
equal to or greater than the numbers established as follows:
2000 39,000 2002 102,000
2001 70,000 2003 134,000
2004 and thereafter 166,000
(d) Debt Service Coverage Ratio: Borrower shall achieve a DSC of an amount
that exceeds the ratio set forth below:
2000 N/A 2003 1.10:1.0
2001 1.0:1.0 2004 1.10:1.0
2002 1.0:1.0 2005 and thereafter 1.25:1.0
(e) Leverage Ratio: Borrower shall achieve a Leverage Ratio of an amount
not exceeding the ratio set forth below:
2000 N/A 2003 6.0:1.0
2001 N/A 2004 5.0:1.0
2002 10.0:1.0 2005 and thereafter 4.0:1.0
6.05. Annual Certificate. Within 120 days after the close of each calendar
year, commencing with the year in which the initial Advance hereunder shall have
been made, deliver to the Lender a written statement signed by the president,
chief executive officer or chairman stating that to the best of said person's
knowledge, the Borrower has fulfilled all of its Obligations under this
Agreement, the Note, and the Mortgage throughout such year or, if there has been
a default in the fulfillment of any such Obligations, specifying each such
default known to said person and the nature and status thereof.
6.06. Use of Proceeds. Use Advances made hereunder and under the Note only
for the purposes 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.
6.07. Special Affirmative Covenants. During the term hereof, Lender and its
counsel shall be fully satisfied that the Borrower has complied and will
continue to comply with any special affirmative covenants identified in Schedule
1 hereto.
7. NEGATIVE COVENANTS
7.01. Notice. Borrower covenants and agrees with the Lender that Borrower
will not, directly or indirectly, without giving written notice to the Lender
thirty (30) days prior to the effective date of any change:
(a) Change Location of Chief Executive Office. Change the location of the
Borrower's chief executive office.
(b) Change of Name. Change the name of Borrower.
7.02. Consent. Borrower covenants and agrees with the Lender that Borrower
and its Subsidiaries will not, directly or indirectly, without the prior written
consent of the Lender, or in the case of additional indebtedness pursuant to
Section 7.02(c) below, without the prior written consent of the Lender and the
Vendor:
(a) Control. Merge, consolidate, liquidate, alter or permit alteration of
control of the Borrower, except for those change of control events which are
contemplated by the Services Agreement. Control shall be as defined by
regulations for PCS companies issued by the FCC.
(b) Subsidiaries/Line of Business. Form or acquire any Subsidiaries or
engage in any other business besides that of the telecommunications business.
(c) Additional Indebtedness. Borrow money on a secured or unsecured 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;
provided, however, Borrower and its Subsidiaries may grant purchase money
secured indebtedness 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 ten percent (10%) of Borrower's
consolidated total assets. Borrower may enter into Leases incurred pursuant to
the Master Lease Agreement without prior written approval of Lender and the
Vendor.
(d) Material Contracts. Terminate, materially amend, modify or assign its
rights under the Purchase Agreement, the Tower Agreements, the Services
Agreement, the Management Agreement or any other material contracts or operating
agreements.
7.03 Dividends and Other Cash Distributions. The Borrower will not, in any
one fiscal year, without the prior approval in writing of the Lender (a) declare
or pay any dividends or make any other distribution to its members with respect
to its membership interests; (b) purchase or redeem or retire any of its
membership interests; or (c) pay any management fees other than those being paid
pursuant to the Services Agreement or pay any increase in management fees,
unless with respect to any of the foregoing (after giving effect to such
transaction) (1) (a) Borrower maintains a Current Ratio of not less than 1.25;
and (b) Borrower meets the Minimum Net Worth Test -or- (2) (a) Borrower
maintains a Current Ratio of not less than 1.25; (b) Borrower maintains a
minimum Net Worth to total assets of not less than twenty-five percent (25%) and
(c) the payment of such dividend, the making of such distribution, or the
purchase, redemption or retirement of such membership interests, individually or
in the aggregate, does not exceed twenty-five percent (25%) of the prior fiscal
year-end Cash Margins in any one fiscal year. Notwithstanding the foregoing, in
no event may the Borrower make such a distribution or payment (i) while the
guaranty from the Vendor Guarantor is in effect, or (ii) 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.
Further notwithstanding the foregoing, and notwithstanding anything to the
contrary contained in the Services Agreement, upon the occurrence of an Event of
Default hereunder which has not been cured within any applicable grace period,
Lender may, at its option, (i) restrict payments under the Services Agreement by
Bright PCS to Borrower to cost-based reimbursements upon five (5) days written
notice to Borrower and Bright PCS, or (ii) terminate the Services Agreement upon
thirty (30) days written notice to Bright PCS.
7.04. Limitations on Contracts; Deposits of Funds. The Borrower will not,
without the approval in writing of the Lender: (a) enter into any contract or
contracts (i) for management of its business or any substantial part thereof
other than the Services Agreement; (ii) for the operation or maintenance of all
or any substantial part of its property other than the Services Agreement, or
(iii) for the use by others of any of the Collateral in excess of $100,000;
provided, however, that such approval shall not be required for any contract
less than $100,000 which in form and substance substantially conforms with
contracts in general use in the Borrower's industry by companies of size and
character similar to Borrower or which substantially conform to contracts which
are currently in existence that Borrower is a party to; or (b) deposit any of
its funds, regardless of the source thereof, in any bank which is not insured by
the Federal Deposit Insurance Corporation or the successor thereof.
7.05. Limitations on Loans, Investments and Other Obligations. The Borrower
will not, without the written approval of the Lender, hereafter make any loan or
advance to, or make any investment in, or purchase or make any commitment to
purchase any stock, bonds, notes or other securities of, or guaranty, assume or
otherwise become obligated or liable with respect to the obligations of, any
person, firm or corporation, except (a) securities or deposits issued,
guaranteed or fully insured as to payment by the United States Government or any
agency thereof; (b) Subordinated Capital Certificates or other certificates and
securities of the Lender or of National Rural Utilities Cooperative Finance
Corporation; (c) investments and obligations of institutions whose senior
unsecured debt obligations are rated by at least two nationally recognized
ratings organizations in either of its two highest categories; and (d)
investments incidental to loans made by Lender.
7.06. Sale of Assets. The Borrower and any Subsidiary of the Borrower may
not, without prior written approval of the Lender, sell, lease or transfer any
Collateral unless the fair market value of such asset is less that $250,000 and
the aggregate value of assets sold, leased or transferred in any 12-month period
is less than $1,000,000. For purposes of this Section 7.06, Borrower may sell
those investments which are permitted in Section 7.05 above without obtaining
the prior written approval of Lender. Furthermore, Borrower may sell, lease or
transfer inventory, customer premise equipment and PABX equipment without
obtaining the prior written approval of Lender. The proceeds of such sale, lease
or transfer (other than the sale of handsets and accessories to retail
customers), less ordinary and reasonable expenses incident to such sale
transaction, must be (a) immediately applied as prepayment (subject to any
applicable prepayment fees) pro-ratably of the Note or any other notes by and
between Borrower and Lender (when permitted under the respective terms of each
loan agreement by and between Borrower and Lender); or (b) used to buy
replacement property as may be designated by Lender at the time of any such
prepayment; or (c) set aside as a deposit in an account selected by the
Borrower. Notwithstanding anything to the contrary herein, Borrower may not
sell, lease, partition or disaggregate any of its right, title or interest in
the PCS licenses, spectrum or service areas identified in the Recitals on page 1
hereto, without obtaining the prior written consent of Lender.
7.07. Special Negative Covenants. During the term hereof, Lender and its
counsel shall be fully satisfied that the Borrower has complied and will
continue to comply with any special negative covenants identified in Schedule 1
hereto.
8. EVENTS OF DEFAULT
The occurrence of any one or more of the following events shall constitute
an "Event of Default":
(a) Representation 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
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) Legal Existence. The Borrower shall forfeit or otherwise be deprived of
its company 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 ten percent (10%) of Borrower's consolidated 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 Vendor Guarantor 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 Vendor Guarantor shall commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, or under any such law, or consent to the appointment or taking of
possession by a receiver, liquidator, assignee, custodian or trustee, of a
substantial part of its property, or make any general assignment for the benefit
of creditors.
(g) Dissolution or Liquidation. Other than as provided in subsection (f)
above, the dissolution or liquidation of the Borrower or any Subsidiary or
Vendor Guarantor, or failure by the Borrower or any Subsidiary or Vendor
Guarantor promptly to forestall or remove any execution, garnishment or
attachment of such consequence as will materially 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.
(i) Vendor Guarantor Default. Default by the Vendor Guarantor in the
payment when due of any money owed to Lender under any guaranty between Lender
and Vendor Guarantor related to this Loan.
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 Section 8(b) for which Borrower shall be provided five
(5) days prior written notice, and Sections 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 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 or the Pledges in the manner, upon the conditions,
and with the effect provided in the Mortgage or the Pledges, including but not
limited to a suit for specific performance, injunctive relief or damages.
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 expenses, including actual attorney's fees and court costs, reasonably
incurred by the Lender in exercising or enforcing any of its rights hereunder or
under the Other Agreements, together with interest thereon at the rate and
determined in the manner provided in the Mortgage. Subject to the Mortgage and
applicable law, the Lender may apply all Collateral and proceeds of all
Collateral to the Obligations in any manner which the Lender, in its sole
discretion, deems appropriate, and Borrower will continue to be liable for any
deficiency.
9.04. Late Payment Charges. If payment of any principal and/or interest due
under the terms of the Note is not received at the office of the Lender in
Herndon, Virginia, or as the Lender may otherwise designate to the Borrower,
within such time period as the Lender may prescribe from time to time in its
policies in connection with any late payment charges, which in no event will be
less than five (5) days (such unpaid amount of principal and/or interest being
herein called the "delinquent amount" and the period beginning after such due
date until payment of the delinquent amount being herein called the
"late-payment period"), the Borrower will pay to the Lender, in addition to all
other amounts due under the terms of the Note, the Mortgage, and this Agreement,
any late-payment charge as may be fixed by the Lender from time to time, on the
delinquent amount for the late-payment period; provided, however, no late
payment charge shall exceed an amount equal to the then prevailing bank prime
rate published in the "Money Rates" column of the Eastern edition of the Wall
Street Journal plus three percent (3%) per annum on the delinquent amount
computed over the late-payment period on the basis of a 365-day year.
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, including but not limited to any monies owed by Lender
to Borrower as a result of Borrower's SCC investments. 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 reasonable discretion, but the Lender shall not be
obligated to, advance funds on behalf of Borrower without prior notice to
Borrower, in order to insure Borrower's compliance with any material covenant,
warranty, representation or agreement of Borrower made in or pursuant to this
Agreement or any of the Other Agreements, to preserve or protect any right or
interest of the Lender in the Collateral or under or pursuant to this Agreement
or any of the Other Agreements, including without limitation, the payment of any
insurance premiums or taxes and the satisfaction or discharge of any judgment or
any Lien upon the Collateral or other property or assets of Borrower; provided,
however, that the making of any such advance by the Lender shall not constitute
a waiver by the Lender of any Event of Default with respect to which such
advance is made nor relieve Borrower of any such Event or Default. Borrower
shall pay to the Lender upon demand all such advances made by the Lender with
interest thereon at the rate and determined in the manner provided in the Note.
All such advances shall be deemed to be included in the Obligations and secured
by the security interest granted the Lender hereunder to the extent permitted by
law.
10.02. Expenses and Filing Fees. Whether or not any of the transactions
contemplated hereby shall be consummated, Borrower agrees to pay to the Lender
at Closing or thirty (30) days after the execution and delivery hereof,
whichever is earlier, all expenses of the Lender in connection with the filing
or recordation of all financing statements and instruments as may be required by
the Lender at the time of, or subsequent to, the execution of this Agreement,
including, without limitation, all documentary stamps, recordation and transfer
taxes and other costs and taxes incident to recordation of any document or
instrument in connection herewith. Borrower agrees to save harmless and
indemnify the Lender from and against any liability resulting from the failure
to pay any required documentary stamps, recordation and transfer taxes,
recording costs, or any other expenses incurred by the Lender in connection with
this Agreement. The provisions of this Section 10.02 shall survive the execution
and delivery of this Agreement and the payment of all other Obligations.
10.03. Waivers by Borrower. Except for notices of non-payment or other
notices of default otherwise provided herein, 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. Absent bad faith or manifest error, 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 forty five (45) 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, the Mortgage, the Pledges or any of the Other Agreements,
and no consent to any departure by Borrower therefrom shall in any event be
effective unless the same shall be in writing, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for which
given. No notice to or demand upon Borrower in any case shall entitle Borrower
to any other or further notice or demand in the same, similar or other
circumstances.
10.07. Notices. All notices, requests and other communications provided for
herein including, without limitation, any modifications of, or waivers, requests
or consents under, this Agreement shall be given or made in writing (including,
without limitation, by telecopy) and delivered to the intended recipient at the
"Address for Notices" specified below; or, as to any party, at such other
address as shall be designated by such party in a notice to each other party.
Except as otherwise provided in this Agreement, all such communications shall be
deemed to have been duly given when personally delivered or, in the case of a
mailed or telecopied 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
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Loan 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 OBJECTION THAT IT MAY NOW OR HEREAFTER
HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT
AND ANY CLAIM THAT ANY SUCH PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM.
(c) EACH OF THE BORROWER AND THE LENDER HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY
IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
10.09. Holiday Payments. If any payment to be made by the Borrower
hereunder shall become due on a day which is not a Business Day, such payment
shall be made on the next succeeding Business Day and such extension of time
shall be included in computing any interest in respect of such payment.
10.10. Survival; Successors and Assigns. All covenants, agreements,
representations and warranties made herein and in the Other Agreements shall
survive Closing and the execution and delivery to the Lender of the Note, and
shall continue in full force and effect until all of the Obligations have been
paid in full. Whenever in this Agreement any of the parties hereto is referred
to, such reference shall be deemed to include the successors and assigns of such
party. All covenants, agreements, representations and warranties by or on behalf
of Borrower which are contained in this Agreement and the Other Agreements shall
inure to the benefit of the successors and assigns of the Lender.
10.11. Use of Terms. The use of any gender or the neuter herein shall also
refer to the other gender or the neuter and the use of the plural shall also
refer to the singular, and vice versa.
10.12. 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.
10.13. 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.
10.14. Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto on separate counterparts, each of
which, when so executed and delivered, shall be an original, but all such
counterparts shall together constitute one and the same instrument.
10.15. Headings. The headings and sub-headings contained in this Agreement
are intended to be used for convenience only and do not constitute part of this
Agreement.
10.16. 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 or
obligations under this Agreement or the Other Agreements without the prior
written consent of the Lender.
10.17. 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.
10.18. 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. Although Lender makes no representations, warranties
or assurances of future actions hereby, Lender currently retires patronage
capital in two different classes as follows: (a) Class One -- 70% of the
patronage capital is retired in cash shortly after the end of the year in which
it was allocated and (b) Class Two -- 30% of the patronage capital allocation is
retired on Lender's Board approved rotation cycle, which is currently 15 years.
10.19. 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.
10.20. Lender's Approval. Wherever prior written approval or consent of
Lender is required under the terms and conditions of this Agreement, Lender
hereby agrees to not unreasonably withhold or delay said approval.
10.21. Schedule 1. Schedule 1 attached hereto is an integral part of this
Agreement.
IN WITNESS WHEREOF, the parties hereto have executed or caused to be
executed this Agreement under seal as of the date first above written.
HORIZON PERSONAL COMMUNICATIONS, INC.
By:__________________________________
Title:_______________________________
(SEAL)
Attest:_____________________________
Title:______________________________
RURAL TELEPHONE FINANCE COOPERATIVE
By:__________________________________
(SEAL) Title: Assistant Secretary-Treasurer
Attest:_____________________________
Assistant Secretary-Treasurer
SCHEDULE 1
1. The "Commitment" shall mean $40,500,000.
2. The "Mortgage" defined in Section 1 is the Restated Mortgage and Security
Agreement by and between Borrower and Lender dated as of even date
herewith.
3. The months relating to the Payment Date are March, June, September and
December.
4. In accordance with Section 2.03, the Loan shall amortize quarterly as
follows: (a) interest only for four (4) years, followed by (b) principal
payments due in equal quarterly installments, plus accrued interest, based
on the following schedule:
Quarter Year Percent [%] of Principal
Paid per Quarter/Year
17-20 5 2.50%/10.0%
21-24 6 3.75%/15.0%
25-28 7 3.75%/15.0%
29-32 8 5.00%/20.0%
33-36 9 5.00%/20.0%
37-40 10 5.00%/20.0%
5. The amount referred to in Section 2.05 is $2,025,000.
6. The chief executive office of the Borrower referred to in Section 4.12 is
00 Xxxx Xxxx Xxxxxx, Xxxxxxxxxxx, XX 00000.
7. The government authorities referred to in Section 4.13 are the FCC.
8. The special conditions referred to in Section 5.06 are as follows:
A. Prior to the initial Advance of any funds hereunder, Lender shall
receive in form and substance reasonably satisfactory to Lender,
copies of the following:
(i) All management, maintenance, service and other material
agreements executed by Borrower, including but not limited to (a)
the Purchase Agreement, (b) the Tower Agreements, (c) the
Services Agreement, (d) the Management Agreement, (e) the
Reimbursement and Security Agreement by and between Borrower and
Vendor executed and delivered in connection with this Loan and
(f) the Subordination Agreement(s) with Vendor executed and
delivered in connection with this Loan.
(ii) Borrower's filed Articles of Incorporation and By-Laws;
(iii)The revised equity subscription and tax sharing agreements
between Borrower and Horizon Telcom, Inc.. All of the equity
subscription and tax sharing agreements must have terms and
conditions reasonably satisfactory to Lender.
(iv) Amendments to the Management Agreement to include the additional
markets in Tennessee and the Wholesale Markets, and all other
material management and service agreements with other entities;
(v) A Consent and Agreement by and between Borrower, Sprint PCS,
Lender, and Vendor; and
(k) Evidence that each Pledgor has received all necessary regulatory,
creditor and third party approvals and consents to the pledge of
the collateral described in the respective Pledge Agreements.
(l) A fully executed modification agreement, in form and substance
satisfactory to Lender, amending the August 29, 1997 Loan
Agreement by and between Borrower and Lender (designated OH
803-A-01), modifying the financial covenant provisions in that
agreement so that they conform to the financial covenant
provisions of this Agreement.
B. On or prior to the date of the initial Advance under the Loan,
Borrower shall have entered into a revised equity subscription
agreement with Horizon Telcom, Inc., in form and substance
satisfactory to Lender, that provides for additional common equity
capital contributions in the minimum amounts set forth below opposite
the corresponding date.
Date Amount
At closing $15,106,203
December 31, 2000 1,500,000
December 31, 2001 1,000,000
December 31, 2002 1,000,000
The revised equity subscription agreement shall also provide that it
may not be modified, transferred, or terminated by either party
without Lender's prior written consent and the Lender shall be named
as a third party beneficiary with regard to enforcing payments under
that agreement.
C. On or prior to the date of the initial Advance under the Loan,
Borrower shall have entered into a revised tax sharing agreement with
Horizon Telcom, Inc., in form and substance satisfactory to Lender,
that provides for the pass through to Borrower of tax benefits as cash
payments equal to the lesser of (i) the amounts set forth below
opposite the corresponding date, or (ii) a positive dollar amount
equivalent to 34% of the Borrower's book net loss.
Date Amount
December 31, 2000 $4,522,000
December 31, 2001 $4,619,000
December 31, 2002 $1,196,000
To the extent that Borrower and/or Guarantor do not have final net
income calculations by December 31st of any given year, such parties
shall use their best efforts to provide an estimated cash payment in
accordance with the above schedule by December 31st of said year;
thereafter, based on the latest available tax information but in no
event later than March 31st of the following year, a "true-up"
calculation shall be made whereby Guarantor shall provide Borrower an
additional cash payment in accordance with the above schedule (if the
December 31st contribution was underestimated) or Borrower at
Guarantor's option shall provide Guarantor a refund payment (if the
December 31st contribution was overestimated). Notwithstanding the
timing of any true-ups and whenever the years final tax return is
filed, Guarantor shall continue to be liable for any necessary
payments in accordance with the above schedule.
The revised tax sharing agreement shall also provide that it may not
be modified, transferred, or terminated by either party without
Lender's prior written consent and the Lender shall be named as a
third party beneficiary with regard to enforcing payments under that
agreement.
D. The initial Advance of funds shall be used as follows: (i) to fully
repay the outstanding principal balance on Horizon Telcom, Inc.'s RTFC
line of credit designated OH 802-S-02 and immediately thereafter that
line of credit shall be terminated and no further advances shall occur
thereunder; (ii) to fully repay the outstanding principal balance on
Borrower's RTFC interim financing line of credit designated OH
803-9901 and immediately thereafter that line of credit shall be
terminated and no further advances shall occur thereunder; and (iii)
to fully repay all outstanding advances used to fund PCS construction
expenditures under Borrower's RTFC line of credit designated OH
803-5102.
E. Borrower shall submit to Lender copies of the Master Site Agreement
and each SLA executed and delivered in connection therewith. The
Master Site Agreement shall be in form and content reasonably
satisfactory to Lender, shall cover a term of at least ten (10) years
(with extension options) and have assignability and equipment removal
provisions for the benefit of Lender and its assignees, or otherwise
be pre-approved by Lender.
F. Borrower shall submit to Lender copies of its Cell Site Agreements.
Such Cell Site Agreements shall be in form and content reasonably
satisfactory to Lender, and at all times 90% of said Cell Site
Agreements, when taken together with the SLAs, shall cover a term of
at least 10 years and have assignability and equipment removal
provisions for the benefit of Lender and its assignees, or otherwise
be pre-approved by Lender.
G. Borrower shall adopt and maintain the calendar year as its fiscal
year.
H. All advances must be pre-approved in writing by Vendor.
I. At no time shall the amount of Borrower's fixed rate debt under this
Loan exceed 50% of the total RTFC Commitment Amount.
9. The purposes referred to in Section 6.06 are as follows:
A. to finance PCS infrastructure costs;
B. to fund up to $164,057 of working capital; and
C. to purchase up to $2,025,000 of SCCs.
10. The special affirmative covenants referred to in Section 6.07 are:
A. Borrower shall make annual prepayments under the loan within 120 days
of the close of the Borrower's fiscal year in an amount equal to 50%
of Excess Cash Flow (defined as audited net cash flow from operations
less budgeted capital expenditures less budgeted principal payable on
all short and long term debt with budgeted figures coming from
Borrower's operating and capital budgets for such next fiscal year)
beginning at RTFC's option once Borrower's audited fiscal year-end
EBITDA is greater than zero. The required prepayments shall be applied
in inverse order of maturity and shall not be subject to a fee or
premium as long as the amount bears the variable interest rate.
B. Cumulative advances shall remain within certain percentages of the
Vendor equipment purchases as shown below:
Maximum Ratio of Loan Advances
to Equipment Purchases
Year Maximum Percentage
1 180%
2 170%
3 160%
4 and thereafter 150%
C. Borrower shall make every effort to fully repay its indebtedness to
First Union Investors, Inc. pursuant to the Bridge Note Purchase
Agreement dated February 15, 2000 (the "First Union Loan") with
proceeds from equity investments in excess of the amounts required
under section 8B above from either private or public investors on or
prior to the maturity date of the First Union Loan.
11. The special negative covenants referred to in Section 7.07 are: None.
12. The address of Borrower referred to in Section 10.07 is XX Xxx 0000, 00
Xxxx Xxxx Xxxxxx, Xxxxxxxxxxx, XX 00000 with copies of notices to Borrower
also to be sent to Arnall Golden & Xxxxxxx, LLC. Attention: Xxx Xxxxxxx,
Esq..
EXHIBIT A
Form of Requisition
RTFC Loan No. OH 000-0000
Date
Rural Telephone Finance Cooperative
Woodland Park
0000 Xxxxxxxxxxx Xxx
Xxxxxxx, XX 00000-0000
Attention: Telco Team
RE: Request for Loan Funds; RTFC Loan No. OH 803-9002, Request #____
Gentlemen:
Reference is made to that certain Loan Agreement designated OH 803-9002 dated as
of ______________, 2000 (the "Loan Agreement") by and between Horizon Personal
Communications, Inc. ("Horizon" or "Borrower") and Rural Telephone Finance
Cooperative ("RTFC" or "Lender"). Capitalized terms used but not defined herein
are defined in the Loan Agreement.
Pursuant to the Loan Agreement, the undersigned hereby requests an Advance in
the amount of $____________ under the Loan, of which 5% (rounded to the nearest
dollar) or $_________ is to be used for payment of RTFC Subordinated Capital
Certificates.
* For funds transfer to Motorola, Inc. ("Motorola"): [The cash portion of the
Advance is to be used for payment of outstanding invoices from Motorola, which
are summarized in the attached supporting documents. These funds should be
remitted to Motorola by bank wire transfer based on the following wiring
instructions:
Bank: First Chicago NBD Bank, Chicago, IL
Bank ABA No.: 000000000
Credit: Motorola, Inc.
Account No.: 0000000
Bank wire transfer confirmation and account verification may be obtained by
contacting ___________ at (000) 000-0000.]
* For funds transfer to Horizon: [The cash portion of the Advance is to be used
for payment of non-Motorola related expenditures as summarized in the attached
supporting documents. These funds should be remitted to Horizon by bank wire
transfer based on the following wiring instructions:
* Select appropriate paragraph
Bank:
Bank ABA No.:
Credit: Horizon Personal Communications, Inc.
Account No.:
Bank wire transfer confirmation and account verification may be obtained by
contacting ___________ at (_____) ______________]
In connection with the proposed Advance hereunder and pursuant to the terms of
the Loan Agreement, the Borrower hereby certifies that as of the date hereof:
(a) Proceeds of the Advance are to be used solely for the purposes set
forth in the Loan Agreement;
(b) Including this Advance, the total principal amount outstanding under
the Loan does not exceed the limits set forth in Section 10(B) of
Schedule 1 of the Loan Agreement as to percentage of the price of the
total products and services supplied by Motorola to Horizon pursuant
to the PCS Infrastructure Sale and Purchase Agreement by and between
Motorola and Borrower (show compliance by attaching confirming
schedule);
(c) No Event of Default and no event that, with the lapse of time or
notice and the lapse of time would become such an Event of Default,
has occurred;
(d) Borrower is in compliance with all terms of the Loan Agreement, the
Mortgage and all other agreements executed with RTFC;
(e) Borrower is in compliance with all terms of the Reimbursement and
Security Agreement executed with Motorola; and
(f) 90% of all Cell Site Agreements, when taken together with the SLAs,
conform to the minimum provisions of the Loan Agreement or have
otherwise been pre-approved by RTFC and Motorola.
Certified this __ day of ___________, 200__.
HORIZON PERSONAL COMMUNICATIONS, INC.
By:________________________________________
Its:_______________________________________
[Signatures continued on following page]
Acknowledged by Motorola this _____ day of ______________, 2000, solely for the
purpose of verifying that the total principal amount outstanding under the Loan
does not exceed the limits set forth in Section 10(B) of Schedule 1 of the Loan
Agreement as to percentage of the price of the total products and services
supplied by Motorola to Horizon pursuant to the PCS Infrastructure Sale and
Purchase Agreement by and between Motorola and Borrower. This acknowledgment is
in no way intended to expand Motorola's obligations under that certain Guaranty
dated as of ___________, 2000 executed by Motorola in favor of RTFC, or to
attest to the accuracy of Borrower's certifications set forth herein.
MOTOROLA, INC.
By:________________________________________
Its:_______________________________________
