EXHIBIT 10.13
LOAN AGREEMENT
LOAN AGREEMENT ("Agreement") made as of January 16th, 1998, by and
between MEBTEL, INC., a North Carolina corporation ("Borrower"), and RURAL
TELEPHONE FINANCE COOPERATIVE, a South Dakota cooperative association
("Lender").
RECITALS
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:
1. CONSTRUCTION AND DEFINITION OF TERMS
All accounting terms not specifically defined herein shall have the
meanings assigned to them as determined by generally accepted accounting
principles. In addition to the terms defined elsewhere in this Agreement, unless
the context otherwise requires, when used herein, the following terms shall have
the following meanings:
"Adjustment Date" shall mean the last date of the term (or rate period) of
the applicable Fixed Rate, after the date of the initial Advance to the Maturity
Date.
"Advance" shall mean an advance as defined in Section 2.02.
"Business Day" shall mean any day that Lender is open for business.
"Cash Margins" for any year shall mean net income plus depreciation,
amortization and any other non-cash charges, less any non-cash credits and
principal on long-term debt payable in such year, as calculated on a
consolidated basis for Borrower and all its Subsidiaries.
"Certified" shall mean that the information, statement, schedule, report or
other document required to be "Certified" shall contain a representation of a
duly authorized 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.
"Commitment" shall have the meaning set forth in Schedule 1 hereto.
"Debt Service Coverage Ratio" or "DSC" for any year shall mean (a) total
net income or margins plus depreciation and amortization expense and interest on
long-term debt for such year, divided by (b) principal and interest on long-term
debt payable in such year, as calculated on a consolidated basis for the
Borrower and all its Subsidiaries.
"Event of Default" shall mean any of the events described in Section 8
hereof.
"Fixed Rate" shall mean the interest rate per annum provided for in Section
2.03 of this Agreement, plus 50 basis points (or plus 25 basis points beginning
on the January 1st immediately following the fiscal year-end in which Borrower
achieves a Leverage Ratio of 3.0 or less).
"Leases" shall mean any lease of property by which Borrower shall be
obligated for rental or other payments which in the aggregate for any fiscal
year are in excess of $100,000 other than such equipment leases which are in
form and substance substantially in conformity with lease agreements in general
use in Borrower's industry by companies of size and character similar to
Borrower.
"Leverage Ratio" for any year shall mean (a) total long- and short-term
debt payable during such year divided by (b) the sum of : (i) total net income
or margins, (ii) income taxes, (iii) interest expense payable on long-term debt
for such year, (iv) depreciation and amortization expense where pre-tax income
or loss excludes any extraordinary gains, (v) the write-up of any asset, (vi)
any investment income or losses, as measured on a consolidated basis for
Borrower and all its Subsidiaries and (vii) payments made to Xxxx XxXxxxx Xxxxxx
pursuant to his employment agreement with the Borrower.
"Lien" shall mean any statutory or common law consensual or non-consensual
mortgage, pledge, security interest, encumbrance, lien, right of set-off, claim
or charge of any kind, including, without limitation, any conditional sale or
other title retention transaction, any lease transaction in the nature thereof
and any secured transaction under the Uniform Commercial Code of any
jurisdiction.
"Loan" shall mean the loan by the Lender to Borrower, pursuant to this
Agreement and the Note, in an aggregate principal amount not to exceed the
Commitment.
"Make-Whole Premium" shall mean the excess, if any, of (i) the present
value of the amount of interest that would have accrued during the applicable
Fixed Rate period on that portion of the Loan to be prepaid or converted over
(ii) the present value of the amount of interest Lender would earn if that
portion of the Loan to be prepaid or converted was reinvested for the remainder
of the applicable Fixed Rate period in U.S. Treasury obligations with a maturity
comparable to the remaining term of the applicable Fixed Rate period. For
purposes of calculating the present value in (i) and (ii) above, the discount
rate will be the rate of interest accruing on the U.S. Treasury obligations in
(ii) above.
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"Material Adverse Effect" shall mean any event or circumstance which, in
Lender's reasonable discretion, has a material and adverse effect upon the
business, operations, assets or properties or financial condition of the
Borrower and its Subsidiaries, taken as a whole.
"Maturity Date" shall mean the maturity date defined in the Note.
"Minimum Net Worth Test" shall be calculated on a consolidated basis for
the Borrower and all its Subsidiaries, and shall mean an equity to total asset
ratio of at least forty percent (40%). Equity shall be determined by subtracting
total liabilities from total assets.
"Mortgage" shall mean the mortgage and security agreement described in
Schedule 1.
"Net Worth" shall be calculated on a consolidated basis for the Borrower
and all its Subsidiaries taken as a whole and arrived at by subtracting total
liabilities from total assets.
"Note" shall mean the Note executed and delivered by Borrower at or prior
to Closing pursuant to Subsection 5.02(a) hereof, and all renewals, replacements
and extensions thereof.
"Obligations" shall include the full and punctual performance of all
present and future duties, covenants and responsibilities due to the Lender by
Borrower under this Agreement, the Note, the Other Agreements, all present and
future obligations of Borrower to the Lender for the payment of money under this
Agreement, the Note, the Other Agreements, extending to all principal amounts,
interest, late charges and all other charges and sums, as well as all costs and
expenses payable by Borrower under this Agreement, the Note, the Other
Agreements, 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 and executed and/or delivered pursuant to this Agreement or
guaranteeing, securing or in any other manner relating to any of the
Obligations, including, the instruments and documents referred to in Subsection
5.02 hereof.
"Payment Date" shall mean the last day of each of the months referred to in
Schedule 1 hereto.
"Payment Notice" shall mean the notice furnished to the Borrower at least
quarterly indicating the precise amount of principal and/or interest due on the
next ensuing Payment Date, such notice to be sent to the Borrower at least ten
(10) days before such Payment Date.
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"Person" shall include natural persons, corporations, associations,
partnerships, joint ventures, trusts, governments and agencies and departments
thereof, and every other entity of every kind.
"Subordinated Capital Certificate" or "SCC" shall mean a subordinated
certificate representing an investment in the Lender purchased by the Borrower
in connection with the Loan.
"Subsidiary" at any time means any entity which is at the time beneficially
owned or controlled directly or indirectly by the Borrower, by one or more such
entities or by the Borrower and one or more such entities.
"Termination Date" shall mean that date which is two (2) years from the
date hereof.
"Times Interest Earned Ratio" or "TIER" for any year shall mean (a) total
net income or margins plus income taxes plus interest payable on long-term debt
for such year, divided by (b) interest on long-term debt payable in such year,
as measured on a consolidated basis for the Borrower and all its Subsidiaries.
"Total Plant" shall be calculated on a consolidated basis for the Borrower
and all its Subsidiaries and shall mean the total of all assets included in
property, plant and equipment pursuant to generally accepted accounting
principles and shall exclude any goodwill or plant acquisition adjustments.
"Variable Rate" shall mean the variable rate established by the Lender from
time to time for loans similarly classified pursuant to Lenders policies and
procedures then in effect, plus 50 basis points (or plus 25 basis points
beginning on the January 1st immediately following the fiscal year-end in which
Borrower achieves a Leverage Ratio of 3.0 or less).
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. The Borrower shall give
the Lender at least one Business Day prior written notice of the date on which
each Advance is to be made. On the Termination Date the Lender may stop
advancing funds and reduce the Commitment to the aggregate amount theretofore
advanced. The obligation of the Borrower to repay the Advances shall be
evidenced by the Note.
2.03 Payment, Amortization and Interest Rate.
(a) Payment. The Borrower shall pay on each Payment Date quarterly
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installments, in an amount as determined by the Lender, of principal and/or
interest as shown in the Payment
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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 on
the date which is one-year after the first full quarter following the initial
Advance of funds as set forth in Schedule 1 and on each subsequent Payment Date
until the Maturity Date or such earlier date as all amounts due hereunder and on
account of the Note shall have been paid in full. Payment of interest hereunder
is due on each Payment Date in which a principal balance is outstanding.
Principal will be amortized in accordance with the method stated in Schedule 1
hereto.
The Lender will use, for purposes of calculating the amortization of principal,
one of the following interest rates, as applicable:
(i) If the Borrower elects the Fixed Rate, the Fixed Rate in effect
on the Adjustment Date; or
(ii) If the Borrower elects the Variable Rate, the Variable Rate in
effect when amortization begins; or
(iii) If the Borrower elects to convert from one interest rate program
to another pursuant to the provisions hereunder, the interest
rate then in effect for the elected program.
At the 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
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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.
(i) Variable Rate. If Advances are made at the Variable Rate, it
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shall apply until the Maturity Date, except as provided herein
below.
(ii) Fixed Rate. If the Borrower elects a Fixed Rate, such Fixed Rate
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as is available and in effect for loans similarly classified
pursuant to Lender's policies and procedures there 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
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Fixed Rate shall apply to that portion of the outstanding
principal balance of the Loan elected to have a Fixed Rate from
the Adjustment Date until a new Adjustment Date or the Maturity
Date. If Borrower does not elect to reset the Fixed Rate, the
Variable Rate shall apply to the outstanding principal balance of
the Loan that had been bearing interest at the Fixed Rate prior
to such Adjustment Date, from such Adjustment Date to the
Maturity Date.
(iii) Conversion to Different Interest Program.
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(A) Variable Rate to Fixed Rate. Subject to the conditions set forth
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herein, the Borrower may convert from the Variable Rate to the
Fixed Rate for any portion or all of the principal amount of the
Commitment then outstanding at any time provided the Lender
offers a Fixed Rate at such time for similarly classified loans.
(B) Fixed Rate to Variable Rate. The Borrower may convert from a
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Fixed Rate to the Variable Rate: (1) on an Adjustment Date or (2)
at any other time, provided that the Borrower shall pay Lender
any applicable Make-Whole Premium.
2.04 Prepayment. In the event the Borrower prepays all or part of the
Loan, the Borrower shall pay any prepayment fee required pursuant to the terms
of this Section 2.04. 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. If the Loan bears interest at the Variable Rate the Borrower may prepay
the Loan or any portion thereof, as the case may be, at any time subject to the
terms hereof and said prepayment fee shall be in an amount equal to fifty (50)
basis points times the amount being prepaid. If the Loan bears interest at the
Fixed Rate, the Borrower may prepay the Loan only on an Adjustment Date or any
such other date provided that the Borrower shall pay a prepayment fee in an
amount equal to fifty (50) basis points times the amount being prepaid plus any
applicable Make-Whole Premium (which Make-Whole Premium shall only be paid to
the extent any Fixed Rate Loan is prepaid on any date other than an Adjustment
Date). Notwithstanding anything to the contrary herein, if Borrower shall make a
permitted prepayment pursuant to the terms hereto, then, upon Borrower's
request, Lender shall reamortize the Loan pursuant to the method of amortization
designated in Section 2.03 (a).
2.05 5% Subordinated Capital Certificate. 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
either: (1) 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, or
(2) by making payments with Borrower's own funds in twenty (20) equal quarterly
installments, commencing on the first Payment Date following the initial
Advance. If the Borrower elects to pay for SCCs other than from Loan funds, the
amount of the Commitment
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will be correspondingly reduced by said amount when the SCCs are fully paid. If
the Borrower obtains Advances hereunder other than for the purpose of purchasing
SCCs and fails to pay for the SCCs, then the Lender may make Advances for the
account of the Borrower to purchase the SCCs. The Lender agrees to deliver the
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 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. 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, except to
the extent such lack of qualification would not have a Material Adverse Effect.
4.02 Authority. Borrower has corporate power and authority to enter into
this Agreement and the Mortgage, to make the borrowing hereunder, to execute and
deliver all documents and instruments required hereunder and to incur and
perform the obligations provided for herein, in the Mortgage, and in the Note,
all of which have been duly authorized by all necessary and proper corporate and
other action, and no consent or approval of any person, including, without
limitation, stockholders and members of Borrower and any public authority or
regulatory body, which has not been obtained is required as a condition to the
validity or enforceability hereof or thereof.
4.03 Binding Agreement. This Agreement has been duly and 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
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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 material provision of
law, any order, rule or regulation of any court or other agency of government,
any material award of any arbitrator, the charter or by-laws of Borrower, or any
indenture, contract, agreement, mortgage, deed of trust or other instrument to
which Borrower is a party or by which it or any of its property is bound; or (b)
be in conflict with, result in a breach of or constitute (with due notice and/or
lapse of time) a default under, any such material 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 a Material Adverse
Effect, 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 could reasonably
be expected to have a Material Adverse Effect.
4.06 Financial Condition. The financial statements of Borrower as at the
date set forth in Schedule 1 hereto, heretofore delivered to the Lender, are
complete and correct in all material respects, fairly present the financial
condition of Borrower and have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis. There are no
material liabilities of Borrower, direct or indirect, fixed or contingent, as of
the date of such statements which are not reflected therein. There has been no
material adverse change in the financial condition or operations of the Borrower
from that set forth in said financial statements except changes previously
disclosed in writing to the Lender prior to the date hereof.
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 has good and marketable title to all of
its real properties and owns all of its other properties and assets free and
clear of any liens, except (i) the lien of the Mortgages and taxes or
assessments not yet due; (ii) deposits or pledges to secure payment of workmen's
compensation, unemployment insurance, old age pensions or other social security;
(iii) deposits or pledges to secure performance of bids, tenders, contracts
(other than contracts for the payment of borrowed money), leases, public or
statutory obligations, surety or appeal bonds, or other deposits or pledges for
purposes of like general nature in the ordinary course of business, and (iv)
easements, rights of way, zoning and similar restrictions and encumbrances not
interfering with the ordinary conduct of the business of Borrower and which
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do not detract materially from the value of such property or asset to which they
attach or impair materially Borrower's use thereof or materially adversely
affect Lender's lien thereon.
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 its property and business that are required by federal, state and local
laws of the jurisdictions in which Borrower conducts its business and each
remains valid and in full force and effect except to the extent the failure to
hold such licenses, permits, certifications or approvals or the lack of validity
of the foregoing could not, in each case, be reasonably expected to have a
Material Adverse 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 material indebtedness of Borrower
owing to any employee, officer, stockholder or director of the board of Borrower
other than accrued salaries, commissions and the like and any indebtedness
subordinated to the Obligations pursuant hereto.
4.12 Location of Office. The chief place of business of the 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 Subsidiary.
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 or otherwise waived by
the Lender:
5.01 Legal Matters. All legal matters incident to the consummation of the
transactions hereby contemplated shall be satisfactory to counsel for the Lender
and to such local counsel as counsel for the Lender may retain.
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5.02 Documents. There shall have been delivered to the Lender, fully
completed and duly executed (when applicable), the following, satisfactory to
the Lender and its counsel:
(a) This Agreement and the Note.
(b) Certified copies, satisfactory to the Lender, of all such
corporate documents and proceedings of the Borrower authorizing
the transactions herein contemplated.
(c) A written opinion from Borrower's counsel addressing such legal
matters as the Lender or its counsel shall reasonably require.
(d) The Borrower shall have (i) executed the Mortgage(s); (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.
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 notice and lapse
of time specified in Section 8 would become such an Event of Default, shall have
occurred and be continuing or will have occurred after giving effect to the
Advance on the books of the Borrower; there shall have occurred no material
adverse changes in the business or condition, financial or otherwise, of the
Borrower; and nothing shall have occurred which in the opinion of the Lender
materially and adversely affects the Borrower's ability to meet its obligations
hereunder.
5.05 Special Conditions. At Closing and at the time of every subsequent
Advance hereunder, the Lender and its counsel shall be fully satisfied that the
Borrower has complied and will continue to comply with any special conditions
identified in Schedule 1 hereto.
5.06 Requisitions. The Borrower will request Advances in form and
substance satisfactory to the Lender. Pursuant to the terms and conditions
hereof, the Lender will wire the proceeds of the requested Advance to an account
as directed by the Borrower.
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6. AFFIRMATIVE COVENANTS
Borrower covenants and agrees with the Lender that, until all of the
Obligations have been paid in full, Borrower will:
6.01 Membership. Remain or an affiliate thereof will remain, a member in
good standing of the Lender.
6.02 Financial Statements and Other Information. Furnish to the Lender: (a)
financial statements as required by the Mortgage; (b) such other information,
reports or statements concerning the operations, business affairs and/or
financial condition of Borrower as the Lender may reasonably request from time
to time; and (c) promptly upon their becoming available information, in form and
substance satisfactory to Lender, of any and all material changes or
modification of licenses, permits, certifications, approvals and the like
necessary for Borrower to own or operate its business or a substantial part of
its business.
6.03 Financial Ratios. Subject to applicable laws and rules and orders of
regulatory bodies, and to events which in the reasonable judgment of the Lender
are beyond the control of the Borrower, so operate and manage its business as to
achieve minimum annual DSC and TIER Ratios, and a maximum annual Leverage Ratio,
in the following amount in each case as of the last calendar day of any fiscal
year:
Period Minimum Minimum DSC Maximum
TIER Ratio Leverage Ratio
Requirement Requirement
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1998 N/A N/A 6.5
1999 1.25 1.10 6.0
2000 1.50 1.25 5.5
2001 1.50 1.35 5.0
2002-Maturity Date 1.50 1.50 4.5
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6.04 Annual Certificate. Within one hundred twenty (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 general manager 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.
6.05 Use of Proceeds. Use Advances made hereunder and under the Note only
for the purpose identified in Schedule 1 hereto and for the payment of the
costs, expenses and fees
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incident to this Agreement and for no other purpose
whatsoever without the prior written consent of the Lender.
6.06 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.
6.07 Mortgage Filing. Within thirty (30) days of acquiring any real
property, the Borrower shall cause a mortgage and security agreement,
substantially in the form of the Mortgage to be duly recorded as a first
mortgage on all such real property and such mortgage and security agreement or
other appropriate documentation shall have been duly filed, recorded or indexed
as a security interest in personal property wherever the Lender shall have
reasonably requested, all in accordance with applicable law, and the Borrower
shall have caused satisfactory evidence thereof to be furnished to the Lender.
7. NEGATIVE COVENANTS.
7.01 Notice. Borrower covenants and agrees with the Lender that 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 Place of Business. Change location of
------------------------------------------
the Borrower's chief place of business.
(b) Change of Name. Change the name of Borrower.
--------------
7.02 Consent. Borrower covenants and agrees with the Lender that Borrower
will not, directly or indirectly, without the prior written consent of the
Lender (such consent not to be unreasonably withheld):
(a) Control. Alter or permit alteration of control of the Borrower.
-------
Control shall be as defined by regulations for telephone
companies issued by the Federal Communications Commission
("FCC").
(b) Subsidiaries. Form or acquire any Subsidiaries.
------------
(c) Additional Indebtedness. Borrow money on a secured or unsecured
-----------------------
basis from any other lender or incur any additional secured or
unsecured indebtedness (other than indebtedness incurred under
and pursuant to the Secured Revolving Line of Credit Agreement,
dated as of the date hereof, between Borrower and Lender, as the
same may be amended, restated, supplemented or otherwise modified
from time to time); or enter into or allow any of its
Subsidiaries to enter into any Leases, unless at that time
Borrower meets the Minimum Net Worth Test; provided, however,
-------- -------
Borrower and its Subsidiaries, may grant purchase money secured
indebtedness or incur unsecured trade debt or pay other current
operating
12
liabilities that arise in the ordinary course of business so long
as the aggregate total of such debt does not exceed five percent
(5%) of Borrower's consolidated total assets. If Borrower meets
the Minimum Net Worth Test, then Borrower and its Subsidiaries
may incur additional indebtedness or enter into Leases without
prior written approval of Lender as provided in the foregoing
sentence, provided the Borrower meets the Minimum Net Worth Test
--------
after incurring such additional indebtedness or entering into
such Leases; provided, further, however, Borrower
-------- ------- -------
must give at least thirty (30) days written notice to Lender
prior to incurring any additional indebtedness or entering into
any such Leases which exceed five percent (5%) of Borrower's
consolidated total assets.
7.03 Dividends and Other Cash Distributions. The Borrower Will not, in any
one calendar year, without the prior approval in writing of the Lender (i)
declare or pay any dividends or make any other distribution to its stockholders
with respect to its capital stock; (ii) purchase or redeem or retire any of its
capital stock; or (iii) increase the management fee factor above the management
fee factor contained in the Mebcom Communications Financial Model dated November
25, 1997, unless with respect to any of the foregoing (after giving effect to
such transaction) Borrower meets the Minimum Net Worth Test, and the payment of
such dividend, the making of such distribution, or the purchase, redemption or
retirement of such stock, individually or in the aggregate, does not exceed
fifty percent (50%) of the prior fiscal year-end Cash Margins in any one
calendar year. In no event may the Borrower make any such distribution or
payment when there is unpaid any due installment of principal and/or interest on
the Note or if the Borrower is otherwise in material default of any provision of
this Agreement or would be in material default hereunder as a result of such
distribution or payment.
7.04 Special Negative Covenants. During the term hereof, Lender and its
counsel shall be fully satisfied that the Borrower has complied and will
continue to comply with any special negative covenants identified in Schedule 1
hereto.
7.05 Limitations on Loans, Investments and Other Obligations:
(a) The Borrower shall not, without first obtaining the written approval
of Lender, (i) purchase or make any commitment to purchase any stock,
bonds, notes, debentures or other securities or obligations of or
beneficial interest in, (ii) make any other investment in, (iii) make
any loan to, or (iv) guarantee, assume, or otherwise become liable for
any obligation of, any corporation, association, partnership, joint
venture, trust, government or any agency or department thereof, or any
other entity of any kind if the aggregate amount of all such
purchases, investments, loans and guarantees exceeds in any twelve
(12) month period the greater of ten percent (10%) of Total Plant or
thirty percent (30%) of Net Worth.
(b) The following shall not be included in the limitation on purchases
investments, loans and guarantees in (a) above: (i) bonds, notes,
debentures, stock, or other securities or obligations issued by or
guaranteed by the United States government or any
13
agency or instrumentality thereof; (ii) bonds, notes, debentures, stock,
commercial paper, subordinated capital certificates, or other security or
obligation of institutions whose senior unsecured debt obligations are
rated by at least two nationally recognized rating organizations in either
or its two highest categories; (iii) investments incidental to loans made
by RTFC; (iv) bonds, notes, debentures, commercial paper or any other
security of the National Rural Utilities Cooperative Finance Corporation;
and (v) any deposit that is fully insured by the Federal Government.
7.06 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 part thereof (except in
connection with any management contract for which the fees are permitted by
Section 7.03 above); (ii) for the operation or maintenance of all or any
substantial part of its property, (iii) for the use by others of any of the
Mortgaged Property in excess of $100,000; or (iv) with other companies;
provided, however, that such approval shall not be required for any contract
----------
which in form and substance substantially conforms with contracts in general use
in the Mortgagors industry by companies of size and character similar to
Mortgagor or which substantially conform to contracts which are currently in
existence that Mortgagor is a party to; or (b) except as permitted by Section
7.05 above, 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.
7.07 Preservation of Corporate Existence and Franchises; Compliance with
Laws; Limitations on Mergers, Transfers and Purchases: The Mortgagor will at all
times, so long as any of the Notes shall be outstanding, take or cause to be
taken all such action as from time to time may be necessary to preserve its
corporate existence and to preserve and renew all franchises, rights of way,
easements, permits and licenses necessary to the conduct of its business, and
will materially comply with all valid laws, ordinances, regulations and
requirements applicable to it or its property.
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.
14
(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) Corporate Existence. The Borrower shall forfeit or otherwise be deprived
of its corporate charter, franchises, permits, easements, consents or
licenses required to carry on any material portion of its business.
(e) Other Obligations. Default, after giving effect to any applicable
grace period, by the Borrower in the payment when due of any money
owed by the Borrower, whether principal, interest, premium or
otherwise, under any other agreement for borrowing money in an amount
in excess of five percent (5%) of total assets, whether or not such
borrowing is secured.
(f) Bankruptcy. A court shall enter a decree or order for relief with
respect to the Borrower or any Subsidiary or guarantor (if any) in an
involuntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator or similar
official, or ordering the winding up or liquidation of its affairs,
and such decree or order shall remain unstayed and in effect for a
period of sixty (60) consecutive days or the Borrower or any
Subsidiary or guarantor (if any) shall commence a voluntary case under
any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or under any such law, or consent to the
appointment or taking of possession by a receiver, liquidator,
assignee, custodian or trustee, of a substantial part of Its prop", 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 guarantor (if any), or failure by the Borrower or any
Subsidiary or guarantor promptly to forestall or remove any execution,
garnishment or attachment of such consequence as will impair its
ability to continue its business or fulfill its obligations and such
execution, garnishment or attachment shall not be vacated within sixty
(60) days.
(h) Final Judgment. A final non-appealable judgment In excess of $100,000
shall be entered against the Borrower and shall remain unsatisfied or
without a stay for a period of sixty (60) days.
9. RIGHTS AND REMEDIES
9.01 Rights and Remedies of the Lender. Upon the occurrence of an Event of
Default, the Lender may, subject to:
(i) thirty (30) days prior written notice during which time Borrower shall
have the opportunity to cure said Event of Default except with respect
to Obligations pursuant to 8(b), 8(f) and 8(g) above which shall
require no notice or demand
15
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 is 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 in the manner, upon the conditions, and
with the effect provided in the
Mortgage, including but not limited to a suit for specific
performance, injunctive relief or damages.
(d) Pursue any other rights and remedies available to the Lender at law or
in equity.
9.02 Cumulative Nature of Remedies. Nothing herein shall limit the right of
the Lender, subject to notice and right to cure provisions contained herein, to
pursue all rights and remedies available to a creditor following the occurrence
of an Event of Default subject to compliance, if required, with the rules and
regulations of the FCC and any state public service or utilities commission
having jurisdiction. Each right, power and remedy of the Lender in this
Agreement and/or the Other Agreements shall be cumulative and concurrent, and
recourse to one or more rights or remedies shall not constitute a waiver of any
other right, power or remedy.
9.03 Costs and Expenses. Borrower agrees to pay and to be liable for any
and all reasonable expenses, including attorneys' fees and court costs, incurred
by the Lender in exercising or enforcing any of its rights hereunder or under
the Other Agreements, together with interest thereon at the rate and determined
in the manner provided in the Mortgage. Subject to the Mortgage and applicable
law, the Lender may apply all Collateral and proceeds of all Collateral to the
Obligations in any manner which the Lender, in its sole discretion, deems
appropriate, and Borrower will continue to be liable for any deficiency.
9.04 Late Payment Charges. If payment of any principal and/or interest due
under the terms of the Note is not received at the office of the Lender in
Herridon, Virginia, or as the Lender may otherwise designate to the Borrower,
within such time period as the Lender may
16
prescribe from time to time in its policies in connection with any late payment
charges (such unpaid amount of principal and/or interest being herein called the
"delinquent amount" and the period beginning after such due date until payment
of the delinquent amount being herein called the "late-payment period"), the
Borrower will pay to the Lender, in addition to all other amounts due under the
terms of the Note, the Mortgage, and this Agreement, any late-payment charge as
may be fixed by the Lender from time to time, on the delinquent amount for the
late-payment period.
9.05 Lenders, Setoff. The Lender shall have the right, in addition to all
other rights and remedies available to it, to setoff and to recover against any
or all of the Obligations due to Lender, any monies now and hereafter owing to
Borrower by the Lender. Borrower waives all rights of setoff, deduction,
recoupment and counterclaim.
10. MISCELLANEOUS
10.01 Performance for Borrower. Borrower agrees and hereby authorizes that
the Lender may, in its sole discretion, but the Lender shall not be obligated
to, advance funds on behalf of Borrower without prior notice to Borrower, in
order to insure Borrower's compliance with any material covenant, warranty,
representation or agreement of Borrower made in or pursuant to this Agreement or
any of the Other Agreements, to preserve or protect any right or interest of the
Lender in the Collateral or under or pursuant to this Agreement or any of the
Other Agreements, including without limitation, the payment of any insurance
premiums or taxes and the satisfaction or discharge of any judgment or any Lien
upon the Collateral or other property or assets of Borrower; provided, however
(1) prior to making any such advance, the Lender shall give the Borrower prior
written notice of its intent to make such advances and, unless there is some
imminent danger of the occurrence of a Material Adverse Effect, the Borrower
shall have fifteen (15) Business Days to rectify the issue set forth In such
notice, and (ii) 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 Subsection 10.02 shall survive the
execution and delivery of this Agreement and the payment of all other
Obligations.
17
10.03 Waivers by Borrower. Borrower hereby waives, to the extent the same
may be waived under applicable law: (a) in the event the Lender seeks to
repossess any or all of the Collateral by judicial proceedings, any bond(s) or
demand(s) for possession which otherwise may be necessary or required; (b)
presentment, demand for payment, protest and notice of non-payment and all
exemptions; and (c) substitution, impairment, exchange or release of any
collateral security for any of the Obligations, Borrower agrees that the Lender
may exercise any or all of its rights and/or remedies hereunder and under the
Other Agreements without resorting to and without regard to security or sources
of liability with respect to any of the Obligations.
10.04 Waivers by the Lender. Neither any failure nor any delay on the part
of the Lender in exercising any right, power or remedy hereunder or under any of
the Other Agreements shall operate as a waiver thereof, nor shall a single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or remedy, been mailed, postage prepaid, to
Borrower, the Lender shall receive written notice of specific objection thereto.
10.06 Modifications. No modification or waiver of any provision of this
Agreement, the Note or any of the Other 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:
The Lender:
Rural Telephone Finance Cooperative
Woodland Park
0000 Xxxxxxxxxxx Xxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Loan Officer
Fax: 000-000-0000
The Borrower:
Mebtel Inc.
18
000 Xxxxx 0xx Xxxxxx
XX Xxx 0
Xxxxxx, Xxxxx Xxxxxxxx 00000
With a copy to:
Mebtel, Inc.
c/o Madison River Telephone Company
0000 Xxxxxxxxxx Xxxxx
Xxxxxx Xxxx, Xxxxx Xxxxxxxx 00000
Attn: Managing Director, Finance and General Counsel
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 ESTABLISHING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH A
COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT
FORUM.
(c) EACH OF THE BORROWER AND THE LENDER HEREBY IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY
IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
10.09 Holiday Payments. If any payment to be made by the Borrower hereunder
shall become due on a day which is not a Business Day, such payment shall be
made on the next succeeding Business Day and such extension of time shall be
included in computing any interest in respect of such payment.
10.10 Consent to Patronage Capital Distributions. The Borrower hereby
consents that the amount of any distributions with respect to Borrower's
patronage which are made in written notices of allocation (as defined in Section
1388 of the Internal Revenue Code of 1986, as amended ("Code") including any
other comparable successor provision) and which are received from Lender will be
taken into account by Borrower at their stated dollar amounts in the manner
provided in Section 1385(a) of the Code in the taxable year in which such
written notices of allocation are received.
19
10.11 Right to Inspect. The Borrower shall permit representatives of the
Lender at any time during normal business hours to inspect and make abstracts
from the books and records pertaining to the Collateral, and permit
representatives of the Lender to be present at Borrower's place of business to
receive copies of all communications and remittances relating to the Collateral,
all in such manner as the Lender may reasonably require, provided, that prior to
--------
the occurrence and continuance of an Event of Default the Lender shall not
exercise its rights pursuant to this Section 10.11 more than one time per
calendar quarter.
10.12 Survival; Successors and Assigns. All covenants, agreements,
representations and warranties made herein and in the Other Agreements shall
survive Closing and the execution and delivery to the Lender of the Note, and
shall continue in full force and effect until all of the Obligations have been
paid in full. Whenever in this Agreement any of the parties hereto is referred
to, such reference shall be deemed to include the successors and assigns of such
party. All covenants, agreements, representations and warranties by or on behalf
of Borrower which are contained in this Agreement and the Other Agreements shall
inure to the benefit of the successors and assigns of the Lender.
10.13 Assignment. The Lender may assign its rights and obligations under
this Agreement and the Other Agreements without the consent of the Borrower;
provided, however, that no such assignment shall effect any of the material
terms of this agreement (other than the name of the Lender and the address for
notices and payments) or otherwise result in terms or conditions less favorable
to Borrower. The Borrower may not assign any of its rights of obligations under
this Agreement or the Other Agreements without the prior written consent of the
Lender.
10.14 Severability. If any term, provision or condition, or any part
thereof, of this Agreement or any of the Other Agreements shall for any reason
be found or held invalid or unenforceable by any court or governmental agency of
competent jurisdiction, such invalidity or unenforceability shall not affect the
remainder of such term, provision or condition nor any other term, provision or
condition, and this Agreement, the Note, and the Other Agreements shall survive
and be construed as if such invalid or unenforceable term, provision or
condition had not been contained therein.
10.15 Counterparts. This Agreement may be executed in any number of
counterparts and by different parties hereto on separate counterparts, each of
which, when so executed and delivered, shall be an original, but all such
counter-parts shall together constitute one and the same instrument.
10.16 Headings/Use of Terms. The headings and sub-headings contained in
this Agreement are intended to be used for convenience only and do not
constitute part of this Agreement. The use of any gender or the neuter herein
shall also refer to the other gender or the neuter and the use of the plural
shall also refer to the singular, and vice versa.
10.17 Further Assurances. The Borrower will, upon demand of the Lender,
make, execute, acknowledge and deliver all such further and supplemental
indentures of mortgage,
20
deeds of trust, mortgages, financing statements,
continuation statements, security agreements and/or any other instruments and
conveyances as may be reasonably requested by the Lender to effectuate the
intention of this Agreement and to provide for the securing and payment of the
principal of and interest on the Note according to the terms thereof.
10.18 Lender's Approval. Wherever prior written approval of Lender is
required under the terms and conditions of this Agreement, Lender hereby agrees
to not unreasonably withhold said approval.
10.19 Merger and Integration. This Agreement and the attached exhibits and
matters incorporated by reference contain the entire agreement of the parties
hereto with respect to the matters covered and the transactions contemplated
hereby, and no other agreement, statement or promise made by any party hereto,
or by any employee, officer, agent or attorney of any party hereto, which is not
contained herein, shall be valid or binding.
10.20 Schedule 1. Schedule 1 attached hereto is an integral part of this
Agreement.
21
IN WITNESS WHEREOF, the parties hereto have executed or caused to be
executed this Agreement under seal as of the date first above written.
MEBTEL, INC.
By: XXXX X. XXXX
-------------------------------
Title: EXECUTIVE VICE PRESIDENT
----------------------------
(SEAL)
Attest: XXXX X. XXXXXX
------------------------------
Assistant Secretary
RURAL TELEPHONE FINANCE COOPERATIVE
By: XXXXX X. XXXX
-------------------------------
Title: Assistant Secretary-Treasurer
(SEAL)
Attest: FAUN ZARI
-----------------------------
Assistant Secretary-Treasurer
22
SCHEDULE 1
1. The "Commitment" shall mean $23,290,526.
2. The Mortgage is the Mortgage and Security Agreement by and between
Borrower and Lender dated as of even date herewith.
3. The months relating to the Payment Date are February, May, August and
November.
4. The method of amortization referred to in Section 2.03 shall be based
upon the method indicated below.
X level principal plus interest (one year
-----
interest only and principal deferral)
_____ level debt service
5. The amount referred to in Section 2.05 is $1,164,526.
6. The date of Borrower's financial statement referred to in Section 4.06 is
December 31, 1996.
7. The chief place of business referred to in Section 4.12 and address of
Borrower referred to in Section 10.07 is XX Xxx 0, 000 Xxxxx 0xx Xxxxxx,
Xxxxxx, XX 00000.
8. The government authorities referred to in Section 4.13 are the North
Carolina Utilities Commission and the Federal Communications Commission.
9. The special conditions referred to in Section 5.05 are as follows:
1. Prior to the initial Advance of funds from this Loan, Lender shall
receive, in form and content satisfactory to Lender, the following:
a) Evidence of a common equity capital contribution equal to the
greater of: (i) $7,159,000 or (ii) 25% of the total transaction
costs, including debt replacement, of the acquisition
contemplated herein but excluding any costs incurred in
connection with the Subordinated Capital Certificates;
b) Evidence of the approval of the acquisition and of the financing
contemplated herein by the North Carolina Utilities Commission;
c) A copy of the draft Promissory Note to be issued to the
shareholders of MEBCOM Communications, Inc. ("MEBCOM") to
facilitate closing on the acquisition of the MEBCOM stock
pursuant to the Stock Purchase Agreement dated September 12, 1997
("Seller Note"); and
23
d) Copies of all documentation related to Madison River Telephone
Company's newly-formed acquisition company's merger into MEBCOM
and subsequent merger into MEBTEL, Inc.
2. All funds for the purpose of refinancing existing debt of MEBTEL, Inc.
will be wired directly to the Rural Utilities Service ("RUS"). Within
30 Business Days of such Advance, Lender shall receive evidence that
all obligations of MEBTEL, Inc. have been satisfied and all liens
related thereto have been released.
10. The purpose referred to in Section 6.05 is to (i) fund up to 70% of the
total costs to acquire the stock of MEBTEL, INC., (ii) refinance all of
Borrower's outstanding debt with RUS and the Rural Telephone Bank, and
(iii) to purchase SCCs.
11. The special affirmative covenants referred to in Section 6.06 are as
follows:
Within 5 Business Days of Closing, Lender shall receive evidence that the
Seller Note has been fully repaid and all obligations thereunder have been
satisfied.
12. The special negative covenants referred to in Section 7.04 are not
applicable.
24
SECURED PROMISSORY NOTE
$23,290,526 January 16, 1998
MEBTEL, INC., a North Carolina corporation (herein called the "Borrower"), for
value received hereby promises to pay, without setoff, deduction, recoupment or
counterclaim, to the order of RURAL TELEPHONE FINANCE COOPERATIVE (herein called
the "Payee") at the Payee's office in Hemdon, Virginia, or such other location
as the Payee may designate, in lawful money of the United States, the sum of the
aggregate unpaid principal amount of all Advances made by the Payee pursuant to
that certain Loan Agreement dated as of even date herewith, between the Borrower
and the Payee as it may be amended from time to time (herein called the "Loan
Agreement"), on the dates provided for in the Loan Agreement (except that if not
sooner paid, any balance shall be due and payable an a date fifteen (15) years
after the date hereof, such date being the "Maturity Date"), with interest
thereon in like money from the respective dates of each Advance (as defined in
the Loan Agreement) hereunder, at the rate or rates and payable at the times
provided in said Loan Agreement together with any other amount payable under the
Loan Agreement.
This Note is secured under a Mortgage and Security Agreement dated as of even
date herewith by and between the Borrower and the Payee, as It may have been or
shall be supplemented, amended, restated or consolidated from time to time
(herein called the "Mortgage"). This Note is the Note referred to in, and has
been executed and delivered pursuant to, the Loan Agreement.
The principal hereof and interest accrued thereon and any other amount due under
the Loan Agreement may be declared to be forthwith due and payable in the
manner, upon the conditions, and with the effect provided in the Mortgage or
Loan Agreement.
The Borrower waives demand, presentment for payment, notice of dishonor,
protest, notice of protest, and notice of non-payment of this Note.
IN WITNESS WHEREOF the Borrower has caused this Note to be signed in its
corporate name and its corporate seal to be hereunto affixed and to be attested
by its authorized officers, all as of the day and year first above written.
MEBTEL, INC.
By: XXXX X. XXXX
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Title EXECUTIVE VICE PRESIDENT
----------------------------
(SEAL)
Attest: XXXX X. XXXXXX
----------------
Assistant Secretary
Loan No.: NC 508-A-01
25
