Exhibit 99.1
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CREDIT AGREEMENT
DATED AS OF MAY 1, 2006
Between
SUREWEST COMMUNICATIONS
as Borrower,
and
COBANK, ACB,
as Lender
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TABLE OF CONTENTS
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SECTION 1 AMOUNTS AND TERMS OF LOANS...................................... 1
1.1 Loans.................................................... 1
(A) Term Loan......................................... 1
(B) Revolving Loans................................... 1
(C) Letters of Credit................................. 2
(D) Notes............................................. 4
(E) Advances.......................................... 4
1.2 Interest................................................. 4
(A) Interest Options.................................. 4
(B) Applicable Margins................................ 5
(C) Interest Periods.................................. 5
(D) Calculation and Payment........................... 6
(E) Default Rate of Interest.......................... 6
(F) Excess Interest................................... 7
(G) Selection, Conversion or Continuation
of Loans; LIBOR Availability..................... 7
1.3 Notice of Borrowing, Conversion or Continuation
of Loans................................................. 8
1.4 Fees and Expenses........................................ 8
(A) Commitment Fee.................................... 8
(B) Certain Other Fees................................ 8
(C) Breakage Fee...................................... 9
(D) Expenses and Attorneys Fees....................... 9
(E) Letter of Credit Fees............................. 9
1.5 Payments................................................. 10
1.6 Repayments and Reduction of Term Loan and Revolving
Loan Commitment and Related Mandatory Repayments........ 10
(A) Scheduled Repayments and Reductions of
Term Loan and Revolving Loan Commitment.......... 10
(B) Reductions Resulting From Mandatory Repayments.... 11
(C) Voluntary Reduction of Loan Commitments........... 11
(D) Mandatory Repayments.............................. 11
1.7 Voluntary Prepayments and Other Mandatory Repayments..... 11
(A) Voluntary Prepayment of Loans..................... 12
(B) Repayments from Insurance Proceeds................ 12
(C) Repayments from Asset Dispositions................ 12
1.8 Application of Prepayments and Repayments;
Payment of Breakage Fees, Etc............................ 12
1.9 Loan Accounts............................................ 12
1.10 Changes in LIBOR Rate Availability....................... 13
1.11 Capital Adequacy and Other Adjustments................... 13
1.12 Taxes: No Deductions..................................... 14
1.13 Changes in Tax Laws...................................... 14
1.14 Term of This Agreement................................... 15
1.15 Letter of Credit Liability............................... 00
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XXXXXXX 0 AFFIRMATIVE COVENANTS........................................... 15
2.1 Compliance With Laws..................................... 15
2.2 Maintenance of Books and Records; Properties; Insurance.. 16
2.3 Inspection............................................... 16
2.4 Legal Existence, Etc..................................... 17
2.5 Use of Proceeds.......................................... 17
2.6 Further Assurances....................................... 17
2.7 CoBank Patronage Capital................................. 17
2.8 Investment Company Act; Public Utility Holding Act....... 17
2.9 Payment of Obligations................................... 17
2.10 Environmental Laws....................................... 18
2.11 ERISA Compliance......................................... 18
SECTION 3 NEGATIVE COVENANTS.............................................. 18
3.1 Indebtedness............................................. 19
3.2 Liens and Related Matters................................ 19
3.3 Investments.............................................. 19
3.4 Contingent Obligations................................... 20
3.5 Restricted Junior Payments............................... 20
3.6 Restriction on Fundamental Changes....................... 20
3.7 Disposal of Assets or Subsidiary Stock................... 21
3.8 Transactions with Affiliates............................. 22
3.9 Conduct of Business...................................... 22
3.10 Fiscal Year.............................................. 22
3.11 Inconsistent Agreements.................................. 22
SECTION 4 FINANCIAL COVENANTS AND REPORTING............................... 23
4.1 Leverage Ratio........................................... 23
4.2 Interest Coverage Ratio.................................. 23
4.3 Net Worth................................................ 23
4.4 Financial Statements and Other Reports................... 23
(A) Quarterly Financials.............................. 23
(B) Year-End Financials............................... 23
(C) Borrower Compliance Certificate................... 24
(D) Budgets........................................... 24
(E) SEC Filings and Press Releases.................... 24
(F) Events of Default, Etc............................ 24
(G) Litigation........................................ 24
(H) Environmental Notices............................. 25
(I) ERISA Events...................................... 25
(J) Regulatory and Other Notices...................... 25
(K) Other Information................................. 25
4.5 Accounting Terms; Utilization of GAAP for
Purposes of Calculations Under Agreement................. 25
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SECTION 5 REPRESENTATIONS AND WARRANTIES.................................. 26
5.1 Disclosure............................................... 26
5.2 No Material Adverse Effect............................... 26
5.3 Organization, Powers, Authorization and Good Standing.... 26
(A) Organization and Powers........................... 26
(B) Authorization; Binding Obligation................. 26
(C) Qualification..................................... 27
5.4 Compliance of Agreement, Loan Documents and
Borrowings with Applicable Law.......................... 27
5.5 Compliance with Law; Governmental Approvals.............. 27
5.6 Tax Returns and Payments................................. 27
5.7 Environmental Matters.................................... 28
5.8 Financial Statements..................................... 28
5.9 Intellectual Property.................................... 28
5.10 Litigation, Investigations, Audits, Etc.................. 28
5.11 Employee Labor Matters................................... 29
5.12 ERISA Compliance......................................... 29
5.13 Communications Regulatory Matters........................ 29
5.14 Solvency................................................. 30
5.15 Investment Company Act; Public Utility Holding Act....... 30
5.16 Certain Agreements and Material Contracts................ 31
5.17 Title to Properties...................................... 31
5.18 Transactions with Affiliates............................. 31
5.19 OFAC..................................................... 31
5.20 Patriot Act.............................................. 31
SECTION 6 EVENTS OF DEFAULT AND RIGHTS AND REMEDIES....................... 32
6.1 Event of Default......................................... 32
(A) Payment........................................... 32
(B) Default in Other Agreements....................... 32
(C) Breach of Certain Provisions...................... 32
(D) Breach of Warranty................................ 32
(E) Other Defaults Under Loan Documents............... 32
(F) Involuntary Bankruptcy; Appointment
of Receiver; Etc.................................. 33
(G) Voluntary Bankruptcy; Appointment
of Receiver; Etc.................................. 33
(H) Governmental Liens................................ 33
(I) Judgment and Attachments.......................... 33
(J) Dissolution....................................... 33
(K) Solvency.......................................... 34
(L) Injunction........................................ 34
(M) ERISA; Pension Plans.............................. 34
(N) Environmental Matters............................. 34
(O) Invalidity of Loan Documents...................... 34
(P) Damage; Strike; Casualty.......................... 34
(Q) Licenses and Permits.............................. 34
(R) Change in Control................................. 34
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6.2 Suspension of Commitments................................ 35
6.3 Acceleration............................................. 35
6.4 Rights of Collection..................................... 35
6.5 Consents................................................. 35
6.6 Performance by CoBank.................................... 35
6.7 Set Off and Sharing of Payments.......................... 36
SECTION 7 CONDITIONS TO LOANS............................................. 36
7.1 Conditions to Initial Loan............................... 36
(A) Executed Loan and Other Documents................. 36
(B) Closing Certificates; Opinions.................... 36
(C) Property.......................................... 37
(D) Consents.......................................... 37
(E) Fees, Expenses, Taxes, Etc........................ 38
(F) Miscellaneous..................................... 38
7.2 Conditions to All Loans.................................. 38
SECTION 8 ASSIGNMENT AND PARTICIPATION.................................... 39
SECTION 9 MISCELLANEOUS................................................... 40
9.1 Indemnities.............................................. 40
9.2 Amendments and Waivers................................... 40
9.3 Notices.................................................. 40
9.4 Failure or Indulgence Not Waiver;
Remedies Cumulative..................................... 41
9.5 Severability............................................. 41
9.6 Headings................................................. 41
9.7 Governing Law............................................ 41
9.8 No Fiduciary Relationship................................ 41
9.9 Construction............................................. 41
9.10 Confidentiality.......................................... 41
9.11 Consent to Jurisdiction and Service of Process........... 42
9.12 Waiver of Jury Trial..................................... 42
9.13 Survival of Warranties and Certain Agreements............ 43
9.14 Entire Agreement......................................... 43
9.15 Counterparts; Effectiveness.............................. 43
9.16 Patriot Act.............................................. 43
SECTION 10 DEFINITIONS.................................................... 44
10.1 Certain Defined Terms.................................... 44
10.2 Other Definitional Provisions............................ 54
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SCHEDULES
Schedule 3.8 Transactions with Affiliates
Schedule 5.3(A) Jurisdiction of Organization
Schedule 5.3(C) Qualification to Transact Business
Schedule 5.4 Governmental Approvals
Schedule 5.6 Tax Returns and Payments
Schedule 5.10 Litigation, Etc.
Schedule 5.11 Employee Labor Matters
Schedule 5.13(A) License Information
Schedule 5.16 Certain Agreements and Material Contracts
EXHIBITS
Exhibit 1.3 Form of Notice of Borrowing/Conversion/Continuation
Exhibit 4.4(C) Form of Compliance Certificate
Exhibit 10.1(A) Form of Revolving Loan Promissory Note
Exhibit 10.1(B) Form of Term Loan Promissory Note
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INDEX OF DEFINED TERMS
Defined Term Defined in Section
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Accounting Changes Section 4.5
Adjusted Consolidated Net Worth Section 10.1
Adjustment Date Section 10.1
Affiliate Section 10.1
Agreement Preamble
Applicable Law Section 10.1
Asset Disposition Section 10.1
Banking Day Section 10.1
Bankruptcy Code Section 10.1
Base Rate Section 10.1
Base Rate Loan Section 10.1
Base Rate Margin Section 10.1
Borrower Preamble
Breakage Fees Section 1.4(C)
Budget Section 10.1
Business Day Section 10.1
Calculation Period Section 10.1
Capital Leases Section 10.1
Cash Equivalents Section 10.1
Closing Date Section 10.1
CoBank Preamble
Communications Act Section 10.1
Compliance Certificate Section 4.4(C)
Consolidated Net Assets Section 10.1
Consolidated Net Worth Section 10.1
Contingent Obligation Section 10.1
Default Section 10.1
EBITDA Section 10.1
Environmental Laws Section 10.1
ERISA Section 10.1
ERISA Affiliate Section 10.1
ERISA Event Section 10.1
Event of Default Section 6.1
Facility(ies) Section 10.1
FCC Section 10.1
Funding Date Section 7.2
GAAP Section 10.1
Governmental Approvals Section 10.1
Governmental Authority Section 10.1
Indebtedness Section 10.1
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Indemnitees Section 9.1
Intellectual Property Rights Section 5.9
Interest Coverage Ratio Section 10.1
Interest Period Section 1.2(C)
Interest Rate Agreement Section 10.1
Investment Section 10.1
IRC Section 10.1
Letter of Credit Liability Section 10.1
Letter(s) of Credit Section 1.1(C)
Leverage Ratio Section 10.1
LIBOR Section 10.1
LIBOR Breakage Fees Section 1.4(C)
LIBOR Loans Section 10.1
LIBOR Margin Section 10.1
Licenses Section 10.1
Lien Section 10.1
Loan(s) Section 10.1
Loan Commitment(s) Section 10.1
Loan Documents Section 10.1
Material Adverse Effect Section 10.1
Material Contracts Section 10.1
Multi-employer Plan Section 10.1
Net Proceeds Section 10.1
Note(s) Section 10.1
Note Purchase Agreement Section 10.1
Notice of Borrowing/Conversion/Continuation Section 1.3
Obligations Section 10.1
Patriot Act Section 9.16
PBGC Section 10.1
Permitted Encumbrances Section 10.1
Person Section 10.1
Plan Section 10.1
Priority Debt Section 10.1
PUC Section 10.1
Quoted Rate Section 10.1
Quoted Rate Breakage Fees Section 1.4(C)
Quoted Rate Loans Section 10.1
Quoted Rate Period Section 1.2(A)(i)
Related Interest Rate Agreement Section 10.1
Reportable Event Section 10.1
Restricted Investments Section 10.1
Restricted Junior Payment Section 10.1
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Revolving Loan(s) Section 10.1
Revolving Loan Commitment Section 10.1
Revolving Loan Expiration Date Section 10.1
Revolving Loan Facility Section 10.1
Revolving Note(s) Section 10.1
SEC Section 4.4(A)
Statement Section 4.4(B)
Subsidiary Section 10.1
Tax Liabilities Section 1.12
Telecommunications System Section 10.1
Term Loan Section 10.1
Term Loan Availability Expiration Date Section 10.1
Term Loan Commitment Section 10.1
Term Loan Facility Section 10.1
Term Loan Maturity Date Section 10.1
Term Loan Note(s) Section 10.1
UCP Section 1.1(C)(6)
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CREDIT AGREEMENT
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This CREDIT AGREEMENT (as amended, supplemented, modified, extended or
restated as permitted herein from time to time, and including all schedules and
exhibits hereto, this "Agreement") is entered into as of May 1, 2006, between
SUREWEST COMMUNICATIONS, a California corporation ("Borrower"), and COBANK, ACB
("CoBank"). Capitalized terms used and not otherwise defined herein shall have
the meanings given to them in Section 10.1 of this Agreement.
R E C I T A L S:
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WHEREAS, Borrower desires that CoBank extend a term loan facility and a
revolving loan facility to Borrower, the proceeds of which are to be available
for general corporate purposes of Borrower and its Subsidiaries, including,
without limitation, refinancing existing indebtedness, capital expenditures,
permitted acquisitions and working capital needs;
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
parties agree as follows:
SECTION 1
AMOUNTS AND TERMS OF LOANS
1.1 Loans. Subject to the terms and conditions of this Agreement and
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in reliance upon the representations, warranties and covenants of Borrower
contained herein and in the other Loan Documents:
(A) Term Loan. CoBank agrees to lend to Borrower, during the
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period commencing on the date all conditions precedent set forth in Subsections
7.1 and 7.2 are satisfied or waived and ending on the Business Day immediately
preceding the Term Loan Availability Expiration Date, the Term Loan in multiple
advances; provided, that the aggregate principal amount of such advances may not
exceed the Term Loan Commitment. Amounts borrowed under this Subsection 1.1(A)
that are repaid or prepaid may not be reborrowed.
(B) Revolving Loans. CoBank agrees to lend to Borrower, during
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the period commencing on the date all conditions precedent set forth in
Subsections 7.1 and 7.2 are satisfied or waived and ending on the Business Day
immediately preceding the Revolving Loan Expiration Date, Revolving Loans;
provided, that at any time the aggregate principal amount of all Revolving Loans
outstanding at any one time may not exceed the Revolving Loan Commitment less
the outstanding Letter of Credit Liability. Within the limits of the Revolving
Loan Commitment and this Subsection 1.1(B) and Subsections 1.6, 1.7 and 1.8,
amounts borrowed under this Subsection 1.1(B) may be prepaid and reborrowed at
any time prior to the Revolving Loan Expiration Date.
Credit Agreement/SureWest Communications
(C) Letters of Credit. The Revolving Loan Commitment may, in
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addition to advances as Revolving Loans, be utilized, upon the request of
Borrower, for the issuance of irrevocable letters of credit (individually, a
"Letter of Credit" and, collectively, the "Letters of Credit") by CoBank for the
account of Borrower or any of its Subsidiaries. Each Letter of Credit shall
reduce the amount available under the Revolving Loan Commitment by the maximum
amount capable of being drawn under such Letter of Credit.
(1) Maximum Amount. The aggregate amount of Letter of Credit
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Liability with respect to all Letters of Credit outstanding at any time for the
account of Borrower or any of its Subsidiaries may not exceed $25,000,000, and
the aggregate amount of Letter of Credit Liability with respect to all Letters
of Credit outstanding for the account of Borrower or any of its Subsidiaries
plus the aggregate principal amount of Revolving Loans outstanding at any time
may not exceed the Revolving Loan Commitment.
(2) Reimbursement. Borrower is irrevocably and
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unconditionally obligated without presentment, demand, protest or other
formalities of any kind to reimburse CoBank in immediately available funds for
any amounts paid by CoBank with respect to a Letter of Credit issued hereunder
for the account of Borrower or any of its Subsidiaries. Borrower hereby
authorizes and directs CoBank, at CoBank's option, to make a Revolving Loan in
the amount of any payment made by CoBank with respect to any Letter of Credit
issued for the account of Borrower or any of its Subsidiaries. If the Letter of
Credit is payable in a foreign currency, the amount owed by Borrower in
connection with such Letter of Credit shall equal an amount in United States
Dollars equivalent to CoBank's actual cost of settling its obligation under such
Letter of Credit in such foreign currency. All amounts paid by CoBank with
respect to any Letter of Credit that are not immediately repaid by Borrower or
that are not repaid with a Revolving Loan shall bear interest at the sum of the
Base Rate plus the Base Rate Margin applicable from time to time as provided in
Subsection 1.2(B).
(3) Conditions of Issuance of Letters of Credit. In addition
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to all other terms and conditions set forth in this Agreement, the issuance by
CoBank of any Letter of Credit shall be subject to the conditions precedent that
the Letter of Credit shall support a transaction entered into in the ordinary
course of Borrower's or any of its Subsidiaries' businesses and shall be in such
form, be for such amount, and contain such terms and conditions as are
reasonably satisfactory to CoBank. The expiration date of each Letter of Credit
must be on a date which is the earlier of one year from its date of issuance or
the 30th day before the date set forth in clause (iii) of the definition of the
term Revolving Loan Expiration Date, or such other date as agreed to by both
CoBank, in its sole discretion.
(4) Request for Letters of Credit. Borrower must give CoBank
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at least three Business Days' prior written notice, which notice will be
irrevocable, specifying the date a Letter of Credit is requested to be issued
and the amount and the currency in which such Letter of Credit is payable,
identifying the beneficiary and describing the nature of the transactions
proposed to be supported thereby. Any notice requesting the issuance of a Letter
of Credit shall be accompanied by the form of the Letter of Credit to be
provided by CoBank. Borrower must also complete any application procedures and
documents required by CoBank in connection with the issuance of any Letter of
Credit, including a certificate regarding Borrower's compliance with the
provisions of Subsection 7.2 of this Agreement.
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Credit Agreement/SureWest Communications
(5) Borrower Obligations Absolute. The obligations of
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Borrower under this Subsection 1.1(C) are irrevocable, will remain in full force
and effect until CoBank has no further obligations to make any payments or
disbursements under any circumstances with respect to any Letter of Credit,
shall be absolute and unconditional, shall not be subject to counterclaim,
setoff or other defense or any other qualification or exception whatsoever and
shall be paid in accordance with the terms and conditions of this Agreement
under all circumstances, including, without limitation, any of the following
circumstances:
(a) Any lack of validity or enforceability of this
Agreement, any of the other Loan Documents or any documents or instruments
relating to any Letter of Credit;
(b) Any change in the time, manner or place of payment
of, or in any other term of, all or any of the obligations in respect of any
Letter of Credit or any other amendment, modification or waiver of or any
consent to or departure from any Letter of Credit, any documents or instruments
relating thereto, or any Loan Document in each case whether or not Borrower or
its Subsidiaries has notice or knowledge thereof;
(c) The existence of any claim, setoff, defense or
other right that Borrower or its Subsidiaries may have at any time against a
beneficiary named in a Letter of Credit, any transferee of any Letter of Credit
(or any Person for whom any such transferee may be acting), CoBank or any other
Person, whether in connection with this Agreement, any other Loan Document, any
Letter of Credit, the transactions contemplated hereby or any other related or
unrelated transaction or transactions (including any underlying transaction
between Borrower or its Subsidiaries and the beneficiary named in any such
Letter of Credit);
(d) Any draft, certificate or any other document
presented under any Letter of Credit proving to be forged, fraudulent, invalid
or insufficient in any respect or any statement therein being untrue or
inaccurate in any respect, any errors, omissions, interruptions or delays in
transmission or delivery of any messages, by mail, telecopier or otherwise, or
any errors in translation or in interpretation of technical terms;
(e) Payment under any Letter of Credit against
presentation of a demand, draft or certificate or other document which does not
comply with the terms of such Letter of Credit;
(f) Any defense based upon the failure of any drawing
under any Letter of Credit to conform to the terms of such Letter of Credit
(provided that any draft, certificate or other document presented pursuant to
such Letter of Credit appears on its face to comply with the terms thereof), any
nonapplication or misapplication by the beneficiary or any transferee of the
proceeds of such drawing or any other act or omission of such beneficiary or
transferee in connection with such Letter of Credit;
(g) The exchange, release, surrender or impairment of
any collateral or other security for the obligations;
(h) The occurrence of any Default or Event of Default;
or
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Credit Agreement/SureWest Communications
(i) Any other circumstance or event whatsoever,
including, without limitation, any other circumstance that might otherwise
constitute a defense available to, or a discharge of, Borrower or any
Subsidiary.
Any action taken or omitted to be taken by CoBank under or in connection with
any Letter of Credit, if taken or omitted in the absence of negligence or
willful misconduct, is binding upon Borrower and its Subsidiaries and shall not
create or result in any liability of CoBank to Borrower or any of its
Subsidiaries. It is expressly agreed that, for purposes of determining whether a
wrongful payment under a Letter of Credit resulted from CoBank's negligence or
willful misconduct, none of the following shall be deemed to constitute
negligence or willful misconduct by CoBank: (i) CoBank's acceptance of documents
that appear on their face to comply with the terms of such Letter of Credit,
without responsibility for further investigation, (ii) CoBank's exclusive
reliance on the documents presented to it under such Letter of Credit as to any
and all matters set forth therein, including the amount of any draft presented
under such Letter of Credit, whether or not the amount due to the beneficiary
thereunder equals the amount of such draft and whether or not any document
presented pursuant to such Letter of Credit proves to be insufficient in any
respect (so long as such document appears on its face to comply with the terms
of such Letter of Credit), and whether or not any other statement or any other
document presented pursuant to such Letter of Credit proves to be forged or
invalid or any statement therein proves to be inaccurate or untrue in any
respect whatsoever, and (iii) any noncompliance in any immaterial respect of the
documents presented under such Letter of Credit with the terms thereof.
(6) UCP. The Uniform Customs and Practice for Documentary
---
Credits as most recently published from time to time by the International
Chamber of Commerce (the "UCP") is hereby incorporated in this Agreement and
shall be deemed incorporated by this reference into each Letter of Credit issued
pursuant to this Agreement. The terms and conditions of the UCP shall be binding
on the parties to this Agreement and each beneficiary of any Letter of Credit
issued pursuant to this Agreement.
(D) Notes. Borrower shall execute and deliver to CoBank a Term
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Loan Note and a Revolving Loans Note, each dated the Closing Date, in the
aggregate principal amount of the Term Loan Commitment and the Revolving Loan
Commitment, respectively.
(E) Advances. Loans will be made available by wire transfer of
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immediately available funds. Wire transfers will be made to such
account or accounts as may be authorized by Borrower.
1.2 Interest.
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(A)Interest Options.
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(i) From the date each Loan is made, based upon Borrower's
election at such time and from time to time thereafter (as provided in
Subsection 1.3 and subject to the conditions set forth in such Subsection 1.3
and Subsection 1.2 (C)), each Loan shall accrue interest as follows:
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Credit Agreement/SureWest Communications
(a) as a portion of the Base Rate Loan, at the sum of
the Base Rate plus the Base Rate Margin applicable from time
to time as provided in Subsection 1.2(B); or
(b) as a LIBOR Loan, for the applicable Interest
Period, at the sum of LIBOR plus the LIBOR Margin applicable
from time to time as provided in Subsection 1.2(B); or
(c) as a Quoted Rate Loan, at the Quoted Rate. The
Quoted Rate may be fixed for periods (each, a "Quoted Rate
Period") ranging from 365 days to, in the case of the Term
Loan, the date in clause (ii) of the definition of "Term
Loan Maturity Date" and, in the case of Revolving Loans, the
date in clause (iii) of the definition of "Revolving Loan
Expiration Date,", such rate and period to be established by
CoBank in its sole discretion; provided, however, the period
during which the Quoted Rate applies may only expire on a
Business Day.
(ii) Except as otherwise provided in Subsections 1.2(E)
and 6.6, interest on all Obligations (other than the interest
payments required pursuant to Subsection 1.2(A)(i) above) not
paid when due will accrue interest at the Base Rate plus 0.25%
per annum.
(B) Applicable Margins. Initially, and continuing through the day
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immediately preceding the first Adjustment Date, the applicable Base Rate Margin
and LIBOR Margin shall be 0.00% and 1.00% per annum, respectively. Commencing on
such Adjustment Date, the applicable Base Rate Margin and LIBOR Margin shall be
for each Calculation Period the applicable per annum percentage set forth in the
pricing table below opposite the applicable Leverage Ratio of Borrower;
provided, that at the election of CoBank, effective upon the occurrence of an
Event of Default and for so long as it continues the applicable Base Rate Margin
and LIBOR Margin shall be 0.25% and 1.25% per annum, respectively.
PRICING TABLE
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Base Rate
Leverage Ratio Margin LIBOR Margin
----------------- --------- ------------
= 2.00:1 0.25% 1.25%
< 2.00:1 = 1.00:1 0.00% 1.00%
< 1.00:1 0.00% 0.75%
(C) Interest Periods. Each LIBOR Loan may be obtained for a one,
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two, three, six, nine or 12 month period (each such period being an "Interest
Period"). With respect to all LIBOR Loans:
(i) the Interest Period will commence on the date that any
LIBOR Loan is made or the date on which any portion of the Base Rate
Loan is converted into a LIBOR Loan, or, in the case of immediately
successive Interest Periods, each successive Interest Period shall
commence on the day on which the immediately preceding Interest Period
expires;
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Credit Agreement/SureWest Communications
(ii) if the Interest Period would otherwise expire on a day
that is not a Business Day, then it will expire on the next Business
Day, provided, that if any Interest Period would otherwise expire on a
day that is not a Business Day and such day is a day of a calendar
month after which no further Business Day occurs in such month, such
Interest Period shall expire on the Business Day next preceding such
day;
(iii) any Interest Period that begins on the last Business
Day of a calendar month or on a day for which there is no numerically
corresponding day in the last calendar month in such Interest Period
shall end on the last Business Day of the last calendar month in such
Interest Period; and
(iv) no Interest Period shall be selected for any LIBOR Loan
if, in order to make repayments required pursuant to Subsection 1.6 in
connection with scheduled installments on the Term Loan or scheduled
reductions of the Revolving Loan Commitment pursuant to Subsection
1.6, repayment of all or any portion of a Loan prior to the expiration
of such Interest Period would be necessary.
(D) Calculation and Payment. Interest on all Loans and all other
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Obligations and the amount of any fees set forth in Subsection 1.4 shall be
calculated on the basis of a 360-day year (of twelve 30-day months) for the
actual number of days elapsed. The date of funding or conversion to the Base
Rate Loan, the first day of an Interest Period with respect to a LIBOR Loan and
the first day of a Quoted Rate Period with respect to a Quoted Rate Loan shall
be included in the calculation of interest. The date of payment of any Loan, the
last day of an Interest Period with respect to a LIBOR Loan and the last day of
a Quoted Rate Period with respect to a Quoted Rate Loan shall be excluded from
the calculation of interest; provided, if a Loan is repaid on the same day that
it is made, one day's interest shall be charged.
Interest accruing on the Base Rate Loan and each Quoted Rate
Loan is payable in arrears on each of the following dates or events: (i) the
last day of each calendar quarter, (ii) the prepayment of such Loan (or portion
thereof) and (iii) the Term Loan Maturity Date or the Revolving Loan Expiration
Date, as applicable, whether by acceleration or otherwise. Interest accruing on
each LIBOR Loan is payable in arrears on each of the following dates or events:
(i) the last day of each applicable Interest Period, (ii) if the Interest Period
is longer than three months, on each three-month anniversary of the commencement
date of such Interest Period, (iii) the prepayment of such Loan (or portion
thereof) and (iv) the Term Loan Maturity Date or the Revolving Loan Expiration
Date, as applicable, whether by acceleration or otherwise.
(E) Default Rate of Interest. At the election of CoBank, after
------------------------
the occurrence of an Event of Default and for so long as it continues, all Loans
and other Obligations shall bear interest at rates that are 2.00% in excess of
the rates otherwise in effect, including, without limitation, rates in effect
pursuant to the proviso in the second sentence of Subsection 1.2(B), with
respect to such Loans and other Obligations.
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Credit Agreement/SureWest Communications
(F) Excess Interest. Notwithstanding anything to the contrary set
---------------
forth herein, the aggregate interest, fees and other amounts required to be paid
by Borrower to CoBank hereunder are hereby expressly limited so that in no
contingency or event whatsoever, whether by reason of acceleration of maturity
of the Indebtedness evidenced hereby or otherwise, shall the amount paid or
agreed to be paid to CoBank for the use or the forbearance of the Indebtedness
or Obligations evidenced hereby exceed the maximum permissible under Applicable
Law. If under or from any circumstances whatsoever, fulfillment of any provision
hereof or of any of the other Loan Documents at the time of performance of such
provision shall be due, shall involve exceeding the limit of such as is validity
prescribed by Applicable Law then the obligation to be fulfilled shall
automatically be reduced to the limit of such validity and if under or from any
circumstances whatsoever CoBank should ever receive as interest any amount which
would exceed the highest lawful rate, the amount of such interest that is
excessive shall be applied to the reduction of the principal balance of the
Obligations evidenced hereby and not to the payment of interest. Additionally,
should the method used for calculating interest (i.e., using a 360-day year) be
unlawful, such calculation method shall be automatically changed to a 365-6-day
year or such other lawful calculation method as is reasonably acceptable to
CoBank. This provision shall control every other provision of this Agreement and
all provisions of every other Loan Document.
(G) Selection, Conversion or Continuation of Loans; LIBOR
-----------------------------------------------------
Availability. Borrower shall have the option to (i) select all or any part of a
------------
new borrowing to be (a) a portion of the Base Rate Loan in a principal amount
equal to $100,000 or any whole multiple of $5,000 in excess thereof, (b) a LIBOR
Loan in a principal amount equal to $1,000,000 or any whole multiple of $250,000
in excess thereof or (c) a Quoted Rate Loan in a principal amount equal to
$10,000,000 or any whole multiple of $1,000,000 in excess thereof, (ii) convert
at any time all or any portion of the Base Rate Loan in a principal amount equal
to $1,000,000 or any whole multiple of $250,000 in excess thereof into a LIBOR
Loan or in a principal amount equal to $10,000,000 or any whole multiple of
$1,000,000 in excess thereof into a Quoted Rate Loan , (iii) upon the expiration
of its Interest Period, convert all or any part of any LIBOR Loan into the Base
Rate Loan or into a Quoted Rate Loan in a principal amount equal to $10,000,000
or any whole multiple of $1,000,000 in excess thereof for such new Quoted Rate
Period(s) as selected by Borrower or upon the expiration of its Quoted Rate
Period, or convert all or any part of any Quoted Rate Loan into the Base Rate
Loan or into a LIBOR Loan in a principal amount equal to $1,000,000 or any whole
multiple of $250,000 in excess thereof for such new Interest Period(s) as
selected by Borrower, and (iv) upon the expiration of its Interest Period,
continue any LIBOR Loan in a principal amount equal to $1,000,000 or any whole
multiple of $250,000 in excess thereof into one or more LIBOR Loans for such new
Interest Period(s) as selected by Borrower, or upon the expiration of its Quoted
Rate Period, continue any Quoted Rate Loan in a principal amount equal to
$10,000,000 or any whole multiple of $1,000,000 in excess thereof into one or
more Quoted Rate Loans for such new Quoted Rate Period(s) as selected by
Borrower. During any period in which any Event of Default is continuing, as the
Interest Periods for LIBOR Loans and Quoted Rate Loans then in effect expire,
such Loans shall be converted into the Base Rate Loan and the LIBOR option and
the Quoted Rate option will not be available to Borrower until all Events of
Default are cured or waived. Each LIBOR Loan or Quoted Rate Loan must be made
under a single Facility. In the event Borrower fails to elect a LIBOR Loan or
Quoted Rate Loan upon any advance hereunder or upon the termination of any
Interest Period or Quoted Rate Period, Borrower shall be deemed to have elected
to have such amount constitute a portion of the Base Rate Loan. Notwithstanding
the foregoing, there may be no more than a total of five LIBOR Loans and Quoted
Rate Loans outstanding under the Facilities at any one time.
-7-
1.3 Notice of Borrowing, Conversion or Continuation of Loans.
--------------------------------------------------------
Whenever Borrower desires to request a Loan pursuant to
Subsection 1.1 or to convert or continue Base Rate, LIBOR Loans or Quoted Rate
Loans pursuant to Subsection 1.2(G), Borrower shall give CoBank irrevocable
prior written notice in the form attached hereto as Exhibit 1.3 (a "Notice of
Borrowing/Conversion/Continuation"), (i) if requesting a borrowing of,
conversion to or continuation of the Base Rate Loan (or any portion thereof) or
a Quoted Rate Loan, not later than 11:00 a.m. (Denver, Colorado time), one
Business Day before the proposed borrowing, conversion or continuation is to be
effective or (ii), if requesting a borrowing of, a conversion to or a
continuation of a LIBOR Loan, not later than 11:00 a.m. (Denver, Colorado time),
three Banking Days before the proposed borrowing, conversion or continuation is
to be effective. Each Notice of Borrowing/Conversion/Continuation shall specify
(a) the Loan (or portion thereof) to be converted or continued and, with respect
to any LIBOR Loan to be converted or continued, the last day of the current
Interest Period therefore and with respect to any Quoted Rate Loan to be
converted or continued, the last day of the current Quoted Rate Period therefor,
(b) the effective date of such borrowing, conversion or continuation (which
shall be a Business Day, and in the case of a LIBOR Loan, also a Banking Day),
(c) the principal amount of such Loan to be borrowed, converted or continued,
(d) the Interest Period to be applicable to any new LIBOR Loan or the Quoted
Rate Period to be applicable to any new Quoted Rate Loan, and (e) the Facility
under which such borrowing, conversion or continuation is to be made.
1.4 Fees and Expenses.
-----------------
(A) Commitment Fee. From the Closing Date through the Revolving
--------------
Loan Expiration Date, Borrower shall pay CoBank a fee in an amount equal to (i)
the Revolving Loan Commitment less the sum of (a) the average daily outstanding
balance of Revolving Loans plus (b) the average daily outstanding Letter of
Credit Liability, in each case during the preceding calendar quarter multiplied
by (ii) either (a) 0.125% per annum, when such aggregate average daily
outstanding balance during the applicable period equals or exceeds 50% of the
applicable Revolving Loan Commitment, or (b) 0.25% per annum, when such
aggregate average daily outstanding balance during the applicable period is less
than 50% of the applicable Revolving Loan Commitment. Such fee is to be paid
quarterly in arrears on the last day of each calendar quarter for such calendar
quarter (or portion thereof), with the final such payment due on the Revolving
Loan Expiration Date. From the Closing Date through the Term Loan Availability
Expiration Date, Borrower shall pay CoBank a fee in an amount equal to the Term
Loan Commitment less the average daily outstanding balance of Term Loan
multiplied by 0.25% per annum. Such fee is to be paid quarterly in arrears on
the last day of each calendar quarter for such calendar quarter (or portion
thereof), with the final such payment due on the Term Loan Availability
Expiration Date
(B) Certain Other Fees. Borrower shall pay to CoBank the fees
------------------
specified in that certain letter agreement, dated April 5, 2006, from CoBank to
Borrower, in such amounts and at such times as specified in such letter
agreement.
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Credit Agreement/SureWest Communications
(C) Breakage Fee. Upon any repayment or payment of a LIBOR Loan
------------
on any day that is not the last day of the Interest Period applicable thereto
(regardless of the source of such repayment or prepayment and whether voluntary,
mandatory, by acceleration or otherwise), Borrower shall pay CoBank an amount
(the "LIBOR Breakage Fee") equal to the greater of (i) $300 or (ii) the present
value of any losses, expenses and liabilities (including any loss (including
interest paid) sustained by CoBank in connection with the good faith
re-employment of such funds) that CoBank may sustain as a result of the payment
of such LIBOR Loan on such day. Upon any repayment or payment of a Quoted Rate
Loan on any day that is not the last day of the Quoted Rate Period applicable
thereto (regardless of the source of such repayment or prepayment and whether
voluntary, mandatory, by acceleration or otherwise), Borrower shall pay CoBank
an amount (the "Quoted Rate Breakage Fee"; and together with the LIBOR Breakage
Fee, the "Breakage Fees") equal to the greater of (i) $300 or (ii) the sum of
(a) the present value of any losses, expenses and liabilities (including any
loss (including interest paid) sustained by CoBank in connection with the good
faith re-employment of such funds) that CoBank may sustain as a result of the
payment of such Quoted Rate Loan on such day plus (b) a per annum yield of 1/2
of 1 percent (0.50%) on the amount prepaid for the period such amount was
scheduled to have been outstanding at Quoted Rate.
(D) Expenses and Attorneys Fees. Borrower agrees to pay promptly
---------------------------
all reasonable fees, costs and expenses (including those of internal and
external attorneys) incurred by CoBank in connection with (i) any matters
contemplated by or arising out of the Loan Documents, and (ii) the continued
administration of the Loan Documents, including any tax payable in connection
with any Loan Documents and any such fees, costs and expenses incurred in
connection with any amendments, modifications and waivers. In addition to fees
due under Subsections 1.4(A) and (B), Borrower shall also reimburse on demand
CoBank for its out-of-pocket expenses (including reasonable attorneys' fees and
expenses and expenses) incurred in connection with the transactions contemplated
herein. Borrower agrees to pay promptly all reasonable out-of-pocket fees, costs
and expenses incurred by CoBank in connection with any action to enforce any
Loan Document or to collect any payments due from Borrower. In addition to fees
due under Subsections 1.4(A) and (B), Borrower agrees to pay promptly (i) all
reasonable fees, costs and expenses incurred by CoBank in connection with any
amendment, supplement, waiver or modification of any of the Loan Documents and
(ii) all reasonable out-of-pocket fees, costs and expenses incurred by each of
CoBank in connection with any Default or Event of Default and any enforcement of
collection proceeding resulting therefrom or any workout or restructuring of any
of the transactions hereunder or contemplated thereby or any action to enforce
any Loan Document or to collect any payments due from Borrower. All fees, costs
and expenses for which Borrower is responsible under this Subsection 1.4(D)
shall be deemed part of the Obligations when incurred, payable upon demand and
in accordance with the second paragraph of Subsection 1.5.
(E) Letter of Credit Fees. Borrower shall pay CoBank a yearly fee
---------------------
for each Letter of Credit from the date of issuance to the date of termination
in an amount equal to the applicable LIBOR Margin multiplied by the face amount
of such Letter of Credit. Such fee is to be paid quarterly in arrears on the
last day of each calendar quarter and the termination of the Letter of Credit.
With respect to each Letter of Credit, Borrower shall also pay CoBank an
issuance fee equal to 0.25% of the face amount of such Letter of Credit, which
amount shall be paid upon the date of issuance and, if the expiration date of
such Letter of Credit is later than one year from its date of issuance, upon
each anniversary of the date of issuance during the term of such Letter of
Credit.
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Credit Agreement/SureWest Communications
1.5 Payments. All payments by Borrower of the Obligations shall be
--------
made in same day funds and delivered to CoBank by wire transfer to the following
account or such other place as CoBank may from time to time designate:
CoBank, ACB
Greenwood Village, Colorado
ABA Number 0000-0000-0
Account No. 00000000-RX0407 (indicate whether a payment on
Term Loan Facility or the Revolving Loan Facility)
Reference: CoBank for the benefit of SureWest Communications
Borrower shall receive credit on the day of receipt for funds received by CoBank
by 11:00 a.m. (Denver, Colorado time) on any Business Day. Funds received on any
Business Day after such time shall be deemed to have been paid on the next
Business Day. Whenever any payment to be made hereunder shall be stated to be
due on a day that is not a Business Day, the payment shall be due on the next
succeeding Business Day and such extension of time shall be included in the
computation of the amount of interest and fees due hereunder.
At any time that funds have been drawn thereunder, Borrower authorizes
CoBank to make (but CoBank shall not be obligated to make) the Base Rate Loan
under the Revolving Loan Facility, for Letter of Credit Liability payments.
Following an Event of Default, Borrower authorizes CoBank to make (but CoBank
shall not be obligated to make) a Base Rate Loan under the Revolving Loan
Facility for the payment of interest, commitment fees and Breakage Fees. Prior
to an Event of Default, other fees, costs and expenses (including those of
attorneys) reimbursable pursuant to Subsections 1.4(A), 1.4(B), 1.4(D) and
1.4(E) or elsewhere in any Loan Document may be debited to the Base Rate Loan
under the Revolving Loan Facility after 15 days' notice. After the occurrence of
an Event of Default, any such other fees, costs and expenses may be debited to
the Base Rate Loan under the Revolving Loan Facility without notice.
To the extent Borrower makes a payment or payments to CoBank, which
payments or any part thereof are subsequently invalidated, declared to be
fraudulent or preferential, set aside and/or required to be repaid to a trustee,
receiver or any other party under any bankruptcy law, state or federal law,
common law or equitable cause, then, to the extent of such payment or proceeds
repaid, the Obligations or part thereof intended to be satisfied shall be
revived and continued in full force and effect as if such payment or proceeds
had not been received by CoBank.
1.6 Repayments and Reduction of Term Loan and Revolving Loan
--------------------------------------------------------
Commitment and Related Mandatory Repayments.
-------------------------------------------
(A) Scheduled Repayments and Reductions of Term Loan and
--------------------------------------------------------
Revolving Loan Commitment.
-------------------------
(1) Term Loan. In addition to any prepayments or repayments
---------
made or required pursuant to Subsection 1.7, commencing on March 31, 2008, and
each June 30, September 30, December 31, and March 31 thereafter through the
Term Loan Maturity Date, Borrower shall repay the aggregate outstanding
principal balance of the Term Loan outstanding on December 31, 2007 in 34 equal
principal quarterly payments; provided, however, that any outstanding principal
balance of the Term Loan not sooner due and payable shall become due and payable
on the Term Loan Maturity Date.
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Credit Agreement/SureWest Communications
(2) Revolving Loan Commitment. In addition to any
-------------------------
reductions pursuant to Subsection 1.6(C), the Revolving Loan Commitment shall be
permanently reduced and terminated in full on the Revolving Loan Expiration
Date, and any outstanding principal balance of the Revolver Loans not sooner due
and payable will become due and payable on the Revolving Loan Expiration Date.
(B) Reductions Resulting From Mandatory Repayments. The Term Loan
----------------------------------------------
Commitment also shall be permanently reduced to the extent and in the amount
that Borrower is required, pursuant to Section 1.8, to apply mandatory
repayments to be made pursuant to Subsection 1.7(B) or (C) to the Term Loan
(whether or not any of the Term Loan is then outstanding and available to be
repaid). All reductions provided for in this Subsection 1.6(B) shall be in
addition to (and shall not serve to reduce the amount or date of) any voluntary
reductions provided for in Subsection 1.6(C).
(C) Voluntary Reduction of Loan Commitments. Borrower shall have
---------------------------------------
the right, upon at least three Business Days' notice to CoBank, to permanently
reduce the then unused portion of either Loan Commitment. Each reduction shall
be in a minimum amount of at least $1,000,000, or any whole multiple of $250,000
in excess thereof. Notwithstanding the foregoing, no reduction shall be
permitted if, after giving effect thereto and to any prepayment made therewith,
the aggregate principal balance of the Loans then outstanding plus, in the case
of the Revolving Loan Commitment the amount of the Letter of Credit Liability
then outstanding, would exceed the Term Loan Commitment or the Revolving Loan
Commitment, as applicable as so reduced. All reductions provided for in this
Subsection 1.6(C) shall be in addition to (and shall not serve to reduce the
amount or date of) the scheduled reductions provided for in Subsection 1.6(A)
and the other reductions provided for in Subsection 1.6(B).
(D) Mandatory Repayments. On the date of any Revolving Loan
--------------------
Commitment reduction provided for in this Subsection 1.6, Borrower shall repay
Revolving Loans or reduce the Letter of Credit Liability pursuant to Subsection
1.15 in an amount at least sufficient to reduce the aggregate principal balance
of Revolving Loans then outstanding plus the amount of the Letter of Credit
Liability then outstanding to the amount of the Revolving Loan Commitment as so
reduced. If at any time the aggregate outstanding amount of Revolving Loans plus
the amount of the Letter of Credit Liability then outstanding exceeds the
Revolving Loan Commitment, Borrower shall repay Revolving Loans or reduce the
Letter of Credit Liability pursuant to Subsection 1.15 in an amount at least
sufficient to reduce the aggregate principal balance of Revolving Loans then
outstanding plus the amount of the Letter of Credit Liability then outstanding
to the amount of the Revolving Loan Commitment, and until such repayment is
made, CoBank shall not be obligated to make any Loans or issue any Letters of
Credit. Any repayments pursuant to this Subsection 1.6(D) shall be applied in
accordance with Subsection 1.8, and shall be accompanied by accrued interest on
the amount repaid and any applicable Breakage Fees.
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Credit Agreement/SureWest Communications
1.7 Voluntary Prepayments and Other Mandatory Repayments.
----------------------------------------------------
(A) Voluntary Prepayment of Loans. Subject to the provisions of
-----------------------------
Section 1.8, at any time, Borrower may prepay the Base Rate Loan, in whole or in
part, without penalty. Subject to the provisions of Section 1.8, payment of
applicable Breakage Fees and the notice requirement in the following sentence,
at any time Borrower may prepay any LIBOR Loan or any Quoted Rate Loan, in whole
or in part. Notice of any prepayment of a LIBOR Loan or Quoted Rate Loan shall
be given not later than 11:00 a.m. (Denver, Colorado time) on the third Business
Day preceding the date of prepayment. All prepayment notices shall be
irrevocable. All prepayments shall be accompanied by accrued interest on the
amount prepaid and any applicable Breakage Fees.
(B) Repayments from Insurance Proceeds. Borrower shall repay the
----------------------------------
Term Loan in an amount equal to the Net Proceeds received by Borrower or any of
its Subsidiaries which are insurance proceeds from any Asset Disposition to the
extent that such proceeds are not reinvested in equipment or other assets that
are used or useful in the business of Borrower or any of its Subsidiaries within
180 days of receipt by Borrower or such Subsidiary of such proceeds. All such
repayments shall be applied in accordance with Subsection 1.8. All such
repayments shall be accompanied by accrued interest on the amount repaid and any
applicable Breakage Fees.
(C) Repayments from Asset Dispositions. Promptly upon receipt by
----------------------------------
Borrower or any of its Subsidiaries of Net Proceeds of an Asset Disposition,
other than insurance proceeds reinvested pursuant to Subsection 1.7(B) or Net
Proceeds of Asset Dispositions permitted pursuant to Subsection 3.7 without the
consent of CoBank (unless pursuant to Subsection 3.7(vi) Borrower is required to
apply such proceeds to the repayment of the Term Loan pursuant to this
Subsection 1.7(C)), Borrower shall repay the Term Loan in an amount equal to the
Net Proceeds received by Borrower or any of its Subsidiaries. All such
repayments shall be applied in accordance with Subsection 1.8. All such
repayments shall be accompanied by accrued interest on the amount repaid and any
applicable Breakage Fees.
1.8 Application of Prepayments and Repayments; Payment of Breakage
--------------------------------------------------------------
Fees, Etc. All prepayment and repayments made pursuant to Subsections 1.6 and
---------
1.7 shall first be applied to such of the applicable type of Loans as Borrower
shall direct in writing and, in the absence of such direction, shall first be
applied to the Base Rate Loan and then to such LIBOR Loans and Quoted Rate Loans
as Borrower and CoBank shall agree (in the absence of agreement, such
prepayments and repayments shall be applied to the LIBOR Loans and Quoted Rate
Loans on which the lowest amount of Breakage Fees would be due). All prepayments
and repayments required or permitted hereunder shall be accompanied by payment
of all applicable Breakage Fees and accrued interest on the amount repaid. All
prepayments and repayments applied to the Term Loan shall be applied to
principal installments in the inverse order of maturity.
1.9 Loan Accounts. CoBank will maintain loan account records for (i)
-------------
all Loans, interest charges and payments thereof, (ii) all Letter of Credit
Liability, (iii) the charging and payment of all fees, costs and expenses and
(iv) all other debits and credits pursuant to this Agreement. Absent manifest
error, the balance in the loan accounts shall be presumptive evidence of the
amounts due and owing to CoBank, provided that any failure by CoBank to maintain
such records shall not limit or affect Borrower's obligation to pay. During the
continuance of an Event of Default, Borrower irrevocably waives the right to
direct the application of any and all payments and Borrower hereby irrevocably
agrees that CoBank shall have the continuing exclusive right to apply and
reapply payments in any manner it deems appropriate.
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Credit Agreement/SureWest Communications
1.10 Changes in LIBOR Rate Availability. If with respect to any
----------------------------------
proposed Interest Period, CoBank determines that deposits in dollars (in the
applicable amount) are not being offered in the relevant market for such
Interest Period, CoBank shall forthwith give notice thereof to Borrower,
whereupon and until CoBank notifies Borrower that the circumstances giving rise
to such situation no longer exist, the obligations of CoBank to make LIBOR Loans
shall be suspended.
If the introduction of, or any change in, any Applicable Law or
any change in the interpretation or administration thereof by any Governmental
Authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by CoBank with any request or directive
(whether or not having the force of law) of any such Governmental Authority,
central bank or comparable agency, shall make it unlawful or impossible for
CoBank to honor its obligations hereunder to make or maintain any LIBOR Loan,
CoBank shall promptly give notice thereof to Borrower. Thereafter, until CoBank
notifies Borrower that such circumstances no longer exist, (i) the obligations
of CoBank to make LIBOR Loans and the right of Borrower to convert any Loan or
continue any Loan as a LIBOR Loan shall be suspended and (ii) if CoBank may not
lawfully continue to maintain a LIBOR Loan to the end of the then current
Interest Period applicable thereto, such Loan shall immediately be converted to
the Base Rate Loan.
1.11 Capital Adequacy and Other Adjustments.
--------------------------------------
(A) If the introduction of or the interpretation of any law,
rule, or regulation would increase the reserve requirement or otherwise increase
the cost to CoBank of making or maintaining a LIBOR Loan, then CoBank shall
submit a certificate to Borrower setting forth the amount and demonstrating the
calculation of such increased cost. CoBank may seek recovery of such additional
amounts from Borrower only to the extent it seeks recovery for such amounts from
similarly situated borrowers. Borrower shall pay the amount of such increased
cost to CoBank within 15 days after receipt of such certificate. Such
certificate shall, absent manifest error, be final, conclusive and binding for
all purposes. There is no limitation on the number of times such a certificate
may be submitted.
(B) In the event that CoBank shall have determined that the
adoption after the date hereof of any law, treaty, governmental (or
quasi-governmental) rule, regulation, guideline or order regarding capital
adequacy, reserve requirements or similar requirements or compliance by CoBank
or any corporation controlling CoBank with any request or directive regarding
capital adequacy, reserve requirements or similar requirements (whether or not
having the force of law and whether or not failure to comply therewith would be
unlawful) from any central bank or governmental agency or body having
jurisdiction does or shall have the effect of increasing the amount of capital,
reserves or other funds required to be maintained by CoBank or any corporation
controlling CoBank and thereby reducing the rate of return on CoBank's or such
corporation's capital as a consequence of its obligations hereunder, then
Borrower shall from time to time within 15 days after notice and demand from
CoBank (together with the certificate referred to in the next sentence) pay to
CoBank additional amounts sufficient to compensate CoBank for such reduction.
CoBank may seek recovery of such additional amounts from Borrower only to the
extent it seeks recovery for such amounts from similarly situated borrowers. A
certificate as to the amount of such cost and showing the basis of the
computation of such cost submitted by CoBank to Borrower shall, absent manifest
error, be final, conclusive and binding for all purposes. There is no limitation
on the number of times such a certificate may be submitted.
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Credit Agreement/SureWest Communications
1.12 Taxes: No Deductions. Any and all payments or reimbursements
--------------------
made hereunder or under the Notes shall be made free and clear of and without
deduction for any and all taxes, levies, imposts, deductions, charges or
withholdings, and all liabilities with respect thereto, excluding, however, any
tax imposed on the revenues, income or net income of CoBank by its jurisdiction
of incorporation or by the federal, state, local or foreign taxing authorities
in the jurisdiction in which the principal place of business of CoBank is
located or by any jurisdiction or taxing authority thereof or therein, with
which CoBank has or had a connection (other than a connection arising solely as
a result of CoBank having executed, delivered or performed its obligations or
received a payment under, or enforced, this Agreement or any other Loan
Document) (all such non-excluded taxes, levies, imposts, deductions or
withholdings, and all liabilities with respect thereto, collectively, "Tax
Liabilities"). If Borrower shall be required by law to deduct any Tax
Liabilities from or in respect of any sum payable hereunder to CoBank, then the
sum payable hereunder shall be increased as may be necessary so that, after
making all required deductions, CoBank receives an amount equal to the sum it
would have received had no such deductions been made.
1.13 Changes in Tax Laws. In the event that, subsequent to the
-------------------
Closing Date, (i) any changes in any existing law, regulation, treaty or
directive or in the interpretation or application thereof, (ii) any new law,
regulation, treaty or directive enacted or any interpretation or application
thereof, or (iii) compliance by CoBank with any request or directive (whether or
not having the force of law) from any Governmental Authority:
(i) does or shall subject CoBank to any tax of any
kind whatsoever with respect to this Agreement, the other Loan
Documents or any Loans made or any Letters of Credit issued hereunder,
or change the basis of taxation of payments to CoBank of principal,
fees, interest or any other amount payable hereunder (except for net
income taxes, or franchise taxes imposed in lieu of net income taxes,
imposed generally by federal, state or local taxing authorities with
respect to interest or commitment or other fees payable hereunder or
changes in the rate of tax on the overall net income of CoBank); or
(ii) does or shall impose on CoBank any other condition
or increased cost in connection with the transactions contemplated
hereby or participations herein;
and the result of any of the foregoing is to increase the cost to CoBank of
making or continuing any Loan or of issuing any Letters of Credit hereunder, or
to reduce any amount receivable hereunder, then, in any such case, Borrower
shall promptly pay to CoBank, upon its demand, any additional amounts necessary
to compensate CoBank, on an after-tax basis, for such additional cost or reduced
amount receivable, as determined by CoBank with respect to this Agreement or the
other Loan Documents. If CoBank becomes entitled to claim any additional amounts
pursuant to this Subsection 1.13, it shall promptly notify Borrower of the event
by reason of which CoBank has become so entitled. A certificate as to any
additional amounts payable pursuant to the foregoing sentence submitted by
CoBank to Borrower shall, absent manifest error, be final, conclusive and
binding for all purposes. There is no limitation on the number of times such a
certificate may be submitted.
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Credit Agreement/SureWest Communications
1.14 Term of This Agreement. All of the Obligations shall become
----------------------
due and payable as otherwise set forth herein, but in any event, all of the
remaining Obligations shall become due and payable on the Term Loan Maturity
Date. Until all Obligations have been indefeasibly and irrevocably paid and
satisfied in full, all Letters of Credit have been terminated and the Revolving
Loan Commitment has been terminated, this Agreement shall remain in full force
and effect.
1.15 Letter of Credit Liability. Upon the occurrence and during
--------------------------
the continuance of an Event of Default, and in the event any Letters of Credit
are outstanding at the time that Borrower terminates the Revolving Loan
Commitment, then (a) with respect to each such Letter of Credit, Borrower shall
either (i) deliver to CoBank a letter of credit in the same currency that such
Letter of Credit is payable, with a term that extends 60 days beyond the
expiration date of such Letter of Credit, issued by a bank satisfactory to
CoBank and in an amount equal to 105% of the aggregate outstanding Letter of
Credit Liability with respect to such Letter of Credit, which letter of credit
shall be drawable by CoBank to reimburse payments of drafts drawn under such
Letter of Credit and to pay any fees and expenses related thereto or (ii)
immediately deposit with CoBank an amount equal to the aggregate outstanding
Letter of Credit Liability to enable CoBank to make payments under the Letters
of Credit when required and such amount shall become immediately due and
payable, and (b) Borrower shall prepay the fees payable under Subsection 1.4(E)
with respect to all such Letters of Credit for the full remaining terms of such
Letters of Credit. Upon termination of any such Letter of Credit, the unearned
portion of such prepaid fee attributable to such Letter of Credit shall be
refunded to Borrower.
SECTION 2
AFFIRMATIVE COVENANTS
Borrower covenants and agrees that so long as this Agreement is in
effect and until payment in full of all Obligations, unless CoBank shall
otherwise give its prior written consent, Borrower shall and shall cause its
Subsidiaries to, perform and comply with all covenants in this Section 2.
2.1 Compliance With Laws. Borrower will (i) comply with and will
--------------------
cause its Subsidiaries to comply with the requirements of all Applicable Laws
(including laws, rules, regulations and orders relating to taxes, employer and
employee contributions, securities, employee retirement and welfare benefits,
environmental protection matters and employee health and safety) as now in
effect and which may be imposed in the future in all jurisdictions in which
Borrower or any of its Subsidiaries is now or hereafter doing business, other
than those Applicable Laws the noncompliance with which could not reasonably be
expected to have, either individually or in the aggregate, a Material Adverse
Effect, (ii) obtain and maintain and will cause its Subsidiaries to obtain and
maintain all licenses, qualifications and permits (including the Licenses) now
held or hereafter required to be held by Borrower or any of its Subsidiaries,
the loss, suspension or revocation of which or which the failure to obtain or
renew could reasonably be expected to have a Material Adverse Effect and (iii)
comply with and will cause its Subsidiaries to comply with all Material
Contracts, other than, in all such cases, as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. This
Subsection 2.1 shall not preclude Borrower or any of its Subsidiaries from
contesting any taxes or other payments, if they are being diligently contested
in good faith and if adequate reserves therefor are maintained in conformity
with GAAP.
-15-
2.2 Maintenance of Books and Records; Properties; Insurance.
-------------------------------------------------------
Borrower will keep and will cause each of its Subsidiaries to keep adequate
records and books of account, in which full, true and correct entries will be
made in accordance with GAAP consistently applied, reflecting all financial
transactions of such Persons. Borrower will maintain or cause to be maintained
and will cause each of its Subsidiaries to maintain or cause to be maintained in
good repair, working order and condition all material property used in its
business and the business of its Subsidiaries, and will make or cause to be made
all appropriate repairs, renewals and replacements thereof. Borrower will and
will cause each of its Subsidiaries to maintain complete, accurate and
up-to-date books, records, accounts and other information relating to all
property in such form and in such detail as may be reasonably satisfactory to
CoBank. Borrower will maintain or cause to be maintained and will cause each of
its Subsidiaries to maintain or cause to be maintained, with financially sound
and reputable insurers, commercial general liability, property loss and damage,
business interruption and workers' compensation insurance with respect to its
business and properties and the business and properties of its Subsidiaries
against loss and damage of the kinds customarily carried or maintained by
corporations of established reputation engaged in the telecommunications service
provider industries and of such types, with such insurers, in such amounts, with
such limits and deductibles and otherwise on such terms and conditions as shall
be acceptable to CoBank in its reasonable discretion, which types, insurers,
amounts, limits, deductibles, and other terms and conditions in no event may be
less protective or less beneficial to Borrower and its Subsidiaries than the
types, insurers, amounts, limits, deductibles, and other terms and conditions as
are in place on the date hereof, and will deliver evidence thereof to CoBank on
or prior to the Closing Date, and thereafter at least 30 days prior to any
expiration thereof, evidence of renewal of such insurance. All property loss and
damage insurance shall be on an all risk basis and shall insure property for the
full replacement cost thereof.
CoBank shall be entitled, upon reasonable advance notice, to review
and/or receive copies of, the insurance policies of Borrower and its
Subsidiaries carried and maintained with respect to Borrower's obligations under
this Subsection 2.2. Notwithstanding anything to the contrary herein, no
provision of this Subsection 2.2 or any provision of this Agreement shall impose
on CoBank any duty or obligation to verify the existence or adequacy of the
insurance coverage maintained by Borrower and its Subsidiaries, nor shall CoBank
be responsible for any representations or warranties made by or on behalf of
Borrower and its Subsidiaries to any insurance broker, company or underwriter.
CoBank, at its sole option, may obtain such insurance if not provided by
Borrower and in such event, Borrower shall reimburse CoBank upon demand for the
cost thereof.
2.3 Inspection. Borrower will and will cause its Subsidiaries to
----------
permit any authorized representatives of CoBank (i) to visit and inspect any of
the properties of Borrower and its Subsidiaries, including its financial and
accounting records, and to make copies and take extracts therefrom, and (ii) to
discuss its affairs, finances and business with its officers, employees and
certified public accountants, all upon at least five days notice, at such
reasonable times during normal business hours and as often as may be reasonably
requested.
-16-
Credit Agreement/SureWest Communications
2.4 Legal Existence, Etc. Except as otherwise permitted by
--------------------
Subsection 3.6, Borrower will and will cause its Subsidiaries to at all times
preserve and keep in full force and effect its or their legal existence and good
standing and all rights and franchises material to its or their business.
2.5 Use of Proceeds. Borrower will use and will cause its
---------------
Subsidiaries to use the proceeds of the Loans solely for the purposes described
in the recital paragraphs to this Agreement. No part of any Loan will be used to
purchase any margin securities or otherwise in violation of the regulations of
the Federal Reserve System.
2.6 Further Assurances. Borrower will, and will cause each of its
------------------
Subsidiaries to, from time to time, do, execute and deliver all such additional
and further acts, documents and instruments as CoBank reasonably requests to
consummate the transactions contemplated hereby and to vest completely in and
assure CoBank of its rights under this Agreement and the other Loan Documents.
2.7 CoBank Patronage Capital. Borrower will acquire non-voting
------------------------
participation certificates in CoBank in such amounts and at such times as CoBank
may require in accordance with CoBank's Bylaws and Capital Plan (as each may be
amended from time to time), except that the maximum amount of participation
certificates that Borrower may be required to purchase in CoBank in connection
with the Loans may not exceed the maximum amount permitted by the Bylaws at the
time this Agreement is entered into. The rights and obligations of the parties
with respect to such participation certificates and any distributions made on
account thereof or on account of Borrower's patronage with CoBank shall be
governed by CoBank's Bylaws. Borrower hereby consents and agrees that the amount
of any distributions with respect to its patronage with CoBank that are made in
qualified written notices of allocation (as defined in 26 U.S.C. section 1388)
and that are received by Borrower from CoBank, will be taken into account by
Borrower at the stated dollar amounts whether the distribution is evidenced by a
participation certificate or other form of written notice that such distribution
has been made and recorded in the name of Borrower on the records of CoBank. The
Obligations shall be secured by a statutory first lien on all equity which
Borrower may now own or hereafter acquire in CoBank.
2.8 Investment Company Act; Public Utility Holding Act. Neither
--------------------------------------------------
Borrower nor any of its Subsidiaries shall be or become an "investment company"
as that term is defined in and is not otherwise subject to regulation under, the
Investment Company Act of 1940, as amended. Neither Borrower nor any of its
Subsidiaries shall be or become a "holding company" as that term is defined in,
and is not otherwise subject to regulation under, the Public Utility Holding
Company Act of 1935, as amended.
2.9 Payment of Obligations. Unless contested in good faith by
----------------------
appropriate proceedings and then only to the extent reserves required by GAAP
have been set aside therefore, Borrower will, and will cause each of its
Subsidiaries to, (i) pay, discharge or otherwise satisfy at or before maturity
all liabilities and obligations as and when due (subject to any applicable
subordination provisions), and any additional costs that are imposed as a result
of any failure to so pay, discharge or otherwise satisfy such obligations,
except to the extent failure to do so would not be reasonably likely to have a
Material Adverse Effect, and (ii) pay and discharge all taxes, assessments,
claims and governmental charges or levies imposed upon it, upon its income or
profits or upon any of its properties, prior to the date on which penalties
would attach thereto or a lien would attach to any of the properties of Borrower
if unpaid unless the same are being contested in good faith and by appropriate
proceedings and then only if and to the extent reserves required by GAAP have
been set aside therefor.
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Credit Agreement/SureWest Communications
2.10 Environmental Laws. Borrower will, and will at all times
------------------
cause each of its Subsidiaries to:
(A) Comply in all material respects with, and ensure compliance
in all material respects by all its tenants and subtenants, if any, with, all
applicable Environmental Laws and obtain and comply in all material respects
with and maintain, and ensure that all its tenants and subtenants obtain and
comply in all material respects with and maintain, any and all licenses,
approvals, notifications, registrations or permits required by applicable
Environmental Laws except to the extent that failure to do so could not
reasonably be expected to have a Material Adverse Effect;
(B) Conduct and complete all investigations, studies, sampling
and testing, and all remedial, removal and other actions required under
Environmental Laws and promptly comply in all material respects with all lawful
orders and directives of all Governmental Authorities regarding Environmental
Laws except to the extent that the same are being contested in good faith by
appropriate proceedings and the pendency of such proceedings could not
reasonably be expected to have a Material Adverse Effect.
(C) Defend, indemnify and hold harmless CoBank, and its
respective employees, agents, officers and directors, from and against any and
all claims, demands, penalties, fines, liabilities, settlements, damages, costs
and expenses of whatever kind or nature known or unknown, contingent or
otherwise, arising out of, or in any way relating to the violation of,
noncompliance with or liability under, any Environmental Law applicable to the
operations of Borrower or any of its Subsidiaries or their respective
properties, or any orders, requirements or demands of Governmental Authorities
related thereto, including, without limitation, reasonable attorney's and
consultant's fees, investigation and laboratory fees, response costs, court
costs and litigation expenses, except to the extent that any of the foregoing is
determined by a final and nonappealable judgment of a court of competent
jurisdiction or pursuant to arbitration as set forth herein to have resulted
from the gross negligence or willful misconduct of the party seeking
indemnification therefor. The agreements in this Subsection 2.10 shall survive
repayment of the Obligations and the termination of this Agreement.
2.11 ERISA Compliance. With respect to any Plan that is intended
----------------
to qualify under Section 401(a) of the IRC, Borrower will apply for and obtain a
favorable determination letter within the period required by Applicable Law.
SECTION 3
NEGATIVE COVENANTS
Borrower covenants and agrees that so long as this Agreement is in
effect and until payment in full of all Obligations, unless CoBank shall
otherwise give its prior written consent, Borrower shall, and shall cause its
Subsidiaries to, perform and comply with all covenants in this Section 3.
-18-
Credit Agreement/SureWest Communications
3.1 Indebtedness. Borrower will not and will not permit its
------------
Subsidiaries directly or indirectly to create, incur, assume, guaranty or
otherwise become or remain liable with respect to any Indebtedness other than:
(A) the Obligations;
(B) Contingent Obligations permitted by Subsection 3.4;
(C) Indebtedness issued or incurred by any of Borrower's
Subsidiaries if after giving effect thereto and the application of proceeds
therefrom, the aggregate of all Priority Debt incurred after December 8, 1998
would not exceed 15% of Consolidated Net Worth as of the most recently completed
fiscal quarter of Borrower;
(D) secured Indebtedness issued by Borrower secured by a Lien
described in clause (9) of the definition of Permitted Encumbrances;
(E) Other unsecured Indebtedness issued by Borrower, provided,
that no Default or Event of Default exists at the time of or will result in the
succeeding 12 months after such issuance, including under Subsections 4.1 and
4.2, taking such additional Indebtedness (and a reasonable estimate of its
related interest expense into account);
(F) Indebtedness incurred in connection with any Related Interest
Rate Agreement; and
(G) Indebtedness under purchase money security agreements and
Capital Leases not to exceed $25,000,000 in the aggregate principal at any one
time.
3.2 Liens and Related Matters. Borrower will not and will not
-------------------------
permit its Subsidiaries directly or indirectly to create, incur, assume or
permit to exist any Lien on or with respect to any property or asset (including
any document or instrument with respect to goods or accounts receivable) of
Borrower or its Subsidiaries, whether now owned or hereafter acquired, or any
income or profits therefrom, except Permitted Encumbrances.
3.3 Investments. Borrower will not and will not permit its
-----------
Subsidiaries directly or indirectly to make or own any Investment in any Person
except:
(A) Borrower and its Subsidiaries may make and own Investments in
Cash Equivalents; provided that neither Borrower nor any of its Subsidiaries
shall incur any obligation to any Person which could subject such Cash
Equivalents (other than deposit accounts established and maintained in the
ordinary course) to set off rights;
(B) equities in CoBank, as set forth in Subsection 2.8;
(C) other Investments by Borrower or its Subsidiaries which do
not, in the aggregate for Borrower and its Subsidiaries, exceed $2,000,000;
(D) advances to employees made in the ordinary course of
business; and
-19-
Credit Agreement/SureWest Communications
(E) Investments in wholly owned Subsidiaries of Borrower.
3.4 Contingent Obligations. Borrower will not and will not permit
----------------------
its Subsidiaries directly or indirectly to create or become or be liable with
respect to any Contingent Obligation except those:
(A) resulting from endorsement of negotiable instruments for
collection in the ordinary course of business;
(B) arising with respect to customary indemnification obligations
incurred in connection with permitted Asset Dispositions (provided that such
obligations shall in no event exceed the amount of proceeds received in
connection therewith);
(C) incurred in the ordinary course of business with respect to
surety and appeal bonds, performance and return-of-money bonds and other similar
obligations not exceeding at any time outstanding $2,000,000 in aggregate
liability; and
(D) incurred with respect to Indebtedness permitted by Subsection
3.1 (provided that such guaranty obligation shall in no event exceed the amount
of such Indebtedness plus other related costs and expenses of collection as set
forth in such guaranty).
3.5 Restricted Junior Payments. Borrower will not directly or
--------------------------
indirectly declare, order, pay, make or set apart any sum for any Restricted
Junior Payment; provided, however, that so long as no Default or Event of
Default exists before or will result in the succeeding 12 months after such
distribution, based upon Borrower's Budget delivered to CoBank pursuant to
Subsection 4.4(G), Borrower may declare or pay lawful distributions to its
shareholders (i) during each of the fiscal years ending December 31, 2006, 2007
and 2008, up to an aggregate amount of $16,500,000 and (ii) during each fiscal
year thereafter, up to an aggregate amount equal to the higher of $16,500,000 or
100% of the net income of the immediately preceding fiscal year; provided,
further, however, that Borrower may (i) satisfy on a non-cash basis the exercise
of any stock option or similar award under a stock-based compensation plan and
(ii) may otherwise repurchase its issued and outstanding stock in an aggregate
amount not to exceed $20,000,000.
3.6 Restriction on Fundamental Changes. Borrower will not and
----------------------------------
will not permit its Subsidiaries directly or indirectly to: (i) unless and only
to the extent required by law, amend, modify or waive any term or provision of
its articles of organization, partnership agreement, operating agreement,
management agreements, articles of incorporation or certificates of designations
pertaining to preferred stock or by-laws without the consent of CoBank (which
consent shall not be unreasonably withheld), other than an amendment,
modification or waiver that is solely ministerial or administrative in nature or
the reincorporation of Borrower in the State of Delaware; provided, however,
Borrower shall promptly give CoBank notice of any such amendment, modification
or waiver; (ii) enter into any transaction of merger or consolidation or acquire
by purchase or otherwise all or any substantial part of the business or assets
of any other Person, except (a) any Subsidiary of Borrower may be merged with or
into Borrower or any wholly owned Subsidiary of Borrower provided that Borrower
or such wholly owned Subsidiary of Borrower is the surviving entity and (b)
Borrower or its Subsidiaries may consolidate or merge with or into any other
Person or acquire by purchase or otherwise all or any substantial part of the
business or assets of any other Person, provided that no Default or Event of
Default then exists or would result from such transaction, Borrower or such
Subsidiary is the surviving or continuing entity and the consideration for each
such transaction provided by Borrower (whether in the form of stock, cash or
other consideration) does not exceed $50,000,000 and such consideration for all
such transactions under this subclause (b) does not in the aggregate exceed
$100,000,000; or (iii) liquidate, wind-up or dissolve itself (or suffer any
liquidation or dissolution).
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Credit Agreement/SureWest Communications
3.7 Disposal of Assets or Subsidiary Stock. Borrower will not,
--------------------------------------
and will not permit any of its Subsidiaries to, directly or indirectly, convey,
sell (including, without limitation, pursuant to a sale and leaseback
transaction), lease (including, without limitation, pursuant to a lease and
leaseback transaction), sublease, transfer or otherwise dispose of, or grant any
Person an option to acquire, in one transaction or a series of transactions, any
of its property, business or assets, or the capital stock of or other equity
interests in any of its Subsidiaries, except for (i) bona fide sales or leases
of inventory to customers in the ordinary course of business, dispositions of
equipment not used or useful in the business or otherwise obsolete and any sale,
conveyance, lease, sublease, transfer or other disposition of assets of any of
Borrower or its Subsidiaries to Borrower or any wholly owned Subsidiary; (ii)
fair market value sales of Cash Equivalents; (iii) leasing or subleasing of its
property in the ordinary course of business; (iv) other Asset Dispositions if
all of the following conditions are met: (a) the aggregate book value of such
assets sold in any one transaction or series of related transactions for any
12-month period does not exceed 10% of Consolidated Net Assets determined as of
the end of the immediately preceding fiscal year in the aggregate for Borrower
and its Subsidiaries, (b) the consideration received by Borrower or such
Subsidiary is at least equal to the fair market value of such assets, (c) the
sole consideration received is cash or other assets (other than a note or other
delayed payment transaction), (d) after giving effect to the Asset Disposition,
Borrower, on a combined and consolidated basis with its Subsidiaries as set
forth in Section 4, are in compliance on a pro forma basis with the covenants
set forth in Section 4 recomputed for the most recently ended fiscal quarter for
which information is available and Borrower is in compliance with all other
terms and conditions contained in this Agreement, and (e) no Default or Event of
Default then exists or would result from the Asset Disposition; (v) the sale by
Borrower or any Subsidiary of property and the subsequent lease, as lessee, of
the same property, within 180 days following the acquisition or construction of
such property, in an aggregate amount not to exceed $25,000,000; and (vi) an
Asset Disposition if (a) the aggregate Net Proceeds of such assets disposed of
under this clause (vi) does not exceed $100,000,000, (b) the consideration
received is at least equal to the fair market value of such assets, (c) the sole
consideration received is cash or other assets (other than a note or other
delayed payment transaction), (d) no Default or Event of Default then exists or
would result from the Asset Disposition, (e) after giving effect to the Asset
Disposition, Borrower, on a combined and consolidated basis with its
Subsidiaries as set forth in Section 4, are in compliance on a pro forma basis
with the covenants set forth in Section 4 recomputed for the most recently ended
fiscal quarter for which information is available and Borrower is in compliance
with all other terms and conditions contained in this Agreement, and (f) the
proceeds from any sale under this clause (vi) are promptly used to repay the
Term Loan pursuant to Subsection 1.7(C), provided that if at the time of such
disposition under this clause (vi) Borrower's Leverage Ratio is less than or
equal to 2.2:1.0 for a disposition occurring on or before December 31, 2007 and
less than or equal to 2.0:1.0 for a disposition occurring on or after January 1,
2008, Borrower may in lieu of repaying the Term Loan apply such proceeds to the
acquisition of fixed assets or other property useful and intended to be used in
the operation of the business of Borrower is Subsidiaries within 365 days of the
date of sale of such assets, any remaining unapplied proceeds after such 365
days to be applied promptly to repay the Term Loan pursuant to Subsection
1.7(C).
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Credit Agreement/SureWest Communications
3.8 Transactions with Affiliates. Borrower will not and will not
----------------------------
permit its Subsidiaries directly or indirectly to enter into or permit to exist
any transaction (including the purchase, sale, lease or exchange of any property
or the rendering of any service) with any Affiliate or with any director,
officer or employee of Borrower or any Affiliate, except (i) as set forth on
Schedule 3.8; (ii) transactions between Borrower or any wholly owned
Subsidiaries with Borrower or any wholly owned Subsidiaries; (iii) in the
ordinary course of and pursuant to the reasonable requirements of the business
of Borrower or such Subsidiary and upon fair and reasonable terms and are no
less favorable to Borrower or such Subsidiary than would be obtained in a
comparable arm's length transaction with a Person that is not an Affiliate; or
(iv) payment of compensation to directors, officers and employees in the
ordinary course of business for services actually rendered in their capacities
as directors, officers and employees, provided such compensation is reasonable
and comparable with compensation paid by companies of like nature and similarly
situated.
3.9 Conduct of Business. Borrower will not and will not permit
-------------------
its Subsidiaries directly or indirectly to engage in any business other than
businesses of owning, constructing, managing and operating Telecommunications
Systems, or other lines of business necessary to or ancillary to the foregoing
or consistent with advances in the Telecommunications Systems industry.
3.10 Fiscal Year. Borrower will not and will not permit its
-----------
Subsidiaries to change its or their fiscal year from a fiscal year ending on
December 31 of each year.
3.11 Inconsistent Agreements. Borrower will not, and will not
-----------------------
permit any of its Subsidiaries to, enter into any agreement containing any
provision which would (a) be violated or breached by any borrowing by Borrower
hereunder or by the performance by Borrower or such Subsidiary of any of its
obligations hereunder or under any other Loan Document, or (b) create or permit
to exist or become effective any encumbrance or restriction on the ability of
such Subsidiary to (i) pay dividends or make other distributions to its Borrower
or pay any Indebtedness owed to Borrower, (ii) make loans or advances to
Borrower or (iii) transfer any of its assets or properties to Borrower, the
effect of which encumbrance or restriction would reasonably be to have a
Material Adverse Effect.
SECTION 4
FINANCIAL COVENANTS AND REPORTING
Borrower covenants and agrees that so long as this Agreement is in
effect and until payment in full of all Obligations, unless CoBank shall
otherwise give its prior written consent, Borrower shall perform and comply
with, and shall cause its Subsidiaries to perform and comply with, all covenants
in this Section 4. For purposes of this Section 4, all covenants calculated for
Borrower shall be calculated on a consolidated basis for Borrower and its
Subsidiaries.
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Credit Agreement/SureWest Communications
4.1 Leverage Ratio. Borrower shall maintain at all times, measured at
--------------
each fiscal quarter end, and maintained through the next measurement date, a
Leverage Ratio less than or equal to 3.0:1.0.
4.2 Interest Coverage Ratio. Borrower shall maintain at all times,
-----------------------
measured at each fiscal quarter end, and maintained through the next measurement
date, an Interest Coverage Ratio not less than 3.0:1.0.
4.3 Net Worth. Borrower shall maintain at all times, measured at each
---------
fiscal quarter end, and maintained through the next measurement date, an
Adjusted Consolidated Net Worth not less than $160,000,000.
4.4 Financial Statements and Other Reports. Borrower will and will
--------------------------------------
cause its Subsidiaries to maintain a system of accounting established and
administered in accordance with sound business practices to permit preparation
of financial statements in conformity with GAAP (it being understood that
quarterly financial statements are not required to have footnote disclosures or
reflect year end adjustments). Borrower will deliver each of the financial
statements and other reports described below to CoBank.
(A) Quarterly Financials. As soon as available and in any event
--------------------
within 60 days after the end of each of the first three fiscal quarters of each
fiscal year, Borrower will deliver consolidated balance sheets of Borrower and
its Subsidiaries, as at the end of such fiscal quarter, and the related
consolidated statements of income and cash flow for such fiscal quarter and for
the period from the beginning of the then current fiscal year of Borrower to the
end of such quarter; provided that delivery within the time period specified
above of copies of Borrower's Quarterly Report on Form 10-Q prepared in
compliance with the requirements therefore and filed with the Securities and
Exchange Commission (the "SEC") will be deemed to satisfy the requirements of
this Subsection 4.4(A).
(B) Year-End Financials. As soon as available and in any event
-------------------
within 105 days after the end of each fiscal year of Borrower, Borrower will
deliver (i) consolidated balance sheets of Borrower and its Subsidiaries, as at
the end of such year, and the related consolidated statements of income,
stockholders' equity and cash flow for such fiscal year and (ii) a report with
respect to the financial statements from Ernst & Young LLP, or another firm of
certified public accountants selected by Borrower and reasonably acceptable to
CoBank, which report shall be prepared in accordance with Statement of Auditing
Standards No. 58 (the "Statement"), as amended, entitled "Reports on Audited
Financial Statements" and such report shall be "Unqualified" (as such term is
defined in such Statement) ; provided that delivery within the time period
specified above of copies of Borrower's Annual Report on Form 10-K prepared in
compliance with the requirements therefore and filed with the SEC will be deemed
to satisfy the requirements of this Subsection 4.4(B).
(C) Borrower Compliance Certificate. Together with each delivery
-------------------------------
of financial statements of Borrower and its Subsidiaries pursuant to Subsections
4.4(A) and 4.4(B), Borrower will deliver a fully and properly completed
compliance certificate in substantially the same form as Exhibit 4.4(C) (each, a
"Compliance Certificate") signed by the chief financial officer of Borrower.
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Credit Agreement/SureWest Communications
(D) Budgets. As soon as available and in any event no later than
-------
30 days prior to the first day of each of Borrower's fiscal years, Borrower will
deliver a preliminary Budget of Borrower prepared on a segment basis for such
fiscal year; 30 days after the first day of Borrower's fiscal years, Borrower
will deliver a final Budget of Borrower and its Subsidiaries for such fiscal
year approved by Borrower's senior management and Board of Directors. Promptly
after becoming aware thereof, Borrower will notify CoBank of any material
amendment to or deviation from such Budget and shall promptly provide revised
Budget reflecting such amendment or deviation.
(E) SEC Filings and Press Releases. Promptly upon their becoming
------------------------------
available, Borrower will deliver copies of (i) all financial statements,
reports, notices and proxy statements sent or made available by Borrower or its
Subsidiaries to its or their security holders, (ii) all regular and periodic
reports and all registration statements and prospectuses, if any, filed by
Borrower or any of its Subsidiaries with any securities exchange or with the SEC
or any governmental or private regulatory authority, and (iii) all material
press releases and other statements made available by Borrower or any of its
Subsidiaries to the public concerning developments in the business of any such
Person.
(F) Events of Default, Etc. Promptly upon any executive officer
----------------------
of Borrower obtaining knowledge of any of the following events or conditions,
Borrower shall deliver copies of all notices given or received by Borrower or
any of its Subsidiaries with respect to any such event or condition and a
certificate of Borrower's chief executive officer specifying the nature and
period of existence of such event or condition and what action Borrower has
taken, is taking and proposes to take with respect thereto: (i) any condition or
event that constitutes an Event of Default or Default; (ii) any notice that any
Person has given to Borrower or any of its Subsidiaries or any other action
taken with respect to a claimed default or event or condition of the type
referred to in Subsection 6.1(B); or (iii) any event or condition that could
reasonably be expected to have a Material Adverse Effect.
(G) Litigation. Promptly upon any executive officer of Borrower
----------
obtaining knowledge of (i) the institution of any action, suit, proceeding,
governmental investigation or arbitration against or affecting Borrower or any
of its Subsidiaries not previously disclosed by Borrower to CoBank which, in
each case, could reasonably be expected to have a Material Adverse Effect or
(ii) any material development in any action, suit, proceeding, governmental
investigation or arbitration at any time pending against or affecting Borrower
or any of its Subsidiaries which, in each case, could reasonably be expected to
have a Material Adverse Effect, Borrower will give notice thereof to CoBank and
provide such other information as may be reasonably available to Borrower to
enable CoBank and its counsel to evaluate such matter.
(H) Environmental Notices. Immediately after becoming aware of
---------------------
any material violation by Borrower or any Subsidiary of Environmental Laws or
immediately upon receipt of any notice that a Governmental Authority has
asserted that Borrower or any Subsidiary is not in material compliance with
Environmental Laws or that its compliance is being investigated, Borrower will
give notice to CoBank thereof and provide such other information as may be
reasonably available to Borrower to enable CoBank and its counsel to reasonably
evaluate such matter.
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Credit Agreement/SureWest Communications
(I) ERISA Events. Promptly after becoming aware of any ERISA
------------
Event, accompanied by any materials required to be filed with the PBGC with
respect thereto; promptly after any Borrower's or any of its Subsidiaries'
receipt of any notice concerning the imposition of any withdrawal liability
under Section 4042 of ERISA with respect to a Plan; promptly upon the
establishment of any Pension Plan not existing at the Closing Date or the
commencement of contributions by any Borrower or any of its Subsidiaries to any
Pension Plan to which any Borrower or any of its Subsidiaries was not
contributing at the Closing Date; and promptly upon becoming aware of any other
event or condition regarding a Plan or any Borrower's, or any of its
Subsidiaries' or an ERISA Affiliate's compliance with ERISA which could
reasonably be expected to have a Material Adverse Effect, such Borrower will
give notice to CoBank thereof and provide such other information as may be
reasonably available to such Borrower to enable CoBank and its counsel to
reasonably evaluate such matter.
(J) Regulatory and Other Notices. Within 15 days after filing,
----------------------------
receipt or becoming aware thereof, copies of any filings or communications sent
to or notices and other communications received by Borrower or any of its
Subsidiaries from any Governmental Authority, including the FCC, any applicable
PUC and the SEC, with respect to any matter or proceeding the effect of which
could reasonably be expected to have a Material Adverse Effect or which could
reasonably be expected to result in a material adverse amendment, change or
termination of any License.
(K) Other Information. With reasonable promptness, Borrower will
-----------------
deliver such other information and data with respect to Borrower or any of its
Subsidiaries as from time to time may be reasonably requested by CoBank.
4.5 Accounting Terms; Utilization of GAAP for Purposes of
-----------------------------------------------------
Calculations Under Agreement. For purposes of this Agreement, all accounting
----------------------------
terms not otherwise defined herein shall have the meanings assigned to such
terms in conformity with GAAP. Except as otherwise expressly provided, financial
statements and other information furnished to CoBank pursuant to this Agreement
shall be prepared in accordance with GAAP as in effect at the time of such
preparation. No "Accounting Changes" (as defined below) shall affect financial
covenants, standards or terms in this Agreement; provided that Borrower shall
prepare footnotes to each Compliance Certificate and the financial statements
required to be delivered hereunder that show the differences between the
financial statements delivered (which reflect such Accounting Changes) and the
basis for calculating financial covenant compliance (without reflecting such
Accounting Changes). "Accounting Changes" means: (i) changes in accounting
principles required by GAAP and implemented by Borrower; (ii) changes in
accounting principles recommended by Borrower's certified public accountants and
implemented by Borrower; and (iii) changes in the method of determining carrying
value of Borrower's or any of its Subsidiaries' assets, liabilities or equity
accounts. All such adjustments resulting from expenditures made subsequent to
the Closing Date (including, but not limited to, capitalization of costs and
expenses or payment of pre-Closing Date liabilities) shall be treated as
expenses in the period the expenditures are made.
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Credit Agreement/SureWest Communications
SECTION 5
REPRESENTATIONS AND WARRANTIES
In order to induce CoBank to enter into this Agreement and to make
Loans, Borrower represents and warrants to CoBank on the Closing Date and on the
date of each request for a Loan or the issuance of a Letter of Credit that the
following statements are true, correct and complete:
5.1 Disclosure. The information furnished by or on behalf of Borrower
----------
and its Subsidiaries contained in this Agreement, the financial statements
referred to in Subsection 5.8 and any other document, certificate, opinion or
written statement furnished to CoBank pursuant to this Agreement or any other
Loan Document (other than projections), taken as a whole, does not contain any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements contained herein or therein not misleading in
light of the circumstances in which the same were made. Any projections provided
by or on behalf of Borrower and its Subsidiaries have been prepared by
management in good faith and based upon assumptions believed by management to be
reasonable at the time the projections were prepared. Borrower is not aware of
any fact which it has not disclosed in writing to CoBank having or which could
reasonably be expect to have a Material Adverse Effect.
5.2 No Material Adverse Effect. Since December 31, 2005, there has
--------------------------
been no event or change in facts or circumstances affecting Borrower or any of
its Subsidiaries which individually or in the aggregate have had or could
reasonably be expected to have a Material Adverse Effect and that have not been
disclosed herein or in the attached Schedules.
5.3 Organization, Powers, Authorization and Good Standing.
-----------------------------------------------------
(A) Organization and Powers. Each of Borrower and its
-----------------------
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization (which jurisdiction
is set forth on Schedule 5.3(A)). Each of Borrower and its Subsidiaries has all
requisite legal power and authority to own and operate its properties, to carry
on its business as now conducted and proposed to be conducted, to enter into
each Loan Document to which it is a party and to carry out its respective
obligations with respect thereto.
(B) Authorization; Binding Obligation. Each of Borrower and its
---------------------------------
Subsidiaries has taken all necessary corporate and other action to authorize the
execution, delivery and performance of this Agreement and each of the other Loan
Documents to which it is a party. This Agreement is, and the other Loan
Documents when executed and delivered will be, the legally valid and binding
obligations of the applicable parties thereto (other than CoBank), each
enforceable against each of such parties, as applicable, in accordance with
their respective terms, except as such enforcement may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar state or federal debt or
relief laws from time to time in effect which affect the enforcement of
creditors' rights in general and general principles of equity.
(C) Qualification. Each of Borrower and its Subsidiaries is duly
-------------
qualified and authorized to do business and in good standing in each
jurisdiction where the nature of its business and operations requires such
qualification and authorization, except where the failure to be so qualified,
authorized and in good standing could not reasonably be expected to have a
Material Adverse Effect. All jurisdictions in which each such Person is
qualified and authorized to do business are set forth on Schedule 5.3(C).
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Credit Agreement/SureWest Communications
5.4 Compliance of Agreement, Loan Documents and Borrowings with
-----------------------------------------------------------
Applicable Law. Except as set forth on Schedule 5.4 hereto, the execution,
--------------
delivery and performance by Borrower and its Subsidiaries of the Loan Documents
to which each is a party, the borrowings hereunder and the transactions
contemplated hereby and thereby do not and will not, by the passage of time, the
giving of notice or otherwise, (i) require any Governmental Approval or violate
any Applicable Law relating to Borrower or any of its Subsidiaries, the
violation of which could reasonably be expected to have a Material Adverse
Effect, (ii) conflict with, result in a breach of or constitute a default under
the articles of incorporation, bylaws or other organizational documents of
Borrower or any of its Subsidiaries or any Material Contract to which such
Person is a party or by which any of its properties may be bound or any
Governmental Approval relating to such Person or (iii) result in or require the
creation or imposition of any Lien upon or with respect to any property now
owned or hereafter acquired by such Person.
5.5 Compliance with Law; Governmental Approvals. Each of Borrower
-------------------------------------------
and its Subsidiaries (i) has, or has the right to use, all material Governmental
Approvals, including the Licenses, required by any Applicable Law for it to
conduct its business and (ii) is in material compliance with each Governmental
Approval, including the Licenses, applicable to it and in compliance with all
other Applicable Laws relating to it or any of its respective properties the
violation of which could reasonably be expected to have a Material Adverse
Effect. Each such Governmental Approval is in full force and effect, is final
and not subject to review on appeal and is not the subject of any pending or
threatened attack by direct or collateral proceeding.
5.6 Tax Returns and Payments. Each of Borrower and its
------------------------
Subsidiaries has duly filed or caused to be filed, except as set forth on
Schedule 5.6, all federal, state, local and other tax returns required by
Applicable Law to be filed, and has paid, or made adequate provision for the
payment of, all federal, state, local and other taxes, assessments and
governmental charges or levies upon it and its property, income, profits and
assets which are due and payable, except where the payment of such tax is being
diligently contested in good faith and adequate reserves therefor have been
established in compliance with GAAP. The charges, accruals and reserves on the
books of Borrower and its Subsidiaries in respect of federal, state, local and
other taxes for all fiscal years and portions thereof are in the judgment of
Borrower adequate, and Borrower and its Subsidiaries do not anticipate any
additional material taxes or assessments for any of such years.
5.7 Environmental Matters. Each of Borrower and its Subsidiaries
---------------------
is in compliance in all material respects with all applicable Environmental
Laws, and there is no contamination at, under or about the properties or
operations of Borrower and its Subsidiaries, which interfere in any material
respect with the continued operation of such properties or impair in any
material respect the fair saleable value thereof or with such operations, except
for any such violations or contamination as could not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect.
-27-
Credit Agreement/SureWest Communications
5.8 Financial Statements.
--------------------
(A) All financial statements concerning Borrower and its
Subsidiaries which have been furnished to CoBank pursuant to this Agreement have
been prepared in accordance with GAAP consistently applied (except as disclosed
therein) and present fairly the financial condition of the Persons covered
thereby as of the date thereof and the results of their operations for the
periods covered thereby and disclose all material liabilities and Contingent
Obligations of Borrower or its Subsidiaries as at the dates thereof. Neither
Borrower nor any of its Subsidiaries has outstanding, as of the Closing Date,
and after giving effect to the initial Loans hereunder on the Closing Date, any
Indebtedness for borrowed money or Contingent Obligations other than (i) the
Loans, (ii) the Indebtedness permitted under Subsection 3.1, and (iii) the
Contingent Obligations permitted under Subsection 3.4.
(B) All Budgets concerning Borrower and its Subsidiaries which
have been furnished to CoBank were prepared in good faith by or on behalf of
Borrower and such Subsidiaries. No fact is known to Borrower which materially
and adversely affects or is reasonably expected to have a Material Adverse
Effect which has not been set forth in the financial statements referred to in
Subsection 5.8(A) or in such information, reports, papers and data or otherwise
disclosed in writing to CoBank prior to the date hereof.
5.9 Intellectual Property. Each of Borrower and its Subsidiaries
---------------------
owns, or possesses through valid licensing arrangements, the right to use all
patents, copyrights, trademarks, trade names, service marks, technology know-how
and processes used in or necessary for the conduct of its business as currently
or anticipated to be conducted (collectively, the "Intellectual Property
Rights") without infringing upon any validly asserted rights of others, except
for any Intellectual Property Rights to absence of which could not reasonably be
expected to have a Material Adverse Effect. No event has occurred which permits,
or after notice or lapse of time or both would permit, the revocation or
termination of any such rights. Neither Borrower nor any of its Subsidiaries has
been threatened with any litigation regarding Intellectual Property Rights that
would present a material impediment to the business of any such Person.
5.10 Litigation, Investigations, Audits, Etc. Except as set forth on
---------------------------------------
Schedule 5.10, there is no action, suit, proceeding or investigation pending
against, or, to the knowledge of Borrower, threatened against or in any other
manner relating adversely to, Borrower or any of its Subsidiaries or any of
their respective properties, including the Licenses, in any court or before any
arbitrator of any kind or before or by any Governmental Authority (including the
FCC), except such as affect the telecommunications industry generally which, in
each case or in the aggregate, could reasonably be expected to have a Material
Adverse Effect. None of the actions, suits, proceedings or investigations
disclosed on Schedule 5.10 (i) calls into question the validity of this
Agreement or any other Loan Document, or (ii) individually or collectively could
reasonably be expected to result in a judgment or liability not fully covered by
insurance which, if determined adversely to Borrower or any of its Subsidiaries,
could reasonably be expected to have a Material Adverse Effect. Neither Borrower
nor any of its Subsidiaries is the subject of any review or audit by the
Internal Revenue Service or any investigation by any Governmental Authority
concerning the violation or possible violation of any law.
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Credit Agreement/SureWest Communications
5.11 Employee Labor Matters. Except as set forth on Schedule 5.11,
----------------------
(i) none of Borrower, its Subsidiaries nor any of their respective employees is
subject to any collective bargaining agreement, (ii) no petition for
certification or union election is pending with respect to the employees of any
such Person and no union or collective bargaining unit has sought such
certification or recognition with respect to the employees of any such Person
and (iii) there are no strikes, slowdowns, unfair labor practice complaints,
work stoppages or controversies pending or, to the best knowledge of Borrower
after due inquiry, threatened between any such Person and its respective
employees, other than employee grievances arising in the ordinary course of
business which could not reasonably be expected to have, either individually or
in the aggregate, a Material Adverse Effect.
5.12 ERISA Compliance.
----------------
(A) Each Plan is in compliance in all material respects with the
applicable provisions of ERISA, the IRC and other federal or state law. Borrower
and each ERISA Affiliate has made all required contributions to any Plan subject
to Section 412 of the IRC, and no application for a funding waiver or an
extension of any amortization period pursuant to Section 412 of the IRC has been
made with respect to any Plan.
(B) There are no pending or, to the best knowledge of
Borrower, threatened claims, actions or lawsuits, or action by any Governmental
Authority, with respect to any Plan which has resulted or could reasonably be
expected to have a Material Adverse Effect. There has been no prohibited
transaction or violation of the fiduciary responsibility rules with respect to
any Plan which has resulted or could reasonably be expected to have a Material
Adverse Effect.
(C) (i) No ERISA Event has occurred or is reasonably expected
to occur; (ii) no Pension Plan has any unfunded liability; (iii) neither
Borrower nor any ERISA Affiliate has incurred, or reasonably expects to incur,
any liability under Title IV of ERISA with respect to any Pension Plan (other
than premiums due and not delinquent under Section 4007 of ERISA); (iv) neither
Borrower nor any ERISA Affiliate has incurred, or reasonably expects to incur,
any liability (and no event has occurred which, with the giving of notice under
Section 4219 of ERISA, would result in such liability) under Section 4201 or
4243 of ERISA with respect to a Multi-employer Plan; and (v) neither Borrower
nor any ERISA Affiliate has engaged in a transaction that could subject any
Person to Section 4069 or 4212(c) of ERISA.
5.13 Communications Regulatory Matters.
---------------------------------
(A) Schedule 5.13(A) sets forth a true and complete list of
----------------
the following information for each License issued to Borrower or its
Subsidiaries: the name of the licensee, the type of service, the expiration date
and the geographic area covered by such License.
(B) The Licenses are valid and in full force and effect
without conditions except for such conditions as are generally applicable to
holders of such Licenses. No event has occurred and is continuing which could
reasonably be expected to (i) result in the imposition of a material forfeiture
or the revocation, termination or adverse modification of any such License or
(ii) materially and adversely affect any rights of Borrower or its Subsidiaries
or any other holder thereunder. Borrower has no reason to believe and has no
knowledge that any License will not be renewed in the ordinary course. Except as
disclosed on Schedule 5.10, neither Borrower nor any of its Subsidiaries is a
party to any investigation, notice of violation, order or complaint issued by or
before the FCC or any applicable Governmental Authority, and there are no
proceedings pending by or before the FCC or any applicable Governmental
Authority, which could in any manner threaten or adversely affect the validity
of any License.
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Credit Agreement/SureWest Communications
(C) All of the material properties, equipment and systems
owned, leased or managed by Borrower or its Subsidiaries are, and (to the best
knowledge of Borrower) all such property, equipment and systems to be acquired
or added in connection with any contemplated system expansion or construction
will be, in good repair, working order and condition (reasonable wear and tear
excepted) and are and will be in material compliance with all terms and
conditions of the Licenses and all standards or rules imposed by any
Governmental Authority or as imposed under any agreements with telephone
companies and customers.
(D) Each of Borrower and its Subsidiaries has paid all
material franchise, license or other fees and charges which have become due
pursuant to any Governmental Approval in respect of its business and has made
appropriate provision as is required by GAAP for any such material fees and
charges which have accrued.
5.14 Solvency. Each of Borrower and its Subsidiaries: (i) owns and
--------
will own assets the present fair saleable value of which are (a) greater than
the total amount of liabilities (including contingent liabilities) of Borrower
or its Subsidiaries and (b) greater than the amount that will be required to pay
the probable liabilities of its then existing debts and liabilities as they
become absolute and matured considering all financing alternatives and potential
asset sales reasonably available to Borrower or such Subsidiary; (ii) has
capital that is not unreasonably small in relation to its business as presently
conducted or after giving effect to any contemplated transaction; and (iii) does
not intend to incur and does not believe that it will incur debts and
liabilities beyond its ability to pay such debts and liabilities as they become
due.
5.15 Investment Company Act; Public Utility Holding Act. None of
--------------------------------------------------
Borrower or any of its Subsidiaries is an "investment company" as that term is
defined in and is not otherwise subject to regulation under, the Investment
Company Act of 1940, as amended. None of Borrower or any of its Subsidiaries is
a "holding company" as that term is defined in, and is not otherwise subject to
regulation under, the Public Utility Holding Company Act of 1935, as amended.
5.16 Certain Agreements and Material Contracts. Schedule 5.16 sets
-----------------------------------------
forth a complete and accurate list of all loan agreements, indentures,
guarantees, capital leases (involving a monetary liability in an amount in
excess of $500,000 per annum) and other similar credit or reimbursement
agreements and all Material Contracts of Borrower and its Subsidiaries. Each of
Borrower and its Subsidiaries has performed all of its material obligations
under such agreements and Material Contracts and, to the best knowledge of
Borrower, each other party thereto is in compliance with each such agreement or
Material Contract. Each such agreement or Material Contract is in full force and
effect in accordance with the terms thereof.
5.17 Title to Properties. Borrower and each of its Subsidiaries has
-------------------
such title or leasehold interest in and to the real property or interests
therein, including material easements, licenses and similar rights in real
estate, owned or leased by it as is necessary or desirable to the conduct of its
business and valid and legal title or leasehold interest in and to all of its
personal property, including those reflected on the balance sheets of Borrower
delivered pursuant to Subsection 5.8, except those which have been disposed of
by Borrower subsequent to such date which dispositions have been in the ordinary
course of business or as otherwise expressly permitted hereunder.
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Credit Agreement/SureWest Communications
5.18 Transactions with Affiliates. No Affiliate of Borrower is a
----------------------------
party to any agreement, contract, commitment or transaction with Borrower or has
any material interest in any material property used by Borrower, except as
permitted by Subsection 3.8.
5.19 OFAC. None of Borrower or its Subsidiaries (i) is a person
----
whose property or interest in property is blocked or subject to blocking
pursuant to Section 1 of Executive Order 13224 of September 23, 2001 Blocking
Property and Prohibiting Transactions With Persons Who Commit, Threaten to
Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)), (ii) engages in any
dealings or transactions prohibited by Section 2 of such executive order, or is
otherwise associated with any such person in any manner violative of Section 2,
or (iii) is a person on the list of Specially Designated Nationals and Blocked
Persons or subject to the limitations or prohibitions under any other U.S.
Department of Treasury's Office of Foreign Assets Control regulation or
executive order.
5.20 Patriot Act. Each of Borrower and its Subsidiaries is in
-----------
compliance, in all material respects, with the (i) Trading with the Enemy Act,
as amended, and each of the foreign assets control regulations of the United
States Treasury Department (31 CFR, Subtitle B, Chapter V, as amended) and any
other enabling legislation or executive order relating thereto, and (ii) Uniting
And Strengthening America By Providing Appropriate Tools Required To Intercept
And Obstruct Terrorism (USA Patriot Act of 2001). No part of the proceeds of the
Loans will be used, directly or indirectly, for any payments to any governmental
official or employee, political party, official of a political party, candidate
for political office, or anyone else acting in an official capacity, in order to
obtain, retain or direct business or obtain any improper advantage, in violation
of the United States Foreign Corrupt Practices Act of 1977, as amended.
SECTION 6
EVENTS OF DEFAULT AND RIGHTS AND REMEDIES
6.1 Event of Default. "Event of Default" shall mean the occurrence
----------------
or existence of any one or more of the following:
(A) Payment. Failure to repay any outstanding amount of the
-------
Loans at the time required pursuant to this Agreement, or to reimburse CoBank
for any payment made by CoBank under or with respect to any Letter of Credit
when due, or failure to pay, within five days after the due date, any interest
on any Loan or failure to pay, within five days after receipt by Borrower of
notice from CoBank, any other amount due under this Agreement or any of the
other Loan Documents; or
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Credit Agreement/SureWest Communications
(B) Default in Other Agreements. (i) Failure of Borrower or
---------------------------
any of its Subsidiaries to pay when due or within any applicable grace period
any principal or interest on Indebtedness (other than the Loans) or any
Contingent Obligation in excess of $5,000,000 or (ii) any other breach or
default of Borrower or any of its Subsidiaries with respect to the Note Purchase
Agreement, any Indebtedness (other than the Loans) or any Contingent Obligation,
if the effect of such breach or default is to cause or to permit the holder or
holders then to cause such Indebtedness or Contingent Obligation having an
aggregate principal amount for Borrower and its Subsidiaries in excess of
$5,000,000 to become or be declared due prior to its stated maturity or (iii)
any breach, default or termination shall have occurred under any Material
Contract by any of the parties thereto, or any Material Contract shall fail to
be renewed or otherwise have ceased to be in full force and effect, and such
breach, default, failure, cessation or termination could reasonably have a
Material Adverse Effect, unless such Material Contract is replaced by a
comparable Material Contract (in the reasonable judgment of CoBank) prior to or
concurrent with such breach, default, failure, cessation or termination; or
(C) Breach of Certain Provisions. Failure of Borrower or any
----------------------------
of its Subsidiaries to perform or comply with any term or condition contained in
that portion of Subsection 2.2 relating to Borrower's or any of its
Subsidiaries' obligation to maintain insurance, Subsection 2.4, Section 3 or
Section 4; or
(D) Breach of Warranty. Any representation, warranty,
------------------
certification or other statement made by Borrower or any of its Subsidiaries in
any Loan Document or in any statement or certificate at any time given by
Borrower or any of its Subsidiaries in writing pursuant to any Loan Document is
false in any material respect on the date made or deemed made; or
(E) Other Defaults Under Loan Documents. Borrower, any of its
-----------------------------------
Subsidiaries or any other party (other than CoBank) breaches or defaults in the
performance of or compliance with any term contained in this Agreement or the
other Loan Documents and such default is not remedied or waived within 30 days
after receipt by Borrower, any such Subsidiary or such other party of notice
from CoBank of such default (other than occurrences described in other
provisions of this Subsection 6.1 for which a different grace or cure period is
specified or which constitute immediate Events of Default); or
(F) Involuntary Bankruptcy; Appointment of Receiver; Etc. (i)
----------------------------------------------------
A court enters a decree or order for relief with respect to Borrower or any of
its Subsidiaries in an involuntary case under the Bankruptcy Code, which decree
or order is not stayed or other similar relief is not granted under any
applicable federal or state law within 60 days; or (ii) the continuance of any
of the following events for 60 days unless dismissed, bonded or discharged: (a)
an involuntary case is commenced against Borrower or any of its Subsidiaries,
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect; or (b) a decree or order of a court for the appointment of
a receiver, liquidator, sequestrator, trustee, custodian or other officer having
similar powers over Borrower or any of its Subsidiaries, or over all or a
substantial part of its property, is entered; or (c) an interim receiver,
trustee or other custodian is appointed without the consent of Borrower or any
of its Subsidiaries, for all or a substantial part of the property of Borrower
or any of its Subsidiaries; or
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Credit Agreement/SureWest Communications
(G) Voluntary Bankruptcy; Appointment of Receiver; Etc.
--------------------------------------------------
Borrower or any of its Subsidiaries (i) commences a voluntary case under the
Bankruptcy Code, files a petition seeking to take advantage of any other law
relating to bankruptcy, insolvency, reorganization, winding up or composition
for adjustment of debts of Borrower or any of its Subsidiaries, or consents to,
or fails to contest in a timely and appropriate manner, the entry of an order
for relief in an involuntary case, the conversion of an involuntary case to a
voluntary case under any such law, or the appointment of or taking possession by
a receiver, trustee or other custodian of all or a substantial part of the
property of Borrower or any of its Subsidiaries; or (ii) makes any assignment
for the benefit of creditors; or (iii) the Board of Directors or the
shareholders of Borrower or any of its Subsidiaries adopts any resolution or
otherwise authorizes action to approve any of the actions referred to in this
Subsection 6.1(G); or
(H) Governmental Liens. Any Lien, levy or assessment (other
------------------
than Permitted Encumbrances) is filed or recorded with respect to or otherwise
imposed upon all or a material portion of the assets of Borrower or any of its
Subsidiaries by the United States or any department or instrumentality thereof
or by any state, county, municipality or other Governmental Authority and
remains undischarged, unvacated, unbonded or unstayed for a period of 60 days or
in any event later than five Business Days prior to the date of any proposed
sale thereunder; or
(I) Judgment and Attachments. Any money judgment, writ or
------------------------
warrant of attachment or similar process (other than those described in
Subsection 6.1(H)) involving an amount in any individual case or in the
aggregate for Borrower and its Subsidiaries at any time in excess of $1,000,000
(in either case not adequately covered by insurance as to which the insurance
company has acknowledged coverage) is entered or filed against Borrower or any
of its Subsidiaries or any of their respective assets and remains undischarged,
unvacated, unbonded or unstayed for a period of 60 days or in any event later
than five Business Days prior to the date of any proposed sale thereunder; or
(J) Dissolution. Any order, judgment or decree is
-----------
entered against Borrower or any of its Subsidiaries decreeing the dissolution or
split up of Borrower or any of its Subsidiaries and such order remains
undischarged or unstayed for a period in excess of 15 days; or
(K) Solvency. Borrower or any of its Subsidiaries ceases
--------
to be solvent or Borrower or any of its Subsidiaries admits in writing its
present or prospective inability to pay its debts as they become due; or
(L) Injunction. Borrower or any of its Subsidiaries is
----------
enjoined, restrained or in any way prevented by the order of any court or any
Governmental Authority from conducting all or any material part of its business
and such order continues for more than 60 days; or
(M) ERISA; Pension Plans. (i) Borrower or any of its
--------------------
Subsidiaries fails to make full payment when due of all amounts which, under the
provisions of any employee benefit plans or any applicable provisions of the
IRC, any such Person is required to pay as contributions thereto and such
failure results in or could reasonably be expected to have a Material Adverse
Effect; or (ii) an accumulated funding deficiency occurs or exists, whether or
not waived, with respect to any such employee benefit plans; or (iii) any
employee benefit plan of Borrower or any of its Subsidiaries loses its status as
a qualified plan under the IRC and such loss results in or could reasonably be
expected to have a Material Adverse Effect; or
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Credit Agreement/SureWest Communications
(N) Environmental Matters. Borrower or any of its Subsidiaries
---------------------
fails to: (i) obtain or maintain any operating licenses or permits required by
environmental authorities; (ii) begin, continue or complete any remediation
activities as required by any environmental authorities; (iii) store or dispose
of any hazardous materials in accordance with applicable Environmental Laws; or
(iv) comply with any other Environmental Laws, if in any such case such failure
could reasonably be expected to have a Material Adverse Effect; or
(O) Invalidity of Loan Documents. Any of the Loan Documents
----------------------------
for any reason, other than a partial or full release in accordance with the
terms thereof, ceases to be in full force and effect or is declared to be null
and void and Borrower or any applicable Subsidiary fails to promptly correct
such cessation or declaration, or Borrower or any of its Subsidiaries denies
that it has any further liability under any Loan Documents to which it is party,
or gives notice to such effect; or
(P) Damage; Strike; Casualty. Any material damage to, or loss,
------------------------
theft or destruction of, any Collateral, whether or not insured, or any strike,
lockout, labor dispute, embargo, condemnation, act of God or public enemy or
other casualty that causes, for more than fifteen (15) consecutive days, the
cessation or substantial curtailment of revenue producing activities at any
facility of Borrower or any of its Subsidiaries if any such event or
circumstance results in or could reasonably be expected to have a Material
Adverse Effect; or
(Q) Licenses and Permits. The loss, suspension or revocation
--------------------
of, or failure to renew, any license or permit, including any License, now held
or hereafter acquired by Borrower or any of its Subsidiaries, if such loss,
suspension, revocation or failure to renew could reasonably be expected to have
a Material Adverse Effect; or
(R) Change in Control. Any Person acquires or beneficially
-----------------
owns, directly or indirectly, and controls at least 35% of the voting equity in
Borrower.
6.2 Suspension of Commitments. Upon the occurrence and during the
-------------------------
continuation of any Default or Event of Default, CoBank, without notice or
demand, may immediately cease making additional Loans and issuing Letters of
Credit and cause its obligation to lend under the Loan Commitments to be
suspended; provided that, in the case of a Default, if the subject condition or
event is cured, or waived by CoBank, within any applicable grace or cure period,
any suspended portion of the Loan Commitments shall be reinstated.
6.3 Acceleration. Upon the occurrence of any Event of Default
------------
described in the foregoing Subsections 6.1(F) or 6.1(G), the unpaid principal
amount of and accrued interest and fees on the Loans, payments under the Letters
of Credit and all other Obligations shall automatically become immediately due
and payable, without presentment, demand, protest, notice of intent to
accelerate, notice of acceleration or other requirements of any kind, all of
which are hereby expressly waived by Borrower, and the obligations of CoBank to
make Loans and issue Letters of Credit shall thereupon terminate. Upon the
occurrence and during the continuance of any other Event of Default, CoBank may
by written notice to Borrower declare all or any portion of the Loans, all or
any Letter of Credit and all or some of the other Obligations to be, and the
same shall forthwith become, immediately due and payable together with accrued
interest thereon, and upon such acceleration the obligations of CoBank to make
Loans and issue Letters of Credit shall thereupon terminate and Borrower shall
immediately comply with the provisions of Subsection 1.15.
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Credit Agreement/SureWest Communications
6.4 Rights of Collection. Upon the occurrence and during the
--------------------
continuation of any Event of Default and at any time thereafter, unless and
until such Event of Default is cured or waived by CoBank, CoBank may exercise
all of its rights and remedies under this Agreement, the other Loan Documents
and Applicable Law, in order to satisfy all of the Obligations.
6.5 Consents. Borrower acknowledges that certain transactions
--------
contemplated by this Agreement and the other Loan Documents and certain actions
which may be taken by CoBank in the exercise of its rights under this Agreement
and the other Loan Documents may require the consent of a Governmental
Authority. If counsel to CoBank reasonably determines that the consent of a
Governmental Authority is required in connection with the execution, delivery
and performance of any of the aforesaid Loan Documents or any Loan Documents
delivered to CoBank in connection therewith or as a result of any action which
may be taken pursuant thereto, then Borrower, at Borrower's sole cost and
expense, agrees to use its reasonable efforts, and to cause its Subsidiaries to
use their reasonable best efforts, to secure such consent and to cooperate with
CoBank in any action commenced by CoBank or CoBank to secure such consent.
6.6 Performance by CoBank. If Borrower shall fail to perform any
---------------------
covenant, duty or agreement contained in any of the Loan Documents, CoBank may
perform or attempt to perform such covenant, duty or agreement on behalf of
Borrower after the expiration of any cure or grace periods set forth herein,
subject to Applicable Law. In such event, Borrower shall, at the request of
CoBank, promptly pay any amount reasonably expended by CoBank in such
performance or attempted performance to CoBank, together with interest thereon
at the highest rate of interest in effect upon the occurrence of an Event of
Default as specified in Subsection 1.2(E) from the date of such expenditure
until paid. Notwithstanding the foregoing, it is expressly agreed that CoBank
shall not have any liability or responsibility for the performance of any
obligation of Borrower under this Agreement or any other Loan Document.
6.7 Set Off and Sharing of Payments. In addition to any rights now
-------------------------------
or hereafter granted under applicable law and not by way of limitation of any
such rights, during the continuance of any Event of Default, CoBank is hereby
authorized by Borrower at any time or from time to time, with reasonably prompt
subsequent notice to Borrower (any prior or contemporaneous notice being hereby
expressly waived) to set off and to appropriate and to apply against and on
account of any of the Obligations any and all (A) balances held by CoBank at any
of its offices for the account of Borrower or any of its Subsidiaries
(regardless of whether such balances are then due to Borrower or any of its
Subsidiaries), and (B) all other property at any time held or owing by CoBank to
or for the credit or for the account of Borrower or any of its Subsidiaries.
SECTION 7
CONDITIONS TO LOANS
The obligations of CoBank to make Loans are subject to satisfaction of
all of the applicable conditions set forth below.
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Credit Agreement/SureWest Communications
7.1 Conditions to Initial Loan. The obligations of CoBank to make
--------------------------
the initial Loan are, in addition to the conditions precedent specified in
Subsection 7.2, subject to the satisfaction of each of the following conditions:
(A) Executed Loan and Other Documents. (i) This Agreement,
---------------------------------
(ii) the Notes and (iii) all other documents and instruments contemplated by
such agreements, shall have been duly authorized and executed by Borrower or
other Person, as applicable, in form and substance satisfactory to CoBank, and
Borrower or such other Person, as applicable, shall have delivered original
counterparts thereof to CoBank.
(B) Closing Certificates; Opinions.
------------------------------
(1) Officers' Certificate. CoBank shall have received a
---------------------
certificate from the chief executive officer and chief financial officer of
Borrower, in form and substance reasonably satisfactory to CoBank, to the effect
that, to their knowledge after reasonable diligence, all representations and
warranties of Borrower and its Subsidiaries contained in this Agreement and the
other Loan Documents are true, correct and complete; that neither Borrower nor
any of its Subsidiaries is in violation of any of the covenants contained in
this Agreement and the other Loan Documents; that, after giving effect to the
transactions contemplated by this Agreement, no Default or Event of Default has
occurred and is continuing; that Borrower has satisfied each of the closing
conditions to be satisfied hereby; and that Borrower and its Subsidiaries have
filed all required tax returns and owes no delinquent taxes, except where the
payment of such tax is being diligently contested in good faith and adequate
reserves therefor have been established in compliance with GAAP.
(2) Certificate of Secretary of Borrower and its
-------------------------------------------------
Subsidiaries. CoBank shall have received a certificate of the secretary or
------------
assistant secretary of Borrower certifying that attached thereto is a true and
complete copy of its articles of incorporation, and all amendments thereto,
certified as of a recent date by the Secretary of State of the state of its
organization; that attached thereto is a true and complete copy of its bylaws as
in effect on the date of such certification; that attached thereto is a true and
complete copy of resolution of its Board of Directors authorizing the borrowings
contemplated hereunder, and the execution, delivery and performance of this
Agreement and the other Loan Documents; and as to the incumbency and genuineness
of the signature of each of its officers executing Loan Documents.
(3) Certificates of Good Standing. CoBank shall
-------------------------------
have received certificates as of a recent date of the good standing of Borrower
and each of its Subsidiaries under the laws of its jurisdiction of organization
and such other jurisdictions as are requested by CoBank.
(4) Opinion of Counsel. CoBank shall have received
------------------
a favorable opinion of counsel to Borrower and each of its Subsidiaries
addressed to CoBank with respect to Borrower and its Subsidiaries, the Loan
Documents and regulatory matters (including, without limitation, the Licenses)
reasonably satisfactory in form and substance to CoBank.
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Credit Agreement/SureWest Communications
(C) Property.
--------
(1) Lien Searches. Borrower shall have delivered
-------------
to CoBank the results of a Lien search of all filings made against each of
Borrower and its Subsidiaries under the Uniform Commercial Code as in effect in
any jurisdiction in which any of its assets are located, indicating among other
things that Borrower's and its Subsidiaries' assets are free and clear of any
Lien, except for Permitted Encumbrances.
(2) Insurance. CoBank shall have received
---------
certificates of insurance and in the form required under Subsection 2.2 and
otherwise in form and substance reasonably satisfactory to CoBank.
(D) Consents.
--------
(1) Governmental and Third Party Approvals. Borrower
--------------------------------------
shall have delivered to CoBank all necessary material approvals, authorizations
and consents, if any, of all Persons, Governmental Authorities, including the
FCC and all applicable PUCs, and courts having jurisdiction with respect to the
execution and delivery of this Agreement and the other Loan Documents, and all
such approvals shall be in form and substance satisfactory to CoBank.
(2) Permits and Licenses. CoBank shall have received
---------------------
copies of all material permits and licenses, including the Licenses, required
under Applicable Laws for the conduct of Borrower's or any of its Subsidiaries'
material businesses.
(3) No Injunction, Etc. No action, proceeding,
------------------
investigation, regulation or legislation shall have been instituted, threatened
or proposed before, nor any adverse ruling received from, any Governmental
Authority to enjoin, restrain or prohibit, or to obtain substantial damages in
respect of, or which is related to or arises out of this Agreement or the other
Loan Documents or the consummation of the transactions contemplated hereby or
thereby, or which, as determined by CoBank in its reasonable discretion, would
make it inadvisable to consummate the transactions contemplated by this
Agreement and such other Loan Documents.
(E) Fees, Expenses, Taxes, Etc. There shall have been paid by
---------------------------
Borrower to CoBank the fees set forth or referenced in Subsection 1.4 and any
other accrued and unpaid fees or commissions due hereunder (including legal fees
and expenses), and to any other Person such amount as may be due thereto in
connection with the transactions contemplated hereby, including all taxes, fees
and other charges in connection with the execution, delivery, recording, filing
and registration of any of the Loan Documents.
(F) Miscellaneous.
-------------
(1) Proceedings and Documents. All opinions, certificates
--------------------------
and other instruments and all proceedings in connection with the transactions
contemplated by this Agreement shall be reasonably satisfactory in form and
substance to CoBank. CoBank shall have received copies of all other instruments
and other evidence as CoBank may reasonably request, in form and substance
reasonably satisfactory to CoBank, with respect to the transactions contemplated
by this Agreement and the taking of all actions in connection therewith.
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Credit Agreement/SureWest Communications
(2) Litigation, Investigations, Audits, Etc. There
-----------------------------------------
is no action, suit, proceeding or investigation pending against, or, to the
knowledge of Borrower after due inquiry, threatened against or in any other
manner relating adversely to, Borrower or any of its Subsidiaries or any of
their respective properties, including the Licenses, in any court or before any
arbitrator of any kind or before or by any Governmental Authority (including the
FCC), except such as affect the telecommunications industry generally, that
would reasonably be expected to have a Material Adverse Effect.
(3) Repayment of Existing Indebtedness. CoBank
-----------------------------------
shall have received evidence, in form and substance reasonably satisfactory to
CoBank, that (i) all Indebtedness of Borrower and its Subsidiaries has been
fully paid, satisfied and discharged, other than Indebtedness permitted under
Subsection 3.1, and (ii) that all Liens in respect of any such Indebtedness to
be paid have been terminated.
7.2 Conditions to All Loans. The obligations of CoBank to make
-----------------------
Loans, including the initial Loan, and of CoBank to issue Letters of Credit,
including the initial Letter of Credit, on any date (each such date a "Funding
Date"), are subject to the further conditions precedent set forth below.
(A) CoBank shall have received, in accordance with the
provisions of Subsection 1.3, a Notice of Borrowing requesting an advance of a
Loan or such notice as Cobank shall require for the issuance of a Letter of
Credit.
(B) The representations and warranties contained in Section 5
of this Agreement and elsewhere herein and in the Loan Documents shall be (and
each request by Borrower for a Loan or a Letter of Credit shall constitute a
representation and warranty by Borrower that such representations and warranties
are) true, correct and complete in all material respects on and as of such
Funding Date to the same extent as though made on and as of that date, except
for any representation or warranty limited by its terms to a specific date and
taking into account any amendments to the Schedules or Exhibits as a result of
any disclosures made in writing by Borrower to CoBank after the Closing Date so
long as what is being disclosed does not give rise to a Default or an Event of
Default.
(C) No event shall have occurred and be continuing or would
result from the consummation of the borrowing or issuance contemplated that
would constitute an Event of Default or a Default.
(D) No order, judgment or decree of any court, arbitrator or
Governmental Authority shall purport to enjoin or restrain CoBank from making
any Loan or issuing any Letter of Credit.
(E) Since December 31, 2005, there shall not have occurred any
event or condition that has had or could reasonably be expected to have a
Material Adverse Effect.
(F) All Loan Documents shall be in full force and effect.
(G) Borrower shall have delivered to CoBank such other
documents, certificates and opinions as CoBank reasonably requests.
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Credit Agreement/SureWest Communications
SECTION 8
ASSIGNMENT AND PARTICIPATION
This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns except that Borrower may not
assign its rights or obligations hereunder without the written consent of
CoBank. CoBank may assign its rights and delegate its obligations under this
Agreement to one or more Persons. CoBank may sell participations in all or any
part of its obligations and rights under this Agreement to one or more Persons;
provided that CoBank's obligations under this Agreement shall remain unchanged;
Borrower shall continue to deal solely and directly with CoBank in connection
with CoBank's rights and obligations under this Agreement; all amounts payable
by Borrower hereunder shall be determined as if CoBank had not sold such
participation; and the holder of any such participation shall not be entitled to
require CoBank to take or omit to take any action hereunder except action
directly affecting (i) any reduction, modification or forgiveness in the
principal amount, interest rate or fees payable with respect to any Loan; (ii)
any extension of the Term Loan Availability Expiration Date, the Term Loan
Maturity Date, the Revolving Loan Expiration Date, or any change of any date
fixed for any payment of any of the Obligations; and (iii) any consent to the
assignment, delegation or other transfer by Borrower or any of its Subsidiaries
of any of its rights and obligations under any Loan Document. Borrower hereby
acknowledges and agrees that any participation will give rise to a direct
obligation of Borrower to the participant, and the participant shall have direct
rights for purposes of Subsections 1.11, 1.12, 1.13, 6.7 and 9.1. CoBank may
furnish any information concerning Borrower and its Subsidiaries in the
possession of CoBank from time to time to assignees and participants (including
prospective assignees and participants), subject to the provisions of Subsection
9.10. CoBank reserves the right to assign or sell participations in all or any
part of its obligations and rights under this Agreement on a non-patronage
basis.
SECTION 9
MISCELLANEOUS
9.1 Indemnities. Borrower agrees to indemnify, pay, and hold
-----------
CoBank and its respective officers, directors, employees, agents, and attorneys
(the "Indemnitees") harmless from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits and claims of
any kind or nature whatsoever that may be imposed on, incurred by, or asserted
against the Indemnitee as a result of its being a party to this Agreement;
provided, that Borrower shall have no obligation to an Indemnitee hereunder with
respect to liabilities arising from the negligence or willful misconduct of that
Indemnitee as determined by a court of competent jurisdiction. This Subsection
9.1 and all indemnification provisions contained within any other Loan Document
shall survive the termination of this Agreement.
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Credit Agreement/SureWest Communications
9.2 Amendments and Waivers. Except as otherwise provided herein,
----------------------
no amendment, modification, termination or waiver of any provision of this
Agreement, the Notes or any of the other Loan Documents, or consent to any
departure by Borrower therefrom, shall in any event be effective unless the same
shall be in writing and signed by Borrower and CoBank. Each amendment,
modification, termination or waiver shall be effective only in the specific
instance and for the specific purpose for which it was given. No notice to or
demand on Borrower in any case shall entitle Borrower to any other or further
notice or demand in similar or other circumstances. Any amendment, modification,
termination, waiver or consent effected in accordance with this Subsection 9.2
shall be binding upon each holder of the Notes at the time outstanding, each
future holder of the Notes, and, if signed by Borrower, on Borrower.
9.3 Notices. Any required notice or other communication shall be
-------
in writing addressed to the respective party as set forth below and may be
personally delivered, telecopied, sent by overnight courier service or U.S. mail
and shall be deemed to have been given: (i) if delivered in person, when
delivered; (ii) if delivered by telecopy, on the date of confirmed transmission
if transmitted on a Business Day before 2:00 p.m. (Denver, Colorado time) and
otherwise on the Business Day next succeeding the date of transmission; (c) if
delivered by overnight courier, two days after delivery to the courier properly
addressed; or (d) if delivered by U.S. mail, four Business Days after deposit
with postage prepaid and properly addressed.
Notices shall be addressed as follows:
If to Borrower: SureWest Communications
000 Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attn: Chief Financial Officer
Fax: (000) 000-0000
If to CoBank: CoBank, ACB
0000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxx Xxxxxxx, Xxxxxxxx 00000
Attn: Communications & Energy Banking Group
Fax: (000) 000-0000
9.4 Failure or Indulgence Not Waiver; Remedies Cumulative. No
-----------------------------------------------------
failure or delay on the part of CoBank to exercise, nor any partial exercise of,
any power, right or privilege hereunder or under any other Loan Documents shall
impair such power, right, or privilege or be construed to be a waiver of any
Default or Event of Default. All rights and remedies existing hereunder or under
any other Loan Document are cumulative to and not exclusive of any rights or
remedies otherwise available.
9.5 Severability. The invalidity, illegality, or unenforceability
------------
in any jurisdiction of any provision under the Loan Documents shall not affect
or impair the remaining provisions in the Loan Documents or any such invalid,
unenforceable or illegal provision in any jurisdiction in which it is not
invalid, unenforceable or illegal.
9.6 Headings. Section and Subsection headings are included herein
--------
for convenience of reference only and shall not constitute a part of this
Agreement for any other purposes or be given substantive effect.
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Credit Agreement/SureWest Communications
9.7 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND SHALL
-------------
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
COLORADO WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES THAT WOULD REQUIRE OR
PERMIT APPLICATION OF THE LAWS OF ANY OTHER STATE OR JURISDICTION.
9.8 No Fiduciary Relationship. No provision in the Loan Documents
-------------------------
and no course of dealing between the parties shall be deemed to create any
fiduciary duty owing to Borrower by CoBank.
9.9 Construction. CoBank and Borrower acknowledge that each of
------------
them has had the benefit of legal counsel of its own choice and has been
afforded an opportunity to review the Loan Documents with its legal counsel and
that the Loan Documents shall be constructed as if jointly drafted by CoBank and
Borrower.
9.10 Confidentiality. CoBank agrees to hold any confidential
---------------
information that it may receive from Borrower or any of its Subsidiaries
pursuant to this Agreement in confidence, except for disclosure: (i) on a
confidential basis, as necessary or appropriate, to directors, officers,
employees, agents or legal counsel, independent public accountants and other
professional advisors of CoBank; (ii) to regulatory officials having
jurisdiction over CoBank; (iii) as required by Applicable Law or legal process
or (iv) in connection with any legal proceeding between CoBank and Borrower
(provided that, in the event CoBank is so required to disclose such confidential
information pursuant to clauses (iii) or (iv) of this Subsection 9.10, CoBank
shall promptly notify Borrower, so that Borrower or any of its Subsidiaries may
seek, at its sole cost and expense, a protective order or other appropriate
remedy); and (v) to another Person in connection with a disposition or proposed
disposition to that Person of all or part of CoBank's interests hereunder or a
participation interest, provided that such disclosure is made subject to an
appropriate confidentiality agreement on terms substantially similar to this
Subsection 9.10. For purposes of the foregoing, "confidential information" shall
mean all information respecting Borrower or any of its Subsidiaries, other than
(A) information previously filed by Borrower or any of its Subsidiaries with any
Governmental Authority and available to the public, (B) information previously
published in any public medium from a source other than, directly or indirectly,
CoBank and (C) information obtained by CoBank from a source independent of
Borrower or its Subsidiaries.
9.11 Consent to Jurisdiction and Service of Process. (A) BORROWER
----------------------------------------------
HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF ANY UNITED
STATES FEDERAL COURT OR COLORADO STATE COURT IN THE STATE OF COLORADO HAVING
SUBJECT MATTER JURISDICTION OVER ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO ANY LOAN DOCUMENTS. BORROWER HEREBY IRREVOCABLY AGREES THAT ALL
CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD AND DETERMINED IN
ANY SUCH COURT AND IRREVOCABLY WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE
AS TO THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH
COURT, PERSONAL JURISDICTION OF ANY SUCH COURT OR THAT SUCH COURT IS AN
INCONVENIENT FORUM. NOTHING HEREIN SHALL LIMIT THE RIGHT OF COBANK TO BRING
PROCEEDINGS AGAINST BORROWER IN THE COURTS OF ANY OTHER JURISDICTION.
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Credit Agreement/SureWest Communications
(B) BORROWER HEREBY AGREES THAT SERVICE OF THE SUMMONS AND COMPLAINT
AND ALL OTHER PROCESS WHICH MAY BE SERVED IN ANY SUCH SUIT, ACTION OR PROCEEDING
MAY BE EFFECTED BY MAILING BY REGISTERED MAIL, RETURN RECEIPT REQUESTED, A COPY
OF SUCH PROCESS TO BORROWER AT THE ADDRESS TO WHICH NOTICES TO BORROWER ARE THEN
TO BE SENT PURSUANT TO SUBSECTION 9.3 AND THAT PERSONAL SERVICE OF PROCESS SHALL
NOT BE REQUIRED. NOTHING HEREIN SHALL BE CONSTRUED TO PROHIBIT SERVICE OF
PROCESS BY ANY OTHER METHOD PERMITTED BY LAW.
9.12 Waiver of Jury Trial. BORROWER AND COBANK EACH HEREBY WAIVE THEIR
--------------------
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT, ANY OF THE OTHER LOAN DOCUMENTS, OR ANY DEALINGS
BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION AND THE
LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. THE SCOPE OF THIS WAIVER
IS INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN
ANY COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING
WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL
OTHER COMMON LAW AND STATUTORY CLAIMS. BORROWER AND COBANK EACH ACKNOWLEDGE THAT
THIS WAIVER IS A MATERIAL INDUCEMENT TO ENTER INTO A BUSINESS RELATIONSHIP, THAT
EACH HAS ALREADY RELIED ON THE WAIVER IN ENTERING INTO THIS AGREEMENT AND THAT
EACH WILL CONTINUE TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS.
BORROWER AND COBANK EACH FURTHER WARRANT AND REPRESENT THAT EACH HAS REVIEWED
THIS WAIVER WITH ITS LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY
WAIVES ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS
WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN
WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THE LOAN DOCUMENTS, OR TO ANY OTHER DOCUMENTS OR
AGREEMENTS RELATING TO THE LOANS. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY
BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE COURT. BORROWER AND COBANK ALSO
EACH WAIVE ANY BOND OR SURETY OR SECURITY UPON SUCH BOND WHICH MIGHT, BUT FOR
THIS WAIVER, BE REQUIRED OF COBANK.
9.13 Survival of Warranties and Certain Agreements. All agreements,
---------------------------------------------
representations and warranties made herein shall survive the execution and
delivery of this Agreement, the making of the Loans, the issuances of Letters of
Credit and the execution and delivery of the Notes. Notwithstanding anything in
this Agreement or implied by law to the contrary, the agreements of Borrower set
forth in Subsections 1.4(D), 1.11, 1.12, 1.13, 9.1, 9.11 and 9.12 shall survive
the payment of the Loans, the payment of the Letter of Credit Liabilities and
the termination of this Agreement.
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Credit Agreement/SureWest Communications
9.14 Entire Agreement. This Agreement, the Notes and the other Loan
----------------
Documents referred to herein embody the final, entire agreement among the
parties hereto and supersede any and all prior commitments, agreements,
representations, understandings, whether oral or written, relating to the
subject matter hereof and may not be contradicted or varied by evidence of
prior, contemporaneous or subsequent oral agreements or discussions of the
parties hereto.
9.15 Counterparts; Effectiveness. This Agreement and any
---------------------------
amendments, waivers, consents or supplements may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all of
which counterparts together shall constitute but one and the same instrument.
This Agreement shall become effective upon the execution of a counterpart hereof
by each of the parties hereto.
9.16 Patriot Act. CoBank notifies Borrower and its Subsidiaries
-----------
that pursuant to the requirements of the USA PATRIOT Act (Title III of Pub. L.
107-56 (signed into law October 26, 2001)) (the "Patriot Act"), it is required
to obtain, verify and record information that identifies each of Borrower and
its Subsidiaries, which information includes the name and address of such entity
and other information that will allow CoBank to identify such in accordance with
the Patriot Act. Each of Borrower and its Subsidiaries shall provide to the
extent commercially reasonable, such information and take such other actions as
are reasonably requested by CoBank in order to assist CoBank in maintaining
compliance with the Patriot Act.
SECTION 10
DEFINITIONS
10.1 Certain Defined Terms. The terms defined below are used in
----------------------
this Agreement as so defined. Terms defined in the preamble and recitals to this
Agreement are used in this Agreement as so defined.
"Adjusted Consolidated Net Worth" means, as of any date of
-------------------------------
determination, the result of (i) Consolidated Net Worth minus (ii) the sum of
Restricted Investments incurred after December 9, 1998 in excess of 10% of
Consolidated Net Worth, all as of the such date of determination.
"Adjustment Date" means each date which is the fifth (5th) Business Day
---------------
after the receipt by CoBank of (i) each Compliance Certificate delivered by
Borrower pursuant to Subsection 4.4(C) and (ii) in the case a decrease in an
applicable margin is warranted, a written notice from Borrower to decrease such
margin.
"Affiliate" means any Person: (i) directly or indirectly controlling,
---------
controlled by, or under common control with, Borrower or any of its
Subsidiaries; (ii) directly or indirectly owning or holding five percent (5%) or
more of any equity interest in Borrower or any of its Subsidiaries; or (iii)
five percent (5%) or more of whose voting stock or other equity interest is
directly or indirectly owned or held by Borrower or any of its Subsidiaries. For
purposes of this definition, "control" (including with correlative meanings, the
terms "controlling," "controlled by" and "under common control with") means the
possession directly or indirectly of the power to direct or cause the direction
of the management and policies of a Person, whether through the ownership of
voting securities or by contract or otherwise.
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Credit Agreement/SureWest Communications
"Applicable Law" means, in respect of any Person, all provisions of
--------------
constitutions, statutes, rules, regulations and orders of governmental bodies or
regulatory agencies applicable to such Person, including the Licenses, the
Communications Act and all Environmental Laws, and all orders, decisions,
judgments and decrees of all courts and arbitrators in proceedings or actions to
which the Person in question is a party or by which it is bound.
"Asset Disposition" means the disposition, whether by sale, lease,
-----------------
transfer, loss, damage, destruction, condemnation or otherwise, by Borrower or
any of its Subsidiaries, of any of the following: (i) any of the capital stock
or the ownership interests of any of its Subsidiaries, or (ii) any or all of its
assets.
"Banking Day" means a day on which CoBank is open for business,
-----------
dealings in U.S. dollar deposits are being carried out in the London interbank
market, and banks are open for business in New York City and London, England.
"Bankruptcy Code" means Title 11 of the United States Code entitled
---------------
"Bankruptcy," as amended from time to time or any applicable bankruptcy,
insolvency or other similar federal or state law now or hereafter in effect and
all rules and regulations promulgated thereunder.
"Base Rate" means a variable rate of interest per annum equal, on any
---------
day, to the rate of interest established by CoBank from time to time as its
CoBank Base Rate, which rate is intended by CoBank to be a reference rate and
not its lowest rate. The CoBank Base Rate will change on the date established by
CoBank as the effective date of any change thereof.
"Base Rate Loan" means, at any time, the aggregate amount of all Loans
--------------
then bearing interest at the rate determined by reference to the Base Rate.
"Base Rate Margin" means the applicable percent per annum determined in
----------------
accordance with Subsection 1.2(B).
"Budget" means, for Borrower prepared on a segment basis, (i) profit
------
and loss statements and (ii) cash flow statements, all prepared on a consistent
basis with Borrower's or such Subsidiaries' historical financial statements,
together with appropriate supporting details and a statement of underlying
assumptions. The Budget represents and will represent as of the date thereof the
good faith estimate of Borrower and its senior management concerning the course
of its business.
"Business Day" means (i) for all purposes other than as covered by
------------
clause (ii) below, any day excluding Saturday, Sunday and any day which is a
legal holiday under the laws of the State of Colorado, or is a day on which
banking institutions located in such state are closed or which the Federal
Reserve Banks are closed, and (ii) with respect to all notices, determinations,
fundings and payments in connection with LIBOR Loans, any day that is a Business
Day described in clause (a) above and that is also a day for trading by and
between banks in U.S. dollar deposits in the applicable interbank LIBOR market.
-44-
Credit Agreement/SureWest Communications
"Calculation Period" means each period commencing on each Adjustment
------------------
Date and ending on the day preceding each subsequent Adjustment Date.
"Capital Lease" means any lease of real or personal property which is
-------------
required to be capitalized under GAAP or which is treated as an operating lease
under regulations applicable to Borrower and its Subsidiaries but which
otherwise would be required to be capitalized under GAAP.
"Cash Equivalents" means: (i) marketable direct obligations issued or
----------------
unconditionally guarantied by the United States Government or issued by any
agency thereof and backed by the full faith and credit of the United States, in
each case maturing within one (1) year from the date of acquisition thereof;
(ii) commercial paper maturing no more than one (1) year from the date issued
and, at the time of acquisition, having a rating of at least A-1 from Standard &
Poor's Rating Service or at least P-1 from Xxxxx'x Investors Service, Inc.;
(iii) certificates of deposit or bankers' acceptances maturing within one (1)
year from the date of issuance thereof issued by, or overnight reverse
repurchase agreements from, any commercial bank organized under the laws of the
United States of America or any state thereof or the District of Columbia having
combined capital and surplus of not less than $500,000,000; and (iv) time
deposits maturing no more than 30 days from the date of creation thereof with
commercial banks having membership in the Federal Deposit Insurance Corporation
in amounts at any one such institution not exceeding the lesser of $100,000 or
the maximum amount of insurance applicable to the aggregate amount of Borrower's
deposits at such institution.
"Closing Date" means the date of this Agreement, which date shall be no
------------
later than April 24, 2006.
"Communications Act" means the Communications Act of 1934, as amended
------------------
and any similar or successor federal statute, and the rules and regulations of
the FCC thereunder, all as the same may be in effect from time to time.
"Consolidated Net Assets" means, on a consolidated basis for Borrower
-----------------------
and its Subsidiaries, total assets minus the sum of (a) Restricted Investments
and (b) current liabilities.
"Consolidated Net Worth" means the consolidated stockholders' equity of
----------------------
Borrower and its Subsidiaries.
-45-
Credit Agreement/SureWest Communications
"Contingent Obligation" as applied to any Person, means any direct or
---------------------
indirect liability of that Person: (i) with respect to any indebtedness, lease,
dividend or other obligation of another Person if the primary purpose or intent
of the Person incurring such liability, or the primary effect thereof, is to
provide assurance to the obligee of such liability that such liability will be
paid or discharged, or that any agreements relating thereto will be complied
with, or that the holders of such liability will be protected (in whole or in
part) against loss with respect thereto; (ii) with respect to any letter of
credit issued for the account of that Person or as to which that Person is
otherwise liable for reimbursement of drawings; or (iii) under any foreign
exchange contract, currency swap agreement, interest rate swap agreement or
other similar agreement or arrangement designed to alter the risks of that
Person arising from fluctuations in currency values or interest rates.
Contingent Obligations shall also include (a) the direct or indirect guaranty,
endorsement (other than for collection or deposit in the ordinary course of
business), co-making, discounting with recourse or sale with recourse by such
Person of the obligation of another, (b) the obligation to make take-or-pay or
similar payments if required regardless of nonperformance by any other party or
parties to an agreement, other than pursuant to routine agreements entered into
in the ordinary course of business and (c) any liability of such Person for the
obligations of another through any agreement to purchase, repurchase or
otherwise acquire such obligation or any property constituting security
therefor, to provide funds for the payment or discharge of such obligation or to
maintain the solvency, financial condition or any balance sheet item or level of
income of another. The amount of any Contingent Obligation shall be equal to the
amount of the obligation so guaranteed or otherwise supported or, if not a fixed
and determined amount, the maximum amount so guaranteed.
"Default" means a condition or event that, after notice or lapse of
-------
time or both, would constitute an Event of Default if that condition or event
were not cured or removed within any applicable grace or cure period.
"EBITDA" means the sum of (a) (i) net income or deficit, as the case
------
may be (excluding extraordinary gains, the write up of any asset or any gain
realized upon the sale of an asset and excluding any extraordinary, non-cash
losses, the write down of any asset and the loss realized upon the sale of any
asset), (ii) total interest expense (including non-cash interest), (iii)
depreciation and amortization expense, and (iv) income or franchise taxes,
federal, state or local. For any period of calculation, EBITDA shall be adjusted
to give effect to any acquisition, sale or other disposition of any operation or
business (or any portion thereof) during the period of calculation as if such
acquisition, sale or other disposition occurred on the first day of such period
of calculation.
"Environmental Laws" means all applicable federal, state or local laws,
------------------
statutes, rules, regulations or ordinances, codes, common law, consent
agreements, orders, decrees, judgments or injunctions issued, promulgated,
approved or entered thereunder relating to public health, safety or the
pollution or protection of the environment, including those relating to
releases, discharges, emissions, spills, leaching, or disposals of hazardous
substances (including petroleum, crude oil or any fraction or derivative
thereof, or other hydrocarbons) to air, water, land or ground water, to the
withdrawal or use of ground water, to the use, handling or disposal of
polychlorinated biphenyls, asbestos or urea formaldehyde, to the treatment,
storage, disposal or management of hazardous substances (including petroleum,
crude oil or any fraction or derivative thereof, or other hydrocarbons),
pollutants or contaminants, to exposure to toxic, hazardous or other controlled,
prohibited, or regulated substances, including, without limitation, any such
provisions under the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended (42 U.S.C. Section 9601 et seq.), or the
Resource Conservation and Recovery Act of 1976, as amended (42 U.S.C. Section
6901 et seq.).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
-----
amended from time to time.
"ERISA Affiliate" means any trade or business (whether or not
---------------
incorporated) which is a member of a controlled group or under common control
with Borrower within the meaning of Section 414(b) or (c) of the IRC (and
Sections 414(m) and (o) of the IRC for purposes of provisions relating to
Section 412 of the IRC).
-46-
Credit Agreement/SureWest Communications
"ERISA Event" means, with respect to Borrower, any ERISA Affiliate or
-----------
any Pension Plan, the occurrence of any of the following: (a) a Reportable
Event; (b) a withdrawal by a substantial employer (as defined in Section
4001(a)(12) of ERISA) subject to Section 4063 of ERISA; (c) a cessation of
operations which is treated as a withdrawal under Section 4062(e) of ERISA; (d)
a complete or partial withdrawal under Section 4203 or 4205 of ERISA from a
Multi-employer Plan; (e) a notification that a Multi-employer Plan is in
reorganization under Section 4242 of ERISA; (f) the filing of a notice of intent
to terminate a Pension Plan under 4041 of ERISA; (g) the treatment of an
amendment of a Pension Plan as a termination under 4041 of ERISA; (h) the
termination of a Multi-employer Plan under Section 4041A of ERISA; (i) the
commencement of proceedings by the PBGC to terminate a Pension Plan under 4042
of ERISA; (j) an event or condition which could reasonably be expected to
constitute grounds under Section 4042 of ERISA for the termination of, or the
appointment of a trustee to administer, a Pension Plan; or (k) the imposition of
any liability under Title IV of ERISA, other than PBGC premiums due but not
delinquent under Section 4007 of ERISA.
"Facility" and "Facilities" mean, respectively, each of the Term Loan
-------- ----------
Facility and the Revolving Loan Facility and, collectively, both of the Term
Loan Facility and the Revolving Loan Facility.
"FCC" means the Federal Communications Commission, or any other similar
---
or successor agency of the federal government administering the Communications
Act.
"GAAP" means generally accepted accounting principles as set forth in
----
statements from Auditing Standards No. 69, as amended, entitled "The Meaning of
`Present Fairly in Conformance with Generally Accepted Accounting Principles in
the Independent Auditors Reports'" issued by the Auditing Standards Board of the
American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board that are applicable
to the circumstances as of the date of determination.
"Governmental Approvals" means all authorizations, consents, approvals,
----------------------
licenses and exemptions of, registrations and filings with, and reports to, all
Governmental Authorities, including all Licenses.
"Governmental Authority" means any nation, province, or state or any
----------------------
political subdivision of any of the foregoing, and any government or any Person
exercising executive, legislative, regulatory or administrative functions of or
pertaining to government, and any corporation or other entity owned or
controlled, through stock or capital ownership or otherwise, by any of the
foregoing, including the FCC and any PUC.
-47-
Credit Agreement/SureWest Communications
"Indebtedness" as applied to any Person, means, without duplication:
------------
(i) all indebtedness for borrowed money; (ii) that portion of obligations with
respect to Capital Leases or other capitalized agreements that is properly
classified as a liability on a balance sheet in conformity with GAAP; (iii)
notes payable and drafts accepted representing extensions of credit whether or
not representing obligations for borrowed money; (iv) any obligation owed for
all or any part of the deferred purchase price of property or services, except
trade payables arising in the ordinary course of business not more than 90 days
past due; (v) all indebtedness secured by any Lien on any property or asset
owned or held by that Person regardless of whether the indebtedness secured
thereby shall have been assumed by that Person or is nonrecourse to the credit
of that Person, but only to the extent of the fair value of such property or
asset; (vi) fixed rate hedging obligations that are due (after giving effect to
any period of grace or notice requirement applicable thereto) and remain unpaid;
(vii) obligations with respect to principal under Contingent Obligations (other
than any performance bond) for the repayment of money or the deferred purchase
price of property, whether or not then due and payable (calculated as the amount
of such principal); (viii) obligations with respect to stated amounts of Letter
of Credit Liability; and (ix) obligations under partnership, organizational or
other agreements to fund capital contributions or other equity calls with
respect to any Person or investment, or to redeem, repurchase or otherwise make
payments in respect to capital stock or other securities of such Person.
"Interest Coverage Ratio" means the ratio derived by dividing (i)
-----------------------
EBITDA by (ii) total interest expense, in each case for the then most recently
completed four fiscal quarters.
"Interest Rate Agreement" means any interest rate swap, hedge, cap,
-----------------------
collar or similar agreement or arrangement designed to protect Borrower against
fluctuations in interest rates.
"Investment" means (i) any direct or indirect purchase or other
----------
acquisition by Borrower or any of its Subsidiaries of any beneficial interest
in, including stock, partnership interest or other equity securities of, any
other Person, other than trade associations and similar organizations purchased
or acquired in the ordinary course of business; and (ii) any direct or indirect
loan, advance, guarantee, assumption of liability or other obligation of
liability, or capital contribution by Borrower or any of its Subsidiaries to any
other Person, including all indebtedness and accounts receivable from that other
Person that are not current assets or did not arise from sales to that other
Person in the ordinary course of business. The amount of any Investment shall be
the original cost of such Investment plus the cost of all additions thereto,
without any adjustments for increases or decreases in value, or write-ups,
write-downs or write-offs with respect to such Investment.
"IRC" means the Internal Revenue Code of 1986, as amended from time to
---
time, and all rules and regulations promulgated thereunder.
"Letter of Credit Liability" means, as to each Letter of Credit, all
--------------------------
reimbursement obligations of Borrower to CoBank consisting of (a) the amount
available to be drawn or which may become available to be drawn; (b) all amounts
which have been paid and made available by CoBank to the extent not reimbursed
by Borrower, whether by the making of a Revolving Loan or otherwise; and (c) all
accrued and unpaid interest, fees and expenses with respect thereto. In the case
of any Letter of Credit that is issued in a currency other than United Stated
Dollars, the corresponding Letter of Credit Liability shall be determined in
United States Dollars based on the currency exchange rate from time to time
applicable to the issuer of such Letter of Credit.
"Leverage Ratio" means, for any period, the ratio derived by dividing
--------------
all Indebtedness as of the last day of the applicable period by EBITDA, in each
case as determined for the immediately preceding four fiscal quarters.
-48-
Credit Agreement/SureWest Communications
"LIBOR" means the rate (rounded upward to the nearest sixteenth and
-----
adjusted for reserves required on Eurocurrency Liabilities (as defined in
Regulation D as promulgated by the Board of Governors of the Federal Reserve
System, 12 CFR Part 204, as amended) for banks subject to such Regulation D or
required by any other federal law or regulation) quoted by the British Bankers
Association at 11:00 a.m. London time two (2) Banking Days before the
commencement of the Interest Period for the offering of U.S. dollar deposits in
the London interbank market for the Interest Period designated by Borrower, as
published by Bloomberg or another major information vendor listed on British
Bankers Association's official website.
"LIBOR Loans" means Loans accruing interest at rates determined by
-----------
reference to the LIBOR.
"LIBOR Margin" means the applicable percent per annum determined in
------------
accordance with Subsection 1.2(B).
"Licenses" means any material telephone, long distance, cellular
--------
telephone, microwave, personal communications or other telecommunications or
similar license, authorization, waiver, certificate of compliance, franchise,
approval or permit, whether for the acquisition, construction or operation of
any Telecommunications System, granted or issued by the FCC or any applicable
PUC and held by Borrower or any of its Subsidiaries, all of which are listed as
of the Closing Date on Schedule 5.13(A).
"Lien" means any lien, mortgage, pledge, security interest, charge or
----
encumbrance of any kind, whether voluntary or involuntary (including any
conditional sale or other title retention agreement and any lease in the nature
thereof), and any agreement to give any lien, mortgage, pledge, security
interest, charge or encumbrance.
"Loan" or "Loans" means an advance or advances under both of the Term
---- -----
Loan Commitment and the Revolving Loan Commitment.
"Loan Commitment" or "Loan Commitments" mean, respectively, each of the
--------------- ----------------
Term Loan Commitment and the Revolving Loan Commitment and collectively, both of
the Term Loan Commitment and the Revolving Loan Commitment.
"Loan Documents" means this Agreement, the Notes, the Letters of
--------------
Credit, any Related Interest Rate Agreement and all other instruments, documents
and agreements executed and delivered concurrently herewith or at any time
hereafter to or for the benefit of CoBank in connection with the Loans and other
transactions contemplated by this Agreement, all as amended, supplemented or
modified from time to time.
"Material Adverse Effect" means (i) a material adverse effect upon the
-----------------------
business, operations, properties, assets or condition (financial or otherwise)
of Borrower and its Subsidiaries, taken as a whole, or (ii) the material
impairment of the ability of Borrower or any of its Subsidiaries to perform its
obligations under any Loan Document to which it is a party or of CoBank to
enforce any Loan Document or collect any of the Obligations. In determining
whether any individual event could reasonably be expected to have a Material
Adverse Effect, notwithstanding that such event does not of itself have such
effect, a Material Adverse Effect shall be deemed to have occurred if the
cumulative effect of such event and all other then existing events could
reasonably be expected to have a Material Adverse Effect.
-49-
Credit Agreement/SureWest Communications
"Material Contracts" means (a) any contract or any other agreement,
------------------
written or oral, of Borrower or any of its Subsidiaries involving monetary
liability of or to any such Person in an amount in excess of $1,000,000 per
annum, and (b) any other contract or agreement, written or oral, of Borrower or
any of its Subsidiaries the failure to comply with which could reasonably be
expected to have a Material Adverse Effect; provided, however, that any (i)
vendor contract or (ii) contract or agreement which is terminable by a party
other than Borrower or any of its Subsidiaries without cause upon notice of 95
days or less shall not be considered a Material Contract.
"Multi-employer Plan" means a Multi-employer plan as defined in Section
-------------------
4001(a)(3) of ERISA to which Borrower or any ERISA Affiliate makes, is making,
made, or was at any time during the current year or the immediately preceding 6
years obligated to make contributions.
"Net Proceeds" means cash proceeds received by Borrower or any of its
------------
Subsidiaries from any Asset Disposition (including insurance proceeds, awards of
condemnation, and payments under notes or other debt securities received in
connection with any Asset Disposition), net of (i) the costs of such sale,
lease, transfer or other disposition (including taxes attributable to such sale,
lease or transfer) and (ii) amounts applied to repayment of Indebtedness (other
than the Obligations) secured by a Lien on the asset or property disposed.
"Note" or "Notes" means one or more of the Term Loan Notes and the
---- -----
Revolving Notes.
"Note Purchase Agreement" means that certain Note Purchase Agreement,
-----------------------
dated as of December 9, 1998, between Borrower and the purchasers listed on
Schedule A thereto, as supplemented by that certain Supplement to Note Purchase
Agreement, dated as of March 13, 2003, between Borrower and the purchasers
listed on Schedule A thereto, and as further amended, supplemented, modified,
extended or restated from time to time.
"Obligations" means all obligations, liabilities and indebtedness of
-----------
every nature of Borrower from time to time owed to CoBank under the Loan
Documents including the principal amount of all debts, claims and indebtedness,
accrued and unpaid interest, all reimbursement obligations in respect of any
Letters of Credit and all fees, costs and expenses thereunder, whether primary,
secondary, direct, contingent, fixed or otherwise, heretofore, now and/or from
time to time hereafter owing, due or payable whether before or after the filing
of a proceeding under the Bankruptcy Code by or against Borrower or any of its
Subsidiaries.
"PBGC" means the Pension Benefit Guaranty Corporation or any Person
----
succeeding to the functions thereof.
"Pension Plan" means a pension plan (as defined in Section 3(2) of
------------
ERISA) subject to Title IV of ERISA which any Borrower or an ERISA Affiliate
sponsors, maintains, or to which it makes, is making, or is obligated to make
contributions or, in the case of a Multi-employer Plan, has made contributions
at any time during the current year or the immediately preceding six plan years.
-50-
Credit Agreement/SureWest Communications
"Permitted Encumbrances" means the following:
----------------------
(1) Liens for taxes, assessments or other governmental
charges not yet due and payable unless the same are being diligently contested
in good faith and by appropriate proceedings and then only if and to the extent
that adequate reserves therefor are maintained in accordance with GAAP;
(2) statutory Liens of landlords, carriers, warehousemen,
mechanics, materialmen and other similar liens imposed by law, which are
incurred in the ordinary course of business for sums not more than 90 days
delinquent or which are being contested in good faith; provided that a reserve
or other appropriate provision shall have been made therefor;
(3) Liens incurred or deposits made in the ordinary course
of business in connection with workers' compensation, unemployment insurance and
other types of social security (other than any Lien imposed by the Employee
Retirement Income Security Act of 1974 or any rule or regulation promulgated
thereunder), or to secure the performance of tenders, statutory obligations,
surety, stay, customs and appeal bonds, bids, leases, government contracts,
trade contracts, performance and return of money bonds and other similar
obligations (exclusive of obligations for the payment of borrowed money);
(4) deposits, in an aggregate amount not to exceed
$1,000,000, made in the ordinary course of business to secure liability to
insurance carriers or others;
(5) any attachment or judgment Lien not constituting an
Event of Default under Subsection 6.1(I);
(6) easements, rights of way, restrictions and other similar
charges or encumbrances not interfering in any material respect with the
ordinary conduct of the business of Borrower or any of its Subsidiaries;
(7) Liens in favor of CoBank as set forth in Subsection 2.7;
(8) Liens securing purchase money security agreements and
capital leases permitted under Section 3.1(G), provided that such Liens do not
encumber any property other than the items purchased with the proceeds of such
Indebtedness or leased pursuant to such Indebtedness and such liens do not
secure any amounts other than amounts necessary to purchase or lease such items;
and
(9) other Liens securing Priority Debt of Borrower or any
Subsidiary not otherwise permitted by this definition of Permitted Encumbrances,
provided that Priority Debt incurred after December 8, 1998 does not exceed 15%
of Consolidated Net Worth as of the most recently completed fiscal quarter of
Borrower.
-51-
Credit Agreement/SureWest Communications
"Person" means and includes natural persons, corporations, limited
------
liability companies, limited partnerships, limited liability partnerships,
general partnerships, joint stock companies, joint ventures, associations,
companies, trusts, banks, trust companies, land trusts, business trusts or other
organizations, whether or not legal entities, and governments and agencies and
political subdivisions thereof and their respective permitted successors and
assigns (or in the case of a governmental person, the successor functional
equivalent of such Person).
"Plan" means an employee benefit plan (as defined in Section 3(3) of
----
ERISA) which any Borrower or an ERISA Affiliate sponsors or maintains or to
which any Borrower or an ERISA Affiliate makes, is making, or is obligated to
make contributions and includes any Pension Plan.
"Priority Debt" means (without duplication) the sum of (a) unsecured
-------------
Indebtedness of the Subsidiaries other than Indebtedness owing to Borrower or
any other Subsidiary and (b) Indebtedness of Borrower and its Subsidiaries
secured by a Lien described in clause (9) of the definition of Permitted
Encumbrances.
"PUC" means any state, provincial or other local regulatory agency or
---
body that exercises jurisdiction over the rates or services or the ownership,
construction or operation of any Telecommunications System or over Persons who
own, construct or operate a Telecommunications System, in each case by reason of
the nature or type of the business subject to regulation and not pursuant to
laws and regulations of general applicability to Persons conducting business in
any such jurisdiction.
"Quoted Rate" means a fixed annual interest rate for a selected Quoted
-----------
Rate Period to be quoted by CoBank in its sole and absolute discretion.
"Quote Rate Loans" means Loans accruing interest at Quoted Rates.
----------------
"Related Interest Rate Agreement" means any Interest Rate Agreement
-------------------------------
entered into between CoBank and Borrower to hedge the interest rate exposure
applicable to any portions of the Loans.
"Reportable Event" means any of the events set forth in Section 4043(c)
----------------
of ERISA or the regulations thereunder, other than any such event for which the
30 day notice requirement under ERISA has been waived in regulations issued by
the PBGC.
"Restricted Investment" means all Investments except (i) property to be
---------------------
used in the ordinary course of business; (ii) current assets arising from the
sale of goods and services in the ordinary course of business; (iii) Investments
in one or more Subsidiaries or any Person that concurrently becomes a
Subsidiary; (iv) Investments existing on December 9, 1998; (v) Investments in
obligations, maturing within one year, issued by or guaranteed by the United
States of America or an agency thereof; (vi) Investments in municipal
securities, maturing within one year, which are rated in one of the top two
ratings classifications by at least one national rating agency; (vii)
Investments in certificates of deposit or banker's acceptances issued by Bank of
America or other commercial banks which are rated in one of the top two rating
classifications by at least one national rating agency; (viii) Investments in
commercial paper, maturing within 270 days, rating in one of the top two rating
classifications by at least one national rating agency; and (ix) Investments in
money market instrument programs which are classified as current assets in
accordance with GAAP.
-52-
Credit Agreement/SureWest Communications
"Restricted Junior Payment" means: (i) any dividend or other
-------------------------
distribution, direct or indirect, on account of any equity interest in Borrower,
including any shares of any class of stock of Borrower now or hereafter
outstanding, except a dividend payable solely in shares of a class of stock to
the holders of that class; (ii) any redemption, conversion, exchange,
retirement, sinking fund or similar payment, purchase or other acquisition for
value, direct or indirect, of any equity interest in Borrower, including any
shares of any class of stock of Borrower now or hereafter outstanding; (iii) any
payment or prepayment of interest on, principal of, premium, if any, redemption,
conversion, exchange, purchase, retirement, defeasance, sinking fund or similar
payment with respect to, any Indebtedness subject to subordination provisions
for the benefit of CoBank; and (iv) any payment made to retire, or to obtain the
surrender of, any outstanding warrants, options or other rights to acquire any
equity interest in Borrower, including any shares of any class of stock of
Borrower now or hereafter outstanding.
"Revolving Loan" or "Revolving Loans" means an advance or advances
-------------- ---------------
under the Revolving Loan Commitment.
"Revolving Loan Commitment" means, initially, $25,000,000, as such
------------------------
amount is reduced from time to time as provided in this Agreement.
"Revolving Loan Expiration Date" means the earlier of (i) the
------------------------------
suspension (subject to reinstatement) of CoBank's obligations to make Loans
pursuant to Subsection 6.2, (ii) the acceleration of the Obligations pursuant to
Subsection 6.3 or (iii) June 30, 2013.
"Revolving Loan Facility" means, the revolving loan credit facility
-----------------------
extended to Borrower pursuant to Section 1.1(B).
"Revolving Note" or "Revolving Notes" means one or more of the notes of
-------------- ---------------
Borrower substantially in the form of Exhibit 10.1(A), or any combination
thereof, and any replacements, restatements, renewals or extensions of any such
notes, in whole or in part.
"Subsidiary" means, with respect to any Person, any corporation,
----------
partnership, association or other business entity of which more than fifty
percent (50%) of the total voting power of shares of stock (or equivalent
ownership or controlling interest) entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by that
Person or one or more of the other Subsidiaries of that Person or a combination
thereof.
"Telecommunications System" means a telephone, long distance, internet,
-------------------------
data services, video and satellite services, wireless telecommunications,
telephone directories, fiber and cable leasing, telecommunications equipment,
including hand sets, rental, leasing, installation, selling or maintenance
system or business and shall include a microwave system or a paging system
operated in connection with (and in the same general service area as) any of the
foregoing systems, and businesses related thereto.
"Term Loan" means the Loan under the Term Loan Commitment.
---------
"Term Loan Availability Expiration Date" means the earlier of (i) the
--------------------------------------
suspension (subject to reinstatement) of CoBank's obligations to make Loans
pursuant to Subsection 6.2, (ii) the acceleration of the Obligations pursuant to
Subsection 6.3 or (iii) December 31, 2007.
"Term Loan Commitment" means $75,000,000, as such amount is reduced
--------------------
from time to time as provided in this Agreement.
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Credit Agreement/SureWest Communications
"Term Loan Facility" means the term loan credit facility extended to
------------------
Borrower pursuant to Subsection 1.1(A).
"Term Loan Maturity Date" means the earlier of (i) the acceleration of
-----------------------
the Obligations pursuant to Subsection 6.3 or (ii) June 30, 2016.
"Term Loan Note" or "Term Loan Notes" means one or more of the notes of
-------------- ---------------
Borrower substantially in the form of Exhibit 10.1(B), or any combination
thereof, and any replacements, restatements, renewals or extensions of any such
notes, in whole or in part.
10.2 Other Definitional Provisions. References to "Sections,"
-----------------------------
"Subsections," "Exhibits" and "Schedules" shall be to Sections, Subsections,
Exhibits and Schedules, respectively, of this Agreement unless otherwise
specifically provided. Any of the terms defined in Subsection 10.1 may, unless
the context otherwise requires, be used in the singular or the plural depending
on the reference. In this Agreement, "hereof," "herein," "hereto," "hereunder"
and the like mean and refer to this Agreement as a whole and not merely to the
specific section, paragraph or clause in which the respective word appears;
words importing any gender include the other gender; references to "writing"
include printing, typing, lithography and other means of reproducing words in a
tangible visible form; the words "including," "includes" and "include" shall be
deemed to be followed by the words "without limitation"; references to
agreements and other contractual instruments shall be deemed to include
subsequent amendments, assignments, and other modifications thereto, but only to
the extent such amendments, assignments and other modifications are not
prohibited by the terms of this Agreement or any other Loan Document; references
to Persons include their respective permitted successors and assigns or, in the
case of governmental Persons, Persons succeeding to the relevant functions of
such Persons; and all references to statutes and related regulations shall
include any amendments of same and any successor statutes and regulations.
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Credit Agreement/SureWest Communications
Witness the due execution hereof by the respective duly authorized
officers of the undersigned as of the date first written above.
SUREWEST COMMUNICATIONS
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------------
Xxxxxx X. Xxxxxx, President and Chief
Executive Officer
[Signatures Continued on Following Page]
Credit Agreement/SureWest Communications
[Signatures Continued from Previous Page]
COBANK, ACB
By: /s/ Xxx Xxxxxxx
-------------------------------------
Xxx Xxxxxxx, Vice President
EXHIBIT 1.3
SureWest Communications
FORM OF
NOTICE OF BORROWING/CONVERSION/CONTINUATION
CoBank, ACB
0000 X. Xxxxxx Xxxxxx
Xxxxxxxxx Xxxxxxx, Xxxxxxxx 00000
Attention:_______________________
Ladies and Gentlemen:
Pursuant to the Credit Agreement, dated as of May __, 2006 (as
such loan agreement may hereafter be amended, modified or supplemented, the
"Credit Agreement") between SureWest Communications ("Borrower") and CoBank, ACB
("CoBank"), Borrower hereby requests that CoBank take the actions indicated
below. Capitalized terms used but not defined herein have the meanings given to
them in the Credit Agreement.
Note: The following requirements apply to all requests:
- Requests must be made no later than 11:00 a.m.
(Denver, Colorado time) on a Business Day.
- In the case of a borrowing of or conversion to or
continuation of the Base Rate Loan or a Quoted Rate
Loan, requests must be made at least one Business Day
in advance of the proposed borrowing, conversion or
continuation date.
- In the case of a borrowing of or conversion to or
continuation of a LIBOR Loan, requests must be made
at least three Banking Days in advance of the
proposed borrowing, conversion or continuation date.
- Borrowings under the Base Rate Loan must be in a
minimum amount of $100,000 and whole multiples of
$5,000 in excess of $100,000.
- LIBOR Loans must be in a minimum amount of
$1,000,000 and whole multiples of $250,000 in excess
of $1,000,000.
- Quoted Rate Loans must be in a minimum account of
$10,000,000 and whole multiples of $1,000,000 in
excess of $10,000,000.
- No more than a combined total of five LIBOR Loans and
Quoted Rate Loans under the Facilities may be
outstanding at any one time.
___ REQUEST FOR BORROWING:
Borrower hereby requests an advance under the _________
[Term/Revolving] Loan Facility. In connection with such request,
Borrower hereby certifies as follows:
(a) The _________ [Term/Revolving] Loan
Commitment as reduced pursuant to the Credit
Agreement is $__________________; and
(b) The aggregate principal balance of _________
[Term/Revolving] Loans _________
[advanced/outstanding] (not including this
requested Loan) is $_____________; and
(c) [The aggregate amount of all outstanding
Letter of Credit Liability is
$_____________; and]
(d) Therefore, the available _________
[Term/Revolving] Loan Commitment is
$_______________. [(a) minus (b) (and in the
case of the Revolving Loan Commitment, also
minus (c)]
Borrower hereby requests under the _________ [Term/Revolving] Loan
Facility an advance of $_____________________, to be made on
____________ and to bear interest pursuant to the interest rate
option(s) checked below [check all applicable]:
___ A portion of the Base Rate Loan in the principal amount of
$____________
___ A LIBOR Loan in the principal amount of $____________, for an
Interest Period of [check one]:
__1 month __2 months __3 months __6 months
__9 months __12 months
___ A Quoted Rate Loan in the principal amount of
$_________, of a Quoted Rate Period of __________,
commencing __________
___ REQUEST FOR CONVERSION:
Borrower hereby requests that the following Loan(s) be converted to new
interest rate option(s) as indicated:
Description of Loan(s) to be Converted [check one]:
--------------------------------------
___ On _________, convert $________________ of the Base
Rate Loan under the _________ [Term/Revolving] Loan
Facility
___ Upon expiration of its current Interest Period, convert the
LIBOR Loan under the _________ [Term/Revolving] Loan Facility
in the principal amount of $_______________, the Interest
Period for which expires on: _____________
___ Upon expiration of its current Quoted Rate Period, convert the
Quoted Rate Loan under the _________ [Term/Revolving] Loan
Facility in the principal amount of $_______________, the
Quoted Rate Period for which expires on: _____________
Description of New Loan(s) [check all applicable]:
--------------------------
___ to a Base Rate Loan in the principal amount of
$_________________
___ to a Quoted Rate Loan in the principal amount of
$_________________, for a Quoted Rate Period of
_________________, commencing _________________
___ to a LIBOR Loan in the principal amount of
$___________________, for an Interest Period of [check one]:
__1 month __2 months __3 months __6 months __9 months __12
months
___ REQUEST FOR CONTINUATION:
Borrower hereby requests that the interest rate option(s) applicable to
the following loan(s) be continued as indicated:
Upon expiration of its current Interest Period, continue the LIBOR Loan
under the _________ [Term/Revolving] Loan Facility in the principal
amount of $____________, the current Interest Period for which expires
on _______ for a new Interest Period of:
__1 month __2 months __3 months __6 months __9 months __12
months
Upon expiration of its current Quoted Rate Period, continue the Quoted
Rate Loan and the _________ [Term/Revolving] Loan Facility in the
principal amount of $____________, the current Quoted Rate Period for
which expires on _______ for a new Quoted Rate Period of _______
The undersigned hereby certifies that both before and after giving
effect to the borrowing, conversion or continuation request above, (i) all of
the representations and warranties contained in the Credit Agreement and the
other Loan Documents, are true, correct and complete in all material respects as
of the date hereof as and to the extent provided in Section 7.2(B) of the Credit
Agreement, (ii) no Default or Event of Default has occurred and is continuing or
would result on the date hereof, (iii) since December 31, 2005, there has not
occurred any event or condition that has had or could reasonably be expected to
have a Material Adverse Effect, (iv) the undersigned is authorized to execute
and deliver this Notice on behalf of Borrower, and (v) the Loan Documents remain
in full force and effect as to Borrower.
SUREWEST COMMUNICATIONS
By: ------------------------
Name: ------------------------
Title: ------------------------
Date: ------------------------
EXHIBIT 4.4(C)
FORM OF
COMPLIANCE CERTIFICATE
THIS COMPLIANCE CERTIFICATE is given by __________________ and
__________________, the [chief financial officer] of SUREWEST COMMUNICATIONS
("Borrower") pursuant to Subsection 4.4(C) of that certain Credit Agreement,
dated as of May __, 2006 (as such agreement may hereafter be amended, modified
or supplemented, the "Credit Agreement"), among Borrower and CoBank, ACB.
Capitalized terms used herein and not otherwise defined herein shall have the
meanings ascribed to them in the Credit Agreement.
I hereby certify as follows:
1. I am the [chief financial officer] of Borrower, and as such possess
the knowledge and authority to certify to the matters set forth in this
Compliance Certificate, and hereby certify that the matters set forth below are
true and accurate to the best of my present knowledge, information and belief
after due inquiry;
2. Attached hereto as Annex A are the [audited/unaudited]
[annual/quarterly] financial statements of Borrower, for the fiscal
[year/quarter] ended ______________, as required by Subsection 4.4[(A)/(B)] of
the Credit Agreement. Such financial statements were prepared in accordance with
GAAP consistently applied (except as expressly provided in the Credit
Agreement), fairly present the condition of Borrower during the periods covered
thereby and as of the dates thereof, and are in a format that demonstrates any
accounting or formatting changes that may be required by various jurisdictions
in which the business of Borrower is conducted (to the extent not inconsistent
with GAAP);
3. As of the date of such financial statements, Borrower is in
compliance with the covenants set forth in Section 4 of the Credit Agreement.
Attached hereto as Annex B are calculations which demonstrate the compliance
by Borrower with such covenants; and
4. I have reviewed the activities of Borrower, and consulted with
appropriate representatives of Borrower during the fiscal [year/quarter] ended
______________, and reviewed the Credit Agreement and the other Loan Documents.
As of the date of this Compliance Certificate, there is no condition, event or
act which constitutes a Default or an Event of Default under the Credit
Agreement, except as disclosed on Annex C hereto.
IN WITNESS WHEREOF, I have executed this Compliance Certificate as
of _____________, _____.
---------------------------
[chief financial officer]
SureWest Communications
ANNEX A
-------
Annual (audited) or Quarterly (unaudited)
Financial Statements
ANNEX B
-------
Financial Covenant Compliance Worksheet
COVENANT 4.1
LEVERAGE RATIO
As of the fiscal year/quarter ended ______________, __________.
(A) Indebtedness $____________________
(B) EBITDA (the sum of 1 through 4, without duplication; (calculated for
the then most recently completed four fiscal quarters))
1. Net income or deficit (excluding
extraordinary gains, the write up of any
asset or gain and excluding any
extraordinary, non-cash losses, the write
down of any asset and loss realized upon sale
of any asset), plus $____________________
2. Total interest expense (including non-cash
interest), plus $____________________
3. Depreciation and amortization expense, plus $____________________
4. Income and franchise taxes, federal,
state or local $____________________
Sum of 1 through 4 $____________________
Leverage Ratio = (A) / (B) = :1.0
Required Ratio: Not more than 3.0:1.0
Compliance: Yes No
COVENANT 4.2
INTEREST COVERAGE RATIO
As of the fiscal quarter/year ended ____________________, ____________.
(Calculated for the then most recently completed four fiscal quarters)
(A) EBITDA $____________________
(B) Cash interest expense $____________________
Pro Forma Debt Service Coverage Ratio = (A) / (B) = :1.0
Required Ratio: Not less than 3.0:1.0
Compliance: Yes No
COVENANT 4.3
NET WORTH
As of the fiscal quarter/year ended __________, ____________.
(A) Consolidated Net Worth $_________________________
(B) Greater of (i) $0 or (ii) the result
of (a) Restricted Investments incurred
after December 9, 1998 minus (b) 10% of
Consolidated Net Worth $_________________________
Net Worth = (A) - (B) =$________________________
Required Amount: Not less than $160,000,000
Compliance: Yes No
EXHIBIT 10.1(A)
FORM OF
REVOLVING NOTE
SUREWEST COMMUNICATIONS
[$___________] ______ __, 2006
FOR VALUE RECEIVED, the undersigned ("Borrower"), hereby
unconditionally promises to pay to the order of __________ ("Lender") in lawful
money of the United States of America and in immediately available funds, the
principal sum of [_________________ UNITED STATES DOLLARS (US $__________)], or
if less, the aggregate unpaid principal amount of all advances made to Borrower
by Lender pursuant to Subsection 1.1(B) of the Credit Agreement described below,
at such times and in the manner specified therein.
This Revolving Note is payable on the dates and in the amounts set
forth in the Credit Agreement described below. This Revolving Note may be
prepaid in whole or in part at any time subject to the terms of the Credit
Agreement described below.
This Revolving Note is one of the Notes referred to in, was executed
and delivered pursuant to, evidences indebtedness of Borrower incurred under,
and is subject to all terms and conditions of, that certain Credit Agreement,
dated as of the date hereof, between Borrower and Lender (as the same may be
amended, restated, supplemented or otherwise modified and in effect from time to
time, the "Credit Agreement"), to which reference is hereby made for a statement
of, among other things, the terms and conditions under which the indebtedness
evidenced hereby was made and is to be repaid and for a statement of Lender's
remedies upon the occurrence of an Event of Default, including without
limitation, the remedy of acceleration. Capitalized terms used herein but not
otherwise specifically defined shall have the meanings ascribed to such terms in
the Credit Agreement.
Borrower unconditionally promises to pay interest on the outstanding
unpaid principal amount hereof from the date hereof until payment in full at the
rates from time to time applicable to the Revolving Loans as determined in
accordance with the Credit Agreement; provided, however, that upon the
occurrence and during the continuance of an Event of Default, Borrower promises
to pay interest on the outstanding principal balance of this Revolving Note at
the rate of interest applicable following the occurrence of an Event of Default
as determined in accordance with the Credit Agreement.
Interest on this Revolving Note shall be payable, at the times and from
the dates specified in the Credit Agreement for the Revolving Loans, on the date
of any prepayment hereof, at maturity, whether due by acceleration or otherwise,
and as otherwise provided in the Credit Agreement. From and after the date when
the principal balance hereof becomes due and payable, whether by acceleration or
otherwise, interest hereon shall be payable on demand, subject to any grace or
cure period set forth in the Credit Agreement. In no contingency or event
whatsoever shall interest charged hereunder, however such interest may be
characterized or computed, exceed the highest rate permissible under any law
which a court of competent jurisdiction shall, in a final determination, deem
applicable hereto. In the event that such a court determines that Lender has
received interest hereunder in excess of the highest rate applicable hereto,
such excess shall be applied in accordance with the terms of the Credit
Agreement. The indebtedness evidenced by this Revolving Note is secured pursuant
to the terms of the Loan Documents.
Except for any notices expressly required by the Loan Documents and as
otherwise required by applicable law, Borrower hereby waives demand, presentment
and protest and notice of demand, presentment, protest and nonpayment.
Borrower further agrees, subject only to any limitation imposed by
applicable law or the Loan Documents, to pay all expenses, including reasonable
attorneys' fees and legal expenses, incurred by Lender in endeavoring to collect
any amounts payable hereunder which are not paid when due, whether by
acceleration or otherwise.
THIS REVOLVING NOTE SHALL BE GOVERNED BY, AND INTERPRETED AND ENFORCED
IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO CONFLICTS OF LAW PROVISIONS
THAT REQUIRE OR PERMIT APPLICATION OF THE LAWS OF ANY OTHER STATE OR
JURISDICTION) AND DECISIONS OF THE STATE OF COLORADO. Whenever possible each
provision of this Revolving Note shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this Revolving
Note shall be prohibited by or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity in such
jurisdiction, without invalidating the remainder of such provision or the
remaining provisions of this Revolving Note or the effectiveness and validity of
such prohibited or invalid provision in any other jurisdiction. Whenever in this
Revolving Note reference is made to Lender or Borrower, such reference shall be
deemed to include, as applicable, a reference to their respective permitted
successors and assigns and in the case of Lender, any financial institution to
which it has sold or assigned all or any part of its interest in the Revolving
Loans or in its commitment to make the Revolving Loans as permitted by the
Credit Agreement. The provisions of this Revolving Note shall be binding upon
and shall inure to the benefit of such permitted successors and assigns.
Borrower's respective successors and assigns shall include, without limitation,
a receiver, trustee or debtor in possession of or for Borrower.
IN WITNESS WHEREOF, Borrower has caused this note to be executed and
delivered, by its duly authorized officer, on the date first shown above.
SUREWEST COMMUNICATIONS
By: -----------------------------
Name: -----------------------------
EXHIBIT 10.1(B)
FORM OF
TERM LOAN NOTE
SUREWEST COMMUNICATIONS
[$___________] ______ __, 2006
FOR VALUE RECEIVED, the undersigned ("Borrower"), hereby
unconditionally promises to pay to the order of __________ ("Lender") in lawful
money of the United States of America and in immediately available funds, the
principal sum of [_________________ UNITED STATES DOLLARS (US $__________)], or
if less, the aggregate unpaid principal amount of all advances made to Borrower
by Lender pursuant to Subsection 1.1(A) of the Credit Agreement described below,
at such times and in the manner specified therein.
This Term Loan Note is payable in installments on the dates and in the
amounts set forth in the Credit Agreement described below. This Term Loan Note
may be prepaid in whole or in part at any time subject to the terms of the
Credit Agreement described below.
This Term Loan Note is one of the Notes referred to in, was executed
and delivered pursuant to, evidences indebtedness of Borrower incurred under,
and is subject to all terms and conditions of, that certain Credit Agreement,
dated as of the date hereof, between Borrower and Lender (as the same may be
amended, restated, supplemented or otherwise modified and in effect from time to
time, the "Credit Agreement"), to which reference is hereby made for a statement
of, among other things, the terms and conditions under which the indebtedness
evidenced hereby was made and is to be repaid and for a statement of Lender's
remedies upon the occurrence of an Event of Default, including without
limitation, the remedy of acceleration. Capitalized terms used herein but not
otherwise specifically defined shall have the meanings ascribed to such terms in
the Credit Agreement.
Borrower unconditionally promises to pay interest on the outstanding
unpaid principal amount hereof from the date hereof until payment in full at the
rates from time to time applicable to the Term Loan as determined in accordance
with the Credit Agreement; provided, however, that upon the occurrence and
during the continuance of an Event of Default, Borrower promises to pay interest
on the outstanding principal balance of this Term Loan Note at the rate of
interest applicable following the occurrence of an Event of Default as
determined in accordance with the Credit Agreement.
Interest on this Term Loan Note shall be payable, at the times and from
the dates specified in the Credit Agreement for the Term Loan, on the date of
any prepayment hereof, at maturity, whether due by acceleration or otherwise,
and as otherwise provided in the Credit Agreement. From and after the date when
the principal balance hereof becomes due and payable, whether by acceleration or
otherwise, interest hereon shall be payable on demand, subject to any grace or
cure period set forth in the Credit Agreement. In no contingency or event
whatsoever shall interest charged hereunder, however such interest may be
characterized or computed, exceed the highest rate permissible under any law
which a court of competent jurisdiction shall, in a final determination, deem
applicable hereto. In the event that such a court determines that Lender has
received interest hereunder in excess of the highest rate applicable hereto,
such excess shall be applied in accordance with the terms of the Credit
Agreement. The indebtedness evidenced by this Term Loan Note is secured pursuant
to the terms of the Loan Documents.
Except for any notices expressly required by the Loan Documents and as
otherwise required by applicable law, Borrower hereby waives demand, presentment
and protest and notice of demand, presentment, protest and nonpayment.
Borrower further agrees, subject only to any limitation imposed by
applicable law or the Loan Documents, to pay all expenses, including reasonable
attorneys' fees and legal expenses, incurred by Lender in endeavoring to collect
any amounts payable hereunder which are not paid when due, whether by
acceleration or otherwise.
THIS TERM LOAN NOTE SHALL BE GOVERNED BY, AND INTERPRETED AND ENFORCED
IN ACCORDANCE WITH THE INTERNAL LAWS (AS OPPOSED TO CONFLICTS OF LAW PROVISIONS
THAT REQUIRE OR PERMIT APPLICATION OF THE LAWS OF ANY OTHER STATE OR
JURISDICTION) AND DECISIONS OF THE STATE OF COLORADO. Whenever possible each
provision of this Term Loan Note shall be interpreted in such manner as to be
effective and valid under applicable law, but if any provision of this Term Loan
Note shall be prohibited by or invalid under applicable law, such provision
shall be ineffective to the extent of such prohibition or invalidity in such
jurisdiction, without invalidating the remainder of such provision or the
remaining provisions of this Term Loan Note or the effectiveness and validity of
such prohibited or invalid provision in any other jurisdiction. Whenever in this
Term Loan Note reference is made to Lender or Borrower, such reference shall be
deemed to include, as applicable, a reference to their respective permitted
successors and assigns and in the case of Lender, any financial institution to
which it has sold or assigned all or any part of its interest in the Term Loan
or in its commitment to make the Term Loan as permitted by the Credit Agreement.
The provisions of this Term Loan Note shall be binding upon and shall inure to
the benefit of such permitted successors and assigns. Borrower's respective
successors and assigns shall include, without limitation, a receiver, trustee or
debtor in possession of or for Borrower.
IN WITNESS WHEREOF, Borrower has caused this note to be executed and
delivered, by its duly authorized officer, on the date first shown above.
SUREWEST COMMUNICATIONS
By: -----------------------------
Name: -----------------------------
