EXHIBIT 10.1
RURAL TELEPHONE FINANCE COOPERATIVE
SECURED REVOLVING LINE OF CREDIT AGREEMENT
("Agreement")
DAKOTA TELECOMMUNICATIONS GROUP, INC. a Delaware corporation and DAKOTA
TELECOM, INC. a South Dakota corporation (hereinafter collectively called
the "Borrower"), hereby agrees to borrow from Rural Telephone Finance
Cooperative ("RTFC" or "Lender"), a South Dakota cooperative association,
pursuant to the terms of this Agreement, dated as of March 31, 1998, for a
revolving line of credit loan in amount not to exceed four million dollars
($4,000,000). In consideration of their mutual premises hereunder and
other valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, Lender and Borrower agree to the following terms and
conditions:
1. REVOLVING CREDIT AND TERM. Lender agrees to make advances to the
Borrower pursuant to the terms of this Agreement ("Advances"). The
maximum principal amount outstanding a any point in time shall not
exceed $4,000,000. Within such limits, the Borrower may borrow, repay
and reborrow at any time or from time to time for a period up to 12
months from the date hereof (the "Maturity Date").
2. REQUISITIONS. The Borrower shall give Lender such prior notice of
requests for Advances as RTFC may reasonably require from time to
time.
3. INTEREST RATE AND PAYMENT. The Borrower unconditionally promises and
agrees to pay, as and when due, interest on all amounts advanced
hereunder from the date of each Advance and to repay all amounts
advanced hereunder with interest on the Maturity Date. Interest shall
be due and payable quarterly on the first day of each March, June,
September, and December, commencing on the first such date after such
initial Advance; except that if Lender gives notice thereof to the
Borrower before the first day of any month, interest shall thereafter
be due and payable on the 15th day of such month and each month
thereafter. Lender shall invoice the Borrower at least five days
prior to the due date of any such interest payment. All amounts shall
be payable at RTFC's main office at Woodland Park, 0000 Xxxxxxxxxxx
Xxx, Xxxxxxx, Xxxxxxxx 00000-0000 or at such other location as
designated by Lender from time to time.
The interest rate on all Advances will be equal to the Prevailing Bank
Prime Rate (as defined herein), plus one and one-half percent per
annum or such lesser total rate per annum as may be fixed by Lender
from time to time. Interest will be computed on the basis of a year
of 365 days. The interest rate will be adjusted as determined from
time to time by Lender, provided that no such adjustment may be
effective on a date other than the first or sixteenth day of any
month, and will remain in effect until a subsequent change in rate
occurs.
The "Prevailing Bank Prime Rate" is that bank prime rate published in
the "Money Rates" column of any edition of The Wall Street Journal
which Lender determines in its discretion to be the representative
bank prime rate on the day preceding the day on which an adjustment in
the interest rate hereof shall become effective. If such preceding
day is not a publication day for The Wall Street Journal then the
Prevailing Bank Prime Rate shall be established by reference to such
"Money Rates" column as of the last publication day next preceding the
day on which such adjustment shall become effective; provided if The
Wall Street Journal shall cease to be published, then the Prevailing
Bank Prime Rate shall be determined by RTFC by reference to another
publication reporting bank prime rates in a similar manner.
4. RTFC ACCOUNTS. Lender shall maintain in accordance with its usual
practice an account or accounts evidencing the indebtedness of the
Borrower resulting from each Advance made from time to time and the
amounts of principal and interest payable and paid from time to time
hereunder. In any legal action or proceeding in respect of this
Agreement, the entries made in such account or accounts (whether
stored on computer memory, microfilm, invoices or otherwise) shall be
presumptive evidence (absent manifest error) of the existence and
amounts of the Borrower's transactions therein recorded.
5. CORPORATE AND REGULATORY APPROVALS. Borrower represents that it has
obtained any and all necessary corporate and regulatory approvals for
Borrower to execute and perform pursuant to this Agreement.
6. REPORTS. Borrower agrees to deliver to Lender, promptly upon their
beginning available, a copy of (i) any annual audit report prepared
subsequent to the submission of this Agreement; (ii) its monthly
operating report within thirty (30) days for any month in which there
are advances outstanding pursuant to this Agreement; and (iii) any
other reports which Lender reasonably requests during the term of this
Agreement.
7. COVENANTS/FINANCIAL RATIOS. Until the Maturity Date, Borrower agrees
to honor and be bound by the affirmative and negative covenants, and
financial ratios, (collectively, the "Covenants") contained in
Sections 6 ad 7 of the Loan Agreement by and between Borrower and
Lender dated as of June 24, 1997, as it may be amended from time-to-time
(the "Loan Agreement"), and such covenants shall be incorporated
by reference as if fully stated herein.
8. FEES. If any amount outstanding and due hereunder shall not be paid
when due, Borrower agrees to pay on demand Lender's reasonable costs
-2-
of collection or enforcement of this Agreement, or preparation
therefor, including reasonable fees of counsel. If pay of any
principal and/or interest due under the terms of this Agreement is not
received at Lender's office in Herndon, Virginia, or such other
location designated by Lender within five (5) business days after the
due date thereof (such unpaid amount of principal and/or interest
being herein called the "delinquent amount," and the period beginning
after such due date being herein called the "late-payment period"),
Borrower will pay to Lender, on demand, in addition to all other
amounts due under the terms of this Agreement, any late-payment charge
as may then be in effect pursuant to Lender's policy on the delinquent
amount for the late payment period.
9. CREDIT SUPPORT. This Agreement may not be used as credit support for
any other financings without Lender's prior written approval.
10. NOTICES, ACCELERATION OF DEBT AND WAIVERS. While any amount hereunder
is outstanding, Borrower agrees to notify Lender of any delinquency or
default on any of its financial obligations, any material adverse
change in its financial or business condition, and if any
representation or warranty made in this Agreement has become untrue in
any respect having a material adverse effect on the financial
condition or business of the Borrower.
Lender may declare at any time all outstanding amounts hereunder
immediately due and payable in full with accrued interest, without
presentment or demand, and may withhold advances of funds upon the
occurrence of any of the following: (i) any delinquency or default in
payment of any sum due the Lender under the Agreement; (ii) a court
shall enter a decree or order for relief with respect to Borrower or
any subsidiary or guarantor in an insolvency or bankruptcy or appoint
a receiver, liquidator, trustee or similar official and such order
remains in effect for a period of sixty (60) days; (iii) Borrower or
any subsidiary shall commence a voluntary case under bankruptcy,
insolvency or similar law or consent to the appointment of a receiver,
liquidator, or trustee; (iv) the dissolution or liquidation of
Borrower or subsidiary or guarantor or failure to forestall or remove
any execution, garnishment or attachment of such consequence as to
impair its ability to continue business and such execution,
garnishment or attachment shall not be vacated within sixty (60) days;
or (v) any other event as a result of which any holder of indebtedness
may declare the same due and payable shall occur and continue for more
than any applicable grace period.
If any representation or warranty herein shall become untrue, or
Borrower shall fail to comply with any term of this Agreement or if
the financial condition of Borrower shall have changed to the extent
that such change in the reasonable judgment of RTFC, materially
increases RTFC's risk hereunder, then RTFC at its discretion may
-3-
withhold advances of funds and/or declare all outstanding amounts
hereunder immediately due and payable in full with accrued interest,
without presentment or demand.
The Borrower waives the defense of usury and all rights to set off,
counterclaim, deduction or recoupment.
11. PURPOSE, REPAYMENTS AND DEPOSIT. Borrower agrees that any and all
Advances hereunder will be used only for proper corporate purposes and
consistently with the requirements of outstanding security documents
of Borrower relating to its operations. Borrower agrees that this
loan shall be repayable out of Borrower's general funds and that loan
proceeds will not be deposited in any other account dedicated for
secured financing advances.
12. ADDITIONAL INDEBTEDNESS. While any amount hereunder is outstanding
and unless otherwise disclosed in writing to Lender and permitted
pursuant to the Loan Agreement, Borrower agrees that it will not,
without the prior written consent of Lender, (i) make distributions of
cash to its shareholders, if applicable, or (ii) create, incur,
assume, guarantee or otherwise become obligated for any additional
indebtedness, other than t Lender except that the Borrower may borrow
against another loan previously approved by Lender.
13. SURVIVAL OF REPRESENTATIONS, WARRANTIES AND PAYMENT OBLIGATIONS.
Borrower agrees that the representations and warranties made in this
Agreement shall survive the making of Advances hereunder. Any
unsatisfied payment obligation hereunder shall survive the maturity
and cancellation of this Agreement.
14. REPRESENTATIONS AND WARRANTIES. Except as set forth in writing and
attached hereto, Borrower represents and warrants as of the date of
its application and on the date of each and every Advance hereunder
that:
(a) The Borrower has and will meet all obligations and be in
compliance with all instruments under which it is bound and that
all information submitted in support of its application is true,
complete and correct;
(b) There has been no material adverse change in the Borrower's
business or financial condition from that set forth in its most
recent audited financial statements provided to Lender;
(c) The Borrower has no outstanding loans from sources other than
Lender, other than those previously disclosed in writing to
Lender;
-4-
(d) The Borrower is not in default in any material respect of any of
its obligations and no litigation is threatened or pending which
would have a material adverse impact on the Borrower's ability to
perform under this Agreement; and
(e) The Borrower has no lines of credit with any other lenders.
15. Consent to Patronage Capital Distributions. Borrower hereby consents
that the amount of any distributions with respect to Borrower's
patronage which are made in written notices of allocation (as defined
in Section 1388 of the Internal Revenue Code of 1986, as amended
("Code") including any other comparable successor provision) and which
are received from Lender will be taken into account by Borrower at
their stated dollar amounts in the manner provided in Section 1385(a)
of the Code in the taxable year in which such written notices of
allocation are received.
16. SEVERABILITY. If any term, provision or condition, or any part
thereof, of this Agreement shall for any reason be found or held
invalid or unenforceable by any court or governmental agency of
competent jurisdiction, such invalidity or unenforceability shall not
affect the remainder of such term, provision or condition nor any
other term, provision or condition, and this Agreement shall survive
and be construed as if such invalid or unenforceable term, provision
or condition had not been contained therein.
17. SETOFF. Lender is hereby authorized at any time and from time to time
without prior notice to the Borrower to exercise rights of setoff or
recoupment and apply any and all amounts held, or hereafter held, by
Lender or owed to the Borrower or for the credit or account of the
Borrower against any and all ob the obligations of the Borrower now or
hereafter existing hereunder. Lender agrees to notify the Borrower
promptly after any such setoff or recoupment and the application
thereof, provided that the failure to give such notice shall not
affect the validity of such setoff, recoupment or application. The
rights of Lender under this section are in addition to any other
rights and remedies (including other rights of setoff or recoupment)
which Lender may have.
18. ADDITIONAL TERMS AND CONDITIONS. Additional terms and conditions set
forth herein or attached hereto as Exhibit A are an integral part of
this Agreement.
19. INTEGRATION. This Agreement and the matters incorporated by reference
contain the entire agreement of the parties hereto with respect to the
matters covered and the transactions contemplated hereby, and no other
agreement, statement or promise made by any party hereto, or by any
employee, officer, agent or attorney of any party hereto, which is not
contained herein, shall be valid and binding. No amendment or waiver
-5-
to this Agreement shall be valid and binding except if in writing and
signed by both parties.
20. HEADINGS. The headings and sub-headings contains in this Agreement
are intended to be used for convenience only and do not constitute
part of this Agreement.
21. SECURITY. All Advances hereunder shall be secured by a security
interest in certain of Borrower's properties pursuant to a Mortgage
and Security Agreement by and between Borrower and RTFC entered into
as of June 24, 1997, which has been filed along with UCC-1 financing
statements in all such locations necessary to provide RTFC with a
first priority, perfected lien on all of Borrower's Mortgaged Property
(as defined in the Mortgage). This Agreement shall be deemed an
Additional Note, as such term is defined under the Mortgage. Such
Mortgage and Security Agreement and UCC-1 financing statements shall
continually exist until at least the later of (i) all Advances and
fees hereunder having been repaid or (ii) the Maturity Date. Borrower
agrees that, with respect to the Collateral which is subject to
Article 9 of the Uniform Commercial Code, the Lender shall have, but
not be limited to, all the rights and remedies of a secured party
under the Uniform Commercial Code.
22. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND BE CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF VIRGINIA.
23. SPECIAL CONDITIONS. None.
IN WITNESS WHEREOF, the parties hereto have executed or caused to be
executed this Agreement under seal as of the date first above written.
DAKOTA TELECOMMUNICATIONS GROUP, INC.
By: /S/XXXXX X. XXXXXX
Title: CHAIRMAN
(SEAL)
Attest: /S/XXX XXXXX
Secretary
DAKOTA TELECOM, INC.
By: /S/XXXXXXX X. XXXXXX
Title: CHAIRMAN
(SEAL)
-6-
Attest: /S/XXX XXXXX
Secretary
RURAL TELEPHONE FINANCE COOPERATIVE
By: /S/XXXXXXX X. XXXXX
Title: CHAIRMAN
(SEAL)
Attest: /S/XXXXX X. XXX
Assistant Secretary-Treasurer
-7-
