MORTGAGE, SECURITY AGREEMENT AND FINANCING STATEMENT dated as of August
3, 1998, made by and among XXXXXXXX TELEPHONE COMPANY, INC. (hereinafter called
the "Mortgagor"), a corporation existing under the laws of the State of
1,ans-as, as mortgagor and debtor, and UNITED STATES OF AMERICA (hereinafter
called the "Government"), acting through the Administrator of the Rural
Utilities Service (hereinafter called "RUS"), and RURAL TELEPHONE BANK
(hereinafter called the "Bank"), a corporation existing under the laws of the
United States of America, as mortgagees and secured parties (the Government and
the Bank being hereinafter sometimes collectively called the "Mortgagees").
WHEREAS, the Mortgagor has determined at this time to borrow
funds from the Government and the Bank pursuant to the Rural Electrification Act
of 1936, as amended (7 U.S.C. 901 et seq., hereinafter called the "Act"), and
pursuant to the Telephone Loan Contract identified in the eighth recital hereof
(hereinafter called the "Instruments Recital"), and has accordingly duly
authorized and executed, and delivered to the Government, its mortgage note
(identified in the Instruments Recital as and hereinafter called the "First RUS
Note") to be secured by this mortgage of the property hereinafter described; and
RUS PROJECT DESIGNATION: KANSAS 506-L13 HAVILAND
THIS INSTRUMENT GRANTS A SECURITY INTEREST IN A TRANSMITTING UTILITY.
AFTER-ACQUIRED PROPERTY IS COVERED BY THIS INSTRUMENT.
Identified as form of document presented to and approved by the Board of
Directors Trustees of the above named Corporation at a meeting hold , 19
Secretary of Meeting
No. A
Generated: July 14, 1998
WHEREAS, the Mortgagor has determined at this time to borrow
funds from the Federal Financing Bank (hereinafter called "FFB") and has
accordingly duly authorized, executed and delivered its mortgage note
(identified in the Instruments Recital and hereinafter called the "First FFB
Note") to be secured by this mortgage of the property hereinafter described; and
WHEREAS, the repayment of the First FFB Note by the Mortgagor
is guaranteed by the Government pursuant to the Act, in accordance with an
agreement, by and between FFB and the Administrator (such agreement, as it may
be amended from time to time, being hereinafter called the "Contract of
Guarantee", and together with the Telephone Loan Contract, as it may be from
time to time amended or supplemented, consolidated or restated, and together
with any agreements, among the Mortgagor, the Government and a third party
lender, whose loans to the Mortgagor are Guaranteed by the Government, acting
through the Administrator, pursuant to the Act, hereinafter called the
"Consolidated Loan Agreement"); and
WHEREAS, the Mortgagor has determined to reimburse the
Government, acting through the Administrator, for certain amounts paid by the
Government, acting through the Administrator, from time to time pursuant to the
Contract of Guarantee and has accordingly duly authorized, executed and
delivered its mortgage note (identified in the Instruments Recital and
hereinafter called the "First Reimbursement Note") to be secured by this
mortgage of the property hereinafter described; and
WHEREAS, it is contemplated that the First RUS Note, the First
FFB Note and the First Reimbursement Note shall be secured by this Mortgage,
Security Agreement and Financing Statement (hereinafter called "the Mortgage"),
as well as additional notes and refunding, renewal and substitute notes
(hereinafter collectively called the "Additional RUS Notes") which may from time
to time be executed and delivered by the Mortgagor to the Government as
hereinafter provided, shall be secured hereby (the First RUS Note, the First FFB
Note and the First Reimbursement Note and any Additional RUS Notes being
hereinafter collectively called the "RUS Notes"; and
WHEREAS, the Mortgagor has determined at this time to borrow
funds from the Bank pursuant to the Act and the Telephone Loan Contract and has
accordingly duly authorized and executed, and delivered to the Bank, its
mortgage note (identified in the Instruments Recital as and hereinafter called
the "First Bank Note"); and
WHEREAS, it is contemplated that the First Bank Note shall be
secured hereby, as well as additional notes and
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refunding, renewal and substitute notes (hereinafter collectively called the
"Additional Bank Notes" and, together with the Additional RUS Notes, the
"Additional Notes") which may from time to time be executed and delivered by the
Mortgagor to the Bank as hereinafter provided, shall be secured hereby (the
First Bank Note and any Additional Bank Notes being hereinafter collectively
called the "Bank Notes", and the RUS Notes and the Bank Notes, collectively,
being hereinafter called the "notes") ; and
WHEREAS, the instruments referred to in the preceding recitals
are as follows:
INSTRUMENTS RECITAL
"Telephone Loan Contract" dated as of April 27, 1998.
"Contract of Guarantee", Note Purchase Commitment and Servicing Agreement,
between the Federal Financing Bank and the Administrator of RUS dated as of
January 1, 1992, as amended.
"First FFB Note": (Of even date herewith):
Interest Rate Final Payment
Principal Amount (per annum) Date
$4,362,000 Determined December 31, 2016
by Advance
"First Reimbursement Note":
Principal Amount Final Payment Date
Determined when advance made On demand
"First RUS Note": (Of even date herewith):
Interest Rate Final Payment
Principal Amount (per annum) Date
$12,560,000 Determined August 3, 2016
by Advance
"First Bank Note": (Of even date herewith):
Interest Rate Final Payment
Principal Amount (per annum) Date
$7,325,850 Determined by Advance August 3, 2016
WHEREAS, the Government and the Bank are authorized to enter into
this Mortgage; and
Page 3
WHEREAS, the Mortgagor now owns a telephone system and other
facilities identified in the Property Schedule contained in the Granting Clause
hereof (hereinafter called the "Existing Facilities"); and
WHEREAS, to the extent that any of the property described or
referred to in this Mortgage is governed by the provisions of the Uniform
Commercial Code of any State (hereinafter called the "Uniform Commercial Code"),
the parties hereto desire that this Mortgage be regarded as a "security
agreement" and as a "financing statement" for said security agreement under the
Uniform Commercial Code.
NOW, THEREFORE, this Mortgage
WITNESSETH:
GRANTING CLAUSE
That, in order to secure the payment of the principal of and
interest on the notes, according to their tenor and effect, and further to
secure the due performance of the covenants, agreements and provisions contained
in this Mortgage and the Consolidated Loan Agreement and to declare the terms
and conditions upon which the notes are to be secured, the Mortgagor, in
consideration of the premises, has executed and delivered this Mortgage, and has
granted, bargained, sold, conveyed, warranted, assigned, transferred, mortgaged,
pledged, and set over, and by these presents does hereby grant, bargain, sell,
convey, warrant, assign, transfer, mortgage, pledge and set over, unto the
Mortgagees, and their respective assigns, all and singular the
following-described property (hereinafter sometimes called the "Mortgaged
Property")
I
All right, title and interest of the Mortgagor in and to the
Existing Facilities and buildings, plants, works, improvements, structures,
estates, grants, franchises, easements, rights, privileges and properties real,
personal and mixed, tangible or intangible, of every kind or description, now
owned or leased by the Mortgagor or which may hereafter be owned or leased,
constructed or acquired by the Mortgagor, wherever located, and in and to all
extensions and improvements thereof and additions thereto, including all
buildings, plants, works, structures, improvements, fixtures, apparatus,
materials, supplies, machinery, tools, implements, poles, posts, crossarms,
conduits, ducts, lines, whether underground or overhead or otherwise, wires,
cables, exchanges, switches including, without limitation, host switches and
remote switches, desks, testboards, frames, racks, motors, generators, batteries
and other items of central office equipment, pay stations, protectors,
instruments,
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connections and appliances, office furniture and equipment, work equipment and
any and all other property of every kind, nature and description, used, useful
or acquired for use by the Mortgagor in connection therewith and including,
without limitation, the property described in the following property schedule:
PROPERTY SCHEDULE
(a) The Existing Facilities are located in the Counties
of Xxxxxx, Comanche, Ford, Harper, Kinsman, Kiowa, Pratt, Sedgwick, and Xxxxxx
in the State of Kansas.
(b) The property referred to in the last line of paragraph 1
of the Granting Clause includes the real estate described on Exhibit A attached
hereto, and by this reference made a part hereof, as if fully set forth at
length at this point.
(c) If the real estate described in Exhibit A is by reference
to deeds, grantor(s), grantee, etc., then the description of each of the
properties conveyed by and through such deeds is by reference made a part of
Exhibit A as though fully set forth at length therein.
(d) The real estate described in Exhibit A shall also include
all plants, works, structures, erections, reservoirs, dams, buildings, fixtures
and improvements now or hereafter located on such real estate, and all
tenements, hereditaments and appurtenances now or hereafter thereunto belonging
or in any wise appertaining.
II
All right, title and interest of the Mortgagor in, to and
under any and all grants, privileges, rights of way and easements now owned,
held, leased, enjoyed or exercised, or which may hereafter be owned, held,
leased, acquired, enjoyed or exercised, by the Mortgagor for the purposes of, or
in connection with, the construction or operation by or on behalf of the
Mortgagor of telephone properties, facilities, systems or businesses, whether
underground or overhead or otherwise, wherever located;
III
All right, title and interest of the Mortgagor in, to and
under any and all licenses, franchises, ordinances, privileges and permits
heretofore granted, issued or executed, or which may hereafter be granted,
issued or executed, to it or to its assignors by the United States of
America,.or by any state, or by any county, township, municipality, village or
other
Page 5
political subdivision thereof, or by any agency, board, commission or department
of any of the foregoing, authorizing the construction, acquisition, or operation
of telephone properties, facilities, systems or businesses, insofar as the same
may by law be assigned, granted, bargained, sold, conveyed, transferred,
mortgaged, or pledged;
IV
All right, title and interest of the Mortgagor in, to and
under any and all contracts heretofore or hereafter executed by and between the
Mortgagor and any person, firm, or corporation relating to the Mortgaged
Property together with any and all other accounts, contract rights and general
intangibles (as such terms are defined in the applicable Uniform Commercial
Code), and all stock, bonds, notes, debentures, commercial paper, subordinated
capital certificates, securities, obligations of or beneficial interests or
investments in any corporation, association, partnership, joint venture, trust,
United States of America or any agency or department thereof, or any other
entity of any kind, heretofore or hereafter acquired by the Mortgagor;
V
Also, all right, title and interest of the Mortgagor in and to
all other property, real or personal, tangible or intangible, of every kind,
nature and description, and wheresoever situated, now owned or leased or
hereafter acquired by the Mortgagor, it being the intention hereof that all such
property now owned or leased but not specifically described herein or acquired
or held by the Mortgagor after the date hereof shall be as fully embraced within
and subjected to the lien hereof as if the same were now owned by the Mortgagor
and were specifically described herein to the extent only, however, that the
subjection of such property to the lien hereof shall not be contrary to law;
Together with all rents, income, revenues, proceeds, profits
and benefits at any time derived, received or had from any and all of the
above-described property of the Mortgagor.
Provided, however, that except as hereinafter provided in
section 12(b) of article II hereof, no automobiles, trucks, trailers, tractors
or other vehicles (including without limitation aircraft or ships, if any) owned
or used by the Mortgagor shall be included in the Mortgaged Property.
TO HAVE AND TO HOLD all and singular the Mortgaged Property
unto the Mortgagees and their respective assigns forever, to secure equally and
ratably the payment of the principal of and interest on the notes, according to
their tenor and effect, without preference, priority or distinction as to
Page 6
interest or principal (except as otherwise specifically provided herein) or as
to lien or otherwise of any note over any other note by reason of the priority
in time of the execution, delivery or maturity thereof or of the assignment or
negotiation thereof, or otherwise, and to secure the due performance of the
covenants, agreements and provisions herein and in the Consolidated Loan
Agreement contained, and for the uses and purposes and upon the terms,
conditions, provisos and agreements hereinafter expressed and declared.
ARTICLE I
ADDITIONAL NOTES
SECTION 1 The Mortgagor, when authorized by resolution or resolutions of
its board of directors, may from time to time (1) execute and deliver to the
Government one or more Additional RUS Notes to evidence loans made or guaranteed
by the Government to the Mortgagor pursuant to the Act, or to evidence
indebtedness of the Mortgagor incurred by the assumption by the Mortgagor of the
indebtedness of a third party or parties to the Government created by a loan or
loans theretofore made or guaranteed by the Government to such third party or
parties pursuant to the Act, and (2) execute and deliver to the Bank one or more
Additional Bank Notes to evidence loans made by the Bank to the Mortgagor
pursuant to the Act, or to evidence indebtedness of the Mortgagor incurred by
the assumption by the Mortgagor of the indebtedness of a third party or parties
to the Bank created by a loan or loans theretofore made by the Bank to such
third party or parties pursuant to the Act. The Mortgagor, when authorized by
resolution or resolutions of its board of directors, may also from time to time
execute and deliver one or more Additional Notes to refund any note or notes at
the time outstanding and secured hereby, or in renewal of, or in substitution
for, any such outstanding note or notes. Additional Notes shall contain such
provisions and shall be executed and delivered upon such terms and conditions as
the board of directors of the Mortgagor in the resolution or resolutions
authorizing the execution and delivery thereof and the relevant lender shall
prescribe; provided, however, that the outstanding principal balances owing on
the notes shall not at any one time exceed fifty million dollars ($50,000,000),
and no note shall mature more than fifty (50) years after the date hereof.
Additional Notes, including refunding, renewal and substitute notes, when and as
executed and delivered, shall be secured by this Mortgage, equally and ratably
with all other notes at the time outstanding, without preference, priority, or
distinction of any of the notes over any other of the notes by reason of the
priority of the time of the execution, delivery or maturity
Page 7
thereof or of the assignment or negotiation thereof. As used in this Mortgage,
the term "directors" includes trustees.
SECTION 2The Mortgagor, when authorized by resolution or resolutions of
its board of directors, may from time to time execute, acknowledge, deliver,
record and file mortgages supplemental to this Mortgage which thereafter shall
form a part hereof, for the purpose of formally confirming this Mortgage as
security for the notes. Nothing herein contained shall require the execution and
delivery by the Mortgagor of a supplemental mortgage in connection with the
issuance hereunder or the securing hereby of notes except as hereinafter
provided in section 12 of article II hereof.
ARTICLE II
PARTICULAR COVENANTS OF THE MORTGAGOR
The Mortgagor covenants with the Mortgagees and the holders of notes
secured hereby (hereinafter sometimes collectively called the "noteholders") and
each of them as follows:
SECTION 1. The Mortgagor is duly authorized under its articles of
incorporation and bylaws and the laws of the State of its incorporation and all
other applicable provisions of law to execute and deliver the First RUS Note,
the First Bank Note, the First FFB Note, the First Reimbursement Note and this
Mortgage and to execute and deliver Additional Notes; and all corporate action
on its part for the execution and delivery of the First RUS Note, the First Bank
Note, the First FFB Note, the First Reimbursement Note and this Mortgage has
been duly and effectively taken; and the First RUS Note, the First Bank Note,
the First FFB Note, the First Reimbursement Note and this' Mortgage are, or when
executed and delivered will be, the valid and enforceable obligations of the
Mortgagor in accordance with their respective terms.
SECTION 2.The Mortgagor warrants that it has good right and lawful
authority to mortgage the property described in the granting clauses of this
Mortgage for the purposes herein expressed, and that the said property is free
and clear of any deed of trust, mortgage, lien, charge or encumbrance thereon or
affecting the title thereto, except (i) the lien of this Mortgage and taxes or
assessments not yet due; (ii) deposits or pledges to secure payment of workmen's
compensation, unemployment insurance, old age pensions or other social security;
and (iii) deposits or pledges to secure performance of bids, tenders, contracts
(other than contracts for the payment of borrowed money), leases, public or
statutory obligations, surety or appeal bonds, or other
Page 8
deposits or pledges for purposes of like general nature in the ordinary course
of business.
The Mortgagor will, so long as any of the notes shall be outstanding,
maintain a.-.d preserve the lien of this Mortgage superior to all other liens
affecting the Mortgaged Property, and will forever warrant and defend the title
to the property described as being mortgaged hereby to the Mortgagees against
any and all claims and demands whatsoever. The Mortgagor will promptly pay or
discharge any and all obligations for or on account of which any such lien or
charge might exist or could be created and any and all lawful taxes, rates,
levies, assessments, liens, claims or other charges imposed upon or accruing
upon any of the Mortgagor's property (whether taxed to the Mortgagor or to any
noteholder), or the franchises, earnings or business of the Mortgagor, as and
when the same shall become due and payable; and whenever called upon so to do
the Mortgagor will furnish to the Mortgagees or to any noteholder adequate proof
of such payment or discharge.
SECTION 3. The Mortgagor will duly and punctually pay the principal of and
interest on the notes at the dates and places and in the manner provided
therein, according to the true intent and meaning thereof, and all other sums
becoming due hereunder.
SECTION 4. (a) The Mortgagor will at all times, so long as any of the notes
shall be outstanding, take or cause to be taken all such action as from time to
time may be necessary to preserve its corporate existence and to preserve and
renew all franchises, rights of way, easements, permits and licenses now or
hereafter to it granted or upon it conferred, and will comply with all valid
laws, ordinances, regulations and requirements applicable to it or its property.
The Mortgagor will not, without the approval in writing of the holder or holders
of not less than a majority in principal amount of the RUS Notes at the time
outstanding (hereinafter called the "majority RUS noteholders") and of the
holder or holders of not less than a majority in principal amount of the Bank
Notes at the time outstanding (hereinafter called the "majority Bank
noteholders"), take or suffer to be taken any steps to reorganize, or to
consolidate with or merge into any other corporation, or to sell lease or
transfer (or make any agreement therefor) the Mortgaged Property, or any part
thereof.
(b) Nothing herein contained shall prevent any such reorganization,
consolidation or merger provided that the lien and security of this Mortgage and
the rights or powers of the Mortgagees and the noteholders hereunder shall not
thereby be impaired or adversely affected, and provided that upon such
reorganization, consolidation or merger, the due and punctual payment of the
principal of and interest on the notes
Page 9
according to their tenor and the due and punctual performance of all covenants
and conditions of this Mortgage shall be assumed by the corporation formed by
such reorganization, consolidation or merger, and the lien of this Mortgage
shall remain a superior lien upon the property owned by the Mortgagor at the
time of such reorganization, consolidation or merger and upon any improvements
or additions to such property, either prior to or subsequent to such
reorganization, consolidation or merger.
(c) The Mortgagor may, however, without obtaining the approval of the
holder or holders of any of the notes at the time outstanding, at any time or
from time to time so long as the Mortgagor is not in default hereunder, sell or
otherwise dispose of, free from the lien hereof, any of its property which is
neither necessary to nor useful for the operation of the Mortgagor's business,
or which has become obsolete, worn out or damaged or otherwise unsuitable for
the purposes of the Mortgagor; provided, however, that the Mortgagor shall: (1)
to the extent necessary, replace the same by, or substitute therefor, other
property of the same kind and nature, which shall be subject to the lien hereof,
free and clear of all prior liens, and apply any proceeds derived from such sale
or other disposition of such property and not needed for the replacement thereof
to the payment of the indebtedness evidenced by the RUS Notes and the Bank Notes
in the proportions which the aggregate principal balances then owing on the RUS
Notes and the aggregate principal balances then owing on the Bank Notes,
respectively, bear to the aggregate principal balances then owing on the RUS
Notes and the Bank Notes, collectively, and shall be applied to such notes and
installments thereof as may be designated by the respective noteholders at the
time of any such receipt; or (2) immediately upon the receipt of the proceeds of
any sale or other disposition of said property, apply the entire amount of such
proceeds to the payment of the indebtedness evidenced by the RUS Notes and the
Bank Notes in the proportions and in the manner provided for in (1) above; or
(3) deposit all or such part of the proceeds derived from the sale or other
disposition of said property as-the majority RUS noteholders and the majority
Bank noteholders shall specify in such restricted bank accounts as such holder
or holders shall designate, and shall use the same only for such additions to or
improvements of the Mortgaged Property and on such terms and conditions as such
holder or holders shall specify.
SECTION 5. The Mortgagor will at all times maintain and preserve the
Mortgaged Property in good repair, working order and condition, and will from
time to time make all needful and proper repairsandenewals, and replacements,
useful and proper alterations, additions, betterments and improvements, and
will, subject to contingencies beyond its reasonable control, at all times keep
its plant and properties in continuous operation and use all reasonable
diligence to furnish the subscribers served by
Page 10
it through the Mortgaged Property with adequate telephone service.
SECTION 6. Except as specifically authorized in writing in advance by the
majority RUS noteholders and the majority Bank noteholders, the Mortgagor will
purchase all materials, equipment, supplies and replacements to be incorporated
in or used in connection with the Mortgaged Property outright, and not subject
to any conditional sales agreement, chattel mortgage, bailment lease, or other
agreement reserving to the seller any right, title or lien.
SECTION 7. (a) The Mortgagor will take out, as the respective risks are
incurred, and maintain the following classes and amounts of insurance: (1)
fidelity bonds covering each officer and employee of the Mortgagor in not less
than the following amounts, based on the estimated annual gross revenues
(including gross toll collected) of the Mortgaged Property:
Annual Gross Revenue Amount of Coverage
-------------------- ------------------
Less than $ 200,000 ..................... $ 50,000
From 200,001 to 400,000 .......... 100,000
400,001 to 600,000 ........... 250,000
600,001 to 800,000 ........... 300,000
800,001 to 1,000,000 ......... 400,000
over 1,000,000 ............... 500,000
and each collection agent of the Mortgagor shall be included in such fidelity
bonds for not less than $2,500, or 10 percent of the highest amount collected
annually by any one collection agent, whichever is greater; (2) workmen's
compensation and employer's liability insurance covering all employees of the
Mortgagor, in such amounts as may be required by law, or if ti)e Mortgage or
any of its employees are not subject to the workmen's compensation laws of the
State or States in which the Mortgagor conducts its operations, then its
workmen's compensation policy shall provide voluntary compensation coverage to
the same extent as though the Mortgagor and such employees were subject to such
laws; and including occupational disease liability coverage, employer's
liability insurance and "additional medical" coverage of not less than $10,000
in States where full medical coverage is not required by law; (3) public
liability and property damage insurance, covering ownership liability, and all
operations of the Mortgagor, with limits for bodily injury or death of not less
than $1,000,000 for one person and $1,000,000 for each accident and with limits
for property damages of not less than $1,000,000 for each accident and
$1,000,000 aggregate for the policy period; (4) liability insurance on all
motor vehicles, trailers, semitrailers, and aircraft used in the conduct of the
Mortgagor's business, whether owned, non-owned or hired by the Mortgagor, with
bodily injury
Page 11
limits of not less than $1,000,000 for one person and $1,000,000 for each
accident, and with property damage limits of $1,000,000 for each accident; in
connection with aircraft liability, also passenger bodily injury limits of
$1,000,000 per person and $1,000,000 for each accident; (5) comprehensive, or
separate fire, theft and windstorm insurance covering loss of or damage to all
owned motor vehicles, trailers, and aircraft of the Mortgagor, having a unit
value in excess of $1,000, in an amount not less than the actual cash value of
the property insured; and (6) fire and extended coverage insurance, designating
the Government and the Bank as mortgagees in the policy, on each building, each
building and its contents, and materials, supplbys, poles and crossarms, owned
the Mortgagor, having a value at any one location in excess of $5,000, or in
excess of one percent of the total plant value, whichever is larger, and in an
amount not less than 80 percent of the current cost to replace the property
new, less actual depreciation.
The Mortgagor will also, from time to time, increase or supplement the
classes and amounts of insurance specified above to the extent requested by the
Administrator of RUS or the Governor of the Bank or required to conform to the
accepted practice of the telephone industry for companies of the size and
character of the Mortgagor. The Mortgagor will, upon request of the majority RUS
noteholders and the majority Bank noteholders, submit to the noteholder or
noteholders designated in such request a schedule of its insurance in effect on
the date specified in such request. If the Mortgagor shall at any time fail or
refuse to take out or maintain insurance or to make changes in respect thereof
upon appropriate request by such noteholder or noteholders, such noteholder or
noteholders may take out such insurance on behalf and in the name of the
Mortgagor, and the Mcrtgagor will pay the cost thereof.
(b) In the event of damage to or the destruction or loss of any portion of
the Mortgaged Property which shall be covered by insurance, unless the majority
RUS noteholders and the majority Bank noteholders shall otherwise agree, the
Mortgagor shall replace or restore such damaged, destroyed or lost portion so
that the Mortgaged Property shall be in substantially the same condition as it
was in prior to such damage, destruction or loss, and shall deposit the proceeds
of the insurance in the Special Construction Account required by the
Consolidated Loan Agreement to be applied for that purpose. The Mortgagor shall
replace the loss or shall commence such restoration promptly after such damage,
destruction or loss shall have occurred and shall complete such replacement or
restoration as expeditiously as practicable, and shall pay or cause to be paid
out of the proceeds of such insurance all costs and expenses in connection
therewith so that such replacement or restoration shall be so completed that the
portion of the Mortgaged Property
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so replaced or restored shall be free and clear of all mechanics' liens and
other claims.
(c) Sums recovered under any fidelity bond by the Mortgagor for a loss of
funds advanced under the notes or recovered by the Mortgagees for any loss under
such bond shall, unless otherwise directed by the Mortgagees, be applied to the
prepayment of the notes, pro rata according to the unpaid principal amounts
thereof (such prepayments to be applied to such installments thereof as may be
designated by the respective noteholders at the time of such prepayments) or to
construct or acquire facilities approved by the Mortgagees, which will become
part of the Mortgaged Property.
(d) The foregoing insurance coverage shall be obtained by means of bond and
policy forms approved by regulatory authorities, including standard RUS
endorsements and riders used by the insurance industry to provide coverage for
RUS borrowers. Each policy or other contract for such insurance shall contain an
agreement by the insurer that, not withstanding any right or cancellation
reserved to such insurer, such policy or contract shall continue in force for at
least ten (10) days after written notice to the Mortgagees of cancellation.
SECTION 8. In the event of the failure of the Mortgagor in any respect to
comply with the covenants and conditions herein contained with respect to the
procuring of insurance, the payment of taxes, assessments and other charges, the
keeping of the Mortgaged Property in repair and free of liens and other claims
or to comply withany other covenant contained in this Mortgage, any noteholder
or noteholders shall have the right (without prejudice to any other rights
arising by reason of such default) to advance or expend moneys for the purpose
of procuring such insurance, or for the payment of insurance premiums, taxes,
assessments or other charges, or to save the Mortgaged Property from sale or
forfeiture for any unpaid tax or assessment, or otherwise, or to redeem the same
from any tax or other sale, or to purchase any tax title thereon, or to remove
or purchase any mechanics' liens or other encumbrance thereon, or to make
repairs thereon or to comply with any other covenant herein contained or to
prosecute or defend any suit in relation to the Mortgaged Property or in any
manner to protect the Mortgaged Property and the title thereto, and all sums so
advanced for any of the aforesaid purposes with interest thereon at the highest
legal rate but not in excess of twelve per centum (12%) per annum shall be
deemed a charge upon the Mortgaged Property in the same manner as the notes at
the time outstanding are secured and shall be forthwith paid to the noteholder
or noteholders making such advance or advances upon demand. It shall not be
obligatory for any noteholder in making any such advances or expenditures to
inquire into the validity of any such tax title, or of any of
Page 13
such taxes or assessments or sales therefor, or of any such mechanics' liens or
other encumbrance.
SECTION 9. The Mortgagor will not, without the approval in writing of the
majority RUS noteholders and the majority Bank noteholders: (a) enter into any
contract or contacts for the operation or maintenance of all or any part of its
property, for the use by others of any of the Mortgaged Property, or for toll
traffic, operator assistance, extended scope or switching services to be
furnished by or for connecting or other companies; provided, however, that such
approval shall not be required for any toll traffic or operator assistance
contract which in form and substance conforms with contracts in general use in
the telephone industry; or (b) deposit any of its funds, regardless of the
source thereof, in any bank, institution or other depository which is not
insured by the Federal Government.
SECTION 10. Salaries, wages and other compensation paid by the Mortgagor
for services, and directors' or trustees' fees, shall be reasonable and in
conformity with the usual practice of corporations of the size and nature of the
Mortgagor. Except as specifically authorized in writing in advance by the
majority RUS noteholders and the majority Bank noteholders, the Mortgagor will
make no advance payments or loans, or in any manner extend its credit, either
directly or indirectly, with or without interest, to any of its directors,
trustees, officers, employees, stockholders, members or affiliated companies,
provided, however, the Mortgagor may make an investment for any purpose
described in section 607(c)-(2) of the Rural Development Act of 1972 (including
any investment in, or extension of credit, guarantee or advance made to, an
affiliated company of the Mortgagor that is used by such company for such
purpose) to the extent that, immediately after such investment, (1) the
aggregate of such investments does not exceed one-third of the net worth
(defined in Exhibit One hereto) of the Mortgagor and (2) the Mortgagor's net
worth is at least twenty percent of its total assets (defined in Exhibit One
hereto). As used in this section, the term "affiliated companies" shall have the
meaning prescribed for this term by the Federal Communications Commission in its
prevailing uniform system of accounts for Class A telephone companies.
SECTION 11. The Mortgagor will at all times keep, and safely preserve,
proper books, records and accounts in which full and true entries will be made
of all of the dealings, business and affairs of the Mortgagor, in accordance
with the methods and principles of accounting then prescribed by the state
regulatory body having jurisdiction over the Mortgagor, or in the absence of
such regulatory body or such prescription, by the Federal Communications
Commission in its uniform system of accounts for telecommunications companies,
as those methods and TMAG-00-14-001-KA
Page 14
principles of accounting may be supplemented, from time to time, by RUS. The
Mortgagor will prepare and furnish each noteholder not later than the thirtieth
day of January in each year, or at such more or less frequent intervals when
specified by the majority RUS noteholders and the majority Bank noteholders,
financial and statistical reports on its condition and operations. Such reports
shall be in such form and include such information as may be specified by the
majority RUS noteholders and the majority Bank noteholders, including without
limitation an analysis of the Mortgagor's revenues, expenses, and subscriber
accounts. The Mortgagor will cause to be prepared and furnished to each
noteholder at least once during each twelve (12)-month period during the term
hereof, full and complete reports of its financial condition and cash flow as of
a date (hereinafter called the Fiscal Date"), and a full and complete report of
its operations of the twelve (12)-month period ended on the Fiscal Date, all in
form and substance satisfactory to the majority RUS noteholders and the majority
Bank noteholders, and will cause such reports to be furnished to each noteholder
within 120 days of the Fiscal Date, such reports having been audited and
certified by independent certified public accountants satisfactory to said
noteholders and accompanied by such reports of such audit in form and substance
satisfactory to said noteholders. The majority RUS noteholders and the majority
Bank noteholders, through their representatives, shall at all times during
reasonable business hours have access to, and the right to inspect and make
copies of, any or all books, records and accounts, and any or all invoices,
contracts, leases, payrolls, canceled checks, statements and other documents and
papers of every kind belonging to or in possession of the Mortgagor and in
anywise pertaining to its property or business. The Mortgagor shall enter into
an audit agreement with an independent certified public accountant in form and
substance satisfactory to the majority RUS noteholders and the majority Bank
noteholders.
SECTION 12. (a)The Mortgagor will from time to time upon written demand of
the majority RUS noteholders or the majority Bank noteholders make, execute,
acknowledge and deliver or cause to be made, executed, acknowledged and
delivered all such further and supplemental indentures of mortgage, deeds of
trust, mortgages, financing statements, continuation statements, security
agreements, instruments and conveyances as may reasonably be requested by the
majority RUS noteholders or the majority Bank noteholders and take or cause to
be taken all such further action as may reasonably be requested by the majority
RUS noteholders or the majority Bank noteholders to effectuate the intention of
these presents and to provide for the securing and payment of the principal of
and interest on the notes according to the terms thereof and for the purpose of
fully conveying, transferring and confirming unto the Mortgagees the property
hereby conveyed, mortgaged and pledged, or intended so to be, whether now owned
by the Mortgagor or hereafter acquired by it
Page 15
and to reflect the assignment of the rights or interests of either of the
Mortgagees or of any noteholder hereunder or under any note. The Mortgagor will
cause this Mortgage and any and all supplemental indentures of mortgage,
mortgages and deeds of trust and every security agreement, financing statement,
contract-on statement and every additional instrument which shall be executed
pursuant to the foregoing provisions forthwith upon execution to be recorded and
filed and rerecorded and refiled as conveyances and mortgages and deeds of trust
of and security interests in real and personal property in such manner and in
such places as may be required by law or reasonably requested by the majority
RUS noteholders or the majority Bank noteholders in order fully to preserve the
security for the notes and to perfect and maintain t1re superior lien of this
Mortgage and all supplemental indentures cf mortgage, mortgages and deeds of
trust and the rights and remedies of the Mortgagees and the noteholders.
(b) In the event that the Mortgagor ha's had or suffers a deficit in net
income or net margins, as determined in accordance with methods of accounting
prescribed in section 11 of article II hereof, for any of the five fiscal years
immediately preceding the date hereof or for any fiscal year while any of the
notes are outstanding, the Mortgagor will at any time or times upon written
demand of the majority RUS noteholders or the majority Bank noteholders, make,
execute, acknowledge and deliver or cause to be made, executed, acknowledged and
delivered all such further and supplemental indentures of mortgage, mortgages,
security agreements, financing statements, instruments and conveyances, and take
or cause to be taken all such further action, as may reasonably be requested by
the majority RUS noteholders or the majority Bank noteholders in order to
include in this Mortgage, as Mortgaged Property, and to subject to all the terms
and conditions of this Mortgage, all right, title and interest of the Mortgagor
in and to, all and singular, the automobiles, trucks, trailers, tractors,
aircraft, ships and other vehicles then owned by the Mortgagor, or which may
thereafter be owned or acquired by the Mortgagor. From and after the time of
such written demand of the majority RUS noteholders or the majority Bank
noteholders, such vehicles shall be deemed to be part of the Mortgaged Property
for all purposes hereof.
SECTION 13. Any noteholder may, at any time or times in succession without
notice to or the consent of the Mortgagor or any other noteholder and upon such
terms as such noteholder may prescribe, grant to any person, firm or corporation
who shall have become obligated to pay all or any part of the principal of or
interest on any note held by or indebtedness owed to such noteholder or who may
be affected by the lien hereby created, an extension of the time for the payment
of such principal or interest, and after any such extension the Mortgagor will
remain liable for the payment of such note or indebtedness to the same
Page 16
extent as though it had at the time of such extension consented thereto in
writing.
SECTION 14. The Mortgagor, subject to applicable laws and rules, and
regulations and orders of regulatory bodies, will charge for telephone service
furnished by it rates which shall yield revenues at least sufficient to enable
the Mortgagor to pay and discharge ail taxes and expenses when due, and also to
make any payment in respect of principal of and interest on the notes when and
as the same shall become due.
SECTION 15. (a) The Mortgagor may make a distribution (hereinafter called a
"distribution"), in the nature of an investment, guarantee, extension of credit,
advance, loan, non-affiliated company joint venture, affiliated company
investment, or dividend or capital credit distribution only if the majority RUS
noteholders and the majority Bank noteholders have given prior written approval
to the distribution or if, after such distribution,
(1) the Mortgagor's net worth is equal to at least one percent of
its total assets and the amount of all such distributions
during the calendar year does not exceed twenty-five percent
of the Mortgagor's net income or net margins for the prior
calendar year;
(2) the Mortgagor's net worth is equal to at least twenty percent
of its total assets and the amount of all such distributions
during the calendar year does not exceed fifty percent of the
Mortgagor's earnings or margins for the prior calendar year;
(3) the Mortgagor's net worth is equal to at least thirty percent
of its total assets and the amount of al such distributions
during the calendar year does not exceed seventy-five percent
of its net income or net margins for the prior calendar year;
or
(4) the Mortgagor's net worth is equal to at least forty percent
of its total assets, regardless of the aggregate amount of
such distributions.
The terms "net worth", "total assets", and "net income or net margins" are
determined in accordance with Exhibit One.
(b) In addition to the distributions authorized under the preceding
subsection 15(a), the Mortgagor may make any distribution or investment provided
in 7 CLR 1744 Subpart D.
SECTION 16. In the event that the Mortgaged Property, or any part thereof,
shall be taken under the power of eminent domain, all proceeds and avails
therefrom, except to the
Page 17
extent that all noteholders shall consent to other use and application thereof
by the Mortgagor, shall forthwith be applied by the Mortgagor: first, to the
ratable payment of any indebtedness by this Mortgage secured other than
principal of or interest on the notes; second, to the ratable payment of
interest which shall have accrued on the notes and be unpaid; third, to the
ratable payment of or on account of the unpaid principal of the notes and to
such installments thereof as may be designated by the respective noteholders at
the time of any such payment, and fourth, the balance shall be paid to whosoever
shall be entitled thereto.
SECTION 17. The Mortgagor will well and truly observe and perform all of
the covenants, agreements, terms and conditions contained in the Consolidated
Loan Agreement, on its part to be observed or performed.
SECTION 18. If all the RUS Notes have been paid and discharged while any of
the Bank Notes are still outstanding, all rights and powers of the Government
and the holders of the RUS Notes under this Mortgage shall immediately vest in
the Bank and the holders of the Bank Notes, respectively, and, correspondingly,
if all the Bank Notes have been paid and discharged while any of the RUS Notes
are still outstanding, all rights and powers of the Bank and the holders of the
Bank Notes under this Mortgage shall immediately vest in the Government and the
holders of the RUS Notes, respectively. The Bank, the Government, the Mortgagor
and the noteholders shall execute and deliver such instruments, assignments,
releases or other documents as shall be reasonably required to carry out the
intention of this section.
SECTION 19. At all times when any note is held by the Government, or in the
event the Government shall assign a note without having insured the payment of
such note, this Mortgage shall secure payment of such note for the benefit of
the Government or such uninsured holder thereof, as the case may be. Whenever
any note may be sold to an insured purchaser, it shall continue to be considered
a "note" as defined herein, but as to any such insured note the Government, and
not such insured purchaser, shall be considered to be, and shall have the rights
of, the noteholder for purposes of this Mortgage. Notice of the rights of the
Government under the preceding sentence shall be set forth in all such insured
notes. As to any note which evidences a loan made by a third party lender to the
Mortgagor and guaranteed by the Government, acting through the Administrator,
pursuant to the Act, the Government and not such third party lender shall be
considered to be, and shall have the rights of the noteholder for purposes of
this Mortgage. SECTION 20. (a) The Mortgagor, subject to applicable laws and
rules and orders of regulatory bodies, shall
Page 18
design its rates for telephone service and other services furnished by it with a
view to paying and discharging all taxes, maintenance expenses and operating
expenses of its telephone system, and also to making all payments in respect of
principal of and interest on the notes when and as the same shall become due, to
providing and maintaining reasonable working capital for the Mortgagor and to
maintaining an Average TIER on all of it outstanding indebtedness to the
Government, the Bank, and all other lenders of not less than 1.00 commencing
with the date hereof and ending December 31, 2001 (hereinafter called the
"Forecast Period"), and the TIER the Mortgagor is required to maintain after the
Forecast Period shall be 1.5.
(b) For purposes of this section 20, Average TIER shall be determined as of
January 1 of each year during which any obligation secured by this Mortgage
remains unsatisfied and shall mean the average of the two highest TIER ratios
achieved by the Mortgagor during each of the three calendar years last preceding
the various dates of its determination.
(c) As used in this section 20, TIER means the Mortgagor's net income or
net margins (determined in accordance with Exhibit One hereto) plus interest
expense (determined in accordance with Exhibit One hereto) divided by interest
expense.
SECTION 21. (a) Net worth, net income or net margins, interest expense, and
total assets, as used in sections 10, 15 or 20 of article II of this Mortgage,
are defined in Exhibit One hereto. Net Plant and secured debt, if referred to in
this Mortgage, are also determined in accordance with Exhibit One hereto.
(b) Accounting terms used in this Mortgage shall also apply to accounts or
groups of accounts of the Mortgagor, regardless of the account title or the
system of accounts used, if such accounts have substantially the same meaning as
those prescribed by the Federal Communications Commission in its prevailing
uniform system of accounts for telecommunications companies (47 CLR Part 32).
SECTION 22. Exhibit One is attached hereto and by reference is made a part
of this Mortgage.
Page 19
ARTICLE III
REMEDIES OF THE MORTGAGEES AND NOTEHOLDERS
SECTION 1. If one or more of the following events (hereinafter
called "events of default") shall happen, that is to say:
(a) default shall be made in the payment of any installment of or on
account of interest on or principal of any note or notes when and as the same
shall be required to be made and such default shall continue for thirty (30)
days;
(b) default shall be made in the due observance or performance of any
other of the representations, warranties, covenants, conditions or agreements on
the part of the Mortgagor in any of the notes or in this Mortgage or in the
Consolidated Loan Agreement contained; and such default shall continue for a
period of thirty (30) days after written notice specifying such default and
requiring the same to be remedied shall have been given to the Mortgagor by any
noteholder;
(c) the Mortgagor shall file a petition in bankruptcy or be
adjudicated a bankrupt or insolvent, or shall make an assignment for the benefit
of its creditors, or shall consent to the appointment of a receiver of itself or
of it property, or shall institute proceedings for its reorganization or
proceedings instituted by others for its reorganization shall not be dismissed
within thirty (30) days after the institution thereof;
(d) a receiver or liquidator of the Mortgagor or of any substantial
portion of its property shall be appointed and the order appointing such
receiver or liquidator shall not be vacated within thirty (30) days after the
entry thereof;
(e) the Mortgagor shall forfeit or otherwise be deprived of its
corporate charter or franchises, permits or licenses required to carry on any
material portion of its business;
(f) a final judgment shall be entered against the Mortgagor and shall
remain unsatisfied or without a stay in respect thereof for a period of thirty
(30) days; then in each and every such case any noteholder may, by notice in
writing to the Mortgagor and delivery of a copy thereof to the other
noteholders, declare all unpaid principal of and accrued
Page 20
interest on any or all notes held by such noteholder to be due and payable
immediately; and upon any such declaration all such unpaid principal and accrued
interest so declared to be due and payable shall become and be due and payable,
immediately, anything contained herein or in any note or notes to be the
contrary notwithstanding; provided, however, that if at any time after the
unpaid principal of and accrued interest on any of the notes shall have been so
declared to be due and payable, all payments in respect of principal and
interest which shall have become due and payable by the terms of such note or
notes shall be paid to the respective noteholders, and all other defaults
hereunder and under the notes shall have been made good or secured to the
satisfaction of all of the noteholders, then and in every such case, the
noteholder or noteholders who shall have declared the principal of and interest
on notes held by such noteholder or noteholders to be due and payable may, by
written notice to the Mortgagor and delivery of a copy thereof to the other
noteholders, annul such declaration or declarations and waive such default or
defaults and the consequences thereof, but no such waiver shall extend to or
affect any subsequent default or impair any right consequent thereon.
SECTION 2. If one or more of the events of default shall happen, the holder
or holders of not less than a majority in principal amount of the notes at the
time outstanding (hereinafter called the "majority noteholders"), for itself or
themselves, and as the agent or agents of the other noteholders, personally or
by attorney, in its or their discretion, may, insofar as not prohibited by law:
(a) take immediate possession of the Mortgaged Property, collect and
receive all credits, outstanding accounts and bills receivable of the Mortgagor
and all rents, income, revenues and profits pertaining to or arising from the
Mortgaged Property, or any part thereof, and issue binding receipts therefor;
and manage, control and operate the Mortgaged Property as fully as the Mortgagor
might do if in possession thereof, including, without limitation, the making of
all repairs or replacements deemed necessary or advisable;
(b) proceed to protect and enforce the rights of the Mortgagees and the
rights of the noteholder or noteholders under this Mortgage by suits or actions
in equity or at law in any court or courts of competent jurisdiction, whether
for specific performance of any covenant or any agreement contained herein or in
aid of the execution of any power herein granted or for the foreclosure hereof
or hereunder or for the sale of the Mortgaged Property, or any part thereof, or
to collect the debts hereby secured or for the enforcement of such other or
additional appropriate legal or equitable remedies as may be deemed most
effectual to
Page 21
protect and enforce the rights and remedies herein granted or conferred, and in
the event of the institution of any such action or suit the noteholder or
noteholders instituting such action or suit shall have the right to have
appointed a receiver of the Mortgaged Property and of all rents, income,
revenues and profits pertaining thereto or arising therefrom derived, received
or had from the time of the commencement of such suit or action, and such
receiver shall have all the usual powers and duties of receivers, in like and
similar cases, to the fullest extent permitted by law, and if application shall
be made for the appointment of a receiver the Mortgagor hereby expressly
consents that the court to which such application shall be made may make said
appointment; and
(c) sell or cause to be sold all and singular the Mortgaged Property or any
part thereof, and all right, title, interest, claim and demand of the Mortgagor
therein or thereto, at public auction at such place in any county in which the
property to be sold, or any part thereof is located, at such time and upon such
terms as may be specified in a notice of sale, which shall state the time when
and the place where the sale is to be held, shall contain a brief general
description of the property to be sold, and shall be given by mailing a copy
thereof to the Mortgagor at least fifteen (15) days prior to the date fixed for
such sale and by publishing the same once in each week for two successive
calendar weeks prior to the date of such sale in a newspaper of general
circulation published in said county, or if no such newspaper is published in
such county, in a newspaper of general circulation in such county, the first
such publication to be not less than fifteen (15) days nor more than thirty (30)
days prior to the date fixed for such sale. Any sale to be made under this
subparagraph 2(c) may be adjourned from time to time by announcement at the time
and place appointed for such sale or for such adjourned sale or sales, and
without further notice or publication the sale may be had at the time and place
to which the same shall be adjourned, provided, however, that in the event
another or different notice of sale or another or different manner of conducting
the same shall be required by law the notice of sale shall be given or the sale
shall be conducted, as the case may be, in accordance with the applicable
provisions of law.
SECTION 3. If, within thirty (30) days after the majority noteholders shall
have had knowledge of the happening of an event or events of default, the
majority noteholders shall not have proceeded to exercise the rights and enforce
each of the remedies herein or by law conferred upon or reserved to the
Mortgagees or to said majority noteholders, then, and only then, any noteholder
for itself and as the agent of all the other
Page 22
noteholders, including the majority noteholders, may proceed to exercise any
such right or rights and remedy or remedies not being enforced by the majority
noteholders. Nothing contained in this Mortgage shall affect or impair the
right, which is absolute and unconditional, of any holder of any note which may
be secured hereby to enforce the payment of the principal of or interest on such
note on the date or dates any such interest or principal shall become due and
payable in accordance with the terms of such note.
SECTION 4 At any sale hereunder any noteholder or noteholders shall have
the right to bid for and purchase the Mortgaged Property, or such part thereof
as shall be offered for sale, and any noteholder or noteholders may apply in
settlement of the purchase price of the property so purchased the portion of the
net proceeds of such sale which would be applicable to the payment on account of
the principal of and interest on the note or notes held by such noteholder or
noteholders, and such amount so applied shall be credited as a payment on
account of principal of and interest on the note or notes held by such
noteholder or noteholders.
SECTION 5. Any proceeds or funds arising from the exercise of any rights or
the enforcement of any remedies herein provided after the payment or provision
for the payment of any and all costs and expenses in connection with the
exercise of such rights or the enforcement of such remedies shall be applied
first, to the payment of indebtedness hereby secured other than the principal of
or interest on the notes; second, to the ratable payment of interest which shall
have accrued on the notes and which shall be unpaid; third, to the ratable
payment of or on account of the unpaid principal of the notes, and the balance,
if any, shall be paid to whosoever shall be entitled thereto.
SECTION 6. The Mortgagor covenants that it will give immediate written
notice to both of the Mortgagees and to all of the noteholders of the occurrence
of an event of default or in the event that any right or remedy described in
clauses 2(a) through 2(c) of this article III is exercised or enforced, or of
any action taken to exercise or enforce any such right or remedy.
SECTION 7. Every right or remedy herein conferred upon or reserved to the
Mortgagees or to the noteholders shall be cumulative and shall be in addition to
every other right and remedy given hereunder or now or hereafter existing at
law, or in equity, or by statute. The pursuit of any right or remedy shall not
be construed as an election.
SECTION 8. The Mortgagor, for itself and all who may claim through or under
it, covenants that it will not at any time insist upon or plead, or in any
manner whatever claim, or
Page 23
take the benefit or advantage of, any appraisement, valuation, stay, extension
or redemption laws now or hereafter in force in any locality where any of the
Mortgaged Property may be situated, in order to prevent, delay or hinder the
enforcement or foreclosure of this Mortgage, or the absolute sale of the
Mortgaged Property, or any part thereof, or the final and absolute putting into
possession thereof, immediately after such sale, of the purchaser or purchasers
thereat, and the Mortgagor, for itself and all who may claim through or under
it, hereby waives the benefit of all such laws unless such waiver shall be
forbidden by law.
ARTICLE IV
POSSESSION UNTIL DEFAULT-DEFEASANCE CLAUSE
SECTION 1. Until some one or more of the events of default shall have
happened, the Mortgagor shall be suffered and permitted to retain actual
possession of the Mortgaged Property, and to manage, operate and use the same
and any part thereof, with the rights and franchises appertaining thereto, and
to collect, receive, take, use and enjoy the rents, revenues, issues, earnings,
income, products and profits thereof or therefrom, subject to the provisions of
this Mortgage.
SECTION 2. If the Mortgagor shall well and truly pay or cause to be paid
the whole amount of the principal of and interest on the notes at the time and
in the manner therein provided, according to the true intent and meaning
thereof, and shall also pay or cause to be paid all other sums payable hereunder
by the Mortgagor and shall well and truly keep and perform according to --he
true intent and meaning of this Mortgage, all covenants herein required to be
kept and performed by it, then and in that case, all property, rights and
interests hereby conveyed or assigned or pledged shall revert to the Mortgagor
and the estate, right, title and interest of the Mortgagees and the noteholders
shall thereupon cease, determine and become void and the Mortgagees and the
noteholders, in such case, on written demand of the Mortgagor but at the
Mortgagor's cost and expense, shall enter satisfaction of this Mortgage upon the
record. In any event, each noteholder, upon payment in full to him by the
Mortgagor of all principal of and interest on any note held by him and the
payment and discharge by the Mortgagor of all charges due to such noteholder
hereunder, shall execute and deliver to the Mortgagor such instrument of
satisfaction, discharge or release as shall be required by law in the
circumstances.
Page 24
ARTICLE V
MISCELLANEOUS
SECTION 1. It is hereby declared to be the intention of the Mortgagor that
all lines, or systems, embraced in the Mortgaged Property, including, without
limitation, all rights of way and easements granted or given to the Mortgagor or
obtained by it to use real property in connection with the construction,
operation or maintenance of such lines, or systems, and all service and
connecting lines, poles, posts, crossarms, wires, cables, conduits, ducts,
connections and fixtures forming part of, or used in connection with, such
lines, or systems, and ail other property physically attached to any of the
foregoing-described property, shall be deemed to be real property.
SECTION 2. All acts and obligations of the Mortgagor hereunder shall be
subject to all applicable orders, rules and regulations, now or hereafter in
effect, of all regulatory bodies having jurisdiction in the premises, to the end
that no act or omission to act on the part of the Mortgagor shall constitute a
default hereunder insofar as such act or omission shall have been required by
reason of any order, rule or regulation of any such regulatory body.
SECTION 3. All of the covenants, stipulations, promises, undertakings and
agreements herein contained by or on behalf of the Mortgagor shall bind its
successors and assigns, whether so specified or not, and all titles, rights and
remedies hereby granted to or conferred upon the Mortgagees shall pass to and
inure to the benefit of the successors and assigns of the Mortgagees and shall
be deemed to be granted or conferred for the ratable benefit and security of all
who shall from time to time be the holders of notes executed and delivered as
herein provided.
SECTION 4. The descriptive headings of the various articles of this
Mortgage were formulated and inserted for convenience only and shall not be
deemed to affect the meaning or construction of any of the provisions hereof.
SECTION 5. All demands, notices, reports, approvals, designations, or
directions required or permitted to be given hereunder shall be in writing and
shall be deemed to be properly given if mailed by registered mail addressed to
the proper party or parties at the following addresses:
As to the Mortgagor: As stated in the testimonium clause hereof
Page 25
As to the Mortgagees: The Bank:
Rural Telephone Bank
c/o Rural Utilities Service
Washington, D. C. 20250-1500
The Government:
Rural Utilities Service
Washington, D. C.20250-1500
and as to any other person, firm, corporation or governmental body or agency
having an interest herein by reason of being the holder of any note or
otherwise, at the last address designated by such person, firm, corporation,
governmental body or agency to the Mortgagor and the Mortgagees. The Mortgagor
or the Mortgagees may from time to time designate to one another a new address
to which demands, notices, reports, approvals, designations or directions may be
addressed and from and after any such designation the address designated shall
be deemed to be the address of such party in lieu of the address hereinabove
given. The Mortgagor will promptly notify the Mortgagees in writing of any
change in location of its chief place of business or the office where its
records concerning accounts and contract rights are kept.
SECTION 6. To the extent that any of the property described or referred to
in this Mortgage is governed by the provisions of the Uniform Commercial Code,
this Mortgage is hereby deemed a "security agreement" under the Uniform
Commercial Code and a "financing statement" under the Uniform Commercial Code
for said security agreement. The mailing address of the Mortgagor, as debtor,
and of the Mortgagees as secured parties, are as set forth in section 5 of this
article V.
SECTION 7. The invalidity of any one or more phrases, clauses, sentences,
paragraphs or provisions shall not affect the remaining portions of this
Mortgage, nor shall any such invalidity as to one Mortgagee or as to any holder
of notes hereunder affect the rights hereunder of the other Mortgagee or any
other holder of notes.
SECTION 8. This Mortgage may be simultaneously executed in any number of
counterparts, and all said counterparts executed and delivered, each as an
original, shall constitute but one and the same instrument.
IN WITNESS WHEREOF, HAVILAND TELEPHONE COMPANY, INC., 000 Xxxxx Xxxx Xxxxxx,
Xxxxxxxx, Xxxxxx 00000, as Mortgagor, has caused this Mortgage to be signed in
its name and its corporate seal to be hereunto affixed and attested by its
officers thereunto duly authorized, RURAL TELEPHONE BANK, as Mortgagee, has
caused this Mortgage to be signed in its name and its corporate seal to be
Page 26
hereunto affixed and attested by its officers thereunto duly authorized and
UNITED STATES OF AMERICA, as Mortgagee, has caused this Mortgage to be duly
executed in its behalf, all as of the day and year first above written.
HAVILAND TELEPHONE COMPANY, INC.
by
President
(Seal)
Attest:
Secretary
Executed by the Mortgagor in the presence of:
Witnesses
Page 00
XXXXXX XXXXXX XX XXXXXXX, and
RURAL TELEPHONE BANK, respectively
by as
Acting Assistant Administrator
Telecommunications Program
of the
Rural Utilities Service
and as Acting Assistant Governor
of the
Rural Telephone Bank
(Seal)
Attest:
Assistant Secretary
of the
Rural Telephone Bank
Executed by United States of America, Mortgagee, and Rural Telephone Bank,
Mortgagee, in the presence of:
Witnesses
Page 28
STATE OF KANSAS
COUNTY OF
SS
This instrument was acknowledged before me on
, 19 , by
as President of HAVILAND TELEPHONE COMPANY, INC.,
a Kansas corporation.
Notary Public
(Notarial Seal)
My appointment expires:
Page 29
DISTRICT OF COLUMBIA
SS
This instrument was acknowledged before me on r 19 . by Acting Assistant
Administrator - Telecommunications-program of the Rural Utilities Service of the
United States of America and as Acting Assistant Governor of the Rural Telephone
Bank.
Notary Public
(Notarial Seal)
My commission expires:
Page 30
Exhibit One (Exhibit to Mortgage)
UNIFORM SYSTEM OF ACCOUNTS
ACCOUNT NUMBERS USED IN CERTAIN PROVISIONS
THIS EXHIBIT CONSISTS OF 2 PAGES
All references regarding account numbers are to 47 CLR Part 32 and supplementary
accounts required by RUS.
ACCOUNT NUMBERS
ACCOUNT NAMES CLASS A CLASS B
INTEREST EXPENSE: the sum of the balances of the following accounts of the
Mortgagor:
Interest and Related Items ......................... 7500** 7500
Interest on Funded Debt ............................ 7510
Interest Expense - Capital Leases .................. 7520
Amortization of Debt Issuance Expense .............. 7530
Other Interest Deductions .......................... 7540
LESS: Allowance for Funds Used
During construction ....................... 7340 7300.4
NET INCOME OR NET MARGINS: the sum of the balances of the
following accounts of the Mortgagor:
Local Network Services Revenues )
Network Access Services Revenues )
Long Distance Network Services Revenues ) 5000 thru 5300
Miscellaneous Revenues )
LESS: Uncollectible Revenues )
Other Operating Income and Expense ............... 7100** 7100
Nonoperating Income and Expense .................. 7300 7300
Income Effect of Jurisdictional
Rate-making Difference - Net ................... 7910 7910
Nonregulated Net Income .......................... 7990
Other Nonregulated Revenues ...................... 7991 7991
LESS balances of the following accounts:
Plant Specific Operations Expense
Plant Nonspecific Operations Expense ............. 6100 thru 6700s
Customer Operations
Corporate Operations
Operating Taxes ................................ 7200** 7200
Nonoperating Taxes ............................. 7400** 7400
Interest and Related Items .............. 7500 7500
Extraordinary Items ..................... 7600 7600
**Summary Accounts
NET WORTH: the sum of the balances of the following accounts of the Mortgagor:
Capital Stock ................................... 4510 4510
Additional Paid-In Capital ...................... 4520 452C,
Treasury Stock .................................. 4530 4530
Other Capital ................................... 4540 4540
Retained Earnings ............................... 4550 4550
NOTE: FOR NONPROFIT ORGANIZATIONS (OWNERS' EQUITY SHALL
BE SHOWN IN SUBACCOUNTS OF 4540 AND 4550)
TOTAL ASSETS: the sum of the balances of the following accounts of the
Mortgagor:
Current Assets ....................................... 1100s thru 1300s
Noncurrent Assets .................................... 1400s thru 1500s
Total Telecommunications Plant ....................... 2001 thru 2007
LESS: Accumulated Depreciation ....................... 3100 thru 3300s
LESS: Accumulated Amortization ....................... 3400 thru 3600s
EXHIBIT "At'
Xxxx 00 & 00, Xxxxx 00, Xxxxxxxx Xxxx of Argonia, Xxxxxx County, Kansas Xxxx 0,
0 & 0, Xxxxx 00, Xxxxxxxx Xxxx of Xxxxxx Springs, Xxxxxx County, Kansas Xxxx 00
& 00, Xxxxx 0, Xxxxxxxxxx Addition to the City of Xxxxxx Springs, Xxxxxx County,
Kansas Xxxx 00 xxxx 00, Xxxxx 00, Xxxxxxxx Xxxx of Xxxxxx Springs, Xxxxxx
County, Kansas East 40'of Xxxx X & 0, Xxxxx 0, Xxxxxxxxx, Xxxxxx Xxxxxx, Xxxxxx
West 40'of Xxx 0, Xxxxx 0, Xxxxxxxx Xxxx xx Xxxxx, Xxxxx Xxxxxx, Kansas Xxx 0,
Xxxxx 00, Xxxxx Xxxxxxxx Addition to the City of Xxxxxxxx, Xxxxx County, Kansas
East 25' Xxxx 00 & 00, Xxxxx 0, Xxxxxxxx Xxxx of Xxxxxx, Xxxxx County, Kansas
West 8'of East 40'of Xxx 0, Xxxxx 0, Xxxxxxxx Xxxx of Haviland, Kiowa County,
Kansas East 32'of Xxx 0, Xxxxx 0, Xxxxxxxx Xxxx of Haviland, Kiowa County,
Kansas Xxxx 0 & 0, Xxxxx 0, Xxxxxx'x X st Addition, to the City of Mullinville,
Kiowa County, Kansas Xxx 00, Xxxxx 0, Xxxx xx Xxxxxxxxx, Xxxxxxx Xxxxxx, Kansas
East 30' of Xxx 00, Xxxxx 00, Xxxx xx Xxxxxxx, Xxxxxxx County, Kansas Xxxx 0 &
0, Xxxxx X except the West 70 feet of each lot, Xxxxxx'x Addition to the Town of
Wilmore, Comanche County, Kansas Xxx 00, Xxxxx 0, Xxxx xx Xxxxxx, Xxxxxx Xxxxxx,
Kansas Lots Eight (8) and Nine (9) in Block One (1) of Xxxx'x Addition to the
Town of Haviland, Kiowa County, Kansas. That portion of Xxxx'x Reserve in the
City of Xxxxxxxx, Kiowa County, Kansas, described as follows: Beginning at
Southeast xxxxx of Xxxx'x Reserve; running thence North on the West line of Main
Street in the City of Xxxxxxxx a distance of Fifty (50) feet to the Southeast
xxxxx of Lot Nine (9) of Block One (1) of Xxxx'x Addition; thence West along the
South line of said Lot Nine (9) a distance of One Hundred Fifty (150) feet to
the Southwest xxxxx of said Lot Nine (9); thence due South to the South line of
Xxxx'x Reserve; thence Easterly along the South line of Xxxx'x Reserve to the
place of beginning; and, a part of Xxxx'x Reserve in Block One (1) in Xxxx'x
Addition to the town of Haviland, Kansas, described as follows: Beginning at a
point One Hundred Twenty-five (125) feet south and Seventy (70) feet East of the
Northwest xxxxx of Lot Five (5) of County Clerk's Plat of a part of Xxxx'x
Reserve; running thence East a distance of Seventy (70) feet to a point; running
thence South to the North line of Maple Street in the City of Xxxxxxxx; running
thence Westerly along the North line of Maple Street a distance of Seventy (70)
feet to a point; running thence North to the place of beginning.
That part of Xxxx'x Reserve in Block One (1), in Xxxx'x Addition to the Town of
Haviland, Kiowa County, Kansas, described as follows: Beginning at a point 125
feet South of the Northwest xxxxx of Lot Five (5) of the County Clerk's Plat of
a part of Xxxx'x Reserve, thence running East 70 feet; thence running South to
the North line of Maple Street in the said Town; thence running Westerly along
the North line of said Maple Street to the
Southwest xxxxx of said Xxxx'x Reserve; thence running North along the East line
of Xxxxxxxx Avenue in said Town to the place of beginning.
A tract of land located in the Northwest Quarter (NW/4) of Section Seventeen
(17), Township Twenty-Eight (28) South, Range Sixteen (16) West, described as
follows, to-wit: Commencing at the XX xxxxx of said NW/4, thence East along the
North line of said NW/4 a distance of 719 feet to a point; thence South a
distance of 71 feet to a point, being the place of beginning; thence
Northeasterly (North 35' East) a distance of 375.84 feet to a point, thence
South a distance of 412 feet to a point on the Northerly right-of-way line of
U.S. Highway 54, as presently located; thence Southwesterly along said Northerly
right-of-way line of U.S. Highway 54, a distance of 384.3 feet to a point;
thence North a distance of 464 feet to the place of beginning, containing 3.82
acres, more or less, subject to mineral reservations and easements of record.
