EXHIBIT 10.18
-------------
REVOLVING LINE OF CREDIT APPLICATION AND AGREEMENT
("Agreement")
Name of Applicant: VIRGIN ISLANDS TELEPHONE CORPORATION,
a U.S. Virgin Islands corporation ("Applicant")
Address: X.X. Xxx 0000
Xx. Xxxxxx, X.X. Xxxxxx Xxxxxxx 00000
Applicant hereby applies to Rural Telephone Finance Cooperative ("RTFC"), a
South Dakota cooperative association, for a revolving line of credit loan in an
amount not to exceed fifteen million dollars ($15,000,000). Applicant hereby
agrees that in the event RTFC approves this Agreement, the terms and conditions
herein and any additional terms and conditions as approved by RTFC, and as
agreed to in writing by Applicant, shall constitute a valid and binding
agreement between Applicant and RTFC. In consideration of their mutual promises
hereunder and other valuable consideration, the receipt and sufficiency of which
is hereby acknowledged, RTFC and Applicant agree to the following terms and
conditions:
1. Revolving Credit and Term. Upon approval of this Agreement, RTFC agrees to
make advances to the Applicant pursuant to the terms of this Agreement
("Advances") in the maximum amount specified above or such lesser amount as
may be approved by RTFC in accordance with the terms and conditions hereof.
Within such limits, the Applicant may borrow, repay and reborrow at any time
or from time to time for a period up to twelve (12) months from the
Effective Date (as defined herein) (the "Maturity Date").
2. Requisitions. The Applicant shall give RTFC such prior notice of requests
for Advances as RTFC may reasonably require from time to time.
3. Interest Rate and Payment. The Applicant 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 January, April, July and October,
commencing on the first such date after such initial Advance; except that if
RTFC gives notice thereof to the Applicant before the first day of any
-2-
month, interest shall thereafter be due and payable on the 15th day of such
month and each month thereafter. RTFC shall invoice the Applicant 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
RTFC 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 RTFC 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 RTFC, 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 RTFC
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. RTFC shall maintain in accordance with its usual practice an
account or accounts evidencing the indebtedness of the Applicant 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 Applicant's transactions therein recorded.
-3-
5. Corporate and Regulatory Approvals. Applicant represents that it has obtained
any and all necessary corporate and regulatory approvals for Applicant to
execute and perform pursuant to this Agreement.
6. Reports. Applicant agrees to deliver to RTFC, promptly upon their becoming
available, a copy of (i) any annual audit report prepared subsequent to the
submission of this Agreement; (ii) its monthly operating report within twenty
(20) days for any month in which there are advances outstanding pursuant to
this Agreement; and (iii) any other reports which RTFC reasonably requests
during the term of this Agreement.
7. Fees. If any amount outstanding and due hereunder shall not be paid when due,
Applicant agrees to pay on demand RTFC's reasonable costs of collection or
enforcement of this Agreement, or preparation therefor, including reasonable
fees of counsel. If payment of any principal and/or interest due under the
terms of this Agreement is not received at RTFC's office in Herndon,
Virginia, or such other location designated by RTFC, 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"),
Applicant will pay to RTFC, 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 RTFC's policy on the delinquent amount for the late
payment period.
8. Limitation on Advances. The amount of outstanding Advances hereunder in any
single calendar year may not at any one time exceed the amount approved by
RTFC.
9. Reduce Balance to Zero. In the event this Agreement is for a term of more
than 12 months, then within 360 days of the first Advance, Applicant will
reduce to zero for a period of at least five consecutive business days (the
last day of such five-day period being herein called the "Zero Balance Date")
amounts outstanding hereunder, and will reduce to zero for a period of at
least five consecutive business days (the last day of such five business
dayperiod being called the "Subsequent Zero Balance Date") amounts
outstanding hereunder within 360 days from the Zero Balance Date or
Subsequent Zero Balance Date, as appropriate.
-4-
10. Credit Support. This Agreement may not be used as credit support for any
other financings without RTFC's prior written approval.
11. Notices, Acceleration of Debt and Waivers. While any amount hereunder is
outstanding, Applicant agrees to notify RTFC 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 Applicant. If any
delinquency, default or 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, or any representation or warranty
herein shall become untrue, or Applicant shall fail to comply with any term
of this Agreement, or if the financial condition of Applicant shall have
changed to the extent that such change, in the reasonable judgment of RTFC,
materially increases RTFC's risk hereunder, then RTFC 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. The Applicant waives the defense of usury and all rights
to setoff, counterclaim, deduction or recoupment.
12. Purpose, Repyaments and Deposit. Applicant 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 Applicant
relating to its operations. Applicant agrees that this loan shall be
repayable out of Applicant's general funds and that loan proceeds will not
be deposited in Applicant's Trustee-Special Construction Fund Account or any
other account dedicated for secured financing advances.
13. Additional Indebtedness. While any amount hereunder is outstanding and
unless otherwise disclosed in writing to RTFC, Applicant agrees that it will
not, without prior written consent of RTFC, (i) make distributions of cash
to its shareholders or partners, if applicable, or (ii) create, incur,
assume, guarantee or otherwise become obligated for any additional
indebtedness, other than to RTFC, except that the Applicant may borrow
against another loan previously approved by RTFC.
-5-
14. Survival of Representations, Warranties and Payment Obligations. Applicant
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.
15. Representations and Warranties. Except as set forth and attached hereto,
Applicant represents and warrants as of the date of its application and on
the date of each and every Advance hereunder that:
(a) The Applicant 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 Applicant's business or
financial condition from that set forth in its audited financial
statements;
(c) The Applicant has no outstanding loans from sources other than RTFC;
(d) The Applicant 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 Applicant's ability to perform under
this Agreement; and
(e) The Applicant has no lines of credit with any other lenders.
16. Submissions. Applicant submits the following documents in support of this
Agreement (if not previously received by RTFC):
(a) The most recently prepared income statement and balance sheet and all
attachments thereto; and
(b) The income statement and balance sheet for each of the three preceding
calendar years; and
(c) Applicant's most recent annual audit report prepared by an independent
certified public accountant.
-6-
17. Consent to Patronage Capital Distributions. Applicant hereby consents that
the amount of any distributions with respect to Applicant'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 RTFC will be
taken into account by Applicant 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.
18. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF VIRGINIA.
19. 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.
20. Setoff. RTFC is hereby authorized at any time and from time to time without
prior notice to the Applicant to exercise rights of setoff or recoupment and
apply any and all amounts held, or hereafter held, by RTFC or owed to the
Applicant or for the credit or account of the Applicant against any and all
of the obligations of the Applicant now or hereafter existing hereunder.
RTFC agrees to notify the Applicant 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 RTFC under this section are in addition to any
other rights and remedies (including other rights of setoff or recoupment)
which RTFC may have.
21. Additional Terms and Conditions. Additional terms and conditions set forth
herein or attached hereto are an integral part of this Agreement.
22. [Paragraph 22 was manually crossed out and initialed.]
23. Integration. This Agreement and the matters incorporated by reference
contain the entire agreement of the parties
-7-
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 to this Agreement shall be valid and binding except if in writing.
24. HEADINGS. The headings and subheadings contained in this Agreement are
intended to be used for convenience only and do not constitute part of this
Agreement.
-8-
===============================================================
(For RTFC Use Only)
Additional Terms and Conditions
-9-
================================================================================
Name of Applicant: VIRGIN ISLANDS TELEPHONE CORPORATION
------------------------------------------------------------
Signed By: /s/ Xxxxx X. Xxxxx
---------------------------------------------------------------------
XXXXX X. XXXXX
Title: PRESIDENT & CEO
------------------------------------------------------------------------
Date of Application: MARCH 10, 1996
----------------------------------------------------------
================================================================================
-ATTACHMENT-
APPROVAL OF AGREEMENT
This Agreement is approved, subject to any Additional Terms and Conditions noted
above, on the date set forth below and is effective as of _____________, 199____
(the "Effective Date").
RURAL TELEPHONE FINANCE COOPERATIVE
Signed By: __________________________, Chief Executive Officer
Loan #: ___________________ Date of Approval: ______________
VIRGIN ISLANDS TELEPHONE CORPORATION
Rural Telephone Finance Cooperative
Herndon, Virginia
Re: Attachment to Revolving Line of Credit
Application and Agreement
--------------------------------------
Dear Sirs:
As is contemplated by paragraph 15 of our line of credit application
and agreement for a $15 million line of credit, we hereby advise you that we,
the Applicant, have outstanding and may on the date of future advances under the
line of credit have outstanding (i) loans from RUS, (ii) loans under and secured
by certain property and casualty insurance which we carry and (iii) capitalized
leases and other purchase money obligations for capital equipment [not in excess
of $3 million at any one time outstanding].
Very truly yours,
VIRGIN ISLANDS TELEPHONE CORPORATION
By: /s/ Xxxxx X. Xxxxx
-------------------------------
Xxxxx X. Xxxxx, President
CERTIFIED COPY OF MINUTES AUTHORIZING
REVOLVING LINE OF CREDIT APPLICATION AND AGREEMENT
I, XXXXXXXXX X. PRIOR, JR., do hereby certify that I am the Secretary
of THE VIRGIN ISLANDS TELEPHONE CORPORATION (the "Applicant").
The following is a true and correct copy of excerpts from the minutes
of a meeting of the Board of Directors f the Applicant held March 28, 1996, as
they appear in the Minutes Book of the Applicant; said resolutions were duly
adopted thereat; the meeting was duly and properly called; the Revolving Line of
Credit Application and Agreement (the "Agreement") submitted herewith or to be
submitted to Rural Telephone Finance Cooperative ("RTFC") is substantially
similar to the form as presented to said meeting, the execution of which was
authorized by the Board of Directors* Trustees*; and said resolutions have not
been modified or rescinded:
"The Board of Directors of
THE VIRGIN ISLANDS TELEPHONE CORPORATION
----------------------------------------
(Name of Applicant)
having been advised by its counsel that the Applicant is legally constituted, is
in compliance with all applicable statutory, regulatory and other legal
requirements and is in good standing, and that an application to be made to RTFC
for a line of credit and its approval by RTFC, together with the execution of an
agreement as authorized by the Board, in the form of the Agreement presented at
this meeting, will constitute a valid and binding obligation of the Applicant,
enforceable by and against the Applicant, in accordance with the terms of these
documents:
"RESOLVED, that the Applicant establish a line of credit and authorize
borrowing from the Rural Telephone Finance Cooperative ("RTFC") in amounts
which shall not at one time exceed $15,000,000* for a term of up to
twelve (12) months, and at such interest rate or rates as shall be
prescribed in the Agreement executed by and on behalf of the Applicant and
delivered to RTFC, the proceeds of such loan or loans to
-----------------
* (in addition to the applicant's existing $5,000,000 line of credit)
-2-
be used for proper corporate purposes and consistently with the
requirements of existing agreements and security documents of the
Applicant; and
"RESOLVED, that the PRESIDENT or any VICE-PRESIDENT
--------------------------------------
(Insert Title of Appropriate Official)
of the Applicant be and is hereby authorized to execute, on behalf of the
Applicant, an agreement for a line of credit substantially in the form of
the Agreement presented to this meeting, a copy of which is attached
hereto; to execute, in the name of the Applicant, to revise and modify said
Agreement within the amount so authorized; and to execute such further
documents as may be needed to comply with RTFC's requirements; and
"RESOLVED, that the PRESIDENT or any VICE-PRESIDENT
---------------------------------------
(Insert Title of Appropriate Official)
is authorized on behalf of the Applicant to request and receive funds
pursuant to the Agreement and is directed to deposit such funds in a bank
account used for the general funds of the Applicant; and
"RESOLVED, that the appropriate officers are authorized to take all actions
they deem advisable to carry out the purpose of these resolutions."
IN WITNESS WHEREOF, I have hereunder set my hand and affixed the seal
of the Applicant this 16th day of April, 1996.
(Corporate Seal) /s/ Xxxxxxxxx X. Prior, Jr.
---------------------------------
XXXXXXXXX X. PRIOR, JR.
Secretary
