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EXHIBIT 10.2
LOAN AGREEMENT
LOAN AGREEMENT ("Agreement") made as of August 14 , 1996, by and between
ILLUMINET, INC., a Delaware corporation ("Borrower"), and RURAL TELEPHONE
FINANCE COOPERATIVE, a South Dakota cooperative association ("Lender").
RECITALS
WHEREAS, Borrower is the surviving corporation of a merger between
Independent Telecommunications Network, Inc. ("ITN") and US Intelco Holdings,
Inc. (the resulting entity of a merger between US Intelco Holdings, Inc.
("USIH") and US Intelco Networks, Inc. ("USIN");
WHEREAS, Lender previously had made several loans to ITN, USIH and USIN
(collectively the "Predecessor Entities"), as are more fully described in
Schedule 1 hereto;
WHEREAS, Borrower has agreed to assume, pay, discharge, satisfy and
observe all of the liabilities, duties and obligations owed by the Predecessor
Entities to Lender;
WHEREAS, Borrower has requested the extension of the aforesaid loans as
well as an additional loan in the amount of $3,894,737.00;
WHEREAS, Lender is willing to make the extension of loans, as well as
the new loan upon the terms and conditions set forth in this Agreement;
WHEREAS, this Agreement is made in substitution of and in lieu of the
original loan agreements ("Original Agreements") made between the Predecessor
Entities and Lender as are more fully described in Schedule 1 hereto; and
WHEREAS, this Agreement shall not be, nor deemed to be, a novation of
the indebtedness evidenced by the Original Agreements.
NOW, THEREFORE, for and in consideration of the mutual covenants
contained herein, Borrower and Lender do hereby agree as follows:
1. CONSTRUCTION AND DEFINITION OF TERMS
All accounting terms not specifically defined herein shall have the
meanings assigned to them as determined by generally accepted accounting
principles. In addition to the terms defined elsewhere in this Agreement, unless
the context otherwise requires, when used herein, the following terms shall have
the following meanings:
"ADJUSTMENT DATE" shall mean a date or dates, determined by the Lender,
after the date of the initial Advance to the Maturity Date.
"ADVANCE" shall mean an advance as defined in Section 2.02.
"BUSINESS DAY" shall mean any day that Lender is open for business.
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"CASH MARGINS" for any year shall mean net income plus depreciation,
amortization and any other non-cash charges, less any non-cash credits and
principal on long-term debt payable in such year, as calculated on a
consolidated basis for Borrower and all its Subsidiaries.
"CERTIFIED" shall mean that the information, statement, schedule, report
or other document required to be "Certified" shall contain a representation of a
duly authorized officer of Borrower that such information, statement, schedule,
report or other document is true and correct and complete.
"CLOSING" shall mean the first date on which funds are advanced to
Borrower pursuant to each Note issued hereunder.
"COLLATERAL" shall mean the Mortgaged Property, as such term is defined
in the Mortgage, and all proceeds, cash and non-cash, including insurance
proceeds, of the foregoing, whether in the possession of Borrower or any other
person.
"COMMITMENT" shall have the meaning set forth in Schedule 1 hereto.
"DEBT SERVICE COVERAGE RATIO" or "DSC" for any year shall mean (a) total
net income or margins plus depreciation, amortization, and interest on long-term
debt for such year, divided by (b) principal and interest on long-term debt
payable in such year, as calculated on a consolidated basis for the Borrower and
all its Subsidiaries.
"EVENT OF DEFAULT" shall mean any of the events described in Section 8
hereof.
"FIXED RATE" shall mean the interest rate per annum provided for in
Section 2.03(b)(ii) of this Agreement.
"INDEBTEDNESS" shall include all items which would properly be included
in the liability section of a balance sheet or in a footnote to a financial
statement, in accordance with generally accepted accounting principles,
including, without limitation, contingent liabilities.
"LEASES" shall mean any lease of property by which Borrower shall be
obligated for rental or other payments which in the aggregate are in excess of
$100,000 other than such equipment leases which are in form and substance
substantially in conformity with lease agreements in general use in Borrower's
industry by companies of size and character similar to Borrower.
"LIEN" shall mean any statutory or common law consensual or
non-consensual mortgage, pledge, security interest, encumbrance, lien, right of
set-off, claim or charge of any kind, including, without limitation, any
conditional sale or other title retention transaction, any lease transaction in
the nature thereof and any secured transaction under the Uniform Commercial Code
of any jurisdiction.
"LOAN" shall mean the loan or loans by the Lender to Borrower, pursuant
to this Agreement and the Note, in an aggregate principal amount not to exceed
the Commitment.
"MATURITY DATE" shall mean the maturity date defined in the Note.
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"MINIMUM NET WORTH TEST" shall be calculated on a consolidated basis for
the Borrower and all its Subsidiaries, and shall mean an equity to total asset
ratio of at least forty (40) percent. Equity shall be determined by subtracting
total liabilities from total assets.
"MORTGAGE" shall mean the mortgage and security agreement described in
Schedule 1.
"NET WORTH" shall be calculated on a consolidated basis for the Borrower
and all its Subsidiaries taken as a whole and arrived at by subtracting total
liabilities from total assets.
"NOTE" shall mean the Note or Notes executed and delivered by Borrower
at or prior to Closing pursuant to Subsection 5.02(a) hereof, and all renewals,
replacements, substitutions and extensions thereof.
"OBLIGATIONS" shall include the full and punctual performance of all
present and future duties, covenants and responsibilities due to the Lender by
Borrower under this Agreement, the Note, and the Other Agreements, all present
and future obligations of Borrower to the Lender for the payment of money under
this Agreement, the Note, and the Other Agreements, extending to all principal
amounts, interest, late charges and all other charges and sums, as well as all
costs and expenses payable by Borrower under this Agreement, the Note, and the
Other Agreements, and any and all other present and future monetary liabilities
of Borrower to the Lender, whether direct or indirect, contingent or
noncontingent, matured or unmatured, accrued or not accrued, related or
unrelated to this Agreement, whether or not of the same character or class as
Borrower's obligations under this Agreement and the Note, whether or not secured
under any other document, instrument or statutory or common law provision, as
well as all renewals, refinancings, consolidations, recastings and extensions of
any of the foregoing.
"ORIGINAL AGREEMENTS" shall mean the original loan agreements referred
to in Schedule 1 hereto.
"OTHER AGREEMENTS" shall mean any and all promissory notes, security
agreements, assignments, subordination agreements, pledge or hypothecation
agreements, mortgages, deeds of trust, leases, contracts, guaranties,
instruments and documents now and hereafter existing between the Lender and
Borrower, executed and/or delivered pursuant to this Agreement or guaranteeing,
securing or in any other manner relating to any of the Obligations, including
the instruments and documents referred to in Subsection 5.2 hereof.
"PAYMENT DATE" shall mean the last day of each of the months referred to
in Schedule 1 hereto.
"PAYMENT NOTICE" shall mean the notice furnished to the Borrower at
least quarterly indicating the precise amount of principal and/or interest due
on the next ensuing Payment Date, such notice to be sent to the Borrower at
least ten (10) days before such Payment Date.
"PERSON" shall include natural persons, corporations, associations,
partnerships, joint ventures, trusts, governments and agencies and departments
thereof, and every other entity of every kind.
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"PREDECESSOR ENTITIES" shall have the meaning as prescribed in the
second WHEREAS clause of the Recitals hereto.
"SUBORDINATED CAPITAL CERTIFICATE" OR "SCC" shall mean a subordinated
certificate representing an investment in the Lender purchased by the Borrower
in connection with the Loan.
"SUBSIDIARY" at any time means any entity which is at the time
beneficially owned or controlled directly or indirectly by the Borrower, by one
or more such entities or by the Borrower and one or more such entities.
"TERMINATION DATE" shall mean that date which is two (2) year(s) from
the date hereof.
"VARIABLE RATE" shall mean the variable rate established by the Lender
from time to time for loans similarly classified pursuant to lender's policies
and procedures then in effect.
2. LOAN
2.01 LOAN. The Lender agrees to make the Loan to Borrower subject to
all of the terms and conditions of this Agreement and the Other Agreements.
2.02 ADVANCES. The Lender agrees to make, and the Borrower agrees to
request, on the terms and conditions of this Agreement, Advances from time to
time at the office of the Lender in Herndon, Virginia, or at such other place as
the Lender may designate, not to exceed the Commitment. The Borrower shall give
the Lender at least one Business Day prior written notice of the date on which
each Advance is to be made. On the Termination Date the Lender may stop
advancing funds and reduce the Commitment to the aggregate amount theretofore
advanced. The obligation of the Borrower to repay the Advances shall be
evidenced by the Note.
2.03 PAYMENT, AMORTIZATION AND INTEREST RATE
(a) Payment. The Borrower shall pay on each Payment Date quarterly
installments, in an amount as determined by the Lender, of principal and/or
interest as shown in the Payment Notice, except that, if not sooner paid, any
balance of the principal amount and interest accrued thereon and all other
amounts due hereunder shall be due and payable on the Maturity Date. Payment of
principal hereunder shall commence after the first full quarter following the
initial Advance of funds as set forth in Schedule 1 and on each subsequent
Payment Date until the Maturity Date or such earlier date as all amounts due
hereunder and on account of the Note shall have been paid in full. Payment of
interest hereunder is due on each Payment Date in which a principal balance is
outstanding. Principal will be amortized in accordance with the method stated in
Schedule 1 hereto.
The Lender will use, for purposes of calculating the amortization of principal,
one of the following interest rates, as applicable:
(i) If the Borrower elects the Fixed Rate, the Fixed Rate in effect
on the Adjustment Date; or
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(ii) If the Borrower elects the Variable Rate, the Variable Rate in
effect when amortization begins; or
(iii) If the Borrower elects to convert from one interest rate program
to another, the interest rate then in effect for the elected
program.
At the Lender's option, all payments shall be applied first to late payment
charges due, as hereinafter provided, then to interest accrued to the date of
such payment, and then to the reduction of principal balance outstanding.
No provision of this Agreement or the Note shall require the payment, or permit
the collection, of interest in excess of the highest rate permitted by
applicable law.
(b) Interest Rate. Each Advance shall be initially made at the
Variable Rate. Interest shall be computed from the actual number of days elapsed
on the basis of a year of 365 days until the first Payment Date following the
initial Advance. Thereafter, interest shall continue to be computed for the
actual number of days elapsed on the basis of a year of 365 days unless a Fixed
Rate is applicable to the Loan, in which case interest shall be computed on the
basis of a 30-day month and 360-day year.
(i) Variable Rate. If Advances are made at the Variable Rate, it
shall apply until the Maturity Date, except as provided herein
below.
(ii) Fixed Rate. If the Borrower elects a Fixed Rate, such Fixed Rate
as is available and in effect for loans similarly classified
pursuant to Lender's policies and procedures then in effect at
the time of the election shall apply to such Advance until the
Adjustment Date. Upon notice given by the Borrower five Business
Days prior to such Adjustment Date, Borrower may elect to reset
the interest rate to such Fixed Rate as is available and in
effect at the time of such Adjustment Date. Such reset Fixed
Rate shall apply to that portion of the outstanding principal
balance of the Loan elected to have a Fixed Rate from the
Adjustment Date until a new Adjustment Date or the Maturity
Date. If Borrower does not elect to reset the Fixed Rate, the
Variable Rate shall apply to the outstanding principal balance
of the Loan that had been bearing interest at the Fixed Rate
prior to such Adjustment Date, from such Adjustment Date to the
Maturity Date.
(iii) Conversion to Different Interest Program.
(A) Variable Rate to Fixed Rate. Subject to the conditions set forth
herein, the Borrower may convert from the Variable Rate to the
Fixed Rate for any portion or all of the principal amount of the
Commitment then outstanding at any time provided the Lender
offers a Fixed Rate at such time for similarly classified loans.
(B) Fixed Rate to Variable Rate. The Borrower may convert from a
Fixed Rate to the Variable Rate only on an Adjustment Date.
2.04 PREPAYMENT. In the event the Borrower prepays all or part of the
Loan, the Borrower shall pay such prepayment fee as the Lender may prescribe
from time to time in its
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policies in connection with any prepayment of the Loan. All prepayments shall be
accompanied by payment of accrued and unpaid interest on the amount of and to
the date of the prepayment. All prepayments shall be applied first to fees,
second to the payment of accrued and unpaid interest, and then to the unpaid
balance of the principal amount of the Loan. If the Loan bears interest at the
Variable Rate the Borrower may prepay the Loan or any portion thereof, as the
case may be, at any time subject to the terms hereof and said prepayment fee
shall be in an amount established by Lender on a cost basis and shall not exceed
fifty (50) basis points times the amount being prepaid. If the Loan bears
interest at the Fixed Rate, the Borrower may prepay the Loan only on an
Adjustment Date or such other date as may be agreed upon by the parties hereto.
2.05 SUBORDINATED CAPITAL CERTIFICATE. The Borrower shall purchase
SCCs corresponding to each Note, as is more fully prescribed in Schedule 1
hereto. Unless otherwise requested in writing by the Borrower prior to the
initial Advance and approved by the Lender, the Borrower agrees to purchase SCCs
either (1) with each Advance in the amount of five percent (5%) or ten percent
(10%) of each such Advance (as specified in Schedule 1), and each such SCC shall
be paid for with proceeds of such Advance, or (2) by making payments with
Borrower's own funds in twenty equal quarterly installments, commencing with the
first full quarter following the initial Advance. If the Borrower elects to pay
for SCCs other than from Loan funds, the amount of the Commitment will be
correspondingly reduced by said amount when the SCCs are fully paid. If the
Borrower obtains Advances hereunder other than for the purpose of purchasing
SCCs and fails to pay for the SCCs, then the Lender may make Advances for the
account of the Borrower to purchase the SCCs. The Lender agrees to deliver the
SCCs on or about the date on which the SCCs have been paid for in full. The SCCs
shall bear no interest and shall mature in accordance with the terms thereof.
3. SECURITY
As security for the payment and performance of all of the Obligations,
Borrower has entered into the Mortgage pledging and granting to the Lender, and
Borrower hereby grants to Lender, a prior and continuing security interest in
the Collateral that may be secured by the Mortgage that shall continually exist
until all Obligations have been paid in full. If reasonably required by the
Lender at any time, Borrower shall make notations, satisfactory to the Lender,
on its books and records disclosing the existence of the Lender's security
interest in the Collateral. Borrower agrees that, with respect to the
Collateral, which is subject to Article 9 of the Uniform Commercial Code, the
Lender shall have, but not be limited to, all the rights and remedies of a
secured party under the Uniform Commercial Code. The Lender shall have no
liability or duty, either before or after the occurrence of an Event of Default
hereunder, on account of loss of or damage to, or to collect or enforce any of
its rights against, the Collateral, or to preserve any rights against account
debtors or other parties with prior interests in the Collateral.
4. REPRESENTATIONS AND WARRANTIES
To induce the Lender to enter into this Agreement, Borrower represents
and warrants to the Lender as of the date of this Agreement that:
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4.01 GOOD STANDING. Borrower is a corporation duly organized validly
existing and in good standing under the laws of the state of its incorporation,
has the power to own its property and to carry on its business, is duly
qualified to do business, and is in good standing in each jurisdiction in which
the transaction of its business makes such qualification necessary.
4.02 AUTHORITY. Borrower has corporate power and authority to enter
into this Agreement and the Mortgage, to make the borrowing hereunder, to
execute and deliver all documents and instruments required hereunder and to
incur and perform the obligations provided for herein, in the Mortgage, and in
the Note, all of which have been duly authorized by all necessary and proper
corporate and other action, and no consent or approval of any person, including,
without limitation, stockholders and members of Borrower and any public
authority or regulatory body, which has not been obtained is required as a
condition to the validity or enforceability hereof or thereof.
4.03 BINDING AGREEMENT. This Agreement has been duly and properly
executed by Borrower, constitutes the valid and legally binding obligation of
Borrower and is fully enforceable against Borrower in accordance with its terms,
subject only to laws affecting the rights of creditors generally, the exercise
of judicial discretion in accordance with general principles of equity or
because waivers of statutory or common law rights or remedies may be limited.
4.04 NO CONFLICTING AGREEMENTS. The execution, delivery of and
performance by Borrower of this Agreement, the Mortgage and the Note, and the
transactions contemplated hereby or thereby, will not: (a) violate any provision
of law, any order, rule or regulation of any court or other agency of
government, any award of any arbitrator, the charter or by-laws of Borrower, or
any indenture, contract, agreement, mortgage, deed of trust or other instrument
to which Borrower is a party or by which it or any of its property is bound; or
(b) be in conflict with, result in a breach of or constitute (with due notice
and/or lapse of time) a default under, any such award, indenture, contract,
agreement, mortgage, deed of trust or other instrument, or result in the
creation or imposition of any Lien (other than contemplated hereby) upon any of
the property or assets of Borrower.
4.05 LITIGATION. There are no judgments, claims, actions, suits or
proceedings pending or, to the knowledge of Borrower, threatened against or
affecting Borrower or its properties, at law or in equity or before or by any
federal, state, municipal or other governmental department, commission, board,
bureau, agency or instrumentality, which may reasonably be expected to result in
any material adverse change in the business, operations, prospects, properties
or assets or in the condition, financial or otherwise, of Borrower, and Borrower
is not, to its knowledge, in default with respect to any judgment, order, writ,
injunction, decree, rule or regulation of any court or federal, state, municipal
or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign, which would reasonably be expected to have
a material adverse effect on Borrower.
4.06 FINANCIAL CONDITION. The financial statements of Borrower as at
the date set forth in Schedule 1 hereto, heretofore delivered to the Lender, are
complete and correct, fairly present the financial condition of Borrower and
have been prepared in accordance with generally accepted accounting principles
applied on a consistent basis. There are no liabilities of
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Borrower, direct or indirect, fixed or contingent, as of the date of such
statements which are not reflected therein. There has been no material adverse
change in the financial condition or operations of the Borrower from that set
forth in said financial statements except changes previously disclosed in
writing to the Lender prior to the date hereof.
4.07 TAXES. Borrower has paid or caused to be paid all federal, state
and local taxes to the extent that such taxes have become due, unless the
Borrower is contesting in good faith any such tax. Borrower has filed or caused
to be filed all federal, state and local tax returns which are required to be
filed by Borrower.
4.08 TITLE TO PROPERTIES. Borrower has good and marketable title to
all of its real properties and owns all of its other properties and assets free
and clear of any liens.
4.09 LICENSES AND PERMITS. Borrower has duly obtained and now holds
all licenses, permits, certifications, approvals and the like necessary to own
and operate its property and business that are required by federal, state and
local laws of the jurisdictions in which Borrower conducts its business and each
remains valid and in full force and effect.
4.10 SUBSIDIARIES. Borrower has no Subsidiaries other than
Subsidiaries heretofore disclosed to the Lender, or hereafter formed or acquired
with the prior written consent of the Lender.
4.11 CERTAIN INDEBTEDNESS. There is no Indebtedness of Borrower owing
to any employee, officer, stockholder or director of the board of Borrower other
than accrued salaries, commissions and the like and any Indebtedness
subordinated to the Obligations pursuant hereto.
4.12 LOCATION OF OFFICE. The chief place of business of the Borrower
and the office where its records concerning accounts and contract rights are
kept is identified in Schedule 1 hereto.
4.13 REQUIRED APPROVALS. No license, consent, permit or approval of
any governmental agency or authority is required to enable the Borrower to enter
into this Agreement or to perform any of its obligations provided for herein
except as disclosed on Schedule 1 hereto and except with respect to regulatory
approvals which may be required in connection with the Lender's enforcement of
certain remedies hereunder.
4.14 ERISA. Each pension plan of Borrower and its Subsidiaries
providing benefits for employees of Borrower or such Subsidiary covered by Title
IV of the Employee Retirement Income Security Act of 1974, as amended, and the
regulations thereto ("ERISA"), is in compliance with ERISA in all material
respects, and no material liability to the Pension Benefit Guaranty Corporation
("PBGC") or to a multiemployer plan has been, or is expected by Borrower or its
Subsidiaries to be, incurred by Borrower or such Subsidiary.
5. CONDITIONS OF LENDING
The Lender shall have no obligation to make the initial Advance to
Borrower hereunder unless, as of the date of Closing, each of the following
conditions precedent shall be satisfied as provided below:
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5.01 LEGAL MATTERS. All legal matters incident to the consummation of
the transactions hereby contemplated shall be satisfactory to counsel for the
Lender and to such local counsel as counsel for the Lender may retain.
5.02 DOCUMENTS. There shall have been delivered to the Lender, fully
completed and duly executed (when applicable), the following, satisfactory to
the Lender and its counsel:
(a) This Agreement and the Note.
(b) Certified copies, satisfactory to the Lender, of all
such corporate documents and proceedings of the Borrower
authorizing the transactions herein contemplated.
(c) A written opinion from Borrower's counsel addressing
such legal matters as the Lender or its counsel shall
reasonably require.
(d) The Borrower shall have (i) executed the Mortgage; (ii)
if any real property is owned by Borrower, recorded a
valid and binding Mortgage granting Lender a first lien
in all real property owned by Borrower; (iii) filed
financing statements in all jurisdictions necessary to
provide Lender a first priority, perfected security
interest in all Collateral which may be perfected by the
filing of financing statements; and (iv) delivered such
other documents as are necessary to create or continue a
perfected security interest in favor of the Lender in
the Collateral.
5.03 GOVERNMENT APPROVALS. The Borrower shall have furnished to the
Lender true and correct copies of all certificates, authorizations and consents,
including without limitation the consents referred to in Section 4.13 hereof,
necessary for the execution, delivery or performance by the Borrower of this
Agreement, the Note and the Mortgage.
5.04 REPRESENTATIONS, WARRANTIES AND MATERIAL CHANGE. At Closing and
at the date of every subsequent Advance hereunder, all covenants,
representations and warranties set forth in this Agreement shall be true and
correct in all material respects on and as of such time with the same effect as
though such covenants, representations and warranties had been made on and as of
such date; no Event of Default specified in Section 8 and no event which, with
the lapse of time or the notice and lapse of time specified in Section 8 would
become such an Event of Default, shall have occurred and be continuing or will
have occurred after giving effect to the Advance on the books of the Borrower;
there shall have occurred no material adverse change in the business or
condition, financial or otherwise, of the Borrower; and nothing shall have
occurred which in the reasonable opinion of the Lender materially and adversely
affects the Borrower's ability to meet its obligations hereunder.
5.05 MORTGAGE FILING. Within ten (10) days of acquiring any real
property, the Borrower shall cause the Mortgage to be duly recorded as a first
mortgage on all real property and the Mortgage or other appropriate
documentation shall have been duly filed, recorded or indexed as a security
interest in personal property wherever the Lender shall have reasonably
requested, all in accordance with applicable law, and the Borrower shall have
caused satisfactory evidence thereof to be furnished to the Lender.
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5.06 SPECIAL CONDITIONS. At Closing and at the time of every
subsequent Advance hereunder, the Lender and its counsel shall be fully
satisfied that the Borrower has complied and will continue to comply with any
special conditions identified in Schedule 1 hereto.
5.07 REQUISITIONS. The Borrower will request Advances in form and
substance satisfactory to the Lender. Pursuant to the terms and conditions
hereof, the Lender will wire the proceeds of the requested Advance to an account
as directed by the Borrower.
6. AFFIRMATIVE COVENANTS
Borrower covenants and agrees with the Lender that, until all of the
Obligations have been paid in full, Borrower will:
6.01 MEMBERSHIP. Remain or an affiliate thereof will remain, a member
in good standing of the Lender.
6.02 FINANCIAL STATEMENTS AND OTHER INFORMATION. Furnish to the
Lender: (a) financial statements as required by the Mortgage; (b) such other
information, reports or statements concerning the operations, business affairs
and/or financial condition of Borrower as the Lender may reasonably request from
time to time; and (c) promptly upon their becoming available information, in
form and substance satisfactory to Lender, notification of any and all changes
or modification of licenses, permits, certifications, approvals and the like
necessary for Borrower to own or operate its business or a substantial part of
its business.
6.03 FINANCIAL RATIOS. Subject to applicable laws and rules and
orders of regulatory bodies, and to events which in the reasonable judgment of
the Lender are beyond the control of the Borrower, so operate and manage its
business as to achieve DSC of not less than 1.25, said ratio being determined by
averaging each of the two highest annual ratios during the three most recent
fiscal years.
6.04 ANNUAL CERTIFICATE. Within one hundred twenty (120) days after
the close of each calendar year, commencing with the year in which the initial
Advance hereunder shall have been made, deliver to the Lender a written
statement signed by the general manager or similar senior presiding officer
stating that to the best of said person's knowledge, the Borrower has fulfilled
all of its Obligations under this Agreement, the Note, and the Mortgage
throughout such year or, if there has been a default in the fulfillment of any
such Obligations, specifying each such default known to said person and the
nature and status thereof.
6.05 USE OF PROCEEDS. Use Advances made hereunder and under the Note
only for the purpose identified in Schedule 1 hereto and for the payment of the
costs, expenses and fees incident to this Agreement and for no other purpose
whatsoever without the prior written consent of the Lender.
6.06 SPECIAL AFFIRMATIVE COVENANTS. During the term hereof, Lender
and its counsel shall be fully satisfied that the Borrower has complied and will
continue to comply with any special affirmative covenants identified in Schedule
1 hereto.
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7. NEGATIVE COVENANTS.
7.01 NOTICE. Borrower covenants and agrees with the Lender that
Borrower will not, directly or indirectly, without giving written notice to the
Lender thirty (30) days prior to the effective date of any change:
(a) Change Location of Chief Place of Business. Change
location of the Borrower's chief place of business.
(b) Change of Name. Change the name of Borrower.
7.02 CONSENT. Borrower covenants and agrees with the Lender that
Borrower will not, directly or indirectly, without the prior written consent of
the Lender:
(a) Control. Alter or permit alteration of control of the
Borrower. Control shall be as defined by regulations for
telephone companies issued by the Federal Communications
Commission ("FCC").
(b) Subsidiaries. Form or acquire any Subsidiaries.
(c) Additional Indebtedness. Borrow money on a secured basis
from any other lender or incur any additional secured
indebtedness; borrow money or incur any unsecured
indebtedness in excess of five percent of total assets;
or enter into or allow any of its Subsidiaries to enter
into any Leases, unless at that time Borrower meets the
Minimum Net Worth Test. If Borrower meets the Minimum
net Worth Test, then Borrower may incur additional
indebtedness or enter into Leases (or allow any of its
Subsidiaries to enter into Leases) without prior written
approval of Lender provided the Borrower meets the
Minimum Net Worth Test after incurring such additional
indebtedness or entering into such Leases; provided,
further, however, Borrower must give at least thirty
(30) days written notice to Lender prior to incurring
any additional indebtedness or entering into such
Leases.
7.03 DIVIDENDS AND OTHER CASH DISTRIBUTIONS. The Borrower will not,
in any one calendar year, without the prior approval in writing of the Lender
(i) declare or pay any dividends or make any other distribution to its
stockholders with respect to its capital stock; (ii) purchase or redeem or
retire any of its capital stock; or (iii) pay any management fees or if already
paying a management fee, pay an increase in management fees unless with respect
to any of the foregoing (after giving effect to such transaction) (a) Borrower
meets the Minimum Net Worth Test and (b) the payment of such dividend, the
making of such distribution, or the purchase, redemption or retirement of such
stock, individually or in the aggregate, does not exceed twenty-five percent
(25%) of the prior fiscal year-end Cash Margins in any one calendar year. In no
event may the Borrower make such a distribution or payment when there is unpaid
any due installment of principal and/or interest on the Note or if the Borrower
is otherwise in material default of any provision of this Agreement or would be
in material default hereunder as a result of such distribution or payment.
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7.04 SPECIAL NEGATIVE COVENANTS. During the term hereof, Lender and
its Counsel shall be fully satisfied that the Borrower has complied and will
continue to comply with any special negative covenants identified in Schedule 1
hereto.
8. EVENTS OF DEFAULT
The occurrence of any one or more of the following events shall
constitute an "Event of Default":
(a) REPRESENTATION AND WARRANTIES. Any representation or
warranty made herein, in any of the Other Agreement or
in any statement, report, certificate, opinion,
financial statement or other document furnished or to be
furnished in connection with this Agreement or the Other
Agreements shall be false or misleading in any material
respect.
(b) PAYMENT. Failure of Borrower to make any of the payment
Obligations, including, without limitation, any sum due
the Lender under this Agreement or any of the Other
Agreements, when and as the same shall become due,
whether at the due date thereof, by demand, by
acceleration or otherwise.
(c) OTHER COVENANTS. Failure, in any material respect, of
Borrower to observe or perform any warranty, covenant or
condition to be observed or performed by Borrower under
this Agreement or any of the Other Agreements.
(d) CORPORATE EXISTENCE. The Borrower shall forfeit or
otherwise be deprived of its corporate charter,
franchises, permits, easements, consents or licenses
required to carry on any material portion of its
business.
(e) OTHER OBLIGATIONS. Default by the Borrower in the
payment when due, beyond any applicable grace period, of
any money owed by the Borrower, whether principal,
interest, premium or otherwise, under any other
agreement for borrowing money in an amount in excess of
5% of total assets, whether or not such borrowing is
secured.
(f) BANKRUPTCY. A court shall enter a decree or order for
relief with respect to the Borrower or any Subsidiary or
guarantor (if any) in an involuntary case under any
applicable bankruptcy, insolvency or other similar law
now or hereafter in effect, or appointing a receiver,
liquidator, assignee, custodian, trustee, sequestrator
or similar official, or ordering the winding up or
liquidation of its affairs, and such decree or order
shall remain unstayed and in effect for a period of
sixty (60) consecutive days or the Borrower or any
Subsidiary or guarantor (if any) shall commence a
voluntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in
effect, or under any such law, or consent to the
appointment or taking of possession by a receiver,
liquidator, assignee,
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custodian or trustee, of a substantial part of its
property, or make any general assignment for the benefit
of creditors.
(g) DISSOLUTION OR LIQUIDATION. Other than as provided in
subsection (f) above, the dissolution or liquidation of
the Borrower or any Subsidiary or guarantor (if any), or
failure by the Borrower or any Subsidiary or guarantor
promptly to forestall or remove any execution,
garnishment or attachment of such consequence as will
impair its ability to continue its business or fulfill
its obligations and such execution, garnishment or
attachment shall not be vacated within sixty (60) days.
(h) FINAL JUDGMENT. A final non-appealable judgment in
excess of $100,000 shall be entered against the Borrower
and shall remain unsatisfied or without a stay for a
period of ninety (90) days.
9. RIGHTS AND REMEDIES
9.01 RIGHTS AND REMEDIES OF THE LENDER. Under the occurrence of an
Event of Default, the Lender may, subject to:
(i) Thirty (30) days prior written notice during which time Borrower
shall have the opportunity to cure said Event of Default except
with respect to Obligations pursuant to 8(b), 8(f) and 8(g)
above which shall require no notice or demand and shall have no
period to cure; and
(ii) compliance, if required, with the rules and regulations of the
FCC and any state public service or utilities commission having
jurisdiction;
exercise in any jurisdiction in which enforcement hereof is sought, the
following rights and remedies, in addition to all rights and remedies available
to the Lender under applicable law, all such rights and remedies being
cumulative and enforceable alternatively, successively or concurrently:
(a) Declare all unpaid principal outstanding on the Note,
all accrued and unpaid interest thereon, and all other
Obligations to be immediately due and payable and the
same shall thereupon become immediately due and payable
without presentment, demand, protest or notice of any
kind, all of which are hereby expressly waived.
(b) Institute any proceeding or proceedings to enforce the
Obligations owed to, or any Liens in favor of the
Lender.
(c) Pursue all rights and remedies available to the lender
that are contemplated by the Mortgage in the manner,
upon the conditions, and with the effect provided in the
Mortgage, including but not limited to a suit for
specific performance, injunctive relief or damages.
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(d) Pursue any other rights and remedies available to the
Lender at law or in equity.
9.02 CUMULATIVE NATURE OF REMEDIES. Nothing herein shall limit the
right of the Lender, subject to notice and right to cure provisions contained
herein, to pursue all rights and remedies available to a creditor following the
occurrence of an Event of Default subject to compliance, if required, with the
rules and regulations of the FCC and any state public service or utilities
commission having jurisdiction. Each right, power and remedy of the lender in
this Agreement and/or the Other Agreements shall be cumulative and concurrent,
and recourse to one or more rights or remedies shall not constitute a waiver of
any other right, power or remedy.
9.03 COSTS AND EXPENSES. Borrower agrees to pay and to be liable for
any and all reasonable expenses, including reasonable attorney's fees and court
costs, incurred by the Lender in exercising or enforcing any of its rights
hereunder or under the Other Agreements, together with interest thereon at the
rate and determined in the manner provided in the Mortgage. Subject to the
Mortgage and applicable law, the Lender may apply all Collateral and proceeds of
all Collateral to the Obligations in any manner which the Lender, in its
reasonable discretion, deems appropriate, and Borrower will continue to be
liable for any deficiency.
9.04 LATE PAYMENT CHARGES. If payment of any principal and/or
interest due under the terms of the Note is not received at the office of the
Lender in Herndon, Virginia, or as the Lender may otherwise designate to the
Borrower, within such time period as the Lender may prescribe from time to time
in its policies in connection with any late payment charges (such unpaid amount
of principal and/or interest being herein called the "delinquent amount" and the
period beginning after such due date until payment of the delinquent amount
being herein called the "late-payment period"), the Borrower will pay to the
Lender, in addition to all other amounts due under the terms of the Note, the
Mortgage, and this Agreement, any late-payment charge as may be fixed by the
Lender from time to time, on the delinquent amount for the late-payment period.
Provided, however, no late payment charge shall exceed an amount equal to the
then prevailing bank prime rate published in the "Money Rates" column of the
Eastern addition of the Wall Street Journal plus three percent (3%) per annum on
the delinquent amount computed over the late-payment period on the basis of a
365-day year.
9.05 LENDER'S SETOFF. The Lender shall have the right, in addition to
all other rights and remedies available to it, to setoff and to recover against
any or all of the Obligations due to Lender, any monies now and hereafter owing
to Borrower by the Lender. Borrower waives all rights of setoff, deduction,
recoupment and counterclaim.
10. MISCELLANEOUS
10.01 PERFORMANCE FOR BORROWER. Borrower agrees and hereby authorizes
that the Lender may, in its sole discretion, but the Lender shall not be
obligated to, advance funds on behalf of Borrower without prior notice to
Borrower, in order to insure Borrower's compliance with any material covenant,
warranty, representation, or agreement of Borrower made in or pursuant to this
Agreement or any of the Other Agreements, to preserve or protect any right or
interest of the Lender in the Collateral or under or pursuant to this Agreement
or any of the Other Agreements, including without limitation, the payment of any
insurance premiums or taxes and
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the satisfaction or discharge of any judgment or any Lien upon the Collateral or
other property or assets of Borrower; provided, however, that the making of any
such advance by the Lender shall not constitute a waiver by the Lender of any
Event of Default with respect to which such advance is made nor relieve Borrower
of any such Event or Default. Borrower shall pay to the Lender upon demand all
such advances made by lender with interest thereon at the rate and determined in
the manner provided in the Note. All such advances shall be deemed to be
included in the Obligations and secured by the security interest granted the
Lender hereunder to the extent permitted by law.
10.02 EXPENSES AND FILING FEES. Whether or not any of the transactions
contemplated hereby shall be consummated, Borrower agrees to pay to the Lender
at Closing or thirty (30) days after the execution and delivery hereof,
whichever is earlier, all expenses of the Lender in connection with the filing
or recordation of all financing statements and instruments as may be required by
the Lender at the time of, or subsequent to, the execution of this Agreement,
including, without limitation, all documentary stamps, recordation and transfer
taxes and other costs and taxes incident to recordation of any document or
instrument in connection herewith. Borrower agrees to save harmless and
indemnify the Lender from and against any liability resulting from the failure
to pay any required documentary stamps, recordation and transfer taxes,
recording costs incurred by the Lender in connection with this Agreement. The
provisions of this Subsection 10.02 shall survive the execution and delivery of
this Agreement and the payment of all other Obligations.
10.03 WAIVERS BY BORROWER. Borrower hereby waives, to the extent the
same may be waived under applicable law: (a) in the event the Lender seeks to
repossess any or all of the Collateral by judicial proceedings, any bond(s) or
demand(s) for possession which otherwise may be necessary or required; (b)
presentment, demand for payment, protest and notice of nonpayment and all
exemptions; and (c) substitution, impairment, exchange or release of any
collateral security for any of the Obligations. Borrower agrees that the Lender
may exercise any or all of its rights and/or remedies hereunder and under the
Other Agreements without resorting to and without regard to security or sources
of liability with respect to any of the Obligations.
10.04 WAIVERS BY THE LENDER. Neither any failure nor any delay on the
part of the Lender in exercising any right, power or remedy hereunder or under
any of the Other Agreements shall operate as a waiver thereof, nor shall a
single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or remedy.
10.05 LENDER'S RECORDS. Every statement of account or reconciliation
rendered by the Lender to Borrower with respect to any of the Obligations shall
be presumed conclusively to be correct and shall constitute an account stated
between the Lender and Borrower unless, within ten (10) Business Days after such
statement or reconciliation shall have been mailed, postage prepaid, to
Borrower, the Lender shall receive written notice of specific objection thereto.
10.06 MODIFICATIONS. No modification or waiver of any provision of
this Agreement, the Note or any of the Other Agreements, and no consent to any
departure by Borrower therefrom shall in any event be effective unless the same
shall be in writing, and then such waiver or consent shall be effective only in
the specific instance and for the purpose for which
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given. No notice to or demand upon Borrower in any case shall entitle Borrower
to any other or further notice or demand in the same, similar or other
circumstances.
10.07 NOTICES. All notices, requests and other communications provided
for herein including, without limitation, any modifications of, or waivers,
requests or consents under, this Agreement shall be given or made in writing
(including, without limitation, by telecopy) and delivered to the intended
recipient at the "Address for Notices" specified below; or, as to any party, at
such other address as shall be designated by such party in a notice to each
other party. Except as otherwise provided in this Agreement, all such
communications shall be deemed to have been duly given when personally delivered
or, in the case of a mailed or telecopied notice, upon receipt, in each case
given or addressed as provided for herein. The Address for Notices of the
respective parties are as follows:
Rural Telephone Finance Cooperative
Woodland Park
0000 Xxxxxxxxxxx Xxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Loan Officer
Fax: 000-000-0000
The Borrower:
The address set forth in
Schedule 1 hereto
10.08 GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY TRIAL
(a) THE PERFORMANCE AND CONSTRUCTION OF THIS AGREEMENT AND THE NOTE
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE
COMMONWEALTH OF VIRGINIA.
(b) BORROWER HEREBY SUBMIT(S) TO THE NONEXCLUSIVE JURISDICTION OF
THE UNITED STATES COURTS LOCATED IN VIRGINIA AND OF ANY STATE COURT SO LOCATED
FOR PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. BORROWER IRREVOCABLY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW
OR HEREAFTER HAVE TO THE ESTABLISHING OF THE VENUE OF ANY SUCH PROCEEDING
BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING HAS BEEN BROUGHT
IN AN INCONVENIENT FORUM.
(c) EACH OF THE BORROWER AND THE LENDER HEREBY IRREVOCABLY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY
JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
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RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
10.09 HOLIDAY PAYMENTS. If any payment to be made by the Borrower
hereunder shall become due on a day which is not a Business Day, such payment
shall be made on the next succeeding Business Day and such extension of time
shall be included in computing any interest in respect of such payment.
10.10 RESCISSION FEE. The Borrower may elect not to borrow all or any
portion of the Loan, in which event the Lender shall release the Borrower from
its obligations hereunder provided the Borrower complies with such terms and
conditions as the Lender may impose for such release including, without
limitation, payment of any rescission fee which shall not exceed fifty (50)
basis points times the amount of the Commitment being rescinded.
10.11 SURVIVAL; SUCCESSORS AND ASSIGNS. All covenants, agreements,
representations and warranties made herein and in the Other Agreements shall
survive Closing and the execution and delivery to the Lender of the Note, and
shall continue in full force and effect until all of the Obligations have been
paid in full. Whenever in this Agreement any of the parties hereto is referred
to, such reference shall be deemed to include the successors and assigns of such
party. All covenants, agreements, representations and warranties by or on behalf
of Borrower which are contained in this Agreement and the Other Agreements shall
inure to the benefit of the successors and assigns of the Lender.
10.12 USE OF TERMS. The use of any gender or the neuter herein shall
also refer to the other gender or the neuter and the use of the plural shall
also refer to the singular, and vice versa.
10.13 SEVERABILITY. If any term, provision or condition, or any part
thereof, of this Agreement or any of the Other Agreements shall for any reason
be found or held invalid or unenforceable by any court or governmental agency of
competent jurisdiction, such invalidity or unenforceability shall not affect the
remainder of such term, provision or condition nor any other term, provision or
condition, and this Agreement, the Note, and the Other Agreements shall survive
and be construed as if such invalid or unenforceable term, provision or
condition had not been contained therein.
10.14 MERGER AND INTEGRATION. This Agreement and the attached exhibits
and matters incorporated by reference contain the entire agreement of the
parties hereto with respect to the matters covered and the transactions
contemplated hereby, and no other agreement, statement or promise made by any
party hereto, or by any employee, officer, agent or attorney of any part hereto,
which is not contained herein, shall be valid or binding.
10.15 COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by different parties hereto on separate counterparts, each of
which, when so executed and delivered, shall be an original, but all such
counterparts shall together constitute one and the same instrument.
10.16 HEADINGS. The headings and sub-headings contained in this
Agreement are intended to be used for convenience only and do not constitute a
part of this Agreement.
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10.17 ASSIGNMENT. The Lender may assign its rights and obligations
under this Agreement and the Other Agreements without the consent of Borrower;
provided, however, that no such assignment shall result in terms or conditions
less favorable to Borrower. The Borrower may not assign any of its rights of
obligations under this Agreement or the Other Agreements without the prior
written consent of the Lender.
10.18 RIGHT TO INSPECT. The Borrower shall permit representatives of
the Lender at any time during normal business hours to inspect and make
abstracts from the books and records pertaining to the Collateral, and permit
representatives of the Lender to be present at Borrower's place of business to
receive copies of all communications and remittances relating to the Collateral,
all in such manner as the Lender may reasonably require.
10.19 CONSENT TO PATRONAGE CAPITAL DISTRIBUTIONS. Borrower hereby
consents that the amount of any distributions with respect to Borrower's
patronage which are made in written notices of allocation (as defined in Section
1388 of the Internal Revenue Code of 1986, as amended ("Code"), including any
other comparable successor provision) and which are received from Lender will be
taken into account by Borrower at their stated dollar amounts in the manner
provided in Section 1385(a) of the Code in the taxable year in which such
written notices of allocation are received.
10.20 FURTHER ASSURANCES. The Borrower will, upon demand of the
Lender, make, execute, acknowledge and deliver all such further and supplemental
indentures of mortgage, deeds of trust, mortgages, financing statements,
continuation statements, security agreements and/or any other instruments and
conveyances as may be reasonably requested by the Lender to effectuate the
intention of this Agreement and to provide for the securing and payment of the
principal of and interest on the Note according to the terms thereof.
10.21 LENDER'S APPROVAL. Wherever prior written approval of Lender is
required under the terms and conditions of this Agreement, Lender hereby agrees
to not unreasonably withhold said approval.
10.22 SCHEDULE 1. Schedule 1 attached hereto is an integral part of
this Agreement.
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IN WITNESS WHEREOF, the parties hereto have executed or caused
to be executed this Agreement under seal as of the date first above written.
ILLUMINET, INC.
By:
-------------------------------------
Title:
----------------------------------
(SEAL)
Attest:
-----------------------------
Assist. Secretary
RURAL TELEPHONE FINANCE COOPERATIVE
By:
-------------------------------------
(SEAL) Title: Assistant Secretary-Treasurer
Attest:
-----------------------------
Assistant Secretary-Treasurer
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SCHEDULE 1
1. The Original Agreements and the current Notes are:
---------------------------------------------------------------------------------------------------
Original Amount
New Loan Original Agreement Note Outstanding SCC Maturity Loan
Number Loan Number Date Amount As of7/30/96 Amount Date Purpose
---------------------------------------------------------------------------------------------------
WA 812-A-01 WA 800-A-01 6/15/90 $4,996,670 $4,328,087.27 $499,670 6/15/2010 Headquarters
construction
---------------------------------------------------------------------------------------------------
WA 812-A-02 WA 806-A-02 3/9/95 $1,167,111 $1,140,879.64 $116,711 3/9/2015 Acquisition
of real
property/
operating
capital
---------------------------------------------------------------------------------------------------
XX 000-X-00 XX 806-A-03 3/9/95 $1,504,444 $1,470,631.26 $150,444 3/9/2015 Operating
capital
---------------------------------------------------------------------------------------------------
XX 000-X-00 XX 801-A-03 10/9/95 $3,078,947 $2,799,158.60 $153,947 10/9/2000 Refinance
Northern
Telecom debt
---------------------------------------------------------------------------------------------------
WA 812-A-05 WA 801-A-04 10/9/95 $4,689,474 $ 842,105.00 $234,474 10/9/2000 Finance SS7
Network
expansion
---------------------------------------------------------------------------------------------------
WA 812-A-06 -- -- $3,894,737 -0- $194,737 5 years Finance
from equity
even investment
date in
herewith Authentix,
Inc. and
capital
expenses for
a cellular
fraud
prevention
service
---------------------------------------------------------------------------------------------------
The "Commitment" shall mean the Note amount for each particular Note referenced
above.
2. The Mortgage is the Consolidated Mortgage and Security Agreement by and
between Borrower and Lender dated as of even date herewith.
3. The months relating to the Payment Date are March, June, September and
December.
4. The method of amortization referred to in Section 2.03 shall be based
upon the level debt service method for all of the Notes issued
hereunder.
5. The date of Borrower's financial statement referred to in Section 4.06
is June 30, 1995 for ITN and December 31, 1995 for USIH.
6. The chief place of business referred to in Section 4.12 and the address
of the Borrower referred to in Section 10.07 is 0000 Xxxxxxx Xxxx, X.X.
Xxxxxxx, XX 00000.
7. The government authorities referred to in Section 4.13 are not
applicable.
8. The special conditions referred to in Section 5.06 are not applicable.
9. The special affirmative covenants referred to in Section 6.06 are not
applicable.
10. The special negative covenants referred to in Section 7.04 are not
applicable.
