20021027RUS_RTB Loan Information 10-27-02.pdf

GIVE P SLEY LLP CASE REOPENED
LAW OFFICES Gary G.Allen D o Michael C.Orr601W.BannockStreet Christopher J.Beeson Emily A.MacMaster Kenneth L.PursleyPOBox2720,Boise,Idaho 83701 Jessica M.Borup KimberlyD.Maloney Bradley V.SneedTELEPHONE:208 388-1200 William C.Cole John M.Marshall H.BartonThomasFACSIMILE:208388-1300 Michael C.Creamer KennethR.McClure Conley E.WardWEBSITE:www.givenspursley.com Thomas E.Dvorak Kelly Greene McConnell Michael V.WoodhouseRoyLewisEigurenCynthiaA.Melillo Robert B.WhiteTimothyP.Feamside Christopher H.Meyer
JeffreyC.Fereday Kendall L Miller RaymondD.GivensStevenJ.Hippler L.EdwardMiller James A.McClure
Kad T.Klein Patrick J.Miller StephanieC.WestermeierViaHandDeliveDeboraK.Kristensen Judson B.Montgomery OFCOUNSEL
Anne C.Kunkel Angela K.Nelson
FranklinG.Lee DeborahE.Nelson John A.Miller.LL.M.*
October 27,2003 David R.Lombardi W.Hugh O'Riordan
Terri Carlock e oSemorAccountantFS -rnId7a2hoPublascUtlitiesCommission
P.O.Box 83720 -OcBoise,ID 83720-0074
Re:Albion TelephoneCompany-RUS/RTBLoan
Our File No.5261-3
Dear Terri:
As we discussed this morning,I am enclosing information concerning the RUS/RTB loantoAlbionTelephoneCompany.In order 29058,the Commission approved a loan from RUS toAlbioninanamountnottoexceed$15,000,000.The enclosed documentation indicates thattherewillbethreeloans,in an aggregate amount of $13,901,150-twofrom RUS and one fromRTB.We would like a clarification of the Commission's order to the effect that Albion mayexecutetheloandocumentsaspresentedbyRUS/RTB.Please call me if I can provide you withanyadditionalinformation.
Thank you in advance for you assistance.
Si c
Enclosures
MCC:kdt S:\CLIENTS\5261\3\MCCLtr to Terri Carlock re Clarification of Order &Loan Docs.DOC
United States Department of Agriculture
Rural Development
Aural Business-Cooperative Service Rural Housing ServiceRural Utilities Service
Washington,DC 20250
0CT 2 1 2003
Mr.O'Deen K.Redman
President
Albion Telephone Company
P.O.Box 98
Albion,Idaho 83311
Dear Mr.Redman:
Enclosed are six copies of the Restated Mortgage,Security Agreement and Financing Statement (the
"mortgage")along with other documentsand instructions relative to your organization's "H"and "K"
loans in the amount of $7,500,000 for hardship funds made by the Rural Utilities Service (RUS)and
concurrent loans in the amounts of $4,046,000made by RUS and $2,355,150made by the Rural
Telephone Bank (Bank).The executed counterparts will be sent to you by CoBank,along with their
instructions.We indicated in our letters dated September27,2002,and March 12,2003,announcingapprovalofthe"H"and "K"loans that we would specify the date by which the telephoneloan contract is
to be executed,authorized and returned to us.That date is 60 days from the date of this letter.
Please note the section in the loan contract which specifies that loan funds advancedto your organization
are to be held in trust for the Government and promptly depositedinto a special construction account.It
is of the utmost importance that loan funds be used only for the purposes and in the amounts approvedby
the RUS as set forth in the financial requirement statement.
Three 18-yearnotes covering these loans in the total amount of $13,901,150 are enclosed for execution.
The terms of the notes provide for monthly principal payments beginning two years after the date of the
notes.Please proceed with fulfillment of the loan contract requirements so that loan funds can be released
for approvedloan purposes with a minimum of delay.Again,observethe abovedate for return of the
loan contract.
We will be pleased to answer any questionsyou may have concerning these loans.
Sincerel ,
JERR .BRENT,Director
North est Area
Telecommunications Program
Rural Utilities Service
Enclosures
Aural Developmentis an Equal Opportunity LanderComplainisofdiscriminadonshouldbesentto:
secretary of Agriculture,Washington,oc 20250
RUS Project Designation:
IDAHO 504-Hl2 &Kl1 ALBION
AMENDING TELEPHONE LOAN CONTRACT
Dated as of November3,2003
among
ALBION TELEPHONECOMPANY,
UNITED STATES OF AMERICA
and
RURAL TELEPHONEBANK
UNITED STATES DEPARTMENTOF AGRICULTURERURALUTILITIESSERVICE
NO .Generated:October 14,2003 6.51
AGREEMENT,made as of November3,2003,pursuant to the RuralElectrificationActof1936,as amended (7 U.S.C.901 et seg.,hereinafter called the"Act"),among ALBION TELEPHONECOMPANY(hereinafter called the "Borrower"),a corporation existing under the laws of the State of Idaho,UNITED STATES OFAMERICA(hereinaftercalled the "Government"),acting through the Administrator oftheRuralUtilitiesService(hereinafter called the "Administrator"),and RURALTELEPHONEBANK(hereinafter called the "Bank"),a corporation existing under thelawsoftheGovernment,acting through the Governorof the Bank (hereinafter called the"Governor").
WHEREAS,pursuant to Public Law No.103-354,the Rural Utilities Service (hereinaftersometimescalled"RUS")is the successor to the Rural Electrification Administration (hereinafter sometimes called"REA")and the Administrator of the Rural Utilities Service is the successor to the Administrator of the RuralElectrificationAdministrationand,for the purposes of the PriorLoan Contract (hereinafter defined),as amended,theterms"REA"and "Administrator"shall be deemed to mean respectively "RUS"and "Administrator of the RUS";and
WHEREAS,the Borrowerhas heretofore entered into a certain telephone loan contract,amendingtelephoneloancontract,consolidating telephone loan contract,or consolidating and amending telephone loancontract,dated as of April 5,1954,with the Bank,the Government,or the Bank and the Government (suchagreement,as it may have been amended,being hereinafter called the "Prior Loan Contract");and
WHEREAS,pursuant to the Prior Loan Contract the Borrowerand/or its predecessor(s)in interesthaveheretoforeborrowedfundsfromtheGovernmentintheaggregateprincipalamountof$4,130,000.00(hereinaftercalled "Prior RUS Loan"),from the Bank in the aggregate principal amount of $0 (hereinafter called the"Prior Bank Loan"),except such portionof the Prior Bank Loan used for the purchase of Class B stock of the Bank,and from the Federal Financing Bank (hereinafter called "FFB"),a body corporate and instrumentality of theGovernment,in the aggregate principalamount of $0 (hereinafter called the "Prior FFB Loan",and together with thePriorRUSLoanandthePriorBankLoanbeinghereinaftercollectivelycalledthe"Prior Loans"),the Prior FFBLoanbeingguaranteedbytheGovernmentpursuanttotheAct,to finance pursuant to the provisions of the Act,theimprovementsandoperationoftheinitialtelephonefacilitiesownedandoperatedbytheBorrowerand/or itspredecessor(s)in interest (hereinafter called the "Existing Facilities");and
WHEËEAS,the parties to this agreement and the parties to the PriorLoan Contract desire toamendthePriorLoanContractincertainrespects,and it is intended that the entire agreement among such parties,containing such amendments and coveringthe terms upon which the "Loan"(hereinafter defined)shall be made andexpanded,shall be expressed in this agreement,except to the extent such parties have heretofore performedobligationsunderthePriorLoanContractinaccordancewiththetermsthereofandexceptasmayhereinafterotherwisebeprovided;and
WHEREAS,it is intended that the Borrowershall use the proceeds of the loan(s)as providedforinsection1.1 of this agreement to finance partially the improvement and operation of the Existing Facilities,aspreviouslyexpandedandaddedtobyfacilitiesfinancedwiththeproceedsofthePriorLoans,and the constructionandoperationofadditionaltelephonefacilitiestoserveapproximatelyfivehundredseventeensubscribersinadditiontothosenowbeingserved(the improvements and additional telephone facilities so financed being hereinaftercollectivelycalledthe"Project",and the Existing Facilities,as the same has previouslybeen expanded and added to,and as improvedand added to by the Project or otherwise,being hereinafter called the "System");and
WHEREAS,it is contemplated that the amounts of such loans may be increased from time to timeforpurposespermittedbytheprovisionsoftheAct,as from time to time amended,and upon the terms andconditionscontainedinthisagreement,as from time to time amended (the RUS Concurrent Loan,the RUS HardshipLoanandtheGuaranteedLoan(to be made to the Borrowerby FFB),all as providedfor in section l.1 of thisagreement,and any such increases in the amounts thereof,and together with the Prior RUS Loan and the Prior FFB
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Loan,being hereinafter collectivelycalled the "RUS Loan",the Bank Concurrent Loan as provided for in section 1.1ofthisagreementandanysuchincreasesintheamountthereof,and together with the Prior Bank Loan,beinghereinaftercollectivelycalledthe"Bank Loan",and the RUS Loan and the Bank Loan being hereinafter collectivelycalledthe"Loan");and
WHEREAS,the Government and the Bank,in determining to enter into this agreement,have reliedupontherepresentationoftheBorrowertothemthatitiswillingtofurnishadequatetelephoneservicetothewidestpracticablenumberofpersonsinruralareaswhomitispossibletoserve,and the Borrowerhas agreed to do so ashereinafterprovided;
NOW,THEREFORE,for and in consideration of the mutual agreements herein contained,theBorrower,the Government and the Bank agree as follows:
ARTICLE I
LOAN,NOTES AND SECURITY
SECTION1.1.RUS Concurrent Loan:For the purposes providedin section 305(d)(2)(A)of theAct(7 U.S.C.§935(d)(2)(A)),the Government shall lend and the Borrowershall borrownot in excess of$4,046,000.00 to partiallyfinance the Project.
Bank Concurrent Loan:For the purposes providedin section 408(a)(2)of the Act (7 U.S.C.§948(a)(2)),the Bank shall lend and the Borrower shall borrownot in excess of $2,355,150.00,(1)to partiallyfinancetheProjectand(2)to purchase Class B stock from the Bank for $112,150.00.
RUS Hardship Loan:Pursuant to section 305(d)(l)of the Act (7 U.S.C.§935(d)(1)),theGovernmentshalllendandtheBorrowershallborrownotinexcessof$7,500,000.00 to partially finance the Project.RUS Hardship Loan funds shall be used for the purposes providedin section 201 of the Act (7 U.S.C.§922).
Guaranteed Loan -FFB shall lend and the Borrowershall borrownot in excess of $0,therepaymentofwhichshallbeguaranteedbytheGovernmentpursuanttosection306oftheAct(7 U.S.C.§936),topartiallyfinancetheProject.
SEC.1.2.Notes.The debt created by the RUS Loan shall be evidenced by notes previouslyexecutedbytheBorrowerand/or its predecessor(s)in interest to evidence the Prior RUS Loan and the Prior FFBLoanandtobeexecutedbytheBorrower,payable to the order of the Government or payable to FFB,as the casemaybe.The debt created by the Bank Loan shall be evidenced by notes previouslyexecuted by the Borrowerand/oritspredecessorsininteresttoevidencethePriorBankLoanandtobeexecutedbytheBorrowerpayabletotheorderoftheBank(the notes evidencingthe PriorRUS Loan and the Prior FFB Loan and the notes payable to the order oftheGovernmentorpayabletoFFB,as the case may be,and any notes executed and delivered to refund,or insubstitutionfor,such notes being hereinafter collectivelycalled the "RUS Notes",and the notes evidencing the PriorBankLoanandthenotespayabletotheorderoftheBankandanynotesexecutedanddeliveredtorefund,or insubstitutionfor,such notes being hereinafter collectively called the "Bank Notes",and the RUS Notes and the BankNotesbeinghereinaftercollectivelycalledthe"Notes").The Notes shall be in formand substance satisfactory to theAdministrator.Interest shall accrue on the principal of each Note only in respect of amounts which shall have beenadvancedtotheBorrowerfromtimetotimeonaccountoftheLoan,shall have been charged against such Note andshallremainunpaid.
The Loans providedfor in section 1.1 of this agreement shall bear interest as follows:
RUS Concurrent Loan -Each advance of funds included in the RUS Concurrent Loan shall bearinterestatthe"Cost-of-MoneyInterest Rate"determined by the Government pursuant to section
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305(d)(2)(A)of the Act (7 U.S.C.§935(d)(2)(A))and the implementing regulations,as amended from time
to time (7 C.F.R.§l735.31(c)).
Bank Concurrent Loan -Each advance (a "Bank Concurrent Loan Advance")of funds included in
the Bank Concurrent Loan shall bear interest at the various rates determined by the Bank for that Bank
Concurrent Loan Advance in accordance with section 408(b)(3)of the Act (7 U.S.C.§948(b)(3)),and the
implementing regulations,as amended from time to time (7 C.F.R.1610.10).
RUS Hardship Loan -Each advance of funds included in the RUS Hardship Loan shall bear
interest at the rate of five per cent per year.
Guaranteed Loan -Each advance (a "Guaranteed Loan Advance")of funds included in the
Guaranteed Loan shall bear interest at the rate established by FFB at the time such Guaranteed Loan
Advance is made on the basis of the determination made by the Secretary of the Treasury pursuant to
section 6(b)(12 U.S.C.§2285(b))of the Federal Financing Bank Act of 1973,as amended (12 U.S.C.
§2281el_seI.).
SEC.1.3.Loan Closing.The parties may from time to time determine by agreement the amountrequiredtoenabletheBorrowertoperformitsobligationshereunder.If any reduction in the maximum amount of
the RUS Loan or of the Bank Loan is thus agreed upon,the Administratorshall cause such one or more of the Notes
as may be agreed upon,to be appropriately credited with an amount equal to such reduction,and the principal
amount of such Note or Notes shall,for the purposes of this agreement,be deemed to be correspondingly reduced.
When the Administrator and the Borrowershall agree that no furtherfunds are required to be advanced on accountoftheRUSLoanortheBankLoan,as the case may be,in order to enable the Borrower to perform its obligations
hereunder to the Government or the Bank,the Administrator shall execute and deliverto the Borrower a loan closing
certificate (hereinafter called the "loan closing certificate")which shall,among other things,specify the date of the
closing of the RUS Loan or the Bank Loan,as the case may be,and the amount of the unpaid principal of and any
accrued interest on each of the RUS Notes or the Bank Notes,as appropriate.
SEC.1.4.Security.The Notes shall be secured by a security instrument (hereinafter called the"Mortgage"),in form and substance satisfactory to the Administrator,covering all the property of the Borrowernow
owned or hereafter acquired,as supplemented by such supplemental mortgages,deeds of trust,supplemental deeds
of trust,chattel mortgages or additional chattel mortgages and by such other action on the part of the Borroweras
may be required to confirm,fully convey,preserve or renew the lien of the Mortgage as security for the Notes and toeffectuatetheintentiontothesepresentsthattheMortgageshallcoverallpropertyoftheBorrower,whether now
owned or hereafter acquired (any such supplemental mortgage,supplemental deed of trust,supplemental oradditionalchattelmortgage,and any such other action,as the case may be,being hereinafter called a "supplementalmortgage").
ARTICLE II
ADVANCES AND DISPOSITIONOF FUNDS
SECTION 2.1.Prerequisites to Advances.(A)Neither the Government nor the Bank shall be
under any obligation to advance funds from time to time on account of the RUS Loan or the Bank Loan,as the case
may be,unless and until the Borrowershall have delivered to the Administrator and the Governor,in form and
substance satisfactory to them,the following:
(a)one or more of the Notes,the Mortgage,and such supplemental mortgages as may be required
pursuant to section 1.4 hereof,all duly executed and accompanied by proofof the due recordation and filingoftheMortgageandanysupplementalmortgageinsuchplacesasmayberequiredbylawinorderfullytoperfectandmaintainthelienoftheMortgageandanysupplementalmortgage;
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(b)evidence of appropriate corporate action authorizing the execution and deliveryof the Notes,the Mortgage,and any supplemental mortgage and amendment to this agreement;
(c)evidence that the Borrowerhas duly registered when and where required by law with all state,Federal and other public authorities and regulatory bodies and obtained therefrom all authorizations,certificates,permits,and approvals to the extent required by law in order to enable the Borrowerto enterintothisagreement,to execute and deliverthe Notes,the Mortgage,and any supplemental mortgage andamendmenttothisagreement;to construct and operate the System,and to perform all other acts to beperformedbyithereunder;
(d)evidence that the Borrowerhas duly adopted a tariff which (1)will providefor such grades ofserviceastheAdministratormayapprove,(2)does not include mileage or zone charges for any telephoneserviceprovidedbytheProjectand(3)is designed to produce net income or margins before interest butaftertaxesinanamountatleastgreatenough,when dividedby the amount of the interest requirements onalloftheBorrower'soutstanding and proposed loans,to produce the ratio required by section 2.8 hereof;
(e)evidence that there has been no substantial adverse change in the Borrower's financialconditionorplantsincethedateofthelastfinancialstatementsubmittedbytheBorrowertotheAdministratorandtheGovernor;
(f)evidence that the Borroweris not involvedin or threatened with any litigation which maysubstantiallyandadverselyaffecttheBorrower's financial condition and that there are no liens or clouds ontitleexcepttheliensoftheMortgageandanyunderlyingsecurityinstrumentsreferredtointheMortgageandanysupplementalmortgageonanyofitsproperty;
(g)evidence that the Borrowerhas duly adopted articles of incorporation and bylaws in form andsubstanceadequatetoenabletheBorrowertoperformallactstobeperformedbyithereunder;
(h)such opinions as the Administrator and the Governormay require,by counsel (who may be amemberoftheBorrower's legal staff,if any,or an attorney regularly employed by the Borrower)selectedbytheBorrowerandapprovedbytheAdministratorandtheGovernor;and
(i)evidence that the Borrowerhas good and marketable title to the Existing Facilities,subject onlytothelienoftheMortgageandanyunderlyingsecurityinstrumentsreferredtointheMortgage,and holdssuchfranchises,permits,leases,easements,rights,privileges,licenses or right-of-wayinstruments,reasonably adequate in form and substance,as may be required by law for the continued maintenance andoperationoftheExistingFacilities,and every part thereof,in their present location.
(B)Notwithstanding the provisions set forth in (A)above of this section 2.1 the Government shallnotcausetobeadvancedanyfundsonaccountofanyGuaranteedLoanunlessanduntilthefollowingspecialconditionsapplicabletotheGuaranteedLoanhavebeensatisfied:
(a)the Government,acting through the Administrator,has entered into a contract with FFB andFFBhasagreedtomaketheBorrowertheGuaranteedLoan;
(b)the Borrowerhas submitted evidence to the Administrator,in form and substance satisfactorytohim,that conditions in the contract of guarantee referred to in subsection (a)above have been satisfied totheextentandinthemannerprescribedbytheAdministrator;and
(c)the Borrowerhas duly authorized,executed and has delivered to the Administrator apromissorynotepayabletoFFBintheamountoftheGuaranteedLoanandareimbursementnote payable totheorderoftheGovernmentinthemannerprescribedbytheAdministrator.
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(C)The first advance of funds on account of the RUS Concurrent Loan,the Bank Concurrent Loanand/or any RUS Hardship Loan and/or any Guaranteed Loan providedfor in section 1.1 of this agreement shallinclude,but shall not be limited to:
(a)an amount to be determined by the Administrator for the cost of preloan engineering services(as such term is defined at 7 C.F.R.Section 1753.15);and
(b)an amount to be determined by the Administrator for costs of construction which wereincurredsubsequenttoAprilII,2002,and which have been approved by the Government and the Bank;
(c)an amount for the purchase of any applicable Class B stock of the Bank.
Thereafter no further advances of funds shall be made unless and until the Borrowerhas furnished evidence to theAdministrator,in form and substance satisfactory to him,that all indebtedness incurred for any interim constructionreferredtoinsubsection(b)above has been paid in full and any associated liens have been duly discharged ofrecord.
SEC.2.2.Requisitions.The Borrowershall from time to time submit to the Administratorrequisitions,on forms furnished by the Administrator,requesting advances on account of the Loan.Each requisitionshallbeaccompaniedbythefollowing:
(a)evidence that the construction of the Project effected to the date of the requisition complieswiththeprovisionshereof;
(b)a certificate signed by a duly authorized officer or employee of the Borrower,which shallspecifyallpaymentsnotpreviouslyaccountedfortheretoforemadebytheBorrowerfromfundsin'theSpecialConstructionAccountprovidedforinsection2.4 liereof;
(c)a statement,on a form to be furnished by the Administrator,setting forth the purposes forwhichitisintendedtherequestedadvancewillbeusedbytheBorrower;and
(d)such additional information,opinions,documents,and proofs relating to the construction oftheProject,the expenditure of Loan funds and the security for the Loan,as may reasonably be requested bytheAdministrator.
SEC.2.3.Advances.Loan funds shall be advanced to the Borroweronly if the Borrowerhas (1)complied with section 2.1 hereof and all other conditions precedent to advance of Loan funds,(2)furnished theAdministratorwitharequisitionandaccompanyingdocumentscomplyingwithsection2.2 hereof and (3)notifiedtheAdministratorwhethersuchLoanfundsaretobeadvancedonaccountoftheRUSLoan,the Bank Loan,or both.Within a reasonable time thereafter,the Government or the Bank,or both,as requested by the Borrower,shalladvanceLoanfundstotheBorrowersufficientintheaggregateforsuchofthepurposesspecifiedinthestatementaccompanyingtherequisitionastheAdministratorshallapprove.The Administratormay at any time,as a conditiontomakinganyadvanceonaccountoftheLoan,require compliance by the Borrowerwith any one or more of thecovenants,terms or conditions of this agreement and any amendment thereto to be performed by the Borrower.Neither the Government nor the Bank shall be obligated to make advances on account of a loan after the date of theclosingofsuchloanspecifiedinaloanclosingcertificate.
At the time of each advance of Bank Loan funds,the Borrowershall purchase Class B stock of theBankinanamountequaltofivepercentoftheamountofBankLoanfundsadvanced,exclusive of the amountadvancedforClassBstock.The Borrowermay purchase the Class B stock with either (1)non-Loan funds or (2)funds included in the Bank Loan.If the initial Bank Loan or any additional Bank Loan includes funds for thepurchaseofClassBstock,each advance of such Bank Loan funds shall include an appropriate amount to purchase
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Class B stock.Evidence of such purchase in such form as the Bank may prescribe shall be promptly issued to theBorrower.
SEC.2.4.Special Construction Account.The Borrowershall promptly deposit all moneysadvancedtoitbytheGovernmentortheBankhereunderinaspecialconstructionaccount(hereinafter called"Special Construction Account")in a bank,institution or other depository,which shall meet the requirementsspecifiedinsection4.3 hereof,and shall hold such moneys in trust for the Government and the Bank as theirinterestsmayappearuntildisbursed.Any Special Construction Account shall be designated by the corporate nameoftheBorrower,followedby the words "Trustee,RUS Construction Fund Account".All Loan funds in any SpecialConstructionAccountshallbeusedsolelyforthepurposesspecifiedinsection1.1 hereof.Moneys in any SpecialConstructionAccountmaybewithdrawnonlyuponchecks,drafts or orders signed on behalf of the Borrower.TheBorrowershallexpendeachadvanceonaccountoftheLoanonlyforsuchofthepurposesspecifiedinthestatementofpurposesaccompanyingtherequisitionforsuchadvanceasshallhavebeenapprovedbytheAdministrator.
SEC.2.5.Unexpended Loan Funds.Any funds advanced on account of the RUS Loan or onaccountoftheBankLoanremaininginanySpecialConstructionAccountupontheclosingofsuchloanshallbeforthwithremittedtotheGovernment,if such unexpended funds were advanced on account of the RUS Loan,or totheBank,if such unexpended funds were advanced on account of the Bank Loan.A credit in the amount of suchremittanceshallbeallowedagainstsuchoneormoreoftheRUSNotesortheBankNotes(depending upon whethertheunexpendedadvancesweremadeonaccountoftheRUSLoanortheBankLoan)as shall be agreed upon by theAdministratorandtheBorrower.
SEC.2.6.Compliance with Restrictions on Use of Materials.No advances will be made onaccountoftheLoanfortheconstructionofanypartoftheProjectwithrespecttowhichtheBorrowershallhavefailedtosubmittotheAdministratorandtheBanksatisfactoryevidencethattheBorrowerhasobtainedfromtheappropriateagencyoragenciesoftheGovernmentallnecessaryordersorapprovalswithrespecttotheuseofthematerialsrequiredfortheconstructionofsuchpartoftheProject.No construction shall be undertaken except inaccordancewithauthorizationsorregulationsofanysuchagencyoragencieshavingjurisdictioninthepremises.
SEC.2.7.Loan Rescissions.The Borrowermay request rescission of all or part of theunadvancedportionoftheRUSLoanortheBankLoanatanytime.The Administratoror the Governor,as the casemaybe,shall comply with such request if the Borrowerdemonstrates,to the satisfaction of the Administrator or theGovernor,that (1)the purposes intended to be financed by the unadvanced Loan funds have been completed,(2)sufficientfunds are available from non-governmental sources to complete such purposes,or (3)the Loan funds beingrescindedarenolongerrequiredtoextendorimprovetelephoneserviceinruralareas.The Administrator or theGovernor,as the case may be,shall not initiate rescission of the unadvanced portion of the RUS Loan or the BankLoan,unless all of the purposes for which telephone loans have been made to the Borrowerunder the Act have beenaccomplishedwithfundsprovidedundersuchAct.Loan funds that have been rescinded are no longer available totheBorrower.
SEC.2.8.Tariff.(a)The Borrowershall,during the period ending on December 31,2005(hereinafter called the "Forecast Period")(1)seek and use its diligent best efforts to obtain all regulatory bodyapprovalsnecessarytoplaceineffectandthereaftertomaintainineffectatariffwhich(i)provides for such gradesofserviceastheAdministratorshallapprove,(ii)does not include mileage or zone charges for any telephone serviceprovidedbytheProject,and (iii)is designed to produce net income or margins,before interest but after taxes,insuchamountsthatwhendividedbytheamountofinterestrequirementsonalloftheBorrower's outstanding andproposedloans,produces a ratio of at least 1.0,and (2)place such tariff into effect as soon as permitted byapplicablelawsandregulations.The Borrowershall use its diligent best efforts to obtain all necessary regulatorybodyapprovalsofsuchrevisionsofitstariffasmaybenecessaryfromtimetotimetosatisfytherequirementsofthisprovision.
(b)The Borrowershall continue to comply with the requirements of this provision after theForecastPeriodexceptthattheratiorequiredby(a)above shall be changed to 1.50.
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(c)The Borrowershall providethe Administrator with evidence,in form and substancesatisfactorytohim,that the Borroweris in full compliance with this section 2.8 whenever the Administrator shall sorequest.
ARTICLE III
CONSTRUCTION
SECTION3.1.Laborand Materials Contract.The Borrowershall cause the Project to beconstructedunderlaborandmaterialscontractbyaresponsiblecontractororcontractorsselectedbytheBorrowerandapprovedbytheAdministrator,except to the extent that the Administratormay in writing authorize othermethodsofconstruction.The Borrowershall keep accurate and detailed records of all costs and expenses inconnectionwithconstructionoftheProject.
SEC.3.2.Commencement and Completion.The Project shall be constructed in accordance withtheapprovedplansandspecificationshereinafterprovidedfor,the provisions of this agreement and all contracts andsubcontractsmadepursuanthereto.Construction of the Project or any portion thereof shall be commenced promptlyaftertheAdministratorshallhavenotifiedtheBorrowerofapprovaltocommencesuchconstruction,and theBorrowershallcausesuchconstructiontobeprosecuteddiligentlyandtobecompletedwithinareasonabletime,unless prevented from so doing by causes beyond the control and without the fault or negligence of the Borrower.The Borrowershall cause the Project to be completed in such manner that the System shall be free and clear of allliensandlawfulclaimsforliensexcepttheliensoftheMortgageandanysupplementalmortgage.
SEC.3.3.Bidding.The Borrowershall invite bids for construction of outside plant and buildings,for installation of station equipment,and for purchase and installation,or either,of central office equipment,included in the Project,unless otherwise authorized in writing by the Administrator.The Borrowershall open allbidspubliclyatthetimeandplacewhichshallhavebeenspecifiedinthenoticetobidders,after reasonable priorwrittennotificationofsuchtimeandplacehasbeengivenbytheBorrowertotheAdministrator.The Borrowershallawardeachcontracttothelowestresponsiblebidder,unless all bids are rejected.
SEC.3.4.Inspection by Administrator.The Administratormay inspect the construction andequipmentoftheProject,and shall have the right to examine and test all work and materials,and the BorrowershallprovidereasonablefacilitiesthereforfortheuseoftheAdministratorandhisagents.The Administrator may rejectanydefectivematerialorworkmanshipandrequirethatanysuchmaterialshallbereplacedwithpropermaterialandthatanysuchworkmanshipshallbecorrected,to the end that all material and workmanship shall conform with theapprovedplansandspecificationshereinafterprovidedfor.
SEC.3.5.Certificates and Maps.The Borrowershall,at the request of the Administrator,furnishtotheGovernmentandtheBank:(a)such certificates of the approved engineer and of the officers and employees oftheBorrowerastheAdministratorshallreasonablyrequirewithrespecttoconstructionoftheProject,or any portionthereof,and the cost thereof;(b)a complete inventoryby construction units,in sufficient detail to reflect accuratelyallconstructioncosts,and a description of the Project,or any portion thereof;and (c)a map or maps,in the sameformascontainedintheapprovedplansandspecificationshereinafterprovidedfor,corrected to show actuallocationsandclassificationsofallexchanges,lines and other properties of the Borrowerexcept those,if any,notdirectlyconnectedwiththeProject.
ARTICLE IV
PARTICULAR COVENANTS
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SECTION4.1.Appointments by Borrower.The Borrowershall designate:(a)one or moreengineerswhoshallperformtheengineeringservicesinvolvedintheconstructionoftheProjectortheseveralportionsthereof,and execute all certificates and other instruments pertaining to engineering details requiredhereundertobedeliveredtotheAdministrator;and (b)a person (who may be regularly employed by the Borrower)who,subject to the general policies fixed by the board of directors for the conduct of the Borrower's business,shallhaveactivechargeofthemanagementandoperationsoftheBorrower(hereinafter called the "Manager").PersonssodesignatedbytheBorrowershallbesubjecttotheapprovaloftheAdministrator;providedthat if any such personisdisapprovedbytheAdministrator,the Administrator shall notify the Borrowerin writing of the reasons why thedesignatedpersonisdeemednotqualifiedtoperformtheproposeddutiesproperly;and providedfurtherthat theAdministrator's approval shall not be required for a person designated as the Manager by the Borrowerif,for each ofthefiveyearsimmediatelyprecedingsuchdesignation,the Borrowerhas owned and operated the Existing FacilitiesandhasnothadadeficitinnetincomeornetmarginsasdeterminedinaccordancewithmethodsofaccountingprescribedbythestateregulatorybodyhavingjurisdictionovertheBorrower,or in the absence of such regulatorybodyorsuchprescription,by the Federal Communications Commission.
SEC.4.2.Submission of Plans,Specifications and Contracts With Third Parties.The Borrowershallsubmit,when requested by the Administrator and subject to the Administrator's approval:
(a)a contract or contracts with one or more approved engineers for all necessary engineeringservicesinconnectionwiththeconstructionoftheProject;
(b)plans and specifications for the construction of each portionof the Project,identifiedby thesignaturesoftheapprovedengineerforsuchportionorportions,and of a duly authorized and responsibleofficeroremployeeoftheBorrower;
(c)a contract or contracts for the construction of outside plant and buildings,for installation ofstationequipment,and for purchase and installation,or either,of central office equipment,included in theProject,together with any contractor's or subcontractor's bond relating thereto;
(d)a contract or contracts for such toll traffic and operator assistance services,to be furnished byconnectingcompanies,as may be necessary for the proper operation of the System;provided,however,thattheAdministrator's approval shall not be required for any such contract or contracts,submitted to theAdministrator,which in form and substance conform with contracts in general use in the telephone industry;
(e)a contract or contracts for the purchase by the Borrowerof materials,equipment and suppliesforuseinconnectionwiththeProject;
(f)a contract or contracts for the purchase,lease,or other acquisition of land for use in connectionwiththeconstructionoroperationoftheSystem;and
(g)a contract or contracts for extended area service to be providedby or for other companies,asmaybenecessaryfortheproperoperationoftheSystem.
SEC.4.3.Deposit of Funds.The Borrowershall not deposit or allow to remain on deposit any ofitsfunds,regardless of the source thereof,in any bank,institution or other depository which is not fully insured bytheFederalgovernment.The Borrowershall inform the Administrator of the names of the banks,institutions orotherdepositorieswhichithasselectedfordepositofitsfunds.
SEC.4.4.Easements and Permits.The Borrowershall submit to the Government and the Bank,when requested by the Administrator,evidence satisfactory to the Administrator that the Borrowerhas obtained sucheasementsfromlandownersandreleasesfromlienorsandsuchfranchises,authorizations,permits,licenses,certificates of convenience and necessity,approvals,and orders from public bodies and others,reasonably adequateinformandsubstance,as may be required by law for the construction of the Project and the operation of the System.
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If requested so to do by the Administrator,the Borrowershall cause such easements and releases to be recorded inappropriateofficesofrecord.Except with the consent of the Administrator,none of the funds advanced on accountoftheLoanshallbeusedbytheBorrowertopayforeasementsobtainedfromlandownersorforreleasesofliensaffectingeasements.
SEC.4.5.Area Coverage.The Borrowershall furnish adequate telephone service to the widestpracticablenumberofruralusersintheBorrower's telephone service area,as such area is shown on the map which is
a part of the Borrower's application for the Loan,and which map,as revised by agreement between the BorrowerandtheAdministrator,is incorporated herein by reference thereto.In the performance of this obligation,the Borrowershall(except to the extent that the Administrator,upon request of the Borrower,may in writingauthorize deviationstherefrom):
(a)furnish service to all applicants for service included in the Project,without payment by suchapplicantsofanyextrachargeasacontributiontothecostofconstructionoffacilitiestoprovidesuchservice;and
(b)take all action that may be required to enable it to extend service,with the use ofsuch funds asmayfromtimetotimebeavailabletoit,either from surplus earnings,increased equity capital,additionalloansmadebylendersotherthantheGovernmentortheBank,or otherwise as the Borrower may elect,andwithoutpaymenttotheBorrowerofanyextrachargeasacontributiontoconstructionoffacilitiestoprovidesuchservice,to every other unserved rural applicant for service in its telephone service area if the
cost of constructing the required line extension for such applicant will not exceed seven times the estimatedannuallocalservicerevenuesfromsuchapplicant.Such service shall be furnished pursuant to terms andconditionssetforthintheBorrower'stariff,as duly filed with or approved by regulatory bodies havingjurisdictioninthepremises,or in the absence of any such regulatory body,as adopted by the Borrower;providedthat the Borrowershall not file with or submit for approval of appropriate regulatory bodies oradoptanyproposedtariff,or continue in effect any existing tariff not required to be continued by anyregulatorybody,unless under such tariff the Borrowerwill be obligated to serve unserved rural applicants
as providedherein.
The furnishing of service to applicants for service under the conditions providedin this section is of the essence oftheBorrower's obligations under this agreement,and the failure or neglect of the Borrower to perform suchobligationshallbedeemedtobeaneventofdefaulthereunder.
SEC.4.6.Morteace Covenants.The Borrowershall performall covenants by it to be performedundertheMortgageandanysupplementalmortgage.
SEC.4.7.Representations and Warranties.The Borrowerrepresents and warrants as follows:
(a)it is an organization of the type indicated in the introductory paragraph and duly organized,existing and in good standing under the laws of the State specified in the introductory paragraph of thisagreementandhasthepowertoenterintothisagreementandtoperformeveryactrequiredtobeperformedbyithereunder;
(b)all proceedings prerequisite to the valid execution of this agreement by it have been duly taken
and all required authorizations thereforhave been secured;
(c)it has not entered into any contract (not heretofore fully performed)for the construction of anyportionoftheProject,or for engineering or for other services pertaining to the construction or operation oftheSystem,unless such contract has (1)been approved by the Administrator;(2)will be submitted for theapprovaloftheAdministrator;or (3)the effectiveness thereofhas been made subject to the approval of theAdministrator;
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(d)the capital structure of the Borroweris as shown in a certified copy of its articles ofincorporationlastsubmittedtotheAdministrator;the Borrowerhas issued and has outstanding only suchnumbersandclassesofsharesofitscapitalstockandsuchbondsandotherevidencesofindebtedness,ifany,as shown in the statement thereoflast submitted to the Administrator;and the Borrowerhas not enteredintoanyagreementfortheissuanceofanyothersharesofitscapitalstock,or of bonds or other evidences ofindebtedness;
(e)every statement contained in this agreement and in every other document,statement,certificateandopinionsubmittedtotheGovernmentortotheBankbyitorinitsbehalfistrueandcorrect;
(f)the Borrower's exact legal name is that indicated on the signature page hereof;
(g)Schedule C accurately sets forth the Borrower's organizational identification number oraccuratelystatesthattheBorrowerhasnone;and
(h)Schedule C hereto accurately sets forth the borrower's place of business or,if more than one,itschiefexecutiveofficeaswellastheBorrower's mailing address if different.
SEC.4.8.Fees and Commissions.No fee or commission has been or shall be paid and noagreementthereforhasbeenorshallbeenteredintobytheBorroweroranyofitsofficers,employees,agents,orrepresentativesinordertoobtaintheLoan.
SEC.4.9."Buy American"Clause.The Borrowershall use or cause to be used in connection withtheexpendituresoffundsadvancedonaccountoftheLoanonlysuchunmanufacturedarticles,materials,andsuppliesashavebeenminedorproducedintheUnitedStatesorinanyeligiblecountry,and only such manufacturedarticles,materials,and supplies as have been manufactured in the United States or in any eligible countrysubstantiallyallfromarticles,materials,or supplies mined,produced,or manufactured,as the case may be,in theUnitedStatesorinanyeligiblecountry,except to the extent the Administrator shall determine that such use shall beimpracticableorthatthecostthereofshallbeunreasonable.For purposes of this section,an "eligiblecountry"is anycountrythatapplieswithrespecttotheUnitedStatesanagreementensuringreciprocalaccessforUnitedStatesproductsandservicesandUnitedStatessupplierstothemarketsofthatcountry,as determined by the United StatesTradeRepresentative.
SEC.4.10.Equal Opportunity Clause.The Borrowerhereby agrees that it will incorporate orcausetobeincorporatedintoanycontractforconstructionwork,or modiñcation thereof,as defined in ExecutiveOrder11246ofSeptember24,1965,or in the rules and regulations of the Secretary of Labor,which is paid for inwholeorinpartwithfundsobtainedfromtheGovernmentortheBankorborrowedonthecreditoftheGovernmentortheBankpursuanttoagrant,contract,loan,insurance or guarantee,or undertaken pursuant to any Federalprograminvolvingsuchgrant,contract,loan,insurance or guarantee,the following equal opportunity clause:
During the performance of this contract,the Contractor agrees as follows:
(1)The Contractor will not discriminate against any employee or applicant for employmentbecauseofrace,color,religion,sex or national origin.The Contractor will take affirmativeaction to ensure thatapplicantsareemployed,and that employees are treated during employment,without regard to their race,color,religion,sex or national origin.Such action shall include,but not be limited to the following:employment,upgrading,demotion or transfer;recruitment or recruitment advertising;layoff or termination;rates of pay or otherformsofcompensation;and selection for training,including apprenticeship.The Contractor agrees to post inconspicuousplaces,available to employees and applicants for employment,notices to be provided setting forth theprovisionsofthisnondiscriminationclause.
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(2)The Contractor will,in all solicitations or advertisements for employees placed by or on behalfoftheContractor,state that all qualifiedapplicants will receive consideration for employment without regard to race,color,religion,sex or national origin.
(3)The Contractor will send to each labor union or representative of workers with which he has acollectivebargainingagreementorothercontractorunderstanding,a notice to be provided advising the said laborunionorworkers'representative of the Contractor's commitments under this section,and shall post copies of thenoticeinconspicuousplacesavailabletoemployeesandapplicantsforemployment.
(4)The Contractor will comply with all provisions of Executive Order 11246 of September 24,1965,and of the rules,regulations and relevant orders of the Secretary of Labor.
(5)The Contractor will furnish all information and reports required by Executive Order 11246 ofSeptember24,1965,and by the rules,regulations and orders of the Secretary of Labor,or pursuant thereto,and willpermitaccesstohisbooks,records,and accounts by the administering agency and the Secretary of Labor forpurposesofinvestigationtoascertaincompliancewithsuchrules,regulations and orders.
(6)In the event of the Contractor's noncompliance with the nondiscrimination clauses of thiscontractorwithanyofthesaidrules,regulations or orders,this contract may be canceled,terminated or suspendedinwholeorinpart,and the Contractor may be declared ineligiblefor furtherGovernment contracts or federallyassistedconstructioncontractsinaccordancewithproceduresauthorizedinExecutiveOrderI1246ofSeptember 24,1965,and such other sanctions may be imposed and remedies invoked as providedin said Executive Order 11246 ofSeptember24,1965,or by rule,regulation or order of the Secretary of Labor,or as otherwise providedby law.
(7)The Contractor will include the portion of the sentence immediately preceding paragraph (1)and the provisions of paragraphs (1)through (7)in every subcontract or purchase order unless exempted by rules,regulations or orders of the Secretary of Labor issued pursuant to section 204 of Executive Order 11246 ofSeptember24,1965,so that such provisions will be binding upon each subcontractor or vendor.The Contractor willtakesuchactionwithrespecttoanysubcontractorpurchaseorderastheadministeringagencymaydirectasameansofenforcingsuchprovisions,includingsanctions for noncompliance.Provided,however,that in the event acontractorbecomesinvolvedin,or is threatened with,litigation with a subcontractor or vendor as a result of suchdirectionbytheadministeringagency,the Contractor may request the United States to enter into such litigation toprotecttheinterestsoftheUnitedStates.
The Borrowerfurtheragrees that it will be bound by the above equal opportunity clause with respect to its ownemploymentpracticeswhenitparticipatesinfederallyassistedconstructionwork:Provided,that if the BorrowersoparticipatingisaStateorlocalgovernment,the above equal opportunity clause is not applicable to any agency,instrumentality or subdivision of such government which does not participate in work on or under the contract.
The Borroweragrees that it will assist and cooperate actively with the administering agency and the Secretary ofLaborinobtainingthecomplianceofcontractorsandsubcontractorswiththeequalopportunityclauseandtherules,regulations and relevant orders of the Secretary of Labor,that it will furnish the administering agency and theSecretaryofLaborsuchinformationastheymayrequireforthesupervisionofsuchcompliance,and that it willotherwiseassisttheadministeringagencyinthedischargeoftheadministeringagency's primary responsibility forsecuringcompliance.
The Borrowerfurtheragrees that it will refrainfrom entering into any contract or contract modification subject toExecutiveOrder11246ofSeptember24,1965,with a contractor debarred from,or who has not demonstratedeligibilityfor,Government contracts and federally assisted construction contracts pursuant to Executive Order11246,of September 24,1965,and will carry out such sanctions and penalties for violationof the equal opportunityclauseasmaybeimposeduponcontractorsandsubcontractorsbytheadministeringagencyortheSecretaryofLaborpursuanttoPartII,Subpart D of Executive Order 11246,of September 24,1965.
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In addition,the Borroweragrees that if it fails or refuses to comply with these undertakings,the administeringagencymaytakeanyorallofthefollowingactions:cancel,terminate or suspend in whole or in part this contract;refrainfrom extending any further assistance to the Borrowerunder the program with respect to which the failure orrefusaloccurreduntilsatisfactoryassuranceoffurthercompliancehasbeenreceivedfromsuchBorrower;and referthecasetotheDepartmentofJusticeforappropriatelegalproceedings.
SEC.4.11.Evidence of Feasibility.The Borrowershall,whenever requested so to do by theAdministrator,submit evidence satisfactory to the Administrator of the economic and engineering feasibility of eachportionoftheSystemdesignatedbytheAdministrator.
SEC.4.12.Proofof Title.No funds shall be advanced on account of the Loan to finance theacquisitionofanyrealpropertybytheBorrower,or any construction thereon,until the Borrowershall havesubmittedevidencesatisfactorytotheAdministratorthatithasacquiredorwillacquiregoodandmarketable title tosuchrealpropertyandownsorwillownorhasotherrightsinallofitspropertiesandassets.
SEC.4.13.Commencement of Operation.The Borrowershall not operate any portion of theProjectuntiltheBorrowershallhavefurnishedevidencethat(a)such portion of the Project has been properlyconstructedandisreadytobeoperated,(b)there are sufficient subscribers ready to take service to permit theeconomicaloperationofsuchportionoftheProject,and (c)the Borrowerhas complied with the provisions of theMortgageconcerninginsuranceinrespectofsuchportionoftheProject.
SEC.4.14.Operating and Maintenance Procedures.The Borrowershall,subject to applicablelawsandrules,regulations and orders of regulatory bodies,operate and maintain the System in accordance withstandardsofoperationandmaintenancegenerallyacceptedforcorporationsofthesizeandcharacteroftheBorrower.
SEC.4.15.Compliance with Environmental Requirements.The Borrowershall,with respect toallfacilitieswhichmaybepartoftheSystem,comply with all applicable water and air pollutioncontrol standardsandotherenvironmentalrequirementsimposedbyFederalorstatestatutes,regulations,licenses or permits.
SEC.4.16.Historic Preservation.The Borrowershall not use any portion of the RUS Loan or theBankLoanwithoutthepriorwrittenapprovaloftheAdministratorortheGovernor,as the case may be,for anyproject,activity or program that can result in changes in the character or use of any prehistoric or historic district,site,building,structure or object included in,or eligible for inclusion in,the NationalRegister of Historic PlacesmaintainedbytheSecretaryoftheInteriorpursuanttotheNationalHistoricPreservationAct,as amended.
SEC.4.17.Historic Landmarks.The Borrowershall not use any portion of the RUS Loan or theBankLoan,without the prior written approval of the Administrator or the Governor,as the case may be,for anyproject,activity or program that may directly and adversely affect any property that the Secretary of the Interior hasdesignatedaNationalHistoricLandmarkpursuanttotheNationalHistoricPreservationAct,as amended.
SEC.4.18.Electronic Funds Transfer.Except as otherwise prescribed by the Administrator andtheGovernor,the Borrowershall make all payments on all notes issued by the Borrowerpursuant to this agreementandanysubsequentamendment,utilizing electronic funds transfer procedures as specified by the Administrator andtheGovernorforpaymentstotheGovernmentortotheBank,respectively.
SEC.4.19.Uniform Relocation and Acquisition Act.The Borrowerhereby covenants that it shall,in acquiring real property,comply with the provisions of the UniformRelocation Assistance and Real PropertyAcquisitionPoliciesActof1970(the "UniformAct"),as amended by the UniformRelocation Act Amendments of1987,and 49 C.F.R.Part 24,referenced by 7 C.F.R.Part 21,to the extent the Uniform Act is applicable to suchacquisition.
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SEC.4.20.Flood Insurance.The Borrowershall not,without the prior written approval of theAdministratorortheGovernor,respectively,use any portion of the RUS Loan or the Bank Loan,as the case may be,to finance,in whole or in part,the acquisition,construction,repair or improvement of any buildingor any machinery,equipment,fixtures or furnishings contained or to be contained therein in any area identified by the Director of theFederalEmergencyManagementAgency(the "Director of FEMA")pursuant to the Flood Disaster Protection Act of1973,as amended (the "Flood Insurance Act")as an area having special flood hazards unless and until the BorrowerhassubmittedevidencesatisfactorytotheAdministrator,or the Administrator has otherwise determined:(i)theDirectorofFEMAhasmadefloodinsuranceavailable,pursuant to the Flood Insurance Act,in the area in which theacquisition,construction,repair or improvement is proposed to occur;and (ii)the Borrowerhas obtained floodinsurancecoveragewithrespecttosuchbuilding,machinery,equipment,fixtures or furnishings as may then berequiredpursuanttotheFloodInsuranceAct.
SEC.4.21.Nonduplication of Facilities.If the Borrowerprovidestelephone service in any stateinwhichthereisnostateregulatorybodywithauthoritytoregulatetelephoneserviceandtorequirecertificatesofconvenienceandnecessitytotheBorrower,the Borrowershall not use any portion of the Loan for the constructionoftelephonefacilitiestofurnishorimproveservicetopersonslocatedinsuchstatereceivingtelephoneservicefromanyothertelephonecompanyatthetimetheBorrowerproposestofurnishorimproveservicetosuchpersons,except that the Borrowermay provideor improveservice to persons receiving service through facilities acquired ortobeacquiredbytheBorrower,and except to the extent the Administrator,on the basis of evidence submitted to himbytheBorrower,shall have determined that service by the Borrowerto such persons will not result in duplication oflines,facilities or systems providingreasonably adequate service.
SEC.4.22.If the Borrowerdoes not have an organizational identification number and laterobtainsone,the Borrowerwill promptly notify the Administrator and the Governorin writing of such organizationalidentificationnumber.
SEC.4.23.Borrowercovenants and agrees with the Government and the Bank that the Borrowerwillnot,directly or indirectly,without giving written notice to the Government and the Bank thirty (30)days prior totheeffectivedate:
(a)Change the location of the Borrower's place of business or if more than one,it chief executiveoffice.
(b)Change the name of the Borrower.
(c)Change the mailing address of the Borrower.
(d)Change its organizational identincation number if it has one.
SEC.4.24.The Borrowercovenants and agrees with the Government and the Bank that theBorrowerwillnot,directly or indirectly,without the prior written consent of the Government and the Bank changeitstypeoforganization,jurisdiction of organization or other legal structure.
ARTICLE V
EVENTS OF DEFAULT AND REMEDIES
SECTION5.1.Events of Default.The happening of any of the following events (hereinaftercalled"events of default")shall constitute a default by the Borrowerhereunder:
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(a)any failure to perform,or any violation of,any term,covenant,promise,condition,oragreementonthepartoftheBorrowertobeperformedhereunderatthetimeandinthemannerhereinprovided;
(b)any breach of any warranty or any material or substantial inaccuracy in any representation onthepartoftheBorrower;or
(c)any event of default which is specified in the Mortgage or any supplemental mortgage.
SEC.5.2.Remedies Upon Default.Upon the happening of any event of default,as specified insection5.1 hereof,the Government or the Bank or the holder or holders of any one or more of the Notes,as theirrespectiveinterestsmayappear,may exercise any one or more of the following rights,privileges,powers,andremedies,to the extent that the exercise thereofis not prohibitedby law:
(a)refuse to make any advance or any furtheradvances on account of the Loan,but any advancethereaftermadebytheGovernmentortheBankshallnotconstituteawaiverofsuchdefault;
(b)declare all unpaid principalof and all interest accrued on any or all of the Notes held by suchholderorholders(which may include the Government or the Bank)to be due and payable immediately anduponsuchdeclarationallsuchprincipalandinterestshallbecomedueandpayableimmediately,anythinghereinorinanyotheragreementtowhichtheBorrowershallbeaparty,or in the Notes or in the Mortgageoranysupplementalmortgagetothecontrarynotwithstanding.
SEC.5.3.Remedies Cumulative.Everyright,privilege,power or remedy herein or in the NotesorintheMortgageorinanysupplementalmortgageconferreduponorreservedtotheGovernmentortheBankoranyholderorholdersoftheNotesshallbecumulativeandshallbeinadditiontoeveryotherright,privilege,power,and remedy now or hereafter existing at law or in equity or by statute.The pursuit of any right,privilege,power,orremedyshallnotbeconstruedasanelection.
ARTICLE VI
MISCELLANEOUS
SECTION6.1.Members of Congress.No Member of or Delegate to the Congress of the UnitedStatesshallbeadmittedtoanyshareorpartofthisagreementortoanybenefittoarisetherefromotherthanthereceivingoftelephoneservicethroughtheSystemonthesametermsaccordedothersservedthroughtheSystem.
SEC.6.2.Receipt of Certain Criminal Sections of U.S.Code.The Borrowerand each of theofficerssigningthisagreementrespectivelyacknowledgethattheyarefamiliarwiththeprovisionsofsections201,286,287,641,666,1001,1361 and 1366 of Title 18,United States Code,Crimes and Criminal Procedure.
SEC.6.3.Relations of Administrator and Governor.
(a)Insofaras required by the Act,the Administratorshall act in his capacity as Governorin theexerciseofhisauthorityandtheperformanceofhisobligationsunderthisagreementandanyamendmentthereto.
(b)Upon payment by the Borrowerof all amounts due on account of the RUS Notes and allamountsduetheGovernmentpursuanttothetermshereof,and to the terms of the Mortgage and anysupplementalmortgageexecutedbytheBorrower,all of the rights,powers,obligations and functions of theAdministratorhereundershallpasstoandbevestedintheGovernor.
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SEC.6.4.Defmitions.Whenever the following terms are used in this agreement,unless thecontextindicatesanotherordifferentmeaningorintent,they shall be construed to have meanings as follows:
(a)"Administrator"means the Administrator of the Rural Utilities Service or his duly authorizedrepresentativeoranyotherpersonorauthorityinwhommaybevestedthedutiesandfunctionsrelatingtoloansfortelephoneserviceinruralareasmadepursuanttotheActwhichtheAdministratorisnowormayhereafterbeauthorizedbylawtoperform.
(b)"Governor"means the Governorof the Rural Telephone Bank providedfor in Title IV of theRuralElectrificationActof1936,as amended,or his duly authorized representative,or any other person orauthorityinwhommaybevestedthedutiesandfunctionsrelatingtoloansfortelephoneservicemadepursuanttosaidTitleIVwhichtheGovernorisnowormayhereafterbeauthorizedtoperform.
(c)"plans and specifications"means the plans and specifications for the Project originallyapprovedbytheAdministratorandshallincludesuchchangesandmodificationsthereofasmayfrom timetotimebeagreeduponbytheBorrowerandtheGovernmentandtheBank;
(d)"note"includes "bond";and
(e)"construction"includes "acquisition",and the word "construct"includes the word "acquire".
SEC.6.5.Approvalsin Writing.No counsel,engineer,manager or other person,or instruments,or act of the Borrower,who or which shall be subject to the approval of the Administrator,shall be deemed to beapprovedunlessanduntiltheAdministratorshallhavegivensuchapprovalinwriting.
SEC.6.6.Waiver.The Administrator,in his absolute discretion and upon such terms andconditionsashemaydetermine,may waivethe performance or doing of any one or more of the acts to be performedorthingstobedonebytheBorrower,and any provisionhereof may be modifiedor amended by mutual consent oftheBorrowerandtheAdministrator.The Borrowershall not claim any modification,amendment,rescission,release,or annulment of any part hereof except pursuant to a written instrument subscribed by the Administrator.The approval by or on behalf of the Administrator of any advance of funds on account of the Loan shall constitute afindingofsufficientperformancebytheBorrowerofallactsprerequisitetosuchadvance,or a waiverthereof;provided,however,that any such waivershall be effectiveonly with reference to such advance and shall not precludetheAdministratorfromrequiringfullperformanceoftheactssowaivedasaprerequisitetoanysubsequentadvance.
SEC.6.7.Non-Assignability.The Borrowershall not assign this agreement or any part hereoforanymoneysdueortobecomeduehereunder.
SEC.6.8.Descriptive Headines:Separability.The descriptive headings of the various articles andsectionshereofwereformulatedandinsertedforconvenienceonlyandshallnotbedeemedtoaffectthemeaningorconstructionofanyoftheprovisionshereof.The invalidity of any one or more phrases,clauses,sentences,paragraphs,or provisionsof this agreement shall not affect any remaining portion or portions hereof.
SEC.6.9.Notices.All demands,notices,approvals,designations,or directions permitted orrequiredtobemadeuponorgiventotheBorrowerhereundershallbemailedtotheBorroweratP.O.Box 98,Albion,Idaho 83311 or such other address as the Borrowershall designate in writing to the Administrator.Allnotices,designations,or communications permitted or required to be given or sent to the Government,the Bank ortheAdministratorhereundershallbemailedtotheAdministratoratWashington,D.C.20250-1500,or such otheraddressastheAdministratorshalldesignateinwritingtotheBorrower.
SEC.6.10.Duration of Agreement.Except where otherwise required by the context,allprovisionsofthisagreementshallcontinueinfullforceandeffectuntilallamountsowingbytheBorrowerto the
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Government and the Bank on account of the Loan shall have been paid,and upon such payment this agreement shallbedeemedtohavebeenfullyperformed.
SEC.6.11.Nature of Obligations.The obligations of the Government and the Bank under thisagreement,and any amendment thereto,shall be several and not joint.
SEC.6.12.Counterparts.This agreement may be simultaneously executed and delivered in two ormorecounterparts,each of which so executed and deliveredshall be deemed to be an original,and all shall constitutebutoneandthesameinstrument.
IN WITNESS WHEREOF the Borrowerand the Bank have caused this agreement to be signed intheirrespectivecorporatenamesandtheirrespectivecorporatesealstobehereuntoaffixedandattestedbytheirofficersthereuntodulyauthorized,and the Government has caused this agreement to be duly executed all as the dayandyearfirstabovewritten.
ALBION TELEPHONECOMPANY
by
President
(Seal)
Attest:
Secretary
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UNITED STATES OF AMERICA,andRURALTELEPHONEBANK,respectively
by
as
irector,Northwest Area
elecommunications Program
of the
Rural Utilities Service
and for the
Rural Telephone Bank
(Seal)
ssistant Secretary
of the
Rural Telephone Bank
Page 17
SCHEDULE C
1.The place of business,or,if more than one,its chiefexecutive office as well as the Borrower's mailing address,ifdifferent,referred to in Section 4.7 is P.O.Box 98,Albion,Idaho 83311.
2.The organizational identification number of the Borrowerreferred to in Section 4.7 is C26771.
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PROJECT DESIGNATION:
IDAHO 504-HI2 &Kll ALBION
MORTGAGENOTE
made by
ALBION TELEPHONECOMPANY
to
UNITED STATES OF AMERICA
MORTGAGENOTE
Albion,Idaho
November 3,2003
Article I:Special Provisions -RUS Hardship Rate Note
1.Amount
ALBION TELEPHONECOMPANY (hereinafter called the "Corporation"),a corporation organized and existingunderthelawsoftheStateofIdaho,for value received,promises to pay to the order of the UNITED STATES OFAMERICA(hereinafter called the "Government"),acting through the Administrator of the Rural Utilities Service,attheUnitedStatesTreasury,Washington,D.C.,at the times and in the manner hereinafter provided,the sum of sevenmillionfivehundredthousanddollars($7,500,000),with interest on the amount thereof advanced by theGovernment,pursuant to a certain loan contract,dated as of November 3,2003,among the Corporation,theGovernmentandtheRuralTelephoneBank(hereinafter called the "Bank"),as the same may be amended from timetotime(said loan contract,as it may be so amended,being hereafter called the "Loan Contract"),and remainingunpaidfromtimetotime,at the rate of five (5)percent per annum.
2.Payment on Advances made within two (2)Years
Interest on principal advanced made pursuant to the Loan Contract and remaining unpaid shall be payable on the lastdayofeachmonthforaperiodendingonadatetwo(2)years after the date hereof.Thereafter,to and including adate(the "Maturity Date")eighteen (18)years after the date hereof,the Corporation shall make a payment on each ofsaidmonthlydatesineachyearattherateof$7.58 per $1,000 of principal amount hereof advanced pursuant to theLoanContractandunpaidtwo(2)years after the date hereof.
3.Payment on Advances made after two (2)Years
Interest and principalpayments on principal advanced more than two (2)years after the date hereof shall be mademonthlybeginningwiththelastdayofthemonthfollowingthemonthofeachadvanceofprincipal.Each paymentshallbe(a)substantially equal to all subsequent monthly payments and (b)in an amount that will pay all principalandinterestonthisNotenolaterthantheMaturityDate.The first payment on an advance made more than two yearsafterthedateofthisNoteshallbeincreasedbytheamountofinterestaccruingbetweenthedateoftheadvanceandthefirstdayofthemonthfollowingthemonthoftheadvance.These payments shall be in addition to the paymentmadeontheprincipalamountadvancedandunpaidtwo(2)years after the date hereof.
4.Prepayment
The Corporationon any payment date,as hereinabove providedmay pay all or any part of the principal hereof thenadvancedpursuanttotheLoanContractandremainingunpaid,but so long as any of the principal hereof advancedpursuanttotheLoanContractshallremainunpaid,the Corporation shall be obligated to make the monthly paymentonaccountofprincipalandinterest,in the amount hereinabove provided,unless the Corporation and the holder ofthisNoteshallotherwiseagree.
Article II:Standard Provisions
1.Applicationof Payments
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IN WITNESS WHEREOF,the Corporation has caused this Note to be signed in its corporate name and its corporatesealtobehereuntoaffixedandattestedbyitsofficersthereuntodulyauthorized,all as of the day and year first abovewritten.
ALBION TELEPHONE COMPANY
by
President
(SEAL)
Attest:
Secretary
Page 3
PROJECT DESIGNATION:
IDAHO 504-Hl2 &Kl1 ALBION
MORTGAGENOTE
made by
ALBION TELEPHONECOMPANY
to
UNITED STATES OF AMERICA
MORTGAGENOTE
Albion,Idaho
November3,2003
Article I:Special Provisions -RUS Variable Rate Note
1.Amount
ALBION TELEPHONECOMPANY(hereinafter called the "Corporation"),a corporation organized and existingunderthelawsoftheStateofIdaho,for value received,promises to pay to the order of the UNITED STATES OFAMERICA(hereinafter called the "Government"),acting through the Administratorof the Rural Utilities Service,attheUnitedStatesTreasury,Washington,D.C.,at the times and in the manner hereinafter provided,such sums as maybeadvancedfromtimetotime,not to exceed four million forty-six thousand dollars ($4,046,000),with interestpayablefromthedateofeachadvance("Advance")on the unpaid principal balance,pursuant to a certain loancontract,dated as of November 3,2003,among the Corporation,the Government and the Rural Telephone Bank(hereinafter called the "Bank"),as the same may be amended from time to time (said loan contract,as it may be soamended,being hereafter called the "Loan Contract"),and remaining unpaid from time to time.
2.Payment on Advances made within two (2)Years
Interest on each Advance made pursuant to the Loan Contract and remaining unpaid shall be payable on the last dayofeachmonth(the "Monthly Payment Date"),of each year for a period ending on a date two (2)years after the datehereof.Thereafter,to and including a date eighteen (18)years after the date hereof(the "Maturity Date"),tiieCorporationshallmakeapaymenteveryMonthlyPaymentDateoneachsuchAdvance(substantially equal to everyothermonthlypaymentonsuchAdvance,and (b)in an amount that will pay all principal and interest of suchAdvancenolaterthantheMaturityDate.
3.Payment on Advances made after two (2)Years
Interest and principal payments on Advances made pursuant to the Loan Contract more than two (2)years after thedatehereofshallberepaidininstallmentsbeginningwiththeMonthlyPaymentDateofthemonthfollowingthemonthofeachAdvanceandendingontheMaturityDate.The first payment on an Advance made more than two (2)years after the date of this Note shall be increased by the amount of interest accruing between the date of theAdvanceandthefirstdayofthemonthfollowingthemonthoftheAdvance.Thereafter,to and includingtheMaturityDate,the Corporation shall make a payment every Monthly Payment Date on each such Advance (a)substantially equal to every other monthly payment on such Advance,and (b)in an amount that will pay all principalandinterestofsuchAdvancenolaterthantheMaturityDate.This payment shall be in addition to the payments ontheAdvancesmadeandunpaidtwo(2)years after the date hereof.
4.Prepayment
The Corporation on any MonthlyPayment Date,as hereinabove provided,may pay all or any part of an Advanceremainingunpaid,but so long as any of the principal of such Advance shall remain unpaid,the Corporation shall beobligatedtomakethemonthlypaymentonaccountofprincipalandinterest,in the amount first determined pursuanttothisNote,unless the Corporation and the holder of this Note shall otherwise agree.
5.Interest Rate
Each Advance hereunder shall bear interest at a rate (the "Cost of Money Interest Rate")determined for thatAdvanceinaccordancewithSection305(d)(2)(A)of the Rural Electrification Act of 1936,as amended (7 U.S.C.§935(d)(2)(A))and the implementing regulations (7 CFR §1735.31(c)),as amended from time to time,provided,
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PROJECT DESIGNATION:
IDAHO 504-Hl2 &Kll ALBION
MORTGAGENOTE
made by
ALBION TELEPHONECOMPANY
to
RURAL TELEPHONEBANK
MORTGAGENOTE
Albion,Idaho
November 3,2003
Article I:Special Provisions -Bank Note
1.Amount
ALBION TELEPHONECOMPANY (hereinafter called the "Corporation"),a corporation organized and existing'under the laws of the State of Idaho,for value received,promises to pay to the order of RURALTELEPHONEBANK(the "Bank"),at Washington,D.C.,at the times and in the manner hereinafter provided,such sums as may beadvancedfromtimetotime,not to exceed two million three hundred fifty-five thousand one hundred fifty dollars($2,355,150),with interest payable from the date of each advance ("Advance")on the unpaid principal balance,pursuant to a certain loan contract,dated as of November3,2003,among the Corporation,the United States ofAmerica(hereinafter called the "Government")and the Bank,as the same may be amended from time to time (saidloancontract,as it may be so amended,being hereafter called the "Loan Contract"),and remaining unpaid from timetotime.
2.Payment on Advances made within two (2)Years
Interest on each Advance made pursuant to the Loan Contract and remaining unpaid shall be payable on the last dayofeachmonth(the "Monthly Payment Date"),for a period ending on a date two (2)years after the date hereof.Thereafter,to and including a date eighteen (18)years after the date hereof(the "Maturity Date"),the CorporationshallmakeapaymenteveryMonthlyPaymentDateoneachsuchAdvance(substantially equal to every othermonthlypaymentonsuchAdvancewhileitissubjecttothesamerateofinterest,and (b)in an amount that will payallprincipalandinterestofsuchAdvancenolaterthantheMaturityDate.
3.Payment on Advances made after two (2)Years
Interest and principal payments on Advances made pursuant to the Loan Contract more than two (2)years after thedatehereofshallberepaidininstallmentsbeginningwiththeMonthlyPaymentDateofthemonthfollowingthemonthofeachAdvanceandendingontheMaturityDate.The first payment on an Advance made more than twoyearsafterthedateofthisNoteshallbeincreasedbytheamountofinterestaccruingbetweenthedateoftheAdvanceandthefirstdayofthemonthfollowingthemonthoftheAdvance.Thereafter,to and including theMaturityDate,the Corporation shall make a payment every Monthly Payment Date on each such Advance (a)substantially equal to every other monthly payment on such Advance while it is subject to the same rate of interest,and (b)in an amount that will pay all principal and interest of such Advance no later than the Maturity Date.ThispaymentshallbeinadditiontothepaymentsontheAdvancesmadeandunpaidtwo(2)years after the date hereof.
4.-Prepayment
The Corporation on any Monthly Payment Date,as hereinabove provided,may pay all or any part of an Advanceremainingunpaid,but so long as any of the principal of such Advance shall remain unpaid,the Corporation shall beobligatedtomakethemonthlypaymentonaccountofprincipalandinterest,in the amount first determined pursuanttothisNote,unless the Corporation and the holder of this Note shall otherwise agree.
5.Interest Rate
Each Advance hereunder shall bear interest at the various rates determined for that Advance in accordance withSection408(b)(3)of the Rural Electrification Act of 1936,as amended (7 U.S.C.§948(b)(3))and the implementingregulations,as amended fromtime to time.
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6.Determination of payment if interest rate changes
Whenever,under the terms of this Note,a payment consists of principal and interest equal to every other payment onsuchAdvance,the payment shall be determined as if the interest rate then in effect would continue to apply to suchAdvanceuntiltheMaturityDate;provided,however,that if the interest rate applying to such Advance is changedpursuanttoArticleI,Section 5 hereof,then the payments of principal and interest on such Advance,beginning withthepaymentdueonthenextMonthlyPaymentDateaftersuchchange,shall be redetermined using the new interestrate.
Article II:Standard Provisions
1.Application of Payments
Each payment made on this Note shall be applied first to the payment of interest on principal and then on account ofprincipal.Any principal hereof advanced pursuant to the Loan Contract remaining unpaid,and interest thereon,shallbecomedueandpayableontheMaturityDate.
2.Security
This Note has been executed and delivered pursuant to and is secured by a certain mortgage,dated as of November3,2003,made by and among the Corporation,the Government,the Bank and CoBank,ACB,as the same may havebeenamendedorsupplementedbyanysupplementalmortgageorsupplementalmortgages(said mortgage and anysuchsupplementalmortgageorsupplementalmortgagesbeinghereinaftercollectivelycalledthe"Mortgage"),and isoneofseveralnotes(hereinafter called the "notes")permitted to be secured by the Mortgage.The MortgageprovidesthatallnotesshallbeequallyandratablysecuredtherebyandreferenceisherebymadetotheMortgage foradescriptionofthepropertymortgagedandpledged,the nature and extent of the security and the rights of theholdersofnoteswithrespectthereto.
3.Default
In case of default by the Corporation,as providedin the Mortgage,all principal advanced pursuant to the LoanContractandremainingunpaid,on this Note and any other notes at the time outstanding,and all interest thereon,may be declared or may become due and payable in the manner and with the effect providedin the Mortgage.
IN WITNESS WHEREOF,the Corporation has caused this Note to be signed in its corporate name and its corporatesealtobehereuntoaffixedandattestedbyitsofficersthereuntodulyauthorized,all as of the day and year first abovewritten.
ALBION TELEPHONECOMPANY
by
President
(SEAL)
Attest:
Secretary
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