20031219Final Document.pdf

IVE€:/PS LEY LLP
Terri Carlock
Idaho Public Utilities Commission
472 W. Washington
O. Box 83720
Boise, 1083720-0074
Re:
Our File:
Dear Terri:
lAW OFFICES
601 W. Bannock S1reet
PO Box 2720, Boise, Idaho 83701
TELEPHONE: [phone]
FACSIMilE: 208 388-1300
WEBSITE: www.givenspursley.com
Gary G. Allen D. David lorello, Jr.Kenneth L Pursley
Christopher J. Beeson Emily A MacMaster Bradley V. Sneed
Jessica M. Borup Kimberty D. Maloney H. Barton Thomas
William C. Cole John M. Marshall Conley E. Ward
Michael C. Creamer Kenneth R. McClure Robert B- White
Thomas E. Dvorak Kelly Greene McConnell Michael V. Woodhouse
Roy Lewis Eiguren Cynthia A Melillo
TImothy P. Feamside Christopher H. Meyer James A McClure
Jeffrey C. Fereday L Edward Miller OF COUNSEL
Steven J. Hippler Patrick J. Miller
Kart T. Klein Judson B. Montgomery , Raymond D. Givens
Debora K Kristensen Angela K. Nelson RETIRED
Anne C. Kunkel Deborah E. Nelson John A Miller, lLM. .Franklin G. lee W. Hugh O'Riordan TAX CONSULTANT
David R. Lombardi Michael C. Orr 'licensed in Kentucky only
Cynthia A. Melillo
Direct Dial: [phone]
Mail: cam(1i)oivenspurslev.com
December 18 , 2003
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Direct Communications Rockland , Inc., Rural Utilities Service and
Rural Telephone Bank Loans
Pursuant to Idaho Public Utilities Commission ("IPUC") Order No. 29378
amending Order No. 29058, which authorized Albion Telephone Company ("Albion ) to
borrow from the Rural Utilities Service ("RUS") and the Rural Telephone Bank ("RTB"
Albion was required to file with the IPUC copies of all final executed RUS and RTB loan
documents. Enclosed herewith are copies of the following final RUS and RTB loan
documents:
Amending Telephone Loan Contract, dated as of November 3 2003;
Mortgage Note , made by Albion Telephone Company, dated as of
November 3 2003 (RUS Variable Rate Note);
Mortgage Note , made by Albion Telephone Company, dated as of
November 3 2003 (RUS Hardship Note);
Mortgage Note, made by Albion Telephone Company, dated as of
November 3 2003
Restated Mortgage , Security Agreement and Financing Statement, dated
November 3, 2003;
Copy of UCC 1 financing statement filed with the Idaho Secretary of State;
and
Copy of UCC 1 financing statement filed with the Utah Department of
Commerce , Division of Corporations and Commercial Code.
Terri Carlock
December 18 2003
Page 2
If you have any questions or comments regarding the enclosed, or if you need
any additional information , please do not hesitate to contact me.
Sincerely,
Cynthia A. Melillo
CAM/kn
Enclosurescc: Mike Creamer (w/o enclosures)
Richard Redman (w/o enclosures)
S:\CLlENTS\5261\3\CAM to IPUC re loan documents.DOC
' , ~
No.
, ', '
RUS Project Designation:
IDAHO 504-H12 & Kll ALBION
AMENDING TELEPHONE LOAN CONTRACT
Dated as of November 3,2003
among
ALBION TELEPHONE COMPANY
UNITED STATES OF AMERICA
and
RURAL TELEPHONE BANK
UNITED STATES DEPARTMENT OF AGRICULTURE
RURAL UTILITIES SERVICE
Generated: October 14, 2003
AGREEMENT, made as of November 3, 2003, pursuant to the Rural
Electrification Act of 1936, as amended (7 U.c. 901 ~
~.,
hereinafter called the
Act ), among ALBION TELEPHONE COMPANY (hereinafter called the "Borrower
a corporation existing under the laws of the State of Idaho, UNITED STATES OF
AMERICA (hereinafter called the "Government ), acting through the Administrator of
the Rural Utilities Service (hereinafter called the "Administrator ), and RURAL
TELEPHONE BANK (hereinafter called the "Bank"), a corporation existing under the
laws of the Government, acting through the Governor of the Bank (hereinafter called the
Governor
WHEREAS, pursuant to Public Law No.1 03-354, the Rural Utilities Service (hereinafter
sometimes called "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 Rural
Electrification Administration and, for the purposes of the Prior Loan Contract (hereinafter defined), as amended, the
terms "REA" and "Administrator" shall be deemed to mean respectively "RUS" and "Administrator of the RUS"
and
WHEREAS, the Borrower has heretofore entered into a certain telephone loan contract, amending
telephone loan contract, consolidating telephone loan contract, or consolidating and amending telephone loan
contract, dated as of April 5 , 1954, with the Bank, the Government, or the Bank and the Government (such
agreement, as it may have been amended, being hereinafter called the "Prior Loan Contract ); and
WHEREAS, pursuant to the Prior Loan Contract the Borrower and/or its predecessor(s) in interest
have heretofore borrowed funds from the Government in the aggregate principal amount of $4 130 000.
(hereinafter called "Prior RUS Loan ), from the Bank in the aggregate principal amount of $0 (hereinafter called the
Prior Bank Loan ), except such portion of 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 the
Government, in the aggregate principal amount of $0 (hereinafter called the "Prior FFB Loan , and together with the
Prior RUS Loan and the Prior Bank Loan being hereinafter collectively called the "Prior Loans ), the Prior FFB
Loan being guaranteed by the Government pursuant to the Act, to finance pursuant to the provisions of the ~ct, the
improvements and operation of the initial telephone facilities owned and operated by the Borrower and/or its
predecessor(s) in interest (hereinafter called the "Existing Facilities ); and
WHEREAS, the parties to this agreement and the parties to the Prior Loan Contract desire to
amend the Prior Loan Contract in certain respects, and it is intended that the entire agreement among such parties,
containing such amendments and covering the terms upon which the "Loan " (hereinafter defined) shall be made and
expanded, shall be expressed in this agreement, except to the extent such parties have heretofore performed
obligations under the Prior Loan Contract in accordance with the terms thereof and except as may hereinafter
otherwise be provided; and
WHEREAS, it is intended that the Borrower shall use the proceeds of the loan(s) as provided for
in section 1.1 of this agreement to finance partially the improvement and operation of the Existing Facilities, as
previously expanded and added to by facilities financed with the proceeds of the Prior Loans, and the construction
and operation of additional telephone facilities to serve approximately five hundred seventeen subscribers in addition
to those now being served (the improvements and additional telephone facilities so financed being hereinafter
collectively called the "Project , and the Existing Facilities, as the same has previously been expanded and added to
and as improved and 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 time
for purposes permitted by the provisions of the Act, as from time to time amended , and upon the terms and
conditions contained in this agreement, as from time to time amended (the RUS Concurrent Loan, the RUS Hardship
Loan and the Guaranteed Loan (to be made to the Borrower by FFB), all as provided for in section 1.1 of this
agreement, and any such increases in the amounts thereof, and together with the Prior RUS Loan and the Prior FFB
Page I
Loan, being hereinafter collectively called the "RUS Loan , the Bank Concurrent Loan as provided for in section 1.
of this agreement and any such increases in the amount thereof, and together with the Prior Bank Loan, being
hereinafter collectively called the "Bank Loan , and the RUS Loan and the Bank Loan being hereinafter collectively
called the "Loan ); and
WHEREAS, the Government and the Bank, in determining to enter into this agreement, have relied
upon the representation of the Borrower to them that it is willing to furnish adequate telephone service to the widest
practicable number of persons in rural areas whom it is possible to serve, and the Borrower has agreed to do so as
hereinafter provided;
NOW, THEREFORE, for and in consideration of the mutual agreements herein contained, the
Borrower, the Government and the Bank agree as follows:
, ARTICLE I
LOAN, NOTES AND SECURITY
SECTION 1.1. RUS Concurrent Loan: For the purposes provided in section 305(d)(2)(A) of the
Act (7 U.c. ~935(d)(2)(A)), the Government shall lend and the Borrower shall borrow not in excess of
046 000.00 to partially finance the Project.
Bank Concurrent Loan: For the purposes provided in section 408(a)(2) of the Act (7 U.
~948(a)(2)), the Bank shall lend and the Borrower shall borrow not in excess of $2 355 , 150., (1) to partially
finance the Project and (2) to purchase Class B stock from the Bank for $112 150.00.
RUS Hardship Loan:Pursuant to section 305(d)(l) ofthe Act (7 U.e. ~935(d)(l)), the
Government shall lend and the Borrower shall borrow not in excess of $7,500 000.00 to partially finance the Project.
RUS Hardship Loan funds shall be used for the purposes provided in section 201 of the Act (7 U.e. ~922).
Guaranteed Loan - FFB shall lend and the Borrower shall borrow not in excess of $0, the
repayment of which shall be guaranteed by the Government pursuant to section 306 of the Act (7 U.e. ~936), to
partially finance the Project.
SEe. 1.2. Notes. The debt created by the RUS Loan shall be evidenced by notes previously
executed by the Borrower and/or its predecessor(s) in interest to evidence the Prior RUS Loan and the Prior FFB
Loan and to be executed by the Borrower, payable to the order of the Government or payable to FFB, as the case
may be. The debt created by the Bank Loan shall be evidenced by notes previously executed by the Borrower and/or
its predecessors in interest to evidence the Prior Bank Loan and to be executed by the Borrower payable to the order
of the Bank (the notes evidencing the Prior RUS Loan and the Prior FFB Loan and the notes payable to the order of
the Government or payable to FFB , as the case may be, and any notes executed and delivered to refund, or in
substitution for, such notes being hereinafter collectively called the "RUS Notes , and the notes evidencing the Prior
Bank Loan and the notes payable to the order of the Bank and any notes executed and delivered to refund, or in
substitution for, such notes being hereinafter collectively called the "Bank Notes , and the RUS Notes and the Bank
Notes being hereinafter collectively called the "Notes ). The Notes shall be in form and substance satisfactory to the
Administrator. Interest shall accrue on the principal of each Note only in respect of amounts which shall have been
advanced to the Borrower from time to time on account of the Loan, shall have been charged against such Note and
shall remain unpaid.
The Loans provided for 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 bear
interest at the "Cost-of-Money Interest Rate" determined by the Government pursuant to section
Page 2
305(d)(2)(A) ofthe Act (7 U.e. ~935(d)(2)(A)) and the implementing regulations, as amended from time
to time (7 C.F.R. ~1735,31(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.e. ~948(b)(3)), and the
implementing regulations, as amended from time to time (7 e.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.c. ~2285(b)) of the Federal Financing Bank Act of 1973, as amended (12 U.
~2281 ~ ~.
SEe. 1.3. Loan Closing. The parties may from time to time determine by agreement the amount
required to enable the Borrower to perform its obligations hereunder. If any reduction in the maximum amount of
the RUS Loan or of the Bank Loan is thus agreed upon, the Administrator shall 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 Borrower shall agree that no further funds are required to be advanced on account
of the RUS Loan or the Bank Loan, 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 deliver to 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.
SEe. lA. 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 Borrower now
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 Borrower as
may be required to confirm, fully convey, preserve or renew the lien of the Mortgage as security for the Notes and to
effectuate the intention to these presents that the Mortgage shall cover all property ofthe Borrower, whether now
owned or hereafter acquired (any such supplemental mortgage, supplemental deed of trust, supplemental or
additional chattel mortgage, and any such other action, as the case may be, being hereinafter called a "supplemental
mortgage
ARTICLE II
ADVANCES AND DISPOSITION OF 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 Borrower shall 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 lA hereof, all duly executed and accompanied by proof of the due recordation and filing
of the Mortgage and any supplemental mortgage in such places as may be required by law in order fully to
perfect and maintain the lien of the Mortgage and any supplemental mortgage;
Page 3
(b) evidence of appropriate corporate action authorizing the execution and delivery of the Notes,
the Mortgage, and any supplemental mortgage and amendment to this agreement;
(c) evidence that the Borrower has 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 Borrower to enter
into this agreement, to execute and deliver the Notes, the Mortgage, and any supplemental mortgage and
amendment to this agreement; to construct and operate the System, and to perform all other acts to be
performed by it hereunder;
(d) evidence that the Borrower has duly adopted a tariff which (1) will provide for such grades of
service as the Administrator may approve, (2) does not include mileage or zone charges for any telephone
service provided by the Project and (3) is designed to produce net income or margins before interest but
after taxes in an amount at least great enough, when divided by the amount of the interest requirements on
all of the Borrower s outstanding 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 financial
condition or plant since the date of the last financial statement submitted by the Borrower to the
Administrator and the Governor;
(f) evidence that the Borrower is not involved in or threatened with any litigation which may
substantially and adversely affect the Borrower s financial condition and that there are no liens or clouds on
title except the liens of the Mortgage and any underlying security instruments referred to in the Mortgage
and any supplemental mortgage on any of its property;
(g) evidence that the Borrower has duly adopted articles of incorporation and bylaws in form and
substance adequate to enable the Borrower to perform all acts to be performed by it hereunder;
(h) such opinions as the Administrator and the Governor may require, by counsel (who may be a
member of the Borrower s legal staff, if any, or an attorney regularly employed by the Borrower) selected
by the Borrower and approved by the Administrator and the Governor; and
(i) evidence that the Borrower has good and marketable title to the Existing Facilities, subject only
to the lien of the Mortgage and any underlying security instruments referred to in the Mortgage, and holds
such franchises, permits, leases, easements, rights, privileges, licenses or right-of-way instruments
reasonably adequate in form and substance, as may be required by law for the continued maintenance and
operation of the Existing Facilities, and every part thereof, in their present location.
(B) Notwithstanding the provisions set forth in (A) above of this section 2.1 the Government shall
not cause to be advanced any funds on account of any Guaranteed Loan unless and until the following special
conditions applicable to the Guaranteed Loan have been satisfied:
(a) the Government, acting through the Administrator, has entered into a contract with FFB and
FFB has agreed to make the Borrower the Guaranteed Loan;
(b) the Borrower has submitted evidence to the Administrator, in form and substance satisfactory
to him, that conditions in the contract of guarantee referred to in subsection (a) above have been satisfied to
the extent and in the manner prescribed by the Administrator; and
(c) the Borrower has duly authorized, executed and has delivered to the Administrator a
promissory note payable to FFB in the amount of the Guaranteed Loan and a reimbursement note payable to
the order of the Government in the manner prescribed by the Administrator.
Page 4
(C) The first advance of funds on account of the RUS Concurrent Loan, the Bank Concurrent Loan
and/or any RUS Hardship Loan and/or any Guaranteed Loan provided for in section 1.1 of this agreement shall
include, 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 e.P.R. Section 1753.15); and
(b) an amount to be determined by the Administrator for costs of construction which were
incurred subsequent to April 11 , 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 Borrower has furnished evidence to the
Administrator, in form and substance satisfactory to him, that all indebtedness incurred for any interim construction
referred to in subsection (b) above has been paid in full and any associated liens have been duly discharged of
record.
SEe. 2.2. Requisitions. The Borrower shall from time to time submit to the Administrator
requisitions, on forms furnished by the Administrator, requesting advances on account of the Loan. Each requisition
shall be accompanied by the following:
(a) evidence that the construction of the Project effected to the date of the requisition complies
with the provisions hereof;
(b) a certificate signed by a duly authorized officer or employee of the Borrower, which shall
specify all payments not previously accounted for theretofore made by the Borrower from funds in the
Special Construction Account provided for in section 2.4 hereof;
(c) a statement, on a form to be furnished by the Administrator, setting forth the purposes for
which it is intended the requested advance will be used by the Borrower; and
(d) such additional information, opinions, documents, and proofs relating to the construction of
the Project, the expenditure of Loan funds and the security for the Loan, as may reasonably be requested by
the Administrator.
SEe. 2.3. Advances.Loan funds shall be advanced to the Borrower only if the Borrower has (I)
complied with section 2.1 hereof and all other conditions precedent to advance of Loan funds, (2) furnished the
Administrator with a requisition and accompanying documents complying with section 2.2 hereof and (3) notified
the Administrator whether such Loan funds are to be advanced on account of the RUS Loan, the Bank Loan, or both.
Within a reasonable time thereafter, the Government or the Bank, or both, as requested by the Borrower, shall
advance Loan funds to the Borrower sufficient in the aggregate for such of the purposes specified in the statement
accompanying the requisition as the Administrator shall approve. The Administrator may at any time, as a condition
to making any advance on account of the Loan, require compliance by the Borrower with anyone or more of the
covenants, 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 the
closing of such loan specified in a loan closing certificate.
At the time of each advance of Bank Loan funds, the Borrower shall purchase Class B stock of the
Bank in an amount equal to five percent of the amount of Bank Loan funds advanced, exclusive of the amount
advanced for Class B stock. The Borrower may purchase the Class B stock with either (I) non-Loan funds or (2)
funds included in the Bank Loan. If the initial Bank Loan or any additional Bank Loan includes funds for the
purchase of Class B stock, each advance of such Bank Loan funds shall include an appropriate amount to purchase
Page 5
Class B stock. Evidence of such purchase in such form as the Bank may prescribe shall be promptly issued to the
Borrower.
SEe. 2.4. Special Construction Account.The Borrower shall promptly deposit all moneys
advanced to it by the Government or the Bank hereunder in a special construction account (hereinafter called
Special Construction Account ) in a bank, institution or other depository, which shall meet the requirements
specified in section 4,3 hereof, and shall hold such moneys in trust for the Government and the Bank as their
interests may appear until disbursed. Any Special Construction Account shall be designated by the corporate name
of the Borrower, followed by the words "Trustee, RUS Construction Fund Account . All Loan funds in any Special
Construction Account shall be used solely for the purposes specified in section 1.1 hereof. Moneys in any Special
Construction Account may be withdrawn only upon checks, drafts or orders signed on behalf of the Borrower. The
Borrower shall expend each advance on account of the Loan only for such of the purposes specified in the statement
of purposes accompanying the requisition for such advance as shall have been approved by the Administrator.
SEe. 2.5. Unexpended Loan Funds. Any funds advanced on account of the RUS Loan or on
account of the Bank Loan remaining in any Special Construction Account upon the closing of such loan shall be
forthwith remitted to the Government, if such unexpended funds were advanced on account of the RUS Loan , or tothe Bank, if such unexpended funds were advanced on account of the Bank Loan. A credit in the amount of such
remittance shall be allowed against such one or more of the RUS Notes or the Bank Notes (depending upon whether
the unexpended advances were made on account of the RUS Loan or the Bank Loan) as shall be agreed upon by the
Administrator and the Borrower.
SEe. 2.6. Compliance with Restrictions on Use of Materials. No advances will be made onaccount of the Loan for the construction of any part of the Project with respect to which the Borrower shall have
failed to submit to the Administrator and the Bank satisfactory evidence that the Borrower has obtained from the
appropriate agency or agencies of the Government all necessary orders or approvals with respect to the use of the
materials required for the construction of such part of the Project. No construction shall be undertaken except inaccordance with authorizations or regulations of any such agency or agencies having jurisdiction in the premises.
SEe. 2.7. Loan Rescissions.The Borrower may request rescission of all or part of the
unadvanced portion of the RUS Loan or the Bank Loan at any time. The Administrator or the Governor, as the casemay be, shall comply with such request if the Borrower demonstrates, to the satisfaction of the Administrator or the
Governor, that (1) the purposes intended to be financed by the unadvanced Loan funds have been completed, (2)
sufficient funds are available from non-governmental sources to complete such purposes, or (3) the Loan funds being
rescinded are no longer required to extend or improve telephone service in rural areas. The Administrator or the
Governor, as the case may be, shall not initiate rescission of the unadvanced portion of the RUS Loan or the Bank
Loan, unless all of the purposes for which telephone loans have been made to the Borrower under the Act have been
accomplished with funds provided under such Act. Loan funds that have been rescinded are no longer available tothe Borrower.
SEe. 2.8. Tariff.(a) The Borrower shall, 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 body
approvals necessary to place in effect and thereafter to maintain in effect a tariff which (i) provides for such grades
of service as the Administrator shall approve, (ii) does not include mileage or zone charges for any telephone service
provided by the Project, and (iii) is designed to produce net income or margins, before interest but after taxes, insuch amounts that when divided by the amount of interest requirements on all of the Borrower s outstanding and
proposed loans, produces a ratio of at least 1.0, and (2) place such tariff into effect as soon as permitted by
applicable laws and regulations. The Borrower shall use its diligent best efforts to obtain all necessary regulatory
body approvals of such revisions of its tariff as may be necessary from time to time to satisfy the requirements of thisprovision.
...-
(b) The Borrower shall continue to comply with the requirements of this provision after the
Forecast Period except that the ratio required by (a) above shall be changed to 1.50.
Page 6
(c) The Borrower shall provide the Administrator with evidence, in form and substance
satisfactory to him, that the Borrower is in full compliance with this section 2.8 whenever the Administrator shall so
request.
ARTICLE III
CONSTRUCTION
SECTION 3.1. Labor and Materials Contract.The Borrower shall cause the Project to be
constructed under labor and materials contract by a responsible contractor or contractors selected by the Borrower
and approved by the Administrator, except to the extent that the Administrator may in writing authorize other
methods of construction. The Borrower shall keep accurate and detailed records of all costs and expenses in
connection with construction of the Project.
SEe. 3.2. Commencement and Completion.The Proj~ct shall be constructed in accordance with
the approved plans and specifications hereinafter provided for, the provisions of this agreement and all contracts and
subcontracts made pursuant hereto. Construction of the Project or any portion thereof shall be commenced promptly
after the Administrator shall have notified the Borrower of approval to commence such construction, and the
Borrower shall cause such construction to be prosecuted diligently and to be completed within a reasonable time
unless prevented from so doing by causes beyond the control and without the fault or negligence of the Borrower.
The Borrower shall cause the Project to be completed in such manner that the System shall be free and clear of all
liens and lawful claims for liens except the liens of the Mortgage and any supplemental mortgage.
SEe. 3.3. Bidding. The Borrower shall 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 Borrower shall.open all
bids publicly at the time and place which shall have been specified in the notice to bidders, after reasonable prior
written notification of such time and place has been given by the Borrower to the Administrator. The Borrower shall
award each contract to the lowest responsible bidder, unless all bids are rejected.
SEe. 3.4. Inspection by Administrator.The Administrator may inspect the construction and
equipment of the Project, and shall have the right to examine and test all work and materials, and the Borrower shall
provide reasonable facilities therefor for the use of the Administrator and his agents. The Administrator may reject
any defective material or workmanship and require that any such material shall be replaced with proper material and
that any such workmanship shall be corrected, to the end that all material and workmanship shall conform with the
approved plans and specifications hereinafter provided for.
SEe. 3.5. Certificates and Maps. The Borrower shall, at the request of the Administrator, furnishto the Government and the Bank: (a) such certificates of the approved engineer and of the officers and employees of
the Borrower as the Administrator shall reasonably require with respect to construction of the Project, or any portionthereof, and the cost thereof; (b) a complete inventory by construction units, in sufficient detail to reflect accurately
all construction costs, and a description of the Project, or any portion thereof; and (c) a map or maps, in the same
form as contained in the approved plans and specifications hereinafter provided for, corrected to show actual
locations and classifications of all exchanges, lines and other properties of the Borrower except those, if any, not
directly connected with the Project.
ARTICLE IV
PARTICULAR COVENANTS
Page 7
SECTION 4.1. Appointments by Borrower.The Borrower shall designate: (a) one or more
engineers who shall perform the engineering services involved in the construction of the Project or the several
portions thereof, and execute all certificates and other instruments pertaining to engineering details required
hereunder to be delivered to the Administrator; 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 Borrowers business, shall
have active charge of the management and operations of the Borrower (hereinafter called the "Manager ). Persons
so designated by the Borrower shall be subject to the approval of the Administrator; provided that if any such person
is disapproved by the Administrator, the Administrator shall notify the Borrower in writing of the reasons why the
designated person is deemed not qualified to perform the proposed duties properly; and provided further that the
Administrator s approval shall not be required for a person designated as the Manager by the Borrower if, for each of
the five years immediately preceding such designation, the Borrower has owned and operated the Existing Facilities
and has not had a deficit in net income or net margins as determined in accordance with methods of accounting
prescribed by the state regulatory body having jurisdiction over the Borrower, or in the absence of such regulatory
body or such prescription, by the Federal Communications Commission.
SEe. 4.2. Submission of Plans. Specifications and Contracts With Third Parties. The Borrower
shall submit, 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 engineering
services in connection with the construction of the Project;
(b) plans and specifications for the construction of each portion of the Project, identified by the
signatures of the approved engineer for such portion or portions, and of a duly authorized and responsible
officer or employee of the Borrower;
(c) a contract or contracts for the 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, together with any contractor s or subcontractor s bond relating thereto;
(d) a contract or cC?ntracts for such toll traffic and operator assistance services, to be furnished by
connecting companies, as may be necessary for the proper operation of the System; provided, however, that
the Administrator s approval shall not be required for any such contract or contracts, submitted to the
Administrator, 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 Borrower of materials, equipment and supplies
for use in connection with the Project;
(f) a contract or contracts for the purchase, lease, or other acquisition of land for use in connection
with the construction or operation of the System; and
(g) a contract or contracts for extended area service to be provided by or for other companies, as
may be necessary for the proper operation of the System.
SEe. 4.3. Deposit of Funds. The Borrower shall not deposit or allow to remain on deposit any of
its funds, regardless of the source thereof, in any bank, institution or other depository which is not fully insured by
the Federal government. The Borrower shall inform the Administrator of the names of the banks, institutions or
other depositories which it has selected for deposit of its funds.
SEe. 4.4. Easements and Permits. The Borrower shall submit to the Government and the Bank
when requested by the Administrator, evidence satisfactory to the Administrator that the Borrower has obtained such
easements from landowners and releases from lienors and such franchises, authorizations, permits, licenses
certificates of convenience and necessity, approvals, and orders from public bodies and others, reasonably adequate
in form and substance, as may be required by law for the construction of the Project and the operation of the System.
Page 8
If requested so to do by the Administrator, the Borrower shall cause such easements and releases to be recorded in
appropriate offices of record. Except with the consent of the Administrator, none of the funds advanced on account
of the Loan shall be used by the Borrower to pay for easements obtained from landowners or for releases of liens
affecting easements.
SEe. 4.5. Area Coverage. The Borrower shall furnish adequate telephone service to the widest
practicable number of rural users in the Borrower 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 Borrower and
the Administrator, is incorporated herein by reference thereto. In the performance of this obligation, the Borrower
shall (except to the extent that the Administrator, upon request of the Borrower, may in writing authorize deviations
therefrom):
(a) furnish service to all applicants for service included in the Project, without payment by such
applicants of any extra charge as a contribution to the cost of construction of facilities to provide such
service; and
(b) take all action that may be required to enable it to extend service, with the use of such funds as
may from time to time be available to it, either from surplus earnings, increased equity capital, additionalloans made by lenders other than the Government or the Bank, or otherwise as the Borrower may elect, andwithout payment to the Borrower of any extra charge as a contribution to construction of facilities to
provide such service, 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 estimated
annual local service revenues from such applicant. Such service shall be furnished pursuant to terms and
conditions set forth in the Borrower s tariff, as duly filed with or approved by regulatory bodies having
jurisdiction in the premises, or in the absence of any such regulatory body, as adopted by the Borrower;
provided that the Borrower shall not file with or submit for approval of appropriate regulatory bodies or
adopt any proposed tariff, or continue in effect any existing tariff not required to be continued by any
regulatory body, unless under such tariff the Borrower will be obligated to serve unserved rural applicants
as provided herein.
The furnishing of service to applicants for service under the conditions provided in this section is of the essence of
the Borrower s obligations under this agreement, and the failure or neglect of the Borrower to perform such
obligation shall be deemed to be an event of default hereunder.
SEe. 4.6. Mortgage Covenants. The Borrower shall perform all covenants by it to be performed
under the Mortgage and any supplemental mortgage.
SEe. 4.7. Representations and Warranties. The Borrower represents 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 this
agreement and has the power to enter into this agreement and to perform every act required to be performed
by it hereunder;
(b) all proceedings prerequisite to the valid execution of this agreement by it have been duly taken
and all required authorizations therefor have been secured;
(c) it has not entered into any contract (not heretofore fully performed) for the construction of any
portion of the Project, or for engineering or for other services pertaining to the construction or operation of
the System, unless such contract has (I) been approved by the Administrator; (2) will be submitted for the
approval of the Administrator; or (3) the effectiveness thereof has been made subject to the approval of the
Administrator;
Page 9
(d) the capital structure of the Borrower is as shown in a certified copy of its articles of
incorporation last submitted to the Administrator; the Borrower has issued and has outstanding only such
numbers and classes of shares of its capital stock and such bonds and other evidences of indebtedness, if
any, as shown in the statement thereof last submitted to the Administrator; and the Borrower has not entered
into any agreement for the issuance of any other shares of its capital stock, or of bonds or other evidences ofindebtedness;
(e) every statement contained in this agreement and in every other document, statement, certificate
and opinion submitted to the Government or to the Bank by it or in its behalf is true and correct;
(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 or
accurately states that the Borrower has none; and
(h) Schedule C hereto accurately sets forth the borrower s place of business or, if more than one, its
chief executive office as well as the Borrower s mailing address if different.
SEe. 4.8. Fees and Commissions. No fee or commission has been or shall be paid and no
agreement therefor has been or shall be entered into by the Borrower or any of its officers, employees, agents, or
representatives in order to obtain the Loan.
SEC. 4.9. Buy American" Clause.The Borrower shall use or cause to be used in connection with
the expenditures of funds advanced on account of the Loan only such unmanufactured articles, materials, and
supplies as have been mined or produced in the United States or in any eligible country, and only such manufactured
articles, materials, and supplies as have been manufactured in the United States or in any eligible country
substantially all from articles, materials, or supplies mined, produced, or manufactured, as the case may be, in the
United States or in any eligible country, except to the extent the Administrator shall determine that such use shall be
impracticable or that the cost thereof shall be unreasonable. For purposes of this section, an "eligible country" is any
country that applies with respect to the United States an agreement ensuring reciprocal access for United States
products and services and United States suppliers to the markets of that country, as determined by the United States
Trade Representative.
SEe. 4.10. Equal Opportunity Clause. The Borrower hereby agrees that it will incorporate or
cause to be incorporated into any contract for construction work, or modification thereof, as defined in Executive
Order 11246 of September 24 1965, or in the rules and regulations of the Secretary of Labor, which is paid for in
whole or in part with funds obtained from the Government or the Bank or borrowed on the credit of the Government
or the Bank pursuant to a grant, contract, loan, insurance or guarantee, or undertaken pursuant to any Federal
program involving such grant, contract, loan, insurance or guarantee, the following equal opportunity clause:
During the performance of this contract, the Contractor agrees as follows:
(1) The Contractor wilJ not discriminate against any employee or applicant for employment
because ofrace, color, religion, sex or national origin. The Contractor will take affirmative action to ensure that
applicants are employed, 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 payor other
forms of compensation; and selection for training, including apprenticeship. The Contractor agrees to post in
conspicuous places, available to employees and applicants for employment, notices to be provided setting forth the
provisions of this nondiscrimination clause.
Page 10
(2) The Contractor will, in all solicitations or advertisements for employees placed by or on behalf
of the Contractor, state that all qualified applicants 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 a
collective bargaining agreement or other contract or understanding, a notice to be provided advising the said labor
union or workers' representative of the Contractor s commitments under this section, and shall post copies of the
notice in conspicuous places available to employees and applicants for employment.
(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 of
September 24, 1965 , and by the rules, regulations and orders of the Secretary of Labor, or pursuant thereto, and will
permit access to his books, records, and accounts by the administering agency and the Secretary of Labor for
purposes of investigation to ascertain compliance with such rules, regulations and orders.
(6) In the event of the Contractor s noncompliance with the nondiscrimination clauses of this
contract or with any of the said rules, regulations or orders, this contract may be canceled, terminated or suspended
in whole or in part, and the Contractor may be declared ineligible for further Government contracts or federally
assisted construction contracts in accordance with procedures authorized in Executive Order 11246 of September 24
1965, and such other sanctions may be imposed and remedies invoked as provided in said Executi ve Order 11246 of
September 24, 1965, or by rule, regulation or order of the Secretary of Labor, or as otherwise provided by law.
(7) The Contractor will include the portion of the sentence immediately preceding paragraph (1)
and the provisions of paragraphs (I) 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 of
September 24, 1965, so that such provisions will be binding upon each subcontractor or vendor. The Contractor will
take such action with respect to any subcontract or purchase order as the administering agency may direct as a means
of enforcing such provisions, including sanctions for noncompliance. Provided, however, that in the event a
contractor becomes involved in, or is threatened with, litigation with a subcontractor or vendor as a result of such
direction by the administering agency, the Contractor may request the United States to enter into such litigation to
protect the interests of the United States.
The Borrower further agrees that it will be bound by the above equal opportunity clause with respect to its own
employment practices when it participates in federally assisted construction work: Provided, that if the Borrower so
participating is a State or local government, 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 Borrower agrees that it will assist and cooperate actively with the administering agency and the Secretary of
Labor in obtaining the compliance of contractors and subcontractors with the equal opportunity clause and the rules
regulations and relevant orders of the Secretary of Labor, that it will furnish the administering agency and the
Secretary of Labor such information as they may require for the supervision of such compliance, and that it will
otherwise assist the administering agency in the discharge of the administering agency s primary responsibility for
securing compliance.
The Borrower further agrees that it will refrain from entering into any contract or contract modification subject to
Executive Order 11246 of September 24 , 1965, with a contractor debarred from, or who has not demonstrated
eligibility for, Government contracts and federally assisted construction contracts pursuant to Executive Order
11246, of September 24, 1965, and will carry out such sanctions and penalties for violation of the equal opportunity
clause as may be imposed upon contractors and subcontractors by the administering agency or the Secretary of Labor
pursuant to Part II, Subpart of Executive Order 11246, of September 24, 1965.
Page IJ
In addition, the Borrower agrees that if it fails or refuses to comply with these undertakings, the administering
agency may take any or all of the following actions: cancel, terminate or suspend in whole or in part this contract;
refrain from extending any further assistance to the Borrower under the program with respect to which the failure or
refusal occurred until satisfactory assurance of further compliance has been received from such Borrower; and refer
the case to the Department of Justice for appropriate legal proceedings.
SEe. 4.11. Evidence of Feasibility.The Borrower shall, whenever requested so to do by the
Administrator, submit evidence satisfactory to the Administrator of the economic and engineering feasibility of each
portion of the System designated by the Administrator.
SEe. 4,12. Proof of Title.No funds shall be advanced on account of the Loan to finance the
acquisition of any real property by the Borrower, or any construction thereon, until the Borrower shall have
submitted evidence satisfactory to the Administrator that it has acquired or will acquire good and marketable title to
such real property and owns or will own or has other rights in all of its properties and assets.
SEe. 4.13. Commencement of Operation.The Borrower shall not operate any portion of the
Project until the Borrower shall have furnished evidence that (a) such portion of the Project has been properly
constructed and is ready to be operated, (b) there are sufficient subscribers ready to take service to permit the
economical operation of such portion of the Project, and (c) the Borrower has complied with the provisions of the
Mortgage concerning insurance in respect of such portion of the Project.
SEC. 4.14. Operating and Maintenance Procedures.The Borrower shall, subject to applicable
laws and rules, regulations and orders of regulatory bodies, operate and maintain the System in accordance with
standards of operation and maintenance generally accepted for corporations of the size and character of the
Borrower.
SEe. 4.15. Compliance with Environmental Requirements. The Borrower shall, with respect to
all facilities which may be part of the System, comply with all applicable water and air pollution control standards
and other environmental requirements imposed by Federal or state statutes, regulations, licenses or permits.
SEe. 4.16. Historic Preservation . The BOiTower shall not use any portion of the RUS Loan or the
Bank Loan without the prior written approval of the Administrator or the Governor, as the case may be, for any
project, 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 National Register of Historic Places
maintained by the Secretary of the Interior pursuant to the National Historic Preservation Act, as amended.
SEe. 4.17. Historic Landmarks. The Borrower shall not use any portion of the RUS Loan or the
Bank Loan, without the prior written approval of the Administrator or the Governor, as the case may be, for any
project, activity or program that may directly and adversely affect any property that the Secretary of the Interior has
designated a National Historic Landmark pursuant to the National Historic Preservation Act, as amended.
SEe. 4.18. Electronic Funds Transfer.Except as otherwise prescribed by the Administrator and
the Governor, the Borrower shall make all payments on all notes issued by the Borrower pursuant to this agreement
and any subsequent amendment, utilizing electronic funds transfer procedures as specified by the Administrator and
the Governor for payments to the Government or to the Bank, respectively.
SEe. 4.19. Uniform Relocation and Acquisition Act.The Borrower hereby covenants that it shall
in acquiring real property, comply with the provisions of the Uniform Relocation Assistance and Real Property
Acquisition Policies Act of 1970 (the "Uniform Act ), as amended by the Uniform Relocation Act Amendments of
1987 , and 49 e.F.R. Part 24, referenced by 7 e.F.R. Part 21 , to tl1e extent the Uniform Act is applicable to such
acquisition.
Page 12
. .
SEe. 4.20. Flood Insurance. The Borrower shall not, without the prior written approval of the
Administrator or the Governor, 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 building or any machinery,
equipment, fixtures or furnishings contained or to be contained therein in any area identified by the Director of the
Federal Emergency Management Agency (the "Director ofFEMA") pursuant to the Flood Disaster Protection Act of
1973, as amended (the "Flood Insurance Act ) as an area having special flood hazards unless and until the Borrower
has submitted evidence satisfactory to the Administrator, or the Administrator has otherwise determined: (i) the
Director of FEMA has made flood insurance available, pursuant to the Flood Insurance Act, in the area in which the
acquisition, construction, repair or improvement is proposed to occur; and (ii) the Borrower has obtained flood
insurance coverage with respect to such building, machinery, equipment, fixtures or furnishings as may then be
required pursuant to the Flood Insurance Act.
SEe. 4.21. Nonduplication of Facilities. If the Borrower provides telephone service in any state
in which there is no state regulatory body with authority to regulate telephone service and to require certificates of
convenience and necessity to the Borrower, the Borrower shall not use any portion of the Loan for the construction
of telephone facilities to furnish or improve service to persons located in such state receiving telephone service from
any other telephone company at the time the Borrower proposes to furnish or improve service to such persons,
except that the Borrower may provide or improve service to persons receiving service through facilities acquired or
to be acquired by the Borrower, and except to the extent the Administrator, on the basis of evidence submitted to him
by the Borrower, shall have determined that service by the Borrower to such persons will not result in duplication of
lines, facilities or systems providing reasonably adequate service.
SEe. 4.22. If the Borrower does not have an organizational identification number and later
obtains one, the Borrower will promptly notify the Administrator and the Governor in writing of such organizational
identification number.
SEe. 4.23. Borrower covenants and agrees with the Government and the Bank that the Borrower
will not, directly or indirectly, without giving written notice to the Government and the Bank thirty (30) days prior to
the effective date:
(a) Change the location of the Borrower s place of business or if more than one, it chief executive
office.
(b) Change the name of the Borrower.
(c) Change the mailing address of the Borrower.
(d) Change its organizational identification number if it has one.
SEe. 4.24. The Borrower covenants and agrees with the Government and the Bank that the
Borrower will not, directly or indirectly, without the prior written consent of the Government and the Bank change
its type of organization, jurisdiction of organization or other legal structure.
ARTICLE V
EVENTS OF DEFAULT AND REMEDIES
SECTION 5.1. Events of Default.The happening of any of the following events (hereinafter
called "events of default ) shall constitute a default by the Borrower hereunder:
Page 13
(a) any failure to perform, or any violation of, any term, covenant, promise, condition, or
agreement on the part of the Borrower to be performed hereunder at the time and in the manner herein
provided;
(b) any breach of any warranty or any material or substantial inaccuracy in any representation on
the part of the Borrower; or
(c) any event of default which is specified in the Mortgage or any supplemental mortgage.
SEe. 5.2. Remedies Upon Default.Upon the happening of any event of default, as specified in
section 5.1 hereof, the Government or the Bank or the holder or holders of anyone or more of the Notes, as their
respective interests may appear, may exercise anyone or more of the following rights, privileges, powers, and
remedies, to the extent that the exercise thereof is not prohibited by law:
(a) refuse to make any advance or any further advances on account of the Loan, but any advance
thereafter made by the Government or the Bank shall not constitute a waiver of such default;
(b) declare all unpaid principal of and all interest accrued on any or all of the Notes held by such
holder or holders (which may include the Government or the Bank) to be due and payable immediately and
upon such declaration all such principal and interest shall become due and payable immediately, anything
herein or in any other agreement to which the Borrower shall be a party, or in the Notes or in the Mortgage
or any supplemental mortgage to the contrary notwithstanding.
SEe. 5.3. Remedies Cumulative. Every right, privilege, power or remedy herein or in the Notes
or in the Mortgage or in any supplemental mortgage conferred upon or reserved to the Government or the Bank or
any holder or holders of the Notes shall be cumulative and shall be in addition to every other right, privilege, power
and remedy now or hereafter existing at law or in equity or by statute. The pursuit of any right, privilege, power, or
remedy shall not be construed as an election.
ARTICLE VI
MISCELLANEOUS
SECTION 6.1. Members of Congress. No Member of or Delegate to the Congress of the United
States shall be admitted to any share or part of this agreement or to any benefit to arise therefrom other than the
receiving of telephone service through the System on the same terms accorded others served through the System.
SEe. 6.2. Receipt of Certain Criminal Sections of U.S. Code. The Borrower and each ofthe
officers signing this agreement respectively acknowledge that they are familiar with the provisions of sections 201
286 287 641 666 1001 1361 and 1366 of Title 18, United States Code, Crimes and Criminal Procedure.
SEe. 6.3. Relations of Administrator and Governor.
(a) Insofar as required by the Act, the Administrator shall act in his capacity as Governor in the
exercise of his authority and the performance of his obligations under this agreement and any amendment
thereto.
(b) Upon payment by the Borrower of all amounts due on account of the RUS Notes and all
amounts due the Government pursuant to the terms hereof, and to the terms of the Mortgage and any
supplemental mortgage executed by the Borrower, all of the rights, powers, obligations and functions of the
Administrator hereunder shall pass to and be vested in the Governor.
Page 14
SEC. 6.4. Definitions. Whenever the following terms are used in this agreement, unless the
context indicates another or different meaning or intent, they shall be construed to have meanings as follows:
(a) "Administrator" means the Administrator of the Rural Utilities Service or his duly authorized
representative or any other person or authority in whom may be vested the duties and functions relating to
loans for telephone service in rural areas made pursuant to the Act which the Administrator is now or may
hereafter be authorized by law to perform.
(b) "Governor" means the Governor of the Rural Telephone Bank provided for in Title IV of the
Rural Electrification Act of 1936, as amended, or his duly authorized representative, or any other person orauthority in whom may be vested the duties and functions relating to loans for telephone service made
pursuant to said Title IV which the Governor is now or may hereafter be authorized to perform.
(c) "plans and specifications" means the plans and specifications for the Project originally
approved by the Administrator and shall include such changes and modifications thereof as may from time
to time be agreed upon by the Borrower and the Government and the Bank;
(d) "note" includes "bond"; and
(e) "construction" includes "acquisition , and the word "construct" includes the word "acquire
SEe. 6.5. Approvals in Writing. No counsel, engineer, manager or other person, or instrumentsor act of the Borrower, who or which shall be subject to the approval of the Administrator, shall be deemed to be
approved unless and until the Administrator shall have given such approval in writing.
SEe. 6.6. Waiver.The Administrator, in his absolute discretion and upon such terms and
conditions as he may determine, may waive the performance or doing of anyone or more of the acts to be performed
or things to be done by the Borrower, and any provision hereof may be modified or amended by mutual consent of
the Borrower and the Administrator. The Borrower shall not claim any modification, amendment, rescissionrelease, 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 a
finding of sufficient performance by the Borrower of all acts prerequisite to such advance, or a waiver thereof;provided, however, that any such waiver shall be effective only with reference to such advance and shall not preclude
the Administrator from requiring full performance of the acts so waived as a prerequisite to any subsequent advance.
SEe. 6.7. Non-Assignability. The Borrower shall not assign this agreement or any part hereof or
any moneys due or to become due hereunder.
SEe. 6.8. Descriptive Headings: Separability. The descriptive headings of the various articles andsections hereof were formulated and inserted for convenience only and shall not be deemed to affect the meaning or
construction of any of the provisions hereof. The invalidity of anyone or more phrases, clauses, sentences
paragraphs, or provisions of this agreement shall not affect any remaining portion or portions hereof.
SEe. 6.9. Notices . All demands, notices, approvals, designations, or directions permitted or
required to be made upon or given to the Borrower hereunder shall be mailed to the Borrower at P.O. Box 98Albion, Idaho 83311 or such other address as the Borrower shall designate in writing to the Administrator. All
notices, designations, or communications permitted or required to be given or sent to the Government, the Bank orthe Administrator hereunder shall be mailed to the Administrator at Washington, D.e. 20250-1500 or such otheraddress as the Administrator shall designate in writing to the Borrower.
SEe. 6.10. Duration of Agreement.Except where otherwise required by the context, allprovisions of this agreement shall continue in full force and effect until all amounts owing by the Borrower to the
Page 15
, ,
Government and the Bank on account of the Loan shall have been paid, and upon such payment this agreement shall
be deemed to have been fully performed,
SEe. 6.11. Nature of Obligations. The obligations of the Government and the Bank under this
agreement, and any amendment thereto, shall be several and not joint.
SEC. 6.12. Counterparts . This agreement may be simultaneously executed and delivered in two or
more counterparts, each of which so executed and delivered shall be deemed to be an original, and all shall constitute
but one and the same instrument.
IN WITNESS WHEREOF the Borrower and the Bank have caused this agreement to be signed in
their respective corporate names and their respective corporate seals to be hereunto affixed and attested by their
officers thereunto duly authorized, and the Government has caused this agreement to be duly executed all as the day
and year first above written.
:BlO
President
(Seal)
Attest:
Page 16
(Seal)
Attest:
~~,
rZ~t--o', ssistant Secretary
of the
Rural Telephone Bank
UNITED STATES OF AMERICA, and
RURAL TELEPHONE BANK, respectively
~tf
irector, Northwest Area
elecommunications Program
of the
Rural Utilities Service
and for the
Rural Telephone Bank
Page 17
. .
SCHEDULE C
1. The place of business, or, if more than one, its chief executive office as well as the Borrower s mailing address, if
different, referred to in Section 4,7 is P.O. Box 98, Albion, Idaho 83311.
2. The organizational identification number of the Borrower referred to in Section 4.7 is C26771.
Page 18
. ',: , '
PROJECT DESIGNATION:
IDAHO 504-Hl2 & KIJ ALBION
MORTGAGE NOTE
made by
ALBION TELEPHONE COMPANY
UNITED STATES OF AMERICA
. .
MORTGAGE NOTE
Albion, Idaho
November 3, 2003
Article I:Special Provisions - RUS Variable Rate Note
Amount
ALBION TELEPHONE COMPANY (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 the UNITED STATES OF
AMERICA (hereinafter called the "Government ), acting through the Administrator of the Rural Utilities Service, at
the United States Treasury, Washington, D.e., at the times and in the manner hereinafter provided, such sums as may
be advanced from time to time, not to exceed four million forty-six thousand dollars ($4 046,000), with interest
payable from the date of each advance ("Advance ) on the unpaid principal balance, pursuant to a certain loan
contract, 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 so
amended, being hereafter called the "Loan Contract ), and remaining unpaid from time to time.
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 day
of each month (the "Monthly Payment Date ), of each year 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
Corporation shall make a payment every Monthly Payment Date on each such Advance (substantially equal to every
other monthly payment on such Advance, and (b) in an amount that will pay all principal and interest of such
Advance no later than the Maturity Date.
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 the
date hereof shall be repaid in installments beginning with the Monthly Payment Date of the month following the
month of each Advance and ending on the Maturity Date. 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 the
Advance and the first day of the month following the month of the Advance. Thereafter, to and including the
Maturity Date, 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 principal
and interest of such Advance no later than the Maturity Date. This payment shall be in addition to the payments on
the Advances made and unpaid two (2) years after the date hereof.
Prepayment
The Corporation on any Monthly Payment Date, as hereinabove provided, may pay all or any part of an Advance
remaining unpaid, but so long as any of the principal of such Advance shall remain unpaid, the Corporation shall be
obligated to make the monthly payment on account of principal and interest, in the amount first determined pursuant
to this Note, unless the Corporation and the holder of this Note shall otherwise agree.
Interest Rate
Each Advance hereunder shall bear interest at a rate (the "Cost of Money Interest Rate ) determined for that
Advance in accordance with Section 305(d)(2)(A) of the Rural Electrification Act of 1936, as amended (7 u.S.
~935(d)(2)(A)) and the implementing regulations (7 CFR 91735.31(c)), as amended from time to time, provided
Page I
. .
however, that the Cost of Money Interest Rate may exceed seven (7) per cent per year (PL. 104-180, 110 Stat.
1587).
Article II:Standard Provisions
Application of Payments
Each payment made on this Note shalI be applied first to the payment of interest on principal and then on account of
principal. Any principal hereof advanced pursuant to the Loan Contract remaining unpaid, and interest thereon, shall
become due and payable on the Maturity Date.
Security
This Note has been executed and delivered pursuant to and is secured by a certain mortgage, dated as of November
3, 2003, made by and among the Corporation, the Government, the Bank and CoBank, ACB, as the same may have
been amended or supplemented by any supplemental mortgage or supplemental mortgages (said mortgage and any
such supplemental mortgage or supplemental mortgages being hereinafter collectively called the "Mortgage ), and is
one of several notes (hereinafter called the "notes ) permitted to be executed and delivered by the Corporation
pursuant to the Mortgage. The Mortgage provides that all notes shall be equalIy and ratably secured thereby and
reference is hereby made to the Mortgage for a description of the property mortgaged and pledged, the nature and
extent of the security and the rights of the holders of notes with respect thereto.
Default
In case of default by the Corporation, as provided in the Mortgage, all principal advanced pursuant to the Loan
Contract and remaining unpaid, 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 provided in the Mortgage.
Noteholder
This Note evidences indebtedness created by a loan made under the Rural Electrification Act of 1936, as amended.
If the Government shall at any time assign this Note and insure the payment hereof, the Corporation shall continue to
make payments hereunder to the Government as collection agent for the insured holder, and, for purposes of the
Mortgage, the Government, and not such insured holder, shall be considered to be, and shall have the rights of, the
noteholder.
Additional Notes
If the Government, at any time prior to the advance of the entire principal amount hereof on account of this Note
shall make a written endorsement hereon stating the amount advanced on account of the principal hereof, and shall
notify the Corporation, in writing, of such endorsement, then the principal amount of this Note shall be deemed to be
and shall become reduced to the amount specified in such endorsement, and the Corporation shall then execute and
deliver to the Government one or more additional notes, in an amount or amounts designated by the Government
which in the aggregate shall be equal to the then unadvanced portion of the original principal amount of this Note
such additional notes to be dated currently when executed, to be in the same form, and to bear the same interest rate
as this Note. The Corporation, upon the request therefor in writing by the Government, shall execute and deliver to
the Government two or more notes, in substitution for this Note, in the same form and bearing the same interest rate
and date (except that any such substitute note which will evidence only an unadvanced portion of this Note may, at .
the discretion of the Government, be dated currently when executed), in an aggregate principal amount which shall
be equal to the principal amount of this Note, but in such individual principal amounts as the Government shall
request; provided that (i) all payments which shall have been made on account of the principal of and interest on this
Page 2
Note shall be credited on account of such substitute notes and (ii) the Government shall return this Note to the
Corporation upon receipt of such substitute notes.
IN WITNESS WHEREOF, the Corporation has caused this Note to be signed in its corporate name and its corporate
seal to be hereunto affixed and attested by its officers thereunto duly authorized, all as of the day and year first above
written.
ALBION TELEPHONE COMP
President
(SEAL)JJ~Attest:
Page 3
. c ,
PROJECT DESIGNATION:
IDAHO 504-H12 & Kll ALBION
MORTGAGE NOTE
made by
ALBION TELEPHONE COMPANY
UNITED STATES OF AMERICA
. .
MORTGAGE NOTE
Albion, Idaho
November 3, 2003
Article 1:Special Provisions - RUS Hardship Rate Note
Amount
ALBION TELEPHONE COMPANY (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 the UNITED STATES OF
AMERICA (hereinafter called the "Government ), acting through the Administrator ofthe Rural Utilities Service, at
the United States Treasury, Washington, D., at the times and in the manner hereinafter provided, the sum of seven
million five hundred thousand dollars ($7 500,000), with interest on the amount thereof advanced by the
Government, pursuant to a certain loan contract, 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 so amended, being hereafter called the "Loan Contract ), and remaining
unpaid from time to time, at the rate of five (5) percent per annum.
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 last
day of each month for a period ending on a date two (2) years after the date hereof. Thereafter, to and including a
date (the "Maturity Date ) eighteen (18) years after the date hereof, the Corporation shall make a payment on each of
said monthly dates in each year at the rate of $7.58 per $1,000 of principal amount hereof advanced pursuant to the
Loan Contract and unpaid two (2) years after the date hereof.
Payment on Advances made after two (2) years
Interest and principal payments on principal advanced more than two (2) years after the date hereof shall be made
monthly beginning with the last day of the month following the month of each advance of principal. Each payment
shall be (a) substantially equal to all subsequent monthly payments and (b) in an amount that will pay all principal
and interest on this Note no later than the Maturity Date. The first payment on an advance made more than two years
after the date of this Note shall be increased by the amount of interest accruing between the date of the advance and
the first day of the month following the month of the advance. These payments shall be in addition to the payment
made on the principal amount advanced and unpaid two (2) years after the date hereof.
Prepayment
The Corporation on any payment date, as hereinabove provided may pay all or any part of the principal hereof then
advanced pursuant to the Loan Contract and remaining unpaid , but so long as any of the principal hereof advanced
pursuant to the Loan Contract shall remain unpaid, the Corporation shall be obligated to make the monthly payment
on account of principal and interest, in the amount hereinabove provided, unless the Corporation and the holder of
this Note shall otherwise agree.
Article II:Standard Provisions
Application of Payments
Page 1
. .
Each payment made on this Note shall be applied first to the payment of interest on principal and then on account of
principal. On the Maturity Date, the principal hereof advanced pursuant to the Loan Contract remaining unpaid, if
any, and interest thereon, shall become due and payable.
Security
This Note has been executed and delivered pursuant to and is secured by a certain mortgage, dated as of November
3, 2003, made by and among the Corporation, the Government, the Bank and CoBank, ACB , as the same may have
been amended or supplemented by any supplemental mortgage or supplemental mortgages (said mortgage and any
such supplemental mortgage or supplemental mortgages being hereinafter collectively called the "Mortgage ), and is
one of several notes (hereinafter called the "notes ) permitted to be executed and delivered by the Corporation
pursuant to the Mortgage. The Mortgage provides that all notes shall be equally and ratably secured thereby and
reference is hereby made to the Mortgage for a description of the property mortgaged and pledged, the nature and
extent of the security and the rights of the holders of notes with respect thereto.
Default
In case of default by the Corporation, as provided in the Mortgage, all principal advanced pursuant to the Loan
Contract and remaining unpaid, 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 provided in the Mortgage.
Noteholder
This Note evidences indebtedness created by a loan made under the Rural Electrification Act of 1936, as amended.
If the Government shall at any time assign this Note and insure the payment hereof, the Corporation shall continue to
make payments hereunder to the Government as collection agent for the insured holder, and, for purposes of the
Mortgage, the Government, and not such insured holder, shall be considered to be, and shall have the rights of, the
noteholder.
Additional Notes
If the Government, at any time prior to the advance of the entire principal amount hereof on account of this Note
shall make a written endorsemeM hereon stating the amount advanced on account of the principal hereof, and shall
notify the Corporation, in writing, of such endorsement, then the principal amount of this Note shall be deemed to be
and shall become reduced to the amount specified in such endorsement, and the Corporation shall then execute and
deliver to the Government one or more additional notes, in an amount or amounts designated by the Government
which in the aggregate shall be equal to the then unadvanced portion of the original principal amount of this Note
such additional notes to be dated currently when executed, to be in the same form, and to bear the same interest rate
as this Note. The Corporation , upon the request therefor in writing by the Government, shall execute and deliver to
the Government two or more notes, in substitution for this Note, in the same form and bearing the same interest rate
and date (except that any such substitute note which will evidence only an un advanced portion of this Note may, at
the discretion of the Government, be dated currently when executed), in an aggregate principal amount which shall
be equal to the principal amount of this Note, but in such individual principal amounts as the Government shall
request; provided that (i) all payments which shall have been made on account of the principal of and interest on this
Note shall be credited on account of such substitute notes and (ii) the Government shall return this Note to the
Corporation upon receipt of such substitute notes.
Page 2
'.
IN WITNESS WHEREOF, the Corporation has caused this Note to be signed in its corporate name and its corporate
seal to be hereunto affixed and attested by its officers thereunto duly authorized, all as of the day and year first above
written.
ALBION TELEPHONE COMPANY
President
EAL)
j)~
Attest:
Page 3
..; ,. )
PROJECT DESIGNATION:
IDAHO 504-Hl2 & KII ALBION
MORTGAGE NOTE
made by
ALBION TELEPHONE COMPANY
RURAL TELEPHONE BANK
, .,. .
MORTGAGE NOTE
Albion, Idaho
November 3, 2003
Article I:Special Provisions - Bank Note
Amount
ALBION TELEPHONE COMPANY (hereinafter called the "Corporation ), a corporation organized and existingunder the laws of the State of Idaho, for value received, promises to pay to the order of RURAL TELEPHONE
BANK (the "Bank"), at Washington, D.e., at the times and in the manner hereinafter provided, such sums as may beadvanced from time to time, 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 balancepursuant to a certain loan contract, dated as of November 3, 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 (said
loan contract, as it may be so amended, being hereafter called the "Loan Contract ), and remaining unpaid from timeto time.
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 day
of each month (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 Corporationshall make a payment every Monthly Payment Date on each such Advance (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 payall principal and interest of such Advance no later than the Maturity Date.
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 the
date hereof shall be repaid in installments beginning with the Monthly Payment Date of the month following the
month of each Advance and ending on the Maturity Date. The first payment on an Advance made more than two
years after the date of this Note shall be increased by the amount of interest accruing between the date of the
Advance and the first day of the month following the month of the Advance. Thereafter, to and including theMaturity Date, 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 th~t will pay all principal and interest of such Advance no later than the Maturity Date. This
payment shall be in addition to the payments on the Advances made and unpaid two (2) years after the date hereof.
Prepayment
The Corporation on any Monthly Payment Date, as hereinabove provided, may pay all or any part of an Advance
remaining unpaid, but so long as any of the principal of such Advance shall remain unpaid, the Corporation shall beobligated to make the monthly payment on account of principal and interest, in the amount rust determined pursuantto this Note, unless the Corporation and the holder of this Note shall otherwise agree.
Interest Rate
Each Advance hereunder shall bear interest at the various rates determined for that Advance in accordance with
Section 408(b)(3) of the Rural Electrification Act of 1936, as amended (7 U.c. 9948(b)(3)) and the implementingregulations, as amended from time to time.
Page I
.. , .' ~
i .
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 on
such Advance, the payment shall be determined as if the interest rate then in effect would continue to apply to such
Advance until the Maturity Date; provided, however, that if the interest rate applying to such Advance is changed
pursuant to Article I, Section 5 hereof, then the payments of principal and interest on such Advance, beginning withthe payment due on the next Monthly Payment Date after such change, shall be redetermined using the new interest
rate.
Article II:Standard Provisions
Application of Payments
Each payment made on this Note shall be applied first to the payment of interest on principal and then on account of
principal. Any principal hereof advanced pursuant to the Loan Contract remaining unpaid, and interest thereon, shallbecome due and payable on the Maturity Date.
Security
This Note has been executed and delivered pursuant to and is secured by a certain mortgage, dated as of November, 2003, made by and among the Corporation, the Government, the Bank and CoBank, ACB, as the same may havebeen amended or supplemented by any supplemental mortgage or supplemental mortgages (said mortgage and any
such supplemental mortgage or supplemental mortgages being hereinafter collectively called the "Mortgage ), and isone of several notes (hereinafter called the "notes ) permitted to be secured by the Mortgage. The Mortgage
provides that all notes shall be equally and ratably secured thereby and reference is hereby made to the Mortgage for
a description of the property mortgaged and pledged, the nature and extent of the security and the rights of the
holders of notes with respect thereto.
Default
In case of default by the Corporation, as provided in the Mortgage, all principal advanced pursuant to the Loan
Contract and remaining unpaid, 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 provided in the Mortgage.
IN WITNESS WHEREOF, the Corporation has caused this Note to be signed in its corporate name and its corporate
seal to be hereunto affixed and attested by its officers thereunto duly authorized, all as of the day and year first abovewritten.
ALBI
:~~
?7P
ANY
by L~~
President
(SEAL)f)~~Attest:
Page 2
RUS PROJECT DESIGNATION:
IDAHO 504-H12 & Kl1 ALBION
RESTATED MORTGAGE
SECURITY AGREEMENT
AND
FINANCING STATEMENT
made by and among
ALBION TELEPHONE COMPANY
O. Box 98
Albion, Idaho 83311,as mortgagor and debtor
and
U1ITTEDSTATES OF AMERICA
Rural Utilities Service
Washington, D.e. 20250-1500,as mortgagee and secured party,
and
RURAL TELEPHONE BANK
Rural Telephone Bank
c/o Rural Utilities Service
Washington, D.c. 20250-1500 as mortgagee and secured party,
and
CO BANK, ACB
5500 South Quebec Street
Greenwood Village, CO 80111 as mortgagee and secured party.
Dated as of November 2003
THIS INSTRUMENT GRANTS A SECURITY INTEREST IN A TRANSMmING UTll...ITY.
THE DEBTOR AS MORTGAGOR IS A TRANSMlTIING UTILITY.
THIS INSTRUMENT CONTAINS PROVISIONS THAT COVER REAL AND PERSONAL PROPERTY, FIXTURES, AFTER-ACQUIRED
PROPERTY, PROCEEDS, FUTURE ADVANCES AND FUTURE OBLIGATIONS.
MORTGAGOR'S ORGANIZATIONAL IDENTIFICATION NUMBER IS C26771.
No. Generated: October 14. 2003 51 wI UCC-1 Revisions
RESTATED MORTGAGE, SECURITY AGREEMENT AND FINANCING
STATEMENT, dated as of November 3 2003, made by and among ALBION
TELEPHONE COMPANY (hereinafter called the "Mortgagor ), a corporation existing
under the laws of the State of Idaho, UNITED STATES OF AMERICA (hereinafter
called the "Government ), acting through the Administrator of the Rural Utilities Service
(hereinafter called "the Administrator ), RURAL TELEPHONE BANK (hereinafter
called the "Bank"), a corporation existing under the laws of the Government, and
CoBANK, ACB, successor to the National Bank for Cooperatives (hereinafter called
CoBank"), a federally chartered instrumentality of the United States (the Government,
the Bank and CoBank being hereinafter sometimes collectively called the "Mortgagees
WHEREAS, pursuant to Public Law 103-354, the Rural Utilities Service (hereinafter sometimes
called "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 Rural Electrification
Administration and for purposes of the "Underlying Mortgage" (as hereinafter defined) identified in Schedule A of
this Mortgage" (as hereinafter defined) the terms "REA" and "Administrator" shall be deemed to mean respectively
RUS" and the " Administrator of the RUS"; and
WHEREAS, pursuant to a consolidation, effective January 1, 1995, of the National Bank for
Cooperatives, the Springfield Bank for Cooperatives, and the Farm Credit Bank of Springfield to form CoBank and
as a result of such consolidation, CoBank succeeded to all rights, title and interests of its predecessors in interest
under the Underlying Mortgage; and
WHEREAS, the Mortgagor has heretofore borrowed funds from one or more of the Mortgagees or
from "FFB" (as hereinafter defined) whose loans are guaranteed by the Government and to secure such indebtedness
has executed and delivered to such Mortgagee(s) the "Outstanding Notes" (as hereinafter defined) identified in
Schedule A hereto and/or in Schedule B hereto.
WHEREAS, the Mortgagor and the Government desire to add CoBank as a secured party under
the RUS Mortgage and further desire to amend, supplement and consolidate the RUS Mortgage (the RUS Mortgage,
as amended, supplemented and consolidated hereby being hereinafter called "this Mortgage ); and
WHEREAS, the Outstanding Notes are secured by the Underlying Mortgage; and
WHEREAS, the Mortgagor deems it necessary to borrow additional funds from one or more of the
Mortgagees and/or from FFB whose loans are guaranteed by the Government and to evidence such additional
indebtedness has executed and deliveredto such Mortgagee(s) the "Current Notes " (as hereinafter defined) identified
in Schedule A hereto and to secure and pledge its property hereunder described or mentioned to secure the same; and
WHEREAS, the Mortgagor desires to enter into this Mortgage pursuant to which all mortgage
notes shall be secured on parity; and
WHEREAS, this Mortgage consolidates and restates the Underlying Mortgage in its entirety; and
WHEREAS, all acts necessary to make this Mortgage a valid and binding legal instrument for the
security of the Outstanding Notes, the Current Notes and other indebtedness of the Mortgagor hereunder, subject to
the terms of this Mortgage, have been in all respects duly authorized; and
WHEREAS, to the extent that any of the property described or referred to in this Mortgage is
governed by the provisions of the Uniform Commercial Code of any state (hereinafter called the "Uniform
Commercial Code ), the parties hereto desire that this Mortgage be regarded as a "security agreement" and as a
financing statement" for said security agreement under the Uniform Commercial Code;
Page I
NOW, THEREFORE, THIS MORTGAGE WITNESSETH that, in order to secure the payment of
the principal of and interest on the "notes" (as hereinafter defined), according to their tenor and effect, and further to
secure the due performance of the covenants, agreements and provisions contained in this Mortgage and the
Consolidated Loan Agreement" (as hereinafter defined) and the "CoBank Loan Agreement" (as hereinafter defined)
and to declare the terms and conditions upon which the notes are to be secured, the Mortgagor, in consideration of
the premises, has executed and delivered this Mortgage, and has granted, bargained, sold, conveyed, warranted,
assigned, transferred, mortgaged, pledged, and set over, and by these presents does hereby grant, bargain, sell
convey, warrant, assign, transfer, mortgage, pledge and set over, unto the Mortgagees, and their respective assigns,
and the Mortgagor does hereby grant to the Mortgagees, for the purposes herein expressed, a security interest in, all
and singular, the following properties, assets and rights ofthe Mortgagor, wherever located, whether now owned or
hereafter acquired or arising, and all proceeds and products thereof (hereinafter sometimes called the "Mortgaged
Property
All right, title and interest of the Mortgagor in and to the "Existing Facilities" (as hereinafter
defined) and buildings, plants, works, improvements, structures, estates, grants, franchises, easements, rights,
privileges and properties real , personal and mixed, tangible or intangible, of every kind or description, now owned or
leased by the Mortgagor or which may hereafter be owned or leased, constructed or acquired by the Mortgagor
wherever located, a1id in and to all extensions and improvements thereof and additions thereto, including all
buildings, plants, works, structures, improvements, fixtures, equipment, apparatus, materials, supplies, machinery,
tools, implements, poles, posts, crossarms, conduits, ducts, lines, whether underground or overhead or otherwise,
wires, cables, exchanges, switches, including, without limitation, host switches and remote switches, desks
testboards, frames, racks, motors, generators, batteries and other items of central office equipment, pay-stations,
protectors, instruments, connections and appliances, office furniture and equipment, work equipment and any and all
other property of every kind, nature and description, used, useful or acquired for use by the Mortgagor in connection
therewith and including, without limitation, the real property described in the following property schedule:
PROPERTY SCHEDULE
(a) The Existing Facilities are located in the Counties of Butte, Cassia, Custer and Oneida in the
State of Idaho, and the County of Box Elder in the State of Utah.
(b) The property referred to in the last line of paragraph 1 of the Granting Clause includes the real
estate described in Exhibit A attached hereto, and by this reference made a part hereof, as if fully set forth at
length at this point.
(c) If the real estate described in Exhibit A is by reference to deeds, grantor(s), grantee, etc., then
the description of each of the properties conveyed by and through such deeds is by reference made a part of
Exhibit A as though fully set forth at length therein.
(d) The real estate described in Exhibit A shall also include all plants, works, structures, erections
reservoirs, dams, buildings, fixtures and improvements now or hereafter located on such real estate, and all
tenements, hereditaments and appurtenances now or hereafter thereunto belonging or in any wise
appertaining.
All right, title and interest of the Mortgagor in, to and under any and all grants, privileges, rights of
Way and easements now owned, held, leased, enjoyed or exercised, or which may hereafter be owned, held, leased,
acquired, enjoyed or exercised, by the Mortgagor for the purposes of, or in connection with, the construction or
operation by or on behalf of the Mortgagor of telephone properties, facilities, systems or businesses, whether
underground or overhead or otherwise, wherever located;
Page 2
III
All right, title and interest of the Mortgagor in, to and under any and all licenses, franchises
ordinances, privileges and permits heretofore granted, issued or executed, or which may hereafter be granted, issued
or executed, to it or to its assignors by the United States of America, or by any state, or by any county, township,
municipality, village or other political subdivision thereof, or by any agency, board, commission or department of
any of the foregoing, authorizing the construction, acquisition, or operation of telephone properties, facilities
systems or businesses, insofar as the same may by law be assigned, granted, bargained, sold, conveyed, transfeITed
mortgaged, or pledged;
All right, title and interest of the Mortgagor, in, to and under all personal property and fixtures of
every kind and nature including without limitation all goods (including inventory, equipment and any accessions
thereto), instruments (including promissory notes), documents, accounts, chattel paper, electronic chattel paper,
deposit accounts (including, but not limited to, money held in a trust account pursuant hereto or to a loan agreement),
letter-of-credit rights, investment property (including certificated and uncertificated securities, security entitlements
and securities accounts), software, general intangibles (including, but not limited to, payment intangibles), supporting
obligations, any other contract rights or rights to the payment of money, insurance claims and proceeds (as such
terms are presently and hereinafter defined in the applicable Uniform Commercial Code provided, however, that the
term "instrument" shall be such term as defined in Article 9 of the applicable Uniform Commercial Code rather than
Article 3);
All right title and interest of the Mortgagor in, to and under any and all agreements, leases or
contracts heretofore or hereafter executed by and between the Mortgagor and any person, firm or corporation
relating to the Mortgaged Property (including contracts for the lease, occupancy or sale of the Mortgaged Property,
or any portion thereof);
All right, title and interest of the Mortgagor in, to and under any and all books, records and
correspondence relating to the Mortgaged Property, including, but not limited to: all records, ledgers, leases and
computer and automatic machinery software and programs, including without limitation, programs, databases, disc or
tape files and automatic machinery print outs, runs and other computer prepared information indicating,
summarizing, evidencing or otherwise necessary or helpful in the collection of or realization on the Mortgaged
Property;
VII
Also, all right, title and interest of the Mortgagor in and to all other property, real or personal
tangible or intangible, of every kind, nature and description, and wheresoever situated, now owned or leased or
hereafter acquired by the Mortgagor, it being the intention hereof that all such property now owned or leased but not
specifically described herein or acquired or held by the Mortgagor after the date hereof shall be as fully embraced
within and subjected to the lien hereof as if the same were now owned by the Mortgagor and were specifically
described herein to the extent only, however, that the subjection of such property to the lien hereof shall not be
contrary to law;
TOGETHER WITH all rents, income, revenues, profits, proceeds and benefits at any time derived
received or had from any and all of the above-described property of the Mortgagor.
Page 3
Provided, however, that except as hereinafter provided in Section 12(b) of Article II hereof, no
automobiles, trucks, trailers, tractors or other vehicles (including without limitation aircraft or ships, if any) which
are titled and/or registered in any state of the United States of America and owned or used by the Mortgagor shall be
included in the Mortgaged Property.
TO HA VB AND TO HOLD all and singular the Mortgaged Property unto the Mortgagees and
their respective assigns forever, to secure equally and ratably the payment of the principal of and interest on the
notes, according to their tenor and effect, without preference, priority or distinction as to interest or principal (except
as otherwise specifically provided herein) or as to lien or otherwise of any note over any other note by reason of the
priority in time of the execution, delivery or maturity thereof or of the assignment or negotiation thereof, or
otherwise, and to secure the due performance of the covenants, agreements and provisions herein and in the
Consolidated Loan Agreement and in the CoBank Loan Agreement contained, and for the uses and purposes and
upon the terms, conditions, provisos and agreements hereinafter expressed and declared.
ARTICLE I
DEFINITIONS AND ADDITIONAL NOTES
SECTION 1. (a) The parties to this Mortgage are hereby deemed to be parties to the Underlying
Mortgage.
(b) In addition to the terms defined elsewhere in this Mortgage, the terms
defined in this subsection (b) shall have the meanings specified herein. The terms defined herein include the plural
as well as the singular and the singular as well as the plural.
Act" shall mean the Rural Electrification Act of 1936, as amended (7 U.e. 901 ~
g:g.
Additional Notes" shall mean the Additional Bank Notes, the Additional CoBank Notes
and the Additional RUS Notes collectively.
Additional Bank Notes" shall mean any notes issued by the Mortgagor to the Bank pursuant to
Article I, Section I , of this Mortgage including any refunding, renewal, or substitute notes which may from
time to time be executed and delivered by the Mortgagor to the Bank pursuant to the terms of Article I
Section 1.
Additional CoBank Notes" shall mean any notes issued by the Mortgagor to CoBank pursuant to
Article I, Section 1 of this Mortgage including any refunding, renewal or substitute notes which may from
time to time be executed and delivered by the Mortgagor to CoBank pursuant to the terms of Article I,
Section I.
Additional RUS Notes" shall mean any notes issued by the Mortgagor to the Government or FFB,
and guaranteed by the Government, pursuant to Article I, Section 1 of this Mortgage including any
refunding, renewal, or substitute notes which may from time to time be executed and delivered by the
Mortgagor to the Government pursuant to the terms of Article I, Section 1.
Bank Notes" means the Outstanding Notes payable to the order of the Bank, the Current Notes
payable to the order of the Bank and the Additional Bank Notes.
CoBank Loan Agreement" shall mean the loan agreement(s) between the Mortgagor and CoBank
listed in Schedule B under the heading "Prior CoBank Loan Agreement(s)" and any amendments thereto
the loan agreement under the heading "Current CoBank Loan Agreement" in Schedule B hereto with respect
Page 4
to any Current Note payable to CoBank listed in Schedule B hereto and any loan agreements with respect to
Additional CoBank Notes and any amendments thereto.
CoBank Notes" means the Outstanding Notes payable to CoBank, the Current Notes payable to
CoBank and the Additional CoBank Notes.
Consolidated Loan Agreement" shall mean the loan agreement between the Mortgagor and the
Government, or between the Mortgagor and the Bank, or among the Mortgagor, the Government and the
Bank, under the heading "Telephone Loan Contract" in Schedule A hereto, as the same may have been
previously amended, and any current or future amendments thereto, any current amendments thereto being
under the heading "Telephone Loan Contract Amendment" in Schedule A hereto, together with any
agreements among the Mortgagor, the Government, acting through the Administrator, and FFB, pursuant to
which the Government guarantees the loans made by FFB to the Mortgagor, pursuant to the Act, and any
amendments thereto.
Current Notes" shall mean the notes issued by the Mortgagor to secure the loans to the Mortgagor
made in conjunction with this Mortgage payable to the order of the Government under the heading "Current
RUS Note(s)" in Schedule A hereto, payable to the order of the Bank under the heading "Current Bank
Note" in Schedule A hereto, payable to the order of Co Bank under the heading "Current CoBank Note" in
Schedule B hereto, payable to FFB under the heading "Current FFB Note" in Schedule A hereto and
payable to the order of the Government to reimburse the Government for certain amounts paid from time to
time by the Government to FFB under the heading "Current Reimbursement Note" in Schedule A hereto.
Existing Facilities" shall mean the telephone system and other facilities presently owned by the
Mortgagor identified in the Granting Clause of this Mortgage.
FFB" shall mean the Federal Financing Bank.
this Mortgage" shall mean this Restated Mortgage, Security Agreement and Financing Statement
including any amendments or supplements thereto from time to time.
notes" shall mean collectively the Bank Notes, the CoBank Notes and the RUS Notes.
Outstanding Notes" shall mean the notes evidencing outstanding indebtedness of the Mortgagor to
the Government under the heading "Outstanding RUS Notes" in Schedule A hereto, to the Bank under the
heading "Outstanding Bank Notes" in Schedule A hereto, to CoBank under the heading "Outstanding
CoBank Notes" in Schedule B hereto and to FFB under the heading "Outstanding FFB Notes" in Schedule
A hereto.
RUS Notes" shall mean the Outstanding Notes payable to the order of the Government and
payable to FFB, the Current Notes payable to the order of the Government and payable to FFB and the
Additional RUS Notes.
Underlying Mortgage" shall mean the instruments identified as such in Schedule A hereto and
Schedule B hereto.
Where in these definitions there is a reference to an instrument as being listed under a particular
heading in Schedules A and B and no such heading is included in Schedules A and B then such definition shall be
read as though there were no such reference.
(c) The Mortgagor, when authorized by resolution or resolutions of its board of
directors, may from time to time (1) execute and deliver to the Government one or more Additional RUS Notes to
evidence loans made or guaranteed by the Government to the Mortgagor pursuant to the Act, or to evidence
Page 5
indebtedness of the Mortgagor incurred by the assumption by the Mortgagor of the indebtedness of a third party or
parties to the Government created by a loan or loans theretofore made or guaranteed by the Government to such third
party or parties pursuant to the Act, (2) execute and deliver to the Bank one or more Additional Bank Notes to
evidence loans made by the Bank to the Mortgagor pursuant to the Act, or to evidence indebtedness of the
Mortgagor incurred by the assumption by the Mortgagor of the indebtedness of a third party or parties to the Bank
created by a loan or loans theretofore made by the Bank to such third party or parties pursuant to the Act, and (3)
execute and deliver to CoBank one or more Additional CoBank Notes to evidence loans made by CoBank to the
Mortgagor, or to evidence indebtedness of the Mortgagor incurred by the assumption by the Mortgagor, of the
indebtedness of a third party or parties to CoBank created by a loan or loans theretofore made by CoBank to such
party or parties. The Mortgagor, when authorized by resolution or resolutions of its board of directors, may also
from time to time execute and deliver one or more Additional Notes to refund any note or notes at the time
outstanding and secured hereby, or to renew or in substitution for, any such outstanding note or notes. Additional
Notes shall contain such provisions and shall be executed and delivered upon such terms and conditions as the board
of directors of the Mortgagor in the resolution or resolutions authorizing the execution and delivery thereof and the
relevant lender shall prescribe; provided, however, that the outstanding principal balances owing on the notes shall
not at anyone time exceed fifty million dollars and no cents ($50 000,000.00) and no note shall mature more than
fifty (50) years after the date hereof. Additional Notes, including refunding, renewal and substitute notes, when and
as executed and delivered, shall be secured by this Mortgage, equally and ratably with all other notes at the time
outstanding, without preference, priority, or distinction of any of the notes over any other of the notes by reason of
the priority of the time of the execution, delivery or maturity thereof or of the assignment or negotiation thereof.
Except as hereinafter provided, however, no Additional CoBank Notes shall be secured by this Mortgage without the
prior written approval thereof by the Government and the Bank, and no Additional RUS Notes or Additional Bank
Notes shall be secured by this Mortgage without the prior written approval thereof by CoBank. No such prior written
approval shall be required with respect to the execution and delivery by the Mortgagor of ( I ) notes issued to refund,
renew or substitute for any outstanding note or notes, and (2) the Outstanding Notes, and (3) Additional Notes issued
to the Government or the Bank in accordance with Subsection (d) of this Section I.
(d) The Mortgagor may execute and deliver Additional RUS Notes to evidence
a loan or loans from the Government to the Mortgagor and/or a loan or loans from FFB to the Mortgagor and
Additional Bank Notes to evidence a loan or loans from the Bank to the Mortgagor provided that the following
condition precedent is met with respect to each such loan:
Written acknowledgment is obtained from RUS, the Bank and CoBank indicating that RUS', the
Bank's and CoBank's pro forma financial analysis of the Mortgagor, for the test year used by RUS in establishing the
economic feasibility of such loan shows that the Mortgagor shall have a Times Interest Earned Ratio ("TIER") of not
less than 1.5; a Debt Service Coverage ("DSC") of not less than 1.25; and an Equity to Assets Ratio equal to or
greater than 40%, as the above are defined in Article II, Section 20 hereof, taking into account the interest to be
charged on the Additional RUS Notes or Additional Bank Notes proposed to be executed and delivered to evidence
such loan.
(e) As used in this Mortgage, the term "directors" includes trustees.
. SECTION 2. The Mortgagor, when authorized by resolution or resolutions of its board of
directors, may from time to time execute, acknowledge, deliver, record and file mortgages supplemental to this
Mortgage which thereafter shall form a part hereof, for the purpose of formally confirming this Mortgage as security
for the notes. Nothing herein contained shall require the execution and delivery by the Mortgagor of a supplemental
mortgage in connec60n with the issuance hereunder or the securing hereby of notes except as hereinafter provided in
Section 12 of Article II hereof.
Page 6
ARTICLE II
PARTICULAR COVENANTS OF THE MORTGAGOR
The Mortgagor covenants with the Mortgagees and the holders of notes secured hereby
(hereinafter sometimes collectively called the "noteholders ) and each of them as follows:
SECTION 1. The Mortgagor is duly authorized under its articles of incorporation and by-laws and
the laws of the State of its incorporation and all other applicable provisions of law to execute and deliver the
Outstanding Notes, the Current Notes and this Mortgage and to execute and deliver Additional Notes; and all
corporate action on its part for the execution and delivery of the Outstanding Notes, the Current Notes arid this
Mortgage has been duly and effectively taken; and the Outstanding Notes, the Current Notes and this Mortgage are
or when executed and delivered will be, the valid and enforceable obligations of the Mortgagor in accordance with
their respective terms.
SECTION 2. The Mortgagor warrants that it has good, right and lawful authority to mortgage the
property described in the granting clause of this Mortgage for the purposes herein expressed, and that the said
property is free and clear of any deed of trust, mortgage, lien, charge or encumbrance thereon or affecting the title
thereto, except (i) the lien of this Mortgage and taxes or assessments not yet due; (ii) deposits or pledges to secure
payment of worker s compensation, unemployment insurance, old age pensions or other social security; and (iii)
deposits or pledges to secure performance of bids, tenders, contracts (other than contracts for the payment of
borrowed money), leases, public or statutory obligations, surety or appeal bonds, or other deposits or pledges for
purposes of like general nature in the ordinary course of business. The Mortgagor will, so long as any of the notes
shall be outstanding, maintain and preserve the lien of this Mortgage superior to all other liens affecting the
Mortgaged Property, and will forever warrant and defend the title to the property described as being mortgaged
hereby to the Mortgagees against any and all claims and demands whatsoever. The Mortgagor will promptly payor
discharge any and all obligations for or on account of which any such lien or charge might exist or could be created
and any and all lawful taxes, rates, levies, assessments, liens, claims or other charges imposed upon or accruing upon
any of the Mortgagor s property (whether taxed to the Mortgagor or to any noteholder), or the franchises, earnings or
business of the Mortgagor, as and when the same shall become due and payable; and whenever called upon so to do
the Mortgagor will furnish to the Mortgagees or to any noteholder adequate proof of such payment or discharge.
SECTION 3. The Mortgagor will duly and punctually pay the principal of and interest on the
notes at the dates and places and in the manner provided therein , according to the true intent and meaning thereof
and all other sums becoming due hereunder. The Mortgagor may at any time make prepayments on account of all or
part of the principal of the notes to the extent and in the manner therein provided and as set forth in the Consolidated
Loan Agreement and the CoBank Loan Agreement; provided that any such prepayment shall be applied pro rata to
the RUS Notes, the Bank Notes and the CoBank Notes, according to the proportions that the aggregate unpaid
principal amount of the RUS Notes, the aggregate unpaid principal amount of the Bank Notes and the aggregate
unpaid principal amount of the CoBank Notes, respectively, bear to the aggregate unpaid principal amount of the
RUS Notes, the Bank Notes and the CoBank Notes, collectively, on the date of prepayment and shall be applied to
such notes and installments thereof as may be designated by the respective noteholders at the time of any such
prepayment. For purposes of this Section 3, delivery by the Mortgagor of any note which renews or is in substitution
for an outstanding note shall not be considered a prepayment hereunder and delivery of a refunding note shall not be
considered a prepayment provided that, the refunding note will result in (1) an economic benefit defined as a present
value savings when comparing the cash flows of the refunding note with the cash flows of the note being refunded;
(2) will not cause the TIER as ofthe most recent December 31 RUS Form 479, when recalculated by substituting the
actual interest expense of the note to be refunded with the projected interest expense of the refunding note, to be less
. than the greater of the TIER before such recalculation or 1.5; and (3) will not cause the DSC as of the most recent
December 31 RUS Fonn 479, when recalculated by substituting the scheduled principal payments of the note to be
refunded with the scheduled principal repayments of the refunding note, to be less than 1.25. Additionally, the
majority RUS noteholders and the majority Bank noteholders and the majority CoBank noteholders (as such terms
Page 7
are defined in Section 4 of Article IT hereof) may agree that such noteholder shall not be paid the pro rata
prepayment to which such noteholder may be entitled under this Section 3.
SECTION 4. (a) The Mortgagor will, at all times, so long as any of the notes shall be outstanding,
take or cause to be taken all such action as from time to time may be necessary to preserve its corporate existence
and to preserve and renew all franchises, rights of way, easements, pemuts and licenses now or hereafter to it granted
or upon it conferred, and will comply with all valid laws, ordinances, regulations and requirements applicable to it or
its property. The Mortgagor will not, without the approval in writing of the holder or holders of not less than a
majority in principal amount of the RUS Notes at the time outstanding (hereinafter called the "majority RUS
noteholders ) and of the holder or holders of not less than a majority in principal amount of the Bank Notes at the
time outstanding (hereinafter called the "majority Bank noteholders ) and of the holder or holders of not less than a
majority ofthe CoBank noteholders at the time outstanding (hereinafter called the "majority CoBank noteholders
take or suffer to be taken any steps to reorganize, or to consolidate with or merge into any other corporation or to
permit any other corporation to merge into the Mortgagor or acquire all or substantially all of the business or assets
of another corporation if such acquisition is analogous in purpose or effect to a merger or consolidation or to sell,
lease or transfer, mortgage, convey by deed to secure debt, pledge or encumber other than under the lien hereof (or
make any agreement therefor) the Mortgaged Property, or any part thereof.
(b) Nothing herein contained shall prevent any such reorganization,
consolidation or merger provided that the lien and security of this Mortgage and the rights or powers of the
Mortgagees and the noteholders hereunder shall not thereby be impaired or adversely affected, and provided that
upon such reorganization, consolidation or merger, the due and punctual payment of the principal of and interest on
the notes according to their tenor and the due and punctual performance of all covenants and conditions of this
Mortgage shall be assumed by the corporation formed by such reorganization, consolidation or merger, and the lien
of this Mortgage shall remain a superior lien upon the property owned by the Mortgagor at the time of such
reorganization, consolidation or merger and upon any improvements or additions to such property, either prior to or
subsequent to such reorganization, consolidation or merger.
(c) The Mortgagor may, however, without obtaining the approval of the holder
or holders of any of the notes at the time outstanding, at any time or from time to time so long as the Mortgagor is
not in default hereunder, sell or otherwise dispose of, free from the lien hereof, any of its property which is neither
necessary to nor useful for the operation of the Mortgagor s business, or which has become obsolete, worn out or
damaged or otherwise unsuitable for the purposes of the Mortgagor; provided, however, that the Mortgagor shall:
(1) to the extent necessary, replace the same by, or substitute therefor, other property ofthe same kind and nature
which shall be subject to the lien hereof, free and clear of all prior liens, and apply any proceeds derived from such
sale or other disposition of such property and not needed for the replacement thereof to the payment of the
indebtedness evidenced by the RUS Notes, the Bank Notes and the CoBank Notes in the proportions which the
aggregate principal balances then owing on the RUS Notes, the aggregate principal balances then owing on the Bank
Notes and the aggregate principal balances then owing on the CoBank Notes, respectively, bear to the aggregate
principal balances then owing on the RUS Notes, the Bank Notes and the CoBank Notes, collectively, and shall be
applied to such notes and installments thereof as may be designated by the respective noteholders at the time of any
such receipt; or (2) immediately upon the receipt of the proceeds of any sale or other disposition of said property,
apply the entire amount of such proceeds to the payment of the indebtedness evidenced by the RUS Notes, the Bank
Notes and the CoBank Notes in the proportions and in the manner provided for in (1) above; or (3) deposit all or
such part of the proceeds derived from the sale or other disposition of said property as the majority RUS noteholders
and the majority Bank noteholders and the majority CoBank noteholders shall specify in such restricted bank
accounts as such holder or holders shall designate, and shall use the same only for such additions to or improvements
of the Mortgaged Property and on such terms and conditions as such holder or holders shall specify.
SECTION 5. The Mortgagor will at all times maintain and preserve the Mortgaged Property in
good repair, working order and condition, and will from time to time make a1l needful and proper repairs, renewals,
and replacements and useful and proper alterations, additions, betterments and improvements, and will, subject to
contingencies beyond its reasonable control, at all times keep its plant and properties in continuous operation and use
Page 8
all reasonable diligence to furnish the subscribers served by it through the Mortgaged Property with adequate
telephone service.
SECTION 6. Except as specifically authorized in writing in advance by the majority RUS
noteholders and the majority Bank noteholders and the majority CoBank noteholders, the Mortgagor will purchase
all materials, equipment, supplies and replacements to be incorporated in or used in connection with the Mortgaged
Property outright, and not subject to any conditional sales agreement, chattel mortgage, bailment lease, or other
agreement reserving to the seller any right, title or lien.
SECTION 7. (a) The Mortgagor shall take out, as the respective risks are incun'ed,
and maintain the classes and amounts of insurance in conformance with generally accepted utility industry standards
for such classes and amounts of coverage for utilities of the size and character of the Mortgagor and consistent with
Prudent Utility Practice." Prudent Utility Practice shall mean any of the practices, methods, and acts which, in the
exercise of reasonable judgement, in light of the facts, including but not limited to, the practices, methods, and acts
engaged in or approved by a significant portion of the telecommunications industry prior thereto, known at the time
the decision was made, would have been expected to accomplish the desired result consistent with cost-effectiveness
reliability, safety, and expedition. It is recognized that Prudent Utility Practice is not intended to be limited to
optimum practice, method, or act to the exclusion of all others, but rather is a spectrum of possible practices
methods, or acts which could have been expected to accomplish the desired result at the lowest reasonable cost
consistent with cost-effectiveness, reliability, safety, and expedition.
(b) The foregoing insurance coverage shall be obtained by means of
bond and policy forms approved by regulatory authorities having jurisdiction, and, with respect to insurance upon
any part of the Mortgaged Property, shall provide that the insurance shall be payable to Mortgagees as their interests
may appear by means of the standard mortgagee clause without contribution, Each policy or other contract for such
insurance shall contain an agreement by the insurer that, notwithstanding any right of cancellation reserved to such
insurer, such policy or contract shall continue in force for at least 30 days after written notice to each Mortgagee of
suspension, cancellation, or termination.
(c) In the event of damage to or the destruction of any portion of the
Mortgaged Property which is used or useful in the Mortgagor s business and which shall be covered by insurance.
unless each Mortgagee shall otherwise agree, the Mortgagor shan replace or restore such damaged, destroyed, or lost
portion so that such Mortgaged Property shall be in substantially the same condition as it was in prior to such
damage, destruction, or loss and shall apply the proceeds of the insurance for that purpose. The Mortgagor shall
replace the lost portion of such Mortgaged Property or shan commence such restoration promptly after such damage
destruction, or loss shall have occurred and shall complete such replacement or restoration as expeditiously as
practicable, and shall payor cause to be paid out of the proceeds of such insurance form all costs and expenses in
connection therewith.
(d) Sums recovered under any policy or fidelity bond by the Mortgagor
for a loss of funds advanced under the notes or recovered by any Mortgagor or any noteholder for any loss under
such policy or bond shall, unless applied as provided in the preceding paragraph, be used to finance construction of
utility plant secured or to be secured by this Mortgage, or unless otherwise directed by the Mortgagees, be applied to
the prepayment of the notes pro rata according to the unpaid principal amounts thereof (such prepayments to be
applied to such notes and installments thereof as may be designated by the respective Mortgagee at the time of any
such prepayment), or be used to construct or acquire utility plant which will become part of the Mortgaged Property.
At the request of any Mortgagee, the Mortgagor shall exercise such rights and remedies which they may have under
such policy or fidelity bond and which may be designated by such Mortgagee, and the Mortgagor hereby irrevocably
appoints each Mortgagee as its agent to exercise such rights and remedies under such policy or bond as such
Mortgagee may choose, and the Mortgagor shall pay all costs and reasonable expenses incurred by the Mortgagee in
connection with such exercise.
Page 9
SECTION 8. In the event of the failure of the Mortgagor in any respect to comply with the
covenants and conditions herein contained with respect to the procuring of insurance, the payment of taxes
assessments and other charges, the keeping of the Mortgaged Property in repair and free of liens and other claims or
to comply with any other covenant contained in this Mortgage, any noteholder or noteholders shall have the right
(without prejudice to any other rights arising by reason of such default) to advance or expend moneys for the purpose
of procuring such insurance, or for the payment of insurance premiums, taxes, assessments or other charges, or to
save the Mortgaged Property from sale or forfeiture for any unpaid tax or assessment, or otherwise, or to redeem the
same from any tax or other sale, or to purchase any tax title thereon, or to remove or purchase any mechanics' liens
or other encumbrance thereon, or to make repairs thereon or to comply with any other covenant herein contained or
to prosecute or defend any suit in relation to the Mortgaged Property or in any manner to protect the Mortgaged
Property and the title thereto, and all sums so advanced for any of the aforesaid purposes with interest thereon at the
highest legal rate but not in excess of Chase Manhattan Prime plus 400 Basis Points per annum shall be deemed a
charge upon the Mortgaged Property in the same manner as the notes at the time outstanding are secured and shall be
forthwith paid to the noteholder or noteholders making such advance or advances upon demand. It shall not be
obligatory for any noteholder in making any such advances or expenditures to inquire into the validity of any such
tax title, or of any of such taxes or assessments or sales therefor, or of any such mechanics' liens or other
encumbrance.
SECTION 9. The Mortgagor will not, without the approval in writing of the majority RUS
noteholders, the majority Bank noteholders and the majority CoBank noteholders: (a) enter into any contract or
contracts for the operation or maintenance of all or any part of its property, for the use by others of any of the
Mortgaged Property, or for toll traffic, operator assistance, extended scope or switching services to be furnished by
or for connecting or other companies; provided, however, that such approval shall not be required for any toll traffic
or operator assistance contract which in form and substance conforms with contracts in general use in the telephone
industry; or (b) deposit any of its funds, regardless of the source thereof, in any bank, institution or other depository
which is not insured by the Federal Government.
SECTION 10. Salaries, wages and other compensation paid by the Mortgagor for services, and
directors' or trustees' fees, shall be reasonable and in conformity with the usual practice of corporations of the size
and nature ofthe Mortgagor. Except as specifically authorized in writing in advance by the majority RUS
noteholders and the majority Bank noteholders and the majority CoBank noteholders, the Mortgagor will make no
advance payments or loans, or in any manner extend its credit, either directly or indirectly, with or without interest
to any of its directors, trustees, officers, employees, stockholders, members or affiliated companies, provided
however, the Mortgagor may make an investment for any purpose described in section 607(c)(2) of the Rural
Development Act of 1972 (including any investment in, or extension of credit, guarantee or advance made to, an
affiliated company of the Mortgagor that is used by such company for such purpose) to the extent that, inunediately
after such investment, (1) the aggregate of such investments does not exceed one-third of the net worth (defined in
Exhibit One hereto) of the Mortgagor and (2) the Mortgagor s net worth is at least twenty percent of its total assets
(defined in Exhibit One hereto). As used herein. the term "affiliated companies" shall have the meaning prescribed
for this term by the Federal Communications Commission in its prevailing uniform system of accounts for Class A
telephone companies.
SECTION 11. The Mortgagor will at all times keep, and safely preserve, proper books, records
and accounts in which full and true entries will be made of all of the dealings, business and affairs of the Mortgagor
in accordance with methods of accounting prescribed by the state regulatory body having jurisdiction over the
Mortgagor, or in the absence of such regulatory body or such prescription, by the Federal Communications
Commission in its uniform system of accounts for telecommunications companies as those methods and principles of
accounting may be supplemented from time to time by RUS or the Bank. The Mortgagor will prepare and furnish
each noteholder not later than the thirtieth day of January, April, July and October in each year, or at such more or
less frequent intervals when specified by the majority RUS noteholders, the majority Bank noteholders and the
majority CoBank noteholders, financial and statistical reports on its condition and operations. Such reports shall be
on the RUS Form 479 and include such information as may be specified by the majority RUS noteholders, the
majority Bank noteholders and the majority CoBank noteholders, including without limitation an analysis of the
Page 10
Mortgagor s revenues, expenses and subscriber accounts. The Mortgagor will cause to be prepared and furnished to
each noteholder at least once during each 12-month period during the term hereof, a full and complete report of its
financial condition and cash flow as of a date (hereinafter called the "Fiscal Date ) not more than 90 days prior to the
date such report is furnished to the noteholders hereunder, and of its operations for the 12-month period ended on the
Fiscal Date, in form and substance satisfactory to the majority RUS noteholders, the majority Bank noteholders and
the majority CoBank noteholders, audited and certified by independent certified public accountants satisfactory to
said noteholders, and accompanied by a report of such audit in form and substance satisfactory to said noteholders.
Each of the majOlity RUS noteholders, the majority Bank noteholders or the majority CoBank noteholders, through
its or their representatives, shall at an times during reasonable business hours have access to, and the right to inspect
and make copies of, any or all books, records and accounts, and any or all invoices, contracts, leases, payrolls
cancelled checks, statements and other documents and papers of every kind belonging to or in the possession of the
Mortgagor or in anywise pertaining to its property or business. The Mortgagor shan enter into an audit agreement
with an independent certified public accountant in form and substance satisfactory to the majority RUS noteholders,
the majority Bank noteholders and the majority CoBank noteholders.
SECTION 12. (a) The Mortgagor will from time to time upon written demand of the majority
RUS noteholders, the majority Bank noteholders or the majority CoBank noteholders make, execute, acknowledge
and deliver or cause to be made, executed, acknowledged and delivered all such further and supplemental indentures
of mortgage, deeds of trust, mortgages, financing statements, continuation statements, security agreements,
instruments and conveyances as may reasonably be requested by the majority RUS noteholders, the majority Bank
noteholders or the majority CoBank noteholders and take or cause to be taken all such further action as may
reasonably be requested by the majority RUS noteholders, the majority Bank noteholders or the majority CoBank
noteholders to effectuate the intention of these presents and to provide for the securing and payment of the principal
of and interest on the notes equally and ratably according to the terms thereof and for the purpose of fully conveying,
transferring and confirming unto the Mortgagees the property hereby conveyed, mortgaged and pledged, or intended
so to be, whether now owned by the Mortgagor or hereafter acquired by it and to reflect the assignment of the rights
or interests of any of the Mortgagees or of any noteholder hereunder or under any note. The Mortgagor will cause
this Mortgage and any and all supplemental indentures of mortgage, mortgages and deeds of trust and every security
agreement, financing statement, continuation statement and every additional instrument which shall be executed
pursuant to the foregoing provisions forthwith upon execution to be recorded and filed and rerecorded and refiled as
conveyances and mortgages and deeds of trust of and security interests in real and personal property in such manner
and in such places as may be required by law or reasonably requested by the majority RUS noteholders, the majority
Bank noteholders or the majority CoBank noteholders in order fully to preserve the security for the notes and to
perfect and maintain the superior lien of this Mortgage and all supplemental indentures of mortgage, mortgages and
deeds of trust and the rights and remedies of the Mortgagees and the noteholders.
(b) In the event that the Mortgagor has had or suffers a deficit in net income or
net margins, as determined in accordance with methods of accounting prescribed in Section 11 of Article II hereof,
for any of the five (5) fiscal years immediately preceding the date hereof or for any fiscal year while any of the notes
are outstanding, the Mortgagor will at any time or times upon written demand of the majority RUS noteholders, the
majority Bank noteholders or the majority CoBank noteholders, make, execute, acknowledge and deliver or cause to
be made, executed, acknowledged and delivered all such further and supplemental indentures of mortgage,
mortgages, security agreements, financing statements, instruments and conveyances, and take or cause to be taken an
such further action, as may reasonably be requested by the majority RUS noteholders, the majority Bank noteholders
or the majority CoBank noteholders in order to include in this Mortgage, as Mortgaged Property, and to subject to an
the terms and conditions of this Mortgage , all right, title and interest of the Mortgagor in and to, all and singular, the
automobiles, trucks, trailers, tractors, aircraft, ships and other vehicles then owned by the Mortgagor, or which may
thereafter be owned or acquired by the Mortgagor. From and after the time of such written demand of the majority
RUS noteholders, the majority Bank noteholders or the majority CoBank noteholders such vehicles shall be deemed
to be part of the Mortgaged Property for all purposes hereof.
(c) The foregoing responsibilities of the Mortgagor include, but are not limited
to, at the request of the majority RUS noteholders, the majority Bank noteholders or the majority RTFC noteholders,
Page II
taking such actions and executing and delivering such documents as are necessary under the Uniform Conmlercial
Code or other applicable law to perfect or establish the Mortgagees' first priority security interests in any Mortgaged
Property to the extent that such perfection or priority cannot be accomplished by the filing of a financing statement.
SECTION 13. Any noteholder may, at any time or times in succession without notice to or the
consent of the Mortgagor or any other noteholder and upon such terms as such noteholder may prescribe, grant to
any person, firm or corporation who shall have become obligated to pay all or any part of the principal of or interest
on any note held by or indebtedness owed to such noteholder or who may be affected by the lien hereby created, an
extension of the time for the payment of such principal or interest, and after any such extension the Mortgagor will
remain liable for the payment of such note or indebtedness to the same extent as though it had at the time of such
extension consented thereto in writing.
SECTION 14. The Mortgagor, subject to applicable laws and rules and orders of regulatory
bodies, shall charge rates for its telephone service and other services furnished which shaH yield revenues at least
sufficient to (1) pay and discharge all taxes, maintenance expenses, operating expenses, and other expenses of its
telephone system when due, (2) pay aH obligations of the Mortgagor and make all payments of principal of and
interest on the notes when due, (3) provide and maintain reasonable capital for the Mortgagor, (4) maintain an
Average TIER on aH of the notes of not less than 1.50 but in no year shaH the TIER be less than 1., and (5)
maintain a DSC of not less than 1.25. Not less than 90 days prior to the effective date of any proposed change in its
rate, the Mortgagor shall give to the holder or holders of the notes written notice of such change and a copy of the
schedule showing the then existing rates and the proposed changes therein.
SECTION 15. (a) The Mortgagor may make a distribution (hereinafter caned a "distribution ), in
the nature of an investment, guarantee, extension of credit, advance, loan, non-affiliated company joint venture
affiliated company investment, or dividend or capital credit distribution only if the majority RUS noteholders and the
majority Bank noteholders have given prior written approval to the distribution or if, after such distribution
(J )the Mortgagor s net worth is equal to at least one percent of its total assets and the amount of all
such distributions during the calendar year does not exceed twenty-five percent ofthe Mortgagor
net income or net margins for the prior calendar year;
(2)the Mortgagor s net worth is equal to at least twenty percent of its total assets and the amount of all
such distributions during the calendar year does not exceed fifty percent of the Mortgagor s net
income or net margins for the prior calendar year;
(3)the Mortgagor s net worth is equal to at least thirty percent of its total assets and the amount of all
such distributions during the calendar year does not exceed seventy-five percent of its net income
or net margins for the prior calendar year; or
(4)the Mortgagor s net worth is equal to at least forty percent of its total assets, regardless of the
aggregate amount of such distributions.
The terms "net worth"
, "
total assets , and "net income or net margins" are determined in accordance with Exhibit
One.
(b) In addition to the distributions authorized under the preceding subsection (a), the Mortgagor
may make any distribution or investment provided in 7 CFR 1744 Subpart D.
SECTION 16. In the event that the Mortgaged Property, or any part thereof, shall be taken under
the power of eminent domain, all proceeds and avails therefrom, except to the extent that all noteholders shall
consent to other use and application thereof by the Mortgagor, shall forthwith be applied by the Mortgagor: first, to
the ratable payment of any indebtedness by this Mortgage secured other than principal of or interest on the notes;
second, to the ratable payment of interest which shall have accrued on the notes and be unpaid; third, to the ratable
Page 12
payment of or on account of the unpaid principal of the notes and to such installments thereof as may be designated
by the respective noteholders at the time of any such payment; and fourth, the balance, if any, shall be paid to
whosoever shall be entitled thereto.
SECTION 17. The Mortgagor will well and truly observe and perform all of the covenants
agreements, terms and conditions contained in the Consolidated Loan Agreement and the CoBank Loan Agreement
on its part to be observed or performed. The Mortgagor will promptly furnish each Mortgagee with written notice of
any amendment or modification of any agreement under which a note or other obligation of the Mortgagor secured
by the lien of this Mortgage has been or will be issued, including, without limitation, the Consolidated Loan
Agreement and the CoBank Loan Agreement, and the occurrence of any default or event of default of which the
Mortgagor has knowledge under any such agreement.
SECTION 18. If all of the notes in anyone of the three groups of notes secured hereby (RUS
Notes, Bank Notes and CoBank Notes) are paid and discharged while notes of the other group of notes remain
outstanding, all rights and powers of the Mortgagee associated with the paid and discharged group of notes shall vest
in the Mortgagee associated with the groups of notes remaining outstanding, and the rights and powers of the
holder(s) of the paid and discharged group of notes shall vest in the holder(s) of the group of notes remaining
outstanding. The Government is the "Mortgagee associated with" the RUS Notes; the Bank is the "Mortgagee
associated with" the Bank Notes; and CoBank is the "Mortgagee associated with" the CoB~nk Notes. The Bank, the
Government, the Mortgagor, CoBank and the noteholders shall execute and deliver such instruments, assignments
releases or other documents as shall be reasonably required to carry out the intention of this section.
SECTION 19. At all times when any note is held by the Government, or in the event the
Government shall assign a note without having insured the payment of such note, this Mortgage shall secure payment
of such note for the benefit of the Government or such uninsured holder thereof, as the case may be. Whenever any
note may be sold to an insured purchaser, it shall continue to be considered a "note" as defined herein, but as to any
such insured note the Government, and not such insured purchaser, shall be considered to be, and shall have the
rights of, the noteholder for purposes of this Mortgage. Notice of the rights of the Government under the preceding
sentence shall be set forth in all such insured notes. As to any note which evidences a loan made by FFB to the
Mortgagor, and guaranteed by the Government, acting through the Administrator, pursuant to the Act, the
Government and not FFB shall be considered to be, and shall have the rights of the noteholder for purposes of this
Mortgage.
SECTION 20. As used in Article I, Section l(d), Article II, Section 3, and Article II, Section 14
hereof and in this Section, TIER shall mean the Mortgagor s net income or net margins (determined in accordance
with Exhibit One hereto) plus interest expense (determined in accordance with Exhibit One hereto), divided by
interest expense.
For purposes of Article II, Section 14 hereof, Average TIER shall be determined as of January I of
each year during which any obligation secured by this Mortgage remains unsatisfied and shall mean the average of
the two highest TIER ratios achieved by the Mortgagor during each of the three calendar years last preceding the
various dates of its determination.
As used in Article I, Section l(d), Article II, Section 3 and Article II, Section 14 hereof, DSC shall
mean the sum of net income, plus interest, plus depreciation, plus amortization, all divided by the sum of interest
plus scheduled principal payments and capital lease obligations due in the test year.
As used in Article I, Section l(d), Equity to Asset Ratio shall mean all equity divided by the total
assets of the Mortgagor.
SECTION 21. (a) Net worth, net income or net margins, interest expense, total assets
depreciation, amortization and equity, as used in Sections 10, 15 or 20 of this Article II, are defined in Exhibit One
Page 13
of this Mortgage. Net plant and secured debt, if referred to in this Mortgage, are also determined in accordance with
Exhibit One hereto.
(b) Accounting terms used in this Mortgage shall also apply to accounts or
groups of accounts of the Mortgagor, regardless of the account title or the system of accounts used, if such accounts
have substantially the same meaning as those prescribed by the Federal Communications Conunission in its
prevailing uniform system of accounts for telecommunications companies (47 CPR Part 32).
SECTION 22. If the Underlying Mortgage contains provisions requiring the Mortgagor to
maintain a net plant to secured debt ratio or a funded reserve, then such provisions are incorporated in and made a
part of this Mortgage as though fully set forth herein at this point.
SECTION 23. The Mortgagor hereby irrevocably authorizes the Mortgagee at any time and from
time to time to file in any jurisdiction any initial financing statements and amendments thereto that:
(a) indicate the Mortgaged Property (i) as all assets of the Mortgagor or words
of similar effect, regardless of whether any particular asset comprised in the Mortgaged Property falls within the
scope of Article 9 of the applicable Uniform Commercial Code, or (ii) as being of an equal or lesser scope or with
greater detail, and
(b) contain any other information required by the applicable Uniform
Commercial Code for the sufficiency or filing office acceptance of any financing statement or amendment, including,
but not limited to, (i) whether the Mortgagor is an organization, the type of organization and any organizational
identification number issued to the Mortgagor and (ii) in the case of a financing statement filed as a fixture filing, a
sufficient description of real property to which the Mortgaged Property relates. The Mortgagor agrees to furnish any
such information to the Mortgagee promptly upon request. The Mortgagor also ratifies its authorization for the
Mortgagee to have filed in any Uniform Commercial Code jurisdiction any like initial financing statements or
amendments thereto if filed prior to the date hereof.
SECTION 24. Schedule A, Schedule B, Exhibit A and Exhibit One, attached hereto, are made
part of this Mortgage.
ARTICLE III
REMEDIES OF THE MORTGAGEES AND NOTEHOLDERS
SECTION 1. If one or more of the following events (hereinafter called "events of default ) shall
happen, that is to say:
(a) default shall be made in the payment of any installment of or on account of interest on or
principal of any note or notes when and as the same shall be required to be made whether by acceleration or
otherwise and such default shall continue for thirty (30) days;
(b) default shall be made in the due observance or performance of any other of the representations,
warranties, covenants, conditions or agreements on the part of the Mortgagor in any of the notes, this
Mortgage, the Consolidated Loan Agreement or the CoBank Loan Agreement contained; and such default
shall continue for a period of thirty (30) days after written notice specifying such default and requiring the
same to be remedied shall have been given to the Mortgagor by any noteholder;
(c) the Mortgagor shall file a petition in bankruptcy or be adjudicated a bankrupt or insolvent, or
shall make an assignment for the benefit of its creditors, or shall consent to the appointment of a receiver of
itself or of its property, or shall institute proceedings for its reorganization or proceedings instituted by
others for its reorganization shall not be dismissed within thirty (30) days after the institution thereof;
Page 14
(d) a receiver or liquidator of the Mortgagor or of any substantial portion of its property shall be
appointed and the order appointing such receiver or liquidator shall not be vacated within thirty (30) days
after the entry thereof;
(e) the Mortgagor shall fOifeit or otherwise be deprived of its corporate charter or franchises,
permits or licenses required to carryon any material portion of its business; or
(f) a final judgment in an amount of two thousand five hundred dollars ($2 500) or more shall be
entered against the Mortgagor and shall remain unsatisfied or without a stay in respect thereof for a periodof thirty (30) days;
then in each and every such case any noteholder may, by notice in writing to the Mortgagor and delivery of a copy
thereof to the other noteholders, without protest, presentment or demand declare all unpaid principal of and accrued
interest on any or all notes held by such noteholder to be due and payable immediately; and upon any such
declaration all such unpaid principal and accrued interest so declared to be due and payable shall become and be due
and payable, immediately, anything contained herein or in any ilote or notes to the contrary notwithstanding;
provided, however, that if at any time after the unpaid principal of and accrued interest on any of the notes shall have
been so declared to be due and payable, all payments in respect of principal and interest which shall have become
due and payable by the terms of such note or notes shall be paid to the respective noteholders, and all other defaults
hereunder and under the notes shall have been made good or secured to the satisfaction of all of the noteholders,
together with reimbursement for any resulting expenses or damage and together with interest at the highest rate
legally permissible, then and in every such case, the noteholder or noteholders who shall have declared the principal
of and interest on notes held by such noteholder or noteholders to be due and payable may, by written notice to the
Mortgagor and delivery of a copy thereof to the other noteholders, annul such declaration or declarations and waive
such default or defaults and the consequences thereof, but no such waiver shall extend to or affect any subsequent
default or impair any right consequent thereon.
SECTION 2. If one or more of the events of default shall happen, the holder or holders of not less
than a majority of the total amount of principal outstanding on the notes, hereinafter called the "majority
noleholders , (for purposes of defining and calculating the majority noteholders the Government and the Bank shall
be determined to be one noteholder with their balances combined and also, such Government and Bank combination
shall be determined to be the majority noteholders if they together hold 50% or more of the outstanding principal
balance) for itself or themselves, and as the agent or ageills of the other noteholders, personally or by attorney, in its
or their discretion, may, insofar as not prohibited by law:
(a) take immediate possession of the Mortgaged Property, collect and receive all credits,
outstanding accounts and bills receivable of the Mortgagor and all rents, income, revenues and profits
pertaining ,to or arising from the Mortgaged Property, or any part thereof, and issue binding receipts
therefor; and manage, control and operate the Mortgaged Property as fully as the Mortgagor might do if in
, possession thereof, including, without limitation, the making of all repairs or replacements deemed
necessary or advisable;
(b) proceed to protect and enforce the rights of the Mortgagees and the rights of the noteholder or
noteholders under this Mortgage by suits or actions in equity or at law in any court or courts of competent
jurisdiction, whether for specific performance of any covenant or any agreement contained herein or in aid
of the execution of any power herein granted or for the foreclosure hereof or hereunder or for the sale of the
Mortgaged Property, or any part thereof, or to collect the debts hereby secured or for the enforcement of
such other or additional appropriate legal or equitable remedies as may be deemed most effectual to protect
and enforce the rights and remedies herein granted or confelTed, and in the event of the institution of any
such action or suit the noteholder or noteholders instituting such action or suit shall have the right to have
appointed a receiver of the Mortgaged Property and of all rents, income, revenues and profits pertaining
thereto or arising therefrom derived, received or had from the time of the commencement of such suit or
action, and such receiver shall have all the usual powers and duties of receivers, in like and similar cases, to
Page 15
the fullest extent permitted by law, and if application shall be made for the appointment of a receiver the
Mortgagor hereby expressly consents that the court to which such application shall be made may make said
appointment; and
(c) sell or cause to be sold all and singular the Mortgaged Property or any part thereof, and all
right, title, interest, claim and demand of the Mortgagor therein or thereto, at public auction at such place in
any county in which the property to be sold, or any part thereof is located, at such time and upon such terms
as may be specified in a notice of sale, which shall state the time when and the place where the sale is to be
held, shall contain a brief general description of the property to be sold, and shall be given by mailing a
copy thereofto the Mortgagor at least fifteen (15) days prior to the date fixed for such sale and by
publishing the same once in each week for two successive calendar weeks prior to the date of such sale in a
newspaper of general circulation published in said county, or if no such newspaper is published in such
county, in a newspaper of general circulation in such county, the first such publication to be not less that
fifteen (15) days nor more than thirty (30) days prior to the date fixed for such sale. Any sale to be made
under this subparagraph (c) of this Section 2 may be adjourned from time to time by announcement at the
time and place appointed for such sale or for such adjourned sale or sales, and without further notice or
publication the sale may be had at the time and place to which the same shall be adjourned, provided,
however, that in the event another or different notice of sale or another or different manner of conducting
the same shall be required by law the notice of sale shall be given or the sale shall be conducted, as the case
may be, in accordance with the applicable provisions of law.
SECTION 3. If, within thirty (30) days after the majority noteholders shall have had knowledge of
the happening of an event or events of default, the majority noteholders shall not have proceeded to exercise the
rights and enforce each of the remedies herein or by law conferred upon or reserved to the Mortgagees or to said
majority noteholders, then, and only then, any noteholder, including the majority noteholders, may proceed to
exercise any such right or rights and remedy or remedies not being enforced by the majority noteholders. Nothing
contained in this Mortgage shall affect or impair the right, which is absolute and unconditional, of any holder of any
note which may be secured hereby to enforce the payment of the principal of or interest on such note on the date or
dates any such interest or principal shall become due and payable in accordance with the terms of such note.
SECTION 4. At any sale hereunder any noteholder or noteholders shall have the right to bid for
and purchase the Mortgaged Property, or such part thereof as shall be offered for sale, and any noteholder or
noteholders may apply in settlement of the purchase price of the property so purchased the portion of the net
proceeds of such sale which would be applicable to the payment on account of the principal of and interest on the
note or notes held by such noteholder or noteholders, and such amount so applied shall be credited as a payment on
account of principal of and interest on the note or notes held by such noteholder or noteholders.
SECTION 5. Any proceeds or funds arising from the exercise of any rights or the enforcement of
any remedies herein provided after the payment or provision for the payment of any and all costs and expenses in
connection with the exercise of such rights or the enforcement of such remedies shall be applied first, to the payment
of indebtedness hereby secured other than the principal of or interest on the notes; second, to the ratable payment of
interest which shall have accrued on the notes and which shall be unpaid; third, to the ratable payment of or on
account of the unpaid principal of the notes; and fourth, the balance, if any, shall be paid to whosoever shall be
entitled thereto.
SECTION 6. The Mortgagor covenants that it will give immediate written notice to each of the
Mortgagees and to all of the noteholders of the occurrence of an event of default or in the event that any right or
remedy described in clauses (a) through (c) of Section 2 of this Article III is exercised or enforced, or any action istaken to exercise or enforce any such right or remedy.
SECTION 7. Every right or remedy herein conferred upon or reserved to the Mortgagees or to the
noteholders shall be cumulative and shall be in addition to every other right and remedy given hereunder or now or
Page 16
hereafter existing at law, or in equity, or by statute. The pursuit of any right or remedy shall not be construed as
election and shall not preclude the pursuit of any other right or remedy.
SECTION 8. The Mortgagor, for itself and all who may claim through or under it, covenants that
it will not at any time insist upon or plead, or in any manner whatever claim, or take the benefit or advantage of, any
appraisement, valuation, stay, extension or redemption laws now or hereafter in force in any locality where any of the
Mortgaged Property may be situated, in order to prevent, delay or hinder the enforcement of foreclosure of this
Mortgage, or the absolute sale ofthe Mortgaged Property, or any part thereof, or the final and absolute putting into
possession thereof, immediately after such sale, of the purchaser or purchasers thereat, and the Mortgagor, for itself
and all who may claim through or under it, hereby waives the benefit of all such laws unless such waiver shall be
forbidden by law.
SECTION 9. For purposes of this Article III, to the extent permitted by applicable state law, each
noteholder appoints the Mortgagee or Mortgagees exercising any remedy as above provided as its attorney(s)-in-fact
for such purpose.
SECTION 10. Nothing herein contained shall be deemed to authorize the Mortgagees to authorize
or consent to or accept or adopt on behalf of any noteholder any plan of reorganization, arrangement, adjustment or
composition affecting the notes or the rights of any holder thereof, or to authorize the Mortgagees to vote in respect
of the claim of any noteholder in any such proceeding.
SECTION 11. Any rights of action and claims under this Mortgage or the notes may be
prosecuted and enforced by the notehol~er or noteholders prosecuting and enforcing the same without the possession
of any of the notes or the production thereof in any proceeding relating thereto, and, to the extent permitted by
applicable state law, any such proceeding instituted by any noteholder shall be brought in its own name as
attorney-in-fact for the noteholders, and any recovery of judgment shall, after provision for the payment of the
reasonable compensation, expenses, disbursements and advances of the noteholders, their agents and counsel (but
only to the extent actually incurred), be for the ratable benefit of the noteholders in respect of which such judgment
had been recovered.
ARTICLE IV
POSSESSION UNTIL DEFAULT-DEFEASANCE CLAUSE
SECTION 1. Until some one or more of the events of default shall have happened, the Mortgagor
shall be suffered and permitted to retain actual possession of the Mortgaged Property, and to manage, operate and
use the same and any part thereof, with the rights and franchises appertaining thereto, and to collect, receive, take,
use and enjoy the rents, revenues, issues, earnings, income, products and profits thereof or therefrom, subject to the
provisions of this Mortgage.
SECTION 2. The assignments to the Mortgagees of all of the Mortgagor s right, title and interest
, to and under contracts, licenses, franchises, ordinances, privileges, permits, chattel paper, contract rights, leases,
subleases, (hereinafter collectively referred to in this Section 2 as the "assigned items ), to the extent set forth in the
granting clauses of this Mortgage, constitutes an assignment for security purposes. Notwithstanding any other
provisions ofthis Mortgage to the contrary, the Mortgagor shall at all times remain liable under each of the assigned
items to perform all of its duties and obligations thereunder to the same extent as if there had been no assignment
contained in this Mortgage. Furthermore, (i) neither the assignment under this Mortgage nor the exercise by the
Mortgagees of the rights assigned hereunder shall cause the Mortgagees to become subject to any obligation or
liability under any of the assigned items, or release the Mortgagor from any of its duties or obligations under any of
the assigned items, or any instrument or document relating thereto, except to the extent such exercise by any
Mortgagee shall constitute performance of such duties or obligations, and (ii) no Mortgagee shall have any
obligation by reason of the assignment under this Mortgage to make any inquiry as to the sufficiency or authorization
Page 17
for any payments received by it or take any other action to collect or enforce any claim for payment assigned
hereunder.
SECTION 3. If the Mortgagor shall well and truly payor cause to be paid the whole amount of the
principal of and the interest on the notes at the time and in the manner therein provided, according to the true intent
and meaning thereof, and shall also payor cause to be paid all other sums payable hereunder by the Mortgagor and
shall well and truly keep and perform according to the true intent and meaning of this Mortgage, all covenants herein
required to be kept and performed by it, then and in that case, all property, rights and interests hereby conveyed or
assigned or pledged shall revert to the Mortgagor and the estate, right, title and interest of the Mortgagees and the
noteholders shall thereupon cease, determine and become void and the Mortgagees and the noteholders, in such case,
on written demand of the Mortgagor but at the Mortgagor s cost and expense, shall enter satisfaction of this
Mortgage upon the record. In any event, each noteholder, upon payment in full to him by the Mortgagor of all
principal of and interest on any note held by him and the payment and discharge by the Mortgagor of all charges due
to such noteholder hereunder, shall execute and deliver to the Mortgagor such instrument of satisfaction, discharge
or release as shall be required by law in the circumstances.
ARTICLE V
MISCELLANEOUS
SECTION 1. It is hereby declared to be the intention of the Mortgagor that all lines, or systems
embraced in the Mortgaged Property, including, without limitation, all rights of way and easements granted or given
to the Mortgagor or obtained by it to use real property in connection with the construction, operation or maintenance
of such lines, or systems, and all service and connecting lines, poles, posts, crossanns, wires, cables, conduits, ducts
connections and fixtures forming part of, or used in connection with, such lines, or systems, and all other property
physically attached to any of the foregoing-described property, shall be deemed to be real property.
SECTION 2. All acts and obligations of the Mortgagor hereunder shall be subject to all applicable
orders, rules and regulations, now or hereafter in effect, of all regulatory bodies having jurisdiction in the premises,
to the end that no act or omission to act on the part of the Mortgagor shall constitute a default hereunder insofar as
such act or omission shall have been required by reason of any order, rule or regulation of any such regulatory body.
SECTION 3. All of the covenants, stipulations, promises, undertakings and agreements herein
contained by or on behalf of the Mortgagor shall bind its successors and assigns, whether so specified or not, and all
titles, rights and remedies hereby granted to or conferred upon the Mortgagees shall pass to and inure to the benefit
of the successors and assigns of the Mortgagees and shall be deemed to be granted or conferred for the ratable
benefit and security of all who shall from time to time be the holders of notes executed and delivered as herein
provided, The Mortgagor and each of the Mortgagees hereby agree to execute and deliver such consents
acknowledgments and other instruments as may be reasonably requested by any of the Mortgagees or any noteholder
in connection with any assignment of the rights or interests of any Mortgagee or noteholder hereunder or under the
notes.
SECTION 4. The descriptive headings of the various articles ofthis Mortgage were formulated
and inserted for convenience only and shall not be deemed to affect the meaning or construction of any of the
provisions hereof.
SECTION 5. All demands, notices, reports, approvals, designations, or directions required or
permitted to be given hereunder shall be in writing and shall be deemed to be properly given if mailed by registered
mail addressed to the proper party or parties at the following addresses:
As to the Mortgagor:Albion Telephone Company
O. Box 98
Albion, Idaho 83311
Page 18
As to the Mortgagees The Government:
Rural Utilities Service
S. Department of Agriculture
Washington, D.C. 20250-1500
The Bank:
Rural Telephone Bank
c/o Rural Utilities Service
S. Department of Agriculture
Washington, D.e. 20250-1500
CoBank:
CoBank, ACB
CoBank, ACB
5500 South Quebec Street
Greenwood Village, Colorado 80111
Attention: Credit Department
and as to any other person, firm, corporation or governmental body or agency having an interest herein by reason of
being the holder of any note or otherwise, at the last address designated by such person, firm, corporation
governmental body or agency to the Mortgagor and the Mortgagees. The Mortgagor or the Mortgagees may from
time to time designate to one another a new address to which demands, notices, reports, approvals, designations or
directions may be addressed and from and after any such designation the address designated shall be deemed to be
the address of such party in lieu of the address hereinabove given. The Mortgagor will promptly notify the
Mortgagees in writing of any change in location of its chief place of business or the office where its records
concerning accounts and contract rights are kept.
SECTION 6. The invalidity of anyone or more phrases, clauses, sentences, paragraphs or
provisions shall not effect the remaining portions of this Mortgage, nor shall any such invalidity as to any Mortgagee
or as to any holder of notes hereunder affect the rights hereunder of the other Mortgagee or any other holder or
holders of notes.
SECTION 7. To the extent that any of the property described or referred to in this Mortgage is
governed by the provisions of the Uniform Commercial Code, this Mortgage is hereby deemed a "security
agreement" under the Uniform Commercial Code and a "financing statement" under the Uniform Commercial Code
for said security agreement. The Mortgagor herein is the "debtor" and the Mortgagees herein are the "secured
parties." The mailing addresses of the Mortgagor as debtor and of the Mortgagees as secured parties are as set forth
in Article V, Section 5 hereof. The Mortgagor is an organization of the type and organized in the jurisdiction set
forth on the first page hereof. The cover page hereof accurately sets forth the Mortgagor s organizational
identification number or accurately states that the Mortgagor has none.
SECTION 8. A Mortgagee acting hereunder shall not be liable to the Mortgagor, the other
Mortgagees or any noteholder except for losses resulting from gross negligence or willful misfeasance.
SECTION 9. This Mortgage may be simultaneously executed in any number of counterparts, and
all said counterparts executed and delivered, each as an original, shall constitute but one and the same instrument.
Page 19
IN WITNESS WHEREOF, ALBION TELEPHONE COMPANY, as Mortgagor, has caused this
Mortgage to be signed in its name and its corporate seal to be hereunto affixed and attested by its officers thereunto
duly authorized, RURAL TELEPHONE BANK, as Mortgagee, has caused this Mortgage to be signed in its name
and its corporate seal to be hereunto affixed and attested by its officers thereunto duly authorized, COBANK, ACB
as Mortgagee, has caused this Mortgage to be signed in its name and its corporate seal to be hereunto affixed arid
attested by its officers thereunto duly authorized, and UNITED STATES OF AMERICA, as Mortgagee, has caused
this Mortgage to be duly executed in its behalf, all as of this day and year first above written.
ALBION TELEPHONE
President
(Seal)
AUe" ,
I~~
Secretary
Page 20
(Seal)
/J.
Attest:
/:...
0~'iffr4'-4.-.L4~~r-osslstant Secretary
of the
Rural Telephone Bank
Executed by United States of America
Mortgagee, and Rural Telephone Bank
Mortgagee, in the presence of:
~-'
~L(
JftLo J4~
Witnesses
(SEAL)
Attest, ~\lL VkL~Dj
Assistant Corporate Secretru
UNITED STATES OF AMERICA, and
RURAL TELEPHONE BANK, respectively
D" ctor, Northwest Area
Te ecommunications Program
of the
Rural Utilities Service
and for the
Rural Telephone Bank
CoB ANf'~~--by
Assistant Co
Page 21
COUNTY OF
STATE OF IDAHO
&S--
) SS
On the
/"
.;.-L day of
~~ /........- ,
in the year 20~3 , before me personally
appeared tJ~ ,;C:::"~n-.
.....
and ~t'.t-
~~ ,
and
known to me to be tl~~';ptWU
~' '
~cuted the foregoing instrument on behalf of ALBION TELEPHONE
COMPANY, and.~~9 1:1 . &B~.at such corporatIon executed the same,
~~~\ :(
0 '\
Ii '(\O'tt.RI' ~
....."'.
Notary Public in a d for the State ofIdaho, residing at ,4lh,'D-IP.
'UI\..\V ~
~ .,..
-tf'~
k!4IIJ'I Of
"'~ ..,,\\'"
My commission expires: ~rr( I ~-Z- 7
(Notarial Seal)
Page 22
DISTRICT OF COLUMBIA
This instrument was acknowledged before me on ((1!:t.~ A ;;2 (?2cO~y
JERRY H.. BRENT , Director, Northwest Area - Telecommunications Program of the
Rural Utilities Service of the United States of America and for the Rural Telephone Bank.
+~~
' Ofury Pub
(Notarial Seal)
My commission expires:Elizabeth J. Hoefler
Notary Public Di:;trict of Columbia
My Commission Expires: August 1, 2007
Page 23
Page 24
STATE OF COLORADO
) ss.
COUNTY OF ARAPAHOE
This instrument was acknowledged before me on ()C (-Iv", "
~~
' 2003, by
Penny Probasco and 4"tH1..(" l/ii;'l~c. , each an
Assistant Corporate Secretary of CoBank, ACB , a federally chartered instrumentality of the United States, on behalf
of said entity.
Wit ,
- -
- ffieifti~k-",.-
..,.-"=~
WILLIAM LEBLANC III
NOTA-1iY PUBLIC
My commission eXPir
::ATE OF COLORAD
~ -. ,
5'4-~
~1"&C~
Notary Public - State of Colorado
Page 25
SCHEDULE A
Telephone Loan Contract" (exclusive of any amendments):
Amending Telephone Loan Contract dated as of November 3,2003.
Outstanding RUS Notes
Six (6) certain mortgage notes payable to the order of the Government, in the aggregate principal amount of
$3,875 000., all of which will finally mature on or before August 26, 2020.
Underlying Mortgage
Instrument
Restated and Consolidated Mortgage, Security Agreement and Financing
Statement
Date
September 1 , 2000
Current RUS Notes" (Of even date herewith):
500,000
Interest Rate
(oer annum)
Determined
by Advance
five per centum
(5%)
Final Payment
Date
November 3, 2021
Principal Amount
046,000
November 3,2021
Current Bank Note" (Of even date herewith):
Principal Amount
355,150
Interest Rate
(oer annum)
Determined
by Advance
Final Payment
Date
November 3, 2021
SCHEDULE B
Prior CoBank Loan Agreement(s)" shaH mean the following loan agreements:
Lien Accommodated Telephone Loan Agreement No. TO809 dated as of September 1, 2000 for term loan
in the principal amount of$8 630,240.
Lien Accommodated Telephone Loan Agreement No. T081 0 dated as of September 1, 2000 for temlloan
in the principal amount of$I,750 000.
Outstanding Notes" payable to CoBanlc shall mean the following:
Stated Interest Maturity
Designation Pdncipal Amount Date Rate Date
No. T0809 1 630 240 9/1/00 Variable 12/20/11
No. T0810 2 750 000 9/1/00 Variable 12/20/11
1 This Amended and Restated Promissory Note amends and restates in its entirety Promissory Note No.
ML0433T1 dated October 15, 1996 in the original principal amount of$8,630 240 made by Westel, Inc.
and payable to CoBank, ACB, which indebtedness was assumed by the Mortgagor in connection with its
merger with Westel, Inc. effective January 1 2000.
2 This Amended and Restated Promissory Note amends and restates in its entirety Promissory Note No.
ML0433T2 dated October 15, 1996 in the original principal amount of $1 ,750 000 made by Westel, Inc.
and payable to CoBank, ACB, which indebtedness was assumed by the Mortgagor in coilllection with its
merger with Westel, Inc. effective January 1, 2000.
Exhibit One (Exhibit to Mortgage)
UNIFORM SYSTEM OF ACCOUNTS
ACCOUNT NUMBERS USED IN CERTAIN PROVISIONS
All references regarding account numbers are to 47 CFR Part 32.
ACCOUNT NAMES
ACCOUNT NUMBERS
CLASS A CLASS B
NET INCOME OR NET MARGINS: the sum of the balances of the following accounts of the Mortgagor:
Local Network Services Revenues
Network Access Services Revenues
Long Distance Network Services RevenuesMiscellaneous Revenues
LESS: Uncollectible Revenues
5000s thru 5300s
Other Operating Income and Expense
Nonoperating Income and Expense
Income Effect of Jurisdictional
Rate-making Difference - Net
Nonregulated Net Income
Other Nonregulated Revenues
LESS: balances of the following accounts:
Plant Specific Operations Expense
Plant Nonspecific Operations Expense
Customer Operations
Corporate Operations
Operating Taxes
Nonoperating Taxes
Interest and Related Items
Extraordinary Items
7100*7100
7300*7300
7910 7910
7990 7990
7991 7991
61O0s thru 6700s
7200*7200
7400*7400
7500*7500
7600*7600
INTEREST EXPENSE: the sum of the balances of the following accounts of the Mortgagor:
Interest and Related Items
Interest on Funded Debt
Interest Expense - Capital Leases
Amortization of Debt Issuance Expense
Other Interest Deductions
LESS: Allowance for Funds Used
During Construction
7500*
7510
7520
7530
7540
7500
7340 7300.4
*Summary Accounts
Page I
TOTAL TELECOMMUNICATIONS PLANT: the sum of the balances of the following accounts of the
Mortgagor:
Telecommunications Plant in Service
Property Held for Future
Telecommunications Use
Telecommunications Plant Under
Construction - Short Term
Telecommunications Plant Under
Construction - Long Term
Telecommunications Plant Adjustment
Nonoperating Plant
Goodwill
2001 2001
2002 2002
2003 2003
2004 2004
2005 2005
2006 2006
2007 2007
NET WORTH OR EQUITY: the sum of the balances of the following accounts of the Mortgagor:Capital Stock 4510
Additional Paid-In Capital 4520Treasury Stock 4530Other Capital 4540Retained Earnings 4550
NOTE: FOR NONPROFIT ORGANIZATIONS- OWNER'S EQUITY SHALL BE SHOWN IN
SUBACCOUNTS OF 4540 AND 4550.
TOTAL ASSETS: the sum of the balances of the following accounts of the Mortgagor:
Current Assets
Noncurrent Assets
Total Telecommunications Plant
LESS: Accumulated Depreciation
LESS: Accumulated Amortization
11 OOs
1400s
2001
3100
3400
thru I JOOs
thru 1500s
thru 2007
thru 3300s
thru 3600s
DEPRECIATION AND AMORTIZATION: the sum of the balances of the following accounts of the Mortgagor:
Depreciation and
Amortization Expenses
Depreciation Expense-
Telecommunications Plant in Service
Depreciation Expense-
Property Held for Future
Telecommunications Use
Amortization Expense- Tangible
Amortization Expense- Intangible
Amortization Expense- Other
6560*
6561
6562
6563
6564
6565
Page 2
Exhibit A
CASSIA COUNTY, IDAHO
PARCEL NO.
TOWNSHIP 13 SOUTH , RANGE 25 EAST OF THE BOISE MERIDIAN, CASSIA COUNTY
IDAHO
Section 32:Pali of the SE1/4 of Section 32, lying North and West of the right of way of the
Connor Creek-Almo County Road, more particularly described as follows:
Commencing at a point 52 rods 14 feet South of the Northwest corner of the SE1 /4
of said Section 32;
Thence South 50 rods 8 % feet;
Thence East 16 rods;
Thence North 50 rods 8 % feet;
Thence West 16 rods to the Point of Beginning.
PARCEL NO.
TOWNSHIP 12 SOUTH, RANGE 25 EAST OF THE BOISE MERIDIAN , CASSIA COUNTYIDAHO
Section 6:A portion of Lot 3 in Section 6 , more particularly described as follows:
Commencing at a point 90 feet North and 70 feet West of the Southeast corner of
said Lot 3;
Run thence North on a line parallel with the. East boundary of said Lot 3 for 172 feet;
Thence West on a line parallel with the South boundary of said Lot 3 for 97 feet;
Thence South on a line parallel with the East boundary line of said Lot 3 for 171 %
feet;
Thence Easterly 97 feet, more or less to the Point of Beginning.
PARCEL NO.
Lot 11 in Block 3 of the Bascom and Robinson s Addition to the Village of Albion, Cassia County,
Idaho, as the same is platted in the official plat thereof, now of record in the office of the Recorder of
said County.
PARCEL NO.
TOWNSHIP 12 SOUTH, RANGE 25 EAST OF THE BOISE MERIDIAN , CASSIA COUNTY
IDAHO
Section 6:Beginning at a point 32 feet West of the Southwest corner of Lot 2 in Section 6;
Thence West 68 feet;
Thence North 90 feet;
Thence East 68 feet;
Thence South 90 feet to the Point of Beginning.
PROPERTY DESCRIPTION
S:\CLlENTS\5261\3\Property Schedule GPO3.doc
PAGE - 1 of 5
PARCEL NO.
TOWNSHIP 13 SOUTH , RANGE 26 EAST OF THE BOISE MERIDIAN , CASSIA COUNTY
IDAHO
Section 12:A parcel of land located in the SE1/4 , NW1/4, of Section 12, more particularly
described as follows:
Commencing at the Southwest corner of the SE1/4 , NW 1/4; thence North 0014'
West 223.60 feet; thence South 89058' East 30.00 feet to a point on the Easterly
right-of-way State Highway 81 , being the True Point of Beginning;
Thence South 89058' East 221.00 feet;
Thence North 14' West 96.4 feet;
Thence North 89058' West 221.00 feet to a point on the Easterly right-of-way State
Highway 81;
Thence South 00 14' East (along said R/W), 96.4 feet to the True Point of Beginning,
PARCEL NO.
TOWNSHIP 10 SOUTH, RANGE 27 EAST OF THE BOISE MERIDIAN , CASSIA COUNTY
IDAHO
Section 26:Part of the SE1/4 of Section 26, more particularly described as follows:
Beginning at a point on the Northeasterly right of way of Heglar Canyon Road which
lies 1313.9 feet North 29010' West of the Southeast corner of said Section 26;
Thence North 47056' West along said Heglar Canyon Road right of way for 100 feet
to a point wh~re Heglar Canyon Road right of way interests Yale Road right of way;
Thence North 42030' East along said Yale Road right of way for 100 feet;
Thence South 47054' East for 100 feet;
Thence South 42023' West for 100 feet to the Point of Beginning.
PARCEL NO.
TOWNSHIP 12 SOUTH , RANGE 25 EAST OF THE BOISE MERIDIAN , CASSIA COUNTY
IDAHO
Section 6:Beginning 221 feet West of the Southwest corner of Lot 2 in Section 6;
Thence North 90 feet, more or less, to the South boundary line of adjacent lots;
Thence Westerly to the East boundary line of Vaughn Street in the City of Albion
Thence South 98.33 feet, more or less, to the North boundary of Jordan and Motter
Additions;
Thence Easterly to the Point of Beginning.
PROPERTY DESCRIPTION
S:\CLlENTS\5261\3\Property Schedule GPO3.doc
PAGE - 2 of 5
PARCEL NO.
TOWNSHIP 15 SOUTH , RANGE 24 EAST OF THE BOISE MERIDIAN, CASSIA COUNTY
IDAHO
Section 22:
PARCEL NO.
Beginning at the Southwest corner of Lot 2 in Block 1 of Durfee Addition (sometimes
referred to as Almo Townsite) located in Section 22;
Thence North 50 feet;
Thence East 50 feet;
Thence South 50 feet;
Thence West 50 feet to the Point of Beginning.
TOWNSHIP 15 SOUTH , RANGE 24 EAST OF THE BOISE MERIDIAN, CASSIA COUNTY
IDAHO
Section 22:
PARCEL NO. 10:
Beginning at a point 50 feet North of the Southwest corner of Lot 2 in Block 1 of
Durfee Addition (sometimes referred to as Alma Townsite) located in Section 22;
Thence North 25 feet;
Thence East 50 feet;
Thence South 25 feet;
Thence West 50 feet to the Point of Beginning.
TOWNSHIP 12 SOUTH, RANGE 25 EAST OF THE BOISE MERIDIAN, CASSIA COUNTYIDAHO
Section 6:Beginning at a point 90 feet North and 167 feet West of the Southeast corner of Lot
3 in Section 6;
Thence running North 171.5 feet;
Thence Westerly 73 1f2 feet;
Thence South 170 feet, more or less to a point 90 feet North of the South boundary
line of said Lot 3;
Thence East 73 1f2 feet to the Place of Beginning.
PROPERTY DESCRIPTION
S:\CLlENTS\5261\3\Property Schedule GP03.doc
PAGE - 3 of 5
PARCEL NO. 11:
Lots 8 , 9, and 10 in Block 3 of the Bascom and Robinson Addition to Albion, Idaho, as the same is
platted in the official plat thereof, now of record in the office of the Recorder of the County of Cassia
State of Idaho.
AND
TOWNSHIP 12 SOUTH , RANGE 25 EAST OF THE BOISE MERIDIAN, CASSIA COUNTY
IDAHO
Section 6:Beginning at the Southwest corner of Lot 2 of said Section 6;
Thence West 32 feet;
Thence North 90 feet;
Thence East 32 feet;
Thence South 90 feet to the Point Of Beginning.
(North of the Jordan and Motter Addition to Albion , Idaho.
BUTTE COUNTY, IDAHO
PARCEL NO. 12:
Beginning at the Northeast (recorded Northwest) corner of Block 9, Arco Original Townsite;
thence S. 410 22'30" E. 100.0 feet along the Southwesterly line of Idaho Street; thence S.
48031'30" W. 50.0 feet; thence N. 41031 '30" W. 100.00 feet to the Southeasterly line of Era
Avenue; thence N. 48031'30" E. 50,0 feet to the Point of Beginning; same being NW 100 feet
of Lot 1 , Block 9, Area Original Townsite, Butte County, Idaho.
PARCEL NO. 13:
Beginning at a point on the Southwesterly line of Idaho Street that is S. 410 22'30" E. 100.
feet from the Northeast (recorded Northwest) corner of BLOCK 9, ARCO ORIGINAL
TOWNSITE; thence S. 410 22'30" E. 50.0 feet; thence S. 480 31'30" W. 100 feet; thence N.
41022'30" W. 50 feet; thence N. 48031'30" E. 100 feet to the Point of Beginning; same being
the southeast 50 feet of Lots 1 and 2, BLOCK 9, ARCO ORIGINAL TOWNSITE, Butte
County, Idaho.
PARCEL NO. 14:
THE PORTION OF LOTS 1 AND 2, BLOCK 1 OF THE ORIGINAL TOWNSITE OF MOORE
Butte County, Idaho, as shown on the recorded plat thereof on file in the office of the County
Recorder of said County, described as follows:
Beginning as a point on the South line of said Lot 1 , that is West 85 feet from the
Southeast corner of said Lot 1; thence along said South line , west 30 feet to the
Southwest corner of said Lot 1 , thence along the West line of said Lots 1 and 2
North 50 feet to the Northwest corner of said Lot 2; thence along the North line of
said Lot 2 , East 30 feet; thence South 50 feet to the Point of Beginning.
PROPERTY DESCRIPTION
S:\CLlENTS\5261\3\Property Schedule GP03.doc
PAGE - 4 of 5
PARCEL NO. 15:
A portion of Section 32, T. 5 N., R. 26 E.M" Butte County, Idaho , described as:
Beginning at a point 119 feet South of the NE corner of said Section 32; thence S.
along the East line to said Section 32 , 30 feet; thence S. 87000'00" W. 44 feet;
thence N. 30 feet; thence N. 87000'00" E. 44 feet to the Point of Beginning.
PARCEL NO. 16:
TOWNSHIP 5 NORTH , RANGE 29 EAST , BOISE MERIDIAN , BUTTE COUNTY, IDAHO.
Section 4:A tract in the SE1/4, NW1/4, more particularly described as follows:
Beginning at a point on the Northeasterly right of way of Butte County Road Project
A.P. W240, said point being North 10037' West 3246.21 feet from the South
quarter corner of Section 4; thence North 58046' East 100 feet; thence North 310 14'
West 50 feet; thence South 58046' West 100 feet, more or less, to the Northeasterly
right of way line of said road; thence South 31014' East along said Northeasterly right
of way line 50 feet, more or less, to the Point of Beginning.
CUSTER COUNTY, IDAHO
PARCEL NO. 17:
LOT 3, BLOCK 14, MACKAY ORIGINAL TOWNSITE, CUSTER COUNTY, IDAHO, AS
SHOWN BY THE OFFICIAL PLAT THEREOF, NOW ON FILE IN THE OFFICE OF THESAID COUNTY RECORDER.
ONEIDA COUNTY, IDAHO
PARCEL NO. 18:
Beginning at a point on the Easterly line of Lot 3, Block 2 , of the original Townsite of Malad
City, Oneida County, Idaho, which point is 25.0 feet Southerly from the Northeast Corner of
said Lot 3; thence continuing on the Easterly line of said Block 2 South 0006' East 40 feet;
thence South 89054' West 103 feet; thence North 0006' West 68 feet; thence South 890 00'
East 48 feet; thence South 0006' East 26.89 feet; thence North 89001' East 55 feet, more or
less, to the point of beginning.
PARCEL NO. 19:
Commencing at the Southeast Corner of Lot4 , Block 15 , of the Townsite of Holbrook, as the
same appears upon the plat thereof on file in the office of the County Recorder of Oneida
County, Idaho; thence running West 50 feet; thence North 50 feet; thence East 50 feet;
thence South 50 feet to the point of beginning.
PROPERTY DESCRIPTION
S:\CLlENTS\5261\3\Property Schedule GPO3.doc
PAGE - 5 of 5
UCC FINANCING STATEMENT
FOLLOW INSTRUCTIONS (front and back! CAREFULLY
A. NAME & PHONE OF CONTACT AT FILER (optional)
Annie Pelletier
B. SEND ACKNOWLEDGMENT TO: (Name and Address)
zmB NOV f 2 PM 2: 52
IDAHO SECRETARY OF STATE11/12/2003 02:52
CK= 37875 CT= 1626 BH= 711219
1 i 12.08 = 12.08 UCC1 FILE 8 2
Filint Hulber:B 2003-0955035-6
Givens Pursley LLP
208-3~1~dorA,gy' OF STATE
~~lATt elf IDAHO
601 West Bannock Street
Boise, Idaho 83702
THE ABOVE SPACE IS FOR FILING OFFICE USE ONLY
1. DEBTOR'S EXACT FULL LEGAL NAME- insert only debtor name (1a or Ib)-do notabbreviele or combine names
la. ORGANIZATION'S NAME
Albion Telephone Company
1b.INDIVIDUAL'S LAST NAME FIRST NAME MIDDLE NAME SUFFIX
1c. MAILING ADDRESS CITY STATE rOSTAL CODE COUNTRY
PO Box 98 Albion ID 83311 USA
Id. TAX ID #:SSN OR EIN
I ADD'
L INFO RE lIe. TYPE OF ORGANIZATION 11. JURISDICTION OF ORGANIZATION 19. ORGANIZATIONAL ID#, n any
g::~~ZATION I Corporation Idaho I C 26771 nNONE
2. ADDITIONAL DEBTOR'S EXACT FULL LEGAL NAME -Insert only debtor name (2a or 2b) - do not abbreviate or combine names
2a. ORGANIZATION'S NAME
OR 2b. INDIVIDUAL'S LAST NAME FIRST NAME MIDDLE NAME SUFFIX
2c. MAILING ADDRESS CITY POSTAL CODE COUNTRY
2d. TAX ID #: SSN OR EIN 21. JURISDICTION OF ORGANIZATIO
edd\\\Onal Sec NONE
3a. ORGANIZATION'S NAME
United States of America, Rural Utilities Service, USDA
3b, INDIVIDUAL'S LAST NAME FIRST NAME MIDDLE NAME SUFFIX
3c. MAILING ADDRESS CITY STATE
IPOSTAL CODE
COUNTRY
1400 Independence Avenue, S.Washington DC 20250-1500 USA
4. This FINANCING STATEMENT covers the following collateral:
See Attached Restated Mortgage, Security Agreement and Financing Statement.
Deblor 2
lOSeS
FILING OFFICE COpy -NATIONAL UCC FINANCING STATEMEI-.JT (FORM UCC1) (REV. 07/29/98)iDAHD ~!LU.E;LE Fce'
",
f~E'.' n'i:iU"
UCC FINANCING STATEMENT ADDENDUM
FOLLOW INSTRUCTIONS (front and back) CAREFULLY
9, NAME OF FIRST DEBTOR (1a or 1b) ON RELATED FINANCING STATEMENT
9a. ORGANIZATION'S NAME
Albion Telephone Company
9b. INDIVIDUAL'S LAST NAME
IFIRST NAME IMIDDLE NAME.
SUFFIX
10, MISCELLANEOUS:
THE ABOVE SPACE IS FOR FILING OFFICE USE ONLY
11. ADDITIONAL DEBTOR'S EXACT FULL LEGAL NAME. insert only one name (11a or11b)- do not abbreviate orcomblnenemes
11a. ORGANIZATION'S NAME
11b.INDIVIDUAL'S LAST NAME FIRST NAME MIDDLE NAME SUFFIX
11c. MAILING ADDRESS CITY :TATE I POSTAL CODE COUNTRY
..~a.C"ed -
11d. TAXID#:SSN OR EIN IADD'LlNFO RE 111e. TYPE OF ORGANIZATION 11f.JURISDICTIONOF~1;i~~i!;'8lifeO .- '"f1g. ORGANIZATIONAL ID #, if any
g~;;~~ZATIDN I edd\\\Oi'\a.\ nNONE
12.;j ADDITIONAL SECURED PARTY'm f 1 ASSIGNOR SIP'NAME - insert only \!!1a name (128 Dr 12b)
12a. ORGANIZATION'S NAME
Rural Telephone Bank
12b.INDIVIDUAL'S LAST NAME FIRST NAME MIDDLE NAME SUFFIX
12c. MAILING ADDRESS CITY STATE rOSTAL CODE COUNTRY
1400 Independence Avenue, S.Washington DC 20250-1500 USA
13. This FINANCING STATEMENT oovers timber to be cut or as-extraoted 16. Addllional collateral description:
collateral, or is filed as 8 EJ fixture filing.
14. Description of real estale:
See Attached Restated Mortgage , Security
Agreement and Financing Statement.
15. Name and eddress of a RECORD OWNER of above-described real estate
(if Debtor does not have a record interest):
17. Clleck lID!:,: if applicable and check !!IIi.)! one box,
Deblor Is a Trust or Trustee acting with respect La properly held in trust or n Decedent's Eslale
18. Check lID!:,: if applicable and check lID!:,: one box.
Debtor is a TRANSMITTING UTILITY
Filed in connection with a Manufactured-Home Transaction - effective 30 years
Filed in connection with a Public-Finance Transaclion - effective 30 years
FILING OFFICE COpy - NATIONAL UCC FINANCING STATEMENT ADDENDUM (FORM UCC1Ad) (REV. 07/29/98)In,';-iC' FILLM3LE FOPi,' "E\!. ')7'clFJ1
see ATT
UCC FINANCING STATEMENT ADDENDUM
FOllOW INSTRUCTIONS (front and back) CAREFULLY
9. NAME OF FIRST DEBTOR (1a or 1b) ON RELATED FINANCING STATEMENT
9a. ORGANIZATION'S NAME
Albion Telephone Company
9b. INDIVIDUAL'S LAST NAME
I FIRST NAME IMIDDLE NAME,
SUFFIX
10. MISCELLANEOUS:
THE ABOVE SPACE IS FOR FILING OFFICE USE ONLY
11. ADDITIONAL DEBTOR'S EXACT FULL LEGAL NAME - insert Dnly Dne name (11a or 11b) - do nDt abbreviate or combine names
11a. ORGANIZATION'S NAME
11b. INDIVIDUAL'S LAST NAME FIRST NAME MIDDLE NAME SUFFIX
11c. MAILING ADDRESS CITY STATE
IPOSTAL CODE
COUNlRY
11d. TAX 10 #: SSN OR EIN IfDD'L INFO RE 111e. TYPE OF ORGANIZATION 1 1f. JURISDICTiON OF ORGANIZATION 11g. ORGANIZATIONAL 10 #, if any
ORGANIZATION
nNONEDEBTOR I
12....1 ADDITIONAL SECURED PARTY'm rl ASSIGNOR SIP'NAME - insert Dnly QM name (12a or 12b)
12a. ORGANIZATION'S NAME
CoBank, ABC
12b. INDIVIDUAL'S LAST NAME FIRSTNAIv1E MIDDLE NAME SUFFIX
12c. MAILING ADDRESS CITY STATE rOSTAL CODE COUNlRY
PO Box 5110 Denver CO 80217 USA
13. This FINANCING STATEMENT covers tImber to be cut Dr as-extracted 16. Additional collateral dascriptlDn:
collateral, Dr is filed as a fixture filing.
14. DescriptiDn of real eslate:
See Attached Restated Mortgage, Security
Agreement and Financing Statement.
15. Name and address of a RECORD OWNER Df above-described real estate
(if Debtor does not heve a record inlereat):
17. Check QIJb! if applicable and chec" Qn\)! Dne box.
DeblDr is anT rust Dr Truslee acling wllh respect 10 properly held In Irust or Decedent's Eslale
18, Check QIJb! ir applicable and check Qn\)! one box.
DebtDr is a TRANSMITTING UTILITY
Filed in cDnnecliDn wilh a ManufaclUred-Home Transaclion - effeclive 30 years
r=i Filed in conneclion with a Public-Finance Trdnsaclion - effeclive 30 years
FILING OFFICE COpy - NATIONAL UCC FINANCING STATEMENT ADDENDUM (FORM UCC1Ad) (REV. 07/29/98)10;;;-10 FILLr'c\LE F()Rr~ HEY 07i2nO"
Albion Telephone Company
SEE ATT
RUS PROJECT DESIGNATION:
IDAHO 504-H12 & Kll ALBION
RESTATED MORTGAGE
SECURITY AGREENIENT
AND
FffiANCING STATE11ENT
made by and among
ALBION TELEPHONE COMPANY
O. Box 98
Albion, Idaho 833 i J,as mortgagor and debtor,
and
UNITED STATES OF AMffiliCA
Rural Utilities Service
Washington, D.C. 20250-1500,as mortgagee and secured party,
and
RURAL TELEPHONE BANK
Rural Telephone Bank
c/o Rural Utilities Servke
Washington, D.C. 20250-1500,as mortgagee and secured party,
and
, ..- - ,-
CO BANK; ACB
5500 South Quebec Sheet
\ Greenwood Village, CO 80111 as mortgagee and secured party.
Dated as of November 3,2003
THIS INSTRUMENT GRANTS A SECURITY INTEREST IN A TRANSMmING UTILITY.
THE DEBTOR AS MORTGAGOR IS A TRANSMITTING UTn...ITY.
THIS INSTRUMENT CONTAINS PROVISIONS THAT COVER REAL AND PERSONAL PROPERTY, FIXTURES, AFTER-
ACQUIRED
PROPERTY, PROCEEDS, FUTURE AJJV ANCES AND FUTURE OBUGATIONS.
MORTGAGOR'S ORGANIZATIONAL IDENTlFICATION NUMBER IS C2677
No.Generated: O~lOber 14, 2003 51 wI UCC-I Revisions
SEE ATf
Albion Telephone Company
RESTATED MORTGAGE, SECURITY AGREEMENT AND FINANCING
STATEMENT, dated as of November 3,2003. made by and among ALBION
TELEPHONE COMPANY (hereinafter caned the "Mortgagor ), a corporation existing
under the laws of Lhe State ofIdaho, UNITED STATES OF AMERICA (hereinafter
caI1ed Lhe "Government"). acting through the Administrator of the Rural Utilities Service
(hereinafter called "the Administrator ), RURAL TELEPHONE BANK (hereinafter
called the "Bank"). a corporation exIsting under the laws of the Government, and
CoBANK, ACB, successor to the National Bank for Cooperatives (hereinaftcr called
CoBank"), a federally chartered instrumentality of the United States (the Government
the Bank and CoBank being hereinafter sometimes coJ1ectively caned the "Mortgagees
WHEREAS, pursuant to Public Law 103-354, the Rural Utilities Service (hereinafter sometimes
caned "RUS") is the successor to the Rural Electrification Administration (hereinafter sometimes caned "
REA") and
the Administrator of the Rural Utilities Service is the successor to the Administrator ofthe Rural Electrification
Administration and for purposes of the "Underlying Mortgage" (as hereinafter defined) identified in Sc~edu)e A of
this Mortgage" (as l1ereinafter defined) the terms "REA" and" Administrator" shaH be deemed to mean respectively
RUS" and the " Administrator of Lhe RUS"; Imd
WHEREAS, pursuant to a consolidation, effective January I, 1995, of the National Bank for
Cooperatives, the Springtield Bank for Cooperatives, and the Farm Credit Bank of Springfield to form CoBankand
as a result of such consolidation, CoBank succeeded to all rights, title and interests of its predecessors in interest
under the Underlying Mortgage; and
WHEREAS, the Mortgagor has heretofore borrowed funds from. one or more of the Mortgagees or
from "FFB" (as hereinafter defined) whose loans are guaranteed by the Government
and to secure such indebtedness
has executed and delivered to such Mortgagee(s) the "Outstanding Notes" (as hereinafter defined) identified in
Schedule A hereto and/or in Schedule J? hereto.
WHEREAS, the Mortgagor and the Government desire to add CoBank as a secured party under
the RUS Mortgage and further desire to amend, supplement and conso1idate the RUS Mortgage (the RUS Mortgage
as amended, supplemented and consolidated hereby being hereinafter called "
this Mortgage ); and
WHEREAS, the Outstanding Notes are secured by the Underlying Mortgage; and
WHEREAS, the Mortgagor deems it necessary to borrow additional funds from one or more of the
Mortgagees and/or from FFB whose loans are guaranteed by the Government
and to evidence such additional
indebtedness has executed and delivered to such Mortgagee(s) the "
Current Notes" (as hereinafter defined) identified
in Schedule A hereto and to secure and pledge its property hereunder described or mentioned to secure the same; and
WHEREAS, the Mortgagor desires to enter into this Mortgage pursuant to which al1 mortgage
notes shall be secured on parity; and
WHEREAS. this Mortgage consolidates and restates Lhe Underlying Mortgage in its entirety; and
WHEREAS, all acts necessary to make this Mortgage a valid and binding legal instrument for the
security of the Outstanding Notes, the Current Notes and other indebtedness of the Mortgagor hereunder, subject to
the terms of this Mortgage, have been in all respects duly authorized; and
WHEREAS, to the extent that any of the property described or referred to in this Mortgage is
governed by the provisions of the Uniform Commercial Code of any state (hereinafter
cal1ed the "Unifonn
Commercial Code ), the parties hereto desire that this Mortgage be regarded as a "security agreement" and as a
!inancing statement" for said security agreement under the Uniform Commercial Code;
Puge I
see ATT
Albion Telephone Company
NOW, THEREFORE, THIS MORTGAGE WITNESSETH that, in order to secure the payment of
the principal of and interest on the "notes" (as hereinafter defined), according to their tenor and effect, and further to
secure the due perfonnance of the covenants, agreements and provisions contained in this Mortgage and the
Consolidated Loan Agreement" (as hereinafter defined) and the "
CoBank Loan Agreement" (as hereinafter defined)
and to declare the tenns and conditions upon which the notes are to be secured, the Mortgagor, in consideration of
the premises, has executed and delivered this Mortgage, and has granted, bargained
, sold, conveyed, warranted,
assigned, transferred, mortgaged, pledged, and set over, and by these presents does hereby grant, bargain, sell,
convey, warrant, assign, transfer, mortgage, pledge and set over, unto the Mortgagees, and their respective assigns,
and the Mortgagor does hereby grant to the Mortgagees, for the purposes herein expressed, a security interest in,
all
and singular, \.he following properties, assets and rights of the Mortgagor, wherever located, whether now owned or
hereafter acquired or arising, and a11
proceeds and products thereof (hereinafter sometimes caned the "
Mortgaged
Property
All right, title and interest of the Mortgagor in and to the "
Existing Facilities" (as hereinafter
defined) and buildings, plants, works, improvements, structures, estates, grants, franchises, easements, rights
privileges and properties real, personal and mixed, tangible or intangible, of every kind or description, now owned or
leased by the Mortgagor or which may hereafter be owned or leased, constructed or acquired by the Mortgagor,
wherever located. and in and to all extensions and improvements thereof and additions thereto, including a
buildings, plants, works, structures, improvements, fixtures, equipment, apparatus, materials, supplies, machinery,
tools, implements. poles, posts, crossarms, conduits, ducts, lines, whether underground or overhead or otherwise,
wires, cables, exchanges, switches, including, without limitation, host switches and remote switches, desks,
testboards, frames, racks, motors, generators, batteries and other items of central office equipment, pay-stations,
protectors, instruments, connections and appliances, office furniture and equipment, work equipment and any and
all
. other property of every kind, nature and description, used, useful or acquired for use by the Mortgagor in connection
therewith and including, without limitation, lhe real properly described in the following property schedule:
PROPERTY SCHEDULE
(a) The Existing Facilities are located in the Counties of Bulte, Cassia, Custer and Oneida in the
State ofIdaho, and the County of Box Elder in the State of Utah.
(b) The property referred to in the last line of paragraph "1 of the Granting Clause includes the real
estate described in Exhibit A attached hereto, and by this reference made a part hereof, as iffully set Forth at
length attbis poinL
(c) If the real estate described in Exhibit A is by reference to deeds, grantor(s), grantee, etc., then
the description of each of the properties conveyed by and through such deeds is by reference made a part of
Exhibit A as though rulIy set forth at length therein.
(d) The real estate described in Exhibit A shall also include all plants, works, structures, erections,
reservoirs, dams, buildings, fixtures and improvements
noW or he.reafterIocaled on such real estate, and all
tenements, hereditaments and appurtenances noW or hereafter thereunto belonging or in any wise
appertaining.
An right, title and interest of the Mortgagor in, La and under any and all grants, privileges, rights of
\Yay and easements now owned, held, leased, enjoyed or exercised, or which may hereafter be owned, held, leased
acquired, enjoyed or exercised, by the Mortgagor for the purposes of, or in connection with, the
construction or
operation by or on behalf of the Mortgagor of telephone properties
, facilities, systems or businesses, whether
underground or overhead or otherwh;e, wherever located;
Puge :2
SEEA1T .
Albion Telephone Company
ill
An right, title and interest of the Mortgagor in, to and under any and all licenses, franchises
ordinances, privileges and permits heretofore granted, issued or executed, or which may hereafler be granted, issued
or executed, to it or to its assignors by the United States of America, or by any state, or by any county, township,
municipality, village or other political subdivision thereof, or by any agency, board, commission or department
any of Ihe foregoing, authorizing the construction, acquisition, or operation of telephone properties, facilities,
systems or businesses, insofar as the same may by law be assigned, granted, bargained, sold, conveyed, transferred,
mortgaged or pledged;
All right, title and interest of the Mortgagor, in, to and under all personal property and fixtures
every kind and nature including without limitation al1 goods (including inventory, equipment and any accessions
thereto), instruments (including promissory notes). documents, accounts, chattel paper, electronic chattel paper,
deposit accounts (including, but notlimiled to, money held in a trust account pursuant hereto or to a loan agreement),
letter-oF-credit rights, investment property (including certificated and uncertificated securities, security entitlements
and securities accounts), software, general intangibles (inc1uding, but not Jimited to, payment intangibles), supporting
obligations, any other conLract rights or rights to (he payment of money, insurance claims and proceeds (as such
terms are presently and hereinafter defined in the applicable Uniform Commercial Code provided, however, that the
term "instrument" shaH be such term as defined in Article 9 of the applicable Uniform Commercial Code rather than
Article 3);
All right title and interest of the Mortgagor in, to and under any and all agreements, leases or
contracts heretofore or hereafter executed by and between the Mortgagor and any person, firm or corporation
relating to the Mortgaged Property (including contracts for the. lease, occupancy or sale of the Mortgaged Property,
or any portion thereof);
All right, Litle and interest of the Mortgagor in, to and under any and all books, records and
correspondence relating to the Mortgaged Property, including, but not limited to: all records. ledgers, leases and
computer and automatic machinery software and programs, including without limitation, programs, databases. disc or
tape files and automatic machinery print outs, runs and other computer prepared information indicating,
summarizing, evidencing or otherwise necessary or helpful in the collection of or realization on the Mortgaged
Property;
VII
Also, all right. title and interesl of the Mortgagor in and to all other property, real or personal,
tangible or intangible, of every kind, nature and description, and wheresoever situated, now owned or leased or
hereafter acquired by the Mortgagor, it being the intention hereof that all such property noW owned or leased but not
specifical1y described herein or acquired or held by the Mortgagor after the date hereof shall be as fully embraced
within and subjected to the lien hereof as if the same were now owned by the Mortgagor and were specifically
described herein to the extent only, however, that the subjection of such property to the lien hereol' shall not be
contrary to Jaw;
TOGETHER WITH all rents, income, revenues, profits, proceeds and benefits at any time derived,
received or had from any and all of the above-described property of the Mortgagor.
Page 3
SEE ATT Albion Telephone Company
Provided, however, that"except as hereinaFter provided in Section l2(b) of Article II hereof, noautomobiles, trucks, trailers, tractors or other vehicles (including without limitation aircraft or ships, if any) which
are tilled and/or registered in any state of the United States of America and owned or used by the Mortgagor shall be
included in the Mortgaged Property.
TO HA VB AND TO HOLD all and singular the Mortgaged Property unto the Mortgagees and
their respective assigns forever, to secure equally and ratably the payment of the principal of and interest on the
notes, according to their tenor and effect, without preference, priority or distinction as to interest or principal (exceptas otherwise specifically provided herein) or as to lien or otherwise of any note over any other note by reason bf the
priority in time of the execution, delivery or maturity thereof or of the assignment or negotiation thereof, or
otherwise, and to secure the due performance of the covenants, agreements and provisions herein and in the
Consolidated Loan Agreement and in the CoBank Loan Agreement contained, and for the uses and purposes and
upon the terms, conditions, provisos and agreements hereinafter expressed and declared.
ARTICLE I
DEFINITIONS AND ADDITlONAL NOTES
Mortgage.
SECTION I. (a) The parties to this Mortgage are hereby deemed to be parties to the Underlying
(b) In addition to the terms defined elsewhere in this Mortgage, the termsdefined in this subsection (b) shalJ have the meanings specified herein. The terms defined herein include the plural
as well as the singular and the singular as well as the plural.
Act" shall mean the Rural Electrification Act of 1936, as amended (7 D.C. 90 I
Additional Notes" shalJ mean the Additional Bank Notes, the Additional CoBank Notesand the Additional RUS Notes collectively.
Additional Bank Notes" shal! mean any notes issued by the Mortgagor to the Bank pursuant to
Article 1. Section I , of this Mortgage incJuding any refunding, renewal, or substitute notes which may from
time to time be executed and delivered by the Mortgagor to the Bank pursuant to the terms of Article J,
Section 1.
Additional CoBank Notes" shall mean any notes issued by the Mortgagor to CoBank pursuant to
Article I, Section I 0 f this Mortgage including any refunding, renewal or substitute notes which may fromtime to time be executed and delivered by the Mortgagor to CoBank pursuant to the terms of Article I,
Section 1.
Additional RUS Notes" shall mean any notes issued by the Mortgagor to the Government or FFB
and guaranteed by the Government, pursuant 10 Article 1, Seclion 1 of this Mortgage including anyrefunding, renewal, or substitute notes which may from time to time be executed and delivered by theMortgagor to the Government pursuant to the terms of Article I, Section 1.
Bank Notes" means the Outstanding Notes payable to the order of the Bank, the Current Notespayable to the order of the Bank and the Additional Bank NoLes.
CoBank Loan Agreement" shall mean the Joan agreement(s) between the Mortgagor and CoBanklisted in St::hedule B under the heading "Prior CoBank Loan Agreement(s)" and any amendments thereto
the loan agreement under the heading "CurrenL CoBank Loan Agreement" in Schedule B hereto with respect
Pngc 4
SEE An-Albion Telephone Company
to any CulTent Note payable to CoBank listed in Schedule B hereto and any loan agreements with respect to
Additional CoBank Notes and any amendments thereto.
CoBank Notes" means the Outstanding Notes payable to CoBank. the Current Notes payable to
CoBank and the Additional CoBank Notes.
Consolidated Loan Agreement" shall mean the loan agreement between the Mortgagor and the
Government, or between the Mortgagor and the Bank, or among the Mortgagor, the Government and the
Bank, under the heading "Telephone Loan Contract" in Schedule A hereto, as the same may have been
previously amended, and any current or future amendments thereto, any current amendments thereto being
under the heading "Telephone Loan Contract Amendment" in Schedule A hereto, together with any
agreements among the Mortgagor, the Government, acting through the Administrator, and FFB , pursuant to
which the Government guarantees the loans made by FFB to the Mortgagor, pursuant to the Act, and any
amendments thereto.
Current Notes" shall mean the notes issued by the Mortgagor LO secure the loans to the Mortgagor
made in conjunction with this Mortgage payable to the order of the Government under the heading "Current
RUS Note(s)" in Schedule A hereto. payable to the order of the Bank under the heading "Cun-ent Bank
Note" in Schedule A hereto, payable to the order of CoBank under the heading "Current CoBank Note" in
Schedule B hereto, payable LO FFB under the heading "Current FFB Note" in Schedule A hereto and
payable to the order of the Government to reimburse the Government for certain amounts paid from time to
time by the Government to FFB under the heading "Current Reimbursement Note" in Schedule A hereto.
Existing Facilities" shaH mean the telephone system and other facilities presently owned by the
Mortgagor identified in the Granting Clause of this Mortga~e.
FFB" shall mean the Federal Financing Bank.
this Mortgage" shall mean this Restated Mortgage. Security Agreement and Financing Statement,
including any amendments or supplements thereto from time to time.
notes" shall mean collectively the Bank Notes, the CoBank Notes and the RUS Notes.
Outstanding Notes" shalI mean the notes evidencing outstanding indebtedness of the Mortgagor to
the Government under the heading "Outstanding RUS Notes" in Schedule A hereto. to the Bank. under the
heading "Outstanding Bank Notes" in Schedule A hereto, to CoBank under the heading "Outstanding
CoBank Notes" in Schedule hereto and to FFB under the heading "Outstanding FFB NoLes" in Schedule
A hereto.
RUS Notes" shall mean the Outstanding Noles payable to the order of the Government and
payable Lo FFB, the Current Notes payable to the order of the Government and payable to FFB and the
Additional RUS Notes.
Underlying Mortgage" shall mean the instruments identified as such in Schedule A hereto and
Schedule B hereto.
Where in these definitions there is a reference to an instrument as being listed under a particular
heading in Schedules A and B and no such heading is included in Schedules A and B then such definition shall be
read as though there were no such reference.
(c) The Mortgagor, when authorized by resolution or resolutions of its board of
directors, may from time to time (1) execute and deliver to the Government one or more Additional RUS Notes to
evidence loans made or guaranteed by the Government to the Mortgagor pursuant to the Act, or to evidence
Page :;
SEe ATT
.- '.'.
Albion Telephone Company
indebtedness of the Mortgagor incurred by the assumption by the Mortgagor of the indebtedness of a third party or
parties to the Government created by a loan or loans theretofore made or guaranteed by the Government to such third
party or parties pursuant to the Act, (2) execute. and deliver to the Bank one or more Additional Bank Notes to
evidence loans made by the Bank to the Mortgagor pursuant to the Act, or to evidence indebtedness of the
Mortgagor incurred by the assumption by the Mortgagor of the indebtedness of a third party or parties to the Bank
created by a loan or loans theretofore made by the Bank to such third party or parties pursuant to the Act, and (3)
execute and deliver to CoBank one or more Additional CoBankNotes to evidence loans made by CoBank to the
Mortgagor. or to evidence indebtedness of the Mortgagor incurred by the assumption by the Mortgagor, of the
indebtedness of a third party or parties to CoBank created by a loan or loans theretofore made by CoBank to such
party or parties. The Mortgagor, when authorized by resolution or resolutions of its board of directors, may also
from time to time execute and deliver one or more Additional Notes to refund any note or notes at the time
outstanding and secured hereby, or to renew or in substitution for, any such oulstanding note or notes. Additional
Notes shan contain such provisions and shall be executed and delivered upon such terms and conditions as the board
of directors of the Mortgagor in the resolution or resolutions authorizing the execution and delivery thereof and the
relevant lender shall prescribe; provided, however, that the oulStanding principal balances owing on the notes shaIl
not al anyone time exceed fifty million dollars and no cents ($50,000,000.00) and no nole shall mature more than
fifty (50) years after the date hereof. Additional Notes, including refunding, renewal and substitute noles, when and
as executed and delivered, shall be secured by this Mortgage, equally and ratably with all other notes at the time
outstanding, without preference, priority, or distinction of any of the noles over any other of the notes by reason of
the priority of the time of the execution, delivery or maturity thereof or of the assign men I or negotiation thereof.
Except as hereinafter provided, however, no Additional CoBank Notes shall be secured by this Mortgage without the
prior written approval thereof by the Government and the Bank, and no Additional RUS Notes or Additional Bank
Notes shall be secured by this Mortgage without lhe prior written approval thereof by CoBanIc. No such prior written
approval shall be required with respect to the execution and delivery by the Mortgagor ot' (I). notes issued 10 refund,
renew or substitute for any outstanding note or notes, and (2) the Outstanding Notes, and (3) AdditionaI Notes issued
to the Government onhe Bank in accordance with Subsection (d) of this Section 1.
(d) The Mortgagor may execute and deliver Additional RUS Notes to evidence
a loan or loans from the Government to the Mortgagor and/or a loan or loans from FFB to the Mortgagor and
Additional Bank Notes to evidence a loan or loans from the Bank to the Mortgagor provided thai the following
condition precedent is met with respect to each such loan:
Written acknowledgment is obtained from RUS, the Bank and CoBank indicating that RUS's, the
Bank's and CoBank's pro forma financial analysis of the Mortgagor, for the test year used by RUS in establishing the
economic feasibility of such Joan shows that the Mortgagor shall have a Times Interest Earned Ratio ("TIER") of not
less than 1.5; a Debt Service Coverage ("DSC") of not less than 1.25; and an Equity 10 AsseLB Ratio equal to or
greater than 40%, as the above are defined in Article ll, Section 20 hereof, taking into account the interest to be
charged on the Additional RUS Notes or Additional Bank Notes proposed to be executed and delivered to evidencesuch loan.
(e) As u!;iedin this Mortgage, the tern "directors" includes trustees.
. SECTION 2. The Mortgagor, when authorized by resolution or resolutions of its board of
directors, may from time to time execute, acknowledge, deliver, record and me mortgages supplemental 10 this
Mortgage which thereafter shall form a part hereof, for the purpose of formally confirming this Mortgage as security
for the notes. Nothing herein contained shall require the execution and delivery by the Mortgagor of a supplemental
mortgage in connection with the issuance hereunder or the securing hereoy of notes except as hereinafter provided
Section 12 of Article II hereof.
Puge 6
SEE Arr
. .
Albion Telephone Company
ARTICLE II
PARTICULAR COVENANrS OF THE MORTGAGOR
The Mortgagor covenants with the Mortgagees and the holders of notes secured hereby
(hereinafter sometimes collectively caBed the "noteholders ) and each of them as follows:
SECTION 1. The Mortgagor is duly authorized under its articles of incorporation and by-laws and
the laws of the State of its incorporation and an other applicable provisions of law to execute and deliver the
Outstanding Notes, the Current Notes and this Mortgage and to execute and deliver Additional Notes; and all
corporate action on its part for the execution and delivery of the Outstanding Notes, the Current Notes Wid this
Mortgage has been duly and effectively taken; and the Outstanding Notes, the Current Notes and this Mortgage are
or when executed and delivered will be, U1e valid and enforceable obligations of the Mortgagor in accordance with
their respective tenDs.
SECTION 2. The Mortgagor warrants that it has good, right and lawful authority to mortgage the
property described in the granting clause of this Mortgage for the purposes herein expr~ssed, and that the said
property is free and clear of any deed of trust, mortgage, lien, charge or encumbrance thereon or affecting the title
thereto, except (i) the lien of this Mortgage and taxes or assessments not yet due; (ii) deposits or pledges to secure
payment of workers compensation, unemployment insurance, old age pensions or other social security; and (iii)
deposits or pledges to secure performance of bids, tenders, contracts (other than contracts for the payment of
borrowed money), leases, public or statutory obJigations, surety or appeal bonds, or other deposits or pledges for
purposes of like general nature in the ordinary course of business. The Mortgagor will, so long as any oftbe notes
shall be outstanding, maintain and preserve the lien of this Mortgage superior to all other liens affecting the
Mortgaged Property, and will forever warrant and defend the title to the property described as being mortgaged
hereby to the Mortgagees against any and all claims and demands whatsoever. The Mortgagor wilJ promptly payor
discharge any and all obligations for or on account of which any such lien or charge might exist or could be created
and any and all lawful taxes, rates, levies, assessments, liens, claims or other charges imposed upon or accruing upon
any of the Mortgagor s property (whether taxed to the Mortgagor or to any noteholder), or tl1e franchises, earnings or
business of the Mortgagor, as and when the same shall become due and payable; and whenever cal1ed upon so to do
the Mortgagor will furnish to the Mortgagees or to any noteholder adequate proof of such payment or discharge.
SECTION 3. The Mortgagor will duly and punctUally pay the principal of and interest on the
notes at the dates and places and in the manner provided therein, according to the true intent and meaning thereof
and all other sums becoming due hereunder. The Mortgagor may at any time make prepayments on account of all or
part of the principal of the notes to the extent and in the manner therein provided and as set forth in the Consolidated
Loan Agreement and the CoBank Loan Agreement; provided that any such prepayment shall be applied pro rata to
the RUS Notes, the Bank Notes and the CoBank Notes, according to the proportions that the aggregate unpaid
principal amount of the RUS Notes, the aggregate unpaid principal amount of the Bank Notes and the aggregate
unpaid principal amount of the CoBank Notes, respectively, bear to the aggregate unpaid principal amount of the
RUS Notes, the Bank Notes and the CoBank Notes, collectively, on the date of prepayment and shall be applied to
such notes and instaIlments thereof as may be designated by the respective noteholders at the time of any such
prepayment. For purposes of this Section 3, delivery by the Mortgagor of any note which renews or is in substitution
for an outstanding note shaIl not be considered a prepayment hereunder and delivery of a refunding note shall not be
considered a prepayment provided that, the refunding note will result in (1) an economic benefit defined as a present
value savings when comparing the cash flows of the refunding note with the cash flows of the note being refunded;
(2) will nol cause the TIER as of the most recent December 31 RUS Forn, 479, when recalculated by substituting the
actual interest expense of the note to be refunded with the projected interest expense of the refunding note, to be less
than the greater of the TIER before such recalculation or J.5; and (3) will not cause the DSC as of the most recent
December 31 RUS Form 479, when recalculated by substituting the scheduled principal payments of the note to be
refunded with the scheduled principal repayments of the refunding note, to be less than J .25, Additionally, the
mD:iority RUS noteholders and the majority Bank noteholders and the majority CoBank noteholders (as such terms
Page 7
SEE AlT
Albipn Telephone Company
are defined in Section 4 pi Article II hereof) may agree that such noteholder shall not be paid the pro rala
prepayment to which such noteholder may be entitled under this Section 3.
SECTION 4. (a) The Mortgagor will, at all times, so long as any of the notes shall be outstanding,
take or cause to be taken all such action as from time to time may be necessary to preserve its corporate existenceand to preserve and renew all franchises, rights of way, easemenlS, permits and licenses now or hereafter to it grantedor upon it conferred, and will comply wiLh all valid laws, ordinances, regulations and requirements applicable to it orits property. The Mortgagor will not, without the approval in writing of the holder or holders of not Jess than amajority in principal amount of the RUS Notes at the time outslanding (hereinafter called the "majority RUSnoteholders) and of the holder or holders of not less than a majority in principal amount of the Bank Notes at the
time outstanding (hereinafter called the "majority Bank noteholders ) and of the holder or holders of not less than amajority of the CoBank noteholders at the time outstanding (hereinafter called the "majority CoBank noteholderstake or suffer to be taken any steps to reorganize or to consolidate with or merge into any other corporation or to
permit any other corporation to merge into the Mortgagor or acquire all or substantially all of the business or assetsof another corporation if such acquisition is analogous in purpose or effect to a merger or consolidation or to sell,
lease or transfer, mortgage, convey by deed to secure debt, pledge or encumber other than under the lien hereof (or
make any agreement therefor) the Mortgaged Property, or any pan thereof.
(b) Nothing herein contained shaH prevent any such reorganization,consolidation or merger provided that the lien and security of this Mortgage and the rights or powers of theMortgagees and the noteholders hereunder shall not thereby be impaired or adversely affected, and provided that
upon such reorganization, consolidation or merger, the due and punctual payment of the principal of and interest on
the notes according to their tenor and the due and punctual perfonnance of all covenants and conditions of thisMortgage shall be assumed by the corporation formed by such reorganization, consolidation or merger, and the lien
of this Mortgage shall remain a superior lien upon the property owned by the Mortgagor at the lime of suchreorganization, consolidation or merger and upon any improvemenlS or additions to such property, either prior to or
subsequent 10 such reorganization, consolidation or merger.
(c) The Mortgagor may, however, without obtaining the approval of the holderor holders of any of the notes at the time outstanding, at any time or from time lo.time so long as the Mortgagor is
not in default hereunder, sell or otherwise dispose of, free from the lien hereof, any of its property which is neithernecessary to nor useFul for the operaLlon of the Mortgagor s business, or which has become obsolete, worn out ordamaged or Dtherwise unsuitable for the purposes of the Mortgagor; provided, however, that the Mortgagor shall:(1) 10 the exlent necessary, replace the same by, or substitute therefor, other property of the same kind and nature,
which shall be subject to the lien hereof, free and clear of all prior liens, and apply any proceeds derived ITom such
sale or other disposition of such property and not needed for the replacement thereof to the payment of the
indebtedness evidenced by the RUS Notes, the Bank Notes arid the CoBank Notes in the proportions which theaggregate principal balances then owing on the RUS Notes, the aggregate principal balances then owing on the BankNotes and tlle aggregate principal balances then owing on the CoBank Notes, respectively, .bear to the aggregateprincipal balam:es then owing on the RUS Notes, the Bank Notes and the CoBank Notes, col1ectively, and shall be
applied to such notes and installments thereof as may be designated by the respective noteholders at the time of anysuch receipt; or (2) immediately upon the receipt of the proceeds of any sale or other disposition of said property,
apply the entire amount of such proceeds to the payment of the indebtedness evidenced by the RUS Notes, the BankNotes and the CoBank Notes in the proportions and in the manner provided for in (1) above; or (3) deposit all
such part of the proceeds derived from the sale or other disposition of said property as the majority RUS no!eholdersand the maj~rity Bank noleholders and the majority CoBank noteholders shall specify in such restricted bank
accdunts as such holder or holders shall designate, and shall use the same only for such additions to or improvementsof the Mortgaged Property and on such terms and conditions as such holder or holders shall specify.
SECTION 5. The Mortgagor wiII at all times maintain and preserve the Mortgaged Property in
good repair, working order and condition, and wiJ! from time to time make al1 needful and proper repairs, renewals,and replacements and useflll and proper alterations, additions, bettennents and improvements, and will, subject to
contingencies beyond its reasonable control, at all times keep its plant and properties in continuous operation and use
Puye 8
Albion Telephone Company
SEE ATT
all reasonable diligence to furnish the subscribers served by it through the Mortgaged Property with adequatetelephone service.
SECTION 6. Except as specifically authorized in writing in advance by the majority RUS
noteholders and the majority Bank noteholders and the majority CoBank noteholders, the Mortgagor will purchase
a11 materials, equipment, supplies and replacements to be incorporated in or used in connection with the Mortgaged
Property outright, and not subject to any conditional sales agreement, challel mortgage, bailment lease, or other
agreement reserving to the seller any right, title or lien.
SECTION 7. (a) The Mortgagor shall take out, as the respective risks are incurred
and maintain the classes and amounts of insurance in conformance with generally accepted utility industry standards
for such clilSses and amounts of coverage for utilities of the size and character of the Mortgagor and consistent with
Prudent Utility Practice." Prudent Utility Practice shall mean any of the practices, methods, and. acts which, in the
exercise of reasonable judgement, in light of the facts, including but not limited to, the practices. methods, and acts
engaged in or approved by a significant portioo of the telecommunications industry prior thereto, known at the Li~e
the decision was made, would have been expected to accomplish the desired result consistent with cost-effectiveness,
reliability, safely, and expedition. lL is recognized that Prudent Utility Practice is not intended to be limited to
optimum practice, method, or act to the exclusion of all others, but rather is a spectrum of possible practices,
methods, or acts which CQuId have been expected to accomplish the desired result at the lowest reasonable cost
consistent with cost-effectiveness, reliability, safety, and expedition.
(b) The foregoing insurance coverage shan be obtained by means of
bond and policy forms approved by regulatory authorities havingjurisdicLion, and, with respect to insurance upon
any part of the Mortgaged Property, shaH provide that the insurance shall be payable lO Mortgagees as their interests
may appear by means of the standard mortgagee clause without contribution. Each poIicy or other contract for such
insurance shall contain an agreement by the insurer that, notwithstanding any right of cancellation reserved to such
insurer, such policy or contract shall continue in force for at least 30 days after written notice to each Mortgagee of
suspension, cancellation, or tennination.
(c) In the event of damage to or the destruction of any portion of the
Mortgaged Property which is used or useful in the Mortgagor s business and which shall be covered by insura!1ce,
unless each Mortgagee shaH otherwise agree, the Mortgagor shaH replace or restore such damaged, destroyed, or lost
portion so that such Mortgaged Property shaH be in substantially the same condition as it was in prior to such
damage, destruction, or loss and shall apply the proceeds of the insurance for thal purpose. The Mortgagor shall
replace the lost portion of such Mortgaged Property or shall commence such restoration promptly after such damage,
destruction, or loss shall have occurred and shall complete such replacement Dr restoration as expeditiously as
practicable, and shall payor cause to be paid out of the proceeds of such insurance form all costs and expenses in
connection therewith.
(d) Sums recovered under any policy or fidelity bond by the Mortgagor
for a loss of funds advanced under the notes or recovered by any Mortgagor or any noteholder for any loss under
such policy or bond shall, unless applied as provided in the preceding paragraph, be used to finance construction of
ulility plant secured or to be secured by this Mortgage, or unless otherwise directed by the Mortgagees, be applied to
the prepayment of the notes pro raW according to the unpaid principaJ amounts thereol' (such prepayments to be
applied to such notes and installments thereof as may be designated by the respective Mortgagee at the time of any
such prepayment), or be used to construct or acquire utility plant which wiII become part of the Mortgaged Property.
At the request of any Mortgagee, the Mortgagor shan exercise such rights and remedies which they may have under
such policy or fidelity bond and which may be designated by such Mortgagee, and the Mortgagor hereby irrevocably
appoints each Mortgagee as its agent to exercise such rights and remedies under such policy or bond as such
Mortgagee may choose, and the Mortgagor shall pay a1l costs and reasonable expenses incurred by the Mortgagee in
connection with such exercise.
Puge 9
SEE AIT
...1
Albion Telephone Company
SECTION 8. In the event of the failure of the Mortgagor in any respect Lo comply with the
covenants and conditions herein contained with respect to the procuring of insurance, the payment of taxes,
assessments and other charges, the keeping of the Mortgaged Property in repair and free of liens and other claims or
to comply with any other covenant contained in this Mortgage, any noteholder or noteholders shaH have the right
(without prejudice to any other rights arising by reason of such default) to advance or expend moneys for the purpose
of procuring such insurance, or for the payment of insurance premiums, taxes, assessments or other charges, or to
save the Mortgaged Property from sale or forfeiture for any unpaid tax. or assessment., or otherwise, or to redeem the
same from any tax or other sale, or to purchase any tax title thereon. or to remove or purchase any mechanics
' liens
or other encumbrance thereon, or to make repairs thereon or to comply with any other covenant herein contained or
to prosecute or deFend any suit in relation to the Mortgaged Property or in any manner to protect the Mortgaged
Properly and the title thereto, and all sums so advanced for any of the aforesaid purposes with interest thereon at the
highest legal rate but not in excess of Chase Manhattan Prime plus 400 Basis Points per annum
shaH be deemed a
charge upon the Mortgaged ProperlY in the same manner as the notes at the time outstanding are secured and shall be
Forthwith paid to the noteholder or noteholders ma1cing such advance or advances upon demand. It shall not be
obligatory for any noteholder in making any such advances or expenditures to inquire into the validity of any such
tax title, or of any of such taxes or assessments or sales therefor, or of any such mechanics
' liens or other
encumbrance.
SECTION 9. The Mortgagor wi1I not, without the approval in writing of the majority RUS
note"holders, the majority Bank noteholders and the majority CoBank noteholders: (a) enter into any contract or
contracts for the operation or maintenance of all or any part of its property, for the use by others of any of the
Mortgaged Property, or for tolltraJfic, operator assistance, extended scope or switching services to be furnished by
or for connecting or other companies; provided, however, that such approval shall not be required for any
~on traffic
or operator assistance contract which in form and substance conforms with contracts in general use in the telephone
industry; or (b) deposit any ofits funds, regardless of the source thereof, in any
bank, institution or other depository
which is not insured by the Federal Government
SECTION 10. Salaries, wages and other compensation paid by the Mortgagor for services, and
directors' or trustees ' fees, shall be reasonable and in conFonnity with the usual practice of corporations of the size
and natUre of the Mortgagor. Except as specifically authorized in writing in advance by the majority RUS
noteholders and the majority Bank noteholders and the majority CoBank noteholders, the Mortgagor will make no
advance payments or loans, or in any manner extend its credit, either directly or indirectly, with or without interest,
to any of its directors, trustees, officers, employees, stockholders, members or
affi1iated companies, provided,
however, the Mortgagor may make an investment for any purpose described in section 607(c)(2) of the Rural
Development Act of 1972 (including any investment in, or extension of credit, guarantee or advance made to, an
affiliatcd company of the Mortgagor that is used by such company for such purpose) to the extent that, immediately
after such investment, (I) the aggregate' of such investments does not exceed one-third of the net worth (detined in
Exhibit One hereto) of the Mortgagor and (2) the Mortgagor s net worth is at least twenty percent ofits total assets
(detined in Exhibit One hereto). As use:d herein, .the term "affiliated companies" shall have the meaning prescribed
for this term by the Federal Communications Commission in its prevailing uniform system of accounts for Class A
telephone companies.
SECTION 11. The Mortgagor wiII at all times keep, and saFely preserve, proper books, records
and accounts in which full and true entries wi11 be made of all of the dealings, business and affairs of the Mortgagor,
in accordance with methods of accounting prescribed by the slate regulatory body having jurisdiction over the
Mortgagor, or in the absence of such regulatory body or such prescription, by the
Federal Communications
Commission in its uniform system of accounts for telecommunications companies as those methods and principles of
accounting may be supplemented from time to time by RUS or the Bank.
The Mortgagor will prepare and Furnish
each noteholder not laler than the thirtieth day of January, April, July and October in each year, or at such more or
less frequent intervals when specified by the majority RUS noteholders
, the majority Bank noteholders and the
majority CoBank noleholders, financial and statistical reports on its condition and operations. Such reports shall be
on the RUS Form 479 and include such information as may be specified by the majority RUS noteholders
, the
majority Bank noteholders and the majority CoBank noteholders, including without limitation an analysis of the
Page 10
SEE ATT Albion Telephone Company
Mortgagor s revenues. expenses and subscriber accounts. The Mortgagor will cause to be prepared and furnished to
each noteholder at least once during each J 2-month period during the term hereof, a full and complete report of its
financial condition and cash flow as of a date (hereinafter called the "Fiscal Date ) not more than 90 days prior to the
date such report is furnished to the noleholders hereunder, and of its operations for the 12-month period ended on the
Fiscal Date, in form and substance satisFactory to the majority RUS noteholders. the majority Bank noteholders and
the majority CoBank noteholders. audited and certified by independent certified public accountants satisfactory to
said noteholders. and accompanied by a report of such audit in form and substance satisfactory to said noteholders.
Each of the majority RUS noteholders, the majority Bank noteholders or the majority CoBank noteholders, through
its or their representatives, shall at all times during reasonable business hours have access to, and the rigi1t to inspect
and make copies of, any or all books. records and accounts, and any or all invoices, contnicts, leases, payrolls,
cancelled checks. statements and other documents and papers of every kind belonging to or in the possession of the
Mortgagor or in anywise pertaining to its property or business. The Mortgagor shall enter into an audit agreement
with an independent certified public accountant in form and substance satisfactory to the majority RUS noteholders.
the majority Bank noteholders and the majority CoBank noteholders.
SECTION 12. (a) The Mortgagor wil1 fTOm time to time upon written demand of the majority
RUS noteholders, the majority Bank noteholders or the majority CoBank noteholders make, execute, acknowledge
and deliver or cause to be made, executed, acknowledged and delivered an such further and supplemental indentures
of mortgage, deeds of trust, mortgages, financing statements. continuation statements, security agreements,
instruments and conveyances as may reasonably be requested by the majority RUS noteholders, the majority Bank
noteholders or the majority CoBank noteholders and take or cause to be taken all such further action as may
reasonably be requested by the majority RUS noteholders, the majority Bank noteholders or the majority CoBank
noteholders to effectuate the intention of these presents and to provide for the securing and payment of the principal
of and interest on the notes equally and ratably according to the terms thereof and for the purpose of fully conveying,
transfemng and confirming unto the Mortgagees the property hereby conveyed, mortgaged and pledged. or intended
so to be, whether now owned by the Mortgagor or hereafter acquired by it and to reflectlhe assignment of the rights
or imerests of any of the Mortgagees or of any noteholder hereunder or under any note. The Mortgagor will cause
this Mortgage and any and all supplemental indentures of mortgage, mortgages and deeds of trust and every securi ty
agreement, financing statement, continuation statement and every additional instrument V(hich shall be executed
pursuant to the foregoing provisions forthwith upon execution to be recorded and filed and rerecorded and refiled as
conveyances and mortgages and deeds of trust of and security interests in real and personal property in such manner
and in such places as may be required by law or reaso"nably requested by the majority RUS noteholders, the majority
Bank noteholders or the majority CoBank. noteholders in order ful1y to preserve the security for the notes and to
perfect and maintain the superior lien of this Mortgage and all supplemental indentures of mortgage, mortgages and
deeds of trust and the rights and remedies of the Mortgagees and the noteholders.
(b) In the event thatlhe Mortgagor has had or suffers a deficit in net income or
net margins, as determined in accordance with methods of accounting prescribed in Section 11 of Article. n hereof,
for any of the five (5) fiscal years immediately preceding the date hereoF or for any fiscal year while any of the notes
are outstanding, the Mortgagor will at any time or times upon written demand of the majority RUS noteholders, the
majority Bank noteholders or the majority CoBank noteholders, make, execute, acknowledge and deliver or cause to
be made, executed, acknowledged and delivered all such further and supplemental indentures of mortgage,
mortgages, security agreements,financing statements, instruments and conveyances, and take or cause to be taken all
such further action, as may reasonably be requested by the m~iority RUS noteholders, the majority Bank noteholders
or the majority CoBank noteholders in order to include in this Mortgage. as Mortgaged Property, and to subject to all
the terms and conditions of this Mortgage, an right, title and interest of the Mortgagor in and to, all and singular, the
automobiles, trucks, trailers. tractors, aircraft, ships and other vehicles then owned by the Mortgagor. or which may
thereafter be owned or acquired by the Mortgagor. From and after the time of such written demand of the majority
RUS noteholders, the majority Bank noteholders or the majority CoBank noteholders such vehicles shall be deemed
to be part of the Mortgaged Property for al1 purposes hereof.
(c) The foregoing responsibilities of the Mortgagor include, but are not limited
, at the request of themajoriLy RUS noteholders, the majority Bank noteholdcis or the majority RTFC noteholders
PlJge II
Albion Telephone Company
SEE ATT
taking such actions and executing and delivering such documents as are necessary under the Uniform Commercial
Code or other applicable law to perfect or estab1ish the Mortgagees' first priority security interests in any Mortgaged
Property to Lhe extent that such perfection or priority cannot be accomplished by the filing of a financing statement.
SECTION 13. Any noteholder may, at any time or limes in succession without notice to or the
consent of the Mortgagor or any other noteholder and upon such terms as such noteholder may prescribe, grant
any person, "!1nn or corporation who shall have become obligated to pay all or any part of the principal of or interest
on any note held by or indebtedness owed to such noteholder or who may be affected by the lien hereby created, an
extension of the time for the payment of such principal or interest, and after any such extension Lhe Mortgagor will
remain liable for the payment of such note or indebtedness to the same extent as though it had at the time of such
extension consented thereto in writing.
SECTION 14. The Mortgagor, subject to applicable laws and rules and orders of regulatory
bodies, shall charge rates for its telephone service and other services furnished which sha1l yield revenues at least
sufficient to (1) pay and discharge all taxes, maintenance expenses, operating expenses, and other expenses of its
telephone system when due, (2) pay all obligations of the Mortgagor and make all payments of principal of and
interest on the notes when due, (3) provide and maintain reasonable capital for the Mortgagor, (4) maintain an
Average TIER on all of the notes ornot less than 1.50 but in no year sl1a1l Lhe TIER be less than 1.00. and (5)
maintain a DSC of not less than 1.25. Not less than 90 days prior to the effective date of any proposed change in its
rate, the Mortgagor shall gi ve to Lhe holder or holders of the notes written notice of such change and a copy of the
schedule showing the then exisung rates and the proposed changes therein.
SECTION 15. (a) The Mortgagor may make a distribution (hereinafter caBed a "distribution ), in
the nature of an investment. guarantee, extension of credit, advance, loan, non-affiliated company joint venture,
affiliated company investment, or dividend or capital credit distribution only ifLhe majority RUS noteholders and the
majority Bank noteholders have given prior written approval to the distributi?n or if, after such distribuuon,
(1)the Mortgagor s net worth is equal to at least one percent of its total assets and the amount of an
such distributions during the calendar year does not exceed twenty-five percent of the Mortgagor
net income or net margins for the prior calendar year;
(2)the Mortgagors net worth is equal to at least twenty percent of its total assets and the amount of all
such distributions during the calendar year does not exceed fifty percent of the Mortgagor s net
income or net margins for the prior calendar year;
(3)the Mortgagors net worLh is equal to at least thirty percent of its total assets and the amount of all
such distributions during the calendar year does not exceed seventy-five percent of its net income
or net margins for the prior calendar year; or
(4)the Mortgagor s net worth is equal to at least forty percent of its total assets, regardless of the
aggregate amount of such distributions.
The terms "net worth"
. "
total assets , and "net income or net margins" are determined in accordance with Exhibit
One.
(b) In addition to the distributions authorized under the preceding subsection (a), the Mortgagor
may make any distribution or investment provided in 7 CFR 1744 Subpart
SECTION 16. In the event that the Mortgaged Property, or any part thereof, shall be taken under
the power of eminent domain, all proceeds and avails therefTom, except to the extent that all noteholders shall
consent to other use and application thereof by the Mortgagor. shan forthwith be applied by the Mortgagor. first, to
the ratable payment of any indebtedness by this Mortgage secured other than principal of or interest on the notes;
second, to the ratable payment of interest which shall have accrued on the notes and be unpaid; third, to the ratable
Pngc 12
SEE ATI
Albion Telephone Company
payment of or on account of the unpaid principal of the notes and to such installments thereof as may be designated
by the respective noteholders at the time of any such payment; and fourth, the balance, if any, shall be paid to
whosoever shall be entitled thereto.
SECTION 17. The Mortgagor wi1I well and truly observe and perform all of the covenants,
agreements, terms and conditions contained in the Consolidated Loan Agreement and the CoBank Loan Agreement,
on its par~ to be observed or performed. The Mortgagor will promptly furnish each Mortgagee with written notice of
any amendment or modification of any agreement under which a note or other obligation of the Mortgagor secured
by the lien of this Mortgage has been or will be issued, including, without limitation, the Consolidated Loan
Agreement and the CoBank Loan Agreement, and the occurrence of any default or event of default of which theMortgagor has knowledge under any such agreement.
SECTION 18. If all of the notes in anyone of the lhree groups of notes secured hereby (RUS
Notes, Bank Notes and CoBank Notes) are paid and discharged while notes of the other group of notes remain
outstanding, an rights and powers of the Mortgagee associated with the paid and discharged group of notes shall vest
in the Mortgagee associated with the groups of notes remaining outstanding, and tbe rights and powers of the
holder(s) of the prod and discharged group of notes shan vest in the holder(s) of Lhe group of notes remaining
outstanding. The Government is the "Mortgagee associated with" the RUS Notes; the Bank is the "Mortgagee
associated with" the Bank Noles; and CoBank is the "Mortgagee associated with" the CoBank Notes. The Bank, the
Government, the Mortgagor, CoBank and the noteholders shall execute and deliver such instruments, assignments,
releases or other documents as shall be reasonably required to carry out the intention of this section.
SECTION 19. At all times when any note is held by the Government, or in the event the
Government sha1l assign a note without having insured the payment of such note, this Mortgage shall secure payment
of such note for the benefit of the Government or such uninsured holder thereof, as the case may be. Whenever any
note may be sold to an insured purchaser, it shall continue to be considered a "note" as defined herein, but as to any
such insured note the Government, and not such insured purchaser, shall be considered to be. and shall have the
rights of. the noteholder for purposes of this Mortgage. Notice of the rights of the Government under the preceding
sentence shan be set forth in all such insured notes. A5 to any note which evidences a loan made by FFB to the
Mortgagor, and guaranteed by the Government, acting through the Administrator, pursuant to the Act, ,the
Government and not FFB shall be considered to be, and shall have the rights of the noteholder
for purposes of this
Mortgage.
SECTION 20. As used in Article I, Section 1(d), Article II, Section 3, and Article ll, Section 14
hereof and in this Section, TIER shall mean the Mortgagor s net income or net margins (determined in accordance
with Exhibit One hereto) plus interest expense (determined in accordance with Exhibit One hereto), divided by
interest expense.
For purposes of Article TI, Section 14 hereof, Average TIER shall be determined as of January I of
each year during which any obligation secured by this Mortgage remains unsatisfied and shall mean the average of
the two highest TJER ratios achieved by the Mortgagor during each of the three calendar years last preceding the
various dates of its determination.
As used in Article I, Section I (d), Article IT, Section 3 and ArticJe TI. Section 14 hereof, DSC shall
mean the sum of net income; plus interest, plus depreciation, plus amortization, an divided by the sum of interest
plus scheduled principal payments and capiLallease obligations due in the test year.
As used in Article I, Section 1 (d), Equity to Asset Ratio shall mean al1 equity divided by the total
assets of the Mortgagor.
SECTION 21. (a) Net warth, nel income or net margins, interest expense, total assets,
depreciation, amortization and equity, as used in Sections 10, 15
or 20 of this Article II, are de"fined in Exhibit One
Pnge t3
. .
of this Mortgage. Net plant and secured debt.. if referred to in this Mortgage, are also determined in accordance with
Exhibil One hereto.
SEE ATT Albion Telephone Company
(b) Accounting terms used in this Mortgage shall also apply to accounts or
groups of accounts of the Mortgagor, regardless of the account title or the system of accounts used, if such accounts
have substantially the same meaning as those prescribed by the Federal Communic!ltions Commission in its
prevailing uniform system of accounts for telecommunications companies (47 CFR Parl32).
SECTION 22. If the Underlying Mortgage contains provisions requiring the Mortgagor to
maintain a net plant to secured debt ratio or a Funded reserve, then such provisions are incorporated in and made a
part of this Mortgage as though fully set forth herein at this point.
SECTION 23. The Mortgagor hereby irrevocably authorizes the Mortgagee at any time and from
Lime to time to me in any jurisdiction any initial financing statements and amendments thereto that:
(a) indicate the Mortgaged ProperLy (i) as all assets of the Mortgagor or words
of simi1ar effect, regardless of whether any parLiculDT asset comprised in lhe Mortgaged Property faBs within the
scope of Article 9 of the applicable Unifonn Commercial Code, or (ii) as being of an equal or lesser scope or withgreater deLnil, and
(b) contain any other information required by the applicable Uniform
Commercial Code for the sufficiency or filing office acceptance of any financing statement Of amendment, including,
but not limited to, OJ whether the Mortgagor is an organization, the type of organization and any organizational
identification number issued .Lo the Mortgagor ~nd (ii) in the case of a financing statement filed as a fixture filing, a
sufficient description or real property to which the Mortgaged Property relates. The Mortgagor agrees lo furnish any
such information to the Mortgagee promptly upon request. The Mortgagor also ratifies its authorization for tile
Mortgagee to have filed in any Unifonn Commercial Code jurisdiction any 1ike initial financing statements or
amendments theret!:? if filed prior to the dale hereof.
SECTION 24. Schedule A, Schedule B, ~xhibit A and Exhibit One, attached hereto, are made
part of this Mortgage.
ARTICLE m
REMEDIES OF THE MORTGAGEES AND NOTEHOLDERS
SECTION I. If one or more of the following events (hereinafter called "events of default") shall
happen, that is to say:
(n) default shall be made in the payment of any instDllmenl of or on account of interest on or
principal of any note or notes when and as the same shall be required to be made whether by Dcceleration or
otherwise and such default shall continue for thirty (30) days;
(b) default shull be made in the due observance or performance of any other of the representations
walTanties, covenants, conditions or agreements on the part of Lhe Mortgagor in any of the notes, this
Mortgage, !he Consolidated Loan Agreement or the CoBank Loan Agreemenl contained; and such defau!l
shall continue for a period of thirty (30) days after written notice specifying such defaull and requiring the
same to be remedied shall have been given to the Mortgagor by any noteholder;
(c) the Mortgagor shall file 8. petition in bankruptcy or be adjudicated a bankrupt or insolvent, or
shall make an assignment for the benefit of its creditors, or shall consent to the appointme:nt of a re:ceiver of
itself or of its property, or shilll institute proceedings for its re:organization or proceedings instituted by
others for its reorganization shall'not be dismissed within thirty (30) days after the institution thereof;
Puge 14
SEE ATT Albion Telephone Company
(d) a receiver or liquidator of the Mortgagor or of any substantial portion of its property shall be
appointed and the order appointing such receiver or liquidator.shaH not be vacated within thirty (30) days
after the entry thereof;
(e) the Mortgagor shall forfeit or otherwise be deprived of its corporate charter or franchises,
pennits or licenses required to carryon any material portion of its business; or
(f) a final judgment in an amount of two thousand five hundred dollars ($2 500) or more shall be
entered against the Mortgagor and shall remain unsatisfied or without a stay in respect thereof for a periodof thirty (30) days;
then in each and every such case any noteholder may, by notice in writing LO the Mortgagor and delivery of a copy
thereof to the other noteholders, without protest, presentment or demand declare all unpaid principal of and accrued
interest on any or all notes held by such noteholder to be due and payable immediately; and upon any such
declaration all such unpaid principal and accrued interest so declared to be due and payable shall become and be due
and payable, immediately, anything contained herein or in any note or notes to the conlrary notwithstanding;
provided, however, that if at any time after the unpaid principal of and accrued interest on any of the notes shaH have
been so declared to be due and payable, a,I1 payments in respect of principal and interest which shall have become
due and payable by the terms of such note or notes shall be paid to the respective noteholders, and all other defaults
hereunder and under the notes shall have been made good or secured to the satisfaction of all of the noteholders,
together with reimbursement for any resulting expenses or damage and together with interest at the highest rate
legally permissible, then and in every such case, the noteholder or noteholders who shaH have declared the principal
of and interest on notes held by such noteholder or noteholders to be due and payable may, by written notice to the
Mortgagor and delivery of a copy thereof to the other noteholders, annul such declaration or declarations and waive
such default or defaults and the consequences thereof, but no such waiver shall extend to or affect any subsequent
default or impair any right consequent thereon.
SECTION 2. If one or more of the events of default shall happen, the holder or holders of not less
than a majority of the total amount of principal outstanding on the notes, hereinafter caned the "majority
noteholders , (for purposes of defining and calculating the majority noteholders the Government and the Bank shall
be determined to be one noteholder with their balances combined and also, such Government and Bank combination
shall be determined to be the majority noteholders if they together hold 50% or more of the outstanding principal
balance) for itself or themselves, and as the agent or agents of the other noteholders, personally or by attorney, in its
or their discretion, may. insofar as not prohibited by law:
(a) take immediate possession of the Mortgaged Property, colIect and receive all credits
outstanding accounts and bills receivable of the Mortgagor and all rents, income, revenues and profits
pertaining to or arising from the Mortgaged ProperlY, or any part thereof, and issue binding receipts
therefor; and manage, control and operate the Mortgaged Property as fully as the Mortgagor might do if
possession thereof, including, without limitation, the making of all repairs or replacements deemed
necessary or advisable;
(b) proceed to protect and enforce the rights of the Mortgagees and the rights of the noteholder or
noteholders under this Mortgage by suits or actions in equity or at law in any court or courts of competent
jurisdiction. whether for specific performance of any covenant or any agreement contained herein or in aid
of the execution of any power herein granted or for the foreclosure hereof or hereunder or for the sale of the
Mortgaged Property, or any part thereof, or to collect the debts hereby secured or for the enforcement of
such other or additional appropriate legal or equitable remedies as may be deemed most effectual Lo protect
and enforce the rights and remedies herein granted or conferred, and in the event of the institution of any
. sudl action or suit the noteholder or noteholders instituting such action or suit shall have the right to have
appointed a receiver of the Mortgaged Property and of all rents, income, revenues and profits pertaining
thereto or arising .therefrom derived, received or had from the time ofthe commencement of such suit or
action, and such receiver shall have all the usual powers and duties of receivers, in like and similar cases, Lo
Page 15
SEE ATT Albion Telephone Company
the fullest extent permitted by law, and if application shall be made for the appointment
of a receiver the
Mortgagor hereby expressly consents that the court to which such application shall be made
may make saidappoinl111ent; and
(c) sell or cause to be sold all and singular the Mortgaged Property or any part thereof, and all
right, title, interest, claim and demand of the Mortgagor therein or thereto, aL public auction at such place inany county in which the property to be sold, or any part thereof is located, at such time and upon such terms
os may be specified in a notice of sale, which shall state the time when and the place where the sale is to be
held , shall contain a brief general description of the property to be sold, and shall be given by mailing acopy thereof to the Mortgagor at least fifteen (15) days prior to the date fixed for such sale and by
pubJishing the same once in each week for two successive calendar weeks prior to the date of such sale in a
newspaper of general circulation published in said county, or if no such newspaper is published in such
county, in a newspaper of general circulation in such county, the first such publication to be not less that
fifteen (15) days nor more than thirty (30) days prior to the date fixed for such sale. Any sale to be made
under this subparagraph (c) of this Section 2 may be adjourned from time to time by announcement at the
time and place appointed for such sale or for such adjourned sale or sales, and without further notice or
publication the sale may be had at the time and place to whkh the same shaH be adjourned, provided
however, that in the event another or different notice of sale or another or different manner of conductingthe same shall be required by law the notice of sale shall be given or the sale shall be conducted, as the casemay be, in accordance with the applicable provisions of law.
SECTION 3. If, within Lhirty (30) days after Lhe majority note holders shall have had knowledge of
the happening of an event or events of default, the majority noteholders shall not have proceeded to exercise the
rights and enforce each of the remedies herein or by law conferred upon or reserved to the Mortgagees or to said
majority noteholders, then, and only then, any noteholder, including the majority noteholders, may proceed
exercise any such right or rights and remedy or remedies not being enforced by the majority noteholders. Nothing
contained in this Mortgage shall affect or impair the right, whkh is absolute and unconditional. of any holder of anynote which may be secured hereby to enf~rce the payment of the principal of or interest on such note on the date or
dates any such interest or principal shaJl become due and payable in accordance with the tenns of such note.
SECTION 4. At any sale hereunder any noteholder or noteholders shall have the right to bid for
and purchase the Mortgaged Property, or such part thereof as shaH be offered for sale, and any noleholder or
noteholders may apply in settlement of the purchase price of the property so purchased the portion of the net
proceeds of such sale which would be applicable to the payment on account of the principal of and interest on the
note or notes held by such noteholder or noteholders, and such amount so applied shall be credited as a payment on
account of principal of and interest on the note or notes held by such noteholder or noteholders.
SECTION 5. Any proceeds or funds arising from the exercise of any righls or the enforcement any remedies herein provided after the payment or provision for the payment of any and all costs and expenses in
connection with the exercise of such rights or the enforcement of such remedies shall be applied rust, to the payment
of indebtedness hereby secured other than the principal of or interest on the notes; second, to the ratable payment of .
interest which shall have accrued on the notes and which shall be unpaid; third, to the ratable payment
of or onaccount of the unpaid principal of the notes; and fourth, the balance, if any. shall be paid to whosoever shall be
entitled thereto.
SECTION 6. The Mortgagor covenants that it will give immediate wntlen notice to each of the
Mortgagees and to all of the noteholders of the occulTence of an event of default or in the event that any right
remedy described in clauses (a) through (c) of Section 2 of this Article m is exercised or enforced, or any action istaken to exercise or enforce. any such right or remedy.
SECTION 7. Every right or remedy herein confelTed upon or reserved to the Mortgagees or to the
noteholders shall be cumulative and shaJI be in addition to every other right and remedy given hereunder or now or
Page 16
SEE ATT Albion Telephone Company
hereaFler existing at law, or in equity, or by statute. The pursuit of any right or remedy shall not be construed as an
election and sha1l not preclude the pursuit of any other right or remedy.
SECTION 8. The Mortgagor, for itself and al1 who may claim through or under it, covenants that
it wiII nOL at any time insist upon Dr plead, or in any manner whatever claim, or take the benefit or advantage of, any
appraisement, valuation, stay, extension Dr redemption laws now or hereafter in force in any locaJity where any of the
Mortgaged Properly may be situated, in order to prevent, delay or hinder the enForcement of foreclosure of this
Mortgage, or the absolute sale of the Mortgaged Property, or any part thereof, or the final and absolute putting into
possession thereof, immediately after such sale, of the purchaser or purchasers thereat, and the Mortgagor, for itself
and all who may claim through or under it, hereby waives the benefit of all such laws unless such waiver shall be
forbidden by law.
SECTION 9. For purposes of this Article III, to the extent permitted by applicable state law, each
noteholder appoints the Mortgagee or Mortgagees exercising any remedy as above provided as its attomey(s)-in-fact
tor such purpose.
SECTION 10. Nothing herein contained shall be deemed to authorize the Mortgagees to authorize
or consent to or accept or adopt on behalf of any noteholder any plan of reorganization, arrangement, adjustment or
composition affecting the notes or the rights of any holder thereof, or to authorize the Mortgagees to vote in respectof the claim of nny noteholder in any such proceeding.
SECTION J 1. Any rights of action and claims under this Mortgage or the notes may be
prosecuted and enForced by the n9tehol~er or noteholders prosecuting and enforcing the same without the possession
of any of the notes or the production thereoF in any proceeding relating thereto, and, to the extent permitted by
applicable state law, any such proceeding instituted by any noteholder shan be brought in its own name as
attorney-in-fact for the notehoIders, and any recovery of judgment shall, after provision for the payment of the
reasonable compensation, expenses, disbursements and advances of the noteholders, their agents and counsel (but
only to the extent actually incurred), be For LIte ratable benefit of the noteholders in respect of which such judgment
had been recovered.
ARTICLE
POSSESSION UNTil. DEFAULT-DEFEASANCE CLAUSE
SECTION 1. Until some one or more of the events of default shall have happened, the Mortgagor
shall be suffered and permitted to retain actual possession ofthe Mortgaged Property, and to manage, operate anduse the same and any part thereof, with the rights and franchises appertaining thereto, and to collect, receive, take,
use and enjoy the rents, revenues, issues, earnings. income, products and profits thereof or therefrom, subject to the
provisions of this Mortgage.
SECTION 2. The assignments to the Mortgagees of all of the Mortgagor s right, Litle and interest
in, to and under contracts, licenses, franchises.ordinances, privileges, permits, chattel paper, contract rights, leases,
subleases, (hereinafter collectively referred to in this Section 2 as the "assigned items ); to the extent set forth in the
granting clauses of this Mortgage, constitutes an assignment for security purposes. Notwithstanding any other
provisions of this Mortgage to the contrary, the Mortgagor shall at all times remain liable under each of the assigned
ilems to perform an of its duties and obligations thereunder 10 the same extent as if there had been no assignment
contained in this Mortgage. Furthermore, (i) neither the assignment under this Mortgage nor the exercise by the
Mortgagees of the rights assigned hereunder shaH cause the Mortgagees to become subject to any obligation or
liability under any of the assigned items, or release the Mortgagor from any of its duties or obligations under any of
the assigned items, or any instrument or document relating thereto, except to tlte extent such exercise by any
Mortgagee shaH constitute performance of such duties or obligations, and (ii) no Ivlortgagee shall have any
obligation by reason of the assignment under this Mortgage to make any inquiry as to the sufticiency or authorization
Page: 17
SEE AIT
. .
Albiqn Telephone Company
for any payments received by it or take any other action to collect or enforce any claim for payment assignedhereunder.
SECTION 3. If the Mortgagor shall well and truly payor cause to be paid the whole amount of the
principal of and the interest on the notes at the time and in the manner therein provided, according to U1e true intentand meaning thereof, and shaH also payor cause to be paid al1 other sums payable hereunder by the Mortgagor and
shall well and truly keep and perform according to the true intent and meaning of this Mortgage, all covenants herein
required to be kept and performed by it, then and in that case, all properly, rights and interests hereby conveyed or
assigned or pledged shaIl revert to the Mortgagor and the estate, right, title and interest of the Mortgagees and the
noteholders shaIlthereupon cease, determine and become void and !:he Mortgagees and the noteholders, in such case,on written demand of the Mortgagor but at the Mortgagor s cost and expense, shall enter salisfacuon of this
Mortgage upon the record. In any event, each noteholder, upon payment in full to him by the Mortgagor of all
principal of and interest on any note held by him and the payment and discharge by the Mortgagor of all charges due
to such noteholder hereunder, shall execute and deliver to the Mortgagor such instrument of satisfaction, discharge
or release as shall be required by law in the circumstances.
ARTICLE V
MISCELLANEOUS
SECTION 1. It is hereby declared to be the intention of the Mortgagor that aJllines, or systemsembraced in the Mortgaged Property, including, without limilation, all rights of way and easements granted or given
to the Mortgagor or obtained by it to use real properly in connection with the construction, operation or maintenanceof such lines, or sy!;tems, and all service and connecting lines, poles, posts, crossarms, wires, cables, conduits, dUClS
connections and fixtures forming part of, or used in connection with, such Jines, or systems, and !ill other property
physically attached to any of the foregoing-described property, shall be deemed to be real property.
SECTION 2. All acts and obligations of the Mortgagor hereunder shall be subject to all applicable
orders, rules and regulations, now or hereafter in effect, of all reguJatory bodies having jurisdiction in the premises,to the end that no act or omission to act on the part of the Mortgagor shall constitute a default hereunder insofar assuch act or omission slu!-II have been required by reason of any order, rule or regulation of any such regulatory body.
SECTION 3. All oftne covenants, stipulations, promises, undertakings and agreements herein
contained by or on behalf of the Mortgagor shall bind its successors and assigns, whether so specified or not, and all
thies, rights and remedies hereby granted to or conferred upon the Mortgagees shall pass to and inure to the benefit
of the successors and assigns of the Mortgagees and shan be deemed to be granted or conferred for the ratable
benefit and security of all who shall from time to time be the holders of notes executed and delivered as her~jnprovided. The Mortgagor and each ofttie Mortgagees hereby agree to execute an~ deliver such consents,
acknowledgments and other instruments as may be reasonably requested by any of the Mortgagees or any noteholder
in connection with any assignment of the rights or interests of any Mortgagee or noteholder hereunder or under the
notes.
SECTION 4. The descriptive headings of the various articles of this Mortgage were formulated
and inserted for convenience only and shan not be deemed to affect the meaning or construction of any of theprovisions hereof.
. SECTION 5. All demands, notices, reports, approvals, designations, or directions required or
penniued to be given hereunder shall be in writing and shall be deemed to be properly given if mailed by registeredmail addressed to tne proper party or parties at the following addresses:
As to the Mortgagor:Albion Telephone Company
O. Box 98
Albion, Idaho 83311
Page J8
SEE ATT
Albion Telephone Company
As to the Mortgagees The Government:
Rural Utilities Service
S. Department of Agriculture
Washington, D.C. 20250-1500
The Bank:
Rural Telephone Bank
cIa Rural Utilities Service
S. Department of Agriculture
Washington, D.c. 20250-1500
CoBank:
CoBank, ACB
CoBank, ACB
5500 South Quebec Street
Greenwood Village, Colorado 8011
Attention: Credit Department
and as to any other person, firm, corporation or governmental body or agency having an interest herein by reason of
being the holder of any note or otherwise, at the last address designated by such person, firm, corporation,
governmental body or agency to the Mortgagor and the Mortgagees. The Mortgagor or the Mortgagees may from
time to Lime designate to one another a new address to which demands, notices, reports, approvals, designations or
directions may be addressed and from and after any such designation the address designated shall be deemed to be
the address of such party in lieu of the address hereinabove given. The Mortgagor will promptly notify the
Mortgagees in writing of any change in location of its chief place of business or the office where its records
concerning accounts and contract rights are kept.
SECTION 6. The invalidity of any one or more phrases, clauses, sentences, paragraphs or
provisions shall not effect the remaining portions of this Mortgage, nor shall any such invalidity as to any Mortgagee
or as to any holder of nO1es hereunder affect the rights hereunder of the other Mortgagee or any other holder or
holders of notes.
SECTION 7. To the extent that any of the property described or referred to in this Mortgage is
governed by the provisions of the Uniform Commercial Code, this Mortgage is hereby deemed a "securityagreement" under the Unifonn Commercial Code and a "financing statement" under the Unifonn Commercial Code
for said security agreement. The Mortgagor herein is the "debtor" and the Mortgagees herein are the "securedparties." The mailing addresses of the Mortgagor as debtor and of the Mortgagees as secured parties are as set forth
in Article V, Section 5 hereof. The Mortgagor is an organization of the type and organized in the jurisdiction set
forth on the first page hereof. The cover page hereof accurately sets forth the Mortgagors organizational
identification number or accurately states that the Mortgagor has none.
SECTION 8. A Mortgagee acting hereunder shall not be liable to the Mortgagor, the other
Mortgagees or any noteholder except for losses resulting from gross negligence or willful misfeasance.
SECTION 9. This Mortgage may be simultaneously executed in any number of counterparts, andall said counterparts executed and delivered, each as an original, shall constitute but one and. the same instrument.
Page 19
SEE AIT Albion Telephone Company
m WITNESS WHEREOF, ALBION TELEPHONE COMPANY, as Mortgagor. has caused this
Mortgage to be signed in its name and its corporate seal 10 be hereunto aflixed and attested by its officers thereuntoduly authorized, RURAL TELEPHONE BANK, as Mortgagee, has caused this Mortgage to be signed in its name
and its corporate seal to be hereunto affixed and attested by its officers thereunto duly authorized, COBANK, ACB,liS Mortgagee, has caused this Mortgage to be signed in its name and its corporate seal to be hereunto affixed aridattested by its officers thereunto duly authorized, and UNITED STATES OF AMERICA, as Mortgagee, has caused
lhis Mortgage to be duly executed in ils behalf, an as of this day and year first above written.
ALBION TELEPHO
President
. (Seal)I~~
fLtt. Secretary
. .
Page 20
(Seal)
Attest: fn,r.#vf~74-0sistant Secretary
of the
Rural Telephone Bank
Executed by United Slates of America,
Mortgagee, and Rural Telephone Bank,
Mortgagee, in the presence of:
Mo
~~~~
WItnesses
(SEAL)
Alres
~~~~SEE ATT
. .J Albion Telephone Company
UNITED STATES OF AMERICA, and
RURAL TELEPHONE BANK, respectively
DO ctar, Northwest Area
Te ecommunications Program
of the
Rural Utilities Service
and for the
Rural Telephone Bank
CoB~:-e~by ~
Assistant Co
Pag~ 11
SEE A1T
Albion Telephone Company
STATE OF IDAHO
fi,S:-:S' n:..,
) S8
COUNTY OF
On the /tJ .,tL day of
~ ~ ,
in the year20o:?3 ,before me personally
appeared tJ
~ .~. - . . ~~"'-
and j).,;,.t:t.. A/~ , and
known to me to be l~e::ptt~U!
~' .
~ecuted the foregoing instrument on behalf of ALBION TELEPHONE .
COMPANY, and.~~~\) ~
. '
. &1D~.fiat such corporation executed the same.
~;~~\'
:'ttJ ill!~~f :'t~R\I" '\Ii't ",0
_.-
A.
~O
Notary Public in a a for the State ofIdaho, residing at /1/h,-:r.P.
put\.: i(-I
(Notarial Seal)
~~
f)~,
.,
~I;: I
~\,\\\,;
My commission expires: ~;",.r1 I~
Page 22