20071016Application.pdf

GIVE&PSLEY
lAW OFFICES
601 W. Bannock Street
PO Box 2720, Boise, Idaho 83701
TELEPHONE: [phone]
FACSIMilE: 208 388-1300
WEBSITE: www.givenspursley.com
DIRECT DIAL: [phone]
EMAll: CAM~GIVENSPURSLEY.COM
Gary G. Allen
Peter G. Barton
Christopher J. Beeson
Clint R. Boiinder
Erik J. Boiinder
Wiiliam C. Cole
Michael C. Creamer
Amber N. Dina
Kristin Bjorkman Dunn
Thomas E. Dvorak
Jeffrey C. Fereday
Martin C. Hendrickson
Steven J. Hippler
Debora K. Kristensen
Anne C. Kunkel
Jeremy G. ladle
Michael P. Lawrence
Franklin G. lee
David R. Lombardi
John M. Marshali
Kenneth R. McClure
Keily Greene McConneil
Cynthia A. Meiiilo
Christopher H. Meyer
L Edward Miller
Patrick J. Miiler
Judson B. Montgomery
Angela K. Nelson
Deborah E. Nelson
W. Hugh O'Riordan, lL~-
'--
::i
:::~() --;'~
~;~i
-;;:
(fJ
G. Andrew Page
Angela M. Reed
Scott A. Tschirgi, lLM.
J. Wiil Varin
Conley E. Ward
Robert B. White
Terri R. Yost
RETIRED
Kenneth L Pursley
Raymond D. Givens
James A. McClure
October 15 2007
r-.
.,;)
c;;.
--'('"", .
Via Hand Delivery .,-c,.1 jj
Jean Jewell, Secretary
Idaho Public Utilities Commission
472 W. Washington Street
O. Box 83720
Boise, ID 83720-0074
/1..1:/:-0 ~07 -
.."
::Z:.
RE:Midvale Telephone Exchange, Incorporated's Application. ATTENTION
COMMISSION SECRETARY AND HEAD LEGAL SECRETARY: Midvale
Telephone Exchange, Incorporated requests that the Commission issue an
Order approving loan agreement on or before November 14 2007.
Dear Jean:
I am enclosing an original and four copies of Midvale Telephone Exchange
Incorporated's application for loan approval, together with a filing fee in the amount of $685.20.
Please acknowledge receipt by returning a stamped copy of this cover letter.
You will note that Exhibit B has not yet been fully executed. We will substitute fully
executed copies as soon as they are received.
Thank you for your help.
Sincerely,
t~a JVJJo
Cynthia A. Melillo
MCC/CAM/and
Enclosures
S:ICLIENTSI1614184\Ltc to puc co Application,DOC
Michael C. Creamer (ISB No. 4030)
Cynthia A. Melillo (ISB No. 5819)
GIVENS PURSLEY LLP
601 W. Bannock Street
P. O. Box 2720
Boise, ID 83701-2720
Telephone No. [phone]
Fax No. [phone]
HEC':EIV
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" i~~,JJm F'UEUCU IILI! 1;::5 COi,iU\4iSSIGic:
Attorneys for Midvale Telephone Exchange, Incorporated
S:ICLIENTSI1614184\PUC Application GPO2.DOC
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
IN THE MATTER OF THE APPLICATION
OF MIDV ALE TELEPHONE EXCHANGE
INCORPORATED FOR AUTHORITY TO
BORROW FROM THE RURAL UTILITIES
SERVICE ("RUS") IN AN AMOUNT NOT
TO EXCEED $12 145 000.
Case No. l""\.'to-7-o(
APPLICATION OF MIDV ALE
TELEPHONE EXCHANGE,
INCORPORATED
Midvale Telephone Exchange, Incorporated ("Midvale" or "Applicant"), by and through
its attorneys, Givens Pursley LLP, makes this Application pursuant to Idaho Code ~ 61-901 for
authority to execute a Loan Agreement and Promissory Note in an amount not to exceed Twelve
Million, One Hundred Forty Five Thousand Dollars ($12 145 000) together with a supplemental
mortgage with the Rural Utilities Service ("RUS"). In support of its Application, Midvale states
as follows:
Applicant is a certificated telephone corporation organized under the laws of the
State of Idaho providing telecommunication services including local exchange service within the
states of Idaho, Arizona, and Oregon.
All notices and communications with regard to this Application should be served
Michael C. Creamer
GIVENS PURSLEY LLP
601 W. Bannock Street
P. O. Box 2720
Boise, ID 83701-2720
mcc~givenspursley. com
upon:
APPLICATION OF MillV ALE TELEPHONE EXCHANGE, INCORPORATED - 1
Lane Williams
Midvale Telephone Exchange, Incorporated
2205 KeitWey Creek Road
O. Box 7
Midvale, ID 83645
Ian er ~ruraln etw 0 r k. n et
The proposed RUS loan proceeds will be used to pay for, and partially reimburse
general funds to: (1) extend service to approximately 1081 new customers, (2) provide for switch
and software upgrades, (3) provide for central office equipment upgrades, (4) make related
system improvements including replacement of an existing analog microwave system with fiber
and (5) repay a line of credit with the Rural Telephone Finance Cooperative ("RTFC") that was
used to construct some of the above mentioned facilities and that will be refinanced through the
RUS loan. The loan qualification and approval letters dated June 29, 2007 and August 8, 2007
which detail the proposed use of the loan funds, are attached hereto as Exhibit A
interest rate of approximately five percent (5%) per annum. Ifthe loan is not designated as a
Applicant believes the proposed RUS loan will qualify as a hardship loan with an
hardship loan, the interest rate will be at RUS's then current market rates at the time of closing.
The proposed transaction is consistent with the public interest. The extension
service and upgrades will improve service for Midvale s customers and make it possible for
Midvale to meet new service demands.
A copy of the Applicant's most recent Annual Report showing the authorized and
outstanding classes of Applicant's securities is on file with the Commission, and the Applicant
respectfully requests the Commission take official notice thereof.
A certified copy of Applicant's Board of Directors consent resolution authorizing
the proposed transaction is attached hereto as Exhibit B
A Proposed Order granting this Application is attached hereto as Exhibit C
Notice of this Application will be published within seven (7) days in The Idaho
Statesman (Boise). A copy ofthis Notice is attached as Exhibit D
10.Applicant submits that the public interest does not require a hearing on this matter
and it requests that the Commission process this Application and determine this matter by
APPLICATION OF MillV ALE TELEPHONE EXCHANGE, INCORPORATED - 2
Modified Procedure, pursuant to Rule 23 of the Commission s Rules of Practice and Procedure.
In the event the Commission determines that formal proceedings on this Application are
necessary, Applicant stands ready for immediate hearing.
11.47.6 percent of Applicant's total book value is located in Idaho. Applicant has
therefore attached its filing fee, calculated pursuant to Idaho Code Section 61-905, in the amount
of Six Hundred Eighty Five and 20/100 Dollars ($685.20).
WHEREFORE, Applicant respectfully requests an Order of this Commission:
Granting the foregoing Application of Midvale Telephone Exchange
Incorporated to execute and deliver to the Rural Utilities Service a Loan Agreement, Promissory
Note and related documents for a loan in an amount not to exceed $12 145 000; and
Granting such other relief as the Commission deems just and reasonable in this
matter.
DATED this 15th day of October, 2007.
GIVENS PURSLEY LLP
By t ydup-- (l YUltCynthia A. Melillo
Attorneys for Midvale Telephone Exchange
Incorporated
APPLICA nON OF MillV ALE TELEPHONE EXCHANGE, INCORPORATED - 3
CERTIFICATE OF SERVICE
I HEREBY CERTIFY that on this 15th day of October, 2007, I caused to be served a true
and correct copy of the foregoing document by the method indicated below, and addressed to the
following:
Ms. Jean Jewell, Secretary
Idaho Public Utilities Commission
472 W. Washington Street
P. O. Box 83720
Boise, ID 83720-0074
( ) U.S. Mail
(;x:) Hand Delivered
( ) Overnight Mail
( ) Facsimile
~~,
JV;ltCynthia A. Melillo
APPLICA nON OF MillV ALE TELEPHONE EXCHANGE, INCORPORATED - 4
Michael C. Creamer (ISB No. 4030)
Cynthia A. Melillo (ISB No. 5819)
GIVENS PURSLEY LLP
601 W. Bannock Street
P. O. Box 2720
Boise, ID 83701-2720
Telephone No. [phone]
Fax No. [phone]
Attorneys for Midvale Telephone Exchange, Incorporated
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
In the Matter of the Application of Midvale
Telephone Exchange, Incorporated for
Authority to Borrow from the Rural Utilities
Service ("RUS") in an Amount Not to Exceed
$12 145 000.
Case No. IVf 1=..0- t- 0"7 -o(
PROPOSED ORDER
On October 15 2007, Midvale Telephone Exchange, Incorporated (hereinafter
Applicant"), filed an Application for Loan Approval with this Commission requesting authority
to execute a loan contract amendment and supplemental mortgage in an amount not to exceed
$12 145 000 with the United States of America, acting through the Rural Utilities Service
RUS"
In support of said Application, Applicant states that the proceeds of the RUS loan will be
used to pay for, and partially reimburse general funds to: (1) extend service to approximately
1081 new customers, (2) provide for switch and software upgrades, (3) provide for central office
equipment upgrades, (4) make related system improvements including replacement of an existing
analog microwave system with fiber, and (5) repay a line of credit with the Rural Telephone
Finance Cooperative ("R TFC") that was used to construct some of the above mentioned facilities
and that will be refinanced through the RUS loan.
After examining the Application and supporting documents and being fully advised in the
premises, the Commission hereby finds that a hearing in this matter is not required, and that the
proposed transaction is consistent with the public interest and the Applicant's proper
performance of its duties as a public utility.
IT IS THEREFORE ORDERED that the Application of Midvale Telephone Exchange
Incorporated for authority to execute a loan contract amendment and supplemental mortgage
with the RUS in an amount not to exceed $12 145 000 be, and the same is hereby granted.
DONE by Order ofthe Idaho Public Utilities Commission this day of
2007.
Paul Kjellander, President
Mack Redford, Commissioner
Marsha Smith, Commissioner
ATTEST:
Jean Jewell, Secretary
LEGAL NOTICE OF MIDV ALE TELEPHONE EXCHANGE, INCORPORATED
APPLICATION FOR AUTHORITY TO BORROW FUNDS
NOTICE IS HEREBY GIVEN that on October 15 2007, Midvale Telephone Exchange
Incorporated, completed and filed with the Idaho Public Utilities Commission an Application for
authority to borrow up to $12 145 000 from the United States of America, acting through the
Rural Utilities Service and in connection with the borrowing, to execute a telephone loan
contract amendment and a supplemental mortgage.
The Application is on file and is available for public inspection at the Idaho Public
Utilities Commission. Any person desiring to comment on said Application must file petitions
or protests with the Idaho Public Utilities Commission within fourteen (14) days of the filing
date. If no protests are received within this time limit, the Commission may consider the
Application and enter its Order without setting the matter for hearing. If written protests are
filed with the Commission within the time limit set, the Commission will consider the same, and
in its discretion, may set a hearing. Petitions or protests must be filed with: Jean Jewell
Secretary, Idaho Public Utilities Commission, Statehouse, Boise, Idaho 83720.
Jean Jewell, Secretary
Idaho Public Utilities Commission
EXHIBIT A
08/14/2007 08: 09 2083552222 MIDVALE TELEPHONE EX PAGE 02
Au~ 13 2007 3 ~ 44PM HP LFiSERJE:T FA:':
USDA
RurilDlvolopmn
Unlt.d !llates Dup&l1ftllltnt 0' AaJlcultuntR..ral Devolo!:,mem
AUG - 8 ZUU/
Mr. Lane R. WjJ1iams
President and CEO
Midvale Telephone Exchange, Inc.
P. O. Box 7
Midvale, Idaho 83645
Dear Mr. Williams:
We aIe pleased to advise that a loan in the amount of $12)145 000 from the
Rural Development Utilities Programs~ under Section 305(d)(1) of the Rural
Electrification Act of 1936, as amended, at an interest rate of 5.00 percent per
annum has b~en approved for your organization. The loan contract and other
documents will be forwarded in the near future for execution. This loan is
approved vo.-ith the understanding that the loan contract will be authorized and
executed by YOUI organization and returned to us by the date which will be sr:t
forth in the letter transmitting th(: 1oan contract.
(:y.~-
fbE M. PO~-
~t Administrator
Telecommunications Program..
1400 Indapend9ncs "'~. S.W. . W38hlnll!t)~ DC 2(JZ5~7()(:1
w&b: http://www.rurdev_usds.1:IOV
Cotnmlltea 10 me future "t ru,.,,1 communlll'M.
USDA i9 an equal opportunity provldllf. Bmploysr ant! lender."
T"fl~ s compIEllntQfdi~~mlnatlon. -...tIle USDA, C~.omCl! arGiv11 Rlghla.
IAOQ lr"l~ndeooe Ay~nue, S,W" W;,nI11ll1Im, DC :!O25C.1;I410 or cell (OliO) 79~2n (Vt)i(;&) or (202) nO-e382 (1"OD).
07/09/2007 10: 35 2083552222 MIDVALE TELEPHONE EX PAGE
Jun 29 2007 2: 45PM HP LASER JET FAX to'.
USDA
DIIIVltlopmllnt
Olllt.,d '..te!; ~rtm."nt of Agrlcaltun!Rural _vejopme~
JUN 2 9 2007Mr. Lane R. Williams
President and CEO
Midvale Tel~pho:nc Exchange~ Inc,
P. O. Box 7
Midvalc, Idaho 83645
Dear Mr. Williams:
We have completed tb.e preliminary studies of YOllr organization 5 "Ii" loan applicationand are 5ubmitting the resu1ts of the.se studies for your consideration. Our studiesshow that YO'1.U" organization qualifies for a RuraJ Utilities Service (RUS) ha.rdship Joanin the amount of $12,145,000 at an interest rate of 0 percent. It should bel.l1'lder$tood that this letter is not a, commitment that a loan wi11 be approved.
Hardship loans are approved qua.rte:rly using a priority system (See RUS regulation7 CFR 1735.30). SpecificaUy, RUB will rank all applications at the end of the quarterbased on criteria p:ro-vided in .th~ regulation. At that time I you will be notified of thesta.tu.s of your org8I)ization s loan application.
Our studies show that the above funds will be needed to: PJ serve J081 newsubscribers; 2) replace existing switches in Ca.$cabel, Granite Mountain, MillsiteYoung, Stanley, Harper, and Juntura with new "soft" switches; 2) instal1 newcentralized voice mail system at Midvale; 3) replace e)cisting analog microwave :systemwith a new fiber toll connection in Lakeview; 4) con5truct neW toll routes in ArizonaIdaho, and Oregon; 5) deploy FTTP in Cascabel, Granite Mountain , MiUsite, Young,Midvale. and Stanley; 6) install four broadband loop carriers in Cascabel to supportthe FTI'P system; 7) replace::: existing copper with a fiber facility in Juntura; 8) upgrade
.aJ1 DSL central offiCE: equipment throughout system; 9) purchase test eq"Ltipment forplant maintenance; and (10) provide for other system 1mprovements. Funds requiredfor construction a.re shown on the el'lclosed preliminary Telephone Loan Budget, RUS
FOrm 493.
~ls.o enclosed is a copy of the "Forecast ot: Revenues a.nd Expenses 't for the proposed
system. It is ba$~d on the nu.rnber of subscribers proposed to be servedt existing local
service rates without mileage or ZOne chaJ'ges, and otller revenues and expensesoutlined On the form.
Please note that under the teons of Article I, Section 1 of your organization s RestatedMortgage, Security Agreement and Financing Statement, dated January 2, 1998, RUSwill not be able to approve the loa;o, until evidence has been submitted to theAdministrator which indicates that the Rural Telephone Finance Cooperative has no
objections to your organization executing and delivering note~ evidencing the proposedW loan.
1400 Inde-pendeflceA...o. S.W. 'W"8hlniJton DC 2!J26()'(J7CCWl\lb; http;/howw,rurdev.uad8.Sov
Committvd t~ Ihe MIJre of rural t:O:'I'Iltlunitles.
USDA 19 an eQlIal opportunity !)l'OVldfH, ell'lJllow andjgnder,"Tc filR 9 comP/Btn! or d18crmitRrliOn. writIt useA. OIrec1Of, omo;, ...r cl.n Rr~hl5.1400 Independence AWIUle, S.W., Washington. DC O!D;1:;009410 or ceR (SOC) 79S~1"2 (Voice) 01'(202) 7:20-8.182 (toOl.
07/09/2007 10: 35 2083552222 MIDVALE TELEPHONE EX PAGE 03
p.
::IJun 29 2007 2: 45PM HF' LFiSERjET F'AX
Mr- Lane R. Williams
If a loan is approved, '/:)0 "H" loan funds wiJI he released until your organization hasfurnished to RUS, among other 1hing!:$, all of the documents, opinions. and other
evidence listed in the loan -contract applicable to this loan, including evidence that
your organization has duly authorized, executed , recorded, and filed a securityinst.ru..mcnt, in form and substance satisfactory to RUS.
The first advance of "H" loan funds will include but not be limited to:
1. M amount then owing for interim fmancing for construction sub5equentto November. 15, 2006, as a:ppro'V~d by RUS.
2. The cost of pr~loan engineering services irt a,j1 amount to be approved by
RUS.
Subsequent advances of "H" loan funds will not be made until your org~.ni?.a.tion ha.$
submitted evidence, satisfactory to RUS, that any debts incurred through interimfinancing .and an associated prior liens have been discharged.
A generic environmental report Wa.5 reviewed and approved for loan purposes fOT. your application- A site specific report was approved for the Crossroads Ranchproject in the Millsite exchange on December i3, 2006. No "H" loan funds will beadvanced for construction in Caseabel, Granite Mountain, Young, Lakeview, Midvale,Stanley, Harper, and Juntura excha.nge$ until site specific surveys are submitted and
approved by RUS.
No "H'" loan funds will be advanced for the construction. of certain toll facilities until
your organi.7..ation has submitted evidence of connecting company conCULTence from
VaHey Telephone Cooperative for Cascabel. .
Debt service payments are to be made on a monthly basis. This requirement w1.11 included in the mortgage notes. The outstanding JOMS will continue to be billed as
required by the mortgage notes for those loans.
The mortgage will contain Ii provision requiring you.r organization to maintain a TIER
of at feast 1.0 throughout the foreca$t period ending December 31, 2011. After thatdate your organization will be req-uired to maintain a TIER of at least 1.50.
The maturity period for your "H" loa!) is 19 years With a principal repayment period
of 17 years. The approximate: amount to be repaid wm be $18 052 000 at a n'1onthlypayment of $88,500, assuming the interest rra.t(;! used in the feasibility study. The
actual repayment of the loan will depend on the schedule of advances of loan funds. Asavings in interest costs ove:l:" the life of the loan would result if a shorter amortization
period were selected.
07/09/2007 10: 35 2083552222 MIDVALE TELEPHONE EX PAGE 04
Jun 29 200? 2: 45PM HP LASERJET FAX
Mr. Lane R. WHliams
We would appreciate any suggestions you may have with respect to the matters
dj$(:'U$sed in thi$ letter. If you conCUr in the above ~quircments, please let us know
by facsimile 1202~690-4654) with a. fol1ow-up letter frc:m an officer of your organization
and indicate the maturity period desired for the Joan, if shorter than the period stated
above. We will then proceed with oUr studies. OUi. office should, how6ver, b~ advised
of you..- decision no later than 15 days from receipt of this Jetter.
Y H. BRENT, OJ.rector
rthem Division
Tdccommunications Program
Enclosures
07109/2007 10: 36 2083552222 MIDVALE TELEPHONE EX PAGE
Jun 29 2007 2: 45PM HP lASERJET FAX
USDA-RUS NAME OF J30RROWER
PrelimiJ.~31Y :\1id'Vlile Telephone Exchan)1c, Inc.
TEl JRPHONE LOAN BUDGET BORRO'WER and LO.o\N DESJGNA TrON
ro SI4.~11 Midv;!Jle
PR'JOR LOAN
BUDGET ITEM RESERVES AS OF:4/1712007
IU;Sli1l. "10 "v A1l.ABLn ro:R NIsW l'ROmCT
BALANCES NBW I'ROJI!CTS BtJD(jTtt
II,
1. t:t~NSTRU(;"!ON :I. CENTRAL omen $3,7OZ,OOO
b, OLJT~IDI'. I'I..ANT 119 000
~, ,.II NT) ~nri Run.nINGS
'd. $?I:'.CrAL I'RumC'l'S
t F.NGTNMn,T);(';~. PIU51.0AN 73,000
b. CONSTRUCTION 229 000
), o~ F.JtA TINa I;QUIPIViBJoJT . Ol'l"CF.. 1'QtJll"MEN'
h. veHlCLBS B~d WORK EQ1JII'MI'J'.j'22,000
~, OVJ;llHMD BXI'ENDmJlUIS
s. OfEJ!.ATINCIfUNDS.
6. JtBFII'JANC1J;O WJl1iI LOAN FUNDS
i. ACQUISITIONS
~. OTHER
9. 'TO'TA!-S $1.2,145 000
I 0. LESS A VA (T..J, Br.J'.. J')tOM PIlleR l.OANS (1:01- B. ITEM 9)
1\. r I!SSNONLOAK FUNDS
12. TOTAL NEW LOAN F1n.1t)S $ L2 145 OOO
13. HARDSH1T' LO/\~12145,000
\ 4. COST OJ? MONJlY LOAN
15. G!,JARANlT~ LOAN
HI. OTHER 1.01..1'
RJ:QUI;RED ADDITIONAL BUDGEr ,DATA
11. PIUORLOAl'IS lB. I"OIUO'I'RJ1"DS.ASAOIUSTE)!P. CUMt!LATII'E ~TWANCO.' M DF filii
PRlOItLOllNTOrAU 512 104 000 1'ONl.OAN FfJNDB. PlUOR lOAN'REA SU JO4.000
LD,o,NS 12104000 MI.ECfnOPEilTV us.
RTI!lQANS ,?THE~"Fa
Rt.lilO"N!roT I\l..I'ImJ LO~'" F1JND!!522 RUS
GUAMI'OCED LOA"'II ~o. EIIQJM~U.EJ) 81.J~
1.JNmvolNCl;D F1.JNDS
21. RETIRED PlANT )o/!!OJ ~ ACQ1JIIUD AItRA!caS11I"Q AREAS
Il$n~":eDOI\IDINAl OO!!I' or Itf.TIRED PLiINT (11.;' I~")oS 1.1 00,000
I)U'!MA1'RI)s"'lv~a~ VALUJlO!' IUmJtEI) P1..o\~ (11M 10",)$IOS-,OOO
NOTES
RetiJ."Erl Plant CaE QSP
Original Cost $1,085 000 $15,000
Salvage VahJ~105,000 -0-
RUS PORM 49~ (Rev. 01~6), E!c.cel V S.
07/09/2007 10: 35 MIDVALE TELEPHONE EX2083552222
JOn 29 2007 2: 45PM HP LASERJET FAX
PAGE
F'.
CORPORA Tlj NAME AND ADDRESS
FORECAST OF REVENUES AND EXPENSES Midvale Telepbone Exc118.Dgc, Inc.
MidvaJe, Idaho
OAN DE~IGNA nON SlJl!sclUilEtl FOItECAST
10 S14-H1 J Midwlc
LccaJ Network Service Revenues
. """""""",.,.""""""""""""",."""""",.".,....... ..........,
Access, Long Distance Network., and Carner Billing & Collectiol1 Rcvenues..................
Mjscetlanecus ReventJe,s,.....,......,...........,........................ .....................,.,.......,...,.... ...,....,
4J..ess Uncollectible RQveJ1IJe:s..............
.........................' ,..... ........ ......,.... ,......................,...
Nct Operating Revenues................,..........
...,...........................,...........,.....................,..
Plant Sp!:Cific Operations Expel1se...
...............,..............................",................,.............,..
7. Plant Non5plO!cific Opera!ions Expense... ,.....
,. ,.............." ",..... ..,......................................
Depre:ciatjon Expens.e..
.................,..........,.........,.......,.....,.....................................,.....,..
Amartl;.atiOII ElIpC:IJSC:......................... , ,........................... , ",...no....,... ........... .m... ........,.....
1 O.Customer Operati.o1!,s Expense." "..,..,.........,...
............,..,..............,................~......,.... ".....
II.Corporate OperafiOJ"!s,Expl::use..............
..,....................,.....".....,..,...................................
12.0ther Operating Income and Expense.............,......
......................,...".......,......................
13.Taxes Excluding F.L T. "."""'..........n...m""""'."""""""m"""""
"""""""'"...'..............
14.Total Fixed Charg~ (Jntere.o::t)....................................m....,n..................m......................
IS.Nonoperating Net Income (expressed with the opposite arithmetic sign).............,..........
16,ExtraOtdroaIY Itcms"""""""""""""""""',
"',,""'.................
'n""
""""'.""""""""""",
17,
1 8.Nonregulsted Net Income... ,.................................... "..,., "m....."",.....................n..........
19.TolAl Expenses, Excluding Federa1lncCltnc Taxe5.............."..................................
,........
20.N~1Inco:me Before: F~d~rallttcoJJ:le. T.\\Xcs......................... .."...."..... """.m"",'"""""",,.
21.Fedcral In,COInC Taxes"........,..
""""""""" ,... ,.........'.... .....""'........,,............... "................
22.Net lnoome After f~;lIlncom~ Taxes............."................",............................
..,.........
23. Add 11'terest.................................,.......................,....... ............."...........,..
:......................
24.Net Oper~ting IncQ111e
.......,...,..........",.....". ....................." """""""""""'.""""""'"
on...
25.Add; Deprecia1ion And ,Amol1ization.................,......................"..... "..
:................ """.,.
26.Available For Interest And Principal Payml!::l1ts....,.. '" .............., ,.......".....,........,..
.........---
27.Scheduled Intt=rest AIUi Principal Paymcnts..........,.............
........"...."...............,.......~."..
ZS.Av,aj!l1bl.c For Plant Adtjitjons, Re1"lac:ernent6, Etc. .,..,...,.......,....."..................
..,............
29.Times Interest Earned Ratio (Line 24/ Line 23)."...,............"..............................
"........,
Item) 4 (interest)
Outstanding Loan Be.lance'(6).......~ 4.$0% $4 962 519.00
;;;
CummtLoan(s).....n..
""""'."""'
~ 5.00% $12 145 000.00 =
Total Ou,tside Fjnancing........", ....($ 8.7~% 5479,252.00 ~
Total Intercst..............,...."...................................................................................
.l.oca1 Service Revenues Based On Approved Rates
697
$1,278 212
RI7 746
1.3$,976
407
$10,231.527
874 308
68,02:5
2,237 47:)
482,902
544 052
250,528
S72 441
(275,000)
$9.064,728
$1,166,799
240 217
$926,582
, 872,441
$J ,799,023
237 473
$4,036,495
380,727
$1,655,768
$223,256
$607,250
$41 935
$872.441
EXHIBIT B
CONSENT RESOLUTION
OF THE BOARD OF DIRECTORS
MIDVALE TELEPHONE EXCHANGE, INCORPORATED
(RUS H" Loan)
The undersigned being all of the directors of MIDVALE TELEPHONE
EXCHANGE, INCORPORATED, an Idaho corporation (the "Corporation ) do hereby
take the following corporate actions without a meeting in accordance with the general
corporation laws of the State of Idaho and the constituent documents of the Corporation:
WHEREAS, the undersigned are familiar with the proposal to borrow funds from
the United States of America , acting through the Rural Utilities Service ("RUS"
in the principal amount of $12 145,000.00 (the "Loan ) upon the terms and
conditions set forth in the Loan Agreement, Promissory Note, Restated
Mortgage, Security Agreement, Financing Statement and other documents and
instruments contemplated therein (the "Loan Documents
WHEREAS the Restated Mortgage, Security Agreement and Financing
Statement provide for RUS and the Rural Telephone finance Cooperative
("RTFC") to each have a shared first lien on the Corporation s property, and
which mortgage is intended to secure the Loan, as well as all prior loans from
RUS and RTFC in parity.
WHEREAS the undersigned have reviewed and desire to approve and execute
the Loan Documents, by and between the Corporation , RUS, and RTFC , dated
effective as of September 4 , 2007 copies of which are attached hereto as
Exhibits A. Band C
NOW THEREFORE, BE IT HEREBY RESOLVED that the Corporation (a)
borrow from the United States of America, acting through the Rural Utilities Service, an
aggregate amount not to exceed $12 145,000.00; and (b) use the funds so borrowed
from RUS (exclusive of any funds borrowed for refinancing) to finance the construction
and operation of additional telephone lines and facilities and the operation of its system
and for such other purposes as approved by RUS.
BE IT FURTHER RESOLVED that Lane R. Williams, as president of the
Corporation, in conjunction with such Loans, is authorized on behalf of the Corporation
to execute and deliver under its corporate seal , which the secretary is directed to affix
and attest as many counterparts as shall be deemed advisable of the Loan Documents
as required by RUS , which provide, among other things, that the notes at anyone time
secured thereby shall not exceed $50 000 000.00.
BE IT FURTHER RESOLVED that the officers of the Corporation be, and each of
them is authorized in the name and on behalf of the Corporation, to execute, deliver
and/or certify all such instruments, make all such payments and do all such other acts as
in the opinion of the officer or officers acting may be necessary or appropriate to carry
out the purposes and intent of the foregoing resolutions; and
BE IT FURTHER RESOLVED that said officers be, and each of them hereby is
authorized and directed to execute, deliver and/or certify in the name of and on behalf of
the Corporation such other documents and to take such other actions as such person, in
CONSENT OF DIRECTORS - 1
S:\CLlENTS\1614\B4\CONSENT RESOLUTION (AUTHORIZING LOAN) FINALDOC
such officer s sole discretion, shall deem necessary or advisable to carry out the intent
and purpose of the foregoing resolutions or the transactions contemplated thereby; and
BE IT FURTHER RESOLVED that any person or entity may rely upon any of the
foregoing upon presentation of a copy of this Resolution certified by the Secretary or any
Assistant Secretary of the Corporation declaring that said Resolution has not been
revoked hereafter.
(end of text)
CONSENT OF DIRECTORS - 2
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The undersigned, being all of the directors of Midvale Telephone Exchange
Incorporated, hereby execute this Consent Resolution effective as of the 3rd day of
October 2007.
,/
0 ~~ A' ":JLJ2:? C?
~ ~
ane R. Williams
Julianne Johnson
Shirley C. Archer
Conley Ward
CONSENT OF DIRECTORS.
S:\CLlENTS\1614\84\CONSENT RESOLUTION (AUTHORIZING LOAN) FINALDOC
The undersigned , being all of the directors of Midvale Telephone Exchange
Incorporated, hereby execute this Consent Resolution effective as of the 3rd day of
October 2007.
Lane R. Williams
Julianne Johnson
~(? ()~
Conley Ward
CONSENT OF DIRECTORS.
S:\CLlENTS\1614\84\CONSENT RESOLUTION (AUTHORIZING LOAN) FINALDOC
The undersigned, being all of the directors of Midvale Telephone Exchange
Incorporated, hereby execute this Consent Resolution effective as of the 3rd day of
October 2007.
Lane R. Williams
Julianne Johnson
CONSENT OF DIRECTORS - 3
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EXHIBIT A
Loan Agreement
(attached)
CONSENT OF DIRECTORS.
S:\CLlENTS\1614\84\CONSENT RESOLUTiON (AUTHORiZiNG LOAN) FINAL.DOC
RUS Project Designation:
IDAHO S14-HII MIDVALE
LOAN AGREEMENT
dated as of September 4, 2007
between
MIDV ALE TELEPHONE EXCHANGE, INC.
and
THE UNITED STATES OF AMERICA
UNITED STATES DEPARTMENT OF AGRICULTURE
RURAL UTILITIES SERVICE
LOAN AGREEMENT
THIS LOAN AGREEMENT (the "Agreement ) dated as of September 4, 2007, is betweenMIDV ALE TELEPHONE EXCHANGE, INc. (hereinafter the "Borrower ) a corporation organized
and existing under the laws of Idaho), and the UNITED STATES OF AMERICA, (hereinafter
the "Govel11ment") acting through the Administrator of the Rural Utilities Service ("RUS.
The Bon'ower has applied to RUS, requesting financial assistance (hereinafter the
Application ) to provide telecommunications andlor broadband services in rural areas.
RUS is willing to extend financial assistance, in the form of loans or loan guarantees to the
Borrower, pursuant to the Rural Electri.ficatiol1 Act of 1936 (7 U.C. 901 et seq.)(the Act ) and all
applicable federal regulations, on the tenns and conditions stated herein.
THEREFORE, in consideration of the promises and mutual covenants herein contained, the
parties agree and bind themselves as follows:
ARTICLE I - DEFINITIONS
The terms defined herein include both the plural and the singular. Unless otherwise
specifically provided, all accounting tel1ns not otherwise defined herein shall have the meanings assigned
to them, and all determinations and computations herein provided for shall be made in accordance with
Accounting Requirements.
Accounting Requirements" shan mean the system of accounting prescribed by RUS in RUSRegulations.
Advance" or "Advances" shall mean an advance or advances made or approved by RUS
under its respective Note(s).
Affiliate" or "Affiliated Company" of any specified person or entity means any other person
or entity directly or indirectly controlling of, controlled by, under direct or indirect common cont1'01 with
or related to, such specified person or entity. For the purpose of this definition
, "
control" of any specified
person or entity means the power to direct the management and policies of such specified person or entity,
directly or indirectly, whether through the ownership of stock, by contract, or otherwise.
Application" shall have the meaning as defined above in the second paragraph hereof.
Broadband Loan" shall mean the broadband loan described in Section 3,
Section 3.
Broadband Loan Expiration Date" shall have the meaning as defined in Paragraph (a)(ii) of
Business Day" shall mean any day that RUS and the Department of Treasury are both open
for business.
5.4.
Construction Fund Account" shall have the meaning as defined in Paragraph (d) of Section
Distributions" shall have the meaning as defined in Section 6.
Event of Default" shall have the meaning as defined in Article VIII.
Interest Expense" shall have the meaning as defined in Attachment 3.
Page 2
Laws" shall have the meaning as defined in paragraph (e) of Article II.
Loan(st shall mean, collectively, the Joans described in Section 3.
Note(s).
Loan Documents" shall mean, collectively, this Agreement, Security Documents, and the
Material Adverse Effect" shall mean a material adverse effect on, or change in, the
condition, financial 01' otherwise, operations, properties, business 01' prospects of the Borrower or on the
ability of the Borrower to perfonn its obligations under the Loan Documents as determined by RUS .
Net Income" or "Net Margins" shall have the meaning as deemed in Attachment 3.
Net Worth" shall have the meaning as defined in Attachment 3.
Note(s)" shall have the meaning as defined in Paragraph (a) of Section 3 .
Permitted Encumbrances" shall have the meaning as defined in the Security Documents.
Pledged Deposit Account" shall have the meaning as defined in Section 5.4.
Prior Telephone Loan Contracts" shall mean all telephone loan agreements previously
entered into by RUS and the Bon-ower.
Project" shall have the meaning as defined in Paragraph (a) of Section 3.4.
RUS Regulations" shall mean the rules, regulations and bulletins of general applicability
published by RUS from time to time, as such rules, regulations and bulletins exist at the date of
applicability thereof, and shall also include any rule and regulations of other Federal entities which RUS is
required by law to implement. Any reference to specific RUS Regulations shall mean the version of and
cite to such regulation effective at the date of applicability thereof.
Security Documents" shall mean, collectively, any mortgage, security agreement, financing
statement, deposit account control agreement or other document providing collateral for the Loan(s).
Subsidiaries" shall mean the subsidiaries listed in Schedule 1.
Telecommunications Loan" shall mean the telecommunications loan described in Section
Telecommunications Loan Expiration Date" shall have the meaning as defined in Paragraph
(b)(ii) of Section 3.
Telecommunications Loan Guarantee" shall mean the telecommunications loan guarantee
described in Section 3.1. '
TIER" shall mean the Borrower s total Net Income or Net Margins plus Interest Expense
payable for such year divided by Interest Expense payable for such year, as determined in Schedule 1
hereto.
TIER Commencement Date" shall have the meaning as defined in Section 5.12.
Total Assets" shall have the meaning as derIDed in Attachment 3.
Page J
Section 3. I Loans
(b)
(11)Location of Properties. All real propeliy and interests therein of the Borrower are
located in the states, counties, or parishes identified in the Security Documents.
(i)Principal Place of Business. The principal place of business and chief executiveoffice of the Borrower is at the address of the Borrower specified in Schedule 1
hereto,
Organization Number, The Bon'ower s organization number is correctly identified
in Schedule I hereto.
(k)Sub:sidiaries and Parent, Any subsidiaries or parent of the Bo!1'ower are disclosedon the attached Schedule I.
(I)Defaults Under Other Agreements. No default by the Borrower has occurred under
any agreement or instrument to which the Borrower is a party, or to which any of its
property is subject, that could have a Material Adverse Effect.
(m)Title to Property, Except as disclosed in writing in the opinion of counsel, theBorrower holds good and marketable title to all of the collateral securing theLoan(s), free and clear of any liens, security interests, or other encumbrances exceptfor Pennitted Encumbrances.
ARTICLE III - THE LOANS
(a)Broadband Loan. RUS agrees to make and the BotTower agrees to accept, on theterms and conditions stated in this Agreement, a Broadband Loan, in the amountspecified in Schedule I hereto.
(i)Interest Rate. The portion of the Broadband Loan specified in Schedule
hereto will bear interest at the comparable Treasury rate for comparable
maturities, as determined by RUS, and the portion of the Loan specified in
Schedule 1 hereto will bear interest at the rate of four percent (4%) perannum.
(ii)Broadband Loan Expiration Date. The obligation of RUS to advance the
Broadband Loan 01' any portion thereof shall expire on a date ("BroadbandLoan Expiration Date ) five years from the date of the Note(s). No portion
of the Broadband Loan will be advanced by RUS to the Borrower after the
Broadband Loan Expiration Date. RUS, in its sole discretion, may approve
an extension of the Broadband Loan Expiration Date, provided that the
Borrower notifies RUS, in writing at least ten days prior to the Broadband
Loan Expiration Date, of the reasons and need for an extension, togetherwith a suggested revised Broadband Loan Expiration Date.
Telecommunications Loan. RUS agrees to make and the Borrower agrees to accept
on the terms and conditions stated in this Agreement, a Telecommunications Loan
in the amount specified in Schedule I hereto.
(1)Interest Rate. The pot1ion of the Telecommunications Loan specified in
Schedule 1 hereto will bear interest at the Cost-of-Money rnterest Ratedetennined by the Govemment pursuant to 7 U.c. 935(d)(2)(A) of the
Act and its implementing regulations, as amended from time to time (7
c.F.R. 1735.31(c)) and the po11ion of the Telecommunications Loan
Page 5
(c)
specified in Schedule I hereto will bear interest at the rate of five percent
(5%) pel' annum.
(ii)Telecommunications Loan Expiration Date. The obligation of RUS to
advance the Telecommunications Loan or any pol1ion thereof shall expire
on a date ("Telecommunications Loan Expiration Date ) five (5) years from
the date ofthe Note(s). No p0l1ion of the Telecommunications Loan wiJI be
advanced by RUS to the Borrower after the Telecommunications Loan
Expiration Date. RUS, in its sole discretion, may approve an extension of
the Telecommunications Loan Expiration Date, provided that the BolTowernotifies RUS, in writing at least ten (10) days prior to the
Telecommunications Loan Expiration Date, of the reasons and need for an
extension, together with a suggested revised Telecommunications Loan
Expiration Date.
Telecommunications Loan Guarantee. RUS agrees to guarantee the loan identified
in Schedule 1 hereto and the Bon'ower agrees to accept such guarantee, on the telms
and conditions stated in this Agreement.
(i)interest Rate. Each Advance of funds subject to the Telecommunications
Loan Guarantee shall bear interest at the rate established by FFB at the time
such Advance is made on the basis of the determination made by the
Secretary of the Treasury pursuant to 12 U.C. 2285(b) of the Federal
Financing Bank Act of 1973, as amended.
(ii)Telecommunications Loan Guarantee Expiration Date. The obligation ofRUS to approve requests for Advances made under the
Telecommunications Loan Guarantee or any portion thereof shall expire on
the Last Advance Date as specified in the applicable guaranteed Note.
Section 3.2 Loan Documents
Section 3.3 Payment
(a)
(b)
The debt created by the Loan(s) will be evidenced by a note(s) ("Note(s)") executed
by the Bon"ower and payable, as applicable, to the United States of America or, in
the case of a loan guarantee, to the guaranteed lender. The Bon-ower shall repay the
Loan(s) in accordance with the Note(s) which shall be payable and bear interest in
accordance with its (their) terms.
The BOtTower shall execute the Security Documents covering all of the Borrower
property, in form and substance satisfactory to RUS and such other security
instTUments as required by RUS.
Except as otherwise prescribed by RUS, if any, the Borrower shaH make all payments on the
Note(s) utilizing elect1'Onic fllnds transfer procedures as specified by RUS.
Section 3.4 Project
(a)
(b)
Loan Purpose. The Loan has been made solely to finance the project speciflcaJly
described in the Application to furnish or improve telecommunications and/or
broadband services in rural areas (the "Project."
Changes to Project. The Borrower shall obtain the prior written approval of RUS
regarding any material change to the scope, loan design, collsn'uction, delivelY of
services, or objectives of the Project.
Page 6
Scction 4.Gcner'al Conditions
ARTICLE IV - CONDITIONS OF LENDING
In connection with the execution and delivery of this Agreement, each of the following
conditions shall be satisfied (all documents, certificates, and other evidence of such conditions are to be
satisfactory to RUS in its discretion):
(a)Legal Mattel's. All legal matters incident to the consUll1mation of the transactions
hereby contemplated shall be satisfactory to counsel for RUS;
(b)Loan Documents.
Documents;
RUS shall receive duly executed originals of the Loan
(c)Filed and Recorded Security Documents. RUS shall have received the following
documents securing the Loan(s): (i) executed, filed, and indexed financing
statements covering all of the personal property and fixtures of the Bon-ower and (ii)
executed, filed, and recorded counterparts of a mortgage covering all of the
Borrower s real property;
(d)Articles of Incorporation, Charter, Bylaws, and Organizational Documents. With
respect to corporate and cooperative Borrowers, RUS shall have received copies of
the Borrower s articles of incorporation, charter, and bylaws. With respect to limited
liability companies or similar organizations, RUS shall have received copies of the
Borrower organizational documents containing provisions reflecting the
obligations of the Borrower in paragraphs (c) and (d) of Section 6.3.
(e)Authorizations. RUS shall have received satisfactory evidence that all Loan
Documents and proceedings of the Bol1'ower necessary for duly authorizing the
execution, delivery, and performance of the Loan Documents have been obtained
and are in full force and effect;
(f)Approvals. RUS shall have received satisfactory evidence that the Borrower has
duly registered as required by law with all state, federal, and other public authorities
and regulatory bodies and has obtained all authorizations, certificates, permits
licenses, franchises and approvals necessary for, or required as a condition of, the
validity and enforceability of each of the Loan Documents and for the construction
and operation of the Project;
(g)
Title Evidence. RUS shal! have received satisfactory evidence that the Borrower has
good and marketable title to its property, including the Project, and holds sllch
franchises, penn its, 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 its existing facilities and the Project;
(h)Tariff Evidence. RUS shall receive evidence from each Bon'ower with rates
imposed by tariff, that it"has duly adopted a tariff, which (l) will provide for such
grades of telephone service as RUS may approve, (2) does not include mileage or
zone charges on any telephone service provided by the Project, and (3) is d~signed
with a view to (i) paying and discharging all taxes, maintenance expenses, and
operating expenses of the Borrower s system, (ii) making all payments in respect ofprincipal and interest on the Note(s) when and as the same shall become due, (Hi)
providing and maintaining reasonable working capital of the Borrower, and (iv)
producing and maintaining the TIER, specified in Schedule 1 hereto;
Page 7
(i)Broadband Rate Evidence. For Broadband loans, RUS shall receive evidence that
the Borrower has duly adopted rates which are designed with a view to (i) paying
and discharging all taxes, maintenance expenses, and operating expenses of the
BolTower s system, (ii) making aU payments in respect of principal and interest on
the Note(s) when and as the same shall become due, (iii) providing and maintaining
reasonable working capital of the BolTower, and (iv) producing and maintaining the
TIER, specified in Schedule I hereto.
Opinion ~l Counsel. RUS shall receive an opinion of counsel for the Borrower
(who shall be acceptable to RUS) in form and content acceptable to RUS;
Section 4.Conditions to Advances
The obligations of RUS to make any Advances under its Loan(s) or approve any requests for
Advances under its Loan Guarantee(s) are subject to the satisfaction of each of the following conditionsprecedent on or before the date of such Advance (all documents, certificates and other evidence Df suchconditions precedent are to be satisfactory to RUS in its discretion):
(a)Continuing Representations and Warranties. That the representations and warranties
of the Borrower contained in this Agreement be true and colTect on and as of the date
of such Advance as though made on and as of such date;
(b)Material Adverse Effect. That 110 event has occurred which has had or could have a
Material Adverse Effect;
(c)Event of Default. That no Event of Default and no event which with the passage of
time or giving of notice, or both, would constitute an Event of Default shall have
occurred and be continuing, or shall have occurred after giving effect to such
Advance on the books of the BOlTower;
(d)Requisitions and Supporting Documentation
(1)Broadband Loans. That RUS shall have received a requisition for
Broadband loan funds, not more frequently than once a month, and
supporting documentation from the Bon'ower in accordance with Rural
Utilities Service RUS Bulletin 1738-Rural Broadband Access Loan and
Loan Guarantee Advance and Construction Procedures Guide as amended
and supplemented from time to time (hereinafter "RUS Bulletin 1738-
attached hereto as Attachment I or available at http://www.usda.gov/rus/telecom/broadbandlrus-bulletin-1738-web2-03.doc;
(2)Telecommunications Loan and Loan Guarantee. That RUS shall have
received a requisition for Telecommunications Loan funds and Loan
Guarantee fl1nds not more fTequently than once a month, and supporting
documentation from the Borrower in accordance with RUS Regulations;
(e)Flood Insurance. That for any Advance used in whole or in part to finance theconstruction or acquisition of any building in any area identified by the Secretary of
Housing and Urban Development pursuant to the Flood Disaster Protection Act of
J 973 (the "Flood Insurance Act ) or any rules, regulations or orders issued to
implement the Flood Insurance Act as any area having special flood llazards, or tofinance any facilities or materials to be located in any such building, or in any
building owned or occupied by the BolTower and located in such a flood hazard area
the Borrower shall have submitted evidence, in form and substance satisfactory to
RUS or RUS has otherwise determined, that (i) the community in which such area is
located is then participating in the national flood insurance program, as required by
Page 8
the Flood Insurance Act and any related regulations, and (H) the BOtTOWer has
obtained flood insurance coverage with respect to such building and contents as may
then be required pursuant to the Flood Insurance Act and any related regulations;
(f)CUI"rent Financial Information and Certification of Authority. That RUS has
received from the Borrower (i) its culTent, updated balance sheet, statement of cash
flow, and income statement and (ii) a duly authorized and executed certification
Form 675, "Cel1ification of Authority," designating an officer, employee, or agent of
the Bon'ower as the person 01' persons authorized to execute and submit, on behalf of
the BOlTower, REA Form 481, "Financial Requirement Statement;
(g)
Fidelity Bond 01' Theft b,sw'ance Coverage. That RUS has received from the
Borrower, except Borrowers which are units of government, evidence, that the
Borrower has obtained fidelity bond or theft insurance coverage in accordance with
RUS Regulations;
(h)Pledged Deposit Account. That, in connection with Broadband Loans (or with
respect to Telecommunications Loans and Loan Guarantees when required on
Schedule 1 , 01' otherwise directed in writing by RUS), the Bon-ower has opened a
Pledged Deposit Account under terms satisfactory to RUS;
(i)Compliance with Deposit Requirements for Broadband Loans. That, in connection
with Broadband Loans, RUS has received from the Borrower, evidence that the
Bon'ower has maintained on deposit in account, funds in the amount specified in
Schedule I to cover operating expenses, in accordance with 7 C.R. Section
I 738.20(b), and has provided RUS with an advance schedule for slich fl!nds;
(j)
Compliance with Loan Documents. That the Borrower is in material compliance
with the Loan Documents;
(k)RUS Loan Guarantee Requirements, In connection with the Telecommunications
Loan Guarantee:
(I)That RUS and the FFB have entered into a contract and that the FFB has
agreed to make the loan to the Borrower, which will be guaranteed by RUS;
(2)That RUS has received evidence that any conditions in the contract referred
to above in subparagraph (I) have been satisfied; and
(3)That RUS has received a promissory note payable to FFB in the amount to
be guaranteed by RUS and a reimbursement note payable to the order of the
GoVel11111ent, both duly authorized, executed and delivered by the Borrower
within the time period prescribed by RUS;
(I)Additional Documents. The Borrower agrees to provide RUS with such additional
documents as RUS may request; and
(m)Additional Conditions. The Borrower has met all additional conditions specified in
Schedule 1 hereto.
Section 4.First Advance to Pay Off Interim Constl'uction Financine;; Restrictions 011 SubseQuent
Advances
Loan funds to payoff RUS approved interim construction financing, if any, will be included
in the first loan advance. Thereafter no further advances will be made unless and until the Borrower has
Page 9
furnished evidence, in form and content satisfactory to RUS, that such interim construction financing has
been paid in full and any associated liens have been duly discharged from record.
Section 5.1 Generallv
ARTICLE V - AFFIRMATIVE COVENANTS
Unless otherwise agreed to in writing by RUS, while this Agreement is in effec~ the Bon-ower
shall duly observe each of the affirmative covenants contained in this Article V.
Section 5.2 Use of Advances
The BolTower shall apply the proceeds of Advances in accordance with its Application with
such modifications as may be mutually agreed to in writing by RUS and the Borrower.
Section 5.3 Unused and Disallowed Advances
(a)The Bon-ower shall return forthwith to RUS any and all advanced portions of the
Loan(s) or Loan Guarantee(s) not disbursed by the Borrower for the Project or not
needed to complete the Project with any interest earned thereon when deposited
the Pledged Deposit Account or other account approved by RUS.
(b)The Borrower shall reimburse RUS for any advanced funds whose original
expenditure has been disallowed by a RUS loan audit Disallowances shal1 be
satisfied, as directed by RUS, by either administrative offset against requests for
Advances or repaying the disal1owed amount directly to the United States Treasury,
Such disal1owed amounts shall accrue interest payable to RUS from the date RUS
delivers to the Borrower a written demand for payment. Interest shall accrue at the
lesser of the following: the interest rate of the disallowed Advance or the then
current United States Treasury rate as prescribed by the Secret:aJ.y of the TreasUlY in
the Federal Register and the Treasury Fiscal Requirements Manual Bulletin.
Closeout of the Loan will not affect such right to disallow expenditures and recover
in full, any amount on the basis of a subsequent audit, or other review or the
Borrower s obligation to return any disallowed expenditures.
Section 5.4 Deposit of Advances into Pledl!ed Deposit Account and Construction Fund Account
(a)Broadband Loans. The Bon'ower of Broadband Loans shall open and maintain a
deposit account pledged to RUS ("Pledged Deposit Account ) in a bank or
depository whose deposits are insured by the Federal Deposit Insurance Corporation
or other federal agency acceptable to RUS and shall be designated by the RUS name
of the Borrower fol1owed by the words "Pledged Deposit Account" The Borrower
shall promptly deposit proceeds from all Advances of the Broadband Loan, including
previously advanced funds whose original expenditure has been disallowed by a
RUS loan audit, and other funds described on Schedule 1 hereto (hereinafter
Additional Funds ) into the Pledged Deposit Account. Moneys in the Pledged
Deposit Account shall be used solely for the purposes for which the Advance was
made, for the purposes as set forth in Schedule 1 hereto (hereinafter "Additional
Purposes ) or for such other purposes as may be approved by RUS. Deposits and
disbursements from the Pledged Deposit Account shall be made and recorded in
accordance with Attachment 1 hereto, RUS Bulletin 1738-, as amended and
supplemented from time to time.
(b)Telecommunications Loans and Loa/? Guarantees and Bank Loans. The Borrower of
Telecommunications Loans andlor Loan Guarantees, when required on Schedule I or
Page 10
otherwise directed in writing by RUS, shaH open and maintain a deposit account
pledged to RUS for Telecommunications Loans and Loan Guarantees. Such account
shall be in a bank 01' depositOlY whose deposits are insured by the Federal Deposit
Insurance Corporation or other federal agency acceptable to RUS, and shall
designated by the corporate name of the Borrower followed by the words "PledgedDeposit Account" The Borrower shall promptly deposit proceeds from Loan
Advances, including previously advanced funds whose original expenditure has been
disallowed by a RUS loan fund audit, and any Additional Funds into the Pledged
Deposit Account. Moneys in the Pledged Deposit Account shall be used solely for
the purposes approved by RUS or other Additional Purposes and shall be withdrawn
from time to time only as pennitted by RUS.
(c)First Lien on Pledged Deposit Account. The Borrower shall establish and maintain
the Pledged Deposit Account as a deposit account and perfect a first and prior lien in
such account for RUS, (pursuant to a deposit account agreement or similaragreement 01' mechanism for perfecting as provided by applicable law) in fonn
acceptable to RUS.
(d)Construction Fund Account. The Borrower shall promptly deposit Loan Advances
not required to be deposited in a Pledged Deposit Account, including previously
advanced Loan funds whose original expenditure has been disallowed by a RUS loan
fund audit, in a bank or depository whose deposits are insured by the Federal Deposit
Insurance Corporation or other federal agency acceptable to RUS. Sl!ch account
(hereinafter called the Construction Fund Account) shall be designated by the
corporate name of the Borrower followed by the words "Construction Fund
Account." Moneys in the Construction Fund Account shall be used solely for the
purposes approved by RUS and shall be withdrawn from time to time only as
permitted by RUS.
Section 5.Use of Ooeratin2: Funds ReQuired in Connection with Broadband Loans
The Borrower shall expend the operating funds required by 7 C.R. Section 1738.20(b), as
approved by RUS.
Section 5.Financial Books
The Bon-ower shall maintain, at its premises, such books, documents, papers, or other records
and supporting documents, including, but not limited to, invoices, receipts, and bills of sale, adequate to
identify the purposes for which and the manner in which Loan and other funds were expended on the
Project. The Borrower shall at a1l times keep and safely preserve proper books, records, and accounts in
which full and true entries shall be made of all dealings, business, and affairs of the Borrower and its
Subsidiaries (as listed in Schedule 1 hereto ) in accordance with any applicable Accounting Requirements.
The Borrower shall maintain copies of all documents submitted to RUS in connection with the Loan until
the Loan has been paid in full and all audits have been completed.
Section 5.Rie-hts ofInsoection
The B011'0wer shall afford RUS, the Office of Inspector General of USDA and the General
Accounting Office, through their representatives, reasonable opportunity, at aJl times during business hours
and upon prior notice, to access and inspect the Project, any other property encumbered by the Security
Documents, and any and all books, records, accounts, including electronic books, records, accounts, and
electronic mail messages, regardless of the physical form or characteristics, invoices, contracts, leases,
payrolls, canceled checks, statements, other documents, and papers of every kind belonging to or in any
way pel1aining to its propel1y or business, including its Subsidiaries, if any, and to make copies or extracts
therefrom.
Page 11
Section 5.Annual and Special Financial Reports
(a)One hundred twenty (120)"days from the end of the Borrower s fiscal year in whicl1
the first Advance is made and, thereafter, one hundred twenty (120) days fi'0111 the
close of each fiscal year of the Borrower, the Borrower shall cause to be prepared
and furnished to RUS a full and complete annual report of jts financial condition and
of its operations in fonn and substance satisfactory to RUS, and as provided in 7
R. 1773, which is audited and certified by an independent certified public
accountant satisfactory to RUS, and accompanied by a report of such audit in form
and substance satisfactory to RUS.
(b)The Bon'ower shall also ful11ish to RUS fifteen (15) Business Days after March 31
of each year, and on such additional date(s) as specified in Schedule I (hereinafter
Additional Rep0l1ing Dates ) or as otherwise requested in writing by RUS, balance
sheets, income statements, statements of cash flow, or such other rep0l1s concerning
the financial condition or operations of the Borrower, including its Subsidiaries, as
RUS may request or RUS Regulations require.
Section 5.Annual Compliance Certificate
Commencing forty-five (45) days from the date hereof, and thereafter within forty-five (45)
days after the close of each calendar year, or sooner if required in writing by RUS, the BolTower shall
deliver to RUS, a written statement signed by its general manager, managing member, or equivalentcorporate official satisfactory to RUS, stating that, during stich year the Borrower has fulfilled its
obligations under the Loan Documents in all material respects or, if there has been a material default in the
fulfillment of such obligations, specifying each such default known to such official and the nature and
status thereof.
Section 5.10 Miscellaneous Reports and Notices
The Borrower shall furnish to RUS:
(a)Notice of Default. Promptly after becoming aware thereof, notice of the occurrence
of any default under the Loan Documents or the receipt of any notice with respect to
the occurrence of any event which with the giving of notice or the passage of time, or
both, could become an Event of Default hereunder or under the other Loan
Documents.
(b)Notice of Litigation. Promptly after the commencement thereof, notice of the
commencement of all actions, suits or proceedings before any COUlt, arbitrator, or
governmental department, commission, board, bureau, agency, or instrumentality
affecting the Bon'ower or any Affiliate which, if adversely determined, could have a
Material Adverse Effect on the Borrower.
(c)Reguiato/:V and Other Notices. Promptly after receipt thereof, copies of any notices
or other communications received from any governmental authority with respect to
any matter or proceeding which could have a Material Adverse Effect on the
Borrower.
(d)Material Adverse Effect. Promptly after becoming aware thereof, notice of any
matter which has resulted or may result in a Material Adverse Effect on the
Borrower.
(e)Corporate Document Changes. Thirty (30) days prior to their effectiveness, any
amendments, supplements or modifications to the Borrower Articles of
Page 12
(t)
Incorporation, Charter, Bylaws, Operating Agreement, Members Agreements orother Organizational Documents.
Other Information. Such other infon11ation regarding the condition , financial orotherwise, or operations of the BolTower as RUS may, from time to time, reasonablyrequest.
(a)
Section 5.11 Tal'iff and Rate Desie:n
(b)
Tariff Requirements for Telecommunications Loan and Telecommunications Loan
Guarantee Bon'owers are as follows:
(I)RegulatolJi Approval NecessalJJ If regulatory approval is required to
effectuate its telephone service tariff, the Bon'ower shall seek and use itsdiligent best effol1S to obtain all regulatory body approvals necessalY toplace in effect and thereafter to maintain in effect a tariff for telephone
service which (A) provides for such grades of service as RUS shall approve
, .
(B) does not include mileage or zone charges for any telephone serviceprovided by the Project, and (C) is designed with a view to (l) paying and
discharging all taxes, maintenance expenses, and operating expenses of theBorrowers system, (2) making all payments in respect of principal of and
interest on the Note(s) when and as the same shall become due, (3)providing and maintaining reasonable working capital for the Borrower, and(4) producing and maintaining the TIER specified on Schedule 1 hereto,The BolTower shall place such tariff into effect as soon as permitted byapplicable laws and regulations and shall use its diligent best efforts to
obtain all necessary regulatolY body approvals of such revisions of its tariff
as may be necessary from time to time to satisfY the requirements of this
provision.
(2)Regula/my Approval Nol Required. If regulatory approval is not required
to effectuate its telephone service tariff, the Bon'ower shall design, charge
and maintain in effect a tariff for telephone service which (A) provides forsuch grades of service as RUS shall approve, (B) does not include mileageor zone charges for any telephone service provided by the Project, and (I)pays and discharges all taxes, maintenance expenses, and operating
expenses of the Bon'ower s system, (2) makes all payments in respect ofprincipal of and interest on the Note(s) when and as the same shall become
due, (3) provides and maintains reasonable working capital for theBon'ower, and (4) produces and maintains the TIER specified on Schedule
1 hereto.
Rate Requirement for Broadband Service, The BolTower shall design, charge, andmaintain in effect rates tor Broadband service which (i) pay and discharge all taxes
maintenance expenses and operating expenses of its system, (ii) make all paymentsin respect of principal of and interest on the Note(s) when and as the same shall
become due, (iii) provide and maintain reasonable working capital for the Borrower
and (jv) produce and maintain the TIER specified on Schedule 1 hereto,
Section 5.12 TIER ReQuirement
From the date of this Agreement until the date specified in Schedule 1 , the Bon'ower wi1lmaintain a TIER of at least 1,0, Thereafter, starting on the date specified in Schedule 1 (hereinafter calledthe "TIER Commencement Date ) the Borrower shall maintain the TIER Jevel(s) as specified in Schedule
Page !3
Section 5.13 Corrective Action
Within thirty (30) days of (i) sending the financial reports required by Section 5.8 hereof that
shows the TIER specified by Section 5.12 was not achieved for the reported fiscal year or (ii) being notified
by RUS that the TIER specified in Section 5.12 was not achieved for the reported fiscal year, whichever is
earlier, the Borrower, in consultation with RUS, shaH provide a written plan satisfactory to RUS setting
forth the actions that shaH be taken to achieve the specified TIER 011 a timely basis and shall promptly
implement said plan.
Section 5.14 Obli!!:ations with Respect to the Construction, Operation and Maintenance of the
Project Funded by the Broadband Loan
(a)Project Management and Operation. The Borrower shall be responsible for
managing the day to day operations of the Project and will operate the Project in an
efficient and economic manner as well as maintaining the Project in good repair.
(b)Design Standards, Construction Standards, and Lists of Materials. The Bon'ower
shall use design standards, construction standards, and lists of acceptable materials in
accordance with Attachment I hereto, RUS Bulletin 1738-, as amended and
supplemented from time to time.
(c)Plans and Specifications, The Bon'ower shall submit plans and specifications for
construction to RUS for review and approval in accordance with Attachment
hereto, RUS Bulletin 1738-2, as amended and supplemented from time to time.
(d)Standard Forms of Purchase Contracts, Installation Contl'acts. Construction
Contl"acts, and Engineering and ArchitecturaL Service Contracts. The Borrower
shall use the standard fonDs of contracts promulgated by RUS for construction
procurement, engineering services, and architectural services in accordance withAttachment 1 hereto, RUS Bulletin 1738-, as amended and supplemented from
time to time, and shall submit to RUS such contracts for review and approval in
accordance with such Attachment I.
(e)Contract Bidding Requirements. The Borrower shall follow RUS bidding procedures
when contracting for construction or procurement in accordance with Attachment I
hereto, RUS Bulletill 1738-, as amended and supplemented from time to time.
(t)Construction in Accordance with Loan Design. The Borrower shall cause the
Project to be constructed and completed in accordance with the loan design
submitted with the Application.
(g)
General Insurance Requirements, The Borrower shall take out and maintain
insurance on the Project and any other propelty acquired with the Loan in
accordance with 7 CFR Section 1788 as well as maintaining the fidelity bond or theft
insurance coverage required in Section 4.2 paragraph (g) hereof.
Section 5.15 Obli!!ations with Respect to the Construction. Ooeration and Maintenance of the
Project Funded bv the Telecommunications Loan and Telecommunications Loan
Gual'antee
(a)Project Management and Operation. The Borrower shall be responsible for
managing the day to day operations of the Project and will operate the Project in an
efficient and economic manner as well as maintaining the Project in good repair.
Page 14
Section 5,
(b)Design Standards, Construction Standa,'ds and List of Material. The Borrower shall
use design standards, construction standards, and lists of acceptable materials in
accordance with RUS Regulations.
(c)Plans and Specifications. The Bon"ower shall submit plans and specifications for
construction to RUS for review and approval in accordance with RUS Regulations.
(d)Standard Forms of Purchase Contracts, Installation Contracts, ConstructionContl'Octs, and Engineering and Architectural Service Contracts. The Borrower
shall use the standard forms of contracts promulgated by RUS for construction
procurement, engineering services, and architectural services in accordance with
RUS Regulations and shall submit to RUS such contracts for review and approval in
accordance with RUS Regulations.
(e)Contracts for Toll Trqlfic, Operator Assistance Services, and Extended Area Service.
The Borrower shall submit contracts for toll traffic, operator assistance services and
contracts for extended area service to RUS for review and approval in accordance
with RUS Regulations.
(f)Contract Bidding Requirements. The Borrower shall follow RUS bidding procedureswhen contracting for construction or procurement in accordance with RUSRegulations.
(g)
Construction in Accordance with Loan Design. The Borrower shall cause the Project
to be constructed and completed in accordance with the loan design submitted with
the Application.
(h)GeneJ"al In.wl'ance Requirements. The Borrower shall take out and maintaininsurance on the Project and any other property acquired with the Loan as well as
maintaining fidelity bond or theft insurance coverage in accordance with RUS
Regulations.
Oblil:!ations Applicable to Telecommunications Loan and Telecommunications Loan
Guarantee BOt'rowers with Respect to Area COVer31:!e of Telephone Service
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 pati of the
Bon"ower s application for the Telecommunications Loan or Telecommunications Loan Guarantee and
which map, as revised by agreement between the Borrower and RUS, is incorporated herein by referencethereto. In the perfol1nance of this obligation, the Borrower shall:
(b)
(a)furnish service to an applicants for telephone service included in the Project funded
by the Telecommunications Loan, or Telecommunications Loan Guarantee, withoutpayment by such applicants of any extra charge as a contribution to the cost of
construction of facilities to provide such service; and
take all action that may be required to enable it to extend service, without payment tothe Borrower of any extra charge as a contribUtion to construction of facilities to
provide such service, to every 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 with the use of such funds as may from
time to time be available to the BolTower, either from surplus earnings, increasedequity capital, additional loans made by lenders other than the Govel1unent, or
otherwise as the Bon'ower may elect, pursuant to terms and conditions set forth in
Page 15
the Bon'ower s tariff, as duly filed with or approved by regulatory bodies havingjurisdiction in the premises, or in the absence of any such regulatory body, as
adopted by the Borrower; provided that the Borrower shall not me with 01' submit forapproval 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.
Section 5.17 PresenTation of Existence and Ri!!hts
The BolTower shall, until the Loan is repaid in full, take or cause to be taken all such actionsas from time to time may be necessary to preserve its existence and to preserve and renew all franchises,
contracts, rights of way, easements, permits, and licenses now or hereafter to be granted or conferred upon
, with respect to the Project, the loss of which would have a Material Adverse Effect on the Borrower.
Section 5.18 Compliance with Laws
The BolTower shall operate and maintain the Project and its properties in compliance in all
material respects with all applicable Laws.
Section 5.19 Nondiscrimination
(a)Equal Opportunity Provisions in Construction Contracts. The Bon'ower shall
incorporate or cause to be incorporated into any construction contract, as defined inExecutive Order 11246 of September 24, 1965 and implementing regulations, whichis paid for in whole or ill part with funds obtained from RUS, or bolTowed on thecredit of the United States pursuant to a grant, contract, loan, insurance or guaranteeor undertaken pursuant to any RUS program involving such grant, contract, loan
insurance or guarantee, the equal opportunity provisions set forth in Attachment 2
hereto, entitled Equal Opportunity Contract Provisions,
(b)Equal Opportunity Contract Provisions Also Bind the Borrower. The Borrowerful1her agrees that it shall be bound by such equal opportunity clause in any federalJy
assisted construction work which it performs itself other than through the permanent
work force directly employed by an agency of goverrunent.
(c)Sanctions and Penalties. The Borrower agrees that it shall cooperate actively with
RUS and the Secretary of Labor in obtaining the compliance of contractors andsubcontractors with the equal opportunity clause and the rules, regulations andrelevant orders of the Secretary of Labor, that it shall furnish RUS and the Secretary
of Labor such inf0l111ation as they may require for the supervision of suchcompliance, and that it shall otherwise assist the administering agency in thedischarge of RUS' primalY responsibility for securing compliance. The Borrowerfurther agrees that it shaH refrain from entering into any contract or contractmodification subject to Executive Order 11246 with a contractor debarred from, orwho has not demonstrated eligibility for, Government contracts and federallyassisted construction contracts pursuant to Part II, Subpart D of Executive Order11246 and shall can)' out such sanctions and penalties for violation of the equal
opportunity clause as may be imposed upon contractors and subcontractors by RUS
or the Secretary of Labor pursuant to Part II, Subpart D of Executive Order 11246.
In addition, the Borrower agrees that if it fails or refuses to comply with theseundertakings RUS may cancel, terminate or suspend in whole or in part thisAgreement, may refrain from extending any fUlther assistance under any of itsprograms subject to Executive Order 11246 until satisfactory assurance of future
compliance has been received ITom the Borrower, or may refer the case to theDepartment of Justice for appropriate legal proceedings.
Page 16
Section 5.20 Buy American
The BolTower shall use or cause to be used in connection with the expenditures of funds if
such funds were obtained in whole or in part by a loat1 being made or guaranteed by RUS only such
unmanufactured articles, materials, and supplies as have been mined or produced in the United States orany eligible country, and only such manufactured articles, material, and supplies as have been
manufactured in the United States or any eligible country substantially aU from at1icles, material, and
supplies mined, produced or manufactured, as the case may be, in the United States or any eligible countT)',
except to the extent RUS 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 countlY that has with respect to
the United States an agreement ensuring reciprocal access for United States products and services andUnited States suppliers to the markets of that Country, as determined by the United States TradeRepresentative.
Section 5.21 Additional Affirmative Covenants
hereto.
The BolTower shall comply with the additional affirmative covenants set forth in Schedule I
ARTICLE VI - NEGATIVE COVENANTS
Section 6.1 General
Unless otherwise agreed to in writing by RUS, while this Agreement is in effect, the Borrower
shall duly observe each of the negative covenants set forth in this Article VI.
Section 6.Mere:el', Consolidation and Transfer of PropertY
The Borrower shall not, without the prior written consent of RUS, take or suffer to be taken
any steps to reorganize, consolidate with, or merge into any other corporation, or to sell, lease or transfer
(or make any agreement therefor) all or any part of its propelty, including, without limitation, the Project.
Section 6.Covenants for Limited Liability Companies and Similar Bol'rowers
Borrowers which are limited liability companies or similar organizations agree that:
(a)The death, retirement, resignation, expulsion, termination, bankruptcy, or dissolution
of any member or the occurrence of any other event that terminates the continued
membership of any member shall not cause the Borrower to be dissolved or its
affairs to be wound up;
(b)Prior to the date on which any and all obligations owed to RUS or the guaranteed
lender with respect to Telecommunications Loan Guarantees, including the (lote
evidencing the Loan, are discharged in full, the Borrower shall not be dissolved or
terminated;
(c)The organizational documents of the Borrower shall contain provisions reflecting the
obligations of the Borrower in paragraphs (a) and (b) immediately above and such
provisions shall not be amended without the prior written consent of RUS; and
Cd)No direct or indirect addition, issuance, or transfer of any membership units (or any
other ownership interest) in the Bol1'0wer may be made by the Borrower or its
members without the prior written consent ofRUS.
Page 17
Section 6.4 Additional Indebtedness
The Borrower shall not, without the prior written consent of RUS, incur additional
indebtedness in the event:
(a)The Borrower is not maintaining a TIER of 1.0 or if the additional indebtedness will
cause the Borrower s TIER to fall below 1.0; or
(b)An Event of Default as defined in Section 8.I(b) hereof has occurred and is
continuing.
Section 6,Nee:ative Pledtrc
The Borrower shall not create, incur, or suffer any lien, mortgage, pledge, assignment, 01'other encumbrance on, or security interest in its property, other than Permitted Encumbrances.
Section 6.6 Contracts
The BOiTower shall not, without the prior written consent of RUS, enter into any contract 01'contracts for the operation or maintenance of all or any part of its property, including, without limitation
the Project, and shall not enter into any contract for the use by others of all 01' any part of its property,including, without limitation, the Project.
Section 6.7 Salaries
Salaries, wages and other compensation paid by the Borrower for services, and directors
members , managers' or trustees' fees, shall be reasonable and in conformity with the usual practice ofentities of the size and nature of the Borrower.
Section 6.8 Extension of Credit
Except as specifically authorized in writing in advance by RUS, the Borrower will make noadvance payments or loans, or in any manner otherwise extend its credit, either directly or indirectly, with
or without interest, to any of its directors; trustees, officers, employees, stockholders, members, managers,Affiliates or Affiliated Companies; provided, however, the Borrower may make an investment for anypurpose 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 that is used by such Affiliate
for such purpose) to the extent that, immediately after such investment, (1) the aggregate of suchinvestments does not exceed one-third of the Net Worth and (2) the Bon-ower s Net Worth is at leasttwenty percent (20%) of its Total Assets.
Section 6.9 Dist,'ibutions 01' Withdrawals
(a)Corporations and Cooperatives. Corporate or cooperative Borrowers shall not
without the prior written approval of RUS, make any dividend, stock, capital, or
other distribution in the nature of an investment, guarantee, extension of credit
advance, or loan, nor make a capital credit distribution (all such distributions being
hereinafter collectively called "Distributions;provided. howevel"Distributionsmay be made in each calendar year as follows:
(1)Aggregate, annual Distributions not to exceed twenty-five percent (25%) of
prior caJendar year s Net Income or Margins may be made if, after such
aggregate annual Distributions, the Bon.ower s net worth is at least one
percent (1%) of its Total Assets;
Page 18
(b)
(4)
(c)
(2)Aggregate annual Distributions not to exceed fif1y percent (50%) of the
prior calendar year s Net Income or Margins may be made if, after suchaggregate annual Distributions, the Borrower s Net Worth is at least twentypercent (20%) of its Total Assets;
(3)Aggregate annual Distributions not to exceed seventy-five percent (75%) ofthe prior calendar year s Net Income or Margins may be made if, after suchaggregate annual Distributions, the Borrower s Net Worth is at least thirty
percent (30%) of its Total Assets; or
There is no limit on aggregate, annual Distributions if, after making suchaggregate, annual Distributions, the Borrower s Net Wol1h is at least forty
percent (40%) of its Total Assets.
(4)
Limited Liability Companies. BolTowers which are limited liabiJity companies shall
not, without the prior written approval of RUS, make any membership withdrawals
unit redemptions, or other type of profit allocation to its members and shall notwithout the prior written approval ofRUS, make capital distributions in the nature of
an investment, guarantee, extension of credit, advance, or Joan (all such actionsbeing hereinafter collectively called "Distributions;p/'ovide(~ however
Distributions may be made in each calendar year as follows:
(1)Aggregate, annual Distributions not to exceed twenty-five percent (25%) ofthe prior calendar year s Net Income or Margins may be made if, after
such aggregate annual Distributions, the Borrower s Net Worth is at leastone percent (I %) of its Total Assets;
(2)Aggregate annual Disttibutions not to exceed fifty percent (50%) of the
prior calendar year s Net Income 01' margins may be made if, after suchaggregate annual Distributions, the Borrower s Net Worth is at least twentypercent (20%) of its Total Assets;
(3)Aggregate annual Distributions not to exceed seventy-five percent (75%) ofthe prior calendar year s Net Income or Margins may be made if, after suchaggregate annual Distributions, the Borrower s Net Worth is at least thil1y
percent (30%) of its Total Assets; or
There is no limit on aggregate, annual Distributions if, after making suchaggregate, annual Distributions, the BoITower s net worth is at least forty
percent forty percent (40%) of its Total Assets.
In addition to the Distributions authorized under the immediately, precedingsubsections, the Bon"ower may make any Distribution or investment as provided in 7
CFR 1744 Subpart D.
Section 6.10 Chan!!in!! Principal Place of Business. Place of Conductine Business. or Type ofOnzanization
The Borrower shaH 110t change its principal place of business, place of conducting businessor type of organization without the prior consent ofRUS.
Section 6.11 Chane:inl! Name or Place of Incorporation or Omanization
The Borrower shall not change its legal name or place of incorporation or organizationwithout giving RUS sixty (60) days prior written notice,
Page 19
Section 6.12 Chanl!ihll Rates or Tariffs
RUS.
The Borrower shan not file for or change its rates or tariffs without prior written approval by
Section 6.13 Historic Preservation
The Borrower shall not, without the prior written consent of RUSt use any Advance(s) toconstruct any facility which shall involve any district, site, building, structure or object which is included
, or eligible for inclusion in, the National Register of Historic Places maintained by the Secretary of the
Interior pursuant to the Historic Sites Act of 1935 and the National Historic Preservation Act of 1966.
Section 6.14 Limitations on Usinl! non-FDIC Insured Depositories.
Without the prior written approval of RUS, the Borrower shall not place the proceeds of the
Loans 01' any loan which has been made 01' guaranteed by RUS, in the custody of any bank or other
depository that is not insured by the Federal Deposit Insurance Corporation or other federal agency
acceptable to RUS.
Section 6.15 Affiliated Transactions
The Borrower shall not enter into any transaction, contract, or dealing with an Affiliate of the
BolTower 01' with the Borrower s 01' Affiliate s directors, trustees, officers, managers, members (if theBorrower is a limited liability company), or other corporate officials, without the prior written consent of
RUS.
Section 6.16 Oblie:ations with Respect to Nonduplication of Facilities for Telecommunications Loan and
Telecommunications Loan Guarantee Loan Borrowers
If the Bol1.ower has outstanding Telecommunications Loan(s) or Telecommunications Loan
Guarantee(s) and provides telephone service in any state in which there is no state regulatory body with
authority to regulate telephone service and to require cel1iticates of convenience and necessity to the
Bon'ower, the Borrower shall not use any portion of such Loan(s) for the constmction 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 RUS, on the basis of evidence
submitted to it by the BolTower, shall have determined that service by the BolTower to such persons will
not result in duplication of lines, facilities or systems providing reasonably adequate service.
Section 6.17 Additional Nel!ative Covenants
hereto.
The Borrower shall comply with the additional negative covenants set forth in Schedule I
ARTICLE VII " LENDER'S RIGHTS
Section 7.Termination of Loan Offer
RUS, in its sole discretion, may terminate the offer to make the Loan(s) if Loan Documents,
duly executed on behalf of the BolTower, are not received and all other conditions in Section 4.1 hereof arenot satisfied within one hundred twenty (120) days from the date hereof.
Page 20
Section 7.Audits and Compliance Reviews
After giving prior notification to the Borrower, RUS has the right to conduct compliancereviews and audits of the Borrower to assure compliance with the Loan Documents and RUS Regulations.
Section 7.Disallowed Expenditures
Upon a determination by RUS that the Borrower did not utilize the Loan in the manner and
exclusively for the Project as approved by RUS, RUS may, in its sole discretion:
(a)Disallow all or a part of the expenditures and disbursements of the Loan and require
the Borrower to deposit such funds in the Construction Fund Account or in the
Pledged Deposit Account, to be applied toward other approved Project purposes 01' toreimburse the Government, as provided in Section 5.3 hereof;
(b)
(c)
Suspend making Advances; and/or
Take any other action RUS determines to be necessary including, without limitation
exercising any right or remedy available under the Loan Documents or at law.
Section 7.Suspension of Advances
RUS may, in its absolute discretion, suspend making or approving Advances hereunder, ifRUS determines that an event has occurred that is likely to have a Material Adverse Effect on theBorrower.
Section 7,Payment Extensions
RUS may, at any time or times in succession without notice to, or the consent of, theBorrower and upon such tenus as RUS may prescribe, grant to any person, firm or entity who shall havebecome obligated to pay all or any part of the principal of or interest on any Note held by, or indebtedness
owed to, RUS or who may be affected by the lien created by the Loan Documents, an extension of the timefor the payment of such principal or interest. After any such extension the Borrower 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.
ARTICLE VIII ~ EVENTS OF DEF A UL
Section 8.1. Events of Default
The following shall be Events of Default under this Agreement:
(a)Representations and Wan.anties. Any representation or waITanty made by the
Bon.ower in the Loan Documents or in the Application, any certificate furnished to
RUS thereunder, shall prove to have been incon'ect in any material respect at the
time made;
(b)Non-Pavment.The nonpayment of any required and due installment of interest on, orprincipal of, any Note, whether by acceleration or otherwise, which continues for
five (5) Business Days, as such tenn is herein defined;
(c)Corrective Actions. Default by the BolTower in the observance or performance of
Section 5,13;
Page 21
Section 9.Generallv
(d)Umited Liability Companies Default by the Borrower or its members in the
observance or performance of Section 6.
(e)Other Covenants. Default by the Borrower in the observance or perfonnance of any
other covenant or agreement contained in any of the Loan Documents, which shall
remain unremedied for thirty (30) calendar days, after written notice thereof had
been given to the Borrower by RUS;
(f)Adverse Effects. The Borrower shall forfeit or otherwise be deprived of its charter
articles of organization, ftanchises, permits, easements, consents, or licenses requiredto canyon any material portion of its business, or the Borrower files for, or an eventoccurs, which can reasonably be expected to result in its dissolution or termination;
(g)
Other Obligations.Default by the Borrower in the payment of any obligation
whether direct or contingent, for borrowed money in excess of ten thousand dollars
($10 000.00) or in the performance or observance of the terms of any instrument
pursuant to which such obligation was created or secUl'ing such obligation which
default shall have resulted in such obligation becoming or being declared due and
payable prior to the date on which it would otherwise be due and payable;
(h)Bankruptcy. A court having jurisdiction in the premises shall enter a decree or order
for relief with respect to the Borrower in an involuntary case under any applicablebankruptcy, insolvency, or other similar law now or hereafter in effect: (I)appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator, or similarofficial, or (2) ordering the winding up or liquidation of its affairs; or the Borrower
shall commence a voluntary case under any applicable bankruptcy, insolvency or
other similar law now or hereafter in effect, or under any such law, or consent to theappointment or taking possession by a receiver, liquidator, assignee, custodian ortrustee, of a substantial part of its property, or make any general assignment for the
benefit of creditors;
(i)Dissolution or Liquidation. Other than as provided in the immediately preceding
subsection, the dissolution or liquidation of the Borrower, or the filing of such by the
Borrower;
CD .Impaired Business. The failure by the Borrower to promptly forestall or remove anyexecution, garnishment or attachment of such consequence as shall impair its ability
. continue its business or fulfill its obligations and such execution, ga111ishment orattachment shall not be vacated within thirty (30) days; 01'
Payment of Final Judgment.A final judgment in an amount of ten thousand dollars
($10 000.00) or more shall be entered against the Borrower and shall remainunsatisfied or without a stay in respect thereof for a period of thirty (30) days.
ARTICLE IX - REMEDIES
Upon the OCCUlTence of an Event of Default, RUS may pursue all rights and remedies that are
contemplated by the Loan Documents in the manner, upon the conditions, and with the effect provided in
the Loan Documents, including, but not limited to, a suit for specific performance, injunctive relief, ordamages. Nothing herein shall limit the rights of RUS to pursue, jointly or severally, all rights and
remedies available to a creditor following the occurrence of an Event of Default listed in Article VIII
hereof. Each right, power, and remedy of RUS shall be cumulative and concurrent, and recourse to one or
more rights or remedies shall not constitute a waiver of any other right, power or remedy.
Page 22
Section 9.Remedies
In addition to the remedies referred to in Section 9. I hereof, upon the occurrence of an Eventof Default RUS may:
(a)Refuse to make any Advance or further Advance on account of the Loan(s), but any
Advance thereafter made by RUS shall not constitute a waiver of such default; or
(b)Declare all unpaid principal of and all interest accrued on the Note(s) to
immediately due and payable and upon such declaration all such principal andinterest shall become immediately due and payable.
ARTICLE X - MISCELLANEOUS
Section 10.Notices
All notices, requests, and other communications provided for herein including, withoutlimitation, any modifications, waivers, requests, or consents under, this Agreement shall be given or madein writing (including, without limitation, by telecopy) and delivered to the intended recipient at theAddress for Notices" specified below; or, as to any party, at such other address as shall be designated by
such party in a notice to each other party. Except as otherwise provided in this Agreement, all suchcommunications shall be deemed to have been duly given when transmitted by telecopier or personally
delivered or, in the case of a mailed notice, upon receipt, in each case given or addressed as provided forherein. The Addresses fol' Notices of the respective parties are as follows:
RUS
Rural Utilities Service
United States Department of Agriculture
1400 Independence Ave!1ue, S.
Washington, D.20250- I 500
Attention: Administl'ator
Fax: [phone]
Borrower
See Schedule 1
With a copy to
See Schedule I
With a CoPY to
See Schedule I
Section 10.ExlJenses
To the extent allowed by law, the Borrower shalt pay all costs and expenses of RUS,including reasonable fees of counsel, incurred in connection with the enforcement of the Loan Documents
or with the preparation for such enforcement if RUS has reasonable grounds to believe that suchenforcement may be necessary.
Section 10.Late Payments
If payment of any amount due hereunder is not received at the United States Treasury inWashington, DC or such other location as RUS may designate to the Borrower within five (5) Business
Days after the due date thereof, or such other time period as RUS may prescribe from time to time in its
policies of general application in connection with any late payment charge (such unpaid amount being
herein called the "delinquent amount", and the period beginning after such due date until payment of the
delinquent amount being herein called tile "late-payment period ) the Borrower shall pay to RUS in
addition to all other amounts due under the terms of the Notes, the Security Documents and thisAgreement, any late payment charge as may be fixed by RUS Regulations from time to time on the
delinquent amount for the late-payment period.
Page 23
Section 10.Filih!! Fees
To the extent permitted by law, the Borrower agrees to pay all expenses of RUS (including
the fees and expenses of its counsel) in connection with the filing or recordation of all financing statements
and instruments as may be required by RUS in connection with this Agreement, including, withoutlimitation, all documentary stamps, recordation, transfer taxes, and other costs and taxes incident torecordation of any document 01' instrument in connection herewith. Borrower agrees to save hannless and
indemnify RUS from and against any liabiJity resulting from the failure to pay any required documentarystamps, recordation and transfer taxes, recording costs, or any other expenses incurred by RUS inconnection with this Agreement. The provisions of this section shall survive the execution and delivery ofthis Agreement and the payrnent of all other amounts due hereunder or due on the Notes.
Section 10.5 No Waiver
No failure on the part of RUS to exercise, nor any delay in exercising, any right hereundershall operate as a waiver thereof, nor shall any single or partial exercise by RUS of any right hereunderpreclude any other or fu11her exercise thereof or the exercise of any other right.
Section 10.Governinl! Law
This Agreement shall be governed by and construed in accordance with applicable federal law
and, in the absence of controlling federal law, by the laws of the State identified in the first paragraphherein, except those that would render such choice of law ineffective.
Section 10.Holiday Payments
If any payment to be made by the Borrower hereunder shall become due on a day which is not
a Business Day, such payment shall be made on the next succeeding Business Day and such extension of
time shall be included in computing any interest in respect of such payment.
Section 10.8 Rescission
The Borrower may elect not to bon'ow the Loan, in which event RUS shall release theBorrower from its obligations hereunder, provided the Borrower complies with such terms and conditions
as RUS may impose for such release.
Section 10.Successors and Assiens
(a)This Agreement shall be binding upon and inure to the benefit of the Borrower and
RUS, and their respective successors and assigns, except that the Borrower may not
assign or transfer its rights or obligations hereunder without the prior written
consent of RUS,
(b)Pursuant to federal claims collection laws, RUS' claims hereunder may be
transferred to other agencies of the United States of America; in the event of such a
transfer, all rights and remedies hereby granted or confelTed on RUS shall pass to
and inure to the benefit of any such successor agency,
Section 10.10 Complete Aereement: Waivers and Amendments
Subject to RUS Regulations, this Agreement and the other Loan Documents are intended by
the parties to be a complete and final expression of their agreement. However, RUS reserve the right towaive its rights to compliance with any provision of this Agreement and the other Loan Documents. No
amendment, modification, or waiver of any provision hereof or thereof, and no consent to any departure of
the Bon'ower herefrom 01' therefrom, shall be effective unless approved in writing by RUS in the fonn of
Page 24
either a RUS Regulation or other writing signed by or on behalf of RUS, and then such waiver or consentshall be effective only in the specific instance and for the specific purpose for which given.
Section 10.11 Prior Telephone Loan Contl"acts
With respect to all Prior Telephone Loan Contracts, the Borrower shall, commencing on the
delivery date hereof, prospectively meet the affirmative and negative covenants as set forth in thisAgreement rather than those set fOl1h ill the Prior Telephone Loan Contracts. In addition, any remaining
obligation of RUS to make or approve additional advances on promissOlY notes of the Borrower that havebeen previously delivered to RUS under Prior Telephone Loan Contracts shall, after the date hereof, besubject to the conditions set forth in this Agreement. In the event of any conflict between any provision set
fOl1h in a Prior Telephone Loan Contract and any provision in this Agreement, the requirements as set forthin this Agreement shall apply. Nothing in this section shall, however, eliminate or modify (i) any special
condition, special affirmative covenant or special negative covenant, if any, set forth in any Prior
Telephone Loan Contract or (ii) alter the repayment terms of any promissory notes which the Borrower has
delivered under any Prior Telephone Loan Contract, except, in either case, as RUS may have specificallyagreed to in writing.
Section 10.12 Headine:s
The headings and sub-headings contained in the titling of this Agreement are intended to be
used for convenience only and do not constitute part of this Agreement.
Section 10.13 Severability
If any term, provision, condition, or any part thereof, of this Agreement, Note(s) or theSecurity Documents shall for any reason be found or held invalid 01' unenforceable by any governmentalagency or com1 of competent jurisdiction, such invalidity or unenforceability shall not affect the remainder
of such term, provision, 01' condition nor any other term, provision, or condition, and this Agreement, theNote(s), and the Security Documents shall survive and be construed as if such invalid or unenforceableterm, provision or condition had not been contained therein.
Section 10.14 Rie:ht of Setoff
Upon the occurrence and during the continuance of any Event of Default, RUS is herebyauthorized at any time, without prior notice to the Bon'ower, to exercise rights of setoff or recoupment andapply any and all amounts held or hereafter held, by RUS, owed to the Borrower, or for the credit oraccount of the Borrower against any and all of the obligations of the Borrower now or hereafter existing
hereunder or under the Note(s), RUS agrees to notify the Bon-ower promptly after any such setoff or
recoupment and the application thereof, provided that the failure to give such notice shall not affect the
validity of such setoff, recoupment or application, The rights of RUS under this section are in addition toany other rights and remedies (including other rights of setoff or recoupment) which RUS may have.
Borrower waives all rights of setoff, deduction, recoupment, or counterclaim.
Section 10.15 Schedules and Attachments
Each Schedule and Attachment attached hereto and referred to herein is each an integral part
of this Agreement.
Section 10.16 Authoritv of Representatives of RUS
In the case of any consent, approval, or waiver from RUS that is required under this
Agreement or any other Loan Document, such consent, approval, or waiver must be in writing and signed
by an authorized RUS representative to be effective. As used in this section
, "
authorized RUS
representative" means the Administrator of RUS or any person to whom the Administrator has officially
delegated specific or general authority to take the action in question.
Page 25
Section 10.17 Amendment of Laws and RUS Ref!u)ations
Nothing contained herein shall restrict in any way RUS' right to amend , rescind, orsupplement any of the RUS Regulations or to seek such changes to existing Laws.
Section 10.18 Thrm.
This Agreement shall remain in effect until one of the following two events has occUlTed:
(a)
(b)
The Bon'ower and RUS replace this Agreement with another written agreement; or
All of the Borrower s obligations under this Agreement have been discharged and
paid,
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be dulyexecuted as of the day and year first above written.
MIDV ALE TELEPHONE EXCHANGE, INC.
Name:
Title:
(Seal)
Attested to by:
Secretaty
THE UNITED STATES OF AMERICA
as Assistant Administrator
Telecommunications Program
of the Rural Utilities Service
Page 26
SCHEDULE 1
Article II Representations and Wan'anties
Paragraph (i) Borrower s address: Midvale Telephone Exchange, Inc.
2205 Keithley Creek Road
Midvale, Idaho 83645
Paragraph U) Borrower s Organization Number: C30686
Paragraph (k) BolTower s Subsidiaries:M & L Enterprises, Inc. d/b/a
Skyline Telephone Company
Paragraph (k) Bon'ower s Parent: None
Article III The Loans
Broadband Loan
Section 3.1(a) Broadband Loan amount:
Section 3. 1 (a)(i) Broadband Loan portion at the cost-of-money interest rate: $0
Section 3.1(a)(i) Broadband Loan portion at the four percent (4%) rate of interest: $0
Telecommunications Loan
Section 3.I(b) Telecommunications Loan amount: $12 145,000
Section 3. J (b )(i) Telecommunications Loan amount at the cost-or-money interest rate: $0
Section 3.1(b)(i) Telecommunications Loan amount five percent (5%) rate of interest: $12,145,000
Telecommunications Loan Guarantee
Section 3.I(c) Telecommunications Loan Guarantee amount:
Bank Loan
Section 3.I(d) Bank Loan amount: $0
Article IV Conditions of Lending
Section4.2(i) funds required on deposit by Broadband bon:ower in accordance with 7 C.
1738.20(b): None
2. The additional conditions to advance refelTed to in Section 4.2(m) are as follows:
8. No Loan funds will be advanced for outside plant construction until site specific
Environmental Reports have been submitted by the Borrower and approved by RUS.
b. No Loan funds will be advanced for the construction ofton facilities until evidence,
satisfactory to RUS, has been received and approved for connecting company concurrence
from Valley Telephone Cooperative for the Cascabel Exchange.
Article V Affirmative Covenants
Section 5.4(a) Additional Funds: None
Section 5.4(a) Additional Purposes: None
Section 5.4(b) Pledged Deposit Account IS NOT required.
Page 27
Section 5.8(b) Additional Reporting Date(s): None
Section 5.12 TIER: 1.50
Section 5.12 TIER Commencement Date: December 31,2011
The additional affim1ative covenants referred to in Section 5.21 are as follows: None
Article VI Negative Covenants
The additional negative covenants referred to in Section 6.17 are as follows: None
Article X Miscellaneous
Section 10.1 Borrower s address for purposes ofnotification:
Midvale Telephone Exchange, Inc.
2205 Keithley Creek Road
Midvale, Idaho 83645
Attention: MI'. Lane R. Williams
Telephone: [phone]
Fax: [phone]
Section 10.1 Address for BolTower s notification copy:
Givens Pursley, LLP
601 W. Bannoclt Street
Boise, Idaho 83701
Telephone: [phone]
Fax: [phone]
Section 10.1 Address for RUS' notification copy:
United States Department of Agriculture
Rural Utilities Service
1400 Independence Avenue, SW
Room 2839-S, STOP 1595
Attention: MI'. Jerry H. BI'ent, Director
Telephone [phone]
Fax: [phone]
Page 28
Attachment
Not applicable
ATTACHMENT 2
Equal Opportunity Contract Provisions
During the perfonnance of this contract, the contractor agrees as follows:
(a)The contractor shall not discriminate against any employee 01' applicant for employment because
. of race, color, religion, sex, or national origin. The contractor shall 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 belimited 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 non-discrimination clause.
(b)The contractor shall, in all solicitations or advertisements for employees placed by or on behalf of
the contractor, state that aU qualified applicants shall receive consideration for employment
without regard to race, color, religion, sex, or national origin.
(c)The contractor shall 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 worker s representative of the contractor s commitments under
this section, and shall post copies of the notice in conspicuous place available to employees and
applicants for employment.
(d)The contractor shall comply with all provisions of Executive Order 11246 of September 24
965and of the rules, regulations, and relevant orders oYthe Secretary of Labor.
The contractor shall 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 shall permit access to his books, records, and accounts by the administering agency
and the Secretary of Labor for purposes of investigation to asce11ain compliance with such rules
regulation, and orders.
(e)
(f)In the event of the contractor s non-compliance with the non-discriminatic:m clauses of this
contract or with any of the said rules, regulations, or orders, this contract may be cancelled,
terminated, or suspended in whole or part by the Government, and the contractor may be declared
ineligible for further Government contracts or federally assisted construction contracts in
accordance with the procedure authorized in Executive Order 11246 of September 14, 1965, and
such other sanctions may be imposed and remedies invoked as provided in said Executive Order
or by rule, regulation, or order of the Secretary of Labor, or as otherwise provided by law.
(g)
The contractor shall include the provisions of paragraphs (a) through (g) 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, dated September 24, 1965, so that such
provisions shall be binding upon each subcontractor or vendor. The contractor shall 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 non-compliance; 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 agency, the contractor may request the
United States to enter into such litigation to protect the interests of the United States.
ATTACHMENT 3
UNIFORM SYSTEM OF ACCOUNTS
All references regarding account numbers are to 47 C.R. 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 Borrower/Mortgagor
Local Network Services Revenues
Network Access Services Revenues
Long Distance Network Services Revenues)
Miscellaneous Revenues
LESS: Uncollectible Revenues
5000s thru 5300s
Other Operating Income and Expense
Non-operating Income and Expense
Income Effect of jurisdictional Rate-making Difference - Net
Non-regulated Net Income
Other Non-regulated Revenues
LESS: balances of the following accounts:
Plant Specific Operations Expense
Plant Non-specific Operations Expense
Customer Operations
Corporate Operations
Operating Taxes
Non-operating Taxes
Interest and Related Items
Extraordinary Items
7100*7100
7300*7300
7910 7910
7990 7990
7991 7991
6\005 thru 6700s
7200*7200
7400*7400
7500*7500
7600*7600
INTEREST EXPENSE: the sum of the balances of the following accounts of the Borrower/Mortgagor
Interest and Related Items
Interest on Funded Debt
Interest Expense - Capita! Leases
Amortization of Debt Issuance Expense
Other Interest Deductions
LESS: Allowance for Funds Used During Construction
7500*
7510
7520
7530
7540
7340
7500
7300.4
TOTAL TELECOMMUNICATIONS PLANT: the sum oftlle balances of the following accounts of the
Borrower/Mortgagor
Telecommunications Plant in Service
Property Held for Future Telecommunications Use
Telecommunications Plant Under Construction - ShO11 Telm
Telecommunications Plant Under Construction- Long Term
Telecommunications Plant Adjustment
Non-Operating Plant
Goodwill
2001
2002
2003
2004
2005
2006
2007
2001
2002
2003
2004
2005
2006
2007
*Summary Accounts
NET WORTH OR EQUITY: the sum ofllie balances of the following accounts oHhe Borrower/Mortgagor
Capital Stock
Additional Paid-in-Capital
TreasUlY Stock
Other Capital
Retained Earnings
4510
4520
4530
4540
4550
NOTE: For Non-Profit Organizations - Owner s equity shall be shown in sub-accounts of 4540 and 4550.
TOTAL ASSETS: the sum of the balances of the following accounts of the Borrower/Mortgagor
Current Assets
Non-Current Assets
Total Telecommunications Plant
LESS: Accumulated Depreciation
LESS: Accumulated Am0l1ization
llOOs
1400s
2001
3100
3400
thru
thm
thm
thru
thl1l
DEPRECIATION AND AMORTIZATION: the sum of the balances of the following accounts of the
Borrower/Mol1gagor
Depreciation and Amortization Expenses
Depreciation Expense - Telecommunications Plant in Service
Depreciation Expense - Property Held for Future Telecommunications Use
Amortization Expense - Tangible
Amol1ization Expense - Intangible
Amortization Expense - Other
6560*
6561
6562
6563
6564
6565
1300s
1500s
2007
3300s
3600s
EXHIBIT B
Promissory Note
(attached)
CONSENT OF DIRECTORS - 5
S:\CLlENTS\1614\84\CONSENT RESOLUTION (AUTHORIZING LOAN) FINAL.DOC
PROMISSORY NOTE
Idaho 514-Hll Midvale
Midvale, Idaho
THIS PROMISSORY NOTE (hereinafter the "Note
, "
) dated as of September 4 2007, is
made by MIDVALE TELEPHONE EXCHANGE, INC. (hereinafter the "Bon-ower ) a
corporation, duly organized and existing under the laws of the State of Idaho, and the UNITEDSTATES OF AMERICA, (hereinafter ,the "Government ) acting through the Administrator of
the Rural Utilities Service. For value received, the Borrower promises to pay to the order of the
Government, at the United States Tr~asury, Washington, D., Twelve Million One Hundred
Forty Five Thousand Dollars ($12 145 000), with interest payable, from the date of each
advance, on the amount advanced by the Government (hereinafter the "Advance ) pursuant to acertain Loan Agreement, dated as of the same date as this Note (hereinafter the "LoanAgreement
, "
) made by and between the BolTower and the Government, and remaining unpaid
from time to time, in the time and manner herein provided:
1. Interest Rate. Interest on each Advance shall be at the rate of five per cent (5%) per annum.
2. Maturity Date. On a date nineteen (19) years after the date hereof, the principal hereof
advanced pursuant to the Loan Agreement and remaining unpaid, if any, and interest thereon
shall be due and payable (hereinafter the "Maturity Date.
3. Fund Advance Period. Funds will be advanced pursuant to the Loan Agreement. The fund
advance period for this Note begins on the date hereof and terminates five (5) years from the date
of this Note (hereinafter the "Termination Date.) No funds will be advanced .subsequent to the
Termination Date unless the Administrator extends the fund advance period in accordance with
the Loan Agreement.
4. Payments on Advances.
(a)Made Within Two (2) Years. Interest on Advances made during the first two (2)
years from the date of the first Advance hereunder, and remaining unpaid, shall be
payable on the last day of each month (hereinafter the "Monthly Payment Date
beginning on the last day of the month following the month of each Advance for
the period ending two (2) years ITem the date of the first Advance hereunder.
Thereafter, to and including the Maturity Date, the BolTower shall make a
payment every Monthly Payment Date on each Advance which shall be: (i)
substantially equal to all subs~quent monthly payments and (ii) in an amount that
will pay all principal and interest due on each Advance no later than the Maturity
Date.
Page 1
(b)Made After Two (2) Years. Interest and principal payments on Advances made
more than two (2) years after the date of the first Advance hereunder shall be
repaid in installments beginning with the Monthly Payment Date of the monthfollowing each Advance and ending on the Maturity Date. The first such payment
on an Advance shall be increased by the amount of interest accruing between the
date of the Advance and the first day of the next month. Thereafter, to andincluding the Maturity Date, the Borrower shall malce a payment every Monthly
Payment Date on each such Advance (i) substantially equal to every other
monthly payment on such Advance, and (ii) 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 payment on the Advances made within two (2)
years from the date of the first Advance hereunder and remaining unpaid.
5. Application of Payments. Each payment made on this Note shall be applied as follows: First
to expenses, costs, and penalties; Second, to late charges; Third, to the payment of interest onprincipal; and Fourth, to principal.
6. Prepayment. All, or a portion of the outstanding balance, of any Advance may be prepaid on
any payment date, as herein provided. However, so long as any of the principal advancedpursuant to the Loan Agreement shall remain unpaid, the Borrower shall be obligated to make
the monthly payment on account of principal and interest, in the amount provided herein, unlessthe Borrower and the Government shall otherwise agree, in writing.
7. Late Payments. A late charge shall be charged on any payment not made within five (5) days
of the date the payment becomes due. . The . late charge rate shall be computed on the payment
from the due date at a rate equal to the rate of the cost of funds to the United States Treasury asprescribed and published by the Secretary of the Treasury. In addition, the Borrower shall pay
administrative costs and penalty charges assessed in accordance with applicable Governmentregulations. Acceptance by the Government of a late payment shall not be deemed to be awaiver of any right or remedy ofthe Government.
8. Security. This Note is . secured by a security interest in collateral described in the Restated
Mortgage, Security Agreement and Financing Statement, dated as of the same date as this Note
made by and among the Borrower, the Government and the Rural Telephone Finance
Cooperative (such mortgage, as amended, supplemented, consolidated or restated from time to
time, hereinafter called the "Mortgage.) Rights and obligations with respect to the collateral are
stated in the Mortgage.
9. Noteholder. This Note evidences indebtedness created by a loan made under the Rural
Electrification Act (7 U.C. ~ 901 et seq.
).
The Government shall be, and shall have all rights
, holder of this Note. If the Government shall at any time assign this Note and insure the
payment hereof, the Borrower 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.
Page 2
10. Default. In an event of default, as provided in the Loan Agreement and/or Mortgage, all
principal advanced pursuant to the Loan Agreement and remaining unpaid on this Note, and all
interest thereon may be declared or may become due and payable in the manner and with the
effect provided in the Loan Agreement and/or Mortgage.
11. Costs. The Bon-ower shall pay any and all costs and expenses incurred in connection with
the exercise of rights or the enforcement of remedies, as set forth in the Loan Agreement and/or
Mortgage.
12. Waivers. The BolTower waives demand, presentment for payment, notice of non-payment
notice of dishonor, protest, and notice of non-payment of this Note.
13. Obligations. The obligations of the Bon-ower hereunder are absolute and unconditional
irrespective of any defense or any right to set off, recoupment, or counterclaim it might
otherwise have against the Government.
IN WITNESS WHEREOF, the Bon'ower has caused this Note to be signed in its
corporate or legal name and its corporate seal, if any, to be hereunto affixed and attested by its
officers thereunto duly authorized, all as of the day and year first above written.
MIDV ALE TELEPHONE EXCHANGE, INC.
Name:
Title:
(SEAL)
Attested to by:
Secretary
Page 3
EXHIBIT C
Restated Mortgage, Security Agreement and Financing Statement
(attached)
CONSENT OF DIRECTORS.
S:\CLlENTS\1614\84\CONSENT RESOLUTiON (AUTHORIZING LOAN) FiNALDOC
RUS DESIGNATION:
Idaho 514-H II Midvale
RESTATED MORTGAGE
SECURITY AGREEMENT
AND
FINANCING STATEMENT
made by and among
MIDV ALE TELEPHONE EXCHANGE, INC.
2205 Keithley Creek Road
Midvale, Idaho 83645
as Mortgagor and Debtor
THE UNITED STATES OF AMERICA
Rural Utilities Service
Washington, D.c. 20250-1500
as Mortgagee and secured party,
and
RURAL TELEPHONE FINANCE COOPERATIVE
220 I Cooperative Way
Herndon, Virginia 20171-3025
as Mortgagee and secured party.
THIS INSTRUMENT GRANTS A SECURITY INTEREST IN A TRANSMITTING UTILITY.
THE DEBTOR AS MORTGAGOR IS A TR..\NSMITTING UTILITY.THIS INSTRUMENT CONTAINS PROVISIONS THAT COVER REAL AND PERSONAL PROPERTY,
AFTER-ACQUIRED PROPERTY, FIXTURES, PROCEEDS, FUTURE ADVANCES AND FUTUREOBLIGA TIONS.
THIS INSTRUMENT WAS DRAFTED BY THE RURAL UTILITIES DIVISION, OFFICE OF
THE GENERAL COUNSEL, U.S. DEPARTMENT OF AGRICULTURE, WASHINGTON, D.C. 20250-1400.
ORGANIZA TION NUMBER: C30686.
No. -W-
THIS RESTATED MORTGAGE SECURITY AGREEMENT AND FINANCING
STATEMENT (hereinafter this "Restated Mortgage,) dated as of September 4, 2007, made by
and between MIDV ALE TELEPHONE EXCHANGE, INC. (hereinafter the "Mortgagor ) a
corporation existing under the laws of the State of Idaho, as Mortgagor and Debtor and THE
UNITED STATES OF AMERICA (hereinafter the "Government ) acting through the
Administrator of the Rural Utilities Service ("RUS") as Mortgagee and secured party and the
RURAL TELEPHONE FINANCE COOPERATIVE (hereinafter called "Co-Lender ) a
District of Columbia corporation (the Government and Co-Lender being hereinafter sometimes
collectively called the "Mortgagees.
RECITALS
WHEREAS, the Mortgagor, the Government and the Co-Lender are parties to that certain mortgage (the
Prior Mortgage ) identified in Schedule A hereof;
WHEREAS, the MOitgagor deems it necessary to borrow funds to provide broadband and/or
telecommunication services and to issue its promissory notes and other debt obligations from time to time in one or
more series, and to mortgage and pledge its property herein described or mentioned to secure payment of the same;
WHEREAS, the MOItgagor desires to enter into this Restated MOitgage pursuant to which all secured debt
of the Mortgagor hereunder shall be secured on parity;
WHEREAS, this Restated Mortgage restates and consolidates the Prior Mortgage while preserving the
priority of the Lien under the Prior Mortgage securing the payment of Mortgagor s outstanding obligations secured
under the Prior Mortgage, which indebtedness is described more particularly by listing the same under "Outstanding
RUS Notes" and "Outstanding Co-Lender Notes" in Schedule A hel'eof;
WHEREAS, the Mortgagor has determined at this time to borrow additional funds or obtain loan
guarantees from RUS and/or the Co-Lender which indebtedness is described more particularly by listing the same
under "CUlTent RUS Notes" in Schedule A hereof and/or "Current Co-Lender Notes" in Schedule A hereof;
WHEREAS, to the extent that any of the property described or referred to in this Restated MOltgage isgovellled by the provisions of the Uniform Commercial Code of any State (hereinafter the "UCC ) the parties
hereto desire that this Restated Mortgage be regarded as a "security agreement" under the UCC; and
WHEREAS, all acts necessary to make this Restated Mortgage a valid and binding legal instrument for the
security of such notes and obligations, subject to the terms of this Restated MOitgage, have b~en in all respects duly
authorized
NOW, THEREFORE, this Restated MOitgage
WITNESSETH: That each of the instruments constituting the Prior Moltgages are hereby amended
supplemented, restated, and consolidated to read in their entirety fi.om and after the date of execution of this
Restated MOltgage, as follows:
GRANTING CLAUSE
NOW, THEREFORE, THIS RESTATED MORTGAGE WITNESSETH: That to secure the payment of
the principal, interest, and pre mium, if any, on the Outstanding Notes, Current Notes and all Notes secured
hereunder according to their tenor and effect, and to secure the performance of all provisions therein, in the Loan
Agreements and herein contained and in consideration of the covenants herein contained, the purchase or guarantee
of Notes by the guarantors or holders thereof and other good and valuable consideration, the Mortgagor has
mortgaged, pledged and granted a continuing security interest in, and by these presents does hereby grant, bargain
sell, alienate, remise, release, convey, assign, transfer, hypothecate, pledge, set over and confirm, pledge, and grant
Page 2
unto the Mortgagees, for the purposes herein expressed, a continuing security interest and lien in all property, assets
rights, privileges, licenses and franchises of the Mortgagor of every kind and description, real, personal or mixed,
tangible and intangible, of the kind or nature specifically mentioned herein, or any other kind or nature now owned
or hereafter acquired or arising by the Mortgagor (by purchase, consolidation, merger, donation, construction
erection or in any other way) wherever located, including without limitation all or in part the following (hereinafter
the "Mortgaged Propelty:
All right, title, and interest of the MOltgagor in and to the Existing Facilities, buildings, plants, works,
improvements, structures, estates, grants, franchises, easements, rights, privileges and propelties, whether real,
personal, or mixed, tangible or intangible, of every kind or description, now or hereafter owned, leased, constructed
or acquired by the MOltgagor, wherever located, and in and to all extensions, improvements, and additions thereto
including but not limited to all buildings, plants, works, structures, towers, antennas, fixtures, apparatus, materials,
supplies, machinery, tools, implements, poles, posts, crossarms, conduits, ducts, lines, wires, cables, whether
underground, overhead, or otherwise, exchanges, switches, including, without limitation, host 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, equipment, and any and all other
property of every kind, nature, and description, used, useful, or acquired for use by the MOltgagor in connection
therewith, and including, without limitation, the following property:
(a)The Existing Facilities located in the Counties listed in Schedule B in the States identified inSchedule B.
(b)The real estate described on Schedule B, and by this reference made a part hereof, as if fully set
forth at length at this point.
(c)lfthe real estate described jn Schedule B 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 Schedule B as though fully set forth at length therein.
(d)The real estate described in Schedule B shall also include all plants, works, structures, erections
reservoirs, dams, buildings, fixtures, towers, antennas, and improvements now or hereafter located
on such real estate, and all tenements, hereditaments, and appurtenances now or hereafter
belonging, or in any way appertaining, thereunto,
AI! 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 its propelties, facilities, systems, or businesses, whether
underground, overhead, or othelwise, wherever located;
III
All right, title, and interest of the M0l1gagor in, to, and under any and all licenses and permits (including
without limitation those granted by the FCC), franchises, ordinances, and privileges, whether heretofore or hereafter
granted, issued, or executed, to it or to its assignors by the Government, or by any state, 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 the Mortgagor s properties, facilities
systems, or businesses, insofar as the same may by law be assigned, granted, bargained, sold, conveyed, transferred
mortgaged, or pledged;
Page 3
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 (such as inventory, equipment and any accessions thereto),
instruments (such as promissory notes or chattel paper, electronic or otherwise), documents, accounts (such as
deposit accounts or trust accounts pursuant hereto or to a loan agreement), letter-of-credit rights, investment
property (such as certificated and uncertificated securities or security entitlements and accounts), software, general
intangibles (such as payment intangibles), supporting obligations, contract rights or rights to the payment of money,
insurance claims, and proceeds (as such terms are presently and hereafter defined in the UCC; provided, however
that the term "instrument" shall be such term as defined in Article 9 ofthe UCC 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, corporation, or other corporate
entity relating to the Mortgaged Property (including contracts for the lease, occupancy, or sale of the Mortgage
Property, or any portion thereot);
All right, title, and interest of the Mortgagor in, to, and under any and all books, records and
correspondence relating to the M0I1gage Property, including, but not limited to, all records, ledgers, leases
computer and automatic machinelY, software, programs, databases, disc or tape files, print-outs, batches, nll1S, and
other electronically-prepared information indicating, summarizing, evidencing, or otherwise necessary or helpful ill
the collection or realization on the M0I1gaged Property;
VII
Also, all right, title, and interest of the Mortgagor in, to, and under all other property, real or personal
tangible or intangible, of every kind, nature, and description , and wherever situated, now or hereafter owned or
leased by the Mortgagor, it being the intention hereof that all such propel1y 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 Mol1gagor and were specifically described herein
to the extent only, however, that the subjection of such property to the lien hereof shall not be contrary to law;
Together with all rents, income, revenues, proceeds, products, profits and benefits at any time derived
received, 01' had from any and all of the above-described property of the Mortgagor;
Provided, however, that except as provided in section 2. \3 of Article II herein, no automobiles, trucks
trailers, tractors or other vehicles (including without limitation aircraft or ships, if any) owned or used by the
Mortgagor shall be included in the Mortgaged Property.
TO HAVE AND TO HOLD all or in part the Mortgaged Property unto the Mortgagees and its respective
assigns forever, to secure equally and ratably the payment of the principal and interest on the Notes, according to
their tenor and effect, without preference, priority, or distinction as to interest, principal (except as otherwise
specifically provided herein), lien, or otherwise, of any note over any other note by reason of the priority in time of
the execution, delivery, maturity, assignment, negotiation, 01' otherwise, thereof, and to secure the due performance
of the covenants, agreements and provisions herein and contained in the Prior Telephone Loan Contracts and in the
Loan Agreement, and for the uses and purposes and upon the terms, conditions, provisos, and agreements herein
expressed and declared,
Page 4
ARTICLE I
SECTION 1.1 Definitions
In addition to the tenns defined elsewhere in this Restated MOitgage, the terms defined in this Article I
shall have the meanings specified herein and under the UCC, unless the context clearly requires otherwise. 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.C. 90 I et seq.
Additional Co-Lender Notes" shall mean any notes, including renewal and substitute notes, issued by the
Mortgagor to the Co-Lender pursuant to Article II , Section 2.1 of this Mortgage.
Additional Notes" shall mean the Additional Co-Lender Notes and the Additional RUS Notes.
Additional RUS Notes" shall mean any notes, including renewal and substitute notes, issued by the
Mortgagor to RUS or FFB and guaranteed by RUS, pursuant to Article II, Section 2.1 of this Mortgage.
Business Day" shall mean any day that RUS, the Depaltment of Treasury and the Co-Lender are all open
for business.
Cunent Co-Lender Notes shaH mean the notes more particularly described in Schedule A hereto
heretofore or about to be executed and delivered by the Mortgagor to the Co-Lender.
Current Notes" shall mean the CuJ1'ent Co-Lender Notes and the Current RUS Notes.
Current RUS Notes" shan mean the notes more particularly described in Schedule A hereto, heretofore or
about to be executed and delivered by the Mortgagor to RUS to evidence obligations to RUS on account of loans
made or guaranteed by RUS,
Co-Lender Loan Agreement" shall mean the Co-Lender Loan Agreement more particularly described in
Schedule A hereto.
Co-Lender Notes" shall mean the Outstanding Co-Lender Notes, Current Co-Lender Notes and Additional
Co-Lender Notes,
Existing Facilities" shall mean the telephone system and other facilities presently owned by the Mortgagor
identified in the Granting Clause of this Moltgage,
Interest Expense" shall have the meaning as defined in Attachment I.
Loan Agreements" shall mean the Co-Lender Loan Agreement and the RUS Loan Agreement.
Majority Noteholders" shall have the meaning as defined in Section 3.3.
Mortgage Debt Limit" shall mean the maximum outstanding principal debt owing on Notes secured under
this Mortgage, as set forth in Schedule A hereto.
Net Income" or "Net Margins" shall have the meaning as defined in Attachment I,
Notes" shall mean collectively the Co-Lender Notes and the RUS Notes.
Outstanding Co-Lender Notes" shall mean the notes evidencing outstanding indebtedness of the
MOIigagor to the Co-Lender, described under the heading "Outstanding Co-Lender Notes" in Schedule A hereto.
Page 5
Outstanding Notes" shall mean the'Outstanding Co-Lender Notes and Outstanding RUS Notes.
Outstanding RUS Notes" shall mean the notes evidencing outstanding indebtedness of the MOI1gagor to
the Government, described under the heading "Outstanding RUS Notes" in Schedule A hereto.
Permitted Encumbrances" shall have the meaning as defined in Section 2.2(a).
Prior Mortgages" shall mean the instruments identified as such in Schedule A hereto.
Restated Mortgage" shall mean this Restated Mortgage, Security Agreement and Financing Statement
including any amendments or supplements thereto from time to time.
hereto.
RUS Loan Agreement" shall mean the RUS Loan Agreement more particularly described in Schedule A
Notes.
RUS Notes" shall mean the Outstanding RUS Notes, the Current RUS Notes, and the Additional RUS
SECTION 1.2
(a)
(b)
(c)
Additional Notes
Additional RUS Notes,
(i)Without the prior consent of the Co-Lender, the Mortgagor may issue Additional RUS
Notes to the Government to evidence loans made or guaranteed pursuant to the Act when
written acknowledgment is obtained from RUS and the Co-Lender indicating that RUS'
and the Co-Lender s pro fonna 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 TIER of not less than 1.5; a debt service coverage (as such term is defined in
7 C.R. 1744., hereinafter "DSC") of not less than 1.25; and an Equity to Assets ratio
equal to or greater than 40%, taking into account the interest to be charged on the
Additional RUS Notes proposed to be executed and delivered to evidence such loan.
(ii)No Additional RUS Notes shall be secu~ed by this Restated Mortgage without the prior
written consent of the Co-Lender, except as provided in the paragraph immediately
above; provided. however, no such prior written approval is required for Additional RUS
Notes which refinance, renew or substitute for any outstanding RUS Note.
Additional Co-Lender Notes. No Additional Co-Lender Notes shall be secured by this Restated
Mortgage without the prior written consent of RUS; provided, however no such prior approval is
required for Additional Co-Lender Notes which refinance, renew or substitute for any outstanding
Co-Lender Note.
All Additional Notes. Additional Notes shall contain such pl'Ovisions and shall be executed and
delivered upon such terms and conditions as the board of directors, members, or other relevant
governing body of the Mortgagor authorizing the execution and delivery thereof, shall prescribe;
provided. however that the outstanding principal balances owing Oil the Notes shall not at anyone
time exceed the limit set fO11h in Schedule A (hereinaf1er the "Mortgage Debt Limit,) and no
Note shalll11ature mOre than fifty (50) years after the date hereof. Additional Notes, when and as
executed and delivered, shall be secured by this Restated Mortgage, equally and ratably with all
other Outstanding Notes, without preference, priority, 01' distinction of any Note over any other
Note by reason of the priority of the time of the execution, delivery, maturity, assignment, or
negotiation thereof. As used in this Restated Mortgage, the term "directors" includes trustees.
Page 6
SECTION 1.3 Sul)Dlemel1tal Mortl!ae:e
The MOltgagor, when authorized by resoilltion(s) of its board of directors, members, or other relevant
goveming body, may from time to time execute, acknowledge, deliver, record, and file mortgages supplemental to
this Restated Moltgage which thereafter shall fonn a palt hereof, for the purpose of formally confirming this
Restated Mortgage as security for the Notes.
ARTICLE 11- PARTICULAR COVENANTS OF THE MORTGAGOR
The Mortgagor covenants with the MOItgagees and the holders of Notes secured hereby (hereinafter
collectively the "Noteholders ) as follows:
SECTION 2.Authority to Execute and Deliver Notes. thc Loan Ae:reemcnts and Morte:ae:e: All Action
Takcn: Enforccable Oblie:ations
The Mortgagor has all requisite corporate and legal power to enter into and perform its obligations under
the Outstanding Notes, the Cun-ent Notes, the Loan Agreements, and this Restated MOItgage and to execute and
deliver Additjonal Notes; and all official action on its palt for the execution and delivery of the Outstanding Notes
the Cull'ent Notes, the Loan Agreements, and this Restated Mortgage has been duly and effectively taken; and the
Outstanding Notes, the Cu11'ent Notes , the Loan Agreements, and this Restated MOItgage are, or when executed and
delivered will be, the valid and enforceable obligations of the Mortgagor in accordance with their respective tenns.
SECTION 2.
(a)
Warranty of Title
At the time of execution and delivelY of this instrument, the Mortgagor has good and marketable
title in fee simple to the Mortgaged Property, free and clear of any deed of trust, mortgage, lien
charge, or encumbrance thereon or affecting the title thereto, except for the following Permitted
Encumbrances:
(i)as to the Mortgaged Property that is real property, restrictions, exceptions, reservations,
conditions, limitations, interests, and other matters which are set forth or referred to in
deeds or other conveyance documents, and each of which fits one or more of the clauses
of th is defin ition; provided however, that such matters do not in the aggregate materially
detract from the value of the Mortgaged Property taken as a whole and do not materially
impair the use of such property for the purposes for which it is held by the Mortgagor;
(ii)liens for taxes, assessments, and other governmental charges which are not delinquent;
(iii)(iens for taxes, assessments, and other govel'l1mental charges already delinquent which
are currently being contested in good faith by appropriate proceedings; provided, the
Mortgagor shall have set aside on its books adequate reserves with respect thereto;
(iv)mechanics , workmen s, repairmen , materialmen s, warehousemen s and carriers' liens
and other similar liens arising in the ordinary course of business for charges which are
not delinquent, 01' which are being contested in good faith and have not proceeded to
judgment; provided, the Mortgagor shall have set aside on its books adequate reserves
with respect thereto;
(v)liens in respect ofjudgl11ents or awards with respect to which the Mortgagor shall in good
faith cUITently be prosecuting an appeal or proceedings for review and with respect to
which the Mortgagor shall have secured a stay of execution pending such appeal or
proceedings for review; provided, the Mortgagor shall have set aside on its books
adequate reserves with respect thereto;
Page 7
(vi)
(vii)
(viii)
(ix)
(x)
(xi)
(xii)
(xiii)
easements and similar rights granted by the Mortgagor over, 01' in respect of, any
Mortgaged Property, provided that in the opinion of the Mortgagor s board, members,
other relevant governing body, or official acceptable to RUS, such grant will not impair
the usefulness of such property in the conduct of the Mortgagor s business and wilJ not be
prejudicial to the interests of the Mortgagees, and similar rights granted by any
predecessor in title of the MOitgagor;
easements, leases, reservations, 01' other rights of others in any property of the Moltgagor
for streets, roads, bridges, pipes, pipe lines, railroads, electric transmission and
distribution lines, telegraph and telephone lines, the removal of oil, gas, coal or other
minerals and other similar purposes, flood rights, river control and development rights
sewage and drainage rights, restrictions against pollution and zoning laws and minor
defects and irregularities in the record of title; provided, that the above do not materially
affect the marketability of title to such property and do not in the aggregate materially
impair the use of the Mortgaged Property taken as a whole for the purposes for which it is
held by the Mortgagor;
liens upon lands over which easements 01' rights of way are acquired by the Mortgagor
for any of the purposes specified in Clause (vii) of this definition, securing indebtedness
neither created, assumed, nor guaranteed by the Mortgagor, nor on account of which it
customarily pays interest, which liens do not materially impair the use of such easements
or rights of way for the purposes for which they are held by the Mortgagor;
leases existing at the date of this instrument affecting propelty owned by the Mortgagor
at said date which have been previously disclosed to the Mortgagees in writing, and
leases for a term of not more than two years (including any extensions 01' renewals)
affecting prope1ty acquired by the Mortgagor after said date;
terminable or short term leases or permits for occupancy which expressly grant to the
MOltgagor the right to terminate at any time on not more than six months' notice and
which occupancy does not intelfere with the operation of the business of the Mortgagor;
any lien or privilege vested in any lessor, licensor, or permittor for rent or other
obligations or acts to be performed, the payment or performance of which other
obligations or acts is required under leases, subleases, licenses or permits, so long as the
payment of such rent or the performance of such other obligations or acts is not
delinquent;
liens 01' privileges of any employees of the Mottgagor for salary or wages earned but not
yet payable;
the burdens of any law, governmental regulation, 01' permit requiring the Mortgagor
maintain certain facilities or to perform celtain acts as a condition of the MOitgagor
occupancy of certain real estate, or prohibiting the interference with any public lands 01'
any river or stream or navigable waters;
(xiv)any irregularities in or deficiencies of title to any rights-of-way for pipe lines, telephone
lines, telegraph lines, power lines or appultenances thereto, 01' other improvements
thereon, and to any real estate used or to be used primarily for right-of-way purposes;
provided, that in the opinion of counsel for the Mortgagor; (I) the Mortgagor shall have
obtained from the apparent owner of the lands or estates therein covered by any such
right-of-way, a sufficient right, by the terms of the instrument granting such right-of-way,
to the use thereof for the construction, operation, or maintenance of the lines
Page 8
SECTION 2.
(xv)
(xvi)
(xvii)
(xviii)
(xix)
(xx)
(xxi)
appUltenances, 01' improvements for which the same are used or to be used; or (2) the
Mortgagor has power under eminent domain, or similar statutes, to remove such
irregularities or deficiencies;
rights reserved to, or vested in, any municipal, governmental, or other public authority to
control or regulate any property of the Mortgagor, or to use such property in any manner
which rights do not materially impair the use of such property, for the purposes it is held
by the Mortgagor;
any obligations or duties affecting the property of the Mortgagor, to any municipal
governmental, or other public authority with respect to any franchise, grant, license or
permit;
any right which any municipal, govenllnental, or other public authority may have by
virtue of any franchise, license, contract or statute (I) to purchase, (2) to designate a
purchaser of, or (3) to order the sale of, any property of the Moltgagor upon payment of
cash or reasonable compensation therefor; or to terminate any franchise, license or other
rights; or to regulate the property and business of the Mortgagor; provided however, that
nothing in this clause is intended to waive any claim or rights that the Government may
otherwise have under federal laws;
any lien required by law or government regulation as a condition to the transaction of any
business or the exercise of any privilege or license, or to enable the Mortgagor to
maintain self-insurance or to participate in any fund established to cover any insurance
risks or in connection with workmen s compensation, unemployment insurance, old age
pensions, or other social security, or to share in the privileges or benefits required for
companies participating in such arrangements; provided however, that nothing in this
clause is intended to waive any claim or rights that the Government may otherwise have
under federal laws;
liens arising out of any defeased mortgage or indenture of the MOltgagor;
the undivided interest of other owners, and liens on such undivided interests, in propelty
owned jointly with the Mortgagor, as well as the rights of such owners to such property
pursuant to the ownership contracts; and/or
this Restated Mortgage and any Prior Mortgages.
(b)The Mortgagor warrants that it has good right and lawful authority to mortgage the Mortgaged
Property for the purposes herein expressed.
At the time of execution and delivery of this Restated Mortgage, the MOitgagor lawfully owns and
is possessed of the personal properly described in the Granting Clauses herein, free and clear of
any deed of trust, mortgage, lien, charge, or encumbrance thereon or affecting the title thereto
except Permit1ed Encumbrances.
(c)
Maintain Superior Lien of MOI.teal!e. After-AcQuired Property. Further Assurances. and
Recordilll!
The Mortgagor will, so long as any of the Notes shall be outstanding, maintain and preserve the
lien of this Restated Moltgage superior to all other liens affecting the MOltgaged Property, and
will execute, file and/or record such financing statements, continuation statements, mortgages or
other security instruments as necessary to maintain such superior lien and will forever warrant and
defend the title to said property against any and all claims and demands whatsoever.
(a)
Page 9
(b)
(c)
SECTION 2.4
AH property of evelY kind acquired by the Mortgagor after the date hereof, shaH, immediately
upon the acquisition thereof by the Mortgagor, and without any further mortgage, conveyance, or
assignment, become subject to the lien of this Restated Mortgage, Nevertheless, the Mortgagor
will do, execute, acknowledge, and deliver any and all such further acts, conveyances, mortgages,
security agreements, financing statements, and assurances as either Mortgagee shall require for
accomplishing the purposes of this Restated Moltgage.
The Mortgagor will cause this Restated Moltgage and all supplemental moltgages and other
instruments of further assurance, including all financing statements covering security interests in
personal property, to be promptly recorded, registered and filed, and will execute and file such
financing statements and cause to be issued and filed such continuation statements, all in such
manner and place as may be required by law, or requested by either Mortgagee, fully to preserve
and protect the rights of the MO1tgagees and Noteholders hereunder to the Mortgaged Property.
Neeative Pledee
The Borrower shaH not create, incur, 01' suffer any lien, mortgage, pledge, assignment, 01' other
encumbrance on, or security interest in, the Mortgaged Propelty, other than the Pennitted Encumbrances.
SECTION 2.Payment of Taxes
The Mortgagor will promptly payor discharge any and all obligations for which, or on account of which
any lien, claim, 01' charge against the Mortgagor s property might exist or could be created, and for any and all
lawful taxes, rates, levies, or assessments imposed upon, 01' accruing upon , any of the Mortgagor s property
(whether taxed to the Mortgagor or to any Noteholder), franchises, earnings, or businesses, as and when the same
shall become due and payable; and whenever called upon to do so, the Mortgagor will furnish to the Mortgagees or
to any NotehoJder adequate proof of such payment or discharge.
SECTION 2.ayrncnt of Notes and Secured Oblie:ations
The Mortgagor will duly and punctually pay the principal and interest on the Notes, at the time, place, andmanner provided therein, according to the true intent and meaning thereof, as well as all other sums becoming due
hereunder.
SECTION 2.Prepayment of Co-Lendel' Notes and RUS Notes
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 applicable Loan Agreement; provided that any
such prepayment shall be applied pro rata to the RUS Notes and the Co-Lender Notes, according to the proportions
that the aggregate unpaid principal amount of the RUS Notes and the aggregate unpaid principal amount of the Co-
Lender Notes, respectively, bear to the aggregate unpaid principal amount of the RUS Notes and the Co-Lender
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, 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 refinancing note shall not be considered a prepayment provided that the
refinancing note will result in (I) an economic benefit defined as a present value savings when comparing the cash
flows of the refinancing note with the cash flows of the note being refinanced; (2) will not cause the TIER as of the
most recent December 31 RUS Form 479, when recalculated by substituting the actual interest expense of the note
to be refinanced with the projected interest expense of the refinancing 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 Form 479,
when recalculated by substituting the scheduled principal payments of the note to be refunded with the scheduled
principal repayments of the refinancing note, to be less than 1.25. Additionally, the Majority RUS Noteholders and
the Majority Co-Lender Noteholders may agree that such 110teholder shall not be paid the pro rata prepayment
which such noteholder may be entitled hereunder.
Page 10
SECTION 2.Restrictions on Transfel'S of Propertv
Except as provided in Section 2.9 below, the Mortgagor shall not sell, lease 01' transfer any Mortgaged
Property to any other person 01' entity (including any subsidiary 01' affiliate of the Mortgagor) without the prior
written consent of the Mortgagees.
SECTION 2.Disposal of Obsolete or Damae:ed Morte:ae:ed Propertv
So long as the Mortgagor is not in default hereunder, the Mortgagor may, without obtaining the consent of
the Mortgagees 01' Noteholders, sell or othelwise 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, wom
out, damaged, 01' othelwise unsuitable for the purposes of the Mortgagor; provided, however, that the Mortgagor
shall to the extent necessary: '(1) replace the same with other property of the same kind and nature, or substitute
thereof, which shall be subject to the lien hereof, free and clear of all prior liens, and apply the proceeds, if any,
derived from the sale or disposition of such property, which are not needed for the replacement thereof, to the
prepayment of the outstanding indebtedness on the RUS Notes and Co-Lender notes in the propoltions which the
aggregate principal balances then owing on the RUS Notes and the aggregate principal balances then owing on the
Co-Lender Notes, respectively, bear to the aggregate principal balances than owing on the RUS Notes and the Co-
Lender 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; (2) immediately upon the receipt of the proceeds of any sale
or disposition of said property, apply the entire amount of such proceeds to the prepayment of the indebtedness
evidenced by the Notes in proportion and manner as provided for in (1) above; or (3) deposit all or such part of the
proceeds derived from the sale or disposition of said property into such bank accounts as the Mortgagees shall
specify, and shall use the same only for such additions to, or improvements in , the Mo11gaged Property, on such
terms and conditions as the Mol1gagees shall specify.
SECTION 2.1 Maintenance, Preservation and Operation of Morte:aflcd ProDel.
(a)At all times the Mortgagor will maintain and preserve the M0l1gaged Property in good repair
working order, and condition, and will, subject to contingencies beyond its reasonable control
keep its plant and propelties in continuous operation, and from time to time make all needed and
proper repairs, renewals, replacements, useful and propel' alterations, additions, betterments and
improvements, and use all reasonable diligence to furnish the subscribers served by it through the
Mol1gaged Properly with adequate telecommunications and broadband telephone service.
(b)If in the sole judgment of either Mortgagee, the Mortgaged Property is not being maintained and
repaired in accordance with paragraph (a) of this Section, either Mortgagee may send the
Mortgagor a written repOlt of needed improvements, upon receipt of which the Mortgagor will
promptly undertake to accomplish such improvements.
SECTION 2.11 Mortf!aged Propertv to be Purchased Free of Encumbrances
Except as specifically authorized in writing in advance by the Moltgagees, 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 2.12 Insurance ReQuirements; Application of Insurance Proceeds
(a)The MOItgagor shall take out and maintain insurance on the property acquired with the Loan in
accordance with 7 C.R, Part 1788.
(b)Sums recovered under any policy or fidelity bond by the Mortgagor or any Noteholder for a loss
of funds advanced under the Notes 01' for any loss under such policy or bond shall, unless applied
Page II
as provided in 7 C.R. Part 1788 be used to finance construction of utility plant secured or to be
secured by this Restated Mortgage, or, unless otherwise directed by the Mortgagees, be applied to
the prepayment of the Outstanding Notes, and shall be applied to such Notes and installments
thereof as may be designated by the respective Noteholders at the time of receipt. At the request
of either Mortgagee, the MOItgagor shall exercise such rights and remedies under such policy or
fidelity bond as 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
each Mortgagee may choose, and the Mortgagor shall pay all costs and reasonable expenses
incurred by the MOItgagee(s) in connection with such exercise.
SECTION 2.13 When Mort!!:ae:e Lien Attaches to Vehicles, Ships, Etc.
In the event the Mortgagor has 01' suffers a deficit in Net Income or Net Margins, during any fiscal year
while any of the Notes are outstanding, the M0I1gagor will at any time, upon written demand of either Mortgagee
make, execute, acknowledge and deliver or cause to be made, executed, acknowledged, and delivered all such
further and supplemental indentures of mo11gages, security agreements, financing statements, instruments, and
conveyances, and take 01' cause to be taken all such further action, as may be requested by the M0l1gagee, in order to
attach to this Restated M0I1gage, as Mortgaged Property, and to subject to all the terms and conditions of this
Restated Mol1gage, all right, title, and interest of the Mortgagor in and to, all or in part, the automobiles, trucks
tractors, trailers, aircraft, ships, boats and other vehicles then or thereafter owned or acquired by the Mortgagor.
From the moments of such written demand by the Mol1gagee, such vehicles shall be deemed pal1 of the Mortgaged
Property for all purposes hereof.
SECTION 2.14 Application of Proceeds from Eminent Domain
In the event the Mortgaged Property, or any pal1 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, shall forthwith be applied by the Mortgagor: First, to the ratable payment of any indebtedness by
this Restated Mortgage secured other than principal or interest on the Notes; Second, to the ratable payment of
interest which shall have accrued on the Notes and be unpaid; Third, to the ratable payment of, or on account of, the
unpaid principal of the Notes and to such installments thereof as may be designated by the respective NotehoJders at
the time of any such payment; and if any, the balance shall be paid to whosoever shall be entitled thereto.
SECTION 2.15 Compliance with Loan A!!reements
The Mortgagor wiJl well and truly observe and perform all applicable covenants, agreements, terms, and
conditions contained in the Loan Agreements.
SECTION 2.16 Covenants for Limited Liabilitv Companies and Similar MortRa!!OI'S
Mortgagors which are limited liability companies or similar organizations agree that:
(a)The death, retirement, resignation, expulsion, termination , bankruptcy, 01' dissolution of any
member or the occurrence of any other event that terminates the continued membership of any
member shall not cause the M0l1gagor to be dissolved 01' its affairs to be wound up;
(b)Prior to the date on which any and all Notes are discharged in full, the M0I1gagor shall not be
dissolved or terminated;
(c)The organizational documents of the M0l1gagor shall contain provisions reflecting the obligations
of the Moligagor in paragraphs (a) and (b) immediately above and such provisions shall not be
amended without the prior written consent of the MOltgagees,
Page 12
SECTION 2.17 Government to be Noteholder
At all times when any Note is held by the Government, or in the event the Govenllnent shall assign an
Additional Note without having insured the payment of such Note, this Restated Mortgage shall secure payment of
such Note for the benefit of the Government 01' such uninsured holder thereof, as the case may be. Whenever any
Additional 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 Govemment, and not such insured purchaser, shall be considered and shall have
the rights of the Notebolder for purposes of this Restated Mortgage. Notice of the rights of the Government under
the preceding sentence shall be set forth in all such insured Notes. As to any Note which evidences a loan made by
a third party lender to the Mortgagor and guaranteed by the Government, acting through the Administrator, pursuant
to the Act, the Government and not such third party lender shall be considered to be and shall have the rights of the
Noteholder for purposes of this Restated Mortgage.
SECTION 2.18 MOI'tg:ag:ees Rig:ht to Expend Money to Protect Mortg:ag:ed Property
If in any respect the Mortgagor fails to comply with the covenants and conditions herein contained
regarding 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 Restated Mortgage or the Loan Agreement, the Mortgagees shall have the right, without prejudice to any other
remedies arising by reason of such default: (I) to advance or expend moneys for the purpose of procuring such
insurance, or for the payment of insurance premiums, taxes, assessments or other charges; (2) to save the Mortgaged
Propelty from sale or forfeiture for any unpaid tax, assessment, or othelwise; (3) to redeem the same from any tax or
other sale; (4) to purchase any tax title thereon; (5) to remove or purchase any mechanics' liens or other
encumbrance thereon; (6) to make repairs thereon; (7) to comply with any other covenant herein contained; (8) to
prosecute and defend any suit in relation to the Mortgaged Property; or (9) in any manner, to protect the Mortgaged
Property and the title thereto, All sums so advanced for any of the aforesaid purposes with interest thereon at the
highest legal rate, but not in excess of twelve percent (12%) per annum, shall be deemed a charge upon the
Mortgaged Property in the same manner as the Notes at the time outstanding are secured and shall be fOl1hwith paid
to the Mortgagees upon demand, It shall not be obligatory for the Mol1gagees in making any such advances or
expenditures to inquire into the validity of any such title, tax, assessment, sale, mechanics' lien, or other
encumbrance thereof.
ARTICLE III - REMEDIES OF THE MORTGAGEES AND NOTEHOLDERS
SECTION 3.Events of Default:
Each of the following shall be an "Event of Default" under this Restated Moltgage:
(a)Non-Payment.The nonpayment of any required and due installment of interest on, or principal of
any Note, whether by acceleration or otherwise, which continues for five (5) consecutive Business
Days;
(b)Repl'esentations and Warranties.Any representation or warranty made by the Mortgagor herein
or in the Loan Agreements or any certificate fumished to RUS or the Co-Lender hereunder or
under the Loan Agreements shall prove to have been incorrect in any material respect at the time
made and shall at the time in question be untrue or incorrect in any material respect and remain
uncured;
(c)Limited Liability Company, Default by the Mortgagor or its members in the observance or
performance of Section 2.16 hereof;
(d)Other Covenants Default by the Mortgagor in the observance or performance of any other
covenant or agreement contained herein or in the Loan Agreements, which shall remain
Page 13
SECTION 3.
unremedied for thirty (30) calendar days, after written notice thereof had been given to the
MOitgagor by RUS or the Co-Lender;
(e)Adverse Effects.The Mortgagor shall forfeit or otherwise be deprived of its charter, al1icJes of
organization, franchises, petmits, easements, consents, 01' licenses required to carryon an)'
material portion of its business, or the M0I1gagor files for, or an event occurs, which can
reasonably be expected to result in its dissolution or termination;
(f)Other Obligations. Default by the Mortgagor in the payment of any obligation, whether direct or
contingent, for borrowed money in excess of ten thousand dollars ($10 000.00) 01' in the
performance or observance of the terms of any instrument pursuant to which such obligation was
created or securing such obligation which default shall have resulted in such obligation becoming
or being declared due and payable prior to the date on which it would otherwise be due and
payable;
(g)
Bankruptcy. A court having jurisdiction in the premises shall enter a decree or order for relief
with respect to the MOltgagor in an involuntary case under any applicable bankruptcy; insolvency,
or other similar law now 01' hereafter in effect: (1) appointing a receiver, liquidator, assignee
custodian, trustee, sequestrator, 01' similar official, or (2) ordering the winding up or liquidation of
its affairs; 01' the Mortgagor shall commence a voluntary case under any applicable bankruptcy,
insolvency or other similar law now or hereafter in effect, or under any such law, or consent to the
appointment or taking possession by a receiver, liquidator, assignee, custodian or trustee, of a
substantial part of its property, or make any general assignment for the benefit of creditors;
(h)Dissolution or Liquidation.Other than as provided in the immediately preceding subsection, the
dissolution or liquidation of the Mortgagor, or the filing of such by the Mortgagor;
(i)Impaired Business, The failure by the Mortgagor to promptly forestall or remove any execution,
gal11ishment or attachment of such consequence as shall impair its ability to continue its business
or fulfill its obligations and such execution, garnishment or attachment shall not be vacated within
thirty (30) days; and
Payment of Final Judgment.A final judgment in an amount of ten thousand dollars ($10 000.00)
or more shall be entered against the Mortgagor and shall remain unsatisfied or without a stay in
respect thereoffor a period ofthirty (30) days.
Acceleration of Maturity: Annulment of Acceleration
(a)If any Event of Default has occurred and is continuing, the Mortgagees and/or any other
Noteholder may, by notice in writing to the Mortgagor and delivery of a copy thereof to the other
Noteholders, if any, declare all unpaid principal and accrued interest on any or all of their
respective Notes to be due alid payable immediately; and upon any such declaration, all such
unpaid principal and accrued interest shall immediately become due and payable, notwithstanding
anything contained herein or in any Note to the contralY.
(b)If after the unpaid principal 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 have become due and
payable by the terms of such Note(s) 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, the Noteholder(s) which have declared the principal and interest on Notes
held by such Noteholder(s) to be due and payable may, by written notice to the Mortgagor and
delivery of a copy thereof to the other NotehoIders, annul such declaration or declarations and
waive such default(s) and consequences thereof, with such waiver not extending to or affecting
any subsequent default or impairing any right consequent thereon.
Page 14
SECTION 3.Remedies of Maiol'itv Noteholders
If any Events of Default has occulTed and is continuing, the holder or holders of not less than a majority of
the total amount of principal outstanding on the notes, (hereinafter called the "Majority Noteholders ) for itself or
themselves, and as the agent or agents of the other Noteholders, personally or by attorney, in its or their discretion
may, insofar as not prohibited by law:
(a)(i) take immediate possession of the Mortgaged Property, (ii) collect and receive all credits
outstanding accounts, bills, receivables, rents, income, revenues, and profits of the Mortgagor,
pertaining to 01' arising from the Mortgaged Property, or any part thereof, and issue binding
receipts therefor; and (iii) manage, control, and/or operate the MOltgaged Propelty 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)Majority Noteholders, or any employee 01' agent of it, is hereby constituted and appointed as true
and lawful attorney-in-fact of the MOltgagor with full power to (i) notify 01' require the Mortgagor
to notify any and all customers that the Mortgaged Propelty has been assigned to Mortgagees
and/or that MOItgagees have a security interest in the Mortgaged Property; (ii) sign and endorse
the name of the Mortgagor upon any notes, checks, acceptances, drafts, money orders, or other
instruments of payment (inc1uding payments made under any policy of insurance) that may come
into possession of Majority Noteholders or MOltgagees, or upon any invoice, freight or express
bill, bill of lading, storage or warehouse receipt, assignment, verification, or notice in connection
with receivables, all in full or part payment of any amount owing to any NotehoJder; (iii) send
requests for verifications of Mortgaged Propelty to customers or account debtors; (iv) sell, assign
sue for, collect, or compromise payment of all or any part of the Mortgaged Property in the name
of the Mortgagor or in its own name, or make any other disposition of Mortgaged Property, 01' any
palt thereof, for cash, credit, or any combination thereof; granting to the Majority NotehoJders, as
the attorney-in-fact of the MOltgagor, full power of substitution and full power to do any and all
things necessary to be done in and about the premises fully and effectually as the Mortgagor might
or could do but for this appointment, and hereby ratifying all that said attorney-in-fact shall
lawfully do or cause to be done by virtue hereof. The Majority Noteholders, Mortgagees, their
employees, or agents shall not be liable for any act, omission, error of judgment, or mistake of fact
or law in its capacity as attorney-in-fact. This power of attorney is coupled with an interest and
shall be irrevocable during the term of this Restated Mortgage so long as any Notes shall remain
outstanding;
(c)proceed to protect and enforce the rights of the MOItgagees and the rights of the Noteholder(s)
under this Restated Moltgage by suits or actions in equity or at law in any court of competent
jurisdiction, whether for specific performance of any covenant or any agreement contained herein
for aid of execution of any power herein granted, for foreclosure hereunder, for sale of the
MOltgaged Property, or any part thereof, for collection of debts hereby secured, 01' for enforcement
of other appropriate legal or equitable remedies as may be deemed most effectual to protect and
enforce the rights and remedies herein granted or conferred; and in the event any such action or
suit is instituted, the Majority Noteholders 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,
derived, received, 01' had therefrom, from the commencement of such suit or action. Such receiver
shall have all the usual powers and duties of receivers, in like and similar cases, to the fullest
extent permitted by law; and if application shall be made for the appointment of a receiver, the
Mortgagor hereby expressly consents that the court to which such application shall be made may
make said appointment;
(d)sell or cause to be sold the Mortgaged Property, all or in part, and all right, title, interest, claim
and demand of the Mortgagor therein or thereto, at public auction in any county in which the
propelty to be sold is located, at such time, place, and manner as may be specified in the notice of
Page 15
sale, containing a brief general description of the property to be sold, giving a copy thereof to the
Mortgagor by mail at least fifteen (15) days prior to the date fixed for such sale, and publishing the
same once in each week for two successive calendar weeks prior to the date of such sale in
newspaper of general circulation published in said county, 01' if no such newspapelO is published
such county, in a newspaper of general circulation in such county, the first such publication to be
not less than fifteen (15) days nor more than thirty (30) days prior to the date fixed for such sale.
Any sale made under this subparagraph may be adjourned from time to time by announcement, at
the time and place appointed for such sale or adjourned sale(s); 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.
The expenses incuned by the Mortgagee(s), including but not limited to receiver s fees, attorneys
fees, cost of advertisement, and agents' compensation, in the exercise of any of the remedies
provided in this Restated Mortgage shall be secured by this Restated Moltgage; and
(e)enter and/or remain upon the premises of the Mortgagor without any obligation to pay rent to the
MOltgagor or others, or any other place(s) where any of the MOltgaged Property is located and
kept, and: (i) remove the Mortgaged Property therefrom in order to maintain, collect, sell, and/orliquidate the Mortgaged Property or, (ii) use such premises, together with materials, suppliesbooks, and records of the Mortgagor, to maintain possession and/or the condition of the
MOltgaged Property, and to prepare the Mortgaged Property for sale, liquidation, or collection.
Mortgagees may require the Mortgagor to assemble the Mortgaged Property and make it available
to Mortgagees at a place to be designated by Mortgagees.
SECTION 3.4 Rh!hts and Remedies of Noteholders
, within thirty (30) days after the Majority Noteholders shall have had knowledge of the happening of an
Event or Events of Default, the Majority NotehoJders shall not have pl'Oceeded to exercise the rights and enforceeach of the remedies herein or by law conferred upon 01' reserved to the Mortgagees or to said Majority Noteholders
then, and only then, any Noteholders, including the Majority Noteholders, and/or any MOltgagee may proceed to
exercise any such right or rights and remedy 01' 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 shalt become due and payable in accordance with the terms of such note.
SECTION 3.Ril!:ht to Purchase Mort!!:a!!ed Propertv
At any sale hereunder any Noteholder or Mortgagee shall have the right to bid for and purchase theMortgaged Property, or such part thereof as shall be offered for sale, and any Noteholder or Mortgagee may in lieu
of actual payment of the purchase price, set off against the purchase price the amount owing to said Noteholder or
Mortgagee secured hereunder and such set off amount shall be credited as a payment on account of principal and
interest on the Note(s) held by such Noteholder.
SECTION 3.Ri!!:ht of Set-Off and Recoupment
Any Noteholder or Mortgagee shall have the right, without prior notice to the Mortgagor, to exercise rights
of setoff, recoupment, or any counterclaim and apply any and all amounts held or hereaJ1er held by such Noteholder
or Mortgagee, owed to the MO1igagor, or foJ' the credit of the Mortgagor, against any and all of the Notes.Noteholders and Mortgagees agree to notify the MOIigagor promptly after any such setoff oj' recoupment and the
application thereof; provided that the failure to give such notice shall not affect the validity of such setoff
recoupment or application. Mortgagor waives all rights of setoff, deduction, recoupment, or counterclaim.
Page 16
SECTION 3.Application of Proceeds from Remedial Actions
Any proceeds 01' funds arising from the exercise of any rights 01' 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 01' the enforcement of such remedies shall be applied: First, to the payment of indebtedness
hereby secured other than the principal 01' interest on the Notes; Second, to the ratable payment of interest which
shall have accrued 011 the Notes and which shall be unpaid; Third, to the ratable payment of, or on account of, the
unpaid principal of the Notes, and the balance, if any, shall be paid to whomsoever shall be entitled thereto.
SECTION 3.Notice of Default
The Mortgagor covenants that it will give immediate written notice to the Mortgagees and to all
Noteholders of the occurrence of an Event of Default, 01' in the event that any right 01' remedy described in Sections
, 3., 3.4, 3.5 01' 3.6 of this Article !II is exercised or enforced, 01' of any action taken to exercise or enforce any
such right 01' remedy.
SECTION 3.Remedies Cumulative. No Election
Every right or remedy herein conferred upon or reserved to the Mortgagee(s) or to the Noteholder(s) shall
be cumulative and shall be in addition to every other right and remedy given hereunder, or now or hereafter existing
at law, in equity, 01' by statute. The pursuit of any right or remedy shall not be construed as an election.
SECTION 3.Waiver of Appraisement Ri!zhts. Marshalin2 of Assets Not Required
The Mortgagor, for itself and for all who may claim through or under it, covenants that it will not at any
time insist upon 01' plead, or in any manner whatsoever, claim or take the benefit or advantage of, any appraisal,
valuation, stay, extension, 01' redemption laws, now or hereafter in force in any locality where any of the M011gaged
Property may be situated, in order to prevent, delay or hinder the enforcement or foreclosure of this Restated
Mortgage, or the absolute sale of the MOItgaged Property, 01' any pat1 thereof, 01' the final and absolute putting into
possession thereof, immediately after such sale, of the purchaser(s) thereat, and the Mortgagor, for itself and for all
who may claim through or under it, hereby waives the benefit of all such laws, unless such waiver shall be forbidden
by law. Under no circumstance shal1 there be any marshal1ing of assets upon any foreclosure or other enforcement
of this Restated Moltgage.
SECTION 3.Ri2hts as Secured Partv
MOltgagees shall have, in addition to any other rights and remedies contained in this Restated Mortgage
and in any other agreements, guarantees, notes, mortgages, instruments, and documents heretofore, now, or at any
time hereafter executed by the Mortgagor and delivered to M0I1gagee(s), all of the rights and remedies of a secured
party under the UCC in force in the state of the M0I1gagor s organization and al1 jurisdictions where the Mortgaged
property is located, all of which rights and remedies shall be cumulative, and nonexclusive.
Section 3.10 Federal Communications Commission Matters.
Notwithstanding any other provision of this Restated Mortgage, the fol1owing provisions shal1 be
applicable in the event that the Mortgaged Property includes (to the extent such property can be included under the
applicable law) licenses, permits, or similar rights granted by the Federal Communications Commission (hereinafter
referred to as the "FCC") to the Mortgagor (such licenses, permits or similar rights hereinafter referred to as "FCC
Licenses:
(a)Any loss, revocation , foreclosure 011, sale, transfer, 01' other disposition of FCC Licenses by the
Mortgagee(s) shall be pursuant to Section 3l0(d) of the Communications Act of 1934, as
amended, and applicable rules and regulations thereunder, and, if and to the extent required
thereby, subject to the prior approval or notice to and non-opposition of the FCc.
Page 17
SECTION 4.
(b)If an Event of Default shall have OCCUlTed and be continuing, the Mortgagor shall take any action
which the Mortgagees may request in order to transfer and assign to the Mortgagees, or to such
one or more third parties as the Mortgagees may designate, or to a com bination of the foregoing,
each FCC License held by the Mortgagor. The Mortgagees are empowered, to the extent
permitted by applicable law, to request the appointment of a receiver from any court of competent
jurisdiction. Such receiver may be instructed by the Mortgagees to seek from the FCC an
involuntary transfer of control of each such FCC License for the purpose of seeking a bona fide
purchaser to whom control wiIJ ultimately be transferred, The Mortgagor hereby agrees to
authorize such an involuntary transfer of control upon the request of the receiver so appointed and
if the Mortgagor shall refuse to authorize the transfer, its approval may be required by the court.
Upon the occurrence and during the continuance of an Event of Default, the Mortgagor shall
further use its best efforts to assist in obtaining approval of the FCC and any state regulatory
bodies, if required, for any action contemplated by this Restated Mortgage, including, without
limitation, the preparation, execution and filing with the FCC and any state regulatory bodies of
the assignor s or transferor s portion of any application or applications for consent to the
assignment of any FCC license or transfer of control necessary or appropriate under the rules and
regulations of the FCC or any state regulatory body for approval or non-opposition of the transfer
or assignment of any portion of the Mortgaged Property, including, without limitation any FCC
License,
(c)The Mortgagor acknowledges that the assignment, transfer, loss, or revocation of any FCC
License is integral to the Mortgagees ' realization of the value of the Mortgaged Property, that
there is no adequate remedy at law for failure by the Mortgagor to comply with the provisions of
this Section and that such failure would not be adequately compensable in damages, and therefore
agrees, without limiting the rights of the Mortgagees to seek and obtain specific performance of
other obligations of the MOItgagor contained in this Restated Moltgage, that the agreements
contained in this Section may be specifically enforced.
(d)In accordance with the requirements of 47 C.R. Section 22.937, or any successor provision
thereto, the Mortgagees shall notify the Mortgagor and the FCC in writing at least ten (10) days
prior to the date on which the Mortgagees intend to exercise their rights under this Restated
Mortgage or any other document or instrument relating to the Notes, by foreclosing on, or
otherwise disposing of any MOitgaged Property in connection with which such notice is required
pursuant to 47 C.R. Section 22.937 or any successor provision thereto.
ARTICLE IV - POSSESSION UNTIL DEFAULT-DEFEASANCE CLAUSE
Possession until Default
Until one or more of the Events of Default has happened, the Mortgagor shall be 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 Restated Mortgage.
SECTION 4.Defeasance
If the Mortgagor shall payor cause to be paid the whole amount of the principal and interest on the Notes at
the time and manner therein provided, according to the true intent and meaning thereof, and shall also pay 01' 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 Restated Mortgage, all covenants herein required to be kept and performed by
it, then and in that case, all property, rights, and interests hereby conveyed, assigned, 01' pledged shall revclt 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
Page 18
Mortgagor, but at the Mortgagor s cost and expense, shall enter satisfaction of this Restated MOitgage upon the
record. In any event, each NotehoIder, upon payment in full to him by the Mortgagor of all principal and interest on
any Note held by him, and the payment and discharge by the Mortgagor of all charges due 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 5.Mortl!al!e to Bind and Benefit Successors and Assil!lls
All of the covenants, stipulations, promises, undertakings, and agreements herein contained by, or on behalf
, the Mortgagor shall bind its successors and assigns, whether so specified 01' not, and all titles, rights, and
remedies hereby granted to, or confelTed upon, the Moltgagees shall pass to and inure to the benefit of the
successors and assigns of the Mortgagees and shall be deemed to be granted or conferred for the ratable benefit and
security of all who shall from time to time be the holders of Notes executed and delivered as herein provided.
SECTION 5.Headilll!s
The descriptive headings of the various articles of this Restated Mortgage were formulated and inserted for
convenience only and shall not be deemed to affect the meaning 01' construction of any provision hereof.
SECTION 5.Notices
All demands, notices, reports, approvals, designations, 01' directions required 01' permitted to be givenhereunder shall be given or made in writing (including, without limitation, by telecopy) and delivered to theintended recipient at the "Address for Notices" specified in Schedule A; or, as to any party, at such other address as
shall be designated by such party in a notice to each other party. All such communications shall be deemed to have
been duly given when transmitted by telecopier or personally delivered or, in the case of a mailed notice, uponreceipt, in each case given or addressed as provided for herein. The Addresses for Notice of the respective partiesare set forth in Schedule "
SECTION 5.4 Mortl!al!e Deemed Sccul'ity A2reement
To the extent that any of the property described 01' referred to in this Restated Mortgage is governed by the
provisions of the UCC, this Restated Mortgage is hereby deemed a "security agreement" under the UCC. Themailing addresses of the Mortgagor, as debtor, and of the Mortgagees as secured patties, are as set forth in Schedule
SECTION 5.Mortl!al!ees Ril!ht to File Financinl! Statements
Mortgagees shall have the right to file such financing statements and continuation statements on behalf of
itself, as secured party, and Mortgagor, as Debtor, as Mortgagees deem necessary to perfect a first lien on the
Mortgaged Property and to maintain and preserve such perfected first lien as long as any Note remains outstanding.
Mortgagor shall reimburse the Mortgagees for any expenses incurred in the exercise of this right.
SECTION 5.Severability Cause
If any provision of this Restated Mortgage shall for any reason be found or held invalid or unenforceable
by any governmental agency or court of competent jurisdiction, such invalidity or unenforceability shall not affect
the validity, legality, and enforceability of the remainder of such provision, nor any other provision thereof and this
Restated Mortgage shall survive and be construed as if such invalid or unenforceable provision had not beencontained therein. Any invalidity or unenforceability as to any Mortgagee hereunder shall not affect or impair the
rights hereunder of any other MOltgagee.
Page 19
SECTION 5.Indemnification by Mortl!ag:or of Mortl!31!ees
The Mortgagor agrees to indemnify the Mortgagees against any liability or damages which it may incur or
sustain in the exercise and performance of its rightful powers and duties hereunder. For such reimbursement and
indemnity, the Mortgagees shall be secured under this Restated Mortgage in the same manner as the Notes and all
such reimbursements for expense or damage shall be paid to the Mortgagees incurring or suffering the same with
interest at the rate specified in Section 2.18 hereof. The Mortgagor s obligation to indemnify the Mortgagees under
this section shall survive the satisfaction of the Notes, the reconveyance or foreclosure of this Restated Mortgage
the acceptance of a deed in lieu offoreclosure, or any transfer or abandonment of the MOltgaged Property.
SECTION 5.Counterparts
This Restated Mortgage may be simultaneously executed and delivered in two or more counterparts, each.
of which so executed and delivered shall be deemed an original, and shall constitute but one and the same
instrument.
Page 20
IN WITNESS WHEREOF, MIDV ALE TELEPHONE EXCHANGE, INC., as Mortgagor, has caused this
Restated Mortgage to be signed in its name and its sea!, if any, to be hereunto affixed and attested by its duly
authorized officer, the UNITED STATES OF AMERICA, as M0I1gagee and secured party, has caused this RestatedMortgage to be duly executed on its behalf, and Co-Lender, as Mortgagee and secured party, has caused thisRestated Mortgage to be duly executed on its behalf all as of the day and year first above written.
MIDV ALE TELEPHONE EXCHANGE, INC.
Name:
Title:(Seal)
Attested to by:
Secretary
Executed by the Mortgagor
in the presence of:
Name:
Name:
UNITED STATES OF AMERICA
Name: Jacqueline M. Ponti-Lazaruk
Title: Assistant Administrator
Executed by the M0I1gagee
in the presence of:
Name:
Name:
RURAL TELEPHONE FINANCE COOPERATIVE
by _..
Name:
Title:
Executed by the Mo11gagee
in the presence of:
Name:
Name:
Page 21
DISTRICT OF COLUMBIA
This instrument was acknowledged before me on 20 -, byJacqueline M. Ponti-Lazaruk, Assistant Administrator of the Rural Utilities Service of the United States of America.
Notary Public
(Notarial Seal)
My commission expires:
Page 22
COMMONWEALTH OF VIRGINIA
COUNTY OF F AIRF AX )SS
BE IT REMEMBERED, that On this day of 2005,
before me, the undersigned, a notary public in and for the Commonwealth of Virginia, aforesaid, came Robert A.
Dyson, signing as an Assistant Secretary-Treasurer of the RURAL TELEPHONE FINANCE COOPERATIVE, a
District of Columbia corporation, who is personally known to me to be the person who executed the within
instrument of writing on behalf of such corporation and such person duly acknowledged the execution of the same
as the act and deed of said corporation.
IN TESTIMONY WHEREOF, I have hereunto set my hand and affixed my notarial seal the day and year above
written.
Notary Public
(Notarial Seal)
My commission expires:
Page 23
SCHEDULE A
The Outstanding RUS Notes referred to in the. Recitals are:
Note Note Stated Principal Maturity Interest
Designation Date Amount Date Rate
08-07-1980 068,000 08-07-2015
C8#1 12-19-1985 $ 367,000 12-19-2020
C8#2 12-19-1985 $1,295,000 12-19-2020
06-01 -1992 $ 276,000 06-01-2016
Fit 09-29-1994 $3,403,000 09-29-2014
Gll 02-01 -2002 $5,695,000 02-01-2016
The Outstanding Co-Lender Notes referred to in the Recitals are:
Note Note Stated Principal Maturity Interest
Designation Date Amount Date Rate
ID 514-9003 02-01-2002 $2,103,981 10-15-2011 Variable
ID 514-9004 02-01-2002 378,947 07-17-2013 Variable
The Prior Mortgages refened to in the Recitals are: Restated Mortgage, Security Agreement
and Financing Statement dated February 1,2002. made by and among the Mortgagor and
the Mortgagees.
A. The Co-Lender Loan Agreement referred to in Section I, I is: Amended Loan Agreement
by and between the Corporation and RTFC dated Feb."uary 1,2002.
B. The RUS Loan Agreement referred to in Section 1.1 is the Loan Agreement, dated the same
day as this Restated Mo11gage between the M0l1gagor and the Mortgagees.
A. The Current RUS Note(s), made by the Mortgagor to the Government, dated the same day as
this Restated Mortgage and refelTed to in the Recitals are:
RUS Designation: ID 514-HlI
Stated Principal Amount: $12,145,000
Interest Rate:
Maturity Date: September 4,2026
The "Mortgage Debt Limit" referred to in Section 1.2(c) is $50,000,000
Page 24
Mortgagees:
The following addresses are for purposes of providing notice pursuant to Section 5.4:
With a copy to:
Mortgagee:
Mortgagor:
With a copy to:
Rural Utilities Service
United States Department of Agt'iculture
1400 Independence Avenue, S.
Washington, D.c.20250-1500
Attention: Administrator
Fax: [phone]
Rural Utilities Service
United States Department of Agriculture
1400 Independence Avenue, S.
Stop 1595, Room No. 2839-8
Washington, D.c. 20250-1599
Attention: Mr. Jerry H. Brent
Fax: [phone]
Rural Telephone Finance Cooperative
2201 Cooperative Way
Herndon, Virginia 20171
Attention: Mr. Robert Parrett
Fax: [phone]
Midvale Telephone Exchange, Inc.
2205 Keithley Creek Road
Midvale, Idaho 83645
Attention: Mr. Lane R. Williams
Fax: [phone]
Givens Pursley, LLP
601 W. Bannock Street
O. Box 2720
Boise Idaho [phone]
Fax" [phone]
Page 25
SCHEDULE B
The "Existing Facilities" refen'ed to in Granting Clause I are located in the counties of COCHISE
GILA, PINAL and Y A V AP AI in the State of Arizona, the counties of CUSTER and WASHINGTON
in the State of Idaho, and the county ofMALHEUR in the State of Oregon
The real estate mortgaged and pledged hereunder includes the following:
County, Arizona
PARCEL I:
That portion of the Northwest quarter of Section 2, Township 17 South, Range 20 East of the Gila and Salt
River Base and Meridian, Cochise County, Arizona, more particularly described as follows:
COMMENCING at the North quarter comer of said Section 2; thence South 000 05' 50" West along the
North-South center section line a distance of 982.26 feet, more or less, to the Southeast cornel' of theNortheast quarter of the Southeast quarter of Govel11ment Lot 3 of said Section 2; thence South 000 OS' 18"West along the North-South center section line a distance of 327.42 feet; thence South 870 41' 09" West a
distance of 281.03 feet to the POINT OF BEGINNNG; thence continuing South 870 4 I I 09" West a
distance of 150.00 feet; thence North 000 05' 18" East a distance of 290.40 feet; thence North 870 41' 09"
East a distance of 150.00 feet; thence South 000 05' 18" West a distance of 290.40 feet the POINT OF
BEGINNING;
PARCEL II:
Lot 29, Block 18, BENSON TOWNSITE, according to Book I of Maps, page 130, records of Cochise
County, Arizona.
Page 26
Custer County, Idaho
LOTS 5 AND 6, LESS THE WEST 35 FEET OF SAID LOT 6, BLOCK 3 , STANLEY GOVERNMENT
TOWNSITE, CUSTER COUNTY, IDAHO, ACCORDING TO THE OFFICIAL SURVEY THEREOF
NOW ON FILE IN THE OFFICE OF THE SURVEYOR GENERAL, BOISE, IDAHO.
ALSO:
THAT PORTION OF THE ALLEY, 20 FEET WIDE, LYING NORTHERLY AND IMMEDIATELY
ADJACENT TO LOT 5 AND PORTION OF LOT 6, EXCEPTING THE WEST 35 FEET THEREOF IN
BLOCK 3 STANLEY GOVERNMENT TOWNSITE VACATED BY ORDER OF THE CUSTERCOUNTY COMMISSIONERS APRIL I I, 1960.
ALSO INCLUDING:
A PART OF THE LOWER STANLEY TOWNSITE LOCATED IN SECTION 34, TOWNSHIP II
NORTH, RANGE 13 EAST, BOISE MERIDIAN, CUSTER COUNTY, IDAHO, MOREPARTICULARLY DESCRIBED AS FOLLOWS: .
COMMENCING AT CORNER 4 OF TRACT 5 OF THE SAWTOOTH NATIONAL RECREATION
AREA (AN ALUMINUM PIPE AND CAP); THENCE SOUTH 00 33' 00" EAST FOR 128,69 FEET
ALONG THE EAST LINE OF TRACT 6 TO A BRASS CAP THAT IS CORNER 3 OF TRACT 6;
THENCE SOUTH 340 39' 14" WEST FOR 84.38 FEET ACROSS THOMPSON STREET TO A BRASS
CAP THAT IS CORNER 2 OF TRACT 7 OF THE SAWTOOTH NATIONAL RECREATION AREA;
THENCE SOUTH 740 57' EAST FOR 20.10 FEET ALONG THE SOUTH LINE OF THOMPSON
STREET TO THE NORTH CORNER OF LOT 12, BLOCK 3 OF THE LOWER STANLEY TOWNSITE;
THENCE SOUTH 200 43' WEST FOR 108.19 FEET ALONG THE NORTHWEST LINE OF LOT 12
THE POINT OF BEGINNING; THENCE SOUTH 360 40' 51" WEST FOR 72.72 FEET TO CORNER 3OF TRACT 7 OF THE SAWTOOTH NATIONAL RECREATION AREA; THENCE NORTH 200 43'
EAST, APPROXIMATELY 81 FEET TO A POINT WHICH LIES NORTH 370 27' WEST FROM THE
POINT OF BEGINNING; THENCE SOUTH 370 27' EAST, APPROXIMA TEL Y 25 FEET, MORE ORLESS TO THE POINT OF BEGINNING.
PARCEL II:
LOT 3 IN BLOCK I OF STANLEY TOWNSITE IN NEII4NEl/4 OF SECTION NINE (9), TOWNSHIP
TEN (10) NORTH, RANGE THIRTEEN (13) EAST, BOISE MERIDIAN, AS SHOWN BY THEOFFICIAL PLAT THEREOF NOW ON FILE IN THE OFFICE OF THE CUSTER COUNTY
RECORDER IN CHALLIS, IDAHO.
Page 27
Gila County, Arizona
EXHIBIT "
FIRST AMENDED
NO. 903-000-1301657
A portion of that certain piece 01' parcel of land, situate, lying and being in the Southeast quarter of Section
17 and the Southwest quarter of Section 16 and the Northeast quaJter of Section 20, Township 9 North,Range 14 East of the Gila and Salt River Base and Meridian , Gila County, Arizona, more particularlydescribed as follows:
That parcel shown as "Lot I" on Record of Survey on October 30, 1996, as Map No. 1275.
Page 28
Malheur County, Oregon
Parcel J:
Land in the TOWN OF HARPER, located in Section 5, Township 20 South, Range 42 East of the
Willamette Meridian, Malheur County, Oregon, according to the Official Plat thereof, as follows:
In Block 9: Lots 3 , 4 and 5.
Parcel 2:
Land in the TOWN OF HARPER, located in Section 5, Township 20 South, Range 42 East of the
Wi!lamette Meridian, Malheur County, Oregon, according to the Official Plat thereof as follows:
In Block 9: A parcel of land in Lot 6 described as follows:
Beginning at the Northeast corner of said Lot 6 which faces "B" Street;
thence South 460 21' West, along said "B" Street, 25 feet;
thence South 430 39' East , 25 feet;
thence North 460 21' East , 25 feet;
thence Nol1h 430 39' West, 25 feet to the Point of Beginning.
Parcel 3:
Land in the TOWN OF JUNTURA, Malheur County, Oregon, according to the Official Plat thereof, as
follows:
In Block 19: Beginning at the most Northerly corner of Lot 4;
thence Southwesterly along the N0I1hwest lot line of said Lot 4, 100 feet;
thence Southeasterly on a line parallel with the Southwest line of 3rd Street, 35 feet;
thence Northeasterly on a line parallel with the Nol1hwest lot line of said Lot 4, 100 feet to a point on the
Southwest line of 3rd Street;
thence Northwesterly along the Southwest line of 3rd Street, 35 feet to the Point of Beginning.
Page 29
Washington County, Idaho
EXHIBIT "
Order No. 100-00-7731
Situated in Section 7, Township 13 North, Range 3 West of the Boise Meridian, in Washington
County, Idaho:
In the SWI/4SEI/4 of said Section 7: Commencing at the southeast comer of the SW1/4SE1/4;
thence North 0034'30" West 322.41 feet to the True Point of Beginning;
thence South 88042' West a distance of 150 feet, more or less;
thence South 0034'30" East a distance of ISO feet, more 01' less;
thence North 88042' East 150 feet, more or less;
thence NOJ1h 0034'30" West ISO feet, more or less, to the True Point of Beginning.
AND ALSO
A parcel of land in the SWI/4SWlI4 of Section 8, Township 13 North, Range 3 West of the Boise
Meridian, Washington County, Idaho, described as follows:
Beginning at a point S 74056' E 247 feet from the southeast corner of Lot 19 of Block 7 , Middle Valley
Townsite, according to the official plat of said Townsite;
Thence N 1405 I' E ISO feet, more or less, to the south line of Bridge Street, the True Point of Beginning;
Thence East 50 feet, more or less, to the center of the channel of the Weiser River;
Thence southerly along the center of the Channel of the Weiser River 55 feet;
Thence westerly 50 feet, more or less;
Thence northerly 55 feet, more or less, to the True Point of Beginning,
SA VE AND EXCEPT that p0l1ion deeded to Washington County in Deed recorded November 2, 1994 as
InstrumentNo. 161713 , Official Records.
Page 30
YAVAPAI COUNTY, ARIZONA
That part of Parcel 9, of HENDERSON V ALLEY RANCH NORTH as shown on Record of Survey Map
recorded in Book 4 of Land Surveys, Page 37 Yavapai County Recorders Office, located within Section 28
Township 14 North, Range 2 East of the Gila and Salt River Base and Meridian, Yavapai County, Arizona
more particularly described as follows:
COMMENCING at the Southeast corner of said Parcel 9;
thence South 89 degrees 58 minutes 01 seconds West, along the South line of said Parcel 9, a distance of
264.46 feet to the TRUE POINT OF BEGINNING;
thence continuing South 89 degrees 58 minutes 0 I seconds West along said South line, a distance of 330.57
feet;
thence North 00 degrees 02 minutes 04 seconds West, a distance of263.76 feet;
thence N0l1h 89 degrees 58 minutes 30 seconds East, a distance of 330.50 feet;
thence South 00 degrees 03 minutes 02 seconds East, a distance of 263.71 feet to the TRUE POINT OF
BEGINNING;
EXCEPTING all coal and other minerals as reselved in the Patent to said land.
Reserving a 20 foot wide easement for ingress, egress, and utility purposes, lying East of, adjacent to, and
parallel with the West line of subject Parcel. Also reserving a 68 foot wide easement for ingress, egress
and utility purposes, lying North of, adjacent to, and parallel with the South line of subject Parcel.
Parcel No.
An easement for ingress and egress and public utilities being 68.00 feet in width and lying 68.00 feet
N0l1hel'ly of and parallel to and contiguous with the following described sideline:
Located on Parcel 9 of HENDERSON V ALLEY RANCH NORTH as recorded in Book 4 of Land Surveys,
pages 37 and 38, records of Yavapai County, Arizona and being located in the Northeast one-qual1er of
Section 28 Township t4 North Range 2 East of the Gila and Satt River Base and Meridian, Yavapai
County, Arizona, being more particularly described as follows:
COMMENCING for reference at the North one-qual1er corner of said Section 28;
thence South 89 degrees 58 minutes 47 seconds East along the North line of the said Northeast one-quarter
of Section 28, a distance of 1715.93 feet to the Northeast corner of the foresaid Parcel 9;
thence South 00 degrees 01 minutes 52 seconds along the East line of said Parcel 9, a distance of 1319,
feet to the Southeast corner of said Parce19 and the TRUE POINT OF BEGINNING of this easement;
thence South 89 degrees 59 minutes 29 seconds West along the South line of said Parcel 9, a distance of
629.00 feet to the POINT OF TERMINATION of this easement.
EXCEPT any portion lying within Parcel No. I
Page 31
PINAL COUNTY, ARIZONA
No. 242-1381592
Lot 47, of SILVER BELL ESTATES UNIT FOUR, according to the plat of record in the office of the
County Recorder of Pinal County, Arizona, recorded in Book 16 of Maps, Page 59;
EXCEPT all coal, gas and other minerals as reserved in Patent from the United States of America; and
EXCEPT all coal, oil, gas and other minerals, hydrocarbon, hydro-thermo and geo-thermo rights or
deposits, as reserved in Deed recorded in Docket 668, Page 964.
Page 32
ATTACHMENT 1
UNIFORM SYSTEM OF ACCOUNTS
All references regarding account numbers are to 47 C.R. 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 BolTower/Mortgagor
Local Network Services Revenues
Network Access Services Revenues
Long Distance Network Services Revenues)Miscellaneous Revenues
LESS: Uncollectible Revenues
5000s thru 5300s
Other Operating Income and Expense
Non-operating Income and Expense
Income Effect of Jurisdictional Rate-making Difference - Net
Non-regulated Net Income
Other Non-regulated Revenues
LESS: balances of the following accounts:
Plant Specific Operations Expense
Plant Non-specific Operations Expense
Customer Operations
Corporate Operations
Operating Taxes
Non-operating Taxes
Interest and Related Items
Extraordinary Items
7100*7100
7300*7300
7910 7910
7990 7990
7991 7991
6100s thru 6700s
7200*7200
7400*7400
7500*7500
7600*7600
INTEREST EXPENSE: the sum of the balances of the following accounts of the Borrower/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
7340
7500
7300.4
TOTAL TELECOMMUNICATIONS PLANT: the sum of the balances of the following accounts of the
Borrower/Mol1gagor
Telecommunications Plant in Service
Property Held for Future Telecommunications Use
Telecommunications Plant Under Construction - ShO11 Term
Telecommunications Plant Under Construction - Long Telm
Telecommunications Plant Adjustment
Non-Operating Plant
Goodwill
2001
2002
2003
2004
2005
2006
2007
2001
2002
2003
2004
2005
2006
2007
*Summary Accounts
Page 33
NET WORTH OR EQUITY: the sum of the balances of the following accounts of the Borrower/Mortgagor
Capital Stock
Additional Paid-in-Capital
Treasury Stock
Other Capital
Retained Earnings
4510
4520
4530
4540
4550
NOTE: For Non-Profit Organizations - Owner s equity shall be shown in sub-accounts of 4540 and 4550.
TOTAL ASSETS: the sum of the balances of the following accounts of the BolTower/Mortgagor
CulTent Assets
Non-Current Assets
Total Telecommunications Plant
LESS: Accumulated Depreciation
LESS: Accumulated Amortization
1100s
1400s
2001
3100
3400
thru
thru
thru
thru
thru
DEPRECIATION AND AMORTIZATION: the sum of the balances of the following accounts of the
Borrower/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
65601jc
6561
6562
6563
6564
6565
13005
1500s
2007
3300s
36005
Page 34
EXHIBIT C
Michael C. Creamer (ISB No. 4030)
Cynthia A. Melillo (ISB No. 5819)
GIVENS PURSLEY LLP
601 W. Bannock Street
P. O. Box 2720
Boise, ID 83701-2720
Telephone No. [phone]
Fax No. [phone]
Attorneys for Midvale Telephone Exchange, Incorporated
BEFORE THE IDAHO PUBLIC UTILITIES COMMISSION
In the Matter of the Application of Midvale
Telephone Exchange, Incorporated for
Authority to Borrow from the Rural Utilities
Service ("RUS") in an Amount Not to Exceed
$12 145 000.
Case No.
PROPOSED ORDER
On October 15 2007, Midvale Telephone Exchange, Incorporated (hereinafter
Applicant"), filed an Application for Loan Approval with this Commission requesting authority
to execute a loan contract amendment and supplemental mortgage in an amount not to exceed
$12 145 000 with the United States of America, acting through the Rural Utilities Service
RUS"
In support of said Application, Applicant states that the proceeds of the RUS loan will be
used to pay for, and partially reimburse general funds to: (1) extend service to approximately
1081 new customers, (2) provide for switch and software upgrades, (3) provide for central office
equipment upgrades, (4) make related system improvements including replacement of an existing
analog microwave system with fiber, and (5) repay a line of credit with the Rural Telephone
Finance Cooperative ("R TFC") that was used to construct some of the above mentioned facilities
and that will be refinanced through the RUS loan.
After examining the Application and supporting documents and being fully advised in the
premises, the Commission hereby finds that a hearing in this matter is not required, and that the
proposed transaction is consistent with the public interest and the Applicant's proper
performance of its duties as a public utility.
IT IS THEREFORE ORDERED that the Application of Midvale Telephone Exchange
Incorporated for authority to execute a loan contract amendment and supplemental mortgage
with the RUS in an amount not to exceed $12 145 000 be, and the same is hereby granted.
DONE by Order of the Idaho Public Utilities Commission this day of
2007.
Paul Kjellander, President
Mack Redford, Commissioner
Marsha Smith, Commissioner
ATTEST:
Jean Jewell, Secretary
EXHIBIT
GIVE SLEY LLP
LAW OFFICES
601 W, Bannock Street
PO Box 2720, Boise, Idaho 83701
TELEPHONE: [phone]
FACSIMILE: 208 388-1300
WEBSITE: www.givenspursiey.com
Gary G. Allen
Peter G. Barton
Christopher J. Beeson
Clint R. Bolinder
Erik J. Bolinder
William C. Cole
Michael C. Creamer
Amber N. Dina
Kristin Bjorkman Dunn
Thomas E. Dvorak
Jeffrey C. Fereday
Martin C. Hendrickson
Steven J. Hippler
Debora K. Kristensen
Anne C. Kunkei
DIRECT DIAL: [phone]
EMAIL: CAM~GIVENSPURSLEY.COM
October 15, 2007
The Idaho Statesman
1200 N. Curtis Road
Boise, ID 83706
To Whom It May Concern:
Jeremy G. Ladle
Michael P. Lawrence
Fcanklin G. Lee
David R. Lombardi
John M. Marshall
Kenneth R. McClure
Kelly Greene McConneli
Cynthia A. Melillo
Christopher H. Meyer
L Edward Miller
Patrick J. Miiler
Judson B. Montgomery
Angela K. Nelson
Deborah E. Nelson
W. Hugh O'Riordan, LLM.
G. Andrew Page
Angela M. Reed
Scott A. Tschirgi, LLM.
J. Wiil Varin
Conley E. Ward
Robert B. White
Terri R. Yost
RETIRED
Kenneth L Pursley
Raymond D. Givens
James A. McClure
Please publish the enclosed Legal Notice of Midvale Telephone Exchange
Incorporated's application for authority to borrow funds in your newspaper within seven (7)
days. A single publication will be sufficient. Thank you.
Sincerely, .
f1JJk
Cynthia A. Melillo
MCC/CAM/and
Enclosure
S:ICLIENTS11614184\Legal Notice to Idaho Statesman,DOC
LEGAL NOTICE OF MIDV ALE TELEPHONE EXCHANGE, INCORPORATED
APPLICATION FOR AUTHORITY TO BORROW FUNDS
NOTICE IS HEREBY GIVEN that on October 15 2007, Midvale Telephone Exchange
Incorporated, completed and filed with the Idaho Public Utilities Commission an Application for
authority to borrow up to $12 145 000 from the United States of America, acting through the
Rural Utilities Service and in connection with the borrowing, to execute a telephone loan
contract amendment and a supplemental mortgage.
The Application is on file and is available for public inspection at the Idaho Public
Utilities Commission. Any person desiring to comment on said Application must file petitions
or protests with the Idaho Public Utilities Commission within fourteen (14) days ofthe filing
date. If no protests are received within this time limit, the Commission may consider the
Application and enter its Order without setting the matter for hearing. If written protests are
filed with the Commission within the time limit set, the Commission will consider the same, and
in its discretion, may set a hearing. Petitions or protests must be filed with: Jean Jewell
Secretary, Idaho Public Utilities Commission, Statehouse, Boise, Idaho 83720.
Jean Jewell, Secretary
Idaho Public Utilities Commission